registered by the monetary authority of singapore

Transcription

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 wellrecognised 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
REGISTERED BY THE MONETARY AUTHORITY
OF SINGAPORE ON 18 APRIL 2012
This document is important. If you are in any doubt as to the action
you should take, you should consult your legal, financial, 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 defined herein) which
are the subject of this Invitation (as defined herein), the new Shares which
may be issued upon the exercise of the Over-allotment Option (as defined
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 defined herein) (the “Award Shares”). Such permission will
be granted when we have been admitted to the Official 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 benefit
arising therefrom, and you will not have any claim against us, the Issue
Manager, the Underwriter or the Placement Agent (as defined herein).
GLOBAL PREMIUM HOTELS LIMITED
168 Changi Road #04-01 Fragrance Building Singapore 419730
Tel: +65 6348 7888 Fax: +65 6345 5951
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) or the Award Shares.
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
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)
Fragrance Hotels
Parc Sovereign Hotel
Invitation in respect of 450,000,000 New Shares (subject to the Overallotment Option) comprising:–
(a)
13,000,000 Public Offer Shares at $0.26 each by way of Public
Offer; and
(b)
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 overallotments (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
22
1
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$157.01
*Daily room rates (excluding GST) as at Latest Practicable Date, being 16 March 2012
Singapore dollars.
Tel: +65 6348 7888 Fax: +65 6345 5951
by 67,500,000 Shares.
Fragrance Hotels
(a)
Offer; and
(b)
22
1
Placement,
Type of Hotel
Economy-tier hotel
Mid-tier hotel
Target Customer
Basic amenities
Room Rates*
Total Number of Rooms and Hotels in Operation
(Rooms)
2000
1800
1600
1400
1200
1000
800
600
400
200
0
R: 13.9%
-2011 CAG
Hotels 2006
18
19
23
Hotels Owned Categorised
by Lease Tenure
(Hotels)
25
All Hotels Categorised
by Years of Operations
20
20
2
(S$million)
17
12
Rooms 2006-2011
1,034
1,212
1,316
15
CAGR: 10.8%
1,356
1,436
1,738
8
11
40
40
35
35
5
2006
2007
2008
2009
2010
2011
19
4
0
Number of hotels in operation
Freehold
1-5 years
Leasehold (999 years)
6-10 years
11-15 years
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
85.9%
Net Profit and Net Profit Margin
(S$million)
(%)
88.0%
88.3%
90
20
85
15
(%)
60
43.7%
44.9%
39.1%
44.9% 44.5%
20
36.9
34.6
44.2
32.3
38.9
20
15
15
10
10
5
5
0
FY2008
FY2009
FY2010
9M2010
9M2011
0
32.0
29.7
39.1
28.4
34.4
80
10
75
5
16.1
13.5
50
40
25
19.9
14.5
17.3
30
20
10
70
FY2008
FY2009
Gross Profit
FY2010
9M2010
9M2011
Gross Profit Margin
0
FY2008
FY2009
Net Profit
FY2010
9M2010
9M2011
0
Net Profit Margin
Regular promotional tie-ups with business partners and active participation in tourism trade
conventions and exhibitions
●
●
●
●
●
86.7%
88.3%
30
30
10
Established and distinctive brand name
●
(S$million)
45
25
Number of rooms islandwide
●
●
Gross Profit and Gross Profit Margin
Revenue
1
●
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-Pacific 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-Pacific 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
* As at Latest Practicable Date being 16 March 2012
(Rooms)
2000
1800
1600
1400
1200
1000
800
600
400
200
0
R: 13.9%
-2011 CAG
Hotels 2006
18
19
23
by Lease Tenure
(Hotels)
25
20
20
2
(S$million)
17
12
Rooms 2006-2011
1,034
1,212
1,316
15
CAGR: 10.8%
1,356
1,436
1,738
8
11
40
40
35
35
5
2006
2007
2008
2009
2010
2011
19
4
0
Freehold
1-5 years
6-10 years
11-15 years
cleanliness
●
●
●
●
●
●
Date*
•
•
•
85.9%
(S$million)
(%)
88.0%
88.3%
90
20
85
15
(%)
60
43.7%
44.9%
39.1%
44.9% 44.5%
20
36.9
34.6
44.2
32.3
38.9
20
15
15
10
10
5
5
0
FY2008
FY2009
FY2010
9M2010
9M2011
0
32.0
29.7
39.1
28.4
34.4
80
10
75
5
16.1
13.5
50
40
25
19.9
14.5
17.3
30
20
10
70
FY2008
FY2009
Gross Profit
FY2010
9M2010
9M2011
Gross Profit Margin
0
FY2008
FY2009
Net Profit
FY2010
9M2010
9M2011
0
Net Profit Margin
●
●
●
●
●
86.7%
88.3%
30
30
10
●
(S$million)
45
25
●
●
Revenue
1
●
channels
and cinemas
●
●
Singapore's Inbound Tourist Arrivals (2006-2015)
Incoming Tourism Receipts and Incoming Tourism Receipts from
Accommodation (2006-2015)
Tourist Arrivals (’000 trips)
Incoming Tourism Receipts ($ billions)
Tourist Arrivals Growth Rate
Incoming Tourism Receipts from Accommodation
(S$ billions)
19,399
19,643
20,372
20,976
21,472
21,869
32.0
30.4
28.5
26.4
15,755
15,759
24.0
15,773
14,635
19.3
23.0%
13.0
7.9%
13.0
7.7%
3.7%
3.0%
2.4%
1.9%
2012F
2013F
2014F
2015F
1.3%
2006
15.3
14.6
2007
0.0%
0.1%
2008
2009
2010
2011E
3.1
2.5
2006
2007
3.4
2008
2.7
2009
4.1
2010
5.6
6.0
6.4
6.7
5.0
2011E
2012F
2013F
2014F
2015F
Source: “Economy-tier Hotels in Singapore” report issued by Euromonitor International Ltd. dated 30 November 2011
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 (defined
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.
●
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 profit 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-Pacific 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 efficiency of electrical appliances and sanitary fittings, and to upgrade where economically feasible
Educate staff on energy conservation
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
Subscribe now through an ATM (defined herein) or IB website (defined herein) of one of the Participating Banks (defined herein) or on printed white application forms which forms part of the
Prospectus, in the manner set out in the Prospectus.
TABLE OF CONTENTS
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
1
TABLE OF CONTENTS
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 OPERATIONS
AND 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
2
TABLE OF CONTENTS
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 Controlling
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
3
TABLE OF CONTENTS
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
4
CORPORATE INFORMATION
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
5
CORPORATE INFORMATION
RECEIVING BANKER
:
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
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
6
DEFINITIONS
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”
:
“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.
“Fragrance Chain of
Hotels” or “Fragrance
Chain”
:
The chain of hotels under the “Fragrance” brand name,
comprising Fragrance Hotel-Sapphire, Fragrance HotelRuby, 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 HotelRiverside. 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
Our Hotels
Other Corporations and Organisations
“ASEAN”
:
The Association of Southeast Asian Nations
“BCA”
:
Building and Construction Authority of Singapore
7
DEFINITIONS
“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”
:
“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.
8
DEFINITIONS
“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
“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
General
9
DEFINITIONS
“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
“IB”
:
Internet banking
10
amended,
DEFINITIONS
“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
“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:
amended,
(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
11
DEFINITIONS
(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 nonhospitality 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
12
DEFINITIONS
“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
13
DEFINITIONS
“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 case may be, ending
30 September
“SGD” or “$” and “cents”
:
Singapore dollars and cents, respectively
“sq. ft.”
:
Square feet
“sq. m.”
:
Square metre
“%” or “per cent”
:
Percentage
Currencies, Units and
Others
14
DEFINITIONS
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.
15
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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
16
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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.
17
PROSPECTUS SUMMARY
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.
18
PROSPECTUS SUMMARY
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. Sim Mong 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.
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
19
PROSPECTUS SUMMARY
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
We plan 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.
20
PROSPECTUS SUMMARY
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.
21
PROSPECTUS SUMMARY
Selected Items from the Results of Operations of our Group
FY2008
Audited
FY2009
FY2010
($’000)
($’000)
($’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
196
221
280
264
203
344
308
—
—
—
—
—
—
Other operating
income
Loss on disposal of
property, plant
and equipment
Unaudited
Pro
9M2010
Forma
FY2010
($’000)
($’000)
(51)
Audited Unaudited
9M2011
Pro
Forma
($’000)
9M2011
($’000)
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.
22
PROSPECTUS SUMMARY
Selected Items From the Financial Position of our Group
Unaudited
Unaudited
Pro
Pro
Forma
Audited
Forma
as at 31
as at 30
as at 30
December September September
2010
2011
2011
Audited
as at 31
December
2008
Audited
as at 31
December
2009
Audited
as at 31
December
2010
($’000)
($’000)
($’000)
Cash and cash
equivalents
1,923
2,458
2,811
19,143
3,899
11,588
Trade receivables
1,216
985
1,274
1,274
1,511
1,511
Other receivables
15,473
11,149
5,982
46,019
47,443
15,608
—
23,820
26,846
—
—
—
18,612
38,412
36,913
66,436
52,853
28,707
Property, plant and
equipment
323,412
425,284
701,942
642,606
738,718
738,718
Total assets
342,024
463,696
738,855
709,042
791,571
767,425
Trade payables
1,223
1,236
1,188
1,188
1,194
1,194
Other payables
($’000)
($’000)
($’000)
Current assets
Properties under
development
Total current assets
Non-current assets
Current liabilities
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
37,319
61,778
63,504
170,547
47,486
120,344
98,996
134,832
150,448
443,035
108,838
443,035
3,760
4,751
23,815
19,528
26,447
26,447
102,756
139,583
174,263
462,563
135,285
469,482
27,100
27,100
27,100
137,500
27,100
137,500
157,779
213,654
451,552
427,344
511,459
—
—
—
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
Total current
liabilities
Non-current liabilities
Term loans
Deferred tax liability
Total non-current
liabilities
Capital and reserves
Share capital
Revaluation reserve
Merger reserve
Retained earnings
23
(530,900)
—
511,459
(530,900)
PROSPECTUS SUMMARY
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.
24
THE INVITATION
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 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, 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
25
THE INVITATION
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.
26
THE INVITATION
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
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)
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
27
THE INVITATION
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 New Shares and may 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:
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.
28
THE INVITATION
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.
29
THE INVITATION
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.
30
THE INVITATION
Invitation Statistics
$0.26
Issue Price
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
31
THE INVITATION
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.
32
THE INVITATION
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.
33
THE INVITATION
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.
34
THE INVITATION
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 Stabilising Manager 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
35
THE INVITATION
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
36
THE INVITATION
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).
THIS DOCUMENT IS FOR DISTRIBUTION IN HONG KONG ONLY TO PERSONS WHO ARE
“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
37
THE INVITATION
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
38
THE INVITATION
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.
39
USE OF PROCEEDS AND LISTING EXPENSES
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 $112.1
million.
We intend to use our gross proceeds from the issue of the New Shares primarily as follows:
Estimated
amount
($ 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
117.0
100
Purpose
Total
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 expenditures may vary from these estimates and we may 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.
40
USE OF PROCEEDS AND LISTING EXPENSES
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
(%)
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
Invitation Expenses(1)
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.
41
RISK FACTORS
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;
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RISK FACTORS
(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 these markets
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 a more 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 nonhospitality uses).
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RISK FACTORS
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, we may
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 deficiencies may 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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RISK FACTORS
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.
45
RISK FACTORS
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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RISK FACTORS
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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RISK FACTORS
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 various measures 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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RISK FACTORS
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 HotelLavender 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 HotelBalestier 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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RISK FACTORS
Increase in Singapore tourism receipts may 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 and manage 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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RISK FACTORS
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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RISK FACTORS
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
We maintain 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
52
RISK FACTORS
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 hospitalityrelated 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 hospitalityrelated 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
53
RISK FACTORS
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 FGL may 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
54
RISK FACTORS
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.
55
RISK FACTORS
New investors may experience dilution
We intend to grant our employees Award Shares under the Global Premium Hotels 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
We may 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
56
RISK FACTORS
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.
57
RISK FACTORS
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.
58
EXCHANGE CONTROLS
Exchange Controls
Singapore
Currently, no foreign exchange control restrictions exist in Singapore.
59
DIVIDEND POLICY
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.
60
CAPITALISATION AND INDEBTEDNESS
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)
17,323
58,882
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
Cash and Cash Equivalents
Indebtedness
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.
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
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 comprised mainly 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:
Description of
Credit Facility
Condition Making
Reference to
Shareholding
Interests of FGL
in our Company
Aggregate
Level of
Facilities
Borrowing
Subsidiary
Name of Bank
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
Term loan
20 years from
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”)
Term loan
20 years from
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
Tenor
63
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
CIMB Bank
Berhad
(“CIMB Bank”)
Revolving credit
facility
Until 31 March
2019 or 84
months from
the date of the
first drawing,
whichever is
earlier(1)
FGL to beneficially
own (either directly
or indirectly), 20%
of the entire issued
share capital of the
Company for as
long as the facility
remains
outstanding
$58.0 million
Fragrance
Ventures
OCBC Bank
Term loan
5 years from
1 February
2012
FGL to hold not
less than 20% of
the shares of the
Company until
Fragrance
Ventures has
repaid all
outstanding sums
owing under the
facility or until the
expiry of the loan
tenor of 5 years,
whichever is earlier
$155.0 million
Fragrance
Assets
DBS Bank
Term loan
60 months after
the drawdown
date(1)
FGL to maintain at
least 20%
shareholding in the
Company until
Fragrance Assets
has repaid all
outstanding sums
owing under the
facility
$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
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 preInvitation 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
26.0
Issue Price
Unaudited pro forma NAV 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.
65
INDUSTRY OVERVIEW
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 $78,415 respectively.
Whilst manufacturing and trade-related services have been adversely impacted by the global
economic conditions, tourism-related services sector continued to expand in 2011 amidst
continued resilience in the region. This in turn, contributed to the uptrend of Average Room
66
INDUSTRY OVERVIEW
Rates (ARR) and hotel Average Occupancy Rates (AOR). The regional market, comprising of
ASEAN, China, Hong Kong, India, Japan, Korea and Taiwan accounted for more than 70.0%
of visitor arrivals into Singapore.
