IMPORTANT NOTICE IMPORTANT: You must read the following disclaimer before continuing reading this document. The following disclaimer applies to the attached Information Memorandum. You are advised to read this disclaimer carefully before accessing, reading or making any other use of the attached Information Memorandum. In accessing the attached Information Memorandum, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result of such access. Confirmation of your Representation: In order to be eligible to view this Information Memorandum or make an investment decision with respect to the securities, investors must not be a U.S. person (within the meaning of Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”)). This Information Memorandum is being sent on the basis that you have confirmed with The Hongkong and Shanghai Banking Corporation Limited that, and by accepting the e-mail and accessing this Information Memorandum, you shall be deemed to have represented to us that (1) you are not resident in the United States nor a U.S. Person, as defined in Regulation S under the Securities Act nor are you acting on behalf of a U.S. Person, the electronic mail address that you gave us and to which this email has been delivered is not located in the U.S. and, to the extent you purchase the securities described in the attached Information Memorandum, you will be doing so pursuant to Regulation S under the Securities Act, and (2) that you consent to delivery of the attached Information Memorandum and any amendments or supplements thereto by electronic transmission. The attached document has been made available to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of The Hongkong and Shanghai Banking Corporation Limited nor any person who controls any of them nor any of their respective directors, officers, employees, representatives or affiliates accepts any liability or responsibility whatsoever in respect of any discrepancies between the document distributed to you in electronic format and the hard copy version. Restrictions: The attached document is being furnished in connection with an offering exempt from registration under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities described therein. You are reminded that the information in the attached document is not complete and may be changed. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR ANY OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. Except with respect to eligible investors in jurisdictions where such offer is permitted by law, nothing in this electronic transmission constitutes an offer or an invitation or solicitation by or on behalf of the Issuer or The Hongkong and Shanghai Banking Corporation Limited, to subscribe for or purchase any of the securities described therein, and access has been limited so that it shall not constitute in the United States or elsewhere a general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or directed selling efforts (within the meaning of Regulation S under the Securities Act). This Information Memorandum or any other materials relating to the Notes do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licenced broker or dealer and the underwriters or any affiliate of the underwriters is a licenced broker or dealer in that jurisdiction, the offering shall be deemed to be made by the relevant dealer, the underwriters or such affiliate on behalf of the Issuer in such jurisdiction.
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You are reminded that you have accessed the attached Information Memorandum on the basis that you are a person into whose possession this Information Memorandum may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver this document, electronically or otherwise, to any other person. If you have gained access to this transmission contrary to the foregoing restrictions, you will be unable to purchase any of the securities described therein. Any securities to be issued will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit, of U.S. persons (as such terms are defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirement of the Securities Act. Actions that You May Not Take: If you received this document by e-mail, you should not reply by e-mail to this announcement, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate by using the “Reply” function on your e-mail software, will be ignored or rejected. YOU ARE NOT AUTHORISED AND YOU MAY NOT FORWARD OR DELIVER THE ATTACHED INFORMATION MEMORANDUM, ELECTRONICALLY OR OTHERWISE, TO ANY OTHER PERSON OR REPRODUCE SUCH INFORMATION MEMORANDUM IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail, your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.
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INFORMATION MEMORANDUM DATED 14 OCTOBER 2011
BANYAN TREE HOLDINGS LIMITED (Incorporated in the Republic of Singapore on 11 April 2000)
S$400,000,000 Multicurrency Medium Term Note Programme (the “Programme”) This Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Information Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of notes (the “Notes”) to be issued from time to time by Banyan Tree Holdings Limited pursuant to the Programme may not be circulated or distributed, nor may any Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b)
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: (i)
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii)
where no consideration is or will be given for the transfer;
(iii)
where the transfer is by operation of law; or
(iv)
as specified in Section 276(7) of the SFA.
Application has been made to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in and quotation for any Notes which are agreed at the time of issue thereof to be so listed on the SGX-ST. Such permission will be granted when such Notes have been admitted to the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Admission to the Official List of the SGX-ST and quotation of any Notes on the SGX-ST is not to be taken as an indication of the merits of the Issuer, its subsidiaries, its associated companies or such Notes. Arranger
Banyan Tree Macau China
Banyan Tree Club Seoul Korea
Banyan Tree Spa Marina Bay Sands Singapore
Banyan Tree Gallery Phuket Thailand
Angsana Velavaru Maldives
Banyan Tree Phuket Thailand
Banyan Tree Hangzhou China
Banyan Tree Al Wadi UAE
TABLE OF CONTENTS Page
NOTICE ................................................................................................................................................
4
FORWARD-LOOKING STATEMENTS .................................................................................................
7
DEFINITIONS .......................................................................................................................................
8
CORPORATE INFORMATION .............................................................................................................
11
SUMMARY OF THE PROGRAMME ....................................................................................................
12
TERMS AND CONDITIONS OF THE NOTES .....................................................................................
17
RISK FACTORS ...................................................................................................................................
43
THE ISSUER ........................................................................................................................................
55
PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS ........................................................
111
CLEARING AND SETTLEMENT..........................................................................................................
112
SINGAPORE TAXATION ......................................................................................................................
114
SUBSCRIPTION, PURCHASE AND DISTRIBUTION .........................................................................
118
APPENDICES I:
General and Other Information of the Issuer and the Group .....................................................
II:
Unaudited Accounts of Banyan Tree Holdings Limited and its Subsidiaries for the Second
III: IV:
I-1
Quarter and First Half ended 30 June 2011 ..............................................................................
II-1
Audited Accounts of Banyan Tree Holdings Limited and its Subsidiaries for the Financial Year ended 31 December 2010 .........................................................................................................
III-1
Audited Accounts of Banyan Tree Holdings Limited and its Subsidiaries for the Financial Year ended 31 December 2009 .........................................................................................................
IV-1
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NOTICE The Hongkong and Shanghai Banking Corporation Limited (the “Arranger”) has been authorised by Banyan Tree Holdings Limited (the “Issuer”) to arrange the S$400,000,000 Multicurrency Medium Term Note Programme (the “Programme”) described herein. Under the Programme, the Issuer may, subject to compliance with all relevant laws, regulations and directives, from time to time issue notes (the “Notes”) denominated in Singapore dollars and/or any other currencies. This Information Memorandum contains information with regard to the Issuer and the Notes. The Issuer, having made all reasonable enquiries, confirms that this Information Memorandum contains all information which is material in the context of the Programme and the issue and offering of the Notes, that the information contained herein is true and accurate in all material respects, the opinions, expectations and intentions expressed in this Information Memorandum have been carefully considered, and that there are no other facts the omission of which in the context of the issue and offer of the Notes would or might make any such information or expressions of opinion, expectation or intention misleading in any material respect. Notes may be issued in series having one or more issue dates and the same maturity date, and on identical terms (including as to listing) except (in the case of Notes other than variable rate notes (as described under “Summary of the Programme”)) for the issue dates, issue prices and/or the dates of the first payment of interest, or (in the case of variable rate notes) for the issue prices and rates of interest. Each series may be issued in one or more tranches on the same or different issue dates. The Notes will be issued in bearer form and may be listed on a stock exchange. The Notes will initially be represented by either a temporary global note or a permanent global note which will be deposited on the issue date either with CDP (as defined herein) or a common depository on behalf of Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonymé (“Clearstream, Luxembourg”) or otherwise delivered as agreed between the Issuer and the relevant Dealer (as defined herein). Subject to compliance with all relevant laws, regulations and directives, the Notes may have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer and may be subject to redemption in whole or in part. The Notes will bear interest at a fixed, floating, variable or hybrid rate or may not bear interest or may be such other notes as may be agreed between the Issuer and the relevant Dealer. The Notes will be repayable at par, at a specified amount above or below par or at an amount determined by reference to a formula, in each case with terms as specified in the pricing supplement issued in relation to each series or tranche of Notes (the “Redemption Amount”). Details applicable to each series or tranche of Notes will be specified in the applicable pricing supplement which is to be read in conjunction with this Information Memorandum. The maximum aggregate principal amount of the Notes to be issued, when added to the aggregate principal amount of all Notes outstanding (as defined in the Trust Deed referred to below) shall be S$400,000,000 (or its equivalent in any other currencies) or such higher amount as may be increased pursuant to the Programme Agreement (as defined herein). No person has been authorised to give any information or to make any representation other than those contained in this Information Memorandum and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Arranger or any of the Dealers. Save as expressly stated in this Information Memorandum, nothing contained herein is, or may be relied upon as, a promise or representation as to the future performance or policies of the Issuer or any of its subsidiaries or associated companies (if any). Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme may be used for the purpose of, and does not constitute an offer of, or solicitation or invitation by or on behalf of the Issuer, the Arranger or any of the Dealers to subscribe for or purchase, the Notes in any jurisdiction or under any circumstances in which such offer, solicitation or invitation is unlawful, or not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. The distribution and publication of this Information Memorandum or any such other document or information and the offer of the Notes in certain jurisdictions may be restricted by law. Persons who distribute or publish this Information Memorandum or any such other document or information or into whose possession this Information Memorandum or any such other document or information comes are required to inform themselves about and to observe any such restrictions and all applicable laws, orders, rules and regulations.
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The Notes have not been, and will not be, registered under the Securities Act (as defined herein) and includes Notes in bearer form that are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to U.S. persons. Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme shall be deemed to constitute an offer of, or an invitation by or on behalf of the Issuer, the Arranger or any of the Dealers to subscribe for or purchase, any of the Notes. This Information Memorandum and any other documents or materials in relation to the issue, offering or sale of the Notes have been prepared solely for the purpose of the initial sale by the relevant Dealers of the Notes from time to time to be issued pursuant to the Programme. This Information Memorandum and such other documents or materials are made available to the recipients thereof solely on the basis that they are persons falling within the ambit of Section 274 and/or Section 275 of the SFA and may not be relied upon by any person other than persons to whom the Notes are sold or with whom they are placed by the relevant Dealers as aforesaid or for any other purpose. Recipients of this Information Memorandum shall not reissue, circulate or distribute this Information Memorandum or any part thereof in any manner whatsoever. Neither the delivery of this Information Memorandum (or any part thereof) or the issue, offering, purchase or sale of the Notes shall, under any circumstances, constitute a representation, or give rise to any implication, that there has been no change in the prospects, results of operations or general affairs of the Issuer or any of its subsidiaries or associated companies (if any) or in the information herein since the date hereof or the date on which this Information Memorandum has been most recently amended or supplemented. The Arranger and the Dealers have not separately verified the information contained in this Information Memorandum. None of the Issuer, the Arranger, any of the Dealers or any of their respective officers or employees is making any representation or warranty expressed or implied as to the merits of the Notes or the subscription for, purchase or acquisition thereof, the creditworthiness or financial condition or otherwise of the Issuer or its subsidiaries or associated companies (if any). Further, none of the Arranger and the Dealers makes any representation or warranty as to the Issuer, its subsidiaries or associated companies (if any) or as to the accuracy, reliability or completeness of the information set out herein (including the legal and regulatory requirements pertaining to Sections 274, 275 and 276 or any other provisions of the SFA) and the documents which are incorporated by reference in, and form part of, this Information Memorandum. Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme or the issue of the Notes is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, the Arranger or any of the Dealers that any recipient of this Information Memorandum or such other document or information (or such part thereof) should subscribe for or purchase any of the Notes. A prospective purchaser shall make its own assessment of the foregoing and other relevant matters including the financial condition and affairs and the creditworthiness of the Issuer and its subsidiaries and associated companies (if any), and obtain its own independent legal or other advice thereon, and its investment shall be deemed to be based on its own independent investigation of the financial condition and affairs and its appraisal of the creditworthiness of the Issuer. Accordingly, notwithstanding anything herein, none of the Issuer, the Arranger, any of the Dealers or any of their respective officers, employees or agents shall be held responsible for any loss or damage suffered or incurred by the recipients of this Information Memorandum or such other document or information (or such part thereof) as a result of or arising from anything expressly or implicitly contained in or referred to in this Information Memorandum or such other document or information (or such part thereof) and the same shall not constitute a ground for rescission of any purchase or acquisition of any of the Notes by a recipient of this Information Memorandum or such other document or information (or such part thereof). The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated by reference in, and to form part of, this Information Memorandum: (1) any annual reports or audited consolidated accounts or published unaudited interim results of the Issuer and its subsidiaries and associated companies (if any), and (2) any supplement or amendment to this
5
Information Memorandum issued by the Issuer. This Information Memorandum is to be read in conjunction with all such documents which are incorporated by reference herein and, with respect to any series or tranche of Notes, any pricing supplement in respect of such series or tranche. Any statement contained in this Information Memorandum or in a document deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Information Memorandum to the extent that a statement contained in this Information Memorandum or in such subsequent document that is also deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information Memorandum. Copies of all documents deemed incorporated by reference herein are available for inspection at the specified office of the Issuing and Paying Agent (as defined herein). Any purchase or acquisition of the Notes is in all respects conditional on the satisfaction of certain conditions set out in the Programme Agreement and the issue of the Notes by the Issuer pursuant to the Programme Agreement. Any offer, invitation to offer or agreement made in connection with the purchase or acquisition of the Notes or pursuant to this Information Memorandum shall (without any liability or responsibility on the part of the Issuer, the Arranger or any of the Dealers) lapse and cease to have any effect if (for any other reason whatsoever) the Notes are not issued by the Issuer pursuant to the Programme Agreement. Any discrepancies in the tables included herein between the listed amounts and totals thereof are due to rounding. The attention of recipients of this Information Memorandum is drawn to the restrictions on resale of the Notes set out under “Subscription, Purchase and Distribution” on pages 118 to 120 of this Information Memorandum. Any person(s) who is invited to purchase or subscribe for the Notes or to whom this Information Memorandum is sent shall not make any offer or sale, directly or indirectly, of any Notes or distribute or cause to be distributed any document or other material in connection therewith in any country or jurisdiction except in such manner and in such circumstances as will result in compliance with any applicable laws and regulations. It is recommended that persons proposing to subscribe for or purchase any of the Notes consult their own legal and other advisers before purchasing or acquiring the Notes.
6
FORWARD-LOOKING STATEMENTS All statements contained in this Information Memorandum that are not statements of historical fact constitute “forward-looking statements”. Some of these statements can be identified by forwardlooking terms such as “expect”, “believe”, “plan”, “intend”, “estimate”, “anticipate”, “may”, “will”, “would” and “could” or similar words. However, these words are not the exclusive means of identifying forwardlooking statements. All statements regarding the expected financial position, business strategy, plans and prospects of the Issuer and its subsidiaries (including statements as to the Issuer’s and its subsidiaries’ revenue and profitability, prospects, future plans and other matters discussed in this Information Memorandum regarding matters that are not historical fact and including the financial forecasts, profit projections, statements as to the expansion plans of the Issuer and its subsidiaries, expected growth in the Issuer and its subsidiaries and other related matters), if any, are forward-looking statements and accordingly, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Issuer and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others: changes in general political, social and economic conditions; changes in currency exchange and interest rates; demographic changes; changes in competitive conditions; and other factors beyond the control of the Issuer and its subsidiaries. Some of these factors are discussed in greater detail in this Information Memorandum, in particular, but not limited to, discussion under the section “Risk Factors”. Given the risks and uncertainties that may cause the actual future results, performance or achievements of the Issuer and its subsidiaries to be materially different from the results, performance or achievements expected, expressed or implied by the financial forecasts, profit projections and forward-looking statements in this Information Memorandum, undue reliance must not be placed on those forecasts, projections and statements. The Issuer, the Arranger and the Dealers do not represent or warrant that the actual future results, performance or achievements of the Issuer and its subsidiaries will be as discussed in those statements. Neither the delivery of this Information Memorandum nor the issue of any Notes by the Issuer shall under any circumstances constitute a continuing representation or create any suggestion or implication that there has been no change in the affairs of the Issuer and its subsidiaries or any statement of fact or information contained in this Information Memorandum since the date of this Information Memorandum. Further, the Issuer, the Arranger and the Dealers disclaim any responsibility, and undertake no obligation, to update or revise any forward-looking statements contained herein to reflect any changes in the expectations with respect thereto after the date of this Information Memorandum or to reflect any change in events, conditions or circumstances on which any such statements are based.
7
DEFINITIONS The following definitions have, where appropriate, been used in this Information Memorandum: “Agency Agreement”
:
The Agency Agreement dated 18 October 2007 between (1) the Issuer, as issuer, (2) The Hongkong and Shanghai Banking Corporation Limited, as issuing and paying agent and agent bank, and (3) the Trustee, as trustee, as amended, varied or supplemented from time to time
“Agent Bank”
:
The Hongkong and Shanghai Banking Corporation Limited
“Arranger”
:
The Hongkong and Shanghai Banking Corporation Limited
“Average occupancy”
:
The average occupancy of a resort or hotel is equal to the number of paid room nights during a period divided by the total number of available room nights during that period, expressed as a percentage
“Average room rate”
:
The average room rate of a resort or hotel is equal to the total room revenue earned during a period divided by the number of paid room nights for that period
“Bt” or “Baht”
:
The lawful currency of Thailand
“Board”
:
Board of Directors of the Issuer
“CDP”
:
The Central Depository (Pte) Limited
“Companies Act”
:
The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time
“Coupons”
:
The interest coupons appertaining to an interest bearing Definitive Note
“Dealers”
:
Persons appointed as dealers under the Programme
“Directors”
:
The directors (including alternate directors, if any) of the Issuer as at the date of this Information Memorandum
“EBITDA”
:
Earnings before interest, tax, depreciation and amortisation
“Euro” or “€”
:
The single currency introduced on 1 January 1999 at the start of the third stage of European Economic and Monetary Union, pursuant to the Treaty establishing the European Communities, as amended by the Treaty on European Union and the Treaty of Amsterdam
“FY”
:
Financial Year
“Group”
:
The Issuer and its subsidiaries
“Issuer”
:
Banyan Tree Holdings Limited
“Issuing and Paying Agent”
:
The Hongkong and Shanghai Banking Corporation Limited
“Laguna Phuket”
:
An integrated resort in Thailand operated by LRH
“Latest Practicable Date”
:
27 September 2011
8
“LRH”
:
Laguna Resorts & Hotels Public Company Limited, a Principal Subsidiary of the Issuer as at the date of this Information Memorandum
“LRH Group”
:
LRH, its subsidiaries and its associated companies
“Marks”
:
The trademarks, service marks, logos and devices used by the Issuer and LRH, including the Trademarks
“MAS”
:
The Monetary Authority of Singapore
“Notes”
:
The notes to be issued by the Issuer under the Programme
“Permanent Global Note”
:
A Global Note representing Notes of one or more Tranches of the same Series, either on issue or upon exchange of interests in a Temporary Global Note
“PRC”
:
The People’s Republic of China, excluding Hong Kong SAR and Macau SAR
“Pricing Supplement”
:
In relation to a Series or Tranche, a pricing supplement, to be read in conjunction with this Information Memorandum, specifying the relevant issue details in relation to such Series or, as the case may be, Tranche
“Programme”
:
The S$400,000,000 Multicurrency Medium Term Note Programme of the Issuer
“Programme Agreement”
:
The Amended and Restated Programme Agreement dated 14 October 2011 made between (1) the Issuer, as issuer, and (2) The Hongkong and Shanghai Banking Corporation Limited, as arranger and dealer, as amended, varied or supplemented from time to time
“REVPAR”
:
Revenue per available room. For any given period, REVPAR equals a resort or hotel’s Average room rate multiplied by its Average occupancy
“RMB”
:
The lawful currency of the People’s Republic of China
“Securities Act”
:
Securities Act of 1933 of the United States, as amended
“Series”
:
(1) (in relation to Notes other than variable rate notes) a Tranche, together with any further Tranche or Tranches, which are (a) expressed to be consolidated and forming a single series and (b) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (2) (in relation to variable rate notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest
“SFA”
:
Securities and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time
“SGX-ST”
:
Singapore Exchange Securities Trading Limited
“Shares”
:
Ordinary shares and preference shares in the capital of the Issuer
9
“Temporary Global Note”
:
A Global Note representing Notes of one or more Tranches of the same Series on issue
“TMB”
:
TMB Bank Public Company Limited
“Trademarks”
:
The “BANYAN TREE”, “ANGSANA”, “YUE RONG”, “YUE CHUN”, “ELEMENTS”, “THE HERITAGE COLLECTION”, “LAGUNA”, “BANYAN TREE PRIVATE COLLECTION” and “THE ALLAMANDA” trademarks
“Tranche”
:
Notes which are identical in all respects (including as to listing)
“TRL”
:
Tropical Resorts Limited
“Trust Deed”
:
The Amended and Restated Trust Deed dated 14 October 2011 made between (1) the Issuer, as issuer, and (2) the Trustee, as trustee, as amended, varied or supplemented from time to time
“Trustee”
:
HSBC Institutional Trust Services (Singapore) Limited
“UAE”
:
United Arab Emirates
“United States” or “U.S.”
:
United States of America
“S$” or “$” and “cents”
:
Singapore dollars and cents respectively
“US$” or “US dollars”
:
United States dollars
“%”
:
Per cent.
Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Any reference to a time of day in this Information Memorandum shall be a reference to Singapore time unless otherwise stated. Any reference in this Information Memorandum to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act or the SFA or any statutory modification thereof and used in this Information Memorandum shall, where applicable, have the meaning ascribed to it under the Companies Act or, as the case may be, the SFA.
10
CORPORATE INFORMATION Board of Directors
:
Mr Ho KwonPing Mr Ariel P Vera Mr Chia Chee Ming Timothy Mrs Fang Ai Lian Mrs Elizabeth Sam
Company Secretaries
:
Ms Teah Seow Lian Jane Mr Chong Kim Seng Paul
Registered Office
:
211 Upper Bukit Timah Road Singapore 588182
Auditors to the Issuer
:
Ernst & Young LLP Certified Public Accountants One Raffles Quay North Tower, Level 18 Singapore 048583
Arranger of the Programme
:
The Hongkong and Shanghai Banking Corporation Limited 21 Collyer Quay #11-01 HSBC Building Singapore 049320
Legal Adviser to the Arranger, the Trustee and the Issuing and Paying Agent and Agent Bank as to Singapore law
:
Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore 018989
Legal Adviser to the Issuer as to Singapore law as at the establishment of the Programme
:
WongPartnership LLP One George Street #20-01 Singapore 049145
Issuing and Paying Agent and Agent Bank
:
The Hongkong and Shanghai Banking Corporation Limited
Trustee for the holders of the Notes
:
HSBC Institutional Trust Services (Singapore) Limited
11
SUMMARY OF THE PROGRAMME The following summary is derived from, and should be read in conjunction with, the full text of this Information Memorandum (and any relevant supplement to this Information Memorandum), the Programme Agreement, the Trust Deed, the Agency Agreement and the relevant Pricing Supplement. Issuer
:
Banyan Tree Holdings Limited
Arranger
:
The Hongkong and Shanghai Banking Corporation Limited
Dealers
:
The Hongkong and Shanghai Banking Corporation Limited and/or such other Dealers as may be appointed by the Issuer in accordance with the Programme Agreement.
Issuing and Paying Agent
:
The Hongkong and Shanghai Banking Corporation Limited and Agent Bank
Description
:
Multicurrency Medium Term Note Programme
Programme Amount
:
The maximum aggregate principal amount of Notes outstanding under the Programme at any time shall not exceed S$400,000,000 (or its equivalent in any other currencies) or such higher amount as may be increased pursuant to the Programme Agreement.
Currency
:
Subject to compliance with all relevant laws, regulations and/or central bank requirements, Notes may be issued in Singapore dollars or any other currency agreed between the Issuer and the relevant Dealer(s).
Method of Issue
:
The Notes may be issued in Series from time to time under the Programme on a syndicated or non-syndicated basis and may be issued by way of private placement or otherwise. Each Series may comprise one or more Tranches, issued on the same or different issue dates. The specific terms of each Series and each Tranche will be specified in the relevant Pricing Supplement.
Issue Price
:
The Notes may be issued on a fully paid or partly paid basis and at an issue price which is at par or at a discount, or premium, to par.
Maturities
:
Subject to compliance with all relevant laws, regulations and directives, Notes may have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer(s).
Mandatory Redemption
:
Unless previously redeemed or purchased and cancelled, each Note will be redeemed at its redemption amount on the maturity date shown on its face.
Interest Basis
:
The Notes may be non-interest bearing or bear interest at fixed, floating, variable or hybrid interest rates as may be agreed between the Issuer and the relevant Dealer(s).
Fixed Rate Notes
:
Fixed Rate Notes will bear a fixed rate of interest which will be payable in arrear on specified dates and at maturity.
12
Floating Rate Notes
:
Floating Rate Notes which are denominated in Singapore dollars will bear interest to be determined separately for each Series by reference to S$ SIBOR or S$ SWAP RATE (or in any other case such other benchmark as may be agreed between the Issuer and the relevant Dealer(s)), as adjusted for any applicable margin. Interest periods in relation to the Floating Rate Notes will be agreed between the Issuer and the relevant Dealer(s) prior to their issue. Floating Rate Notes which are denominated in other currencies will bear interest to be determined separately for each Series by reference to such other benchmark as may be agreed between the Issuer and the relevant Dealer(s). In respect of Floating Rate Notes benchmarked to the Swap Rate, a minimum rate of interest will apply thereto as set out in the Pricing Supplement applicable to such Notes in the event that the Swap Rate falls below zero.
Variable Rate Notes
:
Variable Rate Notes will bear interest at a variable rate determined in accordance with the terms and conditions of the Notes. Interest periods in relation to the Variable Rate Notes will be agreed between the Issuer and the relevant Dealer(s) prior to their issue.
Hybrid Notes
:
Hybrid Notes will bear interest, during the fixed rate period to be agreed between the Issuer and the relevant Dealer(s), at a fixed rate of interest which will be payable in arrear on specified dates and, during the floating rate period to be agreed between the Issuer and the relevant Dealer(s), at the rate of interest to be determined by reference to S$ SIBOR or S$ SWAP RATE (or such other benchmark as may be agreed between the Issuer and the relevant Dealer(s)), as adjusted for any applicable margin (provided that if the Hybrid Notes are denominated in a currency other than Singapore dollars, such Hybrid Notes will bear interest to be determined separately by reference to such benchmark as may be agreed between the Issuer and the relevant Dealer(s)), in each case payable at the end of each interest period to be agreed between the Issuer and the relevant Dealer(s).
Other Notes
:
The Issuer and the relevant Dealer(s) may agree to issue any other type of Notes under the Programme.
Form and Denomination of Notes
:
The Notes will be issued in bearer form only and in such denominations as may be agreed between the Issuer and the relevant Dealer(s). Each Tranche or Series of Notes may initially be represented by a Temporary Global Note or a Permanent Global Note. Each Temporary Global Note may be deposited on the relevant issue date with CDP, a common depositary for Euroclear and Clearstream, Luxembourg and/or any other agreed clearing system and will be exchangeable, upon request as described therein, either for a Permanent Global Note or Definitive Notes (as indicated in the applicable Pricing Supplement). Each Permanent Global Note may be exchanged, unless otherwise specified in the applicable Pricing Supplement, upon request as described therein, in whole (but not in part) for Definitive Notes upon the terms therein.
13
Delivery, Clearing and Settlement
:
The Notes will be cleared through CDP and/or any other clearing systems as may be specified in the relevant Pricing Supplement.
Custody of the Notes
:
Notes which are to be listed on the SGX-ST may be cleared through CDP. Notes which are to be cleared through CDP are required to be kept with CDP as authorised depository. Notes which are cleared through Euroclear and/ or Clearstream, Luxembourg are required to be kept with a common depositary on behalf of Euroclear and Clearstream Luxembourg.
Title
:
Title to the Notes and the Coupons will pass by delivery provided that for so long as the Notes are held through CDP, title to the Notes will pass by transfer through CDP’s scripless book entry system.
Status of the Notes
:
The Notes and Coupons of all Series will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer.
Early Redemption
:
If so provided on the face of the Note and the relevant Pricing Supplement, Notes may be redeemed (either in whole or in part) prior to their stated maturity at the option of the Issuer and/or the holders of the Notes.
Negative Pledge
:
The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes or Coupons remains outstanding, it will not, and will ensure that none of its Principal Subsidiaries (as defined in the Trust Deed) will, create or permit to be created any mortgage, charge, pledge or security interest in respect of any of their respective assets and properties, present or future, unless at the same time or prior thereto, the Issuer’s obligations under the Notes, the Coupons and the Trust Deed (a) are secured equally and rateably therewith to the satisfaction of the Trustee or (b) have the benefit of such other security or other arrangement as shall be approved by the Trustee or as shall be approved by an Extraordinary Resolution of the Noteholders, save for: (i)
(a) any security over any asset existing on or prior to the date of the Trust Deed and as disclosed in writing to the Trustee on or prior to the date of the Trust Deed or (b) any security to be created over any asset which is the subject of such existing security in connection with any replacement or refinancing of any of its outstanding indebtedness which at the date of the Trust Deed is secured by such existing security provided that the amount secured is not increased pursuant to such replacement or refinancing;
(ii)
any security created by any subsidiary in favour of the Issuer;
14
Financial Covenants
:
(iii)
any existing and future Encumbrances (as defined in the Trust Deed) to secure the indebtedness of LRH and its subsidiaries;
(iv)
liens or rights of set off arising in the ordinary course of its business or by operation of law, in either case, in respect of indebtedness which either (a) has been due for less than 14 days or (b) is being contested in good faith and by appropriate means;
(v)
any security over any assets acquired after the date of the Trust Deed (up to the value of such assets) for the sole purpose of financing the acquisition (including acquisition by way of acquisition of the shares in the company or entity owning (whether directly or indirectly) such assets) or any refinancing thereof;
(vi)
pledges of goods and/or related documents of title, arising in the ordinary course of its business, as security for bank borrowings directly relating to the purchase of such goods; and
(vii)
any security created pursuant to a court order as security for costs in connection with litigation outside Singapore as a condition for any prejudgment, attachment or injunction.
The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding, it will ensure that: (i)
the Consolidated Tangible Net Worth (as defined in Condition 3 of the terms and conditions of the Notes) will not at any time be less than S$450,000,000;
(ii)
the ratio of Consolidated Total Borrowings (as defined in Condition 3 of the terms and conditions of the Notes) to Consolidated Tangible Net Worth (as defined in Condition 3 of the terms and conditions of the Notes) shall not at any time exceed 1.5: 1; and
(iii)
the ratio of Consolidated Secured Assets (as defined in Condition 3 of the terms and conditions of the Notes) to Total Tangible Assets (as defined in Condition 3 of the terms and conditions of the Notes) shall not at any time exceed 0.7: 1.
Events of Default
:
See Condition 9 of the terms and conditions of the Notes.
Taxation
:
All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction 15
or withholding been required, save for certain exceptions. For further details, please see Condition 7 of the terms and conditions of the Notes and the section on “Singapore Taxation” herein. Listing
:
Each Series of the Notes may, if so agreed between the Issuer and the relevant Dealer(s), be listed on the SGX-ST or any stock exchange(s) as may be agreed between the Issuer and the relevant Dealer(s), subject to all necessary approvals having been obtained.
Selling Restrictions
:
For a description of certain restrictions on offers, sales and deliveries of Notes and the distribution of offering material relating to the Notes, see the section on “Subscription, Purchase and Distribution” below. Further restrictions may apply in connection with any particular Series or Tranche of Notes.
Governing Law
:
The Programme and any Notes issued under the Programme will be governed by, and construed in accordance with, the laws of Singapore.
16
TERMS AND CONDITIONS OF THE NOTES The following is the text of the terms and conditions which, subject to completion and amendment and as supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, will be endorsed on the Notes in definitive form issued in exchange for the Global Note(s) representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the relevant Pricing Supplement. Those definitions will be endorsed on the Definitive Notes or Certificates, as the case may be. References in the Conditions to “Notes” are to the Notes of one Series only, not to all Notes that may be issued under the Programme. Details of the relevant Series will be shown on the face of the relevant Notes and in the relevant Pricing Supplement. The Notes are constituted by an Amended and Restated Trust Deed (as amended, supplemented and restated, the “Trust Deed”) dated 14 October 2011 made between (1) Banyan Tree Holdings Limited (the “Issuer”) and (2) HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”, which expression shall wherever the context so admits include such company and all other persons for the time being the trustee or trustees of the Trust Deed), as trustee for the Noteholders (as defined below), and (where applicable) the Notes are issued with the benefit of an amended and restated deed of covenant (as amended, supplemented and restated, the “Deed of Covenant”) dated 14 October 2011, relating to the Notes executed by the Issuer. These terms and conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Notes and Coupons referred to below. The Issuer has entered into an Agency Agreement (as amended, supplemented and restated, the “Agency Agreement”) dated 18 October 2007 made between (1) the Issuer, (2) The Hongkong and Shanghai Banking Corporation Limited, as issuing and paying agent (in such capacity, the “Issuing and Paying Agent”) and agent bank (in such capacity, the “Agent Bank”), and (3) the Trustee, as trustee. The Noteholders and the holders of the coupons (the “Coupons”) appertaining to the interest-bearing Notes (the “Couponholders”) are bound by and are deemed to have notice of all of the provisions of the Trust Deed, the Agency Agreement and the Deed of Covenant. Copies of the Trust Deed, the Agency Agreement and the Deed of Covenant are available for inspection at the principal office of the Trustee for the time being and at the specified office of the Issuing and Paying Agent for the time being. 1.
Form, Denomination and Title (a)
(b)
Form and Denomination (i)
The Notes of the Series of which this Note forms part (in these Conditions, the “Notes”) are issued in bearer form in each case in the Denomination Amount shown hereon.
(ii)
This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note, a Hybrid Note or a Zero Coupon Note (depending upon the Interest Basis shown on its face).
(iii)
Notes are serially numbered and issued with Coupons attached, save in the case of Notes that do not bear interest in which case references to interest (other than in relation to default interest referred to in Condition 6(f)) in these Conditions are not applicable.
Title (i)
Title to the Notes and the Coupons appertaining thereto shall pass by delivery.
(ii)
Except as ordered by a court of competent jurisdiction or as required by law, the holder of any Note or Coupon shall be deemed to be and may be treated as the absolute owner of such Note or of such Coupon, as the case may be, for the purpose of receiving payment thereof or on account thereof and for all other purposes, whether
17
or not such Note or Coupon shall be overdue and notwithstanding any notice of ownership, theft or loss thereof or any writing thereon made by anyone, and no person shall be liable for so treating the holder.
2.
(iii)
For so long as any of the Notes is represented by a Global Note and such Global Note is held by a common depository for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonymé (“Clearstream, Luxembourg”) and/ or The Central Depository (Pte) Limited (the “Depository”), each person who is for the time being shown in the records of Euroclear, Clearstream, Luxembourg and/ or the Depository as the holder of a particular principal amount of such Notes (in which regard any certificate or other document issued by Euroclear, Clearstream, Luxembourg and/or the Depository as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Issuing and Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such principal amount of Notes other than with respect to the payment of principal, interest and any other amounts in respect of the Notes, for which purpose the bearer of the Global Note shall be treated by the Issuer, the Issuing and Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such Notes in accordance with and subject to the terms of the Global Note (and the expressions “Noteholder” and “holder of Notes” and related expressions shall be construed accordingly). Notes which are represented by the Global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear, Clearstream, Luxembourg and/or the Depository.
(iv)
In these Conditions, “Global Note” means the relevant Temporary Global Note representing each Series or the relevant Permanent Global Note representing each Series, “Noteholder” means the bearer of any Definitive Note and “holder” (in relation to a Definitive Note or Coupon) means the bearer of any Definitive Note or Coupon, “Series” means (a) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (i) expressed to be consolidated and forming a single series and (ii) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (b) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest and “Tranche” means Notes which are identical in all respects (including as to listing).
(v)
Words and expressions defined in the Trust Deed or used in the applicable Pricing Supplement (as defined in the Trust Deed) shall have the same meanings where used in these Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail.
Status The Notes and Coupons of all Series constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer.
3.
Negative Pledge, Financial and other Covenants (a)
The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes or Coupons remains outstanding, it will not, and will ensure that none of its Principal Subsidiaries will, create or permit to be created any mortgage, charge, pledge or security interest in respect of any of their respective assets and properties, present or future, unless at the same time or prior thereto, the Issuer’s obligations under the Notes, the Coupons and the Trust Deed (a) are secured equally and rateably therewith to the satisfaction of
18
the Trustee or (b) have the benefit of such other security or other arrangement as shall be approved by the Trustee or as shall be approved by an Extraordinary Resolution of the Noteholders, save for:
(b)
(c)
(i)
(a) any security over any asset existing on or prior to the date of the Trust Deed and which has been disclosed in writing to the Trustee on or prior to the date of the Trust Deed or (b) any security to be created over any asset which is the subject of such existing security in connection with any replacement or refinancing of any of its outstanding indebtedness which at the date of the Trust Deed is secured by such existing security provided that the amount secured is not increased pursuant to such replacement or refinancing;
(ii)
any security created by any subsidiary in favour of the Issuer;
(iii)
any existing and future Encumbrances (as defined in the Trust Deed) to secure the indebtedness of LRH and its subsidiaries;
(iv)
liens or rights of set off arising in the ordinary course of its business or by operation of law, in either case, in respect of indebtedness which either (a) has been due for less than 14 days or (b) is being contested in good faith and by appropriate means;
(v)
any security over any assets acquired after the date of the Trust Deed (up to the value of such assets) for the sole purpose of financing the acquisition (including acquisition by way of acquisition of the shares in the company or entity owning (whether directly or indirectly) such assets) or any refinancing thereof;
(vi)
pledges of goods and/or related documents of title, arising in the ordinary course of its business, as security for bank borrowings directly relating to the purchase of such goods; and
(vii)
any security created pursuant to a court order as security for costs in connection with litigation outside Singapore as a condition for any prejudgment, attachment or injunction.
The Issuer has further covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding, it will ensure that: (i)
the Consolidated Tangible Net Worth will not at any time be less than S$450,000,000;
(ii)
the ratio of Consolidated Total Borrowings to Consolidated Tangible Net Worth shall not at any time exceed 1.5: 1; and
(iii)
the ratio of Consolidated Secured Assets to Total Tangible Assets shall not at any time exceed 0.7: 1.
The Issuer has further covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding, it will ensure: (i)
that it will remain listed on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”);
(ii)
that it shall, at all times, (i) own directly or indirectly through its wholly-owned subsidiaries, not less than 48 per cent. of the issued share capital for the time being of LRH (as defined in the Trust Deed); and (ii) retain management control of LRH;
(iii)
that it shall procure, at all times, that there are no limits or restrictions on the ability of the Issuer or any of its Principal Subsidiaries to declare, distribute or pay to its shareholders any amount of any dividends (whether in cash or in specie), whether under its constitutional documents or by contract or otherwise, save for any dividend restriction that would apply only if and when LRH or any of its subsidiaries is in default
19
of its repayment obligations under a loan agreement or a bank facility agreement entered, or to be entered, into by LRH or any of its subsidiaries whether on, before or after the date of the Trust Deed; (iv)
that it will not, and will ensure that none of its Principal Subsidiaries will, (whether by a single transaction or a number of related or unrelated transactions and whether at one time or over a period of time) sell, transfer, lease out, lend or otherwise dispose of (whether outright, by a sale-and-repurchase or sale-and-leaseback arrangement, or otherwise) all or substantially all of its assets nor of any part of its assets which, either alone or when aggregated with all other disposals required to be taken into account under this Condition 3(c)(iv) is substantial in relation to its assets or those of it and its subsidiaries taken as a whole or the disposal of which (either alone or when so aggregated) would have a material adverse effect on it. The following disposals shall not be taken into account under this Condition 3(c)(iv): (I)
disposals made in the ordinary course of business and on normal commercial terms;
(II)
disposals which (i) are conducted on an arm’s length basis, (ii) result in an increase in the net tangible assets of the Group and (iii) have been approved by the Trustee in writing (such approval not be unreasonably withheld or delayed) prior to such disposals;
(III)
any disposal of assets which are obsolete;
(IV)
any transfer of assets, including but not limited to the assets of the Group in the People’s Republic of China and Vietnam, to a subsidiary of the Issuer or to any Real Estate Investment Trust, property fund or any other entity which is, or will immediately after any such transfer be, a Real Estate Investment Trust, property fund or entity in which any member or members of the Group would own beneficially in aggregate at least five per cent. of the units or, as the case may be, shares in such Real Estate Investment Trust, property fund or entity provided that such transfers are conducted on an arm’s length basis and do not result in a decrease in the net tangible assets of the Group;
(V)
any exchange of assets for other assets of a similar value with the prior written consent of the Trustee. The Trustee shall consent to such disposal if the Issuer substitutes and/or replaces the assets to be disposed with replacement assets which have at least the same prevailing open market value (as determined by an Approved Valuer of the assets to be disposed;
(VI)
any transfer of assets from a Principal Subsidiary to another Principal Subsidiary or the Issuer, or from the Issuer to a Principal Subsidiary, and which do not result in a decrease in the net tangible assets of the Group; and
(VII) disposals which are approved by an Extraordinary Resolution of the Noteholders. For the purposes of these Conditions: (i)
“Acceptable Financial Statements” means the latest financial statements (consolidated or unconsolidated, as the context requires) of the Issuer which comply with the requirement of the SGX-ST for companies listed on the Main Board of the SGX-ST, delivered or required to be delivered to the Trustee pursuant to Clause 14.5 of the Trust Deed;
(ii)
“Consolidated Secured Assets” means total assets as shown in the consolidated Acceptable Financial Statements of the Issuer which are subject to any Encumbrance;
20
(iii)
“Consolidated Tangible Net Worth” means the amount (expressed in Singapore dollars) for the time being, calculated in accordance with generally accepted accounting principles in Singapore, equal to the aggregate of: (a)
the amount paid up or credited as paid up on the issued share capital of the Issuer; and
(b)
the amounts standing to the credit of the capital and revenue reserves (including profit and loss account) of the Group on a consolidated basis,
all as shown in the then latest unaudited semi-annual or audited annual consolidated balance sheet of the Group but after: (1)
making such adjustments as may be appropriate in respect of any variation in the issued and paid up share capital and the capital and revenue reserves set out in paragraph (b) above of the Group since the date of the latest unaudited semi-annual or audited annual consolidated balance sheet of the Group;
(2)
deducting:
(3)
(iv)
(aa)
an amount equal to any distribution by any member of the Group out of profits earned prior to the date of the latest unaudited semi-annual or audited annual consolidated balance sheet of the Group and which have been declared, recommended or made since that date except so far as provided for in such balance sheet and/or paid or due to be paid to members of the Group;
(bb)
all goodwill and other intangible assets;
(cc)
any debit balances on consolidated profit and loss account; and
(dd)
currency translation reserve which are unrealised; and
taking into account any amounts arising from a writing-up or writing-down after the date of this Trust Deed of the book value of any property of the Group which is publicly announced after the date of the latest audited consolidated balance sheet of the Group.
“Consolidated Total Borrowings” means in relation to the Group, an amount (expressed in Singapore dollars) for the time being, calculated on a consolidated basis, in accordance with generally accepted accounting principles in Singapore, equal to the aggregate of: (a)
bank overdrafts and all other indebtedness whatsoever of the Group in respect of any borrowings or borrowed moneys;
(b)
the principal amount of the Notes or any bonds or debentures of any member of the Group whether issued for cash or a consideration other than cash;
(c)
the liabilities of the Issuer under the Trust Deed or the Notes; and
(d)
any redeemable preference shares issued by any member of the Group and which is regarded by generally accepted accounting principles in Singapore as debt or other liability of the Group.
Where such aggregate amount is to be calculated, no amount shall be taken into account more than once in the same calculation. For the avoidance of doubt, “Consolidated Total Borrowings” shall exclude all inter-company transactions between the Issuer and its subsidiaries or between its subsidiaries; and
21
(v)
4.
“Total Tangible Assets” means total assets as shown in the consolidated Acceptable Financial Statements of the Issuer and shall include the Group’s properties, assets and revenue (including any right to receive revenues) and at all times exclude any goodwill or other intangible assets.
