Saas Financial Projections by kdu88896

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									CORPCAPITAL
  Investments
            STATEMENT
J. HAMBURGER:



    INDEX                                      PAGE


    lntroduction
               in
    Theinvestment Netainment
     Theestablishment operations
                  of the
             of operations
    Commencement
                     and      strategy
               reports business
        industry
    Early
               of Aqua
     Establishment
             policy
    Accounting
                    (August
    Thefirstvaluation     1999)
            leading to theFebruary valuation
    Theevents     up            2000
             2000
    TheFebruary valuation
    Theevents                  2000
            leading to theAugust
                  up               valuation
    TheAugust
            2000valuation
                                2001
            leading to theFebruary valuation
    Theevents     up
    TheFebruary valuation
             200'l
            leading to theAugust
    Theevents     up           2001valuation
    TheAugust  valuation
            2001
                                2002
            leading to theFebruary valuation
    Theevents     up
    TheFebruary valuation
             2002
    Theevents                  2002
            leading to theAugust
                  up               valuation
            2002
    TheAugust   valuation
           1:              process
                     internal
    Appendix Corpcapital
                              purposes
     Appendix Process valuation
           2:       for
     Appendix Auditinitiatives
            3:
          4:       valuation
    Appendix External
           5:        issues
     Appendix Ownership
           6.          issue
                   Bonus
     Appendix Cytech
                         with
     Appendix Myinteraction Mr Frangos
            7:
           8:
     Appendix Mybonus
           9:            merger
                    Harbour
     Appendix English




             2003
     1 ocToBER
                    R
J . H A M B U R G ES T A T E M E N T



        1 ocroBER2003
                  EXECUTIVE
                          SUMMARYAND
                        TO            OF
              INTRODUCTION THESTATEMENT
                    JADEHAMBURGER


                             1. 1 0 . 2 0 0 3




I am a qualified
               chartered        Priorto joiningCorpcapital 1998 | had both
                       accountant.                      in
local             experience thefield valuations.
    andinternational      in         of


              of                    in                           involved
                           investment CytechI have been intimately
Since inception Corpcapital's
          affairsand the developments the onlinegamingand relatedindustries
in Cytech's                        in
                                     virtuallyevery month, to visit Cytech's
worldwide.I have travelledextensively,
operations                                and numerousmeetingsregarding
          and to attend industryconferences
                         to                   in
                                      investment Cytech.
                   relevant Corpcapital's
        clpportunities
corporate


I was responsible the preparation all Indicative
               for             of                     of      on
                                              Valuations Cytech behalf
of Corpcapital the purposes determining fair value of Corpcapital's
             for             of              the
         for       purposes.
investmentaccounting


After
    Mark      joined
        Matisonn            inJanuary
                   Corpcapital     2001, toowasintimately
                                       he              involvedthe
                                                              in
preparation Indicative
        ofthe       Valuations.


The sole purpose the Indicative
               of                       was to arriveat an honestand
                               Valuations
                                                  in       We
                                        investment Cytech. did not
         estimate the valueof Corpcapital's
reasonable      of
                     Nor    we          todo
                                 requested so.
inflate ofthevaluations. were ever
      any


For each valuation                          controlprocesswhich ensured
                           employed valuation
                  Corpcapital     a
                                                      at
                            with the objectof arriving the fair value of the
a seriesof checksand balances
investment the purposesof Corpcapital's
         for                                             Briefly the process
                                      financialstatements.
entailed following:
       the


o. l                          from        was       scrutinized
                       emanating thebusiness carefully
              information
       Financial                                             and
            for
       tested integrity:


        .                             with operational
                            interaction
            We had continuous
            management a closeproximity the information
                     and              to
                    fromthe business.
            emanatino
             .           Monthly              weresubmitted us andwerecarefully
                                       accounts
                               management                 to
                         considered us.
                                  bv


             .                 management
                         Monthly                                       executives
                                              wereheldwiththe operational
                                       meetings                                 to
                         analyseperformance.


             .           We mademonthly        to                   banking
                                                            investment
                                      submissions Corpcapital's           executive
                                 meetinqs.
                         committee


             .                                                             informedand in
                                       kept executivedirectorsof Corpcapital
                         We continuously
                                they had directaccessto and regular
                         addition                                           with
                                                                  interaction operational
                         executives.


             .           We, and other Corpcapital               executive
                                                         including
                                                executives                        were
                                                                         directors,
                         closelyinvolved                         and opportunities
                                                        activities
                                       with the corporate                        relatingto
                         Cvtech.


             . As a result                          into
                                  enjoyed deepinsight thebustness.
                         Corpcapital    a


6.2   Corpcapital's
                auditors,   Hoffman
                       Fisher         played integral
                                                   part:
                                  (FH),    an


                 .                    year           2000FH conducteddetailed
                         Forthefinancial ending August
                                              31                    a            of
                                                                            review
                         the booksand records the business satisfy
                                            of           to       itselfthat the underlying
                         information projections
                                   and                                   were accurate
                                               relieduponfor the valuation           and
                         reasonable.


                 .                    year           2001FH-conducted auditof Cytech
                         Forthefinancial ending August
                                              31                   an
                                               in          with South African Accounting
                         on behalf of Corpcapital accordance
                                 (SAAS).
                         Standards


                 .                      year           2002FH again
                          Forthe financial ending August
                                                31                         an
                                                                   conducted auditof
                                                in        with
                         Cytech behalf Corpcapitalaccordance SAAS.
                              on     of


                 .                     its              on            and valuationof
                         FH concentrated audit activities the existence
                         Corpcapital's                including
                                             specifically
                                   investments,               Cytech.


                     .               was         audited FH for the purpose expressing
                         Eachvaluation independently   by                 of
                                                to
                          an opinion theinvestment
                                   on
                Corpcapital accordance
                         in          with SAAS.To this end FH thoroughly
                reviewed
                       our valuation methodology valuation
                                               and          assumptions
                and testedour conclusions reasonableness.
                                        for


          .     FH reported the Corpcapital
                           to             audit committee
                                                        their satisfaction
                                                                         that
                the valuation was reliable and that their audit was sufficienilv
                independent.


6.3     In preparing Indicative
                   the        Valuations
                                       Mark and I interacted
                                                           extensively
                                                                     with
        otherobjective              proficient
                      and technically        executivemanagers corpcapital
                                                              of
        (mainlyshane Kidd) and executivedirectorswho had relevantknowledge
        and expertise(JeffLiebesman,
                                   MartinSacksand BenjiLiebmann).


6.4     After completion the Indicative
                        of            Valuations
                                               they were subjectedto further
        comprehensiveconsiderationand debate, both formallyand informally,
        amongst ourselves,corpcapital'sexecutivedirectors,representatives
                                                                        of
        FHS and membersof corpcapital's   executivemanagementinvolvedfrom
        time to time in the preparation corpcapital'saccounts.These further
                                       of
        debates gave rise to the recommendedfair value for purposes of the
        accounts.


6.5     In 2001 KPMG verifiedthe valuations the purposesof the corpcapital
                                          for
        group merger.


o.o     ln 2002 PWC carriedout an independent
                                            valuation the investment.
                                                     of


        The fair value of corpcapital'sinvestment cytech was capableof being
                                                in
        measured reliably. To this end the discounted cash flow method of
                ("theDCF Model")
        valuation              was appropriate. addition valuation
                                             In        the       was
        benchmarked againstascertainable
                                       marketvaluesfor substantially similar
        rnvestments
                  and variouscytech specificcorporate
                                                    initiatives.
                                                               The business
        had a track recordand concretebusinessplanswhichfacilitated
                                                                  reasonable
        projections thesewere in turn capableof beingtestedagainstavailable
                  and
        relevantmarketinformation. supportof this:
                                 In


  7.1         The business
                         commenced May lggg and started
                                 in                    tradingin December
              1998. By August 2000 the businesswas highry profitabre,cash
              generative
                       with a largeclientbaseand an established
                                                              brand.


 7.2       By August 2000 the businesswas no longer an early stage venture
           capitalstartup. lt had developed
                                          intoa leadingbusiness its industry
                                                              in
           and the
                 was     regarded anentrenched growing
           industry widely      as          and             of
                                                     component
                 economy.
          theworld

 7' \.          Lynch,
           Merrill    Credit
                           SuisseFirst     PwC(London) other
                                     Boston,         and    leading
           investment
                   bankers         analysed industry
                            actively      the                  the
                                                   and advocated
           appropriateness DCF
                       ofthe      for             inthe
                                          investments industry
                              Model valuing


 7.4              produced ourDCF
         Theresults      by          were
                                 Model          against:
                                         evaluated

              .                       valuation
                  Price/earninosturnover
                             and             models.

              . Valuationscomparable
                        of                 including actual
                                  businesses,      their  historic
                  revenues.

              . Corporate   and               to
                                        specific thebusiness.
                       events opportunities

              . Theindependent of FHandother
                            views                  executives.
                                           Corpcapital


I have neverwithheld been a partyto withholding information
                    or                        any         from Corpcapital
          the         boardor any non-executive
executives, Corpcapital                              of          (or
                                              director Corpcapital its
then holdingcompany        Corpcapital a culture open debateat all levels
                   Corpgro).        has         of
and its investment Cytech
                 in     was consistently subject suchdebate
                                      the      of          WhenI became
                   was querying
awarethat Mr Frangos          certain                    I
                                     aspects the valuation did not hesitate
                                            of
providing withwhathe required.was requested JeffLiebesman laterMartin
        him                  I            by            and
                               whichI did.
                with Mr Frangos,
Sacksto cooperate


                        management executive
No memberof Corpcapital's        or         directorshas any personal
                                              Sean Rose and Tal Harpazare the
interestin Cytech,whetherdirectlyor indirectly.
         ownersof their combined
beneficial                            interest Cytech.They are not nominal
                                47.5o/o      in
                                                ownedby Dawson
      The remaining interest Cytechis beneficially
owners.           5%       in                                 Systems
       This sharewas previously
Limited.                                         This ownership entirely
                              ownedby VR Services.            is       at
armslength.


            structure Cytech
The ownership       of      was well knownand neverthe subject disguise
                                                             of       or
                                               structure
speculation. my discussions Mr Frangos ownership
          In              with       the                          to
                                                       was referred
                           neverquestioned authenticity the ownership the
as a givenfactand Mr Frangos             the         of             of
                          I                               that he now casts
52.5o/o ownedby Corpcapital.do not acceptthat the suspicion
     not
thereon genuine
      is
10    MarkMatisonn I havecarefully
                 and            considered valuation
                                        the        criticisms
                                                            levelled Mr
                                                                   by
      Abrahams Mr Collett theirreports. areconvinced these
             and        in           We            that   criticisms
                                                                   are
      unjustified thathadtheyknown of therelevant
               and               all           factsandhadtheopportunity
                                                                      to
      consult Corpcapital's
           with         management, would havearrived theirconclusions
                                they     not        at


11    We haveprepared separately
                    and       submitted theinspectors:
                                      to


             '     A document     "Cytech
                           entitled      Valuation
                                                 Report"
                                                      which details abbreviated
                                                                  in
                   formthe factsrelevant eachvaluation.
                                       to


             .     An operational
                               chronology events.
                                       of


             .     A glossary terms.
                            of


      MarkMatisonn prepared separate
                 has      a        statement submission theinspectors
                                          for        to            whichI
      havereadandaqree
                     with.


      I askthatthesedocuments readas if incorporated my statement.
                           be                     into


12    For a complete
                   understanding the relevant
                              of            facts and circumstances
                                                                 supporting
                                                                          eacn
      valuation is necessary consider detailed
              it           to       my       statement the separate
                                                     and          documents
      referred in 11 above. summary the relevant
             to           A       of           factsandcircumstanceseachmaterial
                                                                  at
     valuation is provided
             date        hereunder a convenient
                                as           (albeit
                                                  abridged)
                                                         overview:



     August20fl)


     - Thebusiness grown
                 had    exponentiallyturnover profitability.
                                  in        and

     - Market
            conditions
                     wereveryfavourable.


     - Potential
              listings merger
                     and    opportunities available. indicative
                                       were       The         pricing these
                                                                    of
      opportunities higher
                 was     thanourIndicative
                                         Valuation.


     - The prognosis the business forthe realisation Corpcapital's
                  for           and               of           investment
                                                                       was
      excellent
February2fl)l

- Actual
      profits ahead forecast.
           were   of

- Thebusiness
           continuedgrow.
                  to

- The                   positive.
         continued bevery
     trend       to

- Relevant
        industry           all      assumptions
                    supportedvaluation
              analysis

- Corporate        continued.
         opportunities


AugustZX)l

- The business
             was undergoing fundamental
                          a                        to                      and
                                          considered be in its bestinterests to
                                     change
       value,
 enhance         the    in           platform
            namely change the software      resulting a reduction the software
                                                    in          of
 royalty Aquaadministration thereby
       and               costs                       profit
                                            increasing margins.
                                  significantly


- Historic                           revenue forecast be 19%lessthanthe prior
               growth flattened future
         revenue    had       and          was     to
                                                 and primarily changein the
 year'sactualrevenue, account changes the industry
                    to      for     in                       the
        platform.
 software


- The US creditcard issueswere knownbut had not affected
                                                       revenue             payment
                                                             and alternative
           wereanticipated.
  mechanisms


- The business
             was expected be moreprofitable a lowerturnover
                        to                off                              variable
                                                          due to significant
       savings
 expense                                                            in
                            valuewas regarded enhanced the improvement the
             and its inherent               as       by
         model.
  business


February2002


- All indications thattimewerethatthe newsoftware wellaccepted players.
                at                              was          by


- Forecast                          year's
        revenue slightly thantheprior
              was      less                   revenue
                                         actual


- Theindustry         of
                 signs softening
            showed
       - Thefairvaluewas reduced approximately in US Dollars
                               by           27o/o                       at
                                                           fromthatshown August
          2001.


       - The reduction
                     was a consequence previously
                                     of                  changes the industry
                                                unforeseen     in           and
        the business.


         August 2002


                   was carriedout by PwC.
         A valuation


                       Valuation within PwCrangeof values.
          Our Indicative       was     the


                                                lowerthanthe February
          The fairvalueaccounted was significantly
                               for                                  2002valuedue to
          continuing                               and unforeseen
                          changesin marketconditions
                   material                                                 in
                                                                deterioration the
          performance the business.
                    of


  13     In preparingmy detailedstatementI have carefullyreviewedall of the relevant
         documentation I have recalled eventsof an intimate
                     and             the                            over a period
                                                          association
         exceeding years.lt is difficult do justiceto the exposeof that association a written
                 five                  to                                         in
         statement. have not had as much time as I would have liked to make mv detailed
                  I
                 easilyreadable.
         statement


  14     As he was intimately       in                        has been requested
                                                KevinJoselowitz
                            involved the subject,                              to
                                                  of            investment Cytech.I
                       with regard the restructuring Corpcapital's
         makea statement          to                                     in
                                                                     togetherwith my
                                which will be delivered the inspectors
         concurwith his statement                     to
         statement.




  SIGNED JOHANNESBURGthisthe1stdavof OCTOBER2003.
       at          on




JADE HAMBURGER
f'
     J. HAMBURGER:
                 STATEMENT




     INTRODUCTION:



     1.       My name is Jade Hamburger. was born in SouthAfricaon 3 September1971.I matriculated
                                       I                                                        with six
              distinctions
                         from DamelinHigh Schoolin 1989and then went on to do a bachelor commerce
                                                                                       of       with a
              majorin Accountancy
                                (BCom(CA))from the university Witwatersrand.graduated
                                                            of            I         from my BComwith
              Honours(CumLaude)in 1993and then did my honours Accounts
                                                             in       (majoring taxation). qualified a
                                                                              in         I         as
              CharteredAccountant 1996 after havingservedmy three yearsarticlesat PriceWaterhouse
                                in                                                              ("pW'or
              "PwC")
                    in Johannesburg.

              My auditwork focusedon the bankingindustry. specialised the reviewof Bank'streasuryoperations
                                                        I           in
              with particular                  products.
                            reference derivative
                                    to                 Duringmy finalyear of articles was seconded work in
                                                                                     I           to
              the Corporate
                          Financedepartment PriceWaterhouse an analyst.
                                          of             as

              Subsequent completing articles, joined the Corporate
                       to         my        I                     Financedepartment priceWaterhouse
                                                                                  of
              (Johannesburg) a manager a full time capacity. workfocusedprimarily mergerand acquisition
                          as         in                    My                   on
              opportunities.

     4.       I was involvedin valuation
                                       work including valuation CloverSouthAfricatrademarks
                                                    the        of                         (R430m)on
              behalfof Group Danonepursuantto the acquisition Danoneof a strategic
                                                            by                    equity stake in Clover.
              Additionally,valuedthe ZenexOil trademarks
                         I                                   pursuant a management
                                                       (R280m)      to           buyout.
     6        During'1997 transferred the London
                        |           to          officeof PriceWaterhouse
                                                                      Corporate Finance.
                                                                                       The
              Londonofficewas the largest
                                        PW Corporate
                                                   Finance
                                                         officeworldwide. My responsibilities
              includedsubstantial
                                involvement the mergersand acquisitions
                                          in                          aspect of CorporateFinance.I was
              involved valuation
                      in       work including
                                            financial
                                                    valuations and on behalfof the NHS Supplies
                                                             for                              Division
                                                                                                     of
              the NHSin England.

         o.   I left London join the Corpcapital
                            to                group("Corpcapital")July 1998.Corpcapital recenly been
                                                               in                    had
              established.joinedthe Investment
                          I                   Banking       primarily
                                                     Division       with a mandate initiate
                                                                                  to      structure
                                                                                                  and
              maintain
                     new and existingportfolio
                                             assets.

              I am currently concerned
                           still     with the management Investment
                                                       of         Bankingassetsat Corpcapital.

         8.    I met Sean Rose ("Sean")
                                      and Tal Harpaz("Tal")at university.
                                                                        The three of us lived togetherfor
              approximately yearsbeforeSeanleftto join Glencore commodity
                         two                                  (a




     1 ocToBER
             2003
            STATEMENT
J. HAMBURGER:


                                                   to           untilhe leftto travel.Tal latersettled
       tradingbusiness) Switzerland. and I continued livetogether
                      in          Tal
       in London.

 9.                                contact. and I were livingin London the sametime for approximately
       The threeof us keptin regular      Tal                         at
       threemonthsbeforeI left London join Corpcapital.
                                     to
 '10. I met Evan Hoff ("Evan") Wits and subsequently bothcompleted articles PW (Johannesburg).
                             at                    we            our      at
       Evan was also seconded the PW (Johannesburg)
                             to                                           We often worked
                                                         Financedepartment.
                                                 Corporate
       together jointassignments.
              on                                                              and the four of us
                               Evanlivedin the samestreetas Sean,Tal and myself
       were closefriends.

 11.                         Evanin early1997,afterEvanhad completed articles, assisthim in his
        MartinMoshalapproached                                     his       to
       onlinecasinoventures.Evan left PW to join Martin.The internet
                                                                   was in its infancyat the time and I
       thoughthis movewas brave.

 12.   The Moshal'shad developedproprietary      gamingsoftware,
                                          internet             which they brandedunderthe name
       of Microgaming.

 13.            involved the establishmentVR Services, online
       Evanbecame      in               of          an       casino        /
                                                                   managementadministration
                                                   a                    casinos.
                                        administered numberof Microgaming
             basedin CapeTown.VR Services
       company

 14.                            that VR Services
        Sean,Tal and I understood                       casinosthat were beneficially
                                                supported                           owned by         the
       Moshalfamily.

 15.                        a        plan for the establishment an onlinegamingcompany.
       Tal and Sean developed business                       of                       Evan's
                                                      with Tal and Sean resultedin Tal and Sean being
       proximity the industryand his close relationship
               to
              withfirsthandknowledge the growthand profitability the industryat the time.
       provided                    of                          of

 16.               boomwasjustbeginning.
        The internet                             was notyet widely
                                            gaming
                                       Online                            as
                                                                  regarded the
              industry choice.Evan'sinformation
       internet      of                                                                    industry,
                                              was clearthat,apartfrom the adultentertainment
                                           modeland one of the few onlineindustries be profitable.
       onlinecasinoswere the perfectinternet                                      to

 17. At the time Tal and I were livingin London. and Seanapproached to assistthem in preparing
                                               Tal                me                         a
                                                gaming
              planmotivating investment an online
       business            an        in              operation.




         2003
 1 ocToBER
                     S
J . H A M B U R G E R :T A T E M E N T


  18.                 planformed basisof Seanand Tal'spresentation Corpcapital May 1998(referV82
          This business         the                              to         in
                             key
                 andV8217).Four strategic        wereidentified SeanandTal in this presentation:
                                        strategies            by

                  18.1                                          jurisdiction.
                          The casinowouldbe locatedin an offshore

                                       wouldbe basedin London.
                  18.2 The administration

                  18.3 The Middle-Eastern    (non-English
                                       markets                            wouldbe targeted
                                                               territories)
                                                        speaking                         for
                          groMh.

                  18.4 Microgaming identified the mostlikelycasinosoftware
                                 was        as                            provider.

  19.     Seanand MartinSacksare closefriends. met Martin
                                             I           through                              looking
                                                                Sean.At the time Corpcapitalwas
           to employexecutives Martin
                             and     approached to join Corpcapital.
                                              me

  20.                     approximately month
          ljoinedCorpcapital         one     afterSeanandTal'spresentation.




1 OCToBER
        2003
J. HAMBURGER:
            STATEMENT



              IN
 THE INVESTMENT NETAINMENT



  21.   In or aboutJune'1998, decision principle madeto invest the online
                            a        in        was           in          casino         and
                                                                               opportunity I
        became                            of
                involved the implementationthe deal.
                        in

  22.                       for            capital
                   motivation making venture
        Corpcapital's              this                  was
                                                 investment interalia:

                             /          boomwas just beginning Corpcapital
             22.1 The internet technology                    and        wantedto participate
                    in the expectedgrowth;

             22.2                        with Evan and VR Services,
                    Throughthe association                                  was given an inside
                                                                  Corpcapital
                                       profitability growthrates;
                    trackto the industry           and

             22.3   The absolute                    investment
                                size of Corpcapital's                          smalland the potential
                                                             would be relatively
                          very high;
                    returns

             22.4                investing
                    Corpcapitalwas               individuals werewell knownto Corpcapital.
                                         alongside        that

  23.                  with Sean and Tal were protracted
        The negotiations                                           Sean and Tal were advisedand
                                                       and strained.
        assisted the negotiations Michael
               in               by             of
                                        Segerman EdwardNathanand Friedland     To
                                                                         CENF"). fast-track
        proceedings decision
                  a         was taken by all partiesto convertwhat was anticipated be a non-binding
                                                                                 to
                        into
        headsof agreement a bindingcontract

  24.   The investment concluded a binding
                     was           and                        was signedon 29 July 1998(V85e)
                                              headsof agreement
        (the"GA Agreement") the following
                          on            material
                                               terms:
             24.1    The agreement              on                the        of
                                   was conditional a due diligence, conclusion a VR Services
                              agreement Reserve
                     consulting       and        Bankapproval;

             24.2   Threeyearserviceagreements;

             24.3                            to                   in                   failure(this
                    Sean and Tal were obliged work with Corpcapital the eventof business
                     mitigatedthe risk as we felt they would be good operators.Additionally,
                                                                                           Corpcapital
                     had mediumterm plansto expandoverseas
                                                         and Seanand Tal wouldbe able to look for
                                 from London)
                     opportunities          ;

             24.4                     of
                    A two-yearrestraint tradefollowing          of
                                                      termination employment;

             24.5              invested $600000 consisting $40 000fromSeanand Tal and $540000
                    Totalcapital      of                 of
                                  (Corpcapital
                     by Corpcapital.                     that Sean and Tal contribute
                                             was insistent                           some of their
                              to    commitment).
                     own monev ensure



  1 ocToBER 2003                                                                               o
            STATEMENT
J. HAMBURGER:


            24.5.1                                 over the equity"split.Initially
                       Therewere intensenegotiations                             both Sean / Tal and
                       Corpcapitaleach                         A            of
                                       requiredTSo/othe equity. compromise 50% was finallyagreed.
                                                  of
                                                       "joint venture partnership"
                       This joint ownershipembodiedthe                                      between
                                                                                 relationship
                       the two parties                                  tensionthat wouldsurfacelater.
                                      and set the tonefor the shareholder

            24.5.2           vetoability Corpcapital;Rightspre-emption, come-alongs favour
                      Specific          by              of           and          in
                       of both parties;

            24.5.3               with VR Services
                      An agreement                               lt
                                                 was contemplated. was agreedthat VR Services
                       wouldbe entitled up to 5% (non-voting)
                                       to                   equityof the casino       (only)in lieuof
                                                                               business
                       fees,
                                                                             "shareholders
  25.                  contemplated for the purpose valuation
        The GA Agreement          that             of       of                                   the fact
                                                                                         interest"
                       constitutes minority
        that an interest         a         would be ignored.
                                               "the partieswill maintain
  26                           statingthat
        A clausewas incorporated                                                                regarding
                                                                        the utmostconfidentiality
                               of            and            the       Agreement
                     and.content thisAgreement in due course Definitive
        the conclusion                                                        saveonly
        for such disclosures                                to
                                          which are required be made by law or which are
                           and announcements
                 approved writingbetween parties".
        previously       in             the      This clause       the
                                                            embodied desireby Seanand Tal
        to maintaina level of secrecy around the dealings in this asset (primarilyfor personal tax
                                              yearsSeanand Tal criticised
        considerations their part).In subsequent
                     on                                                          for          it
                                                                        Corpcapital disclosures
        madeto the press(V21n).