Chart 1
Singapore’s GDP and Annual Growth (2006-2015)
Total GDP ($ billions)
Total GDP Growth
Real GDP Growth
416.5
392.4
369.2
347.0
325.8
303.7
267.3
230.9
268.0
266.7
15.7%
13.9%
10.6%
14.5%
8.7%
8.8%
0.3%
1.5%
2006
2007
2008
-0.5%
7.3%
6.5%
6.4%
6.3%
6.1%
5.2%
4.4%
4.3%
4.2%
4.1%
2011E
2012F
2013F
2014F
2015F
-0.8%
2009
2010
Source: Euromonitor International
Chart 2
Singapore’s GDP Per Capita and Annual Growth (2006-2015)
GDP per Capita
GDP per Capita Growth
78,415
74,439
70,578
63,418
58,243
52,466
59,813
55,369
53,464
11.9%
11.0%
7.2%
-4.9%
2006
2007
66,893
2008
6.0%
5.5%
5.5%
5.5%
5.3%
2011E
2012F
2013F
2014F
2015F
-3.4%
2009
2010
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INDUSTRY OVERVIEW
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.
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INDUSTRY OVERVIEW
Chart 3
Singapore’s Inbound Tourist Arrivals (2006-2015)
Tourist Arrivals (’000 trips)
Tourist Arrivals Growth Rate
19,643
19,399
15,755
15,759
20,372
20,976
21,472
21,869
3.0%
2.4%
1.9%
2013F
2014F
2015F
15,773
14,635
23.0%
7.9%
7.7%
3.7%
1.3%
2006
2007
0.0%
0.1%
2008
2009
2010
2011E
2012F
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 between Malaysia 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 2.3 million 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.
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INDUSTRY OVERVIEW
Chart 4
Breakdown of Singapore’s Inbound Tourist Arrivals by Country of Origin in
2010 (Trips)
Malaysia,
7.8 million
Other Countries,
7.3 million
Indonesia,
2.3 million
Australia,
0.9 million
China,
1.1 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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INDUSTRY OVERVIEW
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.
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INDUSTRY OVERVIEW
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 $6.7 billion in 2015.
Note:
1
Incoming tourism receipts from accommodation refer to payments made by international inbound tourists (both
business and leisure) for accommodation services in accommodation that include hotels, motels, service
apartments and guesthouses.
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INDUSTRY OVERVIEW
Chart 5
Incoming Tourism Receipts
Accommodation (2006-2015)
and
Incoming
Tourism
Receipts
from
Incoming Tourism Receipts ($ billions)
Incoming Tourism Receipts from Accommodation
(S$ billions)
32.0
30.4
28.5
26.4
24.0
19.3
15.3
14.6
13.0
13.0
2006
3.4
3.1
2.5
2007
2008
4.1
2.7
2009
2010
5.6
6.0
6.4
6.7
5.0
2011E
2012F
2013F
2014F
2015F
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 and marketing. 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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INDUSTRY OVERVIEW
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 $3.3 billion in 2010. The growth in the number of hotels is
largely due to the increase in government land sales sites made available for hotel
development in anticipation of the increase in tourist arrivals.
Chart 6
Total Number of Hotel Outlets (2006-2015)
Hotel outlets
Hotel outlets growth rate
268
298
283
309
320
331
342
243
226
226
10.3%
7.5%
5.6%
0.4%
0.0%
2006
2007
2008
2009
5.3%
2010
2011E
3.7%
3.6%
3.4%
3.3%
2012F
2013F
2014F
2015F
Chart 7
Total Number of Hotel Rooms (2006-2015)
Number of hotel of rooms
Number of hotel of rooms growth rate
51,258
48,682
52,807
54,356
55,905
57,455
42,719
37,198
37,624
39,376
14.0%
8.5%
5.3%
4.7%
0.8%
1.1%
2006
2007
2008
2009
2010
2011E
74
3.0%
2.9%
2.8%
2.8%
2012F
2013F
2014F
2015F
INDUSTRY OVERVIEW
Chart 8
Retail Value of Hotel Accommodation (2006-2015)
Retail value of hotel accommodation ($ billions)
6.0
Retail value of hotel accommodation growth rate
5.5
5.0
4.4
4.0
3.3
2.9
2.4
2.2
1.9
25.2%
23.0%
45.9%
21.6%
18.0%
11.6%
11.8%
10.3%
10.2%
2012F
2013F
2014F
2015F
-21.5%
2006
2007
2008
2009
2010
2011E
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. The market 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)
Retail value of other hotel accommodation
Retail value of mid-tier hotel accommodation
Retail value of economy-tier hotel accommodation
100.0%
90.0%
6.8%
5.4%
4.9%
6.9%
5.0%
13.8%
12.6%
13.2%
12.8%
12.5%
79.5%
82.0%
81.9%
80.3%
82.5%
2006
2007
2008
2009
2010
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Note:
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.
75
INDUSTRY OVERVIEW
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-onyear 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 $184 over the same period.
Chart 10
Performance of Gazetted Hotels in Singapore (2001-2010)
ARR ($)
81%
76%
REVPAR (S$)
85%
84%
AOR (%)
87%
85%
81%
74%
76%
246
67%
202
217
199
190
184
176
164
126
122
116
101
144
139
137
133
115
99
93
78
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
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.
76
INDUSTRY OVERVIEW
(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 $3.3 billion by 2015.
Chart 11
Retail Value of Hotel Accommodation Booked through Internet (2006-2015)
Retail value of hotel accommodation booked through internet ($ billions)
Retail value of hotel accommodation booked through internet growth rate
3.3
3.0
2.6
48.8%
27.5%
2.3
2.0
23.2%
24.0%
1.6
22.1%
1.4
1.1
13.8%
13.9%
12.3%
12.3%
2012F
2013F
2014F
2015F
1.1
0.9
-19.9%
2006
2007
2008
2009
2010
2011E
77
INDUSTRY OVERVIEW
Chart 12
% Retail Value of Hotel Accommodation Booked through Internet
(2006-2015)
% 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%
2006
2007
2008
2009
2010
2011E
2012F
2013F
2014F
2015F
(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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INDUSTRY OVERVIEW
(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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INDUSTRY OVERVIEW
(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 $409 million in 2015.
Chart 13
Total Number of Mid-tier Hotels (2006-2015)
Mid-tier hotel outlets
Mid-tier hotel outlets growth rate
R
CAG
79
CAGR
2006-2
0
%
10 : 7.0
48
52
2006
2007
2008
.5%
94
88
82
15.9%
15.4%
8.2%
5.0%
0.0%
5:6
63
8.3%
0.0%
-201
73
60
48
1
201
2009
7.3%
6.8%
2014F
2015F
3.8%
2010
2011E
80
2012F
2013F
INDUSTRY OVERVIEW
Chart 14
Retail Value of Mid-tier Hotel Accommodation (2006-2015)
Retail value of mid-tier hotel accommodation ($ millions)
Retail value of mid-tier hotel accommodation growth rate
1009
863
732
31.1%
42.4%
23.3%
619
536
14.7%
6.6%
409
377
306
15.6%
18.3%
17.9%
17.0%
2012F
2013F
2014F
2015F
287
267
-23.9%
2006
2007
2008
2009
2010
2011E
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 $146 over the same period.
Chart 15
Performance of Gazetted Mid-tier Hotels in Singapore (2006-2010)*
Mid-tier hotel ARR ($)
Mid-tier hotel RevPAR ($)
Mid-tier hotel AOR (%)
87%
87%
86%
192
165
151
82%
169
168
145
146
142
129
117
78%
2006
2007
2008
2009
2010
*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.
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INDUSTRY OVERVIEW
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 growing market 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 $340
million in 2010.
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INDUSTRY OVERVIEW
Chart 16
Total Number of Economy-tier Hotels (2006-2015)
Economy-tier hotel outlets
Economy-tier hotel outlets growth rate
170
172
174
176
167
1.8%
1.8%
1.2%
1.2%
1.1%
2011E
2012F
2013F
2014F
2015F
164
155
141
131
131
9.9%
7.6%
5.8%
0.8%
0.0%
2006
2007
2008
2009
2010
Chart 17
Retail Value of Economy-tier Hotel Accommodation (2006-2015)
Retail value of economy-tier hotel accommodation ($ millions)
Retail value of mid-tier hotel accommodation growth rate
644
60.0%
580
522
40.0%
464
29.1%
300
253
18.6%
31.6%
340
403
20.0%
18.7%
258
14.9%
196
12.7%
11.1%
11.0%
0.0%
1.1%
-14.0%
2006
2007
2008
2009
-20.0%
2010
2011E
2012F
2013F
2014F
2015F
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 $87 over the same period.
83
INDUSTRY OVERVIEW
Chart 18
Performance of Gazetted Economy-tier Hotels in Singapore (2006-2010)*
Economy-tier hotel ARR ($)
Economy-tier hotel AOR (%)
112
89%
87%
Economy-tier hotel RevPAR ($)
86%
101
82%
100
92
90
88
74%
87
79
69
2006
66
2007
2008
2009
2010
*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 are mentioned 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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INDUSTRY OVERVIEW
(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 HotelElegance 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
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%
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INDUSTRY OVERVIEW
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.
86
GENERAL INFORMATION OF OUR GROUP
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 23 March 2012 for the material
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 new Group 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.
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 HotelSelegie 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 HotelImperial 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 through major 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 HotelElegance 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 31 March 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
94
Fragrance Capital
100%
Fragrance Investment
100%
Fragrance Ventures
100%
Management
Three (3) sole
proprietorships(1)
25 sole
proprietorships(1)
100%
Fragrance Hotel
Management
100%
(1) The details of the 25 sole proprietorships owned by Fragrance Hotel Management and the three (3) sole proprietorships owned by Parc Sovereign Hotel Management are set
out in the section entitled “General Information of our Group — Our Subsidiaries and sole proprietorships” of this Prospectus.
Note:
Fragrance Assets
100%
Global Premium Hotels
Our corporate structure immediately after the Restructuring Exercise is as follows:
Our Corporate Structure
Our Subsidiaries and sole proprietorships
The details of our Subsidiaries and sole proprietorships as at the date of this Prospectus are as
follows:
Issued and
paid-up
capital
Name of Subsidiary/
sole proprietorship
Date/place of
registration
Principal business
activities
Fragrance Assets
11 December
2008/Singapore
Investment holding and
investing in properties for
long term holding
purposes
$1,000,000
Subsidiary 100%
owned by our
Company
Fragrance Capital
28 July 2000/
Singapore
long term holding
purposes
$20,000,000
Subsidiary 100%
owned by our
Company
13 April 1996/
Singapore
long term holding
purposes
$4,000,000
Subsidiary 100%
owned by our
Company
Fragrance Ventures
17 July 2001/
Singapore
long term holding
purposes
$1,000,000
Subsidiary 100%
owned by our
Company
Fragrance Hotel Management
28 June 1996/
Singapore
Hotel Operations
$100,000
Subsidiary 100%
owned by our
Company
Management
29 July 2003/
Singapore
Hotel Operations
$1,000,000
Subsidiary 100%
owned by our
Company
Fragrance Hotel-Sapphire
15 November
1997/Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Ruby
5 February 1998/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Emerald
5 February 1998/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
The Fragrance Hotel
29 June 2001/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Pearl
26 September
2001/Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Crystal
28 October 2002/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Balestier
12 November
2003/Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
95
Details of ownership
Name of Subsidiary/
sole proprietorship
Date/place of
registration
Principal business
activities
(1)
Issued and
paid-up
capital
Fragrance Hotel-Classic
15 December
2003/Singapore
Not Applicable
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Rose
18 November
2004/Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Sunflower
2 September 2005/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Selegie
11 June 2005/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Kovan
15 June 2006/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Viva
26 April 2007/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Lavender
18 July 2007/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Imperial
18 July 2007/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Oasis
3 August 2007/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Waterfront
15 February 2008/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Ocean View
23 April 2008/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Royal
24 March 2009/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Bugis
16 March 2010/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Elegance
23 April 2008/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hotel-Riverside
22 October 2011/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance
Hotel-Champagne(2)
26 October 2004/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
96
Name of Subsidiary/
sole proprietorship
Date/place of
registration
(2)
Principal business
activities
(1)
Issued and
paid-up
capital
Fragrance Hotel-Esplanade
16 February 2011/
Singapore
Not Applicable
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
Fragrance Hostel(2)
11 June 2005/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Fragrance
Hotel Management
13 January 2009/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Parc
Sovereign Hotel
Management
Economy Hotel(2)
20 July 2010/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Parc
Sovereign Hotel
Management
Premium Hotel(2)
21 July 2010/
Singapore
Not Applicable(1)
Not
Applicable
Sole proprietorship
owned by Parc
Sovereign Hotel
Management
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 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.
Details of the hotels that we operate as at the Latest Practicable Date are set out as follows:
No of
Rooms
Year
Operations AOR(3) ARR(3)
Commenced
(%)
($)
S/No
Hotel Name
Address
1.
Fragrance
Hotel-Sapphire
3 Lorong 10 Geylang
Singapore 399037
50
1998
93.6
75.5
2.
Fragrance
Hotel-Ruby
10 Lorong 20 Geylang
Singapore 398730
168
1998
92.1
56.9
3.
Fragrance
Hotel-Emerald
20 Lorong 6 Geylang
Singapore 399174
126
1998
92.2
62.9
4.
The Fragrance
Hotel
219 Joo Chiat Road
Singapore 427485
90
2001
90.6
67.3
5.
Fragrance
Hotel-Pearl
Singapore 398961
129
2002
95.0
56.2
98
No of
Rooms
S/No
Hotel Name
Address
6.
Fragrance
Hotel-Crystal
Singapore 398824
7.
Fragrance
Hotel-Balestier
8.
Year
Operations AOR(3) ARR(3)
Commenced
(%)
($)
125
2002
90.5
61.8
255 Balestier Road
Singapore 329710
48
2004
84.2
146.5
Fragrance
Hotel-Classic
418 Balestier Road
Singapore 329808
48
2004
80.5
138.4
9.
Fragrance
Hotel-Rose
263 Balestier Road
Singapore 329715
68
2005
91.5
78.1
10.
Fragrance
Hotel-Sunflower
Singapore 399043
27
2005
89.5
65.5
11.
