Guoco Group Limited — Interim / Quarterly Report 2012

Dec 21, 2011

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Interim Report 2011
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CONTENTS

	Page(s)
Corporate Information	2
Managing Director & Chief Executive’s Statement	3 – 4
Interim Financial Information
Condensed Consolidated Statement of Comprehensive Income	5
Condensed Consolidated Statement of Financial Position	6 – 7
Condensed Consolidated Statement of Changes In Equity	8
Condensed Consolidated Statement of Cash Flows	9
Notes to the Condensed Consolidated Financial Statements	10 – 20
Additional Information Required By Listing Rules	21 – 26

In the event of any error or omission in translation of this Interim Report, the English text shall be taken as correct.

Far East Hotels and Entertainment Limited 1 Interim Report 2011

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

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

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. 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.

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 Office

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

Company Secretary

Tang Sung Ki, CPA, FCCA

Solicitors

Woo Kwan Lee & Lo

Auditor

Deloitte Touche Tohmatsu Certified Public Accountants 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

Stock Code

Authorised Representatives

Derek Chiu, B.A. Tang Sung Ki, CPA, FCCA

0037

Website

www.tricor.com.hk/webservice/00037

2 Far East Hotels and Entertainment Limited Interim Report 2011

MANAGING DIRECTOR & CHIEF EXECUTIVE’S STATEMENT

OVERALL RESULTS

For the six months ended 30 September 2011, Far East Hotels And Entertainment Limited (the “Company”) and its subsidiaries (the “Group”) recorded an unaudited consolidated net loss attributable to shareholders of HK$10,423,397 (30/09/2010: net loss of HK$7,189,784).

INTERIM DIVIDEND

The Board has resolved not to declare any interim dividend in respect of the six months ended 30 September 2011.

REVIEW OF OPERATIONS AND PROSPECTS

The overall turnover of Cheung Chau Warwick Hotel has increased by 17% compared with last corresponding period. The Room and Food & Beverages revenue has been increased by 21% and 12% respectively. Both rooms and restaurant facilities have been partially renovated in order to improve the image of the hotel as well as to increase the business. For the Rooms division, the Sales and Marketing Team will continue focusing on the growth of China market in the coming year. Besides doing advertisings in Hong Kong like in the past, the hotel will also do advertisings at China in order to attract more business from this rapid growing market. For the Food & Beverages division, new and tailor-made menus cater for different kinds of clients will be introduced in the coming year.

The turnover of Beijing Warwick Suite Hotel has increased by 44% compared with last corresponding period. This increment brought to this sector a profit of approximately HK$1,741,000 as compared to a loss of approximately HK$422,000 with last corresponding period.

In securities investment and trading, the Group has recorded a loss of approximately HK$5,860,000.

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.

Far East Hotels and Entertainment Limited 3 Interim Report 2011

MANAGING DIRECTOR & CHIEF EXECUTIVE’S STATEMENT

FINANCE ACTIVITIES

At 30 September 2011, there were outstanding bank loans of HK$45,035,000 (31/03/2011: HK$50,406,795) and unutilised overdraft facilities of HK$4,000,000 (31/03/2011: HK$4,000,000) available to the Group.

At 30 September 2011, the Group did not have any foreign exchange contracts, interest or currency swaps or other financial derivatives.

Shareholders’ funds at 30 September 2011 amounted to approximately HK$293 million (31/03/2011: approximately HK$302 million). Accordingly, the Group’s gearing ratio (total bank borrowings to shareholders’ funds) at 30 September 2011 is 15% (31/03/2011: 17%).

