FURAMA LTD. (Incorporated in the Republic of Singapore) (Company Registration Number: G)

Transcription

1 CIRCULAR DATED 13 JANUARY 2010 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. This Circular is issued by Furama Ltd. (the Company). The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold all your shares in the capital of the Company, you should immediately forward this Circular to the purchaser or the bank, stockbroker or agent through whom you effected the sale for transmission to the purchaser. FURAMA LTD. (Incorporated in the Republic of Singapore) (Company Registration Number: G) Circular to Shareholders in relation to THE VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS Bank Ltd. (Incorporated in the Republic of Singapore) (Company Registration No E) FOR AND ON BEHALF OF Samta Hotels Pte. Ltd. (Incorporated in the Republic of Singapore) (Company Registration No C) to acquire all the issued ordinary shares of the Company other than those already owned, controlled or agreed to be acquired by Samta Hotels Pte. Ltd. (the Offeror) Independent Financial Adviser to the Independent Directors of Furama Ltd. PrimePartners Corporate Finance Pte. Ltd. (Incorporated in the Republic of Singapore) (Company Registration No D) SHAREHOLDERS SHOULD NOTE THAT THE OFFER DOCUMENT STATES THAT THE OFFER WILL CLOSE AT 5.30 P.M. ON 27 JANUARY 2010 OR SUCH LATER DATE(S) AS MAY BE ANNOUNCED FROM TIME TO TIME BY OR ON BEHALF OF THE OFFEROR.

2 CONTENTS Page DEFINITIONS... 2 CAUTIONARY NOTE... 5 SUMMARY TIMETABLE... 6 LETTER TO SHAREHOLDERS 1. INTRODUCTION THE OFFER NO CONDITION INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES RATIONALE FOR THE OFFER OFFEROR S INTENTIONS FOR THE COMPANY FINANCIAL ASPECTS OF THE OFFER ADVICE OF PRIMEPARTNERS INDEPENDENT DIRECTORS RECOMMENDATION OVERSEAS SHAREHOLDERS ACTION TO BE TAKEN BY SHAREHOLDERS DIRECTORS RESPONSIBILITY STATEMENT LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD APPENDIX I GENERAL INFORMATION APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY APPENDIX IV STATEMENT OF PROSPECTS APPENDIX V LETTER FROM PRIMEPARTNERS IN RELATION TO THE STATEMENT OF PROSPECTS APPENDIX VI AUDITORS REPORT ON THE STATEMENT OF PROSPECTS APPENDIX VII VALUATION REPORTS

3 DEFINITIONS Unless otherwise defined in this Circular or where the context otherwise requires, the following definitions shall apply: Articles : The articles of association of the Company Auditors or Baker Tilly : Baker Tilly TFWLCL, the auditors of the Company TFWLCL Board of Directors : The board of Directors of the Company as at the Latest Practicable Date CDP : The Central Depository (Pte) Limited Cash Consideration : S$2.00 payable in cash, as more particularly described in paragraph 2.1 of the Letter to Shareholders in this Circular Circular : This circular to Shareholders in relation to the Offer (including the Letter from the IFA to the Independent Directors at page 21 of this Circular) and any other document which may be issued by or on behalf of the Company to amend, revise, supplement or update this circular from time to time Closing Date : 5.30 p.m. on 27 January 2010 or such later date(s) as may be announced from time to time by or on behalf of the Offeror Code : The Singapore Code on Take-overs and Mergers Companies Act : The Companies Act (Chapter 50) of Singapore Company or Furama : Furama Ltd. Concert Party : Any party acting or deemed to be acting in concert with the Offeror DBS Bank : DBS Bank Ltd. DTZ : DTZ Debenham Tie Leung (SEA) Pte Ltd Directors : Directors of the Company as at the Latest Practicable Date Extended Ng Family : Mr Ng Eng Soon, Ms Hong Siew King, Ms Ng Lay Theng, Mr Ng Wei Kok, Mr Ng Wei Ming, Ms Tang Lay Geok and Ms Ng Hui Lan collectively FAA : Form of Acceptance and Authorisation, which forms part of the Offer Document FAT : Form of Acceptance and Transfer, which forms part of the Offer Document FY : Financial year ended or ending 31 December for the relevant year Group : The Company together with its subsidiaries and associated companies IFA or PrimePartners : PrimePartners Corporate Finance Pte. Ltd. 2

4 DEFINITIONS Immediate Ng Family : Certain immediate family members of the Ng Family, namely Mr Ng Kim Suan, Madam Lin Chee Keen and Mr Sam Ng Wei Hing Independent Directors : Directors who are considered independent for the purposes of making a recommendation to Shareholders in respect of the Offer, namely Professor Wee Chow Hou, Mr David Wong Seck Kim, Mr Lau Hui Teck and Mr Tan Boen Ho Irrevocable Undertakings : The announcement issued on 21 December 2009 by DBS Bank for Announcement and on behalf of the Offeror, in relation to the receipt by the Offeror of the irrevocable undertakings to accept the Offer in respect of all Shares held directly and/or indirectly by the Extended Ng Family Knight Frank Thailand : Knight Frank Chartered (Thailand) Co. Ltd. Latest Practicable Date : 6 January 2010, being the latest practicable date prior to the printing of this Circular Listing Manual : The listing manual issued by the SGX-ST in force as at the Latest Practicable Date Memorandum : The memorandum of association of the Company Ng Family : Madam Tan Ah Leng, Mr William Ng Wei Yong, Mr Ng Wei Shing, Steven and Mr Ng Wei Yeow collectively Offer : Voluntary unconditional cash offer made by the Offeror to acquire the Offer Shares on the terms and conditions set out in the Offer Document, as may be extended or revised from time to time by or on behalf of the Offeror Offer Announcement : The announcement issued on 15 December 2009 by DBS Bank, for and on behalf of the Offeror, in relation to the Offer Offer Announcement Date : 15 December 2009 Offer Document : Document dated 30 December 2009 containing the formal terms of the Offer, and any other document which may be issued by or on behalf of the Offeror to amend, revise, supplement or update the document(s) from time to time Offer Price : S$2.00 in cash for each Offer Share Offer Shares : All the issued Shares to which the Offer relates Offeror : Samta Hotels Pte. Ltd. Overseas Shareholders : Shareholders whose addresses are outside Singapore as shown in the register of members of the Company or, as the case may be, in the records of the CDP Relevant Acceptance Forms : The FAA and/or the FAT Securities Account : A securities account (other than a securities sub-account) maintained by a depositor with CDP 3

5 DEFINITIONS SFA : The Securities and Futures Act (Chapter 289) of Singapore SGX-ST : Singapore Exchange Securities Trading Limited Shareholder : Any holder of Shares, including persons whose Shares are deposited with CDP Shares : Issued ordinary shares in the capital of the Company SIC : The Securities Industry Council of Singapore S$ and cents : Singapore dollars and cents % or percent : Percentage or per centum In this Circular: (i) (ii) (iii) (iv) (v) (vi) (vii) the expressions acting in concert, associates and interested persons shall have the respective meanings ascribed to them in the Code; the terms Depositor, Depository Agent and Depository Register shall have the respective meanings ascribed to them in the Companies Act; words importing the singular shall, where applicable, include the plural and vice versa, references to one gender shall, where applicable, include all genders, and references to persons shall include individuals, bodies corporate, unincorporated associations and partnerships; the headings in this Circular are inserted for convenience only and shall not affect the construction of this Circular; any reference to an enactment or statutory provision (which shall, for the purposes of this Circular, include those in the Code) is a reference to it as it may have been, or may from time to time be modified, consolidated or re-enacted, and any word defined under the Companies Act or the Code which is used but not defined in this Circular shall, unless the context otherwise requires, have the meaning ascribed to it under the Companies Act or the Code, as the case may be; any reference to a time of day and date in this Circular shall be a reference to Singapore time and date, unless otherwise specified; and there may be discrepancies in the tables in this Circular between the listed amounts and the totals due to rounding. 4

6 CAUTIONARY NOTE Statements contained in this Circular which are not statements of historical facts are or may constitute forward-looking statements. Some of these statements can be identified by forward-looking terms such as expect, believe, plan, intend, estimate, anticipate, may, will, would, should, shall, could and can or other similar words. However, these words are not the exclusive means of identifying forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which 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. Given the risks and uncertainties that may cause our actual results, performance or achievements to be materially different than expected, expressed or implied by the forward-looking statements in this Circular, you are advised not to place undue reliance on those statements. Further, the Company disclaims any responsibility to update any of those forward-looking statements or publicly announce any revisions to 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, subject to compliance with all applicable laws and regulations and/or rules of the SGX-ST and/or any regulatory or supervisory body or agency. 5

7 SUMMARY TIMETABLE The following summary is derived from, and should be read in conjunction with, the full text of the Offer Document (and any relevant supplement to the aforementioned document): Date of despatch of Offer Document : 30 December 2009 Close of the Offer Period : 27 January 2010 at 5.30 p.m. or such later date(s) as may be announced from time to time by or on behalf of the Offeror Date of despatch of payment for the valid : Within 10 days after the date of receipt of each valid acceptance of the Offer tendered acceptance 6

8 LETTER TO SHAREHOLDERS FURAMA LTD. (Company Registration No G) (Incorporated in the Republic of Singapore) Board of Directors: Registered Office: Ng Kim Suan (Chairman) 405 Havelock Road William Ng Wei Yong (Executive Director) Singapore Sam Ng Wei Hing (Executive Director) Lau Hui Teck (Executive Director) Wee Chow Hou (Lead Independent Director) David Wong Seck Kim (Independent Director) Tan Boen Ho (Independent Director) 13 January 2010 To: The Shareholders of Furama Ltd. Dear Sir/ Madam VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS BANK FOR AND ON BEHALF OF THE OFFEROR FOR THE OFFER SHARES 1. INTRODUCTION 1.1 Background On 15 December 2009, DBS Bank issued the Offer Announcement, for and on behalf of the Offeror, that inter alia, the Offeror intends to make a voluntary unconditional cash offer for all the Shares in the capital of the Company in accordance with Section 139 of the SFA and Rule 15 of the Code at the Offer Price. As stated in the Offer Announcement, the Offer will not be subject to any conditions and will be unconditional in all respects. On 21 December 2009, DBS Bank, for and on behalf of the Offeror, issued the Irrevocable Undertakings Announcement that the Offeror had on the same day received irrevocable undertakings from the Extended Ng Family to accept the Offer in respect of all Shares held directly and/or indirectly by them. On 30 December 2009, DBS Bank, for and on behalf of the Offeror, despatched the Offer Document. 1.2 Purpose of Circular The Company has appointed PrimePartners to advise the Independent Directors on the Offer. The purpose of this Circular is to provide Shareholders with relevant information in relation to the Offer and to set out the recommendation of the Independent Directors and the advice of PrimePartners in relation to the Offer. 2. THE OFFER 2.1 Offer Price. According to the Offer Document, DBS Bank, for and on behalf of the Offeror, is making the Offer to acquire all the Offer Shares on the following basis: FOR EACH OFFER SHARE: Cash Consideration: S$2.00 in cash 7

9 LETTER TO SHAREHOLDERS 2.2 Right to Revise Offer. The Offeror reserves its right to revise the terms of the Offer at such time and in such manner as it may consider appropriate. If the Offer terms are revised, all Shareholders who have already accepted the Offer will receive the revised consideration. 2.3 Offer Shares. The Offer is extended to any Shares owned, controlled or agreed to be acquired by any Concert Party in accordance with Section 139 of the SFA and the Code. For the purposes of the Offer, the expression Offer Shares shall include all such Shares. 2.4 No Encumbrances. The Offer Shares will be acquired: (i) (ii) (iii) fully paid; free from all liens, equities, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever; and together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by the Company on or after the Offer Announcement Date. If any dividend, other distribution or return of capital is declared, made or paid by the Company on or after the Offer Announcement Date to a Shareholder who accepts or who has accepted the Offer, the Offeror will reduce the Offer Price payable to such accepting Shareholder by the amount of such dividend, distribution or return of capital. 2.5 Closing Date The Offer will close at 5.30 p.m. on 27 January 2010 or such later date(s) as may be announced from time to time by or on behalf of the Offeror. (i) (ii) Subsequent Closing Date(s) If the Offer is extended, the announcement of the extension need not state the next Closing Date but may state that the Offer will remain open until further notice. In such a case, the Offeror will give Shareholders at least 14 days prior notice in writing before it may close the Offer. Offer to Remain Open for 14 Days The Offer will remain open for a period of not less than 14 days after the date on which it would otherwise have closed, unless the Offeror has given Shareholders at least 14 days notice in writing (Shut-off Notice) that the Offer will not be open for acceptance beyond a specified Closing Date, provided that: (a) (b) the Offeror may not give a Shut-off Notice in a competitive situation; and the Offeror may not enforce a Shut-off Notice, if already given, in a competitive situation. For these purposes, a competitive situation shall be deemed to arise when either (i) a firm intention to make a competing offer for the Company is announced, whether or not subject to any pre-conditions; or (ii) the SIC determines that a competitive situation has arisen. 2.6 Offer Document Shareholders should by now have received a copy of the Offer Document issued by the Offeror setting out, inter alia, the terms and conditions of the Offer. The principal terms and conditions of the Offer are set out on pages 7 to 8 of the Offer Document. Shareholders are advised to read the terms and conditions contained therein carefully. 8

10 LETTER TO SHAREHOLDERS 2.7 Warranty A Shareholder who tenders his Offer Shares in acceptance of the Offer will be deemed to warrant that he sells such Offer Shares as or on behalf of the beneficial owner(s) thereof, (i) fully paid, (ii) free from all liens, equities, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever and (iii) together with all rights, benefits and entitlements attached thereto as of the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by the Company on or after the Offer Announcement Date. 2.8 Details of the Offer Further details of the Offer are set out in Appendix 1 to the Offer Document, including details on (a) the duration of the Offer, (b) the settlement of the Cash Consideration for the Offer, (c) the requirements relating to the announcement of the level of acceptances of the Offer, and (d) the right of withdrawal of acceptances of the Offer. 2.9 Procedures for Acceptance The procedures for acceptance of the Offer are set out in Appendix 2 to the Offer Document. 3. NO CONDITION The Offer is not subject to any conditions and is unconditional in all respects. 4. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES 4.1 The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 7. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES 7.1 The Offeror. The Offeror is a private company limited by shares incorporated in Singapore on 20 October 2009 for the purposes of making the Offer and holding the Offer Shares. Its principal activity is investment holding. As at the Latest Practicable Date, the Offeror has an issued and paid-up share capital of S$100,000 comprising 100,000 ordinary shares. The Offeror is wholly-owned by the Ng Family in the following proportions: each of Madam Tan Ah Leng and Mr Ng Wei Yong holds 30,000 ordinary shares in the capital of the Offeror, representing 30 per cent. of the issued share capital of the Offeror, while each of Mr Ng Wei Shing, Steven and Mr Ng Wei Yeow holds 20,000 ordinary shares in the capital of the Offeror, representing 20 per cent. of the issued share capital of the Offeror. 7.2 Samta Investment. The Ng Family also owns the entire share capital of Samta Investment and each of Madam Tan Ah Leng, Mr Ng Wei Yong, Mr Ng Wei Shing, Steven and Mr Ng Wei Yeow holds shares in Samta Investment in the same proportion as their respective shareholding interests in the Offeror. Samta Investment is an investment holding company incorporated in Singapore on 11 September 1986 and, as at the Latest Practicable Date, holds 85,350,128 Shares, representing approximately 55.3 per cent. of the Shares in issue. 7.3 Offeror, Directors of Samta Investment, the Ng Family and the Immediate Ng Family. The directors of each of the Offeror and Samta Investment are Mr Ng Kim Suan, Mr Ng Wei Yong and Mr Ng Wei Shing, Steven. Mr Ng Kim Suan is the husband of Madam Tan Ah Leng and the father of Mr Ng Wei Yong, Mr Ng Wei Shing, Steven, Mr Ng Wei Hing and Mr Ng Wei Yeow. Mr Ng Kim Suan is also the Chairman and an executive director of Furama. Mr Ng Wei Yong and Mr Ng Wei Hing are also executive directors of Furama. Madam Lin Chee Keen is the wife of Mr Ng Wei Yong. 7.4 Additional Information on the Offeror. Appendix 3 of this Offer Document sets out additional information on the Offeror. 9

11 LETTER TO SHAREHOLDERS 4.2 Undertakings received by the Offeror. The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 12.2 Waiver Undertakings. As at the Offer Announcement Date, the Offeror has received irrevocable undertakings (the Waiver Undertakings ) from the Ng Family, Samta Investment and the Immediate Ng Family to, should they accept the Offer, waive their rights to receive from the Offeror the Offer Price in consideration for their respective Offer Shares which each of them may tender in acceptance of the Offer Undertakings to Accept. As at the Latest Practicable Date, the Offeror has received irrevocable undertakings dated 21 December 2009 (the Irrevocable Undertakings ) from the following shareholders of Furama (collectively, the Extended Ng Family ) to accept the Offer in respect of all Shares held (directly and/or indirectly) by them: Name No. of Shares heldas at the As a percentage of Latest Practicable Date Shares in Issue (%) Ng Eng Soon 4,000, Hong Siew King 870, Ng Lay Theng 360, Ng Wei Kok 360, Ng Wei Ming 360, Tang Lay Geok 823, Ng Hui Lan 2,600, ,374, The aggregate number of Shares held (directly and/or indirectly) by the Extended Ng Family as at the Latest Practicable Date is 9,374,753 Shares, representing approximately 6.1 per cent. of the Shares in issue as at the Latest Practicable Date. Pursuant to the terms of the Irrevocable Undertakings: (a) each member of the Extended Ng Family has irrevocably undertaken to accept the Offer in respect of (i) all Shares which they have an interest in as at 21 December 2009, being the date of the Irrevocable Undertakings; and (ii) any Shares which he or she may subsequently acquire (directly or indirectly or through a nominee) after 21 December 2009; and (b) the Irrevocable Undertakings shall lapse on the earlier of the close of the Offer and 15 December 2010 (or such other date as may be agreed between the Offeror and the relevant Extended Ng Family member). Save as disclosed in this Offer Document, as at the Latest Practicable Date, none of the Offeror or its Concert Parties has received irrevocable undertakings from any party to accept or reject the Offer. 4.3 As announced on 4 January 2010, pursuant to the irrevocable undertakings dated 21 December 2009, the Extended Ng Family accepted the Offer in respect of all 9,374,753 Shares held directly and/or indirectly by them. On 4 January 2010, the Company issued an announcement in relation to its public float that pursuant to the tendering of the Shares held by the Extended Ng Family, the percentage of Shares held in public hands has fallen below 10% of the total number of issued Shares, the minimum public float requirement stipulated under Rule 723 of the Listing Manual. 10

12 LETTER TO SHAREHOLDERS 4.4 Based on publicly available information, as at the Latest Practicable Date, the Offeror and its Concert Parties own, control or have agreed to acquire an aggregate of 115,236,082 Shares representing approximately 74.68% of the total Shares in issue. 5. RATIONALE FOR THE OFFER The full text of the rationale for the Offer has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 9. RATIONALE FOR THE OFFER 9.1 Opportunity for Shareholders to Realise their Investment. The objective of the Offer is to privatise Furama while at the same time providing minority shareholders with an opportunity to exit from Furama and to realise their investment in the Shares for cash at an attractive price that is at a premium of approximately per cent. to the last transacted price of S$1.460 per Share as quoted on the SGX-ST on 14 December 2009 (being the last Market Day on which there were trades in the Shares on the SGX-ST prior to the Offer Announcement Date). 9.2 Illiquidity of Shares. The trading liquidity of the Shares has generally been thin. The average daily trading volume of the Shares has been approximately 22,038 Shares over the 12-month period prior to the Offer Announcement Date, representing approximately per cent. of the issued share capital of Furama. In addition, the free float of the Shares on the SGX-ST is low. As disclosed in Furama s Annual Report 2008, approximately per cent. of the issued Shares are held by the public as at 5 March As mentioned in paragraph 9.1 above, the Offer will provide the opportunity for the remaining shareholders of Furama, other than the Offeror and its Concert Parties, to realise their investments for a cash consideration at a premium over the market prices of the Shares prior to the Offer Announcement Date, an opportunity that would otherwise not be available given the low trading liquidity and low free float of the Shares. 9.3 No Necessity to Access Capital Markets. Furama has been listed on the SGX-ST since 30 September Its public listing status no longer serves a material purpose as Furama has not raised any funds from the capital markets for at least the last 10 years and is unlikely to require access to the capital markets to finance its operations in the foreseeable future. 9.4 Compliance Costs relating to Listing Status. As a listed entity, Furama has to incur listing, compliance and other related costs associated with continued listing requirements under the Listing Manual. The privatisation of Furama will allow it to dispense with listingrelated expenses and enable it to channel its resources to its business operations instead. 11

13 LETTER TO SHAREHOLDERS 6. OFFEROR S INTENTIONS FOR THE COMPANY The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 10. OFFEROR S INTENTIONS IN RELATION TO FURAMA 10.1 Future Plans for Furama. The Offeror intends for Furama to continue its existing business activities and there are no plans to (a) introduce any major changes to the business of Furama or the operations of any of its subsidiaries; (b) re-deploy any of the fixed assets of Furama; or (c) discontinue the employment of any of the existing employees of Furama and/or its subsidiaries, other than in the ordinary course of business. The Offeror and its Concert Parties have no plans or any intention for the foreseeable future to divest or initiate the divestment of any of the principal assets of the Furama Group, namely, the Furama RiverFront Hotel, the Furama City Centre Hotel, the investments in the Furama Thai Hotels and the 13 per cent. interest in the Grand Hyatt Hotel, Taipei, Republic of China. Shareholders should note that the key assets of Furama in Singapore, namely, the Furama RiverFront Hotel and the Furama City Centre Hotel, are situated on 99-year leasehold lands commencing from 23 February 1968 and 19 October 1979, representing unexpired leasehold interests of about 57 and 69 years, respectively. The two hotels are situated on sites that have been zoned for hotel use under the Singapore Master Plan 2008 (the Master Plan ). According to a circular issued by the Urban Redevelopment Authority on 14 January 2008, hotels located on sites zoned for hotel use under the Master Plan will not, as a general rule, be allowed to be converted to other uses Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offeror receives valid acceptances of the Offer or acquires Offer Shares during the Offer Period otherwise than through valid acceptances of the Offer in respect of not less than 90 per cent. of the total number of issued Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Offer Announcement Date), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of Shareholders who have not accepted the Offer ( Dissenting Shareholders ). In such event, the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer. The Offeror will then proceed to delist the Company from the SGX-ST. Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice Listing Status of Furama. Pursuant to Rule 1105 of the Listing Manual, in the event that the Offeror and parties acting in concert with it should, as a result of the Offer or otherwise, own or control more than 90 per cent. of the issued Shares (excluding treasury shares), the SGX-ST may suspend trading of the Shares on the SGX-ST until such time when the SGX- ST is satisfied that at least 10 per cent. of the issued Shares (excluding treasury shares) are held by at least 500 shareholders of the Company who are members of the public. 12

14 LETTER TO SHAREHOLDERS In addition, pursuant to Rule 723 of the Listing Manual ( Rule 723 ), Furama must ensure that at least 10 per cent. of its total issued Shares (excluding treasury shares) is at all times held in public hands (the Free Float Requirement ). Pursuant to Rule 724 of the Listing Manual ( Rule 724 ), if the percentage of the issued Shares held in public hands falls below 10 per cent., Furama must, as soon as practicable, announce that fact and the SGX-ST may suspend trading of all the Shares on the SGX-ST. Pursuant to Rule 725 of the SGX-ST Listing Manual ( Rule 725 ), the SGX-ST may allow Furama a period of three (3) months, or such longer period as the SGX-ST may agree, to raise the percentage of issued Shares held by members of the public to at least 10 per cent., failing which Furama may be delisted from the SGX-ST. In the event the Offeror is unable to exercise the right to compulsorily acquire all the Offer Shares not acquired under the Offer as set out in paragraph 10.2 above and the Company does not meet the requirements under Rule 723, the Offeror and its Concert Parties do not intend to maintain or support any action taken or to be taken to maintain the present listing status of the Company. Accordingly, the Offeror and its Concert Parties do not intend to place out any Shares held by the Offeror and its Concert Parties to members of the public to meet the Free Float Requirement, and if Furama does not meet the requirements under Rule 723, the SGX-ST will suspend trading of the Shares on the SGX-ST following the close of the Offer. Given the receipt by the Offeror of the Irrevocable Undertakings (as defined in paragraph 12.3 below), taking into account the Shares already held (directly and/or indirectly) by the Offeror, the Ng Family, Samta Investment, the Immediate Ng Family, the substantial shareholders and directors of the Company and their respective associates (as defined in the Listing Manual), the percentage of issued Shares held by members of the public is likely to fall to below 10 per cent. and the Free Float Requirement will not be met. In such an event, the SGX-ST will suspend trading of the Shares on the SGX-ST following the close of the Offer. If, for any reason, Furama continues to meet the requirements under Rule 723 following the close of the Offer, Furama will remain listed, and trading of the Shares will be maintained, on the SGX-ST SGX-ST Directed Delisting and Exit Offer. Under Rule 1305 of the Listing Manual ( Rule 1305 ), if a company listed on the SGX-ST ( ListCo ) is unable or unwilling to comply with a listing rule, the SGX-ST may remove the ListCo from the Official List of the SGX-ST. In that event, under Rule 1306 of the Listing Manual ( Rule 1306 ), either the ListCo or its controlling shareholder(s) must comply with the requirements of Rule 1309 of the Listing Manual ( Rule 1309 ), and offer a reasonable exit alternative, which should normally be in cash, to the ListCo s shareholders. Rule 1309 also requires that an independent financial adviser be appointed by the ListCo to advise on such reasonable exit alternative. In the event that the Offeror is unable to exercise the right to compulsorily acquire all the Offer Shares not acquired under the Offer as set out in paragraph 10.2 above but receives such number of acceptances such that the public float of Furama falls to below 10 per cent., resulting in Furama not being in compliance with the requirements relating to the minimum public float under Rules 723, 724 and/or 725, the SGX-ST may exercise its discretion under Rule 1305 to remove Furama from the Official List of the SGX-ST. In the event of such a directed delisting, the SGX-ST will not require Furama to convene a general meeting to obtain the approval of its shareholders for the delisting. Instead, the SGX-ST will direct that a reasonable cash exit alternative (the Exit Offer ) be offered to all remaining shareholders of Furama pursuant to Rule 1306 and Rule An independent financial adviser must also be appointed to advise on the Exit Offer. 13

15 LETTER TO SHAREHOLDERS The Offeror wishes to state that if the Offeror is directed by the SGX-ST to make the Exit Offer, the terms of such Exit Offer will be substantially the same as the terms of the Offer. In particular, the price for each Share to be paid pursuant to such Exit Offer will not be higher than the Offer Price, as pursuant to Rule 33.2 of the Code, the Offeror may not, within six (6) months of the close of the Offer, acquire or make another offer to acquire Shares on terms better than the terms of the Offer. Following the conclusion of the Exit Offer, the SGX-ST will delist Furama from the SGX-ST. 7. FINANCIAL ASPECTS OF THE OFFER The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 11. FINANCIAL ASPECTS OF THE OFFER 11.1 Benchmarking the Offer Price. 1 In arriving at the Offer Price, the Offeror took into account, inter alia, the premiums offered by the Offer Price over various prices at which the Shares were trading on the SGX-ST during certain periods (as detailed below). The Offer Price of S$2.00 for each Offer Share represents: (a) (b) (c) (d) a premium of approximately per cent. to the last transacted price of S$1.460 per Share as quoted on the SGX-ST on 14 December 2009, being the last Market Day on which there were trades in the Shares on the SGX-ST prior to the Offer Announcement Date; a premium of approximately per cent. to the VWAP of approximately S$1.443 per Share on the SGX-ST for the one-month period prior to the Offer Announcement Date; a premium of approximately per cent. to the VWAP of approximately S$1.398 per Share on the SGX-ST for the three-month period prior to the Offer Announcement Date; and a premium of approximately per cent. to the VWAP of approximately S$1.326 per Share on the SGX-ST for the six-month period prior to the Offer Announcement Date Comparison of Offer Price to Net Tangible Asset Backing per Share. 2 The Offer Price of S$2.00 for each Offer Share also represents a premium of approximately per cent. to the net tangible asset backing per Share of S$1.360 of Furama as at 30 September Notes: 1 The figures set out in this paragraph 11.1 are based on data extracted from Bloomberg as at 14 December 2009 and are computed based on share prices rounded to three (3) decimal places. 2 In this Offer Document, the net tangible asset backing per Share used is based on the net tangible asset backing per Share of S$1.360, as extracted from Furama s unaudited consolidated financial statements for the nine (9) months ended 30 September 2009 announced by Furama on 9 November

16 LETTER TO SHAREHOLDERS 8. ADVICE OF PRIMEPARTNERS PrimePartners has been appointed by the Company as the independent financial adviser to the Independent Directors in respect of the Offer. In this Circular, Shareholders should consider carefully the recommendation of the Independent Directors and the advice of PrimePartners before deciding whether to accept or reject the Offer. A copy of the letter from PrimePartners to the Independent Directors dated 13 January 2010 is set out at page 21 of this Circular. PrimePartners advice on the Offer is set out in section 11 of PrimePartners letter at page 54 of this Circular. The advice of PrimePartners to the Independent Directors in respect of the Offer has been extracted from the aforementioned letter and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meaning as those defined in the letter. Shareholders should read the following extract in conjunction with, and in the context of the full text of the letter. 11. OUR RECOMMENDATION In arriving at our recommendation in respect of the Offer, we have taken into account the factors, inter-alia, the following factors: (a) The Offer Price represents a discount of 0.1% and a premium of 58.4%, 64.5%, 49.6%, 42.6% and 38.2% over the 2 year, 18-month, 1-year, 6-month, 3-month and 1- month VWAP of the Shares respectively; (b) (c) (d) (e) (f) (g) The trading liquidity of the Shares had been low for the 2 year period prior to the Announcement Date. The average daily trading liquidity of the Shares represents approximately 0.02%, 0.01%, 0.01%, 0.02%, 0.01% and 0.01% of the Company s total Shares and 0.10%, 0.07%, 0.07%, 0.10%, 0.06%, and 0.03% of the Company s free float during the 2-year, 18-month, 1-year, 6-month, 3-month and 1-month period prior to the Announcement Date respectively; The market price of the Share appears to have underperformed the Hotel Index and the STI (save for the period which the Apollo Centre was disposed and the declaration and payment of a special dividend pursuant to the disposal of Apollo Centre); The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of the P/NTA ratios of the Comparable Companies and is higher than the simple average and median P/NTA ratios of 0.9 times and 0.9 times of the Comparable Companies respectively; The P/E ratio of the Company implied by the Offer Price of 10.1 times is within the range of the P/E ratios of the Comparable Companies (excluding outliers) and is lower than the simple average (excluding outliers) and median P/E ratios of 17.0 times and 26.0 times of the Comparable Companies respectively; The P/AdjNTA of the Company implied by the Offer Price of 0.9 times is within the range of the P/AdjNTA ratios of the Comparable Companies, above the median P/AdjNTA ratio of 0.8 times and the same as the simple average P/AdjNTA ratio of 0.9 times of the Comparable Companies respectively; The Offer Price represents a premium of 37.0%, 38.2% and 42.6% (calculated based on the last transacted market price, the 1-month VWAP and 3-month VWAP of the Shares prior to the Announcement Date) and is within the range of premia and above the simple average and median premia implied by the respective offer prices paid for the recent Successful Delisting Offers over the last transacted market prices, the 1- month VWAP and the 3-month VWAP of the shares of the companies in the Successful Delisting Offer prior to the respective announcement dates; 15

17 LETTER TO SHAREHOLDERS (h) (i) (j) (k) The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of 0.3 times to 9.0 times in respect of the companies in the Successful Delisting Offers. In addition, the P/NTA ratio of the Company as implied by the Offer Price of 1.5 times is higher than the median P/NTA ratios in respect of the companies in the Successful Delisting Offers; The Offer Price represents a premium of 37.0% and 42.6% (calculated based on the last transacted market price and 3-month VWAP of the Shares prior to the Announcement Date) and is within the range of premia and above the simple average and median premia implied by the respective offer prices paid for the recent Successful Privatisation Transactions over the last transacted market prices and the 3- month VWAP of the Shares of the companies in the Successful Privatisation Transactions prior to the respective announcement dates while the premium of 38.2% (calculated based on the 1-month VWAP of the Shares prior to the Announcement Date) is within the range of premia and close to the simple average premia but below the median premia implied by the 1-month VWAP of the shares of the companies in the Successful Privatisation Transaction prior to the respective announcement dates; The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of 0.3 times to 5.8 times in respect of the companies in the Successful Privatisation Transactions. The P/NTA ratio of the Company as implied by the Offer Price of 1.5 times is lower than the simple average and median P/NTA ratios in respect of the companies in the Successful Privatisation Transactions; The percentage of Shares held in public hands has fallen below the 10% Free Float Requirement and only 9.997% of the Shares are held by the public. The Offeror has stated that the Offeror and its Concert Parties do not intend to place out any Shares held by the Offeror and its Concert Parties to members of the public to meet the Free Float Requirement; (l) In the event that the Offeror receives valid acceptances of the Offer in respect of 90% or more of the Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Announcement Date), the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer. The Offeror will then proceed to delist the Company from the SGX- ST; (m) (n) In the event that the SGX-ST directs the Company to delist, the SGX-ST will not require the Company to convene a general meeting to obtain the approval of its shareholders for the delisting. Instead, the SGX-ST will direct that a reasonable cash exit alternative be offered to all remaining shareholders of the Company pursuant to Rule 1306 and Rule Following the conclusion of the Exit Offer, the SGX-ST will delist the Company from the SGX-ST. The Offeror states that if the Offeror is directed by the SGX-ST to make the Exit Offer, the terms of such Exit Offer will be substantially the same as the terms of the Offer. In particular, the price for each Share to be paid pursuant to such Exit Offer will not be higher than the Offer Price; and As at the Latest Practicable Date, the Directors have not received any competing offer or an enhancement or revision of the Offer and there is no publicly available evidence of an alternative takeover offer for the Shares from any third party. Based on the considerations set out in this letter and the information available to us as at the Latest Practicable Date, we are of the opinion that the financial terms of the Offer, on balance, are fair and reasonable, from a financial point of view. Accordingly, our recommendation to the Independent Directors of the Company in respect of the Offer is that they should recommend the Shareholders to ACCEPT the Offer. 16

18 LETTER TO SHAREHOLDERS In rendering our advice and giving our recommendation, we have not had regard to the general or specific investment objectives, financial situation, risk profiles, tax position or particular needs and constraints of any Shareholder. As different Shareholders have different investment profiles and objectives, we advise the Independent Directors to recommend that any Shareholder who may require specific advice in relation to the Offer consult his stockbroker, bank manager, solicitor, accountant, tax advisor or other professional advisor immediately. Independent Directors and/or Shareholders should note that the trading of the Shares are subject to, inter alia, the performance and prospects of the Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, our advice on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of our review and also, such advice, if given, would not fall within our terms of reference in connection with the Offer. Our recommendation is addressed to the Independent Directors for their benefit in connection with and for the purposes of their consideration of the Offer. Any recommendation made by the Independent Directors in respect of the Offer shall remain their responsibility. Our recommendation may not be used and/or relied on by any other person for any purpose at any time and in any manner except with our prior written consent in each specific case. Our recommendation is governed by the laws of Singapore, and is strictly limited to the matters stated in this letter and do not apply by implication to any other matter. Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of PPCF in each specific case. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Nothing herein shall confer or be deemed or is intended to confer any right of benefit to any third party and the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore and any amendments thereto shall not apply. 9. INDEPENDENT DIRECTORS RECOMMENDATION 9.1 Appointment of IFA The Company has appointed PrimePartners as the independent financial adviser to advise the Independent Directors in respect of the Offer. Shareholders should consider carefully the recommendation of the Independent Directors before deciding whether to accept or reject the Offer. In arriving at their recommendation, the Independent Directors have carefully considered the advice given by PrimePartners. 9.2 Exemptions by SIC In its letter dated 6 January 2010, the SIC has confirmed that the following directors of the Company, namely Mr Ng Kim Suan, Mr William Ng Wei Yong and Mr Sam Ng Wei Hing are excused from the requirement to make a recommendation on the Offer as they face irreconcilable conflicts of interest being persons acting in concert with the Offeror. Nevertheless, Mr Ng Kim Suan, Mr William Ng Wei Yong and Mr Sam Ng Wei Hing accept responsibility for the accuracy of the facts stated or opinions expressed in documents and advertisements issued by, or on behalf of, the Company in connection with the Offer. 17

