MACAU SUCCESS LIMITED - Interim Report 2006

CONTENTS Page Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Operational Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 3 Condensed Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 5 Condensed Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Condensed Consolidated Cash FlowStatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Notes to the Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Independent Review Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Management Discussion and Analysis – Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 – Interim Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 20 – Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20 – Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 21 – Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Disclosure of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Closure of Register of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 26 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 27 Purchase, Sale or Redemption of the Company’sListed Securities . . . . . . . . . . . . . . . . . . . . . . . . . 28 CORPORATE INFORMATION Directors Executive Directors Mr. Yeung Hoi Sing, Sonny (Chairman) Mr. Chan William (Deputy Chairman)# Mr. Lee Siu Cheung Non-executive Director Mr. Choi Kin Pui, Russelle*# Independent Non-executive Directors Mr. Luk Ka Yee, Patrick*# Mr. Yim Kai Pung*# Ms. Yeung Mo Sheung, Ann*# Company Secretary Ms. Chiu Nam Ying, Agnes Qualified Accountant Mr. Luk Sai Wai, Simon Authorised Representatives Mr. Lee Siu Cheung Ms. Chiu Nam Ying, Agnes Auditors Messrs. CCIF CPA Limited Legal Advisors on Hong Kong Law Messrs. Iu, Lai & Li, Solicitors Legal Advisors on Bermuda Law Messrs. Conyers Dill & Pearman Principal Bankers Asia Commercial Bank Limited Fubon Bank (Hong Kong) Limited Liu Chong Hing Bank Limited The Bank of East Asia, Limited The Hongkong & Shanghai Banking Corporation Limited Principal Share Registrar and Transfer Agent in Bermuda Butterfield Fund Services (Bermuda) Limited 65 Front Street Hamilton Bermuda Branch Share Registrar and Transfer Office in Hong Kong Tengis Limited 26th Floor Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong Registered Office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head Office and Principal Place of Business Units 1002-05A, 10th Floor West Tower, Shun Tak Centre 200 Connaught Road Central Hong Kong Share Listing The Stock Exchange of Hong Kong Limited Stock Code: 0487 Website www.macausuccess.com * Members of Audit Committee # Members of Remuneration Committee OPERATIONAL HIGHLIGHTS Unaudited results for the six months ended 31 March 2006 ‧ Net profits attributable to shareholders surged 160% to HK$13.8 million ‧ The Group’s turnover remained stable and reached approximately HK$50.9 million ‧ Turnover from the cruise business was approximately HK$47.7 million, segment profit was approximately HK$24.0 million ‧ Turnover from the travel business grew 18% to HK$3.3 million ‧ Loan interest income generated from King Seiner was approximately HK$5.0 million ‧ Our integrated casino resort – Ponte 16 was granted the approval to double its Gross Floor Area to 126,500 square metres ‧ The first phase of Ponte 16 is targeted to open in the second quarter of 2007 CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 31 March 2006 (Unaudited) For the six months ended 31 March 2006 2005 Notes HK$’000 HK$’000 TURNOVER 3 50,941 50,372 Cost of sales (3,292) (3,140) Gross profit 47,649 47,232 Other revenue 10,275 427 57,924 47,659 Administrative expenses (33,558) (32,017) PROFIT FROM OPERATIONS 4 24,366 15,642 Share of results of associates 17 (6) Finance costs 5 – (97) Profit before taxation 24,383 15,539 Taxation 6 – – PROFIT FOR THE PERIOD 24,383 15,539 ATTRIBUTABLE TO: Equity holders of the Company 13,757 5,321 Minority interests 10,626 10,218 24,383 15,539 INTERIM DIVIDEND 7 3,209 – EARNINGS PER SHARE – Basic 8 HK0.72 cents HK0.29 cents – Diluted N/A N/A CONDENSED CONSOLIDATED BALANCE SHEET As at 31 March 2006 Notes (Unaudited) 31 March 2006 HK$’000 (Audited) 30 September 2005 HK$’000 NON-CURRENT ASSETS Property, plant and equipment