global premium hotels - registration prospectus (clean)

GLOBAL PREMIUM HOTELS LIMITED

168 Changi Road #04-01 Fragrance Building Singapore 419730Tel: +65 6348 7888 Fax: +65 6345 5951

REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 18 APRIL 2012This document is important. If you are in any doubt as to the action you should take, you should consult your legal, fi nancial, tax, or other professional adviser.

We have applied to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in and for quotation of all our ordinary shares (the “Shares”) in the capital of Global Premium Hotels Limited (the “Company”) already issued, the New Shares (as defi ned herein) which are the subject of this Invitation (as defi ned herein), the new Shares which may be issued upon the exercise of the Over-allotment Option (as defi ned herein) (the “Over-allotment Shares”) and the shares which may be issued upon the vesting of the Awards granted pursuant to the Global Premium Hotels PSP (as defi ned herein) (the “Award Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the Main Board of the SGX-ST. The dealing in and quotation of our Shares will be in Singapore dollars.

Acceptance of applications for the New Shares will be conditional upon, inter alia, the issue of the New Shares and permission being granted to deal in and for quotation of all of our existing issued Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised) and the Award Shares. If completion of the Invitation does not occur because permission is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk, without interest or any share of revenue or other benefi t arising therefrom, and you will not have any claim against us, the Issue Manager, the Underwriter or the Placement Agent (as defi ned herein).

The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our Subsidiaries, our existing issued Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised) or the Award Shares.

In connection with the Invitation, we have granted to the Issue Manager the Over-allotment Option exercisable in whole or in part for up to 67,500,000 Over-allotment Shares, representing not more than 15% of the New Shares, within 30 days from the date of commencement of dealing of our Shares on the SGX-ST, at the Issue Price, solely for the purpose of covering over-allotments (if any) made in connection with the Invitation. The Stabilising Manager may over-allot and/or effect transactions that may stabilise or maintain the market prices of our Shares at levels which may not otherwise prevail in the open market, subject to compliance with all applicable laws and regulations. Such stabilisation activities, if commenced, may be discontinued by Stabilising Manager at any time at its discretion, subject

to compliance with all applicable laws and regulations. The total number of issued Shares immediately after the completion of the Invitation (and prior to the exercise of the Over-allotment Option) will be 1,000,000,000 Shares. If the Over-allotment Option is exercised in full, the total number of issued Shares immediately after completion of the Invitation will increase by 67,500,000 Shares.

A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”) on 26 March 2012 and 18 April 2012 respectively. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our existing issued Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised) and the Award Shares, as the case may be, being offered for investment. We have not lodged or registered this Prospectus in any other jurisdiction.

No Shares shall be allotted on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority.

Investing in our shares involves risks which are described in the section entitled “Risk Factors” of this Prospectus.

Global Premium Hotels Limited(Incorporated in the Republic of Singapore on 19 September 2011)

(Company Registration Number 201128650E)Invitation in respect of 450,000,000 New Shares (subject to the Over-allotment Option) comprising:–(a) 13,000,000 Public Offer Shares at $0.26 each by way of Public

Offer; and(b) 437,000,000 Placement Shares at $0.26 each by way of

Placement,payable in full on application.

Issue Manager, Underwriter and Placement Agent

Applications should be received by 12:00 noon on 24 April 2012 or such further period or periods as our Directors may, in consultation with the Issue Manager, in their absolute discretion, decide, subject to any limitations under all applicable laws.

Type of Hotel Economy-tier hotel Mid-tier hotel

Target Customer Value-conscious customers Business/up-market travellers

Amenities and Services Basic amenities Enhanced services and amenities

Room Rates* Room rates range from S$54.21 to S$157.01 Room rates range from S$139.04 to S$261.80

Fragrance Hotels

Parc Sovereign Hotel

We operate one of Singapore’s largest chains of hotels with 23 hotels, of which 22 are operated under our “Fragrance” brand and one hotel under the “Parc Sovereign” brand. We provide economy-tier and mid-tier class of accommodation with 1,738 rooms in Singapore*. We own all our hotels save for Fragrance Hotel – Elegance. As at 31 October 2011, the market value of all the 22 hotels which we own amounted to S$747.6 million.

We are principally engaged in the business of developing and operating economy-tier to mid-tier class hotels. Our established track record and reputation of providing affordable accommodation has led to our “Fragrance” brand of hotels becoming well-recognised in the local and regional hospitality industry. Most of our hotel property assets and hotel operations are strategically located in the city or city-fringe areas.

* As at Latest Practicable Date being16 March 2012

122

*Daily room rates (excluding GST) as at Latest Practicable Date, being 16 March 2012

Established and distinctive brand name

● Developing and operating hotels in Singapore since 1995 ● Established track record and reputation of providing affordable and value-for-money accommodation in terms of price, location, service and

cleanliness ● Well-recognised brand name in the local and regional hospitality industry

Dedicated and experienced key management personnel

● Experienced hands-on management team with in-depth knowledge of hotel operations and hotel property development, and strong understanding of the local hospitality and property market

Offering of quality service and affordable hotel rooms at strategic locations

● Hotel rooms have been furnished with essential amenities to provide guests with comfortable stay at affordable prices● Hotel staff are trained in-house to maintain consistent level of service to guests● Hotels are strategically located either in the city or city-fringe areas and are easily accessible by major roads, public buses and the MRT

Active development and management of hospitality-related assets to provide value accretion to existing portfolio of hotels

● Successfully developed 20 hotels, renovated 4 hotels after acquisition and converted 3 buildings to hotels as at the Latest Practicable Date*

● Wide network of contacts and long-standing relationships with professionals, consultants, builders, agents and suppliers allows better control over the construction or renovations of hotels in terms of costs and downtime

● As hotel developer and operator, the Group has:

• Necessary know-how to optimise the design and type of rooms as well as the repair and maintenance of hotels • Ability to identify opportune time to upgrade and refurbish hotel portfolio • Ability to better pinpoint new sites for development of hotels

(Rooms) (Hotels)

2006 2007 2008 2009 2010 2011

1,034 1,212 1,316 1,356 1,436 1,738

Total Number of Rooms and Hotels in Operation

Number of rooms islandwide Number of hotels in operation

1217

1819 20

23Hotels 2006-2011 CAGR: 13.9%

Freehold

Leasehold (999 years)


1-5 years

6-10 years

11-15 years

Regular promotional tie-ups with business partners and active participation in tourism trade conventions and exhibitions

● Good working relationship with more than 900 local and overseas travel agents to promote hotels worldwide ● Work closely with various on-line travel agents such as Booking.com, AsiaTravel.com and Agoda.com, to promote hotels through various on-line

channels● Entered into contractual arrangements with corporate clients such as shipping companies for the provision of accommodation to their staff and

crew while in Singapore ● Participate in tourism trade conventions and exhibitions in the Asia-Pacifi c region and overseas road shows, consumer fairs and product updates

organised by the Singapore Tourism Board● Advertise in trade magazines which are circulated within the tourism industry in the Asia-Pacifi c region as well as in newspapers, television, buses

and cinemas

Integrated Property Management System allows better management of hotel operations

● Centrally manage all 23 hotels island-wide to maximise hotel occupancy rates and reduce the manpower required for manual updates

Established relationships with suppliers allows better leverage on economies of scale

● Bulk purchase of hotel room supplies and daily necessities centrally, coupled with good relationship with our suppliers, allow us to obtain supplies and daily necessities on favourable terms, reduce operating costs and ensure consistency and quality standards

0

5

10

15

20

25

0

200

400

600

800

1000

1200

1400

1600

18002000

Rooms 2006-2011 CAGR: 10.8%

19

12

4

118

* As at Latest Practicable Date being 16 March 2012

Hotels Owned Categorised by Lease Tenure

All Hotels Categorisedby Years of Operations

32.0 29.7 39.1 28.4 34.4

Gross Profi t MarginGross Profi t

86.7% 85.9%88.3%

88.0% 88.3%

Gross Profi t and Gross Profi t Margin

FY2008 FY2009 FY2010 9M2010 9M2011

Net Profi t and Net Profi t Margin

(S$million)

Net Profi t MarginNet Profi t

16.1 13.5 19.9 14.5 17.3

43.7%39.1%

44.9% 44.9% 44.5%

FY2008 FY2009 FY2010 9M2010 9M2011

(S$million)(S$million)

Revenue

(%)(%)

36.9 34.6 44.2 32.3 38.9

45

40

35

30

25

20

15

10

5

0

40

35

30

25

20

15

10

5

0

90

85

80

75

70

20

15

10

5

0

60

50

40

30

20

10

0FY2008 FY2009 FY2010 9M2010 9M2011

Singapore's Inbound Tourist Arrivals (2006-2015) Incoming Tourism Receipts and Incoming Tourism Receipts from Accommodation (2006-2015)

Key factors contributing to growth of Singapore’s tourism and hotel industry include:

● Global economic recovery following the recession that occurred between the years 2008-2009 saw a rebound in tourist arrivals to Singapore. Inbound tourist arrivals registered 23.0% year on year growth to reach 19.4 million trips in 2010

● Leisure visitor arrivals grew by 17% in 2010 to reach 13 million trips due to the opening of two integrated resorts

● The Singapore Tourism Board is expected to increase higher tourist spending by focusing on more value-added activities such as education, healthcare and expanded tourism offerings through infrastructural investments. Such investments include the International Cruise Terminal, Gardens by the Bay, the River Safari, Mandai Fourth Gate and the Jurong Lake

● New-long haul routes and regular airfare promotions introduced by low-cost airlines have contributed to the increase in tourist arrival numbers from regional Asian countries

Robust levels of visitor arrivals will ensure the constant growth of the hotel industry in Singapore. Barring major external shocks, AORs (defi ned herein) are likely to remain above 80% during the forecast period of 2011-2015. However, the economic uncertainty as well as the increase in hotel room inventory is likely to moderate the growth in room rates from 2012 onwards.

Whilst the hospitality industry is expected to experience slower growth in 2012 due to uncertain economic conditions, the demand for mid-tier and economy-tier hotels is unlikely to be affected. In the face of adverse economic conditions and tighter budgets, both leisure and business travellers are likely to downgrade to more affordable accommodation that economy-tier hotels provide.

Source: “Economy-tier Hotels in Singapore” report issued by Euromonitor International Ltd. dated 30 November 2011

14,63515,755 15,759 15,773

19,399 19,64320,372 20,976 21,472 21,869

7.9% 7.7%

0.0% 0.1%

23.0%

1.3%3.7% 3.0% 2.4% 1.9%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Tourist Arrivals (’000 trips)

Tourist Arrivals Growth Rate

13.014.6 15.3

13.0

19.3

24.026.4

28.530.4

32.0

2.5 3.1 3.4 2.74.1 5.0 5.6 6.0 6.4 6.7

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Incoming Tourism Receipts ($ billions)

Incoming Tourism Receipts from Accommodation(S$ billions)

19 April 2012, 9.00 a.m. Opening date and time of public offer

24 April 2012, 12.00 noon Closing date and time of public offer

26 April 2012, 9.00 a.m. Commencement of trading on SGX-ST

● 2nd largest economy-tier hotel chain in Singapore

● More than 85% of hotels owned by the Group are sited on freehold land

● Acquired 22 hotels at a discount on market value

● Dividend: We intend to distribute at least 80% of net profi t after tax for FY2012

Expand “Fragrance” and “Parc Sovereign” brand of hotels ● Identify and pursue potential sites for hotel development ● Add 200-300 (increase of up to 17.3%) rooms to our economy-tier and/or mid-tier hotels within 1 to 2 years after successful acquisition

of the development site ● Expand overseas into the Asia-Pacifi c region (particularly Malaysia, Indonesia and Phillippines), with focus on the economy-tier hotel

market segment, when opportunity arises

Upgrade existing hotels● Refurbish hotels to upgrade and enhance their value

Launch more aggressive marketing strategies● Launch new interactive booking engine to facilitate booking process ● Strengthen and increase collaborations with Singapore Tourism Board, Singapore Hotel Association, on-line travel agents and budget

airlines to promote our hotels

Lower cost of operations● Explore feasibility of establishing own laundry service ● Review energy effi ciency of electrical appliances and sanitary fi ttings, and to upgrade where economically feasible ● Educate staff on energy conservation

Subscribe now through an ATM (defi ned herein) or IB website (defi ned herein) of one of the Participating Banks (defi ned herein) or on printed white application forms which forms part of the

Prospectus, in the manner set out in the Prospectus.

CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. . . . . . . . 16

PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Overview of our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Our Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Our Competitive Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Our Business Strategies and Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Our Financial Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Our Contact Details. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Listing on the SGX-ST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Details of the Invitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Invitation Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Public Offer Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Placement Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Over-allotment and Stabilisation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Share Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Subscription for the New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Selling Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Clearance and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Indicative Timetable for Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

USE OF PROCEEDS AND LISTING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Risks Relating to our Business and Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Risks Relating to Investment in our Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

TABLE OF CONTENTS

1

GENERAL INFORMATION OF OUR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Our History and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Restructuring Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Our Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

Our Subsidiaries and Sole Proprietorships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Our Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Credit Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Major Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Major Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Permits, Licences, Approvals, Certifications and Government Regulations. . . . . . 110

Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

Competitive Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

SELECTED COMBINED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 120

Selected Combined Results of Operations of our Group . . . . . . . . . . . . . . . . . . . . 120

Selected Combined Financial Position of our Group. . . . . . . . . . . . . . . . . . . . . . . . 121

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Significant Factors Affecting our Results of Operations . . . . . . . . . . . . . . . . . . . . . 123

Unaudited Pro Forma Combined Financial Statements for FY2010 and 9M2011 . 127

Breakdown by Business Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Review of Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Review of Financial Position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Capital Expenditures and Divestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

Operating Lease Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Foreign Exchange Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Changes to Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

TABLE OF CONTENTS

2

PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . 149

Our Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

Trend Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

Our Business Strategies and Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

SHARE CAPITAL AND SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

Share Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Moratorium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

DIRECTORS, MANAGEMENT AND STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Management Reporting Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

Key Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Material Background Information on our Directors, Key Executives and ControllingShareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

Directors’ and Key Executives’ Remuneration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Global Premium Hotels Performance Share Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Objectives of the Global Premium Hotels PSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Summary of the Global Premium Hotels PSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

Rationale for participation of Non-Executive Directors . . . . . . . . . . . . . . . . . . . . . . 184

Disclosures in Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Cost of Awards made under the Global Premium Hotels PSP to our Company . . 185

INTERESTED PERSON TRANSACTIONS AND CONFLICT OF INTERESTS . . . . . . 187

Interested Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

Past Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

On-going Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

Review Procedures for Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . 192

Potential Conflict of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

Remuneration Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

Nominating Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

TABLE OF CONTENTS

3

OTHER GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

APPENDIX A : INDEPENDENT AUDITORS’ REPORT ON THE COMBINED

FINANCIAL STATEMENTS FOR THE YEARS ENDED 31

DECEMBER 2010, 2009 AND 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

APPENDIX B : INDEPENDENT AUDITORS’ REPORT ON THE COMBINED

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE

NINE MONTHS ENDED 30 SEPTEMBER 2011 . . . . . . . . . . . . . . . . . B-1

APPENDIX C : INDEPENDENT AUDITORS’ REPORT ON THE UNAUDITED PRO

FORMA COMBINED FINANCIAL INFORMATION . . . . . . . . . . . . . . C-1

APPENDIX D : SUMMARY OF MEMORANDUM AND ARTICLES OF

ASSOCIATION OF OUR COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . D-1

APPENDIX E : DESCRIPTION OF OUR SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

APPENDIX F : TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION

AND ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

APPENDIX G : TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1

APPENDIX H : RULES OF THE GLOBAL PREMIUM HOTELS PERFORMANCE

SHARE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

APPENDIX I : VALUER’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

TABLE OF CONTENTS

4

BOARD OF DIRECTORS : Mr. Koh Wee Meng, Non-Executive Chairman

Mr. Lim Chee Chong, Executive Director and CEO

Mr. Sim Mong Yeow, Executive Director and COO

Mr. Kau Jee Chu, Independent Director

Mr. Woo Peng Kong, Independent Director

Mr. Kwan Chee Wai, Independent Director

COMPANY SECRETARY : Keloth Raj Kumar

(Associate of the Institute of Chartered Secretaries and

Administrators)

REGISTERED OFFICE : 168 Changi Road

#04-01 Fragrance Building

Singapore 419730

ISSUE MANAGER,

UNDERWRITER AND

PLACEMENT AGENT

: Oversea-Chinese Banking Corporation Limited

65 Chulia Street

#09-00 OCBC Centre

Singapore 049513

AUDITORS OF THE

COMPANY AND

REPORTING

ACCOUNTANTS

: Deloitte & Touche LLP

6 Shenton Way

#32-00 DBS Building Tower Two

Singapore 068809

(Partner-in-charge: Leow Chung Chong Yam Soon,

Certified Public Accountant)

SOLICITOR TO THE

INVITATION AND LEGAL

ADVISER TO THE

COMPANY ON

SINGAPORE LAW

: Duane Morris & Selvam LLP

16 Collyer Quay #17-00

Singapore 048318

SOLICITOR TO THE

ISSUE MANAGER,

UNDERWRITER AND

PLACEMENT AGENT

: Shook Lin & Bok LLP

1 Robinson Road

#18-00 AIA Tower

Singapore 048542

SHARE REGISTRAR AND

SHARE TRANSFER

AGENT

: Tricor Barbinder Share Registration Services

(A division of Tricor Singapore Pte Ltd)

80 Robinson Road

#02-00

Singapore 068898

INDEPENDENT VALUER : Colliers International Consultancy & Valuation

(Singapore) Pte Ltd

1 Raffles Place #45-00

One Raffles Place

Singapore 048616

CORPORATE INFORMATION

5

RECEIVING BANKER : Oversea-Chinese Banking Corporation Limited

65 Chulia Street

#09-00 OCBC Centre

Singapore 049513

PRINCIPAL FINANCIAL

INSTITUTIONS

: CIMB Bank Berhad

50 Raffles Place

#09-01 Singapore Land Tower

Singapore 048623

DBS Bank Ltd.

6 Shenton Way

DBS Building Tower One

Singapore 068809

Hong Leong Finance Limited

16 Raffles Quay

#01-05 Hong Leong Building

Singapore 048581

Oversea-Chinese Banking Corporation Limited

65 Chulia Street

#09-00 OCBC Centre

Singapore 049513

RHB Bank Berhad

90 Cecil Street

#03-00 RHB Bank Building

Singapore 069531

Sing Investments & Finance Limited

96 Robinson Road #01-01

SIF Building

Singapore 068899

United Overseas Bank Limited

80 Raffles Place

UOB Plaza

Singapore 048624

INDUSTRY EXPERT : Euromonitor International Ltd.

No. 3 Lim Teck Kim Road

#08-01 Genting Centre

Singapore 088934

CORPORATE INFORMATION

6

In this Prospectus and the accompanying Application Forms and, in relation to Electronic

Applications, the instructions appearing on the screens of the ATMs of Participating Banks and

the IB websites of the Participating Banks, unless the context otherwise requires, the following

definitions apply throughout where the context so admits:

Companies within our Group

“Company” or “Global

Premium Hotels”

: Global Premium Hotels Limited

“Fragrance Assets” : Fragrance Assets Pte. Ltd.

“Fragrance Capital” : Fragrance Capital Pte. Ltd.

“Fragrance Hotel

Management”

: Fragrance Hotel Management Pte. Ltd.

“Fragrance Investment” : Fragrance Investment Pte. Ltd.

“Fragrance Ventures” : Fragrance Ventures Pte. Ltd.

“Parc Sovereign Hotel

Management”

: Parc Sovereign Hotel Management Pte. Ltd.

Our Hotels

“Fragrance Chain of

Hotels” or “Fragrance

Chain”

: The chain of hotels under the “Fragrance” brand name,

comprising Fragrance Hotel-Sapphire, Fragrance Hotel-

Ruby, Fragrance Hotel-Emerald, The Fragrance Hotel,

Fragrance Hotel-Pearl, Fragrance Hotel-Crystal,

Fragrance Hotel-Balestier, Fragrance Hotel-Classic,

Fragrance Hotel-Rose, Fragrance Hotel-Sunflower,

Fragrance Hotel-Selegie, Fragrance Hotel-Kovan,

Fragrance Hotel-Viva, Fragrance Hotel-Lavender,

Fragrance Hotel-Imperial, Fragrance Hotel-Oasis,

Fragrance Hotel-Waterfront, Fragrance Hotel-Ocean

View, Fragrance Hotel-Royal, Fragrance Hotel-Bugis,

Fragrance Hotel-Elegance and Fragrance Hotel-

Riverside. Please refer to the section entitled “General

Information of our Group” of this Prospectus for details of

our hotels

“Our Chain of Hotels” or

“Our Chain”

: Fragrance Chain of Hotels and Parc Sovereign Hotel

Other Corporations and Organisations

“ASEAN” : The Association of Southeast Asian Nations

“BCA” : Building and Construction Authority of Singapore

DEFINITIONS

7

“CDP” : The Central Depository (Pte) Limited

“CPF” : The Central Provident Fund

“DBS Bank” : DBS Bank Ltd. (including POSB)

“EMA” : Energy Market Authority

“FGL” : Fragrance Group Limited, a company listed on the Main

Board of the SGX-ST

“FGL Group” : FGL and its Subsidiaries

“Fragrance Biz Space” : Fragrance Biz Space Pte. Ltd.

“Fragrance Heritage” : Fragrance Heritage Pte. Ltd.

“Fragrance Homes” : Fragrance Homes Pte. Ltd.

Fragrance Holdings : Fragrance Holdings Pte. Ltd. (formerly known as

Fragrance Global Pte. Ltd.)

“Fragrance Land” : Fragrance Land Pte. Ltd.

“Fragrance Properties” : Fragrance Properties Pte. Ltd.

“Fragrance Realty” : Fragrance Realty Pte. Ltd.

“HLB” : Hotels Licensing Board

“IRAS” : Inland Revenue Authority of Singapore

“Issue Manager” or

“Underwriter” or

“Placement Agent” or

“Stabilising Manager” or

“Receiving Banker” or

“OCBC Bank”

: Oversea-Chinese Banking Corporation Limited

“Kensington Land” : Kensington Land Pte. Ltd.

“Kensington Village” : Kensington Village Pte. Ltd.

“MAS” or “Authority” : The Monetary Authority of Singapore

“MHA” : Ministry of Home Affairs of Singapore

“MOM” : Ministry of Manpower of Singapore

“NEA” : National Environment Agency of Singapore

“Participating Banks” : OCBC Bank, DBS Bank and United Overseas Bank

Limited and its subsidiary, Far Eastern Bank Limited

(“UOB Group”), and “Participating Bank” means any of

the abovementioned entities

“SCCS” : Securities Clearing & Computer Services (Pte) Ltd.

DEFINITIONS

8

“SCDF” : The Singapore Civil Defence Force

“SGX-ST” : Singapore Exchange Securities Trading Limited

“SHA” : The Singapore Hotel Association

“STB” : The Singapore Tourism Board

“URA” : Urban Redevelopment Authority

General

“AOR” : Average occupancy rates is computed by dividing total

number of rooms sold by total number of rooms available

“Application Forms” : The official printed application forms to be used for the

purpose of the Invitation which form part of this

Prospectus

“ARR” : Average room rates per day is computed by dividing total

room revenue earned by total number of rooms sold

“Articles of Association” : Articles of association of our Company, as at the date of

lodgement of this Prospectus

“ATM” : Automated teller machine

“Audit Committee” : The audit committee of our Company

“Award” : A contingent award of Shares granted pursuant to the

rules of the Global Premium Hotels PSP, details of which

may be found in the section entitled “Directors,

Management and Staff — Global Premium Hotels

Performance Share Plan” of this Prospectus

“Award Shares” : The Shares which may be issued upon the vesting of the

Awards pursuant to the Global Premium Hotels PSP

“Board” : Our board of Directors

“BTMICE” : Business travel, meetings, incentives, conventions and

exhibitions

“Building Control (Outdoor

Advertising) Regulations”

: The Building Control (Outdoor Advertising) Regulations,

Chapter 29 Regulation 6, of Singapore, as amended,

supplemented or modified from time to time

“CEO” : Chief executive officer

“COO” : Chief operating officer

“Companies Act” : The Companies Act, Chapter 50, of Singapore, as

amended, supplemented or modified from time to time

DEFINITIONS

9

“Changi Road Property” : A five-storey commercial building with an attic, shops and

car parks at the ground floor located at 168 Changi Road,

Fragrance Building, Singapore 419730

“Customs Act” : The Customs Act, Chapter 70, of Singapore, as


“Directors” : The directors of our Company as at the date of this

Prospectus

“Electricity Act” : The Electricity Act, Chapter 89A, of Singapore, as


“Electronic Applications” : Applications for the Public Offer Shares made through an

ATM or IB website of one of the Participating Banks,

subject to and on the terms and conditions of this

Prospectus

“Employment Act” : The Employment Act, Chapter 91, of Singapore, as


“Employment of Foreign

Manpower Act”

: The Employment of Foreign Manpower Act, Chapter 91A,

of Singapore, as amended, supplemented or modified

from time to time

“EPS” : Earnings per share

“Executive Directors” : The executive directors of our Company as at the date of

this Prospectus

“Fire Safety Act” : The Fire Safety Act, Chapter 109A, of Singapore, as


“FY” : Financial year ended or, as the case may be, ending 31

December

“GDP” : Gross Domestic Product

“Geylang Industrial

Property”

: A nine-storey light industrial factory building with surface

car parks located at 72 Lorong 19 Geylang Singapore

388510

“Global Premium Hotels

PSP”

: Global Premium Hotels Performance Share Plan

“GST” : Goods and Services Tax

“Hotels Act” : The Hotels Act, Chapter 127, of Singapore, as amended,


“Hotels Licensing

Regulations”

: The Hotels Licensing Regulations, as amended,


“IB” : Internet banking

DEFINITIONS

10

“Independent Directors” : The independent directors of our Company as at the date

of this Prospectus

“Integrated Resorts” : Marina Bay Sands and Resorts World Sentosa

“Invitation” : Our invitation to the public in Singapore to subscribe for

the New Shares at the Issue Price, subject to and on the

terms and conditions of this Prospectus

“Immigration Act” : The Immigration Act, Chapter 133, of Singapore, as


“Immigration Regulations” : The Immigration Regulations, as amended,


“Issue Price” : $0.26 for each New Share

“Key Executives” : The key executives of our Company as at the date of this

Prospectus

“Land Acquisition Act” : The Land Acquisition Act, Chapter 152, of Singapore as


“Latest Practicable Date” : 16 March 2012, being the latest practicable date prior to

the lodgement of this Prospectus with the Authority

“Listing Date” : The date on which our Shares commence trading on the

SGX-ST

“Listing Manual” : The Listing Manual of the SGX-ST, as amended,

supplemented, or modified from time to time

“Market Day” : A day on which the SGX-ST is open for trading in

securities

“Market Value” : The estimated amount for which a property should

exchange on the date of valuation between a willing buyer

and a willing seller in an arm’s length transaction after

proper marketing wherein the parties had each acted

knowledgeably, prudently and without compulsion, based

on the following assumptions:

(a) the properties are sold in the open market without

the benefit of a deferred term contract or any similar

arrangement which could serve to affect the value of

the properties;

(b) no allowance is made for any charges, mortgages or

amounts owing on the properties, nor for any

expenses or taxation which may be incurred in

effecting a sale; and

DEFINITIONS

11

(c) the properties are free from any major or material

encumbrances, restrictions and outgoings of an

onerous nature which could affect their values

“Memorandum” : Memorandum of association of our Company, as at the

date of lodgement of this Prospectus

“Mixed-Use Development

Project”

: Mixed-use property development comprising hospitality

property development and non-hospitality property

development

“MRT” : The Singapore Mass Rapid Transit railway transport

system

“NAV” : Net asset value

“New Shares” : The 450,000,000 new Shares for which our Company

invites applications to subscribe for pursuant to the

Invitation, subject to and on the terms and conditions of

this Prospectus

“Nominating Committee” : The nominating committee of our Company

“non-hospitality uses or

property”

: Refers to any use of property or property used for other

than hospitality uses such as hotels and serviced

apartments. Non-hospitality uses of property or non-

hospitality property may include property used for

commercial, residential, retail and food and beverage

outlet purposes

“NTA” : Net tangible assets

“Over-allotment Option” : The option granted to the Issue Manager, exercisable in

whole or in part for the Over-allotment Shares,

representing not more than 15% of the New Shares,

within 30 days from the date of commencement of dealing

of our Shares on the SGX-ST, at the Issue Price, solely

for the purpose of covering over-allotments (if any) made

in connection with the Invitation (Please refer to the

section entitled “The Invitation — Over-allotment and

Stabilisation” of this Prospectus for more information).

Unless indicated otherwise, all information in this

Prospectus assumes that the Issue Manager does not

exercise the Over-allotment Option

“Over-allotment Shares” : Up to 67,500,000 new Shares (representing 15% of the

New Shares) which may be issued upon the exercise of

the Over-allotment Option

DEFINITIONS

12

“Pasir Panjang Commercial

Property”

: Fourteen units of two storey shop-houses at 216 Pasir

Panjang Road Singapore 118577, 218 Pasir Panjang

Road Singapore 118579, 220 Pasir Panjang Road

Singapore 118581, 222 Pasir Panjang Road Singapore

118583, 224 Pasir Panjang Road Singapore 118585, 226

Pasir Panjang Road Singapore 118586, 228 Pasir

Panjang Road Singapore 118587, 230 Pasir Panjang

Road Singapore 118589, 232 Pasir Panjang Road

Singapore 118589, 234 Pasir Panjang Road Singapore

118592, 236 Pasir Panjang Road Singapore 118593, 238

Pasir Panjang Road Singapore 118594, 240 Pasir

Panjang Road Singapore 118595 and 242 Pasir Panjang

Road Singapore 118597

“Period Under Review” : FY2009, FY2010, FY2011 and 1 January 2012 to the

Latest Practicable Date

“Placement” : The placement of the Placement Shares at the Issue

Price by the Placement Agent on behalf of our Company,


Prospectus

“Placement Shares” : The 437,000,000 New Shares which are the subject of

the Placement

“PMS” or “Property

Management System”

: A sophisticated software system that manages our

reservation and billing processes centrally

“Property Tax (Valuation by

Gross Receipts for Hotel

Premises) Order”

: The Property Tax (Valuation by Gross Receipts for Hotel

Premises) Order as amended, supplemented or modified

from time to time

“Public Offer” : The offer by our Company to the public in Singapore for

subscription of the Public Offer Shares at the Issue Price,


Prospectus

“Public Offer Shares” : The 13,000,000 New Shares which are the subject of the

Public Offer

“Purchase Consideration : The total consideration paid by our Company to FGL for

the acquisition of our Subsidiaries, amounting to $558.0

million. Please refer to the section entitled “General

Information of our Group — Restructuring Exercise” of

this Prospectus for further details

“Prospectus” : This Prospectus dated 26 March 2012 issued by our

Company in respect of the Invitation

“Remuneration Committee” : The remuneration committee of our Company

DEFINITIONS

13

“Restructuring Agreement” : The restructuring agreement dated 31 March 2012

entered into by our Company and FGL in connection with

the acquisition of our Subsidiaries

“Restructuring Exercise” : The restructuring exercise implemented in connection

with the Invitation, more fully described in the section

entitled “General Information of our Group —

Restructuring Exercise” of this Prospectus

“REVPAR” : Revenue per available room computed by multiplying

AOR by ARR

“Securities Account” : The securities account maintained by a depositor with

CDP, excluding a securities sub-account

“Securities and Futures

Act” or “SFA”

: Securities and Futures Act, Chapter 289, of Singapore,

as amended, supplemented or modified from time to time

“Service Agreements” : The service agreements entered into between our

Company and our Executive Directors, Mr. Lim Chee

Chong and Mr. Sim Mong Yeow as described in the

section entitled “Directors, Management and Staff —

Service Agreements” of this Prospectus

“SFR” : Securities and Futures (Offer of Investments) (Shares

and Debentures) Regulations 2005, as amended,


“SFRS” : Singapore Financial Reporting Standards

“Shareholders” : Registered holders of Shares, except where the

registered holder is CDP, the term “Shareholders” shall,

in relation to such Shares mean the depositors whose

Securities Accounts are credited with Shares

“Share Lending

Agreement”

: The share lending agreement dated 18 April 2012

entered into between FGL and the Stabilising Manager in

connection with the Over-allotment Option

“Shares” : The ordinary shares in the capital of our Company

“9M” : Nine months period ended or, as the casemay be, ending

30 September

Currencies, Units and

Others

“SGD” or “$” and “cents” : Singapore dollars and cents, respectively

“sq. ft.” : Square feet

“sq. m.” : Square metre

“%” or “per cent” : Percentage

DEFINITIONS

14

The expressions “Associate”, “Associated Company”, “Associated Entity”, “Controlling

Shareholders”, “Related Corporation”, “Related Entity”, “Entity At Risk”, “Interested Person”,

“Interested Person Transaction”, “Subsidiary” and “Substantial Shareholder” shall have the

meanings ascribed to the terms “associate”, “associated company”, “associated entity”,

“controlling shareholders”, “related corporation”, “related entity”, “entity at risk”, “interested

person”, “interested person transaction”, “subsidiary” and “substantial shareholder”

respectively in the Fourth Schedule of the SFR, the Companies Act and/or the Listing Manual.

The expressions “our”, “ourselves”, “us”, “we” or “our Group” or other grammatical variations

thereof shall, unless otherwise stated, refer to our Company and our subsidiaries and

subsidiary entities taken as a whole.

The expression “currently” in a statement refers to the relevant state of affairs as at the Latest

Practicable Date.

The terms “depositor”, “depository agent” and “depository register” shall have the same

meanings ascribed to them respectively in Section 130A of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa and

words importing the masculine gender shall, where applicable, include the feminine and neuter

genders and vice versa. References to persons shall include corporations.

Any discrepancies in tables, graphs and/or charts included herein between the amounts listed

and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables

may not be an arithmetic aggregation of the figures which precede them. All figures and

percentages disclosed in this Prospectus are rounded off.

Any reference in this Prospectus, the Application Forms and Electronic Applications to any

statute or enactment is a reference to that statute or enactment for the time being amended or

re-enacted. Any word defined in the Companies Act, the Securities and Futures Act, or the

Listing Manual and used in this Prospectus, the Application Forms and Electronic Applications

shall, where applicable, have the meaning ascribed to it under the Companies Act, the

Securities and Futures Act, or the Listing Manual, as the case may be.

Any reference in this Prospectus, the Application Forms and Electronic Applications to our

Shares being allotted to an applicant includes allotment to CDP for the account of that

applicant.

Any reference to a time of day in this Prospectus, the Application Forms and Electronic

Applications shall be a reference to Singapore time unless otherwise stated.

DEFINITIONS

15

All statements contained in this Prospectus, statements made in press releases and oral

statements that may be made by us or our Directors, Key Executives or employees acting on

our behalf, that are not statements of historical fact, constitute “forward-looking statements”.

You can identify some of these statements by forward-looking terms such as “anticipate”,

“believe”, “could”, “estimate”, “profit estimate” “expect”, “intend”, “may”, “plan”, “will” and

“would” or similar words. However, you should note that these words are not the exclusive

means of identifying forward-looking statements. All statements regarding our expected

financial position, profit estimate, business strategies, plans and prospects are forward-looking

statements.

These forward-looking statements, including without limitations, statements as to:

(a) our revenue and profitability;

(b) our planned expansion;

(c) any expected growth;

(d) other expected industry trends; and

(e) anticipated completion of proposed plans and other matters discussed in this Prospectus

regarding matters that are not historical facts,

are only predictions.

These forward-looking statements involve known and unknown risks, uncertainties and other

factors that may cause our actual results, performance or achievements to be materially

different from any future results, performance or achievements expressed or implied by such

forward-looking statements. These risks, uncertainties and other important factors include,

amongst others, the following:

(a) changes in political, social and economic conditions and the regulatory environment in the

places in which we conduct our business;

(b) our anticipated growth strategies and expected internal growth;

(c) changes in competitive conditions and our ability to compete under these conditions;

(d) changes in currency exchange rates;

(e) changes in our future capital needs and the availability of financing and capital to fund

these needs;

(f) other factors beyond our control; and

(g) the factors described in the section entitled “Risk Factors” of this Prospectus.

All forward-looking statements made by or attributable to us, or persons acting on our behalf,

contained in this Prospectus are expressly qualified in their entirety by such factors. Given the

risks and uncertainties that may cause our actual future results, performance or achievements

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

16

to be materially different than expected, expressed or implied by the forward-looking

statements in this Prospectus, we advise you not to place undue reliance on those statements.

Our Company, the Issue Manager, Underwriter and Placement Agent are not representing or

warranting to you that our actual future results, performance or achievements will be as

discussed in those statements. Further, our Company, the Issue Manager, Underwriter and

Placement Agent disclaim any responsibility to update any of those forward-looking statements

to reflect future developments, events or circumstances for any reason, even if new information

becomes available or other events occur in the future.

We are, however, subject to the provisions of the Securities and Futures Act and the Listing

Manual regarding corporate disclosure upon our admission to the Official List of the SGX-ST.

In particular, pursuant to Section 241 of the Securities and Futures Act, if after the Prospectus

is registered but before the close of the Invitation, our Company becomes aware of (a) a false

or misleading statement or matter in the Prospectus; (b) an omission from the Prospectus of

any information that should have been included in it under Section 243 of the Securities and

Futures Act; or (c) a new circumstance that has arisen since the Prospectus was lodged with

the Authority and would have been required by Section 243 of the Securities and Futures Act

to be included in the Prospectus, if it had arisen before the Prospectus was lodged and that is

materially adverse from the point of view of an investor, we may lodge a supplementary or

replacement prospectus with the Authority.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

17

The information contained in this summary is derived from and should be read in conjunction

with the full text of this Prospectus. Terms defined elsewhere in this Prospectus have the same

meanings when used herein. Prospective investors should read the entire Prospectus

carefully, in particular the matters set out in the section entitled “Risk Factors” of this

Prospectus, before making an investment decision.

Overview of our Group

On 19 September 2011, our Company was incorporated in Singapore under the Companies

Act as a private limited liability company under the name of “Global Hotels Pte. Ltd.”. We

changed our name to “Global Premium Hotels Pte. Ltd.” on 21 February 2012. We further

changed our name to “Global Premium Hotels Limited” on 29 March 2012 in connection with

our conversion to a public company limited by shares. Our Group comprises our Company and

our Subsidiaries, Fragrance Assets, Fragrance Capital, Fragrance Investment, Fragrance

Ventures, Fragrance Hotel Management and Parc Sovereign Hotel Management.

Please refer to the section entitled “General Information of our Group — Our Corporate

Structure” of this Prospectus for more details.

Our Business

We operate one of Singapore’s largest chains of hotels with 23 hotels, of which 22 hotels are

operated under our “Fragrance” brand and one hotel under the “Parc Sovereign” brand. We

provide economy-tier and mid-tier class of accommodation with 1,738 rooms in Singapore, as

at the Latest Practicable Date. We own all our hotels save for Fragrance Hotel-Elegance. As at

31 October 2011, the Market Value of all the 22 hotels which we own amounted to S$747.6

million based on the valuation carried out by Colliers International Consultancy & Valuation

(Singapore) Pte Ltd. Further details relating to the valuation of the hotels we own are set out in

Appendix I entitled “Valuer’s Report” of this Prospectus.

We are principally engaged in the business of developing and operating of economy-tier to

mid-tier class of hotels. Our established track record and reputation of providing affordable

accommodation has led to our “Fragrance” brand of hotels becoming well-recognised in the

local and regional hospitality industry.

All our hotel rooms have individually-controlled air-conditioning systems and an attached

bathroom. Our hotel rooms also come with facilities such as international direct dialing

telephone services, cable television and complementary beverages. Some of our hotels offer

additional facilities and amenities comprising wireless internet connectivity, swimming pools,

restaurants and convenience stores.

Most of our hotels are strategically located in the city or city-fringe areas and easily accessible

by major roads, public buses and the MRT. Many of our hotels are also situated near major

convention centres, tourist attractions and the Integrated Resorts.

A detailed discussion of our business is set out in the section entitled “General Information of

our Group — Our Business” of this Prospectus.

PROSPECTUS SUMMARY

18

Our Competitive Strengths


We have been developing and operating hotels in Singapore since 1995 and as at the Latest

Practicable Date, we operate 23 hotels across Singapore with 1,738 rooms. Our established

track record and reputation of providing affordable and value-for-money accommodation in

terms of price, location, service and cleanliness has led to our “Fragrance” brand of hotels

becoming well-recognised in the local and regional hospitality industry.


We have an experienced management team who are hands-on, have in-depth knowledge of

hotel operations and hotel property development and have a strong understanding of the local

hospitality and property market. Our Directors, Mr. Koh Wee Meng, Mr. Lim Chee Chong and

Mr. SimMong Yeow collectively have approximately 27 years of experience in hotel operations

and hotel property development, with approximately 15 years, 5 years and 7 years of

experience respectively. Please refer to the section entitled “General Information of our

Group-Competitive Strengths” of this Prospectus for more details.


We place great importance on the quality of the rooms and services offered by our hotels, with

all our hotel rooms furnished with essential amenities to provide our guests with a comfortable

stay at affordable prices. Most of our hotels are strategically located either in the city or

city-fringe areas and easily accessible by major roads, public buses and the MRT. Major

shopping and convention centres, tourist attractions and the two Integrated Resorts are

conveniently accessible from our hotels.

Active development and management of hospitality-related assets to provide value accretion

to existing portfolio of hotels

Based on our experience in acquiring, developing, converting and renovating hotels, we have

established a wide network of contacts with professionals, consultants, builders, agents and

suppliers. We believe that our ability to capitalise on these relationships allows us to maintain

better control over the construction or renovations of our hotels in terms of costs and downtime.

In addition, we are more likely, as hotel developers, to identify opportune time to upgrade and

refurbish the hotels within our portfolio. We believe that our experience as developers will also

enable us to better pinpoint new sites for development of hotels.

Regular promotional tie-ups with business partners and active participation in tourism trade

conventions and exhibitions

As at the Latest Practicable Date, we have established a good working relationship with more

than 900 local and overseas travel agents, who promote our hotels worldwide. Besides that, we

work closely with various established on-line travel agents to promote our hotels through

PROSPECTUS SUMMARY

19

various on-line channels. We have also entered into contractual arrangements with corporate

clients such as shipping companies for the provision of accommodation to their staff and crew

while in Singapore.

We have participated in tourism trade conventions and exhibitions in the Asia-Pacific region. In

addition, we also actively participate in overseas road shows, consumer fairs and product

updates organised by the STB.

We believe that our marketing activities help us to identify the current market needs and

preferences of present-day travellers so that we can adjust our products and service offerings

to better suit their needs. These promotional efforts also enable us to raise our profile among

potential guests and contribute to the expansion of the number of guests at our hotels.

Integrated Property Management System allows us to better manage our hotel operations

We have invested in a sophisticated software system that manages our reservation and billing

processes centrally through the PMS. The PMS allows us to centrally manage all the 23 hotels

island-wide so as to maximise hotel occupancy rates and reduce the manpower required for

manual updates. By being able to manage the occupancy status of Our Chain of Hotels in

real-time, we are able to increase the overall occupancy and room revenue of our hotels.

Established relationships with our suppliers allows us to better leverage on our economies of

scale

The bulk purchase of our hotel room supplies and daily necessities centrally, coupled with the

good relationship with our suppliers, allows us to obtain such supplies and daily necessities on

favourable terms. Our centralised procurement policy also helps to reduce operating costs and

monitor the consistency and quality standards of the supplies and daily necessities.

A detailed discussion of our competitive strengths is set out in the section entitled “General

Information of our Group — Competitive Strengths” of this Prospectus.

Our Business Strategies and Future Plans

Expansion of our “Fragrance” and “Parc Sovereign” brands of hotels

Weplan to increase the number of hotel properties we operate under the “Fragrance” and “Parc

Sovereign” brands of hotels. We believe that such expansion plans will allow us to capitalise on

our experience in conceptualising and operating economy-tier to mid-tier hotels. We are in the

process of identifying potential sites for hotel development and expect to pursue one or more

of these opportunities within one year from the Listing Date. We intend to add 200 to 300 rooms

to our economy-tier and/or mid-tier hotels within one to two years after successful acquisition

of the development site. We also plan to expand overseas as and when the opportunity arises

through setting up of new subsidiaries, establishment of joint ventures with local partners

and/or acquisitions of business or assets.

PROSPECTUS SUMMARY

20

Upgrading our existing hotels

In order to stay competitive in the market and to enhance the value of our hotels, our Group

intends to upgrade and refurbish our current portfolio of hotels. Our Group believes that the

refurbished hotels will be able to command higher room rates and improve occupancy rates,

which would then increase our Group’s revenue and profits.

Launching of more aggressive marketing strategies

We plan to increase our collaborations with on-line travel agents, launch a new interactive

booking engine and review existing portal design so as to facilitate the booking process for

persons seeking accommodation with us. Furthermore, we plan to strengthen our

collaborations with the budget airlines to promote our hotels. We also plan to work closely with

the STB and the SHA to promote our economy-tier and mid-tier hotels.

Lowering the cost of operations

We will review the energy efficiency of the electrical appliances and sanitary fittings in our

hotels and where economically feasible, upgrade such appliances and fittings so as to be more

energy efficient. In addition, we will educate all our operating staff on energy conservation so

as to achieve the dual aims of environmental conservation and cost savings. We will also

explore the feasibility of establishing our own laundry service to reduce the outsourcing costs

and operating expenses.

A detailed discussion of our future plans is set out in the section entitled “Prospects, Business

Strategies and Future Plans — Our Business Strategies and Future Plans” of this Prospectus.

Our Financial Performance

The following tables present a summary of the financial highlights of our Group and should be

read in conjunction with the section entitled “Management’s Discussion and Analysis of Results

of Operations and Financial Position”, Appendix A entitled “Independent Auditors’ Report on

the Combined Financial Statements for the Years Ended 31 December 2010, 2009 and 2008”,

Appendix B entitled “Independent Auditors’ Report on the Combined Interim Condensed

Financial Statements for the Nine Months Ended 30 September 2011” and Appendix C entitled

“Independent Auditors’ Report on the Unaudited Pro Forma Combined Financial Information”

of this Prospectus.

PROSPECTUS SUMMARY

21

Selected Items from the Results of Operations of our Group

Audited Unaudited Audited Unaudited

FY2008

($’000)

FY2009

($’000)

FY2010

($’000)

Pro

Forma

FY2010

($’000)

9M2010

($’000)

9M2011

($’000)

Pro

Forma

9M2011

($’000)

Revenue 36,893 34,579 44,215 42,465 32,284 38,929 37,860

Cost of sales (4,895) (4,883) (5,156) (5,996) (3,867) (4,571) (5,201)

Gross profit 31,998 29,696 39,059 36,469 28,417 34,358 32,659

Other operating

income 196 221 280 264 203 344 308

Loss on disposal of

property, plant

and equipment — — — (51) — — —

Administrative

expenses (9,319) (10,355) (12,223) (11,560) (8,754) (11,296) (10,852)

Finance costs (3,239) (3,184) (3,001) (2,052) (2,346) (2,158) (1,712)

Profit before

income tax 19,636 16,378 24,115 23,070 17,520 21,248 20,403

Income tax

expense (3,505) (2,867) (4,260) (4,091) (3,040) (3,930) (3,786)

Profit for the

year/period 16,131 13,511 19,855 18,979 14,480 17,318 16,617

EPS (cents)(1) 2.93 2.46 3.61 3.45 2.63 3.15 3.02

Unaudited

EPS as adjusted for

the Invitation

(cents)(2) 1.61 1.35 1.99 1.90 1.45 1.73 1.66

Notes:

(1) For comparative purposes, EPS is calculated based on profit for the year/period and the pre-Invitation share

capital of 550,000,000 Shares.

(2) For comparative purposes, EPS as adjusted for the Invitation is calculated based on profit for the year/period

and the post-Invitation share capital of 1,000,000,000 Shares.

PROSPECTUS SUMMARY

22

Selected Items From the Financial Position of our Group

Audited

as at 31

December

2008

Audited

as at 31

December

2009

Audited

as at 31

December

2010

Unaudited

Pro

Forma

as at 31

December

2010

Audited

as at 30

September

2011

Unaudited

Pro

Forma

as at 30

September

2011

($’000) ($’000) ($’000) ($’000) ($’000) ($’000)

Current assets

Cash and cash

equivalents 1,923 2,458 2,811 19,143 3,899 11,588

Trade receivables 1,216 985 1,274 1,274 1,511 1,511

Other receivables 15,473 11,149 5,982 46,019 47,443 15,608

Properties under

development — 23,820 26,846 — — —

Total current assets 18,612 38,412 36,913 66,436 52,853 28,707

Non-current assets

Property, plant and

equipment 323,412 425,284 701,942 642,606 738,718 738,718

Total assets 342,024 463,696 738,855 709,042 791,571 767,425

Current liabilities

Trade payables 1,223 1,236 1,188 1,188 1,194 1,194

Other payables 26,067 45,515 49,986 140,893 5,584 91,082

Term loans 6,433 12,198 7,895 20,147 32,643 20,147

Income tax payable 3,596 2,829 4,435 8,319 8,065 7,921

Total current

liabilities 37,319 61,778 63,504 170,547 47,486 120,344

Non-current liabilities

Term loans 98,996 134,832 150,448 443,035 108,838 443,035

Deferred tax liability 3,760 4,751 23,815 19,528 26,447 26,447

Total non-current

liabilities 102,756 139,583 174,263 462,563 135,285 469,482

Capital and reserves

Share capital 27,100 27,100 27,100 137,500 27,100 137,500

Revaluation reserve 157,779 213,654 451,552 427,344 511,459 511,459

Merger reserve — — — (530,900) — (530,900)

Retained earnings 17,070 21,581 22,436 41,988 70,241 59,540

Total equity 201,949 262,335 501,088 75,932 608,800 177,599

Total liabilities and

equity 342,024 463,696 738,855 709,042 791,571 767,425

PROSPECTUS SUMMARY

23

Our Contact Details

Our registered address is 168 Changi Road #04-01 Fragrance Building Singapore 419730.

Our telephone and fax numbers are +65 6348 7888 and +65 6345 5951 respectively.

Our company registration number is 201128650E.

Our website addresses are http://www.fragrancehotel.com and http://www.parcsovereign.com.

Information contained on our websites does not constitute a part of this Prospectus.

PROSPECTUS SUMMARY

24

Listing on the SGX-ST

We have applied to the SGX-ST for permission to deal in, and for quotation of, all our Shares

already issued, the New Shares, the Over-allotment Shares (if the Over-allotment Option is

exercised) and the Award Shares on the Official List of the SGX-ST. Such permission will be

granted when we have been admitted to the Official List of the SGX-ST. Acceptance for

applications of the New Shares will be conditional upon the completion of the Invitation, which

is subject to certain conditions, including the SGX-ST granting permission to deal in, and for

quotation of, all our existing issued Shares, the New Shares, the Over-allotment Shares (if the

Over-allotment Option is exercised) and the Award Shares.

If the said permission from the SGX-ST is not granted, monies paid in respect of any application

accepted will be returned to you at your own risk, without interest or any share of revenue or

other benefit arising therefrom and you will not have any claim against our Company, and/or the

Issue Manager, Underwriter and Placement Agent.

Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop

order (the “Stop Order”) to our Company, directing that no New Shares or no further Shares to

which this Prospectus relates, be allotted or issued. Such circumstances will include a situation

where this Prospectus (i) contains a statement or matter, which in the opinion of the Authority

is false or misleading; (ii) omits any information that should be included in accordance with the

Securities and Futures Act; or (iii) does not, in the opinion of the Authority, comply with the

requirements of the Securities and Futures Act. A Stop Order may also be issued if the

Authority is of the opinion that it is in the public interest to do so.

In the event that the Authority issues a Stop Order and applications to subscribe for the New

Shares to which this Prospectus relates have been made prior to the Stop Order, then:

(a) where the New Shares have not been issued to you, your applications shall be deemed to

have been withdrawn and cancelled and our Company shall, within 14 days from the date

of the Stop Order, return to you all monies you have paid on account of your applications

for the New Shares; or

(b) where the New Shares have been issued to you, the SFA provides that the issue of our

New Shares shall be deemed to be void and our Company is required, within 14 days from

the date of the Stop Order, return to you all monies paid by you for our New Shares.

The SGX-ST assumes no responsibility for the correctness of any of the statements made,

reports contained or opinions expressed in this Prospectus. Admission to the Official List of the

SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our

Subsidiaries, our existing issued Shares, the New Shares, the Over-allotment Shares (if the

Over-allotment Option is exercised) and the Award Shares.

A copy of this Prospectus together with copies of the Application Forms have been lodged with

and registered by the Authority on 26March 2012 and 18 April 2012 respectively. The Authority

assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus

by the Authority does not imply that the Securities and Futures Act, or any other legal or

regulatory requirements, have been complied with. The Authority has not, in any way,

considered the merits of the Invitation, our Company, our Subsidiaries, our existing issued

THE INVITATION

25

Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised)

and the Award Shares, as the case may be, being offered or in respect of which the Invitation

is made, for investment. We have not lodged or registered this Prospectus in any other

jurisdiction.

Neither our Company, the Issue Manager, Underwriter and Placement Agent, the experts nor

any other parties involved in the Invitation is making any representation to any person

regarding the legality of an investment in our Shares by such person under any investment or

other laws or regulations. No information in this Prospectus should be considered as being

business, legal or tax advice. You should consult your own professional or other advisers for

business, legal or tax advice regarding an investment in our Shares. No person has been or is

authorised to give any information or to make any representation not contained in this

Prospectus in connection with the Invitation and, if given or made, such information or

representation must not be relied upon as having been authorised by our Company, the Issue

Manager, Underwriter and Placement Agent.

Neither the delivery of this Prospectus and the Application Forms nor any document relating to

the Invitation shall, under any circumstances, constitute a continuing representation or create

any suggestion or implication that there has been no change in our affairs or in the statements

of fact or information contained in this Prospectus since the date of this Prospectus. Where

such changes occur and are material or are required to be disclosed by law, we will promptly

make an announcement of the same to the SGX-ST and to the public and, if required, lodge a

supplementary or replacement prospectus with the Authority and make an announcement of

the same to the SGX-ST and to the public and will comply with the requirements of the

Securities and Futures Act. You should take note of any such announcement and, upon release

of such an announcement, shall be deemed to have given notice of such changes. Save as

expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise or

representation as to the future performance or policies of our Company or our Subsidiaries.

In the event that a supplementary or replacement prospectus is lodged with the Authority, the

Invitation shall be kept open for at least 14 days after the lodgement of such supplementary or

replacement prospectus.

We are subject to the provisions of the Securities and Futures Act and the Listing Manual

regarding corporate disclosure. In particular, if after this Prospectus is registered but before the

close of the Invitation, we become aware of:

(a) a false or misleading statement in this Prospectus;

(b) an omission from this Prospectus of any information that should have been included in it

under Section 243 of the Securities and Futures Act; or

(c) a new circumstance that has arisen since the Prospectus was lodged with the Authority

which would have been required by Section 243 of the Securities and Futures Act to be

included in this Prospectus if it had arisen before this Prospectus was lodged,

that is materially adverse from the point of view of an investor, we may lodge a supplementary

or replacement prospectus with the Authority pursuant to Section 241 of the Securities and

Futures Act.

THE INVITATION

26

Where prior to the lodgement of the supplementary or replacement prospectus, applications

have been made under this Prospectus to subscribe for our New Shares and:

(a) where the New Shares have not been issued to you, our Company shall either:

(i) (A) within two (2) days (excluding any Saturday, Sunday or public holiday) from the

date of lodgement of the supplementary or replacement prospectus, give you notice

in writing of how to obtain, or arrange to receive a copy of the supplementary or

replacement prospectus, as the case may be, and to provide you with an option to

withdraw your application; and (B) take all reasonable steps to make available within

a reasonable period the supplementary or replacement prospectus, as the case may

be, to you, where you have indicated that you wish to obtain, or have arranged to

receive, a copy of the supplementary of replacement prospectus; or

(ii) within seven (7) days from the date of lodgement of the supplementary or

replacement prospectus, give you the supplementary or replacement prospectus, as

the case may be, and provide you with an option to withdraw your application; or

(iii) treat the applications as withdrawn and cancelled, in which case your application

shall be deemed to have been withdrawn and cancelled, and our Company shall

within seven (7) days from the date of lodgement of the supplementary or

replacement prospectus, return all monies paid in respect of any application to you;

or

(b) where the New Shares have been issued to you, our Company shall either:

(i) (A) within two (2) days (excluding any Saturday, Sunday or public holiday) from the

date of lodgement of the supplementary or replacement prospectus, give you notice

in writing of how to obtain, or arrange to receive a copy of the supplementary or

replacement prospectus, as the case may be, and to provide you with an option to

return to our Company, the Shares which you do not wish to retain title in; and (B)

take all reasonable steps to make available within a reasonable period the

supplementary or replacement prospectus, as the case may be, to you, where you

have indicated that you wish to obtain, or have arranged to receive, a copy of the

supplementary of replacement prospectus; or

(ii) within seven (7) days from the date of lodgement of the supplementary or

replacement prospectus, give you the supplementary or replacement prospectus, as

the case may be, and provide you with an option to return to our Company the New

Shares, which you do not wish to retain title in; or

(iii) treat the issue of our Shares as void, in which case the issue shall be deemed void

and our Company shall within seven (7) days from the date of lodgement of the

supplementary or replacement prospectus, return all monies paid in respect of any

application to you.

If you wish to exercise your option under paragraph a(i) or a(ii) above to withdraw your

application in respect of the New Shares, you shall, within 14 days from the date of

lodgement of the supplementary or replacement prospectus, notify our Company of

THE INVITATION

27

this, whereupon our Company shall within seven (7) days from the receipt of such

notification, return to you all monies you have paid on account of your application for

such New Shares.

If you wish to exercise your option under paragraph b(i) or b(ii) above to return the New

Shares issued to you, you shall, within 14 days from the date of lodgement of the

supplementary or replacement prospectus, notify our Company of this and return all

documents, if any, purporting to be evidence of title to those Shares, to our Company,

whereupon our Company shall within seven (7) days from the receipt of such

notification and documents, if any, return to you all monies you have paid for those New

Shares and the issue of those Shares shall be deemed to be void.

Where monies are to be returned to you for the New Shares, it shall be paid to you without any

interest or share of revenue or other benefit arising therefrom at your own risk, and you will not

have any claim against us, and the Issue Manager, Underwriter and Placement Agent.

This Prospectus has been prepared solely for the purpose of the Invitation and may only be

relied upon by you in connection with your application for the NewShares andmay not be relied

upon by any other person or for any other purpose.

This Prospectus does not constitute an offer of, or Invitation or solicitation to subscribe

for the New Shares in any jurisdiction in which such offer or Invitation or solicitation is

unauthorised or unlawful nor does it constitute an offer or Invitation or solicitation to

any person to whom it is unlawful to make such offer or Invitation or solicitation.

Copies of this Prospectus and the Application Forms and envelopes may be obtained on

request, during office hours, subject to availability, from:

Oversea-Chinese Banking Corporation Limited

65 Chulia Street

OCBC Centre

Singapore 049513

and from selected branches of OCBC Bank.

A copy of this Prospectus is also available on the SGX-ST website at http://www.sgx.com and

the Authority website at http://masnet.mas.gov.sg/opera/sdrprosp.nsf.

The Invitation will be open from 9.00 a.m. on 19 April 2012 to 12.00 p.m. on 24 April 2012

or such further period or periods as our Directors may, in consultation with the Issue

Manager, in their absolute discretion, decide, subject to any limitations under all

applicable laws, PROVIDED ALWAYS THAT where a supplementary prospectus or

replacement prospectus has been lodged with the Authority pursuant to Section 241 of

the Securities and Futures Act, the Invitation shall be kept open for at least 14 days after

the lodgement of the supplementary prospectus or replacement prospectus.

Details for the procedure for application for the New Shares are set out in Appendix F entitled

“Terms, Conditions and Procedures for Application and Acceptance” of this Prospectus.

THE INVITATION

28

Details of the Invitation

Invitation Size : 450,000,000 New Shares offered in Singapore comprising

13,000,000 Public Offer Shares and 437,000,000

Placement Shares.

The New Shares, upon issue and allotment, will rank pari

passu in all respects with the existing issued Shares.

Issue Price : $0.26 for each New Share.

The Invitation : The Invitation comprises an offering of:

(a) 13,000,000 Public Offer Shares at the Issue Price, to

members of the public in Singapore; and

(b) 437,000,000 Placement Shares at the Issue Price,

reserved for placement to retail and institutional

investors in Singapore.

The Placement : The Placement comprises a placement of 437,000,000

Placement Shares at the Issue Price, subject to and on the

terms and conditions of this Prospectus.

Over-allotment Option : In connection with the Invitation, we have granted the Issue

Manager the Over-allotment Option exercisable in whole or

in part for up to 67,500,000 Shares, representing not more

than 15% of the New Shares, within 30 days from the Listing

Date, at the Issue Price, solely for the purpose of covering

over-allotments (if any) made in connection with the

Invitation. Unless indicated otherwise, all information in this

Prospectus assumes that the Issue Manager does not

exercise the Over-allotment Option.

The Over-allotment Shares will, upon issue and allotment,

rank pari passu in all respects with the existing issued

Shares.

THE INVITATION

29

Stabilisation : In connection with the Invitation, the Stabilising Manager or

person(s) acting on behalf of the Stabilising may, over-allot

or effect transactions that may stabilise or maintain the

market price of our Shares at levels which might not

otherwise prevail in the open market. Such transactions

may be effected on the SGX-ST and in all jurisdictions

where it is permissible to do so, in each case, in compliance

with all applicable laws and regulatory requirements,

including the Securities and Futures Act. Such stabilisation

activities may commence on or after the Listing Date and, if

commenced, may be discontinued by the Stabilising

Manager at any time at its discretion, and shall not be

effected after the earlier of (a) the date falling 30 days from

the Listing Date; or (b) the date when the Stabilising

Manager or its appointed agent has bought, on the SGX-ST,

such number of Shares equivalent to the Over-allotment

Shares.

Purpose of the

Invitation

: We consider that the Invitation and quotation of our Shares

on the Official List of the SGX-ST will enhance our public

image and enable us to tap the capital markets to fund our

business growth. It will also provide members of the public,

our employees, business associates and those who have

contributed to our success with an opportunity to participate

in the equity of our Company. The Invitation will also enlarge

our capital base for continued expansion of our business.

Listing Status : Our Shares will be quoted in Singapore dollars on the Main

Board of the SGX-ST, subject to admission of our Company

to the Official List of the SGX-ST and permission for dealing

in and for quotation of our Shares being granted by the

SGX-ST and the Authority not issuing a Stop Order.

THE INVITATION

30

Invitation Statistics

Issue Price $0.26

NAV

NAV per Share based on the unaudited pro forma combined balance

sheet of our Group as at 30 September 2011(1):

(a) before adjusting for the estimated net proceeds from the issue of

the New Shares and based on the pre-Invitation share capital of

550,000,000 Shares

32.29 cents

(b) after adjusting for the estimated net proceeds from the issue of the

New Shares and based on the post-Invitation share capital of

1,000,000,000 Shares

28.97 cents

Discount of Issue Price over the pro forma NAV per Share as at 30

September 2011:

(a) before adjusting for the estimated net proceeds from the issue of

the New Shares and based on the pre-Invitation share capital of

550,000,000 Shares

19.5%

(b) after adjusting for the estimated net proceeds from the issue of the

New Shares and based on the post-Invitation share capital of

1,000,000,000 Shares

10.3%

Earnings(2)

Unaudited pro forma net EPS of our Group for FY2010 based on the

pre-Invitation share capital of 550,000,000 Shares

3.45 cents

Unaudited pro forma net EPS of our Group for FY2010 based on the

pre-Invitation share capital of 550,000,000 Shares, assuming that the

Service Agreements had been in place in FY2010

3.32 cents

Price Earnings Ratio

Pro forma price earnings ratio based on the unaudited pro forma net

EPS of our Group for FY2010

7.5 times

Pro forma price earnings ratio based on the unaudited pro forma net

EPS of our Group for FY2010, assuming that the Service Agreements

had been in place in FY2010

7.8 times

THE INVITATION

31

Net Operating Cash Flow(3)

Unaudited pro forma net operating cash flow per Share of our Group for

FY2010 based on the pre-Invitation share capital of 550,000,000

Shares

5.24 cents

Unaudited pro forma net operating cash flow per Share of our Group for

FY2010 based on the pre-Invitation share capital of 550,000,000

Shares, assuming that the Service Agreements had been in place in

FY2010

5.11 cents

Price to Net Operating Cash Flow

Pro forma price to net operating cash flow ratio based on the unaudited

pro forma net operating cash flow per Share for FY2010 and the

pre-Invitation share capital of 550,000,000 Shares

5.0 times

Pro forma price to net operating cash flow ratio based on the unaudited

pro forma net operating cash flow per Share for FY2010 and the

pre-Invitation share capital of 550,000,000 Shares, assuming that the

Service Agreements had been in place in FY2010

5.1 times

Market Capitalisation

Market capitalisation based on the Issue Price and the post-Invitation

share capital of 1,000,000,000 Shares

$260.0 million

Notes:

(1) Please refer to the section entitled “Unaudited Pro Forma Combined Statement of Financial Position as at 30

September 2011” in Appendix C entitled “Independent Auditors’ Report on the Unaudited Pro Forma Combined

Financial Information” of this Prospectus, for details.

(2) The EPS is computed from profit for the year, derived from the section entitled “Unaudited Pro Forma Combined

Statement of Comprehensive Income for the Year Ended 31 December 2010”. Please refer to Appendix C

entitled “Independent Auditors’ Report on the Unaudited Pro Forma Combined Financial Information” of this

Prospectus, for details.

(3) Net operating cash flow is defined as cash flows from operating activities. Please refer to the section entitled

“Unaudited Pro Forma Combined Statement of Cash Flows for the Year ended 31 December 2010” in Appendix

C entitled “Independent Auditors’ Report on the Unaudited Pro Forma Combined Financial Information” of this

Prospectus for details.

THE INVITATION

32

Plan of Distribution

The Invitation is for 450,000,000 New Shares offered in Singapore by way of public offer and

placement comprising 13,000,000 Public Offer Shares and 437,000,000 Placement Shares

managed and underwritten by OCBC Bank.

The Issue Price is determined by us in consultation with the Issue Manager, Underwriter and

the Placement Agent based on market conditions and estimated market demand for our

Shares determined through a book-building process. The Issue Price is the same for each New

Share and is payable in full on application.

Public Offer Shares

The Public Offer Shares are made available to the members of the public in Singapore for

subscription at the Issue Price. Members of the public may apply for the Public Offer Shares by

way of printed Application Forms or by Electronic Applications as described under “Terms,

Conditions and Procedures for Application and Acceptance” set out in Appendix F of this

Prospectus.

Pursuant to the Management and Underwriting Agreement entered into between us, and

OCBC Bank, as set out in the section entitled “Other General Information — Management and

Underwriting Agreement and Placement Agreement” of this Prospectus, we have appointed

OCBC Bank to manage the Invitation and to underwrite the 13,000,000 Public Offer Shares.

OCBC Bank will receive an underwriting commission of 2.0% of the Issue Price for the Public

Offer Shares payable by us for subscribing, or procuring subscribers, for such Public Offer

Shares. Our Company may, at our sole discretion, pay to the Underwriter an additional

incentive fee of 0.25% of the aggregate Issue Price for the Public Offer Shares payable by us

for subscribing, or procuring subscribers, for such Public Offer Shares. OCBC Bank may, at its

absolute discretion, appoint one or more sub-underwriters for the Public Offer Shares.

In the event of an under-subscription for the Public Offer Shares as at the close of the Invitation,

that number of Public Offer Shares not subscribed for shall be made available to satisfy excess

applications for the Placement Shares to the extent there is an over-subscription for the

Placement Shares as at the close of the Invitation.

In the event of an over-subscription for the Public Offer Shares as at the close of the Invitation

and/or the Placement Shares are fully subscribed for as at the close of the Invitation, the

successful applications for the Public Offer Shares will be determined by ballot or otherwise as

determined by us after consultation with the Issue Manager, and approved by the SGX-ST.

Placement Shares

The Placement Shares are made available to retail and institutional investors who apply

through their brokers or financial institutions. Applications for Placement Shares may only be

made by way of printed Application Forms as described under “Terms, Conditions and

Procedures for Application and Acceptance” set out in Appendix F of this Prospectus.

THE INVITATION

33

Pursuant to the Placement Agreement entered into between us and OCBC Bank as set out in

the section entitled “Other General Information — Management and Underwriting Agreement

and Placement Agreement” of this Prospectus, OCBC Bank agreed to subscribe or procure

subscribers for the 437,000,000 Placement Shares for a placement commission of 2.0% of the

Issue Price for the Placement Shares payable by us. Our Company may, at our sole discretion,

pay to the Placement Agent an additional incentive fee of 0.25% of the aggregate Issue Price

for the Placement Shares payable by us. OCBC Bank may, at its absolute discretion, appoint

one or more sub-placement agent(s) for the Placement Shares.

In the event of an under-subscription for the Placement Shares as at the close of the Invitation,

that number of Placement Shares not subscribed for shall be made available to satisfy excess

applications for the Public Offer Shares to the extent that there is an over-subscription for the

Public Offer Shares as at the close of the Invitation.

Subscribers and purchasers of the Placement Shares may be required to pay brokerage of up

to 1.0% of the Issue Price to the Placement Agent or any sub-placement agent(s) that may be

appointed by the Placement Agent.

Over-allotment and Stabilisation

In connection with this Invitation, our Company has granted OCBC Bank an Over-allotment

Option, exercisable in whole or in part by the Stabilising Manager within 30 days from the

Listing Date. In the event that the Over-allotment Option is exercised, we will pay a commission

of 2.0% of the Issue Price for each Over-allotment Share subscribed by OCBC Bank. Our

Company may, at our sole discretion, pay to OCBC Bank an additional incentive fee of 0.25%

of the aggregate Issue Price for the Over-allotment Shares payable by us.

In connection with this Invitation, OCBC Bank (or person(s) acting on behalf of it) may, in its

discretion but subject always to applicable laws and regulations in Singapore, over-allot or

effect transaction(s) which stabilise or maintain the market price of the Shares at levels which

might not otherwise prevail in the open market. Such transaction(s) may be effected on the

SGX-ST and in all jurisdictions where it is permissible to do so, in each case, in compliance with

all applicable laws and regulatory requirements including the SFA and any regulation

thereunder. The number of Shares that OCBC Bank may buy to undertake stabilising action(s)

shall not exceed an aggregate of 67,500,000 Shares representing not more than 15% of the

New Shares. However, there is no assurance that OCBC Bank (or any person(s) acting on its

behalf) will undertake stabilisation action(s). Such stabilisation activities may commence on or

after the commencement of trading of the Shares on the SGX-ST and, if commenced, may be

discontinued by OCBC Bank at any time at OCBC Bank’s discretion in accordance with the

laws of Singapore and shall not be effected after the earlier of (a) the date falling 30 days from

the Listing Date; or (b) the date when OCBC Bank or its appointed agent(s) has bought on the

SGX-ST, such number of Shares equivalent to the Over-allotment Shares, to undertake

stabilising action(s).

We will publicly announce the total number of Over-allotment Shares which is subject to the

Over-allotment Option, through a SGXNET announcement to be posted on the internet at the

SGX-ST website http://www.sgx.com, no later than the day immediately following the close of

the Invitation.

THE INVITATION

34

Neither our Company nor OCBC Bank makes any representation or prediction as to the

direction or magnitude of any effect that the transactions described above may have on the

price of our Shares. In addition, neither our Company nor OCBC Bank makes any

representation that OCBC Bank or any person acting for it will engage in such transaction(s),

or that such transaction(s), once commenced, will not be discontinued without notice.

Share Lending

In connection with the over-allotment and stabilisation, OCBC Bank has entered into the Share

Lending Agreement, pursuant to which OCBC Bank may borrow up to 67,500,000 Shares from

FGL before the Listing Date for the purpose of covering the over-allotments in connection with

this Invitation, if any. Any Shares that may be borrowed by the Stabilising Manager under the

Share Lending Agreement will be returned by the StabilisingManager to FGL either through the

purchase of Shares in the open market by the Stabilising Manager in the conduct of stabilising

activities or through the exercise of the Over-allotment Option by the Stabilising Manager.

Subscription for the New Shares

None of our Directors save for Mr. Koh Wee Meng, Mr. Lim Chee Chong and Mr. Sim Mong

Yeow, nor our Controlling Shareholders intends to subscribe for the New Shares in the

Invitation.

To the best of our knowledge, we are unaware of any person who intends to subscribe for 5.0%

or more of the New Shares. However, through the book-building process to assess market

demand for our Shares, there may be person(s) who may indicate an interest to subscribe for

5.0% or more of the New Shares. If such person(s) were to make an application for 5.0% or

more of the New Shares pursuant to the Invitation and subsequently be allotted such number

of Shares, we will make the necessary announcements at an appropriate time. The final

allotment of Shares will be in accordance with the shareholdings spread and distribution

guidelines as set out in Rule 210 of the Listing Manual.

No Shares shall be allotted on the basis of this Prospectus later than six (6) months after the

date of registration of this Prospectus.

Please also refer to the section entitled “Other General Information — Management and

Underwriting Agreement and Placement Agreement” of this Prospectus for further details on

our Management and Underwriting Agreement and Placement Agreement.

Selling Restrictions

This Prospectus does not constitute an offer, solicitation or Invitation to subscribe for the New

Shares in any jurisdiction in which such offer, solicitation or Invitation is unlawful or is not

authorised or to any person to whom it is unlawful to make such an offer, solicitation or

Invitation. No action has been or will be taken under the requirements of the legislation or

regulations of, or of the legal or regulatory authorities of, any jurisdiction, except for the

lodgement and/or registration of this Prospectus in Singapore in order to permit an Invitation of

the New Shares and the distribution of this Prospectus in Singapore. The distribution of this

Prospectus and the offering of the New Shares in certain jurisdictions may be restricted by the

THE INVITATION

35

relevant laws in such jurisdictions. Persons who may come into possession of this Prospectus

are required by our Company, the Issue Manager, Underwriter and Placement Agent to inform

themselves about, and to observe and comply with, any such restrictions at their own expense

and without liability to our Company, the Issue Manager, Underwriter and Placement Agent.

Persons to whom a copy of this Prospectus has been issued shall not circulate to any other

person, reproduce or otherwise distribute this Prospectus or any information herein for any

purpose whatsoever nor permit or cause the same to occur.

HONG KONG

This Prospectus does not constitute an offer to the public in Hong Kong to subscribe for the

Placement Shares.

This Prospectus has not been and will not be registered with the Registrar of Companies in

Hong Kong. Accordingly, except as mentioned below, no copy of this Prospectus may be

issued, circulated or distributed in Hong Kong.

A copy of this Prospectus may, however, be issued by the Placement Agent or its designated

sub-placement agents to professional investors (within the meaning of the Securities and

Futures Ordinance (Chapter 571 of the Laws of Hong Kong)) for the Placement Shares in Hong

Kong, or otherwise pursuant to, and in accordance with the conditions of, any applicable

exemptions as set out in the Securities and Futures Ordinance (Chapter 571 of the Laws of

Hong Kong) in a manner which does not constitute an invitation or offer of the Placement

Shares to the public in Hong Kong or an issue, circulation or distribution in Hong Kong of a

prospectus for the purposes of the Companies Ordinance (Chapter 32 of the Laws of Hong

Kong). The offer of the Placement Shares is personal to the person named in the

accompanying Application Form, and application for the Placement Shares will only be

accepted from such person. An application for the Placement Shares is not invited from any

person in Hong Kong other than a person to whom a copy of this Prospectus has been issued

by the Placement Agent or its designated sub-placement agents, and if made, will not be

accepted, unless the applicant satisfies the Placement Agent or its designated sub-placement

agents that he is a professional investor as defined in the Securities and Futures Ordinance

(Chapter 571 of the Laws of Hong Kong).

No person to whom a copy of this Prospectus is issued may issue, circulate or distribute this

Prospectus in Hong Kong or make or give a copy of this Prospectus to any other person, other

than their legal, financial, tax or other appropriate advisers who are subject to a duty of

confidentiality to such person.

The Placement Agent has agreed with our Company that it (and its sub-placement agents, if

any) has not offered or sold, and will not offer or sell, in Hong Kong, by means of any document,

any of our Shares other than permitted under the Companies Ordinance (Chapter 32 of the

Laws of Hong Kong) and the Securities and Futures Ordinance (Chapter 571 of the Laws of

Hong Kong) and has not issued or had in its possession for the purpose of issue, and will not

issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere,

any advertisement, invitation or document in respect of any of our Shares, which is directed at,

or the contents of which are likely to be accessed or read by, the public in Hong Kong other than

with respect to any of our Shares which are or are intended to be disposed of only to persons

THE INVITATION

36

outside Hong Kong or permitted under the Companies Ordinance (Chapter 32 of the Laws of

Hong Kong) or the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

This Prospectus may not be issued in Hong Kong to any person other than a professional

investor within the meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws

of Hong Kong) or otherwise pursuant to and in accordance with the conditions or any other

applicable exemptions set out in the Companies Ordinance (Chapter 32 of the Laws of Hong

Kong) or the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

THISDOCUMENT IS FORDISTRIBUTION INHONGKONGONLYTOPERSONSWHOARE

“PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND

FUTURES ORDINANCE (CAP 571) OF HONG KONG AND ANY RULES MADE UNDER

THAT ORDINANCE.

THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY

REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE

CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF

THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT

PROFESSIONAL ADVICE.

BY ACCEPTING THIS DOCUMENT YOU AGREE TO BE BOUND BY THE FOREGOING

LIMITATIONS.

NO PART OF THIS MATERIAL MAY BE (1) COPIED, PHOTOCOPIED OR DUPLICATED IN

ANY FORM BY ANY MEANS OR (2) REDISTRIBUTED OR PASSED ON, DIRECTLY OR

INDIRECTLY, TO ANY OTHER PERSON IN WHOLE OR IN PART, FOR ANY PURPOSE.

Clearance and Settlement

Upon listing and quotation on the Main Board of the SGX-ST, our Shares will be traded under

the book-entry settlement system of the CDP and all dealings in and transactions of the Shares

through the Main Board of the SGX-ST will be effected in accordance with the terms and

conditions for the operation of securities accounts with the CDP, as amended from time to time.

Our Shares will be registered in the name of CDP and held by CDP for and on behalf of persons

who maintain, either directly or through depository agents, securities accounts with CDP.

Persons named as direct securities account holders and depository agents in the depository

register maintained by the CDP, other than CDP itself, will be treated, under our Articles of

Association and the Companies Act, as members of our Company in respect of the number of

Shares credited to their respective securities accounts.

Persons holding our Shares in a securities account with CDP may withdraw the number of

Shares they own from the book-entry settlement system in the form of physical share

certificate(s). Such share certificates will, however, not be valid for delivery pursuant to trades

transacted on the Main Board of the SGX-ST, although they will be prima facie evidence of title

and may be transferred in accordance with our Articles of Association. A fee of $10.00 for each

withdrawal of 1,000 Shares or less and a fee of $25.00 for each withdrawal of more than 1,000

Shares is payable upon withdrawing our Shares from the book-entry settlement system and

obtaining physical share certificates. In addition, a fee of $2.00 or such other amount as our

THE INVITATION

37

Directors may decide, is payable to the share registrar for each share certificate issued and a

stamp duty of $0.20 per $100.00 or part thereof of the last-transacted price is also payable

where our Shares are withdrawn in the name of a third party. Persons holding physical share

certificates who wish to trade on the Main Board of the SGX-ST must deposit with CDP their

share certificates together with the duly executed and stamped instruments of transfer in favour

of CDP and have their respective securities accounts credited with the number of Shares

deposited before they can effect the desired trades. A deposit fee of $10.00 is payable upon the

deposit of each instrument of transfer with CDP.

Transactions in our Shares under the book-entry settlement system will be reflected by the

seller’s securities account being debited with the number of Shares sold and the buyer’s

securities account being credited with the number of Shares acquired. No transfer stamp duty

is currently payable for Shares that are settled on a book-entry basis.

A Singapore clearing fee for trades in our Shares on the Main Board of the SGX-ST is payable

at the rate of 0.04% of the transaction value subject to a maximum of $600.00 per transaction.

The clearing fee, instrument of transfer, deposit fee and share withdrawal fee may be subject

to GST currently at 7.0%.

Dealings of our Shares will be carried out in Singapore dollars and will be effected for

settlement through CDP on a scripless basis. Settlement of trades on a normal “ready” basis on

the Main Board of the SGX-ST generally takes place on the third Market Day following the

transaction date and payment for the securities is generally settled on the following business

day. CDP holds securities on behalf of investors in securities accounts. An investor may open

an account with CDP or a sub-account with a CDP depository agent. The CDP depository agent

may be a member company of the SGX-ST, bank, merchant bank or trust company.

Indicative Timetable for Listing

The indicative timetable is set out below for the reference of applicants:

Indicative Time and Date Event

19 April 2012, 9.00 a.m. Opening of Invitation

24 April 2012, 12.00 noon Close of Invitation

25 April 2012 Balloting of applications, if necessary (in the event

of over-subscription for the Public Offer Shares)

26 April 2012, 9.00 a.m. Commence trading on a “ready” basis

2 May 2012 Settlement date for all trades done on a “ready”

basis on 26 April 2012

The above timetable is only indicative as it assumes that the closing of the Invitation takes place

on 24 April 2012, the date of admission of our Company to the Official List of the Main Board of

the SGX-ST will be 26 April 2012, the SGX-ST’s shareholding spread requirement will be

complied with and the New Shares will be issued or allotted and fully paid prior to 9.00 a.m. on

THE INVITATION

38

26 April 2012. The actual date on which our Shares will commence trading on a “ready” basis

will be announced when it is confirmed by the SGX-ST.

