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					                                                               IMPORTANT

    If you are in any doubt about this prospectus, you should consult your stock broker, bank manager, solicitor, professional accountant
    or other professional advisor.




                                                    NAGACORP LTD.                                                                                         App 1A(1)
                                                                                                                                                          App 1A(5)
                                                               *                                                                                          R8.02

                            (incorporated in the Cayman Islands with limited liability)
                              LISTING ON THE MAIN BOARD OF
                        THE STOCK EXCHANGE OF HONG KONG LIMITED
                           BY WAY OF PLACING AND PUBLIC OFFER
         Number of Offer Shares                                      : 500,000,000 Shares (subject to the                                                 R8.09(1), (2)
                                                                         Over-allotment Option)                                                           R19.05(6)
                                                                                                                                                          3rd Sch. 2
         Number of Placing Shares                                    : 450,000,000 Shares (subject to reallocation
                                                                         and the Over-allotment Option)
         Number of Public Offer Shares                               : 50,000,000 Shares (subject to reallocation)                                        3rd Sch. 9
         Offer Price                                                 : Not more than HK$1.60 per Offer Share
                                                                         (payable in full on application and subject
                                                                         to refund) and expected to be not less
                                                                         than HK$1.25 per Offer Share
         Nominal value                                               : US$0.0125 each
         Stock code                                                  : 3918
                                                         Sponsor and Arranger

                                                       ANGLO CHINESE
                                                       CORPORATE FINANCE, LIMITED

                                                          Joint Lead Managers

                                                                                ANGLO CHINESE
                                                                                CORPORATE FINANCE, LIMITED

                                                            Co-Lead Managers



                                                              Underwriters
First Shanghai Securities Limited                          Taiwan Securities (Hong Kong)                           VC Brokerage Limited
                                                                 Company Limited

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this                 Rule 11.20
prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising      R10.06(1)(b)(xi)
from or in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in the paragraph headed “Documents delivered to the Registrar of               S342c(1),
Companies in Hong Kong and available for inspection” in Appendix X to this prospectus, has been registered by the Registrar of Companies in Hong          (2)(a), (2)(b)
Kong as required by section 342C of the Companies Ordinance. The Registrar of Companies in Hong Kong and the Securities and Futures Commission
of Hong Kong take no responsibility as to the contents of this prospectus or any of the other documents referred to above.
The Offer Price is expected to be determined by agreement between the Company and the Joint Lead Managers (on behalf of the Underwriters) on
or before 5:00 p.m. on Wednesday, 11th October, 2006 or such later time as may be agreed by the Company and the Joint Lead Managers (on behalf
of the Underwriters) but in any event not later than 5:00 p.m. on Thursday, 12th October, 2006.
The Offer Price will be not more than HK$1.60 per Offer Share and is expected to be not less than HK$1.25 per Offer Share. Investors applying for         IENotes 8,9,12
Public Offer Shares must pay the maximum Offer Price of HK$1.60 per Share together with brokerage of 1%, Stock Exchange trading fee of 0.005%
and the SFC transaction levy of 0.005%. The Joint Lead Managers (on behalf of the Underwriters) may reduce the indicative Offer Price range stated
in this prospectus at any time prior to the morning of the last day for lodging applications under the Public Offer. In such a case, a notice of the
reduction of the indicative Offer Price range will be published in the South China Morning Post (in English) and the Hong Kong Economic Times
(in Chinese) not later than the morning of the last day for lodging applications under the Public Offer. If applications for Public Offer Shares have
been submitted prior to the day which is the last day for lodging applications under the Public Offer, then even if the Offer Price is so reduced, such
applications cannot subsequently be withdrawn. Further details are set out in the sections headed “Structure of the Share Offer” and “How to apply
for the Public Offer Shares” in this prospectus.
If, for any reason, the Offer Price is not agreed between the Company and the Joint Lead Managers (on behalf of the Underwriters) on or before 5:00       IE Note 10
p.m. on Wednesday, 11th October, 2006 or such later time as may be agreed by the Company and the Joint Lead Managers (on behalf of the
Underwriters) but in any event not later than 5:00 p.m. Thursday, 12th October, 2006, the Share Offer will not become unconditional and will lapse.
Prior to making an investment decision, prospective investors of the Offer Shares should carefully consider all the information set out in this           S342(1)
prospectus, including the risk factors set out in the section headed “Risk Factors” of the prospectus.
Prospective investors of the Offer Shares should note that Kim Eng Securities, for and on behalf of the Underwriters, are entitled to terminate the
obligations of the Underwriters under the Underwriting Agreement by giving written notice to the Company upon occurrence of any of certain events
at any time prior to 5:00 p.m. (Hong Kong time) on the date before the Listing Date. Such grounds are set out in the paragraph headed “Grounds
for termination” under the section headed “Underwriting” of this prospectus.
*    For identification purposes only

                                                                                                                          6th October, 2006               S342
NagaWorld complex — The hotel wing is on the left and is joined to
     the entertainment wing on the right by two sky bridges
                                            EXPECTED TIMETABLE

                                                                                                                    2006
                                                                                                                 (Note 4)

Application lists open (Note 1) . . . . . . . . . . . . . . . . . . . 11:45 a.m. on Wednesday, 11th October                    3rd Sch. 8
                                                                                                                               S342.B


Latest time to lodge WHITE and YELLOW
  Application Forms . . . . . . . . . . . . . . . . . . . . . . . . . . 12:00 noon on Wednesday, 11th October

Application lists close (Note 1) . . . . . . . . . . . . . . . . . . 12:00 noon on Wednesday, 11th October

Price Determination Time (Note 2) . . . . . . . . . . . . . . . . 5:00 p.m. on Wednesday, 11th October                         IENote 9



Announcement of the Offer Price and the level                                                                                  P.N. 18(4.4)
                                                                                                                               I.E. Note 13
  of indication of interest in the Placing, the                                                                                I.E. Note 14

  results of applications under the Public Offer
  and the basis of allotment of the Public Offer
  Shares to be published in the South China
  Morning Post (in English) and the Hong Kong
  Economic Times (in Chinese) on or before . . . . . . . . . . . . . . . . . . . Wednesday, 18th October


Despatch of refund cheques to wholly or partially
 unsuccessful applicants on or before (Note 3) . . . . . . . . . . . . . . . . Wednesday, 18th October


Despatch of Share certificates for Offer Shares or
 deposit of the Share certificates for Offer Shares
 into CCASS on or before (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 18th October


Dealings in the Shares on the Main Board                                                                                       App 1A(22)

 expected to commence on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 19th October

Notes:


1.       If a “black” rainstorm warning signal or a tropical cyclone warning signal number 8 or above is in force in Hong
         Kong at any time between 9:00 a.m. and 12:00 noon on Wednesday, 11th October, 2006, the application lists will
         not open on that day. Please refer to the paragraph headed “Effect of bad weather on the opening of the application
         lists” in the section headed “How to apply for Public Offer Shares” in this prospectus.


2.       The Offer Price is expected to be determined by agreement between the Company and the Joint Lead Managers (on
         behalf of the Underwriters) on or before 5:00 p.m. on Wednesday, 11th October, 2006 (Hong Kong time) or such
         later time as may be agreed by the Company and the Joint Lead Managers (on behalf of the Underwriters) but in
         any event not later than 5:00 p.m. on Thursday, 12th October, 2006 (Hong Kong time).


         If, for any reason, the Offer Price is not agreed between the Company and the Joint Lead Managers (on behalf of       IE Note 10
         the Underwriters) on or before 5:00 p.m. on Wednesday, 11th October, 2006 or such later time as may be agreed
         by the Company and the Joint Lead Managers (on behalf of the Underwriters) but in any event not later than 5:00
         p.m. Thursday, 12th October, 2006, the Share Offer will not become unconditional and will lapse.



                                                          — i —
                                         EXPECTED TIMETABLE

3.   Applicants who have applied on WHITE Application Forms for 1,000,000 Public Offer Shares or more may collect             App 1A
                                                                                                                              (15)(2)(g)
     their Share certificates and/or refund cheques (if any) in person. Applicants who opt for personal collection must
     indicate so in the WHITE Application Forms and provide the particulars specified in that form. These applicants
     may collect their Share certificates and refund cheques (if any) from the Company’s share registrar in Hong Kong,
     Computershare Hong Kong Investor Services Limited at shops 1712-1716 17th Floor, Hopewell Centre, 183 Queen’s
     Road East, Wanchai, Hong Kong between 9:00 a.m. and 1:00 p.m. on Wednesday, 18th October, 2006. Applicants
     being individuals who opt for personal collection must not authorise any other persons to make their collection
     on their behalf. Applicants being corporations who opt for personal collection must attend by their authorised
     representatives bearing letters of authorisation from their corporations duly stamped with the corporations’ chops.
     Both individuals and authorised representatives of corporations (where applicable) must produce, at the time of
     collection, evidence of identity acceptable to Computershare Hong Kong Investor Services Limited. Uncollected
     Share certificates and refund cheques will also be despatched by ordinary post at the applicants’ own risk to the        A1A(15)(g)
     addresses specified in the relevant Application Forms. Further information is set out in the section headed “How
     to apply for Public Offer Shares” in this prospectus.


     Applicants who have applied on YELLOW Application Forms for 1,000,000 Public Offer Shares or more may collect
     their refund cheques (if any) in person but may not elect to collect their Share certificates, which will be deposited
     into CCASS for credit to their designated CCASS participants’ stock accounts or investor participants’ stock
     accounts, as appropriate. The procedures for collection of refund cheques for YELLOW Application Form
     applicants are the same as those for WHITE Application Form applicants.


     For applicants who have not indicated on their Application Forms that they will collect their Share certificates
     and/or refund cheques (where applicable) in person, their Share certificates and/or refund cheques (where
     applicable) will be despatched by ordinary post to the addresses specified in their respective Application Forms
     at the applicants’ own risk.


     No temporary documents of title will be issued in connection with the Share Offer.


     Refund cheques will be issued in respect of wholly or partially unsuccessful applications.


4.   In this prospectus, unless otherwise stated, all times and dates refer to Hong Kong local times and dates.


     It should be noted that the Underwriting Agreement contains provisions granting Kim Eng
Securities, on behalf of the Underwriters, the right, which may be exercised at any time prior to
5:00 p.m. on the date before the Listing Date, after consultation with Anglo Chinese and, to the
extent that it is practicable to do so, the Company, to terminate the Underwriting Agreement on
the occurrence of certain events, as set out in the Underwriting Agreement. Details of the grounds
for termination are set out in the paragraph headed “Grounds for termination” in the section
headed “Underwriting” in this prospectus.


      Part of the Hong Kong identity card number/passport number of an applicant, or, if the
applicants are joint applicants, part of the Hong Kong identity card number/passport number of
the first-named applicant, provided by the applicants may be printed on the refund cheque, if
any. Such data may also be transferred to a third party for the purpose of preparing refund
cheques. Inaccurate completion of an applicant’s Hong Kong identity card number/passport
number may lead to delay in the encashment of or may invalidate the refund cheque.



                                                       — ii —
                                  EXPECTED TIMETABLE

     Share certificates are expected to be despatched on or before Wednesday, 18th October,
2006, but will only become valid certificates of title provided that the Share Offer has become
unconditional and the Underwriting Agreement has not been terminated in accordance with its
terms. If the Underwriting Agreement does not become unconditional and is terminated in
accordance with its terms, we will make an announcement as soon as reasonably possible.


     Particulars of the structure of the Share Offer, including the conditions thereto, are set forth
in the sections headed “Information about this prospectus and the Share Offer”, “Structure of the
Share Offer” and “How to apply for Public Offer Shares” in this prospectus.




                                             — iii —
                                                             CONTENTS


       You should rely only on the information contained in this prospectus and the Application
  Forms to make your investment decision. The Company has not authorised anyone to provide
  you with information that is different from that contained in this prospectus. Any information
  or representation not made in this prospectus and the Application Forms must not be relied
  on by you as having been authorised by the Company, the Sponsor, the Joint Lead Managers,
  the Underwriters, any of their respective directors or any other person or party involved in the
  Share Offer.

                                                                                                                                           Page

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      12

Glossary of technical terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  20

Risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     22

Waiver from compliance with the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    38

Information about this prospectus and the Share Offer . . . . . . . . . . . . . . . . . . . . . . . .                                        39

Directors and parties involved in the Share Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  49

Corporate information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                55

Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       57

Industry overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            64

History and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    71

Business
       Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      79
       Competitive strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             80
       Corporate structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           82
       Agreements with the Cambodian Government and the Casino Licence . . . . . . . . . . . .                                               85
       Regulation and supervision of our casino                         ..................................                                   91
       Business operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           92
       Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
       Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
       Gaming machine stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
       Credit management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
       Quality assurance and internal controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
       Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
       Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
       Intellectual property rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Relationship with controlling shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132


                                                                 — iv —
                                                          CONTENTS

                                                                                                                                                            Page

Connected transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

Directors, senior management and staff                           . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Financial information
    Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .    160
    Disclosure requirement under rules 13.11 to 13.22 of the Listing Rules                                      .   .   .   .   .   .   .   .   .   .   .    160
    Trading record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    .   .   .   .   .   .   .   .   .   .   .    161
    Critical accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          .   .   .   .   .   .   .   .   .   .   .    163
    Management discussion and analysis . . . . . . . . . . . . . . . . . . . . . . . . . . .                    .   .   .   .   .   .   .   .   .   .   .    165
    Liquidity, financial resources and capital structure . . . . . . . . . . . . . . . .                        .   .   .   .   .   .   .   .   .   .   .    183
    Arrangement to settle overdue obligation payments and other taxes . .                                       .   .   .   .   .   .   .   .   .   .   .    189
    Property interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     .   .   .   .   .   .   .   .   .   .   .    190
    Dividends and working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               .   .   .   .   .   .   .   .   .   .   .    191
    Distributable reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        .   .   .   .   .   .   .   .   .   .   .    191
    Property interests and property valuation . . . . . . . . . . . . . . . . . . . . . . . .                   .   .   .   .   .   .   .   .   .   .   .    192
    No material adverse change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              .   .   .   .   .   .   .   .   .   .   .    192
    Unaudited pro forma adjusted net tangible assets . . . . . . . . . . . . . . . . . .                        .   .   .   .   .   .   .   .   .   .   .    193

Future plans and use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

Structure of the Share Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

How to apply for Public Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

Appendix I              —     Accountants’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227

Appendix II             —     Unaudited pro forma financial information . . . . . . . . . . . . . . . . 281

Appendix III            —     Property valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286

Appendix IV             —     Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

Appendix V              —     Summary of the constitution of the Company &
                                Cayman Islands company law . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

Appendix VI             —     Regulations of our casino and internal controls on
                                money laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336

Appendix VII            —     Summary of a report from Hill & Associates internal controls
                                on money laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362

Appendix VIII —               An independence confirmation from Hill & Associates . . . . . . . 375

Appendix IX             —     Statutory and general information . . . . . . . . . . . . . . . . . . . . . . . . 378

Appendix X              —     Documents delivered to the Registrar of Companies in
                               Hong Kong and available for inspection . . . . . . . . . . . . . . . . . . 400


                                                              — v —
                                          SUMMARY


      This summary aims to give you an overview of the information contained in this
 prospectus. As it is a summary, it does not contain all the information that may be important
 to you. You should read the whole prospectus before you decide to invest in the Offer Shares.

      There are risks associated with any investment. Some of the particular risks in investing
 in the Offer Shares are set out in the section headed “Risk Factors” of this prospectus. You
 should read that section carefully before you decide to invest in the Offer Shares.

OVERVIEW


     We are engaged principally in the management and operation of the only licensed casino in
Phnom Penh, the capital city of Cambodia. Our rights to operate the casino, which were granted
by the Cambodian Government pursuant to the Casino Licence, are valid for a period of 70 years
from 2nd January, 1995. Our right to operate within the Designated Area is exclusive until the end
of 2035.


     Our gaming operations began in 1995 and have been profitable since 1996. Our Casino
Licence allows us to operate 24 hours a day throughout the year and contains no restrictions as
to the location and size of the casino complex, casino operating areas, number of tables and type
of games within the Designated Area. As at the Latest Practicable Date, our casino operated 44
gaming tables offering Mini Baccarat, Roulette, Blackjack, Tai Sai and Caribbean Stud Poker and
211 gaming machine stations. From May 1995 until the end of September 2003, we operated our
casino on a barge moored along the banks of the Bassac River in a central location in Phnom
Penh. The barge was close to many tourist attractions such as the National Museum, the Royal
Palace and the Independence Monument in Cambodia.


      On 1st October, 2003, we relocated our casino operations to our new hotel and
entertainment complex called NagaWorld, situated on land a few hundred metres away from
where the barge was moored. Upon full completion, to the best of the knowledge of our
Directors, NagaWorld will be the only entertainment complex with gaming, entertainment and
recreational facilities within the Designated Area. NagaWorld will consist of an eight-storey
entertainment wing, a 14-storey hotel wing and a car park block. It is strategically located on a
wide landscaped boulevard next to the Hun Sen Garden near the riverfront district of Sisowath
Quay in Phnom Penh. All eight storeys of the entertainment wing are structurally complete with
the ground and part of the first floor completely furnished. The entertainment wing, when fully
operational, will also house food and beverage outlets, leisure, recreational and entertainment
facilities. All 14 levels of the hotel wing are also structurally complete with fittings work being
carried out in the lobby and some of the hotel rooms.


     Our casino is currently located on level one of the entertainment wing of NagaWorld.
Customers who wish to play our table games are required by our Casino Control Rules and in
accordance with best practice within the Cambodian regulatory framework to be foreign passport
holders and can be divided into two distinct categories, namely Public Players and STG Players.
All customers, including Cambodians, are allowed to play our gaming machine stations. As at the
Latest Practicable Date, we derived our revenue principally from casino operations.


                                             — 1 —
                                          SUMMARY

COMPETITIVE STRENGTHS


      We believe that our success to date and our potential for business expansion are primarily
attributable to a combination of the following key strengths:


     Our exclusive Casino Licence


          Our Casino Licence is valid for a period of 70 years from 2nd January, 1995 and we
     have the exclusive right to operate the only casino within the Designated Area up to the end
     of 2035 (save that the right to operate gaming machine stations is not on an exclusive basis).


     The benefits of our location


           NagaWorld is located in Phnom Penh, the capital city of Cambodia with a population
     of approximately one million. The city is the commercial hub of Cambodia and is
     strategically located in the south of the country where the Mekong, Bassac and Tonle Sap
     Rivers converge. Phnom Penh is also a convenient location for international tourists
     travelling to Cambodia for destinations such as Siem Reap and the temples of Angkor.
     Phnom Penh itself also has a number of tourist attractions such as the Royal Palace, the
     Silver Pagoda and the National Museum.


          Phnom Penh is in close proximity to our traditional markets namely, Singapore and
     Malaysia in the south and the PRC in the north, and nearby markets namely, Thailand in the
     west and Vietnam in the east. Phnom Penh is accessible, by air, within approximately three
     hours from Singapore, Malaysia and the PRC, and within approximately one hour from
     Bangkok, Thailand and Ho Chi Minh City, Vietnam. Customers can reach NagaWorld in
     about 30 minutes by road from Phnom Penh International Airport.


           NagaWorld is strategically located on a wide landscaped boulevard next to the Hun Sen
     Garden near the riverfront district of the Sisowath Quay in Phnom Penh. Among the many
     attractions that line the streets and riverside of the Sisowath Quay are the Royal Palace and
     the Silver Pagoda. A collection of restaurants and nightspots are also available near the
     Sisowath Quay and the riverfront boulevard.


     Our established reputation


           We believe that we have established a reputation as a provider of quality gaming
     activities amongst our STG Operators. We endeavour to foster long-term commercial
     relationships with our STG Operators and have maintained commercial dealings with a
     number of STG Operators for over eight years. Our relationships with STG Operators allow
     us to benefit from any increase in the number of ST Groups managed by our STG Operators,
     thus increasing our customer base. We also believe that we are a popular destination
     amongst the expatriate community in Phnom Penh.


                                             — 2 —
                                     SUMMARY

Our effective operating costs


     During the Track Record Period, the wage of our Cambodian employees averaged
approximately US$151 per month which, in our opinion, compared favourably to staff costs
in more developed cities and countries with casinos such as Macau, Malaysia and Australia.
As such, by virtue of our casino operations being based in Cambodia, we consider that we
have a significant labour cost advantage over our competitors operating in other parts of the
region.


Our experienced senior management


     Our current management team comprises a group of experienced executives with
substantial experience and knowledge of casino operations. Tan Sri Dr Chen, our
controlling Shareholder, chief executive officer and a Director, has been active in business
in Cambodia since 1990, in which time he has gained knowledge of the local commercial
landscape valuable to the future development of our operations. In addition, certain of our
senior management have over 10 years of experience in running casino operations in
Cambodia.


Strong market presence and loyal customer base


     Our casino is well known in Phnom Penh and Cambodia as it is the only licensed
casino within the Designated Area. A number of our customers have been with us for over
eight years and we believe we have a loyal customer base.




                                       — 3 —
                                         SUMMARY

TRADING RECORD


     The table below summarises our consolidated audited financial results for each of the three
financial years ended 31st December, 2005 and the five-month period ended 31st May, 2006, and
our unaudited consolidated financial results for the five-month period ended 31st May, 2005. This
summary should be read in conjunction with the Accountants’ Report set out in Appendix I to this
prospectus.

                                                                                 Five months
                                         Year ended 31st December,             ended 31st May,
                                          2003      2004      2005              2005      2006
                                        US$000    US$000    US$000            US$000    US$000
                                                                            (unaudited)

     Revenue (1&2)                        55,175      58,534      64,282      20,561      38,007
     Cost of sales                       (23,641)    (28,530)    (24,554)     (8,855)    (12,784)


     Gross profit                        31,534       30,004      39,728      11,706      25,223

     Other operating income                   27          44          53          18          15
     Administrative expenses              (4,584)     (4,394)     (5,702)     (2,935)     (2,596)
     Amortisation of casino
       licence premium                      (150)       (150)     (1,282)        (62)     (1,477)
     Other operating expenses             (5,955)     (6,647)     (6,504)     (2,804)     (3,125)


     Profit from operations              20,872       18,857      26,293       5,923      18,040
     Costs relating to postponed
       initial public offering            (4,065)         —           —           —           —
     Finance costs                           (15)         (1)         —           —           —


     Profit before taxation              16,792       18,856      26,293       5,923      18,040
     Income tax                            (723)      (1,202)     (1,352)       (563)       (634)


     Profit attributable to
       equity Shareholders
       of the Company                    16,069       17,654      24,941       5,360      17,406


     Dividends declared                       —       32,000      20,737          —       18,000


     Basic earnings per share
       (US cents) (3)                       1.30        1.42        2.01        0.43        1.21




                                            — 4 —
                                                     SUMMARY

     Notes:

     (1)      Revenue comprises house takings and income from casino operations and income from the provision of food
              and beverages and video arcade games as follows:

                                                                            Year ended                     Five months
                                                                           31st December,                 ended 31 May,
                                                                   2003         2004        2005          2005       2006
                                                                US$000        US$000     US$000         US$000     US$000
                                                                                                    (unaudited)


              Casino operations                                   55,149      58,527     62,599          20,549     36,632
              Income from operating lease for the
                 operation of gaming machine stations                 —           —         1,535            —       1,292
              Food and beverages and video arcade games              26            7         148            12           83


                                                                  55,175      58,534     64,282          20,561     38,007



     (2)      All of the Group’s business is based in Cambodia.

     (3)      The calculation of basic earnings per Share does not take into account the Shares which will or may be issued
              pursuant to the Share Offer or the Capitalisation Issue.


FUTURE PLANS AND PROSPECTS

      Our vision is to become a world class casino operator with standards comparable to those
casinos operating in countries such as Australia and the United States and for NagaWorld, as an
integrated hotel and entertainment complex, to become a preferred tourist destination, alongside
the ancient temples of Angkor, for visitors travelling to Cambodia. The hotel wing of NagaWorld,
upon completion, will house a collection of entertainment, leisure and themed retail outlets
which will allow us to develop gaming and non-gaming revenue streams. Our focus will be to
further expand our markets in the PRC and ASEAN countries such as Thailand and Vietnam. In
order to achieve our objectives, we intend to implement the following business development
strategies:

     Expand facilities at NagaWorld

          We are closely monitoring the completion of the hotel wing of NagaWorld to help
     ensure that it will be operational according to schedule and within budget. We expect 60
     rooms in the hotel wing of NagaWorld to be fully completed by the fourth quarter of 2006
     followed by 157 rooms by the first half of 2007.

     Increase marketing presence

          We intend to develop our regional marketing presence. We are exploring the possibility
     of actively marketing our resort hotel (upon its completion) in our traditional markets
     namely, Singapore, Malaysia and the PRC, and nearby markets namely, Thailand and
     Vietnam. These promotional efforts will be carried out with the view to raising the profile
     of our hotel as well as promoting both NagaWorld and Cambodia as tourist destinations.


                                                         — 5 —
                                                      SUMMARY

         Strengthen and establish commercial ties with STG Operators


              We intend to continue to develop our commercial ties with our STG Operators on a
         person-to-person basis, and to develop new ties with STG Operators outside our core
         markets in Singapore, Malaysia and the PRC. Our Directors believe that the establishment of
         strong commercial ties with STG Operators will ensure a stable flow of customers to
         NagaWorld.


         Expand the scope of our products and services


              We will continue to explore opportunities to expand the scope of products (such as the
         variety of table games and gaming machine stations), and services offered by NagaWorld
         and to broaden our customer base and gaming and non-gaming revenue sources.


SHARE OFFER STATISTICS

                                                                            Based on a                    Based on a
                                                                             minimum                       maximum
                                                                         Offer Price of                Offer Price of
                                                                        1.25 per Share                1.60 per Share

Market capitalisation of the Shares (1)                                HK$2,500 million              HK$3,200 million

Historic price/earnings multiple (2)                                       approximately                 approximately
                                                                                9.6 times                   12.3 times

Adjusted net tangible asset value per Share (3)                            1.85 US cents                 2.94 US cents        App 1A(21)

                                                                         (approximately                (approximately
                                                                        14.41 HK cents)               22.93 HK cents)


Notes:


(1)      The calculation of the market capitalisation of the Shares is based on 2,000,000,000 Shares in issue immediately
         after completion of the Share Offer and the Capitalisation Issue but does not take into account any Shares which
         may be issued upon exercise of the Over-allotment Option or of any options which may be granted under the Share
         Option Scheme or any Shares which may be allotted and issued or repurchased by the Company pursuant to the
         general mandates for the allotment and issue and repurchase of Shares granted to our Directors as described in the
         paragraphs headed “Further information about the Company — Resolutions of Shareholders” in Appendix IX to this
         prospectus.


(2)      The calculation of the historic price/earnings multiple is based on the audited net profit of the Company for the
         year ended 31st December, 2005 and 1,500,000,000 Shares in issue at the respective Offer Price of HK$1.25 and
         HK$1.60 per Share, but does not take into account any Shares which may be issued upon exercise of the
         Over-allotment Option or of any options which may be granted under the Share Option Scheme or any Shares
         which may be allotted and issued or repurchased by the Company pursuant to the general mandates for the
         allotment and issue or repurchase of Shares granted to our Directors.



                                                         — 6 —
                                                     SUMMARY

(3)   The pro forma adjusted net tangible asset value per Share has been arrived at after the adjustments referred to in
      the paragraph headed “Unaudited pro forma adjusted net tangible assets” in Appendix II to this prospectus and on
      the basis of the audited net tangible assets of the Company as at 31st May, 2006. The number of Shares is based
      on a total of 2,000,000,000 Shares that were in issue and outstanding during the entire year, adjusted as if the Share
      Offer and Capitalisation Issue had occurred at 31st May, 2006 (but without taking into account any Shares which
      may fall to be issued upon the exercise of the Over-allotment Option).


DIVIDEND POLICY


     For the three financial years ended 31st December, 2005 and the five-month period ended
31st May, 2006, we declared dividend payments of nil, US$32.0 million, US$20.7 million and
US$18.0 million respectively and these dividends have all been paid. The frequency and scale of
dividend payments declared in the past should not be used as guidance for estimating the level
of dividends to be paid by us in the future. The amount and frequency of payment of any
dividends will be at the discretion of our Directors and will depend upon our future operations
and earnings, capital requirements and surplus, general financial condition, applicable laws and
regulations and other factors that the Directors deem relevant.


     Subject to the factors described above, it is the intention of the Directors to distribute as
dividends for each year not less than 50% of our distributable profit for periods subsequent to the
Share Offer. However, there is no assurance as to whether the dividend distributions will occur
as intended, the amount of the dividend payments or the timing of such payments. Cash
dividends on our Shares, if any, will be paid in HK dollars. The Directors expect that in the future,
subject to the financial performance of the Group, the Group will declare and pay two dividends
in each financial year.


USE OF PROCEEDS                                                                                                                A1a(17)



     On the assumption that the Over-allotment Option is not exercised, the net proceeds from
the Share Offer, after deducting related expenses, are estimated to be approximately HK$546
million (based on an Offer Price of HK$1.25 per Share, being the lowest of the stated range of
the Offer Price of between HK$1.25 and HK$1.60 per Share). The Directors presently intend that
the net proceeds from the Share Offer will be utilised as follows:


      —     as to approximately HK$461 million, for the development of NagaWorld;


      —     as to approximately HK$62 million, for the development of our gaming activities such
            as installation of gaming equipment and tables, and other ancillary equipment for the
            public gaming floor in the hotel lobby; and


      —     as to the remaining balance of approximately HK$23 million, for our general working
            capital.




                                                        — 7 —
                                          SUMMARY

      In the event that the Over-allotment Option is exercised in full, the additional net proceeds
of approximately HK$89 million (based on an Offer Price of HK$1.25 per Share, being the lowest
of the stated range of the Offer Price of between HK$1.25 and HK$1.60 per Share) will be used
for the development of our gaming activities such as installation of gaming equipment and tables,
and other ancillary equipment for the public gaming floor in the hotel lobby. Additional proceeds
from the Share Offer (based on an Offer Price higher than HK$1.25 per Share) will be utilised in
the proportions scheduled above.


     Approximately HK$461 million of the proceeds from the Share Offer (based on an Offer
Price of HK$1.25 per Share) will be used to fund the construction cost of NagaWorld as follows:

                                                                                     Share Offer
                                                                                     HK$’ million

     Hotel wing and car park block                                                             253
     Entertainment wing                                                                         68
     External works and services                                                                 7
                                                                                          ---------

                                                                                               328

     Preliminaries (mobilisation, surveying fees etc)                                           21
     Contingencies (allowance for cost overruns only based on a
       percentage of total construction cost)                                                   14
                                                                                          ---------

     Sub-Total                                                                                 363

     Furniture, furnishings and equipment                                                       52
     Hotel operators equipment - hotel wing (this includes interior
       fitting-out items such as tables, desks, beds and other hotel
       fittings)                                                                                46
                                                                                          ---------

     Total                                                                                     461



    To the extent that the net proceeds from the Share Offer are not immediately used for the
above purposes, it is the management’s present intention to place such proceeds in short-term
demand deposits, money-market instruments or other forms of banking deposits.