19 LETTER TO SHAREHOLDERS 9.3 Independent Directors Recommendation Having carefully considered the terms of the Offer and PrimePartner s advice on the Offer, the Independent Directors concur with PrimePartners that the financial terms of the Offer, on balance, are fair and reasonable, from a financial point of view. Accordingly, the Independent Directors recommend the Shareholders to ACCEPT the Offer. 9.4 Limitations In making their recommendation, the Independent Directors have not had regard to the general or specific investment objectives, financial situation, risk profiles, tax position or particular needs and constraints of any Shareholder. As different Shareholders have different investment profiles and objectives, the Independent Directors recommend that any Shareholder who may require specific advice in relation to the Offer should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. 9.5 Disclosures Section 5 of Appendix I sets out certain information regarding the Directors shareholdings and dealings in: (a) (b) the Shares; and the shares in the Offeror. 10. OVERSEAS SHAREHOLDERS 10.1 Based on the Offer Document, the availability of the Offer to Overseas Shareholders may be affected by the laws of the relevant overseas jurisdictions. Accordingly, all Overseas Shareholders should inform themselves about and observe any applicable requirements in their own jurisdictions. For the avoidance of doubt, the Offer is made to all Shareholders including those to whom the Offer Document and the Relevant Acceptance Forms have not been, or will not be, sent. It is the responsibility of any Overseas Shareholder who wishes to (a) request for the Offer Document, the Relevant Acceptance Forms and/or any related documents, or (b) accept the Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdictions in that connection, including the obtaining of any governmental or other consent which may be required, or compliance with all other necessary formalities or legal requirements, or the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Shareholder shall be liable for any taxes, imposts, duties or other requisite payments payable and the Offeror and any person acting on its behalf (including DBS Bank and CDP) shall be fully indemnified and held harmless by such Overseas Shareholder for any such taxes, imposts, duties or requisite payments that may be required to be paid. If any Shareholder is in any doubt about his position, he should consult his professional adviser in the relevant jurisdiction Copies of the Circular Potential restrictions in sending this Circular and any related documents to overseas jurisdictions could result in such documents not being sent to any Overseas Shareholder. Copies of the Circular may however be obtained from the office of the Share Registrar, B.A.C.S. Private Limited, 63 Cantonment Road, Singapore Alternatively, any Overseas Shareholder may write to the Share Registrar at the aforementioned address to request for the Circular and any related documents to be sent to an address in Singapore by ordinary post at his own risk. The last date for despatch in respect of such request shall be a date falling three (3) Market Days prior to the final Closing Date. 18

20 LETTER TO SHAREHOLDERS 10.3 Copies of the Offer Document Based on the Offer Document, Shareholders (including Overseas Shareholders) may obtain copies of the Offer Document, the Relevant Acceptance Forms and any related documents, during normal business hours up to the Closing Date from the Registrar at 63 Cantonment Road, Singapore or CDP at 4 Shenton Way, #02-01 SGX Centre 2, Singapore Alternatively, Shareholders (including Overseas Shareholders) may write to the Offeror at Samta Hotels Pte. Ltd. c/o B.A.C.S. Private Limited at 63 Cantonment Road, Singapore to request for the Offer Document, the Relevant Acceptance Forms and any related documents to be sent to an address in Singapore by ordinary post at his own risk, up to three (3) Market Days prior to the Closing Date Notice Based on the Offer Document, the Offeror and DBS Bank each reserves the right to notify any matter, including the fact that the Offer has been made, to any or all Overseas Shareholders by announcement to the SGX-ST or paid advertisement in a daily newspaper published and circulated in Singapore, in which case, such notice shall be deemed to have been sufficiently given notwithstanding any failure by any Shareholder to receive or see such announcement or advertisement. 11. ACTION TO BE TAKEN BY SHAREHOLDERS Shareholders who wish to accept the Offer must do so on or before the Closing Date and should follow the procedures for acceptance set out in Appendix 2 to the Offer Document. Shareholders who do not wish to accept the Offer need not take any further action in respect of the Offer Document. 12 DIRECTORS RESPONSIBILITY STATEMENT The issue of this Circular has been approved by all Directors. The Directors (including those who may have delegated detailed supervision of the preparation of this Circular) have taken all reasonable care to ensure that the facts stated and opinions expressed in this Circular (excluding (i) the letter from PrimePartners to the Independent Directors dated 13 January 2010 at page 21 of this Circular and its letter dated 13 January 2010 as set out in Appendix V to this Circular, (ii) the report by the Auditors dated 8 January 2010 as set out in Appendix VI, and (iii) the valuation reports from DTZ and Knight Frank Thailand dated 11 December 2009 and 6 January 2010 respectively as set out in Appendix VII to this Circular) are fair and accurate and no material facts have been omitted from this Circular. In respect of the letter from PrimePartners to the Independent Directors dated 13 January 2010, the sole responsibility of the Directors has been to ensure that the facts stated therein with respect to the Group are fair and accurate in all material respects. Additionally, the Directors confirm that they jointly and severally accept full responsibility for the accuracy of information contained herein, and having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Circular have been arrived at after due and careful consideration and that there are no other facts not contained in this Circular the omission of which would make any statement in this Circular misleading. The Directors do not accept any responsibility for any opinions expressed by PrimePartners, the Auditors, DTZ or Knight Frank Thailand, whether in PrimePartners Letter to the Independent Directors, or any of the documents set out in Appendix V, VI or VII to this Circular or otherwise. 19

21 LETTER TO SHAREHOLDERS Where any information in this Circular has been extracted from published or publicly available sources (including, without limitation, information relating to the Offer and the Offeror and its Concert Parties), the sole responsibility of the Directors has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, accurately reflected or reproduced in this Circular. Yours faithfully, for and on behalf of the Directors of FURAMA LTD. Professor Wee Chow Hou Lead Independent Director 20

22 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. 1 Raffles Place #30-03 OUB Centre Singapore January 2010 To: The Independent Directors Furama Ltd. 450 Havelock Road Singapore Dear Sirs VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS BANK LTD. FOR AND ON BEHALF OF SAMTA HOTELS PTE. LTD. TO ACQUIRE ALL THE ISSUED ORDINARY SHARES IN THE CAPITAL OF FURAMA LTD. Unless otherwise defined or the context otherwise requires, all terms defined in the Circular dated 13 January 2010 shall have the same meaning herein. 1. INTRODUCTION On 15 December 2009 ( Announcement Date ), DBS Bank Ltd. ( DBS Bank ) announced, for and on behalf of Samta Hotel Pte. Ltd. (the Offeror ), inter alia, that the Offeror intends to make a voluntary unconditional cash offer (the Offer ) for all the issued ordinary shares ( Shares ) in the capital of Furama Ltd. ( Furama or the Company ) in accordance with Section 139 of the Securities and Futures Act, Chapter 289 of Singapore ( SFA ) and Rule 15 of The Singapore Code on Take-overs and Mergers (the Code ). The Offeror s shareholders are Madam Tan Ah Leng, Mr. Ng Wei Yong, Mr. Ng Wei Shing, Steven and Mr. Ng Wei Yeow (together, the Ng Family ). On 30 December 2009, DBS Bank, for and on behalf of the Offeror, despatched the Offer Document. On 4 January 2010, the Company announced that the percentage of Shares held in public hands has fallen below the 10% Free Float Requirement as only 9.997% of the Shares are held by the public. PrimePartners Corporate Finance Pte. Ltd. ( PPCF ) has been appointed by the Company as the independent financial adviser to advise the Directors who are considered independent in respect of the Offer ( Independent Directors ). This letter sets out, inter alia, our views and evaluation of the financial terms of the Offer and our opinion thereon, and will form part of the circular to be dated 13 January 2010 in respect of the Offer (the Circular ) and issued by the Company providing, inter alia, details of the Offer and the recommendation of the Independent Directors. 2. TERMS OF REFERENCE PPCF has been appointed to advise the Independent Directors on the financial terms of the Offer in compliance with the provisions of the Code. We have confined our evaluation to the financial terms of the Offer and have not taken into account the commercial risks or commercial merits of the Offer. 21

23 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Our terms of reference do not require us to evaluate or comment on the rationale for, or the strategic or long-term merits of the Offer or on the future prospects of Furama or Furama and its subsidiaries and associated companies (the Group ) or the method and terms by which the Offer is made or any other alternative methods by which the Offer may be made, and we have not made such evaluation or comment. Such evaluations and comments (if any) remain the sole responsibility of the Directors and the management of the Company, although we may draw upon their views or make such comments in respect thereof (to the extent deemed necessary or appropriate by us) in arriving at our opinion as set out in this letter. We were also not requested or authorised to solicit, and we have not solicited, any indications of interest from any third party with respect to the Offer. We are therefore not addressing the relative merits of the Offer as compared to any alternative transaction that may be available to the Company (or its Shareholders), or as compared to any alternative offer that might otherwise be available in the future. In the course of our evaluation of the financial terms of the Offer, we have relied on, and assumed without independent verification, the accuracy and completeness of published information relating to the Company. We have also relied on information provided and representations made by the Directors, the Company s solicitors, valuers and auditors. We have not independently verified such information or any representation or assurance made by them, whether written or verbal, and accordingly cannot and do not make any representation or warranty, expressed or implied, in respect of, and do not accept any responsibility for, the accuracy, completeness or adequacy of such information, representation or assurance. We have nevertheless made such enquiries and exercised our judgement as we deemed necessary and have found no reason to doubt the reliability of the information. We have relied upon the assurances of the Directors that, upon making all reasonable inquiries and to the best of their respective knowledge, information and belief, all material information in connection with the Offer and the Company has been disclosed to us, that such information is true, complete and accurate in all material respects and that there is no other information or fact, the omission of which would cause any information disclosed to us or the facts of or in relation to the Company stated in the Circular to be inaccurate, incomplete or misleading in any material respect. The Directors jointly and severally accept responsibility accordingly. For the purposes of assessing the financial terms of the Offer and reaching our conclusions thereon, we have not relied upon any financial projections or forecasts in respect of Furama or the Group. We will not be required to express, and we do not express, any view on the growth prospects and earnings potential of Furama or the Group (other than the Statement of Prospects as set out in Appendix IV of the Circular) in connection with our opinion in this letter. We have not made any independent evaluation or appraisal of the assets and liabilities of Furama or the Group and we have not been furnished with any such independent evaluation or appraisal of the assets and liabilities of Furama or the Group, except for the valuation reports dated 4 November 2009 issued by Knight Frank Chartered (Thailand) Co., Ltd. ( Knight Frank (Thailand) ) in relation to the Group s Thailand Hotel Properties (as defined in section 6 of this letter) and the valuation reports dated 11 December 2009 issued by DTZ Debenham Tie Leung (SEA) Pte Ltd ( DTZ (SEA) ) in relation to the Group s Singapore Hotel Properties (as defined in section 6 of this letter), the summary of which is reproduced in Appendix VII of the Circular. With respect to such valuation reports, we are not experts in the evaluation or appraisal of the assets concerned and we have placed sole reliance on these summary valuation reports for such asset appraisal and have not made any independent verifications of the contents thereof. 22

24 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Our opinion as set out in this letter is based upon market, economic, industry, monetary and other conditions in effect on, and the information provided to us as of, 6 January 2010 (the Latest Practicable Date ). Such conditions may change significantly over a relatively short period of time. We assume no responsibility to update, revise or reaffirm our opinion in light of any subsequent development after the Latest Practicable Date that may affect our opinion contained herein. Shareholders should further take note of any announcements, relevant to their consideration of the Offer which may be released by the Company and/or the Offeror after the Latest Practicable Date. In rendering our opinion, we did not have regard to the specific investment objectives, financial situation, tax status, risk profiles or unique needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to his investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. As such, our opinion should not be the sole basis for deciding whether or not to accept the Offer. The Company has been separately advised by its own advisers in the preparation of the Circular (other than this letter and our letter regarding the Statement of Prospects as set out in Appendix V of the Circular). We were not involved in and have not provided any advice, financial or otherwise, in the preparation, review and verification of the Circular (other than this letter and our letter regarding the Statement of Prospects as set out in Appendix V of the Circular). Accordingly, we take no responsibility for and express no views, express of implied, on the contents of the Circular (other than this letter and our letter regarding the Statement of Prospects as set out in Appendix V of the Circular). While a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or refer to this letter (or any part thereof) for any other purposes at any time and in any manner without the prior written consent of PPCF in each specific case. Our opinion in respect of the Offer, as set out in section 11 of this letter, should be considered in the context of the entirety of this letter and the Circular. 3. THE OFFER The following has been extracted from the Circular and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Circular. Shareholders are advised to read the extract below carefully: 2.1 Offer Price. According to the Offer Document, DBS Bank for and on behalf of the Offeror is making the Offer to acquire all the Offer Shares on the following basis: FOR EACH OFFER SHARE: Cash Consideration: S$2.00 in cash 2.2 Right to Revise Offer. The Offeror reserves its right to revise the terms of the Offer at such time and in such manner as it may consider appropriate. If the Offer terms are revised, all Shareholders who have already accepted the Offer will receive the revised consideration. 2.3 Offer Shares. The Offer is extended to any Shares owned, controlled or agreed to be acquired by any Concert Party in accordance with Section 139 of the SFA and the Code. For the purposes of the Offer, the expression Offer Shares shall include all such Shares. 23

25 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. 2.4 No Encumbrances. The Offer Shares will be acquired: (i) (ii) (iii) fully paid; free from all liens, equities, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever; and together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by the Company on or after the Offer Announcement Date. If any dividend, other distribution or return of capital is declared, made or paid by the Company on or after the Offer Announcement Date to a Shareholder who accepts or who has accepted the Offer, the Offeror will reduce the Offer Price payable to such accepting Shareholder by the amount of such dividend, distribution or return of capital. 2.5 Closing Date The Offer will close at 5.30 p.m. on 27 January 2010 or such later date(s) as may be announced from time to time by or on behalf of the Offeror. (i) (ii) Subsequent Closing Date(s) If the Offer is extended, the announcement of the extension need not state the next closing date but may state that the Offer will remain open until further notice. In such a case, the Offeror will give Shareholders at least 14 days prior notice in writing before it may close the Offer. Offer to Remain Open for 14 Days The Offer will remain open for a period of not less than 14 days after the date on which it would otherwise have closed, unless the Offeror has given Shareholders at least 14 days notice in writing (Shut-off Notice) that the Offer will not be open for acceptance beyond a specified closing date, provided that: (a) (b) the Offeror may not give a Shut-off Notice in a competitive situation; and the Offeror may not enforce a Shut-off Notice, if already given, in a competitive situation. For these purposes, a competitive situation shall be deemed to arise when either (i) a firm intention to make a competing offer for the Company is announced, whether or not subject to any pre-conditions; or (ii) the SIC determines that a competitive situation has arisen. 2.6 Offer Document Shareholders should by now have received a copy of the Offer Document issued by the Offeror setting out, inter alia, the terms and conditions of the Offer. The principal terms and conditions of the Offer are set out on pages 7 to 8 of the Offer Document. Shareholders are advised to read the terms and conditions contained therein carefully. 2.7 Warranty A Shareholder who tenders his Offer Shares in acceptance of the Offer will be deemed to warrant that he sells such Offer Shares as or on behalf of the beneficial owner(s) thereof, (i) fully paid, (ii) free from all liens, equities, charges, encumbrances, rights of pre-emption 24

26 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. and any other third party rights or interests of any nature whatsoever and (iii) together with all rights, benefits and entitlements attached thereto as of the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by the Company on or after the Offer Announcement Date. 2.8 Details of the Offer Further details of the Offer are set out in Appendix 1 of the Offer Document, including details on (a) the duration of the Offer, (b) the settlement of the Cash Consideration for the Offer, (c) the requirements relating to the announcement of the level of acceptances of the Offer, and (d) the right of withdrawal of acceptances of the Offer. 2.9 Procedure for Acceptance The procedures for acceptance of the Offer are set out in Appendix 2 to the Offer Document. 4. NO CONDITION The Offer is not subject to any conditions and is unconditional in all respects. 5. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES 5.1 The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 7. INFORMATION ON THE OFFEROR AND ITS CONCERT PARTIES 7.1 The Offeror. The Offeror is a private company limited by shares incorporated in Singapore on 20 October 2009 for the purposes of making the Offer and holding the Offer Shares. Its principal activity is investment holding. As at the Latest Practicable Date, the Offeror has an issued and paid-up share capital of S$100,000 comprising 100,000 ordinary shares. The Offeror is wholly-owned by the Ng Family in the following proportions: each of Madam Tan Ah Leng and Mr Ng Wei Yong holds 30,000 ordinary shares in the capital of the Offeror, representing 30 per cent. of the issued share capital of the Offeror, while each of Mr Ng Wei Shing, Steven and Mr Ng Wei Yeow holds 20,000 ordinary shares in the capital of the Offeror, representing 20 per cent. of the issued share capital of the Offeror. 7.2 Samta Investment. The Ng Family also owns the entire share capital of Samta Investment and each of Madam Tan Ah Leng, Mr Ng Wei Yong, Mr Ng Wei Shing, Steven and Mr Ng Wei Yeow holds shares in Samta Investment in the same proportion as their respective shareholding interests in the Offeror. Samta Investment is an investment holding company incorporated in Singapore on 11 September 1986 and, as at the Latest Practicable Date, holds 85,350,128 Shares, representing approximately 55.3 per cent. of the Shares in issue. 7.3 Offeror, Directors of Samta Investment, the Ng Family and the Immediate Ng Families. The directors of each of the Offeror and Samta Investment are Mr Ng Kim Suan, Mr Ng Wei Yong and Mr Ng Wei Shing, Steven. Mr Ng Kim Suan is the husband of Madam Tan Ah Leng and the father of Mr Ng Wei Yong, Mr Ng Wei Shing, Steven, Mr Ng Wei Hing and Mr Ng Wei Yeow. Mr Ng Kim Suan is also the Chairman and an executive director of Furama. Mr Ng Wei Yong and Mr Ng Wei Hing are also executive directors of Furama. Madam Lin Chee Keen is the wife of Mr Ng Wei Yong. 7.4 Additional Information on the Offeror. Appendix 3 of this Offer Document sets out additional information on the Offeror. 25

27 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. 5.2 The following has been extracted from the Circular and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Circular. Shareholders are advised to read the extract below carefully: 4.2 Undertakings received by the Offeror. The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 12.2 Waiver Undertakings. As at the Offer Announcement Date, the Offeror has received irrevocable undertakings (the Waiver Undertakings ) from the Ng Family, Samta Investment and the Immediate Ng Family to, should they accept the Offer, waive their rights to receive from the Offeror the Offer Price in consideration for their respective Offer Shares which each of them may tender in acceptance of the Offer Undertakings to Accept. As at the Latest Practicable Date, the Offeror has received irrevocable undertakings dated 21 December 2009 (the Irrevocable Undertakings ) from the following shareholders of Furama (collectively, the Extended Ng Family ) to accept the Offer in respect of all Shares held (directly and/or indirectly) by them: No. of Shares held as at the Latest As a percentage Name Practicable Date of Shares in Issue (%) Ng Eng Soon 4,000, Hong Siew King 870, Ng Lay Theng 360, Ng Wei Kok 360, Ng Wei Ming 360, Tang Lay Geok 823, Ng Hui Lan 2,600, ,374, The aggregate number of Shares held (directly and/or indirectly) by the Extended Ng Family as at the Latest Practicable Date is 9,374,753 Shares, representing approximately 6.1 per cent. of the Shares in issue as at the Latest Practicable Date. Pursuant to the terms of the Irrevocable Undertakings: (a) (b) each member of the Extended Ng Family has irrevocably undertaken to accept the Offer in respect of (i) all Shares which they have an interest in as at 21 December 2009, being the date of the Irrevocable Undertakings; and (ii) any Shares which he or she may subsequently acquire (directly or indirectly or through a nominee) after 21 December 2009; and the Irrevocable Undertakings shall lapse on the earlier of the close of the Offer and 15 December 2010 (or such other date as may be agreed between the Offeror and the relevant Extended Ng Family member). Save as disclosed in this Offer Document, as at the Latest Practicable Date, none of the Offeror or its Concert Parties has received irrevocable undertakings from any party to accept or reject the Offer. 4.3 As announced on 4 January 2010, pursuant to the irrevocable undertakings dated 21 December 2009, the Extended Ng Family accepted the Offer in respect of all 9,374,753 Shares held directly and/or indirectly by them. 26

28 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. On 4 January 2010, the Company issued an announcement in relation to its public float. The announcement provides that pursuant to the tendering of the Shares held by the Extended Ng Family, the percentage of Shares held in public hands has fallen below 10% of the total number of issued Shares, the minimum public float requirement stipulated under Rule 723 of the Listing Manual. 4.4 Based on publicly available information, as at the Latest Practicable Date, the Offeror and its Concert Parties own, control or have agreed to acquire an aggregate of 115,236,082 Shares representing approximately 74.68% of the total Shares in issue. 6. INFORMATION ON FURAMA Furama is an investment holding company focusing on the hospitality industry. The Company was incorporated in Singapore on 27 December 1967 and listed on the Singapore Exchange Securities Trading Limited ( SGX-ST ) on 30 September The Group owns the Furama RiverFront Hotel (formerly the Apollo Hotel Singapore) and the Furama City Centre Hotel (formerly the Furama Hotel Singapore) (together, as the Singapore Hotel Properties ). The Company also holds a 13% stake in Hong Leong Hotel Development Ltd ( HLHDL ) (formerly known as Apollo Hotel Development Ltd) that owns the Grand Hyatt Hotel in Taipei ( Grand Hyatt Taipei ). The Company has also entered into joint ventures with various Thai partners and invested in four hotel properties in Bangkok, Thailand, namely, FuramaXclusive Asoke, Bangkok Hotel A Unico Collection, FuramaXclusive Sathorn Bangkok Hotel A Unico Collection, FuramaXclusive Sukhumvit Bangkok Hotel A Unico Collection and Unico Grande Silom Bangkok Hotel (together, as the Thailand Hotel Properties ). Additional information on the Company is set out in Appendix I of the Circular. 7. RATIONALE FOR THE OFFER The full text of the rationale for the Offer has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 9. RATIONALE FOR THE OFFER 9.1 Opportunity for Shareholders to Realise their Investment. The objective of the Offer is to privatise Furama while at the same time providing minority shareholders with an opportunity to exit from Furama and to realise their investment in the Shares for cash at an attractive price that is at a premium of approximately per cent. to the last transacted price of S$1.460 per Share as quoted on the SGX-ST on 14 December 2009 (being the last Market Day on which there were trades in the Shares on the SGX-ST prior to the Offer Announcement Date). 9.2 Illiquidity of Shares. The trading liquidity of the Shares has generally been thin. The average daily trading volume of the Shares has been approximately 22,038 Shares over the 12-month period prior to the Offer Announcement Date, representing approximately per cent. of the issued share capital of Furama. In addition, the free float of the Shares on the SGX-ST is low. As disclosed in Furama s Annual Report 2008, approximately per cent. of the issued Shares are held by the public as at 5 March

29 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. As mentioned in paragraph 9.1 above, the Offer will provide the opportunity for the remaining shareholders of Furama, other than the Offeror and its Concert Parties, to realise their investments for a cash consideration at a premium over the market prices of the Shares prior to the Offer Announcement Date, an opportunity that would otherwise not be available given the low trading liquidity and low free float of the Shares. 9.3 No Necessity to Access Capital Markets. Furama has been listed on the SGX-ST since 30 September Its public listing status no longer serves a material purpose as Furama has not raised any funds from the capital markets for at least the last 10 years and is unlikely to require access to the capital markets to finance its operations in the foreseeable future. 9.4 Compliance Costs relating to Listing Status. As a listed entity, Furama has to incur listing, compliance and other related costs associated with continued listing requirements under the Listing Manual. The privatisation of Furama will allow it to dispense with listingrelated expenses and enable it to channel its resources to its business operations instead. 8. OFFEROR S INTENTIONS FOR THE COMPANY The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 10. OFFEROR S INTENTIONS IN RELATION TO FURAMA 10.1 Future Plans for Furama. The Offeror intends for Furama to continue its existing business activities and there are no plans to (a) introduce any major changes to the business of Furama or the operations of any of its subsidiaries; (b) re-deploy any of the fixed assets of Furama; or (c) discontinue the employment of any of the existing employees of Furama and/or its subsidiaries, other than in the ordinary course of business. The Offeror and its Concert Parties have no plans or any intention for the foreseeable future to divest or initiate the divestment of any of the principal assets of the Furama Group, namely, the Furama RiverFront Hotel, the Furama City Centre Hotel, the investments in the Furama Thai Hotels and the 13 per cent. interest in the Grand Hyatt Hotel, Taipei, Republic of China. Shareholders should note that the key assets of Furama in Singapore, namely, the Furama RiverFront Hotel and the Furama City Centre Hotel, are situated on 99-year leasehold lands commencing from 23 February 1968 and 19 October 1979, representing unexpired leasehold interests of about 57 and 69 years, respectively. The two hotels are situated on sites that have been zoned for hotel use under the Singapore Master Plan 2008 (the Master Plan ). According to a circular issued by the Urban Redevelopment Authority on 14 January 2008, hotels located on sites zoned for hotel use under the Master Plan will not, as a general rule, be allowed to be converted to other uses Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offeror receives valid acceptances of the Offer or acquires Offer Shares during the Offer Period otherwise than through valid acceptances of the Offer in respect of not less than 90 per cent. of the total number of issued Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Offer Announcement Date), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of Shareholders who have not accepted the Offer ( Dissenting Shareholders ). 28

30 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. In such event, the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer. The Offeror will then proceed to delist the Company from the SGX-ST. Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice Listing Status of Furama. Pursuant to Rule 1105 of the Listing Manual, in the event that the Offeror and parties acting in concert with it should, as a result of the Offer or otherwise, own or control more than 90 per cent. of the issued Shares (excluding treasury shares), the SGX-ST may suspend trading of the Shares on the SGX-ST until such time when the SGX- ST is satisfied that at least 10 per cent. of the issued Shares (excluding treasury shares) are held by at least 500 shareholders of the Company who are members of the public. In addition, pursuant to Rule 723 of the Listing Manual ( Rule 723 ), Furama must ensure that at least 10 per cent. of its total issued Shares (excluding treasury shares) is at all times held in public hands (the Free Float Requirement ). Pursuant to Rule 724 of the Listing Manual ( Rule 724 ), if the percentage of the issued Shares held in public hands falls below 10 per cent., Furama must, as soon as practicable, announce that fact and the SGX- ST may suspend trading of all the Shares on the SGX-ST. Pursuant to Rule 725 of the SGX-ST Listing Manual ( Rule 725 ), the SGX-ST may allow Furama a period of three (3) months, or such longer period as the SGX-ST may agree, to raise the percentage of issued Shares held by members of the public to at least 10 per cent., failing which Furama may be delisted from the SGX-ST. In the event the Offeror is unable to exercise the right to compulsorily acquire all the Offer Shares not acquired under the Offer as set out in paragraph 10.2 above and the Company does not meet the requirements under Rule 723, the Offeror and its Concert Parties do not intend to maintain or support any action taken or to be taken to maintain the present listing status of the Company. Accordingly, the Offeror and its Concert Parties do not intend to place out any Shares held by the Offeror and its Concert Parties to members of the public to meet the Free Float Requirement, and if Furama does not meet the requirements under Rule 723, the SGX-ST will suspend trading of the Shares on the SGX-ST following the close of the Offer. Given the receipt by the Offeror of the Irrevocable Undertakings (as defined in paragraph 12.3 below), taking into account the Shares already held (directly and/or indirectly) by the Offeror, the Ng Family, Samta Investment, the Immediate Ng Family, the substantial shareholders and directors of the Company and their respective associates (as defined in the Listing Manual), the percentage of issued Shares held by members of the public is likely to fall to below 10 per cent. and the Free Float Requirement will not be met. In such an event, the SGX-ST will suspend trading of the Shares on the SGX-ST following the close of the Offer. If, for any reason, Furama continues to meet the requirements under Rule 723 following the close of the Offer, Furama will remain listed, and trading of the Shares will be maintained, on the SGX-ST. 29

31 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD SGX-ST Directed Delisting and Exit Offer. Under Rule 1305 of the Listing Manual ( Rule 1305 ), if a company listed on the SGX-ST ( ListCo ) is unable or unwilling to comply with a listing rule, the SGX-ST may remove the ListCo from the Official List of the SGX-ST. In that event, under Rule 1306 of the Listing Manual ( Rule 1306 ), either the ListCo or its controlling shareholder(s) must comply with the requirements of Rule 1309 of the Listing Manual ( Rule 1309 ), and offer a reasonable exit alternative, which should normally be in cash, to the ListCo s shareholders. Rule 1309 also requires that an independent financial adviser be appointed by the ListCo to advise on such reasonable exit alternative. In the event that the Offeror is unable to exercise the right to compulsorily acquire all the Offer Shares not acquired under the Offer as set out in paragraph 10.2 above but receives such number of acceptances such that the public float of Furama falls to below 10 per cent., resulting in Furama not being in compliance with the requirements relating to the minimum public float under Rules 723, 724 and/or 725, the SGX-ST may exercise its discretion under Rule 1305 to remove Furama from the Official List of the SGX-ST. In the event of such a directed delisting, the SGX-ST will not require Furama to convene a general meeting to obtain the approval of its shareholders for the delisting. Instead, the SGX-ST will direct that a reasonable cash exit alternative (the Exit Offer ) be offered to all remaining shareholders of Furama pursuant to Rule 1306 and Rule An independent financial adviser must also be appointed to advise on the Exit Offer. The Offeror wishes to state that if the Offeror is directed by the SGX-ST to make the Exit Offer, the terms of such Exit Offer will be substantially the same as the terms of the Offer. In particular, the price for each Share to be paid pursuant to such Exit Offer will not be higher than the Offer Price, as pursuant to Rule 33.2 of the Code, the Offeror may not, within six (6) months of the close of the Offer, acquire or make another offer to acquire Shares on terms better than the terms of the Offer. Following the conclusion of the Exit Offer, the SGX-ST will delist Furama from the SGX-ST. 9. ASSESSMENT OF THE FINANCIAL TERMS OF THE OFFER In assessing the fairness and reasonableness or otherwise of the financial terms of the Offer, we have considered the following factors which we consider to be pertinent and to have a significant bearing on our assessment: (a) (b) (c) (d) (e) (f) (g) Market quotation and trading activity of the Shares; Relative Share price performance; Valuation ratios of selected listed companies broadly comparable to the Group; Net tangible assets ( NTA ) and adjusted NTA ( AdjNTA ) of the Group; Dividend track record of the Company and alternative investments; Comparison with recently completed successful privatisation exercises in Singapore; and Other relevant considerations (as set out in section 10 of this letter). We have relied on the following general bases in our analysis: (a) As at the Latest Practicable Date, the issued share capital of the Company comprises 154,301,300 Shares and the Company does not have any outstanding instrument convertible into rights to subscribe for and options in respect of the Shares; 30

32 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. (b) The market prices and trading statistics of all securities and trading indices as well as foreign exchange rates used in this letter have been extracted from Bloomberg L.P. unless otherwise stated; and For the purposes of evaluating the financial terms of the Offer, we have considered the audited financial statements of the Group for FY2006, FY2007 and FY2008 and the unaudited consolidated interim financial statements of the Group for the nine months ended 30 September 2008 ( 3Q2008 ) and 30 September 2009 ( 3Q2009 ). 9.1 Market quotation and trading activity of the Shares (a) Share price performance The trend of the daily last transacted prices and trading volume of the Shares from 15 December 2007 (being the two-year period prior to the Announcement Date) to the Latest Practicable Date is set out below. Share Price (S$) Note 5 Volume Traded ('000) , Note 1 Note 2 Note 3 Note 4 Note 7 Note 6 Note 9 Note 11 Note 12 Note 13 Note 14 Note 15 Note 18 Note 16 1,800 1,600 1,400 1,200 1, Note 8 Note 10 Note Dec-07 Feb-08 Mar-08 May-08 Jun-08 Aug-08 Oct-08 Dec-08 Mar-09 May-09 Jul-09 Sep-09 Nov-09 0 Jan-10 Volume Last Transacted Price Source: Bloomberg L.P. Notes: 1. On 27 December 2007, the Company announced that AEW VIA SP3 Pte Ltd has exercised the option to purchase Apollo Centre for S$205.0 million (exclusive of goods and services tax) ( Purchase Price ) and entered into a sale and purchase agreement with Apollo Centre Pte Ltd ( Seller ) to purchase Apollo Centre at the Purchase Price. 2. On 22 February 2008, the Company released its full year unaudited results for FY2007 ended 31 December 2007 and reported that the Group s profit after tax from continued operations decreased by 56.0% to S$16.9 million as compared to FY2006. The Company also announced that the Directors proposed a final dividend of S$0.06 per Share for FY2007 that was subject to shareholders approval. In addition, the Company announced its intention to declare a special dividend of S$0.75 per Share upon the completion of the sale of Apollo Centre. 3. On 1 April 2008, the Company announced that it had entered into a Memorandum of Understanding ( MOU ) with Mr Prasert Chansrichawla and his nominees ( Vendors ) to form joint venture companies in Thailand for the purpose of acquiring properties in Bangkok for hotel operations. 4. On 11 April 2008, the Company announced that the Seller had completed the disposal of Apollo Centre on 10 April

33 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. 5. On 7 May 2008, the Company released its unaudited results for the three months ended 31 March 2008 and reported that the Group s profit after tax from continued operations increased by 240.7% to S$8.8 million compared to the corresponding period in FY2007. The Company also declared a special interim dividend of S$0.75 per Share for FY2008 that was paid on 3 June On 12 June 2008, the Company announced that it had entered into joint venture agreements with the Vendors and Unique Panorama Property Co., Ltd ( UP ) to form (a) Furama-Unico Sathorn Holdings Co., Ltd (b) Furama-Unico Sukhumvit Holdings Co., Ltd and (c) Furama-Unico Asoke Holdings Co., Ltd (collectively known as JVCOS ) that have been incorporated in Thailand. UP is an entity with the Company and the Vendors each holding 49% stake respectively, while an independent Thai third party holds the remaining 2% stake. The Company and the Vendors each holds 49% share equity respectively and UP holds the remaining 2% share equity in each of the JVCOS. The respective JVCOS had entered into the sale and purchase agreements to acquire 100% of the Unico Grande Sathorn Boutique Hotel, Unico Grande Sukhumvit Boutique Hotel and Unico Grande Asoke Boutique Hotel that are all located in Thailand (collectively known as Properties ). The Company would invest a total of THB 763,896,000 (approximately S$32.2 million) for the proposed acquisition of the Properties. 7. On 11 July 2008, the Company announced the completion of the acquisition of the Properties on 10 July On 28 July 2008, the Company announced that the excess provision of S$1.6 million would be written back from the provision for development charge of S$8.4 million since FY1999 in respect of the extension made to Furama Riverfront Singapore after the Singapore Land Authority had on 3 July 2008, after due considerations of the appeals, decided to review and offer the development charge to be levied at S$6.8 million inclusive of all charges. 9. On 29 July 2008, the Company announced that it had entered into a joint venture agreement with the Vendors and UP to form a joint venture company called Furama-Unico Silom Holdings Co., Ltd in Thailand for the purpose of the proposed acquisition of the Unico Grande Silom Hotel in Thailand. The Company and the Vendors each hold 49% share equity respectively and UP holds the remaining 2% share equity in Furama-Unico Silom Holdings Co., Ltd. The Company would invest THB 392,343,000 (approximately S$16.0 million) for the proposed acquisition of the Unico Grande Silom Hotel. 10. On 4 August 2008, the Company released its unaudited results for the six months ended 30 June 2008 and reported that the Group s profit after tax from continued operations increased by 133.0% to S$17.6 million compared to the corresponding period in FY2007. The Company also declared a special interim dividend of S$0.06 per Share and an interim dividend of S$0.04 per Share for FY2008 which was paid on 29 August On 6 November 2008, the Company released its unaudited results for the nine months ended 30 September 2008 and reported that the Group s profit after tax from continued operations increased by 113.2% to S$27.1 million compared to the corresponding period in FY On 5 February 2009, the Company announced the completion of the acquisition of the Unico Grande Silom Hotel on 4 February On 20 February 2009, the Company released its full year unaudited results for FY2008 ended 31 December 2008 and reported that the Group s profit after tax from continued operations increased by 86.9% to S$31.5 million as compared to FY On 5 May 2009, the Company released its unaudited results for the three months ended 31 March 2009 and reported that the Group s profit after tax from continued operations increased by 4.9% to S$8.1 million compared to the corresponding period in FY On 5 August 2009, the Company released its unaudited results for the six months ended 30 June 2009 and reported that the Group s profit after tax from continued operations decreased by 45.2% to S$9.6 million compared to the corresponding period in FY On 5 November 2009, the Company announced the profit guidance for its third quarter results which was expected to show a loss for the period compared to a profit for the corresponding period in FY2008 due to the share of impairment losses of the hotel properties of its joint venture entities in Thailand. 17. On 9 November 2009, the Company released its unaudited results for the nine months ended 30 September 2009 and reported that the Group s loss after tax from continued operations was S$4.6 million compared to the profit after tax from continued operations of S$26.1 million in the corresponding period in FY On 15 December 2009, the Company announced that Samta Hotels Pte. Ltd. would make a voluntary unconditional cash offer for all the Shares at S$2.00 per Share. 32