The above timetable and procedures may be subject to such modifications as the SGX-ST

may, in its discretion, decide, including the decision to permit trading on a “ready” basis and the

commencement date of such trading.

In the event of any changes in the closure of the Invitation or the shortening or extension of the

time period during which the Invitation is open, we will publicly announce the same:

(a) through a SGXNET announcement to be posted on the internet at the SGX-ST website

http://www.sgx.com; and

(b) in a local English newspaper, such as The Straits Times or The Business Times.

Results of the Invitation including the level of subscription and the basis of allotment of the

Public Offer Shares will be provided as soon as it is practicable after the close of the Invitation

through the channels in (a) and (b) above.

Investors should consult the SGX-ST announcement on the “ready” trading date on the internet

(at SGX-ST website http://www.sgx.com), or the newspapers, or check with their brokers on

the date on which trading on a “ready” basis will commence.

THE INVITATION

39

Based on the Issue Price, our estimated net proceeds from the issue of New Shares (assuming

the Over-allotment Option is not exercised), after deducting the underwriting commission,

placement commission, brokerage and other estimated expenses payable in relation to the

issue of New Shares (estimated to be approximately $4.9 million), will be approximately $112.1

million.

We intend to use our gross proceeds from the issue of the New Shares primarily as follows:

Purpose

Estimated

amount

($ million)

Estimated amount

allocated for each dollar

of the gross proceeds

raised from the issue of

New Shares

(cents)

Partial repayment of the Purchase Consideration 74.8 64

Development and expansion of hotel business and

operations in Singapore and overseas 30.0 26

Working capital purposes 7.3 6

Expenses incurred in connection with the issue of

New Shares 4.9 4

Total 117.0 100

If the Over-allotment Option is exercised by the Stabilising Manager, we shall use the net

proceeds arising therefrom for our working capital requirements.

Please see the section entitled “General Information of Our Group — Restructuring Exercise”

of this Prospectus for further information on the partial repayment of the Purchase

Consideration and section entitled “Prospects, Business Strategies and Future Plans” of this

Prospectus for more details on the future plans of the Group.

The foregoing represents our best estimate of the allocation of our net proceeds from the issue

of the New Shares based on our current plans and estimates regarding our anticipated

expenditures. Actual expendituresmay vary from these estimates and wemay find it necessary

or advisable to re-allocate our net proceeds within the categories described above or to use

portions of our net proceeds for other purposes. In the event that we decide to re-allocate our

net proceeds from the issue of the New Shares for other purposes, we will publicly announce

our intention to do so through a SGXNET announcement to be posted on the Internet at the

SGX-ST website, http://www.sgx.com.

We have undertaken to announce periodically via SGXNET the use of the net proceeds from

the issue of the New Shares as and when the net proceeds from the issue of the New Shares

are materially disbursed, and to provide a status report on the use of the net proceeds from the

issue of the New Shares in the annual report(s) of our Company.

USE OF PROCEEDS AND LISTING EXPENSES

40

Pending the deployment of the net proceeds as aforesaid, the net proceeds may be added to

our working capital, placed as deposits with banks or financial institutions, or used for

investment in short-term deposits, money market or debt instruments, as our Directors may

deem appropriate in their absolute discretion.

In the event that the amount set aside to meet the estimated expenses listed above is in excess

of the actual expenses incurred, such excess amount will be made available for our working

capital purposes.

Expenses incurred in connection with the Invitation

The Invitation involves listing and issuing New Shares. The existing Shares will also be listed

on the SGX-ST at the same time as the Invitation. The cost directly attributable to issuing and

listing New Shares (including underwriting commission, placement commission and

brokerage) will be substantially recognised directly in equity and any cost attributable to listing

the existing Shares will be expensed as incurred.

We estimate that the Invitation expenses, including the professional fees, underwriting

commission, placement commission and brokerage and miscellaneous expenses, will amount

to approximately $4.9 million. A breakdown of these expenses (inclusive of GST of 7%) is set

out below:

Estimated

amount

($ million)

As a percentage of the

gross proceeds raised

from the Invitation

(%)

Invitation Expenses(1)

Professional Fees 1.4 1.2

Underwriting commission, placement commission and

brokerage(2) 2.8 2.4

Miscellaneous expenses (including listing fees) 0.7 0.6

Total 4.9 4.2

Notes:

(1) Assuming the Over-allotment Option is not exercised.

(2) Please refer to the section entitled “Other General Information — Management and Underwriting Agreement

and Placement Agreement” of this Prospectus for more information.

USE OF PROCEEDS AND LISTING EXPENSES

41

You should evaluate carefully each of the following considerations and all of the other

information set forth in this Prospectus before deciding to invest in our Shares. Some of

the following considerations relate principally to the industry in which we operate and

our business in general. Other considerations relate principally to general, social,

economic, political and regulatory conditions, the securities market and ownership of

our Shares, including possible future dilution in value of our Shares.

If any of the following considerations and uncertainties develop into actual events, our

business, financial position or results of operations could be materially and adversely

affected. In such a case, the trading price of our Shares could decline due to any of these

considerations, and you may lose all or part of your investment in our Shares.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

Our financial performance is dependent on the conditions of the hospitality industry

A number of factors, many of which are common to the global hospitality industry could affect

the conditions of the hospitality industry and our financial performance, including the following:

(a) changes in the domestic, regional and global economies which are affected by factors,

including, but not limited to, the political landscape, environmental conditions and viral

epidemics such as human avian flu and Severe Acute Respiratory Syndrome (“SARS”);

(b) increased threat of terrorism, terrorist events, airline strikes, hostilities between countries

or increased risk of natural disasters that may affect travel patterns and reduce the

number of business and commercial travellers and tourists;

(c) length of a traveller’s stay which is dependent on business and commercial travel, leisure

travel and tourism;

(d) changes in governmental laws and regulations, fiscal policies and zoning ordinances and

the related costs of compliance with laws and regulations, fiscal policies and ordinances;

(e) increased competition in the Singapore hospitality industry, for example new supply in the

markets which our Group operates in, which could negatively affect our hotels’ occupancy

rates and revenue;

(f) increases in operating costs and occurrence of unanticipated costs due to various

reasons including inflation, labour costs, workers’ compensation and health-care related

costs, utility and energy costs, property tax, advertising and promotion expenses,

insurance, environmental damage and acts of nature and their consequences;

(g) changes in interest rates and in the availability, cost and terms of debt financing and other

changes in our business that adversely affect our ability to obtain financing and comply

with debt financing covenants;

(h) relations between our service providers, suppliers and/or lenders and us;

RISK FACTORS

42

(i) difficulties in identifying hospitality assets to acquire and completing and integrating

acquisitions;

(j) increase in transportation or fuel costs or strikes among workers in the transportation

industry, particularly in the aviation industry;

(k) adverse weather patterns; and

(l) adverse effects of any downturn in the hospitality industry.

As a result of such factors, our business, financial position and results of operations could be

materially and adversely affected.

We may be adversely affected by disruptions in the global financial markets

Since the second half of 2011, factors such as the sovereign debt crisis in Europe and the rising

unemployment and weaker than expected economic growth in the United States have raised

the possibility of the world economy slipping back into a recession. These adverse conditions

have resulted in historic volatility, uncertainty and disruptions in the global economy. The

worsening global economic climate may negatively affect the hospitality industry in Singapore

and there could be a material adverse effect on our business, financial position and results of

operations.

We face risks associated with adverse economic conditions in the Asia-Pacific region or

other factors that depress the level of disposable income of consumers in thesemarkets

Our business is subject to prevailing economic conditions in markets or countries from which

our guests originate. In particular, a majority of our guests are from the Asia-Pacific region,

especially the People’s Republic of China, Indonesia, Philippines, India and Malaysia. We

believe that we are, and will continue to be, substantially dependent on the ability and

willingness of these consumers to spend money on leisure and entertainment activities,

including vacations, in Singapore. A deterioration in economic conditions in these countries

may reduce the level of disposable income that consumers spend on leisure and entertainment

activities, which may reduce their patronage of our hotels, and in turn could have a material

adverse effect on our business, financial position and results of operations.

Our strategy of investing mainly in hospitality and hospitality-related assets may entail

a higher level of risk compared to other types of business that have amore diverse range

of investments

One of our investment strategies is to invest, directly or indirectly, in a portfolio of real estate

which (a) is primarily used for hospitality and/or hospitality-related purposes, whether wholly or

partially, and real estate in relation to the foregoing and (b) may exist as part of larger

mixed-use developments (where such mixed-use developments may also include non-

hospitality uses).

RISK FACTORS

43

A concentration of investments in a portfolio of such specific real estate assets may cause

susceptibility to a downturn in the real estate market as well as the hospitality industry in

Singapore and the relevant regions elsewhere. A decline in occupancy and room rates for such

real estate assets, and/or a decline in the asset value of our portfolio, will have an adverse

impact on our business, financial position and results of operations.

Real estate investments which we have invested or intend to invest, are relatively illiquid. Such

illiquidity may affect our ability to vary our investment portfolio or liquidate part of our assets in

response to changes in economic, real estate market or other conditions. For instance, wemay

be unable to sell our assets on short notice or may be forced to give a substantial reduction in

the price that may otherwise be sought for such assets in order to ensure a quick sale. These

factors could have an adverse effect on our business, financial position and results of

operations.

Our acquisition of our current hotel properties or future acquisitions may be subject to

risks associated with the acquisition of real estate

While we believe that reasonable due diligence has been and will be conducted with respect to

our acquisition of hotel properties, there can be no assurance that properties acquired or future

acquisitions will not have defects or deficiencies requiring significant capital expenditure, repair

or maintenance expenses, or payment or other obligations to third parties. The reports, which

we may have relied upon as part of our due diligence on the acquired hotel properties, may

contain inaccuracies and deficiencies. Certain building defects and deficienciesmay be difficult

or impossible to ascertain due to the limitations inherent in the scope of the inspections, the

technologies or techniques used and other factors.

In addition, laws and regulations (including those relating to real estate) may have been

breached and certain regulatory requirements in relation to the current hotel properties or

future acquisitions may not be or have not been complied with, which our due diligence did not

or might not uncover. As a result, we may incur financial or other obligations in relation to such

breaches or non-compliance. In such an event, our business, financial position and results of

operations could be materially and adversely affected.

In particular, the representations, warranties and indemnities granted in our favour by the

vendors of the acquired hotel properties or future acquisitions are subject to limitations as to

their scope and as to the amount and timing of claims which can be made thereunder. There

can be no assurance that we would be entitled to be compensated for all losses or liabilities

suffered or incurred by us as a result of our acquisition of the hotel properties or future

acquisitions. Should we be unable to recover all such losses or liabilities suffered or incurred by

us, our business, financial position and results of operations could be materially and adversely

affected.

We face risks associated with high debt financing

Immediately following full payment of the Purchase Consideration, our total external

borrowings owing to financial institutions in connection with the Restructuring Exercise is

approximately $463.2 million with interest rates ranging from 2% to 3% per annum. As such, we

have significant obligations to service our borrowings. Our debt to equity ratio (defined as ratio

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44

of total external borrowings owing to financial institutions to shareholders’ equity) immediately

following completion of our Restructuring Exercise is 1.6(1). Due to the nature of our hotel

development business, we are likely to continue to face high debt levels in the future.

Note:

(1) Taking into account the net proceeds of the Invitation of $112.1 million in the computation of shareholders’

equity as at 30 September 2011.

As such, we are subject to risks normally associated with debt financing, including the risk of

changes to interest rates, and the risk that our cash flow may be insufficient to meet payments

of principal and interest amounts under our borrowings. In the event we are unable to meet our

payment obligations including payment obligations which are accelerated due to a default of

any of our other payment obligations, our business and financial performance will be adversely

affected. Also, we may underestimate our capital requirements and other expenditures or

over-estimate our future cash flows. In such event, additional capital, debt or other forms of

financing may be required. If we are unable for any reason to raise such additional capital, debt

or other financing, our business, results of operations, liquidity and financial position will be

adversely affected.

If such financing requirements are met by way of debt financing, we may have restrictions

placed on us through such debt financing arrangements which may:

(a) limit our ability to pay dividends or require us to seek consents for the payment of

dividends;

(b) increase our vulnerability to general adverse economic and industry conditions;

(c) limit our ability to pursue our growth plans;

(d) require us to dedicate a substantial portion of our cash flow from operations to payments

on our debt, thereby reducing the availability of our cash flow to fund capital expenditure,

working capital requirements and other general corporate purposes; and

(e) limit our flexibility in planning for, or reacting to, changes in our business and our industry.

We may be unable to obtain future financing on favourable terms, or at all, to fund our

operations, expected capital expenditure and working capital requirements

We may be unable to obtain future financing on favourable terms, or at all, to fund our

operations, anticipated capital expenditure and working capital requirements. In addition,

lenders may be unwilling to accept security interests in the hotel property being developed as

collateral for the loan due to, amongst others, the illiquidity of the relevant property. If we are

unable to raise such financing on favorable terms, or at all, we may not be able to fund our

operations sufficiently or we may be unable to carry out our planned expansion, all of which

could adversely affect our business, financial position, results of operations and ability to

implement our growth strategy.

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We may be subject to additional risks in expanding Our Chain of Hotels

Our ability to expand Our Chain of Hotels successfully will depend on a number of factors

including the ability to obtain financing on competitive terms, the ability to control construction

costs and the ability to obtain the necessary licences and approvals from the relevant

authorities. There is no assurance that our expansion plans will be successful or that our

existing resources will be able to cope with the additional demands arising from the expansion.

If we are unable to meet the demands of expansion, such as retaining or recruiting sufficient

staff to service additional hotels, our results of operations may be affected. In addition, should

occupancy rates of our new hotels be significantly lower than projected, our business, financial

position and results of operations may be adversely affected.

In order to grow our business, we may expand our operations or explore strategic alliances,

acquisitions or hotel investment opportunities. Any expansion involves numerous risks, such

as the costs of setting up operations and increased working capital requirements. There is no

assurance that our expansion, if it materialises, will achieve a sufficient level of revenue and if

we fail to manage our costs, our results of operations and financial position may be adversely

affected. Participation in strategic alliances, acquisitions or hotel investment opportunities

involves numerous risks, such as difficulties in the assimilation of the management, operations

and personnel and the possible diversion of management attention from our existing business

concerns.

We are subject to risks associated with developing new hotels

New project developments are subject to a number of risks, many of which are outside our

control, including:

(a) market or site deterioration after acquisition;

(b) the possibility of discovering previously undetected defects or problems at a site; and

(c) the possibility of construction delays or cost overruns due to delayed regulatory approvals,

adverse weather, labour or material shortages, work stoppages and the unavailability of

construction and/or long-term financing.

A period of one to two years normally elapses between the acquisition of the site and the

project’s completion. Between the acquisition of the site and the project’s completion, travel

preferences, political or social conditions of the location or other conditions critical to the

success of the hotel may change, such that we are unable to commence operations of the

hotel, repay our debt financing and/or achieve our projected returns. In such an event, our

business, financial position and results of operations could be materially and adversely

affected.

We usually finance the development of hotels by way of loans from financial institutions in

addition to internally generated funds. As a significant amount of funds is required in hotel

development projects, we would typically seek financing for a substantial proportion of the cost

of the hotel developments. Such financing is usually secured by a mortgage over the hotel

development. Our ability to engage in new development would depend on our ability to secure

such financing at favorable terms. Please refer to the sections entitled “Capitalisation and

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46

Indebtedness” and “Management’s Discussion and Analysis of Results of Operations and

Financial Position — Liquidity and Capital Resources” of this Prospectus for details of our

liabilities and cash flow positions.

In planning for the financing of our hotel development projects, we take into consideration

various factors, including potential operating yield, the timing of the completion, the expected

interest charges to be incurred for the entire duration of the project, the risk of recall of loans

and the possibility that financial institutions may require that we provide additional security for

our loans. A change in any of the factors may cause our business, financial position and results

of operations to be adversely affected.

Furthermore, there can be no assurance that we will be able to obtain approval from the

relevant authorities, including, without limitation, planning approval from URA, to develop

hotels on sites that we may acquire. Should this occur, we may choose to dispose of the site.

The price realised on such disposal will depend on, inter alia, market conditions prevailing at

the time of the sale, and may be lower than the price we paid to acquire the site. In such an

event, our business, financial position and results of operations could be materially and

adversely affected.

We face significant competition

The hospitality industry in Singapore is highly competitive. The level of competition in the

Singapore hospitality industry is affected by various factors, including changes in economic

conditions, both locally and regionally, changes in local and regional populations, the supply

and demand for hotel rooms, changes in travel patterns and preferences and new supply of

hotels in the locations which our Group operates in, which could negatively affect our hotels’

occupancy rates, and materially and adversely affect our business, financial position and

results of operations.

We offer reasonably-priced accommodation at convenient locations. However, our competitors

also have hotels located in these areas. Some of these hotels offer more facilities at their

premises at similar or more competitive prices. Some of our competitors may also significantly

lower their rates or offer greater convenience, services or amenities, to attract more guests. If

their efforts are successful, our business, financial position and results of operations may be

adversely affected. There can also be no assurance that demographic, geographic or other

changes will not adversely affect the convenience or demand for our hotels. Further details on

the competition we face are set out in the section entitled “General Information of our Group—

Competition” of this Prospectus.

We may face rising labour costs and labour shortage

Our hospitality business is labour-intensive. Our ability to meet our labour requirements may be

subject to numerous external factors, including the availability of a sufficient number of suitable

persons in the relevant work force, prevailing labour costs including wage rates and applicable

levies, demographics and health and insurance costs. In addition, recent changes to the labour

laws in Singapore in the form of stricter qualifying criteria and salary thresholds for foreign

workers, and increases in foreign worker levies and foreign worker accommodation costs could

similarly result in an increase in our labour-related costs.

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47

Our growth plans will require us to hire, train and retain a significant number of new employees

in the future. As we face competition from our competitors for labour, we may have to increase

wages and benefits to attract and retain qualified personnel or risk considerable employee

turnover. If we are unable to hire, train and retain qualified employees at a reasonable cost, we

may be unable to execute our growth strategy and our business, financial position and results

of operations could be materially and adversely affected.

Our operations are subject to the laws and regulations in Singapore

The operation of hotels in Singapore is subject to various laws and regulations, such as the

Hotels Act. For example, we presently require hotel licences issued under the Hotels Act for the

operation of Our Chain of Hotels. The withdrawal, suspension or non-renewal of any of these

licences will have an adverse impact on our business and results of operations. Also, if we are

unable to obtain such licences for any new hotels, our business and results of operations could

be adversely affected. Further, any changes in such laws and regulations may also have an

impact on our business and result in higher costs of compliance. In addition, any failure to

comply with these laws and regulations could result in the imposition of fines or other penalties

by the relevant authorities. This could have an adverse impact on our business, financial

position and results of operations of our hotels.

We face risks associated with illegal activities being carried out in our hotels

The holders of the Hotel-keeper’s licence (all of whom are senior employees of our Group)

granted in respect of each of our hotels are required to ensure that the prescribed requirements

and conditions under the Hotel Licensing Regulations are strictly adhered to. Under the Hotels

Act, no licensee shall knowingly permit any person who is a prostitute or of bad character to

occupy a room in the hotel or frequent the premises. In addition, gaming, drunkenness, drug

abuse or disorderly conduct of any kind is also a prohibited activity under the Hotels Act. We

have adopted variousmeasures to enforce strict adherence to the requirements and conditions

of the Hotel Licensing Regulations but there can be no assurance that there will be no such

illegal activities being carried out in our hotels.

In the event that such illegal activities are carried out in our hotels and our Hotel-keeper’s

licence holders are convicted of contravening the provisions of the Hotel Licensing

Regulations, they will be liable to a fine not exceeding $1,000, and for a second or subsequent

conviction, to a fine not exceeding $2,000. In addition to any other penalty imposed, the court

may, pursuant to Section 43 of the Hotels Licensing Regulations, cancel their licence and also

cancel or suspend any certificate of registration granted in relation to our hotels.

Our Executive Director, Mr. Sim Mong Yeow assisted the police with investigations relating to

the failure to register certain guests allegedly engaged in vice activities being carried out at

Fragrance Hotel-Kovan in September 2010 and he was issued a warning by the police. Mr Sim

assisted the police with investigations relating to vice activities being carried out at Fragrance

Hotel-Imperial and Fragrance Hotel-Lavender in September 2010 and December 2010

respectively and he was issued with a conditional warning by the police against committing any

offence in the next twelve months. Mr. Sim also assisted the police with investigations relating

to vice activities being carried out at Fragrance Hotel-Balestier in November 2010 and he was

issued with a reminder by the police with regards to the prohibition against vice activities being

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48

carried out in the hotel. As the licensee of Fragrance Hotel-Lavender, Mr. Sim assisted the

police with investigations relating to vice activities being carried out at Fragrance Hotel-

Lavender in November 2011 and December 2011 in contravention of the Hotels Licensing

Regulations. As at the Latest Practicable Date, no further action has been taken against Mr.

Sim in relation to the December 2011 incident. In relation to the November 2011 incident, Mr.

Sim was informed by the police that the case has now been closed. He has also been charged

previously and issued with a conditional warning for failing to require two guests of Fragrance

Hotel-Kovan to fully furnish their particulars. Please refer to the section entitled “Directors,

Management and Staff — Material Background Information on our Directors, Key Executives

and Controlling Shareholders” of this Prospectus for further details.

In the event that Mr. Sim is convicted for breaching the Hotels Licensing Regulations, within

twelve months of the latest conditional warning issued to him in September 2011, in relation to

either the original offence, the subsequent offence committed within the 12-month period or

both, the Court may, pursuant to section 43 of the Hotels Licensing Regulations, levy fines on

Mr. Sim, cancel any or all of his Hotel-keeper’s licences or cancel or suspend the certificate of

registration of the hotel that is the subject of such breach or of any other Group hotel.

In the event that the Hotels Licensing Board determines that Mr. Sim does not satisfy the fit and

proper criteria, the Hotels Licensing Board may decline to renew Mr. Sim’s Hotel-keeper’s

licences when the licences expire.

In the event that Mr Sim’s Hotel-keeper’s licence and certificate of registration of Fragrance

Hotel-Kovan, Fragrance Hotel-Imperial, Fragrance Hotel-Lavender and Fragrance Hotel-

Balestier are cancelled, we will lose the revenue and profits generated by these hotels. These

hotels contributed to approximately, 21.3% and 29.1% of our revenue and profit before income

tax in FY2010.

As at the Latest Practicable Date, none of the Hotel-keeper’s licences or certificates of

registration granted in relation to our hotels have been cancelled.

In the event that one or more of the Hotel-keeper’s licence and/or our certificates of registration

for our hotels which are essential to our operations is cancelled, our business, financial position

and results of operations could be materially and adversely affected.

Certain of our hotels contribute significantly to our financial results

For 9M2011, six (6) of our hotels, namely Fragrance Hotel-Bugis, Fragrance Hotel-Imperial,

Fragrance Hotel-Ruby, Fragrance Hotel-Selegie, Fragrance Hotel-Waterfront and Parc

Sovereign Hotel (collectively known as “Key Hotels”), each contributed more than 5% of our

total revenue. In the event that there are disruptions in the business operations of any of the

Key Hotels, our business, financial position and results of operations could be materially and

adversely affected.

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Increase in Singapore tourism receiptsmay not result in an improvement of our financial

performance

The STB’s initiatives to increase tourism receipts have been ongoing. However, there may not

be an increase in the number of visitors or their length of stay in Singapore after such initiatives.

Accordingly, an increase in the number of visitors or the length of their stay in Singapore may

not result in an improvement of our operating results or financial position.

We may face delays and cost overruns resulting from mismanagement of our hotel

development projects or maintenance and improvement works

We manage our own hotel development projects and carry out most of our maintenance and

improvement works on our hotels in-house as we believe that good project management is

critical to the success of our projects. Depending on the nature of the project, we carry out

inspections to ensure the quality of the building materials, conduct site visits to monitor and

supervise work progress, and conduct regular meetings to discuss any outstanding issues

relating to the project. The failure to properly monitor andmanage any of our hotel development

projects as well as our maintenance and improvement works may result in delays and cost

overruns which may have an adverse impact on our business, financial position and results of

operations.

We face risks associated with an increase in property tax

We are subject to property tax levied on our hotels. Currently, such property tax is based on

10.0% of the annual value of the hotels.

The annual value of a hotel comprises the annual value of hotel rooms and other assessable

parts of the hotel. Under the Property Tax (Valuation by Gross Receipts for Hotel Premises)

Order, the annual value of hotel rooms in any year is assessed at 25.0% of the gross receipts

of the preceding calendar year. The annual value of the other assessable parts of the hotel

(excluding hotel rooms) is based on their rental value.

However, there is no assurance that the property tax levied on our hotels will remain as they

presently are. Property tax expenses may increase due to reasons including but not limited to

the following:

(a) increase in the applicable property tax rate;

(b) changes to the Property Tax (Valuation by Gross Receipts for Hotel Premises) Order

including but not limited to changes to the basis of assessment and rates of the gross

receipts;

(c) changes to the basis of assessment for property tax on the other parts of the hotels; and

(d) changes to the property tax legislation/regime including but not limited to changes in the

definition of annual value.

Any increase in the property tax, could adversely affect our business, financial position and


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Our hotels may be acquired compulsorily

The Land Acquisition Act gives the Singapore Government the power to acquire any land in

Singapore:

(a) for any public purpose;

(b) where the acquisition is of public benefit or of public utility or in the public interest; or

(c) for any residential, commercial or industrial purpose.

As at the Latest Practicable Date, none of our properties have been designated for compulsory

acquisition.

The compensation to be awarded pursuant to any compulsory acquisition would be the market

value of the land as at the date of its acquisition. Accordingly, if the land over which our

hospitality and hospitality-related assets are situated on is compulsorily acquired during a

market downturn period when there is a decline in the prices of real estate, the compensation

paid in respect of the acquired property may be less than what we would be entitled to

otherwise. In such an event, our business, financial position and results of operations could be

materially and adversely affected. In addition, any compulsory acquisition may have a material

adverse impact on our business continuity which may consequently affect our financial position

and/or results of operations.

We may acquire hospitality assets located in other countries. The laws of these countries may

also provide for a right by the governments of these countries to compulsorily acquire any land

or property with no compensation to the owner, or for compensation below market value. Such

compulsory acquisitions would have an adverse effect on our business, financial position and


Our operations and financial performance may be adversely affected by acts of God,

wars, terrorist attacks, riots, civil commotions, widespread communicable diseases

(such as Influenza A (H1N1), avian influenza, SARS) and other events beyond our

control

An outbreak of Influenza A (H1N1), avian influenza, SARS and/or other communicable

diseases, if uncontrolled, could affect our operations, as well as our guests and suppliers. Any

occurrence of a pandemic, an epidemic or outbreak of other disease may have an adverse

effect on our business operations. Further, in the event that any of our employees or guests are

infected or suspected to be infected with SARS, avian influenza, Influenza A (H1N1) and/or

other communicable diseases, we may be required to quarantine some of our guests,

employees and/or shut down part of our operations to prevent the spread of the disease. Such

events may lead to loss of business or affect our ability to attract new business. An outbreak of

SARS, avian influenza, Influenza A (H1N1) and/or other communicable diseases may

therefore have an adverse impact on our business, financial position and results of operations.

The consequences of any terrorist attacks or armed conflicts are unpredictable and may

include the issuance of travel advisories warning people to defer and/or avoid travel to

Singapore, as well as a general reluctance of people to travel. Travel advisories or restrictions

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51

are likely to have a material adverse effect on the number of international visitor arrivals to

Singapore and the corresponding demand for our hotels rooms. If such terrorist incidents and

acts of violence were to occur in Singapore, the hospitality industry could experience a

downturn and there could be a material adverse effect on our business, financial position and


We may be affected by uninsured loss to our properties

Wemaintain insurance policies covering certain eventualities arising from our hotel operations.

Our insurance policies include public liability insurance, fire insurance and workmen’s

compensation. Further details on our insurance policies are set out in the section entitled

“General Information of Our Group — Insurance” of this Prospectus. We believe that the

coverage from these insurance policies is adequate and is in accordance with the standard

industry practice and government specifications. However, our insurance policies do not cover

losses arising from all risks, including, without limitation, losses arising from natural disasters,

war, civil disorder and acts of terrorism. Should there be losses arising out of damage to our

properties which are not covered by our insurance policies, or should such damage exceed the

amount for which we are insured, our business, financial position and results of operations

could be materially and adversely affected.

With respect to losses which are covered by our policies, it may be difficult and it may take time

to recover such losses from insurers. In addition, we may not be able to recover the full amount

from the insurers. There can be no assurance that our policies would be sufficient to cover all

potential losses, or whether we can recover for such losses, or whether the recovery for such

losses will be subject to protracted delays.

Our intellectual property rights may be subject to imitation or otherwise infringed

Our “Fragrance” trademarks have become established in Singapore and our trademarks are

used in the marketing and promoting of our hotels to the general public. We have registered or

are in the process of registering our trademarks to protect our intellectual property rights in

Singapore. Please refer to the section entitled “General Information of Our Group— Intellectual

Property” of this Prospectus for more details. In the event that our trademarks or other

intellectual property rights are imitated or otherwise infringed, our reputation and business may

be adversely affected. There can be no assurance that our trademarks or other intellectual

property rights will not be susceptible to imitation or other infringement. In the event that we

initiate legal or other proceedings to enforce our intellectual property rights, there can be no

assurance that we will succeed in such proceedings or be able to obtain favourable outcomes

at a reasonable cost or at all. In such an event, our business, financial position and results of

operations could be materially and adversely affected.

We may face uncertainties associated with the expansion of our business overseas

We will be subject to foreign real estate laws, regulations and policies as a result of property

investments in foreign countries. There may be a negative impact on any property owned by us

in a foreign country as a result of measures and policies adopted by the relevant foreign

governments and regulatory authorities at national, provincial or local levels, such as

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52

government control over property investments or regulations in relation to foreign exchange.

Legal protection and recourse available to us in certain countries may be limited.

In addition, the income and gains derived from investments in hospitality and/or hospitality-

related assets in other countries will be subject to various types of taxes in Singapore and these

foreign countries including income tax, withholding tax, capital gains tax, and any other taxes

that may be imposed specifically for ownership of real estate. All of these taxes, which are

subject to changes in laws and regulations that may lead to an increase in tax rates or the

introduction of new taxes, could adversely affect and erode the returns from these hospitality

and hospitality-related assets. There is also no assurance that we will be able to repatriate to

Singapore the income and gains derived from investments in hospitality and/or hospitality-

related assets outside Singapore on a timely and regular basis.

Accordingly, there is no assurance that we will be able to execute the above growth strategies

successfully and as such, the performance of any strategic alliances, acquisitions or hotel

investments could fall short of expectations.

We may be adversely affected by fire, accidents or other calamities at our hotels

The occurrence of fire, accidents or other calamities at any of our hotels could have a material

adverse effect on our business, financial position or results of operations. In the event such

calamities occur, we are unable to determine the extent of the material adverse effect that it will

have on our business and financial position.

We have experienced negative cash flow in FY2009 and negative working capital

We had negative cash flow from operating activities of $7.9 million for FY2009 and negative

working capital of $18.7 million, $23.4 million, $26.6 million, as at 31 December 2008, 31

December 2009 and 31 December 2010 respectively. Our negative cash flow for FY2009 was

due to development of a commercial property project which we have since disposed. Our

Group will no longer be involved in the development of commercial properties except where

ancillary to the Group’s hotel operations. Our negative working capital was mainly due to

advances from FGL (which were short-term in nature) being used to finance the development

of our properties. As such, we are subject to the risk that our current assets will be insufficient

to meet our obligations under the current liabilities. In such event, additional capital, debt or

other forms of financing may be required for our cash flow and working capital purposes. If we

do not have sufficient internal resources and are unable for any reason, to raise additional

capital, debt or other financing for our working capital requirements, our business, results of

operations, liquidity and financial position will be adversely affected. Please refer to the section

entitled “Management’s Discussion and Analysis of Results of Operations and Financial

Position — Liquidity and Capital Resources” of this Prospectus for more information.

We are reliant on certain members of our Board

Our success depends largely on the skills, experience and performance of our Board,

especially our Non-Executive Director, Mr. Koh Wee Meng, and our Executive Directors, Mr.

Lim Chee Chong and Mr. Sim Mong Yeow. There is no assurance that we will continue to have

the service of these Directors. We do not maintain significant key-person life insurance on our

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53

Directors. If we were to lose one or more of these Directors, our ability to set and implement

successfully our strategy could be materially adversely affected. Further, such losses of

Directors may adversely affect our business, financial position and results of operations and

may also be negatively perceived in the capital markets, which could reduce the value of our

Shares.

We may not obtain a renewal of the lease of Fragrance Hotel-Elegance

We have entered into a lease of two years in respect of Fragrance Hotel-Elegance with an

option to renew the lease for a further period of one (1) year upon expiry of the initial term. The

revenue and gross profit contribution for Fragrance Hotel-Elegance were $0.3 million and $0.2

million respectively for the period from 16 September 2011 to 31 December 2011. In the event

we wish to continue the operations of Fragrance Hotel-Elegance, any failure to obtain a

renewal of the lease thereafter or a renewal on less favourable terms could have a adverse

impact on our business, financial position and results of operations.

We may compete with FGL for acquisition of property for development as well as for

potential tenants for our commercial space

Our Group or FGLmay wish to acquire property which may be designated for mixed-use where

one of the permitted uses includes hospitality uses. In the event FGL wishes to acquire such

property for non-hospitality uses only and our Group wishes to acquire such property for

hospitality use only, there may be a potential conflict of interest arising from the acquisition of

such land by either FGL or us (as the case may be), whether in Singapore and/or elsewhere.

There can be no assurance that we will be successful in competing with FGL for such

acquisitions. Please refer to the section “Interested Person Transactions and Conflict of

Interests — Potential Conflict of Interests” of this Prospectus for more information on the

potential conflicts of interest arising in respect of a competitive tender for Mixed-Use

Development Projects.

Further, both FGL and us own commercial space that may be leased out to potential tenants.

Tenants for such commercial space, whether in Singapore and/or elsewhere, may prefer space

owned by our Group or FGL and there can be no assurance that we will be able to successfully

compete with FGL for such tenants. Please refer to the section “Interested Person

Transactions and Conflict of Interests — Potential Conflict of Interests” of this Prospectus for

more information on the potential conflicts of interest arising in respect of lease of commercial

space to tenants.

In the event that we are unsuccessful in competing with FGL for tenants, or in an acquisition for

property which may be designated for mixed-use, our business, financial position and results of

operations could be adversely affected.

We face commercial risks in entering into a joint venture with FGL

Our Group, together with FGL may also acquire property for development which includes

hospitality uses and non-hospitality uses. In such event, our Group and FGL would enter into

a joint venture for such development. Please refer to the section “Interested Person

Transactions and Conflict of Interests — Potential Conflict of Interests” of this Prospectus for

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54

more information on the terms of the joint venture to be entered into between us and FGL for the

development of Mixed-Use Development Projects. There can be no assurance that any

proposed joint venture entered into between our Group and FGL, in relation to such Mixed-Use

Development Projects will be successful.

We face risks associated with covenants in our credit facilities making reference to

shareholding interest of FGL in our Company

Our Subsidiaries, Fragrance Ventures and Fragrance Assets, entered into credit facilities with

OCBC Bank and DBS Bank respectively, whereas our subsidiary Fragrance Capital entered

into credit facilities with RHB Bank Berhad and CIMB Bank Berhad. The aforementioned credit

facilities contain covenants making reference to the minimum shareholding interest of our

Controlling Shareholder, FGL, in our Company. The OCBC Bank facility contained a condition

requiring FGL to hold not less than 20% of the Shares of our Company until Fragrance

Ventures has repaid all outstanding sums owing under the OCBC Bank facility or until the

expiry of the loan tenor of 5 years, whichever is earlier. The DBS Bank facility contained a

condition requiring FGL to maintain at least 20% shareholding in our Company until Fragrance

Assets has repaid all outstanding sums owing under the DBS Bank facility. The RHB Bank

Berhad facility contained a condition requiring FGL to retain ownership and control, either

directly or indirectly, of not less than 20% of the issued and paid-up share capital of our

Company for the period of the loan tenor. The CIMB Bank Berhad facility contained a condition

requiring FGL to beneficially own (either directly or indirectly) 20% of the entire issued share

capital of our Company for as long as the facility remains outstanding. Please refer to the

section entitled “Capitalisation and Indebtedness — Credit Facilities and Restructuring

Exercise Refinancing” of this Prospectus for details on the relevant covenants. In the event that

FGL’s shareholding in our Company falls below the requisite threshold stipulated in the

aforementioned credit facilities, we will be in breach of the loan covenants and this may result

in our credit facilities (including other credit facilities where repayment is accelerated due to

such breach of loan covenant) becoming immediately repayable. In the event we are unable to

make the required repayment using internal resources or obtain adequate financing from third

parties, our business, financial position and results of operations could be adversely affected.

RISKS RELATING TO INVESTMENT IN OUR SHARES

Our Controlling Shareholder will retain control over our Group after the Invitation, which

will allow them to influence the outcome of matters submitted to Shareholders for

approval

Upon completion of the Invitation, our Controlling Shareholder, FGL will own approximately

55.0% (assuming the Over-allotment Option is not exercised) of the issued share capital of our

Company. As a result, it will be able to exercise influence over matters requiring Shareholders’

approval, including the election of Directors and approval of significant corporate transactions.

Such concentration of ownership will place our Controlling Shareholder in a position to affect

our corporate actions such as mergers or takeover attempts (notwithstanding that the same

may be synergistic or beneficial to our Group) in a manner that could conflict with the interests

of our public Shareholders.

RISK FACTORS

55

New investors may experience dilution

We intend to grant our employees Award Shares under the Global PremiumHotels PSP. To the

extent that such Award Shares are granted and vested, there will be dilution of the equity

interest of our Shareholders.

Investors may not be able to participate in future issues of our Shares

If we offer to our Shareholders rights to subscribe for additional Shares or any rights of any

other nature, we will have discretion as to the procedure to be followed in making the rights

available to our Shareholders or in disposing of the rights for the benefit of our Shareholders

and making the net proceeds available to our Shareholders. We may choose not to offer the

rights to our Shareholders having an address outside Singapore. Accordingly, Shareholders

who have a registered address outside Singapore may be unable to participate in rights

offerings and may experience a dilution in their shareholdings as a result.

Additional funds raised through issuances of new Shares for future growth will dilute

Shareholders’ equity interests

Wemay in the future expand our capabilities and business through acquisitions, joint ventures,

strategic partnerships and alliances with parties who can add value to our business. We may

require additional equity funding after the Invitation to finance future acquisitions, joint ventures

and strategic partnerships and alliances which may result in a dilution of the equity interest of

our Shareholders.

Future sales or issuances of our Shares could adversely affect our Share price

Any future sale or issuance of our Shares may have a downward pressure on our Share price.

The sale of a significant amount of our Shares in the public market after the Invitation, or the

perception that such sale may occur, could materially and adversely affect the market price of

our Shares. These factors may also affect our ability to sell or issue additional equity securities.

Except as otherwise described under the section entitled “Share Capital and Shareholders —

Moratorium” of this Prospectus and subject to applicable laws and regulations, there is

currently no restriction on the ability of our Controlling Shareholder to sell Shares, either on the

SGX-ST or otherwise.

Our Share price may be volatile, which could result in substantial losses for investors

acquiring our Shares pursuant to the Invitation

The Issue Price was determined through a book-building exercise and arrived at after

consultation between our Company, the Issue Manager, Underwriter and Placement Agent

and after taking into consideration, inter alia, prevailing market conditions and estimated

market demand for the New Shares. The Issue Price may not be indicative of prices which will

prevail in the trading market after the Invitation and investors may not be able to resell their

Shares at or above the Issue Price. Volatility in the trading price of our Shares may be caused

by factors beyond our control and may not correlate with or be proportionate to our operating

RISK FACTORS

56

results. Further, the market price of our Shares may fluctuate significantly and rapidly in

response to, inter alia, the following factors, some of which are beyond our control:

(a) variations in our operating results;

(b) changes in securities analysts’ estimates of our financial performance;

(c) changes in market valuations of similar companies;

(d) announcements by our competitors or ourselves of the gain or loss resulting from

significant acquisitions;

(e) strategic partnerships, joint ventures or capital commitments;

(f) fluctuations in stock market price and volume;

(g) our involvement in litigation;

(h) changes in general economic and stock market conditions;

(i) additions or departures of key personnel;

(j) the perceived prospects of our business and investments and the hospitality real estate

market in Singapore and other regions;

(k) the market value of our assets;

(l) our ability to implement successfully our investment and growth strategies; and

(m) broad market fluctuations, including weakness of the equity market and increases in

interest rates.

For these reasons, among others, our Shares may trade at prices that are higher or lower than

the NAV per share. To the extent that there is any retention of operating cash for investment

purposes, working capital requirements or other purposes, these retained funds, while

increasing the value of our underlying assets, may not correspondingly increase the market

price of our Shares. Any failure on our part to meet market expectations with regard to future

earnings and cash distributions may adversely affect the market price for our Shares.

In addition, our Shares are not capital-safe products and there is no guarantee that holders of

our Shares can realise a higher amount or even the principal amount of their investment.

In case of liquidation of our Company, it is possible that investors may lose all or a part of their

investment in our Shares.

There has been no prior market for our Shares, and the Invitation may not result in an

active or liquid market for our Shares

Prior to the Invitation, there has been no public market for our Shares. Therefore, we cannot

assure investors that an active public market will develop or be sustained after the Invitation.

RISK FACTORS

57

The Issue Price was determined through a book-building exercise and arrived at after

consultation between our Company, and the Issue Manager, Underwriter and Placement

Agent and after taking into consideration, inter alia, prevailing market conditions and estimated

market demand for the New Shares. The Issue Price may not be indicative of prices which will

prevail in the trading market after the Invitation and investors may not be able to resell their

Shares at or above the Issue Price.

Negative publicity may adversely affect our share price

Negative publicity involving our Group, any of our Directors, Key Executives or Controlling

Shareholders may adversely affect the market perception or the stock performance of our

Company, whether or not it is justified. Some examples of the negative publicity may include,

inter alia, unsuccessful attempts in joint ventures, takeovers or involvement in insolvency

proceedings.

We may not be able to pay dividends to our shareholders

Although we currently do not have a formal dividend policy, we intend to distribute at least

eighty per cent. (80%) of our net profit after tax to our Shareholders for FY2012, as we wish to

reward our Shareholders for participating in our Group’s growth. The declaration and payment

of future dividends will depend on our operating results, financial position, other cash

requirements including capital expenditure, the terms of borrowing arrangements (if any),

dividend yield of comparable companies (if any) listed in Singapore and other factors deemed

relevant by our Directors. There is no assurance that dividend distributions will be made by our

Company in the future.

For a description of our dividend policy, please refer to the section entitled “Dividend Policy” of

this Prospectus.

RISK FACTORS

58

Exchange Controls

Singapore

Currently, no foreign exchange control restrictions exist in Singapore.

EXCHANGE CONTROLS

59

Since incorporation, our Company has not declared any dividends.

Although we currently do not have a formal dividend policy, we intend to distribute at least

eighty per cent. (80%) of our net profit after tax to our Shareholders for FY2012, as we wish to

reward our Shareholders for participating in our Group’s growth. The declaration and payment

of future dividends will depend on our operating results, financial position, other cash

requirements including capital expenditure, the terms of borrowing arrangements (if any),

dividend yield of comparable companies (if any) listed in Singapore and other factors deemed

relevant by our Directors. There is no assurance that dividend distributions will be made by our

Company in the future.

Any final dividend paid by us must be approved by an ordinary resolution of our Shareholders

at a general meeting and must not exceed the amount recommended by our Board. Our

Directors may, without the approval of our Shareholders, also declare an interim dividend. We

must pay dividends out of our profits.

Information relating to taxes payable on dividends is set out in Appendix G entitled “Taxation”

of this Prospectus.

DIVIDEND POLICY

60

The following table shows our combined cash and cash equivalents, short-term debt, long-term

debt and capitalisation of our Group as at 31 January 2012, on an actual basis and as adjusted

for the Restructuring Exercise and the issue of New Shares pursuant to the Invitation, the net

proceeds from the issue of New Shares (after deducting the estimated expenses in relation to

the Invitation) and the application of the net proceeds from the issue of New Shares in the

manner described in the section entitled “Use of Proceeds and Listing Expenses” of this

Prospectus.

You should read this table in conjunction with:

(a) the audited combined financial statements of our Group as set out in Appendix A entitled

“Independent Auditors’ Report on the Combined Financial Statements for the Years

Ended 31 December 2010, 2009 and 2008”, Appendix B entitled “Independent Auditor’s

Report on the Combined Interim Condensed Financial Statements for the Nine Months

Ended 30 September 2011” and Appendix C entitled “Independent Auditors’ Report on the

Unaudited Pro Forma Combined Financial Information” of this Prospectus, the related

notes and the other financial information contained elsewhere in those documents; and

(b) the sections entitled “Management’s Discussion and Analysis of Results of Operations

and Financial Position” and “Selected Combined Financial Information” of this

Prospectus.

Actual as at

31 January 2012

($’000)

As adjusted for the

Restructuring Exercise,

the net proceeds from

the issue of New Shares

and the intended use of

such proceeds

($’000)

Cash and Cash Equivalents 17,323 58,882

Indebtedness

Current

Term Loans (Secured and Guaranteed)(2) 28,602 20,147(1)

Non-current

Term Loans (Secured and Guaranteed)(2) 112,807 443,035(1)

Total Indebtedness 141,409 463,182

Total Shareholders’ Equity 607,543 299,119

Total Capitalisation and Indebtedness 748,952 762,301

Note:

(1) Adjusted for refinancing of existing term loans and new term loans taken up to finance the Purchase

Consideration.

(2) The term loans are secured by various security interests comprising, inter alia, mortgages over our hotels,

corporate guarantees provided by FGL (to be replaced by corporate guarantees of our Company after the

Listing Date), assignment of rental proceeds and debentures over the assets of our hotels.

CAPITALISATION AND INDEBTEDNESS

61

Our Group’s indebtedness as at 31 January 2012 would be refinanced pursuant to the

Restructuring Exercise with details as set out below.

Credit Facilities and Restructuring Exercise Refinancing

In connection with the Restructuring Exercise, some of our Subsidiaries entered into

refinancing agreements with their respective lenders. The amounts obtained by our

Subsidiaries were then advanced to our Company for the purposes of partial payment of the

Purchase Consideration. Further details on the Restructuring Exercise can be found in the

section entitled “General Information of Our Group — Restructuring Exercise” of this

Prospectus.

As at the Latest Practicable Date, our total credit facilities were $497.3 million. The following

table sets out the details of our credit facilities:

Banks Facility Amount ($’000)

CIMB Bank Berhad 58,000

DBS Bank Ltd 64,800

Hong Leong Finance Limited 101,077

OCBC Bank 173,400

RHB Bank Berhad 55,000

Sing Investments & Finance Limited 35,300

UOB Bank 9,747

Total 497,324

As at the Latest Practicable Date, the Group has utilised $141.6 million of the credit facilities,

of which $117.5 million was utilised to repay or refinance existing loans and $24.1 million

utilised to finance the purchase of Pasir Panjang Commercial Property and Changi Road

Property. As at 13 April 2012, the Group has completed the sale of the Pasir Panjang

Commercial Property and Changi Road Property and repaid the credit facilities of $24.1 million

obtained in connection with these properties. Upon repayment of the aforesaid, our total credit

facilities were $473.2 million. The Group will utilise $345.7 million of the credit facilities to

partially repay the Purchase Consideration in connection with the Restructuring Exercise.

Upon utilisation of the aforesaid, the balance of $10.0 million of the credit facilities remains

unutilised.

Immediately upon full payment of the Purchase Consideration, our total borrowings will

comprise short-term borrowings of $20.2 million and long-term borrowings of $443.0 million.

Short-term borrowings comprised mainly the current portion of interest-bearing loans, while

long-term borrowings comprisedmainly the long-term portion of interest-bearing loans, ranging

in tenure from 5 years to 20 years.

The borrowings are subject to applicable interest rates, benchmarked against the swap offer

rate, cost of funds rate, base rate, commercial financing rate and commercial property rate.

As at 31 January 2012, we had cash and cash equivalents of $17.3 million.


62

Our Group has not been in default of either the principal or interest payments of any of the

banking facilities to-date as the current business operations of our Group generates sufficient

cash flow for such payments. Our Group is not currently in breach of any of the terms or

conditions or covenants associated with any loan agreements or debt issues which could

materially affect our Group’s financial position or results of operations, or investments by

Shareholders in our Company.

Save for the scheduled monthly repayments of our borrowings and changes in our retained

earnings arising from the day-to-day operations in the ordinary course of our business, there

were no material changes in our capitalisation and indebtedness since 1 February 2012 to the

Latest Practicable Date.

There is no loan agreement entered into by our Group with any financial institutions or debt

securities issued by our Group which contains covenants restricting our Group’s ability to pay

dividends.

As at the Latest Practicable Date, save as disclosed below, there is no loan agreement entered

into by our Group with any financial institution or debt securities issued by our Group which

contains a condition making reference to the shareholding interests of any Controlling

Shareholders or places restrictions on any change in control of our Company.

The table below sets out the details of our credit facilities obtained in connection with the

Restructuring Exercise:

Borrowing

Subsidiary Name of Bank

Description of

Credit Facility Tenor

Condition Making

Reference to

Shareholding

Interests of FGL

in our Company

Aggregate

Level of

Facilities

Fragrance

Capital

Hong Leong

Finance Limited

Term loan 20 years from

the date of

drawdown(1)

Nil $95.4 million

Fragrance

Capital

Sing

Investments &

Finance Limited


the first day of

the next

calendar month

following the

advance of the

loan or any part

thereof

Nil $35.3 million

Fragrance

Capital

RHB Bank

Berhad

(“RHB Bank”)


the date of first

drawdown(1)

FGL to retain

ownership and

control, either

directly or indirectly

of not less than

20% of the issued

and paid up share

capital of the

Company for the

period of the loan

tenor

$55.0 million


63

BorrowingSubsidiary Name of Bank

Description ofCredit Facility Tenor

Condition MakingReference toShareholdingInterests of FGLin our Company

AggregateLevel ofFacilities

FragranceCapital

CIMB BankBerhad(“CIMB Bank”)

Revolving creditfacility

Until 31 March2019 or 84months fromthe date of thefirst drawing,whichever isearlier(1)

FGL to beneficiallyown (either directlyor indirectly), 20%of the entire issuedshare capital of theCompany for aslong as the facilityremainsoutstanding

$58.0 million

FragranceVentures

OCBC Bank Term loan 5 years from1 February2012

FGL to hold notless than 20% ofthe shares of theCompany untilFragranceVentures hasrepaid alloutstanding sumsowing under thefacility or until theexpiry of the loantenor of 5 years,whichever is earlier

$155.0 million

FragranceAssets

DBS Bank Term loan 60 months afterthe drawdowndate(1)

FGL to maintain atleast 20%shareholding in theCompany untilFragrance Assetshas repaid alloutstanding sumsowing under thefacility

$64.8 million

Note:(1) This loan facility will only be drawdown within 30 days of the Listing Date.

Our Controlling Shareholder, FGL, has on 21 March 2012 provided an undertaking to RHB

Bank, that it will retain ownership and control, either directly or indirectly, of not less than 20%

of the issued and paid up share capital of our Company for the period of the loan tenor under

the RHB Bank facility.

Additionally, FGL has, on 21 March 2012 provided an undertaking to CIMB Bank that it will

beneficially own (either directly or indirectly), 20% of the entire issued share capital of the

Company for as long as the CIMB Bank facility remains outstanding and an undertaking to

OCBC Bank that it will not, at any time, hold less than 20% of the Shares of our Company until

Fragrance Ventures has repaid outstanding sums owed under the OCBC Bank facility.

Finally, with respect to the DBS Bank facility, FGL has on 21 March 2012 provided an

undertaking to DBS Bank, that it will maintain at least 20% shareholding in our Company until

Fragrance Assets has repaid all outstanding sums owing under the DBS Bank facility.

Contingent Liabilities

As at the Latest Practicable Date, we do not have any contingent liabilities.


64

Dilution results when the amount by which the Issue Price paid by the applicants for our New

Shares in this Invitation exceeds our unaudited pro forma NAV per Share immediately after the

Invitation. The unaudited pro forma NAV per Share as at 30 September 2011 before adjusting

for the estimated net proceeds from the issue of the New Shares and based on the pre-

Invitation issued share capital of 550,000,000 Shares was 32.29 cents per Share.

Pursuant to the Invitation in respect of 450,000,000 New Shares at the Issue Price, the

unaudited pro forma NAV per Share after adjusting for the estimated net proceeds from the

Invitation and based on the post-Invitation issued and paid up share capital of 1,000,000,000

Shares would have been 28.97 cents per Share. This represents an immediate decrease in the

unaudited pro forma NAV per Share of 3.32 cents per Share to our existing Shareholders and

an immediate increase in the unaudited pro forma NAV per Share of 2.97 cents per Share to

new investors. There will be no immediate dilution in the unaudited pro forma NAV per Share

to the new investors. The following table illustrates such increase on a per Share basis:

Cents

Issue Price 26.0

Unaudited pro formaNAV per Share before Invitation based on the pre-Invitation share

capital of 550,000,000 Shares (as at 30 September 2011) 32.29

Decrease in unaudited pro forma NAV per Share pursuant to the Invitation attributable

to the existing Shareholders 3.32

Unaudited pro forma NAV per Share after the Invitation based on the post-Invitation

share capital of 1,000,000,000 Shares and as adjusted for the estimated net proceeds

of the New Shares 28.97

Increase in unaudited pro forma NAV per Share to new investors 2.97

The following table summarises the total number of Shares issued by us, the total consideration

and the average price per Share held by our Controlling Shareholder (after adjusting for the

Restructuring Exercise) and our new investors pursuant to the Invitation:

Number of

Shares

Total

consideration

Average price

per Share

($) ($)

FGL(1) 550,000,000 137,500,000 0.25

New investors 450,000,000 117,000,000 0.26

Note:

(1) The consideration related to the partial Purchase Consideration of approximately $137.5 million which was

satisfied by our Company by way of allotment and issuance of 549,999,999 new Shares credited as fully

paid-up to FGL. Please refer to the section entitled “General Information of our Group — Restructuring

Exercise” of this Prospectus for details.

DILUTION

65

Unless expressly stated below, the information and analysis given in this section are extracted

from the industry report, “Economy-tier Hotels in Singapore” (the “Hotels Industry Report”) by

Euromonitor International Ltd. (“Euromonitor”) dated 30 November 2011. The Hotels Industry

Report was prepared by Euromonitor for the purpose of incorporation in this Prospectus. The

following “Industry Overview” section has been extracted from the Hotel Industry Report.

Euromonitor has agreed to the production of these extracts on condition that, save in respect

of liability imposed by any applicable law, including, without limitation, the SFA, any and all

liability (whether arising in contract, tort or otherwise) for any loss of any nature suffered by any

party as a result of a direct or indirect error in or omission in these extracts, as a direct or indirect

result of the use of any of these extracts or of making any investment decision, or refraining

from making any investment decision, in reliance or based wholly or party on any data,

expression of opinion, statement or other information or data contained in these extracts.

While our Directors have taken reasonable action to ensure that statements from the Hotels

Industry Report have been reproduced in their proper form and context, and that such

statements have been extracted accurately and fairly from the Hotels Industry Report, none of

the Issue Manager, Underwriter and Placement Agent, or our Company or their respective

officers, agents, employees and advisers have conducted an independent review of the

content or independently verified the accuracy thereof. You should be aware that since the date

of the Hotels Industry Report, there may have been changes in the tourism industry and the

various sectors therein which could affect the accuracy or completeness of the information in

this section.

MACROECONOMIC ENVIRONMENT IN SINGAPORE

Overview of the Economy

GDP and GDP Per Capita

Whilst real GDP experienced a decline of 0.8% in 2009, the broad-based recovery in 2010

pushed real GDP up 14.5%— the strongest growth in Singapore’s history. GDP per capita also

declined by 3.4% in 2009 during the recession, but grew by 11.9% in 2010 to reach $59,813.

Overall, GDP experienced a robust compound annual growth rate (CAGR) of 7.1% during the

years 2006-2010.

As one of the most trade-dependent economies in the Asia-Pacific region, Singapore remains

vulnerable to uncertainties in global economic conditions. Economic growth was weak in the

first half of 2011, reflecting the impact of transitory shocks due to higher oil prices and the

Japanese earthquake. Downward GDP data revisions in the US as well as the growth

slowdown in the Eurozone also contributed to the modest growth in Singapore’s economic

activity. As such, for the 2011-2015 period, Singapore’s GDP and GDP per capita are expected

to grow at a CAGR of 6.3% and 5.4% to reach $416.5 billion and $78,415 respectively.

Whilst manufacturing and trade-related services have been adversely impacted by the global

economic conditions, tourism-related services sector continued to expand in 2011 amidst

continued resilience in the region. This in turn, contributed to the uptrend of Average Room

INDUSTRY OVERVIEW

66

Rates (ARR) and hotel Average Occupancy Rates (AOR). The regional market, comprising of

ASEAN, China, Hong Kong, India, Japan, Korea and Taiwan accounted for more than 70.0%

of visitor arrivals into Singapore.

Chart 1 Singapore’s GDP and Annual Growth (2006-2015)

230.9

267.3 268.0 266.7

303.7

325.8

347.0

369.2

392.4

416.5

10.6%

15.7%

0.3%-0.5%

13.9%

7.3% 6.5% 6.4% 6.3% 6.1%

8.7% 8.8%

1.5%-0.8%

14.5%

5.2% 4.4% 4.3% 4.2% 4.1%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Total GDP ($ billions)

Total GDP Growth

Real GDP Growth

Source: Euromonitor International

Chart 2 Singapore’s GDP Per Capita and Annual Growth (2006-2015)

52,466

58,243 55,369

53,464

59,813 63,418

66,893 70,578

74,439 78,415

7.2%

11.0%

-4.9%-3.4%

11.9%

6.0% 5.5% 5.5% 5.5% 5.3%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

GDP per Capita

GDP per Capita Growth


INDUSTRY OVERVIEW

67

Overview Of Tourism In Singapore

Based on the World Economic Forum’s Travel and Tourism Competitiveness Index 2011 —

which takes into account the regulatory framework, business environment and infrastructure,

and human, cultural and natural resources of participating countries’ travel and tourism sectors

— Singapore emerged as the top-ranking country in the Asia-Pacific region for its tourism

industry. It is also ranked as the 10th most competitive worldwide.

Table 1 Travel and Tourism Competitiveness Index 2011: Asia Pacific

Country Regional rank International rank

Singapore 1 10

Hong Kong 2 12

Australia 3 13

New Zealand 4 19

Japan 5 22

South Korea 6 32

Malaysia 7 35

Taiwan 8 37

China 9 39

Thailand 10 41

Source: Euromonitor International based on World Economic Forum Travel and Tourism Report 2011

Inbound Tourist Arrivals

Constant Uptrend in Inbound Tourist Arrivals

Alongside the economic recovery in 2010, consumers regained their confidence in spending

and were more willing to take vacations, a trend which favoured Singapore as a preferred

tourist destination. Inbound tourist arrivals to Singapore registered 23.0% growth to reach 19.4

million trips in 2010. This strong performance was a major improvement over the marginal

growth recorded in 2009.

Overall, inbound tourist arrivals are expected to increase by a CAGR of 2.7% during 2011-2015

to reach 21.9 million trips by 2015.

INDUSTRY OVERVIEW

68

Chart 3 Singapore’s Inbound Tourist Arrivals (2006-2015)

14,63515,755 15,759 15,773

19,399 19,64320,372

20,97621,472 21,869

7.9% 7.7%

0.0% 0.1%

23.0%

1.3%

3.7% 3.0% 2.4% 1.9%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Tourist Arrivals (’000 trips)

Tourist Arrivals Growth Rate


Malaysia and Indonesia Remain the Key Source Markets for Inbound Tourism

Malaysia remained the key source market for Singapore in 2010, accounting for 7.8 million

trips. This is due to the Causeway link betweenMalaysia and Singapore, which facilitates travel

between the two countries at low cost.

Indonesia, the second-largest source market for travel to Singapore, registered the fastest

growth in terms of number of arrivals. Indonesian tourist trips increased from 1.7 million in 2009

to 2.3million in 2010, reflecting a 35.3% growth rate. The wide variety of shopping opportunities

in Singapore continues to be a key attraction for many Indonesians.

INDUSTRY OVERVIEW

69

Chart 4 Breakdown of Singapore’s Inbound Tourist Arrivals by Country of Origin in

2010 (Trips)

Malaysia,7.8 million

Indonesia,2.3 million

China,1.1 million

Australia,0.9 million

Other Countries,7.3 million

Total: 19.4 million trips


Innovative Events Lead to Increase in Number of Leisure Tourists

Leisure visitor arrivals grew by 17.0% in 2010 to reach 13 million trips. The high growth in

leisure visitors was due to the opening of two integrated resorts in 2010, with Universal Studios

Singapore and two new casinos proving popular. Singapore is promoted as a short family

holiday destination with attractions such as the integrated resorts, Singapore Zoological

Gardens and Night Safari catering to family needs.

Singapore also hosted the first Youth Olympics in 2010. The Youth Olympics attracted 15,000

visitors and earned incoming tourist receipts of $57 million. In addition, Singapore saw the

return of Formula 1 motor racing in September 2010.

Economic Recovery Boosts Business Visitor Arrivals

Business visitor arrivals represented 5 million trips in 2010, an increase of 13.2% over 2009.

This strong growth was due largely to the economic recovery, which saw business

performances improve and companies regain their confidence in expansion plans. Importantly,

Singapore is seen as a key regional commercial hub.

New Tourist Attractions to Spur Tourism

Alongside the opening of Marina Bay Sands, the government has revamped the entire Marina

Bay area to build Gardens by the Bay, which comprise of three distinctive waterfront gardens.

Gardens by the Bay is scheduled to be completed by the end of 2011 and will be officially

opened to the public in mid-2012. In 2012, Singapore is also scheduled to open River Safari,

Asia’s first river-themed wildlife park.

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70

Low-cost Carriers Gain Prominence

Low-cost airlines, namely AirAsia, Jetstar and Tiger Airways, have gained prominence,

especially in recent years. Their budget airfares offer attractive alternatives for tourists looking

to fly regionally to neighbouring countries.

The attractive promotions offered by low-cost carriers appeal to travellers looking for quick and

comfortable modes of transport at affordable prices. As a result, there was a marked increase

in the number of tourists who visited Singapore in 2010, in particular from neighbouring

countries such as Malaysia and Indonesia.

Low-cost airlines are also entering into joint ventures with on-line travel websites to offer

exclusive on-line third-party distribution rights of holistic holiday packages that include flight

tickets and hotel bookings. AirAsia and travel website Expedia have begun such

collaborations, offering passengers low-cost travel packages on both AirAsiaGo and Expedia

websites as of first quarter 2011. Such developments are likely to increase the number of

short-haul trips made by tourists, especially those from neighbouring countries.

Singapore Becomes a Regional Cruise Hub through the Construction of New Cruise Terminal

The Singapore Cruise Centre estimates the potential market from India and China alone to be

74 million passengers. Singapore, being strategically located at the crossroads of these fast

growing markets, coupled with its established reputation as a tourist destination for regional

travellers provides a huge draw for regional operators. In 2010, a record 1 million cruise

passengers passed through Singapore and number of passengers are expected to increase to

1.5 million by 2015. To further cement its position as Asia’s regional cruise hub, Singapore is

expected to open a new International Cruise Terminal at Marina South in 2012.

Incoming Tourism Receipts

Tourism Receipts Experienced a Rebound in 2010

Receipts from travel and tourism experienced a rebound following a decline in 2009. Incoming

tourism receipts accounted for $19.3 billion in 2010 and contributed approximately 6.0% to

Singapore’s gross domestic product.

Given the space and resource constraints faced by the city-state, the Singapore Tourism Board

(STB) has shifted its emphasis away from driving an increase in tourist arrivals and towards

growing tourism revenue. STB intends to coax higher tourist spending by focusing on more

value-added activities such as education, healthcare and expanded tourism offerings through

infrastructural investments. Such investments include the International Cruise Terminal (to be

ready by 2012), Gardens by the Bay (Bay South to open in 2012), the River Safari (to open in

2012), Mandai Fourth Gate and the Jurong Lake District.

INDUSTRY OVERVIEW

71

Tourism receipts are expected to increase by a CAGR of 7.5% over the years 2011-2015 to

$32.0 billion in 2015.

Indonesian and Malaysian Tourists Accounted for Greatest Volume of Tourism Receipts

Indonesians and Malaysians accounted for the largest spend in 2010, contributing a combined

31.0% share of incoming tourism receipts in current value terms. The wide variety of shopping

venues in Singapore has long attracted Indonesians to the country. Meanwhile, Malaysia is by

far the biggest source market for Singapore. The close proximity of the two countries

encourages many Malaysians to visit Singapore for a weekend getaway.

Integrated Resorts Make Significant Contributions to Inbound Tourism Receipts

The integrated resorts are estimated to have contributed significantly to the 48.5% current

value growth in incoming tourist receipts in 2010, not only from resort revenues but also from

the spill-over effect they had on nearby shopping and entertainment areas.

Shopping Malls to Offer Innovative Services to Attract Tourists

The economic recovery in 2010 saw consumers regain confidence in spending on travel and

holidays. Tourism receipts from shopping that accounted for approximately 24.4% of incoming

tourism receipts grew from $4.4 billion in 2009 to $4.7 billion in 2010.

Seeking to exploit the economic recovery and rising consumer confidence, the Singapore

Tourism Board implemented innovative strategies that focused on products and processes

targeted at affluent travellers. For instance, ION Orchard and Mandarin Gallery are two key

shopping malls at Orchard Road that offer personal concierge services.

Strong Growth in Incoming Tourism Receipts from Accommodation

Incoming tourism receipts from accommodation1 have increased at a CAGR of 13.2% during

the review period of 2006-2010 to $4.1 billion in 2010. The growth in tourism receipts from

accommodation is due to the increase in tourist arrival numbers that had outpaced Singapore’s

hotel room supply, resulting in the hike in ARR. With the development of more new hotels

during the forecast period 2011-2015 to cope with increasing tourist arrival numbers, incoming

tourism receipts from accommodation is expected to grow at a moderate CAGR of 7.6% from

$5.0 billion in 2011 to $6.7 billion in 2015.

Note:

1 Incoming tourism receipts from accommodation refer to payments made by international inbound tourists (both

business and leisure) for accommodation services in accommodation that include hotels, motels, service

apartments and guesthouses.

INDUSTRY OVERVIEW

72

Chart 5 Incoming Tourism Receipts and Incoming Tourism Receipts from

Accommodation (2006-2015)

13.014.6 15.3

13.0

19.3

24.0

26.4

28.5

30.432.0

2.5 3.1 3.4 2.74.1

5.0 5.6 6.0 6.4 6.7

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Incoming Tourism Receipts ($ billions)

Incoming Tourism Receipts from Accommodation(S$ billions)


HOTELS IN SINGAPORE

Overview of Singapore’s Hotel Industry

Hotel Tiers

(a) Economy-tier Hotels

Includes budget chained and independent outlets, which are classified as 0–2 stars, and

their corresponding sales. The budget classification is also determined by the brand’s

positioning andmarketing. The average room rate of a standard twin room for hotels in the

economy tier would be below $150 as of 2011.

(b) Mid-tier Hotels

Includes mid-tier chained and independent hotel outlets, which are classified as 3-stars

and their corresponding sales. The mid-priced classification can also be determined by

the brand’s positioning and marketing. The average room rate of a standard twin room for

a mid-tier hotel would range between $150-$250 as of 2011.

(c) Other Hotels

Includes upscale and luxury chained and independent hotel outlets, which are classified

as 4-stars and above. The “Other Hotels” classification can also be determined by the

brand’s positioning and marketing. The average room rate of a standard twin room for

“Other Hotels” would be above $250 as of 2011.

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73

Historical Market Performance

The total number of hotels in Singapore increased by 5.6% from 268 hotels in 2009 to 283

hotels in 2010. Similarly, the supply of hotel rooms rose by 14.0% from 42,719 rooms in 2009

to 48,682 rooms in 2010. Hotels also recorded a 45.9% increase in retail value of hotel

accommodation from 2009 to reach $3.3 billion in 2010. The growth in the number of hotels is

largely due to the increase in government land sales sites made available for hotel

development in anticipation of the increase in tourist arrivals.

Chart 6 Total Number of Hotel Outlets (2006-2015)

226 226243

268283

298309

320331

342

0.4% 0.0%

7.5%

10.3%

5.6% 5.3%3.7% 3.6% 3.4% 3.3%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Hotel outlets

Hotel outlets growth rate


Chart 7 Total Number of Hotel Rooms (2006-2015)

37,198 37,62439,376

42,719

48,68251,258

52,80754,356

55,90557,455

0.8% 1.1%

4.7%

8.5%

14.0%

5.3%

3.0% 2.9% 2.8% 2.8%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Number of hotel of rooms

Number of hotel of rooms growth rate


INDUSTRY OVERVIEW

74

Chart 8 Retail Value of Hotel Accommodation (2006-2015)

1.9

2.4

2.9

2.2

3.3

4.0

4.4

5.0

5.5

6.0

23.0% 25.2%18.0%

-21.5%

45.9%

21.6%11.6% 11.8% 10.3% 10.2%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Retail value of hotel accommodation ($ billions)

Retail value of hotel accommodation growth rate


The growth for the retail value of hotel accommodation1 is driven by “Other Hotels”, comprising

primarily of luxury hotels. The market share of such hotels by retail value of accommodation

ranged from 79.5% to 82.5% over the years 2006-2010. The market share of mid-tier hotels by

retail value of hotel accommodation ranged from 12.5% to 13.8% over the review period

2006-2010. Themarket share of economy-tier hotels ranged from 5.0% to 6.8% over the review

period 2006-2010.

Chart 9 Market Share of Hotel Tiers by Retail Value of Hotel Accommodation

(2006-2010)

79.5% 82.0% 81.9% 80.3% 82.5%

13.8% 12.6% 13.2% 12.8% 12.5%

6.8% 5.4% 4.9% 6.9% 5.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2006 2007 2008 2009 2010

Retail value of other hotel accommodation Retail value of mid-tier hotel accommodation

Retail value of economy-tier hotel accommodation

Source: Euromonitor InternationalNote:1 Retail value of hotel accommodation is classified as room revenue generated from hotel outlets. This includes

both room bookings made by international inbound tourists and locals residing in the country.

INDUSTRY OVERVIEW

75

Based on data obtained from the STB, the national AOR for gazetted hotels in Singapore had

improved from 76.0% in 2009 to 85.0% in 2010. The ARR also improved by 14.5% year-on-

year to $217. The growth in both average AOR as well as ARR led to a significant 28.0%

increase in Revenue Per Available Room (REVPAR) to $184 over the same period.

Chart 10 Performance of Gazetted Hotels in Singapore (2001-2010)

133126

116122

137

164

202

246

190

217

10193

78

99

115

139

176

199

144

184

76%74%

67%

81%84% 85%

87%

81%

76%

85%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ARR ($) REVPAR (S$) AOR (%)

Source: STB, Euromonitor International

Trends and Key Drivers

(a) Rebound in Tourist Arrivals Contribute to Increased Demand for Accommodation

The global economic recovery following the recession that occurred between the years

2008-2009 saw a rebound in tourist arrivals to Singapore. In 2010, inbound tourist arrivals

registered 23.0% year-on year growth to reach 19.4 million trips.

Over the review period 2006-2010, the 7.3% CAGR of inbound tourist arrivals to

Singapore had outpaced that of hotel outlets (5.8% CAGR) and hotel room stock (7.0%

CAGR). The increased demand for accommodation led to higher hotel AORs and

increased ARRs. The burgeoning demand for travel by regional tourists as well as the

Singapore Tourism Board’s constant efforts to refresh Singapore’s tourism landscape has

also enabled the country to absorb unprecedented levels of new hotels during the latter

half of the review period from 2006-2010.

INDUSTRY OVERVIEW

76

(b) Opening of Integrated Resorts and Special Events Provide Boost to Sales of Hotels

Hotels registered the highest growth in room stock and current value sales growth in 2010

due to the opening of the integrated resorts. The opening of new hotels such as Hard Rock

Hotel within Resorts World Sentosa and Marina Bay Sands increased room supply by

2,600 rooms and 1,350 rooms respectively.

Special events such as the fireworks display marking Singapore’s National Day and

Formula 1 Grand Prix saw consumers’ book hotels near to the Marina Bay belt to watch

these events. Hotels near the Marina Bay Belt capitalised on these events and launched

several packages that catered to consumers who chose to stay the night in order to watch

these special events. Such packages boosted the performance of hotels and, as a result,

the average sales per outlet increased by 42.0% in value terms from $8.2 million in 2009

to $11.6 million in 2010.

(c) Growing On-line Sales for Travel Accommodation

On-line sales of travel accommodation grew by 48.8% in retail value terms from $1.1

billion in 2009 to $1.6 billion in 2010 as consumers increasingly took advantage of the

convenience and universal accessibility of the Internet to make bookings on-line. Special

promotions such as weekend packages also provided a boost to on-line sales. The

percentage of hotel accommodation booked through the Internet is expected to continue

increasing by a CAGR of 13.1% over the forecast years 2011-2015 to $3.3 billion by 2015.

Chart 11 Retail Value of Hotel Accommodation Booked through Internet (2006-2015)

0.91.1

1.4

1.1

1.6

2.0

2.3

2.6

3.0

3.3

22.1%

27.5% 23.2%

-19.9%

48.8%

24.0%

13.8% 13.9% 12.3% 12.3%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Retail value of hotel accommodation booked through internet ($ billions)

Retail value of hotel accommodation booked through internet growth rate


INDUSTRY OVERVIEW

77

Chart 12 % Retail Value of Hotel Accommodation Booked through Internet

(2006-2015)

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

% of Retail value of hotel accommodation booked through other channels

% Retail value of hotel accommodation booked through internet

45% 46% 48% 49% 50% 51% 52% 53% 54% 55%

55% 54% 52% 51% 50% 49% 48% 47% 46% 45%


(d) More Sites Released for Hotels to Cope with Rising Tourist Arrival Rates

With land scarce in Singapore, land usage is heavily regulated by the government through

the Urban Redevelopment Authority (URA). However, as Singapore focuses on improving

its tourism rates, the need for accommodation to meet the travel requirements of incoming

tourists has increased the pressure on the government to release more land for the

building of hotels.

In June 2011, a hotel site located at the Kallang Riverside was made available for sale

under the Reserve List of the Government Land Sales Programme. The land parcel, which

can potentially yield approximately 490 hotel rooms, has a maximum permissible gross

floor area of about 22,900 square metres and a maximum allowable building height of 16

storeys. In July 2011, the URA released a commercial land parcel in Paya Lebar, for

tender. The 2.07 hectare commercial site can generate a gross floor area (GFA) of

approximately 87,000 square metres. In November 2011, the URA released yet another

hotel site at Rangoon Road/Farrer Park Station Road. The proposed hotel site is expected

to generate a gross floor area of about 13,004 square metres.

Some hotel owners have also explored the conversion of old sites into boutique hotels. For

example, a three-storey shop house in Chinatown has been converted into Hotel 1929,

while the Majestic cinema in Chinatown has been converted into New Majestic Hotel.

(e) Rising Cost Pressure for Hotels Due to Demand for Qualified Labour

The increasing number of new hotels opening in Singapore will result in higher demand for

qualified labour. The simultaneous restrictions governing the import of foreign talent to

meet the needs of the hospitality sector are likely to push wages up for staff in the

hospitality sector, indirectly leading to rising cost pressures for hotels.

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78

(f) More Diverse Hotel Offerings Available to Cater to Various Tourist Groups

Luxury hotels continued to sustain the interest of consumers in 2010. These

establishments pride themselves on providing excellent service and offering guests the

opportunity to enjoy a wholesome lifestyle experience. On the other hand, economy-tier

hotels attracted consumers through low-priced, no-frills accommodation. Economy-tier

hotels, including the Fragrance Hotel chain, have started eyeing locations close to key

tourist areas in order to offer a convenient alternative to luxury hotels. Thus, the strategic

location of Global Premium Hotels Limited’s Viva and Royal branches, which are near

Vivo City and Sentosa, enables budget travellers to explore Sentosa and one of the major

shopping centres in Singapore while staying at a good-quality, affordable hotel.

Future Prospects of Singapore’s Hotel Industry

(a) More Hotels and Room Stock to Accommodate Increased Tourist Arrivals

Taking into account the existing hotel room stock in Singapore that is already 85%

occupied, there is a balance of only 7,300 rooms that is insufficient to meet the medium to

longer term expected increase in tourist arrival figures. With the number of inbound

tourists expected to increase during 2011-2015, there will be rising demand for affordable

hotels that are close to tourist attractions.

Assuming that all projects are completed by 2015, the total number of hotels is expected

to increase to 342 whilst the total supply of hotel rooms is estimated to reach 57,455 by

2015. This reflects CAGRs of 3.5% and 2.9%, respectively, for the years 2011-2015.

(b) Hotel AOR to Remain Above 80%

With the bulk of tourist arrivals originating from Asian countries where economic

performance is expected to remain fairly stable coupled with numerous BTMICE events

held throughout the year as well as the opening of new attractions, tourist arrival figures

are expected to increase during the forecast period, 2011-2015. Tourist arrivals are

expected to increase at a CAGR of 2.7% to 21.9 million trips by 2015.

Robust levels of tourist arrivals will ensure consistently strong demand for hotel rooms in

Singapore. According to statistics compiled by the STB, in spite of the increase in hotel

outlets and rooms, hotel AORs had increased from 85.6% for the first eight months of 2010

to 86.1% for the first eight months of 2011. Barring major external shocks, AORs are likely

to remain above 80% during the forecast period of 2011-2015.

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79

(c) ARR and REVPAR to Experience Moderate Growth

Robust hotel AORs, indicating strong demand for rooms, had allowed hoteliers to raise

room rates in Singapore. The ARR nationwide increased from $209.85 for the first eight

months of 2010 to $240.30 for the first eight months of 2011. REVPAR also reflected a

similar increase from $179.60 for the first eight months of 2010 to $206.90 for the first eight

months of 2011.

However, the economic uncertainty as well the increase in hotel room inventory is likely to

moderate the growth in room rates from 2012 onwards. Hoteliers are likely to maintain

current room rates so as to attract demand in an increasingly competitive environment.

Mid-tier Hotels

Mid-tier Hotels Experience Robust Growth during 2006-2010

During the historical period 2006-2010, the number of mid-tier hotels in Singapore increased by

a CAGR of 7.0% to 63 outlets. In addition, the retail value of accommodation in such hotels

increased by 11.3% to $409 million in 2015.

Chart 13 Total Number of Mid-tier Hotels (2006-2015)

48 4852

63

73

7982

88

94

0.0% 0.0%

8.3%

15.4%

5.0%

15.9%

8.2%

3.8%

7.3% 6.8%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Mid-tier hotel outlets

Mid-tier hotel outlets growth rate

CAGR 2006-2010 : 7.0%

CAGR 2011-2015 : 6.5%

60


INDUSTRY OVERVIEW

80

Chart 14 Retail Value of Mid-tier Hotel Accommodation (2006-2015)

267306

377

287

409

536

619

732

863

1009

6.6%14.7%

23.3%

-23.9%

42.4%31.1%

15.6% 18.3% 17.9% 17.0%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Retail value of mid-tier hotel accommodation ($ millions)

Retail value of mid-tier hotel accommodation growth rate


Based on data obtained from the STB, the national AOR for gazetted mid-tier hotels in

Singapore had improved from 78.0% in 2009 to 87.0% in 2010. The ARR also improved by

19.0% year-on-year to $169. The growth in both average AOR as well as ARR led to a 24.8%

increase in REVPAR to $146 over the same period.

Chart 15 Performance of Gazetted Mid-tier Hotels in Singapore (2006-2010)*

151

165

192

142

169

129

145

168

117

146

86%

87%

82%

87%

2006 2007 2008 2009 2010

Mid-tier hotel ARR ($) Mid-tier hotel RevPAR ($) Mid-tier hotel AOR (%)

78%


*Please note that whilst STB’s data for gazetted mid-tier hotels provide a good indication of performance, the

definitions used by STB vary from Euromonitor’s definition of mid-tier hotels used in this study. No distinct price

cut-offs are mentioned in STB’s definitions. STB also uses location to segment the hotel tier. Mid-tier hotels are

generally located in prime commercial zones or immediately outlying areas.

INDUSTRY OVERVIEW

81

Whilst as of 2010 mid-tier hotels accounted for only 22.3% of the total number of hotel outlets,

there is much interest in expanding mid-priced properties — which are considered the least

vulnerable to an economic slowdown in Singapore — as business travellers are likely to

downgrade in order to cut back on travel spending in anticipation of another global recession.