                                             — 8 —
                                             SUMMARY

RISK FACTORS


     As with any investment, there is an element of risk associated with investing in securities.
You should read the section headed “Risk Factors” in this prospectus and evaluate the risks
associated with investing in the Shares as set out therein before making an investment decision.


       We consider that our operations are subject to certain risks which can be categorised into
(i) risks relating to our business; (ii) risks relating to our industry; (iii) risks relating to Cambodia;
and (iv) risks relating to the ownership of our Shares, as summarised below:


     Risks relating to our business


     —     Our Casino Licence may be revoked


     —     Stock Exchange requirements on gambling activities of listed issuers may affect us


     —     The Cambodian Government may fail to enforce our right of exclusivity


     —     Our right of exclusivity may not be extended further after the end of 2035


     —     Loss of the commitment and services of our controlling Shareholder may adversely
           affect our business


     —     Loss of the commitment and services of our senior management may adversely affect
           our business


     —     Our losses may exceed our winnings


     —     Other factors may affect theoretical win rates


     —     We place a significant reliance on STG Operators


     —     We may experience fluctuations in our financial performance


     —     Net current liabilities as at the end of any financial period may affect our financial
           condition


     —     Restrictions and limitations may be imposed by new casino legislation, regulations or
           amendments in Cambodia


     —     The Cambodian Government may make a claim against Ariston


     —     We risk changes in taxation


                                                — 9 —
                                     SUMMARY

—   We may incur penalties and interest on overdue obligation payments and other taxes

—   We face credit risks

—   The costs of developing NagaWorld may exceed our current estimate or completion
    may be delayed

—   We may require additional funding for our future growth

—   Hotel operations, leisure, retail, recreational and entertainment facilities will represent
    a new business for the Group and hence, the financial impact of these operations and
    facilities is uncertain

—   We may face a shortage of labour

—   We may face industrial action

Risks relating to our industry

—   Money laundering is a specific risk to our industry

—   Operation of illegal casinos in Cambodia may affect our main operations

—   The gaming industry is highly competitive

—   Fraud or cheating can affect our business

Risks relating to Cambodia

—   We depend on foreigners visiting Cambodia

—   We rely on air access to Phnom Penh

—   Access to other parts of Cambodia may draw visitors away from Phnom Penh

—   Our growth is dependent on the growth of the tourism industry in Cambodia

—   There may be political instability and change in the Cambodian Government

—   Changes in the regulatory environment may have an adverse impact on the Group

—   We may be deprived of our rights in respect of the parcel of land on which NagaWorld
    is erected

—   Exchange control restrictions may be imposed


                                       — 10 —
                                    SUMMARY

—   Cambodia relies on foreign funding


—   Cambodia’s infrastructure may limit the growth of its tourism industry


Risks relating to ownership of our Shares


—   The liquidity of our Shares may be adversely affected by a lack of a trading market for
    our Shares


—   Future financing may cause a dilution in your shareholding or place restrictions on our
    operations


—   We may not pay dividends on our Shares


—   The interests of our controlling Shareholder may differ from those of our other
    Shareholders


—   Forward-looking statements in this prospectus are subject to uncertainties


—   We caution investors not to rely on information contained in press articles and or other
    media in respect of our Share Offer and us




                                      — 11 —
                                        DEFINITIONS

     In this prospectus, unless the context otherwise requires, the following expressions have the
following meanings:

“Addendum Agreement”                  the addendum agreement dated 12th August, 2005 entered
                                      into between the Cambodian Government and Ariston to
                                      supplement and amend the terms and conditions of the
                                      SDA and the SSDA

“Anglo Chinese”                       Anglo Chinese Corporate Finance, Limited, the sponsor
                                      and the arranger, a joint lead manager, an underwriter of
                                      the Share Offer and a licensed corporation under the SFO
                                      permitted to engage in types 1, 4, 6 and 9 of the regulated
                                      activities (as defined in the SFO)

“APG”                                 the Asia/Pacific Group on Money Laundering, a FATF-style
                                      body established in 1997 for facilitating the adoption,
                                      implementation and enforcement of internationally
                                      accepted anti-money laundering and counter-terrorist
                                      financing standards issued by FATF for countries in the
                                      Asia Pacific region

“Application Form(s)”                 WHITE Application Form(s) and YELLOW Application
                                      Form(s) or, where the context so requires, either of them

“Ariston”                             Ariston Sdn. Bhd., a company incorporated in Malaysia          3rd Sch(29)

                                      with limited liability on 13th April, 1982 and an indirect
                                      wholly-owned subsidiary of the Company

“Ariston Cambodia”                    Ariston (Cambodia) Limited, a company incorporated in          3rd Sch(29)

                                      Cambodia with limited liability on 25th June, 2001 and an
                                      indirect wholly-owned subsidiary of the Company

“Ariston Holdings”                    Ariston Holdings Sdn. Bhd., a company incorporated in          3rd Sch(29)

                                      Malaysia with limited liability on 6th February, 1986 and
                                      wholly owned by Tan Sri Dr Chen, save for one share
                                      which is held by his spouse

“Arranger”                            Anglo Chinese, which has arranged for, among others, the
                                      underwriting of the Placing and the Public Offer




                                            — 12 —
                              DEFINITIONS

“Articles” or “Articles of   the articles of association of the Company, conditionally
  Association”               adopted on 11th May, 2006, as amended on 26th June, 2006
                             and as may be amended from time to time, which are
                             expected to come into effect on the Listing Date, a
                             summary of which is set out in Appendix V to this
                             prospectus, provided that any references in this
                             prospectus to the “Articles” or “Articles of Association”
                             prior to the Listing Date shall be to the articles of
                             association of the Company prior to the adoption of its
                             current articles of association

“ASEAN”                      Association of Southeast Asian Nations

“associates”                 has the meaning ascribed thereto in the Listing Rules

“Board”                      the board of Directors

“business day”               a day (excluding Saturday) on which banks in Hong Kong
                             are open for general banking business

“BVI”                        the British Virgin Islands

“CAGR”                       compound annual growth rate

“Cambodian Government”       the Royal Government of Cambodia

“Capitalisation Issue”       the issue of Shares credited as fully paid up out of the
                             Company’s reserves as referred to in the paragraphs
                             headed “Further information about the Company” in
                             Appendix IX to this prospectus

“Casino Licence”             the casino licence in respect of our casino operations
                             granted by the Cambodian Government to Ariston
                             pursuant to the SDA, as amended by the SSDA and the
                             Addendum Agreement, for a period of 70 years from 2nd
                             January, 1995, with an exclusive right to operate a casino
                             (save that the right to operate gaming machine stations is
                             not on an exclusive basis) within the Designated Area up
                             to the end of 2035; and where the context refers to a time
                             prior to the date of the Addendum Agreement, the casino
                             licence with the terms and extent of exclusivity under the
                             SDA or SSDA then in force

“CCASS”                      the Central Clearing and Settlement System established and
                             operated by HKSCC




                                  — 13 —
                           DEFINITIONS

“CDC”                     Cambodia Development Corporation, a company
                          incorporated in the BVI on 3rd November, 2003 and one of
                          our Shareholders, which is ultimately owned by Tan Sri Dr
                          Chen

“CLA”                     the casino licence agreement dated 8th May, 1995 entered
                          into between Ariston and NRCL, as amended by the
                          Supplemental CLA, an amendment agreement dated 28th
                          April, 2003 between Ariston and NRCL, the Supplemental
                          Deed, an amendment agreement dated 31st August, 2005
                          and the Second Supplemental CLA

“Companies Law”           the Companies Law, Chapter 22 (Law 3 of 1961, as
                          consolidated and revised) of the Cayman Islands

“Companies Ordinance”     the Companies Ordinance (Chapter 32 of the Laws of Hong
                          Kong), as amended, supplemented or otherwise modified
                          from time to time

“Company” or “NagaCorp”   NagaCorp Ltd., an exempted company incorporated in the       App 1A(5)
                                                                                       R8.02
                          Cayman Islands with limited liability on 25th February,
                          2003

“Covenantors”             Tan Sri Dr Chen and CDC

“Court”                   the Grand Court of the Cayman Islands

“Designated Area”         Phnom Penh, Cambodia and the area within a radius of
                          200km of Phnom Penh (except the Cambodia-Vietnam
                          border area, Bokor, Kirirom Mountains and Sihanoukville)
                          being the area within which we have an exclusive right to
                          operate a casino (save that the right to operate gaming
                          machine stations is not on an exclusive basis) up to the
                          end of 2035

“Director(s)”             the director(s) of the Company

“FATF”                    the Financial Action Task Force, an inter-governmental
                          body established in Paris in 1989 and whose purpose is the
                          development and promotion of policies, both at national
                          and international levels, to combat money laundering and
                          terrorist financing

“FIC”                     the Malaysian Foreign Investment Committee

“Gambling Ordinance”      the Gambling Ordinance (Chapter 148 of the Laws of Hong
                          Kong) as amended, supplemented or otherwise modified
                          from time to time




                               — 14 —
                             DEFINITIONS

“Group”                     the Company and its subsidiaries or, where the context so
                            requires, in respect of the period before the Company
                            became the holding company of its present subsidiaries,
                            such subsidiaries as if they were the subsidiaries of the
                            Company at the relevant time

“Hill and Associates”       Hill and Associates Ltd., an independent professional
                            party, engaged to review the AML internal controls and
                            external environment in respect of our casino in Cambodia

“HK dollars” or “HK$” and   Hong Kong dollars and cents respectively, the lawful
  “HK cents”                currency of Hong Kong

“HKSCC”                     Hong Kong Securities Clearing Company Limited, a
                            wholly-owned subsidiary of Hong Kong Exchanges and
                            Clearing Limited

“HKSCC Nominees             HKSCC Nominees Limited, a wholly owned subsidiary of
                            HKSCC

“Hong Kong”                 the Hong Kong Special Administrative Region of the PRC

“Joint Lead Managers”       Anglo Chinese and Kim Eng Securities

“Kim Eng Securities”        Kim Eng Securities (Hong Kong) Limited, a joint lead
                            manager and an underwriter of the Share Offer and a
                            licensed corporation under the SFO permitted to engage in
                            types 1 and 4 of the regulated activities (as defined in the
                            SFO)

“Latest Practicable Date”   18th September, 2006, being the Latest Practicable Date
                            prior to the printing of this prospectus for ascertaining
                            certain information contained in this prospectus

“Listing Date”              the date on which dealings in the Shares on the Main Board
                            first commence, which is expected to be on or about 19th
                            October, 2006

“Listing Rules”             the Rules Governing the Listing of Securities on the Stock
                            Exchange

“LoI”                       the Law of Investment of Cambodia promulgated on 4th
                            August, 1994 and as amended in March 2003

“LoT”                       the Law of Taxation of Cambodia promulgated on 8th
                            January, 1997 and as amended in March 2003

“Macau”                     the Macau Special Administrative Region of the PRC




                                 — 15 —
                             DEFINITIONS

“Main Board”                the stock market operated by the Stock Exchange prior to
                            the establishment of the Growth Enterprise Market of the
                            Stock Exchange (excluding the options market) and which
                            continues to be operated by the Stock Exchange

“MAS”                       the Monetary Authority of Singapore

“MOEF”                      the Ministry of Economy and Finance of Cambodia

“MOI”                       the Ministry of Interior of Cambodia

“NagaCorp (HK)”             NagaCorp (HK) Limited, a company incorporated in Hong          3rd Sch(29)

                            Kong with limited liability on 30th November, 1993 and a
                            direct wholly-owned subsidiary of the Company

“NagaWorld”                 the NagaWorld hotel, casino and entertainment complex

“Neptune Orient”            Neptune Orient Sdn. Bhd., a company incorporated in            3rd Sch(29)

                            Malaysia with limited liability on 16th April, 1987 and an
                            indirect wholly-owned subsidiary of the Company

“net profit”                profit attributable to equity shareholders of the Company

“NRCL”                      Naga Resorts & Casinos Limited, a company incorporated         3rd Sch(29)

                            in Hong Kong with limited liability on 19th March, 1982
                            and an indirect wholly-owned subsidiary of the Company

“Offer Price”               the final offer price per Offer Share (exclusive of the
                            brokerage fee of 1%, SFC transaction levy of 0.005% and
                            Stock Exchange trading fee of 0.005%) of not more than
                            HK$1.60 per Share and expected to be not less than
                            HK$1.25 per Share, such price to be agreed upon by the
                            Company and the Joint Lead Managers (on behalf of the
                            Underwriters) at the Price Determination Time

“Offer Shares”              the Public Offer Shares and the Placing Shares

“Over-allotment Option”     the option granted by the Company to, and exercisable by,      A1a(15)
                                                                                           (3)(c)
                            Kim Eng Securities pursuant to which the Company may be
                            required to issue up to an additional 75,000,000 new
                            Shares representing 15% of the number of Offer Shares
                            solely to cover over allocations under the Placing, if any,
                            within a period of 30 days from the last day for the lodging
                            of applications under the Public Offer

“Over-allotment Share(s)”   up to an aggregate of 75,000,000 new Shares which may be
                            allotted and issued by the Company pursuant to the
                            exercise of the Over-allotment Option




                                 — 16 —
                               DEFINITIONS

“Placing”                     the conditional placing of the Placing Shares at the Offer
                              Price with professional, institutional and other investors as
                              further described in the section headed “Structure of the
                              Share Offer” of this prospectus

“Placing Shares”              the 450,000,000 new Shares initially being offered by the
                              Company for subscription under the Placing, subject to
                              reallocation as described in the section headed “Structure
                              of the Share Offer” of this prospectus and the Over-
                              allotment Option

“Placing Underwriters”        Anglo Chinese, Kim Eng Securities, Evolution Watterson
                              Securities Limited, China Merchants Securities (HK) Co.
                              Limited, First Shanghai Securities Limited, Taiwan
                              Securities (Hong Kong) Company Limited and VC
                              Brokerage Limited

“PRA”                         Pakatan Reka Arkitek Sdn Bhd, the architect for NagaWorld

“PRC” or “China”              People’s Republic of China, which for the purpose of this
                              prospectus, excludes Hong Kong, Macau and Taiwan

“Price Determination Time”    on or before 5:00 p.m. on Wednesday, 11th October, 2006
                              (Hong Kong time) at which time the Offer Price is
                              determined, or such later time as the Company and the
                              Joint Lead Managers (on behalf of the Underwriters) may
                              agree, but in any event not later than 5:00 p.m. on
                              Thursday, 12th October, 2006 (Hong Kong time)

“Public Offer”                the offer by the Company to the public in Hong Kong for
                              subscription of the Public Offer Shares for cash at the Offer
                              Price, subject to the terms and conditions stated in this
                              prospectus and the Application Forms relating thereto

“Public Offer Shares”         the 50,000,000 new Shares initially being offered for
                              subscription under the Public Offer at the Offer Price,
                              subject to reallocation as described in the section headed
                              “Structure of the Share Offer” of this prospectus

“Public Offer Underwriters”   Anglo Chinese, Kim Eng Securities, Evolution Watterson
                              Securities Limited, China Merchants Securities (HK) Co.
                              Limited, First Shanghai Securities Limited, Taiwan
                              Securities (Hong Kong) Company Limited and VC
                              Brokerage Limited




                                   — 17 —
                               DEFINITIONS

“SDA”                         the Sihanoukville Development Agreement dated 2nd
                              January, 1995 entered into between Ariston and the
                              Cambodian Government, as supplemented and amended
                              by the SSDA and the Addendum Agreement

“SFC”                         the Securities and Futures Commission of Hong Kong

“SFO”                         the Securities and Futures Ordinance (Chapter 571 of the
                              Laws of Hong Kong) as amended, supplemented or
                              otherwise modified from time to time

“Second Supplemental CLA”     the Second Supplemental Casino Licence Agreement dated
                              31st May, 2006 entered into between Ariston and NRCL to
                              amend the terms of the CLA

“Share(s)”                    ordinary share(s) of nominal value of US$0.0125 each in
                              the share capital of the Company

“Share Offer”                 the Placing and the Public Offer

“Share Option Scheme”         the share option scheme conditionally adopted by the
                              Company on 11th May, 2006, the principal terms of which
                              are summarised in the paragraph headed “Share Option
                              Scheme” in Appendix IV to this prospectus

“Shareholder(s)”              holder(s) of the Shares

“Sihanoukville Development”   the development of the Sihanoukville region of Cambodia

“Singapore Stock Exchange”    Singapore Exchange Securities Trading Limited

“Sponsor”                     Anglo Chinese

“SSDA”                        the Supplemental Sihanoukville Development Agreement
                              dated 2nd February, 2000 entered into between Ariston
                              and the Cambodian Government to supplement and amend
                              the terms of the SDA, which agreements were further
                              supplemented and amended by the Addendum Agreement

“Stock Borrowing Agreement”   the stock borrowing agreement entered into between Tan
                              Sri Dr Chen and Kim Eng Securities

“Stock Exchange”              The Stock Exchange of Hong Kong Limited

“Substantial Shareholder”     has the meaning ascribed thereto in the Listing Rules

“Supplemental CLA”            the Supplemental Casino Licence Agreement dated 2nd
                              February, 2000 entered into between Ariston and NRCL to
                              supplement and amend the terms of the CLA




                                   — 18 —
                                      DEFINITIONS

“Supplemental Deed”                  the Supplemental Deed dated 30th April, 2003 entered into
                                     between Ariston and NRCL to supplement the terms of the
                                     CLA

“Takeovers Code”                     the Hong Kong Codes on Takeovers and Mergers and Share
                                     Repurchases

“Tan Sri Dr Chen”                    Tan Sri Dr Chen Lip Keong, our controlling Shareholder,
                                     chief executive officer and a Director

“Track Record Period”                the three financial years ended 31st December, 2005 and
                                     the five months ended 31st May, 2006

“Tun Hamid”                          Tun Dato’ Seri Abdul Hamid Bin Haji Omar, our vice
                                     chairman and an independent non-executive Director

“Underwriters”                       the Placing     Underwriters   and   the   Public    Offer
                                     Underwriters

“Underwriting Agreement”             the conditional underwriting agreement dated 5th October,
                                     2006 entered into between the Company, the Covenantors
                                     and the Underwriters relating to the Share Offer, brief
                                     particulars of which are summarised in the section headed
                                     “Underwriting” of this prospectus

“US”, “USA” or “United States”       the United States of America

“MOP”                                Macau Pataca, the lawful currency of Macau

“Riels”                              Cambodian riels, the lawful currency of Cambodia

“RM”                                 Malaysian Ringgit, the lawful currency of Malaysia

“US$” or “US dollars” and            United States dollars and cents respectively, the lawful
  “US cents”                         currency of the US

“%”                                  per cent.

“km”                                 kilometers

“sq.m.”                              square metres


     In this prospectus, unless otherwise stated, all times and dates refer to Hong Kong local
times and dates.




                                          — 19 —
                         GLOSSARY OF TECHNICAL TERMS


      This glossary contains certain definitions and other terms used in this prospectus in
 connection with the Group and its business. As such, these terms and definitions may not
 correspond to standard industry definitions or usage of these terms.

“AML”                               anti-money laundering

“buy-ins”                           the amount of cash chips purchased by players on the
                                    public floor

“Casino Control Rules”              an internal set of rules under which our casino operates

“check-in amount”                   the amount of money deposited by an STG

“croupier”                          a person in charge of a gaming table

“JC Chips”                          cash chips which represent the winnings of STG Players on
                                    our gaming tables. JC Chips in excess of the check-in
                                    amount deposited by an STG can be paid by cheque or in
                                    cash at the STG Operator’s discretion. If the initial check-in
                                    amount is deposited in cash, the STG Operator shall be
                                    payable and receive back the initial check-in amount only
                                    in cash and not otherwise. If the initial check-in amount
                                    deposited by an STG Operator is by cheque or wire
                                    transfer, the STG Operator shall be payable and receive
                                    back the initial check-in amount in the same manner as it
                                    was deposited

“money laundering”                  conduct or acts designed in whole or in part to conceal or
                                    disguise the nature, location, source, ownership,
                                    movement or control of money to avoid a transaction
                                    reporting requirement under applicable laws or to disguise
                                    the fact that the money was acquired by illegal means

“NN Chips”                          non-negotiable chips issued to an STG which are used to
                                    track the level of Rollings and, hence, qualification for the
                                    incentives we offer as part of our STG programmes. The
                                    level of Rollings also determines the commission payable
                                    to an STG Operator. While NN Chips can be paid out in the
                                    same manner as JC Chips, our STGs typically will not do
                                    this as it will reduce their level of Rollings and, hence,
                                    their ability to qualify for our STG incentives. The value of
                                    the NN Chips issued at the beginning of an STG visit is
                                    equivalent to the check-in amounts deposited by the STG.
                                    More NN Chips can be acquired during a visit either
                                    through converting JC Chips or depositing additional funds
                                    with us




                                          — 20 —
                        GLOSSARY OF TECHNICAL TERMS

“Public Player” or “Non-STG     a player who visits our public gaming floors and is not part
  Player”                       of an ST Group. These customers tend to comprise the
                                following groups: expatriates in Cambodia, business
                                travellers visiting Cambodia and other visitors, including
                                tourists, visiting Cambodia

“Rollings”                      reflects the amount of NN Chips purchased by an STG
                                during their visit to our casino, less the amount of NN
                                Chips returned, if any, prior to leaving our casino

“STG”, “ST Group” or “junket”   a specialised tour group comprising a group of players
                                who visit our casino under a programme and are organised
                                by an STG Operator. Under this programme, the STG is
                                offered complimentary incentives and rebates such as air
                                tickets, accommodation, food and beverages subject to
                                achieving a pre-determined amount of Rollings during
                                their visit to our casino

“STG floor”                     a floor or area solely to cater to ST Groups

“STG Operators” or              operators, who are not our employees or agents, who
  “junket operators”            organise STGs to visit our casino and participate in our
                                STG programmes. These programmes offer a package of
                                complimentary incentives and rebates to STGs during their
                                visit to our casino subject to achieving a pre-determined
                                amount of Rollings. These operators enjoy a commission
                                paid by the casino at a pre-agreed rate based on the actual
                                level of Rollings achieved by the STG they bring to our
                                casino

“STG Player”                    a specialised tour group player who is part of an STG

“STR”                           a suspicious transaction report




                                     — 21 —
                                       RISK FACTORS


      Potential investors should consider carefully all the information set out in this prospectus
 and, in particular, should consider the following risks and special considerations associated
 with an investment in the Company before making any investment decision in relation to the
 Company. The trading price of the Shares could decline due to any of these risks and
 uncertainties and you may lose all or part of your investment.


RISKS RELATING TO OUR BUSINESS


Our Casino Licence may be revoked


     In order to operate our casino in Phnom Penh, we require a licence issued by the
Cambodian Government. We were issued with our Casino Licence for a period of 70 years. If we
lose our Casino Licence, we may not be able to operate our casino and our main operations may
cease. This may have a material adverse effect on our operations and our revenue and
profitability may be adversely impacted.


Stock Exchange requirements on gambling activities of listed issuers may affect us


     Should the operation of any gambling activities of the Group (i) fail to comply with the
applicable laws in the areas where such activities operate; and/or (ii) contravene the Gambling
Ordinance, depending on the circumstances of the case, the Stock Exchange may direct the
Company to take remedial action, and/or may suspend dealings in, or may cancel the listing of,
the Shares.


The Cambodian Government may fail to enforce our right of exclusivity


     Under the terms of our Casino Licence, we have the exclusive right to operate a casino
within the Designated Area for a period of around 41 years from 2nd January, 1995 to the end of
2035. In 1999, the Group experienced incidents which led it to take the view that the Cambodian
Government was not enforcing the right of exclusivity under the Casino Licence as it operated at
that time. Therefore, we applied to the Phnom Penh City Court to interpret and reaffirm our rights
under the SDA. We then entered into the SSDA with the Cambodian Government on 2nd
February, 2000 to supplement and amend the terms and conditions referred to in the SDA and to
affirm the scope and validity of the Casino Licence. The terms and conditions of the SDA and the
SSDA were further supplemented and amended under the Addendum Agreement by virtue of
which the exclusivity period was extended to the end of 2035. If the Cambodian Government
does not honour or fails to enforce our right of exclusivity and other casinos (whether legal or
not) are allowed to operate in Phnom Penh and the surrounding areas, we may lose our market
share within the Designated Area and, as such, our operating results may be adversely affected.




                                            — 22 —
                                       RISK FACTORS

Our right of exclusivity may not be extended further after the end of 2035


      While our Casino Licence is for a period of 70 years from 2nd January, 1995, our right of
exclusivity to operate a casino within the Designated Area is for an aggregate of around 41 years.
If the Cambodian Government does not grant us an extension to this exclusivity period, our right
of exclusivity will cease at the end of 2035 and other licensed casinos may open in Phnom Penh.
We will then face competition for our customers and may lose customers to such competing
casinos, which may adversely impact our revenue and profitability.


Loss of the commitment and services of our controlling Shareholder may adversely
affect our business


    Tan Sri Dr Chen, our controlling Shareholder, chief executive officer and a Director, has
been instrumental in establishing our casino operations in Cambodia and has been actively
involved in the negotiations with the Cambodian Government in relation to the various
agreements entered into between the Cambodian Government and our Group. His involvement
has been a key factor in founding and growing our business. In the event that Tan Sri Dr Chen
leaves the Company, or ceases to be committed to the business of the Company, our business
may be adversely affected.


Loss of the commitment and services of our senior management may adversely affect
our business


     Various members of our senior management team have been with the Group for a number
of years and have contributed to the success of our casino operations. Due to the nature of our
business, maintaining strong personal relationships with our STG Operators and our players is
essential to our success and, accordingly, the continued service of key members of our senior
management team including, among others, our chief operating officer, chief financial officer and
heads of Security, Casino Tables Operations and Surveillance departments, is important to our
ongoing success. In the event that key members of our management team leave the Group or
cease to be committed to the business of the Group, or if we are unable to attract and retain
additional qualified senior personnel as needed, our business and operating results may be
adversely affected.


Our losses may exceed our winnings


     The profitability of our casino operations is primarily determined by the difference between
the amount of money won from players at our casino and the amount paid-out as winnings to
players. Gaming, by its nature, involves an element of chance that cannot be controlled. The
higher the amount paid out as winnings, the lower our profitability may be. In the event that the
amount paid out as winnings actually exceeds the amount won from players, we may record a
loss from our gaming operations.



                                            — 23 —
                                        RISK FACTORS

Other factors may affect theoretical win rates


     The theoretical win rates in favour of a casino may vary depending on a variety of factors.
These factors include, but are not limited to, the particular mix of games played, the spread of
table limits, the skill and experience of players, the financial resources of players, the volume of
bets placed and the amount of time players have available for gaming. In addition, as mentioned
above, casino games by their nature involve an element of chance that may influence the actual
win rates achieved. Any negative impact on actual win rates may adversely affect our operating
results.


We place a significant reliance on STG Operators


     Revenue from ST Groups accounted for approximately 39.1%, 42.9%, 54.9%, 47.1% and
58.4% of our revenue in the three financial years ended 31st December, 2005 and the two
five-month periods ended 31st May, 2005 (unaudited) and 2006, respectively. Most of our STG
Operators organise ST Groups on a regular basis. In the event that our STG Operators reduce the
number of ST Groups they bring to our casino or choose to take their ST Groups to other casinos,
or our STG Players choose to visit other casinos, our revenue and profitability may be adversely
affected.


      The STG Operators are under no obligation, and provide no commitment, to bring ST
Groups to our casino on a regular basis. The willingness of STG Operators to bring ST Groups
to our casino is largely determined by two factors: first, the preference of the STG Players, and
second, the level of commissions that we are able to offer to the STG Operators. To the extent
that our commissions are less attractive than our competitors’, the number of ST Groups that visit
our casino may decline. As a result our revenue and profitability may be adversely affected.


We may experience fluctuations in our financial performance


     We engage mainly in the provision of table games and gaming machine stations in our
casino. For the three financial years ended 31st December, 2005 and the two five-month periods
ended 31st May, 2005 (unaudited) and 2006, our gross profit margins were approximately 57%,
51%, 62%, 57% and 66%, respectively, while our net profit margins were approximately 29%, 30%,
39%, 26% and 46%, respectively, over the corresponding period.


     Our gross profit margin and net profit margin are dependent on the level of revenue, being
the difference between our total winnings and total losses from players who bet in our casino.
The nature of gambling involves an element of chance which cannot be controlled and may affect
to a certain extent our financial performance. In addition, our level of revenue may also be
affected by the mix of games played, the spread of table limits, the skill and experience of
players, the financial resources of players, the volume of bets placed, and the amount of time
players have available for gaming. The gross profit margin is also subject to changes in the cost
of sales, which comprise mainly commissions paid to STG Operators and local operators and
rebates on air fares, accommodation and food and beverage costs. The competition for STG


                                             — 24 —
                                         RISK FACTORS

Operators and local operators in the South East Asia region including Cambodia is intense and
commissions and rebates payable to such operators may vary in accordance with the market
conditions, such as the availability of casinos and the number of operators who are active in the
region. Internally, the administrative and other operating expenses, which comprise staff costs,
depreciation, amortisation and other operating costs, may also affect our financial performance
and in particular our net profit margin.


     Our financial performance fluctuated for the Track Record Period and may continue to
fluctuate after listing. There is no assurance that our operations will remain profitable after
listing. In the event that the factors mentioned above fluctuate against our operations, our
financial performance may be affected adversely.


Net current liabilities as at the end of any financial period may affect our financial
condition


      We recorded net current liabilities of approximately US$70.8 million as at 31st May, 2006.
The net current liabilities sustained by the Company were attributed mainly to the amount due
to a related company of approximately US$55 million as at 31st May, 2006. The amounts due to
a related company were settled in full on 16th August, 2006 by way of a capital contribution. It
is noted that whether net current assets or net current liabilities are recorded as at the end of any
financial period depends on, among other factors, changes in our current assets comprising items
such as consumables, trade and other receivables or cash at bank and in hand, and our current
liabilities comprising items such as trade and other payables, current tax liabilities, finance lease
or provisions, which in turn may be affected by events that may or may not fall within our
control. In the event that the items comprising our current assets or current liabilities fluctuate
in a way that results in the value of our current liabilities exceeding the value of our current assets
as at the end of any financial period, we will record net current liabilities and our liquidity and,
in turn, financial condition may be adversely affected.


Restrictions and limitations may be imposed by new casino legislation, regulations or
amendments in Cambodia


      The “Kram on the Control of Gambling” and other rules and regulations promulgated by the
Cambodian Government govern various aspects of the operations of a casino in Cambodia, the
prevention of money laundering and taxation. The introduction of new or amending Cambodian
legislation and regulations relating to casino and gambling controls may, when passed, introduce
new obligations with which we would have to comply. We may have to incur additional costs to
comply with such new obligations. If we are unable to comply with or violate such legislation or
regulations, we may face sanctions such as fines against the Group or the persons involved. If our
Casino Licence is revoked or not renewed as a result, or if substantial fines are imposed on us,
our business and operating results may be adversely affected. In addition, additional licences or
permits may be required and there is no assurance that such new licences or permits will be
granted to us.


