HOTEL ROYAL LIMITED

(Incorporated in the Republic of Singapore)

(Co Reg No: 196800298G)

________________________________________________________________________________________________

THE PROPOSED ACQUISITION OF

THE CORONADE HOTEL KUALA LUMPUR
AND ITS BUSINESS

________________________________________________________________________________________________

The Board of Directors of Hotel Royal Limited (the “Company”) wishes to announce that the Company’s
wholly-owned subsidiary, Premium Lodge Sdn. Bhd. (“Premium” or the “Purchaser”), had on 4 March
2010 entered into a conditional Sale and Purchase Agreement (the “Agreement”) to acquire The
Coronade Hotel Kuala Lumpur and its business (the “Hotel”) in Malaysia (the “Acquisition”) from Achi
Jaya Properties Sdn. Bhd. (the “Vendor”).

1. INFORMATION ON THE CORONADE KUALA LUMPUR

The Hotel is situated at the junction of Jalan Walter Grenier and Lorong Walter Grenier, off
Jalan Sultan Ismail. It is within walking distance to the famous Bukit Bintang shopping district,
one of the prime tourist and hotel belts of Kuala Lumpur City Centre, which comprises Lot 10,
Sungei Wang and Bukit Bintang Plaza, Starhill, KL Plaza, Pavilion and the famous Bintang
Walk. The mono-rail train station that covers a major part of Kuala Lumpur is situated in front of
the Hotel.

The 4-star Hotel sits on freehold land totaling approximately about 773 square metres with a
total gross built up area of approximately 20,027 square metres. It is 21-storeys high (with a
mezzanine floor, lower ground floor and 3 basement floors) and has 255 suites and rooms. It
also has 3 food and beverage outlets, together with seminar and meeting facilities, swimming
pool, gymnasium and 75 car parking bays.

2. AGREEMENT TO SELL AND PURCHASE

Subject to the terms and conditions of the Agreement, the Vendor has agreed to sell and the
Purchaser has agreed to purchase the Hotel and its business for a consideration of Ringgit
Malaysia Ninety Three Million (RM93,000,000/-) and 10% of the consideration is payable upon
signing of the Agreement and the balance upon completion.

The consideration was arrived at on a willing buyer and a willing seller basis based on a
valuation by VPC Alliance (JB) Sdn. Bhd. in March 2010.

3. CONDITIONS PRECEDENT

The Acquisition is conditional upon the following approvals being received by the Purchaser
within three months from the date of the Agreement (“Conditions Period”):
3.1 the approval of the Economic Planning Unit in the Prime Minister’s Department, Malaysia,
being obtained by the Purchaser of the Acquisition; and

3.2 the approval of the Wilayah Persekutuan Kuala Lumpur State Authority consenting to the
transfer of the land on which the Hotel is situated by the Vendor to the Purchaser pursuant to
Section 433B of the National Land Code, 1965.

If the abovementioned conditions precedent are not fulfilled within the Conditions Period, the
Agreement has provided for the extension of the Conditions Period by another two months.

4. COMPLETION

Completion shall be carried on the date falling three months after the last of the conditions
precedent has been fulfilled.

5. RATIONALE

The Company is of the view that the Acquisition will be in the best interests of the Company
as the Acquisition is an opportunity for the Company to expand its hotel operations in the
region. Based on the approximate purchase price of RM93 million for the Hotel, the cost per
guest room of about RM365,000/- is reasonable. In addition, the Directors are of the view
that the Hotel being located in one of the prime tourist and hotel belts of Kuala Lumpur City
Centre offers potential capital appreciation in the future.

6. MAJOR TRANSACTION

The relative figures computed based on the Group’s unaudited results for the financial year
ended 31 December 2009 (“FY2009”) on the bases set out in Rule 1006 are as follows:

(a) Net asset value of assets to be disposed of compared to group's

net asset value. This is not applicable to an acquisition of assets. NA

(b) Net profits attributable to the assets acquired compared to group's

net profits. 7%

(c) Aggregate value of the consideration given compared to issuer's

market capitalisation. 24%

(d) Number of equity securities issued by the issuer as consideration

for an acquisition, compared with the number of equity securities NA
previously in issue.

NOTES:

(1) Under Rule 1002(3)(b), “net profits” means profit or loss before income tax, minority interests and
extraordinary items.
(2) Determined by dividing the net profit attributable of approximately S$0.765 million by the Group’s latest
unaudited consolidated net profit of S$10.616 million for the financial year ended 31 December 2009.
(3) Based on the consideration of RM93 million (equivalent to S$38.7 million based on an exchange rate of
S$0.4156 to RM1) and the market capitalisation of the Company of S$160.8 million as at 3 March 2010.
Under Rule 1002(5), the market capitalisation of the Company is determined by multiplying the number of
shares in issue and the closing market price of S$2.68 per share on 3 March 2010.