Key Trends and Drivers for Mid-tier Hotels

(a) Local and International Players Keen to Enter Mid-tier Segment

To date, prominent boutique property developer and hotel operator Global Premium

Hotels Limited has developed mid-tier offerings such as Parc Sovereign Hotel to leverage

this growingmarket opportunity. InterContinental Hotels Group (IHG) has also announced

the signing of the first Holiday Inn Express Hotel for Singapore, which is set to open on

Orchard Road by 2013.

(b) Local Authorities Encourage Growth of Mid-tier Hotels

In line with STB’s master plan to increase inbound tourist arrivals and tourism receipts, the

relevant government organisations, namely URA and STB, have been increasing the

range of tourist accommodation in Singapore so as to attract a wider variety of tourists to

the city-state. As a result, the number of mid-tier hotels in development increased. These

hotels bridge the gap between luxury and economy-tier hotels with average room rates

generally ranging from more than $150 to $250 a night. They offer limited services and

amenities by comparison to luxury hotels and are often conveniently located at the fringe

of the city. Their location allows hotels guests to enjoy excellent connectivity to the various

shopping districts and major heritage areas such as Little India and Kampong Glam.

(c) Strong Performance Expected for Mid-tier Hotels During 2011-2015

With the increase of low-cost carriers making travel more accessible to cost-conscious

travellers, more BTMICE business events bringing in regional business travellers and the

tightening of travel budgets of multinational corporations, the demand for mid-tier hotels

will increase during the forecast period, 2011-2015. Between the years 2011-2105, the

number of mid-tier hotels is expected to experience strong CAGR growth of 6.5% to reach

94 outlets by 2015. Retail value of accommodation in mid-tier hotels will also increase by

a CAGR of 17.2% to $1.0 billion in 2015.

Economy-Tier Hotels

Market Size of Economy-tier Hotels

During the historical period of 2006-2010, economy-tier hotels registered strong volume and

value growth. The total number of hotel outlets increased by a CAGR of 5.8% to 164 in 2010.

Hotels in this segment also contributed an additional 9,265 rooms to the total hotel industry.

The retail value for economy-tier hotels also increased by a CAGR of 14.7% to reach $340

million in 2010.

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82

Chart 16 Total Number of Economy-tier Hotels (2006-2015)

131 131141

155164 167 170 172 174 176

0.8% 0.0%

7.6%

9.9%

5.8%

1.8% 1.8% 1.2% 1.2% 1.1%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Economy-tier hotel outlets

Economy-tier hotel outlets growth rate


Chart 17 Retail Value of Economy-tier Hotel Accommodation (2006-2015)

196

253

300

258

340

403

464

522

580

644

1.1%

29.1%

18.6%

31.6%

18.7%

14.9%12.7% 11.1% 11.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

2006 2007 2008 2009 2010 2011E 2012F 2013F 2014F 2015F

Retail value of economy-tier hotel accommodation ($ millions)

Retail value of mid-tier hotel accommodation growth rate

-14.0%


Based on data obtained from the STB, the national AOR for gazetted economy-tier hotels in

Singapore had improved from 74.0% in 2009 to 86.0% in 2010. The ARR also improved by

14.7% year-on-year to $101. The growth in both average AOR as well as ARR led to a 31.8%

increase in REVPAR to $87 over the same period.

INDUSTRY OVERVIEW

83

Chart 18 Performance of Gazetted Economy-tier Hotels in Singapore (2006-2010)*

79

100

112

88

101

69

90 92

66

87

87%89%

82%

74%

86%

2006 2007 2008 2009 2010

Economy-tier hotel ARR ($) Economy-tier hotel RevPAR ($) Economy-tier hotel AOR (%)


*Please note that whilst STB’s data for gazetted economy-tier hotels provide a good indication of performance, the

definitions used by STB vary from Euromonitor’s definition of economy-tier hotels used in this study. No distinct price

cut-offs arementioned in STB’s definitions. STB also uses location to segment the hotel tier. Economy-tier hotels are

generally located in outlying areas.

Key Trends and Drivers for Economy-tier Hotels

(a) Spill over Effects of Increased Tourist Arrivals

The growth of Singapore’s BTMICE industry as well as the opening of attractions such as

integrated resorts will provide a boost to tourist arrivals, leading to higher AORs across all

hotels, including the economy-tier segment.

(b) Conversion of Shop Houses into Economy-tier Hotels

With the number of inbound tourists expected to increase during 2011-2015, there will be

increasing demand for affordable hotels that are close to tourist attractions. Due to the

scarcity of land in Singapore, there are limitations in the availability of space that can be

released for the construction of large hotels. Since 2004, the URA has allowed existing

shop houses and shop flats in selected locations to be converted to hotels on a temporary

basis for up to 99 years. To date, many of these sites have been refurbished into

economy-tier hotels that offer comfortable lodging for cost-conscious travellers.

(c) Economy-tier Hotels Appeal to Cost-conscious Travellers

The rising popularity of low-cost carriers has enabled more consumers, especially tourists

from neighbouring countries, to visit Singapore. As a result of soaring average room rates

in the city-state during the review period 2006-2010, cost-conscious travellers have been

staying at economy-tier hotels due to their relatively affordable pricing.

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84

(d) Economy-tier Hotels are Unlikely to be Affected by Uncertain Economic Conditions

Whilst the hospitality industry might experience slower growth in 2012 due to uncertain

economic conditions, demand for economy-tier hotels is unlikely to be affected. In the face

of adverse economic conditions and tighter budgets, both leisure and business travellers

are likely to downgrade to the more affordable accommodation that economy-tier hotels

provide.

(e) Growth Driven by Expansion of Chain Hotels

Chain hotels accounted for 33.0% of the total number of outlets in the economy-tier hotel

segment. Expansion of chain hotels will continue to drive growth in the economy-tier

sector. Due to economies of scale, they are able to expand operations at a faster pace and

lower cost in comparison to independent establishments.

COMPETITIVE LANDSCAPE OF ECONOMY-TIER HOTELS

Overview of Competitive Landscape

Leading Economy-tier Hotels Chains Account for 47.2% Market Share

The total retail value of economy-tier hotel accommodation was $340 million as of 2010. The

top five economy-tier players collectively accounted for 47.2% market share.

With a total of 20 outlets and 1,436 rooms in 2010, the Fragrance Hotel chain is the second

largest player in the market with retail value of $41.3 million, accounting for 12.2% market

share. In 2011, two additional hotels were opened by the hotel chain. Fragrance Hotel-

Elegance is a 31-room establishment located in the Little India conservation district. Fragrance

Hotel-Riverside is a 101-room establishment located at Hongkong Street.

Table 2 Market Share of Top Five Economy-tier Hotels by Retail Value of

Accommodation (2010)

Rank Company Name Hotel Brand Name Market Share

1 Hotel 81 Management Pte Ltd Hotel 81 21.6%

2 Global Premium Hotels Limited Fragrance Hotel 12.2%

3 Hotel 81 Management Pte Ltd Value Hotel 7.6%

4 Santa United International Holdings Santa Grand Hotels 3.6%

5 Aqueen Hotels Pte Ltd Aqueen Hotels 2.2%

Others 52.8%

Total 100.0%


INDUSTRY OVERVIEW

85

SINGAPORE TOURISM AND HOTEL MARKET OUTLOOK

Singapore’s tourism and hotel industry is expected to remain positive for the forecast period of

2011-2015. Overall, inbound tourist arrivals are expected to increase by a CAGR of 2.7%

during 2011-2015 to reach 21.9 million trips by 2015. Tourism receipts are also expected to

increase by a CAGR of 5.8% over the years 2011-2015 to $27.6 billion in 2015.

Key factors contributing to growth of Singapore’s tourism and hotel industry include:

• The global economic recovery following the recession that occurred between the years

2008-2009 saw a rebound in tourist arrivals to Singapore. In 2010, inbound tourist arrivals

registered 23.0% year-on year growth to reach 19.4 million trips. Tourists from ASEAN,

China, Hong Kong, India, Japan, Korea and Taiwan accounted for the majority of tourist

arrivals to Singapore in 2010.

• The continued resilience of the Asian market despite economic uncertainties in other

regions resulted in the continued expansion of tourism-related services. This in turn,

contributed to the uptrend of ARRs and hotel AORs.

• Leisure visitor arrivals grew by 17% in 2010 to reach 13 million trips. The high growth in

leisure visitors was due to the opening of two integrated resorts in 2010, with Universal

Studios Singapore and two new casinos proving popular.

• STB intends to increase higher tourist spending by focusing on more value-added

activities such as education, healthcare and expanded tourism offerings through

infrastructural investments. Such investments include the International Cruise Terminal

(to be ready by 2012), Gardens by the Bay (Bay South to open in 2012), the River Safari

(to open in 2012), Mandai Fourth Gate and the Jurong Lake.

• Low-cost airlines have begun offering new-long haul routes, diversifying from an initial

concentration of South-East Asian cities to include more cities in China, India, and

Australasia. Besides exploring new routes, low-cost carriers continued to introduce airfare

promotions regularly during 2010. The expansion of affordable air travel has contributed

to the increase in tourist arrival numbers from regional Asian countries.

Robust levels of visitor arrivals will ensure the constant growth of the hotel industry in

Singapore. Barring major external shocks, AORs are likely to remain above 80% during the

forecast period of 2011-2015. However, the economic uncertainty as well as the increase in

hotel room inventory is likely to moderate the growth in room rates from 2012 onwards.

Hoteliers are likely to maintain current room rates so as to attract demand in an increasingly

competitive environment.

Whilst the hospitality industry is expected to experience slower growth in 2012 due to uncertain

economic conditions, the demand for mid-tier and economy-tier hotels is unlikely to be affected.

In the face of adverse economic conditions and tighter budgets, both leisure and business

travellers are likely to downgrade to more affordable accommodation that economy-tier hotels

provide.

INDUSTRY OVERVIEW

86

Our History and Development

Global Premium Hotels was incorporated in Singapore as a private limited liability company on

19 September 2011 with the sole founding shareholder being FGL.

Prior to the Restructuring Exercise and Invitation, the FGL Group comprised two distinct

business divisions namely, the property business and the hotel business.

Pursuant to the Restructuring Exercise, FGL divested itself of its hotel business and transferred

its hotel properties to our Company at market value to unlock value for FGL’s shareholders.

Subsequently, FGL obtained the approval of its shareholders on 23March 2012 for thematerial

dilution of its interest in our Company in connection with the Proposed Invitation and the

Company’s proposed listing.

On 29 March 2012, our Company converted to a public company limited by shares and

changed its name to Global Premium Hotels Limited.

We entered into a Restructuring Agreement on 31 March 2012, pursuant to which our

Company acquired the shares of our Subsidiaries from FGL. Upon completion of the

Restructuring Exercise on 13 April 2012, our newGroup structure comprised our Company and

the six (6) Subsidiaries, namely, Fragrance Assets, Fragrance Capital, Fragrance Investment,

Fragrance Ventures, Fragrance Hotel Management and Parc Sovereign Hotel Management.

Details of our restructuring exercise are set out in the section entitled “General Information of

Our Group — Restructuring Exercise” of this Prospectus.

Set out below are the major milestones in our corporate history:

1997

We commenced the development of our first hotel in 1995, a 45-room hotel located at 14

Lorong 10 Geylang. That same year, we acquired another plot of land at 9 Lorong 10 Geylang

and developed it into a 36-room hotel. Both hotels were completed in 1996 and sold to third

parties in 1997.

1998

We leased the first hotel in our Fragrance Chain of Hotels named Fragrance Hotel-Sapphire

from our Non-Executive Director, Koh Wee Meng and commenced operations in February

1998. Fragrance Hotel-Sapphire is a 50-room hotel located at 3 Lorong 10 Geylang. We

acquired Fragrance Hotel-Sapphire in March 2004.

Subsequently, we commenced operations of two more hotels, namely Fragrance Hotel-Ruby

and Fragrance Hotel-Emerald. Fragrance Hotel-Ruby is a 168-room hotel located at 10 Lorong

20 Geylang and Fragrance Hotel-Emerald is a 126-room hotel located at 20 Lorong 6 Geylang.

We acquired the land parcel over which Fragrance Hotel-Ruby is presently situated,

demolished the original building situated thereon and subsequently developed the hotel on the

land parcel (“Redeveloped Property”). Fragrance Hotel-Ruby was acquired in December

1996 and its construction and development works were completed in December 1997.

GENERAL INFORMATION OF OUR GROUP

87

We leased Fragrance Hotel-Emerald from our Non-Executive Director, Koh Wee Meng and

commenced operations in July 1998. We acquired the hotel in October 2002.

2001

We leased The Fragrance Hotel, a 82-room hotel located at 219 Joo Chiat Road from James

Koh Investment Pte. Ltd. and commenced operations in November 2001. We acquired the

hotel in May 2004.

In 2009, The Fragrance Hotel underwent major addition and alteration works to increase its

total room capacity to 90 rooms.

2002

We commenced operations of three (3) hotels, namely, Fragrance Hotel-Pearl, Fragrance

Hotel-Crystal and Fragrance Hotel-Jasper. Fragrance Hotel-Pearl is a 129-room hotel located

at 21 Lorong 14 Geylang, Fragrance Hotel-Crystal is a 125-room hotel located at 50 Lorong 18

Geylang and Fragrance Hotel-Jasper is a 56-room hotel located at 44 Lorong 6 Geylang.

Fragrance Hotel-Pearl was acquired in September 2001 as a partially constructed hotel

building and we completed its construction and development work in December 2001.

Fragrance Hotel-Crystal and Fragrance Hotel-Jasper were acquired as fully constructed hotel

buildings. Fragrance Hotel-Jasper was subsequently sold to a third party.

We built hotels in the Geylang area due to the strong demand for budget accommodation and

lower cost of land in the area.

2004

We commenced operations of two (2) hotels, namely, Fragrance Hotel-Balestier and

Fragrance Hotel-Classic. Fragrance Hotel-Balestier is a 48-room hotel located at 255 Balestier

Road and Fragrance Hotel-Classic is a 48-room hotel located at 418 Balestier Road. Both

Fragrance Hotel-Balestier and Fragrance Hotel-Classic are Redeveloped Properties.

Fragrance Hotel-Balestier was acquired in March 2003 and its construction and development

works were completed in December 2003.

Fragrance Hotel-Classic was acquired in March 2003 and its construction and development

works were completed in January 2004.

2005

We commenced operations of three (3) hotels, namely, Fragrance Hotel-Rose, Fragrance

Hotel-Sunflower and Fragrance Hotel-Selegie. Fragrance Hotel-Rose is a 68-room hotel and is

located at 263 Balestier Road. Fragrance Hotel-Sunflower is a 27-room hotel located at 10

Lorong 10 Geylang and was acquired as a fully-constructed hotel building. Fragrance Hotel-

Selegie is a 120-room hotel located at 183 Selegie Road. It was the first of our hotels to be


88

opened and operated in the Central Business District area and was also our flagship hotel. Both

Fragrance Hotel-Rose and Fragrance Hotel Selegie are Redeveloped Properties.

Fragrance Hotel-Rose was acquired in November 2004 and its construction and development

works were completed in April 2005.

The land parcels for Fragrance Hotel-Selegie were acquired between December 2003 and

August 2004 and the construction and development works for the hotel were completed in

December 2005.

We commenced operations of our first backpacker hostel named Fragrance Hostel. It has a

total of 17 rooms with 102 beds and is located at 63 Dunlop Street.

2006

We commenced operations of Fragrance Hotel-Kovan. Fragrance Hotel-Kovan is a 43-room

hotel located at 760 Upper Serangoon Road and is a Redeveloped Property.

Fragrance Hotel-Kovan was acquired in October 2005 and its construction and development

works were completed in July 2006.

2007

We commenced operations of four (4) hotels, namely, Fragrance Hotel-Viva, Fragrance

Hotel-Lavender, Fragrance Hotel-Imperial and Fragrance Hotel-Oasis as we expanded our

presence in the city-fringe areas. We built hotels in the city and city-fringe areas because of its

convenient location and ease of access to major roads, public buses and the MRT. All these

four (4) hotels are Redeveloped Properties.

Fragrance Hotel-Viva was acquired in September 2006 and its construction and development

works were completed in June 2007.

Fragrance Hotel-Lavender was acquired in December 2006 and its construction and

development works were completed in September 2007.

Fragrance Hotel-Imperial was acquired in January 2007 and its construction and development

works were completed in November 2007.

Fragrance Hotel-Oasis was acquired in September 2006 and its construction and development

works were completed in November 2007.

Fragrance Hotel-Viva is a 33-room hotel and is located at 75 Wishart Road. Fragrance

Hotel-Lavender is a 35-room hotel and is located at 51 Lavender Street. Fragrance Hotel-

Imperial is a 74-room hotel and is located at 28 Penhas Road. Fragrance Hotel-Oasis is a

36-room hotel and is located at 435 Balestier Road.


89

2008

We commenced operations of two (2) hotels, namely, Fragrance Hotel-Waterfront and

Fragrance Hotel-Ocean View as we expanded our presence in the western region of

Singapore.

Both the hotels are Redeveloped Properties. Fragrance Hotel-Waterfront is a 57-room hotel

and is located at 418 Pasir Panjang Road and Fragrance Hotel-Ocean View is a 47-room hotel

and is located at 432 Pasir Panjang Road.

Fragrance Hotel-Waterfront was acquired in September 2007 and its construction and

development works were completed in March 2008.

Fragrance Hotel-Ocean View was acquired in February 2008 and its construction and

development works were completed in September 2008.

2009

We commenced operations of Fragrance Hotel-Royal to tap on the demand for hotels from

tourists visiting Sentosa and the surrounding tourist attractions. Fragrance Hotel-Royal is a

Redeveloped Property. It is a 32-room hotel and is located at 400 Telok Blangah Road.

Fragrance Hotel-Royal was acquired in January 2009 and its construction and development

works were completed in June 2009.

2010

We commenced operations of Fragrance Hotel-Bugis. Fragrance Hotel-Bugis is an 80-room

hotel and is located at 33 Middle Road. We acquired the hotel as an office building and through

major addition and alteration works, the property was converted to a hotel.

We obtained approval from URA to convert Fragrance Hostel to a hotel.

2011

We commenced operations of our first premium brand of hotel, Parc Sovereign Hotel, targeting

the mid-tier hotel market. Prior to this, all our hotels targeted the economy-tier market.

Parc Sovereign Hotel is a 170-room hotel and is located at 175 Albert Street within the Central

Business District area of Singapore. We acquired the land parcel from the government land

sales programme in 2009 and developed it into a hotel.

We successfully converted and renovated a 7-storey office building located at 103 Beach Road

to a 96-room hotel throughmajor addition and alteration works.We subsequently sold this hotel

to Sky Property Pte. Ltd. for a consideration of $46 million as we received an attractive offer to

purchase the hotel from the purchaser.

We successfully converted and renovated our Fragrance Hostel into a 31-room hotel named

Fragrance Hotel-Elegance through major addition and alteration works. Fragrance Hotel-

Elegance was subsequently sold to IPAH Hotels (Pte) Limited for $14.5 million and we have


90

entered into a tenancy agreement with the third party for a two-year period with an option to

renew for a further one (1) year period thereafter. Fragrance Hotel-Elegance was sold to a third

party to take advantage of the attractive sale price offered by the third party.

In 2010, we commenced the development of a 101-room hotel located at 20 Hongkong Street

which we acquired through a private offer. This hotel, Fragrance Hotel-Riverside, commenced

operations in November 2011.

Restructuring Exercise

Acquisition of Subsidiaries

Prior to the Invitation, we undertook a restructuring exercise to streamline and rationalise our

Group structure. Pursuant to the Restructuring Agreement dated 31March 2012, our Company

acquired:

(a) the entire issued and paid-up share capital of Fragrance Capital, comprising 20,000,000

ordinary shares in the capital of Fragrance Capital, resulting in Fragrance Capital

becoming a wholly-owned subsidiary of our Company for a consideration of $284,517,694

(based on NTA as at 30 September 2011(1) less a discount of $33,111,984 and a dividend

of $10,000,000 declared after 30 September 2011). The shares in Fragrance Capital were

transferred with all rights, benefits and interests in and to the shares as at 13 April 2012

and thereafter;

(b) the entire issued and paid-up share capital of Fragrance Ventures, comprising 1,000,000

ordinary shares in the capital of Fragrance Ventures, resulting in Fragrance Ventures


(based on NTA as at 30 September 2011(1) less a discount of $19,784,057). The shares

in Fragrance Ventures were transferred with all rights, benefits and interests in and to the

shares as at 13 April 2012 and thereafter;

(c) the entire issued and paid-up share capital of Fragrance Assets, comprising 1,000,000

ordinary shares in the capital of Fragrance Assets, resulting in Fragrance Assets


(based on NTA as at 30 September 2011(1) less a discount of $9,849,600). The shares in

Fragrance Assets were transferred with all rights, benefits and interests in and to the

shares as at 13 April 2012 and thereafter;

(d) the entire issued and paid-up share capital of Fragrance Investment, comprising

4,000,000 ordinary shares in the capital of Fragrance Investment, resulting in Fragrance

Investment becoming a wholly-owned subsidiary of our Company for a consideration of

$32,126,729 (based on NTA as at 30 September 2011(1) less a discount of $4,443,264).

The shares in Fragrance Investment were transferred with all rights, benefits and interests

in and to the shares as at 13 April 2012 and thereafter;

(e) the entire issued and paid-up share capital of Fragrance Hotel Management, comprising

100,000 ordinary shares in the capital of Fragrance Hotel Management, resulting in

Fragrance Hotel Management becoming a wholly-owned subsidiary of our Company for a

consideration of $9,473,809 (based on NTA as at 30 September 2011(1)). The shares in


91

Fragrance Hotel Management were transferred with all rights, benefits and interests in

and to the shares as at 13 April 2012 and thereafter;

(f) the entire issued and paid-up share capital of Parc Sovereign Hotel Management,

comprising 1,000,000 ordinary shares in the capital of Parc Sovereign Hotel

Management, resulting in Parc Sovereign Hotel Management becoming a wholly-owned

subsidiary of our Company for a consideration of $1,212,812 (based on NTA as at 30

September 2011(1) less a discount of $31,545). The shares in Parc Sovereign Hotel

Management were transferred with all rights, benefits and interests in and to the shares as

at 13 April 2012 and thereafter.

Note:

(1) The NTA for each of our Subsidiaries was based on its respective unaudited management accounts as at 30

September 2011, which takes into account the fair value gain arising from market valuation of the hotels owned

by our Group as at 30 September 2011 as per the valuer’s report dated 22 November 2011 prepared by Colliers

International Consultancy & Valuation (Singapore) Pte Ltd.

The aggregate discounts were approximately 9.1% of the aggregate adjusted market value of

hotels of $736.7 million and were arrived at on a willing buyer willing seller basis. There was no

discount agreed for Fragrance Hotel Management. The market value of $747.6 million

assumed that the construction of Fragrance Hotel-Riverside was completed as of 30

September 2011. The market value was adjusted to deduct the incomplete portion of the

construction costs as the hotel only commenced operations in November 2011 to arrive at a

value of $736.7 million.

Pursuant to the Restructuring Exercise, we have acquired each of the Subsidiaries listed above

and the assets and liabilities of each of these Subsidiaries would form part of the Group. The

aggregate unaudited assets and liabilities for the Subsidiaries as at 30 September 2011 were

$812.2 million and $177.0 million respectively. The aggregate unaudited NTA of the

Subsidiaries as at 30 September 2011 was $635.2 million.

The Purchase Consideration is proposed to be paid by our Company to FGL in the following

manner:

(a) approximately $345.7 million is to be satisfied in cash by way of loans, obtained directly by

our Group and/or internally generated funds of our Group, and insofar as it constituted

financial assistance under the Companies Act, duly approved by way of a special

resolution passed by each of our Subsidiaries in accordance with Section 76(9B) of the

Companies Act within thirty (30) days from the date of the Listing Date;

(b) approximately $137.5 million was satisfied by our Company by way of allotment and

issuance of 549,999,999 new Shares (“Consideration Shares”) at an effective price of

$0.25 each, credited as fully paid-up to FGL; and

(c) approximately $74.8 million is to be satisfied by our Company by way of utilisation of part

of the proceeds of the Invitation within thirty (30) days from the date of the Listing Date.

The Restructuring Exercise was completed on 13 April 2012, notwithstanding that (a) and (c)

have not been paid as at the time of completion.


92

Sale of properties to FGL’s subsidiaries

On 30 September 2011, we entered into sale and purchase agreements for the sale of Pasir

Panjang Commercial Property, Geylang Industrial Property and Changi Road Property to

FGL’s wholly-owned Subsidiaries, Fragrance Realty and Fragrance Holdings. The sale of

these three properties was part of the Restructuring Exercise to dispose of our non-hospitality

properties as well as to resolve potential conflict of interests prior to our listing on the Main

Board of the SGX-ST. The proceeds since received have been used for repayment of the

advances made by FGL and repayment of term loans. The balance of the proceeds would be

used for working capital purposes. Further details on the sale of the three properties can be

found in the section entitled “Interested Person Transactions and Conflict of Interests — Past

Interested Person Transactions—Sale of properties to FGL’s Subsidiaries” of this Prospectus.


93

OurCorporateStructure

OurcorporatestructureimmediatelyaftertheRestructuringExerciseisasfollows:

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Note:

(1)Thedetailsofthe25soleproprietorshipsownedbyFragranceHotelManagementandthethree(3)soleproprietorshipsownedbyParcSovereignHotelManagementareset

outinthesectionentitled“GeneralInformationofourGroup—OurSubsidiariesandsoleproprietorships”ofthisProspectus.

GENERALINFORMATIONOFOURGROUP

94

Our Subsidiaries and sole proprietorships

The details of our Subsidiaries and sole proprietorships as at the date of this Prospectus are as

follows:

Name of Subsidiary/

sole proprietorship

Date/place of

registration

Principal business

activities

Issued and

paid-up

capital Details of ownership

Fragrance Assets 11 December2008/Singapore

Investment holding andinvesting in properties forlong term holdingpurposes

$1,000,000 Subsidiary 100%owned by ourCompany

Fragrance Capital 28 July 2000/Singapore



Fragrance Investment 13 April 1996/Singapore



Fragrance Ventures 17 July 2001/Singapore



Fragrance Hotel Management 28 June 1996/Singapore

Hotel Operations $100,000 Subsidiary 100%owned by ourCompany

Parc Sovereign HotelManagement

29 July 2003/Singapore

Hotel Operations $1,000,000 Subsidiary 100%owned by ourCompany

Fragrance Hotel-Sapphire 15 November1997/Singapore

Not Applicable(1) NotApplicable

Sole proprietorshipowned by FragranceHotel Management

Fragrance Hotel-Ruby 5 February 1998/Singapore



Fragrance Hotel-Emerald 5 February 1998/Singapore



The Fragrance Hotel 29 June 2001/Singapore



Fragrance Hotel-Pearl 26 September2001/Singapore



Fragrance Hotel-Crystal 28 October 2002/Singapore



Fragrance Hotel-Balestier 12 November2003/Singapore




95

Name of Subsidiary/

sole proprietorship

Date/place of

registration

Principal business

activities

Issued and

paid-up


Fragrance Hotel-Classic 15 December2003/Singapore



Fragrance Hotel-Rose 18 November2004/Singapore



Fragrance Hotel-Sunflower 2 September 2005/Singapore



Fragrance Hotel-Selegie 11 June 2005/Singapore



Fragrance Hotel-Kovan 15 June 2006/Singapore



Fragrance Hotel-Viva 26 April 2007/Singapore



Fragrance Hotel-Lavender 18 July 2007/Singapore



Fragrance Hotel-Imperial 18 July 2007/Singapore



Fragrance Hotel-Oasis 3 August 2007/Singapore



Fragrance Hotel-Waterfront 15 February 2008/Singapore



Fragrance Hotel-Ocean View 23 April 2008/Singapore



Fragrance Hotel-Royal 24 March 2009/Singapore



Fragrance Hotel-Bugis 16 March 2010/Singapore



Fragrance Hotel-Elegance 23 April 2008/Singapore



Fragrance Hotel-Riverside 22 October 2011/Singapore



FragranceHotel-Champagne(2)

26 October 2004/Singapore




96

Name of Subsidiary/

sole proprietorship

Date/place of

registration

Principal business

activities

Issued and

paid-up


Fragrance Hotel-Esplanade(2) 16 February 2011/Singapore



Fragrance Hostel(2) 11 June 2005/Singapore



Parc Sovereign Hotel 13 January 2009/Singapore


Sole proprietorshipowned by ParcSovereign HotelManagement

Economy Hotel(2) 20 July 2010/Singapore



Premium Hotel(2) 21 July 2010/Singapore



Notes:

(1) Each of our sole proprietorship was registered to carry the name of a hotel/hostel and the Group conducts its

business under the names of the various hotels we operate. Our sole proprietorships do not have any business

operations of their own. All our sole proprietorships that have been registered to carry the names of the

“Fragrance” brand of hotels are owned by Fragrance Hotel Management, whereas the individual hotel

properties under the “Fragrance” brand are owned by their respective hotel-owning companies namely,

Fragrance Capital, Fragrance Investments and Fragrance Ventures. Similarly, whilst Parc Sovereign Hotel

property is owned by Fragrance Assets, the sole proprietorship registered to carry its name is held by Parc

Sovereign Hotel Management. Fragrance Hotel Management and Parc Sovereign Hotel Management are hotel

management companies and do not own any hotels. Please refer to the section entitled “General Information of

Our Group — Properties” of this Prospectus for details on the hotels and their respective hotel-owning

companies.

(2) These sole proprietorships are registered but currently not used for any properties of our Group.

All of our Subsidiaries and sole proprietorships operate in Singapore.

None of our Subsidiaries are listed on any stock exchange.

We do not have any associated company.

Our Business

General

We operate one of Singapore’s largest chains of hotels with 23 hotels, of which 22 hotels are

operated under our “Fragrance” brand and one hotel under the “Parc Sovereign” brand. We

provide economy-tier and mid-tier class of accommodation with 1,738 rooms in Singapore, as

at the Latest Practicable Date. We own all our hotels save for Fragrance Hotel-Elegance. As at

31 October 2011, the Market Value of all the 22 hotels which we own amounted to S$747.6

million based on the valuation carried out by Colliers International Consultancy & Valuation

(Singapore) Pte Ltd. Further details relating to the valuation of the hotels we own are set out in

Appendix I entitled “Valuer’s Report” of this Prospectus.


97




local and regional hospitality industry. Most of our hotel property assets and hotel operations

are located in the city or city-fringe areas.

Hotel Operations

As at the Latest Practicable Date, we operate all the hotels under the “Fragrance” brand and

“Parc Sovereign” brand. Each brand of hotels is classified differently and targets different

customer groups. The Fragrance Chain targets budget travellers which are value-conscious

customers. The hotel facilities provided under the “Fragrance” brand are therefore basic

amenities to provide our guests with a comfortable stay at affordable prices. The “Parc

Sovereign” brand targets business and up-market travellers who are more willing to spend on

travel accommodation. Therefore, Parc Sovereign Hotel, pitched as a mid-tier hotel, features

more facilities such as a swimming pool, gym and restaurant. All our hotels are designed in

accordance with our corporate branding requirements, including the prominent display of our

trademarks in order to promote our image and enhance our brand recognition among

travellers.

We place great importance on the quality of the rooms and services offered by our hotels. All

our hotel rooms have individually-controlled air-conditioning systems and an attached

bathroom. Our hotel rooms also come with facilities such as international direct dialing

telephone services, cable television and complimentary beverages. Some of our hotels offer

additional facilities and amenities comprising wireless internet connectivity, swimming pools,

restaurants and convenience stores. All our hotel operations staff are trained in-house with a

focus on providing quality service to our hotel guests.

Most of our hotels are strategically located in the city or city-fringe areas and are easily

accessible bymajor roads, public buses and theMRT.Many of our hotels are also situated near

major convention centres, tourist attractions and the Integrated Resorts.

Details of the hotels that we operate as at the Latest Practicable Date are set out as follows:

S/No Hotel Name AddressNo ofRooms

YearOperationsCommenced

AOR(3)

(%)ARR(3)

($)

1. FragranceHotel-Sapphire

3 Lorong 10 GeylangSingapore 399037

50 1998 93.6 75.5

2. FragranceHotel-Ruby


168 1998 92.1 56.9

3. FragranceHotel-Emerald


126 1998 92.2 62.9

4. The FragranceHotel

219 Joo Chiat RoadSingapore 427485

90 2001 90.6 67.3

5. FragranceHotel-Pearl


129 2002 95.0 56.2


98

S/No Hotel Name AddressNo ofRooms

YearOperationsCommenced

AOR(3)

(%)ARR(3)

($)

6. FragranceHotel-Crystal


125 2002 90.5 61.8

7. FragranceHotel-Balestier

255 Balestier RoadSingapore 329710

48 2004 84.2 146.5

8. FragranceHotel-Classic


48 2004 80.5 138.4

9. FragranceHotel-Rose


68 2005 91.5 78.1

10. FragranceHotel-Sunflower


27 2005 89.5 65.5

11. FragranceHotel-Selegie

183 Selegie RoadSingapore 188329

120 2005 90.6 102.6

12. FragranceHotel-Kovan

760 Upper Serangoon RoadSingapore 534629

43 2006 85.9 166.2

13. FragranceHotel-Viva

75 Wishart RoadSingapore 098721

33 2007 74.0 265.2

14. FragranceHotel-Lavender

51 Lavender StreetSingapore 338710

35 2007 97.5 180.6

15. FragranceHotel-Imperial

28 Penhas RoadSingapore 208187

74 2007 96.4 107.9

16. FragranceHotel-Oasis


36 2007 94.3 76.4

17. FragranceHotel-Waterfront

418 Pasir Panjang RoadSingapore 118759

57 2008 91.6 147.4

18. FragranceHotel-Ocean View

432 Pasir Panjang RoadSingapore 118773

47 2008 81.6 161.1

19. FragranceHotel-Royal

400 Telok Blangah RoadSingapore 098838

32 2009 92.2 129.7

20. FragranceHotel-Bugis

33 Middle RoadSingapore 188942

80 2010 96.8 105.2

21. Parc SovereignHotel

175 Albert StreetSingapore 189970

170 2011 88.2 133.3

22. FragranceHotel-Elegance(1)

63 Dunlop StreetSingapore 209391

31 2011 90.7 89.2

23. FragranceHotel-Riverside(2)

20 Hongkong StreetSingapore 059663

101 2011 98.3 122.3

Notes:

(1) We entered into a tenancy agreement in relation to Fragrance Hotel-Elegance in November 2011.

(2) Commenced operations on 29 November 2011.

(3) The AOR and the ARR was applicable to the period from 1 January 2012 to the Latest Practicable Date.


99

Hotel Development

The hotel property development business and the related refurbishment and maintenance

works of the hotels operated under the FGL Group prior to the Restructuring Exercise were

handled by our Executive Director, Mr. Lim Chee Chong, Ms. Lee Yen Mei and Mr. Calvin

Chew. Mr. Lim Chee Chong was responsible for the overall supervision of residential,

commercial and hotel development projects of FGL. Ms. Lee Yen Mei was responsible for

overseeing daily hotel operations and she was also involved in monitoring renovations and

refurbishments works. Mr. Calvin Chew was the maintenance manager responsible for

maintenance of our hotel properties. Mr. Lim Chee Chong, Ms. Lee Yen Mei and Mr. Calvin

Chew are now employees of our Group and shall provide their expertise to our Group

exclusively. Accordingly, our Directors are of the view that we continue to have the necessary

expertise for hotel development upon completion of the Restructuring Exercise.

We regularly search for hotels to purchase and potential sites for hotel development. Before we

acquire any hotel, site or property for development or conversion into a hotel, we will assess the

estimated earnings from the gross development value and hotel operations. The evaluation

process usually involves the following stages:

(a) identification of the potential property or site for hotel development either through a private

offer or a government land sales program;

(b) market research as well as a feasibility study to evaluate the viability, profitability and the

potential risks involved in undertaking the particular hotel development project through

capital budgeting and project evaluation processes. Relevant factors taken into

consideration include purchase price of the site, availability of financing, restrictions or

requirements imposed by the relevant authorities in respect of the site, population density,

traffic flows, competition from neighbouring development as well as the profile of potential

tourists; and

(c) consultation with external specialists, professionals and qualified persons to ascertain the

construction cost and maximum realisable potential of the development site.

The aforementioned factors which are specific to the identified land site will be reviewed

together with other considerations which may be more broad-based. Such broad-based

considerations that may also have an impact on the investment decision include the global

economic outlook and business environment in Singapore, the overall travellers’ patterns and

trends of the hospitality and hospitality-related industries.

Upon completion of the evaluation process, if the potential property or land site is found to be

suitable, we may proceed to tender for such potential property or land site. Once the

development of the hotel is completed, we will commence operations upon obtaining the

relevant regulatory approvals. We will appoint either Fragrance Hotel Management or Parc

Sovereign Hotel Management to be the operator of the hotel depending on the marketing

strategy and classification of the hotel according to our initial evaluation. Wemay also consider

disposing of the hotel property as and when the opportunity arises.


100

Apart from hotel development, we actively carry out refurbishment works on our hotels so as to

keep them modern and new. This will potentially attract new hotel guests and increase their

length of stay.

Marketing

Our hotel marketing team, led by our Executive Directors, Mr. Lim Chee Chong and Mr. Sim

Mong Yeow, are responsible for the marketing of Our Chain of Hotels. The marketing team

focuses on promoting our hotels in the Asia-Pacific region. Our marketing channels include the

following:

(a) Tourism Trade Conventions and Exhibitions

We have participated in tourism trade conventions and exhibitions in the Asia-Pacific

region such as the China International Trade Mart, ASEAN Tourism Forum andMalaysian

Association of Tour and Travel Agents International Travel Exhibition. In addition, we also

actively participate in overseas road shows, consumer fairs and product updates

organised by the STB.

(b) Advertisements and Online Reservations

We advertise in trade magazines which are circulated within the tourism industry in the

Asia-Pacific region as well as in newspapers, television, buses and cinemas. In addition,

we have promotional materials relating to Our Chain of Hotels which are distributed to

local and foreign travel agents and hotel guests.

Other than traditional forms of advertising, our Group has also used innovative methods to

advertise our hotels. In 2008, we embarked on a marketing campaign by adopting a

family-friendly theme with our “Bear” mascot and the advertisement was widely shown on

television, public cinemas and public buses. To build upon the success of our “Bear”

mascot marketing campaign, we had in September and December 2009 given out soft toy

bears which were dressed in “F1 Costume” and “Christmas Costume” respectively to all

guests who stayed at our hotels.

We accept online hotel reservations through our websites http://www.fragrancehotel.com

and http://www.parcsovereign.com.

(c) Promotional tie-ups with Tourism-Related Companies

We also market our hotels through collaborations with tourism-related companies. For

example, certain airlines have offered tour packages which include accommodation at our

hotels together with airline tickets. In addition, we also collaborate with local and foreign

travel agents who offer customised travel packages. These customised travel packages

provide accommodation at discounted rates at selected hotels in Our Chain.


101

Parc Sovereign Hotel, Fragrance Hotel-Ruby and Fragrance Hotel-Sapphire are

members of the Singapore Hotel Association. The SHA maintains a list of member hotels

at the Changi International Airport hotel reservation bureau at which air travellers may

make enquiries and direct reservations for hotel rooms. Fragrance Hotel-Sapphire and

Fragrance Hotel-Ruby were the first two hotels which were operated by our Group in 1998.

In order to generate awareness of our “Fragrance” brand and demand for our hotel rooms,

these two hotels were registered with SHA. We also registered Parc Sovereign Hotel with

SHA as Parc Sovereign Hotel is our first mid-tier hotel in order to further promote the new

hotel.

(d) Business Partners

We have established a good working relationship with more than 900 local and overseas

travel agents, who will promote our hotels worldwide with their travel packages, and

corporate clients. Besides that, we work closely with various leading on-line travel agents

such as Booking.com, AsiaTravel.com and Agoda.com, to promote our hotels through

various on-line channels. We have also entered into contractual arrangements with

corporate clients such as shipping companies for the provision of accommodation to their

staff and crew during their stay in Singapore.

Property Management System

Our hotel reservations and billing processes rely heavily on the PMS to effectively manage our

guests, reservations and billings as well as the billings to our business partners. The PMS

allows us to centrally manage all our 23 hotels island-wide so as to maximise hotel occupancy

rates and reduce the manpower required for manual updates. By being able to monitor the

occupancy status of Our Chain of Hotels in real-time, we are able to increase the overall

occupancy and room revenue of our hotels.

Staff Training and Development

To assist employees in achieving a better quality of work and higher safety standards, we carry

out a half-day orientation programme and a two-day in-house induction course for new

employees as well as provide on-the-job training. The two-day induction course comprises of

training conducted by our general manager on operational matters and training conducted by

our information technology manager on operating systems, primarily the operation of our PMS.

Room Rates

Our room rates depend on a variety of factors such as the location of the hotel, the demand and

supply of our hotel rooms, the pricing of hotel accommodation by our competitors, conditions in

the hotel industry, and whether there is a pre-existing customer relationship with the hotel

guests, or relevant travel agents or other tourism-related companies.

Intellectual Property

We believe that our trademarks are an integral part of our Group’s focus on branding, and play

a significant role in creating brand recognition for our hotels. As such, we have registered or are

in the process of registering our trademarks in Singapore.


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As at the Latest Practicable Date, we have registered the following trademarks:

Nature and Description of

Intellectual Property Right Granted By

Duration of Right

(including expiry

date) Right of Renewal

Trademark

No. T03/18398D in Class 43

in respect of:

Provisions of temporary

accommodations; Preparation

of food and drink

Registry of

Trade Marks,

Intellectual

Property Office

of Singapore

Ten (10) Years

(due for renewal

on 13 November

2013)

Registration is for a

period of ten (10)

years and may be

renewed at the

expiration of this

period and upon the

expiration of each

succeeding period of

ten (10) years

Trademark

No. T03/18397F in Class 43

in respect of:

Provisions of temporary

accommodations; Preparation

of food and drink

Registry of Trade

Marks,

Intellectual

Property Office

of Singapore

Ten (10) Years

(due for renewal

on 13 November

2013)

Registration is for a

period of ten (10)

years and may be

renewed at the

expiration of this

period and upon the

expiration of each

succeeding period of

ten (10) years

As at the Latest Practicable Date, we have applied for the registration of the following

trademark:

Trademark

Country of

Registration Class Status

Trade Mark

Number

Date of

Application

Singapore Class 43 in respect

of: Hotels

Pending T1112196H 31 August 2011

Singapore Class 35 in respect

of: business

management of

hotels, motels and

temporary

accommodation

Class 43 in respect

of: Provisions of

temporary

accommodations;

Preparation of food

and drink

Pending TT12103271C 9 March 2012


103

Our Directors are not aware of any reason which would cause or lead to the non-registration of

the above-mentioned trademarks.

To the best of our Directors’ knowledge and belief, there is no third party that is currently using

a trademark that is similar to the above-mentioned trademarks. Save as disclosed above, our

business and profitability are not materially dependent on any registered trademark or

trademark pending registration, patent, or other intellectual property right.

Insurance

As at the Latest Practicable Date, we had taken up insurance policies in respect of the

following:

(a) work injury compensation insurance;

(b) public liability insurance in respect of accidental bodily injury to third parties and accidental

loss and/or damage to third parties’ properties;

(c) fidelity guarantee insurance in respect of loss suffered by act of fraud or dishonesty of

employee;

(d) money insurance in respect of loss of money;

(e) foreign worker medical insurance;

(f) fire insurance;

(g) motor vehicle insurance;

(h) hospital and surgical insurance for our employees; and

(i) group business travel insurance.

Our Directors are of the view that the above insurance policies are adequate for our existing

operations. However, significant damage to our operations, whether as a result of fire or other

causes, may still have a material adverse effect on our results of operations or financial

position. If such events were to occur, our business, results of operations and financial position

may be materially or adversely affected. Please refer to the section entitled “Risk Factors” of

this Prospectus for further details. We are not insured against loss of key personnel and

business interruption as we understand that such insurance policies are not commonly

purchased in the hotel industry. Our Directors will review the adequacy of our insurance

coverage in relation to our business annually.

Credit Management

Credit Policy for Our Customers

The credit term granted to selected customers, including selected travel agents, on-line travel

agents and corporate customers is typically 30 days and dependent on the following factors:

(a) paid-up capital of the customer;

(b) date of incorporation of the customer;

(c) key management personnel of the customer;


104

(d) background checks on the customer, such as its reputation, industry feedback andmarket

presence; and

(e) the customer’s sales volume with our Group.

For customers who have exceeded their credit limit, their accounts will be blocked thus

preventing any further bookings. In order to unblock their accounts, either of the following must

take place:

(a) payment has been made, which will bring the outstanding amount below 85% of the

applicable credit limit. If the outstanding amount is still above 85% of the applicable credit

limit after payment, management approval will be required to uplift the credit hold; or

(b) management has approved a temporary uplifting of the credit hold.

We have not experienced any significant bad debts for our trade receivables for the last three

(3) financial years ended 31 December 2010 and for 9M2011.

Details of the average trade receivables turnover days for FY2008, FY2009, FY2010 and

9M2011 are set out as follows:

FY2008(1) FY2009(1) FY2010(1) 9M2011(2)

Trade receivables turnover (days)(3) 11.8 11.6 8.2 8.7

Notes:

(1) Trade receivables turnover (days) = (Average trade receivables divided by total revenue) x 365 days.

(2) Trade receivables turnover (days) = (Average trade receivables divided by total revenue) x 273 days.

(3) We have excluded GST in the computation of average trade receivables.

Our trade receivables turnover days ranged between 8.2 to 11.8 days. The decrease in number

of trade receivables turnover days from FY2009 to FY2010 was due to more stringent internal

controls pertaining to the management of credit limits of customers.

Credit Policy from Our Suppliers

Our suppliers typically grant us a credit term of about 30 days from the date of invoice. We

maintain a good credit track record with our suppliers.

Details of the average trade payables turnover days for FY2008, FY2009, FY2010 and 9M2011

are set out as follows:

FY2008(1) FY2009(1) FY2010(1) 9M2011(2)

Trade payables turnover (days)(3) 34.8 35.1 36.2 28.2

Notes:

(1) Trade payables turnover (days) = (Average trade payables divided by cost of sales (adjusted to include repair

and maintenance costs)) x 365 days.

(2) Trade payables turnover (days) = (Average trade payables divided by cost of sales (adjusted to include repair

and maintenance costs)) x 273 days.

(3) We have excluded GST and retention sum payable in the computation of average trade payables.


105

Our trade payable turnover days ranged between 28.2 to 36.2 days. The trade payable

turnover days declined from 36.2 days in FY2010 to 28.2 days in 9M2011. This can be

attributed to the Group adopting a pro-active approach in terms of payment to our suppliers,

and in line with the Group’s policy of enhancing our business relationships with our suppliers.

Major Customers

Our customers comprise mainly travel agents, on-line travel portals, business entities and

walk-in customers. The breakdown by revenue derived from rental of hotel rooms across the

customer groups for FY2008, FY2009, FY2010 and 9M2011 is as follows:

FY2008 FY2009 FY2010 9M2011

% % % %

Travel agents 14.6 7.2 16.7 25.1

On-line travel portals 5.4 12.0 12.4 19.0

Business entities 5.9 6.0 5.2 5.7

Walk-in customers 74.1 74.8 65.7 50.2

Total 100.0 100.0 100.0 100.0

No single customer contributed 5% or more of our total revenue during FY2008, FY2009,

FY2010 and 9M2011.

Major Suppliers

The following suppliers accounted for 5% or more of our total cost of sales (adjusted to include

repair and maintenance costs) in FY2008, FY2009, FY2010 and 9M2011.

% of Cost of Sales

Name of Supplier FY2008 FY2009 FY2010 9M2011

Seraya Energy Pte Ltd 22.3 21.9 27.2 2.7

SP Services Ltd 14.4 8.2 6.9 36.0

Flash Laundry Pte Ltd 21.0 7.7 — 1.0

Zero Spot Laundry Services Pte Ltd — 10.9 18.2 15.2

iFood Pte Ltd 13.3 10.4 9.8 9.2

Starhub Cable Vision Ltd 5.7 6.0 3.4 1.8

Singapore Telecommunications Ltd 1.1 1.0 3.5 5.8

Fortuna Air-conditioning & Electrical Pte Ltd 3.4 4.1 5.5 4.2

The decrease in percentage of cost of sales from SP Services Ltd from FY2008 to FY2009 was

due to five of our hotels, namely Fragrance Hotel-Waterfront, Fragrance Hotel-Ocean View,

Fragrance Hotel-Selegie, Fragrance Hotel-Kovan and Fragrance Hotel-Imperial switching to

Seraya Energy Pte Ltd with effect from June 2009.


106

The increase in percentage of cost of sales from Seraya Energy Pte Ltd from FY2009 to

FY2010 was due mainly to higher AORs for our Group in FY2010 compared to FY2009.

The decrease in percentage of cost of sales from Seraya Energy Pte Ltd from FY2010 to

9M2011 and the increase in percentage of cost of sales from SP Services Ltd from FY2010 to

9M2011 was due to all our hotels switching fromSeraya Energy Pte Ltd to SP Services Ltd from

January 2011.

The decrease in percentage of cost of sales from Flash Laundry Pte Ltd from FY2008 to

FY2009 was due to us partially switching to Zero Spot Laundry Services Pte Ltd for laundry

services with effect from May 2009. Thereafter, save for Parc Sovereign Hotel which

commenced operations only in 9M2011, all our hotels switched to Zero Spot Laundry Services

Pte Ltd in FY2010.

iFood Pte Ltd provides breakfast meals for two of our hotels, Fragrance Hotel-Selegie and

Fragrance Hotel-Imperial. The percentage of costs of sales from iFood Pte Ltd decreased from

FY2008 to FY2009 due to the reduction in cost of meals and occupancy rates at these two

hotels.

The decrease in percentage of cost of sales from Starhub Cable Vision Ltd from FY2009 to

9M2011 was due to us switching to Singapore Telecommunications Limited for cable services

with effect from June 2010.

The increase in percentage of cost of sales from Fortuna Air-conditioning & Electrical Pte Ltd

from FY2009 to FY2010 was due mainly to additional repairs and replacements of air-

conditioners carried out in FY2010.

Properties

As at the Latest Practicable Date, we own the following properties:

Owner ofProperty

Name of Hotel/Location Area Tenure

Valuation as at31 October 2011

Purpose/Useof Property

FragranceAssets

Parc SovereignHotel

175 Albert StreetSingapore 189970

1,164.6 sq. m. Leasehold Estate(99 Years withapproximately 97years remaining)

$108,000,000 Hotel

FragranceCapital

FragranceHotel-Sapphire

3 Lorong 10GeylangSingapore 399037

528.1 sq. m. Freehold Estate $16,900,000 Hotel

FragranceCapital

FragranceHotel-Emerald




107

Owner ofProperty




FragranceCapital

FragranceHotel-Pearl



FragranceCapital

FragranceHotel-Crystal


1,051.1 sq. m. Freehold Estate $36,250,000 Hotel

FragranceCapital

FragranceHotel-Balestier



FragranceCapital

FragranceHotel-Classic



FragranceCapital

FragranceHotel-Rose



FragranceCapital

FragranceHotel-Sunflower



FragranceCapital

FragranceHotel-Selegie

183 Selegie RoadSingapore 188329


FragranceCapital

FragranceHotel-Kovan

760 UpperSerangoon RoadSingapore 534629


FragranceCapital

FragranceHotel-Lavender

51 Lavender StreetSingapore 338710


FragranceCapital

FragranceHotel-Imperial

28 Penhas RoadSingapore 208187


FragranceCapital

FragranceHotel-Oasis




108

Owner ofProperty




FragranceInvestment

FragranceHotel-Ruby



FragranceVentures

The FragranceHotel

219 Joo ChiatRoadSingapore 427485


FragranceVentures

FragranceHotel-Viva

75 Wishart RoadSingapore 098721


FragranceVentures

FragranceHotel-Waterfront

418 Pasir PanjangSingapore 118759


FragranceVentures

FragranceHotel-Ocean View

432 Pasir PanjangRoadSingapore 118773


FragranceVentures

FragranceHotel-Royal

400 Telok BlangahRoadSingapore 098838


FragranceVentures

FragranceHotel-Bugis

33 Middle RoadSingapore 188942

348.3 sq. m. Leasehold Estate(999 Years withapproximately823 Yearsremaining)

$44,000,000 Hotel

FragranceVentures

FragranceHotel-Riverside

20 HongkongStreetSingapore 059663

513.3 sq. m. Leasehold Estate(99 Years withapproximately 99Years remaining)

$58,600,000 Hotel

As at the Latest Practicable Date, we lease the following properties:

Propertyleased by Location Area Tenure

RegisteredOwner

Rental(permonth)

Purpose/Use ofProperty

FragranceHotelManagement

23 Genting Road#03-03Singapore 349481

2,200 sq. ft. Two YearsFrom 20 April2010 Till 19April 2012

ChevalierDevelopment(S) Pte. Ltd.

$2,800 Warehouse(1)


109

Propertyleased by Location Area Tenure

RegisteredOwner

Rental(permonth)



63 Dunlop StreetSingapore 209391

237.5 sq. m. Two YearsFrom 26November2011 Till 25November2013 with anoption torenew forfurther 1 year

IPAH Hotels(Pte.) Limited

$70,000 Hotel

Note:

(1) For the purposes of storing our consumables, furniture and fittings. We will not be renewing this lease upon its

expiry on 19 April 2012. We intend to utilise storage space in our various hotel premises following expiry of the

lease for the above purposes.

Permits, Licences, Approvals, Certifications and Government Regulations

The following are brief descriptions of the material licences typically obtained for hotel

operations:

Certificate of Registration & Hotel-keeper’s Licence

Under the Hotels Act, a hotel includes a boarding-house, lodging-house, guest-house and any

building or premises not being a public institution and containing not less than four rooms or

cubicles in which persons are harboured or lodged for hire or reward of any kind and where any

domestic service is provided by the owner, lessee, tenant, occupier or manager for the person

so harboured or lodged.

Under Section 5(1) of the Hotels Act, any person who wishes to operate a hotel has to apply to

the Hotels Licensing Board for a Certificate of Registration to use the premises as a hotel. The

Certificate of Registration is only granted if the Hotels Licensing Board is satisfied:

(a) that the premises will not be conducted as a disorderly house;

(b) that the premises to be registered are structurally adapted for use as a hotel;

(c) that proper provision has been made in all respects for the sanitation of the premises;

(d) that the situation of the premises is suitable for the purpose; and

(e) that the standard of accommodation provided is adequate for the class within which the

applicant desires the premises to be registered as a hotel.

We have obtained the Certificate of Registration for each of our 23 hotels from the Hotel

Licensing Board.

Additionally, under Section 7(1) of the Hotels Act, any person who wishes to operate a hotel

also has to apply for a Hotel-keeper’s Licence to enable the person to keep or manage the


110

hotel. A separate Hotel-keeper’s Licence is required in respect of each individual hotel.

Moreover, under the Hotels Licensing Board’s qualification requirements, the proposed Hotel-

keeper has to be a person who holds a post equivalent to that of a chief executive officer or

general manager of the hotel and must either be a Singaporean, Permanent Resident or an

Employment Pass holder. Furthermore, Section 7(6) of the Hotels Act provides that no licence

shall be granted by the Hotels Licensing Board unless the person applying satisfies the Hotels

Licensing Board that the premises in respect of which the application is made will not be

conducted as a disorderly house and he is of good character and a fit and proper person to

keep and manage a hotel.

A Hotel-keeper’s Licence is valid for one (1) year and is renewable annually. As at the Latest

Practicable Date, we have not had any difficulties renewing the Hotel-keeper’s Licence for our

hotels.

All hotel operators must also comply with the Hotels Licensing Regulations which prescribe

certain requirements in connection with the control and management of a hotel and the

standards of hygiene. For example, the Hotels Licensing Regulations require every licensee to

keep displayed in a conspicuous place in the public part of the hotel the certificate of

registration of the hotel, the licence to manage the hotel, and the rates charged for rooms in the

hotel. In addition, all rooms used for the accommodation of guests must have a minimum floor

area of 11.0 square metres and that a double room must have a minimum floor area of 14.5

square metres.

The following are the Hotel-keeper’s Licences held in connection with our hotel operations:

Name of Licensee Relevant Hotel Regulatory Body Validity

Mr. Sim Mong Yeow Fragrance Hotel-Sapphire

Fragrance Hotel-Ruby

Fragrance Hotel-Emerald

The Fragrance Hotel

Fragrance Hotel-Pearl

Fragrance Hotel-Crystal

Fragrance Hotel-Balestier

Fragrance Hotel-Classic

Fragrance Hotel-Rose

Fragrance Hotel-Sunflower

Fragrance Hotel-Selegie

Fragrance Hotel-Kovan

Fragrance Hotel-Viva

Fragrance Hotel-Lavender

Fragrance Hotel-Imperial

Fragrance Hotel-Oasis

Fragrance Hotel-Waterfront

Fragrance Hotel-Ocean View

Fragrance Hotel-Royal

Fragrance Hotel-Bugis

Fragrance Hotel-Riverside

Hotels Licensing

Board

1 January 2012 to

31 December 2012


111


Mr. Lim Chee Chong Parc Sovereign Hotel Hotels Licensing

Board

1 January 2012 to

31 December 2012

Ms. Lee Yen Mei Fragrance Hotel-Elegance Hotels Licensing

Board

1 January 2012 to

31 December 2012

Liquors Licence

The Customs Act requires that a liquor licence be obtained from the Liquors Licensing Board

for the sale of intoxicating liquor. The administration and enforcement of the Customs Act falls

under the purview of the Liquors Licensing Board of the MHA. The liquors licence is valid for a

period of not more than two (2) years. The grant and renewal of the liquors licence is at the

discretion of the Liquors Licensing Board, which also has the discretion to suspend or cancel

the liquors licence at any time.

The following are the Liquor Licences held in connection with our hotel operations:


Ms. Lee Kay Him The Fragrance Hotel Liquors Licensing

Board

1 January 2012 to

31 December 2013

Ms. Lee Yen Mei Fragrance Hotel-Emerald Liquors Licensing

Board

1 January 2012 to

31 December 2013

Mr. Sim Mong Yeow Fragrance Hotel-Ruby Liquors Licensing

Board

1 January 2012 to

31 December 2013

Employment of Foreign Workers

The availability and the employment cost of skilled and unskilled foreign workers are affected

by the Singapore government’s policies and regulations on the immigration and employment of

foreign workers. The policies and regulations are set out in, inter alia, the Employment of

Foreign Manpower Act and the relevant Government Gazettes. The availability of foreign

workers for hotel operations is regulated by the MOM through the following:

(a) approved source countries;

(b) issuance of work permits;

(c) the imposition of security bonds and levies; and

(d) set ratios for local to foreign workers.

An employer of foreign workers is also subject to, inter alia, the provisions set out in the

Employment Act, the Employment of Foreign Manpower Act, the Immigration Act and the

Immigration Regulations.


112

Electrical Installation Licence

Under the Electricity Act, no person shall use, work or operate or permit to be used, worked or

operated any electrical installation without an electrical installation licence granted by the EMA.

The licensee is required to ensure that the electrical installation is properly maintained and

inspected in accordance with the terms of the licence. Any licensee who fails to comply with the

terms of such electrical installation licence may be guilty of an offence and may be liable on

conviction to monetary fines and/or custodial sentences. An electrical installation licence shall

be valid for the period stated therein unless it is revoked before the expiry of that period. Upon

expiry of the licence, it may be renewed.

As at the Latest Practicable Date, all electrical installation licences for each of our 23 hotels

have been obtained and are valid.

Fire Certificate

Under the Fire Safety Act, the owner of any public building, including a hotel, with an occupant

load of more than 200 persons, is required to apply and obtain a fire certificate. The

administration and enforcement of the Fire Safety Act falls under the purview of the MHA. Any

person who fails to comply with the requirement to apply and obtain a fire certificate shall be

guilty of an offence and shall be liable on conviction to monetary fines and/or custodial

sentences. The fire certificate is valid for the period stated therein and for a period of not more

than one (1) year. The fire certificate may be renewed upon its expiry.

As at the Latest Practicable Date, all fire certificates required for our hotel operations have been

obtained and are valid.

Signboard Licence

Under Section 3(1) of the Building Control (Outdoor Advertising) Regulations 2002, a licence is

required to be obtained prior to displaying or causing or permitting to be displayed outdoors any

single signboard that has an area exceeding five (5) square metres or a series of related

signboards that together have an aggregate area exceeding five (5) squaremetres. Any person

who fails to comply with this requirement shall be guilty of an offence and shall be liable on

conviction to monetary fines. A signboard licence shall be valid for the period stated therein

unless it is revoked before the expiry of that period and will need to be renewed upon its expiry.

As at the Latest Practicable Date, all signboard licences for each of our 23 hotels have been

obtained and are valid.

To the best of our Directors’ belief and knowledge, we have obtained all material licences,

permits, approvals and certifications for our business operations in Singapore and believe we

have complied with all relevant laws and regulations that would materially affect our business

operations. We will renew our licences, permits, approvals and certifications as and when

required. Our Directors are not aware of any reason which would cause or lead to non-renewal

of any of the necessary licences, permits, approvals and certifications for our business and

operations.


113

Fines and Penalties

We had, from time to time, incurred fines imposed by regulatory authorities including the MOM,

SCDF, NEA, BCA and CPF. The fines generally related to our Group’s business operations,

such as fines for mosquito breeding and late payment of foreign worker’s levy. Each of these

fines range from $50 to $6,200 during the Period Under Review. The aggregate of such fines

imposed by regulatory authorities on our Group for FY2010 and between 1 January 2012 to

Latest Practicable Date were $682 and $50 respectively. There were no fines imposed in

FY2009. For FY2011, there was an aggregate fine of $6,600 of which $6,200 was imposed in

relation to contraventions of the Employment of Foreign Manpower Act for not updating the

MOM of certain foreign workers’ addresses and the use of unsuitable accommodations by

certain foreign workers employed by our Group and the balance of $400 was a fine in relation

to mosquito breeding. The types of “unsuitable accommodation” which could lead to a

contravention of the Employment of Foreign Manpower Act are not exhaustive. However, we

understand from the Ministry of Manpower that to avoid any contravention of this requirement,

the following factors must be considered: (i) no over-crowding within the accommodation

utilised and (ii) provision of proper sanitation facilities. The fines imposed by the MOM on our

Group for the use of unsuitable accommodation were in relation to over-crowding in the

accommodation utilised.

We also understand from our discussion with MOM that any application for foreign workers’

work permits for the period of three (3) months from 18 July 2011 to 18 October 2011 by our

Group would not likely to have been approved in light of the contraventions discussed above.

As at the Latest Practicable Date, we understand that such restriction has been lifted and our

applications for foreign workers’ work permits made after 18 October 2011 have been

approved by the MOM.

To minimise fines imposed by regulatory authorities, we have put in place the following

measures:

Mosquito Breeding

We have reminded all our staff at our various hotels to be vigilant to ensure that no stagnant

water is collected in any part of our hotels and our maintenance team has also been alerted to

assist in this area. We have also engaged a professional pest control company to conduct

regular monthly inspections of all our hotels.

Late Payment Penalty for Foreign Workers Levy

Our human resources department will assist to keep our accounts department informed at least

fourteen days in advance of the due date for payment of foreign workers levy so as to ensure

timely payment of foreign workers levies prior to their due date.

Unacceptable Accommodation/Update of Workers Address

We had relocated our foreign workers to dormitories approved by the MOM by 15 August 2011

in compliance with the stipulated deadline of 18 August 2011, save where we were satisfied

that such foreign workers were staying on their own in proper accommodation complying with


114

relevant MOM regulations. We will continue to impress upon our foreign workers the

importance of updating their address details as soon as they have changed their address and

we have also instructed our hotel duty managers to ensure this is done. We will also conduct

regular checks on the accommodation of those foreign workers who stay on their own.

Our Directors will periodically review the adequacy of our Group’s operational and compliance

controls, including reviewing the list of the fines imposed by regulatory authorities on our Group

for each financial year, and provide directions for the implementation of preventive measures

as appropriate.

Breach of Hotel Licensing Regulations

Our Executive Directors, Mr. Lim Chee Chong and Mr. Sim Mong Yeow, the licensees of some

of our hotels, previously assisted the police in investigations relating to breach of hotel licensing

regulations and some of these investigations resulted in warnings, conditional warnings and a

reminder by the police.

Mr. Lim assisted the police with investigations relating to vice activities being carried out at Parc

Sovereign Hotel. Mr. Sim assisted the police with investigations relating to vice activities being

carried out at Fragrance Hotel-Kovan in May 2011 and September 2010, at Fragrance

Hotel-Imperial and Fragrance Hotel-Lavender in September 2010 and December 2010

respectively, at Fragrance Hotel-Balestier in November 2010 and at Fragrance Hotel-Lavender

in November 2011 and December 2011. Please refer to the section entitled “Directors,

Management and Staff — Material Background Information on our Directors, Key Executives

and Controlling Shareholders” of this Prospectus for details on these investigations.

In order to prevent any such re-occurrence and as part of our operating procedure, our front

desk staff requests for full particulars of guests as required by the Hotels Licensing Regulations

on check-in. There are signs at each check-in counter requesting guests to provide us with

such information. Our staff shall reject or deny accommodation to any person who refuses to

fully furnish his or her particulars to us as required by the Hotels Licensing Regulations.

In addition, we will enhance our checks on all guests and/or visitors and reject or deny

accommodation to those whom we suspect might be involved in illegal activities. Furthermore,

all our staff including those working in the front desk and the room attendants have to report any

suspected illegal activities involving any guest or visitor to their respective duty manager on a

daily basis. Our duty manager will then investigate and take appropriate actions, including

requesting the alleged guest and/or visitor to leave our hotel and/or reporting them to the

relevant authorities. In addition, we will continue to evaluate the necessity of installing

additional cameras to strengthen our hotels’ 24 hour surveillance system. We will also rely on

our Property Management System to “black-list” certain guests so as to prevent them from

staying in our hotels.

Furthermore, we are committed to providing continuous support to the police and other relevant

authorities for all necessary investigations as we also hope to deter all illegal activities.


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Competition

The operation of hotels in Singapore is highly competitive. The principal factors that affect our

business are location, room rate, service, supply and demand for hotel rooms and changes in

travel patterns and preferences.

We face intense competition from other hotels that may offer more facilities at their premises at

similar or more competitive prices.

To the best of our knowledge, our key competitors are:

(a) Albert Court Village Hotel;

(b) Aqueen Hotel;

(c) Bayview Hotel;

(d) Grand Chancellor Hotel;

(e) Hotel Grand Pacific;

(f) Hotel 81 chain;

(g) Ibis Hotel;

(h) Strand Hotel;

(i) Santa Grand Hotel chain;

(j) V Hotel Lavender; and

(k) Value Hotel chain.

None of our Directors or Controlling Shareholders or their respective Associates has any

interest, direct or indirect, in any of the above-mentioned competitors.

Competitive Strengths

Our Directors believe that our competitive strengths are as follows:


We have been developing and operating hotels in Singapore since 1995 and as at the Latest

Practicable Date, we operate 23 hotels across Singapore with 1,738 rooms. Our established

track record and reputation of providing affordable and value-for-money accommodation in

terms of price, location, service and cleanliness has led to our “Fragrance” brand of hotels

becoming well-established in the local and regional hospitality industry.


116

We believe that our distinctive brand, as well as our value proposition of providing quality

accommodation at affordable prices, enables us to differentiate ourselves from our

competitors.


We have an experienced management team who are hands-on, have in-depth knowledge of

hotel operations and hotel property development, and have a strong understanding of the local

hospitality and property market. Our Directors, Mr. Koh Wee Meng, Mr. Lim Chee Chong and

Mr. SimMong Yeow collectively have approximately 27 years of experience in hotel operations

and hotel property development with approximately 15 years, 5 years and 7 years of

experience respectively.

We believe that the management team’s depth and breadth of experience has enabled us to

enjoy considerable success in the development and the operations of our hotels. Our Directors

have been successful in implementing the growth strategies of expanding our hotels portfolio

which has in turn contributed to an increase in revenue over the years.

Further details of our management team’s working experience is set out in the section entitled

“Directors, Management and Staff” of this Prospectus.


We place great importance on the quality of the rooms and services offered by our hotels, with

all our hotel rooms furnished with essential amenities to provide our guests with a comfortable

stay at affordable prices.

We believe strongly in the importance of training our hotel staff. All our hotel staff are trained

in-house to enable them to have a concrete foundation in hotel operations so as to maintain a

consistent level of service to our guests.

Most of our hotels are strategically located either in the city or city-fringe areas and are easily

accessible by major roads, public buses and theMRT. Major shopping and convention centres,

tourist attractions and the two Integrated Resorts are conveniently accessible from our hotels.

We believe that the strategic location of our hotels has enabled us to cater to a variety of guests

with varying needs.

Our room capacity enables us to accommodate bulk bookings from corporate clients or travel

agents which provides us with an edge over other smaller-scale competitors within the

economy-tier hotel segment.

We believe that a combination of quality service and value-for-money accommodation at

strategic locations offers a strong selling proposition to our existing guests and allows us to

continue to attract new guests.


117

Active development and management of hospitality-related assets to provide value accretion

to existing portfolio of hotels

We regularly search for hotels to purchase and potential sites for hotel development. As at the

Latest Practicable Date, we have successfully developed 20 hotels, renovated four hotels after

acquisition and converted three buildings to hotels.

Based on our experience in acquiring, developing, converting and renovating hotels, we have

established a wide network of contacts and long-standing relationships with professionals,

consultants, builders, agents and suppliers. We believe that our ability to capitalise on these

relationships allows us to maintain better control over the construction or renovations of our

hotels in terms of costs and downtime.

Furthermore, as hotel developer and operator, we have the necessary know-how to optimise

the design and type of rooms as well as the repair and maintenance of our hotels. In addition,

we are more likely, as hotel developers, to be able to identify opportune time to upgrade and

refurbish the hotels within our portfolio.

We believe that our experience as hotel developers will also enable us to better pinpoint new

sites for development of hotels. For example, we are able to better assess the feasibility, time

and resources of developing potential properties into hotels which gives us an edge over our

competitors who are solely hotel operators.

Regular promotional tie-ups with business partners and active participation in tourism trade

conventions and exhibitions

As at the Latest Practicable Date, we have established a good working relationship with more

than 900 local and overseas travel agents, who will promote our hotels worldwide with their

travel packages and corporate clients. Besides that, we work closely with various on-line travel

agents such as Booking.com, AsiaTravel.com and Agoda.com, who are established players in

the market, to promote our hotels through various on-line channels. We have also entered into

contractual arrangements with corporate clients such as shipping companies for the provision

of accommodation to their staff and crew while in Singapore. Some of our hotels, namely Parc

Sovereign Hotel, Fragrance Hotel-Ruby and Fragrance Hotel-Sapphire are members of the

SHA which promotes our hotels through the Changi International Airport reservation system.

We have participated in tourism trade conventions and exhibitions in the Asia-Pacific region

such as the China International Trade Mart, ASEAN Tourism Forum and the Malaysian

Association of Tour and Travel Agents International Travel Exhibition. In addition, we also

actively participate in overseas road shows, consumer fairs and product updates organised by

the STB. We believe our participation in such overseas marketing activities will increase the

recognition and acceptance of Our Chain of Hotels amongst international travellers.

We also advertise in trade magazines which are circulated within the tourism industry in the

Asia-Pacific region as well as in newspapers, television, buses and cinemas. In addition, we

have promotional materials relating to Our Chain of Hotels which are distributed to local and

foreign travel agents and hotel guests.


118

We believe that our marketing activities help us to identify the current market needs and

preferences of present-day travellers so that we can adjust our products and service offerings

to better suit their needs. These promotional efforts also enable us to raise our profile among

potential guests and contribute to the expansion of the number of guests at our hotels.

Integrated Property Management System allows us to better manage our hotel operations

We have invested in a sophisticated software system that manages our reservation and billing

processes centrally through the PMS. The PMS allows us to centrally manage all our 23 hotels

island-wide so as to maximise hotel occupancy rates and reduce the manpower required for

manual updates. By being able to monitor the occupancy status of Our Chain of Hotels in

real-time, we are able to increase the overall occupancy and room revenue of our hotels.

Established relationships with our suppliers allows us to better leverage on our economies of

scale

The bulk purchase of our hotel room supplies and daily necessities centrally, coupled with the

good relationship with our suppliers, allows us to obtain such supplies and daily necessities on

favourable terms.

At the same time, our centralised procurement policy also helps to reduce operating costs such

as logistical costs and to monitor the consistency and quality standards of the supplies and

daily necessities.

Corporate Social Responsibility

Our Company is committed to adopting green initiatives and green policies by monitoring and

reducing energy consumption in our hotels. This initiative is supported by our employees who

will assist in identifying and implementing eco-friendly programs such as:

(a) reducing the use of water and materials through awareness programs and through

incorporating energy-efficient designs into new buildings, equipment and working

practices;

(b) setting and meeting targets for the reduction of utilities consumption. Our employees will

monitor the targets against actual consumption on a regular basis;

(c) using dual flush water closets to save water;

(d) utilising energy-efficient light bulbs;

(e) using energy-efficient windows, resulting in less cooling required by the air-conditioners;

(f) encouraging our guests to use their bed linens and towels more than once to save water

and energy; and

(g) using energy-efficient appliances (such as air-conditioners).


119

The following summary financial data should be read in conjunction with the full text of this

Prospectus including Appendix A entitled “Independent Auditors’ Report on the Combined

Financial Statements for the Years ended 31 December 2010, 2009 and 2008”, Appendix B

entitled “Independent Auditor’s Report on the Combined Interim Condensed Financial

Statements for the Nine Months Ended 30 September 2011” and Appendix C entitled


of this Prospectus. Our financial statements are prepared and presented in accordance with

SFRS.

Selected Combined Results of Operations of our Group

Audited Unaudited Unaudited Audited Unaudited

FY2008

($’000)

FY2009

($’000)

FY2010

($’000)

Pro

Forma

FY2010

($’000)

9M2010

($’000)

9M2011

($’000)

Pro

Forma

9M2011

($’000)

Revenue 36,893 34,579 44,215 42,465 32,284 38,929 37,860

Cost of sales (4,895) (4,883) (5,156) (5,996) (3,867) (4,571) (5,201)

Gross profit 31,998 29,696 39,059 36,469 28,417 34,358 32,659

Other operating

income 196 221 280 264 203 344 308

Loss on disposal of

property, plant and

equipment — — — (51) — — —

Administrative

expenses (9,319) (10,355) (12,223) (11,560) (8,754) (11,296) (10,852)

Finance costs (3,239) (3,184) (3,001) (2,052) (2,346) (2,158) (1,712)

Profit before

income tax 19,636 16,378 24,115 23,070 17,520 21,248 20,403

Income tax

expense (3,505) (2,867) (4,260) (4,091) (3,040) (3,930) (3,786)

Profit for the

year/period 16,131 13,511 19,855 18,979 14,480 17,318 16,617

EPS (cents)(1) 2.93 2.46 3.61 3.45 2.63 3.15 3.02

Unaudited

EPS as adjusted

for the Invitation

(cents)(2) 1.61 1.35 1.99 1.90 1.45 1.73 1.66

Notes:

(1) For comparative purposes, EPS is calculated based on profit for the year/period and the pre-Invitation Share

capital of 550,000,000 Shares.

(2) For comparative purposes, EPS as adjusted for the Invitation is calculated based on profit for the year/period

and the post-Invitation share capital of 1,000,000,000 Shares.

SELECTED COMBINED FINANCIAL INFORMATION

120

Selected Combined Financial Position of our Group

Audited

as at 31

December

2008

Audited

as at 31

December

2009

Audited

as at 31

December

2010

Unaudited

Pro

Forma

as at 31

December

2010

Audited

as at 30

September

2011

Unaudited

Pro

Forma

as at 30

September

2011

($’000) ($’000) ($’000) ($’000) ($’000) ($’000)

Current assets

Cash and cash

equivalents 1,923 2,458 2,811 19,143 3,899 11,588

Trade receivables 1,216 985 1,274 1,274 1,511 1,511

Other receivables 15,473 11,149 5,982 46,019 47,443 15,608

Properties under

development — 23,820 26,846 — — —

Total current assets 18,612 38,412 36,913 66,436 52,853 28,707

Non-current assets

Property, plant and

equipment 323,412 425,284 701,942 642,606 738,718 738,718

Total assets 342,024 463,696 738,855 709,042 791,571 767,425

Current liabilities

Trade payables 1,223 1,236 1,188 1,188 1,194 1,194

Other payables 26,067 45,515 49,986 140,893 5,584 91,082

Term loans 6,433 12,198 7,895 20,147 32,643 20,147

Income tax payable 3,596 2,829 4,435 8,319 8,065 7,921

Total current

liabilities 37,319 61,778 63,504 170,547 47,486 120,344


Term loans 98,996 134,832 150,448 443,035 108,838 443,035

Deferred tax liability 3,760 4,751 23,815 19,528 26,447 26,447

Total non-current

liabilities 102,756 139,583 174,263 462,563 135,285 469,482


Share capital 27,100 27,100 27,100 137,500 27,100 137,500

Revaluation reserve 157,779 213,654 451,552 427,344 511,459 511,459

Merger reserve — — — (530,900) — (530,900)

Retained earnings 17,070 21,581 22,436 41,988 70,241 59,540

Total equity 201,949 262,335 501,088 75,932 608,800 177,599

Total liabilities and

equity 342,024 463,696 738,855 709,042 791,571 767,425

SELECTED COMBINED FINANCIAL INFORMATION

121

The following discussion and analysis of our results of operations and financial position should

be read in conjunction with the full text of this Prospectus, including the section on

“Independent Auditors’ Report on the Combined Financial Statements for the Years Ended

31 December 2010, 2009 and 2008” and “Independent Auditors’ Report on the Combined

Interim Condensed Financial Statements for the Nine Months ended 30 September 2011” as

set out in Appendices A and B of this Prospectus. Our combined financial statements have

been prepared in accordance with SFRS.

The unaudited pro forma group financial information set out in Appendix C entitled


of this Prospectus have been prepared for illustrative purposes only and based on certain

assumptions after making certain adjustments to show what:

(a) the unaudited combined results and cash flows for the year ended 31 December 2010 and

the unaudited combined interim results and cash flows for the nine months ended

30 September 2011 of our Group would have been if the significant events including

disposal of hotel property, disposal of construction-in-progress, disposal of office

premises, disposal of properties under development, restructuring exercise and

declaration of interim one-tier exempt dividend stated in the explanatory note 1 of

Appendix C, had occurred on 1 January 2010; and

(b) the unaudited combined statement of financial position as at 31 December 2010 and the

unaudited combined interim statement of financial position as at 30 September 2011 of

our Group would have been if the foresaid significant events had occurred on

31 December 2010 and 30 September 2011 respectively.

The unaudited pro forma group financial information, because of their nature, may not give a

true picture of the Group’s actual financial position or results.

Please refer to Appendix C entitled “Independent Auditors’ Report on the Unaudited Pro Forma

Combined Financial Information” of this Prospectus for further details.

INTRODUCTION

We operate one of Singapore’s largest chain of hotels with 23 hotels of which 22 hotels are

operated under our “Fragrance” brand and one hotel is operated under the “Parc Sovereign”

brand. We provide economy-tier and mid-tier class of accommodation with 1,738 rooms in

Singapore, as at the Latest Practicable Date. We own all our hotels save for Fragrance

Hotel-Elegance. We have entered into a tenancy agreement in relation to Fragrance Hotel-

Elegance in November 2011.




local and regional hospitality industry. Most of our hotel property assets and hotel operations

are located in the city or city fringe areas.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL POSITION

122

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Revenue

We invest in, develop and operate hotels. Revenue is mainly derived from the rental of hotel

rooms.

Our room revenue will be affected by the following factors:

1. Room rates: As at the Latest Practicable Date, our room rates (excluding GST) range from

$54.21 to $157.01 for Fragrance Chain of Hotels and from $139.04 to $261.80 for Parc

Sovereign Hotel on a daily basis, depending on the room type and the location of the hotel.

Room rates will be reviewed by the management on half-yearly basis. If there is a

significant change in the market conditions, we will adjust the room rates accordingly.

2. Availability of rooms: Our revenue depends on the number of rooms available to our

guests. As we increase the number of hotels we own or operate, we will be in a better

position to increase our revenue. Our Group is currently operating 23 hotels.

3. Occupancy rates: Occupancy rates are affected by the general economic environment as

well as visitor arrivals to Singapore.With the proliferation of budget airlines, we believe the

number of budget travellers from the neighbouring countries will likely increase, and thus,

has a positive impact on our hotel operations. Visitors’ arrivals are also affected by

external factors including the outbreak of communicable diseases such as the SARS

epidemic in 2003 or Influenza A (H1N1) in 2009 or threat of terrorism. Please refer to the

section entitled “Risk Factors” for details on such external factors.

Cost of sales

Our cost of sales comprises mainly costs incurred to provide hotel services, namely utilities

charges, laundry charges, hotel consumables, cable services and other related costs. Other

related costs relate mainly to telecommunication charges and provision of meals to hotel

guests.



