SUCCESS UNIVERSE GROUP LIMITED - Annual Report 2013

OUR VISION 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. CORPORATE INFORMATION   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. Luk Ka Yee, Patrick (Chairman) Mr. Yeung Hoi Sing, Sonny Mr. Choi Kin Pui, Russelle Ms. Yeung Mo Sheung, Ann Mr. Chin Wing Lok, Ambrose Nomination 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 Limited Certified Public Accountants Legal Advisers on Hong Kong Laws 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 MUFG Fund Services (Bermuda) Limited (formerly known as Butterfield Fulcrum Group (Bermuda) Limited) 26 Burnaby Street Hamilton HM 11 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* * With effect from 31 March 2014, the address will be changed to: Level 22, Hopewell Centre 183 Queen’s Road East 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 CHAIRMAN’S STATEMENT Ponte 16 and our lottery business in China have made remarkable progress in 2013 and will become the dual growth engines for the Group in the future.   CHAIRMAN’S STATEMENT   Dear Valued Shareholders, On behalf of the board of directors (the “Board”) of Success Universe Group Limited (the “Company”), I am pleased to present the annual report of the Company and its subsidiaries (collectively the “Group”) for the year ended 31 December 2013 (the “Year”). DUAL GROWTH ENGINES Despite the moderation in its economic growth in 2013, the GDP and disposable income per capita of China continued to rise during the Year. The uninterrupted expansion of the middle class in China, with their thriving consumption power, served as the catalyst for the rapid development of gaming and tourism industries in the Greater China. Given such a favourable backdrop, the Group has established itself in Macau’s gaming business with our flagship investment project – Ponte 16, and the lottery market in China. On our diligent effort and having persisted in the last few years, I am proud to report that Ponte 16 and our lottery business in China have made remarkable progress in their operations in 2013. This performance reinforces our confidence that these two business streams are certain to be the dual growth engines for the Group in the coming future. It is our endeavour to continue strengthening our management capabilities in order to deliver the vision in becoming a key player in the gaming, entertainment and tourist-related industries in the Asia-Pacific region. PONTE 16 — A TOURIST DESTINATION OF CHOICE IN MACAU In 2013, Ponte 16 celebrated its fifth anniversary and we are proud of its accomplishment in being a premier resort destination in just a few years’ time. Since its opening in 2008, it organised series of exciting, world-class events, shows and exhibitions to establish Ponte 16 as a unique one-stop destination for tourists all over the world. Last year, Ponte 16 launched the new generation 5D reality adventure game “Dangerous”, featuring Michael Jackson elements to match and fulfill the desire of the younger generation. The collaboration and launching of large scale events in Macau demonstrated Ponte 16’s dedication to source excitements all round the world to the local scene. This has made Ponte 16 unique from its peers and has significantly boosted its appeal as tourist destination of choice. On the New Year’s Eve of 2013, the resort held a tremendous countdown event to celebrate the new start of a year. The courtyard of Ponte 16 was packed with over 4,000 spectators for the greatest hits and live music performed by the singers and artists from Hong Kong and Macau until midnight. This special party at the Inner Harbour brought its guests an unforgettable New Year’s Eve that was full of joy, warmth and festive blessings. All these fabulous tourist attractions, facilitated by enormous marketing efforts, created a refreshing experience to visitors and its returning customers at Ponte 16. This in turn drove a steady and sustainable growth in 2013. The growing affluence of the middle class in China is a key driver for the continuous growth in tourism and gaming industries in Macau. This formidable force of consumption is constantly in search of quality and opportunity to indulge in life. The resort will keep on its endeavour to lift the standards of its amenities so as to offer them a wide range of cultural and entertainment experience. We strongly believe this will eventually help to build a pool of loyal customers for Ponte 16. It will also weave in a diverse range of leisure activities, events and seasonal promotions to appeal to the up and rising affluent Chinese middle class families. Adding to the versatile activities offered, Ponte 16 is going to launch an online magazine to showcase the exclusive cultural and world heritage spots. We are confident that this will put Ponte 16 ahead in the industry. CHAIRMAN’S STATEMENT (CONTINUED)   CHINA LOTTERY BUSINESS — ACTIVE PENETRATION WITH SOLID FOUNDATION In 2013, we successfully expanded our existing sports lottery sales agency services network to Heilongjiang province after settled in Jiangxi and Qinghai provinces. The lottery market in China has been rapidly growing over the past few years. Lottery sales in China reached approximately RMB309.3 billion in 2013, increased by approximately 18.3% year-on-year. This trend is expected to carry on. Given this enormous growth potential and our existing local network, we are actively seeking opportunities through expansion to other provinces in China. Our existing lottery business is gradually and steadily making a significant contribution to the Group. To capture the influx of sports lottery sales brought by the upcoming FIFA World Cup 2014, the Group is setting up and initiating a multimedia football commentary channel. This will provide viewers with helpful information whilst engaging their interest onto our lottery platform 128cai.com. The programme is meant to expand our loyal customer base, and in turn boosting our lottery sales. In the beginning of 2014, the Group entered into a cooperation agreement with 北京中投視訊文化傳媒有限公司 (Beijing Zhongtoushixun Culture Media Co., Ltd.) (“CNLive”) and 北京天潤瑞怡文化發展有限公司 (Beijing Rejoy Culture Development Co., Ltd.) (“Rejoy Culture”) to further strengthen our distribution channels. CNLive is an operating arm of the China Internet Information Centre of the State Council Information Office of The People’s Republic of China and it operates a mobile television and internet media platform in China. We believe that the customer base and the technology expertise of CNLive and Rejoy Culture in the mobile internet industry will help us to reach an array of mobile lottery players, hence expanding our revenue stream in the lottery business. To garner greater share in the thriving lottery market, the Group has become an official business partner of Shanghai Welfare Lottery Issuance Centre and has been authorised to provide the telephone agency sales services of welfare lottery through the Group’s technology service platform in March 2014. Since the welfare lottery market is an even larger segment, together with the comprehensive sports and welfare lottery sales services as well as our specialised online portal 128cai.com, we believe the lottery business is going to be another driving force for the Group in the near future. BECOMING A LEADER IN THE GAMING, ENTERTAINMENT AND TOURIST-RELATED INDUSTRIES With various encouraging signs from the outlook of Macau gaming industry, and flourishing lottery market in China, the Board believes that we are well-positioned to seize the plentiful opportunities in the future. We are gradually achieving our goal to become one of the leading players in the gaming, entertainment and tourist-related industries in the Asia-Pacific region. These well planned efforts will result in delivering long-term value for our shareholders. APPRECIATION I would like to take this opportunity to thank our shareholders, customers and business partners for their continuous support, and express my gratitude to my fellow directors for their dedication and insights, and our staff for their relentless effort. Our achievements would not have been possible without the commitment and hard work of our staff at all levels. Yeung Hoi Sing, Sonny Chairman Hong Kong 28 March 2014 BUSINESS HIGHLIGHTS   ‧ Turnover achieved approximately HK$1,584.8 million for 2013 ‧ Profit attributable to owners of the Company realised approximately HK$18.6 million, making a financial turnaround in 2013 ‧ Earnings per share was 0.42 HK cents for 2013 ‧ For lottery business, sports lottery sales agency services network in China expanded to Heilongjiang province in 2013, in addition to existing network in Jiangxi and Qinghai provinces ‧ For the flagship investment project, Ponte 16, the adjusted EBITDA* substantially increased by approximately 19% to approximately HK$387.3 million. Shared profit relating to Ponte 16 amounted to approximately HK$51.0 million, representing approximately 444% year-on-year growth * Adjusted EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortisation (and excluded interest income from the pledged deposit) MANAGEMENT DISCUSSION AND ANALYSIS The Group achieved financial turnaround in 2013, strengthening its unique position in the gaming, entertainment and tourist-related industries in the Asia-Pacific region. The following discussion should be read in conjunction with the consolidated financial statements and the related notes included in this annual report. MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   RESULTS The Group recorded a turnover of approximately HK$1,584.8 million for the Year, decreased by approximately 3% from approximately HK$1,635.0 million in 2012. Gross profit dropped by approximately 5% to approximately HK$83.6 million (2012: approximately HK$87.9 million). Shared profit of the associates relating to Ponte 16 for the Year amounted to approximately HK$51.0 million (2012: approximately HK$9.4 million). In 2013, a one-off gain of approximately HK$83.4 million was recorded due to the derecognition of a long-term payable as a result of the World Fortune Acquisition (as defined hereinafter), mitigating the impact of the loss of approximately HK$71.8 million from the Golden Sun Acquisition (as defined hereinafter). As a result, profit attributable to owners of the Company amounted to approximately HK$18.6 million, compared with a loss attributable to the owners of