(Incorporated in Bermuda with limited liability) Stock Code: 00487 FORGING SYNERGY Contents 1 Our.Vision 3 Corporate.Information 4 Financial.Highlights 5 Group.Structure 6 Chairman s.Statement 9 Business.Highlights 10 Management.Discussion.and.Analysis 26 Corporate.Governance.Report 32 Report.of.Directors 43 Biographical.Details.of.Directors.and. Senior.Management 45 Independent.Auditors Report 47 Consolidated.Income.Statement 48 Consolidated.Statement.of. Comprehensive.Income 49 Financial.Position 51 Statement.of.Financial.Position 52 Changes.in.Equity 53 Consolidated.Statement.of.Cash.Flows 55 Financial.Statements 128 Five-year.Financial.Summary OurVision The.Group.aims.to.become.a.leading.player.in.the.gaming,.entertainment.and.tourist-related.industries.and.contribute.to.the.sustainable.development.of.these.sectors..We endeavour.to.create.long-term.value.for.all.of.our.stakeholders,.while.adhering.to.a.high.standard of.corporate.governance. FORGING. SYNERGY DIRECTORS Executive.Directors Mr..Yeung.Hoi.Sing,.Sonny.(Chairman) Dr..Ma.Ho.Man,.Hoffman.(Deputy.Chairman) Non-executive.Director Mr..Choi.Kin.Pui,.Russelle Independent.Non-executive.Directors Mr..Luk.Ka.Yee,.Patrick Ms..Yeung.Mo.Sheung,.Ann Mr..Chin.Wing.Lok,.Ambrose. COMPANY.SECRETARY Ms..Chiu.Nam.Ying,.Agnes FINANCIAL.CONTROLLER Mr..Wong.Chi.Keung,.Alvin AUTHORISED.REPRESENTATIVES Dr..Ma.Ho.Man,.Hoffman Ms..Chiu.Nam.Ying,.Agnes AUDIT.COMMITTEE Mr..Chin.Wing.Lok,.Ambrose.(Chairman) Mr..Choi.Kin.Pui,.Russelle Mr..Luk.Ka.Yee,.Patrick Ms..Yeung.Mo.Sheung,.Ann REMUNERATION.COMMITTEE Mr..Yeung.Hoi.Sing,.Sonny.(Chairman) Mr..Choi.Kin.Pui,.Russelle Mr..Luk.Ka.Yee,.Patrick Ms..Yeung.Mo.Sheung,.Ann Mr..Chin.Wing.Lok,.Ambrose EXECUTIVE.COMMITTEE Mr..Yeung.Hoi.Sing,.Sonny.(Chairman) Dr..Ma.Ho.Man,.Hoffman AUDITORS HLB.Hodgson.Impey.Cheng Chartered.Accountants Certified.Public.Accountants LEGALADVISERSONHONGKONGLAWS Iu,.Lai.&.Li LEGAL.ADVISERS.ON.BERMUDA.LAWS Conyers.Dill.&.Pearman PRINCIPAL.BANKERS Chong.Hing.Bank.Limited Fubon.Bank.(Hong.Kong).Limited Royal.Bank.of.Canada The.Bank.of.East.Asia,.Limited The.Hongkong.and.Shanghai.Banking.Corporation.Limited PRINCIPAL.SHARE.REGISTRAR.AND.TRANSFER.AGENT.IN.BERMUDA Butterfield.Fulcrum.Group.(Bermuda).Limited Rosebank.Centre 11.Bermudiana.Road Pembroke,.HM.08 Bermuda BRANCH.SHARE.REGISTRAR.AND TRANSFER.OFFICE.IN.HONG.KONG Tricor.Tengis.Limited 26th.Floor Tesbury.Centre 28.Queen’s.Road.East Wanchai Hong.Kong REGISTERED.OFFICE Clarendon.House 2.Church.Street Hamilton.HM.11 Bermuda HEAD.OFFICE.AND.PRINCIPAL.PLACE.OF.BUSINESS Suite.1601-2.&.8-10,.16/F. Great.Eagle.Centre 23.Harbour.Road Wanchai Hong.Kong SHARE.LISTING The.Stock.Exchange.of.Hong.Kong.Limited Stock.Code:.00487 WEBSITE www.successug.com FinancialHighlights 　 Year.ended.Year.ended.31.December.31.December.2010 2009.HK$’000 HK$’000 At.At.31.December.31.December.2010 2009 HK$’000.HK$’000 Consolidated.statement.of.financial.position Total.assets 1,475,374 1,345,509 Total.liabilities 881,823 671,636 Net.assets 593,551 673,873 Success.Universe.Group.Limited Annual.Report.2011 GroupStructure 　 Success.Universe.Group.Limited Annual.Report.2011 Chairman’s. Statement In.2011,.the.Group.made.progress.intwokeybusinessplans,including.the.participation.in.China’s.lottery.market.and.preparation.for.the.commencement.of.Ponte.16’s.Phase.3.Project,.which.we.believe.willdeliver enormousgrowthfor us further.down.the.road. Chairman’sStatement(continued) 　 Dear.Valued.Shareholders, On behalf of the board of directors of Success Universe.Group.Limited.(the.“Company”),.I.am.pleased.to.present.the.annual reportoftheCompany andits subsidiaries(collectively the.“Group”).for.the.year.ended.31.December.2011. The Group witnessed a year of both challenges and opportunitiesin2011,asuncertaintiesineconomicrecoveryin theUnitedStatesofAmericaandEuropedampenedconsumer sentiments,affectingthegrowthofourtravelbusinessinNorth America, whilethe strongChinese economycontinuedtofuel substantialgrowthintourism andgamingindustriesinMacau, benefitingourflagshipinvestmentproject,Ponte16.Duringthe year,theGroupachieved animprovedperformance.Wehave not only strengthened our business platforms by maximising the synergies across our corebusinesses andPonte16,but alsobroadened our avenueforgrowthbyparticipatingin the fast-growing mobile sports lottery market in Mainland China. In addition,theCompanyhas completedits successful rights issueinJanuary2012,providingfurtherfinancial resourcesfor thebusiness operation of theGroup.With all theseinitiatives, wehavelaid a solidfoundationfor ourbusinessgrowthgoing forward. UNIQUE.POSITIONING During the year, Ponte 16 further strengthened its unique.positioning in Macau’s gaming and tourism scenes and elevated.its.global.profile..In.terms.of.financial.performance,.grossgamingrevenue ofPonte16 once again outperformed the Macau gaming market. The surge in gross gaming.revenue.has.not.only.translated.into.another.record.EBITDA*.forPonte16,butalsothefirstnetprofitforthe resort sinceits commencement.of.operation. Such positive performance was the result of Ponte 16’s continuous.efforts.in.enriching.its.cultural.and.entertainment.offerings for visitors worldwide. In 2011, Ponte 16 significantly enhanced its brand awareness in the China market by.introducing.a.prestigious.international.exhibition.tour.-the.“Super.Stars’ Memorable.Collections.Exhibition”..In collaboration with New World Department Store China Limited, the exhibition toured major cities across China, offered.the.Mainland.audiences.a.one-of-a-kind.opportunity.to view over 100 iconic collections from some of the world’s most popular super stars. The exhibition proved to.be.an.enormous.success.with.overwhelming.responses.received throughout.the.tour..As.an.extension.of.the.tour,.Ponte16partneredagain withJulien’sAuctionsto stagethe “Legends” Auction.in.Macau.in.2011,.adding.colour.to.the.legendary.Inner.Harbour. With its unbeatable world-class services and facilities, Sofitel Macau At Ponte 16 achieved another successful year.in.2011,.with.a.continuous.high.occupancy.rate.and.a.series of awards and accolades recognisingitsdedicationto providingan unrivalled accommodation experiencetoguests from.around.the.world. *EBITDA:EarningsBeforeInterest,Taxes,Depreciation andAmortisation Chairman’sStatement(continued) 　 UNPARALLELED.SYNERGIES Despite the challenging global business environment, we.continued.to.strengthen.our.business.platforms.by.exploring.opportunities in market segments where we can best leverage.our.strengths. We continued to enhance synergies between our core businesses andkeyinvestmentprojectby stepping up cross-selling efforts. Our travel business continued to expand its presence.in.China.by.targeting.the.high-margin.market.segments such asMICE(Meeting,Incentive,Convention and Exhibition).and.corporate.ticketing,.and.seized.further.cross-selling.opportunities.with.Ponte.16.and.the.Group’s.cruise.ship business through cooperation with tour operators in China. EXPANDED.PLATFORMS The.focus.of.our.business.strategy.has.always.been.on.the.future..During.the.year,.we.made.important.progress.in.two.key.business.development.plans.that.we.believe.will.deliver.enormous.growth.for.us.further.down.the.road. In the second half of 2011, the Group made a move to participate.in.China’s.mobile.sports.lottery.market,.in.view.of the.tremendous.growth.potential.in.the.fast-growing.sector..Through the subsidiaries of ajoint venture company,the Group.is.now.authorised.to.offer.sports.lottery.sales.agency.services.via.mobile.in.the.Jiangxi.and.Qinghai.provinces.in.Chinabyprovidingatechnology serviceplatform and related technicalsupport.We lookforwardto opportunitiestofurther expand.the.business.to.other.provinces.in.order.to.capture.the flourishing potential presented by the dynamic China lottery.market. In Macau, we are preparing for the commencement of the Phase 3 development project of Ponte 16, which will implement an extension of the world-class casino and introduce premier.facilities.to.further.enrich.the.dining.and.entertainment offerings of the resort. With strong growth prospectsfortheChinese economy, we are confidentthatthe newphase ofPonte16willnotonlybringunique and exciting experiences.to.our.guests,.but.also.deliver.substantial.value.for.the.Group. Riding on.our.expanded.business.platforms.and.forward-looking vision of theGroup,I am confident that we arein the bestpositiontoseizetheampleopportunitiesaheadanddeliver long-term valueto our shareholders.We shallcontinueto work towards our goal of becoming one of the key players in the gaming,entertainmentandtourist-relatedindustriesinAsia. APPRECIATION I.would.like.to.take.this.opportunity.to.extend.my.heartfelt.gratitude to our shareholders for their continued support, my fellow directors for their guidance, our customers and.business.partners.for.their.trust.and.our.staff.for.their.dedication.and.hard.work..The.support.from.our.people.at.all.levels.is.invaluable.in.our.shared.quest.to.create.enduring.value.for.the.benefit.of.all. Yeung.Hoi.Sing,.Sonny Chairman Hong.Kong 29.March.2012 Success.Universe.Group.Limited Annual.Report.2011 BusinessHighlights 　 ‧ Total.turnover.rose.approximately.2%.from.approximately.HK$1,444.9.million.to.approximately.HK$1,468.4.million ‧ Gross.profit.reached.approximately.HK$71.5.million ‧ Turnover.in.travel.business.amounted.to.approximately.HK$1,398.8.million. ‧ TheGroup’sflagshipinvestmentproject,Ponte16,recordeditsfirst netprofit,withtheEBITDA*increasedbyapproximately 53.4%.to.approximately.HK$316.8.million. ‧ Ponte.16.staged.the.first.“Super.Stars’.Memorable.Collections.Exhibition”.in.2011,.which.toured.five.cities.across.China ‧ The Group continued to develop the mobile sports lottery business in 2011 in order to grasp the rapidly growing opportunities.in.China’s.flourishing.lottery.industry *.EBITDA:.Earnings.Before.Interest,.Taxes,.Depreciation.and.Amortisation Success.Universe.Group.Limited Annual.Report.2011 ManagementDiscussion andAnalysis 　 During.the.year,.the.Group.delivered.improved.performance, attributable.to.the.effective.execution.of.its.synergeticthree-pronged business.strategy. SuccessUniverseGroupLimited(the “Company”)and its.subsidiaries.(collectively.the.“Group”).attained.an.improved.performance for the year ended 31 December 2011, attributable to effective execution of its synergetic three-pronged.business.strategy. As the.economic.climate.of.the.United.States.of.America.(the “USA”).and.Europe.remained.sluggish.throughout.the.year, the.Group.continued.to.step.up.its.efforts.in.focusing.on.business.opportunities.in.the.fast-growing.China.market..During the year, the Group continued to develop a new business to provide a technology service platform and technical support as well as sports lottery sales agency services.to.China’s.burgeoning.mobile.sports.lottery.market. Success.Universe.Group.Limited 10 Annual.Report.2011 (the “Lottery Business”). On the other hand, the Group’s flagship investment project, Ponte 16, benefited from the continued.growth.of.Macau’s.gaming.industry.and.started.contributing.net.profit.to.Ponte.16. With continuous commitment to building a sustainable and diversified platform of gaming, entertainment and tourist-related businesses, the Group is well-placed to seize opportunities and achieve further results improvement when theglobalmarketrecovers. The.following.discussion.should.be.read.in.conjunction.with.the.consolidated.financial.statements.and.the.related.notes.included.in.this.annual.report. RESULTS The.Group.attained.an.improved.performance.in.2011.and.posted.a turnover.of.approximately.HK$1,468.4.million.for.theyear ended31December2011, representinganincrease ManagementDiscussion andAnalysis(continued) 　 of.approximately.2%.from.approximately.HK$1,444.9.million.in2010.Grossprofitreached approximatelyHK$71.5million (2010:.approximately.HK$92.1.million)..Loss.attributable.to.owners oftheCompany narrowedto approximatelyHK$77.7 million, comparedto approximatelyHK$80.8millionin2010. Loss.per.share.also.reduced.from.3.31.HK.cents.in.2010.to. 3.18.HK.cents.in.2011. Turnover from the Group’s travel business increased from approximately HK$1,375.3 million in 2010 to approximately HK$1,398.8millionin2011, withitsgrowthbeing affectedby the continuing economic turmoil in its core market of North America.Ticketingrevenue rosetoapproximatelyHK$1,315.8 million, comparedto approximatelyHK$1,281.5 millioninthe lastcorrespondingyear.Thetravelbusinesspostedasegment loss of approximately HK$11.2 million, compared with a segmentprofitof approximatelyHK$8.2millionin2010. Possessing a unique combination of cultural and entertainment elements for visitors worldwide, Ponte 16 achieved continuous operating improvement in 2011 and recordedanetprofitforthefirsttimesincethecommencement of its operation. During the year under review, Ponte 16 continued to attain growth in gross gaming revenue which outpaced Macau’s overall industry growth, and its EBITDA* increased by approximately 53.4% to approximately HK$316.8 million(2010: approximatelyHK$206.6 million). The Group’s shared profit of the associates relating to Ponte16fortheyear ended31December2011amountedto approximatelyHK$3.3 million, whileitposted a sharedloss of approximatelyHK$44.4millionin2010. RIGHTS.ISSUE Withreferencetothe announcementdated25October2011.issued by the Company, the Company proposed to raise approximatelyHK$308.9 million,before expenses,byissuing 1,625,976,154rights sharestothequalifyingshareholdersby way.of.the.rights.issue.at.the.subscription.price.of.HK$0.19.per.rights.share.on.the.basis.of.two.rights.shares.for.every.three.shares.held.on.the.record.date.(“Rights.Issue”). The circular of the Company dated 22 November 2011 in relation to, among other things, the Rights Issue and the whitewash.waiver.was.despatched.to.the.Company’s.shareholders on the same date. The Rights Issue and the whitewash waiver.were approved by the.independent.shareholders.at.the.special.general.meeting.of.the.Company.held on 9 December 2011 and the prospectus of the.Company.dated.21.December.2011.containing.the.details.oftheRightsIssue(the “Prospectus”)togetherwiththe provisional allotment letter for the rights shares and the applicationformfor excess rights shares weredespatchedto the.qualifying.shareholders.on.21.December.2011. The Rights Issue was conditional upon the obligation of SilverRichMacauDevelopmentLimited(“SilverRich”, a controllingshareholderoftheCompanyandwholly-ownedbya discretionarytrust,thebeneficiariesofwhicharefamilymembers ofMr.YeungHoiSing,Sonny(“Mr.Yeung”,beingadirectoranda controllingshareholderoftheCompany))undertheunderwriting agreemententeredintobetweentheCompanyandSilverRich, as underwriter regarding the underwriting and certain other arrangementsinrespect of theRightsIssue(the “Underwriting Agreement”)becoming unconditional. As all the conditions set outin the Underwriting Agreementhave been fulfilled, the Rights Issuehasbecome unconditional on 12 January 2012. 1,625,976,154 shares have been allotted and issued by the CompanyundertheRightsIssue on18January2012andthe RightsIssuehasbeencompletedonthesamedate. The net cash proceeds of theRightsIssue, after the setting offbytheAssignedLoans(asdefinedhereinafter)fromSilver Rich,is approximatelyHK$173.2million, whichwillbe applied asfollows:(i) uptoHK$100.0 millionfor settlement ofpart of thethirdparty interest-bearing loans whentheyfalldue on22 October2012;(ii)approximatelyHK$29.0millionforfulfillment oftheGroup’s commitmenttoprovidefinancialassistanceto the joint venture companyin relationtotheLotteryBusiness; and(iii) the remainingbalance of approximatelyHK$44.2 millionforgeneralworkingcapitaloftheGroup. Basedonthe reducedinterest-bearingborrowings as a result of.the.said.setting.off,.repayment.of.certain.interest-bearing.loans.and.the.enlarged.total.equity.attributable.to.owners.of.the.Company,.the.Group’s.gearing.ratio.would.be.reduced.accordingly. DIVIDENDS No interim dividend was paid in 2011 (2010: Nil). The.directors.of.the.Company.(“Director(s)”).do.not.recommend.any payment of a final dividend for the year ended 31 December.2011.(2010:.Nil). *.EBITDA:EarningsBeforeInterest,Taxes,Depreciation andAmortisation aiming.to.expand.its.presence.in.the.China.market. Success.Universe.Group.Limited 12 Annual.Report.2011 approximatelyHK$1,398.8million, comparedtoapproximately HK$1,375.3 millionin2010.Lossin this segment amounted to approximately HK$11.2 million, compared with a profit of approximately HK$8.2 million in 2010, and an impairment loss on certain assets of approximately HK$4.6 million was recognisedduringtheyear. During the year, the Group continued to focus on the high-end market.segment.and.further.developed.its.MICE.(Meeting, Incentive, Convention and Exhibition) business, tapping into the high growth potential of the market. The granting of “Approved Destination Status” to Canada by.China’s authorities has further opened up opportunities for inbound tours. As part of its three-pronged business.strategy, the.Group.has.also.expanded.its.presence.in.the.China.market.and.seized.further.cross-selling.opportunities.with.Ponte.16.and.the.Group’s.cruise.ship.business.through.cooperation.with.travel.operators.in.Mainland.China.. unitsinHongKong,Macau andits travel eslocatedinCanada andtheUSA (the“JadeTravelGroup”)whichoperate theircorebusinessinNorthAmer Turnoverinthis segmentincreased by approximately 2% to Success.Universe.Group.Limited 13 Annual.Report.2011 compani ManagementDiscussion andAnalysis(continued) 　 Cruise.Ship.Business. The.cruise.ship.business.continued.to. ManagementDiscussion andAnalysis(continued) 　 Investment.Project.–.Ponte.16. Leveraging.the.strong.growth.momentum.of.the.Macau.gaming.industry.and.the.resort’s.strong.international.brand.positioning,.Ponte.16.continued.to.outperform.the.overall.Macau.gaming.industry.and.achieved.its.first.net.profit.in.2011. Success.Universe.Group.Limited Annual.Report.2011 ManagementDiscussion andAnalysis(continued) 　 Investment.Project.–.Ponte.16 Substantialimprovementdrivenbystrongmomentum.of.the.Macau.gaming.market. Jackson(“MJ”) –aniconicpiecefromtheMJGallery at Ponte16(the “Gallery”),thefirstand onlyMJgallery inAsia. Followingthe series ofhighlysuccessful exhibitions,Ponte16 proudlystagedthegrandfinale oftheChinatourinMacau. Inaddition,Ponte16sponsoredthevenueforthe “Legends” Auction.held.by.renowned.auction.house,.Julien’s.Auctions,.in October 2011. As one of the most “star-studded” international auctions in Asia, it attracted numerous enthusiastic buyers.and.collectors.from.around.the.world.. Atotalof517stage costumes and celebritycollectables were.soldduringthe11-hour auction.The itemsincludedpersonal.belongings of Bruce Lee, Elvis Presley, Madonna, Marilyn Monroe,.MJ.and.The.Beatles,.as.well.as.an.assortment.of.artifacts from Hollywood movies. Among them, the dress worn.by.Marilyn.Monroe.in.“River.of.No.Return”.was.sold.for.US$504,000.including.buyer’s.premium,.while.Madonna’s.“Who’s That Girl” tour bustier received overwhelming responses from.international.bidders.and.sold.at.a.record.price.of.US$72,000.including.buyer’s.premium. Success.Universe.Group.Limited 17 Annual.Report.2011 ManagementDiscussion andAnalysis(continued) 　 In.November.2011,.Ponte.16.opened.a.luxury.MJ-themed.VIP.mansion.–.the.MJ.Mansion.–.in.order.to.replicate.the.remarkable.success.of.the.Gallery.by.injecting.additional.MJ.elements.into.the.highly-regarded.hotel.resort..This.initiative.further enhancedPonte16’s uniquepositioning and enriched its.appeal.to.potential.visitors.from.near.and.far.. The.award-winning.Sofitel.Macau.At.Ponte.16.continued.to.be.one.of.the.preferred.accommodation.choices.for.visitors.from Mainland China and overseas. Throughout the year under review, the five-star hotel attained not only a high.occupancy.rate,.but.also.a.more.diverse.customer.mix.. With its.splendid.world-class.services.and.facilities,.Sofitel.Macau At Ponte 16 received various industry awards in 2011. The magnificent resort hotel was named “China’s Best Hotel Manager” by LifeStyle Magazine in its “2010 China’s.Best.Hotels.Awards”,.“Customer.Satisfaction.Award.(Macau)” by Rakuten Travel, “The Best Theme Hotel in.Chinese Hospitality Award” by “The 3rd China Hotel Gold.Champion Award”, “China’s Top 10 Most Popular Resort Hotels.of.2011” by.“The.8th Golden-Pillow.Award.of.China.Hotels”, “2011BestBusinessHotel”byNationalGeographic Traveler(Chinaedition) inits “GoldListAward ofChina Tourism”,.“Best.Leisure.Hotel” by.Travel.&.Leisure.website,.“China’s.100.Best.Hotel.in.2011” by.China.Travel.+.Leisure.Magazine.and.“Best.Club.Floor”by.China.Voyage.Magazine.in.its.“2011.Hotel.&.Resorts.Best.Value.Awards”..All.these.accolades have.demonstrated.Ponte.16’s.commitment.to.achieving.and.exceeding.customers’ expectations.. Steady progress has been made during the year on the expansion plan of Ponte 16, which aims to further enrich the gaming and entertainment offerings of the resort. Success.Universe.Group.Limited 18 Annual.Report.2011 ManagementDiscussion andAnalysis(continued) 　 ManagementDiscussion andAnalysis(continued) 　 Success.Universe.Group.Limited Annual.Report.2011 ManagementDiscussion andAnalysis(continued) 　 Strategically.planned.to.harness.the.growth.potential. With.reference.to.the.announcement.dated.25.August.2011issuedbytheCompany,theGroupcontinued to.develop.the.Lottery.Business.in.2011.in.order.to grasp the rapidly growing opportunities in China’s.flourishing.lottery.industry..The.Group provides a technology service platform and technical support as well as sports lottery sales agency services to China’s mobile sports lottery market through the subsidiaries of a joint venture company(the “JVCompany”). TheGrouphasbeen authorised to.provide.sports.lottery.sales.agency services via mobile in.the.Jiangxi.and.Qinghai.provinces.in.Mainland.China..A.dedicated website for the Lottery Business, 128cai.com (www.128cai.com), has also been launched to offer information and hot tips on the lottery market as well as round-the-clock.online.customer.services.. China’s burgeoning lottery industry has an enormous growth potential, with a CAGR＃ of lottery sales revenue of approximately 23% in the last ten years and year-on-year growth of approximately 33% in 2011 to approximately RMB221.6 billion. This will offer generous prospects for players, including the Group, who possess well-connected networks and a sound business strategy. The Group is confident that theLotteryBusinessinChina will contribute a significantproportion ofrevenuefortheGroupinthelong-run. # CAGR:.Compound.Annual.Growth.Rate ManagementDiscussion andAnalysis(continued) 　 The.Group.will.continue.to.strengthen.its.business.platforms..Over.the.long-term, the.Group.is.well.positioned.to.further.enrich.its.extensive.business.portfolio.in.the.travel.and.entertainment.sectors. Success.Universe.Group.Limited Annual.Report.2011 ManagementDiscussion andAnalysis(continued) 　 FINANCIAL.REVIEW Liquidity,.Financial.Resources.and.Gearing As at31December2011,theGrouphadnetcurrentliabilities.of.approximately.HK$288.0.million.(31.December.2010:.net.current.assets.of.approximately.HK$117.9.million).and.net.assets of approximatelyHK$502.1 million(31December 2010:.approximately HK$593.6.million)..Various.loans.and.payables which.will.become.mature.within.the.coming.12.months.were.reclassified.as.current.liabilities. On.1.December.2008,.Mr..Yeung.provided.a.HK$200.million.term.loan.facility.to.the.Company.which.is.unsecured.and.charged with interest at the prime rate quoted for Hong KongdollarsloansbyTheHongkongandShanghaiBanking Corporation.Limited..The.principal.amount.of.the.loan.facility.wasincreased uptoHK$290million on14April2009andthe final.repayment.date.of.the.loan.and.all.other.sums.owing.to.Mr.Yeungunderthe revisedloanfacilitywasfurther extended from 30 October 2012 to 31 October 2013 by a letter agreement dated 15 March 2012(“Yeung Loan Facility”). Reference was madetotheProspectus, aportion oftheloan undertheYeungLoanFacilityinthe amountof approximately HK$104.7 million was assigned toSilverRich(“Assigned Yeung.Loan”)..As.at.31.December.2011,.the.Company.had.owed.to.Mr..Yeung.in.the.amount.of.approximately.HK$30.3.million.(31.December.2010:.HK$105.0.million). On.22.October.2009,.the.Company.as.borrower.and.New.ShepherdAssetsLimited(“NewShepherd”), a wholly-owned subsidiary of the Company, as security provider entered into.an.agreement.in.relation.to.a.HK$250.million.revolving.credit.facility.(the.“Revolving.Credit.Facility”).with.a.financial.institution(the “Lender”)aslender,whichisathirdparty independent.of.the.Company..The.Revolving.Credit.Facility.carries afloatinginterest rate andtheloan under suchfacility shall.be.repayable.on.or.before.36.months.after.22.October.2009..The.proceeds.of.the.Revolving.Credit.Facility.should.beappliedforon-lendingtoPier16–PropertyDevelopment Limited(“Pier16 –PropertyDevelopment”)inconnection with the cash flow requirements of Pier 16 – Property Development.and.its.subsidiaries..As.at.31.December.2011,.the.Company.had.utilised.the.Revolving.Credit.Facility.in.the.amount ofHK$246.0 million(31December2010:HK$246.0 million).and.the.said.amount. was reclassified as current liabilities.in.2011. Jade Travel Ltd. (“Jade Travel,Canada”of the Company whigranted secured bank lcarry.a fixed.interest.rate.and.the.loans.shall.be repayable by consecutive monthly instalments. The proceeds.of.the.loans.were.to.finance.the.acquisition.of.the.new.properties.of.Jade.Travel,.Canada.and.their.renovation.costs.As at31December2011,the outstanding loans were equivalent.to.approximately.HK$13.6.million.(31.December.2010:.equivalent.to.approximately.HK$14.5.million). Reference was made to the Prospectus, the loan from a related company to a subsidiary of the Company in the amount.of.approximately.HK$23.4.million.was.assigned.to.Silver Rich.while.the.said.subsidiary.has.novated.and.the.Companyhas assumedthe relatedliabilities(“Assigned SS.Loan”)..As.at.31.December.2011,.the.Group.had.owed.a non-interest bearing loan to that related company of approximately.HK$0.1.million.(31.December.2010:.interest-bearing loan.equivalent.to.approximately.HK$23.2.million)..Theloanis unsecuredand chargedwithinterestatthe rate of 4%per annumin2010andhas nofixedterms ofrepayment. As.at.31.December.2011,.the.outstanding.loan.from.Silver.Rich was approximatelyHK$128.3 million(31December.2010: Nil), being the aggregate amount of the Assigned Yeung Loan and Assigned SS Loan in the amount of approximatelyHK$128.1 million(“AssignedLoans”) and subsequent.interest.accrued.thereon..The.Assigned.Yeung.Loan.is.charged.with.interest.at.the.prime.rate.quoted.for.Hong.Kong.dollars.loans.by.The.Hongkong.and.Shanghai.Banking Corporation Limited and the Assigned SS Loan is charged with interest at the rate of 4% per annum. Subsequent to the year-end date, on 12 January 2012, the Assigned.Loans.had.been.used.to.set.off.against.the.aggregate subscription price of the 673,968,954 rights shares provisionally.allotted.to.Silver.Rich.pursuant.to.the.Rights.Issue. Success.Universe.Group.Limited 23 Annual.Report.2011 ManagementDiscussion andAnalysis(continued) 　 HK$192.2 million (31 December 2010: approximately HK$192.2million).The loans areinterest-free andunsecured. These.included.approximately.HK$152.7.million.which.was.reclassified.as.current.liabilities.in.2011,.and.the.remaining.amount.of.approximately.HK$39.5.million.which.will.not.be.repaid.within.the.next.12.months. Takinginto accounttheloanfacility andfinancial undertaking by.Mr..Yeung.and.an.additional.funding.generated.from.the.RightsIssue,theGroupwillhave sufficient working capitalfor its.current.requirements..Accordingly,.the.Directors.consider.that.it.is.appropriate.to.prepare.these.consolidated.financial.statements.on.a.going.concern.basis. Total equity attributable to owners of the Company as at 31 December 2011 was approximately HK$470.2 million (31 December 2010: approximately HK$547.9 million). Accordingly,.the.gearing.ratio,.which.was.measured.on.the.basis.of.the.interest-bearing.borrowings.of.the.Group.over.total equity attributable to owners of the Company, was approximately.89%.as.at.31.December.2011.(31.December.2010:.approximately.71%). Provision.of.Further.Financial.Assistance.to.Pier.16.–.Property.Development With referencetothe announcementdated25June.2010 issued by the Company, there was no further additional shareholders’ loans provided to Pier 16 – Property Development during the year (31 December 2010:.approximately HK$134.9.million,.which.were.mainly.to finance the construction cost and the repayment of indebtedness.by.Pier.16.–.Property.Development). Success.Universe.Group.Limited 24 Annual.Report.2011 Pledge.of.Assets As at 31 December 2011, the Group had secured the.following.assets: (a). the.Group.pledged.the.time.deposits.of.approximately.HK$7.9 million(31December2010: approximately HK$8.1 million) to certain banks for the issuance of several bank guarantees and a standby letter of credit facility of approximately HK$9.9 million (31 December 2010: approximately HK$10.2 million) for the.operations.of.the.Group; (b). World Fortune Limited, an indirect subsidiary of the Company,pledged all(31December2010:100%) of.its.shares.in.Pier.16.–.Property.Development.to.a.bank,.for.and.on.behalf.of.the.syndicate.of.lenders,.in.respect.of.syndicated.loan.facilities.granted.to.Pier.16. –.Property.Development; (c). NewShepherdpledged51%(31December2010: 51%) of.the.entire.issued.share.capital.from.time.to.time ofFavorJumboLimited, anindirect wholly-owned subsidiary.of.the.Company,.to.the.Lender.in.respect.of.the.Revolving.Credit.Facility.granted.to.the.Company;.and (d). the Group’s self-occupied properties with carrying amount of equivalentto approximatelyHK$20.6 million (31 December 2010: equivalent to approximately HK$21.6 million) were pledged to a bank to secure bank.loans.to.Jade.Travel,.Canada. Contingent.Liabilities As.at.31.December.2011,.the.Company.gave.a.corporate.guarantee for the syndicated loan facilities of HK$1,600 million.granted.to.an.associate.of.the.Group.