123

The following table sets forth the breakdown for cost of sales for FY2008, FY2009, FY2010,

9M2010 and 9M2011 in absolute terms and expressed as a percentage of total cost of sales:

Audited Unaudited Audited

FY2008 FY2009 FY2010 9M2010 9M2011

$’000 % $’000 % $’000 % $’000 % $’000 %

Utilities charges 2,069 42.3 2,009 41.1 2,241 43.5 1,715 44.4 2,129 46.6

Laundry charges 1,168 23.9 1,124 23.0 1,180 22.9 882 22.8 868 19.0

Hotel consumables 452 9.2 698 14.3 526 10.2 380 9.8 405 8.9

Cable services 317 6.5 359 7.4 384 7.4 295 7.6 278 6.1

Others 889 18.1 693 14.2 825 16.0 595 15.4 891 19.4

Total 4,895 100.0 4,883 100.0 5,156 100.0 3,867 100.0 4,571 100.0

Factors that can materially affect our cost of sales include the following:

1. Changes in utilities charges

Our utilities charges are affected by changes to utilities rates, which in turn may be

affected by higher crude oil prices. If there is an increase or decrease of utilities charges,

there will be amajor impact on cost of sales as utilities charges form amajor portion of cost

of sales.

2. Changes arising from external vendor charges

Aswe are hotel operators, anymajor change of external vendors’ charges such as laundry

charges, hotel consumables and cable services may affect our cost of sales.

Gross profit

The gross profit margin of our hotel operations range from 85.9% to 88.3% for FY2008,

FY2009, FY2010, 9M2010 and 9M2011.

Other operating income

Other operating income comprises mainly the following:

(a) license fees for installation of telecommunication equipment located at one of our hotels;

(b) income from vending machines, internet kiosks and wireless internet; and

(c) sale of refreshments.

Other miscellaneous income includes utilities charged to tenants, income derived from rental of

counter space to tour agencies, interest income, income derived from carpark charges and

insurance claims.



124

The following table sets forth our other operating income in FY2008, FY2009, FY2010, 9M2010

and 9M2011 in absolute terms and expressed as a percentage of total other operating income:


FY2008 FY2009 FY2010 9M2010 9M2011

$’000 % $’000 % $’000 % $’000 % $’000 %

Licence fees 43 21.9 43 19.5 46 16.4 32 15.8 46 13.4

Income from

vending machines,

internet kiosks and

wireless internet 88 44.9 98 44.3 150 53.6 103 50.7 200 58.1

Sale of

refreshments 20 10.2 25 11.3 25 8.9 20 9.9 13 3.8

Others 45 23.0 55 24.9 59 21.1 48 23.6 85 24.7

Total 196 100.0 221 100.0 280 100.0 203 100.0 344 100.0

Administrative expenses

Administrative expenses comprise mainly staff costs, depreciation expenses, property tax and

other administrative expenses. The following table sets forth our administrative expenses for

FY2008, FY2009, FY2010, 9M2010 and 9M2011 in absolute terms and expressed as a

percentage of total administrative expenses:


FY2008 FY2009 FY2010 9M2010 9M2011

$’000 % $’000 % $’000 % $’000 % $’000 %

Staff costs 5,137 55.1 5,603 54.1 6,463 52.9 4,543 51.9 5,996 53.1

Depreciation

expenses 1,500 16.1 1,685 16.3 2,058 16.8 1,524 17.4 1,904 16.9

Property tax 840 9.0 831 8.0 981 8.0 755 8.6 852 7.5

Others 1,842 19.8 2,236 21.6 2,721 22.3 1,932 22.1 2,544 22.5

Total 9,319 100.0 10,355 100.0 12,223 100.0 8,754 100.0 11,296 100.0

Staff costs include employees’ salaries and bonuses, CPF contribution and other staff benefits

as well as directors’ remuneration. Staff costs are mainly affected by the number of employees

within our Group, which is, in turn, dependent on the number of hotels in operation and the

occupancy rate.

Depreciation expenses were charged for leasehold land, hotel buildings, office premises,

motor vehicle, furniture, fixtures and fittings, computers, office equipment, electrical

installation, renovations and kitchen equipment on a straight-line basis over their estimated

useful lives.



125

We are subject to property tax for properties that we own, including land, hotel properties and

properties under development. The prevailing property tax rate is 10% of the annual value of

the relevant property, which is assessed by IRAS based on the revenue derived from the

respective properties.

Other administrative expenses mainly consist of repair and maintenance expenses,

commission expenses (arising from commission payable to travel agents for referral of guests

to our hotels and commission payable to property agent for successful disposal of our

property), Network for Electronic Transfers (NETS) and credit card charges, and printing and

stationery expenses.

Finance cost

Finance cost mainly consists of interest expenses on term loans from financial institutions. We

utilise bank borrowings to finance acquisitions and development of our hotels. As such, our

finance cost is dependent on the amount of borrowings we obtained and the interest rates

charged by the financial institutions.

Income tax expense

Income tax expense for FY2008, FY2009, FY2010, 9M2010 and 9M2011 comprises current

and deferred taxes.

Current tax is the expected tax payable on the taxable income for FY2008, FY2009, FY2010,

9M2010 and 9M2011, using tax rates enacted or substantially enacted at balance sheet dates,

and any adjustment to income tax payable in respect of previous financial years.

Deferred tax is provided, using the liability method, for temporary differences at the balance

sheet date between the tax bases of assets and liabilities and their carrying amounts for

financial reporting purposes. Deferred tax is measured using the tax rates expected to be

applied to the temporary differences when they are realised or settled, based on tax rates

enacted or substantially enacted at the balance sheet dates.

Deferred tax assets are recognised only to the extent that it is probable that future taxable

profits will be available against which temporary differences can be utilised. Deferred tax

assets are reviewed at each balance sheet date and reduced to the extent that it is no longer

probable that the related tax benefits will be realised.

Current and deferred tax are recognised as an expense or income in profit or loss, except when

they relate to items credited or debited outside profit or loss (either in other comprehensive

income or directly in equity), in which case the tax is also recognised outside profit or loss

(either in other comprehensive income or directly in equity respectively).

The statutory tax rates in Singapore for FY2008, FY2009, FY2010, 9M2010 and 9M2011 were

18.0%, 17.0%, 17.0%, 17.0% and 17.0% respectively.



126

The effective tax rates for FY2008, FY2009, and FY2010 were 17.8%, 17.5% and 17.7%

respectively. The effective tax rates for 9M2010 and 9M2011 were 17.4% and 18.5%

respectively.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS FOR FY2010 AND

9M2011

The pro forma combined statement of comprehensive income for FY2010 took into account the

following:

(a) disposal of the hotel property at 103 Beach Road, Changi Road Property, Geylang

Industrial Property and Pasir Panjang Commercial Property assuming they took place on

1 January 2010 which resulted in reversal of $1.8 million revenue in FY2010 and

recognition of $0.8 million rental expense for the lease of Fragrance Hotel-Elegance;

(b) reversal of administrative expenses, finance costs and income tax expense of

approximately $1.8 million relating to the sale of the 4 properties as mentioned above and

disposal of Fragrance Hotel-Elegance;

(c) transfer of fair value gain and depreciation expense recognised in prior years of

approximately $28.5 million to retained earnings, assuming the disposal of Fragrance

Hotel-Elegance and the hotel property at 103 Beach Road took place on 1 January 2010;

and

(d) transfer of deferred tax of approximately $4.3 million due to the disposal of the hotel

property at 103 Beach Road from other comprehensive income to income tax payable.

These constitute the major differences between the audited combined statement of

comprehensive income and the unaudited pro forma combined statement of comprehensive

income for FY2010.

The pro forma combined statement of comprehensive income for 9M2011 took into account the

following:

(a) disposal of Pasir Panjang Commercial Property and Changi Road Property assuming they

took place on 1 January 2010 which resulted in reversal of $1.1 million revenue in 9M2011

and recognition of $0.6 million rental expense for lease of Fragrance Hotel-Elegance; and

(b) reversal of administrative expenses, finance costs and income tax expense of

approximately $1.0 million relating to the 2 properties as mentioned above as well as

disposal of Fragrance Hotel-Elegance and the hotel property at 103 Beach Road.

These constitute the major differences between the audited combined statement of

comprehensive income and the unaudited pro forma combined statement of comprehensive

income for 9M2011.



127

The pro forma combined statement of financial position as at 31 December 2010 took into

account the following:

(a) disposal of Fragrance Hotel-Elegance, the hotel property at 103 Beach Road and Changi

Road Property assuming they took place on 1 January 2010 amounting to $59.3 million

and disposal of Pasir Panjang Commercial Property and Geylang Industrial Property

which were properties under development amounting to $26.8 million;

(b) repayment of existing term loans of $158.3 million;

(c) draw-down of term loan facilities of $463.2 million to repay part of the existing term loans

and the Purchase Consideration;

(d) increase in share capital of $137.5 million relating to issuance of Shares to FGL as

payment for part of the Purchase Consideration;

(e) declaration of final dividend of $10.0 million to FGL;

(f) recognition of Purchase Consideration due to FGL of $558.0 million; and

(g) payment of part of Purchase Consideration and advances from FGL of $345.1 million.

These constitute the major differences between the audited combined statement of financial

position and the unaudited pro forma combined statement of financial position as at

31 December 2010.

The pro forma combined statement of financial position as at 30 September 2011 took into

account the following:

(a) repayment of existing term loans of $141.5 million;

(b) draw-down of term loan facilities of approximately $463.2 million to repay part of the

existing term loans and Purchase Consideration. The gearing of the Group will increase

from 0.2 times to 2.6 times as at 30 September 2011 after the Restructuring Exercise. The

gearing will decrease to 1.6 times after the Restructuring Exercise and taking into account

the net proceeds from the Invitation;

(c) receipt of amount due from FGL subsidiaries on disposal of Pasir Panjang Commercial

Property, Geylang Industrial Property and Changi Road Property of $31.8 million;

(d) increase in share capital of $137.5 million relating to the issuance of Shares to FGL as

payment of part of the Purchase Consideration;

(e) declaration of final dividend of $10.0 million to FGL; and

(f) recognition of Purchase Consideration due to FGL of $558.0 million offset by payment of

part Purchase Consideration due to FGL of $345.7 million.



128

These constitute the major differences between the audited combined statement of financial

position and the unaudited pro forma combined statement of financial position as at

30 September 2011.

The pro forma combined statement of cash flows for FY2010 took into account the following:

(a) proceeds from draw-down of term loan facilities of $463.2 million;

(b) repayment of existing term loans of $158.3 million;

(c) receipt of part of the proceeds from disposal of Fragrance Hotel-Elegance, the hotel

property at 103 Beach Road, Pasir Panjang Commercial Property, Geylang Industrial

Property and Changi Road Property of $50.1 million; and

(d) payment of part of the Purchase Consideration and repayment of all advances from FGL

of $345.1 million.

These constitute the major differences between the audited combined statement of cash flows

and the unaudited pro forma combined statement of cash flows for FY2010.

The pro forma combined statement of cash flows for 9M2011 took into account the following:

(a) reversal of advances from FGL and repayment to FGL of $40.8 million assuming that they

have been repaid on 1 January 2010; and

(b) reversal of part of the proceeds from disposal of Fragrance Hotel-Elegance, the hotel

property at 103 Beach Road, Pasir Panjang Commercial Property, Geylang Industrial

Property and Changi Road Property which took place in 9M2011 of $50.1 million.

These constitute the major differences between the audited combined statement of cash flows

and the unaudited pro forma combined statement of cash flows for 9M2011.



129

BREAKDOWN BY BUSINESS SEGMENT

A breakdown of our revenue, gross profit and gross profit margin by business segments for the

years/periods under review is summarised as below:

Revenue(1)


FY2008 FY2009 FY2010 9M2010 9M2011

$’000 % $’000 % $’000 % $’000 % $’000 %

Fragrance Chain

of Hotels 36,533 99.0 34,579 100.0 44,215 100.0 32,284 100.0 34,692 89.1

Parc Sovereign

Hotel 360(2) 1.0 — — — — — — 4,237 10.9

Total 36,893 100.0 34,579 100.0 44,215 100.0 32,284 100.0 38,929 100.0

Gross Profit

Fragrance Chain

of Hotels 31,638 98.9 29,696 100.0 39,059 100.0 28,417 100.0 30,689 89.3

Parc Sovereign

Hotel 360 1.1 — — — — — — 3,669 10.7

Total 31,998 100.0 29,696 100.0 39,059 100.0 28,417 100.0 34,358 100.0

Notes:

(1) The revenue information for Fragrance Chain of Hotels and Parc Sovereign Hotel is based on the revenue

breakdown for budget hotels operations and boutique hotel operations respectively as disclosed in note 24 of

Appendix B entitled “Independent Auditors’ Report on the Combined Interim Condensed Financial Statements

for the Nine Months ended 30 September 2011”.

(2) In 2008, the principal activities of Parc Sovereign Hotel related to the provision of hotel management

consultancy services and revenue was generated for the provision of such services. In 2009, the principal

activity was changed to hotel management services.



130

Gross Profit Margin


FY2008 FY2009 FY2010 9M2010 9M2011

% % % % %

Fragrance Chain

of Hotels 86.6% 85.9% 88.3% 88.0% 88.5%

Parc Sovereign

Hotel 100.0%(1) — — — 86.6%

Overall 86.7% 85.9% 88.3% 88.0% 88.3%

In general, Fragrance Chain of Hotels as economy-tier hotels tend to have higher gross profit

margins as compared to higher-tier hotels. We believe the higher margin is mainly due to lower

utilities costs, lower laundry charges and hotel consumables expenses.

Note:

(1) Gross profit margin was 100% due to the operating expenses, which consist mainly of staff costs, has been

classified as part of administrative expenses.

REVIEW OF FINANCIAL RESULTS

9M2011 compared to 9M2010

Revenue

Our revenue increased by $6.6 million or 20.4%, from $32.3 million in 9M2010 to $38.9 million

in 9M2011 mainly attributed to the following factors:

(a) Revenue from Fragrance Chain of Hotels increased by $2.4 million mainly due to the

following:

(i) Fragrance Hotel-Bugis commenced operations in April 2010. The revenue generated

from the nine-month operation of this hotel in 9M2011 was $2.2 million as compared

to revenue generated in 9M2010 of $1.2 million;

(ii) the increase in revenue from Fragrance Hotel-Sapphire which re-opened in February

2010 after renovation works. The revenue generated from this hotel was $0.7 million

in 9M2010 as compared to $1.0 million in 9M2011;

(iii) the increase in revenue from the rest of the hotels from $28.8 million in 9M2010 to

$30.1 million in 9M2011. The increase in revenue was mainly due to higher room

rates as the result of the increase in the number of visitors entering Singapore after

the two Integrated Resorts commenced operations in 2010;

(iv) the aforementioned increases in revenue were offset by the decrease in rental

income of $0.2 million arising from the disposal of the hotel property at 103 Beach

Road; and



131

(b) Revenue from Parc Sovereign Hotel increased by $4.2 million mainly due to Parc

Sovereign Hotel commencing operations in February 2011.

The Group’s AOR remained relatively stable at between 87.2% and 88.9% in 9M2010 and

9M2011 while the Group’s ARR increased from $92.20 in 9M2010 to $104.90 in 9M2011. The

increase in the Group’s ARR was mainly due to the commencement of business of our mid-tier

hotel Parc Sovereign Hotel in February 2011. The increase in REVPAR from $82.00 in 9M2010

to $91.50 in 9M2011 was mainly due to the increase in the Group’s ARR.

Cost of sales

Our cost of sales increased by $0.7 million or 17.9%, from $3.9 million in 9M2010 to $4.6 million

in 9M2011, mainly due to the commencement of operations of Parc Sovereign Hotel in

February 2011. The cost of sales related to Parc Sovereign Hotel for 9M2011 was $0.6 million.

The increase in cost of sales for Fragrance Chain of Hotels was mainly attributed to Fragrance

Hotel-Bugis which commenced operations in Apr 2010. The cost of sales related to Fragrance

Hotel-Bugis increased from $0.2 million in 9M2010 to $0.3 million in 9M2011.

Gross profit

As a result of the above factors, our gross profit increased by $6.0 million or 21.1%, from $28.4

million in 9M2010 to $34.4 million in 9M2011. Our gross profit margin increased from 88.0% in

9M2010 to 88.3% in 9M2011 as a result of higher room rates charged by our hotels.


Other operating income increased by $0.1 million, from $0.2 million in 9M2010 to $0.3 million

in 9M2011 mainly due to the increase in income from vending machines, internet kiosks and

wireless internet.


Our administrative expenses increased by $2.5 million or 28.4%, from $8.8 million in 9M2010

to $11.3million in 9M2011, mainly due to the increase in staff costs, depreciation expenses and

commission expenses.

Staff costs increased by $1.5 million or 33.3%, from $4.5 million in 9M2010 to $6.0 million in

9M2011. The increase in staff cost was mainly due to the general increase in wages and

additional staff required for Parc Sovereign Hotel which commenced operations in February

2011, and full nine-months operation of Fragrance Hotel-Bugis. The average percentage

increase in wages was approximately 5.4%.

Depreciation expenses increased by $0.4 million or 26.7%, from $1.5 million in 9M2010 to

$1.9 million in 9M2011. The increase in depreciation expenses was mainly due to Parc

Sovereign Hotel which commenced operations in February 2011, full nine-months

operation of Fragrance Hotel-Bugis and the increase in fair value of leasehold land and

hotel buildings.



132

Commission expenses increased by $0.5 million or 166.7%, from $0.3 million in 9M2010 to

$0.8 million in 9M2011, mainly due to the commission paid to property agent in relation to the

disposal of the hotel property at 103 Beach Road.

Finance cost

Our finance cost was relatively stable at $2.3 million and $2.2 million in 9M2010 and 9M2011

respectively.

Profit before income tax

Our profit before income tax increased by $3.7 million or 21.1%, from $17.5 million in 9M2010

to $21.2million in 9M2011 duemainly to the increase in gross profit partly offset by the increase

in administrative expenses.

Income tax expense

Income tax expense increased by $0.9 million or 30.0%, from $3.0 million in 9M2010 to $3.9

million in 9M2011 as a result of the increase in profit before income tax.

Profit for the year

As a result of the foregoing, our profit for the year increased by $2.8 million or 19.3%, from

$14.5 million in 9M2010 to $17.3 million in 9M2011.

FY2010 compared to FY2009

Revenue

Our revenue increased by $9.6 million or 27.7%, from $34.6 million in FY2009 to $44.2 million

in FY2010 mainly due to the increase in the Group’s AOR and ARR, which is attributed to the

following factors:

(a) additional revenue of $2.0 million from Fragrance Hotel-Bugis which commenced

operations in April 2010;

(b) full-year operation of Fragrance Hotel-Royal in FY2010, contributing a revenue of $1.6

million as compared to a revenue of $0.6 million in FY2009. Fragrance Hotel-Royal

commenced operations in July 2009; and

(c) the increase in revenue from the rest of the hotels, from $32.2 million in FY2009 to $38.4

million in FY2010. The increase in revenue was mainly due to higher occupancy rates and

room rates as a result of the increase in the number of visitors entering Singapore after the

two Integrated Resorts commenced operations in 2010.

The Group’s AOR increased from 83.9% in FY2009 to 89.4% in FY2010 and the Group’s ARR

increased from $87.40 in FY2009 to $94.30 in FY2010, resulting in the increase in REVPAR

from $73.40 in FY2009 to $84.30 in FY2010.



133

Cost of sales

Our cost of sales increased by $0.3 million or 6.1%, from $4.9 million in FY2009 to $5.2 million

in FY2010 mainly due to the commencement of hotel operations by Fragrance Hotel-Bugis in

April 2010.

Gross profit

As a result of the above factors, our gross profit increased by $9.4 million or 31.6%, from $29.7

million in FY2009 to $39.1 million in FY2010. Our gross profit margin increased from 85.9% in

FY2009 to 88.3% in FY2010 mainly due to higher room and occupancy rates of our hotels.


Other operating income increased by $0.1 million or 50.0%, from $0.2 million in FY2009 to $0.3

million in FY2010 mainly due to the increase in income from vending machines, internet kiosks

and wireless internet.


Our administrative expenses increased by $1.8 million or 17.3%, from $10.4 million in FY2009

to $12.2 million in FY2010, mainly due to the increase in staff costs, depreciation expenses,

property tax and repair and maintenance expenses.

Staff costs increased by $0.9 million or 16.1% from $5.6 million in FY2009 to $6.5 million in

FY2010. The increase was mainly due to the general increase in wages and additional staff

required for the new hotel, Fragrance Hotel-Bugis and full-year operation of Fragrance

Hotel-Royal. The average percentage increase in wages was approximately 9.5%.

Depreciation expenses increased by $0.4 million or 23.5% from $1.7 million in FY2009 to $2.1

million in FY2010. The increase was mainly due to the new hotel, Fragrance Hotel-Bugis which

commenced operations in FY2010, full-year operation of Fragrance Hotel-Royal and the

increase in fair value of leasehold land and hotel buildings.

Property tax increased by $0.2 million or 25.0%, from $0.8 million in FY2009 to $1.0 million in

FY2010 mainly due to increase in annual value of our hotel properties.

Repair and maintenance expenses increased by $0.2 million or 18.2%, from $1.1 million in

FY2009 to $1.3 million in FY2010 mainly due to paintworks, electrical works, air-conditioning

maintenance and general repairs.

Finance cost

Our finance cost decreased by $0.2 million or 6.3%, from $3.2 million in FY2009 to $3.0 million

in FY2010. The decrease in finance cost can be attributed to the lower interest rate and lower

outstanding balances for existing term loans, and partially offset by higher interest costs



134

relating to increased term loan facilities in respect of Fragrance Hotel-Bugis for working capital

purposes and bank borrowings to finance the purchase of hotel property at 103 Beach Road

and Pasir Panjang Commercial Property.


Our profit before income tax increased by $7.7 million or 47.0%, from $16.4 million in FY2009

to $24.1 million in FY2010 mainly due to the increase in gross profit.

Income tax expense

In line with the increase in profit before income tax, income tax expense increased by $1.4

million or 48.3%, from $2.9 million in FY2009 to $4.3 million in FY2010.

Profit for the year

As a result of the foregoing, our profit for the year increased by $6.4 million or 47.4%, from

$13.5 million in FY2009 to $19.9 million in FY2010.

FY2009 compared to FY2008

Revenue

Our revenue decreased by $2.3 million or 6.2%, from $36.9 million in FY2008 to $34.6 million

in FY2009. This was mainly due to the decrease in the Group’s ARR of $87.40 in FY2009 as

compared to $107.40 in FY2008, arising from the recessionary economic conditions which

started in August 2008 and lasted till 2009 and the Influenza A (H1N1) epidemic outbreak

during this period. The decrease in revenue was partially offset by contribution from the

following:

(a) additional revenue from Fragrance Hotel-Royal which commenced operations in July

2009. Revenue generated from this hotel was $0.6 million in FY2009;

(b) full-year operation of Fragrance Hotel-Waterfront in FY2009 contributing a revenue of

$2.6 million as compared to $1.9 million for the 9-month operation in FY2008. Fragrance

Hotel-Waterfront commenced operations in April 2008;

(c) full-year operation of Fragrance Hotel-Ocean View in FY2009 contributing to a revenue of

$2.1 million as compared to $0.5 million for the 3-month operation in FY2008. Fragrance

Hotel-Ocean View commenced operations in end-September 2008; and

(d) higher Group’s AOR of 83.9% in FY2009 as compared to 76.9% in FY2008, mainly due to

lower room rates as shown in the decrease in the Group’s ARR.

The decline in the Group’s ARR and partially offset by the increase in the Group’s AOR from

FY2008 to FY2009 resulted in the decrease in REVPAR from $82.60 in FY2008 to $73.40 in

FY2009.



135

Cost of sales

Our cost of sales remained relatively stable at $4.9 million in FY2009.

Gross profit

As a result of the above factors, our gross profit decreased by $2.3 million or 7.2%, from $32.0

million in FY2008 to $29.7 million in FY2009. Our gross profit margin decreased marginally

from 86.7% in FY2008 to 85.9% in FY2009.


Other operating income remained relatively stable at $0.2 million in FY2009.


Our administrative expenses increased by $1.1 million or 11.8%, from $9.3 million in FY2008

to $10.4 million in FY2009, mainly due to the increase in staff costs, depreciation expenses and

repair and maintenance expenses.

Staff costs increased by $0.5 million or 9.8%, from $5.1 million in FY2008 to $5.6 million in

FY2009. The increase in staff cost was mainly due to additional staff required for new hotel,

Fragrance Hotel-Royal and the full-year operation of two hotels, namely Fragrance Hotel-

Waterfront and Fragrance Hotel-Ocean View which had commenced operations in FY2008.

Depreciation expenses increased by $0.2 million or 13.3%, from $1.5 million in FY2008 to $1.7

million in FY2009, mainly due to the additional hotels which commenced operations in FY2009,

the full-year depreciation expenses of the new PMS which was acquired in FY2008 and the

increase in fair value of leasehold land and hotel buildings.

Repair and maintenance expenses increased by $0.4 million or 57.1%, from $0.7 million in

FY2008 to $1.1 million in FY2009 mainly due to paintworks, electrical works, air-conditioning

maintenance and general repairs.

Finance cost

Finance cost remained relatively stable at $3.2 million in FY2009.


Our profit before income tax decreased by $3.2 million or 16.3%, from $19.6 million in FY2008

to $16.4 million in FY2009 mainly due to the decrease in gross profit and increase in

administrative expenses.



136

Income tax expense

Income tax expense decreased by $0.6 million or 17.1%, from $3.5 million in FY2008 to $2.9

million in FY2009 mainly due to the decrease in profit before income tax and the changes in

statutory tax rate from 18.0% in FY2008 to 17.0% in FY2009.

Profit for the year

As a result of the foregoing, our profit for the year decreased by $2.6 million or 16.1%, from

$16.1 million in FY2008 to $13.5 million in FY2009.

REVIEW OF FINANCIAL POSITION

Non-current assets

Non-current assets comprise property, plant and equipment. As at 31 December 2010, our

non-current assets had an aggregate carrying value of $701.9 million and accounted for

approximately 95.0% of our total assets. Our property, plant and equipment mainly consist of

freehold land of $424.5 million, leasehold land of $31.9 million, hotel buildings of $74.8 million,

and construction-in-progress of $161.1 million (mainly relating to the construction of Parc

Sovereign Hotel, hotel property at 103 Beach Road and Fragrance Hotel-Riverside).

As at 30 September 2011, our non-current assets had an aggregate carrying value of $738.7

million and accounted for approximately 93.3% of our total assets. Our property, plant and

equipment mainly consist of freehold land of $469.4 million, leasehold land of $135.5 million,

hotel buildings of $84.1 million, and construction in-progress of $47.7 million (mainly relating to

Fragrance Hotel-Riverside).

Our non-current assets increased by 5.2% or $36.8 million from $701.9 million as at 31

December 2010 to $738.7 million as at 30 September 2011. This was attributable to the

increase in construction-in-progress relating to Fragrance Hotel-Riverside, Parc Sovereign

Hotel, the hotel property at 103 Beach Road and the increase in fair value of freehold land,

leasehold land and construction-in-progress which was partially offset by the disposal of the

hotel property at 103 Beach Road, Fragrance Hotel-Elegance and Changi Road Property in

9M2011.

Current assets

Current assets comprise trade and other receivables, properties under development and cash

and cash equivalents. Trade and other receivables comprised trade receivables, advances to

FGL, other receivables, deposits, prepayments, amounts due from related companies and

amounts due from an external party. Our current assets as at 31 December 2010 and 30

September 2011 amounted to $36.9 million or 5.0% of our total assets and $52.9 million or

6.7% of our total assets respectively.



137

As at 31 December 2010, our current assets comprised trade and other receivables of $7.3

million (19.8% of total current assets), properties under development of $26.8 million (72.6% of

total current assets) and cash and cash equivalents of $2.8 million (7.6% of total current

assets).

As at 30 September 2011, our current assets comprised trade receivables and other

receivables of $49.0 million (92.6% of total current assets), and cash and cash equivalents of

$3.9 million (7.4% of total current assets).

Our current assets increased by 43.4% or $16.0 million from $36.9 million as at 31 December

2010 to $52.9 million as at 30 September 2011. This was largely attributed to the increase in

amounts due from related companies arising from disposal of Geylang Industrial Property and

Pasir Panjang Commercial Property and Changi Road Property, and amounts due from an

external party arising from the disposal of Fragrance Hotel-Elegance, and offset by the

decrease in advances to FGL.

Current liabilities

Current liabilities comprise trade and other payables, current portion of term loans and income

tax payable. Trade and other payables comprise trade payables, advances from FGL, other

payables, accrued operating expenses, deposits received in advance and withholding income

tax on staff costs. Our current liabilities as at 31 December 2010 and 30 September 2011

amounted to $63.5 million and $47.5 million respectively which are equivalent to 26.7% and

26.0% of our total liabilities respectively.

As at 31 December 2010, our current liabilities comprised trade and other payables of $51.2

million (80.6% of total current liabilities), current portion of the term loans of $7.9 million (12.4%

of total current liabilities), and income tax payable of $4.4 million (7.0% of total current

liabilities).

As at 30 September 2011, our current liabilities comprised trade and other payables of $6.8

million (14.3% of total current liabilities), current portion of term loans of $32.6 million (68.6% of

total current liabilities), and income tax payable of $8.1 million (17.1% of total current liabilities).

Our current liabilities decreased by 25.2% or $16.0 million from $63.5 million as at 31

December 2010 to $47.5 million as at 30 September 2011. This was largely attributable to the

repayment of advances from FGL of $44.9 million, which was partially offset by the increase in

current portion of term loans. The advances from FGL were for the financing of the

development of hotel and commercial properties as well as for working capital purposes. The

increase in current portion of term loans was mainly due to the re-classification of non-current

portion of term loans to current portion of term loans of $24.0 million arising from the disposal

of Fragrance Hotel-Elegance, Pasir Panjang Commercial Property and Changi Road Property.

The reclassification was due to the expected settlement of the terms loans within the next 12

months as the financial institutions would have to release the title on property mortgaged upon

completion of the disposal of the 3 properties.



138


Non-current liabilities comprise non-current portion of term loans and deferred tax liabilities.

Our non-current liabilities as at 31 December 2010 and 30 September 2011 amounted to

$174.3 million or 73.3% of our total liabilities and $135.3 million or 74.0% of our total liabilities

respectively.

Our non-current liabilities decreased by 22.4% or $39.0 million from $174.3 million as at 31

December 2010 to $135.3 million as at 30 September 2011. The decrease was mainly due to

the repayment of loans and the re-classification of non-current portion of term loans to current

portion of term loans arising from the disposal of Fragrance Hotel-Elegance, Pasir Panjang

Commercial Property and Changi Road Property. This decrease was partially offset by the

increase in loans relating to Fragrance Hotel-Riverside and Parc Sovereign Hotel.


Capital and reserves comprise share capital, revaluation reserves and retained earnings.

Our capital and reserves increased by 21.5% or $107.7 million from $501.1 million as at 31

December 2010 to $608.8 million as at 30 September 2011. The increase was mainly due to

increase in our retained earnings of $17.3 million from the day-to-day operations in the ordinary

course of our business and fair value gain arising from revaluation of land and hotel buildings

(net of income tax effects of $6.7 million) of $90.4 million.

LIQUIDITY AND CAPITAL RESOURCES

In FY2008, FY2009 and FY2010, 9M2011 and from 1October 2011 up to the Latest Practicable

Date, we have financed our operations through cash flows from our operations and loans from

financial institutions.

Cash flow

As at 30 September 2011, our cash and cash equivalents amounted to approximately $3.9

million. As at the Latest Practicable Date, our cash and cash equivalents were $10.7 million.

Our Directors are of the opinion that we have adequate working capital to meet our current

requirements, taking into account cash generated from operating activities, unutilised credit

facilities and cash and cash equivalents as at the Latest Practicable Date.



139

The following table sets forth certain information about our cash flows in FY2008, FY2009,

FY2010 and 9M2011:

Audited

FY2008

Audited

FY2009

Audited

FY2010

Unaudited

Pro Forma

FY2010

Audited

9M2011

Unaudited

Pro Forma

9M2011

$’000 $’000 $’000 $’000 $’000 $’000

Net cash generated

from/(used in) operating

activities 19,098 (7,856) 19,878 28,823 18,294 19,047

Net cash (used in)/

generated from investing

activities (25,576) (46,572) (20,940) 26,672 40,919 (9,262)

Net cash generated

from/(used in) financing

activities 6,898 54,963 1,415 (38,810) (58,125) (17,340)

Net increase/(decrease)

in cash and cash

equivalents 420 535 353 16,685 1,088 (7,555)

Cash and cash

equivalents at beginning

of year/period 1,503 1,923 2,458 2,458 2,811 19,143

Cash and cash

equivalents at end of

year/period 1,923 2,458 2,811 19,143 3,899 11,588

Negative Working Capital

The working capital of our Group as at 31 December 2008, 2009, 2010 and 30 September 2011

was as follows:

Audited

31 December

2008

31 December

2009

31 December

2010

30 September

2011

$’000 $’000 $’000 $’000

Current assets 18,612 38,412 36,913 52,853

Current liabilities (37,319) (61,778) (63,504) (47,486)

Net current (liabilities)/assets (18,707) (23,366) (26,591) 5,367



140

The negative working capital as at 31 December 2008, 2009 and 2010 was mainly due to

advances from FGL (which were short-term in nature) being used to finance the development

of our Group’s hotel and commercial properties. The Group recorded positive working capital

of $5.4 million as at 30 September 2011 after the Group repaid the advances from FGL of $44.9

million.

FY2008

Net cash generated from operating activities

In FY2008, the net cash generated from operations of $19.1million, which comprised operating

cash flows before movements in working capital of $24.4 million, working capital outflow of $0.2

million, interest paid of $3.3 million and income taxes paid of $1.8 million.

The working capital outflow was mainly due to the decrease in other payables of $0.3 million

which related to the decrease in accrual expenses. This was partially offset by the decrease in

trade receivables of $0.1 million.

Net cash generated from investing activities

Net cash used in investing activities amounted to $25.6 million in FY2008. This comprised

purchase of property, plant and equipment of $27.3million, partially offset by the proceeds from

the disposal of commercial property at 44 Foch Road of $1.7 million.

Additions to property, plant and equipment were mainly attributed to the construction of the

following properties amounting to $26.3 million:

(a) Changi Road Property of $0.6 million;

(b) Fragrance Hotel-Bugis of $17.3 million; and

(c) Fragrance Hotel-Waterfront and Fragrance Hotel-Ocean View of $8.4 million.

Net cash generated from financing activities

In FY2008, there was a net cash inflow of $6.9 million from financing activities. This was mainly

due to advances from FGL of $19.2 million, issuance of new shares of $2.0 million and increase

in bank borrowings of $13.6 million which related to loans to part finance the purchase of

Fragrance Hotel-Bugis and Fragrance Hotel-Waterfront, which were partially offset by

repayment of term loan of $14.1 million, repayment of advances from FGL of $8.4 million and

payment of dividend of $5.4 million.

FY2009


In FY2009, the net cash used in operating activities was $7.9 million and this comprised

operating cash flows before movements in working capital of $21.3 million, working capital

outflow of $22.4 million, interest paid of $3.2 million and income taxes paid of $3.6 million.



141

The working capital outflow was mainly due to the increase in properties under development of

$23.8 million and this related to Pasir Panjang Commercial Property. This was partially offset

by an increase in other payables amounting to $0.7 million.


Net cash used in investing activities amounted to $46.6 million in FY2009. This comprised

mainly purchase of property, plant and equipment.



(a) Hotel property at 103 Beach Road of $18.5 million;

(b) Fragrance Hotel-Royal of $6.2 million;

(c) Parc Sovereign Hotel of $16.7 million;

(d) Fragrance Hotel-Riverside of $3.6 million; and

(e) Fragrance Hotel-Bugis of $0.7 million.


In FY2009, we had a net cash inflow of $55.0 million which was mainly due to advances from

FGL of $18.7 million, repayment of our advances to FGL of $3.8 million, and increase in bank

borrowings of $63.6 million which related to loans to part finance the purchase of the Pasir

Panjang Commercial Property, and loans to finance the purchase of hotel property at 103

Beach Road, land for Parc Sovereign Hotel and land for Fragrance Hotel-Riverside. This was

partially offset by repayment of bank borrowings of $22.1 million and payment of dividends of

$9.0 million.

FY2010


In FY2010, we recorded net cash generated from operating activities of $19.9 million which

comprised operating cash flows before movements in working capital of $29.2 million, working

capital outflow of $2.8 million, interest paid of $3.9 million and income taxes paid of $2.6 million.

The working capital outflow arose mainly due to an increase in properties under development

of $3.0 million relating to Geylang Industrial Property, and increase in other receivables

amounting to $1.7 million, which was partially offset by an increase in other payables of $2.3

million. The increase in other receivables was mainly due to an amount of $1.6 million paid as

a deposit for a URA land tender sale. The increase in other payables was mainly due to an

increase in accrual expenses related to construction cost of the hotel property at 103 Beach

Road, Fragrance Hotel-Riverside and Geylang Industrial Property.



142


Net cash used in investing activities amounted to $20.9 million in FY2010. This comprised the

purchase of property, plant and equipment.




(b) Parc Sovereign Hotel of $8.7 million;

(c) Fragrance Hotel-Riverside of $7.5 million; and

(d) Fragrance Hotel-Bugis of $2.1 million.


In FY2010, we had a net cash inflow of $1.4 million arising from advances from FGL of $2.2

million, repayment of our advances to FGL of $6.8 million and proceeds from bank borrowings

of $36.5 million related to Fragrance Hotel-Bugis, Parc Sovereign Hotel and Fragrance

Hotel-Riverside. These were partially offset by repayment of bank borrowings of $25.1 million

and payment of dividends of $19.0 million.

9M2011


In 9M2011, we generated net cash from operating activities of $18.3 million, which comprised

operating cash flows before movements in working capital of $25.3 million, working capital

outflow of $0.2 million, interest paid of $2.4 million and income tax paid of $4.4 million.

The working capital outflow arose mainly due to the increase in property under development

and offset by the decrease in other receivables. The increase in property under development of

$1.6 million was mainly due to the additional cost related to the development of the Geylang

Industrial Property. The decrease in other receivables of $1.0 million was mainly due to refund

of the deposit for the URA land sale tender to the Group upon finalisation of the tender result.


Net cash from investing activities amounted to $40.9 million in 9M2011. This was mainly

attributed to the proceeds from disposal of hotel property at 103 Beach Road of $46.0 million,

and deposits received from disposal of Geylang Industrial Property, Pasir Panjang Commercial

Property, Changi Road Property and Fragrance Hotel-Elegance of aggregate $4.1 million

which was partially offset by the purchase of property, plant and equipment of $9.2 million.



143




(b) Parc Sovereign Hotel of $1.5 million; and

(c) Fragrance Hotel-Riverside of $4.4 million.


Net cash used in financing activities of $58.1 million in 9M2011 was mainly due to repayment

of advances from FGL of $44.9 million and repayment of bank borrowings of $21.6 million,

which were partially offset by proceeds from bank borrowings of $4.2 million related to Parc

Sovereign Hotel and Fragrance Hotel-Riverside and advances from FGL of $4.2 million.

CAPITAL EXPENDITURES AND DIVESTMENTS

The following table sets forth the material capital expenditures for FY2009, FY2010, FY2011

and for period from 1 January 2012 to the Latest Practicable Date:

FY2009 FY2010 FY2011

Period

from

1 January

2012 to

the Latest

Practicable

Date

$’000 $’000 $’000 $’000

Acquisition

Hotel buildings and leasehold land — 94 12,219 1,012

Construction-in-progress 45,710 20,363 7,888 —

Motor vehicles — 44 — —

Furniture, fixtures & fittings 43 53 65 83

Office equipment 113 110 96 16

Computers 308 121 192 88

Electrical installation 15 28 45 32

Renovations 612 948 109 —

Kitchen equipment — — 64 —



144

The construction-in-progress of $45.7 million in FY2009 was mainly related to:


(b) Fragrance Hotel-Royal of $6.2 million;

(c) Parc Sovereign Hotel of $16.7 million;

(d) Fragrance Hotel-Riverside of $3.6 million; and

(e) Fragrance Hotel-Bugis of $0.7 million.



(b) Parc Sovereign Hotel of $8.7 million;

(c) Fragrance Hotel-Riverside of $7.5 million; and

(d) Fragrance Hotel-Bugis of $2.1 million.

The capital expenditure for hotel buildings and leasehold land of $12.2 million in FY2011 was

mainly related to:

(a) Fragrance Hotel-Elegance of $1.0 million;







The capital expenditure for hotel buildings and leasehold land of $1.0 million from 1 January

2012 to Latest Practicable Date were mainly attributed to:

(a) Fragrance Hotel-Emerald of $0.6 million; and

(b) Fragrance Hotel-Riverside of $0.4 million.

The above capital expenditures were financed by internally generated funds and bank

borrowings.



145

The following table sets forth the material divestments for FY2009, FY2010, FY2011, and for

period from 1 January 2012 to the Latest Practicable Date:

FY2009 FY2010 FY2011

Period from

1 January 2012

to the Latest

Practicable Date

$’000 $’000 $’000 $’000

Divestments

Freehold land — — 4,180 —

Hotel buildings — — 2,920 —

Construction-in-progress — — 47,379 —

Office premises — — 7,450 —

Motor vehicles 26 — — —

Furniture fixtures and fittings — — 170 —

Office equipment 5 — 11 —

Computers 94 42 9 —

Electrical installation — — 220 —

Renovation — — 74 —

The divestments in FY2011 were mainly attributed to construction-in-progress, office

premises, freehold land and hotel buildings.

The divestment for construction-in-progress of $47.4 million was mainly related to the disposal

of the hotel property at 103 Beach Road.

The divestment for office premises of $7.5 million was mainly related to the disposal of the

Changi Road Property.

The divestment for freehold land and hotel buildings were mainly related to the disposal of

Fragrance Hotel-Elegance.

There were no material divestments from 1 January 2012 to the Latest Practicable Date.

Capital commitments

Our Group does not have any other material commitments for capital expenditure as at the

Latest Practicable Date.

OPERATING LEASE COMMITMENTS

As at 31 December 2011, we have operating lease commitments amounting to $1.6 million. As

at the Latest Practicable Date, we have operating lease commitments of $1.4 million.



146

The following table sets forth information regarding our operating lease commitments as at

31 December 2009, 2010, 2011 and as at the Latest Practicable Date:

As at

31 December

2009

As at

31 December

2010

As at

31 December

2011

As at Latest

Practicable

Date

$’000 $’000 $’000 $’000

Within 1 year — 34 850 843

After 1 year but within 5 years — 10 758 582

Total — 44 1,608 1,425

Operating lease commitments represent rental payable by the Group for the following:

(a) 2-year lease of warehouse at 23 Genting Road; and

(b) 2-year lease of the premises of Fragrance Hotel-Elegance.

Save as disclosed above, our Group does not have any other material operating lease

commitments in the last 3 financial years ended 31 December 2009, 2010 and 2011 and

1 January 2012 to the Latest Practicable Date.

FOREIGN EXCHANGE EXPOSURE

Our financial statements are prepared in Singapore dollars. As all our operations are in

Singapore and our sales and purchases are conducted only in Singapore dollars, we are not

subject to foreign exchange fluctuation. Similarly, our assets and liabilities are recorded in

Singapore dollars, and we are not exposed to foreign exchange translation. In view of the

foregoing, we have not purchased any financial instruments for purpose of managing our

foreign currency exposure.

INFLATION

In FY2008, FY2009, FY2010 and 9M2011, inflation did not have a material impact on the

performance of our Group.

SEASONALITY

The Group’s operations are usually affected by seasonality as revenue from June to July and

from November to December, which are school holiday periods, tend to be higher.



147

CHANGES TO ACCOUNTING POLICIES

Save as disclosed in the Independent Auditors’ Report on the Combined Financial Statements

for the Years Ended 31 December 2010, 2009, 2008, and the Independent Auditors’ Report on

the Combined Interim Condensed Financial Statements for the Nine Months Ended

30 September 2011 as set out in Appendix A and Appendix B of this Prospectus respectively,

we have not made any significant changes in our accounting policies during the last three

financial years ended 31 December 2008, 2009 and 2010 and nine months ended

30 September 2011.



148

Our Prospects

Moving forward, barring unforeseen circumstances, our Directors believe that the outlook for

our business is expected to remain positive, due to the following factors:

Development plans for the Singapore tourism industry

Given the importance of the tourism sector to Singapore’s economy, the STB and other

government agencies have committed to ensure that the sector remains competitive and

continues to be a key contributor going forward.

The Singapore government’s target is to achieve tourism receipts of $30 billion, increase visitor

arrivals to 17 million and create an additional 100,000 jobs in the services sector by 2015.(1) In

order to achieve these goals, the STB has identified three (3) key areas of focus:

(a) strengthening Singapore’s position as a leading convention and exhibition city in Asia with

a strong and dynamic business environment;

(b) developing Singapore as a leading Asian leisure destination; and

(c) establishing Singapore as the services centre of Asia, to be a place where visitors come

to enjoy high-end quality services such as healthcare and education services.

Some examples of recent tourism-related initiatives and activities driven by the government

and the tourism industry include:

(a) further development of the Integrated Resorts such as the opening of the ArtScience

Museum at Marina Bay Sands and “Battlestar Galactica” attractions at Universal Studios

Singapore(2);

(b) development of new facilities at Sentosa island such as the Skyride, the Wave House

Sentosa, iFly Singapore and the Sentosa Boardwalk(2)(3);

(c) growing the BTMICE sector through the organisation of major events such as the

CommunicAsia and BroadcastAsia summits, the Singapore Airshow and Singapore

International Water Week, among others(2)(4);

(d) developing Singapore as Asia’s leading medical and education hub by attracting world-

leading educational institutions such as INSEAD and the University of Chicago Graduate

School of Business (now known as The University of Chicago Booth School of Business)

to set up campuses in Singapore(5), as well as promotion of clinical and healthcare

services providers in Singapore as one-stop international patient service centres(6); and

(e) organisation of major cultural, arts, sports, food and music events such as the Formula

One Singapore Grand Prix, Zoukout, World Gourmet Summit, and the Asia Fashion

Exchange.(2)

Given the number of new initiatives and upcoming events to develop Singapore’s tourism

industry, the Directors anticipate the outlook for the tourism industry to remain positive.

PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS

149

Visitor arrivals in Singapore

As discussed in the section entitled “Industry Overview — Inbound Tourist Arrivals”, inbound

tourist arrivals to Singapore registered 23.0% growth to reach 19.4 million trips in 2010 and

inbound tourist arrivals are expected to increase to reach 19.6 million trips and 20.4 million trips

in 2011 and 2012 respectively, with an overall CAGR of 2.7% during 2011–2015 to reach 21.9

million trips in 2015.

The strong performance in 2010 was a major improvement over the marginal growth recorded

in 2009, as consumers regained their confidence in spending and were more willing to take

vacations alongside the economic recovery in 2010. The tourism and hospitality sectors in

Singapore were relatively stable in 2011 and are expected to remain so in 2012.

We believe that the record number of visitors in 2010, the moderate growth in 2011 and

expected stability in 2012 demonstrates the resilience of the tourism industry to rebound from

the global financial crisis, and also believe that this is attributed to a multitude of factors,

including global economic growth, the advent of budget air-carriers in Asia, as well as

increased global propensity for travelling for business and leisure purposes. In addition, the

collaborative efforts of government agencies and the tourism industry to promote Singapore as

a travel and transit destination and to develop new tourist attractions have also significantly

contributed to the increase in visitor arrivals.

Furthermore, as discussed in the section entitled “Industry Overview — Key Trends and

Drivers for Economy-tier Hotels”, whilst the hospitality industry might experience slower growth

in 2012 due to uncertain economic conditions, demand for economy-tier hotels is unlikely to be

affected. In the face of adverse economic conditions and tighter budgets, both leisure and

business travellers are likely to downgrade to the more affordable accommodation that

economy-tier hotels provide. We believe that if such a trend occurs, our Group would be in a

position to benefit from it.

Improvements in ARR, AOR and REVPAR for the hotel industry in Singapore in 2010 and first

eight months of 2011

As discussed in the section entitled “Industry Overview — Overview of Singapore’s Hotel

Industry”, the national AOR for gazetted hotels in Singapore improved from 76.0% in 2009 to

85.0% in 2010. The ARR has also improved by 14.5% year-on-year to $217.00 in 2010. The

growth in both the AOR and ARR led to a 28.0% increase in the REVPAR to $184.00 in 2010.

As also discussed in the section entitled “Industry Overview—Future Prospects of Singapore’s

Hotel Industry”, in spite of STB’s plans to increase the number of hotel outlets and hotel rooms,

the AOR for gazetted hotels increased from 85.6% for the first eight months of 2010 to 86.1%

for the first eight months of 2011; and barring any major external shocks, AORs are likely to

remain above 80% during the forecast period of 2011–2015.

In addition, the following were also discussed in the section entitled “Industry Overview —

Future Prospects of Singapore’s Hotel Industry”, (i) the ARR nationwide increased from

$209.85 for the first eight months of 2010 to $240.30 for the first eight months of 2011; (ii)

REVPAR also reflected a similar increase from $179.60 for the first eight months of 2010 to

$206.90 for the first eight months of 2011; (iii) economic uncertainty as well as increase in hotel


150

room inventory is likely to moderate the growth in ARR from 2012 onwards; and (iv) hoteliers

are likely to maintain current room rates so as to attract demand in an increasingly competitive

environment.

Sources:

(1) STB media release entitled, “Singapore Sets Out To Triple Tourism Receipts To $30 Billion by 2015”, 11

January 2005

(2) STB presentation, entitled “Sustaining the Momentum: Creating Value”, 22 March 2011

(3) Sentosa Leisure Group website, http://www.sentosa.com.sg, as at 21 September 2011

(4) Singapore Association of Convention and Exhibition Organisers and Suppliers (“SACEOS”) website,

http://www.saceos.org.sg, as at 21 September 2011 and CommunicAsia and BroadcastAsia press release

entitled “CommunicAsia2011 and BroadcastAsia2011 Close With Strong Results”, 24 June 2011

(5) Singapore Education website http://www.singaporeedu.gov.sg, as at 21 September 2011

(6) Singapore Medicine website, http://www.singaporemedicine.com as at 21 September 2011. Singapore

Medicine is a multi-government agency comprising the Economic Development Board, IE Singapore and STB

The STB, Sentosa Leisure Group, SACEOS, CommunicAsia, BroadcastAsia, Singapore

Education, Singapore Medicine, the Economic Development Board and International

Enterprise Singapore have not consented to the inclusion of the relevant information for the

purposes of Section 249 of the SFA and are therefore not liable for the relevant statements(s)

under Sections 253 and 254 of the SFA. While we have taken reasonable steps to ensure that

the relevant statement(s) have been included in its proper context and form, we have not

independently verified the accuracy of the relevant information.

Trend Information

On the bases and assumptions below and based on the unaudited financial statements of our

Group for the financial year ended 31 December 2011, we estimate as follows (“profit

estimate”):

(i) the net asset value of our Group as at 31 December 2011 is $605.2 million; and

(ii) the profit before income tax of our Group for FY2011 is $27.9 million.

Investors should be aware that there is no assurance that the profit estimate set out above can

be achieved, as there are risks and uncertainties that may cause our actual results and

performance (after completion of the entire audit process and the adoption of our financial

statements for FY2011) to be materially different from the profit estimate set out above.

The factors that may affect our business and operations are mainly set out in the section

entitled “Risk Factors” of this Prospectus.

The profit estimate, for which our Directors are solely responsible, has been prepared on the

bases consistent with the accounting policies normally adopted by our Group in the preparation

of our financial statements.


151

The general principal assumptions underlying the profit estimate are set out below:

(a) there will be no material change in the valuation of our hotel properties as at 31 December

2011;

(b) there will be no material adverse changes in the prevailing interest rates; and

(c) there will be no exceptional circumstances, which will require provisions to bemade by our

Group in respect of any contingent liability, bad debts and other assets.

For the current financial year and barring unforeseen circumstances, our Directors have

observed the following trends:

(a) We expect the occupancy rates for our hotels to remain fairly stable or increase due to the

expected increase in visitor arrivals.

(b) We expect our operating expenses to increase due to the full-year operations of

Fragrance Hotel-Riverside, Fragrance Hotel-Elegance and Parc Sovereign Hotel,

compliance costs as a listed company as well as the impact of the Service Agreements

entered into with our Executive Directors. Further details are set out in the section entitled

“Directors, Management and Staff — Service Agreements” of this Prospectus.

(c) Some of our suppliers or contractors may increase the selling prices of their products or

services in response to an increase in raw material, labour and transportation costs.

(d) We expect the labour cost to increase due to the increasing demand for hospitality-related

jobs and any change in government policies for hiring foreigners.

(e) We expect our financing cost to increase and our liquidity to decrease as we will be

financing the acquisition of our hotel properties pursuant to the Restructuring Exercise

using bank loans. Please refer to the section entitled “General Information of Our Group—

Restructuring Exercise” of this Prospectus for further details on the Restructuring

Exercise.

There is however no assurance that the growth pattern as reflected in the past financial years

will continue.

Save as disclosed above and under the sections entitled “Risk Factors”, “Management’s

Discussion and Analysis of Results of Operations and Financial Position” and “Prospects,

Business Strategies and Future Plans” of this Prospectus, and barring any unforeseen

circumstances, our Directors are not aware of any other known recent trends, uncertainties,

demands, commitments or events that are reasonably likely to have a material and adverse

effect on our revenue, profitability, liquidity or capital resources, or that would cause financial

information disclosed in this Prospectus to be not necessarily indicative of our future operating

results or financial position. Please also refer to the section entitled “Cautionary Note

Regarding Forward-Looking Statements” of this Prospectus.


152

Our Business Strategies and Future Plans

We intend to implement the following business strategies and future plans:

Expansion of our “Fragrance” and “Parc Sovereign” brands of hotels

Weplan to increase the number of hotel properties we operate under the “Fragrance” and “Parc

Sovereign” brands of hotels. We believe that such expansion plans will allow us to capitalise on

our experience in conceptualising and operating economy-tier to mid-tier hotels. In doing so,

we hope to meet the increase in demand for affordable hotel stays by tourists from the

Asia-Pacific region due to the popularity of the Integrated Resorts and the attractive offerings

from the budget airlines.

We are in the process of identifying potential sites for hotel development and expect to pursue

one or more of these opportunities within one year from the Listing Date. We intend to add 200

to 300 rooms to our economy-tier and/or mid-tier hotels within one to two years after successful

acquisition of the development site. The actual opportunities pursued will depend on, among

other things, whether the Company is successful in any private or government land sales

programs or bidding processes (where applicable) and the final pricing of the sites or projects

involved.

We also plan to increase the number of hotel properties we operate under the “Fragrance” and

“Parc Sovereign” brands of hotels by entering into hotel management agreements with third

parties to manage and operate hotels that are owned by the third parties, under the “Fragrance”

and/or “Parc Sovereign” brands. This will enable us to take advantage of commercial

opportunities in the market which may make it more advantageous for us to manage and

operate the hotel rather than acquiring the hotel.

We also plan to expand into the Asia-Pacific region, particularly in countries such as Malaysia,

Indonesia and the Philippines, with focus on the economy-tier hotel market segment, as and

when the opportunity arises through setting up of new subsidiaries, establishment of joint

venture with local partners and/or acquisitions of business or assets. Should such opportunity

arise, we will seek approval where necessary, from our shareholders and the relevant

authorities as required by the relevant laws and regulations.

We have earmarked $30.0 million of our net proceeds from the issue of New Shares for our

expansion plans. We may also finance such expansion plans by way of internal resources

and/or through new debt or equity financing.

Upgrading our existing hotels

In order to stay competitive in the market and enhance the value of our hotels, the Group

intends to upgrade and refurbish our current portfolio of hotels. The Group believes that the

refurbished hotels will be able to command higher room rates and improve occupancy rates,

which would then increase our Group’s revenue and profits.


153

We plan to renovate Fragrance Hotel-Ruby over the course of 2012 at an approximate cost of

$2.0 million. There are presently no definite plans to upgrade any of our other hotels, though we

may do so as and when the need arises.

We intend to finance refurbishment of our hotels with internally generated funds.

Launching of more aggressive marketing strategies

The increasing popularity of booking hotels on-line through e-commerce or social media has

changed the way tourists currently search and book their hotel rooms. Moving forward, this

trend will likely continue and hence, we plan to increase our collaborations with the on-line

travel agents to engage our customers globally and through multiple platforms. In addition, we

plan to launch a new interactive booking engine in 2012 (at an approximate cost of $60,000) as

well as review existing portal design so as to facilitate the booking process for persons seeking

accommodation with us.

Furthermore, we plan to strengthen our collaborations with the budget airlines to promote our

hotels in order to capitalise on the affordable air fares offered by them.

With the expansion of the BTMICE market in Singapore, we plan to increase our presence in

the BTMICE market through our close relationships with the STB and the SHA to promote our

economy-tier and mid-tier hotels.

We intend to finance implementation of these plans with internally generated funds.

Lowering the cost of operations

We will review the energy efficiency of the electrical appliances and sanitary fittings in our

hotels and where economically feasible, upgrade such appliances and fittings so as to be more

energy efficient. In addition, we will continue to educate all our operating staff on energy

conservation so as to achieve the dual aims of environmental conservation and costs savings.

We currently outsource our laundry services to third parties. We will explore the feasibility of

establishing our own laundry service to reduce the outsourcing costs and operating expenses.

We intend to finance implementation of these plans with internally generated funds.


154

SHARE CAPITAL

Our Company was incorporated in Singapore on 19 September 2011 under the Companies Act

as a private company limited by shares, under the name of “Global Hotels Pte. Ltd.”. We

changed our name to “Global Premium Hotels Pte. Ltd.” on 21 February 2012. On 29 March

2012 our Company further changed its name to “Global Premium Hotels Limited” in connection

with its conversion to a public company limited by shares.

As at the date of incorporation, the issued and paid-up share capital of our Company was $1

comprising one Share.

As at the Latest Practicable Date, the issued and paid-up share capital of our Company was $1

comprising one Share.

At the extraordinary general meetings deemed to be held on 21 March 2012 and 23 March

2012, our Controlling Shareholder, FGL approved, inter alia, the following:

(a) the conversion of our Company into a public company limited by shares and the

consequential change of name to “Global Premium Hotels Limited”;

(b) the adoption of the Memorandum and Articles of Association;

(c) the issue of the New Shares pursuant to the Invitation, which when allotted, issued and

fully paid, will rank pari passu in all respects with our existing issued Shares;

(d) that authority be given to our Directors, pursuant to Section 161 of the Companies Act, to:

(i) (aa) issue Shares whether by way of rights, bonus or otherwise; and/or

(bb) make or grant offers, agreements or options (collectively, “Instruments”) that

might or would require Shares to be issued during the continuance of this

authority or thereafter, including but not limited to the creation and issue of (as

well as adjustments to) 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 our Directors may, in their absolute discretion, deem fit; and

(ii) issue Shares in pursuance of any Instrumentsmade or granted by our Directors while

such authority was in force (notwithstanding that such issue of Shares pursuant to

the Instruments may occur after the expiration of the authority contained in this

resolution),

Provided that:

(iii) the aggregate number of Shares issued pursuant to such authority (including the

Shares to be issued in pursuance of Instruments made or granted pursuant to such

authority), does not exceed 50.0% of the Post-Invitation Issued Share Capital, and

provided further that where Shareholders with registered addresses in Singapore are

not given the opportunity to participate in the same on a pro-rata basis (“non pro-rata

SHARE CAPITAL AND SHAREHOLDERS

155

basis”), then the Shares to be issued under such circumstances (including the

Shares to be issued in pursuance of Instruments made or granted pursuant to such

authority) shall not exceed 20.0% of the Post-Invitation Issued Share Capital;

(iv) (unless revoked or varied by our Company in general meeting) the authority so

conferred shall continue in force until the conclusion of the next annual general

meeting of our Company or the date by which the next annual general meeting of our

Company is required by law to be held, whichever is the earlier.

For the purposes of this resolution, the “Post-Invitation Issued Share Capital” shall mean

the total number of issued Shares of our Company (excluding treasury shares)

immediately after this Invitation, after adjusting for: (i) new Shares arising from the

conversion or exercise of any convertible securities; (ii) new Shares arising from

exercising share options or vesting of share awards outstanding or subsisting at the time

such authority is given, provided the options or awards were granted in compliance with

the Listing Manual; and (iii) any subsequent bonus issue, consolidation or sub-division of

Shares; and

(e) The adoption of the Global Premium Hotels PSP, the rules of which are set out in

Appendix H of this Prospectus and that our Directors be authorised to allot and issue

Award Shares upon the vesting of the Awards granted under the Global Premium Hotels

PSP.

As at the date of this Prospectus, our Company has only one (1) class of shares, being ordinary

shares. The rights and privileges of our Shares are stated in our Articles of Association. Save

for the Award Shares, there is no founder, management, deferred or unissued shares reserved

for issuance for any purpose. There are no Shares that are held by or on behalf of our Company

or by any of our Subsidiaries.


156

Details of the changes in the issued and paid-up share capital of our Company since

incorporation is set out as follows:

Number of

Shares

Resultant Issued

and Paid-up

Share Capital

($)

Issued and fully paid-up Shares as at incorporation 1 1

Issuance of Consideration Shares pursuant to the

Restructuring Exercise 549,999,999 137,499,999

Pre-Invitation issued and paid-up share capital 550,000,000 137,500,000

Issue of New Shares pursuant to this Invitation 450,000,000 113,541,000(1)

Post-Invitation issued and paid-up share capital 1,000,000,000 251,041,000(1)

Note:

(1) This amount assumes the setting-off against share capital estimated expenses incurred in connection with the

Invitation of approximately $3.4 million, and excludes estimated expenses incurred in connection with the

Invitation of approximately $1.5 million to be charged directly to the combined statements of comprehensive

income.

Shareholders

Our Directors and Shareholders and their respective equity interests in our Company as at the

Latest Practicable Date and immediately after the Invitation are set out below:

As at the Latest Practicable Date

After the Invitation

(assuming the Over-allotment Option

is not exercised)

Direct Interest Deemed Interest Direct Interest Deemed Interest

No. of Shares % No. of Shares % No. of Shares % No. of Shares %

Directors

Koh Wee Meng(1) — — 1 100.0 — — 550,000,000 55.0

Lim Chee Chong — — — — — — — —

Sim Mong Yeow — — — — — — — —

Kau Jee Chu — — — — — — — —

Kwan Chee Wai — — — — — — — —

Woo Peng Kong — — — — — — — —

Shareholders

FGL 1 100.0 — — 550,000,000 55.0 — —

Lim Wan Looi(2) — — 1 100.0 — — 550,000,000 55.0

Public — — — — 450,000,000 45.0 — —

Total 1 100.0 —- — 1,000,000,000 100.0 —- —

Notes:

(1) Mr. Koh Wee Meng has a direct 73.24% shareholding interest in FGL. Accordingly, Mr. Koh Wee Meng is

deemed to be interested in the Shares held by FGL by virtue of Section 4 of the SFA.

(2) Ms. Lim Wan Looi is the spouse of Mr. Koh Wee Meng. Accordingly, Ms. Lim Wan Looi is deemed to be

interested in Shares held by FGL by virtue of section 4 of the SFA.


157

Save as disclosed in the section entitled “Restructuring Exercise” of this Prospectus, there has

been no change in the percentage ownership of Shares by our Controlling Shareholder in the

past three (3) years prior to the Latest Practicable Date.

The Shares held by our Controlling Shareholder does not carry different voting rights from the

New Shares. Our Directors are not aware of any arrangement, the operation of which may, at

a subsequent date, result in a change in control of our Company.

Save as disclosed in this Prospectus, our Company is not directly or indirectly owned or

controlled by another corporation, any government or other natural or legal person whether

severally or jointly.

Moratorium

To demonstrate their commitment to our Group, our Controlling Shareholder, FGL, which holds

550,000,000 Shares, representing approximately 55.0% of our enlarged issued and paid-up

share capital after this Invitation (assuming that the Over-allotment Option is not exercised),

has undertaken to the Issue Manager and our Company that, for a period of six (6) months

commencing from the date of admission of our Company to the Official List of SGX-ST, it will

not offer, pledge, sell, contract to sell, sell any option or contract to purchase, grant any option,

right or warrant to purchase, lend, enter into any contract that will directly or indirectly constitute

or will be deemed as a disposal of, hypothecate or encumber or otherwise transfer or dispose

of, directly or indirectly, any part of its interests in our Company. In connection with the Share

Lending Agreement, FGL may lend up to 67,500,000 Shares to the Issue Manager. The

restrictions above do not apply to the Shares lent to the Issue Manager pursuant to the Share

Lending Agreement, provided that these restrictions shall apply to the Shares returned to FGL

pursuant to the Share Lending Agreement. Please refer to the section entitled “The Invitation—

Plan of Distribution” of this Prospectus for further details.

Our Non-Executive Director, Mr. Koh Wee Meng, who directly owns 73.24% of the issued and

paid-up share capital of FGL, has undertaken to the Issue Manager and our Company that for

a period of six (6) months commencing from the date of admission of our Company to the

Official List of SGX-ST, he will not, offer, pledge, sell, contract to sell, sell any option or contract

to purchase, grant any option, right or warrant to purchase, lend, enter into any contract that will

directly or indirectly constitute or will be deemed as a disposal of, hypothecate or encumber or

otherwise transfer or dispose of, directly or indirectly, any part of his interests in FGL.

Ms. Lim Wan Looi, the spouse of Mr. Koh Wee Meng, directly owns 10.94% of the issued and

paid-up share capital of FGL, has undertaken to the Issue Manager and our Company that for

a period of six (6) months commencing from the date of admission of our Company to the

Official List of SGX-ST, she will not, offer, pledge, sell, contract to sell, sell any option or

contract to purchase, grant any option, right or warrant to purchase, lend, enter into any

contract that will directly or indirectly constitute or will be deemed as a disposal of, hypothecate

or encumber or otherwise transfer or dispose of, directly or indirectly, any part of her interests

in FGL.


158

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DIRECTORS,MANAGEMENTANDSTAFF

159

Directors

Our board of Directors is entrusted with the responsibility for the overall management of our

Company. The particulars of our Directors as at the date of lodgement of this Prospectus are as

follows:

Name Age Address Principal Occupation

Koh Wee Meng 48 20 Cove Grove

Singapore 098131

Non-Executive Chairman

Lim Chee Chong 36 Blk 567 Hougang Street 51

#06-69

Singapore 530567

Chief Executive Officer and

Executive Director

Sim Mong Yeow 59 35 Joo Chiat Avenue

Singapore 428150

Chief Operating Officer and

Executive Director

Kau Jee Chu 73 5 Jalan Bahasa

Singapore 299261

Independent Director of

Aspial Corporation Limited

Kwan Chee Wai 41 66 Elias Road #08-11

Oasis @ Elias

Singapore 519941

Accounting and Finance

Lecturer

Woo Peng Kong 59 33 Soo Chow View

Singapore 575425

Executive Director of Viking

Offshore & Marine Limited

Information on the business and working experience, education and professional

qualifications, if any, and areas of responsibilities of each of our Directors are set out below:

Mr. Koh Wee Meng is our Non-Executive Chairman. Mr. Koh founded the FGL Group in the

early 1990s. He is the Executive Chairman and Chief Executive Officer of our Controlling

Shareholder, FGL. Mr. Koh is responsible for the overall strategy, management and operations

of the FGL Group. His responsibilities include overseeing all aspects of the property

development business of the FGL Group.Mr. Koh has approximately 25 years of experience in

property development.

Prior to founding the FGL Group, Mr. Koh was a director of Menglee & Wheeseng Investment

(1983) Pte. Ltd. (now known as Fragrance Land) since 1983 where he was responsible for its

property development projects.

Mr. Koh was awarded an honourary Doctorate of Philosophy in Entrepreneurship from

Wisconsin International University in 2004.

Mr. Koh Wee Meng is the brother-in-law of our Executive Director, Mr. Lim Chee Chong.

Mr. Lim Chee Chong is our Chief Executive Officer and is responsible for overseeing our

operations, setting directions for new growth areas and developing business strategies. Mr.

Lim manages our day-to-day operations, including overseeing the development of our hotel

DIRECTORS, MANAGEMENT AND STAFF

160

projects from inception to completion. Mr. Lim is involved in the conceptualisation of the design,

operating functions and property enhancements of our Group’s new and existing hotel

buildings. He spearheaded the launch of our Group’s premium brand hotel, “Parc Sovereign

Hotel”. Mr. Lim served as an executive director of our Controlling Shareholder, FGL, from April

2010 toMarch 2012. Prior to that, Mr. Limwas the director of property development of FGL from

2007 to 2010 and was responsible for the overall supervision of the residential, commercial and

hotel development projects of FGL.

From 2005 to 2006, Mr. Lim was hired as a project manager of SLF Management Services Pte.

Ltd. and was responsible for managing the residential development projects of NTUC Choice

Home from inception to completion. From 2004 to 2005, Mr. Lim worked as a project director of

Fragrance Project Management Pte. Ltd., a wholly-owned Subsidiary of our Controlling

Shareholder, FGL. As a project director, his responsibilities included management of the

project team and the customer service team. From 2000 to 2003, Mr. Lim was the project

manager of World Class Land Pte. Ltd., a wholly-owned Subsidiary of Aspial Corporation

Limited, a company listed on the Main Board of the SGX-ST. Mr. Lim was responsible for

managing the residential development projects of World Class Land Pte. Ltd.

Mr. Lim earned a Bachelor’s degree in Engineering (Electrical & Electronic Engineering) from

the Nanyang Technological University, Singapore in 2000.

Mr. Lim Chee Chong is the brother-in-law of our Non-Executive Director, Mr. Koh Wee Meng.

Mr. SimMong Yeow is our Chief Operating Officer and is responsible for overseeing the entire

business operations of our Group, including the management of hotel operations, sales and

marketing and human resources. Mr. Sim has been instrumental in our Group’s growth and has

been leading the expansion of our business and operations since he joined our Controlling

Shareholder, FGL as an executive director from October 2005 to March 2012. Prior to that, Mr.

Sim served as the independent director of FGL from December 2004 to October 2005.

From 2004 to 2005, Mr. Sim worked as a manager of Singpost Retail Services Pte Ltd. where

he assisted in the setting up and management of a pawnshop. From 2002 to 2004, Mr. Sim

worked at OCBCBank as their vice president of business development and was responsible for

marketing business credit schemes and wealth management products to small and medium-

sized enterprises. From 2000 to 2002, Mr. Sim was the vice president and team leader at

Keppel Tatlee Bank Ltd where he was in charge of the overall operations of a single branch and

was also responsible for overseeing the performance of several branches. From 1981 to 1999,

Mr. Sim worked his way up from a credit and marketing officer to the position of branch

manager and team leader at Asia Commercial Bank Ltd and Keppel Bank Ltd. Mr. Sim began

his career in Industrial and Commercial Finance Ltd as a credit and operations officer and

worked there from 1976 to 1981. Mr. Sim was responsible for, inter alia, the marketing and

sales of various retail and commercial loans.

Mr. Sim attained the Singapore-Cambridge General Certificate of Education Advanced Level

Examination Pass. Mr. Sim is an associate of the Chartered Institute of Bankers since 1981 and

an associate of the Institute of Chartered Secretaries and Administrators since 1983.

Mr. Kau Jee Chu is our Independent Director. Mr. Kau is currently an independent director of

Aspial Corporation Limited, a company listed on the Main Board of the SGX-ST. Mr. Kau is a


161

member of the audit committee of Aspial Corporation Limited and is responsible for overseeing

the internal controls and auditing functions of the company.

Mr. Kau has over twenty-seven (27) years of experience in the banking and finance industry

and has held senior management roles in various financial institutions. From December 2002

to March 2009, Mr. Kau was an independent director of Hiap Moh Corporation Limited where

he was a member of the audit committee and remuneration committee. From 2003 to 2005, Mr.

Kau was an independent director and a member of the audit committee and remuneration

committee of CAM International Corporation Limited. From 1988 to 2003, Mr. Kau was an

independent director and a member of the audit committee and nominating committee of Hotel

Negara Limited. Prior to that, from 1992 to 2002, Mr. Kau was the chairman of OUB Securities

Pte. Ltd. where he was responsible for overseeing the stock broking business carried out by the

company. From 1985 to 2002, Mr. Kau was the chief executive officer and executive director of

Overseas Union Trust Limited where he was responsible for the general management of the

company. From 1975 to 1982, Mr. Kau was the general manager of Singapura Building Society

Limited (now known as Singapura Finance Limited) where he was also responsible for the

general management of the company.

Mr. Kau earned a Bachelor of Accountancy degree from the University of Singapore (now

known as the National University of Singapore) in 1972. He is a member in retirement of the

Institute of Certified Public Accountants of Singapore and is a Fellow Chartered and Certified

Accountant of the Association of Chartered Certified Accountants since 2006. Mr. Kau is also

an adjudicator at the Financial Industry Disputes Resolution Centre Ltd.

Mr. Kwan Chee Wai is our Independent Director. Mr. Kwan is currently an accounting and

finance lecturer at the SAA Global Education, the training arm of the Institute of Certified Public

Accountants of Singapore. He also lectures in accounting and finance at the Singapore

Institute of Management, Kaplan Higher Education and LMC Pte. Ltd.

Mr. Kwan has over fifteen (15) years of experience in teaching accounting and finance at various

institutions of higher learning. Mr. Kwan has held various teaching positions at Raffles Campus

Pte. Ltd., Sumbershire Business School, Times Management Institute, Management

Development Institute of Singapore, Nanyang Polytechnic, Midland School of Commerce and

Yishun Commercial School in the past fifteen (15) years. Mr. Kwan worked as a management

accountant with Rothmans of Pall Mall (S) Pte. Ltd. from May 1997 to October 1999. From May

1995 to April 1997, Mr. Kwan worked as an assistant accountant with Sembawang Capital Pte.

Ltd.

Mr. Kwan earned a Masters of Business Research from the University of Western Australia in

2008. He also earned a Masters of Business Administration (Investment and Finance) degree

from the University of Hull in 2002, a Masters of Business Administration degree from the

University of Strathclyde in 2000 and a Bachelor of Accountancy degree from the Nanyang

Technological University in 1995. Mr. Kwan is a Fellow Certified Public Accountant of the

Institute of Certified Public Accountants of Singapore, an Associate Management Accountant

of the Institute of Certified Management Accountants of Australia, an ordinary member of the

Singapore Institute of Management, a fellow of the Association of International Accountants

United Kingdom, a fellow of the International Academy of Financial Management United States

of America and a Fellow Certified Public Accountant of the Certified Public Accountants of

Australia.


162

Mr. Woo Peng Kong is our lead Independent Director. Mr. Woo has over thirty (30) years of

experience in the oil and gas and marine and offshore industries. He has held a diverse range

of senior management roles in various private and public listed companies. Mr.Woo is currently

the executive director of Viking Offshore & Marine Limited, a company listed on the Catalist

Board of the SGX-ST. Mr. Woo is responsible for the business operations and financial

management of the company and its Subsidiaries.

Previously, between 2010 to 2011, Mr. Woo was the chief executive officer and executive

director of Renewable Energy Asia Group Limited, a company listed on the Catalist Board of

the SGX-ST. Between 2004 and 2010, Mr. Woo served as an executive director and chief

operating officer of KS Energy Services Limited (now known as KSEnergy Limited), a company

listed on the Main Board of SGX-ST. Prior to that, Mr. Woo was the founder and managing

director of GlobalTech Offshore & Marine Pte. Ltd. and co-founder and managing director of

GlobalTech Systems Engineering Pte. Ltd. from 2002 to 2010. From 2001 to 2002, Mr. Woo

was the chief executive officer of Van der Horst Engineering Services Pte. Ltd. Between 1984

to 2001, Mr. Woo co-founded and was the general manager of Oakwell Engineering Limited, a

company listed on the Catalist Board of the SGX-ST. Mr. Woo was also a director and general

manager of Oakwell Engineering International Pte. Ltd. from 1991 to 2001 and a director of

Oakwell-Breen Pte. Ltd. from 1995 to 2001.

Mr. Woo earned a Bachelor’s degree in Engineering (Mechanical) (Hons) from the University of

Singapore (now known as the National University of Singapore) in 1977 and a certified diploma

in Accounting and Finance from the Chartered Association of Certified Accountants, United

Kingdom in 1987. Mr. Woo was awarded the Esso Asia Services Inc. scholarship in 1976. He

is a member of the Institution of Engineers since 1979 and the Singapore Institute of Directors

since 2009.

Pursuant to Rule 210(5)(a) of the Listing Manual, all our Directors save for Mr. Kwan CheeWai

have prior experience as directors of public listed companies in Singapore. Mr. Kwan has

undertaken to undergo relevant training in Singapore to familiarise himself with the rules and

responsibilities of a director of a public listed company in Singapore.

Save as disclosed in the section entitled “Interested Person Transactions and Conflict of

Interests”, our Group does not have any existing business or professional relationships with our

Non-Executive Director and Independent Directors.


163

The present and past directorships for companies, of each of our Directors held in the five (5)

years preceding the date of lodgement of this Prospectus, excluding that held in our Company,

are set out below:

Name Present Directorships Past Directorships

Koh Wee Meng Group companies or entities

Fragrance AssetsFragrance CapitalFragrance InvestmentFragrance VenturesParc Sovereign Hotel Management

Group companies or entities

Fragrance Hotel Management

Other companies or entities

FGLFragrance Biz SpaceFragrance HoldingsFragrance HeritageFragrance HomesFragrance LandFragrance PropertiesFragrance RealtyJames Koh Investment Pte. Ltd.JK Auto Restoration Hub Pte. Ltd.JK Assets Pte. Ltd.JK Land Pte. Ltd.Kensington LandMLHS Holdings Pte. Ltd.Kensington Village Pte. Ltd.


—

Lim Chee Chong Group companies or entities

Fragrance AssetsFragrance CapitalFragrance InvestmentFragrance VenturesParc Sovereign Hotel ManagementFragrance Hotel Management


—


FGL


—

Sim Mong Yeow Group companies or entities

Fragrance Hotel Management


—


FGL


—

Kau Jee Chu Group companies or entities

—


—


Aspial Corporation Limited


Hiap Moh Corporation LimitedH P Y Holdings Pte Ltd

Kwan Chee Wai Group companies or entities

—


—


—


—


164


Woo Peng Kong Group companies or entities

—


—


Promoter Hydraulics Pte. Ltd.Viking Facilities Management &Operations Pte. Ltd.

Viking Offshore and Marine Limited


Atlantic Esbjerg LimitedAtlantic Marine Services B.V.Atlantic Marine Services (Cyprus)Group Limited

Atlantic Marine Services Denmark B.V.Atlantic Marine Service EgyptAtlantic Oilfield Services Ltd.Atlantic Onshore Services B.V.Blue Ocean Explorer Ltd.Casadilla Group Pte. Ltd.Girdnal Oilfield Services Inc.Global Oilfield Services Pte Ltd.GlobalTech Offshore & Marine Pte. Ltd.GlobalTech Systems Engineering Pte.Ltd.

Harta Holding Pte. Ltd.Harta Offshore & Marine Services Pte.Ltd.

KS Capital Equipment (HK) LimitedKS Discoverer 2 (HK) LimitedKS Discoverer 2 Pte. Ltd.KS Discoverer 3 (HK) LimitedKS Discoverer 4 (HK) LimitedKS Discoverer 4 Pte. Ltd.KS Discovery (HK) LimitedKS Discovery LimitedKS Drilling Pte. Ltd.KS Energy Services Limited (nowknown as KS Energy Limited)

KS Fabrication and EngineeringPte. Ltd.

KS Offshore & Marine Services Inc.KS Oil Rig Services Inc.KS Oilfield Equipment Pte. Ltd.KS Oilfield Services LimitedKS Oilfield Support LimitedKS Technical Resources (HK) LimitedKS Venture Pte. Ltd.KSAM2 Petrodrill Offshore IncKT Lion Oilfield Services Ltd.PNT (Asia Pacific) LimitedQIM Ventures LimitedRenewable Energy Asia GroupLimited

REA Power Pte. Ltd.Sphinx Frontier Ltd.United Oilfield Services Pte. Ltd.Yakki International Pte. Ltd.


165

Key Executives

Our Directors are assisted by a team of experienced and qualified Key Executives who are

responsible for the various functions of our Company. The particulars of our Key Executives as

of the Latest Practicable Date are as follows:

Name Age Principal Occupation

Chen Loong Mey 35 Chief Financial Officer

Neo En Liang 39 Vice President, Corporate Affairs

Liu Xiaojing 31 Financial Controller

Wong Ping Ping 38 Vice President, Human Resources

Yong Cheong Beng 51 Vice President, Sales

Lee Yen Mei 42 Vice President, Hotel Operations

Lim Hwee Leng 39 Vice President, Business Development

Chew Boon Seng 46 Vice President, Information Technology

The correspondence address for all our Key Executives is 168 Changi Road #04-01 Fragrance

Building Singapore 419730.

Information on the business and working experience, education and professional

qualifications, if any, and areas of responsibilities of each of our Key Executives are set out

below:

Ms. Chen Loong Mey is our Chief Financial Officer. She joined us in November 2011 and is

responsible for overseeing the finance and accounting functions, cash management, strategic

planning and budgets, tax management, corporate governance and internal controls of our

Group.

Prior to joining us from June 2008 to November 2011, Ms. Chen was the finance manager of

CapitaMalls Asia Limited, a company listed on the Main Board of the SGX-ST, where she was

responsible for the overall finance and accounting function of CapitaRetail China Trust, a real

estate investment trust listed on the Main Board of the SGX-ST, and its Subsidiaries. From July

2007 to May 2008, Ms. Chen was the group management accountant of CitySpring

Infrastructure Management Pte. Ltd., the trustee manager of CitySpring Infrastructure Trust, a

business trust listed on the Main Board of the SGX-ST, where she was responsible for

reviewing the accounts of CitySpring Infrastructure Trust as well as its sub-trust accounts.