34 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. The volume-weighted average price ( VWAP ), highest and lowest closing price and trading volume of the Shares from 15 December 2007 to the Latest Practicable Date are set out below. Daily Daily Trading Trading Premium / Volume Volume (Discount) Average as a as a of Offer Highest Lowest Daily percentage percentage Price over Closing Closing Trading of Total of Free VWAP (1) VWAP Price Price Volume (2) Shares (2) (2) (3) Float (S$) (%) (S$) (S$) ( 000) (%) (%) Periods prior to Announcement Date Last 2 years (0.1) Last 18 months Last 1 year Last 6 months Last 3 months Last 1 month Last transacted price on 14 December 2009 prior to Announcement Date (4) After Announcement Date Between Announcement Date and the Latest Practicable Date (both days inclusive) Latest Practicable (5) Date Source: Bloomberg L.P. and PPCF s calculations Notes: 1. The VWAP had been weighted based on the last transacted prices of the Shares and traded volumes for the trading days in the respective periods. 2. The average daily volume of the Shares is calculated based on the total volume of Shares traded during the period divided by the number of Market Days over the same period. 3. Free float refers to approximately 31.8 million Shares or approximately 20.61% of the issued share capital of the Company held by the public as at 5 March 2009 and as disclosed in the Company s annual report The last transacted price of the Share on 14 December 2009 (being the Market Day the Shares last traded prior to the Announcement Date) was S$1.46 per Share. On 14 December 2009, the highest intra-day traded price was S$1.46 and lowest intra-day traded price was S$ This represents the last transacted price on 6 January 2010 (being the Latest Practicable Date). The highest and lowest intra-day traded prices on 6 January 2010 were both S$2.00 per Share. 33

35 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Based on the above, we note the following in respect of the market price: (a) (b) The Offer Price of S$2.00 per Share is within the range that the Shares have traded over the 2-year period prior to the Announcement Date which is between a low of S$0.61 per Share and a high of S$3.16 per Share. Over the 2-year period, the Company had announced the disposal of the Apollo Centre, declared and paid the special dividend arising from the disposal of the Apollo Centre resulting in the market price of the Share trading above the Offer Price. In this regard, should the market price e.g. the highest closing price be adjusted to exclude such special dividend, the highest closing price of S$3.16 (after adjusting for the special interim dividend of S$0.75 declared in May 2008) would be S$2.41 as per the chart of section 9.2 below; The Offer Price represents a discount of 0.1% from the 2-year VWAP of the Shares as the market price of the Share has taken into consideration the announcement of the disposal of the Apollo Centre in December 2007 and the declaration and payment of a special dividend in May 2008; (c) The Offer Price represents a premium of 58.4%, 64.5%, 49.6%, 42.6% and 38.2% over the 18-month, 1-year, 6-month, 3-month and 1-month VWAP of the Shares respectively; and (d) From the Announcement Date to the Latest Practicable Date, the market price of the Share fluctuated in a band of between S$1.98 and S$2.00. We note the following in respect of the trading liquidity: (a) The trading liquidity of the Shares had been low prior to the Announcement Date. The Shares were traded with an average daily liquidity of 32,200 Shares, 21,300 Shares, 22,000 Shares, 31,800 Shares, 20,500 Shares, and 10,100 Shares during the 2-year, 18-month, 1-year, 6-month, 3-month and 1-month period prior to the Announcement Date; (b) The average daily trading liquidity of the Shares represents approximately 0.02%, 0.01%, 0.01%, 0.02%, 0.01% and 0.01% of the total Shares and 0.10%, 0.07%, 0.07%, 0.10%, 0.06%, and 0.03% of the Company s free float during the 2-year, 18- month, 1-year, 6-month, 3-month and 1-month period prior to the Announcement Date respectively; (c) (d) The volume of Shares traded on the market day immediately prior to the Announcement Date was 120,000 Shares (or 0.08% and 0.38% of the total Shares and the Company s free float respectively); and From the Announcement Date to the Latest Practicable Date (both days inclusive), trading liquidity of the Shares is higher than the trading liquidity during the 2-year, 18-month, 1-year, 6-month, 3-month and 1-month period prior to the Announcement Date. The average daily trading volume between the Announcement Date and the Latest Practicable Date (both dates inclusive) was approximately 171,400 Shares, representing approximately 0.11% and 0.54% of the total Shares and the Company s free float respectively. 34

36 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Based on the above observations, we note that in the last 24 months prior to the Announcement Date, the absolute volumes of trades made on average in the Shares is low compared to the Company s issued share capital and its free float. It would appear likely that the current market price of the Share is supported by the Offer. As such, there is no assurance that the market price and trading volume of the Shares will be maintained at the level prevailing between the Announcement Date and the Latest Practicable Date after the close of the Offer. Nonetheless, Shareholders are advised that the past trading performance of the Shares should not, in any way, be relied upon as an indication or a promise of its future trading performance. 9.2 Relative Share price performance To gauge the market price performance of the Share relative to the general performance of the Singapore equity market, we have compared the market price movement of the Share against that of the Straits Times Index ( STI ) and an index comprising selected companies listed on the SGX- ST and engaged in the hotel business which we consider to be broadly comparable to the Group ( Comparable Companies ) ( Hotel Index 1 ) for the period from 15 December 2007 (being the two-year period prior to the Announcement Date) to the Latest Practicable Date Note 2 Note Hotel Index STI 0.60 Note Furama Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Source: Bloomberg L.P. Normalised Furama Price Hotel Index Normalised Value Normalised STI Notes: 1. On 27 December 2007, the Company announced that AEW VIA SP3 Pte Ltd has exercised the option to purchase Apollo Centre for S$205.0 million (exclusive of goods and services tax) ( Purchase Price ) and entered into a sale and purchase agreement with Apollo Centre Pte Ltd to purchase Apollo Centre at the Purchase Price. 2. On 7 May 2008, the Company released its unaudited results for the three months ended 31 March 2008 and reported that the Group s profit after tax from continued operations increased by 240.7% to S$8.8 million compared to the corresponding period in FY2007. The Company also declared a special interim dividend of S$0.75 per Share for FY2008 that was paid on 3 June May 2008, being the ex-dividend date for the special dividend of S$0.75 per share. 1 Please refer to section 9.3 (a) for the list of Comparable Companies. The Hotel Index is computed by PPCF. The Hotel Index level is computed as: Hotel Index Value = (Market Capitalisation of component Comparable Company)/base value on first trading day of the 2 year period prior to the Announcement Date. 35

37 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Based on the above chart, it appears that the market price of the Share had outperformed the STI and the Hotel Index from December 2007 to late May 2008 mainly due to the disposal of the Apollo Centre in December 2007 and the declaration and payment of a special dividend pursuant to the disposal of Apollo Centre in May Thereafter, the market price of the Share had generally underperformed the STI and the Hotel Index over the period from late May 2008 to the Announcement Date. We have also observed that the market price of the Share experienced an immediate upward spike upon the release of the Announcement. Based on the above observation, in the past 2 years prior to the Announcement, we note that the market price of the Share only outperformed the STI and the Hotel Index due to the disposal of the Apollo Centre and the declaration and payment of a special dividend pursuant to the disposal of Apollo Centre as described above. We further note that the Offeror does not have the intention to dispose any properties of the Group in the foreseeable future. Therefore, it is likely that the market price of the Share may continue to underperform the STI and the Hotel Index. Nonetheless, Shareholders are advised that the past trading performance of the Shares should not, in any way, be relied upon as an indication or a promise of its future trading performance. 9.3 Valuation ratios of selected listed companies broadly comparable to the Group (a) Comparable Companies For the purpose of evaluating the financial terms of the Offer, we have made reference to the valuation statistics of the Comparable Companies to get an indication of the current market expectations with regard to the perceived valuation of the Group. Brief descriptions of the Comparable Companies are set out below. Market Capitalisation (1) Company Name Business Description (S$ million) Amara Holdings Amara operates hotels and restaurants, provides food Limited ( Amara ) and beverage catering services as well as develops and invests in properties. Amara owns and operates Amara Hotel and invests in shares. Banyan Tree Banyan Tree owns and manages hotels. Banyan Tree Holdings Limited ( Banyan Tree ) also operates spas, galleries and golf courses, and invests in properties. Banyan Tree offers design and project management services as well. Bonvests Holdings Bonvests is an investment holding company whose Limited ( Bonvests ) subsidiaries develop real estate and operate waste collection and disposal, and contract cleaning services. Bonvests also develops and operates hotels in Singapore and overseas, as well as operates food and beverage restaurants. Bonvests trades securities and rents properties. GuocoLeisure GuocoLeisure is an investment holding company Limited ( GuocoLeisure ) GuocoLeisure holds investments in the areas of hotels and resorts, and portfolio investments. GuocoLeisure also invests in properties for residential and tourism purposes. Hotel Grand Central HGC owns, operates and manages hotels. HGC also Limited ( HGC ) collects rent, develops properties, and provides marketing and support services. 36

38 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Market Capitalisation (1) Company Name Business Description (S$ million) Hotel Properties HPL, through its subsidiaries, operates and manages 1,210.8 Limited ( HPL ) hotels. HPL also operates restaurants, and retails and distributes food and fashion merchandise. In addition HPL trades shares, develops and invests in properties, hotels and resorts. Hotel Royal Limited HRL owns and operates the Hotel Royal in Singapore ( HRL ) HRL, through its subsidiaries, also manages and invests in properties in Malaysia and New Zealand. Orchard Parade OPH and its subsidiaries invest, develop and manage Holdings Limited ( OPH ) properties. OPH also provides investment trading and operates Orchard Parade Hotel, Albert Court Hotel and Central Square. Pan Pacific Hotels Pan Pacific owns and manages hotels and properties Group Ltd. Pan Pan Pacific s hotel operations comprise ( Pan Pacific ) development, operation and management of hotels. Stamford Land Stamford Land is an investment holding company Corporation Limited ( Stamford Land ) Stamford Land owns and manages hotels and travel agencies. Stamford Land also develops and invests in properties. Furama Furama owns and manages the Furama RiverFront and the Furama City Centre in Singapore. Furama entered into joint ventures with Thai partners to invest in four hotel properties in the prime locations of Bangkok, Thailand. Furama also holds a 13% stake in HLHDL, a company incorporated in Taiwan, which owns an international tourist hotel named Grand Hyatt Taipei. Source: Bloomberg L.P. Note: 1. The market capitalisation of the Comparable Companies is based on their respective last transacted prices as at the Latest Practicable Date. We recognise that there is no company listed on the SGX-ST which we may consider to be identical to the Group in terms of, inter alia, geographical markets, composition of business activities, scale of business operations, risk profile, asset base, valuation methodologies adopted, accounting policies, track record, future prospects, market/industry size, political risk, competitive and regulatory environment, financial positions and other relevant criteria and that such businesses may have fundamentally different annual profitability objectives. The Independent Directors should note that any comparison made with respect to the Comparable Companies merely serve to provide an illustrative perceived market valuation of the Group as at the Latest Practicable Date. 37

39 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. (b) Valuation statistics For the purpose of evaluating the financial terms of the Offer, we have applied the following valuation ratios on the Comparable Companies to arrive at their valuation statistics. Valuation Ratio General Description P/NTA : P/NTA or Price-to-Book NTA ratio illustrates the ratio of the market price of a company s share relative to its historical book NTA per share. P/E : P/E or Price-to-Earnings ratio illustrates the ratio of the market price of a company s share relative to its historical earnings per share. EV/EBITDA : EV or Enterprise Value is the sum of a company s market capitalisation, preferred equity, minority interests, short and long term debt less its cash and cash equivalents. EBITDA stands for historical earnings before interest, tax, depreciation and amortisation expenses. The EV/EBITDA ratio illustrates the market value of a company s business relative to its historical pre-tax operating cashflow performance, without regard to the company s capital structure. The table below sets out the valuation statistics for the Comparable Companies based on their last transacted share prices as at the Latest Practicable Date. Last Comparable Transacted Market Company Price (1) Capitalisation (1) P/NTA (2) P/E (3) EV/EBITDA (4) Gearing (9) (S$) (S$ million) (times) (times) (times) (times) Amara Banyan Tree Bonvests GuocoLeisure HGC HPL , HRL OPH Pan Pacific Stamford Land Maximum (7) Median Minimum (7) Simple Average Simple Average (excluding outliers) N.A. (6) 17.0 (7) N.A. (6) N.A. (6) Furama (5) (8) 5.6 NIL Source: Bloomberg L.P. and PPCF s calculations Notes: 1. Based on the respective last transacted prices of the respective companies as at the Latest Practicable Date. 38

40 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. 2. Based on the book NTA per share obtained from the most recent announced financial statements of the respective companies. In respect of the Company, the P/NTA ratio is based on the Company s unaudited NTA of S$209.3 million as at 30 September Based on the earnings per share obtained from the most recent annual reports of the respective companies. 4. Based on the EBITDAs, net borrowings and minority interests obtained from the most recent annual reports and announced financial statements of the respective companies. 5. Based on the Offer Price of S$2.00 per Share. 6. Not applicable. 7. Excluding Banyan Tree, HPL, Pan Pacific and Stamford Land as outliers. 8. Excluding the profit after tax from discontinued operations. 9. Based on the total borrowings divided by total shareholders equity as disclosed in most recent quarterly announcements of the respective companies. We note that: (a) (b) (c) The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of the P/NTA ratios of the Comparable Companies and is higher than the simple average and median P/NTA ratios of 0.9 times and 0.9 times of the Comparable Companies respectively; The P/E ratio of the Company implied by the Offer Price of 10.1 times is within the range of the P/E ratios of the Comparable Companies (excluding outliers) and is lower than the simple average (excluding outliers) and median P/E ratios of 17.0 times and 26.0 times of the Comparable Companies respectively. The P/E ratios of the Comparable Companies range widely from 8.7 times to 91.0 times and as such the P/E ratio may not be appropriate as a valuation statistic for comparison of companies in the hotel industry; and The EV/EBITDA ratio of the Company implied by the Offer Price of 5.6 times is below the range of the EV/EBITDA ratios of the Comparable Companies and is lower than the simple average and median EV/EBITDA ratios of 13.3 times and 12.7 times of the Comparable Companies respectively. The lower EV/EBITDA ratio corresponds with the nil gearing of the Company. Based on the above illustration of the valuation statistics, the P/NTA and P/E ratios of the Company implied by the Offer Price are within the range of P/NTA and P/E ratios of the Comparable Companies. 9.4 Analysis of the NTA and AdjNTA of the Group It is necessary to make a distinction between NTA and AdjNTA for the purpose of applying the asset based valuation approach. NTA as reflected in the accounts of a company is based on the value of a company s net assets as determined by accounting procedures and does not necessarily reflect the prevailing market value of the underlying assets. On the other hand, AdjNTA is determined after adjusting for the revaluation of a company s key assets based on their estimated current market values. We wish to highlight that the NTA and AdjNTA approaches are meaningful insofar as it shows the extent to which the value of each share is backed by tangible assets and would be relevant in the event that the group decides to realise or convert the use of all or most of its assets. 39

41 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD Analysis of the NTA of the Group The NTA approach of valuing a group of companies is based on the aggregate value of all the assets of the group in their existing condition, after deducting the sum of all liabilities and intangible assets of the group. In our evaluation of the financial terms of the Offer, we have considered whether there are any factors which have not been otherwise disclosed in the announced financial results of the Group that are likely to materially impact the unaudited NTA as at 30 September Save as disclosed in the financial results of the Group as at 30 September 2009, the Directors have confirmed that as at the Latest Practicable Date, to the best of their knowledge, there are no material contingent liabilities undisclosed, any asset impairment/surplus in revaluation and unrecorded liabilities that may have a material impact on the NTA of the Group as at the Latest Practicable Date. Based on the unaudited financial results of the Group as at 30 September 2009, the NTA of the Group was S$209.3 million or S$1.36 per Share. As such, the Offer Price of S$2.00 represents a premium of approximately 47.4% to the NTA per Share of the Group as at 30 September 2009, i.e. P/NTA of 1.5 times. As per the illustration under section 9.3(b) of this letter, the P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of the Comparable Companies and is higher than the simple average and median P/NTA ratios of 0.9 times and 0.9 times of the Comparable Companies respectively Analysis of the AdjNTA of the Group In our evaluation of the financial terms of the Offer, we have also considered whether there are any tangible assets which should be valued at an amount that is materially different from that recorded in the balance sheet of the Group as at 30 September The Company has commissioned Knight Frank (Thailand) and DTZ (SEA) to conduct an independent valuation on the Thailand Hotel Properties and Singapore Hotel Properties respectively. The Valuation Summary is set out in Appendix VII of this Circular. Based on the Valuation Summary, the market values of the Thailand Hotel Properties and the Singapore Hotel Properties are S$55.7 million 2 and S$333.0 million respectively. In addition to the Thailand Hotel Properties and Singapore Hotel Properties, the Company also holds 13% equity interest in HLHDL. We have also considered the 13% investment in HLHDL in addition to the NTA to derive the AdjNTA that includes the adjustment relating to the Company s investment in HLHDL ( AdjNTA HLHDL ). 2 The valuations are translated at an exchange rate of THB : S$ For further disclosure, please refer to the asset valuations announcement made by the Company on 9 November

42 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. The table below sets out the computation of the AdjNTA of the Group and the AdjNTA HLHDL. (S$ million) Unaudited NTA of the Group as at 30 September 2009 (1) Add: Gross revaluation surplus on the Singapore Hotel Properties (2) Less: Deferred tax liability arising from the revaluation surplus on the (29.4) Singapore Hotel Properties (3) Unaudited AdjNTA of the Group Add: Adjustments for the investment of 13% stake in HLHDL that owns the 61.4 Grand Hyatt Taipei (4) Unaudited AdjNTA HLHDL of the Group Unaudited AdjNTA per Share of the Group (S$) 2.29 Unaudited AdjNTA HLHDL per Share of the Group (S$) 2.69 Notes: 1. The Unaudited NTA of the Group as at 30 September 2009 has taken into account the Group s share of impairment losses of the Thailand Hotel Properties amounting to S$18.3 million. 2. Based on the Valuation Summary set out in Appendix VII of the Circular. In the event of a hypothetical sale of the properties, the adjustment has not considered the effect of the capital gain tax (if any). 3. Assuming the deferred tax liability arising from the revaluation surplus on the Singapore Hotel Properties is taxed at its corporate tax rate of 17%. 4. The adjustments were calculated based on last available appraisal of the Grand Hyatt Taipei as set out in the annual report for 1997 of the Company, the book value of HLHDL for FY2008 and book NTA value of the Company s investment in HLHDL as disclosed in Company s annual report The Company has confirmed that information relating to the market valuation of Grand Hyatt Taipei and the fair value of the 13% equity interest in HLHDL is not readily available. Therefore, we are unable to have access to and have not included current information relating to the value of Grand Hyatt Taipei and the fair value of the investment in HLHDL in our analysis of the AdjNTA HLHDL. These adjustments may not reflect the current value of the Company s investment in HLHDL and as such the current value of the Company s investment in HLHDL will likely to be different. These adjustments were made assuming no change in the appraised value of Grand Hyatt Taipei between FY1997 and 3Q2009, no change in HLHDL s book value between FY2008 and 3Q2009, no tax impact from the revaluation surplus of Grand Hyatt Taipei in FY1997 and no capital gain tax effect (if any), assuming the hypothetical sale of the 13% equity interest in HLHDL. Based on the above, the unaudited AdjNTA per Share and the unaudited AdjNTA HLHDL per Share as at 30 September 2009 are S$2.29 and S$2.69 per Share respectively. As such, the Offer Price of S$2.00 represents a discount of approximately 12.7% and 25.7% to the unaudited AdjNTA per Share and unaudited AdjNTA HLHDL per Share respectively, i.e. P/AdjNTA of 0.9 times and P/AdjNTA HLHDL of 0.7 times. 41

43 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. For Illustration purposes only, we have set out the P/AdjNTA ratios of the Company and the Comparable Companies adjusted for revaluations, if any, below: Comparable Last Transacted Market Company Price (1) Capitalisation (1) P/AdjNTA (2) (S$) (S$ million) (times) Amara (3) Banyan Tree (4) Bonvests (5) GuocoLeisure (4) HGC (4) HPL , (6) HRL (7) OPH (4) Pan Pacific (8) Stamford Land (9) Maximum 1.8 Median 0.8 Minimum 0.5 Simple Average 0.9 Furama P/AdjNTA P/AdjNTA HLHDL Source: Bloomberg L.P. and PPCF s calculations Notes: 1. Based on the respective last transacted share prices of the respective companies as at the Latest Practicable Date. 2. Based on the book NTA per share obtained from the most recent announced financial statements of the respective companies and adjusted based on the last disclosed revaluation increase/decrease which was not recognised. In respect of the Company, the P/AdjNTA ratio is based on the Company s unaudited NTA of S$209.3 million as at 30 September 2009 adjusted for revaluation surplus/impairment. 3. Based on Amara s FY2008 annual report, all properties, plants and equipment are stated at cost except for a one-off revaluation of the leasehold land and buildings in 1987 by an external independent valuer. The Amara Group does not have a fixed policy of revaluation. 4. No adjustment was made as the balance sheet reflects the revaluations (if any). Hence, for illustration purposes, the implied AdjNTA used is the same as the NTA of the company. 5. Based on Bonvests FY2008 annual report, properties, plants and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses, if any. 6. Based on HPL s FY2008 annual report, the freehold and long-term leasehold land are stated at valuation based on the open market value for existing use as at 31 December 1996 by DTZ Debenham Tie Leung (SEA) Pte Ltd and its associates. The revaluation surplus of HPL and of the HPL Group has been recorded in the asset revaluation reserve. Subsequent to the above one-off revaluation, no further revaluation was done after the adoption of FRS 16, Property, Plant and Equipment. 7. Based on HRL s unaudited NTA of S$245.8 million as at 30 September 2009 adjusted for the revaluation increases which were not recognised for freehold building hotels and investment properties. Based on the FY2008 annual report of HRL, the fair value and book value of the freehold buildings as at 31 December 2008 were S$137.6 million and S$49.8 million respectively, the fair value and book value of the investment properties as at 31 December 2008 were S$73.5 million and $52.6 million respectively. Assuming that there are no tax and depreciation effects on revaluation, and the fair value of HRL s freehold building hotels and investment properties remained the same between 31 December 2008 and 30 September 2009, a revaluation adjustment of S$108.7 million was made to arrive at HRL s AdjNTA as at 30 September 2009 of S$354.5 million. 42

44 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. 8. Based on Pan Pacific s unaudited NTA of S$746.9 million as at 30 September 2009 adjusted for the revaluation surplus which was not incorporated into the financial statements. Based on the FY2008 Annual Report of Pan Pacific (formerly known as Hotel Plaza Limited), the surplus on valuation of hotel properties of the Pan Pacific Group (including plants, properties, equipment, furniture and fittings) amounting to S$524.6 million has not been incorporated in the financial statements. On 12 August 2009, Pan Pacific announced that the valuation of the property at 7500A/D/E Beach Road Singapore ( Beach Road Property ) was S$158.6 million as at 30 June 2009, which was S$1.6 million higher than the previous valuation as at 31 December Assuming that there are no tax and depreciation effects on revaluation, the open market value of hotel properties of the Pan Pacific Group (including plant, property, equipment, furniture and fittings but excluding the Beach Road Property) remained the same between 31 December 2008 and 30 September 2009, and the open market value of the Beach Road Property remained the same between 30 June 2009 and 30 September 2009, a revaluation adjustment of S$526.2 million was made to arrive at Pan Pacific s AdjNTA as at 30 September 2009 of S$1,273.1 million. 9. Based on Stamford Land s unaudited NTA of S$418.1 million as at 30 September 2009, adjusted for the fair value increase which was not recognised for the investment properties. Based on the FY2009 annual report of Stamford Land, the fair value and book value of the investment properties as at 31 March 2009 were S$25.1 million and S$13.0 million respectively. Assuming that there are no tax and depreciation effects on revaluation, and the fair value of Stamford Land s investment properties remained the same between 31 March 2009 and 30 September 2009, a revaluation adjustment of S$12.1 million was made to arrive at Stamford Land s AdjNTA as at 30 September of S$430.2 million. Based on the above, we note that the P/AdjNTA ratio of the Company implied by the Offer Price of 0.9 times is within the range of the P/AdjNTA ratios of the Comparable Companies, above the median P/AdjNTA ratio of 0.8 times and same as the simple average P/AdjNTA ratio of 0.9 times of the Comparable Companies respectively. We further note that the P/AdjNTA HLHDL ratio of the Company implied by the Offer Price of 0.7 times is within the range of the P/AdjNTA ratios of the Comparable Companies but below the simple average and median P/AdjNTA ratios of 0.9 times and 0.8 times of the Comparable Companies respectively. In addition to the Singapore Hotel Properties and Thailand Properties of the Company, the Company holds 13% equity interest in HLHDL that owns an international tourist hotel named Grand Hyatt Taipei within the Taipei World Trade Centre Complex. The tenure of the Grand Hyatt Taipei is 50-year term with effect from 7 March 1990 and extendable to 80- year term. The Company s investment in HLHDL started at its incorporation in We have set out the following note in respect of the independent appraisal of the value of Grand Hyatt Taipei as extracted from the Company s annual report for FY1997 below: Based on the investee company s audited accounts for the year ended 31 st December 1997, the share of the investee s profit and net assets attributable to the Company and the Group are S$3,285,705 (1996:S$1,886,989) and S$16,291,598 (1996: S$13,323,044) respectively. An independent appraisal of the value of Grand Hyatt Taipei was conducted by CY Leung & Company Limited in November 1997 indicated a surplus over cost of approximately S$460 million which has not been taken up in the investee company s audited accounts. The Company s share of that surplus would be approximately S$59 million. The Company has confirmed that, to the best of its knowledge, since the independent appraisal in November 1997, no independent appraisal of the value of Grand Hyatt Taipei has been conducted by HLHDL. We have also set out the following note in respect of the Company s 13% equity interest in HLHDL which is classified as available-for-sale financial assets of S$14.0 million as extracted from the Company s annual report for FY2008 below: With the adoption of FRS 39, the Group s and the Company s policy is to state availablefor-sale investments at fair value. However, since the fair value cannot be measured reliably as the market value is not readily available without incurring excessive costs, the unquoted investments are stated at cost, less impairment. 43

45 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. The Company has confirmed that information relating to the market valuation of Grand Hyatt Taipei and the fair value of the 13% equity interest in HLHDL is not readily available. We understand from the Company that as the Company s stake in HLHDL is a minority stake and they do not have control of HLHDL, they are not in a position to procure an updated independent appraisal of Grand Hyatt Taipei. Therefore, we are unable to have access to and have not included current information relating to the value of Grand Hyatt Taipei and the fair value of the investment in HLHDL in our analysis of the AdjNTA HLHDL. As such, it is important for the Independent Directors to note that: (i) (ii) We are unable to obtain an updated valuation report on Grand Hyatt Taipei; and We therefore have to rely only on publicly available information and a valuation that was performed in 1997, in order to derive the AdjNTA HLHDL (the approach is detailed out in explanatory note 4 set out on page 41 of this Circular). Whilst it is not a general practice to do so, however given the lack of information and the unavailability of an updated independent appraisal, we have then had to rely and use such information in our assessment of the 13% investment in HLHDL above. We note that HLHDL has been consistently declaring dividends since FY1997. The dividends received by the Company in respect of the investment in HLHDL for the past three financial years are set out below: S$ ( million) FY2006 FY2007 FY2008 Dividends received The total dividends received by the Company since FY1997 amounted to S$23.4 million which is higher than the Company s cost of investment in HLHDL of S$14.0 million. Based on the dividend payment track record from the investment in HLHDL, there is no reason to doubt that the dividends stream will cease. However, we understand from the Company that HLHDL does not have a fixed or formal dividend policy. Therefore, there is no guarantee of the quantum and regularity of the future dividend stream. The quantum of dividends paid by HLHDL in any period or in the future would depend on various factors including but not limited to its financial performance, its working capital and capital expenditure needs as well as other considerations. Based on the above and the AdjNTA HLHDL, it would appear that the value of the Company s 13% stake in HLHDL will likely to be higher than the Company s cost of investment in HLHDL of S$14.0 million. We understand that the Company s 13% stake in HLHDL represents a minority stake, is illiquid, an unquoted passive investment and the Company has confirmed that it has no management involvement in HLHDL. Moreover, in view of its minority stake in HLHDL, the Company is not in the position to initiate and to effect the divestment of any of the assets of HLHDL unilaterally. Whilst the Offeror and the Company have no plans or any intention for the foreseeable future to divest or initiate the divestment of the 13% investment in HLHDL, in the event that the Company sells its 13% stake in HLHDL, such a minority stake in an unquoted company is generally subject to discount as a result of lack of management control and marketability. Further, the investment in HLHDL is an equity stake and the valuation of the investment in HLHDL should take into consideration the Company s share of the assets and liabilities of HLHDL as well. 44

46 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. As per section 8 above, the Offeror and its Concert Parties have stated that they have no plans or any intention for the foreseeable future to divest or initiate the divestment of any of the principal assets of the Group, namely, the Singapore Hotel Properties, the Thailand Hotel Properties and the 13% interest in HLHDL that owns the Grand Hyatt Taipei. We wish to highlight to the Independent Directors that the AdjNTA approach may provide an estimate of the value of a group assuming the hypothetical sale of all of its assets over a reasonable period of time at the aggregate value of the assets used in the computation of the AdjNTA, the proceeds of which would be used to repay the liabilities of that group. However, such a hypothetical scenario is assumed to be made without considering factors such as, inter alia, time value of money, market conditions, legal fees, liquidation costs, taxes, contractual obligations, regulatory requirements and availability of potential buyers, which would theoretically lower the NTA and AdjNTA value that can be realised. 9.5 Dividend track record of the Company and alternative investments Set out below is a summary of the dividend per Share declared in respect of each of FY2006, FY2007 and FY2008 by the Company. FY2006 FY2007 FY2008 Ordinary Dividend per Share (cents) (1) Special Dividend per Share (cents) (1) 10.0 (3) (4) 81.0 (5) Ordinary Dividend Yield (%) (2) Special Dividend Yield (%) (2) Total Dividend Yield (%) (2) Source: Company s annual reports and financial statements Notes: 1. Based on dividends declared in respect of each financial year. 2. Dividend yield of the Company is computed as the dividend per share divided by the closing market price on the last cum-dividend date (or where there was no trading on such date, the last available closing market price prior thereto). The aforementioned dividend yield computed may differ from the actual dividend yield which will vary depending on the actual cost of investment paid by the individual investor. 3. On 11 August 2006, the Company declared its intention to make a special dividend of 10 cents per Share in relation to the sale of the Company s wholly owned subsidiary Laudet Pty Ltd. which owns the Citigate Sebel Sydney, a 270- room hotel. This dividend was paid on 12 December A dividend payout of cents per Share was paid in December 2007 which fully utilised the Section 44 tax credit. 5. The special dividend of 81.0 cents per Share was pursuant to the sale of Apollo Centre of which 75.0 cents per Share was declared in May 2008 and 6.0 cents per Share was declared in August As shown in the table above, the Company declared and paid dividends for the past three years with ordinary dividend yields of 5.6%, 2.2% and 2.3% in respect of FY2006, FY2007 and FY2008 respectively. The Company also paid special dividends which resulted in the total dividend yields of 14.3%, 4.9% and 29.5% in respect of FY2006, FY2007 and FY2008 respectively. 45

47 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. The dividend yields of Comparable Companies based on their ordinary cash dividends declared in their respective last financial years are as follows: Comparable Company Financial year ended Dividend yield (1) (%) Amara 31 Dec Banyan Tree 31 Dec 2008 Nil Bonvests 31 Dec GuocoLeisure 30 Jun HGC 31 Dec HPL 31 Dec HRL 31 Dec OPH 31 Dec 2008 Nil Pan Pacific 31 Dec Stamford Land 31 Mar Maximum (2) 6.1 Median (2) 2.4 Minimum (2) 0.7 Simple Average (2) 2.9 Source: Annual reports of the respective companies and PPCF s calculations Notes: 1. Dividend yield of each selected comparable company is computed as the dividend per share divided by the closing market price on the last cum-dividend date (or where there was no trading on such date, the last available closing market price prior thereto). The aforementioned dividend yield computed may differ from the actual dividend yield which will vary depending on the actual cost of investment paid by the individual investor. 2. The statistics do not consider Banyan Tree and OPH which did not declare dividends for the last reported financial year. Based on the above, we note that the ordinary dividend yield of the Company of 2.3% for FY2008 is within the range of the dividend yields of the Comparable Companies which declared dividends for their most recent reported financial year and below the simple average of 2.9%. For illustration purposes, Shareholders who choose to accept the Offer and re-invest in the Comparable Companies can expect to receive dividend yields ranging from 0.7% to 6.1%. Notwithstanding the above, it is uncertain whether the Company and the Comparable Companies can maintain its dividend yields at the levels set out above, hence it is uncertain whether Shareholders will be able to increase their investment income by liquidating their investment in the Company and reinvesting their proceeds in the Comparable Companies. Independent Directors should note that an investment in the equity of the Comparable Companies provides a different risk-return profile as compared to an investment in the Shares, and therefore the above comparison serves purely as a guide only. Furthermore, it should also be noted that the above analysis ignores the effect of any potential capital gain or capital loss that may accrue to the Shareholders arising from their investment in the Shares due to market fluctuations in the price of the Shares during the relevant corresponding periods in respect of which the above dividend yields were analysed. 46