4 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2011

Notes Revenue Cost of sales Gross profit Other gains and losses 5 Administrative expenses Finance costs 6 Share of results of associates Loss before taxation Taxation 7 Loss for the period attributable to owners of the Company Other comprehensive income (expenses) for the period Exchange differences arising on translation of foreign operations Total comprehensive expenses for the period attributable to owners of the Company Loss per share – Basic 8	Six months ended 30 September 2011 2010 (unaudited) (unaudited) HK$ HK$ 19,113,645 14,947,443 (15,144,208) (14,233,713)
	3,969,437 713,730 (5,942,290) 714,558 (8,156,441) (8,004,239) (545,684) (769,472) 251,581 155,639
	(10,423,397) (7,189,784) – –
	(10,423,397) (7,189,784) 421,418 (970,716)
	(10,001,979) (8,160,500)
	Cents Cents (2.13) (1.47)

Far East Hotels and Entertainment Limited 5 Interim Report 2011

INTERIM FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2011

Notes NON-CURRENT ASSETS Property, plant and equipment Investment properties Interests in associates Interest in a jointly controlled entity Loan to a jointly controlled entity 9 Available-for-sale investments Paintings CURRENT ASSETS Held-for-trading investments Inventories Trade and other receivables 10 Deposits and prepayment Amount due from an associate Pledged bank deposits Bank balances and cash Investment property held for sale	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 89,421,488 90,897,768 66,479,120 66,479,120 1,426,322 1,174,741 1,830,336 1,830,336 8,707,226 8,706,948 159,188,314 159,188,314 4,220,000 4,220,000
	331,272,806 332,497,227
	20,680,677 16,849,965 573,794 503,829 357,221 1,021,965 1,078,386 1,481,896 213,562 813,562 2,118,000 2,118,000 12,187,332 8,865,596
	37,208,972 31,654,813 – 20,500,000
	37,208,972 52,154,813

6 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

Notes CURRENT LIABILITIES Trade and other payables 11 Receipt in advance Rental deposits received Amounts due to directors Amounts due to associates Amounts due to related companies Amount due to a non-controlling shareholder Bank borrowings – due within one year 12 Deposit received for investment property held for sale NET CURRENT ASSETS CAPITAL AND RESERVES Share capital 13 Reserves NON-CURRENT LIABILITIES Deferred taxation Provision for long service payments Bank borrowings – due after one year 12	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 7,234,328 8,030,609 4,403,388 4,252,190 3,214,949 2,722,110 228,634 – 1,342,381 823,381 586,301 592,156 2,759,382 3,977,205 4,908,000 12,075,795
	24,677,363 32,473,446 – 800,000
	24,677,363 33,273,446
	12,531,609 18,881,367
	343,804,415 351,378,594
	48,884,268 48,884,268 244,041,186 253,411,365
	292,925,454 302,295,633
	8,696,948 8,696,948 2,055,013 2,055,013 40,127,000 38,331,000
	50,878,961 49,082,961
	343,804,415 351,378,594

Far East Hotels and Entertainment Limited 7 Interim Report 2011

INTERIM FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2011

			Share	Capital	Property
	Share	Share	option	redemption	revaluation	Translation	Special	Accumulated
	capital	premium	reserve	reserve	reserve	reserve	reserve	losses	Total
	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$
At 1 April 2010 (Audited)	48,884,268	210,865,965	1,433,663	28,990,000	2,938,532	(4,020,912)	54,710,271	(47,532,119)	296,269,668
Loss for the period	–	–	–	–	–	–	–	(7,189,784)	(7,189,784)
Exchange differences arising
on translation of foreign operations	–	–	–	–	–	(970,716)	–	–	(970,716)
Total comprehensive expenses
for the period	–	–	–	–	–	(970,716)	–	(7,189,784)	(8,160,500)
Transfer prior year loss to
special reserve	–	–	–	–	–	–	(13,096,674)	13,096,674	–
At 30 September 2010 (Unaudited)	48,884,268	210,865,965	1,433,663	28,990,000	2,938,532	(4,991,628)	41,613,597	(41,625,229)	288,109,168
At 1 April 2011 (Audited)	48,884,268	210,865,965	1,433,663	28,990,000	2,938,532	(3,375,629)	41,613,597	(29,054,763)	302,295,633
Loss for the period	–	–	–	–	–	–	–	(10,423,397)	(10,423,397)
Exchange differences arising
on translation of foreign operations	–	–	–	–	–	421,418	–	–	421,418
Released upon disposal of property	–	–	–	–	(2,938,532)	–	–	2,938,532	–
Total comprehensive (expenses) income
for the period	–	–	–	–	(2,938,532)	421,418	–	(7,484,865)	(10,001,979)
Share-based payment expenses	–	–	631,800	–	–	–	–	–	631,800
Transfer prior year loss to
special reserve	–	–	–	–	–	–	(36,581,067)	36,581,067	–
At 30 September 2011 (Unaudited)	48,884,268	210,865,965	2,065,463	28,990,000	–	(2,954,211)	5,032,530	41,439	292,925,454