Fragrance
Hotel-Selegie
183 Selegie Road
Singapore 188329
120
2005
90.6
102.6
12.
Fragrance
Hotel-Kovan
760 Upper Serangoon Road
Singapore 534629
43
2006
85.9
166.2
13.
Fragrance
Hotel-Viva
75 Wishart Road
Singapore 098721
33
2007
74.0
265.2
14.
Fragrance
Hotel-Lavender
51 Lavender Street
Singapore 338710
35
2007
97.5
180.6
15.
Fragrance
Hotel-Imperial
28 Penhas Road
Singapore 208187
74
2007
96.4
107.9
16.
Fragrance
Hotel-Oasis
435 Balestier Road
Singapore 329816
36
2007
94.3
76.4
17.
Fragrance
Hotel-Waterfront
418 Pasir Panjang Road
Singapore 118759
57
2008
91.6
147.4
18.
Fragrance
Hotel-Ocean View
Singapore 118773
47
2008
81.6
161.1
19.
Fragrance
Hotel-Royal
400 Telok Blangah Road
Singapore 098838
32
2009
92.2
129.7
20.
Fragrance
Hotel-Bugis
33 Middle Road
Singapore 188942
80
2010
96.8
105.2
21.
Parc Sovereign
Hotel
175 Albert Street
Singapore 189970
170
2011
88.2
133.3
22.
Fragrance
Hotel-Elegance(1)
63 Dunlop Street
Singapore 209391
31
2011
90.7
89.2
23.
Fragrance
Hotel-Riverside(2)
20 Hongkong Street
Singapore 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. We may 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 and 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.
(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.
102
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
Pending
TT12103271C 9 March 2012
Class 43 in respect
of: Provisions of
temporary
accommodations;
Preparation of food
and drink
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 and market
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:
Trade receivables turnover (days)(3)
FY2008(1)
FY2009(1)
FY2010(1)
9M2011(2)
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:
Trade payables turnover (days)(3)
FY2008(1)
FY2009(1)
FY2010(1)
9M2011(2)
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
%
Travel agents
FY2009
%
FY2010
%
9M2011
%
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
74.1
74.8
65.7
50.2
100.0
100.0
100.0
100.0
Walk-in customers
Total
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.
Name of Supplier
FY2008
% of Cost of Sales
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
—
10.9
18.2
15.2
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
Zero Spot Laundry Services Pte Ltd
iFood Pte Ltd
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 from Seraya 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 airconditioners carried out in FY2010.
Properties
As at the Latest Practicable Date, we own the following properties:
Owner of
Property
Name of Hotel/
Location
Fragrance
Assets
Parc Sovereign
Hotel
Valuation as at
31 October 2011
Purpose/Use
of Property
Leasehold Estate
(99 Years with
approximately 97
years remaining)
$108,000,000
Hotel
528.1 sq. m.
Freehold Estate
$16,900,000
Hotel
817.5 sq. m.
Freehold Estate
$36,540,000
Hotel
Area
Tenure
1,164.6 sq. m.
175 Albert Street
Singapore 189970
Fragrance
Capital
Fragrance
Hotel-Sapphire
3 Lorong 10
Geylang
Singapore 399037
Fragrance
Capital
Fragrance
Hotel-Emerald
20 Lorong 6
Geylang
Singapore 399174
107
Owner of
Property
Name of Hotel/
Location
Fragrance
Capital
Fragrance
Hotel-Pearl
Area
Tenure
Valuation as at
31 October 2011
Purpose/Use
of Property
843.1 sq. m.
Freehold Estate
$37,410,000
Hotel
1,051.1 sq. m.
Freehold Estate
$36,250,000
Hotel
244.6 sq. m.
Freehold Estate
$23,000,000
Hotel
265.2 sq. m.
Freehold Estate
$23,800,000
Hotel
399.9 sq. m.
Freehold Estate
$31,300,000
Hotel
322.8 sq. m.
Freehold Estate
$8,370,000
Hotel
468.3 sq. m.
Freehold Estate
$60,000,000
Hotel
284.2 sq. m.
Freehold Estate
$20,000,000
Hotel
219.9 sq. m.
Freehold Estate
$17,500,000
Hotel
544.0 sq. m.
Freehold Estate
$37,000,000
Hotel
229.3 sq. m.
Freehold Estate
$15,000,000
Hotel
21 Lorong 14
Geylang
Singapore 398961
Fragrance
Capital
Fragrance
Hotel-Crystal
50 Lorong 18
Geylang
Singapore 398824
Fragrance
Capital
Fragrance
Hotel-Balestier
255 Balestier Road
Singapore 329710
Fragrance
Capital
Fragrance
Hotel-Classic
418 Balestier Road
Singapore 329808
Fragrance
Capital
Fragrance
Hotel-Rose
263 Balestier Road
Singapore 329715
Fragrance
Capital
Fragrance
Hotel-Sunflower
10 Lorong 10
Geylang
Singapore 399043
Fragrance
Capital
Fragrance
Hotel-Selegie
183 Selegie Road
Singapore 188329
Fragrance
Capital
Fragrance
Hotel-Kovan
760 Upper
Serangoon Road
Singapore 534629
Fragrance
Capital
Fragrance
Hotel-Lavender
51 Lavender Street
Singapore 338710
Fragrance
Capital
Fragrance
Hotel-Imperial
28 Penhas Road
Singapore 208187
Fragrance
Capital
Fragrance
Hotel-Oasis
435 Balestier Road
Singapore 329816
108
Owner of
Property
Name of Hotel/
Location
Fragrance
Investment
Fragrance
Hotel-Ruby
Area
Tenure
Valuation as at
31 October 2011
Purpose/Use
of Property
902.1 sq. m.
Freehold Estate
$48,720,000
Hotel
672.1 sq. m.
Freehold Estate
$27,000,000
Hotel
300.1 sq. m.
Freehold Estate
$20,000,000
Hotel
477.7 sq. m.
Freehold Estate
$33,000,000
Hotel
255.5 sq. m.
Freehold Estate
$26,800,000
Hotel
278.2 sq. m.
Freehold Estate
$18,400,000
Hotel
348.3 sq. m.
Leasehold Estate
(999 Years with
approximately
823 Years
remaining)
$44,000,000
Hotel
513.3 sq. m.
Leasehold Estate
(99 Years with
approximately 99
Years remaining)
$58,600,000
Hotel
10 Lorong 20
Geylang
Singapore 398730
Fragrance
Ventures
The Fragrance
Hotel
219 Joo Chiat
Road
Singapore 427485
Fragrance
Ventures
Fragrance
Hotel-Viva
75 Wishart Road
Singapore 098721
Fragrance
Ventures
Fragrance
Hotel-Waterfront
418 Pasir Panjang
Singapore 118759
Fragrance
Ventures
Fragrance
Hotel-Ocean View
432 Pasir Panjang
Road
Singapore 118773
Fragrance
Ventures
Fragrance
Hotel-Royal
400 Telok Blangah
Road
Singapore 098838
Fragrance
Ventures
Fragrance
Hotel-Bugis
33 Middle Road
Singapore 188942
Fragrance
Ventures
Fragrance
Hotel-Riverside
20 Hongkong
Street
Singapore 059663
As at the Latest Practicable Date, we lease the following properties:
Property
leased by
Location
Area
Tenure
Fragrance
Hotel
Management
23 Genting Road
#03-03
Singapore 349481
2,200 sq. ft.
Two Years
From 20 April
2010 Till 19
April 2012
109
Registered
Owner
Chevalier
Development
(S) Pte. Ltd.
Rental
(per
month)
Purpose/
Use of
Property
$2,800
Warehouse(1)
Property
leased by
Fragrance
Hotel
Management
Location
Area
Tenure
63 Dunlop Street
Singapore 209391
237.5 sq. m.
Two Years
From 26
November
2011 Till 25
November
2013 with an
option to
renew for
further 1 year
Registered
Owner
IPAH Hotels
(Pte.) Limited
Rental
(per
month)
Purpose/
Use of
Property
$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 Hotelkeeper 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
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
Name of Licensee
Relevant Hotel
Regulatory Body
Validity
Mr. Lim Chee Chong
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:
Name of Licensee
Relevant Hotel
Regulatory Body
Validity
Ms. Lee Kay Him
The Fragrance Hotel
Liquors Licensing
Board
1 January 2012 to
31 December 2013
Ms. Lee Yen Mei
Liquors Licensing
Board
1 January 2012 to
31 December 2013
Mr. Sim Mong Yeow
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) square metres. 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.
115
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. Sim Mong 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 the MRT. 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.
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
SELECTED COMBINED FINANCIAL INFORMATION
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
Pro
Pro
Forma
Forma
FY2010
FY2010
9M2010
9M2011
9M2011
($’000)
($’000)
($’000)
($’000)
($’000)
FY2008
($’000)
FY2009
($’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
196
221
280
264
203
344
308
—
—
—
—
—
—
Other operating
income
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
1.45
1.73
1.66
Unaudited
EPS as adjusted
for the Invitation
(cents)(2)
1.61
1.35
1.99
1.90
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.
120
SELECTED COMBINED FINANCIAL INFORMATION
Selected Combined Financial Position of our Group
Audited
as at 31
December
2008
($’000)
Audited
as at 31
December
2009
($’000)
Audited
as at 31
December
2010
($’000)
Unaudited
Unaudited
Pro
Pro
Forma
Audited
Forma
as at 31
as at 30
as at 30
December September September
2010
2011
2011
($’000)
($’000)
($’000)
Current assets
Cash and cash
equivalents
Trade receivables
Other receivables
Properties under
development
1,923
1,216
15,473
2,458
985
11,149
2,811
1,274
5,982
19,143
1,274
46,019
3,899
1,511
47,443
11,588
1,511
15,608
—
23,820
26,846
—
—
—
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
Other payables
Term loans
Income tax payable
1,223
26,067
6,433
3,596
1,236
45,515
12,198
2,829
1,188
49,986
7,895
4,435
1,188
140,893
20,147
8,319
1,194
5,584
32,643
8,065
1,194
91,082
20,147
7,921
Total current
liabilities
37,319
61,778
63,504
170,547
47,486
120,344
Term loans
98,996
3,760
134,832
4,751
150,448
23,815
443,035
19,528
108,838
26,447
443,035
26,447
Total non-current
liabilities
102,756
139,583
174,263
462,563
135,285
469,482
Share capital
Revaluation reserve
Merger reserve
Retained earnings
27,100
157,779
—
17,070
27,100
213,654
—
21,581
27,100
451,552
—
22,436
137,500
427,344
(530,900)
41,988
27,100
511,459
—
70,241
137,500
511,459
(530,900)
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
121
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL POSITION
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 HotelElegance 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.
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:
FY2008
$’000
%
Audited
FY2009
$’000
%
Utilities charges
2,069
42.3
2,009
Laundry charges
1,168
23.9
Hotel consumables
452
Cable services
Others
Total
FY2010
$’000
%
Unaudited
9M2010
$’000
%
Audited
9M2011
$’000
%
41.1
2,241
43.5
1,715
44.4
2,129
46.6
1,124
23.0
1,180
22.9
882
22.8
868
19.0
9.2
698
14.3
526
10.2
380
9.8
405
8.9
317
6.5
359
7.4
384
7.4
295
7.6
278
6.1
889
18.1
693
14.2
825
16.0
595
15.4
891
19.4
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 a major impact on cost of sales as utilities charges form a major portion of cost
of sales.
2.
Changes arising from external vendor charges
As we are hotel operators, any major 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
$’000
%
Audited
FY2009
$’000
%
FY2010
$’000
%
Unaudited
9M2010
$’000
%
Audited
9M2011
$’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
196
100.0
221
100.0
280
100.0
203
100.0
344
100.0
Total
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
$’000
%
Audited
FY2009
$’000
%
FY2010
$’000
%
Unaudited
9M2010
$’000
%
Audited
9M2011
$’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
$’000
%
Fragrance Chain
of Hotels
Parc Sovereign
Hotel
Total
36,533
360(2)
Audited
FY2009
$’000
%
FY2010
$’000
%
Unaudited
9M2010
$’000
%
Audited
9M2011
$’000
%
99.0 34,579 100.0 44,215 100.0 32,284 100.0 34,692
1.0
—
—
—
—
—
—
4,237
89.1
10.9
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
Parc Sovereign
Hotel
Total
31,638
360
98.9 29,696 100.0 39,059 100.0 28,417 100.0 30,689
1.1
—
—
—
—
—
—
3,669
89.3
10.7
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
Fragrance Chain
of Hotels
Parc Sovereign
Hotel
Overall
FY2008
%
Audited
FY2009
%
86.6%
100.0%(1)
86.7%
FY2010
%
Unaudited
9M2010
%
Audited
9M2011
%
85.9%
88.3%
88.0%
88.5%
—
—
—
86.6%
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 $11.3 million 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 $21.2 million in 9M2011 due mainly 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 HotelWaterfront 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 1 October 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
$’000
Audited
FY2009
$’000
Audited
FY2010
$’000
Unaudited
Pro Forma
FY2010
$’000
Audited
9M2011
$’000
Unaudited
Pro Forma
9M2011
$’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:
31 December
2008
$’000
Current assets
Audited
31 December
31 December
2009
2010
$’000
$’000
30 September
2011
$’000
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 $19.1 million, 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 $27.3 million, 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
$’000
FY2010
$’000
FY2011
$’000
Period
from
1 January
2012 to
the Latest
Practicable
Date
$’000
—
94
12,219
1,012
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
15
28
45
32
612
948
109
—
—
—
64
—
Acquisition
Hotel buildings and leasehold land
Construction-in-progress
Electrical installation
Renovations
Kitchen equipment
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;
(c)
(c)
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:
Divestments
Freehold land
Hotel buildings
Office premises
Motor vehicles
Furniture fixtures and fittings
Office equipment
Computers
Renovation
FY2009
$’000
FY2010
$’000
FY2011
$’000
Period from
1 January 2012
to the Latest
Practicable Date
$’000
—
—
—
—
26
—
5
94
—
—
—
—
—
—
—
—
—
42
—
—
4,180
2,920
47,379
7,450
—
170
11
9
220
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
As at
As at
31 December 31 December 31 December
2009
2010
2011
$’000
$’000
$’000
As at Latest
Practicable
Date
$’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
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
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 worldleading 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.