48 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Additionally, no views are being expressed with regard to the future dividend policy of the Company and the Directors have confirmed that even though the Company has been consistently declaring dividends in respect of the past three financial years, the Company does not have a fixed and formal dividend policy. As such, the quantum of dividends paid by the Company in any period would depend on various factors including but not limited to the financial performance of the Group, its working capital and capital expenditure needs as well as other considerations. 9.6 Comparison with recently completed successful privatization exercises in Singapore We note that it is the intention of the Offeror to privatise the Company and delist the Shares from the Official List of the SGX-ST. For the purpose of providing an illustrative guide as to whether the financial terms of the Offer are attractive, we have compared the valuation statistics implied in the Offer Price vis-à-vis those in recent successful takeovers of companies listed on the SGX-ST, which were announced and completed during the 24-month period prior to the Announcement Date up to and including the Latest Practicable Date, in which the respective offerors had indicated their intentions to delist the target companies from the Official List of the SGX-ST. The successful takeovers of companies listed on the SGX-ST as set out below generally fall into the categories of: (i) delisting offer under Rule 1307 of the Listing Manual where the primary intention of the offeror is to delist the target company from the Official List of the SGX-ST ( Successful Delisting Offers ); and (ii) privatisation transactions whether by way of scheme of arrangement under Section 210 of the Act or general offer under the Code, where the intention of the offeror is to acquire 100% control of the target company, leading to the eventual delisting of the target company from the Official List of the SGX-ST ( Successful Privatisation Transactions ) (Successful Delisting Offers and Successful Privatisation Transactions are collectively defined as Privatisation Transactions ). We wish to highlight that the list of companies set out under the Successful Delisting Offers and the Successful Privatisation Transactions are not directly comparable to the Company in terms of size, market capitalisation, business activities, accounting policy, future prospects and other relevant criteria. Each transaction must be judged on its own commercial and financial merits. The premium that any offeror is prepared to pay in order to privatise a listed company depends on various factors such as the offeror s intention with regard to the target company, the potential synergy that the offeror can gain from acquiring the target company, the presence of competing bids for the target company, prevailing market conditions, attractiveness and profile of the target company s underlying business and assets, size of consideration, existing level of control in the target company, as well as general economic and business risks. Therefore, any comparison of the Offer with the Successful Delisting Offers and the Successful Privatisation Transactions is for illustrative purposes. Conclusions drawn from the comparisons made may not necessarily reflect any perceived market valuation for the Company. 47

49 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD Successful Delisting Offers (1) Premium / Premium/ Premium / (Discount) (Discount) (Discount) Over Last Over VWAP Over VWAP Date of Transacted for 1 month for 3 months Listed Announcement Price prior to prior to prior to Companies of Offer Announcement Announcement Announcement P/NTA (%) (%) (%) (times) Hartford Education 1-Feb Corporation Limited Transmarco Ltd 8-Apr Midsouth Holdings Ltd 13-May Courts (Singapore) 16-Jul Limited SP Chemicals Ltd. 15-Sep Hiap Moh 29-Oct Corporation Ltd AGVA Corporation 21-Feb Limited ChungHong 5-May Holdings Limited C. K. Tang Limited 8-May Man Wah Holdings 5-Jun Limited Evergro Properties 12-Jul Limited Maximum Median Minimum Simple Average Furama (2) 15-Dec Source: Bloomberg L.P., company filings, announcements and circulars to shareholders in relation to the respective transactions Notes: 1. We have excluded the following transactions in our analysis: (a) all transactions which were announced but not successful, and (b) non privatisation transactions. 2. Based on the Offer Price of S$

50 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Based on the above analysis, we note the following: (a) (b) (c) (d) the Offer Price represents a premium of approximately 37.0% (calculated based on the last transacted market price of the Share prior to the Announcement Date) and is within the range of premia and above the simple average and median premia implied by the respective offer prices paid for the recent Successful Delisting Offers over the last transacted market prices of the shares prior to the respective announcement dates; the premium of 38.2% implied by the Offer Price over the 1-month VWAP of the Shares prior to the Announcement Date is within the range of premia and above the simple average and median premia implied by the 1-month VWAP of the shares of the companies in the Successful Delisting Offers; the premium of 42.6% implied by the Offer Price over the 3-month VWAP of the Shares prior to the Announcement Date is within the range of premia and above the simple average and median premia implied by the 3-month VWAP of the shares for the companies in the Successful Delisting Offers; and the P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of 0.3 times to 9.0 times in respect of the companies in the Successful Delisting Offers. In addition, the P/NTA ratio of the Company as implied by the Offer Price of 1.5 times is higher than the median of P/NTA ratios in respect of the companies in the Successful Delisting Offers Successful Privatisation Transactions (1) Premium / Premium/ Premium / (Discount) (Discount) (Discount) Over Last Over VWAP Over VWAP Date of Transacted for 1 month for 3 months Listed Announcement Price prior to prior to prior to Companies of Offer Announcement Announcement Announcement P/NTA (%) (%) (%) (times) The Ascott Group 8-Jan Robinson and 20-Jan Company, Limited China Education 1-Feb Limited Sing Lun Holdings 30-Mar Limited Unisteel Technology 7-Jun Limited SNP Corporation Ltd 10-Jun Pokka Corporation 13-Jun (Singapore) Limited Datacraft Asia Limited 22-Jul Singapore Computer 25-Aug Systems Limited 49

51 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Premium / Premium/ Premium / (Discount) (Discount) (Discount) Over Last Over VWAP Over VWAP Date of Transacted for 1 month for 3 months Listed Announcement Price prior to prior to prior to Companies of Offer Announcement Announcement Announcement P/NTA (%) (%) (%) (times) King s Safetywear 19-Sep Limited Cityneon Holdings 2-Oct Limited Singapore Food 22-Oct Industries Limited ETLA Limited 3-Nov (3.6) (28.2) 0.3 Singapore Petroleum 24-May Company Limited RSH Limited 18-Jun Sihuan 24-Aug Pharmaceutical Holdings Group Ltd. Chartered 7-Sep (3) Semiconductor Manufacturing Ltd. ( CSM ) Maximum Median Minimum 10.4 (3.6) (28.2) 0.3 Simple Average Furama (2) 15-Dec Source: Bloomberg L.P., company filings, announcements and circulars to shareholders in relation to the respective transactions Notes: 1. We have excluded the following transactions in our analysis: (a) all transactions which were announced but not successful, and (b) non-privatisation transactions. 2. Based on the Offer Price of S$ On 29 May 2009, the Singapore Business Times reported on a possible acquisition by Advanced Technology Investment Company, LLC of the issued and paid-up ordinary shares in the capital of CSM held by Singapore Technologies Semiconductors Pte Ltd which was followed by a holding announcement by CSM on the same day. 28 May 2009 is therefore the trading day immediately prior to the commencement of market speculation. The scheme consideration represents a premium of 22.9% to the benchmark price of CSM s shares on the SGX-ST on 28 May The scheme consideration represents a premium of 0.8% to the benchmark price of CSM s shares on the SGX-ST on 4 September 2009, being the latest practicable date prior to the date of announcement of the scheme. 50

52 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Based on the above analysis, we note the following: (a) (b) (c) (d) the Offer Price represents a premium of approximately 37.0% (calculated based on the last transacted market price of the Share prior to the Announcement Date) and is within the range of premia and above the simple average and median premia implied by the respective offer prices paid for the recent Successful Privatisation Transactions over the last transacted market prices of the shares prior to the respective announcement dates; the premium of 38.2% implied by the Offer Price over the 1-month VWAP of the Shares prior to the Announcement Date is within the range of premia and close to the simple average premia implied by the 1-month VWAP of the shares of the companies in the Successful Privatisation Transactions; the premium of 42.6% implied by the Offer Price over the 3-month VWAP of the Shares prior to the Announcement Date is within the range of premia and above the simple average and median premia implied by the 3-month VWAP of the shares for the companies in the Successful Privatisation Transactions; and the P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of 0.3 times to 5.8 times in respect of the companies in the Successful Privatisation Transactions. The P/NTA ratio of the Company as implied by the Offer Price of 1.5 times is lower than the simple average and median P/NTA ratios in respect of the companies in the Successful Privatisation Transactions. The Independent Directors should note that the level of premium (if any) an acquiror would normally pay for acquiring and/or privatising a listed company (as the case may be) varies in different circumstances depending on, inter alia, the attractiveness of the underlying business to be acquired, the synergies to be gained by the acquiror from integrating the target company s businesses with its existing business, the possibility of a significant revaluation of the assets to be acquired, the availability of substantial cash reserves, the liquidity in the trading of the target company s shares, the presence of competing bids for the target company, the extent of control the acquiror already has in the target company and prevailing market expectations. Consequently, each Privatisation Transaction has to be judged on its own merits (or otherwise). The list of Privatisation Transactions indicated herein has been compiled based on publicly available information as at the Latest Practicable Date. The above tables capture only the premia/discounts implied by the offer prices in respect of the Privatisation Transactions over the aforesaid periods and do not highlight bases other than the aforesaid in determining an appropriate premium/discount for the recent Privatisation Transactions. It should be noted that the comparison is made without taking into account the total amount of the offer value of each respective Privatisation Transaction or the relative efficiency of information or the underlying liquidity of the shares of the relevant companies or the performance of the shares of the companies or the quality of earnings prior to the relevant announcement and the market conditions or sentiments when the announcements were made or the desire or the relative need for control leading to compulsory acquisition. Moreover, we wish to highlight that the Company is not in the same industry and does not conduct the same businesses as the other companies in the list of Privatisation Transactions and would not, therefore, be directly comparable to the list of companies in terms of, inter alia, geographical markets, composition of business activities, scale of business operations, risk profile, asset base, valuation methodologies adopted, accounting policies, track record, future prospects, market/industry size, political risk, competitive and regulatory environment, financial 51

53 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. positions and other relevant criteria. Accordingly, the Independent Directors should note that the above comparison merely serves as a general guide to provide an indication of the premium or discount in connection with the Privatisation Transactions. Therefore, any comparison of the Offer Price with the Privatisation Transactions is for illustration purposes only. Conclusions drawn from the comparisons made may not necessarily reflect any perceived market valuation of the Company. 10. OTHER CONSIDERATIONS (a) Recent performance of the Company On 9 November 2009, the Company released its unaudited results for the nine months ended 30 September 2009 and reported that the Group s recorded loss after tax from continued operations of S$4.6 million compared to the profit after tax from continued operations of S$26.1 million in the corresponding period in FY2008. The decline in revenue was primarily due to the decrease in tourist arrivals into Singapore triggered by the global economic downturn, which in turn put pressure on the average rates charged by the Group. For the third quarter of the year, the Group recognised a share of losses of its joint venture entities amounting to $19.3 million. Included in this increased share of losses was the Group s share of impairment losses of the hotel properties of the joint venture entities amounting to $18.3 million. Furthermore, in view of the continued losses incurred by the joint venture entities for the year to date, the Group does not expect them to make any repayment in Therefore, the Group has provided an additional $1.7 million in allowance for doubtful debts from joint venture entities in 3Q2009. As a result of this allowance and the increase in management fee in 2009, the Group s administrative expenses increased 47.9% from $2.9 million in 3Q2008 to $4.3 million in 3Q2009. Total allowance for doubtful debts from joint venture entities stood at $7.4 million for the nine months of The lower revenue, higher allowance for doubtful debts and higher share of losses of joint venture entities have contributed to the loss before tax generated by the Group for the third quarter of The Company has also in the same results announcement made certain commentaries on its outlook and prospects, excerpts of which are in italics below: The average room rates for the Group s hotels in Singapore were lower in the third quarter of 2009 as compared to the same period last year. The rates, and therefore revenue from the Group s hotels in Singapore, are expected to face continued pressure for the remaining three months of The operating conditions in Thailand remain uncertain. As such, the Group expects the recovery to be slow and the performance of its four joint venture entities will only improve gradually over time. Together with the lower profits generated by the Group for the year to date, as well as impairment losses of its Thailand joint venture entities recognised in 3Q2009, the Group expects its full year results to be lower than that of Shareholders should read the announcements and press releases of the Company in relation to its respective interim results for 3Q2009 in their entirety including the commentaries therein as well as the Statement of Prospects, our letter and the Auditors Report in relation to the Statement of Prospects as set out in Appendix IV, V and VI of the Circular respectively. 52

54 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. (b) Compliance with Free Float Requirement, Trading Suspension and SGX-ST Directed Delisting Pursuant to Rule 723, the Company must ensure that at least 10% of its total Shares is at all time held in public hands and pursuant to Rule 724, if the percentage of securities held in public hands falls below 10%, an issuer must, as soon as practicable, announce that fact, and the SGX-ST may suspend the trading of the class, or all securities of the issuer. However, Rule 725 states that in such an event, the SGX-ST may allow a period of three months or such longer period as the SGX-ST may agree, for the free float in the shares to be raised to at least 10%, failing which the company may be delisted. Shareholders should also take note that under Rule 1303(1) of the Listing Manual, in a take-over situation, where the offeror succeeds in garnering acceptances exceeding 90% of the Shares (excluding treasury shares), thus causing the percentage of the Shares (excluding treasury shares) held in public hands to fall below 10%, the SGX-ST will suspend trading of the listed securities only at the close of the take-over offer. On 31 December 2009, the Company announced that the Extended Ng Family has tendered all the Relevant Shares into the Offer on 30 December Pursuant to the tendering of the Relevant Shares by the Extended Ng Family, the percentage of Shares held in public hands has fallen below the 10% Free Float Requirement and only 9.997% of the Shares are held by the public. The Offeror has stated that the Offeror and its Concert Parties do not intend to place out any Shares held by the Offeror and its Concert Parties to members of the public to meet the Free Float Requirement, and if Furama does not meet the requirements under Rule 723, the SGX-ST will suspend trading of the Shares on the SGX-ST following the close of the Offer. In the event of such a directed delisting, the SGX-ST will not require the Company to convene a general meeting to obtain the approval of its shareholders for the delisting. Instead, the SGX-ST will direct that a reasonable cash exit alternative be offered to all remaining shareholders of the Company pursuant to Rule 1306 and Rule An independent financial adviser must also be appointed to advise on the Exit Offer. The Offeror states that if the Offeror is directed by the SGX-ST to make the Exit Offer, the terms of such Exit Offer will be substantially the same as the terms of the Offer. In particular, the price for each Share to be paid pursuant to such Exit Offer will not be higher than the Offer Price, as pursuant to Rule 33.2 of the Code, the Offeror may not, within six (6) months of the close of the Offer, acquire or make another offer to acquire Shares on terms better than the terms of the Offer. Following the conclusion of the Exit Offer, the SGX-ST will delist the Company from the SGX-ST. As a result of the above delisting of the Shares, Shareholders who do not accept the Offer or Exit Offer should note the following implications or consequences which may arise as below: (i) (ii) Share of an unquoted company is generally subject to discount as a result of lack of marketability. Following the delisting, it is likely to be difficult for Shareholders to sell their Shares in the absence of a public market for the Shares as there is no arrangement for such Shareholders to exit. If the Company is delisted, even if such Shareholders were able to sell their Shares, they may receive a lower price compared with the Offer or Exit Offer. 53

55 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. (iii) As an unquoted company, the Company will no longer be obliged to comply with the listing requirements of the SGX-ST, in particular the continuing corporate disclosure requirements under Chapter 7 and Appendices 7.1 to 7.4 of the SGX-ST Listing Manual. Nonetheless, as a company incorporated in Singapore, the Company will still need to comply with the Companies Act and its memorandum and articles of association and the interests of Shareholders who do not accept the Offer or Exit Offer will be protected to the extent provided for by the Companies Act. (c) (d) Compulsory Acquisition In the event that the Offeror receives valid acceptances of the Offer in respect of 90% or more of the Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Announcement Date), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of the Dissenting Shareholders, the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer. The Offeror will then proceed to delist the Company from the SGX-ST. Alternative Offer As at the Latest Practicable Date, the Directors have not received any competing offer or an enhancement or revision of the Offer and there is no publicly available evidence of an alternative takeover offer for the Shares from any third party. Shareholders should also note that, under Rule 33.2 of the Code, except with the consent of the SIC, neither the Offeror nor its Concert Parties may, within 6 months of the closure of the Offer, made a second offer to, or acquire any Shares from any Shareholder on better terms than those under the Offer. (e) Singapore Hotel Industry Outlook The Singapore hotel industry remains challenging as extracted from the Business Times article titled Hotel room rates may dip further this year: CBRE, dated 7 January 2010 as below: The consultancy expects the hospitality industry to continue facing a challenging 2010, and room rates and room revenues could dip by up to 4 per cent on an annualised basis. Many market participants have serious concerns as to whether the anticipated demand will be sufficient to absorb the additional supply. CBRE Hotels expects visitor arrivals to grow an annualised 5-10 per cent this year. This means that there could be some million visitors. 11. OUR RECOMMENDATION In arriving at our recommendation in respect of the Offer, we have taken into account the factors, inter-alia, the following factors: (a) The Offer Price represents a discount of 0.1% and a premium of 58.4%, 64.5%, 49.6%, 42.6% and 38.2% over the 2 year, 18-month, 1-year, 6-month, 3-month and 1-month VWAP of the Shares respectively; (b) The trading liquidity of the Shares had been low for the 2 year period prior to the Announcement Date. The average daily trading liquidity of the Shares represents approximately 0.02%, 0.01%, 0.01%, 0.02%, 0.01% and 0.01% of the Company s total Shares and 0.10%, 0.07%, 0.07%, 0.10%, 0.06%, and 0.03% of the Company s free float during the 2-year, 18-month, 1-year, 6-month, 3-month and 1-month period prior to the Announcement Date respectively; 54

56 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. (c) (d) (e) (f) (g) (h) (i) (j) (k) The market price of the Share appears to have underperformed the Hotel Index and the STI (save for the period which the Apollo Centre was disposed and the declaration and payment of a special dividend pursuant to the disposal of Apollo Centre); The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of the P/NTA ratios of the Comparable Companies and is higher than the simple average and median P/NTA ratios of 0.9 times and 0.9 times of the Comparable Companies respectively; The P/E ratio of the Company implied by the Offer Price of 10.1 times is within the range of the P/E ratios of the Comparable Companies (excluding outliers) and is lower than the simple average (excluding outliers) and median P/E ratios of 17.0 times and 26.0 times of the Comparable Companies respectively; The P/AdjNTA of the Company implied by the Offer Price of 0.9 times is within the range of the P/AdjNTA ratios of the Comparable Companies, above the median P/AdjNTA ratio of 0.8 times and the same as the simple average P/AdjNTA ratio of 0.9 times of the Comparable Companies respectively; The Offer Price represents a premium of 37.0%, 38.2% and 42.6% (calculated based on the last transacted market price, the 1-month VWAP and 3-month VWAP of the Shares prior to the Announcement Date) and is within the range of premia and above the simple average and median premia implied by the respective offer prices paid for the recent Successful Delisting Offers over the last transacted market prices, the 1-month VWAP and the 3-month VWAP of the shares of the companies in the Successful Delisting Offer prior to the respective announcement dates; The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of 0.3 times to 9.0 times in respect of the companies in the Successful Delisting Offers. In addition, the P/NTA ratio of the Company as implied by the Offer Price of 1.5 times is higher than the median P/NTA ratios in respect of the companies in the Successful Delisting Offers; The Offer Price represents a premium of 37.0% and 42.6% (calculated based on the last transacted market price and 3-month VWAP of the Shares prior to the Announcement Date) and is within the range of premia and above the simple average and median premia implied by the respective offer prices paid for the recent Successful Privatisation Transactions over the last transacted market prices and the 3-month VWAP of the Shares of the companies in the Successful Privatisation Transactions prior to the respective announcement dates while the premium of 38.2% (calculated based on the 1-month VWAP of the Shares prior to the Announcement Date) is within the range of premia and close to the simple average premia but below the median premia implied by the 1-month VWAP of the shares of the companies in the Successful Privatisation Transaction prior to the respective announcement dates; The P/NTA ratio of the Company implied by the Offer Price of 1.5 times is within the range of P/NTA ratios of 0.3 times to 5.8 times in respect of the companies in the Successful Privatisation Transactions. The P/NTA ratio of the Company as implied by the Offer Price of 1.5 times is lower than the simple average and median P/NTA ratios in respect of the companies in the Successful Privatisation Transactions; The percentage of Shares held in public hands has fallen below the 10% Free Float Requirement and only 9.997% of the Shares are held by the public. The Offeror has stated that the Offeror and its Concert Parties do not intend to place out any Shares held by the Offeror and its Concert Parties to members of the public to meet the Free Float Requirement; 55

57 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. (l) (m) (n) In the event that the Offeror receives valid acceptances of the Offer in respect of 90% or more of the Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Announcement Date), the Offeror intends to exercise its right to compulsorily acquire all the Offer Shares not acquired under the Offer. The Offeror will then proceed to delist the Company from the SGX-ST; In the event that the SGX-ST directs the Company to delist, the SGX-ST will not require the Company to convene a general meeting to obtain the approval of its shareholders for the delisting. Instead, the SGX-ST will direct that a reasonable cash exit alternative be offered to all remaining shareholders of the Company pursuant to Rule 1306 and Rule Following the conclusion of the Exit Offer, the SGX-ST will delist the Company from the SGX-ST. The Offeror states that if the Offeror is directed by the SGX-ST to make the Exit Offer, the terms of such Exit Offer will be substantially the same as the terms of the Offer. In particular, the price for each Share to be paid pursuant to such Exit Offer will not be higher than the Offer Price; and As at the Latest Practicable Date, the Directors have not received any competing offer or an enhancement or revision of the Offer and there is no publicly available evidence of an alternative takeover offer for the Shares from any third party. Based on the considerations set out in this letter and the information available to us as at the Latest Practicable Date, we are of the opinion that the financial terms of the Offer, on balance, are fair and reasonable, from a financial point of view. Accordingly, our recommendation to the Independent Directors of the Company in respect of the Offer is that they should recommend the Shareholders to ACCEPT the Offer. In rendering our advice and giving our recommendation, we have not had regard to the general or specific investment objectives, financial situation, risk profiles, tax position or particular needs and constraints of any Shareholder. As different Shareholders have different investment profiles and objectives, we advise the Independent Directors to recommend that any Shareholder who may require specific advice in relation to the Offer consult his stockbroker, bank manager, solicitor, accountant, tax advisor or other professional advisor immediately. Independent Directors and/or Shareholders should note that the trading of the Shares are subject to, inter alia, the performance and prospects of the Group, prevailing economic conditions, economic outlook and stock market conditions and sentiments. Accordingly, our advice on the Offer does not and cannot take into account future trading activities or patterns or price levels that may be established for the Shares after the Latest Practicable Date since these are governed by factors beyond the ambit of our review and also, such advice, if given, would not fall within our terms of reference in connection with the Offer. Our recommendation is addressed to the Independent Directors for their benefit in connection with and for the purposes of their consideration of the Offer. Any recommendation made by the Independent Directors in respect of the Offer shall remain their responsibility. Our recommendation may not be used and/or relied on by any other person for any purpose at any time and in any manner except with our prior written consent in each specific case. Our recommendation is governed by the laws of Singapore, and is strictly limited to the matters stated in this letter and do not apply by implication to any other matter. 56

58 LETTER FROM PRIMEPARTNERS TO THE INDEPENDENT DIRECTORS OF FURAMA LTD. Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of PPCF in each specific case. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Nothing herein shall confer or be deemed or is intended to confer any right of benefit to any third party and the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore and any amendments thereto shall not apply. Yours faithfully, For and on behalf of PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. MARK LIEW MANAGING DIRECTOR, CORPORATE FINANCE MAH HOW SOON DIRECTOR, CORPORATE FINANCE 57

59 APPENDIX I GENERAL INFORMATION 1. DIRECTORS The names, addresses and designations of the Directors as at the Latest Practicable Date are set out below:- Name Address Designation Ng Kim Suan 71C Shelford Road Chairman Watten Estate Singapore William Ng Wei Yong 1 Leedon Park Executive Director Singapore Sam Ng Wei Hing 71C Shelford Road Executive Director Watten Estate Singapore Lau Hui Teck 58 Worthing Road Executive Director Singapore Wee Chow Hou 8 Jalan Wajek Lead Independent Director Singapore David Wong Seck Kim 12 Haig Lane Independent Director Singapore Tan Boen Ho 28A Watten View Independent Director Singapore INFORMATION ON THE GROUP The Company was incorporated in Singapore on 27 December 1967, under the name of Apollo Enterprises Pte. Limited and converted into a public limited company with the name of Apollo Enterprises Limited. It has been listed on the Mainboard of the SGX-ST since 30 September 1975 and changed its name to Furama Ltd. on 28 February The Company s ultimate holding company is Samta Investment Pte. Ltd., a company incorporated in Singapore. The Group owns, operates and invests in hotels. 3. SHARE CAPITAL 3.1 Issued Capital As at the Latest Practicable Date, the Company has a share capital of S$216,518,469 comprising 154,301,300 Shares. There have been no additional shares issued since the end of the last financial year 31 December The Shares are ordinary shares carrying equal ranking rights to dividend, voting at general meetings and return of capital. The Company does not have any other class of share capital as at the Latest Practicable Date. There is no restriction in the Memorandum or Articles of the Company on the right to transfer any Shares, which has the effect of requiring the holders of Shares, before transferring them, to offer them for purchase to members of the Company or to any other person. 58

60 APPENDIX I GENERAL INFORMATION 3.2 Rights in Respect of Voting, Dividends and Capital The rights of Shareholders in respect of voting, dividends and capital as set out in the Articles of the Company are as follows - (a) Votes of Members Voting rights of Members 74. Subject to any special privileges or restrictions as to voting for the time being attached to any special class of shares for the time being forming part of the capital of the Company and to Article 8A, each Member entitled to vote may vote in person or by proxy or by attorney or in the case of a corporation by a representative. On a show of hands every Member who is present in person or by proxy or by attorney or in the case of a corporation by a representative shall have one (1) vote and on a poll, every Member who is present in person or by proxy or by attorney or in the case of a corporation by a representative shall have one vote for each share which he holds or represents. Voting rights of joint holders 75. Where there are joint registered holders of any share any one (1) of such persons may vote and be reckoned in a quorum at any meeting either personally or by proxy or by attorney or in the case of a corporation by representative as if he were solely entitled thereto but if more than one (1) of such joint holders is so present at any meeting then the person present whose name stands first in the Register of Members or, (as the case may be) the Depository Register, in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased Member in whose name any share stands shall for the purpose of this Article be deemed joint holders thereof. Voting rights of Member of unsound mind 76. Where in Singapore or elsewhere a receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any Member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such receiver or other person on behalf of such Member to vote in person or by proxy or by attorney at any general meeting or to exercise any other right conferred by membership in relation to meetings of the Company. Right to vote 77. Subject to the provisions of these Articles, every Member either personally or by proxy or attorney or in the case of a corporation by a representative shall be entitled to be present and to vote at any general meeting and to be reckoned in the quorum thereat in respect of shares fully paid and in respect of partly paid shares where calls are not due and unpaid. Provided that where a Member is a Depositor, the Depositor shall only be entitled to attend any general meeting and to speak and vote thereat if his name is shown in the Depository Register maintained by the Depository at a time not earlier than forty-eight (48) hours prior to the time of the relevant general meeting (the cut off time ) as a Depositor on whose behalf the Depository holds shares in the Company, the Company being entitled then to deem each such Depositor, or each proxy of a Depositor who is to represent the entire balance standing to the Securities Account of the Depositor, to represent such number of shares as is actually credited to the Securities Account of the Depositor as at the cut off time, according to the records of the Depository as supplied by the Depository to the Company, or where a Depositor has apportioned the balance standing to his Security Account between two (2) proxies, to apportion the said number of shares between the two 59

61 APPENDIX I GENERAL INFORMATION (2) proxies in the same proportion as specified by the Depositor in appointing the proxies; and accordingly, no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the number of shares specified by the Depositor in the instrument of proxy or where the balance standing to a Depositor s Securities Account has been apportioned between two (2) proxies the aggregate number of shares specified by the Depositor in the instruments of proxy, and the true balance standing to the Securities Account of a Depositor as at the time of the relevant general meeting, if the instrument is dealt with in such manner as aforesaid. Objections 78. No objection shall be raised as to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is or may be given or tendered and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the meeting whose decision shall be final and conclusive. Votes on a poll 79. On a poll, votes may be given either personally or by proxy or by attorney or in the case of a corporation by its representative and a person entitled to more than one (1) vote need not use all his votes or cast all the votes he uses in the same way. Appointment of proxies 80. (A) A Member may appoint not more than two (2) proxies to attend and vote at the same general meeting. (B) Where a Member appoints more than one (1) proxy, he shall specify the proportion of his shareholding to be represented by each proxy. If no such proportion or number is specified the first named proxy may be treated as representing 100 per cent of the shareholding and any second named proxy as an alternate to the first named. (C) Voting right(s) attached to any shares in respect of which a Member has not appointed a proxy may only be exercised at the relevant general meeting by the Member personally or by his attorney, or in the case of a corporation by its representative. (D) Where a Member appoints a proxy in respect of more shares than the shares standing to his name in the Register of Members or, in the case of a Depositor, standing to the credit of that Depositor s Securities Account as at the cut-off time as certified by the Depository to the Company, such proxy may not exercise any of the votes or rights of the shares not registered in the name of that Member in the Register of Members or standing to the credit of that Depositor s Securities Account as at the cut-off time, as the case may be. (E) If the Chairman is appointed as proxy, he may authorise any other person to act as proxy in his stead. Where the Chairman has authorised another person to act as proxy, such other person shall be taken to represent all Members whom the Chairman represented as proxy. Proxy need not be a Member 81. (A) A proxy need not be a Member of the Company and shall be entitled to vote on a show of hands on any matter at any general meeting. (B) If the Member is a Depositor, the Company shall be entitled :- (a) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered in its Securities Account as at the cut-off time as certified by the Depository to the Company; and 60

62 APPENDIX I GENERAL INFORMATION (b) to accept as validly cast by the proxy or proxies appointed by the Depositor on a poll that number of votes which corresponds to or is less than the aggregate number of shares entered in its Securities Account of that Depositor as at the cut-off time as certified by the Depository to the Company, whether that number is greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor. Instrument appointing a proxy 82. (A) The signature on such instrument need not be witnessed. An instrument appointing a proxy to vote at a meeting shall be deemed to include the power to demand or concur in demanding a poll on behalf of the appointer and to speak at the meeting. (B) The instrument of proxy shall be under the hand of the Member, or by his attorney duly authorised in writing or if the Member is a corporation, under seal or under the hand of its attorney duly authorised in writing or in such manner as appropriate under applicable laws. The original power of attorney or other authority, if any, under which the instrument of proxy is signed on behalf of the Member or a duly certified copy of that power of attorney or other authority (failing previous registration with the Company) shall be attached to the original instrument of proxy and must be left at the Office or such other place (if any) as is specified for the purpose in the notice convening the meeting not less than forty-eight (48) hours before the time appointed for the holding of the meeting or adjourned meeting (or in the case of a poll before time appointed for the taking of the poll) at which it is to be used failing which the instrument may be treated as invalid. Form of proxies 83. An instrument appointing a proxy shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates. Provided that an instrument of proxy relating to more than one (1) meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not require again to be delivered for the purposes of any subsequent meeting to which it relates. Intervening death or insanity of principal not to revoke proxy 84. A vote given in accordance with the terms of an instrument of proxy (which for purposes of these Articles shall also include a power of attorney) shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy, or of the authority under which the proxy was executed or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Office (or such other place as may be specified for the deposit of instruments appointing proxies) before the commencement of the meeting or adjourned meeting (or in the case of a poll before the time appointed for the taking of the poll) at which the proxy is used. 84A. Subject to these Articles and the Act, the Directors may, at their sole discretion, approve and implement, subject to such security measures as may be deemed necessary or expedient, such voting methods to allow members who are unable to vote in person at any general meeting the option to vote in absentia, including but not limited to voting by mail, electronic mail or facsimile. 61

63 APPENDIX I GENERAL INFORMATION Corporations acting by representatives 85. Any corporation which is a Member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of members of the Company. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Member of the Company. (b) Rights in respect of Dividends and Reserves Payment of dividends 125. The Company may by ordinary resolution declare dividends but (without prejudice to the powers of the Company to pay interest on share capital as hereinbefore provided) no dividend shall be payable except out of the profits of the Company or in excess of the amount recommended by the Directors. Apportionment of dividends 126. Subject to any rights or restrictions attached to any shares or class of shares and except as otherwise provided by the Act: (a) (b) all dividends in respect of shares must be paid in proportion 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 all dividends must be apportioned and paid proportionately to the amounts so paid or credited as paid during any portion or portions of the period in respect of which the dividend is paid; 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. Payment of preference and interim dividends 127. Without the need for sanction of the Company under Article 125, if and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may declare and pay the fixed preferential dividends on any express class of shares carrying a fixed preferential dividend expressed to be payable on fixed dates on the half-yearly or other dates (if any) prescribed for the payment thereof by the terms of issue of the shares and may also from time to time declare and pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit. Dividends not to bear interest 129. No dividend or other moneys payable on or in respect of a share shall bear interest as against the Company. Deduction of debts due to Company 130. The Directors may deduct from any dividend or other moneys payable to any Member on or in respect of a share all sums of money (if any) presently payable by him to the Company on account of calls or in connection therewith. Retention of dividends on shares subject to lien 131. The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. 62

64 APPENDIX I GENERAL INFORMATION Retention of dividends on shares pending transmission 132. The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a Member, or which any person is under those provisions entitled to transfer, until such person shall become a Member in respect of such shares or shall transfer the same. Unclaimed dividends 133. (A) The payment by the Directors of any unclaimed dividends or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof. All dividends unclaimed after being declared may be invested or otherwise made use of by the Directors for the benefit of the Company and any dividend unclaimed after a period of six (6) years from the date of declaration of such dividend may be forfeited and if so shall revert to the Company but the Directors may at any time thereafter at their absolute discretion annul any such forfeiture and pay the dividend so forfeited to the person entitled thereto prior to the forfeiture. For the avoidance of doubt no Member shall be entitled to any interest, share of revenue or other benefit arising from any unclaimed dividends, howsoever and whatsoever. If the Depositor returns any such dividend or money to the Company, the relevant Depositor shall not have any right or claim in respect of such dividend or money against the Company if a period of six (6) year has elapsed from the date of the declaration of such dividend or the date on which such other money was first payable. (B) A payment by the Company to the Depositor of any dividend or other money payable to a Depositor shall, to the extent of the payment made, discharge the Company from any liability to the Depositor in respect of that payment The Company may, upon the recommendation of the Directors by ordinary resolution direct payment of a dividend in whole or in part 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. Where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, 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. Dividends payable by cheque 135. Any dividend, interest or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto (or, if two or more persons are registered as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons) or to such person and such address as such Member or person or persons may by writing direct provided that where the Member is a Depositor, the payment by the Company to the Depository of any dividend payable to a Depositor shall to the extent of the payment discharge the Company from any further liability in respect of the payment. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque or warrant by the banker upon whom it is drawn shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby. 63

65 APPENDIX I GENERAL INFORMATION Effect of transfer 136. A transfer of shares shall not pass the right to any dividend declared in respect thereof before the transfer has been registered. Power to carry profit to reserve 137. The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for meeting contingencies or for the gradual liquidation of any debt or liability of the Company or for repairing or maintaining the works, plant and machinery of the Company or for special dividends or bonuses or for equalising dividends or for any other purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one (1) fund, any special funds or any parts 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 which they may think it not prudent to divide. Power to capitalise profits 138. (A) The Directors may with the sanction of an ordinary resolution of the Company (including any ordinary resolution passed pursuant to Article 49(B)): (a) issue bonus shares for which no consideration is payable to the Company to the persons registered as holders of shares in the Register of Members or (as the case may be) the Depository Register at the close of business on: i. the date of the ordinary resolution (or such other date as may be specified therein or determined as therein provided); or ii. (in the case of an ordinary resolution passed pursuant to Article 49(B)) such other date as may be determined by the Directors, in proportion to their then holdings of shares; and (b) capitalise any sum standing to the credit of any of the Company s reserve accounts or other undistributable reserve or any sum standing to the credit of profit and loss account by appropriating such sum to the persons registered as holders of share in the Register of Members or (as the case may be) in the Depository Register at the close of business on: i. the date of the ordinary resolution (or such other date as may be specified therein or determined as therein provided); or ii. (in the case of an ordinary resolution passed pursuant to Article 49(B)) such other date as may be determined by the Directors, in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full unissued shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class not being redeemable shares) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. 64