(I)
Interest on Fixed Rate Notes
(a)
Interest Rate and Accrual Each Fixed Rate Note bears interest on its Calculation Amount (as defined in Condition 4(II) (d)) from the Interest Commencement Date in respect thereof and as shown on the face of such Note at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest Payment Date or Interest Payment Dates shown on the face of such Note in each year and on the Maturity Date shown on the face of such Note if that date does not fall on an Interest Payment Date. The first payment of interest will be made on the Interest Payment Date next following the Interest Commencement Date (and if the Interest Commencement Date is not an Interest Payment Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the Maturity Date falls before the date on which the first payment of interest would otherwise be due. If the Maturity Date is not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the Interest Commencement Date, as the case may be) to the Maturity Date will amount to the Final Broken Amount shown on the face of the Note. Interest will cease to accrue on each Fixed Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of principal is improperly withheld or refused, in which event interest at such rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(I) to the Relevant Date (as defined in Condition 7).
(b)
Calculations In the case of a Fixed Rate Note, interest in respect of a period of less than one year will be calculated on the Day Count Fraction specified hereon.
(II)
Interest on Floating Rate Notes or Variable Rate Notes
(a)
Interest Payment Dates Each Floating Rate Note or Variable Rate Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note, and such interest will be payable in arrear on each interest payment date (“Interest Payment Date”). Such Interest Payment Date is/are either shown hereon as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the “Specified Number of Months”) after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date (and which corresponds numerically with such preceding Interest Payment Date or the Interest Commencement Date, as the case may be), provided that the Agreed Yield (as defined in Condition 4(II) (c)) in respect of any Variable Rate Note for any Interest Period (as defined below) relating to that Variable Rate Note shall be payable on the first day of that Interest Period. If any Interest Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a business day, then if the Business Day Convention specified is (1) the Floating Rate Business Day Convention, such date shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event (i) such date shall be brought forward to the immediately preceding business day and (ii) each subsequent such date shall be the last business day of the month in which such date would have fallen had it not been subject to adjustment, (2) the Following Business Day Convention, such date shall be postponed to the next day that is a business day, (3) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a business 22
day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding business day or (4) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding business day. The period beginning on the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date is herein called an “Interest Period”. Interest will cease to accrue on each Floating Rate Note or Variable Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of the Redemption Amount is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(II) to the Relevant Date. (b)
Rate of Interest - Floating Rate Notes (i)
Each Floating Rate Note bears interest at a floating rate determined by reference to a Benchmark as stated on the face of such Floating Rate Note, being (in the case of Notes which are denominated in Singapore dollars) SIBOR (in which case such Note will be a SIBOR Note) or Swap Rate (in which case such Note will be a Swap Rate Note) or in any case (or in the case of Notes which are denominated in a currency other than Singapore dollars) such other Benchmark as is set out on the face of such Note. Such floating rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Note. The “Spread” is the percentage rate per annum specified on the face of such Note as being applicable to the rate of interest for such Note. The rate of interest so calculated shall be subject to Condition 4(V)(a) below. The rate of interest payable in respect of a Floating Rate Note from time to time is referred to in these Conditions as the “Rate of Interest”. In respect of Floating Rate Notes benchmarked to the Swap Rate, a minimum rate of interest will apply thereto as set out in the Pricing Supplement applicable to such Notes in the event that the Swap Rate falls below zero.
(ii)
The Rate of Interest payable from time to time in respect of each Floating Rate Note will be determined by the Agent Bank on the basis of the following provisions: (1)
in the case of Floating Rate Notes which are SIBOR Notes: (A)
the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period which shall be the offered rate for deposits in Singapore dollars for a period equal to the duration of such Interest Period which appears on the Reuters Screen ABSIRFIX01 Page under the caption “ASSOCIATION OF BANKS IN SINGAPORE - SIBOR AND SWAP OFFER RATES - RATES AT 11:00 AM SINGAPORE TIME” and under the column headed “SGD SIBOR” (or such other Screen Page as may be provided hereon) and as adjusted by the Spread (if any);
(B)
if no such rate appears on the Reuters Screen ABSIRFIX01 Page under the column headed “SGD SIBOR” (or such other replacement page thereof), the Agent Bank will, at or about the Relevant Time on such Interest Determination Date, determine the Rate of Interest for such Interest Period which shall be the rate which appears under the caption “SINGAPORE DOLLAR INTERBANK OFFERED RATES - 11:00 A.M.” and the row headed “SIBOR SGD” on the Reuters Screen SIBP Page (or such other replacement page thereof), being the offered rate for deposits in Singapore dollars for a period equal to the duration of such Interest Period and as adjusted by the Spread (if any); 23
(2)
(C)
if no such rate appears on the Reuters Screen SIBP Page (or such other replacement page thereof or if no rate appears on such other Screen Page as may be provided hereon) or if the Reuters Screen SIBP Page (or such other replacement page thereof or such other Screen Page as may be provided hereon) is unavailable for any reason, the Agent Bank will request the principal Singapore offices of each of the Reference Banks to provide the Agent Bank with the rate at which deposits in Singapore dollars are offered by it at approximately the Relevant Time on the Interest Determination Date to prime banks in the Singapore interbank market for a period equivalent to the duration of such Interest Period commencing on such Interest Payment Date in an amount comparable to the aggregate principal amount of the relevant Floating Rate Notes. The Rate of Interest for such Interest Period shall be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of such offered quotations and as adjusted by the Spread (if any), as determined by the Agent Bank;
(D)
if on any Interest Determination Date two but not all the Reference Banks provide the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be determined in accordance with (C) above on the basis of the quotations of those Reference Banks providing such quotations; and
(E)
if on any Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the rates quoted by the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about the Relevant Time on such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and as adjusted by the Spread (if any) or if on such Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotation, the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the prime lending rates for Singapore dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any);
in the case of Floating Rate Notes which are Swap Rate Notes: (A)
the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period which shall be the Average Swap Rate for such Interest Period (determined by the Agent Bank as being the rate which appears on the Reuters Screen ABSIRFIX01 Page under the caption “ASSOCIATION OF BANKS IN SINGAPORE - SIBOR AND SWAP OFFER RATES - RATES AT 11:00 AM SINGAPORE TIME” under the column headed “SGD SWAP OFFER” (or such replacement page thereof for the purpose of displaying the swap rates of leading reference banks) at or about the Relevant Time on such Interest Determination Date and for a period equal to the duration of such Interest Period) and as adjusted by the Spread (if any);
24
(B)
if on any Interest Determination Date, no such rate is quoted on the Reuters Screen ABSIRFIX01 Page (or such other replacement page as aforesaid) or the Reuters Screen ABSIRFIX01 Page (or such other replacement page as aforesaid) is unavailable for any reason, the Agent Bank will determine the Average Swap Rate (which shall be rounded up, if necessary, to the nearest 1/16 per cent.) for such Interest Period in accordance with the following formula: In the case of Premium: Average Swap Rate
=
365 360
x SIBOR + (Premium x 36500) (T x Spot Rate)
+ (SIBOR x Premium) (Spot Rate)
x
365 360
In the case of Discount: Average Swap Rate
=
365 360 –
x SIBOR – (Discount x 36500) (T x Spot Rate)
(SIBOR x Discount) (Spot Rate)
x
365 360
where: SIBOR
=
the rate which appears under the caption “SINGAPORE INTERBANK OFFER RATES (DOLLAR DEPOSITS) 11 A.M.” and the row headed “SIBOR USD” on the Reuters Screen SIBO Page (or such other page as may replace the Reuters Screen SIBO Page for the purpose of displaying Singapore interbank United States dollar offered rates of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned;
Spot Rate
=
the rate (determined by the Agent Bank) to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the rates quoted by the Reference Banks and which appear on the Reuters Screen ABSIRFIX06 Page under the caption “ASSOCIATION OF BANKS IN SINGAPORE - SGD SPOT AND SWAP OFFER RATES AT 11:00 AM SINGAPORE” under the column headed “SPOSPOT” (or such other replacement page thereof for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned;
Premium or Discount
=
the rate (determined by the Agent Bank) to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the rates quoted by the Reference Banks for a period equal to the duration of the Interest Period concerned which 25
appear on the Reuters Screen ABSIRFIX06 Page under the caption “ASSOCIATION OF BANKS IN SINGAPORE - SGD SPOT AND SWAP OFFER RATES AT 11:00 AM SINGAPORE” (or such other replacement page thereof for the purpose of displaying the spot rates and swap points of leading reference banks) at or about the Relevant Time on the relevant Interest Determination Date for a period equal to the duration of the Interest Period concerned; and T
=
the number of days in the Interest Period concerned.
The Rate of Interest for such Interest Period shall be the Average Swap Rate (as determined by the Agent Bank) and as adjusted by the Spread (if any); (C)
if on any Interest Determination Date any one of the components for the purposes of calculating the Average Swap Rate under (B) above is not quoted on the relevant Reuters Screen Page (or such other replacement page as aforesaid) or the relevant Reuters Screen Page (or such other replacement page as aforesaid) is unavailable for any reason, the Agent Bank will request the principal Singapore offices of the Reference Banks to provide the Agent Bank with quotations of their Swap Rates for the Interest Period concerned at or about the Relevant Time on that Interest Determination Date and the Rate of Interest for such Interest Period shall be the Average Swap Rate for such Interest Period (which shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the Swap Rates quoted by the Reference Banks to the Agent Bank) and as adjusted by the Spread (if any). The Swap Rate of a Reference Bank means the rate at which that Reference Bank can generate Singapore dollars for the Interest Period concerned in the Singapore inter-bank market at or about the Relevant Time on the relevant Interest Determination Date and shall be determined as follows: In the case of Premium: Swap Rate
=
365 360 +
x SIBOR + (Premium x 36500) (T x Spot Rate)
(SIBOR x Premium) (Spot Rate)
x
365 360
In the case of Discount: Swap Rate
=
365 360 –
x SIBOR – (Discount x 36500) (T x Spot Rate)
(SIBOR x Discount) (Spot Rate)
x
365 360
where: SIBOR
=
the rate per annum at which United States dollar deposits for a period equal to the duration of the Interest Period concerned are being offered by that Reference Bank to prime banks
26
in the Singapore interbank market at or about the Relevant Time on the relevant Interest Determination Date;
(D)
(3)
Spot Rate
=
the rate at which that Reference Bank sells United States dollars spot in exchange for Singapore dollars in the Singapore inter-bank market at or about the Relevant Time on the relevant Interest Determination Date;
Premium
=
the premium that would have been paid by that Reference Bank in buying United States dollars forward in exchange for Singapore dollars on the last day of the Interest Period concerned in the Singapore inter-bank market;
Discount
=
the discount that would have been received by that Reference Bank in buying United States dollars forward in exchange for Singapore dollars on the last day of the Interest Period concerned in the Singapore inter-bank market; and
T
=
the number of days in the Interest Period concerned; and
if on any Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with quotations of their Swap Rate(s), the Average Swap Rate shall be determined by the Agent Bank to be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the rates quoted by the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about the Relevant Time on such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and the Rate of Interest for the relevant Interest Period shall be the Average Swap Rate (as so determined by the Agent Bank) and as adjusted by the Spread (if any), or if on such Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotation, the Rate of Interest for the relevant Interest Period shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the prime lending rates for Singapore dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any); and
in the case of Floating Rate Notes which are not SIBOR Notes or Swap Rate Notes or which are denominated in a currency other than Singapore dollars, the Agent Bank will determine the Rate of Interest in respect of any Interest Period at or about the Relevant Time on the Interest Determination Date in respect of such Interest Period as follows: (A)
if the Primary Source for the Floating Rate is a Screen Page (as defined below), subject as provided below, the Rate of Interest in respect of such Interest Period shall be:
27
(aa)
the Relevant Rate (as defined below) (where such Relevant Rate on such Screen Page is a composite quotation or is customarily supplied by one entity); or
(bb)
the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Screen Page, in each case appearing on such Screen Page at the Relevant Time on the Interest Determination Date,
and as adjusted by the Spread (if any);
(iii)
(c)
(B)
if the Primary Source for the Floating Rate is Reference Banks or if paragraph (b)(ii)(3)(A)(aa) applies and no Relevant Rate appears on the Screen Page at the Relevant Time on the Interest Determination Date or if paragraph (b)(ii)(3)(A)(bb) applies and fewer than two Relevant Rates appear on the Screen Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of Interest shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to the nearest 1/16 per cent.) of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre (as defined below) at the Relevant Time on the Interest Determination Date and as adjusted by the Spread (if any); and
(C)
if paragraph (b)(ii)(3)(B) applies and the Agent Bank determines that fewer than two Reference Banks are so quoting Relevant Rates, the Rate of Interest shall be the Rate of Interest determined on the previous Interest Determination Date.
On the last day of each Interest Period, the Issuer will pay interest on each Floating Rate Note to which such Interest Period relates at the Rate of Interest for such Interest Period.
Rate of Interest – Variable Rate Notes (i)
Each Variable Rate Note bears interest at a variable rate determined in accordance with the provisions of this paragraph (c). The interest payable in respect of a Variable Rate Note on the first day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the “Agreed Yield” and the rate of interest payable in respect of a Variable Rate Note on the last day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the “Rate of Interest”.
(ii)
The Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect of each Variable Rate Note for each Interest Period shall, subject as referred to in paragraph (c)(iv) below, be determined as follows: (1)
not earlier than 9.00 a.m. (Singapore time) on the ninth business day nor later than 3.00 p.m. (Singapore time) on the third business day prior to the commencement of each Interest Period, the Issuer and the Relevant Dealer (as defined below) shall endeavour to agree on the following: (A)
whether interest in respect of such Variable Rate Note is to be paid on the first day or the last day of such Interest Period;
(B)
if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in respect of such Variable Rate Note for such Interest Period (and, in the event of the Issuer and the Relevant Dealer so agreeing on such Agreed Yield, the Interest Amount (as defined below) for such Variable Rate Note for such Interest Period shall be zero); and
28
(C)
(2)
(iii)
(iv)
if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in respect of such Variable Rate Note for such Interest Period (an “Agreed Rate”) and, in the event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such Agreed Rate shall be the Rate of Interest for such Variable Rate Note for such Interest Period; and
if the Issuer and the Relevant Dealer shall not have agreed either an Agreed Yield or an Agreed Rate in respect of such Variable Rate Note for such Interest Period by 3.00 p.m. (Singapore time) on the third business day prior to the commencement of such Interest Period, or if there shall be no Relevant Dealer during the period for agreement referred to in (1) above, the Rate of Interest for such Variable Rate Note for such Interest Period shall automatically be the rate per annum equal to the Fall Back Rate (as defined below) for such Interest Period.
The Issuer has undertaken to the Issuing and Paying Agent and the Agent Bank that it will as soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any Variable Rate Note is determined but not later than 10.30 a.m. (Singapore time) on the next following business day: (1)
notify the Issuing and Paying Agent and the Agent Bank of the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note for such Interest Period; and
(2)
cause such Agreed Yield or, as the case may be, Agreed Rate for such Variable Rate Note to be notified by the Issuing and Paying Agent to the relevant Noteholder at its request.
For the purposes of sub-paragraph (ii) above, the Rate of Interest for each Interest Period for which there is neither an Agreed Yield nor Agreed Rate in respect of any Variable Rate Note or no Relevant Dealer in respect of the Variable Rate Note(s) shall be the rate (the “Fall Back Rate”) determined by reference to a Benchmark as stated on the face of such Variable Rate Note(s), being (in the case of Variable Rate Notes which are denominated in Singapore dollars) SIBOR (in which case such Variable Rate Note(s) will be SIBOR Note(s)) or Swap Rate (in which case such Variable Rate Note(s) will be Swap Rate Note(s)) or (in any other case or in the case of Variable Rate Notes which are denominated in a currency other than Singapore dollars) such other Benchmark as is set out on the face of such Variable Rate Note(s). Such rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Variable Rate Note. The “Spread” is the percentage rate per annum specified on the face of such Variable Rate Note as being applicable to the rate of interest for such Variable Rate Note. The rate of interest so calculated shall be subject to Condition 4(V)(a) below. The Fall Back Rate payable from time to time in respect of each Variable Rate Note will be determined by the Agent Bank in accordance with the provisions of Condition 4(II)(b)(ii) above (mutatis mutandis) and references therein to “Rate of Interest” shall mean “Fall Back Rate”.
(v)
If interest is payable in respect of a Variable Rate Note on the first day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Agreed Yield applicable to such Variable Rate Note for such Interest Period on the first day of such Interest Period. If interest is payable in respect of a Variable Rate Note on the last day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Interest Amount for such Variable Rate Note for such Interest Period on the last day of such Interest Period.
29
(d)
Definitions As used in these Conditions: “Benchmark” means the rate specified as such in the applicable Pricing Supplement; “business day” means: (i)
(in the case of Notes denominated in Singapore dollars) a day (other than a Saturday, Sunday or public holiday) on which commercial banks are generally open for business in Singapore; and
(ii)
(in the case of Notes denominated in a currency other than Singapore dollars), a day (other than a Saturday, Sunday or public holiday) on which commercial banks and foreign exchange markets are generally open for business in Singapore and the principal financial centre for that currency;
“Calculation Amount” means the amount specified as such on the face of any Note, or if no such amount is so specified, the Denomination Amount of such Note as shown on the face thereof; “Interest Commencement Date” means the Issue Date or such other date as may be specified as the Interest Commencement Date on the face of such Note; “Interest Determination Date” means, in respect of any Interest Period, that number of business days prior thereto as is set out in the applicable Pricing Supplement or on the face of the relevant Note; “Reference Banks” means the institutions specified as such hereon or, if none, three major banks selected by the Agent Bank (in consultation with the Issuer) in the interbank market that is most closely connected with the Benchmark; “Relevant Currency” means the currency in which the Notes are denominated; “Relevant Dealer” means, in respect of any Variable Rate Note, the Dealer party to the Programme Agreement referred to in the Agency Agreement with whom the Issuer has concluded or is negotiating an agreement for the issue of such Variable Rate Note pursuant to the Programme Agreement; “Relevant Financial Centre” means, in the case of interest to be determined on an Interest Determination Date with respect to any Floating Rate Note or Variable Rate Note, the financial centre with which the relevant Benchmark is most closely connected or, if none is so connected, Singapore; “Relevant Rate” means the Benchmark for a Calculation Amount of the Relevant Currency for a period (if applicable or appropriate to the Benchmark) equal to the relevant Interest Period; “Relevant Time” means, with respect to any Interest Determination Date, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Relevant Currency in the inter-bank market in the Relevant Financial Centre; and “Screen Page” means such page, section, caption, column or other part of a particular information service (including, but not limited to, the Reuters Monitor Money Rates Service (“Reuters”) and the Moneyline Telerate Service (“Telerate”)) as may be specified hereon for the purpose of providing the Benchmark, or such other page, section, caption, column or other part as may replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Benchmark. 30
(III)
Interest on Hybrid Notes
(a)
Interest Rate and Accrual Each Hybrid Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note.
(b)
(c)
Fixed Rate Period (i)
In respect of the Fixed Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Fixed Rate Period at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest Payment Date or Interest Payment Dates shown on the face of the Note in each year and on the last day of the Fixed Rate Period if that date does not fall on an Interest Payment Date.
(ii)
The first payment of interest will be made on the Interest Payment Date next following the first day of the Fixed Rate Period (and if the first day of the Fixed Rate Period is not an Interest Payment Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the last day of the Fixed Rate Period falls before the date on which the first payment of interest would otherwise be due. If the last day of the Fixed Rate Period is not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the first day of the Fixed Rate Period, as the case may be) to the last day of the Fixed Rate Period will amount to the Final Broken Amount shown on the face of the Note.
(iii)
Where the due date of redemption of any Hybrid Note falls within the Fixed Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest at such rate will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(III) to the Relevant Date.
(iv)
In the case of a Hybrid Note, interest in respect of a period of less than one year will be calculated on the Day Count Fraction specified hereon during the Fixed Rate Period.
Floating Rate Period (i)
In respect of the Floating Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Floating Rate Period, and such interest will be payable in arrear on each interest payment date (“Interest Payment Date”). Such Interest Payment Date is/are either shown hereon as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the “Specified Number of Months”) after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the first day of the Floating Rate Period (and which corresponds numerically with such preceding Interest Payment Date or the first day of the Floating Rate Period, as the case may be). If any Interest Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a business day, then if the Business Day Convention specified is (1) the Floating Rate Business Day Convention, such date shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event (i) such date shall be brought forward to the immediately preceding business day and (ii) each subsequent such date shall be the last business day of the month in which such date would have fallen had it not been subject to adjustment, (2) the Following Business Day Convention, such date shall be postponed to the next day that is a business day, (3) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a business day unless it would thereby fall 31
into the next calendar month, in which event such date shall be brought forward to the immediately preceding business day or (4) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding business day.
(IV)
(ii)
The period beginning on the first day of the Floating Rate Period and ending on the first Interest Payment Date and each successive period beginning on an Interest Payment Date and ending on the next succeeding Interest Payment Date is herein called an “Interest Period”.
(iii)
Where the due date of redemption of any Hybrid Note falls within the Floating Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation thereof, payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in this Condition 4(III) and the Agency Agreement to the Relevant Date.
(iv)
The provisions of Condition 4(II)(b) shall apply to each Hybrid Note during the Floating Rate Period as though references therein to Floating Rate Notes are references to Hybrid Notes.
Zero Coupon Notes Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Note (determined in accordance with Condition 5(f)). As from the Maturity Date, the rate of interest for any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Condition 5(f)).
(V)
Calculations
(a)
Determination of Rate of Interest and Calculation of Interest Amounts The Agent Bank will, as soon as practicable after the Relevant Time on each Interest Determination Date determine the Rate of Interest and calculate the amount of interest payable (the “Interest Amounts”) in respect of each Calculation Amount of the relevant Floating Rate Notes, Variable Rate Notes or (where applicable) Hybrid Notes for the relevant Interest Period. The amount of interest payable in respect of any Note shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount, by the Day Count Fraction shown on the Note and rounding the resultant figure to the nearest sub-unit of the relevant currency. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Agent Bank shall (in the absence of manifest error) be final and binding upon all parties.
(b)
Notification The Agent Bank will cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified to the Issuing and Paying Agent, the Trustee and the Issuer and (in the case of Floating Rate Notes) to be notified to Noteholders in accordance with Condition 15 as soon as possible after their determination but in no event later than the fourth business day thereafter. The Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period by reason of any Interest Payment Date not being a business day. If the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes become due and payable under Condition 9, the Rate of Interest and Interest Amounts payable in respect of the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest and Interest Amounts need to be made unless the Trustee requires otherwise.
32
(c)
Determination or Calculation by the Trustee If the Agent Bank does not at any material time determine or calculate the Rate of Interest for an Interest Period or any Interest Amount, the Trustee shall do so. In doing so, the Trustee shall apply the foregoing provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects, it shall do so in such manner as it shall deem fair and reasonable in all the circumstances.
(d)
Agent Bank and Reference Banks The Issuer will procure that, so long as any Floating Rate Note, Variable Rate Note or Hybrid Note remains outstanding, there shall at all times be three Reference Banks (or such other number as may be required) and, so long as any Floating Rate Note, Variable Rate Note, Hybrid Note or Zero Coupon Note remains outstanding, there shall at all times be an Agent Bank. If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank or the Agent Bank is unable or unwilling to act as such or if the Agent Bank fails duly to establish the Rate of Interest for any Interest Period or to calculate the Interest Amounts, the Issuer will appoint another bank with an office in the Relevant Financial Centre to act as such in its place. The Agent Bank may not resign its duties without a successor having been appointed as aforesaid.
5.
Redemption and Purchase (a)
Final Redemption Unless previously redeemed or purchased and cancelled as provided below, this Note will be redeemed at its Redemption Amount on the Maturity Date shown on its face (if this Note is shown on its face to be a Fixed Rate Note, Hybrid Note (during the Fixed Rate Period) or Zero Coupon Note) or on the Interest Payment Date falling in the Redemption Month shown on its face (if this Note is shown on its face to be a Floating Rate Note, Variable Rate Note or Hybrid Note (during the Floating Rate Period)).
(b)
Redemption at the Option of the Issuer If so provided hereon, the Issuer may, on giving irrevocable notice to the Noteholders falling within the Issuer’s Redemption Option Period shown on the face hereof, redeem all or, if so provided, some of the Notes at their Redemption Amount or integral multiples thereof and on the date or dates so provided. Any such redemption of Notes shall be at their Redemption Amount, together with interest accrued to the date fixed for redemption. All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition. In the case of a partial redemption of the Notes, the notice to Noteholders shall also contain the certificate numbers of the Notes to be redeemed, which shall have been drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between the Issuer and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on the Singapore Exchange Securities Trading Limited, the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any redemption of Notes.
(c)
Redemption at the Option of Noteholders If so provided hereon, the Issuer shall, at the option of the holder of any Note, redeem such Note on the date or dates so provided at its Redemption Amount together with interest accrued to the date fixed for redemption. To exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with the Issuing and Paying Agent at its specified office, together with a duly completed option exercise notice in the form obtainable from the Issuing and Paying Agent or the Issuer (as applicable) within the Noteholders’ Redemption Option Period shown on the face hereof. Any Note so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer.
33
(d)
Redemption for Taxation Reasons If so provided hereon, the Notes may be redeemed at the option of the Issuer in whole, but not in part, on any Reference Date or Interest Payment Date (as the case may be) or, if so specified hereon, at any time on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their Redemption Amount or (in the case of Zero Coupon Notes) Early Redemption Amount (as defined in Condition 5(f) below) (together with interest accrued to (but excluding) the date fixed for redemption), if (i) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 7, or increase the payment of such additional amounts, as a result of any change in, or amendment to, the laws (or any regulations, rulings or other administrative pronouncements promulgated thereunder) of Singapore or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws, regulations, rulings or other administrative pronouncements, which change or amendment is made public on or after the Issue Date or any other date specified in the Pricing Supplement, and (ii) such obligations cannot be avoided by the Issuer taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Issuing and Paying Agent a certificate signed by a duly authorised officer of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem under this Condition 5(d) have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or is likely to become obliged to pay such additional amounts as a result of such change or amendment.
(e)
Purchases The Issuer or any of its related corporations may at any time purchase Notes at any price (provided that they are purchased together with all unmatured Coupons relating to them) in the open market or otherwise, provided that in any such case such purchase or purchases is in compliance with all relevant laws, regulations and directives. Notes purchased by the Issuer or any of its related corporations may be surrendered by the purchaser through the Issuer or the relevant related corporation to the Issuing and Paying Agent for cancellation or may at the option of the Issuer be held or resold. For the purposes of these Conditions, “directive” includes any present or future directive, regulation, request, requirement, rule or credit restraint programme of any relevant agency, authority, central bank department, government, legislative, minister, ministry, official public or statutory corporation, self-regulating organisation, or stock exchange.
(f)
Early Redemption of Zero Coupon Notes (i)
The Early Redemption Amount payable in respect of any Zero Coupon Note, the Early Redemption Amount of which is not linked to an index and/or formula, upon redemption of such Note pursuant to Condition 5(d) or upon it becoming due and payable as provided in Condition 9, shall be the Amortised Face Amount (calculated as provided below) of such Note unless otherwise specified hereon.
(ii)
Subject to the provisions of sub-paragraph (iii) below, the Amortised Face Amount of any such Note shall be the scheduled Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is shown hereon, shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if they were discounted back to their issue price on the Issue Date) compounded annually.
(iii)
If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to Condition 5(d) or upon it becoming due and payable as provided in Condition 9 is not paid when due, the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such 34
Note as defined in sub-paragraph (ii) above, except that such sub-paragraph shall have effect as though the date on which the Note becomes due and payable were the Relevant Date. The calculation of the Amortised Face Amount in accordance with this sub-paragraph will continue to be made (as well after as before judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Redemption Amount of such Note on the Maturity Date together with any interest which may accrue in accordance with Condition 4(IV). Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction shown hereon. (g)
Cancellation All Notes purchased by or on behalf of the Issuer or any of related corporations may be surrendered for cancellation by surrendering each such Note together with all unmatured Coupons to the Issuing and Paying Agent at its specified office and, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Coupons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold.
6.
Payments (a)
Principal and Interest Payments of principal and interest in respect of the Notes will, subject as mentioned below, be made against presentation and surrender of the relevant Notes or Coupons, as the case may be, at the specified office of the Issuing and Paying Agent by a cheque drawn in the currency in which payment is due on, or, at the option of the holders, by transfer to an account maintained by the payee in that currency with, a bank in the principal financial centre for that currency.
(b)
Payments subject to law etc. All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 7. No commission or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.
(c)
Appointment of Agents The Issuing and Paying Agent and its specified office are listed below. The Issuer reserves the right at any time to vary or terminate the appointment of the Issuing and Paying Agent and to appoint additional or other Issuing and Paying Agents, provided that it will at all times maintain an Issuing and Paying Agent having a specified office in Singapore. Notice of any such change or any change of any specified office will promptly be given to the Noteholders in accordance with Condition 15. The Agency Agreement may be amended by the Issuer, the Issuing and Paying Agent and the Trustee, without the consent of any Noteholder, for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained therein or in any manner which the Issuer, the Issuing and Paying Agent and the Trustee may mutually deem necessary or desirable and which does not, in the reasonable opinion of the Issuer, the Issuing and Paying Agent and the Trustee, adversely affect the interests of the Noteholders.
(d)
Unmatured Coupons (i)
Fixed Rate Notes and Hybrid Notes should be surrendered for payment together with all unmatured Coupons (if any) relating to such Notes (and, in the case of Hybrid Notes, relating to interest payable during the Fixed Rate Period), failing which an amount equal to the face value of each missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the amount of such missing unmatured Coupon which the sum of principal so paid bears to the total principal 35
due) will be deducted from the Redemption Amount due for payment. Any amount so deducted will be paid in the manner mentioned above against surrender of such missing Coupon within a period of three years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 8).
(e)
(ii)
Subject to the provisions of the relevant Pricing Supplement upon the due date for redemption of any Floating Rate Note, Variable Rate Note or Hybrid Note, unmatured Coupons relating to such Note (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period) (whether or not attached) shall become void and no payment shall be made in respect of them.
(iii)
Where any Floating Rate Note, Variable Rate Note or Hybrid Note is presented for redemption without all unmatured Coupons relating to it (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period), redemption shall be made only against the provision of such indemnity as the Issuer may require.
(iv)
If the due date for redemption or repayment of any Note is not a due date for payment of interest, interest accrued from the preceding due date for payment of interest or the Interest Commencement Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant Note.
Non-business days Subject as provided in the relevant Pricing Supplement or subject as otherwise provided in these Conditions, if any date for the payment in respect of any Note or Coupon is not a business day, the holder shall not be entitled to payment until the next following business day and shall not be entitled to any further interest or other payment in respect of any such delay.
(f)
Default Interest If on or after the due date for payment of any sum in respect of the Notes, payment of all or any part of such sum is not made against due presentation of the Notes or, as the case may be, the Coupons, the Issuer shall pay interest on the amount so unpaid from such due date up to the day of actual receipt by the relevant Noteholders or, as the case may be, Couponholders (as well after as before judgment) at a rate per annum determined by the Issuing and Paying Agent to be equal to one per cent. per annum above (in the case of a Fixed Rate Note or a Hybrid Note during the Fixed Rate Period) the Interest Rate applicable to such Note, (in the case of a Floating Rate Note or a Hybrid Note during the Floating Rate Period) the Rate of Interest applicable to such Note or (in the case of a Variable Rate Note) the variable rate by which the Agreed Yield applicable to such Note is determined or, as the case may be, the Rate of Interest applicable to such Note, or in the case of a Zero Coupon Note, as provided for in the relevant Pricing Supplement. So long as the default continues then such rate shall be re-calculated on the same basis at intervals of such duration as the Issuing and Paying Agent may select, save that the amount of unpaid interest at the above rate accruing during the preceding such period shall be added to the amount in respect of which the Issuer is in default and itself bear interest accordingly. Interest at the rate(s) determined in accordance with this paragraph shall be calculated on the Day Count Fraction specified hereon and the actual number of days elapsed, shall accrue on a daily basis and shall be immediately due and payable by the Issuer.
7.
Taxation All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction or withholding been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment: 36
(a)
by or on behalf of a holder who is subject to such taxes, duties, assessments or governmental charges by reason of his being connected with Singapore otherwise than by reason only of the holding of such Note or Coupon or the receipt of any sums due in respect of such Note or Coupon (including, without limitation, the holder being a resident of, or a permanent establishment in, Singapore); or
(b)
more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to such additional amounts on presenting the same for payment on the last day of such period of 30 days.
As used in these Conditions, “Relevant Date” in respect of any Note or Coupon means the date on which payment in respect thereof first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date falling seven days after that on which notice is duly given to the Noteholders in accordance with Condition 15 that, upon further presentation of the Note or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon presentation, and references to “principal” shall be deemed to include any premium payable in respect of the Notes, all Redemption Amounts, Early Redemption Amounts and all other amounts in the nature of principal payable pursuant to Condition 5, “interest” shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 4 and any reference to “principal” and/or “premium” and/or “Redemption Amounts” and/or “interest” and/or “Early Redemption Amounts” shall be deemed to include any additional amounts which may be payable under these Conditions. 8.
Prescription The Notes and Coupons shall become void unless presented for payment within three years from the appropriate Relevant Date for payment.
9.
Events of Default If any of the following events (“Events of Default”) occurs the Trustee at its discretion may, and if so requested by holders of at least 50 per cent. in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall, give notice to the Issuer that the Notes are immediately repayable, whereupon the Redemption Amount of such Notes or (in the case of Zero Coupon Notes) the Early Redemption Amount of such Notes together with accrued interest to the date of payment shall become immediately due and payable: (a)
the Issuer does not pay any sum payable by it under any of the Notes or the Issue Documents (as defined in the Trust Deed) when due and such default continues for not less than five business days;
(b)
the Issuer does not perform or comply with any one or more of its obligations (other than the payment obligation of the Issuer referred to in paragraph (a)) under any of the Issue Documents or any of the Notes and, if the opinion of the Trustee that default is capable of remedy, it is not in the opinion of the Trustee remedied within 30 days of its occurrence;
(c)
any representation or warranty by the Issuer in any of the Issue Documents or any of the Notes or in any document delivered under any of the Issue Documents or any of the Notes is not complied with in any respect or is or proves to have been incorrect in any respect when made or deemed repeated and if the event resulting in such non-compliance is, in the opinion of the Trustee, capable of remedy, it is not in the opinion of the Trustee remedied within 30 days of its occurrence;
(d)
(i)
any other present or future indebtedness of the Issuer or any of its Principal Subsidiaries in respect of borrowed money is or is declared to be or is capable of being rendered due and payable prior to its stated maturity by reason of any actual or potential default, event of default or the like (however described) or is not paid when due or, as the case may be, within any applicable grace period in any agreement relating to that indebtedness or seven business days of its due date, whichever is later; or 37
(ii)
the Issuer or any of its Principal Subsidiaries fails to pay when properly called upon to do so or within seven business days of the due date, whichever is later, any present or future guarantee of indebtedness for borrowed moneys,
Provided however that no Event of Default will occur under this paragraph (d) unless and until the aggregate amount of the indebtedness in respect of which one or more of the events mentioned in this paragraph (d) has or have occurred exceeds S$15,000,000 or its equivalent in other currency or currencies (as determined by the Trustee); (e)
the Issuer or any of its Principal Subsidiaries is (or is, or could be, deemed by law or a court to be) insolvent or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of (or of a particular type of) its indebtedness, begins negotiations or takes any other step with a view to the deferral, rescheduling or other readjustment of all or a material part of (or of a particular type of) its indebtedness (or of any part which it will or might otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors or a moratorium is agreed or declared in respect of or affecting all or a material part of (or of a particular type of) the indebtedness of the Issuer or any of its Principal Subsidiaries;
(f)
a distress, attachment, execution or other legal process is levied, enforced or sued out on or against all or a material part of the assets of the Issuer or any of its Principal Subsidiaries and is not discharged or stayed within 30 days;
(g)
any security on or over all or a material part of the assets of the Issuer or any of its Principal Subsidiaries becomes enforceable;
(h)
any voluntary step is taken by the Issuer or any of its Principal Subsidiaries, or the commencement of legal proceedings by a person other than the Issuer or any of its Principal Subsidiaries, with a view to the winding-up of the Issuer or any of its Principal Subsidiaries (except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger, consolidation or transfer of assets to its subsidiary and such event does not or is not likely to have a material adverse effect on the Issuer) or the appointment of a liquidator (including a provisional liquidator), receiver, judicial manager, trustee, administrator, agent or similar officer of the Issuer or any of its Principal Subsidiaries or over any part of the assets of the Issuer or any of its Principal Subsidiaries;
(i)
the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on all or any material part of its business or (otherwise than in the ordinary course of its business) disposes or threatens to dispose of the whole or any material part of its property or assets (in each case, otherwise than for the purposes of such a consolidation, amalgamation, merger, reconstruction or transfer of assets as is referred to in the parenthesis in paragraph (h) above);
(j)
any governmental authority or agency or court seizes, compulsorily acquires, expropriates or nationalises all or a material part of the assets of the Issuer or any of its Principal Subsidiaries;
(k)
any action, condition or thing (including the obtaining of any necessary consent) at any time required to be taken, fulfilled or done in order (i) to enable it lawfully to enter into, exercise its rights and perform and comply with its obligations under each of the Issue Documents and the Notes, (ii) to ensure that those obligations are valid, legally binding and enforceable, (iii) to ensure that those obligations rank and will at all times rank in accordance with Condition 2 or (iv) to make the Issue Documents and the Notes admissible in evidence in the courts of Singapore is not taken, fulfilled or done, or any such consent ceases to be in full force and effect without modification or any condition in or relating to any such consent is not complied with (unless that consent or condition is no longer required or applicable);
(l)
it is or will become unlawful for the Issuer to perform or comply with any one or more of its payment or other material obligations under any of the Issue Documents or any of the Notes; 38
(m)
any of the Issue Documents or any of the Notes ceases for any reason (or is claimed by the Issuer not) to be the legal and valid obligations of the Issuer, binding upon it in accordance with its terms;
(n)
any litigation, arbitration or administrative proceeding is current or pending other than those of a frivolous or vexatious nature (i) to restrain the exercise of any of the rights and/or the performance or enforcement of or compliance with any of the obligations of the Issuer under any of the Issue Documents or any of the Notes or (ii) which has or is reasonably likely to have a material adverse effect on the Issuer’s ability to perform or comply with its obligations under any of the Issue Documents or the Notes;
(o)
any event occurs which, under the law of any relevant jurisdiction, has an analogous or equivalent effect to any of the events mentioned in paragraph (e), (f), (g), (h) or (j); and
(p)
the Issuer or any of its Principal Subsidiaries is declared by the Minister of Finance to be a declared company under the provisions of Part IX of the Companies Act, Chapter 50 of Singapore or analogous provisions in the relevant jurisdictions.
In these Conditions: (1)
“LRH” means Laguna Resorts & Hotels Public Company Limited, a Principal Subsidiary of the Issuer as at the date of the Trust Deed.
(2)
“Principal Subsidiaries” means any subsidiary of the Issuer: (aa)
whose total assets, as shown by the accounts of such subsidiary (consolidated in the case of a company which itself has subsidiaries), based upon which the latest audited consolidated accounts of the Group have been prepared, are at least 10 per cent. of the total assets of the Group as shown by such audited consolidated accounts; or
(bb)
whose turnover, as shown by the accounts of such subsidiary (consolidated in the case of a company which itself has subsidiaries), based upon which the latest audited consolidated accounts of the Group have been prepared, is at least 10 per cent. of the consolidated turnover of the Group as shown by such audited consolidated accounts,
provided that if any such subsidiary (the “transferor”) shall at any time transfer the whole or a substantial part of its business, undertaking or assets to another subsidiary or the Issuer (the “transferee”) then: (I)
if the whole of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall thereupon cease to be a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary; and
(II)
if a substantial part only of the business, undertaking and assets of the transferor shall be so transferred, the transferor shall remain a Principal Subsidiary and the transferee (unless it is the Issuer) shall thereupon become a Principal Subsidiary.
Any subsidiary which becomes a Principal Subsidiary by virtue of (I) above or which remains or becomes a Principal Subsidiary by virtue of (II) above shall continue to be a Principal Subsidiary until the date of issue of the first audited consolidated accounts of the Group prepared as at a date later than the date of the relevant transfer which show the total assets or (as the case may be) turnover as shown by the accounts of such subsidiary (consolidated (if any) in the case of a company which itself has subsidiaries), based upon which such audited consolidated accounts have been prepared, to be less than 10 per cent. of the total assets or, as the case may be, the consolidated turnover of the Group, as shown by such audited consolidated accounts. A report by the Auditors, who shall also be responsible for producing any pro-forma accounts required for the above purposes, that in their opinion a subsidiary is or is not a Principal Subsidiary shall, in the absence of manifest error, be conclusive.
39
(3)
10.
“subsidiary” means: (i)
a subsidiary within the meaning of Section 5 of the Companies Act, Chapter 50 of Singapore;
(ii)
a trust, fund or other entity (whether or not a body corporate) in which more than half of the interest in such trust, fund or other entity (whether represented by units or otherwise) is beneficially owned, directly or indirectly, by the Issuer; or
(iii)
any company or corporation which is a subsidiary of any trust, fund or other entity (whether or not a body corporate) to which paragraph (ii) above applies.
Enforcement of Rights At any time after the Notes shall have become due and payable, the Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce repayment of the Notes, together with accrued interest, but it shall not be bound to take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by Noteholders holding not less than 50 per cent. in principal amount of the Notes outstanding and (b) it shall have been indemnified by the Noteholders to its satisfaction. No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound to do so, fails or neglects to do so within a reasonable period and such failure or neglect shall be continuing.
11.
Meeting of Noteholders and Modifications The Trust Deed contains provisions for convening meetings of Noteholders of a Series to consider any matter affecting their interests, including modification by Extraordinary Resolution of the Notes of such Series (including these Conditions insofar as the same may apply to such Notes) or any of the provisions of the Trust Deed. The Trustee or the Issuer at any time may, and the Trustee upon the request in writing by Noteholders holding not less than one-tenth of the principal amount of the Notes of any Series for the time being outstanding shall, convene a meeting of the Noteholders of that Series. An Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders of the relevant Series, whether present or not and on all relevant Couponholders, except that any Extraordinary Resolution proposed, inter alia, (a) to amend the dates of maturity or redemption of the Notes or any date for payment of interest or Interest Amounts on the Notes, (b) to reduce or cancel the principal amount of, or any premium payable on redemption of, the Notes, (c) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates of interest or the basis for calculating any Interest Amount in respect of the Notes, (d) to vary any method of, or basis for, calculating the Redemption Amount or the Early Redemption Amount including the method of calculating the Amortised Face Amount, (e) to vary the currency or currencies of payment or denomination of the Notes, (f) to take any steps that as specified hereon may only be taken following approval by an Extraordinary Resolution to which the special quorum provisions apply or (g) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary Resolution, will only be binding if passed at a meeting of the Noteholders of the relevant Series (or at any adjournment thereof) at which a special quorum (provided for in the Trust Deed) is present. The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification of any of the provisions of the Trust Deed which in the opinion of the Trustee is of a formal, minor or technical nature, is made to correct a manifest error or to comply with mandatory provisions of Singapore law or is required by Euroclear Bank S.A./N.V. and/or Clearstream Banking, société anonymé and/or The Central Depository (Pte) Limited and/or any other clearing system in which the Notes may be held and (ii) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed which is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Noteholders as soon as practicable. 40
In connection with the exercise of its functions (including but not limited to those in relation to any proposed modification, waiver, authorisation or substitution) the Trustee shall have regard to the interests of the Noteholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders. These Conditions may be amended, modified, or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series. 12.
Replacement of Notes and Coupons If a Note or Coupon is lost, stolen, mutilated, defaced or destroyed it may be replaced, subject to applicable laws, at the specified office of the Issuing and Paying Agent, or at the specified office of such other Issuing and Paying Agent as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Noteholders in accordance with Condition 15, on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note or Coupon is subsequently presented for payment, there will be paid to the Issuer on demand the amount payable by the Issuer in respect of such Note or Coupon) and otherwise as the Issuer may require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.