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
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 be made 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
We plan 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 AND SHAREHOLDERS
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 Instruments made 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
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:
Resultant Issued
and Paid-up
Share Capital
($)
Number of
Shares
Issued and fully paid-up Shares as at incorporation
1
1
Issuance of Consideration Shares pursuant to the
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)
1,000,000,000
251,041,000(1)
Post-Invitation issued and paid-up share capital
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
Direct Interest
Deemed Interest
No. of Shares
%
No. of Shares
%
After the Invitation
(assuming the Over-allotment Option
is not exercised)
Direct Interest
Deemed Interest
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
—
—
—
—
—
—
—
—
1
100.0
—
—
550,000,000
55.0
—
—
Lim Wan Looi
—
—
1
100.0
—
—
550,000,000
55.0
Public
—
—
—
—
450,000,000
45.0
—
—
Total
1
100.0
—-
— 1,000,000,000 100.0
—-
—
Shareholders
FGL
(2)
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
159
Vice
President,
Human
Resources
Wong Ping Ping
Vice
President,
Hotel
Operations
Lee Yen Mei
Vice President,
Business
Development
Lim Hwee Leng
Financial
Controller
Liu Xiaojing
Chief Financial
Officer
Chen Loong Mey
Chief Operating
Officer
Sim Mong Yeow
Chief Executive
Officer
Lim Chee Chong
Board
Vice President,
Sales
Yong Cheong Beng
Audit
Committee
Our management reporting structure as at the date of lodgement of this Prospectus is as follows:
Management Reporting Structure
DIRECTORS, MANAGEMENT AND STAFF
Vice President,
Information
Technology
Chew Boon Seng
Vice President,
Corporate
Affairs
Neo En Liang
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
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 to March 2012. Prior to that, Mr. Lim was 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. Sim Mong 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 OCBC Bank as their vice president of business development and was responsible for
marketing business credit schemes and wealth management products to small and mediumsized 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
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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 KS Energy 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 Chee Wai
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.
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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 Assets
Fragrance Capital
Fragrance Ventures
Parc Sovereign Hotel Management
Other companies or entities
FGL
Fragrance Biz Space
Fragrance Holdings
Fragrance Heritage
Fragrance Homes
Fragrance Land
Fragrance Properties
Fragrance Realty
James Koh Investment Pte. Ltd.
JK Auto Restoration Hub Pte. Ltd.
JK Assets Pte. Ltd.
JK Land Pte. Ltd.
Kensington Land
MLHS Holdings Pte. Ltd.
Kensington Village Pte. Ltd.
—
Fragrance Assets
Fragrance Capital
Fragrance Ventures
Parc Sovereign Hotel Management
—
FGL
—
—
FGL
—
—
—
Aspial Corporation Limited
Hiap Moh Corporation Limited
H P Y Holdings Pte Ltd
—
—
—
—
Lim Chee Chong
Sim Mong Yeow
Kau Jee Chu
Kwan Chee Wai
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Name
Past Directorships
Woo Peng Kong
—
—
Promoter Hydraulics Pte. Ltd.
Viking Facilities Management &
Operations Pte. Ltd.
Viking Offshore and Marine Limited
Atlantic Esbjerg Limited
Atlantic Marine Services B.V.
Atlantic Marine Services (Cyprus)
Group Limited
Atlantic Marine Services Denmark B.V.
Atlantic Marine Service Egypt
Atlantic 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) Limited
KS Discoverer 2 (HK) Limited
KS Discoverer 2 Pte. Ltd.
KS Discoverer 4 Pte. Ltd.
KS Discovery (HK) Limited
KS Discovery Limited
KS Drilling Pte. Ltd.
KS Energy Services Limited (now
known as KS Energy Limited)
KS Fabrication and Engineering
Pte. Ltd.
KS Offshore & Marine Services Inc.
KS Oil Rig Services Inc.
KS Oilfield Equipment Pte. Ltd.
KS Oilfield Services Limited
KS Oilfield Support Limited
KS Technical Resources (HK) Limited
KS Venture Pte. Ltd.
KSAM2 Petrodrill Offshore Inc
KT Lion Oilfield Services Ltd.
PNT (Asia Pacific) Limited
QIM Ventures Limited
Renewable Energy Asia Group
Limited
REA Power Pte. Ltd.
Sphinx Frontier Ltd.
United Oilfield Services Pte. Ltd.
Yakki International Pte. Ltd.
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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 from Monash 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 Lum Chang 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 a Diploma 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
Name
Past Directorships
Chen Loong Mey
Group companies
Group companies
—
—
Other companies
Other companies
—
—
Name
Past Directorships
Neo En Liang
Group companies
Group companies
—
—
Other companies
Other companies
—
—
Liu Xiaojing
Lee Yen Mei
Yong Cheong Beng
Wong Ping Ping
Lim Hwee Leng
Chew Boon Seng
Group companies
Group companies
—
—
Other companies
Other companies
—
—
Group companies
Group companies
—
—
Other companies
Other companies
—
—
Group companies
Group companies
—
—
Other companies
Other companies
—
—
Group companies
Group companies
—
—
Other companies
Other companies
—
—
Group companies
Group companies
—
—
Other companies
Other companies
DSL Design & Contracts Pte. Ltd.
Shwee Realty Pte. Ltd.
Machuan Development Pte. Ltd.
—
Group companies
Group companies
—
—
Other companies
Other companies
—
—
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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
172
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 HotelImperial, 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 hotelkeeper’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.
173
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 hotelkeeper’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 Hotelkeeper, 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.
174
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.
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.
7.
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.
9.
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 receive monthly 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
Sim Mong Yeow
(1)
% of NPBT
% of NPBT(1)
$5.0 million
NPBT < $15.0 million
1.00%
0.35%
$15.0 million
1.50%
0.50%
$25.0 million
1.75%
0.65%
$30.0 million
2.25%
0.70%
2.50%
0.75%
$35.0 million and above
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)
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
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
Directors
Koh Wee Meng
Key Executives
Chen Loong Mey
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
Management
10
11
16
Administration
17
17
27
Hotel Operations
199
199
230
Total
226
227
273
Function
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 a meaningful reward for contributions to our Company and/or our
subsidiaries. However, it does not necessarily mean that our Committee will grant Awards
181
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 have met 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 NonExecutive Directors may be appointed as members 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 Premium Hotels 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.
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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
INTERESTED PERSON TRANSACTIONS AND CONFLICT OF INTERESTS
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 $100,000 is not considered material in the context of the Invitation and is not taken into
account for the purposes of aggregation in this section.
Save as disclosed below and in the section entitled “General Information of our Group —
Restructuring Exercise” of this Prospectus, our Group does not have any material transactions
with any Interested Person for FY2009, FY2010 and FY2011 and for the period commencing 1
January 2012 up to the Latest Practicable Date.
Interested Persons
Our Controlling Shareholder, FGL, is incorporated in Singapore and listed on the Main Board
of the SGX-ST. FGL is engaged in the property development business, with focus on the
development of residential, commercial and industrial properties.
As at the date of this Prospectus, FGL has six wholly-owned subsidiaries, Fragrance Land,
Fragrance Properties, Fragrance Realty, Fragrance Homes, Fragrance Heritage and
Fragrance Holdings. FGL also has another two Subsidiaries, Kensington Land and Kensington
Village, in which it has a 60% shareholding interest of such Subsidiary. Accordingly, FGL and
its Subsidiaries are Interested Persons of our Group.
Past Interested Person Transactions
Advances to the Group
FGL had advanced the following amounts to our Group which were unsecured, interest-free
and repayable on demand:
FGL
FY2009
($’000)
FY2010
($’000)
FY2011
($’000)
From 1
January
2012 to
the Latest
Practicable
Date
($’000)
58,388
60,943
36,732
—
187
Largest amount
Outstanding for
Period Under
Review
($’000)
50,124
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 HotelElegance.
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:
FGL
FY2009
($’000)
FY2010
($’000)
FY2011
($’000)
From 1
January
2012 to
the Latest
Practicable
Date
($’000)
34,885
52,937
77,259
—
Largest Amount
Outstanding for
Period Under
Review
($’000)
19,605
The amounts were advanced by our Group to FGL for their cash management purposes.
As at the Latest Practicable Date, all the advances owing to our Group had been fully settled
and there were no outstanding amounts due to our Group.
Our Directors are of the view that the above advances were not carried out on an arm’s length
basis and were not based on normal commercial terms as no interest was charged. We do not
intend to enter into such transactions after our listing on the Main Board of the SGX-ST.
Sale of properties to FGL’s Subsidiaries
On 30 September 2011, we entered into sale and purchase agreements for the sale of three (3)
properties to FGL’s wholly-owned Subsidiaries, Fragrance Realty and Fragrance Holdings.
The sale of these three properties was part of the Restructuring Exercise to dispose of our
non-hospitality properties as well as to resolve potential conflict of interests prior to our listing
on the Main Board of the SGX-ST.
188
The details of such transactions are as follows:
Date of Sale and
Purchase Agreement
Purchase Price
($’000)
Property
23,820
Purchaser
(1)
Fragrance Realty
30 September 2011
Pasir Panjang Commercial
Property
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 ($’000)
Term Loan
18,808
Fragrance
Assets
18,070
UOB Group
Term Loan
48,466
Fragrance
Capital
45,977
Term Loan
32,490
Fragrance
Capital
25,221
Term Loan
47,864
Fragrance
Ventures
42,441
Sing Investments & Finance
Limited
Land and
Construction
Loan
16,328
Fragrance
Ventures
12,582
189
The interest rates for the above-mentioned facilities were between approximately 2% to 3% per
annum.
No consideration was paid to FGL for the provision of the aforesaid corporate guarantees. As
such, our Directors believe that the above transactions were not entered into on an arm’s length
basis or on normal commercial terms but were not prejudicial to the interests of our Group
and/or minority shareholders.
Partial occupation of Changi Road Property by the FGL Group for no consideration
FGL Group occupied part of the Changi Road Property for use as their corporate headquarters.
No consideration was paid by the FGL Group for such occupation.
Our Directors are of the view that the above transaction was not carried out on an arm’s length
basis and was not based on normal commercial terms as no consideration was paid by the FGL
Group for their occupation.
The Changi Road Property has since been disposed and accordingly, such transactions will not
occur after our listing on the Main Board of the SGX-ST.
On-going Interested Person Transactions
Provision of corporate guarantee by an Interested Person
As at the Latest Practicable Date, our Controlling Shareholder, FGL, provided the following
corporate guarantees to secure banking and trade facilities granted to our Group:
Financial
Institution/Lender
Type of
Facilities
Amount of
Facilities
($’000)
Facilities
Granted to
Largest
Amount
Amount
Outstanding
Outstanding
as at the
for Period
Latest
Under
Practicable
Review
Date
($’000)
($’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
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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:
Properties
Leased by
Location
Area
Tenure
Fragrance
Hotel
Management
168 Changi Road
#03-01
Singapore 419730
268.0 sq. m.
Two years
from 1 May
2012 with
option to
renew for
further two
years
Fragrance
Hotel
Management
168 Changi Road
#04-01
Singapore 419730
268.0 sq. m.
Two years
from 1 May
2012 with
option to
renew for
further two
years
Rental
(per
month)
Purpose/
Use of
Property
Fragrance
Holdings
$10,500
Office
Fragrance
Holdings
$10,500
Office
Registered
Owner
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 the most 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 (“Noncompetition 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. Koh Wee Meng’s siblings, namely Mr. Koh Wee 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
CORPORATE GOVERNANCE
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;
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 a member 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, pricesensitive 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. Koh Wee Meng 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.
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OTHER GENERAL INFORMATION
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;
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 a material 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, having made 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 no minimum amounts which must 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
Certified Public Accountants
6 Shenton Way #32-00
DBS Building Tower Two
Singapore 068809
Professional Body
Institute of Certified Public
Accountants of Singapore
Partner-in-charge/
Professional
Qualification
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 Issue Manager 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 Overallotment 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 Overallotment 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-à-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) the material 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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APPENDIX A
INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIAL
STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2010,
2009 AND 2008
18 April 2012
The Board of Directors
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.
A-1
APPENDIX A
2009 AND 2008
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
A-2
APPENDIX A
2009 AND 2008
COMBINED STATEMENTS OF FINANCIAL POSITION
As at 31 December 2010, 2009 and 2008
Note
2010
$’000
2009
$’000
2008
$’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
—
36,913
38,412
18,612
701,942
425,284
323,412
738,855
463,696
342,024
Non-current asset
Property, plant and equipment
11
Total assets
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
4,435
2,829
3,596
63,504
61,778
37,319
Income tax payable
Total current liabilities
Term loans
14
150,448
134,832
98,996
15
23,815
4,751
3,760
174,263
139,583
102,756
Total non-current liabilities
Share capital
16
27,100
27,100
27,100
Revaluation reserve
17
451,552
213,654
157,779
22,436
21,581
17,070
Total equity
501,088
262,335
201,949
Total liabilities and equity
738,855
463,696
342,024
Retained earnings
See accompanying notes to combined financial statements.