                                              — 25 —
                                       RISK FACTORS

The Cambodian Government may make a claim against Ariston


      Pursuant to the terms of the SSDA and the Addendum Agreement, Ariston surrendered to the
Cambodian Government, among other things, the development rights to the Naga Island resort,
O’Chhoue Teal area, Sihanoukville Airport and related facilities in the Sihanoukville region. As
at the Latest Practicable Date, Ariston had surrendered and had procured Ariston Holdings and
certain wholly-owned subsidiaries of Ariston Holdings to surrender such development rights and
related assets to the Cambodian Government. However, the Addendum Agreement did not
contain an express release of Ariston by the Cambodian Government from any liabilities in
respect of the surrendered assets, for example for any design or construction defects. In theory,
the Cambodian Government may therefore be able to bring a claim against Ariston in respect of
the development rights and assets so surrendered, and there are no assurances that the
Cambodian Government will not make such a claim. In the event that such a claim is made, we
may be involved in prolonged litigation to defend our position and interests and may become
liable to satisfy such a claim and other related expenses and, as such, our financial performance
may be adversely affected.


We risk changes in taxation


Taxes on gaming activities


     Pursuant to the terms of the SDA, the Group enjoyed a tax incentive and was exempted from
the requirement to pay profits tax in respect of its casino operations for a period of eight years
ended in May 2003. According to the terms and conditions of the SSDA, the Group is obliged to
pay a Casino Licence fee and casino tax on revenue derived from the management and operation
of our licensed casino in Phnom Penh as may from time to time be prescribed under the casino
control laws in Cambodia. As at the Latest Practicable Date, the law governing the operation of
casinos in Cambodia was “The Kram On The Control Of Gambling”, which does not provide
details in respect of the payment of casino licence fees and taxation on revenue derived from the
operation of casinos in Cambodia.


    The Group is, however, required to make obligation payments to the MOEF in respect of
gaming activities. These payments were US$100,000 per month for the year ended 31st December,
2004, US$112,500 per month for the year ended 31st December, 2005, and are US$126,563 per
month for the year ending 31st December, 2006. The obligation payments will be subject to an
annual increase of 12.5% after 31st December, 2006 until the full completion of NagaWorld. The
obligation payments are subject to the review of the MOEF after the full completion of NagaWorld
and are therefore uncertain.


     In addition, the Group is obliged to pay a casino taxation certificate fee of US$30,000 per
year to the MOEF for the year ended 31st December, 2004 and onwards.




                                            — 26 —
                                       RISK FACTORS

Taxes on non-gaming activities


     The Group is obliged to make tax payments in respect of non-gaming activities carried out
in our casino complex in Cambodia. The tax payments for our non-gaming activities were
US$31,000 per month for the two years ended 31st December, 2004, US$34,875 per month for the
year ended 31st December, 2005 and are US$39,235 per month for the year ending 31st
December, 2006. The taxes payable by the Group in respect of non-gaming activities are subject
to the annual review and approval of the MOEF and are therefore uncertain.


     The tax payments for our non-gaming activities are considered representative of various
types of tax payable in respect of our non-gaming activities, including, salary tax, fringe benefit
tax, withholding tax and value-added tax.


Other corporate taxes


     The NRCL hotel and entertainment branch in Cambodia is entitled to certain tax incentives,
such as an allowance for any losses to be carried forward for five years for computation of profit
tax. The NRCL hotel and entertainment branch is liable to pay profit tax at a concessionary rate
of 9% per year for the period up to March 2008, after which it will be subject to the normal rate
of 20% per year.


    The NRCL hotel and entertainment branch is also exempted from payment of import duties
on imported machinery, materials and equipment used in the construction of NagaWorld.
However, there is no assurance that we will continue to receive such tax incentives and
exemptions.


Taxes on dividends


     Our operations in Cambodia are currently exempt from any form of withholding taxes on
dividends declared and distributed by the NRCL gaming branch in Cambodia. In the event that
this preferential tax treatment ceases to be effective, we will be liable to pay taxes on the
dividends declared and distributed by the NRCL gaming branch under the LoI and LoT.


     The taxes payable by the Group, being taxes on gaming, non-gaming and other activities
carried out in our casino, are subject to the review and approval of the MOEF. There can be no
assurance as to the rate of taxation or, if applicable, the amount of additional tax that may be
imposed on the Group by the MOEF. The Cambodian Government may promulgate new laws
governing the taxation of gaming activities in the future and, as a result, the existing taxation
regime applicable to the gaming activities of the Group, including applicable tax exemptions,
may cease to be effective. In the event that the taxation payable by the Group under a new
taxation regime is more onerous than our existing tax payments, our financial performance may
be adversely affected. (Please refer to the sub-section headed “Taxation” in the section headed
“Financial Information” in this prospectus for further details on taxation payable by the Group.)


                                            — 27 —
                                        RISK FACTORS

We may incur penalties and interest on overdue obligation payments and other taxes


     Under the current arrangements with the Cambodian Government, the obligation payments
payable by us in respect of our gaming and non-gaming activities are due within the first week
of each month. In the event that obligation payments and other taxes are not paid within seven
days from the due date, a penalty of 2% is imposed on the late payment and further interest of
2% per month is payable.


     In addition, after 15 days of official government notice to the Group for the late payment
of the obligation payments and other taxes, an additional penalty of 25% is imposed.


    As at 31st May, 2006, the Group had overdue obligation payments and other taxes of
approximately US$5.0 million, together with penalties and late payment interest thereon of
US$0.8 million. The Group reached a tax agreement with the Cambodian Government under
which the overdue obligation payments up to 31st December, 2005 (including interest and
penalties) will be discharged by the payment, in instalments, in aggregate of US$4,555,758
between May 2006 and October 2006. It was further agreed with the Cambodian Government that
the obligation payments payable by the Company for the period between February 2006 and July
2006, in aggregate of US$994,788, will be settled in the fourth week of October 2006. Under this
tax agreement, the Cambodian Government agreed to waive all other amounts owing, including
penalties and late payment interest, subject to the continuing payment, in a timely manner, by the
Group of the obligation payments and other taxes payable by it in 2006. If in the future we do
not pay our obligation payments and other taxes as they fall due, the Cambodian Government
may impose penalties and interest on such overdue amounts which will adversely impact our
financial performance.


We face credit risks


     Credit facilities, on an unsecured basis, are made available to certain STG Operators with
whom we have had dealings over a number of years. For the financial year ended 31st December,
2005 and for the five-month period ended 31st May, 2006, outstanding trade receivables were
approximately US$7.5 million and approximately US$7.7 million, respectively, of which US$1.7
million and US$2.2 million, respectively, were balances of credit facilities granted to STG
Operators for whom the Group had agreed to roll forward the credit facility to future visits to the
casino and, therefore, extend their credit periods. In the future, similar facilities may be extended
from time to time in the course of the casino’s operations to particular STG Operators on a
case-by-case basis. If settlement regarding amounts outstanding under such facilities cannot be
reached, our profitability may be adversely affected. Please refer to the paragraph headed “Credit
management” in the section headed “Business” in this prospectus for further details.




                                             — 28 —
                                       RISK FACTORS

The costs of developing NagaWorld may exceed our current estimate or completion may
be delayed

      Details of the costs of developing NagaWorld are set out in the paragraph headed “Business
operations” in the section headed “Business” in this prospectus. Due to typical completion
uncertainties associated with any construction project, there is no assurance that the final costs
will not be higher than our estimated cost of completion. There is also no assurance that we will
not exceed the budget costs of the project or that the project will be completed on time or that
our hotel operations will commence on schedule.

We may require additional funding for our future growth

     The actual amount of funding that is required to implement our future plans as set out in the
section headed “Future plans and use of proceeds” in this prospectus may be different from our
estimation and additional funding may be necessary.

      To implement our future growth plans or any other expansion plans that we may have, we
may need to raise additional capital or funding through equity or debt or a combination of both.
Equity funding may be in the form of issue(s) of securities after the Share Offer. If new Shares
are issued after the Share Offer, these may be priced at a discount to the then prevailing market
price of our Shares trading on the Stock Exchange. If we fail to utilise the new equity to generate
a commensurate increase in earnings, our earnings per Share may be diluted, and this may lead
to a decline in our Share price. There is also no assurance that it will be possible to obtain debt
financing on favourable terms in the future and such funding may, apart from increasing interest
expense and gearing, contain restrictive covenants with respect to dividends, future fund raising
exercises and other financial and operational matters.

Hotel operations, leisure, retail, recreational and entertainment facilities will represent
a new business for the Group and hence, the financial impact of these operations and
facilities is uncertain

     NagaWorld will comprise hotel, leisure, recreational and entertainment facilities, a grand
ballroom, meeting rooms, a spa centre and a karaoke centre, together with restaurants, a food
court and themed retail outlets. These are new businesses for the Group and, as such, may
require time and resources to become fully integrated with our casino and profitable on a
stand-alone basis. There is no assurance that these new business will be successfully integrated
with our casino business.

     Furthermore, the hotel industry is typically highly competitive. As at the Latest Practicable
Date, there were about eight international hotels in Phnom Penh offering, in aggregate, around
1,600 hotel rooms. Introduction of new hotels in Phnom Penh may further increase the supply of
hotel rooms in the segment targeted by NagaWorld. In the event that visitor arrivals to Phnom
Penh increase at a slower rate than the increase in available hotel rooms or even decrease, there
may be a surplus of hotel rooms in Phnom Penh. The increased competition in the hotel industry
may impact our occupancy and/or room rates and, under such circumstances, the operating
results and profits of our hotel operations may be adversely affected.


                                            — 29 —
                                        RISK FACTORS

We may face a shortage of labour


      The leisure and tourism industry is typically labour intensive. There is no assurance that
labour costs will not increase or that we will be able to source suitably skilled/qualified
employees. In particular, our new facilities in NagaWorld will require us to hire and train a
number of additional employees over the coming months. This increase in hiring will lead to
higher training costs in the short term. There is also no guarantee that a sufficient number of
skilled employees will be available locally and, therefore, as a worst case scenario, we may have
to source suitably qualified employees from other countries, which may result in higher costs.
Additionally, there is no assurance that we will be successful in training, retaining and motivating
current and future employees. If we are unable to attract, retain and train skilled workers, our
ability to adequately manage and staff our operations may be impaired, which in turn may
adversely affect our operations and profitability.


We may face industrial action


     Some of our employees belong to two labour unions (of which we are aware). We do not
have any collective agreements with these unions nor do we have a regular dialogue with
representatives of these unions. In 1998, we experienced a strike for a few days and in 2001
experienced a three-day strike by some of our employees. Further details of the strikes are set
out in the sub-section headed “Relationship with employees” under the section headed
“Directors, Senior Management and Staff” of this prospectus.


     In the event that these unions, or our employees on their own accord, undertake some form
of industrial action such as a strike, our operations and profitability may be adversely affected.


RISKS RELATING TO OUR INDUSTRY


Money laundering is a specific risk to our industry


     Money laundering involves conduct or acts designed in whole or in part to conceal or
disguise the nature, location, source, ownership, movement or control of money to avoid a
transaction reporting requirement under applicable national and international laws or to disguise
the fact that the money was acquired by illegal means.


     Our casino may fail to detect money laundering transactions. In the event that our casino
becomes a target for money laundering, the activities offered by NagaWorld may be exploited.
Certain staff and/or the operations of NagaWorld may be investigated by regulators in Cambodia,
as a result of which our business operations may be interrupted and/or certain rights currently
enjoyed by us, including tax treatments and the Casino Licence, may be withdrawn or revoked.
In turn, this may have a negative impact on our operations. (Please refer to “Regulations of our
casino and internal controls on money laundering” in Appendix VI in this prospectus for details
about the measures taken to mitigate money laundering.)


                                             — 30 —
                                       RISK FACTORS

Operation of illegal casinos in Cambodia may affect our main operations

     By virtue of the “Kram on the Control of Gambling”, it is illegal to operate a casino in
Cambodia without a licence. However, there may be casinos operating in Phnom Penh or other
parts of Cambodia illegally and without licences. The presence of illegal casinos in Cambodia
may affect our main operations and adversely impact our revenue and profitability.

The gaming industry is highly competitive

      In the Asia Pacific region, the gaming industry has traditionally been highly regulated with
gaming operations prohibited in some countries and requiring licences in most other countries.
However, in recent times, there has been a relaxation of this prohibition in some countries which
has resulted in a number of new entrants into the gaming industry in the region. For example,
recently the South Korean government licensed its first casino resort and the Macau government
issued three casino licences for casino operations in Macau. In addition, the Singapore
government has allowed the construction of land-based casinos in the city-state. The Thai
government is also understood to be considering the legalisation of casinos operating in
Thailand. There are also other casinos operating in Cambodia outside the Designated Area. In the
event that further casinos are opened in the region, there will be increased competition for the
players in the region and STG Operators and STG Players who frequent our casino may opt to
visit other casinos instead. If this occurs, we may need to consider offering more attractive
incentives to our visitors and STG Operators. This may adversely impact the profitability of our
operations. Further details are set out in the sections headed “Industry Overview” and “Business
— Competition” in this prospectus.

Fraud or cheating can affect our business

      Our business is a cash business and there is a possibility that players may seek to cheat our
casino, particularly if players collude with our employees. In the event that we are not able to
detect such cheating in time or at all, we may suffer losses and our operating results may be
adversely affected. Any negative publicity arising from such incidents may also tarnish our
reputation and may result in a decline in business, and as such our operating results and profits
may be adversely affected. We are currently involved in investigations in relation to a suspected
cheating incident at our casino. Please refer to the paragraph headed “Other information —
Litigation” set out in Appendix IX to this prospectus for further details.

RISKS RELATING TO CAMBODIA

We depend on foreigners visiting Cambodia

     Under our Casino Control Rules and pursuant to Cambodian law, only holders of foreign
passports are permitted to gamble in our casino’s gaming halls where table games are played. As
such, we are dependent on foreigners coming to Cambodia and Phnom Penh in particular. If for
any reason Cambodia imposes new restrictions on visitor access, such as more stringent visa or
other entry requirements, this may deter foreigners from visiting Cambodia and consequently our
casino and hotel. As such, our operating results may be adversely affected.


                                            — 31 —
                                       RISK FACTORS

We rely on air access to Phnom Penh

The flights in and out of Cambodia are limited


      There is presently only one airport in Phnom Penh, the Phnom Penh International Airport,
which is small by international standards. Whilst, as at the Latest Practicable Date, there were 42
flights a week from Bangkok and 22 flights a week from Ho Chi Minh City, 17 flights a week from
Singapore and 17 flights a week from Kuala Lumpur, there were relatively few flights from other
destinations to Phnom Penh. For example, as at the Latest Practicable Date, there were only seven
flights a week from Guangzhou, three flights a week from Shanghai, eight flights a week from
Hong Kong, seven flights a week from Taipei, seven flights a week from Hanoi, two flights a
week from Seoul and nine flights a week from Vientiane. This limits the number of visitors that
have access to Phnom Penh and if flights to Phnom Penh are not increased in response to greater
demand, in the long term our capacity for growth may be constrained.

The open sky policy may change

     At present, the Cambodian Government has adopted an “open sky” policy under which it
maintains a liberal stance on allowing foreign airlines to operate commercial air services to
various points in Cambodia. If there is a change in the policy that results in foreign airlines
reducing the frequency of flights, or cancelling flights to Cambodia, our operations may be
adversely affected.


High airfares may deter tourists to visit Cambodia

     Any increase in airfares may increase the overall cost of visiting Cambodia and may act as
a deterrent to visiting Cambodia. In addition, as one of the incentives which we offer to
qualifying STGs is a rebate on their airfares to Cambodia, our operating expenses may increase
as a result.


Access to other parts of Cambodia may draw visitors away from Phnom Penh

      The Phnom Penh International Airport is currently the primary air-gateway to Cambodia.
Increased tourist interest in Cambodia and its tourist attractions, such as the Angkor Wat temples
at Siem Reap, should result in greater numbers of tourists visiting Phnom Penh as a transit point.
However, the development of improved infrastructure in other parts of the country, such as the
expansion of the Siem Reap Airport, may lead to visitors bypassing Phnom Penh when visiting
other parts of the country. In such event, our business development and/or profitability may be
adversely affected.


Our growth is dependent on the growth of the tourism industry in Cambodia


      Our growth prospects, particularly for our public gaming business, depend to a large extent
on the development of the tourism industry in Cambodia and on Cambodia’s relative
attractiveness as a tourist destination. Changes in economic or political conditions, the outbreak


                                            — 32 —
                                        RISK FACTORS

of epidemics, sustained bad weather, natural disasters and other events beyond our control may
adversely affect the willingness of tourists to come to Cambodia and of customers to travel to our
casino. In the event that the tourism industry does not grow, or in fact contracts, our business
development and profitability may be adversely impacted.


There may be political instability and change in the Cambodian Government


     The recent history of Cambodia has been characterised by political instability and civil war,
with fighting between different factions until as recently as 1997. It is only in the past few years
that Cambodia has regained some measure of political stability with Prime Minister Samdech Hun
Sen and his Cambodian People’s Party rising to political dominance. National Assembly elections
in Cambodia were held in 1998 and 2003 and the next elections are expected to be held in July,
2008. However, any event of political instability may have an adverse effect on Cambodia as a
tourist destination and deter visitors to the country. Further, future political leaders may not make
tourism a priority in their policies. In such event, our profits and operating results may be
adversely affected.


Changes in the regulatory environment may have an adverse impact on the Group


     Our operations in Cambodia are subject to laws, rules and regulations promulgated by the
Cambodian Government. The laws in Cambodia and its legal system are still in a developmental
stage and are subject to change. These factors mean that there is a lack of consistency and
predictability in dispute resolution and in the interpretation and enforcement of laws and
regulations. Accordingly, doing business in Cambodia entails a certain degree of risk and
uncertainty. In the event that new laws are imposed, or existing laws, rules or regulations are
interpreted or enforced in a way which is adverse to our operations, our operations and financial
performance may be affected.


     Please refer to the paragraph headed “Agreements with the Cambodian Government and the
Casino Licence” in the section headed “Business” in this prospectus for further details.


We may be deprived of our rights in respect of the parcel of land on which NagaWorld
is erected


     We have leased a parcel of land from the Cambodian Government of approximately 14,160
sq.m. located on the Bassac River on which NagaWorld is erected (“Leased Area”). The Leased
Area has been leased from the Municipality of Phnom Penh for a period of 70 years from 1st
August, 1996.


     Pursuant to the terms of the lease agreement for the Leased Area, the Cambodian
Government has a right to annul the agreement if the rental payments are outstanding for 6
consecutive months or more. As at 31st May, 2006, the Group had approximately US$453,990 of
rental payments outstanding for the period from April 2004 to June 2006 which have
subsequently been settled in full.


                                             — 33 —
                                      RISK FACTORS

     If in the future we do not pay our rental payments in respect of the Leased Area promptly,
the Cambodian Government may levy charges or terminate the lease agreement. In such an event,
our operations may be interrupted and we may have no rights of compensation against the
Cambodian Government for our investment in the Leased Area. Our controlling Shareholder has
given an undertaking to the Stock Exchange that he will use all reasonable endeavours to procure
that the Company will pay the rental payments in respect of the Leased Area in a timely manner.


     In addition, the laws and regulations in Cambodia are still in a developmental stage and may
be subject to revisions or amendments. The leasing of land in Cambodia may not provide a lessee
the same level of protection as in countries which are considered generally to have more
developed legal systems. In the event that there is a change in laws or regulations in Cambodia
that impose restrictions on the Group’s right to the Leased Area or if the Group is otherwise
deprived of the right to use the Leased Area, our operations may be interrupted and our financial
performance may be adversely affected.


Exchange control restrictions may be imposed                                                        A1a(31)



     Presently there are no exchange control restrictions in force in Cambodia which may
prevent repatriation of profits from our operations in Cambodia. However, in the event that such
exchange control restrictions are imposed, our ability to utilise revenue generated in Cambodia
or distribute dividends to Shareholders may be constrained.


Cambodia relies on foreign funding


     Cambodia is dependent on funding from donor countries such as Japan, Australia and the
PRC, as well as from bodies such as the World Bank and the International Monetary Fund. The
need for such external help may limit the Cambodian Government’s ability to pursue policies
which deviate significantly from the advice of such donor bodies. Such advice may be indirectly
prejudicial to our operations or may prevent the Cambodian Government from pursuing policies
which may be favourable to the hotel or casino industry in Cambodia.


Cambodia’s infrastructure may limit the growth of its tourism industry


     The existing infrastructure may not be able to support the anticipated growth of the tourism
industry in Cambodia. For example, the Phnom Penh International Airport has limited capacity
and may not be able to accommodate a significant increase in the number of tourists visiting in
the near future. In addition, poor access to other tourist focal points such as Siem Reap and
Sihanoukville may reduce Cambodia’s attractiveness as a tourist destination. In such event, our
potential for growth, which depends in large part on the tourism industry, may be adversely
affected.




                                           — 34 —
                                        RISK FACTORS

RISKS RELATING TO OWNERSHIP OF OUR SHARES


The liquidity of our Shares may be adversely affected by a lack of a trading market for
our Shares


     Prior to the Share Offer, there was no public market for our Shares. We have made an
application to the Stock Exchange for the listing and trading of our Shares. A Stock Exchange
listing and quotation does not, however, guarantee that a trading market for our Shares will
develop or, if a market does develop, the liquidity of that market for our Shares. Therefore, we
cannot predict the marketability or liquidity of our Shares. Any sale of Shares after the Share Offer
by any of our Substantial Shareholders or Underwriters, in the case of an under-subscribed issue,
may also cause the market price of our Shares to fall.


Future financing may cause a dilution in your shareholding or place restrictions on our
operations


     The Group will need to make substantial ongoing capital expenditures to sustain its growth.
In particular, the Group will need significant capital to complete the construction of NagaWorld
and to refurbish or renovate the complex. The Group may issue additional shares or other
securities to raise capital for its future expansion, and Shareholders’ interest in the Group may
be diluted as a result of any such issue. The market price of the Offer Shares may decline as a
result of the issue of additional shares or other securities or the perception that such additional
issues may occur.


We may not pay dividends on our Shares


     For the three financial years ended 31st December, 2005 and the five-month period ended
31st May, 2006, we declared dividend payments of nil, US$32.0 million, US$20.7 million and
US$18.0 million, respectively. The frequency and scale of dividend payments declared in the past
should not be used as guidance for estimating the level of dividends to be paid by us in the
future. The amount and frequency of the payment of any dividends to be declared by us will be
at the discretion of our Directors and will be subject to among others, our future operations and
earnings, capital requirements and surplus, general financial condition and applicable law and
regulations. Therefore, the amount of dividends we declared in the past should not be used as
indication of the likelihood of dividend payments in the future.




                                             — 35 —
                                       RISK FACTORS

The interests of our controlling Shareholder may differ from those of our other
Shareholders


     Upon completion of the Share Offer and the Capitalisation Issue, Tan Sri Dr Chen will own,
directly and indirectly, an aggregate of approximately 69.6 per cent. of our Shares, or
approximately 67.1 per cent. if the Over-allotment Option is exercised in full. Tan Sri Dr Chen,
as our controlling Shareholder, may cause us to effect corporate transactions which might be in
conflict with our other Shareholders’ interests. Furthermore, Tan Sri Dr Chen is in a position to
exert considerable influence, subject to the Articles of Association, applicable Cayman laws and
regulations including the Listing Rules, in relation to the following:


     ●    the composition of our Board;


     ●    amendments to our Memorandum and Articles of Association; and


     ●    any corporate actions requiring shareholder approval, including election and removal
          of directors, merger, consolidation or sale of our assets.


      There is no assurance that Tan Sri Dr Chen will always vote his shares in a way that benefits
all of our other Shareholders. The interests of Tan Sri Dr Chen may conflict with your interests.


Forward-looking statements in this prospectus are subject to uncertainties


     This prospectus contains forward-looking statements that are, by their nature, subject to
significant risks and uncertainties. These forward-looking statements include, without limitation,
statements relating to:


     —    our business and operating strategies and our various measures to implement such
          strategies;


     —    our dividend distribution plans;


     —    our capital expenditure plans;


     —    our operations and business prospects, including development plans for our existing
          and new business;


     —    our financial condition and results of operations; and


     —    future developments and the competitive environment in the industry.




                                             — 36 —
                                       RISK FACTORS

     The words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”,
“seek”, “will”, “would”, “shall”, “should” and similar expressions, as they relate to us, are
intended to identify a number of these forward-looking statements. These forward-looking
statements reflect our current views with respect to future events and are not a guarantee of
future performance. Actual results may differ materially from information contained in the
forward-looking statements as a result of a number of factors, including:


     —    general economic, legal, market and business conditions;


     —    changes or volatility in foreign exchange rates, equity prices or other rates or prices;


     —    the effects of competition in the industry; and


     —    various business opportunities that we may pursue.


We caution prospective investors not to rely on information contained in press articles
and or other media in respect of our Share Offer and us


     We note press articles in respect of our Share Offer and us reported in certain news
publications in Hong Kong (including, among others, the South China Morning Post on 5th June,
2006 and 26th September, 2006 and the Hong Kong Economic Times on 16th August, 2006), which
included financial, operational and other information about the Share Offer and us. We wish to
emphasise that we do not make any representation about, nor accept any responsibility as to, the
appropriateness, accuracy, completeness or reliability of such information or the underlying
assumptions. Such information was not sourced from or authorised by us. We disclaim, to the
extent applicable, any of such information that is inconsistent or conflicts with the information
contained in this prospectus and the Application Forms. We caution prospective investors to read
the information contained in this prospectus and Application Forms only before making an
investment decision in relation to the Share Offer and not to rely on any other information not
sourced from or authorised by us.




                                            — 37 —
            WAIVER FROM COMPLIANCE WITH THE LISTING RULES

STOCK BORROWING


     In order to facilitate settlement of over-allocations in connection with the Placing, the Stock
Borrowing Agreement has been entered into between Tan Sri Dr Chen and Kim Eng Securities.
Under the Stock Borrowing Agreement, Tan Sri Dr Chen would, if requested by Kim Eng
Securities, and subject to the terms of the Stock Borrowing Agreement, make available to Kim Eng
Securities up to 75,000,000 Shares held by him, by way of stock lending, in order to cover
over-allocations in connection with the Placing. For the purposes of this stock borrowing
arrangement a waiver has been granted by the Stock Exchange from strict compliance with Rule
10.07(1)(a) of the Listing Rules, which otherwise restricts the disposal of shares by controlling
shareholders, as defined in the Listing Rules, following the new listing of a company. The waiver
allows Tan Sri Dr Chen, a controlling Shareholder (as defined in the Listing Rules) of the
Company, to enter into and perform his obligations under the Stock Borrowing Agreement and
has been granted on the following conditions:


     1.   such stock borrowing arrangement will only be effected by Kim Eng Securities for
          settlement of over-allocations in connection with the Placing;


     2.   the maximum number of Shares borrowed from Tan Sri Dr Chen by Kim Eng Securities
          will be limited to the maximum number of Shares which may be issued upon full
          exercise of the Over-allotment Option;


     3.   the same number of Shares borrowed from Tan Sri Dr Chen must be returned to him
          not later than three business days following the earlier of (i) the last day for exercising
          the Over-allotment Option and (ii) the date on which the Over-allotment Option is
          exercised in full;


     4.   Tan Sri Dr Chen will receive no payment or benefit in respect of such stock borrowing
          arrangement; and


     5.   the stock borrowing arrangement will be effected in compliance with all applicable
          laws and regulatory requirements.




                                             — 38 —
    INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS


      This prospectus includes particulars given in compliance with the Companies Ordinance,
the Securities and Futures (Stock Market Listing) Rules under the SFO and the Listing Rules for      App 1A(2)
                                                                                                     Rule 11.12
the purpose of giving information with regard to the Company. The Directors collectively and         Rule 19.08(1)
                                                                                                     S342C(1),2(c)
individually accept full responsibility for the accuracy of the information contained in this
prospectus and confirm, having made all reasonable enquiries, that to the best of their
knowledge and belief there are no other facts the omission of which would make any statement
in this prospectus misleading.


INFORMATION ON THE SHARE OFFER


     The Offer Shares are offered solely on the basis of the information contained and the
representations made in this prospectus and the Application Forms. No person is authorised to
give any information in connection with the Share Offer or to make any representation not
contained in this prospectus, and any information or representation not contained herein must
not be relied upon as having been authorised by the Company, the Sponsor, the Joint Lead
Managers, the Underwriters, any of their respective directors or any other person involved in the
Share Offer.


FULLY UNDERWRITTEN


     The Share Offer comprises the Placing and the Public Offer. Details of the structure of the     App 1A(15)
                                                                                                     (2)(a)
Share Offer are set out in the section headed “Structure of the Share Offer” in this prospectus.
This prospectus is published in connection with the Share Offer and, together with the related
Application Forms, sets out the terms and conditions of the Share Offer.


     The Share Offer is sponsored by Anglo Chinese, jointly lead managed by Kim Eng Securities       App 1A(15)
                                                                                                     (2)(h)
and Anglo Chinese and fully underwritten by the Underwriters, subject to the Offer Price that will
be agreed between the Company and the Joint Lead Managers (on behalf of the Underwriters)
and other conditions set out in the section headed “Underwriting” in this prospectus. Information
relating to the underwriting arrangements is set out in the section headed “Underwriting” in this
prospectus.


DETERMINATION OF THE OFFER PRICE


     The Offer Shares are offered at the Offer Price which will be determined by the Joint Lead      IE Note 9, 10

Managers (on behalf of the Underwriters) and the Company at the Price Determination Time,
being on or before 5:00 p.m. on Wednesday, 11th October, 2006 (Hong Kong time), or such later
time as may be agreed between the Joint Lead Managers (on behalf of the Underwriters) and the
Company, but in any event no later than 5:00 p.m. on Thursday, 12th October, 2006.




                                            — 39 —
    INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

    If the Joint Lead Managers (on behalf of the Underwriters) and the Company are
unable to reach an agreement on the Offer Price at the Price Determination Time , the
Share Offer will not become unconditional and will lapse.


SELLING RESTRICTIONS


      No action has been taken to permit an offering of the Public Offer Shares or the distribution
of this prospectus in any jurisdiction other than Hong Kong. Accordingly, this prospectus may not
be used for the purpose of, and does not constitute, an offer or invitation in any jurisdiction or
in any circumstances in which such an offer or invitation is not authorised or to any person to
whom it is unlawful to make such an offer or invitation.


      The Public Offer Shares are offered to the public in Hong Kong for subscription solely on
the basis of the information contained and the representations made in this prospectus and the
Application Forms. No person is authorised in connection with the Share Offer to give any
information, or to make any representation, not contained in this prospectus, and any
information or representation not contained herein must not be relied upon as having been
authorised by the Company, the Sponsor, the Joint Lead Managers and the Underwriters, any of
their respective directors or any other person involved in the Share Offer.