(31.December.2010:.HK$1,600.million)..The.maximum.guarantee.amount.borne.by.the.Company.was.HK$860.million.(31.December.2010:.HK$860.million)..The.total.loan.outstanding.and.bank.guarantee.facility.from.the.syndicated.loan.facilities.for.the.associate as at31December2011wereHK$560 million and HK$240.million.respectively.(31.December.2010:.HK$800.million.and.HK$240.million.respectively). ManagementDiscussion andAnalysis(continued) 　 HUMAN.RESOURCES As at 31 December 2011, the Group.had a total of 470 employees. Remuneration is determined on the basis of qualifications, experience, responsibilities and performance. Apartfromthebasic remuneration, staff benefits.include.medical.insurance.and.retirement.benefits.under.the.Mandatory.Provident Fund Scheme. Share options might.also.be.granted.to.eligible.employees.of.the.Group.as.a.long-term.incentive. PROSPECTS Looking ahead, despite the volatile worldwide economy,.robust.economic.fundamentals.of.China.are.still.the.strong.growth.drivers.for.the.Group’s.businesses. For the Group’s travel business, its operation in North America may continue to encounter challenges given the uncertain economic prospects for the USA and the prolonged Eurozone.crisis..However,.outbound.tours.from.the region.are.expected.to.see.an.improved.performance.owingtothegradual recovery ofthebusiness environmentin the.USA,.while.the.sustained.growth.of.the.Chinese.affluent.class.will.continue.to.lead.to.opportunities.in.inbound.tours.fromChina.To channelbusinessestotheJadeTravelGroup, the.Group.is.actively.continuing.to.solicit.business.partners.with.sound.credibility.in.China.and.identify.opportunities.to.expand.its.corporate.and.group.tour.businesses. The growth momentuminChinais expected to continue as thedrivingforceforbothvisitation and spendingintheMacau gaming industry, from which Ponte 16 stands to benefit. In addition, the opening of new resorts has enriched the entertainmentscene ofMacauas awhole andboostedoverall touristarrivalsforthe entire market.Leveragingonthegrowing momentum ofMacau’s gaming industry, theGroupbelieves thecombination ofPonte16’s uniquepositioningandsuperior services willsustainitsleadingroleinthe market. Buildingonits risinginternational reputation,Ponte16 willjoin hands again with Julien’s Auctions to stage an MJ-themed exhibitiontour inGreaterChina in2012.ThiswillbringPonte16 underthespotlightoftheworldonceagainandfurtherbroaden itscustomerbase. To bring.new.entertainment.offerings.to.Macau,.Ponte.16.is.in.the.process.of.rolling.out.the.Phase.3.Project..This.new.phase is set to further diversify the shopping, dining and entertainment experiences, and expand the scale of the world-class.casino.in.Ponte.16..The.Phase.3.Project,.upon.its.completion,.is.poised.to.bring.another.stable.stream.of.revenue.for.the.Group. The Ministry of Finance, Ministry of Civil Affairs and General.Administration.of.Sport.of.China.jointly.announced.the Implementation Details of the Regulations on the AdministrationofLottery(the “ImplementationDetails”)in January 2012, with approval from the State Council. The Implementation Details, effective from 1 March 2012, will strengthen the monitoring and management of China’s lottery industry. The measures are expected to create a healthymarket environmentto supportthelong-termgrowth of the.industry..With.a.well-established.technology.service.platform and network, the Group will actively seek out opportunities.to.expand.the.business.to.other.provinces.in.Mainland.China.via.the.subsidiaries.of.the.JV.Company. The.Group.remains.optimistic.on.the.outlook.for.Macau.and.China..To take.advantage.of.the.ample.growth.opportunities.in.China,.the.Group.will.continue.to.strengthen.its.business.platforms.by.implementing.its.three-pronged.strategy..Over.the.long-term,.the.Group.is.well-positioned.to.further.enrich.its.extensive.portfolio.of.assets.for.maximising.value.for.its.shareholders,.partners.and.customers. Success.Universe.Group.Limited Annual.Report.2011 SuccessUniverseGroupLimited(the “Company”)iscommittedtomaintainhigh corporategovernancestandard and.procedures.to.ensure.the.integrity,.transparency.and.quality.of.disclosure.in.order.to.enhance.the.shareholders’.value. CORPORATE.GOVERNANCE.PRACTICES Inthe opinion ofthedirectors oftheCompany(“Director(s)”),theCompanyhas appliedtheprinciples andcompliedwith allthe.codeprovisions as set outintheCode onCorporateGovernancePractices containedinAppendix14 oftheRulesGoverning theListing ofSecuritiesonTheStockExchangeofHongKongLimited(the “ListingRules”)duringtheyearended31December 2011. DIRECTORS’.SECURITIES.TRANSACTIONS TheCompanyhasadoptedacodeof conduct regarding securitiestransactionsbyDirectors(the “CodeofConduct”)onterms.no.less.exacting.than.the.required.standard.of.the.Model.Code.for.Securities.Transactions.by.Directors.of.Listed.Issuers.(the.“Model.Code”).as.set.out.in.Appendix.10.of.the.Listing.Rules. Having.made.specific.enquiry.of.all.Directors.who.held.office.during.the.year.ended.31.December.2011,.each.of.whom.has.confirmed.his/her.compliance.with.the.required.standard.set.out.in.the.Code.of.Conduct.and.the.Model.Code.throughout.the.year.under.review. BOARD.OF.DIRECTORS The.board.of.Directors.(the.“Board”),.led.by.its.chairman.(the.“Chairman”),.Mr..Yeung.Hoi.Sing,.Sonny,.is.responsible.for.overseeing the.management.of.the.business.and.affairs,.considering.and.approving.strategic.plans.and.major.corporate.matters,.as.well.as.reviewing.operational.and.financial.performance..The.Board.is.committed.to.make.decisions.in.the.best.interests.of.both.the.Company.and.its.shareholders. TheBoardcurrently consists of six members, includingtwo executiveDirectors, namelyMr.YeungHoiSing,Sonny(Chairman) andDr.MaHoMan,Hoffman(DeputyChairman); anon-executiveDirector,namelyMr.ChoiKinPui,Russelle(the “NED”);and three.independent.non-executive.Directors,.namely.Mr..Luk.Ka.Yee,.Patrick,.Ms..Yeung.Mo.Sheung,.Ann.and.Mr..Chin.Wing.Lok,Ambrose(collectively“INEDs”).Mr.ChinWingLok,Ambrosewasappointed asanindependent non-executiveDirectorin replacement ofMr.YimKaiPung witheffectfrom1March2012.TheDirectors’biographicalinformationis set outinthe section headed.“Biographical.Details.of.Directors.and.Senior.Management”.on.pages.43.and.44. TherolesoftheChairmanandtheDeputyChairmanoftheBoard(the “DeputyChairman”)whoperformsthefunctionof chief executive officer are segregated and assumedby separateindividualsto strike abalance ofpower and authority sothatpower and.job.responsibilities.are.not.concentrated.in.any.one.individual.of.the.Board..The.Chairman,.Mr..Yeung.Hoi.Sing,.Sonny,.is.responsible.for.overseeing.the.function.of.the.Board.and.formulating.overall.strategies.and.policies.of.the.Company,.while.the.DeputyChairman,Dr.MaHoMan,Hoffman,is responsiblefor implementingtheCompany’s strategies regardingthebusiness development.of.the.Company.and.its.subsidiaries.(collectively.the.“Group”).as.well.as.managing.the.Group’s.business.and.operations..The.functions.and.responsibilities.between.the.Chairman.and.the.Deputy.Chairman.are.clearly.segregated. CorporateGovernanceReport(continued) 　 Except.that.Dr..Ma.Ho.Man,.Hoffman.is.the.nephew.of.Mr..Yeung.Hoi.Sing,.Sonny,.to.the.best.knowledge.of.the.Directors,.thereis nofinancial,business,family and/or other material/relevant relationship among members oftheBoard andbetweenthe Chairman.and.the.Deputy.Chairman.who.performs.the.function.of.chief.executive.officer. TheBoardincludesthreeINEDs andone ofthem,Mr.ChinWingLok,Ambrose,is a certifiedpublic accountant(practising)and afellow member oftheHongKongInstitute ofCertifiedPublicAccountants, afellow member ofTheAssociation ofChartered Certified.Accountants.as.well.as.a.certified.tax.adviser.and.a.fellow.member.of.The.Taxation.Institute.of.Hong.Kong..He.has.over.25.years.of.experience.in.auditing,.accounting.and.taxation. The NED.and.all.INEDs.entered.into.service.contracts.with.the.Company.for.a.term.of.one.year,.save.that.the.term.of.appointment.of.Mr..Chin.Wing.Lok,.Ambrose.under.his.service.contract.is.for.the.period.from.1.March.2012.to.31.December.2012..Pursuant.to.the.bye-laws.of.the.Company,.all.Directors.appointed.by.the.Board.shall.hold.office.until.the.next.following.general.meeting.of.the.Company.(in.case.of.filling.a.casual.vacancy).or.until.the.next.following.annual.general.meeting.of.the.Company.(in.case.of.an.addition.to.the.number.of.Directors).after.their.appointment.and.the.retiring.Director.shall.be.eligible.for re-election.In addition, ateach annualgeneral meeting oftheCompany, one-third oftheDirectors shallretirefrom officeby rotation.such.that.all.Directors.should.be.subject.to.retirement.by.rotation.at.least.once.every.three.years. The.Board.meets.regularly.throughout.the.year.as.and.when.required..Notices.of.at.least.14.days.are.given.to.all.Directors.for.all.regular.Board.meetings..The.company.secretary.of.the.Company.assists.the.Chairman.in.preparing.the.agendas.for.the.meetings and allDirectors are consultedtoinclude any mattersinthe agendas.Agenda and accompanyingboardpapers are given.to.all.Directors.in.a.timely.manner.and.at.least.3.days.before.the.appointed.date.of.each.meeting. During.the.year.under.review,.four.regular.Board.meetings.and.two.non-regular.Board.meetings.were.held..Details.of.the.Directors’.attendance.at.the.said.Board.meetings.are.set.out.below: Number.of.Board.meetings.Directors attended/held Executive.Directors Mr..Yeung.Hoi.Sing,.Sonny.(Chairman) 5/6. Dr..Ma.Ho.Man,.Hoffman.(Deputy.Chairman) 5/6. Non-executive.Director Mr..Choi.Kin.Pui,.Russelle.6/6 Independent.non-executive.Directors Mr..Luk.Ka.Yee,.Patrick.6/6 Mr..Yim.Kai.Pung.(resigned.with.effect.from.1.March.2012).6/6 Ms..Yeung.Mo.Sheung,.Ann 6/6 The Board has agreed on a procedure to enable the Directors to seek independent professional advice in appropriate circumstances, at the Company’s expense, to assist them to discharge their duties. Adequate, complete and reliable information.is.provided.to.the.Directors.in.a.timely.manner.to.keep.them.abreast.of.the.Group’s.latest.developments.and.any.major.changes.to.the.relevant.rules.and.regulations.and.thus.can.assist.them.in.discharging.their.duties. DELEGATION.BY.THE.BOARD The.Board.has.established.three.Board.committees,.namely.the.audit.committee.(the.“Audit.Committee”),.the.remuneration.committee.(the.“Remuneration.Committee”).and.the.executive.committee.(the.“Executive.Committee”).to.oversee.particular.aspects.of.the.Company’s.affairs.and.to.assist.in.sharing.the.Board’s.responsibilities..The.Board.has.reserved.for.its.decision.or consideration on matters covering corporate strategy, annualandinterim results, changes of members oftheBoard and its committees,.major.acquisitions,.disposals.and.capital.transactions,.and.other.significant.operational.and.financial.matters..All.the.Board.committees.have.clear.written.terms.of.reference.and.have.to.report.to.the.Board.regularly.on.their.decisions.and.recommendations.Theday-to-day running oftheGroup,includingimplementation ofthe strategies andplans adoptedbythe Boardandits committees,isdelegatedto management withdivisionalheads responsiblefordifferent aspects ofthebusiness/ affairs. AUDIT.COMMITTEE TheCompanyformulatedwrittenterms of referencefortheAuditCommittee in accordance withthe requirements oftheListing.Rules,fulltextofwhichis available ontheCompany’s website.TheAuditCommittee currently consists oftheNEDandallINEDs and.is.chaired.by.Mr..Chin.Wing.Lok,.Ambrose,.who.was.appointed.as.the.chairman.and.a.member.of.the.Audit.Committee.in.replacement.of.Mr..Yim.Kai.Pung.with.effect.from.1.March.2012..Mr..Chin.possesses.appropriate.professional.accounting.qualification.as.required.under.the.Listing.Rules. The.primary.duties.of.the.Audit.Committee.include,.inter.alia,.monitoring.integrity.of.the.financial.statements.of.the.Company.and ensuring objectivity and credibilityoffinancialreporting, reviewing effectiveness oftheinternal control system oftheGroup as.well.as.overseeing.the.relationship.with.the.external.auditors.of.the.Company. During.the.year.under.review,.three.Audit.Committee.meetings.were.held.and.several.resolutions.in.writing.were.passed.by.all.members.of.the.Audit.Committee..Details.of.attendance.of.the.Audit.Committee.members.at.the.said.Audit.Committee.meetings.are.set.out.below: Number.of.Audit.Committee.Audit.Committee.members meetings.attended/held Mr..Yim.Kai.Pung.(Chairman.of.the.Audit.Committee).3/3 (resigned.with.effect.from.1.March.2012) Mr..Choi.Kin.Pui,.Russelle 3/3 Mr..Luk.Ka.Yee,.Patrick.3/3 Ms..Yeung.Mo.Sheung,.Ann 3/3 During.the.year.under.review,.the.Audit.Committee.had.considered,.reviewed.and/or.discussed.(i).the.auditing.and.financial.reporting matters;(ii)the appointment of external auditorsincludingtheterms ofengagement;(iii)the annualandinterim results; and.(iv).the.effectiveness.of.the.internal.control.system.of.the.Group..Each.member.of.the.Audit.Committee.has.unrestricted.access.to.the.external.auditors.and.all.senior.staff.of.the.Group. CorporateGovernanceReport(continued) 　 REMUNERATION.COMMITTEE The.Company.formulated.written.terms.of.reference.for.the.Remuneration.Committee.in.accordance.with.the.requirements.of.the.Listing.Rules,.full.text.of.which.is.available.on.the.Company’s.website..The.Remuneration.Committee.currently.consists.of the.Chairman.of.the.Board,.the.NED.and.all.INEDs.(including.Mr..Chin.Wing.Lok,.Ambrose,.who.was.appointed.as.a.member.of.the.Remuneration.Committee.in.replacement.of.Mr..Yim.Kai.Pung.with.effect.from.1.March.2012).with.Mr..Yeung.Hoi.Sing,.Sonny.acts.as.the.chairman.of.the.Remuneration.Committee. The major responsibilities oftheRemunerationCommittee areto make recommendationtotheBoardontheCompany’spolicy and.structure.for.remuneration.of.the.Directors.and.senior.management.of.the.Company.(“Senior.Management”).and.on.the.establishment.of.a.formal.and.transparent.procedure.for.developing.remuneration.policy,.to.determine.specific.remuneration.packages.of.all.executive.Directors.and.the.Senior.Management.and.also.to.make.recommendations.to.the.Board.of.the.remuneration oftheNEDandallINEDs.TheRemunerationCommitteetakesinto consideration onfactors suchas salariespaid by.comparable.companies,.time.commitment.and.responsibilities.of.the.Directors.and.the.Senior.Management. During.the.year.under.review,.one.Remuneration.Committee.meeting.was.held.and.several.resolutions.in.writing.were.passed.byall members oftheRemunerationCommitteefor,inter alia, reviewingthe remunerationpolicy and structurefor as well asthe remunerationpackages ofallDirectors andtheSeniorManagement, andconsideringthe changes ofthe remunerationpackage of.one.of.the.Senior.Management..Details.of.attendance.of.the.Remuneration.Committee.members.at.the.said.Remuneration.Committee.meeting.are.set.out.below: Number.of.Remuneration.Committee.Remuneration.Committee.members meeting.attended/held Mr..Yeung.Hoi.Sing,.Sonny.(Chairman.of.the.Remuneration.Committee) 1/1 Mr..Choi.Kin.Pui,.Russelle 1/1 Mr..Luk.Ka.Yee,.Patrick 1/1 Mr..Yim.Kai.Pung.(resigned.with.effect.from.1.March.2012) 1/1 Ms..Yeung.Mo.Sheung,.Ann 1/1 In.order.to.comply.with.the.new.rules.(the.“New.Rules”).and.the.new.code.provisions.of.the.Corporate.Governance.Code.(the“NewCode”)intheListingRuleswhich willtakeeffect on1April2012,attheBoard meetingheld on29March2012(the “Board.Meeting.Held.on.29.March.2012”),.the.Board.has.resolved.to.(i).appoint.Mr..Luk.Ka.Yee,.Patrick.as.the.chairman.of.the.Remuneration.Committee.in.place.of.Mr..Yeung.Hoi.Sing,.Sonny.with.effect.from.30.March.2012;.(ii).amend.the.terms.of.referencefortheRemunerationCommittee inline withtheNewRules andtheNewCode on30March2012; and(iii)to remain thedelegation ofthe responsibilitytotheRemunerationCommittee ondetermination ofthe remunerationpackages ofindividual executive.Directors.and.Senior.Management. EXECUTIVE.COMMITTEE The.Executive.Committee.was.established.by.the.Board.with.specific.written.terms.of.reference..It.currently.consists.of.all.executive.Directors,.namely.Mr..Yeung.Hoi.Sing,.Sonny.and.Dr..Ma.Ho.Man,.Hoffman.with.Mr..Yeung.Hoi.Sing,.Sonny.acts.as.the.chairman.of.the.Executive.Committee..The.Executive.Committee.is.responsible.for.reviewing.and.approving,.inter.alia,.any matters concerningtheday-to-day management,business and operations affairs oftheCompany, and any matterstobe delegated.to.it.by.the.Board.from.time.to.time. NOMINATION.OF.DIRECTORS The.Company.did.not.establish.a.nomination.committee.during.the.year.under.review.and.the.Board.is.responsible.for.reviewingits size, structure and composition(includingthe skills,knowledge and experience ofits members)fromtimetotime as.appropriate.to.ensure.that.the.Board.has.a.balance.of.skills.and.experience.appropriate.for.the.business.of.the.Company..Besides,.the.Board.is.responsible.for.assessing.the.independence.of.INEDs.and.considering.any.appointment.of.its.own.membersaswell asmaking recommendationstotheshareholdersoftheCompany(the “Shareholders”)onDirectorsstanding for.re-election.at.the.general.meeting.following.their.appointments.and.retirement.by.rotation. During.the.year.ended.31.December.2011,.no.new.member.was.appointed.to.the.Board..The.Board.has.(i).recommended.the.re-appointment.of.the.Directors.standing.for.re-election.at.the.annual.general.meeting.of.the.Company.held.on.3.June.2011.(the.“2011.Annual.General.Meeting”);.(ii).reviewed.its.own.size,.structure.as.well.as.composition;.and.(iii).assessed.the.independence.of.INEDs..Besides,.on.29.February.2012,.the.Board.has.passed.a.written.resolution.to.appoint.Mr..Chin.Wing.Lok,.Ambrose.as.an.independent.non-executive.Director.after.taking.into.consideration.of.his.qualification.and.experience. At.the.Board.Meeting.Held.on.29.March.2012,.the.Board.has.resolved.to.establish.a.nomination.committee.(the.“Nomination.Committee”).on.30.March.2012.with.written.terms.of.reference.as.required.under.the.New.Code..The.Nomination.Committee.will.consist.of.the.Chairman.of.the.Board,.the.NED.and.all.INEDs,.and.Mr..Yeung.Hoi.Sing,.Sonny.will.act.as.the.chairman.of.this.committee. INTERNAL.CONTROLS TheBoardis responsiblefor ensuringthattheGroupmaintains sound and effectiveinternal control system so asto safeguard.the investment.of.the.Shareholders.and.the.assets.of.the.Group..The.Company.has.annually.engaged.an.independent.professionalfirm(the“IndependentProfessionalFirm”)toreviewtheinternalcontrolsystemoftheGroupwhichcoversfinancial, operational and compliance controls as wellas risk managementfunctions.Duringtheyear,theIndependentProfessionalFirm has conducteda review oftheinternal control system oftheGroup andthe relevant review reporthasbeen consideredbythe Audit.Committee.for.assessing.the.effectiveness.of.the.said.internal.control.system..The.Board,.through.the.reviews.made.by.theIndependentProfessionalFirm andtheAuditCommittee, concludedthattheGroup’sinternal control system was effective. The.Audit.Committee.has.also.reviewed.the.adequacy.of.resources,.qualifications.and.experience.of.staff.(the.“Accounting.Staff”)oftheCompany’saccounting andfinancial reportingfunction(the “AccountingFunction”),andtheirtrainingprogrammes and.budget.during.the.year..The.Board,.through.the.review.made.by.the.Audit.Committee,.considered.that.the.resources.of.the.Accounting.Function.as.well.as.the.qualifications.and.experience.of.the.Accounting.Staff.are.adequate.and.the.training.programmes.and.budget.for.the.Accounting.Staff.are.sufficient. DIRECTORS’ANDAUDITORS’RESPONSIBILITIESFORTHEFINANCIALSTATEMENTS The.Directors.acknowledge.their.responsibilities.for.the.preparation.of.the.financial.statements.of.the.Group.and.ensure.that.the.financial.statements.are.prepared.in.accordance.with.statutory.requirements.and.applicable.accounting.standards..The.Directors.also.ensure.the.timely.publication.of.the.financial.statements.of.the.Group.. The.statement.of.the.external.auditors.of.the.Company,.HLB.Hodgson.Impey.Cheng,.about.their.reporting.responsibilities.on.the.financial.statements.of.the.Group.is.set.out.in.the.Independent.Auditors’.Report.on.pages.45.and.46. CorporateGovernanceReport(continued) 　 The.Directors.confirm.that,.to.the.best.of.their.knowledge,.information.and.belief,.having.made.all.reasonable.enquiries,.they.are notaware of any material uncertainties relatingto events or conditionsthat may cast significantdoubt upontheCompany’s ability.to.continue.as.a.going.concern. AUDITORS’.REMUNERATION For.the.year.ended.31.December.2011,.the.amounts.paid.to.the.external.auditors.of.the.Group.in.respect.of.the.following.services.provided.to.the.Group.are.as.follows: 31.December.2011 HK$’000 Audit.services 1,658 Other.advisory.services 581 2,239 COMMUNICATION.WITH.SHAREHOLDERS The.Board.is.committed.to.provide.clear.and.full.information.on.the.Group.to.the.Shareholders.through.the.publication.of.notices,.announcements,.circulars.and.financial.reports.of.the.Company..Additional.information,.such.as.press.releases.and.other.business.information.are.also.available.on.the.Company’s.website.at.www.successug.com,.being.updated.in.a.timely.manner. The annualgeneralmeetingprovides a usefulforumfortheShareholdersto exchange views withtheBoard.TheChairman, also being.the.chairman.of.the.Remuneration.Committee,.as.well.as.a.member.of.the.Audit.Committee.were.present.at.the.2011.Annual.General.Meeting.to.answer.the.Shareholders’.questions. Separate resolutions areproposedatgeneralmeetings on eachsubstantiallyseparateissues,includingthe election ofindividual Directors..Notices.of.at.least.20.clear.business.days.and.10.clear.business.days.are.given.to.the.Shareholders.for.all.annual.general.meetings.and.special.general.meetings.of.the.Company.respectively..Detailed.procedures.for.conducting.a.poll.are.clearly.explained.at.the.commencement.of.the.general.meetings.. The.directors.(“Director(s)”).of.Success.Universe.Group.Limited.(the.“Company”).present.their.annual.report.together.with.the.audited consolidatedfinancial statementsoftheCompany anditssubsidiaries(collectivelythe“Group”)fortheyearended31 December.2011. PRINCIPAL.ACTIVITIES TheCompanyis aninvestmentholding company.Its subsidiaries areprincipallyengagedintheleasing and management ofthe.55%.owned.cruise.ship.and.travel-related.businesses. Particulars of.the.Company’s.subsidiaries.as.at.31.December.2011.are.set.out.in.note.19.to.the.consolidated.financial.statements. RESULTS.AND.APPROPRIATIONS The results oftheGroupfortheyear ended31December2011are set outinthe consolidatedincome statement onpage47. No.interim.dividend.was.paid.during.the.year.(2010:.Nil)..The.Directors.do.not.recommend.any.payment.of.a.final.dividend.for.the.year.ended.31.December.2011.(2010:.Nil). SEGMENT.INFORMATION An analysis oftheGroup’sperformancefortheyear ended31December2011bybusiness andgeographical segmentsis set.out.in.note.6.to.the.consolidated.financial.statements. FIVE-YEAR.FINANCIAL.SUMMARY A.financial.summary.of.the.Group.for.the.past.five.financial.years.is.set.out.on.page.128. RESERVES Details ofthe movementsinthe reserves oftheGroupduringtheyear are set outinthe consolidatedstatement of changesin.equity onpage52 ofthis annual report and otherdetails ofthe reserves oftheGroupare set out in note39tothe consolidated financial.statements. CHARITABLE.CONTRIBUTIONS During.the.year,.the.Group.made.charitable.and.other.donations.totalling.approximately.HK$5,000.(2010:.approximately.HK$10,000). PROPERTY,.PLANT.AND.EQUIPMENT Details.of.the.movements.in.the.property,.plant.and.equipment.of.the.Group.during.the.year.are.set.out.in.note.16.to.the.consolidated.financial.statements. ReportofDirectors(continued) 　 SHARE.CAPITAL There.was.no.movement.in.the.share.capital.of.the.Company.during.the.year..Details.of.the.share.capital.of.the.Company.are.set.out.in.note.37.to.the.consolidated.financial.statements. LOANS.AND.BORROWINGS Details.of.the.loans.and.borrowings.of.the.Group.as.at.31.December.2011.are.set.out.in.notes.29,.31,.34,.35.and.36.to.the.consolidated.financial.statements. DIRECTORS The.Directors.who.held.office.during.the.year.and.up.to.the.date.of.this.report.were: Executive.Directors: Mr..Yeung.Hoi.Sing,.Sonny.(Chairman) Dr..Ma.Ho.Man,.Hoffman.(Deputy.Chairman) Non-executive.Director.(“NED”): Mr..Choi.Kin.Pui,.Russelle Independent.Non-executive.Directors.(“INED(s)”): Mr..Luk.Ka.Yee,.Patrick. Ms..Yeung.Mo.Sheung,.Ann Mr..Chin.Wing.Lok,.Ambrose.(appointed.with.effect.from.1.March.2012) Mr..Yim.Kai.Pung.(resigned.with.effect.from.1.March.2012) Mr.ChinWingLok,Ambrose,beingaDirectorappointedbytheboard ofDirectors(the “Board”)with effectfrom1March2012,. shall.retire.from.office.in.accordance.with.bye-law.86(2).of.the.bye-laws.of.the.Company.(the.“Bye-laws”).and,.being.eligible,. will.offer.himself.for.re-election.at.the.forthcoming.annual.general.meeting.of.the.Company.(the.“Annual.General.Meeting”). In.accordance.with.bye-law.87.of.the.Bye-laws,.Mr..Choi.Kin.Pui,.Russelle.and.Mr..Luk.Ka.Yee,.Patrick.shall.retire.by.rotation. and,.being.eligible,.will.offer.themselves.for.re-election.at.the.forthcoming.Annual.General.Meeting. The.Company.has.received.from.each.of.the.INEDs.who.held.office.during.the.year.ended.31.December.2011.an.annual. confirmation.of.his/her.independence.pursuant.to.Rule.3.13.of.the.Rules.Governing.the.Listing.of.Securities.on.The.Stock. ExchangeofHongKongLimited(the“ListingRules”)and considersalloftherelevantINEDstobeindependent.Mr.ChinWing Lok,Ambrose, who was appointedas anINED with effectfrom1March2012,has met alltheindependenceguidelines as set outinRule3.13 oftheListingRulesandhassubmittedtoTheStockExchangeofHongKongLimited(the “StockExchange”) a.written.confirmation.of.his.independence.pursuant.to.the.said.Rule.3.13.after.his.appointment. CHANGES.OF.DIRECTORS’.INFORMATION On29December2011,theNEDand allthethenINEDs, namelyMr.LukKaYee,Patrick,Mr.YimKaiPung andMs.YeungMo.Sheung,Ann, enteredinto new service contracts withtheCompanyfor aterm ofoneyear commencingfrom1January2012, and.each.of.the.NED.and.the.said.INEDs.is.entitled.to.a.director’s.fee.of.HK$120,000.per.annum.for.the.year.of.appointment.under.his/her.service.contract,.while.each.of.them.was.entitled.to.a.director’s.fee.of.HK$105,000.per.annum.for.the.year.of.appointment.in.2011.. Save.as.disclosed.above,.there.was.no.change.in.the.information.of.the.Directors.required.to.be.disclosed.pursuant.to.Rule.13.51B(1).of.the.Listing.Rules.subsequent.to.the.date.of.the.Interim.Report.2011.of.the.Company.and.up.to.the.date.of.this.report. DIRECTORS’.SERVICE.CONTRACTS None oftheDirectorsproposedfor re-election attheAnnualGeneralMeetinghas a service contract withtheCompany which.is.not.determinable.by.the.Company.within.one.year.without.payment.of.compensation,.other.than.statutory.compensation. DIRECTORS’ANDCONTROLLINGSHAREHOLDERS’INTERESTSINCONTRACTSOF.SIGNIFICANCE (A). On.1.December.2008,.the.Company.as.borrower.and.Mr..Yeung.Hoi.Sing,.Sonny.(“Mr..Yeung”),.an.executive.Director.and a.controlling.shareholder.of.the.Company,.as.lender.entered.into.a.letter.agreement.regarding.an.unsecured.term.loan.facility.of.up.to.HK$200.million.(“Loan.Facility”)..The.rate.of.interest.on.the.entire.principal.amount.drawn.and.outstanding.under.the.Loan.Facility.was.the.prime.rate.for.Hong.Kong.dollars.loans.quoted.by.The.Hongkong.and.Shanghai.Banking.Corporation.Limited..On.14.April.2009,.the.Company.and.Mr..Yeung.also.entered.into.a.letter.agreementtoincreasetheprincipal amount oftheLoanFacility uptoHK$290 million.In addition,Mr.Yeungundertook not.to.demand.early.repayment.of.the.loan.and.all.other.sums.owing.to.him.under.the.revised.Loan.Facility.before.30.June.2010.(the.“Final.Repayment.Date”)..The.Final.Repayment.Date.was.extended.to.30.June.2011.by.a.letter.agreement.dated.25.June.2009.and.was.further.extended.to.30.October.2012.by.another.letter.agreement.dated.23.June.2010.. (B). On19October2011,theCompanyenteredintoanunderwriting agreement(the “UnderwritingAgreement”)withSilver RichMacauDevelopmentLimited(“SilverRich”,being a controllingshareholder oftheCompanyand wholly-ownedby a.discretionary.trust.(the.beneficiaries.of.which.were.the.family.members.of.Mr..Yeung)).as.underwriter,.regarding.the.underwriting and certain other arrangementsin respect oftheissueby way of rights of new ordinary shares ofHK$0.01 eachinthe share capitaloftheCompany(“RightsShare(s)”)intheproportion oftwoRightsSharesfor everythree shares of.the.Company.held.on.the.Record.Date.(as.defined.hereinafter),.being.1,625,976,154.new.shares.of.the.Company,.atthesubscriptionpriceofHK$0.19perRightsShare(the “RightsIssue”).DetailsoftheUnderwritingAgreementwere set outinthe announcementdated25October2011,the circulardated22November2011 andtheprospectusdated 21.December.2011.issued.by.the.Company. ReportofDirectors(continued) 　 Pursuant.to.the.Underwriting.Agreement,.an.underwriting.commission.of.2.5%.of.the.aggregate.subscription.price.in.respect ofthe952,007,200RightsShares underwrittenbySilverRich(“UnderwrittenShares”)of approximatelyHK$4.5 million.would.be.paid.by.the.Company.to.Silver.Rich.(the.“Underwriting.Commission”),.except.under.the.circumstance.that.the.Underwriting.Agreement.was.terminated.in.accordance.with.the.terms.thereof. (C). On.15.December.2011,.pursuant.to.the.terms.of.the.Underwriting.Agreement,. a). Mr..Yeung.as.assignor,.Silver.Rich.as.assignee.and.the.Company.entered.into.a.deed.of.assignment,.whereby.Mr. Yeung has assigned and transferred, and Silver Rich has accepted the assignment and transfer of, HK$104,667,902.02.(the.“Assigned.Yeung.Loan”,.being.a.portion.of.the.principal.amount.of.HK$135.million.having.been.drawn.down.and.indebted.by.the.Company.to.Mr..Yeung.under.the.letter.agreement.dated.1.December2008fortheLoanFacilityas amendedbytheletter agreementsdated14April2009,25June2009 and.23.June.2010.as.mentioned.in.the.above.paragraph.A.of.this.section); b). Smart.Class.Enterprises.Limited.(“Smart.Class”),.a.wholly-owned.subsidiary.of.the.Company,.Star.Spangle.Corporation(“StarSpangle”), a companybeneficiallywholly-ownedbyMr.Yeung,SilverRich andtheCompany entered.into.a.deed.of.novation.and.assignment.(the.“SS.Loan.Assignment”),.in.relation.to.the.novation.and.assignment.of.HK$23,386,199.24.