13.
Further Issues The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further notes having the same terms and conditions as the Notes of any Series and so that the same shall be consolidated and form a single Series with such Notes, and references in these Conditions to “Notes” shall be construed accordingly.
14.
Indemnification of the Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking proceedings to enforce repayment unless indemnified to its satisfaction. The Trust Deed also contains a provision entitling the Trustee to enter into business transactions with the Issuer or any of its subsidiaries without accounting to the Noteholders or Couponholders for any profit resulting from such transactions.
15.
Notices Notices to the holders will be valid if published in a daily newspaper of general circulation in Singapore (or, if the holders of any Series of Notes can be identified, notices to such holders will also be valid if they are given to each of such holders). It is expected that such publication will be made in the Business Times. Notices will, if published more than once or on different dates, be deemed to have been given on the date of the first publication in such newspaper as provided above. Couponholders shall be deemed for all purposes to have notice of the contents of any notice to the holders in accordance with this Condition 15. Until such time as any Definitive Notes (as defined in the Trust Deed) are issued, there may, so long as the Global Note(s) is or are held in its or their entirety on behalf of Euroclear, Clearstream, Luxembourg and/or the Depository, be substituted for such publication in such newspapers the delivery of the relevant notice to Euroclear, Clearstream, Luxembourg and/or the Depository for communication by it to the Noteholders, except that if the Notes are listed on the Singapore Exchange Securities Trading Limited and the rules of such exchange so require, notice will in any event be published in accordance with the previous paragraph. Any such notice shall be deemed to have been given to the Noteholders on the seventh day after the day on which the said notice was given to Euroclear, Clearstream, Luxembourg and/or the Depository. Notices to be given by any Noteholder pursuant hereto (including to the Issuer) shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Issuing and Paying Agent. Whilst the Notes are represented by a Global Note, such notice may be given by
41
any Noteholder to the Issuing and Paying Agent through Euroclear, Clearstream, Luxembourg and/ or the Depository in such manner as the Issuing and Paying Agent and Euroclear, Clearstream, Luxembourg and/or the Depository may approve for this purpose. Notwithstanding the other provisions of this Condition, in any case where the identity and addresses of all the Noteholders are known to the Issuer, notices to such holders may be given individually by recorded delivery mail to such addresses and will be deemed to have been given when received at such addresses. 16.
Governing Law The Notes and the Coupons are governed by, and shall be construed in accordance with, the laws of Singapore.
17.
Contracts (Rights of Third Parties) Act No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore.
42
RISK FACTORS Prior to making an investment or divestment decision, prospective investors or existing holders of the Notes should carefully consider all the information set forth in this Information Memorandum including the risk factors set out below. The risk factors set out below do not purport to be complete or comprehensive of all the risks that may be involved in the businesses of the Issuer, or any decision to purchase, own or dispose of the Notes. Additional risks which the Issuer are currently unaware of may also impair the businesses, financial condition, performance or prospects. Limitations of this Information Memorandum This Information Memorandum does not purport to nor does it contain all information that a prospective investor or existing holder in the Notes may require in investigating the Issuer, prior to making an investment or divestment decision in relation to the Notes issued under the Programme. Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme or the Notes (nor any part thereof) is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, any of the Dealers or the Arranger that any recipient of this Information Memorandum or any such other document or information (or such part thereof) should subscribe for or purchase or sell any of the Notes. Each person receiving this Information Memorandum acknowledges that such person has not relied on the Issuer, its subsidiaries or associated companies (if any), any of the Dealers or the Arranger or any person affiliated with each of them in connection with its investigation of the accuracy or completeness of the information contained herein or of any additional information considered by it to be necessary in connection with its investment or divestment decision. Any recipient of this Information Memorandum contemplating subscribing for or purchasing or selling any of the Notes should determine for itself the relevance of the information contained in this Information Memorandum and any such other document or information (or any part thereof) and its investment or divestment should be, and shall be deemed to be, based solely upon its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer, its subsidiaries and associated companies (if any), the terms and conditions of the Notes and any other factors relevant to its decision, including the merits and risks involved. RISKS RELATING TO AN INVESTMENT IN THE NOTES Limited Liquidity of the Notes issued under the Programme There can be no assurance regarding the future development of the market for the Notes issued under the Programme, the ability of such Noteholders, or the price at which such Noteholders may be able, to sell their Notes. Although the issue of additional Notes may increase the liquidity of the Notes, there can be no assurance that the price of such Notes will not be adversely affected by the issue in the market of such additional Notes. Fluctuation of Market Value of Notes issued under the Programme Trading prices of the Notes are influenced by numerous factors, including the operating results and/or financial condition of the Issuer and/or its subsidiaries and/or associated companies (if any), political, economic, financial and any other factors that can affect the capital markets, the industry, the Issuer, its subsidiaries and/or associated companies (if any) generally. Adverse economic developments, in Singapore as well as countries in which the Issuer, its subsidiaries and/or associated companies (if any) operate or have business dealings, could have a material adverse effect on the Singapore economy and the operating results and/or the financial condition of the Issuer, its subsidiaries and associated companies (if any).
43
Interest Rate Risk Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in bond prices, resulting in a capital loss for the Noteholders. However, the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, bond prices may rise. The Noteholders may enjoy a capital gain but interest payments received may be reinvested at lower prevailing interest rates. Inflation Risk Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders would have an anticipated rate of return based on expected inflation rates on the purchase of the Notes. An unexpected increase in inflation could reduce the actual returns. Singapore Taxation Risk The Notes to be issued from time to time under the Programme, during the period from the date of this Information Memorandum to 31 December 2013, are intended to be “qualifying debt securities” for the purposes of the Income Tax Act, Chapter 134 of Singapore (“ITA”) subject to the fulfillment of certain conditions more particularly described in the section “Singapore Taxation”. However, there is no assurance that such Notes will continue to enjoy the tax concessions should the relevant tax laws be amended or revoked at any time. The Qualifying Debt Securities Plus Scheme (“QDS Plus Scheme”) has also been introduced as an enhancement of the Qualifying Debt Securities Scheme. Under the QDS Plus Scheme, subject to certain qualifications and conditions, income tax exemption is granted on interest, discount income (not including discount income from secondary trading), “prepayment fee”, “redemption premium” and “break cost” (as such terms are defined in the ITA) derived by any investor from qualifying debt securities (excluding Singapore Government Securities) which: (a)
are issued during the period from 16 February 2008 to 31 December 2013;
(b)
have an original maturity of not less than 10 years;
(c)
cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue; and
(d)
cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date.
With respect to any tranche of the Notes issued with an original maturity of at least 10 years and which are “qualifying debt securities”, there is no assurance that holders of such Notes would enjoy any tax exemption under the QDS Plus Scheme as it is currently unclear how the above requirements would be applicable in the context of certain events occurring or which may occur within 10 years from the date of issue of such Notes. RISKS RELATING TO THE GROUP’S BUSINESS AND OPERATIONS Prospective investors should carefully consider and evaluate each of the following considerations and all other information contained in this Information Memorandum before deciding whether to invest in the Notes. The Group could be affected by a number of risks that may relate to the industries in which the Group operates as well as those that may generally arise from, inter alia, economics, business, market and political factors, including the risks set out herein. The risks described below (which may be known or anticipated by the general public but are nevertheless set out herein for information) are not intended to be exhaustive. There may be additional risks not presently known to the Issuer, or that the Issuer may currently deem immaterial, which could affect the Group’s net sales or revenues, profitability, liquidity, capital resources, profits, financial condition, results, business operations and/or prospects (collectively, “Business”) and/or any investment in the Notes. If any of the following considerations and uncertainties develops into actual events, the Business could be materially and adversely affected.
44
The Group may not be able to successfully develop new resorts, hotels, spas, resort residences or serviced residences The Group is developing and intends to develop new resorts, hotels, spas, resort residences and serviced residences in the future. The Group’s operation of resorts, hotels, spas, resort residences and serviced residences in new locations, many of which the Group expects to be in geographic regions where it has limited operating experience, and its acquisition of land and/or existing hotel or resort properties could present operating, marketing, financial and legal challenges that are different from those that the Group currently encounters in its existing locations. There can be no assurance that the Group will succeed in implementing its strategy of expanding into new geographic markets to become more accessible to its key customer segments. If the Group is unsuccessful in doing so, it may be unable to expand its operations and increase its revenues and profits. The Group’s ability to expand its existing business and operations and pursue new growth opportunities successfully will depend on factors such as its ability to: identify suitable acquisition and expansion opportunities; negotiate purchases of vacant land and/or existing hotel or resort properties as well as the construction or refurbishment of resorts, hotels, resort residences and serviced residences on satisfactory terms; obtain the necessary financing on competitive terms; obtain the requisite regulatory and/or governmental approvals; and integrate new properties into its existing operations. The Group’s operations may be adversely affected by another outbreak of Severe Acute Respiratory Syndrome (“SARS”), avian flu or other epidemics Epidemics such as SARS, H5N1 avian flu or H1N1 human swine flu (also known as Influenza A), have caused varying degrees of harm to business and the economies in which the Group operates. During the period in which an epidemic was prevalent, it had an adverse effect on the economies of those countries which were affected, and on the hospitality and leisure industry in general. As a consequence of the epidemic outbreak, certain countries implemented immigration policies to restrict travellers coming from, and several airlines reduced flights to and from, epidemic-affected countries or regions. The Group’s operations in epidemic-affected countries were adversely affected, particularly the Group’s visitor numbers and bookings for its resorts and hotels. If an epidemic re-emerges, the Group’s business, revenues, financial condition and results of operations could be materially and adversely affected. Terrorist attacks and other acts of violence or war may adversely affect the Group’s business Terrorist attacks, such as those that occurred in the United States on 11 September 2001, in Bali on 12 October 2002 and 2 October 2005, in Jakarta on 5 August 2003 and 9 September 2004, in Madrid on 11 March 2004, in London on 7 July 2005 and in Mumbai on 26 November 2008, armed conflicts or other acts of violence, may adversely affect the Group’s operations, revenues and profitability. The consequences of any terrorist attacks, armed conflicts or other acts of violence are unpredictable and may include the issuance of travel advisories warning people to defer and/or avoid travel to certain locations in which the Group operates, as well as a general reluctance of people to travel. The Group may not be able to foresee events that could have an adverse effect on the travel, hospitality and leisure industry, the locations in which the Group’s resorts and hotels are located and its business and results of operations. Since January 2004, there have been numerous terrorist incidents, including attacks on Thailand’s security forces and other sporadic acts of violence caused by separatist groups in southern Thailand, approximately 500 kilometres from Laguna Phuket. The Thai government declared martial law in certain southern provinces of Thailand in January 2004 and in November 2005 to curtail the violence. This led countries like the United States and the United Kingdom to issue travel warnings for the region. As at the Latest Practicable Date, these travel warnings have been lifted. If such terrorist incidents and acts of violence were to continue in Thailand or spread to other regions of Thailand, its hospitality and leisure industry could experience a downturn and there could be a material adverse effect on the Group’s business, financial condition, profitability and results of operations. 45
The Group may fail to promote or guard the value of its brands The Group intends to continue to develop and increase the value of the Banyan Tree and Angsana brands. The Group believes brand awareness, image and loyalty are critical to its ability to achieve and maintain high Average occupancy and Average room rates, and to support the larger number of resorts, hotels, spas and galleries it intends to operate and manage. If the Group fails to provide the service levels, the facilities and the experience promised by its marketing programmes, then the value of its brands could be diminished, which would have a material adverse effect on its business, financial condition, profitability and results of operations. The Group’s success will also depend on its awareness of and its ability to prevent third parties from using its brands without its consent. The Group could incur substantial costs in pursuing any claims relating to the Marks. Issues relating to intellectual property rights can be complicated and there is no assurance that disputes will not arise or that any disputes in relation to the Marks will be resolved in its favour. The Group is in the process of registering all the assignments of the Trademarks in a number of jurisdictions where it is required. Until such registrations are completed, the process of protecting the Group’s interests should there be an infringement, may be more complex. The Group derives a majority of its revenues from LRH’s operations in Thailand and the Group is therefore highly dependent on LRH’s performance For each of the years ended 31 December 2008, 2009 and 2010, 87.6%, 60.5% and 89.5% of the Group’s EBITDA respectively, were attributable to the Group’s interest in LRH. For the year ended 31 December 2010, the increase in contribution from LRH was largely due to profit from divestment of Dusit Laguna Phuket hotel. Excluding this one-off gain, the contribution from LRH will be 68.5%. Although the Group is currently rebalancing its assets portfolio to reduce concentration in Thailand and to redeploy capital to more promising markets, the dependency on LRH performance will remain high for the next few years. As a result, any condition which might have a material adverse effect on LRH’s business, financial condition, profitability and results of operations, such as changes in the attractiveness of Thailand as a tourist destination, acts of terrorism, increased levels of criminal activity, civil unrest or epidemics which affect Thailand, increased competition for the resorts, hotels, spas and galleries in which LRH has an ownership interest or a depression of property values in Phuket, could have a material adverse effect on the Group’s business, financial condition, profitability and results of operations. From time to time, the Group may be involved in legal, regulatory and other proceedings and may incur substantial costs arising therefrom From time to time, the Group may be involved in disputes with various parties. These disputes may lead to legal or other proceedings and may result in substantial costs, affect the value of the Group’s brands, cause delays in the Group’s development, and divert the Group’s resources and management’s attention, regardless of the outcome. In addition, if the Group were to incur substantial losses and liabilities arising from such disputes, such occurrence could have a material and adverse effect on the Group’s business, financial condition, profitability and results of operations. (See “The Issuer - Litigation”.) LRH and its subsidiaries have entered or may enter into loan agreements or bank facility agreements which may limit or restrict their ability to distribute dividends if they fail to perform their payment obligations under such loan agreements or bank facility agreements As at the Latest Practicable Date, LRH and its subsidiaries have entered into various loan agreements with various lenders (the “Loan Agreements”) which would limit or restrict the ability of LRH or, as the case may be, its subsidiaries from declaring, distributing or paying to its respective shareholders any dividends (whether by way of annual or interim dividends) in the event that LRH or, as the case may be, its subsidiaries fails to perform its payment obligations within the relevant due dates in accordance with the terms and conditions set out in the relevant Loan Agreement. In addition, LRH and/or its subsidiaries may enter into loan agreements or bank facility agreements after the date of this Information Memorandum pursuant to which the relevant lender may impose a similar dividend restriction on LRH or, as the case may be, its subsidiaries. As at the Latest Practicable Date, the Issuer has a 65.8% ownership interest in LRH and a majority of the Group’s profits after minority interests were attributable to the Group’s interest in LRH. (See ‘‘Risk Factors - Risks Relating to The Group’s Business and Operations - The Group derives a majority of its revenues from LRH’s operations in Thailand and the Group is therefore highly dependent on LRH’s performance”.) Any restriction on dividend payments by LRH could have a material adverse effect on the cashflow position of the Issuer. 46
Economic, political, legal and regulatory conditions in Thailand and elsewhere may adversely affect the Group Because of the Group’s extensive operations in the Asia Pacific, particularly in Thailand through LRH, the Group is subject to political, legal and regulatory conditions that differ in certain significant respects from those prevailing in more developed countries. The Group’s results of operations may be influenced in part by the political situation in the Asia Pacific, which has been unstable from time to time in the past. The Group’s business and operations are also subject to the changing economic and political conditions prevailing from time to time in the Asia Pacific, particularly in Thailand, such as the military coup on 19 September 2006, the declarations of a state of emergency in September 2008, April 2009 and April 2010 and the seizure of the Suvarnabhumi International Airport in November 2008. On 15 December 2008, the Thai Parliament elected a new government after the ruling party was disbanded following a ruling by the Constitutional Court of Thailand that the ruling coalition comprising the People’s Power Party and two other parties had committed electoral fraud in the 2007 Thai elections. Since the election of the new government, there have been a number of large scale protests in Thailand including the political anti-government riots that took place during the ASEAN summit in Pattaya and Songkran festival in Bangkok in April 2009 and the mass political violence in Bangkok in April and May, 2010, where a state of emergency was declared. On 3 July 2011, a new government was elected. The impact of the new political leadership, the actions of, and potential confrontation between various political groups, the threat of potential large scale protests in Thailand and their effect on political, economic and legal conditions in Thailand, remain uncertain. It is also unclear whether the current political leadership will lead to policy reforms affecting the Thai business sectors in which the Group operates generally or the Group in particular. If there is any significant change in the Thai government’s policy or any Thai government’s actions that may result in, among other things, wage and price controls, capital controls and limitations on imports, the Group’s business, financial condition, profitability and results of operations may be adversely affected. This is true also of the other countries in which the Group operates. The Group’s majority control over LRH may not be sufficient to permit it to take certain corporate actions Although the Group controls LRH’s affairs and business with its current interest of 65.8% in LRH, minority shareholders may be able to prevent it from taking certain actions which require approval of threequarters of the total votes of shareholders who attend a meeting of shareholders and have voting rights; such as an increase or decrease of capital, changes to LRH’s objectives, an issuance of debentures, a sale or transfer of the whole or material parts of the business of LRH to other persons and a purchase or acceptance of the transfer of business of other private or public companies by LRH. A fire, accident or other calamity at one of the Group’s resorts could adversely affect it The Group currently operates resorts. A fire or other calamity resulting in significant damage to any of these resorts could have a material adverse effect on the Group’s business, financial conditions, profitability or results of operations. The consequences of fire, accidents or calamities could be severe and they could have a material adverse effect on the Group’s business, financial conditions, profitability and results of operations. The Group cannot determine when such an event will occur or the effect that it will have on the hospitality and leisure industry in areas in which the Group’s hotels and resorts are located. For example, on 26 December 2004, a powerful earthquake struck the floor of the Indian Ocean off the northwest coast of Sumatra, Indonesia triggering a massive tsunami which devastated towns, seaside communities and holiday resorts, killing tens of thousands of people in several countries. Many areas in the East Indian Ocean basin, including the coast of Northern Sumatra, the Eastern and Southern coasts of Sri Lanka and South Western Thailand were affected. Not only did the 2004 tsunami cause physical damage in the areas affected, it also had a severe effect on the hospitality and leisure industry in the region as tourists were deterred from travelling to the devastated and nearby areas. The 2004 tsunami affected the operation and financial results of the Group’s resorts in Phuket, and to a lesser extent, in Maldives.
47
The Group’s insurance policies do not cover all operating risks While the Group maintains insurance policies covering losses, including those arising from fire, accidents and calamities, the Group does not carry insurance that covers losses that are due to operating risks such as acts of terrorism save for its operations in Phuket and Bangkok, Thailand. With respect to losses which are covered by the Group’s policies, it may be difficult and may take time to recover such losses from insurers. In addition, the Group may not be able to recover the full amount from the insurer. There can be no assurance that the Group’s policies would be sufficient to cover all potential losses, regardless of the cause, or whether it can recover for such losses. The Group’s expansion plans will place additional demands on its management and key in-house operating divisions Rapid growth in the Group’s resort, hotel, spa and property sales operations will continue to place additional demands on its management team, its global marketing team, its in-house design and project management divisions and its financial reporting and information systems. (See ‘‘The Issuer - Resort and Hotel Expansion’’ and ‘‘The Issuer - Spa Operations - Spa Expansion’’.) There can be no assurance that the Group’s expansion plans can be implemented successfully and that the Group will be able to recruit and retain sufficient numbers of high quality management and staff to service the additional resorts, hotels, spas and property sales operations. The Group is subject to risks associated with constructing new resorts and hotels or converting existing properties into Banyan Tree or Angsana resorts and hotels New project development and property conversions are subject to a number of risks, many of which are outside the Group’s control, including: market or site deterioration after acquisition; the possibility of discovering previously undetected defects or problems at a site or property to be converted; and the possibility of construction or conversion delays or cost overruns due to delayed regulatory approvals, inclement weather, labour or material shortages, work stoppages and the unavailability of construction and/or long-term financing. A minimum of two years normally elapses between the time the design of a new resort or hotel commences and the project’s completion, while conversion of an existing resort or hotel normally takes between six to nine months to complete. Between the time the design of a new resort or hotel commences and its completion, operating conditions, travel preferences, political or social conditions of the location or other conditions critical to the success of the hotel or resort may change, such that the Group is unable to open the hotel or resort, repay its debt financing and/or achieve its projected returns. (See ‘‘Risk Factors - Risks Relating to The Group’s Business and Operations - The Group may not be able to successfully develop new resorts, hotels, spas, resort residences or serviced residences”.) The Group is subject to risks associated with the execution of new strategies The Group may from time to time, review its business strategy. In the event of a change in the Group’s business strategy, there can be no assurance that the Group will be able to implement its new business strategy successfully. Such successful implementation may depend on numerous factors, some of which are beyond the Group’s control, including (without limitation) economic, political, legal, regulatory and competitive uncertainties. Such new business strategies may also cause the Group to incur substantial costs, affect the value of the Group’s brands, cause delays in the Group’s development, and divert the Group’s resources and management’s attention from capitalising on other opportunities, which could have a material and adverse effect on the Group’s business, financial condition, profitability and results of operations. Most recently, the Group has announced its intention to employ a new growth strategy to add more depth to its current property segment where properties are currently sold as luxury holiday or secondary homes. The Group intends to capitalise on the Banyan Tree brand and build branded residential primary or owner-occupied homes. These homes will be situated in suburban extensions of second-tier and third-tier cities, mainly China’s provincial capitals, where land is still relatively inexpensive. The Group is 48
targeting discerning buyers looking to buy properties for use as their primary homes and who appreciate the Banyan Tree design and quality. The Group believes China, especially in inland cities, continues to offer good growth potential. Land near Chengdu in Sichuan province and near the Yangtze River Delta has been identified. The Group’s budgeted costs of these current and future projects may be exceeded and such projects may not be completed within contemplated time schedules. Where regulatory approvals and permits fail to be obtained in time, or at all, the construction of such projects may be prevented or delayed and completion costs may be increased. In addition, it is possible that the identified target market to which such projects are intended to be marketed may not grow rapidly or as rapidly as anticipated. Even if such markets were to grow rapidly, there is no assurance that the Group would be able to achieve its desired growth results for that market segment and to compete successfully against significant competitors whose positions may be more established. The Group expects to face competition for management agreements; management agreements may contain restrictive provisions, including restrictions on competition Part of the Group’s growth strategy focuses on expansion through the acquisition of additional management agreements. (See ‘‘The Issuer - Strategy’’.) In pursuing this strategy, the Group will compete with international, regional and local management companies and brand franchisers, some of which may have greater name recognition and financial resources than the Group does. Competition for management agreements is intense among management companies and brand franchisers in the hospitality and leisure industry. As a result, in order for the Group to expand its business activities by acquiring additional management agreements, the Group may be required to offer more attractive terms to hotel owners than under its existing agreements. The Group also anticipates that, in certain cases, it may be required to make equity investments in hotel properties in order to secure management agreements. In addition, certain of the Group’s resort, hotel and spa management contracts contain provisions permitting termination of the contract under certain circumstances and restricting its ability to manage other resorts, hotels and spas within specific geographic areas surrounding some of its resorts. Such restrictions could have a material adverse effect on the Group’s business, financial condition, profitability and results of operations. The majority of the Group’s customers come from Europe and the Asia Pacific; adverse economic conditions in Europe or the Asia Pacific or other factors that depress the level of disposable income of consumers in these markets could have a material adverse effect on the Group’s business financial condition, profitability and results of operations The Group’s business is subject to prevailing economic conditions in markets or countries from which its guests come. In particular, a majority of its guests visit from, and purchasers of its resort residences reside in, countries within Europe (particularly the United Kingdom) and the Asia Pacific, especially Japan, Korea, Hong Kong, PRC and Singapore. The Group believes that it is, and will continue to be, substantially dependent on the ability and willingness of these consumers to spend money on leisure and entertainment activities, including vacations, in the locations where it operates. A deterioration in economic conditions in these countries may reduce the level of disposable income that consumers spend on leisure and entertainment activities, which may reduce their patronage of the Group’s hotels and resorts, and in turn could have a material adverse effect on its business, financial condition, profitability and results of operations. The Group may face potential conflicts of interests with related parties The Group has entered into various transactions with companies directly or indirectly controlled by or associated with its Executive Chairman and substantial shareholder, Mr Ho KwonPing. Such companies include companies within the TRL Group (one of the Group’s shareholders and a company which has an ownership interest in certain of the hotels and resorts that the Group manages), and Universal Starch Public Company Limited (formerly known as Thai Wah Public Company Limited (“Thai Wah Public”)). (See the notes to the Group’s financial statements appearing elsewhere in this Information Memorandum for the details of its previous and current interested person transactions.) In the future, the Group expects that it may enter into other transactions with related parties.
49
Some of the Group’s directors are also officers, directors and/or shareholders of related parties and, with respect to the interested person transactions, may, individually or in the aggregate, have conflicts of interests. The Group has obtained certain undertakings to address the potential conflicts of interests with related parties. If these undertakings are breached, there may be conflicts of interests between the Group and related parties including companies within the TRL Group, Universal Starch Public Company Limited and/or their respective subsidiaries and/or associated companies (if any). Fluctuations in exchange rates may adversely affect the Group’s reported financial results Because of the geographic diversity of the Group’s business, it receives revenue and incurs expenses in a variety of currencies. The Group’s room rates are typically quoted in US dollars but payments are made in local currency at the then applicable exchange rate. Most of the Group’s contracts with its wholesale distributors are denominated in US dollars, and in Euros. A substantial portion of the Group’s revenue, including payments from resort, hotel and spa customers is denominated in US dollars and Euros but payable in local currency. The majority of the Group’s expenses are denominated in local currency. As a result, the Group is exposed to depreciation of the US dollar, the Euro against local currencies. In addition, its financial statements are presented in Singapore dollars. Changes in the value of local currencies, especially Baht, US dollar and RMB against the Singapore dollar can cause fluctuations in the Group’s results of operations and could have a material adverse effect on its reported financial results. The Group’s financial statements are impacted by foreign exchange fluctuations through both: translation risk, which is the risk that its financial statements for a particular period or as of a certain date depend on the prevailing exchange rates of the currencies discussed above against the Singapore dollar; and transaction risk, which is the risk that the currencies of its costs and liabilities fluctuate in relation to the currencies of its revenue and assets. With respect to translation risk, even though the fluctuations of currencies against the Singapore dollar can be substantial and therefore significantly impact comparisons with prior periods, the translation impact is a reporting consideration and does not affect the underlying profit or loss of operations, as transaction risk does. Future fund raising may place restrictions on the Group’s operations In the future, the Group may be required to raise additional funding to meet capital or operational expenditure requirements, to increase its shareholding in subsidiaries and/or associated companies. If such funding requirements are met by way of additional debt financing, the Group may have restrictions placed on it through such debt financing arrangements which may: limit its ability to pay dividends or require it to seek consents for the payment of dividends; increase its vulnerability to general adverse economic and industry conditions; limit its ability to pursue its growth plans; require it to dedicate a substantial portion of its cash flow from operations to payments on its debt, thereby reducing the availability of its cash flow to fund capital expenditure, working capital requirements and other general corporate purposes; and limit its flexibility in planning for, or reacting to, changes in its business and its industry. The Group may be unable to obtain future financing on favourable terms, or at all, to fund its operations, expected capital expenditure and working capital requirements The Group may be unable to obtain future financing on favourable terms, or at all, to fund its operations, expected capital expenditure and working capital requirements. The Group incurs indebtedness in connection with the construction or refurbishment of resorts and hotels as well as in connection with converting existing properties into resorts and hotels. Outside Thailand, for example, in the Maldives, its subsidiaries historically have borrowed mostly in US dollars as their construction costs tend to be denominated in US dollars and a substantial portion of its subsidiaries’ revenues are denominated in US dollars. The Group may have difficulty finding lenders who will provide sufficient US dollar denominated financing for its planned new resorts and hotels as these properties may be located in countries with 50
respect to which local lenders may be unable to make US dollar denominated loans and foreign lenders may be unwilling or unable to loan significant amounts necessary to construct a new resort or hotel. In addition, lenders may be unwilling to accept security interests in the property being developed as collateral for the loan due to the illiquidity of the relevant property. If the Group is unable to raise such financing on favourable terms, or at all, it may not be able to fund its operations sufficiently or the Group may be unable to carry out its planned expansion, all of which could have a material adverse effect on its business, financial condition, profitability, results of operations and ability to implement the Group’s growth strategy. The Group is reliant on key members of its senior management team The Group’s success depends largely on the skills, experience and performance of key members of its senior management team, especially its Executive Chairman, Mr Ho KwonPing. However, there is no assurance that it will continue to have the service of the key members of its senior management team. If the Group were to lose one or more of these key employees, its ability to set and implement successfully its strategy could be materially adversely affected. The Group generally does not maintain significant keyperson life insurance on its employees. Its future success also depends on the continued service of its key operating, marketing, design and administrative personnel. The Group must attract, train and retain qualified employees to execute its business strategy As a service-oriented company, the Group’s future success depends largely on its ability to hire, train and retain appropriately qualified employees with appropriate language skills and cultural sensitivity to pursue its resort, hotel and spa management, customer service and sales and marketing activities. Skilled personnel in these areas, especially for certain remote locations where the Group has operations, such as Seychelles, have on occasion been in short supply, and any shortages in the future may increase competition for such personnel and hence the staff turnover and/or employment costs incurred by it. Any inability to hire, train and retain a sufficient number of qualified employees could materially adversely affect the Group’s business. (See ‘‘The Issuer - Employees’’.) In addition, labour disruptions at the Group’s resorts and hotels can also negatively affect its ability to operate. For example, in February 2009, hotels in Laguna Phuket were confronted with the illegal assembly of around 150 staff, their blockage of public roads and infringement of private property. This was a result of several Laguna Phuket hotel unions not accepting their year end bonus awarded to the employees. As a result of the disruptions, the Group’s operations were affected but this had no significant impact on its financial results. Thai labour laws are highly protective of employees, which may make it difficult and costly for the Group to streamline its workforce in Thailand in the event of an economic downturn A majority of the Group’s employees are based in Thailand. Labour laws in Thailand are highly protective of employees. Under Thai labour laws, the Group is generally prohibited from discharging employees without severance payments and/or compensation in the absence of gross misconduct, neglect, or acts of dishonesty. As such, it has limited measures at its disposal to reduce headcount in order to increase efficiencies, reduce costs or achieve similar objectives. Any changes to employment terms and conditions that diminish employees’ rights and benefits would require consent from employees. For example, subsequent to the global financial crisis sparked off by the collapse of Lehman Brothers in 2008, the Group instituted a voluntary unpaid leave programme in March 2009 as it was prohibited from discharging employees without compensation. The Group has been restricted in the past and expects in the future to be limited to using voluntary plans and similar measures under which selected employees may elect to leave in return for lump-sum compensation packages and other benefits. The Group’s properties or part thereof may be acquired compulsorily Immovable properties in Thailand and other countries where the Group operates may be subject to expropriation. For example, the Thai Government may expropriate immovable properties for the purpose of public utilities, national defence, acquisition of natural resources, city planning, development of agriculture or industry, land reform or other public benefits. However, the Thai Government has to pay compensation in these circumstances. Under the Immovable Property Expropriation Act B.E. 2530 (1987), the compensation will be determined by taking into account certain factors including market price, condition, location, reason and purpose of the expropriation.
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In addition, certain state enterprises or government entities have the right to expropriate immovable properties for their own use, for example, the State Railway Authority of Thailand and the Department of Highways. If any of the Group’s property in Thailand or other countries was acquired compulsorily, the Group may not receive the property’s fair market value as compensation. In addition, the Group may not be able to replace the revenue streams it loses as a result of its loss of ownership in the property, which may have a material adverse effect on its business, operating results, profitability and financial condition. RISKS RELATING TO THE INDUSTRY IN WHICH THE GROUP OPERATES The Group’s results of operations are dependent on the conditions of the hospitality and leisure industry and the state of the property market in the countries in which it operates, especially Thailand The number of guests at the Group’s resorts and hotels is affected, to a large extent, by the conditions of the hospitality and leisure industry in the countries in which it operates. Any condition that adversely affects the hospitality and leisure industry in the Asia Pacific, or Thailand specifically, such as acts of terrorism, health scares, adverse weather conditions and natural disasters, new visa requirements or seasonal factors, may cause a drop in Average occupancy levels and/or Average room rates at its resorts, hotels and spas. The Group’s property sales are affected by demand and supply factors in relation to the property market in the Asia-Pacific and in particular, Thailand. If there were a prolonged depression of the property market in these areas, it could have a material adverse effect on its property sales revenues. Such conditions would have a material adverse effect on the Group’s business, financial condition, profitability and results of operations. The Group faces significant competition The hospitality and leisure industry is highly competitive. The Group’s resorts and hotels compete with international, regional and local resort and hotel companies, some of which have greater name recognition and financial resources than the Group does. The Group’s resorts and hotels are often located in areas where competition is intense. Competitive factors at each resort or hotel destination include room rates, quality of accommodation, name recognition, service levels and convenience of location, and to a lesser extent, the quality and scope of other amenities. Competition also exists between destinations and is affected by factors such as the political stability, social conditions, market perception, local culture, the ability of the location to successfully promote itself as a tourist destination, accessibility, infrastructure and other macro-level factors. There can be no assurance that new or existing competitors will not offer significantly lower rates than the Group’s rates or offer greater convenience, services or amenities or significantly expand or improve facilities in the locations in which it operates, thereby adversely affecting its results of operations. There also can be no assurance that demographic, geographic or other changes in markets will not adversely affect the accessibility or attractiveness of the Group’s resort and hotel properties. The Group’s spas also face significant competition. The Group faces many competitors in most locations in which it operates. The Group’s competitors may offer similar treatments which may erode the Group’s competitive advantage and/or force it to lower the prices at which it offers its treatments. The Group is under constant pressure to innovate with respect to its resorts, hotels and spas to maintain its market leading position. There can be no assurance that such competition will not adversely affect the Group’s business and results of operations. The Group’s business is subject to government rules and requirements, which may adversely affect its operations The Group is subject to various national and local government regulations, including those relating to the environment, the operation of resorts and hotels, preparation and sale of food and beverages, general building and zoning requirements, occupational health and safety requirements and foreign exchange regulations (in countries such as Seychelles and PRC). The Group’s spa treatment products are also subject to local health regulations in the locations in which it operates. The Group is also subject to laws governing its relationship with its employees, including minimum wage, overtime, working conditions and work permit requirements. Also, the success of the Group’s strategy to develop new properties and/or expand its existing properties may be dependent upon its obtaining necessary building permits or zoning variances from local authorities. Compliance with these laws and regulations can increase costs and 52
reduce revenues and profits of the Group’s resorts, hotels and spas or otherwise adversely affect its operations. (See ‘‘The Issuer - Applicable Laws and Regulations’’.) The Group’s property sales business is also subject to regulations limiting the ability of non-local investors to acquire an ownership interest in the Group’s developed properties. These regulations may reduce the market for the Group’s development properties and thereby affect its ability to sell more properties as well as the prices it is able to charge. The Group may be exposed to unknown or unforeseen environmental liabilities The Group is subject to various national and local environmental laws, ordinances and regulations relating to the environment which may impose or create significant potential environmental liabilities. Although the Group is not currently aware of any material environmental claims pending or threatened against it or any of its properties, no assurance can be given that a material environmental claim will not be asserted against it, and ultimately result in liability for the Group. The cost of defending against, and ultimately paying or settling, claims of liability or of remediating a contaminated property could have a material adverse effect on the Group’s results of operations. RISKS RELATING TO GENERAL ECONOMIC AND POLITICAL CONDITIONS Adverse economic conditions would negatively affect the Group’s business The global financial markets have been undergoing pervasive and fundamental disruptions since the third quarter of 2008. The continuation or intensification of such disruptions may lead to additional adverse effects including, among others, availability of credit to businesses, and could lead to a further weakening of the global economies. The Group could be affected by market and economic challenges which may arise from a continued or exacerbated general economic slowdown experienced by the global markets or the industry and economies in which the Group operates in or is dependent upon. An economic slowdown or downturn could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. The pervasive and fundamental disruptions in the global financial markets have led to extensive and unprecedented governmental intervention in those markets. In addition, it is not certain when governmental intervention will end or what, if any, additional temporary or permanent restrictions and/ or increased regulation governments may impose on the financial markets. Any further government intervention, restrictions or regulation could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects. The Group is subject to risks relating to the economic, political, legal or social environments of the locations in which it operates The Group is subject to risks associated with operating in countries that have at various times in the past been characterised by volatile economic, political and social conditions. The Group’s business, earnings, asset values and prospects may be materially and adversely affected by developments with respect to inflation, interest rates, currency fluctuations, government policies, price and wage controls, exchange control regulations, real estate laws and regulations, taxation, expropriation, social instability and other political, legal, economic or diplomatic developments in or affecting the countries in which the Group operates. The Group has no control over such conditions or developments and can provide no assurance that such conditions or developments will not have a material adverse effect on its operations. The Group is subject to a broad range of risks, and it expects these risks to increase as it expands its operations into new countries. These risks include, among others, the following: unexpected changes in governmental laws and regulations; difficulties and costs of staffing and managing international operations; the ability of its management to deal with multiple, diverse regulatory regimes; potentially adverse tax consequences; uncertain protection for intellectual property rights; the risk of nationalisation and expropriation of its assets;
53
currency fluctuation and regulation risks; social unrest or political instability; and adverse economic, political and other conditions; in each case in the countries in which it currently, or in the future, conducts business. Any of these factors, many of which are outside the Group’s control, could have a material adverse effect on its business, financial condition, profitability and results of operations. The Group has operations in various jurisdictions in which the legal and regulatory regimes may be uncertain and in which it has no or little experience The Group has operations in various developing countries, including Thailand, Indonesia and PRC, where the legal and regulatory regimes may be uncertain and subject to unforeseen changes as discussed below. At times, the interpretation or application of laws and regulations is unclear, and in the past, it may not always have obtained adequate legal advice. Thailand’s legal system is a civil law system based on written statutes. Supreme Court judgments may be used as a guideline for the interpretation of law. The application of certain Thai laws depends upon subjective criteria such as the good faith of the parties to the transaction and principles of public policy. Indonesia’s legal system is a civil law system based on written statutes in which judicial decisions do not constitute binding precedent and are not systematically published. The application of many Indonesian laws and regulations depends, in large part, upon subjective criteria such as the good faith of the parties to the transaction and principles of public policy. Indonesian judges operate in an inquisitorial legal system and Indonesian court decisions may omit express articulation of the legal and factual analysis of the issues presented in a case. Indonesian authorities have very broad fact-finding powers and a high level of discretion in relation to the manner in which those powers are exercised. As a result, the administration and enforcement of laws and regulations by Indonesian courts and governmental agencies may be subject to uncertainty and considerable discretion. Since 1979, PRC government has begun to promulgate a comprehensive system of laws and has introduced many new laws and regulations to provide general guidance on economic and business practices in PRC and to regulate foreign investment. As these laws, regulations and legal requirements are relatively recent, their interpretation and enforcement may involve significant uncertainty. The interpretation of PRC laws may be subject to policy changes which reflect domestic political changes. As PRC legal system develops, the promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may have an adverse effect on the Group’s prospects, financial condition and results of operations in PRC. The Group expects to grow its business by setting up new operations in other developing countries, which may exacerbate the legal and regulatory risks to which it is already subject.
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THE ISSUER OVERVIEW Introduction The Group is a leading manager and developer of luxury hotels, resorts and residences in the Asia Pacific and boasts an industry track record since 1994. It also manages and/or has ownership interests in niche resorts and hotels. These resorts and hotels are located in 12 countries, namely Maldives, China, Seychelles, Thailand, Mexico, Morocco, Indonesia, UAE, Korea, Australia, India and Laos, with a total of 3,192 rooms available for use by guests as at 30 June 2011. A resort managed by the Group typically commands room rates at the high end of each property’s particular market. As at 30 June 2011, the Group offers its customers a multi-faceted travel and leisure experience which it delivers through its 28 resorts and hotels, 65 spas, 83 galleries (where its Banyan Tree and Angsana branded products are sold) and two golf courses. In 2010, to facilitate a better understanding of the Group’s business, the Group streamlined the presentation of the business segments into three core segments instead of the seven segments presented in the past. The three core segments are Hotel Investments segment, Property Sales segment and Fee-based segment. Property Sales segment comprises sales of Hotel Residences which is part of the hotel operations, Laguna Property sales which are standalone vacation homes in Laguna Phuket and sales of development project and sites. Fee-based segment comprises Hotel Management operations which include hotel management, club management and fund management, Spa/Gallery operations and Design and Others operations. The Group also operates the leading integrated resort in Laguna Phuket, Thailand through its subsidiary, LRH. Within Laguna Phuket, the Group manages three resorts, five spas, 13 galleries, an 18-hole golf course and resort residence developments currently available for sale. Because of its positioning as an integrated resort, Laguna Phuket is marketed as a travel destination within Phuket. Primarily as a result of the Group’s ownership interest in LRH, Hotel Investments is its largest business segment. Hotel Investments accounted for 49.7%, 59.6%, 62.0% and 52.1% of the Group’s revenue for the three years ended 31 December 2008, 2009 and 2010 and for the six months ended 30 June 2011, respectively. As at 30 June 2011, the Group managed and/or had ownership interests in 624 rooms in the three resorts at Laguna Phuket. Through the Banyan Tree brand and its sister brand Angsana, the Group targets two distinct customer segments, allowing it to expand its customer base. The Group has pioneered concepts that have become the signature features for many of its hotels and resorts such as the tropical garden spa and pool villa. As the leading operator of spas in the Asia Pacific, the spas that the Group operates are often considered by its guests to be one of the key features of its resorts and hotels. The Group also operates the Banyan Tree Spa Academy, accredited by Thailand’s Ministry of Education and Ministry of Public Health, where spa therapists receive theoretical and practical training. Apart from Thailand, two additional training facilities in Bintan and Lijiang have been set up to meet expansion needs. In addition, galleries owned by the Group, which complement its resorts, hotels and spas, provide opportunities to extend the reach and scope of its brands. The integrated business model of the Group comprises a hotel management division, an in-house design and project management division, as well as a global marketing team. These in-house capabilities enable the Group to preserve brand integrity, create innovative product offerings with quicker time to market and maintain the quality of the resorts, hotels, spas and galleries that it manages and the services it offers. The Group believes that these capabilities and the geographic diversity of its customer markets and its product offerings increase the resilience of its business model. The Group’s revenues for the three years ended 31 December 2008, 2009 and 2010 and for the six months ended 30 June 2011 were S$412.6 million, S$313.3 million, S$305.3 million and S$177.9 million, respectively. Average occupancy levels for its resorts and hotels for the three years ended 31 December 2008, 2009 and 2010 and for the six months ended 30 June 2011 were approximately 56.1%, 52.7%, 51.6% and 51.0%, respectively. Average room rates for the three years ended 31 December 2008, 2009
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and 2010 and for the six months ended 30 June 2011 were S$363.0, S$326.6, S$346.1 and S$348.6 respectively. REVPAR for the three years ended 31 December 2008, 2009 and 2010 and for the six months ended 30 June 2011 was S$203.5, S$171.9, S$178.6 and S$177.9 respectively. Milestones The Issuer was incorporated in Singapore under the Companies Act on 11 April 2000 with the name Banyan Tree Holdings Pte Ltd as a private limited company. The Issuer’s name was changed to Banyan Tree Holdings Limited on 17 May 2006 in connection with its conversion to a public company limited by shares. Its shares were listed on the Main Board of the SGX-ST on 14 June 2006. The following list summarises several significant events in the Issuer’s corporate history. 1984
LRH, a future subsidiary of the Issuer, acquires over 550 acres of land on the site of an abandoned tin mine at Bang Tao Bay, Phuket, Thailand.
1987-1992
After extensive rehabilitation of the Phuket site, LRH launches Dusit Laguna Resort Hotel and Laguna Beach Resort. LRH is marketed as a destination within Phuket.
