Guoco Group Limited — Interim / Quarterly Report 2009

Dec 29, 2008

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2008 Interim Report

CONTENTS

	Page
Corporate Information	2
Managing Director and Chief Executive’s Statement	3-4
Other Information	5-9
Condensed Consolidated Income Statement	10
Condensed Consolidated Balance Sheet	11-12
Condensed Consolidated Statement of Changes in Equity	13
Condensed Consolidated Cash Flow Statement	14
Notes to the Condensed Consolidated Financial Statements	15-24

1

Interim Report 2008

CORPORATE INFORMATION

Place of Incorporation

Hong Kong

Board of Directors

Executive Directors Deacon Te Ken Chiu, J.P. (Chairman) Derek Chiu, B.A. (Managing Director and Chief Executive) Desmond Chiu, B.A. (Deputy Managing Director) Margaret Chiu, LL.B.

Audit Committee

Ip Shing Hing, J.P. Duncan Chiu, B.SC. Ng Wing Hang Patrick Choy Wai Shek Raymond, MH, J.P.

Remuneration Committee

Derek Chiu, B.A. Ng Wing Hang Patrick Choy Wai Shek Raymond, MH, J.P.

Principal Bankers

Non-executive Directors

Chiu Ju Ching Lan, J.P. Dick Tat Sang Chiu, M.A. Tan Sri Dato’ David Chiu, B.SC. Dennis Chiu, B.A. Duncan Chiu, B.SC.

Independent Non-executive Directors Ip Shing Hing, J.P. Ng Wing Hang Patrick Choy Wai Shek Raymond, MH, J.P.

Alternate Directors

Chan Chi Hing (Alternate Director to Deacon Te Ken Chiu) Tang Sung Ki, CPA, FCCA (Alternate Director to Desmond Chiu)

Company Secretary

Tang Sung Ki, CPA, FCCA

Qualifi ed Accountant

Tang Sung Ki, CPA, FCCA

Allied Banking Corporation (Hong Kong) Limited Bank of China (Hong Kong) Limited Hang Seng Bank Limited Public Bank (Hong Kong) Limited The Bank of East Asia, Limited The Hongkong and Shanghai Banking Corporation Limited

Registered & Principal Offi ce

Suite 2308, 23rd Floor, Offi ce Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong

Share Registrars

Tricor Standard Limited 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong

Stock Exchange

The Shares of the Company are listed on The Stock Exchange of Hong Kong Limited

Solicitors

Woo Kwan Lee & Lo

Stock Code 0037

Auditors

Deloitte Touche Tohmatsu Certifi ed Public Accountants Hong Kong

Website

www.tricor.com.hk/webservice/00037

2

Far East Hotels & Entertainment Limited

MANAGING DIRECTOR AND CHIEF EXECUTIVE’S STATEMENT

Overall Results

For the six months ended 30 September 2008, Far East Hotels And Entertainment Limited (the “Company”) and its subsidiaries (the “Group”) recorded an unaudited consolidated net loss attributable to shareholders of HK$25,978,394 (30/09/2007: net profi t of HK$12,718,989).

Interim Dividend

The Board has resolved not to declare any interim dividend in respect of the six months ended 30 September 2008 (2007: Nil).

Review of Operations and Prospects

The overall turnover of Cheung Chau Warwick Hotel has increased by 6% compared with last corresponding period. This increment is due to the various promotions from both rooms division and food & beverage division. In view of the current worldwide economic crisis, Cheung Chau Warwick Hotel will launch different special promotions from time to time to attract more business from local and overseas markets, including mainland China and Macau. The food & beverage division will offer more attractive menu in order to keep our customers and further enhance the market share.

The turnover of Beijing Warwick Suite Hotel has increased by 52% compared with last corresponding period. During the period, the renovation work of all the rooms on Level 1, Level 2 and the external wall of the main building (East Building) of Beijing Warwick Suite Hotel has been completed. New facilities such as conference service are available. The restaurant has been moved from the basement to Level 1, thus making the environment greatly improved. For the aspect of sales, more emphasis will be placed on both local and overseas short term business clients and overseas tours.