From February 2004 to August 2006, Ms. Chen was an accountant at FGL where she was

responsible for managing and reviewing the full set of accounts of FGL and its Subsidiaries.

From August 2002 to January 2004, Ms. Chen was an audit assistant at MGI Ma & Mah Pte.

Ltd.

Ms. Chen earned a Bachelor of Science in Applied Accounting from Oxford Brookes University

in 2002 and a professional certificate in finance and accountancy from the Association of


166

Chartered Certified Accountants in 2006. She is a member of the Association of Chartered

Certified Accountants since 2006 and a Certified Public Accountant of the Institute of Certified

Public Accountants of Singapore since 2008.

Mr. Neo En Liang is our Vice President, Corporate Affairs. He joined us in June 2009, and his

responsibilities include monitoring daily revenue reports of the Group as well as liaising with

government authorities, regulatory compliance, corporate social responsibility and monitoring

workplace safety and health.

Prior to joining us, from August 2008 to March 2009, Mr. Neo was the finance executive of

SetClear Pte. Ltd., a wholly-owned subsidiary of CLSA Singapore Pte. Ltd., where he was

responsible for preparing the daily accounting reports and managing clients’ accounts across

markets in Asia, Europe and the United States. From October 2004 to August 2008, Mr. Neo

worked in the group finance, management information systems department of OCBC Bank

where he was responsible for the data quality assurance and the production of management

information systems reports.

Mr. Neo earned a Bachelor of Business (Accounting) degree fromMonash University, Australia

in 2003.

Ms. Liu Xiaojing is our Financial Controller. Ms. Liu joined us in April 2010, and assists our

Chief Financial Officer in the preparation of the financial statements of our Group as well as our

Subsidiaries, cash management, corporate governance and internal controls.

Prior to joining us, Ms. Liu worked as an audit supervisor at MGI Singapore PAC from March

2007 to March 2010. Ms. Liu was responsible for leading a team of audit associates to conduct

internal and external audit. She also provided financial and strategic risk management advice

to clients from a wide range of industries.

Ms. Liu earned a Bachelor of Science in Applied Accounting from the Oxford Brookes

University in 2008 and a diploma in Electronics, Computer and Communication Engineering

from the Singapore Polytechnic in 2003. She is a Certified Public Accountant of the Institute of

Certified Public Accountants of Singapore since 2011 and an affiliate of the Association of

Chartered Certified Accountants since 2008.

Ms. Wong Ping Ping is our Vice President, Human Resources. She joined us in January 2009

and her responsibilities include managing all aspects of staff recruitment and selection and

overseeing all issues relating to employees’ relations, compensation and benefits.

Prior to joining us, from November 2007 to June 2008, Ms Wong was the group human

resources manager at Technics Oil & Gas Ltd., a company listed on the SGX-ST, where she

was responsible for managing all aspects of human resource management. From September

2005 to November 2007, Ms.Wong was the human resources manager at LumChang Building

Contractors Pte. Ltd. where she was responsible for recruitment and selection and training and

development. From March 2004 to September 2005, Ms. Wong was the human resources

senior executive at National Healthcare Group Polyclinics where she was responsible for

managing all aspects of human resource management. From May 2002 to March 2004, Ms.


167

Wong was the human resources executive at Luxasia Pte. Ltd. where she assisted in

compensation and benefits matters and human resource policy and reporting.

Ms. Wong earned a Bachelor of Commerce degree from the Curtin University of Technology,

Australia in 2004. She earned a professional certificate in compensation and benefits

management from the Singapore Human Resource Institute in 2001. She also holds a Diploma

in Human Resource Management since 1999 and a Certificate in Human Resource

Management from the Singapore Human Resource Institute since 1997.

Mr. Yong Cheong Beng is our Vice President, Sales. He joined us on 2 June 2010 and his

responsibilities include managing the local and foreign travel agents, marine companies

customer accounts and carrying out marketing activities at regional travel fairs.

Prior to joining us, from August 2004 to May 2010, Mr. Yong was the sales and marketing

manager of Metropolitan YMCA Singapore where he was responsible for the regional markets

and managed the local travel agents, corporate accounts, internet portal sales and internet

agents. From January 1999 to July 2004, Mr. Yong was the sales and marketing manager at

Online Technology Pte. Ltd. where he was responsible for managing the online portal. From

February 1997 to December 1998, Mr. Yong was a sales and marketing executive at Pasta

Fresca De Salvatore Pte. Ltd. where he was responsible for managing the banquet sales. From

January 1986 to January 1997, Mr. Yong was the sales and marketing manager at Initial

Services Pte. Ltd. where he was responsible for managing a sales team and attending to trade

fair enquiries.

Mr. Yong earned a Diploma in Marketing from the Chartered Institute of Marketing in 1989. He

also holds a Diploma in Sales and Marketing since 1988 and a Certificate in Sales and

Marketing from the Marketing Institute of Singapore since 1985.

Ms. Lee Yen Mei is our Vice President, Hotel Operations. She joined us in 2005 and is

responsible for overseeing the daily hotel operations for the Fragrance Chain of Hotels.

Prior to joining us, from 2000 to 2005, Ms. Lee was the senior accounts officer of ISK Singapore

Pte. Ltd. where she was responsible for managing the accounts receivables, accounts

payables and the generation of monthly statements for financial closure. From 1994 to 2000,

Ms. Lee was the senior officer at the Singapore branch office of Ishihara Sangyo Kaisha Ltd.

where she was responsible for handling the branch office accounts and liaising with the major

customers in Singapore. From 1991 to 1994, Ms. Lee was the executive officer in the general

administration department of UOB Life Assurance where she was responsible for a range of

administrative duties including recruitment and staff training.

Ms. Lee earned a Diploma in Human Resource Management from the PSB Academy in 2004

and a Diploma in Accountancy from Ngee Ann Polytechnic in 1991. In August 2010, Ms. Lee

was awarded the Minister’s Award for public spiritedness from the Ministry of Home Affairs.


168

Ms. Lim Hwee Leng is our Vice President, Business Development. She joined us in February

2009 and is responsible for the marketing and sales of our hotel rooms.

From February 2002 to January 2009, Ms. Lim was the business development manager of DSL

Design & Contracts Pte. Ltd. and Shwee Realty Pte. Ltd. where she was responsible for its

business development and client servicing. From March 2001 to February 2002, Ms. Lim

worked as an air-traffic control officer for the Civil and Aviation Authority of Singapore. From

June 2000 to February 2001, Ms. Lim was the senior visual merchandiser for OG Pte. Ltd.

where she was responsible for planning and implementing effective visual merchandising

strategies for the stores that she was in charge of. From February 1997 to June 2000, Ms. Lim

was the senior visual merchandiser of Lee Hwa Jewellery where she was responsible for

conceptualising and implementing visual ideas into effective window and in-store displays and

decorations for all the island-wide outlets. From November 1995 to February 1997, Ms. Lim

worked as a visual merchandiser of Takashimaya Singapore Ltd. where she was responsible

for planning, developing and implementing the display and visual merchandising strategies for

Takashimaya-Ngee Ann City Shopping Centre.

Ms. Lim holds a Bachelor of Arts (Honours) in Graphic Design degree from The London

Institute—Camberwell College of Arts in 1995 and aDiploma in Graphic Design from Temasek

Polytechnic of Singapore in 1993.

Ms. Lim is the sister-in-law of our Executive Director, Mr. Lim Chee Chong, who as set out

above, is the brother-in-law of our Non-Executive Director, Mr. Koh Wee Meng.

Mr. Chew Boon Seng is our Vice President, Information Technology. He joined us in 2008 and

his responsibilities include managing and supporting the information technology network

infrastructure and application systems of our Group.

Prior to joining us, Mr. Chew was an information technology manager at Suntec Singapore

International Convention & Exhibition Centre from 2000 to 2008 where he was responsible for

the information technology needs of the company. From 1998 to 2000, Mr. Chew was the

assistant information technology manager of Aspial Corporation Limited where he was

responsible for assisting the director of information technology to manage the information

technology department. From 1996 to 1998, Mr. Chew was a information technology specialist

in Shimano Singapore Private Limited where he was responsible for system study, analysis

and design as well as application system development. From 1994 to 1996, Mr. Chew was a

computer operator of The Kwangtung Provincial Bank where he was responsible for providing

technical support and assisting programmers in simple database programming. From 1992 to

1994, Mr. Chew was the system controller of DBS Bank Ltd. where he was responsible for

ensuring that the daily data processing was done properly.

Mr. Chew earned a Bachelor of Science degree from the University of West London in 1995.

Mr. Chew is a member of the Information Systems Audit & Control Association since 2005,

International Information Systems Security Certification Consortium since 2004 and Singapore

Computer Society since 2004.

Save as disclosed below, none of our Key Executives has any present or past directorships

over the five (5) years preceding the date of lodgement of this Prospectus:


169


Chen Loong Mey Group companies

—

Group companies

—

Other companies

—

Other companies

—


Neo En Liang Group companies

—

Group companies

—

Other companies

—

Other companies

—

Liu Xiaojing Group companies

—

Group companies

—

Other companies

—

Other companies

—

Lee Yen Mei Group companies

—

Group companies

—

Other companies

—

Other companies

—

Yong Cheong Beng Group companies

—

Group companies

—

Other companies

—

Other companies

—

Wong Ping Ping Group companies

—

Group companies

—

Other companies

—

Other companies

—

Lim Hwee Leng Group companies

—

Group companies

—

Other companies

DSL Design & Contracts Pte. Ltd.

Shwee Realty Pte. Ltd.

Machuan Development Pte. Ltd.

Other companies

—

Chew Boon Seng Group companies

—

Group companies

—

Other companies

—

Other companies

—


170

Material Background Information on our Directors, Key Executives and Controlling

Shareholders

1. Save as disclosed below, none of our Directors, Key Executives or Controlling

Shareholders:

(a) has, at any time during the last ten (10) years, had an application or a petition under

any bankruptcy laws of any jurisdiction filed against him or against a partnership of

which he was a partner at the time when he was a partner or at any time within two

(2) years from the date he ceased to be a partner;

(b) has, at any time during the last ten (10) years, had an application or a petition under

any law of any jurisdiction filed against an entity (not being a partnership) of which he

was a director or an equivalent person or a key executive, at the time when he was

a director or an equivalent person or a key executive of that entity or at any time within

two (2) years from the date he ceased to be a director or any equivalent person or a

key executive of that entity, for the winding up or dissolution of that entity or, where

that entity is the trustee of a business trust, on the ground of insolvency;

(c) has any unsatisfied judgment against him;

(d) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or

dishonesty which is punishable with imprisonment, or has been the subject of any

criminal proceedings (including any pending criminal proceedings of which he is

aware) for such purpose;

(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a

breach of any law or regulatory requirement that relates to the securities or futures

industry in Singapore or elsewhere, or has been the subject of any criminal

proceedings (including any pending criminal proceedings of which he is aware) for

such breach;

(f) has, at any time during the last ten (10) years, had judgment entered against him in

any civil proceedings in Singapore or elsewhere involving a breach of any law or

regulatory requirement that relates to the securities or futures industry in Singapore

or elsewhere, or a finding of fraud, misrepresentation or dishonesty on his part, nor

has he been the subject of any civil proceedings (including any pending civil

proceedings of which he is aware) involving an allegation of fraud, misrepresentation

or dishonesty on his part;

(g) has ever been convicted in Singapore or elsewhere of any offence in connection with

the formation or management of any entity or business trust;

(h) has ever been disqualified from acting as a director or an equivalent person of any

entity (including the trustee of a business trust), or from taking part directly or

indirectly in the management of any entity or business trust;

(i) has ever been the subject of any order, judgement or ruling of any court, tribunal or

governmental body permanently or temporarily enjoining him from engaging in any

type of business practice or activity;


171

(j) has ever, to his knowledge, been concerned with the management or conduct, in

Singapore or elsewhere, of the affairs of:

(i) any corporation which has been investigated for a breach of any law or

regulatory requirement governing corporations in Singapore or elsewhere;

(ii) any entity (not being a corporation) which has been investigated for a breach of

any law or regulatory requirement governing such entities in Singapore or

elsewhere;

(iii) any business trust which has been investigated for a breach of any law or

regulatory requirement governing business trusts in Singapore or elsewhere; or

(iv) any entity or business trust which has been investigated for a breach of any law

or regulatory requirement that relates to the securities or futures industry in

Singapore or elsewhere,

in connection with any matter occurring or arising during the period when he was so

concerned with the entity or business trust;or

(k) has been the subject of any current or past investigation or disciplinary proceedings,

or has been reprimanded or issued any warning, by the Authority or any other

regulatory authority, exchange, professional body or government agency, whether in

Singapore or elsewhere.

Mr. Sim Mong Yeow

In August 2011, our Executive Director, Mr. Sim Mong Yeow, the licensee of Fragrance

Hotel-Kovan, was charged in court for failing to require two guests allegedly engaged in

vice activities being carried out at Fragrance Hotel-Kovan in May 2011 to fully furnish their

particulars as required by Regulation 27(1) of the Hotels Licensing Regulations. These

particulars related to, inter alia, the nationality, occupation and place of employment of the

guests in question. All charges against Mr. Sim were dropped in September 2011 and he

was issued with a conditional warning by the police against committing any offence in the

next twelve months. The condition imposed in connection with the conditional warning

was that Mr. Sim is not to commit any offence in the next twelve months from the date of

the notice. In the event that the condition is not complied with and another offence is

committed, he would be liable to be prosecuted not only for the subsequent offence but

also for the original offences in respect of which he was given the conditional warning.

As the licensee of Fragrance Hotel-Kovan, Mr. Sim assisted the police with investigations

relating to the failure to register certain guests allegedly engaged in vice activities being

carried out at Fragrance Hotel-Kovan in September 2010 in contravention of the Hotels

Licensing Regulations. The investigations against Mr. Sim were completed in November

2010 and he was issued with a warning by the police.

As the licensee of Fragrance Hotel-Imperial and Fragrance Hotel-Lavender, Mr. Sim

assisted the police with investigations relating to vice activities being carried out at

Fragrance Hotel-Imperial and Fragrance Hotel-Lavender in September 2010 and


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December 2010 in contravention of the Hotels Licensing Regulations. The investigations

against Mr. Sim were completed on December 2010 and he was issued with a conditional

warning by the police against committing any offence in the next twelve months.

As the licensee of Fragrance Hotel-Balestier, Mr. Sim assisted the police with

investigations relating to vice activities being carried out at Fragrance Hotel-Balestier in

November 2010 in contravention of the Hotels Licensing Regulations. The investigations

against Mr. Sim were completed in January 2011 and he was issued with a reminder by

the police with regards to the prohibition against vice activities being carried out in the

hotels pursuant to Regulation 24 of the Hotels Licensing Regulations.

As the licensee of Fragrance Hotel-Lavender, Mr. Sim assisted the police with

investigations relating to vice activities being carried out at Fragrance Hotel-Lavender in

November 2011 and December 2011 in contravention of the Hotels Licensing

Regulations. As at the Latest Practicable Date, no further action has been taken against

Mr. Sim in relation to the December 2011 incident. In relation to the November 2011

incident, Mr. Sim was informed by the police that the case has now been closed.

Pursuant to Section 43 of the Hotels Licensing Regulations, the Court may, in addition to

levying fines, cancel or suspend any certificate of registration and any license granted

under the Hotels Act if any person is convicted as a result of contravening any of the

provisions of the Hotels Licensing Regulations.

Furthermore, Section 8 of the Hotels Act of Singapore provides that the Hotels Licensing

Board may either cancel the certificate of registration of the hotel, cancel the licence

granted to the Hotel-keeper in respect of the hotel or cancel both the certificate and licence

if it appears to it that a hotel is being conducted in an improper or unsatisfactory manner.

Although Mr. Sim has been issued with the aforementioned warnings and a reminder in

relation to the vice activities carried out at Fragrance Hotel-Kovan, Fragrance Hotel-

Imperial, Fragrance Hotel-Balestier and Fragrance Hotel-Lavender, he has never been

convicted of an offence under either the Hotels Act or the Hotels Licensing Regulations.

As at the Latest Practicable Date and to the best of the knowledge of our Directors, we are

not aware of any precedent cases of cancellation of certificates of registration or hotel-

keeper’s licences save for the cancellation of the Hotel-keeper’s licence in the following

case. In November 2010, the Hotel-keeper’s licence holder of Shing Hotel located in

Kitchener Road in Little India, pleaded guilty to a charge of allowing vice activities on the

hotel premises(1). Although the charge followed a stern police warning for a similar offence

committed less than six days after the administration of the police warning, the Court did

not cancel the hotel’s certificate of registration but fined the Hotel-keeper’s licence holder

$800 and cancelled his Hotel-keeper’s licence(1).

Note:

(1) Extracted from on-line Straits Times media report dated 10 November 2010 entitled “Hookers cost hotel owner

his licence” obtained from Property Edge. The Property Edge and the Straits Times have not consented to the

inclusion of the relevant information for the purposes of Section 249 of the SFA and are therefore not liable for

the relevant statements(s) under Sections 253 and 254 of the SFA. While we have taken reasonable steps to

ensure that the relevant statement(s) have been included in its proper context and form, we have not

independently verified the accuracy of the relevant information.


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In the event that the Hotels Licensing Board deem that the hotel is conducted in an

improper or unsatisfactory manner upon Mr. Sim being charged for vice activities carried

out at any of our hotels, the Hotels Licensing Board may, pursuant to Section 8 of the

Hotels Act, cancel both the certificate of registration of the hotel as well as Mr. Sim’s

Hotel-keeper’s licence for that particular hotel. However, this would not affect the other

Hotel-keeper’s licences held by Mr. Sim. As at the Latest Practicable Date, we have not

received any notification letter or any other form of communication from the Hotels

Licensing Board informing us that any of the hotels for which Mr. Sim holds a hotel-

keeper’s licence is being conducted in an improper or unsatisfactory manner in breach of

Section 8 of the Hotels Act.

In the event that the Hotels Licensing Board determines that Mr. Sim does not satisfy the

fit and proper criteria, the Hotels Licensing Board may decline to renew Mr. Sim’s

Hotel-keeper’s licence when the licences expires. As at the Latest Practicable Date, our

Group has not had any difficulties renewing the Hotel-keeper’s licences held by the

licence holders. At present, Mr. Sim is the Hotel-keeper for all our Group’s hotels apart

from Parc Sovereign Hotel and Fragrance Hotel-Elegance. The Hotel-keeper’s licence

holders for the aforementioned hotels are Mr. Lim Chee Chong and Ms. Lee Yen Mei

respectively. In the event that there are any issues with Mr. Sim’s eligibility as Hotel-

keeper, the aforementioned personnel are eligible to be appointed in his place. As such,

our Directors are of the view that should Mr. Sim’s Hotel-keeper’s licence not be renewed,

it is unlikely to have a material adverse effect on our Group’s operations.

Please refer to the section entitled “General Information of Our Group — Permits,

Licences, Approvals, Certifications and Government Regulations — Breach of Hotel

Licensing Regulations” of this Prospectus for details on remedial measures taken by our

Company to prevent similar re-occurences.

Mr. Lim Chee Chong

Our Executive Director, Mr. Lim Chee Chong, the licensee of Parc Sovereign Hotel,

assisted the police with investigations relating to vice activities being carried out at Parc

Sovereign Hotel in contravention of the Hotels Licensing Regulations. The investigations

against Mr. Lim were completed in September 2011 and no further action was taken

against him.

Please refer to the section entitled “General Information of Our Group — Permits,

Licences, Approvals, Certifications and Government Regulations — Breach of Hotel

Licensing Regulations” of this Prospectus for details on remedial measures taken by our

Company to prevent similar re-occurences.

Mr. Koh Wee Meng

In FY2003 and FY2004, our Non-Executive Director, Mr. Koh Wee Meng, was a director

of various Subsidiaries of FGL which were fined for late payment on property tax, late

payment on income tax and late filing of income tax. The fines amounted to $23,363 in

FY2003 and $62,157 in FY2004. The relevant FGL Subsidiaries have paid the relevant

taxes and fines and the matter is concluded.


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Separately, on 7 January 2004, Mr. Koh was a director of Fragrance Land, a wholly-owned

subsidiary of FGL, when Fragrance Land was fined $600 by the Land Transport Authority

for unauthorised display of two signages on Balestier Road and Moulmein Road, which

were used to direct potential purchasers to its property development project known as

Treasure Loft. Fragrance Land has paid the fine and the matter was concluded.

2. Save to the extent disclosed in the section entitled “Share Capital and Shareholders” of

this Prospectus, none of our Directors or Key Executives has any equity interests in our

Company as at the date of lodgement of this Prospectus.

3. No option to subscribe for securities of our Company has been granted to, or was

exercised by, any Director or Key Executive within the two (2) financial years preceding

the date of lodgement of this Prospectus.

4. Save as disclosed in the section entitled “Directors, Management and Staff — Service

Agreements” of this Prospectus, there are no existing or proposed service contracts

between our Directors and our Company.

5. There are no shareholding qualifications for Directors in the Articles of Association.

6. Save as disclosed in the section entitled “Interested Person Transactions and Conflict of

Interests” of this Prospectus, none of our Directors is interested, whether directly or

indirectly, in the promotion of, or in any assets acquired or disposed of by, or leased to, our

Company within the two (2) years preceding the date of lodgement of this Prospectus, or

in any proposal for such acquisition or disposal or lease as aforesaid.


Interests” of this Prospectus, none of our Directors or Key Executives has any interest,

whether direct or indirect, in any company carrying on the same trade as our Company.

8. No sum or benefit has been paid or has been agreed to be paid to any Director or to any

firm in which a Director is a partner or corporation in which such Director holds shares or

debentures, in cash or in shares or otherwise by any person to induce him to become, or

to qualify him as, a Director or otherwise for services rendered by him or such firm or

corporation in connection with the promotion or formation of our Company.


Interests” of this Prospectus, none of our Directors has any interest in any existing

contract or arrangement subsisting at the date of lodgement of this Prospectus which is

significant in relation to the business of our Company.

10. Save as disclosed in the section entitled “Directors, Management and Staff” of this

Prospectus and the section entitled “Share Capital and Shareholders — Shareholders” of

this Prospectus, there is no family relationship between any of our Directors and/or Key

Executives, or between any of our Directors, Key Executives and Substantial

Shareholders.


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11. There is no arrangement or understanding with any of our Substantial Shareholders,

customers, suppliers or any other person pursuant to which any of our Directors or Key

Executives were selected as Director or Key Executive.

Service Agreements

Our Company has entered into separate Service Agreements with our Executive Directors, Mr.

Lim Chee Chong and Mr. Sim Mong Yeow (collectively, the “Appointees”). Each Service

Agreement is valid for an initial period of three (3) years with effect from the date of admission

of our Company to the Official List of the SGX-ST. Upon the expiry of the initial period of three

(3) years, the employment of each Appointee shall be automatically renewed on a year-to-year

basis. During the initial period of three (3) years, either party may terminate the Service

Agreement by giving to the other party not less than two (2) months’ notice in writing, or the

Company can give the Appointee, in lieu of notice, payment of an amount equivalent to two (2)

months’ salary based on the Appointees’ last drawn monthly salary. Our Company may also

terminate the employment of the Appointee without notice or payment in lieu of notice under,

inter alia, the following circumstances:

(a) if the Appointee is guilty of any grave misconduct or unlawful neglect in the discharge of

his duties in connection with or affecting the business of our Company;

(b) in the event of any serious or repeated breach or non-observance by the Appointee of any

of the stipulations contained in the Service Agreement;

(c) if the Appointee becomes bankrupt or makes any composition or enters into any deed of

arrangement with his creditors; or

(d) if the Appointee shall become of unsound mind.

Pursuant to the terms of the respective Service Agreements, Mr. Lim Chee Chong and Mr. Sim

Mong Yeow are entitled to receivemonthly salaries of $25,000 and $15,000, respectively. Each

of them is entitled to receive a fixed bonus of two months’ salary per annum and an annual

performance bonus of a sum calculated based on the audited consolidated profit before income

tax of our Group (“Performance Bonus”). The Performance Bonus shall be paid to the

Appointee within one (1) month of the approval by the Board of the audited consolidated

accounts of the Group for the relevant financial year. Mr. Lim Chee Chong and Mr. Sim Mong

Yeow are also entitled to receive monthly transport allowances of $2,000 and $1,600

respectively.


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The respective entitlements of the Executive Directors to the Performance Bonus are set out

below:

Performance Bonus

Lim Chee Chong

% of NPBT(1)Sim Mong Yeow

% of NPBT(1)

$5.0 million NPBT < $15.0 million 1.00% 0.35%




$35.0 million and above 2.50% 0.75%

Under the Service Agreements, each Appointee has covenanted that, except with the written

consent of our Company, he shall not, inter alia, within the Territory(2), carry on or be engaged,

concerned or interested directly or indirectly in any business carried on by our Group, entice

away any of our customers or entice away any of our employees for twelve (12) months after

ceasing his employment under his Service Agreement.

Had the Service Agreements been in place with effect from 1 January 2010, the aggregate

remuneration paid to the Appointees for FY2010 would have been approximately $1.1 million

instead of approximately $0.4 million and our profit before tax for FY2010 would have

decreased from approximately $24.1 million to approximately $23.4 million.

There is no existing or proposed service contract entered or to be entered into by our Directors

with our Company or any of our Subsidiaries which provides for benefits upon termination of

employment or severance payments.

Save as disclosed above, there are no other existing or proposed service agreements or

service contracts between our Company or our Subsidiaries and any of our Directors.

Our Remuneration Committee has considered the framework of remuneration for Executive

Directors for FY2011 and is of the view that the framework is fair and reasonable in light of the

past remuneration for our Executive Directors, as well as their respective roles, responsibilities,

and past and future contributions, and general market practices.

Directors’ and Key Executives’ Remuneration

The compensation (which includes benefits-in-kind, directors’ fees and bonuses) paid to our

Directors and our Key Executives for services rendered to our Group on an aggregate basis

and in remuneration bands are as follows:

Notes:

(1) NPBT means net profit before tax of our Group after excluding any profits arising from the disposal of hotels.

(2) Territory shall be interpreted as referring to any country where our Group has a direct presence (including but

not limited to, Singapore) and any country where our Board has approved the setting up of operations, at the

time of the cessation of employment of the Appointee with our Company.


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FY2010 FY2011

FY2012(1)

(Estimated)

Directors

Koh Wee Meng Nil(2) Nil(2) A

Lim Chee Chong Nil A B

Sim Mong Yeow B B A

Kau Jee Chu Nil Nil A

Kwan Chee Wai Nil Nil A

Woo Peng Kong Nil Nil A

Key Executives

Chen Loong Mey Nil A A

Neo En Liang A A A

Liu Xiaojing A A A

Wong Ping Ping A A A

Yong Cheong Beng A A A

Lee Yen Mei A A A

Lim Hwee Leng A A A

Chew Boon Seng A A A

Remuneration bands:

“A”: Remuneration below $250,000 per annum

“B”: Remuneration between $250,001 and $500,000 per annum

“C”: Remuneration between $500,001 and $750,000 per annum

“D”: Remuneration between $750,001 and $1,000,000 per annum

Notes:

(1) The estimated remuneration for FY2012 does not include any performance bonus that our Executive Directors

are entitled to under their respective service agreements, the details of which are set out in the section entitled

“Directors, Management and Staff — Service Agreements” of this Prospectus. In addition, all our Independent

Directors will be paid with effect from FY2012.

(2) Koh Wee Meng is an executive director of FGL and his service agreement is with FGL.

Save for contributions made for our employees by our Subsidiaries for the Central Provident

Fund, no amounts have been set aside or accrued by our Company or our Subsidiaries to

provide for pension, retirement or similar benefits for our Directors and Key Executives.

Employees

As at 31 December 2011, we have 273 full-time employees. We do not employ any part-time

staff. We do not experience any significant seasonal fluctuations in our number of employees.

Our employees are not unionised. There has not been any incidence of work stoppages or

labour disputes that affected our business. Accordingly, we consider our relationship with our

employees to be good.


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The functional distribution of our employees as at 31 December 2009, 31 December 2010 and

31 December 2011 are as follows:

As at

31 December

2009

As at

31 December

2010

As at

31 December

2011

Function

Management 10 11 16

Administration 17 17 27

Hotel Operations 199 199 230

Total 226 227 273

The increase in the total number of staff from 227 as at 31 December 2010 to 273 as at 31

December 2011 was mainly due to the opening of our new hotels, Parc Sovereign Hotel in

February 2011 and Fragrance Hotel-Riverside in November 2011.

Global Premium Hotels Performance Share Plan

On 23 March 2012, our Controlling Shareholder, FGL, approved an employee share award

scheme known as the Global Premium Hotels Performance Share Plan (the “Global Premium

Hotels PSP”), the rules of which are set out in Appendix H of this Prospectus. The Global

Premium Hotels PSP complies with the relevant rules of Chapter 8 of the Listing Manual.

As at the Latest Practicable Date, no Awards (as defined below) have been granted under the

Global Premium Hotels PSP.

Objectives of the Global Premium Hotels PSP

The purpose of adopting the Global Premium Hotels PSP is to give our Company greater

flexibility to align the interests of its employees, especially key executives, with those of

Shareholders. It is also intended that the Global Premium Hotels PSP will complement each

other in our Company’s continuing efforts to reward, retain and motivate employees to achieve

superior performance. The Global Premium Hotels PSP will further strengthen our Company’s

competitiveness in attracting and retaining employees, especially employees who have the

requisite knowledge, technical skills and experience whom our Company believes could

contribute to the development and growth of the Group. Our Company believes that with the

Global Premium Hotels PSP in place, they will strengthen and enhance our Company’s ability

to attract and retain suitable talent.

The objectives of the Global Premium Hotels PSP are as follows:

(a) to motivate the participants to optimise performance standards and efficiency and to

maintain a high-level of contribution to our Group;

(b) to retain key employees whose contributions are important to the long-term growth and

prosperity of our Group;


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(c) to instill loyalty and a stronger sense of identification by the participants with the long-term

prosperity of our Group;

(d) to attract potential employees with relevant skills to contribute to our Group and to create

value for Shareholders; and

(e) to align the interests of the participants with the interests of Shareholders.

Summary of the Global Premium Hotels PSP

The defined terms in this summary shall, unless otherwise defined, bear the meanings stated

in Appendix H entitled “Rules of the Global Premium Hotels Performance Share Plan”.

A summary of the rules of the Global Premium Hotels PSP is set out as follows:

(a) Participants

Subject to the absolute discretion of the committee tasked with the management of the

Global Premium Hotels PSP (the “Committee”), the following persons shall be eligible to

participate in the Global Premium Hotels PSP:

(i) Group Employees;

(ii) Group Executive Directors; and

(iii) Group Non-Executive Directors,

provided that, as of the date of grant of Award, such persons have attained the age of

twenty-one (21) years, are not undischarged bankrupts and have not entered into any

composition(s) with their respective creditors, and in the case of Group Employees and

Group Executive Directors, have been in the employment of the Group for at least twelve

(12) months, or such shorter period as the Committee may determine.

The Committee shall be constituted by our Remuneration Committee comprising our

Independent Director, Mr. Woo Peng Kong, our Non-Executive Director, Mr. Koh Wee

Meng and our Independent Director, Mr. Kwan Chee Wai. A member of the Committee

who is also a participant of the Global Premium Hotels PSP must not be involved in its

deliberation in respect of Awards to be granted to him.

Controlling Shareholders and their Associates will not be eligible to participate in the

Global Premium Hotels PSP. Mr. Koh Wee Meng, our Non-Executive Director who is also

a Controlling Shareholder of our Company, is not eligible to participate in the Global

Premium Hotels PSP.

(b) Scheme Administration

The Global Premium Hotels PSP shall be administered by the Committee with powers to

determine, inter alia, the following:


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(i) the date on which a contingent award of Shares is granted pursuant to the Global

Premium Hotels PSP (“Award”);

(ii) the number of Shares or cash equivalent or both which are the subject of the Award;

(iii) the Performance Target for the participant; and

(iv) the Performance Period for the participant.

Awards are personal to the participant to whom it is given and shall not be transferred

(other than to a participant’s personal representative on the death of the former), charged,

assigned, pledged or otherwise disposed of, unless with the prior approval of the

Committee.

(c) Size of the Global Premium Hotels PSP

In compliance with the requirements of the Listing Manual, the aggregate number of

Shares for which an Award may be granted on any date under the Global Premium Hotels

PSP, when added to the number of Shares issued and/or issuable in respect of:

(i) all Awards granted under the Global Premium Hotels PSP; and

(ii) all Shares, options or awards granted under any other share option or share scheme

of our Company then in force,

shall not exceed 15.0% of the total issued Shares of our Company (excluding treasury

shares) on the day preceding that date.

The Global Premium Hotels PSP shall continue to be in force at the discretion of the

Committee, subject to a maximum period of ten (10) years commencing on the date on

which the Global Premium Hotels PSP is adopted by Shareholders in a general meeting,

provided that the Global Premium Hotels PSP may continue beyond the aforesaid period

of time with the approval of Shareholders in a general meeting and of any relevant

authority which may then be required.

We believe that the 15.0% limit set by the SGX-ST gives our Company sufficient flexibility

to decide the number of Award Shares to offer to our existing and new employees. 15.0%

of the post-Invitation issued shares of our Company constitutes 67.5 million Shares. The

number of eligible participants is expected to grow over the years. Our Company, in line

with its goal of ensuring sustainable growth, is constantly reviewing our position and

considering the expansion of its talent pool which may involve employing new employees.

The employee base, and thus the number of eligible participants will increase as a result.

If the number of Award Shares available under the Global Premium Hotels PSP is limited,

our Company may only be able to grant a small number of Awards to each eligible

participant which may not be a sufficiently attractive incentive. Our Company is of the

opinion that it should have sufficient number of Award Shares to offer to existing

employees as well as to new employees. The number of Award Shares offered must also

be significant to serve as ameaningful reward for contributions to our Company and/or our

subsidiaries. However, it does not necessarily mean that our Committee will grant Awards


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up to the prescribed limit. The Committee shall exercise its discretion in deciding the

number of Award Shares to be granted to each employee which will depend on, inter alia,

the performance of our Company, our Subsidiaries, the years of service and individual

performance of the employee, the contribution of the employee to the success and

development of our Company and/or our Subsidiaries and the prevailing market

conditions.

(d) Vesting of Awards

Notwithstanding that a participant may havemet his performance target, no Award Shares

shall be vested in the event of:

(i) the decision of the Committee, in its absolute discretion, to revoke or annul such

Award;

(ii) the cessation of employment of a participant;

(iii) the bankruptcy of a participant;

(iv) the misconduct of a participant; or

(v) a take-over, winding-up or reconstruction of our Company.

Upon the occurrence of any of the events specified in paragraphs (i), (ii), (iii) and (iv)

above, an Award then held by a participant shall immediately lapse without any claim

whatsoever against our Company and/or our Group.

Upon the occurrence of any of the events specified in paragraph (v) above, the Committee

will consider, at its discretion, whether or not to release any Award, and will take into

account all circumstances on a case-by-case basis, including (but not limited to) the

contributions made by that participant.

(e) Operation of the Global Premium Hotels PSP

Subject to prevailing legislation and guidelines issued by the SGX-ST, our Company shall,

on the release date, do any one or more of the following as it deems fit in its sole and

absolute discretion:

(i) allot and issue the relevant Shares to the participant;

(ii) deliver existing Shares to the participant, whether such existing Shares are acquired

pursuant to a share purchase mandate or (to the extent permitted by law) held as

treasury shares; and/or

(iii) subject to the prior approval of the Committee and at the Committee’s absolute

discretion, pay the Equivalent Value in Cash (after deduction of any applicable taxes)

to the participant, in lieu of issuing or delivering all or some of the Shares to be issued

or delivered to the participant. The Committee, in exercising such discretion, will


182

consider each Award on a case-by-case basis and will decide, taking into account all

and any relevant factors including but not limited to the present shareholdings of the

relevant Participant.

(f) Modification or Alteration of the Global Premium Hotels PSP

Any or all the provisions of the Global Premium Hotels PSP may be modified and/or

altered at any time and from time to time by resolution of the Committee, except that:

(i) any modification or alteration which would be to the advantage of the holders of the

Awards shall be subject to the prior approval of Shareholders in a general meeting;

and

(ii) no modification or alteration shall be made without the prior approval of the SGX-ST

and such other regulatory authorities as may be necessary.

However, no modification or alteration shall adversely affect the rights attached to Awards

granted prior to such modification or alteration except with the written consent of such

number of participants who, if their Awards were released to them, would thereby become

entitled to not less than three quarters in number of all the Shares which would be issued

or delivered, as the case may be, upon the release in full of all outstanding Awards under

the Global Premium Hotels PSP.

(g) Rights and Entitlements of the Award Shares

Shares issued and allotted upon the vesting of an Award shall be subject to all the

provisions of the Memorandum and Articles of Association, and shall rank in full for all

entitlements, excluding dividends or other distributions declared or recommended in

respect of the then existing Shares, the Record Date (defined below) for which falls on or

before the relevant vesting date of the Award, and shall in all other respects rank pari

passu with other existing Shares then in issue. “Record Date” means the date fixed by the

Company for the purposes of determining entitlements to dividends or other distributions

to or rights of holders of Shares.

(h) Abstention from Voting

Shareholders who are eligible to participate in the Global Premium Hotels PSP are to

abstain from voting on any resolution of Shareholders relating to the Global Premium

Hotels PSP.

In particular, all Shareholders who are eligible to participate in the Global Premium Hotels

PSP shall abstain from voting on resolutions of the Shareholders relating to the

implementation of the Global Premium Hotels PSP. Notwithstanding the foregoing,

participants of the Global Premium Hotels PSP may act as proxies, but such participants

who are appointed as proxies will not vote on the aforementioned resolutions unless

specific instructions have been given in the proxy instrument on how the Shareholders

wish their votes to be cast for the said resolutions.


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Rationale for participation of Non-Executive Directors

Our Non-Executive Directors (including our Independent Directors) come from different

professions and backgrounds and bring to our Group a wealth of experience in corporate

governance and business management. They also provide invaluable guidance in relation to

the strategic issues and development of our Group. Our Non-Executive Directors therefore

provide our Group with a multi-disciplinary approach in evaluating and considering business

issues and opportunities.

Although they are not specifically involved in the day-to-day management of the Group, our

Non-Executive Directors are frequently consulted on various matters in relation to the business

of our Group. Our Company therefore regards these persons as an additional resource pool

and values their contributions greatly. The extension of the Global Premium Hotels PSP to our

Non-Executive Directors is thus in recognition of their services and contributions to the growth

and development of our Group.

Before granting any Award to a Non-Executive Director, the Committee will take into

consideration, inter alia, his performance and contributions to the success and development of

our Group as well as the requirements of applicable laws in relation to grant of awards. In

assessing the performance of our Non-Executive Directors, the Committee will take into

account their attendance at meetings, their membership in various committees in our Group as

well as their contributions, which includes contributing their experience to our Group in the

areas of overall business strategies, risk management and investment decisions. Our Non-

Executive Directors may be appointed asmembers of the Committee. However, the rules of the

Global Premium Hotels PSP provide that no member of the Committee shall be involved in any

deliberation in respect of Awards to be granted to him.

In order to minimise any potential conflict of interests, our Company does not intend to grant

Awards of significant sizes to our Non-Executive Directors. In particular, in the event that any

Awards are granted to our Independent Directors, the quantum of such Awards will not be of

such significance as to affect or compromise the independence of such Directors. In addition,

in the event that any conflict of interests arise in any matter to be decided upon by the Board,

our Company will request that the relevant Non-Executive Director abstain from voting on such

matter.

Mr. Koh Wee Meng, our Non-Executive Director who is also a Controlling Shareholder of our

Company, is not eligible to participate in the Global Premium Hotels PSP.

The participation in the Global PremiumHotels PSP by the participants will take place only after

the listing of our Company on the SGX-ST. By subscribing for the New Shares, investors shall

be deemed to have acknowledged and approved the participation by each of the participants in

the Global Premium Hotels PSP.

Participants holding share awards granted by FGL will not be granted further awards by FGL

following the Listing of our Company.


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Disclosures in Annual Reports

Our Company will make such disclosures in its annual report for so long as the Global Premium

Hotels PSP continues in operation, as from time to time required by the Listing Manual.

Cost of Awards Made Under The Global Premium Hotels PSP to Our Company

As the participants are not required to pay for the grant of the Awards, such grant of Awards will

have a financial effect on our Company.

The Singapore Financial Reporting Standards (“FRS”) 102 “Share-based Payment”, which is

effective for the financial periods beginning on or after 1 January 2005, requires the recognition

of an expense in respect of Awards granted under the Global Premium Hotels PSP. The

expenses will be based on the fair value of the Awards at the date of the grant and will be

recognised over the expected vesting period. However, no expense will ultimately be

recognised for any Awards granted that do not vest because of failure to satisfy the vesting

conditions.

Our Company is required to account for the grant of Awards during the vesting period, with a

corresponding increase in equity. On a cumulative basis, no amount is recognized for services

received if the equity instruments granted do not vest because of failure to satisfy a vesting

condition. Our Company shall recognise an amount for the services received during the vesting

period based on the best available estimate of the number of equity instruments expected to

vest and shall revise that estimate, if necessary. Therefore, the grant of Awards is recognised

in the statement of comprehensive income over the expected vesting period. If an employee

leaves before the end of vesting period, our Company should revise the estimated number of

equity instruments expected to vest.

The Global Premium Hotels PSP will result in an increase in our Company’s issued share

capital only if new Shares are issued to the participants. The number of new Shares issued will

depend on, inter alia, the size of the Awards granted under the Global Premium Hotels PSP.

However, if existing Shares are purchased by our Company for delivery to participants in lieu

of issuing new shares to the participants, the Global Premium Hotels PSP will have no impact

on our Company’s issued share capital.

The amount charged to our Company’s statement of comprehensive income would be the

same whether our Company settles the Awards by issuing new Shares or by purchasing

existing Shares. If new Shares are issued under the Global Premium Hotels PSP, there will be

no effect on the NTA of our Company. If existing Shares are purchased for delivery to

participants, the NTA of our Company will be impacted by the cost of the Shares purchased.

Although the Global Premium Hotels PSP will result in a charge to the statement of

comprehensive income of our Company, it should be noted that Awards are granted only on a

selective basis and will be granted to the participants whom our Company believes would have

contributed or will contribute significant value in its success including financial performance. In

particular, the grant of Awards and delivery of Shares to the participants are contingent upon

the participants meeting prescribed performance targets and conditions. Therefore, the

participants would have contributed to or will contribute significant value add to the NTA of our

Company before the Awards are granted and Shares delivered.


185

The Global Premium Hotels PSP will result in a charge to earnings equivalent to the market

value at which the existing Shares are purchased or the market value on the date at which new

Shares are issued under the Awards. Although the Global Premium Hotels PSP will have a

dilutive impact (to the extent that new Shares are issued pursuant to the Global Premium

Hotels PSP) on the EPS of our Company, the delivery of Shares to the participants in respect

of Awards granted under the Global Premium Hotels PSP is contingent upon the participants

meeting prescribed conditions. Accordingly, the earnings of our Company and our Group

should have grown before the Awards are granted and the Shares delivered.

It is expected that the dilutive impact of the Global Premium Hotels PSP on the NTA per Share

and EPS of our Company will not be significant.


186

In general, transactions between our Group and any of its Interested Persons (namely, our

Directors, or Controlling Shareholders of our Company and/or any of their Associates) are

known as Interested Person Transactions.

The following discussion on Interested Person Transactions (as defined in Chapter 9 of the

Listing Manual) for FY2009, FY2010 and FY2011 and for the period commencing 1 January

2012 up to the Latest Practicable Date is based on each member of our Group (namely, our

Company and our Subsidiaries) being an entity at risk and with Interested Persons being

construed accordingly.

In line with the rules set out in Chapter 9 of the Listing Manual, a transaction which value is less

than $100,000 is not considered material in the context of the Invitation and is not taken into

account for the purposes of aggregation in this section.

Save as disclosed below and in the section entitled “General Information of our Group —

Restructuring Exercise” of this Prospectus, our Group does not have any material transactions

with any Interested Person for FY2009, FY2010 and FY2011 and for the period commencing 1

January 2012 up to the Latest Practicable Date.

Interested Persons

Our Controlling Shareholder, FGL, is incorporated in Singapore and listed on the Main Board

of the SGX-ST. FGL is engaged in the property development business, with focus on the

development of residential, commercial and industrial properties.

As at the date of this Prospectus, FGL has six wholly-owned subsidiaries, Fragrance Land,

Fragrance Properties, Fragrance Realty, Fragrance Homes, Fragrance Heritage and

Fragrance Holdings. FGL also has another two Subsidiaries, Kensington Land and Kensington

Village, in which it has a 60% shareholding interest of such Subsidiary. Accordingly, FGL and

its Subsidiaries are Interested Persons of our Group.

Past Interested Person Transactions

Advances to the Group

FGL had advanced the following amounts to our Group which were unsecured, interest-free

and repayable on demand:

FY2009 FY2010 FY2011

From 1

January

2012 to

the Latest

Practicable

Date

Largest amount

Outstanding for

Period Under

Review

($’000) ($’000) ($’000) ($’000) ($’000)

FGL 58,388 60,943 36,732 — 50,124

INTERESTED PERSON TRANSACTIONS AND CONFLICT OF INTERESTS

187

The above amounts were advanced by FGL to our Group to finance the development of hotel

and commercial properties as well as for working capital purposes.

As at the Latest Practicable Date, all the advances owing by our Group had been fully settled

and there were no outstanding amounts due from our Group. The advances were repaid using

sale proceeds from the sale of Pasir Panjang Commercial Property, Geylang Industrial

Property, Changi Road Property, hotel property at 103 Beach Road and Fragrance Hotel-

Elegance.

Our Directors are of the view that the above advances were not carried out on an arm’s length

basis and were not based on normal commercial terms as no interest was charged. We do not

intend to enter into such transactions after our listing on the Main Board of the SGX-ST.

Advances by our Group

We had advanced the following amounts to FGL which were unsecured, interest-free and

repayable on demand:

FY2009 FY2010 FY2011

From 1

January

2012 to

the Latest

Practicable

Date

Largest Amount

Outstanding for

Period Under

Review

($’000) ($’000) ($’000) ($’000) ($’000)

FGL 34,885 52,937 77,259 — 19,605

The amounts were advanced by our Group to FGL for their cash management purposes.

As at the Latest Practicable Date, all the advances owing to our Group had been fully settled

and there were no outstanding amounts due to our Group.

Our Directors are of the view that the above advances were not carried out on an arm’s length

basis and were not based on normal commercial terms as no interest was charged. We do not

intend to enter into such transactions after our listing on the Main Board of the SGX-ST.

Sale of properties to FGL’s Subsidiaries

On 30 September 2011, we entered into sale and purchase agreements for the sale of three (3)

properties to FGL’s wholly-owned Subsidiaries, Fragrance Realty and Fragrance Holdings.

The sale of these three properties was part of the Restructuring Exercise to dispose of our

non-hospitality properties as well as to resolve potential conflict of interests prior to our listing

on the Main Board of the SGX-ST.


188

The details of such transactions are as follows:

Date of Sale and

Purchase Agreement Property

Purchase Price

($’000) Purchaser

30 September 2011 Pasir Panjang Commercial

Property

23,820(1) Fragrance Realty

30 September 2011 Geylang Industrial

Property

4,589(1) Fragrance Realty

30 September 2011 Changi Road Property 7,273(1) Fragrance

Holdings

Note:

(1) The purchase price represents the acquisition cost of the respective property after deducting accumulated

depreciation (if applicable).

Our Directors are of the view that the transactions were not carried out on an arm’s length basis

and were not based on normal commercial terms, as the above-mentioned properties were

disposed as part of the Restructuring Exercise to Fragrance Realty and Fragrance Holdings at

their respective book values as at 30 September 2011.

We do not intend to enter into such transactions after our listing on the Main Board of the

SGX-ST.

As at the Latest Practicable Date, there is an amount owing of $28.2 million which will be repaid

by FGL subsidiaries to our Group on the completion of the sale of the Pasir Panjang

Commercial Property and the Changi Road Property. As at 13 April 2012, the sale of all three

properties has been completed and as at the date of this Prospectus, the amount owing has

been repaid to our Group.

Provision of corporate guarantee by an Interested Person

Our Controlling Shareholder, FGL, had provided the following corporate guarantees to secure

banking and trade facilities granted to our Group, which have since been terminated:

Financial

Institution/Lender

Type of

Facilities

Amount of

Facilities

($’000)

Facilities

Granted to

Largest Amount

Outstanding for

Period Under

Review ($’000)

Hong Leong Finance Limited Term Loan 18,808 Fragrance

Assets

18,070

UOB Group Term Loan 48,466 Fragrance

Capital

45,977


Capital

25,221


Ventures

42,441

Sing Investments & Finance

Limited

Land and

Construction

Loan

16,328 Fragrance

Ventures

12,582


189

The interest rates for the above-mentioned facilities were between approximately 2% to 3% per

annum.

No consideration was paid to FGL for the provision of the aforesaid corporate guarantees. As

such, our Directors believe that the above transactions were not entered into on an arm’s length

basis or on normal commercial terms but were not prejudicial to the interests of our Group

and/or minority shareholders.

Partial occupation of Changi Road Property by the FGL Group for no consideration

FGLGroup occupied part of the Changi Road Property for use as their corporate headquarters.

No consideration was paid by the FGL Group for such occupation.

Our Directors are of the view that the above transaction was not carried out on an arm’s length

basis and was not based on normal commercial terms as no consideration was paid by the FGL

Group for their occupation.

The Changi Road Property has since been disposed and accordingly, such transactions will not

occur after our listing on the Main Board of the SGX-ST.

On-going Interested Person Transactions

Provision of corporate guarantee by an Interested Person

As at the Latest Practicable Date, our Controlling Shareholder, FGL, provided the following

corporate guarantees to secure banking and trade facilities granted to our Group:

Financial

Institution/Lender

Type of

Facilities

Amount of

Facilities

($’000)

Facilities

Granted to

Largest

Amount

Outstanding

for Period

Under

Review

($’000)

Amount

Outstanding

as at the

Latest

Practicable

Date

($’000)

Hong Leong Finance

Limited

Term Loan 5,695 Fragrance

Capital

5,300 4,194

OCBC Bank Term Loan 173,400 Fragrance

Ventures

127,472 126,901

UOB Group Term Loan 15,200 Fragrance

Investment

13,430 9,614


190

The interest rates for the above-mentioned facilities were approximately between 2% to 3% per

annum.

No consideration was paid to FGL for the provision of the aforesaid corporate guarantees. As

such, our Directors believe that the above transactions were not entered into on an arm’s length

basis or on normal commercial terms but were not prejudicial to the interests of our Group

and/or minority shareholders.

As at 13 April 2012, the Hong Leong Finance Limited facility has been repaid.

Subsequent to the Invitation OCBC Bank and the UOB Group have agreed to discharge the

above guarantees provided by FGL and substitute the same with guaranteies to be furnished

by our Company.

Lease of properties to our Group

On 23 March 2012, we entered into two lease agreements with Fragrance Holdings pursuant

to which our Subsidiary, Fragrance Hotel Management, leased 2 floors of the Changi Road

Property, at an aggregate monthly rental of $21,000 for two (2) years from 1 May 2012. We

occupied the above-mentioned premises rent-free from 13 April 2012 to 30 April 2012. Mr. Koh

Wee Meng abstained from all board decisions taken in relation to the lease agreements. The

details of the two lease agreements are as follows:

PropertiesLeased by Location Area Tenure

RegisteredOwner

Rental(permonth)



168 Changi Road#03-01Singapore 419730

268.0 sq. m. Two yearsfrom 1 May2012 withoption torenew forfurther twoyears

FragranceHoldings

$10,500 Office


168 Changi Road#04-01Singapore 419730

268.0 sq. m. Two yearsfrom 1 May2012 withoption torenew forfurther twoyears

FragranceHoldings

$10,500 Office

Our Directors are of the view that the rental rates were derived at on an arm’s length basis and

on normal commercial terms as it was supported by an independent valuation report.

Future renewal of the lease shall be subject to the review procedures set out in the section

entitled “Interested Person Transactions — Review Procedures for Interested Person

Transactions” of this Prospectus.

The lease, is not more than three (3) years and is supported by independent valuation.

Accordingly, pursuant to the exemption granted under Rule 916(1) of the Listing Manual, no

shareholders approval will be required in the future for the lease of the properties even if the

rental should exceed the applicable threshold set out in Rule 906 of the Listing Manual.


191

Review Procedures for Interested Person Transactions

Our Audit Committee, which comprises our Independent Directors, will review all Interested

Person Transactions on a quarterly basis to ensure that they are on normal commercial terms

and are not prejudicial to the interests of our Group and/or our minority Shareholders.

To ensure that all future Interested Person Transactions are carried out on normal commercial

terms and will not be prejudicial to the interests of our Group and/or our minority Shareholders,

the following procedures will be implemented by our Group:

(a) in the case of renting properties from or to an Interested Person, appropriate steps will be

taken to ensure that such rent is matched with prevailing market rates, including adopting

measures such as making relevant enquiries with landlords of similar properties and

obtaining suitable valuations, reports or reviews published by property agents (where

necessary). The rent payable shall be based on the most competitive market rental rates

of similar properties in terms of size and location, based on the results of the relevant

enquiries;

(b) in the case of selling any products or supplying any services to an Interested Person, the

price or fee and terms of two (2) other successful transactions of a similar nature with

non-interested persons shall be used as comparison to ensure that the interests of

Shareholders are not disadvantaged. The price or fee for the supply of products or

services shall not be lower than the lowest price or fee of the two (2) other successful

transactions with non-interested persons;

(c) in the case of purchasing any products or engaging any services from an Interested

Person, two (2) other quotations from non-interested persons will be obtained for

comparison to ensure that the interests of Shareholders are not disadvantaged. The

purchase price or fee for services shall not be higher than themost competitive price or fee

of the two (2) other quotations from non-interested persons. In determining the most

competitive price or fee, all pertinent factors, including but not limited to quality,

requirements, specifications, delivery time and track record will be taken into

consideration;

(d) where it is not possible to compare against the terms of other transactions with unrelated

third parties and given that the products and/or services may be purchased only from an

Interested Person, the Interested Person Transaction will be approved by our Audit

Committee, in accordance with our Group’s usual business practices and policies. In

determining the transaction price payable to the Interested Person for such products

and/or service, factors such as, but not limited to, quantity, requirements and

specifications will be taken into account; and

(e) in addition, we shall monitor all “Interested Person Transactions” entered into by us and

categorise these transactions as follows:

(i) a Category 1 Interested Person Transaction is one where the value thereof is in

excess of or equal to 3.0% of the NTA of our Group; and


192

(ii) a Category 2 Interested Person Transaction is one where the value thereof is below

3.0% of the NTA of our Group.

All “Category 1 Interested Person Transactions” must be approved by our Audit Committee

prior to entry whereas “Category 2 Interested Person Transactions” need not be approved by

our Audit Committee prior to entry but shall be reviewed on a quarterly basis by our Audit

Committee.

Our Audit Committee will review all Interested Person Transactions, if any, on a quarterly basis

to ensure that they are carried out on normal commercial terms, are not prejudicial to the

interests of our Group and/or our minority Shareholders and in accordance with the procedures

outlined above. It will take into account all relevant non-quantitative factors. In the event that a

member of our Audit Committee is interested in any such transaction, he will abstain from

participating in the review and approval process in relation to that particular transaction.

Our Company shall prepare all the relevant information to assist our Audit Committee in its

review and will keep a register to record all Interested Persons Transactions. The register shall

also record the basis for entry into the transactions, including the quotations and other

evidence obtained to support such basis and the procedures used to determine the terms of the

transactions and whether the terms are normal commercial terms and not prejudicial to the

interests of our minority Shareholders.

Disclosure will be made in our Company’s annual report of the aggregate value of Interested

Person Transactions during the financial year under review and in the annual reports for the

subsequent financial years of our Company.

In addition, our Audit Committee will include the review of Interested Person Transactions as

part of the standard procedures while examining the adequacy of our internal controls. Our

Board will also comply with the provisions in Chapter 9 of the Listing Manual in respect of all

on-going and future Interested Person Transactions, and if required under the Listing Manual,

the Companies Act or the Securities and Futures Act, we will seek our Shareholders’ approval

for such transactions.

Potential Conflict of Interests

We summarise below the potential conflict of interests which may arise between us and the

FGL Group.

Non-competition Deed

FGL is a company incorporated under the laws of Singapore and is listed on the Main Board of

the SGX-ST. Upon completion of the Restructuring Exercise, the FGL Group will continue to be

engaged in property development business, focusing on the development of residential,

commercial and industrial properties. As our Group is currently involved in hotel property

development, there may be circumstances where any proposed hospitality property

development business (including hotels and serviced apartments) may be in competition with

the FGL Group’s property development business.


193

To mitigate the potential conflicts of interest arising from competition between FGL Group’s

property development business and our involvement in hospitality property development

and/or hospitality operations, our Company has entered into a non-competition deed (“Non-

competition Deed”) with FGL whereby our Company has undertaken to FGL that, from the

Listing Date and for the duration of the Non-competition Deed, our Company shall not, and

shall procure our Subsidiaries to not, whether directly or indirectly, engage in, carry on (whether

alone or in partnership or joint venture with anyone else) or otherwise be interested in (whether

as trustee, principal, agent, shareholder, unitholder or in any other capacity) non-hospitality

property development projects.

In addition, FGL has pursuant to the Non-competition Deed undertaken to us that, from the

Listing Date and for the duration of the Non-competition Deed, FGL shall not, and shall procure

its Subsidiaries to not, whether directly or indirectly, engage in, carry on (whether alone or in

partnership or joint venture with anyone else) or otherwise be interested in (whether as trustee,

principal, agent, shareholder, unitholder or in any other capacity) hospitality property

development projects and/or hospitality operations.

FGL and our Company have undertaken to each other that should either party wish to directly

or indirectly develop Mixed-Use Development Projects they can only do so jointly with each

other and not with any third party. The development of such Mixed-Use Development Project

may be on sites where the permitted use specified by the landowner includes both hospitality

property development and non-hospitality property development, or on sites where the

developer is free to determine the use of the site (“White Site”).

Any joint venture entered into by the parties in respect of the Mixed-Use Development Project

shall be on the following terms (“Joint Venture Terms”):

(a) the joint venture shall be entered into by way of a contractual joint venture arrangement

between the parties or such other arrangement as may be agreed between the parties;

(b) all financial and commercial risks and rewards deriving from the hospitality property

development operations shall be solely borne and enjoyed by our Group; and

(c) all financial and commercial risks and rewards deriving from the non-hospitality property

development operations shall be solely borne and enjoyed by FGL Group.

The Non-competition Deed shall commence on the Listing Date and be effective for so long as

(i) our Company remains listed on the SGX-ST and (ii) FGL continues to hold 15.0% or more,

directly or indirectly, of the total number of issued Shares of our Company.

Competition for White Sites to be developed exclusively for non-hospitality property

development or hospitality property development

As developers are free to determine the use of White Sites, FGL or our Company may choose

to develop the site exclusively for non-hospitality property development or hospitality property

development respectively. In such event, each party tenders for the White Site separately on

the basis of developing the White Site exclusively for its respective business and no joint

venture would be formed.


194

Our Directors are of the view that there is no material conflict of interests as our Non-Executive

Director, Mr. Koh Wee Meng who is also the Controlling Shareholder of FGL, will refrain from

participating in all matters in connection with any competition with FGL for White Sites to be

developed exclusively for hospitality property development. In addition, our Directors are under

a fiduciary duty to act in the best interests of our Company.

Lease of commercial and retail space

We currently have an ancillary business of leasing out part of our hotel properties for

commercial and retail use. The Group’s revenue derived from the ancillary business

contributed 5% or less of the total Group’s revenue in FY2008, FY2009, FY2010 and 9M2011.

The FGL Group similarly leases out some of its commercial properties for such purposes. Our

Directors are of the view that since the leasing of hotel properties for commercial and retail use

forms an ancillary part of our business, there is no material conflict of interests.

Relationship between our Director and the Controlling Shareholders and Directors of Aspial

Corporation Limited (“Aspial”)

Our Non-Executive Director Mr. KohWeeMeng’s siblings, namely Mr. KohWee Seng, Ms. Koh

Lee Hwee and Ms. Ko Lee Meng are also controlling shareholders and directors of Aspial and

its Subsidiaries. Aspial is a company listed on the SGX-ST and is also involved in property

development business. Our Directors are of the view that there is no conflict of interests as Mr.

Koh Wee Meng is not a Substantial Shareholder of Aspial and is not involved in the

management of Aspial. In addition, Aspial and our Company are separate legal entities.

Transfer of Non-hospitality Properties

As at the Latest Practicable Date, we own two non-hospitality related properties, namely the

Pasir Panjang Commercial Property and the Changi Road Property. We used to own the

Geylang Industrial Property, another non-hospitality related property (the abovementioned

shall be collectively known as, the “Non-hospitality Properties”).

As at 13 April 2012, all Non-hospitality Properties have been transferred to the FGL Group.

Please refer to the section entitled “Interested Person Transactions — Past Interested Person

Transaction” of this Prospectus for details on the transfers of the Non-hospitality Properties.

Our Directors are of the view that the conflict of interest situation arising from the ownership of

the Non-hospitality Properties by our Group has been resolved and as at the Latest Practicable

Date, there is no further material conflict of interest.

Save as disclosed above and in this section entitled “Interested Person Transactions and

Conflict of Interests” of this Prospectus:

(a) none of our Directors, Key Executives, Controlling Shareholders or any of their Associates

has had any interest, direct or indirect, in any material transactions to which our Company

was or is to be a party;


195

(b) none of our Directors, Key Executives, Controlling Shareholders or any of their Associates

has any interest, direct or indirect, in any company carrying on the same business or a

similar trade which competes materially and directly with the existing business of our

Group; and

(c) none of our Directors, Key Executives, Controlling Shareholders or any of their Associates

has any interest, direct or indirect, in any company that is our customer or supplier of

goods and services.

Save as disclosed in this Prospectus, none of our Directors, Key Executives, Controlling

Shareholders or any of their Associates has any interest in any existing contract or

arrangement which is significant in relation to the business of our Company and our

Subsidiaries, taken as a whole.


196

Our Directors recognise the importance of corporate governance and the offering of high

standards of accountability to our Shareholders. Our Board of Directors has formed three

committees: (i) the Audit Committee, (ii) the Remuneration Committee and (iii) the Nominating

Committee.

Our lead Independent Director is Mr. Woo Peng Kong.

Audit Committee

Our Audit Committee comprises our Independent Directors, Mr. Kau Jee Chu, Mr. Kwan Chee

Wai and Mr. Woo Peng Kong. The chairman of the Audit Committee is Mr. Kau Jee Chu.

Our Audit Committee will assist our Board in discharging its responsibility to safeguard our

assets, maintain adequate accounting records, and develop and maintain effective systems of

internal control, with the overall objective of ensuring that our management creates and

maintains an effective control environment in our Group. Our Audit Committee will provide a

channel of communication between our Board, our management and our external auditors on

matters relating to audit.

Our Audit Committee will meet periodically to perform the following functions:

(a) review with the external auditors and the internal auditors their audit plans including the

results of the external auditors’ and internal auditors’ review and evaluation of our system

of internal accounting controls;

(b) review the half yearly and annual, and quarterly if applicable, financial statements and

results announcements before submission to our Board for approval, focusing in particular

on changes in accounting policies and practices, major risk areas, significant adjustments

resulting from the audit, compliance with accounting standards and compliance with the

Listing Manual and any other relevant statutory or regulatory requirements;

(c) review the effectiveness and adequacy of the internal control procedures addressing

financial, operational and compliance risks including procedures for entering into hedging

transactions;

(d) review the assistance given by our management to the auditors, and discuss problems

and concerns, if any, arising from audits, and any matters which the auditors may wish to

discuss (in the absence of our management, where necessary);

(e) review and discuss with the external auditors any suspected fraud or irregularity, or

suspected infringement of any relevant laws, rules or regulations, which has or is likely to

have a material impact on our Group’s operating results or financial position;

(f) consider and recommend the appointment or re-appointment of the external and internal

auditors and matters relating to the resignation or dismissal of the auditors;

(g) review any Interested Persons Transactions and/or potential conflict of interests, and

review the guidelines and review procedures set out under the sections entitled

“Interested Person Transactions” of this Prospectus and future interested person

transactions, if any;

CORPORATE GOVERNANCE

197

(h) monitor the undertakings described under the section entitled “Potential Conflict of

Interests” of this Prospectus and review potential conflict of interest, if any;

(i) review the suitability of the Chief Financial Officer and the adequacy of the finance team

on an on-going basis;

(j) review the appointments of persons occupying managerial positions who are related to a

director or a Substantial Shareholder of our Company;

(k) undertake such other reviews and projects as may be requested by our Board, and report

to our Board its findings from time to time on matters arising and requiring the attention of

our Audit Committee;

(l) review the Company’s key financial risk areas and disclose the outcome of their reviews

in the Annual Report, or when the findings are material, immediately announce via

SGXNET; and

(m) generally undertake such other functions and duties as may be required by statute or the

Listing Manual.

Our Audit Committee will meet, as a minimum, on a quarterly basis. Apart from the duties listed

above, our Audit Committee shall commission and review the findings of internal investigations

into matters where there is any suspected fraud or irregularity, or failure of internal controls or

infringement of any Singapore law, rule or regulation which has or is likely to have a material

impact on our operating results and/or financial position. In the event that amember of our Audit

Committee is interested in any matter being considered by our Audit Committee, he will abstain

from reviewing that particular transaction or voting on that particular resolution.

Our Audit Committee shall engage a third party professional firm to carry out our internal audit

functions once every two (2) years or more regularly if required, after our Company is listed on

the Official List of the SGX-ST.

Our Directors, with the concurrence of the Audit Committee, are of the view that, as of the

Latest Practicable Date, our internal controls addressing financial, operational and compliance

risks are sufficiently adequate. Pursuant to the Eligibility-to-list Letter from the SGX-ST dated

17 February 2012, we will commission an annual internal controls audit (“Annual Internal

Controls Audit”) that will continue until such time that the Audit Committee is satisfied that the

Group’s internal controls, including those put in place to monitor and check against vice-related

violations at our hotels, are robust and effective enough to mitigate the Group’s internal control

weaknesses. Prior to the decommissioning of the Annual Internal Controls Audit, the Board will

report to the SGX-ST on how the key internal control weaknesses have been rectified, and the

basis for the decision to decommission the Annual Internal Controls Audit. Thereafter, such

audits may be initiated by the Audit Committee as and when it deems fit to satisfy itself that the

Group’s internal controls remain robust and effective. Upon completion of the Annual Internal

Controls Audit, we shall make appropriate disclosure via SGXNET on any material, price-

sensitive internal control weaknesses and any follow-up actions to be taken by the Board.


198

Our Audit Committee’s views on Chen Loong Mey’s suitability as Chief Financial Officer

Our Audit Committee has interviewed Ms. Chen Loong Mey and reviewed her educational and

professional qualifications, as well as her previous working experience.

Our Audit Committee noted Ms. Chen’s working experience at two listed entities in the real

estate and utilities sectors and her previous employment with FGL where she managed the full

set of its accounts. Hence, our Audit Committee is of the view that Ms. Chen is familiar with the

finance and accounting functions of the hotel division of FGL. Ms. Chen has also been a

member of the Institute of Certified Public Accountants of Singapore since May 2008. In

addition, our Audit Committee has also considered input from a senior officer of FGL, who

previously supervised Ms. Chen for a period of two and a half years during her employment as

accountant of FGL.

Our Audit Committee is satisfied and of the opinion that Ms. Chen is suitable to be appointed as

the Chief Financial Officer of our Group.

After making all reasonable enquiries, and to the best of their knowledge and belief, nothing

has come to the attention of our Audit Committee members to cause them to believe that Ms.

Chen does not have the competence, character and integrity expected of a Chief Financial

Officer of our Group.

Remuneration Committee

Our Remuneration Committee comprises our Non-Executive Director, Mr. Koh Wee Meng and

our Independent Directors, Mr. Kwan Chee Wai and Mr. Woo Peng Kong. The chairman of the

Remuneration Committee is Mr. Woo Peng Kong.

Our Remuneration Committee will recommend to our Board a framework of remuneration for

the Directors and Key Executives, and determine specific remuneration packages for each

Executive Director. The recommendations of our Remuneration Committee shall be submitted

for endorsement by the entire Board. All aspects of remuneration, including but not limited to

directors’ fees, salaries, allowances, bonuses, Award Shares, options and benefits-in-kind

shall be covered by our Remuneration Committee. In addition, our Remuneration Committee

will perform an annual review of the remuneration of employees related to our Directors and

Substantial Shareholders to ensure that their remuneration packages are in line with our staff

remuneration guidelines and commensurate with their respective job scopes and level of

responsibilities. They will also review and approve any bonuses, pay increases and/or

promotions for these employees. Each member of the Remuneration Committee shall abstain

from voting on any resolutions in respect of his remuneration package or that of employees

related to him.

Nominating Committee

Our Nominating Committee comprises our Non-Executive Director, Mr. KohWeeMeng and our

Independent Directors, Mr. Kau Jee Chu and Mr. Kwan Chee Wai. The chairman of the

Nominating Committee is Mr. Kwan Chee Wai.


199

Our Nominating Committee will be responsible for:

(a) reviewing and recommending the nomination or re-nomination of our Directors having

regard to the Director’s contribution and performance;

(b) determining on an annual basis whether or not a Director is independent;

(c) assessing the performance of the Board and contribution of each Director to the

effectiveness of the Board; and

(d) reviewing and approving any employment of persons related to our Directors and

Substantial Shareholders and the proposed terms of their employment.

Our Nominating Committee will recommend a framework for the evaluation of the Board’s and

individual Director’s performance for the approval of the Board. Each member of our

Nominating Committee shall abstain from voting on any resolutions in respect of the

assessment of his performance or re-nomination as director.

Term of Office

Our Articles of Association provide that the quorum necessary for transaction of business of our

Directors may be fixed by them, and unless so fixed shall be two. Save for our Executive

Directors, who have Service Agreements with us (please refer to the section entitled “Directors,

Management and Staff — Service Agreements” of this Prospectus for more details), none of

our Directors are appointed for any fixed terms. The tenure of our Executive Directors are

subject to the terms of their respective Service Agreements and to being re-elected as directors

of our Company at general meetings of our Company.

Our Directors are appointed by our Shareholders at general meeting, and an election of

Directors takes place annually. One-third (or the nearest number larger than one-third) of our

Directors, are required to retire from office at each annual general meeting. Every Director must

retire from office at least once every three (3) years. However, a retiring Director is eligible for

re-election at the meeting at which he retires.


200

SHARE CAPITAL

1. As at the date of this Prospectus, there is only one (1) class of shares in the capital of our

Company, being ordinary shares. There are no founder, management, deferred or

unissued shares. Our existing Shares do not carry voting rights which are different from

the New Shares. The rights of and privileges attached to the Shares are stated in the

Articles of Association.

2. Save as disclosed in the section entitled “Share Capital and Shareholders” of this

Prospectus, there were no changes in the issued and paid-up share capital of our

Company or our Subsidiaries within the three (3) years preceding the Latest Practicable

Date.

3. Save as disclosed in paragraph 2 above and in the section entitled “General Information

of our Group — Restructuring Exercise” of this Prospectus, no shares in or debentures of

our Company or our Subsidiaries has been issued, or is proposed to be issued, as fully or

partly paid-up for cash, or for a consideration other than cash, during the three (3) years

preceding the Latest Practicable Date.

4. No person has been granted, or is entitled to be granted, an option to subscribe for shares

in, or debentures of our Company or our Subsidiaries.

MEMORANDUM AND ARTICLES OF ASSOCIATION

5. An extract of our Articles of Association relating to, inter alia, the transferability of shares,

Directors’ voting rights, borrowing powers of Directors and dividend rights are set out in

Appendix D entitled “Summary of Memorandum and Articles of Association of our

Company” of this Prospectus. The Memorandum and Articles of Association of our

Company are available for inspection at our registered office in accordance with the

section entitled “Other General Information—Documents for Inspection” in this section of

this Prospectus.

MATERIAL CONTRACTS

6. The following contracts, not being contracts entered into in the ordinary course of

business, to which our Company or any member of our Group is a party, for the period of

two (2) years before the date of lodgement of this Prospectus with the Authority, are or

may be material:

(a) the sale and purchase agreement for the sale of the Pasir Panjang Commercial

Property. Please refer to the section entitled “Interested Persons Transactions and

Conflicts of Interests — Past Interested Person Transactions— Sale of Properties to

FGL’s Subsidiaries” of this Prospectus for further details;

(b) the sale and purchase agreement for the sale of the Geylang Industrial Property.

Please refer to the section entitled “Interested Persons Transactions and Conflicts of

Interests — Past Interested Person Transactions — Sale of Properties to FGL’s

Subsidiaries” of this Prospectus for further details;

OTHER GENERAL INFORMATION

201

(c) the sale and purchase agreement for the sale of the Changi Road Property. Please

refer to the section entitled “Interested Persons Transactions and Conflicts of

Interests — Past Interested Person Transactions — Sale of Properties to FGL’s

Subsidiaries” of this Prospectus for further details;

(d) the sale and purchase agreement for the sale of Fragrance Hotel-Elegance. Please

refer to the section entitled “General Information of Our Group — Our History and

Development” of this Prospectus for further details.

(e) the tenancy agreement in relation to Fragrance Hotel-Elegance. Please refer to the

section entitled “General Information of Our Group — Properties of this Prospectus”

for further details;

(f) the Restructuring Agreement. Please refer to the section entitled “General

Information of Our Group — Restructuring Exercise” of this Prospectus for further

details; and

(g) the sale and purchase agreement for the sale of the property at 103 Beach Road.

Please refer to the section entitled “General Information of Our Group — Our History

and Development” of this Prospectus for further details.

FINANCIAL POSITION AND OPERATIONS OF OUR GROUP

7. Save as disclosed in this Prospectus, our Directors are not aware of any event which has

occurred between 1 October 2011 and the Latest Practicable Date, which may have a

material effect on the financial position and results of operations of our Group.

8. Save as disclosed in this Prospectus, our financial position and results of operations are

not likely to be affected by any of the following:

(a) known trends, uncertainties, demands, commitments or events that will result or are

reasonably likely to result in our Group’s liquidity increasing or decreasing in any

material way;

(b) material commitments for capital expenditure;

(c) unusual or infrequent events or transactions or any significant economic changes

that materially affect the amount of reported income from operations; and

(d) known trends, uncertainties, demands, commitments or events that have had or that

our Group expects to have amaterial favourable or unfavourable impact on revenues

or operating income.

ORDER BOOK

9. Due to the nature of our business, we do not maintain an order book.


202

LITIGATION

10. To the best of our knowledge and belief, havingmade all reasonable enquiries, neither our

Company nor our Subsidiaries is engaged in any litigation or arbitration either as plaintiff

or defendant and our Directors have no knowledge and are not aware of any litigation or

arbitration which are pending or threatened against our Company or our Subsidiaries or of

any facts likely to give rise to any such litigation or arbitration, in respect of any claims or

amounts which may have or had during the 12 months immediately before the date of

lodgement of this Prospectus, a material effect on our Group’s results of operations or

financial position.

GENERAL

11. No Shares will be allotted or issued on the basis of this Prospectus later than six (6)

months after the date of registration of this Prospectus.

12. The time of opening of the Invitation is stated in the section entitled “Details of the

Invitation” of this Prospectus.

13. The amount payable on application is $0.26 for each New Share.

14. In the opinion of our Directors, there are nominimum amounts whichmust be raised by the

issue of the New Shares. Although no minimum amount must be raised by the Invitation,

such amounts which are proposed to be provided out of the proceeds of the New Shares

shall, in the event the Invitation is cancelled, be provided out of the existing banking

facilities and/or internal funds generated from operations.

15. No amount of cash or securities or benefit has been or is intended to be paid or given to

any promoter within the two (2) years preceding the date of lodgement of this Prospectus

or is proposed or intended to be paid or given to any promoter at any time in respect of this

Invitation.

16. Application monies received by our Company in respect of successful applications

(including successfully balloted applications which are subsequently rejected) will be

placed in a separate non-interest bearing account with the Receiving Bank. In the ordinary

course of its business, the Receiving Banker will deploy these monies in the interbank

money market. Our Company and the Receiving Banker have agreed that our Company

will not receive any revenue earned by the Receiving Banker from the deployment of such

monies in the interbank money market. Any refund of all or part of the application monies

to unsuccessful or partially successful applicants will be made without any interest or any

share of revenue or any other benefit arising therefrom.

17. Details, including the names, addresses and professional qualifications (including

membership in a professional body) of the auditors of our Company since the

incorporation of our Company are as follows:


203

Name, Membership

and Address Professional Body

Partner-in-charge/

Professional

Qualification

Deloitte & Touche LLP

Certified Public Accountants

6 Shenton Way #32-00

DBS Building Tower Two

Singapore 068809

Institute of Certified Public

Accountants of Singapore

Leow Chung Chong Yam

Soon/Certified Public

Accountant

18. We currently have no intention of changing our auditors after the admission of our

Company to the Official List of the SGX-ST.

19. There was no public take-over, by a third party in respect of our Shares or by the Company

in respect of the shares of another corporation or the units of a business trust, which

occurred between 1 January 2011 and the Latest Practicable Date.

MANAGEMENT AND UNDERWRITING AGREEMENT AND PLACEMENT AGREEMENT

20. Pursuant to the management and underwriting agreement (the “Management and

Underwriting Agreement”) dated 18 April 2012 entered into between our Company, the

Issue Manager and Underwriter, our Company appointed the Issue Manager to manage

the Invitation. The IssueManager will receive a management fee from our Company for its

services rendered in connection with the Invitation.

21. Pursuant to the Management and Underwriting Agreement, the Underwriter has agreed to

underwrite the Public Offer Shares for a commission of 2.0% of the Issue Price for each

Public Offer Share, payable by our Company, for subscribing or for procuring subscribers

for any Public Offer Shares. Our Company may, at our sole discretion, pay to the

Underwriter an additional incentive fee of 0.25% of the aggregate Issue Price for the

Public Offer Shares. The Underwriter may, at its absolute discretion, appoint one (1) or

more sub-underwriters for the Public Offer Shares.

22. Pursuant to the Management and Underwriting Agreement, our Company has agreed to

pay the Stabilising Manager a commission of 2.0% of the Issue Price for each Over-

allotment Share for which the Over-allotment Option has been exercised. Our Company

may, at our sole discretion, pay to the Stabilising Manager an additional incentive fee of

0.25% of the aggregate Issue Price for the Over-allotment Shares for which the Over-

allotment Option has been exercised.

23. Brokerage payable for the Public Offer Shares will be paid by our Company to members

of the SGX-ST, merchant banks and members of the Association of Banks in Singapore

in respect of accepted applications made on Application Forms bearing their respective

stamps, or to Participating Banks in respect of successful applications made through

Electronic Applications at the rate of 0.25% (and in the case of DBS Bank, 0.5%) of the

Issue Price for each Public Offer Share. In addition, DBS Bank levies a minimum

brokerage of $10,000 that will be paid by our Company.

24. Pursuant to the placement agreement (the “Placement Agreement”) dated 18 April 2012

between our Company and the Placement Agent, the Placement Agent has agreed to


204

subscribe for and/or procure subscribers for the Placement Shares for a placement

commission of 2.0% of the Issue Price for each Placement Share, payable by our

Company pursuant to the Invitation. Our Company may, at our sole discretion, pay to the

Placement Agent an additional incentive fee of 0.25% of the aggregate Issue Price for the

Placement Shares payable by us. The Placement Agent may, at its absolute discretion,

appoint one (1) or more sub-placement agents for the Placement Shares.

25. Subscribers of the Placement Shares may be required to pay a commission of up to 1.0%

of the Issue Price to the Placement Agent or its sub-placement agents (including the

relevant Goods and Services Tax, if applicable).

26. The Management and Underwriting Agreement may be terminated by the Issue Manager

and Underwriter at any time on or before the close of the Invitation on the occurrence of

certain events. These events include any changes in national or international monetary,

financial, political or economic conditions which result or are likely to result in, inter alia,

the conditions in the Singapore stock market being materially and adversely affected or

the success of the Invitation being materially prejudiced.

27. The Placement Agreement is conditional upon the Management and Underwriting

Agreement not having been terminated or rescinded pursuant to the provisions of the

Management and Underwriting Agreement and may be terminated on the occurrence of

certain events, including those specified in the foregoing paragraph.

28. In the event that the Management and Underwriting Agreement is terminated, our

Company reserves the right, at our absolute discretion, to cancel the Invitation.

29. Subject to certain conditions, the Company has agreed to indemnify the Issue Manager,

Underwriter and Placement Agent against certain liabilities (including liabilities under the

Securities and Futures Act) incurred in connection with the Invitation. Such indemnity is

provided on a full and effective basis and does not provide for any exclusions to the liability

of our Company vis-a-vis the Issue Manager, Underwriter and Placement Agent.

30. Save as disclosed in this section, no commission, discount or brokerage has been paid or

other special terms granted within the preceding two (2) years or is payable to any

Director, promoter, expert, proposed Director or any other person for subscribing or

agreeing to subscribe or procuring or agreeing to procure subscription for any Shares in or

debentures of our Company.

31. Other than the Management and Underwriting Agreement and the Placement Agreement,

where OCBC Bank was appointed as the Issue Manager, Underwriter and Placement

Agent, and save as disclosed in the section entitled “Other General Information —

Interests of Experts and Underwriters” of this Prospectus, we do not have any material

relationship with the Issue Manager, Underwriter and Placement Agent.