  27    The bindingGA Agreement
                              contemplated separateshareholder's definitive
                                         a                     and         (comprehensive)
                agreement. draftshareholders
        agreement       A                          was circulated ENF but the partiesnever
                                           agreement            by
                                  agreement
                this.The definitive
        concluded                                    in
                                          contemplated the
                   was neverattempted. The GA Agreement
        GA Agreement                                  however         governed
                                                            effectively

                       between shareholders stilldoesso.
        the relationship     the         and

  28.   ln November2000 Seanand Taldemanded that, given the recent busrnesssuccess (the formation of
        Aqua the anticipated English Harbour merger) they felt it was appropriate to be released from all
        outstandingobligationscontainedin the GA Agreement. Corpcapitalwas not prepared to do this.
        As usual there was a lengthy internal Corpcapitaldebate and disagreementwith Sean and Tal over
        fhls lssue. We resolved fo seff/e the matter by substituting the GA Agreement with similar rights and
        obligations contained in a new Netainment shareholders agreement. Sean and Tal instructedLarry
        Nathan of (Mishcon De Reya ("Mishcon'l (a prominent London law firm) to comment on Kevin
        Joselowitz's draft




1 OCTOBER2OO3
            STATEMENT
J. HAMBURGER:


          agreement. This agreement was debated for months but never signed. Various drafts are
          contained in the Cytech submisslonpack. The GA Agreement thereforecontinuedto regulatethe
          relationship.

 29                                                  Benjisubmitted memorandum FirstNational
       Aftersigning GA Agreement, behalfof Corpcapital,
                   the         on                                 a          to
       Bank("FNB")in supportof an application SARBapproval, part of Corpcapital' strategy expand
                                            for           as                  s         to
                  interests
       its overseas

 30    The ReserveBank raisedqueries response
                                    in      and FNB expressed Benjitheirview that the application
                                                            to
       would be betterreceived SARB if it was made by a companyoperating the lT industryratherthan
                              by                                       in
                                                reluctant permitinvestment
                   bank becauseSARB was generally
       an investment                                    to               abroadby investment
       banks.

 J I   At the time we received                      for                              into a
                                          discussions Corpcapital establish investment
                             this response,                    to         an
       separate e-commerceentity, were well advanced.These discussionswere the precursorto the
                                              by          was put on hold pendingthe outcomeof
       establishment Aqua. The SARB application Corpcapital
                   of
       theseinitiatives.

 32. Subsequently                            were acquired Aqua SARB approval
               when GlobalAdminand lnteractive           by                 was soughtand
       obtained.

 ??    As a consequence thesetransactions
                      of                                      to
                                                  was entitled receiveits 47.5% and 50% interests
                                        Corpcapital
                                                          wereexcluded
       in Netainment CFIfor no consideration thesecompanies
                  and                     as                         fromthe saleto Aqua.

 34. Corpcapital's to receiveits interest Netainment CFI was reported SARB in accordance
                right                   in         and              to                 with
                     This notification
       the Regulations.                                          of
                                     was handledby KevinJoselowitz Corpcapital      Finance
                                                                            Corporate      and
       Benji.SARB responded approving
                          by                                                    thereonits
                                               interests Netainment CFl, imposing
                                    Corpcapital's      in         and
                     applicable offshoreinvestments.
       usualconditions        to




 1 ocToBER2003
            STATEMENT
J. HAMBURGER:



                    OF
    THE ESTABLISHMENT THE OPERATIONS




     35.   After negotiating                            Sean and Tal returnedto London and
                                        the GA Agreement,
                           and concluding
           establishedoperationsin Kentish Town. They developedthe call center and back office
           administration                                           of
                                     necessary supportthe operations internetbusinesses
                        infrastructure        to                                       (and
           specifically
                     onlinecasinos).

           They established    Admin(a UK company) housethe Londonbasedoperations.
                          Global                 to                              Interactive
                               was established provide
           Online(a BVI company)             to                 services internetbusinesses.
                                                      consultancy      to
                                                of               (that it later convertedinto Aqua
                     receiveda right to own 50o/o these operations
           Corpcapital
           shares).

     37.                              (as          in
                       with VR Services contemplated the GA Agreement)
           The agreement                                             was signedin August
                                     entitledVR Servicesto earn up to 5% of the casino business
           1998 lVBicM).This agreement
           (which                in
                            housed Netainment notGlobalAdmin).
                was ultimately             and

     38.   VR Servicesreceivedits equityin lieu of fees for providingconsultingservicesto the startup
                   VR       advicepertained interalia necessary
           business. Services             to                  hardwareinfrastructure,
                                                                                   designing
                     internet
           of relevant              plansfor the casinobusiness,
                            marketing                                           controlprocedures
                                                               settingup internal
           and other technical      This advicewas invaluable
                             support.                       and ensuredthat the many teething
           problemsand mistakesnormally          by
                                       experienced a start up businesswere avoided.Specifically,
                                           strategies, casinowas able to trade profitably
           given the successof the marketing         the                                very soon
           afterits initial
                          launch.

     ?o                    for
           The 5% earmarked VR Serviceswas envisagedin the GA Agreementand VR Services
                   to            VR        ultimately
           Agreement be non-voting. Services                  its          in
                                                    transferred shareholding
           Netainment DawsonSystems
                    to             Limited(V9sr).

     40                                             Benjinotedthat it was important Sean and Tal
           At the time of conclusion the GA Agreement
                                   of                                             for
           to determinean appropriate
                                    corporate         for
                                             structure the business.In this regard Sean and Tal
                  an      fromMishcon issues taxation jurisdiction.
           obtained opinion         on     of       and

     41                                           to
           It was not legalfor a Londonbasedcompany own and operatean onlinecasino.Sean and Tal
           therefore                  (a
                             Netainment Netherlands
                   established                           company) this purpose. was agreed
                                                  Antilles      for           lt
                                                      Sean and Tal 47.5% and VR Servicesthe
                          would own 47.5o/o Netainment,
           that Corpcapital               of
                   5%.
           remaining




        2003
1 OCTOBER
           STATEMENT
J. HAMBURGER:


    42.                                                                       Netainment's
                   applied and received licence operate onlinecasinoin Antigua.
          Netainment      for         a       to       an
          gamingservers                   transported Antiguain orderto complywith the Mishcon
                       were then physically         to
                             jurisdiction.
                        gaming
                regarding
          opinion

    43                                                                 to
          CFI (a BVI company)was formed to establishbankingrelationships facilitatee-commerce
          flnancial                                              wouldown 50% of CFI and Sean
                            processing. was agreedthat Corpcapital
                  transaction         lt
                       50%.
          andTaltheother

    44.   The Global                was        established support operations Netainment.
                   Admininfrastructure initially         to      the        of
           In time it becameapparent                       of         otherbrands casinos
                                            Adminwas capable supporting
                                   thatGlobal                                    of
          and different                          Even beforeNetainment's casino(branded
                                        companies.
                      types of e-commerce                              first
                                                                                        including
           King Solomon)went live there were opportunitres supportother online businesses
                                                         to
           lotteries,                   UK           pools(V81t).Global
                   onlineUK bookretailers, horseracing                Adminbeganto develop
                                                                            with the oriainal
                                                          This was consistent
                    base of clientsin additionto Netainment.
           a customer
                    strategy.
           investment

    45                                                                               usersof 47.5%
           Therewas and neverhas beenany doubtthat Seanand Tal are the real beneficial
           of Netainment                                          (subsequently
                                 and 50% of CFI or that VR Services
                       (nowCyteoh)                                           throughOawson
                                                                       (Pleaserefer to additional
                                                               (Cytech).
                                       owner of 5% of Netainment
           Systemsis the real beneficial
                                          5).
           information thistopicin Appendix
                     to

    46     Internet
                  business                         were plentiful.
                                   and opportunities
                         was booming                                              like
                                                                Lossmakingcompanies AOL
                              of
           werevaluedin excess $27 billion.

    47.                                               Sean and Tal researched marketand
                                gamingsoftware operate.
          An onlinecasinorequires             td                            the
           concluded              offered bestproduct.
                   that Microgaming      the

    48.             1998, Microgaming
          In December   the         license      was concluded
                                          contract                         (VBzos).
                                                             ("MGSagreement")
                          with                                       were difficult.
                                            (represented MartinMoshal)
                                      ("MGS")
           The negotiations Microgaming                by                          Moshal
                                                       terms, which were onerous.Microgaming
           was unwillingto vary MGS's standardcommercial
                                               from runninga casino operationin parallelto the
           requiredSean and Tal to be restrained
                    casinos(i.e.alternative
           Netainment                     casinosoftwareplatforms
                                                                were forbidden).

     49                                   termsinteralia:
                        contained following
          The MGSagreement      the
                                                       "revenue");
           49.1    A royaltyol25o/o GrossWin ("drop"
                                  of               /

                              was    "continuous",
                                                containing fixed terms or noticeperiod.The legal
                                                         no
           49.2   The agreement
                  advice received at the time was that the agreementcould be terminatedgiving
                           notice("reasonable" assumed be a few months).
                  reasonable                was      to




1 OcroBER2003                                                                            10
a




                STATEMENT
    J, HAMBURGER:



               OF
    COMMENCEMENT OPERATIONS



         AA                                                                  of
                                                          and the establishment its callcentre
                       commissioned development its website
               Netainment        the         of
               infrastructure.                                   brandwas the firstcasinoto
                                 Adminimplemented The King Solomon
                            Global              this.
                             by
                be established Netainment.

         51.   The onlinecasino                 in       1998.
                                       operations December
                               commenced

         cz    AroundNovember             (a
                            1998,Schindlers trustcompany                             were
                                                        basedin Londonand Lichtenstein)
                appointedto assist in the administration the corporatestructureand become the initial
                                                       of
                        directors Netainment, and Interactive.
                corporate       for        CFI

         53.                                                                             corporate
               Tal and Seanwere conscious the advicethey have received establish efficient
                                        of                           to        an
                         They commission
                structure.              arm's lengthagreementsbetweenthe variouscorporateentities.
                                                                  Global Admin and Interactive
                Market related service contractsbetween Netainment,                           were
                concluded.

         54                                       1998the online
                At the time of goinglivein December             gamingmarket           The sizeof
                                                                           was immature.
                the marketdwarfedthe numberof seriouscasino operatorsend was growingfaster than the
                internetat the time. Almost any casino established   aroundthis time with modest capitalwas
                                                                   The "Microgaming
                able to turn a profitif it offeredan averageproduct.                 casinoplatformwas very
                popular
                      withonlinegamingplayers.
                                            "low hangingfruit"of the casinoindustry the time. Like motetof
                                                                                   at
                The Americanmarketwas the
                its competitors,                                             resources the American
                                        focuseda large portionof its marketing
                               Netainment                                            at
                market.At the time it seemedthat the growthin the business                  only by the
                                                                         would be constrained
                extent the money
                     of         youwereableto spendon marketing.
                Revenue                      proportional marketing
                       and profitwere directly         to         spend.

         56.    Infrastructure a fixedcost.The variable
                             is                        costsat the timewere the MGS royaltyand transaction
                processingfees. The casino productwas deliveredelectronically.          the business
                                                                            Additionally,
                carriedno stock and received                            Apart from the upfrontcosts to
                                            cash in advancefrom. Players,
                        the                                        Playerloyaltymeantthat as the
                                       ongoingcapexspendwas minimal.
                establish infrastructure,
                business              grew.This is the perfect
                       expanded margins
                              its                                   model.Although
                                                             business             thereis natural
                playerattrition the casino's
                              in            database, core numberof new playersattracted
                                                    a                                  each monthby
                the marketing                                                                    in
                                        withthe business years.lf the casinowere to stop marketing
                            spendremained              for
                       theseplayers
                a month,          woulddeliverrevenuealmostdirectly profit(afterthe variable
                                                                  to                        costs).




    1 OcroBER2003                                                                                11
                     S
J . H A M B U R G E R :T A T E M E N T


                  ln subsequent             competition creditcard issuescreatedbarriers entryin the
                              years,increased         and                              to
                 market(it becameharder deliver profitable
                                        to       a                              New entrants
                                                          returnfrom advertising).           requiredan
                            "realworld"brandor extensive
                                                       capital developan internetbrand if they wantedto
                                                             to
                 established
                  survive.

         58.               with its early first moveradvantage
                  Netainment                                                  was able to quicklyestablish
                                                              into the industry                          a
                  database playersand an internet
                          of                    brand name to enableit to overcome               in
                                                                                  the difficulties the
                         that happened lateryears.
                  industry           in

         59.                                                                   advantageby targeting
                                   early howeverthat it could gain a competitive
                          recognized
                 Netainment
                       countries language
                  unique       with     specific                  support.
                                                     and callcenter
                                               content

         60.     Tal was born in lsrael and was very familiarwith the country.This was fortunatefor the
                                    began to activelytarget the lsraelimarketwith a Hebrewversionof its
                  business.Netainment
                                                          This proved to be the most importantstrategic
                  King Solomon brand almost from inception.
                  initiative the groupas the lsraelimarkethas a highpropensity gambleand is particularly
                           of                                                to                       loyal.
                                                          marketposition lsrael.The playerreturnfrom
                  King Solomonwas able to developa dominant             in
                  advertising               (andstillis) particularly
                            spendin lsraelwas                      high.

         ot.                                       is                              was identified
                                                                brand King Solomon's
                  The Hebrewversionof King Solomon's a well-known                               as
                  the third most recognizedgaming (not just online) brand in the country and has a strong
                                                          The lsraelicustomerbase is particularly
                            advantage other gamingproducts.
                  competitive       to                                                          high
                       and loyal.
                  margin




1 ocroBER 2003                                                                                  12
          STATEMENT
J.HAMBURGER:


    EARLY INDUSTRYREPORTSAND BUSINESSSTRATEGY




   62.   Pressarticles       the           of         gaming
                     detailing attractivenessthe online         began filter
                                                           market    to    through Corpcapital
                                                                                 to
         from1999.

   63.   Jeremy       of
               Badstone Natwest         (whomI calledand spoketo telephonically) very bullish
                              Stockbrokers                                   was
                       (V9r
         aboute-gambling g).

   64.                                                        that landbasedgamingbrandslikeLadbrokes
                           earlyin the lifecycleof the industry
                  identified
         Corpcapital
         and Lasseters, personalities Kerry
                     and           like         wouldbegin develop
                                           Packer         to      onlinegamingstrategies. our
                                                                                       In
                                  'brandnames"legitimised gaminginvestment the industry
                                                        our               and            (and
         opinion, emergence the
                the         of
         confirmed knowledge its attractiveness)
                 our       of

   65.   Additionally                      our                   wouldultimately
                                                  thatthe industry
                   thesebrandnamesreinforced belief                            regulate.

   66. The casino's       strategy the timewas to ultimately to a landbasedproperty wantedto
                  corporate      at                        exit                   that
                     Alternatively, moreattractive, the strategy create necessary
         migrate
               online.           and             was           to     the              mass
                                                                                critical   to
         purchase established
                an                landbased
                            branded        operation. lastideawas particularly
                                                   This                             afterAOL
                                                                            appealing
                          in       2000.
                     merged February
         andTimeWarner

   67.   A report me on the performance the casino
                by                    of                    in          boardpack(V92e). is clear
                                                 was included the Corpgro             lt
                                           were profitable
         from this reportthat the operations                                (operations
                                                         almostfrom inception                 four
                                                                                      commenced
              previously).
         months




                                                                                              ,1?
        2003
1 OCToBER
L




                STATEMENT
    J. HAMBURGER:



         ESTABLISHMENT AQUA
                     OF



         68.                        had                  of
                                              independently Netainment
                             business developed
               The GlobalAdmin

         69.   AroundMarchorApril1999, concept creating dedicated
                                     the     of       a                  groupto be listed
                                                                e-services                on
               the JSE was developed.

         70.                                        Corpcapital a small,young e-services
               Alex Maraneyand Wayne Brett introduced         to                       company
                                          comparable
               calledApshai.Internationally,       companieslike Sapient,Razorfishand Scientwere
                                              by            market.I identified similarbut larger
               big brandnamesand highlyregarded the financial                 a
                      run
               business by BrentShahimcalled               Station.
                                            Aqua Information                       provided
                                                                  Thesetwo companies
                         designand lT services
               consulting,                                    aroundinternet
                                                       focussed
                                             specifically                  technologies.

         71.            was developed combine
               A strategy           to       Apshaiand Aqua Information             the
                                                                             rebrand merged
                                                                      Station,
               business,                                      and grow organically
                       reverse-list companyand then consolidate
                                 the                                             and through
               acquisition. industry
                         This      roll-up                                  by       in
                                                                  implemented Corpgro the
                                                had beensuccessfully
                                         strategy
                                                                      into
                                marketwith its consolidation businesses Corpcom.
               outdooradvertising                          of

         72.                           that to be successfulin providinge-services, internetcentric
               It occurredto Corpcapital                                          an
               serviceprovidershould be able to extend its servicesto includewebsite administration
                                                                                                  and
               financial         processing.
                       transaction

         73                                were busy developing
                Global Admin and Interactive                   its businesses into a providerof
                                                    "dot.com"        (primarily
                                                                              onlinecasinos it
                                                                                           but
                            and
                administration consultancy       to
                                          services          companies
                also had otherclients).

         74.    Thereseemedto Corpcapital natural between
                                       a        fit                                         as
                                                              Aqua and GlobalAdmin/lnteractive
                                                        Apshai/
                the combinedcompany could offer its clients an extendedrange of e-commerceservices.
                           givenGlobal
                Additionally,                                           worldmarkets, South
                                                      access hardcurrency
                                     Admin/Interactive's   to                       the
                African based divisionscould providerand based (but world class)servicesto hard currency
                payingclients.

         75.              was conscious the time of developing e-commerce
                Corpcapital           at                     an         businessthat would make
                          profits(in an industrywhere loss makingcompanies
                significant                                               were attractinghigh ratings).
                Benji in particular                                                      fail
                                              that the loss marketdot.comswould ultimately and their
                                  was insistent
                                   to        markets.
                shortcomings exposed financial
                           be




    1 ocroBER 2003                                                                              14
            STATEMENT
J. HAMBURGER:


     76.   Notwithstanding        from the Aqua executives Aqua Onlinerevisedlistingparticulars
                         resistance                      the
           contained profitforecast(as opposed forecast losses,in the hope of achieving turnover
                   a                          to      of                              a
                  based
           multiple            common
                       valuation,                  markets the time)
                                    withinternational    at

     77.   At the time of Aqua'sreverselisting of the underlying
                                              all                       were profitable growing.
                                                               businesses             and

     78.   The acquisition Absec(thecashshell) the Aqua Information
                         by                  of                         /                Admin
                                                                  Station Apshaiand Global
                                                     on of
                       businesses announced the market 4th August1999.
           / Interactive        was       to

     79.   Aqua's revised listing particularswere only released in April 2000 given the protracted
                                  Bankfor approval acquire international
           negotiations the Reserve
                     with                        to      the          businesses.

     80.                                               was
                         meeting approve Aquaacquisitions heldon 12 May2000.
           TheAbsecGeneral     to      the




     1 ocroBER2003                                                                          1q
J. HAMBURGER: STATEMENT


       ACCOUNTINGPOLICY




       81    SoonafterjoiningCorpcapitalparticipated discussions research
                                          I         in             and        regarding appropriate
                                                                                       the
             accounting         for
                       treatmert Corpcapital's investments.helddiscussions
                                                              I               with PWCwho gaveme a
             verbalopinion the matter. alsodiscussed with Fisher
                          on            I             it            Hoffman("FH"){Corpcapital's
             auditors). produced draftopiniona relevant
                      FH           a                        forecast.Together reviewed prevailing
                                                                             we         the
             GAAPstatements international
                              and            accounting   standards. also had regardto market
                                                                    We
             commentators' reportswhichsaidthat international practice
                                                              best       was for investmentcompanies
             to marktheirinvestments marketand reflect
                                     to                                         in
                                                         increases decreases theirincomestatement.
                                                                   and

       62.   The uniformconclusionwas that this was the best accountingpracticeand that accordingly
                      wouldadoptit.
             Corpcapital

       83.   The investment in Netainmentwas treated in this way, along with Corpcapital'sother
                                                                             that the investments,
                                    tennet of this decisionwas the recognition
             investments. fundamental
                        A
             including        wereall heldfor satein the nearfuture.
                     Netainment,

       84.   In relationto each valuation                          accounting
                                         that followedof Corpcapital         purposes,I was satisfied
                            investmentin Cytech was capable of being measured reliably and I was
             thatCorpcapital's
                     that the indicative
             satisfied                          presented me for reviewby the executive
                                       valuations       by                            management,
             directors                     a          estimate the valueof the investment.
                                 constituted reasonable
                     and auditors,                           of




       '1ocToBER2003                                                                       16
            STATEMENT
J. HAMBURGER:




        THE F|RSTVALUATTON(AUGUST1999)



  85.                                                         (V9az). valuation $3m (100%)was
           In August 1999 | produced first valuation Netainment
                                   my              of              A          of
          determined                                          August1999 profits.
                   basedon a forwardPE ratioof 3x on annualised                 Listedcomparable
                                                                                           Casino
          multiples 58x and 19x were notedin the marketfor Boss Mediaand Tropikarespectively.
                  of
          profits
                were growing          per
                           exponentially monthand I calculated annualised
                                                             an                basedon the last
                                                                        earnings
                profits whichto apply multiple.
          month's     on             the




       2003
1ocToBER                                                                                    17
            STATEMENT
J. HAMBURGER:

THE EVENTSLEADINGUP TO THE FEBRUARY   VALUATION
                                   2OOO


  86.     ln January                      report
                    2000thefirstBearStearns               (refer
                                                wasreleased    V31.). report very
                                                                    The     is
          comprehensive.Thefollowing         from
                                    information thereport                       of
                                                         waskeyto ourunderstandingthe
          industry thistime:
                 at

          Theonline    market forecast growby 80%peryearuntil
                  gaming    was     to                      2002andbeyond.

          86.1   Theydo notbelieve Kyl"willpassalthough do feelthatotherformsof legislation
                                 the                  they
                 willbe proposed regulate
                               to              gambling opposed prohibit
                                        internet      (as     to      it).

          86.2   Certain        jurisdictions beginning recognise support industry.
                       established         were       to        and    the

          86.3   Onlinegamingcompanies, any internet
                                        like            company, were able to leverageoff
                         of                                 businesses relatively
                                             costscf internet
                 economies scale.lnfrastructure                      are         fixed(or
                       in      and                                      without
                                                                 revenues
                                         companies ableto increase
                 stepped nature) e-commerce      are                          a
                                                                      in          should
                                                                margins e-businesses
                        increase cost.The resultis that operating
                 dramatic      in
                                         experienced withNetainment. wasalsoconsistent
                 increase time(weinitially
                        over                      this           This
                                  experience).
                 withtheVR Services

                                                          of         brands
          86.4 Theindustry lowbarriers entry the developmentestablished
                         had         to     but                           should
                      an                                              in
                                                 havemanaged successfully non-US
                                      KingSolomon's
                                barrier.
                 create artificial                         this
                 markets,    lsrael.
                       notably

          86.5    "lnternet
                          gaming                                  capitalisation sharevalue
                               firmswill be ableto raisetheirmarket           and
                                        itself  the                 players
                                                             industry
                               legitimises within US"therefore
                 whentheindustry
                            reoulation
                      welcome
                 should

          86.6 "consolidation be a keyfactor
                          will                                      but
                                           driving future theindustry, branding
                                                 the    of
                            to
                 willcontinue beof utmost        (King           enjoyed strong
                                                           already
                                        importance". Solomon           a      brand).