The Acquisition will constitute a major transaction under Rule 1013 of the Listing Manual and
would require the approval of the Company's shareholders in a general meeting pursuant to
Rule 1014 as the relative figure is more than 20% based on basis (c) above.

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7. CONFIRMATION SOUGHT FROM THE SGX-ST

An application was made on 1 February 2010 to the SGX-ST pursuant to Practice Note 10.1,
Sub-rule 3.2 for confirmation that shareholders’ approval in respect of the Acquisition is not
required, on the following grounds:

(i) The Group is principally in the business of an hotelier. The Acquisition is that of a hotel.
The Company intends to continue the operation of the said property as a hotel after
the Acquisition. Hence, pursuant to Sub-rule 3.2.1 of Practice Note 10.1 of the Listing
Manual, the Acquisition will result in an expansion of the Group's existing core business
by expanding its portfolio of hotels.

(ii) Although the relative figures in respect of the Acquisition computed pursuant to Rule
1006 of the Listing Manual is expected to exceed the 20% threshold referred to in
Rule 1013 of the Listing Manual, the Acquisition will not increase the scale of
operations significantly as defined under Sub-rule 3.2.3(a).

(iii) The Acquisition will not result in a change in control of the Company as defined
under Sub-rule 3.2.3(b) as it will be paid for fully in cash.

(iv) The Acquisition is expected to have a positive and not an adverse impact on the
Group's earnings. Although the gearing of the enlarged Group after the Acquisition
may increase, the Company believes that the gearing levels after the Acquisition are
expected to be within acceptable limits.

(v) The Hotel is located in Malaysia in which the Group currently has a presence as it is
already operating Hotel Royal Penang in Penang. The Acquisition will not result in an
expansion of the Group's business to a new geographical market.

The SGX-ST had on 11 February 2010 confirmed that Shareholders’ approval is not required
for the Acquisition based on the above.

8. FINANCIAL EFFECTS

8.1 Purely for illustrative purposes only, the pro forma financial effects of the Acquisition summarised
below have been prepared using the unaudited accounts of the Group prepared on a
consolidated basis for FY2009 and based on, inter alia, the following assumptions:-

(i) For the purposes of the effect on the Earning Per Share (“EPS”), the Proposed
Acquisition had been completed on 1 January 2009, being the start of the latest
unaudited financial year of the Group; and

(ii) For the purposes of the effect on the Net Tangible Assets (“NTA”) per Share and
gearing, the Proposed Acquisition had been completed on 31 December 2009, being
the date to which the latest full-year unaudited accounts of the Group were made up.

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 Earning Per Share

The effect of the Acquisition on the Group’s EPS for FY2009 would have been as follows:

Before the Proposed After the Proposed

Acquisition Acquisition

Profit after tax ($’000) 10,616 11,381

Number of Shares (‘000) 60,000 60,000
Earnings per Shares (cents) 17.69 18.97

Net Tangible Assets

The effect of the Acquisition on the Group’s consolidated NTA as at 31 December 2009
would have been as follows:

Before the Proposed After the Proposed

Acquisition Acquisition

NTA ($’000) 251,391 251,391

Number of Shares (‘000) 60,000 60,000
NTA per Share($) 4.19 4.19

Gearing

The effect of the Acquisition on the gearing of the Group as at 31 December 2009 would
have been as follows:

Before the Proposed After the Proposed

Acquisition Acquisition

Total borrowings ($’000) 58,271 92,561

Shareholders’ funds ($’000) 251,391 251,391
Gearing (times) 0.23 0.37

NOTE:

For the purposes of the above calculations, “Gearing” means the ratio of total borrowings to Shareholders’ funds. “Total
borrowings” means the aggregate borrowings from banks and financial institutions including hire purchase financing and
“Shareholders’ funds” means the aggregate amount of share capital, asset revaluation reserves, fair value reserve,
translation reserves and retaining earnings.

9. FUNDING

The proposed purchase will be financed by internal resources and bank borrowings.

10. INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

None of the Directors or any of the controlling shareholders of the Company has any interest,
directly or indirectly, in the Proposed Acquisition.

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11. DOCUMENT FOR INSPECTION

A copy of the Agreement is available for inspection during normal business hours at the
Company’s Registered Office at 36 Newton Road, Singapore 307964 for three months from the
date of this announcement.

By Order of the Board

Dr Lee Keng Thon

Chairman

4 March 2010