INTERESTS OF EXPERTS AND UNDERWRITERS

32. Interests of Experts

No expert is employed on a contingent basis by our Company or our Subsidiaries, has a

material interest, whether direct or indirect, in the shares of our Company or our

Subsidiaries, or has a material economic interest, whether direct or indirect, in our

Company, including in the success of the Invitation.


205

33. Interests of Underwriters

In the reasonable opinion of our Directors, the Underwriter, OCBC Bank, does not have a

material relationship with our Company save as below:

(a) OCBC Bank is the Issue Manager, Underwriter and the Placement Agent of the

Invitation;

(b) OCBC Bank is the Receiving Banker of the Invitation; and

(c) OCBC Bank is one of the Principal Bankers of the Group.

CONSENTS

34. (a) The Auditors and Reporting Accountants of the Company, Deloitte & Touche LLP,

have given and have not withdrawn their written consent to the issue of this

Prospectus with the inclusion herein of (i) the “Independent Auditors’ Report on the

Combined Financial Statements for the Years ended 31 December 2010, 2009 and

2008” as set out in Appendix A of this Prospectus; (ii) the “Independent Auditors’

Report on the Combined Interim Condensed Financial Statements for the Nine

Months Ended 30 September 2011” as set out in Appendix B of this Prospectus; and

(iii) the “Independent Auditors’ Report on the Unaudited Pro Forma Combined

Financial Information” as set out in Appendix C of this Prospectus in the form and

context in which they appear in this Prospectus and to act in such capacity in relation

to this Prospectus.

(b) The Issue Manager, Underwriter and Placement Agent, has given and not withdrawn

its written consent to the issue of this Prospectus with the inclusion of its name in the

form and context in which it appears in the Prospectus and to act in such capacity in

relation to this Prospectus.

(c) Euromonitor International Ltd. has given and has not withdrawn its written consent to

the issue of this Prospectus with the inclusion herein of the statements in the section

entitled “Industry Overview” of this Prospectus, and references to its name in the form

and context in which they appear in this Prospectus, and to act in such capacity in

relation to this Prospectus.

(d) Colliers International Consultancy & Valuation (Singapore) Pte Ltd has given and has

not withdrawn its written consent to the issue of this Prospectus with the inclusion

herein of its name and all references thereto, the valuation date and the valuation

quantum of the relevant property set out against its name in the section entitled

“General Information of Our Group — Properties” of this Prospectus, and its

valuation report set out in Appendix I entitled “Valuer’s Report” of this Prospectus, in

the form and context in which they appear in this Prospectus and to act in such

capacity in relation to this Prospectus. The valuation date, valuation quantum and

valuation report were prepared for the purpose of incorporation in this Prospectus.


206

RESPONSIBILITY STATEMENT BY OUR DIRECTORS

35. The Directors collectively and individually accept full responsibility for the accuracy of the

information given in this Prospectus and confirm after making all reasonable enquiries

that, to the best of their knowledge and belief, this Prospectus constitutes full and true

disclosure of all material facts about the Invitation and our Group, and the Directors are not

aware of any fact the omission of which would make any statement in this Prospectus

misleading. Where information in this Prospectus has been extracted from published or

otherwise publicly available sources or obtained from a named source, the sole

responsibility of the Directors has been to ensure that such information has been

accurately and correctly extracted from those sources and/or reproduced in this

Prospectus in its proper form and context.

DOCUMENTS FOR INSPECTION

36. The following documents may be inspected at our registered office at 168 Changi Road,

#04-01, Singapore 419730 during normal business hours for a period of six (6) months

from the date of registration of this Prospectus:

(a) the Memorandum and Articles of Association of our Company;

(b) the Independent Auditors’ Report on the Combined Financial Statements for the

Years Ended 31 December 2010, 2009 and 2008;

(c) the Independent Auditors’ Report on the Combined Interim Condensed Financial

Statements for the Nine Months Ended 30 September 2011;

(d) the Independent Auditors’ Report on the Unaudited Pro Forma Combined Financial

Information;

(e) thematerial contracts referred to in the section entitled “Other General Information—

Material Contracts” of this Prospectus;

(f) the letters of consent referred to in the section entitled “Other General Information —

Consents” of this Prospectus;

(g) the Hotels Industry Report referred to in the section entitled “Industry Overview” of

this Prospectus;

(h) the Valuer’s Report referred to in the section entitled “General Information of our

Group — Our Business” of this Prospectus;

(i) the Service Agreements referred to in the section entitled “Directors, Management

and Staff — Service Agreements” of this Prospectus; and

(j) the audited financial statements of our Subsidiaries for the financial years ended 31

December 2008, 2009 and 2010.


207

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18 April 2012

The Board of Directors

Global Premium Hotels Limited

168 Changi Road


Singapore 419730

Dear Sirs

Report on the Combined Financial Statements

We have audited the accompanying combined financial statements of Global Premium Hotels

Limited (the “Company”) and its subsidiaries (the “Group”). The combined financial statements

comprise the combined statements of financial position as at 31 December 2010, 2009 and

2008, and the related combined statements of comprehensive income, combined statements

of changes in equity and combined statements of cash flows of the Group for the years ended

31 December 2010, 2009 and 2008 (the “Relevant Periods”), and a summary of significant

accounting policies and other explanatory notes, as set out on pages A-3 to A-45.

Management’s Responsibility for the Combined Financial Statements

Management is responsible for the preparation of these combined financial statements that

give a true and fair view in accordance with the provisions of the Singapore Financial Reporting

Standards and for devising and maintaining a system of internal accounting controls sufficient

to provide a reasonable assurance that assets 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 balance sheets

and to maintain accountability of assets.

Auditors’ Responsibility

Our responsibility is to express an opinion on these combined financial statements based on

our audit. We conducted our audit in accordance with the Singapore Standards on Auditing.

Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the combined financial statements are

free from material misstatement.

APPENDIX A

INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIALSTATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2010,

2009 AND 2008

A-1

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the combined financial statements. The procedures selected depend on the

auditor’s judgement, including the assessment of the risks of material misstatement of the

combined financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation of

combined financial statements that give a true and 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 combined financial

statements. We believe that the audit evidence we have obtained is sufficient and appropriate

to provide a basis for our audit opinion.

Opinion

In our opinion, the combined financial statements of the Group are properly drawn up in

accordance with Singapore Financial Reporting Standards so as to give a true and fair view of

the state of affairs of the Group as at 31 December 2010, 2009 and 2008 and of the results,

changes in equity and cash flows of the Group for the Relevant Periods.

Restriction on Distribution and Use

These combined financial statements have been prepared solely in connection with the

proposed listing of Global Premium Hotels Limited on the Singapore Exchange Securities

Trading Limited for inclusion in the prospectus. This report is made solely to you, as a body and

for no other purpose. We do not assume responsibility towards or accept liability to any other

person for the contents of this report.

Yours faithfully


Public Accountants and


Singapore

Leow Chung Chong Yam Soon

Partner

APPENDIX A


2009 AND 2008

A-2


COMBINED STATEMENTS OF FINANCIAL POSITION

As at 31 December 2010, 2009 and 2008

Note 2010 2009 2008

$’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 7 2,811 2,458 1,923

Trade receivables 8 1,274 985 1,216

Other receivables 9 5,982 11,149 15,473

Properties under development 10 26,846 23,820 —

Total current assets 36,913 38,412 18,612

Non-current asset

Property, plant and equipment 11 701,942 425,284 323,412

Total assets 738,855 463,696 342,024

LIABILITIES AND EQUITY

Current liabilities

Trade payables 12 1,188 1,236 1,223

Other payables 13 49,986 45,515 26,067

Term loans 14 7,895 12,198 6,433

Income tax payable 4,435 2,829 3,596

Total current liabilities 63,504 61,778 37,319


Term loans 14 150,448 134,832 98,996

Deferred tax liability 15 23,815 4,751 3,760

Total non-current liabilities 174,263 139,583 102,756


Share capital 16 27,100 27,100 27,100

Revaluation reserve 17 451,552 213,654 157,779

Retained earnings 22,436 21,581 17,070

Total equity 501,088 262,335 201,949

Total liabilities and equity 738,855 463,696 342,024

See accompanying notes to combined financial statements.

APPENDIX A


2009 AND 2008

A-3


COMBINED STATEMENTS OF COMPREHENSIVE INCOME

For the financial years ended 31 December 2010, 2009 and 2008

Note 2010 2009 2008

$’000 $’000 $’000

Revenue 18 44,215 34,579 36,893

Cost of sales (5,156) (4,883) (4,895)

Gross profit 39,059 29,696 31,998

Other operating income 19 280 221 196

Administrative expenses (12,223) (10,355) (9,319)

Finance costs 20 (3,001) (3,184) (3,239)

Profit before income tax 24,115 16,378 19,636

Income tax expense 21 (4,260) (2,867) (3,505)

Profit for the year 22 19,855 13,511 16,131

Other comprehensive income:

Revaluation of land and hotel buildings 256,957 56,843 25,106

Income tax effects (19,059) (968) 3

Net other comprehensive income 237,898 55,875 25,109

Total comprehensive income for the year 257,753 69,386 41,240

Basic and diluted earnings per share (cents) 24 3.61 2.46 2.93


APPENDIX A


2009 AND 2008

A-4


COMBINED STATEMENTS OF CHANGES IN EQUITY


Note

Share

capital

Revaluation

reserve

Retained

earnings Total

$’000 $’000 $’000 $’000

Balance at 1 January 2008 25,100 132,857 6,138 164,095

Transfer on sale of land and hotel

building 17 — (187) 187 —

Issue of shares 2,000 — — 2,000

Total comprehensive income for

the year — 25,109 16,131 41,240

Dividends paid 23 — — (5,386) (5,386)

Balance at 31 December 2008 27,100 157,779 17,070 201,949


the year — 55,875 13,511 69,386

Dividends paid 23 — — (9,000) (9,000)



the year — 237,898 19,855 257,753

Dividends paid 23 — — (19,000) (19,000)



APPENDIX A


2009 AND 2008

A-5


COMBINED STATEMENTS OF CASH FLOWS


2010 2009 2008

$’000 $’000 $’000

Operating activities


Adjustments for:

Depreciation of property, plant and equipment 2,058 1,685 1,500

Loss on disposal of property, plant and equipment 1 27 2

Interest expense 3,001 3,184 3,239

Operating cash flows before movements in working capital 29,175 21,274 24,377

Trade receivables (289) 231 142

Other receivables (1,662) 524 49

Trade payables (48) 13 (38)

Other payables 2,293 741 (328)

Properties under development (3,026) (23,820) —

Cash generated from (used in) operations 26,443 (1,037) 24,202

Interest paid (Note A) (3,917) (3,208) (3,307)

Income taxes paid (2,648) (3,611) (1,797)

Net cash from (used in) operating activities 19,878 (7,856) 19,098

Investing activities

Purchase of property, plant and equipment (Note A) (20,940) (46,579) (27,326)

Proceeds from disposal of property, plant and equipment — 7 1,750

Net cash used in investing activities (20,940) (46,572) (25,576)

Financing activities

Advances from ultimate holding company 2,178 18,707 19,169

Repayments from (to) ultimate holding company 6,828 3,800 (8,414)

Proceeds from term loans 36,499 63,608 13,654

Repayment of term loans (25,090) (22,152) (14,125)

Proceeds from issuance of new shares — — 2,000

Dividends paid (19,000) (9,000) (5,386)

Net cash from financing activities 1,415 54,963 6,898

Net increase in cash and cash equivalents 353 535 420

Cash and cash equivalents at beginning of year 2,458 1,923 1,503

Cash and cash equivalents at end of year 2,811 2,458 1,923

Note A

Included in the interest paid is $821,000 (2009: $169,000; 2008: $68,000) which has been capitalised under

property, plant and equipment (Note 11).


APPENDIX A


2009 AND 2008

A-6


NOTES TO COMBINED FINANCIAL STATEMENTS


1 GENERAL

The Company (Registration No. 201128650E) is incorporated in Singapore on 19

September 2011 with its principal place of business and registered office at 168 Changi

Road, #04-01 Fragrance Building, Singapore 419730. The combined financial statements

are expressed in Singapore dollars, which is also the functional currency of the Company.

The combined financial statements have been prepared solely in connection with the

proposed listing of Global Premium Hotels Limited on the Singapore Exchange Securities

Trading Limited.

The Directors have considered the Group’s cash flow and future estimates and

projections taking into account possible fluctuations arising from the principal risks and

uncertainties and other factors, and in particular the current and expected debt leverage,

net current liability position, liquidity and funding position of the Group and the ability to

meet finance charges, scheduled debt repayments and financial covenant reporting

requirements.

After making enquiries, and in consideration of the foregoing, the Directors have a

reasonable expectation that the Company and the Group have adequate resources to

continue in operational existence for the foreseeable future. Accordingly, the going

concern basis has been adopted in preparing the combined financial statements.

The principal activities of the Company are to carry on the business of operating hotels

and investment holding.

Restructuring Exercise

In preparation for the proposed listing of the Company on the Singapore Exchange

Securities Trading Limited, the Company undertook a restructuring exercise to streamline

and rationalise the Group structure. Pursuant to the Restructuring Agreement dated 31

March 2012 (the “Restructuring Agreement”), the Company acquired:

(i) the entire issued and paid-up share capital of Fragrance Capital Pte Ltd, comprising

20,000,000 ordinary shares in the capital of Fragrance Capital Pte Ltd, resulting in

Fragrance Capital Pte Ltd becoming a wholly-owned subsidiary of the Company for

a consideration of $284,517,694 (based on NTA as at 30 September 2011 less a

discount of $33,111,984 and a dividend of $10,000,000 declared after 30 September

2011). The shares in Fragrance Capital Pte Ltd were transferred with all rights,

benefits and interests in and to the shares as at 13 April 2012 and thereafter;

APPENDIX A


2009 AND 2008

A-7

1 GENERAL (continued)

(ii) the entire issued and paid-up share capital of Fragrance Ventures Pte Ltd,

comprising 1,000,000 ordinary shares in the capital of Fragrance Ventures Pte Ltd,

resulting in Fragrance Ventures Pte Ltd becoming a wholly-owned subsidiary of the

Company for a consideration of $157,637,036 (based on NTA as at 30 September

2011 less a discount of $19,784,057). The shares in Fragrance Ventures Pte Ltd

were transferred with all rights, benefits and interests in and to the shares as at 13

April 2012 and thereafter;

(iii) the entire issued and paid-up share capital of Fragrance Assets Pte Ltd, comprising

1,000,000 ordinary shares in the capital of Fragrance Assets Pte Ltd, resulting in

Fragrance Assets Pte Ltd becoming a wholly-owned subsidiary of the Company for


discount of $9,849,600). The shares in Fragrance Assets Pte Ltd were transferred

with all rights, benefits and interests in and to the shares as at 13 April 2012 and

thereafter;

(iv) the entire issued and paid-up share capital of Fragrance Investment Pte Ltd,

comprising 4,000,000 ordinary shares in the capital of Fragrance Investment Pte Ltd,

resulting in Fragrance Investment Pte Ltd becoming a wholly-owned subsidiary of the

Company for a consideration of $32,126,729 (based on NTA as at 30 September

2011 less a discount of $4,443,264). The shares in Fragrance Investment Pte Ltd

were transferred with all rights, benefits and interests in and to the shares as at 13

April 2012 and thereafter;

(v) the entire issued and paid-up share capital of Fragrance Hotel Management Pte Ltd,

comprising 100,000 ordinary shares in the capital of Fragrance Hotel Management

Pte Ltd, resulting in Fragrance Hotel Management Pte Ltd becoming a wholly-owned

subsidiary of the Company for a consideration of $9,473,809 (based on the NTA as

at 30 September 2011). The shares in Fragrance Hotel Management Pte Ltd were

transferred with all rights, benefits and interests in and to the shares as at 13 April

2012 and thereafter;

(vi) the entire issued and paid-up share capital of Parc Sovereign Hotel Management Pte

Ltd, comprising 1,000,000 ordinary shares in the capital of Parc Sovereign Hotel

Management Pte Ltd, resulting in Parc Sovereign Hotel Management Pte Ltd

becoming a wholly-owned subsidiary of the Company for a consideration of

$1,212,812 (based on NTA as at 30 September 2011 less a discount of $31,545).

The shares in Parc Sovereign Hotel Management Pte Ltd were transferred with all

rights, benefits and interests in and to the shares as at 13 April 2012 and thereafter.

APPENDIX A


2009 AND 2008

A-8


The Purchase Consideration was paid by the Company to Fragrance Group Limited in the

following manner:

(a) approximately $345.7 million was satisfied in cash by way of loans, obtained directly

by the Group and/or internally generated funds of the Group and insofar as it

constituted financial assistance under the Companies Act, duly approved by way of

a special resolution passed by each of our Subsidiaries in accordance with Section

76(9B) of the Companies Act within thirty (30) days from the date of the Listing Date;

(b) approximately $137.5 million was satisfied by the Company by way of allotment and

issuance of 549,999,999 new Shares (“Consideration Shares”) credited as fully

paid-up to Fragrance Group Limited;

(c) approximately $74.8 million is to be satisfied by the Company by way of utilisation of

part of the proceeds of the Invitation within thirty (30) days from the date of the Listing

Date; and

The Restructuring Exercise was completed on 13 April 2012, notwithstanding that (a) and

(c) have not been paid as at the time of completion.

At the completion of the Restructuring Exercise and at the date of this report, the Company

has the following subsidiaries:

Name of subsidiaries

Country of

incorporation

and

operations

Attributable

equity

interest

of the Group Principal activity%

Fragrance Investment

Pte Ltd

Singapore 100 Investment holding and

investing in properties for long

term holding purposes

Fragrance Ventures

Pte Ltd

Singapore 100 Investment holding and



Fragrance Capital Pte Ltd Singapore 100 Investment holding and



Fragrance Assets Pte Ltd Singapore 100 Investment holding and



Fragrance Hotel

Management Pte Ltd

Singapore 100 Hotel operations

APPENDIX A


2009 AND 2008

A-9


Name of subsidiaries

Country of

incorporation

and

operations

Attributable

equity

interest

of the Group Principal activity%


Management Pte Ltd

Singapore 100 Hotel operations

Basis of preparation of the combined financial statements

For the purpose of preparing this set of combined financial statements for the years ended

31 December 2010, 2009 and 2008 (the “Relevant Periods”), the combined financial

statements have been prepared on a combined basis and include the financial information

of the companies now comprising the Group as if the current Group structure had been in

existence throughout the Relevant Periods. The combined statements of financial position

of the Group as at 31 December 2010, 2009 and 2008 have been prepared to present the

assets and liabilities of the Group as at those dates as if the current Group structure had

been in existence at these dates.

The combined financial statements of the Group for the years ended 31 December 2010,

2009 and 2008 were authorised for issue by the Board of Directors on 18 April 2012.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING — The combined financial statements are prepared in

accordance with the historical cost basis, except as disclosed in the accounting policies

below, and are drawn up in accordance with Singapore Financial Reporting Standards

(“FRS”).

ADOPTION OF NEW AND REVISED STANDARDS — The Group has adopted all the

new and revised FRSs and Interpretations of FRS (“INT FRS”) and amendments to FRS

that are relevant to the Group since the beginning of the earliest Relevant Periods

presented.

At the date of authorisation of these combined financial statements, the following FRS and

amendments to FRSs that are relevant to the Group were issued but not effective:

FRS 24 (Revised) — Related Party Disclosures

FRS 27 (Revised) — Separate Financial Statements

FRS 110 — Consolidated Financial Statements

FRS 112 — Disclosure of Interests in Other Entities

APPENDIX A


2009 AND 2008

A-10

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FRS 113 — Fair Value Measurement

Amendments to FRS 1 — Presentation of Financial Statements (as part of

Improvements to FRSs issued in 2010)

Amendments to FRS 1 — Presentation of Financial Statements —

Amendments relating to Presentation of Items of

Other Comprehensive Income

Amendments to FRS 107 — Financial Instruments: Disclosures (as part of


Amendments to FRS 107 — Financial Instruments: Disclosures — Transfer of

Financial Assets

FRS 24 (Revised) — Related Party Disclosures

FRS 24 (Revised) is effective for annual periods beginning on or after 1 January 2011. The

revised Standard clarifies the definition of a related party and consequently additional

parties may be identified as related to the reporting entity. 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 group of transactions involved. In the period of initial adoption,

the changes to related party disclosures, if any, will be applied retrospectively with

restatement of the comparative information.

FRS 27 (Revised) — Separate Financial Statements and FRS 110 — Consolidated

Financial Statements

FRS 110 replaces the control assessment criteria and consolidation requirements

currently in FRS 27 and INT FRS 12 Consolidation -Special Purpose Entities.

FRS 110 defines the principle of control and establishes control as the basis for

determining which entities are consolidated in the consolidated financial statements. It

also provides more extensive application guidance on assessing control based on voting

rights or other contractual rights. Under FRS 110, control assessment will be based on

whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable

returns from its involvement with the investee; and (iii) the ability to use its power over the

investee to affect the amount of the returns. FRS 27 remains as a standard applicable only

to separate financial statements.

FRS 110 will take effect from financial years beginning on or after 1 January 2013, with full

retrospective application.

APPENDIX A


2009 AND 2008

A-11


The Group is currently estimating the effects of FRS 110 on its investments in the period

of initial adoption.

FRS 112 — Disclosure of Interests in Other Entities

FRS 112 requires an entity to provide more extensive disclosures regarding the nature of

and risks associated with its interest in subsidiaries and unconsolidated structured

entities.

FRS 112 will take effect from financial years beginning on or after 1 January 2013, and the

Group is currently estimating extent of additional disclosures needed.

FRS 113 — Fair Value Measurement

FRS 113 is a single new Standard that applies to both financial and non-financial items. It

replaces the guidance on fair value measurement and related disclosures in other

Standards, with the exception of measurement dealt with under FRS 102 Share-based

Payment, FRS 17 Leases, net realisable value in FRS 2 Inventories and value-in-use in

FRS 36 Impairment of Assets.

FRS 113 provides a common fair value definition and hierarchy applicable to the fair value

measurement of assets, liabilities, and an entity’s own equity instruments within its scope,

but does not change the requirements in other Standards regarding which items should be

measured or disclosed at fair value.

FRS 113 will be effective prospectively from annual periods beginning on or after 1

January 2013. Comparative information is not required for periods before initial

application.

The Group is currently estimating the effects of FRS 113 in the period of initial adoption.

Amendments to FRS 1 — Presentation of Financial Statements (as part of


The amendments to FRS 1 clarify that an entity may choose to present the required

analysis of items of other comprehensive income either in the statement of changes in

equity or in the notes to the financial statements.

Amendments to FRS 1 will be effective for annual periods beginning on or after 1 January

2011.

APPENDIX A


2009 AND 2008

A-12


Amendments to FRS 1 — Presentation of Financial Statements: Amendments

relating to Presentation of Items of Other Comprehensive Income (“OCI”)

The amendment on Other Comprehensive Income (“OCI”) presentation will require the

Group to present in separate groupings, OCI items that might be recycled i.e., reclassified

to profit or loss (e.g., those arising from cash flow hedging, foreign currency translation)

and those items that would not be recycled (e.g. revaluation gains on property, plant and

equipment under the revaluation model). The tax effects recognised for the OCI items

would also be captured in the respective grouping, although there is a choice to present

OCI items before tax or net of tax.

Changes arising from these amendments to FRS 1 will take effect from financial years

beginning on or after 1 July 2012, with full retrospective application.

When the Group adopts the amendments, it will have to present revaluation gains on

property, plant and equipment and the corresponding tax effects separately from other

OCI items that might be recycled to profit or loss.

Amendments to FRS 107 — Financial Instruments: Disclosures (as part of


The amendments to FRS 107 clarify the required level of disclosures about credit risk and

collateral held and provide relief from disclosures previously required regarding

renegotiated loans.

Amendments to FRS 107 will be effective for annual periods beginning on or after 1

January 2011.

Amendments to FRS 107 — Financial Instruments: Disclosures: Transfers of

Financial Assets

The amendments to FRS 107 increase the disclosure requirements for transactions

involving transfers of financial assets. These amendments are intended to provide greater

transparency around risk exposures when a financial asset is transferred but the

transferor retains some level of continuing exposure in the asset. The amendments also

require disclosures where transfers of financial assets are not evenly distributed

throughout the period.

The Group does not anticipate that these amendments to FRS 107 will have a significant

effect on the Group’s disclosures regarding its existing arrangements for transfers of trade

receivables. However, if the Group enters into other types of transfers of financial assets

in the future, disclosures regarding those transfers may be affected.

APPENDIX A


2009 AND 2008

A-13


Amendments to FRS 107 will be effective for annual periods beginning on or after 1 July

2011.

Except as disclosed above, the management anticipates that the adoption of the above

FRS and amendments to FRSs that were in issue but not yet effective at the date of

authorisation of these combined financial statements will not have a material impact on

the combined financial statements of the Group in the period of their initial adoption.

BASIS OF COMBINATIONS — The combined financial statements incorporate the

financial statements of the Company and its subsidiaries and had been prepared using the

principles of merger accounting and on the assumption that the re-organisation of entities

under common control has been effected as at the beginning of the Relevant Periods

presented in these combined financial statements.

Where necessary, adjustments are made to the combined financial statements of the

Group entities to bring their accounting policies in line with those used by other members

of the Group.

All significant intercompany transactions and balances between Group enterprises are

eliminated on combination.

FINANCIAL INSTRUMENTS—Financial assets and financial liabilities are recognised on

the Group’s combined statements of financial position when the Group becomes a party

to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial

instrument and of allocating interest income or expense over the relevant period. The

effective interest rate is the rate that exactly discounts estimated future cash receipts or

payments (including all fees on points paid or received that form an integral part of the

effective interest rate, transaction costs and other premiums or discounts) through the

expected life of the financial asset or liability, or where appropriate, a shorter period.

Financial assets

All financial assets 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 plus transaction costs.

APPENDIX A


2009 AND 2008

A-14


Trade and other receivables

Trade and other receivables that have fixed or determinable payments that are not quoted

in an active market are classified as “loans and receivables”. Loans and receivables are

initially measured at fair value and subsequently measured at amortised cost using the

effective interest method less impairment. Interest is recognised by applying the effective

interest method, except for short-term receivables when the recognition of interest is

immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each Relevant

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 future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount 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.

The carrying amount of the financial asset is reduced by the impairment loss directly for all

financial assets with 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 against the allowance account. Changes in the

carrying amount of the allowance account are recognised in profit or loss.

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 to 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.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash

flows from the asset expire, or it transfers the financial asset and substantially all the risks

and rewards of ownership of the asset to another entity. If the Group neither transfers nor

retains substantially all the risks and rewards of ownership and continues to control the

transferred asset, the Group recognises its retained interest in the asset and an

associated liability for amounts it may have to pay. If the Group retains substantially all the

APPENDIX A


2009 AND 2008

A-15


risks and rewards of ownership of a transferred financial asset, the Group continues to

recognise the financial asset and also recognises a collaterialised borrowing for the

proceeds received.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to

the substance of the contractual arrangements entered into and the definitions of a

financial liability and an equity instrument.

Equity instruments

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.

Other 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 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).

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations

are discharged, cancelled or they expire.

PROPERTIES UNDER DEVELOPMENT — Development properties are stated at the

lower of cost and net realisable value. Cost comprises the payment made for acquisition

of land, development costs, finance costs and other related expenditure which are

capitalised as and when activities that are necessary to get the asset ready for its intended

use until such time that the properties are substantially completed.

Foreseeable losses, if any, are provided as soon as they become known based on the

management’s estimates of net realisable value and estimates of cost to complete.

APPENDIX A


2009 AND 2008

A-16


PROPERTY, PLANT AND EQUIPMENT — Freehold and leasehold land and hotel

buildings including those under construction, held for use in the operation of hotels are

stated in the combined statements of financial position at their revalued amounts, being

the fair value at the date of revaluation, less any subsequent accumulated depreciation

and subsequent accumulated impairment losses. Revaluations are performed with

sufficient regularity such that the carrying amount does not materially differ from that

which would be determined using fair values as at the end of the relevant periods.

Any revaluation increase arising on such freehold and leasehold land and hotel buildings

is credited to the property 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 profit or loss to the extent of the decrease previously

charged. A decrease in carrying amount arising on the revaluation of such freehold and

leasehold land and hotel buildings is charged to profit or loss to the extent that it exceeds

the balance, if any, held in the property revaluation reserve relating to a previous

revaluation of that asset.

Office premises and plant and equipment are carried at cost, less accumulated

depreciation and any impairment losses.

Depreciation is charged so as to write off the cost or valuation of assets, other than

freehold land and construction-in-progress, over their estimated useful lives, using the

straight-line method, on the following bases:

Leasehold land — over the remaining lease period of 39 years to

824 years

Hotel buildings — over the remaining useful life of 48 years to

60 years

Office premises — 2%

Motor vehicles — 20%

Furniture, fixtures and fittings — 20%

Office equipment — 20%

Computers — 20% to 331⁄3%

Electrical installation — 20%

Renovations — 20%

The estimated useful lives, residual values and depreciation method are reviewed each

year end, with the effect of any changes in estimate accounted for on a prospective basis.

Fully depreciated assets are retained in the financial statements until they are no longer in

use.

APPENDIX A


2009 AND 2008

A-17


The gain or loss arising on the 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 or loss. On the subsequent sale or

retirement of a revalued property, the attributable revaluation surplus remaining in the

properties revaluation reserve is transferred directly to retained earnings. No transfer is

made from the revaluation reserve to retained earnings except when an asset is

derecognised.

LEASES — Leases are classified as finance leases whenever the terms of the lease

transfer substantially all the risks and rewards of ownership to the lessee. All other leases

are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term

of the relevant lease unless another systematic basis is more representative of the time

pattern in which use benefit derived from the leased asset is diminished. Initial direct costs

incurred in negotiating and arranging an operating lease are recognised on a straight-line

basis over the lease term.

IMPAIRMENT OF TANGIBLE ASSETS— At the end of each Relevant Period, the Group

reviews the carrying amounts of its tangible assets to determine whether there is any

indication that those assets have suffered an impairment loss. If any such indication

exists, the recoverable amount of the asset is estimated in order to determine the extent

of the impairment loss (if any). Where it is not possible to estimate the recoverable amount

of an individual asset, the Group estimates the recoverable amount of the cash-

generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In

assessing value in use, the estimated future cash flows are discounted to their present

value using a pre-tax discount rate that reflects current market assessments of the time

value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than

its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to

its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset

(cash-generating unit) is increased to the revised estimate of its recoverable amount, but

so that the increased carrying amount does not exceed the carrying amount that would

have been determined had no impairment loss been recognised for the asset (cash-

generating unit) in prior years. A reversal of an impairment loss is recognised immediately

in profit or loss.

APPENDIX A


2009 AND 2008

A-18


PROVISIONS — Provisions are recognised when the Group has a present obligation

(legal or constructive) as a result of a past event, it is probable that the Group will be

required to settle the obligation, and a reliable estimate can be made of the amount of the

obligation.

The amount recognised as a provision is the best estimate of the consideration required

to settle the present obligation at the end of the Relevant Periods, 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 carrying amount is the present

value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to

be recovered from a 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.

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. Revenue from vending

machines is recognised when goods are dispensed.

Rental income from operating leases is recognised on a straight-line basis over the term

of the relevant lease unless another systematic basis is more representative of the time

pattern in which use benefit derived from the leased asset is diminished. Initial direct costs

incurred in negotiating and arranging an operating lease are added to the carrying amount

of the leased asset and recognised on a straight-line basis over the lease term.

Interest income is accrued on a time basis, by reference to the principal outstanding and

at the effective interest rate applicable.

BORROWING COSTS — Borrowing costs directly attributable to the acquisition and

construction of properties, which are assets that necessarily take a substantial period of

time to get ready for their intended use or sale, are added to the cost of those 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.

RETIREMENT BENEFIT COSTS — Payments to defined contribution retirement benefit

plans are charged as an expense as they fall due. Payments made to state-managed

retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with

APPENDIX A


2009 AND 2008

A-19


as payments to defined contribution plans where the Group’s obligations under the plans

are equivalent to those arising in a defined contribution retirement benefit plan.

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

Relevant Periods.

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 profit differs from

profit as reported in the combined statement of comprehensive income because it

excludes items of income or expense that are taxable or deductible in 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 by the end of the Relevant Periods.

Deferred tax is recognised on differences between the carrying amounts of assets and

liabilities in the financial statements and the corresponding tax bases used in the

computation of taxable profit, and is accounted for 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.

The carrying amount of deferred tax assets is reviewed at the end of each Relevant Period

and reduced to the extent that it is no longer probable that sufficient taxable profits will be

available to allow all or part of the asset to be recovered.

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 Relevant 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 items credited or debited outside profit or loss (either in other

comprehensive income or directly in equity), in which case the tax is also recognised

outside profit or loss (either in other comprehensive income or directly in equity

respectively).

APPENDIX A


2009 AND 2008

A-20


SEGMENT — An operating segment is a component of the Group that engages in

business activities from which it may earn revenues and incur expenses, including

revenues and expenses that relate to transactions with any of the Group’s other

components.

The Group determines and presents operating segments based on information that

internally is provided to the Chief Executive Officer (“CEO”), who is the Group’s chief

operating decision maker. All operating segments’ results are reviewed regularly by the

Group’s CEO for the purpose of monitoring segment performance and allocating

resources.

CASH ANDCASH EQUIVALENTS—Cash and cash equivalents comprise cash on hand

and bank balances that are readily convertible to a known amount of cash and are subject

to an insignificant risk of changes in value.

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.

Critical judgements in applying the Group’s accounting policies

Management is of the opinion that there are no critical judgements involved that have a

significant effect on the amounts recognised in the financial statements.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation

uncertainty at the end of the Relevant Periods that have significant effects on the amounts

of assets and liabilities within the next year as discussed below.

APPENDIX A


2009 AND 2008

A-21


UNCERTAINTY (continued)

Valuation of freehold and leasehold land and hotel buildings

Freehold and leasehold land and hotel buildings including those under construction are

stated at fair value based on independent professional valuations. In determining the fair

value, the valuer has used valuation techniques which involve certain estimates. The key

assumptions used to determine the fair value include market-corroborated capitalisation

yield, terminal yield and discount rate. The valuer has considered valuation techniques

including the direct comparison method, capitalisation approach and/or discounted cash

flows in arriving at the open market value as at the end of each Relevant Periods. The

direct comparison method involves the analysis of hotels property transactions and

adjusting the transacted prices to that reflective of the entity’s hotel properties. The

capitalisation approach capitalises an income stream into a present value using revenue

multipliers or single-year capitalisation rates. The discounted cash flow method involves

the estimation and projection of an income stream over a period and discounting the

income stream with an internal rate of return to arrive at the market value.

The fair values of the hotel buildings have been estimated based on construction costs as

at the end of each Relevant Periods and adjusting for the condition of the buildings and

their expected remaining useful lives.

In relying on the valuation reports, management has exercised its judgement and is

satisfied that the independent valuer has appropriate recognised professional

qualifications and their estimates are reflective of current market conditions at the end of

each Relevant Periods. Please see Note 11 for the fair value of the freehold and leasehold

land, hotel buildings and construction-in-progress at the end of each Relevant Periods.

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS

MANAGEMENT

(a) Categories of financial instruments

The following table sets out the financial instruments as at the end of the Relevant

Periods:

2010 2009 2008

$’000 $’000 $’000

Financial assets

Loans and receivables (including cash and

cash equivalents) 10,023 14,563 18,611

Financial liabilities

Amortised cost 208,809 193,219 132,501

APPENDIX A


2009 AND 2008

A-22


MANAGEMENT (continued)

(b) Financial risk management policies and objectives

The Group is exposed to various financial risks arising in the normal course of

business. It has adopted risk management policies and utilises a variety of

techniques to manage its exposure to these risks.

There has been no change to the Group’s exposure to these financial risks or the

manner in which it manages and measures the risks. Market risk exposures are

measured using sensitivity analysis indicated below.

(i) Foreign exchange risk management

The Group is not exposed to any significant foreign currency risk as the Group’s

transactions are mainly denominated in Singapore dollars.

(ii) Interest rate risk management

The Group is exposed to interest rate risk through the impact of rate changes on

interest bearing assets and liabilities. The Group manages its interest rate

exposure by actively reviewing its debt portfolio and switching to cheaper

sources of funding to achieve a certain level of protection against interest hikes.

Summary quantitative data of the Group’s interest-bearing financial instruments

can be found in Section (iv) of this Note.

Interest Rate Sensitivity

The sensitivity analyses below have been determined based on the exposure to

interest rates for the Group’s term loans at the end of the Relevant Period and

the stipulated change taking place at the beginning of each of the Relevant

Period and held constant throughout the Relevant Periods in the case of

instruments that have floating rates. A 50 basis point increase or decrease is

used when reporting interest rate risk internally to key management personnel

and represents management’s assessment of the possible change in interest

rates.

If interest rates had been 50 basis points higher or lower and all other basis

points held constant:

• The Group’s profit for the year ended 31 December 2010 would decrease/

increase by approximately $573,000 (2009: decrease/increase by

$538,000; 2008: decrease/increase by $339,000). This is mainly

attributable to the Group’s exposure to interest rates on its variable rate

borrowings.

APPENDIX A


2009 AND 2008

A-23



(iii) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual

obligations resulting in financial loss to the Group. The Group has adopted a

policy of obtaining customer deposits to mitigate credit risk.

The Group’s financial assets are cash and cash equivalents, and trade and

other receivables.

The Group does not have any significant credit risk exposure to any single

counterparty or any group of counterparties having similar characteristics. The

Group has no significant concentration of credit risk.

Cash is held with creditworthy financial institutions.

The carrying amounts of financial assets recorded in the combined financial

statements, net of any allowances for losses, represent the Group’s maximum

exposure to credit risk.

(iv) Liquidity risk management

The Group maintains sufficient cash and cash equivalents, and internally

generated cash flows to finance its activities. The Group finances its liquidity

needs through internally generated cash flows and external financing, and

minimises liquidity risk by keeping committed credit lines available.

The Directors have considered the Group’s cash flow and future estimates and

projections taking into account possible fluctuations arising from the principal

risks and uncertainties and other factors, and in particular the current and

expected debt leverage, net current liability position, liquidity and funding

position of the Group and the ability to meet finance charges, scheduled debt

repayments and financial covenant reporting requirements.

Liquidity and interest risk analyses

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative

financial liabilities. The tables have been drawn up based on the undiscounted

cash flows of financial liabilities based on the earliest date on which the Group

can be required to pay. The table includes both interest and principal cash flows.

The adjustments column represents the estimated future interest attributable to

APPENDIX A


2009 AND 2008

A-24



the instrument included in the maturity analysis which is not included in the

carrying amount of the financial liabilities on the combined statements of

financial position.

Weighted

average

effective

interest rate

On demand

or within

1 year

Within

2 to

5 years

After

5 years Adjustments Total

% $’000 $’000 $’000 $’000 $’000

2010

Non-interest

bearing NA 50,466 — — — 50,466

Variable interest

rate instruments 2.34 19,774 60,536 115,980 (37,947) 158,343

Total 70,240 60,536 115,980 (37,947) 208,809

2009

Non-interest

bearing NA 46,189 — — — 46,189

Variable interest


Total 62,096 61,322 108,600 (38,799) 193,219

2008

Non-interest

bearing NA 27,072 — — — 27,072

Variable interest


Total 36,698 43,016 84,768 (31,981) 132,501

The non-derivative financial assets of the Group are due on demand or within

one year.

(v) Fair value of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current

receivables and payables and other liabilities and amounts payable

approximate their respective fair values due to the relatively short-term maturity

of these financial instruments.

The fair values of other classes of financial assets and liabilities are disclosed in

the respective notes to the combined financial statements.

APPENDIX A


2009 AND 2008

A-25



(c) 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 shareholders through the

optimisation of the debt and equity balance and to ensure that all externally imposed

capital requirements are complied with.

The capital structure of the Group consists debts which include the advances from

the ultimate holding company and borrowings as disclosed in Notes 13 to 14 and

equity attributable to equity holder of the Company, comprising issued capital as

disclosed in Note 16 and retained earnings.

The Group is required to maintain maximum gearing in order to comply with

covenants in loan agreements with banks and finance companies.

The management reviews the capital structure on a semi-annual basis. As a part of

the review, themanagement consider the cost of capital and the risks associated with

each class of capital. The management also ensures that the Group maintains

certain security ratios of outstanding term loans over the value of the properties in

order to comply with the loan covenants imposed by banks and financial institutions.

Based on the review, the Group will balance its overall capital structure through the

payment of dividends, new share issues as well as the issue of new debt or the

redemption of existing debts.

The Group’s overall strategy remains unchanged during the Relevant Periods. The

Group is in compliance with externally imposed capital requirements for the financial

years ended 31 December 2010, 2009 and 2008.

5 HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS

The Company is a wholly-owned subsidiary of Fragrance Group Limited, incorporated in

Singapore which is also the Company’s ultimate holding company. Related companies in

these financial statements refer to members of the ultimate holding company’s group of

companies.

Some of the Company’s transactions and arrangements are between members of the

Group and the effect of these on the basis determined between the parties is reflected in

these combined financial statements. The intercompany balances are unsecured,

interest-free and repayable on demand.

APPENDIX A


2009 AND 2008

A-26

5 HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS (continued)

During the Relevant Periods, the Group entered into the following transactions with

related companies:

2010 2009 2008

$’000 $’000 $’000

Dividends paid to the ultimate holding company 19,000 9,000 5,386

6 OTHER 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 influence over the other party in making financial and operating

decisions.

Some of the Group’s transactions and arrangements are with related parties and the effect

of these on the basis determined between the parties is reflected in these combined

financial statements. The balances are unsecured, interest-free and repayable on

demand.

During the year, the Group entered into the following transactions with related parties:

2010 2009 2008

$’000 $’000 $’000

Salaries and related costs paid to key management

personnel and relatives of a director 897 817 621

Compensation of directors and key management personnel

The remuneration of directors and other members of key management are as follows:

2010 2009 2008

$’000 $’000 $’000

Short-term benefits 689 637 356

Post-employment benefits 18 28 10

707 665 366

APPENDIX A


2009 AND 2008

A-27

7 CASH AND CASH EQUIVALENTS

2010 2009 2008

$’000 $’000 $’000

Cash on hand 28 34 27

Cash at bank 2,783 2,424 1,896

2,811 2,458 1,923

Cash and cash equivalents comprise cash held by the Group and bank balances.

8 TRADE RECEIVABLES

2010 2009 2008

$’000 $’000 $’000

External parties 1,274 985 1,216

Certain customers are granted a credit period on the rental of hotel room of 30 days (2009:

30 days; 2008: 30 days). In determining the recoverability of trade receivables, the Group

considers any change in the credit quality of the trade receivables from the date credit was

initially granted up to the end of the Relevant Period. The concentration of credit risk is

limited due to the customer base being large and unrelated. All trade receivables are

neither past due nor impaired and management has considered the quality of the debts

and determined that no allowance is required.

9 OTHER RECEIVABLES

2010 2009 2008

$’000 $’000 $’000

Prepayments 44 29 1

Deposits(1) 1,699 92 682

Advances to the ultimate holding company (Note 5) 4,155 10,983 14,783

Others 84 45 7

5,982 11,149 15,473

(1) An amount of $1,581,000 was paid as a deposit for a tender in a land sale from Urban Redevelopment

Authority (“URA”) as at the reporting period ended 31 December 2010. This amount was subsequently

refunded to the Group upon finalisation of the result of the tender.

APPENDIX A


2009 AND 2008

A-28

10 PROPERTIES UNDER DEVELOPMENT

2010 2009 2008

$’000 $’000 $’000

Land cost and other related costs 25,690 23,000 —

Development costs 247 — —

Property taxes and other overhead expenses 909 820 —

26,846 23,820 —

Certain properties are mortgaged to the banks to secure credit facilities of the subsidiaries

(Note 14).

These properties are acquired with the intention of using for hotel related activities upon

approval from the Urban Redevelopment Authority (“URA”). In the event that no approval is

received from URA, these properties are expected to be sold after redevelopment.

Subsequent to 31 December 2010, approval is not obtained from URA and these properties

have been sold to related companies (Note 5).

The properties under development as at 31 December 2010, 2009 and 2008 are as

follows:

Property and address Description Tenure

Land area

(sq m)

2010

Lots 99033X & 99035C MK 03

at Pasir Panjang Road(1)Conservation of existing 2-storey

shop houses with rear extension

for a residential and commercial

development

Freehold 2,056

Lots 97061A, 97064X,

and 97065L MK 24

at Lorong 19 Geylang(2)

Development of 9-storey building Freehold 390

(1) The property is currently undergoing development works, additions and alterations work as at 31

December 2010. The expected date of completion is 31 December 2015.

(2) The property is currently undergoing development works, additions and alterations work as at 31

December 2010. The expected date of completion is 31 December 2011.

Property and address Description Tenure

Land area

(sq m)

2009

Lots 99033X & 99035C MK 03

at Pasir Panjang Road

Conservation of existing 2-storey

shop houses with rear extension

for a residential and commercial

development

Freehold 2,056

APPENDIX A


2009 AND 2008

A-29

11PROPERTY,PLANTANDEQUIPMENT

Freehold

land

Leasehold

land

Hotel

buildings

Office

premises

Motor

vehicles

Furniture

fixtures

and

fittings

Office

equipment

Computers

Electrical

installationRenovations

Construction-

in-progress

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Costorvaluation:

At1January2008

195,120

—65,280

—70

609

225

264

291

184

13,207

275,250

Additions

——

342

—96

175

102

141

203

326,332

27,394

Transfer

10,207

—4,573

7,450

——

——

——

(22,230)

—

Revaluation

Increase/(Decrease)

24,013

—(565)

——

——

——

—691

24,139

Disposals

(1,580)

—(420)

——

(13)

(1)

(31)

——

—(2,045)

At31December2008

227,760

—69,210

7,450

166

771

326

374

494

187

18,000

324,738

Additions

——

——

—43

113

308

15

612

45,710

46,801

Adjustment

——

(53)

——

——

——

——

(53)

Transfer

4,563

—1,587

——

——

——

—(6,150)

—

Revaluation

Increase/(Decrease)

48,687

—(314)

——

——

——

7,200

55,573

Disposals

——

——

(26)

—(5)

(94)

——

—(125)

At31December2009

281,010

—70,430

7,450

140

814

434

588

509

799

64,760

426,934

Addition

——

94

—44

53

110

121

28

948

20,363

21,761

Transfer

—24,755

3,207

——

——

——

—(27,962)

—

RevaluationIncrease/

(Decrease)

143,510

7,115

1,079

——

——

——

—103,918

255,622

Disposals

——

——

——

—(42)

——

—(42)

At31December2010

424,520

31,870

74,810

7,450

184

867

544

667

537

1,747

161,079

704,275

APPENDIXA

INDEPENDENTAUDITORS’REPORTONTHECOMBINEDFINANCIALSTATEMENTSFORTHEYEARSENDED

31DECEMBER2010,2009AND2008

A-30

11PROPERTY,PLANTANDEQUIPMENT(continued)

Freehold

land

Leasehold

land

Hotel

buildings

Office

premises

Motor

vehicles

Furniture

fixtures

and

fittings

Office

equipment

Computers

Electrical


Construction-

in-progress

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Comprising:

December31,2008

Atcost

——

—7,450

166

771

326

374

494

187

—9,768

Atvaluation

227,760

—69,210

——

——

——

—18,000

314,970

227,760

—69,210

7,450

166

771

326

374

494

187

18,000

324,738

December31,2009

Atcost

——

—7,450

140

814

434

588

509

799

—10,734

Atvaluation

281,010

—70,430

——

——

——

—64,760

416,200

281,010

—70,430

7,450

140

814

434

588

509

799

64,760

426,934

December31,2010

Atcost

——

—7,450

184

867

544

667

537

1,747

—11,996

Atvaluation

424,520

31,870

74,810

——

——

——

—161,079

692,279

424,520

31,870

74,810

7,450

184

867

544

667

537

1,747

161,079

704,275

APPENDIXA



A-31

11PROPERTY,PLANTANDEQUIPMENT(continued)

Freehold

land

Leasehold

land

Hotel

buildings

Office

premises

Motor

vehicles

Furniture

fixtures

and

fittings

Office

equipment

Computers

Electrical


Construction-

in-progress

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Accumulated

depreciation:

At1January2008

——

——

15

541

200

147

98

78

—1,079

Depreciation

——

1,217

38

26

42

20

47

78

32

—1,500

Eliminatedon

revaluation

——

(1,215)

——

——

——

——

(1,215)

Disposals

——

(2)

——

(8)

(1)

(27)

——

—(38)

At31December2008

——

—38

41

575

219

167

176

110

—1,326

Depreciation

——

1,270

51

28

58

38

116

92

32

—1,685

Eliminatedon

revaluation

——

(1,270)

——

——

——

——

(1,270)

Disposals

——

——

(20)

—(3)

(68)

——

—(91)

At31December2009

——

—89

49

633

254

215

268

142

—1,650

Depreciation

—20

1,314

51

33

66

61

108

91

314

—2,058

Eliminatedon

revaluation

—(20)

(1,314)

——

——

——

——

(1,334)

Disposals

——

——

——

—(41)

——

—(41)

At31December2010

——

—140

82

699

315

282

359

456

—2,333

Carryingamount:

At31December2008

227,760

—69,210

7,412

125

196

107

207

318

77

18,000

323,412

At31December2009

281,010

—70,430

7,361

91

181

180

373

241

657

64,760

425,284

At31December2010

424,520

31,870

74,810

7,310

102

168

229

385

178

1,291

161,079

701,942

APPENDIXA



A-32

11 PROPERTY, PLANT AND EQUIPMENT (continued)

Interest capitalised for hotel buildings under construction during the year was $821,000

(2009: $169,000; 2008: $68,000) at interest rates from 2.7% to 3.2% (2009: 3.00% to

4.00%; 2008: 2.53% to 4.75%) per annum (Note 14).

Most of the freehold and leasehold land, hotel buildings, office premises and construction-

in-progress are mortgaged to banks and finance companies to secure credit facilities for

the Company and its subsidiaries (Note 14).

Had the freehold and leasehold land, hotel buildings and construction-in-progress been

carried at historical cost less accumulated depreciation and accumulated impairment

losses, their carrying amounts would be as followed:

2010 2009 2008

$’000 $’000 $’000

Freehold land 95,433 95,433 90,870

Leasehold land 13,898 — —

Hotel buildings 51,317 46,211 45,629

Construction-in-progress 57,163 56,818 17,309

Details of properties held by the Group are as follows:

Properties and addresses Tenure

Land area

(sq m)

Number of

rooms

The Fragrance Hotel

219 Joo Chiat Road

Singapore 427485

Freehold 672 90

Fragrance Hotel — Balestier

255 Balestier Road

Singapore 329710

Freehold 245 48

Fragrance Hotel — Bugis

33 Middle Road

Singapore 188942

999 years

Leasehold

348 80

Fragrance Hotel — Classic

418 Balestier Road

Singapore 329808

Freehold 265 48

Fragrance Hotel — Crystal

50 Lorong 18 Geylang

Singapore 398824

Freehold 1,051 125

Fragrance Hotel — Emerald

20 Lorong 6 Geylang

Singapore 399174

Freehold 818 126

APPENDIX A


2009 AND 2008

A-33



Land area

(sq m)

Number of

rooms

Fragrance Hotel — Imperial

28 Penhas Road

Singapore 208187

Freehold 544 74

Fragrance Hotel — Kovan

760 Upper Serangoon Road

Singapore 534629

Freehold 284 43

Fragrance Hotel — Lavender

51 Lavender Street

Singapore 338710

Freehold 220 35

Fragrance Hotel — Oasis

435 Balestier Road

Singapore 329816

Freehold 229 36

Fragrance Hotel — Ocean View

432 Pasir Panjang Road

Singapore 118773

Freehold 256 47

Fragrance Hotel — Pearl


Singapore 398961

Freehold 843 129

Fragrance Hotel — Rose

263 Balestier Road

Singapore 329715

Freehold 400 68

Fragrance Hotel — Royal

400 Telok Blangah Road

Singapore 098838

Freehold 278 32

Fragrance Hotel — Ruby


Singapore 398730

Freehold 902 168

Fragrance Hotel — Sapphire

3 Lorong 10 Geylang

Singapore 399037

Freehold 528 50

Fragrance Hotel — Selegie

183 Selegie Road

Singapore 188329

Freehold 468 120

Fragrance Hotel — Sunflower


Singapore 399043

Freehold 323 27

Fragrance Hotel — Viva

75 Wishart Road

Singapore 098721

Freehold 300 33

APPENDIX A


2009 AND 2008

A-34



Land area

(sq m)

Number of

rooms

Fragrance Hotel — Waterfront

418 Pasir Panjang Road

Singapore 118759

Freehold 478 57

63 Dunlop Street

Singapore 209391(1)Freehold 238 31

175 Albert Street

Singapore 189970(1)99 years

Leasehold

1,165 170

103 Beach Road

Singapore 189704(1)999 years

Leasehold

333 —

Lot 99797C, 99803K &

99799W TS 07

Singapore(1)

99 years

Leasehold

513 —

Fragrance Building

168 Changi Road

Singapore 419730

Freehold 680 —

(1) These properties are undergoing development works, additions and alteration works as at 31 December

2010.

12 TRADE PAYABLES2010 2009 2008

$’000 $’000 $’000

External parties 1,188 1,236 1,223

The average credit period for trade payables is 14 to 30 days (2009: 14 to 30 days; 2008:

14 to 30 days). The Group has financial risk management policies in place to ensure that

all payables are within the credit time frame specified by the suppliers.

13 OTHER PAYABLES2010 2009 2008

$’000 $’000 $’000

Accruals 4,070 1,926 1,533

Withholding income tax on staff costs 118 130 132

Advances from the ultimate holding company (Note 5) 45,064 42,886 24,179

Deposits received in advance 708 562 218

Others 26 11 5

49,986 45,515 26,067

APPENDIX A


2009 AND 2008

A-35

14 TERM LOANS

2010 2009 2008

$’000 $’000 $’000

Term loan 158,343 147,030 105,429

Less: Amount due for settlement within 12 months

(shown under current liabilities) (7,895) (12,198) (6,433)

Amount due for settlement after 12 months 150,448 134,832 98,996

As the interest rates of the term loans are at floating rates which are pegged to the

commercial financing rates of the banks and finance companies, the management is of

the opinion that the carrying values of the term loans approximate their fair values.

The Group’s term loans from banks and finance companies bear effective interest rates

from 1.88% to 3.21% (2009: 1.47% to 3.21%; 2008: 1.69% to 4.50%) per annum. The term

loans are secured against the properties of the Group with a fair value of $654,079,000

(2009: $388,100,000; 2008: $300,870,000) (Note 11).

15 DEFERRED TAX LIABILITY

The movement for the year in the deferred tax position was as follows:

Accelerated

tax

depreciation

Revaluation of

leasehold land and

hotel buildings

including

construction-

in-progress Total

$’000 $’000 $’000

At 1 January 2008 55 3,653 3,708

Credit to other comprehensive income for the

year — (3) (3)

Charge to profit or loss for the year (Note 21) 55 — 55

At 31 December 2008 110 3,650 3,760

Charge to other comprehensive income

for the year — 1,005 1,005

Charge to profit or loss for the year (Note 21) 29 — 29

Effect of change in tax rate (6) (37) (43)

At 31 December 2009 133 4,618 4,751


for the year — 19,059 19,059

Charge to profit or loss for the year

(Note 21) 5 — 5

At 31 December 2010 138 23,677 23,815

APPENDIX A


2009 AND 2008

A-36

16 SHARE CAPITAL

The Company has one class of ordinary shares which have no par value, carry one vote

per share and carry no right to fixed income.

The Company was incorporated on 19 September 2011. Accordingly, the share capital in

the combined statements of financial position as at 31 December 2010, 2009 and 2008

represent the Group’s share of the paid-up capital of the subsidiaries as at the respective

dates.

17 REVALUATION RESERVE

The revaluation reserve arise on the revaluation of land and hotel buildings including

those under construction. Where revalued land and buildings are sold, the portion of the

property revaluation reserve that relates to that asset, and is effectively realised, is

transferred directly to retained earnings.

The revaluation reserve is not available for distribution to Company’s shareholder.

18 REVENUE

2010 2009 2008

$’000 $’000 $’000

Hotel room revenue 42,018 32,870 35,564

Rental revenue 2,197 1,709 969

Others — — 360

44,215 34,579 36,893

Rental revenue is derived from the leasing of shop space to third parties of certain hotel

buildings, office premises and properties under development.

19 OTHER OPERATING INCOME

2010 2009 2008

$’000 $’000 $’000

Income from vending machines and internet services 150 98 88

Others 130 123 108

280 221 196

APPENDIX A


2009 AND 2008

A-37

20 FINANCE COSTS

2010 2009 2008

$’000 $’000 $’000

Interest on term loans 3,001 3,184 3,239

21 INCOME TAX EXPENSE

2010 2009 2008

$’000 $’000 $’000

Current tax 4,310 2,835 3,596

Deferred tax 5 29 55

(Over) Under provision in prior years — current tax (55) 9 (146)

Effect of change in tax rate — (6) —

Income tax expense for the year 4,260 2,867 3,505

The income tax varied from the income tax expense determined by applying the

Singapore income tax rate of 17% (2009: 17%; 2008: 18%) to profit before income tax as

a result of the following differences:

2010 2009 2008

$’000 $’000 $’000


Income tax expense at the statutory rate 4,100 2,784 3,534

Tax effect of items that are not deductible in

determining taxable profit 245 222 239

(Over) Under provision in prior year — current tax (55) 9 (146)

Tax exempt profit (104) (104) (114)

Effect due to change in tax rates — (6) —

Others 74 (38) (8)

Net 4,260 2,867 3,505

APPENDIX A


2009 AND 2008

A-38

22 PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging:

2010 2009 2008

$’000 $’000 $’000

Directors’ remuneration 340 209 —

Costs of defined contribution plans included in staff

costs 634 543 462

Staff costs 6,407 5,574 5,126

23 DIVIDENDS PAID

During the year ended 31 December 2010, a subsidiary declared and paid an interim

tax-exempt (one-tier) dividend of $190 per ordinary share of the subsidiary to its

shareholder prior to the completion of the Restructuring Exercise, totalling $19,000,000 in

respect of the financial year ended 31 December 2010.

During the year ended 31 December 2009, a subsidiary declared and paid an interim

tax-exempt (one-tier) dividend of $90 per ordinary share of the subsidiary to its

shareholder prior to the completion of the Restructuring Exercise, totalling $9,000,000 in

respect of the financial year ended 31 December 2009.

During the year ended 31 December 2008, two subsidiaries declared and paid an interim

tax-exempt (one-tier) dividend to its shareholders prior to the completion of the

Restructuring Exercise, totalling $5,386,000 in respect of the financial year ended 31

December 2008.

24 EARNINGS PER SHARE

For illustrative purposes, earnings per share for the Relevant Periods have been

calculated based on the profit attributable to the equity holders of the Company for each

of the Relevant Periods and pre- invitational share capital of 550,000,000 shares.

The diluted earnings per share is the same as basic earnings per share as there are no

effect of dilutive potential ordinary shares.

25 SEGMENT INFORMATION

For the purposes of the resource allocation and assessment of segment performance, the

Group’s chief operating decision maker focus on the business operating units which in

turn, are segregated based on the services provided by the Group.

The Group’s principal business operating units are operations for budget hotels and

boutique hotel.

The accounting policies of the reportable segments are as described in Note 2.

APPENDIX A


2009 AND 2008

A-39

25 SEGMENT INFORMATION (continued)

For the purpose of monitoring segment performance and allocating resources, the chief

operating decision maker monitors the tangible and financial assets attributable to each

segment. All assets and liabilities are allocated to reportable segments on a reasonable

basis.

Business segments

The Group comprises the two main business segments which are budget hotels

operations and boutique hotel operations.

Budget hotel

operations

Boutique

hotel

operations Total

$’000 $’000 $’000

2010

Segment assets

Assets:

Segment assets 640,600 98,255 738,855

Segment liabilities

Liabilities:

Segment liabilities 199,550 38,217 237,767

2009

Segment assets

Assets:

Segment assets 446,004 17,692 463,696

Segment liabilities

Liabilities:


2008

Segment assets

Assets:

Segment assets 340,007 2,017 342,024

Segment liabilities

Liabilities:

Segment liabilities 140,058 17 140,075

APPENDIX A


2009 AND 2008

A-40


Segmental results for the Relevant Periods are not disclosed as the Group has not

commenced the operations for the boutique hotel and management deemed the results

for the Relevant Periods are largely from the budget hotels operations.

Geographical information and information about major customers

The Group operates solely in Singapore and revenue is spread over a broad base of

customers.

26 OPERATING LEASE ARRANGEMENTS

At the end of the Relevant Periods, the Group has contracted with tenants for the following

future minimum lease income:

2010 2009 2008

$’000 $’000 $’000

Within one year 1,864 1,667 1,263

In the second to fifth year inclusive 700 745 296

2,564 2,412 1,559

27 COMMITMENTS

2010 2009 2008

$’000 $’000 $’000

Estimated amounts committed/contracted but not

provided for in the financial statements 6,577 9,897 4,299

Pending the expiry of the existing lease agreements that existed at the time of the

purchase of the properties under development and the application of the relevant licenses

in converting the properties under development into hotel operations, the Group rents out

its properties under development. Rental income earned during the year amounted to

$1,185,000 (2009: $274,000; 2008: $Nil).

28 SUBSEQUENT EVENTS

(a) On 24 March 2011, the Group contracted to sell a property that was undergoing

major additions and alteration works, which is located at 103 Beach Road, Singapore

189704 for a consideration of $46,000,000, which was received during the financial

period ended 30 September 2011.

APPENDIX A


2009 AND 2008

A-41

28 SUBSEQUENT EVENTS (continued)

(b) On 30 September 2011, the Group contracted to sell 2 properties that were

undergoingmajor additions and alteration works, which are located at 216 - 242 Pasir

Panjang Singapore 118577–118597 and 72 Lorong 19 Geylang Road Singapore

388510 for a consideration of $28,409,000 to Fragrance Realty Pte Ltd, a related

company of the Group. An amount of $2,000,000 was received from Fragrance

Realty Pte Ltd during the financial period ended 30 September 2011 in relation to the

sales of properties under development.

(c) On 30 September 2011, the Group contracted to sell the property that is located at

168 Changi Road Singapore 419730 for a consideration of $7,390,000 to Fragrance

Global Pte Ltd, a related company of the Group. An amount of $2,000,000 was

received from Fragrance Global Pte Ltd during the financial period ended 30

September 2011 in relation to the sale of office premises.

(d) On 26 August 2011, the Group contracted to sell the property located at 63 Dunlop

Street Singapore 209391 for a consideration of $14,500,000. The Group

subsequently entered into a tenancy agreement with the buyer for a monthly rental of

$70,000 for 2 years. An amount of $145,000 was received from the buyer during the

financial period ended 30 September 2011.

(e) An interim one-tier dividend of $0.50 per ordinary share of Fragrance Capital Pte Ltd

totalling $10,000,000 for the year ended 31 December 2011 was declared on 22

November 2011.

(f) Restructuring exercise


Securities Trading Limited, the Company undertook a restructuring exercise to

streamline and rationalise the Group structure. Pursuant to the Restructuring

Agreement dated 31 March 2012 (the “Restructuring Agreement”), the Company

acquired:

(i) the entire issued and paid-up share capital of Fragrance Capital Pte Ltd,

comprising 20,000,000 ordinary shares in the capital of Fragrance Capital Pte

Ltd, resulting in Fragrance Capital Pte Ltd becoming a wholly-owned subsidiary

of the Company for a consideration of $284,517,694 (based on NTA as at 30

September 2011 less a discount of $33,111,984 and a dividend of $10,000,000

declared after 30 September 2011). The shares in Fragrance Capital Pte Ltd

were transferred with all rights, benefits and interests in and to the shares as at

13 April 2012 and thereafter;


comprising 1,000,000 ordinary shares in the capital of Fragrance Ventures Pte

Ltd, resulting in Fragrance Ventures Pte Ltd becoming a wholly-owned

APPENDIX A


2009 AND 2008

A-42


subsidiary of the Company for a consideration of $157,637,036 (based on NTA

as at 30 September 2011 less a discount of $19,784,057). The shares in

Fragrance Ventures Pte Ltd were transferred with all rights, benefits and

interests in and to the shares as at 13 April 2012 and thereafter;

(iii) the entire issued and paid-up share capital of Fragrance Assets Pte Ltd,

comprising 1,000,000 ordinary shares in the capital of Fragrance Assets Pte

Ltd, resulting in Fragrance Assets Pte Ltd becoming a wholly-owned subsidiary


September 2011 less a discount of $9,849,600). The shares in Fragrance

Assets Pte Ltd were transferred with all rights, benefits and interests in and to

the shares as at 13 April 2012 and thereafter;


comprising 4,000,000 ordinary shares in the capital of Fragrance Investment

Pte Ltd, resulting in Fragrance Investment Pte Ltd becoming a wholly-owned



Fragrance Investment Pte Ltd were transferred with all rights, benefits and


(v) the entire issued and paid-up share capital of Fragrance Hotel Management Pte

Ltd, comprising 100,000 ordinary shares in the capital of Fragrance Hotel

Management Pte Ltd, resulting in Fragrance Hotel Management Pte Ltd


$9,473,809 (based on the NTA as at 30 September 2011. The shares in

Fragrance Hotel Management Pte Ltd were transferred with all rights, benefits

and interests in and to the shares as at 13 April 2012 and thereafter;

(vi) the entire issued and paid-up share capital of Parc Sovereign Hotel

Management Pte Ltd, comprising 1,000,000 ordinary shares in the capital of

Parc Sovereign Hotel Management Pte Ltd, resulting in Parc Sovereign Hotel

Management Pte Ltd becoming a wholly-owned subsidiary of the Company for


discount of $31,545). The shares in Parc Sovereign Hotel Management Pte Ltd


13 April 2012 and thereafter.

The Purchase Consideration was paid by the Company to Fragrance Group Limited

in the following manner:

(a) approximately $345.7 million was satisfied in cash by way of loans, obtained

directly by the Group and/or internally generated funds of the Group and insofar

as it constituted financial assistance under the Companies Act, duly approved

APPENDIX A


2009 AND 2008

A-43


by way of a special resolution passed by each of the Subsidiaries in accordance

with Section 76(9B) of the Companies Act within thirty (30) days from the date of

the Listing Date;

(b) approximately $137.5 million was satisfied by the Company by way of allotment

and issuance of 549,999,999 new Shares (“Consideration Shares”) credited as

fully paid-up to Fragrance Group Limited;

(c) approximately $74.8 million is to be satisfied by the Company by way of

utilisation of part of the proceeds of the Invitation within thirty (30) days from the

date of the Listing Date; and

The Restructuring Exercise was completed on 13 April 2012, notwithstanding that (a)

and (c) have not been paid as at the time of completion.

(g) At the extraordinary general meetings deemed to be held on 21 March 2012 and 23

March 2012, the Controlling Shareholder, FGL approved, inter alia, the following:

(1) the conversion of the Company into a public company limited by shares and the


(2) the adoption of the Memorandum and Articles of Association;

(3) the issue of the New Shares pursuant to the Invitation, which when allotted,

issued and fully paid, will rank pari passu in all respects with the existing issued

Shares;

(4) that authority be given to the Directors, pursuant to Section 161 of the

Companies Act, to:


(bb) make or grant offers, agreements or options (collectively,

“Instruments”) that might or would require Shares to be issued during

the continuance of this authority or thereafter, including but not limited

to the creation and issue of (as well as adjustments to) 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;

and

(ii) issue Shares in pursuance of any Instruments made or granted by the

Directors while such authority was in force (notwithstanding that such issue

APPENDIX A


2009 AND 2008

A-44


of Shares pursuant to the Instruments may occur after the expiration of the

authority contained in this resolution),

provided that:

(iii) the aggregate number of Shares issued pursuant to such authority

(including the Shares to be issued in pursuance of Instruments made or

granted pursuant to such authority), does not exceed 50.0% of the Post-

Invitation Issued Share Capital, and provided further that where

Shareholders with registered addresses in Singapore are not given the

opportunity to participate in the same on a pro-rata basis (“non pro- rata

basis”), then the Shares to be issued under such circumstances (including

the Shares to be issued in pursuance of Instruments made or granted

pursuant to such authority) shall not exceed 20.0% of the Post- Invitation

Issued Share Capital;

(iv) (unless revoked or varied by the Company in general meeting) the

authority so conferred shall continue in force until the conclusion of the next

annual general meeting of the Company or the date by which the next

annual general meeting of the Company is required by law to be held,

whichever is the earlier.

For the purposes of this resolution, the “Post-Invitation Issued Share Capital”

shall mean the total number of issued Shares of the Company (excluding

treasury shares) immediately after this Invitation, after adjusting for: (i) new

Shares arising from the conversion or exercise of any convertible securities; (ii)

new Shares arising from exercising share options or vesting of share awards

outstanding or subsisting at the time such authority is given, provided the

options or awards were granted in compliance with the Listing Manual; and (iii)

any subsequent bonus issue, consolidation or sub-division of Shares; and

(5) The adoption of the Global Premium Hotels Performance Share Plan (“PSP”),

the rules of which are set out in Appendix H of the Prospectus and that the

Directors be authorised to allot and issue Award Shares upon the vesting of the

Awards granted under the Global Premium Hotels PSP.

(h) Subsequent to the end of the reporting period, the Group entered into a financing

arrangement with a commercial bank for a five year term loan of $155,000,000. Part

of the term loan was used to repay existing term loans of the Group amounting to

$106,263,000 at the redemption dates.

APPENDIX A


2009 AND 2008

A-45


STATEMENT OF DIRECTORS

In the opinion of the directors, the combined financial statements set up on pages A-3 to A-45

are drawn up so as to give a true and fair view of the state of affairs of the Group as at 31

December 2010, 2009 and 2008, and of the results, changes in equity and cash flows of the

Group for the years ended 31 December 2010, 2009 and 2008 and at the date of this statement,

there are reasonable grounds to believe that the Group will be able to pay its debts when they

fall due.

ON BEHALF OF THE DIRECTORS

......................................

Koh Wee Meng

......................................

Lim Chee Chong

18 April 2012

APPENDIX A


2009 AND 2008

A-46

18 April 2012



168 Changi Road

#04-01, Fragrance Building

Singapore 419730

Dear Sirs

Report on the Financial Statements

We have audited the accompanying combined interim condensed financial statements of

Global Premium Hotels Limited and its subsidiaries (the “Group”) which comprise the

combined statement of financial position as at 30 September 2011, and the related combined

statement of comprehensive income, combined statement of changes in equity and combined

statement of cash flows of the Group for the nine months period from 1 January 2011 to 30

September 2011, and selected explanatory notes as set out on pages B-3 to B-21.

Management’s Responsibility for the Combined Interim Condensed Financial

Statements

Management is responsible for the preparation and presentation of the combined interim

condensed financial statements in accordance with the Singapore Financial Reporting

Standard 34, Interim Financial Reporting (“FRS 34”), and for such internal control as

management determines is necessary to enable the preparation of the financial statements

that is free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the combined interim condensed financial

statements based on our audit. We conducted our audit in accordance with Singapore

Standards on Auditing applicable to special purpose audit engagements. Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the combined interim condensed financial statements

are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the combined interim condensed financial statements. The procedures selected

depend on the auditor’s judgement, including the assessment of the risks of material

misstatement of the combined interim condensed financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal control relevant to the

entity’s preparation of combined interim condensed financial statements 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

APPENDIX B

INDEPENDENT AUDITORS’ REPORT ON THE COMBINED INTERIMCONDENSED FINANCIAL STATEMENTS FOR THE NINE MONTHS

ENDED 30 SEPTEMBER 2011

B-1

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 combined interim condensed financial statements. We believe that the audit evidence we

have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the combined interim condensed financial statements of the Group is prepared,

in all material respects, in accordance with Singapore Financial Reporting Standard 34, Interim

Financial Reporting.

Other Matters

Wehave not carried out an audit or review in accordance with Singapore Standards on Auditing

on the financial information for the nine months period ended 30 September 2010 included as

comparatives in the combined interim condensed financial statements for the nine months

period ended 30 September 2011 and, accordingly, we do not express any assurance on the

comparative financial information.

Restriction on Distribution and Use

This report has been prepared solely in connection with the proposed listing of Global Premium

Hotels Limited on the Singapore Exchange Securities Trading Limited for inclusion in the

prospectus. This report is made solely to you, as a body for this purpose and for no other

purpose. We do not assume responsibility towards or accept liability to any other person for the

contents of this report.

Yours faithfully




Singapore


Partner

APPENDIX B



B-2


COMBINED STATEMENT OF FINANCIAL POSITION

As at 30 September 2011

Note

As at

30 September

2011

As at

31 December

2010

(Audited) (Audited)

$’000 $’000

ASSETS

Current assets

Cash and cash equivalents 3,899 2,811

Trade receivables 9 1,511 1,274

Other receivables 10 47,443 5,982

Properties under development 11 — 26,846

Total current assets 52,853 36,913

Non-current asset

Property, plant and equipment 12 738,718 701,942

Total assets 791,571 738,855


Current liabilities

Trade payables 13 1,194 1,188

Other payables 14 5,584 49,986

Term loans 15 32,643 7,895

Income tax payable 8,065 4,435

Total current liabilities 47,486 63,504


Term loans 15 108,838 150,448

Deferred tax liabilities 16 26,447 23,815

Total non-current liabilities 135,285 174,263


Share capital 17 27,100 27,100

Revaluation reserve 18 511,459 451,552

Retained earnings 70,241 22,436

Total equity 608,800 501,088

Total liabilities and equity 791,571 738,855

See accompanying notes to combined interim condensed financial statements.

APPENDIX B



B-3


COMBINED STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended 30 September 2011

Note

1 January 2011

to

30 September

2011

1 January 2010

to

30 September

2010

$’000 $’000

(Audited) (Unaudited)

Revenue 19 38,929 32,284

Cost of sales (4,571) (3,867)

Gross profit 34,358 28,417

Other operating income 20 344 203

Administrative expenses (11,296) (8,754)

Finance costs 21 (2,158) (2,346)

Profit before income tax 21,248 17,520

Income tax expense 22 (3,930) (3,040)

Profit for the period 17,318 14,480

Other comprehensive income:

Revaluation of land and hotel buildings 97,083 209,715

Income tax effects (6,689) (11,086)

Net other comprehensive income 90,394 198,629

Total comprehensive income for the period 107,712 213,109

Basic and diluted earnings per share (cents) 23 3.15 2.63


APPENDIX B



B-4


COMBINED STATEMENT OF CHANGES IN EQUITY


Share

capital

Revaluation

reserve

Retained

earnings Total

$’000 $’000 $’000 $’000

Audited


Transfer on sale of land, hotel buildings and

construction-in-progress — (30,487) 30,487 —

Total comprehensive income for the period — 90,394 17,318 107,712

Balance at 30 September 2011 27,100 511,459 70,241 608,800

Unaudited


Total comprehensive income for the period — 198,629 14,480 213,109

Dividends paid — — (10,000) (10,000)

Balance at 30 September 2010 27,100 412,283 26,061 465,444


APPENDIX B



B-5


COMBINED STATEMENTS OF CASH FLOWS


1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000



Profit before income tax 21,248 17,520

Adjustments for:

Depreciation of property, plant and equipment 1,904 1,524

Interest expense 2,158 2,346

Interest income (36) —

Operating cash flows before movements in working capital 25,274 21,390

Trade receivables (237) (247)

Other receivables (Note A) 1,017 (170)

Property under development (1,563) (2,769)

Trade payables 6 53

Other payables 537 1,202

Cash generated from operations 25,034 19,459

Interest paid (2,383) (2,880)

Income tax paid (4,357) (2,647)

Net cash from operating activities 18,294 13,932


Purchase of property, plant and equipment (9,262) (15,035)

Proceeds from disposal of property, plant and equipment (Note A) 50,145 —

Interest received 36 —

Net cash from (used in) investing activities 40,919 (15,035)

APPENDIX B



B-6

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000



Advances from (to) ultimate holding company 4,154 (1,072)

Repayments (to) from ultimate holding company (44,939) 2,028

Proceeds from borrowings 4,233 33,313

Repayment of borrowings (21,573) (24,200)

Dividend paid — (10,000)

Net cash (used in) from financing activities (58,125) 69

Net increase (decrease) in cash and cash equivalents 1,088 (1,034)

Cash and cash equivalents at beginning of period 2,811 2,458

Cash and cash equivalents at end of period 3,899 1,424

Note A:

During the nine months period ended 30 September 2011, the Group disposed of certain hotel

properties, its office premises and properties under development for $96,299,000 out of which

cash of $50,145,000 was received and $46,154,000 remains unpaid as at 30 September 2011.


APPENDIX B



B-7


NOTES TO COMBINED INTERIM CONDENSED FINANCIAL STATEMENTS


1 GENERAL

The Company (Registration No. 201128650E) is incorporated in Singapore on 19

September 2011 with its registered office at 168 Changi Road, #04-01 Fragrance

Building, Singapore 419730. The financial statements are expressed in Singapore dollars,

which is also the functional currency of the Company.

The combined interim condensed financial statements have been prepared solely in

connection with the proposed listing of Global Premium Hotels Limited on the Singapore

Exchange Securities Trading Limited.

The principal activities of the Group are to carry on the business of operating hotels and

investment holding.


Securities Trading Limited, the Company undertook a restructuring exercise to streamline

and rationalise the Group structure which are disclosed in the audited Combined Financial

Statements for the years ended 31 December 2010, 2009 and 2008.

The combined interim condensed financial statements of the Group for the nine months

ended 30 September 2011 were authorised for issue by the Board of Directors on 18 April

2012.

2 BASIS OF PREPARATION

The combined interim condensed financial statements for the nine months period ended

30 September 2011 have been prepared in accordance with Singapore Financial

Reporting Standard 34, Interim Financial Reporting (“FRS 34”).

3 SIGNIFICANT ACCOUNTING POLICIES

The combined interim condensed financial statements have been prepared using

accounting policies consistent with the Singapore Financial Reporting Standards in

accordance with the historical cost convention except as disclosed in the accounting

policies in the audited combined financial statements for the years ended 31 December

2010, 2009 and 2008.

The accounting policies adopted are consistent with those followed in the preparation of

the Group’s combined financial statements for the latest annual period ended 31

December 2010.

APPENDIX B



B-8

4 OPERATIONS IN THE INTERIM PERIOD

TheGroup’s operations are affected by seasonality as revenue from June to July and from

November to December of each reporting period, which are school holiday periods, tend

to be higher

The Group uses the revaluation model under FRS 16, Property, plant and equipment, to

account for its hotel properties. During the period ended 30 September 2010, the directors

estimate that the gross fair value recorded in other comprehensive income was

$209,715,000 compared to $97,083,000 in the period ended 30 September 2011. Future

valuation of hotel properties would be influenced by the economic and market conditions

at the time when future valuation would be performed.

5 FINANCIAL RISK MANAGEMENT POLICIES

There have been no changes in the financial risk management of the Group and the

Group’s overall capital risk management remains unchanged and have been disclosed in

the audited combined financial statements for the years ended 31 December 2010, 2009

and 2008. The working capital has improved as the Group has repaid certain loans and

amount due to ultimate holding company using the proceeds from the sale of hotel

properties as disclosed in Note 12 of the combined interim condensed financial

statements.


UNCERTAINTY

The critical judgments and key sources of estimation uncertainty made by the

management remain unchanged from the last audited financial year except as disclosed

in Notes 11 and 12 of the combined interim condensed financial statements where the

Group disposed of certain properties under development and office premises to related

companies at their carrying values. Management is of the opinion that these disposals are

as a result from a restructuring exercise to streamline and rationalise the Group structure,

and accordingly these transactions would not have any tax consequences.

7 HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS

The Company is a wholly-owned subsidiary of Fragrance Group Limited, incorporated in

Singapore which is also the Company’s ultimate holding company. Related companies in

these financial statements refer to members of the ultimate holding company’s group of

companies.

Some of the Company’s transactions and arrangements are between members of the

Group and the effect of these on the basis determined between the parties is reflected in

these financial statements. The intercompany balances are unsecured, interest-free and

repayable on demand.

APPENDIX B



B-9

7 HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS (continued)

During the period, the Group entered into the following transactions with related

companies:

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000

Sale of office premises and properties under development 35,799 —

8 RELATED PARTY TRANSACTIONS

Some of the Group’s transactions and arrangements are with related parties and the effect

of these on the basis determined between the parties is reflected in these combined

interim condensed financial statements. The balances are unsecured, interest-free and

repayable on demand.

During the period, the Group entered into the following transactions with related parties:

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000

Salaries and related costs paid to key management personnel

and relatives of a director 520 468

Compensation of directors and key management personnel

The remuneration of directors and other members of key management are as follows:

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000

Short-term benefits 484 337

Post-employment benefits 20 15

504 352

APPENDIX B



B-10

9 TRADE RECEIVABLES

As at

30 September

2011

As at

31 December

2010

$’000 $’000

External parties 1,511 1,274

Certain customers are granted a credit period on the rental of hotel room of 30 days (2010:

30 days). In determining the recoverability of trade receivables, the Group considers any

change in the credit quality of the trade receivables from the date credit was initially

granted up to the reporting date. The concentration of credit risk is limited due to the

customer base being large and unrelated. All trade receivables are neither past due nor

impaired andmanagement has considered the quality of the debts and determined that no

allowance is required.