1993
LRH lists its shares on the Stock Exchange of Thailand. Banyan Tree Hotels & Resorts Pte. Ltd., a resort and hotel management company, is established, as well as companies to operate spas and galleries. Sheraton Grande Laguna Phuket and The Allamanda are launched. LRH begins to sell units at The Allamanda.
1994
The Group’s flagship resort - Banyan Tree Phuket - is launched in Laguna Phuket, Thailand. The resort includes the first Banyan Tree Spa and Banyan Tree Gallery.
1995-1999
Banyan Tree Vabbinfaru, Maldives and Banyan Tree Bintan, Indonesia are launched.
2000
Angsana brand is launched with the opening of Angsana Bintan, Indonesia and Angsana Great Barrier Reef, Australia. Banyan Tree Holdings Pte Ltd is established. Banyan Tree Hotels & Resorts Pte. Ltd. and several subsidiaries which own and operate resorts, spas and galleries and golf courses, become part of the Group.
2001
The Banyan Tree Spa Academy is set up to train therapists and research new treatment recipes and techniques. Angsana Ihuru, Maldives and Angsana Bangalore, India open. The Green Imperative Fund is launched to formalise the Group’s corporate social responsibility efforts.
2002
Banyan Tree Seychelles is launched, and the Westin Banyan Tree is rebranded as Banyan Tree Bangkok, Thailand.
2003-2004
Gyalthang Dzong Hotel in Shangri-la, Yunnan, PRC and Deer Park Hotel, Sri Lanka are launched.
2005
Maison Souvannaphoum Hotel opens in Laos. The Group’s first Banyan Tree resort in PRC - Banyan Tree Ringha is launched in Shangri-la, Yunnan. The Group acquires Thai Wah Plaza, which houses Banyan Tree Bangkok in Thailand.
2006
Following its initial public offering, Banyan Tree Holdings Limited is listed on the Singapore Exchange. Banyan Tree Lijiang, China and Angsana Velavaru, Maldives are launched. The Group introduces the Banyan Tree Private Collection, Asia’s first asset-backed destination club offering perpetual and transferable membership.
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2007
Banyan Tree Madivaru, Maldives, the first to introduce Tented Pool Villas in the Maldives, and Angsana Riads Collection, Morocco open. The Group fully subscribes to LRH’s rights issue and sees shareholding in LRH increase from 51.8% to 65.8%. Banyan Tree establishes S$400 million Medium Term Note (“MTN”) programme and successfully places out S$100 million from this programme.
2008
Banyan Tree Sanya, China opens. Banyan Tree successfully places out a further S$27.3 million from the S$400 million MTN programme. Total MTN placed out as at 31 December 2008 is S$127.3 million. The Group launches the Banyan Tree Indochina Fund, a real estate development fund primarily focusing on the hospitality sector in Vietnam, Cambodia and Laos. Its principal project is Laguna Lang Co, an integrated resort development in Central Vietnam.
2009
Banyan Tree Mayakoba, Mexico, Banyan Tree Hangzhou, China, Banyan Tree Ungasan, Indonesia and Banyan Tree Al Wadi, UAE open. Angsana Velavaru, Maldives introduces new InOcean Villas. Banyan Tree Indochina Fund achieves a total capital commitment of US$283 million at final closing on 30 June 2009. Banyan Tree Global Foundation is set up as a separate entity to house, manage and administer the funds raised by the Group’s Green Imperative Fund; as well as to provide in-house corporate social responsibility consultancy services.
2010
Banyan Tree Cabo Marqués, Mexico, Banyan Tree Club and Spa Seoul, Korea, Banyan Tree Samui, Thailand and Angsana Fuxian Lake, China, open. LRH sells the Dusit Laguna Phuket hotel in Phuket, Thailand, to Dusit Thani Public Company Limited for THB2.6 billion (S$112.3 million). The Banyan Tree China Fund (I) achieves a total capital commitment of RMB1.1 billion. Banyan Tree places out a further S$50 million as part of the MTN programme. Series 001 (S$50 million) matures and is fully repaid in November 2010. Total MTN outstanding as at 31 December 2010 is S$127.3 million.
2011
Banyan Tree Macau, China opens in May 2011. Banyan Tree Spa Marina Bay Sands, Singapore opens in July 2011. LRH sells all its shares in Laguna Beach Club Limited which holds Laguna Beach Resort, Thailand, to Laguna Phuket Club Co., Ltd for THB717.2 million (S$29.6 million).
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The Group holds equity interests in 15 hotels, comprising over 1,600 keys.
The Group owns and manages luxury hotels under its own brands as well as hotels that are managed by other world-class operators.
Hotel Investments
The Group has hotel residences sales in Phuket, Seychelles, Lijiang, Bangkok, Bintan and Mexico.
Hotel residences are hotel villas or suites sold to investors under a compulsory leaseback scheme.
Hotel Residences
Laguna Properties under the rental programme are managed by Hawaiian resort operator, Outrigger and offer an attractive rental yield.
Laguna properties refer to townhouses and bungalows located in Laguna Phuket that are within the vicinity of our hotels but are not part of our hotel operations.
Laguna Properties are sold by our subsidiary company, LRH.
Laguna Properties Sales
Property Sales
Development project / sites are largely in China.
Development project / site sales refer to sale of pure land or lands with completed infrastructure.
Development Project / Site Sales
It also manages an asset-backed destination club and two private equity funds.
The Group manages 13 resorts and hotels, of which 12 are under the Banyan Tree and Angsana brands.
The Group manages hotels under the Banyan Tree and Angsana brands for other owners.
Hotel / Fund / Club Management
Banyan Tree Holdings Limited
The Group has 65 spas worldwide, spa training facilities in Phuket, Bintan and Lijiang and 83 gallery outlets.
The retail arm of the Group supports indigenous artistry, livelihoods of village artisans and environmental conservation.
The Group pioneered the tropical garden spa concept and manages spas within owned hotels and also in hotels owned by other hotel operators.
Spa / Gallery Operations
Fee-based
The Group receives fees for design services and income from operating golf clubs.
Design & Others
The details of the Issuer’s subsidiaries and associated companies as at 30 June 2011 are as follows:
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Singapore Architrave Design & Project Services Pte Ltd
27 October 2000, Singapore/Singapore
Providing consultancy services
100.0%
S$ 2
Banyan Tree Gallery (Singapore) Pte Ltd
16 November 1994, Singapore/Singapore
Sale of merchandise
82.5%(1)
S$ 432,000
Banyan Tree Hotels & Resorts Pte. Ltd.
26 October 1991, Singapore/Singapore
Providing resort, spa, project and golf management services
100.0%
S$ 50,000
Banyan Tree Spas Pte. Ltd.
5 December 2002, Singapore/Singapore
Operating spas
100.0%
S$ 2
Hotelspa Pte. Ltd.
15 April 2003, Singapore/Singapore
Investment holding
100.0%
S$ 2
Banyan Tree Investments Pte. Ltd. (formerly known as Banyan Tree Properties Pte. Ltd.)
22 January 1985, Singapore/Singapore
Property holding
100.0%
S$ 3,606,422
Banyan Tree Adventures Pte. Ltd.
21 March 2000, Singapore/Singapore
Providing travel agency services
100.0%
S$ 1,150,000
Banyan Tree Anhui (S) Pte. Ltd.
19 June 2009, Singapore/ Singapore
Investment holding
100.0%
S$ 1
Brand Services (Singapore) Pte. Ltd.
19 September 2008, Singapore/Singapore
Owning and managing intellectual property for and on behalf of Banyan Tree Group
100.0%
S$ 1
Banyan Tree Chengdu Pte. Ltd.
31 July 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Banyan Tree China Holdings Pte. Ltd.
12 December 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Banyan Tree Capital Pte. Ltd.
23 July 2008, Singapore/Singapore
Business management and consultancy services
100.0%
S$ 500,000
Banyan Tree Dunhuang (S) Pte. Ltd.
22 October 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Banyan Tree Indochina Holdings Pte. Ltd.
22 January 2008, Singapore/Singapore
Investment holding
100.0%
S$ 1
Banyan Tree Indochina Management (Singapore) Pte. Ltd.
22 January 2008, Singapore/Singapore
Investment holding
100.0%
S$ 1
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Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Banyan Tree Jiuzhaigou (S) Pte. Ltd.
24 October 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Banyan Tree Properties (S) Pte. Ltd.
16 March 2010, Singapore/Singapore
Property development and investments
100.0%
S$ 1
Banyan Tree Indochina Pte. Ltd.
10 December 2009, Singapore/Singapore
Business management and consultancy services
100.0%
S$ 1
Banyan Tree Yangshuo (S) Pte. Ltd.
10 October 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Integrated Resort Management Co., Pte. Ltd.
28 July 2008, Singapore/Singapore
Integrated resorts facilities management services
100.0%
S$ 1
Sanctuary Jiwa Renga (S) Pte. Ltd.
10 October 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Sanctuary Lijiang (S) Pte. Ltd.
10 October 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Sanctuary Lhasa (S) Pte. Ltd.
10 October 2007, Singapore/Singapore
Investment holding
100.0%
S$ 1
Banyan Tree Resorts Limited
22 January 1991, Hong Kong/Hong Kong
Providing resort management services
100.0%
US$ 220,000
Banyan Tree Spa (HK) Limited
30 December 1996, Hong Kong/Hong Kong
Providing spa management services
100.0%
HKD(31) 2
Triumph International Holdings Limited
20 January 2003, Hong Kong/Hong Kong
Investment Holding
80.0%(2)
HKD(31) 10,000
Banyan Tree Investment Holdings (HK) Limited (formerly known as Sanctuary Lhasa (Hong Kong) Limited)
27 August 2007, Hong Kong/Hong Kong
Investment Holding
100.0%
HKD(31) 1
Banyan Tree Gallery (Thailand) Limited
22 December 1994, Thailand/Thailand
Sale of merchandise
82.5%(3)
Baht 7,750,000
Banyan Tree Resorts & Spas (Thailand) Company Limited
4 October 1996, Thailand/Thailand
Providing spa services
100.0%
Baht 20,041,000
Laguna Resorts & Hotels Public Company Limited
30 April 1986, Thailand/Thailand
Hotel and property development business
65.8%(4) Baht 1,666,827,010
Hong Kong
Thailand
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Name LVCL (Thailand) Co., Ltd.
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
15 August 2008, Thailand/Thailand
Providing project development
100.0%
Ordinary Baht 49,000 Preference Baht 51,000
Hill View Resorts Holdings Limited (formerly known as Banyan Tree Seychelles Holdings Limited)
23 December 1998, British Virgin Islands/ British Virgin Islands
Investment holding
30.0%(5)
US$ 43,000
Seychelles Tropical Resorts Holdings Limited
7 January 1998, British Virgin Islands/ British Virgin Islands
Investment holding
50.0%(6)
US$ 2
Club Management Limited
18 September 2006, British Virgin Islands/ British Virgin Islands
Provide resort and hotel management and operation services, and ancillary services related to the hospitality industry
100.0%
US$ 2
Jayanne International Limited
3 October 2006, British Virgin Islands/ British Virgin Islands
Investment holding
100.0%
US$ 2
Hill View Resorts (Seychelles) Limited (formerly known as Banyan Tree Resorts (Seychelles) Limited)
7 April 1999, Seychelles/Seychelles
Resort development
30.0%(7)
SR(21) 100,000
Seytropical Resorts Limited
7 April 1999, Seychelles/Seychelles
Resort development
50.0%(8)
SR(21) 2
Jayanne (Seychelles) Limited
15 December 2006, Seychelles/Seychelles
To own, buy, sell, take on lease, develop or otherwise deal in immovable property
100.0%
SR(21) 10,000
Ocean Estate (Seychelles) Limited
10 December 2009, Seychelles/Seychelles
Development of residences for sale
30.0%(9)
SR(21) 10,000
Maldives Angsana Pvt Ltd
14 September 2000, Maldives/Maldives
Operating holiday resorts
100.0%
MRF(22) 20
Vabbinvest Maldives Pvt Ltd
31 July 1985, Maldives/Maldives
Operating holiday resorts
100.0%
MRF(22) 35,360,000
Maldives Bay Pvt Ltd
28 March 2004, Maldives/Maldives
Development and management of resorts, hotels and spas
93.4%(10)
US$ 35,000,000
British Virgin Islands
Seychelles
Maldives
61
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Maldives Cape Pvt Ltd
28 March 2004, Maldives/Maldives
Development and management of resorts, hotels and spas
100.0%
MRF(22) 20
Maldives Sun Pvt Ltd
16 May 2006, Maldives/Maldives
Property investment
100.0%
MRF(22) 10,000
Maldives Sand Pvt Ltd
16 May 2006, Maldives/Maldives
Property investment
100.0%
MRF(22) 10,000
Maldives Shore Pvt Ltd
16 May 2006, Maldives/Maldives
Property investment
100.0%
MRF(22) 10,000
2 July 2009, New Zealand/ New Zealand
Investment holding
100.0%
NZD(32) 100
17 May 2002, Guam/Guam
Providing spa and other associated services
100.0%
US$ 257,000
Beruwela Walk Inn PLC (formerly known as Beruwela Walk Inn Limited)
13 March 1973, Sri Lanka/Sri Lanka
Operating hotel resorts
79.9%(11)
LKR(23) 9,000,000
Banyan Tree (Private) Limited
10 May 2004, Sri Lanka/Sri Lanka
Operating of spas
100.0%
LKR(23) 20
6 February 2002, Australia/Australia
Operating of spas
100.0%
AUD(33) 2
Lijiang Banyan Tree Hotel Co. Ltd
5 September 2003, PRC/PRC
Hotel construction and operation
83.2%(12)
US$ 18,400,000
Jiwa Renga Resorts Limited
12 January 2004, PRC/PRC
Hotel construction and operation
96.0%(13)
RMB 39,900,000
Wanyue Leisure Health (Shanghai) Co., Ltd
8 December 2004 PRC/PRC
Operating of spas
100.0%
US$ 350,000
Zhongdian Jiantang Hotel Limited (formerly known as Gyalthang Dzong Hotel)
29 December 1997, PRC/PRC
Hotel services
80.0%(14)
RMB 8,800,000
Tibet Lhasa Banyan Tree Resorts Limited
13 November 2006, PRC/PRC
Construction and management of hotels and spas
100.0%
US$ 1,140,000
New Zealand Integrated Investments Limited Guam Banyan Tree Guam Limited Sri Lanka
Australia Keelbay Pty Ltd PRC
62
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Banyan Tree Hotels Management (Beijing) Co., Ltd
19 December 2006, PRC/PRC
Provide operation and management services for property, spas and food and beverage, and consulting services for hotel design and tourism information
100.0%
RMB 500,000
Lijiang Banyan Tree Property Service Company Limited (formerly known as Lijiang Banyan Tree Property Management Co., Ltd)
21 May 2007, PRC/PRC
Hotel management
87.0%(15)
RMB 500,000
Banyan Tree Huangshan Tourism Development Co., Ltd.
12 March 2010, PRC/PRC
Property owner, developer, operator and management of hotels, resorts and residences in China as well as ancillary services relating to the hospitality industry
100.0%
US$ 449,975
Banyan Tree Lijiang International Travel Service Co., Ltd.
10 January 2008, PRC/PRC
Providing travel agency services
83.2%(16)
RMB 2,500,000
Banyan Tree Hotels Management (Tianjin) Co., Ltd.
29 November 2010, PRC/PRC
Consultant and operator of hotels/ resorts, residences, spas, food and beverage including ancillary services relating to the hospitality industry
100.0%
RMB 473,450
Dunhuang Banyan Tree Hotel Company Limited
11 January 2008, PRC/PRC
Develop, own and operate hotels and resorts in China
100.0%
US$ 1,000,000
Lijiang Banyan Tree Gallery Trading Company Limited
18 October 2008, PRC/PRC
Trading and retailing of consumer goods in resorts
82.5%(17)
US$ 75,000
Tianjin Banyan Tree Capital Investment Management Co., Ltd.
18 June 2010, PRC/PRC
Investment management and related consulting services
100.0%
RMB 1,000,000
1 March 2004, Malaysia/Malaysia
Operating of spas
100.0%
RM(24) 500,000
Malaysia Banyan Tree Spas Sdn. Bhd.
63
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Japan 12 April 2004, Japan/Japan
Operating of spas
100.0%
JPY(34) 3,000,000
22 November 2004, Egypt/Egypt
Operating and investing in resorts, spas and retail outlets
100.0%
LE(25) 50,000
24 November 2004, UAE/UAE
Operating of spas
100.0%
AED(26) 300,000
29 June 2004, South Africa/ South Africa
Operating and investing in resorts, spas and retail outlets
100.0%
ZAR(27) 100
Sanctuary Lijiang (Cayman) Limited
23 August 2007, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
Sanctuary Lhasa (Cayman) Limited
23 August 2007, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
Sanctuary Jiwa Renga (Cayman) Limited
23 August 2007, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
Sanctuary Gyalthang Dzong (Cayman) Limited
23 August 2007, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
Banyan Tree Indochina (GP) Company Limited
29 January 2008, Cayman Islands/ Cayman Islands
Manage and operate the Banyan Tree Indochina Fund, L.P.
100.0%
US$ 50,000
Sanctuary Anhui (Cayman) Limited
10 June 2009, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
Sanctuary Yangshuo (Cayman) Limited
14 September 2007, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
Sanctuary Dunhuang (Cayman) Limited
15 October 2008, Cayman Islands/ Cayman Islands
Investment holding
100.0%
US$ 1
30 June 2005, Indonesia/Indonesia
Tourism management consultant services
100.0%
US$ 200,000
Banyan Tree Japan Yugen Kaisha Egypt Heritage Spas Egypt LLC United Arab Emirates Heritage Spa Dubai LLC South Africa Heritage Spas South Africa (Pty) Ltd Cayman Islands
Indonesia PT. Heritage Resorts & Spas
64
Name PT. Management Banyan Tree Resorts & Spas
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
08 December 2006, Indonesia/Indonesia
Provide consultation and management services of the international hotels marketing
100.0%
US$ 100,000
22 May 2007, United Kingdom/ United Kingdom
Provide marketing services
100.0%
GBP(28) 1
17 July 2007, United States/ United States
Provide marketing services
100.0%
US$ 75
Banyan Tree MX S.A. De C.V.
18 October 2008, Mexico/Mexico
Providing business management services, resort and hotel management, operation services and ancillary services related to the hospitality industry
100.0%
MXN(29) 50,000
Banyan Tree Servicios S.A. De C.V.
17 October 2008, Mexico/Mexico
Providing business management services, resort and hotel management, operation services and ancillary services related to the hospitality industry
100.0%
MXN(29) 50,000
Lotes 3 Servicios S.A. De C.V.
14 April 2008, Mexico/Mexico
Providing business management and services
20.0%(18)
MXN(29) 50,000
18 May 2010, Vietnam/Vietnam
Providing project supervision and management service
100.0% VND(35) 547,800,000
Banyan Tree Resorts & Spas (Morocco) S.A.
29 March 2007, Morocco/Morocco
Provide management, operation services and ancillary services related to the hospitality industry
100.0% MAD(30) 150,000,000
Green Transportation SARL AU
15 January 2009, Morocco/Morocco
Providing tourist transportation activities
100.0%
United Kingdom Banyan Tree Resorts (UK) Ltd United States Banyan Tree Hotels & Resorts USA, Inc. Mexico
Vietnam Banyan Tree Indochina Co., Ltd. Morocco
65
MAD(30) 100,000
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Cyprus 3 March 2009, Cyprus/Cyprus
Providing management consultancy and hotel design services
100.0%
€ 2,000
BT Investments Holdings Phils. Inc.
26 May 2008, Philippines/Philippines
Investment Holding
97.9%(19)
Class A Ordinary PHP(36) 42,000 Class B Ordinary PHP(36) 28,000,000
Diwaran Resorts Phil. Inc.
14 April 2009, Philippines/Philippines
Investment Holding
9.1%(20)
Class A Common PHP(36) 6,450,000 Class B Common PHP(36) 64,500,000
Banyan Tree Hotels (Cyprus) Ltd
Philippines
Notes: (1)
Banyan Tree Gallery (Singapore) Pte Ltd is 49.0% held by the Issuer and 51.0% held by Laguna Resorts & Hotels Public Company Limited (“LRH”).
(2)
The remaining 20.0% in Triumph International Holdings Limited is held by individuals unrelated to the Issuer.
(3)
Banyan Tree Gallery (Thailand) Limited is 49.0% held by the Issuer and 51.0% held by LRH.
(4)
LRH is listed on the Stock Exchange of Thailand (“SET”). Universal Starch Public Company Limited (“USC”), a company listed on the SET, has a direct interest of 17.7% in LRH. Executive Chairman, Mr Ho KwonPing and his family members have an aggregate direct and deemed interests of 26.6% in USC.
(5)
Hill View Resorts Holdings Limited is a joint venture company of which the remaining 70.0% is held by Immobiliere Sorento S.A, the Issuer’s joint venture partner.
(6)
Seychelles Tropical Resorts Holdings Limited is a joint venture company of which the remaining 50.0% is held by Immobiliere Sorento S.A., the Issuer’s joint venture partner.
(7)
Hill View Resorts (Seychelles) Limited is a wholly-owned subsidiary of Hill View Resorts Holdings Limited.
(8)
Seytropical Resorts Limited, which is currently under voluntary liquidation, is a wholly-owned subsidiary of Seychelles Tropical Resorts Holdings Limited.
(9)
Ocean Estate (Seychelles) Limited is a wholly-owned subsidiary of Hill View Resorts (Seychelles) Limited.
(10)
The remaining 6.6% in Maldives Bay Pvt Ltd is held by individuals unrelated to the Issuer.
(11)
Beruwela Walk Inn PLC is listed on the Colombo Stock Exchange of Sri Lanka.
(12)
Lijiang Banyan Tree Hotel Co. Ltd is 51.0% held by the Issuer and 49.0% held by Laguna Banyan Tree Limited.
(13)
The remaining 4.0% in Jiwa Renga Resorts Limited is held by an unrelated third party.
(14)
Zhongdian Jiantang Hotel Limited is 100.0% held by Triumph International Holdings Limited.
(15)
Lijiang Banyan Tree Property Service Company Limited is 30.0% held by Jiwa Renga Resorts Limited and the remaining 70.0% is held by Lijiang Banyan Tree Hotel Co., Ltd.
(16)
Banyan Tree Lijiang International Travel Service Co., Ltd. is a wholly-owned subsidiary of Lijiang Banyan Tree Hotel Co., Ltd.
(17)
Lijiang Banyan Tree Gallery Trading Company Limited is a wholly-owned subsidiary of Banyan Tree Gallery (Singapore) Pte Ltd.
(18)
Lotes 3 Servicios S.A. De C.V. is 20.0% held by Hotelspa Pte. Ltd. and the remaining 80.0% is held by Aqua Mayakoba S.A. de C.V, the Issuer’s joint venture partner.
(19)
The remaining 2.1% effective interest in BT Investments Holdings Phils. Inc. is held by individuals unrelated to the Issuer.
(20)
BT Investments Holdings Phils. Inc. has significant influence over the operating and financial policies of Diwaran Resorts Phil. Inc., and therefore considers it as an associate.
66
(21)
“SR” means Seychelles Rupees.
(22)
“MRF” means Maldivian Rufiyaa.
(23)
“LKR” means Sri Lankan Rupees.
(24)
“RM” means Malaysian Ringgit.
(25)
“LE” means Egyptian Pounds.
(26)
“AED” means United Arab Emirates Dirham.
(27)
“ZAR” means South African Rand.
(28)
“GBP” means British Pound.
(29)
“MXN” means Mexican Pesos.
(30)
“MAD” means Moroccan Dirham.
(31)
“HKD” means Hong Kong Dollars.
(32)
“NZD” means New Zealand Dollars.
(33)
“AUD” means Australian Dollars.
(34)
“JPY” means Japanese Yen.
(35)
“VND” means Vietnam Dong.
(36)
“PHP” means Philippine Peso.
67
The details of LRH’s subsidiaries and associated companies as at 30 June 2011 are as follows:
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Thailand Bangtao Grande Limited 30 November 1993 Thailand/Thailand
Hotel operations
100.0%
Baht 1,546,000,000
Bangtao (1) Limited
22 August 1988 Thailand/Thailand
Property development
100.0%
Baht 20,930,000
Bangtao (2) Limited
22 August 1988, Thailand/Thailand
Property development
100.0%
Baht 19,100,000
Bangtao (3) Limited
22 August 1988, Thailand/Thailand
Property development
100.0%
Baht 7,750,000
Bangtao (4) Limited
23 August 1988, Thailand/Thailand
Property development
100.0%
Baht 14,550,000
Bangtao Development Limited
30 July 1987, Thailand/Thailand
Property development
100.0%
Baht 80,000,000
Banyan Tree Gallery (Thailand) Limited
22 December 1994, Thailand/Thailand
Sale of merchandise
51.0%(1)
Baht 7,750,000
Laguna (3) Limited
9 March 1988, Thailand/Thailand
Property development
100.0%
Baht 100,000
Laguna Banyan Tree Limited
9 January 1991, Thailand/Thailand
Hotel operations and property development
100.0%
Baht 500,000,000
Laguna Central Limited
29 August 2001, Thailand/Thailand
Dormant
85.0%(2)
Baht 1,000,000
Laguna Grande Limited
24 February 1988, Thailand/Thailand
Operating a golf club and property development
100.0%
Baht 1,000,000,000
Laguna Holiday Club Limited
4 May 1994, Thailand/Thailand
Holiday Club membership and property development
100.0%
Baht 330,000,000
Laguna Service Company Limited
13 November 1990, Thailand/Thailand
Providing utilities and other services to hotels of the company and subsidiaries
72.9%(3)
Baht 90,500,000
Mae Chan Property Company Limited
16 October 1989, Thailand/Thailand
Property development
100.0%
Baht 232,300,000
Phuket Resort Development Limited
4 July 1983, Thailand/Thailand
Property development
100.0%
Baht 41,400,000
Pai Samart Development Company Limited
22 November 1990, Thailand/Thailand
Property development
100.0%
Baht 28,400,000
68
Name
Date and Place of Incorporation/ Principal Place of Business
Principal Activities
Effective Ownership Interest
Share Capital
Talang Development Company Limited
26 October 1990, Thailand/Thailand
Property development
50.0%(4)
Baht 251,000,000
Thai Wah Plaza Limited
20 March 1989, Thailand/Thailand
Hotel operations, lease of office building space and property development
100.0%
Baht 2,250,000,000
Thai Wah Tower Company Limited
8 June 1989, Thailand/Thailand
Lease of office building space
100.0%
Baht 455,000,000
Thai Wah Tower (2) Company Limited
2 December 1988, Thailand/Thailand
Property development
100.0%
Baht 21,000,000
Twin Waters Development Company Limited
22 June 1989, Thailand/Thailand
Property development
100.0%
Baht 214,370,000
TWR-Holdings Limited
14 June 1988, Thailand/Thailand
Investment holding and property development
100.0%
Baht 1,250,000,000
Laguna Excursions Limited
25 November 2005, Thailand/Thailand
Travel Operations
49.0%(5)
Baht 8,000,000
Laguna Village Limited
24 March 2009, Thailand/Thailand
Hotel Operations
100.0%
Baht 6,000,000
Laguna Lakes Limited
23 June 2008, Thailand/Thailand
Property development
95.0%(6)
Baht 1,000,000
16 August 2002, Indonesia/ Indonesia
Holiday Club membership
100.0%
US$ 700,000
Lijiang Banyan Tree Gallery Trading Company Limited
18 October 2008, PRC/PRC
Trading and retailing of consumers goods in resorts
51.0%(7)
US$ 75,000
Lijiang Banyan Tree Hotel Co., Ltd
5 September 2003, PRC/PRC
Hotel operations and property development
49.0%(8)
US$ 18,400,000
16 November 1994, Sale of merchandise Singapore/ Singapore
51.0%(9)
S$ 430,000
Cheer Golden Limited
1 March 2002, Hong Kong/ Hong Kong
Investment holding
100.0%
HKD 2
Tropical Resorts Limited
19 October 1990, Hong Kong/ Hong Kong
Resort investment and development
25.9%(10)
US$ 21,000,000
Indonesia PT. AVC Indonesia PRC
Singapore Banyan Tree Gallery (Singapore) Pte Ltd Hong Kong
69
Notes: (1)
The remaining 49.0% in Banyan Tree Gallery (Thailand) Limited is held by the Issuer.
(2)
The remaining 15.0% in Laguna Central Limited is held by an unrelated third party.
(3)
The remaining 27.1% in Laguna Service Company Limited is held by an unrelated third party.
(4)
The remaining 50.0% in Talang Development Company Limited is held by an unrelated third party.
(5)
The remaining 51.0% in Laguna Excursions Limited is held by unrelated third parties.
(6)
The remaining 5.0% in Laguna Lakes Limited is held by an unrelated third party.
(7)
Lijiang Banyan Tree Gallery Trading Company Limited is a wholly-owned subsidiary of Banyan Tree Gallery (Singapore) Pte Ltd (“BTG(S)”) and BTG(S) is 51.0% held by LRH and 49.0% held by the Issuer.
(8)
The remaining 51.0% is held by Sanctuary Lijiang (S) Pte. Ltd..
(9)
The remaining 49.0% in Banyan Tree Gallery (Singapore) Pte Ltd is held by the Issuer.
(10)
Tropical Resorts Limited is 25.9% held by Laguna Banyan Tree Limited. The other shareholders are Chang Fung Limited (“CFL”) of 15.1% and Universal Starch Public Company Limited (“USC”) of 19.8% and the remaining 39.2% is held by an unrelated third party. Executive Chairman, Mr Ho KwonPing and his family have an aggregate direct interest of 100.0% in CFL and an aggregate direct and deemed interests of 26.6% in USC.
AWARDS AND ACCOLADES The Group has garnered over 730 awards and accolades for the hotels, resorts and residences that it manages since the first Banyan Tree resort was launched in 1994. The resorts, hotels and spas owned by the Group have been voted as being among the best in the world by readers of leading travel consumer and trade publications in the Middle East, the United Kingdom, the United States and the Asia Pacific. The Group has also won a broad spectrum of awards and claimed prestigious top spots for its brands, galleries, architecture and design, websites and environmental programmes. Several awards and accolades received by the Group include: Corporate “Best Annual Report - Silver Award” from Singapore Corporate Awards 2011 “Best Managed Board - Silver Award” from Singapore Corporate Awards 2011 “Most Transparent Company Award 2010” from SIAS Investors Choice Awards “Top Ten Influential Figures” from 3rd Continental Diamond Award (World Hotel Magazine) (Ho KwonPing) “Corporate Governance Asia Recognition Awards” from Corporate Governance Asia Recognition Awards 2010 “Asian Corporate Director Recognition Awards” from Corporate Governance Asia Recognition Awards 2010 (Ho KwonPing) Resorts and Hotels “Middle East’s Leading Villa Resort” from 2011 World Travel Awards (Banyan Tree Al Wadi) “The Best New Hotels 2011” from Travel + Leisure It List (Banyan Tree Al Wadi) “Best Hotel in Bangkok” from DestinAsian Readers’ Choice Awards 2011 (Banyan Tree Bangkok) “Best Resort Hotel” from National Geographic Traveler China Readers’ Choice Gold List (Banyan Tree Lijiang) “Hot List - New Hotels” from Condé Nast Traveler’s Hot List 2011 (Banyan Tree Samui and Banyan Tree Cabo Marqués) “China’s Best Elegant and Luxury Resort Hotel of 2011” from 8th Golden-Pillow Award of China Hotels (Banyan Tree Hangzhou) “The Best Romance Resort Award” from Best Value Brand Awards - Posh Magazine (Angsana Fu Xian Lake) “Hot List Hotels - Asia” from Condé Nast Traveler USA Hot List 2010 (Banyan Tree Ungasan) “Hot List Hotels - North America” from Condé Nast Traveler USA Hot List 2010 (Banyan Tree Mayakoba) “Region’s Best New Hotels - South Korea” from DestinAsian Luxe List 2010 (Banyan Tree Club & Spa Seoul)
70
Spas “Best Spa Resort” from TTG China Travel Awards 2011 (Banyan Tree Lijiang) “Best Luxury Resort Spa” from World Luxury Spa Awards 2011 (Banyan Tree Mayakoba and Angsana Spa Vineyard Hotel, South Africa) “Top 25 Spas” from Condé Nast Traveller UK Readers’ Spa Awards 2011 (Banyan Tree Spa Phuket) “Most Unique Body Massage” from Harper’s Bazaar Spa Awards 2011 (Angsana Spa Kuala Lumpur) “Best Spa Operator” from 6th China Hotel Starlight Awards 2011 “Best Spa Operator” from 21st TTG Travel Awards 2010 (6th consecutive year) “Favorite Resort + Hotel Spas - Asian Subcontinent” from Spa Magazine’s ‘Silver Sage Readers’ Choice Awards (Banyan Tree Vabbinfaru) “Favourite Spa in Overseas Hotels (no. 1)” from Conde Nast Traveller UK Readers’ Travel Awards 2010 Galleries “Best Shopping Experience” from Singapore Experience Award 2009 Ecotourism and Heritage Winner of Preservations category from Conde Nast Traveler 5th Annual World Savers Awards 2011 “Sustainable Tourism” from National Geographic Traveller China Readers’ Choice Gold List (Banyan Tree Ringha) “Leadership in Environment” from 2010 Tatler Leadership Awards (Banyan Tree Hotels and Resort) “World’s Leading CSR Programme” from World Travel Awards 2010 “Decade of Achievement Award for Sustainable Development” from The Economic Observer “Winner - Overall Category for Large Hotels” from Conde Nast Traveler USA World Saver’s Awards Marketing and Brand “Best Spa Brand” from Best of The Best Award 2011 - Hurun Report China “China Family’s Favorite Hotel Brand 2010” from Global Times Awards 2010 Architecture and Design “The Best Design Award in Resort” from HA+D Awards 2011 (Banyan Tree Hangzhou) “The Best Landscape Design” from China Best Design Hotels Award 2010 (Banyan Tree Lijiang) Listed among 50 Favourite Interior Designs (Hotels) in Commercial Interior Design Magazine (Banyan Tree Al Wadi) Education and Training “2010 PATA Grand Award - Education and Training” from Pacific Asia Travel Association Grand Award 2010 (Banyan Tree Spa Academy) “Best Spa Academy of the Year Award” from Spa China Awards Quality and Innovation “ACA Lifetime Creative Achievement Award” from American Creativity Association (Ho KwonPing) “Wedding Creative Award” from Wedding Awards of the Year (Banyan Tree Hotels & Resorts) BRANDS The Group’s business is centered around its two award-winning brands: Banyan Tree and Angsana. Each of its brands is targeted at distinct customer segments. This enables the Group to expand its customer base without brand dilution and cannibalisation. The strength of its brands also enables the Group to attract like-minded business partners, such as American Express, Citibank, Visa International, MasterCard International, as well as Okura Hotels and Resorts in Japan. These partnerships help expand awareness of its brands and increase customer reach through their customer databases.
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The Group believes that its commitment to protecting the environment and corporate social responsibility also enhances the image and reputation of its brands. Banyan Tree In 2011, the Banyan Tree brand was named Asia’s Leading Resort Brand by World Travel Award. The Banyan Tree brand is targeted primarily at highly affluent travellers seeking a luxury retreat with a focus on romance, intimacy and rejuvenation. Rates for Banyan Tree resorts and hotels currently range between US$220 to US$9,275 per room night. Positioned in the niche resort, hotel and spa market segments, the Group believes that the Banyan Tree brand is associated with aspiration, prestige and luxury, and is able to command rates that are at the higher end of the market for resorts and hotels within each resort or hotel’s particular market. The Group pioneered the tropical garden spa and pool villa concepts that are now often associated with the Banyan Tree brand. As at 30 June 2011, there are 17 resorts and hotels, 21 spas and 28 galleries under the Banyan Tree brand which reflect the natural environment, culture and heritage of their locations. Since the first Banyan Tree resort opened in 1994, Banyan Tree resorts have garnered numerous awards and accolades including “Middle East’s Leading Villa Resort” from 2011 World Travel Awards (Banyan Tree Al Wadi), “Best Resort Hotel” from National Geographic Traveler China Readers’ Choice Gold List (Banyan Tree Lijiang), and “Hot List - New Hotels” from Condé Nast Traveler’s Hot List 2011 (Banyan Tree Samui and Banyan Tree Cabo Marqués). Angsana Launched in 2000 as the sister brand of Banyan Tree, there are, as at 30 June 2011, seven resorts and hotels, 40 spas and 39 galleries, under the award-winning Angsana brand. The Group positions Angsana as offering a refreshing, vibrant and contemporary experience, manifested in its interior designs and spa treatments. A brand that the Group believes is associated with youth and revitalisation, Angsana targets a younger customer segment than Banyan Tree. Angsana’s rates are at the high end of the market for resorts and hotels within each resort or hotel’s particular market and presently range between US$165 and US$5,240 per room night. Angsana resorts, hotels and spas have won many awards and accolades, including the “Top Ten New Hotels” from 3rd Continental Diamond Award (Angsana Fu Xian Lake), “Choice New Hotel” from Golfers’ Choice Awards (Angsana Fu Xian Lake), as well as TripAdvisor Certificate of Exellence for Angsana Ihuru and Angsana Great Barrier Reef. RESORTS AND HOTELS The primary business of the Group is the management, development and ownership of resorts and hotels. As at 30 June 2011, the Group: manages and has ownership interests in 14 resorts and hotels (Banyan Tree Madivaru Maldives, Banyan Tree Vabbinfaru Maldives, Banyan Tree Ringha China, Banyan Tree Lijiang China, Banyan Tree Bangkok Thailand, Banyan Tree Phuket Thailand, Banyan Tree Seychelles, Banyan Tree Mayakoba, Banyan Tree Cabo Marqués, Angsana Riads Marrakech Morocco, Angsana Resort & Spa Ihuru Maldives, Angsana Resort & Spa Velavaru Maldives, Laguna Holiday Club Phuket Resort Thailand and Gyalthang Dzong Hotel China); manages 13 resorts and hotels (Banyan Tree Bintan, Banyan Tree Sanya, Banyan Tree Ungasan Bali, Banyan Tree Hangzhou, Banyan Tree Al Wadi Ras Al Khaimah, Banyan Tree Club & Spa Seoul, Banyan Tree Samui, Banyan Tree Macau, Angsana Resort & Spa Bintan, Angsana Resort & Spa Great Barrier Reef, Angsana Oasis Resort & Spa Bangalore and Maison Souvannaphoum Hotel) in which it has no ownership interest; and has ownership interests but no management arrangement in one resort (Sheraton Grande Laguna Resort). The management arrangement with Sheraton Overseas Management Corporation however ceased on 30 June 2011. The resort was rebranded as Angsana Laguna Phuket in July 2011 and will open in December 2011 after renovation.
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As at 30 June 2011, these resorts and hotels are located in 12 countries, and have 3,192 rooms available for use by guests. A brief description of the resorts and hotels the Group manages and/or has ownership interests is set forth below:
Name of Resort
Location
Number of available rooms
Banyan Tree Madivaru
Maldives
6
100.0%
Management agreement
2007
Banyan Tree Vabbinfaru
Maldives
48
100.0%
Management agreement
1995
Banyan Tree Ringha
China
32
96.0%
Management agreement
2005
Banyan Tree Lijiang
China
120
83.2%
Management agreement
2006
Banyan Tree Bangkok
Thailand
327
65.8%
Management agreement
2002
Banyan Tree Phuket
Thailand
173
65.8%
Technical assistance
1994
Banyan Tree Seychelles
Seychelles
60
30.0%
Management agreement
2002
Banyan Tree Mayakoba
Mexico
107
11.1%
Management agreement
2009
Banyan Tree Cabo Marqués
Mexico
45
13.7%
Management agreement
2010
Angsana Riads Marrakech
Morocco
41
100.0%
Management agreement
2007
Angsana Resort & Spa Ihuru
Maldives
45
100.0%
Management agreement
2001
Angsana Resort & Spa Velavaru
Maldives
112
93.4%
Management agreement
2006
Sheraton Grande Laguna Resort
Thailand
334
65.8%
Managed externally by Sheraton Overseas Management Corporation
1992(1)
Laguna Holiday Club Phuket Resort
Thailand
117
65.8%
Managed by LRH
2006
China
47
80.0%
Management agreement
2003
Banyan Tree Bintan
Indonesia
61
—
Management agreement
1995
Banyan Tree Sanya
Hainan, China
49
—
Management agreement
2008
Banyan Tree Ungasan
Bali, Indonesia
71
—
Management agreement
2009
Gyalthang Dzong Hotel
73
Effective ownership interest
Form of management arrangement
Year opened/ rebranded
Location
Number of available rooms
Effective ownership interest
Form of management arrangement
Year opened/ rebranded
China
72
—
Management agreement
2009
Ras Al Khaimah, UAE
133
—
Management agreement
2010
Banyan Tree Club & Spa Seoul
South Korea
50
—
Management agreement
2010
Banyan Tree Samui
Koh Samui, Thailand
88
—
Management agreement
2010
Banyan Tree Macau
China
256
—
Management agreement
2011
Angsana Resort & Spa Bintan
Indonesia
106
—
Management agreement
2000
Angsana Resort & Spa Great Barrier Reef
Australia
63
—
Management agreement
2000
Angsana Oasis Resort & Spa Bangalore
India
79
—
Management agreement
2001
Yunnan, China
525
—
Management agreement
2010
Laos
25
—
Management agreement
2005
Name of Resort Banyan Tree Hangzhou Banyan Tree Al Wadi
Angsana Fuxian Lake Maison Souvannaphoum Hotel Note: (1)
Rebranded as Angsana Laguna Phuket in July 2011 and managed by the Group under a technical service agreement.
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Generally, guests for the resorts and hotels the Group manages and/or in which it has ownership interests come from North Asia, Europe and America. Full year ended 31 December
Half year ended 30 June
As a percentage of total room nights
2008
2009
2010
2011
Europe
40.0%
35.9%
30.4%
27.6%
Americas
5.8%
7.8%
8.4%
8.9%
North Asia
24.0%
31.8%
38.7%
45.9%
South Asia
15.5%
13.2%
12.9%
9.8%
Oceania
6.9%
5.7%
5.4%
3.7%
Middle East/Africa
7.8%
5.6%
4.2%
4.1%
Notes: (1)
Europe includes United Kingdom, Germany, France, Switzerland, Russia, Italy and all European countries
(2)
Americas includes the United States, Canada and South America
(3)
North Asia includes Japan, Korea, Hong Kong, PRC and Taiwan
(4)
South Asia includes Singapore, Malaysia, India, Thailand and Indonesia
(5)
Oceania includes Australia, New Zealand and other Pacific countries
(6)
Middle East/Africa includes all Middle East and all African countries
The information above is based on information provided by the Group’s customers to their country of residence.
Full year ended 31 December
Half year ended 30 June
As a percentage of total room revenue
2008
2009
2010
2011
Europe
49.4%
42.2%
35.6%
34.4%
Americas
5.4%
8.8%
11.0%
11.2%
North Asia
20.2%
26.7%
34.9%
37.2%
South Asia
9.3%
9.0%
8.5%
7.7%
Oceania
5.0%
4.3%
4.3%
3.1%
10.7%
9.0%
5.7%
6.4%
Middle East/Africa Notes: (1)
Europe includes United Kingdom, Germany, France, Switzerland, Russia, Italy and all European countries
(2)
Americas includes the United States, Canada and South America
(3)
North Asia includes Japan, Korea, Hong Kong, PRC and Taiwan
(4)
South Asia includes Singapore, Malaysia, India, Thailand and Indonesia
(5)
Oceania includes Australia, New Zealand and other Pacific countries
(6)
Middle East/Africa includes all Middle East and all African countries
The information above is based on information provided by the Group’s customers to their country of residence.
