09:49 MASSIVE RES<00070> - Announcement & Resumption (5) Save for the aforesaid, Walden has not conducted any business nor made any profit or incurred any loss since its incorporation. The Ship, which is currently under renovation, was previously used as a passenger ship without engaging in any gaming activities. According to Mr. Lin, since the Ship had ceased to be operated as a passenger ship when WAS acquired it, the route of the Ship operated in the past could not be traced. The Company understands from Mr. Lin and Mr. Lee that as the Casino will only be in operation when the Ship is in international waters, where is not within the jurisdiction of any country or region, no licence is required for conducting the gaming activities on the Ship. The Ship will commence its operation after completion of the renovation, which is expected to be in mid 2005. Walden presently intends to lease the Ship together with its entire operation to a ship operating company, which has not been identified as at the date of this announcement, and the Casino Operator will be engaged by such ship operating company directly under a casino operation agreement to operate the Casino on board the Ship in international waters. Walden will request the to-be-appointed ship operating company to appoint Artwin, an Independent Third Party, or its nominee as the Casino Operator. As at the date of this announcement, no verbal or written casino operation agreement has been made and terms therein are still subject to negotiation between the to-be-appointed ship operating company and the Casino Operator. Nonetheless, the relevant agreement is expected to be entered into prior to the commencement of the operation of the Ship in mid-2005. The Directors confirm that the Company will not hold any role in respect of the gaming activities on board the Ship. Upon completion of the S&P Agreement, Walden will be held as to 70% by the Company and as to 30% by Ms. Lee Lin, and Walden will be accounted as a 70% owned subsidiary of the Group. To the best of knowledge, information and belief of the Directors, both Mr. Lin and Ms. Lee Lin have no relationship with Artwin and/or its ultimate beneficial owner. The board of directors of Walden consists of three directors and two representatives of the Company will be appointed as the directors of Walden in place of the two directors nominated by Mr. Lin upon Completion. REASONS FOR THE ACQUISITION AND BENEFITS TO THE COMPANY As stated in the Company's announcement dated 25 November 2004, the Group suffered losses after taxation and minority interests in the amount of approximately HK$49.7 million, HK$45.3 million and HK$25.9 million for each of the three years ended 30 June 2004 respectively. As stated in the latest annual report 2004 for the year ended 30 June 2004, the Board is at all times seeking to identify suitable projects and/or investments that would be reasonably expected to generate profits and/or have potential for capital appreciation. Therefore, further to the Group's recent move to get involved in the gaming industry in Macau as disclosed in the aforesaid announcement, the Group intends to further develop in this business area via the Acquisition. According to official statistics on the number of visitors to Hong Kong and Macau during the first eleven months of 2004, the number of visitors to Hong Kong and Macau had increased by 26.96% and 27.48% respectively when compared with the number of visitors in the year of 2003. In light of the booming tourism industry in Macau and Hong Kong, the Board believes that the demand for casino games and entertainment business in the region is strong, the gaming and entertainment industry has immense growth potential and the Acquisition will strengthen the Group's earning base. MEMORANDUM Parties The Company and Artwin Artwin is a company incorporated in the British Virgin Islands whose principal business is casino operation. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Mr. Lee Chun Hing, an Independent Third Party, is the beneficial owner and sole director of Artwin and has more than 7 years of experience in casino operation on board of cruise ship in international waters (i.e. outside Hong Kong) and he is currently holding a senior management position in a cruise ship with gaming activities on board. Mr. Lee is a business associate of Mr. Lin. Mr. Lee is introduced to the Company by Mr. Lin. For the avoidance of doubt, Mr. Lee is not connected with Mr. Lin. According to Mr. Lee, (i) Artwin is a newly incorporated company and has