     Each person acquiring the Offer Shares will be required, and is deemed by his acquisition
of the Offer Shares, to confirm that he is aware of the restriction on offers of the Offer Shares
described in this prospectus and that he is not acquiring, and has not been offered, any Offer
Shares in circumstances that contravene any such restrictions.


     The following information is provided for guidance only. Prospective applicants for Offer
Shares should consult their financial advisors and take legal advice, as appropriate, to inform
themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction.
Prospective applicants for the Offer Shares should inform themselves as to the relevant legal
requirements of applying and any applicable exchange control regulations and applicable taxes
in the countries of their respective citizenship, residence or domicile.


     In particular, but without limitation to the above:


Canada


      The Offer Shares may not be offered or sold, directly or indirectly, in any province or
territory of Canada or to, for the benefit of, any resident of any province or any province or
territory of Canada except pursuant to an exemption from the requirement to file a prospectus
in the province or territory of Canada in which such offer or sale is made and only by a dealer
duly registered under the applicable securities laws of that province or territory or in
circumstances where any exemption from the applicable registered dealer requirements is
available.


                                            — 40 —
    INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

Cayman Islands


     No invitation may be made to the public in the Cayman Islands to subscribe for or purchase
any of the Offer Shares.


European Economic Area


     In relation to each member state of European Economic Area which has implemented the
Prospective Directive 2003/71/EC (each a “relevant member state”), with effect from and
including the date on which the Prospective Directive 2003/71/EC is implemented in that relevant
member state (the “relevant implementation date”), the Offer Shares have not been and will not
be offered to the public in that relevant member state prior to the publication of a prospectus in
relation to the Offer Shares which has been approved by the competent authority in that relevant
member state or, where appropriate, approved in another relevant member state and notified to
the competent authority in that relevant member state, all in accordance with the Prospective
Directive 2003/71/EC, except for the Offer Shares that have been or will be offered to the public,
with effect from and including the relevant implementation date, in that relevant member state
at any time: (a) to legal entities which are authorized or regulated to operate in the financial
markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in
securities; (b) to any legal entity which has two or more of (i) an average of at least 250
employees during the last financial year, (ii) a total balance sheet of more than Euro 43,000,000
and (iii) an annual net turnover of more than Euro 50,000,000, as shown in its last annual or
consolidated accounts; or (c) in any other circumstances which do not require the publication of
a prospectus under article 3 of the Prospective Directive 2003/71/EC.


France


      The Offer Shares will not be offered or sold, and copies of this prospectus or other
documents or materials relating to the Share Offer will not be distributed or caused to be
distributed, directly or indirectly, in France except to corporate entities having the status of
“qualified investors” (investisseurs qualifie s), as defined in article L. 411-2 of the French Code
                                            ´
Mone taire et Financier and acting for their own account, or otherwise in circumstances which
     ´
have not resulted and will not result in a public offering (appel public a l’e pargne) in France as
                                                                            ` ´
defined in article L. 411-1 of the French Code Mone taire et Financier.
                                                       ´


     In accordance with article 215-2 of the General Regulations (Re glement Ge ne ral) of the
                                                                          `          ´ ´
French Autorite des Marche s Financiers, such “qualified investors” (investisseurs qualifie s) are
               ´            ´                                                                ´
informed that: (i) no prospectus nor any other offering material in relation to the Offer Shares has
been or will be lodged or registered with the French Autorite des Marche s Financiers; (ii) they
                                                                ´           ´
must participate in the offering for their own account, in the conditions set out in the decree n˚
98-880 of 1st October, 1998; and (iii) the direct or indirect resale to the public in France of the
Offer Shares can only be made in accordance with articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8
of the French Code Mone taire et Financier.
                         ´


                                             — 41 —
     INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

Germany


      The Offer Shares have not been admitted to trading on a German stock exchange and no
sales prospectus pursuant to the German Securities Sales Prospectus Act (Wertpapier-
Verkaufsprospektgesetz) of 9th September, 1998, as amended, has been filed with or approved by
the Federal Financial Supervisory Authority (Bundesanstalt fu r Finanzdienstleistungsaufsicht) or
                                                               ¨
published with regard to the offer of the Offer Shares in Germany. Accordingly, no offer of the
Offer Shares is being made to the public in Germany and the Offer Shares may not be offered or
sold in Germany by means of this prospectus or otherwise, either directly or indirectly, except
to persons or under circumstances falling within the scope of section 2 numbers 1, 2 or 4 of the
German Securities Sales Prospectus Act and other applicable laws and regulations. Under these
exemptions of the German Securities Sales Prospectus Act, the Offer Shares can only be offered
and sold, (i) to persons who, in the course of their professional or commercial activities,
purchase or sell securities for their own account or for the account of others; or (ii) to a restricted
circle of persons as this term is construed by the courts and the Federal Financial Supervisory
Authority; or (iii) to investors if they are acquired in denominations of at least EUR40,000 or for
a purchase price of at least EUR40,000 per investor.


     Neither this prospectus, nor any other document issued in connection with the offer or sale
of the Offer Shares, may be issued or distributed to any person in Germany except under
circumstances which do not constitute an offer to the public pursuant the German Securities Sales
Prospectus Act.


     Any resale of the Offer Shares in Germany may only be made in accordance with the
provisions of the Securities Sales Prospectus Act and any other laws applicable in Germany
governing the offering and sale of securities.


Italy


      This prospectus has not been and will not be filed with or approved by the Italian securities
market regulator (Commissione Nazionale per le Societa e la Borsa — the “CONSOB”), pursuant
                                                         `
to Legislative Decree No. 58 of 24th February, 1998 (as amended, the “Finance Law”) and to
CONSOB Regulation No. 11971 of 14th May, 1999 (as amended, the “Issuers Regulation”).
Accordingly, this prospectus or any other document relating to the Offer Shares may not be
distributed, made available or advertised in Italy, nor may the Offer Shares be offered, purchased,
sold, promoted, advertised or delivered, directly or indirectly, to the public other than (i) to
“Professional Investors” (such being the persons and entities as defined pursuant to article 31(2)
of CONSOB Regulation No. 11522 of 1st July, 1998, as amended, the “Intermediaries
Regulation”), pursuant to article 100 of the Finance Law; (ii) to prospective investors where the
offer of the Offer Shares is subject to a minimum investment requirement of EUR250,000 or to a
maximum, in Italy, of 200 investors, pursuant to article 100 of the Finance Law and article 33 of
the Issuers Regulation; or otherwise in reliance on a total exemption from the investment
solicitation rules pursuant to, and in compliance with the conditions set forth by Article 100 of
the Finance Law or article 33 of the Issuers Regulation, or by any applicable exemption; or (iii)


                                              — 42 —
      INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

to Italian residents who submit an unsolicited offer to purchase such Offer Shares, provided that
any such offer, sale, promotion, advertising or delivery of the Offer Shares or distribution of the
prospectus, or any part thereof, or of any other document or material relating to the Offer Shares
in Italy is made: (a) by investment firms, banks or financial intermediaries authorised to carry out
such activities in the Republic of Italy in accordance with the Finance Law, the Issuers Regulation,
the Legislative Decree No. 385 of 1st September, 1993 (as amended, the “Banking Law”), the
Intermediaries Regulation, and any other applicable laws and regulations; (b) in compliance, as
the case may be, with article 129 of the Banking Law and the implementing regulations and
instructions issued by the Italian national central bank (“Bank of Italy”); and (c) in compliance
with any other applicable notification requirement or duty which may, from time to time, be
imposed by CONSOB, Bank of Italy or by any other competent authority.


Japan


     This prospectus has not been and will not be registered under the Securities and Exchange
Law of Japan (the “Securities and Exchange Law”). None of the Offer Shares may be offered,
re-offered, sold or re-sold, directly or indirectly, in Japan or to, or for the benefit of, any resident
of Japan, except: (i) pursuant to an exemption from the registration requirements of the Securities
and Exchange Law; and (ii) in compliance with any other applicable requirements of Japanese
Law, Regulations and Ministerial Guidelines.


PRC


      This prospectus has not been and will not be filed with or approved by the PRC securities
market regulator pursuant to the PRC Securities Law of 29th December, 1998 (“PRC Securities
Law”) as amended. Accordingly, this prospectus or any other documents relating to the Offer
Shares may not be published, distributed, made available or advertised, directly or indirectly, to
the public in the PRC other than to a restricted circle of less than 200 residents of the PRC, nor
may the Offer Shares be offered, sold, promoted, advertised or delivered, or sold to anyone for
re-offering or re-sale, directly or indirectly, to the public in the PRC, other than to a restricted
circle of less than 200 residents of the PRC.


     Neither this prospectus, nor any other document issued in connection with the offer or sale
of the Offer Shares, may be issued or distributed to any person in the PRC except under
circumstances which do not constitute an offer to the public pursuant to the PRC Securities Law.


Taiwan


     The Offer Shares have not been and will not be registered with the Securities and Futures
Commission of Taiwan and are not being offered or sold and may not be offered or sold, directly
or indirectly, in Taiwan or to, or for the benefit of, any resident of Taiwan, except (a) pursuant
to the requirements of the securities related laws and regulations in Taiwan; and (b) in
compliance with any other applicable requirements of Taiwanese laws.


                                               — 43 —
    INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

Singapore


      This prospectus has not been and will not be registered as a prospectus with the MAS in
Singapore and the Share Offer is made pursuant to an exemption invoked under sections 274 and
275 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”). Accordingly, this
prospectus and any other document or material in connection with the Share Offer may not be
circulated or distributed in Singapore, nor may any of the Offer Shares be offered or sold,
whether directly or indirectly, nor may any invitation or offer to subscribe for or purchase any
Offer Shares be made, whether directly or indirectly, to the public or any member of the public
in Singapore other than (i) to an institutional investor or other person specified in section 274 of
the SFA; (ii) to a sophisticated investor specified in, and in accordance with the conditions of,
section 275 of the SFA; or (iii) pursuant to, and in accordance with the conditions of, any other
applicable provisions of the SFA. The MAS takes no responsibility for the contents of this
prospectus or any of the documents referred to above.


Malaysia


     This prospectus has not been and will not be registered as a prospectus with the Securities
Commission of Malaysia. This prospectus does not constitute and may not be used for the
purpose of, a public offering or an issue, offer for subscription or purchase, invitation to
subscribe for or purchase of any Offer Shares in Malaysia whether directly or indirectly to the
public or any member of the public in Malaysia. Accordingly, this prospectus and any other
document or material in connection with the Share Offer may not be circulated or distributed in
Malaysia.


The Netherlands


     No offer of the Offer Shares has been or will be made to the public in the Netherlands prior
to the publication of a prospectus in relation to the Offer Shares which has been approved by the
competent authority in the Netherlands in accordance with the European Union Prospective
Directive, except that it may, with effect from and including the date on which the Prospective
Directive is implemented in the Netherlands, make an offer of the Offer Shares to the public in
the Netherlands at any time:


     (a)   to legal entities which are authorized or regulated to operate in the financial markets
           or, if not so authorised or regulated, whose corporate purpose is solely to invest in
           securities;


     (b)   to any legal entity which has two or more of (i) an average of at least 250 employees
           during the last financial year; (ii) a total balance sheet of more than Euro 43,000,000
           and (iii) an annual net turnover of more than Euro 50,000,000, as shown in its last
           annual or consolidated accounts; or


     (c)   in any other circumstances which do not require the publication by the issuer of a
           prospectus pursuant to article 3 of the Prospective Directive.


                                             — 44 —
     INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

      For the purposes of this provision, the expression an “offer of the Offer Shares to the public”
in relation to any Offer Shares in the Netherlands means the communication in any form and by
any means of sufficient information on the terms of the offer and the Offer Shares to be offered
so as to enable an investor to decide to purchase or subscribe for the Offer Shares, as the same
may be varied in the Netherlands and the expression Prospective Directive means Directive
2003/71/EC and includes any relevant implementing measure in the Netherlands.


     If the Offer Shares are offered in the Netherlands upon reliance of article 3 sub 2(a) of the
Prospective Directive, then “qualified investors” shall have the meaning of “professional market
parties” as defined in article 1(a) sub 3 of thee Exemption Regulation to the Netherlands Act on
the Supervision of Securities Trade 1995 (Vrijstellingsregeling Wet toezicht effectenverkeer 1995).


United Kingdom


     This prospectus has not been approved by an authorised person in the United Kingdom and
has not been registered with the Registrar of Companies in the United Kingdom. The Offer Shares
may not be offered or sold and will not be offered or sold to any persons in the United Kingdom
except to persons who are qualified investors within the meaning of section 86 of the Financial
Services and Markets Act 2000 (“FSMA”) as amended by the Prospectus Regulations 2005. In
addition, no person may communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in
connection with the issue or sale of any Offer Shares except in circumstances in which section
21(1) of the FSMA does not apply to the Company. This prospectus is directed only at (i) persons
outside the United Kingdom; or (ii) persons having professional experience in matters relating to
investments who fall within the definition of “investment professionals” in article 19 of the
Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (as amended) (the
“FPO”); or (iii) high net worth bodies corporate, unincorporated associations and partnerships
and trustees of high value trusts as described in article 49 of the FPO. Any investment or
investment activity to which this prospectus relates is only available to and will only be engaged
in with such persons and persons who do not fall within (ii) or (iii) above should not rely on or
act upon this communication.


United States


      The Offer Shares have not been, and will not be, registered under the US Securities Act of
1933, as amended (the “US Securities Act”) or under any securities regulatory authority of any
state of the US and may not be offered, sold, pledged or transferred within the US, or to, or for
the account or benefit of, US persons. The Offer Shares are being offered and sold outside the
US in an offshore transaction to non-US persons pursuant to Regulation S under the US Securities
Act. Terms used in this paragraph have the meanings given to them by Regulation S under the US
Securities Act.




                                             — 45 —
     INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

     The Offer Shares have not been approved or disapproved by the US Securities and Exchange
Commission, any state securities commission in the US or any other US regulatory authority, nor
have any of the foregoing authorities passed upon or endorsed the merits of the Share Offer or
the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal
offence in the US.


APPLICATION FOR LISTING ON THE STOCK EXCHANGE


     Application has been made to the listing committee of the Stock Exchange for the listing of,        App 1A(14)(1)

and permission to deal in, the Shares in issue and to be issued as mentioned in this prospectus
(including any Shares which may be issued upon the exercise of the Over-allotment Option, any
Shares to be issued upon the exercise of the options which may be granted under the Share
Option Scheme and any Shares to be issued pursuant to the Capitalisation Issue).


    No part of the share or loan capital of the Company is listed or dealt in on any other stock         A1a(11)

exchange and, at present, no such listing or permission to deal is being or is proposed to be
sought on any other stock exchange.


HONG KONG SHARE REGISTER AND STAMP DUTY


     The Company’s register of members will be maintained in Hong Kong by the Company’s
share registrar, Computershare Hong Kong Investor Services Limited. All Shares issued and to be
issued as mentioned in this prospectus will be registered on the Company’s register of members
to be maintained in Hong Kong.


     The sale, purchase and transfer of, and dealings in, Shares registered on the Company’s
register of members in Hong Kong will be subject to Hong Kong stamp duty.


PROFESSIONAL TAX ADVICE RECOMMENDED


     If you are unsure about the taxation implications of subscribing for, purchasing, holding,
disposing of, dealing in, or the exercise of any rights in relation to, the Offer Shares, you should
consult your professional advisors.


     None of the Company, the Directors, the Sponsor, the Joint Lead Managers, the Underwriters
and any of their respective directors, agents or advisors or any other person involved in the Share
Offer accepts responsibility for any tax effects on, or liabilities of, any person resulting from, the
subscription for, purchasing, holding, disposing of, dealing in, or the exercise of any rights in
relation to, the Offer Shares.




                                              — 46 —
    INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

PROCEDURE FOR APPLICATION FOR THE PUBLIC OFFER SHARES


    The procedure for applying for the Public Offer Shares is set out under the section headed
“How to apply for Public Offer Shares” of this prospectus and on the relevant Application Forms.


STRUCTURE OF THE SHARE OFFER


    Details of the structure of the Share Offer, including its conditions and the Over-allotment
Option, are set out under the section headed “Structure of the Share Offer” of this prospectus.


SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS                                                     A1a14(2)



    Subject to the granting of the listing of, and permission to deal in, the Shares on the Stock
Exchange and compliance with the stock admission requirements of HKSCC, the Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the Shares on the Stock Exchange or on any
other date HKSCC chooses. Settlement of transactions between participants of the Stock
Exchange is required to take place in CCASS on the second business day after any trading day.
Investors should seek the advice of their stockbroker or other professional advisor for details of
those settlement arrangements and how such arrangements will affect their rights and interests.


     All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational
Procedures in effect from time to time.


     All necessary arrangements have been made for the Shares to be admitted into CCASS.


COMMENCEMENT OF DEALINGS IN THE SHARES


     Dealings in the Shares on the Stock Exchange are expected to commence on or about 19th          Rule 8-13
                                                                                                     App 1A(22)
October, 2006. Shares will be traded in board lots of 2,000 Shares each.


     The stock code for the Shares is 3918.


     The Company will not issue any temporary documents of title. Dealings in the Shares on the
Main Board will be effected by participants of the Stock Exchange whose bid and offer quotations
will be available on the Stock Exchange’s teletext page information system.




                                            — 47 —
    INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER

ROUNDING


     Any discrepancies in any table between totals and sums of amounts listed therein are due
to rounding.


EXCHANGE RATE CONVERSION


     For the purpose of this prospectus, unless otherwise stated, the conversion of US dollars
into HK dollars has been calculated using an exchange rate of US$1.00 = HK$7.8, and vice versa.
While the conversion of RM into US dollars has been calculated using an exchange rate of RM3.8
= US$1, and vice versa. The conversion of MOP into HK dollars has been calculated using an
exchange rate of MOP1.03028 = HK$1.0, and vice versa. Such exchange rates have been used for
the purpose of illustration only and do not constitute a representation that any amounts have
been, could have been, or may be exchanged at these or any other rates or at all.




                                           — 48 —
        DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER

DIRECTORS

Name                      Address                     Nationality

Executive Directors

Tan Sri Dr Chen           18 Jalan Tengku Ampuan      Malaysian     A1a(41)
                                                                    3rd Sch (6)
                          Taman Duta                                A1a49(1)
                                                                    R8.12
                          50480 Kuala Lumpur
                          Malaysia

David Martin Hodson       Flat B, 5/F Manly Mansion   British
                          69B Robinson Road
                          Hong Kong

Tian Toh Seng             Room 511                    Malaysian
                          Himawari Hotel Apartments
                          313 Sisowath Quay
                          Phnom Penh
                          Kingdom of Cambodia

Lee Wing Fatt             No 239, Street 63           Malaysian
                          Boeng Keng
                          Kang 1
                          Phnom Penh
                          Kingdom of Cambodia

Lew Shiong Loon           No 22, Jalan Desa Aman 1A   Malaysian
                          Taman Desa Aman
                          Cheras, 56100
                          Kuala Lumpur
                          Malaysia

Monica Lam Yi Lin         Flat C 16/F Block 8         Canadian      A1a(15)
                                                                    A1a(3)
                          Villa Athena
                          Ma On Shan
                          New Territories
                          Hong Kong

John Pius Shuman Chong    Unit 603, 6th Floor         American
                          Likas Square Apartments
                          Jalan Isdiatat
                          88400 Kota Kinabalu
                          Sabah




                              — 49 —
        DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER

Name                                  Address                   Nationality

Independent non-executive Directors                                           A1a(41)(1)


Timothy Patrick McNally               2233 Peak Place           American
                                      Thousand Oaks
                                      California 91362
                                      USA

Tun Hamid                             No. 10 Langgak Tunku      Malaysian     3rd Sch(6)
                                                                              R8.12
                                      Bukit Tunku
                                      50480 Kuala Lumpur
                                      Malaysia

Wong Choi Kay                         3596, Hudson Street       Malaysian
                                      Vancouver, BC
                                      Canada

Zhou Lian Ji                          5/F,                      Chinese
                                      157 Wong Nai Chung Road
                                      Happy Valley
                                      Hong Kong




                                          — 50 —
          DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER

PARTIES INVOLVED IN THE SHARE OFFER

Sponsor                      Anglo Chinese Corporate Finance, Limited       A1a(3)

                             40th Floor, Two Exchange Square
                             8 Connaught Place
                             Central
                             Hong Kong

Joint Lead Managers          Kim Eng Securities (Hong Kong) Limited
                             Level 30, Three Pacific Place
                             1 Queen’s Road East
                             Hong Kong

                             Anglo Chinese Corporate Finance, Limited
                             40th Floor, Two Exchange Square
                             8 Connaught Place
                             Central
                             Hong Kong

Co-Lead Managers             Evolution Watterson Securities Limited
                             5th Floor, 8 Queen’s Road Central
                             Hong Kong

                             China Merchants Securities (HK) Co., Limited
                             48/F One Exchange Square
                             8 Connaught Place
                             Central
                             Hong Kong

Placing Underwriters         Anglo Chinese Corporate Finance, Limited       A1a(15)(2h)

                             40th Floor, Two Exchange Square
                             8 Connaught Place
                             Central
                             Hong Kong

                             Kim Eng Securities (Hong Kong) Limited
                             Level 30, Three Pacific Place
                             1 Queen’s Road East
                             Hong Kong

                             Evolution Watterson Securities Limited
                             5th Floor, 8 Queen’s Road Central
                             Hong Kong

                             China Merchants Securities (HK) Co., Limited
                             48/F One Exchange Square
                             8 Connaught Place
                             Central
                             Hong Kong



                                  — 51 —
       DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER

                            First Shanghai Securities Limited
                            19/F Wing On House
                            71 Des Voeux Road Central
                            Hong Kong

                            Taiwan Securities (Hong Kong) Company Limited
                            Rm 1302 - 05, 13/F, Tower II, Admiralty Centre
                            18 Harcourt Road
                            Hong Kong

                            VC Brokerage Limited
                            28/F The Centrium
                            60 Wyndham Street
                            Central
                            Hong Kong

Public Offer Underwriters   Kim Eng Securities (Hong Kong) Limited           App1A(15)
                                                                             (2)(h)(f)
                            Level 30, Three Pacific Place
                            1 Queen’s Road East
                            Hong Kong

                            Evolution Watterson Securities Limited
                            5th Floor, 8 Queen’s Road Central
                            Hong Kong

                            China Merchants Securities (HK) Co., Limited
                            48/F One Exchange Square
                            8 Connaught Place
                            Central
                            Hong Kong

                            First Shanghai Securities Limited
                            19/F Wing On House
                            71 Des Voeux Road Central
                            Hong Kong

                            Taiwan Securities (Hong Kong) Company Limited
                            Rm 1302 - 05, 13/F, Tower II, Admiralty Centre
                            18 Harcourt Road
                            Hong Kong

                            VC Brokerage Limited
                            28/F The Centrium
                            60 Wyndham Street
                            Central
                            Hong Kong




                                 — 52 —
        DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER

Legal advisors to the Company   As to Hong Kong law                 A1a(3)

                                Simmons & Simmons
                                35th Floor, Cheung Kong Center
                                2 Queen’s Road Central
                                Hong Kong

                                As to Cambodian law
                                Dr. Nolan C. Stringfield, Esq
                                Nolan C. Stringfield & Associates
                                4330N Pershing Avenue
                                Suite B-21 Stockton
                                CA 95207
                                USA

                                in association with
                                Law Office of Long Dara
                                #35CD, St 271,
                                Sangkat Teukthla
                                Khan Russeykeo
                                Phnom Penh
                                Cambodia

                                As to Cayman Islands law            A1a(3)

                                Conyers Dill & Pearman
                                Century Yard
                                Cricket Square
                                Hutchins Drive
                                George Town
                                Grand Cayman
                                British West Indies

                                As to Malaysian law                 A1a(3)
                                                                    A1a15(2)(f)
                                Zaid lbrahim & Co
                                Level 19 Menara Millenium
                                Jalan Damanlela
                                Pusat Bandar Damansara
                                50490 Kuala Lumpur
                                Malaysia

Legal advisors to the Sponsor   As to Hong Kong law                 App1A(3)

  and the Underwriters          Richards Butler
                                20th Floor, Alexandra House
                                16-20 Chater Road
                                Central
                                Hong Kong




                                     — 53 —
       DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER

Auditors and reporting   KPMG                                          3rd Sch(18)
                                                                       App 1A(4)
 accountants             Certified Public Accountants
                         8th Floor, Prince’s Building
                         10 Chater Road
                         Central
                         Hong Kong

Property valuer          CB Richard Ellis Limited
                         34/F Central Plaza
                         18 Harbour Road
                         Wanchai
                         Hong Kong

Receiving banker         Standard Chartered Bank (Hong Kong) Limited   App 1A(15)
                                                                       (2)(f)
                         15th Floor
                         Standard Chartered Tower
                         388 Kwun Tong Road
                         Hong Kong




                              — 54 —
                              CORPORATE INFORMATION

Registered office                 Century Yard                           A1a(43)
                                                                         A1a(6)
                                  Cricket Square
                                  Hutchins Drive
                                  P.O. Box 2681 GT
                                  George Town
                                  Grand Cayman
                                  British West Indies

Principal place of business       NagaWorld Building                     App 1A(6)
                                                                         S342(1)(a)(v)
                                  South of Samdech Hun Sen’s Park        A1a(43)

                                  Phnom Penh
                                  Kingdom of Cambodia

Principal place of business       8th Floor, Gloucester Tower
  in Hong Kong                    The Landmark
                                  15 Queen’s Road Central
                                  Hong Kong

Company secretary                 Gloria Sau-kuen Ma, FCIS, FCS          A1a(42)
                                                                         A1a(6)
                                  8th Floor, Gloucester Tower            A1a(3)
                                  The Landmark
                                  15 Queen’s Road Central
                                  Hong Kong

Assistant company secretary       Codan Trust Company (Cayman) Limited

Qualified accountant              Ling Doh Seong, Richard, CPA

Authorised representatives        Gloria Sau-kuen Ma, FCIS, FCS          A1a(3)
                                  8th Floor, Gloucester Tower
                                  The Landmark
                                  15 Queen’s Road Central
                                  Hong Kong

                                  Monica Lam Yi Lin, ACS ACIS
                                  Office No. 6, 7/F
                                  Shatin Galleria
                                  No. 18-24 Shan Mei Street
                                  Fo Tan
                                  New Territories
                                  Hong Kong




                                       — 55 —
                           CORPORATE INFORMATION

Compliance Advisor             Anglo Chinese Corporate Finance, Limited
                               40th Floor, Two Exchange Square
                               8 Connaught Place
                               Central
                               Hong Kong

Audit committee                Wong Choi Kay (Chairperson)
                               Tun Hamid
                               Zhou Lian Ji

AML Oversight Committee        David Martin Hodson (Chairman)
                               Timothy Patrick McNally
                               Tun Hamid
                               Wong Choi Kay
                               Tan Sri Dr Chen
                               Tian Toh Seng
                               Lee Wing Fatt
                               Lew Shiong Loon

Remuneration Committee         Timothy Patrick McNally (Chairman)
                               Tun Hamid
                               Zhou Lian Ji
                               Tan Sri Dr Chen
                               Tian Toh Seng

Nomination Committee           Timothy Patrick McNally (Chairman)
                               Tun Hamid
                               Zhou Lian Ji
                               Tan Sri Dr Chen
                               Tian Toh Seng

Credit committee               Lee Wing Fatt (Chairman)
                               Paul Ng Wee Sin
                               Tian Toh Seng

Principal banker               Malayan Banking Berhad, Phnom Penh Branch           App 1A(3)
                                                                                   App 1A(3)
                               No. 4B, Street 114 (Kramoun Sar)
                               Phnom Penh
                               Kingdom of Cambodia

Share registrar and transfer   Computershare Hong Kong Investor Services Limited   A1a(3)
                                                                                   Rule 8.16
  office                       Shops 1712-1716, 17th Floor, Hopewell Centre
                               183 Queen’s Road East
                               Wanchai
                               Hong Kong




                                    — 56 —
                                         CAMBODIA

CAMBODIA




     The Royal Kingdom of Cambodia is situated on the Southeast Asia mainland between
Thailand to its west and north and Vietnam to its east, and shares a land border with Laos in its
northeast. Cambodia has a sea coast on the Gulf of Thailand. The country features hill ranges,
including The Dangrek Mountain range in the north and Cardamom Mountains in the southwest,
and two main rivers running across its territory, namely the Mekong and Tonle Sap rivers.


     For the period between 1975 and 1979, Cambodia, which was until then a stable and
prosperous country in the region, was subject to the rule of the agrarian collectivist policies of
the Khmer Rouge regime. The implementation of central planning under the Vietnamese-backed
People’s Republic of Kampuchea following the Khmer Rouge regime also stifled the economic
growth of the country. In the late 1980s, a market economy was adopted by the Cambodian




                                            — 57 —
                                          CAMBODIA

Government. After the 1991 Paris Peace Accords, and with the assistance provided by the United
Nations-sponsored administrative and military force, a constitutional monarchy was established
after the country’s national election in 1993. Since then, the economy has resumed its growth
momentum.


      According to the inter-censal population survey conducted by the National Institute of
Statistics of Cambodia, the population of Cambodia for 2004 was estimated to be around 13.4
million.


The Cambodian Government and political conditions


     Cambodia is a constitutional monarchy and its constitution provides for a multiparty
democracy. On 24th September, 1993, the Cambodian Government was established on the basis
of elections. Currently, the coalition government of the Cambodian People’s Party (“CPP”) and
the National United Front for an Independent, Neutral, Peaceful, and Cooperative Cambodia
(“FUNCINPEC”) are the ruling parties, while The Sam Rainsy Party (“SRP”) and several minor
parties are the main opposition parties.


     In the 1998 National Assembly elections, the CPP received the largest number of votes and
was followed by the FUNCINPEC and the SRP. The CPP and FUNCINPEC formed a coalition
government with the CPP acting as the senior partner. In July 2003, further National Assembly
elections were held but failed to give any one party the two-thirds majority of seats required
under the constitution to form a government. The CPP secured 73 seats, the FUNCINPEC 26 seats,
and the SRP 24 seats. As a result, the incumbent CPP-led administration continued in power,
pending the formation of a coalition with the required number of National Assembly seats to form
a government. On 15th July, 2005, the National Assembly approved a new coalition government
comprising the CPP and FUNCINPEC.


     The prime minister of the Cambodian Government is appointed by the National Assembly
every five years following the national elections. There is no constitutional or legal restriction on
how long a prime minister can service in that office. The next National Assembly elections are
expected to be held in July 2008.


The economy of Cambodia


      Cambodia is emerging from decades of war and internal strife including the factional
fighting in Phnom Penh that happened in mid-1997. The per capita income and education levels
of Cambodians are, in general, lower than in most neighbouring countries. According to statistics
released by the United Nations Organization for Education, Science and Culture and the World
Bank, the literacy rate in Cambodia was approximately 69.4% for 2002 while the corresponding
rate in the East Asia and Pacific region was on average approximately 87.3%. The Cambodian
Government inter-censal survey statistics show that the literacy rate for Cambodians has
increased to approximately 73.6% for 2004.