the Company of approximately HK$33.0 million in 2012. Earnings per share in 2013 was 0.42 HK cents (2012: loss per share of 0.83 HK cents). ACQUISITIONS Acquisition of the interest pursuant to the exercise of option by Maruhan Corporation Reference was made to the Company’s announcements dated 18 February 2013 and 28 March 2013 as well as the Company’s circular dated 29 April 2013. In May 2013, Golden Sun Profits Limited (“Golden Sun”, a then indirect non-wholly owned subsidiary of the Company) completed its acquisition of the legal and beneficial ownership of the entire equity interest of Maruhan Corporation (“Maruhan”) in World Fortune Limited (“World Fortune”, a then indirect non-wholly owned subsidiary of the Company) together with the entire amount of the shareholder’s loans provided by Maruhan to World Fortune (collectively the “World Fortune Interest”) pursuant to the exercise of option by Maruhan (the “World Fortune Acquisition”). The purchase price of the World Fortune Interest of HK$219,117,318 was settled as to HK$109,558,659 by cash and as to HK$109,558,659 by way of allotment and issue of 550,546,025 new ordinary shares of the Company at an issue price of HK$0.199 per share. Following the completion of the World Fortune Acquisition, the Company increased its effective beneficial interest in World Fortune from approximately 85.71% to 95.45%. The gain, before expenses, on derecognition of a long-term payable of approximately HK$83.4 million was recognised in 2013. Acquisition of the interest pursuant to the exercise of option by SBI Macau Holdings Limited Reference was made to the Company’s announcements dated 6 September 2013 and 3 October 2013. In October 2013, Favor Jumbo Limited, an indirect wholly-owned subsidiary of the Company, completed its acquisition of the legal and beneficial ownership of the entire equity interest of SBI Macau Holdings Limited (“SBI Macau”) in Golden Sun and the entire amount of the shareholder’s loan owing by Golden Sun to SBI Macau (the “Golden Sun Interest”), pursuant to the exercise of option by SBI Macau (the “Golden Sun Acquisition”). The purchase price of the Golden Sun Interest was HK$130,000,000, of which HK$65,000,000 was settled by cash and HK$65,000,000 was settled by way of allotment and issue of 311,004,784 new ordinary shares of the Company at an issue price of HK$0.209 per share. Subsequent to the completion of the Golden Sun Acquisition, Golden Sun and World Fortune became indirect wholly-owned subsidiaries of the Company. The loss, before expenses, on derecognition of a long-term payable of approximately HK$71.8 million was recognised for the Year. MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   REVIEW OF OPERATIONS Travel Business The Group runs one of the largest travel agencies in North America with offices located in Canada and the United States of America. The business mainly focuses on the inbound and outbound travel packages and arrangements for high-end market segment, such as MICE (Meeting, Incentive, Convention and Exhibition) and FIT (Free Independent Traveller). The unfavourable global economy, especially the unstable economy in North America continued to have negative impact on the performance of the travel business of the Group. In 2013, turnover in this segment decreased by approximately 7% to approximately HK$1,430.2 million (2012: approximately HK$1,543.9 million). Loss in this segment posted approximately HK$16.1 million for the Year (2012: profit of approximately HK$1.1 million), including an impairment loss on certain assets of approximately HK$2.8 million in 2013 (2012: approximately HK$0.4 million). MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   CRUISE SHIP BUSINESS The cruise ship business remained as a steady revenue contributor for the Group. Turnover of the lottery business for the Year was approximately HK$70.6 million (2012: approximately HK$10.7 million), representing a growth of approximately 563% as compared with the previous year. As a result, loss recorded for the Year was reduced to approximately HK$13.4 million (2012: approximately HK$21.9 million). Thanks to the continuous growth of GDP and individual disposable income in China, favourable government regulations, as well as the evolving public acceptance of lottery games in China, the industry has been enjoying substantial growth. According to the Ministry of Finance of China, lottery sales reached approximately RMB309.3 billion in 2013, equivalent to a growth of 18.3% year-on-year, of which, sports lottery sales rose by 20.2% year-on-year to approximately RMB132.8 billion. In view of the enormity of the lottery market in China, the Group has increased its investment in the business in 2013. The paid-up share capital of the subsidiary of the JV Company has been enlarged to RMB50 million. This has supported the Group in strengthening its business network, expanding the customer base, hence capturing greater market share. By putting effort to exceed expectation from customers all over the world, Ponte 16 presented a series of all-rounded events to experience the French elegance in 2013. In April and September 2013, Ponte 16 enlisted a Michelin Star chef and its executive chef from France to present their exquisite, award-winning cuisine at the French restaurant, Prive. In May 2013, Ponte 16 organised a Burgundy-themed gourmet festival to introduce French specialties including escargots and Burgundy cheese platter; it also proudly presented the cultural programme “Musique Litteraire” which combined the best of Chinese and French culture and affection. In October 2013, Ponte 16 hosted an exclusive photo exhibition of Brigitte Bardot, the iconic star of France. This art exhibition featured photos of Brigitte that were never shown before to the public, and the behind-the-scenes of some of her most famous films. All these events were met with huge success in terms of bringing its guests and the Macau tourism with the world-class lifestyle and horizons. This successfully helped differentiate Ponte 16 from peers with its global vision and connections, as well as expand its customer base. In November 2013, the world famous spa, So SPA with L’Occitane and well-being amenities arrived at Ponte 16. Rejuvenating with the French cosmetology in front of the China across Macau Harbour, the spa has become a must-go place after a long day of excitements in the never-resting Macau for its valuable guests. Featuring a superb location, world-class facilities and attentive services, Sofitel Macau At Ponte 16 received a number of reputable awards from the tourists in 2013, which included “China Hotel Award 2013” by China LifeStyle magazine, “2013 Certificate of Excellence” by “Daodao.com” (the official Chinese website of TripAdvisor), “2013 Travel Award – China Top 100 Hotels” by Travel & Leisure China magazine, “2013 Continental Diamond Award – Best Cultural Theme Hotel” by World Hotel China and “2013 U Travel Award – U Favorite Travel Hotel & Resort Brand” by HK U Magazine. The fine dining restaurant, Prive was awarded “Best Restaurants (Hong Kong and Macau Edition)” by Hong Kong Tatler magazine and “100 TOP Tables 2013” by South China Morning Post. The Executive Chef of Prive was awarded “Maitres Cuisiniers de France 2013” by Association des Maitres Cuisiniers de France. These accolades approved Ponte 16’s commitment of being one of the finest five-star resorts in Macau in all aspects. Ponte 16 has not only made its effort in delivering good business performance, but also been searching for innovative ways to fulfill its corporate social responsibility. In 2013, the resort replaced its traditional festive mooncake boxes with environmentally friendly boxes that were made of paper certified by FSC (Forest Stewardship Council) during the Mid-Autumn Festival to help shape a more sustainable world. MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   FINANCIAL REVIEW Liquidity, Financial Resources and Gearing As at 31 December 2013, the Group had net current assets of approximately HK$79.0 million (31 December 2012: net current liabilities of approximately HK$175.1 million) and net assets of approximately HK$1,009.6 million (31 December 2012: approximately HK$766.0 million). The Group adopts a conservative approach towards its treasury policies. The Group strives to reduce exposure to credit risk by monitoring the trade receivables of its customers on an ongoing basis. To manage liquidity risk, the Board closely monitors the Group’s liquidity position to ensure that the liquidity structure of the Group’s assets, liabilities and commitments can meet its funding requirements. Presently, there is no hedging policy with respect to the foreign exchange exposure. The Group’s transactional currency are Hong Kong dollars, Renminbi, Canadian dollars and United States dollars as substantially all the turnover are in Hong Kong dollars, Renminbi, Canadian dollars and United States dollars. The Group’s and the Company’s transactional foreign exchange exposure was insignificant. On 1 December 2008, Mr. Yeung Hoi Sing, Sonny (“Mr. Yeung”, being a Director and a controlling shareholder of the Company) 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 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 31 October 2014 to 31 October 2016 by a letter agreement dated 21 March 2014. As at 31 December 2013, the Company had owed to Mr. Yeung in the amount of approximately HK$50.0 million (31 December 2012: nil). In 2013, Jade Travel Ltd. (“Jade Travel, Canada”, being a then 80% indirectly owned subsidiary of the Company which was incorporated in Canada) was granted secured bank loans which carry fixed interest rates and the loans shall be repayable by consecutive monthly instalments. The proceeds of the loans were to finance the acquisition of the properties of Jade Travel, Canada and their renovation costs. In addition, during the Year, Jade Travel, Canada purchased a certain asset under a finance lease which shall be repayable by consecutive monthly instalments. As at 31 December 2013, the outstanding bank loans and finance lease liabilities were approximately CAD1.6 million and CAD18,000 (equivalent to approximately HK$11.8 million and HK$0.1 million) respectively (31 December 2012: approximately CAD1.7 million and nil (equivalent to approximately HK$13.3 million and nil) respectively). MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   Apart from the aforesaid loans, as at 31 December 2013, there were loans from non-controlling shareholders of approximately CAD1.4 million and HK$7.3 million, totally equivalent to approximately HK$17.8 million (31 December 2012: approximately CAD1.4 million and HK$7.3 million, totally equivalent to approximately HK$17.9 million). During the Year, the Company had fully repaid the outstanding other loans payables of approximately HK$187.3 million (31 December 2012: the outstanding other loans payables were approximately HK$187.3 million). The loans were interest-free and unsecured. As at 31 December 2013, total equity attributable to owners of the Company was enlarged to approximately HK$984.7 million (31 December 2012: approximately HK$741.6 million), which was mainly due to the completion of the World Fortune Acquisition and the Golden Sun Acquisition. 