MACAU SUCCESS LIMITED - Interim Report 2008

MACAU SUCCESS LIMITED 澳門實德有限公司* (Incorporated in Bermuda with limited liability) Stock Code: 00487 Interim Report * For identi.cation purpose only Turning a New Page of Success CONTENTS Corporate Information 02 Operational Highlights 03 Condensed Consolidated Income Statement 04 Condensed Consolidated Balance Sheet 05 Condensed Consolidated Statement of Changes in Equity 06 Condensed Consolidated Cash Flow Statement 07 Notes to the Condensed Financial Statements 08 Report on Review of Interim Financial Report 25 Management Discussion and Analysis 27 Disclosure of Interests 34 Purchase, Sale or Redemption of the Company’s Listed Securities 37 Compliance with Code on Corporate Governance Practices 37 Compliance with Model Code for Securities Transactions by Directors 38 Audit Committee 38 Review of Interim Results 38 Interim Report 2008 Macau Success Limited CORPORATE INFORMATION Directors Executive Directors Mr. Yeung Hoi Sing, Sonny (Chairman) Mr. Ma Ho Man, Hoffman (Deputy Chairman) 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. Leung Sui Wah, Raymond Authorised Representatives Mr. Ma Ho Man, Hoffman Ms. Chiu Nam Ying, Agnes Audit Committee Mr. Yim Kai Pung (Chairman) Mr. Choi Kin Pui, Russelle Mr. Luk Ka Yee, Patrick Ms. Yeung Mo Sheung, Ann Remuneration Committee Mr. Yeung Hoi Sing, Sonny (Chairman) Mr. Choi Kin Pui, Russelle Mr. Luk Ka Yee, Patrick Mr. Yim Kai Pung Ms. Yeung Mo Sheung, Ann Executive Committee Mr. Yeung Hoi Sing, Sonny (Chairman) Mr. Ma Ho Man, Hoffman Auditors CCIF CPA Limited Legal Advisors on Hong Kong Law Iu, Lai & Li Legal Advisors on Bermuda Law Conyers Dill & Pearman Principal Bankers Chong Hing Bank Limited Dah Sing Bank, Limited Fubon Bank (Hong Kong) Limited Public Bank (Hong Kong) Limited The Bank of East Asia, Limited The Hongkong and Shanghai Banking Corporation Limited Principal Share Registrar and Transfer Agent in Bermuda Butter.eld Fund Services (Bermuda) Limited Rosebank Centre 11 Bermudiana Road Pembroke, HM 08 Bermuda Branch Share Registrar and Transfer Office in Hong Kong Tricor Tengis Limited 26th Floor Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong Registered Office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head Office and Principal Place of Business Suite 1601-2 & 8-10, 16/F. Great Eagle Centre 23 Harbour Road Wanchai Hong Kong Share Listing The Stock Exchange of Hong Kong Limited Stock Code: 00487 Website www.macausuccess.com OPERATIONAL HIGHLIGHTS Unaudited interim results for the six months ended 31 March 2008 ‧ The total turnover decreased slightly to approximately HK$50.2 million ‧ Turnover from the cruise business remained stable, with a segment pro.t of approximately HK$13.5 million ‧ Turnover from the travel business decreased to approximately HK$2.2 million, with a segment loss of approximately HK$0.3 million ‧ Net pro.t attributable to equity shareholders increased to HK$51.2 million ‧ Casino of Ponte 16 commenced operation on 1 February 2008 Interim Report 2008 Macau Success Limited The board of directors (the “Board”) of Macau Success Limited (the “Company”) presents the unaudited condensed consolidated .nancial statements of the Company and its subsidiaries (collectively the “Group”) for the six months ended 31 March 2008 as follows: CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2008 (Unaudited) For the six months ended 31 March Note 2008 2007 04 HK$’000 HK$’000 TURNOVER 2 50,202 52,845 Cost of sales (2,429) (5,083) Gross pro. t 47,773 47,762 Other revenue 6,216 10,504 Gain on partial disposal of a subsidiary 17 116,992 – Change in fair value of derivative . nancial instrument 12 (26) – Administrative expenses (55,780) (42,278) PROFIT FROM OPERATIONS 3 115,175 15,988 Share of results of associates (64,346 ) (607) PROFIT BEFORE TAXATION 50,829 15,381 Income tax 4 – – PROFIT FOR THE PERIOD 50,829 15,381 ATTRIBUTABLE TO: Equity shareholders of the Company 51,182 6,700 Minority interests (353) 8,681 PROFIT FOR THE PERIOD 50,829 15,381 EARNINGS PER SHARE – Basic 5 HK2.14 cents HK0.31 cents – Diluted N/A N/A NON-CURRENT ASSETS Property, plant and equipment 7 Goodwill 8 Interest in associates 9 CURRENT ASSETS 87,819 1,313 1,213,669 87,9451,313 886,930 1,302,801 976,188 Inventories 2,248 1,323 Trade and other receivables 10 100,983 18,398 Pledged bank deposits 761 751 Cash and bank balances CURRENT LIABILITIES 79,712 200,719 183,704 221,191 Trade and other payables 11 7,599 106,422 Tax payable 162 961 Derivative . nancial instrument 12 NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES 224 – 7,985 107,383 175,719 113,808 1,478,520 1,089,996 Loans from minority shareholders 13 107,256 – Deferred tax liabilities 83 83 Financial guarantee contract 20NET ASSETS CAPITAL AND RESERVES Share capital 14 Reserves 15 EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE COMPANY Minority Interests 15 TOTAL EQUITY 53,550 63,000 160,889 63,083 1,317,631 1,026,913 24,195 1,233,341 21,995954,935 1,257,536 60,095 976,930 49,983 1,317,631 1,026,913 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MARCH 2008 (Unaudited) Attributable to equity shareholders of the Company Capital Property Share Share Distributable redemption revaluation Retained Minority Total capital premium reserve reserve reserve pro. ts Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 October 2006 21,395 612,516 52,333 976 187,065 52,331 926,616 40,304 966,920 Allotment of consideration shares (note 14(a)) 600 47,400 – – – – 48,000 – 48,000 Pro.t for the period – – – – – 6,700 6,700 8,681 15,381 At 31 March 2007 21,995 659,916 52,333 976 187,065 59,031 981,316 48,985 1,030,301 At 1 October 2007 21,995 659,916 52,333 976 187,065 54,645 976,930 49,983 1,026,913 Allotment of shares 2,200 231,440 – – – – 233,640 – 233,640 (note 14(b)) Share issuance costs – (4,216 ) – – – – (4,216 ) – (4,216) Pro.t/(loss) for the period – – – – – 51,182 51,182 (353) 50,829 Partial disposal of a subsidiary – – – – – – – 17,215 17,215 Dividend paid to minority shareholders – – – – – – – (6,750 ) (6,750) At 31 March 2008 24,195 887,140 52,333 976 187,065 105,827 1,257,536 60,095 1,317,631 Net cash used in operating activities Net cash generated from/(used in) investing activities Net cash generated from . nancing activities (424,454 ) 39,985 263,462HK$’000 (213,002) (148,828) – HK$’000 Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period (121,007)200,719 (361,830 ) 468,876 Cash and cash equivalents at end of the period 79,712 107,046 Analysis of balances of cash and cash equivalents Cash and bank balances 79,712 107,046 NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MARCH 2008 1. BASIS OF PREPARATION The condensed consolidated .nancial statements have been prepared in accordance with the applicable disclosure provision of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and compliance with Hong Kong Accounting Standard (“HKAS”) 34, Interim .nancial reporting, issued by the Hong Kong Institute of Certi.ed Public Accountants. The condensed consolidated .nancial statements have been prepared in accordance with the same accounting policies adopted in the annual .nancial statements for the year ended 30 September 2007, except for the adoption of the following Hong Kong Financial Reporting Standards (“HKFRSs”), which are adopted for the .rst time in the current period’s . nancial statements. HKAS 1 Amendment Capital Disclosures HKFRS 7 Financial Instruments: Disclosures HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment HK(IFRIC)-Int 11 HKFRS 2 – Group and Treasury Share Transactions The adoption of these new and revised HKFRSs does not have signi.cant impact on the Group’s operating results or .nancial position. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period (see note 23). The preparation of the condensed consolidated .nancial statements in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. The condensed consolidated .nancial statements contain selected explanatory notes. The notes include an explanation of events and transactions that are signi.cant to an understanding of the changes in .nancial position and performance of the Group and the Group’s interest in associates since the annual .nancial statements for the year ended 30 September 2007. The condensed consolidated interim .nancial statements and notes thereon do not include all of the information required for full set of .nancial statements prepared in accordance with HKFRSs. Cruise leasing and management Travel Consolidated HK$’000 HK$’000 HK$’000 09 TurnoverOther revenue Segment results Unallocated corporate income Unallocated corporate expenses Pro.t from operations Share of results of associates Pro.t before taxation For the six months ended 31 March 2007 Cruise leasing and management Travel Consolidated HK$’000 HK$’000 HK$’000 Turnover 47,901 4,944 52,845 Other revenue 27 26 53 47,928 4,970 52,898 Segment results 19,609 (354 ) 19,255 Unallocated corporate income 10,451 Unallocated corporate expenses (13,718 ) Pro.t from operations 15,988 Share of results of associates (607 ) Pro.t before taxation 15,381 Interim Report 2008 Macau Success Limited Hong Kong South China Sea, other than in Hong Kong Macau 2,202 48,000 – 4,94447,901 – (300 ) 13,477 (13 ) (348 ) 19,609 (6 ) 50,202 52,845 13,164 19,255 Earnings Earnings for the purpose of basic earnings per share 51,182 6,700 For the six months ended 31 March 2008 2007 Number of shares Weighted average number of the shares for the purpose of basic earnings per share 2,389,409,588 2,149,684,013 There was no dilution effect on the basic earnings per share for the six months ended 31 March 2008 and 31 March 2007 respectively as there were no dilutive instruments outstanding during both periods. 6. DIVIDENDS The directors of the Company do not recommend the declaration of any interim dividend for the period (for the six months ended 31 March 2007: Nil). No dividend payable to equity shareholders of the Company attributable to the previous . nancial year was approved and paid during the Interim period. Interim Report 2008 Macau Success Limited Net book value as at 1 October 2007 and 31 March 2008 1,313 9. INTEREST IN ASSOCIATES (a) 31 March 30 September 2008 2007 HK$’000 HK$’000 Share of net assets Goodwill (d) Net book value as at 31 March 2008 8. GOODWILL 361,397 19,409 425,696 19,409 87,819 HK$’000 Amounts due from associates Financial guarantee contract (note 20) 380,806 779,313 53,550 445,105 378,825 63,000 1,213,669 886,930 The amounts due from associates are unsecured, interest free and have no .xed terms of repayment. Macau Success Limited Interim Report 2008 9. INTEREST IN ASSOCIATES (Continued) (b) Particulars of the associates as at 31 March 2008 are as follows: Name of associate Place of incorporation and operation Particulars of issued and paid up capital Proportion of ownership interest Group’s Held by Held by a non effective the wholly-owned interest Company subsidiary Principal activities Pier 16 – Entertainment Macau 2 shares of 44% – 49% Operation of casino Group Corporation MOP24,000 and promotion of Limited and MOP1,000 entertainment respectively products and 13 activities Pier 16 – Management Macau 2 shares of 44% – 49% Provision of Limited (also MOP24,000 management operated in and MOP1,000 services for Hong Kong) respectively development of an integrated casino-resort project “Ponte 16” Pier 16 – Property Macau 100,000 shares 44% – 49% Investment, Development of MOP100 development Limited each and operation of an integrated casino-resort project “Ponte 16” Pier 16 – Resort Hotel Macau 2 shares of 44% – 49% Provision of Management Limited MOP24,000 management and MOP1,000 services for an respectively integrated casino-resort project “Ponte 16” (c) On 1 October 2007, Golden Sun Pro.ts Limited (“Golden Sun”), a wholly-owned subsidiary of the Company, as vendor and the Company as Golden Sun’s guarantor entered into a sale and purchase agreement with a then independent third party, Maruhan Corporation (“Maruhan”) as purchaser for the disposal of 10.2% interest in the entire issued share capital of, and the related shareholder’s loan to, World Fortune Limited (“World Fortune”), a then wholly-owned subsidiary of the Company. Upon completion of the disposal, the Group’s effective interest in the associates decreased from 49% to approximately 44%. Interim Report 2008 Macau Success Limited On 30 November 2006, World Fortune as purchaser entered into an agreement with an independent third party, Joy Idea Investments Limited for the purchase of 12.25% equity interest in and the related loan to Pier 16 – Property Development Limited (“Pier 16 – Property Development”), an associate of the Company, for an aggregate