10 OTHER RECEIVABLES AND DEPOSITS

As at

30 September

2011

As at

31 December

2010

$’000 $’000

Prepayments 596 44

Deposits 420 1,699

Advances to the ultimate holding company (Note 7) — 4,155

Amount due from related companies (Note 7) 31,799 —

Amount due from an external party 14,355 —

Others 273 84

47,443 5,982

The amount due from related companies amounting to $31,799,000 and amount due from

an external party amounting to $14,355,000 represents proceeds from disposal of hotel

properties, office premises and properties under development.

APPENDIX B



B-11

11 PROPERTIES UNDER DEVELOPMENT

As at

30 September

2011

As at

31 December

2010

$’000 $’000

Land cost and other related costs — 25,690

Development costs — 247

Property taxes and other overhead expenses — 909

— 26,846

Certain properties are mortgaged to the banks to secure credit facilities (Note 15).

During the nine months ended 30 September 2011, the Group disposed of its properties

under development to its related companies (Note 7).

12 PROPERTY, PLANT AND EQUIPMENT

During the nine months period ended 30 September 2011, the Group incurred

approximately $9,486,000 mainly on renovation expenditure to certain existing hotel

buildings and a new hotel building under construction.

The Group disposed of certain hotel properties for $60,500,000. There was no profit or

loss arising from the sale as the sales consideration represents their fair values.

The Group also disposed of its office premises for $7,390,000 to a related company (Note

7). The sales consideration is based on its carrying value resulting in no gain or loss.

An amount of $97,083,000 was recorded in other comprehensive income as a fair value

gain from the revaluation of the freehold and leasehold land and hotel buildings including

those under construction.

13 TRADE PAYABLES

As at

30 September

2011

As at

31 December

2010

$’000 $’000

External parties 1,194 1,188

The average credit period for trade payables is 14 to 30 days (2010: 14 to 30 days). The

Group has financial risk management policies in place to ensure that all payables are

within the credit time frame specified by the suppliers.

APPENDIX B



B-12

14 OTHER PAYABLES

As at

30 September

2011

As at

31 December

2010

$’000 $’000

Accruals 4,367 4,070

Withholding income tax on staff costs 105 118

Advances from the ultimate holding company (Note 7) 125 45,064

Deposits received in advance 957 708

Others 30 26

5,584 49,986

15 TERM LOANS

As at

30 September

2011

As at

31 December

2010

$’000 $’000

Term loan 141,481 158,343

Less: Amount due for settlement within 12 months

(shown under current liabilities) (32,643) (7,895)

Amount due for settlement after 12 months 108,838 150,448

16 DEFERRED TAX LIABILITIES

The movement in deferred tax liabilities position during the period is as follows:

Accelerated

tax

depreciation

Revaluation of

leasehold land and

hotel buildings

including

construction-

in-progress Total

$’000 $’000 $’000

At 1 January 2011 138 23,677 23,815


for the year — 6,689 6,689

Credit to equity upon disposal — (4,053) (4,053)

Credit to profit or loss for the period (4) — (4)

At 30 September 2011 134 26,313 26,447

APPENDIX B



B-13

17 SHARE CAPITAL

The Company has one class of ordinary share which has no par value carries one vote per

share and carries no right to fixed income.

The Company was incorporated on 19 September 2011. Accordingly, the share capital in

the combined statements of financial position as at 30 September 2011 and 31 December

2010 represent the share of the paid-up capital of the subsidiaries and the Company.

18 REVALUATION RESERVE

The revaluation reserve arise on the revaluation of land and hotel buildings including

those under construction. Where revalued land and buildings are sold, the portion of the

property revaluation reserve that relates to that asset, and is effectively realised, is

transferred directly to retained earnings.

The revaluation reserve is not available for distribution to Company’s shareholder.

19 REVENUE

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000

Hotel room revenue 37,272 30,592

Rental revenue 1,657 1,692

38,929 32,284

Rental revenue is derived from the leasing of shop spaces to third parties of certain office

premises, hotel buildings and properties under development.

20 OTHER OPERATING INCOME

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000

Interest income 36 –

Income from vending machines and internet services 200 103

Others 108 100

344 203

APPENDIX B



B-14

21 FINANCE COSTS

1 January

2011 to

30 September

2011

1 January

2010 to

30 September

2010

$’000 $’000

Interest on term loans 2,158 2,346

22 INCOME TAX EXPENSE

The interim period income tax expense is accrued based on the estimated average annual

effective income tax rate of the respective entities.

23 EARNINGS PER SHARE

The calculation of basic and diluted earnings per share is based on the profit attributable

to the equity holders of the Company for each of the periods ended 30 September 2011

and 2010 and the pre-invitational share capital of 550,000,000 shares.

24 SEGMENT INFORMATION

For the purposes of the resource allocation and assessment of segment performance, the

Group’s chief operating decision maker focus on the business operating units which in

turn, are segregated based on the services of the Group.

The Group’s principal business operating units are operations for budget hotels and

boutique hotel.

Segment revenue represents revenue generated from external customers. Segment profit

represents the profit earned by each segment after allocating central administrative costs

and finance costs. This is the measure reported to the chief operating decision maker for

the purpose of resource allocation and assessment of segment performance.

For the purpose of monitoring segment performance and allocating resources, the chief

operating decision maker monitor the tangible and financial assets attributable to each

segment. All assets and liabilities are allocated to reportable segments on a reasonable

basis.

APPENDIX B



B-15


Business segments

The Group comprises the two main business segments which are budget hotels

operations and boutique hotel operations.

Budget

hotels

Operations

Boutique

hotel

operations Total

$’000 $’000 $’000

Nine months ended 30 September 2011

REVENUE 34,692 4,237 38,929

RESULT

Segment result 30,688 3,670 34,358

Other operating income 318 26 344

Other operating expenses (9,765) (1,531) (11,296)

Finance costs (1,826) (332) (2,158)


Income tax (3,625) (304) (3,930)

Profit after income tax 15,790 1,529 17,318


Segment assets

Assets:

Segment assets 687,616 103,955 791,571

Segment liabilities

Liabilities:


APPENDIX B



B-16


Budget

hotels

Operations

Boutique

hotel

operations Total

$’000 $’000 $’000

Nine months ended 30 September 2010

REVENUE 32,284 — 32,284

RESULT

Segment result 28,417 — 28,417

Other operating income 203 — 203

Other operating expenses (8,740) (14) (8,754)

Finance costs (2,346) — (2,346)

Profit before income tax 17,534 (14) 17,520

Income tax (3,040) — (3,040)

Profit after income tax 14,494 (14) 14,480

As at 31 December 2010

Segment assets

Assets:

Segment assets 640,600 98,255 738,855

Segment liabilities

Liabilities:


Geographical information and information about major customers

The Group operates solely in Singapore and revenue is spread over a broad base of

customers.

25 COMMITMENTS

As at

30 September

2011

As at

30 September

2010

$’000 $’000

Estimated amounts committed/contracted but not provided

for in the financial statements 348 5,276

APPENDIX B



B-17

25 COMMITMENTS (continued)

Pending the expiry of the existing lease agreements that existed at the time of the

purchase of the properties under development and the application of the relevant licenses

in converting the properties under development into hotel operations, the Group rents out

its properties under development. Rental income earned during the period amounted to

$825,000 (2010: $890,000).

26 SUBSEQUENT EVENTS

Subsequent to 30 September 2011, except as disclosed in other notes to the financial

statements, the subsequent events of the Group are as follows:

(a) At the extraordinary general meetings deemed to be held on 21 March 2012 and 23

March 2012, the Controlling Shareholder, FGL approved, inter alia, the following:

(1) the conversion of the Company into a public company limited by shares and the


(2) the adoption of the Memorandum and Articles of Association;

(3) the issue of the New Shares pursuant to the Invitation, which when allotted,

issued and fully paid, will rank pari passu in all respects with the existing issued

Shares;

(4) that authority be given to the Directors, pursuant to Section 161 of the

Companies Act, to:


(bb) make or grant offers, agreements or options (collectively,

“Instruments”) that might or would require Shares to be issued during

the continuance of this authority or thereafter, including but not limited

to the creation and issue of (as well as adjustments to) 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; and

(ii) issue Shares in pursuance of any Instruments made or granted by the

Directors while such authority was in force (notwithstanding that such issue

of Shares pursuant to the Instruments may occur after the expiration of the

authority contained in this resolution), provided that:

APPENDIX B



B-18


(iii) the aggregate number of Shares issued pursuant to such authority

(including the Shares to be issued in pursuance of Instruments made or

granted pursuant to such authority), does not exceed 50.0% of the Post-

Invitation Issued Share Capital, and provided further that where

Shareholders with registered addresses in Singapore are not given the

opportunity to participate in the same on a pro-rata basis (“non pro-rata

basis”), then the Shares to be issued under such circumstances (including

the Shares to be issued in pursuance of Instruments made or granted

pursuant to such authority) shall not exceed 20.0% of the Post- Invitation

Issued Share Capital;

(iv) (unless revoked or varied by the Company in general meeting) the

authority so conferred shall continue in force until the conclusion of the next

annual general meeting of the Company or the date by which the next

annual general meeting of the Company is required by law to be held,

whichever is the earlier.

For the purposes of this resolution, the “Post-Invitation Issued Share

Capital” shall mean the total number of issued Shares of the Company

(excluding treasury shares) immediately after this Invitation, after adjusting

for: (i) new Shares arising from the conversion or exercise of any

convertible securities; (ii) new Shares arising from exercising share

options or vesting of share awards outstanding or subsisting at the time

such authority is given, provided the options or awards were granted in

compliance with the Listing Manual; and (iii) any subsequent bonus issue,

consolidation or sub-division of Shares; and

APPENDIX B



B-19


(5) The adoption of the Global Premium Hotels Performance Share Plan (“PSP”),

the rules of which are set out in Appendix H of the Prospectus and that the

Directors be authorised to allot and issue Award Shares upon the vesting of the

Awards granted under the Global Premium Hotels PSP.

(b) Restructuring exercise





acquired:






























APPENDIX B



B-20

















The Purchase Consideration was paid by the Company to Fragrance Group

Limited in the following manner:

(a) approximately $345.7 million was satisfied in cash by way of loans,

obtained directly by the Group and/or internally generated funds of the

Group and insofar as it constituted financial assistance under the

Companies Act, duly approved by way of a special resolution passed by

each of the Subsidiaries in accordance with Section 76(9B) of the

Companies Act within thirty (30) days from the date of the Listing Date;

(b) approximately $137.5 million was satisfied by the Company by way of

allotment and issuance of 549,999,999 new Shares (“Consideration

Shares”) credited as fully paid-up to Fragrance Group Limited;


utilisation of part of the proceeds of the Invitation within thirty (30) days

from the date of the Listing Date; and

The Restructuring Exercise was completed on 13 April 2012, notwithstanding

that (a) and (c) have not been paid as at time of completion.

(c) Subsequent to the end of the reporting period, the Group entered into a financing

arrangement with a commercial bank for a five year term loan of $155,000,000. Part

of the term loan was used to repay existing term loans of the Group amounting to

$106,263,000 at the redemption dates.

APPENDIX B



B-21


STATEMENT OF DIRECTORS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011

In the opinion of the directors, the combined interim condensed financial statements of the

Group set out on pages B-3 to B-21 are prepared in accordance with Singapore Financial

Reporting Standard 34, Interim Financial Reporting as at 30 September 2011 and of the

results, changes in equity and cash flows of the Group for the nine months from 1 January 2011

to 30 September 2011 and at the date of this statement, there are reasonable grounds to

believe that the Group will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

......................................

Koh Wee Meng

......................................

Lim Chee Chong

18 April 2012

APPENDIX B



B-22

18 April 2012



168 Changi Road


Singapore 419730

Dear Sirs

This report has been prepared for inclusion in the Prospectus dated 18 April 2012 (the

“Prospectus”) in respect of initial public offering of shares of Global Premium Hotels Limited

(the “Company”). The unaudited Pro Forma Group financial information comprises the

unaudited Pro Forma combined statements of financial position as at 31 December 2010 and

30 September 2011, and the unaudited Pro Forma combined statements of comprehensive

income and statements of cash flows for the year ended 31 December 2010 and for the nine

months ended 30 September 2011 (collectively the “unaudited Pro Forma Group financial

information”).

We report on the unaudited Pro Forma Group financial information set out on pages C-3 to

C-22 which have been prepared for illustrative purposes only and based on certain

assumptions after making certain adjustments to show what:

(i) the unaudited combined results and cash flows for the year ended 31 December 2010 and

the unaudited combined interim results and cash flows for the nine months ended 30

September 2011 of the Company and its subsidiaries (the “Group”) would have been if the

Significant Events stated in the Explanatory Note 1 of the unaudited Pro Forma Group

financial information had occurred on 1 January 2010; and

(ii) the unaudited combined statement of financial position as at 31 December 2010 and the

unaudited combined interim statement of financial position as at 30 September 2011 of

the Group would have been if the foresaid Significant Events had occurred on 31

December 2010 and 30 September 2011 respectively.

The unaudited Pro Forma Group financial information, because of their nature, may not give a

true picture of the Group’s actual financial position or results.

The unaudited Pro Forma Group financial information is the responsibility of the management

of the Company. Our responsibility is to express an opinion on the unaudited Pro Forma Group

financial information based on our work.

We carried out procedures in accordance with Singapore Statement of Auditing Practice 24:

Auditors and Public Offering Documents. Our work, which involved no independent

examination of the unaudited Pro Forma Group financial information, consisted primarily of

comparing the unaudited Pro Forma Group financial information to the audited combined

financial statements of the Group for the year ended 31 December 2010 and the unaudited

combined interim condensed financial statements of the Group for the nine months ended 30

APPENDIX C

INDEPENDENT AUDITORS’ REPORT ON THE UNAUDITEDPRO FORMA COMBINED FINANCIAL INFORMATION

C-1

September 2011, considering the evidence supporting the adjustments and discussing the

unaudited Pro Forma Group financial information with the management of the Company.

In our opinion:

(a) the unaudited Pro Forma Group financial information have been properly prepared:

(i) on the basis stated in the Explanatory Note 2 of the unaudited Pro Forma Group

financial information;

(ii) such basis is consistent with the accounting policies adopted by the Group for its

latest audited combined financial statements, which are drawn up in accordance with

the Singapore Financial Reporting Standards; and

(b) eachmaterial adjustment made to the information used in the preparation of the unaudited

Pro Forma Group financial information is appropriate for the purpose of preparing such

unaudited Pro Forma Group financial information.

Yours faithfully




Singapore


Partner

APPENDIX C


C-2

UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION

As at 31 December 2010

Explanatory

note

Audited

combined

statement of

financial

position

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

financial

position

$’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 2(e) 2,811 16,332 19,143

Trade receivables 1,274 — 1,274

Other receivables 2(a), 2(b),

2(c), 2(d),

2(e)

5,982 40,037 46,019

Properties under development 2(d) 26,846 (26,846) —

Total current assets 36,913 29,523 66,436

Non-current asset

Property, plant and equipment 2(a), 2(b),

2(c)

701,942 (59,336) 642,606

Total assets 738,855 (29,813) 709,042


Current liabilities

Trade payables 1,188 — 1,188

Other payables 2(a), 2(b),

2(d), 2(e),

2(f)

49,986 90,907 140,893

Term loans 2(a), 2(c),

2(d), 2(e)

7,895 12,252 20,147

Income tax payable 2(a), 2(b),

2(c), 2(d)

4,435 3,884 8,319



Term loans 2(a), 2(b),

2(c), 2(d),

2(e)

150,448 292,587 443,035

Deferred tax liabilities 2(a), 2(b) 23,815 (4,287) 19,528


APPENDIX C


C-3

Explanatory

note

Audited

combined

statement of

financial

position

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

financial

position

$’000 $’000 $’000


Share capital 2(e) 27,100 110,400 137,500

Revaluation reserve 2(a), 2(b) 451,552 (24,208) 427,344

Merger reserve 2(e) — (530,900) (530,900)

Retained earnings 2(a), 2(b),

2(c), 2(d),

2(f)

22,436 19,552 41,988

Total equity 501,088 (425,156) 75,932

Total liabilities and equity 738,855 (29,813) 709,042

APPENDIX C


C-4

UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2010

Explanatory

note

Audited

combined

statement of

comprehensive

income

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

comprehensive

income

$’000 $’000 $’000

Revenue 2(b), 2(c), 2(d) 44,215 (1,750) 42,465

Cost of services 2(a) (5,156) (840) (5,996)

Gross profit 39,059 (2,590) 36,469

Other operating income 2(a), 2(b) 280 (16) 264

Loss on disposal of property, plant

and equipment

2(c) — (51) (51)

Administration expenses 2(a), 2(b), 2(c),

2(d)

(12,223) 663 (11,560)

Finance costs 2(a), 2(b), 2(c),

2(d)

(3,001) 949 (2,052)

Profit before income tax 24,115 (1,045) 23,070

Income tax expense 2(a), 2(b), 2(c),

2(d)

(4,260) 169 (4,091)

Profit for the year 19,855 (876) 18,979

Other comprehensive income

Revaluation of land and hotel

buildings

2(a), 2(b) 256,957 (28,494) 228,463

Income tax effects 2(b) (19,059) 4,286 (14,773)

Net other comprehensive income 237,898 (24,208) 213,690

Total comprehensive income 257,753 (25,084) 232,669

Basic and diluted earnings per share

(cents)

3.61 3.45

APPENDIX C


C-5

UNAUDITED PRO FORMA COMBINED STATEMENT OF CASH FLOWS

For the year ended 31 December 2010

Explanatory

note

Audited

combined

statement of

cash flows

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

cash flows

$’000 $’000 $’000


Profit before income tax 2(a), 2(b),

2(c), 2(d)

24,115 (1,045) 23,070

Adjustments for:

Depreciation of property, plant and

equipment

2(a), 2(c) 2,058 (86) 1,972

Loss (Gain) on disposal of property,

plant and equipment

2(c) 1 51 52

Interest expense 2(a), 2(b),

2(c), 2(d)

3,001 (949) 2,052

Operating cash flows before movements

in working capital

29,175 (2,029) 27,146

Trade receivables (289) — (289)

Other receivables 2(a), 2(b),

2(c), 2(d),

2(e)

(1,662) (22,292) (23,954)

Trade payables (48) — (48)


2(d)

2,293 5,471 7,764

Properties under development 2(d) (3,026) 26,846 23,820

Cash generated from (used in)

operations

26,443 7,996 34,439

Interest paid 2(a), 2(b),

2(c), 2(d)

(3,917) 949 (2,968)

Income tax paid (2,648) — (2,648)

Net cash from (used in) operating

activities

19,878 8,945 28,823


Purchase of property, plant and

equipment

2(a), 2(b) (20,940) (2,533) (23,473)

Proceeds from disposal of property,

plant and equipment

2(a), 2(b),

2(c), 2(d)

— 50,145 50,145

Net cash (used in) from investing

activities

(20,940) 47,612 26,672

APPENDIX C


C-6

Explanatory

note

Audited

combined

statement of

cash flows

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

cash flows

$’000 $’000 $’000


Advances from (to) ultimate holding

company

2(e) 2,178 (345,064) (342,886)

Repayments from ultimate holding

company

6,828 — 6,828

Proceeds from term loans 2(e) 36,499 463,182 499,681

Repayment of term loans 2(a), 2(b),

2(c), 2(d),

2(e)

(25,090) (158,343) (183,433)

Dividend paid (19,000) — (19,000)

Net cash from (used in) financing

activities

1,415 (40,225) (38,810)

Net increase in cash and cash

equivalents

353 16,332 16,685

Cash and cash equivalents at beginning

of year

2,458 — 2,458

Cash and cash equivalents at end of

year

2,811 16,332 19,143

APPENDIX C


C-7

UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION


Explanatory

note

Audited

combined

statement of

financial

position

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

financial

position

$’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 2(e) 3,899 7,689 11,588

Trade receivables 1,511 — 1,511

Other receivables 2(b), 2(e) 47,443 (31,835) 15,608

Total current assets 52,853 (24,146) 28,707

Non-current asset

Property, plant and equipment 738,718 — 738,718

Total assets 791,571 (24,146) 767,425


Current liabilities

Trade payables 1,194 — 1,194


2(c), 2(d),

2(e), 2(f)

5,584 85,498 91,082

Term loans 2(e) 32,643 (12,496) 20,147

Income tax payable 2(a), 2(b),

2(c), 2(d)

8,065 (144) 7,921



Term loans 2(e) 108,838 334,197 443,035

Deferred tax liabilities 26,447 — 26,447



Share capital 2(e) 27,100 110,400 137,500

Revaluation reserve 511,459 — 511,459

Merger reserve 2(e) — (530,900) (530,900)

Retained earnings 2(a), 2(b),

2(c), 2(d),

2(f)

70,241 (10,701) 59,540

Total equity 608,800 (431,201) 177,599

Total liabilities and equity 791,571 (24,146) 767,425

APPENDIX C


C-8

UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME


Explanatory

note

Audited

combined

statement of

comprehensive

income

Unaudited

Pro Forma

adjustments

Unaudited

Pro Forma

combined

statement of

comprehensive

income

$’000 $’000 $’000

Revenue 2(c), 2(d) 38,929 (1,069) 37,860

Cost of services 2(a) (4,571) (630) (5,201)

Gross profit 34,358 (1,699) 32,659

Other operating income 2(b) 344 (36) 308

Administration expenses 2(a), 2(b),

2(c), 2(d)

(11,296) 444 (10,852)

Finance costs 2(b), 2(c),

2(d)

(2,158) 446 (1,712)

Profit before income tax 21,248 (845) 20,403

Income tax expense 2(a), 2(b),

2(c), 2(d)

(3,930) 144 (3,786)

Profit for the period 17,318 (701) 16,617

Other comprehensive income

Revaluation of land and hotel

buildings

97,083 — 97,083

Income tax effects (6,689) — (6,689)

Net comprehensive income 90,394 — 90,394

Total comprehensive income

for the year

107,712 (701) 107,011

Basic and diluted earnings per

share (cents)

3.15 3.02

APPENDIX C


C-9

UNAUDITED PRO FORMA COMBINED STATEMENT OF CASH FLOWS


Explanatorynote

Auditedcombinedstatement ofcash flows

UnauditedPro Formaadjustments

UnauditedPro Formacombinedstatement ofcash flows

$’000 $’000 $’000Operating activitiesProfit before income tax 2(a), 2(b),

2(c), 2(d)21,248 (845) 20,403

Adjustments for:Depreciation of property, plant andequipment

2(a), 2(c) 1,904 (62) 1,842

Interest expense 2(a), 2(c),2(d)

2,158 (446) 1,712

Interest income 2(b) (36) 36 —

Operating cash flows beforemovementsin working capital

25,274 (1,317) 23,957

Trade receivables (237) — (237)Other receivables 2(a), 2(b),

2(c), 2(d),2(e)

1,017 41,195 42,212

Trade payables 6 — 6Other payables 2(a), 2(b),

2(c), 2(d),2(e)

537 (39,571) (39,034)

Properties under development (1,563) — (1,563)

Cash generated from operations 25,034 307 25,341Interest paid 2(a), 2(c),

2(d)(2,383) 446 (1,937)

Income tax paid (4,357) — (4,357)

Net cash from operating activities 18,294 753 19,047

Investing activitiesInterest received 2(b) 36 (36) —Purchase of property, plant andequipment

(9,262) — (9,262)

Proceeds from disposal of property,plant and equipment

2(a), 2(b),2(c), 2(d)

50,145 (50,145) —

Net cash from (used in) investingactivities

40,919 (50,181) (9,262)

Financing activitiesAdvances from (to) ultimate holdingcompany

2(e) 4,154 (4,154) —

Repayment to ultimate holdingcompany

2(e) (44,939) 44,939 —

Proceeds from borrowings 4,233 — 4,233Repayment of borrowings (21,573) — (21,573)

Net cash used in financing activities (58,125) 40,785 (17,340)

APPENDIX C


C-10

Explanatorynote

Auditedcombinedstatement ofcash flows

UnauditedPro Formaadjustments

UnauditedPro Formacombinedstatement ofcash flows

$’000 $’000 $’000

Net increase (decrease) in cash andcash equivalents

1,088 (8,643) (7,555)

Cash and cash equivalents atbeginning of period

2,811 16,332 19,143

Cash and cash equivalents at end ofperiod

3,899 7,689 11,588

Explanatory Notes:

1. Significant Events

Save for the following significant events relating to the disposal of hotel properties, office

premises and properties under development of the Group, and changes to the capital

structure (the “Significant Events”) discussed below, the directors, as at the date of this

report, are not aware of other significant disposal of assets subsequent to 31 December

2009 and significant changes made to the capital structure of the Group subsequent to 31

December 2010.

(a) Disposal of hotel property

On 26 August 2011, the Group contracted to sell the hotel property located at 63

Dunlop Street Singapore 209391 for a consideration of $14,500,000. The hotel

property was subsequently leased back to the Group for a monthly rental of $70,000

for 2 years. An amount of $145,000 was received from the buyer during the financial


(b) Disposal of construction-in-progress

On 24 March 2011, the Group contracted to sell a property that was undergoing

major additions and alteration works, which is located at 103 Beach Road, Singapore

189704 for a consideration of $46,000,000, which was received during the financial


(c) Disposal of office premises

On 30 September 2011, the Group contracted to sell the office premises located at

168 Changi Road Singapore 419730 for a consideration of $7,390,000 to Fragrance

Global Pte Ltd, a related company of the Group. An amount of $2,000,000 was

received from Fragrance Global Pte Ltd during the financial period ended 30

September 2011 in relation to the sale of office premises.

APPENDIX C


C-11

(d) Disposal of properties under development

On 30 September 2011, the Group contracted to sell 2 properties which are located

at 2161 242 Pasir Panjang Singapore 118577–118597 and 72 Lorong 19 Geylang

Road Singapore 388510 for a consideration of $28,409,000 to Fragrance Realty Pte

Ltd, a related company of the Group. An amount of $2,000,000 was received from

Fragrance Realty Pte Ltd during the financial period ended 30 September 2011 in

relation to the sales of properties under development.

(e) Restructuring exercise





acquired:



























APPENDIX C


C-12



















The Purchase Consideration was paid by the Company to Fragrance Group Limited

in the following manner:

(a) approximately $345.7 million was satisfied in cash by way of loans, obtained

directly by our Group and/or internally generated funds of the Group and insofar

as it constituted financial assistance under the Companies Act, duly approved

by way of a special resolution passed by each of the Subsidiaries in accordance

with Section 76(9B) of the Companies Act within thirty (30) days from the date of

the Listing Date;

(b) approximately $137.5 million was satisfied by the Company by way of allotment

and issuance of 549,999,999 new Shares (“Consideration Shares”) credited as

fully paid-up to Fragrance Group Limited;


utilisation of part of the proceeds of the Invitation within thirty (30) days from the

date of the Listing Date; and

The Restructuring Exercise was completed on 13 April 2012, notwithstanding that (a)

and (c) have not been paid as at the time of completion.

(f) Declaration of interim one-tier exempt dividend

On 22 November 2011, a subsidiary, Fragrance Capital Pte Ltd declared an interim

one-tier exempt dividend of $0.50 per ordinary share totalling $10,000,000 in respect

for the year ending 31 December 2011.

APPENDIX C


C-13

2. Basis of preparation of the unaudited Pro Forma Group financial information

The Unaudited Pro Forma Group financial information for the year ended 31 December

2010 and the nine months ended 30 September 2011 have been prepared for inclusion in

the Prospectus in connection with the invitation of shares of Global Premium Hotels

Limited and should be read in conjunction with the audited combined financial statements

of Global Premium Hotels Limited for the year ended 31 December 2010, 2009 and 2008

and the audited combined interim condensed financial statements of Global Premium

Hotels Limited for the nine months ended 30 September 2011.

The unaudited Pro Forma Group financial information has been prepared based on the

following:

— Audited combined financial statements of Global PremiumHotels Limited for the year

ended 31 December 2010 which were prepared by management in accordance with

the Singapore Financial Reporting Standards (“FRS”) and audited by Deloitte &

Touche LLP, Singapore, in accordance with Singapore Standards on Auditing. The

auditors’ report on these financial statements was not qualified.

— Audited combined interim condensed financial statements of Global Premium Hotels

Limited for the nine months ended 30 September 2011 which were prepared by

management in accordance with FRS 34 Interim Financial Reporting and audited by

Deloitte & Touche LLP, Singapore, in accordance with Singapore Standards on

Auditing. The auditors’ report on these financial statements was not qualified.

The unaudited Pro Forma Group financial information for the year ended 31 December

2010 and the nine months ended 30 September 2011 are prepared for illustrative

purposes only. These are prepared based on certain assumptions and after making

certain adjustments to show what:

(i) the unaudited combined results and cash flows of the Group for the year ended 31

December 2010 and for the ninemonths ended 30 September 2011 would have been

if the Significant Events discussed above had occurred on 1 January 2010; and

(ii) the unaudited combined statement of financial positions of the Group as at 31

December 2010 and 30 September 2011 would have been if the Significant Events

had occurred on 31 December 2010 and 30 September 2011 respectively.

APPENDIX C


C-14

Based on the assumptions discussed above, the following material adjustments have

been made to the audited combined financial statements of Global Premium Hotels

Limited for the year ended 31 December 2010 and audited combined interim condensed

financial statements for the nine months ended 30 September 2011, in arriving at the

unaudited Pro Forma Group financial information included herein:

(a) Disposal of hotel property

Effect of disposal of hotel property located at 63 Dunlop Street Singapore 209391

subsequent to 1 January 2010 and adjusted as appropriate for the following:

Unaudited Pro Forma combined statement of financial position

Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000

Other receivables 12,334 —

Property, plant and equipment (6,100) —

Other payables 1,787 566

Term loans (Current) (180) —

Term loans (Non-current) (1,986) —

Income tax payable (127) (97)

Deferred tax liabilities (1) —

Revaluation reserve (3,279) —

Retained earnings 10,020 (469)

Unaudited Pro Forma combined statement of comprehensive income

Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000

Cost of sales 840 630

Other operating income (2) —

Administrative expenses (51) (36)

Finance costs (39) (28)

Income tax expense (128) (97)

APPENDIX C


C-15

Unaudited Pro Forma combined statement of cash flows

Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000


Profit before income tax (752) (566)

Depreciation (35) (24)

Interest expense (39) (28)

Other receivables 2,021 145


Interest paid (39) (28)


Proceeds from disposal of property, plant and

equipment 145 (145)

Additions to property, plant and equipment (1,000) —

Financing activity

Repayment of term loans (2,166) —

(b) Disposal of construction-in-progress

Effect of disposal of construction-in-progress located at 103 Beach Road Singapore

189704 subsequent to 1 January 2010 and adjusted as appropriate for the following:


Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000

Other receivables 31,775 (36)


Other payables 1,533 (58)


Income tax payable 4,088 4

APPENDIX C


C-16

Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000

Deferred tax liabilities (4,286) —

Revaluation reserve (20,929) —

Retained earnings 19,960 18


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000

Revenue (266) —

Other operating income (14) (36)


Finance costs (288) —

Income tax expense 36 4


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000


Profit before income tax 212 22

Interest expense (288) —

Interest income — 36

Other receivables (31,775) 46,036

Other payables 1,533 (58)

Interest paid (288) —

APPENDIX C


C-17

Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000


Interest received — (36)


equipment 46,000 (46,000)

Additions to property, plant and equipment (1,533) —

Financing activity


(c) Disposal of office premises

Effect of disposal of office premises located at 168 Changi Road Singapore 419730



Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000



Other payables — (35)



Income tax payable 23 6

Retained earnings 60 29

APPENDIX C


C-18


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000

Revenue (298) (244)

Loss on disposal of property, plant and equipment 51 —



Income tax expense 23 6


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000


Profit before income tax 83 35

Depreciation (51) (38)

Loss on disposal of property, plant and equipment 51 —


Other receivables 2,520 2,000

Other payables — 3


Investing activity


equipment 2,000 (2,000)

Financing activity


APPENDIX C


C-19

(d) Disposal of properties under development

Effect of disposal of properties under development located at 72 Lorong 19 Geylang

Singapore 388510 and 216–242 Pasir Panjang Singapore 118577 — 118597



Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000


Properties under development (26,846) —




Income tax payable (100) (57)

Retained earnings (488) (279)


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000

Revenue (1,186) (825)



Income tax expense (100) (57)

APPENDIX C


C-20


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000


Profit before income tax (588) (336)


Other receivables (12,460) 2,000


Properties under development 26,846 —


Investing activity


equipment 2,000 (2,000)

Financing activity


(e) Restructuring exercise

Effect of restructuring exercise and adjusted appropriate for the following:


Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000

Cash and cash equivalents 16,332 7,689

Other receivables (17,402) (31,799)

Other payables 75,436 74,689

Term loans (Current) 13,178 (12,496)

Term loans (Non-current) 330,816 334,197

Share capital 110,400 110,400

Merger reserve (530,900) (530,900)

APPENDIX C


C-21


Increase (Decrease)

1 January

2010 to

31 December

2010

1 January

2011 to

30 September

2011

$’000 $’000


Other receivables 17,402 (8,986)

Other payables — (40,442)


Advances (to) from ultimate holding company (345,064) (4,154)

Proceeds from borrowings 463,182 —


Repayments (to) from ultimate holding company — 44,939

(f) Declaration of interim one-tier exempt dividend

Effect of declaration of interim one-tier exempt dividend of $10,000,000 subsequent

to 31 December 2010 and adjusted appropriate for the following:


Increase (Decrease)

As at

31 December

2010

As at

30 September

2011

$’000 $’000

Other payables 10,000 10,000

Retained earnings (10,000) (10,000)

The unaudited Pro Forma Group financial information, because of their nature, are

not necessarily indicative of the results of the operations, cash flows and financial

position would have been attained had the Significant Events actually occurred

earlier. Save as disclosed in the Explanatory Notes, the management, for the

purpose of preparing this set of unaudited Pro Forma Group financial information,

have not considered the effects of other events.

APPENDIX C


C-22

The discussion below provides a summary of the principal objects of our Company as set out

in our Memorandum of Association and certain provisions of our Articles of Association and the

laws of Singapore. This discussion is only a summary and is qualified by reference to

Singapore law and our Memorandum and Articles of Association.

Memorandum of Association and Registration Number

We are registered in Singapore with the Registrar of Companies and Businesses. Our

Company registration number is 201128650E. Our Memorandum of Association sets out the

objects for which our Company was formed, including carrying on business as, inter alia, an

investment holding company.

Summary of our Articles of Association

1. Directors

(a) Ability of interested directors to vote

Article 87(2) A Director shall not vote in respect of any contract or proposed

contract or arrangement in which he has directly or indirectly a

personal material interest and if he shall do so his vote shall not

be counted. Notwithstanding his interest, a Director may be

counted in the quorum present at any meeting of the Directors.

(b) Remuneration

Article 84 The remuneration of the Directors shall from time to time be

determined by the Company in general meeting. Such

remuneration shall not be increased except pursuant to an

ordinary resolution passed at a general meeting where notice of

the proposed increase shall have been given in the notice

convening the meeting. Such remuneration shall be divided

amongst the Directors in such proportions and in suchmanner as

they may agree and in default of agreement, equally, except that

in the latter event any Director who shall hold office for part only

of the period in respect of which such remuneration is payable

shall be entitled to rank in such division for the proportion of the

remuneration related to the period during which he has held

office.

Article 86 Any Director who is appointed to any executive office or serves

on any committee or who otherwise performs or renders services

which, in the opinion of the Directors, are outside his ordinary

duties as a Director, may be paid such remuneration as the

Directors may determine but such remuneration shall not include

APPENDIX D

SUMMARY OF MEMORANDUM ANDARTICLES OF ASSOCIATION OF OUR COMPANY

D-1

a commission on or a percentage of turnover. Fees payable to a

non-executive Director shall be by a fixed sum and not by a

commission on or percentage of profits or turnover. No Director

shall be remunerated by a commission on or percentage of

turnover.

(c) Borrowing

Article 101 The Directors may exercise all the powers of the Company to

borrow money and to mortgage or charge its undertaking,

property and uncalled capital, or any part thereof, and to issue

debentures and other securities whether outright or as security

for any debt, liability, or obligation of the Company or of any third

party.

2. Share rights and restrictions

We currently have one class of shares namely, ordinary shares.

Article 5(3) Without prejudice to any special rights or privileges attached to

any then existing shares in the capital of the Company, any

shares may be issued upon such terms and conditions, and with

such rights and privileges attached thereto, as the Company by

special resolution may direct or, if no such direction be given, as

the Directors shall determine, and in particular such shares may

be issued with preferential, qualified or deferred right to

dividends and in the distribution of assets of the Company, and

with a special or restricted right of voting, and any preference

share may be issued on the terms that it is, or at the option of the

Company, liable to be redeemed.

Article 8 Subject to Article 7 and such limitation thereof as may be

prescribed by the Stock Exchange, further preference shares

ranking equally with, or in priority to preference shares already

issuedmay be issued by the Company. Preference shareholders

shall have the same rights as ordinary shareholders as regards

receiving notices, reports and balance sheets, and attending

general meetings of the Company. The repayment of preference

capital other than redeemable preference capital, or alteration of

preference shareholders’ rights, may only be made pursuant to a

special resolution of the preference shareholders concerned,

provided always that where the necessary majority for such a

special resolution is not obtainable at the meeting, consent in

writing if obtained from the holders of three-fourths of the issued

shares of the class concerned within two months of the meeting

shall be as valid and effectual as a special resolution carried at

APPENDIX D


D-2

the meeting. Preference shareholders shall also have the right to

vote at any meeting convened for the purpose of reducing the

capital, or winding up, or sanctioning a sale of the undertaking of

the Company, or where the proposition to be submitted to the

meeting directly affects their rights and privileges, or when the

dividend on the preference shares is in arrears for more than six

months.

Article 26 No member shall be entitled to receive any dividend or to be

present or vote at any meeting or upon a poll, or to exercise any

privilege as amember until he shall have paid all calls for the time

being due and payable on every share held by him, whether

alone or jointly with any other person, together with interest and

expenses (if any).

Transferability of Our Shares

Article 29 Subject to these Articles, any member may transfer all or any of

his shares. Every transfer must be in writing and in the usual form

or in any form approved by the Directors and by the Stock

Exchange. The instrument of transfer of a share shall be signed

by or on behalf of both the transferor and the transferee, and by

the witness or witnesses thereto, provided that an instrument of

transfer in respect of which the transferee is the Depository shall

be effective although not signed or witnessed by or on behalf of

the Depository. The transferor shall be deemed to remain the

holder of the share until the name of the transferee is entered in

the Register of Members in respect thereof. Shares of different

classes shall not be comprised in the same instrument of

transfer.

Article 31 The Directors may decline to register any transfer of shares not

being fully paid shares to a person not approved by them and

may also decline to register any transfer of shares on which the

Company has a lien. Save as aforesaid or where required by law

or by the rules, bye-laws or listing rules of the Stock Exchange,

there shall be no restriction on the transfer of fully paid-up

shares.

Article 32 The Directors may decline to accept any instrument of transfer

unless:

(a) such fee not exceeding $2.00 as the Directors may from

time to time determine is paid to the Company in respect

thereof;

APPENDIX D


D-3

(b) the instrument of transfer is duly stamped in accordance

with any law for the time being in force relating to stamp

duty;

(c) the instrument of transfer is deposited at the office or at

such other place (if any) as the Directors may appoint

accompanied by a certificate of payment of stamp duty (if

any), the certificates of the shares to which the transfer

relates and such other evidence as the Directors may

reasonably require to show the right of the transferor to

make the transfer and, if the instrument of transfer is

executed by some other person on his behalf, the authority

of the person so to do; and

(d) such fee not exceeding $2.00 as the Directors may from

time to time determine is paid to the Company in respect of

the registration of any probate, letters of administration,

certificate of marriage or death, power of attorney or any

document relating to or affecting the title to the shares.

Article 34 The Directors shall refuse to register the transfer of any share:

(a) if the share has not been fully paid or is subject to a lien; or

(b) if the provisions of these Articles relating to the transfer of

shares have not been complied with.

Voting Rights

Article 72 Every member (other than a holder of treasury shares) shall be

entitled to be present and to vote at any general meeting either

personally or by proxy in respect of any shares upon which all

calls due to the Company have been paid.

Article 73 Subject to any rights or restrictions for the time being attached to

any class or classes of shares, at a meeting of members or

classes of members each member entitled to vote may vote in

person or by proxy or by attorney. On a show of hands every

member present in person or by proxy shall have one vote.

Subject to any rights or restrictions for the time being attached to

any class or classes of shares, on a poll every member present

in person or by proxy shall have one vote for each share he

holds.

For the purpose of determining the number of votes which a

member, being a Depositor, or his proxy may cast at any general

meeting on a poll, the reference to shares held or represented

APPENDIX D


D-4

shall, in relation to shares of that Depositor, be the number of

shares entered against his name in the Depository Register as at

48 hours before the time of the relevant general meeting as

supplied by the Depository to the Company.

Article 75 In the case of joint holders, any one of such persons may vote,

but if more than one of such persons shall be present at a

meeting, the person whose name stands first on the Register of

Members (as the case may be) the Depository Register shall

alone be entitled to vote.

Variation of Rights of Existing Shares or Classes of Shares

Article 6 Subject to Article 8, if at any time the share capital is divided into

different classes of shares, the rights attached to any class

(unless otherwise provided by the terms of issue of the shares of

that class) may, whether or not the Company is being wound up,

be varied with the consent in writing of the holders of three-

fourths of the issued shares of that class, or with the sanction of

a special resolution passed at a separate general meeting of the

holders of the shares of the class. To every such separate

general meeting the provisions of these Articles relating to

general meetings shall mutatis mutandis apply, but so that the

necessary quorum shall be two persons at least holding or

representing by proxy one-third of the issued shares of the class

and that any holder of shares of the class present in person or by

proxy may demand a poll. Provided always that where the

necessary majority for such a special resolution is not obtained

at the meeting, consent in writing if obtained from the holders of

three-fourths of the issued shares of the class concerned within

two months of the meeting shall be as valid and effectual as a

special resolution carried at the meeting.

Article 7 The rights conferred upon the holder of the shares of any class

issued with preferred or other rights shall, so far as they are not

expressed in these Articles, be expressed with necessary

amendments to these Articles. Furthermore, unless otherwise

expressly provided by the terms of issue of the shares of that

class, those aforesaid rights shall be deemed to be varied by the

creation or issue of further shares ranking equally with, or in

priority to such shares.

APPENDIX D


D-5

Limitations on the Right to Own Shares

Article 13 Except as required by law, no person shall be recognised by the

Company as holding any share upon any trust, and the Company

shall not be bound by or be compelled in any way to recognise

(even when having notice thereof) any equitable, contingent,

future or partial interest in any share or unit of a share or (except

only as by these Articles or by law otherwise provided) any other

rights in respect of any share except an absolute right to the

entirety thereof in the registered holder thereof or (as the case

may be) the person whose name is entered in the Depository

Register in respect of that share.

(a) Dividends and distribution

Dividend Entitlements

Article 133 The Company in general meeting may declare dividends, but no

dividend shall exceed the amount recommended by the

Directors.

Article 134 The Directors may from time to time pay to the members such

interim dividends as appear to the Directors to be justified by the

profits of the Company.

Article 135(1) The dividends, interest and bonuses and any other benefits and

advantages in the nature of income receivable in respect of the

Company’s investments, and any commissions, trusteeship,

agency, transfer and other fees and current receipts of the

Company shall, subject to the payment thereout of the expenses

of management, interest upon borrowed money and other

expenses which in the opinion of the Directors are of a revenue

nature, constitute the profits of the Company available for

dividend.

Article 135(2) Appreciations of capital assets, investments and realised profits

resulting in a sale of capital assets or investments (except so far

as representing interest or dividend accrued and unpaid) shall

either be carried to the credit of capital reserve or shall be applied

in providing for depreciation or contingencies or for writing down

the value of the assets. It is expressly declared that in

ascertaining the profits of the Company available for dividend it

shall not be necessary to make good any losses or depreciation

in value of any of the Company’s investments or any other assets

of the Company except circulating capital.

APPENDIX D


D-6

Article 136 The Directors may, before recommending any dividend, set

aside out of the profits of the Company such sums as they think

proper as reserves which shall, at the discretion of the Directors,

be applicable for any purpose to which the profits of the

Company may be properly applied. The Directors may divide the

reserve into such special funds as they think fit and may

consolidate into one fund any special funds or any part of any

special funds into which the reserve may have been divided. The

Directors may also, without placing the same to reserve, carry

forward any profits. In carrying sums to reserve and in applying

the same, the Directors shall comply with the provisions of the

Statutes.

Article 137 Subject to the rights or restrictions attached to any shares or

class of shares and except as otherwise permitted under the Act:

(a) all dividends in respect of shares shall be declared and paid

according to the number of shares held by a member but

where shares are partly paid all dividends must be

apportioned and paid proportionately to the amounts paid or

credited as paid on the partly paid shares; and

(b) all dividends shall be apportioned and paid proportionately

to the amounts paid or credited as paid on the shares during

any portion or portions of the period in respect of which the

dividend is paid; but if any share is issued on terms

providing that it shall rank for dividend as from a particular

date that share shall rank for dividend accordingly.

For the purposes of this Article, an amount paid or credited as

paid on a share in advance of a call is to be ignored.

Article 139 Any general meeting declaring a dividend or bonus may direct

payment of such dividend or bonus wholly or partly by the

distribution of specific assets and in particular of paid-up shares,

debentures or debenture stock of any other company or in any

one or more of such ways and the Directors shall give effect to

such resolution, and where any difficulty arises in regard to such

distribution, the Directors may settle the same as they think

expedient, and fix the value for distribution of such specific

assets or any part thereof and may determine that cash

payments shall be made to any members upon the footing of the

value so fixed in order to adjust the rights of all parties, and may

vest any such specific assets in trustees as may seem expedient

to the Directors.

APPENDIX D


D-7

Article 141 A transfer of a share shall not pass the right to any dividend

declared in respect thereof before the transfer has been

registered.

3. Change in capital

Article 53 The Company may from time to time by ordinary resolution do

one or more of the following:

(a) increase the share capital by such sum to be divided into

shares of such amount as the resolution shall prescribe;

(b) consolidate and divide all or any of its share capital into

shares of larger amount than its existing shares;

(c) subdivide its shares or any of them into shares of a smaller

amount than is fixed by the Memorandum provided that the

proportion between the amount paid and the amount (if any)

unpaid on each reduced share shall be the same as it was in

the case of the share from which the reduced share is

derived;

(d) subject to the provisions of these Articles and the Act,

convert any class of shares into any other class of shares;

and

(e) cancel shares which at the date of the passing of the

resolutions in that behalf have not been taken or agreed to

be taken by any person or which have been forfeited and

diminish the amount of its share capital by the amount of the

shares so cancelled.

Article 54 Subject to any direction to the contrary that may be given by the

Company in the general meeting or except as permitted under

the listing rules of the Stock Exchange, all new shares shall,

before issue, be offered to such persons who as at the date of the

offer are entitled to receive notices from the Company of general

meetings in proportion, as far as the circumstances admit, to the

amount of the existing shares to which they are entitled. The offer

shall be made by notice specifying the number of shares offered,

and limiting a time within which the offer, if not accepted, will be

deemed to be declined. After the expiration of the aforesaid time

or on the receipt of an intimation from the person to whom the

offer is made that he declines to accept the shares offered, the

Directors may dispose of those shares in a manner as they think

most beneficial to the Company. The Directors may likewise

dispose of any new shares which (by reason of the ratio which

APPENDIX D


D-8

the new shares bear to shares held by persons entitled to an offer

of new shares) cannot, in the opinion of the Directors, be

conveniently offered in accordance with this Article.

Article 55 Notwithstanding Article 54 above, the Company may by ordinary

resolution in a general meeting, give to the Directors a general

mandate, either conditionally or unconditionally to issue:

(a) shares in the capital of the Company (whether by way of

bonus, rights or otherwise);

(b) convertible securities;

(c) additional convertible securities arising from adjustments

made to the number of convertible securities previously

issued in the event of rights, bonus or capitalisation issues; or

(d) shares arising from the conversion of convertible securities,

at any time and upon such terms and conditions and for such

purpose as the Directors may in their absolute discretion deem fit

provided that:

(a) the aggregate number of shares and convertible securities

that may be issued shall not be more than 50.0% of the

issued share capital of the Company as at the date the

general mandate is passed or such other limit as may be

prescribed by the Stock Exchange;

(b) the aggregate number of shares and convertible securities

to be issued other than on a pro-rata basis to existing

shareholders shall be not more than 20.0% of the issued

share capital of the Company as at the date the general

mandate is passed or such other limit as may be prescribed

by the Stock Exchange;

(c) for the purpose of determining the aggregate number of

shares that may be issued under sub-paragraphs (a) and

(b) above, the percentage of issued share capital shall be

calculated based on the issued share capital of the

Company as at the date the general mandate is passed

after adjusting for new shares arising from the conversion of

any convertible securities or exercise of any employee

options in issue as at the date the general mandate is

passed and any subsequent consolidation or subdivision of

the Company’s shares; and

APPENDIX D


D-9

(d) unless earlier revoked or varied by the Company in general

meeting, such authority shall continue in force only until the

next annual general meeting or the date by which the next

annual general meeting is required by law to be held,

whichever is earlier.

Article 9 Subject to and in accordance with the provisions of the Act, the

Company may purchase or otherwise acquire shares issued by it

on such terms as the Company may think fit and in the manner

prescribed by the Act. Unless as permitted under Article 10

hereof, all shares repurchased by the Company shall be deemed

to be cancelled on purchase or acquisition by the Company. In

the cancellation of any share as aforesaid, the rights and

privileges attached to that share shall expire. In any other

instance, the Company may hold or deal with any such share so

purchased or acquired by it in such manner as may be permitted

by, and in accordance with, the Act.

Article 10 The Company may hold or deal with its treasury shares in the

manner authorised by, or prescribed pursuant to, the Act. The

treasury shares shall have no voting rights and shall not be entitled

to any dividend or other distribution (whether in cash or otherwise)

of the Company’s assets (including any distribution of assets to

members on a winding up) that may be made by the Company.

Article 56 The Company may by special resolution reduce its share capital

in any manner and subject to, any incident authorised, and

consent required by law.

There are no limitations imposed by Singapore law or by our Articles of Association

on the rights of our shareholders who are regarded as non-residents of Singapore, to

hold or vote their shares.

There is no shareholding qualification for Directors in our Articles of Association.

There is no retirement age limit for Directors under our Articles of Association.

Section 153(1) of the Act, however, provides that no person of or over the age of 70

years shall be appointed or act as a director of a public company, unless he is

appointed or reappointed as a director or authorised to continue in office as a director

by way of an ordinary resolution passed at an annual general meeting.

There is no provision in our Articles of Association which provides for any time limit

after which a dividend entitlement will lapse.

APPENDIX D


D-10

The following statements are brief summaries of the rights and privileges of our Shareholders

conferred by the laws of Singapore, the Listing Manual and our Articles of Association as at the

Latest Practicable Date. These statements summarise the material provisions of our Articles

but are qualified in entirety by reference to our Articles, a copy of which is available for

inspection at our registered office during normal business hours for a period of six months from

the date of this Prospectus.

Ordinary Shares

All of our Shares are in registered form.Wemay, subject to the provisions of the Companies Act

and the rules of the SGX-ST, purchase our Shares. However, we may not, except in

circumstances permitted by the Companies Act, grant any financial assistance for the

acquisition or proposed acquisition of our Shares.

New Shares

New Shares may only be issued with the prior approval of our Shareholders in a general

meeting. The aggregate number of Shares to be issued pursuant to such approval may not

exceed 50.0% (or such other limit as may be prescribed by the SGX-ST) of our issued share

capital, of which the aggregate number of Shares to be issued other than on a pro rata basis to

our Shareholders may not exceed 20.0% (or such other limit as may be prescribed by the

SGX-ST) of our issued share capital (the percentage of issued share capital being based on

our Company’s issued share capital at the time such authority is given after adjusting for new

shares arising from the conversion of convertible securities or employee share options on issue

at the time such authority is given and any subsequent consolidation or subdivision of Shares).

The approval, if granted, will lapse at the conclusion of the annual general meeting following the

date on which the approval was granted or the date by which the annual general meeting is

required by law to be held, whichever is the earlier. Subject to the foregoing, the provisions of

the Companies Act and any special rights attached to any class of shares currently issued, all

new Shares are under the control of our Board of Directors who may allot and issue the same

with such rights and restrictions as it may think fit.

Shareholders

Only persons who are registered in our Register of Shareholders and, in cases in which the

person so registered is CDP, the persons named as the Depositors in the Depository Register

maintained by CDP for the Shares, are recognised as our Shareholders. We will not, except as

required by law, recognise any equitable, contingent, future or partial interest in any Share or

other rights for any Share other than the absolute right thereto of the registered holder of that

Share or of the person whose name is entered in the Depository Register for that Share. We

may close our Register of Shareholders for any time or times if we provide the Registrar of

Companies and Businesses with at least 14 days’ notice and the SGX-ST at least ten clear

Market Days’ notice. However, the Register of Shareholders may not be closed for more than

30 days in aggregate in any calendar year. We typically close our Register of Shareholders to

determine Shareholders’ entitlement to receive dividends and other distributions.

APPENDIX E

DESCRIPTION OF OUR SHARES

E-1

Transfer of Shares

There is no restriction on the transfer of fully paid Shares except where required by law or the

Listing Manual or the rules or by-laws of any stock exchange on which our Company is listed.

Our Board of Directors may decline to register any transfer of Shares which are not fully paid

Shares or Shares on which we have a lien. Our Shares may be transferred by a duly signed

instrument of transfer in a form approved by the SGX-ST. Our Board of Directors may also

decline to register any instrument of transfer unless, among other things, it has been duly

stamped and is presented for registration together with the share certificate and such other

evidence of title as they may require. We will replace lost or destroyed certificates for Shares

if it is properly notified and if the applicant pays a fee which will not exceed $2.00 and furnishes

any evidence and indemnity that our Board of Directors may require.

General Meetings of Shareholders

We are required to hold an annual general meeting every year. Our Board of Directors may

convene an Extraordinary General Meeting whenever it thinks fit and must do so if Shareholders

representing not less than 10.0%of the total voting rights of all Shareholders request in writing that

such a meeting be held. In addition, two or more shareholders holding not less than 10.0% of our

issued share capital may call a meeting. Unless otherwise required by law or by our Articles of

Association, voting at general meetings is by ordinary resolution, requiring an affirmative vote of a

simple majority of the votes cast at the meeting. An ordinary resolution suffices, for example, for

the appointment of directors. A special resolution, requiring the affirmative vote of at least 75.0%

of the votes cast at the meeting, is necessary for certain matters under Singapore law, including

voluntary winding up, amendments to the Memorandum and Articles of Association, a change of

our corporate name and a reduction in our share capital. We must give at least 21 days’ notice in

writing for every general meeting convened for the purpose of passing a special resolution.

Ordinary resolutions generally require at least 14 days’ notice in writing. The notice must be given

to each of our Shareholders andmust set forth the place, the day and the hour of themeeting and,

in the case of special business, the general nature of that business.

Voting Rights

A holder of our Shares is entitled to attend, speak and vote at any general meeting, in person

or by proxy. Proxies need not be Shareholders. A person who holds Shares through the

SGX-ST book- entry settlement system will only be entitled to vote at a general meeting as a

Shareholder if his name appears on the Depository Register maintained by CDP 48 hours

before the general meeting. Except as otherwise provided in our Articles of Association, two or

more Shareholders must be present in person or by proxy to constitute a quorum at any general

meeting. Under our Articles of Association, on a show of hands, every Shareholder present in

person and by proxy shall have one vote (provided that in the case of a Shareholder who is

represented by two proxies, the chairman of the meeting shall be entitled to treat the first

named proxy as the authorised representative to vote on a show of hands), and on a poll, every

Shareholder present in person or by proxy shall have one vote for each Share which he holds

or represents. A poll may be demanded in certain circumstances, including by the chairman of

themeeting or by any Shareholder present in person or by proxy and representing not less than

APPENDIX E


E-2

10.0% of the total voting rights of all Shareholders having the right to attend and vote at the

meeting or by any two Shareholders present in person or by proxy and entitled to vote. In the

case of an equality of votes, whether on a show of hands or a poll, the chairman of the meeting

shall be entitled to a casting vote.

Dividends

We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting,

but wemay not pay dividends in excess of the amount recommended by our Board of Directors.

We must pay all dividends out of our profits. See “Bonus and Rights Issue” below. All dividends

are paid pro rata among our Shareholders in proportion to the amount paid-up on each

Shareholder’s Shares, unless the rights attaching to an issue of any Share provides otherwise.

Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to

each Shareholder at his registered address. Notwithstanding the foregoing, the payment by us

to CDP of any dividend payable to a Shareholder whose name is entered in the Depository

Register shall, to the extent of payment made to CDP, discharge us from any liability to that

Shareholder in respect of that payment.

Bonus and Rights Issue

Our Board of Directors may, with approval of our Shareholders at a general meeting, capitalise

any sum standing to the credit of any of our reserve accounts (including any undistributable

reserve) or any sum standing to the credit of our profit and loss account and distribute the same

as bonus Shares credited as paid-up to our Shareholders in proportion to their shareholdings.

Our Board of Directors may also issue rights to take up additional Shares to Shareholders in

proportion to their Shareholdings. Such rights are subject to any conditions attached to such

issue and the regulations of any stock exchange on which we are listed.

Takeovers

Under the Singapore Code on Take-overs and Mergers (“Singapore Take-over Code”),

issued by the Authority pursuant to Section 321 of the SFA, any person acquiring an interest,

either on his own or together with parties acting in concert with him, in 30.0% or more of the

voting Shares must extend a takeover offer for the remaining voting Shares in accordance with

the provisions of the Singapore Take-over Code. In addition, a mandatory takeover offer is also

required to be made if a person holding, either on his own or together with parties acting in

concert with him, between 30.0% and 50.0% of the voting Shares acquires additional voting

Shares representingmore than 1.0% of the voting Shares in any six(6) month period. Under the

Singapore Take-over Code, the following individuals and companies will be presumed to be

persons acting in concert with each other unless the contrary is established:

(a) the following companies:

(i) a company;

(ii) the parent company of (i);

APPENDIX E


E-3

(iii) the subsidiaries of (i);

(iv) the fellow subsidiaries of (i);

(v) the associated companies of (i), (ii), (iii) or (iv); and

(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v);

(b) a company with any of its directors (together with their close relatives, related trusts as

well as companies controlled by any of the directors, their close relatives and related

trusts);

(c) a company with any of its pension funds and employee share schemes;

(d) a person with any investment company, unit trust or other fund whose investment such

person manages on a discretionary basis, but only in respect of the investment account

which such person manages;

(e) a financial or other professional adviser, including a stockbroker, with its customer in

respect of the shareholdings of:

(i) the adviser and persons controlling, controlled by or under the same control as the

adviser; and

(ii) all the funds which the adviser manages on a discretionary basis, where the

shareholdings of the adviser and any of those funds in the customer total 10.0% or

more of the customer’s equity share capital;

(f) directors of a company (together with their close relatives, related trusts and companies

controlled by any of such directors, their close relatives and related trusts) which is subject

to an offer or where the directors have reason to believe a bona fide offer for their company

may be imminent;

(g) partners; and

(h) the following persons and entities:

(i) an individual;

(ii) the close relatives of (i);

(iii) the related trusts of (i);

(iv) any person who is accustomed to act in accordance with the instructions of (i); and

(v) companies controlled by any of (i), (ii), (iii) or (iv).

APPENDIX E


E-4

Under the Singapore Take-over Code, a mandatory offer made with consideration other than

cash must be accompanied by a cash alternative at not less than the highest price paid by the

offeror or any person acting in concert within the preceding six(6) months.

Liquidation or Other Return of Capital

If we liquidate or in the event of any other return of capital, holders of our Shares will be entitled

to participate in any surplus assets in proportion to their shareholdings, subject to any special

rights attaching to any other class of shares.

Indemnity

As permitted by Singapore law, our Articles of Association provide that, subject to the

Companies Act, our Board of Directors and officers shall be entitled to be indemnified by us

against any liability incurred in defending any proceedings, whether civil or criminal, which

relate to anything done or omitted to have been done as an officer, director or employee and in

which judgment is given in their favour or in which they are acquitted or in connection with any

application under any statute for relief from liability in respect thereof in which relief is granted

by the court. We may not indemnify our Directors and officers against any liability which by law

would otherwise attach to them in respect of any negligence, default, breach of duty or breach

of trust of which they may be guilty in relation to us.

Limitations on Rights to Hold or Vote Shares

Except as described in “Voting Rights” and “Takeovers” above, there are no limitations

imposed by Singapore law or by our Articles of Association on the rights of non-resident

shareholders to hold or vote in respect of our Shares.

Minority Rights

The rights of minority Shareholders of Singapore-incorporated companies are protected under

Section 216 of the Companies Act, which gives the Singapore courts a general power to make

any order, upon application by any of our shareholders, as they think fit to remedy any of the

following situations where:

(a) our affairs are being conducted or the powers of our Board of Directors are being

exercised in a manner oppressive to, or in disregard of the interests of, one or more of our

Shareholders; or

(b) we take an action, or threaten to take an action, or our Shareholders pass a resolution, or

propose to pass a resolution, which unfairly discriminates against, or is otherwise

prejudicial to, one or more of our Shareholders, including the applicant.

APPENDIX E


E-5

Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are

in no way limited to those listed in the Companies Act itself. Without prejudice to the foregoing,

the Singapore courts may:

(a) direct or prohibit any act or cancel or vary any transaction or resolution;

(b) regulate the conduct of our affairs in the future;

(c) authorise civil proceedings to be brought in our name of, or on behalf of, by a person or

persons and on such terms as the court may direct;

(d) provide for the purchase of a minority Shareholder’s Shares by our other Shareholders or

by us and, in the case of a purchase of Shares by us, a corresponding reduction of our

share capital; or

(e) provide that we be wound up.

APPENDIX E


E-6

Applications are invited for the subscription of the New Shares at the Issue Price subject to the

following terms and conditions:

1. YOUR APPLICATIONMUST BEMADE IN LOTS OF 1,000 NEW SHARES OR HIGHER

INTEGRAL MULTIPLES THEREOF. APPLICATIONS FOR ANY OTHER NUMBER OF

NEW SHARES WILL BE REJECTED.

2. Your application for Public Offer Shares may be made by way of the printed White Offer

Shares Application Forms or by way of Electronic Applications through the ATMs of the

Participating Banks (“ATM Electronic Applications”) or by way of Electronic

Applications through the Internet Banking (“IB”) websites of the relevant Participating

Banks (“Internet Electronic Applications”) (which together with ATM Electronic

Applications shall be referred to as “Electronic Applications”). Applications for the

Placement Shares may only be made by way of the printed Blue Placement Shares

Application Forms. “Application Form” shall mean either Public Offer Shares Application

Form or Placement Shares Application Form, as the context so requires. YOU MAY NOT

USE YOUR CPF FUNDS TO APPLY FOR THE NEW SHARES.

3. You are allowed to submit only one (1) application in your own name for either the

Public Offer Shares or the Placement Shares.

You may not submit multiple applications for the Public Offer Shares via the

Application Forms, ATM Electronic Applications or Internet Electronic

Applications. A person who is submitting an application for the Public Offer Shares

by way of an Application Form may not submit another application for the Public

Offer Shares by way of an ATM Electronic Application or Internet Electronic

Application and vice versa.

If you (not being an approved nominee company) have submitted an application in

your own name, you confirm that such application is the only application made by

you as a beneficial owner and you should not submit any other application whether

by way of an Application Form or by way of an Electronic Application, for any other

person. Such separate applications shall be deemed to bemultiple applications and

will be liable to be rejected at the discretion of our Company.

If you have made an application for Placement Shares, you should not make any

application for Public Offer Shares by way of an Application Form or by way of an

ATM Electronic Application or Internet Electronic Application. If you have made an

application for Public Offer Shares, you should not make any application for

Placement Shares. Such separate applications shall be deemed to be multiple

applications and will be liable to be rejected at the discretion of our Company.

Joint or multiple applications shall be rejected. If you submit or procure

submissions of multiple share applications (whether for Public Offer Shares,

Placement Shares or both Public Offer Shares and Placement Shares), you may be

deemed to have committed an offence under the Penal Code Chapter 224 of

Singapore and the Securities and Futures Act, and your applications may be

referred to the relevant authorities for investigation. Multiple applications or those

APPENDIX F

TERMS, CONDITIONS AND PROCEDURESFOR APPLICATION AND ACCEPTANCE

F-1

appearing to be or suspected of being multiple applications will be liable to be

rejected at the discretion of our Company.

4. Our Company will not accept applications from any person under the age of 18 years,

undischarged bankrupt, sole proprietorship, partnership, non-corporate body, joint

Securities Account holder and applicant whose address (furnished in his Application Form

or, in the case of Electronic Application, contained in the records of the relevant

Participating Bank, as the case may be) bear post office box number. No person acting or

purporting to act on behalf of a deceased person is allowed to apply under the deceased’s

Securities Account at the time of application.

5. Our Company will not recognise the existence of a trust. Any application by a trustee must

be made in his own name and without qualification.

6. OURCOMPANYWILLONLYACCEPTNOMINEEAPPLICATIONS FROMAPPROVED

NOMINEE COMPANIES. Approved nominee companies are defined as banks, merchant

banks, finance companies, insurance companies, licensed securities dealers in

Singapore and nominee companies controlled by them. Applications made by persons

acting as nominees other than approved nominee companies shall be rejected.

7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A

SECURITIES ACCOUNT IN YOUR OWN NAME AT THE TIME OF YOUR

APPLICATION. If you do not have an existing Securities Account in your own name at the

time of your application, your application will be rejected (if your application is by way of an

Application Form), or you will not be able to complete your Electronic Application (if your

application is by way of an Electronic Application). If you have an existing Securities

Account but fail to provide your Securities Account number, your application is liable to be

rejected. Your application shall be rejected if your particulars such as name, NRIC/

passport number, nationality, permanent residence status and Securities Account

number, provided in your Application Form or in the case of an Electronic Application,

contained in the records of the relevant Participating Bank, differ from those particulars in

your Securities Account as maintained with CDP. If you possess more than one (1)

individual direct Securities Account with CDP, your application shall be rejected.

8. Notwithstanding paragraph 7, if your address stated in the Application Form or, in

the case of an Electronic Application, in the records of the relevant Participating

Bank is different from the address registered with CDP, you must inform CDP of

your updated address promptly, failing which the notification letter on successful

allotment and other correspondence from the CDP will be sent to your address last

registered with CDP.

9. Our Company reserves the right to reject any application which does not conform

strictly to the instructions set out in the Application Forms and this Prospectus or

which does not comply with the instructions for Electronic Applications or with the

terms and conditions of this Prospectus or, in the case of an application by way of

an Application Form, which is illegible, incomplete, incorrectly completed or which

is accompanied by an improperly drawn or improper form of remittance. Our

APPENDIX F


F-2

Company further reserves the right to treat as valid any application not completed

or submitted or effected in all respects in accordance with the terms and conditions

of this Prospectus, the instructions set out in the Application Forms or the

instructions for the Electronic Applications and also to present for payment or

other processes all remittances at any time after receipt and to have full access to

all information relating to, or deriving from, such remittances or the processing

thereof.

10. Our Company reserves the right to reject or accept any application in whole or in part, or

to scale down or ballot any application, without assigning any reason therefore, and no

enquiry and/or correspondence on the decision will be entertained. This right applies to

applications made by way of Application Forms and by way of Electronic Applications. In

deciding the basis of allotment, which will be at the discretion of our Company, due

consideration will be given to the desirability of allotting the New Shares to a reasonable

number of applicants with a view to establishing an adequate and orderly market for our

Shares.

11. Share certificates will be registered in the name of CDP or its nominee and will be

forwarded only to CDP by ordinary post, at your own risk. If your application is successful,

it is expected that CDP will send to you, at your own risk, within 15 Market Days after the

close of the Invitation, a statement of account stating that your Securities Account has

been credited with the number of New Shares allotted to you. You irrevocably authorise

CDP to complete and sign on your behalf as transferee or renouncee any instrument of

transfer and/or other documents required for the issue of the New Shares allotted to you.

This authorisation applies to applications made by way of Application Forms and by way

of Electronic Applications.

12. In the event that our Company lodges a supplementary or replacement prospectus

(“Relevant Document”) pursuant to the Securities and Futures Act or any applicable

legislation in force from time to time prior to the close of the Invitation, and the New Shares

have not been issued, wewill (as required by law) at the sole and absolute discretion of our

Company either:

(a) within two days (excluding any Saturday, Sunday or public holiday) from the date of

the lodgment of the Relevant Document give you notice in writing of how to obtain, or

arrange to receive, a copy of the same and provide you with an option to withdraw

your application and take all reasonable steps to make available within a reasonable

period the Relevant Document to you if you have indicated that you wish to obtain, or

have arranged to receive, a copy of the Relevant Document;

(b) within seven days of the lodgment of the Relevant Document give you a copy of the

Relevant Document and provide you with an option to withdraw your application; or

(c) deem your application as withdrawn and cancelled and refund your application

monies to you within seven days from the lodgment of the Relevant Document.

APPENDIX F


F-3

Any applicant who wishes to exercise his option under paragraphs 12(a) and (b) above to

withdraw his application for the New Shares shall, within 14 days from the date of

lodgment of the Relevant Document, notify us whereupon we shall, within seven days

from the receipt of such notification, return all monies in respect of such application to him

and at his own risk.

In the event that at the time of the lodgment of the Relevant Document, the New Shares

have already been issued but trading has not commenced, we will (as required by law), at

the sole and absolute discretion of our Company, either:

(d) within two days (excluding Saturday, Sunday or public holiday) from the date of the

lodgment of the Relevant Document, give you notice in writing of how to obtain, or

arrange to receive, a copy of the same and provide you with an option to return to our

Company the New Shares which you do not wish to retain title in and take all

reasonable steps to make available within a reasonable period the Relevant

Document to you if you have indicated that you wish to obtain, or have arranged to

receive, a copy of the Relevant Document;

(e) within seven days of the lodgment of the Relevant Document give you a copy of the

Relevant Document and provide you with an option to return the New Shares; or

(f) deem the issue as void and refund your payment for the New Shares within seven

days from the lodgment of the Relevant Document.

Any applicant who wishes to exercise his option under paragraphs 12(d) and (e) above to

return the New Shares issued to him shall, within 14 days from the date of lodgment of the

Relevant Document, notify us of this and return all documents, if any, purporting to be

evidence of title of those New Shares, whereupon we shall, within seven days from the

receipt of such notification and documents, pay to him all monies paid by him for the New

Shares, and the New Shares issued to him shall be void.

Additional terms and instructions applicable upon the lodgment of the Relevant

Document, including instructions on how you can exercise the option to withdraw your

application or return the New Shares allotted to you, may be found in such Relevant

Document.

13. By completing and delivering an Application Form or, in the case of an ATM Electronic

Application, by pressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key

on the ATM (as the case may be), or in the case of an Internet Electronic Application, by

clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other relevant button on the IB

website screen (as the case may be), in accordance with the provisions herein, you:

(a) irrevocably offer, agree and undertake to subscribe for the number of New Shares

specified in your application (or such smaller number for which the application is

accepted) at the Issue Price and agree that you will accept such New Shares as may

be allotted to you, in each case on the terms of, and subject to the conditions set out

APPENDIX F


F-4

in, this Prospectus and you agree to be bound by the Memorandum of Association

and Articles of Association of our Company;

(b) agree that in the event of any inconsistency between the terms and conditions for

application set out in this Prospectus (including its accompanying Application Form)

and those set out in the ATMs or IB websites of the Participating Banks, the terms

and conditions set out in this Prospectus (including its accompanying Application

Form) shall prevail;

(c) agree that the aggregate Issue Price for the New Shares applied for is due and

payable to our Company upon application;

(d) warrant the truth and accuracy of the information contained, and representations and

declarations made, in your application, and acknowledge and agree that such

information, representations and declarations will be relied on by our Company in

determining whether to accept your application and/or whether to allot any New

Shares to you; and

(e) agree and warrant that if the laws of any jurisdiction outside Singapore are applicable

to your application, you have complied with such laws and none of our Company, the

Issue Manager, Underwriter and Placement Agent will infringe any such laws as a

result of the acceptance of your application.

14. In the event of an under-subscription for the Public Offer Shares as at the close of the

Invitation, that number of Public Offer Shares not subscribed for shall be made available

to satisfy applications for Placement Shares to the extent that there is an over-subscription

for Placement Shares as at the close of the Invitation.

In the event of an under-subscription for the Placement Shares as at the close of the

Invitation, that number of Placement Shares not subscribed for shall be made available to

satisfy excess applications for Public Offer Shares to the extent that there is an over-

subscription for Public Offer Shares as at the close of the Invitation.

In the event of an over-subscription for the Public Offer Shares as at the close of the

Invitation and/or Placement Shares are fully subscribed as at the close of the Invitation,

the successful applications for Public Offer Shares will be determined by ballot or

otherwise as determined by our Directors, after consultation with the Issue Manager,

Underwriter and Placement Agent, and approved by the SGX-ST.

In the event of an under-subscription for Public Offer Shares and/or Placement Shares as

at the close of the Invitation, the number of Public Offer Shares and/or Placement Shares

under-subscribed shall be subscribed for by the Underwriter and the Placement Agent.

In all the above instances, the basis of allotment of the New Shares as may be decided by

our Company, after consultation with the Issue Manager, Underwriter and Placement

Agent, and approved by the SGX-ST, in ensuring a reasonable spread of the shareholders

APPENDIX F


F-5

of our Company, shall be made public, as soon as practicable, via an announcement

through the SGX-ST and by advertisement in a generally circulating daily press.

15. You consent to the disclosure of your name, NRIC/Passport number, address, nationality,

permanent resident status, Securities Account number, CPF Investment Account number

(if applicable) and share application amount from your account with the relevant

Participating Bank to the Share Registrar for the Invitation and Singapore Share Transfer

Agent, SCCS, SGX-ST, CDP, our Company, and the Issue Manager, the Underwriter and

the Placement Agent. You irrevocably authorise CDP to disclose the outcome of your

application, including the number of New Shares allotted to you pursuant to your

application, to our Company, the Issue Manager, Underwriter and Placement Agent

and/or any other parties so authorised by CDP, our Company and the Issue Manager,

Underwriter and Placement Agent. CDP shall not be liable for any delays, failures or

inaccuracies in the recording, storage or transmission or delivery of data relating to

Electronic Applications.

16. Acceptance of applications will be conditional upon, inter alia, our Company being

satisfied that:

(a) permission has been granted by the SGX-ST to deal in and for quotation of all our

existing Shares and the New Shares on the Official List of the Main Board of the

SGX-ST;

(b) no Stop Order has been issued by the Authority under the Securities and Futures Act;

and

(c) the Management and Underwriting Agreement and the Placement Agreement

referred to in the section entitled, “Other General Information—Management and

Underwriting Agreement and Placement Agreement” of the Prospectus, have

become unconditional and have not been terminated.

17. Any reference to “you” or the “applicant” in this Annexure shall include an individual, a

corporation and an approved nominee company applying for the Public Offer Shares by

way of Public Offer Shares Application Form or by way of an Electronic Application or

applying for Placement Shares by way of a Placement Shares Application Form or such

other forms of applications as the Issue Manager, Underwriter and Placement Agent

deem appropriate.

18. In the event that a Stop Order in respect of the New Shares is served by the Authority or

other competent authority, and:

(a) the New Shares have not been issued, we will (as required by law) deem all

applications withdrawn and cancelled and our Company shall refund the application

monies to you within 14 days of the date of the Stop Order; or

APPENDIX F


F-6

(b) if the New Shares have already been issued but trading has not commenced, the

issue will (as required by law) be deemed void, and our Company will refund the

application monies to you within 14 days from the date of the Stop Order.

This shall not apply where only an interim Stop Order has been served.

19. In the event that an interim Stop Order in respect of the New Shares is served by the

Authority or other competent authority, no New Shares shall be issued to you until the

Authority revokes the interim Stop Order.

20. The Authority is not able to serve a Stop Order in respect of the New Shares if the New

Shares have been issued and listed on a securities exchange and trading in them has

commenced.

21. All payments in respect of any application for New Shares and any refunds, shall be made

in Singapore dollars.

22. Where monies are to be returned to you for the New Shares, it shall be paid to you without

any interest or share of revenue or other benefit arising therefrom at your own risk, and

you will not have any claim against us, the Issue Manager, Underwriter and Placement

Agent.

23. No person in any jurisdiction outside Singapore receiving this Prospectus or its

accompanying documents (including the Application Form) may treat the same as an offer

or invitation to subscribe for any New Shares unless such offer or invitation could lawfully

be made without compliance with any regulatory or legal requirements in those

jurisdiction.

24. In the event of any changes in the closure of the Invitation or the time period during which

the Invitation is open, we will publicly announce the same through a SGXNET

announcement to be posted on the Internet at the SGX-ST website http://www.sgx.com

and through a paid advertisement in a local English newspaper(s).

25. We will not hold any application in reserve.

26. We will not allot New Shares on the basis of this Prospectus later than six months after the

date of registration of this Prospectus.

27. Additional terms and conditions for applications by way of Application Forms are set out on

pages F-8 to F-12 of this Prospectus.

28. Additional terms and conditions for applications by way of Electronic Applications are set

out on pages F-12 to F-21 of this Prospectus.

APPENDIX F


F-7

ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED

APPLICATION FORMS

You shall make an application by way of an Application Form on the terms and subject to

conditions of this Prospectus including but not limited to the terms and conditions appearing

below as well as those set out under this Annexure, “TERMS, CONDITIONS AND

PROCEDURES FOR APPLICATION AND ACCEPTANCE” on pages F-1 to F-21 of this

Prospectus, as well as the Memorandum of Association and Articles of Association of our

Company.

1. Your application for Public Offer Shares must be made using the WHITE Public Offer

Shares Application Form andWHITE official envelopes “A” and “B” for Public Offer Shares

accompanying and forming part of this Prospectus.

Application for Placement Shares must be made using the BLUE Placement Shares

Application Forms accompanying and forming part of this Prospectus or such other forms

of applications as the Issue Manager, Underwriter and Placement Agent deem

appropriate. Without prejudice to the rights of our Company, the Issue Manager,

Underwriter and Placement Agent, as agents of our Company have been authorised to

accept for and on behalf of our Company, such other forms of application, as the Issue

Manager, Underwriter and Placement Agent may (in consultation with our Company)

deem appropriate.

Please note and carefully follow the detailed instructions contained in the respective

Application Forms and this Prospectus. We reserve the right to reject applications

which do not conform strictly to the instructions set out in the Application Forms

and this Prospectus or to the terms and conditions of this Prospectus or which are

illegible, incomplete, incorrectly completed or which are accompanied by

improperly drawn or improper forms of remittance.

2. Your Application Forms must be completed in English. Please type or write clearly in ink

using BLOCK LETTERS.

3. All spaces in the Application Forms except those under the heading “FOROFFICIAL USE

ONLY” must be completed and the words “NOT APPLICABLE” or “N.A.” should be

written in any space that is not applicable.

4. Individuals, corporations and approved nominee companies must give their names in full.

If you are an individual, you must make your application using your full name as it appears

in your identity card (if you have such an identification document) or in your passport and,

in the case of a corporation, in your full name as registered with a competent authority. If

you are not an individual and you are completing the Application Form under the hand of

an official, you must state the name and capacity in which that official signs. If you are a

corporation completing the Application Form, you are required to affix your Common Seal

(if any) in accordance with your memorandum and articles of association or equivalent

constitutive documents. If you are a corporate applicant and your application is

successful, a copy of your memorandum and articles of association or equivalent

APPENDIX F


F-8

constitutional documents must be lodged with our Share Registrar and Share Transfer

Agent. We reserve the right to require you to produce documentary proof of identification

for verification purposes.

(a) You must complete Sections A and B and sign page 1 of the Application Form.

(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application

Form. Where paragraph 7(a) is deleted, you must also complete Section C of the

Application form with particulars of the beneficial owners.

(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may

be, on page 1 of the Application Form, your application is liable to be rejected.

6. Your application must be accompanied by a remittance in Singapore currency for the full

amount payable, in respect of the number of New Shares applied for, in the form of a

BANKER’S DRAFT or CASHIER’S ORDER drawn on a bank in Singapore, made out in

favour of “GPH SHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, with your

name, CDP Securities Account Number and address written clearly on the reverse side.

WE WILL NOT ACCEPT APPLICATIONS NOT ACCOMPANIED BY ANY PAYMENT

OR ACCOMPANIED BY ANY OTHER FORM OF PAYMENT. WE WILL REJECT

REMITTANCES BEARING “NOT TRANSFERABLE” or “NON TRANSFERABLE”

CROSSINGS. Our Company reserves the right to reject any application which are

accompanied by combined Bankers Draft or Cashier’s Order for different CDP Securities

Accounts. No acknowledgement of receipt will be issued by our Company for applications

and application monies received.