          86.7   KingSolomons.com listed theBear
                               was     in                 (V3107).
                                                     report
                                               Stearns

    87.          By January
                          2000SeanandTalbelieved thecasino
                                               that             had       groMh
                                                         business substantial
                 potential.           that         was growing multiples the amounts
                         Theyrecognised the business         in        of
                     to     the                       Corpcapital provide
                                    SeanandTalapproached
                 spent market brands.                          to       debtfunding
                 to the business finance
                               to       this growth.                       growthin the
                                                               futuremonthly
                                                   Seanestimated
                        to              on     history.
                                    based recent
                 business beexponential              V10114)




1 ocToBER2003                                                                         18
            STATEMENT
J. HAMBURGER:


    BB     Jeff and Benji were directlyinvolvedin evaluatingthis proposaland obtained an inherent
           understanding the potential the casino'scash generation
                       of            of                          ability.Benji did not favourthe
                                                          balancebetweengrowthand free cash
                               preferring more conservative
           fundedgrowthstrategy,        a
           generation.

     89.                                                                           This was further
                                                 listingits onlinebettingoperations.
           In January2000 WilliamHill investigated
                                 "UK brand"mitigating                   on
                                                       onlineand listing the UK exchanges.
           evidence an established
                   of

    90.                                                                        was t160m. The
           Sportingbet.comreleasedtheir interimresults.lts market capitalisation
           business                                                    offeredpredominantly
                                                        flm. Sportingbet
                   turnedover f4.6m and lost approximately
           onlinesportsbetting thiswas regarded a goodproxy online
                             but              as           for    gaming
                                                                       valuations.

    ol     By January2000,approximately                       was derived
                                      50%of the casinosbusiness          from non-USsources.
           The returnon marketing                                                    returns.I
                                 spend outsideAmericawas far betterthan US advertising
           recognisedat the time that Netainmentwould have higher operationalmargins than its
           competitors     of                I had an earlypremonition the industry
                     because this.Additionally,                      that         wouldone
           day maturebut I was not sure when this wouldhappen(referV3izg).The statistics included
                                                                                       I         in
           this memoto Benjiclearly        that         was growing
                                   indicated the business          rapidlyand profitably




                                                                                               '19
        2003
1 ocToBER
                     S
J . H A M B U R G E R :T A T E M E N T



                       VALUATION
        THE FEBRUARY2OOO



        92.     In February  the     was
                         2000, business valued $5.7m
                                             at     (100%).
                                                          Thiswasbased thegrowth
                                                                     on
                 experiencedthecompany,PEof 7 andan exchange of 6.3(V 10135)
                          by         a                     rate




        1 O C T O B E R2 O O 3                                                 20
                     S
J . H A M B U R G E R :T A T E M E N T

                                    VALUATION
THE EVENTSLEADINGUP TO THE AUGUST2OOO



        93.                                                       boomwas in full swingon the London
                 By the beginning the year 2000,the dot.comlistings
                                of
                                           felt that to unlock the value of its investmentin Aqua and
                 stock exchanges.Corpcapital
                                                       for
                          and to obtaina listedcurrency Netainment
                 Netainment                                                growthstrategies, would
                                                                 acquisitive               it
                 require London
                        a      listedpresence thesebusinesses.
                                            for

         94.                                       justifiedPE ratios in excess of 100x for listed internet
                 Industrytrade journals(Red-Herring)
                 companieson the basis that e-commerce                            growth (V101Bo).
                                                      companiesexhibitedexponential
                                             for
                              were not unusual the time.
                 Thesemultiples

        95.               firmlybelieved
                Corpcapital                                                 strategyfor its internetassets
                                        that a Londonlistingwas an attractive
                 for the followinoreasons:

                 95.1                             appetite internet
                          Therewas a stronginvestor       for     stocksat the time;

                 95.2 London was provingto be a jurisdiction
                                                           that supportedonline gaming companies
                           (Sportingbet,
                                      Gaminglnternet).

                 95.3     Netainment Aqua were profitable,
                                     and                     cash generative and growing.This,we felt,was a
                          uniquesellingpointrelative the otherinternet
                                                   to                       thatwere 'burning"l
                                                                     listings                 cash.

                 95.4     The Londonlisting              a
                                           wouldfacilitate consolidation       usingpaperfor acquisition
                                                                       strategy,                       of
                                   businesses.
                          comparable

                 95.5    Seanand Tal werephysically
                                                  basedin London.

                 95.6             wouldenable
                          A listing                   to                 optimally.
                                             Corpcapital exitits investment

         96.     Therewere three Londonlistinginitiatives list on AIM or the LSE throughan IPO or reverse-
                                                        to
                       namely.
                 listing

                 96.1                 group listing
                          An e-commerce                   (consisting a mergedAqua, Netainmentand
                                                   (V10211).        of
                           CFI business). was notwellsupported SeanandTal.
                                       This                  by

                  96.2                                            by
                                          listing.Thiswas supported Seanand Tal; and
                                  Netainment
                         A separate

                  96.3             Aqua listing
                          A separate           promoted the executive
                                                      by            Aqua boardof directors

         97.      lnsingerTownsley (who later pitched for the sponsoringbroker role for the NetainmentLondon
                                                                          This reportdetailedthe prevailing
                  listing),releasedits internetstocksresearchreport(V10zro).
                  Londonlistedpricingvalues.Additionally, reportdetailedthe prospects GamingInternet
                                                       the                           of
                  (V'10255)     competitor Netainment.
                         a direct       to

        2003
1 ocToBER                                                                                              21
            STATEMENT
J. HAMBURGER:


     98.    In March2000 I dealtclosely                  (a           who was eagerto introduce
                                       with Doug MacDonald deal broker)
                                                                        (Benji and me) about
            Netainment institutions London(Vll B-11). informedCorpcapital
                     to           in               He
            currentstrongdemandfor AIM listings(particularly the internetsector).He also mentioned
                                                           in
            there shouldbe no resistance an onlinegaminglisting(whichwas a concernthat we had at
                                       to
            the time).

     99.    The pressat the time confirmed the Netainment
                                         that                  structure
                                                       corporate       was not unique(V111).
            Sportingbet.com example, established
                         for       had                  in          lslands
                                               operations the Channel

                              (fromSportingbet.com),
            99.1 Mark Blandford                  in this RedHerring              my
                                                                         confirmed thinking
                                                                  article,
                   at the time that the onlinegamingindustry           and that the young,recently
                                                           wouldregulate
                   establishedonline gaming brands would establisha first-moveradvantagein the
                          gamingspacelong before landbasedcompetitors
                   internet                     the                 entered market.
                                                                           the

     100.                                   group,predicted onlinegambling
            Datalvlonitor,Londonbasedresearch
                       a                                  that           wouldbe a $5.5
                  market 2001.Theirforecast online
            billion    by                 in      gamblers          to
                                                         was expected doubleannually.

     101.              encouraged lt was clearthat the London
            Thesereports        us.                                  markets
                                                             financial                  to
                                                                           were receptive
            onlinegamingand internet                                          We
                                               Seanand Tal were basedin London. were bullish
                                   opportunities.
            thata London                        achieved.
                              couldbe successfully
                        listing

     102.   In April 2000 Jeff went to Londonto meet with various promoters,
                                                                           sponsoringbrokersand
                     banksto investigate Londonlistingof our e-commerce
            investment                 the                             assets.In April 2000, I
                                                                                    startedby Jeff.
                                               and followup on the listinginitiatives
            flew to Londonto visitthe operations

     103.                  madein London thetimeprompted
            The goodprogress           at                    memoin April2000
                                                       Benji's               r
            (V1114).This memosummarised importance the proposed
                                      the        of           listingtransactions
                                                                                to
                                                                       governance
                                                              prevailing
            Corpcapital all stakeholders the time. Additionally
                     and               at                                       issueswere
            highlighted.           pointsare extracts
                       The following                from the memo.

                                                                  issuesat all times;
                            neededto be conscious conflict interest
            103.1 Corpcapital                   of       of

             103.2 Sufficient
                            diligencewas to be placedon the valuationprocessfor the purposeof any
                                                   to                   pricing models and prepare
                    capital raising.I was instructed analyseinternational
                                               it              that these valuationmethodologies
                                    Additionally was anticipated
                    forecastearnings.
                    mightbe testedby Londonsponsoring     looking placecapitalfor the companyin
                                                    brokers     to
                                           I             advised be prepared defendcalculations
                    contemplation a listing. was therefore
                                of                              to         to
                    at all times. (Benji is particularlyfastidiouson matters of process. As a resu/f I kept
                    detailed records and provided reqular feed



        2003
1 ocToBER                                                                                             22
            STATEMENT
J. HAMBURGER:


                   back to ensure that Benji (and later Martin,Jeff and Shane)were always updated
                   about developments).

            103.3 ProjectManagement the listingprocesswas considered
                                  of                               vital (information
                                                                                    neededto
                                    prepared and efficientlydistributed,
                   be comprehensively                                                was to be
                                                                       confidentiality
                                                          need to be given to timetables,
                   adheredto at all times and due attention                             agendasand
                   minutes).

                                                 statutory
            103.4 lt was notedthat all contractual,                    compliance
                                                          and regulatory         issuesneededto
                   be dealtwith(Benji
                                    listssomeof them).

                                   of              natureof a Londonlisting
            103.5 Benjiwas conscious the distracting                       and emphasized need
                                                                                        the
                                                                and management the operational
                   to stayfocused the Aqua JSE listinginitiatives
                                on                                           of
                   business.

     104.   I established projectmanagement
                        a                         to       the listingand began a processof
                                          framework consider
                          listing
            weeklyNetainment           committee
                                steering               (V1131).
                                               meetings.                          reports
                                                             lpreparedregularstatus
            (V11ss; 51)        all      (Vl1 1s5). documentswere
                 V11 and minuted meetings       The                    to
                                                              circulated all members
                                                        David Leibowitz,Benji and Jeff. Corpcapital
            of the projectteam includingKevin Joselowitz,
            CorporateFinancewas engagedto adviseon two mattersthat could arise as a resultof the
                                      namelyconflictof interestissues(V112os) exchange
                           initiatives;
            Londone-commerce                                               and       control
            issues(V'1121s). werehighly
                        We             awareof theseconcernsat the time.
     '105. Therewere variouscorporate
                                    listingopportunities presented
                                                       that               for
                                                                 themselves both Netainment
            and Aqua duringthe periodAprilto August2000. I took the presence these opportunities
                                                                            of                 into
            accountin my assessment marketconditions the purposeof my valuations.
                                  of               for                          The various
                      listing
            alternative                  were:
                             opportunities

                                                                      broker)pitchedto list
                                      Townsley(a Londonbased sponsoring
            105.'1 In May 2000 Insinger
                   Netainment the AIM market in London.Insingerbelievedthat they could raise
                            on
                   betweenf3m - fSm new capitalat a pre-new-money
                                                                valuation between
                                                                        of       €30m - t50m
                   ($50m- $83m).They recommended placement a price acknowledged be lower
                                               a         at                   to
                   than marketvalue in order to give initialoutsideinvestors(theirclients)a good profit
                            and      createan activemarket
                   opportunity thereby                                listed
                                                         fortheremaining        (V1'12s1
                                                                           shares     and
                   v 112a4).

            105.2 Reverse       of            groupintoa London
                         listing the e-commerce                cashshell(Crestan);

                                           (discussed
                           groupAim listings
            105.3 E-commerce                                      brokers
                                                    with sponsoring      Warburg,Henderson
                             J
                   Crosswaith, P Morgan,
                                       Salomon                           Townsley);
                                              Bros,MerrylLynchand Insinger



        2OO3
1 OCTOBER                                                                                        ZJ
            STATEMENT
J. HAMBURGER:


            '105.4 Preliminary
                             investment                   expressed Investecon behalfof fcs
                                      interestin Netainment        by
                   clientBskyB;

                                       (discussed
                             initiatives
            105.5 DougMcDonald                  earlier)

            105.6 In June 2000, Jonathan                               board of Aqua of his
                                                advisedthe non-executive
                                        Schneider
                                                                      of           t45m. At
                   initiatives mergeAquawith Amaze.Amazehad a valuation approximately
                             to
                  the time Jonathanwas arguingthat the Aqua share price,given the thin volumes,
                   undervalued true marketcapitalisation Aqua;
                             the                       of

            105.7 In July 2000 JonathanSchneider
                                               advised                 were eager to assist
                                                      that Beeson-Gregory
                  Aqua to list on AlM. Beesonhad confirmed initialvaluation the Aqua businessof
                                                         an               on
                  betweenC35-40m           they indicated appetitein the London market for a
                                Additionally             an
                                                              the differencesin the Aqua and
                  fund-raisingof between f5-1m. Notwithstanding
                           businesses, gave us a strongindication
                  Netainment        this                        that the Londonmarketwas still
                  receptive internet
                          to       listings this time and that company
                                          at                                   were stilltradingon
                                                                      valuations
                                                                    of            R250mat
                               Aqua was trading a marketcapitalisation approximately
                  high multiples.              at
                  the time.

                                                                         markets(particularly
     106. The interest Aqua (notedabove)fortified assessment the financial
                     in                         our        that
            London)                       opportunities particularly
                  were hungryfor e-commerce           at                    valuations.
                                                                   attractive

     107.   In earlyMay 2000 Sean informedCorpcapital a potential
                                                   of           opportunity mergethe Netainment
                                                                          to
                                   basedonlinecasinocalledEnglish
                     with a Canadian
            operations                                                  A                 of
                                                                                 chronology
                                                                 Harbour. complete
            the English     negotiations contained the Appendix Notwithstanding signing a
                      Harbour         is         in           9.             the      of
                                                         (to                  "Amalco")
                                                                                      was
            binding     agreement, English
                   merger        the        Harbourmerger forma company called
                                                                precedent the deal,was
            ultimately pursued the consent Microgaming, condition
                     not      as         of          a                  to
            refused.
     108. The key relevant                                    negotiations the purposeof this
                         facts arisingout of the EnglishHarbour          for
                    are:
            statement

                                                                        with a larger
                               presented for Netainment mergeits business
            108.1 The opportunity      was           to
                          player;
                   industry

                                             resultswere smallerthan EnglishHarbour's,
            108.2 Notwithstanding Netainment's
                               that
                  Corpcapital, andTalmanaged negotiate 50%of Amalco
                           Sean            to        for            (primarily    of
                                                                            because
                   thehigher    player
                           non-US           of
                                     componentthebusiness);

                                 provided
            108.3 This transaction      valuableinsightinto a competitors'
                                                                        businessvalidating
                             growth
                   Corpcapital's           for          and
                                  assumptions theindustry Netainment.
                                                                  Corpcapital


1 ocToBER 2003                                                                               24
           STATEMENT
J. HAMBURGER:


                      was ableto analyse English
                                        the                                           with English
                                                      financials a resultof discussions
                                                Harbour        as
                                      (predominantly
                      Harbourexecutives                                                  due
                                                  Paul Sudolskithe CEO) and the subsequent
                      diligence          performed the English
                              investigation      on                business;
                                                             Harbour

             108.4 The parties consideredan Amalco listing on the London AIM exchange highly
                               withina year of the merger
                      achievable

             108.5 The mergeranticipated Aqua wouldservice
                                       that                                         6%
                                                          Amalcoat fees approximating of
                      Amalcorevenue, linewiththe existing
                                   in                         Harbour
                                                        English                 costs(thiswas a
                                                                    infrastructure
                                                                                     revenue):
                      reduction the then current12.5%fee leviedbv Aoua on Netainment's
                              of

                         Harbour
             108.6 English                                of                  reviews
                                           were the subject mutualdue diligence
                               and Netainment                                       that
                                        concluded.
                      were satisfactorily

                                           from          Banking
     109. In May 2000 | received instruction the Investment
                               an                              Excoto havean independent
             expert value the Netainmentasset. Please refer Appendix4 lor a detailedaccount of the
             "ExternalValuation"          The resultof the processwas a decisionby the Corpcapital
                                chronology.
             board not to proceed with the substantialexpense of a third party valuation,given the
                         internal
             Corpcapital's              and the roll playedby Corpcapital's
                                expertise                                auditorsto audit the internal
             valuation.

     110.    In my July 2000 (Vl1365)
                                    investment
                                             banking          lcommentedon Netainment's
                                                    Excoreport,                      June
             2000 resultsand noted that revenueswere slightlyup by 10%. My choice of words indicates
             that I believed a 10% monthly increasewas a slight improvementin performance.
                                                                                         Profit,
             however,was down (as a result of large marketingspend). July's resultswere forecastto
                                I          and mentionthat a potential
             improvesubstantially.understand                         reasonfor month-on-month
             volatility profitsmay be a resultof matchingissuesrelatingto the accounting marketing
                       in                                                               for
                                                   factors:
                        This is due to the following
             expenditure.
                           spendin a monthmay only yieldreturns futuremonths.Players
             110.1 Marketing                                   in                   attractedin
                      monthone may only startplaying        in        months.
                                                    actively subsequent

                            payments
              110.2 Marketing                  prepaid.
                                   weresometimes                 wouldbe pay in advance
                                                      The business                    for
                               thatwouldrun overa few months.
                      a campaign

     111. The above points are importantto consider when understanding
                                                                     the valuations.lt is
            necessary to determine the trend in profits over a period rather than. lt is difficult to
                                             Additionally this is a casino businessthere is
            comment on one month in isolation.          as
            always an inherentvolatility a playerwinning an abnormally
                                       of                            large amount in a month.
            Over time these effects are neutralisedto give a true reflectionof performance(i.e. a
            trend).



1 OCTOBER
        2OO3                                                                                     25
            STATEMENT
J. HAMBURGER:


     112. Stanley                   results
                             its
                      released annual
                Leisure                   (V1213s) a- 32%risein earnings.
                                                with                   Additionally,
                                                                                 the
                  commented theinitial
            company       on         success itsinternet
                                           of               acquisition stated they
                                                       casino         and    that
            believed business a growth
                   this     was      areaforthecompany.

     113.          press thetimeJuly2000(V12136)
            Industry   at                     reinforced thinking it would difficult
                                                      the       that      be      to
                  any        ban        gaming.
            enforce legislative onon-line

     114.             2000, House Representatives to passa billbanning
            On July2Oth   the   of            failed                       gaming.
                                                                     internet
            (V121s8). further
                  This               Corpcapital's
                            reinforced                                wouldcontinue
                                                      that the industry
                                               thinking                           to
                                quo               future.
                           status for theforeseeable
            maintain current
                   the

     115. Starnet                      (market of $83m)
                            International
                Communications               cap      announced July2000thatit was
                                                              in
            launching Chinese
                    a                                       that therewas a potential
                                    gamingsite.This indicated
                             internet                                               Asian
            marketworth pursuing.
                                (Netainment         yet           launched Korean
                                         subsequently, unsuccessfully    a
            website April2002.
                  in

     1'16. TheCredit      /    Boston
                    Suisse First           reports Stanley
                                     analyst     on             was
                                                          Leisure noted August
                                                                        in       2000.The
           relevant
                  analyst          that
                         commented Stanley          was a "strong
                                              Leisure           buy"notingthatfuturegrowth
            wouldcomefromthe recent    gaming
                                  online    acquisitions.
                                                       These      confirmed conviction
                                                            reports       our
                          financial
            that the London            identified valuedthe importance land based
                                  market        and                  of          gaming
            operations developed
                      that              casino
                                   online               Stanley
                                               strategies.     Leisure's  WACCwas 7.6%at the
            time. (Ihe StanleyLeisureacquisitions dealt with more fully in the "CytechValuation"
                                                are
            document).

     117.              2000              lsraeli
                                   largest
             In September the second          newspaper    published listof the most
                                                     Ma'ariv       a
                         gaming
            widely
                 recognised   brands lsrael.
                                   in     King       was    thirdbehind state
                                              Solomon's voted         the    run
                  and sportsbetting
            lottery                                   our
                                         This confirmed belief
                                  business.                                version our
                                                             that the Hebrew     of
            online    was
                 casino a dominant  in             lt                 in
                                              market. explained success theregion
                                brand itslsraeli              our               and
                               of          value thebusiness.
            reinforced confidencetheintrinsic
                    our                        of

     118. A bullish           brokers
                  BOEsecurities          dated
                                    report    26'nSeptember was released respect
                                                         2000          with    to
            Aqua.BOErecommendedstrong
                             a                        forecast ratiousedby BOEfor the
                                     buy.The indicative      PE
            purposes their
                   of    Aquavaluation 21x(Vl3aq5).
                                     was




1 ocToBER2003                                                                             26
 J .H A M B U R G E R : T A T E M E N T
                     S



                     VALUATION
       THE AUGUST 2OOO



       ' t1 9                                                   modelused to determine indicative
                In the beginning August2000 | developed financial
                               of                     the                            the
                        of
                valuation Netainment.

        120.                 of                 was
                The importance thisfirstvaluation debated various
                                                        at      investment
                                                                        banking        meetings
                                                                              operational
                            Banking
                and Investment    Excomeetings.

        121.    Thiswas Corpcapital's attempt a comprehensive
                                  first     at                      cashflow("DCF")
                                                           discounted             valuation the
                                                                                          of
                Netainment      The                                                   giventhe
                                          directors I werevery conscious its importance
                        business. executive       and                  of
                       nature the asset.
                material     of

        122.    I was particularly                     wouldprovide benchmark framework all future
                                awarethat this valuation          a         and       for
                valuations. methodology
                         The                                   applied futureperiods.
                                      wouldneedto be consistently    in

        123.                my
                Additionally, valuation          and assumptions
                                       methodology             would need to withstandscrutinyfrom
                                                   (Additionally,
                withinCorpcapital from our auditors.
                               and                             when I developed August2002valuation
                                                                              the
                                                         advisor prepare independent
                modelI believed weregoingto getan external
                              we                               to      an         valuation).

        124.                 experience notedearlier this statement) performing
                I had previous        (as          in             in                   at
                                                                              valuations university,
                PwC Johannesburg PwC London. the time of preparing modelI performed
                              and          At                    the                     that
                                                                                  research
                                               textbooks previous
                consisted a review my university
                        of        of                   and              financial
                                                                valuation       models
                                                                                     usedat PwC
                to ensure the methodology wasappropriate.
                        that           used

      125.      I spenta lot of timeconsulting Shane(whohasa strong
                                             with                          ability) refine
                                                                   technical      to      the
                model.

        126.     Please refer to the process for preparing and reviewing the valuations contained in the
                Appendix 2.

        127.                            led me to the conclusion
                My researchand experience                                      cash flow basis of
                                                               that a discounted
                determining                          valuation
                          valuewas the mostappropriate                     was no longera start-up
                                                             model.Netainment
                                                          it
                company. the time of the Augustvaluation had a trackrecordof increasing
                          By                                                                  and cash
                                                                                       turnover
                profits. thisregard referto the document
                       In          I                   titled"Cytech        In                  factors
                                                                   Valuation". addition following
                                                                                      the
                            by
                wereevaluated me:




1 O C T o B E R2 0 0 3                                                                             27
                     S
J . H A M B U R G E R :T A T E M E N T


                                                                     method valuing business.
                  127.1 DCF is recognised conceptually mostappropriate
                                        as          the                    of     a         lt
                                                                high growthbusinesses
                                        relevant cash generative,
                          is particularly      for                                  that requirelittlere-
                          investment caoexfor futureorowth.
                                   I

                  127.2 An earningsyield or pe vatiation cannot adequatelyprovidefor future anticipated
                                                                                 of
                                                Futureeventslike the renegotiation Aqua fees, changein
                          changesin the business.
                                                 in          marginscan never be adequately
                          royaltybasis or movement operational                            dealt with
                               a        multiple
                          using comparable     approach.

                  127               use comparable
                     .3 PE valuations                          and indicesthat are not strictly
                                                 data businesses
                          comparable.

                  1 27.4 Turnover
                                and earningsmultiple                 performed benchmark DCF
                                                    basiswere,however,       to        the
                          value.