8 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2011

Net cash used in operating activities Net cash from investing activities Net cash (used in) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Effect of foreign exchange rate changes Cash and cash equivalents at end of the period	Six months ended 30 September 2011 2010 (unaudited) (unaudited) HK$ HK$ (9,510,207) (2,798,254) 19,925,990 194,620 (6,622,157) 1,693,153
	3,793,626 (910,481) 8,865,596 4,145,215 (471,890) –
	12,187,332 3,234,734

Far East Hotels and Entertainment Limited 9 Interim Report 2011

INTERIM FINANCIAL INFORMATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified 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 2011 annual financial statements.

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

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

The accounting policies used in the unaudited condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 March 2011.

In addition, in the current period, the Group has applied, for the first time, a number of new and revised Standards, Amendments and Interpretations (collectively the “new and revised HKFRSs”) issued by the HKICPA. The adoption of these new and revised HKFRSs had no material effect on the condensed consolidated financial statements of the Group for the current or prior accounting periods.

The Group has not early applied new and revised Standards, Amendments or Interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of the other new and revised Standards, Amendments or Interpretations will have no material impact on the condensed consolidated financial statements of the Group, except HKFRS 9 “Financial Instruments”.

10 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

HKFRS 9 which was issued in November 2009 introduces new requirements for the classification and measurement of financial assets. HKFRS 9 (as revised in November 2010) adds requirements for financial liabilities and for derecognition. HKFRS 9 is effective for annual periods beginning on or after 1st January, 2013, with earlier application permitted. The directors anticipate that the application of HKFRS 9 may have an impact on measurement and classification of the Group’s available-for-sale investments, which will be measured at fair value. However, it is not practicable to provide a reasonable estimate of that effect until a detail review has been completed.

3. SEGMENT INFORMATION

The Group’s operating and reportable segments are as follows:

1. Hotel operation in Hong Kong

2. Hotel operation and property letting in the People’s Republic of China, excluding Hong Kong (“PRC”)

3. Property investment in Hong Kong

4. Securities investment and trading

Far East Hotels and Entertainment Limited 11 Interim Report 2011

INTERIM FINANCIAL INFORMATION

Segment revenues and results

The following is an analysis of the Group’s revenue and profit (loss) by operating segments:

2011 Revenue Segment profit (loss) Unallocated gains and losses Unallocated expenses Unallocated finance costs Share of results of associates Loss before taxation Taxation Loss for the period	Hotel operation and Hotel property Property Securities operation in letting investment in investment Hong Kong in PRC Hong Kong and trading HK$ HK$ HK$ HK$ Six months ended 30 September (unaudited) 10,590,584 8,523,061 – –	Total HK$ 19,113,645
	2,269,052 1,740,988 (166,229) (5,863,584)	(2,019,773) (78,706) (8,156,441) (420,058) 251,581
		(10,423,397) –
		(10,423,397)

12 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

2010 Revenue Segment profit (loss) Unallocated gains and losses Unallocated expenses Unallocated finance costs Share of results of associates Loss before taxation Taxation Loss for the period	Hotel operation and Hotel property Property Securities operation in letting investment in investment Hong Kong in PRC Hong Kong and trading HK$ HK$ HK$ HK$ Six months ended 30 September (unaudited) 9,039,708 5,907,735 – –	Total HK$ 14,947,443
	1,270,213 (421,942) (496,337) 200,732	552,666 513,826 (8,004,239) (407,676) 155,639
		(7,189,784) –
		(7,189,784)