In securities investment and trading, the Group has recorded a loss of approximately HK$19.34 million.

3

Interim Report 2008

On 29 May 2008, the Group has acquired two pre-sale units in phase 1 of the property development “Celestial Heights” at 80 Sheung Shing Street, Homantin, Kowloon at a total consideration of HK$32,229,000. According to the pre-sale brochure, the anticipated completion date of the construction of the building in this development is 31 July 2009. The Directors believe that the acquisitions will improve the Group’s operating performance and widen its asset base.

In the long run, the Company will seek more business opportunities to maximize its return.

Employees

The Group has approximately 100 employees. Employees are remunerated in accordance with nature of the job and market conditions. Staff incentive bonus would be granted to reward and motivate those well-performed employees.

Finance Activities

At 30/09/2008, the Group had bank credit facilities amounting to approximately HK89,698,000 (31/03/2008: HK$92,172,000), of which approximately HK$85,698,000 (31/03/2008: HK$83,172,000) were utilised. These facilities, other than HK$5,000,000 which was unsecured, were secured by legal mortgages over the Group’s properties and deposits.

At 30/09/2008, the Group had no material exposure under foreign exchange contracts, interest or currency swaps or other fi nancial derivatives.

Shareholders’ funds at 30/09/2008 amounted to approximately HK$359 million (31/03/2008: approximately HK$386 million). Accordingly, the Group’s gearing ratio (total bank credit facilities utilized to shareholders’ funds) at 30/09/2008 is 24% (31/03/2008: 22%).

4

Far East Hotels & Entertainment Limited

OTHER INFORMATION

Directors’ Interests in Shares and Underlying Shares

At 30 September 2008, the interests and short positions of the directors and the Company’s chief executives in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)) which were required (a) to be notifi ed to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, were as follows:

(a) Ordinary shares of HK$0.10 each of the Company

					Approximate
					percentage
					of issued
					share capital
	Personal	Family	Corporate		of the
Name of Director	interests	interests	interests	Total	Company
Mr. Deacon Te Ken Chiu	12,491,424	–	108,901,052	121,392,476	24.83%
			(Note 1)
Mr. Derek Chiu	12,394,000	–	78,430,299	90,824,299	18.58%
			(Note 2)
Madam Chiu Ju Ching Lan	188,000	–	–	188,000	0.04%
Mr. Dick Tat Sang Chiu	12,172,800	–	22,277,033	34,449,833	7.05%
			(Note 3)
Mr. David Chiu	3,144,627	–	–	3,144,627	0.64%
Ms. Margaret Chiu	676,240	–	5,000,000	5,676,240	1.16%
			(Note 4)

5

Interim Report 2008

Notes:

• (1) Of the 108,901,052 shares, (i) 100,939,842 shares were held by various private companies controlled by Mr. Deacon Te Ken Chiu of which 72,182,400 shares were held by Achiemax Limited; (ii) 295,210 shares were held by Far East Consortium Limited, a wholly-owned subsidiary of Far East Consortium International Limited; and (iii) 7,666,000 shares were held by Brentford Investments Inc., a wholly-owned subsidiary of Far East Holdings International Limited. Mr. Deacon Te Ken Chiu is a controlling shareholder of these companies.

• (2) The 78,430,299 shares were held by Energy Overseas Ltd., a company controlled by Mr. Derek Chiu.

• (3) The 22,277,033 shares were held by various private companies controlled by Mr. Dick Tat Sang Chiu.

• (4) The 5,000,000 shares were held by a private company controlled by Ms. Margaret Chiu.

(b) Share options of the Company

At an extraordinary general meeting of the Company held on 1 June 2007, an ordinary resolution to approve the adoption of a new share option scheme that complies with the Listing Rules was duly passed by the shareholders. No share options were granted under this new share option scheme during the period and as at 30 September 2008.