                  127.5 The PwC (London)valuationproposal(refenedto in Appendix4) provideda useful
                           indicationof the methodologythey would recommendto value Netainment.PwC
                           proposedperforming valuationbased on a discounted
                                            a                               cash flow analysis(V11+oa)
                                   by          of        fromcomparable
                           supported an analysis multiples            listedcompanies.

                  127.6                       reportat the time of the Aqua listing(checkdate)(V112ss)
                          The ABN Amro Broker's
                                                         ABN Amro notethat"thevaluations e-commerce
                          supported DCF basisof valuation.
                                  a                                                          of
                                            players increasingly
                          and internet-related    are                to         giventhe disparities
                                                              difficult determine                  in
                          demandforecasts
                                        and the evolvingbusiness     Notwithstanding, propose
                                                               model*.             they      two
                          techniquesto determinefair value being a discountedfree cash flow and the PE
                                  method. performing
                           Relative     In                          ABN Amro determined discount
                                                   theirDCF valuation,                the
                           rateusingthe CAPMmodel.

                  127.7 I point out that the use of the DCF modelwas subsequentlyconfirmedas appropriate
                           in the MerrillLynch report (January2001) (V1816d.

         I 28.    In respectof the August2000 valuation:

                  128.1                         valuation
                            circulated indicative
                                     the                                     Shaneand Jeff for their
                                                        document Benji,Martin,
                                                               to
                                                 I
                           commentsand discussion. clearlymarkedthe first draft as such and mentionedto
                                                              afterdebateand discussion. was awarethat all
                           Benjithat the valueswouldbe adjusted                        I
                                        would be tested and debatedfor reasonableness conservatism.
                           my assumptions                                           and
                                       in                  with Shane,Benji,Jeff and Martinreferred in the
                           This occurred a seriesof meetings                                      to
                                                    The                                      valuation
                           variousemailcorrespondence. first draft of my August2001 indicative        is
                                   in
                           contained V13o^.

        2OO3
1 OCTOBER                                                                                            28
            STATEMENT
J. HAMBURGER:


                          128.1.1      This draft versionwas inadveftentlygiven to Mr Frangos in
                                       my submission him of 21 June 2002 (V20243)instead
                                                   to
                                       of the final versionreferredto below.

            128.2 Benji commented this first draft in a memo dated 14 August 2000 (V1392).He
                                on
                          that the numbershad not been reviewed
                  mentioned                                                 the ooint that FHS
                                                               and re-iterate
                  must performsufficient
                                       and adequatework on the accountsprior to finalisation the
                                                                                           of
                  valuation.

                                                                            valuationprior to a
            1 28.3 | asked Benji and Shane for furthercommenton my Netainment
                  meeting        with Jeff on August15 (Jeff,Shaneand myselfattend)(Vl394.).
                         scheduled
                              on August 17 the Netainmentvaluationwas debated with Peter
                  Additionally,
                                ("Key"),
                  Katzenellenbogen     Shane,Jeff and myself.AlthoughI cannotrecallspecifically
                                                                                             for
                  what was said in this meeting,I have no doubt that we debatedthe methodology
                                    and determined
                  valuingthe business                      auditteststo ensurethat the value
                                                 appropriate
                                     financial
                  was basedon accurate                 and
                                             information assumptions.

                          128.3.1      I included the narrative summary of the indicative valuations
                                       in my submissionto Mr Frangos of 21 June 2002. I did not
                                       include the Excel models paft of the valuation workings.
                                       There was nothing slnlsfer in this omission. lt is clear to a
                                       reader of the narrative that there is a detailed financial
                                       model to support the calculations of the valuation ranges. I
                                       would have provided fhese models to him if he requested
                                       them.

     129.       interactive
            After        exchanges    me,    Martin, Benji Peter
                                between Shane,     Jeff, and                my
                                                               KayI finalised
            August           valuation September (V1355)
                 2000indicative      in       2000

                                  drivers theindicative
     1 30. A summary thekeybusiness
                   of                   of                    at
                                                      valuation thisdatewere:

            1 30.1 Thebusiness grown
                             had             in
                                   exponentiallybothturnover profitability.
                                                           and

                                were
                        conditions veryfavourable.
            1 30.2 Market

                                        opportunities on thetable.
                          listings merger
            1 30.3 Potential     and              were

            1 30.4 Theprognosis excellent
                             was

     131.           2000 fairvalue the business determined be $44.8. (100%) $21.
            In August    the        of           was         to       m        and
                      (V1355).
            3m (47,5o/o)     Please
                                  refer the
                                       to   "Cytech       document further
                                                  Valuation"    for      detail.

        2OO3
1 OCTOBER                                                                                      ZY
            STATEMENT
J. HAMBURGER:


THE EVENTSLEADINGUP TO THE FEBRUARY   VALUATION
                                   2OO1



     132. My Investment                                      contained following
                                                   2000 (V13a+)
                           Excoreportdated24 October
                     Banking                                         the
                    information:
             relevant

                                                                   with
             132.1 I notedthatthe Aqua term sheethad been negotiated Amalco.

             132.2 The Fisher Hoffman review of the Netainmentmanagementaccounts identifiedno
                           issues.
                    material

             132.3 Sean Rosewill moveto Netainment a fulltimebasisfrom 1 December.
                                                 on

                                                     increase in actual revenue was relatively
             132.4 | believed that a 3% month-on-month
                                                                 pet            in
                                                             43o/o annumincreases revenue
                    moderated. stateof mindwas that a compound
                             My
                    was only a moderateperformance                             growth and very
                                                 given the historyof exponential
                    favourable    conditions prospects the time.
                             market        and       at

                                                                           BankingExcoat October
                                            because showsthat the Investment
     133. The date of this reportis important      it
             24 wouldhavebeenawareof the Augusttradingperformance the casino(at the very least).
                                                                of

                                                         exchangesis detailedon V13a31
                                  companieson international
     134. A list of Aqua comparable
                        the                                             and the relative
                                     demandfor these types of investments
             highlighting international                                                 pricing
             parameters.

     135.                                                               and Sean / Tal in relationto a
             In the latter half of 2000 a disputearose betweenCorpcapital
             bonusclamedby them.I dealwiththis in Appendix The issueis relevant the purpose
                                                         6.                   for          of
                                                                   relationship
             showingthat therewas an arm's lengthand often difficult                          and
                                                                              betweenCorpcapital
                                                                                        Corpcapital
             Sean/ Tal. Sean and Tal were not nominees Corpcapital any of its executives.
                                                     of         or
                                                               and processand was oftenmet with
                                                      governance
             foughtto enforceproperprincipals corporate
                                            of
             resistance.

     136.                2000, Deloitte Touch produced reporthighlighting
              In September            &              a                         valuations
                                                                        internet        and
                      benchmarkcriteria
             comoarable                                                      pricing
                                           This gave us an indication industry
                                      (V154).                       of             criteriaat
             the time.

      137.               Banking
             My Investment                                2000 (referred Netainment
                                Excoreportdated13thNovember            to               to
                                                                                  results
                                          that the due diligence both the EnglishHarbour
                     2000 (V1575) mentioned
             September          |                              of                      and
             Netainment        had           satisfactory. alsomentioned PKF(London)
                      businesses beenconcluded          lt             that        had
                          to
             beenapproached auditAmalco.




1 ocToBER
        2003                                                                                      30
            STATEMENT
J. HAMBURGER:


                          of               14o/o
                                   increased $2.4m.
     138. Revenues themonth September
                 for

                       Inoticed Ladbrokes begun aggressively
     139. In December2000     that     had    to              its    casino
                                                         market online    in
                      press,
            the English          V15 297.)Thisconfirmed thinking the London
                            (refer                      my         that          marketwas
            becoming                                                    were not permitted
                     more receptive this industry. the past onlinecasinos
                                   to            ln                                      to
            advertise the UKthrough traditional
                    in             the         media(print,       Today
                                                          outdoor).   theyadveftise
                                                                                  prolifically
            e.g.dominant          of           sport(cricket,
                        advertisers international                 events,
                                                            soccer)

     140. In January   Merrill
                   200'1     Lynch       its      report E-gambling
                                  released in-depth    on         (refer
                                                                       V16 oe-zrs.)This
            report       our      on          at                 Merrill
                                                                       Lynch
                 confirmed thoughts theindustry thetime.In summary          believed
                                                                                   the
            onlinegamingmarketwoulddemonstrate     growth
                                            superior     prospects that internet
                                                                 and           gaming
                     wereveryvaluable. summary Merrill
            properties              A        of      Lynch's        report provided
                                                           E-gambling    is       on
            v1816e.

     141.   Merrill Lynch valued the Stanley Leisure and Ladbrokesonline casinos businesses.
                                                                                   (theywere in fact
                                                       track recordand profitability
                          thesecasinoshad less operating
            Notwithstanding
                              to         (theywere in fact loss makingat the time of valuation),
                       compared Netainment
            loss making)
            Merrill Lynch valued these businessesin excess of Corpcapital'sNetainmentvaluation.
                    was
            Netainment an identical     trading the samemarkets
                                 business,    in                          product
                                                              witha similar     offering
                     operated the MGS platform).
            (Ladbrokes       off

     142.   The material         used by MerrillLynchwith respect growthand discountrateswere
                       assumptions                              to
            more aggressive                                    valuation.Please refer the detailed
                           than those applied in the Corpcapital
            "Cytech         document furthercomparison MerrillLynch.
                   Valuation"        for                 to

                                        the                 and materialindustry
                                                  methodology
     143. The MerrillLynchreportvalidated approach,                             assumptions
                                valuations.
            usedin the Corpcapital

                                        was identified the potential
                    2000 EvanHoff("Evan")
     144. In December                                as            CEO for Netainment.
            Sean,Tal and I believed Evanwas responsible the success VR Services.The MGS
                                  that               for          of
                                    by                     leaders.
                                                wereindustry
                  established managed VR Services
            casinos         and

     145.                                 and                He
                                                      thinker. was hired in March2001 on an
                                intelligent a strategic
             Evan was articulate,
                    package
            expensive                      withMGSended.
                          afterhis restraint

                Sean,Evanand the (soonto be) newlyappointed
     146. Between                                                       (AlexAstenga"Alex')
                                                                  manager
                                                          financial
                                                                           (due to its outsourced
            a businessthat had previouslyoperatedwith minimal infrastructure
                                                                                 growth and
                                      with senior personal part of a comprehensive
            businessmodel)was supported                  as
                   cationstrategy.
            diversifi



1 OCTOBER OO3
        2                                                                                      31
           STATEMENT
J. HAMBURGER:


    147.                                       planning
           When EvanjoinedI insisted a strategic
                                    on                       (heldin SouthAfricaon 28 March
                                                      session,
           200'l)to alignthe Sean/Tal                    with respect the futureof the business
                                                  thinking
                                    and Corpcapital's               to
           (and to give Evan a carefully                                                  sessionI
                                                 plan goingfonrvard). facilitate meaningful
                                       articulated                 To          a
           prepared comprehensive
                  a                    document
                                strategy                                       onlinegaming
                                                      plansto form a diversified
                                              outlining
           group that could take advantage the growthopportunities the industry(referdocumenton
                                         of                      in
                                                                                       for
                              sets out our views at the time and was the factualunderpin the
           V17ss).This document
                      valuation. key points highlighted
                  200'1
           February           The         are         below:

                                                         regularcash flow profits). has no large
           147.1 Cytechwas viewedas a cash cow (generating                        lt
                                        couldelectto receiveregular
                  capexneeds.Shareholders                                 withoutimpairing
                                                                  dividends              the
                  business.

           147 Thebusiness growing
             .2         was      exponentially.

           147.3Thebusiness oneproduct online
                          had        (the                 in             competitive
                                                  operating an increasingly
                                            casino)
                  market.

           147.4 Therewas debate          barriers entrywere highor low. (Merrill
                                overwhether      to                             Lynchin
                  particular                           online
                                              of
                          believed the emergence dominant
                                 that                            would
                                                            brands    create
                                                                           barriers
                  to newentrants).

                       Lynch
           147.5 Merrill                      incremental of attracting new player
                            assumed the marginal
                                  that                 cost           a
                                                    assuming financial
                  wouldcost less over time (therefore      that            of
                                                                     margins the internet
                       would
                  casino                        this               margins,
                                    Notwithstanding viewof increased
                            increase).                                            and
                                                                         Corpcapital
                          were
                  management moreconservativeitsforecasting future
                                           in            of       Netainment    (ln
                                                                          margins.
                  the Feb2001valuation forecast
                                     we                                    of
                                                         overtimeas a result increased
                                              lowermargins
                  competition).

                        Lynch
            147.6 Merrill    predicted
                                     supernormal profits thenexttenyears
                                                       for              followed a
                                                                               by
                           phase fiveyears to industry
                  transition    of        up           maturationyear15.(lntheFeb2001
                                                               in
                  valuation, forecast
                           we        businessgrowth 3 years
                                                   for      followed "maturation"
                                                                    by
                             by        growth 3%).
                  represented a terminal      of

           147.7 Merrill
                      Lynch     that          prohibition e-gambling North
                          forecast the complete        of          in           if
                                                                         America,
                            would
                  successful,    onlyreduce totalmarket
                                          the                           Lynch notexpect
                                                       sizeby 33%.Merrill    do
                  thisto happen forecast
                              and                    (which welcomed Netainment)
                                        someregulation    was         by          within
                  the nextfour years.                         at
                                                       business the time was approximately
                                    Giventhat Netainment's
                  50% outside the US and growing,
                               of                  this threatwas viewedas less important.
                  Additionally, thatthismade
                            I felt          Netainment attractive
                                                     an               relative itspeers.
                                                               business      to




1 ocToBER2003                                                                                5Z
            STATEMENT
J. HAMBURGER:


                       drawnby the strategy
     148. The conclusion                                          shoulddevelop multiple
                                                 was that Netainment
                                          document                             a
                  strategy leverage the industry
            product      to       off                                            team and its
                                                       and skillsof its management
                                               knowledge
                                                                                            to
                           base.This would reducereliance the onlinecasinoand createsynergies
            existingcustomer                             on
            leverage                              (crossmarketing each products'client base was
                    acrossvariousother applications              to
            particularly
                      appealing).

     149.   The strategy documentwas circulatedwithin Corpcapital(to Martin, Benji, Jeff and Mark
            Matisonn). was considered accurately
                     lt              to         reflectthe views of Corpcapital the time. The
                                                                              at
            strategic                              were widelyaccepted the way forwardfor the
                              proposed this document
                    initiatives       in                              as
                                                       Evan was the championto drive this strategy
            group to deliveron the growth opportunities.
            forward.

     150.   Afterthe strategy       Mark Matisonn
                             session,            prepared                     them to Jeff,Martin
                                                         minutesand distributed
            and myselfhighlighting growthstrategy
                                 the                                March2001).Theseminutes
                                                 goingforward(V17eB2B
            contained following points;
                    the       key

                          needed diversify product
            150.1Netainment     to       its                                baseand
                                                        and leverage customer
                                                 offering          the
                           skills.
                   manaqement

            150.2 Sean and Evan believedthat a listingat this time should not be pursued,given the
                   current growth initiatives.Jeff disagreed saying that a listing would facilitate a
                   consolidation growthstrategy.
                               or

                                          valued their company (a start-upvirtual horse racing
            150.3 The Digiturfshareholder's
                   application) between
                              at                                       capitalraisingwas at a pre-
                                       $20m and $30m.The initialDigiturf
                                                $6m (basedon the conceptonly).Jeff and I were
                           value of approximately
                   new-money
                   highlyconscious overpayingfor a business
                                 of                                       in         stage.
                                                          thatwas currently conceptual

            150.4 lt was notedthatNetainment $4.5mcashin the bank. A dividend between
                                          had                               of

                   $1 and $1.5mwas proposed.

                                                                                           value
            150.5 The opportunity a VC fund to investcapitalin the businessat an appropriate
                                for
                   was discussed.

            150.6 Evan discussed potential
                               a                         with AnthonyMoshal(the brotherof
                                         mergeropportunity
                   MartinMoshal).
                               Anthony's      was          online
                                       business a comparable     casinousingMGSsoftware
                   withrevenues $4.5mper month
                              of                            PBTof $10mper annum.
                                              andan estimated

                                        that the mediumterm Netainment
                         was in agreement
            150.7 Everyone                                                  was to list.
                                                                     strategy



1 ocToBER2003
                     S
J . H A M B U R G E R :T A T E M E N T


                  150.8 lt was notedthat Netainment in the process nearly
                                                 was             of             its
                                                                         doubling staffcompliment
                          from9 to 17 people.

                  150.9 Jeff agreedwith the strategybut voiced his concernsat the time of the abilityof the
                          executive execute
                                  to                 timeously.
                                           and deliver

                  150.10Seanand Evanwere pushing increased
                                               for                  packages
                                                         remuneration      (bothEvanand Sean
                                                 of
                                          salaries overtl00 000 oer annumeach).
                          were on effective

                  150.1 The minutes
                       1           reflect insistence the governance internal
                                         our        that           and                    of
                                                                            controlaspects the
                                                             Evan committed focus on improving
                                   group neededto be upgraded.
                          Netainment                                      to                 this.
                                          agreedto improvethe processof shareholder
                          Evan additionally                                                   (in
                                                                                  communication
                          respect financial
                                of               making
                                          results,     new investments).

         151.    Althoughthe strategysession                            of
                                            was held afterthe formulation the February              the
                                                                                      2002 valuation,
                                        contained
                  facts and circumstances       withinthe strategy       (prepared me) were known
                                                                  document        by
                                                         valuation.
                  to me at the timeof executing indicative
                                              the




1 o c T o BE R2 0 0 3                                                                                  34
           STATEMENT
J. HAMBURGER:




                   VALUATION
    THE FEBRUARY2OO1



    152. The February            valuation performed finalised March200'1
                    2001 indicative      was       and       in         0/19150).

    153.           of                                 valuation thisdatewere.
                                  drivers theindicative
           A summary thekeybusiness     of                    at

                      profits
           153.1 Actual                        profits.
                            wereahead forecasted
                                     of

                          continued grow.
           153.2Thebusiness      to

           153.3Thetrendcontinued be verypositive.
                                to

                       industry
           153.4 Relevant                             assumptions.
                                    supported valuation
                              analysis      our

                          to         growth beenarticulated
           153.5 A strategy for future    had

    154. In February thefairvalue thebusiness determinedbe $57.1m
                   2001            of         was         to        (100%)and
                                                                            $27.1m
          (47,5%).
                 Please refer the
                            to    "Cytech        document further
                                        Valuation"      for     detail.




1 OcroBER2003
J. HAMBURGER:
            STATEMENT




                                        VALUATION
    THE EVENTSLEADINGUP TO THE AUGUST2OO1



    15 5 .                                     strategy was determined buildan operational
             Evanwas supportive the multi-product
                              of                      and            to
                                        the              products.
                                                    gaming
                         in London support alternative
             infrastructure      to

    156.     The development roll-out the new gamingproducts
                          and       of                            seniormanagement
                                                           consumed              time
             and utilised                                                    of
                                              The start-upnatureand excitement the new initiatives
                         othercompanyresources.
                                      lost sight of where the money was being made (the casino
                             Management
             were distracting.
                                                  neglected definitely
                      The casinowas not necessarily
             business).                                   but                as
                                                                     suffered a result.

     157.    The multi-product
                            strategy         in
                                    identified the strategydocument(V173)
                                                                        ultimately
                                                                                 developed(over
                                                                                       until2002.
                                                                was not fullyappreciated
                            The successor failureof this strategy
             time)as follows.

             157.1 The Casino: Profitable
                                        new marketswere successfully
                                                                   developed(Greeceand Turkey).
                    A new softwareplatformwas acquired.

             157.2 Quiz: A budgetto develop onlineQuiz application approved
                                           an                    was       (approximately
                                                                                       $500
                                                Evan secured additionalfinance from high net-worth
                    000 funded by CFI initially).
                                                                                      the
                    individuals. championfor the businesswas employedand Aqua developed
                               A
                                                   was not popular.
                               Unfortunately product
                    application.          the                                the         of
                                                                  Additionally development
                                                          was more expensive
                                  took longerthan expected,
                    the application                                         and failedto meet the
                    technicalobjectives. was evidentthat this product
                                       lt                           was a failurefrom the beginning
                            Evanfailedto see this).We refusedto sanctionany further investment).
                    (although                                                                  The
                    businessunitwas ultimately
                                             closeddownin March2003.

             157.3 Lottery: A Swiss based online lotterywas introduced us. The business(Zabadoo)
                                                                      to
                                              Althoughthe businesswas operational was not making
                    requireda capitalinjection.                                 it
                    money. The deal terms proposedby us were rejectedby the Lotterybusiness.The
                                         and I understand Lottery
                    dealwas neverconcluded              the                wentinsolvent.
                                                                 subsequently

              157.4 Greyhound Racing: On 12 March 2001 Nic Frangosintroduced          (Jeff
                                                                            Corpcapital
                                                                  who had made considerable
                    and l) to Nigel Robertson, internetentrepreneur
                                             an
                    profit by sellingScoot.com(an online directoryinquiryservicecompany).



        2003
1 OCToBER
            STATEMENT
J, HAMBURGER:


                         Niget was involved with Gaming lnternet, an online casino and Greyhound racing
                         betting busrness. The potential merger of Netainment and Gaming lnternet was
                         dlscussed in V11rs. Gaming lnternet's then market capitalizationwas tn excess of
                         $50m (benchmarkedby a private fund raising of $8m). / dlscussed the relative value
                         parameters to be used in a merger of Netainment and Gaming Internet with Nigel.
                         Given his understandingof the current profitabilityof the Netainment business (and
                         tack of substantialprofits of his business,) acknowledgedthat Netainment would
                                                                    he
                         necessarilyown more than 50% of an enlarged merged group. (This implied a value
                         for Netainmentin excessof $50m).
                                                                                                       "start up",
                         IJttimatetyEvan and Scan dismlssed the opportunity given the risk of the
                         toss-makingGreyhounddivision.A deal proposed by Nigel presumed that Netainment
                         would only get half of the enlargedgroup was not attractive(even if ft did fast-tracka
                         London listing).(Detailon Gaminglnternetis provided on Vl7 gg/ oo.)

                157.5 Virtual Horses.' The opportunity to acquire Digiturf was never concluded given the
                         price aspirationsof the Digiturf vendors. The application has yet to take off (two years
                                                       and I understand that the busrness is marginally loss
                         after our initial discussions.)
                         making.

                157.6 Bingo: A bingo application was developed by CFl. The product has recently been
                         launched (in 2003) and early indicationsarethat lf ls successful (Bingo has achieved
                         a cash break-evenposition after 4 months of trading).

                157.7 Overheads: Evan aggressivelyhired staff in London to support the strategy. New
                         premlses were leasedand infrastructureinvested in. Overheadsalmost doubled.



                   2001 Bear
        158. InMarch  the        flaming
                           Stearns           report released
                                       industry  was             A summarythis
                                                           (V17167).    of    report
                                                                                  is
              provided V172s6.
                    on

                158.'l Bear                                        2000              the
                                updated opinion theindustry. February theycharacterized
                          Stearns     their   on          In
                                                         to
                                   industry having barriers entry.
                              gaming
                         online          as      low

                158.2 Bear Stearns concluded barriers rising 2002. favoured
                                 now       that       were    in   This       Netainment
                                                                                      as
                      I wasoftheview increased
                                    that           meant
                                             barriers        competitors improved
                                                         fewer        and             As
                                                                                margins.
                                 Netainment, its critical
                         a result,         given        mass,             in           significant
                                                                  invested infrastructure,
                                                            capital
                         client databaseand brand name would consolidate positionin the market.
                                                                       its
                                      new          fail,
                                               would
                         Undercapitaltsedentrants


 1 o c r o BE R2 0 0 3                                                                                       37
            STATEMENT
J. HAMBURGER:


                           would
                 Theindustry                       players, Netainment) benefit.
                               consolidate thelarger
                                        and              (like      would

                              the                        in           theystillforecast
                                        raised BearStearns this report,
           158.3 Notwithstanding concerns     by
                 compound    growth
                        annual                      for     casinos.
                                  rates 2003of 36.4o/o online
                                      to

                                       that new payment
                            alsoforecast
           1 58.4 BearStearns                                               the
                                                                wouldmitigate riskof
                                                      technologies
                      cardlegislation.
                 credit

     159. OnApril 2001myinvestment
                 6th              banking Exco     covered results February
                                              report     the      to             In
                                                                           2001. this
                                         "bonus" legal
                                 executive      and                            Harbour
                                                       fees(inrespect theEnglish
                                                                    of
               I     the
          report note non-recurring
          merger).
     '160. The May 2001investment    Excoreport
                               banking                results March2001.This report
                                              contained     to
                 the       information:
          included following

           160.1 Thegrowth      adopted Netainment would
                         strategy     by        that    result theemployment more
                                                             in           of
                 people London.
                      in

           1 60.2In the Netainment      therewas approximately 000 of abnormal
                                  results                   $50                 marketing
                 expenditure      to          purchase a carin support an lsraeli
                           relating theonce-off      of              of         marketing
                          (V1836)
                 initiative

                                        valuation approximately could used
     16'1. In May2001I proposed a company
                              that              of          $70m     be   forthe
          purpose determining
                 of        executive options Evan Alex. argued thebusiness
                                             for    and    I       that          could be
          worth$60m- $70mon the basisof 'l 2 months      profits $6m-$ 7m and a PE of 10x
                                                  forecast     of
          (using recent
               a             acquisition
                      Aspinals               as
                                      multiple a benchmark). thata discount
                                                                         would
                                                         Given                be
               to                          wouldrange
                                   valuation
          given the staffthe company                 between and$50m(Vl7 3eato for
                                                           $40               3e5)
                      purposes thepurposes awarding
              incentive
          staff              for         of       options.