(comprising.the.principal.amount.of.HK$20,719,906.39.and.portion.of.the.accrued.interest.in.the.sum.of.HK$2,666,292.85).owing.by.Smart.Class.to.Star.Spangle.under.the.unsecured.loan(such.loan.was.charged.with.interest.at.the.rate.of.4%.per.annum.and.the.principal.amount.and.all.interest.accrued.thereon.should.be.repaid.by.Smart.Class.to.Star.Spangle.upon.Star.Spangle.serving.not.less.than.fourteen.days’ prior.written.notice.on.Smart.Class).(the.“Assigned.SS.Loan”)..Pursuant.to.the.SS.Loan.Assignment,.(i).Smart.Class.has.novated,.and.the.Company.has.assumed,.all.and.any.obligations,.duties.and.liabilities ofSmartClassin allrespects asborrower oftheAssignedSSLoan; and(ii)StarSpanglehas assigned and.transferred,.and.Silver.Rich.has.accepted.the.assignment.and.transfer.of,.the.Assigned.SS.Loan.. Pursuanttotheterms oftheUnderwritingAgreement,SilverRichandtheCompanyhave agreedthatthe entire amount of.the.Assigned.Yeung.Loan.and.the.Assigned.SS.Loan.should.be.used.to.set.off.against.the.aggregate.subscription.price.of.the.673,968,954.Rights.Shares.provisionally.allotted.to.Silver.Rich.pursuant.to.the.Rights.Issue.(“SR.Shares”).which.amounted.to.a.total.of.HK$128,054,101.26. Save asdisclosedabove,there were no contracts of significanceto whichtheCompany or any ofits subsidiaries was aparty and.in.which.any.of.the.Directors.or.controlling.shareholders.or.its.subsidiaries.had.a.material.interest,.whether.directly.or.indirectly,.subsisted.at.the.end.of.the.year.or.at.any.time.during.the.year. MANAGEMENT.CONTRACTS No.contracts.concerning.the.management.and.administration.of.the.whole.or.any.substantial.part.of.the.business.of.the.Company.were.entered.into.or.subsisted.during.the.year. DIRECTORS’.AND.CHIEF.EXECUTIVE’S.INTERESTS.IN.SECURITIES As.at.31.December.2011,.the.Directors.or.chief.executive.of.the.Company.and/or.any.of.their.respective.associates.had.the.followinginterests andshortpositionsinthe shares, underlyingshares ordebentures oftheCompany or any ofits associated corporations.(within.the.meaning.of.Part.XV.of.the.Securities.and.Futures.Ordinance.(Chapter.571).of.the.Laws.of.Hong.Kong.(the.“SFO”)).as.recorded.in.the.register.required.to.be.kept.by.the.Company.pursuant.to.Section.352.of.the.SFO,.or.as.otherwise,.notified.to.the.Company.and.the.Stock.Exchange.pursuant.to.the.Model.Code.for.Securities.Transactions.by.Directors.of.Listed.Issuers.(the.“Model.Code”).contained.in.the.Listing.Rules: Interest.in.the.shares.of.the.Company.(“Share(s)”) Number.of Shares. interested.or. Approximate. Long.position/ deemed.to. percentage.of. Name.of.Director Short.position Nature.of.interest be.interested shareholding % Mr..Yeung.(Note.1) Long.position Corporate.interest 2,636,929,586.64.87 (Note.1) (Note.2) Short.position Corporate.interest 26,452,296.0.65 (Note.3) (Note.4). Notes: 1.. Mr.Yeung,anexecutiveDirectorandtheChairmanoftheCompany,wasdeemedtohavecorporateinterest in2,636,929,586Sharesasat31.December2011comprising:(i)1,010,953,432SharesheldbySilverRich;(ii)673,968,954SRSharestobe acceptedbySilverRich in respect of.its.entitlement.to.the.Rights.Shares.as.a.qualifying.shareholder.under.the.Rights.Issue;.and.(iii).952,007,200.excess.Rights.Shares.which.might.be.allotted.to.Silver.Rich.pursuant.to.the.irrevocable.undertaking.given.by.Silver.Rich.in.the.Underwriting.Agreement.(the.“Irrevocable.Undertaking”)or.952,007,200.Underwritten.Shares.which.might.be.taken.up.by.Silver.Rich.pursuant.to.the.underwriting.obligation.under.the.UnderwritingAgreement.Mr.YeungwasdeemedtobeinterestedintheseSharesbyvirtue ofhisfamilymembersbeingthe eligiblebeneficiaries of.the.discretionary.trust.holding.Silver.Rich. 2.. The.approximate.percentage.of.shareholding.was.calculated.based.on.2,636,929,586.Shares.interested.or.deemed.to.be.interested.by.Mr..Yeungas at31December2011 inthe enlargedissued share capitaloftheCompany of4,064,940,387Shares upon completion oftheRights Issue. 3.. Mr..Yeung.was.deemed.to.have.a.short.position.in.these.Shares.as.at.31.December.2011.by.virtue.of.his.family.members.being.the.eligible.beneficiaries.of.the.discretionary.trust.holding.Silver.Rich.and.pursuant.to.the.placing.agreement.dated.18.November.2011.entered.into.between.Silver.Rich.and.an.independent.placing.agent.in.relation.to.the.placing.by.the.placing.agent,.on.a.fully.underwritten.basis,.of.such.number.of.Shares.to.be.confirmed.by.Silver.Rich.(which.should.not.exceed.a.maximum.of.26,452,296.Shares).for.the.purpose.of.maintaining.sufficient.public.float.requirement.of.the.Company.under.the.Listing.Rules.(the.“Placing.Agreement”). 4.. The.approximate.percentage.of.shareholding.was.calculated.based.on.Mr..Yeung’s.short.position.in.26,452,296.Shares.as.at.31.December.2011.in.the.enlarged.issued.share.capital.of.the.Company.of.4,064,940,387.Shares.upon.completion.of.the.Rights.Issue. ReportofDirectors(continued) 　 Save asdisclosedabove, as at31December2011, none oftheDirectors or chief executive oftheCompany, ortheir respective.associates,.had.any.interests.or.short.positions.in.the.shares,.underlying.shares.or.debentures.of.the.Company.or.any.of.its.associated.corporations.(within.the.meaning.of.Part.XV.of.the.SFO).as.recorded.in.the.register.required.to.be.kept.by.the.CompanypursuanttoSection352 oftheSFO, or as otherwise, notifiedtotheCompany andtheStockExchangepursuantto the.Model.Code. SHARE.OPTION.SCHEME.AND.DIRECTORS’.RIGHTS.TO.ACQUIRE.SHARES.OR.DEBENTURES Details.of.the.share.option.scheme.are.set.out.in.note.38(b).to.the.consolidated.financial.statements. Except.for.the.Underwriting.Commission.as.mentioned.in.paragraph.(B).under.the.section.headed.“Directors’ and.controlling.shareholders’ interests.in.contracts.of.significance” in.this.report,.at.no.time.during.the.year.was.the.Company.or.any.of.its.subsidiaries,.a party.to.any.arrangements.to.enable.the.Directors.to.acquire.benefits.by.means.of.the.acquisition.of.shares.in,.or.debentures.of,.the.Company.or.any.other.body.corporate. SUBSTANTIAL.SHAREHOLDERS’.INTERESTS.IN.SECURITIES As at31December2011,thefollowingpersons(otherthan aDirector or chiefexecutive oftheCompany)had, or weredeemed.ortakentohave,interests or shortpositionsintheShares and underlyingShares as recordedinthe register requiredtobekept by.the.Company.pursuant.to.Section.336.of.the.SFO: Interest.in.the.Shares Number.of. Shares. /underlying. Shares. interested.or. Approximate. Name.of. Long.position/ deemed.to. percentage.of. substantial.shareholder Short.position Capacity. be.interested. shareholding % Silver.Rich. Long.position Short.position Beneficial.owner Beneficial.owner 2,636,929,586 26,452,296 64.87.(Note.6) 0.65.(Note.7) Fiducia.Suisse.SA.(Note.1) Long.position Short.position Trustee Trustee 2,636,929,586 26,452,296 64.87.(Note.6) 0.65.(Note.7) Mr..David.Henry.Christopher.Hill.(Note.1) Long.position Short.position Interest.of.controlled.corporation Interest.of.controlled.corporation 2,636,929,586 26,452,296 64.87.(Note.6) 0.65.(Note.7) Mrs..Rebecca.Ann.Hill.(Note.2) Long.position Short.position Interest.of.spouse Interest.of.spouse 2,636,929,586 26,452,296 64.87.(Note.6) 0.65.(Note.7) Number.of. Shares. /underlying. Shares. interested.or. Approximate. Name.of. Long.position/ deemed.to. percentage.of. substantial.shareholder Short.position Capacity. be.interested. shareholding % Ms..Liu.Siu.Lam,.Marian.(Note.3) Long.position Interest.of.spouse 2,636,929,586 64.87.(Note.6) Short.position Interest.of.spouse 26,452,296 0.65.(Note.7) Maruhan.Corporation Long.position Beneficial.owner 406,087,500 9.99.(Note.8) Pacific.Alliance.Asia.Opportunity. Long.position Beneficial.owner 324,292,500. 7.98.(Note.9) Fund.L.P. (Note.4) Pacific.Alliance.Group.Asset.Long.position Interest.of.controlled.324,292,500 7.98.(Note.9) Management.Limited (Note.5) corporation Pacific.Alliance.Investment.Long.position Interest.of.controlled.324,292,500 7.98.(Note.9) Management.Limited.(Note.5) corporation Pacific.Alliance.Group.Limited.Long.position Interest.of.controlled.324,292,500 7.98.(Note.9) (Note.5) corporation PAG.Holdings.Limited.Long.position Interest.of.controlled.324,292,500 7.98.(Note.9) (Note.5) corporation Notes: 1.. Theentire issuedsharecapitalofSilverRichisheldbyFiduciaSuisseSA(formerlyknownasKFSuisseSA),whichisatrusteeofadiscretionary.trust,.the.beneficiaries.of.which.are.family.members.of.Mr..Yeung..Fiducia.Suisse.SA.is.wholly-owned.by.Mr..David.Henry.Christopher.Hill..Accordingly,.each.of.Fiducia.Suisse.SA.and.Mr..David.Henry.Christopher.Hill.was.deemed.to.be.interested.in.2,636,929,586.Shares.as.at.31.December.2011,.which.comprised:.(i).1,010,953,432.Shares.held.by.Silver.Rich;.(ii).673,968,954.SR.Shares.to.be.accepted.by.Silver.Rich.in.respect.of.its.entitlement.to.the.Rights.Shares.as.a.qualifying.shareholder.under.the.Rights.Issue;.and.(iii).952,007,200.excess.Rights.Shares.which.might.be.allotted.to.Silver.Rich.pursuant.to.the.Irrevocable.Undertaking.or.952,007,200.Underwritten.Shares.which.might.be.taken.up.by.Silver.Rich.pursuant.to.the.underwriting.obligation.under.the.Underwriting.Agreement. 2.. Mrs..Rebecca.Ann.Hill,.being.the.spouse.of.Mr..David.Henry.Christopher.Hill,.was.deemed.to.be.interested.in.2,636,929,586.Shares.as.at.31.December.2011.in.which.Mr..David.Henry.Christopher.Hill.had.a.deemed.interest. 3.. Ms..Liu.Siu.Lam,.Marian,.being.the.spouse.of.Mr..Yeung,.was.deemed.to.be.interested.in.2,636,929,586.Shares.as.at.31.December.2011.in.which.Mr..Yeung.had.a.deemed.interest. 4.. These.include.(i).an.interest.in.32,140,500.Shares;.and.(ii).an.interest.in.physically.settled.derivatives,.giving.rise.to.an.interest.in.292,152,000.underlying.Shares. 5.. As.at.31.December.2011,.PAG.Holdings.Limited.(“PAGHL”).held.99.17%.interest.in.Pacific.Alliance.Group.Limited.(“PAGL”),.which.in.turn.held.90%.interest.in.Pacific.Alliance.Investment.Management.Limited.(“PAIML”)..PAIML.held.100%.interest.in.Pacific.Alliance.Group.Asset.Management.Limited.(“PAGAML”).which.was.the.General.Partner.of.Pacific.Alliance.Asia.Opportunity.Fund.L.P..(“PAAOF”).and.PAAOF.was.a.corporation controlledbyPAGAMLbyvirtue ofPartXV oftheSFO.Therefore, each ofPAGHL,PAGL,PAIML andPAGAML wasdeemedtobe interested.in.32,140,500.Shares.and.292,152,000.underlying.Shares.held.by.PAAOF. ReportofDirectors(continued) 　 Notes: (continued) 6.. The.approximate.percentage.of.shareholding.was.calculated.based.on.2,636,929,586.Shares.interested.or.deemed.to.be.interested.by.the.relevant.person.as.at.31.December.2011.in.the.enlarged.issued.share.capital.of.the.Company.of.4,064,940,387.Shares.upon.completion.of.the.Rights.Issue. 7.. The.short.position.in.Shares.was.arised.pursuant.to.the.Placing.Agreement.and.the.approximate.percentage.of.shareholding.was.calculated.basedonthe shortposition in26,452,296Sharesheldbythe relevantperson as at31December2011 inthe enlargedissued share capital of the.Company.of.4,064,940,387.Shares.upon.completion.of.the.Rights.Issue. 8.. Theapproximatepercentageofshareholding wascalculatedbased on406,087,500SharesheldbyMaruhanCorporationasat31December 2011.in.the.enlarged.issued.share.capital.of.the.Company.of.4,064,940,387.Shares.upon.completion.of.the.Rights.Issue.. 9.. The.approximate.percentage.of.shareholding.was.calculated.based.on.32,140,500.Shares.and.292,150,000.underlying.Shares.interested.or.deemedtobeinterestedbythe relevantperson as at31December2011inthe enlargedissued share capitaloftheCompanyof4,064,940,387 Shares.upon.completion.of.the.Rights.Issue. Save asdisclosedabove, as at31December2011, no otherperson(otherthan aDirector or chief executive oftheCompany).had,.or.was.deemed.or.taken.to.have,.an.interest.or.short.position.in.the.Shares.and.underlying.Shares.which.were.recorded.in.the.register.required.to.be.kept.by.the.Company.pursuant.to.Section.336.of.the.SFO. DISCLOSURE.UNDER.RULES.13.20.AND.13.22.OF.THE.LISTING.RULES Based.on.the.disclosure.obligations.under.Rules.13.20.and.13.22.of.the.Listing.Rules,.the.financial.assistance,.which.was.madebytheGroupby wayofthe shareholder’sloanprovidedbyWorldFortuneLimited(“WorldFortune”), anindirectsubsidiary of.the.Company,.and.a.corporate.guarantee.given.by.the.Company.in.respect.of.the.payment.obligation.of.Pier.16.–.Property.Development.Limited.(“Pier.16.–.Property.Development”,.a.49%.owned.associate.of.World.Fortune).under.syndicated.loan.facilities.granted.to.Pier.16.–.Property.Development.(the.“Financial.Assistance”),.continued.to.exist.as.at.31.December.2011..Pier.16.–.Property.Development.is.principally.engaged.in.the.property.holding.and,.through.its.subsidiaries,.operating.Ponte.16,.being.a.world-class.integrated.casino-entertainment.resort.located.in.Macau..The.Financial.Assistance.is.mainly.used.for.the.development.and.operations.of.Ponte.16. The.amounts.of.the.Financial.Assistance.as.at.31.December.2011.were.set.out.below: Aggregate..Shareholder’s.Corporate.Financial.Name.of.associate loan guarantee Assistance HK$’million HK$’million HK$’million Pier.16.–.Property.Development.1,224 860 2,084 The.shareholder’s.loans.provided.by.World.Fortune.is.unsecured,.interest-free.and.has.no.fixed.terms.of.repayment. Further.details.are.set.out.in.notes.20.and.41.to.the.consolidated.financial.statements. Set.out.below.is.a.combined.balance.sheet.of.Pier.16.–.Property.Development.and.the.Group’s.attributable.interests.in.this. associate.according.to.its.audited.consolidated.financial.statements.for.the.year.ended.31.December.2011: Group’s. Combined. attributable. balance.sheet interests HK$’000 HK$’000 Non-current.assets 2,130,982 1,044,181 Current.assets 391,367 191,770 Current.liabilities 666,709 326,687 Non-current.liabilities. 2,512,686 1,231,216 CONVERTIBLE.SECURITIES,.OPTIONS,.WARRANTS.OR.SIMILAR.RIGHTS The.Company.had.no.outstanding.convertible.securities,.options,.warrants.or.other.similar.rights.as.at.31.December.2011. PURCHASE,.SALE.OR.REDEMPTION.OF.THE.COMPANY’S.LISTED.SECURITIES During the year ended 31 December 2011, there was no purchase, sale or redemption by the Company, or any of its.subsidiaries,.of.the.listed.securities.of.the.Company. MAJOR.SUPPLIERS.AND.CUSTOMERS During.the.year,.the.five.largest.customers.of.the.continuing.operations.of.the.Group.accounted.for.approximately.14.4%.of.totalturnover ofthe continuing operations oftheGroup of whichthelargest customer accountedfor approximately4.7% and the.five.largest.suppliers.of.the.continuing.operations.of.the.Group.accounted.for.approximately.82.3%.of.total.purchases.of.the.continuing.operations.of.the.Group,.of.which.the.largest.supplier.accounted.for.approximately.75.4%.. None oftheDirectors or anyoftheir associates or any shareholders(which,tothebestknowledge oftheDirectors, owns more than.5%.of.the.Company’s.issued.share.capital).had.any.beneficial.interest.in.the.above.five.largest.customers.or.five.largest.suppliers. PRE-EMPTIVE.RIGHTS There.is.no.provision.for.pre-emptive.rights.under.the.Bye-laws.and.there.is.no.restriction.against.such.rights.under.the.laws.of.Bermuda,.which.would.oblige.the.Company.to.offer.new.Shares.on.a.pro-rata.basis.to.its.existing.shareholders. SUFFICIENCY.OF.PUBLIC.FLOAT As atthedate ofthis report,theCompanyhas maintained a sufficientpublicfloat asprescribedundertheListingRules,based.on.the.information.that.is.publicly.available.to.the.Company.and.within.the.knowledge.of.the.Directors. ReportofDirectors(continued) 　 EMOLUMENT.POLICY Theremunerationcommittee(the “RemunerationCommittee”)oftheBoardisresponsiblefordeterminingspecific.remuneration.packages.of.all.executive.Directors.and.senior.management.of.the.Company.(“Senior.Management”)..Besides,.the.Remuneration.Committee.makes.recommendation.to.the.Board.for.its.determination.on.the.remuneration.of.the.NED.and all INEDs. Factors such as salaries paid by comparable companies, qualifications, experience, time commitment and responsibilities of the Directors and the Senior Management as well as prevailing market condition are considered by the.Remuneration.Committee.for.determining/making.proposals.on.remuneration.of.the.relevant.Directors.and.Senior.Management.. The.remuneration.packages.of.employees.of.the.Group.(other.than.the.executive.Directors.and.the.Senior.Management).are determined and reviewed periodically on the basis of their respective qualifications, experience, responsibilities and performance.as.well.as.prevailing.market.condition..In.addition.to.salaries,.the.Company.offers.staff.benefits.which.include.medical.insurance.and.retirement.benefits.under.the.Mandatory.Provident.Fund.Scheme..The.Group.also.operates.a.share.option.scheme.pursuant.to.which.share.options.might.be.granted.as.a.long-term.incentive.to.its.directors.and.employees. RETIREMENT.BENEFIT.SCHEME Details.of.the.retirement.benefit.scheme.of.the.Group.are.set.out.in.note.38(a).to.the.consolidated.financial.statements. CORPORATE.GOVERNANCE The.Company.has.published.its.Corporate.Governance.Report,.details.of.which.are.set.out.on.pages.26.to.31.of.this.annual.report. EVENTS.AFTER.THE.REPORTING.PERIOD (A). Reference.was.made.to.the.announcement.dated.25.October.2011.issued.by.the.Company,.the.Company.proposed.to.raise.approximately.HK$308.9.million,.before.expenses,.by.issuing.1,625,976,154.Rights.Shares.to.the.qualifying.shareholdersbywayoftheRightsIssue atthe subscriptionprice ofHK$0.19perRightsShare onthebasis oftwoRights SharesforeverythreeSharesheldontherecorddate(the “RecordDate”,being adateagreedbetweenSilverRich as underwriter.and.the.Company.for.determining.the.entitlements.of.the.shareholders.of.the.Company.(“Shareholder(s)”),. i.e..20.December.2011). The.circular.of.the.Company.dated.22.November.2011.in.relation.to,.among.other.things,.the.Rights.Issue.and.the.whitewash.waiver.has.been.despatched.to.the.Shareholders.on.the.same.date..The.Rights.Issue.and.the.whitewash.waiver.have.been.approved.by.the.independent.shareholders.at.the.special.general.meeting.of.the.Company.held.on.9.December.2011.and.the.prospectus.of.the.Company.dated.21.December.2011.containing.the.details.of.the.Rights.Issue.together.with.the.provisional.allotment.letter.for.the.Rights.Shares.and.the.application.form.for.excess.Rights.Shares.have.been.despatched.to.the.qualifying.shareholders.on.21.December.2011.. The Rights.Issue.was.conditional.upon.the.obligation.of.Silver.Rich.under.the.Underwriting.Agreement.becoming.unconditional..As.all.the.conditions.set.out.in.the.Underwriting.Agreement.have.been.fulfilled,.the.Rights.Issue.has.become.unconditional.on.12.January.2012..1,625,976,154.Shares.have.been.allotted.and.issued.by.the.Company.under.the.Rights.Issue.on.18.January.2012.and.the.Rights.Issue.has.been.completed.on.the.same.date. ReportofDirectors(continued) 　 Besides,.pursuant.to.the.Underwriting.Agreement,.Silver.Rich.has.accepted.and.taken.up.all.the.SR.Shares,.being.673,968,954.Rights.Shares.provisionally.allotted.by.the.Company.at.a.total.subscription.price.of.HK$128,054,101.26.(the “Subscription.Monies”),.and.the.Assigned.Yeung.Loan.and.the.Assigned.SS.Loan.(collectively.the.“Assigned.Loans”).should.be.used.to.set.off.against.the.Subscription.Monies.. On 12 January 2012, the Subscription Monies have been set off by the Assigned Loans with the sum of HK$128,054,101.26. (B). Withregardtotheunsecuredtermloanfacility of uptoHK$290 milliongrantedbyMr.YeungtotheCompany(“Revised Facility”,detailsof which werementionedinparagraph(A) underthesectionheaded “Directors’and controlling shareholders’ interests.in.contracts.of.significance” in.this.report),.a.letter.agreement.was.entered.into.between.the.Company.and.Mr..Yeung.on.15.March.2012.to.further.extend.the.Final.Repayment.Date.to.31.October.2013.and.to.confirmthat any amount repaidundertheRevisedFacilityshouldbe availabletofurther advances withinthe availability period.of.the.Revised.Facility.(i.e..the.Company.was.permitted.to.draw.the.Revised.Facility.until.the.earlier.of.(i).30.September2013,beingone monthbeforetheFinalRepaymentDate; and(ii)thedate on whichthe amount of available Revised.Facility.is.reduced.to.zero). AUDITORS HLBHodgsonImpeyChengwere appointed as auditors oftheCompanyon21July2010tofillthe casual vacancy createdby.the.resignation.of.CCIF.CPA.Limited.on.the.same.date. The consolidatedfinancialstatements oftheGroupfortheyear ended31December2011havebeen auditedbyHLBHodgson Impey.Cheng.whose.term.of.office.will.expire.upon.the.forthcoming.Annual.General.Meeting..In.March.2012,.the.practice.of.HLB.Hodgson.Impey.Cheng.was.reorganised.as.HLB.Hodgson.Impey.Cheng.Limited..A.resolution.for.the.appointment.of.HLBHodgsonImpeyChengLimitedas auditors oftheCompanyforthe subsequentyearistobeproposed attheforthcoming Annual.General.Meeting. On.behalf.of.the.Board Yeung.Hoi.Sing,.Sonny Chairman Hong.Kong,.29.March.2012 EXECUTIVE.DIRECTORS Mr..Yeung.Hoi.Sing,.Sonny,.aged 57,.joined.the.Group.in.2003..He.is.an.executive.director.and.the.Chairman.of.the.Company.as.well.as.a.director.of.the.subsidiaries.of.the.Company..He.is.also.the.chairman.of.the.remuneration.committee.(the.“Remuneration.Committee”).and.the.executive.committee.(the.“Executive.Committee”).of.the.Company..Mr..Yeung.is.responsibleforthe overall corporateplanning andbusinessdevelopment oftheGroup.Hehasbeen a member oftheNational Committee.of.the.Chinese.People’s.Political.Consultative.Conference,.the.People’s.Republic.of.China.(the.“PRC”).since.1993.and.has.over.28.years.of.experience.in.finance.industry.in.Hong.Kong..Prior.to.joining.the.Group,.Mr..Yeung.held.managerial.roles.in.several.financial.service.sectors.such.as.leveraged.foreign.exchange.trading,.and.securities.and.futures.brokerage..He.is.presently.the.sole.beneficial.owner.of.Success.Securities.Limited.(“Success.Securities”),.which.is.a.licensed.corporation.undertheSecuritiesandFuturesOrdinanceaswellasaparticipant ofTheStockExchangeofHongKongLimited(the “Stock Exchange”),principallyengaged intheprovision of securitiesbrokerage services.Mr.Yeunghas certainprivateinvestmentsin propertydevelopmentbusinessesinHongKong,Macau andCanada.Heis also adirector ofSilverRichMacauDevelopment Limited,.being.a.substantial.shareholder.of.the.Company..Mr..Yeung.is.the.uncle.of.Dr..Ma.Ho.Man,.Hoffman,.an.executive.director.and.the.Deputy.Chairman.of.the.Company. Dr. Ma.Ho.Man,.Hoffman,.aged.38,.joined.the.Group.in.2005..He.is.an.executive.director.and.the.Deputy.Chairman.of.the.Companyas well as adirector ofthe subsidiaries oftheCompany.Dr.Mais also a member oftheExecutiveCommittee.Heis responsibleforimplementingtheCompany’s strategies regardingthebusinessdevelopment oftheGroup as well as managing the.Group’s.business.and.operations..Dr..Ma.joined.Success.Securities,.which.is.beneficially.wholly-owned.by.Mr..Yeung.Hoi.Sing,.Sonny.(“Mr..Yeung”),.being.an.executive.director.and.the.Chairman.of.the.Company,.in.2000..He.has.been.a.director.of.SuccessSecurities sinceNovember2008andis responsiblefor overseeingits marketingaffairs.Dr.Mais currentlyan executive director.and.the.chairman.of.See.Corporation.Limited,.a.company.whose.issued.shares.are.listed.on.the.Main.Board.of.the.Stock.Exchange..He.has.over.15.years.of.experience.in.the.financial.industry.and.years.of.managerial.experience..He.was.awarded.Fellowship.by.Canadian.Chartered.Institute.of.Business.Administration.and.Honorary.Doctorate.of.Management.by.Lincoln.University.in.2009.and.2010.respectively..Dr..Ma.is.the.nephew.of.Mr..Yeung. NON-EXECUTIVE.DIRECTOR Mr..Choi.Kin.Pui,.Russelle,.aged.57,.joined.the.Group.in.2003..He.is.a.non-executive.director.of.the.Company.as.well.as.a member.of.the.audit.committee.of.the.Company.(the.“Audit.Committee”).and.the.Remuneration.Committee..Mr..Choi.graduated.from.St..Pius.X.High.School.in.1976..He.has.over.18.years.of.management.experience.in.the.telecommunication.industry.in.Hong.Kong.and.the.United.States.of.America.(the.“US”)..Mr..Choi.established.Elephant.Talk.Limited.in.1994,.a.wholly-ownedsubsidiary of anAmerican corporation,ElephantTalkCommunicationsInc.(“ETCI”), whose securities arequoted ontheOver-The-CounterBulletinBoard intheUS and engagesintheprovision oftelecommunications servicesinHongKong andtheUS.Mr.Choi was adirector ofETCIfrom2002to2008 as well asthepresidentandthe chief executive officer ofETCI from2002to2006and was responsiblefortheplanning ofthe overall strategy ofETCI.He also served asthe chairman ofET NetworkServicesLimited, aHongKong company engaged intheprovision ofinternet access and outsourcing servicesinthe PRC.and.Hong.Kong. BiographicalDetailsofDirectorsandSeniorManagement(continued) 　 INDEPENDENT.NON-EXECUTIVE.DIRECTORS Mr..Luk.Ka.Yee,.Patrick,.aged.50,.joined.the.Group.in.2003..He.is.an.independent.non-executive.director.of.the.Company.as.well.as.a.member.of.the.Audit.Committee.and.the.Remuneration.Committee..Mr..Luk.obtained.a.Law.Degree.in.England.in.1986..Throughout.his.tenure.of.career,.Mr..Luk.has.been.appointed.to.serve.in.various.senior.management.positions.which.involved.corporate/legal.and.property.development.as.well.as.property.management.aspects..He.is.presently.the.consultant.to.Pacific.Rich.Management.&.Consultants.Limited,.a.company.providing.property.and.facilities.management.in.Hong.Kong. Ms. Yeung.Mo.Sheung,.Ann,.aged 47,.joined.the.Group.in.2004..She.is.an.independent.non-executive.director.of.the.Companyas wellas a member oftheAuditCommittee andtheRemunerationCommittee.Ms.Yeungholds aBachelordegree ofRetailMarketing withhonoursintheUnitedKingdom and aDiploma inMarketingfromTheCharteredInstitute ofMarketing. She.pursued.her.further.study.on.legal.course.and.has.been.awarded.a.Diploma.in.Legal.Practice.in.the.United.Kingdom.in.1998.and.is.presently.a.partner.of.Messrs..Fung.&.Fung,.Solicitors,.a.legal.firm.in.Hong.Kong..Ms..Yeung.is.currently.an.independent.non-executive.director.of.Hao.Wen.Holdings.Limited,.a.company.whose.issued.shares.are.listed.on.the.Growth.Enterprise.Market.of.the.Stock.Exchange. Mr. Chin.Wing.Lok,.Ambrose,.aged 47,.joined.the.Group.in.2012..He.is.an.independent.non-executive.director.of.the.Company, the.chairman.of.the.Audit.Committee.and.a.member.of.the.Remuneration.Committee..Mr..Chin.is.a.certified.public.accountant.(practising).and.a.fellow.member.of.the.Hong.Kong.Institute.of.Certified.Public.Accountants,.a.fellow.member.of.The.Association.of.Chartered.Certified.Accountants,.The.Hong.Kong.Institute.of.Chartered.Secretaries.and.The.Institute.of.Chartered.Secretaries.and.Administrators.as.well.as.a.certified.tax.adviser.and.a.fellow.member.of.The.Taxation.Institute.of.HongKong.Hehas over25years ofexperiencein auditing, accounting andtaxation.Mr.Chinispresentlythe solepractitioner of.CNT.&.Co.,.Certified.Public.Accountants. COMPANY.SECRETARY Ms..Chiu.Nam.Ying,.Agnes,.aged.38,.joined.the.Group.in.2003..She.is.the.company.secretary.of.the.Company.and.is.responsiblefor overseeing alllegal matters oftheGroup.Ms.Chiuis aqualified solicitor and an associate member ofTheHong Kong.Institute.of.Chartered.Secretaries.and.The.Institute.of.Chartered.Secretaries.and.Administrators..She.holds.a.Master.degree ofLawsfromTheUniversityofSheffield,UnitedKingdom.BeforejoiningtheGroup,Ms.Chiu was apracticing solicitor in.a.local.law.firm.and.possessed.experience.in.banking.and.finance.as.well.as.property.related.matters. FINANCIAL.CONTROLLER Mr..Wong.Chi.Keung,.Alvin,.aged.49,.joined.the.Group.in.2008..He.is.the.financial.controller.of.the.Group.as.well.as.the.qualifiedaccountantoftheCompany, andis responsibleforfinancialandaccounting matters oftheGroup.Mr.Wongis afellow member.of.the.Hong.Kong.Institute.of.Certified.Public.Accountants.and.The.Association.of.Chartered.Certified.Accountants.and an.associate.member.of.The.Chartered.Institute.of.Management.Accountants..He.is.currently.an.independent.non-executive.director.as.well.as.the.chairman.of.both.the.audit.committee.and.the.remuneration.committee.of.ITC.Properties.GroupLimited, a companywhose issued shares arelisted ontheMainBoard oftheStockExchange.Hehas over24years of experiencein accounting and corporatefinancegainedinpropertydevelopment, construction and manufacturing companies. 31/F,GloucesterTower TheLandmark 11PedderStreet Central HongKong INDEPENDENT.AUDITORS’.REPORT.TO.THE.SHAREHOLDERS.OF.SUCCESS.UNIVERSE.GROUP.LIMITED (Incorporated.in.Bermuda.with.limited.liability) WehaveauditedtheconsolidatedfinancialstatementsofSuccessUniverseGroupLimited(the “Company”)anditssubsidiaries.(collectively.referred.to.as.the.