Save as disclosed above, as at 30 September 2008, none of the directors nor the Company’s chief executives nor their respective associates, had interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notifi ed to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

6

Far East Hotels & Entertainment Limited

Substantial Shareholders

Save as the interests of certain directors disclosed under the section headed “DIRECTORS’ INTERESTS IN SHARES AND UNDERLYING SHARES”, according to the register of interests maintained by the Company pursuant to Section 336 of the SFO and so far as was known to the directors or chief executive of the Company, as at 30 September 2008, the following persons or corporations (other than a director or chief executive of the Company) had an interest or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO or was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any member of the Group or in any options in respect of such capital:

capital:
			Approximate
			percentage
			of issued
		Number of	share capital
		ordinary shares	of the
Name of Shareholder	Capacity	held	Company
Achiemax Limited	Benef cial owner	72,182,400	14.77%
(Note 1)
Energy Overseas Ltd.	Benef cial owner	78,430,299	16.04%
(Note 2)

Notes:

• (1) Mr. Deacon Te Ken Chiu and Mr. Dennis Chiu are directors of Achiemax Limited.

• (2) Energy Overseas Ltd. is a company controlled by Mr. Derek Chiu who is also its director.

7

Interim Report 2008

Save as disclosed above, as at 30 September 2008 and so far as is known to the directors or chief executive of the Company, there was no other person (other than a director or chief executive of the Company) who had an interest or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO or who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any member of the Group or in any options in respect of such capital.

Purchase, Sale or Redemption of the Company’s Listed Securities

During the period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

Corporate Governance

The Company has complied with Code of Corporate Governance Practices (the “Code”) as set out in Appendix 14 of the Listing Rules throughout the six months ended 30 September 2008.

None of the existing Non-executive Directors of the Company is appointed for a specifi c term. This constitutes a deviation from code provision A.4.1 and A.4.2 of the Code. However, all Directors of the Company are subject to the retirement by rotation at each annual general meeting under Articles 78 and 79 of the Company. As such, the Company considers that suffi cient measures have been taken to ensure that the Company’s Corporate Governance Practices are no less exacting than those in the Code.

8

Far East Hotels & Entertainment Limited

Audit Committee

The Audit Committee of the Company comprises three independent non-executive directors, namely, Mr. Ip Shing Hing, Mr. Ng Wing Hang Patrick, Mr. Choy Wai Shek Raymond and one non-executive director, Mr. Duncan Chiu.

The audit committee has reviewed with management the accounting principles and practices adopted by the Group, and discussed fi nancial reporting matters, including a review of the unaudited interim fi nancial statements for the six months ended 30 September 2008.

Remuneration Committee

The Company has established a Remuneration Committee with written terms of reference pursuant to the provisions set out in the Code. The committee comprises two independent non-executive directors, namely Mr. Ng Wing Hang Patrick, Mr. Choy Wai Shek Raymond and the Managing Director of the Company, Mr. Derek Chiu. The Remuneration Committee is principally responsible for formulation and making recommendation to the Board on the Group’s policy and structure for all remuneration of directors and senior management.

Model Code for Securities Transactions By Directors

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) set out in Appendix 10 of the Listing Rules.

Upon enquiry by the Company, all directors of the Company have confi rmed that they have complied with the required standard set out in the Model Code throughout the six months ended 30 September 2008.

Derek Chiu

Managing Director & Chief Executive

Hong Kong, 12 December 2008

9

Interim Report 2008

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

Notes Revenue from hotel operation Property rental income Cost of sales Dividend income from listed securities (Decrease) Increase in fair value of held-for-trading investments Other income Gain on disposal of investment properties Increase in fair value of f nancial liabilities at fair value through prof t and loss Administrative expenses Finance costs 5 Share of results of associates (Loss) Prof t before taxation Taxation 6 (Loss) Prof t for the period (Loss) Earnings per share – Basic 7	Six months ended 30 September 2008 2007 (unaudited) (unaudited) HK$ HK$ 8,727,114 8,258,442 6,769,197 3,855,265 (15,131,236) (12,864,973)
	365,075 (751,266) 337,902 33,241 (16,928,258) 22,674,665 66,102 901,224 – 50,010 (2,749,799) – (6,152,661) (8,132,900) (1,127,461) (2,324,783) 210,706 268,798
	(25,978,394) 12,718,989 – –
	(25,978,394) 12,718,989
	Cents Cents (5.31) 2.60