Goodwill Available-for-sale investment Interest in associates Loan receivable 9 10 11 12 13 95,118 1,313 25,239 339,256 51,616 512,542 90,247 1,313 25,239 339,042 51,562 507,403 CURRENT ASSETS Inventories Trade receivables Deposits, prepayment and other receivables Pledged bank deposits Cash and bank balances 14 897 1,844 9,875 717 198,180 211,513 1,181 1,624 11,213 708 189,965 204,691 CURRENT LIABILITIES Trade payables Other payables and accruals 15 410 3,122 3,532 156 4,996 5,152 NET CURRENT ASSETS 207,981 199,539 TOTAL ASSETS LESS CURRENT LIABILITIES 720,523 706,942 CONDENSED CONSOLIDATED BALANCE SHEET (Continued) As at 31 March 2006 (Unaudited) (Audited) 31 March 30 September 2006 2005 Notes HK$’000 HK$’000 NON-CURRENT LIABILITIES Loans from minority shareholders 16 15,406 26,208 NET ASSETS 705,117 680,734 CAPITAL AND RESERVES Issued capital 17 19,045 19,045 Reserves 644,211 630,454 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 663,256 649,499 Minority Interests 41,861 31,235 TOTAL EQUITY 705,117 680,734 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 31 March 2006 (Unaudited) Share capital HK$’000 Attributable to equity holders of the Company Capital Property Share Distributable redemption revaluation Retained premium reserve reserve reserve profits HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Total HK$’000 Minority interests HK$’000 Total equity HK$’000 At 1 October 2004 15,875 – 54,450 976 – 14,869 86,170 11,743 97,913 Placing of new shares 3,170 402,590 – – – – 405,760 – 405,760 Share issuance costs – (39,670 ) – – – – (39,670 ) – (39,670 ) Net profit for the period – – – – – 5,321 5,321 10,218 15,539 Redomicile costs – – (2,117 ) – – – (2,117 ) – (2,117 ) At 31 March 2005 19,045 362,920 52,333 976 – 20,190 455,464 21,961 477,425 At 1 October 2005 19,045 362,920 52,333 976 187,065 27,160 649,499 31,235 680,734 Net profit for the period – – – – – 13,757 13,757 10,626 24,383 At 31 March 2006 19,045 362,920 52,333 976 187,065 40,917 663,256 41,861 705,117 CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the six months ended 31 March 2006 (Unaudited) For the six months ended 31 March 2006 2005 HK$’000 HK$’000 Net cash generated from operating activities 18,078 11,115 Net cash generated from/(used in) investing activities 939 (3,257) Net cash (used in)/generated from financing activities (10,802) 361,366 Net increase in cash and cash equivalents 8,215 369,224 Cash and cash equivalents at beginning of the period 189,965 31,326 Cash and cash equivalents at end of the period 198,180 400,550 Analysis of balances of cash and cash equivalents Cash and bank balances 198,180 400,550 NOTES TO THE CONDENSED FINANCIAL STATEMENTS For the six months ended 31 March 2006 1. GROUP REORGANISATION AND BASIS OF PRESENTATION 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 is listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). Macau Success (Hong Kong) Limited (“MSHK”), the former holding company of the Group which was previously listed on the Stock Exchange, put forward a group reorganisation plan (the “Group Reorganisation”). Pursuant to the Group Reorganisation, a scheme of arrangement dated 27 August 2004 which was sanctioned by the Court of First Instance of the High Court, Hong Kong on 29 October 2004 became effective on 8 November 2004, the following events took place: i) simultaneously: – the entire issued share capital of MSHK was reduced by cancelling and extinguishing all the 1,587,464,233 shares in issue (the “Scheme Shares”); – MSHK applied part of the credit arising as a result of the capital reduction to pay up in full at par the 10,000,000 new shares allotted and issued, credited as fully paid, to the Company such that MSHK became a wholly-owned subsidiary of the Company and transferred the remaining credit to the distributable reserve account of MSHK; – the authorised share capital of MSHK was reduced to HK$100,000 divided into 10,000,000 shares held by the Company; ii) the share premium account of MSHK was reduced, cancelled and applied to set off against the accumulated losses of MSHK and the remaining credit thereof was transferred to the distributable reserve account; and iii) the