66 APPENDIX I GENERAL INFORMATION (B) In addition and without prejudice to the powers provided for by Articles 138(A) and 139, the Directors shall have power to issue shares for which no consideration is payable and to capitalise any undivided profits or other moneys of the Company not required for the payment or provision of any dividend on any shares entitled to cumulative or noncumulative preferential dividends (including profits or other moneys carried and standing to any reserve or reserves) and to apply such profits or other moneys in paying up such shares in full, in each case on terms that such shares shall, upon issue, be held by or for the benefit of participants of any share incentive or option scheme or plan implemented by the Company and approved by shareholders in general meeting and on such terms as the Directors shall think fit. Directors to do all acts and things to give effect 139. The Directors may do all acts and things considered necessary or expedient to give effect to any such bonus issue and/or capitalisation under Article 138 with full power to the Directors to make such provision for the satisfaction of the right of the holders of such shares in the Register of Members or in the Depository Register as the case may be and as they think fit for any fractional entitlement which would arise including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned. The Directors may authorise any person to enter, on behalf of all the members interested, into an agreement with the Company providing for any such capitalisation and matters incidental thereto, and any agreement made under such authority shall be effective and binding on all concerned (c) Rights in respect of Capital Company s shares as security 6. The Company may purchase or otherwise acquire its issued shares subject to and in accordance with the provisions of the Act and any other relevant rule, law or regulation enacted or promulgated by any relevant competent authority from time to time (collectively, the Relevant Laws ), on such terms and subject to such conditions as the Company may in general meeting prescribe in accordance with the Relevant Laws. Any shares purchased or acquired by the Company as aforesaid may be cancelled or held as treasury shares and dealt with in accordance with the Relevant Laws. On 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 which is so purchased or acquired by it in such manner as may be permitted by, and in accordance with, the Act. Issue of Shares 7. Subject to the Act, no shares may be issued by the Directors without the prior approval of the Company in general meeting but subject thereto and to Article 49(A), and to any special rights attached to any shares for the time being issued, the Directors may issue, allot or grant options over or otherwise deal with or dispose of the same to such persons on such terms and conditions and for such consideration and at such time and subject or not to the payment of any part of the amount thereof in cash as the Directors may think fit, any shares may be issued in such denominations or with such preferential, deferred, qualified or special rights, privileges or conditions as the Directors may think fit, and preference shares may be issued which are or at the option of the Company are liable to be redeemed, the terms and manner of redemption being determined by the Directors, provided always that: (a) (b) no Director shall participate in any issue of shares to employees unless the Members in a general meeting have approved of the specific allotment to be made to such Director and unless he holds office in an executive capacity; and no shares shall be issued which results in a transfer of a controlling interest in the Company without the prior approval of the Members in a general meeting. 65

67 APPENDIX I GENERAL INFORMATION Rights attached to certain shares 8. (A) Preference shares may be issued subject to such limitations thereof as may be prescribed by any stock exchange upon which shares in the Company may be listed and the rights attaching to shares other than ordinary shares shall be expressed in the Memorandum of Association or these Articles. Preference shareholders shall have the same right as ordinary shareholders as regards receiving of notices, reports and financial statements and attending general meetings of the Company. 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 undertaking of the Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six (6) months in arrears. (B) The Company has power to issue further preference capital ranking equally with, or in priority to, preference shares already issued. 8A. The Company shall not exercise any rights in respect of treasury shares other than as provided by the Act. Subject thereto, the Company may hold or deal with its treasury shares in the manner authorised by, or prescribed pursuant to, the Act. Variation of rights 9. (A) If at any time the share capital of the Company is divided into different classes of shares, the special rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may subject to the provisions of the Act whether or not the Company is being wound up, be varied or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of shares of that class and to every such special resolution the provisions of Section 184 of the Act shall, with such adaptations as are necessary, apply. To every such separate general meeting all the provisions of these Articles relating to general meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two (2) persons at least holding or representing by proxy or by attorney at least one-third (1/3) of the issued shares of the class and that any holder of shares of that class present in person or by proxy or by attorney may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him. Provided always that where the necessary majority for such a special resolution is not obtained at such general meeting, consent in writing if obtained from the holders of three-fourths (3/4) of the issued shares of the class concerned within two (2) months of such general meeting shall be as valid and effectual as a special resolution carried at such general meeting. The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if each group of shares of the class differently treated formed a separate class the special rights whereof are to be varied. Rights of preference shareholders (B) The repayment of preference capital other than redeemable preference or any other alteration of preference shareholder 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 obtained at the meeting, consent in writing if obtained from the holders of three-fourth (3/4) of the preference shares concerned within two (2) months of the meeting, shall be as valid and effectual as a special resolution carried at the meeting. Creation or issue of further shares with special rights 10. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking equally therewith. 66

68 APPENDIX I GENERAL INFORMATION Power to pay commission and brokerage 11. Unless otherwise specified or restricted by law, the Company may pay commissions or brokerage on any issue or purchase of its shares, or sale, disposal or transfer of treasury shares at such rate or amount and in such manner as the Directors may deem fit. Such commissions or brokerage may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other. Power to charge interest on capital 12. If any shares of the Company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a long period the Company may, subject to the conditions and restrictions mentioned in the Act, pay interest on so much of the share capital as is for the time being paid up and may charge the same to capital as part of the cost of the construction or provision. Exclusion of equities 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 compelled in any way to recognise any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these Articles or by law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the person (other than the Depository) entered in the Register of Members as the registered holder thereof or (where the person entered in the Register of Members as the registered holder of a share is the Depository) the person whose name is entered in the Depository Register in respect of that share. Nothing contained in these Articles concerning or relating to the Depository or the Depository Agents or Depositors or in any depository agreement made by the Company with any common depository for shares or in any notification of substantial shareholding to the Company or in response to a notice pursuant to Section 92 of the Act or any note made by the Company of any particulars in such notification or response shall derogate or limit or restrict or qualify these provisions; and any proxy or instructions on any matter whatsoever given by the Depository or the Depository Agents or Depositors to the Company or the Directors shall not constitute any notification of trust and the acceptance of such proxies and the acceptance of or compliance with such instructions by the Company or the Directors shall not constitute the taking of any notice of trust. Rights and privileges of new shares 48. Subject to any special rights for the time being attached to any existing class of shares, the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the general meeting resolving upon the creation thereof shall direct and if no direction be given as the Directors shall determine; subject to the provisions of these Articles and in particular (but without prejudice to the generality of the foregoing) such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company or otherwise. Issue of new shares to Members 49. (A) Subject to any direction to the contrary that may be given by the Company in general meeting, or except as permitted under the Stock Exchange s listing rules, all new shares shall before issue be offered to such persons as at the date of the offer are entitled to receive notices from the Company of general meetings in proportion, as nearly as the circumstances admit, to the number 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 67

69 APPENDIX I GENERAL INFORMATION within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that 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 such manner as they think most beneficial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which 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 under this Article. (B) Notwithstanding Article 49(A) above but subject to the Act and the byelaws and listing rules of the Stock Exchange, the Company may by ordinary resolution in general meeting give to the Directors a general authority, either unconditionally or subject to such conditions as may be specified in the ordinary resolution to: (i) (ii) (iii) issue shares in the capital of the Company (whether by way of rights, bonus or otherwise); and/or make or grant Instruments; and/or (notwithstanding the authority conferred by the ordinary resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while the ordinary resolution was in force. provided that: (a) (b) (c) the aggregate number of shares or Instruments to be issued pursuant to the ordinary resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the ordinary resolution but excluding shares which may be issued pursuant to any adjustments effected under any relevant Instrument) does not exceed any applicable limits prescribed by the Stock Exchange. in exercising the authority conferred by the ordinary resolution, the Company shall comply with the listing rules for the time being in force (unless such compliance is waived by the Stock Exchange) and the Articles; and (unless revoked or varied by the Company in general meeting) the authority conferred by the ordinary resolution shall not continue in force beyond the conclusion of the Annual General Meeting next following the passing of the ordinary resolution, or the date by which such Annual General Meeting is required by law to be held, or the expiration of such other period as may be prescribed by the Act (whichever is the earliest) (C) Notwithstanding Article 49(A) above but subject to the Act, the Directors shall not be required to offer any new shares to Members to whom by reason of foreign securities laws such offers may not be made without registration of the shares or a prospectus or other document, but may sell the entitlements to the new shares on behalf of such Members in such manner as they think most beneficial to the Company. New share otherwise subject to provisions of Articles 50. Except so far as otherwise provided by the conditions of issue or by these Articles, all new shares shall be subject to the provisions of the Act and of these Articles with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise. 68

70 APPENDIX I GENERAL INFORMATION Power to consolidate, cancel and subdivide shares 51. The Company may by ordinary resolution alter its share capital in the manner permitted under the Act including without limitation: (a) (b) (c) (d) consolidate and divide all or any of its shares; cancel the number of shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person or which have been forfeited and diminish its share capital in accordance with the Act; subdivide its shares or any of them (subject to the provisions of the Act) provided always that in such subdivision 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; and subject to the provisions of the Act and these Articles, convert any class of shares into any other class of shares. Power to reduce capital 52. The Company may by special resolution reduce its share capital or any other undistributable reserve in any manner subject to any requirements and consents required by law. Without prejudice to the generality of the foregoing, upon cancellation of any share purchased or otherwise acquired by the Company pursuant to these presents and the Act, the number of issued shares of the Company shall be diminished by the number of shares so cancelled, and where any such cancelled shares were purchased or acquired out of the capital of the Company, the amount of the share capital of the Company shall be reduced accordingly. Power to convert into stock 53. The Company may from time to time by ordinary resolution convert any paid-up shares into stock and may from time to time by like resolution reconvert any stock into paidup shares. Transfer of stock 54. The holders of stock may transfer the same or any part thereof in the same manner and subject to the same Articles as and subject to which the shares from which the stock arose might previously to conversion have been transferred (or as near thereto as circumstances admit) but no stock shall be transferable except in such units as the Directors may from time to time determine. Rights of stockholders 55. The holders of stock shall, according to the number of stock units held by them, have the same rights, privileges and advantages as regards dividend, return of capital, voting and other matters, as if they held the shares from which the stock arose, but no such privilege or advantage (except as regards dividend and return of capital and the assets on winding up) shall be conferred by any such number of stock units which would not, if existing in shares, have conferred such privilege or advantage, and no such conversion shall affect or prejudice any preference or other special privileges attached to the shares so converted. Interpretation 56. All provisions of these Articles applicable to paid up shares shall apply to stock and the words share and shareholder or similar expression herein shall include stock or stockholder. 69

71 APPENDIX I GENERAL INFORMATION 4. CONVERTIBLE SECURITIES As at the Latest Practicable Date, to the best of the knowledge of the Directors, there are no instruments convertible into, rights to subscribe for, and options in respect of, securities being offered for or which carry voting rights affecting the Shares. 5. DISCLOSURE OF INTERESTS 5.1 Interests of Company in Shares of the Offeror Neither the Company nor its subsidiaries have any direct or indirect interests in the shares, or securities which carry voting rights, or instruments convertible into or rights to subscribe for or options in respect of shares or securities which carry voting rights (collectively, the convertible securities) of the Offeror as at the Latest Practicable Date. 5.2 Dealings in Shares of the Offeror by Company Neither the Company nor its subsidiaries have dealt for value in the shares or convertible securities of the Offeror during the period commencing six months prior to 15 December 2009, being the Offer Announcement Date, and ending on the Latest Practicable Date. 5.3 Interests of Directors in Shares of the Offeror Save as disclosed below, none of the Directors has any direct or indirect interests in the shares of the Offeror as at the Latest Practicable Date. Direct Deemed Director No. of shares % (1) No. of shares % (1) Ng Kim Suan 30, William Ng Wei Yong 30, Sam Ng Wei Hing Lau Hui Teck Wee Chow Hou David Wong Seck Kim Tan Boen Ho Notes: (1) Percentage interest is based on 100,000 issued shares of the Offeror as at the Latest Practicable Date. 5.4 Dealings in Shares of the Offeror by Directors Save for the subscription for 30,000 shares of the Offeror on 20 October 2009 by Mr William Ng Wei Yong, none of the Directors has dealt for value in the shares of the Offeror during the period commencing six months prior to 15 December 2009, being the Offer Announcement Date and ending on the Latest Practicable Date. 5.5 Interests of Directors in Shares Save as disclosed below, as at the Latest Practicable Date, none of the Directors has an interest, direct or indirect, in the Shares. Direct Deemed Director No. of Shares % (1) No. of Shares % (1) Ng Kim Suan 4,389, ,397, William Ng Wei Yong 2,000, ,301, Sam Ng Wei Hing 58, Lau Hui Teck 1, , Wee Chow Hou 90, Tan Boen Ho 476, David Wong Seck Kim Notes: (1) Percentage interest is based on 154,301,300 issued Shares as at Latest Practicable Date. 70

72 APPENDIX I GENERAL INFORMATION 5.6 Dealings in Shares by Directors Save as disclosed below, none of the Directors has dealt for value in the Shares during the period commencing six months prior to 15 December 2009, being the Offer Announcement Date and ending on the Latest Practicable Date: On 26 August 2009, Mr Tan Boen Ho purchased 16,000 Shares at $1.16 per Share. 5.7 Interests of PrimePartners in Shares None of PrimePartners, its related corporations or funds whose investments are managed by PrimePartners or its related corporations on a discretionary basis, owns or controls any Shares as at the Latest Practicable Date. 5.8 Dealings in Shares by PrimePartners None of PrimePartners, its related corporations or funds whose investments are managed by PrimePartners or its related corporations on a discretionary basis has dealt for value in the Shares during the period commencing six months prior to 15 December 2009, being the Offer Announcement Date and ending on the Latest Practicable Date. 5.9 Accepting or Rejecting the Offer It is the intention of Mr Ng Kim Suan, Mr William Ng Wei Yong and Mr Sam Ng Wei Hing to accept the Offer in respect of the Shares they have an interest in (direct or deemed), only if the Offeror is able to exercise the right to compulsorily acquire all the Shares not acquired under the Offer as set out in paragraph 10.2 of the Offer Document. If by the close of the Offer, the Offeror is not able to exercise the right of compulsory acquisition, Mr Ng Kim Suan, Mr William Ng Wei Yong and Mr Sam Ng Wei Hing, being parties acting in concert with the Offeror, do not intend to accept the Offer in respect of the Shares they have an interest in (direct or deemed). Professor Wee Chow Hou, Mr Lau Hui Teck and Mr Tan Boen Ho intend to accept the Offer in respect of the Shares they have an interest in (direct or deemed). Mr David Wong Seck Kim does not have an interest (direct or deemed) in any Shares. 6. OTHER DISCLOSURES 6.1 Directors Service Contracts There are no service contracts between any Director or proposed Director with the Company or any of its subsidiaries with more than 12 months to run and which cannot be terminated by the Company within the next 12 months without paying any compensation. In addition, there are no service contracts entered into or amended between any Director or proposed Director with the Company during the period commencing six (6) months prior to 15 December 2009, being the Offer Announcement Date and ending on the Latest Practicable Date. 6.2 No Payment or Benefit to Directors It is not proposed, in connection with the Offer, that any payment or other benefit be made or given to any Director or to any director of any other corporation which is, by virtue of Section 6 of the Companies Act 1, deemed to be related to the Company as compensation for loss of office or otherwise in connection with the Offer. 1 In accordance with section 6 of the Companies Act, corporations are deemed to be related to each other where a corporation is (a) the holding company of another corporation; (b) is a subsidiary of another corporation; or (c) is a subsidiary of the holding company of another corporation, that first-mentioned corporation and that other corporation shall for the purposes of the Companies Act be deemed to be relation to each other. 71

73 APPENDIX I GENERAL INFORMATION 6.3 Agreements Conditional upon Outcome of the Offer There are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Offer save as aforementioned in paragraph 4.2 of the Letter to Shareholders which provides that the Offeror has received irrevocable undertakings dated 21 December 2009 from inter alia, Mr Ng Kim Suan, Mr William Ng Wei Yong and Mr Sam Ng Wei Hing to, should they accept the Offer, waive their rights to receive from the Offeror the Offer Price in consideration for their respective Offer Shares which each of them may tender in acceptance of the Offer. 6.4 Material Contracts entered into by the Offeror There are no material contracts entered into by the Offeror in which any Director has a material personal interest, whether direct or indirect, save for the interests of Mr Ng Kim Suan, Mr William Ng Wei Yong and Mr Sam Ng Wei Hing through the Offeror. 7. FINANCIAL INFORMATION ON THE GROUP 7.1 Summary Financial Information A summary of the financial statements of the Group and the Company for the past 3 financial years for FY2006, FY2007 and FY2008 is set out below. The following summary financial information should be read together with and in the context of, the audited financial statements and the announced interim results for the relevant financial periods and related notes thereto:- Profit and Loss Group (audited) FY2006 FY2007 FY2008 S$ S$ S$ CONTINUING OPERATIONS Revenue 77,931,387 76,535,488 97,811,764 Cost of sales and services (29,828,186) (24,337,557) (26,044,800) Gross profit 48,103,201 52,197,931 71,766,964 Interest income 453,989 43,481 2,904,483 Dividend income 1,386,737 1,270,219 3,248,751 Other income 265, ,311 Gain on disposal of a subsidiary 28,768,577 Distribution costs (2,620,345) (2,680,852) (3,103,389) Administrative expenses (8,832,879) (9,280,760) (15,295,707) Finance costs (5,172,412) (2,214,032) (1,572,311) Other expenses (19,195,738) (15,811,803) (16,329,328) Share of losses of joint venture entities, net of tax (2,299,284) Profit before tax 42,891,130 23,789,661 40,032,490 Tax expense (4,552,520) (6,927,671) (9,491,537) Profit from continuing operations, net of tax 38,338,610 16,861,990 30,540,953 DISCONTINUED OPERATION Profit from discontinued operation, net of tax 763,225 12,665, ,893,659 Profit for the year 39,101,835 29,527, ,434,612 72

74 APPENDIX I GENERAL INFORMATION Group (audited) FY2006 FY2007 FY2008 S$ S$ S$ Earnings Per Share (cents) From continuing operations: Basic Diluted From discontinued operation: Basic Diluted Net Dividend Per Share (cents) Company (unaudited) FY2006 FY2007 FY2008 S$ S$ S$ Revenue 57,468,331 46,943,304 61,525,312 Cost of sales (13,421,541) (13,427,822) (15,743,081) Gross profit 44,046,790 33,515,482 45,782,231 Other income 9,365, ,356,949 Distribution costs (1,092,325) (1,514,878) (1,790,352) Administrative expenses 1,898,023 (6,321,665) (12,319,899) Other operating expenses (8,892,245) (3,265,879) (4,017,441) Provision of impairment loss in joint venture entities (1,619,988) Depreciation (5,849,855) (5,290,687) Operating profit 35,960,243 25,929, ,100,813 Finance income 4,018,601 2,558,798 3,226,186 Finance expense (2,219,797) (1,556,148) (1,635,479) Profit before tax 37,759,047 26,931, ,691,520 Tax expense (4,216,667) (6,415,375) (6,439,550) Profit after tax 33,542,380 20,516, ,251, Balance Sheet The following table summarises the balance sheet of the Group and the Company as at 31 December 2008 (based on the audited financial statements as at 31 December 2008). The following summary should be read together with, and in the context of the Annual Report for FY2008:- Group FY2008 Company FY2008 ASSETS Non-current assets Property, plant and equipment 165,273,016 64,370,558 Investments in subsidiaries 107,639,982 Amounts due from joint venture entities 39,939,991 39,939,991 Available-for-sale financial assets 14,016,048 14,016,048 Total non-current assets 219,229, ,966,579 73

75 APPENDIX I GENERAL INFORMATION Group FY2008 Company FY2008 Current assets Inventories 262, ,767 Trade receivables 5,073,708 2,831,038 Other receivables 169,962 11,722,745 Amounts due from subsidiaries 13,290,258 Amounts due from joint venture entities 2,987,694 2,987,694 Bank and cash balances 15,722,324 14,062,224 Total current assets 24,215,699 45,035,726 Total assets 243,444, ,002,305 EQUITY AND LIABILITIES Equity Share capital 216,518, ,518,469 Asset revaluation reserve 14,882,248 14,882,248 Foreign currency translation reserve 41,594 Accumulated losses (17,710,022) (6,635,789) Total equity 213,732, ,764,928 Non-current liabilities Deferred tax liability 4,526,200 2,683,000 Net investments in joint venture entities 637,702 Total non-current liabilities 5,163,902 2,683,000 Current liabilities Trade payables 3,355,665 2,231,433 Other payables 10,628,046 7,297,668 Derivative financial instruments 525, ,725 Provision Amount due to a subsidiary 28,966,318 Bank borrowings (secured) Tax payable 10,039,127 4,533,233 Total current liabilities 24,548,563 43,554,377 Total liabilities 29,712,465 46,237,377 Total equity and liabilities 243,444, ,002, MATERIAL CHANGES IN FINANCIAL POSITION Save as disclosed in this Circular, the unaudited financial statements for the periods ended 31 March 2009, 30 June 2009 and 30 September 2009 respectively as announced on 5 May 2009, 5 August 2009 and 9 November 2009 correspondingly and any other information on the Group which is publicly available (including without limitation, the announcements released by the Group on the SGX-ST), there have been no material changes to the financial position of the Group since 31 December 2008, being the date of the last audited accounts of the Group laid before the Shareholders in a general meeting. 74

76 APPENDIX I GENERAL INFORMATION 9. RECENT DEVELOPMENTS 9.1 Prospects of the Group for the Third Quarter ended 30 September 2009 In its announcement dated 9 November 2009, of the unaudited financial results for the nine month period ended 30 September 2009, the Company stated that: Together with the lower profits generated by the Group for the year to date, as well as impairment losses of its Thailand joint venture entities recognised in 3Q2009, the Group expects its full year results to be lower than that of (Statement of Prospects) 9.2 The commercial bases and assumptions of the Statement of Prospects, the IFA letter on the Statement of Prospects and the Auditor s report on the same are set out in Appendices IV to VI respectively to this Circular. 10. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies of the Group which are of major relevance to the interpretation of the audited consolidated financial statements of the Group for FY2008 are reproduced in Note 2 of Appendix II to this Circular. Save as mentioned above, there are no other significant accounting policies of the Group which are of major relevance for the interpretation of the audited consolidated financial statements of the Group for FY2008 referred to in this Circular. 11. CHANGES IN ACCOUNTING POLICIES As at the Latest Practicable Date, there have been no changes in the significant accounting policies of the Group which will cause the figures disclosed in paragraph 7.1 of this Appendix I to be not comparable to a material extent. 12. MATERIAL CONTRACTS WITH INTERESTED PERSONS 2 Save as disclosed below, neither the Company nor any of its subsidiaries have entered into any material contract (other than those entered into in the ordinary course of business) with interested persons during the period commencing three (3) years prior to 15 December 2009, being the Offer Announcement Date, and ending on the Latest Practicable Date: (a) (b) By an agreement dated 12 June 2008 entered into between Furama-Unico Asoke Holdings Co., Ltd. (Furama Asoke) and Furama Hotels & Resorts International Management (Thailand) Co., Ltd. (FHRIM), Furama Asoke has engaged FHRIM to provide management and supervision services to the hotel FuramaXclusive Asoke, a Unico Collection located at No. 133/2 Soi Sukhumvit 21 (Asoke) Sukhumvit Road, Klongtoey Nuea, Khet Watthana, Bangkok Thailand, in accordance with the terms and conditions therein. By an agreement dated 12 June 2008 entered into between Furama-Unico Sathorn Holdings Co., Ltd. (Furama Sathorn) and FHRIM, Furama Sathorn has engaged FHRIM to provide management and supervision services to the hotel FuramaXclusive Sathorn, a Unico Collection located at Soi Phipat 2, Silom Road, Kwaeng Silom, Khet Bangrak, Bangkok Thailand, in accordance with the terms and conditions therein. 2 As defined in the Note to Rule of the Code, an Interested Person is:- (a) a director, chief executive officer, or substantial shareholder of the Company; (b) the immediate family of a director, the chief executive officer, or a substantial shareholder (being an individual) of the Company; (c) the trustees, acting in their capacity as such trustees, of any trust of which a director, the chief executive officer, or a substantial shareholder (being an individual) and his immediate family is a beneficiary; (d) any company in which a director, the chief executive officer, or a substantial shareholder (being an individual) together and his immediate family together (directly or indirectly) have an interest of 30 per cent. or more; (e) any company that is the subsidiary, holding company or fellow subsidiary of the substantial shareholder (being a company); or (f) any company in which a substantial shareholder (being a company) and any of the companies listed in (e) above together (directly or indirectly) have an interest of 30 per cent. or more. 75

77 APPENDIX I GENERAL INFORMATION (c) (d) (e) (f) By an agreement dated 12 June 2008 entered into between Furama-Unico Sukhumvit Holdings Co., Ltd. (Furama Sukhumvit) and FHRIM, Furama Sukhumvit has engaged FHRIM to provide management and supervision services to the hotel FuramaXclusive Sukhumvit, a Unico Collection located at No. 27 Soi Sukhumvit 1 (Ruenrudee), Sukhumvit Road, Kwaeng Klongtoey Nuea, Khet Watthana, Bangkok Thailand, in accordance with the terms and conditions therein. By an agreement dated 1 August 2008 entered into between Furama-Unico Silom Holdings Co., Ltd. (Furama Silom) and FHRIM, Furama Silom has engaged FHRIM to provide management and supervision services to the hotel Furama Silom, a Unico Collection located at Silom Tower Condominium, 533 Silom Road, Kwaeng Silom, Khet Bangrak, Bangkok Thailand, in accordance with the terms and conditions therein. By a deed of hotel management dated 18 March 2009 entered into between Furama Hotel Singapore Private Limited (FHS) and Furama Hotels International Management Private Limited (FHIM), FHS has engaged FHIM to provide management and supervision services to Furama City Centre Hotel in accordance with the terms and conditions therein. By a deed of hotel management dated 1 June 2009 entered into between FHIM and the Company, the Company has engaged FHIM to provide management and supervision services to the Furama RiverFront Hotel in accordance with the terms and conditions therein. 13. MATERIAL LITIGATION As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any material litigation or arbitration proceedings as plaintiff or defendant which might materially and adversely affect the financial position of the Company and its subsidiaries taken as a whole. As at the Latest Practicable Date, the Directors are not aware of any proceedings pending or threatened against the Company or any of its subsidiaries or of any facts likely to give rise to any proceedings which might materially and adversely affect the financial position of the Company and its subsidiaries taken as a whole. 14. GENERAL 14.1 Costs and Expenses All costs and expenses incurred by the Company in relation to the Offer will be borne by the Company Consent of PrimePartners PrimePartners has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of its name, its letters dated 13 January 2010 relating to (i) its advice to the Independent Directors in respect of the Offer and (ii) the Statement of Prospects, and all references thereto, in the form and context in which they appear in this Circular Consent of the Auditors The Auditors have given and have not withdrawn their written consent to the issue of this Circular with the inclusion herein of their name and references thereto and (i) the Auditor s report relating to the audited financial statements for FY2008 and (ii) the Auditor s report on the Statement of Prospects, and all references thereto, in the form and context in which they appear in this Circular. 76

78 APPENDIX I GENERAL INFORMATION 14.4 Consent of the Valuers DTZ and Knight Frank Thailand have each given and not withdrawn their respective written consent to the issue of this Circular with the inclusion herein of their respective names and the references thereto and their respective valuation reports as set out in Appendix VII to this Circular, and all references thereto in the form and context in which they appear in this Circular. 15. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection at the registered office of the Company at 405 Havelock Road Singapore , during normal business hours for the period which the Offer remains open for acceptance: (a) (b) the Memorandum and Articles of the Company; the Annual Report of the Group for FY2006, FY2007 and FY2008; (c) the unaudited consolidated financial statements for the periods ended 31 March 2009, 30 June 2009 and 30 September 2009 respectively; (d) (e) (f) (g) the IFA letter on the Statement of Prospects; the Auditor s report on the Statement of Prospects; the valuation reports referred to in paragraph 14.4 above; and the letters of consent referred to in paragraph 14 above. 77

79 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 DIRECTORS REPORT The Directors are pleased to present their report to the members together with the audited consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December Directors The Directors of the Company in office at the date of this report are: Ng Kim Suan Ng Wei Yong Prof. Wee Chow Hou David Wong Seck Kim Lau Hui Teck Sam Ng Wei Hing Lee Teong Sang 2. Arrangements to enable Directors to acquire shares or debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. 3. Directors interests in shares or debentures The Directors of the Company holding office at the end of the financial year had no interests in the shares or debentures of the Company and related corporations as recorded in the Register of Directors' Shareholdings kept by the Company under Section 164 of the Companies Act, Cap. 50, except as follows: Shareholdings registered in the name of Directors Shareholdings in which Directors are deemed to have an interest Ultimate holding company Samta Investment Pte Ltd At At At At Number of ordinary shares Ng Kim Suan 150, ,000 Ng Wei Yong 150, ,000 78

80 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 DIRECTORS REPORT 3. Directors interests in shares or debentures (cont d) Shareholdings registered in the name of Directors Shareholdings in which Directors are deemed to have an interest Ultimate holding company Samta Investment Pte Ltd At At At At Number of preference shares Ng Kim Suan 8,000,000 8,000,000 Ng Wei Yong 10,500,000 Sam Ng Wei Hing 9,000,000 The Company Furama Ltd. Number of ordinary shares Ng Kim Suan 500,379 4,389,379 90,446,128 90,446,128 Ng Wei Yong 2,000,000 2,000,000 86,350,128 86,350,128 Sam Ng Wei Hing 58,000 58,000 Lau Hui Teck 1,000 1,000 1,000 11,000 Prof. Wee Chow Hou 72,000 90,000 In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited, the Directors of the Company state that, according to the Register of Directors Shareholdings, the Directors interests as at 21 January 2009 in the shares of the Company and its related corporations have not changed from those disclosed as at 31 December By virtue of Section 7 of the Act, Mr Ng Wei Yong is deemed to have interests in the shares of all the subsidiaries of the Company, all of which are wholly-owned, as at the beginning and end of the financial year. 4. Directors contractual benefits Since the end of the previous financial year, no Director has received or become entitled to receive a benefit other than disclosed in the consolidated financial statements and this report by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except that certain Directors received remuneration from related corporations in their capacity as Directors and/or executives of these related corporations. 79

81 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 DIRECTORS REPORT 5. Share options No option to take up unissued shares of the Company or its subsidiaries was granted during the financial year. There were no shares issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries whether granted before or during the financial year. There were no unissued shares of the Company or its subsidiaries under option at the end of the financial year. 6. Audit committee The members of the Audit Committee during the financial year and at the date of this report are: Prof. Wee Chow Hou David Wong Seck Kim Lee Teong Sang (Chairman) (Member) (Member) The Audit Committee carried out its functions specified in Section 201B of the Companies Act, the Listing Manual and the Code of Corporate Governance. The functions are detailed in the Annual Report on Corporate Governance. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditor, Baker Tilly TFWLCL, be nominated for re-appointment as auditor of the Company at the forthcoming Annual General Meeting. 7. Independent auditor The independent auditor, Baker Tilly TFWLCL, has expressed its willingness to accept re-appointment. On behalf of Directors NG KIM SUAN Director NG WEI YONG Director 18 March

82 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 STATEMENT BY DIRECTORS In the opinion of the Directors: (i) (ii) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company as set out on pages 27 to 78 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year then ended; and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of Directors NG KIM SUAN Director NG WEI YONG Director 18 March

83 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF FURAMA LTD. AND ITS SUBSIDIARIES We have audited the accompanying financial statements of Furama Ltd. (the Company ) and its subsidiaries (the Group ) as set out on pages 27 to 78 which comprise the balance sheets of the Group and the Company as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement of the Group and statement of changes in equity of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act ) and the Singapore Financial Reporting Standards. This responsibility includes: (a) (b) (c) 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 account and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the 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 evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 82

84 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF FURAMA LTD. AND ITS SUBSIDIARIES Opinion In our opinion, (a) (b) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and the Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date; and the accounting and other records required by the Act to be kept by the Company, and by the subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act. Baker Tilly TFWLCL Public Accountants and Certified Public Accountants Singapore Foong Daw Ching Partner Appointed on 25 April March

85 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 CONSOLIDATED INCOME STATEMENT For the financial year ended 31 December 2008 CONTINUING OPERATIONS Group Note $ $ Revenue 4 97,811,764 76,535,488 Cost of sales and services (26,044,800) (24,337,557) Gross profit 71,766,964 52,197,931 Interest income 2,904,483 43,481 Dividend income 3,248,751 1,270,219 Other income 712, ,477 Distribution costs (3,103,389) (2,680,852) Administrative expenses (15,295,707) (9,280,760) Finance costs (1,572,311) (2,214,032) Other expenses 5 (16,329,328) (15,811,803) Share of losses of joint venture entities, net of tax 23 (2,299,284) Profit before tax 6 40,032,490 23,789,661 Tax expense 8 (9,491,537) (6,927,671) Profit from continuing operations, net of tax 30,540,953 16,861,990 DISCONTINUED OPERATION Profit from discontinued operation, net of tax 9 126,893,659 12,665,955 Profit for the year 157,434,612 29,527,945 Earnings per share (cents) 10 From continuing operations: - Basic Diluted From discontinued operation: - Basic Diluted The accompanying notes form an integral part of these financial statements. 84

86 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 BALANCE SHEETS At 31 December 2008 Group Company Note $ $ $ $ ASSETS Non-current assets Property, plant and equipment ,273, ,974,323 64,370,558 68,892,655 Investments in subsidiaries ,639, ,639,980 Amounts due from joint venture entities 13 39,939,991 39,939,991 Available-for-sale financial assets 14 14,016,048 14,016,048 14,016,048 14,016,048 Total non-current assets 219,229, ,990, ,966, ,548,683 Current assets Inventories , , , ,506 Trade receivables 16 5,073,708 5,201,624 2,831,038 2,867,511 Other receivables , ,019 11,722,745 89,539 Amounts due from subsidiaries 18 13,290,258 58,212,325 Amounts due from joint venture entities 13 2,987,694 2,987,694 Bank and cash balances 19 15,722,324 10,934,223 14,062,224 9,691,673 24,215,699 16,519,944 45,035,726 70,992,554 Held for sale investment property 9 76,946,259 Total current assets 24,215,699 93,466,203 45,035,726 70,992,554 Total assets 243,444, ,456, ,002, ,541,237 EQUITY AND LIABILITIES Equity Share capital ,518, ,518, ,518, ,518,469 Asset revaluation reserve 21 14,882,248 14,882,248 14,882,248 14,882,248 Foreign currency translation reserve 41,594 Accumulated losses (17,710,022) (34,730,451) (6,635,789) (14,473,577) Total equity 213,732, ,670, ,764, ,927,140 Non-current liabilities Deferred tax liability 22 4,526,200 4,740,000 2,683,000 2,495,000 Net investments in joint venture entities ,702 Total non-current liabilities 5,163,902 4,740,000 2,683,000 2,495,000 The accompanying notes form an integral part of these financial statements. 85

87 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 BALANCE SHEETS (cont'd) At 31 December 2008 Group Company Note $ $ $ $ Current liabilities Trade payables 24 3,355,665 3,942,871 2,231,433 2,299,977 Other payables 25 10,628,046 10,398,369 7,297,668 6,057,998 Derivative financial instruments , , , ,628 Provision 27 8,400,000 8,400,000 Amount due to a subsidiary 18 28,966,318 Bank borrowings (secured) 28 42,810,000 20,900,000 Tax payable 10,039,127 6,390,494 4,533,233 4,358,494 Total current liabilities 24,548,563 72,046,308 43,554,377 42,119,097 Total liabilities 29,712,465 76,786,308 46,237,377 44,614,097 Total equity and liabilities 243,444, ,456, ,002, ,541,237 The accompanying notes form an integral part of these financial statements. 86

88 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 STATEMENTS OF CHANGES IN EQUITY For the financial year ended 31 December 2008 Foreign Asset currency Share revaluation translation Accumulated capital reserve reserve losses Total Note $ $ $ $ $ Group Balance at 1 January ,518,469 14,882,248 (34,730,451) 196,670,266 Foreign currency translation 41,594 41,594 Net income recognised directly in equity 41,594 41,594 Net profit for the financial year 157,434, ,434,612 Total recognised income for the year 41, ,434, ,476,206 Dividends 29 (140,414,183) (140,414,183) Balance at 31 December ,518,469 14,882,248 41,594 (17,710,022) 213,732,289 Balance at 1 January ,518,469 14,882,248 (43,205,557) 188,195,160 Net profit for the financial year 29,527,945 29,527,945 Total recognised income for the year 29,527,945 29,527,945 Dividends 29 (21,052,839) (21,052,839) Balance at 31 December ,518,469 14,882,248 (34,730,451) 196,670,266 The accompanying notes form an integral part of these financial statements. 87