“Group”).set.out.on.pages.47.to.127,.which.comprise.the.consolidated.statement.of.financial.position.as.at.31.December.2011,.and.the.consolidated.income.statement,.the.consolidated.statement.of.comprehensive.income,the consolidatedstatement ofchangesin equityandthe consolidatedstatementofcashflowsfortheyearthen ended, and.a.summary.of.significant.accounting.policies.and.other.explanatory.information. DIRECTORS’.RESPONSIBILITY.FOR.THE.CONSOLIDATED.FINANCIAL.STATEMENTS The.directors.of.the.Company.are.responsible.for.the.preparation.of.consolidated.financial.statements.that.give.a.true.and.fair.view.in.accordance.with.Hong.Kong.Financial.Reporting.Standards.issued.by.the.Hong.Kong.Institute.of.Certified.Public.Accountants.and.the.disclosure.requirements.of.the.Hong.Kong.Companies.Ordinance,.and.for.such.internal.control.as.the.directors.determine.is.necessary.to.enable.the.preparation.of.consolidated.financial.statements.that.are.free.from.material.misstatement,.whether.due.to.fraud.or.error. AUDITORS’.RESPONSIBILITY Our.responsibility.is.to.express.an.opinion.on.these.consolidated.financial.statements.based.on.our.audit.and.to.report.our.opinion solelytoyou, as abody,in accordance with section90 oftheBermudaCompaniesAct, andfor no otherpurpose.We do.not.assume.responsibility.towards.or.accept.liability.to.any.other.person.for.the.contents.of.this.report..We.conducted.our.auditin accordance withHongKongStandards onAuditingissuedbytheHongKongInstitute ofCertifiedPublicAccountants. Those standards.require.that.we.comply.with.ethical.requirements.and.plan.and.perform.the.audit.to.obtain.reasonable.assurance.about.whether.the.consolidated.financial.statements.are.free.from.material.misstatement. IndependentAuditors’Report (continued) 　 An.audit.involves.performing.procedures.to.obtain.audit.evidence.about.the.amounts.and.disclosures.in.the.consolidated.financial statements..The.procedures.selected.depend.on.the.auditors’judgment,.including.the.assessment.of.the.risks.of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,the auditors considerinternal controlrelevanttothe entity’spreparation ofthe consolidatedfinancial statements that.give.a.true.and.fair.view.in.order.to.design.audit.procedures.that.are.appropriate.in.the.circumstances,.but.not.for.the.purpose.of.expressing.an.opinion.on.the.effectiveness.of.the.entity’s.internal.control..An.audit.also.includes.evaluating.the.appropriateness.of.accounting.policies.used.and.the.reasonableness.of.accounting.estimates.made.by.the.directors,.as.well.as.evaluating.the.overall.presentation.of.the.consolidated.financial.statements. We.believe.that.the.audit.evidence.we.have.obtained.is.sufficient.and.appropriate.to.provide.a.basis.for.our.audit.opinion. OPINION In.our.opinion,.the.consolidated.financial.statements.give.a.true.and.fair.view.of.the.state.of.affairs.of.the.Group.as.at.31.December.2011.and.of.the.Group’s.loss.and.cash.flows.for.the.year.then.ended.in.accordance.with.Hong.Kong.Financial.Reporting.Standards.and.have.been.properly.prepared.in.accordance.with.the.disclosure.requirements.of.the.Hong.Kong.Companies.Ordinance. EMPHASIS.OF.MATTER Without.qualifying.our.opinion,.we.draw.attention.to.note.2(b)(i).in.the.consolidated.financial.statements.which.indicates.that.the.Group.incurred.a.net.loss.of.approximately.HK$91,489,000.for.the.year.ended.31.December.2011.and,.as.of.that.date,.the.Group’s.current.liabilities.exceeded.its.current.assets.by.approximately.HK$288,039,000..These.conditions,.along.with.other.matters.as.set.forth.in.note.2(b)(i),.indicate.the.existence.of.a.material.uncertainty.that.may.cast.significant.doubt.about.the.Group’s.ability.to.continue.as.a.going.concern. HLB.Hodgson.Impey.Cheng Chartered.Accountants Certified.Public.Accountants Hong.Kong,.29.March.2012 ConsolidatedIncomeStatement For.the.year.ended.31.December.2011 Notes HK$’000 Turnover 6,.7 1,444,902 Cost.of.sales (1,396,960) (1,352,774) Gross.profit 71,484 92,128 Other.revenue.and.gains 8 44,521 Administrative.expenses (138,585) Other.operating.expenses 9(c) (17,198) (12,600) Loss.from.operations (72,253) (14,536) Finance.costs 9(a) (20,854) Share.of.results.of.jointly.controlled.entities 331 Share.of.results.of.associates (44,435) Loss.before.taxation 9 (79,494) Income.tax 10(a) (2,170) Loss.for.the.year (81,664) –.Diluted (3.31).HK.cents The.accompanying.notes.form.an.integral.part.of.these.consolidated.financial.statements. Success.Universe.Group.Limited Annual.Report.2011 ConsolidatedStatementofComprehensiveIncome For.the.year.ended.31.December.2011 The.accompanying.notes.form.an.integral.part.of.these.consolidated.financial.statements. Success.Universe.Group.Limited Annual.Report.2011 ConsolidatedStatementofFinancialPosition As.at.31.December.2011 At 31.December Note HK$’000 NON-CURRENT.ASSETS Property,.plant.and.equipment Goodwill Intangible.assets Interest.in.associates Interest.in.jointly.controlled.entities CURRENT.ASSETS Inventories Trade.and.other.receivables Amount.due.from.an.associate Tax.recoverable Pledged.bank.deposits Cash.and.cash.equivalents CURRENT.LIABILITIES Trade.and.other.payables Deferred.income Profit.guarantee.liabilities Loans.payables.–.current.portion Long-term.payables.–.current.portion Financial.guarantee.contract Bank.loans.–.due.within.one.year Loan.from.a.director.and.controlling.shareholder Loan.from.a.controlling.shareholder Tax.payable NET.CURRENT.(LIABILITIES)/ASSETS TOTAL.ASSETS.LESS.CURRENT.LIABILITIES 16 17 18 20 21 22 23 20(c) 32(a) 24 25 26 27 28 29 30 33 34 35 36 32(a) 91,923 6,828 38,823 1,171,087 1,693 1,310,354 983 47,707 – 184 8,104 108,042 165,020 22,536 948 9,100 – – 12,600 556 – – 1,347 47,087 117,933 1,428,287 Success.Universe.Group.Limited Annual.Report.2011 ConsolidatedStatementofFinancialPosition(continued) As.at.31.December.2011 At 31.December Note HK$’000 CAPITAL.AND.RESERVES Share.capital 37 24,390 Reserves 39 445,767 523,500 Approved.and.authorised.for.issue.by.the.board.of.directors.on.29.March.2012. On.behalf.of.the.board Yeung.Hoi.Sing,.Sonny Ma.Ho.Man,.Hoffman Director Director The.accompanying.notes.form.an.integral.part.of.these.consolidated.financial.statements. Success.Universe.Group.Limited Annual.Report.2011 StatementofFinancialPosition As.at.31.December.2011 Note HK$’000 NON-CURRENT.ASSETS Investments.in.subsidiaries 19 1,379,953 1,284,829 CURRENT.ASSETS Prepayments.and.deposits 23 295 Pledged.bank.deposits 24 7,335 Cash.and.cash.equivalents 25 67,334 74,964 CURRENT.LIABILITIES Other.payables.and.accruals 26 52,487 Loans.payable.–.current.portion 29 – Financial.guarantee.contract 33 12,600 Loan.from.a.director.and.controlling.shareholder 35 – Loan.from.a.controlling.shareholder 36 – 65,087 NET.CURRENT.(LIABILITIES)/ASSETS 9,877 TOTAL.ASSETS.LESS.CURRENT.LIABILITIES 1,294,706 NON-CURRENT.LIABILITIES Loans.payable 29 246,000 Financial.guarantee.contract 33 6,300 Loan.from.a.director.and.controlling.shareholder 35 105,000 357,300 NET.ASSETS 937,406 Approved.and.authorised.for.issue.by.the.board.of.directors.on.29.March.2012. On.behalf.of.the.board Yeung.Hoi.Sing,.Sonny Ma.Ho.Man,.Hoffman Director Director The.accompanying.notes.form.an.integral.part.of.these.consolidated.financial.statements. Success.Universe.Group.Limited Annual.Report.2011 Attributable.to.owners.of.the.Company Capital Non- Share Share Distributable redemption Exchange Accumulated controlling Total capital premium reserve reserve reserve losses Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At.1.January.2010 24,390 908,785 52,333 976 (1,369) (357,456) 627,659 46,214 673,873 Loss.for.the.year – – – – – (80,782) (80,782) (882) (81,664) Other.comprehensive.income. for.the.year – – – – 1,013 – 1,013 329 1,342 Total.comprehensive.income/ (loss).for.the.year – – – – 1,013 (80,782) (79,769) (553) (80,322) At.31.December.2010 24,390 908,785 52,333 976 (356) (438,238) 547,890 45,661 593,551 At.1.January.2011 24,390 908,785 52,333 976 (356) (438,238) 547,890 45,661 593,551 Loss.for.the.year – – – – – (77,666) (77,666) (13,823) (91,489) Other.comprehensive. (loss)/income.for.the.year – – – – (67) – (67) 61 (6) Total.comprehensive.loss. for.the.year – – – – (67) (77,666) (77,733) (13,762) (91,495) At.31.December.2011 24,390 908,785 52,333 976 (423) (515,904) 470,157 31,899 502,056 The.accompanying.notes.form.an.integral.part.of.these.consolidated.financial.statements. ConsolidatedStatementofCashFlows For.the.year.ended.31.December.2011 Note HK$’000 OPERATING.ACTIVITIES Loss.before.taxation Adjustment.for: Interest.income Finance.costs Depreciation Amortisation.on.intangible.assets Amortisation.on.financial.guarantee.contract Share.of.results.of.jointly.controlled.entities Share.of.results.of.associates Reversal.of.impairment.loss.recognised.on.intangible.assets Reversal.of.impairment.loss.recognised.on.other.receivable Impairment.loss.recognised.on – .goodwill – .intangible.assets –.interest.in.associates Compensation.for.termination.of.contract Write.back.of.long-outstanding.trade.payables Exchange.alignment (79,494) (49) 20,854 10,313 339 (12,600) (331) 44,435 (4,542) (4,943) – – 12,600 (7,026) (346) 1,697 Loss.on.disposal.of.property,.plant.and.equipment 6 2 Operating.loss.before.changes.in.working.capital (63,296) (19,091) (Increase)/decrease.in.inventories 146 Decrease/(increase).in.trade.and.other.receivables (20,072) Increase.in.trade.and.other.payables 15 (Decrease)/increase.in.deferred.income 3,780 Cash.used.in.operations (35,222) Income.tax.refunded/(paid) –.Hong.Kong.profits.tax.refunded/(paid) (228) –.Overseas.tax.paid – NET.CASH.USED.IN.OPERATING.ACTIVITIES (35,450) Success.Universe.Group.Limited Annual.Report.2011 ConsolidatedStatementofCashFlows(continued) For.the.year.ended.31.December.2011 Note HK$’000 The.accompanying.notes.form.an.integral.part.of.these.consolidated.financial.statements. Success.Universe.Group.Limited Annual.Report.2011 1..ORGANISATION.AND.PRINCIPAL.ACTIVITIES TheCompanywas incorporated as an exempted company withlimitedliabilityinBermuda on27May2004 underthe.CompaniesAct1981ofBermudaandislisted onTheStockExchangeofHongKongLimited(the “StockExchange”). The.addresses.of.the.registered.office.and.principal.place.of.business.of.the.Company.are.disclosed.in.the.corporate.information.of.the.annual.report. Theprincipalactivity oftheCompany isinvestmentholding.Theprincipal activities ofits subsidiaries are set outin note 19.to.the.consolidated.financial.statements. 2..SIGNIFICANT.ACCOUNTING.POLICIES (a).Statement.of.compliance These.consolidated.financial.statements.have.been.prepared.in.accordance.with.all.applicable.Hong.Kong.Financial.Reporting.Standards.(“HKFRS(s)”),.which.collective.term.includes.all.applicable.individual.HKFRSs,.HongKongAccountingStandards(“HKAS(s)”)andinterpretationsissuedbytheHongKongInstitute ofCertified Public.Accountants.(“HKICPA”),.accounting.principles.generally.accepted.in.Hong.Kong.and.the.disclosure.requirements.of.the.Hong.Kong.Companies.Ordinance..These.consolidated.financial.statements.also.comply.with the.applicable.disclosure.requirements.of.the.Rules.Governing.the.Listing.of.Securities.on.the.Stock.Exchange.(the.“Listing.Rules”)..A.summary.of.the.significant.accounting.policies.adopted.by.the.Group.(as.defined.hereinafter).is.set.out.below. The.HKICPA.has.issued.certain.amendments.and.interpretations.which.are.or.have.become.effective..It.also.issued.certain.new.and.revised.HKFRSs,.which.are.first.effective.or.available.for.early.adoption.for.the.current.accountingperiod oftheGroup and oftheCompany.Note3provides information oninitial application ofthese developments.to.the.extent.that.they.are.relevant.to.the.Group.for.the.current.and.prior.accounting.periods.reflected.in.these.consolidated.financial.statements. (b).Basis.of.preparation.of.the.consolidated.financial.statements The.consolidated.financial.statements.include.the.financial.statements.of.the.Company.and.its.subsidiaries.(together.the.“Group”).and.the.Group’s.interests.in.associates.and.jointly.controlled.entities.made.up.to.31.December.each.year. The.consolidated.financial.statements.are.presented.in.Hong.Kong.dollars.(HK$),.which.is.the.same.as.the.functional.currency.of.the.Company. (i).Going.Concern The.Group.incurred.a.loss.attributable.to.owners.of.the.Company.of.approximately.HK$77,666,000.(2010:.approximately.HK$80,782,000),.operating.net.cash.outflow.of.approximately.HK$36,458,000.(2010:approximatelyHK$35,450,000)and netdecreasein cash and cash equivalents of approximately HK$33,781,000(2010:netincrease of approximatelyHK$66,790,000)fortheyear ended31December 2011.As at31December2011,theGroup’s currentliabilities exceedits currentassetsbyapproximately HK$288,039,000.(2010:.net.current.asset.of.approximately.HK$117,933,000). In.preparing.these.consolidated.financial.statements,.the.directors.of.the.Company.(“Directors”).have.given.careful.consideration.to.the.impact.of.the.current.and.anticipated.future.liquidity.of.the.Group.and.the abilityoftheGroupto attainprofitable andpositive cashflow operationsintheimmediate andlonger term. 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (b).Basis.of.preparation.of.the.consolidated.financial.statements.(continued) (i).Going.Concern.(continued) In orderto strengthenthe capitalbase oftheGroupandtoimprovetheGroup’sliquidity and cashflows.in.the.near.foreseeable.future,.and.to.sustain.the.Group.as.a.going.concern,.the.Company.has.entered.into atermloanfacilityagreement of uptoHK$200 million withMr.YeungHoiSing,Sonny(“Mr.Yeung”), a.director.and.the.controlling.shareholder.of.the.Company..The.loan.is.unsecured.and.charged.with.interest.at.the.prime.rate.quoted.for.Hong.Kong.dollars.loans.by.The.Hongkong.and.Shanghai.Banking.Corporation.Limited..The.principal.amount.of.the.loan.facility.was.increased.up.to.HK$290.million.on.14.April.2009.and.the.final.repayment.date.of.the.loan.and.all.other.sums.owing.to.Mr..Yeung.under.the.revised.loan.facility.was.further.extended.from.30.October.2012.to.31.October.2013.by.a.letter.agreementdated15March2012.Uptothedate of approval ofthese consolidatedfinancial statements, the.Company.had.owed.to.Mr..Yeung.in.the.amount.of.approximately.HK$30.3.million.(31.December.2010:.HK$105.0.million). The Company.has.proposed.to.raise.approximately.HK$308.9.million,.before.expenses,.by.issuing.1,625,976,154rights sharestothequalifying shareholdersby way ofthe rights issue atthe subscription price ofHK$0.19per rights share onthebasis oftwo rights sharesfor everythree sharesheldon record date.(“Rights.Issue”). The.circular.of.the.Company.dated.22.November.2011.in.relation.to,.among.other.things,.the.Rights.Issue andthe whitewashwaiver wasdispatchedtotheCompany’s shareholders onthe samedate.The Rights.Issue.and.the.whitewash.waiver.were.approved.by.the.independent.shareholders.at.the.special.generalmeeting oftheCompanyheld on9December2011 andtheprospectus oftheCompanydated 21December2011containingthedetailsoftheRightsIssue(the“Prospectus”)togetherwithprovisional allotmentletterforthe rights shares andthe applicationformfor excess rights share weredispatchedto the.qualifying.shareholders.on.the.same.date. On19October2011,theCompanyenteredintoanunderwriting agreement(the “Underwriting Agreement”)withSilverRichMacauDevelopmentLimited(“SilverRich”,being a controlling shareholder of.the.Company.and.wholly-owned.by.a.discretionary.trust.(the.beneficiaries.of.which.were.the.family.members.of.Mr..Yeung)),.as.underwriter,.pursuant.to.the.terms.of.the.Underwriting.Agreement,.(i).Sliver.Rich has.accepted.and.taken.up.673,968,954.rights.shares.provisionally.allotted.by.the.Company.at a.total.subscription.price.of.HK$128,054,101.26.(the.“Subscription.Monies”).and.a.maximum.of.952,007,200.underwritten.shares.(the.“Underwritten.Shares”).were.underwritten.by.Silver.Rich;.(ii).a.commission.of.2.5%.of.the.aggregate.subscription.price.in.respect.of.the.Underwritten.Shares,.which.amount.to.approximately.HK$4.5.million.would.be.paid.by.the.Company.to.Silver.Rich;.and.(iii).the.Subscription.Monies.should.be.set.off.by.the.Assigned.Loans.(as.defined.hereinafter). On12January2012,theSubscriptionMonieshavebeen set offbytheAssignedLoans withthe sum of HK$128,054,101.26.and.the.Rights.Issue.has.been.completed.on.18.January.2012. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (b).Basis.of.preparation.of.the.consolidated.financial.statements.(continued) (i).Going.Concern.(continued) The netcashproceeds oftheRightsIssue, afterthe set offbythe aggregate oftheAssignedYeungLoan.(as.defined.hereinafter.in.note.35).and.Assigned.SS.Loan.(as.defined.hereinafter.in.note.31).(collectively.the.“Assigned.Loans”).from.Silver.Rich,.is.approximately.HK$173.2.million,.which.will.be.applied.as.follows:(i)uptoHK$100.0millionfor settlementofpartofthethirdpartyinterest-bearingloans whenthey falldue on22October2012;(ii)approximatelyHK$29.0 millionforfulfillmentoftheGroup’s commitment toprovidefinancialassistancetothejoint venture companyin relationtothelotterybusiness; and(iii)the remaining.balance.of.approximately.HK$44.2.million.for.general.working.capital.of.the.Group..Further.details.refer.to.the.announcement.of.the.Company.dated.25.October.2011. In.the.opinion.of.the.Directors,.after.taking.into.account.of.the.loan.facility.and.financial.undertaking.fromMr.Yeungand an additionalfundinggeneratedfromtheRightsIssue,theGroup willhave sufficient working.capital.for.its.current.requirements..Accordingly,.the.Directors.consider.that.it.is.appropriate.to.prepare.these.consolidated.financial.statements.on.a.going.concern.basis. Should.the.Group.be.unable.to.continue.as.a.going.concern,.adjustments.would.have.to.be.made.to.restatethe values of assetstotheir recoverable amounts,toprovidefor anyfurtherliabilities which might arise.and.to.classify.non-current.assets.and.liabilities.as.current.assets.and.liabilities,.respectively..The.effects ofthesepotential adjustmentshave notbeen reflectedinthese consolidatedfinancialstatements. (ii).Basis.of.measurement The measurementbasis usedinthepreparation ofthe consolidatedfinancial statementsisthehistorical.cost. The.preparation.of.consolidated.financial.statements.in.conformity.with.HKFRSs.requires.management.to.make.judgements,.estimates.and.assumptions.that.affect.the.application.of.policies.and.reported.amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances,.the.results.of.which.form.the.basis.of.making.the.judgements.about.carrying.amount.of.assets.and.liabilities.not.readily.apparent.from.other.sources..Actual.results.may.differ.from.these.estimates. The.estimates.and.underlying.assumptions.are.reviewed.on.an.ongoing.basis..Revisions.to.accounting.estimates.are.recognised.in.the.period.in.which.the.estimate.is.revised.if.the.revision.affects.only.that.period,.or.in.the.period.of.the.revision.and.future.periods.if.the.revision.affects.both.current.and.future.periods. Judgements.made.by.management.in.the.application.of.HKFRSs.that.have.significant.effect.on.the.financial.statements.and.estimates.with.a.significant.risk.of.material.adjustment.in.the.next.year.are.discussed.in.note.5. 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (c).Subsidiaries.and.non-controlling.interests Subsidiaries are entities controlledbytheGrouportheCompany.Control exists whentheGrouphasthepower.togovernthefinancial and operatingpolicies of an entity so asto obtainbenefitsfromits activities.In assessing control,.potential.voting.rights.that.presently.are.exercisable.are.taken.into.account. An.investment.in.a.subsidiary.is.consolidated.into.the.consolidated.financial.statements.from.the.date.that.control.commences.until.the.date.that.control.ceases. Intra-group balances.and.transactions.and.any.unrealised.profits.arising.from.intra-group.transactions.are.eliminatedinfullinpreparingthe consolidatedfinancialstatements.Unrealisedlosses resultingfromintra-group transactions.are.eliminated.in.the.same.way.as.unrealised.gains.but.only.to.the.extent.there.is.no.evidence.of.impairment. Non-controlling.interests.represent.the.portion.of.the.net.assets.of.subsidiaries.attributable.to.interests.that.are not.owned.by.the.Company,.whether.directly.or.indirectly.through.subsidiaries,.and.in.respect.of.which.the.Grouphas notagreedany additionalterms withtheholders ofthoseinterests whichwouldresultinthegroup as a wholehavinga contractualobligationin respect ofthose intereststhat meetsthedefinition ofafinancialliability. Non-controlling.interests.are.presented.in.the.consolidated.statements.of.financial.position.and.changes.in.equity within equity, separatelyfrom equityattributabletothe owners oftheCompany.Non-controlling interests inthe results oftheGrouparepresented ontheface ofthe consolidatedincome statementandthe consolidated statement.of.comprehensive.income.as.an.allocation.of.the.total.profit.or.loss.for.the.year.between.the.holders.of.non-controlling.interests.and.the.owners.of.the.Company. Wherelosses applicabletothe non-controllinginterestsholders exceedits’interestinthe equityof a subsidiary, the.excess,.and.any.further.losses.applicable.to.the.non-controlling.interests.holders,.are.charged.against.the.Group’s.interest.except.to.the.extent.that.the.non-controlling.interests.holders.has.a.binding.obligation.to,.and.is.able.to,.make.additional.investment.to.cover.the.losses..If.the.subsidiary.subsequently.reports.profits,.the.Group’sinterestis allocated all suchprofits untilthe non-controllinginterestsholders’ share oflossespreviously absorbed.by.the.Group.has.been.recovered. Loans.from.holders.of.non-controlling.interests.and.other.contractual.obligations.towards.these.holders.are.presented.as.financial.liabilities.in.the.consolidated.statement.of.financial.position.in.accordance.with.note.2(l). IntheCompany’s statement offinancialposition, aninvestmentin subsidiaries is stated at costlessimpairment losses.(see.note.2(i)). NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (d).Associates.and.jointly.controlled.entities An.associate.is.an.entity.in.which.the.Group.or.the.Company.has.significant.influence,.but.not.control.or.joint.control,.over.its.management,.including.participation.in.the.financial.and.operating.policy.decisions. Ajointlycontrolledentityis an entitywhich operates under a contractual arrangementbetweentheGroup orthe Companyandotherparties, wherethe contractual arrangementestablishedthattheGrouportheCompany and one.or.more.of.the.other.parties.share.joint.control.over.the.economic.activity.of.the.entity. An investmentin an associate or ajointly controlled entity is accountedforinthe consolidatedfinancial statements under the equity method and is initially recorded at cost and adjusted thereafter for the post acquisition.change.in.the.Group’s.share.of.the.associate’s.net.assets,.unless.it.is.classified.as.held.for.sale.(or.includedin adisposalgroupthat is classified asheldfor sale).The consolidatedincome statementincludesthe Group’s.share.of.the.post-acquisition,.post-tax.results.of.the.associates.for.the.year,.including.any.impairment.loss.on.goodwill.relating.to.the.investment.in.associates.for.the.year.(see.notes.2(e).and.(i))..The.Group’s.share.of the.post-acquisition.post-tax.items.of.the.investees’ other.comprehensive.income.is.recognised.in.the.consolidated.statement.of.comprehensive.income. WhentheGroup’s share oflosses exceedsitsinterestinthe associate orthejointlycontrolledentity,theGroup’s interest.is.reduced.to.nil.and.recognition.of.further.losses.is.discontinued.except.to.the.extent.that.the.Group.hasincurredlegalor constructive obligations or madepayments onbehalf oftheinvestee.Forthispurpose,the Group’s.interest.is.the.carrying.amount.of.the.investment.under.the.equity.method.together.with.the.Group’s.long-term.interests.that.in.substance.form.part.of.the.Group’s.net.investment.in.the.associate.or.the.jointly.controlled.entity. Unrealisedprofits.and.losses.resulting.from.transactions.between.the.Group.and.its.associates.and.jointly.controlled.entity.are.eliminated.to.the.extent.of.the.Group’s.interest.in.the.associate,.except.where.unrealised.losses provide evidence of an impairment of the asset transferred, in which case they are recognised immediately.in.profit.or.loss. In.the.Company’s.statement.of.financial.position,.investments.in.associates.and.jointly.controlled.entity.are.stated.at.cost.less.impairment.loss.(see.note.2(i)). 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (e).Goodwill Goodwillrepresentsthe excess ofthe costofabusiness combination or aninvestmentin an associate or ajointly.controlled.entity.over.the.Group’s.interest.in.the.net.fair.value.of.the.acquiree’s.identifiable.assets,.liabilities.and.contingent.liabilities. Goodwill.is.stated.at.cost.less.accumulated.impairment.losses..Goodwill.arising.on.a.business.combination.is.allocated.to.each.cash-generating.units.(“CGU(s)”).or.groups.of.CGUs,.that.is.expected.to.benefit.from.the.synergies.of.the.combination.and.is.tested.annually.for.impairment.(see.note.2(i))..In.respect.of.associate.or.jointly.controlled.entity,.the.carrying.amount.of.goodwill.is.included.in.the.carrying.amount.of.the.interest.in.the.associate.or.jointly.controlled.entity.and.the.investment.as.a.whole.is.tested.for.impairment.whenever.there.is.objective.evidence.of.impairment.(see.note.2(i)). Any excess.of.the.Group’s.interest.in.the.net.fair.value.of.the.acquiree’s.identifiable.assets,.liabilities.and.contingentliabilities overthe cost of abusiness combination or aninvestmentin an associate orjointlycontrolled entity.is.recognised.immediately.in.profit.or.loss. Ondisposalof aCGUofan associate or ajointlycontrolled entity, anyattributable amountofpurchasedgoodwill is.included.in.the.calculation.of.the.profit.or.loss.on.disposal. (f).Property,.plant.and.equipment Property, plant and equipment are stated in the consolidated statement of financial position at cost less.accumulated.depreciation.and.impairment.losses.(see.note.2(i)). Gain orlosses arisingfromthe retirement ordisposalofanitem ofproperty,plant and equipmentaredetermined as.the.difference.between.the.net.disposal.proceeds.on.disposal.and.the.carrying.amount.of.the.item.and.are.recognised.in.profit.or.loss.on.the.date.of.retirement.or.disposal. Depreciation.is.calculated.to.write.off.the.cost.of.items.of.property,.plant.and.equipment,.less.their.estimated.residual.value,.if.any,.using.the.straight-line.method.over.their.estimated.useful.life.at.the.following.rates.per.annum: Building.2.5% Cruise.ship.5% Leasehold.improvements.Over.lease.terms Plant.and.machinery.20% Furniture,.fittings.and.office.equipment.18%.–.331/3% Motor.vehicles.30%.–.331/3% Motor.yacht.20% Where parts.of.an.item.of.property,.plant.and.equipment.have.different.useful.lives,.the.cost.of.the.item.is.allocated.on.a.reasonable.basis.between.the.parts.and.each.part.is.depreciated.separately..Both.the.useful.life.of an asset andits residual value,if any, are reviewed annually.There is nodepreciationimposed onthefreehold land. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (g). Intangible.assets.(other.than.goodwill) Intangible.assets,.other.than.goodwill,.identified.on.business.combinations.are.capitalised.on.their.fair.values..They.represent.mainly.trademark.and.relationship.with.customers..Subsequent.to.initial.recognition,.intangible.assets.with.finite.useful.lives.are.carried.at.cost.less.accumulated.amortisation.and.accumulated.impairment.losses.Amortisationforintangible assets withfinite usefullivesis chargedtoprofit orloss on a straight-linebasis from.the.date.of.acquisition.over.their.estimated.useful.lives.as.follows: Client.list. 15.years The.asset’s.useful.lives.and.their.amortisation.method.are.reviewed.annually. Intangible.assets.with.indefinite.useful.lives.are.not.amortised..The.intangible.asset.and.its.status.are.reviewed.annually.to.determine.whether.events.and.circumstances.continue.to.support.indefinite.useful.life..Should.the.usefullife ofanintangible asset changefromindefinitetofinite,the change wouldbe accountedforprospectively from.the.date.of.change.and.in.accordance.with.the.policy.for.amortisation.of.intangible.assets.with.finite.lives.as.set.out.above. (h). Operating.lease.charges Where.the.Group.has.the.use.of.assets.held.under.operating.leases,.payments.made.under.the.leases.are.charged.to.profit.or.loss.in.equal.installments.over.the.accounting.periods.covered.by.the.lease.term,.except.where an alternativebasisis more representative ofthepattern ofbenefitstobederivedfromtheleasedasset. Leaseincentives receivedare recognisedinprofitorloss as anintegralpartofthe aggregate netleasepayments made..Contingent.rentals.are.charged.to.profit.or.loss.in.the.accounting.period.in.which.they.are.incurred. (i). Impairment.of.assets (i).Impairment.of.investments.in.debt.and.equity.securities.and.other.receivables Investments.in.debt.and.equity.securities.and.other.current.and.non-current.receivables.that.are.stated.at cost or amortised cost or are classified as available-for-sale securities are reviewedatthe end of each reporting.period.to.determine.whether.there.is.objective.evidence.of.impairment..If.any.such.evidence.exists,.any.impairment.loss.is.determined.and.recognised.as.follows: –. For.unquoted.equity.securities.and.current.receivables.that.are.carried.at.cost,.the.impairment.loss.is.measured.as.the.difference.between.the.carrying.amount.of.the.financial.asset.and.the.present.value.of.estimated.future.cash.flows,.discounted.at.the.current.market.rate.of.return.for.a.similar.financial.asset.where.the.effect.of.discounting.is.material..Impairment.losses.for.current.receivables are reversedifin a subsequentperiodthe amount oftheimpairmentlossdecreases. Impairment.losses.for.equity.securities.are.not.reversed. –. Forfinancialassetscarried at amortised cost,theimpairmentloss ismeasured asthedifference between the.asset’s.carrying.amount.and.the.present.value.of.estimated.future.cash.flows,.discounted.at.the.financial.asset’s.original.effective.interest.rate.(i.e..the.effective.interest.rate.computed.at.initial.recognition.of.these.assets). 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (i). Impairment.of.assets.(continued) (i). Impairment.of.investments.in.debt.and.equity.securities.and.other.receivables.(continued) If.in.a.subsequent.period.the.amount.of.an.impairment.loss.decreases.and.the.decrease.can.be.linked.objectively to.an.event.occurring.after.the.impairment.loss.was.recognised,.the.impairment.loss.is.reversed.through.profit.or.loss..A.reversal.of.an.impairment.loss.shall.not.result.in.the.asset’s.carrying.amount exceedingthat which wouldhavebeendeterminedhad noimpairmentlossbeen recognisedin prior.years. Impairment.losses.recognised.in.profit.or.loss.in.respect.of.other.receivables.are.not.reversed.through.profit.or.loss..Any.subsequent.increase.in.the.fair.value.of.such.assets.is.recognised.directly.in.other.comprehensive.income. Impairment.losses.in.respect.of.other.receivables.are.reversed.if.the.subsequent.increase.in.fair.value.can.be.objectively.related.to.an.event.occurring.after.the.impairment.loss.was.recognised..Reversals.of.impairment.losses.in.such.circumstances.are.recognised.in.profit.or.loss. (ii). Impairment.of.other.assets Internal.and.external.sources.of.information.are.reviewed.at.the.end.of.each.reporting.period.to.identify.indications.that.the.following.assets.may.be.impaired.or,.except.in.the.case.of.goodwill,.an.impairment.loss.previously.recognised.no.longer.exists.or.may.have.decreased: –. property,.plant.and.equipment; –. intangible.assets; –. investments.in.subsidiaries,.associates.and.jointly.controlled.entities;.and –. goodwill If.any.such.indication.exists,.the.asset’s.recoverable.amount.is.estimated..In.addition,.for.goodwill,.the.recoverable.amount.is.estimated.annually.whether.or.not.there.is.any.indication.of.impairment. –. Calculation.of.recoverable.amount The.recoverable.amount.of.an.asset.is.the.greater.of.its.net.selling.price.and.value.in.use..In.assessingvaluein use,the estimatedfuture cashflows arediscountedtotheirpresentvalue using apre-taxdiscount ratethat reflects current market assessments oftime value of money andthe risks specifictothe asset.Where an assetdoes notgenerate cashinflowslargelyindependent of those.from.other.assets,.the.recoverable.amount.is.determined.for.the.smallest.group.of.assets.that.generates.cash.inflows.independently.