A-3
APPENDIX A
2009 AND 2008
COMBINED STATEMENTS OF COMPREHENSIVE INCOME
For the financial years ended 31 December 2010, 2009 and 2008
Note
2010
$’000
2009
$’000
2008
$’000
18
44,215
34,579
36,893
Cost of sales
(5,156)
(4,883)
(4,895)
Gross profit
39,059
29,696
31,998
280
221
196
Revenue
19
Finance costs
20
(12,223)
(10,355)
(9,319)
(3,001)
(3,184)
(3,239)
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
Revaluation of land and hotel buildings
256,957
56,843
25,106
Income tax effects
(19,059)
Net other comprehensive income
237,898
55,875
25,109
Total comprehensive income for the year
257,753
69,386
41,240
3.61
2.46
2.93
Other comprehensive income:
Basic and diluted earnings per share (cents)
24
A-4
(968)
3
APPENDIX A
2009 AND 2008
COMBINED STATEMENTS OF CHANGES IN EQUITY
Note
Balance at 1 January 2008
Transfer on sale of land and hotel
building
Share
capital
$’000
25,100
17
Balance at 31 December 2010
164,095
187
—
2,000
—
25,109
16,131
41,240
—
—
(5,386)
(5,386)
27,100
157,779
17,070
201,949
—
55,875
13,511
69,386
—
—
(9,000)
(9,000)
27,100
213,654
21,581
262,335
—
237,898
19,855
257,753
—
—
(19,000)
(19,000)
27,100
451,552
22,436
501,088
23
Total comprehensive income for
the year
Dividends paid
6,138
—
23
Total
$’000
—
the year
Dividends paid
(187)
Retained
earnings
$’000
2,000
the year
132,857
—
Issue of shares
Dividends paid
Revaluation
reserve
$’000
23
A-5
APPENDIX A
2009 AND 2008
COMBINED STATEMENTS OF CASH FLOWS
2010
$’000
2009
$’000
2008
$’000
24,115
16,378
19,636
2,058
1
3,001
1,685
27
3,184
1,500
2
3,239
Operating cash flows before movements in working capital
Trade receivables
Other receivables
Trade payables
Other payables
29,175
(289)
(1,662)
(48)
2,293
(3,026)
21,274
231
524
13
741
(23,820)
24,377
142
49
(38)
(328)
—
Cash generated from (used in) operations
Interest paid (Note A)
Income taxes paid
26,443
(3,917)
(2,648)
(1,037)
(3,208)
(3,611)
24,202
(3,307)
(1,797)
19,878
(7,856)
19,098
Investing activities
Purchase of property, plant and equipment (Note A)
Proceeds from disposal of property, plant and equipment
(20,940)
—
(46,579)
7
(27,326)
1,750
Net cash used in investing activities
(20,940)
(46,572)
(25,576)
Financing activities
Advances from ultimate holding company
Repayments from (to) ultimate holding company
Proceeds from term loans
Repayment of term loans
Proceeds from issuance of new shares
Dividends paid
2,178
6,828
36,499
(25,090)
—
(19,000)
18,707
3,800
63,608
(22,152)
—
(9,000)
19,169
(8,414)
13,654
(14,125)
2,000
(5,386)
Net cash from financing activities
1,415
54,963
6,898
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
353
2,458
535
1,923
420
1,503
Cash and cash equivalents at end of year
2,811
2,458
1,923
Operating activities
Adjustments for:
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Interest expense
Net cash from (used in) operating activities
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).
A-6
APPENDIX A
2009 AND 2008
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.
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;
A-7
APPENDIX A
2009 AND 2008
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.
A-8
APPENDIX A
2009 AND 2008
1
GENERAL (continued)
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:
Country of
incorporation
and
operations
Attributable
equity
interest
of the Group
%
Pte Ltd
Singapore
100
investing in properties for long
term holding purposes
Fragrance Ventures
Pte Ltd
Singapore
100
Fragrance Capital Pte Ltd
Singapore
100
Fragrance Assets Pte Ltd
Singapore
100
Fragrance Hotel
Management Pte Ltd
Singapore
100
Hotel operations
Name of subsidiaries
A-9
Principal activity
APPENDIX A
2009 AND 2008
1
GENERAL (continued)
Name of subsidiaries
Management Pte Ltd
Country of
incorporation
and
operations
Attributable
equity
interest
of the Group
%
Singapore
100
Principal activity
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
A-10
APPENDIX A
2009 AND 2008
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.
A-11
APPENDIX A
2009 AND 2008
2
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.
A-12
APPENDIX A
2009 AND 2008
2
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.
A-13
APPENDIX A
2009 AND 2008
2
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.
A-14
APPENDIX A
2009 AND 2008
2
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
A-15
APPENDIX A
2009 AND 2008
2
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.
A-16
APPENDIX A
2009 AND 2008
2
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%
—
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.
A-17
APPENDIX A
2009 AND 2008
2
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 cashgenerating 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 (cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately
in profit or loss.
A-18
APPENDIX A
2009 AND 2008
2
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
A-19
APPENDIX A
2009 AND 2008
2
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).
A-20
APPENDIX A
2009 AND 2008
2
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 AND CASH 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.
A-21
APPENDIX A
2009 AND 2008
3
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,
MANAGEMENT
FINANCIAL
RISKS
AND
CAPITAL
RISKS
(a) Categories of financial instruments
The following table sets out the financial instruments as at the end of the Relevant
Periods:
2010
$’000
2009
$’000
2008
$’000
10,023
14,563
18,611
208,809
193,219
132,501
Financial assets
Loans and receivables (including cash and
cash equivalents)
Financial liabilities
Amortised cost
A-22
APPENDIX A
2009 AND 2008
4
MANAGEMENT (continued)
FINANCIAL
RISKS
AND
CAPITAL
RISKS
(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.
A-23
APPENDIX A
2009 AND 2008
4
FINANCIAL
RISKS
AND
CAPITAL
RISKS
(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
A-24
APPENDIX A
2009 AND 2008
4
FINANCIAL
RISKS
AND
CAPITAL
RISKS
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
NA
50,466
—
—
2.34
19,774
60,536
115,980
(37,947)
158,343
70,240
60,536
115,980
(37,947)
208,809
NA
46,189
—
—
2.55
15,907
61,322
108,600
(38,799)
147,030
62,096
61,322
108,600
(38,799)
193,219
NA
27,072
—
—
2.18
9,626
43,016
84,768
(31,981)
105,429
36,698
43,016
84,768
(31,981)
132,501
2010
Non-interest
bearing
Variable interest
rate instruments
Total
—
50,466
2009
Non-interest
bearing
Variable interest
rate instruments
Total
—
46,189
2008
Non-interest
bearing
Variable interest
rate instruments
Total
—
27,072
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.
A-25
APPENDIX A
2009 AND 2008
4
FINANCIAL
RISKS
AND
CAPITAL
RISKS
(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, the management 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.
A-26
APPENDIX A
2009 AND 2008
5
HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS (continued)
During the Relevant Periods, the Group entered into the following transactions with
related companies:
Dividends paid to the ultimate holding company
6
2010
$’000
2009
$’000
2008
$’000
19,000
9,000
5,386
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:
Salaries and related costs paid to key management
personnel and relatives of a director
2010
$’000
2009
$’000
2008
$’000
897
817
621
Compensation of directors and key management personnel
The remuneration of directors and other members of key management are as follows:
Short-term benefits
Post-employment benefits
A-27
2010
$’000
2009
$’000
2008
$’000
689
637
356
18
28
10
707
665
366
APPENDIX A
2009 AND 2008
7
CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
2010
$’000
2009
$’000
2008
$’000
28
34
27
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
External parties
2010
$’000
2009
$’000
2008
$’000
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
Prepayments
Deposits
(1)
Advances to the ultimate holding company (Note 5)
Others
2010
$’000
2009
$’000
2008
$’000
44
29
1
1,699
92
682
4,155
10,983
14,783
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.
A-28
APPENDIX A
2009 AND 2008
10
PROPERTIES UNDER DEVELOPMENT
Land cost and other related costs
Development costs
Property taxes and other overhead expenses
2010
$’000
2009
$’000
2008
$’000
25,690
247
909
23,000
—
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)
Freehold
2,056
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
A-29
A-30
11
7,115
—
143,510
—
424,520
At 31 December 2010
31,870
—
—
24,755
—
—
48,687
—
281,010
—
—
—
—
—
—
—
—
24,013
(1,580)
227,760
—
—
4,563
—
—
—
195,120
—
10,207
$’000
$’000
At 31 December 2009
Addition
Transfer
Revaluation Increase/
(Decrease)
Disposals
At 31 December 2008
Additions
Adjustment
Transfer
Revaluation
Increase/(Decrease)
Disposals
Cost or valuation:
At 1 January 2008
Additions
Transfer
Revaluation
Increase/(Decrease)
Disposals
Leasehold
land
Freehold
land
74,810
1,079
—
70,430
94
3,207
(314)
—
69,210
—
(53)
1,587
(565)
(420)
65,280
342
4,573
$’000
7,450
—
—
7,450
—
—
—
—
7,450
—
—
—
—
—
—
—
7,450
$’000
Hotel
Office
buildings premises
PROPERTY, PLANT AND EQUIPMENT
184
—
—
140
44
—
—
(26)
166
—
—
—
—
—
70
96
—
$’000
Motor
vehicles
867
—
—
814
53
—
—
—
771
43
—
—
—
(13)
609
175
—
$’000
544
—
—
434
110
—
—
(5)
326
113
—
—
—
(1)
225
102
—
$’000
Furniture
fixtures
and
Office
fittings equipment
667
—
(42)
588
121
—
(94)
374
308
—
—
—
(31)
264
141
—
$’000
Computers
537
—
—
509
28
—
—
—
494
15
—
—
—
—
291
203
—
$’000
Electrical
installation
1,747
—
—
799
948
—
—
—
187
612
—
—
—
—
184
3
—
$’000
Renovations
161,079
103,918
—
64,760
20,363
(27,962)
7,200
—
18,000
45,710
—
(6,150)
691
—
13,207
26,332
(22,230)
$’000
Constructionin-progress
704,275
255,622
(42)
426,934
21,761
—
55,573
(125)
324,738
46,801
(53)
—
24,139
(2,045)
275,250
27,394
—
$’000
Total
APPENDIX A
INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED
31 DECEMBER 2010, 2009 AND 2008
A-31
11
December 31, 2010
At cost
At valuation
December 31, 2009
At cost
At valuation
Comprising:
December 31, 2008
At cost
At valuation
—
31,870
31,870
424,520
—
281,010
—
424,520
—
—
—
227,760
—
281,010
—
—
$’000
$’000
—
227,760
Leasehold
land
Freehold
land
74,810
—
74,810
70,430
—
70,430
69,210
—
69,210
$’000
7,450
7,450
—
7,450
7,450
—
7,450
7,450
—
$’000
Hotel
Office
buildings premises
PROPERTY, PLANT AND EQUIPMENT (continued)
184
184
—
140
140
—
166
166
—
$’000
Motor
vehicles
867
867
—
814
814
—
771
771
—
$’000
544
544
—
434
434
—
326
326
—
$’000
Furniture
fixtures
and
Office
fittings equipment
667
667
—
588
588
—
374
374
—
$’000
Computers
537
537
—
509
509
—
494
494
—
$’000
Electrical
installation
1,747
1,747
—
799
799
—
187
187
—
$’000
Renovations
161,079
—
161,079
64,760
—
64,760
18,000
—
18,000
$’000
704,275
11,996
692,279
426,934
10,734
416,200
324,738
9,768
314,970
$’000
Total
APPENDIX A
31 DECEMBER 2010, 2009 AND 2008
A-32
11
(20)
—
—
—
—
227,760
281,010
424,520
At 31 December 2010
Carrying amount:
At 31 December 2008
At 31 December 2009
At 31 December 2010
31,870
—
—
—
—
20
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$’000
$’000
At 31 December 2009
Depreciation
Eliminated on
revaluation
Disposals
At 31 December 2008
Depreciation
Eliminated on
revaluation
Disposals
Accumulated
depreciation:
At 1 January 2008
Depreciation
Eliminated on
revaluation
Disposals
Leasehold
land
Freehold
land
74,810
70,430
69,210
—
(1,314)
—
—
1,314
(1,270)
—
—
1,270
(1,215)
(2)
—
1,217
$’000
7,310
7,361
7,412
140
—
—
89
51
—
—
38
51
—
—
—
38
$’000
Hotel
Office
buildings premises
102
91
125
82
—
—
49
33
—
(20)
41
28
—
—
15
26
$’000
Motor
vehicles
168
181
196
699
—
—
633
66
—
—
575
58
—
(8)
541
42
$’000
229
180
107
315
—
—
254
61
—
(3)
219
38
—
(1)
200
20
$’000
Furniture
fixtures
and
Office
fittings equipment
385
373
207
282
—
(41)
215
108
—
(68)
167
116
—
(27)
147
47
$’000
Computers
178
241
318
359
—
—
268
91
—
—
176
92
—
—
98
78
$’000
Electrical
installation
1,291
657
77
456
—
—
142
314
—
—
110
32
—
—
78
32
$’000
Renovations
161,079
64,760
18,000
—
—
—
—
—
—
—
—
—
—
—
—
—
$’000
701,942
425,284
323,412
2,333
(1,334)
(41)
1,650
2,058
(1,270)
(91)
1,326
1,685
(1,215)
(38)
1,079
1,500
$’000
Total
APPENDIX A
31 DECEMBER 2010, 2009 AND 2008
APPENDIX A
2009 AND 2008
11
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 constructionin-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
$’000
2009
$’000
2008
$’000
Freehold land
95,433
95,433
90,870
Leasehold land
13,898
—
—
Hotel buildings
51,317
46,211
45,629
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
999 years
Leasehold
348
80
Fragrance Hotel — Classic
418 Balestier Road
Singapore 329808
Freehold
265
48
Fragrance Hotel — Crystal
Singapore 398824
Freehold
1,051
125
Fragrance Hotel — Emerald
20 Lorong 6 Geylang
Singapore 399174
Freehold
818
126
Fragrance Hotel — Bugis
33 Middle Road
Singapore 188942
A-33
APPENDIX A
2009 AND 2008
11
Tenure
Land area
(sq m)
Number of
rooms
Fragrance Hotel — Imperial
28 Penhas Road
Singapore 208187
Freehold
544
74
Fragrance Hotel — Kovan
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
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
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
A-34
APPENDIX A
2009 AND 2008
11
Tenure
Land area
(sq m)
Number of
rooms
Fragrance Hotel — Waterfront
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
—
Freehold
680
—
Fragrance Building
168 Changi Road
Singapore 419730
(1) These properties are undergoing development works, additions and alteration works as at 31 December
2010.