Geographical information

Hong Kong PRC	Revenue from external customers 2011 2010 (unaudited) (unaudited) HK$ HK$ 10,590,584 9,039,708 8,523,061 5,907,735
	19,113,645 14,947,443

Far East Hotels and Entertainment Limited 13 Interim Report 2011

INTERIM FINANCIAL INFORMATION

4. LOSS BEFORE TAXATION

Loss before taxation has been arrived at after charging: Depreciation Auditor’s remuneration Directors’ remuneration & other staff costs Salaries, bonus and allowances Retirement benefits cost Share-based payment expenses Operating lease rentals in respect of rental premises Share of taxation of associates (included in share of results of associates) Cost of inventories recognised as an expense and after crediting: Net rental income from properties	Six months ended 30 September 2011 2010 (unaudited) (unaudited) HK$ HK$ 3,693,236 3,561,101 498,366 346,453 6,362,295 6,652,890 430,842 414,681 631,800 –
	7,424,937 7,067,571
	3,042,379 2,898,919 49,692 30,750 2,122,381 1,994,910
	4,056,321 194,622

14 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

5. OTHER GAINS AND LOSSES

Dividend income from listed securities Decrease in fair value of held-for-trading investments Loss on disposal of property, plant & equipment Bank interest income Other interest income Exchange gain	Six months ended 30 September 2011 2010 (unaudited) (unaudited) HK$ HK$ 637,647 280,555 (6,501,230) (79,823) (89,728) – 11,010 2,250 11 17 – 511,559
	(5,942,290) 714,558

6. FINANCE COSTS

Interest on bank borrowings: Wholly repayable within 5 years Not wholly repayable within 5 years	Six months ended 30 September 2011 2010 (unaudited) (unaudited) HK$ HK$ 221,707 147,534 323,977 621,938
	545,684 769,472

Far East Hotels and Entertainment Limited 15 Interim Report 2011

INTERIM FINANCIAL INFORMATION

7. TAXATION

No provision for Hong Kong Profits Tax is required as the individual companies comprising the Group either incurred a loss or has tax losses to offset the assessable profits in both periods.

No provision for PRC Enterprise income tax is required as the subsidiary operating in the PRC has tax losses to offset the assessable profits. In last corresponding period, it incurred a loss and no provision is required.

8. LOSS PER SHARE

(a) Basic loss per share

The calculation of basic loss per share is based on the loss for the period of HK$10,423,397 (2010: loss of HK$7,189,784) and 488,842,675 (2010: 488,842,675) ordinary shares in issue during the period.

(b) Diluted loss per share

No diluted loss per share for the six months ended 30 September 2011 was presented as there were no potential ordinary shares outstanding during the period.

No diluted loss per share for the six months ended 30 September 2010 was presented as the exercise of the potential dilutive ordinary shares would result in a reduction in loss per share.

9. LOAN TO A JOINTLY CONTROLLED ENTITY

The loan to the jointly controlled entity is unsecured, interest-free and has no fixed repayment terms.

The loan is not expected to be repaid within twelve months from the end of the reporting period.

16 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

10. TRADE AND OTHER RECEIVABLES

Included in trade and other receivables are trade debtors net of allowance of HK$233,150 (31/03/2011: HK$117,237).

Trade debtors mainly comprise of receivable from renting of properties and hotel operation. Rentals are payable on presentation of demand notes. No credit is allowed to these customers. Hotel room revenue is normally settled by cash or credit card. The Group allows an average credit period of not more than 30 days to travel agents and corporate customers.

The following is an aged analysis of trade debtors based on the invoice date:

0 – 30 days 31 – 60 days Over 60 days	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 147,567 87,512 43,440 8,408 42,143 21,317
	233,150 117,237

11. TRADE AND OTHER PAYABLES

Included in trade and other payables are trade creditors of HK$3,737,425 (31/03/2011: HK$4,546,236).