(i.e..a.CGU). NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (i). Impairment.of.assets.(continued) (ii). Impairment.of.other.assets.(continued) –. Recognition.of.impairment.losses An.impairment.loss.is.recognised.in.profit.or.loss.whenever.the.carrying.amount.of.an.asset,.or.the.CGU.to.which.it.belongs,.exceeds.its.recoverable.amount..Impairment.losses.recognised.in.respectofCGUs are allocatedfirstto reducethe carryingamountof anygoodwillallocatedtothe CGU(orgroupof units)andthen,to reducethe carrying amountofthe other assetsinthe unit(or group.of.units).on.a.pro.rata.basis,.except.that.the.carrying.amount.of.asset.will.not.be.reduced.below.its.individual.fair.value.less.costs.to.sell,.or.value.in.use,.if.determinable. –. Reversals.of.impairment.losses In respect.of.assets.other.than.goodwill,.an.impairment.loss.is.reversed.if.there.has.been.a.favourable.change.in.the.estimates.used.to.determine.the.recoverable.amount..An.impairment.loss.in.respect.of.goodwill.is.not.reversed. A.reversal.of.an.impairment.loss.is.limited.to.the.asset’s.carrying.amount.that.would.have.been.determined.had.no.impairment.loss.been.recognised.in.prior.years..Reversals.of.impairment.losses.are.credited.to.profit.or.loss.in.the.year.in.which.the.reversals.are.recognised. (j). Inventories Inventories.are.carried.at.the.lower.of.cost.and.net.realisable.value. Cost is calculated using the first-in, first-out formula and comprises all costs of purchase in bringing the inventories.to.their.present.location.and.condition. Net.realisable.value.is.the.estimated.selling.price.in.the.ordinary.course.of.business.less.the.estimated.costs.of.completion.and.the.estimated.costs.necessary.to.make.the.sale. When.inventories.are.consumed,.the.carrying.amount.of.those.inventories.is.recognised.as.an.expense.in.the.periodin whichthe relatedrevenueis recognised.The amount of any writedown of inventoriesto net realisable value and alllosses ofinventories are recognised as an expense intheperiodthe writedown orloss occurs.The amount of any reversalofanywrite-down ofinventoriesis recognisedas a reductioninthe amount of inventories recognised.as.an.expense.in.the.period.in.which.the.reversal.occurs. 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (k). Trade.and.other.receivables Trade.and.other.receivables.are.initially.recognised.at.fair.value.on.the.trade.date.and.thereafter.stated.at.amortised costless allowanceforimpairment ofdoubtfuldebts(see note2(i)), exceptwherethe receivables are interest-freeloans madeto relatedparties without anyfixed repaymentterms orthe effect ofdiscounting would beimmaterial.In suchcases,the receivables are stated at costless allowanceforimpairmentlossesforbadand doubtful.debts.(see.note.2(i)). (l). Trade.and.other.payables Trade andotherpayables areinitially recognised atfair value andthereafter stated at amortised cost unlessthe.effect.of.discounting.would.be.immaterial,.in.which.case.they.are.stated.at.cost. (m). Cash.and.cash.equivalents Cash.and.cash.equivalents.comprise.cash.at.bank.and.on.hand,.demand.deposits.with.banks.and.other.financial.institutions,.and.short-term,.highly.liquid.investments.that.are.readily.convertible.into.known.amounts.of.cash.and.which.are.subject.to.an.insignificant.risk.of.changes.in.value,.having.been.within.three.months.of.maturity.at.acquisition..Bank.overdrafts.that.are.repayable.on.demand.and.form.an.integral.part.of.the.Group’s.cash.management.are.also.included.as.a.component.of.cash.and.cash.equivalents.for.the.purpose.of.the.consolidated.statement.of.cash.flows. (n). Employee.benefits (i). Short.term.employee.benefits.and.contributions.to.defined.contribution.retirement.plans Salaries,.annual.bonuses,.paid.annual.leave,.contributions.to.defined.contribution.plans.and.the.cost.of.non-monetary.benefits.are.accrued.in.the.year.in.which.the.associated.services.are.rendered.by.employees..Where.payment.or.settlement.is.deferred.and.the.effect.would.be.material,.these.amounts.are.stated.at.their.present.values. (ii). Termination.benefits Termination.benefits.are.recognised.when,.and.only.when,.the.Group.demonstrably.commits.itself.to.terminate.employment.or.to.provide.benefits.as.a.result.of.voluntary.redundancy.by.having.a.detailed.formal.plan.which.is.without.realistic.possibility.of.withdrawal. (o).Income.tax Income.tax.for.the.year.comprises.current.tax.and.movements.in.deferred.tax.assets.and.liabilities..Current.tax.andmovementsindeferredtax assets andliabilities are recognisedinprofitorloss excepttothe extentthatthey relate.to.items.recognised.other.comprehensive.income.or.directly.in.equity,.in.which.case.they.are.recognised.in.other.comprehensive.income.or.directly.in.equity,.respectively. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2..SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (o).Income.tax.(continued) Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or.substantively enacted.at.the.end.of.the.reporting.period,.and.any.adjustment.to.tax.payable.in.respect.of.previous.years. Deferred.tax.assets.and.liabilities.arise.from.deductible.and.taxable.temporary.differences.respectively,.being.thedifferencesbetweenthe carrying amounts of assets andliabilitiesforfinancial reportpurposes andtheirtax bases..Deferred.tax.assets.also.arise.from.unused.tax.losses.and.unused.tax.credits. Apart.from.certain.limited.exceptions,.all.deferred.tax.liabilities,.and.all.deferred.tax.assets.to.the.extent.that.it.is.probable.that.future.taxable.profits.will.be.available.against.which.the.asset.can.be.utilised,.are.recognised..Futuretaxableprofitsthat may supportthe recognition ofdeferredtax assets arisingfromdeductibletemporary differences.include.those.that.will.arise.from.the.reversal.of.existing.taxable.temporary.differences,.provided.thosedifferences relatetothe sametaxation authorityandthe sametaxable entity, and are expectedto reverse eitherinthe sameperiod asthe expected reversal ofthedeductibletemporarydifference or inperiodinto which ataxloss arisingfromthedeferredtax assetcanbe carriedbackorforward.The same criteria are adoptedwhen determining whether existingtaxabletemporarydifferences supportthe recognition ofdeferredtax assets arising from.unused.tax.losses.and.credits,.that.is,.those.differences.are.taken.into.account.if.they.relate.to.the.same.taxation authorityandthe sametaxable entity, and are expectedto reversein aperiod, orperiods,in whichthe tax.loss.or.credit.can.be.utilised. Thelimitedexceptionsto recognition ofdeferredtax assets andliabilities arethosetemporarydifferences arising from.goodwill.not.deductible.for.tax.purposes,.the.initial.recognition.of.assets.or.liabilities.that.affect.neither.accounting nortaxableprofit(providedtheyare notpart of abusiness combination), andtemporarydifferences related.to.investments.in.subsidiaries.to.the.extent.that,.in.the.case.of.taxable.differences,.the.Group.controls.thetimingofthe reversal anditisprobablethatthedifferences willnot reverseintheforeseeablefuture, orinthe case.of.deductible.differences,.unless.it.is.probable.that.they.will.reserve.in.the.future. The amountofdeferredtax recognised is measuredbased onthe expected manner of realisation or settlement of.the.carrying.amount.of.the.assets.and.liabilities,.using.tax.rates.enacted.or.substantively.enacted.at.the.end.of.the.reporting.period..Deferred.tax.assets.and.liabilities.are.not.discounted. The carryingamountofadeferredtax asset is reviewed atthe endofeachreportingperiod andis reducedtothe extentthat itis nolongerprobablethatsufficienttaxableprofits willbe availableto allowthe relatedtaxbenefitto be.utilised..Any.such.reduction.is.reversed.to.the.extent.that.it.becomes.probable.that.sufficient.taxable.profits.will.be.available. 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (o). Income.tax.(continued) Additionalincometaxesthatarisefromthedistribution ofdividends are recognisedwhentheliabilitytopaythe.related.dividends.is.recognised. Current.tax.balances.and.deferred.tax.balances,.and.movements.therein,.are.presented.separately.from.each.other.and.are.not.offset..Current.tax.assets.are.offset.against.current.tax.liabilities,.and.deferred.tax.assets.againstdeferredtaxliabilities,iftheCompanyortheGrouphasthelegally enforceable rightto set off currenttax assets.against.current.tax.liabilities.and.the.following.additional.conditions.are.met: –. in.the.case.of.current.tax.assets.and.liabilities,.the.Company.or.the.Group.intends.either.to.settle.on.a.net.basis,.or.to.realise.the.asset.and.settle.the.liability.simultaneously;.or –. inthecaseofdeferredtaxassetsandliabilities,iftheyrelatetoincometaxesleviedbythesametaxation authority.on.either: –. the.same.taxable.entity;.or –. differenttaxableentities,which,ineachfutureperiodinwhich significantamountsofdeferredtax liabilities or assets are expectedtobe settledor recovered,intendto realisethe currenttax assets and.settle.the.current.tax.liabilities.on.a.net.basis.or.realise.and.settle.simultaneously. (p). Financial.guarantees.issued,.provisions.and.contingent.liabilities (i). Financial.guarantees.issued Financialguarantees are contractsthatrequiretheissuer(i.e.theguarantor)to make specifiedpayments.toreimburse.the.beneficiary.of.the.guarantee.(the.“holder”).for.a.loss.the.holder.incurs.because.a.specified.debtor.fails.to.make.payment.when.due.in.accordance.with.the.terms.of.a.debt.instrument. Where the.Group.issues.a.financial.guarantee,.the.fair.value.of.the.guarantee.(being.the.transaction.price, unlessthefair value can otherwisebe reliably estimated)isinitially recognised asdeferredincome within.trade.and.other.payables..Where.consideration.is.received.or.receivable.for.the.issuance.of.the.guarantee,.the.consideration.is.recognised.in.accordance.with.the.Group’s.policies.applicable.to.that.category.of.asset..Where.no.such.consideration.is.received.or.receivable,.an.immediate.expense.is.recognised.in.profit.or.loss.on.initial.recognition.of.any.deferred.income. The amountoftheguaranteeinitially recognised asdeferred incomeis amortisedinprofitorloss overthe term oftheguarantee asincomefromfinancialguaranteesissued.In addition,provisions are recognised in.accordance.with.note.2(p)(ii).if.and.when.(i).it.becomes.probable.that.the.holder.of.the.guarantee.will.call.upon.the.Group.under.the.guarantee,.and.(ii).the.amount.of.that.claim.on.the.Group.is.expected.to.exceed.the.amount.currently.carried.in.trade.and.other.payables.in.respect.of.that.guarantee.i.e..the.amount.initially.recognised,.less.accumulated.amortisation. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (p). Financial.guarantees.issued,.provisions.and.contingent.liabilities.(continued) (ii). Other.provisions.and.contingent.liabilities Provisions.are.recognised.for.other.liabilities.of.uncertain.timing.or.amount.when.the.Group.or.the.Company.has.a.legal.or.constructive.obligation.arising.as.a.result.of.a.past.event,.it.is.probable.that.an.outflow ofeconomicbenefits willbe requiredto settlethe obligation and a reliable estimate canbe made. Where.the.time.value.of.money.is.material,.provisions.are.stated.at.the.present.value.of.the.expenditure.expected.to.settle.the.obligation. Where.it.is.not.probable.that.an.outflow.of.economic.benefits.will.be.required,.or.the.amount.cannot.be.estimated.reliably,.the.obligation.is.disclosed.as.a.contingent.liability,.unless.the.probability.of.outflow.of.economic.benefits.is.remote..Possible.obligations,.whose.existence.will.only.be.confirmed.by.the.occurrence.or.non-occurrence.of.one.or.more.future.events,.are.also.disclosed.as.contingent.liabilities.unless.the.probability.of.outflow.of.economic.benefits.is.remote. (q). Revenue.recognition Provideditisprobablethatthe economicbenefits willflowtotheGroupandthe revenue andcosts,ifapplicable,.can.be.measured.reliably,.revenue.is.recognised.in.profit.or.loss.as.follows: (i). Cruise.ship.leasing.and.management.fee.income –. Cruiseshipleasing incomeisrecognisedonanaccrualbasisinaccordancewiththetermsofthe.leasing.agreement. –. Cruiseshipmanagementfeeincome isrecognised whenthemanagement servicesisrendered. (ii). Travel-related.agency.service.fee.income –. Revenue.from.the.sale.of.air.tickets.is.recognised.when.the.tickets.are.issued. –. Revenue.from.the.sale.of.tour.packages.is.recognised.when.travel.arrangements.have.been.booked.and.confirmed.with.customers..Deposits.from.customers.are.reported.as.liabilities. –. Revenuefromthesaleofgrouptoursisrecognisedatthepointofgroupdeparture.Depositsfrom customers.are.reported.as.liabilities.until.the.tour.departs. –. Other.income.consists.of.revenue.earned.based.on.volume.sales.through.various.on-line.ticket.processing systems. Other income is recognised when it is measurable and all contractual obligations.have.been.fulfilled. (iii) Management.fee.income.is.recognised.when.the.amounts.are.measurable.and.the.ultimate.collections.are.reasonably.assumed. (iv) Dividend income from unlisted investments is recognised when the shareholder’s right to receive.payment.is.established. 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (q). Revenue.recognition.(continued) (v) Interest.income.is.recognised.on.a.time-apportioned.basis.using.the.effective.interest.method. (vi) Service.income.is.recognised.when.services.are.provided. (vii) Deferredincome comprises of a sign-upbonusfor an on-lineticketprocessingsystem andis recognised.as.revenue.in.accordance.with.the.terms.of.the.agreement. (r). Translation.of.foreign.currencies Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the.transactiondates.Monetary assets andliabilitiesdenominatedinforeign currencies aretranslated attheforeign exchange.rates.ruling.at.the.end.of.the.reporting.period..Exchange.gains.and.losses.are.recognised.in.profit.or.loss. Non-monetary assets.and.liabilities.that.are.measured.in.terms.of.historical.cost.in.a.foreign.currency.are.translated.using.the.foreign.exchange.rates.ruling.at.the.transaction.dates..Non-monetary.assets.and.liabilities.denominated.in.foreign.currencies.that.are.stated.at.fair.value.are.translated.using.the.foreign.exchange.rates.ruling.at.the.dates.the.fair.value.was.determined. The results offoreign operations aretranslatedintoHongKongdollars atthe exchange rates approximatingthe foreign exchange rates rulingatthedates ofthetransactions.The items showedinthe consolidatedstatement of.financial.position,.including.goodwill.arising.on.consolidation.of.foreign.operations.acquired.on.or.after.1.January.2005,.are.translated.into.Hong.Kong.dollars.at.the.foreign.exchange.rates.ruling.at.the.end.of.the.reportingperiod.The resulting exchangedifferences are recogniseddirectlyin a separate component of equity. Goodwill.arising.on.consolidation.of.a.foreign.operation.acquired.before.1.January.2005.is.translated.at.the.foreign.exchange.rate.that.applied.at.the.date.of.acquisition.of.the.foreign.operation. On.disposal.of.a.foreign.operation,.the.cumulative.amount.of.the.exchange.differences.recognised.in.equity.which.relate.to.that.foreign.operation.is.included.in.the.calculation.of.the.profit.or.loss.on.disposal. (s). Borrowing.costs. Borrowingcosts are expensed inprofit orlossintheperiodin whichthey areincurred, excepttothe extentthat.theyare capitalisedasbeingdirectly attributabletothe acquisition, construction orproduction of an asset which necessarily.takes.a.substantial.period.of.time.to.get.ready.for.its.intended.use.or.sale. The capitalisation ofborrowingcosts aspart ofthe cost of aqualifying asset commences when expenditurefor the.asset.is.being.incurred,.borrowing.costs.are.being.incurred.and.activities.that.are.necessary.to.prepare.the.assetforitsintendeduse or sale areinprogress.Capitalisation ofborrowing costsis suspended or ceases when substantiallyallthe activities necessarytopreparethequalifyingassetforitsintended use or sale areinterrupted or.complete. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (t). Related.parties (a). A.person,.or.a.close.member.of.that.person’s.family,.is.related.to.the.Group.if.that.person: (i). has.control.or.joint.control.over.the.Group; (ii). has.significant.influence.over.the.Group;.or (iii). is.a.member.of.the.key.management.personnel.of.the.Group.or.the.Group’s.parent. (b). An.entity.is.related.to.the.Group.if.any.of.the.following.conditions.applies: (i). theentity.and.the.Group.are.members.of.the.same.group.(which.means.that.each.parent,.subsidiary.and.fellow.subsidiary.is.related.to.the.others). (ii). one.entity.is.an.associate.or.joint.venture.of.the.other.entity.(or.an.associate.or.joint.venture.of.a.member.of.a.group.of.which.the.other.entity.is.a.member). (iii). the.entity.and.the.Group.are.joint.ventures.of.the.same.third.party. (iv). one.entity.is.a.joint.venture.of.a.third.entity.and.the.other.entity.is.an.associate.of.the.third.entity. (v). the.entity.is.a.post-employment.benefit.plan.for.the.benefit.of.employees.of.either.the.Group.or.an.entity.related.to.the.Group. (vi). the.entity.is.controlled.or.jointly.controlled.by.a.person.identified.in.(a). (vii). a person.identified.in.(a)(i).has.significant.influence.over.the.entity.or.is.a.member.of.the.key.management.personnel.of.the.entity.(or.of.a.parent.of.the.entity). Close.family.members.of.an.individual.are.those.family.members.who.may.be.expected.to.influence,.or.be.influenced.by,.that.person.in.their.dealings.with.the.entity. Atransactionis consideredtobe a relatedpartytransaction whenthereis atransfer ofresources andobligations between.related.parties. 2.. SIGNIFICANT.ACCOUNTING.POLICIES.(CONTINUED) (u). Segment.reporting Operatingsegments, andthe amounts of each segmentitem reported inthe consolidatedfinancial statements,.are identified.from.the.financial.information.provided.regularly.to.the.Group’s.chief.operating.decision.maker.(“CODM’).for.the.purposes.of.allocating.resources.to,.and.assessing.the.performance.of,.the.Group’s.various.lines.of.business.and.geographical.location. Individually material operating segments are not aggregated for financial reporting purposes unless the segmentshave similar economic characteristics andare similarin respect ofthe nature ofproducts and services, the nature ofproductionprocesses,thetype or class ofcustomers,the methods usedtodistributetheproducts or provide.the.services,.and.the.nature.of.the.regulatory.environment..Operating.segments.which.are.not.individually.material.may.be.aggregated.if.they.share.a.majority.of.these.criteria. 3.. APPLICATION.OF.NEW.AND.REVISED.HONG.KONG.FINANCIAL.REPORTING.STANDARDS The.accounting.policies.adopted.in.the.consolidated.financial.statements.for.the.year.ended.31.December.2011.are.consistent.with.those.followed.in.the.preparation.of.the.Group’s.consolidated.financial.statements.for.the.year.ended.31.December.2010.except.as.described.below. In.the.current.year,.the.Group.has.applied,.for.the.first.time,.a.number.of.new.and.revised.standards,.amendments.and.interpretations.(the.“New.HKFRSs”).issued.by.the.HKICPA,.which.are.effective.for.the.Group’s.accounting.period.beginning.on.1.January.2011. The.New.HKFRSs.adopted.by.the.Group.in.the.consolidated.financial.statements.are.set.out.as.follows: HKFRSs.(Amendments) Improvements.to.HKFRSs.issued.in.2010 HKAS.24.(Revised) Related.Party.Disclosures HKAS.32.(Amendments) Classification.of.Rights.Issues HKFRS.1.(Amendment) Limited.Exemption.from.Comparative.HKFRS.7.–.Disclosure.for.First-time. Adopters HK(IFRIC).–.Int.14.(Amendments) Prepayments.of.a.Minimum.Funding.Requirements HK(IFRIC).–.Int.19 Extinguishing.Financial.Liabilities.with.Equity.Instruments The application ofthe aboveNewHKFRSshad no material effect onthe results andfinancialpositions oftheGroupfor the currentorprior accountingperiodshavebeenprepared andpresented.Accordingly, nopriorperiod adjustmenthas been.required. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 3.. APPLICATION.OF.NEW.AND.REVISED.HONG.KONG.FINANCIAL.REPORTING.STANDARDS.(CONTINUED) The.Group.has.not.early.applied.the.following.New.HKFRSs.that.have.been.issued.but.are.not.yet.effective: HKFRS.1.(Amendment) Severe.Hyperinflation.and.Removal.of.Fixed.Dates.for.First-time.Adopters1 HKFRS.1.(Amendments) Government.Loans4 HKFRS.7.(Amendments) Disclosures.–.Transfers.of.Financial.Assets1 HKFRS.7.(Amendments) Disclosures.–.Offsetting.Financial.Assets.and.Financial.Liabilities4 HKFRS.9 Financial.Instruments6 HKFRS.10 Consolidated.Financial.Statements4 HKFRS.11 Joint.Arrangements4 HKFRS.12 Disclosure.of.Interests.in.Other.Entities4 HKFRS.13 Fair.Value.Measurement4 HKAS.1.(Amendments) Presentation.of.Items.of.Other.Comprehensive.Income3 HKAS.12.(Amendments) Deferred.Tax.–.Recovery.of.Underlying.Assets2 HKAS.19.(as.revised.in.2011) Employee.Benefits4 HKAS.27.(as.revised.in.2011) Separate.Financial.Statements4 HKAS.28.(as.revised.in.2011) Investments.in.Associates.and.Joint.Ventures4 HKAS.32.(Amendments) Presentation.–.Offsetting.Financial.Assets.and.Financial.Liabilities5 HK(IFRIC).–.Int.20 Stripping.Costs.in.the.Production.Phase.of.a.Surface.Mine4 1 Effective.for.annual.periods.beginning.on.or.after.1.July.2011 2 Effective.for.annual.periods.beginning.on.or.after.1.January.2012 3 Effective.for.annual.periods.beginning.on.or.after.1.July.2012 4 Effective.for.annual.periods.beginning.on.or.after.1.January.2013 5 Effective.for.annual.periods.beginning.on.or.after.1.January.2014 6 Effective.for.annual.periods.beginning.on.or.after.1.January.2015 The.amendments.to.HKFRS.7.increase.the.disclosure.requirements.for.transactions.involving.transfers.of.financial.assets.These amendments areintendedtoprovidegreatertransparency around risk exposures when afinancialasset is.transferred.but.the.transferor.retains.some.level.of.continuing.exposure.in.the.asset..The.amendments.also.require.disclosures.where.transfers.of.financial.assets.are.not.evenly.distributed.throughout.the.period. The reviseddisclosure requirements containedinthe amendmentstoHKFRS7areintendedtohelpinvestors and other financial.statements.users.to.better.assess.the.effect.or.potential.effect.of.offsetting.arrangements.on.a.company’s.financial.position..The.amendments.also.improve.transparency.in.the.reporting.of.how.companies.mitigate.credit.risk,.including.disclosure.of.related.collateral.pledged.or.received..Companies.and.other.entities.are.required.to.apply.the.amendments.for.annual.periods.beginning.on.or.after.1.January.2013,.and.also.interim.periods.within.those.annual.periods..The.required.disclosures.should.be.provided.retrospectively. HKFRS.9 issued.in.2009.introduces.new.requirements.for.the.classification.and.measurement.of.financial.assets..HKFRS9amendedin2010includesthe requirementsforthe classification and measurement offinancialliabilities and for.derecognition. 3.. APPLICATION.OF.NEW.AND.REVISED.HONG.KONG.FINANCIAL.REPORTING.STANDARDS.(CONTINUED) Key.requirements.of.HKFRS.9.are.described.as.follows: ‧. HKFRS.9.requires.all.recognised.financial.assets.that.are.within.the.scope.of.HKAS.39.“Financial.Instruments:.Recognition andMeasurement”tobe subsequently measured at amortised cost orfair value.Specifically,debt investmentsthatareheld within abusiness model whose objectiveisto collectthe contractualcashflows, and that.have.contractual.cash.flows.that.are.solely.payments.of.principal.and.interest.on.the.principal.outstanding.aregenerally measuredat amortisedcost atthe end of subsequentreportingperiods.All otherdebtinvestments and equity.investments.are.measured.at.their.fair.values.at.the.end.of.subsequent.accounting.periods..In.addition,.under.HKFRS.9,.entities.may.make.an.irrevocable.election.to.present.subsequent.changes.in.the.fair.value.of.an.equity.investment.(that.is.not.held.for.trading).in.other.comprehensive.income,.with.only.dividend.income.generally.recognised.in.profit.or.loss. ‧. Themostsignificant effect ofHKFRS9 regardingtheclassificationand measurement offinancial liabilitiesrelates tothepresentation of changesinthefair value of afinancialliability(designated as atfair valuethroughprofit or loss).attributable.to.changes.in.the.credit.risk.of.that.liability..Specifically,.under.HKFRS.9,.for.financial.liabilities.that.are.designated.as.at.fair.value.through.profit.or.loss,.the.amount.of.change.in.the.fair.value.of.the.financial.liabilitythatis attributableto changesinthe creditriskofthatliabilityispresentedin other comprehensiveincome, unlessthe recognition ofthe effects of changesintheliability’s credit riskin other comprehensiveincome would create.or.enlarge.an.accounting.mismatch.in.profit.or.loss..Changes.in.fair.value.attributable.to.a.financial.liability’s credit.risk.are.not.subsequently.reclassified.to.profit.or.loss..Previously,.under.HKAS.39,.the.entire.amount ofthe changeinthefair value ofthefinancialliabilitydesignated as atfair valuethroughprofit orloss was presented.in.profit.or.loss. HKFRS.9.is.effective.for.annual.periods.beginning.on.or.after.1.January.2015,.with.earlier.application.permitted. HKFRS 10 replaces the parts of HKAS 27 “Consolidated and Separate Financial Statements” that deal with consolidated.financial.statements.and.HK.(SIC)-Int.12.“Consolidation.–.Special.Purpose.Entities”..HKFRS.10.includes.a.new.definition.of.control.that.contains.three.elements:.(a).power.over.an.investee,.(b).exposure,.or.rights,.to.variable.returnsfromitsinvolvement withtheinvestee, and(c)the abilityto useitspower overtheinvesteeto affectthe amount of.the.investor’s.returns..Extensive.guidance.has.been.added.in.HKFRS.10.to.deal.with.complex.scenarios. HKFRS.11.replaces.HKAS.31.“Interests.in.Joint.Ventures” and.HK.(SIC)-Int.13.“Jointly.Controlled.Entities.–.Non-Monetary.Contributions.by.Venturers”..HKFRS.11.deals.with.how.a.joint.arrangement.of.which.two.or.more.parties.have.joint.control.should.be.classified..Under.HKFRS.11,.joint.arrangements.are.classified.as.joint.operations.or.joint.ventures,dependingonthe rights and obligations ofthepartiestothe arrangements.In contrast, underHKAS31,there arethreetypes ofjoint arrangements:jointly controlled entities,jointly controlled assets andjointly controlledoperations. In.addition,.joint.ventures.under.HKFRS.11.are.required.to.be.accounted.for.using.the.equity.method.of.accounting,.whereas.jointly.controlled.entities.under.HKAS.31.can.be.accounted.for.using.the.equity.method.of.accounting.or.proportionate.accounting. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 3.. APPLICATION.OF.NEW.AND.REVISED.HONG.KONG.FINANCIAL.REPORTING.STANDARDS.(CONTINUED) HKFRS12is a standardfordisclosure andis applicableto entitiesthathaveinterests in subsidiaries,jointarrangements,.associates.and/or.unconsolidated.structured.entities..In.general,.the.disclosure.requirements.in.HKFRS.12.are.more.extensive.than.those.in.the.current.standards. These.standards.are.effective.for.annual.periods.beginning.on.or.after.1.January.2013..Earlier.application.is.permitted.provided.that.all.of.these.five.standards.are.applied.early.at.the.same.time. HKFRS 13.establishes.a.single.source.of.guidance.for.fair.value.measurements.and.disclosures.about.fair.value.measurements. The standard defines fair value, establishes a framework for measuring fair value, and requires disclosures.about.fair.value.measurements..The.scope.of.HKFRS.13.is.broad;.it.applies.to.both.financial.instrument.items and.non-financial.instrument.items.for.which.other.HKFRSs.require.or.permit.fair.value.measurements.and.disclosures aboutfair value measurements, exceptin specified circumstances.Ingeneral,thedisclosure requirements in HKFRS 13 are more extensive than those in the current standards. For example, quantitative and qualitative disclosures.based.on.the.three-level.fair.value.hierarchy.currently.required.for.financial.instruments.only.under.HKFRS.7.“Financial.Instruments:.Disclosures”.will.be.extended.by.HKFRS.13.to.cover.all.assets.and.liabilities.within.its.scope. HKFRS.13.is.effective.for.annual.periods.beginning.on.or.after.1.January.2013,.with.earlier.application.permitted. The amendmentstoHKAS1retainthe optiontopresentprofitorloss and other comprehensiveincomein either a single statement.or.in.two.separate.but.consecutive.statements..However,.the.amendments.to.HKAS.1.require.additional.disclosures.to.be.made.in.the.other.comprehensive.income.section.such.that.items.of.other.comprehensive.income.are grouped.into.two.categories:.(a).items.that.will.not.be.reclassified.subsequently.to.profit.or.loss;.and.(b).items.that.may.be.reclassified.subsequently.to.profit.or.loss.when.specific.conditions.are.met..Income.tax.on.items.of.other.comprehensive.income.is.required.to.be.allocated.on.the.same.basis. The.amendments.to.HKAS.1.are.effective.for.annual.periods.beginning.on.or.after.1.July.2012..The.presentation.of.items.of.other.comprehensive.income.will.be.modified.accordingly.when.the.amendments.are.applied.in.the.future.accounting.periods. The.amendments.to.HKAS.12.provide.an.exception.to.the.general.principles.in.HKAS.12.that.the.measurement.of.deferred.tax.assets.and.deferred.tax.liabilities.should.reflect.the.tax.consequences.that.would.follow.from.the.manner.in whichthe entityexpectsto recoverthe carrying amount of an asset.Specifically, underthe amendments, investment properties that.are.measured.using.the.fair.value.model.in.accordance.with.HKAS.40.“Investment.Property” are.presumed to.be.recovered.through.sale.for.the.purposes.of.measuring.deferred.taxes,.unless.the.presumption.is.rebutted.in.certain.circumstances. The.amendments.to.HKAS.12.are.effective.for.annual.periods.beginning.on.or.after.1.January.2012. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 3.. APPLICATION.OF.NEW.AND.REVISED.HONG.KONG.FINANCIAL.REPORTING.STANDARDS.