12
TRADE PAYABLES
External parties
2010
$’000
2009
$’000
2008
$’000
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 PAYABLES
Accruals
Withholding income tax on staff costs
Advances from the ultimate holding company (Note 5)
Deposits received in advance
Others
A-35
2010
$’000
2009
$’000
2008
$’000
4,070
118
45,064
708
26
1,926
130
42,886
562
11
1,533
132
24,179
218
5
49,986
45,515
26,067
APPENDIX A
2009 AND 2008
14
TERM LOANS
Term loan
2010
$’000
2009
$’000
2008
$’000
158,343
147,030
105,429
Less: Amount due for settlement within 12 months
(shown under current liabilities)
Amount due for settlement after 12 months
(7,895)
150,448
(12,198)
(6,433)
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:
At 1 January 2008
Credit to other comprehensive income for the
year
Charge to profit or loss for the year (Note 21)
Accelerated
tax
depreciation
$’000
55
—
55
At 31 December 2008
Charge to other comprehensive income
for the year
Charge to profit or loss for the year (Note 21)
Effect of change in tax rate
110
At 31 December 2009
for the year
Charge to profit or loss for the year
(Note 21)
At 31 December 2010
A-36
Revaluation of
leasehold land and
hotel buildings
including
constructionin-progress
$’000
3,653
(3)
—
Total
$’000
3,708
(3)
55
3,650
3,760
1,005
—
(37)
1,005
29
(43)
133
4,618
4,751
—
19,059
19,059
5
—
5
138
23,677
23,815
—
29
(6)
APPENDIX A
2009 AND 2008
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
Hotel room revenue
Rental revenue
Others
2010
$’000
2009
$’000
2008
$’000
42,018
32,870
35,564
2,197
1,709
969
—
—
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
$’000
2009
$’000
2008
$’000
Income from vending machines and internet services
150
98
88
Others
130
123
108
280
221
196
A-37
APPENDIX A
2009 AND 2008
20
FINANCE COSTS
Interest on term loans
21
2010
$’000
2009
$’000
2008
$’000
3,001
3,184
3,239
2010
$’000
2009
$’000
2008
$’000
4,310
2,835
3,596
5
29
55
(55)
9
(146)
—
(6)
INCOME TAX EXPENSE
Current tax
Deferred tax
(Over) Under provision in prior years — current tax
Effect of change in tax rate
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
$’000
2009
$’000
2008
$’000
24,115
16,378
19,636
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)
Income tax expense at the statutory rate
Tax exempt profit
(104)
9
(104)
(146)
(114)
Effect due to change in tax rates
—
(6)
—
Others
74
(38)
(8)
Net
4,260
A-38
2,867
3,505
APPENDIX A
2009 AND 2008
22
PROFIT FOR THE YEAR
Profit for the year has been arrived at after charging:
2010
$’000
2009
$’000
2008
$’000
Directors’ remuneration
340
209
—
Costs of defined contribution plans included in staff
costs
634
543
462
6,407
5,574
5,126
Staff costs
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.
A-39
APPENDIX A
2009 AND 2008
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
$’000
Boutique
hotel
operations
$’000
Total
$’000
640,600
98,255
738,855
199,550
38,217
237,767
446,004
17,692
463,696
185,640
15,721
201,361
340,007
2,017
342,024
140,058
17
140,075
2010
Segment assets
Assets:
Segment assets
Segment liabilities
Liabilities:
Segment liabilities
2009
Segment assets
Assets:
Segment assets
Segment liabilities
Liabilities:
Segment liabilities
2008
Segment assets
Assets:
Segment assets
Segment liabilities
Liabilities:
Segment liabilities
A-40
APPENDIX A
2009 AND 2008
25
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:
Within one year
In the second to fifth year inclusive
27
2010
$’000
2009
$’000
2008
$’000
1,864
1,667
1,263
700
745
296
2,564
2,412
1,559
2010
$’000
2009
$’000
2008
$’000
6,577
9,897
4,299
COMMITMENTS
Estimated amounts committed/contracted but not
provided for in the financial statements
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.
A-41
APPENDIX A
2009 AND 2008
28
SUBSEQUENT EVENTS (continued)
(b) On 30 September 2011, the Group contracted to sell 2 properties that were
undergoing major 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;
(ii)
comprising 1,000,000 ordinary shares in the capital of Fragrance Ventures Pte
Ltd, resulting in Fragrance Ventures Pte Ltd becoming a wholly-owned
A-42
APPENDIX A
2009 AND 2008
28
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
A-43
APPENDIX A
2009 AND 2008
28
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:
(i)
(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
A-44
APPENDIX A
2009 AND 2008
28
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 PostInvitation 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.
A-45
APPENDIX A
2009 AND 2008
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
A-46
APPENDIX B
INDEPENDENT AUDITORS’ REPORT ON THE COMBINED INTERIM
CONDENSED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED 30 SEPTEMBER 2011
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
B-1
APPENDIX B
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
We have 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
B-2
APPENDIX B
COMBINED STATEMENT OF FINANCIAL POSITION
As at 30 September 2011
Note
As at
30 September
2011
(Audited)
$’000
As at
31 December
2010
(Audited)
$’000
ASSETS
Current assets
3,899
2,811
Trade receivables
9
1,511
1,274
Other receivables
10
47,443
5,982
11
—
26,846
52,853
36,913
738,718
701,942
791,571
738,855
Non-current asset
12
Total assets
Current liabilities
Trade payables
13
1,194
1,188
Other payables
14
5,584
49,986
Term loans
15
32,643
7,895
8,065
4,435
47,486
63,504
Income tax payable
Term loans
15
108,838
150,448
Deferred tax liabilities
16
26,447
23,815
135,285
174,263
Share capital
17
27,100
27,100
Revaluation reserve
18
511,459
451,552
70,241
22,436
Total equity
608,800
501,088
791,571
738,855
Retained earnings
See accompanying notes to combined interim condensed financial statements.
B-3
APPENDIX B
COMBINED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended 30 September 2011
1 January 2011
to
30 September
2011
$’000
(Audited)
1 January 2010
to
30 September
2010
$’000
(Unaudited)
38,929
32,284
Cost of sales
(4,571)
(3,867)
Gross profit
34,358
28,417
344
203
Note
19
Revenue
20
(11,296)
(8,754)
(2,158)
(2,346)
21,248
17,520
(3,930)
(3,040)
17,318
14,480
Revaluation of land and hotel buildings
97,083
209,715
Income tax effects
(6,689)
(11,086)
90,394
198,629
107,712
213,109
3.15
2.63
Finance costs
21
Income tax expense
22
Profit for the period
Other comprehensive income:
Total comprehensive income for the period
Basic and diluted earnings per share (cents)
23
B-4
APPENDIX B
COMBINED STATEMENT OF CHANGES IN EQUITY
Share
capital
$’000
Revaluation
reserve
$’000
Retained
earnings
$’000
Total
$’000
27,100
451,552
22,436
501,088
Audited
Transfer on sale of land, hotel buildings and
construction-in-progress
—
(30,487)
30,487
—
—
90,394
17,318
107,712
27,100
511,459
70,241
608,800
27,100
213,654
21,581
262,335
—
198,629
14,480
213,109
Dividends paid
—
—
(10,000)
(10,000)
27,100
412,283
26,061
465,444
Balance at 30 September 2011
Unaudited
Balance at 30 September 2010
B-5
APPENDIX B
COMBINED STATEMENTS OF CASH FLOWS
1 January
2011 to
30 September
2011
$’000
(Audited)
1 January
2010 to
30 September
2010
$’000
(Unaudited)
21,248
17,520
Depreciation of property, plant and equipment
1,904
1,524
Interest expense
2,158
2,346
Adjustments for:
Interest income
(36)
Operating cash flows before movements in working capital
Trade receivables
25,274
(237)
Other receivables (Note A)
1,017
Property under development
(1,563)
—
21,390
(247)
(170)
(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)
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
—
36
—
Net cash from operating activities
Interest received
Net cash from (used in) investing activities
40,919
B-6
(15,035)
APPENDIX B
1 January
2011 to
30 September
2011
$’000
(Audited)
1 January
2010 to
30 September
2010
$’000
(Unaudited)
Advances from (to) ultimate holding company
4,154
(1,072)
(44,939)
2,028
Proceeds from borrowings
4,233
33,313
Repayment of borrowings
(21,573)
(24,200)
Repayments (to) from ultimate holding company
Dividend paid
—
Net cash (used in) from financing activities
(58,125)
(10,000)
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.
B-7
APPENDIX B
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.
B-8
APPENDIX B
4
OPERATIONS IN THE INTERIM PERIOD
The Group’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.
6
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.
B-9
APPENDIX B
7
HOLDING COMPANY AND RELATED COMPANY TRANSACTIONS (continued)
During the period, the Group entered into the following transactions with related
companies:
Sale of office premises and properties under development
8
1 January
2011 to
30 September
2011
$’000
1 January
2010 to
30 September
2010
$’000
35,799
—
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:
Salaries and related costs paid to key management personnel
and relatives of a director
1 January
2011 to
30 September
2011
$’000
1 January
2010 to
30 September
2010
$’000
520
468
Compensation of directors and key management personnel
The remuneration of directors and other members of key management are as follows:
Short-term benefits
Post-employment benefits
B-10
1 January
2011 to
30 September
2011
$’000
1 January
2010 to
30 September
2010
$’000
484
337
20
15
504
352
APPENDIX B
9
TRADE RECEIVABLES
External parties
As at
30 September
2011
$’000
As at
31 December
2010
$’000
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 and management has considered the quality of the debts and determined that no
allowance is required.
10
OTHER RECEIVABLES AND DEPOSITS
As at
30 September
2011
$’000
As at
31 December
2010
$’000
Prepayments
596
44
Deposits
420
1,699
—
4,155
Amount due from related companies (Note 7)
31,799
—
Amount due from an external party
14,355
—
273
84
47,443
5,982
Advances to the ultimate holding company (Note 7)
Others
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.
B-11
APPENDIX B
11
PROPERTIES UNDER DEVELOPMENT
As at
30 September
2011
$’000
As at
31 December
2010
$’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
External parties
As at
30 September
2011
$’000
As at
31 December
2010
$’000
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.
B-12
APPENDIX B
14
OTHER PAYABLES
As at
30 September
2011
$’000
As at
31 December
2010
$’000
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
30
26
5,584
49,986
As at
30 September
2011
$’000
As at
31 December
2010
$’000
Term loan
141,481
158,343
Less: Amount due for settlement within 12 months
(shown under current liabilities)
(32,643)
Amount due for settlement after 12 months
108,838
Accruals
Others
15
16
TERM LOANS
(7,895)
150,448
DEFERRED TAX LIABILITIES
The movement in deferred tax liabilities position during the period is as follows:
Accelerated
tax
depreciation
$’000
Revaluation of
leasehold land and
hotel buildings
including
constructionin-progress
$’000
Total
$’000
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)
At 1 January 2011
At 30 September 2011
134
B-13
—
26,313
(4)
26,447
APPENDIX B
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
Hotel room revenue
Rental revenue
1 January
2011 to
30 September
2011
$’000
1 January
2010 to
30 September
2010
$’000
37,272
30,592
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
$’000
Interest income
1 January
2010 to
30 September
2010
$’000
36
–
Income from vending machines and internet services
200
103
Others
108
100
344
203
B-14
APPENDIX B
21
FINANCE COSTS
Interest on term loans
22
1 January
2011 to
30 September
2011
$’000
1 January
2010 to
30 September
2010
$’000
2,158
2,346
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.
B-15
APPENDIX B
24
Business segments
The Group comprises the two main business segments which are budget hotels
operations and boutique hotel operations.
Budget
hotels
Operations
$’000
Boutique
hotel
operations
$’000
Total
$’000
Nine months ended 30 September 2011
REVENUE
34,692
4,237
38,929
30,688
3,670
34,358
318
26
344
RESULT
Segment result
Other operating expenses
(9,765)
(1,531)
(11,296)
Finance costs
(1,826)
(332)
(2,158)
19,415
Income tax
(3,625)
Profit after income tax
15,790
1,529
17,318
687,616
103,955
791,571
149,271
33,500
182,771
1,833
(304)
21,248
(3,930)
Segment assets
Assets:
Segment assets
Segment liabilities
Liabilities:
Segment liabilities
B-16
APPENDIX B
24
Budget
hotels
Operations
$’000
Boutique
hotel
operations
$’000
Total
$’000
Nine months ended 30 September 2010
REVENUE
32,284
—
32,284
28,417
—
28,417
203
—
203
RESULT
Segment result
Other operating expenses
(8,740)
(14)
(8,754)
Finance costs
(2,346)
—
(2,346)
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
199,550
38,217
237,767
Segment liabilities
Liabilities:
Segment 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
Estimated amounts committed/contracted but not provided
for in the financial statements
B-17
As at
30 September
2011
$’000
As at
30 September
2010
$’000
348
5,276
APPENDIX B
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:
(i)
(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:
B-18
APPENDIX B
26
(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 PostInvitation 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
B-19
APPENDIX B
26
(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:
(i)
(ii)
B-20
APPENDIX B
26
(v)
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;
(c)
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.