89 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 STATEMENTS OF CHANGES IN EQUITY (cont'd) For the financial year ended 31 December 2008 Asset Share revaluation Accumulated capital reserve losses Total Note $ $ $ $ Company Balance at 1 January ,518,469 14,882,248 (14,473,577) 216,927,140 Net profit for the financial year 148,251, ,251,971 Dividends 29 (140,414,183) (140,414,183) Balance at 31 December ,518,469 14,882,248 (6,635,789) 224,764,928 Balance at 1 January ,518,469 14,882,248 (13,937,029) 217,463,688 Net profit for the financial year 20,516,291 20,516,291 Dividends 29 (21,052,839) (21,052,839) Balance at 31 December ,518,469 14,882,248 (14,473,577) 216,927,140 The accompanying notes form an integral part of these financial statements. 88

90 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 CONSOLIDATED CASH FLOW STATEMENT For the financial year ended 31 December 2008 Group $ $ Cash flows from operating activities Total profit 157,434,612 29,527,945 Adjustments for: Tax expense 11,503,537 7,410,364 Write back of impairment loss on held for sale investment property (11,000,000) Depreciation 8,919,680 11,740,704 Fair value changes on derivative financial instruments (not in a designated hedge accounting relationship) - loss on interest rate swap 421, ,888 Finance expense 517,796 1,472,344 Finance income (2,350,087) (46,628) Dividend income (3,248,751) (1,270,219) Property, plant and equipment written off 11, ,417 (Gain)/loss on disposal of property, plant and equipment (31,114) 11,407 Gain on disposal of held for sale investment property (128,001,764) Share of losses of joint venture entities, net of tax 2,299,284 Unrealised exchange loss 94,695 Operating cash flow before working capital changes 47,570,146 38,769,222 Inventories (40,933) 158,575 Trade and other receivables 120, ,154 Trade and other payables (7,120,917) 2,899,179 Cash generated from operations 40,529,269 42,662,130 Interest received 405,669 46,628 Interest paid (566,367) (1,675,936) Income taxes paid (8,068,704) (5,678,433) Net cash from operating activities 32,299,867 35,354,389 Cash flows from investing activities Purchase of property, plant and equipment (9,900,010) (7,200,789) Proceeds from disposal of property, plant and equipment 113, Proceeds from disposal of held for sale investment property 204,948,023 Investment in joint venture entities (1,619,988) Dividends received 3,248,751 1,270,219 Net cash from/(used in) investing activities 196,790,379 (5,929,597) The accompanying notes form an integral part of these financial statements. 89

91 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 CONSOLIDATED CASH FLOW STATEMENT (cont'd) For the financial year ended 31 December 2008 Group $ $ Cash flows from financing activities Repayments of bank borrowings (42,810,000) (5,490,000) Funds to joint venture entities (41,077,962) Dividends paid (140,414,183) (21,052,839) Net cash used in financing activities (224,302,145) (26,542,839) Net increase in cash and cash equivalents 4,788,101 2,881,953 Cash and cash equivalents at beginning of financial year 10,934,223 8,052,270 Cash and cash equivalents at end of financial year 15,722,324 10,934,223 Cash and cash equivalents comprise the bank and cash balances on the balance sheet. The accompanying notes form an integral part of these financial statements. 90

92 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2008 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. Corporate information The Company is a public limited company, domiciled and incorporated in Singapore. The address of the Company s registered office and principal place of business is 405 Havelock Road, Singapore The Company s registration number is G. The Company officially changed its name from Apollo Enterprises Limited to Furama Ltd. on 28 February 2008, as approved by shareholders at the extraordinary general meeting. The Company s immediate and ultimate holding company is Samta Investment Pte Ltd, a company incorporated in Singapore. The Company owns, operates and invests in hotels. The principal activities of the subsidiaries are set out in Note 12 to the financial statements. 2. Significant accounting policies (a) Basis of preparation The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards ( FRS ) including related Interpretations of FRS ( INT FRS ). The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The financial statements are presented in Singapore dollars (SGD). The preparation of financial statements in conformity with FRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management s best knowledge of current events and actions and historical experiences and various other factors that are believed to be reasonable under the circumstances, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are 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. Judgements made by management in application of FRSs that have a significant effect on the financial statements and in arriving at estimates with a significant risk of material adjustment in the following year are disclosed in note 3 to the financial statements. 91

93 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (a) Basis of preparation (cont d) The carrying amounts of trade and other receivables, cash and cash equivalents, trade and other payables and provisions approximate their respective fair values due to the relatively short-term maturity of these financial instruments. In the current financial year, the Group has adopted all the new and revised FRSs and INT FRSs that are relevant to its operations and effective for the current financial year. The adoption of these new and revised FRSs and INT FRSs has no material effect on the financial statements. At the date of the balance sheet, the following FRSs and INT FRSs were issued, revised or amended but not yet effective: FRS 1 Presentation of Financial Statements FRS 23 Borrowing Costs FRS 108 Operating Segments INT FRS 113 Customer Loyalty Programmes INT FRS 116 Hedges of a Net Investment in a Foreign Operation Amendments to FRS 101 Cost of an Investment in a Subsidiary, Jointly Controlled and FRS 27 Entity or Associate Amendments to FRS 32 Puttable Financial Instruments and Obligations Arising on and FRS 1 Liquidation Amendments to FRS 39 Financial Instrument: Recognition and Measurement Eligible Hedged Items Amendments to FRS 102 Share-based Payment Vesting Conditions and Cancellations Improvements to FRSs 2008 FRS 1 Presentation of Financial Statements Revised Presentation The revised FRS 1 requires owner and non-owner changes in equity to be presented separately. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line item. In addition, the revised standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The Group is currently evaluating the format to adopt. Revised FRS 1 will become effective for financial statements for the year ending 31 December Revised FRS 23, Borrowing Costs The revised standard removes the option to recognise immediately as an expense borrowing costs that are attributable to qualifying assets, except for those borrowing costs on qualifying assets that are measured at fair value. Revised FRS 23 will become effective for financial statements for the year ending 31 December

94 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (a) Basis of preparation (cont d) FRS 108, Operating Segments FRS 108 requires an entity to adopt a management perspective approach in reporting financial and descriptive information about its reportable segment. Financial information is required to be reported on the basis that it is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. FRS 108 introduces additional segmental disclosures to be made to improve the information about operating segments. FRS 108 will become effective for financial statements for the year ending 31 December The Group anticipates that the adoption of these FRSs and INT FRSs (where applicable) in future periods will have no material impact on the balance sheet and statement of changes in equity of the Company and the consolidated financial statements of the Group. (b) Principles of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the parent company. Consistent accounting policies are applied for like transactions and events in similar circumstances. Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognised in assets, such as inventories and property, plant and equipment, are eliminated in full. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. (c) Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the Board of Directors. In the Company s separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses. 93

95 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (d) Joint venture entities The Group s joint ventures are entities over which the Group has contractual arrangements to jointly share the control over the economic activity of the entities with one or more parties. The Group s interest in joint venture entities is accounted for in the consolidated financial statements using the equity method. The consolidated financial statements include the Group s share of the income, expenses and equity movements of the joint venture entities, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. In the Company s separate financial statements, investments in joint venture entities are accounted for at cost less any impairment losses. (e) Revenue recognition Revenue comprises the fair value for the sale of goods and rendering of services, net of goods and services tax, rebates and discounts, and after eliminating sales within the Group. (i) Hotel and restaurant operations and other services rendered Revenue from rental of hotel rooms and other facilities are recognised when the services are rendered. Revenue from food and beverages is recognised upon billing of food and beverages to customers. Revenue from rendering of services is recognised when the service is rendered. (ii) (iii) (iv) Rental income Rental and service fee income under operating leases are recognised on a straight-line basis over the term of the lease. Dividend income Dividend income from investments is recognised in the income statement when the shareholder s right to receive the payment has been established. Interest income Interest income is accrued on a time-apportionment basis using the effective interest method. 94

96 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (f) Property, plant and equipment Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses. All property, plant and equipment are stated at cost except for a one-off revaluation of the leasehold land and buildings in 1975 by an external independent valuer. The Group does not have a fixed policy of revaluation. The cost of the property, plant and equipment comprises its purchase price and any direct attributable costs of bringing the property, plant and equipment to working conditions for its intended use. Expenditure for additions, improvements and renewals are capitalised, and expenditure for maintenance and repairs are charged to the income statement. Depreciation Depreciation is calculated on the straight-line method so as to write off the costs of the property, plant and equipment over their estimated useful lives as follows: Years Leasehold land terms of lease Leasehold buildings 50 Leasehold improvement 10 Plant and machinery 15 Furniture, fixtures and equipment 3-15 Motor vehicles 5 Depreciation for construction in progress will commence when construction is completed and ready for use. Operating supplies Operating supplies comprising linen and soft furnishings and crockery, utensils and glassware are stated at half of cost. Items not used at the end of the financial year are carried at cost. The residual values, useful life and depreciation method of property, plant and equipment are reviewed at each balance sheet date to ensure that the residual values, period of depreciation and depreciation method are consistent with previous estimates and the expected pattern of consumption of future economic benefits embodied in the items of property, plant and equipment. Fully depreciated assets are retained in the financial statements until they are no longer in use. 95

97 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (g) Financial assets Classification The Group classifies its investments in financial assets in the following categories: loans and receivables and available-for-sale investments. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except those maturing more than 12 months after the balance sheet date. These are classified as non-current assets. Available-for-sale investments Available-for-sale investments are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Recognition and derecognition Purchases and sales of investments are recognised on the date on which the Group commits to purchase or sell the asset. Investments are derecognised when the rights to receive cash flows from financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Initial measurement Loans and receivables are initially recognised at fair value plus transaction costs. Available-for-sale financial assets are initially recognised at fair value plus transaction costs. Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Available-for-sale financial assets are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in the fair value reserve within equity. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments in the fair value reserve within equity are included in the income statement. Interest income on financial assets is recognised separately in the income statement. 96

98 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (g) Financial assets (cont d) Determination of fair value The fair values of quoted financial assets are based on current bid prices. If the market for a financial asset is not active, the Group establishes fair value by using valuation techniques. These include the use of recent arm s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer s specific circumstances. Impairment The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. (i) Loans and receivables An allowance for impairment of loans and receivables, including trade and other receivables, is recognised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance 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. (ii) Available-for-sale investments In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the investment below its cost is considered in determining whether the investments are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the income statement is removed from the fair value reserve within equity and recognised in the income statement. Impairment losses recognised in the income statement on equity investments are not reversed through the income statement, until the equity investments are disposed of or the fair value increase can be objectively related to an event occurring after the impairment losses were recognised in the income statement. 97

99 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (h) Inventories Inventories, comprising food and beverage and consumables, are stated at the lower of cost and net realisable value. Cost is determined on a weighted-average basis and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price at which the inventories can be realised in the normal course of business after allowing for the costs of realisation. (i) Cash and cash equivalents Cash consists of cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. For the purpose of the consolidated cash flow statement, cash and cash equivalents are presented net of bank overdraft which is repayable on demand and which forms an integral part of the Group s operating cash cycle. Bank and cash balances carried in the balance sheets are classified and accounted for as loans and receivables under FRS 39. (j) Non-current assets held for sale and discontinued operation A component of the Group is classified as a discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical areas of operations or is part of a single coordinated major line of business or geographical area of operations. A component is deemed to be held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. Upon classification as held for sale, non-current assets and disposal groups are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in the income statement. Prior period comparatives are re-presented so that the disclosures relate to all operations that have been discontinued by the balance sheet date of the current financial year. (k) Impairment of non-financial assets At each balance sheet date, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 98

100 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (k) Impairment of non-financial assets (cont d) 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 the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (l) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new equity instruments are taken to equity as a deduction, net of tax, from the proceeds. (m) Financial liabilities Financial liabilities include trade and other payables, amount due to a subsidiary, derivative financial instruments and bank borrowings. Financial liabilities are recognised on the balance sheet when, and only when, the Group and Company become a party to the contractual provisions of the financial instrument. (i) (ii) Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Bank borrowings Interest-bearing loans and borrowings are recognised initially at the fair value of the consideration received less directly attributable transaction costs and are subsequently carried at amortised cost using the effective interest method. (n) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors best estimate of the expenditure required to settle the obligation at the balance sheet, and are discounted to present value where the effect is material. 99

101 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (o) Borrowing costs Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are being incurred. Borrowing costs are capitalised until the assets are ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded. (p) Derivative financial instruments The Group and the Company use derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivative financial instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivative financial instruments that do not qualify for hedge accounting are taken to the income statement for the financial year. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments. (q) Employee benefits (i) (ii) Employee leave entitlement Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the balance sheet date. Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund, and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current or preceding years. Contributions to the scheme are recognised as an expense in the year in which the related service is performed. 100

102 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (r) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided using the liability method, on all temporary differences at the balance sheet date arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred income tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax are charged or credited to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity. (s) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the related assets to the lessee. All other leases are classified as operating leases. As lessor Leases where the Group retains substantially all the risks and rewards of ownership of the assets are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. As operating leases Payments made under operating leases (net of any incentives received from the lessor) are taken to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 101

103 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (t) Foreign currencies (i) (ii) (iii) Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency ). The financial statements of the Group and the Company are presented in SGD, which is the Company s functional and presentation currency. Transactions and balances Transactions in a currency other than the functional currency ( foreign currency ) are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Currency translation gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except for currency translation differences on net investment in foreign entities and borrowings and other currency instruments qualifying as net investment hedges for foreign operations in the consolidated financial statements. Translation of Group entities financial statements The assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity as foreign currency translation reserve. On disposal of a foreign operation, the cumulative amount recognised in foreign currency translation reserve relating to that particular foreign operation is recognised in the income statement. (u) Segment reporting A segment is a distinguishable component of the Group s business that is engaged in either providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment information is presented in respect of the Group s business and geographical segments. The primary format, business segments, is based on the Group s management and internal reporting structure. Inter-segment pricing is determined on an arm s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the financial year to acquire segment assets that are expected to be used for more than one financial year. 102

104 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting policies (cont d) (v) Dividends Interim dividends are recognised during the financial year in which they are declared payable. Final dividends on ordinary shares are recognised as a liability in the financial year in which they are approved by the shareholders. (w) Related parties Related parties are entities in which the Directors have or are deemed to have an interest and when one of them has either the ability to control the other or can exercise significant influence over the other in making financial and operating decisions. (x) Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group. Contingent liabilities are not recognised on the balance sheet of the Group. 3. Significant accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (a) Depreciation of property, plant and equipment The property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 1 to 50 years. The carrying amounts of the Group s property, plant and equipment as at 31 December 2008 were $165,273,016 (2007: $165,974,323). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of the property, plant and equipment, therefore future depreciation charges could be revised. (b) Impairment of non-financial assets The Group follows the guidance of FRS 36 in determining when a non-financial asset is impaired and in respect of its property, plant and equipment, is other than temporarily impaired. This assessment requires significant judgement. The Group evaluates, among other factors, the duration and extent to which the fair value of the asset is less than its cost; and the financial health of and near-term business outlook for the asset, including factors such as industry, sector performance and operational and financing cash flow. 103

105 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Significant accounting estimates and judgements (cont d) (c) Allowance for bad and doubtful receivables The Group establishes allowance for bad and doubtful receivables on a case-by-case basis when it believes the collection of amounts owed is unlikely to occur. In establishing these allowances, the Group considers its historical experience and changes to its customers financial position. If the financial conditions of receivables were to deteriorate, resulting in impairment of their ability to make the required payments, additional allowances may be required. (d) Income taxes Significant judgements are involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters differs from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group s tax payable is $10,039,127 (2007: $6,390,494) and deferred tax liability is $4,526,200 (2007:$4,740,000). 4. Revenue Group $ $ Rooms, food and beverage and other services 91,789,652 70,388,017 Rental and maintenance charge 4,988,929 4,893,257 Other revenue 1,033,183 1,254,214 97,811,764 76,535, Other expenses The following items have been included in arriving at other expenses: Group $ $ Depreciation (included in Note 6) 8,915,615 9,421,546 Employee benefits expenses (included in Note 7) 1,503,025 1,214,

106 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Profit before tax Continuing Discontinued operations operation Total $ $ $ $ $ $ This is arrived at: After charging: Allowance for doubtful receivables: - third parties (trade) (Note 16) 109, ,572 - joint venture entities (Note 13) 2,529,718 2,529,718 Bad debts written off 9,389 2,762 9,389 2,762 Depreciation (Note 11) 8,915,615 9,421,546 4,065 2,319,158 8,919,680 11,740,704 Non-audit fees - auditor of the Company 21,422 23,500 1,050 3,000 22,472 26,500 Cost of inventories recognised as expense 1,826,906 2,353,783 1,719 1,826,906 2,355,502 Interest expenses - overdrafts revolving credit facilities 272,887 1,471, ,887 1,471,071 - loss on interest rate swap, net 665, , , ,465 Property, plant and equipment written off 11, ,417 11, ,417 Loss on disposal of property, plant and equipment 9,884 1,523 11,407 Operating lease rental 132,423 67, ,753 68,705 Employee benefits expenses (Note 7) 25,443,167 21,424,411 32, ,815 25,475,951 21,678,226 And crediting: Allowance for doubtful trade receivables no longer required, now written back (Note 16) 135,305 3, ,305 3,989 Foreign exchange gain 199, , , ,103 Gain on disposal of property, plant and equipment 31,114 31,114 Gain on disposal of held for sale investment property (Note 9) 128,001, ,001,764 Gain on disposal of available-for-sale financial assets 5,940 5,940 Gross dividend income - quoted investment 2,400 2,400 - unquoted investment 3,248,751 1,267,819 3,248,751 1,267,819 Interest income - bank deposits 326,127 30,271 78,967 3, ,094 33,834 - trade receivables joint venture entities 1,944,418 1,944,418 Write back of impairment loss on held for sale investment property (Note 9) 11,000,000 11,000,

107 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Employee benefits expenses Continuing Discontinued operations operation Total $ $ $ $ $ $ Salaries, wages and bonuses 21,720,975 18,244,466 35, ,671 21,756,609 18,469,137 Contributions to defined contribution plans/ superannuation fund contributions 2,041,371 2,034,719 5,453 16,318 2,046,824 2,051,037 Other employee benefits 1,680,821 1,145,226 (8,303) 12,826 1,672,518 1,158,052 25,443,167 21,424,411 32, ,815 25,475,951 21,678,226 These include the amounts shown as Directors remuneration (excluding fees) in the Note 32 to the financial statements. Remuneration bands of the Company The following information relates to the remuneration (including fees) of Directors of the Company: Number of Directors $750,000 to $1,000,000 2 $500,000 to $749,999 1 $250,000 to $499, Below $250,

108 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Tax expense Group $ $ From continuing operations: Current income tax - Current financial year 8,795,508 5,720,518 - Under provision in prior financial years 194,432 1,614,662 - Overseas tax on income remitted to Singapore not eligible for tax credit 550, ,691 9,540,337 7,564,871 Deferred tax - Current financial year (285,102) (463,100) - Under provision in prior financial year 236, ,800 - Effect of change in Singapore s statutory tax rate (558,900) Deferred tax (Note 22) (48,800) (637,200) Tax expense from continuing operations 9,491,537 6,927,671 From discontinued operation: Current income tax - Current financial year 2,177, ,000 - Under provision in prior financial years 345,693 2,177, ,693 Deferred tax - Current financial year (189,000) (170,800) - Under/(over) provision in prior financial year 24,000 (3,000) - Effect of change in Singapore s statutory tax rate (38,200) Deferred tax (Note 22) (165,000) (212,000) Tax expense from discontinued operation (Note 9) 2,012, ,693 Tax expense is attributable to: Continuing operations 9,491,537 6,927,671 Discontinued operation 2,012, ,693 11,503,537 7,410,

109 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Tax expense (cont d) The income tax expense on the results of the financial year varies from the amount of income tax determined by applying the Singapore statutory rate of income tax to profit before tax due to the following factors: Group $ $ Profit before tax - Continuing operations 40,032,490 23,789,661 - Discontinued operation 128,905,659 13,148, ,938,149 36,938,309 Income tax calculated at Singapore s statutory tax rate of 18% 30,408,867 6,648,895 Income not subject to tax (22,250,206) (2,208,207) Expenses non-deductible for income tax purposes 2,418,132 1,098,632 Under provision of current income tax in prior financial years 194,432 1,960,355 Effect on deferred tax balance due to the change in income tax rate from 20% to 18% (597,100) Singapore statutory stepped income exemption (82,350) (82,350) Tax benefit arising from special allowance for hotel refurbishment (48,338) Overseas tax on income remitted to Singapore not eligible for tax credit 550, ,691 Under provision of deferred tax in prior financial years 260, ,800 Others 3,963 26,986 11,503,537 7,410, Discontinued operation and held for sale investment property On 27 December 2007, one of the subsidiaries signed a sale and purchase agreement with a third party to sell its leasehold investment property, including the plant and machinery (collectively as the Property ), at a selling price of $205 million (exclusive of goods and service tax). The Property was sold subject to the approval of Furama Ltd s shareholders. This was subsequently approved in an extraordinary general meeting on 28 February As the Property was expected to be sold within the next twelve months after the balance sheet date, it was reclassified from property, plant and equipment to held for sale investment property as at 31 December The Group completed the sale on 10 April As the selling price of $205 million exceeds the net carrying amount of the leasehold investment property, the impairment loss of $11,000,000 which was provided for in prior year was written back to income statement for the year ended 31 December The carrying value of the held for sale investment property as at 31 December 2007 is $76,946,

110 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Discontinued operation and held for sale investment property (cont d) The details of the held for sale investment property are as follows: Property Location Existing use Tenure Approximate site area Apollo Centre Havelock Office and 99-year 5,069 sq.m Road shopping leasehold from complex 4 May 1983 The results of the discontinued operation are as follows: Group $ $ Revenue and other income 2,104,117 6,587,368 Expenses (1,200,222) (4,438,720) Exceptional item write back of impairment loss of investment property (Note 6) 11,000,000 gain on disposal of held for sale investment property (Note 6) 128,001,764 Profit before tax from discontinued operation 128,905,659 13,148,648 Tax expense (Note 8) (2,012,000) (482,693) Profit after tax from discontinued operation 126,893,659 12,665,955 The impact of the discontinued operation on the cash flows of the Group is as follows: $ $ Operating cash outflows (551,222) (117,850) Investing cash inflows/(outflows) 204,993,200 (33,867) Total cash inflows/(outflows) 204,441,978 (151,717) 10. Earnings per share Continuing operations The calculation of basic earnings per share is based on the Group s profit after tax from continuing operations of $30,540,953 (2007: $16,861,990) divided by the number of fully-paid ordinary shares in issue during the financial year of 154,301,300 (2007: 154,301,300). As the Group has no dilutive potential ordinary shares, the diluted earnings per share is equivalent to basic earnings per share. Discontinued operation The calculation of basic earnings per share is based on the Group s profit after tax from discontinued operation of $126,893,659 (2007: $12,665,955) divided by the number of fully-paid ordinary shares in issue during the financial year of 154,301,300 (2007: 154,301,300). As the Group has no dilutive potential ordinary shares, the diluted earnings per share is equivalent to basic earnings per share. 109

111 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Property, plant and equipment Group 2008 Cost Leasehold land $ Leasehold buildings $ Leasehold improvement $ Plant and machinery $ Furniture, fixtures, and equipment $ Motor vehicles $ Operating supplies $ Construction in progress $ Total $ Balance at ,786, ,824,538 13,472,862 25,438,159 55,422, , , , ,990,832 Additions 1,586, ,757 1,546,756 9,955 6,190,374 9,900,010 Disposals (27,300) (517,212) (146,538) (11,107) (702,157) Write-back from provision (Note 27) (1,588,041) (1,588,041) Reclassification 5,486,629 (2,994,585) 1,723,885 2,678,936 (6,894,865) Balance at ,786, ,723,126 12,064,445 27,701,501 59,130, , , , ,600,644 Representing: Cost 36,757, ,347,154 12,064,445 27,701,501 59,130, , , , ,195,672 Valuation 9,029,000 22,375,972 31,404,972 45,786, ,723,126 12,064,445 27,701,501 59,130, , , , ,600,644 Accumulated depreciation Balance at ,019,466 48,822,027 6,663,755 19,431,155 38,865, , ,016,509 Depreciation for the year 535,649 2,722,609 1,072, ,668 3,709,959 10,250 8,919,680 Disposals (16,305) (445,718) (146,538) (608,561) Reclassification (399,278) 138, ,871 Balance at ,555,115 51,544,636 7,337,022 20,421,925 42,391,079 77, ,327,628 Net carrying value At ,231,511 99,178,490 4,727,423 7,279,576 16,739,772 33, , , ,273,

112 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Property, plant and equipment (cont d) Leasehold land $ Leasehold buildings $ Leasehold improvement $ Plant and machinery $ Furniture, fixtures, and equipment $ Motor vehicles $ Operating supplies $ Construction in progress $ Group 2007 Cost Balance at ,786, ,109,453 8,417,829 37,075,009 53,943, , , , ,207,956 Additions 23, ,394 1,557,988 51, ,591 5,219,171 7,200,789 Disposals (5,493) (96,920) (82,020) (182,417) (366,850) Reclassified as held for sale investment property (99,308,312) (11,742,751) (111,051,063) Reclassification 5,055,033 18,000 (5,073,033) Balance at ,786, ,824,538 13,472,862 25,438,159 55,422, , , , ,990,832 Total $ Representing: Cost 36,757, ,448,566 13,472,862 25,438,159 55,422, , , , ,585,860 Valuation 9,029,000 22,375,972 31,404,972 45,786, ,824,538 13,472,862 25,438,159 55,422, , , , ,990,832 Accumulated depreciation Balance at ,483,817 67,771,765 5,692,278 28,390,011 34,926, , ,552,662 Depreciation for the year 535,649 4,591, ,477 1,608,891 4,025,325 7,687 11,740,704 Disposals (4,356) (85,677) (82,020) (172,053) Reclassified as held for sale investment property (23,541,413) (10,563,391) (34,104,804) Balance at ,019,466 48,822,027 6,663,755 19,431,155 38,865, , ,016,509 Allowance for impairment in value Balance at ,000,000 11,000,000 Write back to income statement (11,000,000) (11,000,000) Balance at Net carrying value At ,767,160 98,002,511 6,809,107 6,007,004 16,556,404 43, , , ,974,

113 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Property, plant and equipment (cont d) Company 2008 Cost Leasehold land $ Leasehold buildings $ Leasehold improvement $ Plant and machinery $ Furniture, fixtures, and equipment $ Motor vehicles $ Operating supplies $ Construction in progress $ Balance at ,109,459 64,955,693 13,472,862 11,049,005 39,472,585 59, , ,526,829 Additions 861, , , ,446 2,373,744 Disposals (149,308) (10,627) (159,935) Write-back from provision (Note 27) (1,588,041) (1,588,041) Reclassification (2,994,585) 1,038,056 1,956,529 Balance at ,109,459 63,367,652 11,339,545 12,472,916 42,122,981 59, , , ,152,597 Representing: Cost 80,459 40,991,680 11,339,545 12,472,916 42,122,981 59, , , ,747,625 Valuation 9,029,000 22,375,972 31,404,972 9,109,459 63,367,652 11,339,545 12,472,916 42,122,981 59, , , ,152,597 Accumulated depreciation Balance at ,234,079 23,360,981 6,663,755 6,916,254 29,399,191 59,914 69,634,174 Depreciation for the year 99,016 1,032,814 1,060, ,885 2,437,509 5,290,687 Disposals (142,822) (142,822) Reclassification (399,278) 138, ,871 Balance at ,333,095 24,393,795 7,324,940 7,715,546 31,954,749 59,914 74,782,039 Net carrying value At ,776,364 38,973,857 4,014,605 4,757,370 10,168, , ,446 64,370,558 Total $ 2007 Cost Balance at ,109,459 64,955,693 8,417,829 10,977,972 39,075,921 59, , , ,804,024 Additions 71, , ,601 4,259,924 4,925,668 Disposals (20,446) (182,417) (202,863) Reclassification 5,055,033 (5,055,033) Balance at ,109,459 64,955,693 13,472,862 11,049,005 39,472,585 59, , ,526,829 Representing: Cost 80,459 42,579,721 13,472,862 11,049,005 39,472,585 59, , ,121,857 Valuation 9,029,000 22,375,972 31,404,972 9,109,459 64,955,693 13,472,862 11,049,005 39,472,585 59, , ,526,829 Accumulated depreciation Balance at ,135,063 21,994,686 5,692,278 6,230,323 26,688,417 59,914 63,800,681 Depreciation for the year 99,016 1,366, , ,931 2,727,136 5,849,855 Disposals (16,362) (16,362) Balance at ,234,079 23,360,981 6,663,755 6,916,254 29,399,191 59,914 69,634,174 Net carrying value At ,875,380 41,594,712 6,809,107 4,132,751 10,073, ,310 68,892,

114 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Property, plant and equipment (cont d) If the leasehold land and buildings stated at valuation less accumulated depreciation and allowance for impairment in value had been included in the financial statements at cost less accumulated depreciation and allowance for impairment in value, the net carrying value would have been as follows: Group Company $ $ $ $ Leasehold land 29,087,226 30,050,039 1,457,971 1,513,669 Leasehold buildings 169,573, ,805,657 40,382,777 41,821, ,661, ,855,696 41,840,748 43,334,769 As at 31 December 2008, the properties held by the Group are as follows: Approximate Properties Location Existing use Tenure site area Furama RiverFront Havelock Hotel 99-year 14,000 sq.m Singapore Road leasehold from 23 February 1968 Furama City Centre Eu Tong Sen Hotel 99-year 3,712 sq.m Singapore Street leasehold from 19 October 1979 As at the balance sheet date, the Group s and the Company s property, plant and equipment with a net carrying value of $139,424,607 (2007: $141,578,778) and $48,764,826 (2007: $54,279,199) respectively have been mortgaged as security for the banking facilities as set out in Note 28 to the financial statements. Of the remaining property, plant and equipment of the Group and the Company, net carrying value of $24,513,527 (2007: $23,352,939) and $15,322,286 (2007: $14,613,456) respectively have been pledged as a fixed charge as security for the banking facilities of the Group and of the Company as set out in Note 28 to the financial statements. 12. Investments in subsidiaries Company $ $ Unquoted equity shares in corporations, at cost 112,139, ,139,980 Impairment loss (4,500,000) (4,500,000) 107,639, ,639,

115 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Investments in subsidiaries (cont d) Particulars of the subsidiaries are: Country Effective equity of interest held by Name of subsidiaries incorporation the Company Principal activities % % Held by the Company Apollo Properties Pte Ltd Singapore Under member s voluntary liquidation Furama Hotel Singapore Pte Ltd* Singapore Owns and operates hotel Apollo Center Pte Ltd Singapore Under member s voluntary liquidation Spa Furama Pte. Ltd.* # Singapore Spa operator # The Company incorporated the subsidiary on 2 June 2008 with a registered capital of $2. * Audited by Baker Tilly TFWLCL, Singapore. 13. Amounts due from joint venture entities Group and Company $ $ Loan - Current portion 2,529,718 - Non-current portion 39,939,991 42,469,709 Allowance for doubtful receivables (Note 6) (2,529,718) 39,939,991 Trade - current portion 2,987,694 The loans to joint venture entities are unsecured and with the following terms: (a) (b) (c) Interest bearing at 10% per annum, and repayable in full by 10 July 2013 or earlier upon demand; Interest bearing at 10% per annum, and repayable in full by 1 August 2013 or earlier upon demand; and Interest bearing at Thailand s minimum lending rate ( MLR ) minus 1.5% per annum for the first 1-3 years and at MLR minus 1% per annum from the 4th year onwards, with monthly repayment terms ranging from $57,000 to $61,

116 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Available-for-sale financial assets Group and Company $ $ Unquoted equity investments 15,016,056 15,016,056 Impairment loss (1,000,008) (1,000,008) 14,016,048 14,016,048 Unquoted equity investments include the Company s 13% holding in Hong Leong Hotel Development Ltd, a company incorporated in Taiwan on 14 October 1983, which owns an international tourist hotel named Grand Hyatt Taipei within the Taipei World Trade Centre Complex. With the adoption of FRS 39, the Group s and the Company s policy is to state available-for-sale investments at fair value. However, since the fair value cannot be measured reliably as the market value is not readily available without incurring excessive costs, the unquoted investments are stated at cost, less impairment. 15. Inventories Group Company $ $ $ $ Food and beverage 140, ,331 87,733 89,795 Consumables 121,708 69,747 54,034 41, , , , ,506 The Group and Company have pledged a floating charge of $223,981 (2007: $221,078) and $141,767 (2007: $131,506) respectively over inventories as security for the banking facilities of the Group and of the Company as set out in Note 28 to the financial statements. 16. Trade receivables Group Company $ $ $ $ Trade receivables 5,148,010 5,422,702 2,854,200 3,006,111 Allowance for doubtful trade receivables (74,302) (221,078) (23,162) (138,600) 5,073,708 5,201,624 2,831,038 2,867,

117 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Trade receivables (cont d) Movements in the allowance for doubtful receivables are as follows: Group Company $ $ $ $ Balance at beginning of financial year 221, , , ,418 Allowance made during the financial year (Note 6) 109,572 38,565 Allowance written off (11,471) (565,493) (30,394) Allowance written back during the financial year (Note 6) (135,305) (3,989) (115,438) (3,989) 74, ,078 23, ,600 The Group and the Company have pledged a floating charge of $5,072,252 (2007: $4,955,147) and $2,831,038 (2007: $2,867,511) respectively over trade receivables as a security for the banking facilities of the Group and of the Company as set out in Note 28 to the financial statements. 17. Other receivables Group Company $ $ $ $ Other receivables 35,722 48,227 30,926 19,187 Dividend receivable 11,600,000 Rental and other deposits 10,452 28,641 5,234 16,502 Prepayments 123,788 86,151 86,585 53, , ,019 11,722,745 89,539 The Group and the Company have pledged a floating charge of $168,666 (2007: $158,352) and $11,722,745 (2007: $89,539) over other receivables as a security for the banking facilities of the Group and of the Company as set out in Note 28 to the financial statements. 116

118 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Amounts due from/(to) subsidiaries Company $ $ Amounts due from subsidiaries non-trade 14,177,534 58,212,325 Allowance for doubtful receivables (887,276) 13,290,258 58,212,325 Amount due to a subsidiary non-trade (28,966,318) Movements in the allowance for doubtful receivables are as follows: Company $ $ Balance at beginning of financial year 10,641,913 Allowance for the year 887,276 Allowance written off (10,641,913) 887,276 The amounts due from/(to) subsidiaries are unsecured and repayable on demand. Of the total amounts due from subsidiaries, $Nil (2007: $57,958,665) was interest bearing at the Company s weighted average market lending rate at nil% (2007: 3.83%) per annum. 19. Bank and cash balances The Group and Company pledged a floating charge over bank and cash balances which amounted to $15,683,982 (2007: $10,863,287) and $14,062,224 (2007: $9,691,673) respectively as security for the banking facilities as set out in Note 28 to the financial statements. 20. Share capital Group and Company $ $ Issued and fully paid 154,301,300 ordinary shares 216,518, ,518,

119 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Asset revaluation reserve Group and Company The asset revaluation reserve arose on the revaluation of leasehold land and buildings. The reserve is not available for distribution as dividends. 22. Deferred tax liability Group Company $ $ $ $ Balance at beginning of the financial year 4,740,000 5,589,200 2,495,000 3,223,000 Recognised in the income statement (Note 8) (213,800) (849,200) 188,000 (728,000) Balance at end of financial year 4,526,200 4,740,000 2,683,000 2,495,000 Deferred tax liabilities arise as a result of: Group Company $ $ $ $ An excess of book value over tax written down value of property, plant and equipment 4,526,200 5,337,100 2,683,000 2,819,400 Effect of change in Singapore s statutory tax rate (597,100) (324,400) 4,526,200 4,740,000 2,683,000 2,495, Net investments in joint venture entities Group Company $ $ $ $ Investments in joint venture entities, at cost 1,619,988 1,619,988 Impairment losses in joint venture entities (1,619,988) Share of losses of joint venture entities, net of tax (2,299,284) Currency realignment 41,594 Net investment in joint venture entities (637,702) 118