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 6% as at 31 December 2013 (31 December 2012: approximately 2%). Pledge of Assets As at 31 December 2013, the Group had secured the following assets: (a) the Group pledged the time deposits of approximately CAD1.2 million and HK$0.7 million, totally equivalent to approximately HK$9.7 million (31 December 2012: approximately CAD1.2 million and HK$0.7 million, totally equivalent to approximately HK$10.4 million) to certain banks for the issuance of several bank guarantees and a standby letter of credit facility of approximately CAD1.5 million, HK$0.2 million and MOP0.5 million, totally equivalent to approximately HK$11.6 million (31 December 2012: approximately CAD1.5 million, HK$0.2 million and MOP0.5 million, totally equivalent to approximately HK$12.5 million) for the operations of the Group; (b) World Fortune pledged all (31 December 2012: all) of its shares in Pier 16 – Property Development Limited (“Pier 16 – Property Development”, an associate of the Group) to a bank, for and on behalf of the syndicate of lenders, in respect of the syndicated loan facilities of HK$1,900 million and RMB400 million granted to Pier 16 – Property Development (the “Syndicated Loan Facilities”); (c) the Group’s self-occupied properties with carrying amount of approximately CAD2.4 million (equivalent to approximately HK$17.4 million) (31 December 2012: approximately CAD2.6 million (equivalent to approximately HK$20.7 million)), together with a time deposit approximately CAD0.2 million (equivalent to approximately HK$1.1 million) (31 December 2012: nil) were pledged to a bank to secure bank loans to Jade Travel, Canada; and (d) the Group’s certain asset with a carrying amount of approximately CAD18,000 (equivalent to approximately HK$0.1 million) (31 December 2012: nil) was pledged to secure a finance lease to Jade Travel, Canada. MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   Contingent Liabilities The Company gave a corporate guarantee (the “Guarantee”) to a bank in respect of the Syndicated Loan Facilities in 2012. The maximum guarantee amount borne by the Company under the Guarantee was HK$1,176 million. The outstanding loan under the Syndicated Loan Facilities as at 31 December 2013 was approximately HK$1,048.8 million (31 December 2012: approximately HK$1,273.3 million). Human Resources As at 31 December 2013, the Group had a total of 494 employees. Remuneration is determined on the basis of qualifications, experience, responsibilities and performance. In addition to the basic remuneration, staff benefits include medical insurance and retirement benefits. Share options may also be granted to eligible employees of the Group as a long-term incentive. PROSPECTS The economy of China has seen robust growth over the last decade, translated into the increase in disposable income and a rapidly growing middle class. This emerging population with great spending power is in search of quality and indulgence in life, which will offer flourishing opportunities to the gaming, entertainment and tourist-related industries. With its well-established business portfolio and sound business strategy, the Group is ready to capitalise this growing market. In January 2014, 致勝盈彩網絡科技有限公司 (Success Lottery Services Limited) (“Success Lottery”, an indirect non-wholly owned subsidiary of the Company), previously known as 上海德彩譽富網絡科技有限公司 (Shanghai Success Lottery Services Limited), entered into cooperation agreement with北京中投視訊文化傳媒有限公司 (Beijing Zhongtoushixun Culture Media Co., Ltd) a(“CNLive”) and 北京天潤瑞怡文化發展有限公司 (Beijing Rejoy Culture Development Co., Ltd) (“Rejoy Culture”) to promote the lottery agency sales of Success Lottery by utilising the mobile internet platform as well as the customer bases of CNLive and Rejoy Culture. CNLive is an operating arm of the China Internet Information Centre of the State Council Information Office of the People’s Republic of China, and it operates a mobile television and internet media platform in China. Rejoy Culture manages sports and culture projects and is authorised by CNLive to operate the internet and mobile internet lottery platform of CNLive. The Group believes that this collaboration will strengthen its distribution capability by leveraging on the enormous customer base and the technology expertise of CNLive and Rejoy Culture in the mobile internet industry. On top of the existing sports lottery sales agency services network in Jiangxi, Qinghai and Heilongjiang provinces, the Group has been seeking opportunities to expand to other provinces in China and tap into the welfare lottery business. In March 2014, the Group cooperated with Shanghai Welfare Lottery Issuance Centre (“Shanghai Welfare Lottery Centre”) to jointly launch the telephone sales of welfare lottery in Shanghai. The Group has become an official business partner of Shanghai Welfare Lottery Centre and has been authorised to provide the telephone agency sales services of welfare lottery through the Group’s technology service platform. As compared with the sports lottery, the welfare lottery is an even bigger market that accounts for approximately 57% of the overall lottery sales of 2013 in China. With the comprehensive sports and welfare lottery sales agency services as well as its specialised online lottery platform 128cai.com, the Group believes that the lottery business is going to be another driving force for the Group in the near future. MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)   Other than developing the sales network, the Group plans to upgrade its online lottery platform 128cai.com by introducing multimedia programmes. The first foray is to launch a broadcasting channel to provide football commentary as soon as practical to get prepared for the upcoming FIFA World Cup in June 2014. Live programmes will also be introduced in the near future to provide interactive services to customers. As the only integrated casino-entertainment resort located in the Inner Harbour of Macau, Ponte 16 infuses with top notch entertainment, upscale culinary experience and the rich culture of Macau, and offers unforgettable travelling experience to families. Adding to the versatile amenities and activities provided, Ponte 16 will be launching a karaoke in 2014, featuring MJ elements to attract the younger generation. Together with the new Chinese restaurant, Le Chinois Cantonese Restaurant that opened in January 2014, Ponte 16 has further strengthened its position as an integrated cultural, leisure and entertainment destination for the affluent middle-class Chinese. As part of its marketing strategy in 2014, Ponte 16 prepares to launch an online travel magazine guiding travellers to discover the inner beauty of Macau. By showcasing the unique culture, heritage and local attractions that Macau has to offer, the online travel magazine will distribute through various online channels including social networking platforms, which in turn will enhance the brand awareness of Ponte 16. Occupying gross floor area of approximately 40,000 square meters, the phase 3 of the Ponte 16 development project will consist of a shopping arcade, an entertainment and recreation complex as well as space for gaming expansion. Currently, the construction plan is under reviewing process by the Macau Government. Upon its completion, it will open another revenue source for Ponte 16. The Group will continue to seek sustainable growth in the travel and cruise ship businesses. Leverage on its business portfolio that encompasses the value chain, the Group will seize every cross-selling opportunity with Ponte 16. The Group will initiate collaborations and business programmes targeting the high-margin MICE (Meeting, Incentive, Convention and Exhibition) and FIT (Free Independent Traveller) markets. In March 2014, the Group increased its interest in its travel business arm from 80% to approximately 85.1%. With its endeavour, the Group is confident that the travel and cruise ship businesses will remain stable and make contribution to the Group’s revenue. Aiming to be a leading player in the gaming, entertainment and tourist-related industries, the Group will strive to maximise the synergies among its existing businesses and further strengthen its business platform. Venturing through the value chain, the Group is committed to actively exploring business opportunities to generate greater returns for its shareholders, partners and customers. CORPORATE GOVERNANCE REPORT   Success Universe Group Limited (the “Company”) is committed to maintain high corporate governance standard and procedures to ensure the integrity, transparency and quality of disclosure in order to enhance the shareholders’ value. CORPORATE GOVERNANCE In the opinion of the directors of the Company (“Director(s)”), the Company has complied with all the code provisions as set out in the Corporate Governance Code (the “CG Code”) contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) during the year ended 31 December 2013. DIRECTORS’ SECURITIES TRANSACTIONS The Company has adopted a code of conduct regarding securities transactions by Directors (the “Code of Conduct”) on terms 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, 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 (“Shareholders”). The Board currently consists of six members, including two executive Directors, namely Mr. Yeung Hoi Sing, Sonny (Chairman) and Dr. Ma Ho Man, Hoffman (Deputy Chairman); a non-executive Director, namely Mr. Choi Kin Pui, 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” or each