(CONTINUED) The amendments to HKAS 19 change the accounting for defined benefit plans and termination benefits. The.most.significant.change.relates.to.the.accounting.for.changes.in.defined.benefit.obligations.and.plan.assets..The.amendments require.the.recognition.of.changes.in.defined.benefit.obligations.and.in.the.fair.value.of.plan.assets.when.they.occur,.and.hence.eliminate.the.‘corridor.approach’ permitted.under.the.previous.version.of.HKAS.19..The.amendments require all actuarialgains andlossestobe recognisedimmediatelythrough other comprehensiveincome in orderforthe netpension asset orliability recognised inthe consolidatedstatement offinancialpositionto reflectthe full.value.of.the.plan.deficit.or.surplus. The amendments.to.HKAS.19.are.effective.for.annual.periods.beginning.on.or.after.1.January.2013.and.require.retrospective.application.with.certain.exceptions. The.amendments.to.HKAS.32.address.inconsistencies.in.current.practice.when.applying.the.offsetting.criteria.and.clarify: ‧. the.meaning.of.‘currently.has.a.legally.enforceable.right.of.set-off’;.and ‧. that.some.gross.settlement.systems.may.be.considered.equivalent.to.net.settlement. The.amendments.are.effective.for.annual.periods.beginning.on.or.after.1.January.2014.and.are.required.to.be.applied.retrospectively. The.Group.is.in.the.process.of.assessing.the.potential.impact.of.the.above.New.HKFRSs.upon.initial.application.but.is.not.yet.in.a.position.to.state.whether.the.above.New.HKFRSs.will.have.a.significant.impact.on.the.Group’s.and.the.Company’s.results.of.operations.and.financial.position. 4.. FINANCIAL.INSTRUMENTS (a). Categories.of.financial.instruments The.Group. The.Company. At. At.31.December 31.December 2010 2010 HK$’000 HK$’000 Financial.assets Loans.and.receivables.(including.cash.and.bank.balances) 134,265 74,669 Financial.liabilities Amortised.costs 857,597 403,487 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 4..FINANCIAL.INSTRUMENTS.(CONTINUED) (b).Financial.risk.management.and.fair.values TheGrouphas exposureto creditrisk,liquidity risk and market risk(including currency risk,interest rate risk and.otherprice risk)fromits use offinancialinstruments.This notepresentsinformation abouttheGroup’s exposure to eachofthe above risks,theGroup’s objectives,policies andprocessesfor measuringand managing risk, and the.Group’s.management.of.capital. (i).Credit.risk Creditriskisthe risk offinanciallosstotheGroupif a customer or counterpartyto afinancialinstrument.fails.to.meet.its.contractual.obligations,.and.the.Group’s.credit.risk.is.primarily.attributable.to.the.trade.and other receivables and cashand cash equivalents.Managementhas a creditpolicy in aplace andthe exposures.to.these.credit.risks.are.monitored.on.an.ongoing.basis. The.management.has.established.a.credit.policy.under.which.credit.evaluations.are.performed.on.all.customers.requiring.credit..Trade.receivables.are.due.within.3.months.from.the.date.of.billing..Trade.debtors withbalancesthatare morethan3months are requestedto settle alloutstandingbalancebefore any.further.credit.is.granted..Normally,.the.Group.does.not.obtain.collateral.from.customers. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. At.the.end.of.the.reporting.period,.the.Group.has.a.certain.concentration.of.credit.risk.as.1.25%.and.2.1%.(2010:.Nil.and.0.32%).of.the.total.trade.and.other.receivables.were.due.from.the.Group’s.largest.customer.and.the.five.largest.customers.respectively. The maximum exposureto creditrisk withouttaking account of any collateralheldis representedbythe carrying.amount.of.each.financial.asset,.including.derivative.financial.instruments,.in.the.consolidated.statement offinancialposition afterdeductinganyimpairment allowance.Exceptfor afinancialguarantee given.by.the.Company.as.set.out.in.note.33,.the.Group.does.not.provide.any.other.guarantees.which.would exposetheGroup ortheCompanyto credit risk.The maximum exposureto credit riskin respect of.this.financial.guarantee.at.the.Company’s.statement.of.financial.position.is.disclosed.in.note.33. Further.quantitative.disclosures.in.respect.of.the.Group’s.exposure.to.credit.risk.arising.from.trade.and.other.receivables.are.set.out.in.note.23. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 4..FINANCIAL.INSTRUMENTS.(CONTINUED) (b).Financial.risk.management.and.fair.values.(continued) (ii).Liquidity.risk Liquidityriskisthe riskthattheGroupwillnotbe ableto meetitsfinancialobligations astheyfalldue.The.Group’s.policy.is.to.regularly.monitor.its.current.and.expected.liquidity.requirement.and.its.compliance.with.lending.covenants,.to.ensure.that.it.maintains.sufficient.reserves.of.cash.and.adequate.committed.lines.of.funding.from.major.financial.institutions.to.meet.its.liquidity.requirements.in.the.short.and.longer.term. The.following.table.details.the.remaining.contractual.maturities.at.the.end.of.the.reporting.period.of.the.Group’s.and.the.Company’s.non-derivative.financial.liabilities,.which.are.based.on.the.contractual.maturitydate.The amountsdisclosedinthetable arethe contractual undiscounted cashflows(including interest.payments.computed.using.contractual.rates.or,.if.floating,.based.on.rates.current.at.the.end.of.the.reporting.period).and.the.earliest.date.the.Group.and.the.Company.can.be.required.to.pay: The.Group At.31.December.2011 Within More.than More.than Total 1.year 1.year.but 2.years.but contractual or.on less.than less.than More.than undiscounted Carrying demand 2.years 5.years 5.years cash.flow amount HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Trade.and.other.payables 30,015 – – – 30,015 30,015 Profit.guarantee.liabilities 9,100 9,100 5,308 – 23,508 23,508 Loans.payables 404,556 57,187 – – 461,743 455,925 Long-term.payables 86,066 45,257 – – 131,323 214,586 Amount.due.to.a.related.company – 129 – – 129 129 Bank.loans 1,338 1,338 4,014 15,028 21,718 13,588 Loan.from.a.controlling.shareholder 128,054 282 – – 128,336 128,336 Loan.from.a.director.and. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 4.. FINANCIAL.INSTRUMENTS.(CONTINUED) (b). Financial.risk.management.and.fair.values.(continued) (ii). Liquidity.risk.(continued) The.Group.(continued) At.31.December.2010 Within More.than More.than Total 1.year 1.year.but 2.years.but contractual or.on less.than less.than More.than undiscounted Carrying demand 2.years 5.years 5.years cash.flow amount HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Trade.and.other.payables 22,536 – – – 22,536 22,536 Profit.guarantee.liabilities 9,100 9,100 14,408 – 32,608 32,608 Loans.payables – 461,823 – – 461,823 454,640 Long-term.payables – 86,066 45,257 – 131,323 205,126 Amount.due.to.a.related.company – 24,036 – – 24,036 23,191 Bank.loans 1,373 1,373 4,119 16,795 23,660 14,496 Loan.from.a.director.and. controlling.shareholder – 110,250 – – 110,250 105,000 33,009 692,648 63,784 16,795 806,236 857,597 The.Company At.31.December.2011 Within More.than More.than Total 1.year 1.year.but 2.years.but contractual or.on less.than less.than undiscounted Carrying demand 2.years 5.years cash.flow amount HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Other.payables.and.accruals 44,453 – – 44,453 44,453 Loan.from.a.director.and. controlling.shareholder 31,849 – – 31,849 30,332 Loan.from.a.controlling. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 4.. FINANCIAL.INSTRUMENTS.(CONTINUED) (b). Financial.risk.management.and.fair.values.(continued) (ii). Liquidity.risk.(continued) The.Company.(continued) At.31.December.2010 Within More.than More.than Total 1.year 1.year.but 2.years.but contractual or.on less.than less.than undiscounted Carrying demand 2.years 5.years cash.flow amount HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Other.payables.and.accruals 52,487 – – 52,487 52,487 Loan.from.a.director.and. controlling.shareholder – 110,250 – 110,250 105,000 Loans.payable – 253,183 – 253,183 246,000 52,487 363,433 – 415,920 403,487 As at31December2011,itwas notprobablethatthe counterpartiestothefinancialguarantee willclaim.under.the.contracts..Consequently,.the.carrying.amount.of.the.financial.guarantee.contract.of.HK$6.3.million.(2010:.HK$18.9.million).has.not.been.presented.above. At.31.December.2010 HK$’000 Expiry.period Guarantee.given.to.bank.in.respect.of.banking.facilities.granted.to.an.associate 860,000 2012 (iii).Currency.risk Presently, there is no hedging policy with respect to the foreign exchange exposure. The Group’s.transactionalcurrencyareHongKongdollars,Canadiandollars andUnitedStatesdollars as substantially all.the.turnover.are.in.Hong.Kong.dollars,.Canadian.dollars.and.United.States.dollars..The.Group’s.and.the.Company’s.transactional.foreign.exchange.exposure.was.insignificant. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 4..FINANCIAL.INSTRUMENTS.(CONTINUED) (b).Financial.risk.management.and.fair.values.(continued) (iv).Interest.rate.risk The.market.risk.exposure.of.the.Group.is.the.changes.in.interest.rates..Interest.rate.risk.arises.primarily.fromthe amountdueto a controllingshareholder, amountdueto a related company andloanspayables carry.a floating.interest.rates..The.Group’s.cash.flow.exposure.is.to.the.cash.flow.interest.rate.risk.and.fair.value.interest.rate.risk.as.the.borrowings.issued.at.variable.rates.and.fixed.rates,.respectively..The.Group.does.not.use.financial.derivatives.to.hedge.against.the.interest.rate.risk..Other.than.bank.loans,.the.Company.has.no.significant.exposure.to.interest.rate.risk. At.31.December.2011,.it.is.estimated.that.a.general.increase/decrease.of.100.basis.points.in.interest.rates,.with.all.other.variables.held.constant,.would.increase/decrease.the.Group’s.loss.before.tax.by.approximately.HK$3,810,000.(2010:.approximately.HK$3,510,000).The.sensitivity.analysis.above.has.been.determined.assuming.that.the.change.in.interest.rates.had.occurred.at.the.end.of.the.reporting.period.and.had.been.applied.to.the.exposure.to.interest.rate.risk.for.the.financial.liabilities.in.existence.at that date. The 100 basis points increase or decrease represents management’s assessment of reasonably.possible.change.in.interest.rates.over.the.period.until.the.next.annual.reporting.date..The.analysis.is.performed,.on.the.same.basis.for.2010. (v).Fair.value The.fair.values.of.the.Group’s.financial.assets.and.financial.liabilities.are.determined.in.accordance.with.generally.accepted.pricing.models.based.on.discounted.cash.flow.analysis.using.prices.or.rates.from.observable current markettransactions.TheDirectors considerthatthe carryingamounts ofthefinancial assets andfinancialliabilities recorded at amortised costinthe consolidatedfinancial statements are not materially.different.from.their.fair.values.as.at.31.December.2011.and.2010. The.Group.does.not.have.any.financial.instrument.that.is.measured.subsequent.to.initial.recognition.at.fair.value. (vi).Other.price.risk The.Group.is.exposed.to.other.price.risk.mainly.through.the.cost.of.fuel.oil..The.Group.manages.this.exposure by.entering.into.an.agreement.with.the.lessee.of.the.cruise.ship.for.reimbursement.of.the.fluctuation.of.price.of.fuel.oil.while.its.price.is.over.a.certain.amount. 5..ACCOUNTING.ESTIMATES.AND.JUDGEMENTS (a).Key.sources.estimation.uncertainty In.the.process.of.applying.the.Group’s.accounting.policies.which.are.described.in.note.2,.management.has.made certainkey assumptions concerningthefuture, and otherkey sources of estimated uncertainty atthe end ofthe reportingperiod,that mayhave a significant risk of causing a material adjustmenttothe carrying amounts of.assets.and.liabilities.within.the.next.financial.year,.as.discussed.below: (i). Impairment.of.property,.plant.and.equipment.and.freehold.land.and.buildings The.recoverable.amount.of.an.asset.is.the.greater.of.its.net.selling.price.and.value.in.use..In.assessing.value in.use,.the.estimated.future.cash.flows.are.discounted.to.their.present.value.using.a.pre-tax.discountratethat reflects current market assessments ofthetime value of money andthe risks specific to.the.asset,.which.requires.significant.judgement.relating.to.the.level.of.revenue.and.the.amount.of.operating.costs..The.Group.uses.all.readily.available.information.in.determining.an.amount.that.is.a.reasonable.approximation.of.the.recoverable.amount,.including.estimates.based.on.reasonable.and.supportable.assumptions.and.projections.of.revenue.and.operating.costs..Changes.in.these.estimates.could have.a.significant.impact.on.the.carrying.amount.of.the.assets.and.could.result.in.additional.impairment.charge.or.reversal.of.impairment.in.future.periods. (ii). Impairment.of.receivables The Group maintains impairment allowance for doubtful accounts based upon evaluation of the.recoverability of.the.trade.receivables.and.other.receivables,.where.applicable,.at.the.end.of.each.reporting.period..The.estimates.are.based.on.the.aging.of.the.trade.receivables.and.other.receivables.balances andthehistorical write-off experience, net of recoveries.Ifthefinancial condition ofthedebtors were.to.deteriorate,.additional.impairment.allowance.may.be.required. (iii).Impairment.of.goodwill The.Group.performs.annual.test.on.whether.there.has.been.impairment.of.goodwill.in.accordance.with.the.accounting.policy.stated.in.note.2(i)..The.recoverable.amounts.of.CGUs.are.determined.based.on.value.in.use.calculations..These.calculations.require.the.use.of.estimates.and.assumptions.made.by.management.on.the.future.operation.of.the.business,.pre-tax.discount.rates,.and.other.assumptions.underlying.the.value.in.use.calculations. (iv). Impairment.of.intangible.assets The Group performs annual test on whether there has been impairment of intangible assets in.accordance with the accounting policy stated in note 2(i). The recoverable amounts of CGUs are determined.based.on.value.in.use.calculations..These.calculations.require.the.use.of.estimates.and.assumptions madeby management onthefuture operation ofthebusiness,pre-taxdiscount rates, and other.assumptions.underlying.the.value.in.use.calculations. (v). Amortisation.of.intangible.assets Intangible assets are amortised on a straight-line basis over their estimated useful lives. The.determination ofthe usefullivesinvolves management’s estimation.TheGroup reassessesthe usefullife of.the.intangible.assets.and.if.the.expectation.differs.from.the.original.estimate,.such.a.difference.may.impact.the.amortisation.in.the.year.and.the.estimate.will.be.changed.in.the.future.period. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 5..ACCOUNTING.ESTIMATES.AND.JUDGEMENTS.(CONTINUED) (b).Critical.accounting.judgements.in.applying.the.Group’s.accounting.policies Indeterminingthe carryingamounts of some assets andliabilities,theGroupmakes assumptionsforthe effects.of.uncertain.future.events.on.those.assets.and.liabilities.at.the.end.of.each.reporting.period..These.estimates.involve.assumptions.about.such.items.as.cash.flows.and.discount.rates.used..The.Group’s.estimates.and.assumptions arebased onhistorical experience and expectations offuture events and are reviewedperiodically. In.addition.to.assumptions.and.estimations.of.future.events,.judgements.are.also.made.during.the.process.of.applying.the.Group’s.accounting.policies. (i).Impairment.test.for.interest.in.associates TheGroupcompletedits annualimpairmenttestforinterestin associatesby comparingthe recoverable.amount of interest in associates to its carrying amount as at 31 December 2011. The Group has engaged.Roma.Appraisals.Limited.(“Roma”),.an.independent.professional.valuer,.who.has.among.their.staff,.fellow.members.of.the.Hong.Kong.Institute.of.Surveyor,.to.carry.out.a.valuation.of.the.interest.in.associate.as.at.31.December.2011.based.on.the.value.in.use.calculations..This.valuation.uses.cash.flowprojectionsbasedonfinancial estimates covering afive-yearperiod, and adiscount rate of15.80% (2010:.14.97%)..The.cash.flows.beyond.the.five-year.period.are.extrapolated.using.a.steady.4.79%.(2010:.4.66%).growth.rate.for.the.casino.and.hotel.industries.in.which.are.operated.by.associates. Management.has.considered.the.above.assumptions.and.valuation.and.also.taken.into.account.the.business.plan.going.forward..The.valuation.depends.upon.an.estimate.of.future.cash.flows.from.the.interestin associates andotherkey assumptions, which arebased ontheDirectors’bestestimates.The valuationis sensitivetotheseparameters.Changesintheseparameters couldleadto a materialrevision of.the.valuation.which.may.have.effects.on.the.net.assets.and.results.of.the.Group. The.carrying.amount.of.the.interest.in.associates.is.written.down.by.approximately.HK$56.7.million.(2010:approximatelyHK$44.1million) which wasduetodecreaseinthe carrying amount ofthedeemed capital.contribution.to.the.associate. (ii).Going.concern As.mentioned.in.note.2(b)(i).to.the.consolidated.financial.statements,.the.Directors.are.satisfied.that.the.Group.will.be.able.to.meet.its.financial.obligations.in.full.as.and.when.they.fall.due.in.the.foreseeable.future..As.the.Directors.are.confident.that.the.Group.will.be.able.to.continue.in.operational.existence.in.the.foreseeable.future,.the.consolidated.financial.statements.have.been.prepared.on.a.going.concern.basis. If.the.going.concern.basis.is.not.appropriate,.adjustment.would.have.to.be.made.to.provide.for.any.furtherliabilities which might arise.Such adjustments mayhave a significant consequential effect onthe loss.for.the.year.and.net.assets.of.the.Group. 5..ACCOUNTING.ESTIMATES.AND.JUDGEMENTS.(CONTINUED) (b).Critical.accounting.judgements.in.applying.the.Group’s.accounting.policies.(continued) (iii).Maruhan.Put.Option On.1.October.2007,.Golden.Sun.Profits.Limited.(“Golden.Sun”),.an.indirect.subsidiary.of.the.Company,.as.vendor.and.the.Company.as.Golden.Sun’s.guarantor.entered.into.a.sale.and.purchase.agreement.with.Maruhan.Corporation.(“Maruhan”),.a.then.independent.third.party,.as.purchaser.regarding.(i).the.disposal.of.10.2%.interest.of.the.entire.issued.share.capital.(the.“World.Fortune.Sale.Shares”).of.World.Fortune.Limited.(“World.Fortune”),.a.subsidiary.of.Golden.Sun;.and.(ii).the.assignment.of.all.rights,.title,.interests.and.benefits.of.and.in.the.shareholder’s.loan.of.approximately.HK$66,468,000.due.by.World.Fortune.to.Golden.Sun.for.a.total.consideration.of.approximately.HK$208,501,000.(the.“World.Fortune.Disposal”)..The.World.Fortune.Disposal.was.completed.on.29.October.2007. On.the.date.of.completion.of.the.World.Fortune.Disposal,.Golden.Sun,.the.Company,.Maruhan.and.World.Fortune.entered.into.a.shareholders’ agreement.(the.“World.Fortune.Shareholders’ Agreement”)..Pursuant.to.the.terms.of.the.World.Fortune.Shareholders’ Agreement,.(i).Golden.Sun,.in.consideration.of.HK$1.paid.by.Maruhan,.granted.to.Maruhan.the.right.to.require.Golden.Sun.to.purchase.or.procure.thepurchase ofMaruhan’s entire equity interestinWorldFortune andthe entire amount ofshareholder’s loan.provided.by.Maruhan.to.World.Fortune.(the.“Maruhan.Put.Option”);.and.(ii).Maruhan.shall.advance.toWorldFortune afurther sum ofapproximatelyHK$116,369,000byway ofshareholder’sloantoWorld Fortune.which.would.on-lend.the.same.to.Pier.16.–.Property.Development.Limited.(“Pier.16.–.Property.Development”)forthepurpose offinancing and completingthedevelopment ofPonte16,theintegrated casino-entertainment.resort. The Maruhan Put Option shall be exercised at any time on any business day during the period commencing.from.the.fifth.anniversary.of.29.October.2007,.the.date.of.entering.into.the.World.Fortune.Shareholders’Agreement, andending onthedayfalling six monthsthereafter.TheMaruhanPutOption purchase.price.shall.be.determined.based.on.Maruhan’s.effective.interest.of.4.998%.in.the.properties.heldbyPier16–PropertyDevelopment(the “Property”)andwithreferencetoa30%discounttothethen prevailing.market.value.of.the.Property.to.be.determined.by.an.independent.professional.valuer.to.be.agreedbythe shareholders ofWorldFortune.Ifthe value oftheProperty asdeterminedbythe saidvaluer after.taking.into.account.a.30%.discount.exceeds.HK$6,500.million.or.is.below.HK$3,900.million,.the.MaruhanPutOptionpurchaseprice shallbe calculated with referencetoHK$6,500 million orHK$3,900 million(asthe case maybe) andtobe settled asto50%by cash and50%by allotmentandissue of new shares.by.the.Company. TheDirectors consideredthatafterthe completion oftheWorldFortuneDisposal,theGroup stillretains substantially.all.the.risks.and.rewards.of.ownership.of.the.World.Fortune.Sale.Shares..Therefore,.the.Group continues.to.account.for.World.Fortune.as.a.wholly-owned.subsidiary.of.the.Company..The.consideration of approximately HK$208,501,000 received has been recognised as liabilities and classifiedunderloanspayables(note29) andlong-termpayables(note30) inthe consolidatedstatement of.financial.position..As.the.Group.does.not.have.the.unconditional.rights.to.avoid.settlement.under.the.Maruhan.Put.Option,.the.Group.has.to.recognise.the.relevant.financial.liabilities.at.the.amount.of.the.presentvalue ofthe estimatedfuture cash outflows whenitis requiredto acquiretheWorldFortuneSale Shares. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 5..ACCOUNTING.ESTIMATES.AND.JUDGEMENTS.(CONTINUED) (b).Critical.accounting.judgements.in.applying.the.Group’s.accounting.policies.(continued) (iv).SBI.Macau.Put.Option On.7.July.2008,.Favor.Jumbo.Limited.(“Favor.Jumbo”),.an.indirect.wholly-owned.subsidiary.of.the.Company, as.vendor.and.the.Company.as.Favor.Jumbo’s.guarantor.entered.into.a.sale.and.purchase.agreement.with.SBI.Macau.Holdings.Limited.(“SBI.Macau”),.an.independent.third.party,.as.purchaser.regarding.(i).the.disposal.of.910.shares.(the.“Golden.Sun.Sale.Shares”).of.Golden.Sun,.being.4.55%.of.the.entire.issued.share.capital.of.Golden.Sun,.a.subsidiary.of.Favor.Jumbo;.and.(ii).the.assignment.of all rights, title, interests and benefits of and in 4.55% of the entire amount of the interest-free shareholder’sloanduebyGoldenSuntoFavorJumbo atface value which amountingto approximately HK$39,486,000.(collectively.the.“Golden.Sun.Disposal”)..The.total.consideration.for.the.Golden.Sun.Disposal.was.HK$130.0.million..In.addition,.Favor.Jumbo.guaranteed.that.SBI.Macau.shall.be.entitled.to a return ofnotlessthanHK$9.1 millionfor eachfullfiscalyearfor aperiodof sixty successive months immediatelyafterthedate of completion oftheGoldenSunDisposal.Thedetails oftheprofitguarantee liabilities.have.been.set.out.in.note.28.to.the.consolidated.financial.statements. The.Golden.Sun.Disposal.was.completed.on.8.August.2008..On.the.date.of.completion.of.the.Golden.Sun Disposal, Favor Jumbo, the Company, SBI Macau, SBI Holdings, Inc.(SBI Macau’s holding company).and.Golden.Sun.entered.into.a.shareholders’ agreement.(the.“Golden.Sun.Shareholders’ Agreement”). Pursuant.to.the.terms.of.the.Golden.Sun.Shareholders’ Agreement,.Favor.Jumbo,.in.consideration.of.HK$1.paid.by.SBI.Macau,.granted.to.SBI.Macau.the.right.to.require.Favor.Jumbo.to.purchase.or.procure.the.purchase.of.the.entire.equity.interest.in.Golden.Sun.and.the.entire.amount.of.the.shareholder’s.loan.owing.by.Golden.Sun.to.SBI.Macau.(the.“SBI.Macau.Put.Option”). TheSBIMacauPutOptionpurchaseprice shallbeHK$99,465.77per ordinaryshareinthe share capital of.Golden.Sun.held.by.SBI.Macau.as.at.completion.of.the.SBI.Macau.Put.Option.plus.the.face.value.of.the entire amount ofthe shareholder’sloan owingbyGoldenSuntoSBIMacau as at completion ofthe SBI.Macau.Put.Option,.and.the.reserve.as.calculated.in.accordance.with.the.terms.of.the.Golden.Sun.Shareholders’.Agreement. The SBI Macau Put Option can be exercised at any time on any business day during the period commencing.from.the.fifth.anniversary.of.8.August.2008,.the.date.of.entering.into.the.Golden.Sun.Shareholders’.Agreement,.and.ending.on.the.day.falling.two.months.thereafter. 5..ACCOUNTING.ESTIMATES.AND.JUDGEMENTS.(CONTINUED) (b).Critical.accounting.judgements.in.applying.the.Group’s.accounting.policies.(continued) (iv).SBI.Macau.Put.Option.(continued) TheGroupmay needto settle a sumbeingHK$130.0 millionplus reserves as calculatedin accordance.with.the.terms.of.the.Golden.Sun.Shareholders’ Agreement,.of.which.50%.will.be.settled.by.cash.and.thebalancebyallotment andissue of new shares,providedthattheCompanywouldbe ableto comply with minimumpublicfloat requirements undertheListingRules aftertheissuance ofthe new shares,the number of sharestobeissued wouldbe reduced andthe outstandingbalance wouldbe settledin cash accordingly,.if.the.SBI.Macau.Put.Option.is.exercised. The.Directors.considered.that.after.the.completion.of.the.Golden.Sun.Disposal,.the.Group.still.retains.substantially allthe risks and rewards of ownership oftheGoldenSunSaleShares.Therefore,theGroup accountsforGoldenSun as a wholly-ownedsubsidiary oftheCompany.The consideration ofHK$130.0 million receivedhasbeen recognised asliabilities and classified underprofitguaranteeliabilities(note28), theloanspayables(note29)andlong-termpayables(note30)inthe consolidated statement offinancial position.AstheGroupdoes nothavethe unconditionalrightsto avoid settlement undertheSBIMacau PutOption,theGrouphasto recognisethe relevantfinancialliabilities atthe amountofthepresent value of.the.estimate.future.cash.outflow.when.it.is.required.to.acquire.the.Golden.Sun.Sale.Shares. 6..SEGMENT.INFORMATION Operating.segments.are.identified.on.the.basis.of.internal.reports.which.provide.information.about.components.of.the.Group..This.information.are.reported.to.and.reviewed.by.the.CODM.for.the.purposes.of.resource.allocation.and.performance.assessment. The CODM consider the business from both geographic and service perspective. Geographically, management considers.the.performance.of.the.travel.business.in.North.America.and.Hong.Kong.separately. The Group.has.presented.the.following.two.reportable.segments..These.segments.are.managed.separately..The.travel.segment.and.the.cruise.ship.leasing.and.management.segment.provide.different.services.and.require.different.information.technology.systems.and.marketing.strategies. The cruise.ship.leasing.and.management.reportable.segment.provides.cruise.ship.management.services.and.the.leasing.of.cruise.ship. The.travel.reportable.operating.segment.derives.their.revenue.primarily.from.sales.of.air.tickets.and.provision.of.travel-related.services. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 6..SEGMENT.INFORMATION.(CONTINUED) (a).Segment.results,.assets.and.liabilities Forthepurposes ofassessing segmentperformance and allocating resourcesbetween segments,theGroup’s.CODMmonitorsthe results, assets andliabilities attributableto eachreportable segment onthefollowingbasis: Segment.profit.represents.the.profit.from.each.segment.without.allocation.of.corporate.administrative.costs.such as.directors’ salaries,.share.of.results.of.associates.and.jointly.controlled.entities,.investment.income.and corporate finance costs. To arrive at reportable segment profit, the management additionally provide.segmentinformation concerninginterestincome,finance costs andmajor non-cashitems such asdepreciation, amortisation.and.impairment.losses.derived.from.reportable.segments..Unallocated.corporate.income.mainly.comprises amortisation on financial guarantee contract, management fee income from an associate and other.sundry.income..This.is.the.measure.reported.to.the.CODM.for.the.purposes.of.resource.allocation.and.performance.assessment..Taxation.charge/(credit).is.not.allocated.to.reportable.segments. Revenue.and.expenses.are.allocated.to.the.reportable.segments.with.reference.to.sales.generated.by.those.segments.and.the.expenses.incurred.by.those.segments. Inter-segmentsales arepriced withreferencetoprices chargedto externalpartiesfor similar orders.The revenue from.external.parties.reported.to.the.CODM.is.measured.in.a.manner.consistent.with.that.in.the.consolidated.income.statement. All.assets.are.allocated.to.reportable.segments.other.than.current.and.deferred.tax.assets,.tax.recoverable,.interests.in.associates.and.jointly.controlled.entities..Unallocated.corporate.assets.mainly.include.part.of.the.property,.plant.and.equipment,.cash.and.cash.equivalents.of.the.central.administration.companies. All liabilities.are.allocated.to.reportable.segments.other.than.current,.deferred.tax.liabilities.and.corporate.liabilities..Unallocated.corporate.liabilities.mainly.include.profit.guarantee.liabilities,.loans.payables,.long-term.payables,financialguarantee contracts,loanfrom adirector and controlling shareholder,loanfrom a controlling shareholder,.and.part.of.other.payables.bor ne.by.the.central.administration.companies. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 6..SEGMENT.INFORMATION.(CONTINUED) (a).Segment.results,.assets.and.liabilities.(continued) Information.regarding.the.Group’s.reportable.segments.as.provided.to.the.Group’s.CODM.for.the.purposes.of.resource.allocation.and.assessment.of.segment.performance.for.the.year.is.set.out.below: Cruise.ship.leasing.and.management Travel Total 2010 2010 2010 HK$’000 HK$’000 HK$’000 Interest.income Amortisation.on.intangible.assets Depreciation Reversal.of.impairment.loss.recognised.on.other.receivable Reversal.of.impairment.loss.recognised.on.intangible.assets Impairment.loss.recognised.on – .intangible.assets – .goodwill Finance.costs 14 10 24 – (339) (339) (7,052) (1,391) (8,443) 4,943 – 4,943 – 4,542 4,542 – – – – – – – (921) (921) Reportable.segment.assets 96,183 102,192 198,375 Additions.to.non-current.segment.assets 2,339 21,135 23,474 Reportable.segment.liabilities 3,235 68,729 71,964 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 6..SEGMENT.INFORMATION.(CONTINUED) (b).Reconciliation.of.reportable.segment.revenue,.profit/(loss),.assets,.liabilities.and.other.items HK$’000 Revenue Reportable.segment.revenue Elimination.of.inter-company.revenue Consolidated.turnover Profit/(loss) Reportable.segment.(loss)/profit Share.of.results.of.jointly.controlled.entities Share.of.results.of.associates Unallocated.corporate.income Depreciation Interest.income Finance.costs Unallocated.corporate.expenses Consolidated.loss.before.taxation 1,445,848 (946) 1,444,902 6,237 331 (44,435) 28,354 (1,870) 25 (19,933) (48,203) (79,494) At.31.December.2010 HK$’000 Assets Reportable.segment.assets Interest.in.associates Amount.due.from.an.associate Interest.in.jointly.controlled.entities Unallocated – .Tax.recoverable – .Corporate.assets Consolidated.total.assets Liabilities Reportable.segment.liabilities Unallocated – .Tax.payable – .Deferred.tax.liabilities – .Corporate.liabilities Consolidated.total.liabilities 198,375 1,171,087 – 1,693 184 104,035 1,475,374 71,964 1,347 29 808,483 881,823 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 6.. SEGMENT.INFORMATION.