                         of                results April2001werepresented.
                                   Netainment
     162. In my Excoreport June2001,             to                     I mentioned
           that approximately$100000                                             I notethat
                                    was spentto establish new officeinfrastructure.
                                                        the
                                       $230 000 whichwas a decrease 40%from March($379
           April'sprofitwas approximately                          ol
                                                     increase
                         Evan had begunto significantly
           000) consistent.                                  marketing         without
                                                                     expenditure
                            in
                    increases revenue.
           concomitant                                                     marketing
                                           werelessas a result an inefficient
                                     Profits                 of                    and
           abnormalinfrastructure              Afterremoving infrastructure
                                          costs.
                               establishment               the              set-upcostsof
                         wereonly13%below previous
               000 profits
           $'100                          the                                 Revenue
                                                     month a likefor likebasis.
                                                         on                          was
                                                                      of
              ahead March.wasunconcerned I feltthedecline notindicative a trend.
           4o/o   of     I            as                was




1 ocroBER2003                                                                         ?R
            STATEMENT
J. HAMBURGER:


            162.1 We did not adjust these infrastructurecosfs in our determinationof sustainableprofits
                   for the purpose of the indicative valuations.

     163.                                        forecasted
            ln June 2001 an articlein the LA-Times        that Nevadaland-based
                                                                              casinoswouldsoon
            legally entitled migrate
                   be      to                          In
                                                 online. a Benjimemodated7th June200'1
                                   theirbusinesses                                    to
                                and myselfhe confirmed thinking
            Martin,Dave Leibowitz                    our       that this an opportunity become
                                                                                      to
            acquiredby a Nevadaoperator   who would requirean instantentry into the market.Additionally
                                                                       "undermines
            Benji mentionedthat this is good for the industrybecauseit              the basic argument
            thatonlinegaming illegal
                            is                 (V18e,).
                                   and unwanted"

     164.                in                         marketing
            Evanmaintained June2001that a sustainable                for          was 4x
                                                            efficiency the business
                     expenseas a percentage revenue
            (marketing                    of       equals25%) (ReferV'18r5).
                                                                          Both Corpcapital's
            August 200'1and February2002 valuations                       marketingefficiency
                                                   adoptedmore conservative
            rations.

     165.                       2001valuation reasonableness the purposes the Corpcapital
            KPMGtestedmy February           for           for           of
            groupmerger.
                       KPMG's       are
                             findings contained KPMG's
                                              in            Thesefindings
                                                      report.           were updatedby
                         (ln    2001we wouldhavebeenawareof June'sresults).
            KPMGin August. August                                               I
                                                                         Although have
                                  of               with KPMG I have no doubt that I relayedthe
            no specificrecollection my conversations
                                                         relevant an updateperformed them:
                    factsto KPMGas thesefactswere directly
            following                                           to                 by

                        fromFebruary Aprilhad increased. had decreased in relation
            165.1 Revenue          to                 May            but         to
                          in
                   forecast February was not considered trendas Junewas showing
                                   this               a                       signsof
                   growth;

                       werevolatile haddecreased wereaffected theabnormal
            165.2Profits          and          but          by         infrastructure
                   costsin support the multi-product
                                 of                      (t$100 000) and inefficient
                                                  strategy                        marketing
                          assumed beabnormal
                   campaigns    to
                       165.2.1     I wasstillconfident thegrowth
                                                    that       strategy goingto be
                                                                      was
                                   successful.

                                  165.2.1.1 credit
                                          The    card issue               the      yef
                                                           had not impacted business but
                                                                             (f
                                                       deafhad beenanticipated was awareby July
                                            the software
                                            that a deal was imminentand that this would improvethe
                                                   valueof the busrness)
                                            inherent

     too                financial
            The Netainment            Alexjoinedin July2001and I prepared work program him
                                manager                                 a             for
            U16 zt)'


1 ocToBER
        2003
            STATEMENT
J. HAMBURGER:


     167. Evancomplained theAquafeeswerenotmarket
                       that                              relative thecostof performing
                                                   related      to                   the
                 Thisconfirmed evidence the relatively administration
          service.           the      of             low             overheads        to
                                                                               required
             support English
                  the      Harbour     (evidenced
                                business            the
                                               during duediligence).

     168.                       pack
             In the Julymanagement Evanstates that"much the increase marketing
                                                       of          {of       spendlwas
                                                   ad-buys'. implies at a pointthereare
             unsuccessful to the purchase inefficient
                         due            of                This      that
                            from      ad
                      returns additional spend.
             diminishing

                  infrastructure wereincreasing
     169. TheLondon           costs                  Evan
                                              rapidly.   justified increase overheads
                                                                 the      in
              (V18ss) necessary support growth
                   as        to      the     strategy.

     170. In July, a result theJuneUSA"credit issue",
                 as      of                card                to
                                                   lsentan email SeanandEvan(dated
             23 July2001-      The                           discernibly thisbanking
                                       numbers notbeenaffected
                        V18gz.). casinos'    had                      by
                       (primarily the time because all the majorbankshad began blockgaming
              initiative       at                not                          to
                                         was              on             Therewerea
                                                     solely the US market).
             transactions because business not reliant
                       and      the
                   of                                      positively the prospects the
              number factsandcircumstances in myviewimpacted
                                        which                      on            of
                              of                 Theywere:
                                        cardissue.
              business a result thecredit
                     as

                           to
              170.1 barriers entryhadsignificantly     which
                                               increased    could       competition.
                                                                 decrease

              170.2 it wouldbe moredifficult a customer switchcasinos
                                           for        to             (customer
                                                                             loyaltywould
                        increase).

                                       capitalized
              170.3 he largersufficiently                            smaller
                                                       wouldoutperform
                                                 casinos                         that were
                                                                           casinos
                        expected fallawavor be consolidated.
                               to

                             that Microgaming's
              170.4 I believed               royalty                   in             of
                                                    fee was unsustainable an environment
                                margins they
                        decreasing    and   would       agree a reduction
                                                ultimately  to          across industry.
                                                                             the

                                      that                                          identified
                                                        continue focuson thefollowing
                                                   should
                         I alsostressed the business           to
                        growth
                             strategies:

                               its       base
               170.5 Diversifying customer   outside America
                                                   of

               170.6 ldentifying        payment
                               alternative    mechanisms,

               170.7 Entrenching            and
                                     loyalty;
                              customer

                                                 to            casinos.
                                                         smaller
                                          strategy acquire
                              a consolidation
               170.8 Considering

                                                                                                                   ani tsncof
     1 7 1 . I n J u l y 2 0 0 w a s c o n v i n c e d t h a t t h e " c r e d i t c a r d i s s u e " w a s n ost u b ss a u e e .
                              l1

     172.      ByJuly2001                                                software
                         discussions underway IMSregardingchange thecasino
                                  were     with          a     to               used
                         (V18
              by Netainment as).




1 OcroBER2003                                                                                                                         40
                   R:
J . H A M B U R G ES T A T E M E N T


                New software

                                                                                       MGS's
                 173. The relationship MGShad beenstrained sometime.Seanand Tal resented
                                    with                 for
                                   actionsin respectof the EnglishHarbour
                         frustrating                                                     Sean,Tal and
                                                                              Additionally
                                                                        merger.
                                                                                    (relativeto the
                                   believedthat the MGS licence fee was uncompetitive
                         Corpcapital
                                 and                                   of       your own product).
                                               (relative the alternative building
                         industry) too expensive       to

                 174.                                         with                     of
                                                                            the operator the Golden
                         Sean and Tal had builtup a relationship Jack Stroll,
                              online
                         Palace          Golden
                                   casino.          was one of the firstand larger
                                               Palace                            onlinecasinos the
                                                                                             in
                         world.Golden                         clients.
                                          was'one MGS's initial
                                     Palace     of

                 175.    Jack had recentlymigrated playersonto a software
                                                  his                    platformthat he had effectively
                                          Jack informedSean and Tal that he was very pleasedwith the
                         developedin-house.
                                               and that he had lost very few of his playerdatabase
                         resultsof the migration                                                  duringthe
                                           Jack mentionedthat his businessquickly returnedto pre-
                         move. Additionally,
                                  revenue
                         changeover      levels(thisindicated us that the software
                                                            to                    was of equalqualityto
                         the MGS system)

                 176.                                                          MGS productand beganto
                         Sean and Tal were very excitedto hear of an alternative
                                                       the
                         discussthe opportunity licence software.
                                              to

                 177.                             in            softwarelicenseagreementthat was
                                        culminated the IMS/Cytech
                         The negotiations
                         concludedwith effectfrom 1 October2001 (V18187).

                 178                of                          agreed September 2001as
                                                      werelargely
                                               agreement
                         Thekeyterms thesoftware                     by       7
                         follows:

                                                                           (after
                         178.1 A licence calculated .5%withreference revenue
                                       fee        at7              to           deducting
                                 promotional                        As             were
                                                     cardcharge-backs). MGSroyalties
                                          money credit
                                              and
                                 calculated reference revenues
                                          with      to       only,theequivalent       royalty
                                                                              effective
                                                  for         purposes
                                 on the IMSsoftware comparative       (i.e. the IMSroyalty
                                 calculated a percentage revenue
                                          as           of           wasapproximately
                                                               alone)             6.75%;

                         178.2 A minimum  monthlyroyaltyof $100 000. Cytechmonthly revenues never
                                          grew above the level ($1.3m)requiredto avoid paying the
                               consistently
                                 minimum.

         179.   The positive                                                                  are
                                                 margins the business a resultof this agreement
                            effecton the financial      of          as
                                   in                  document.
                                              Valuation"
                 dealtwith in detail the'Cytech

         180. Stanley                                approaching for a tradesalein July
                          released results lconsidered
                    Leisure      its     and                  them
                 2001.




 1 OCTOBER2OO3                                                                                        41
J. HAMBURGER:
            STATEMENT


     181.   In the July managementpack Evan says "much of the increase.[of marketingspend] was
            unsuccessful to the purchase inefficient
                        due             of         ad-buys"

     182. In an emailfrom me to Martindated 12 June 200'1(V'1855)                      had
                                                               lmentionedthat Netainment
                       $5m in free cash.I proposed
            approximately                                   this            and
                                                 distributing to shareholders then raisingnew
            moneyfrom outsideshareholders a pre-new-money
                                         at                  valuation $60m.At the time Corpcapital
                                                                      of
                                     'investors
                          creatingan
            was considering                   club" of high net-worth          who were considered
                                                                     individuals
            potential investors in opportunitiesCorpcapitalpresented them. This proposal was not
            progressed, it was considered
                     as                                         wouldinvestdebtfundingintothe
                                               that the investors
                                        unlikely
            business.
     '1
      83.   In September             published article
                       2001,RedHerring       an               the
                                                      detailing averagePE ratioon a basketof
            1000domestic
                       and foreigntechnology        The averagePE ratiowas 26x 2002 earnings
                                           companies.
            (a fonvardmultiple).          RedHerring
                               Additionally        expected       for        companies the
                                                           earnings technology       in
            S & P 500 to increase an average 55% in2002.
                                by         of

     184.              2001:
            In September

                                Sportingbet MGM Miragewere believed be the 3 casinogroups
            184.1 StanleyLeisure,         and                      to
                                        in
                         licences operate the British
                   awarded      to                   lsles;

                                 announced theyhad beenawarded of threegaming
            184.2 Sun International      that                one             licences the
                                                                                    by
                                      an          (Vl8323.).
                                             casino
                   lsleof Manto operate online             Thiswasinteresting Kevin Joselowitz
                                                                            as
                   had a good working relationship with Sun lnternational. I believed that in the mediunt
                   term they could be approachedas a potentialtradebuyer of Netainment.

                                     our      thatthe UK market
                            reinforced thinking
            Thesedevelopments                                 was the mostreceptive
            jurisdictions online
                       to      gaming
                                    businesses.

     155.                                                Nomurapitched Aqua to assistin Aqua's
                       2001(afterthe September 1th events)
            In September                     1                        to
            Londonlisting.Nomura's                                       was that notwithstanding
                                  view on the then currentmarketconditions
                                 indicesworldwide, AIM markethad provedextremelyresilient.
            the fall in technology               the                                     They
                                                towardsthe technology
            furthernotedthat a shift in sentiment                   sectormay be occurringand that
                                              shouldprovidea good platform
            Aqua'strack recordand profitability                           from which to approach
                                                                                               the
                  They were confident
            market.                                          t3-5m withinthe following months
                                    thatAqua couldraisebetween                       six
            (v19144).




        2003
1 ocToBER                                                                                           42
J. HAMBURGER:
            STATEMENT


               NewAquacontract

                                   entered a newadministration
               186. AquaandNetainment    into              services     with    from1
                                                                  contract effect
                              2001.
                        October   Thecommercial   of
                                             terms thiscontract          well
                                                             werenegotiated in advance
                                                                                     of
                        October
                              2001(V181i4). August
                                        The      2001valuation
                                                             forecasts     included
                                                                    therefore     reference
                                                                                         to
                                  of          The
                        thereductionthisexpense terms thiscontract
                                                    of          included.

                        186.1 A reduced          fee
                                      administrationcalculated .5%of Cytech
                                                            at7           revenue.

                        186.2 Thepurchase theAqua Kings
                                        of       /          marketing fromAquaat a capital
                                                      Solomon      team
                              cost $600 payable twelve
                                 of   000     in     equal
                                                         instalments    per   .
                                                                 of $50k month.




1 o c T o BE R2 0 0 3                                                                43
J. HAMBURGER:
           STATEMENT

THEAUGUST  VALUATION
        2OO1



    187. Thepreliminary
                     Netainment    results the 36 months
                             audited     for           ended30thSeptember
                                                                       2001were
           presented Corpcapital or around
                   to         in                /       2001(V18zo+).As
                                         SeptemberOctober                    these
                                                                      expected,
                 reconciled the management
           results        to                                        givingus further
                                        accounts we had beenreviewing,
                                               that
                 on       results thepurpose theAugust
           comfort financial    for        of        2001valuation.

    188. I wasconfident thatthe prospects the business
                     that              for           leading to theAugust
                                                           up           2001valuation
                        based thefollowing:
           wereattractive   on

                           growth
           188.1 Alternative             were
                                strategies identified    the
                                                    during strategy
                                                                  session.

           188.2 Evan was a newCEOwithrelevant
                                            industry
                                                   experience assist the
                                                           to      in
                 implementation growth
                             of the  strategy.

                            was
           188.3 The business investing     in
                                      capital newinfrastructurefundthegrowth.
                                                             to

           188.4 Newsoftware identified.
                           was

           188.5 Aquacontract been
                           had    renegotiated.
    '189. TheAugust
                  2001valuation finalised September
                              was       in       2001[V18147]

    190. A summary thekeybusiness
                 of             drivers theindicative
                                      of            valuation thisdatewere:
                                                            at

                       was
           190.1 Revenue forecast be 19%lesthantheorior
                               to                              revenue.
                                                          actual
                                                      vears

           190.2 In August September
                         and      therewasan international
                                                        reduction turnover.
                                                                of

           190.3 Thecredit
                         cardissuehadnotyetaffected business
                                                  the      materially.

           190.4 Thereduction      royalty Aquafeewereforecast significantly
                            software     and                 to          increase
                 margrns.

           190.5 Thiswasa margin
                               driven
                                    valuation. held view thebusiness
                                             We    the  that      would more
                                                                      be
                 profitable a lower
                         off             (due
                                  turnover to variable     savings).
                                                     expense

    191.   In August
                   2001thefairvalue thebusiness determined be $55.4m
                                   of          was          to         (100%) $26,3
                                                                            and
           (47,SYo).
                  Pleaserefer the
                            to    "Cytech
                                        Valuation"      for
                                                 document further
                                                                detail.




1 ocToBER
        2003                                                                    44
J. HAMBURGER:STATEMENT




          Events around the time of the finalisationof the August 200i valuation;



           192. Soon after the software switchoverNetainmentmanagementindicatedthat the player
                      acceptance the newsoftwarehad been very good (V18 263).This viewwas supported
                               of                                                                  in
                      the following
                                  emailcorrespondence:

                       192.1 12'n      200'l -Evanstatedthat everyday sincethe changeover
                                 October                                                had resulted an
                                                                                                    in
                                  increase player
                                         in     purchases. x7)
                                                        (V1B

                                           2001 -Seanenthusiastically
                       192.2 On 22nd October                              that the previous
                                                                   reported               weekends'totat
                                  player purchaseswas $324 000 verses a typical Microgaming
                                                                                          weekendof $320 000
                                  (V18zog).

          193.        By the time of the release Corpcapital's
                                               of          Augustresults [October
                                                                       in       2001]the initial
                                                                                               indications
                     were that the casinomigration
                                                 had occurred
                                                            successfully the business
                                                                       and          was on-trackto meet
                     forecasts.

          194.        The actualrevenueand profitearnedfor the monthsof September
                                                                                and Octoberapproximated
                     forecast (if you remove the abnormal promotional  expense relating to the migration-refer
                     "Netainment
                                  Valuation").wouldnot havehad the actualresults Octoberbeforethe release
                                            I                                  for                        of
                     Corpcapital
                              financial
                                      statements.
                                                Detailed
                                                       belowis an reviewof the forecast
                                                                                      and actualrevenues
                     and profitsimmediately
                                          post year-end. resultsapproximated
                                                       As                  forecast
                                                                                  there would have been
                     no needto consider
                                      changing fair valuefor the purpose releasing Corpcapital
                                             the                        of       the        financial
                     statements.


Netainment
        results
              versus
                   forecast
      ($'OOO;
Revenue                                                                                        01
                                                                                            Sept                               Oct 01
Forecast August
      at      2001                                                                              1969                              1750
Actual                                                                                          I 885                             1750


     (S'OOOI
Profit                                                                                      Sept
                                                                                               01                              Oct 01
Forecast August
      at      2001                                                                                379                               250
Actual                                                                                            434                               88*

 N o t e :' P r o m o t i o n as p e n d o f + 5 7 0 0 0 0 0 i n O c t o b e rc o m p a r e st o a n o r m a lm o n t h o f 5 1 5 0 0 0 0
                               l




1 OCToBER
        2003                                                                                                                                45
            STATEMENT
J. HAMBURGER:

                                      VALUATION
THE EVENTSLEADINGUP TO THE FEBRUARY2OO2



     195.    GamingInsight's     (formally
                           results       Gaminglnternet)
                                                      were released
                                                                  Friday             2001.
                                                                        28th September
                                                            from Zap Casino(its onlinecasino
                    was up 351% drivenby a major contribution
             Turnover
                      Gross profitwas up 365%.The release
             division).                                  was complimentary the onlinecasino's
                                                                        of
             grov'rth success.
                    and                                perspective Netainment.
                                    reinforcing positive
                             (V18136),        our                of

     196.             sold its business
             Netainment                (excluding MGS contract) Cytechfor sharesin Cytechwith
                                                the           to
             effectfrom 1 October2001 (Pleaserefer KevinJoselowitz's      for           behind
                                                                   document the rationale
             the disposal).                      a                    of
                                     Cytechbecame whollyownedsubsidiary Netainment.
                          Subsequently,

      197.                                     in
                        Casinobrandwas launched October200'1and in its first monthcontributed
             The Columbus
             revenueof $26 000. Management
                                         believed               casino brands (the businessnow
                                                 that alternative
             operated brands)
                     3                 growthinitiatives.
                            wouldsupport

     198.            strategy
             A further      session                                                      plan-
                                                         (referagenda-Y18267 the strategic
                                   was heldon 5th November                and
             v 18273).

                                                         notedthat that giventhe recentchangein
                                            session(V18284)
             198.1 The minutesof the strategy
                            the       management Cytechshouldbe focusedon drivingturnover.
                    software, executive        of

                               felt                 productstrategy
             198.2 Evan strongly that the diversified              shouldcontinue.
             '198.3 The executive        agreedto focuson strategies delivercasinoturnover
                                management                         to
                    of between$2m - $2.5mper month.

                             reconfirmed strategy pursue
             198.4 The minutes         the      to     non-USmarkets.

             198.5 A budget of $200000 was approvedto pursue the alternativegrowth markets
                    identified Koreaand Taiwan.
                             in

             198.6 Turkey was also considereda potentialgrowth opportunity(by September2003,
                    Turkey was the third largest Cytech market after lsrael and Greece).

                     198.6.1       The revenue growth forecast used for the purpose of the February
                                   2002 valuationassumed that $2.5m revenue per month would only
                                   be reached by November/December 2002 (one year after the
                                           change).
                                   soffuvare




1 OCToBER2003                                                                                 46
1-
     J. HAMBURGER:
                 STATEMENT


                  198'7 The strategysessionidentified range of software
                                                    a                  enhancements
                                                                                  that IMS would be
                        required implement.
                                to

                         198.7.1       The businessrealbed c/ose fo a year after the changeover that
                                                                                                     tMS
                                       were not geared to service the business adequately. Numerous
                                       requesfs went unanswered. The affiliate system application
                                                                                                  was
                                       delayed for two years and imptementation of new payment
                                       swifches were always detayed. This severely undermined
                                                                                                       the
                                       pefformance of the new software and frustrated strategic
                                                                                                initiatives
                                       to the detrirnent of the busrness. This subttety was
                                                                                                       not
                                       comprehendedfully until calendaryear 2003.

          199    |n my investment
                               banking
                                     Excoreport November | commented
                                              of      2oo1        on                 results september
                                                                                           to
                 2001(V1813). mentioned foilowing:
                            I        the

                 1991 Marketing reduced september200l anticipation
                             was        in         in           of thechange software
                                                                           in       and
                      player
                           migration October.
                                  in

                 199'2 September's marketing
                                high         efficiency
                                                      resulted the month's
                                                             in          largeprofit. noted
                                                                                    I      that
                       September's
                                marketing
                                        efficiency notsustainable.
                                                 was
                 199.3 Management focused growing revenue
                               was      on      the     to               $2min theshortto mediumterm
                       (byMarch 2002)' Thiswasto be achieved exploiting database focusing
                                                           by         the        and       on
                       the US market.Afterachieving $2mlevel,
                                                  the         Netainmentwouldcontinue pursue
                                                                                    to     its
                       multi-location
                                   strategy
                                          (Korea Taiwan).
                                                and
                        19 9 . 3 . 1   The February2002 valuationforecastassumed
                                                                               revenueto reach
                                       $2m by May 2002
                            -2-win
                1994 Millions     had beenlaunched management
                                                 and       expected marketing
                                                                  this      portal
                      to driverevenuegrowth.

         200    |n November
                          2001ArenaLeisure diversified
                                           (a         racecourseand mediagroup)was reported be
                                                                                            to
                makinga bid to acquireGamingInsight(Nigel Robertson's
                                                                    company).lnsight had a market
                capitalisation l30m but Nigeldemanded premium the then
                            of                        a        to              shareprice.
                                                                         current            Fromour
                previousdiscussionswith Nigel Robertson (Netainment)
                                                      we             concludedthat our business  was
                moreprofitable
                             (andtherefore morevaluable)thanGamingInternet it was calledat the time).
                                                                         (as
         201' InteractiveGamingNews (an industry publication)
                                                            surveyed readersto see the effectof the
                                                                    its
               creditissueon its reader's
                                        business
                                               revenues(November 2OO1).37%
                                                                         responded  that



     1 OCTOBER
             2OO3
                                                                                                   47
J. HAMBURGER:
            STATEMENT


                    were not affected. 1B%of company's
             revenues                                       were down by less than25o/o.
                                                     revenues
             (v1B2s2).