shareholders of the 1,587,464,233 shares of MSHK received on the basis of one share of the Company for every one share of MSHK in consideration for the cancellation of their Scheme Shares. Upon the completion of the Group Reorganisation, the Company was became the holding company of MSHK and its subsidiaries. MSHK was then delisted from the Stock Exchange on 8 November 2004, and the Company was listed on the Stock Exchange on 9 November 2004 in its place by way of introduction. The Group Reorganisation involved companies under common control, and for accounting purpose, the Company and its acquired subsidiaries are regarded and accounted for as a continuing group. Accordingly, the condensed consolidated financial statements have been prepared using the merger basis of accounting as if the Company had always been the holding company of the Group. On this basis, the Company has been treated as the holding company of its subsidiaries for the financial periods presented or since their dates of incorporation if these are shorter periods, rather than from the subsequent date of acquisition of the subsidiaries. The comparative condensed consolidated results and cash flows of the Group for the six months ended 31 March 2005 include the results and cash flows of the Company and its subsidiaries with effect from 1 October 2004 or since their respective dates of incorporation, where these are shorter periods. In the opinion of the directors, the condensed consolidated financial statements prepared on this basis present more fairly the comparative results, cash flows and financial position of the Group as a whole. 2. ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on the Stock Exchange and with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants. The condensed consolidated financial statements have been prepared under the historical cost basis except for the revaluation of an associate’s property at fair value. The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 30 September 2005. 3. TURNOVER AND SEGMENT INFORMATION The Group’s turnover and results for the six months ended 31 March 2006 analysed by business segments and geographical segments are as follows: a) Business segments For the six months ended 31 March 2006 Cruise leasing and management Travel Consolidated HK$’000 HK$’000 HK$’000 Turnover 47,660 3,281 50,941 Other revenue 26 3561 47,686 3,316 51,002 Segment results 23,973 (203) 23,770 Unallocated corporate income 10,214 Unallocated corporate expenses (9,618) Profit from operations 24,366 Share of results of associates 17 Profit before taxation 24,383 3. TURNOVER AND SEGMENT INFORMATION (Continued) a) Business segments (Continued) For the six months ended 31 March 2005 Cruise leasing and management Travel Consolidated HK$’000 HK$’000 HK$’000 Turnover 47,591 2,781 50,372 Other revenue 6 18 24 47,597 2,799 50,396 Segment results 22,747 (395) 22,352 Unallocated corporate income 403 Unallocated corporate expenses (7,113 ) Profit from operations 15,642 Share of results of associates (6 ) Finance costs (97 ) Profit before taxation 15,539 b) Geographical segments For the six months ended 31 March Turnover Segment results 2006 2005 2006 2005 HK$’000 HK$’000 HK$’000 HK$’000 Hong Kong 3,281 2,781 (192) (380 ) South China Sea, other than in Hong Kong 47,660 47,591 23,973 22,747 Macau – – (11) (15 ) 50,941 50,372 23,770 22,352 4. PROFIT FROM OPERATIONS Profit from operations is arrived at after (crediting)/charging the following: For the six months ended 31 March 2006 2005 HK$’000 HK$’000 Crediting: Dividend from available-for-sale investment (1,133) – Interest income (8,177) (411) Charging: Auditors’ remuneration 97 63 Depreciation 3,435 3,222 Loss on disposal of property, plant and equipment 2 – Operating lease rentals – land and buildings 694 620 – plant and machinery 10 2 Staff costs including contribution of retirement scheme of HK$229,000 (2005: HK$195,000) 14,272 13,185 5. FINANCE COSTS For the six months ended 31 March 2006 2005 HK$’000 HK$’000 Interest expenses on: Other borrowings wholly repayable within five years – 97 6. TAXATION No Hong Kong profits tax and taxation arising in other jurisdiction, in which the subsidiaries operate, have been provided for the six months ended 31 March 2006 as the Group has no estimated assessable profits for the period (for the six months ended 31 March 2005: HK$Nil). 