                                             — 58 —
                                                           CAMBODIA

     Infrastructure in Cambodia remains inadequate. The main industries in Cambodia are the
service sector, such as trade, and the industry sector, such as manufacturing and textile wearing
apparel and footwear. The textile wearing apparel and footwear industries, which expanded
rapidly in the mid-1990s, now face an uncertain future with the end of textile quotas at the end
of 2004. The other main industry is tourism with Angkor Wat, one of the seven wonders of the
world, being the country’s main international tourist attraction. For the period between 2002 and
2003, the tourism industry was impacted briefly by the outbreak of severe acute respiratory
syndrome in Asia and the growth of the industry slowed as a result.


                                     Gross Domestic Product (“GDP”) of Cambodia
                      5,000                                                           370
                      4,800                                                                         GDP
                                                                                      350           Per capita GDP
                      4,600
                      4,400
       (US$million)




                                                                                      330
                      4,200




                                                                                            (US$)
                      4,000                                                           310
                      3,800
                                                                                      290
                      3,600
                      3,400                                                           270
                      3,200
                      3,000                                                           250
                              19


                                        20


                                                  20


                                                           20


                                                                        20


                                                                               20
                                99


                                          00


                                                    01


                                                             02


                                                                          03


                                                                                 04




     Source:             National Institute of Statistics of Cambodia


    The GDP of Cambodia derives mainly from agriculture, fisheries and forestry, industry (such
as manufacturing and textile wearing apparel and footwear) and services (such as trade, hotels
and restaurants). As depicted in the table above, the GDP of Cambodia increased from
approximately US$3,515 million for 1999 to approximately US$4,888 million for 2004,
representing a CAGR of approximately 6.8% over the period. In particular, the mainstays for the
GDP in 2004 were the manufacturing, textile wearing apparel and footwear and fisheries
industries which accounted for approximately 20.3%, 14.5% and 9.8% of the GDP.


     As depicted in the table above, the per capita GDP of Cambodia increased from
approximately US$282 for 1999 to approximately US$357 for 2004, representing a CAGR of
approximately 4.8% over the period.


     Cambodia relies to a certain extent, on foreign borrowings and assistance for the
development of its economy. In a consultative group meeting held in December 2004,
international donors including UN agencies, International Monetary Fund, and European Central
Bank have collectively pledged financial aid of approximately US$504.0 million to Cambodia for
the 2005. The financial aid is intended for the funding of the construction of infrastructure and
the improvement of the general living standard of Cambodians.


                                                              — 59 —
                                      CAMBODIA

Foreign affairs of Cambodia


    Cambodia has established broad diplomatic relations, including with the following
countries:


    —    Australia


    —    Canada


    —    European Union


    —    France


    —    Germany


    —    Japan


    —    PRC and Hong Kong


    —    Republic of Korea


    —    United Kingdom


    —    United States


     Since joining ASEAN on 30th April, 1999, Cambodia has been an active member of this
regional body and is a frequent host of ASEAN meetings.


    —    8th ASEAN Summit 2002


    —    ASEAN Tourism Forum 2003


    —    6th Meeting of the ASEAN Tourism Ministers


    —    2nd Meeting of the ASEAN + 3 Tourism Ministers


    —    First ASEAN, China, Japan and Korea Communication Team for Tourism


    —    10th ASEAN Ministerial Meeting on Haze


    —    6th Meeting of the Steering Committee of the ASEAN Regional Center on Biodiversity
         Conservation


                                        — 60 —
                                        CAMBODIA

     —    Regional Launch of ASEAN Environment Year 2003


     —    1st Meeting of the ASEAN Expert Group on Communicable Diseases


     —    ASEAN+3 (comprising ASEAN countries and PRC, Japan, Korea) Senior Officials’
          Meeting 2003


     —    Special ASEAN+3 (comprising ASEAN countries and PRC, Japan, Korea) Health
          Ministers Meeting on severe acute respiratory syndromes


     —    36th ASEAN Ministerial Meeting


     —    ASEAN Regional Forum 2003


     —    17th ASEAN Free Trade Area Council


     —    35th ASEAN Economic Ministerial Meeting


     —    3rd ASEAN Inter-Parliamentary Organisation Fact Finding Comm. to Combat the Drug
          Menace


     —    10th ASEAN-China Senior Officials Consultations


     —    25th ASEAN Inter-Parliamentary Organisation General Assembly


     —    ASEAN-China Senior Officials Meeting Working Group Meeting on the Plan of Action
          for the ASEAN-China Strategic Partnership


     —    3rd Meeting of the ASEAN Committee on Disaster Management


     Cambodia and China have had a formal diplomatic relationship since 1958. In the 1990s,
Cambodia enjoyed increased political and economic integration with China with various visits
between the two countries involving presidents and ministers. In 1996, Cambodia and China
co-signed an agreement on trade, investment promotion and protection. In 2000, the two
countries set up an economic and trade cooperation committee. China has invested in over 100
projects in relation to development of infrastructures in Cambodia and is one of the top five
foreign investors in Cambodia. In order to assist Cambodia with its post-war construction, China
has also provided economic aid to Cambodia. (Source: Ministry of Foreign Affairs, PRC)


      Cambodia has also benefited from the assistance provided by members of ASEAN. For
example, a team from the Economic Planning Unit of the Prime Minister’s Department of Malaysia
assisted Cambodia in developing its long-term economic master plan in 2001.


                                           — 61 —
                                         CAMBODIA

      In addition, other neighbours within the South East Asia region have also provided technical
assistance to Cambodia. In particular, the Cambodian Government appointed a special consultant
to the UN on anti-corruption recently, who was a former commissioner of the Hong Kong
Independent Commission Against Corruption, to assist the country in drafting new legislation on
anti-corruption.


     Cambodia is also a member of most other major international organisations including the
United Nations, the World Bank, the International Monetary Fund, the Asian Development Bank,
APG, Food and Agriculture Organisation and the World Trade Organisation. In addition,
Cambodia is a member of the following international organisations:


     —    Group of 77


     —    International Bank for Reconstruction and Development


     —    International Civil Aviation Organisation


     —    International Criminal Court


     —    International Development Association


     —    International Fund for Agricultural Development


     —    International Finance Corporation


     —    International Federation of Red Cross and Red Crescent Societies


     —    International Labor Organisation


     —    International Criminal Police Organisation


     —    International Olympic Committee


     —    International Organisation for Standardisation


     —    Nonaligned Movement


     —    Organisation for the Prohibition of Chemical Weapons


     —    Permanent Court of Arbitration




                                             — 62 —
                                  CAMBODIA

—   United Nations Conference on Trade and Development


—   United Nations Educational, Scientific, and Cultural Organisation


—   United Nations Industrial Development Organisation


—   World Customs Organisation


—   World Federation of Trade Unions


—   World Health Organisation


—   World Intellectual Property Organisation


—   World Tourism Organisation




                                     — 63 —
                                 INDUSTRY OVERVIEW


      The information provided herein and elsewhere in this prospectus relating to the casino
 industry is derived from various official and unofficial publications. Neither we, the Sponsor,
 the Underwriters, any of our respective agents or advisors, nor any other parties involved in
 the Share Offer have independently verified the official information contained in this section.
 We make no representation as to the accuracy of the information derived from official sources
 namely, information set out in the paragraphs under headings “Poipet”, “Macau”, “Visitor
 arrivals” and “The continued growth trend in visitor arrivals” in this section, which may not
 be consistent with other information derived from other sources. Accordingly, the official
 information contained herein may not be accurate and should not be unduly relied upon.

OVERVIEW OF THE CASINO INDUSTRY IN CAMBODIA

     There are a number of casino operators in Cambodia offering gaming activities to tourists
and visitors. In particular, there are some casino complexes with sizeable operations located in
certain tourist destinations in Cambodia such as Pailin, Bavet (near the border between Cambodia
and Vietnam), Poipet, Sihanoukville and Koh Kong. As at the Latest Practicable Date, it is
estimated that there were around 14 casinos located in these regions of Cambodia. Our casino is
the only licensed casino within the Designated Area.

Poipet

    Poipet is a small town just inside the Cambodian border across from Aranyapathet in the Sa
Kaew province of Thailand. Poipet is approximately four hours drive from Bangkok.

     According to public information, there are around seven land-based casinos in Poipet,
offering table games, slot machines and accommodation to gaming customers, particularly those
travelling over the Thai-Cambodian border from Thailand.

Pailin

    Pailin is located in the isolated hills of Western Cambodia, close to the Thai province of
Chanthaburi. The town is understood to have two small casinos catering mainly to Thai tourists.

Koh Kong

      Koh Kong is located near the Thai southern province of Trat. Cambodia’s longest bridge was
opened in April 2002 connecting Koh Kong and Trat. The completion of the bridge was expected
to result in increased tourism and trade from Thailand. We understand that there are one or more
casinos in Koh Kong.

Sihanoukville

     Sihanoukville, also known as Kompong Som, is a beach resort town located approximately
four hours drive from Phnom Penh. Boat access from Thailand’s south east provinces, via Koh
Kong, is also available. Sihanoukville is understood to have several casinos.


                                           — 64 —
                                  INDUSTRY OVERVIEW

Other forms of gaming activities


     In Cambodia, certain companies are granted licences by the Cambodian Government to
operate lotteries in Cambodia. In addition, the Cambodian Government allows the offering of
football bettings and gaming machine stations in the country.


REGULATION OF THE GAMING INDUSTRY IN CAMBODIA


    Cambodia has legal infrastructure, laws and regulations governing the regulation of casino
operations and the prevention of money laundering. Cambodia joined APG as an observer in 1997
and has been a full member since 2004. Cambodia observes FATF recommendations, the
benchmark for combating money laundering and terrorist financing, in accordance with its own
political, economic and constitutional framework as permitted under the recommendations. A
casino licence is granted by the senior officials on behalf of the Cambodian Government such as
the prime minister and council of ministries.


     Casino operations in Cambodia are subject to a variety of laws and regulations. The
principal laws (or Krams) are the Kram on the Control of Gambling (promulgated in 1996) and
the Kram on Drug Control (promulgated in 1997). The former provides that “gambling of all
kinds, in all places throughout the whole kingdom of Cambodia shall be strictly prohibited
except those permitted by the Royal Government”. By virtue of Ariston’s rights, as granted under
the SDA and SSDA, NRCL is appropriately licensed and has the legal authority to operate its
casino and gaming business in Cambodia. The Kram on Drug Control, among other things,
establishes a framework for dealing with transactions (whether or not drug related).


     After FATF extended its recommendations to cover casinos in June 2003, the MOI and
National Bank of Cambodia have issued various Prakas (or guidelines) to combat money
laundering in the financial and non-financial sector in Cambodia. Prakas are guidelines rather
than laws.


     In terms of the regulatory bodies in Cambodia relevant to the Group’s casino operations, the
frontline regulator as regards AML matters is the MOI, under whose authority the police agencies
operate. The National Police Central Security Department is responsible for ensuring
enforcement of the laws, monitoring the casino operations and in particular any money
laundering activities. Pursuant to one of the Prakas referred to above, the MOI has established
the “Legal Gaming Control Bureau” which is empowered to act against any criminal acts that
contradict the law relating to casinos including cheating and money laundering.


     The MOEF is responsible for regulating the tax affairs of the casino.


     Please refer to Appendix VI to this prospectus for further details concerning the laws and
regulations governing the operation of casinos and prevention of money laundering.



                                           — 65 —
                                  INDUSTRY OVERVIEW

OVERVIEW OF THE CASINO INDUSTRY IN OTHER PARTS OF THE ASIA PACIFIC REGION


     The number of licensed casinos and other gaming establishments in the region is relatively
low in comparison to other regions such as North America and Australia. This is largely due to
government regulatory restrictions or a reluctance to permit gambling as a legal and/or socially
acceptable form of entertainment.


      The proposed establishment of casinos in countries such as Thailand and other countries in
Asia has proved, in many cases, controversial due to various perceived potential negative social
and welfare effects and concerns regarding the use of such establishments for money laundering.
In light of these factors many countries in Asia have adopted a conservative ‘go-slow’ approach
to legalising and regulating gaming operations.


     The demand for gambling activities accompanied by the lack of regulated gambling
establishments in the region has contributed to the significant proliferation of illegal casino
operations. In response to restrictive regulatory requirements, those casino operators with valid
licences to operate their businesses have often established their operations in remote locations
and on cruise liners.


     Against this background however, a number of countries in Asia, such as Macau, Malaysia,
the Philippines and South Korea, have developed regulated land-based casino industries.


Macau


     Gambling was legalised in Macau in 1847 and today Macau has several casinos and a
racecourse.


     In 1847, the government of Macau passed legislations and legalised gambling in the former
Portuguese enclave. The casino and gaming industry has become one of the important
components of the economy of Macau as measured by gross domestic product.


     With the intention of replicating the success of the casino and gaming industry in the United
States, the government of Macau decided to promote the reputation of the enclave as a Las-Vegas
style family resort. In 2002, the government of Macau restructured and liberalised the casino and
gaming industry, which had until then been the monopoly of Sociedade de Turismo e Diversoes
de Macau, S.A.R.L. (“STDM”) for around 39 years, by awarding three gaming concessions for the
operation of casinos in Macau to STDM, Galaxy Casino, S.A. and Wynn Resorts (Macao) S.A.


     Galaxy Casino, S.A. opened a casino complex in July 2004 and sub-concessioned a gaming
licence to Venetians Macao S.A., who opened a casino complex in Macau in 2004. In March 2006,
Wynn Resorts (Macao) S.A. sub-concessioned a gaming licence to Australian based Publishing
and Broadcasting Ltd, and in September 2006 it opened a casino and hotel complex.



                                            — 66 —
                                   INDUSTRY OVERVIEW

    As at June 2006, there were around 21 casinos in Macau (Source: Gaming Inspection and
Coordination Bureau, Macau). It is estimated that more casinos will become operational in
Macau in the near future.


Malaysia


     Resorts World Bhd (57.69% owned by Genting Bhd as at May 2006) operates the only
land-based casino known as the “Casino de Genting and Hotel” in Malaysia, which is located in
the Genting Highlands outside Kuala Lumpur. Apart from catering to foreigners, the casino is also
open to non-Muslim Malaysians.


Hong Kong and Singapore


     Although neither Hong Kong nor Singapore permit land-based casino establishments at this
stage, cruise-ship fleets with onboard casino operations have been successful in catering for
these markets. Star Cruises Limited is one of the largest cruise operators in Asia. It has a fleet of
cruise liners and also owns several cruise terminals in Asia. Hong Kong and Singapore are
understood to be Star Cruises Limited’s primary markets.


     On 18th April, 2005, the prime minister of Singapore announced that Singapore will allow
land-based casino establishments and has approved the construction of two casino complexes in
the city-state. In May 2006, Las Vegas Sands Corp won a bid to build Singapore’s first casino in
Marina Bay. The casino is expected to open in 2009. Singapore has also invited bids for its second
casino project on Sentosa island.


The Philippines


     The Philippine Amusement and Gaming Corporation (“PAGCOR”), a government entity,
oversees and regulates the nation’s gaming industry. PAGCOR currently operates a number of
casinos located in various hotels throughout the Philippines.


South Korea


     Casinos were first established in South Korea when gambling was legalised in 1967.
Currently, there are more than ten casinos catering for foreigners and one casino operated by
Kangwon Land Ltd catering for the domestic market. Kangwon Land Ltd’s casino was established
at the end of 2000.


Thailand, Taiwan, Indonesia, the PRC and Japan


     To the best of our Directors’ knowledge, there are no licensed land-based casino operators
in these countries at present. It has been reported that the government of Thailand is considering
the possibility of legalising land-based casinos. As at the Latest Practicable Date, there was no
solid plan or conclusion in respect of the legislation of land-based casinos in these countries.


                                             — 67 —
                                         INDUSTRY OVERVIEW

OVERVIEW OF THE HOTEL INDUSTRY IN CAMBODIA


    Since the restoration of political stability in late 1998, Cambodia has become increasingly
popular as a tourist destination.


Visitor arrivals


     Tourism is an important industry for the development of Cambodia. Tourism allows the
country to profit from foreign expenditure and generates employment for Cambodians. A
successful tourism industry also makes it easier, from a commercial perspective, for the
Cambodian Government to obtain financing or assistance from multilateral lending bodies like
the World Bank and the Asian Development Bank for the development of the country’s
infrastructure, such as the financing for the Mekong Express boat service from Phnom Penh to
Siem Reap.


                                       Visitor arrivals to Cambodia


                   1,600,000
                                                                                             1,421,615
                   1,400,000

                   1,200,000
                                                                                 1,055,202
                   1,000,000
                                                             786,524
                    800,000                                            701,014
                                                   604,919
                    600,000
                                         466,365
                    400,000    367,743

                    200,000

                           0
                                1999      2000     2001      2002      2003       2004        2005

     Source:   Ministry of Tourism, Cambodia (January 2006)


     According to statistics released by the Ministry of Tourism, Cambodia, the number of visitor
arrivals to Cambodia has, in recent years, generally increased. The brief decline in the number
of visitor arrivals to Cambodia in 2003 resulted from the closure of the Thailand-Cambodia
border, as a result of diplomatic strains in January 2003 and the Cambodian national election held
in July 2003. The outbreak of the severe acute respiratory symptom in parts of Asia in early 2003
was another reason for the brief decline in the number of visitors who travelled to Cambodia for
leisure or business reasons. The number of visitor arrivals to Cambodia resumed its growth
momentum after the passing of the epidemic and in 2004 the number of visitors increased
annually by approximately 50.5% to over 1 million visitors and in 2005 increased by
approximately 34.7% to around 1,421,615.



                                                   — 68 —
                                                 INDUSTRY OVERVIEW

     The chart below sets out the breakdown of visitor arrivals to Cambodia by countries for the
period between 2003 and 2005:


                                         Visitor arrivals breakdown by countries


                        250,000

                        200,000
      No. of visitors




                        150,000                                                                       2003
                                                                                                      2004
                        100,000                                                                       2005

                         50,000

                              0
                                        nd


                                        an
                                        m




                                                                                         n
                                                                     ce




                                                                                                  a
                                                             a




                                                                          UK


                                                                                A
                                                          in




                                                                                              re
                                                                                      pa
                                     na




                                                                   an




                                                                               US
                                    iw
                                     la




                                                        Ch




                                                                                             Ko
                                                                                    Ja
                                  et


                                  ai




                                                                 Fr
                                 Ta
                                Vi


                               Th




     Source:              Ministry of Tourism, Cambodia (January 2006)


      According to the Cambodian Ministry of Tourism, Korea has provided the largest number of
visitors over the three years ended 2005, with a total of 407,278 visitors. In terms of growth in
visitor arrivals, Korea also generated the largest increase over the three years ended 2005, from
62,271 visitors to 128,423 to 216,584 respectively, representing a CAGR of approximately 86.5%
over the period. The numbers of Chinese visitors travelling to Cambodia for the three years ended
2005 were approximately 38,664, 46,325 and 59,153, respectively.


     In general, Cambodia has continued to be a stable and secure destination for travellers after
the end of brief factional fighting triggered by the collapse of a coalition government in July 1997.
The winning of a majority seats in the national assembly of the Cambodian Government by the
Cambodian People’s Party in the election conducted in July 2003 and the renewed appointment
of the prime minister, Mr. Hun Sen, was seen as a signal of continued political stability in
Cambodia. The next elections are expected to be held in July 2008.


     Further, the Cambodian Government has selected tourism as an industry for development
and, as such, it has introduced policies to promote the future growth of tourism. In particular, the
Cambodian Government has encouraged the preservation of artifacts of cultural significance and
the development of amenities and ancillary infrastructures, such as transportation systems and
accommodation, which are expected to facilitate the continued development of tourism in
Cambodia.




                                                             — 69 —
                                                      INDUSTRY OVERVIEW

Supply of hotels and hotel rooms


     According to an industry survey conducted by the National Institute of Statistics of
Cambodia in 2000, there were around 211 hotels established in Cambodia. Based on the
information about hotels in Cambodia made available on certain Internet websites, such as
www.tourismcambodia.com, there are currently around eight international hotels in Phnom Penh
and on the basis of 200 hotel rooms to one hotel, all of these international hotels offer, in
aggregate, around 1,600 hotel rooms. The tariff for a single room offered by these international
hotels ranges between US$40 and US$350 per night. As at the Latest Practicable Date, our
Directors are not aware of any construction of a hotel of significant scale in Phnom Penh that will
commence operations in the near future other than NagaWorld.


The continued growth trend in visitor arrivals


     The Cambodian Government has streamlined the visa controls and allowed travellers to
apply for tourist visas at the airport and certain checkpoints across the Cambodia-Vietnam and
Cambodia-Thailand borders upon arrival. For a visit of up to thirty days, a traveller is required
to apply for a tourist visa for a fee of US$20. Nationals of Philippines and Malaysia are exempt
from the application for tourist visas for stays in Cambodia of up to 21 and 30 days respectively.


    Based on the number of visitor arrivals to Cambodia between the years 1999 and 2004, the
number of visitor arrivals to Cambodia is expected to continue its growth trend. The forecast
numbers of visitor arrivals to Cambodia between years 2005 and 2010 are set out in the table
below:


                                          3,500,000
                                          3,000,000
                         No of visitors




                                          2,500,000
                                          2,000,000
                                          1,500,000
                                          1,000,000
                                           500,000
                                                 0
                                                        2004     2006   2008     2010

     Source:   Ministry of Tourism, Cambodia. Data for 2004 is actual and those for 2005 to 2010 are forecasts.




                                                               — 70 —
                            HISTORY AND DEVELOPMENT

HISTORY AND DEVELOPMENT

Casino Licence

     In 1994, the Cambodian Government invited proposals as part of an international tender
process for the development of an island casino resort in the Sihanoukville region, which is a
coastal area near the southern tip of Cambodia. Ariston, which was then privately owned by Tan
Sri Dr Chen, was the preferred bidder in the tender.

     On 2nd January, 1995, Ariston entered into the SDA with the Cambodian Government in
which the rights and obligations of Ariston in relation to the Sihanoukville Development were set
out. On signing the SDA, Ariston paid to the Cambodian Government a consideration of US$3
million in cash, being the first installment of the premiums of US$103 million payable during
period between 1995 and 2008. Pursuant to the SDA, the Cambodian Government granted to
Ariston the Casino Licence, which at that time included a 20-year right of exclusivity to operate
a casino in Cambodia, as well as certain rights to develop the Sihanoukville region as a tourist
destination. Ariston was entitled to assign its rights or obligations under the SDA to any company
of which Tan Sri Dr Chen was a controlling shareholder. On 8th May, 1995, pursuant to the CLA,
Ariston assigned the Casino Licence to NRCL and NRCL agreed to pay the casino premium, casino
tax and the casino licence fee as referred to under the SDA.

      In May 1995, we began our gaming operations on a barge which was anchored on the bank
of the Bassac River in a central location in Phnom Penh situated near many tourist attractions,
such as the National Museum, the Royal Palace and the Independence Monument. We spent
approximately US$7 million (about HK$54.6 million) to renovate and upgrade the barge to
facilitate our gaming operations.

     During the period between 1995 and mid-1999, a number of casinos, which were
unlicensed, opened in Phnom Penh. The Directors considered that such casino operations
prejudiced the right of exclusivity granted to Ariston under the SDA. These unlawful operations
adversely affected our business and revenue. In mid-1999, the Cambodian Government ordered
the closure of all casinos operating in Phnom Penh save for our casino.

     In June 1999, Ariston instituted legal proceedings against the Cambodian Government and
successfully obtained a court order interpreting and re-affirming Ariston’s rights under the SDA.
The court order formed the basis for a subsequent settlement between the Cambodian
Government and Ariston in respect of, amongst other things, Ariston’s right of exclusivity in
connection with the Casino Licence.

     On 2nd February, 2000, the Cambodian Government and Ariston entered into the SSDA
under which Ariston’s rights and obligations for the Sihanoukville Development were amended
and the requirement by Ariston to settle the remaining casino licence premium was repealed. The
SSDA also specifically provided for the establishment by Ariston of a casino based in Phnom
Penh. The Cambodian Government and Ariston further agreed under the SSDA that Ariston had
exclusive rights for an initial 20-year period to conduct casino gaming within a 200km radius of
Phnom Penh.


                                            — 71 —
                             HISTORY AND DEVELOPMENT

     On 2nd February, 2000, Ariston and NRCL entered into the Supplemental CLA as a result of
Ariston’s rights and obligations relating to the Casino Licence being supplemented and amended
by the SSDA. The Supplemental CLA provided, inter alia, the confirmation and recognition of the
Casino Licence granted to NRCL by Ariston for a duration of 70 years from 2nd January, 1995. The
CLA was supplemented and amended by way of an agreement dated 28th April, 2003 and by the
Supplemental Deed dated 30th April, 2003. These amendments, inter alia, revised the Casino
Control Rules and provided for the payment of an annual sum by NRCL to Ariston.


     To streamline and rationalise the corporate structure and shareholding structure of the
group of companies controlled by Tan Sri Dr Chen and with a view to listing the Group on the
Singapore Stock Exchange, a series of corporate reorganisation steps were effected between
August 2002 and August 2003. In particular, save for the Casino Licence, other assets of Ariston
such as the rights and obligations to develop the Sihanoukville International Airport, the Naga
Island Resort and the O’Chhoue Teal area (save for the licences to operate casinos in both of
these resorts) granted to Ariston pursuant to the SDA and SSDA were divested to Ariston Holdings
at cost for approximately US$6.8 million. For details of these pre-listing reorganisation steps,
please refer to the paragraph headed “Pre-listing Reorganisation in August 2002” set out below.


     On 12th August, 2005, Ariston entered into the Addendum Agreement with the Cambodian
Government, under which the right of exclusivity of the Casino Licence was redefined to be the
Designated Area and the exclusivity period was extended by around 21 years, thus providing us
the right to operate a casino exclusively within the Designated Area up to the end of 2035. In
consideration of the extension of the exclusivity period of the Casino Licence, the development
rights granted to Ariston under the SDA and SSDA were surrendered back to the Cambodian
Government, which included the assets and rights to develop the O’Chhoue Teal area, the Naga
Island resort, the Sihanoukville International Airport and other related facilities (the
“Surrendered Assets”), valued independently in aggregate at approximately US$155 million.


     In light of the extension of the exclusivity period under the Addendum Agreement, Ariston
and NRCL entered into two agreements on 31st August, 2005 and 31st May, 2006 (the Second
Supplemental CLA), respectively. These agreements revised the annual sum payable by NRCL to
Ariston and redefined the area and period of exclusivity respectively.


     On 29th April, 2006, the Company and Ariston entered into an agreement with Ariston
Holdings and certain wholly-owned subsidiaries of Ariston Holdings, under which Ariston
Holdings and its subsidiaries agreed to surrender all rights and interests in the Surrendered Assets
to the Cambodian Government at a cost of US$105 million, which represented the application of
a discount of approximately 32% to the valuation of the Surrendered Assets for prudence. Of the
total cost, US$50 million was settled by the issue of 202,332,411 shares to Tan Sri Dr Chen in May




                                             — 72 —
                             HISTORY AND DEVELOPMENT

2006. The number of shares issued was based mainly on an earnings multiple of 13 times applied
to the net profits of the Company for the financial year ended 31st December, 2005, which was
at that time an estimation for the pricing of the Share Offer based on, among others, earnings
multiples of comparable companies. The shareholdings in the Company held by Tan Sri Dr Chen
and his associates increased from approximately 91.6% to 92.8% immediately after completion of
the share issue. The remaining US$55 million was settled by a capital contribution by the
controlling Shareholder. Further, Ariston Holdings agreed to indemnify Ariston for any cost, loss,
liability, claim or damage suffered by Ariston or its affiliates in connection with the Surrendered
Assets.


     The Surrendered Assets were transferred from Ariston to Ariston Holdings at cost as part of
the Group’s reorganisation in 2002. At that time, both Ariston and Ariston Holdings were private
companies of which Tan Sri Dr Chen was the majority shareholder and therefore the terms of the
transfer of the Surrendered Assets were of little commercial significance to him. Subsequently,
the Company was established in February 2003, and Shares were allotted both to Tan Sri Dr Chen
and his associates and to a number of minority shareholders. In view of this fact and taking into
account the interests of all the shareholders of the Company, the Board considered that it was
appropriate for the surrender of the Surrendered Assets to the Cambodian Government in April
2006 to be based on arms-length commercial terms. The total cost was settled as to US$50 million
by the issue of Shares to Tan Sri Dr Chen, as a result of which his direct and indirect
shareholdings in the Company increased to approximately 92.8% from 91.6%, and as to US$55
million by way of capital contribution to the Company by Tan Sri Dr Chen. Having considered the
basis of the consideration and the settlement method above, and the benefit afforded to the
Group by the extension of the exclusivity period of the Casino Licence to the end of 2035, the
Sponsor is of the view that the consideration paid to Ariston Holdings in respect of the surrender
of the Surrendered Assets was fair and on commercial terms.




                                            — 73 —
                                       HISTORY AND DEVELOPMENT

Pre-Listing Reorganisation in August 2002


     Prior to August 2002, the Group essentially comprised NagaCorp (HK) and its wholly-owned
subsidiary, NRCL, while Ariston and its subsidiaries, including Neptune Orient and Ariston
Cambodia, were held by Tan Sri Dr Chen under another holding company, Lipkland Holdings Sdn
Bhd (“Lipkland”). The structure of the various entities controlled by Tan Sri Dr Chen prior to the
reorganisation commencing in August 2002 (the “Reorganisation Exercise”) was as follows:


                                                            Tan Sri Dr Chen

                                 99.9%                                           100%                   100%

                            Lipkland                                      Starling(1)             Medallion(2)
                                                                       Trading Limited            Asian Fund
                                 100%

                            Ariston
                                                                                                Byrne Trust(3)
                                                                                              Company Limited
                                                                                 80%                    20%
                  100%           100%            100%

          Other             Neptune        Ariston          Ariston (Cambodian
                                                                                  NagaCorp (HK)
       subsidiaries          Orient       Cambodia                branch)
                                                                                              100%
                         Neptune Orient
                                                                                        NRCL(4)
                       (Cambodian branch)

                                                                                  NRCL (Cambodian
                                                                              branch) — gaming branch



     Notes:


     (1)      Starling Trading Limited (“Starling”) was a company incorporated in the British Virgin Islands with limited
              liability.


     (2)      Medallion Asian Fund (“Medallion”) was a unit trust established and constituted under the laws of Hong
              Kong. Tan Sri Dr Chen was the sole beneficiary of all the units in Medallion.


     (3)      The shares in NagaCorp (HK) registered in the name of Byrne Trust Company Limited (“Byrne Trust”) were
              held on trust by Byrne Trust for Medallion.


     (4)      The issued share capital of NRCL comprised HK$78,000,000 divided into 78,000,000 ordinary shares of
              HK$1.00 each, of which 77,999,998 were legally and beneficially owned by NagaCorp (HK) and 2 were
              registered in the name of Berycon Limited. Berycon Limited held the two shares as trustee for NagaCorp
              (HK).