10 Far East Hotels & Entertainment Limited

CONDENSED CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2008

Notes NON-CURRENT ASSETS Property, plant and equipment Investment properties Prepaid lease payments Interests in associates 8 Available-for-sale investments Other non-current assets CURRENT ASSETS Prepaid lease payments Held-for-trading investments Inventories Trade and other receivables 9 Deposits and prepayment Amount due from an associate Amounts due from related companies Pledged bank deposits Bank balances and cash	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 105,767,655 106,371,482 143,014,342 143,014,342 1,015,456 1,029,464 4,709,150 4,535,780 180,411,545 180,411,545 4,982,173 3,373,523
	439,900,321 438,736,136
	28,016 28,016 15,824,305 22,517,895 519,254 437,303 3,588,813 3,468,789 9,899,492 7,214,889 203,562 203,562 472,489 472,489 2,430,133 2,410,948 4,333,088 19,457,028
	37,299,152 56,210,919

11

Interim Report 2008

Notes CURRENT LIABILITIES Trade and other payables 10 Deposits received Amount due to associates Amount due to related companies Amount due to a minority shareholder Secured bank borrowings – due within 1 year Unsecured bank borrowings – due within 1 year Financial liabilities at fair value through prof t and loss NET CURRENT ASSETS CAPITAL AND RESERVES Share capital 11 Reserves NON-CURRENT LIABILITIES Deferred taxation Provision for long service payments Secured bank borrowings – due after 1 year	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 6,923,327 6,310,615 1,457,290 1,499,709 3,280,381 1,697,717 238,011 212,406 3,251,420 1,718,594 5,469,870 5,195,638 5,000,000 – 3,247,434 497,635
	28,867,733 17,132,314
	8,431,419 39,078,605
	448,331,740 477,814,741
	48,884,268 48,884,268 310,422,307 337,157,233
	359,306,575 386,041,501
	11,741,752 11,741,752 2,055,013 2,055,013 75,228,400 77,976,475
	89,025,165 91,773,240
	448,331,740 477,814,741

12

Far East Hotels & Entertainment Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

At 1 April 2008 (Audited) Transfer prior year loss to special reserve Exchange differences arising on translation of foreign operations Loss for the period At 30 September 2008 (Unaudited) At 1 April 2007 (Audited) Capital reduction Transfer prior year loss to special reserve Exchange differences arising on translation of foreign operations Change in fair value of available-for-sale investments Prof t for the period At 30 September 2007 (Unaudited)	Retained Capital Investment Property prof ts Share Share Capital redemption revaluation revaluation Exchange Special (Accumulated capital premium reserve reserve reserve reserve reserve reserve losses) Total HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$
	48,884,268 210,865,965 21,223,231 28,990,000 – 2,938,532 (3,320,491) 89,445,045 (12,985,049) 386,041,501 – – – – – – – (5,958,124) 5,958,124 – – – – – – – (756,532) – – (756,532) – – – – – – – – (25,978,394) (25,978,394)
	48,884,268 210,865,965 21,223,231 28,990,000 – 2,938,532 (4,077,023) 83,486,921 (33,005,319) 359,306,575
	488,842,675 92,805,386 21,223,231 28,990,000 – 2,938,532 (4,239,396) – (246,008,192) 384,552,236 (439,958,407) 118,060,579 – – – – – 100,000,000 221,897,828 – – – – – – – – (10,554,955) 10,554,955 – – – – – – – (956,594) – – (956,594) – – – – 137,130 – – – – 137,130 – – – – – – – – 12,718,989 12,718,989
	48,884,268 210,865,965 21,223,231 28,990,000 137,130 2,938,532 (5,195,990) 89,445,045 (836,420) 396,451,761