consideration of HK$200 million. On the date of acquisition, the fair value of Pier 16 – Property Development was approximately HK$157 million. The consideration excluding the sale loan of approximately HK$29 million was approximately HK$171 million. By excluding acquisition expenses of approximately HK$0.8 million, the goodwill for this acquisition was approximately HK$14.8 million. Impairment test for interest in associates The recoverable amount of interest in Pier 16 – Property Development is determined by using discount cash .ows which represents the present value of estimated future cash . ows expected to arise from ultimate disposal of Pier 16 – Property Development. The discount rate used is the .ve-year Exchange Fund Notes as at 31 March 2008 of 2.04 per cent (2007: 4.09 per cent). Interim Report 2008 All of the trade and other receivables are expected to be recovered within one year. Included in deposits, prepayment and other receivables is a deposit of HK$60 million paid to 上海永德投資有限公司 (”上海永德”), an independent third party upon signing of a letter of intent and a con.dentiality agreement on 10 January 2008 for the proposed acquisition by a wholly-owned subsidiary of the Company of at least 10% and not more than 51% of the entire issued share capital of重慶林科物業發展有限公司, a then 90% owned subsidiary of 上海永德. Interim Report 2008 Macau Success Limited Trade payables Accrued charges and other payables Current to 30 days 31 to 60 days 61 to 90 days Over 90 days The Group normally allows a credit period of 30 days (2007: 30 days) 11. TRADE AND OTHER PAYABLES 168 7,431 HK$’000 HK$’000 2,090 727 12 165 45 – – 104 2,147 996 31 March 30 September 2008 2007 HK$’000 HK$’000 163 106,259 7,599 106,422 All of the trade and other payables are expected to be settled within one year. Included in accrued charges and other payables is a deposit of HK$100 million received from a purchaser for the Group’s disposal of 10.2% equity interest in World Fortune. The amount was applied as part of consideration upon completion of the disposal on 29 October 2007. Macau Success Limited Interim Report 2008 Grant of a put option, at fair value Loss from change in fair value during the period Current to 30 days 31 to 60 days 61 to 90 days Over 90 days 12. DERIVATIVE FINANCIAL INSTRUMENT 19826HK$’000 HK$’000 155 149 – 1 – – 13 13 168 163 31 March 30 September 2008 2007 HK$’000 HK$’000 – – 224 – a) On 29 October 2007, Golden Sun, World Fortune and the Company entered into a shareholders’ agreement with Maruhan relating to World Fortune upon completion of the disposal of 10.2% interest in the entire issued share capital of, and the related shareholder’s loan to, World Fortune. Pursuant to the terms of the shareholders’ agreement, Golden Sun, in consideration of HK$1, granted to Maruhan the right to require Golden Sun to purchase or procure the purchase of the entire equity interest owned by Maruhan in World Fortune and the entire amount of shareholder’s loan provided by Maruhan to World Fortune. The option shall be exercised at any time on any business day during the period commencing from the .fth anniversary of the said agreement and ending on the day falling six months thereafter subject to conditions. Interim Report 2008 Macau Success Limited i) Risk free rate 2.082% 4.113% ii) Stock price (HK$’000) 150,440 134,796 iii) Exercise price (HK$’000) 136,445 136,445 iv) Volatility (%) 5.040% 5.040% v) Expected Option Life (years) 5 5.5 13. LOANS FROM MINORITY SHAREHOLDERS On 1 October 2007, Golden Sun as vendor and the Company as vendor’s guarantor entered into a sale and purchase agreement with Maruhan as purchaser for the disposal of 10.2% interest in the entire issued share capital of, and the related shareholder’s loan of approximately HK$66.5 million to, World Fortune. On 29 October 2007, Golden Sun, Maruhan, the Company and World Fortune entered into a shareholders’ agreement relating to World Fortune. Pursuant to the terms of the shareholders’ agreement, Maruhan agreed to provide further shareholder’s loan of approximately HK$116 million according to its shareholding to World Fortune which will on-lend the same to Pier 16 – Property Development for the purpose of .nancing and completing the development of the integrated casino-resort project “Ponte 16”. During the period, Maruhan advanced approximately HK$40.8 million. The loan is interest free and unsecured. In the opinion of the directors of the Company, the loans will not be repaid within the next twelve months and the carrying value approximated to the fair value. Macau Success Limited Interim Report 2008 15. RESERVES (Unaudited) Attributable to equity shareholders of the Company Capital Property Share Distributable redemption revaluation Retained premium reserve reserve reserve pro. ts Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Minority interests HK$’000 Total HK$’000 At 1 October 2006 612,516 52,333 976 187,065 52,331 905,221 40,304 945,525 20 Allotment of consideration shares (note 14 (a)) Pro.t for the period 47,400 – – – – – – – – 6,700 47,400 6,700 – 8,681 47,400 15,381 At 31 March 2007 659,916 52,333 976 187,065 59,031 959,321 48,985 1,008,306 At 1 October 2007 659,916 52,333 976 187,065 54,645 954,935 49,983 1,004,918 Allotment of shares (note 14 (b)) 231,440 – – – – 231,440 – 231,440 Share issuance costs (4,216) – – – – (4,216 ) – (4,216) Pro.t/(loss) for the period – – – – 51,182 51,182 (353) 50,829 Partial disposal of a subsidiary – – – – – – 17,215 17,215 Dividend paid to minority shareholders – – – – – – (6,750) (6,750) At 31 March 2008 887,140 52,333 976 187,065 105,827 1,233,341 60,095 1,293,436 Within one year In the second to .fth years, inclusive No deferred tax asset has been recognised in relation to tax losses as it is not probable that taxable pro.t will be available against which the tax losses can be utilised. 17. PARTIAL DISPOSAL OF A SUBSIDIARY The disposal of 10.2% equity interest in World Fortune by Golden Sun was completed on 29 October 2007. Gain on the partial disposal of a subsidiary of approximately HK$117 million was recognized for the six months ended 31 March 2008. 