B-21
APPENDIX B
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
B-22
APPENDIX C
INDEPENDENT AUDITORS’ REPORT ON THE UNAUDITED
PRO FORMA COMBINED FINANCIAL INFORMATION
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
C-1
APPENDIX C
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) each material 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
C-2
APPENDIX C
UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION
As at 31 December 2010
Explanatory
note
ASSETS
Current assets
Trade receivables
Other receivables
2(e)
2(a), 2(b),
2(c), 2(d),
2(e)
2(d)
Non-current asset
2(a), 2(b),
2(c)
Total assets
Current liabilities
Trade payables
Other payables
Term loans
Income tax payable
2(a), 2(b),
2(d), 2(e),
2(f)
2(a), 2(c),
2(d), 2(e)
2(a), 2(b),
2(c), 2(d)
Term loans
2(a), 2(b),
2(c), 2(d),
2(e)
2(a), 2(b)
Unaudited
Pro Forma
adjustments
$’000
Unaudited
Pro Forma
combined
statement of
financial
position
$’000
2,811
1,274
5,982
16,332
—
40,037
19,143
1,274
46,019
26,846
(26,846)
36,913
29,523
66,436
701,942
(59,336)
642,606
738,855
(29,813)
709,042
1,188
49,986
—
90,907
1,188
140,893
7,895
12,252
20,147
4,435
3,884
8,319
63,504
107,043
170,547
150,448
292,587
443,035
Audited
combined
statement of
financial
position
$’000
23,815
174,263
C-3
(4,287)
288,300
—
19,528
462,563
APPENDIX C
Audited
combined
statement of
financial
position
$’000
Unaudited
Pro Forma
adjustments
$’000
Unaudited
Pro Forma
combined
statement of
financial
position
$’000
27,100
451,552
—
22,436
110,400
(24,208)
(530,900)
19,552
137,500
427,344
(530,900)
41,988
Total equity
501,088
(425,156)
75,932
738,855
(29,813)
709,042
Explanatory
note
Share capital
Revaluation reserve
Merger reserve
Retained earnings
2(e)
2(a), 2(b)
2(e)
2(a), 2(b),
2(c), 2(d),
2(f)
C-4
APPENDIX C
UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2010
Audited
combined
statement of
Explanatory comprehensive
note
income
$’000
Revenue
Cost of services
2(b), 2(c), 2(d)
44,215
2(a)
(5,156)
Gross profit
Loss on disposal of property, plant
and equipment
2(a), 2(b)
2(c)
Unaudited
Pro Forma
combined
Unaudited
statement of
Pro Forma comprehensive
adjustments
income
$’000
$’000
(1,750)
(840)
42,465
(5,996)
39,059
(2,590)
36,469
280
(16)
264
—
(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)
24,115
Income tax expense
2(a), 2(b), 2(c),
2(d)
(1,045)
23,070
(4,260)
169
(4,091)
19,855
(876)
18,979
2(a), 2(b)
256,957
(28,494)
228,463
2(b)
(19,059)
4,286
(14,773)
237,898
(24,208)
213,690
Total comprehensive income
257,753
(25,084)
232,669
Profit for the year
Other comprehensive income
Revaluation of land and hotel
buildings
Income tax effects
Basic and diluted earnings per share
(cents)
3.61
C-5
3.45
APPENDIX C
UNAUDITED PRO FORMA COMBINED STATEMENT OF CASH FLOWS
For the year ended 31 December 2010
Unaudited
Audited
Pro Forma
combined
Unaudited
combined
Explanatory statement of Pro Forma statement of
note
cash flows adjustments cash flows
$’000
$’000
$’000
2(a), 2(b),
2(c), 2(d)
24,115
(1,045)
23,070
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)
Adjustments for:
Interest expense
2(a), 2(b),
2(c), 2(d)
Operating cash flows before movements
in working capital
Trade receivables
Other receivables
52
(949)
2,052
29,175
(2,029)
27,146
(1,662)
(48)
—
(22,292)
—
(289)
(23,954)
(48)
2(a), 2(b),
2(d)
2,293
5,471
7,764
2(d)
(3,026)
26,846
23,820
26,443
7,996
34,439
Cash generated from (used in)
operations
Interest paid
51
3,001
(289)
2(a), 2(b),
2(c), 2(d),
2(e)
Trade payables
Other payables
1
2(a), 2(b),
2(c), 2(d)
Income tax paid
Net cash from (used in) operating
activities
(3,917)
949
(2,968)
(2,648)
—
(2,648)
19,878
8,945
28,823
(20,940)
(2,533)
(23,473)
50,145
50,145
47,612
26,672
Purchase of property, plant and
equipment
2(a), 2(b)
Proceeds from disposal of property,
plant and equipment
2(a), 2(b),
2(c), 2(d)
Net cash (used in) from investing
activities
—
(20,940)
C-6
APPENDIX C
Unaudited
Audited
Pro Forma
combined
Unaudited
combined
Explanatory statement of Pro Forma statement of
note
cash flows adjustments cash flows
$’000
$’000
$’000
Advances from (to) ultimate holding
company
2(e)
Repayments from ultimate holding
company
2,178
(345,064)
(342,886)
6,828
—
6,828
Proceeds from term loans
2(e)
36,499
463,182
499,681
2(a), 2(b),
2(c), 2(d),
2(e)
(25,090)
(158,343)
(183,433)
Dividend paid
(19,000)
Net cash from (used in) financing
activities
1,415
—
(19,000)
(40,225)
(38,810)
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
Net increase in cash and cash
equivalents
C-7
APPENDIX C
UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITION
Explanatory
note
ASSETS
Current assets
Trade receivables
Other receivables
2(e)
2(b), 2(e)
Audited
combined
statement of
financial
position
$’000
Unaudited
Pro Forma
adjustments
$’000
Unaudited
Pro Forma
combined
statement of
financial
position
$’000
3,899
1,511
47,443
7,689
—
(31,835)
11,588
1,511
15,608
52,853
(24,146)
28,707
Non-current asset
738,718
Total assets
791,571
—
738,718
(24,146)
767,425
1,194
5,584
—
85,498
1,194
91,082
32,643
8,065
(12,496)
(144)
20,147
7,921
47,486
72,858
120,344
108,838
26,447
334,197
—
443,035
26,447
135,285
334,197
469,482
27,100
511,459
—
70,241
110,400
—
(530,900)
(10,701)
137,500
511,459
(530,900)
59,540
Total equity
608,800
(431,201)
177,599
791,571
(24,146)
767,425
Current liabilities
Trade payables
Other payables
Term loans
Income tax payable
2(a), 2(b),
2(c), 2(d),
2(e), 2(f)
2(e)
2(a), 2(b),
2(c), 2(d)
Term loans
2(e)
Share capital
Revaluation reserve
Merger reserve
Retained earnings
2(e)
2(e)
2(a), 2(b),
2(c), 2(d),
2(f)
C-8
APPENDIX C
UNAUDITED PRO FORMA COMBINED STATEMENT OF COMPREHENSIVE INCOME
Explanatory
note
Revenue
Cost of services
Audited
combined
statement of
comprehensive
income
$’000
2(c), 2(d)
38,929
2(a)
(4,571)
Gross profit
Unaudited
Pro Forma
adjustments
$’000
(1,069)
(630)
Unaudited
Pro Forma
combined
statement of
comprehensive
income
$’000
37,860
(5,201)
34,358
(1,699)
32,659
344
(36)
308
2(b)
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)
21,248
(845)
20,403
(3,930)
144
(3,786)
17,318
(701)
16,617
Income tax expense
2(a), 2(b),
2(c), 2(d)
Profit for the period
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
Basic and diluted earnings per
share (cents)
3.15
C-9
(701)
107,011
3.02
APPENDIX C
UNAUDITED PRO FORMA COMBINED STATEMENT OF CASH FLOWS
Explanatory
note
Adjustments for:
Depreciation of property, plant and
equipment
Interest expense
Interest income
Operating cash flows before
movements
in working capital
Trade receivables
Other receivables
Trade payables
Other payables
21,248
(845)
20,403
2(a), 2(c)
1,904
(62)
1,842
2(a), 2(c),
2(d)
2(b)
2,158
(446)
1,712
2(a), 2(b),
2(c), 2(d),
2(e)
2(a), 2(b),
2(c), 2(d),
2(e)
2(a), 2(c),
2(d)
Net cash from operating activities
36
—
(1,317)
23,957
(237)
1,017
—
41,195
(237)
42,212
6
537
—
(39,571)
6
(39,034)
(1,563)
—
(1,563)
25,034
(2,383)
307
446
25,341
(1,937)
(4,357)
—
(4,357)
18,294
753
19,047
2(b)
36
(9,262)
(36)
—
—
(9,262)
2(a), 2(b),
2(c), 2(d)
50,145
(50,145)
40,919
(50,181)
2(e)
4,154
(4,154)
—
2(e)
(44,939)
44,939
—
4,233
(21,573)
—
—
4,233
(21,573)
(58,125)
40,785
(17,340)
Net cash from (used in) investing
activities
Advances from (to) ultimate holding
company
Repayment to ultimate holding
company
Repayment of borrowings
(36)
25,274
Income tax paid
Interest received
Purchase of property, plant and
equipment
Proceeds from disposal of property,
plant and equipment
Unaudited
Pro Forma
adjustments
$’000
Unaudited
Pro Forma
combined
statement of
cash flows
$’000
2(a), 2(b),
2(c), 2(d)
Cash generated from operations
Interest paid
Audited
combined
statement of
cash flows
$’000
Net cash used in financing activities
C-10
—
(9,262)
APPENDIX C
Audited
combined
statement of
cash flows
$’000
Unaudited
Pro Forma
adjustments
$’000
Unaudited
Pro Forma
combined
statement of
cash flows
$’000
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents at
beginning of period
1,088
(8,643)
(7,555)
2,811
16,332
19,143
Cash and cash equivalents at end of
period
3,899
7,689
11,588
Explanatory
note
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.
C-11
APPENDIX C
(d) Disposal of properties under development
On 30 September 2011, the Group contracted to sell 2 properties which are located
at 216 1 242 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:
(i)
(ii)
C-12
APPENDIX C
(v)
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;
(c)
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.
C-13
APPENDIX C
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 Premium Hotels 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 nine months 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.
C-14
APPENDIX C
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
$’000
As at
30 September
2011
$’000
Other receivables
12,334
—
(6,100)
—
Other payables
1,787
Term loans (Current)
Term loans (Non-current)
Income tax payable
566
(180)
—
(1,986)
—
(127)
(97)
(1)
—
Revaluation reserve
(3,279)
—
Retained earnings
10,020
(469)
Unaudited Pro Forma combined statement of comprehensive income
Increase (Decrease)
Cost of sales
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
840
630
(2)
—
(51)
(36)
Finance costs
(39)
(28)
(128)
(97)
Income tax expense
C-15
APPENDIX C
Unaudited Pro Forma combined statement of cash flows
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
(752)
(566)
Depreciation
(35)
(24)
Interest expense
(39)
(28)
Other receivables
2,021
145
Other payables
1,787
590
Interest paid
(39)
(28)
145
(145)
Proceeds from disposal of property, plant and
equipment
Additions to property, plant and equipment
(1,000)
—
(2,166)
—
Financing activity
(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)
Other receivables
Other payables
Income tax payable
C-16
As at
31 December
2010
$’000
As at
30 September
2011
$’000
31,775
(36)
(45,846)
—
1,533
(58)
(14,437)
—
4,088
4
APPENDIX C
Increase (Decrease)
As at
31 December
2010
$’000
Revaluation reserve
Retained earnings
As at
30 September
2011
$’000
(4,286)
—
(20,929)
—
19,960
18
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
(266)
—
(14)
(36)
(204)
(58)
Finance costs
(288)
—
36
4
Revenue
Income tax expense
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
Interest expense
Interest income
212
22
(288)
—
—
Other receivables
(31,775)
Other payables
1,533
Interest paid
(288)
C-17
36
46,036
(58)
—
APPENDIX C
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
Interest received
—
(36)
equipment
46,000
(46,000)
Additions to property, plant and equipment
(1,533)
—
(14,437)
—
Financing activity
(c) Disposal of office premises
Effect of disposal of office premises located at 168 Changi Road Singapore 419730
Increase (Decrease)
Other receivables
Other payables
As at
31 December
2010
$’000
As at
30 September
2011
$’000
2,870
—
(7,390)
—
—
(35)
(326)
—
(4,277)
—
Income tax payable
23
6
Retained earnings
60
29
C-18
APPENDIX C
Increase (Decrease)
Revenue
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
(298)
(244)
51
—
(292)
(203)
Finance costs
(140)
(76)
23
6
Income tax expense
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
Depreciation
Interest expense
Other receivables
Other payables
Interest paid
83
35
(51)
(38)
51
—
(140)
(76)
2,520
2,000
—
3
(140)
(76)
Investing activity
equipment
2,000
(2,000)
Financing activity
(4,603)
C-19
—
APPENDIX C
(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
$’000
Other receivables
Other payables
As at
30 September
2011
$’000
10,460
—
(26,846)
—
2,151
336
(420)
—
(17,529)
—
Income tax payable
(100)
(57)
Retained earnings
(488)
(279)
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
(1,186)
(825)
(116)
(147)
Finance costs
(482)
(342)
Income tax expense
(100)
(57)
Revenue
C-20
APPENDIX C
Increase (Decrease)
1 January
2010 to
31 December
2010
1 January
2011 to
30 September
2011
$’000
$’000
(588)
(336)
Interest expense
(482)
(342)
Other receivables
(12,460)
Other payables
Interest paid
2,000
2,151
336
26,846
—
(482)
(342)
Investing activity
equipment
2,000
(2,000)
Financing activity
(17,949)
—
(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
16,332
7,689
(17,402)
(31,799)
Other payables
75,436
74,689
13,178
(12,496)
330,816
334,197
Share capital
110,400
110,400
(530,900)
(530,900)
Other receivables
Merger reserve
C-21
APPENDIX C
Increase (Decrease)
1 January
2010 to
31 December
2010
$’000
1 January
2011 to
30 September
2011
$’000
Other receivables
Other payables
17,402
(8,986)
—
(40,442)
Advances (to) from ultimate holding company
(4,154)
463,182
—
(119,188)
—
Repayments (to) from ultimate holding company
(f)
(345,064)
—
44,939
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)
Other payables
Retained earnings
As at
31 December
2010
$’000
As at
30 September
2011
$’000
10,000
10,000
(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.
C-22
APPENDIX D
SUMMARY OF MEMORANDUM AND
ARTICLES OF ASSOCIATION OF OUR COMPANY
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 such manner 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
D-1
APPENDIX D
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
2.
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.
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
issued may 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
D-2
APPENDIX D
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 a member 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;
D-3
APPENDIX D
(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
D-4
APPENDIX D
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 threefourths 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.
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APPENDIX D
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.
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APPENDIX D
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.
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APPENDIX D
Article 141
3.
A transfer of a share shall not pass the right to any dividend
declared in respect thereof before the transfer has been
registered.
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
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APPENDIX D
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
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APPENDIX D
(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.
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APPENDIX E
DESCRIPTION OF OUR SHARES
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. We may, 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.
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APPENDIX E
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 and must set forth the place, the day and the hour of the meeting 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
the meeting or by any Shareholder present in person or by proxy and representing not less than
E-2
APPENDIX E
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 we may 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 representing more 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);
E-3
APPENDIX E
(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:
(f)
(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;
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).
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APPENDIX E
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.
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APPENDIX E
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.
E-6
APPENDIX F
TERMS, CONDITIONS AND PROCEDURES
FOR APPLICATION AND ACCEPTANCE
Applications are invited for the subscription of the New Shares at the Issue Price subject to the
following terms and conditions:
1.
YOUR APPLICATION MUST BE MADE 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 be multiple 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
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APPENDIX F
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.
OUR COMPANY WILL ONLY ACCEPT NOMINEE APPLICATIONS FROM APPROVED
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
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APPENDIX F
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, we will (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.