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GLOBAL MARKETING SERVICES Overview The Group operates a global marketing structure (“GMS”) to undertake the marketing, brand management, media and guest relations, customer acquisition and retention programmes, distribution, internet marketing, reservations and yield management of the resorts and hotels under its integrated marketing structure allows the Group to: manage its global distribution network more efficiently; achieve economies of scale; maintain the integrity of its brands and consistency in the marketing and positioning of its resorts, hotels, spas and galleries; respond to changing market demands in a more effective and timely manner; and drive the group digital strategy to increase the percentage of direct bookings through the Group’s corporate websites www.banyantree.com and www.angsana.com. Brand Management Branding is key to the Group’s business success and the platform for its global marketing efforts. To position the Banyan Tree and Angsana brands distinctively, the Group generally utilises separate distribution channels for each brand. The Group manages its brands through marketing programmes with strategic partners of similar branding platforms, such as American Express Centurion, Visa Platinum, Singapore Airlines and Citigroup. Through selected promotional, sales and marketing campaigns in leading lifestyle and trade publications, the Group maintains its brand visibility and associates itself with high-end publications such as Condé Nast Traveler and Tatler UK. The Group’s websites are a source of brand communication to reflect its quality product offerings through their contents and descriptions of its theme-based signature packages that are available all year round. The contents of the websites are available in English, Chinese, French, German, Italian and Japanese languages. The Banyan Tree website won the ‘‘American Design Award - Gold Medal’’ in 2003 and Travel Weekly East ‘‘Golden Web Awards’’ in 2002. The Group participates in major international tradeshows such as the World Travel Market, Internationale Tourismus Börse and Asean Tourism Forum as a trade platform to promote its brands and where it signs contracts with sales agents for upcoming travel seasons. The Group has dedicated resources to oversee its brand discipline and positioning, to maintain consistency in its communications and to ensure disciplined growth. GMS recently launched a new corporate website with a modern look and feel and enhanced functionality, marking another milestone in driving more bookings towards the Group’s own booking engine. Global Marketing Network As at 30 September 2011, the Group has 59 staff located in 14 regional marketing offices and additionally employs the services of eight representatives (general sales agencies) to market the resorts and hotels it manages through various marketing channels. The network of regional marketing offices are located in Singapore (its head office), Bangkok, Hong Kong, Taipei, Tokyo, Shanghai, Beijing, Kunming, Chengdu, Guangzhou, Dubai, Frankfurt, London and Los Angeles. It also has general sales offices in New York, Delhi, Paris, Moscow, Kiev, Milan and Sydney. For the year ended 31 December 2010, 2/3 of the total room revenue for the resorts and hotels the Group manages was derived from a diversified portfolio of over 1,000 wholesalers. The Group selects wholesalers based on its experience in niche marketing for luxury leisure travel and/or the ability to promote a specific destination. These preferred partners combine the Group’s product offerings with flights and other holiday components to provide complete vacation packages. Wholesalers enable the Group to reach out to customers around the world via their network
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of retail agencies. The Group’s sales and relationship management structure also enables it to utilise this global wholesales network efficiently for cross-selling. It also helps to deliver business quickly to the Group’s new resorts, hotels and spas. The Group allocates wholesalers a certain average number of available rooms at negotiated prices for periods of between six and 12 months. These allocations are based on each wholesaler’s historical ability to produce materialised occupancies and are reviewed annually in meetings between the Group’s sales directors and wholesalers. The Global Marketing network also organises selected Roadshows into key cities that have business potential for the hotels and resorts. For the year ended 31 December 2010, events were held in India (Delhi, Mumbai), United States (LA, Chicago, NY), UAE (Dubai), Europe (Paris, London, Frankfurt, Munich, Zurich), Russia (Moscow, St Petersburg), Ukraine (Kiev), Hong Kong and China (Beijing, Shanghai). Marketing Communications The Group believes that maintaining strong, long-term relationships with journalists, travel and consumer publications and opinion leaders within the media industry is important to its success. The Group’s communications activities include the creation and placement of information about its hotels, resorts and spas it manages in editorial channels of print, broadcast and electronic media. The Group encourages and plans trips for journalists to write feature stories on its many products and services. It also writes and issues timely and targeted press releases to introduce new product offerings including the launches of new hotels and services. In addition, the Group’s communications team is responsible for monitoring and responding to the media during times of crisis. The communications team consciously integrates its pro-community and proenvironment approach into its promotional and communications efforts. Marketing Alliances and Strategic Partnership Most of the reservations and guest information for the resorts, hotels and spas the Group manages, are captured by its Central Information System (‘‘CIS’’). CIS provides all the resorts, hotels and spas it manages with each guest’s transactional history and preferences. With this information, the Group’s global marketing team develops a series of acquisition and retention programmes to encourage customers to make repeat visits to its resorts, hotels and spas and to increase direct bookings. The data captured in the CIS allows GMS to: communicate new openings, destination content, new spa treatments, etc. to former guests; and communicate special offers to drive traffic toward the corporate website, which increases revenues from repeated bookings. Global Reservations System The resorts and hotels that the Group manages use Property Management System and Reservations System that enable it to capture guests’ profiles and transaction history. Most of the properties are interfaced with its Central Reservations System, which duplicates the information and enables its Global Reservations Offices worldwide access to the information via the internet. These critical reservations systems are backed up daily by each of the Group’s resorts and hotels, as well as by its head office in Singapore. In the event that any of the Global Reservations Offices faces operational or technical problems, information and enquiries can be re-routed and accessed at another location by another team with relative ease, to ensure that its operations remain uninterrupted.
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RESORT AND HOTEL EXPANSION New Resorts The Group’s business development team considers new locations for its resorts and hotels on an ongoing basis. Potential new locations for the Group’s resorts and hotels are usually either proposed by its business development team or recommended to the Group by potential business associates. Along with satisfying demand for its product offerings, introducing its brands in new markets serves as valuable advertising for its existing resorts, hotels, spas and galleries, facilitating cross-selling. The decision to develop or manage a new resort or hotel is subject to a structured process and is only made after the consideration of several factors. These factors include whether the potential site has the natural beauty and other features which are characteristic of a Banyan Tree or, Angsana resort or hotel, the Group’s ability to achieve high price-to-cost ratios, accessibility of location, potential market demand, its ability to establish a niche position in the potential location and existing basic infrastructure. The Group is continually assessing new opportunities to develop or manage new resorts and hotels. To meet the expansion needs of the Group, Group Hotel Services (“GHS”), based in the Singapore head office is responsible for Innovation and Operations, part of which includes pre-opening functions via collaboration with other departments, and the utilisation of the wide expertise of personnel in the field. GHS together with the Banyan Tree Management Academy (“BTMA”) draws from its associates in existing hotels to form pre-opening task forces which assist in training new hotel associates in the operational aspects of new hotels. Such associates are seconded for a few months to the new hotels from the pre-opening phase to after opening. BTMA is the Group’s centralised training facility. It was established officially in February 2008 and supports the Group’s expansion while helping the Group to maintain high standards throughout its properties. It does this by developing a critical mass of internal talents and by equipping the Group’s associates with the necessary leadership and management skills to meet the manpower requirements of the Group’s new and existing properties. As at 30 June 2011, 33 new hotels and resorts where management agreements have been entered into are being planned or designed (of which, 17 are Banyan Tree branded and the remaining 16 are Angsana branded). SPA OPERATIONS The Group believes that it is one of the leading spa operators in Asia. Most Banyan Tree and Angsana Spas are open to the general public as well as its resort and hotel guests. The Group’s spas have received more than 200 awards, including “Best Spa Operator” from Travel Trade Gazette (TTG) Travel Awards 2010 for the sixth consecutive year, “Best Spa Brand” from Hurun Report China Best of the Best Awards 2011 for the fifth consecutive year, “Best Spa Operator’ from China Hotel Starlight Awards 2010 for the third consecutive year, “Spa Academy of the Year” from AsiaSpa Awards 2010 for the second consecutive year, “Best Spa Academy of the Year” from SpaChina Awards 2010, “PATA Grand Award - Education and Training” from Pacific Asia Travel Association Gold Awards 2010 (Banyan Tree Spa); “Favourite Overseas Hotel Spa - Winner” from Conde Nast Traveller UK - Readers’ Travel Awards 2010 and “Outstanding Performance Award for Health Tourism - Destination Spa” by 8th Thailand Tourism Awards 2010 (Banyan Tree Phuket). The table below sets forth details about the Group’s spas as at 30 June 2011: Number of outlets
Number of treatment rooms
Number of spa therapists
Banyan Tree Spa
21
233
280
Angsana Spa
40
390
324
Elements Spa by Banyan Tree
3
25
16
The World Spa by Banyan Tree
1
4
8
652
628
Total
65*
Note: *
Of the 65 spas that the Group operates, 30 are leased from third parties
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The Group has established Banyan Tree Spas at each of the Banyan Tree resorts and hotels. In addition, it operates a Banyan Tree Spa at The Westin Shanghai, which it believes gives the Banyan Tree brand greater exposure in PRC and a Banyan Tree Spa at Marina Bay Sands, marking Banyan Tree’s very first venture in its home base of Singapore. The Group operates an Angsana Spa in all the other resorts it manages and/or owns. The Group also operates Angsana Spas in other operators’ resorts and day spas in countries such as Kenya, Mauritius, Morocco, South Africa, Australia, China, Guam, India, Indonesia, Japan, Laos, Malaysia, Maldives, Sri Lanka, Thailand, Ireland, Portugal, United Arab Emirates, Egypt and Qatar. The spas are promoted by the Group’s in-house global marketing team. The Elements Spa by Banyan Tree is located in the Royale Hayat Hospital, Kuwait, Tivoli Victoria in Algarve, Portugal and Tivoli Sao Paulo in Sao Paulo, Brazil. The Group operates Elements Spa by Banyan Tree under a spa management agreement which receives management and incentive fees as a percentage of revenues and gross operating profit respectively for the operation of the spa. The World Spa by Banyan Tree is located on board ‘The World’ cruise ship. The Group operates the World Spa by Banyan Tree under a spa management agreement with ROW Management Ltd based in the United States. This agreement has an initial operating term of 15 years with effect from 26 January 2007. The Group receives management and incentive fees as a percentage of revenues and gross operating profit respectively for the operation of the spa. The spa treatments are priced based on the Group’s premium services and branding. The Group optimises revenue from this business segment by effectively managing the hours the spas are in operation and its average rates. Unlike the resorts and hotels, where Average room rates are affected by seasonality, the Group maintains consistent spa treatment prices throughout the year. Each spa has its own pricing structure and offers different packages to increase usage during off-peak hours. The Banyan Tree Spa Academy In May 2001, the Group opened the Banyan Tree Spa Academy (the ‘‘Academy’’) at Banyan Tree Phuket, Thailand. The spa therapists from Thailand must first enroll in the Academy and receive over 350 hours of theoretical and practical training, including lessons in basic anatomy and physiology, English and professional ethics. Over 1000 therapists have graduated from the Academy since it opened. Even prior to the Academy’s launch, all the therapists were trained extensively, receiving a minimum of twelve weeks of intensive training before commencing work at one of the Group’s spas. The therapists receive training on an ongoing basis from trainers from the Academy who visit all of the Group’s spas to train therapists and introduce new spa product offerings. The Academy also conducts research to develop new treatments, recipes, techniques and product offerings, to help maintain the Group’s leadership position in the spa industry in Asia. The Academy is accredited by Thailand’s Ministry of Education and Ministry of Public Health. The Academy has set up branch training centres in Bintan in Indonesia and Lijiang in China. The expansion of the Academy enables the Group to select from a wider pool of quality therapists for the spas it manages internationally. The therapists can acquire overseas exposure, which in turn, enables the Group to increase its pool of experienced therapists to support its growth plans. Ambience and Treatments Banyan Tree Spas and Angsana Spas each offer distinct product offerings and experiences. Banyan Tree Spas are set in a more traditional, luxurious environment with a classic design, and use natural herbs and spices and more complex techniques as the cornerstone of their therapies. Angsana Spas have contemporary interiors and colourful decors and place special emphasis on the use of flowers and fruits. Each spa offers treatments that range from a minimum of 60 minutes to a maximum of a one-day package of seven hours. Spa treatments offered include massage, body wraps, body scrubs, facials and beauty treatments for hand and foot pampering. Spa Management Agreements Spa management agreements are normally for ten-year terms. Where the Group manages a spa and a resort or a hotel, the term of the spa management agreements is the same as the resort or hotel management agreement. When it operates a spa through a lease, the term of the lease is negotiated
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on a case-by-case basis. The Group typically requires the owner to fit out the spa in accordance with its specifications at the owner’s cost prior to a six-month rent free period. The Group then provides all the movable spa equipment such as tables, oils and linen. The following table sets forth certain operating data for the spas the Group managed during the three years ended 31 December 2008, 2009 and 2010 and for the six months ended 30 June 2011: For the six months ended 30 June
Full year ended 31 December 2008
2009
2010
2011
12 93.35 3.27
16 90.58 2.80
19 99.98 2.47
21 101.27 2.52
39 63.80 2.70
39 62.40 2.51
41 62.44 2.42
40 69.74 2.25
1 107.28 2.42
4 99.94 1.87
3 95.47 1.85
3 99.16 1.66
16 68.85 3.29
8 79.68 1.86
2 86.45 2.88
1 94.09 4.23
Banyan Tree Number of spas Average rates per hour of use per room per day (S$) Average hours of use per room per day Angsana Number of spas Average rates per hour of use per room per day (S$) Average hours of use per room per day Elements Spa by Banyan Tree Number of spas Average rates per hour of use per room per day (S$) Average hours of use per room per day Other Spas Number of spas Average rates per hour of use per room per day (S$) Average hours of use per room per day Spa Expansion As the spas are a valued feature of the Group’s resorts and hotels, it opens a spa at each new resort and hotel that it launches. In addition, the Group is frequently offered opportunities by other reputable hotel companies located in markets where it does not operate a spa, to open a Banyan Tree or Angsana Spa. These opportunities allow the Group to expand its spa business into new markets and further promote its brands without incurring the costs associated with opening a new resort. As at 30 June 2011, the Group has more than 30 new spas which it plans to manage in the next few years.
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GALLERY OPERATIONS The retail arm of Banyan Tree Hotels & Resorts, Banyan Tree Gallery acts as a marketing channel for traditional village crafts handmade in various parts of Asia like Thailand, Indonesia, Vietnam, Cambodia and China. In the process of showcasing these local crafts, the livelihoods and skills of these artisans are sustained through gainful employment. Banyan Tree Gallery’s flagship store was set up in Banyan Tree Phuket in 1994 with the ethos of a socially responsible tourism retailer. Gallery’s CSR efforts Banyan Tree Gallery’s business philosophy is aimed toward embracing the environment and empowering the people. Some of the CSR initiatives include sustaining village development, creating green awareness as well as promoting cultural heritage. Banyan Tree Gallery provides a marketing channel for cottage crafts found in various parts of Asia. By generating market demand and interest in traditional crafts, it has helped to conserve the unique cultural heritage of the artisans while sustaining their livelihoods through gainful employment. Banyan Tree Gallery is continuously using eco-friendly and recycled materials for its merchandise from photo frames made using discarded telephone directories, elephant dung paper stationary to lead-free celadon and ceramic spa amenities. In line with the Banyan Tree Group’s Green Imperative Fund initiative, unique collections are continuously created to promote environmental consciousness. Gallery’s Brands In order to better cater for the changing demographics of the guests, Banyan Tree Gallery branched out and started brands apart from Banyan Tree Gallery and Angsana Gallery. Angsana Gallery introduced the Angsana Spa Essentials outlets alongside Angsana Spas, now established worldwide, which features key merchandise range inspired by the unique treatments at Angsana Spa. The range includes pampering hair and body care toiletries like the Jasmine Frangipani collection, relaxing spa music, as well as Angsana-branded aromatherapy amenities like oil burners, incense holders and eye pillows. The Angsana Colours outlet features signature Angsana merchandise and other basic travel essentials and souvenirs. Elements Jewelry By Banyan Tree showcases fine jewellery pieces which are inspired by ethics and luxury, reflecting a sense of place and a touch of tradition like the Banyan Tree brand whilst the Banyan Tree Spa Essentials features an award winning and unique range of Banyan Tree Spa-inspired merchandise. Elements Spa Essentials By Banyan Tree was also developed to complement Elements Spa By Banyan Tree, which represents a luxurious approach to Asian spa therapy and focuses on a nonclinical and holistic approach based on traditional Eastern healing therapies. Affiliate brand Museum Shop By Banyan Tree creates a platform for showcasing Singapore’s, as well as Asia’s, rich cultural legacy. Examples of ethnic crafts that are being retailed at the shops include Vietnamese celadon vases, Burmese silver accessories, and Chinese camphor woodcarvings. In addition to quality museum replicas, museum-inspired merchandise - like famille rose plates, Peranakan porcelain ware and Old Singapore stationary - also help make history more accessible to the general public. As at 30 June 2011, the Banyan Tree Group operates 83 retail galleries in 27 countries worldwide. Awards and Accolades Banyan Tree Gallery and Angsana Gallery received the Pacific Asia Travel Association (‘‘PATA’’) “Gold Award for Heritage” in 2003. Museum Shop by Banyan Tree was winner of Singapore Experience Award’s “Best Shopping Experience” in 2009, PATA “Grand Award for Heritage 2004” and “Best New Entrant Award 2003” by the Singapore Retailers Association. CLUB MANAGEMENT In 2006, The Group capitalised its brand name and launched another milestone product, Banyan Tree Private Collection (“BTPC”). BTPC is the first asset-backed destination club in Asia to offer perpetual and transferable membership. BTPC‘s exotic properties in Asia, Europe and the Americas include villas in
81
Italy and France, and serviced apartments in the United Kingdom and Japan. Besides the indulgence of a second home without the expense of ownership, members enjoy asset protection, as the properties are safeguarded by an independent company whose shares are held by trustee shareholders. FUND MANAGEMENT To fund future expansion and increase the Group’s fee-based income stream, the Group tapped into private equity funds and launched Banyan Tree Indochina Fund in late 2007 and Banyan Tree China Fund (I) in 2010. By the final closing in 2009, Banyan Tree Indochina Fund successfully raised US$283 million and by the final closing in January 2011, Banyan Tree China Fund (I) successfully raised RMB1.1 billion. In addition to annual fund management fees, the Group will receive fees over the next few years for design, hotel management, spa/golf/facilities management and royalty fees for the use of the Group’s brands in property sales. Banyan Tree Indochina Fund will focus primarily on Vietnam and construction of phase I of the integrated resort commenced in May 2010. Banyan Tree China Fund (I) will focus on China with five projects in different parts of China. PROPERTY SALES The Group’s property sales business comprises the development and sale of properties (such as apartments, townhouses and resort villas) and the sale of development project/sites. For the three years ended 31 December 2008, 2009 and 2010 and as at 30 June 2011, the vast majority of the Group’s property sales have been in Laguna Phuket. In addition, in 2011, the Group also sold development project/sites in China. The Group monitors the market value of each property it acquires for potential resort or hotel development. Occasionally, the Group receives offers from potential buyers at prices that it considers attractive. The Group’s property sales business generates funds to finance future hotel investments. When it builds resort villas, such as the Banyan Tree Phuket Double Pool Villas, the Group has the option of selling the villas to third parties (while maintaining the villas as part of the resort’s available room inventory). If it is unable to find a buyer willing to pay the price it has established for the villas, the Group retains its ownership interest in the villas, which increases its Hotel Investments revenues. The Group formally launched a new property sales initiative known as ‘‘Banyan Tree Residences’’ in London on 31 May 2007 and in Hong Kong on 15 June 2007. However, there had been prior sales of Double Pool Villas and two-bedroom Pool Villas at Banyan Tree Phuket in 2005 and 2006. In addition, the Group released for sale resort residences in Banyan Tree Lijiang and as at 30 June 2011, a total of 10 two-bedroom and three-bedroom villas and 12 two-bedroom townhouses have been sold. Two threebedroom villas have been reserved with deposits paid. In Banyan Tree Bangkok, four floors of existing office space have been converted into 24 two-bedroom apartments. As at 30 June 2011, the Group has sold 13 apartments. In Bintan, the Group has also sold 11 one-bedroom and two-bedroom villas. ‘‘Banyan Tree Residences’’ will operate a ‘‘Banyan Tree Residence Club’’, whereby unit owners will enjoy privileges at all Banyan Tree and Angsana hotels, resorts and spas, and 60-days complimentary days use every year. Each investor in Banyan Tree Residences can choose to receive a fixed income return of 6% of the purchase price or a 33% share of the net room revenue generated by their own property. As a standard term, both options have a term of six years, after which time the investors may choose to renew or change the basis of the return by mutual consent. The new Banyan Tree and Angsana resorts, located in the master-planned integrated resort complex of Laguna Lang Co, will offer property for sales in the later part of 2011. Banyan Tree Residences will release a variety of investment properties in the form of individual pool villas, while Angsana Residences will offer condominium units. Apart from the guaranteed returns, investors will also have access to the 18hole Nick Faldo-designed golf course.
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OTHER BUSINESSES Design and Project Management The Group has an experienced, in-house division that plans, designs and oversees construction (or conversion) and maintenance for nearly all of the resorts, hotels, spas and galleries it manages and operates. The division seeks to establish aesthetically appealing, distinctive and luxurious properties which celebrate the unique local culture and display sensitivity to the environment. The Group believes that having these in-house capabilities provide it with several advantages including faster design times and better cost control than if it hired external architects and project managers. Third parties who are interested in enlisting the Group to manage their resorts and hotels are attracted to its ability to provide an in-house team to supervise construction. In addition, the Group’s in-house team allows it to better maintain the quality and consistency of each of its product offerings, which is essential to maintaining the strength of its brands. For new resorts and hotels, the Group’s design and planning division helps to choose each site and designs the entire resort or hotel, including the architecture, engineering and interior design. Once a design is finalised, the Group’s Project Services (“GPS”) department establishes and monitors a budget for the project, oversees construction and works with resort and hotel managers to procure furniture, fixtures and equipment for the resort or hotel. GPS also supervises all the renovations, alterations and extensions that go on at its resorts and hotels. Soft furnishings are replaced as necessary and each resort and hotel undergoes a major refurbishing after approximately eight years. Over the years, this approach has garnered numerous international awards. In 2010, for example, Banyan Tree Lijiang clinched the Bund Award for “Best Landscape Design”, while Banyan Tree Al Wadi made it to Commercial Interior Design Magazine’s list of “Favourite 50 Interior Designs”. Recently, Banyan Tree Hangzhou also won the “Best Design Award in Resort” at the HA+D Awards 2011. Golf Clubs The Group presently owns and operates golf clubs in Phuket and Bintan. The Laguna Phuket Golf Course is located next to Banyan Tree Phuket and has an 18-hole par 71 golf course, driving range, putting greens, practice bunkers, chipping areas and club house pro shop within its facilities. The Laguna Phuket Golf Course is owned by LRH. The Laguna Bintan Golf Club is located next to the Group’s resorts in Bintan, and boasts an 18-hole golf course designed by Greg Norman. COMPETITION The hospitality and leisure industry in which the Group operates is highly competitive. At each of its resorts and hotels, the Group competes for guests with other resorts and hotels in the relevant destination. For the resorts it manages, the Group typically does not compete with large scale hotel operators, as most of its resorts have less than 100 rooms and/or villas. Instead, the Group believes it operates in a niche market with relatively high barriers to entry. Each location also competes with other tourist destinations for visitors. Bali is a significant alternative destination for the Group’s key customer segments. However, this competition is mitigated because Bali’s high season coincides with the low season of most of its resorts and hotels. While general competitive levels for resorts and hotels are intense, the Group focuses primarily on a niche market in premium resorts and hotels. The Group believes it occupies a leading position in this niche market. The spa industry is very fragmented. In each location in which the Group operates, it competes mainly with local spa operators.
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COMPETITIVE STRENGTHS The Group believes that it can capitalise on its competitive strengths as follows: Leading manager and developer of niche resorts, hotels and spas in the Asia Pacific The Group is a leading operator of premium resorts, hotels and spas in the Asia Pacific, with 28 resorts and hotels and 65 spas and 83 galleries that it manages and/or has ownership interests as at 30 June 2011. The Group has, in the last few years, grown its business geographically by entering into management agreements in new locations ranging from Europe to Mexico, the Middle East, PRC and India. By 2014, the Group will have an additional 4,200 rooms in 33 new hotels spread across 11 countries on three continents. The Group’s leadership is demonstrated by the fact that the resorts, hotels and spas that it manages have won more than 730 awards and accolades since the first Banyan Tree resort, Banyan Tree Phuket, was launched in 1994. Laguna Phuket, an integrated resort complex in Phuket, Thailand, has a leading presence in one of the top resort destinations in Asia. The Group has pioneered concepts that have become the signature features of many of its resorts and hotels, such as the tropical garden spa and the pool villa. The Group believes that its strength as a manager and developer is principally derived from its integrated business model, including an in-house design and project management division as well as a global marketing team. The Group’s integrated capabilities enable it to preserve brand integrity, create innovative product offerings with quicker time to market, preserve its premium positioning in the niche markets in which it operates and the quality of its resorts, hotels, spas and galleries and the services it offers. Award-winning brands which drive its growth strategy The two key brands that the Group owns, Banyan Tree and Angsana, have received many awards and accolades. The Banyan Tree brand was named as ‘‘Singapore’s Strongest Brand’’ by International Enterprise Singapore, 2003 and “The Most Potential Brand Hotel Chains” by World Hotel Magazine in 2011. The Group’s strong brand recognition allows it to command prices at the high end of the market for the resorts, hotels and spas that it manages. In the full year ended 31 December 2010, the Group’s Average room rate was S$594.5 and S$290.2 for Banyan Tree and Angsana respectively. Through the strength of its brands, the Group is also able to expand its product offerings more quickly. Its differentiated brands strategy allows it to target distinct customer market segments and drive growth in its hotel investments and hotel management business segments while avoiding brand dilution and cannibalisation. The strength of the Banyan Tree and Angsana brands also improves the Group’s negotiating position with potential business associates. Through its brand name, the Group is also able to tap into alternative sources of funding for its expansion. For example, the Group has successfully launched and raised US$283 million and RMB1.1 billion through private equity funds; Banyan Tree Indochina Fund in 2009 and Banyan Tree China Fund (I) in 2011 respectively. Complementary product offerings and integrated business model enhance resilience The resilience of the business model of the Group is sustained by its strong brands: Banyan Tree and Angsana. Each brand and product line targets distinct market segments and consequently expands its overall customer base. The Group’s complementary product offerings, ranging from resorts, hotels, spas, galleries and resort residences to golf courses, enable it to offer a multifaceted travel and leisure experience and give rise to cross-selling opportunities. The Group believes that it was able to reduce the adverse impact of external events such as the 2004 tsunami, SARS, the Bali bombings and the 11 September 2001 terrorist attack because its resorts, hotels and spas are located across different countries and have a geographically diverse customer base. For example, although the operations in Maldives were impacted by the 2004 tsunami, operations recovered by the third quarter of 2005 and by the fourth quarter of 2005, REVPAR for the quarter was higher than in the fourth quarter of 2004. In addition, following the onset of global financial crisis in 2008, there was a clear shift from corporate and long-haul travel to short-haul travel and the Group was able to shift its focus to Asia swiftly due to its global presence. The Group’s global presence has acted as a buffer against dipping long-haul market revenues. For example, as a result of the Group’s focus, China has been its largest market for two years running since 2009, contributing 18% to the Group’s revenue as at 31 December 2010, up from just 8% as at 31 December 2008. The Group’s integrated capabilities (including in-house design and project management and global marketing) enable it to create innovative product offerings, reduce the 84
time needed to launch new product offerings and manage costs effectively. When events affect one or more of markets in which the Group operates, it utilises multiple sales channels through its global marketing approach to target unaffected and/or less affected customer markets. For example, following the 2004 tsunami, the Group was able to mitigate losses and speed up recovery by redirecting marketing efforts to unaffected customer markets/locations. Effective financial management The Group remained profitable notwithstanding the onset of the global financial crisis in 2008. At the heart of the global downturn in 2009, the Group implemented several cost-cutting measures that generated substantial cost savings during the year. The Group’s proactiveness and ability to stay on top of any unforeseen circumstances helped the Group stay resolute yet adaptable. The Group’s profit after tax and after minority interests (“PATMI”) was S$7.0 million in 2008 but remained profitable at S$3.0 million in 2009 when the world was in recession and further improved to S$15.7 million in 2010 when the global economy recovered. In addition, the Group’s net gearing remained healthy at a low of 0.4 times and cash flow was strong at S$158.8 million as at 30 June 2011. Proven and experienced management team The Group boasts an experienced and qualified management team with a successful track record in managing its businesses. Most of the core members of the Group’s senior management team have been instrumental in its development since the inception of the Banyan Tree brand in 1992. The team has successfully grown its business through brand building initiatives, strategic alliances and effective crisis management through difficult operating conditions for the industry over the last few years. The Group is led by its founder, Executive Chairman, Mr Ho KwonPing, who has more than 20 years of experience in the hospitality and leisure industry and has won awards including the “Chief Executive Officer of the Year Award ” from the Singapore Corporate Awards 2008, “ACA Lifetime Creative Achievement Award” in 2010 from American Creativity Association, “Top ten influential figures” from the World Hotel Magazine. Mr Ho is supported by an experienced management team. The Group believes its senior management team possesses the appropriate mix of multi-disciplinary skills and experience, particularly in areas of product innovation, branding, resort and hotel design and construction, as well as hotel operations. Mr Ho is also assisted by an experienced Board who is committed to maintaining high standards of corporate governance and sound corporate practices to promote accountability and transparency. For the three years since 2008, the Group has been awarded “The most transparent company - Hotels & Restaurants” by SIAS Investors’ Choice Awards, “Winner - Corporate Governance Asia Recognition Awards” by Corporate Governance Asia Recognition Awards 2010 and “Best Managed Board - Silver Award” by Singapore Corporate Awards 2011. STRATEGY The Group’s principal strategic objective is to build upon the Banyan Tree and Angsana brands, to create a diversified group of niche resorts and hotels in strategic locations throughout the world, complemented by its resort/hotel residence and property sales and its spa and gallery operations, while achieving strong profitability and operating margins and maintaining its strong balance sheet position. In particular, the Group seeks to: Focus on growing its business through fee-based operations The Group intends to grow its business by increasing the number of resorts and hotels that it manages. The Group believes that this strategy will enhance its management fee income, increase awareness of its brands at a faster pace and expand its revenue base without incurring significant incremental capital expenditure. As at 30 June 2011, the Group plans to open 33 resorts and hotels in the next few years, 28 of which it will manage but not have any ownership interest in. The Group believes that its strong operating track record in managing its resorts and hotels, the strength of its brands, in-house design and innovation and its global sales and marketing and distribution networks help attract owners of resorts and hotels. The Group expects to increase its revenues from spa operations by expanding into new locations through leases, management agreements and strategic alliances. As at 30 June 2011, the Group has a pipeline of more than 30 new spas which are scheduled to open in the next few years. In addition, the Group has also further diversified its 85
fee-based income through new product offerings such as the Banyan Tree Private Collection which it set up in 2007 to derive club management fees. The two Banyan Tree private funds such as Banyan Tree Indochina Fund and Banyan Tree China Fund (I) also help generate fund management fees and resort development and management fees. The Group’s strategy of concentrating on feebased business has paid off for the Group. Revenue for fee-based business increased by 12% from S$78.3 million in 2009 to S$87.6 million in 2010. For the half year ended 30 June 2011, revenue increased by 20% from S$39.3 million at 30 June 2010 to S$47.3 million. Development funding through private equity funds The Group believes that sustainability includes the ability to raise development funding for its expansion. Apart from traditional fund raising through debt, the Group will continue to look into setting up other region specific funds for future funding requirements. The Group does this through its subsidiary, Banyan Tree Capital. The Group believes that the success of both the Banyan Tree Indochina Fund which raised US$283 million despite the financial crisis and the Banyan Tree China Fund (I) which raised RMB1.1 billion from wealthy domestic investors in China will enable us to tap alternative sources of funding for swift expansion in strategic locations around the world. Continue to grow its online presence and direct room bookings The Group believes that bookings made by customers who book through its websites www. banyantree.com and www.angsana.com are the most profitable, and will continue to pursue its strategy to grow direct bookings of its hotels and resorts through its websites. The Group believes that its ongoing investments in online advertising and marketing initiatives allow it to target its marketing messages to affluent audiences worldwide in a cost-effective manner. In 2010, as a result of aggressive online advertising and social media marketing initiatives, website traffic to BanyanTree.com grew by 90% and online share of room revenue increased by almost 20%. To keep up with evolving web technologies, Banyan Tree and Angsana’s revamped websites were launched in September 2011 to provide customers with a more experiential online journey. The Group intends to continue to expand and evolve its online presence in order to grow revenue from online direct bookings to at least 17.5% of total room revenue by 2012. Increase its geographical presence by expanding its resort and hotel operations into new strategic locations The Group intends to develop its international presence to grow its resorts and hotels business and diversify its revenue base. Through strategic expansion into low-cost locations close to its key customer markets, the Group intends to increase accessibility to its existing customers as well as reach out to affluent customer segments within these operating countries. The Group’s ability to command premium rates will be a key consideration in its geographic expansion. The Group believes that strategic geographical expansion will reduce its exposure to seasonal and cyclical fluctuations in its business by having more diversified geographic and customer bases and will also permit it to take advantage of cross-marketing opportunities. The Group typically targets an internal rate of return in excess of 20% on its equity investment in resort and hotel projects. Accelerate asset rebalancing to unlock value and enlarge China contribution The Group will continue to rebalance its asset portfolio to reduce concentration and country-risk exposure from any single country and to unlock the value of its mature assets. This will enable the Group to deploy capital to promising markets such as China to create greater value. Thailand has in recent years been plagued by political uncertainties (see “Risk Factors - Risks Relating to The Group’s Business and Operations - Economic, political, legal and regulatory conditions in Thailand and elsewhere may adversely affect the Group”). As at 31 December 2010, Thailand contributed 52% to the Group’s EBITDA before accounting for the one-off gain from the sale of Dusit Laguna Phuket. The Group intends to reduce the contribution to about 40% in 2013. As part of this strategy, the Group disposed of Dusit Laguna Phuket in 2010 for S$112.3 million which represented 2.7 times its book value and generated S$67.0 million of additional profit before tax. The disposal enabled the Group to optimise and extract value from its mature assets. In May 2011, the Group disposed another of its hotel asset; Laguna Beach resort in Laguna Phuket for S$29.6 million and generated profit before tax of S$1.8 million. The Group will continue to monitor the political situation in Thailand and further unlock asset value when the opportunities arise.
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Increase its presence in China With the increasing affluence of Chinese consumers and their penchant for travel, both domestically and abroad, the Group believes China will be its growth engine for the next few years. For the two years running since 2009, China has been the Group’s largest market contributing 18% to the Group’s room revenue in 2010, up from just 8% in 2008. This growth in 2010 has been broad based; with revenue of the Group’s resorts in China doubling from 2008 levels, benefitting from strong growth in domestic tourism; and revenue from Chinese guests in the Group’s resorts outside China boasting three-fold growth since 2008 aided by an expanding China outbound market. The Group believes its strategy of enlarging its presence in China will enable it to tap this growing market further. To further exploit opportunities that are opening up in China, the Group has also successfully raised RMB1.1 billion in 2011 for the Banyan Tree China Fund (I), which will enable the Group to establish a portfolio of resorts and hotels in the fast growing China market, in line with the Group’s expansion plans. In addition, of the Group’s 33 new projects in the pipeline, close to 60% are in China. This investment focus will significantly enlarge the Group’s presence in China, quadrupling the number of the Group’s resorts there to 25 by 2014. In the same period, the number of spas in China will also increase to 33 from just 12 today. Continue to target niche markets through its differentiated brand strategy The Group will continue to capitalise on the strong recognition of its award-winning brands, Banyan Tree and Angsana, to capture the premium segment of different customer markets. The Group believes Banyan Tree’s product offerings are associated with prestige and luxury. Best available rates for Banyan Tree resorts and hotels typically range between US$220 to US$9,275 per room night. Angsana offers a refreshing and contemporary ambience and targets a younger customer market than Banyan Tree. Best available rates for Angsana hotels typically range between US$165 and US$5,240 per room night. The Group believes it has the first-mover advantage in providing premium rooms to this market segment. The Group also believes it will be able to crosssell its existing product offerings to customers of its new product lines and encourage its existing customers to experience its new product offerings. Continue residential development and sales to reduce resort and hotel investments outlay The Group intends to continue its strategy of developing and managing resort/hotel residences selectively in locations where it has existing resorts or hotels, as it has done in Laguna Phuket, Bangkok, Lijiang, Bintan, and Mexico. Additional locations where the Group intends to implement this strategy include the integrated resort in Laguna Lang Co, Hue (Vietnam) owned by Banyan Tree Indochina Fund, Huangshan (PRC) and Lijiang (PRC) owned by Banyan Tree China Fund (I) and on third party owned projects such as Tengchong (PRC), Luofushan (PRC), Kerala (India), Sifah (Oman), Sveti Marko (Montenegro), Alqueva (Portugal) and Penon del Lobo (Spain). The cash flows generated from the sale of its resort/hotel residence developments will reduce its investment outlay for resort/hotel developments and expansion of existing resorts and hotels. The Group also intends to lease back and/or manage the resort residences that it sells, in order to obtain recurring revenues from these resort residences, in addition to sale proceeds received. Furthermore, for those projects owned by third party owners, the Group receives royalty fees on sale of branded properties. The Group also believes that the value of land surrounding its resorts and hotels typically appreciates as the resort or hotel matures. The sale of resort residences will enable the Group to capitalise any appreciation in land values. The Group also intends to selectively enter into management contracts to manage premium serviced residences (apartments) in selected locations. These premium serviced residences will operate under one of its brands. Investments in branded primary homes in China The Group intends to employ a new growth strategy to add more depth to its current property sales segment where properties are currently sold as luxury holiday or secondary homes. The Group intends to capitalise on the Banyan Tree brand and build branded residential primary or owner-occupied homes. These homes will be situated in suburban extensions of second-tier and third-tier cities, mainly China’s provincial capitals, where land is still relatively inexpensive. The 87
Group is targeting discerning buyers looking to buy properties for use as their primary homes and who appreciate the Banyan Tree design and quality. The Group believes China, especially in inland cities, continues to offer good growth potential. The Group also believes the current crack down by the government in China is more likely to affect those buyers who are buying properties for investment or as second or even third homes. In addition, there is a time lag from planning a property development to actual completion and in a few years’ time, when the properties are completed, the situation may turn in favour of the property segment. Land near Chengdu in Sichuan province and near the Yangtze River Delta have been identified. Expand and upgrade its existing resorts to achieve increasing returns to scale The Group believes that a cost-efficient way to increase its revenue base and enhance profitability is to expand and upgrade its existing resorts. Building new rooms or villas at its existing resorts allows it to provide its guests with new product offerings while expanding its revenue base, generally without incurring significant incremental costs. PROPERTIES AND FIXED ASSETS The Group has ownership interests in several properties where its resorts, hotels, spas, galleries and offices are located. The Group owns properties in several countries including Thailand, Seychelles, Singapore, Morocco and PRC. The Group also leases properties for some of its operations, such as in the Maldives, Thailand, Indonesia, Australia, Guam, Dubai, Malaysia, South Africa, Egypt, Sri Lanka and PRC. EMPLOYEES The Group has high standards for all employees employed at its resorts, hotels, spas and galleries to maintain the service standards of its businesses. As the Group’s guests are predominantly international, fluency in English (and in certain circumstances, other languages) is essential for all employees that come into contact with its guests at its resorts, hotels, spas and galleries. All the Group’s employees undergo on-the-job training with experienced supervisors. APPLICABLE LAWS AND REGULATIONS Due to the nature of the Group’s business, it is subject to the applicable national and local government regulations in the locations in which it operates, including those relating to the relevant licensing requirements in relation to resorts, hotels and spas, the preparation and sale of food and beverages (such as health and liquor licence laws) and environmental, general building and zoning requirements. The Group is also subject to laws governing its relationship with its employees, including minimum wage, overtime, worker’s compensation claims, working conditions and work permit requirements. For the resorts, hotels and spas the Group leases or in which its has an ownership interest, the Group is responsible for all costs, expenses and liabilities incurred in connection with its ownership of the properties, including the costs of complying with applicable government regulations. In most instances, it is the owner of a resort or hotel which must apply for a licence to operate the resort, hotel or spa. The relevant licensing body which regulates the issue of licences for the Group’s resorts and hotels in Thailand is the local authority under the supervision of the Ministry of Interior in Thailand. (See “Risk Factors - Risks Relating to General Economic and Political Conditions - The Group has operations in various jurisdictions in which the legal and regulatory regimes may be uncertain and in which it has no or little experience”.) The Group has entered into leases for the operation of its spas in various jurisdictions. In some of these jurisdictions, the leases may be required to be registered with the relevant authorities in order for the Group’s rights to be fully protected. Where registration is required, the Group has and will register the relevant leases. Where the Group manages a hotel, resort or spa under a management agreement, the owner is generally responsible for all costs, expenses and liabilities incurred in connection with operating the property, including complying with applicable government regulations. However, as manager, the Group may also be responsible for certain liabilities, including workers’ compensation claims and environmental liabilities, in connection with managed resorts, hotels or spas. 88
CORPORATE SOCIAL RESPONSIBILITY (“CSR”) AND ENVIRONMENTAL CONSERVATION Since the Group’s founding, it has considered the physical and human environment when making business decisions. The resorts and hotels that the Group has built have been constructed using design and construction techniques that minimise damage to the environment to the extent practicable. Where practicable, the Group also opts for environmentally friendly methods in its operations such as converting used cooking oil into biodiesel to power the resort’s diesel vehicles at Banyan Tree Seychelles. In addition, the Group seeks out opportunities to support local businesses. Each resort also carries out community development and environmental projects. Making a positive impact on the human environment The Group endeavours to make a positive impact on the lives of people who live in areas where the Group has a presence. The Group tries, as far as practicable, to employ native associates in each location in which it operates. Associate training and opportunities for transfers to the resorts it manages in other locations offer the local workforce a good foundation and exposure in the global hospitality and leisure industry. The business model of Banyan Tree Gallery also adds to the Group’s community development efforts. Its first project was the Yasothorn community in Northern Thailand. Women were given the opportunity to work from home while looking after their children when the Gallery engaged them to produce ‘‘Maun’’ triangular cushions. These cushions were used to furnish the Laguna Phuket resorts and at the same time retailed at Banyan Tree Gallery outlets. Part of the proceeds from the sale of the cushions in the Group’s galleries was also used to build the Santhitham Vidhayakhom School that serves the community. One recent example of the Group’s efforts to support communities was as a result of the 2004 tsunami catastrophe. The Group worked in partnership with various groups to restore housing, livelihoods, and essential needs for the communities which have supported the Group. Another example was a result of the Group’s efforts to support one of the largest developing economies - PRC. More details about these two efforts are below: 1)
Maldives: Economic Re-establishment of Women As part of its effort to support long term recovery of tsunami affected communities, the Group donated equipment and supplies to local women entrepreneurs whose equipment and supplies were lost in the 2004 tsunami. By working with the Government of the Maldives, the Group was able to deliver sewing, weaving and ice making equipment packages to help the women once again be able to provide income for their families.
2)
PRC: School of Tourism Culture in Lijiang In PRC’s Yunnan province, the Group provided scholarships for students at Yunnan University’s School of Tourism Culture in Lijiang. Awarded to students from the local communities around the Group’s resorts, these scholarships support the ability of local residents to embrace tourism as a means to achieving higher levels of communal prosperity.
Making a positive impact on the natural environment Apart from the considerations taken into mind during the initial design and construction process, the Group seeks to care for the environment by way of dedicated projects supporting specific aspects of the local ecologies and by raising awareness of such ecological concerns issues. The following two recent examples highlight how such concerns are addressed: Indonesia: Banyan Tree Bintan Conservation Lab Nestled amid a coastal rainforest, the Group opened the Banyan Tree Bintan Conservation Lab (the “Lab”) in 2007 to support land and marine conservation efforts. This resort-based research facility has hosted expert visits and surveys to study the local environment and better integrate tourism with environmental protection. The Lab also features awareness raising sessions and hands-on learning experiences for both guests and local school children to foster a wider consideration of the natural environment.
