09:45 CENTURY LEGEND<00079> - Announcement & Resumption (4) By virtue of HKMJI's holdings of 5% interest in the DH Syndicate and DEH Syndicate since 1 December 2003 and additional 10% interest in the DH Syndicate and DEH Syndicate since 29 February 2004, HKMJI's return from the Gaming Intermediary Operation amounted to approximately HK$5.54 million for the year ended 31 Dec 2004. In the month of December 2003, HKMJI's share of losses from the Gaming Intermediary Operation amounted to approximately HK$42,000. No tax arising from the Gaming Intermediary Operation was borne by the DH Syndicate or the DEH Syndicate. The Gaming Intermediary Operation is currently operated under a verbal agreement with a casino operator. Under the verbal agreement, the casino operator is responsible for providing casino facilities at the Diamond Hall and the Diamond Entertainment Hall. All associated costs and the operating profit or loss generated from the gaming activities of the customers introduced by the DH Syndicate and DEH Syndicate (as the case may be) will be shared between the casino operator and the DH Syndicate and DEH Syndicate respectively at an agreed rate. Upon the two Joint Ventures obtaining the Gaming Intermediaries Licences from the Macau government authorities under the Regulation, the DH Syndicate and DEH Syndicate will be dissolved and liquidated and the Gaming Intermediary Operation will since then be carried out through the two Joint Ventures. HKMJI and China Sky shall use their best endeavours to cause a written agreement, on the same or substantially same terms and conditions of the existing verbal agreement, being entered into between the casino operator and the two Joint Ventures in relation to the Gaming Intermediary Operation to be carried out at the Diamond Hall and the Diamond Entertainment Hall. Risk relating to the Gaming Intermediary Operation The Group is subject to certain risk arising from its Gaming Intermediary Operation. First of all, the Group as a joint venture partner to the Gaming Intermediary Operation shall share the loss, if any, arising from the gaming activities of customers introduced by the Joint Ventures at the Diamond Hall or the Diamond Entertainment Hall. In this case, the maximum exposure of the Group is limited to approximately HK$30 million, being the aggregate investment sum committed by HKMJI to the Gaming Intermediary Operation under the JV Agreement. Besides that normal business risk, the Joint Ventures may be exposed to credit risk arising from the credit facilities (by way of providing gaming chips on credit) provided to customers introduced by them to participate in the gaming activities at the Diamond Hall and the Diamond Entertainment Hall. In order to limit the credit risk exposure of the two Joint Ventures, HKMJI and China Sky have agreed that the total loans outstanding shall, from time to time, not exceed 30% of the total investment sum committed to the respective Joint Ventures by the two joint venture partners, being initially approximately HK$30 million in the case of each of the Joint Ventures. IMPLICATION OF THE LAWS OF MACAU, HONG KONG AND THE LISTING RULES The Group's Gaming Intermediary Operation is currently being carried out in Macau. Pursuant to the Regulation which came into force in 2004, the Gaming Intermediary Operation is to be carried out through incorporated bodies or individuals. The two Joint Ventures have been formed and is in the process of obtaining the Gaming Intermediaries Licences to carry on the Gaming Intermediary Operation. The Joint Ventures have obtained nomination from the casino operator to apply for the Gaming Intermediaries Licences. The Board is confident that the Joint Ventures would successfully obtain the required licences under the Regulation. The Company has obtained the Hong Kong and Macau legal opinions that the Gaming Intermediary Operation does not constitute an unlawful activity under the laws of Hong Kong and Macau. The Company will use its best effort to ensure that throughout the holding of its investment in the two Joint Ventures, the Gaming Intermediary Operation will comply with the applicable laws in the relevant jurisdictions. The Board is aware of the possibility of the misuse of the Gaming Intermediary Operation and the gaming establishments at the Diamond Hall or the Diamond Entertainment Hall by culprits and criminals for money laundering activities. The Board is mindful of its legal obligation and has implemented procedures to detect and report any suspicious transactions to the relevant authorities to assist in combating money laundering activities. Such procedures include identifying and verifying the identity of customers as well as keeping proper records. Proper records are kept for exchange of gaming chips to customers to enable speedy compliance with information requests from the competent authorities. In addition, front line staff are trained on the anti-money laundering procedures, in particular on detecting suspicious gaming activities. Shareholders are reminded that, in accordance with the Stock Exchange's guidelines on gambling business, if the Gaming Intermediary Operation