7. INTERIM DIVIDEND For the six months ended 31 March 2006 2005 HK$’000 HK$’000 Interim dividend of HK0.15 cents (2005: HK$Nil) per share 3,209 – The interim dividend for the six months ended 31 March 2006 was based on approximately of 2,139,464,000 shares in issued on 12 July 2006. The interim dividend has not been recognised as a liability as at the balance sheet date. 8. EARNINGS PER SHARE The calculation of the basic earnings per share is based on the profit attributable to equity holder of the Company for the six months ended 31 March 2006 of approximately HK$13,757,000 (for the six months ended 31 March 2005: HK$5,321,000) and on the weighted average number for the six months ended 31 March 2006 of 1,904,464,233 (for the six months ended 31 March 2005: 1,834,793,903) ordinary shares in issue during the period. There was no dilution effect on the basic earnings per share for the six months ended 31 March 2006 and 31 March 2005 respectively as there were no dilutive instruments outstanding during both periods. 9. PROPERTY, PLANT AND EQUIPMENT HK$’000 Net book value as at 1 October 2005 90,247 Additions 8,308 Disposal (2) Depreciation charge for the period (3,435) Net book value as at 31 March 2006 95,118 10. GOODWILL HK$’000 Net book value as at 1 October 2005 and 31 March 2006 1,313 11. AVAILABLE-FOR-SALE INVESTMENT 31 March 30 September 2006 2005 HK$’000 HK$’000 Unlisted shares, at cost 25,239 25,239 On 13 July 2005, Top Region Assets Limited, a wholly-owned subsidiary, entered into an agreement with two independent third parties for the acquisition of 8.13% interest in the issued share capital of Triumph Up Investments Limited, a company incorporated in the British Virgin Islands, at a consideration of HK$22,800,000. Including the acquisition expenses, the total investment cost was approximately HK$25,239,000. 12. INTEREST IN ASSOCIATES 31 March 30 September 2006 2005 HK$’000 HK$’000 Share of net assets 284,141 284,124 Goodwill on acquisition 4,581 4,581 Due from associates 50,534 50,337 339,256 339,042 The amounts due from associates are unsecured, interest free and have no fixed terms of repayment. 12. INTEREST IN ASSOCIATES (Continued) Particulars of the associates as at 31 March 2006 are as follows: Nominal Attributable Place of value of interest incorporation/ issued Principal Name of company to the group and operations share capital activities Direct Indirect %% Pier 16 – Property – 36.75 Macau MOP10,000,000 Investment, Development development Limited and operation of an integrated hotel resort project “Ponte 16” Pier 16 – Management – 36.75 Macau MOP25,000 Provision of Limited management services for development of an integrated hotel resort project “Ponte 16” The following is a summary of aggregate amounts of assets, liabilities, revenues and results of the Group’s associates: 31 March 30 September 2006 2005 HK$’000 HK$’000 Assets 992,486 926,420 Liabilities 219,282 153,238 Revenues 1,757 327 Profits 1 2 13. LOAN RECEIVABLE 31 March 30 September 2006 2005 HK$’000 HK$’000 Loan receivable 51,616 51,562 On 7 March 2005, Joyspirit Investments Limited, an indirect wholly-owned subsidiary of the Company, entered into a loan agreement with King Seiner Palace Promotor De Jogos, Limitada (“the Borrower”), which is owned by the related parties Mr. Yeung Hoi Sing, Sonny (“Mr. Yeung”), Mr. Chan Hon Keung (“Mr. Chan”) and an independent third party, for providing a facility of HK$50 million to the Borrower. The Borrower drew the loan on 5 August 2005. The loan is secured by the guarantee from Mr. Yeung and Mr. Chan and will be repayable in full on or before 5 August 2010. The interest payable on the loan was the higher of (i) 20% per annum; and (ii) the amount equivalent to 18% of the net profit of the Borrower before all interest payments on the loan for the latest financial year of the Borrower as shown in the audited financial statements of the Borrower. During the six months ended 31 March 2006, the loan interest of approximately HK$4,986,000 (for the six months ended 31 March 2005: HK$Nil) was received / receivable from the Borrower. 