The following is an aged analysis of the trade creditors based on invoice date:

0 – 30 days 31 – 60 days Over 60 days	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 423,010 442,736 356,794 551,488 2,957,621 3,552,012
	3,737,425 4,546,236

The average credit period on purchase of goods is 60 days.

Far East Hotels and Entertainment Limited 17 Interim Report 2011

INTERIM FINANCIAL INFORMATION

12. BANK BORROWINGS

Bank borrowings comprise: Secured Unsecured The above borrowings are repayable as follows: Within one year More than one year, but not exceeding two years More than two years, but not exceeding three years More than three years, but not exceeding five years More than five years Less: Amount due within one year shown under current liabilities Amount due after one year	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 45,035,000 48,406,795 – 2,000,000
	45,035,000 50,406,795
	4,908,000 12,075,795 3,908,000 3,408,000 3,908,000 2,908,000 23,646,000 21,896,000 8,665,000 10,119,000
	45,035,000 50,406,795 (4,908,000) (12,075,795)
	40,127,000 38,331,000

18 Far East Hotels and Entertainment Limited Interim Report 2011

INTERIM FINANCIAL INFORMATION

13. SHARE CAPITAL

Ordinary shares of HK$0.10 each Authorised: At 1 April 2011 and 30 September 2011 Issued and fully paid: At 1 April 2011 and 30 September 2011	Number of shares Share capital HK$ 750,000,000 75,000,000
	488,842,675 48,884,268

Pursuant to a special resolution passed by the shareholders on 1 June 2007 and the subsequent order of the High Court of the Hong Kong Special Administrative Region granted on 20 July 2007, capital reduction took effect on 20 July 2007 whereby both issued and unissued ordinary share capital with par value of HK$1.00 were reduced by HK$0.90 per share to HK$0.10 per share and the nominal value of the issued share capital was reduced by HK$439,958,407 of which an amount of HK$221,897,828 was applied towards eliminating the accumulated losses of the Company as at 31 March 2006, an amount of HK$100,000,000 was reserved and credited to a special reserve account and the remaining balance of HK$118,060,579 was credited to the share premium account.

The special reserve can be applied for:

• (a) capitalisation by the issue of new shares of the Company

• (b) eliminating losses, if any, sustained by the Company after 31 March, 2006. Such loss is to be reversed if the relevant asset, against which impairment loss has been eliminated against this reserve, is realised or revalued at an amount in excess of the amount of provision already made.

The special reserve is undistributable pursuant to section 79C of the Hong Kong Companies Ordinance unless the person entitling to the benefit thereof has agreed otherwise.

Far East Hotels and Entertainment Limited 19 Interim Report 2011

INTERIM FINANCIAL INFORMATION

14. OPERATING LEASE

Operating lease arrangements

The Group as lessee:

At 30 September 2011, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follows:

Within one year In the second to fifth year inclusive Over five years The Group as lessor: Within one year	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 5,150,846 4,986,347 20,603,385 19,945,388 41,206,770 42,383,949
	66,961,001 67,315,684
	30/09/2011 31/03/2011 (unaudited) (audited) HK$ HK$ 2,336,073 4,652,157

20 Far East Hotels and Entertainment Limited Interim Report 2011

ADDITIONAL INFORMATION REQUIRED BY LISTING RULES

DIRECTORS’ INTERESTS IN SHARES AND UNDERLYING SHARES

At 30 September 2011, the interests and short positions of the directors and the Company’s chief executive 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 notified 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 Companies, were as follows:

(a) Directors’ interest in shares and underlying shares of the Company

					Approximate
					percentage of
	Number	of issued	ordinary shares	held	issued share
	Personal	Family	Corporate		capital 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)
Ms. Margaret Chiu	676,240	–	5,000,000	5,676,240	1.16%
				(Note 4)

Notes:

• (1) Of the 108,901,052 shares, (i) 100,939,842 shares were held by various private companies wholly owned 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.