             201.1 At thistimethe onlinecasinoindustry
                                                     was predominantly
                                                                    focusedin the US market.

             201.2 Someof the majorUS banks(likeCitiBank)                  gaming
                                                        onlybeganto regulate     transaction
                                                                                           one
                      yearafterthe initial
                                         waveof banks(inJune2002).

             201.3 Approximately of the Netainment
                               half              business November
                                                         in      2002was focusedoutsiqe
                      of Americaand these playerswould not have been affectedby the creditcard issueto
                      the sameextentas the US players.

             202.     I was requested preparea valuationpresentation the Corpcapital
                                     to                            to              board. The
                      presentation scheduled 26thNovember
                                was        for          2001(Vl B 305).
                                                                      Although was available
                                                                             I
                      at the allottedtime (l was waitingoutsidethe boardroom) was nevercalledto do the
                                                                            |
                      presentation.

             202.1     | noted in the presentation
                                                 that the new softwarehad receiveda very satisfactory
                      acceptance the old players.
                               by               Approximately
                                                            50% of the casino'sVIP's and 30% of
                      entire       had
                            database migrated.

             202.2 | also notedthatwe were trackingforecasts the end of October2001 I explained
                                                           to                      .          that
                      June2001 revenue(priorto the US rejection creditcard purchases) forecast be
                                                              of                    was      to
                             in      2002.
                      achieved October

      203.           The business
                                wastracking
                                          aheadof expectations thistime.I believed forecast
                                                            at                   that
                     profits
                           wouldexceedbudgetbecausemarketing
                                                           was beingcurtailed focuson short
                                                                            to
                     term profitability.
                                      Additionallyforecasted
                                                 I         that operations
                                                                         wouldbe movedto
                                to
                     Johannesburg take advantage the lowercost of SouthAfricaninfrastructure. the
                                               of                                          At
                     time I notedthat therewerepreliminary
                                                         discussions GoldenPalace merge
                                                                   with          to
                     operations leverage the planned
                              and      off         GoldenPalaceLondonlisting the firsthalfof
                                                                            in
                            year 2002.
                     calendar

      204.           In January2002a meeting
                                           was held in Londonbetween
                                                                   Jeff,Sean,Tal and myself
                                                                                          where
                                 points
                     the following                 (Refer
                                       werediscussed    V16 2).

             204.1 The growthof the business
                                           shouldbe moreconservative the shareholders
                                                                   as               wantedto
                      manage business cashdividends.
                           the      for

             204.2 A dividendpayoutof 50% of quarterly
                                                     earnings
                                                            was agreed.

             204.3 Evan'sstrategy "buy marketshare"and aggressively
                                 to                               targettop line growthwas not
                      working. the time we discussed replacement Evanand Alex and the relocation
                             At                    the        of
                      of the infrastructure SouthAfrica.
                                         to

1 ocToBER 2003                                                                                  48
J. HAMBURGER.
            STATEMENT


           204.4 Aqua was consideringdelistingand we discussedwhether Netainmentwould be
                  considered potential
                           a         buyerof the AquaGamingbusiness.

           204.5 Corpcapital
                          needed develop closer
                                to     a      workingrelationship Jack Strollof Golden
                                                               with
                        (Taland Seanmentioned Jackwas considering London
                   Palace                   that                a      listing
                                                                             and thatwe
                  shouldconsider     withGoldenPalace
                               merging               pre-listing).

    205.   Jeffand I met JackStroll 25thJanuary
                                  on          2002withSeanand Tal in London.

            205.1 lt was evident
                               thatJackheldSeanand Tal in the highest
                                                                    regard.

           205.2 Jackseemedinterested the low cost-infrastructure our operations SouthAfrica.
                                    in                         of              in

           205.3 Jack intimated
                              that he would be listingin the first half of 2002 in London.

           205.4 He seemedkeento mergeoperations anticipation his listing.
                                               in           of

           205.5 He agreed that the Londonmarketwould preferan enlargedgroup with low cost
                 infrastructure.

           205.6 Sean and Tal had discussed
                                          mergeropportunities Jack previously.
                                                           with             This meeting
                  confirmed            preliminary
                          GoldenPalace's         interest a Cytechdeal.We resolved discuss
                                                        in                       to
                  the potential
                              merger
                                   overthe nextfew months.

    206.   In January2002,a Cryptologic
                                      brokersnote contained following
                                                          the        information
                                                                               relevant our
                                                                                      to
           February
                  2002market
                           outlook(V19a_7):

                             furtherquarterresults belowexpectations a resultof the creditcard
           206.1 Cryptologic's                    fell             as
                  rejections, jackpot
                           high     win rateand low levelsof play.

           206.2 Notwithstanding
                               this, Cryptologic       that first quarterresultswould still growby
                                               indicated
                  30% and 20% in respect revenue
                                       of      and earning
                                                         targetsrespectively.
           206.3 Cryptologic
                           mentioned
                                   that its licensees
                                                    were utilising        payment
                                                                 additional     optionslike
                  bankwires,electronic     and PayPal neutralise credit
                                     cheques        to         the    cardissue..

           206.4 Cryptologic's
                             forwardearning'smultiplewas 10.7times.

    207.   A Boss Media analysisreportdated 4 February2002 (V19u) (receivedby us in or around
                  /
           February March2002)on was broadlynegative
                                                   and impliedthat the creditcard issuewas
                   business
           affecting                 Evenso EV/Ebita
                          considerably.            multiples
                                                           were still high at 19 times forecast
           earnings.

    208.   In my 14 January
                          2002Excoreport mentioned following
                                       I         the




1 OCToBER
        2003                                                                                 49
            STATEMENT
J. HAMBURGER:


                            revenue(after deductingpromotional
             208.1 November's                                expenses)had increased42% on
                                                by                  numberbeingeffected the
                                                          comparative
                      October(thiswas exaggerated October's                            by
                                promotions
                      substantial        granted migrate
                                                to      usersontothe new platform).

             208.2 Turnovergrowthreflected successof the new software.
                                         the

                                  were that the software
             208.3 Earlyindications                                         implemented.
                                                        had been successfully

             208.4 The technical                                 and initialplayercomments
                                                    was successful
                               aspectof the migration                                     were

                      Positive.

             208.5 Averagepurchases player
                                  per                                       of
                                                                      October $584.
                                                      were $687 against
                                         duringNovember
                               average
                      November's                    approximated average July and August
                                      playerpurchases          the     for
                                                                                 with the software
                                         that playerswere becomingmore comfortable
                      2002. This indicated

                      U18 zeg)'

                            were about to enter new countries
             208.6 Management                                         Korea and Taiwan).This
                                                             (Portugal,
                      was thoughtto be a key driverof futuregrowth.

     209.                                              Finance
             In January2001 Jeff and I met PwC Corporate                           with the
                                                              (London). a discussion
                                                                      In
                   responsible gamingwe are givenan indication the indicative
             partner         for                             of                    multiples
                                                                            industry
                                                                                  profitof between
                                                        were quotedon a sustainable
             attributable an onlinecasino.Ebitdamultiples
                        to
             8-1 Ox for non-USA        and2-4x USA profits.
                               earnings,

                               Finance
             209.1 PwC Corporate      represented they had onlinecasinoexperience.
                                                that

             209.2 PwC (London)was
                                 mandated sellCytech.
                                        to

                             an        letterfrom PWC on 26th February
             209.3 | received engagement                              2002 (V19 sz)that was
                      signed earlyMarch2002.
                            in

                                                                 valueup to f25m,
             209.4 The fee quoted PWCbeganat L5% of thetransaction
                                 by
                                                                                    over
                                                            and by 5% on the remainder
                      increasing 3% on the nextt10m of value,
                               by
                      f35m.

                                                    like      Galaand PaddyPowercouldbe
                              that UK listedcompanies Ladbrokes,
             209.5 PwC believed
                       interested our onlinecasino
                                in                giventhe predominance non-US
                                                                      of      players.

              209.6    The PWC (London] information memorandum was distributed to the potential
                       purchasers May 2002 (post finalisation the Feb 2002 valuation]
                                 in                          of

      210.    ln February                                       gambling
                                                    that Internet
                        2002a BBC newsreportindicated                  was stillshowingsignsof
              growth.A quotefrom a mediaresearchsurveyperformed JupiterMedia Matrixmentioned
                                                              by
                              visitors onlinegambling
                          200'1
              that December          to                    was up significantly
                                                    websites



                                                                                              6n
         2OO3
 1 OCTOBER
            STATEMENT
J. HAMBURGER.


          From previous
              the                   (the
                     year.KSCasino.com Cytech
                                            website               in
                                                           mentionedthis
                                                  address)was
          article.

                Investment Exco
     211. MyMarch       Bank  report,
                                   commenting January
                                           on       2002     results
                                                        Cytech     (V19u5)
                            comments:
          contained following
                  the

          211.1 A decision taken focus profitability reduce
                         was    to    on         and              expenditure.
                                                          marketing

                             for
          211.2 Evan'sforecast February                     $380 000. This was
                                             was approximately
                                      earnings
                                    to                    for      and         of
                                                    revenue February an estimate
                 determined reference the anticipated
                          with
                         budgeted
                 February's             expenditure themonthly
                                marketing        and         overheads.

                 211.2.1     The February2002 indicativevaluationcontaineda forecastprofit
                             for February2002 of $2Bg 000. At the time of pefformingour
                             February2002 forecasfswe believedthat profitabilitywould be
                             increasinggiven this Februaryforecastfrom Evan (refer January's
                             Cytech anage
                                  m             nts).
                                        mentaccou




        2003
1 OCTOBER                                                                       51
        STATEMENT
HAMBURGER:

THEFEBRUARY   VALUATION
           2OO2



                        that                                                 valuation
                                      were achievable the time of the February
   212. We were confident the forecasts              at
        because believed newsoftware
              we         the         would prove be as popular Microgaming at a
                                          still   to            as             but
           muchlowercost.Additionally, wereconfident the growth
                                     we            that                   were stillrelevant
                                                                 strategies
                    portals,
           (affiliate;     newmarkets revenue
                                    for     growth            in
                                                  and reduction overheads given move
                                                                               the       to
               Africa).
           South

           212.1 Management      that            migration successful thatthey
                                            Palace
                         understood theGolden           was        and
                                                 (in         time).
                  hadrecovered pre-switch revenues a veryshort
                             to        over

                                 (prior USrejection
           212.2 June2001 revenues    to                           wereonlyforecast
                                                       cardpurchases)
                                                  credit                         to
                           again MaY
                  beachieved   in   2003.

    213. The February                                                         Forecast
                                                       contained typingmistake.
                                               narrative
                                       valuation
                    2002draft indicative                        a
                                                                            (whichare
                                                                    purchases
                                                    referred forecast
               detailed the tableon page11 incorrectly
         revenue      in                                   to
                       twice forecastrevenue) the years ending2003, 2004, 2005.The excel
           approximately                    for
                    (containing financial
           spreadsheet         the       model)attached thisreport
                                                      to         reported correct
                                                                        the     position.
                                       of
                                estimate flatturnover.
           Thisindicated forecast
                       a

    214. A firstdraftof the Cytech                            was prepared 22ndFebruary
                                                      valuation
                                         2002indicative
                                  February                               on
         2002lor internal          (V1039).
                          discussion            was valued $51,7m this initial
                                           Cytech          at       in              An
                                                                             version.
           internal    and discussion
                  debate                         Martin,
                                           between
                                    occurred            Shane,                   (JH
                                                              Mark,Jeff,TomWixley to
           check) me.Thisinternal
                 and             debateconsidered indicative thatwas muchlower
                                               an         value                thanmy
                              value.
           firstdraftindicative

                 numerous
    215. Following            discussions board
                        further          the    approvedfairvalue $40,7m
                                                         a      of     for
         Cytech decrease 27%in dollars the
              (a       of            to             Fair
                                                200'1 Value).
                                           August

                 of                                 valuation thisdatewere:
                                drivers theindicative
    216. A summary thekeybusiness     of                    at

                       indications thatthenewsoftware wellaccepted players;
           216.1 Initial        were                was          by

           216.2 Monthly     was       to     to             (credit
                                                                  cardissue
                       revenue onlygoing return June2001levels             start
                                                                               date)
                  in Mav2003.

                                                     years
                         revenue slightly thantheprior
           216.3 Forecasted    was      less                  revenue.
                                                         actual

    217.    In February thefairvalue thebusiness determinedbe $40.7m
                     2002          of          was        to          (100%) $19,3
                                                                           and
            (47,5%).    refer the
                   Please   to   "Cytech       document further
                                       Valuation"     for     detail.




        2003
1 OcroBER                                                                             52
            STATEMENT
J. HAMBURGER:

THE EVENTSLEADINGUP TO THE AUGUST 2OO2VALUATION



     21;8. In late March2002Seanentered                          with
                                                      discussions Sportingbet.
                                             acquisition
                                      informal                                  These
           discussions notprogressed theCytech
                     were          as                                              of
                                                                          indications
                                                        believed theinitial
                                             shareholders      that
             pricing Sportingbet below
                   by         were    expectations.

                                 report             2002 results
                                             February
     219. My April investment-banking detailed                  (V19 67).Inoted the
             following;

             219.1 Revenue profits
                         and                        budget.
                                               behind
                                 weresignificantly

             219.2 Infrastructure relocating South
                               was         to    Africa              intended scaledown
                                                       andthe business      to
                                 in London.
                     infrastructure

     2ZO. A Sunday April2002ariicle the London
                 7th              in                                          at
                                                    gavean insight the industry the
                                             Observer            into
             time.

                          to    seemed have
             220.1 Barriers entry    to        dramatically;
                                           risen

                            operators MGM
                       Gaming
             220.2Online           like  were     online;
                                             moving

                              for
             220.3 The strategy a successfulonlinecasinowas determined be a global,multi-
                                                                     to
                   currency,           operation couldexploit
                            multi-product      that           economies scale(thiswas
                                                                        of
                           strategY 2001).
                     Cytech's     in

        .
      221             Week
             A Business             April29th
                                dated
                          article               (V19129)
                                             2002      contained following
                                                               the       insight:

             221 European
               .1           betting
                       online         grow
                                  would   from$3.5billion 2002 $15.5billion 2005
                                                        in   to           in    (over
                     140o/o annum).
                         Det
                                           "offer[ed] bestenvironment online
                                                   the             for     gaming
             221.2 Merrill  believed Europe
                        Lynch      that
                     comoanies theworld".
                            in

             221.3 Entrepreneurs findways
                             would                   cardissue.
                                         around credit
                                              the

      222. Ladbrokes Paddy
                   and           showed
                             Power           interest the Cytech
                                       initial      in         business a result PwC
                                                                      as       of
                  initiatives company
           (London)         at      valuations             $20m.Thesediscussions
                                               approximating                     never
             progressed a preliminary
                     past          stage

      223.   ln a June28th2OO2      (V'19 experts
                              article   rga)                       systems credit
                                                 believed alternative
                                                         that             to        (like
                                                                                cards
             debit cards,   cards PayPal)
                        smart    and           overcome credit
                                           would        the   cardissues.




 1 ocToBER2003
            STATEMENT
J. HAMBURGER:


             The BearSteam,s                               revenues 2003coulddropby 160/o
                                               that industry
                                        forecast
                           gaminganalysts                         in

             from 2002 revenues.
                                                                        factors:
                                                 undermined the following
                                    was ultimately        by
     224.    The valueof the business

                                    growthstrategy                           yet The Quiz initiative
                                                  that has not been successful
             224.1 The multi-product
                   failedand the increasedoverhead was not required supportother products-(Bingo
                                                                   to

                    looksto be an early success though)'

             224.2 The systemicindustryissues(creditcard issuewhich beganin June but which did not

                   affectthe businessuntilthe secondquarterof 2002)'
                                                                         as the softwareis of a
             224.3 The softwaremigration October2001 that proveda mistake
                                        in

                    lesserqualitY the MGS software,
                                to

                                            (overheadsincreased                    growth in
                                                               without a concomitant
              224.4 Evan was a disappointment
                    turnoveror Profits).
                                                                           to delist Aqua' lf cytech
      225.   In August 2oo2 | formally proposed(to corpcapital)a strategy
             purchased Aqua, as contemplated, Cytechconsolidated
                                             the                    profitwould consistof the actual

                                          supportfunction'
             cost to administer back-office
                              the




                                                                                         54
  1 OCTOBER2003
            STATEMENT
J. HAMBURGER:




    THEAUGUST   VALUATION
             2OO2



     226.                                        valuation the business.
                        engaged perform independent
            PwC (Jhb)were     to       an                of

     227.           of                                    valuation thisdatewere:
                                     drivers the indicative
            A summary the key business     of                     at

                                         valuation.
            227.1 PwCcarried an independent
                           out

                                              was withinthe PwC Range.
                                      valuation
                             indicative
            227.2 Management's

                                                                     2002 value.
                                                lowerthan the February
            227.3 The fair valuewas significantly

     228.   ln August2002the fairvalueof the businesswas determined be $21.8m(100%)
                                                                  to                  and $
                                              "CytechValuation"
                                                              documentfor furtherdetail.
            10,4m(47,5%). Pleasereferto the




1 OCTOBER2OO3
           STATEMENT
J. HAMBURGER:

       1:                PROCESS
                  INTERNAL
APPENDIX CORPCAPITAL

Themanagement the investment
            of



      1.   Srnce inception I received monthly accounts from Netainmentand CFI together with
                                                       with Sean, Tal and / or the incumbent
                                             discussions
                     lnitiallyI had telephonic
           commentary.
                   Manageraboutthe resultsso that I could get a properunderstanding operating
           financial                                                              of
           performance.
                     These monthlyinteractions       over time into fully-fledged minuted
                                             developed                          and
           monthlyManco meetingsattendedby me (and later with Mark Matisonnafter he joined
                                                                                    I
                                                                      with management
           Corpcapital January2001).Subsequent these monthlydiscussions
                     in                      to
                                                               bankingExco report.Corpcapital
           prepared summarythat would be included the investment
                   a                             in
           executive       attended monthly
                   directors      the      Excomeetings.

      2.                                                                      Our style of
                     requiredregularfeedbackon the performance its investments.
           Corpcapital                                       of
                                          "hands on". We were active shareholders.
                                                                                This was
           investmentmanagement  was very
                                                                                    was involved
                                                                          Corpcapital
                                                              Additionally,
                    with our rightsin termsof the GA Agreement.
           consistent
            in all the material       and                of           (although wouldrelyon
                                                 decisions the business
                              corporate operational                           we
                                                           a
                                               beforemaking decision).
                                  representations
                        management's
           the operational

                                                                  to              investment
            I beganto reporton the progress our interest Netainment the Corpcapital
                                           of          in
                    as                                               1998(V82e2)
            committee earlyas November In a memoto me dated18 November
                                     98.                                      Benji

            suggested, Seanand Tal prepare
                    that                 writtenupdate                    to          They
                                                      reports be circulated Corpcapital.
                                                            to
                             (VBa,1).
                      complied
            subsequently

            I reportedprimarily Jeff on a regularbasis,updating
                              to                                                    performance
                                                               him on the operational         of
                                     corporate
            the businessand discussing                                 with Martin,Benji or Shane
                                              strategy. often interacted
                                                      I
            whenappropriate.

      A     I frequently                              the performance the Netainment
                       travelled Londonto eithermonitor
                               to                                   of             operations
            directly develop
                   or      various
                                 corporate        relevant the time(London
                                         strategies      at                      tradesales,
                                                                         listings,
                        I was in London
            acquisitions).                                            2002 (withthe exclusion
                                       eachmonthfromApril2000to January
                                      2001).
            only of June2001and October

                                                       membersthrougha processof interoffice
                                              executives
                      was relayedto Corpcapital
            Information
                                                                        "corridor
            memos,        issuemeetings,
                   specific            e-mail,undisclosedmeetings general
                                                                and             chats"and
                                              key                   were
                                                      and difficulties
                                   Additionally, issues
            opendebates the canteen.
                      in




         2OO3
 1 OCTOBER
           STATEMENT
J, HAMBURGER:


                                                      Bankingdriven operationalmeetingsand
         debated at length in weekly internalInvestment
                         BankingExco meetingsattendedby executive
         monthlyInvestment                                                Notwithstanding
                                                                 directors.
         that a projectteam would have had intimateknowledgeof issues at the time, the broader
                  banking,
         investment                                                 wouldhavehad at
                                                              members
                                                      executive
                                 Financeand Corpcapital
                         Corporate
                       of                                development.
                                     issues eachsignificant
         an understandingkeyoperational   and

    1
    I                                             BankingExco (attended executive
         On a monthlybasisI reported the Investment
                                   to                                 by        directors)
         on the performance Netainment the relevant
                          of         and                  initiatives. a weeklybasisthe
                                                  corporate          On
                                                                                  in
                  Bankingteam updatedeach other on the developments each investment an
         Investment                                               of
                   meeting
         operational      (Opco).               guidance operational
                                The Opco provided      on                with respect
                                                                   matters          to
                        The Exco debated issues and guided my strategy with regard to the
         each investment.
          management the asset.Additionally received
                   of                     I                    from the Exco on administrative
                                                    instructions
                                                                                and processfor
                                                               externalvaluations
                         the need for an audit of the investment,
          mattersincluding
                            valuations.
                     internal
         communicating
                                  "open door" and the management
                                                               structurewas very flat. This
    8.                 culturewas
         The Corpcapital
         facilitated the free flow of informationamongst executives (except for Corporate Finance
         retated matterswith external third party clients).Members of the Corpcapitalexecutiveand
          Investment     team had a goodunderstanding whatwas goingon in the investments.
                   Banking                          of




                                                                                             47
1 ocroBER2003
            STATEMENT
J. HAMBURGER.


APPENDIX PROCESS
        2:      FORVALUATIONPURPOSES




            process the August2000
    Valuation     for                     accounts.
                                  financial



          I prepared detailed
                   a                                                                    the
                                    modelin Exceland a narrative the key issuesconcerning
                            valuation                          of
                              macro industryfactors,specificcompanyinitiatives swot analysis,a
          businessincorporating                                              a
                                                                           values.The Excel
                                                   and a range of indicative
                              valuationmethodologies
          summaryof alternative
          model and narrative                 my                  Shane Kidd reviewed
                                                         valuation.
                            togetherconstituted indicative                           the
          model in August 2000. His review includeda review of the DCF calculations, DCF
                                                                                  the
                                                                         of         I
                                                    with Shanein a series discussions.
          assumotions the forecasts. modelwas debated
                    and           The
          madechanges the modelas a resultof the discussions.
                    to

          Once Shane and I were satisfiedwith the model it was sent to various executivedirectors
                   Martin,Benji and Jeff,; their input and review.The reviewby the executive
          (including                     for                                                was
          comprehensive.

                                                                                      the
                                 givento FH for the purpose theirannualaudit.FH audited
          The modelwas subsequently                       of
          valuation partof theirannualauditof Corpcapital. process
                  as                                    This            testing the DCF
                                                                 included      of
                      review of the forecasts and audit verificationof certain historicalfinancial
          calculations,
                              of
          transactions balances Netainment.
                    and



             process accounting
     Valuation      for        periodssubsequent August2000
                                               to



                     prepared detailed
          MarkMatisonn      the                                            as
                                             models narrative the samebasis above.
                                     valuation    and       on

                                                                                group
                                                               was sentto various
                                                           model
                                                The reviewed
          I reviewed model the samebasisas above.
                   the   on
                                                  Shane,Benji,Martinand Jeffl.
                                         (including
          executives theirinputand comment
                   for

                                                                   reviewmeetings.
                               with Markand I at a seriesof internal
          The modelwas discussed




        2OO3
1 OCTOBER                                                                                   58
           STATEMENT
J. HAMBURGER:


        methodology
Valuation



      The methodology detaitedbelow was consisfe appliedfor reportingperiods August 2000 -
                     as                        ntly
      February2002.tn August2002 PWC (Johannesburg) performed valuation their own basisto
                                                            a         on
                                  fair
      assisffhe boardin determining value.