13

Interim Report 2008

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

Net cash (used in) from operating activities Net cash (used in) from investing activities Net cash from (used in) f nancing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period	Six months ended 30 September 2008 2007 (unaudited) (unaudited) HK$ HK$ (13,989,288) 2,410,497 (4,066,174) 9,164,282 2,931,522 (410,689)
	(15,123,940) 11,164,090 19,457,028 40,230,730
	4,333,088 51,394,820

14

Far East Hotels & Entertainment Limited

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Preparation

The unaudited condensed consolidated interim fi nancial statements have been prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certifi ed Public Accountants (“HKICPA”) and with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and should be read in conjunction with the 2008 annual fi nancial statements.

2. Application of New and Revised Hong Kong Financial Reporting Standards

The accounting policies used in the unaudited condensed consolidated interim fi nancial statements are consistent with those followed in the preparation of the Group’s annual fi nancial statements for the year ended 31st March 2008 except as described below:

In current period, the Group has applied, for the fi rst time, a number of new standards, amendments and interpretations (“new HKFRSs”), issued by the HKICPA that is effective for accounting periods beginning on or after 1st April, 2008. The adoption of the new HKFRSs has had no material effect on how the results and fi nancial position of the Group for the current and prior accounting periods have been prepared and presented. Accordingly, no prior period adjustment has been required.

The Group has not early applied the following new standards, amendment or interpretations that have been issued but are not yet effective. The directors of the Company anticipate that application of these standards, amendment or interpretations will have no material impact on the results and the fi nancial position of the Group.

HKAS 1 (Revised)	Presentation of Financial Statements1
HKAS 23 (Revised)	Borrowing Costs1
HKAS 27 (Revised)	Consolidated and Separate Financial Statements2
HKAS 32 & 1 (Amendments)	Puttable Financial Instruments and Obligations
	Arising on Liquidation1
HKFRS 2 (Amendment)	Vesting Conditions and Cancellations1
HKFRS 3 (Revised)	Business Combinations2

15

Interim Report 2008

HKFRS 8 Operating Segments[1] HK(IFRIC)-INT 13 Customer Loyalty Programmes[3] HK(IFRIC)-INT 15 Agreements for the Construction of Real Estate[1] HK(IFRIC)-INT 16 Hedges of a Net Investment in a Foreign Operation[4]

• 1 Effective for annual periods beginning on or after 1st January, 2009

• 2 Effective for annual periods beginning on or after 1st July, 2009

• 3 Effective for annual periods beginning on or after 1st July, 2008

• 4 Effective for annual periods beginning on or after 1st October, 2008

Certain comparative fi gures for prior accounting period have been restated to conform with the current period’s presentation.

3. Business and Geographical Segments

Business segments

2008 REVENUE RESULTS Segment prof t (loss) Bank interest income Unallocated corporate expenses Finance costs Share of results of associates Loss before taxation Taxation Loss for the period	Securities Hotel Property investment Investment operation letting and trading holding Consolidated HK$ HK$ HK$ HK$ HK$ Six months ended 30 September (unaudited) 8,727,114 6,769,197 – – 15,496,311	Securities Hotel Property investment Investment operation letting and trading holding Consolidated HK$ HK$ HK$ HK$ HK$ Six months ended 30 September (unaudited) 8,727,114 6,769,197 – – 15,496,311
	914,810 (549,735) (19,340,155) 12,269	(18,962,811) 53,833 (6,152,661) (1,127,461) 210,706
		(25,978,394) –
		(25,978,394)

16

Far East Hotels & Entertainment Limited

2007 REVENUE RESULTS Segment prof t (loss) Bank interest income Gain on disposal of investment property Unallocated corporate expenses Finance costs Share of results of associates Prof t before taxation Taxation Prof t for the period	Securities Hotel Property investment Investment operation letting and trading holding HK$ HK$ HK$ HK$ Six months ended 30 September (unaudited) 8,258,442 3,855,265 – –	Consolidated HK$ 12,113,707
	611,302 (1,362,568) 22,707,906 219,745	22,176,385 681,479 50,010 (8,132,900) (2,324,783) 268,798
		12,718,989 –
		12,718,989