(CONTINUED) (b). Reconciliation.of.reportable.segment.revenue,.profit/(loss),.assets,.liabilities.and.other.items.(continued) Other.items Cruise.ship.leasing.and.management Travel Unallocated Consolidated 2010 2010 2010 2010 HK$’000 HK$’000 HK$’000 HK$’000 Amortisation.on.intangible.assets – 339 – Impairment.loss.recognised.on –.goodwill – – – – –.intangible.assets – – – – Depreciation 7,052 1,391 1,870 10,313 Reversal.of.impairment.loss.recognised.on.intangible.assets – (4,542) – (4,542) Reversal.of.impairment.loss.recognised.on.other.receivable (4,943) – – (4,943) Interest.income (14) (10) (25) (49) Finance.costs – 921 19,933 20,854 Additions.to.non-current.assets 2,339 21,135 128 23,602 Included in the unallocated corporate assets, there are assets and liabilities amounted to approximately.HK$11,937,000.and.HK$9,006,000.respectively.contributed.by.subsidiaries.engaging.in.provision.of.technical.supportandtechnology serviceplatform as wellas sportslottery sales agency servicestoChina’s mobile sports lottery.market..The.subsidiaries.also.contributed.administrative.expenses.of.approximately.HK$31,266,000.to.the.unallocated.corporate.results.during.the.year. Sincethe subsidiaries werepreparingfor operation,theGroup’sCODM considerthebusinessis nota reportable segment.for.the.year. (c). An.analysis.of.the.Group’s.revenue.from.all.services.is.as.follows: 2011 HK$’000 HK$’000 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 6..SEGMENT.INFORMATION.(CONTINUED) (d).Geographical.information Thefollowingis an analysis ofgeographicallocation of(i)theGroup’s revenuefrom externalcustomers and(ii)the.Group’s non-current assets.Thegeographical location of customers referstothelocation at whichthe services were provided..The.Group’s.non-current.assets.included.property,.plant.and.equipment,.goodwill,.intangible.assets,.interests.in.associates.and.jointly.controlled.entities. Thegeographicallocation ofproperty,plantand equipmentisbased onthephysicallocation ofthe asset under consideration..In.the.case.of.intangible.assets.and.goodwill,.it.is.based.on.the.location.of.operations.to.which.theseintangibles are allocated.Inthe case of interestsin associates andjointly controlled entities,itisbased on the.location.of.operations.of.such.associates.and.jointly.controlled.entities. Non-current.assets Revenue.from At external.customers 31.December 2010 2010 HK$’000 HK$’000 (e). Major.customer Thereis no single externalcustomer amountingto10%or more oftheGroup’s revenueforboth2011and2010. (f). Revenue.from.major.services The.Group’s.revenue.from.its.major.services.was.listed.in.note.7.to.the.consolidated.financial.statements. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 7..TURNOVER The.principal.activities.of.the.Group.are.leasing.of.and.provision.of.management.services.to.the.cruise.ship.and.travel-related.business. Turnover represents cruise shipleasingand managementfeeincome andtravel-related agency servicefeeincome.The amount.of.each.significant.category.of.revenue.recognised.in.turnover.during.the.year.is.as.follows: 2010 HK$’000 Cruise.ship.leasing.and.management.fee.income 69,600 69,600 Travel-related.agency.service.fee.income –.Sales.of.air.tickets 1,281,477 –.Travel.and.related.service.fee.income 93,825 1,375,302 1,444,902 8..OTHER.REVENUE.AND.GAINS 2010 HK$’000 Other.revenue Interest.income.on.bank.deposits 237 This representsimpairmentondebtsduebyadebtor whichhasbeen long-outstanding.Thedirectors oftheCompany consideredthat. * the amountsdue couldnotbe recovered.Therefore,fullimpairmenthasbeen made inthepreviousyears.Duringtheyear,thedebtor has.made.repayment.in.respect.of.such.long-outstanding.amount,.therefore,.the.reversal.of.impairment.loss.was.recognised.for.the.year.(note.23(b)). Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 9.. LOSS.BEFORE.TAXATION Loss.before.taxation.is.arrived.at.after.charging/(crediting).the.following: 2010 HK$’000 (a). Finance.costs (i). Not.wholly.repayable.within.five.years: Interest.on.loan.from.a.related.company 816 Interest.on.bank.loans 827 105 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 9..LOSS.BEFORE.TAXATION.(CONTINUED) HK$’000 (d).Other.items Auditors’ remuneration –.audit.services –.other.services Depreciation.on.owned.fixed.assets Amortisation.on.intangible.assets Loss.on.disposal.of.property,.plant.and.equipment Operating.lease.rentals – .properties – .plant.and.machinery Net.exchange.gain Cost.of.inventories 1,449 250 10,313 339 2 8,963 571 (687) 23,079 10..INCOME.TAX.IN.THE.CONSOLIDATED.INCOME.STATEMENT (a).Taxation.in.the.consolidated.income.statement.represents: 2010 HK$’000 Current.tax.–.Hong.Kong.Profits.Tax – .Charge.for.the.year – .Under.provision.in.respect.of.prior.years – 17 14 – 31 Current.tax.–.Overseas.profits.tax –.(Credit)/charge.for.the.year (1,319) 1,324 (1,319) 1,355 Deferred.taxation.relating.to.the.origination.and.reversal.of.temporary.differences 2,170 Hong.Kong.Profits.Tax.is.calculated.at.16.5%.(2010:.16.5%).of.the.estimated.assessable.profit.for.the.year. Taxation.arising.in.other.jurisdictions.are.calculated.at.the.rates.prevailing.in.the.relevant.jurisdictions. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 10..INCOME.TAX.IN.THE.CONSOLIDATED.INCOME.STATEMENT.(CONTINUED) (b).Reconciliation.between.tax.expense.and.accounting.loss.at.applicable.tax.rates: 11..DIRECTORS’.REMUNERATION Directors’.remuneration.disclosed.pursuant.to.Section.161.of.the.Hong.Kong.Companies.Ordinance.is.as.follows: Salaries,.allowance.Retirement.benefit.Directors’.fee and.other.benefits scheme.contributions Total 2010 2010 2010 2010 Name HK$’000 HK$’000 HK$’000 HK$’000 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 12..INDIVIDUALS.WITH.HIGHEST.EMOLUMENTS Thefiveindividuals withthehighestemoluments, one(2010: one)is aDirector whose emoluments isdisclosedin note. 11..The.aggregate.of.the.emoluments.in.respect.of.the.other.four.(2010:.four).individuals.are.as.follows: The.emoluments.of.the.four.(2010:.four).individuals.with.the.highest.emoluments.are.within.the.following.band: Number.of.individuals Nil.–.HK$1,000,000 13.. LOSS.ATTRIBUTABLE.TO.OWNERS.OF.THE.COMPANY Theloss attributableto owners oftheCompanyincludes aprofit of approximatelyHK$8,518,000(2010:loss.approximately.HK$8,812,000).which.has.been.dealt.with.in.the.financial.statements.of.the.Company. 14.. DIVIDENDS No.interim.dividend.was.paid.during.the.year.under.review.(2010:.Nil)..The.Directors.do.not.recommend.any.payment.of.a.final.dividend.for.the.year.ended.31.December.2011.(2010:.Nil). 15.. LOSS.PER.SHARE (a).Basic.loss.per.share The calculation of basic loss per share is based on the loss attributable to owners of the Company of.approximately.HK$77,666,000.(2010:.approximately.HK$80,782,000).and.on.the.weighted.average.number.of.approximately.2,438,964,000.ordinary.shares.(2010:.approximately.2,438,964,000.ordinary.shares).in.issue.during.the.year. In.respect.of.the.issuance.of.rights.shares.pursuant.to.the.Rights.Issue,.there.is.no.effect.on.the.weighted.average.number.of.ordinary.shares.for.the.calculation.of.basic.loss.per.share.for.the.year. (b).Diluted.loss.per.share Diluted.loss.per.share.equals.to.the.basic.loss.per.share.as.there.were.no.potential.dilutive.ordinary.shares.outstanding.for.the.year.presented. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 16.. PROPERTY,.PLANT.AND.EQUIPMENT The.Group Freehold land.and building HK$’000 Cruise Leasehold ship improvements HK$’000 HK$’000 Plant.and machinery HK$’000 Furniture, fittings.and office equipment HK$’000 Motor vehicles HK$’000 Motor yacht HK$’000 Total HK$’000 Cost At.1.January.2010 2,780 93,600 3,801 12,951 6,275 2,468 4,700 126,575 Additions 18,847 – 2,024 2,339 392 – – 23,602 Disposals – – (30) – (20) (1) – (51) Exchange.alignment 167 – (153) – (2,614) 63 – (2,537) At.31.December.2010.and.1.January.2011 21,794 93,600 5,642 15,290 4,033 2,530 4,700 147,589 Additions 6 – 1,164 – 5,418 560 – 7,148 Disposals – – (15) – (80) (543) – (638) Exchange.alignment (558) – (151) – (212) (27) – (948) At.31.December.2011 21,242 93,600 6,640 15,290 9,159 2,520 4,700 153,151 Accumulated.depreciation 1.January.2010 70 28,080 3,168 8,587 4,601 1,730 1,958 48,194 Charge.for.the.year 125 4,680 571 2,330 1,117 550 940 10,313 Written.back.on.disposals – – (30) – (18) (1) – (49) Exchange.alignment (8) – (184) – (2,662) 62 – (2,792) At.31.December.2010.and.1.January.2011 187 32,760 3,525 10,917 3,038 2,341 2,898 55,666 Charge.for.the.year 484 4,680 680 1,341 1,003 198 940 9,326 Written.back.on.disposals – – (15) – (74) (468) – (557) Exchange.alignment (7) – (95) – (195) (27) – (324) At.31.December.2011 664 37,440 4,095 12,258 3,772 2,044 3,838 64,111 Carrying.amount At.31.December.2011 20,578 56,160 2,545 3,032 5,387 476 862 89,040 At.31.December.2010 21,607 60,840 2,117 4,373 995 189 1,802 91,923 The.analysis.of.carrying.amount.of.property.is.as.follows: At.31.December. HK$’000 Freehold.land.and.building.held.outside.Hong.Kong 21,607 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 17..GOODWILL The.Group HK$’000 Cost At.1.January.2010,.31.December.2010,.1.January.2011.and.31.December.2011 8,332 Accumulated.impairment.losses At.1.January.2010 (1,504) Impairment.loss – At.31.December.2010.and.1.January.2011 (1,504) Impairment.loss (2,966) At.31.December.2011 (4,470) Carrying.amount At.31.December.2011 3,862 At.31.December.2010 6,828 Goodwill.is.allocated.to.the.Group’s.CGUs.identified.according.to.business.segment.as.follows: At.31.December.2010 HK$’000 Cruise.ship.management.CGU Travel.CGU At.31.December. HK$’000 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 17..GOODWILL.(CONTINUED) The.recoverable.amount.of.the.CGU.is.determined.on.value.in.use.calculations..These.calculations.use.cash.flow.projections.based.on.the.financial.budgets.approved.by.management.covering.a.five-year.period..Cash.flows.beyond.thefive-yearperiodare extrapolated usingthe estimatedgrowth rates statedbelow.Thegrowth ratedoes not exceed the.long-term.average.growth.rate.for.the.business.in.which.the.CGU.operates. Key.assumptions.used.for.value.in.use.calculations: Travel.CGU Cruise.ship.management.CGU 2010 2010 % % –.Growth.rate 3 Zero –.Discount.rate 11.65 5 The.discount.rates.reflect.specific.risks.relating.to.the.relevant.segment. Basedontheimpairmenttestsperformed,the recoverable amount ofthe cruise ship managementCGUishigherthan its.carrying.amount.based.on.value.in.use.calculations..Therefore,.no.impairment.of.cruise.ship.management.CGU.is.required..However,.the.operation.results.of.travel.CGU.is.not.turnout.as.expected..Accordingly,.impairment.loss.of.approximately.HK$2,966,000.is.recognised.for.the.travel.CGU.for.the.year.(2010:.Nil). Management.believes.that.any.reasonably.possible.change.in.the.key.assumptions.on.which.recoverable.amount.is.based.would.not.cause.the.aggregate.carrying.amount.to.exceed.the.aggregate.recoverable.amount.of.the.travel.and.cruise.ship.management.CGU. Success.Universe.Group.Limited Annual.Report.2011 18.. INTANGIBLE.ASSETS Trademark Client.list Total HK$’000 HK$’000 HK$’000 Cost At.1.January.2010 31,887 8,915 40,802 Exchange.alignment 2,053 574 2,627 At.31.December.2010.and.1.January.2011 33,940 9,489 43,429 Exchange.alignment (865) (243) (1,108) At.31.December.2011 33,075 9,246 42,321 Accumulated.amortisation.and.impairment.losses At.1.January.2010 (3,682) (4,594) (8,276) Charge.for.the.year – (339) (339) Reversal.on.impairment.loss 3,571 971 4,542 Exchange.alignment (237) (296) (533) At.31.December.2010.and.1.January.2011 (348) (4,258) (4,606) Charge.for.the.year – (405) (405) Impairment.loss (1,632) – (1,632) Reversal.on.impairment.loss – 43 43 Exchange.alignment 9 109 118 At.31.December.2011 (1,971) (4,511) (6,482) Carrying.amount At.31.December.2011 31,104 4,735 35,839 At.31.December.2010 33,592 5,231 38,823 Trademark InaccordancewithHKAS36“ImpairmentofAssets”(“HKAS36”),theGroupcompleteditsannualimpairmenttestfor.the.trademark.by.comparing.its.recoverable.amount.to.its.carrying.amount.as.at.31.December.2011..The.Group.has.conducted a valuation ofthetrademarkbased onthe valuein use calculations.With referencetothe valuations carried outbyRoma,the carrying amount ofthetrademarkis equivalentto approximatelyHK$31,104,000.Animpairmentloss equivalentto approximatelyHK$1,632,000hasbeen recognisedfortheyear ended31December2011(2010: reversal ofimpairmentloss equivalentto approximatelyHK$3,571,000).The main reasonforthe recognition ofimpairmentloss is.the.decrease.in.the.projected.revenue.from.travel.CGU. The.valuation.of.the.trademark.is.based.on.the.relief-from-royalty.method.and.uses.cash.flow.projections.based.on.financial.estimates.covering.a.five-year.period,.the.expected.sales.deriving.from.the.trademark.in.the.travel.CGU.and.a.discount.of.13.58%.(2010:.13.1%)..The.cash.flows.beyond.the.five-year.period.are.extrapolated.using.a.steady.3%.(2010:3%)growthrate.Thisgrowthratedoes not exceedthelong-term averagegrowth ratefortravelmarketsin which the.Group.operates..Management.has.considered.the.above.assumptions.and.valuation.and.also.taken.into.account.the.business.plan.going.forward. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 18.. INTANGIBLE.ASSETS.(CONTINUED) Client.list The.Directors.assessed.that.the.client.list.having.15.years.of.useful.lives.from.the.date.of.acquisition..The.Group.has.completed.its.annual.impairment.test.for.the.client.list.by.comparing.the.recoverable.amount.of.the.client.list.to.its.carrying amount as at31December2011.TheGrouphas conducted a valuation ofthe clientlistbased onthe valuein use calculations.With referencetothe valuations carriedoutbyRoma,the carrying amountofthe clientlistis equivalent to approximately.HK$4,735,000..A.reversal.of.impairment.loss.equivalent.to.approximately.HK$43,000.has.been.recognised.for.the.year.ended.31.December.2011.(2010:.equivalent.to.approximately.HK$971,000)..The.reversal.of.impairment.is.mainly.contributed.by.the.decrease.in.contributory.charge.of.fixed.assets.and.trademark. The.valuation.of.the.client.list.is.based.on.the.contributory.charge.method.and.uses.cash.flow.projections.based.on.financial.estimates.covering.a.five-year.period,.the.expected.sales.deriving.from.the.client.list.in.the.travel.CGU.and.a.discountrate of13.58%(2010:13.1%),The cashflowsbeyondthefive-yearperiod are extrapolated using a steady3% (2010:3%)growthrate.Thisgrowthratedoes notexceedthelong-term averagegrowth ratefortravel marketsin which the.Group.operates..Management.has.considered.the.above.assumptions.and.valuation.and.also.taken.into.account.the.business.plan.going.forward. 19.. INVESTMENTS.IN.SUBSIDIARIES The.Company At.31.December.2010 HK$’000 HK$’000 Unlisted.shares,.at.cost 40,655 40,655 Deemed.capital.contribution.(note.33) 63,000 Amounts.due.from.subsidiaries 1,270,512 1,374,167 Less:.impairment.loss# (89,338) 1,284,829 #. After.considering.the.accumulated.losses.and.net.liabilities.positions.of.the.relevant.subsidiaries,.the.Directors.are.of.the.opinion.that.an.additional.impairment.loss.of.approximately.HK$19,530,000.(2010:.approximately.HK$19,202,000).has.been.recognised.for.the.year.ended.31.December.2011. Success.Universe.Group.Limited Annual.Report.2011 19..INVESTMENTS.IN.SUBSIDIARIES.(CONTINUED) As statedin note20(d)tothe consolidatedfinancialstatements,theGrouphas engagedRomato carry out a valuation.on.the.interest.in.associates.based.on.value.in.use.calculations..The.recoverable.amount.of.the.interest.in.associates.is.higher.than.its.carrying.amount,.therefore,.the.Directors.considered.that.there.is.no.impairment.loss.on.interest.in.associates exceptforthe reductioninthe carrying amountofthedeemedcapitalcontributionfortheyear.Onthisbasis, the.Directors.considered.that.no.impairment.should.be.made.for.the.investments.in.those.subsidiaries.which.held.the.interestin associates.The valuationdepends upon an estimate offuture cashflowsfromthe interestin associates and other.key.assumptions.on.the.growth.of.the.business,.which.is.based.on.the.Directors’ best.estimates..The.valuation.is.sensitive.to.these.parameters..Changes.in.these.parameters.could.lead.to.a.material.revision.of.the.valuation.which.mayhave effects ontheDirectors’impairmentassessment on investmentsinthose subsidiaries whichheldtheinterest in.associates. Thefollowinglist contains onlytheparticulars of subsidiaries whichprincipally affectedthe results, assets orliabilities of the.Group..The.class.of.shares.held.is.ordinary.unless.otherwise.stated. All of these are controlled subsidiaries as defined under note 2(c) and have been consolidated into the financial statements.of.the.Group. Proportion.of.ownership.interest Place.of Particulars.of Group’s Held incorporation/ issued.and.paid.up effective by.the Held.by Principal Name.of.subsidiary operations share.capital interest Company subsidiaries activities %%% Macau.Success.(Hong.Kong). Hong.Kong 10,000,000.shares.of. 100 100 – Investment.holding Limited HK$0.01.each Capture.Success.Limited British.Virgin.Islands/ 100.shares.of.US$1.each 55 – 55 Cruise.ship.leasing South.China.Sea,.other. than.in.Hong.Kong Favor.Jumbo.Limited British.Virgin.Islands 100.shares.of.US$1.each 100 – 100 Investment.holding Golden.Sun.Profits.Limited British.Virgin.Islands 20,000.shares.of.US$1.each 100 – 100 Investment.holding Hover.Management.Limited Hong.Kong/South.China. 100.shares.of.HK$1.each 55 – 55 Provision.of.cruise.ship. Sea,.other.than.in. management.services Hong.Kong Macau.Success.Management. Hong.Kong 100.shares.of.HK$1.each 100 – 100 Provision.of.administration. Services.Limited services Travel.Success.Limited Hong.Kong 500,000sharesofHK$1each 100 – 100 Travel.agency World.Fortune.Limited Hong.Kong 1,000.shares.of.HK$1.each 100 – 100 Investment.holding NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 19.. INVESTMENTS.IN.SUBSIDIARIES.(CONTINUED). Name.of.subsidiary Place.of incorporation/ operations Particulars.of issued.and.paid.up share.capital Proportion.of.ownership.interest Group’ s Held effective by.the Held.by interest Company subsidiaries % % % Principal activities 665127.British.Columbia.Ltd. Canada (i).10,000.common.shares.80 – 80 Investment.holding without.par.value;.and (ii).1,400.Class.A.Preferred.shares.with.CAD0.01.par.value.(without.voting.right) Jade.Travel.Ltd..(“Jade.Canada 7.common.shares.without.80 – 80 Wholesale.and.retail.Travel.(Canada)”) par.value business.of.selling.airline.ticketsandtourpackages Jade.Travel.Ltd. United.States.of.America 100.common.shares.without.80 – 80 Wholesale.and.retail.par.value business.of.selling.airline.ticketsandtourpackages 上海德彩置佳科技服務PRC HK$10,000,000.paid.up.70 – 70 Provision.of.technical.有限公司（「德彩置佳」） capital support(note.i) 上海德彩譽富網絡科技PRC RMB10,000,000.paid.up.70 – 70 Provision.of.technology.有限公司（「德彩譽富」） capital serviceplatformandsales (note.ii) agency.services.of.sports. lottery Notes: (i).德彩置佳.is.a.wholly.foreign.owned.enterprise.established.in.the.PRC,.the.Group.had.70%.of.controlling.interest.for.this.company. (ii).德彩譽富.is.a.limited.liability.company.established.in.the.PRC,.the.Group.had.70%.of.controlling.interest.for.this.company. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 20.. INTEREST.IN.ASSOCIATES The.Group At 31.December 2010 Note HK$’000 (a) The.following.list.contains.only.the.particulars.of.associates,.all.of.which.are.unlisted.corporate.entities,.which.principally.affected.the.results.or.assets.of.the.Group: Proportion.of.ownership.interest Place.of Particulars.of Group’s Held incorporation/ issued.and.paid.up effective by.the Held.by.a Principal Name.of.associate operations share.capital interest Company subsidiary activities %%% Pier.16.–.Entertainment. Macau 2.shares.of.MOP24,000. 49 – 49 Provision.of.management. Group.Corporation. and.MOP1,000. services.for.casino. Limited respectively operations Pier.16.–.Gaming.Macau 1.share.of.MOP50,000 49 – 49 Provision.of.gaming.Promotion,.Limited promotion.services Pier.16.–.Management. Macau/Hong.Kong 2.shares.of.MOP24,000. 49 – 49 Hotel.operations Limited and.Macau and.MOP1,000. respectively Pier.16.–.Property.Macau 100,000.shares.of.49 – 49 Property.holding Development MOP100.each Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 20.. INTEREST.IN.ASSOCIATES.(CONTINUED) (b). Goodwill Because goodwill is included in the carrying amount of the interest in associates and in not separately.recognised,.it.is.not.tested.for.impairment.separately.by.applying.the.requirements.for.impairment.testing.in.HKAS36.Instead,the entire carryingamount oftheinterestin associatesistestedforimpairment as set out in note.20(d).below. (c) The.amounts.due.from.associates.are.unsecured,.interest-free.and.have.no.fixed.terms.of.repayment..Their.carrying.amounts.are.not.materially.difference.from.their.fair.value. In.addition,.a.group.of.banks.led.by.Industrial.and.Commercial.Bank.of.China.(Macau).Limited.has.began.syndication.of.5-year.loan.facilities.for.the.associate.in.the.amounts.of.HK$1,900.million.and.RMB400.million..The.funds.will.be.used.mainly.to.refinance.existing.credit.facilities,.to.repay.shareholders’.loans.and.to.fund.the.constructions.of.phase.3.development.of.the.associate..The.new.syndicated.loan.facilities.are.to.be.secured,.amongst others, a severalguaranteetobeprovidedbytheCompany.Thefinancingis expectedtobe completed by.the.first.half.of.2012. Asforthepurpose ofrepayment of shareholders’loan, amountduefrom an associate ofHK$343.0million was reclassified.to.current.assets.as.it.is.expected.to.be.recoverable.from.the.associate.within.next.twelve.months.from.the.end.of.the.reporting.period. (d). Impairment.test.for.interest.in.associates During.the.year,.the.additional.impairment.loss.recognised.on.interest.in.associates.of.HK$12.6.million.(2010:.HK$12.6.million).was.due.to.the.decrease.in.the.carrying.amount.of.the.deemed.capital.contribution.to.the.associate..The.deemed.capital.contribution.is.referenced.to.the.financial.guarantee.contract.(note.33).granted.bytheGrouptothe associates.Thedeemed capital contributiondecreased asthe carrying amount offinancial guaranteetothe associatesdecreasedduringtheyear.Therefore, atthe endofthe reportingperiod,the carrying amount.of.the.interest.in.associates.is.written.down.by.approximately.HK$56.7.million.(2010:.approximately.HK$44.1.million). Moreover, the Group completed its annual impairment test for interest in associates by comparing the recoverable.amount.of.interest.in.associates.to.its.carrying.amount.as.at.31.December.2011..The.Group.has.engaged.Roma.to.carry.out.a.valuation.of.the.interest.in.associates.as.at.31.December.2011.based.on.the.valuein use calculations.This valuation uses cashflowprojectionsbased onfinancial estimates covering afive-year.period,.and.a.discount.rate.of.15.80%.(2010:.14.97%)..The.cash.flows.beyond.the.five-year.period.are.extrapolated.using.a.steady.4.79%.(2010:.4.66%).growth.rate.for.the.casino.and.hotel.industries.in.which.are.operatedby associates.Managementhas consideredthe above assumptions and valuation and alsotaken into account.the.business.plan.going.forward. NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 20.. INTEREST.IN.ASSOCIATES.(CONTINUED) (e) The following is summary of aggregate amounts of assets, liabilities, revenue, and results of the Group’s.associates: 2010 HK$’000 Revenues 782,979 Profit/(loss) (90,683) 21.. INTEREST.IN.JOINTLY.CONTROLLED.ENTITIES The.Group At.31.December.2010 HK$’000 Share.of.net.assets 343 Amount.due.from.a.jointly.controlled.entity 12,050 12,050 12,493 12,393 Impairment.loss# (10,700) 1,693 #. The.Group.has.advanced.HK$12.million.to.the.jointly.controlled.entity.to.finance.the.acquisition.of.certain.assets..The.advance.was.unsecured.and.interest-free..In.the.opinion.of.the.Directors,.the.amount.will.not.be.repaid.within.twelve.months.from.the.end.of.the.reporting.period.and.is.therefore.classified.as.non-current.assets..As.at.31.December.2011,.the.accumulated.impairment.loss.of.interest.in.jointly.controlled.entities.was.HK$10.7.million.(2010:.HK$10.7.million).and.is.considered.to.be.adequate.as.there.are.no.indicationforfurtherimpairment.The recoverable amount ofthis advanceisdeterminedbased onthe net cashflowsfrom operations estimated.by.management.for.the.coming.five.years. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 21..INTEREST.IN.JOINTLY.CONTROLLED.ENTITIES.(CONTINUED) Details.of.the.Group’s.interest.in.the.jointly.controlled.entities.are.as.follows: Particulars.of Group’s Form.of.business Place.of issued.and.paid.up effective Principal Name.of.joint.venture structure incorporation share.capital interest activity Surplus.Win.Enterprises.Limited Incorporated British.Virgin.Islands 2.shares.of.US$1.each 50% Investment.holding Double.Diamond.International.Incorporated British.Virgin.Islands 100.shares.of.US$1.each 40% Operation.of.pier Limited The.amount.due.from.a.jointly.controlled.entity.is.unsecured,.interest-free.and.has.no.fixed.terms.of.repayment. Thefollowingis summaryofaggregate amounts of assets,liabilities, revenue and results ofthejointly controlled entities: At.31.December.2010 HK$’000 2010 HK$’000 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 22..INVENTORIES The.Group At.31.December.2010 HK$’000 Fuel.oil The analysis ofthe amount ofinventories recognised as an expense andincludedin consolidatedincome statementis.as.follows: 2010 HK$’000 Carrying.amount.of.inventories.use 23,079 23..TRADE.AND.OTHER.RECEIVABLES The.Group The.Company All.of.the.trade.and.other.receivables.are.expected.to.be.recovered.within.one.year. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 23.. TRADE.AND.OTHER.RECEIVABLES.(CONTINUED) (a). Trade.receivables (i). Aging.analysis Included.in.trade.and.other.receivables,.the.aging.analysis.for.trade.receivables.is.as.follows: (ii). Impairment.of.trade.receivables TheGroupnormallyallows an average creditperiod of30to60daysto customers of cruise shipleasing.and managementbusiness(2010: average creditperiod of30to60days) and30daysto customers of travel.business.(2010:.30.days)..Further.details.on.the.Group’s.credit.policy.are.set.out.in.note.4(b)(i). Impairment.losses.in.respect.of.trade.receivables.are.recorded.using.an.allowance.account.unless.the.Group.is.satisfied.that.recovery.of.the.amount.is.remote,.in.which.case.the.impairment.loss.is.written.off against.trade.receivables.directly.(see.note.2(i))..At.the.end.of.the.reporting.period,.there.has.no.impairment.losses.recognised.on.the.trade.receivables.(2010:.Nil). Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 23..TRADE.AND.OTHER.RECEIVABLES.(CONTINUED) (a).Trade.receivables.(continued) (iii).Trade.receivables.that.are.not.impaired The.aging.analysis.of.trade.receivables.that.are.neither.individually.nor.collectively.considered.to.be.impaired.are.as.follows: Receivablesthatwere neitherpastdue nor impaired relateto a wide range of customersfor whomthere.was.no.recent.history.of.default. Receivables.that.were.past.due.but.not.impaired.relate.to.a.number.of.independent.customers.that.have.a good.track.record.with.the.Group..Based.on.past.experience,.management.believes.that.no.impairment.allowance.is.necessary.in.respect.of.these.balances.as.there.has.not.been.a.significant.changein creditquality andthebalances are still consideredfullyrecoverable.TheGroupdoes nothold any.collateral.over.these.balances. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 23..TRADE.AND.OTHER.RECEIVABLES.(CONTINUED) (b).Other.receivables The.Group Note HK$’000 Movement.in.the.impairment.loss.recognised.on.other.receivable At.1.January.2010 21,376 Reversal.of.impairment.loss* 8 (4,943) At.31.December.2010.and.1.January.2011 16,433 Reversal.of.impairment.loss* 8 (6,159) At.31.December.2011 10,274 This.represents.impairment.on.debts.due.by.a.debtor.which.has.been.long-outstanding..The.Directors.considered.that.the. * amounts.due.could.not.be.recovered..Therefore,.full.impairment.has.been.made.in.the.previous.years..During.the.year,.the.debtor.has.made.repayment.in.respect.of.such.long-outstanding.amount,.therefore,.the.reversal.of.impairment.loss.was.recognised.for.the.year. 24.. PLEDGED.BANK.DEPOSITS The.amounts.are.pledged.to.secure.certain.banking.facilities.granted.to.the.Group.(note.45(a))..The.pledged.bank.deposits carryfixedinterestrate of approximately0.6%to0.7%per annum(2010: approximately0.01%to0.175%per annum). 25.. CASH.AND.CASH.EQUIVALENTS The.Group The.Company At.31.December. At. 31.December.2010 2010 HK$’000 HK$’000 Cash.and.bank.balances 85,042 67,334 Non-pledged.bank.deposits 23,835 23,000 – – Cash.and.cash.equivalents.in.the.consolidated.statements.of.financial.position.and.cash.flows 108,042 67,334 Deposits.with.banks.carry.interest.at.market.rates.which.is.approximately.0.1%.to.0.4%.per.annum.for.current.year.(2010:.approximately.0.01%.to.0.38%.per.annum). Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 26..TRADE.AND.OTHER.PAYABLES The.Group The.Company At. At. 31.December 31.December. 2010 2010 HK$’000 HK$’000 The.amount.due.to.subsidiaries.are.interest-free,.unsecured.and.without.fixed.term.of.repayment. Aging.analysis Included.in.trade.and.other.payables,.the.aging.analysis.of.trade.payables.is.as.follows: At.31.December.2010 HK$’000 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 27..DEFERRED.INCOME The.Group Deferredincome comprises ofa sign-upbonusfor an on-lineticketprocessing system andis recognised as revenue in.accordance.with.the.terms.of.the.agreements. 28..PROFIT.GUARANTEE.LIABILITIES As.mentioned.in.note.5(b)(iv),.Favor.Jumbo.guaranteed.that.SBI.Macau.shall.be.entitled.to.a.return.of.not.less.than.HK$9.1million(“GuaranteedAmount”)for eachfullfiscalyearfor aperiod of sixty successive monthsimmediately after thedateof completionoftheGoldenSunDisposal(the “RelevantPeriod”).Theprofitguaranteeliabilitiesarecarriedat amortised.cost. In.the.event.the.amounts.received.by.SBI.Macau.from.the.distribution.of.the.profits.of.Golden.Sun.for.any.fiscal.year.during.the.Relevant.Period.falls.short.