F-3
APPENDIX F
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
F-4
APPENDIX F
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 oversubscription 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
F-5
APPENDIX F
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
F-6
APPENDIX F
(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.
F-7
APPENDIX F
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 and WHITE 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 “FOR OFFICIAL 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
F-8
APPENDIX F
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.
F-9
APPENDIX F
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.
F-10
APPENDIX F
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
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, 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) insert WHITE envelope “A” into WHITE envelope “B”, seal WHITE 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 as we may, in consultation with 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.
F-11
APPENDIX F
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 ATM Electronic 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.
F-12
APPENDIX F
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 OCBC Bank, 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 name will render your Electronic Application
liable to be rejected.
For Internet Electronic Applications, you must 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.
F-13
APPENDIX F
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
F-14
APPENDIX F
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
F-15
Operating
Hours
Service
Expected from
APPENDIX F
Operating
Hours
Service
Expected from
ATM/Phone Banking/
Internet Banking/
www.ocbc.com(1)
24 hours
Evening of the
balloting day
Internet Banking
www.dbs.com(2)
24 hours
Evening of the
balloting day
ATM (Other
Transactions —
“IPO Results Enquiry”)/
Phone Banking
24 hours
Evening of the
balloting day
Bank
Telephone
ATM/Internet
OCBC Bank
1 800 363 3333
DBS Bank
1 800 339 6666
(POSB account
holders)
1 800 111 1111
(DBS Bank account
holders)
UOB Group
1 800 222 2121
www.uobgroup.com
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 ATM Electronic
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
F-16
APPENDIX F
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.
F-17
APPENDIX F
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 nonexclusive 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
F-18
APPENDIX F
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 SGXST, which assumes no responsibility for its contents
•
Where applicable, the
Participating Banks
Prospectus
is
available
at
various
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
F-19
APPENDIX F
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.
F-20
APPENDIX F
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 — Personal
Banking” from the drop lists and click on “GO” to proceed.
4
: Enter your “Access Code” and “PIN” and click on “LOGIN”. Thereafter, enter
the One-Time password (OTP) and click “Submit”.
5
: Select the tab “Investment & Trading” and click on “Initial public offering.” You
will be directed to the ‘Apply for IPO’ page.
6
: Answer the five questions under the section entitled “Fill In Details” by
selecting “Yes” or “No” and selecting the relevant country of residence (you
must be residing in Singapore to apply).
7
: Read the important information on “Electronic Security Application (ESA)” on
the screen and click on the check box to acknowledge that you have read and
understood the declaration.
Click on “Confirm” on the lower right hand corner.
For first-time Electronic Security Application (ESA) applicants, you will be
prompted to fill in your CDP Account number. After filling in the CDP Account
number, click on “Next”.
8
: Under section “1. Select Securities”, check the details of the share counter that
you 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 and
conditions will be loaded. Read the important information on the screen and
click on the check box at the bottom of the screen to acknowledge that you
have read and understood the declaration.
Click on “Next”.
10 : Under section “2. Investment Details”, click on the checkbox next to “Apply
using cash” if you are applying for the shares using cash and key in the number
of units you intend to apply for.
Click on “Next”.
11 : Under “Review Application”, check your personal details, details of the share
counter 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’.
F-21
APPENDIX G
TAXATION
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.
G-1
APPENDIX G
TAXATION
The current rates of tax for a tax resident of Singapore vary according to the individual’s
chargeable income, ranging from 0% 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.
G-2
APPENDIX G
TAXATION
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 GSTregistered 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.
G-3
APPENDIX H
RULES OF THE GLOBAL PREMIUM HOTELS PERFORMANCE SHARE PLAN
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
H-1
APPENDIX H
“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
H-2
APPENDIX H
“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
H-3
APPENDIX H
“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
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
the
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 the meaning ascribed to it by
Section 5 and Section 6 of the Act respectively.
H-4
APPENDIX H
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.
H-5
APPENDIX H
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.
H-6
APPENDIX H
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;
H-7
APPENDIX H
(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 being made for
the Shares, a Participant shall be entitled to the Shares or cash equivalent or both under
H-8
APPENDIX H
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
H-9
APPENDIX H
(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=BxC
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 subaccount 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.
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APPENDIX H
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.
H-11
APPENDIX H
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:
H-12
APPENDIX H
(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.
H-13
APPENDIX H
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 any modification or alteration made 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.
H-14
APPENDIX H
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.
H-15
APPENDIX I
VALUER’S REPORT
I-1
APPENDIX I
VALUER’S REPORT
I-2
APPENDIX I
VALUER’S REPORT
I-3
APPENDIX I
VALUER’S REPORT
VALUATION CERTIFICATE
Address of Property
:
THE FRAGRANCE HOTEL
219 Joo Chiat Road
Singapore 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
accommodating 90 guest rooms.
a
4-storey
hotel
with
attic
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/ct
This valuation certificate is subject to the attached Limiting Conditions.
I-4
APPENDIX I
VALUER’S REPORT
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
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 1998
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
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-5
APPENDIX I
VALUER’S REPORT
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
Registered Owner
:
Brief Description
:
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.
Site Area
:
Gross Floor Area
:
Approximately 1,524 sqm (as provided and subject to final survey)
Year of Completion
:
Circa 1996
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$16,900,000/(Singapore Dollars Sixteen Million And Nine Hundred Thousand Only)
TT/CN/ha
I-6
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - PEARL
Singapore 398961
Our Reference
:
2011/210 (D)
Legal Description
:
Lot 6181X Mukim 25
Tenure
:
Freehold
Registered Owner
:
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
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2001
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$37,410,000/(Singapore Dollars Thirty-Seven Million Four Hundred And Ten
Thousand Only)
TT/CN/ha
I-7
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - CRYSTAL
Singapore 398824
Our Reference
:
2011/210 (E)
Legal Description
:
Lot 5438K Mukim 25
Tenure
:
Freehold
Registered Owner
:
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
Gross Floor Area
:
Year of Completion
:
Circa 2002
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$36,250,000/(Singapore Dollars Thirty-Six Million Two Hundred And Fifty Thousand
Only)
TT/CN/ha
I-8
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - RUBY
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 1997
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$48,720,000/(Singapore Dollars Forty-Eight Million Seven Hundred And Twenty
Thousand Only)
TT/CN/ha
I-9
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - SUNFLOWER
Singapore 399043
Our Reference
:
2011/210 (G)
Legal Description
:
Lot 5603N Mukim 25
Tenure
:
Freehold
Registered Owner
:
Brief Description
:
It is located on the western side of Lorong 10 Geylang, off Geylang
Road, and approximately 6 km from the City Centre.
Site Area
:
Gross Floor Area
:
Approximately 733 sqm (as provided and subject to final survey)
Year of Completion
:
Circa 2005
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$8,370,000/(Singapore Dollars Eight Million Three Hundred And Seventy Thousand
Only)
TT/CN/ha
I-10
APPENDIX I
VALUER’S REPORT
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
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2007
Condition
:
Good
Basis of Valuation
:
As-Is basis, subject to vacant possession and free from all encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$17,500,000/(Singapore Dollars Seventeen Million And Five Hundred Thousand Only)
JL/CN/tc
I-11
APPENDIX I
VALUER’S REPORT
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
Registered Owner
:
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
Gross Floor Area
:
Year of Completion
:
Circa 2007
Condition
:
Good
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$37,000,000/(Singapore Dollars Thirty-Seven Million Only)
JL/CN/tc
I-12
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - BALESTIER
255 Balestier Road
Singapore 329710
Our Reference
:
2011/210(J)
Legal Description
:
Lot 914T Town Subdivision 29
Tenure
:
Freehold
Registered Owner
:
Brief Description
:
The subject property comprises
accommodating 48 guest rooms.
a
4-storey
hotel
with
attic,
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2003
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$23,000,000/(Singapore Dollars Twenty-Three Million Only)
DA/CN/ct
I-13
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - ROSE
263 Balestier Road
Singapore 329715
Our Reference
:
2011/210(K)
Legal Description
:
Lot 919L Town Subdivision 29
Tenure
:
Freehold
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Approximately 1,179.2 sqm (as extracted from floor plans prepared by
Architects Associates)
Year of Completion
:
Circa 2005
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$31,300,000/(Singapore Dollars Thirty-One Million And Three Hundred Thousand
Only)
DA/CN/ct
I-14
APPENDIX I
VALUER’S REPORT
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
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Approximately 687.4 sqm (as extracted from H.U.A.Y Architects
drawings)
Year of Completion
:
Circa 2007
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$15,000,000/(Singapore Dollars Fifteen Million Only)
DA/CN/ct
I-15
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - CLASSIC
418 Balestier Road
Singapore 329808
Our Reference
:
2011/210(M)
Legal Description
:
Lot 9245N Mukim 17
Tenure
:
Freehold
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Approximately 840.9 sqm (as provided and subject to final survey)
Year of Completion
:
Circa 2004
Condition
:
Good
Basis of Valuation
:
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$23,800,000/(Singapore Dollars Twenty-Three Million And Eight Hundred Thousand
Only)
DA/CN/ct
I-16
APPENDIX I
VALUER’S REPORT
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
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2005
Condition
:
Good
Basis of Valuation
:
As Is Basis, subject to vacant possession and free from all
encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$60,000,000/(Singapore Dollars Sixty Million Only)
CN/CYC/ct
I-17
APPENDIX I
VALUER’S REPORT
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
Registered Owner
:
Brief Description
:
Subject property is a 5-storey hotel with 80 guest rooms comprising a shop
and 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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2010
Condition
:
Good
Basis of Valuation
:
As Is Basis, subject to vacant possession and free from all encumbrances
:
Date of Valuation
:
31 October 2011
Market Value
:
S$44,000,000/(Singapore Dollars Forty-Four Million Only)
CN/CYC/ct
I-18
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - VIVA
75 Wishart Road
Singapore 098721
Our Reference
:
2011/210 (P)
Legal Description
:
Lot 3680C Mukim 1
Tenure
:
Freehold
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2007
Condition
:
Good
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$20,000,000/(Singapore Dollars Twenty Million Only)
DN/CN/ds
I-19
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL- KOVAN
Singapore 534629
Our Reference
:
2011/210(Q)
Legal Description
:
Lots 99873K & 99874N Mukim 22
Tenure
:
Freehold
Registered Owner
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2006
Condition
:
Good
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$20,000,000/(Singapore Dollars Twenty Million Only)
JL/CN/tc
I-20
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - WATERFRONT
Singapore 118759
Our Reference
:
2011/210 (R)
Legal Description
:
Lot 4580V Mukim 3
Tenure
:
Freehold
Registered Owner
:
Brief Description
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2008
Condition
:
Good
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$33,000,000/(Singapore Dollars Thirty-Three Million Only)
DN/CN/ds
I-21
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - OCEAN VIEW
Singapore 118773
Our Reference
:
2011/210 (S)
Legal Description
:
Lot 4664M Mukim 3
Tenure
:
Freehold
Registered Owner
:
Brief Description
:
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.
Site Area
:
Gross Floor Area
:
Year of Completion
:
Circa 2008
Condition
:
Good
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$26,800,000/(Singapore Dollars Twenty-Six Million And Eight Hundred Thousand Only)
DN/CN/ds
I-22
APPENDIX I
VALUER’S REPORT
Address of Property
:
FRAGRANCE HOTEL - ROYAL
Singapore 098838
Our Reference
:
2011/210 (T)
Legal Description
:
Lot 3865K Mukim 1
Tenure
:
Freehold
Registered Owner
:
Brief Description
:
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.
Site Area
:
Floor Area
:
Year of Completion
:
Circa 2009
Condition
:
Good
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$18,400,000/(Singapore Dollars Eighteen Million And Four Hundred Thousand Only)
DN/CN/ds
I-23
APPENDIX I
VALUER’S REPORT
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
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
Basis of Valuation
:
:
Date of Valuation
:
31 October 2011
Market Value
:
S$108,000,000/(Singapore Dollars One Hundred And Eight Million Only)
CN/CYC/ct
I-24
APPENDIX I
VALUER’S REPORT
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.
Registered Owner
:
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
Gross Floor Area
:
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
:
Date of Valuation
:
31 October 2011
Market Value
:
S$58,600,000/(Singapore Dollars Fifty-Eight Million And Six Hundred Thousand Only)
Subject To Satisfactory Completion And Issuance Of Temporary Occupation Permit And
Certificate Of Statutory Completion
CN/CYC/ct
I-25
(Rooms)
2000
1800
1600
1400
1200
1000
800
600
400
200
0
R: 13.9%
-2011 CAG
Hotels 2006
18
19
23
by Lease Tenure
(Hotels)
25
20
20
2
(S$million)
17
12
Rooms 2006-2011
1,034
1,212
1,316
15
CAGR: 10.8%
1,356
1,436
1,738
8
11
40
40
35
35
5
2006
2007
2008
2009
2010
2011
19
4
0
Freehold
1-5 years
6-10 years
11-15 years
cleanliness
●
●
●
●
●
●
Date*
•
•
•
85.9%
(S$million)
(%)
88.0%
88.3%
90
20
85
15
(%)
60
43.7%
44.9%
39.1%
44.9% 44.5%
20
36.9
34.6
44.2
32.3
38.9
20
15
15
10
10
5
5
0
FY2008
FY2009
FY2010
9M2010
9M2011
0
32.0
29.7
39.1
28.4
34.4
80
10
75
5
16.1
13.5
50
40
25
19.9
14.5
17.3
30
20
10
70
FY2008
FY2009
Gross Profit
FY2010
9M2010
9M2011
Gross Profit Margin
0
FY2008
FY2009
Net Profit
FY2010
9M2010
9M2011
0
Net Profit Margin
●
●
●
●
●
86.7%
88.3%
30
30
10
●
(S$million)
45
25
●
●
Revenue
1
●
channels
and cinemas
●
●
Singapore dollars.
Tel: +65 6348 7888 Fax: +65 6345 5951
by 67,500,000 Shares.
Fragrance Hotels
(a)
Offer; and
(b)
22
1
Placement,
Type of Hotel
Economy-tier hotel
Mid-tier hotel
Target Customer
Basic amenities
Room Rates*

registered by the monetary authority of singapore

Transcription

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