Geographical segments

Hong Kong Other regions in the People’s Republic of China	Sales revenue by geographical market 2008 2007 (unaudited) (unaudited) HK$ HK$ 9,619,633 8,258,442 5,876,678 3,855,265
	15,496,311 12,113,707

17

Interim Report 2008

4. Depreciation and Amortisation

During the period, depreciation of HK$4,268,406 (2007: HK$3,977,655) was charged in respect of the Group’s property, plant and equipment.

During the period, amortisation of HK$14,008 (2007: HK$14,008) was charged in respect of the Group’s prepaid lease payments.

5. Finance Costs

Interest on bank and other borrowings: Wholly repayable within 5 years Not wholly repayable within 5 years Interest on f nance leases	Six months ended 30 September 2008 2007 (unaudited) (unaudited) HK$ HK$ 436,802 4,659 690,659 2,276,650 – 43,474
	1,127,461 2,324,783

6. Taxation

No provision for Hong Kong Profi ts Tax has been made in the fi nancial statements as the Company and its subsidiaries have no assessable profi t in both periods.

7. (LOSS) EARNINGS PER SHARE

(a) Basic (loss) earnings per share

The calculation of basic (loss) earnings per share is based on the loss for the period of HK$25,978,394 (2007: profi t of HK$12,718,989) and 488,842,675 (2007: 488,842,675) ordinary shares in issue during the period.

18

Far East Hotels & Entertainment Limited

(b) Diluted (loss) earnings per share

No diluted loss per share for the six months ended 30 September 2008 is presented as the Company does not have potential dilutive ordinary shares.

No diluted earnings per share for the six months ended 30 September 2007 has been presented because the exercise price of the Company’s option was higher than the average market price per share.

8. Interests in Associates

The summarised fi nancial information in respect of the Group’s associates is set out below:

Results

Revenue Prof t for the period Group's share of results of associates for the period	Six months ended 30 September 2008 2007 (unaudited) (unaudited) HK$ HK$ 1,829,962 2,033,520
	421,412 537,596
	210,706 268,798

Financial position

Total assets Total liabilities Net assets Group's share of net assets of associates	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 11,950,514 11,754,170 (2,532,214) (2,682,611)
	9,418,300 9,071,559
	4,709,150 4,535,780

19

Interim Report 2008

9. Trade and Other Receivables

The Group generally allows an average credit period of not more than 30 days to its customers.

The following is an aged analysis of trade receivables at the reporting date:

0 – 30 days 31 – 60 days Over 60 days Trade and other receivables Less: allowance for doubtful debts	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 3,306,738 3,409,065 7,093 53,974 785,527 516,295
	4,099,358 3,979,334 (510,545) (510,545)
	3,588,813 3,468,789

10. Trade and Other Payables

The following is an aged analysis of trade payables at the reporting date:

0 – 30 days 31 – 60 days Over 60 days Trade payables Other payables	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 469,182 974,698 341,945 125,830 1,915,310 1,596,711
	2,726,437 2,697,239 4,196,890 3,613,376
	6,923,327 6,310,615

20

Far East Hotels & Entertainment Limited

11. Share Capital

Authorised: At 1 April Capital reduction At 30 September Issued and fully paid: At 1 April Capital reduction At 30 September	Number of shares Share capital 2008 2007 2008 2007 HK$ HK$ 750,000,000 750,000,000 75,000,000 750,000,000 – – – (675,000,000)
	750,000,000 750,000,000 75,000,000 75,000,000
	488,842,675 488,842,675 48,884,268 488,842,675 – – – (439,958,407)
	488,842,675 488,842,675 48,884,268 48,884,268

Pursuant to a special resolution passed at an extraordinary general meeting of the Company held on 1st June, 2007, and the subsequent Order of the High Court of the Hong Kong Special Administrative Region (the “High Court”) granted on 20th July, 2007, the Company effected a capital reduction which took effect on 20th July, 2007 (the “Capital Reduction”). The paid-up capital on each of its issued ordinary share of HK$1.00 was cancelled to the extent of HK$0.90 per share, and the nominal value of all of the ordinary shares of the Company, both issued and unissued, was reduced from HK$1.00 per share to HK$0.10 per share.