18. OPERATING LEASE COMMITMENTS At the balance sheet date, the Group had the following commitments for future lease payment under non-cancellable operating leases which fall due as follows: 31 March 30 September 2008 2007 HK$’000 HK$’000 3,011 414 3,757 1,575 3,425 5,332 Interim Report 2008 Macau Success Limited Travel service income received and receivable from – Associates – Key management personnel – Close family members of key management personnel (i)(ii) (ii) (ii) 792 136– 411 346 163 928 920 Management service income received and receivable from – Associates (i)(iii) 2,112 2,436 Receivables from travel service as at the balance sheet date – Associates – Key management personnel 291 – 31 March 2008HK$’000 159 105 30 September 2007 HK$’000 291 264 Receivable from management services as at the balance sheet date – Associates 1,050 283 i) The directors of the Company, Mr. Yeung Hoi Sing, Sonny and Mr. Lee Siu Cheung, were the directors of the associates during the six months periods ended 31 March 2007 and 2008. Mr. Lee Siu Cheung resigned as the director of the Company and its associates on 1 June 2008. ii) The travel agent service fee was charged according to prices and conditions similar to those offered to other customers. iii) The management fee was charged on actual cost incurred by the Group for providing the services. Macau Success Limited Interim Report 2008 20. CONTINGENT LIABILITIES At the balance sheet date, the Group gave the following undertakings: (a) A syndicated loan facility granted to an associate held by a non wholly-owned subsidiary of the Company was HK$1,600 million (30 September 2007: HK$1,600 million). The maximum guarantee amount borne by the Company was HK$860 million (30 September 2007: HK$860 million). The syndicated loan facility utilised by the associate at the balance sheet date was HK$1,360 million (30 September 2007: HK$1,010 million). (b) A loan facility of up to HK$250 million (30 September 2007: HK$250 million) was granted to a wholly-owned subsidiary of the Company. The maximum guarantee amount borne by the 23 Company was HK$250 million (30 September 2007: HK$250 million). Based on the valuation performed by BMI Appraisals Limited, the directors of the Company considered that the fair values of the .nancial guarantee contracts for the associate and subsidiary are HK$63 million and nominal respectively. The carrying amount of the .nancial guarantee contract recognised in the condensed balance sheet and income statement in accordance with HKSA 39 and HKFRS 4 (Amendments) were approximately HK$53.6 million (30 September 2007: HK$63 million) and HK$9.5 million for the period (for the six months ended 31 March 2007: Nil) respectively. 21. PLEDGED OF ASSETS (a) As at 31 March 2008, the Group pledged the time deposits of approximately HK$0.8 million (30 September 2007: HK$0.8 million) to certain banks for issuance of several bank guarantees of approximately HK$0.8 million (30 September 2007: HK$0.8 million) for operation of the Group. (b) As at 31 March 2008, World Fortune pledged all (30 September 2007: 100%) of its shares in Pier 16 – Property Development to a bank, for and on behalf of the syndicate of lenders, in respect of a syndicated loan facility granted to Pier 16 – Property Development. 22. NON-ADJUSTING POST BALANCE SHEET EVENTS (a) On 15 April 2008, Favor Jumbo Limited (“Favor Jumbo”), being a wholly-owned subsidiary of the Company, entered into a letter of intent and a con.dentiality agreement with an independent third party, SBI Macau Holdings Limited (“SBI Macau”) for the proposed disposal from Favor Jumbo to SBI Macau of not less than 4.55% but not more than 22.73% of the entire issued share capital of Golden Sun so that the effective interest of SBI Macau in Pier 16 – Property Development will not be less than 2% but in any event not be more than approximately 10%. Pursuant to the con.dentiality agreement, a sum of US$2 million was paid by SBI Macau to Fred Kan & Co., being the escrow agent, as earnest money which will be applied as part of the deposit payable by SBI Macau should the legally binding sale and purchase agreement in relation to the proposed disposal be entered into. Interim Report 2008 Macau Success Limited 22. NON-ADJUSTING POST BALANCE SHEET EVENTS (Continued) Pursuant to the letter of intent, Favor Jumbo and SBI Macau agreed to negotiate in good faith with a view to entering into a legally binding sale and purchase agreement in respect of the proposed disposal by no later than 16 June 2008 or such later date as they may agree in writing. As the negotiation between Favor Jumbo and SBI Macau has not yet been . nalized before 16 June 2008, both parties agreed to postpone the date for the entering into of the said sale and purchase agreement to no later than 7 July 2008 or such later date as they may agree in writing. (b) On 5 May 2008, the Company as purchaser entered into a conditional sale and purchase agreement with Star Spangle Corporation (“Star Spangle”, which is bene. cially wholly-owned by Mr. Yeung Hoi Sing, Sonny (“Mr. Yeung”), being an executive director and the Chairman of the Company) as vendor and Mr. Yeung as Star Spangle’s guarantor, for the purchase from Star Spangle of the entire issued share capital of Smart Class Enterprises Limited, which owns 80% effective equity interest in certain companies incorporated in Canada or the United States of America (“US”) conducting the business of air travel consolidator, travel agent, tour provider and provider of related services in Canada and US, at a consideration of CAD2.9 million (equivalent to approximately HK$22.6 million). The consideration was arrived after arm’s length negotiation between the Company and Star Spangle and will be settled by the allotment and issue of 19.5 million new shares of the Company at an agreed issued price of HK$1.16 per share. Completion of the said acquisition shall be subject to all the conditions precedent set out in the said agreement being ful.lled or waived (as applicable). 