                                                        — 74 —
                        HISTORY AND DEVELOPMENT

The following steps were carried out in the Reorganisation Exercise:


(a)   Divestment of assets by Ariston


     On 30th August, 2002, Ariston divested all its assets and subsidiaries, save for the
casino licences granted to it by the Cambodian Government to operate a casino in Phnom
Penh under the SSDA and its holdings of a 100% equity interest in each of Neptune Orient
and Ariston Cambodia, to Ariston Holdings. As at 30th August, 2002, Tan Sri Dr Chen was
the beneficial owner of 90% of the issued share capital of Ariston Holdings. Currently, Tan
Sri Dr Chen is the beneficial owner of all of the issued share capital of Ariston Holdings save
for one share, which is legally and beneficially held by his spouse.


(b)   Sale of leasehold interest and works in progress relating to NagaWorld and novation
      of construction contracts by Neptune Orient to NRCL


     On 30th August, 2002, Neptune Orient entered into an agreement with NRCL pursuant
to which Neptune Orient sold to NRCL its interest in the land on which NagaWorld was being
developed and the works in progress on such land (the “Leasehold Sale Agreement”).


      Under the terms of the Leasehold Sale Agreement, Neptune Orient conveyed to NRCL
its leasehold interest in the parcel of land in Phnom Penh described as being situated “on
riverside land located between the south of Samdech Hun Sen Park and the east of Ministry
of Cult and Religion land” (the “Leasehold Interest”) pursuant to a lease agreement with the
Phnom Penh Municipality dated 27th February, 1996 for a consideration of US$891.740.70
(approximately HK$6,955,577), being the book value of Neptune Orient’s interest in the
Leasehold Interest. Neptune Orient also conveyed the improvements and work in progress
on the Leasehold Interest to NRCL for a consideration of US$4,777,334.33 (approximately
HK$37,263,208), where the consideration was based on actual costs incurred by Neptune
Orient for the improvements and work in progress up to 30th August, 2002.


     In addition, on 30th August, 2002, Neptune Orient novated to NRCL its rights, duties
and obligations under the relevant construction contracts relating to the construction of
NagaWorld to which Neptune Orient was a party (or which had been novated to Neptune
Orient by the original parties).


     On 16th October, 2002, NRCL registered a second branch in Cambodia for the purposes
of applying to the relevant authorities in Cambodia for certain investment incentives in
regard to the construction of NagaWorld.




                                        — 75 —
                              HISTORY AND DEVELOPMENT

(c)   Acquisition of Ariston by NagaCorp (HK) after the divestment of assets by Ariston 1


     On 30th September, 2002, NagaCorp (HK) and Lipkland entered into a sale and
purchase agreement pursuant to which NagaCorp (HK) purchased the entire issued share
capital of Ariston from Lipkland at a consideration of RM3,127,572 (approximately
HK$6,419,753). The purchase consideration was determined with reference to the net assets
of Ariston.


Note 1:   The transfer of shares in Ariston owned by Lipkland to NagaCorp (HK) in 2002 may require the approval
          of the FIC under the Guidelines on the Acquisition of Interests, Mergers and Take-overs by Local and
          Foreign Interests (“FIC Guidelines”). Under the FIC Guidelines, Ariston and Nepture Orient are required
          to increase their Bumiputera equity to at least 30%, with the remaining equity held either by local interest,
          foreign interest or both. (The term “Bumiputera” is generally described as Malay and other indigenous
          people.)


          According to our legal advisors as to Malaysian law, the FIC Guidelines are issued by the FIC which is a
          committee of the Economic Planning Unit of the Prime Minister’s Department. The committee is not a
          statutory body and the FIC Guidelines are not issued pursuant to any power granted by legislation. As a
          result, the Malaysian courts have held that the FIC Guidelines are simply administrative guidelines and
          do not have the force of law. There are, therefore, no statutory penalties for non-compliance with these
          guidelines. Non-compliance has no practical consequences unless the relevant company (a) needs to
          apply for a governmental licence, permit or approval such as employment work passes for expatriate
          personnel, (b) wishes to participate in government contracts, (c) attempts to register any land purchases
          at the relevant land office or registry in Malaysia or (d) needs to apply to any other regulatory body in
          Malaysia or other person which may require the prior approval of the FIC or compliance with the FIC
          Guidelines. Given that the principal activity of Ariston is investment holdings, Ariston has no intention
          to apply for any licence, permit or approval or participate in government contracts or register land
          purchases in Malaysia, which may require prior approval of the FIC. As such, Ariston has not applied for
          approval of the FIC in respect of the transfer of shares described above. According to our legal advisers
          as to Malaysia Law, the FIC Guidelines do not govern the repatriation and distribution of dividends and
          assets of companies incorporated in Malaysia.




                                                  — 76 —
                             HISTORY AND DEVELOPMENT

         As a result of these initial steps in the Reorganisation Exercise, the structure of the
     group controlled by Tan Sri Dr Chen was as follows:


                                                        Tan Sri Dr Chen

                                                                                  100%
                                            100%                             Medallion
                                     Starling
                                                                            Byrne Trust
                                            80%                                   20%


                                                        NagaCorp (HK)



                                                      100%                                       100%

                                                  Ariston                                      NRCL


                                          100%                   100%
                                                                                                         NRCL
                Ariston                                                          NRCL
                                Neptune                Ariston                                   (Cambodian branch)
              (Cambodian                                                  (Cambodian branch)
                                 Orient               Cambodia                                        - hotel and
                branch)                                                     - gaming branch
                                                                                                 entertainment branch


                             Neptune Orient
                           (Cambodian branch)


The development of NagaWorld


    On 16th August, 2000, we formalised the conveyance of a 70-year lease granted by the
Cambodian Government in respect of an area of approximately 14,160 sq.m. located along the
Bassac River, approximately 500 metres from our former location on the barge, for the
construction of a new entertainment and hotel complex called NagaWorld, where our casino
operations are currently located. The construction of NagaWorld commenced in December 2000
and, upon completion, will consist of a 14-storey hotel wing and an eight-storey entertainment
wing connected together by two sky bridges, encompassing an estimated total floor area of
approximately 80,552 sq.m. There will also be a car park block.


     On 1st October, 2003, we relocated our casino from the barge to level one of the
entertainment wing of NagaWorld.


AML matters


     In 2003 we applied for listing on the Singapore Stock Exchange and on 29th July, 2003
received confirmation from the Singapore Stock Exchange that the Company was eligible to list.
We proceeded to take steps to register the prospectus for the issue of new shares relating to the
proposed listing which included submitting the prospectus to the MAS. On 8th September, 2003,




                                                    — 77 —
                              HISTORY AND DEVELOPMENT

the MAS gave notice to the Company that it intended to refuse registration as the MAS was of the
opinion that it was not in the interest of the public to do so on the basis that, first, the Company’s
operations were not subject to a fully developed and implemented legal and supervisory
framework for the regulation of casinos and the prevention of money laundering, as
recommended by FATF on money laundering; and secondly, the Company did not possess an
established track record of independent audits of the effectiveness of its internal controls for
addressing money laundering risks. The MAS subsequently confirmed its decision to refuse
registration. We decided not to appeal the decision and as a result the application for listing in
Singapore did not proceed. In late 2004, we decided to raise funds in Hong Kong and seek a
listing on the Stock Exchange.


    On 15th June, 2004, Cambodia became a full member of the APG. The terms of reference of
the APG recognised that recommendations issued by FATF constituted the international
benchmark for AML and included a commitment that members of APG would implement the
recommendations according to their particular political, economic and constitutional
frameworks. (Please refer to Appendix VI to this prospectus for further details of FATF, its
recommendations, APG, the regulatory framework in Cambodia in relation to gaming and our
internal controls for the prevention of money laundering and terrorist financing.)




                                              — 78 —
                                          BUSINESS

INTRODUCTION                                                                                         A1a(28)
                                                                                                     (1)(a)
                                                                                                     3rd Sch(1)

     We are engaged principally in the management and operation of the only licensed casino in
Phnom Penh, the capital city of Cambodia. Our rights to operate the casino, which were granted
by the Cambodian Government pursuant to the Casino Licence, are valid for a period of 70 years
from 2nd January, 1995. Our right to operate within the Designated Area is exclusive (save for
the right to operate gaming machine stations) until the end of 2035.


     Our gaming operations began in 1995 and have been profitable since 1996. Our Casino
Licence allows us to operate 24 hours a day throughout the year and contains no restrictions as
to the location and size of the casino complex, casino operating areas, number of tables and type
of games within the Designated Area. As at the Latest Practicable Date, our casino operated 44
gaming tables offering Mini Baccarat, Roulette, Blackjack, Tai Sai and Caribbean Stud Poker and
211 gaming machine stations. From May 1995 until the end of September 2003, we operated our
casino on a barge moored along the banks of the Bassac River in a central location in Phnom
Penh. The barge was close to many tourist attractions such as the National Museum, the Royal
Palace and the Independence Monument in Cambodia.


     On 1st October, 2003, we relocated our casino operations to our new hotel and
entertainment complex called NagaWorld, situated on land a few hundred metres away from
where the barge was moored. Upon full completion, to the best of the knowledge of our
Directors, NagaWorld will be the only entertainment complex with gaming, hotel, entertainment
and recreational facilities within the Designated Area. NagaWorld will consist of an eight-storey
entertainment wing, a 14-storey hotel wing and a car park block. It is strategically located on a
wide landscaped boulevard next to the Hun Sen Garden near the riverfront district of Sisowath
Quay in Phnom Penh. As at the Latest Practicable Date, all eight storeys of the entertainment wing
are structurally complete with the ground and part of the first floor completely furnished. The
entertainment wing, when fully operational, will also house food and beverage outlets, leisure,
recreational and entertainment facilities. All 14 levels of the hotel wing are also structurally
complete with fittings work being carried out in the lobby and some hotel rooms.


     Our casino is currently located on level one of the entertainment wing of NagaWorld.
Customers who wish to play our table games are required by our Casino Control Rules and in
accordance with best practice within the Cambodian regulatory framework to be foreign passport
holders and can be divided into two distinct categories, namely Public Players and STG Players.
All customers, including Cambodians, are allowed to play our gaming machine stations. As at the
Latest Practicable Date, we derived our revenue principally from casino operations.




                                            — 79 —
                                          BUSINESS

COMPETITIVE STRENGTHS


      We believe that our success to date and our potential for business expansion are primarily
attributable to a combination of the following key strengths:


     Our exclusive Casino Licence


          Our Casino Licence is valid for a period of 70 years from 2nd January, 1995 and we
     have the exclusive right to operate the only casino within the Designated Area up to the end
     of 2035 (save that the right to operate gaming machine stations is not on an exclusive basis).


     The benefits of our location


           NagaWorld is located in Phnom Penh, the capital city of Cambodia with a population
     of approximately one million. The city is the commercial hub of Cambodia and is
     strategically located in the south of the country where the Mekong, Bassac and Tonle Sap
     Rivers converge. Phnom Penh is also a convenient location for international tourists
     travelling to Cambodia for destinations such as Siem Reap and the temples of Angkor.
     Phnom Penh itself also boasts a number of tourist attractions such as the Royal Palace, the
     Silver Pagoda and the National Museum.


          Phnom Penh is in close proximity to our traditional markets namely, Singapore and
     Malaysia in the south and the PRC in the north, and nearby markets namely, Thailand in the
     west and Vietnam in the east. Phnom Penh is accessible, by air, within approximately three
     hours from Singapore, Malaysia and the PRC, and within approximately one hour from
     Bangkok, Thailand and Ho Chi Minh City, Vietnam. Customers can reach NagaWorld in
     about 30 minutes by road from Phnom Penh International Airport.


           NagaWorld is strategically located on a wide landscaped boulevard next to the Hun Sen
     Garden near the riverfront district of the Sisowath Quay in Phnom Penh. Among the many
     attractions that line the streets and riverside of the Sisowath Quay are the Royal Palace and
     the Silver Pagoda. A collection of restaurants and nightspots are also available near the
     Sisowath Quay and the riverfront boulevard.


     Our established reputation


           We believe that we have established a reputation as a provider of quality gaming
     activities amongst our STG Operators. We endeavour to foster long-term commercial
     relationships with our STG Operators and have maintained commercial dealings with a
     number of STG Operators for over eight years. Our relationships with STG Operators allow
     us to benefit from any increase in the number of ST Groups managed by our STG Operators,
     thus increasing our customer base. We also believe that we are also a popular destination
     amongst the expatriate community in Phnom Penh.


                                            — 80 —
                                     BUSINESS

Our effective operating costs


     During the Track Record Period, the wage of our Cambodian employees averaged
approximately US$151 per month which, in our opinion, compared favourably to staff costs
in more developed cities and countries with casinos such as Macau, Malaysia and Australia.
As such, by virtue of our casino operations being based in Cambodia, we consider that we
have a significant labour cost advantage over our competitors operating in other parts of the
region.


Our experienced senior management


     Our current management team comprises a group of experienced executives with
substantial experience and knowledge of casino operations. Tan Sri Dr Chen, our
controlling Shareholder, chief executive officer and a Director, has been active in business
in Cambodia since 1990, in which time he has gained knowledge of the local commercial
landscape valuable to the future development of our operations. In addition, certain of our
senior management have over 10 years of experience in running casino operations in
Cambodia.


Strong market presence and loyal customer base


     Our casino is well known in Phnom Penh and Cambodia as it is the only licensed
casino within the Designated Area. A number of our customers have been with us for over
eight years and we believe we have a loyal customer base.




                                       — 81 —
                                                     BUSINESS

CORPORATE STRUCTURE                                                                                                          A1a(28)(2)
                                                                                                                             A1a(28)(9)
                                                                                                                             3rd Sch(29)

Group structure

    The following chart sets out our corporate structure as at the Latest Practicable Date:


                                            NagaCorp
                                                  100%

                                        NagaCorp (HK)(1)


                          100%                                                 100%

                     NRCL(2)                                             Ariston(3)


                                                                100%                        100%
       NRCL                NRCL (Cambodian
                                                                                                         Ariston
    (Cambodian              branch) — hotel              Neptune(3)(5)                 Ariston(6)
                                                                                                       (Cambodian
     branch) —             and entertainment               Orient                     Cambodia
                                                                                                        branch)(4)
   gaming branch                branch


                                                    Neptune Orient
                                                 (Cambodian branch)(5)


    Notes:


    (1)      NagaCorp (HK) is an investment holding company. The issued share capital of NagaCorp (HK) comprises
             HK$10 divided into 10 ordinary shares of HK$1.00 each, of which nine ordinary shares are beneficially
             owned by NagaCorp and one ordinary share is registered in the name of Cobyrne Limited. Cobyrne Limited
             holds the one ordinary share on trust for the benefit of NagaCorp.


    (2)      NRCL, through its Cambodian branches, is engaged in the casino business and the hotel and entertainment
             business. The issued share capital of NRCL comprises HK$78,000,000 divided into 78,000,000 ordinary shares
             of HK$1.00 each, of which 77,999,998 are owned by NagaCorp (HK) and two ordinary shares are registered
             in the name of Berycon Limited. Berycon Limited holds the two ordinary shares on trust for the benefit of
             NagaCorp (HK).


    (3)      Ariston is an investment holding company. Before 30th September, 2002, the entire issued share capital of
             Ariston was held by Lipkland Holdings Sdn Bhd (“Lipkland”), a company of which Tan Sri Dr Chen was the
             controlling shareholder. On 30th September, 2002, Lipkland transferred all its shares in Ariston to NagaCorp
             (HK). This transfer may require the approval of the FIC under the Guidelines on the Acquisition of Interests,
             Mergers and Takeovers by Local and Foreign Interests (“FIC Guidelines”). Under the FIC Guidelines, Ariston
             and Neptune Orient are required to increase their Bumiputera equity to at least 30%, with the remaining
             equity held either by local interest, foreign interest or both. (The term “Bumiputera” is generally described
             as Malay and other indigenous people.) According to our legal advisors as to Malaysian law, the FIC
             Guidelines are issued by the FIC which is a committee of the Economic Planning Unit of the Prime Minister’s
             Department. The committee is not a statutory body and the FIC Guidelines are not issued pursuant to any
             power granted by legislation. As a result, the Malaysian courts have held that the FIC Guidelines are simply
             administrative guidelines and do not have the force of law. There are, therefore, no statutory penalties for
             non-compliance with these guidelines. Non-compliance has no practical consequences unless the relevant
             company (a) needs to apply for a governmental licence, permit or approval, such as employment work



                                                         — 82 —
                                              BUSINESS

      passes for expatriate personnel, (b) wishes to participate in government contracts, (c) attempts to register
      any land purchases at the relevant land office or registry in Malaysia or (d) needs to apply to any other
      regulatory body in Malaysia or other person which may require the prior approval of the FIC or compliance
      with the FIC Guidelines. Given that the principal activity of Ariston is investment holding, Ariston has no
      intention to apply for any licence, permit or approval or participate in government contracts or register land
      purchases in Malaysia, which may require the prior approval of the FIC. As such, Ariston has not applied for
      the approval of the FIC in respect of the transfer of its shares from Lipkland to NagaCorp (HK). According
      to our legal advisors as to Malaysian law, the FIC Guidelines do not govern the repatriation and distribution
      of dividends and assets of companies incorporated in Malaysia.


(4)   Ariston (Cambodian Branch) was established to implement Ariston’s development projects pursuant to the
      SDA (as supplemented and amended by the SSDA). On 30th August, 2002, Ariston assigned certain of its
      rights to the development projects under the SDA (as supplemented and amended by the SSDA), including
      the O’Chhoue Teal development, Naga Island Resort and the Sihanoukville International Airport, to Ariston
      Holdings at cost for approximately US$6.8 million. Ariston (Cambodian Branch) has been inactive since then.


(5)   On 30th August, 2002, Neptune Orient sold its interest in the leased area on which NagaWorld is built to
      NRCL and assigned its rights, duties and obligations under relevant construction contracts to NRCL. It was
      the intention that NRCL would be the main “operations” subsidiary. As a result, Neptune Orient does not hold
      any material assets (save for the lease of the car park block which remains in the name of Neptune Orient)
      and does not engage in any business activities. Neptune Orient (Cambodian Branch) was established as the
      vehicle to acquire the leased area on which NagaWorld is built from International Land Company (ILC) in
      July 2000. (please also refer to the paragraphs under heading “Development of NagaWorld” in this section
      for further information). The leased area was sold to NRCL in August 2002 and Neptune Orient (Cambodian
      Branch) has not engaged in any business activity since then.


(6)   Ariston Cambodia was established as the construction arm of Ariston to undertake the construction of
      Ariston’s projects in Cambodia. However, the Group decided not to venture into any other business activities
      outside its core business activities namely the offer of gaming and hotel operations. Ariston Cambodia has
      therefore not engaged in any business activity.




                                                — 83 —
                                                    BUSINESS

Shareholding structure


     The following illustrates the shareholding structure of the Company immediately following
the Share Offer and the Capitalisation Issue (assuming the Over-allotment Option is not
exercised):



                                            Tan Sri Dr Chen
                                                (note i)
                                                                                             Song Meng Kong




                                                                         100%                           100%

                                                          Cambodia Development                Selvione Limited
          Public             Others (note iii)
                                                           Corporation (note ii)                   (note iv)



              25.0%                    2.4%             61.5%            8.1%                           3.0%




                                                        NagaCorp Ltd.



    Notes:


    (i)      As at the Latest Practicable Date, Tan Sri Dr Chen held 1,183,452,921 Shares, of which 202,332,411 Shares
             were issued on 11th May, 2006 pursuant to an agreement between, among others, the Company, Ariston and
             Ariston Holdings.


    (ii)     The issued share capital of CDC comprises USD1.00 divided into one ordinary share of USD1.00, which is
             registered in the name of Cobyrne Limited. Cobyrne Limited holds the one ordinary share as trustee for Tan
             Sri Dr Chen. CDC is an investment holding company incorporated in the British Virgin Islands.


    (iii)    Others include Fameup Trading Limited, Pacific Asset Management Limited, Double Assets Investments
             Limited, Avia Growth Opportunities Limited, Pureland Enterprise Ltd and individual shareholders namely Lee
             Heng Ghee, Henry, Kua Phek Long, Huang Yu Zhu, Wendy, Koon Soon Heng and Ng Eng Tiong. The other
             investors and, in the case of corporate Shareholders, together with their respective ultimate beneficial
             owners are, to the best of the Directors’ knowledge and belief, independent of and not connected with the
             Company (as defined under the Listing Rules) and are passive Shareholders. Other investors (save for Koon
             Soon Heng, Huang Yu Zhu, Wendy, Ng Eng Tiong, Pureland Enterprise Ltd. and Fameup Trading Limited)
             acquired shareholdings in the Company during or around the time of the proposed initial public offering in
             Singapore that was subsequently aborted.




                                                      — 84 —
                                                    BUSINESS

      (iv)   Selvione Limited is an investment holding company wholly owned by Song Meng Kong. Song Meng Kong
             was one of the first staff members of Ariston and was with the Group for more than 10 years prior to his
             resignation in February 2003. In recognition of his services, 49,600,000 Shares were transferred from Pepin
             Investment to Selvione Limited on 5th August, 2003.


      (v)    As at the Latest Practicable Date, none of the other investors referred to in notes (iii) and (iv) above has
             expressed an intention to join the Company and/or any of its subsidiaries and become employees after the
             listing.


AGREEMENTS WITH THE CAMBODIAN GOVERNMENT AND THE CASINO LICENCE


Agreements with the Cambodian Government


     The successful bid made by Ariston for the Sihanoukville Development and the entry into
the SDA between Ariston and the Cambodian Government on 2nd January, 1995 marked the
beginning of our casino operations in Cambodia.


SDA


     On 2nd January, 1995, Ariston entered into the SDA with the Cambodian Government. The
SDA was signed on behalf of the Cambodian Government by His Excellency Sok An, Minister in
charge of the Council of Ministers, and His Excellency Sun Chanthol, Secretary of Economy and
Finance, both with the authority granted by a power of attorney from the then First Prime Minster,
His Royal Highness Prince Norodom Ranariddh, and the Second Prime Minister, His Excellency
Samdech Hun Sen.


     Under the terms and conditions of the SDA, Ariston was granted development rights in
respect of the following:


      (i)    the development of the Sihanoukville region, including the Sihanoukville International
             Airport, highway linkages to Naga Island, jetties and catamaran services, independent
             power production, water supply and treatment, telecommunication, golf course and
             club house, industrial estate, and residential and commercial development;


      (ii)   the development of the Naga Island resort, including a hotel and casino complex,
             recreational facilities, marina and yacht club, and residential and commercial
             development; and


      (iii) the development of the Takiev Island resort, including a hotel and casino complex,
            theme park, and marina and yacht club.


     An integral right granted under the SDA was the Casino Licence, which at that time included
a 20-year right of exclusivity to operate a casino in Cambodia. Pursuant to the SDA, in May 1995,
we commenced our operations at the barge anchored on the bank of the Bassac River in a central
location in Phnom Penh.


                                                       — 85 —
                                           BUSINESS

     The SDA required Ariston to comply with casino laws to be promulgated by the Cambodian
Government, as well as to pay a specified amount of casino tax in respect of each month of the
term of the Casino Licence.


      The SDA was conditional on the payment by Ariston of US$3 million, being the first
instalment of the casino premium, and the enactment of a casino law, which the Cambodian
Government intended to implement by 31st January, 1995. According to our legal advisors as to
Cambodian Law, the second condition was met by the enactment of the Kram on the Control of
Gambling. The SDA could be terminated by the Cambodian Government if (i) there was a
substantial breach by Ariston of any of its obligations that had not been remedied to the
satisfaction of the Cambodian Government within a reasonable period or (ii) except where
expressly permitted by the SDA, Ariston assigned the benefit of the agreement without the prior
written consent of the Cambodian Government. Under the terms of the SDA, no consent was
required for the assignment by Ariston to, amongst others, any company of which Tan Sri Dr Chen
was the controlling shareholder.


     Further to this power to assign the benefit of the SDA, on 8th May, 1995, Ariston and NRCL
entered into the CLA pursuant to which Ariston assigned to NRCL certain of its rights and
obligations in respect of the Casino Licence under the SDA and granted to NRCL an irrevocable
licence (subject to breach or termination of the CLA) to operate a casino in Phnom Penh for a
period of 70 years. Under the terms and conditions of the CLA, NRCL was granted a licence to
operate those areas of any vessel, complex and/or building identified for gaming in Phnom Penh,
as well as all ancillary areas which relate directly to the operation and functioning of the casino.
NRCL was obliged to operate the casino in accordance with the Casino Control Rules of the
Group, which may be superseded by casino law promulgated by the Cambodian Government.


     The CLA provided that NRCL would pay the casino premium, casino tax and casino licence
fee as referred to in the SDA. The CLA also provided, inter alia, that all revenue, cash flow and
profits generated by NRCL during the term of the licence would be for the sole account of NRCL.


     We were granted our Casino Licence in 1995. However, we did not fully enjoy the benefits
of our exclusive right to run casino operations after commencement of our business at that time
because there were a number of other casinos operating in Phnom Penh in direct competition
with our casino and we therefore believed that Ariston’s right of exclusivity was not being
sufficiently enforced by the Cambodian Government. In December 1998, the Cambodian
Government ordered the closure of all casinos operating in Phnom Penh save for our casino. In
June 1999, Ariston subsequently applied to the Phnom Penh City Court to interpret and re-affirm
its rights under the SDA. The Phnom Penh City Court re-affirmed the terms and conditions
referred to in the SDA. Following the court order, the Cambodian Government and Ariston
entered into the SSDA on 2nd February, 2000 to supplement and amend the terms and conditions
referred to in the SDA and to affirm the validity and amend the scope of the Casino Licence.




                                             — 86 —
                                           BUSINESS

SSDA


     The SSDA was signed by His Excellency Sok An, Senior Minister in charge of the Council of
Ministers, with the authority granted by a power of attorney from the Prime Minister, His
Excellency Samdech Hun Sen.


    Under the SSDA it was agreed that Ariston’s rights to develop the Sihanoukville region
would be amended to consist of the following:


     —    a casino within 200km of the city limits of Phnom Penh, which included a 20-year right
          of exclusivity within that area from 2nd January, 1995 and an option to renew such
          right of exclusivity for a further 20-year period, subject to the consent of both Ariston
          and the Cambodian Government;


     —    the development of the Naga Island resort and related facilities (which included a
          licence to operate a casino); and


     —    the development of the O’Chhoue Teal area (which included a licence to operate a
          casino),


and that all other developments under the SDA that had not been undertaken were mutually
rescinded by Ariston and the Cambodian Government. The only exception to this is that Ariston’s
rights to develop the Sihanoukville International Airport continued pursuant to an agreement
with the Cambodian Government.


      The SSDA required Ariston to pay or cause to be paid to the Cambodian Government a
casino tax in accordance with a casino law. No law governing the taxation of casino operations
was subsequently promulgated. Instead, the MOEF specifies, annually, the level of obligation
payments and casino taxation certificate fees payable by the Group. Although the SSDA contains
no express termination or revocation provisions, the Cambodian Government could terminate
this agreement, or revoke the licence or the exclusive period of the licence, granted thereunder.
Under the terms of the SSDA, if the agreement was terminated or the Cambodian Government
breached its obligations in relation to either the granting to Ariston of a casino licence or the
initial 20-year period of exclusivity of such licence, the Cambodian Government would be
obliged to pay to Ariston (i) a sum equal to the amount of money invested by Ariston in the
businesses in Cambodia as an agreed initial investment cost, (ii) mutually agreed damages for the
termination and/or revocation of the casino licence before the end of its 70-year duration and (iii)
agreed damages for having lost the right of exclusivity to operate a casino within 200km of
Phnom Penh.


     Under the terms of the SSDA, Ariston was permitted to assign its rights and obligations under
the SSDA to any third party without the prior consent of the Cambodian Government. In light of
the amendments arising from the SSDA, Ariston and NRCL entered into the Supplemental CLA on
2nd February, 2000 to correspondingly supplement and amend the terms of the rights to the
Casino Licence granted by Ariston to NRCL under the CLA.


                                             — 87 —
                                         BUSINESS

     Under the terms and conditions of the Supplemental CLA, NRCL was granted a licence by
Ariston to operate those areas of any complex and/or building identified for gaming located
within a 200km radius of Phnom Penh, as well as all ancillary areas which relate directly to the
operation and functioning of the casino.


     NRCL was obliged to operate the casino in accordance with the Casino Control Rules, which
may be superceded by casino law promulgated by Cambodian Government. The Supplemental
CLA further provided that NRCL would pay casino tax in accordance with the casino law namely,
obligation payments.


    On 28th April, 2003, Ariston and NRCL entered into an agreement to amend the Casino
Control Rules of the Group to provide that Cambodian nationals are not allowed to play the table
games in the casino, in line with their previous practice in this respect.


     Pursuant to the Supplemental Deed, entered into between Ariston and NRCL on 30th April,
2003, NRCL agreed to pay to Ariston US$400,000 per year for a period of 12 years, the first such
payment being due and payable on 1st January, 2003 as consideration for the grant and use of
the Casino Licence.


     On 30th August, 2002, Ariston assigned its rights to develop the Naga Island resort,
Sihanoukville International Airport and O’Chhoue Teal area to Ariston Holdings with the
exception that Ariston continued to hold the casino licences for Phnom Penh, Naga Island Resorts
and O’Chhoue Teal directly.


Addendum Agreement


     Ariston entered into the Addendum Agreement with the Cambodian Government on 12th
August, 2005. The Addendum Agreement was signed by His Excellency Cham Prasidh, Senior
Minister, Minster of Commerce and vice chairman of the Council for the Development of
Cambodia, who had the authority to bind the Royal Government of Cambodia which was granted
under a power of attorney from the Prime Minster, His Excellency Samdech Hun Sen. The
Addendum Agreement was also co-signed by His Excellency Kong Vibol, First Secretary of State
of Economy and Finance as co-Vice Chairman of the Council for Development of Cambodia.


     Under the Addendum Agreement, Ariston agreed to surrender all concessions and
development rights under the SDA, including but not limited to the rights to develop the Naga
Island resort, Sihanoukville International Airport and O’Chhoue Teal area. In consideration for
the surrender of these concessions and development rights, the Cambodian Government:


     —    confirmed Ariston’s rights to operate a casino in NagaWorld or any other complex that
          may be built by Ariston or its assignee within the Phnom Penh Municipality;


     —    confirmed that the Casino Licence was for a period of 70 years from 1995, expiring in
          2065;


                                           — 88 —
                                            BUSINESS

     —    confirmed that the Casino Licence has a right of exclusivity within the Designated Area;
          and

     —    agreed to extend the period of exclusivity for the operation of the casino within the
          Designated Area until the end of 2035.