7. Monies in respect of unsuccessful applications are expected to be returned to you by

ordinary post (without interest or any share of revenue or other benefit arising therefrom)

within 24 hours of balloting at your own risk. Where your application is accepted in part

only, the balance of the application monies, will be refunded (without interest or any share

of revenue or other benefit arising therefrom) to you by ordinary post at your own risk

within 14 days after the close of the Invitation, provided that the remittance accompanying

such application has been presented for payment or other processes has been honoured

and the application monies have been received in the designated share issue account. If

the completion of the Invitation does not occur for any other reason, monies paid in

respect of any application accepted will be returned to you at your own risk (without

interest or any share of revenue or other benefit arising therefrom). In the event that the

Invitation is cancelled by us following the termination of the Management and

Underwriting Agreement and/or the Placement Agreement, the application monies

received will be refunded (without interest or any share of revenue or other benefit arising

therefrom) to you by ordinary post at your own risk within five (5) Market Days of the

termination of the Invitation. In the event that the Invitation is cancelled by us following the

issuance of a Stop Order by the Authority or any competent authority, the application

monies received will be refunded (without interest or any share of revenue or other benefit

arising therefrom) to you by ordinary post at your own risk within 14 days from the date of

the Stop Order.

APPENDIX F


F-9

8. In consideration of us having distributed the Application Form to you and agreeing to close

the Invitation at 12.00 noon on 24 April 2012 or such other time or date as we may, in

consultation with the Issue Manager, Underwriter and Placement Agent, decide and by

completing and delivering the Application Form, you agree that:

(a) your application is irrevocable;

(b) your remittance will be honoured on first presentation and that any application

monies returnable may be held pending clearance of your payment without interest

or any share of revenue or other benefit arising therefrom;

(c) all applications, acceptances and contracts resulting therefrom under the Invitation

shall be governed by and construed in accordance with the laws of Singapore and

that you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;

(d) in respect of New Shares for which your application has been received and not

rejected, acceptance of your application shall be constituted by allotment of the New

Shares and not otherwise, notwithstanding any remittance being presented for

payment by us;

(e) you will not be entitled to exercise any remedy of rescission for misrepresentation at

any time after acceptance of your application;

(f) in making your application, reliance is placed solely on the information contained in

the Prospectus and that none of our Company, the Issue Manager, the Underwriter,

the Placement Agent or any other person involved in the Invitation shall have any

liability for any information not so contained; and

(g) you undertake to subscribe for the number of New Shares applied for as stated in the

Application Form or any smaller number of such New Shares that may be allotted to

you in respect of your application. In the event that our Company decides to allot a

smaller number of New Shares or not to allot any New Shares to you, you agree to

accept such decision as final.

APPENDIX F


F-10

A. Applications for Public Offer Shares

1. Your application for Public Offer Shares MUST be made using the WHITE Public Offer

Shares Application Form and WHITE official envelopes “A” and “B”. ONLY ONE

APPLICATION should be enclosed in each envelope.

2. You must:

(a) enclose the WHITE Public Offer Shares Application Form, duly completed and

signed, together with the correct remittance in accordance with the terms and

conditions of this Prospectus in the WHITE envelope “A” provided;

(b) in the appropriate spaces on WHITE envelope “A”:

(i) write your name and address;

(ii) state the number of Public Offer Shares applied for;

(iii) tick the relevant box to indicate the form of payment; and

(iv) affix adequate Singapore postage;

(c) SEAL WHITE envelope “A”;

(d) write, in the special box provided on the larger WHITE envelope “B” addressed to

GLOBALPREMIUMHOTELS LIMITED., c/o Tricor Barbinder Share Registration

Services (a division of Tricor Singapore Pte. Ltd.), 80 Robinson Road, #02-00,

Singapore 068898, the number of Public Offer Shares for which the application is

made and tick the relevant box to indicate the form of payment; and

(e) insertWHITE envelope “A” intoWHITE envelope “B”, sealWHITE envelope “B”, affix

adequate Singapore postage on WHITE envelope “B” (if despatching by ordinary

post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at

your own risk to GLOBAL PREMIUM HOTELS LIMITED., c/o Tricor Barbinder

Share Registration Services (a division of Tricor Singapore Pte. Ltd.), 80

Robinson Road, #02-00, Singapore 068898, so as to arrive by 12.00 noon on 24

April 2012 or such other time and date aswemay, in consultationwith the Issue

Manager, decide. Local Urgent Mail or Registered Post must NOT be used.

3. No acknowledgement of receipt will be issued for any application or remittance received.

APPENDIX F


F-11

B. Applications for Placement Shares

1. Your application for Placement Shares MUST be made using the BLUE Placement

Shares Application Form or in any other form of application as may be deemed

appropriate by OCBC Bank. ONLY ONE APPLICATION should be enclosed in each

envelope.

2. The completed BLUE Placement Shares Application Form and your remittance in

accordance with the terms and conditions of this Prospectus for the full amount payable in

respect of the number of Placement Shares applied for, with your name, Securities

Account and address written clearly on the reverse side, must be enclosed and sealed in

an envelope to be provided by you. You must affix adequate Singapore postage (if

despatching by ordinary post) and thereafter, the sealed envelope must be

DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to

OCBC BANK, 63 CHULIA STREET, OCBC CENTRE EAST #03-02, SINGAPORE

049514, so as to arrive by 12.00 noon on 24 April 2012 or such other time and date

as we may, in consultation with the Issue Manager, Underwriter and the Placement

Agent, decide. Local Urgent Mail or Registered Post must NOT be used.

3. No acknowledgement of receipt will be issued for any application or remittance received.

C. Additional Terms and Conditions for Electronic Applications

The procedures for Electronic Applications are set out on the ATM screens (in the case of

ATM Electronic Applications) and the IB websites (in the case of Internet Electronic

Applications) of the relevant Participating Banks (the “Steps”). For illustration purposes,

the procedures for Electronic Applications at ATMs and the IB website of OCBC Bank are

set out in the sections “Steps for ATM Electronic Applications through ATMs of OCBC

Bank” and “Steps for Internet Electronic Applications through the IB website of OCBC

Bank” respectively appearing on pages F-19 to F-21. For ATMElectronic Applications, the

actions that you must take at ATMs of other Participating Banks are set out on the ATM

screens of the relevant Participating Banks while for Internet Electronic Applications, the

actions that you must take for other Participating Banks are set out on the IB websites of

the relevant Participant Banks.

Applicants applying for the Public Offer Shares by way of Electronic Applications may

incur an administrative fee and/or such related charges as stipulated by the respective

Participating Banks from time to time.

Please read carefully the terms of this Prospectus, the Steps and the terms and conditions

for Electronic Applications set out below before making an Electronic Application. Any

reference to “you” or the “applicant” in the Additional Terms and Conditions for Electronic

Applications and the Steps shall refer to you making an application for Public Offer Shares

through an ATM or the IB website of a Participating Bank.

APPENDIX F


F-12

You must have an existing bank account with and be an ATM cardholder of one of the

Participating Banks before you can make an Electronic Application at the ATMs of that

Participating Bank. An ATM card issued by one Participating Bank cannot be used to

apply for Public Offer Shares at an ATM belonging to other Participating Banks. For

Internet Electronic Applications, you must have an existing bank account with and an IB

user identification (“User ID”) and a personal identification number/password (“PIN”) given

by the relevant Participating Bank. The Steps set out the actions that you must take at

ATMs or the IB website of OCBC Bank to complete an Electronic Application. The actions

that you must take at ATMs or the IB websites of other Participating Banks are set out on

the ATM screens or the IB websites of the relevant Participating Banks. Upon the

completion of your ATM Electronic Application transaction, you will receive an ATM

transaction slip (the “Transaction Record”), confirming the details of your ATM Electronic

Application. Upon completion of your Internet Electronic Application through the IB

website of OCBCBank, there will be an on-screen confirmation (“Confirmation Screen”) of

the application which can be printed for your record. The Transaction Record or your

printed record of the Confirmation Screen is for retention by you and should not be

submitted with any printed Application Form.

For ATM Electronic Applications, you must ensure that you enter your own

Securities Account number when using the ATM card issued to you in your own

name. If you fail to use an ATM card issued in your own name or do not key in your

own Securities Account number, your application will be rejected. If you operate a

joint bank account with any of the Participating Banks, you must ensure that you

enter your own Securities Account number when using the ATM card issued to you

in your own name. Using your own Securities Account number with an ATM card

which is not issued to you in your own namewill render your Electronic Application

liable to be rejected.

For Internet Electronic Applications, youmust ensure that your mailing address for

the account selected for the application is in Singapore, and the application is being

made in Singapore and you will be asked to declare accordingly. Otherwise your

application is liable to be rejected.

Your Electronic Application shall be made on the terms and subject to the conditions of

this Prospectus including but not limited to the terms and conditions appearing below and

those set out under this Annexure on “TERMS, CONDITIONS AND PROCEDURES FOR

APPLICATION AND ACCEPTANCE” on pages F-1 to F-21 as well as our Memorandum

of Association and Articles of Association.

APPENDIX F


F-13

1. In connection with your Electronic Application, you are required to confirm statements to

the following effect in the course of activating your Electronic Application:

(a) that you have received a copy of this Prospectus and have read, understood

and agreed to all the terms and conditions of application for Public Offer

Shares in this Prospectus prior to effecting the Electronic Application and

agree to be bound by the same;

(b) that you consent to the disclosure of your name, NRIC/passport number,

address, nationality, permanent resident status, Securities Account number,

CPF Investment Account number (if applicable) and share application amount

(the “Relevant Particulars”) from your account with that Participating Bank to

the Share Registrar for the Invitation, CDP, CPF, SCCS, the SGX-ST, our

Company and the Issue Manager (the “Relevant Parties”); and

(c) that the Electronic Application made is your only application for Public Offer

Shares and it is made in your own name and at your own risk.

Your application will not be successfully completed and cannot be recorded as a

completed transaction in the ATM or on the IB website unless you press the “Enter”

or “OK” or “Confirm” or “Yes” key or any other relevant key in the ATM (as the case

may be) (in the case of ATM Electronic Applications) or click “Submit” or “Continue”

or “Yes” or “Confirm” or any other relevant button on the IB website screen (as the

case may be) (in the case of Internet Electronic Applications). By doing so, you shall

be treated as signifying your confirmation of each of the three (3) statements. In

respect of statement 1(b) above, your confirmation, shall signify and shall be treated

as your written permission, given in accordance with the relevant laws of Singapore

including Section 47(2) of the Singapore Banking Act (Chapter 19) to the disclosure

by that Participating Bank of the Relevant Particulars to the Relevant Parties.

2. You must have sufficient funds in your bank account with your Participating Bank at the

time you make your Electronic Application, failing which your Electronic Application will

not be completed. Any Electronic Application which does not conform strictly to the

instructions set out in this Prospectus or on the screens of the ATMs or the IB

websites of the relevant Participating Banks through which the Electronic

Application is being made shall be liable to being rejected.

3. By making an Electronic Application, you further confirm that you are not under 18 years

of age or (an) undischarged bankrupt, sole-proprietorship, partnership, non-corporate

body, joint Securities Account holder and an applicant whose address as stated in the

Electronic Application bear a post office box number. You also confirm that you do not

possess more than one individual direct Securities Account with CDP.

4. Where your Electronic Application is unsuccessful, the full amount of the application

monies will be refunded in Singapore dollars (without interest or any share of revenue or

other benefit arising therefrom) to you by being automatically credited to your account with

APPENDIX F


F-14

your Participating Bank within 24 hours of balloting of the applications provided that the

application monies have been received in the designated share issue account.

Where your Electronic Application is accepted in part only, the the balance of the

application monies will be refunded in Singapore dollars (without interest or any share of

revenue or other benefit arising therefrom) to you by being automatically credited to your

account with your Participating Bank within 14 days after the close of the Invitation

provided that the application monies have been received in the designated share issue

account.

If the completion of the Invitation does not occur for any other reason, monies paid in

respect of any application accepted will be returned to you at your own risk (without

interest or any share of revenue or other benefit arising therefrom). In the event that the

Invitation is cancelled by us following the termination of the Management and

Underwriting Agreement and/or the Placement Agreement, the application monies

received will be refunded (without interest or any share of revenue or other benefit arising

therefrom) to you by automatically crediting your account with your Participating Bank at

your own risk within five (5) Market Days of the termination of the Invitation. In the event

that the Invitation is cancelled by us following the issuance of a Stop Order by the Authority

or any competent authority, the application monies received will be refunded (without

interest or any share of revenue or other benefit arising therefrom) to you by automatically

crediting your account with your Participating Bank at your own risk within 14 days from

the date of the Stop Order.

Responsibility for timely refund of application monies lies solely with the

respective Participating Banks. Therefore, you are strongly advised to consult your

Participating Bank as to the status of your Electronic Application and/or the refund

of any monies to you from an unsuccessful or partially successful Electronic

Application, to determine the exact number of Public Offer Shares allotted to you, if

any, before trading Public Offer Shares on the SGX-ST. Neither the SGX-ST, CDP,

SCCS, the Participating Banks, we nor the Issue Manager, Underwriter and

Placement Agent assume any responsibility for any loss that may be incurred as a

result of your having to cover any net sell positions or from buy-in procedures

activated by the SGX-ST.

5. If your Electronic Application is unsuccessful, no notification will be sent by the

Participating Banks.

If your Electronic Application is made through an ATM or IB website of one of the following

Participating Banks, you may check the provisional results of your Electronic Application

as follows:

Bank Telephone ATM/Internet

Operating

Hours

Service

Expected from

APPENDIX F


F-15

Bank Telephone ATM/Internet

Operating

Hours

Service

Expected from

OCBC Bank 1 800 363 3333 ATM/Phone Banking/

Internet Banking/

www.ocbc.com(1)

24 hours Evening of the

balloting day

DBS Bank 1 800 339 6666

(POSB account

holders)

1 800 111 1111

(DBS Bank account

holders)

Internet Banking

www.dbs.com(2)24 hours Evening of the

balloting day

UOB Group 1 800 222 2121 ATM (Other

Transactions —

“IPO Results Enquiry”)/

Phone Banking

www.uobgroup.com

24 hours Evening of the

balloting day

Notes:

(1) If you have made your Electronic Application through the ATMs or IB website of OCBC Bank, you may

check the results of your application through OCBC Personal Internet Banking, OCBC Bank’s ATMs and

OCBC Phone Banking Services.

(2) If you have made Internet Electronic Applications through the IB website of DBS Bank, you may also

check the results of your application through the same channels listed above in relation to ATMElectronic

Applications made at the ATMs of DBS Bank.

6. Electronic Applications shall close at 12.00 noon on 24 April 2012 or such other time and

date as we may, in consultation with the Issue Manager, Underwriter and Placement

Agent, decide. Subject to the paragraph above, an Internet Electronic Application is

deemed to be received only upon its completion, that is, when there is an on-screen

confirmation of the application.

7. You are deemed to have requested and authorised us to:

(a) register Public Offer Shares allotted to you in the name of the CDP for deposit into

your Securities Account;

(b) send the relevant share certificate(s) to the CDP by ordinary post, at your own risk;

(c) return or refund (without interest or any share of revenue or other benefit arising

therefrom) the application monies in Singapore currency, should your Electronic

Application be rejected, by automatically crediting your bank account with your

Participating Bank with the relevant amount within 24 hours of balloting;

(d) return or refund (without interest or any share of revenue or other benefit arising

therefrom) the balance of the application monies in Singapore dollars, should your

APPENDIX F


F-16

Electronic Application be accepted in part only, by automatically crediting your bank

account with your Participating Bank with the relevant amount within 14 days after

the close of the Invitation;

(e) return or refund (without interest or any share of revenue or other benefit arising

therefrom) the application monies in Singapore dollars should the Invitation be

cancelled following the termination of the Management and Underwriting Agreement

and/or Placement Agreement, by automatically crediting your bank account with your

Participating Bank with the relevant amount within 5 Market Days of the termination

of the Invitation; and

(f) return or refund (without interest or any share of revenue or other benefit arising

therefrom) the application monies in Singapore dollars should the Invitation be

cancelled following the issuance of a Stop Order by the Authority or any competent

authority, by automatically crediting your bank account with your Participating Bank

with the relevant amount within 14 days from the date of the Stop Order.

8. You irrevocably agree and acknowledge that your Electronic Application is subject to risks

of electrical, electronic, technical and computer-related faults and breakdowns, fires, acts

of God and other events beyond the control of the Participating Banks, our Company, and

the Issue Manager, Underwriter and Placement Agent and if, in any such event, we, the

Issue Manager, Underwriter and Placement Agent and/or the relevant Participating Bank

do not record or receive your Electronic Application, or data relating to your Electronic

Application or the tape containing such data is lost, corrupted, destroyed or not otherwise

accessible, whether wholly or partially for whatever reason, you shall be deemed not to

have made an Electronic Application and you shall have no claim whatsoever against us,

the Issue Manager, Underwriter and Placement Agent and/or the relevant Participating

Bank for Public Offer Shares applied for or for any compensation, loss or damage.

9. We do not recognise the existence of a trust. Any Electronic Application by a trustee must

be made in his own name(s) and without qualification. Our Company will reject any

Electronic Application by any person acting as nominee except those made by approved

nominee companies only.

10. All particulars in the records of your Participating Bank at the time you make your

Electronic Application shall be deemed to be true and correct and your Participating Bank

and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been

any change in your particulars after making your Electronic Application, you shall promptly

notify your Participating Bank.

11. You should ensure that your personal particulars as recorded by both CDP and the

relevant Participating Bank are correct and identical, otherwise, your Electronic

Application is liable to be rejected. You should promptly inform CDP of any change in

address, failing which the notification letter on successful allotment and other

correspondence from the CDP will be sent to your address last registered with CDP.

APPENDIX F


F-17

12. In consideration of our Company making available the Electronic Application facility

through the ATMs and IB websites of the Participating Banks and agreeing to close the

Invitation at 12.00 noon on 24 April 2012 or such other time or date as we may, in

consultation with the Issue Manager, Underwriter and Placement Agent, decide, and by

making and completing an Electronic Application, you agree that:

(a) your Electronic Application is irrevocable;

(b) your Electronic Application, the acceptance by our Company, and the contract

resulting therefrom under the Invitation shall be governed by and construed in

accordance with the laws of Singapore and you irrevocably submit to the non-

exclusive jurisdiction of the Singapore courts;

(c) neither our Company, the Issue Manager, Underwriter and Placement Agent, the

Participating Banks nor CDP shall be liable for any delays, failures or inaccuracies in

the recording, storage or in the transmission or delivery of data relating to your

Electronic Application to us or CDP due to a breakdown or failure of transmission,

delivery or communication facilities or any risks referred to in paragraph 9 above or

to any cause beyond their respective controls;

(d) in respect of Public Offer Shares for which your Electronic Application has been

successfully completed and not rejected, acceptance of your Electronic Application

shall be constituted by allotment of the New Shares not otherwise, notwithstanding

any payment received by or on behalf of our Company;

(e) you will not be entitled to exercise any remedy of rescission or misrepresentation at

any time after acceptance of your application;

(f) in making your application, reliance is placed solely on the information contained in

the Prospectus and none of our Company, the Issue Manager, Underwriter and

Placement Agent or any other person involved in the Invitation shall have any liability

for information not so contained; and

(g) you undertake to subscribe for the number of Public Offer Shares applied for as

stated in your Electronic Application or any smaller number of such Public Offer

Shares that may be alloted to you in respect of your Electronic Application. In the

event we decide to allot any smaller number of Public Offer Shares or not to allot any

Public Offer Shares to you, you agree to accept such decision as final.

D. Steps for Electronic Applications

Instructions for Electronic Applications will appear on the ATM screens or IB website

screens of the Participating Banks. For illustration purposes, the steps for making an

Electronic Application through an OCBC Bank ATM or through the IB website of OCBC

are shown below. Certain words appearing on the screen are in abbreviated form (“a/c”,

“appln”, “ESA”, “no.” and “&” refer to “account”, “application”, “electronic share

application”, “number” and “and”, respectively). Instructions for Electronic Applications

APPENDIX F


F-18

appearing on the ATM screens or IB website screens of the other Participating Banks may

differ from those represented below.

Steps for ATM Electronic Applications through ATMs of OCBC Bank

Step 1 : Insert your personal OCBC ATM card

2 : Enter your Personal Identification Number

3 : Select “More Services”

4 : Select “Investment Services”

5 : Select “Electronic Share Appln”

6 : Select “GPH”

7 : For an applicant making an Electronic Application at the ATM for the first time

(a) For non-Singaporean

Press the “Yes” key if you are a permanent resident of Singapore,

otherwise, press the “No” key.

(b) Enter your own Securities Account number (12 digits) e.g.

168101234567 and press “Yes” key to confirm that the Securities

Account number you have entered is correct

8 : Check your particulars appearing on the screen and press the “Correct” key to

confirm that your particulars are correct.

9 : Press the “Confirm” key to confirm that you have read the following messages:

• Where applicable, a copy of this Prospectus has been lodged with

and registered by the Monetary Authority of Singapore and/or SGX-

ST, which assumes no responsibility for its contents

• Where applicable, the Prospectus is available at various

Participating Banks

10 : Press the “Confirm” key again to confirm that you have read the following

messages:

• Anyone who intends to submit an application for these securities

should read the Prospectus before submitting his/her application in

the manner set out in the Prospectus

• You have read, understood and agreed to all terms of application set

out in the Prospectus

APPENDIX F


F-19

11 : Press the “Confirm” key again to confirm that you have read the following

messages:

• You consent to the disclosure of your NRIC/Passport No., address,

nationality, securities a/c no., qty of securities applied for and CPF

investment a/c no. to share registrar, CDP, CPF, SCCS, Issuer &

Vendor(s)

• This application is made in your own name & at your own risk

12 : Select the number of Shares you wish to apply for:

• For fixed price ESA, this is the only application submitted

• Price: $0.26

13 : Select the type of bank account to debit your application monies.

14 : Check the details of your application appearing on the screen and press the

“Confirm” key to confirm your application.

APPENDIX F


F-20

Steps for Internet Electronic Applications through the IB website of OCBC Bank

Step 1 : Connect to OCBC Bank website at http://www.ocbc.com.

2 : Locate the “Logon to Internet Banking” link on the left hand side.

3 : Select the relevant “country — Singapore” and relevant “service — PersonalBanking” from the drop lists and click on “GO” to proceed.

4 : Enter your “Access Code” and “PIN” and click on “LOGIN”. Thereafter, enterthe One-Time password (OTP) and click “Submit”.

5 : Select the tab “Investment & Trading” and click on “Initial public offering.” Youwill be directed to the ‘Apply for IPO’ page.

6 : Answer the five questions under the section entitled “Fill In Details” byselecting “Yes” or “No” and selecting the relevant country of residence (youmust be residing in Singapore to apply).

7 : Read the important information on “Electronic Security Application (ESA)” onthe screen and click on the check box to acknowledge that you have read andunderstood the declaration.

Click on “Confirm” on the lower right hand corner.

For first-time Electronic Security Application (ESA) applicants, you will beprompted to fill in your CDP Account number. After filling in the CDP Accountnumber, click on “Next”.

8 : Under section “1. Select Securities”, check the details of the share counter thatyou wish to apply for and if there is more than one share counter on the screen,select the relevant counter by clicking on the appropriate radio button.

9 : Upon selection of the share counter, the prospectus and prospectus terms andconditions will be loaded. Read the important information on the screen andclick on the check box at the bottom of the screen to acknowledge that youhave read and understood the declaration.

Click on “Next”.

10 : Under section “2. Investment Details”, click on the checkbox next to “Applyusing cash” if you are applying for the shares using cash and key in the numberof units you intend to apply for.

Click on “Next”.

11 : Under “Review Application”, check your personal details, details of the sharecounter you wish to apply for, payment mode and account to debit.

Click on “Submit”.

12 : Print the Confirmation Screen (optional) for your reference and retention only.You can also check the application status by clicking ‘Application Status’.

APPENDIX F


F-21

Singapore Taxation

The following is a discussion of certain tax matters arising under the current tax laws of

Singapore and is not intended to be and does not constitute legal or tax advice. While this

discussion is considered to be a correct interpretation of existing laws in force as at the date of

this Prospectus, no assurance can be given that courts or fiscal authorities responsible for the

administration of such laws will agree with this interpretation or that changes in such laws will

not occur, changes which could be retrospective in effect.

The discussion is limited to a summary of certain tax considerations in Singapore with respect

to the subscription, purchase, ownership and disposal of our Shares by investors (either

individuals or corporations), and does not purport to be a comprehensive nor exhaustive

description of all of the tax considerations that may be relevant to a decision to subscribe to,

purchase, own or dispose of the Shares and does not purport to deal with the tax

consequences applicable to all categories of investors, some of which (such as dealers in

securities) may be subject to special rules.

Prospective investors are advised to consult their tax advisors regarding the overall tax

consequences of subscription, purchase, ownership and disposal of our Shares.

It is emphasised that neither our Company, our Directors nor any other persons involved in the

Invitation accepts responsibility for any tax effects or liabilities resulting from the subscription,

purchase, ownership and disposal of our Shares.

Income Tax

Individual Income Tax

Individuals, both resident and non-resident for Singapore tax purposes, subject to certain

specific exemptions provided for under the Singapore tax laws, are subject to income tax on

income accrued in or derived from Singapore.

All foreign-sourced income received in Singapore by individuals, regardless of whether they

are tax residents of Singapore or otherwise, are generally exempt from Singapore income tax,

except where such income is received through a partnership in Singapore.

Certain Singapore-sourced investment income received or deemed received by individuals is

also exempt from income tax in Singapore.

To be considered a tax resident of Singapore in a year of assessment, the individual has to be

physically present in Singapore or exercise an employment in Singapore (other than as a

director of a company) for 183 days or more, or reside in Singapore in the year preceding the

year of assessment except for such temporary absences that may be reasonable and not

inconsistent with his claim to be resident in Singapore. As such, a Singapore citizen is generally

considered a tax resident of Singapore.

APPENDIX G

TAXATION

G-1

The current rates of tax for a tax resident of Singapore vary according to the individual’s

chargeable income, ranging from0% to 20%.A non-resident of Singapore is generally taxed at the

20%, except for employment income which is taxed at the higher of 15% or tax resident rates.

Corporate Income Tax

Corporates, both resident and non-resident for Singapore tax purposes, subject to certain

exemptions, are subject to tax on the following:

• Income accruing in or derived from Singapore; and

• Foreign income received or deemed received in Singapore.

Under the tax laws, foreign-sourced service income, foreign-sourced branch profits and

foreign-sourced dividend income received by a corporate tax resident in Singapore are exempt

from Singapore income tax if the following conditions are all met:

(i) Such income was subject to income tax in the foreign jurisdiction from which the said

income is received, unless the income is exempted from tax in the foreign jurisdiction as

a direct consequence of that foreign jurisdiction granting a tax incentive for carrying out

substantive business activities in that jurisdiction;

(ii) The highest rate of tax in the foreign jurisdiction from which such income is received is at

least 15%; and

(iii) The IRAS is satisfied that the tax exemption granted is beneficial to the recipient of such

income.

To be considered a tax resident of Singapore, generally, a corporate must demonstrate that its

control and management of the business is carried out in Singapore.

The prevailing corporate tax rate in Singapore is currently 17% for the year of assessment

2010. In addition, 75% of up to the first $10,000, and 50% of up to the next $290,000 of a

company’s chargeable income is exempt from Singapore income tax.

Dividend Distributions

Singapore adopts the one-tier corporate tax system. Under the one-tier corporate tax system,

the Singapore income tax payable on normal chargeable income by Singapore companies,

whether tax resident in Singapore or not, would constitute a final Singapore income tax.

Dividends payable by Singapore companies on the one-tier corporate tax system would be tax

exempt from Singapore income tax in the hands of their shareholders. Such dividends are

referred to as tax exempt (one-tier) dividends.

Dividend payments made to non-tax residents are not subject to withholding tax in Singapore.

Foreign shareholders are advised to consult their own tax advisors in respect of the tax laws of

their respective countries of residence and the applicability of any Avoidance of Double

Taxation Agreement that their country of residence may have with Singapore.

APPENDIX G

TAXATION

G-2

Gain on Disposal of Our Shares

Singapore currently does not impose tax on capital gains. However, there are no specific laws

or regulations which deal with the characterisation of whether a gain is income or capital in

nature. Generally, gains arising from the disposal of our shares are not taxable in Singapore

unless the seller is regarded as having derived gains of an income nature in Singapore, in

which case, the disposal profits would be taxable as trading income in the hands of the seller.

Stamp Duty

No stamp duty is payable on the subscription of our Shares. Stamp duty is payable on the

instrument of transfer of our Shares at the rate of $0.20 for every $100 or any part thereof,

computed on the higher of the consideration of the transfer or market value of our Shares.

However, stamp duty is not applicable to electronic transfers of our Shares through the CDP

system.

The purchaser would be liable for stamp duty, unless otherwise agreed by the relevant parties.

No stamp duty is levied if no instrument of transfer is executed or the instrument of transfer is

executed outside Singapore. However, stamp duty would be payable if the instrument of

transfer which is executed outside Singapore is received in Singapore.

Goods and Services Tax (“GST”)

The issue or transfer of ownership of an equity security in Singapore is exempt from GST.

Hence, investors would not incur any GST on the subscription of our Shares. Where the

investors are GST — registered persons, any GST on expenses (e.g. legal fees) incurred in

connection with the subscription or acquisition of our Shares is generally not recoverable as

input tax credit from the IRAS unless certain conditions are satisfied. The investors should

consult their tax consultants on these conditions.

The subsequent disposal of our Shares by the investors belonging in Singapore is also exempt

from GST. Any GST incurred by a GST-registered investor in the making of this exempt supply

is generally not recoverable as input tax credit from the IRAS unless certain conditions are

satisfied.

Generally, services such as brokerage, handling and clearing charges rendered by a GST-

registered person to an investor belonging in Singapore in connection with the investor’s

purchase and sale of shares will be subject to GST at the prevailing standard-rate of 7%.

Similar services rendered to an investor belonging outside Singapore would generally be

subject to GST at zero-rate.

Estate duty

Estate duty has been abolished, as announced by the Singapore Government, with effect from

15 February 2008.

APPENDIX G

TAXATION

G-3

1. NAME OF THE GLOBAL PREMIUM HOTELS PSP

This performance share plan shall be called the “Global Premium Hotels Performance

Share Plan”.

2. DEFINITIONS

2.1 Unless the context otherwise requires, the following words and expressions shall have

the following meanings:

“Act” or “Companies Act” : The Companies Act, Chapter 50 of Singapore, as

amended, modified or supplemented from time to

time

“Articles of Association” : The articles of association of the Company, as

amended, modified or supplemented from time to

time

“Associate” : (a) In relation to any Director, chief executive

officer, Substantial Shareholder or Controlling

Shareholder (being an individual) means:

(i) his immediate family;

(ii) the trustees of any trust of which he or his

immediate family is a beneficiary or, in the

case of a discretionary trust, is a

discretionary object; and

(iii) any company in which he and his

immediate family together (directly or

indirectly) have an interest of 30% or

more; and

(b) In relation to a Substantial Shareholder or a

Controlling Shareholder (being a company)

means any other company which is its

subsidiary or holding company or is a

subsidiary of such holding company or one in

the equity of which it and/or such other

company or companies taken together (directly

or indirectly) have an interest of 30% or more

“Auditors” : The auditors of the Company for the time being

“Award” : A contingent award of Shares granted pursuant to

the rules of the Global Premium Hotels PSP

APPENDIX H

RULESOF THEGLOBALPREMIUMHOTELSPERFORMANCESHAREPLAN

H-1

“Award Date” : In relation to an Award, the date on which the Award

is granted pursuant to the rules of the Global

Premium Hotels PSP

“Award Letter” : A letter in such form as the Committee shall approve,

confirming an Award granted to a Participant by the

Committee

“Board” : The board of Directors of the Company for the time

being

“CDP” : The Central Depository (Pte) Limited

“Committee” : A committee comprising Directors as may be duly

authorised and appointed by the Board from time to

time to administer the Global Premium Hotels PSP

“Code” : The Singapore Code on Take-overs and Mergers,

as amended, modified or supplemented from time to

time

“Company” : Global Premium Hotels Limited, a company

incorporated in Singapore

“Controlling

Shareholder”

: A person who:

(a) holds directly or indirectly 15% or more of the

total number of issued Shares excluding

Treasury Shares (the SGX-ST may determine

that a person who satisfies the above is not a

Controlling Shareholder); or

(b) in fact exercises control over the Company

“CPF” : Central Provident Fund

“Directors” : The directors of the Company, including alternate

directors of the Company (if any), as at the date of

this Circular

“EPS” : Earnings per Share

“FY” : The financial year ended 31 December

“Group” : The Company and its subsidiaries

“Group Employee” : Any confirmed employee of the Group selected by

the Committee to participate in the Global Premium

Hotels PSP in accordance with the rules thereof

APPENDIX H


H-2

“Group Executive

Director”

: A director of the Company and/or its subsidiaries

(excluding Directors who are Controlling

Shareholders and Directors who are Associates of

Controlling Shareholders), as the case may be, who

performs an executive function

“Group Non-Executive

Director”

: A director of the Company and/or its subsidiaries

(excluding Directors who are Controlling

Shareholders and Directors who are Associates of

Controlling Shareholders), as the case may be,

other than a Group Executive Director but including

an Independent Director

“Immediate Family” : In relation to a person, means the person’s spouse,

child, adopted child, step-child, sibling and parent

“Independent Director” : An independent director of the Company who has no

relationship with the Company, its related

companies or its officers that could interfere, or be

reasonably perceived to interfere, with the exercise

of the director’s independent business judgment

with the best interests of the Company

“Independent

Shareholders”

: Shareholders other than Shareholders who are

Participants and Shareholders who are Associates

of the Participants

“Listing Manual” : The Listing Manual of the SGX-ST, as amended,

modified or supplemented from time to time

“Market Day” : A day on which the SGX-ST is open for trading in

securities

“Market Price” : The price equal to the average of the last dealt prices

for a Share, as determined by reference to the daily

official list or other publication published by the

SGX-ST for five (5) consecutive Market Days

immediately preceding the Offer Date, rounded up to

the nearest whole cent in the event of fractional

prices

“Memorandum” : The memorandum of association of the Company,

as amended, modified or supplemented from time to

time

“Offer Date” : The date on which an offer to grant an Award is

made

APPENDIX H


H-3

“Participant” : A Group Employee, a Group Executive Director or a

Group Non-Executive Director who has been

granted an Award pursuant to the Global Premium

Hotels PSP

“Performance Period” : The performance period during which the

Performance Targets shall be satisfied

“Performance Target” : The performance target prescribed by the

Committee to be fulfilled by a Participant for any

particular period under the Global Premium Hotels

PSP

“Global Premium Hotels

PSP”

: The proposed performance share plan to be

adopted by the Company

“Rules” : The rules of the Global Premium Hotels PSP, as

they may be modified or altered from time to time

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Shares” : Ordinary shares in the capital of the Company

“Shareholders” : Registered holders of Shares, except where the

registered holder is CDP, the term “Shareholders”

shall, in relation to such Shares and where the

context admits, mean the Depositors who have

Shares entered against their names in the

Depository Register

“Substantial

Shareholder”

: A person who has an interest or interests in one or

more voting Shares in the Company and the total

votes attached to that Share, or those Shares, is not

less than 5% of the total votes attached to all the

voting Shares of the Company

“Vesting Period” : The period of three (3) years (or such other period as

the Committee may decide in its sole and absolute

discretion) commencing on the Award Date

“%” or “per cent.” : Per centum or percentage

2.2 The terms “Depositor”, “Depository Register” and “Depository Agent” shall have the

meanings ascribed to them respectively by Section 130A of the Companies Act.

2.3 The term “subsidiary” and “related companies” shall have themeaning ascribed to it by

Section 5 and Section 6 of the Act respectively.

APPENDIX H


H-4

2.4 Words importing the singular shall, where applicable, include the plural and vice versa

and words importing the masculine gender shall, where applicable, include the feminine

and neuter gender and vice versa. References to persons shall include corporations.

2.5 Any reference in the Global Premium Hotels PSP to any enactment is a reference to that

enactment as for the time being amended or re-enacted. Any word defined under the

Companies Act or any statutory modification thereof and used in the Global Premium

Hotels PSP shall, where applicable, have the same meaning assigned to it under the

Companies Act.

2.6 Any reference in the Global Premium Hotels PSP to a time of day shall be a reference to

Singapore time.

3. OBJECTIVES OF THE GLOBAL PREMIUM HOTELS PSP

The objectives of the Global Premium Hotels PSP are as follows:

(a) to motivate the Participants to optimise performance standards and efficiency and

to maintain a high level of contribution to the Group;

(b) to retain key employees whose contributions are important to the long term growth

and prosperity of the Group;

(c) to instill loyalty and a stronger sense of identification by the Participants with the

long-term prosperity of the Group;

(d) to attract potential employees with relevant skills to contribute to the Group and to

create value for Shareholders; and

(e) to align the interests of the Participants with the interests of Shareholders.

4. ELIGIBILITY OF PARTICIPANTS

4.1 Subject to the absolute discretion of the Committee, the following persons shall be

eligible to participate in the Global Premium Hotels PSP:

(a) Group Employees;

(b) Group Executive Directors; and

(c) Group Non-Executive Directors,

provided that, as of the Offer Date, such persons have attained the age of twenty-one

(21) years, are not undischarged bankrupts and have not entered into any

composition(s) with their respective creditors, and in the case of Group Employees and

Group Executive Directors, have been in the employment of the Group for at least twelve

(12) months, or such shorter period as the Committee may determine.

APPENDIX H


H-5

Controlling Shareholders and their Associates will not be eligible to participate in the

Global Premium Hotels PSP. Mr. Koh Wee Meng, our Non-Executive Director who is

also a Controlling Shareholder of our Company, is not eligible to participate in the Global

Premium Hotels PSP.

4.2 There shall be no restriction on the eligibility of any Participant to participate in any other

share option or share incentive scheme implemented by the Company or any other

company within the Group.

4.3 Subject to the Companies Act and any requirement of the SGX-ST or any other stock

exchange on which the Shares may be listed or quoted from time to time (if applicable),

the terms of eligibility for participation in the Global Premium Hotels PSP may be

amended from time to time at the absolute discretion of the Committee.

5. LIMITATIONS UNDER THE GLOBAL PREMIUM HOTELS PSP

The aggregate number of Shares for which an Award may be granted on any date under

the Global Premium Hotels PSP, when added to the number of Shares issued and/or

issuable in respect of:

(a) all Awards granted under the Global Premium Hotels PSP; and

(b) all Shares, options or awards granted under any other share option or share

scheme of the Company then in force,

shall not exceed 15% of the total issued Shares of the Company (excluding Treasury

Shares) on the day preceding that date.

6. DATE OF GRANT

The Committee may grant Awards at any time, provided that in the event that an

announcement on any matter of an exceptional nature involving unpublished price

sensitive information is imminent, Awards may only be vested, and hence any Shares or

cash equivalent or both comprised in such Awards may only be delivered, on or after the

second Market Day from the date on which the aforesaid announcement is made.

7. GRANT OF AWARDS

7.1 Subject to Rules 4 and 5, the number of Shares or cash equivalent or both which are the

subject of each Award to be granted to a Participant under the Global Premium Hotels

PSP shall be determined at the absolute discretion of the Committee, which shall take

into consideration, where applicable, factors such as the Participant’s rank, past

performance, length of service, contribution to the success and development of the

Group, potential for future development of the Participant and the prevailing market and

economic conditions.

APPENDIX H


H-6

7.2 The Committee shall, in its absolute discretion, determine in relation to an Award:

(a) the Award Date;

(b) the number of Shares or cash equivalent or both which are the subject of the Award;

(c) the Performance Target for the Participant;

(d) the Performance Period for the Participant;

(e) the extent to which the prescribed Performance Target has been satisfied (whether

fully or partially) or been exceeded, as the case may be, and the extent to which the

Shares, which are the subject of that Award, shall be released at the end of the

Performance Period on satisfaction of the prescribed Performance Target;

(f) the vesting schedule (if any), pursuant to which an Award shall vest at the end of

each Performance Period (if there is more than one Performance Period), provided

the Performance Target for the period has been achieved;

(g) the Vesting Period; and

(h) any other condition which the Committee may decide in relation to that Award.

Upon its decision to grant the Award, the Committee shall as soon as practicable send to

the Participant an Award Letter confirming such Award and specifying the above.

7.3 An Award is personal to the Participant to whom it is given and shall not be transferred

(other than to a Participant’s personal representative on the death of the Participant),

charged, assigned, pledged or otherwise disposed of, unless with the prior approval of

the Committee.

8. VESTING OF AWARDS

8.1 Awards may only be vested, and consequently any Shares or cash equivalent or both

comprised in such Awards shall only be delivered, upon the Committee being satisfied at

its absolute discretion that the Participant has achieved the Performance Target,

performance conditions, service conditions and/or such other conditions such as Vesting

Period(s) or vesting schedules applicable for the release of the Award and/or all or any

of the Shares or cash equivalent or both to which that Award relates, and/or upon the

Committee being satisfied that due recognition should be given for good work

performance and/or significant contribution to the Company.

8.2 Notwithstanding that a Participant may have met his Performance Target, no Awards

shall be vested in the event of:

(a) the decision of the Committee, in its absolute discretion, to revoke or annul such

Award;

APPENDIX H


H-7

(b) the cessation of employment of a Participant;

(c) the bankruptcy of a Participant;

(d) the misconduct of a Participant; or

(e) a take-over, winding-up or reconstruction of the Company.

8.3 In general, upon the cessation of employment of a Participant, an Award then held by

such Participant shall immediately lapse without any claim whatsoever against the

Company and/or the Group.

8.4 If the cessation is due to certain specified reasons (for example, ill health, injury,

disability, redundancy, retirement or death), the Committee may, in its absolute

discretion, preserve all or any part of any Award and decide either to vest some or all of

the Award or to preserve all or part of any Award until the end of the relevant Vesting

Period. In exercising its discretion, the Committee will have regard to all circumstances

on a case-by-case basis, including (but not limited to) the contributions made by that

Participant and the extent to which the applicable performance conditions and targets

have been satisfied.

8.5 Upon the occurrence of any of the events specified in Rule 8.2 (a), (b), (c) and (d), an

Award then held by a Participant shall immediately lapse without any claim whatsoever

against the Company and/or the Group.

8.6 Upon the occurrence of any of the events specified in Rule 8.2(e), the Committee will

consider, at its discretion, whether or not to release any Award, and will take into account

all circumstances on a case-by-case basis, including (but not limited to) the contributions

made by that Participant.

8.7 Save as provided and for the avoidance of doubt, the Shares or cash equivalent or both

under an Award shall nevertheless be released to a Participant for as long as he has

fulfilled his Performance Target and notwithstanding a transfer of his employment within

any company in the Group or any apportionment of Performance Target within any

company within the Group.

8.8 If a Participant has fulfilled his Performance Target but dies before the Shares or cash

equivalent or both under an Award are released, the Shares or cash equivalent or both

under the Award shall in such circumstances be given to the personal representatives of

the Participant.

9. TAKE-OVER AND WINDING UP OF THE COMPANY

9.1 Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over beingmade for

the Shares, a Participant shall be entitled to the Shares or cash equivalent or both under

APPENDIX H


H-8

the Awards if he has met the Performance Targets for the corresponding Performance

Period. For the avoidance of doubt, the vesting of such Awards will not be affected by the

take-over offer.

9.2 If under any applicable laws, the court sanctions a compromise or arrangement

proposed for the purposes of, or in connection with, a scheme for the reconstruction of

the Company or its amalgamation with another company or companies, each Participant

who has fulfilled his Performance Target shall be entitled, notwithstanding the provisions

under this Rule 9 but subject to Rule 9.5, to any Shares or cash equivalent or both under

the Awards so determined by the Committee to be released to him during the period

commencing on the date upon which the compromise or arrangement is sanctioned by

the court and ending either on the expiry of sixty (60) days thereafter or the date upon

which the compromise or arrangement becomes effective, whichever is later.

9.3 If an order is made for the winding-up of the Company on the basis of its insolvency, all

Awards, notwithstanding that Shares or cash equivalent or both may have not been

released to the Participants, shall be deemed or become null and void.

9.4 In the event of a members’ voluntary winding-up (other than for amalgamation or

reconstruction), the Shares or cash equivalent or both under the Awards shall be

released to the Participant for so long as, in the absolute determination by the

Committee, the Participant has met the Performance Targets prior to the date on which

the members’ voluntary winding-up is deemed to have commenced or is effective in law.

9.5 If in connection with the making of a general offer referred to in Rule 9.1 or the scheme

referred to in Rule 9.2 or the voluntary winding-up referred to in Rule 9.4, arrangements

are made (which are confirmed in writing by the Auditors, acting only as experts and not

as arbitrators, to be fair and reasonable) for the compensation of the Participants,

whether by the payment of cash or by any other form of benefit, no release of Shares or

cash equivalent or both under the Award shall be made in such circumstances.

10. ALLOTMENT AND LISTING OF SHARES

10.1 Subject to such consents or other required action of any competent authority under any

regulations or enactments for the time being in force as may be necessary and subject to

the compliance with the terms of the Global Premium Hotels PSP and the Memorandum

and Articles of Association, the Company shall within one (1) month after the vesting of

an Award, allot the relevant Shares and despatch to CDP the relevant share certificates

by ordinary post or such other mode as the Committee may deem fit.

10.2 Subject to prevailing legislation and guidelines issued by the SGX-ST, the Company

shall, on the Release Date, do any one or more of the following as it deems fit in its sole

and absolute discretion:

(a) allot and issue the relevant Shares to the Participant, and apply to the SGX-ST, for

permission to deal in and for quotation of such Shares; and/or

APPENDIX H


H-9

(b) deliver existing Shares to the Participant, whether such existing Shares are

acquired pursuant to a share purchase mandate or (to the extent permitted by law)

held as Treasury Shares; and/or

(c) subject to the prior approval of the Committee and at the Committee’s absolute

discretion, pay the Equivalent Value in Cash (as defined below) (after deduction of

any applicable taxes) to the Participant, in lieu of issuing or delivering all or some of

the Shares to be issued or delivered to the Participant. The Committee, in

exercising such discretion, will consider each Award on a case-by-case basis and

will decide, taking into account all and any relevant factors including but not limited

to the present shareholdings of the relevant Participant.

For the purpose of this Rule 10.2:

“Equivalent Value in Cash” to be paid to a Participant in lieu of the Shares to be issued

or delivered upon vesting of an Award, shall be calculated in accordance with the

following formula:

A = B x C

Where:

“A” is the Equivalent Value in Cash to be paid to the Participant in lieu of all or some of the

Shares to be issued or delivered upon the vesting of an Award;

“B” is equal to the average of the last dealt prices for a Share, as determined by reference

to the daily official list or other publication published by the SGX-ST for the five (5) Market

Days on which there were transactions done for the Shares on the SGX-ST immediately

preceding the Release Date; and

“C” is such number of Shares (as determined by the Company in its sole and absolute

discretion) in respect of which cash will be paid to a Participant in lieu of Shares to be

issued or delivered to the Participant upon the vesting of an Award.

10.3 Shares which are the subject of an Award shall be issued in the name of CDP to the credit

of the securities account of that Participant maintained with CDP, the securities sub-

account maintained with a Depository Agent or the CPF investment account maintained

with a CPF agent bank.

10.4 Shares issued and allotted upon the vesting of an Award shall be subject to all the

provisions of the Memorandum and Articles of Association, and shall rank in full for all

entitlements, excluding dividends or other distributions declared or recommended in

respect of the then existing Shares, the Record Date for which falls on or before the

relevant vesting date of the Award, and shall in all other respects rank pari passu with

other existing Shares then in issue. “Record Date” means the date fixed by the Company

for the purposes of determining entitlements to dividends or other distributions to or

rights of holders of Shares.

APPENDIX H


H-10

10.5 The Company shall keep available sufficient unissued Shares to satisfy the delivery of

the Shares pursuant to the vesting of the Awards.

11. VARIATION OF CAPITAL

11.1 If a variation in the issued share capital of the Company (whether by way of a

capitalisation of profits or reserves or rights issue or reduction (including any reduction

arising by reason of the Company purchasing or acquiring its issued Shares),

subdivision, consolidation or distribution, or issues for cash or for shares or otherwise

howsoever) shall take place, then:

(a) the class and/or number of Shares which are the subject of an Award to the extent

not yet vested; and/or

(b) the class and/or number of Shares over which future Awards may be granted under

the Global Premium Hotels PSP,

may, at the option of the Committee, be adjusted in such manner as the Committee may

determine to be appropriate.

11.2 Unless the Committee considers an adjustment to be appropriate:

(a) the issue of securities as consideration for an acquisition or a private placement of

securities; or

(b) the cancellation of issued Shares purchased or acquired by the Company by way of

a market purchase of such Shares undertaken by the Company on the SGX-ST

during the period when a share purchase mandate granted by Shareholders

(including any renewal of such mandate) is in force,

shall not normally be regarded as a circumstance requiring adjustment.

11.3 Notwithstanding the provisions of Rule 11.1:

(a) no such adjustment shall be made if as a result, the Participant receives a benefit

that a Shareholder does not receive; and

(b) any determination by the Committee as to whether to make any adjustment and if

so, the manner in which such adjustment should be made, must (except in relation

to a capitalisation issue) be confirmed in writing by the Auditors (acting only as

experts and not as arbitrators) to be in their opinion, fair and reasonable.

11.4 Any increase in the issued share capital of the Company as a consequence of the

delivery of Shares pursuant to the vesting of Awards from time to time by the Company

or through any other share-based incentive schemes implemented by the Company will

also not be regarded as a circumstance requiring adjustment.

APPENDIX H


H-11

11.5 Upon any adjustment required to be made pursuant to this Rule 11, the Company shall

notify the Participant (or his duly appointed personal representatives where applicable)

in writing and deliver to him (or his duly appointed personal representatives where

applicable) a statement setting forth the class and/or number of Shares thereafter to be

issued pursuant to the grant of an Award. Any adjustment shall take effect upon such

written notification being given.

12. ADMINISTRATION OF THE GLOBAL PREMIUM HOTELS PSP

12.1 The Global Premium Hotels PSP shall be administered by the Committee duly

authorised and appointed by the Board, in its absolute discretion with such powers and

duties as are conferred on it by the Board, provided that no member of the Committee

shall participate in any deliberation or decision in respect of Awards granted or to be

granted to him.

12.2 The Committee shall have the power, from time to time, to make and vary such rules (not

being inconsistent with the Global Premium Hotels PSP) for the implementation and

administration of the Global Premium Hotels PSP as they think fit including, but not

limited to:

(a) imposing restrictions on the number of Awards that may be vested within each FY;

and

(b) amending Performance Targets if, by so doing, it would be a fairer measure of

performance for a Participant or for the Global Premium Hotels PSP as a whole.

12.3 Any decision of the Committee made pursuant to any provision of the Global Premium

Hotels PSP (other than a matter to be certified by the Auditors) shall be final and binding,

including but not limited to any decision pertaining to the number of Shares to be vested,

or to disputes as to the interpretation of the Global Premium Hotels PSP or any rule,

regulation, procedure thereunder or as to any right under the Global Premium Hotels

PSP.

13. NOTICES AND DISCLOSURE IN ANNUAL REPORT

The following disclosures (as applicable) will be made by the Company in its annual

report for so long as the Global Premium Hotels PSP continues in operation:

(a) the names of the members of the Committee;

(b) in respect of the following Participants:

(i) Participants who are Directors of the Company; and

(ii) Participants, other than those in (i) above, who have received 5% or more of the

total number of Shares available under the Global Premium Hotels PSP;

the following information:

APPENDIX H


H-12

(aa) the name of the Participant; and

(bb) the following particulars relating to the Awards released under the Global

Premium Hotels PSP: (A) the number of Award Shares issued to such

Participant during the FY under review; (B) the number of existing Shares

transferred to such Participant during the FY under review; (C) the number of

Award Shares issued to such Participant since the commencement of the

Global Premium Hotels PSP to the end of the FY under review; and (D) the

number of existing Shares transferred to such Participant since the

commencement of the Global Premium Hotels PSP to the end of the FY under

review.

(c) in relation to the Global Premium Hotels PSP the following particulars:

(i) the aggregate number of Shares comprised in Awards granted since the

commencement of the Global Premium Hotels PSP to the end of the financial

year under review;

(ii) the aggregate number of Shares comprised in Awards which have vested

during the financial year under review; and

(iii) the aggregate number of Shares comprised in Awards which have not been

released as at the end of the financial year under review; and

(d) An appropriate negative statement will be included in the annual report in respect of

the requirements in Rule 852(1) of the Listing Manual that are not applicable.

14. MODIFICATIONS AND ALTERATIONS OF THE GLOBAL PREMIUM HOTELS PSP

14.1 Any or all the provisions of the Global Premium Hotels PSP may be modified and/or

altered at any time and from time to time by resolution of the Committee, except that:

(a) any modification or alteration which would be to the advantage of the holders of the

Awards shall be subject to the prior approval of Shareholders in a general meeting;

and

(b) no modification or alteration shall be made without the prior approval of the SGX-ST

and such other regulatory authorities as may be necessary.

14.2 However, no modification or alteration shall adversely affect the rights attached to

Awards granted prior to such modification or alteration except with the written consent of

such number of participants who, if their Awards were released to them, would thereby

become entitled to not less than three quarters in number of all the Shares which would

be issued or delivered, as the case may be, upon the release in full of all outstanding

Awards under the Global Premium Hotels PSP.

APPENDIX H


H-13

14.3 The Committee may at any time by resolution (and without other formality, save for the

prior approval of the SGX-ST) modify or alter the rules or provisions of the Global

Premium Hotels PSP in any way to the extent necessary to cause the Global Premium

Hotels PSP to comply with any statutory provision or the provision or the regulations of

any regulatory or other relevant authority or body (including the SGX-ST).

14.4 Written notice of anymodification or alterationmade in accordance with this Rule 14 shall

be given to all Participants.

15. TERMS OF EMPLOYMENT UNAFFECTED

The Global Premium Hotels PSP or any Award shall not form part of any contract of

employment between the Company or any subsidiary (as the case may be) and any

Participant and the rights and obligations of any individual under the terms of office or

employment with such company within the Group shall not be affected by his

participation in the Global Premium Hotels PSP or any right which he may have to

participate in it or any Award which he may hold and the Global Premium Hotels PSP or

any Award shall afford such an individual no additional rights to compensation or

damages in consequence of the termination of such office or employment for any reason

whatsoever.

16. DURATION OF THE GLOBAL PREMIUM HOTELS PSP

16.1 The Global Premium Hotels PSP shall continue to be in force at the discretion of the

Committee, subject to a maximum period of ten (10) years from the date the Global

Premium Hotels PSP is adopted by the Company in a general meeting, provided always

that the Global Premium Hotels PSP may continue beyond the above stipulated period

with the approval of Shareholders by ordinary resolution in a general meeting and of any

relevant authority which may then be required.

16.2 The termination of the Global Premium Hotels PSP shall not affect (including potential

vesting) any Award(s) which have been made to the Participants.

16.3 The Global Premium Hotels PSP may be terminated at any time by the Committee or by

resolution of the Company in a general meeting subject to all relevant approvals which

may be required and if the Global Premium Hotels PSP is so terminated, no further

Awards shall be made by the Company thereunder.

17. TAXES

All taxes (including income tax) arising from the grant and/or disposal of Shares pursuant

to the Awards granted to any Participant under the Global Premium Hotels PSP shall be

borne by that Participant.

APPENDIX H


H-14

18. COSTS AND EXPENSES

18.1 Each Participant shall be responsible for all fees of CDP (if any) relating to or in

connection with the issue and allotment of any Shares pursuant to the Awards in CDP’s

name, the deposit of share certificate(s) with CDP, the Participant’s securities account

with CDP, or the Participant’s securities sub-account with a CDP Depository Agent or

CPF investment account with a CPF agent bank and all taxes referred to in Rule 17 which

shall be payable by the relevant Participant.

18.2 Save for the taxes referred to in Rule 17 and such other costs and expenses expressly

provided in the Global Premium Hotels PSP to be payable by the Participants, all fees,

costs and expenses incurred by the Company in relation to the Global Premium Hotels

PSP including but not limited to the fees, costs and expenses relating to the allotment,

issue and/or delivery of Shares pursuant to the Awards shall be borne by the Company.

19. DISCLAIMER OF LIABILITY

Notwithstanding any provision herein contained, the Board, the Committee and the

Company shall not under any circumstances be held liable for any costs, losses,

expenses and damages whatsoever and howsoever arising in any event, including but

not limited to the Company’s delay in issuing the Shares or applying for or procuring the

listing of the Shares on the SGX-ST in accordance with Rule 10.2.

20. DISPUTES

Any dispute or differences of any nature arising hereunder shall be referred to the

Committee and its decision shall be final and binding in all respects.

21. CONDITION OF AWARDS

Every Award shall be subject to the condition that no Shares would be issued pursuant

to the vesting of any Award(s) if such issue would be contrary to any law or enactment,

or any rules or regulations of any legislative or non-legislative governing body for the time

being in force in Singapore or any other relevant country having jurisdiction in relation to

the issue of Shares hereto.

22. ABSTENTION FROM VOTING

Shareholders who are eligible to participate in the Global Premium Hotels PSP shall

abstain from voting on any resolution(s) relating to the Global Premium Hotels PSP.

23. GOVERNING LAW

The Global Premium Hotels PSP shall be governed by, and construed in accordance

with, the laws of the Republic of Singapore. The Participants, by accepting Awards in

accordance with the Global Premium Hotels PSP, and the Company irrevocably submit

to the exclusive jurisdiction of the courts of the Republic of Singapore.

APPENDIX H


H-15

I-1

APPENDIX IVALUER’S REPORT

I-2


I-3


I-4


VALUATION CERTIFICATE

Address of Property : THE FRAGRANCE HOTEL219 Joo Chiat RoadSingapore 427485

Our Reference : 2011/210(A)

Legal Description : Lot 9276L Mukim 26

Tenure : Freehold

Registered Owner : Fragrance Ventures Pte Ltd

Brief Description : The subject property comprises a 4-storey hotel with attic accommodating 90 guest rooms.

It is located on the north-eastern side of Joo Chiat Road, between Joo Chiat Place and Koon Seng Road, and approximately 8.5 km from the City Centre.

Site Area : 672.1 sqm or thereabouts

Gross Floor Area : Approximately 2,104.5 sqm (as provided and subject to final survey)

Year of Completion : Circa 2001 & 2009

Condition : Good

Basis of Valuation : As-Is basis, subject to vacant possession and free from all encumbrances

Methods of Valuation : Direct Comparison Method/ Investment Method

Date of Valuation : 31 October 2011

Market Value : S$27,000,000/-(Singapore Dollars Twenty-Seven Million Only)

Colliers International Consultancy & Valuation (Singapore) Pte Ltd

DA/CN/ctThis valuation certificate is subject to the attached Limiting Conditions.

I-5



Address of Property : FRAGRANCE HOTEL - EMERALD 20 Lorong 6 Geylang Singapore 399174

Our Reference : 2011/210 (B)

Legal Description : Lot 5535M Mukim 25

Tenure : Freehold

Registered Owner : Fragrance Capital Pte Ltd

Brief Description : The subject property comprises a 8-storey hotel with 126 guest rooms.

It is located on the western side of Lorong 6 Geylang, off Geylang Road, and approximately 6 km from the City Centre.



Year of Completion : Circa 1998

Condition : Good




Market Value : S$36,540,000/- (Singapore Dollars Thirty-Six Million Five Hundred And Forty Thousand Only)


TT/CN/ha

This valuation certificate is subject to the attached Limiting Conditions

I-6



Address of Property : FRAGRANCE HOTEL - SAPPHIRE 3 Lorong 10 Geylang Singapore 399037

Our Reference : 2011/210 (C)

Legal Description : Lot 4997W Mukim 25

Tenure : Freehold



It is located on the eastern side of Lorong 10 Geylang, between its junction with Talma Road and Geylang Road, and approximately 6 km from the City Centre.


Gross Floor Area : Approximately 1,524 sqm (as provided and subject to final survey)


Condition : Good




Market Value : S$16,900,000/- (Singapore Dollars Sixteen Million And Nine Hundred Thousand Only)


TT/CN/ha

This valuation certificate is subject to the attached Limiting Conditions.

I-7



Address of Property : FRAGRANCE HOTEL - PEARL 21 Lorong 14 Geylang Singapore 398961

Our Reference : 2011/210 (D)

Legal Description : Lot 6181X Mukim 25

Tenure : Freehold


Brief Description : The subject property comprises an 8-storey hotel with 129 guest rooms.

It is located on the eastern side of Lorong 14 Geylang, off Geylang Road, near to its junction with Talma Road and approximately 5.5 km from the City Centre.




Condition : Good




Market Value : S$37,410,000/- (Singapore Dollars Thirty-Seven Million Four Hundred And Ten Thousand Only)


TT/CN/ha


I-8



Address of Property : FRAGRANCE HOTEL - CRYSTAL 50 Lorong 18 Geylang Singapore 398824

Our Reference : 2011/210 (E)

Legal Description : Lot 5438K Mukim 25

Tenure : Freehold


Brief Description : The subject property comprises a part 4-/ part 8-storey hotel with 125 guest rooms.

It is located on the western side of Lorong 18 Geylang, between its junction with Westerhout Road and Guillemard Road, and approximately 5.5 km from the City Centre.

Site Area : 1,051.1 sqm or thereabouts



Condition : Good




Market Value : S$36,250,000/- (Singapore Dollars Thirty-Six Million Two Hundred And Fifty Thousand Only)


TT/CN/ha


I-9



Address of Property : FRAGRANCE HOTEL - RUBY 10 Lorong 20 Geylang Singapore 398730

Our Reference : 2011/210 (F)

Legal Description : Lot 5450W Mukim 25

Tenure : Freehold

Registered Owner : Fragrance Investment Pte Ltd

Brief Description : The subject property comprises an 8-storey hotel with 168 guest rooms.

It is located on the western side of Lorong 20 Geylang, near to its junction with Geylang Road, and approximately 6 km from the City Centre.




Condition : Good




Market Value : S$48,720,000/- (Singapore Dollars Forty-Eight Million Seven Hundred And Twenty Thousand Only)


TT/CN/haThis valuation certificate is subject to the attached Limiting Conditions.

I-10



Address of Property : FRAGRANCE HOTEL - SUNFLOWER 10 Lorong 10 Geylang Singapore 399043

Our Reference : 2011/210 (G)

Legal Description : Lot 5603N Mukim 25

Tenure : Freehold



It is located on the western side of Lorong 10 Geylang, off Geylang Road, and approximately 6 km from the City Centre.


Gross Floor Area : Approximately 733 sqm (as provided and subject to final survey)


Condition : Good




Market Value : S$8,370,000/- (Singapore Dollars Eight Million Three Hundred And Seventy Thousand Only)


TT/CN/ha


I-11



Address of Property : FRAGRANCE HOTEL- LAVENDER 51 Lavender Street Singapore 338710

Our Reference : 2011/210(H)

Legal Description : Lots 2667L & 2668C Town Subdivision 17

Tenure : Freehold


Brief Description : The subject property is a 6-storey budget hotel with 35 guest rooms

It is located on the western side of Lavender Street at its junction with Penhas Road, off Lavender Street, and approximately 4 km from the City Centre.




Condition : Good




Market Value : S$17,500,000/- (Singapore Dollars Seventeen Million And Five Hundred Thousand Only)


JL/CN/tcThis valuation certificate is subject to the attached Limiting Conditions

I-12



Address of Property : FRAGRANCE HOTEL- IMPERIAL 28 Penhas Road Singapore 208187

Our Reference : 2011/210(I)

Legal Description : Lot 2657V Town Subdivision 17

Tenure : Freehold


Brief Description : The subject property is a 4-storey hotel with 74 guest rooms comprising a cafe and a shop on the 1st storey.

It is located on the north-western side of Penhas Road, off Kallang Road/ Lavender Street, and approximately 4 km from the City Centre.

Site Area : 544 sqm or thereabouts



Condition : Good




Market Value : S$37,000,000/- (Singapore Dollars Thirty-Seven Million Only)



I-13



Address of Property : FRAGRANCE HOTEL - BALESTIER 255 Balestier RoadSingapore 329710

Our Reference : 2011/210(J)

Legal Description : Lot 914T Town Subdivision 29

Tenure : Freehold


Brief Description : The subject property comprises a 4-storey hotel with attic, accommodating 48 guest rooms.

It is located on the western side of Balestier Road, near to its junction with Ava Road, and approximately 6 km from the City Centre.




Condition : Good




Market Value : S$23,000,000/-(Singapore Dollars Twenty-Three Million Only)


DA/CN/ct


I-14



Address of Property : FRAGRANCE HOTEL - ROSE 263 Balestier RoadSingapore 329715

Our Reference : 2011/210(K)

Legal Description : Lot 919L Town Subdivision 29

Tenure : Freehold


Brief Description : The subject property comprises a part 2/part 6-storey hotel with 68 guest rooms.

It is located on the western side of Balestier Road, near to its junction with Ava Road and approximately 6 km from the City Centre.


Gross Floor Area : Approximately 1,179.2 sqm (as extracted from floor plans prepared by Architects Associates)


Condition : Good




Market Value : S$31,300,000/-(Singapore Dollars Thirty-One Million And Three Hundred Thousand Only)


DA/CN/ct


I-15



Address of Property : FRAGRANCE HOTEL - OASIS 435 Balestier Road Singapore 329816

Our Reference : 2011/210(L)

Legal Description : Lot 975P Town Subdivision 29

Tenure : Estate In Fee Simple


Brief Description : The subject property comprises a part 2-/part 6-storey hotel with 36 guest rooms.

It is located on the south-western side of Balestier Road, between Shan Road and Prome Road, and approximately 6.5 km from the City Centre.


Gross Floor Area : Approximately 687.4 sqm (as extracted from H.U.A.Y Architects drawings)


Condition : Good




Market Value : S$15,000,000/-(Singapore Dollars Fifteen Million Only)


DA/CN/ct


I-16



Address of Property : FRAGRANCE HOTEL - CLASSIC 418 Balestier RoadSingapore 329808

Our Reference : 2011/210(M)

Legal Description : Lot 9245N Mukim 17

Tenure : Freehold


Brief Description : The subject property comprises a part 2/part 6-storey hotel with 48 guest rooms and a convenience store.

It is located on the north-eastern side of Balestier Road, between Boon Teck Road and Jalan Kemaman, and approximately 6.5 km from the City Centre.


Gross Floor Area : Approximately 840.9 sqm (as provided and subject to final survey)


Condition : Good




Market Value : S$23,800,000/-(Singapore Dollars Twenty-Three Million And Eight Hundred Thousand Only)


DA/CN/ct


I-17



Address of Property : FRAGRANCE HOTEL - SELEGIE 183 Selegie Road Singapore 188329

Our Reference : 2011/210(N)

Legal Description : Lot 666P Town Subdivision 19

Tenure : Freehold


Brief Description : Subject property is a part 2-/part 10-storey hotel with rear extension comprising a total of 120 guest rooms. There are 4 shops on the 1st

storey and a café on the 2nd storey. A roof top swimming pool is located on the 10th storey.

It is located on the western side of Selegie Road, near its junction with Mackenzie Road, and approximately 3 km from the City Centre. The Little India MRT Station is just a few minutes’ walk away.




Condition : Good

Basis of Valuation : As Is Basis, subject to vacant possession and free from all encumbrances



Market Value : S$60,000,000/- (Singapore Dollars Sixty Million Only)


CN/CYC/ctThis valuation certificate is subject to the attached Limiting Conditions

I-18



Address of Property : FRAGRANCE HOTEL - BUGIS 33 Middle Road Singapore 188942

Our Reference : 2011/210(O)

Legal Description : Lot 533N Town Subdivision 11

Tenure : Leasehold 999 years commencing from 30 January 1835


Brief Description : Subject property is a 5-storey hotel with 80 guest rooms comprising a shopand a restaurant on the 1st storey.

It is located on the south-western side of Middle Road, between Beach Road and North Bridge Road, and approximately 2.5 km from the City Centre. The Bugis MRT Station is just a few minutes’ walk away.




Condition : Good

Basis of Valuation : As Is Basis, subject to vacant possession and free from all encumbrances



Market Value : S$44,000,000/- (Singapore Dollars Forty-Four Million Only)


CN/CYC/ct


I-19



Address of Property : FRAGRANCE HOTEL - VIVA 75 Wishart RoadSingapore 098721

Our Reference : 2011/210 (P)

Legal Description : Lot 3680C Mukim 1

Tenure : Freehold


Brief Description : Subject property is a 2-storey with attic budget hotel comprising 33 guest rooms located at the foot of Mount Faber Park.

It is sited at the south-western junction of Wishart Road and Morse Road, off Telok Blangah Road and approximately 6 km from the City Centre.




Condition : Good




Market Value : S$20,000,000/- (Singapore Dollars Twenty Million Only)


DN/CN/ds


I-20



Address of Property : FRAGRANCE HOTEL- KOVAN 760 Upper Serangoon Road Singapore 534629

Our Reference : 2011/210(Q)

Legal Description : Lots 99873K & 99874N Mukim 22

Tenure : Freehold


Brief Description : The subject property is a 4-storey hotel with 43 guest rooms and a shop on the 1st storey.

It is located on the south-eastern side of Upper Serangoon Road, near its junction with Kampong Sireh and approximately 10 km from the City Centre.




Condition : Good




Market Value : S$20,000,000/- (Singapore Dollars Twenty Million Only)



I-21



Address of Property : FRAGRANCE HOTEL - WATERFRONT 418 Pasir Panjang RoadSingapore 118759

Our Reference : 2011/210 (R)

Legal Description : Lot 4580V Mukim 3

Tenure : Freehold


Brief Description : Subject property is a 4-storey with attic budget hotel comprising 57 guest rooms and a shop on the 1st storey.

It is located on the north-eastern side of Pasir Panjang Road, near its junction with Clementi Road, and approximately 11 km from the City Centre.




Condition : Good




Market Value : S$33,000,000/- (Singapore Dollars Thirty-Three Million Only)


DN/CN/ds


I-22



Address of Property : FRAGRANCE HOTEL - OCEAN VIEW 432 Pasir Panjang RoadSingapore 118773

Our Reference : 2011/210 (S)

Legal Description : Lot 4664M Mukim 3

Tenure : Freehold


Brief Description : Subject property is a 4-storey with attic budget hotel comprising 47 guest rooms located on the north-eastern side of Pasir Panjang Road, near its junction with Clementi Road, and approximately 11 km from the City Centre.




Condition : Good




Market Value : S$26,800,000/- (Singapore Dollars Twenty-Six Million And Eight Hundred Thousand Only)


DN/CN/ds


I-23



Address of Property : FRAGRANCE HOTEL - ROYAL 400 Telok Blangah RoadSingapore 098838

Our Reference : 2011/210 (T)

Legal Description : Lot 3865K Mukim 1

Tenure : Freehold


Brief Description : Subject property is a 3-storey with attic budget hotel comprising 32 guest rooms, comprising a shop on the 1st storey.

It is situated on the north-western side of Morse Road, off Telok Blangah Road and approximately 6 km from the City Centre.


Floor Area : Approximately 656.3 sqm (as provided and subject to final survey)


Condition : Good




Market Value : S$18,400,000/- (Singapore Dollars Eighteen Million And Four Hundred Thousand Only)


DN/CN/ds


I-24



Address of Property : PARC SOVEREIGN HOTEL 175 Albert Street Singapore 189970

Our Reference : 2011/210(U)

Legal Description : Lot 1004W Town Subdivision 12

Tenure : Leasehold interest for 99-years commencing from 14 September 2009

Registered Owner : Fragrance Assets Pte Ltd

Brief Description : Subject property is a newly completed 10-storey hotel with 170 guest rooms comprising a restaurant and a shop on the 1st storey, carpark on the 2nd and 3rd storeys, and swimming pool, gymnasium and sauna on the 4th

storey.

It is located on the north-western side of Short Street, at its junction with Albert Street, off Selegie Road/ Rochor Road, and approximately 3 km from the City Centre.

Site Area : 1,164.6 sqm or thereabouts, subject to government’s re-survey

Gross Floor Area : Approximately 4,074.8 sqm (as extracted from H.U.A.Y Architects’ drawings provided, subject to final survey)

Year of Completion : Temporary Occupation Permit was issued in January 2011.

Condition : Good




Market Value : S$108,000,000/- (Singapore Dollars One Hundred And Eight Million Only)


CN/CYC/ct




Address of Property : FRAGRANCE HOTEL - RIVERSIDE 20 Hong Kong Street Singapore 059663

Our Reference : 2011/210(V)

Legal Description : Lots 99797C, 99803K and 99799W Town Subdivision 7

Tenure : Leasehold interest for 99-years commencing from 1 May 1951 (No. 20), 26 November 1928 (No. 21), and 7 October 1929 (No. 22)

We understand that a fresh 99-year lease will be issued soon.


Brief Description : Subject property is a proposed part 4-/ part 6-storey hotel with 101 guest rooms comprising a restaurant and a shop on the 1st storey. Mechanical carpark system and swimming pool will be provided.

It is located on the northern side of Hong Kong Street, near New Bridge Road junction, and approximately 2 km from the City Centre. The Clarke Quay MRT Station is just a few minutes’ walk away.

Site Area : 513.3 sqm or thereabouts, subject to government’s re-survey


Year of Completion : Temporary Occupation Permit is expected to issue by November 2011.

Condition : At its final stage of construction

Basis of Valuation : Upon completion basis, subject to vacant possession and free from all encumbrances, and payment of differential premium



Market Value : S$58,600,000/- (Singapore Dollars Fifty-Eight Million And Six Hundred Thousand Only) Subject To Satisfactory Completion And Issuance Of Temporary Occupation Permit And Certificate Of Statutory Completion


CN/CYC/ct


I-25


● Developing and operating hotels in Singapore since 1995 ● Established track record and reputation of providing affordable and value-for-money accommodation in terms of price, location, service and

cleanliness ● Well-recognised brand name in the local and regional hospitality industry


● Experienced hands-on management team with in-depth knowledge of hotel operations and hotel property development, and strong understanding of the local hospitality and property market


● Hotel rooms have been furnished with essential amenities to provide guests with comfortable stay at affordable prices● Hotel staff are trained in-house to maintain consistent level of service to guests● Hotels are strategically located either in the city or city-fringe areas and are easily accessible by major roads, public buses and the MRT

Active development and management of hospitality-related assets to provide value accretion to existing portfolio of hotels

● Successfully developed 20 hotels, renovated 4 hotels after acquisition and converted 3 buildings to hotels as at the Latest Practicable Date*

● Wide network of contacts and long-standing relationships with professionals, consultants, builders, agents and suppliers allows better control over the construction or renovations of hotels in terms of costs and downtime

● As hotel developer and operator, the Group has:

• Necessary know-how to optimise the design and type of rooms as well as the repair and maintenance of hotels • Ability to identify opportune time to upgrade and refurbish hotel portfolio • Ability to better pinpoint new sites for development of hotels

(Rooms) (Hotels)

2006 2007 2008 2009 2010 2011

1,034 1,212 1,316 1,356 1,436 1,738

Total Number of Rooms and Hotels in Operation

Number of rooms islandwide Number of hotels in operation

1217

1819 20

23Hotels 2006-2011 CAGR: 13.9%

Freehold



1-5 years

6-10 years

11-15 years

Regular promotional tie-ups with business partners and active participation in tourism trade conventions and exhibitions

● Good working relationship with more than 900 local and overseas travel agents to promote hotels worldwide ● Work closely with various on-line travel agents such as Booking.com, AsiaTravel.com and Agoda.com, to promote hotels through various on-line

channels● Entered into contractual arrangements with corporate clients such as shipping companies for the provision of accommodation to their staff and

crew while in Singapore ● Participate in tourism trade conventions and exhibitions in the Asia-Pacifi c region and overseas road shows, consumer fairs and product updates

organised by the Singapore Tourism Board● Advertise in trade magazines which are circulated within the tourism industry in the Asia-Pacifi c region as well as in newspapers, television, buses

and cinemas

Integrated Property Management System allows better management of hotel operations

● Centrally manage all 23 hotels island-wide to maximise hotel occupancy rates and reduce the manpower required for manual updates

Established relationships with suppliers allows better leverage on economies of scale

● Bulk purchase of hotel room supplies and daily necessities centrally, coupled with good relationship with our suppliers, allow us to obtain supplies and daily necessities on favourable terms, reduce operating costs and ensure consistency and quality standards

0

5

10

15

20

25

0

200

400

600

800

1000

1200

1400

1600

18002000

Rooms 2006-2011 CAGR: 10.8%

19

12

4

118

* As at Latest Practicable Date being 16 March 2012

Hotels Owned Categorised by Lease Tenure

All Hotels Categorisedby Years of Operations

32.0 29.7 39.1 28.4 34.4

Gross Profi t MarginGross Profi t

86.7% 85.9%88.3%

88.0% 88.3%

Gross Profi t and Gross Profi t Margin

FY2008 FY2009 FY2010 9M2010 9M2011

Net Profi t and Net Profi t Margin

(S$million)

Net Profi t MarginNet Profi t

16.1 13.5 19.9 14.5 17.3

43.7%39.1%

44.9% 44.9% 44.5%

FY2008 FY2009 FY2010 9M2010 9M2011

(S$million)(S$million)

Revenue

(%)(%)

36.9 34.6 44.2 32.3 38.9

45

40

35

30

25

20

15

10

5

0

40

35

30

25

20

15

10

5

0

90

85

80

75

70

20

15

10

5

0

60

50

40

30

20

10

0FY2008 FY2009 FY2010 9M2010 9M2011


168 Changi Road #04-01 Fragrance Building Singapore 419730Tel: +65 6348 7888 Fax: +65 6345 5951

REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 18 APRIL 2012This document is important. If you are in any doubt as to the action you should take, you should consult your legal, fi nancial, tax, or other professional adviser.

We have applied to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in and for quotation of all our ordinary shares (the “Shares”) in the capital of Global Premium Hotels Limited (the “Company”) already issued, the New Shares (as defi ned herein) which are the subject of this Invitation (as defi ned herein), the new Shares which may be issued upon the exercise of the Over-allotment Option (as defi ned herein) (the “Over-allotment Shares”) and the shares which may be issued upon the vesting of the Awards granted pursuant to the Global Premium Hotels PSP (as defi ned herein) (the “Award Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the Main Board of the SGX-ST. The dealing in and quotation of our Shares will be in Singapore dollars.

Acceptance of applications for the New Shares will be conditional upon, inter alia, the issue of the New Shares and permission being granted to deal in and for quotation of all of our existing issued Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised) and the Award Shares. If completion of the Invitation does not occur because permission is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk, without interest or any share of revenue or other benefi t arising therefrom, and you will not have any claim against us, the Issue Manager, the Underwriter or the Placement Agent (as defi ned herein).

The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our Subsidiaries, our existing issued Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised) or the Award Shares.

In connection with the Invitation, we have granted to the Issue Manager the Over-allotment Option exercisable in whole or in part for up to 67,500,000 Over-allotment Shares, representing not more than 15% of the New Shares, within 30 days from the date of commencement of dealing of our Shares on the SGX-ST, at the Issue Price, solely for the purpose of covering over-allotments (if any) made in connection with the Invitation. The Stabilising Manager may over-allot and/or effect transactions that may stabilise or maintain the market prices of our Shares at levels which may not otherwise prevail in the open market, subject to compliance with all applicable laws and regulations. Such stabilisation activities, if commenced, may be discontinued by Stabilising Manager at any time at its discretion, subject

to compliance with all applicable laws and regulations. The total number of issued Shares immediately after the completion of the Invitation (and prior to the exercise of the Over-allotment Option) will be 1,000,000,000 Shares. If the Over-allotment Option is exercised in full, the total number of issued Shares immediately after completion of the Invitation will increase by 67,500,000 Shares.

A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”) on 26 March 2012 and 18 April 2012 respectively. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our existing issued Shares, the New Shares, the Over-allotment Shares (if the Over-allotment Option is exercised) and the Award Shares, as the case may be, being offered for investment. We have not lodged or registered this Prospectus in any other jurisdiction.

No Shares shall be allotted on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority.

Investing in our shares involves risks which are described in the section entitled “Risk Factors” of this Prospectus.

Global Premium Hotels Limited(Incorporated in the Republic of Singapore on 19 September 2011)

(Company Registration Number 201128650E)Invitation in respect of 450,000,000 New Shares (subject to the Over-allotment Option) comprising:–(a) 13,000,000 Public Offer Shares at $0.26 each by way of Public

Offer; and(b) 437,000,000 Placement Shares at $0.26 each by way of

Placement,payable in full on application.

Issue Manager, Underwriter and Placement Agent

Applications should be received by 12:00 noon on 24 April 2012 or such further period or periods as our Directors may, in consultation with the Issue Manager, in their absolute discretion, decide, subject to any limitations under all applicable laws.

Type of Hotel Economy-tier hotel Mid-tier hotel

Target Customer Value-conscious customers Business/up-market travellers

Amenities and Services Basic amenities Enhanced services and amenities

Room Rates* Room rates range from S$54.21 to S$157.01 Room rates range from S$139.04 to S$261.80

Fragrance Hotels


We operate one of Singapore’s largest chains of hotels with 23 hotels, of which 22 are operated under our “Fragrance” brand and one hotel under the “Parc Sovereign” brand. We provide economy-tier and mid-tier class of accommodation with 1,738 rooms in Singapore*. We own all our hotels save for Fragrance Hotel – Elegance. As at 31 October 2011, the market value of all the 22 hotels which we own amounted to S$747.6 million.

We are principally engaged in the business of developing and operating economy-tier to mid-tier class hotels. Our established track record and reputation of providing affordable accommodation has led to our “Fragrance” brand of hotels becoming well-recognised in the local and regional hospitality industry. Most of our hotel property assets and hotel operations are strategically located in the city or city-fringe areas.

* As at Latest Practicable Date being16 March 2012

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*Daily room rates (excluding GST) as at Latest Practicable Date, being 16 March 2012