120 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Net investments in joint venture entities (cont d) Particulars of the joint venture entities are: Country Effective equity of interest held by the Principal Name of joint venture entities incorporation Group activities % % Furama-Unico Sathorn Holdings Co., Ltd* Thailand 49 Hotel operations Furama-Unico Sukhumvit Holdings Co., Ltd* Thailand 49 Hotel operations Furama-Unico Asoke Holdings Co., Ltd* Thailand 49 Hotel operations Furama-Unico Silom Holdings Co., Ltd* Thailand 49 Hotel operations Unique Panorama Property Co., Ltd* Thailand 49 Investment holding * Audited by Baker Tilly Audit and Advisory Services (Thailand) Ltd, an independent member firm of Baker Tilly International. The summarised financial information of the joint venture entities are adjusted for the percentage of ownership held by the Group. The financial information of the Group s interests in the joint venture entities are as follows: Group $ $ Assets and liabilities Non-current assets 43,900,730 Current assets 1,236,144 Total assets 45,136,874 Non-current liabilities 42,695,021 Current liabilities 3,124,492 Total liabilities 45,819,513 Results Revenue 2,582,932 Expenses (4,882,216) Loss after tax (2,299,284) Group s share of joint venture entities contingent liabilities 31,009 Group s share of joint venture entities capital commitments 61,437 Group s share of joint venture entities operating lease commitments 25,

121 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Trade payables Group Company $ $ $ $ Trade payables 2,040,869 2,650,786 1,394,646 1,511,596 Goods and services tax 1,314,796 1,292, , ,381 3,355,665 3,942,871 2,231,433 2,299, Other payables Group Company $ $ $ $ Rental and related deposits 2,016,694 3,606,708 1,727,320 1,737,246 Other payables 704, , ,512 98,217 Accrued operating expenses 6,449,640 6,239,352 4,421,812 4,021,173 Advance billings 429, ,184 Retention sums 930, , , ,303 Income received in advance 77, ,118 77,656 70,668 Due to a related party 20,000 17,391 10,000 7,391 10,628,046 10,398,369 7,297,668 6,057,998 Amount due to a related party, which comprises mainly of management fees, is trade in nature, unsecured, interestfree and repayable on demand. 26. Derivative financial instruments Group Company $ $ $ $ Interest rate swap Liabilities 525, , , ,628 Derivative financial instruments refer to hedges against specific exposures. The Group does not trade in derivatives. As part of its management of treasury risks, the Group and the Company enter into interest rate swaps to manage interest rate risks on its financial assets and liabilities, with the prior approval of the Board of Directors. As derivative financial instruments are used for the purpose of risk management, they do not expose the Group and the Company to market risk because gains and losses on the derivative financial instruments offset losses and gains on the matching assets, liabilities, revenues or costs being hedged. Therefore, the possibility of material loss arising in the event of non-performance by a counter-party is considered to be unlikely. 120

122 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Derivative financial instruments (cont d) As at 31 December 2008, the Group and the Company have an interest rate swap agreement (not in a designated hedge accounting relationship) entered into on 15 August 2005, in place with notional amount of $15 million, whereby the Group and the Company pay fixed rate of interest of 2.99% per annum and receive a variable rate equal to the DBS Bank Ltd Swap Offer Rate in Singapore dollars. As at 31 December 2007, the Group and the Company had interest rate swap agreements (not in a designated hedge accounting relationship) entered into on 15 August 2005, 15 August 2005 and 24 August 2005, in place with notional amount of $15 million, $15 million and $10 million respectively, whereby the Group and the Company paid fixed rate of interest ranging from 2.65%-2.99% per annum and received a variable rate equal to the DBS Bank Ltd Swap Offer Rate in Singapore dollars. The fair value of the interest rate swap agreements as at 31 December 2008 amounted to $525,725 (2007: $104,574) of the Group and $525,725 (2007: $102,628) of the Company have been recognised on the balance sheet as financial liabilities and as income and expenses in the income statement for the financial year. 27. Provision Group and Company $ $ Development charge Balance at the beginning of financial year 8,400,000 8,400,000 Amount paid during the year (6,811,959) Provision written back during the year (1,588,041) Balance at the end of financial year 8,400,000 The Group had made a provision for development charge / differential premium of $8,400,000 since the financial year ended 31 December 1999 in respect of the extension made to Furama RiverFront Singapore. On 28 July 2008, the Group announced that Singapore Land Authority (SLA) had on 3 July 2008, after due considerations of the appeals, decided to review the differential premium valuation and offered to levy the outstanding differential premium at $6,811,959 inclusive of all charges. The Group had accepted the SLA offer for the full resolution of the matter. The excess provision of $1,588,041 was therefore written back against the cost of the property, plant and equipment during the year (Note 11). 121

123 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Bank borrowings (secured) Group Company $ $ $ $ Revolving credit facilities 42,810,000 20,900,000 Revolving credit facilities are due for repayment within one to twelve months. The weighted average effective interest rate approximated 2.49% (2007: 3.91%) per annum during the financial year. The bank borrowings are arranged at floating interest rates, thus exposing the Group and the Company to cash flow interest rate risk. The interest rates reprice at intervals of one to twelve months. The Group has banking facilities amounting to $226 million (2007: $226 million) which bear interests at 0.25% to 0.75% (2007: 0.25% to 0.75%) above prime or 1% (2007: 1%) above the US$/$ swap per annum. The Company has banking facilities amounting to $172 million (2007: $172 million) which bear interests at 0.75% (2007: 0.75%) above prime or 1% (2007: 1%) above the US$/$ swap per annum. Bank borrowings are secured by way of: (a) a legal mortgage over certain of the Group s and Company s leasehold land, leasehold buildings and leasehold improvement with a net carrying value of $139,424,607 (2007: $141,578,778) and $48,764,826 (2007: $54,279,199) respectively at the balance sheet date; (b) a fixed and floating charge over all other assets of the Company and one of its subsidiaries; and (c) an undertaking from a subsidiary to provide the bank with a fixed and floating charge over all its assets in the event that the Company is in default of the terms of the said facilities. As at 31 December 2008, $16,338,921 (2007: $83,979,300) of the Group s and $15,855,000 (2007: $51,611,300) of the Company s facilities have been utilised. The facilities utilised as at 31 December 2008 relate to banker's guarantees and interest rate swaps whereas for 2007, it relates to banker's guarantees, interest rate swaps and revolving credit facilities. 122

124 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Dividends Group and Company $ $ Final tax exempt one-tier dividend paid of $0.06 per ordinary share (2007: $0.04 per ordinary share less income tax at 18%) in respect of the financial year ended 31 December 2007 (2007: 31 December 2006) 9,258,078 5,061,082 Special dividend paid of $0.06 per ordinary share less income tax at 18% in respect of the financial year ended 31 December ,591,624 Special tax exempt one-tier interim dividend paid of $0.81 per ordinary share (2007: $ per ordinary share less income tax at 18%) in respect of the financial year ended 31 December 2008 (2007: 31 December 2007) 124,984,053 8,400,133 Interim tax exempt one-tier dividend paid of $0.04 per ordinary share in respect of the financial year ended 31 December ,172, ,414,183 21,052, Commitments (a) The Group as lessor The Group rents out its leasehold properties under operating leases. As at the balance sheet date, the Group has contracted with tenants for the following future minimum lease payments in subsequent accounting periods as follows: Group $ $ Within one financial year 5,331,725 9,537,738 After one financial year but within five financial years 5,043,817 7,056,817 10,375,542 16,594,555 These operating leases have remaining lease terms between 1 and 5 years. The leases have varying terms and renewal rights. 123

125 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Commitments (cont d) (b) The Group as lessee The Group leases certain property, plant and equipment from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. As at the balance sheet date, the Group has operating leases contracted for the following future minimum lease payments in subsequent accounting periods as follows: Group $ $ Within one financial year 281,656 59,863 After one financial year but within five financial years 963,031 83,487 After five financial years 5,408,518 6,653, ,350 (c) Capital commitment Capital commitment contracted for but not provided for in the financial statements: Group $ $ Capital commitment in respect of property, plant and equipment 251, ,376 (d) Investment commitment With respect to one of its joint venture entities, the Company has committed to pay 19,600,000 Thai Baht (approximately S$800,000) to the joint venture partner provided the joint venture entity can attain the budget target gross operating profit within one year after the completion date as stipulated in the sales and purchase agreement. 31. Contingent liabilities As at the balance sheet date, the Company has undertaken to provide continued financial support to its subsidiary, Spa Furama Pte. Ltd. and its joint venture entities so as to enable them to continue to operate as a going concern and to meet their obligations as and when they fall due. In the opinion of the Directors, other than the share of losses for the financial period of the joint venture entities which have been recognised by the Group as at 31 December 2008 as disclosed in Note 23, no losses are expected to arise. 124

126 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Related party transactions In addition to the related parties information disclosed elsewhere in the financial statements, the following were significant related parties transactions during the financial year at terms and rates agreed between the parties: Group $ $ With a related party Management fee paid 240, ,000 With Directors Directors fees paid - Directors of the Company 283, ,000 - a Director of a subsidiary 12,000 12,000 With joint venture entities Service fees income 233,666 Licence fees income 549,802 Compensation of key management personnel The remunerations of Directors and other members of key management of the Group and the Company during the financial year are as follows: Continuing Discontinued operations operation Total $ $ $ $ $ $ Short-term benefits 4,173,661 2,641, ,245 4,173,661 2,751,218 Post-employment benefits 91,907 94,018 10,040 91, ,058 4,265,568 2,735, ,285 4,265,568 2,855,276 These include Directors remuneration (excluding fees) amounting to $2,632,307 (2007: $1,469,707) for Directors of the Group and $2,293,500 (2007: $1,173,880) for Directors of the Company. 125

127 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Financial instruments (a) Categories of financial instruments The financial instruments as at the balance sheet date are: Group Company $ $ $ $ Financial assets Available-for-sale financial assets 14,016,048 14,016,048 14,016,048 14,016,048 Loans and receivables (including cash and cash equivalents) 63,769,891 16,212,715 84,747,365 70,807,198 77,785,939 30,228,763 98,763,413 84,823,246 Financial liabilities Financial liabilities at amortised cost 13,569,270 65,185,314 38,242,521 37,474,729 Derivative financial instruments 525, , , ,628 14,094,995 65,289,888 38,768,246 37,577,357 (b) Financial risk management objectives and policies Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The Management continually monitors the Group s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group s activities. The Audit Committee oversees how Management monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group s and the Company s exposure to credit risk arises primarily from trade and other receivables and the amounts due from joint venture entities. For trade receivables, the Group adopts the policy of dealing only with customers with appropriate credit history and obtaining sufficient security where appropriate to mitigate credit risk. Credit evaluations are performed on all customers requiring credit over a certain amount. The credit quality of customers is assessed after taking into account its financial position and past experience with other hotels. Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Credit Manager based on on-going credit evaluation. The counterparty s payment profile and credit exposure are continuously monitored. For the other financial assets (including cash and cash equivalents and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. 126

128 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Financial instruments (cont d) (b) Financial risk management objectives and policies (cont'd) Credit risk (cont'd) The Group and the Company establish an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. This allowance comprises a specific loss component that relates to individually significant exposures. The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group and the Company are satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. (i) (ii) Financial assets that are neither past due nor impaired Cash is placed with banks which are regulated, with high credit-ratings assigned by international creditrating agencies. Trade receivables that are neither past due nor impaired are substantially companies with good collection track records with the Group. Financial assets that are past due and/or impaired The age analysis of trade receivables past due but not impaired is as follows: Group Company $ $ $ $ Past due 0 to less than 3 months 1,344,430 1,888, ,519 1,034,827 Past due over 3 months 138,688 8,985 20,511 24,613 1,483,118 1,897, ,030 1,059,440 The carrying amount of trade receivables individually determined to be impaired and the movements in the related allowance for doubtful debts are as follows: Group Company $ $ $ $ Gross amount 134, ,354 23, ,600 Allowance for impairment (74,302) (221,078) (23,162) (138,600) 60,143 40,276 Balance at beginning of financial year 221, , , ,418 Allowance made during the financial year 109,572 38,565 Allowance written off (11,471) (565,493) (30,394) Allowance written back during the financial year (135,305) (3,989) (115,438) (3,989) 74, ,078 23, ,600 The impaired trade receivables arise mainly from potential uncollectible balances. 127

129 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Financial instruments (cont d) (b) Financial risk management objectives and policies (cont'd) Credit risk (cont'd) At the balance sheet date, the Group and Company have provided an allowance of $2,529,718 (2007: $Nil) for impairment of the unsecured loan to joint venture entities and the Company has provided an allowance of $887,276 (2007: $Nil) for impairment of amount due from a subsidiary. Liquidity risk The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the Directors of the Group to finance the Group s operations and mitigate the effects of fluctuations in cash flows and minimise liquidity risk by ensuring the availability of funding through adequate amount of committed credit facilities from financial institutions. Less than 1 Between 1 Between 2 year and 2 years and 5 years Over 5 years $ $ $ $ Group At 31 December 2008 Trade and other payables 13,569,270 Derivative financial instruments 525,725 14,094,995 At 31 December 2007 Trade and other payables and provision 22,375,314 Derivative financial instruments 104,574 Bank borrowings 42,810,000 65,289,888 Company At 31 December 2008 Trade and other payables 9,276,203 Derivative financial instruments 525,725 Amount due to a subsidiary 28,966,318 38,768,246 At 31 December 2007 Trade and other payables and provision 16,574,729 Derivative financial instruments 102,628 Bank borrowings 20,900,000 37,577,

130 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Financial instruments (cont d) (b) Financial risk management objectives and policies (cont'd) Foreign currency risk The Group and the Company are exposed to foreign currency risk on transactions that are denominated in a currency other than the respective functional currencies of the Group s entities. The currencies giving rise to this risk are primarily Thai Baht ( THB ) and Indonesian Rupiah ( IDR ). The Group s and Company s exposures to foreign currency are as follows: Group and Company IDR THB IDR THB $ $ $ $ Amounts due from joint venture entities 42,927,685 Bank and cash balances 12,011 12,011 42,927,685 Sensitivity analysis on foreign currency risk A 10% strengthening of the Singapore dollar against the following currencies at the reporting date would increase (decrease) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Group and Company Equity Profit or (loss) $ $ 31 December 2008 Indonesian Rupiah (1,200) Thai Baht (4,293,000) A 10% weakening of the Singapore dollar against the above currencies would have had the equal but opposite effect on the profit or loss to the amounts shown above, on the basis that all other variables remain constant. Interest rate risk The Group s and the Company's exposure to market risk for changes in interest rate relate primarily to the bank facility at floating interest rates at 0.25% to 0.75% above prime or 1% above the US$/$ swap rate applicable for each interest period. Interest re-pricing period is between one to twelve months. 129

131 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Financial instruments (cont d) (b) Financial risk management objectives and policies (cont'd) Interest rate risk (cont d) Interest rate swaps, which are denominated in Singapore dollar, have been entered into to manage interest rate risk on its financial assets and liabilities. As at 31 December 2008, the Group has interest rate swap agreements with total notional amounts of $15 million (2007: $40 million). The Group classifies these interest rate swaps as cash flow hedges. The fair value of these swaps as at 31 December 2008 amounted to a liability of $525,725. The corresponding figure for 2007 was $104,574. Sensitivity analysis on interest rate risk For the interest rate swaps, a change in 100 basis points ("bp") in interest rate at the reporting date would increase (decrease) profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. Group Profit or (loss) 100 bp 100 bp increase decrease 31 December 2008 Interest rate swap 399,000 (399,000) 31 December 2007 Interest rate swap 402,000 (402,000) Capital management The Group's policy is to maintain an adequate capital base and healthy capital ratios in order to support its business, sustain future development and maximise shareholder value. The Group manages its capital structure through a mix of equity and debts. It monitors the economic conditions in which it operates, and where required, makes adjustments to its capital structure, through raising new debt, adjusting dividend payments to shareholders, returning capital to shareholders, or issuing new shares. The Group monitors capital using a gearing ratio. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and other payables and provision less bank and cash balances. Total capital is calculated as equity plus net debt. 130

132 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Financial instruments (cont d) (b) Financial risk management objectives and policies (cont'd) Capital management (cont'd) Group $ $ Bank borrowings 42,810,000 Trade and other payables and provision 13,983,711 22,741,240 Less: bank and cash balances (15,722,324) (10,934,223) Net debt (1,738,613) 54,617,017 Equity attributable to equity holders of the Group 213,732, ,670,266 Capital and net debt 211,993, ,287,283 Gearing ratio (1%) 22% The Group s gearing ratio was a healthy 22% for the year ended 31 December For the year ended 31 December 2008, the Group sold Apollo Centre for net proceeds of $205 million. With this injection of funds, the Group is able to repay its bank borrowings and reduce its trade and other payables and provision, thus reducing its gearing ratio. The Group will continue to monitor the economic conditions in which it operates and will make adjustments to its capital structure where necessary. (c) Fair value of financial assets and financial liabilities The carrying amounts of the financial assets and liabilities in the financial statements approximate their fair values except as disclosed in note 14 to the financial statements. 34. Segment information (a) Business segments The Group operates in two main business segments: (i) Hotel operations: operating hotels owned by the Group; and (ii) Property investment activities: property development and investment holdings. Segment assets consist primarily of property, plant and equipment, inventories, trade and other receivables, derivative financial instruments, cash and cash equivalents and held for sale investment property. Segment liabilities comprise operating liabilities and exclude tax payable and deferred tax liability. Capital expenditure comprises additions to property, plant and equipment. 131

133 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Segment information (cont d) (a) Business segments (cont d) Continuing Discontinued operations operation Hotel Property operations investment Total $ $ $ 2008 Revenue derived from outside the Group 97,811,764 2,025,150 99,836,914 Inter-segment 26,000 26,000 Eliminations 97,837,764 2,025,150 99,862,914 (26,000) Total 99,836,914 Segmental results 40,999, ,928 41,824,530 Exceptional item gain on sale of held for sale investment property 128,001, ,001,764 40,999, ,826, ,826,294 Interest expense (1,572,311) Interest income 2,983,450 Share of losses of joint venture entities, net of tax (2,299,284) (2,299,284) Profit before tax 168,938,149 Tax expense (11,503,537) Profit after tax 157,434,

134 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Segment information (cont d) (a) Business segments (cont d) Continuing Discontinued operations operation Hotel Property operations investment Total $ $ $ 2008 Other segment items Capital expenditure 9,893,210 6,800 9,900,010 Depreciation expenses 8,915,615 4,065 8,919,680 Segment assets 331,123, ,123,508 Elimination entries (101,694,802) Unallocated assets 14,016,048 Total assets 243,444,754 Segment liabilities 15,147,138 15,147,138 Unallocated liabilities 14,565,327 Total liabilities 29,712, Revenue derived from outside the Group 76,535,488 6,583,421 83,118,909 Inter-segment 78,000 78,000 76,613,488 6,583,421 83,196,909 Eliminations (78,000) Total 83,118,909 Segmental results 25,960,212 2,144,701 28,104,913 Exceptional item impairment loss of investment property written back 11,000,000 11,000,000 25,960,212 13,144,701 39,104,913 Interest expense (2,214,032) Interest income 47,428 Profit before tax 36,938,309 Tax expense (7,410,364) Profit after tax 29,527,

135 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Segment information (cont d) (a) Business segments (cont d) Continuing Discontinued operations operation Hotel Property operations investment Total $ $ $ 2007 Other segment items Capital expenditure 7,166,921 33,868 7,200,789 Depreciation expenses 9,421,546 2,319,158 11,740,704 Segment assets 286,920, , ,296,931 Elimination entries (104,802,664) Unallocated assets 14,016, ,510,315 Held for sale investment property 76,946,259 76,946,259 Total assets 273,456,574 Segment liabilities 63,665,694 1,990,120 65,655,814 Unallocated liabilities 11,130,494 Total liabilities 76,786,308 (b) Geographical segments The Group s two business segments operate mainly in Singapore, the home country of the companies in the Group, with the exception of its joint venture entities which operate in Thailand. The operations in Singapore are principally hotel operations and property investment activities. The operations in Thailand are hotel operations and results of these operations are equity-accounted into the Group s results for the year. 134

136 APPENDIX II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 NOTES TO THE FINANCIAL STATEMENTS (cont'd) For the financial year ended 31 December Reclassifications and comparative figures Certain reclassifications have been made to the prior year s financial statements to enhance comparability with the current year s financial statements as the Management considers the amounts due from subsidiaries to be current assets instead of non-current assets. The items were reclassified as follows: Previously reported As reclassified $ $ Non-current assets Subsidiaries 165,852,305 Investments in subsidiaries 107,639,980 Current assets Amounts due from subsidiaries 58,212, Subsequent event On 5 February 2009, the Company announced via SGXNET that its joint venture entity, Furama-Unico Silom Holdings Co., Ltd has completed the acquisition of Unico Grand Silom Hotel. 37. Authorisation of financial statements The financial statements of the Group and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December 2008 were authorised for issue in accordance with a resolution of the Directors dated 18 March

137 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY Company Registration No G First Quarter Financial Statement 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated Statement of Comprehensive Income S$'000 % 1Q2009 1Q2008 Change Continuing operations Revenue 20,933 23,716 (11.7) Cost of sales and services (5,808) (6,178) (6.0) Gross profit 15,125 17,538 (13.8) Finance income 1,120 3 NM Other income 2, NM Distribution costs (650) (727) (10.6) Administrative expenses (3,174) (2,345) 35.4 Finance costs - (675) (100.0) Other expenses (3,903) (4,081) (4.4) Share of losses of joint venture entities, net of tax (654) - NM Profit before tax 9,889 9, Tax expense (1,818) (2,060) (11.7) Profit from continuing operations, net of tax 8,071 7, Discontinued operation (asset was sold in April 2008) Profit from discontinued operation, net of tax - 1,104 (100.0) Profit for the period , ,798 (8.3) Other comprehensive income Exchange differences on translating foreign operations, net of tax (10) - NM Other comprehensive income for the period, net of tax (10) - NM Total comprehensive income for the period 8,061 8,798 (8.4) NM: Not meaningful The above is arrived at:- 1Q2009 1Q2008 S$ 000 S$ 000 After charging - Depreciation of property, plant and equipment 2,179 2,446 Interest expense - revolving credit facilities loss on interest rate swaps, net Loss on disposal of property, plant & equipment 5 - And crediting - Allowance for doubtful trade receivables no longer required, now written back 1 85 Interest income - bank deposits joint ventures gain on interest rate swaps, net 79 - Foreign exchange gain 1, Gain on disposal of property, plant & equipment - 41 The above includes both continuing and discontinued operations. 136

138 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Group Company Statements of Financial Position S$ 000 S$ NON-CURRENT ASSETS Property, plant and equipment 163, ,273 63,379 64,370 Investments in subsidiaries , ,640 Investments in joint venture entities Amounts due from joint venture entities 42,706 39,940 42,706 39,940 Available-for-sale financial assets 14,016 14,016 14,016 14, , , , ,966 CURRENT ASSETS Inventories Trade receivables 5,211 5,074 3,058 2,831 Other receivables 1, ,723 Amounts due from subsidiaries ,930 13,291 Amounts due from joint venture entities 4,012 2,987 4,012 2,987 Bank and cash balances 18,093 15,722 15,855 14,062 28,639 24,215 47,871 45,036 TOTAL ASSETS 248, , , ,002 EQUITY Share capital 216, , , ,519 Asset revaluation reserve 14,882 14,882 14,882 14,882 Foreign currency translation reserve Accumulated (losses)/ profits (9,639) (17,710) 28 (6,636) 221, , , ,765 NON-CURRENT LIABILITIES Deferred tax liability 4,538 4,526 2,682 2,683 Net investments in joint venture entities 1, ,818 5,164 2,682 2,683 CURRENT LIABILITIES Trade payables 2,751 3,355 1,648 2,231 Other payables 7,424 10,628 5,417 7,298 Derivative financial instruments Amounts due to a subsidiary ,966 28,966 Tax payable 10,499 10,038 5,044 4,533 21,121 24,547 41,522 43,554 TOTAL EQUITY AND LIABILITIES 248, , , ,002 1(b)(ii) Aggregate amount of group s borrowings and debt securities Amount repayable in one year or less, or on demand Secured S$ 000 As at Unsecured S$ 000 NIL NIL Secured S$ 000 As at Unsecured S$ 000 NIL NIL Amount repayable after one year Secured S$ 000 As at As at Unsecured Secured Unsecured S$ 000 S$ 000 S$ 000 NIL NIL NIL NIL Details of any collaterals These facilities are secured by:- (i) (ii) (iii) a legal mortgage over certain of the Group s properties; a fixed and floating charge over all other assets of the Company and one of its subsidiary companies; and an undertaking from a subsidiary company to provide the bank with a fixed and floating charge over all its assets in the event that the Company is in default of the terms of the said facilities. 137

139 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated Statement of Cash Flows S$ 000 1Q2009 1Q2008 CASH FLOWS FROM OPERATING ACTIVITIES Total profit 8,071 8,798 Adjustments for: Tax expense 1,818 2,232 Depreciation 2,179 2,446 Fair value changes on derivative financial instruments (not in a designated hedge accounting relationship) - loss on interest rate swap (79) 458 Finance expense Finance income (1,041) (3) Loss/ (gain) on disposal of property, plant & equipment 5 (41) Share of losses of joint ventures, net of tax Unrealised exchange loss (1,315) - Operating cash flow before working capital changes 10,292 14,108 Inventories Trade and other receivables (1,068) (1,974) Trade and other payables (3,808) (2,567) Cash generated from operations 5,456 9,580 Interest received Interest paid - (267) Income taxes paid (1,347) (1,465) Net cash from operating activities 4,514 7,851 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Investments in joint venture entities Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayments of bank borrowings Funds to joint venture entities Net cash used in financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (285) (1,128) 2 42 (21) - (304) (1,086) - (15,610) (1,839) - (1,839) (15,610) 2,371 (8,845) 15,722 10,934 18,093 2,089 For the purposes of the consolidated statement of cash flows, the consolidated cash and cash equivalents comprised the following: 1Q2009 1Q2008 S$'000 S$'000 Bank, cash balances and deposits 18,093 2,089 Note to the consolidated statement of cash flows A. Discontinued operation The impact of the discontinued operation on the cash flows of the Group is as follows: Operating cash inflows Investing cash outflows Total cash inflows 1Q2009 1Q2008 S$'000 S$' (7)

140 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Statements of Changes in Equity GROUP Balance at 1 January 2008 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2008 Balance at 1 January 2009 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2009 COMPANY Balance at 1 January 2008 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2008 Balance at 1 January 2009 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2009 Share capital Asset Revaluation Reserve Foreign Currency Translation Reserve Accumulated (Losses)/ Profits Total Equity S$'000 S$'000 S$'000 S$'000 S$' ,519 14,882 - (34,731) 196, ,798 8, ,519 14,882 - (25,933) 205, ,519 14, (17,710) 213, (10) 8,071 8, ,519 14, (9,639) 221, ,519 14,882 - (14,474) 216, ,314 5, ,519 14,882 - (9,160) 222, ,519 14,882 - (6,636) 224, ,664 6, ,519 14, ,429 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year There were no changes in share capital during the period under review. There are no unissued shares under option as at the end of the financial year. The company has no treasury shares as at the end of the financial year. 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year No. of issued shares, excluding treasury shares Group and Company No. of shares ('000) , ,

141 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on There were no sales, transfers, disposal, cancellation and/ or use of treasury shares during the financial period. 2 Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice For this quarter, these figures have neither been audited nor reviewed by the Company s auditors. However, the auditors will be performing certain procedures and inquiries, as agreed with the Audit Committee, on the half year results. These procedures are substantially less in scope than an audit or a review as prescribed by the Singapore Standards on Review Engagements. 3 Where the figures have been audited or reviewed, the auditor s report (including any qualifications or emphasis of matter) Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied The accounting policies and methods of computation used in the preparation of this announcement are consistent with those used in the audited financial statements for the year ended 31 December 2008, except for the adoption of revised Financial Reporting Standards (FRS) disclosed in paragraph 5 below. 5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change On 1 January 2009, the Group adopted the revised FRS 1, Presentation of Financial Statements (FRS 1(R)). FRS 1(R) requires all changes in equity arising from transactions with owners in their capacity as owners to be presented separately from components of comprehensive income. Components of comprehensive income are presented in the Consolidated Statement of Comprehensive Income. The "Balance Sheets" and "Cash Flow Statement" have been re-titled to "Statements of Financial Position" and "Consolidated Statement of Cash Flows" respectively. Comparatives for 2008 have been restated to conform to the requirements of the revised standard. There was no impact on prior period earnings per share and net asset value per share on adoption of the revised FRS 1(R). 6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends 1Q2009 1Q2008 cents cents Earnings per ordinary share for the period based on profit after tax from:- Continuing operations:- (i) Based on the weighted average number of ordinary shares on issue (ii) On a fully diluted basis Discontinued operation:- (i) Based on the weighted average number of ordinary shares on issue (ii) On a fully diluted basis Total:- (i) Based on the weighted average number of ordinary shares on issue (ii) On a fully diluted basis

142 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 7 Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year Net tangible asset backing per ordinary share Group Company $ $ $ $ A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following: (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on Revenue for the Group has decreased by 11.7% in 1Q2009 to $20.9m as compared to the same period last year. This is due to the slowdown in visitor arrivals for the first quarter of the year, and the reduction in average room rates for the Group. In line with the reduction in revenue and due to cost-cutting measures put in place, the Group correspondingly reduced its cost of sales and services by 6% from $6.2m in 1Q2008 to $5.8m in 1Q2009. Administrative expenses, however, rose 35.4%, to $3.2m, mainly due to the increase in management fee and expenses in joint venture entities. There were no finance costs incurred by the Group in 1Q2009 due to full repayment of its borrowings in Finance income rose to $1.1m in 1Q2009 as a result of $1.0m interest income from shareholders' loan extended to its Thailand joint venture entities, as well as the fair value gain of $79,000 on the upward revaluation of interest rate swaps (a hedging instrument) for the quarter. Other income generated by the the Group includes an unrealised exchange gain of $1.3m from the translation of its financial assets denominated in foreign currency, service and licence fee income receivable from its Thailand joint venture entities totaling $429,000. Share of losses of joint venture entities, net of tax stood at $654,000 for the quarter. Due to the increase in finance income and unrealised exchange gain as well as its efforts to reduce costs, the Group managed to post a higher profit before tax of $9.9m, a 4.9% year-on-year increase, despite the lower revenue. Tax expense was lower at $1.8m for the quarter and profit from continuing operations increased 4.9% from $7.7m in 1Q2008 to $8.1m in 1Q2009. With the completion of the sale of Apollo Center, there were no profits from discontinued operation for 1Q2009 ($1.1m in 1Q2008). Despite this, total profits for the period were only lower by 8.3% to $8.1m in 1Q2009 from $8.8m in 1Q2008. In the Statement of Financial Position, amount due from subsidiaries was higher due to a net loan to one of its subsidiaries amounting to $9.8m. Other payables were lower by $3.2m due to reversal of bonus accrual as well as payment for projects which were already capitalised in year

143 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results In the 20 February 2009 announcement of the Group s full year results for FY 2008, it was stated that barring any unforeseen circumstances, the Directors expect the Group to remain profitable in 1Q2009, but the operating performance is expected to be lower than that of 1Q2008. The announced first quarter results are in line with the prospect statement previously disclosed. 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months The Group expects to face continuing challenges in the months ahead. Singapore's economy continues to contract as a result of the ongoing global economic crisis. Key statistics released by the Singapore Tourism Board (STB) have shown declines in visitor arrivals, hotel room revenue, and occupancy rates for the first three months of the year. This decline is expected to continue for the rest of the year. The economic conditions in Thailand remain uncertain. As such, the Group does not expect its four joint venture entities in Thailand to contribute positively to its bottomline in the second quarter of With the recent outbreak of swine flu which started in Mexico, and its rapid spread across the world, the travel industry could be badly affected if the outbreak cannot be controlled quickly. In view of these circumstances, the Directors expect the Group's performance in 2Q2009 to be lower than that of 2Q Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? No (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? Yes Special Interim Dividend Name of Dividend Dividend Type Dividend Amount per share (in cents) Tax Rate Ordinary Special Interim 75 cents per ordinary share Tax exempt (One-tier) (c) Date payable Not applicable (d) Books closing date Not applicable 142

144 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 12 If no dividend has been declared/recommended, a statement to that effect The Directors do not recommend the payment of any dividend for the first quarter ended 31 March Interested Person Transactions Interested person transactions incurred in 1Q2009 are as follows: Name of Interested person Aggregate value of all interested person transactions during the financial period under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transaction less than $100,000) Furama Hotels International Management Pte Ltd Management fee, marketing fee and related services payable of S$625,000 Nil Furama Hotels & Resorts International Management (Thailand) Co., Ltd Management/ incentive fee payable of S$137,000 Nil CONFIRMATION BY DIRECTORS The Directors of the Company hereby confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the unaudited consolidated financial results for the first quarter ended 31 March 2009 to be false or misleading. il BY ORDER OF THE BOARD DOROTHY HO COMPANY SECRETARY 5 MAY

145 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY Company Registration No G Second Quarter Financial Statement 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated Statement of Comprehensive Income Second Quarter Half Year S$'000 % S$'000 % Change Change Continuing operations Revenue 19,278 24,405 (21.0) 40,211 48,121 (16.4) Cost of sales and services (5,788) (6,616) (12.5) (11,596) (12,794) (9.4) Gross profit 13,490 17,789 (24.2) 28,615 35,327 (19.0) Finance income 1, , Dividend income 2,148 3,249 (33.9) 2,148 3,249 (33.9) Other income NM 2, NM Distribution costs (643) (753) (14.6) (1,293) (1,480) (12.6) Administrative expenses (7,987) (4,359) 83.2 (11,161) (6,704) 66.5 Finance costs (147) (74) 98.6 (147) (749) (80.4) Other expenses (3,898) (4,315) (9.7) (7,801) (8,396) (7.1) Share of losses of joint venture entities, net of tax (1,127) - NM (1,781) - NM Profit before tax 3,535 12,283 (71.2) 13,424 22,037 (39.1) Tax expense (1,987) (2,431) (18.3) (3,805) (4,491) (15.3) Profit from continuing operations, net of tax 1,548 9,852 (84.3) 9,619 17,546 (45.2) Discontinued operation (asset was sold in April 2008) Profit from discontinued operation, net of tax - 125,835 (100.0) - 126,939 (100.0) Profit for the period 1, ,687 (98.9) 9, ,485 (93.3) Other comprehensive income Exchange differences on translating foreign operations, net of tax Other comprehensive income for the period, net of tax Total comprehensive income for the period 4 - NM (6) - NM 4 - NM (6) - NM 1, ,687 (98.9) 9, ,485 (93.3) NM: Not meaningful The above is arrived at:- After charging - Second Quarter Half Year S$ 000 S$ 000 S$ 000 S$ 000 Depreciation of property, plant and equipment 2,180 2,410 4,359 4,856 Interest expense - revolving credit facilities loss on interest rate swaps, net Allowance for doubtful debts 5,678-5,678 - Loss on disposal of property, plant & equipment Foreign exchange loss And crediting - Allowance for doubtful trade receivables no longer required, now written back Interest income - bank deposits joint ventures 957-1, gain on interest rate swaps, net Foreign exchange gain , Gain on disposal of - property, plant & equipment held for sale investment property - 128, ,002 The above includes both continuing and discontinued operations. 144