23. POSSIBLE IMPACT OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE PERIOD ENDED 31 MARCH 2008 The Group has not early applied the following new standards, amendments and interpretations that have been issued but are not yet effective. The directors of the Company anticipates that the application of these standards, amendments or interpretations will have no material impacts on the .nancial statements of the Group. HKAS 1 (Revised) Presentation of Financial Statements 2 HKAS 23 (Revised) Borrowing Costs 2 HKAS 27 (Revised) Consolidated and Separate Financial Statements 1 HKFRS 3 (Revised) Business Combinations 1 HKFRS 8 Operating Segments 2 HK(IFRIC)-Int 12 Service Concession Arrangements 3 HK(IFRIC)-Int 13 Customer Loyalty Programmes 4 HK(IFRIC)-Int 14 HKAS 19 – The Limit on a De. ned Bene. t Assets, Minimum Funding Requirements and their Interaction 3 1 Effective for annual periods beginning on or after 1 July 2009 2 Effective for annual periods beginning on or after 1 January 2009 3 Effective for annual periods beginning on or after 1 January 2008 4 Effective for annual periods beginning on or after 1 July 2008 25 TO THE BOARD OF DIRECTORS OF MACAU SUCCESS LIMITED (Incorporated in Bermuda with limited liability) Introduction We have reviewed the interim .nancial report set out on pages 4 to 24, which comprises the condensed consolidated balance sheet of Macau Success Limited as at 31 March 2008 and the related condensed consolidated income statement, the condensed consolidated statement of changes in equity and the condensed consolidated cash .ow statement for the six-month period then ended, and explanatory notes. The Main Board Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim . nancial report to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certi.ed Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim . nancial report in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting“. Our responsibility is to express a conclusion on this interim .nancial report based on our review, 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 another person for the contents of this report. Scope of Review We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity“ issued by the Hong Kong Institute of Certi.ed Public Accountants. A review of interim .nancial report consists of making inquiries, primarily of persons responsible for .nancial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all signi.cant matters that might be identi.ed in an audit. Accordingly, we do not express an audit opinion. Interim Report 2008 Macau Success Limited Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim .nancial report is not prepared, in all material respects, in accordance with the Hong Kong Accounting Standard 34 “Interim Financial Reporting”. CCIF CPA Limited Certi.ed Public Accountants Hong Kong, 18 June 2008 Delores Teh Practising Certi.cate Number P03207 MANAGEMENT DISCUSSION AND ANALYSIS Results For the period under review, the Group’s turnover was approximately HK$50.2 million, representing a decrease of approximately 5% as compared to the last corresponding period (2007: approximately HK$52.8 million). Gross pro.t was approximately HK$47.8 million (2007: approximately HK$47.8 million). Pro.t attributable to equity shareholders of the Company increased signi.cantly to approximately HK$51.2 million (2007: approximately HK$6.7 million). As a result, earnings per share for the period also increased substantially to HK2.14 cents (2007: HK0.31 cents). The reduction in the Group’s consolidated turnover is attributable to the lower turnover of the travel business. The cruise business generated steady revenue but its performance deteriorated due to the increase in fuel oil price and operating costs. The travel business, despite recording a lower turnover .gure, achieved better .nancial performance after effective cost control measures were implemented. The Group’s pro.tability increased year-on-year due to a gain on disposal of approximately 5% effective interest in Ponte 16, the Group’s world-class integrated casino-resort project, which amounted to approximately HK$117 million. However, some of the gain brought by the stake disposal was absorbed by the loss from the associates related to Ponte 16 shared by the Company. Casino business of Ponte 16 commenced operation in February 2008 while the hotel as well as the food and beverage facilities were still awaiting licence approval. As the business was still in its initial stage of operation and higher operating costs including staff cost, training cost as well as marketing and promotion expenses were incurred during the period under review, share of loss of the associates increased from approximately HK$0.6 million for the corresponding period of last year to approximately HK$64.3 million for this period. Interim Dividend The directors of the Company (the “Director(s)”) do not recommend the declaration of any interim dividend for the six months ended 31 March 2008 (2007: Nil). Interim Report 2008 Macau Success Limited Review of Operations Cruise Business During the period under review, leasing and management of the Group’s cruise ship, M.V. Macau Success (in which the Group has 55% interest) continued to be the major contributor to the Group’s revenue and a stable source of income. Turnover from the cruise business was approximately HK$48.0 million (2007: approximately HK$47.9 million), accounting for approximately 95.6% of the Group’s total turnover. In 2007, it accounted for approximately 90.6% of the Group’s total turnover. Segment pro.t from this business decreased by 31.3% to approximately HK$13.5 million compared with approximately HK$19.6 million in the corresponding period of 2007. This reduction in pro.tability was mainly driven by increasing fuel cost and operating costs. Travel Business During the period under review, turnover from the travel business was approximately HK$2.2 million, representing a decrease of approximately 55.5% from the corresponding . gure of 2007. The travel business accounted for approximately 4.4% of the Group’s total turnover (2007: approximately 9.4% of the Group’s total turnover). Segment loss from this business narrowed by 11.6% to HK$0.3 million, compared with a loss of approximately HK$0.4 million in 2007. It is the Group’s strategy to develop the travel business into a unique platform, providing professional travel services to high-end customers while enhancing the business of Ponte 16. Investment Project – Ponte 16 Ponte 16, the Group’s .agship project, is a world-class integrated casino-entertainment resort comprising a .ve-star luxury hotel - So.tel Macau at Ponte 16, a casino, a shopping arcade, and food and beverage facilities. Featuring a unique European theme, the development is located at Pier 16, which has been in operation since the beginning of the last century and is now a famous historic landmark. A two-minute ferry connection between