      In order to satisfy Ariston’s obligations under the Addendum Agreement, the Company,
Ariston, Ariston Holdings and others entered into an agreement on 29th April, 2006 under which
Ariston Holdings and certain wholly-owned subsidiaries of Ariston Holdings agreed to surrender
all rights, title, benefit, interests and assets in the O’Chhoue Teal area, the Naga Island resort, the
Sihanoukville International Airport and other related facilities to the Cambodian Government,
with effect from 12th August, 2005 for a consideration of US$105 million. The consideration was
settled as to US$50 million by way of the allotment and issue of 202,332,411 Shares to Tan Sri Dr
Chen and as to US$55 million by capital contribution by the controlling Shareholder. Further,
Ariston Holdings indemnified Ariston for any cost, loss, liability, claim or damage suffered by
Ariston or its affiliates in connection with the rights and interests above, whether arising before
or after 12th August, 2005.

      In light of the amendments arising from the Addendum Agreement, Ariston and NRCL
entered into two further agreements. The first agreement was dated 31st August, 2005 and
provided for certain payments to be made by NRCL to Ariston for the grant and use of the
extended exclusivity period of the Casino Licence. The second agreement was the Second
Supplemental CLA pursuant to which the parties agreed to supplement and amend the terms of
the rights to the Casino Licence granted by Ariston to NRCL under the CLA in line with the
amendments arising from the Addendum Agreement. Under the terms and conditions of the
Second Supplemental CLA, the licence granted to NRCL was amended to include an exclusive
right to operate a casino located within 200km of Phnom Penh (except the Cambodia-Vietnam
border area, Bokor, Kirirom Mountains and Sihanoukville) for the period from 2nd January, 1995
to the end of 2035.

     As at the Latest Practicable Date, there were no ongoing negotiations with the Cambodian
Government in respect of the extension of the exclusivity period of the Casino Licence. As at the
Latest Practicable Date, there were no rights and/or obligations granted to the Group by the
Cambodian Government, save for the rights and obligations disclosed in this prospectus and
those in respect of its ordinary course business activities.

Our Casino Licence

     The principal terms of our Casino Licence are as follows:

     1.   Duration of Licence

           The Casino Licence is for a duration of 70 years from 2nd January, 1995. The SSDA
     states that the Casino Licence is irrevocable, but also provides that if the agreement is
     terminated or is breached by the Cambodian Government in relation to the grant by it of the
     Casino Licence or the right of exclusivity thereunder, for any reason, the Cambodian


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                                          BUSINESS

     Government will pay Ariston a sum equivalent to the amount of money invested in
     businesses in Cambodia as an agreed initial investment cost and certain mutually agreed
     damages in respect of termination of the Casino Licence before expiry of its term and/or loss
     of the right of exclusivity.

     2.   Exclusivity

          Ariston has a right of exclusivity to operate a casino within the Designated Area up to
     the end of 2035 (save that the right to operate gaming machine stations in not on an
     exclusive basis). During this period, the Cambodian Government is prohibited from:

          —    authorising, licensing or approving the conduct of casino gaming within the
               Designated Area other than under the Casino Licence;

          —    entering into any written agreement with any other party with respect to casino
               gaming within the Designated Area; and

          —    issuing or granting any other casino licence.

     3.   Casino Complex

          Ariston has the right to locate the casino at any premises or complex within the
     Designated Area and is entitled to operate any games and gaming machines at its sole
     discretion without the need for any approval from the Cambodian Government. There are
     no restrictions relating to the operating hours of the casino.

     4.   Premiums/Casino Tax and Licence Fees

          As stated above, Ariston was required to pay to the Cambodian Government certain
     specified premiums under the terms of the SDA. On signing of the SDA, Ariston paid a sum
     of US$3 million, being the first instalment of the premiums. Pursuant to a letter agreement
     dated 10th July, 2000 entered into between the Cambodian Government and Ariston which
     was supplemental to the SSDA, it was noted that Ariston had not enjoyed the rights of
     operating a casino on an exclusive basis as provided in the Casino Licence, and it was
     agreed and declared that the payment of premiums under the SDA should not be fully
     implemented and that payment of the said premiums should not be applicable.

     Ariston is required under the SSDA to pay casino taxes and licence fees in accordance with
the provisions of the casino tax laws promulgated by the Cambodian Government. The casino
taxes and licence fees are, however, not payable in the manner set out in the SSDA as no casino
law regulating casino taxes and licence fees had been promulgated as at the Latest Practicable
Date. The Group has obtained a legal opinion confirming that such casino taxes are not payable.
The MOEF in 2000 levied an “obligation payment” of US$60,000 per month on NRCL payable from
January 2000 to December 2003, in respect of gaming activities. The MOEF also confirmed that
gaming taxes and licence fees were not payable in respect of periods prior to January 2000. Since
the Group relocated its casino business from the barge to level one of the entertainment wing of


                                            — 90 —
                                          BUSINESS

NagaWorld, the MOEF revised the obligation payment levied on NRCL. For the year ended 31st
December, 2004, NRCL was required to pay US$100,000 per month for its gambling activities and
US$31,000 per month for non-gambling activities as well as a casino taxation certificate fee of
US$30,000 for the year. For the year ended 31st December, 2005, NRCL was required to pay
US$112,500 per month for its gambling activities and US$34,875 per month for non-gambling
activities as well as a casino taxation certificate fee of US$30,000 per year. For the year ending
31st December, 2006, NRCL is required to pay US$126,563 per month for the obligation payment,
US$39,235 per month for non-gaming activities and a casino taxation certificate fee of US$30,000
per year. Thereafter, tax on our gaming activities will be subject to an annual increment of 12.5%
until NagaWorld is fully completed while tax on our non-gaming activities will be subject to the
review and approval of the MOEF, on an annual basis. Once NagaWorld is completed, the tax
payment on gaming activities will also be reviewed by the MOEF.


REGULATION AND SUPERVISION OF OUR CASINO


     The Group was selected as the preferred bidder of an international tender for the
development of the Sihanoukville region offered by the Cambodian Government in 1994. We
were granted the Casino Licence under the terms of the SDA as a result. The tender was open to
any bidders with the commitment and resources to develop the Sihanoukville region. The
application process was administered by a team of Australian consultants in accordance with
international standards which included, among others, evaluation of business plans and
prospects, probity checks on bidders, interviews and submissions of due diligence reports to
government ministers. Pursuant to the SDA, the licensing of our casino was within the purview
of the Cabinet of the Cambodian Government, namely the Council of Ministers of Cambodia.


     Our Casino Licence is governed by the terms of SDA, SSDA and the Addendum Agreement.


     The MOI is mandated to supervise our casino operations by way of, among other things, the
issue of guidelines on the regulation and supervision of the casino operations and the prevention
of money laundering. Since 1996, the Cambodian Government has promulgated laws and
guidelines on the regulation of casinos and the prevention of money laundering. Cambodia was
an observer of the APG from 1997 to 2004 and has become a full member since then.


     The applicable laws and regulations are the Kram on the Control of Gambling (promulgated
in 1996) and the “Kram on Drug Control” (promulgated in 1997). After FATF extended its
recommendations to cover casino operations in June 2003, the MOI and the National Bank of
Cambodia issued guidelines to combat money laundering in the financial and non-financial
sectors. In general, pursuant to the laws and regulations in Cambodia, any form of gambling is
prohibited everywhere in Cambodia except that permitted by the Cambodian Government.
Further, any licence authorising the opening of a gaming establishment, apart from that granted
by the Cambodian Government, shall be null and void.


     The MOI is the primary regulator in Cambodia for our casino operations. The MOEF
regulates the payment of taxation on gaming and on-gaming activities being carried out in
Cambodia.


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                                          BUSINESS

     The National Police Central Security Department is responsible for ensuring enforcement of
the laws, supervision and monitoring of casino operations, particularly potential money
laundering activities. The Central Security Department of Cambodia is also responsible for
gathering intelligence concerning organised criminal groups as well as individuals engaged in
crimes including the distribution of proceeds from their criminal activities. This national police
organisation also investigates allegations and matters pertaining to counterfeit currency. The
Central Security Department also stations police officers in our casino for security purposes.
Cambodian nationals are not allowed to participate in our table games.


     Please also refer to Appendix VI to this prospectus for further details about regulations of
our casino and internal controls on money laundering.


BUSINESS OPERATIONS                                                                                  A1a(28)
                                                                                                     (1)(a)
                                                                                                     3rd Sch(1)
                                                                                                     LR11.07
     We operate the only licensed casino within the Designated Area, under a Cambodian branch
of our wholly-owned subsidiary NRCL.


Our existing operations


Our gaming facilities


     On 1st October, 2003, we relocated our casino operations from a barge moored along the
banks of the Bassac River in Phnom Penh to level one of the entertainment wing of NagaWorld.
Our casino operates on a continuous basis, 24 hours a day and 365 days a year.


     Our casino operations currently occupy level one of the entertainment wing of NagaWorld,
which covers an area of approximately 5,018 sq.m. The gaming tables for the public and ST
Groups cover an area of approximately 1,663 sq.m., while the gaming machine stations cover the
remaining 1,001 sq.m. of gaming space. The food court together with a Chinese restaurant
occupies an area of about 561 sq.m.


Our games


     As at the Latest Practicable Date, we operated 44 gaming tables offering five major types of
table games namely, mini baccarat, blackjack, Tai Sai, Caribbean stud poker and roulette. Mini
baccarat is the most popular game amongst our customers as measured by the level of revenue
generated from the game and as such it is offered on 33 gaming tables. In addition, we have a
total of 211 gaming machine stations located on level one. A gaming machine station is a site
where there exists a distinct individual coin slot into which a wager can be placed. As an
example, if a gaming machine has eight seats, each with an individual coin slot, that machine
represents eight gaming machine stations.




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                                           BUSINESS

     The breakdown of our gaming tables and gaming machine stations by location and type as
at the Latest Practicable Date is set out below:

                                                                              Number
     Game offered                                                      Public Area   STG Area

     Gaming Tables
     Mini Baccarat                                                               13              20
     Roulette                                                                     3               2
     Blackjack                                                                    2               0
     Tai Sai                                                                      1               0
     Caribbean Stud Poker                                                         3               0


     Total Tables                                                                22              22


     Gaming Machine Stations
     Total Gaming Machine Stations                                              211              —



    In general, the number of gaming tables and gaming machine stations offering a particular
game are allocated in accordance with the popularity of that game.


      Our casino operates with table differentials (that is, the difference between the minimum
and maximum bets) of up to 130 times on our gaming tables. Generally, a lower differential on
bets allowed on a particular table will effectively result in a relatively reduced risk exposure on
any one hand to the house. This, in turn, lowers the relative volatility in terms of house takings
for the casino.


      In general, a gaming table is operated by a trained croupier, who is supervised by a
supervisor responsible for overseeing between one and four gaming tables. Our supervisors and
croupiers work in eight-hour shifts, and on average work at a particular table for just over an
hour, before taking a 20-minute break and then moving on to operate or monitor another gaming
table. The arrangement is designed to ensure that our supervisors and croupiers are alert and
vigilant at all times during their working shifts.


Our casino games


     A brief description of the playing instructions of the table games offered in our casino is set
out below:


     ●    Mini Baccarat


         Mini baccarat is a card game where one can decide to bet on the “Player” hand, the
     “Banker” hand or a tie between the “Player” and “Banker” hands.


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                                      BUSINESS

     Both the Player and the Banker can only draw a maximum of three cards each. The
minimum number of points is 0 and the maximum number of points is 9. The winning hand
(of two or three cards) is the one with an aggregate value that is as close to 9 as possible.
The perfect hand is one where the total of 9 is achieved with two cards.


      All cards from 2 to 9 are counted at face value and an Ace is counted as 1. Picture cards
(that is, King, Queen and Jack) and tens have a value of 0 or any combinations totalling 10
will likewise have a value of 0 (for example, King + 10 = 0). The game is played using eight
decks of cards to begin with.




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                                     BUSINESS

●    Blackjack


     Blackjack (or 21) is a card game in which the basic object is to draw cards totalling 21
or as close to 21 without exceeding this number. The player wins if his points are higher
than the house’s. Other players, hands on the table do not affect whether a particular
player’s hand wins against the house


      Picture cards (namely, King, Queen and Jack) count as 10, an Ace as 1 or 11 (whichever
is to the player’s advantage) and all other cards count at their face value. There is no limit
on the number of cards which can be drawn as long as the total point count is not less than
12 and not greater than 21.


      The rules of play for dealers are clearly specified whereby they must continue to draw
until the cards they have drawn equal 17 or more whereupon, assuming they have not
exceeded 21, they must “stand” (that is, stop drawing cards). As a result, no decisions are
left to the dealer’s discretion.




                                       — 95 —
                                    BUSINESS

●    Tai Sai


     Tai sai or sic bo is an ancient Chinese game in which players bet on the sum of the
numbers on three dice. The game begins with three dice being shaken not less than three
times in a covered glass dome at the gaming table by the croupier. Players then place their
bets on the gaming table. The cover of the glass dome is then lifted to reveal the numbers
on the dice. A player wins or loses depending on whether the numbers on the dice match
the numbers they have placed their bet on.




                                      — 96 —
                                      BUSINESS

●    Caribbean Stud Poker


     Caribbean Stud Poker is a variation of poker played with a single deck of cards with
the players playing against the casino, as opposed to each other. Players also have the
opportunity to wager on the Jackpot.


     The game begins with each player making an opening wager (that is, ante). Players
also have the option to make a Jackpot bet. Each player is then dealt five cards each face
down while the casino is dealt four cards face down and one face up. After players have
examined their hand, they can elect to fold (that is, they lose their ante) or play their hand
against the casino. If they elect to play, they must place exactly double the amount of their
ante in a designated area (that is, bet).


     If the casino does not have a hand of an Ace and a King or higher, the player
automatically wins their ante and the game is over. If the casino does have a hand of an Ace
and a King, the dealer compares his hand to each player’s hand individually. If the casino
outranks the player, then the player loses his ante and bet. If the player outranks the casino,
then the player wins and is paid out depending on the cards he has in hand.


●    Roulette


     Roulette is one of the oldest and most popular casino games where a player bets on
where the spinning ball will finally come to rest. The game is played against the casino and
hence, other players do not affect a player’s chances.


     The game uses a Roulette wheel which has marked on it numbers 0 through 36
inclusive, where 18 of the numbers are marked black and the other 18 are marked red.


     The game begins when the dealer turns the wheel in one direction and a Roulette ball
is spun in the other direction. The number and colour of the slot that the ball drops in is the
winning number.




                                        — 97 —
                                         BUSINESS

     If a player has placed his bet on the winning number then he will win an amount of 35 times
his initial wager. Players are also able to place wagers on different combinations of numbers
which offer various payout ratios.




Our gaming chip facilities


     Our customers are primarily from countries in the region such as the PRC, Malaysia and
Singapore. Currently we offer gaming chips denominated in US$. We are also able to offer gaming
chips, based on player demand, in other currencies such as Singapore Dollars and Thai Baht.
Players on our public floors can purchase and redeem gaming chips for cash at our casino cashier
counter. Players on our ST Group floors are subject to different arrangements which are
described in the sub-section titled “ST Groups” under the “Business” section in this prospectus.


Gaming Machine Stations


     Gaming machine stations are installed in our casino to complement our table games and
provide our customers with a wider choice of entertainment. The gaming machine stations are
located on level one of NagaWorld’s entertainment wing and may be played by all customers,
including Cambodians.



                                           — 98 —
                                           BUSINESS

Development of NagaWorld


     Since 1999, our operations have experienced notable growth on the back of a stable political
environment in Cambodia. It became apparent that our temporary facilities located on the barge
leased from an independent third party would not be adequate to support the continued growth
in our business. Accordingly, we decided to relocate our existing gaming operations to an
integrated hotel and entertainment complex known as NagaWorld.


      The chosen site for NagaWorld was a parcel of land of approximately 14,160 sq.m. located
on the Bassac River, approximately 500 metres away from where the barge had been moored (the
“Leased Area”). The Group entered into an agreement to acquire the lease to this land on 27th
July, 2000 for an initial consideration of US$920,000. The rental payments over the course of the
remaining 60 years of this lease will total approximately US$1.4 million. This acquisition was
approved by the Municipality of Phnom Penh on 16th August, 2000. The lease is for a 70-year
period from 1st August, 1996. In addition, the Group entered into a 10-year lease agreement with
the Municipality of Phnom Penh on 26th June, 2001 for an adjacent parcel of land of 2,561 sq.m.
The Group is currently entitled to use this adjacent parcel of land only for car parking purposes.
However, the Municipality of Phnom Penh has given conditional approval for multi-use
construction to be undertaken at the site (such as adding entertainment and staff quarters),
subject to the submission of technical drawings and blueprints to the Cambodian Government.
The legal advisors to the Company as to Cambodian law have opined that the Group has good
and legal title to the leasehold interest in the Leased Area.


      Construction of NagaWorld commenced in December 2000 and piling of the NagaWorld
complex commenced in March 2001. As at the Latest Practicable Date, the majority of the
construction works of the entertainment wing and hotel wing of NagaWorld were completed save
for the mechanical and electrical works, interior design fittings and fixtures, loose furniture and
carpark block. Level one of the entertainment wing (which is where the public and STG gaming
floors and public gaming machine stations are currently located) has been completed and
operational since October 2003. NagaWorld is being opened in several phases. When fully
operational, NagaWorld will have a 14-storey hotel wing and an eight-storey entertainment wing,
connected by two sky bridges, and will encompass a total gross floor area of approximately
80,552 sq.m. There will also be a car park block. It is intended that NagaWorld, upon completion,
will be the first international hotel complex containing gaming and entertainment facilities in
Phnom Penh, Cambodia, attracting tourists and gaming enthusiasts travelling to the region.


     Pursuant to the terms of the lease agreement for the Leased Area, the Cambodian
Government has a right to annul the agreement if the rental payments are outstanding for six
consecutive months or more. As at 31st May, 2006, the Group had approximately US$453,990 of
rental payments outstanding for the period from April 2004 to June 2006. The rental payments
were outstanding mainly as a result of the negotiations for the settlement of the advance of
US$4.2 million made to the Cambodian Government (please refer to the paragraph headed
“Arrangement to settle overdue obligation payments and other taxes” in the section headed
“Financial Information” of this prospectus). On 9th June, 2006, the Group settled in full the


                                            — 99 —
                                           BUSINESS

outstanding rental payments for the Leased Area and the Municipality of Economy and Finance
of the Cambodian Government confirmed this in a letter to the Group dated 1st July, 2006. The
legal advisors to the Company as to Cambodian Law have opined that this letter constitutes a
waiver by the Municipality of its right to terminate the lease for late payment. Our controlling
Shareholder has given an undertaking to the Stock Exchange that he will use all reasonable
endeavours to procure that the Company will pay the rental payments in respect of the Leased
Area in a timely manner.


     It should be noted that the Group is not restricted to carry on its business at the Leased Area.
The Group could, if management considered it appropriate and desirable, relocate its place of
business to anywhere in the Designated Area to continue to enjoy the exclusivity right in
accordance with the conditions of the Casino Licence. Therefore, whilst the Group intends to take
all necessary steps to ensure that it continues to have the rights to use the Leased Area, the
Directors are of the view that the risk of losing the right to the Leased Area is negligible and can
be managed.


                                      NagaWorld complex




                                            — 100 —
                           BUSINESS

NagaWorld complex — The hotel wing is on the left and is joined to
     the entertainment wing on the right by two sky bridges




           NagaWorld complex showing the hotel wing




                            — 101 —
                                           BUSINESS

     Wimberly, Allison, Tong & Goo was the design architect responsible for designing
NagaWorld. Wimberly, Allison, Tong & Goo of Hawaii was responsible for designing several of
Las Vegas’ famous landmarks, namely the Venetian Resort Hotel Casino, Palace Tower at Caesar’s
Palace and Mansion at MGM Grand, and other destination tourists attractions such as the Palace
of the Lost City in Sun City, South Africa, Disney’s Grand Floridian Beach Resort & Spa in Florida,
USA and the Grand Hyatt in Bali, Indonesia.

     PRA is the architect for NagaWorld. PRA was also the architect for Sheraton Hotel and
Towers Subang in Kuala Lumpur, the PD Marina World Resort in Port Dickson and the Village
Paradise Resort in Melaka.

    The entertainment wing of NagaWorld will encompass a total gross floor area of
approximately 21,597 sq.m., and it is proposed that this will include, amongst other things:

     —    a public floor casino with a total available gaming area of approximately 1,663 sq.m.
          and the gaming machine station area, which is currently operational, of approximately
          486 sq.m.;

     —    gaming halls for our STG Players in the north and south towers with a total area of
          approximately 3,262 sq.m.;

     —    a number of leisure, recreational and entertainment facilities covering a total area of
          approximately 3,915 sq.m.; and

     —    a variety of restaurants and other food and beverage shop outlets with a total area of
          approximately 1,993 sq.m.

     The hotel wing of NagaWorld will, upon full completion, consist of a 14-storey building with
a total gross floor area of approximately 58,955 sq.m., and will include:

     —    a proposed international hotel with 508 rooms, which shall be built in stages and shall
          be equipped with amongst other things, full room amenities, internet connections and
          electronic safes;

     —    a hotel lobby with public gaming floor, private club rooms, food and beverage outlets
          and lounges;

     —    a proposed themed retail area;

     —    a proposed leisure, recreational and entertainment area;

     —    a proposed selection of facilities such as a grand ballroom and smaller function rooms;

     —    a business centre; and

     —    a collection of restaurants, bars, discotheque and karaoke lounges.


                                            — 102 —
                                           BUSINESS

     It is expected that the car park block of NagaWorld will consist of a nine-storey building
with a total gross floor area of approximately 20,727 sq.m, and will include 307 car parking
spaces and various entertainment facilities, such as discotheque and karaoke lounges and a
swimming pool.


The entertainment wing


     Construction of the entertainment wing began in December 2000 and was completed
structurally with fittings work being carried out in the lobby and the first 70 rooms. Level one
(ground floor) of the entertainment wing, which houses our casino, is operational. Interior fitting
out work is being carried out on other levels.


     The entertainment wing is adjacent to the hotel wing, with the two buildings linked by two
sky bridges. The entertainment wing of NagaWorld houses our casino facilities and leisure,
recreational and entertainment facilities, together with a collection of food courts and a Chinese
restaurant.


     Currently, both the public and STG gaming halls are located on level one of the
entertainment wing. Following completion of the entertainment wing, the main public gaming
hall will be located on level one and have an area of approximately 1,591 sq.m. Levels five to
eight of the north and south towers will house private gaming halls for our STGs with a total area
of approximately 3,262 sq.m.


    Depending on player demand, we anticipate that, when fully operational, the entertainment
wing of our casino will have approximately 124 gaming tables (approximately 32 in the public
gaming hall and 92 in the STG gaming halls).


     In addition to gaming tables, our gaming machines are also located on level one of the
entertainment wing. We have 211 gaming machine stations which may be played by all
customers, including Cambodians. However, depending on player demand, we may also locate
gaming machine stations in other parts of NagaWorld.


     We also intend to set up a number of leisure and entertainment facilities on level two of the
entertainment wing.




                                            — 103 —
                                           BUSINESS

    Details of the gaming facilities offered, and expected to be offered, in the entertainment
wing of NagaWorld are set out in the table below:


                                                                          Expected Date of
          Level         Descriptions                                      full completion

            1           (i)   Gaming machine area of                    Operational
                              approximately 486 sq.m.
                        (ii) Main casino hall of approximately
                              1,663 sq.m.
                        (iii) Food court with capacity for
                              approximately 80 patrons.
                        (iv) Chinese restaurant with capacity for
                              approximately 172 patrons.

            2           (i)    This floor will include private dining   (i)    Completed
                               rooms for the Chinese restaurant.
                        (ii)   Leisure, recreational and                (ii)   Fourth quarter of
                               entertainment facilities.                       2006

            3           Leisure, recreational and entertainment         First half of 2007
                        facilities

            4           Surveillance department and executive           Completed
       (South Tower)    offices.

            5           STG gaming halls.                               Fourth quarter of 2006
       (South Tower)

            6           STG gaming halls.                               Fourth quarter of 2006
       (South Tower)

            7           STG gaming halls.                               Fourth quarter of 2006
       (South Tower)

            8           STG gaming halls.                               Fourth quarter of 2006
       (South Tower)

            4           Casino staff amenities area including staff     Completed
       (North Tower)    lockers, dining and housekeeping.

            5           Offices.                                        Completed
       (North Tower)

            6           STG gaming halls.                               Fourth quarter of 2007
       (North Tower)

            7           STG gaming halls.                               Fourth quarter of 2007
       (North Tower)

            8           STG gaming halls.                               Fourth quarter of 2007
       (North Tower)




                                            — 104 —
                                              BUSINESS

The hotel wing


     All 14 levels of the hotel wing have been structurally completed with fittings work being
carried out in the lobby and some of the hotel rooms.


     The hotel wing consists of the following sections:


     (i)    14 levels of hotel north tower;


     (ii)   14 levels of hotel south tower; and


     (iii) 5 levels of podium block expected to be completed by the end of 2007.


    The hotel wing of NagaWorld will, upon full completion, house our international hotel
which will offer a total of 508 guest rooms comprising:


     —      444 standard rooms;


     —      61 executive suites;


     —      2 executive VIP suites; and


     —      1 presidential suite.


     The hotel rooms are designed to be comparable to the other international hotels in Phnom
Penh in terms of quality, standard and size. Each room will be equipped with facilities such as
air-conditioning, satellite television, mini-bar, computer modem outlets and electronic safes.


     Upon completion, the hotel lobby, which will house a public gaming floor, will encompass
an area of approximately 4,264 sq.m. while the grand ballroom which will be situated on level
three will have an area of approximately 1,164 sq.m. and will offer banqueting facilities for up
to approximately 1,000 persons. The public gaming floor in the hotel lobby is expected to be
completed by the second half of 2007 and, upon completion, have 52 gaming tables.


     The hotel will allow us to accommodate our STG Players on our premises rather than other
hotels in Phnom Penh. In addition, we hope our hotel will allow us to capitalise on the growing
number of visitors and business travellers visiting Phnom Penh.


     Upon full completion (including the north and south towers), the hotel will have 508 guest
rooms. 60 guest rooms (of the central tower) are expected to be fully completed by the fourth
quarter of 2006 and an additional 157 guest rooms are expected to be completed by the first half
of 2007.


                                              — 105 —
                                         BUSINESS

    The remaining 291 guest rooms of the north and south towers of the hotel wing of
NagaWorld are expected to be completed by the second half of 2007 and will comprise:


    —    252 standard rooms;


    —    38 executive suites; and


    —    1 presidential suite.


     The proposed leisure, recreational and entertainment area, together with the collection of
restaurants and bars and karaoke lounges, are expected to be completed by first half of 2007.


     Building work has not yet commenced on the car park block. However, it is expected that
this block, together with the entertainment facilities proposed to be contained in it, will be
completed by the end of 2007.


Costs


      Based on the estimate by an independent quantity surveyor the construction of NagaWorld
will cost in aggregate approximately US$90.5 million, with a breakdown as follows:

                                                                         Estimated Costs
                                                                      (US$’000)   (HK$’000)

    Hotel wing and car park block                                        49,780        388,284
    Entertainment wing                                                   20,564        160,399
    External works and services                                             870          6,786


                                                                         71,214        555,469
    Preliminaries (mobilisation, surveying fees etc)                      4,189         32,674
    Contingencies (allowance for cost overruns based
      on a percentage of total construction cost deemed
      appropriate by the independent quantity surveyor)                   2,513         19,601


    Sub-Total                                                            77,916        607,744


    Furniture, furnishings and equipment                                  6,618         51,620
    Hotel operators equipment — hotel wing (this includes
      interior fitting-out items such as tables, desks, beds
      and other hotel fittings)                                           5,940         46,332


    Total                                                                90,474        705,696




                                          — 106 —
                                           BUSINESS

      In addition to the US$90.5 million estimated construction costs mentioned above, a further
amount of approximately US$5 million is estimated for the purchase and installation of casino
related equipment for NagaWorld.


     Of the total construction cost of approximately US$90.5 million for NagaWorld,
approximately US$31.5 million was incurred and approximately US$59.0 million allocated as
capital commitment as at 31st May, 2006.


     It is to be noted that whilst we will endeavour to procure the engagement of relevant parties
for the construction of NagaWorld and to ensure that it is completed according to the schedule
and within budget, the actual completion costs of NagaWorld may exceed the estimated cost of
US$90.5 million due to unexpected or unforeseen circumstances, such as cost overruns due to
faults or delays by contractors, our failure to obtain tenders for construction works at or below
our cost estimates or unexpected additional structural works to be undertaken.


SALES AND MARKETING


     We have not set up any marketing offices outside Cambodia. As a result, we have relied
principally on our STG Operators and local operators to promote the quality and scope of our
casino services by word-of-mouth, person-to-person marketing and referrals. Our Casino
Marketing and VIP Services Department is responsible for fostering cordial commercial
relationships with STG Operators and local operators.


     Our Casino Marketing and VIP Services Department also formulates promotion plans and
conducts sales and marketing activities for the promotion of NagaWorld. In particular, we intend
to set up and maintain our own website for the promotion of NagaWorld as a preferred
destination for tourists travelling to Cambodia.


CUSTOMERS


     Our principal business involves the provision of gaming activities to players such as tourists,   App 1A(28)
                                                                                                       (1)(b)(iii),
travellers and STG Players arriving at NagaWorld (and previously, until 1st October, 2003, at the      (iv),(vi),(vii)

barge moored in Phnom Penh).


     Our customers comprise players on the public floors (mostly walk-in customers) and STG
Players on STG floors. Given that only gaming chips are accepted at the table games and gaming
machine stations offered in our casino, all players are required to purchase gaming chips prior
to gaming and the total amount of chips purchased is recorded by our Treasury Department.
Individual winnings and contributions to turnover cannot be monitored for all individuals. In
general, other statistics such as check-in amounts and buy-in amounts do not translate directly
into our revenue and as such, there is no record of the turnover contributed by our top five
customers for the Track Record Period.



                                            — 107 —
                                          BUSINESS

    Under our Casino Control Rules and Cambodian rules and guidelines, only foreign passport
holders are allowed to enter or remain in our casino’s gaming halls where table games are played.
However, Cambodian nationals who do not hold foreign passports are allowed into the
non-gambling areas to use our facilities including the gaming machine stations. Accordingly, all
the gaming table players at our casino are foreign passport holders and are divided into two
categories, namely public customers and STG Players, as further described below.


Public customers


     The public customers of our casino comprise expatriates living in Cambodia, business
travellers visiting Cambodia and other visitors including tourists visiting Cambodia.


     These customers are essentially walk-in customers who normally purchase chips at our
casino for cash. For each of the three financial years ended 31st December, 2005 and the
five-month periods ended 31st May, 2005 (unaudited) and 2006, the revenue derived from the
public floor gaming tables and gaming machine stations was approximately US$33.6 million,
US$33.4 million, US$29.0 million, US$10.9 million and US$15.8 million, respectively, which
accounted for approximately 60.9%, 57.1%, 45.1%, 52.9% and 41.6%, respectively, of our total
revenue.