of them “INED”). With a majority of NED and INEDs, the Board has a strong independent element. All Directors, including the NED and all INEDs, have brought a wide spectrum of valuable business experience, knowledge and professionalism to the Board for its efficient and effective functioning. The Board is also characterised by diversity, whether considered in terms of gender, age, educational background, professional experience, skills and knowledge and independence. A list of Directors identifying their role and function is available on the Company’s website and on the website of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Directors’ biographical information is set out in the biographical details of Directors and senior management on pages 46 and 47 of this annual report. The roles of the Chairman and the Deputy Chairman of the Board (the “Deputy Chairman”) who performs the function of chief executive are segregated and assumed by separate individuals to strike a balance of power and authority so that power 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 Deputy Chairman, Dr. Ma Ho Man, Hoffman, is responsible for implementing the Company’s strategies regarding the business 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. CORPORATE GOVERNANCE REPORT (CONTINUED)   Except that Dr. Ma Ho Man, Hoffman is the nephew of Mr. Yeung Hoi Sing, Sonny, to the best knowledge of the Directors, there is no financial, business, family and/or other material/relevant relationship among members of the Board and between the Chairman and the Deputy Chairman who performs the function of chief executive. The Board includes three INEDs and one of them, Mr. Chin Wing Lok, Ambrose, 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 as well as a certified tax adviser and a fellow member of The Taxation Institute of Hong Kong. He has over 27 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. All executive Directors also entered into service contracts with the Company without specific term of office. Pursuant to the bye-laws of the Company (the “Bye-laws”), 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, at each annual general meeting of the Company, one-third of the Directors shall retire from office by 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 (the “Company Secretary”) assists the Chairman in preparing the agendas for the meetings and all Directors are consulted to include any matters in the agendas. Agenda and accompanying board papers 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 six 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) 9/10 Dr. Ma Ho Man, Hoffman (Deputy Chairman) 10/10 Non-executive Director Mr. Choi Kin Pui, Russelle 10/10 Independent non-executive Directors Mr. Luk Ka Yee, Patrick 10/10 Ms. Yeung Mo Sheung, Ann 10/10 Mr. Chin Wing Lok, Ambrose 10/10 CORPORATE GOVERNANCE REPORT (CONTINUED)   During the year under review, an annual general meeting and a special general meeting were held. Details of the Directors’ attendance at the said general meetings are set out below: Number of general meetings attended/held Annual general Special general Directors meeting meeting Executive Directors Mr. Yeung Hoi Sing, Sonny (Chairman) 1/1 1/1 Dr. Ma Ho Man, Hoffman (Deputy Chairman) 1/1 1/1 Non-executive Director Mr. Choi Kin Pui, Russelle 1/1 1/1 Independent non-executive Directors Mr. Luk Ka Yee, Patrick 1/1 1/1 Ms. Yeung Mo Sheung, Ann 1/1 1/1 Mr. Chin Wing Lok, Ambrose 1/1 1/1 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 in performing their duties. Adequate information, which is accurate, clear, complete and reliable, 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 performing their duties. During the year, the Board has reviewed and considered that the contribution required from each of the Directors to perform his/her responsibilities to the Company was appropriate and each of the Directors has given sufficient time to perform his/her responsibilities. The Directors have informed the Company in a timely manner of any change in the number and nature of offices held in public companies or organisations and other significant commitments. Each of the Directors discloses semi-annually to the Company the identity and nature of office he/she holds in the public companies or organisations as well as an indication of the time involved. To assist the Directors to participate in continuous professional development, the Company arranges and funds suitable training to the Directors to update and enhance their knowledge and skills for performing the Directors’ roles and responsibilities. During the year, all Directors, namely Mr. Yeung Hoi Sing, Sonny, Dr. Ma Ho Man, Hoffman, Mr. Choi Kin Pui, Russelle, Mr. Luk Ka Yee, Patrick, Ms. Yeung Mo Sheung, Ann and Mr. Chin Wing Lok, Ambrose, received and studied reading materials regarding applicable rules and regulations updates provided by the Company from time to time and attended an in-house seminar on “Environmental, Social and Governance Reporting” organised by the Company and conducted by a professional firm. The Directors are also encouraged to attend training relevant to their duties and responsibilities that they consider appropriate. All Directors are requested to provide their respective records of training to the Company. CORPORATE GOVERNANCE REPORT (CONTINUED)   DELEGATION BY THE BOARD The Board has established four Board committees, namely the audit committee (the “Audit Committee”), the remuneration committee (the “Remuneration Committee”), the nomination committee (the “Nomination 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, annual and interim results, changes of members of the Board 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. The day-to-day running of the Group, including implementation of the strategies and plans adopted by the Board and its committees, is delegated to management with divisional heads responsible for different aspects of the business/affairs. AUDIT COMMITTEE The Company formulated written terms of reference for the Audit Committee in accordance with the requirements of the Listing Rules, full text of which is available on the Company’s website and the website of the Stock Exchange. The Audit Committee currently consists of the NED and all INEDs and is chaired by Mr. Chin Wing Lok, Ambrose who possesses appropriate professional accounting qualification as required under the Listing Rules. The Board has delegated to the Audit Committee the responsibility to perform the corporate governance duties set out in the CG Code during the year. The primary duties of the Audit Committee include, inter alia, monitoring integrity of the financial statements of the Company and ensuring objectivity and credibility of financial reporting, reviewing effectiveness of the internal control system of the Group (“Internal Control System”), overseeing the relationship with the external auditors of the Company (“External Auditors”) as well as ensuring maintenance of good corporate governance standard and procedures by the Company. During the year under review, four Audit Committee meetings were held and 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. Chin Wing Lok, Ambrose (Chairman of the Audit Committee) 4/4 Mr. Choi Kin Pui, Russelle 4/4 Mr. Luk Ka Yee, Patrick 4/4 Ms. Yeung Mo Sheung, Ann 4/4 CORPORATE GOVERNANCE REPORT (CONTINUED)   The major work performed by the Audit Committee during the year included the following: – Reviewed the draft annual report and accounts as well as the draft annual results announcement for the year ended 31 December 2012, and the draft interim report and accounts as well as the draft interim results announcement for the six months ended 30 June 2013; – Discussed with the External Auditors the nature and scope of the audit and reporting obligations; – Considered the re-appointment of the External Auditors; – Considered the adoption of policy applicable to the Directors and the employees of the Group (“Employees”); – Considered the financial performance of the Group as well as its associates; – Considered the engagement of an independent professional firm to review the Internal Control System; – Reviewed the effectiveness of the Internal Control System, including the adequacy of resources, qualifications and experience of staff (the “Accounting Staff”) of the Company’s accounting and financial reporting function (the “Accounting Function”) and their training programmes and budget; – Reviewed and/or approved the terms of engagement of and the fee proposals provided by the External Auditors; – Reviewed the arrangements for the Employees to raise concerns about possible improprieties in financial reporting, internal control or other matters; – Reviewed the Company’s compliance with the CG Code and disclosure in the Corporate Governance Report contained in the annual report; – Reviewed the Company’s policies and practices on corporate governance; – Reviewed the training and continuous professional development of all Directors and senior management of the Company (“Senior Management”); – Reviewed the Company’s policies and practices on compliance with legal and regulatory requirements; and – Reviewed the codes of conduct, policy, guidelines and compliance manuals applicable to the Directors and the Employees. 