Ponte 16 and Zhuhai provides a convenient access for tourists. Investment Project – Ponte 16 (Continued) Casino of Ponte 16 started operation on 1 February 2008 with a grand opening ceremony and management is delighted by its performance in the initial stage of operation. The highest number of visitors recorded in one single day amounted to 30,000 during the Chinese New Year period. The average number of visitors per day during the .rst two months since its opening exceeded 10,000. Average daily mass drop during these two months was HK$14 million. However, there was a delay in the opening schedule of So.tel Macau at Ponte 16 as the licence from the Government of the Macau Special Administrative Region of the People’s Republic of China (“Macau”) was yet to be obtained. The delay in the hotel opening imposed some uncertainty on the overall .nancial performance of the project, but 29 the effect is expected to be temporary and should not overcast the Group’s outlook in the long run. Financial Review Pledge of Assets As at 31 March 2008, the Group pledged the time deposits of approximately HK$0.8 million (30 September 2007: HK$0.8 million) to certain banks for issuance of several bank guarantees of approximately HK$0.8 million (30 September 2007: HK$0.8 million) for operation of the Group. As at 31 March 2008, World Fortune Limited (“World Fortune”), a non wholly-owned subsidiary of the Company, pledged all (30 September 2007: 100%) of its shares in Pier 16 – Property Development Limited (“Pier 16 – Property Development”), an associate of the Company, to a bank, for and on behalf of a syndicate of lenders, in respect of a syndicated loan facility granted to Pier 16 – Property Development. Contingent Liabilities As at 31 March 2008, the Group gave the following undertakings: 1. A syndicated loan facility granted to an associate held by a non wholly-owned subsidiary of the Company was HK1,600 million (30 September 2007: HK$1,600 million). The maximum guarantee amount borne by the Company was HK$860 million (30 September 2007: HK$860 million). The syndicated loan facility utilized by the associates as at 31 March 2008 was HK$1,360 million (30 September 2007: HK$1,010 million). 2. A loan facility of up to HK$250 million (30 September 2007: HK$250 million) was granted to a wholly-owned subsidiary of the Company. The maximum guarantee amount borne by the Company was HK$250 million (30 September 2007: HK$250 million). Interim Report 2008 Macau Success Limited Liquidity, Financial Resources and Gearing As at 31 March 2008, the Group had net current assets of approximately HK$175.7 million (30 September 2007: approximately HK$113.8 million) and had net assets of approximately HK$1,317.6 million (30 September 2007: approximately HK$1,026.9 million). As at 31 March 2008, the Group did not have any interest-bearing borrowings and . nancial lease obligations (30 September 2007: Nil). As at 31 March 2008, there were loans from minority shareholders of approximately 30 HK$107.3 million (30 September 2007: Nil). The loans are non interest-bearing, unsecured and will not be repaid within the next twelve months. The Group did not have any bank loan as at 31 March 2008 (30 September 2007: Nil). Equity attributable to equity shareholders of the Company as at 31 March 2008 was approximately HK$1,257.5 million (30 September 2007: approximately HK$976.9 million). Accordingly, the gearing ratio, which is measured on the basis of the interest-bearing borrowings of the Group over equity attributable to equity shareholders of the Company, was zero for this period and the last corresponding period. Partnership with Maruhan In October 2007, the Company through its wholly-owned subsidiary disposed to Maruhan Corporation (“Maruhan”) of 10.2% of the entire issued share capital of, and related shareholder’s loan to, World Fortune for a consideration of approximately HK$208.5 million. World Fortune owns 49% equity interest in Pier 16 – Property Development. The Company and Maruhan also entered into a subscription agreement in October 2007, pursuant to which Maruhan has subscribed for and the Company has allotted and issued 220 million new shares of the Company at a subscription price of HK$1.062 each. Besides, Maruhan also acquired 220 million shares of the Company from the market in October 2007. Consequently, Maruhan held approximately 18.2% interest in the Company and through its equity interest in the Company and World Fortune, Maruhan currently has an effective interest of about 13% in Pier 16 – Property Development. Human Resources As at 31 March 2008, the Group had over 300 employees. Remuneration is determined on the basis of quali.cation, experience, responsibility and performance. Apart from the basic remuneration, staff bene.ts include medical insurance and retirement bene.ts under the Mandatory Provident Fund Scheme. Share options might also be granted to eligible employees of the Group as a long-term incentive. Prospects Management is positive about the Group’s future and is actively seeking new opportunities to accelerate the Group’s growth and improve its pro. tability. The travel business of the Group is expected to be strengthened and expanded with the addition of the network of the Jade Travel Group (as de.ned below) in North America and Canada. These cross-selling business opportunities between travel business and Ponte 16 will enhance the business of Ponte 16. In the long run, this unique travel platform will de. nitely bene.t the Group’s expansion in gaming and entertainment-related business in the Asia-Paci. c region. Management anticipates the operating environment of the cruise business is still tough and further challenges are lying ahead taking into account of surging fuel price and there is no sign of price stability in the near future. The operation of this business segment is being closely monitored and reviewed. Ponte 16 is the most signi.cant project realized by the Group in recent years. Having reviewed the operating statistics of the casino of Ponte 16 in its initial stage of operation, management is con.dent of the prospects for the whole project. Before the granting of a licence for the hotel operation by the Government of Macau, the Company has cooperated with So. tel Macau at Ponte 16 to implement a series of marketing programmes for the purpose of drawing tourists and