      1.    Indicative                            assisted MarkMatisonn
                            prepared JadeHamburger,
                    Valuation      by                    by             (primarily)
                                                                                 for
                     with
            discussion senior                                           Value.
                             management auditors preparationdecision Fair
                                      and     in          for      on

      2.             valuation prepared
            Indicative       was                         CashFlow("DCF")
                                         usinga Discounted                      modelby
                                                                        valuation
            discounting                           and                      usingGordon's
                                                             valuecalculated
                                           earnings a terminal
                       threeyearsof forecast
             Groqh Model.       wereprepared
                         Forecasts            usinghistoric               (excluding
                                                                   earnings
                                                          sustainable               non-
                     expenses) a base.Profits
             recurring       as                            to
                                             were assumed approximate  cash flows on the
             assumption capital
                       that             would
                               expenditure             depreciation working
                                             approximate         and            would
                                                                          capital
             be neutral.                                 performance the natureof the
                                     were basedon historic
                       Theseassumptions                            and
                    The                                                 woulduse in
                                                              participants
                                incorporated assumptions market
             business. valuations         the         that
             theirestimates fairvalue.
                          of

      3.     Forecasts a period threeyearswerecompiled
                     for      of                     takingintoaccountreasonableestimates
             usingindustry         operational
                         background,              analystreports,
                                            issues,                       performance
                                                                 historical          and
                       management
             operational           input.      future
                                         Relevant             initiatives
                                                     operational        wereincorporated the
                                                                                         in
             forecasts the valuation if management therewas a strong
                     at             date            felt                 likelihood the events
                                                                                  of
             occurnng.

      4.             were
             Forecasts                             depreciation rand:dollar
                         prepared USdollars. forecast
                                in         The               of the
             exchange wasnottaken account. terminal
                    rate           into     The                     using
                                                      value calculated a 5%
                                                          was
             growth            2000anda 3% growth thereafter. terminal
                   ratein August                  rate        The       growth
             assumptionbased a longterm
                       is     on                                            over
                                                 assumption theUS.USinflation the
                                         inflation       for
                                3%
             last18 years averaged
                        has

       5.    Thediscount ("WACC") wasconservatively
                        rate       used               comparabletheprevailing of returns
                                                               to           rate
                                bearing
                       investments
             forfinancial                       the
                                      substantially same                            using
                                                        characteristics wascalculated
                                                                    and
             theCapitalAsset                      stream
                                             income
                                Model a dollar
                          Pricing   for

       6.                             periods.
             WACC 24o/o forallreporting
                 of   used




 1 OCTOBER2OO3                                                                           59
J. HAMBURGER        STATEMENT


                                                2000valuation.
                                usedin the August
          Example the assumptions
                of


           Riskfreerate:  6 . O % 10years Gov't
                                        US         yield
                                                bond     (August
                                                              20001
           Market premium:4.5o/o Historic
                 risk                         market premium
                                        English      risk
           Debt:               o.ooh
                                       Average Betaof companies  listedon the
                                       lT sectorof the JSE was 1,85 (August
                                       2000).Stanley Leisure's (UK
                               2.0     listed industry  comparable) was
                                                                    beta
           Beta:                       4 A


           Additionalrisk
           Premium:                         premium
                               9 . O % Further    applied


          The additional premium
                       rrsk                                                       a
                                 was intended take into account risk in forecasting relatively
                                            to                the
                                    developing
          young businessin a dynamic,        industry.The premiumis considered          high
                                                                               relatively

          comparedto other valuationspreparedfor comparablebusinesses.Merrill Lynch in their

          valuations online
                   of                                                     of
                                 useda WACCof 14.5o/o CSFBin theirvaluation Stanley
                           casinos                  and                              Leisure

          useda WACCof 7.6%.
                                             '10-year government
                                                    US         bondyieldreduced a resultof the
                                                                               as
          (During periodunderreview
                the                the
          declining                       Howeverthe WACC was not reducedin the interestsof
                   interestrate environment.
          consistency conservatism.)
                    and

          Turnover and earnings based valuations were also calculated as part of the Indicative
          Valuation with reference to the current market value of other instruments that were
                      the same. A range of values was calculatedafter performingsensitivity
          substantially
                                earningsand revenuebases.
          analysis the respective
                  on

                          was comparedfor reasonableness theseturnoverand earnings
          The DCF valuation                            to

          valuations.

          At each valuation date there were active markets where equity interests in online
          gaming operationswere traded and from which, independentlyof the company itself
          and its management, information regarding operating trends (revenue) could be
          extracted. Corporate activities relevant to the company were also considered. After
          every valuation date regard was had to these active markets to verify assumptions,
          forecastsand valuations reasonableness.
                                for

    10.   Senior management and directors of Corpcapital reviewed the Indicative Valuations.
          Based on the IndicativeValuation, numerous informal debates, auditors and audit
          committeeinputs a value for reportingpurposeswas recommendedfor inclusionin the
          financial statements,which were then approved by the board of directors'



  1 OCTOBER OO3
           2                                                                               60
J . H A M B U R G E R :S T A T E M E N T

APPENDIX AUDIT
       3:     INITIATIVES



                                   Antillescompanyand is not requiredby statuteto produceaudited
            Netainment a Netherlands
                     is
                    Seanand Taltherefore no needto produce
            accounts.                  felt                     accounts.
                                                          audited

             I nevertheless     pressure SeanandTal to prepare
                          exerted      on                                 fromearly2000.
                                                                   accounts
                                                             audited

                                  was essential the purposeof finalising
            The audit of Netainment           for                                 own audited
                                                                       Corpcapital's

            accounts.

                            by                                   audited. earlyas July 2000thereis
                                            Excoto have Netainment
             I was instructed the Corpcapital                           As

             evidence                                                        resultsto supportthe
                       Shanereminding to have an auditor reviewof Netainment's
                                      me
                                 He                                                        by
                                          that timingwas critical the workneeded be complete
             August2000 valuation. stressed                     as             to

                   of        2000 (V 12v).
             the22nd September

                                                                                     I
                                                                            (V13s2)andcontinued
                                                                 auditprocess
                           followed on the statusof the Netainment
             Shaneconstantly      up
             to pressure                 me
                       SeanandTalto assist [Vl3so).

                                                  the              their intentions list Amalco on the
             At the time of the Amalco negotiations partiesindicated              to

                             exchange
             Londonalternative       ("AlM")withina year of the deal becameeffective.

                     (Seanffal
            Netainment                        Harbour
                             and me)and English       (PaulSudolski) preliminary
                                                                   had          discussions two
                                                                                          with

             sponsoringbrokers London(lnvestec
                             rn                                                       (in
                                                           with regard the AIM listing July 2000).
                                               and Insinger)          to

             We were advised Insinger
                             by          that the accounts English
                                                         of        Harbour   and Netainment  wouldneedto

             be auditedfor the purposeof the AIM listing. This work was the responsibility the Nomad
                                                                                             of
                                                                 "big foui' auditing                      to
                                                                                    firm to add credibility
             (nominatedadvisorto the listing). partiespreferred
                                             All               a

             the Londonlisting.

             When it becameapparent Corpcapital the booksof accounts Netainment
                                    to         that                   of          would not be in

                       to                  an          approach
             a position be auditedtimeously, alternative                   with FHS. FHS agreed
                                                               was discussed

             that they could derive sufficientcomfort on the Netainmentresults in August 2000 from a
             comprehensive                                          performance the business.
                           reviewundertaken its staffon the financial
                                             by                                 of

       c     I approached PwC (Johannesburg)  (V133ae) get them to perform
                                                      to                    the necessaryauditwork. They
                                                                if                        They offered
             advisethat the Londonofficeis bestsuitedparticularly a Londonlisting required.
                                                                                 is                   to
                                          I        a                           issues
                                                            response someinitial
             help liasewith theirUK office. prepared detailed      to                          by
                                                                                     highlighted
                       -
             PwC(Jhb) V1336a. issues
                               The       wereprincipally
                                                      around




                                                                                                    o l
 1 OcroBER2003
            STATEMENT
J. HAMBURGER:


           pwC gainingfamiliarity                   and operators. disclosedthat $ean and Tal are
                                with the stakeholders             I

                         shareholders the business
                                      in                                    keen,PW (London)
                                                                    initially
                                                             Although
                                                  (referVlei).                              could
                    47.5o/o
           beneficial
           notgetapprovalfromitsinternationa|comp|iancedepartment.

    g.     pKF weresimultaneously                                                          V1
                                 approached me to perform auditfrom London(V13qzt', 5roz' 51s8)
                                          by              the                        Vl

                                        WhitochwhereI disclose                                  in
                                                                                     shareholding
                                                               Seanand Tal'sbeneftcial
           (refercorrespondence Rhodri
                              with
                              pKF subsequenily
                      (V15i6s).               confirmed that they wouldauditthe Netainmentbusiness
           Netainment
           (V15srs)

    10.    sean and Tal were reluctant incurthe expense an auditfor the September
                                     to                of                                      if
                                                                                  2000 year-end this
                                                                            -                  to be
           cost was going to be repeatedfor the purposeof the Amalco listing which was believed
           imminent

           In a memoto the English       merger
                                   Harbour    project       teamdated4 September
                                                    management                                  |
                                                                                    2000 (V13346)
    11.
           reiterated urgency havethe accounts Netainment
                    the         to               of               l
                                                           audited. stressed                of
                                                                            that irrespective the

                                            requiredfor its own audit purposes the accounts of its
           English Harbour merger Corpcapital
           investments be audited.Unfortunately
                      to                       there was no sense of urgencyfrom Sean, Tal or the

           financial                                          readyfor an audit.Referauditemail
                            team at Netainment havethe accounts
                   management                to

           corresPondence 33a7.
                       Vl

                       alsobegan exertpressure appoint auditfirmfor Amalco
           paul Sudolski        to           to      an                   (V13s7g)
     12.

    13.    Fisher Hoffman (Johannesburg)  ("FH")was engaged perform a review the, Netainment
                                                          to                of
                                                                                        in
                                                                        auditrequirements
                    sufficient givethem comfort the purpose Corpcapital's
                             to                for          of
           financials
           August2000.
                                                                                   2000)
                                                                   audit(September'19
                                                             Hoffman
                                    shaneand lregarding Frsher
                              between                 the
     14.    Furthercorrespondence
            - Shanenotesthatwe are running of ttme'(V13385)'
                                         out
                                                                                 -September
                                                                           (V133e2)       21't. I
     j5.                         FisherHoffman perform work timeously
           lasked Shaneto pressure             to        the
                                                      giventhe time constraints.
                                    work was a priority
            acknowledge the auditor's
                      that

     16.                                                 themthat PKF wouldperform auditand that
                      2000 | wroteto Seanand Paulinforming
            ln December                                                           the

            theirrespectivefinancia|managersshouIdnoWmanagetheprocess'

     j7.    The Amalcomerger                (because MGS).As a result, benefits engaging London
                               was terminated       of                 the       of        a

            based auditingfirm were outweighed the costs.The AIM listingwas shelvedand FH (Jhb)were
                                              by

            engaged perform auditof Netainment the period
                    to        the                 for        endedSeptember   200'1.

     18.                                                                 results the purpose
                   belowis my summary theworkperformed FH on the Netainment
            Detailed                of               by                        for

            of the Corpcapital     audit:
                            Year-end




                                                                                              oz
  1 OcroBER2003
J . H A M B U R G E R :S T A T E M E N T




19.                   financialyear ended 31 August 2000'
          Corpcapital's
                                                                                               income
                                                                     cost itemsin the Netainment
                                                          and material
                                                    revenue
                                       agreedhistoric
                  1g.1     The auditors
                                              sources.            sufficient
                                                      Theyperformed                               that
                                                                                         themselves
                                                                            workto satisfy
                            statement external
                                    to
                           the Netainmentmanagement accountsresultscould be reliedon for the purposeof

                                                    income base which was subsequently
                                      the sustainable                                      used in the
                           determining
                                   valuation Corpcapital'
                           Netainment      by

                 IJ.Z       During period
                                  the       ended August
                                                  31                     outsourced majority its
                                                           2000,Netainment         the      of

                            operations thirdpartyservice
                                     to                 providers. a result, majority Netainment's
                                                                As         the       of
                                                itemsweretraced thirdpartyinvoices
                                                               to                             the
                                                                                   Consequently'
                            revenue expense
                                    and
                            auditors                         income
                                    couldrelyon the Netainment     statement performing audit
                                                                             after      their

                            review.

                                    betow an example Netarnment's
                             Detailed    is           of           August 2000month'sresults an
                                                                                           and
                    1g.3
                                               auditprocedures illustrate point.By vouching
                                                              to        this                seven
                            example suggested
                                   of
                            incomestatement    to          invoices, auditors
                                           rtems the external      the        couldagree80%of the

                                 statementthird
                            income        to    party
                                                    documentation'




                                                  Example
                                                    month    Potentialaudit testing
                                                   Aug-00
                                                     USD



                               Turnover / DroP           8
                                                      2,05   Agreementto 3'dparty casino software' royalty
                                                                              review (xl2)
                                                                     analytical
                                                             invoices,
                               Expenses
                               Non controllable
                                                             Agreementto 3'dPartYinvoicesand
                               RoyaltY                451    Analytical review (xl 2)
                                                             Agreementto 3'd PartYinvoicesand
                               Aqua / admin           257    Analyticalreview(xl2)
                                                             Agreementto 3'dparty invoicesand
                               Jackpotprovision       147    Analyticalrevicw (xl2)
                               Transactton                   Agreementto 3'dPartYinvoicesand
                               Processing             )34    Analyticalreview(xl2)

                                                      969
                               Controllable                  Sampleand agreeto 3'd PartY
                                                             Marketing invoices
                                Marketing
                                Aqua media                   Agreementto 3'dPartYinvoices and
                                Placementfee                 Analytical review
                                (7.5% of mktg)         29
                                                              Review ofactual to accrual(historically
                                Bad debts accrual30    62     Actual accrual)


                                Overheads              37     Somevouchingof invoices
                                                      462

                                                                                                             63
1 ocToBER2003
         STATEMENT
HAMBURGER:


    1.                                      2001
                           yearended31 August
                    financial
          Corpcapital's
                 -TheFisherHoffmanengagement|etteriscontainedonVlSl26.

                 - The auditors performedan audit in accordancewith South African Aud'ting
                           (,'SAAS") Netainment's
                   Standards         of                         information.
                                                        financial
                                                 historic

                 - Auditors issued draft financialstatements(prior to the sign off of Corpcapital's
                   Netainment  valuation).There were outstanding items that requiredfollow up but

                   were subsequenlyresolved              revenue earnings.
                                          withoutaffecting      or

                              2002,the auditorspresented
                  - ln February                            final audit accountsfor the periodending

                    September 2001 for sign off by the corporate directors. materialdiscrepancles
                                                                          No
                                            were identified
                                     accounts
                   with the management

                  - The responsibility implementation the audit and statutoryrequirements the
                                     for            of                                  of

                    foreignsubsidiaries Corpcapital givento RuthCredoUl7 roe)
                                      of         was                            and ShaneKidd

                   (V17zos)to
                            tmPlement'




     2.               financialyearended 31 August 2002
          Corpcapital's



                  - FH againaudited Cytechrecords termsof SAAS'
                                  the           in

                  - The cytech audited                                       2002 havebeen
                                                           year endedseptember
                                      accounts the financial
                                             for
                                                                              accounts
                                                   discrepancies the management
                                                               with
                    completed the auditors. material
                            by            No
                    were identified.




                                                                                               64
         2OO3
 1 OCTOBER
           STATEMENT
J. HAMBURGER:
                VALUATION
APPENDIX EXTERNAL
       4:



                        bankingExco meetingof 12 May 2O0Olwas instructed have an external
                                                                       to
         ln an investment
                 performed Netainment'
         valuation       on

                                                   InvestmentBankingExco meeting  that a malor
          Again on 14 July 2000 it was agreedin an
                                                     a thoroughvaluationof the business'lt was
          auditingfirm would be requested undertake
                                         to

          notedthatlwasrndiscussionsregardingexternalvaluationswithArthurAndersen'PwCa
          KPMG.
                                                                  I knewthat PWC (London) had a
          I approached  PWC (London) do the valuation Netainment'
                                    to               of
                                                             wrththem previously)PWC have strict
                           valuation
           highlyspeclalized        department had interacted
                                              (l
                           procedures.                  workingrelationshipwas able to give them
                                       Givenmy historical                 I
           clientacceptance
                                                                    proposal us'
                                                                            to
                       comfort
           the requisite      aboutthe business allowthemto makea
                                              to

         3.,llspenttimetnterfacingwiththePwCva|uationdepartmenttogivethembackgrou
                                                           business. suppliedPwC with industry
                                                                   I
              informatron the industryand the natureof the
                        on
                       In                                research'
                                they did thetrown internal
                reports. addition
                                                             in June 2000 (refer V11 402) PwC
         3.2     This culminatedin their proposalto Netainment
                                                                                            f80-
                                                             that it would cost approximately
                 proposed fee basedon time spentand estimated
                         a
                 '100 00.
                     0

         3.3Thefeeseemedexceptiona||y|arge.Itriedtogetcompettngquotesfromother
                 advisors.TheprocesswasVeryt|meconsumingantheindicationswerethatthe
                 costwouldbe no lessthan PWC'

           ThesizeofPWC(London)feeandthedifficu|tyIwashavingintimeous|ysecuringana|ter
            WaSconveyedtoFisherHoffmanandtheCorpcapita|executivedirectors.

           IunderstoodthatPeterKaysubsequent|yadvisedagainstanindependentva|uation.Hisrat
            wasthatCorpcapita|mustva|uetheassetconsistentlywithaccountingpractice.Hisfeeling
            thatthecostoftheexterna|valuationwou|doutweighanybenefrtfromhavingtheva|uat
                                                                                   attention
                                                                         independent        to
                           Peter'saudit processwould providethe necessary
            done externally.
               ensurethattheassumptionsunder|yingthevaluationwerereasonab|e.




                                                                                              65
           2003
   1 ocToBER
            STATEMENT
J. HAMBURGER:

                 ISSUES
APPENDIX OWNERSHIP
        5:



                                                         has any personalinterestin cytech'
                                  management its executive
                                            or
      1.   No memberof corpcapital
                                                                                    owners
           whether      or         SeanRoseand Tal Harpaz benefictal not nomlnee
                 directly indirectly.                   are        and

           of theircombined .5% interest Cytech'
                          47           in
                                                                                         and
                                                                               represented
     2.                       negotiations bothSeanand Tal theywere independently
           ln all the important          with

            the drscusstons were heated.            included:
                                        Theiradvisors

           2.1               (M.       and
                        Nathan Segerman),
                   Edward

           2.2                     Nathan)
                              (Larry
                   Mishcon ReYa
                         de


                                                                 tnteractions disclosures:
                                                 fromthe following          and
                 evrdence theirownership evidenced
           Further      of             is

                                                                             mergeragreements   was
            3.1    one of the pointsraisedduringthe negotiation the Amalco
                                                                of
                                                                             to a venturecapitalfund
                   that corpcapitalwanted transferits shareholding Amalco
                                          to                       in
                                                                       any rightsof pre-emption  The
                   it was in the processof formingwithoutthis triggering
                                    Harbour (SeanStevens Fasken
                                                        of         Martineau)mentioned sean and
                                                                                       that
                   lawyer English
                          to
                    Ta|.sbeneficial|yhe|dsharesmustbeboughtpro-rata(V1559).
                                                                                   Sean resignedas a
            3.2     Sean and Tal were executivedirectorsof Aqua. Subsequently
                                                                               year-end,Sean and Tal
                    directorand Tal became non-executive. each financial
                                                             At

                    were required makedirectors'
                                   to               declaration theirinterests contracts terms of
                                                              of              in         in
                                                                                   are includedin the
                    section 234 (3) (a) of the companiesAct. Their declarations
                                                                                 sean and Tal initially
                    file (refer V15 80,: vlB 23 to 26 : V1B 219 and 220)'
                                                                                            "but change
                    made a declaration
                                                                            in
                                         that they were indirectshareholders Netainment
                                "indirect beneficial
                                        non          shareholder"
                    thisto read

             3.3|nmybrieftoJanetBarnesofDe|oitteandToucheHumanResources(V151
                         that Seanand paut Sudotski                      12.5%(50%of 50% of
                                                              beneficially)
                                                  own (implying
                  disclose
                                                                                     fact two when
                    47.S%)and 10%of Amalcorespectively.advisethat she shoulduse this
                                                     I

                    determinrng appropriate
                              an          remuneration packages them'
                                                               for

                                                                      251 where he notes that
             3.4     Refer Evan Hoff's schematicgroup structureon Y17
                     Rose/Harpazareshareho|dersinNetainment.ReviewVls6lemailfrom




                                                                                                  oo
          2003
  1 OcroBER
            STATEMENT
J. HAMBURGER:


                 Schindler's me. MandyFeldman
                            to                requires ultimate
                                                     the                ownersof Netainment
                                                               beneficial

                 to signan agreement. refers SeanandTal signing behalf the trusts.
                                   she     to                 on      of

                            2001meeting London
                                       in     withJeff,Sean,Tal and myself, parties
                                                                          all       agreedto
          3.5    In a January
                  consider                 Aqua.sean and Tal were concerned
                                  purchasing
                          Netarnment                                       that the proposed

                           wherebycytech purchased
                 transaction                       Aqua for sharesin cytech couldresultin them
                                                                                           that
                 having less shares than us in an enlargedcytech/Aquagroup. They insist
                           proposed mechanism
                 corpcapital       a           wherebythe ultimateshareholding the enlarged
                                                                             in

                 groupwouldremainequally          sean/Tal
                                       splitbetween                     (V192 to 3)'
                                                          and corpcapital'

          J.O     I disclosed pwC London
                            to                                            ownersof 47.5%of the
                                        that Seanand Tal are the beneficial
                                           Riderinitiatives'
                              during Project
                        (V19rB)
                 business           the




 1 OCTOBER2OO3
         STATEMENT
HAMBURGER:

APPENDIX CYTEGHBONUSISSUE
        6:



                                                               mergerto be near final and in light of the
  1.           In september2000 sean and ral, believing Amalco
                                                      the
                                                                                   of        Corpcapital
               undisputed          successof the casino requested bonus payment $1m
                         operationat                             a

               debates payment thisbonusat length'
                     the     of

                                                           to                 bonuspayments
                                                                 the Netainment                   by
                                                                                          requested
   2.                                  Benjiand Jeffrelating
               I prepared Memoto Martrn,
                        a
               SeanandTa|(V15136).Therewasmuchdebatearoundthisbonusissue.
                  ,12thDecember                                              that Tal and him had paid
                                2000 | receivedI an email from sean confirming
  3.           on
                                                                                corpcapitalviewed this
               themselvesthe bonus proposedin his september18 email u15 'oo)
                          actionin the mostserious
               unauthorised                       light'

    4.          pleaserefer     correspondences respect thisissue V15 328,32e,330
                          various            with     to         on         354

                                                           he was                                and
                                                                                      telephonically
                                                                               informed
                                                                      rmmediately
       5.       Jeffwas in Thailand the time.Notwithstanding,
                                  at
                 through of Seanand Tal'sactions'
                        fax
                                                                   dav-to-da.           understood risk
                                                                             (corpcapital          this
       6.        corpcaprtalreliedon sean and ral to run Netainment
                                                         focused reduce
                                                                to       this reliance the two individuals')
                                                                                     on
                 and overtime I becamemoreoperationaily
                 andthereforeCorpcapita|wasre|uctanttobe..heavyhanded''oraggresstveinourresponse
                                                                                      Paulsudolski's
                                                                       deal(we welcomed
                             Additionally neededthem to closethe Amalco
                 theiractions.          we
                                                          personality)
                                              entrepreneurial
                 rolein Amalco balance Shaun/Tal
                              to     the

       T.Corpcapital.sresponse(principa||ybyBenjibutwithinputfromJeff,Martinandmyse|f;w
            immediate,firm clearaboutour position'
                        and
                                                                                               and
                                                                              betweenCorpcapital
       g.                       was a microcosm the dynamicin the relationships
                    This incident              of

                    Shaun/Tal.

        g.          Jeff requestedthat I prepare memorandum
                                                a           summarising bonusissues'I respondin a memo
                                                                          the
                                                                    V16 a). Thts memo summarised historic
                                                                                                  the
                    dated 11 January2001 (copiedto Martinand Benji
                                                    sheetand referred the Deloitte
                                                                     to            salarybenchmark reportthat
                    Donuses,         results,
                             financial       balance
                                                                      difficulty am havingrn arranging the
                                                                                I                     for
                    Benji had commissioned.suggestthat, given the
                                              I
                                                                 part of their bonus conditional complettng
                                                                                               on          a
                    financialstatements be presented, maKe
                                         to            we

                               audit'
                    satisfactory

                                    2001 Jeff agreedwith Tal that the executivebonusesfor the perrodsending
         10.        on lgth February
                    December 2000was $700000 payable  $600000 immediately $100000 on
                                                                           and




                                                                                                         68
        2003
  OCTOBER
           STATEMENT
J. HAMBURGER:


                      conclusion an audit theNetainment
                               of        of            business. bonus
                                                               The      wasextraordinary
        thesatisfactory
                                       growth thebusiness
                                            of          since                 made
                                                                     Corpcapital
                                                             rnception.            the
        in sizeandrepresented superb
                             the
        pointto sean andTal thatfuturebonuseswouldbe calculated reference year-on-year
                                                              with,      to

         performance.