14. TRADE RECEIVABLES The Group normally allows a credit period of 30 days (2005: 30 days). An analysis of trade receivables is as follows: 31 March 30 September 2006 2005 HK$’000 HK$’000 Current to 30 days 1,805 1,584 31 to 60 days 28 11 61 to 90 days 8 13 Over 90 days 3 16 1,844 1,624 15. TRADE PAYABLES An aged analysis of trade payables is as follows: 31 March 30 September 2006 2005 HK$’000 HK$’000 Current to 30 days 379 137 31 to 60 days 17 5 61 to 90 days – – Over 90 days 14 14 410 156 16. LOANS FROM MINORITY SHAREHOLDERS The loans are unsecured, non-interest bearing and have no fixed repayment terms. In the opinion of the directors, the loans will not be repaid within the next twelve months. 17. SHARE CAPITAL 31 March 2006 30 September 2005 Number Nominal Number Nominal of shares value of shares value Notes ’000 HK$’000 ’000 HK$’000 Authorised: At beginning of the period 160,000,000 1,600,000 10,000 100 Increase on authorised shares (a) –– 159,990,000 1,599,900 At end of the period 160,000,000 1,600,000 160,000,000 1,600,000 Issued and fully paid: At beginning of the period 1,904,464 19,045 –– Shares issued to shareholders of MSHK as consideration for cancellation of shares of MSHK (b) –– 1,587,464 15,875 Shares placement (c) –– 317,000 3,170 At end of the period 1,904,464 19,045 1,904,464 19,045 The movements in the authorised and issued share capital of the Company were as follows: a) On 8 November 2004, the authorised share capital of the Company was increased from HK$100,000 to HK$1,600,000,000 by the creation of a further 159,990,000,000 shares of HK$0.01 each, ranking pari passu with the existing share capital of the Company. b) On 8 November 2004, as part of the Group Reorganisation, the Company issued an aggregate of 1,577,464,233 shares of HK$0.01 each, credited as fully-paid and transfer of 10,000,000 shares of HK$0.01 each, also credited as fully-paid by MSHK to the shareholders of MSHK in consideration for the cancellation of the shares of MSHK. c) On 10 November 2004, the Company entered into a top-up subscription agreement (the “Subscription Agreement”) with its major shareholder. Pursuant to the Subscription Agreement, the major shareholder agreed to subscribe 317,000,000 new shares of the Company of HK$0.01 each at HK$1.28 per share. On 23 November 2004, the Company issued and allotted 317,000,000 new shares for a total consideration of HK$405,760,000, before expenses, to the major shareholder. 18. DEFERRED TAXATION Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax benefit through utilisation against future taxable profits is probable. At 31 March 2006, the Group had tax losses of approximately HK$62 million (30 September 2005: HK$60 million) that are available to carry forward indefinitely for offsetting against future taxable profits. 19. CAPITAL COMMITMENTS a) Capital commitments Group 31 March 30 September 2006 2005 HK$’000 HK$’000 Contracted but not provided for – 1,021 b) Operating lease commitments At the balance sheet date, the Group had the following commitments for future lease payment under non-cancellable operating leases which fall due as follows: Group 31 March 30 September 2006 2005 HK$’000 HK$’000 Within one year 941 972 In the second to fifth years, inclusive 437 58 1,378 1,030 20. RELATED PARTY TRANSACTIONS Apart from those disclosed elsewhere in the condensed financial statements, the Group also had the following transactions with the related parties during the period: For the six months ended 31 March 2006 2005 Notes HK$’000 HK$’000 Travel service income received and receivable from – Associates (i)(ii) 45 5 – Key management personnel (ii) 328 27 – Close family members of key management personnel (ii) 164 155 537 187 Management service income received and receivable from – Associates (i)(iii) 741 – 20. RELATED PARTY TRANSACTIONS (Continued) 31 March 30 September 2006 2005 HK$’000 HK$’000 Trade receivables from travel service as at the balance sheet date – Associates 2 102 – Key management personnel 35 10 – Close family members of key management personnel – 10 37 122 Trade receivable from management service income as at the balance sheet date – Associates 296 – i) The Company directors, Mr. Yeung Hoi Sing, Sonny and Mr. Lee Siu Cheung, are the directors of the associates. ii) The travel agent service fee was charged according to prices and conditions similar to those offered to other customers. iii) The management service income was charged according to the terms stated in the management service agreement. 