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Thailand: Forest in the City A city hotel, Banyan Tree Bangkok planted over 1500 trees in 2006 as part of an urban reforestation effort to provide greenery within a city park. This effort pioneered a group wide initiative launched in 2007 called Greening Communities, where the Group challenged its resorts to plant 2000 trees per year for the next decade. The Green Imperative Fund In 2001, the Group established the Green Imperative Fund (the “Fund’’) to expand and formalise its environmental conservation and community development efforts. The Fund provides financial support for environmental initiatives and community based projects in places where the Group has a presence. The Fund also gives guests an opportunity to support environmental protection and community empowerment efforts. Guests of Banyan Tree resorts and hotels may make a US$2 contribution and guests of Angsana resorts and hotels may make a US$1 contribution under an ‘‘opt-out’’ arrangement for each night they spend at the hotel or resort. The Group matches its guests’ contributions, dollar for dollar to develop the Fund. As at 30 June 2011, the total amount raised from the Group and its guests was approximately US$5.8 million, with the total amount disbursed being approximately US$3.0 million. Banyan Tree Global Foundation Established in 2009, the Sustainability arm of the group, Banyan Tree Global Foundation provides inhouse CSR consultancy services to the Group. By promoting as well as enacting strategies and efforts which consider and seek to enhance the social, environmental and economic well-being of all its stakeholders, Banyan Tree Global Foundation seeks to direct and guide the continual process of the Group’s overall commitment to the Sustainability journey. A separate entity specifically formed to house, manage, and administer the funds raised by the Green Imperative Fund mechanism, Banyan Tree Global Foundation provides an even greater level of assurance to contributing guests that such funds will create social and/or environmental benefits for the communities in which Banyan Tree has a presence. QUALITY CONTROL Maintaining the highest standards of quality at the Group’s resorts, hotels, spas and galleries is important to the success of its business. Each of the Group’s guests is asked to complete a survey after they have visited one of its resorts, hotels or spas. The Group uses this feedback to assess areas of its business in which it can improve. Each general manager of the resorts and hotels it manages makes daily rounds to ensure they are being maintained to the standards it sets. In addition, for the Group’s spa operations, spa therapists are required to undergo extensive training of over 350 hours at the Banyan Tree Spa Academy before commencing work at one of the Group’s spas. INSURANCE The Group has insurance policies to cover loss or damage suffered through legal and contractual liabilities, property damage, business interruption, business travel and general liabilities. The Group has general insurance for worker’s compensation. It also maintains directors’ and officers’ legal liability insurance. The Group believes it has insurance coverage with limits appropriate for a group of its size and with activities in the resort and spa ownership and management business. (See ‘‘Risk Factors - Risks Relating to The Group’s Business and Operations - A fire, accident or other calamity at one of the Group’s resorts could adversely affect it; The Group’s insurance policies do not cover all operating risks’’.) PROPERTY TAX Property tax is a tax on immovable properties. The amount of tax payable on the properties the Group owns is different in each of the locations in which it owns property. For the years ended 31 December 2008, 2009 and 2010 and for the six months ended 30 June 2011, the Group has paid an aggregate of S$4.8 million, S$4.7 million and S$5.1 million and S$1.8 million in property tax, respectively.
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LITIGATION z
The Group is defending a case brought about by TMB (a security agent acting on behalf of the creditors of Thai Wah Public (now known as Universal Starch Public Company Limited) which is a shareholder of LRH, holding 27,983,542 shares in LRH) against LRH in the Court of First Instance in Thailand in relation to the LRH Group’s rights issue. On 4 July 2007, the shareholders of LRH had passed a resolution at an extraordinary general meeting (“EGM”) relating to an increase of the company’s registered capital and allotment of the company’s new ordinary shares. Prior to the EGM, TMB applied to the Southern Bangkok Civil Court for a court order to allow it to attend the EGM on Thai Wah Public’s behalf but TMB’s application was dismissed. Subsequently, TMB brought a case in the Southern Bangkok Civil Court of Thailand against LRH for the revocation of the resolution and the cancellation of the registration of the resolution with the Public Companies Registrar of Thailand. TMB alleged that it had a direct interest in attending and voting at LRH’s EGM but was not allowed to attend the EGM. LRH has taken the position that the TMB representative did not have the proper proxy form signed by Thai Wah Public, and was therefore not allowed to attend the EGM. The defendant filed a motion with the Southern Bangkok Civil Court requesting for the forwarding of this case to the President of the Supreme Court for his decision on whether this case falls under the jurisdiction of the Southern Bangkok Civil Court or the Central Bankruptcy Court. According to the President’s decision, this case falls under the jurisdiction of the Central Bankruptcy Court. Therefore, the Southern Bangkok Civil Court dismissed the plaintiff’s plaint. On 5 August 2009, the plaintiff brought the plaint to the Central Bankruptcy Court asking the Court to revoke the resolution passed at the EGM and to cancel the registration of the passed resolution. A decision on the case from the Central Bankruptcy Court is currently pending. If the Court rules in TMB’s favour, LRH has a right to appeal to the Supreme Court. There can be no assurance that LRH will be successful in this case. The consequence of a decision against LRH would be that all previous acts in relation to the increase in LRH’s capital would be revoked and cancelled and that LRH would have to ensure that all of its shareholders are reinstated to the position they were in at the outset as if there had been no capital increase. In that event, LRH would have to indemnify its shareholders against the payments made to acquire the newly issued shares. The consequence of this is that the Issuer’s shareholding interest in LRH will revert to 51.8% from the current 65.8%.
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The Group is defending a case brought against LRH in Thailand in relation to the same EGM. In July 2008, Avenue Asia Capital Partners, L.P., the first plaintiff et al, being six plaintiffs in total, filed a lawsuit against the Defendants, namely, Universal Starch Public Company Limited as the first Defendant, Ms. Supranee Kanoksrikrin as the second Defendant, Ms. Patrarat Poolpatrachevin as the third Defendant, Mr Chokchai Niljearsakul as the fourth Defendant, Mr Suwat Pruksatiean as the fifth Defendant and LRH as the sixth defendant at the Southern Bangkok Civil Court, Black Case No. 5773/2551 under Thailand Civil and Commercial Code. The plaintiffs claimed that they are the creditors of Universal Starch Company Limited, a shareholder of LRH. They alleged that in arranging the EGM on or about mid 2007 and approving the capital increase by the shareholders where some shareholders did not subscribe for newly issued shares were the actions undertaken by some shareholders and LRH to commit a tort against the plaintiffs. Thus they claimed from the defendants damages of Baht 539,052,407 with interest of 7.5% per annum and the costs of legal proceedings. Based on information made available by LRH to the Group, the Group has reasonable grounds to believe that the lawsuit is not likely to succeed. The rights issue that was tabled at the EGM was approved and completed, and subsequently, the rights shares were listed and quoted on the Stock Exchange of Thailand. However, in the unlikely event that the lawsuit is successful and LRH becomes liable to pay a monetary sum, such payment could have a material adverse effect on the Group if such sum is substantial.
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On 11 February 2010, the Group initiated arbitration proceedings in the Dubai International Arbitration Center against Meydan City Corporation, Meydan Group LLC and Meydan LLC (“Meydan”) for breaches of the hotel management agreement and the wrongful termination of the hotel management agreement, and in the same arbitration proceeding, is defending a 91
counterclaim by Meydan for breaches of the hotel management agreement. Meydan has yet to quantify its counterclaim and the Group is unable to assess the impact if Meydan were to succeed on its counterclaim. Based on the legal advice and information available however, the Group has reasonable grounds to believe that Meydan will not be successful on its claims. z
On 7 March 2010, the Group sought to wind up Al Areen Desert Spa & Resort Holding Company B.S.C. (closed) (“Al Areen’’) in the Kingdom of Bahrain for its failure to make certain specified payments to the Group. In the interim, the hotel management agreement was terminated. About a month later, the Group instituted arbitration proceedings in the Singapore International Arbitration Center (“SIAC’’) against Al Areen for breaches of the hotel management agreement and the wrongful termination of the hotel management agreement. In this same arbitration proceeding, Al Areen has filed a counterclaim against the Group for breaches of the hotel management agreement. Al Areen has yet to quantify its counterclaim and the Group is unable to assess the impact if Al Areen were to succeed on its counterclaim. Based on the legal advice and information available however, the Group has reasonable grounds to believe that Al Areen will not be successful on its claims.
RECENT DEVELOPMENTS In 2011 to date, the Group entered into five new development agreements comprising two in China and one in each of the following countries: India, Kuala Lumpur (Malaysia) and Mexico. China In China, the Group will manage two new developments, including the Banyan Tree Dali, Yunnan and Angsana Hot Spring Tengchong, Yunnan. These two agreements signal the Group’s continued focus in growing its PRC operation. The Group’s management contract with YMCI Haidong Investment & Development Co., Ltd. is to design, provide master planning advisory services and manage Banyan Tree Dali which is expected to open in 2014. This project is located next to the scenic Erhai Lake and overlooking Cangshan Mountain in Dali, China. There will be over 200 hotel rooms, comprising villas and terraced blocks. Under a management contract with Mary Imperial Valley Hot Springs Tengchong Investment Co., Ltd, Angsana Hot Spring Tengchong, Yunnan will have 28 standard rooms, four spa villas, one presidential villa, and about 40 outdoor hot spring pools, with expected opening in 2012. This project is within the Tengchong Mayugu Hot Spring International Tourist Resort. These developments support Banyan Tree’s strategy of growth in China and complement Banyan Tree’s existing operation there. The Group successfully operates the award-winning resorts of Banyan Tree Hangzhou, Banyan Tree Sanya and Banyan Tree Lijiang. India Developed in collaboration with Elite Townships Private Limited, Banyan Tree Goa, India, is located within the Sindhudurg District and is surrounded by the Arabian Sea. When completed in July 2015, it will have 175 keys of hotel suites and 25 keys of villas as well as 15 spa treatment rooms. Malaysia Under a management contract with Lumayan Indah Sdn Bhd, Banyan Tree Signatures Pavilion, Kuala Lumpur, Malaysia, is within close proximity to famed landmark building, Petronas Twin Towers. Connected by private link bridge to the multi-award winning Pavilion Kuala Lumpur shopping mall, this 55-storey hotel-plus-residences landmark will comprise 50 exclusive hotel keys, Banyan Tree Spa and specialty restaurants on its topmost floors. Its expected opening is in 2016. Mexico Angsana Acapulco, Mexico is developed by Multibanco Mercantil Fideicomiso Real Diamante and is situated within a condominium development in the Punta Diamante area. The area of Acapulco is laced with beaches. Its 60 hotel suites and various residential units all enjoy a commanding view of the new Acapulco shoreline facing the Pacific Ocean and access to the Real Diamante Beach Club. The hotel opening is projected in 2014.
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DIRECTORS The Board is entrusted with the responsibility for its overall management and direction. The Board meets on a quarterly basis at least, or more frequently as required, to review and monitor the Group’s financial position and operations. The Articles of Association of the Issuer provide that the Board shall not be less than one in number. The following table sets forth information as at 1 October 2011 regarding the Board: Name
Occupation
Ho KwonPing
Executive Chairman
Ariel P Vera
Group Managing Director
Chia Chee Ming Timothy
Chairman Hup Soon Global Corporation Limited
Fang Ai Lian
Chairman Great Eastern Holdings Limited
Elizabeth Sam
Consultant
None of the Directors and Executive Officers are related to each other, save that Ms Chiang See Ngoh Claire is the spouse of the Executive Chairman, Mr Ho KwonPing, and Mr Ho KwonCjan is the sibling of Mr Ho KwonPing. Certain information on the business and working experience of the Directors is set out below: Ho KwonPing is the Executive Chairman. He is the founder of the Group and is currently responsible for the overall management and operations of the Group. He has been a Director since 5 July 2000 and was designated Executive Chairman on 1 March 2004. Mr Ho is also Chairman of Laguna Resorts & Hotels Public Company Limited, Thai Wah Food Products Public Company Limited and Singapore Management University. He is a member of the Asia-Pacific Council of The Nature Conservancy, Global Advisory Council of London Business School, International Council and East Asia Council of INSEAD, International Council of Asia Society, Management Board of the Middle East Institute at the National University of Singapore and Global Advisory Board of Moelis & Company. Mr Ho previously served as a Director of Singapore Airlines Limited and Standard Chartered PLC as well as Chairman of MediaCorp Pte. Ltd.. He holds a Bachelor of Arts (Economics) from the University of Singapore and an Honorary Doctorate of Business Administration in Hospitality Management from Johnson & Wales University, United States. Ariel P Vera is the Group Managing Director and assumes overall responsibility for the corporate wellbeing of all the companies owned and controlled by the Issuer. He has been a Director since 11 April 2000 and was designated Group Managing Director on 1 March 2004. He is concurrently the Managing Director of Banyan Tree Hotels & Resorts Pte. Ltd., where he started as Vice President, Finance in 1995. He is also a Director of Laguna Resorts & Hotels Public Company Limited. Prior to joining the Group, he was Director of Finance and Administration of Asian Resorts Pte Ltd from 1992 to 1995 and Vice President, Finance, of Tropical Resorts Limited from 1995 to 1997. He has over 25 years of experience in the hotel industry. Mr Vera is a Certified Public Accountant in Philippines and holds a Bachelor of Science in Business Administration from the University of the East, Philippines as well as a Master of Business Administration from the National University of Singapore.
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Chia Chee Ming Timothy is the Lead Independent Director. He was appointed Independent Director on 8 June 2001 and became Lead Independent Director on 28 February 2007. He is Chairman of Hup Soon Global Corporation Limited. Mr Chia also sits on the boards of several other private and public companies, including Fraser and Neave Ltd and SP Power Grid Limited. Since January 2004, he has been a Trustee of the Singapore Management University. Mr Chia was appointed as Senior Advisor of EQT Funds Management Ltd on 24 May 2010. From 1986 to 2004, he was a Director of PAMA Group where he was responsible for private equity investments and served as President from 1995 to 2004. Prior to that, he served as Vice President of the Investment Department of American International Assurance Company Limited from 1982 to 1986 and as President of Unithai Oxide Company Ltd from 1980 to 1981. He was previously a Director of F J Benjamin Holdings Ltd and Singapore Post Limited and also Chairman - Asia for UBS Investment Bank. Mr Chia holds a Bachelor of Science cum laude, majoring in Management from the Fairleigh Dickinson University, United States. Fang Ai Lian has been an Independent Director since 1 May 2008. She is Chairman of Great Eastern Holdings Limited and its insurance subsidiaries in Singapore and Malaysia. Mrs Fang is also a Director of Singapore Telecommunications Limited, Metro Holdings Ltd, MediaCorp Pte. Ltd. and OCBC Bank. She is also Chairman of the Board of Directors for the Tax Academy of Singapore. In addition, Mrs Fang is Chairman of the Charity Council as well as a Member of the Board of Trustees of the Singapore University of Technology and Design. Mrs Fang was previously with Ernst & Young for over 30 years until her retirement in March 2008, her last position being Chairman of Ernst & Young Singapore. She qualified as a Chartered Accountant in England and is a Fellow of the Institute of Chartered Accountants in England and Wales, a Fellow of the Institute of Certified Public Accountants in Singapore and a Member of the Malaysian Association of Certified Public Accountants. Elizabeth Sam has been an Independent Director since 23 March 2004. Principally engaged in management consultancy, Mrs Sam is also a Director of Boardroom Limited, SC Global Development Ltd, AV Jennings Ltd, Kasikornbank Public Company Limited and The Straits Trading Company Limited. She has over 40 years of experience in the financial sector, having held the positions of Executive Vice President and Deputy President of OCBC Bank from 1988 to 1998, Director of Mercantile House Holdings plc (a company listed on the London Stock Exchange) from 1981 to 1987 and Chief Manager of the Monetary Authority of Singapore from 1976 to 1981. She was a Director of the Singapore International Monetary Exchange and served two three-year terms from 1987 to 1990 and 1993 to 1996 as its Chairman until its merger with the Stock Exchange of Singapore. She was also previously a Director of Nippecraft Limited and Chairman of ST Asset Management Limited. She has been a member of the Singapore Institute of Directors since April 1999. Mrs Sam holds a Bachelor of Arts Honours degree in Economics from the University of Singapore.
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EXECUTIVE OFFICERS The Executive Officers, together with the Executive Directors, are responsible for the Group’s day-to-day management and operations. The following table sets forth information as at 1 October 2011 regarding the Executive Officers: Name
Designation
Chiang See Ngoh Claire
Senior Vice President, Chairperson, China Business Development and Managing Director, Retail Operations
Ho KwonCjan
Senior Vice President, Group Chief Designer
Surapon Supratya
Senior Vice President, Deputy Chairman, LRH
Arthur Kiong Kim Hock
Senior Vice President, Group Marketing Services and Managing Director, Hotel Operations (Asia Pacific)
Eddy See Hock Lye
Senior Vice President, Chief Financial Officer
Michael Ramon Ayling
Senior Vice President, Managing Director, LRH
Shankar Chandran
Senior Vice President, Managing Director, Spa Operations and Laguna Lang Co Vietnam
Dharmali Kusumadi
Senior Vice President, Managing Director, Design Services
Steve Small
Managing Director, Banyan Tree Capital
Paul Chong
Vice President, Business Development and Group Legal
Stefan Buchs
Vice President, Hotel Operations and Business Development (Europe, Middle East and Africa)
Luca Deplano
Vice President, Marketing
Hokan Limin
Vice President, Hotel Finance
Michael Lee
Vice President, Chief Information Officer
Emilio Llamas Carreras
Vice President and Deputy Managing Director, Laguna Phuket
Maximilian Lennkh
Vice President and Area General Manager (Mexico)
Francois Huet
Vice President and Area General Manager (Phuket, Koh Samui and Laos)
Foong Pohmun
Vice President, People Development
Sachiko Shiina
Vice President (Japan and Korea)
Elsie Leung
Vice President, Marketing (China)
Lim See Bee
Vice President, Head of Group Project Services 95
Name
Designation
Stuart Reading
Vice President, Chief Financial Officer, LRH
Zhang Li
Vice President, Managing Director, Banyan Tree Capital (Hong Kong)
Information on the business and working experience of the other Executive Officers is set out below: Chiang See Ngoh Claire is the Senior Vice President responsible for the strategic direction, management and operation of Banyan Tree Gallery and Angsana Gallery worldwide. She is also the Chairperson of the Banyan Tree Global Foundation, which was established in 2009. In 2010, she assumed the roles of Chairperson, China Business Development, and Chairperson, Human Capital Development Task Force. Ms Chiang has served two terms as a Nominated Member of Parliament. She is the Director and NonExecutive Chairperson of the Wildlife Reserves Singapore, and Chairperson of the Wildlife Reserves Singapore Conservation Fund. She sits on the Global Governing Board of the Caux Round Table as ViceChair for Asia. Following her appointment as Justice of the Peace in 2008, she was appointed to the Board of Visiting Justices in 2010. Her other duties include chairing the Employer’s Alliance and the Shirin Fozdar Trust Fund. Ms Chiang is a member of the Board of Governors of Raffles’ Girls School, a member of the Singapore General Hospital Medifund Committee, and a mentor for the Young Women’s Leadership Connection mentorship programme. She is an honorary council member of Singapore Chinese Chamber of Commerce and Industry, and volunteers with Help Every Lone Parent and the People’s Association. In 2010, she became a member of the Advisory Council, National Committee for United Nations Development Fund for Women (UNIFEM) in Singapore. She is married to the Executive Chairman, Mr Ho KwonPing. Ho KwonCjan is Senior Vice President and Group Chief Designer. He heads and oversees the project and design teams. Prior to March 2005, he was Joint Managing Director of LRH, a position he held from 1998. Mr Ho served as Vice Chairman of Thai Wah Public in Thailand from 1997 to 2003. From 1996 to 1998, he was the Managing Director of Thai Wah Resorts Development Public Co., Ltd and from 1985 to 1992, the Project Manager of Thai Wah Resorts Development Public Co., Ltd. Prior to this, he worked at the architecture firm, Akitek Tenggara, in Singapore. Mr Ho holds a Bachelor of Architecture (Honours) from the National University of Singapore and is a recipient of the Singapore Institute of Architects Gold Medal. He has been registered with the Singapore Board of Architects since 1986. Mr Ho is the brother of the Executive Chairman, Mr Ho KwonPing. Surapon Supratya is Senior Vice President and Deputy Chairman of LRH. He has been a member of the Board of LRH since 1996 and previously served as its Group Managing Director. He was also Joint Managing Director and Chief Financial Officer of Thai Wah Public. Prior to that, he was Financial Controller of Thomson Television (Thailand) and Louis T. Leonowens (Thailand). A Certified Public Accountant, Mr Surapon holds a Bachelor of Accountancy from Chulalongkorn University, Thailand, and a Master of Accountancy from Thammasat University, Thailand. Arthur Kiong Kim Hock is Managing Director, Hotel Operations (Asia Pacific) and Senior Vice President, Group Marketing Services. In addition to overseeing hotel operations for Banyan Tree and Angsana branded hotels in Asia Pacific, he is also responsible for Group Marketing Services, which includes field performance support, worldwide sales, marketing communications, revenue management, global reservations operations, customer relationship management and e-business. Prior to joining the Group in 2008, Mr Kiong was Far East Organisation’s Director of Hospitality Operations, with a portfolio that included five operating hotels, three hotels in pre-opening and development phase, 11 serviced residences and one heritage restaurant. He has also held various regional and area sales and marketing positions with hotels such as the Mandarin Oriental Hong Kong, the Ritz-Carlton in Singapore and America, and the Grand Hyatt and Westin Stamford and Westin Plaza in Singapore. Mr Kiong holds a Higher Diploma in Hotel Management from the Singapore Hotel Association Training & Education Centre. Eddy See Hock Lye is Senior Vice President and Chief Financial Officer. Prior to joining the Group in 2004, he was the Managing Director of Asia Business Forum from 2002 to 2004 and its Chief Financial Officer from 2001 to 2004. From 1996 to 2001, Mr See was the Group Financial Controller of Amara Holdings Limited. He was also the General Director of Amara Hotel Saigon Company Ltd, which operates
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Amara Hotel in Ho Chi Minh City, from 1998 to 2001. Prior to that, he was with Ernst & Young for nearly a decade, spending his last four years there as Audit Manager. Mr See holds a Bachelor of Commerce from University of Auckland and is an Associate Chartered Accountant, New Zealand. Michael Ramon Ayling is Senior Vice President and Managing Director, LRH. He oversees the operations of LRH including the hotel, property sales and timeshare businesses. Mr Ayling joined LRH in 2000 as Assistant Vice President, Finance. He was promoted to Deputy Managing Director/Vice President, Finance in 2005 and to Managing Director, Laguna Phuket in 2006. He became Vice President and Managing Director, LRH in 2007 and Senior Vice President in February 2009. Prior to joining LRH, Mr Ayling was a Senior Audit Manager with KPMG, Sydney from 1998 to 2000, and KPMG, Port Moresby from 1992 to 1998 where he was responsible for the day-to-day running of the audit division and managing client audits. He is a member of the Institute of Chartered Accountants in England and Wales. Mr Ayling holds a Bachelor of Arts in Accounting and Finance (Honours) from Manchester Metropolitan University, United Kingdom. Shankar Chandran is Senior Vice President and Managing Director, Spa Operations and Laguna Lang Co Vietnam. Overseeing the Spa Operations of the Group since 2005, he is responsible for the operations and growth of the Group’s global portfolio of over 65 spas. He will also be responsible and overseeing the operations of Laguna Lang Co Integrated Resorts. From 2001 to 2004, he served as Group Executive (Corporate) Director, and from 1997 to 2001 Assistant Vice President, Finance. Prior to joining the Group, he was the Financial Controller and Deputy General Manager of Regent Plaza, London, and Regional Internal Auditor/Financial Controller of Hilton International Hotels, United Kingdom. Mr Chandran holds a Postgraduate Diploma in Management Studies from Kingston University (London) and a Higher National Diploma Finance from South West London College, United Kingdom. Dharmali Kusumadi is Senior Vice President and Managing Director, Design Services. He is responsible for the design and planning of properties managed by the Group. Prior to joining the Group in 1991, he was the Planning and Development Head of LG Group, Bali, and was in charge of design and planning for projects. From 1985 to 1989, Mr Kusumadi was a part-time lecturer at the Architecture Department of Soegijapranata Catholic University, Semarang, Indonesia. From 1984 to 1989, he was Principal Architect of Kusumadi Associates. He has been a member of the Indonesian Institute of Architects since 1991 and holds a Master of Architecture from Parahyangan Catholic University, Bandung, Indonesia. Steve Small is Managing Director of Banyan Tree Capital. He is responsible for leading and managing the Group’s dedicated real estate fund management activities to fund its hotel, resort and private residence development programmes. Mr Small launched and manages the Group’s funds for Indochina (US$283 million) and China (RMB1 billion). Prior to joining the Group in 2008, he spent over 20 years in private equity investment and management in Asia. From 1991 to 2003, he was an Executive Director of Consolidated Resources Ltd, the Asian private equity investment vehicle of Anglo American plc and the De Beers Group. He was also engaged in private equity investment and consultancy services through a company he founded in Singapore in 1998. He has been a non-executive director of various regionally listed companies, including his current position on the Board of LRH. Mr Small is a Fellow of the Institute of Chartered Accountants in England and Wales and has a Bachelor of Economics (Honours) from Durham University. Paul Chong is Vice President, Business Development and Group Legal. He oversees the global development team and all legal matters related to the Group and its international expansion. Mr Chong joined the Group in 2001 as the Legal Manager of the Group, and was promoted to the position of Group Legal Manager in 2002 and Assistant Vice President, Head of Development in 2004. Prior to joining Banyan Tree, he worked in several top Singapore legal firms including Allen & Gledhill and Rajah & Tann. He holds a Bachelor of Laws (Honours) from National University of Singapore. Stefan Buchs is Vice President, Hotel Operations and Business Development (Europe, Middle East and Africa (“EMEA”)). He is responsible for supervising all existing hotel operations and new hotel developments in the EMEA as well as in Seychelles and Mauritius. Mr Buchs is also in charge of developing new business opportunities for the Group in the EMEA. Prior to joining the Group in June 2011 he was Vice President for CHI Hotels & Resorts, a high-end management company and the exclusive operator and developer for the luxury Corinthia Hotel brand. Mr Buchs’ experience includes developing
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large-scale premium properties with deluxe facilities and spas in Europe over the last 15 years. He has been at the helm of luxury hotels in London, St Petersburg, Lisbon, Budapest and Prague. Mr Buchs holds a degree in Hotel Management from the Hotel Management School, Les Roches in Switzerland. Luca Deplano is Vice President, Marketing for Banyan Tree Hotels & Resorts. He is responsible for reinforcing the Banyan Tree and Angsana brands. Mr Deplano joined the Group on 1 December 2010, bringing with him over 14 years of experience in business development as well as strategic planning in the sales and marketing of products under brands like American Express, Prada, Furla and Cerruti 1881, in both Asia and Europe. He holds a Master of Business Administration from Columbia Business School, and a Bachelor’s Degree in Business Administration from Bologna University, Italy, where he majored in Marketing and Finance. Hokan Limin is Vice President, Hotel Finance. He is in charge of monitoring hotel performance and implementing policies and procedures. His main responsibilities are hotel finance, compliance, operational analysis, quality control and operational audit. He also supervises risk management. Prior to joining the Group in 1999, Mr Limin worked at hotel investment companies in Indonesia and several five-star resort chains including Hyatt, Inter-Continental and Shangri-la. He holds a Bachelor of Finance and Accountancy from Trisakti University, Jakarta, Indonesia. Michael Lee is Vice President and Chief Information Officer. He has been with the Group since 2006 and has over 20 years of experience in the travel, banking and hospitality sectors. He served as CEO of Raffles Marina Limited. He previously held positions of Vice President of Marketing at CDL Hotels International and Vice President at United Overseas Bank. He holds a Master of Business Administration from Oklahoma City University, United States. He also attended the Certified Enterprise Architecture Practitioner programme conducted by Institute of Systems Science at the National University of Singapore, and is a TOGAF Certified Practitioner. Mr Lee is a Chartered Marketer and a Fellow of Chartered Institute of Marketing, United Kingdom, and a member of the Chartered Financial Analyst Institute, CFA (United States). Emilio Llamas Carreras is Vice President and Deputy Managing Director of Laguna Phuket. His role is to oversee the operations and hospitality services of Laguna Phuket, including the Angsana Laguna Phuket; Laguna Services Operations; Laguna Tours; Destination Marketing; Golf Operations; the China Sales Office; Estate Services and the Rental Pool operations. Mr Carreras previous roles include Area General Manager for Banyan Tree Bintan, Indonesia (2001), Banyan Tree Phuket, Thailand (2005) and Banyan Tree Mayakoba, Mexico (2008). In December 2004 he was promoted to Vice President - Operations of Angsana Resorts & Spas. The Portfolio includes properties in China, Laos, Sri Lanka, Australia, India and Maldives. Prior to joining the Group in 2001, he was General Manager of SolMelia in ‘Gran Melia Salinas’, Lanzarote, Spain, where he was responsible for the overall management of the hotel. In 1998, he was conferred the Civil Merit Award by the King of Spain in recognition of his role as the Honorary Consul of Spain in Bali, Indonesia. Mr Carreras holds a hotel diploma and an engineering degree from Sevilla University, Spain. Maximilian Lennkh is Vice President and Area General Manager (Mexico), leading and overseeing the operations and day-to-day business of the Group’s properties in Mexico. Mr Lennkh joined the group in 2001 as Area General Manager (Maldives), subsequently moving from there to open the Banyan Tree Seychelles in 2002. In 2005, he assumed the role of Area General Manager (Southern China). In that capacity, he guided the successful opening of Banyan Tree Lijiang, Sanya and Hangzhou, with Banyan Tree Ringha and Gyalthang Dzong Hotel concurrently reporting to him. Having gained experience in various aspects of hotel operations around the world, Mr Lennkh has a well-rounded hospitality background. He is fluent in German, English, Portuguese and Spanish, and holds various hotel management certifications, including one from the London Business School. Francois Huet is Vice President and Area General Manager (Phuket, Koh Samui and Laos). He oversees the operations of the Group’s three properties in these locations. A veteran hotelier, he previously served as Area General Manager of Banyan Tree Bintan and Angsana Bintan in Indonesia, and Banyan Tree Vabbinfaru and Angsana Ihuru in Maldives. Before joining the Group in 2002, he was General Manager of Bora Bora Pearl Beach Resort in French Polynesia and spent 12 years of his career with the InterContinental group. Mr Huet did his apprenticeship with Relais & Chateaux, France and attended the General Managers Programme at the Cornell-Nanyang Institute of Hospitality Management in Singapore.
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Foong Pohmun is Vice President, People Development. She oversees operations at the Banyan Tree Management Academy, whose aim is to develop the future leaders of the Group by advancing people development, management excellence and learning. Prior to this appointment in 2009, she was Vice President, Projects. She joined the Group in 1990, and served in various positions overseeing the costing and project management of Banyan Tree Hotels. She was promoted to Assistant General Manager in 1995 and Assistant Vice President in 2000. Ms Foong holds a degree in Economics (Honours) from the University of London, and diplomas in Industrial Management, Building Science and Culinary Arts and Management. Sachiko Shiina is Vice President, Japan and Korea. She is responsible for sales and marketing activities for Japan and Korea, and also leads, coordinates and supervises the overall operational and business development activities for the Group in Japan. Ms Shiina joined the Group in 1995 as Sales and Marketing Manager of the Group Sales Agent in Japan. In 2000, she became Director of Sales, Japan, and was promoted to Assistant Vice President, Sales & Business Development in 2006. Elsie Leung is Vice President, Marketing (China). She is responsible for sales and marketing activities; and developing both domestic and outbound business for the Group in mainland China. Ms Leung has more than 20-years’ experience in hospitality sales and marketing. Prior to joining the Group in 2008, she held senior regional sales and marketing positions at hotel groups like Mandarin Oriental Hotel Group, Four Seasons Hotels & Resorts and Hilton Hotel Corporation. Ms Leung holds an Associate Degree in Business Administration from The Open University of Hong Kong. Lim See Bee is Vice President and Head of Group Project Services, overseeing the development of all new projects by the Group. She joined Banyan Tree in 1992 as Senior Manager, Projects. She has 25 years of experience in the construction and real estate industry, having practised in both the public and private sectors. Ms Lim is registered with the Board of Architects, Singapore, and is also a member of the Society of Project Managers and the Singapore Institute of Arbitrators. She holds a Bachelor of Arts and a Bachelor of Architecture from the National University of Singapore, a Master of Business Administration from Reading University, United Kingdom, and a Royal Institute of Chartered Surveyors Diploma in Project Management, from the College of Estate Management, United Kingdom. Stuart Reading is Vice President, Chief Financial Officer for LRH, and has served on the Board of LRH since 2006. He joined LRH in 2002 as Assistant Vice President, Finance & Administration, responsible for the property sales and holiday club businesses finance function. He subsequently rose through the ranks, attaining his current position in 2010. Prior to joining the Group, Mr Reading spent more than 10 years with Pricewaterhouse Coopers in Australia and Papua New Guinea. From 1999 to 2002, he was a Director in the Assurance and Business Advisory Services division in Sydney. He is a member of the Institute of Chartered Accountants in Australia and holds a Bachelor of Business degree in Accounting from the University of Western Sydney. Zhang Li is Vice President and Managing Director of Banyan Tree Capital (Hong Kong), a division of Banyan Tree Capital which manages the Group’s dedicated real estate fund management activities. Based in Hong Kong, he focuses on China-related fund management activities specific to the funding of the Group’s hotel, resort and private residence development programmes in that region. Prior to joining the Group in 2009, Mr Zhang spent over 15 years working in the private equity and investment banking industries as well as the public sector. From 2001 to 2008, he worked at various investment banks, including Wachovia Securities, Standard Chartered Bank, Credit Suisse and Morgan Stanley. He was a Director at CDH Investments, focusing on real estate private equity investment. Mr Zhang is a CFA charterholder, and holds a Master of Business Administration from the Kellogg Graduate School of Management, Northwestern University.
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FINANCIAL SUMMARY AND OVERVIEW The Group’s financial statements for the two years ended 31 December 2009 and 2010 and for the six months ended 30 June 2010 and 2011 are as follows: Consolidated Income Statement
Revenue Other income
Costs and expenses Cost of operating supplies Cost of properties sold Salaries and related expenses Administrative expenses Sales and marketing expenses Other operating expenses
For the year ended 31 December (audited) 2009 2010 $’000 $’000
For the year ended For the six months 31 December ended 30 June (unaudited) (unaudited) 2009 2010 2010 2011 $’000 $’000 $’000 $’000 Restated Restated Restated
313,251 3,663
305,303 76,965
347,853 3,663
321,304 76,965
168,172 4,319
177,869 2,885
316,914
382,268
351,516
398,269
172,491
180,754
(24,821) (12,885) (91,041) (46,820) (15,995) (55,812)
(25,834) (6,650) (117,159) (48,478) (20,468) (62,278)
(24,821) (27,685) (91,041) (48,087) (15,995) (55,812)
(25,834) (14,469) (117,159) (48,478) (20,468) (62,278)
(12,904) (8,435) (53,385) (23,842) (9,379) (30,141)
(13,684) (16,339) (54,996) (25,226) (7,110) (27,300)
(247,374) (280,867) (263,441) (288,686) (138,086) (144,655) Profit before interests, taxes, depreciation and amortisation Depreciation of property, plant and equipment Amortisation of lease rental and land use rights Profit from operations and other gains
69,540 (35,533) (4,375)
101,401 (34,219) (4,112)
88,075 (35,533) (4,375)
109,583 (34,219) (4,112)
34,405 (17,414) (2,136)
36,099 (13,526) (1,600)
29,632
63,070
48,167
71,252
14,855
20,973
100
Consolidated Income Statement (cont’d) For the year ended For the year ended For the six months 31 December 31 December ended 30 June (audited) (unaudited) (unaudited) 2009 2010 2009 2010 2010 2011 $’000 $’000 $’000 $’000 $’000 $’000 Restated Restated Restated Profit from operations and other gains Finance income Finance costs Share of results of associated companies Share of results of joint venture companies
29,632 3,365 (19,047) 791 1
63,070 4,044 (19,288) (101) 5,070
48,167 3,365 (19,047) 791 1
71,252 4,044 (19,288) (101) 5,070
14,855 2,154 (9,345) (101) (4)
20,973 1,703 (9,467) 435 (3)
Profit before taxation Income tax expenses
14,742 (11,314)
52,795 (22,668)
33,277 (14,967)
60,977 (25,124)
7,559 (5,883)
13,641 (7,360)
Profit after taxation
3,428
30,127
18,310
35,853
1,676
6,281
Attributable to: Equity holders of the Company Non-controlling interests
3,005 423
15,693 14,434
14,681 3,629
19,458 16,395
(1,453) 3,129
3,034 3,247
3,428
30,127
18,310
35,853
1,676
6,281
0.40 0.39
2.07 2.06
1.94 1.93
2.56 2.56
(0.19) (0.19)
0.40 0.40
Earnings per share attributable to equity holdings of the Company (in cents): Basic Diluted
Note: i)
The audited Consolidated Income Statements for the two years ended 31 December 2009 and 2010 and the unaudited Consolidated Income Statements for the six months ended 30 June 2010 and 2011 should be read in conjunction with Appendices III and IV (signed FS) and Appendix II respectively.
ii)
The unaudited restated Consolidated Income Statements for two years ended 31 December 2009 and 2010 and six months ended 30 June 2010 should be read in conjunction with Note A on page 105.
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Consolidated Statement of Comprehensive Income For the year ended For the year ended For the six months 31 December 31 December ended 30 June (audited) (unaudited) (unaudited) 2009 2010 2009 2010 2010 2011 $’000 $’000 $’000 $’000 $’000 $’000 Restated Restated Restated Profit after taxation
3,428
30,127
18,310
35,853
1,676
6,281
9,711 –
(46,353) –
Other comprehensive income: Exchange differences arising from consolidation of foreign operations and net investment in foreign operations Net change in fair value adjustment reserve Adjustment on property revaluation reserve, net of deferred tax
(4,732) 2
(1,008) 70
(4,732) 2
(1,008) 70
(76,614)
11,585
(76,614)
11,585
236
Other comprehensive income for the year, net of tax
(81,344)
10,647
(81,344)
10,647
9,947
(43,136)
Total comprehensive income for the year
(77,916)
40,774
(63,034)
46,500
11,623
(36,855)
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests
(48,672) (29,244)
17,002 23,772
(36,996) (26,038)
20,767 25,733
3,842 7,781
(26,975) (9,880)
(77,916)
40,774
(63,034)
46,500
11,623
(36,855)
3,217
Note: i)
The audited Consolidated Statement of Comprehensive Income for the two years ended 31 December 2009 and 2010 and the unaudited Consolidated Statement of Comprehensive Income for the six months ended 30 June 2010 and 2011 should be read in conjunction with Appendices III and IV (signed FS) and Appendix II respectively.
ii)
The unaudited restated Consolidated Statement of Comprehensive Income for two years ended 31 December 2009 and 2010 and six months ended 30 June 2010 should be read in conjunction with Note A on page 105.
102
Consolidated Balance Sheets As at 31 December (audited) 2009 2010 $’000 $’000 Non-current assets Property, plant and equipment Land use rights Investment properties Land awaiting future development Associated companies Joint venture companies Prepaid island rental Long-term trade receivables Intangible assets Long-term investments Prepayments Other receivables Deferred tax assets
Current assets Inventories Trade receivables Prepayments and other non-financial assets Other receivables Amounts due from associated companies Amounts due from related parties Property development costs Cash and cash equivalents
Total assets
As at 31 December (unaudited) 2009 2010 $’000 $’000 Restated Restated
As at 30 June (unaudited) 2011 $’000
876,964 20,484 – 33,995 23,814 3,422 22,603 49,292 26,903 27,193 2,303 17,408 13,810
811,066 23,549 33,469 – 21,820 7,719 19,986 40,799 26,903 36,178 3,610 11,623 18,157
876,964 20,484 – 33,995 23,814 3,422 22,603 29,452 26,903 27,193 2,303 17,408 19,718
811,066 23,549 33,469 – 21,820 7,719 19,986 26,993 26,903 36,178 3,610 11,623 21,609
700,550 13,729 31,134 – 20,971 7,324 18,823 23,966 26,903 35,161 3,151 13,852 20,471
1,118,191
1,054,879
1,104,259
1,044,525
916,035
12,247 56,918 11,733 16,310 1,374 10,079 69,765 76,252
12,195 62,311 13,290 21,411 611 8,855 105,066 138,989
12,247 50,092 11,733 16,310 1,374 10,079 89,252 76,252
12,195 57,041 13,290 21,411 611 8,855 117,106 138,989
11,752 56,476 16,121 24,763 1,316 7,333 112,902 158,784
254,678
362,728
267,339
369,498
389,447
1,372,869
1,417,607
1,371,598
1,414,023
1,305,482
103
Consolidated Balance Sheets (cont’d) As at 31 December (audited) 2009 2010 $’000 $’000 Current liabilities Trade payables Unearned income Other non-financial liabilities Other payables Amounts due to associated companies Amounts due to related parties Interest-bearing loans and borrowings Notes payable Tax payable
Net current assets Non-current liabilities Interest-bearing loans and borrowings Deferred income Loan stock Notes payable Deposits received Amount due to a joint venture company Other non-current liabilities Deferred tax liabilities
Net assets
As at 31 December (unaudited) 2009 2010 $’000 $’000 Restated Restated
As at 30 June (unaudited) 2011 $’000
20,947 4,180 15,295 46,837 372 813 70,790 50,000 7,295
22,228 6,745 19,527 40,007 302 639 51,413 26,746 31,454
20,947 4,180 30,836 46,675 372 813 70,790 50,000 7,095
22,228 6,745 27,029 39,845 302 639 51,413 26,746 31,254
13,219 7,452 18,695 37,479 100 702 49,548 26,136 9,630
216,529
199,061
231,708
206,201
162,961
38,149
163,667
35,631
163,297
226,486
184,528 15,367 552 77,250 1,200 – 1,504 169,344
175,938 14,521 552 99,269 1,429 6,747 5,975 171,655
184,528 15,367 552 77,250 1,200 – 1,504 169,344
175,938 14,521 552 99,269 1,429 6,747 5,975 171,655
160,500 6,880 634 168,417 1,336 6,358 6,090 150,358
449,745
476,086
449,745
476,086
500,573
706,595
742,460
690,145
731,736
641,948
104
Consolidated Balance Sheets (cont’d) As at 31 December (audited) 2009 2010 $’000 $’000
As at 31 December (unaudited) 2009 2010 $’000 $’000 Restated Restated
As at 30 June (unaudited) 2011 $’000
Equity attributable to equity holders of the Company Share capital Treasury shares Reserves
199,995 (5,071) 313,358
199,995 (4,438) 327,656
199,995 (5,071) 302,342
199,995 (4,438) 320,405
199,995 (3,051) 288,772
Non-controlling interests
508,282 198,313
523,213 219,247
497,266 192,879
515,962 215,774
485,716 156,232
Total equity
706,595
742,460
690,145
731,736
641,948
Note: i)
The audited Consolidated Balance Sheets as at 31 December 2009 and 2010 and the unaudited Consolidated Balance Sheets as at 30 June 2011 should be read in conjunction with Appendices III and IV (signed FS) and Appendix II respectively.
ii)
The unaudited restated Consolidated Balance Sheets as at 31 December 2009 and 2010 should be read in conjunction with Note A.