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 and the website of the Stock Exchange. The Remuneration Committee currently consists of the Chairman of the Board, the NED and all INEDs with Mr. Luk Ka Yee, Patrick acts as the chairman of the Remuneration Committee. The major responsibilities of the Remuneration Committee to make recommendations to the Board on the Company’s policy and structure for remuneration of all Directors an ared the 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 of the NED and all INEDs. The Remuneration Committee takes into consideration on factors such as salaries paid by comparable companies, time commitment and responsibilities of the Directors and the Senior Management. CORPORATE GOVERNANCE REPORT (CONTINUED)   During the year under review, one Remuneration Committee meeting was held and details of attendance of the Remuneration Committee members at the said Remuneration Committee meeting are set out below: Number of Remuneration Committee meeting Remuneration Committee members attended/held Mr. Luk Ka Yee, Patrick (Chairman of the Remuneration Committee) 1/1 Mr. Yeung Hoi Sing, Sonny 1/1 Mr. Choi Kin Pui, Russelle 1/1 Ms. Yeung Mo Sheung, Ann 1/1 Mr. Chin Wing Lok, Ambrose 1/1 The major work performed by the Remuneration Committee during the year included the following: – Reviewed the Company’s remuneration policy and structure for all Directors and the Senior Management; – Assessed the performance of the executive Directors and reviewed and determined the remuneration packages of the executive Directors and the Senior Management; – Reviewed the terms of the service contracts of all executive Directors; and – Considered the annual performance bonus for the Senior Management. NOMINATION COMMITTEE The Company formulated written terms of reference for the Nomination Committee in accordance with the requirements of the Listing Rules, full text of which is available on the Company’s website and the website of the Stock Exchange. The Nomination Committee currently consists of the Chairman of the Board, the NED and all INEDs with Mr. Yeung Hoi Sing, Sonny acts as the chairman of the Nomination Committee. The major responsibilities of the Nomination Committee are to review the structure, size and composition (including the skills, knowledge, experience and diversity of perspectives) of the Board annually, to identify individuals suitably qualified to become Board members and select or make recommendations to the Board on selection for directorships, to assess the independence of INEDs, to make recommendations to the Board on the appointment or re-appointment of Directors and succession planning of Directors, and to review the Board Diversity Policy (as defined hereinafter) as appropriate. CORPORATE GOVERNANCE REPORT (CONTINUED)   In compliance with a new code provision in the CG Code regarding diversity of the board members, the Board adopted a policy concerning diversity of its members effective from 1 September 2013 (the “Board Diversity Policy”) which set out the approach to achieve diversity on the Board. The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance, and will select candidates for the Board basing on a range of diversity perspectives, including but not limited to gender, age, educational background, professional experience, skills, knowledge and independence (the “Measurable Objectives”). The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board. The Nomination Committee will review the Measurable Objectives set for implementing the Board Diversity Policy by considering the Company’s business model and specific needs from time to time and will recommend any revision thereof, if necessary, to the Board for consideration and approval. The Nomination Committee will review, as appropriate, the Board Diversity Policy to ensure its effectiveness. The Nomination Committee will also discuss any revisions that may be required, and recommend any such revisions to the Board for consideration and approval. During the year under review, two Nomination Committee meetings were held and details of attendance of the Nomination Committee members at the said Nomination Committee meetings are set out below: Number of Nomination Committee meetings Nomination Committee members attended/held Mr. Yeung Hoi Sing, Sonny (Chairman of the Nomination Committee) 2/2 Mr. Choi Kin Pui, Russelle 2/2 Mr. Luk Ka Yee, Patrick 2/2 Ms. Yeung Mo Sheung, Ann 2/2 Mr. Chin Wing Lok, Ambrose 2/2 The major work performed by the Nomination Committee during the year included the following: – Considered the re-election of the Directors at the annual general meeting of the Company; – Formulated the Board Diversity Policy and recommended to the Board for approval; – Reviewed the structure, size and composition of the Board; – Assessed the independence of all INEDs and reviewed the INED’s annual confirmations on their independence; and – Reviewed the policy for the nomination of Directors. CORPORATE GOVERNANCE REPORT (CONTINUED)   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 concerning the day-to-day management, business and operations affairs of the Company, and any matters to be delegated to it by the Board from time to time. During the year under review, eleven Executive Committee meetings were held and details of attendance of the Executive Committee members at the said Executive Committee meetings are set out below: Number of Executive Committee meetings Executive Committee members attended/held Mr. Yeung Hoi Sing, Sonny (Chairman of the Executive Committee) 11/11 Dr. Ma Ho Man, Hoffman 11/11 INTERNAL CONTROLS The Board is responsible for ensuring that the Group maintains sound and effective Internal Control System so as to safeguard the investment of the Shareholders and the assets of the Group. The Company has annually engaged an independent professional firm (the “Independent Professional Firm”) to review the Internal Control System which covers financial, operational and compliance controls as well as risk management functions. During the year, the Independent Professional Firm has conducted a review of the Internal Control System and the relevant review report has been considered by the Audit Committee for assessing the effectiveness of the Internal Control System. The Board, through the reviews made by the Independent Professional Firm and the Audit Committee, concluded that the Internal Control System was effective. The Audit Committee has also reviewed the adequacy of resources of the Accounting Function, the qualifications and experience of the Accounting Staff, and their training programmes 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’ AND AUDITORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS 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, HLB Hodgson Impey Cheng Limited (“HLB”), about their reporting responsibilities on the financial statements of the Group is set out under the section headed “Auditors’ responsibility” in the independent auditors’ report on page 48 of this annual report. The Directors confirm that, to the best of their knowledge, information and belief, having made all reasonable enquiries, they are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern. policies and auditors independence. Separate resolutions are proposed at general meetings on each substantially separate issues, including the election of individual Directors and the re-appointment of an INED who had served on the Board for more than 9 years. Notices of at least 20 clear business days and 10 clear business days are given to the Shareholders for all AGMs and special general meetings (“SGM(s)”) of the Company respectively. Detailed procedures for conducting a poll are clearly explained at the commencement of the general meetings. The Board adopted a Shareholders’ communication policy for the purposes of ensuring that the Shareholders are provided with ready, equal and timely access to information about the Company, enabling the Shareholders to exercise their rights in an informed manner and allowing the Shareholders to engage actively with the Company. Details regarding the necessary procedures for the Shareholders to propose a person for election as a Director are set out in the “Procedures for Shareholders to Propose a Person for Election as a Director”, which is available on the Company’s website. COMPANY SECRETARY Ms. Chiu Nam Ying, Agnes is the Company Secretary. Her biographical information is set out under the section headed “Company Secretary” in the biographical details of Directors and Senior Management on page 47 of this annual report. During the year under review, in compliance with Rule 3.29 of the Listing Rules, the Company Secretary has taken no less than 15 hours of relevant professional training. CORPORATE GOVERNANCE REPORT (CONTINUED)   SHAREHOLDERS’ RIGHTS Convening a SGM Pursuant to bye-law 58 of the Bye-laws, the Board may whenever it thinks fit call SGMs, and Shareholders holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company shall at all times have the right, by written requisition to the Board or the Company Secretary, to require a SGM to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two months after the deposit of such requisition. The requisition must state the purposes of the meeting, and must be signed by the requisitionists and deposited at the Company’s head office and principal place of business (the “Head Office”) at Suite 1601-2 & 8-10, 16/F., Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong for the attention of the Company Secretary and may consist of several documents in like form each signed by one or more requisitionists. The request will be verified with the Company’s Branch Share Registrar in Hong Kong and upon their confirmation that the request is proper and in order, the Company Secretary will ask the Board to include the resolution in the agenda for the SGM. If the Board do not within 21 days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, but any meeting so convened shall not be held after the expiration of three months from the said date. Putting forward proposals at Shareholders’ Meetings To put forward proposals at an AGM or a SGM, the Shareholders should submit a written notice of those proposals with the detail contact information to the Company Secretary at the Head Office at Suite 1601-2 & 8-10, 16/F., Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong. The request will be verified with the Company’s Branch Share Registrar in Hong Kong and upon their confirmation that the request is proper and in order, the Company Secretary will ask the Board to include the resolution in the agenda for the general meeting. Shareholders’ enquiries The Shareholders should direct their questions about their shareholdings to the Company’s Branch Share Registrar in Hong Kong. The Shareholders may at any time make a request for the Company’s information to the extent such information is publicly available. The Shareholders may also make enquiries to the Board in writing with their contact information and deposited at the Head Office at Suite 1601-2 & 8-10, 16/F., Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong for the attention of the Company Secretary. CONSTITUTIONAL DOCUMENTS During the year under review, there was no change in the Company’s memorandum of association and the Bye-laws. REPORT OF DIRECTORS   The directors (“Director(s)”) of Success Universe Group Limited (the “Company”) is pleased to present their annual report together with the audited consolidated financial statements of the Company and its subsidiaries (collectively the “Group”) for the year ended 31 December 2013. PRINCIPAL ACTIVITIES The Company is an investment holding company. Its subsidiaries are principally engaged in the leasing and management of the 55% owned cruise ship, travel-related and lottery businesses. Particulars of the Company’s subsidiaries as at 31 December 2013 are set out in note 19(a) to the consolidated financial statements. RESULTS AND APPROPRIATIONS The results of the Group for the year ended 31 December 2013 are set out in the consolidated statement of profit or loss on page 50 of this annual report. No interim dividend was paid during the year (2012: nil). The Directors do not recommend any payment of a final dividend for the year ended 31 December 2013 (2012: nil). SEGMENT INFORMATION An analysis of the Group’s performance for the year ended 31 December 2013 by business and geographical segments is 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 130. RESERVES Details of the movements in the reserves of the Group during the year are set out in the consolidated statement of changes in equity on page 55 of this annual report and other details of the reserves of the Group are set out in note 38 to the consolidated financial statements. CHARITABLE CONTRIBUTIONS No charitable and other donations were made by the Group during the year (2012: nil). 