Far East Hotels and Entertainment Limited 21 Interim Report 2011

ADDITIONAL INFORMATION REQUIRED BY LISTING RULES

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

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

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

(b) Directors’ interest in shares and underlying shares of associated corporation

				Percentage of
				issued share
				capital of
	Nature of	Name of associated	Number of	associated
Name of director	interests	corporation	ordinary shares held	corporation
Mr. Derek Chiu	Long Position	Sino Noble	50	50%
		Development Limited

Sino Noble Development Limited is a jointly controlled entity of the Company which the Company held 50% of the issued share capital.

22 Far East Hotels and Entertainment Limited Interim Report 2011

ADDITIONAL INFORMATION REQUIRED BY LISTING RULES

(c) 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 shareholders. Share options granted under the scheme during the period and as at 30 September 2011 were as follows:

		Number of Options	Number of Options
	Options	Options	Options	Options
	held at	granted	exercised	held at at			Exercisable
Category of	1 April	during the	during the 30 September		Exercise		Period
Grantee	2011	period	period	2011	Price	Grant date	From	To
					HK$
Executive director
Mr. Derek Chiu	–	4,500,000	–	4,500,000	0.2498	15/04/2011	15/04/2011	14/04/2021
Independent
non-executive
directors
Mr. Ip Shing Hing	1,000,000	–	–	1,000,000	0.2820	30/12/2009	30/12/2009	29/12/2019
Mr. Ng Wing Hang
Patrick	1,000,000	–	–	1,000,000	0.2820	30/12/2009	30/12/2009	29/12/2019
Mr. Choy Wai Shek
Raymond	1,000,000	–	–	1,000,000	0.2820	30/12/2009	30/12/2009	29/12/2019
Aggregate for
employees	5,000,000	–	–	5,000,000	0.2820	30/12/2009	30/12/2009	29/12/2019
	1,500,000	–	–	1,500,000	0.2650	24/02/2010	24/02/2010	23/02/2020
	9,500,000	4,500,000	–	14,000,000

Save as disclosed above, as at 30 September 2011, none of the directors nor the Company’s chief executive 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 notified 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 Listing Companies.

Far East Hotels and Entertainment Limited 23 Interim Report 2011

ADDITIONAL INFORMATION REQUIRED BY LISTING RULES

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 2011, 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:

		Number of	Percentage of
		ordinary issued	share capital
Name of shareholder	Capacity	shares held	of the Company
Achiemax Limited_(Note 1)_	Beneficial owner	72,182,400	14.77%
Energy Overseas Ltd._(Note 2)_Beneficial owner		78,430,299	16.04%

Notes:

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

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

Save as disclosed above, as at 30 September 2011 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.

24 Far East Hotels and Entertainment Limited Interim Report 2011

ADDITIONAL INFORMATION REQUIRED BY LISTING RULES

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 2011, with deviations from code provision A.4.1 of the Code in respect of the service term of Directors.

None of the existing Non-executive Directors of the Company is appointed for a specific term. This constitutes a deviation from code provision A.4.1 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’s Articles of Association. As such, the Company considers that sufficient measures have been taken to ensure that the Company’s Corporate Governance Practices are no less exacting than those in the Code.

AUDIT COMMITTEE

The Audit Committee of the Company comprises three independent non-executive directors, namely, Mr. Ng Wing Hang Patrick, Mr. Ip Shing Hing, 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 financial reporting matters, including a review of the unaudited interim financial statements for the six months ended 30 September 2011.

Far East Hotels and Entertainment Limited 25 Interim Report 2011

ADDITIONAL INFORMATION REQUIRED BY LISTING RULES

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 confirmed that they have complied with the required standards set out in the Model Code throughout the six months ended 30 September 2011.

On Behalf of the Board

Derek Chiu

Managing Director & Chief Executive

Hong Kong, 25 November 2011

26 Far East Hotels and Entertainment Limited Interim Report 2011