Note A The Group has adopted INT FRS 115 for the financial period beginning 1 January 2011. The adoption has been applied retrospectively to the audited financial statements for the year ended 2009 and 2010 and to the unaudited financial results for the six months ended June 2010, as if INT FRS 115 had always been applied. The restated amounts are presented in the financial summary and overview. The nature and effect of the restatement is as follows: INT FRS 115 Agreements for the Construction of Real Estate On 26 August 2010, the Accounting Standards Council issued INT FRS 115 with an accompanying note that clarifies when revenue and related expenses from sale of real estate should be recognized if an agreement between a developer and buyer is reached before the real estate is completed. INT FRS 115 determines that contracts which do not classify as construction contracts in accordance with FRS 11 Construction Contracts can only be accounted for using the percentage of completion method if the entity continuously transfers to the buyer control and the significant risks and rewards of ownership of work in progress in its current state as construction progresses. The Group has considered the application of INT FRS 115 and concluded that certain ‘pre-completion’ sale contracts were not, in substance, construction contracts, and the legal terms are such that the construction does not represent the continuous transfer of work in progress to the purchaser. As such, the Group changed its revenue recognition method from “percentage of completion” method as construction progresses to “completion” method whereby revenue is to be recognised when significant risk and rewards are transferred to the buyer, with effect from FY2011.
105
Impact on the financial statements arising from the adoption of INT FRS 115, is detailed as follows: GROUP Increase
Income Statement for the period ended 31 December: Revenue Cost of properties sold Administrative expenses Income tax expenses Profit attributable to: - Equity holders of the Company - Non-controlling interests Increase in basic earnings per share (cents) Increase in diluted earnings per share (cents)
2009 S$’000
2010 S$’000
34,602 14,800 1,267 3,653
16,001 7,819 – 2,456
11,676 3,206
3,765 1,961
1.54 1.54
0.49 0.50
GROUP Increase/(decrease) 2009 2010 S$’000 S$’000 Balance Sheet: Long-term trade receivables Deferred tax assets Trade receivables Property development costs Other non-financial liabilities Other payables Tax payable Retained earnings Non-controlling interests
(19,840) 5,908 (6,826) 19,487 15,541 (162) (200) (11,016) (5,434)
(13,806) 3,452 (5,270) 12,040 7,502 (162) (200) (7,251) (3,473)
The restated figures are solely for comparative purposes and do not affect any of the previously audited financial statements.
106
On the overview of the income statement from pages 107 to 110, the analysis is based on the unaudited restated income statement for the financial years 2010 and 2009. For the six months performance, it is based on the unaudited income statement for the six months ended 30 June 2011 and the unaudited restated income statement for the six months ended 30 June 2010. Similarly, for the overview of the balance sheet from pages 107 to 110, the analysis is based on the unaudited restated balance sheet as at 31 December 2010 and 31 December 2009. For the six months performance, it is based on the unaudited balance sheet as at 30 June 2011 and the unaudited restated balance sheet as at 31 December 2010. (i)
Financial Year 2010 versus Financial Year 2009 Revenue The Group’s 2010 performance registered a decrease in revenue growth by 7.6%, from S$347.9 million to S$321.3 million. Performance of the Group in 2010 was affected by the political uncertainties in Thailand. A state of emergency was being declared and several countries issued travel advisories on Thailand following the political riots that took place in April and May 2010. Given the negative sentiments towards the country, performance of Property Sales segment recorded lower revenue by S$38.5 million, partly cushioned by higher revenue of S$9.3 million and S$2.7 million from Fee-based and Hotel Investments segments respectively. Fee-based segment revenue increased by S$9.3 million to S$87.6 million in 2010 mainly due to higher hotel and fund management fees, higher revenue from spa/gallery operations, and higher architectural and design fees. Higher fund management fees were due to fees from managing Banyan Tree China Fund (I) (“China Fund”) which completed its first close in September 2010. Higher hotel management fees and revenue from spa/gallery operations were attributable to the opening of new resorts such as Banyan Tree Hangzhou, Banyan Tree Ungasan, Banyan Tree Club and Spa Seoul, Banyan Tree Cabo Marqués, Banyan Tree Samui, coupled with royalty fees from property sales in Angsana Fuxian Lake. Hotel Investments segment registered higher revenue by S$2.7 million to S$189.3 million, helped by a strong first quarter performance due to the improvement in the global economy led by Asia and prior to the political uncertainties in Thailand. This however was partially offset by shortfall in the remaining quarters mainly due to the cessation of Dusit Laguna Phuket (“Dusit”) revenue following the sale of the hotel in the fourth quarter, lower revenue from Bangkok due to the political uncertainties, and lower revenue from China due to the World Expo held in Shanghai from May to October which resulted in less travelers to Lijiang. Property Sales segment recorded revenue of S$44.4 million, a decrease of S$38.5 million compared to 2009 given the negative sentiments towards Thailand as a result of its political situation. As such, there were fewer property units recognised compared to 2009. Profit before interests, taxes, depreciation and amortisation (“EBITDA”) The Group’s EBITDA increased by S$21.5 million or 24.4% to S$109.6 million for the year ended 31 December 2010. This was mainly due to higher other income by S$73.3 million mainly due to gain on sale of Dusit, but partially offset by lower profits as a result of lower revenue and higher operating expenses following the cessation of cost cutting measures at the end of 2009. The Group’s profit before taxation was S$61.0 million, an increase of S$27.7 million or 83.2% compared to S$33.3 million recorded for year ended 2009. This was mainly due to higher operating profits as explained above, and higher share of profits from a joint venture company due to gain on disposal of a freehold land in Seychelles.
(ii)
Balance Sheets as at 31 December 2010 versus 31 December 2009 Property, Plant and Equipment The decrease in property, plant and equipment was mainly due to disposal of hotel assets in Dusit, depreciation charge during the period and reclassification of building to investment properties, partially offset by upward revaluation on properties in Thailand, and on-going purchases of furniture, fittings and equipments by the Group’s resorts for its operations. 107
Land Use Rights The increase in land use rights was mainly due to the reclassification of land deposits in Tibet Lhasa from non-current other receivables to land use rights upon receipt of land certification. Investment Properties Investment properties relates to shop rental building in Laguna Phuket, office building in Bangkok and lands in Northern Thailand. The balances as at 31 December 2010 was due to reclassification from property, plant and equipment and land awaiting future development. Land Awaiting Future Development There was no land awaiting future development as at 31 December 2010 as it was partly reclassified to investment properties as mentioned above and partly to property development costs. Joint Venture Companies The increase in joint venture companies was mainly due to gain on disposal of land by a joint venture company. Long-Term Investments The increase in long-term investments was due to progressive equity investments in Banyan Tree Indochina Fund and initial equity investment in China Fund which had its first closing in September 2010. Other Receivables (Non-Current) The decrease in non-current other receivables was mainly due to the reclassification of land deposits in Tibet Lhasa from non-current other receivables to land use rights upon receipt of land certification. Trade Receivables (Current And Non-Current) The increase in trade receivables was mainly due to higher management fee receivables from newly-opened resorts. Other Receivables (Current) The increase in other receivables was mainly due to deposit for land purchase in Huangshan, China. Property Development Costs The increase in property development costs was mainly due to the reclassification from land awaiting future development as mentioned above. Other Non-Financial Liabilities The decrease in other non-financial liabilities was mainly due to reversal of property sales deposits upon revenue recognition partially offset by higher hotel booking deposits. Other Payables The decrease in other payables was mainly due to lower payables following the completion of InOcean villas project in Maldives and lower service charge. Interest-Bearing Loans and Borrowings (Current And Non-Current) The decrease in current and non-current interest-bearing loans and borrowings was mainly due to scheduled loan repayments offset by draw down of additional loans. Notes Payable (Current And Non-Current) The net decrease in current and non-current notes payable was mainly due to repayment of notes matured in November 2010 offset by new notes issued in August 2010. 108
Tax Payable The increase in tax payable was mainly due to provision of tax for gain on sale of Dusit. Amount Due To A Joint Venture Company The increase in amount due to a joint venture company was due to the distribution of proceeds from the sale of land in Seychelles. Other Non-Current Liabilities The increase in other non-current liabilities was due to provision for employee benefits. Property Revaluation Reserve This reserve relates to the movement in the fair value of revalued properties, net of deferred tax. The decrease during the period was mainly due to the disposal of Dusit. Currency Translation Reserve Currency translation reserve relates to translation difference on subsidiaries’ reserves at historical exchange rates compared to current exchange rates. The decrease in the reserve was due to weaker US dollar and RMB against Singapore dollar. (iii)
Six Months Ended 30 June 2011 versus Six Months Ended 30 June 2010 Revenue The Group reported revenue of S$177.9 million for the six months ended 30 June 2011, an increase of S$9.7 million or 5.8% compared to the six months ended 30 June 2010, due to higher revenue from Property Sales and Fee-based segments by S$12.5 million and S$8.0 million respectively, but partially offset by lower revenue from Hotel Investments segment by $10.8 million Property Sales segment contributed S$12.5 million to the increase largely due to divestment of development sites in Lijiang and Yangshuo to China Fund, but partially offset by lower revenue recognition from sales of property units. Fee-based segment revenue increased by S$8.0 million, largely due to higher hotel management fees, higher fund management fees and higher revenue from spa/gallery operations. Higher hotel management fees were mainly attributable to contributions from new resorts in Banyan Tree Cabo Marqués, Banyan Tree Club and Spa Seoul, Banyan Tree Samui, Angsana Fuxian Lake and Banyan Tree Macau. Higher fund management fees were mainly due to the final close of China Fund in January 2011 with a total fund size of S$210 million. Revenue from Gallery operation was also higher due to sales to new outlet at Banyan Tree Spa Marina Bay Sands and upcoming outlet at Angsana Balaclava. Hotel Investments segment registered a decrease of S$10.8 million. The decrease was mainly from Thailand as revenue from Dusit and Laguna Beach Resort (“LBR”) ceased following their sale in October 2010 and May 2011 respectively. This was however partially cushioned by better performance from Maldives. Profit before interests, taxes, depreciation and amortisation (“EBITDA”) The Group’s EBITDA increased by S$1.7 million or 4.9% to S$36.1 million for the six months ended 30 June 2011, from Property Sales segment and Fee-based segment by S$5.1 million and S$3.3 million respectively, but partially offset by lower EBITDA from Hotel Investments segment of S$3.9 million, in line with the movement in revenue as explained above. The higher EBITDA was however partially reduced by higher head office expenses of S$1.4 million mainly due to higher staff and related costs and lower other income by S$1.4 million. Lower other income was mainly due to oneoff final settlement of insurance proceeds arising from the Tsunami claim last year. The Group’s profit before taxation was S$13.6 million, an increase of S$6.0 million or 78.9% over S$7.6 million for the six months ended 30 June 2010. This was mainly due to higher EBITDA as mentioned earlier, coupled with lower depreciation following the disposal of Dusit and LBR. 109
(iv)
Balance Sheets as at 30 June 2011 versus 31 December 2010 Property, Plant and Equipment The decrease in property, plant and equipment was mainly due to the disposal of LBR assets, depreciation charge during the period and reduction in opening balance due to currency translation adjustment, partially offset by on-going purchases of furniture, fittings and equipment by the Group’s resorts for its operations. Land Use Rights Land use rights represent the Group’s rights over plots of land in China. The decrease was mainly due to divestment of a development site to China Fund in March 2011. Property Development Costs Lower property development costs was due to reversal of cost upon revenue recognition of properties sold. Trade Payables Trade payables decreased mainly due to lower cost of operation following the sale of Dusit and LBR in October 2010 and May 2011 respectively and lower construction payables on property sales project in Laguna Phuket. Other Non-Financial Liabilities The decrease in other non-financial liabilities was mainly due to reversal of property sales deposits upon revenue recognition and lower hotel booking deposits. Interest-Bearing Loans and Borrowings (Current And Non-Current) The decrease in current and non-current interest-bearing loans and borrowings was mainly due to scheduled loan repayments offset by draw down of additional loans. Notes Payable (Current And Non-Current) The increase in current and non-current notes payable was mainly due to proceeds of S$70 million from new notes issuance in March 2011. Tax Payable The decrease in tax payable was mainly due to payment of tax pertaining to sale of Dusit. Deferred Income Deferred income relates to government grants received for the acquisition of land use rights for tourism related development activities undertaken by the Group’s subsidiary companies in China to promote the tourism industry. The decrease in deferred income was mainly due to the realisation of deferred income upon divestment of a development site in Lijiang to China Fund. Deferred Tax Liabilities The decrease in deferred tax liabilities was mainly due to reduction in opening balance arising from translation adjustment and reversal of deferred tax liabilities relating to sale of LBR. Property Revaluation Reserve This reserve relates to the movement in the fair value of revalued properties, net of deferred tax. The decrease during the period was due to the disposal of LBR. Currency Translation Reserve Currency translation reserve relates to translation difference on subsidiaries’ reserves at historical exchange rates compared to current exchange rates. The decrease in the reserve was due to weaker Baht, US dollar and RMB against Singapore dollar.
110
PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS The net proceeds arising from the issue of Notes under the Programme (after deducting issue expenses) will be used for financing the general working capital, capital expenditure and investment requirements and refinancing the existing borrowings of the Group.
111
CLEARING AND SETTLEMENT Clearance and Settlement under the Depository System In respect of Notes which are accepted for clearance by CDP in Singapore, clearance will be effected through an electronic book-entry clearance and settlement system for the trading of debt securities (“Depository System”) maintained by CDP. Notes that are to be listed on the SGX-ST may be cleared through CDP. CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of Singapore and acts as a depository and clearing organisation. CDP holds securities for its accountholders and facilitates the clearance and settlement of securities transactions between accountholders through electronic book-entry changes in the securities accounts maintained by such accountholders with CDP. In respect of Notes which are accepted for clearance by CDP, the entire issue of the Notes is to be held by CDP in the form of a Global Note for persons holding the Notes in securities accounts with CDP (“Depositors”). Delivery and transfer of Notes between Depositors is by electronic book-entries in the records of CDP only, as reflected in the securities accounts of Depositors. Although CDP encourages settlement on the third business day following the trade date of debt securities, market participants may mutually agree on a different settlement period if necessary. Settlement of over-the-counter trades in the Notes through the Depository System may only be effected through certain corporate depositors (“Depository Agents”) approved by CDP under the Companies Act to maintain securities sub-accounts and to hold the Notes in such securities sub-accounts for themselves and their clients. Accordingly, Notes for which trade settlement is to be effected through the Depository System must be held in securities sub-accounts with Depository Agents. Depositors holding the Notes in direct securities accounts with CDP, and who wish to trade Notes through the Depository System, must transfer the Notes to be traded from such direct securities accounts to a securities sub-account with a Depository Agent for trade settlement. CDP is not involved in money settlement between Depository Agents (or any other persons) as CDP is not a counterparty in the settlement of trades of debt securities. However, CDP will make payment of interest and repayment of principal on behalf of issuers of debt securities. Although CDP has established procedures to facilitate transfer of interests in the Notes in global form among Depositors, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, the Issuing and Paying Agent or any other agent will have the responsibility for the performance by CDP of its obligations under the rules and procedures governing its operations. Clearance and Settlement Through Euroclear and/or Clearstream, Luxembourg Upon the initial deposit of a Global Note with a common depository for Euroclear and Clearstream, Luxembourg (the “Common Depositary”), Euroclear or Clearstream, Luxembourg will credit each subscriber with a nominal amount of Notes equal to the nominal amount thereof for which it has subscribed and paid. In respect of Notes which are accepted for clearance by Euroclear and/or Clearstream, Luxembourg, for so long as any of the Notes is represented by a Global Note and such Global Note is held on behalf of Euroclear and/or Clearstream, Luxembourg, each person who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (other than Clearstream, Luxembourg, where Clearstream, Luxembourg is an accountholder of Euroclear or vice versa) shall be treated as the holder of such nominal amount of Notes other than with respect to the payment of principal of and interest on the Notes. For such purpose, the bearer of the relevant Global Note will be treated as the holder of such nominal amount of such Notes.
112
Notes that are initially deposited with the Common Depositary may also be credited to the accounts of subscribers with (if indicated in the relevant Pricing Supplement) other clearing systems through direct or indirect accounts with Euroclear and Clearstream, Luxembourg held by such other clearing systems. Conversely, Notes that are initially deposited with any other clearing system may similarly be credited to the accounts of subscribers with Euroclear, Clearstream, Luxembourg or other clearing systems. Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any other clearing system as the holder of a Note represented by a Global Note must look solely to Euroclear, Clearstream, Luxembourg or such clearing system (as the case may be) for his share of each payment of principal or interest (if any) made by the Issuer to the bearer of such Global Note and in relation to all other rights arising under the Global Notes, subject to and in accordance with the respective rules and procedures of Euroclear, Clearstream, Luxembourg, or such clearing system (as the case may be). Such persons shall have no claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are represented by such Global Note and such obligations of the Issuer will be discharged by payment to the bearer of such Global Note in respect of each amount so paid. Whilst any Note is represented by a Temporary Global Note, payments of principal and interest (if any) due prior to the exchange date will be made through Euroclear and/or Clearstream, Luxembourg against presentation of the Temporary Global Note only to the extent of receipt of non-U.S. beneficial ownership certifications. The holder of a Temporary Global Note will not be entitled to collect any payment of principal or interest due on or after the exchange date, unless exchange for an interest in a Permanent Global Note or for Definitive Notes is improperly withheld or refused. Payments of principal of, and interest (if any) on, a Permanent Global Note will be made through Euroclear and/or Clearstream, Luxembourg against presentation or, as the case may be, surrender of such Permanent Global Note without any requirement for such certification as is referred to in the preceding paragraph. Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear or of Clearstream, Luxembourg, as the case may be.
113
SINGAPORE TAXATION The statements below are general in nature and are based on certain aspects of current tax laws in Singapore and administrative guidelines issued by MAS in force as at the date of this Information Memorandum and are subject to any changes in such laws or administrative guidelines, or the interpretation of those laws or guidelines, occurring after such date, which changes could be made on a retroactive basis. Neither these statements nor any other statements in this Information Memorandum are intended or are to be regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. The statements do not purport to be a comprehensive or exhaustive description of all the tax considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or financial institutions in Singapore which have been granted the relevant Financial Sector Incentive tax incentive(s)) may be subject to special rules or tax rates. Prospective holders of the Notes are advised to consult their own professional tax advisers as to the Singapore or other tax consequences of the acquisition, ownership of or disposal of the Notes, including, in particular, the effect of any foreign, state or local tax laws to which they are subject. It is emphasised that neither the Issuer, the Arranger nor any other persons involved in the Programme accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Notes. 1.
Interest and Other Payments Subject to the following paragraphs, under Section 12(6) of the Income Tax Act, Chapter 134 of Singapore (the “ITA”), the following payments are deemed to be derived from Singapore: (a)
any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or
(b)
any income derived from loans where the funds provided by such loans are brought into or used in Singapore.
Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld for such payments (other than those subject to the 15.0% final withholding tax described below) to non-resident persons (other than non-resident individuals) is 17.0% with effect from the year of assessment 2010. The applicable rate for non-resident individuals is 20.0%. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15.0%. The rate of 15.0% may be reduced by applicable tax treaties. However, certain Singapore-sourced investment income derived by individuals from financial instruments is exempt from tax, including: (a)
interest from debt securities derived on or after 1 January 2004;
(b)
discount income (not including discount income arising from secondary trading) from debt securities derived on or after 17 February 2006; and
(c)
prepayment fee, redemption premium and break cost from debt securities derived on or after 15 February 2007,
114
except where such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession. In addition, as the Programme as a whole is arranged by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch, which is a Financial Sector Incentive (Bond Market) Company (as defined in the ITA), any tranche of the Notes issued as debt securities under the Programme during the period from the date of this Information Memorandum to 31 December 2013 (the “Relevant Notes”) would be “qualifying debt securities” for the purposes of the ITA, to which the following treatment shall apply: (i)
subject to certain prescribed conditions having been fulfilled (including the furnishing by the Issuer, or such other person as the Comptroller of Income Tax in Singapore (the “Comptroller”) may direct, of a return on debt securities for the Relevant Notes within such period as the Comptroller may specify and such other particulars in connection with the Relevant Notes as the Comptroller may require to the Comptroller and MAS, and the inclusion by the Issuer in all offering documents relating to the Relevant Notes of a statement to the effect that where interest, discount income, prepayment fee, redemption premium or break cost from the Relevant Notes is derived by a person who is not resident in Singapore and who carries on any operation in Singapore through a permanent establishment in Singapore, the tax exemption for qualifying debt securities shall not apply if the non-resident person acquires the Relevant Notes using funds from that person’s operations through the Singapore permanent establishment), interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium and break cost (collectively, the “Qualifying Income”) from the Relevant Notes, derived by a holder who is not resident in Singapore and who (aa) does not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but the funds used by that person to acquire the Relevant Notes are not obtained from funds from Singapore operations, are exempt from Singapore tax. “Funds from Singapore operations” means, in relation to a person, the funds and profits of that person’s operations through a permanent establishment in Singapore;
(ii)
subject to certain conditions having been fulfilled (including the furnishing by the Issuer, or such other person as the Comptroller may direct, of a return on debt securities within such period as the Comptroller may specify and such other particulars in connection with the Relevant Notes as the Comptroller may require to the Comptroller and MAS), Qualifying Income from the Relevant Notes derived by any company or body of persons (as defined in the ITA) in Singapore is subject to income tax at a concessionary rate of 10.0%; and
(iii)
subject to: (aa)
the Issuer including in all offering documents relating to the Relevant Notes a statement to the effect that any person whose interest, discount income, prepayment fee, redemption premium or break cost derived from the Relevant Notes is not exempt from tax shall include such income in a return of income made under the ITA; and
(bb)
the Issuer, or such other person as the Comptroller may direct, furnishing to the Comptroller and MAS a return on debt securities for the Relevant Notes within such period as the Comptroller may specify and such other particulars in connection with the Relevant Notes as the Comptroller may require,
Qualifying Income derived from the Relevant Notes is not subject to withholding of tax by the Issuer. However, notwithstanding the foregoing: (A)
if during the primary launch of any tranche of Relevant Notes, the Relevant Notes of such tranche are issued to fewer than four persons and 50.0% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by related parties of the Issuer, such Relevant Notes would not qualify as “qualifying debt securities”; and
115
(B)
even though a particular tranche of Relevant Notes are “qualifying debt securities”, if, at any time during the tenure of such tranche of Relevant Notes, 50.0% or more of the issue of such Relevant Notes is held beneficially or funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying Income derived from such Relevant Notes held by: (i)
any related party of the Issuer; or
(ii)
any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption or concessionary rate of tax as described above. The term “related party”, in relation to a person, means any other person who, directly or indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or indirectly, are under the control of a common person. The terms “prepayment fee”, “redemption premium” and “break cost” are defined in the ITA as follows: “prepayment fee”, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by the terms of the issuance of the securities; “redemption premium”, in relation to debt securities and qualifying debt securities, means any premium payable by the issuer of the securities on the redemption of the securities upon their maturity; and “break cost”, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by any loss or liability incurred by the holder of the securities in connection with such redemption. References to “prepayment fee”, “redemption premium” and “break cost” in this Singapore tax disclosure have the same meaning as defined in the ITA. Notwithstanding that the Issuer is permitted to make payments of interest, discount income, prepayment fee, redemption premium and break cost in respect of the Relevant Notes without deduction or withholding for tax under Section 45 or Section 45A of the ITA, any person whose interest, discount income, prepayment fee, redemption premium or break cost derived from the Relevant Notes is not exempt from tax is required to include such income in a return of income made under the ITA. The Qualifying Debt Securities Plus Scheme (“QDS Plus Scheme”) has also been introduced as an enhancement of the Qualifying Debt Securities Scheme. Under the QDS Plus Scheme, subject to certain conditions having been fulfilled (including the submission by the issuer or such other person as the Comptroller may direct, of a return on debt securities in respect of the qualifying debt securities within such period as the Comptroller may specify and such other particulars in connection with the qualifying debt securities as the Comptroller may require to the Comptroller and MAS), income tax exemption is granted on interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium and break cost derived by any investor from qualifying debt securities (excluding Singapore Government Securities) which:(a)
are issued during the period from 16 February 2008 to 31 December 2013;
(b)
have an original maturity of not less than 10 years;
(c)
cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue; and
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(d)
cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date.
However, even if a particular tranche of the Relevant Notes are “qualifying debt securities” which qualify under the QDS Plus Scheme, if, at any time during the tenure of such tranche of Relevant Notes, 50.0% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by any related party(ies) of the Issuer, interest, discount income, prepayment fee, redemption premium and break cost from such Relevant Notes derived by: (aa)
any related party of the Issuer; or
(bb)
any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption under the QDS Plus Scheme as described above. 2.
Capital Gains Any gains considered to be in the nature of capital made from the sale of the Notes will not be taxable in Singapore. However, any gains derived by any person from the sale of the Notes which are gains from any trade, business, profession or vocation carried on by that person, if accruing in or derived from Singapore, may be taxable as such gains are considered revenue in nature. Holders of the Notes who apply or are required to apply Singapore Financial Reporting Standard 39 (“FRS 39”) for Singapore income tax purposes, may be required to recognise gains or losses (not being gains or losses in the nature of capital) on the Notes, irrespective of disposal, in accordance with FRS 39. Please see the section below on “Adoption of FRS 39 Treatment for Singapore Income Tax Purposes”.
3.
Adoption of FRS 39 Treatment for Singapore Income Tax Purposes The Inland Revenue Authority of Singapore has issued a circular entitled “Income Tax Implications Arising from the Adoption of FRS 39 - Financial instruments: Recognition and Measurement” (the “FRS 39 Circular”). The ITA has since been amended to give effect to the FRS 39 Circular. The FRS 39 Circular generally applies, subject to certain “opt-out” provisions, to taxpayers who are required to comply with FRS 39 for financial reporting purposes. Holders of the Notes who may be subject to the tax treatment under the FRS 39 Circular should consult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or disposal of the Notes.
4.
Estate Duty Singapore estate duty has been abolished with respect to all deaths occurring on or after 15 February 2008.
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SUBSCRIPTION, PURCHASE AND DISTRIBUTION The Programme Agreement provides for Notes to be offered from time to time through one or more Dealers. The price at which a Series or Tranche will be issued will be determined prior to its issue between the Issuer and the relevant Dealer(s). The obligations of the Dealers under the Programme Agreement will be subject to certain conditions set out in the Programme Agreement. Each Dealer (acting as principal) will subscribe or procure subscribers for Notes from the Issuer pursuant to the Programme Agreement. United States (1)
The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act. Each Dealer represents and agrees that it has offered and sold the Notes of any identifiable tranche, and shall offer and sell the Notes of any identifiable tranche (i) as part of their distribution at any time and (ii) otherwise until 40 days after completion of the distribution of such tranche as determined, and certified to the Issuer and each Relevant Dealer, by the Issuing and Paying Agent or, in the case of a Syndicated Issue, the Lead Manager, only in accordance with Rule 903 of Regulation S under the Securities Act. Accordingly, neither it, its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Notes, and it and they have complied and shall comply with the offering restrictions requirement of Regulation S. Each Dealer agrees to notify the Issuing and Paying Agent or, in the case of a Syndicated Issue, the Lead Manager when it has completed the distribution of its portion of the Notes of any identifiable tranche so that the Issuing and Paying Agent, or in the case of a syndicated issue, the Lead Manager may determine the completion of the distribution of all Notes of that tranche and notify the other Relevant Dealers of the end of the distribution compliance period. Each Dealer agrees that, at or prior to confirmation of sale of Notes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the distribution compliance period a confirmation or notice to substantially the following effect: “The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after completion of the distribution of an identifiable tranche of the Notes as determined, and certified to the Issuer and the Relevant Dealers, by [[AGENT]/LEAD MANAGER]], except in either case in accordance with Regulation S under the Securities Act. Terms used above have the meanings given to them by Regulation S.” Terms used in this paragraph have the meanings given to them by Regulation S.
(2)
In addition, unless the Pricing Supplement or the Subscription Agreement relating to one or more Tranches specifies that the applicable TEFRA exemption is either “C Rules” or “not applicable”, each Dealer represents and agrees in relation to each Tranche of bearer Notes: (i)
except to the extent permitted under U.S. Treas. Reg. §1.163-5(c)(2)(i)(D) (the “D Rules”): (a)
it has not offered or sold, and during a 40-day restricted period shall not offer or sell, Notes in bearer form to a person who is within the United States or its possessions or to a United States person; and
(b)
it has not delivered and shall not deliver within the United States or its possessions Definitive Notes in bearer form that are sold during the restricted period;
118
(ii)
it has and throughout the restricted period shall have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Notes are aware that such Notes in bearer form may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules;
(iii)
if it is a United States person, it is acquiring the Notes in bearer form for purposes of resale in connection with their original issuance and if it retains Notes in bearer form for its own account, it shall only do so in accordance with the requirements of U.S. Treas. Reg. §1.1635(c)(2)(i)(D)(6); and
(iv)
with respect to each affiliate that acquires from it Notes in bearer form for the purpose of offering or selling such Notes during the restricted period, it either (a) repeats and confirms the representations contained in sub-paragraphs (i), (ii) and (iii) on behalf of such affiliate or (b) agrees that it shall obtain from such affiliate for the benefit of the Issuer the representations contained in sub-paragraphs (i), (ii) and (iii).
Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and regulations thereunder, including the D Rules. (3)
In addition, to the extent that the Pricing Supplement and the Subscription Agreement relating to one or more Tranches of bearer Notes specifies that the applicable TEFRA exemption is “C Rules”, under U.S. Treas. Reg. §1.163-5(c)(2)(i)(C) (the “C Rules”), Notes in bearer form must be issued and delivered outside the United States and its possessions in connection with their original issuance. In relation to each such Tranche, each Dealer represents and agrees that it has not offered, sold or delivered, and shall not offer, sell or deliver, directly or indirectly, Notes in bearer form within the United States or its possessions in connection with their original issuance. Further, in connection with their original issuance of Notes in bearer form, it has not communicated, and shall not communicate, directly or indirectly, with a prospective purchaser if either such purchaser or it is within the United States or its possessions or otherwise involve its U.S. office in the offer or sale of Notes in bearer form. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and regulations thereunder, including the C Rules.
Hong Kong Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that: (a)
it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes (except for Notes which are a “structured product” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong) other than (i) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance; or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and
(b)
it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
Singapore Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be required to acknowledge, that this Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold any Notes or caused such Notes to be made the subject of an invitation for 119
subscription or purchase and will not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Information Memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b)
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: (i)
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii)
where no consideration is or will be given for the transfer;
(iii)
where the transfer is by operation of law; or
(iv)
as specified in Section 276(7) of the SFA.
General Each Dealer understands that no action has been taken in any jurisdiction that would permit a public offering of any of the Notes, or possession or distribution of this Information Memorandum or any other document or any Pricing Supplement, in any country or jurisdiction (other than Singapore) where action for that purpose is required. Each Dealer has agreed that it will comply with all applicable securities laws, regulations and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers Notes or any interest therein or rights in respect thereof or has in its possession or distributes, any other document or any Pricing Supplement. No Dealer will directly or indirectly offer, sell or deliver Notes or any interest therein or rights in respect thereof or distribute or publish any prospectus, circular, advertisement or other offering material (including, without limitation, this Information Memorandum) in any country or jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations, and all offers, sales and deliveries of Notes or any interest therein or rights in respect thereof by it will be made on the foregoing terms. In connection with the offer, sale or delivery by any Dealer of any Notes or any interest therein or rights in respect thereof, the Issuer shall not have responsibility for, and each Dealer will obtain, any consent, approval or permission required in and each Dealer will comply with the laws and regulations in force in, any jurisdiction to which it is subject or from which it may make any such offer or sale. Any person who may be in doubt as to the restrictions set out in the SFA or the laws, regulations and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers the Notes or any interest therein or rights in respect thereof and the consequences arising from a contravention thereof should consult his own professional advisers and should make his own inquiries as to the laws, regulations and directives in force or applicable in any particular jurisdiction at any relevant time.
120
APPENDIX I
GENERAL AND OTHER INFORMATION OF THE ISSUER AND THE GROUP INFORMATION ON DIRECTORS 1.
The name and position of each of the Directors are set out below: Name
Position
Mr Ho KwonPing
Executive Chairman
Mr Ariel P Vera
Group Managing Director
Mr Chia Chee Ming Timothy
Lead Independent Director
Mrs Fang Ai Lian
Independent Director
Mrs Elizabeth Sam
Independent Director
2.
The Directors are not related by blood or marriage to one another nor are they related to any substantial shareholder of the Issuer save as disclosed under item 5 below.
3.
On 28 April 2006, the shareholders of the Company approved the adoption of two share based incentive schemes for its Directors and employees, the Banyan Tree Share Option Scheme (the “Share Option Scheme”) and a performance share plan known as the Banyan Tree Performance Share Plan (the “Plan”). The Company has not issued any options to any eligible participants pursuant to the Share Option Scheme to date. The Plan comprises the Performance Share Plan (“PSP”) and the Restricted Share Plan (“RSP”). The Initial Award is for a 1 to 3 Year Performance Period. The Final award will vary from 0% to 200% of the Initial Award depending on the achievement of the established performance conditions of the grantees. Share Grants Vested On 7 April 2011, the company released 801,300 share awards vested under the PSP and RSP pursuant to the Banyan Tree Performance Share Plan for FY2007 to FY2010. Performance Shares As at 30 June 2011, 2,678,800 performance-based shares are outstanding. Founder’s Grant Mr Ho KwonPing, the Executive Chairman was earlier awarded a Founder’s Grant which was effective from 1 January 2010. Under the Founder’s Grant, he shall be entitled to, for each financial year for a period of ten years beginning from the financial year ended 31 December 2010, an amount equivalent to 5% of the profit before tax of the Group, such amount to be payable in cash or in shares at the sole discretion of the Issuer. Mr Ho was paid a total amount of S$2,778,691 in cash pursuant to the Founder’s Grant in respect of the financial year ended 31 December 2010.
4.
Save as disclosed in the Issuer’s annual report for the financial year ended 31 December 2010 and the Issuer’s announcements of interim results for each financial quarter, there are no interested party transactions between the Group and its interested persons (as defined in the Listing Manual of the SGX-ST) for the above period.
I-1
5.
The interests of the Directors and the substantial shareholders of the Issuer in the Shares as at 27 September 2011 are as follows: Directors
Direct Interest Number of shares
Ho KwonPing Ariel P Vera Chia Chee Ming Timothy Fang Ai Lian Elizabeth Sam Substantial Shareholders Ho KwonPing1 Chiang See Ngoh Claire1 Bibace Investments Ltd Recourse Investments Ltd.2 KAP Holdings Ltd.2 Estate of Ho Lien Fung, Deceased3 Qatar Holdings LLC4 Qatar Investment Authority5 Citigroup Global Markets Limited (“CGML”) and the following entities by virtue of their interest in CGML; Citigroup Inc., Citigroup Global Markets Holdings Inc., Citigroup Financial Products Inc. and Citigroup Global Markets Europe Limited6
– 839,000 257,000 – 156,000
%7
Deemed Interest Number of shares
%7
– 0.11 0.03 – 0.02
286,232,582 793,100 – – –
37.68 0.10 – – –
Deemed Interest Number of shares 286,232,582 286,232,582 9,772,000 280,232,582 280,232,582 38,095,000 205,187,443 205,187,443 149,103,942
%7 37.68 37.68 1.29 36.89 36.89 5.01 27.01 27.01 19.63
Direct Interest Number of shares %7 – – – – 270,460,582 35.60 6,000,000 0.79 – – – – – – – – 1 0.00
1
Mr Ho KwonPing and Ms Chiang See Ngoh Claire are each deemed to have an interest in the shares held by Recourse Investments Ltd., Bibace Investments Ltd (“Bibace”) and Citibank Nominees Singapore Pte Ltd (acting as nominee for Bibace). Ms Chiang See Ngoh Claire is the spouse of Mr Ho KwonPing.
2
Recourse Investments Ltd. and KAP Holdings Ltd. are each deemed to have an interest in the shares held by Bibace and Citibank Nominees Singapore Pte Ltd (acting as nominee for Bibace).
3
Mrs Ho Lien Fung, who passed away on 3 August 2011, is the mother of Mr Ho KwonPing.
4
Qatar Holding LLC (“QH”) is deemed to have an interest in the shares held through thirty party nominees.
5
Qatar Investment Authority is deemed to have an interest in the shares held by its wholly-owned subsidiary, QH.
6
CGML is deemed to have an interest in the shares held by Citibank Nominees Singapore Pte Ltd (acting as nominee for QH).
7
Percentage shareholding is based on issued share capital of 759,639,280 (excluding treasury shares).
SHARE CAPITAL 6.
As at the date of this Information Memorandum, there is one class of ordinary shares in the Issuer. The rights and privileges attached to the shares are stated in the Articles of Association of the Issuer.
7.
The issued share capital of the Issuer as at 30 September 2011 is as follows: Share Designation
Issued Share Capital Number of Shares Amount 759,639,280* S$199,994,894
Ordinary Shares * Excluding 1,763,000 treasury shares.
I-2
BORROWINGS 8.
Save as disclosed in Appendix II, the Group had as at 30 June 2011 no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.
WORKING CAPITAL 9.
The Directors are of the opinion that, after taking into account the present banking facilities and the net proceeds of the issue of the Notes, the Issuer will have adequate working capital for their present requirements.
CHANGES IN ACCOUNTING POLICIES 10.
Save as disclosed in the section “The Issuer - Financial Summary and Overview”, there has been no significant change in the accounting policies of the Issuer since its audited financial accounts for the year ended 31 December 2010.
LITIGATION 11.
Save as disclosed in this Information Memorandum, there are no legal or arbitration proceedings pending or threatened against the Issuer or any of its subsidiaries the outcome of which may have or have had during the 12 months prior to the date of this Information Memorandum a material adverse effect on the financial position of the Group and the Directors have no knowledge of any proceedings pending or threatened against the Issuer or any of its subsidiaries or any facts likely to give rise to any litigation, claims or proceedings which might be material in the context of the issue of the Notes.
ADVERSE CHANGE 12.
Save as disclosed in this Information Memorandum, there has been no adverse change in the financial position or business of the Issuer since 31 December 2010 that is material in the context of the issue of the Notes.
CONSENTS 13.
The Arranger of the Programme, the Legal Adviser to the Arranger and the Trustee, the Legal Adviser to the Issuer, the Issuing and Paying Agent and Agent Bank, the Trustee and the Auditors have given and have not withdrawn their respective written consents to the issue of this Information Memorandum with the references herein to their names and, where applicable, reports in the form and context in which they appear in this Information Memorandum.
DOCUMENTS AVAILABLE FOR INSPECTION 14.
Copies of the following documents may be inspected at the registered office of the Issuer at 211 Upper Bukit Timah Road Singapore 588182 during normal business hours for a period of six months from the date of this Information Memorandum: (a)
the Memorandum and Articles of Association of the Issuer;
(b)
the Trust Deed; and
(c)
the financial statements of the Group as set out in Appendices II, III and IV respectively.
FUNCTIONS, RIGHTS AND OBLIGATIONS OF THE TRUSTEE 15.
The functions, rights and obligations of the Trustee are set out in the Trust Deed.
I-3
APPENDIX II
UNAUDITED ACCOUNTS OF BANYAN TREE HOLDINGS LIMITED AND ITS SUBSIDIARIES FOR THE SECOND QUARTER AND FIRST HALF ENDED 30 JUNE 2011 The information in this Appendix II has been reproduced from the unaudited results for the second quarter and first half announcement on 12 August 2011 of Banyan Tree Holdings Limited and its subsidiaries for the period ended 30 June 2011 and has not been specifically prepared for inclusion in this Information Memorandum. References to the page numbers herein are those as reproduced from the second quarter and first half announcement on 12 August 2011 of Banyan Tree Holdings Limited and its subsidiaries for the period ended 30 June 2011.
II-1
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 PART I – INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS 1(a)(i) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year.
2011
Group
Group
3 months ended 30 Jun Incr/ 2010 (Decr)
6 months ended 30 Jun Incr/ 2010 (Decr)
Restated Notes
(S$’000)
(S$’000)
%
2010 As previously reported (For info only)
2011
(S$’000)
(S$’000)
Restated (S$’000)
2010 As previously reported (For info only) (S$’000)
%
Revenue
1
63,564
61,881
3%
60,740
177,869
168,172
6%
156,978
Other income
2
2,494
877
184%
877
2,885
4,319
-33%
4,319
Cost of operating supplies
(5,979)
(5,143)
16%
(5,143)
(13,684)
(12,904)
6%
(12,904)
Cost of properties sold
(3,830)
(2,286)
68%
(1,908)
(16,339)
(8,435)
94%
(3,115)
Salaries and related expenses
(25,990)
(24,784)
5%
(24,784)
(54,996)
(53,385)
3%
(53,385)
Administrative expenses
(11,123)
(9,694)
15%
(9,694)
(25,226)
(23,842)
6%
(23,925)
(2,935)
(5,022)
-42%
(5,022)
(7,110)
(9,379)
-24%
(9,379)
(12,618)
(14,076)
-10%
(14,076)
(27,300)
(30,141)
-9%
(30,141)
Costs and expenses
Sales and marketing expenses Other operating expenses Total costs and expenses
3
(62,475)
(61,005)
2%
(60,627)
(144,655)
(138,086)
5%
(132,849)
Profit before interests, taxes, depreciation and amortisation
4
3,583
1,753
104%
990
36,099
34,405
5%
28,448
5
(6,554)
(8,655)
-24%
(8,655)
(13,526)
(17,414)
-22%
(17,414)
(761)
(1,164)
-35%
(1,164)
(1,600)
(2,136)
-25%
(2,136)
(3,732)
(8,066)
54%
(8,829)
20,973
14,855
41%
8,898
Depreciation of property, plant and equipment Amortisation of lease rental and land use rights (Loss)/Profit from operations and other gains Finance income Finance costs Share of results of associated companies Share of results of joint venture companies
6
(Loss)/Profit before taxation
934
979
-5%
979
1,703
2,154
-21%
2,154
(5,159)
(4,667)
11%
(4,667)
(9,467)
(9,345)
1%
(9,345)
248
(33)
NM
(33)
435
(101)
NM
(101)
(1)
(2)
50%
(2)
(3)
(4)
25%
(4)
(7,710)
(11,789)
35%
(12,552)
13,641
7,559
80%
1,602
Income tax expenses
7
(1,219)
394
NM
622
(7,360)
(5,883)
25%
(3,945)
(Loss)/Profit after taxation
8
(8,929)
(11,395)
22%
(11,930)
6,281
1,676
275%
(2,343)
Equity holders of the Company
10
(7,010)
(8,860)
21%
(9,212)
3,034
(1,453)
NM
(3,876)
Non-controlling interests Net (Loss)/Profit for the Period
9
(1,919)
(2,535)
24%
(2,718)
3,247
3,129
4%
1,533
(8,929)
(11,395)
22%
(11,930)
6,281
1,676
275%
(2,343)
Attributable to:
Page 1
II-2
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 1(a)(ii)
Statement of Comprehensive Income
2011
(S$’000)
Net (Loss)/Profit for the Period
Group 3 months ended 30 Jun 2010 2010 Incr/ As previously (Decr) Restated reported % (For info only) (S$’000)
2011
(S$’000)
Group 6 months ended 30 Jun 2010 2010 Incr/ As previously (Decr) Restated reported % (For info only) (S$’000)
(8,929)
(11,395)
22%
(11,930)
6,281
1,676
275%
(2,343)
Other comprehensive (loss)/income: Exchange differences arising from consolidation of foreign operations and net investment in foreign operations
(27,081)
(1,815)
NM
(1,815)
(46,353)
9,711
NM
9,711
Adjustment on property revaluation reserve, net of deferred tax
3,217
118
NM
118
3,217
236
NM
236
Total comprehensive (loss)/income
(32,793)
(13,092)
-150%
(13,627)
(36,855)
11,623
NM
7,604
(22,897)
(10,493)
-118%
(10,845)
(26,975)
3,842
NM
1,419
(9,896)
(2,599)
-281%
(2,782)
(9,880)
7,781
NM
6,185
(32,793)
(13,092)
-150%
(13,627)
(36,855)
11,623
NM
7,604
Attributable to: Equity holders of the Company Non-controlling interests
1(a)(iii)
Additional Disclosures
Adjustments for under or over provision of tax in respect of prior years Included in the tax expense for the year was an under provision of S$692,000 relating to prior years. Group 3 months ended 30 Jun 2011 2010 Incr/ (Decr) (S$’000) (S$’000) %
Group 6 months ended 30 Jun 2011 2010 Incr/ (Decr) (S$’000) (S$’000) %
(Loss)/Profit from operations and other gains is stated after charging/(crediting): Write back of doubtful debts - trade, net
(223)
(1,170)
-81%
(102)
(344)
-70%
Allowance for/(write back of) inventory obsolescence Exchange loss/(gain)
6 523
(4) 216
NM 142%
41 1,400
(40) (137)
NM NM
Gain on disposal of investment in subsidiaries (Gain)/loss on disposal of property, plant and equipment Allowance for impairment loss on property, plant and equipment, net
(1,809)
-
NM
(1,809)
-
NM
(27)
3
NM
8
24
-67%
183
-
NM
183
-
NM
Page 2
II-3
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 1(a)(iv)
Explanatory notes on performance for 2Q 2011
Due to the change in the Group’s accounting policy to be in line with the new INT FRS 115 – Agreements for the Construction of Real Estate as disclosed in Note 5 of Page 15, a retrospective application is required under FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors, and hence the Income Statement for the Group for 2Q10 and 1H10 has been restated as if the new accounting policy had always been applied. The variance analysis below is a comparison of the income statement for 2Q11 and the restated income statement for 2Q10. The original income statements for 2Q10 and 1H10 (before restatement) are also presented for information only.