21. PLEDGED OF ASSETS As at 31 March 2006, the Group pledged the time deposits of approximately HK$0.7 million (30 September 2005: HK$0.7 million) to certain banks for issuance of several bank guarantees of approximately HK$0.7 million (30 September 2005: HK$0.7 million) for the operation of the Group. 22. POST BALANCE SHEET EVENT (a) On 12 April 2006, Silver Rich Macau Development Limited (“Silver Rich”), a substantial shareholder of the Company, entered into a placing agreement (the “Placing Agreement”) and a top-up subscription agreement (the “Subscription Agreement”) with Grand Vinco Capital Limited (“Placing Agent”) and the Company respectively. Pursuant to the Placing Agreement, the Placing Agent agreed to place up to 235,000,000 shares (the “Placing Shares”) of the Company at a price of HK$1.09 for and on behalf of Silver Rich. Pursuant to the Subscription Agreement, Silver Rich conditionally agreed to subscribe for such number of new shares as equal to the number of Placing Shares successfully placed by the Placing Agent. The above transaction was detailed in the Company’s announcement dated 12 April 2006. On 25 April 2006, the Company issued and allotted 235,000,000 new shares for the net proceeds of approximately HK$252 million, after deducting expenses. (b) On 13 June 2006, Top Region Assets Limited, a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with China Star Entertainment Limited, an independent third party, for the disposal of 8.13% interest in the share capital of Triumph Up Investments Limited (Note 11) for a consideration of HK$36,112,763 before expenses. INDEPENDENT REVIEW REPORT TO THE BOARD OF DIRECTORS OF MACAU SUCCESS LIMITED (INCORPORATED IN BERMUDA WITH LIMITED LIABILITY) INTRODUCTION We have been instructed by the Company to review the interim financial report set out on pages 4 to 18. DIRECTORS’ RESPONSIBILITIES The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of an interim financial report to be in compliance with the Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and the relevant provisions thereof. The interim financial report is the responsibility of, and has been approved by, the directors of the Company. It is our responsibility to form an independent conclusion, based on our review, on the interim financial report and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. REVIEW WORK PERFORMED We conducted our review in accordance with the Statement of Auditing Standards 700 “Engagements to Review Interim Financial Reports” issued by the HKICPA. A review consists principally of making enquiries of group management and applying analytical procedures to the interim financial report and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as test of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly we do not express any audit opinion on the interim financial report. REVIEW CONCLUSION On the basis of our review which does not constitute an audit, we are not aware of any material modifications that should be made to the interim financial report for the six months ended 31 March 2006. CCIF CPA Limited Certified Public Accountants Hong Kong, 22 June 2006 Delores Teh Practising Certificate Number P03207 “Placing Agreement”) and a Ponte 16. Approximate Nature of Number of percentage of interest shares shareholding Corporate interest 775,488,802 40.72% Corporate interest 332,352,630 17.45% Approximate Nature of Number of percentage of interest Shares held shareholding Corporate interest 775,488,802 40.72% Corporate interest 332,352,630 17.45% Corporate interest 332,352,630 17.45% Corporate interest 171,104,000 8.98% Corporate interest 171,104,000 8.98% Corporate interest 171,104,000 8.98% “Remuneration Committee”) which By Order of the Board Macau Success Limited Yeung Hoi Sing, Sonny Chairman