146 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Group Company Statements of Financial Position S$ 000 S$ NON-CURRENT ASSETS Property, plant and equipment 161, ,273 62,293 64,370 Investments in subsidiaries , ,640 Amounts due from joint venture entities 42,432 39,940 42,432 39,940 Available-for-sale financial assets 14,016 14,016 14,016 14, , , , ,966 CURRENT ASSETS Inventories Trade receivables 4,845 5,074 2,904 2,831 Other receivables ,723 Amounts due from subsidiaries ,097 13,291 Amounts due from joint venture entities - 2,987-2,987 Bank and cash balances 26,763 15,722 25,771 14,062 32,211 24,215 50,120 45,036 TOTAL ASSETS 250, , , ,002 EQUITY Share capital 216, , , ,519 Asset revaluation reserve 14,882 14,882 14,882 14,882 Foreign currency translation reserve Accumulated (losses)/ profits (8,091) (17,710) 1,122 (6,636) 223, , , ,765 NON-CURRENT LIABILITIES Deferred tax liability 4,634 4,526 2,777 2,683 Net investments in joint venture entities 2, ,059 5,164 2,777 2,683 CURRENT LIABILITIES Trade payables 3,040 3,355 1,943 2,231 Other payables py 7,676 10,628 5,844 7,298 Derivative financial instruments Amount due to a subsidiary ,966 28,966 Tax payable 8,875 10,038 4,116 4,533 19,923 24,547 41,201 43,554 TOTAL EQUITY AND LIABILITIES 250, , , ,002 1(b)(ii) Aggregate amount of group s borrowings and debt securities Amount repayable in one year or less, or on demand Secured S$ 000 As at NIL Unsecured S$ 000 NIL Secured S$ 000 As at Unsecured S$ 000 NIL NIL Amount repayable after one year Secured S$ 000 As at As at Unsecured Secured Unsecured S$ 000 S$ 000 S$ 000 NIL NIL NIL NIL Details of any collaterals The Group has facilities of $226 million and they are secured by:- (i) (ii) (iii) a legal mortgage over certain of the Group s properties; a fixed and floating charge over all other assets of the Company and one of its subsidiary companies; and an undertaking from a subsidiary company to provide the bank with a fixed and floating charge over all its assets in the event that the Company is in default of the terms of the said facilities. 145

147 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated Statement of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Total profit Adjustments for: Tax expense Depreciation Fair value changes on derivative financial instruments (not in a designated hedge accounting relationship) - gain on interest rate swap Finance expense Finance income Dividend income Loss/ (gain) on disposal of property, plant & equipment Gain on disposal of held for sale investment property Allowance for doubtful debts - joint venture entities Share of losses of joint venture entities, net of tax Unrealised exchange loss/ (gain) Operating cash flow before working capital changes Inventories Trade and other receivables Trade and other payables Cash generated from operations Interest received Interest paid Income taxes paid Net cash from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of held for sale investment property Investments in joint venture entities Dividends received Net cash from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayments of bank borrowings Funds to joint venture entities Dividends paid Net cash from/ (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Second Quarter Half Year S$ 000 S$ , ,687 9, ,485 1,987 4,271 3,805 6,503 2,180 2,410 4,359 4,856 (115) (508) (194) (50) (994) (309) (2,035) (312) (2,148) (3,249) (2,148) (3,249) - (48) 5 (89) - (128,002) - (128,002) 5,678-5,678-1,127-1, (1,289) - 9,436 10,326 19,728 24, (3) , (10) (1,806) (3,267) (1,796) 11,063 11,261 16,519 20, (147) (74) (147) (341) (3,514) (2,881) (4,861) (4,346) 7,439 8,615 11,953 16,466 (477) (1,465) (762) (2,593) , , ,148 3,249 2,148 3,249 1, ,796 1, ,710 - (27,200) - (42,810) (461) - (2,300) - - (124,984) - (124,984) (461) (152,184) (2,300) (167,794) 8,670 63,227 11,041 54,382 18,093 2,089 15,722 10,934 26,763 65,316 26,763 65,316 For the purposes of the consolidated statement of cash flows, the consolidated cash and cash equivalents comprised the following: Second Quarter Half Year S$'000 S$' Bank and cash balances 26,763 65,316 26,763 65,316 Note to the consolidated statement of cash flows A. Discontinued operation The impact of the discontinued operation on the cash flows of the Group is as follows: Operating cash outflows Investing cash inflows Total cash inflows Second Quarter Half Year S$'000 S$' (704) - (596) - 205, , , ,

148 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Statements of Changes in Equity GROUP Balance at 1 January 2008 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2008 Changes in equity for the period Dividends paid Total comprehensive income for the period Balance at 30 June 2008 Balance at 1 January 2009 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2009 Changes in equity for the period Total comprehensive income for the period Balance at 30 June 2009 COMPANY Balance at 1 January 2008 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2008 Changes in equity for the period Dividends paid Total comprehensive income for the period Balance at 30 June 2008 Balance at 1 January 2009 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2009 Changes in equity for the period Total comprehensive income for the period Balance at 30 June 2009 Share capital Asset Revaluation Reserve Foreign Currency Translation Reserve Accumulated (Losses)/ Profits Total Equity S$'000 S$'000 S$'000 S$'000 S$' ,519 14,882 - (34,731) 196, ,798 8, ,519 14,882 - (25,933) 205, (124,984) (124,984) , , ,519 14,882 - (15,230) 216, ,519 14, (17,710) 213, (10) 8,071 8, ,519 14, (9,639) 221, ,548 1, ,519 14, (8,091) 223, ,519 14,882 - (14,474) 216, ,314 5, ,519 14,882 - (9,160) 222, (124,984) (124,984) , , ,519 14,882 - (10,141) 221, ,519 14,882 - (6,636) 224, ,664 6, ,519 14, , ,094 1, ,519 14,882-1, ,

149 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year There were no changes in share capital during the period under review. There are no unissued shares under option as at the end of the financial period. The company has no treasury shares as at the end of the financial period. 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year No. of issued shares, excluding treasury shares Group and Company No. of shares ('000) , ,301 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on There were no sales, transfers, disposal, cancellation and/ or use of treasury shares during the financial period. 2 Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice These figures have neither been audited nor reviewed by the Company s auditors. However, the auditors have performed certain procedures and inquiries, as agreed with the Audit Committee, on the figures. These procedures are substantially less in scope than an audit or a review as prescribed by the Singapore Standards on Review Engagements. 3 Where the figures have been audited or reviewed, the auditor s report (including any qualifications or emphasis of matter) Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied The accounting policies and methods of computation used in the preparation of this announcement are consistent with those used in the audited financial statements for the year ended 31 December 2008, except for the adoption of revised Financial Reporting Standards (FRS) disclosed in paragraph 5 below. 5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change On 1 January 2009, the Group adopted the revised FRS 1, Presentation of Financial Statements (FRS 1(R)). FRS 1(R) requires all changes in equity arising from transactions with owners in their capacity as owners to be presented separately from components of comprehensive income. Components of comprehensive income are presented in the Consolidated Statement of Comprehensive Income. The "Balance Sheets" and "Cash Flow Statement" have been re-titled to "Statements of Financial Position" and "Consolidated Statement of Cash Flows" respectively. Comparatives for 2008 have been restated to conform to the requirements of the revised standard. There was no impact on prior period earnings per share and net asset value per share on adoption of the revised FRS 1(R). 148

150 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends Earnings per ordinary share for the period based on profit after tax from:- Second Quarter Half Year cents cents cents cents Continuing operations:- (i) Based on the weighted average number of ordinary shares on issue (ii) On a fully diluted basis Discontinued operation:- (i) Based on the weighted average number of ordinary shares on issue (ii) On a fully diluted basis Total:- (i) Based on the weighted average number of ordinary shares on issue (ii) On a fully diluted basis Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year Net tangible asset backing per ordinary share Group Company $ $ $ $ A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following: () (a) any significant ifi factors thatt affected the turnover, costs, and earnings of the group for the current financiali period idreported td on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on The Group's performance for the second quarter of 2009 was affected by the decrease in tourist arrivals as a result of the continued global economic downturn and the A(H1N1) flu outbreak. This translated into lower occupancy and average room rates, as the Group reported a revenue of $19.3m in 2Q2009, a 21.0% decline from $24.4m in 2Q2008. Revenue for the half year to date stood at $40.2m, as compared to $48.1m in the same period last year. Due to the cost-cutting measures put in place, the Group managed to reduce its cost of sales and services by 12.5% from $6.6m in 2Q2008 to $5.8m in 2Q2009. Finance income rose 50.3% to $1.1m in 2Q2009. This included $1.0m in interest income from shareholders' loans extended to its Thailand joint venture entities. Finance costs were higher by 98.6% for the quarter, due to a realised loss on interest rate swaps amounting to $147,000. No other finance costs were incurred as the Group has fully repaid its borrowings in The Group also received a dividend income of $2.1m from its equity investments in 2Q2009. This represents a 33.9% decrease from that received in 2Q2008. Other income included the service and licence fee income receivable from its Thailand joint venture entities totaling $435,000 for 2Q2009. For the second quarter of the year, the Group recognised a share of losses of its joint venture entities amounting to $1.1m. In view of the continued losses incurred by the joint venture entities for the year to date, the Group does not expect them to make any repayment in Therefore, the Group has provided $5.7m in allowance for doubtful debts from joint venture entities in 2Q2009. As a result of this allowance and the increase in management fee in 2009, the Group's administrative expenses increased 83.2% from $4.4m in 2Q2008 to $8.0m in 2Q2009. Despite efforts to control expenses, the lower revenue coupled with the allowance for doubtful debts and the higher share of losses of joint venture entities placed pressure on the Group's bottomline, as it reported a lower profit before tax of $3.5m in this quarter, a 71.2% decrease from $12.3m generated in 2Q2008. In line with the lower profits generated, tax expense was reduced to $2.0m for the quarter ($2.4m in 2Q2008). Profit from continuing operations for the quarter were $1.5m in 2Q2009, representing a drop of 84.3% from a year ago. For the half year to 30 June 2009, profit from continuing operations declined 45.2% to $9.6m, as compared to $17.5m for the first half of With the completion of the sale of Apollo Centre, there were no profits from discontinued operation for 2Q2009 (2Q2008: $125.8m). Total profit for the period were therefore lower by 98.9% from $135.7m in 2Q2008 to $1.6m in 2Q

151 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY In the Statement of Financial Position, amounts due from subsidiaries were higher mainly due to a net loan to one of its subsidiaries amounting to $7.3m. Current portion of amounts due from joint venture entities decreased to zero as a result of the allowance for doubtful debts provided during the quarter. At the Group level, bank and cash balances increase due to the net cash from operating activities of $12.0m for the year to date. Net investments in joint venture entities also increased after the Group recognised a $1.8m in share of losses of joint venture entities for the half year to 30 June Other payables were lower by $3.0m due to the write-back of excess bonus provision as well as payment for projects which were already capitalised in year Tax payable was also lower by $1.2m as the Group's payment for income tax for YA2009 was higher than its current year tax provision. In the Consolidated Statement of Cash Flows, net cash from operating activities was lower in the first half of 2009 mainly due to the lower profits generated by the Group. Net cash from investing activities were higher in first half of 2008, as the Group received a one-time proceed of $205.0m from the disposal of Apollo Centre. Dividends received in 2Q2009 were also lower than that received in the same period last year. As no dividends were paid and the Group held no bank borrowings for the first half of 2009, net cash used in financing activities also dropped from $167.8m in first half of 2008, to $2.3m in the same period this year. 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results In the 5 May 2009 announcement of the Group s first quarter results for FY 2009, it was stated that the Directors expect the Group's performance in 2Q2009 to be lower than that of 2Q2008. The announced second quarter results are in line with the prospect statement previously disclosed. 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months Until the second quarter of 2009, the tourism industry has yet to recover from the economic downturn. The A(H1N1) flu outbreak in 2009 further compounded the impact of the economic downturn. Singapore continues to report lower visitor arrivals, hotel room revenue and average occupancy rates in the second quarter of Visitor arrivals for year 2009 are expected to decline to between 9 and 9.5 million, a year-on-year decline of 6% to 11%. Total tourism receipts are also expected to fall between 15% to 18% to $12 billion to $12.5 billion. Thailand's tourism industry is also adversely affected, with visitor arrivals down 19% for the first 4 months of 2009 compared to the same period last year. Visitor arrivals for year 2009 are also expected to be lower than the million visitors in In view of the uncertain economic conditions in Thailand, the Group does not expect its four joint venture entities in Thailand to contribute positively to its bottomline in the third quarter of In view of the above, the Directors expect the Group's performance in 3Q2009 to be lower than that of 3Q Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? No (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? Yes Dividend Dividend Type Dividend Amount per share (in cents) Dividend Type Dividend Amount per share (in cents) Special Interim 6 cents per ordinary share Interim 4 cents per ordinary share (c) Date payable Not applicable (d) Books closing date Not applicable 12 If no dividend has been declared/recommended, a statement to that effect The Directors do not recommend the payment of any dividend for the second quarter ended 30 June

152 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 13 Interested Person Transactions Interested person transactions incurred in 2Q2009 are as follows: Name of interested person Aggregate value of all interested person transactions during the financial period under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transaction less than $100,000) Furama Hotels International Management Pte Ltd Management fee, marketing fee and related services payable of S$476,000 Nil Furama Hotels & Resorts International Management (Thailand) Co., Ltd Management/ incentive fee payable of S$50,000 Nil CONFIRMATION BY DIRECTORS The Directors of the Company hereby confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the unaudited consolidated financial results for the second quarter ended 30 June 2009 to be false or misleading. BY ORDER OF THE BOARD DOROTHY HO COMPANY SECRETARY 5 AUGUST

153 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY Company Registration No G Third Quarter Financial Statement 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated Statement of Comprehensive Income Third Quarter Nine Months S$'000 % S$'000 % Change Change Continuing operations Revenue 20,485 23,877 (14.2) 60,696 71,998 (15.7) Cost of sales and services (5,950) (6,788) (12.3) (17,546) (19,582) (10.4) Gross profit 14,535 17,089 (14.9) 43,150 52,416 (17.7) Finance income ,223 1, Dividend income ,148 3,249 (33.9) Other income 109 1,486 (92.7) 2,724 1, Distribution costs (774) (745) 3.9 (2,067) (2,225) (7.1) Administrative expenses (4,349) (2,941) 47.9 (15,510) (9,645) 60.8 Finance costs (139) (380) (63.4) (286) (1,129) (74.7) Other expenses (3,839) (3,826) 0.3 (11,640) (12,222) (4.8) Share of losses of joint venture entities, net of tax (19,302) (842) NM (21,083) (842) NM (Loss)/ profit before tax (12,765) 10,804 NM ,841 (98.0) Tax expense (1,461) (2,242) (34.8) (5,266) (6,733) (21.8) (Loss)/ profit from continuing operations, net of tax (14,226) 8,562 NM (4,607) 26,108 NM Discontinued operation (asset was sold in April 2008) (Loss)/ profit from discontinued operation, net of tax - (45) (100.0) - 126,894 (100.0) (Loss)/ profit for the period (14,226) 8,517 NM (4,607) 153,002 NM Other comprehensive income Exchange differences on translating foreign operations, net of tax Other comprehensive income for the period, net of tax Total comprehensive (loss)/ income for the period NM NM NM NM (14,038) 8,541 NM (4,425) 153,026 NM NM: Not meaningful 152

154 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY Notes to Consolidated Statement of Comprehensive Income The above is arrived at:- After charging - Third Quarter Nine Months S$ 000 S$ 000 S$ 000 S$ Depreciation of property, plant and equipment 2,186 1,807 6,545 6,663 Interest expense - revolving credit facilities loss on interest rate swaps, net Allowance for doubtful debts - joint venture entities 1,725-7, third parties Loss on disposal of property, plant & equipment Underprovision of income tax for prior years Foreign exchange loss And crediting - Allowance for doubtful trade receivables no longer required, now written back Interest income - bank deposits joint venture entities , Foreign exchange gain ,011 Gain on disposal of - property, plant & equipment held for sale investment property ,002 The above includes both continuing and discontinued operations. 153

155 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Group Company Statements of Financial Position S$ 000 S$ Non-current assets Property, plant and equipment 159, ,273 61,089 64,370 Investments in subsidiaries , ,640 Amounts due from joint venture entities 41,561 39,940 41,561 39,940 Available-for-sale financial assets 14,016 14,016 14,016 14, , , , ,966 Current assets Inventories Trade receivables 5,298 5,074 3,019 2,831 Other receivables ,723 Amounts due from subsidiaries ,619 13,291 Amounts due from joint venture entities - 2,987-2,987 Bank and cash balances 32,609 15,722 31,454 14,062 38,723 24,215 53,676 45,036 Total assets 253, , , ,002 Equity Share capital 216, , , ,519 Asset revaluation reserve 14,882 14,882 14,882 14,882 Foreign currency translation reserve Accumulated (losses)/ profits (22,317) (17,710) 4,779 (6,636) 209, , , ,765 Non-current liabilities Deferred tax liability 4,209 4,526 2,585 2,683 Net investments in joint venture entities 21, ,748 5,164 2,585 2,683 Current liabilities Trade payables 3,228 3,355 1,965 2,231 Other payables 9,590 10,628 7,109 7,298 Derivative financialinstruments instruments Amount due to a subsidiary ,878 28,966 Tax payable 5,610 10,038 2,794 4,533 18,899 24,547 39,217 43,554 Total equity and liabilities 253, , , ,

156 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(b)(ii) Aggregate amount of group s borrowings and debt securities Amount repayable in one year or less, or on demand Secured S$ 000 As at Unsecured S$ 000 NIL NIL Secured S$ 000 As at Unsecured S$ 000 NIL NIL Amount repayable after one year Secured S$ 000 As at As at Unsecured Secured Unsecured S$ 000 S$ 000 S$ 000 NIL NIL NIL NIL Details of any collaterals The Group has facilities of $226 million and they are secured by:- (i) (ii) (iii) a legal mortgage over certain of the Group s properties; a fixed and floating charge over all other assets of the Company and one of its subsidiary companies; and an undertaking from a subsidiary company to provide the bank with a fixed and floating charge over all its assets in the event that the Company is in default of the terms of the said facilities. 155

157 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated Statement of Cash Flows Cash flows from operating activities Total (loss)/ profit Adjustments for: Tax expense Depreciation Fair value changes on derivative financial instruments (not in a designated hedge accounting relationship) - loss/ (gain) on interest rate swap Finance expense Finance income Dividend income Loss/ (gain) on disposal of property, plant & equipment Gain on disposal of held for sale investment property Allowance for doubtful debts Share of losses of joint venture entities, net of tax Unrealised exchange loss/ (gain) Operating cash flow before working capital changes Inventories Trade and other receivables Trade and other payables Cash generated from operations Interest received Interest paid Income taxes paid Net cash from operating activities Cashflows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of held for sale investment property Investments in joint venture entities Dividends received Net cash (used in)/ from investing activities Cash flows from financing activities Repayments of bank borrowings Funds to joint venture entities Dividends paid Net cash used in financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Third Quarter Nine Months S$ 000 S$ (14,226) 8,517 (4,607) 153,002 1,461 2,242 5,266 8,745 2,186 1,807 6,545 6, (55) (994) (963) (3,029) (1,275) - - (2,148) (3,249) (44) (128,002) 1, ,403-19, , (787) (754) (787) 10,128 12,103 29,856 36,516 (14) (652) 738 (662) (1,048) 2,102 (6,488) (1,165) (8,284) 11,564 6,353 28,083 27, (147) (341) (5,150) (2,228) (10,011) (6,574) 6,448 4,194 18,401 20,660 (174) (3,768) (936) (6,361) ,000 - (1,620) - (1,620) - - 2,148 3,249 (172) (5,387) 1, , (42,810) (430) (42,436) (2,730) (42,436) - (15,430) - (140,414) (430) (57,866) (2,730) (225,660) 5,846 (59,059) 16,887 (4,677) 26,763 65,316 15,722 10,934 32,609 6,257 32,609 6,257 For the purposes of the consolidated statement of cash flows, the consolidated cash and cash equivalents comprised the following: Third Quarter Nine Months S$'000 S$' Bank and cash balances 32,609 6,257 32,609 6,

158 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY Note to the consolidated statement of cash flows A. Discontinued operation The impact of the discontinued operation on the cash flows of the Group is as follows: Operating cash inflows/ (outflows) Investing cash inflows Total cash inflows Third Quarter Nine Months S$'000 S$' (551) , ,442 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Statements of Changes in Equity GROUP Balance at 1 January 2008 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2008 Changes in equity for the period Dividends paid Total comprehensive income for the period Balance at 30 June 2008 Changes in equity for the period Dividends paid Total comprehensive income for the period Balance at 30 September 2008 Balance at 1 January 2009 Changes in equity for the period Total comprehensive (loss)/ income for the period Balance at 31 March 2009 Changes in equity for the period Total comprehensive income for the period Balance at 30 June 2009 Changes in equity for the period Total comprehensive income/ (loss) for the period Balance at 30 September 2009 Share Capital Asset Revaluation Reserve Foreign Currency Translation Reserve Accumulated (Losses)/ Profits Total Equity S$'000 S$'000 S$'000 S$'000 S$' ,519 14,882 - (34,731) 196, ,798 8, ,519 14,882 - (25,933) 205, (124,984) (124,984) , , ,519 14,882 - (15,230) 216, (15,430) (15,430) ,517 8, ,519 14, (22,143) 209, ,519 14, (17,710) 213, (10) 8,071 8, ,519 14, (9,639) 221, ,548 1, ,519 14, (8,091) 223, (14,226) (14,038) 216,519 14, (22,317) 209,

159 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY Statements of Changes in Equity COMPANY Balance at 1 January 2008 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2008 Changes in equity for the period Dividends paid Total comprehensive income for the period Balance at 30 June 2008 Changes in equity for the period Dividends paid Total comprehensive income for the period Balance at 30 September 2008 Balance at 1 January 2009 Changes in equity for the period Total comprehensive income for the period Balance at 31 March 2009 Changes in equity for the period Total comprehensive income for the period Balance at 30 June 2009 Changes in equity for the period Total comprehensive income for the period Balance at 30 September 2009 Share Capital Asset Revaluation Reserve Foreign Currency Translation Reserve Accumulated (Losses)/ Profits Total Equity S$'000 S$'000 S$'000 S$'000 S$' ,519 14,882 - (14,474) 216, ,314 5, ,519 14,882 - (9,160) 222, (124,984) (124,984) , , ,519 14,882 - (10,141) 221, (15,430) (15,430) ,971 6, ,519 14,882 - (18,600) 212, ,519 14,882 - (6,636) 224, ,664 6, ,519 14, , ,094 1, ,519 14,882-1, , ,657 3, ,519 14,882-4, ,

160 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year There were no changes in share capital during the period under review. There are no unissued shares under option as at the end of the financial period. The company has no treasury shares as at the end of the financial period. 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year No. of issued shares, excluding treasury shares Group and Company No. of shares ('000) , ,301 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on There were no sales, transfers, disposal, cancellation and/ or use of treasury shares during the financial period. 2 Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice The figures have neither been audited nor reviewed by the Company s auditors. 3 Where the figures have been audited or reviewed, the auditor s report (including any qualifications or emphasis of matter) Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied The accounting policies and methods of computation used in the preparation of this announcement are consistent with those used in the audited financial statements for the year ended 31 December 2008, except for the adoption of revised Financial Reporting Standards (FRS) disclosed in paragraph 5 below. 159

161 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 5 If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change On 1 January 2009, the Group adopted the revised FRS 1, Presentation of Financial Statements (FRS 1(R)). FRS 1(R) requires all changes in equity arising from transactions with owners in their capacity as owners to be presented separately from components of comprehensive income. Components of comprehensive income are presented in the Consolidated Statement of Comprehensive Income. The "Balance Sheets" and "Cash Flow Statement" have been re-titled to "Statements of Financial Position" and "Consolidated Statement of Cash Flows" respectively. Comparatives for 2008 have been restated to conform to the requirements of the revised standard. There was no impact on prior period earnings per share and net asset value per share on adoption of the revised FRS 1(R). 6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends Discontinued operation:- (i) Based on the weighted average number of ordinary shares on issue - (0.03) (ii) On a fully diluted basis - (0.03) Third Quarter Nine Months cents cents cents cents (Losses)/ earnings per ordinary share for the period based on (loss)/ profit after tax from:- Continuing operations:- (i) Based on the weighted average number of ordinary shares on issue (9.22) 5.55 (2.99) (ii) On a fully diluted basis (9.22) 5.55 (2.99) Total:- (i) Based on the weighted average number of ordinary shares on issue (9.22) 5.52 (2.99) (ii) On a fully diluted basis (9.22) 5.52 (2.99) Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year Net tangible asset backing per ordinary share Group Company $ $ $ $

162 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 8 A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following: (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on The Group reported a lower revenue of $20.5m for 3Q2009, a 14.2% decrease from $23.9m generated in 3Q2008. Revenue for the nine months of 2009 stood at $60.7m compared to $72.0m a year ago. The decline in revenue was primarily due to the decrease in tourist arrivals into Singapore triggered by the global economic downturn, which in turn put pressure on the average rates charged by the Group. Due to the cost-cutting measures put in place, the Group managed to reduce its cost of sales and services by 12.3% from $6.8m in 3Q2008 to $6.0m in 3Q2009. Finance income rose 3.2% to $1.0m in 3Q2009. Interest income from shareholders' loans extended to the Group's Thailand joint venture entities stood at $0.96m for the quarter, an increase of 7.3% over the same period last year. On the other hand, finance costs decreased 63.4% to $139,000 for the quarter contributed by the lower net loss on interest rate swaps of $139,000 in 3Q2009 compared to $380,000 in 3Q2008. No other finance costs were incurred as the Group has fully repaid its borrowings in the second quarter of Other income decreased 92.7% from $1.5m in 3Q2008 to $109,000 in 3Q2009. Other income, which included service and licence fee income receivable from the Group's Thailand joint venture entities totaling $436,000 for 3Q2009, was reduced by the foreign exchange loss of $519,000 recognised in the current quarter, compared to the foreign exchange gain of $861,000 recognised in the same quarter last year. For the third quarter of the year, the Group recognised a share of losses of its joint venture entities amounting to $19.3m. Included in this increased share of losses was the Group's share of impairment losses of the hotel properties of the joint venture entities amounting to $18.3m. The Group has appointed an independent firm of professional valuers to carry out the valuation of its Thailand hotel properties as at 30 September Furthermore, in view of the continued losses incurred by the joint venture entities for the year to date, the Group does not expect them to make any repayment in Therefore, the Group has provided an additional $1.7m in allowance for doubtful debts from joint venture entities in 3Q2009. As a result of this allowance and the increase in management fee in 2009, the Group's administrative expenses increased 47.9% from $2.9m in 3Q2008 to $4.3m in 3Q2009. Total allowance for doubtful debts from joint venture entities stood at $7.4m for the nine months of The lower revenue, higher allowance for doubtful debts and higher share of losses of joint venture entities have contributed to the loss before tax generated by the Group for the third quarter of Loss before tax for 3Q2009 was $12.8m, as compared to a profit before tax of $10.8m generated in 3Q2008. Tax expense was thus lower at $1.5m (3Q2008: $2.2m). This is despite the $616,000 in prior year tax paid for Apollo Center Pte Ltd in respect of YA 2003 in accordance to the additional Notice of Assessment raised by the Comptroller of Income Tax on 25 September Loss from continuing operations for the quarter stood at $14.2m (3Q2008: profit of $8.6m). For the nine months to 30 September, loss from continuing operations in 2009 was $4.6m while the Group generated a profit from continuing operations of $26.1m in With the completion of the sale of Apollo Centre, there were no profits from discontinued operation for 3Q2009 (3Q2008: loss of $45,000). Total loss for the period was therefore $14.2m in 3Q2009 versus a total profit for the period of $8.5m in 3Q2008. In the announcement dated 6 November 2008, the Group has written back the excess provision for development charge of $1.6m to net profit and loss in 3Q2008. However, subsequent to the finalisation of the audit for FY 2008, it was found that the excess provision should be written back against the cost of property, plant and equipment. Depreciation on the property, plant and equipment and taxation should also be adjusted accordingly. The 3Q2008 figures disclosed in this announcement have been amended to incorporate these adjustments. In the Statement of Financial Position, amounts due from subsidiaries were higher mainly due to net funds to its subsidiaries totaling $5.3m. Current portion of amounts due from joint venture entities decreased to zero as a result of the allowance for doubtful debts provided during the quarter. At the Group level, bank and cash balances increase due to the net cash from operating activities of $18.4m for the year to date. Net investments in joint venture entities increased after the Group recognised $21.5m in share of losses of joint venture entities for the nine months to 30 September Tax payable for the quarter was lower by $4.4m as the Group's payment for income tax for YA2009 was higher than its current year tax provision. In the Consolidated Statement of Cash Flows, net cash from operating activities was lower in the first nine months of 2009 mainly due to the lower cash profits generated by the Group. Net cash from investing activities were also lower. As at 30 September 2008, the Group has received higher dividends of $3.2m (9M2009: $2.1m) and a one-time proceed of $205.0m from the disposal of Apollo Centre. Net cash used in financing activities also decreased for the year to date. As at 30 September 2008, the Group has repaid all its borrowings, invested $42.4m in its Thailand joint venture entities, and paid dividends of $140.4m. No such expenses were incurred in the same period this year, except for $2.7m in net funds to its joint venture entities

163 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results In the 5 August 2009 announcement of the Group s second quarter results for FY 2009, it was stated that the Directors expect the Group's performance in 3Q2009 to be lower than that of 3Q2008. The announced third quarter operating results are in line with the prospect statement previously disclosed. The overall results, however, were severely impacted due to the Group recognition of its share of impairment losses from the hotel properties of the joint venture entities in Thailand. The profit guidance announcement was released on 5 November A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months The average room rates for the Group's hotels in Singapore were lower in the third quarter of 2009 as compared to the same period last year. The rates, and therefore revenue from the Group's hotels in Singapore, are expected to face continued pressure for the remaining three months of The operating conditions in Thailand remain uncertain. As such, the Group expects the recovery to be slow and the performance of its four joint venture entities will only improve gradually over time. Together with the lower profits generated by the Group for the year to date, as well as impairment losses of its Thailand joint venture entities recognised in 3Q2009, the Group expects its full year results to be lower than that of Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? No (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? No (c) Date payable Not applicable (d) Books closing date Not applicable 12 If no dividend has been declared/recommended, a statement to that effect The Directors do not recommend the payment of any dividend for the third quarter ended 30 September

164 APPENDIX III UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS ENDED 31 MARCH 2009, 30 JUNE 2009 AND 30 SEPTEMBER 2009 RESPECTIVELY 13 Interested Person Transactions Interested person transactions incurred in 3Q2009 are as follows: Name of interested person Aggregate value of all interested person Aggregate value of all interested person transactions during the financial period transactions conducted under under review (excluding transactions shareholders mandate pursuant to Rule less than $100,000 and transactions 920 (excluding transaction less than conducted under shareholders $100,000) mandate pursuant to Rule 920) Furama Hotels International Management Pte Ltd Management fee, marketing fee and related services payable of S$575,000 Nil Furama Hotels & Resorts International Management (Thailand) Co., Ltd Management/ incentive fee payable of S$70,000 Nil CONFIRMATION BY DIRECTORS The Directors of the Company hereby confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the unaudited consolidated financial results for the third quarter ended 30 September 2009 to be false or misleading. BY ORDER OF THE BOARD DOROTHY HO COMPANY SECRETARY 9 NOVEMBER

165 APPENDIX IV STATEMENT OF PROSPECTS In its announcement dated 9 November 2009, of the unaudited financial results for the nine month period ended 30 September 2009, the Company stated that: Together with the lower profits generated by the Group for the year to date, as well as impairment losses of its Thailand joint venture entities recognised in 3Q2009, the Group expects its full year results to be lower than that of (Statement of Prospects) The Statement of Prospects, for which the Directors are solely responsible, was arrived at on bases consistent with the accounting policies normally adopted by the Company and has been made on the following assumptions: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) There will be no material change in the existing political, regulatory, or legal conditions affecting the activities of the Group, the industry and the countries in which the Group operates. There will be no material change in the principal activities, management and organization structure of the Group. There will be no major change to existing and anticipated reservations from customers. There will be lower operational profits due to reduction in room rates and other product prices as a result of lower demand and challenging operating environment. There will be no material change in the relationships the Group has with major suppliers, customers and financial institutions which may affect the Group s financial performance. There will be no material effect on the Group arising from any changes in the economic and financial positions of the Group, its suppliers and its customers. There will be no material disruption arising from any delays from any suppliers. There will be no material adverse change in the costs of suppliers, labour costs and other costs from those currently prevailing. There will be no material disruption arising from industrial disputes or labour strikes by the Group s employees or workers employed by the Group s sub-contractors or the supply of labour, or any other causes that may affect the operations of the Group. There will be no material change to relevant foreign currency exchange rates which may adversely affect the Group s financial performance. There will be no material change in the accounting policies of the Group. There will be no material impairment to the carrying values of assets of the Group including assets held for investment, receivables, inventories and property, plant & equipment. There will be no material change to the bases or rates of taxation, provident fund contributions and interest rates from those prevailing. There will be no material change in the key management personnel who may impact the Group s business, operations and future viability. There will be no material change to the existing employment benefits and incentive scheme of the Group. There will be no exceptional circumstances that requires material provision to be made by the Group in respect of any contingent liability, litigation, or arbitration threatened or otherwise, abnormal bad debts or unexpected termination of contracts. 164

166 APPENDIX IV STATEMENT OF PROSPECTS (q) (r) (s) (t) There will be no material acquisitions or disposals of subsidiaries by Group. There will be no material change to the budgeted capital expenditure of the Group. There will be no material change in inflation rates. There will be no exceptional gain on the disposal of assets such as the sale of Apollo Centre in FY

167 APPENDIX V LETTER FROM PRIMEPARTNERS IN RELATION TO THE STATEMENT OF PROSPECTS PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. 1 Raffles Place #30-03 OUB Centre Singapore January 2010 The Board of Directors Furama Ltd. 405 Havelock Road Singapore Dear Sirs VOLUNTARY UNCONDITIONAL CASH OFFER BY DBS BANK LTD. FOR AND ON BEHALF OF SAMTA HOTELS PTE. LTD. TO ACQUIRE ALL THE ISSUED ORDINARY SHARES IN THE CAPITAL OF FURAMA LTD. (THE OFFER ) Unless otherwise defined or the context otherwise requires, all terms defined in the Circular dated 13 January 2010 shall have the same meaning herein. This letter has been prepared for inclusion in the circular dated 13 January 2010 issued by Furama Ltd. (the Company ) to its shareholders in relation to the Offer (the Circular ). The Circular contains a Statement of Prospects by the Company which is reproduced in Appendix IV of the Circular. We have reviewed and held discussions with the Directors and the management of the Company in the Statement of Prospects as well as the underlying bases and assumptions for the Statement of Prospects prepared by the Company. We have also considered the letter by Baker Tilly TFWLCL dated 8 January 2010 and addressed to the Board of Directors (a copy which is reproduced in Appendix VI of the Circular) relating to their examination of the Statement of Prospects and the accounting policies, bases and assumptions upon which the Statement of Prospects was prepared. Based on the above, we are of the opinion that the Statement of Prospects (for which the Directors are solely responsible) has been made by the Directors after due and careful enquiry. For the purpose of rendering our opinion in this letter, we have relied upon and assumed the accuracy and completeness of all financial and other information provided to, or discussed with us. Save as provided in this letter, we do not express any other opinion on the Statement of Prospects. This letter is provided to the Directors solely for the purpose of complying with Rule 25 of the Singapore Code on Take-overs and Mergers and not for any other purpose. We do not accept any responsibility to any person, other than the Directors, in respect of, arising out of, or in connection with this letter. Yours faithfully For and on behalf of PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. Mark Liew Managing Director, Corporate Finance Mah How Soon Director, Corporate Finance 166

168 APPENDIX VI AUDITORS' REPORT ON THE STATEMENT OF PROSPECTS 167

169 APPENDIX VII VALUATION REPORTS 168

170 APPENDIX VII VALUATION REPORTS 169

171 APPENDIX VII VALUATION REPORTS 170

172 APPENDIX VII VALUATION REPORTS 171

173 APPENDIX VII VALUATION REPORTS 172

174 APPENDIX VII VALUATION REPORTS 173

175 APPENDIX VII VALUATION REPORTS 174