11:04 K. WAH INT'L<00173>K. WAH CONS<00027>-Joint Ann & Resumed-12 The commencement of building works for Galaxy Cotai Mega Resort is dependent upon issuance of governmental approval for the Cotai development plan, which is expected within approximately 9 months. Galaxy has begun site formation works on the Galaxy Cotai Mega Resort site. Galaxy management expects to complete Phase 1 site formation works by the end of 2005. Galaxy commenced works at its Cotai Mega Resorts site on the strength of approval by the Macau government of the building plans it submitted. In the building plans submitted, the Cotai Mega Resorts site has been clearly demarcated. Based on such building plans and other planning and construction-related information submitted, the Macau government approved Galaxy to erect site hoarding and commence site formation and drainage works at the Galaxy Cotai Mega Resort site. It is understood that it is neither a practice, nor a requirement under law, that Galaxy must first obtain the land concession before commencing works. The City Club Casinos Chain Galaxy Casino at Waldo Hotel, Galaxy's first city club casino in Macau, is aimed at the VIP gaming market. Galaxy will be adding two more city club casinos, which will be marketed in schemes tailored to the specific needs of the VIP gaming markets. City club casinos are located, under lease, on purpose-built and fitted out premises. Galaxy locates its city club casinos at hotel blocks such that its gaming customers are well served by food and beverage, standard or en suite accommodation and other hotel amenities and services. The First City Club Casino --- Galaxy Casino at Waldo Hotel Galaxy Casino at Waldo Hotel opened for business on 4th July, 2004. Galaxy Casino at Waldo Hotel is located in a specially refurbished commercial space within the Waldo Hotel rented by Galaxy. Mr. Yeung Chi Hang and Mr. Cheng Kwee, through Wealth Access, ultimately and beneficially own Waldo Hotel. Galaxy Casino at Waldo Hotel is within a short distance from Macau's main ferry terminal and helipad, and is located on one of Macau's main thoroughfares. Galaxy Casino at Waldo Hotel offers approximately 3,500 square metres of gaming space on five floors, which include 63 table games (baccarat, blackjack, Caribbean Stud, sic bo and roulette) and 74 slot machines. Galaxy Casino at Waldo Hotel offers 20 gaming tables on its main gaming floor and 43 baccarat tables in nine semi-private gaming rooms dedicated to VIP play. For the six months of operations between July 2004 and December 2004, based on information published by the Macau DICJ, Galaxy Casino at Waldo Hotel achieved a market share of around 14% of net gaming wins with less than 6% of total gaming tables in operation in Macau. Galaxy Casino at Waldo Hotel rents its gaming floors from the Waldo Hotel under a two-year lease commencing from 1st January, 2004, with an option for Galaxy to extend for another 3 years from 1st January, 2006. The monthly rental is HK$2,500,000. The lessor is Waldo Realty Limited and Waldo Hotels Limited. Both Waldo Realty Limited and Waldo Hotels Limited are ultimately beneficially owned by Mr. Yeung Chi Hang and Mr. Cheng Kwee, each of whom is an Independent Third Party. A substantial majority of net gaming win at Galaxy Casino at Waldo Hotel is contributed by VIP gaming and its customer base at present is predominantly VIP players, for whom the game of choice is baccarat. Galaxy Casino at Waldo Hotel's VIP rooms are equipped only with baccarat tables, and at present 54 of the 63 table games at Galaxy Casino at Waldo Hotel are baccarat tables. This ratio is consistent with table distribution generally in the Macau market. On 4th July, 2004, Galaxy entered into an agreement which is for a term equal to the life of the Concession with Hugo Legend (the ultimate beneficial owner of which is Suen Suk Hing, an Independent Third Party who acquired it from Mr. Pedro Ho on 12th April, 2005) and Wealth Access (the ultimate beneficial owners of which are Mr. Yeung Chi Hang and Mr. Cheng Kwee, each of whom is an Independent Third Party and, so far as KWCM and KWIH know, is independent of Galaxy and of connected persons of Galaxy) who have undertaken to provide a steady flow of customers for Galaxy Casino at Waldo Hotel and who are well-experienced in this market. In return, their entitlements will be determined by reference to various rates on net gaming wins of the Galaxy Casino at Waldo Hotel.