A total credit of HK$439,958,407 arose as a result of the Capital Reduction. An amount of HK$221,897,828 of the total amount was applied towards writing off the unconsolidated accumulated losses of the Company as at 31st March, 2006, and HK$100,000,000 was transferred to a special reserve. The remaining balance of HK$118,060,579 was credited to the share premium account of the Company.

21

Interim Report 2008

An undertaking was given to the High Court by the Company in connection with the Capital Reduction. Pursuant to the undertaking, an amount of HK$100,000,000 arising from the Capital Reduction, and any reversal, on or after 1st April, 2006, of the following provisions recorded in the books of account of the Company:

• (1) the HK$11,419,494 impairment loss recognised in respect of the Company’s subsidiaries;

• (2) various provisions in the aggregate amount of HK$131,025,752, against loans due from the Company’s subsidiaries;

• (3) the HK$163,600,000 provision in respect of the Company’s investment in an associated company;

• (4) the HK$3,500,000 provision for a deposit paid in respect of a proposed additional interest in a subsidiary; and

• (5) the HK$1,200,000 provision in respect of long service awards/severance payments,

up to an aggregate amount of HK$221,897,828, shall be credited to a special reserve in the accounting records of the Company.

While any debt of or claim against the Company as at 20th July, 2007 (the effective date of the Capital Reduction) remains outstanding, and the person entitled to the benefi t thereof has not agreed otherwise, the special reserve shall not be treated as realised profi ts and (for so long as the Company remains a listed company) shall be treated as an undistributable reserve pursuant to section 79C of the Hong Kong Companies Ordinance.

The undertaking is subject to the following provisions:

1. the amount standing to the credit of the special reserve may be applied for the same purposes as a share premium account may be applied or may be reduced by the aggregate of any increase in the Company’s issued share capital or share premium account resulting from an issue of shares for cash or other new consideration or upon a capitalisation of distributable reserves after 20th July, 2007; and

22 Far East Hotels & Entertainment Limited

1. an amount of up to HK$100,000,000 of the special reserve may be applied by the Company for the purpose of eliminating any loss sustained after 31st March, 2006, provided that such loss is referable to an audited balance sheet of the Company as published from time to time, and provided further that if subsequent to the elimination, any of the Company’s investments against which provision for impairment loss or diminution in value has been made shall be revalued in the accounting records of the Company in excess of the provision, or such investment shall be realised for a sum in excess of the amount of such provision, then a sum equal to the amount of the revaluation or the sum realised in excess of the amount of the provision, up to an aggregate amount of HK$100,000,000, shall be recredited to the special reserve.

12. Commitments

• (a) Operating lease arrangements

The Group as lessee:

At 30/09/2008, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of premises which fall due as follows:

Within one year In the second to f fth year inclusive Over f ve years	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 4,791,567 4,656,836 19,166,267 18,627,342 52,707,235 53,553,609
	76,665,069 76,837,787

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Interim Report 2008

The Group as lessor:

Within one year In the second to f fth year inclusive	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ 3,598,666 3,066,335 – 277,193
	3,598,666 3,343,528

Property rental income earned during the period was HK$6,769,197 (2007: HK$3,855,265).

(b) Capital commitments

Capital expenditure contracted for but not provided in the f nancial statements in respect of: Acquisition of property, plant and equipment Acquisition of investment properties	30/09/2008 31/03/2008 (unaudited) (audited) HK$ HK$ – 66,250 27,394,650 –
	27,394,650 66,250

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Far East Hotels & Entertainment Limited