business travellers to So.tel Macau at Ponte 16. The overwhelming enquiries for hotel room bookings received so far have con.rmed management’s con. dence. The hotel and restaurant facilities will de.nitely help boost the business of the casino. Interim Report 2008 Macau Success Limited Prospects (Continued) The bright future of Ponte 16 is set against the backdrop of a booming Macau economy. Management has great con.dence in the future growth in the economy and tourist industry of Macau as well as the opportunities provided to the Group. According to the Government of Macau, the number of tourists who visited Macau in the .rst quarter of 2008 reached approximately 7.5 million, an increase of 17.9% over the corresponding period in 2007. As 58.4% of the tourists are from Mainland China, the strong economic development in Mainland China should further enhance Macau’s economy. In the .rst quarter of 2008, gaming revenue in Macau surged to MOP29.8 billion, representing an increase of 62% over the same period of the last year. Management expects to commence operation of the hotel and restaurants in the near future, probably in the third quarter of calendar year 2008 while Phase Two of Ponte 16 commercial complex, the shopping arcade, will be completed in 2009. Other than the Ponte 16 project, there have been a number of important strategic moves made by the Group which can bene.t the future development of the Group. Introduction of Maruhan as a Strategic Investor With reference to the section headed “Partnership with Maruhan”, Maruhan has become a strategic investor of the Group. Maruhan, being a leading company in the pachinko industry in Japan with more than 1 million memberships and extensive experience in the entertainment industry as well as business network in Japan, is expected to bring Japanese and Korean customers to Ponte 16. The Group and Maruhan also anticipate to cooperate in developing the gaming industry in Japan, pending a grant of gaming licences. This partnership should accelerate the Group’s future growth in the gaming and entertainment-related businesses in the Asia-Paci. c region. Letter of Intent with SBI Macau On 15 April 2008, Favor Jumbo Limited (“Favor Jumbo”), a wholly-owned subsidiary of the Company, entered into a letter of intent (the “LOI”) with SBI Macau Holdings Limited (“SBI Macau”), a wholly-owned subsidiary of SBI Holdings, Inc. (“SBI Holdings”), in relation to the proposed disposal by Favor Jumbo to SBI Macau of certain equity interest in Golden Sun Pro.ts Limited which indirectly owns approximately 44% of the entire issued share capital of Pier 16 – Property Development (the “Proposed Disposal”). Pursuant to the LOI, Favor Jumbo and SBI Macau agreed to negotiate in good faith with a view to entering into a legally binding sale and purchase agreement in respect of the Proposed Disposal (the “S&P Agreement”) by no later than 16 June 2008 or such later date as they may agree in writing. As the negotiation between Favor Jumbo and SBI Macau has not yet been . nalized before 16 June 2008, both parties agreed to postpone the date for the entering into of the S&P Agreement to no later than 7 July 2008 or such later date as they may agree in writing. Letter of Intent with SBI Macau (Continued) The Group is taking the initiative to develop a strategic partnership with this reputable Japanese .nance group. SBI Holdings and its subsidiaries are engaged in asset management, brokerage and investment banking, housing and real estate businesses and the provision of other .nancial services. The partnership with SBI Holdings should lift the Group’s . nancial position and further strengthen the Group’s network in Japan. Proposed Acquisition of the Jade Travel Group On 5 May 2008, the Company signed a conditional sale and purchase agreement to acquire the entire issued share capital of Smart Class Enterprises Limited (“Smart Class”) for CAD2.90 million (equivalent to approximately HK$22.62 million) (the “Acquisition”), which will be settled by the allotment and issue of 19.5 million new shares of the Company at an agreed issue price of HK$1.16 per share. The principal asset of Smart Class is its 80% equity interest in certain companies in Canada and the United States of America (“US”) which conduct the business of air travel consolidator, travel agent, tour provider and provider of related services in Canada and US (the “Jade Travel Group”). Upon completion of the Acquisition, the Company will indirectly hold 80% equity interest in the Jade Travel Group. The Acquisition will strengthen the Company’s international network in the travel business. The Jade Travel Group is a major air travel consolidator offering travellers competitive fares to Asia and other parts of the world. With an extensive of.ce network in Vancouver, Calgary, Toronto, Montreal and New York, the Jade Travel Group offers complex travel plans and tailor-made tour packages to customers. The Acquisition will enhance the Group’s travel business with economies of scale and better operational ef.ciency among its core businesses, including Ponte 16. The new platform can also facilitate cross-selling between the integrated casino-entertainment resort and the tour packages. Conclusion On top of its solid core businesses, the Group is striving hard to explore new opportunities that will create synergies, broaden the revenue base and enhance its pro. tability. Steering to the goal of becoming one of the leading gaming and entertainment-related companies in the Asia-Paci.c region, management is making strides to create more value for its shareholders. Interim Report 2008 Macau Success Limited DISCLOSURE OF INTERESTS Directors’ and Chief Executive’s Interests in Securities As at 31 March 2008, 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 34 pursuant to Section 352 of the SFO, or as otherwise, noti.ed to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) contained in the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”): Interest in the shares of the Company (“Shares”) Approximate Long position/ Nature Number of percentage of Name Short position of interest Shares held shareholding % Mr. Yeung Hoi Sing, Long position Corporate 987,841,432 40.83 Sonny (Note) interest Note: Mr. Yeung Hoi Sing, Sonny, an executive Director and the Chairman of the Company, is deemed to have corporate interest