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. SHARE CAPITAL Details of the movement in the share capital of the Company during the year are set out in note 36 to the consolidated financial statements. REPORT OF DIRECTORS (CONTINUED)   LOANS AND BORROWINGS Details of the loans and borrowings of the Group as at 31 December 2013 are set out in notes 29 and 35 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 In accordance with bye-law 87 of the bye-laws of the Company (the “Bye-laws”), Dr. Ma Ho Man, Hoffman (“Dr. Ma”) and Mr. Choi Kin Pui, Russelle shall retire by rotation and, being eligible, will offer themselves for re-election at the forthcoming annual general meeting of the Company (the “2014 AGM”). The Company has received from each of the existing INEDs, namely Mr. Luk Ka Yee, Patrick, Ms. Yeung Mo Sheung, Ann (“Ms. Ann Yeung”) and Mr. Chin Wing Lok, Ambrose, an annual confirmation of his/her independence pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and all of the said INEDs were considered to be independent. CHANGES OF DIRECTORS’ INFORMATION Ms. Ann Yeung, an INED, was appointed as an independent non-executive director of Dejin Resources Group Company Limited, a company whose issued shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), with effect from 3 September 2013. 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 2013 of the Company and up to the date of this report. DIRECTORS’ SERVICE CONTRACTS None of the Directors proposed for re-election at the 2014 AGM has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation. REPORT OF DIRECTORS (CONTINUED)   CONNECTED TRANSACTIONS/DIRECTORS’ AND CONTROLLING SHAREHOLDERS’ INTERESTS IN CONTRACTS OF 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 quoted for Hong Kong dollars loans by The Hongkong and Shanghai Banking Corporation Limited. On 14 April 2009, the Company and Mr. Yeung also entered into a letter agreement to increase the principal amount of the Loan Facility up to HK$290 million. In addition, Mr. Yeung undertook 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 (i) 30 June 2011 by a letter agreement dated 25 June 2009; and (ii) 30 October 2012 by another letter agreement dated 23 June 2010. On 15 March 2012, Mr. Yeung entered into a letter agreement with the Company to further extend the Final Repayment Date to 31 October 2013 and to confirm that any amount repaid under the revised Loan Facility should be available to further advances within the availability period of the revised Loan Facility. Besides, the Final Repayment Date was further extended to 31 October 2014 by a letter agreement dated 18 March 2013. After the reporting period, the Company and Mr. Yeung entered into a letter agreement on 21 March 2014 to further extend the Final Repayment Date to 31 October 2016. (B) On 21 May 2013, Golden Sun Profits Limited, a then indirect non-wholly owned subsidiary of the Company, completed its acquisition of the legal and beneficial ownership of the entire equity interest of Maruhan Corporation (“Maruhan”, a substantial shareholder of World Fortune Limited (“World Fortune”, a then indirect non-wholly owned subsidiary of the Company) before completion of the Acquisition (as defined hereinafter)) in World Fortune together with the entire amount of the shareholder’s loans provided by Maruhan to World Fortune (collectively the “Interest”) pursuant to the exercise of option by Maruhan on 14 February 2013 (the “Acquisition”). The purchase price of the Interest of HK$219,117,318 was settled as to HK$109,558,659 by cash and as to HK$109,558,659 by way of allotment and issue of 550,546,025 new ordinary shares of the Company at an issue price of HK$0.199 per share. Immediately following the completion of the Acquisition, the Company increased its effective beneficial interest in World Fortune from approximately 85.71% to 95.45%. For details of the Acquisition, please refer to the Company’s announcements dated 18 February 2013 and 28 March 2013 as well as the Company’s circular dated 29 April 2013. The connected transaction mentioned in paragraph (A) above is exempt from reporting, announcement and independent shareholders’ approval requirements under Rule 14A.65(4) of the Listing Rules. Details of the connected transaction mentioned in paragraph (B) above are disclosed in compliance with the requirements of Chapter 14A of the Listing Rules. Details of other connected transactions of the Company during the year which are exempt from reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules are set out in notes 42(f), (g) and (h) to the consolidated financial statements. Save as disclosed in paragraph (A) above, there were no contracts of significance to which the Company or any of its subsidiaries was a party 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. DIRECTORS’ INTERESTS IN COMPETING BUSINESS On 14 March 2013, Dr. Ma, an executive Director and the Deputy Chairman of the Company, became a substantial shareholder of Well Way Group Limited (formerly known as Trasy Gold Ex Limited) (“Well Way”), whose issued shares are listed on the Growth Enterprise Market of the Stock Exchange. Dr. Ma disposed of all shares of Well Way held by him and the said disposal was completed on 17 September 2013. During the period from 14 March 2013 to 17 September 2013 (the “Period”), the principal businesses of Well Way and its subsidiaries (“Well Way Group”) were, among others, the provision and operation of travel business in Singapore. Well Way Group also participated and involved in the business of operating as tours and travel agents in Malaysia after completion of a discloseable transaction of Well Way on 31 August 2013. The said business of Well Way Group (the “Competing Business”) competed or was likely to compete with the Group’s travel business during the Period. REPORT OF DIRECTORS (CONTINUED)   As the Competing Business was operated at different locations and in different scale, and the board of directors of Well Way was independent of the board of directors of the Company (the “Board”), the Group had therefore been capable of carrying on its businesses independently of, and at arm’s length from, the Competing Business during the Period. Save as disclosed above, during the year ended 31 December 2013, none of the Directors and their respective associates was interested in any business, apart from the Group’s businesses, which competes or is likely to compete, either directly or indirectly, with the Group’s businesses, other than those businesses where the Directors were appointed as directors to represent the interests of the Group. 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 2013, the Directors or chief executive of the Company and/or any of their respective associates had the following interests and 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 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)”) Approximate Long position/ Number of percentage of Name of Director Short position Nature of interest Shares held shareholding % Mr. Yeung (Note) Long position Corporate interest 2,466,557,462 50.07 Note: Mr. Yeung, an executive Director and the Chairman of the Company, was deemed to have corporate interest in 2,466,557,462 Shares by virtue of the interest of the Shares held by Silver Rich Macau Development Limited, which is wholly-owned by a discretionary trust, the beneficiaries of which are family members of Mr. Yeung. Save as disclosed above, as at 31 December 2013, none of the Directors or chief executive of the Company, or their 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 Company pursuant to Section 352 of the SFO, or as otherwise, notified to the Company and the Stock Exchange pursuant to 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 37(b) to the consolidated financial statements. 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. REPORT OF DIRECTORS (CONTINUED)   SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SECURITIES As at 31 December 2013, the following persons (other than a Director or chief executive of the Company) had, or were deemed or taken to have, interests or short positions in the Shares and underlying Shares as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO: Interest in the Shares Approximate Name of substantial Long position/ Number of percentage of shareholder Short position Capacity Shares held shareholding % Silver Rich Macau Long position Beneficial owner 2,466,557,462 50.07 Development Limited Fiducia Suisse SA (Note 1) Long position Trustee 2,466,557,462 50.07 Mr. David Henry Christopher Long position Interest of controlled 2,466,557,462 50.07 Hill (Note 1) corporation Mrs. Rebecca Ann Hill Long position Interest of spouse 2,466,557,462 50.07 (Note 2) Ms. Liu Siu Lam, Marian Long position Interest of spouse 2,466,557,462 50.07 (Note 3) Maruhan Long position Beneficial owner 956,633,525 19.42 Notes: 1. The entire issued share capital of Silver Rich Macau Development Limited is held by Fiducia Suisse SA, which is a trustee of a discretionary 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 2,466,557,462 Shares held by Silver Rich Macau Development Limited. 