11:06 K. WAH INT'L<00173>K. WAH CONS<00027>-Joint Ann & Resumed-16 The Concession expires on 26th June, 2022. Unless the Concession is extended, on that date all of Galaxy's casino operations and related equipment in Macau (but not its hotel, retail or other non-gaming facilities) will automatically be transferred to the Macau government without compensation to Galaxy and Galaxy will cease to be entitled to operate any casino or gaming operations permitted under the Concession. Beginning on 26th June, 2017, the Macau government may redeem the Concession by giving Galaxy at least one year's prior notice. According to Clause 5 of Article 78 of the Concession, if the Macau government redeems the Concession then Galaxy will be entitled to fair and reasonable compensation. Such compensation will correspond to the benefit that it has ceased to obtain in consequence of such redemption at its resort-hotel-casino undertaking as described in the investment plan annexed to the Concession. The amount of compensation will correspond to the income from such undertaking of Galaxy in the final year prior to the redemption, before deduction of interest, depreciation and amortisation, multiplied by the number of years remaining until expiry of the Concession. Capital structure of Galaxy Under Macau law, the managing director of a company operating games of fortune and other casino games must be a Macau permanent resident and hold at least 10% of the voting shares of such company. Galaxy therefore has in issue two classes of shares --- Galaxy A Shares and Galaxy B Shares. The Galaxy A Shares make up 10% of the total issued shares in Galaxy. The Galaxy B Shares make up the remaining 90% of the issued shares in Galaxy. By the articles of association of Galaxy, while both are voting shares, the Galaxy A Shares carry negligible economic interest whereas Galaxy B Shares have effectively full economic interest. The Galaxy A shareholder is only entitled to a 0.0000000000000000001% share while the Galaxy B shareholders together are entitled to the remaining 99.9999999999999999999% share of Galaxy's annual distributable profit. On a dissolution or liquidation of Galaxy, the Galaxy A shareholder will only be entitled to a return of the amount of capital invested without any right to distribution of the liquidation assets of Galaxy while the Galaxy B shareholders will be entitled to both a return of capital invested as well as distribution of liquidation assets. None of the Galaxy A Shares is the subject of the Acquisition. The Acquisition is only of Galaxy B Shares. In accordance with Macau law, all the Galaxy A Shares are held directly by Mr. Pedro Ho, who is a Macau permanent resident. Mr. Pedro Ho is independent of KWIH, KWCM, the Family Companies and their respective connected persons, save for his interests in Kentlake, Top Notch and Galaxy referred to in this announcement. Mr. Pedro Ho is the resident managing director of Galaxy and owns 100% Future Leader. Future Leader is one of the Minority Vendors. He has disposed of his entire interest in Hugo Legend to Honour Link Group Limited. The sole beneficial owner of Honour Link Group Limited is Mr. Suen Suk Hing who is an Independent Third Party. Financial information Based on the audited consolidated income statement of Galaxy prepared in accordance with Hong Kong Financial Reporting Standards for the year ended 31st December, 2003 and for the year ended 31st December, 2004, its audited consolidated profit/(loss) before taxation, audited consolidated taxation, and audited consolidated profit/(loss) after taxation were as follows: Year ended 31st December, 2003 (HK$) Year ended 31st December, 2004 (HK$) (Loss)/Profit before taxation (86,926,296) 72,658,409 Taxation --- --- (Loss)/Profit after taxation (86,926,296) 72,658,409 An accountants report on Galaxy will be included in the circular to the shareholders of KWIH and KWCM.