in 987,841,432 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 bene.ciaries of which are family members of Mr. Yeung Hoi Sing, Sonny. Save as disclosed above, as at 31 March 2008, 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, noti.ed to the Company and the Stock Exchange pursuant to the Model Code. Share Option Scheme and Directors’ Rights to Acquire Shares or Debentures Pursuant to the share option scheme adopted by the shareholders of the Company on 20 August 2004 (the “Share Option Scheme”), the Board may at a consideration of HK$1 offers to grant share options to selected eligible persons to subscribe for Shares as incentives or rewards for their contribution to the Group. The exercise price of any share option will be determined by the Board at its absolute discretion, but in any event shall not be less than the highest of (i) the of.cial closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the date on which the relevant option is offered; (ii) the average of the of. cial closing price of the Shares as stated in the daily quotation sheets of the Stock 35 Exchange for the .ve trading days immediately preceding the date on which the relevant option is offered; and (iii) the nominal value of the Share. The maximum number of Shares in respect of which options may be granted under the Share Option Scheme and any other schemes of the Company must not, in aggregate, exceed 30% of the total number of Shares in issue from time to time. The Share Option Scheme became effective on 8 November 2004 and, unless otherwise cancelled or amended, will remain in force for 10 years from the date of adoption of the Share Option Scheme, i.e. 20 August 2004. No options under the Share Option Scheme had been granted to any person since its adoption and up to the balance sheet date. At no time during the period was the Company or any of its subsidiaries a party to any arrangement to enable the Directors to acquire bene.ts by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Interim Report 2008 Macau Success Limited Substantial Shareholders’ Interests in Securities As at 31 March 2008, 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 36 Name Long position/ Short position Capacity Number of Shares held Approximate percentage of shareholding % Silver Rich Macau Long position Bene. cial 987,841,432 40.83 Development Limited owner Trustcorp Limited Long position Trustee 987,841,432 40.83 (Note 1) Newcorp Ltd. (Note 1) Long position Interest of 987,841,432 40.83 controlled corporation Newcorp Holdings Ltd. Long position Interest of 987,841,432 40.83 (Note 1) controlled corporation Mr. David Henry Long position Interest of 987,841,432 40.83 Christopher Hill controlled (Note 1) corporation Mr. David William Long position Interest of 987,841,432 40.83 Roberts (Note 1) controlled corporation Mrs. Rebecca Ann Hill Long position Interest of 987,841,432 40.83 (Note 2) spouse Ms. Liu Siu Lam, Marian Long position Interest of 987,841,432 40.83 (Note 3) spouse Maruhan Corporation Long position Bene. cial 440,000,000 18.19 owner Interest in the Shares (Continued) Notes: 1. The entire issued share capital of Silver Rich Macau Development Limited is held by Trustcorp Limited, which is a trustee of a discretionary trust, the bene.ciaries of which are family members of Mr. Yeung Hoi Sing, Sonny. Trustcorp Limited is a wholly-owned subsidiary of Newcorp Ltd., which is in turn wholly-owned by Newcorp Holdings Ltd., Newcorp Holdings Ltd. is owned as to 35% by each of Mr. David Henry Christopher Hill and Mr. David William Roberts. Accordingly, each of Trustcorp Limited, Newcorp Ltd., Newcorp Holdings Ltd., Mr. David Henry Christopher Hill and Mr. David William Roberts was deemed to be interested in 987,841,432 Shares held by 37 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 987,841,432 Shares in which Mr. David Henry Christopher Hill had a deemed interest. 3. Ms. Liu Siu Lam, Marian, being the spouse of Mr. Yeung Hoi Sing, Sonny, was deemed to be interested in 987,841,432 Shares in which Mr. Yeung Hoi Sing, Sonny had a deemed interest. Save as disclosed above, as at 31 March 2008, 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 under Section 336 of the SFO. PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES During the six months ended 31 March 2008, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the listed securities of the Company. COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE PRACTICES In the opinion of the Directors, the Company has applied the principles and complied with all the code provisions as set out in the Code on Corporate Governance Practices contained in Appendix 14 of the Listing Rules during the six months ended 31 March 2008. Interim Report 2008 Macau Success Limited COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS 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 as set out in Appendix 10 of the Listing Rules. Having made speci.c enquiry of all Directors, each of whom has con.rmed his/her compliance with the required standard set out in the Code of Conduct and the Model Code. AUDIT COMMITTEE The Audit Committee of the Company (the “Audit Committee”) comprises the non-executive Director, Mr. Choi Kin Pui, Russelle, and the three independent non-executive Directors, Mr. Luk Ka Yee, Patrick, Mr. Yim Kai Pung and Ms. Yeung Mo Sheung, Ann, with terms of reference prepared in accordance with the requirements of the Listing Rules. The Audit Committee is chaired by Mr. Yim Kai Pung who possesses appropriate professional accounting quali.cation as required under the Listing Rules. The primary duties of the Audit Committee include, inter alia, monitoring integrity of the .nancial statements of the Company and ensuring objectivity and credibility of . nancial reporting, reviewing the internal control system of the Group as well as overseeing the relationship with the external auditors of the Company. REVIEW OF INTERIM RESULTS The unaudited interim results for the six months ended 31 March 2008 have been reviewed by the Audit Committee and CCIF CPA Limited, the auditors of the Company, which were of the opinion that the preparation of such results complied with the applicable accounting standards and requirements and that adequate disclosures have been made. On behalf of the Board Yeung Hoi Sing, Sonny Chairman Hong Kong, 18 June 2008