1.
Revenue Revenue increased by S$1.7 million from S$61.9 million in 2Q10 to S$63.6 million in 2Q11. This was mainly due to higher revenue from Fee-based segment by S$4.4 million, but partially offset by lower revenue from Property Sales and Hotel Investments segments by S$1.5 million and S$1.2 million respectively. Fee-based segment recorded higher revenue by S$4.4 million compared to 2Q10 largely due to higher hotel management revenue as a result of new openings at Banyan Tree Samui (opened in July 2010), Angsana Fuxian Lake (opened in October 2010) and Banyan Tree Macau (opened in May 2011). In addition, there were higher fund management fees from Banyan Tree China Hospitality Fund (I) (“China Fund”) which completed its final close in January 2011. Revenue from gallery sales was also higher due to sales to the upcoming new outlets at Banyan Tree Spa Marina Bay Sands and Angsana Balaclava, Mauritius. Lower revenue from Property Sales segment was mainly attributable to lower revenue recognition from property sales as there was only revenue recognition for 2 units of Laguna Village townhomes as compared to revenue from 2 units of Laguna Village townhomes and 3 units of Banyan Tree Bangkok suites recognized last year. The shortfall was however partially offset by revenue from divestment of a development site in Yangshuo to China Fund. Lower revenue from Hotel Investments segment was mainly attributable to properties in Thailand, but partially offset by higher revenue from Maldives. Revenue from Thailand was lower as performance of Banyan Tree Phuket was affected by the run-up to the general election in Thailand. In addition, revenue from Dusit Laguna Phuket (“Dusit”) and Laguna Beach Resort (“LBR”) hotel operations also ceased following their disposals in October 2010 and May 2011 respectively. The shortfall was however partially cushioned by higher revenue from Banyan Tree Bangkok as its performance last year was impacted by the political violence and subsequent state of emergency imposed in Bangkok. Our resorts in Maldives recorded higher revenue as their performances last year were also impacted by the Icelandic volcanic ash cloud crisis which affected air travel.
2.
Other income Other income increased by S$1.6 million from S$0.9 million in 2Q10 to S$2.5 million in 2Q11 largely due to gain on sale of LBR. The underlying transaction gain on the sale of LBR was S$16.7 million (56% profit margin). This is the value that the Group has unlocked. However, due to accounting treatment of revaluation reserve, the accounting profit is only S$1.8 million (6% profit margin). The revaluation reserves relating to the disposed LBR, net of tax and noncontrolling interests, is transferred to retained earnings as illustrated in the statement of changes in equity.
3.
Costs and expenses Total costs and expenses increased by S$1.5 million from S$61.0 million in 2Q10 to S$62.5 million in 2Q11. Almost all categories of expenses were higher than last year, except for sales and marketing expenses and other operating expenses. Cost of operating supplies increased by S$0.9 million from S$5.1 million in 2Q10 to S$6.0 million in 2Q11 mainly due to higher cost of sales from higher sales of gallery products partially offset by lower cost of hotel’s operating supplies in line with the lower revenue from Hotel Investments segment. Cost of properties sold increased by S$1.5 million from S$2.3 million in 2Q10 to S$3.8 million in 2Q11 mainly due to cost relating to the divestment of a development site, but partially offset by lower cost due to lower revenue recognition of property units. Salaries and related expenses increased by S$1.2 million from S$24.8 million in 2Q10 to S$26.0 million in 2Q11 mainly due to annual salary adjustments.
Page 3
II-4
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
Administrative expenses increased by S$1.4 million from S$9.7 million in 2Q10 to S$11.1 million in 2Q11 mainly due to higher write-back of provision for doubtful debts last year. Sales and marketing expenses decreased by S$2.1 million from S$5.0 million in 2Q10 to S$2.9 million in 2Q11 and other operating expenses decreased by S$1.5 million from S$14.1 million in 2Q10 to S$12.6 million in 2Q11. This was mainly due to cessation of Dusit and LBR hotel operations following their sale.
4.
Profit before interest, taxes, depreciation and amortisation (“EBITDA”) EBITDA increased by S$1.8 million from S$1.8 million in 2Q10 to S$3.6 million in 2Q11 mainly due to higher other income by S$1.6 million as explained above.
5.
Depreciation Depreciation decreased by S$2.1 million from S$8.7 million in 2Q10 to S$6.6 million in 2Q11 mainly due to disposal of Dusit and LBR in October 2010 and May 2011 respectively.
6.
Finance costs Finance costs increased by S$0.5 million from S$4.7 million in 2Q10 to S$5.2 million in 2Q11, mainly due to higher interest expense incurred on the new S$70 million medium term notes issued in March 2011, partially offset by loan repayments and lower average borrowing rate.
7.
Income tax expenses Income tax expenses increased by S$1.6 million from income tax credit of S$0.4 million in 2Q10 to income tax expense of S$1.2 million in 2Q11, mainly attributable to higher withholding tax on higher dividend received from Laguna Resorts & Hotels Public Company Ltd (“LRH”) in 2Q11.
8.
Loss after taxation (“LAT”) Loss after taxation reduced by S$2.5 million from S$11.4 million in 2Q10 to LAT of S$8.9 million in 2Q11 mainly due to higher EBITDA and lower depreciation partially reduced by higher income tax.
9.
Non-controlling interests Non-controlling interests’ share of loss reduced by S$0.6 million from share of loss of S$2.5 million in 2Q10 to S$1.9 million in 2Q11 mainly due to higher profits in LRH largely due to gain on sale of LBR.
10.
Loss attributable to equity holders of the Company As a result of the foregoing, loss attributable to equity holders of the Company reduced by S$1.9 million from S$8.9 million in 2Q10 to S$7.0 million in 2Q11.
Page 4
II-5
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Group As at 31-Dec-10 1-Jan-10 Restated Restated (S$’000) (S$’000)
30-Jun-11 Notes
Non-current assets Property, plant and equipment Land use rights Investment properties Land awaiting future development Subsidiary companies Associated companies Joint venture companies Prepaid island rental Long-term trade receivables Intangible assets Long-term investments Prepayments Other receivables Deferred tax assets
1 2
Current assets Inventories Trade receivables Prepayments and other nonfinancial assets Other receivables Amounts due from subsidiary companies Amounts due from associated companies Amounts due from related parties Property development costs Cash and cash equivalents Total assets Current liabilities Trade payables Unearned income Other non-financial liabilities Other payables Amounts due to subsidiary companies Amounts due to associated companies Amounts due to related parties Interest-bearing loans and borrowings Notes payable Tax payable Net current assets/(liabilities)
3 4
5 6 7
(S$’000)
700,550 13,729 31,134 20,971 7,324 18,823 23,966 26,903 35,161 3,151 13,852 20,471 916,035
811,066 23,549 33,469 21,820 7,719 19,986 26,993 26,903 36,178 3,610 11,623 21,609 1,044,525
11,752 56,476
2011 vs 2010 Incr/ (Decr) %
(S$’000)
(S$’000)
Incr/ (Decr) %
33,995 23,814 3,422 22,603 29,452 26,903 27,193 2,303 17,408 19,718 1,104,259
-14% -42% -7% -4% -5% -6% -11% 0% -3% -13% 19% -5% -12%
13 372,432 16,346 6,000 777 395,568
15 371,504 17,298 6,000 777 395,594
-13% 0% -6% 0% 0% 0%
12,195 57,041
12,247 50,092
-4% -1%
475
-
NM
16,121 24,763
13,290 21,411
11,733 16,310
21% 16%
72 2,181
44 2,078
64% 5%
-
-
-
-
25,563
7,819
227%
1,316 7,333 112,902 158,784 389,447 1,305,482
611 8,855 117,106 138,989 369,498 1,414,023
1,374 10,079 89,252 76,252 267,339 1,371,598
115% -17% -4% 14% 5% -8%
12 74,583 102,886 498,454
527 13,050 23,518 419,112
NM -100% 472% 337% 19%
13,219 7,452 18,695 37,479
22,228 6,745 27,029 39,845
20,947 4,180 30,836 46,675
-41% 10% -31% -6%
2,077 108 3,844
2,077 735 5,331
0% -85% -28%
-
-
-
-
12,855
19,562
-34%
100 702
302 639
372 813
-67% 10%
1
1
0%
49,548 26,136 9,630 162,961 226,486
51,413 26,746 31,254 206,201 163,297
70,790 50,000 7,095 231,708 35,631
-4% -2% -69% -21% 39%
6,318 26,136 51,339 51,547
6,466 26,746 60,918 (37,400)
-2% -2% -16% NM
Page 5
II-6
876,964 20,484
30-Jun-11
Company As at 31-Dec-10
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
30-Jun-11 Notes
(S$’000)
Group As at 31-Dec-10 Restated (S$’000)
1-Jan-10 Restated (S$’000)
Incr/ (Decr) %
Company As at 31-Dec-10
30-Jun-11 (S$’000)
(S$’000)
Incr/ (Decr) %
Non-current liabilities Interest-bearing loans and borrowings
5
160,500
175,938
184,528
-9%
12,917
14,342
-10%
Deferred income
8
6,880
14,521
15,367
-53%
-
-
-
634
552
552
15%
-
-
-
168,417
99,269
77,250
70%
168,417
99,269
70%
Deposits received Amounts due to joint venture companies
1,336
1,429
1,200
-7%
-
-
-
6,358
6,747
-
-6%
6,358
6,747
-6%
Other non-current liabilities
6,090
5,975
1,504
2%
-
-
-
150,358
171,655
169,344
-12%
-
-
-
500,573
476,086
449,745
5%
187,692
120,358
56%
641,948
731,736
690,145
-12%
259,423
237,836
9%
199,995
199,995
199,995
0%
199,995
199,995
0%
(3,051)
(4,438)
(5,071)
-31%
(3,051)
(4,438)
-31%
288,772
320,405
302,342
-10%
62,479
42,279
48%
485,716
515,962
497,266
-6%
259,423
237,836
9%
Non-controlling interests
156,232
215,774
192,879
-28%
-
-
-
Total equity
641,948
731,736
690,145
-12%
259,423
237,836
9%
Loan stock Notes payable
Deferred tax liabilities
Net assets
6
9
Equity attributable to equity holders of the Company Share capital Treasury shares Reserves
Page 6
II-7
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 Explanatory notes on Balance Sheet Due to the change in the Group’s accounting policy to be in line with the new INT FRS 115 – Agreements for the Construction of Real Estate as disclosed in Note 5 of Page 15, a retrospective application is required under FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors, and hence Balance Sheets as at 31 December 2010 and 1 January 2010 have been restated as if the new accounting policy had always been applied. The variance analysis below is a comparison between the balance sheet as at 30 June 2011 and the restated balance sheet as at 31 December 2010.
1.
Property, plant and equipment Property, plant and equipment decreased by S$110.5 million from S$811.1 million as at 31 December 2010 to S$700.6 million as at 30 June 2011. This was mainly due to the disposal of LBR assets of S$40.6 million, depreciation charge of S$13.5 million during the period and reduction in opening balance of S$60.7 million due to translation adjustment, partially offset by capital expenditure of S$3.2 million expended on on-going purchases of furniture, fittings and equipment by our resorts for their operations.
2.
Land use rights Land use rights decreased by S$9.8 million from S$23.5 million as at 31 December 2010 to S$13.7 million as at 30 June 2011 mainly due to divestment of a development site to China Fund in March 2011.
3.
Trade payables Trade payables decreased by S$9.0 million from S$22.2 million as at 31 December 2010 to S$13.2 million as at 30 June 2011 mainly due to lower cost of operation following the sale of Dusit and LBR in October 2010 and May 2011 respectively and lower construction payables on property sales project in Laguna Phuket.
4.
Other non-financial liabilities Other non-financial liabilities decreased by S$8.3 million from S$27.0 million as at 31 December 2010 to S$18.7 million as at 30 June 2011 mainly due to reversal of advance deposits for property sales segment upon revenue recognition and lower hotel booking deposits.
5.
Current and non-current interest-bearing loans and borrowings Current and non-current interest-bearing loans and borrowings decreased by S$17.4 million from S$227.4 million to S$210.0 million due to scheduled loan repayments offset by draw down of additional loans.
6.
Notes payable (current and non-current) Current and non-current Notes payable increased by S$68.5 million from S$126.0 million as at 31 December 2010 to S$194.5 million as at 30 June 2011, mainly due to proceeds of S$70 million from new notes issuance in March 2011 under the S$400 million Medium Term Notes programme.
7.
Tax payable Tax payable decreased by S$21.7 million from S$31.3 million as at 31 December 2010 to S$9.6 million as at 30 June 2011 due to payment of tax pertaining to sale of Dusit.
Page 7
II-8
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
8.
Deferred income Deferred income decreased by S$7.6 million from S$14.5 million as at 31 December 2010 to S$6.9 million as at 30 June 2011, mainly due to the realization of deferred income upon divestment of a development site in Lijiang to China Fund.
9.
Deferred tax liabilities Deferred tax liabilities decreased by S$21.3 million from S$171.7 million as at 31 December 2010 to S$150.4 million as at 30 June 2011 mainly due to reduction in opening balance arising from translation adjustment and reversal of deferred tax liabilities relating to sale of LBR.
10.
On-going Litigation On 3 July 2008, Avenue Asia Capital Partners, L.P., one of 6 plaintiffs, filed a lawsuit against LRH, a listed subsidiary of the Company, as one of 6 defendants at the Southern Bangkok Civil Court. The plaintiffs claimed that they are the creditors of a shareholder of LRH. The plaintiffs alleged that in arranging the Extraordinary General Meeting No. 1/2007 and approving its proposed capital increase where some shareholders did not subscribe for newly issued shares, LRH acted jointly with certain shareholders to commit a tort against the plaintiffs. Thus, the plaintiffs claimed damages of S$21.6 million (Baht 539,052,407) with interest of 7.5% per annum and the costs of legal proceedings. There is no change to the case and it is currently pending at the Court of First Instance. LRH maintains that it did not commit a tort against the plaintiffs and has not made a provision in its accounts. LRH is vigorously defending this lawsuit.
Page 8
II-9
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 1(b)(ii)
Aggregate amount of the group’s borrowings and debts securities Group As at 30-Jun-11
31-Dec-10
(S$’000)
(S$’000)
Amount repayable in one year or less, or on demand:Secured
24,380
45,297
Unsecured
51,304
32,862
Sub-Total 1
75,684
78,159
Amount repayable after one year:Secured
157,167
171,355
Unsecured
171,750
103,852
Sub-Total 2
328,917
275,207
Total Debt
404,601
353,366
Details of any collateral The secured bank loans are secured by assets with the following net book values:
Group As at
Freehold land and buildings
30-Jun-11
31-Dec-10
(S$’000)
(S$’000)
358,923
379,451
Investment properties
21,670
23,222
Quoted shares in a subsidiary company
10,320
11,558
Property development costs
15,658
13,452
Leasehold land and buildings
89,748
94,339
Unquoted shares in subsidiary companies
50,917
50,917
Prepaid island rental
19,138
20,969
Other assets
40,861
40,236
607,235
634,144
Page 9
II-10
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 1(c)
A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Group 6 months ended 30 Jun 2011 2010 Restated (S$'000) (S$'000)
Cash flows from operating activities Profit before taxation Adjustments for: Share of results of associated companies Share of results of joint venture companies Depreciation of property, plant and equipment Allowance for impairment loss on property, plant and equipment, net Loss on disposal of property, plant and equipment Gain on disposal of investment in subsidiaries Finance income Finance costs Amortisation of lease rental and land use rights Write back of doubtful debts - trade, net Allowance for/(write back of) inventory obsolescence Gain on disposal of other investment Share-based payment expenses Currency realignment
13,641
7,559
(435) 3 13,526 183 8 (1,809) (1,703) 9,467 1,600 (102) 41 611 (15,348)
101 4 17,414 24 (2,154) 9,345 2,136 (344) (40) (1) 150 (1,190)
19,683
33,004
(Increase)/decrease in inventories Increase in trade and other receivables Decrease/(increase) in amounts due from related parties Decrease in trade and other payables
(404) 3,899 1,444 (16,668) (11,729)
327 17,135 (454) (31,438) (14,430)
Cash flows generated from operating activities Interest received Interest paid Tax paid Net cash flows (used in)/generated from operating activities
7,954 1,749 (8,380) (31,910) (30,587)
18,574 2,132 (9,359) (6,130) 5,217
Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Disposal of subsidiary companies, net of cash received Payment of lease rental Increase in long-term investments Net cash flows generated from/(used in) investing activities
(3,171) 813 26,815 (851) (404) 23,202
(8,535) 367 (945) (3,840) (12,953)
30,710 (36,734) 70,000
52,649 (47,554) -
(27,832) (3,798) 32,346
(5,379) (284)
Net increase in cash and cash equivalents Net foreign exchange difference Cash and cash equivalents at beginning of year
24,961 (5,166) 138,989
(8,020) 233 76,252
Cash and cash equivalents at end of the period
158,784
68,465
Operating profit before working capital changes
Cash flows from financing activities Proceeds from bank loans Repayment of bank loans Proceeds from issuance of notes payable Payment of dividends - by subsidiary companies to non-controlling interests - by Company to shareholders Net cash flows generated from/(used in) financing activities
Page 10
II-11
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 Explanatory notes on Consolidated Cash Flow
The Group’s cash and cash equivalents increased by S$90.3 million or 132% from S$68.5 million as at 30 June 2010 to S$158.8 million as at 30 June 2011. The increase in cash flow was largely due to net proceeds received from sale of Dusit and LBR in late 2010 and in May 2011 respectively and new notes issuance in March 2011, partially offset by dividends paid by LRH to minority shareholders. During the 6-month ended 30 June 2011, net cash flow used in operating activities was S$30.6 million, mainly due to profit before tax of S$13.6 million, adjusted for non-cash items of S$6.0 million which comprised mainly the depreciation and amortization of island rental of S$15.1 million and finance expenses of S$9.5 million. This was offset by a net decrease in cash generated from working capital of S$11.7 million, and net interest paid of S$6.6 million and income tax payments of S$31.9 million. The income tax payment relates mainly to sale of Dusit. The net cash flows from investing activities was S$23.2 million, due largely to the proceeds from the sale of LBR, partly offset by on-going purchases of furniture, fittings and equipment by our resorts for their operations. The net cash flows from financing activities amounted to S$32.3 million. This was mainly due to proceeds of S$70.0 million from notes issuance in March 2011 under the S$400 Medium Term Notes programme and loan drawdown of S$30.7 million, partially offset by scheduled bank repayments of S$36.7 million, payment of dividend to its shareholders (S$3.8 million) and payment of dividend by LRH to minority shareholders (S$27.8 million).
Page 11
II-12
II-13
Balance as at 1 January 2010, as previously reported Effect of adopting INT FRS 115 Balance as at 1 January 2010, as restated Profit after taxation Other comprehensive income for the year Total comprehensive income for the year Acquisition of non-controlling interests' shares in a subsidiary company Treasury shares reissued pursuant to Performance Share Plan Issue of Performance Share Grants to employees Dividend paid to non-controlling interests of a subsidiary company Transfer to legal reserve Balance as at 30 June 2010 74 -
(4,997)
-
199,995
-
-
-
(18,038)
(5,071)
(18,038)
-
-
-
(18,038)
(5,071)
(18,038)
-
-
-
(18,038)
(18,038)
Merger deficit (S$'000)
199,995 199,995
(3,051)
-
-
199,995
-
-
1,387
(4,438)
199,995
-
(4,438)
Treasury shares (S$'000)
199,995
Share capital (S$'000)
7,852
-
-
-
7,852
7,852
7,852
-
-
-
7,852
7,852
Capital reserve (S$'000)
142,515
-
172
-
-
-
-
172
172
242
-
-
-
-
242
242
Fair value adjustment reserve (S$'000)
Page 12
(28,602)
-
-
5,149 5,149
-
(33,751)
146 146
(33,751)
(71,704)
-
-
142,369
142,369
131,530
-
(6,074) -
(39,126) (32,578) (32,578)
2,569 2,569
(39,126)
Currency translation reserve (S$'000)
135,035
135,035
Property revaluation reserve (S$'000)
460 7,388
-
-
-
6,928
6,928
6 8,661
-
-
-
8,655
8,655
Legal reserve (S$'000)
(32) 150 9,033
(2,562)
-
8,915
(2,562)
-
-
8,915
8,480
(2,562)
-
(747)
611
-
8,616
8,616
Share based payment reserve (S$'000)
-
-
-
(2,562)
(2,562)
Premium paid on acquisition of noncontrolling interests (S$'000)
(127)
(42) -
-
-
(85)
(85)
(1,079)
(640)
-
-
(439)
(439)
Loss on reissuance of treasury shares (S$'000)
(460) 186,067
-
-
(1,453)
198,996 (11,016) 187,980 (1,453)
(6) 225,390
-
(84) 6,074 -
3,034 (3,798)
227,421 (7,251) 220,170 3,034
Accumulated profits (S$'000)
498,696
150
(2,562)
508,282 (11,016) 497,266 (1,453) 5,295 3,842
485,716
-
(84) 611
523,213 (7,251) 515,962 3,034 (30,009) (26,975) (3,798)
Total attributable to equity holders of the Company (S$'000)
(5,379) 197,843
-
2,562
198,313 (5,434) 192,879 3,129 4,652 7,781
(27,832) 156,232
-
(21,830) -
219,247 (3,473) 215,774 3,247 (13,127) (9,880)
Noncontrolling interests (S$'000)
1(d)(i) A statement (for the issuer and the group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.
Balance as at 1 January 2011, as previously reported Effect of adopting INT FRS 115 Balance as at 1 January 2011, as restated Profit after taxation Other comprehensive income for the year Total comprehensive income for the year Dividend paid Dividend paid to loan stockholders of a subsidiary company Disposal of subsidiary company Issue of Performance Share Grants to employees Treasury shares reissued pursuant to Performance Share Plan Dividend paid to non-controlling shareholders of a subsidiary company Transfer to legal reserve Balance as at 30 June 2011
GROUP
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
(5,379) 696,539
150
-
706,595 (16,450) 690,145 1,676 9,947 11,623
(27,832) 641,948
-
(84) (21,830) 611
742,460 (10,724) 731,736 6,281 (43,136) (36,855) (3,798)
Total equity (S$'000)
II-14
1,387 (3,051)
199,995 199,995 199,995
Balance as at 1 January 2010 Total comprehensive income for the period Issue of Performance Share Grants to employees Treasury shares reissued pursuant to Performance Share Plan Balance as at 30 June 2010
Page 13
(5,071) 74 (4,997)
(4,438) -
Treasury shares (S$'000)
199,995 -
Share capital (S$'000)
Balance as at 1 January 2011 Total comprehensive income for the year Dividend paid Issue of Performance Share Grants to employees Treasury shares reissued pursuant to Performance Share Plan Balance as at 30 June 2011
COMPANY
7,852 7,852
7,852
7,852 -
Capital reserve (S$'000)
8,343 722 (32) 9,033
611 (747) 8,480
8,616 -
Share based payment reserve (S$'000)
(85) (42) (127)
(640) (1,079)
(439) -
Loss on reissuance of treasury shares (S$'000)
27,974 5,243 33,217
26,250 24,774 (3,798) 47,226
Accumulated profits (S$'000)
239,008 5,243 722 244,973
237,836 24,774 (3,798) 611 259,423
Total equity (S$'000)
1(d)(i) A statement (for the issuer and the 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.
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 1(d)(ii)
Details of any changes in the company's share capital arising from rights issue, bonus issue, share buybacks, 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 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. Share Grants Vested (Ex-gratia Award) On 7 April 2011, the company released 801,300 share awards (2010: 366,000) vested under the Performance Share Plan and Restricted Share Plan pursuant to the Banyan Tree Performance Share Plan for FY2007 to FY2010. As such, 801,300 shares (2010: 366,000) were issued from the treasury shares to the employees, resulting in an increase in the number of issued shares excluding treasury shares from 758,837,980 as at 31 December 2010 to 759,639,280 shares as at 30 June 2011. See 1(d)(iii) and 1(d)(iv) for movement of the issued shares excluding treasury shares, and movement of treasury shares respectively. Performance Shares During the quarter, 1,672,000 (2Q10: 1,983,000) performance-based shares were issued and 1,313,050 (2Q10: 86,050) performance-based shares were cancelled/vested under the Banyan Tree Performance Share Plan. As at 30 June 2011, 2,678,800 (30 June 2010: 4,503,750) performance-based shares are outstanding.
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. 30-Jun-11 No. of shares
Number of issued shares excluding Treasury shares
1(d)(iv)
759,639,280
758,837,980
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. 30-Jun-11 No. of shares
At 1 January Reissued pursuant to performance share option plans
2
31-Dec-10 No. of shares
31-Dec-10 No. of shares
2,564,300 (801,300)
2,930,300 (366,000)
1,763,000
2,564,300
Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the group auditors.
3
Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of a 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. Except as disclosed in Note 5 below, the Group has applied the same accounting policies and method of computation in the financial statements for the current financial period compared with those of the audited financial statements as at 31 December 2010.
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 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, the effect of, the change. The Group has applied the same accounting policies and methods of computation in the financial statements for the current reporting period compared with those of the audited financial statements for the year ended 31 December 2010, except for the adoption of accounting standards (including its consequential amendments) and interpretations applicable for the financial period beginning 1 January 2011. The adoption of the standards and interpretations does not have material impact to the financial statements in the period of initial application except for the following adoption which is relevant to the Group: INT FRS 115 Agreements for the Construction of Real Estate On 26 August 2010, the Accounting Standards Council issued INT FRS 115 with an accompanying note that clarifies when revenue and related expenses from sale of real estate should be recognized if an agreement between a development and buyer is reached before the real estate is completed. INT FRS 115 determines that contracts which do not classify as construction contracts in accordance with FRS 11 Construction Contracts can only be accounted for using the percentage of completion method if the entity continuously transfers to the buyer control and the significant risks and rewards of ownership of work in progress in its current state as construction progresses. The Group has considered the application of INT FRS 115 and concluded that certain 'pre-completion' sale contracts were not, in substance, construction contracts, and the legal terms are such that the construction does not represent the continuous transfer of work in progress to the purchaser. As such, the Group changed its revenue recognition method from "percentage of completion" method as construction progresses to "completion" method whereby revenue is to be recognised when significant risk and rewards are transferred to the buyer, with effect from FY2011. The effect of the adoption of completion method under INT FRS 115 Agreements for the Construction of Real Estate has been retrospectively applied to the financial statements. Accordingly, the comparatives have been restated. Impact on the financial statements arising from the adoption of INT FRS 115, subject to year-end audit, is detailed as follows: GROUP Increase/(decrease) 2010 2009 S$'000 S$'000 Balance Sheet: Long-term trade receivables Deferred tax assets Trade receivables Property development costs Other non-financial liabilities Other payables Tax payable Retained earnings Non-controlling interests
(13,806) 3,452 (5,270) 12,040 7,502 (162) (200) (7,251) (3,473)
GROUP Increase/ (decrease) 2010 S$'000 Income Statement for the period ending 30 June: Revenue Cost of properties sold Administrative expenses Income tax expenses Profit attributable to: - Equity holders of the Company - Non-controlling interests Increase in basic earnings per share (cents) Increase in diluted earnings per share (cents)
11,194 5,320 (83) 1,938 2,423 1,596 0.32 0.32
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(19,840) 5,908 (6,826) 19,487 15,541 (162) (200) (11,016) (5,434)
BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 6
Earnings per ordinary share of the group for the current financial period reported and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends: (a)
Based on the weighted average number of ordinary shares on issue; and
(b)
On a fully diluted basis (detailing any adjustments made to the earnings). 3 months ended 30 Jun 2011 2010 Restated
6 months ended 30 Jun 2011 2010 Restated
a)
Based on the weighted average number of ordinary shares on issue (cents)
(0.92)
(1.17)
0.40
(0.19)
b)
On fully diluted basis (cents)
(0.92)
(1.16)
0.40
(0.19)
(a)
The basic earnings per ordinary share for the 3 months period and the same period last year have been calculated based on the weighted average number of 759,586,447 and 758,515,280 ordinary shares respectively. The basic earnings per ordinary share for the 6 months period and the same period last year have been calculated based on the weighted average number of 759,214,281 and 758,493,750 ordinary shares respectively.
(b)
The diluted earnings per ordinary share for the 3 months period and the same period last year have been calculated based on the weighted average number of 762,259,954 and 761,415,382 ordinary shares respectively. The diluted earnings per ordinary share for the 6 months period and the same period last year have been calculated based on the weighted average number of 761,813,733 and 761,248,011 ordinary shares respectively.
7
Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the:(a)
current financial period reported on; and
(b) immediately preceding financial year.
Group
Company
As at
As at
30-Jun-11
31-Dec-10
30-Jun-11
31-Dec-10
0.34
0.31
Restated Net asset value per ordinary share based on issued share capital* at the end of the period (S$)
0.64
0.68
* 759,639,280 and 758,837,980 ordinary shares in issue as at 30 June 2011 and 31 December 2010.
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 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)
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. A)
REVENUE
Group 3 months ended 30 Jun 2011 2010 Restated SGD'000 SGD'000 Hotel Investments
Actual vs 2010 Incr/(Decr) SGD'000
%
32,866
34,107
(1,241)
-4%
6,603 (28) 3,697 2,934
8,054 4,168 3,886 -
(1,451) (4,196) (189) 2,934
-18% NM -5% NM
Fee-based Segment - Hotel/Fund/Club Management - Spa/Gallery Operations - Design and Others
24,095 7,608 9,771 6,716
19,720 5,176 8,308 6,236
4,375 2,432 1,463 480
22% 47% 18% 8%
Revenue
63,564
61,881
1,683
3%
Property Sales - Hotel Residences - Laguna Property Sales - Development Project/Site Sales
Group 6 months ended 30 Jun 2011 2010 Restated SGD'000 SGD'000
Actual vs 2010 Incr/(Decr) SGD'000
%
Hotel Investments
92,686
103,487
(10,801)
-10%
Property Sales - Hotel Residences - Laguna Property Sales - Development Project/Site Sales
37,859 2,771 7,381 27,707
25,365 13,550 11,815 -
12,494 (10,779) (4,434) 27,707
49% -80% -38% NM
Fee-based Segment - Hotel/Fund/Club Management - Spa/Gallery Operations - Design and Others
47,324 14,378 19,976 12,970
39,320 9,771 17,045 12,504
8,004 4,607 2,931 466
20% 47% 17% 4%
177,869
168,172
9,697
6%
Revenue
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 B) PROFITABILITY
Group 3 months ended 30 Jun 2011 2010 Restated SGD'000 SGD'000
Actual vs 2010 Incr/(Decr) SGD'000
%
Hotel Investments
(1,433)
(2,248)
815
36%
Property Sales - Hotel Residences - Laguna Property Sales - Development Project/Site Sales
(1,103) (900) (223) 20
2,331 1,991 340 -
(3,434) (2,891) (563) 20
NM NM NM NM
6,712 3,873 1,073 1,766
3,493 816 1,015 1,662
3,219 3,057 58 104
92% 375% 6% 6%
(3,087)
(2,700)
(387)
14%
Other income (net)
2,494
877
1,617
184%
Operating Profit (EBITDA)
3,583
1,753
1,830
104%
(7,010)
(8,860)
1,850
21%
Fee-based Segment - Hotel/Fund/Club Management - Spa/Gallery Operations - Design and Others Head Office Expenses
Net Loss for the period (LATMI)
Group 6 months ended 30 Jun 2011 2010 Restated SGD'000 SGD'000
Actual vs 2010 Incr/(Decr) SGD'000
%
Hotel Investments
19,569
23,422
(3,853)
-16%
Property Sales - Hotel Residences - Laguna Property Sales - Development Project/Site Sales
14,172 90 (14) 14,096
9,031 7,321 1,710 -
5,141 (7,231) (1,724) 14,096
57% -99% NM NM
8,992 4,645 2,949 1,398
5,703 745 2,518 2,440
3,289 3,900 431 (1,042)
58% NM 17% -43%
(9,519)
(8,070)
(1,449)
18%
2,885
4,319
(1,434)
-33%
36,099
34,405
1,694
5%
3,034
(1,453)
4,487
NM
Fee-based Segment - Hotel/Fund/Club Management - Spa/Gallery Operations - Design and Others Head Office Expenses Other income (net) Operating Profit (EBITDA) Net Profit/(Loss) for the period PATMI/(LATMI)
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 C)
BUSINESS SEGMENTS REVIEW i)
Hotel Investments segment
Hotel Investments segment achieved revenue of S$32.9 million in 2Q11, a decrease of 4% or S$1.2 million compared to S$34.1 million in 2Q10. Lower revenue was mainly from Thailand (S$2.3 million) but partially offset by Maldives (S$1.2 million). Revenue in Thailand was lower as performance in Laguna Phuket such as Banyan Tree Phuket was affected by the run up to the Thai General Elections held on 3rd July 2011. In addition, revenue from Dusit and LBR also ceased following their sale in October 2010 and May 2011 respectively. This was partially cushioned by Banyan Tree Bangkok which posted higher revenue as the property was impacted by the political riots which took place in Bangkok in April and May last year. Although performance of Banyan Tree Bangkok improved, occupancy at 56% was still below the pre-political crisis level and ARR at S$146 was 13% lower than last year. Overall occupancy in Thailand improved by 14% points to 56%, but was offset by lower ARR by 18% to S$177. Our resorts in Maldives also recorded higher revenue in 2Q11 as their performances last year were affected by Icelandic ash cloud situation which affected air travel. Overall occupancy improved by 19% points to 67% but ARR decreased by 14% to US$318 in 2Q11. For 1H11, Hotel Investments segment revenue decreased by S$10.8 million from S$103.5 million in 1H10 to S$92.7 million in 1H11. The decrease was mainly from Thailand as mentioned above but partially offset by better performance in Maldives largely contributed by 2Q11. Notwithstanding a lower revenue, 2Q11 recorded a lower loss from S$2.2 million in 2Q10 to S$1.4 million in 2Q11. This was mainly due to lower operating costs at Sheraton Grande Laguna Phuket as certain positions remained unfilled, and lower spending on repair and maintenance in view of the planned termination of hotel management agreement with Starwood Hotels & Resorts. Against 1H10, EBITDA decreased from S$23.4 million in 1H10 to S$19.6 million in line with lower revenue. ii)
Property Sales segment
Property Sales segment revenue decreased by S$1.5 million or 18% from S$8.1 million in 2Q10 to S$6.6 million in 2Q11 as there was only revenue recognition for 2 units of Laguna Village townhomes. However, revenue for 2Q10 comprised 2 units of Laguna Village townhomes and 3 units of Banyan Tree Bangkok suites. The sentiments towards Thailand remain cautious and continue to affect the secondary home sales market. The shortfall was however partially offset by revenue from divestment of a development site in Yangshuo to China Fund. There were 4 new units sold with deposits received in 2Q11 compared to deposit for 1 unit in 2Q10, an increase of 300% and 354% in units and value terms respectively. For 1H11, Property Sales segment revenue increased by S$12.5 million from S$25.4 million to S$37.9 million, largely due to divestment of development sites in Lijiang and Yangshuo to China Fund. This was however partially offset by revenue recognition for only 1 unit each of Laguna Village bungalow and Banyan Tree Phuket Double Pool villa and 2 units of Laguna Village townhomes in 1H11, as opposed to 13 units of Laguna Village townhomes/bungalow, Banyan Tree Phuket 2 bed Pool villa and Banyan Tree Bangkok suites recognized in total in 1H10. There were 5 new units sold with deposits received in 1H11 compared to deposits for 7 units in 1H10, a decrease of 29% and 46% in units and value terms respectively. EBITDA decreased by S$3.4 million from S$2.3 million in 2Q10 to a loss of S$1.1 million in 2Q11 mainly due to lower revenue. Against 1H10, EBITDA increased by S$5.2 million from S$9.0 million to S$14.2 million mainly due to profit from the sale of a development site in Lijiang in 1Q11.
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
iii)
Fee- based segment
Fee-based segment revenue increased by S$4.4 million or 22% from S$19.7 million in 2Q10 to S$24.1 million in 2Q11 largely due to higher hotel management fees, higher fund management fees and higher revenue from spa/gallery operations. Higher hotel management fees were mainly attributable to contributions from new resorts in Banyan Tree Samui (opened in July 2010), Angsana Fuxian Lake (opened in October 2010) and Banyan Tree Macau (opened in May 2011). Higher fund management fees were mainly due to the final close of China Fund in January 2011 with a total fund size of S$210 million. Revenue from Gallery operation was also higher due to sales to the new outlet at Banyan Tree Spa Marina Bay Sands and upcoming outlet at Angsana Balaclava. In 1H11, Fee-based segment revenue increased by S$8.0 million from S$39.3 million to S$47.3 million. Apart from the reasons mentioned above, there were also contributions from other new resorts such as Banyan Tree Cabo Marques (opened in April 2010) and Banyan Tree Club and Spa Seoul (opened in June 2010). EBITDA increased by S$3.2 million from S$3.5 million in 2Q10 to S$6.7 million in 2Q11 and increased by S$3.3 million from S$5.7 million in 1H10 to S$9.0 million in 1H11 mainly due to higher revenue. If management fees of those resorts which the Group has a majority interest but were not eliminated on consolidation, a sum of S$2.3 million, S$2.3 million, S$7.1 million, S$6.6 million in 2Q10, 2Q11, 1H10 and 1H11 would be added to EBITDA respectively. EBITDA would have been S$9.0 million in 2Q11 as compared to S$5.8 million in 2Q10, and S$15.6 million in 1H11 as compared to S$12.8 million in 1H10. iv)
Head Office
Head office expenses increased by S$0.4 million or 14% from S$2.7 million in 2Q10 to S$3.1 million in 2Q11. Against 1H10, head office expenses increased by S$1.4 million from S$8.1 million to S$9.5 million. This was mainly due to higher staff and related cost.
9
Where a forecast, or prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results Not applicable.
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
10
A commentary at the date of 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. Sheraton Grande Laguna Phuket is currently closed for extensive renovation and refurbishment works and shall be opened by 1 December 2011 as the Angsana Phuket. This closure will affect 3rd quarter results. The forward bookings for 3Q11 for owned hotels in Thailand are currently 57% higher than last year and overall the Group is ahead by 18%. We continue to monitor political events in Thailand which are currently stable. For our property sales in Thailand, sales of secondary holiday homes are expected to remain slow due to the current negative sentiments towards the country. Given the above developments coupled with the looming global uncertainties surrounding Europe’s sovereign debt crisis and still tepid economic recovery in the USA, 3rd quarter will remain challenging and possibly unprofitable considering that this will be a low season. However, we are hopeful of a better 4th quarter, it being the high season of the year. The Group is currently rebalancing its asset portfolio and raising cash for strategic investments in new areas. Current available cash is approximately S$150 million. The 2 private equity funds raised approximately S$560 million. Over the next few years, we shall deploy capital for investment in branded property developments in China and Vietnam. These developments shall include 5 projects in China and an integrated resort in Vietnam. We believe this strategic repositioning will yield results within the next few years.
New Openings and New Management Contracts We expect to open the following 3 new resorts in the next 12 months: i. ii. iii.
Banyan Tree Riverside, Shanghai, China Angsana Hangzhou, China Angsana Balaclava, Mauritius
Also in the next 12 months, we expect to launch an estimated 11 spas under management. We have also signed the following new hotel management contracts in the recent months: i.
Banyan Tree Goa, India, is located within the Sindhudurg District and is surrounded by the Arabian Sea.
ii.
Banyan Tree Signatures Pavilion, Kuala Lumpur, Malaysia is within close proximity to famed landmark building, Petronas Twin Towers.
iii.
Angsana Acapulco, Mexico is situated within a condominium development in Punta Diamante. The area of Acapulco is laced with beaches.
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011
11
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 disclosure date Not applicable. 12
If no dividend has been declared / recommended, a statement to that effect. No dividend has been declared in respect of the current financial period.
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 13
Interested Persons Transactions for the 3 months ended 30 June 2011 Aggregate value of all interested person transactions during the financial quarter under review (excluding transactions less than S$100,000 and transactions conducted under Shareholders' Mandate)
Aggregate value of all interested person transactions conducted under Shareholders' Mandate (excluding transactions less than S$100,000)
Q2 2011 in S$'000
Q2 2011 in S$'000
Interested Person Transaction
A
Transactions with the Tropical Resorts Limited Group ('TR')
a
Provision of Resort Management and Related Services to TR
b
c
Provision of Spa Management and Other Related Services to TR
364
Returns from TR in respect of units in Banyan Tree Bintan and Angsana Bintan
B
Transactions with the Laguna Resorts & Hotels Public Company Limited Group ('LRH')
a
Provision of Resort Management and Related Services to LRH
b
1,346
353
Reimbursement of expenses - from LRH
1,055
- to LRH d
507
Provision of Rent and Services - from LRH
c
850
524
Supply of Goods and Vouchers - from LRH
385
Total
5,384
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BANYAN TREE HOLDINGS LIMITED Unaudited results for the Second Quarter ended 30 June 2011 CONFIRMATION BY THE BOARD We, Ho KwonPing and Ariel Vera, being Directors of Banyan Tree Holdings Limited (the “Company”), do hereby confirm on behalf of the Board of Directors that taking into account the matters announced and publicly disclosed by the Company prior to the date of this confirmation and the prevailing accounting policies adopted by the Company in accordance with the Singapore Financial Reporting Standards, to the best of the knowledge of the Board of Directors of the Company, nothing has come to the attention of the Board of Directors of the Company which may render the second quarter financial results false or misleading in any material respect.
On behalf of the Board,
BY ORDER OF THE BOARD Jane Teah & Paul Chong Joint Company Secretaries 12 August 2011
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APPENDIX III
AUDITED ACCOUNTS OF BANYAN TREE HOLDINGS LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 The information in this Appendix III has been reproduced from the annual report of Banyan Tree Holdings Limited and its subsidiaries for the financial year ended 31 December 2010 and has not been specifically prepared for inclusion in this Information Memorandum. References to the page numbers herein are those as reproduced from the annual report of Banyan Tree Holdings Limited and its subsidiaries for the financial year ended 31 December 2010.
Company Registration No. 2000 03108 H
Annual Financial Statements
BANYAN TREE HOLDINGS LIMITED AND ITS SUBSIDIARY COMPANIES 31 December 2010
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APPENDIX IV
AUDITED ACCOUNTS OF BANYAN TREE HOLDINGS LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009 The information in this Appendix IV has been reproduced from the annual report of Banyan Tree Holdings Limited and its subsidiaries for the financial year ended 31 December 2009 and has not been specifically prepared for inclusion in this Information Memorandum. References to the page numbers herein are those as reproduced from the annual report of Banyan Tree Holdings Limited and its subsidiaries for the financial year ended 31 December 2009.
Company Registration No. 2000 03108 H
Audited Financial Statements
BANYAN TREE HOLDINGS LIMITED AND ITS SUBSIDIARY COMPANIES 31 December 2009
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