                                                                                    AO
         2003
 1 ocToBER
J. HAMBURGER:
            STATEMENT

APPENDIX MY INTERACTION
        7:            WITH MR FRANGOS



     1.    I detail
                  below chronology my interaction Mr Frangos.
                       the       of             with

     2.   I have never withheldany information
                                             from Mr Frangos.I never sought to delay the
          communication information him.At no time was I influenced misrepresent embellish
                     of           to                              to          or
          information I gavehim.
                    that

     3.        my
          During meetings Mr Frangos was honest
                        with       I          andforthcoming alltimes.
                                                           at

     4.   The chronology my dealings
                       of          with Mr Frangos as follows:
                                                 are

          4.1    In November
                           2001 | was requested prepare presentation the Cytechvaluation
                                              to       a           on                  to
                 the boardof directors Corpcapital
                                     of         (V18365).
                                                      Although presentation ready,and I
                                                             the          was
                 waitedoutside boardroom,was nevercalledon to makethe presentation.
                             the        I

          4.2   On 31 May 2002| am askedto join a meeting
                                                        with Mr Frangos
                                                                      and Martinon shortnotice.
                 In this meetingI was questroned Mr Frangosabout variousissues relatingto the
                                               by
                 Cytech valuation.I dealt with most issues at the time and where I was not able to
                 answer,I committed get backto him.
                                  to

          4.3    | subsequently
                              discussedtiming for the deliveryof the further informationwith Mr
                 Frangos.He was relaxedwhen I told him that I had concomitant
                                                                            work pressure.He
                 informed that it wouldbe acceptable delivermy response him afterhe returned
                        me                         to                 to
                 fromthe US Open.

          4.4    On 21 June 2002 | delivered a detailed document to Mr Frangos answering
                 comprehensively questionsraised at the time of the 31 May 2002 meeting
                               his
                 (v2o2o).

          4.5    | subsequently Mr Frangos few daysafterthe delivery the document answer
                             met         a                         of           to
                      questions explain document.
                further       and     the

          4.6   Mr Frangoshad furtherquestions.
                                              Notwithstanding the answers his questions
                                                           that          to
                couldbe substantially
                                   foundin the 21 June 2002 document, responded
                                                                    I               in
                                                                              further a
                       faxedto Mr Frangos 9 July 2002(V2U$). Mr Frangos
                document                on                            never revertedback
                             with any furtherquestions.
                to me directly




1 OCTOBER2OO3                                                                                 70
I

    J. HAMBURGER:
                STATEMENT


         5.   I subsequently        from Jeffand Benjithat Mr Frangos
                           understood                               was not satisfied
                                                                                    and I received
                                                                                                 a
              copy of Mr Frango's
                                submission Eric Ellerine,
                                         to             Tom Wxley and Wim Trengove 14 October
                                                                                  of
              2002 (V20eo).

         6.   I was requested Benjion or about20 October2002to prepare detailed
                             by                                       a        submission the
                                                                                         for
              purposeof the Saxon meetingof 25 October2002. My submission includedin the Cytech
                                                                        is
              bundle N20rc, V20205,
                                 V202ss,
                                      V20303)




    '1OCTOBER
            2003                                                                             71
            STATEMENT
J. HAMBURGER:




     APPENDIX MY BONUS
             8:



                                                                             yearsended31
                                                                     financial
     1.   I recerved bonusof R.l.5mand R1m in respect the Corpcapital's
                   a                                of

          August2000and 200'l resPectivelY

     2.   Duringthe relevantOctober'sperformancereviewprocessI was told that my performance in
                                                                                          the
                                                      relevantfor the purposeof determining
          respectof the followingmatterswas considered
          ouantum thesebonuses:
                 of

          2.1                and        success the assets
                The operational corporate     of                including:
                                                          managed

                                                                                       IMS
                                                   and EnglishHarbourmerger initiatives,
                         Cytech:operatingperformance
                                          in
                         softwarecorPorate itiatives;

                                    successful
                         Aoua Online:        reverse      concluded;
                                                    listrng

          2.2Thefollowingqualitativefactorswerealsoconsidered:

                                                 had been expanded includethe management
                        My role within Corpcapital                to                     of

                        Investment Bankingdivrsion.I was responsible the administration the
                                                                    for               of

                        divisron,the attendanceof monthly InvestmentBanking Exco's and the
                                         initiatives.
                                 marketing
                        division's




                                                                                            IZ
         2OO3
 1 OCTOBER
            STATEMENT
J. HAMBURGER:

APPENDIX ENGLISH
       9:       HARBOURMERGER




     1.     ln earlyMay 2000 Seaninformed                      opportunity mergethe Netainment
                                         Corpcapital a potential
                                                  of                     to

            operations a Canadian
                      with                      casino
                                     basedon-line     calledEnglishHarbour. PaulSudolski, ex-
                                                                                       an

                           was the CEO of thisbusiness.
                     banker,
            investment

     2.     Netainment English
                       and        Harbour operated casinos the Microgaming
                                                  its       on               casinoplatform.Given

            the highlyscalablenatureof on-linecasinooperations, was understood
                                                              it              that the management

                                  couldoccuroff a singlebackofficeinfrastructure.
            of bothcasinooperations

     3.     The two businesses                                            structures. proposed
                               had almost identicalcorporateand operational         A
                                                        immediately.
            merger could eliminateduplicateinfrastructure           The cost savings and other

                              andsubstantial.
                    wereobvious
            synergies

     4.     paul shai.ed enthusiasm a London
                       our        for                                                we
                                                                 withthe relationships had
                                            listing. was impressed
                                                   He
                    with London
            developed          institutions the progress had madeto listthere.
                                          and          we

     5.     paul had contemplated English
                                an             listing
                                         Harbour                            Planon Vl lsis) He
                                                               (referBusiness
                                                      previously

                   that                                thanhis planned listings.
                                  wouldbe morefavourable
                            listing
            believed a London                                        US

     6.      Jeffwas informed the mergerpotential was very excited.
                            of                  and

     7.                                                             opportunities.
             l met paul,SeanandTal in London May2000to discuss merger
                                           in                the

     g.                a                                                   The memo was
                                  highlighting May 2000 Londontrip (Vllaoe).
            I circulated memorandum          my

                      to      Jeff and Benji,DavidLiebowitz KevinJoselowitz.
             circulated Martin,                           and

     g.      Inherentin the mergerdiscussionswas a conflictof interestbetweenAqua and Netainment.
                                       early in the negotiations
             These issueswere identified                        and were dealt with by engagingwith

             disinterested                                                 earlyand often
                                                      Schneider BrentShahim)
                         members the Aquaboard(Jonathan
                               of                             and

             in the process.

      10.    English Harbour indirecflyowned its back office administrationbusiness. Netainment's

             infrastructure outsourced Aqua.A merger the Aqua and English
                         was           to             of                    Harbourinfrastructures
                                                           Sean and Tal stronglybelievedthat the
                                                  synergies.
             was necessary fully exploitoperational
                           to
                                              expensewas not market related.The Aqua fee was
             current monthlyAqua administration
             calculated                  The Netainment
                        at12.5%of revenue.               revenue                           terms
                                                                            grownin absolute
                                                                 had,however,

             to a levelwherethe Aquafee was not marketrelated maximum was negotiated).
                                                             (no        fee




         2003
 1 OcroBER                                                                                    73
                                                        -
l

    J . H A M B U R G E R :T A T E M E N T
                         S


             11.     Aqua performedmarketing
                                           and administrative
                                                            functions the Netainment
                                                                    for            casinos.Marketing
                     was seenas a corecompetence the casinoSeanand Tal proposed
                                               of                                           purchase
                                                                              that Netainment
                     the Aqua marketing
                                      teamto facilitate English
                                                      the     Harbour     lt
                                                                    merger. was considered
                                                                                         necessary
                                                                                                 for
                     the merged group {"Amalco") own its own marketing
                                               to                     team. (After the English Harbour
                     merger failed in March 2001, Netainment entered into a new long-term agreement with
                     Aqua. Ihls was negotiatedbetween Brent Shahim and Sean Rose. Ihe monthly fee to Aqua
                     was reduced from 12,5% to 7,5% and the Aqua marketing team (4 people) were purchased
                     for a considerationof $600,000payable over 12 months).

             12.     Thebasis agreeing
                            of       relative
                                            values thepurpose theAmalco
                                                 for        of             was
                                                                      merger notdetermined
                               in          meeting May2000.!t was proposed consider
                     conclusively the London     of                      to       relative
                                                                                         values
                     basedon relative                  revenue profit
                                    contributions actual
                                               of            and    levels the priorthreemonths.
                                                                         for
                              revenue profits
                     Netainment's   and     wereapproximately and40%lower
                                                          20%           thanthe equivalent
                     English Harbour      (although Netainment's
                                    numbers        the            profits
                                                                        included very highAquafee
                                                                               a
                     relative English
                            to             infrastructure - refer
                                    Harbour's          costs)
                     vl 131o.

             13.              that Netainment,
                      We argued            notwithstandingsmaller
                                                       its                     quality earnings
                                                                size,hada better     of
                               Harbour. wasbecause highpercentage Netainment's
                     thanEnglish     This        a             of                was
                                                                           clients resident
                     outside US.These
                           the       players
                                           werelesssusceptible any US regulatory
                                                            to                       Additionally,
                                                                              threats.
                     higher
                          margins        on     players return advertising
                                wereearned non-US     (the   on              in
                                                                        spend the non-US
                     markets particularly andgiven lackof competition players
                           was        high       the               these         to
                                                                            tended be more
                     loyal played longer).
                         and    for

             14.     P a u l S u d o l s k i 'C V i s c o n t a i n e d n V 1 1 g r r . M yi m p r e s s i o o f P a u l w a s t h a t h e w a s a
                                              s                       o                                      n
                     professional
                               manager
                                     and that he would complement very entrepreneurial
                                                                the                 management
                     styleof SeanandTal.
             16      The corporate      to
                                 strategy formAmalcowas intensely                (Benjimemoof May
                                                                debated Corpcapital
                                                                       at
                     2000 refersV11r;'2). was not a dealwe weregoingto enterintolightly
                                       This                                            giventhe valueof our
                     assetand our own initiatives list Netainment
                                                to              separately London.
                                                                         in

                     English      prepared memorandum anticipation its own listing
                            Harbour      a          in           of                         (May2000)
                                                                                  initiatives
                                     and projected
                     (V1l21s).Historic                 and profitnumbers presented
                                                 revenue               are       (andshownbelow).
                                givea good indication comparable
                     Thesenumbers                   of                groMh ratesand the expectations
                                                               industry
                     for forwardgrowthof Cytech'scompetitors.




    1 ocroBER2003                                                                                                                            74
J . H A M B U R G E R :S T A T E M E N T




                                        Actual     Actual         1 yr twd         2 yr fwd         3 yrsfwd
                                      Dec1998       Dec          Dec.2000         Dec.200'1         Dec2002
                                                    1S99
  Droo/revenue($'m)                         ? 1       11              41.4              84.5            104.6
       ($'m)
  Profit                                    0.4      2.5              11.7              24.4             30.4
  Growthin drop                                    267%              276%              104%              24o/o
  Growth profit
        in                                         525Yo             368%              109%              25%
  Margin(asa%of
  drop)                                    12,9%    ZJ"/o              28Yo             28%              29%




                         was to list the mergedgroup.
             The intention                                  lt was anticipated the listingwould attracta higher
                                                                             that
                                                                                    listing.
             pricefor the Cytechshareholders projected Insinger the Cytechstand-alone
                                          than       by       for

             16.                                                                       were experiencing
                      The conclusionI drew from the table above was that our competitors
                                    growth.
                            explosive
                      similar                                                                     On
                                                     was not unique(or an aberration) the industry. the
                                          Our business                              to
                              gtvenour non-US
                      conrrary,                                                                   than
                                                                                     betterbusiness
                                                    baseI felt Netainment a relatively
                                             customer                  had
                      its oeers.

              17.     Jeffand lplanned meetSudolski Toronto lateJuneand earlyJuly2000to negotiate
                                      to             in         in                                    the
                                                   I                                      required Sudolski
                      Amalco merger.In anticipation, sent off a list of relevantinformation       by

                             ldothis in orderto
                      (V1l37s).                                                   Harbourbusiness.
                                                           understandingthe English
                                               geta detailed          of

                       One of the key issues the Amalco
                                            in           merger                               Sean,Tal
                                                               discussions the MGS relationship.
                                                                         was
                       and Paulbelieved                                                       giventhe
                                                                     relationship unsustainable
                                                            commercial
                                         that the Microgaming                  was

                       orofit the business. Netainment's
                            of            In                  months paidan approximate
                                                         better      it                  $750,000 royalty

                       to Microgaming and obviouslythe temptationto develop proprietarysoftwareand leave
                                                                                        reduceits royalty
                                 was great.Sean,Tal and Paulfelt that MGS wouldeventually
                       Microgaming
                                           (software
                       terms.MGS competitors                  couldenter* the marketand offer a similaror
                                                    developers)
                       superiorproductat lowerusagefees. (Ultimately occuned.
                                                                   this

                        -       Ptaytech, example an lsraelibased
                                         for     is                developer on-linecasinosysfems.
                                                                            of                     /ts
                                software regardedas being of relativelyequal quality to MGSs.Playtech's
                                        is
                               royaltyis calculated a maximum 15%of revenues.
                                                  at         of

                        -       MGS recently(February  20031- loweredifs usagefee payableby its clientson
                                their non-lJS        The rate was loweredto 20% in an attemptto encourage
                                             busrness.
                                                           awayfromAmerica]'
                                ctients movetheir businesses
                                      to




     1 OCTOBER2OO3                                                                                         75
            STATEMENT
J. HAMBURGER:

18.   DavidLeibowitz  was requested analvse Netainment English
                                  to       the         and        Harbour  MGS agreements
                                                                                of
                                                             (Vl1 4is)in advance the
                                                 legalposition
                             understanding parties
      with a viewto thoroughly           the
      Amaicomerger.

1g.   EnglishHarbour               businesses
                     and Netainment's        were dependent Microgaming
                                                             on            givingconsent.

      EnglishHarbour                                    in
                     and Netainment sharedexperiences dealing
                                  had                           with MGS (and the Moshal
                                           "switch-off the operating system This was an
      family). Often MGS would threaten to
                and        relationship whichto growa business.
      unacceptable untenable         with

      20.    Jeff,Tal, Sean and l met Sudolski Torontofrom 25'nJuneto 31 July 2000 to negotiate
                                             in
             and finalise termsof the Amaicodeal.The outcome
                         the                                    was successful we negotiated
                                                                              as

             aSO%holding Netainment Amaico. this basisI prepared English
                        for       in      On                   an       Harbour/

                     memorandum understanding (V1217 ). The key features the deal
             Netainment        of          brief                       of

             were:

              20.j   English                           wouldparticipate
                                             shareholders
                                 and Netainment
                           Harbour                                         in
                                                                     equally
                     Amaico.

                                                                       possible.
                             wouldlistAmaicoon AIM as soonas practically
              20.2 The parties

              20.3                shareholders
                     The Netainment           would undertake purchase
                                                              to         the marketingteam
                                                                         Aqua would provide
                     from AquaandreleaseSean from his servicecontract.20.4
                                   servicesto the enlargedgroup on arm's length basis for an
                      administration
                      extendedterm. (We anticipatedthat Aqua would be prepared to levy a lower
                      percentage fee but be more than compensated by providing a service to a
                      much larger busrness. Given that Aqua's infrastructurewas highly scalable,
                      the increasedrevenues to Aqua (calculated with reference to the Amaico
                      revenues) woutd more than offset the reduced fee percentage)'

              20.4 Microgaming                         the
                                   was required finalise deal.
                             consent          to

                                       wouldbe performed.
              20.5 Reciprocal diligences
                           due

       21.     My memoto Kevin,Benji,       Seanand Tal of July2000 summarised detail
                                      Martin,                                 in      the

                       terms of the proposed
              commercial                    Aqua / Amaicocontract the supplyof back office
                                                                 for
                      I                             termswould resultin Aqua increasing
                                    that the proposed
              services. was confident                                                   EPS.

                          Aqua would secure an extendedcontract(3.5 years) with Amaico . The
              Additionally,
              Aoua discussions                                          administration
                                    the purchase Aqua of EnglishHarbour's
                             included          by
              business shares Aqua.
                     for    in

       22.    lt was contemplated Aqua levy a fee to Amaicocalculated 3% of the totalAmaico
                                that                                at

              customer deposits.         experience that50%of customer
                               Netainment's           was                  deposits would




         2OO3
 1 OCTOBER                                                                              76
I

    J. HAMBURGER:
                STATEMENT


                  translate revenue,
                          to       therefore 3o/o calculated reference purchases an
                                           a    lee        with      to        is
                  approximate
                            equrvalent 6% calculated
                                    to             with reference revenue).
                                                                to

         23       In July 2000 we receivedthe first drafts of the heads of agreementfrom Sudolski's
                  lawyers.There followedsignificant debate and correspondence   betweenthe parties,
                  culminating a non-binding
                            in            heads agreement
                                               of      signed 3 August
                                                            on       2000.
         24       It is contemplated Paulwould
                                  that       become CEOandSeanthe COO.As a consequence
                                                  the
                  Paulwouldrelocate London.
                                  to

         25       EnglishHarbourwas convinced that the Microgaming relationship
                                                                              was unsustainable.
                  One of their requirements
                                          was that Amaico be free to consideralternative
                                                                                       software
                  providerson commercial
                                       terms. We obviousiyunderstoodat the time that English
                  Harbourshareholders
                                    may havecommissioned development an alternative
                                                       the            of             casino
                  software platform.English Harbour requiredthat Amaico used this software when
                  complete a licensefee of 15%. Netainment
                          at                                shareholders
                                                                       agreedto this on the basis
                  that the new software               standard. 'sideletter"
                                      was of acceptable       A            was draftedand signed
                  to give the EnglishHarbourshareholderscomfortthat Netainmentwould supportthis
                           (r'/12rc7)
                  initiative

         zo      Aftera 7 August2000 meeting confirmed Amaicowouldsecure'bluechip',advisors
                                            I        that
                 in London. thisregard:
                            In

                 26'1    CliffordChancewas retained perform
                                                  to       initial
                                                                 work on the mergerdocuments
                                                                                           to
                         ensurecompliance
                                        with Englishlaw. LJnklaters
                                                                  were approached becomethe
                                                                                to
                         solicitors Amaico(22August2000).
                                  to

                 26.2    PwC (London)
                                    was approached auditthe business.
                                                 to

                  26.3   Amaicorepresentatives briefedFieldFisher
                                                                Waterhouse November
                                                                          in       2000to
                         assist
                              in jurisdiction!
                                            issues(V15130). The FieldFisher
                                                                          Waterhouse
                                                                                   opinionis
                         contained V15 239.
                                 in

                 26.4    Jonathan Swartza UK advocatewas engagedto adviseAmaicoon structuring
                         matters.

        27. Seanand PaulSudolski
                               dictated termsfor theirLondon
                                      the                   basedAmaicoemployment. was
                                                                                lt
              agreedthat disinterested
                                     EnglishHarbourand Cytech shareholders'
                                                                          represented John
                                                                                    by
              Warren and Benji negotiatethe employment
                                                     contracts.(Refer V13276and V133,1).
                                                                                       Benji
              receivedauthority
                              from Amaicoto engageDeloitte
                                                         and ToucheHumanCapitalin Londonto
              adviseon an appropriate
                                    salarystructure




    '1ocToBER
            2004                                                                           77
           STATEMENT
J. HAMBURGER:

28.         copy theSean
      A draft   of      Boss Paul
                            and          proposed
                                  Sudolski      service restraint trade
                                                      and      of     agreement
      is containedV15258forcompleteness'
                 in

29.   paulSudolski
                came South
                     to          on         2000 visit
                                       August
                            Africa 3'1st        to   Corpcapital review Aqua
                                                             and       the
      operations. wasalsoimpressed thequality extent theAquainfrastructure.
               He                with       and     of

      30.    The disinterestedboard of Aqua directorsapprovedthe Amalco / AIM term sheet.
             Additionally                           Sean's release from his service contract
                         they approved,conditionally,
                       (V153)
             obligations.

      31.    The English                                    was signedon the 26th
                                       bindingmergeragreement
                              Netainment
                        Harbour
                                                   consent)ff1a). This merger agreement
             October (subjectto obtainingMicrogaming
                               termsheet(V1438)
             contained finalAqua
                     the

      32.    The Netainment diligence the English
                          due       of           Harbour businesstookplacein Toronto late
                                                                                   in

             OctoberearlyNovember2000.Sean,Tal, an lT person(fromAqua)and I performed the

             work.The work programarid findings detailed V'1589. obtained high degree
                                              are      on        We         a

             of comfortfrom the EnglishHarbournumbersgiven that they operatedoff the same
             Microgaming           package.
                          accounting                                                 was
                                           Our conclusion that EH was a good business,
                                                        was
             highly profitableand was growing We were doing well to get 50% of the merged
             business.

      33.    The comparison EnglishHarbourto Netainment
                           of                               resultsis detailedon Vl592.
                                                                below EnglishHabour's(in
                      (King Solomon("KS"))resultsare consistently
             Netainment
             June the EH cash drop was 20% higherthan Netainment's).(V1599-'102contains
                                                        The EnglishHarbourmonthlygrowth
                                                results).
             furthercomparison the EnglishHarbour
                             of
                      was particular
             in revenue           impressive.

       34.              2000 PaulSudolski
              In November               and a colleague completed                   of
                                                                 theirdue diligence the

             Netainment                    their reviewin Londonusingflnancial
                              They conducted
                      business.                                                information

             extractedfrom the Microgaming          package.Paul'sDrimarvconcernafter his
                                           accounting
                         was                numbers(relative EnalishHarbour) not warrant
             investigation that our historic,              to              did
                                   receiving50% of Amalco. Notwithstanding desire to
              Netainmentshareholders                                     his

              renegotiate pricehe concluded due diligence.
                        the               the

       35.    MGS were not willing provide
                                  to            easily(review
                                          consent            correspondence V16 233,V16
                                                                          in

              3 1 7 ,V 1 6 3 3 1. )

       36.    In a conference arranged
                              call       betweenEnglishHarbour                     (Sean,
                                                                (Paul)and Netainment     Tal,

              Jeff, Jade - in London)on 8th March2001, all partiesagreedto postponethe merger
                              unwillingnessprovide
              givenMicrogaming's         to      consent.




         2OO3
 1 OCTOBER
            STATEMENT
J. HAMBURGER:


      37.                                                                        software
            I understood the time that Sudolskiwantedto ensurethat his alternative
                       at
                       werereadypriorto any merger
            arrangements                          Paulsubsequently MGSand movedonto
                                                                 left

            his new platform 2001.
                           in

     38.                                     discussions Cytechin 2003'
                                 furthermerger
            Paulhas sinceinitiated                     with

     39.    ln July 2002,as a resultof a requestby Martin,I met Tom Wixleyto take him through
                                                 with the presentation.
                                l"om was satisfied
            the Cytechvaluations.

     40.                          |                                          would be
                                             from Martinthat PWC (Johannesburg)
            In or aroundAugust 2OO2 understood
                                             of
                                     valuation Cytech.
            engaged perform independent
                  to       an

     41.               fullywith PWC duringtheirinvestigation.
            I cooperated




 1 ocToBER2003                                                                           7g

								
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