(“Shortfall”).of.the.higher.of.the.return.(the.“Return”).as.stipulated.in.the.Golden.SunShareholders’AgreementortheGuaranteedAmount(pro-rated,ifnecessary),FavorJumbo shallpaytoSBIMacau such.Shortfall.within.six.months.from.the.end.of.the.relevant.fiscal.year.during.the.Relevant.Period. Ifthe aggregate oftheReturn andtheShortfallpayments receivedbySBIMacaufromGoldenSun and/orFavorJumbo in respectoftheRelevantPeriod exceedsthetotalGuaranteedAmount(pro-rated,if necessary)fortheRelevantPeriod (the.“Excess”),.SBI.Macau.shall.refund.and.pay.to.Favor.Jumbo.the.lesser.of.(a).the.aggregate.amount.of.the.Shortfall.paid.by.Favor.Jumbo.to.SBI.Macau.during.the.Relevant.Period;.and.(b).the.Excess,.within.three.months.upon.notice.from.Favor.Jumbo.the.amount.payable.by.SBI.Macau.after.the.expiry.of.the.Relevant.Period. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 29.. LOANS.PAYABLES The.Group The.Company At. At. 31.December. 31.December. 2010 2010 Note HK$’000 HK$’000 Loans.from.shareholders.of. non-controlling.interests –.Mrs..Yung.Yuen.Ping.Kwok (i) 2,749 – –.SABC.Holdings.Ltd. (ii) 7,918 – –.Up.Fly.Limited (iii) 7,306 5,749 – – 17,701 16,416 – – Loan.from.Maruhan (iv) 152,738 – Loan.from.SBI.Macau (v) 39,486 – Other.loans (vi) 246,000 246,000 246,000 246,000 455,925 454,640 246,000 246,000 Less:.Amounts.shown.under.current.liabilities – – Amounts.shown.under.non-current.liabilities 454,640 246,000 Notes: (i). Mrs.YungYuenPingKwokisashareholderofnon-controllinginterestsof an80% indirectlyownedsubsidiaryoftheCompany,namely.665127.British.Columbia.Ltd...The.loan.is.unsecured,.interest-free.and.not.expected.to.be.settled.within.one.year. (ii). SABC.Holdings.Ltd..is.a.shareholder.of.non-controlling.interests.of.an.80%.indirectly.owned.subsidiary.of.the.Company,.namely.665127.British.Columbia.Ltd...The.loan.is.unsecured,.interest-free.and.not.expected.to.be.settled.within.one.year. (iii). UpFlyLimitedisashareholderofnon-controlling interestsof a70% indirectly owned subsidiaryoftheCompany,namelyHonourRich China.Development.Limited..The.loan.is.unsecured,.interest-free.and.not.expected.to.be.settled.within.one.year. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 29.. LOANS.PAYABLES.(CONTINUED) Notes:.(continued) (iv). The.amount.represented.the.shareholder’s.loan.of.approximately.HK$66,468,000.due.by.World.Fortune.to.Golden.Sun.taken.up.by.Maruhan.upon.the.completion.of.the.World.Fortune.Disposal.on.29.October.2007.and.further.shareholder’s.loan.of.approximately.HK$86,270,000.(2010:.approximately.HK$86,270,000).advanced.by.Maruhan.to.World.Fortune.pursuant.to.the.World.Fortune.Shareholders’ Agreement.(as.defined.in.note.5.(b)(iii))..The.loans.are.unsecured,.interest-free.and.become.mature.in.coming.twelve.months.and.have.been.reclassified.as.current.liabilities.in.this.year. (v). Asmentionedinnote5(b)(iv)pursuanttoadeedofassignmentdated8August2008,FavorJumboassignedtheloanofapproximately HK$39,486,000duebyGoldenSuntoSBIMacau.Theloanis unsecured, interest-free and notexpectedtobe settledwithin oneyear. (vi). The.other.loans.carry.a.floating.interest.rate.at.Hong.Kong.interbank.offered.rate.plus.a.margin.and.are.secured.by.51%.of.the.entire.issued.share.capital.from.time.to.time.of.Favor.Jumbo..The.loan.shall.be.repayable.on.or.before.36.months.after.22.October.2009..According.to.the.loan.agreement,.the.Group.shall.maintain.a.consolidated.tangible.net.worth.at.all.times.of.not.less.than.HK$400.million..The.loans.become.mature.in.coming.twelve.months.and.have.been.reclassified.as.current.liabilities.in.this.year. The.carrying.amounts.of.the.loans.payables.approximate.to.their.fair.values. 30.. LONG-TERM.PAYABLES The.Group At.31.December.2010 HK$’000 The.carrying.amounts.of.the.long-term.payables.approximate.to.their.fair.values. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 31..AMOUNT.DUE.TO.A.RELATED.COMPANY The.Group The.related.company.is.an.investment.holding.company.beneficially.wholly-owned.by.Mr..Yeung. Reference.was.made.to.the.Prospectus,.the.loan.from.the.related.company.of.the.Group.in.amount.of.approximately.HK$23.4million(comparingtheprincipalamount of approximatelyHK$20.7 million and aportion of accruedinterest of approximately.HK$2.7.million).was.assigned.(“Assigned.SS.Loan”).to.Silver.Rich,.pursuant.to.the.terms.thereof. As at 31 December 2011, the outstanding accrued interest due to the related company was approximately HK$129,000 which is unsecured, non-interestbearing and not expectedtobe settled within oneyear(2010: approximately.HK$23.2.million.in.which.the.principal.amount.of.approximately.HK$20.7.million.is.unsecured,.bearing.interest.at.the.rate.of.4%.per.annum.and.not.expected.to.be.settled.within.one.year). 32..INCOME.TAX.IN.THE.CONSOLIDATED.STATEMENT.OF.FINANCIAL.POSITION (a).Current.taxation.in.the.consolidated.statement.of.financial.position The.Group At.31.December.2010 HK$’000 (Refundable)/provision.for.Hong.Kong.profits.tax.for.the.year (170) (Refundable)/provision.for.overseas.profit.tax.for.the.year 1,324 Provisional.profits.tax.paid (228) Exchange.alignment – 47 (1,743) 973 Balance.of.profits.tax.provision.relating.to.prior.years –.Hong.Kong 214 –.Overseas (24) Tax.(recoverable)/payable 1,163 Tax.recoverable (184) Tax.payable 1,347 1,163 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 32.. INCOME.TAX.IN.THE.CONSOLIDATED.STATEMENT.OF.FINANCIAL.POSITION.(CONTINUED) (b). Recognised.deferred.tax.(assets)/liabilities The.movements.of.deferred.tax.(assets)/liabilities.during.the.year.are.as.follows: The.Group Accelerated depreciation Note HK$’000 At.1.January.2010 (765) Debited.to.the.consolidated.income.statement 10(a) 815 Exchange.alignment (21) At.31.December.2010.and.1.January.2011 29 Debited.to.the.consolidated.income.statement 10(a) 250 Exchange.alignment (9) At.31.December.2011 The.Group At.31.December.2010 HK$’000 Net.deferred.tax.liabilities.recognised.on.the.consolidated.statement.of.financial.position (c).Unrecognised.deferred.tax.assets Deferred.tax.assets.are.recognised.for.tax.loss.carried.forward.to.the.extent.that.the.realisation.of.the.related.tax.benefit.through.utilisation.against.future.taxable.profits.is.probable..At.31.December.2011,.the.Group.had.taxlosses ofapproximatelyHK$111.7 million(2010:approximatelyHK$103.0million)thatare availableto carry forwardindefinitely.for.offsetting.against.future.taxable.profits..Estimated.tax.losses.of.approximately.HK$19.6.million.and.HK$3.1.million.(2010:.Nil).will.expire.within.1.to.5.years.and.over.5.years.respectively. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 33..FINANCIAL.GUARANTEE.CONTRACT The.Group.and.the.Company At.31.December.2010 HK$’000 At31December2011,theCompanyhadan outstanding corporateguaranteeto abankin respect of syndicated loan.facilities.of.HK$1,600.million.(2010:.HK$1,600.million).granted.to.an.associate.(note.41)..The.maximum.guarantee.amountbornebytheCompany wasHK$860 million(2010:HK$860 million).Totalloan outstanding underthe syndicated.loan.facilities.of.the.associate.as.at.31.December.2011.was.HK$560.million.(2010:.HK$800.million). Based.on.the.valuation.performed.by.an.independent.professional.valuer,.the.directors.considered.that.the.fair.value.of.the.financial.guarantee.contract.was.approximately.HK$63.million.at.the.date.of.issuance.of.the.financial.guarantee.contract. The.carrying.amount.of.the.financial.guarantee.contract.recognised.in.the.Group’s.and.the.Company’s.statements.of.financial.position.were.in.accordance.with.HKAS.39.and.HKFRS.4.(Amendments). The.financial.guarantee.contract.is.carried.at.amortised.cost..No.provision.for.financial.guarantee.contracts.have.been.made.at.31.December.2011.and.2010.as.default.risk.is.low. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 34..BANK.LOANS The.Group At.31.December.2010 HK$’000 Bank.loans,.secured 14,496 Carrying.amount.repayable: Within.one.year More.than.one.year,.but.no.exceeding.two.years More.than.two.years,.but.not.more.than.five.years More.than.five.years Less:.Amounts.shown.under.current.liabilities Amounts.shown.under.non-current.liabilities 556 587 1,976 11,377 14,496 (556) 13,940 35..LOAN.FROM.A.DIRECTOR.AND.CONTROLLING.SHAREHOLDER The.Group.and.the.Company This representstheloanfromMr.Yeungunderthe revisedloanfacility asdisclosedin note2(b)(i).Theloanis unsecured.and.bearing.interest.at.the.prime.rate.quoted.for.Hong.Kong.dollars.loans.by.The.Hongkong.and.Shanghai.Banking.CorporationLimited.Thefinal repaymentdate underthe revised loanfacilityhasbeenfurther extendedfrom30October 2012.to.31.October.2013.by.a.letter.agreement.dated.15.March.2012.(“Yeung.Loan.Facility”)..In.the.opinion.of.the.Directors,theborrowingofthe saidloanfromMr.Yeung wasforthebenefit oftheCompany and on normal commercial terms.where.no.security.over.the.assets.of.the.Company.was.granted. Reference was made to the Prospectus, the portion of the loan under the Yeung Loan Facility in amount of approximately.HK$104.7.million.was.assigned.(“Assigned.Yeung.Loan”).to.Silver.Rich,.pursuant.to.the.terms.thereof. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 36..LOAN.FROM.A.CONTROLLING.SHAREHOLDER Silver.Rich.was.a.controlling.shareholder.of.the.Company.which.hold.41.45%.of.the.issued.share.capital.of.the.Company.as.at.31.December.2011. On.15.December.2011,.the.Company.had.entered.into: (i). adeed.of.assignment.with.Mr..Yeung.and.Silver.Rich.(the.“Yeung.Loan.Assignment”)..The.Company.was.indebted.to.Mr..Yeung.in.the.principal.amount.of.HK$135.0.million.at.the.date.of.assignment..Pursuant.to.the.terms oftheYeungLoanAssignment,Mr.Yeunghas agreedto assign andtransfer, andSilverRichhas agreed to acceptthe assignmentandtransfer ofAssignedYeungLoan.TheAssignedYeungLoan wasbearinginterest at.the.prime.rate.quoted.for.Hong.Kong.dollars.loans.by.The.Hongkong.and.Shanghai.Banking.Corporation.Limited;.and (ii). adeed of novationand assignmentwithSmartClassEnterprisesLimited(“SmartClass”,being adirect subsidiary oftheCompany),StarSpangleCorporation(“StarSpangle”)andSilverRich(the “SSLoan Assignment”).SmartClass wasindebtedtoStarSpangleinthe aggregate sum ofapproximatelyHK$23.5million at.the.date.of.assignment..Pursuant.to.the.terms.of.the.SS.Loan.Assignment,.Smart.Class.will.novate,.and.the.Companywill assume, all and any obligations,duties andliabilities ofSmartClassin all respects asborrower of the.Assigned.SS.Loan..Star.Spangle.assigned.and.transferred,.and.Silver.Rich.has.accepted.the.assignment.and.transferred.of.the.Assigned.SS.Loan..The.Assigned.SS.Loan.was.bearing.interest.at.the.rate.of.4%.per.annum. As mentionedin note2(b)(i),pursuanttotheterms oftheUnderwritingAgreement,(i)SliverRichhas acceptedandtaken up.673,968,954.rights.shares.provisionally.allotted.by.the.Company.at.the.Subscription.Monies.and.the.Underwritten.Shares were underwrittenbySilverRich;(ii)a commission of2.5% ofthe aggregate subscriptionpricein respect ofthe Underwritten.Shares,.which.amounted.to.approximately.HK$4.5.million.would.be.paid.by.the.Company.to.Silver.Rich;.and(iii)theSubscriptionMonies shouldbe set offbythe aggregate oftheAssignedYeungLoan andAssignedSSLoan (collectively.the.“Assigned.Loans”). On 12 January 2012, the Subscription Monies have been set off by the Assigned Loans with the sum of HK$128,054,101.26.and.on.18.January.2012,.the.Rights.Issue.has.been.completed. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 37..SHARE.CAPITAL Number Nominal of.shares value ’000 HK$’000 Authorised: Ordinary.shares.of.HK$0.01.each At.1.January.2010,.31.December.2010,.1.January.2011.and.31.December.2011 160,000,000 1,600,000 Issued.and.fully.paid: Ordinary.shares.of.HK$0.01.each At.1.January.2010,.31.December.2010,.1.January.2011.and.31.December.2011 2,438,964 24,390 The owners ofordinaryshares are entitledto receivedividends asdeclaredfromtimetotime and are entitledto one vote.per.share.at.general.meetings.of.the.Company..All.ordinary.shares.rank.equally.with.regard.to.the.Company’s.residual.assets. 38..EMPLOYEE.RETIREMENT.BENEFITS (a). Defined.contribution.retirement.plan The.Group.participates.in.a.Mandatory.Provident.Fund.Scheme.(the.“MPF.Scheme”).under.the.Hong.Kong.Mandatory.Provident.Fund.Schemes.Ordinance.for.employees.employed.under.the.jurisdiction.of.the.Hong.Kong Employment.Ordinance..The.MPF.Scheme.is.a.defined.contribution.retirement.plan.administered.by.independent.trustees..Under.the.MPF.Scheme,.the.employer.and.its.employees.are.each.required.to.make.contributionstotheplan at5% ofthe employees’ relevantincome, subjectto a cap of monthly relevantincome of.HK$20,000..Contributions.to.the.plan.vest.immediately. (b). Share.option.scheme TheCompanyparticipatesinashareoptionscheme(the “OptionScheme”)forthepurposeofproviding.incentives andrewardsto eligibleparticipants who contributetothe success oftheGroup’s operations.Eligible participants oftheOptionSchemeincludetheDirectors andother employees oftheGroup.TheOptionScheme became.effective.on.8.November.2004.and,.unless.otherwise.cancelled.or.amended,.will.remain.in.force.for.10yearsfromthedate ofadoption oftheOptionScheme,i.e.20August2004.UndertheOptionScheme,the Directors are authorised attheir absolutediscretion,toinvite any employee, executive or officer of anymember of theGroupor any entity in whichtheGroupholds any equityinterest(including anyDirectors) andany consultant, agent,.adviser,.vendor,.supplier.or.customer.who.is.eligible.to.participate.in.the.Option.Scheme,.to.take.up.options.to.subscribe.for.shares.of.the.Company.(“Share(s)”). There is.no.provision.in.the.Option.Scheme.to.require.a.grantee.to.fulfill.any.performance.target.or.to.hold.the.option.for.a.certain.period.before.exercising.the.option,.but.the.Company.may.at.its.absolute.discretion.from.time.to.time.provide.such.requirements.in.the.offer.of.grant.of.options. 38..EMPLOYEE.RETIREMENT.BENEFITS.(CONTINUED) (b).Share.option.scheme.(continued) The.maximum.number.of.Shares.which.may.be.issued.upon.exercise.of.all.options.to.be.granted.under.the.OptionScheme andany other share option schemes oftheCompany shallnotin aggregate exceed10% ofthe total.number.of.Shares.in.issue.as.at.the.date.of.adoption.of.the.Option.Scheme. The.Company.may.seek.approval.of.the.shareholders.in.general.meeting.for.refreshing.the.10%.limit.under.the.Option.Scheme.save.that.the.total.number.of.Shares.which.may.be.issued.upon.exercise.of.all.options.to.be.granted.under.the.Option.Scheme.and.any.other.share.option.schemes.of.the.Company.under.the.limit.as.“refreshed” shall.not.exceed.10%.of.the.total.number.of.Shares.in.issue.as.at.the.date.of.approval.of.the.limit..Options.previously.granted.under.the.Option.Scheme.and.any.other.share.option.schemes.of.the.Company.(includingthose outstanding, cancelled,lapsedin accordance withthe other scheme(s) or exercisedoptions) will not.be.counted.for.the.purpose.of.calculating.the.limit.as.“refreshed”. Notwithstanding.aforesaid.in.above,.the.maximum.number.of.Shares.which.may.be.issued.upon.exercise.of.all.outstanding.options.granted.and.yet.to.be.exercised.under.the.Option.Scheme.and.any.other.share.option.schemes.of.the.Company.must.not.exceed.30%.of.the.total.number.of.Shares.in.issue.from.time.to.time. The.total.number.of.Shares.issued.and.to.be.issued.upon.exercise.of.the.options.granted.to.each.participant.(including.both.exercised.and.outstanding.options).in.any.12-month.period.shall.not.exceed.1%.of.the.total.number.of.Shares.in.issue. The exercisepricein respectofanyparticular option shallbe suchprice asdeterminedbytheboardofDirectors inits absolutediscretion atthetime ofthe making ofthe offerbutin any casethe exerciseprice shallnotbeless than.the.highest.of.(i).the.official.closing.price.of.the.Shares.as.stated.in.the.daily.quotation.sheets.of.the.Stock.Exchange.on.the.date.of.offer,.which.must.be.a.business.day;.(ii).the.average.of.the.official.closing.price.of.the.Shares.as.stated.in.the.daily.quotation.sheets.of.the.Stock.Exchange.for.the.five.business.days.immediately.preceding.the.date.of.offer;.and.(iii).the.nominal.value.of.the.Share. The.offer.of.a.grant.of.share.options.must.be.accepted.not.later.than.28.days.after.the.date.of.offer,.upon.payment of.a.consideration.of.HK$1.by.the.grantee..The.exercise.period.of.the.share.options.granted.is.determined.by.the.board.of.Directors,.save.that.such.period.shall.not.be.more.than.a.period.of.10.years.from.the.date.upon.which.the.share.options.are.granted.or.deemed.to.be.granted.and.accepted. At.the.end.of.the.reporting.period,.no.share.options.had.been.granted.under.the.Option.Scheme.since.its.adoption.(2010:.Nil). NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 39.. RESERVES The.Group Attributable.to.owners.of.the.Company Capital Non- Share Distributable redemption Exchange Accumulated controlling Total premium reserve reserve reserve losses Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At.1.January.2010 908,785 52,333 976 (1,369) (357,456) 603,269 46,214 649,483 Loss.for.the.year – – – – (80,782) (80,782) (882) (81,664) Other.comprehensive.income. for.the.year – – – 1,013 – 1,013 329 1,342 Total.comprehensive.income/(loss). for.the.year – – – 1,013 (80,782) (79,769) (553) (80,322) At.31.December.2010 908,785 52,333 976 (356) (438,238) 523,500 45,661 569,161 At.1.January.2011 908,785 52,333 976 (356) (438,238) 523,500 45,661 569,161 Loss.for.the.year – – – – (77,666) (77,666) (13,823) (91,489) Other.comprehensive.(loss)/income. for.the.year – – – (67) – (67) 61 (6) Total.comprehensive.loss.for.the.year – – – (67) (77,666) (77,733) (13,762) (91,495) At.31.December.2011 908,785 52,333 976 (423) (515,904) 445,767 31,899 477,666 Nature.and.purpose.of.reserves (a). Share.premium The application.of.the.share.premium.accounts.is.governed.by.section.40.of.the.Companies.Act.1981.of.Bermuda. (b). Exchange.reserve The.exchange.reserve.comprises.all.foreign.exchange.differences.arising.from.the.translation.of.the.financial.statements offoreign operations.The reserveisdealt within accordance withthe accountingpolicies set out in note.2(r). NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 39..RESERVES.(CONTINUED) The.Company Share.premium HK$’000 Retained.profits HK$’000 Total HK$’000 At.1.January.2010 908,785 19,645 928,430 Total.comprehensive.loss.for.the.year – (15,414) (15,414) At.31.December.2010.and.1.January.2011 908,785 4,231 913,016 Total.comprehensive.income.for.the.year – 1,587 1,587 At.31.December.2011 908,785 5,818 914,603 Distribution.of.reserves At.31.December.2011,.the.aggregate.amount.of.reserves.available.for.distribution.to.owners.of.the.Company.was.approximately.HK$5,818,000.(2010:.approximately.HK$4,231,000). 40.. COMMITMENTS (a) Thereis no capitalcommitments outstandingat31December2011 notprovideforinthe consolidatedfinancial.statements. (b) At.31.December.2011,.the.total.future.minimum.lease.payments.under.non-cancellable.operating.leases.are.payable.as.follows: The.Group The.Company At. At.31.December. 31.December.2010 2010 HK$’000 HK$’000 TheGrouplease certain officepremises under operatingleases.Theleasestypically runforperiod rangingfrom.two.to.five.years..None.of.leases.includes.contingent.rentals. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 41.. CONTINGENT.LIABILITIES As.at.31.December.2011,.the.Company.gave.a.corporate.guarantee.for.syndicated.loan.facilities.of.HK$1,600.million.granted to an associate of theGroup(2010:HK$1,600 million).The maximumguarantee amountbornebythe CompanywasHK$860 million(2010:HK$860million)(note33).Thetotalloan andbankguarantee outstandingforthe syndicatedloanfacilities atthe end ofthe reportingperiod wasHK$560 million andHK$240 million respectively(2010: HK$800.million.and.HK$240.million.respectively). 42.. RELATED.PARTY.TRANSACTIONS (a) The.Group.had.the.following.transactions.with.the.related.parties.during.the.year: The.Group 2010 Note HK$’000 Travel.service.income.received.and.receivable.from –.an.associate (i) 290 –.key.management (i) 1,236 Cost.of.sales.related.to.travel.services.paid.and.payable.to.an.associate (i) 342 Management.fee.income.received.and.receivable.from.an.associate (ii) 6,840 Interest.expenses.payable.to.a.related.company 31 816 Interest.expenses.paid.to.a.director.and.controlling.shareholder 35 3,412 Interest.expenses.payable.to.a.controlling.shareholder 36 – Notes: (i). The.travel.service.fee.was.charged.according.to.prices.and.conditions.comparable.to.those.offered.to.other.customers. (ii). ThemanagementfeewaschargedonactualcostincurredbytheGroupforprovisionofmanagement andtechnical services. Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 42.. RELATED.PARTY.TRANSACTIONS.(CONTINUED) (b) The.outstanding.balances.with.related.parties.at.the.end.of.the.reporting.period.are.as.follows: The.Group At 31.December 2010 Note HK$’000 Amounts.due.from.associates 20(c) 1,132,778 Amount.due.from.a.jointly.controlled.entity 21 12,050 Other.receivable.from.a.related.party (i) 4,310 Other.payable.to.a.director.of.a.subsidiary.of.the.Company (ii) – Amount.due.to.a.related.company 31 23,191 Loan.from.a.director.and.controlling.shareholder 35 105,000 Loan.from.a.controlling.shareholder 36 – Notes: (i). Theamountof receivableisfromanindependentthirdparty(the “JVPartner”)forhison-lendingtoajointventurecompany of.whichtheCompany andtheJVPartnerheld70%and30% interestsrespectively(the “JVCompany”).Theamountissecured by.30%.equity.interest.of.the.JV.Company,.interest-free.and.has.no.fixed.repayment.terms. (ii). Ashort-termloanagreementwasenteredbetweenadirectorof asubsidiaryoftheCompany(“DirectoroftheSubsidiary”)and a.subsidiary.ofthe.Company..The.Director.ofthe.Subsidiaryprovides.a.short-termloan.to.one.of subsidiary of.the.Company for.its.general.working.capital.use..The.loan.is.unsecured,.interest-free.and.to.be.repaid.on.or.before.29.January.2012. (c). Key.management.personnel.compensation Compensationforkeymanagementpersonnel,including amountspaidtotheCompany’sdirectors asdisclosed.in.note.11.and.certain.of.the.highest.paid.employees.as.disclosed.in.note.12.is.as.follows: The.Group 2010 Note HK$’000 Success.Universe.Group.Limited Annual.Report.2011 NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 42.. RELATED.PARTY.TRANSACTIONS.(CONTINUED) (d) On.1.December.2008,.the.Company.has.entered.into.a.term.loan.facility.agreement.of.up.to.HK$200.million.withMr.Yeung,theloanis unsecured and charged withinterest attheprime ratequotedforHongKongdollars loansbyTheHongkongandShanghaiBankingCorporationLimited.Theprincipalamountoftheloanfacilitywas increased.up.to.HK$290.million.on.14.April.2009.and.the.final.repayment.date.of.the.loan.and.all.other.sums.owing.to.Mr..Yeung.under.the.revised.loan.facility.were.further.extended.from.30.October.2012.to.31.October.2013.by.a.letter.agreement.dated.15.March.2012. (e) As.mentioned.in.note.36,.on.19.October.2011,.the.Company.entered.into.the.Underwriting.Agreement.with.Silver.Rich.as.underwriter,.regarding.the.underwriting.and.certain.other.arrangements.in.respect.of.the.issue.by.way.of.rights.of.new.ordinary.shares.of.HK$0.01.each.in.the.share.capital.of.the.Company.in.the.proportion.of.two.rights.shares.for.every.three.shares.of.the.Company.held.on.the.record.date,.being.1,625,976,154.new.shares.of.the.Company,.at.the.subscription.price.of.HK$0.19.per.rights.share..Pursuant.to.the.terms.of.the.Underwriting.Agreement,.(i).Sliver.Rich.has.accepted.and.taken.up.673,968,954.rights.shares.provisionally.allotted.by.the.Company.at.the.Subscription.Monies.and.the.Underwritten.Shares.were.underwritten.by.Silver.Rich;.(ii).a.commission.of.2.5%.of.the.aggregate.subscription.price.in.respect.of.the.Underwritten.Shares,.which.amounted.to.approximately.HK$4.5.million.would.be.paid.by.the.Company.to.Silver.Rich;.and.(iii).the.Subscription.Monies.should.be.set.off.by.Assigned.Loans. On 12.January.2012,.the.Subscription.Monies.have.been.set.off.by.the.Assigned.Loans.with.the.sum.of.HK$128,054,101.26.and.on.18.January.2012,.the.Rights.Issue.has.been.completed. 43.. CAPITAL.RISK.MANAGEMENT The.Group’s.primary.objectives.when.managing.capital.are.to.safeguard.the.Group’s.ability.to.continue.as.a.going.concern, sothatit can continuetoprovide returnsfor shareholders andbenefitsfor other stakeholders andto maintain an.optimal.capital.structure.to.reduce.the.cost.of.capital. The.Group.actively.and.regularly.reviews.and.manages.its.capital.structure.to.maintain.a.balance.between.the.higher.shareholders.returns.that.might.be.possible.with.higher.level.of.borrowings.and.the.advantages.and.security.afforded.bya sound capitalposition, and makes adjustmentstothe capital structureinlight of changesin economic conditions. The.Group.monitors.its.capital.structure.on.the.basis.of.debt-to-capital.ratio..For.this.purpose.the.Group.defines.debt.astotalborrowings which arebearing afixed or variableinterest rates such as amountdueto a related company(note 31),.other.loans.(note.29(vi)),.bank.loans.(note.34),.loan.from.a.director.and.controlling.shareholder.(note.35).and.loan.from.a.controlling.shareholder.(note.36)..Capital.represents.total.equity.attributable.to.owners.of.the.Company.in.the.consolidated.statement.of.financial.position. As.at.31.December.2011,.the.debt-to-capital.ratio.is.89%.(2010:.71%). 43.. CAPITAL.RISK.MANAGEMENT.(CONTINUED) As mentionedin note2(b)(i)and36,the net cashproceeds oftheRightsIssue, after setting offbytheAssignedLoans.from.Silver.Rich,.is.approximately.HK$173.2.million,.which.will.be.applied.as.follows:.(i).up.to.HK$100.0.million.for.settlement.of.part.of.the.third.party.interest-bearing.loans.when.they.fall.due.on.22.October.2012;.(ii).approximately.HK$29.0.million.for.fulfillment.of.the.Group’s.commitment.to.provide.financial.assistance.to.the.joint.venture.company.in.relation.to.the.lottery.business;.and.(iii).the.remaining.balance.of.approximately.HK$44.2.million.for.general.working.capital.of.the.Group. Based.on.the.reduced.interest-bearing.borrowings.as.a.result.of.the.setting.off,.repayment.of.certain.interest-bearing.loans andthe enlargedtotal equity attributableto owners oftheCompany,theGroup’sgearing ratio wouldbe reduced accordingly. 44.. NON-CASH.TRANSACTIONS The.Group.has.the.following.non-cash.transaction.during.the.year: As.mentioned.in.notes.31,.35.and.36,.the.Assigned.SS.Loan.and.Assigned.Yeung.Loan.were.settled.through.the.assignment.of.loan.to.Silver.Rich.under.the.Yeung.Loan.Assignment.and.the.SS.Loan.Assignment. 45.. PLEDGE.OF.ASSETS As.at.31.December.2011,.the.Group.had.secured.the.following.assets: (a). The.Group.pledged.the.time.deposits.of.approximately.HK$7.9.million.(2010:.approximately.HK$8.1.million).to.certain.banks.for.the.issuance.of.several.bank.guarantees.and.standby.letter.of.credit.facility.of.approximately.HK$9.9.million.(2010:.approximately.HK$10.2.million).for.the.operations.of.the.Group; (b). World.Fortune.pledged.all.(2010:.100%).of.its.shares.in.Pier.16.–.Property.Development.to.a.bank,.for.and.on.behalf.of.the.syndicate.of.lenders,.in.respect.of.the.syndicated.loan.facilities.granted.to.Pier.16.–.Property.Development; (c). New Shepherd.Assets.Limited,.a.wholly-owned.subsidiary.of.the.Company,.pledged.51%.(2010:.51%).of.the.entire.issued.share.capital.from.time.to.time.of.Favor.Jumbo.to.a.financial.institution.which.is.a.third.party.independent.of.the.Company.in.respect.of.the.revolving.credit.facility.granted.to.the.Company;.and (d). TheGroup’sself-occupiedpropertieswith carrying amount equivalenttoapproximatelyHK$20.6 million(2010: equivalent.to.approximately.HK$21.6.million).were.pledged.to.a.bank.to.secure.bank.loans.to.Jade.Travel.(Canada). NotestotheConsolidatedFinancialStatements(continued) For.the.year.ended.31.December.2011 46.. EVENT.AFTER.THE.REPORTING.PERIOD (i). Referencewasmadetotheannouncementdated25October2011issuedbytheCompany,theCompanyhas.proposed.to.raise.approximately.HK$308.9.million,.before.expenses,.by.the.Rights.Issue. The.circular.in.relation.to,.among.other.things,.the.Rights.Issue.and.the.whitewash.waiver.has.been.posted.on.22.November.2011..The.Rights.Issue.and.the.whitewash.waiver.have.been.approved.by.the.independent.shareholders atthe specialgeneral meetingheld on9December2011 andtheprospectushasbeenpostedto qualifying.shareholders.on.21.December.2011. As mentionedin note36,pursuanttotheterms oftheUnderwritingAgreement,(i)SliverRichhas acceptedand taken.up.673,968,954.rights.shares.provisionally.allotted.by.the.Company.at.the.Subscription.Monies.and.the.UnderwrittenShares were underwrittenbySilverRich;(ii)the commission of2.5% ofthe aggregate subscription price.in.respect.of.the.Underwritten.Shares,.which.amount.to.approximately.HK$4.5.million.would.be.paid.by.the.Company.to.Silver.Rich;.and.(iii).the.Subscription.Monies.should.be.set.off.by.the.Assigned.Loans. On 12.January.2012,.the.Subscription.Monies.have.been.set.off.by.the.Assigned.Loans.with.the.sum.of.HK$128,054,101.26.and.on.18.January.2012,.the.Rights.Issue.has.been.completed. (ii). Withregardtotheunsecuredtermloanfacilityof uptoHK$290 milliongrantedbyMr.YeungtotheCompany,a letter agreementwas enteredintobetweentheCompany andMr.Yeung on15March2012,thefinal repayment date oftheloanfromMr.Yeungunderthe revisedloanfacility wasfurther extendedfrom30October2012to31 October.2013. Five-yearFinancialSummary 　 RESULTS Fifteen.months Year.ended Year.ended ended Year.ended.31.December 31.December 31.December 30.September 2010 2009 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 ASSETS.AND.LIABILITIES At At At At 31.December 31.December 31.December 30.September 2010 2009 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 Total.assets 1,475,374 1,345,509 1,418,947 1,197,379 Total.liabilities (881,823) (671,636) (487,788) (170,466) Non-controlling.interests (31,899) (45,661) (46,214) (46,321) (49,983) Total.equity.attributable.to.owners.of.the.Company 547,890 627,659 884,838 976,930 Success.Universe.Group.Limited Annual.Report.2011