2. Mrs. Rebecca Ann Hill, being the spouse of Mr. David Henry Christopher Hill, was deemed to be interested in 2,466,557,462 Shares 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 2,466,557,462 Shares in which Mr. Yeung had a deemed interest. Save as disclosed above, as at 31 December 2013, no other person (other than a Director or chief executive of the Company) 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. REPORT OF DIRECTORS (CONTINUED)   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 made by the Group by way of the shareholder’s loans provided by World Fortune, an indirect wholly-owned subsidiary 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 2013. Pier 16 – Property Development is principally engaged in the investment, development and, through its subsidiaries, operating Ponte 16, 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 2013 were set out below: Aggregate Shareholder’s Corporate Financial Name of associate loans guarantee Assistance HK$ million HK$ million HK$ million Pier 16 – Property Development 856 1,176 2,032 The shareholder’s loans provided by World Fortune are unsecured, interest-free and have 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 consolidated 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 2013: Group’s Consolidated attributable balance sheet interests HK$’000 HK$’000 Non-current assets 2,168,606 1,062,617 Current assets 721,447 353,509 Current liabilities (502,678) (246,312) Non-current liabilities (2,935,782) (1,438,533) CONVERTIBLE SECURITIES, OPTIONS, WARRANTS OR SIMILAR RIGHTS The Company had no outstanding convertible securities, options, warrants or other similar rights as at 31 December 2013. PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES During the year ended 31 December 2013, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the listed securities of the Company. REPORT OF DIRECTORS (CONTINUED)   MAJOR SUPPLIERS AND CUSTOMERS During the year, the five largest customers of the continuing operations of the Group accounted for approximately 15.0% of total turnover of the continuing operations of the Group of which the largest customer accounted for approximately 5.3% and the five largest suppliers of the continuing operations of the Group accounted for approximately 68.7% of total purchases of the continuing operations of the Group, of which the largest supplier accounted for approximately 59.7%. None of the Directors or any of their respective associates or any shareholders (which, to the best knowledge of the Directors, 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 at the date of this report, the Company has maintained a sufficient public float as prescribed under the Listing Rules, based on the information that is publicly available to the Company and within the knowledge of the Directors. EMOLUMENT POLICY The remuneration committee (the “Remuneration Committee”) of the Board is responsible for determining specific remuneration packages of all executive Directors and senior management of the Company (“Senior Management”). Besides, the Remuneration Committee makes recommendations to the Board for its determination on the remuneration of the NED and all INEDs. Factors which include, inter alia, 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 37(a) to the consolidated financial statements. CORPORATE GOVERNANCE The Company has published its Corporate Governance Report, details of which are set out on pages 28 to 37 of this annual report. REPORT OF DIRECTORS (CONTINUED)   EVENTS AFTER THE REPORTING PERIOD (A) In March 2014, 665127 British Columbia Ltd. (“665127 BC Ltd.”, an indirect non-wholly owned subsidiary of the Company) entered into a share repurchase agreement with one of its non-controlling shareholders to repurchase her entire equity interest in 665127 BC Ltd., namely 600 common shares without par value, at a cash consideration of an amount equivalent to approximately HK$42 from that non-controlling shareholder (the “Share Repurchase”). Besides, the said non-controlling shareholder assigned to 1338 Successful Venture Ltd., an indirect wholly-owned subsidiary of the Company and the immediate holding company of 665127 BC Ltd., an approximately 85.1% interest in all of her right, title and interest in and to a debt of an amount equivalent to approximately HK$2.2 million owed by a wholly-owned subsidiary of 665127 BC Ltd. at a consideration of an amount equivalent to approximately HK$7. Immediately after the Share Repurchase, the Company increased its effective beneficial interest in 665127 BC Ltd. from 80% to approximately 85.1%. (B) As mentioned in paragraph (A) under the section headed “Connected transactions/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 21 March 2014 to further extend the Final Repayment Date regarding the revised Loan Facility to 31 October 2016. AUDITORS At the annual general meeting of the Company held on 5 June 2012, HLB Hodgson Impey Cheng retired as auditors of the Company (the “Auditors”) and HLB Hodgson Impey Cheng Limited were appointed as the Auditors due to the reorganisation of the practice of HLB Hodgson Impey Cheng as HLB Hodgson Impey Cheng Limited in March 2012. The consolidated financial statements of the Group for the year ended 31 December 2013 have been audited by HLB Hodgson Impey Cheng Limited, who shall retire at the 2014 AGM and, being eligible, will offer themselves for re-appointment. On behalf of the Board Yeung Hoi Sing, Sonny Chairman Hong Kong, 28 March 2014 BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT   EXECUTIVE DIRECTORS Mr. Yeung Hoi Sing, Sonny, aged 59, 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 nomination committee (the “Nomination Committee”) and the executive committee (the “Executive Committee”) of the Company, and a member of the remuneration committee (the “Remuneration Committee”) of the Company. Mr. Yeung is responsible for the overall corporate planning and business development of the Group. He was a member of the Eighth to Eleventh National Committee of the Chinese People’s Political Consultative Conference and has over 30 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 under the Securities and Futures Ordinance as well as a participant of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), principally engaged in the provision of securities brokerage services. Mr. Yeung has certain private investments in property development businesses in Hong Kong, Macau and Canada. He is also a director of Silver Rich Macau Development 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 40, joined the Group in 2005. He is an executive director and the Deputy Chairman of the Company as well as a director of the subsidiaries of the Company. Dr. Ma is also a member of the Executive Committee. He is responsible for implementing the Company’s strategies regarding the business development of the Group 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 Success Securities since November 2008 and is responsible for overseeing its marketing affairs. Dr. Ma is currently an 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 is presently a member of the Chongqing Committee of the Chinese People’s Political Consultative Conference. Dr. Ma has over 17 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 59, 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”), the Remuneration Committee and the Nomination Committee. Mr. Choi graduated from St. Pius X High School in 1976. He has over 20 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-owned subsidiary of Elephant Talk Communications Inc. (“ETCI”). ETCI was an American corporation whose securities were quoted on the Over-The-Counter Bulletin Board in the US and engaged in the provision of telecommunications services in Hong Kong and the US. Mr. Choi was a director of ETCI from 2002 to 2008 as well as the president and the chief executive officer of ETCI from 2002 to 2006 and was responsible for the planning of the overall strategy of ETCI. He also served as the chairman of ET Network Services Limited, a Hong Kong company engaged in the provision of internet access and outsourcing services in the People’s Republic of China and Hong Kong. BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT (CONTINUED)   INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Luk Ka Yee, Patrick, aged 52, joined the Group in 2003. He is an independent non-executive director of the Company. He is also the chairman of the Remuneration Committee and a member of the Audit Committee and the Nomination 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 49, joined the Group in 2004. She is an independent non-executive director of the Company as well as a member of the Audit Committee, the Remuneration Committee and the Nomination Committee. Ms. Yeung holds a Bachelor degree of Retail Marketing with honours in the United Kingdom and a Diploma in Marketing from The Chartered Institute of Marketing. She pursued her further study on legal course and has been awarded a Diploma in Legal Practice in the United Kingdom in 1998. Ms. Yeung has over 15 years of experience in legal field and is presently a solicitor of Messrs. Wong & Wong, Lawyers, a legal firm in Hong Kong. She is currently an independent non-executive director of Hao Wen Holdings Limited and Merdeka Resources Holdings Limited, the issued shares of both companies are listed on the Growth Enterprise Market of the Stock Exchange, and an independent non-executive director of Dejin Resources Group Company Limited, a company whose issued shares are listed on the Main Board of the Stock Exchange. Mr. Chin Wing Lok, Ambrose, aged 49, joined the Group in 2012. He is an independent non-executive director of the Company. He is also the chairman of the Audit Committee and a member of the Remuneration Committee and the Nomination 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 Hong Kong. He has over 27 years of experience in auditing, accounting and taxation. Mr. Chin is presently the sole practitioner of CNT & Co., Certified Public Accountants. COMPANY SECRETARY Ms. Chiu Nam Ying, Agnes, aged 40, joined the Group in 2003. She is the company secretary of the Company and is responsible for overseeing all legal matters of the Group. Ms. Chiu is a qualified solicitor and an associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. She holds a Master degree of Laws from The University of Sheffield, United Kingdom. Before joining the Group, Ms. Chiu was a practicing 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 51, joined the Group in 2008. He is the financial controller of the Group as well as the qualified accountant of the Company, and is responsible for financial and accounting matters of the Group. Mr. Wong is a fellow 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, the chairman of both the audit committee and the remuneration committee as well as a member of the nomination committee of ITC Properties Group Limited, a company whose issued shares are listed on the Main Board of the Stock Exchange. He has over 26 years of experience in accounting and corporate finance gained in property development, construction and manufacturing companies. INDEPENDENT AUDITORS’ REPORT 31/F, Gloucester Tower 國衛會計師事務所有限公司 The Landmark11 Pedder StreetCentral Hodgson Impey Cheng Limited Hong Kong INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF SUCCESS UNIVERSE GROUP LIMITED (Incorporated in Bermuda with limited liability) We have audited the consolidated financial statements of Success Universe Group Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 50 to 129, which comprise the consolidated and the Company’s statement of financial position as at 31 December 2013, and the consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then 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 solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. 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. 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’ judgement, 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 consider internal control relevant to the entity’s preparation of the consolidated financial 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. INDEPENDENT AUDITORS’ REPORT (CONTINUED) OPINION In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2013 and of the Group’s profit 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. HLB Hodgson Impey Cheng Limited Certified Public Accountants Shek Lui Practicing Certificate Number: P05895 Hong Kong, 28 March 2014 Profit/(loss) for the year 12,245 (37,977) The accompanying notes form an integral part of these consolidated financial statements. The accompanying notes form an integral part of these consolidated financial statements. 139,092 295,201 CURRENT LIABILITIES Trade and other payables 26 33,265 26,762 Deferred income 27 875 945 Profit guarantee liabilities 28 5,308 9,100 Bank loans – due within one year 29 608 620 Loans payables – current portion 30 – 187,336 Long-term payables – current portion 31 – 225,464 Financial guarantee contract 32 19,995 19,995 Finance lease liabilities – current portion 33 24 – Tax payable 34(a) – 51 60,075 470,273 NET CURRENT ASSETS/(LIABILITIES) 79,017 (175,072) TOTAL ASSETS LESS CURRENT LIABILITIES 1,139,232 873,498 TOTAL EQUITY 1,009,549 765,995 Approved and authorised for issue by the board of directors on 28 March 2014. 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. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2013 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 2012 24,390 908,785 52,333 976 (423) (515,904) 470,157 31,899 502,056 Loss for the year – – – – – (33,034) (33,034) (4,943) (37,977) Other comprehensive income for the year – – – – 1,175 – 1,175 251 1,426 Total comprehensive income/(loss) for the year – – – – 1,175 (33,034) (31,859) (4,692) (36,551) Issue of rights shares 16,259 – – – – – 16,259 – 16,259 Issue of rights shares at premium – 292,676 – – – – 292,676 – 292,676 Expenses incurred in connection with the issue of rights shares – (7,621) – – – – (7,621) – (7,621) Dividend paid to non-controlling shareholder – – – – – – – (4,500) (4,500) Unclaimed dividends forfeited – – – – – 2,022 2,022 1,654 3,676 At 31 December 2012 40,649 1,193,840 52,333 976 752 (546,916) 741,634 24,361 765,995 At 1 January 2013 40,649 1,193,840 52,333 976 752 (546,916) 741,634 24,361 765,995 Profit/(loss) for the year – – – – – 18,644 18,644 (6,399) 12,245 Other comprehensive loss for the year – – – – (2,290) – (2,290) (140) (2,430) Total comprehensive (loss)/income for the year – – – – (2,290) 18,644 16,354 (6,539) 9,815 Issue of consideration shares 8,616 – – – – – 8,616 – 8,616 Issue of consideration shares at premium – 225,123 – – – – 225,123 – 225,123 Acquisition of additional interests in a subsidiary – – – – – (7,003) (7,003) 7,003 – At 31 December 2013 49,265 1,418,963 52,333 976 (1,538) (535,275) 984,724 24,825 1,009,549 The accompanying notes form an integral part of these consolidated financial statements. Decrease/(increase) in inventories 308 (527) Increase in trade and other receivables (1,603) (2,701) Increase/(decrease) in trade and other payables 7,424 (3,326) Decrease in deferred income (906) (889) Cash used in operations (47,165) (45,589) Income tax (paid)/refunded – Hong Kong profits tax refunded – 14 – Overseas tax (paid)/refunded (188) 1,541 NET CASH USED IN OPERATING ACTIVITIES (47,353) (44,034) NET CASH USED IN FINANCING ACTIVITIES (135,636) (124,629) Net (decrease)/increase in cash and cash equivalents (158,666) 167,323 Cash and cash equivalents at the beginning of the year 239,581 72,410 Effect of foreign exchange rate changes (492) (152) CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 80,423 239,581 Analysis of balances of cash and cash equivalents Cash and bank balances 25 80,423 239,581 The accompanying notes form an integral part of these consolidated financial statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2013 1. ORGANISATION AND PRINCIPAL ACTIVITIES The Company was incorporated as an exempted company with limited liability in Bermuda on 27 May 2004 under the Companies Act 1981 of Bermuda and its issued shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). Its controlling shareholder is Silver Rich Macau Development Limited (“Silver Rich”, a company incorporated in the British Virgin Islands with limited liability). The principal activity of the Company is investment holding. The principal activities of its subsidiaries are set out in note 19(a) 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, Hong Kong Accounting Standards (“HKAS(s)”) and interpretations issued by the Hong Kong Institute of Certified 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 standards, amendments and interpretation (“New HKFRSs”), which are first effective or available for early adoption for the current accounting period of the Group (as defined hereinafter) and the Company. Note 3 provides information on initial application of these 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 interest in associates and joint ventures 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. Basis of measurement The measurement basis used in the preparation of the consolidated financial statements is the historical 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. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2013 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of preparation of the consolidated financial statements (continued) Basis of measurement (continued) 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. (c) Subsidiaries and non-controlling interests Subsidiaries are entities controlled by the Group or the Company. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently 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 eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-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 Group has not agreed any additional terms with the holders of those interests which would result in the group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. Non-controlling interests are presented in the consolidated statements of financial position and changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statement of profit or loss and other 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. Where losses applicable to the non-controlling interests holders exceed its’ interest in the equity of 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’s interest is allocated all such profits until the non-controlling interests holders’ share of losses previously 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(k). In the Company’s statement of financial position, an investment in subsidiaries is stated at cost less impairment losses (see note 2(i)). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2013 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Associates and joint ventures 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. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exits only when decisions about the relevant activities require unanimous consent of the parties sharing control. An investment in an associate or a joint venture is accounted for in the consolidated financial 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 net assets of the associate or joint venture, unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated statement of profit or loss includes the Group’s share of the post-acquisition, post-tax results of the associate and joint venture for the year, including any impairment loss on goodwill relating to the investment in associate and joint venture 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 profit or loss and other comprehensive income. When the Group’s share of losses exceeds its interest in the associate or the joint venture, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For this purpose, 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 joint venture. Unrealised profits and losses resulting from transactions between the Group and its associate and joint venture are eliminated to the extent of the Group’s interest in the associate and joint venture, 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 associate and joint venture are stated at cost less impairment loss (see note 2(i)). (e) Goodwill Goodwill represents the excess of the cost of a business combination or an investment in an associate or a jointly 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 joint venture, the carrying amount of goodwill is included in the carrying amount of the interest in the associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (see note 2(i)). 60 :\JJLZZ