ST Groups


     We endeavour to maintain long-term commercial relationships with a number of STG
Operators, some of whom have been our customers for over eight years. Many of our STG
Operators come from various countries in the region such as Singapore, Malaysia and Thailand
and in addition to our casino, may also visit other casinos. STG Operators organise ST Groups to
visit our casino and participate in our STG programmes, which entitle the STG Operators to
receive commissions and the STG Players to enjoy complimentary incentives such as free
accommodation, food and beverages and rebates on air tickets, subject to achieving a
pre-determined amount of Rollings during their visit to our casino. In order for members of the
ST Group to qualify as STG Players to gamble on our STG floors we have set a minimum check-in
amount of US$5,000 per person.


    There are two types of ST Groups: those with an STG Operator who is well-known to the
Group and those with an STG Operator who is not. Common to both types is that the STG
Operator, and not the individual STG Player, deals with the house in relation to money for betting
and, where applicable, wins and losses on the part of the individual STG Player. Before the ST
Group’s visit begins, the STG Operator takes money from the STG Players. After the ST Group’s
visit, the STG Operator refunds individual STG Players or demands further money from the
individual STG Players, depending on whether they have won or lost in the casino. The payment
from the casino to the STG Operator or the payment to the casino is not done on a bet-by-bet
basis but, instead, is settled at the end of the ST Group’s visit.



                                           — 108 —
                                           BUSINESS

     The settlement differs between the two types of ST Groups. In the case of ST Groups with
an STG Operator who is well-known to the Group, the STG Operator will not normally be
required to actually place a deposit with NRCL before embarking on the tour. Instead, the casino
offers credit terms to these STG Operators and the settlement at the end of the ST Group’s visit
reflects this. In the case of STG Operators who have not attained this trusted status, they are
required to make a deposit with NRCL before the ST Group’s visit. In the case of STG Operators
bringing ST Groups from the PRC and Hong Kong, this settlement is carried out in Hong Kong;
in the case of STG Operators bringing ST Groups from elsewhere, this settlement in carried out
in Cambodia.


     Our Finance Department will notify the Treasury Department of our casino of the amount
of any check-in deposit paid, actually or notionally, by an STG Operator and the Treasury
Department will issue to the STG Operator a number of NN Chips according to the check-in
amount deposited with us upon their arrival at our casino. The STG Operator is then responsible
for ensuring that the relevant STG Players are given their respective value of gaming chips for
participating in the games offered on our STG floors.


     The procurement of STG Operators is carried out through person-to-person referrals. The
STG Operators are independent of and not connected persons in relation to the Company (as
defined under the Listing Rules).


STG programmes


      We offer STG programmes to ST Groups who achieve a certain level of Rollings during their
trips to our casino, which typically last for three to four nights per visit. Under the STG
programmes, members of an ST Group are able to enjoy benefits such as complimentary
accommodation and food and beverage and rebates on air tickets. The level of benefits offered
under the STG programmes varies depending on the minimum check-in amounts deposited by an
ST Group (which ranges from US$25,000 to US$125,000) or the minimum check-in amounts
deposited on behalf of an STG Player (which ranges from US$5,000 to US$60,000); and the level
of Rollings required per STG Player per trip (which ranges from US$25,000 to US$200,000). The
higher the minimum level of check-in amounts and Rollings, the higher the value of air ticket
rebates and complimentary accommodation offered under the STG programmes.


     In order to provide accommodation for our STGs, we have block bookings for hotel rooms
at preferred rates with a number of hotels in Phnom Penh including Hotel Cambodiana and
Phnom Penh Hotel. Once our hotel wing at NagaWorld is completed, we will be able to offer our
customers accommodation on our premises.


Rollings


     ST Groups are required to achieve a certain level of Rollings during their trips to our casino
in order to qualify for the STG programmes. The level of Rollings achieved by an STG is measured


                                            — 109 —
                                           BUSINESS

through the use of NN Chips, which are given to STGs when they arrive at our casino. The level
of Rollings achieved by the STG during a trip reflects the amount of NN Chips purchased by an
STG during the course of its visit to our casino, less the amount of NN Chips returned, if any, prior
to leaving our casino.


     Rollings are typically specified as a multiple of the initial check-in amount deposited by an
STG. This multiple generally ranges between three to six times the initial check-in amount. NN
Chips cannot be redeemed for cash prior to the end of an STG visit. Any winnings recorded by
our STG Players are paid in JC Chips, which can be redeemed for cash prior to the end of the visit.
In view of the minimum level of Rollings that must be achieved by the STG for the incentives
under our STG programmes, STG Players will typically convert their JC Chips (that is, winnings)
into NN Chips and continue their gambling at our casino so as to increase the chances of meeting
the required minimum level of Rollings.


     STG Players normally return all their NN Chips and JC Chips to our casino prior to their
departure. The aggregate value of the NN Chips and JC Chips of the STG is counted and
cross-checked with reference to the records maintained by the STG Operator along with the level
of Rollings achieved by the STG. Any discrepancies between our records and those of the STG
Operator are investigated and reconciled.


      The STG Operator is paid a pre-agreed commission, the amount of which is determined by
the level of Rollings achieved by their ST Group during their trips to our casino. The pre-agreed
commission rates are set by reference to market conditions and negotiations between the STG
Operator and ourselves and documented in a written agreement. For the Track Record Period,
many of the STG Operators traveled from our core markets in Singapore, Malaysia and the PRC.


     For the three financial years ended 31st December, 2005 and the five-month periods ended
31st May, 2005 (unaudited) and 2006, the revenue derived from the STG floor gaming tables was
approximately US$21.6 million, US$25.1 million, US$35.3 million, US$9.7 million and US$22.2
million, respectively, which accounted for approximately 39.1%, 42.9%, 54.9%, 47.1% and 58.4%,
respectively, of our total revenue.


Complimentary rated programme


      The complimentary rated programme is offered to players who wish to enjoy our gaming
activities offered in the public floor of our casino at a lower check-in amount in comparison to
that under a STG programme. Players under the complimentary rated programme are entitled to
certain benefits similar to those offered to STG Players including complimentary accommodation,
food and beverage and rebates on air tickets.


     None of our Directors or their respective associates or our existing Shareholders who, to the      App 1A(28)(1)
                                                                                                        (b)(v)
knowledge of the Directors, own more than 5% of our issued share capital, has any interest in any
of our five largest STG Operators.


                                             — 110 —
                                          BUSINESS

GAMING MACHINE STATIONS

     For the five years up to the end of June 2005, our gaming machine stations were supplied
by RGB Sdn. Bhd. (“RGB”), an independent supplier engaged principally in the distribution of
gaming machine stations and video arcade game machines in South East Asia, pursuant to a rental
agreement. Under this agreement, RGB was required to provide gaming and video machines to
our casino and maintain these machines. Our arrangement with RGB was exclusive and RGB had
undertaken not to be involved in a similar arrangement to let, lease or hire similar gaming
machines to any other person, party or casino operator in Phnom Penh without our prior consent.
In return, RGB was entitled to a rental fee based on 50% of the gross amount collected by these
machines less mutually agreed operating costs. Our arrangement with RGB expired at the end of
June 2005.

      Following commercial negotiations, the Group and Best Merit Assets Limited, an
independent party, entered into two agreements on 28th March, 2005 and 28th December, 2005
respectively under which Best Merit Assets Limited is responsible for the provision, operation
and maintenance of gaming machine stations owned by Best Merit Assets Limited in a designated
area of our casino and is obliged to observe and follow our AML internal controls with effect from
1st July, 2005.

     Under the terms of these agreements, Best Merit Assets Limited is obliged to provide and
maintain its gaming machine stations in our casino for a period of ten years ending on 30th June,
2015 and in return Best Merit Assets Limited, as the principal receiver of proceeds from the
gaming machines stations, is obliged to make payments to us in accordance with the following
terms:

     ●    payment of a fixed sum of US$10 million in respect of the first four years to 30th June,
          2009 with the initial payment of US$4 million duly received in March 2005, twelve
          monthly instalments of US$100,000 each from 1st July, 2006 to 30th June, 2007, twelve
          monthly payments of US$150,000 each from 1st July, 2007 to 30th June, 2008 and
          twelve monthly payments of US$250,000 each from 1st July, 2008 to 30th June, 2009,
          while excess proceeds from the gaming machine stations after payments of the fixed
          sums to us will be kept by Best Merits Assets Limited;

     ●    profit share of 60% due to the Group, or a guaranteed monthly income to NRCL of
          US$275,000 (total guaranteed income due to the Group of US$9.9 million), for the
          period from 1st July, 2009 to 30th June, 2012; and

     ●    profit share of 70% due to the Group or a guaranteed monthly income to NRCL of
          US$300,000 (total guaranteed income due to the Group of US$10.8 million), for the
          period from 1st July, 2012 to 30th June, 2015.

     We are given the right to elect the type of income payment method for years five to ten. The
arrangement with Best Merit Assets Limited gives us an option to receive guaranteed revenue, in
aggregate of approximately US$30.7 million, and reduce the impact of potential fluctuations
stemming from the competitive gaming machine stations market in Cambodia.


                                           — 111 —
                                          BUSINESS

     Best Merit Assets Limited also agreed to indemnify the Group against any liability arising
from the misconduct of its employees and/or agents; and to maintain a public liability insurance
policy to protect the Group against all liability that may be suffered by players of its gaming
machine stations in our casino.

     For the three financial years ended 31st December, 2005, our largest supplier, namely RGB,      App 1A(28)(1)
                                                                                                     (b)(i),(ii),(vi)
accounted for approximately 25.5%, 35.3% and 12.7%, respectively, of our total purchases. For
the three financial years ended 31st December, 2005, our five largest suppliers accounted in
aggregate for approximately 55.4%, 62.2% and 53.3%, respectively, of our total purchases. For the
five-month periods ended 31st May, 2005 (unaudited) and 2006, our largest supplier accounted
for approximately 29.6% and 17.4%, respectively, of our total purchases and our five largest
suppliers accounted in aggregate for approximately 58.4% and 45.1%, respectively, of our total
purchases. Credit terms of 14-45 days are generally granted by suppliers to the Group.

     None of our Directors or their respective associates or our existing shareholders who, to the   App 1A(28)(1)
                                                                                                     (b)(v)
knowledge of the Directors, own more than 5% of our issued share capital, has any interest in any
of our five largest suppliers.

CREDIT MANAGEMENT

     We presently only offer credit facilities, on an unsecured basis, to those STG Operators who
have a good financial background or with whom we have had extended dealings over the past
few years. We adopt a stringent credit control policy and evaluate the financial background and
credit standing of STG Operators, before extending any credit facilities to them. A formal credit
control policy setting out requirements for credit applications and conditions for credit approval
allows us to monitor the quality of our credit lines and minimise our credit risk exposure.

     We require applicants who wish to apply for credit lines with our casino to complete a credit
application form and submit such completed form together with the following supporting
documents for our review:

     —    if applicable, references from other casinos; and

     —    previous credit history with the Company, if any.

     It should be noted that mere goodwill which the Company may have for an STG Operator
is not sufficient to obtain credit lines. Credit lines with our casino will only be granted to STG
Operators with good financial background and credit standing. The granting of a credit line with
a limit up to US$500,000 (approximately HK$3.9 million) must be approved by the credit
committee comprising the Vice President of Operations, the Company’s Chief Operating Officer
and the Chief Financial Officer. The granting of a credit line exceeding US$500,000 must be
approved by our Board-appointed executive committee comprising Tan Sri Dr Chen, Mr. Lee
Wing Fatt and Mr. Tian Toh Seng. The credit granted to the STG Operators is normally settled
shortly after their trips to our casino or, for some STG Operators, the credit securities may be
rolled forward to future visits. In general, STG Operators may be given a credit period of up to
14 days.


                                           — 112 —
                                          BUSINESS

     We also maintain and update, on a regular basis, records of those of our STG Operators who
are granted credit lines. The records include, amongst other things, personal particulars of the
STG Operators such as banking details and history of settlements of outstanding balances of the
credit lines. The records will be considered by our credit committee or executive committee in
the granting of credit lines to our STG Operators. Our credit committee holds regular meetings
to review the quality of credit lines granted to STG Operators for formal review at least once
every year.


     As we offer credit to STG Operators with a good financial background and credit standing
and adhere to strict credit approval procedures, we believe the potential risk to our financial
position due to doubtful debts is not significant.


     For the three financial years ended 31st December, 2005 and the five-month periods ended
31st May, 2005 (unaudited) and 2006, we had set aside an allowance for doubtful debts of
approximately US$0.2 million, US$0.2 million, US$0.2 million, US$0.2 million and approximately
US$0.4 million, respectively. Our credit committee meets regularly to monitor the quality of our
credit lines and sufficiency of the allowance against bad and doubtful debts.


QUALITY ASSURANCE AND INTERNAL CONTROLS


     The casino business has a number of unique operational risks. Accordingly, our
management has sought to create an internal control environment which is capable of managing
these risks. In doing so, our management has taken guidance from the standards adopted by
major casino operators in highly regulated environments such as Australia and the United States.


     We have adopted a system of internal controls for quality assurance and risk management
of our casino operations. The specific measures we have put into place are set out below:


     Casino Control Rules


          We have developed our own Casino Control Rules based on internationally accepted
     standards adopted by casinos in Australia and USA with an aim to ensuring that gaming in
     our casino is conducted in a professional manner. The key features of our Casino Controls
     Rules are set out below:


          Casino Operations


          —    Maintenance of casino facilities: All facilities and amenities of our casino must be
               maintained in a condition that will at all times promote the satisfaction of patrons
               and ensure that the operation of the casino is conducted in a proper and
               competent manner and that all gaming equipment and chips are in good
               condition. In addition, we must ensure that all casino installation, equipment and
               procedures for security and safety purposes are properly and competently tested,
               used, operated and applied.


                                           — 113 —
                               BUSINESS

—   Casino layout: We shall ensure that visibility throughout the gaming area is clear
    and unobstructed and that floor plans, the layout of closed circuit television
    systems and other surveillance systems are sufficiently documented.


—   Training courses for employees: We shall provide training courses relating to the
    playing and conduct of games and any other activities in connection with casino
    operations.


—   Junkets: We shall not enter into a junket agreement unless it is a written
    agreement. When we do enter into such an agreement, we must ensure that a
    photocopy of the relevant parts of the participant’s passport is deposited at our
    casino.


Administrative, Accounting and Audit Requirements


—   System of controls and procedures: We shall have in the premises a description of
    our proposed system of internal controls and administrative and accounting
    procedures. Such description must contain both narrative and diagrammatic
    representation of the system to be utilised by us including, but not limited to, the
    accounting procedures for gaming operations, job descriptions and the system of
    organising personnel, and the procedures for the conduct and playing of games.


—   Documents to be kept on premises: All books, records and documents relating to
    the operations of our casino complex or casino must be kept on the casino
    premises. These records and documents shall be retained for a period of three
    years (subject to any other law) after completion of the transactions to which they
    relate.


—   Accounts: We shall keep proper accounting records in a manner that will enable
    true and fair financial statements and accounts to be prepared from time to time
    and that will enable the convenient and proper auditing of these statements.


—   Financial statements: We shall prepare, in accordance with international
    accounting standards, financial statements and accounts giving a true and fair
    view of the financial operations of the casino. These statements and accounts
    shall include trading, profit and loss and balance sheet accounts.


—   Audit provisions: We will cause the books, accounts and financial statements to be
    audited by a person who is a qualified and registered public accountant and
    auditor.




                                — 114 —
                                         BUSINESS

         General


         —    Entry and exclusion: Except where provided in the Casino Control Rules, no
              person has a right to enter or remain in our casino except at our sole discretion.
              A verbal or written direction prohibiting a person from entering or remaining in
              our casino may be given by us or the person who at the time is in charge of the
              operation of our casino.


         —    Cambodian nationals: Cambodian nationals who do not hold foreign passports are
              not allowed to enter or remain in our casino’s gaming halls where table games are
              played except as our employee, agent or officer or a member of the National
              Police of Cambodia acting in the course of his/her duties.


         —    Cambodian Government may exclude entry: The Cambodian Government may
              exclude a specified person from the casino.


         —    List of names of excluded persons: We shall maintain a list of names of persons
              who are excluded from entry into our casino. We must also make available to the
              Cambodian Government a current copy of the list of excluded persons.


         —    Operator’s right to exclude or remove excluded person: We shall use such force
              as is reasonably necessary to prevent such excluded persons from entering or
              remaining in our casino.


         —    Provisions relating to minors: Persons under the age of 18 years shall not be
              permitted in our casino during the hours of operation of the casino on any day.
              Such persons who are found in our casino during these hours will be requested
              to leave the casino and such an incident will be reported to the National Police
              of Cambodia.


         —    Cheating and unlawful use of equipment: Any person found cheating (as defined
              in the Casino Control Rules) will be requested to stop playing in our casino and
              such an incident will be reported to the National Police of Cambodia.


Key internal controls on money laundering — since 1995


     We and our controlling shareholder are committed to combat money laundering and
terrorist financing. Accordingly, we have put in place since the beginning of our casino
operations in 1995 key and adequate AML internal controls to mitigate effectively the risk of
money laundering.




                                          — 115 —
                                          BUSINESS

      We do not grant sub-concessions to any third parties to offer table games so as to avoid the
risks relating to the introduction of new management and staff of untested background, changes
in management culture and standards of compliance with internal controls and applicable laws
and regulations. In some countries and cities, the sub-concession of casino licences is allowed
and casino operators do indeed appoint third parties for the provision of gaming activities.

     We have put in place key AML internal controls, such as the stringent control of the issue
of cheques and provision of electronic funds transfers for the benefit of our casino customers.
Since inception, we have not issued cheques to Public or Non-STG Players. This is key to
preventing the public floor from being exploited for money laundering.


     We have also adopted other key AML internal controls that are the foundation and
cornerstone of any good AML practice, such as customer due diligence, good record keeping and
not dealing with anonymous accounts.


Internal controls on money laundering — since extension of FATF recommendations in
June 2003

     In June 2003, FATF extended its recommendations, for the first time, to cover non-financial
sectors, such as casino operations, and professions, such as lawyers and accountants. We adopted
AML internal controls that comply with the relevant recommendations from FATF and that are
relevant and applicable to the monitoring and safeguarding of casino operations against money
laundering and terrorist financing.


     In addition, we have engaged independent professional parties to assess and report on our
internal controls, including our AML internal controls, and acted upon the recommendations from
these independent professional parties.

Establishment of AML Oversight Committee and AML Sub-Committee


     At Board level, we set up an AML Oversight Committee comprising Directors, some of whom
have extensive experience in domestic and international law enforcement, to formulate policies
and strategies on AML development and implementation programmes as well as to help ensure
quality control and act as oversight committee on AML matters.

     At management level, our AML Sub-Committee was formally set up to help ensure
day-to-day compliance with our AML internal controls. The AML Sub-Committee comprises senior
management personnel from key departments, each of whom is a member of the United States
based Association of Certified Anti-Money Laundering Specialists.


Internal audits


     Our Internal Audit Department has conducted internal audits to assess the effectiveness of
the AML internal controls and documented findings from such internal audits for future review
and reference.


                                           — 116 —
                                           BUSINESS

    The first round of internal audits started soon after the issue of the FATF recommendations
covering non-financial sectors in June 2003, and covered the period between July 2003 and
December 2003.


     Another two rounds of internal audits were conducted for the period between January and
December 2004. The fourth and fifth internal audits were conducted for the period between
January and December 2005. The sixth internal audit was conducted for the period between
January and June 2006.


     The effectiveness of the internal controls in place, particularly in respect of record keeping,
has led to the provision of information (with some dating back to 1996) to a law enforcement
body in Hong Kong in connection with an investigation in 2003.


Independent reviews by Hill & Associates


     Hill & Associates, an independent professional party with working knowledge of AML and
risk management, reviewed the AML internal controls of the Group and the external AML
environment in which our casino operates for the purpose of assessing the degree of compliance
of our AML internal controls with the relevant FATF recommendations issued in June 2003.


    Hill & Associates reviewed the AML internal controls of the Group for the period between
August 2004 and February 2005 and conducted follow-up reviews on the AML internal controls
for the period between March 2005 and December 2005 and in September 2006. Its findings are
set out in a report dated 18th September, 2006.


     Hill & Associates noted, among others, the following:


     —    the Group has put in place AML internal controls and procedures that are efficient and
          effective;


     —    no areas of weakness were identified in the internal operating environment of the
          Group;


     —    the AML internal controls of the Group comply in full with the relevant FATF
          recommendations; and


     —    the Cambodian Government is compliant with the FATF recommendations, particularly
          when applying the country best practice qualification, as recognised by FATF, in
          accordance with the unique legal and financial system, constitutional framework and
          social, economic and political circumstances of the country.




                                            — 117 —
                                          BUSINESS

     A summary of the improvements made to the AML internal controls of the Group in response
to recommendations from Hill & Associates is set out below:

     Areas of AML internal control            Improvements

     Customers due diligence                  ●    Engagement of an international security firm
                                                   to conduct background checks on STG
                                                   Operators

                                              ●    Enhanced random checks on customers

     Audit                                    ●    Engagement of external professional party to
                                                   audit and review the AML internal controls


    The Group has taken up all the recommendations from Hill & Associates. (Please refer to
Appendix VI for more details about the improvements on AML internal controls of the Group and
Appendix VII for a summary of the report from Hill & Associates)


     Hill & Associates was first appointed in August 2004 to review the AML internal controls and
external environment in relation to our casino operations in Cambodia and the level of
compliance with the relevant FATF recommendations. Hill & Associates documented its findings
in its report that was finalised in January 2005 and addressed to the Sponsor and dated 19th
February, 2005. The report from Hill & Associates had been commissioned for the purpose of
providing to the Sponsor due diligence and verification material supporting the statements to be
included in this prospectus relating to the Company’s AML controls. In compliance with the
decision of the Listing (Review) Committee of 23rd November, 2005 namely, (i) the Company
should engage an independent professional party to review/audit its internal controls with a
focus on AML, on a bi-annual (or semiannual) basis, and the findings would be disclosed in its
annual report. The Company would act upon any recommendations of the independent auditor,
where appropriate, and (ii) Tan Sri Dr Chen, our controlling shareholder, should indemnify the
Company for any liabilities suffered and brought about by any actions or suits filed by third
parties as a result of any shortcomings and deficiencies in AML internal controls of the Company
that might have occurred prior to the listing. Hill & Associates were commissioned to carry out
an update of its report for the purpose of the Company’s listing application. It was agreed that
the report which had originally been prepared for due diligence and verification purposes as
referred to above should be included in the prospectus. Under the Listing Rules, Hill & Associates
would be deemed to be an expert.


     In 2004, we were seeking a professional party with knowledge and experience of AML
controls in Asia Pacific region for the review of our casino operations and through an
intermediary, we were introduced to Mr. Timothy Patrick McNally, who was then employed as the
Executive Director of Security and Corporate Legal Services of the Hong Kong Jockey Club until




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                                           BUSINESS

his departure in October 2005. Mr. McNally in this capacity dealt with a number of firms providing
security services. Mr. McNally was requested to recommend to the Group firms that would be
capable of providing an independent assessment of anti-money laundering controls in Asia
Pacific region and particularly, in Cambodia. Following a meeting with Tan Sri Dr Chen in
February 2004, Mr. McNally suggested, among other firms, Hill & Associates, which was engaged
to conduct the review for us in August 2004.


     In February 2005, Mr. McNally became our chairman and an independent non-executive
Director.


      Shortly before leaving the Hong Kong Jockey Club in October 2005, Mr. Timothy McNally
was approached by Mr. Colin Hill, the chairman of Hill & Associates, for a consultancy role for
business development in the US. Mr. McNally accepted the offer and joined Hill & Associates as
a senior adviser for which he was entitled to an annual fee of US$50,000 and a commission based
on business referred successfully to Hill & Associates. Mr. McNally had not received and will not
receive any form of remuneration from Hill & Associates in relation to its engagement for the
review and preparation of the reports. It was not an exclusive arrangement and Mr. McNally was
free to and did provide consultancy services to other companies. Mr. McNally also carries out his
own investigative and security consultancy business in the US and he is not financially dependent
on Hill & Associates, the Company, any of its subsidiaries or its connected persons.


     In June 2006, the Sponsor became aware of Mr. McNally’s relationship with Hill & Associates
and made inquires in this respect. On 10th July, 2006, the Sponsor informed the Stock Exchange
in writing of Mr. McNally’s relationship with Hill & Associates.


     Mr. McNally has informed us that his appointment as a senior adviser to Hill & Associates
was due to his prior professional experience with the Hong Kong Jockey Club and the Federal
Bureau of Investigation and was not connected with the Company or his appointment to the
board. Mr. McNally was not a director, partner, principal nor an employee of Hill & Associates.
In addition to Mr. McNally, Hill & Associates engaged five other senior advisers. Mr. McNally’s
role was to develop clients in the United States and particularly, in California, and attend
conferences there, and make presentations on behalf of Hill & Associates of its capabilities to
deliver services in Asia. Mr. McNally’s role in the US operation of Hill & Associates was
considered to be a minor aspect of the whole operation of Hill & Associates as the majority of
which was based around its 18 offices in Asia. The Company was informed that Hill & Associates
recorded total revenue of approximately US$22 million in 2004 and approximately US$24 million
in 2005. Mr. McNally had no role in Hill & Associates’ operations in Asia. The arrangement formed
a small part of Mr. McNally’s overall business and his responsibilities were limited to work for Hill
& Associates in the United States but not in Asia. As such, the arrangement between Hill &
Associates and Mr. McNally was not, in our view, considered to be material either financially, in
terms of revenue, or commercially.


    The Hill & Associates report, prior to its updating in March 2006, was presented to the
Company and the Sponsor in February 2005 approximately eight months before Mr. McNally
became an adviser to Hill and Associates. Mr. McNally had no involvement in the commissioning


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or preparation of the initial report and the updated reports save that he reviewed them in his
capacity as the chairman and an independent non-executive Director. The reports from Hill &
Associates focused on the AML internal controls of the Group and how they have complied with
the relevant FATF recommendations. The reports covered mainly factual documents and
procedures that have already been established and followed and, in our view, leave little room
for subjective interpretation.


     The report updated in March 2006 noted improvements made to the AML internal controls
of the Group and compliance with the relevant FATF recommendations. Hill & Associates had
confirmed that there was no material change to the conclusion and findings in this updated report
when compared to the initial report.


      On 24th August, 2006, the Listing Committee of the Stock Exchange considered whether the
relationship between Mr. McNally and Hill & Associates affected the independence of the report
updated by Hill & Associates in March 2006. The Exchange considered the following factors
weighted in favour of adopting a disclosure-based approach:


     (i)    the issue did not call into question the competence or expertise of Hill & Associates;


     (ii)   when the Company appointed Hill & Associates in August 2004, Mr. McNally was not
            a Director or an adviser of Hill & Associates;


     (iii) Mr. McNally had not been involved in preparing the reported updated in March 2006
           although he had reviewed it in his capacity as a Director; and


     (iv) Mr. McNally will cease to be an adviser of Hill & Associates upon listing.


     However, the Listing Committee also noted the following factors weighed against adopting
a disclosure-based approach:


     (i)    although Mr. McNally had not been involved in preparing the updated report, his
            association with Hill & Associates did not leave that report untainted;


     (ii)   the appointment of independent experts to review the Company’s AML controls had
            been a very significant part of the Stock Exchange’s conditions for listing; and


     (iii) the appointment of Hill & Associates was a continuing one as reviews of the Company’s
           AML controls on an ongoing basis had been made a condition of the listing the
           Company.


     The Listing Committee determined that on balance it was not appropriate to accept the
updated report from Hill & Associates. As such, it requested that the Company should appoint
another independent expert to conduct a review of the Company’s AML controls.


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     On 29th August, 2006, the Company requested the Stock Exchange to reconsider the
acceptability of the updated report from Hill & Associates and it was granted a review hearing by
the Listing (Review) Committee on 8th September, 2006.


     The Listing (Review) Committee supported the view of the Listing Committee that it was
inappropriate to accept the report updated by Hill & Associates in March 2006 and determined
that the Company should appoint another independent expert to conduct a review of the
Company’s AML controls or, alternatively, it should undertake the following to the satisfaction of
the Listing Division:


     —    the Company should arrange for the report to be updated by Hill & Associates through
          a date which is after the resignation of Mr. McNally as an adviser to Hill & Associates
          and which is the latest practicable date prior to the date of the prospectus. The Listing
          (Review) Committee required that the updated report in full be made available to the
          public as a document for inspection and a summary of which be disclosed in the
          prospectus;


     —    a declaration by Hill & Associates in respect of its independence during the preparation
          of the updated report addressed to the Stock Exchange and signed by Mr. Colin Hill,
          the chairman of Hill & Associates, and such declaration be set out in the prospectus;


     —    the Company should make full disclosure in the prospectus of the relationship among
          the Company, Mr. McNally and Hill & Associates reflecting the information contained
          in the various submissions (oral and written) made to the Listing (Review) Committee.


     The Listing (Review) Committee arrived at its determination recognising the fact that Mr.
McNally was an adviser to Hill & Associates from October 2005, during which time the report was
being updated. The Listing (Review) Committee believed that this could give rise to questions
about the independence of the report.


     On 11th September, 2006 Mr. Timothy Patrick McNally terminated his position as a senior
adviser to Hill & Associates and ceased to have any relationship with Hill and Associates
thereafter. On 12th September, 2006, Hill & Associates conducted a further review after the
resignation of Mr. McNally covering a period up to 18th September, 2006 and produced, a further
update of the report and in connection with this, issued an independence confirmation in respect
of the updated report. The full review which was completed on 18th September, 2006 comprised,
among other things, interviews with members of the AML Oversight Committee, AML Sub-
Committee, our senior management and officials of the Cambodian Government, a physical
walk-through of AML controls and procedures of the Group, a review of randomly selected
transactions, a review of AML documentations and records and an assessment of compliance with
the relevant FATF recommendations. In this latest review, Hill & Associates noted the compliance




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                                           BUSINESS

of the Group’s AML internal controls with the relevant FATF recommendations and that there was
no material change to the conclusion and findings. Please refer to Appendices VII and VIII
respectively to this prospectus for a summary of the report and the independence confirmation
from Hill & Associates.


Internal controls on gaming operations


Exposure to the risk of cheating and fraud


     Cheating is a specific industry risk relating to casinos. Notwithstanding the preventative and
mitigating measures that a casino operator may adopt and observe, the risk of fraud and cheating
cannot be eradicated completely. Our Directors have confirmed that, to the best of their
knowledge, only one major case of attempted fraud and cheating has occurred in our casino
during the Track Record Period in the amount of US$2 million, for which full provision was made.
In this particular case, the Surveillance Department reviewed the images of gaming activities
immediately after the losses occurred and detected suspicious activities which led to the
reporting of the alleged fraud to the MOI and an injunction being filed to stop the payment to
the STG Operator concerned. The incident appears to be an isolated event. The prompt detection
has prevented the Group from suffering a financial loss. In view of the preventative and
mitigative measures adopted by us, our management is of the view that the risk relating to fraud
and cheating in the casino can be managed.


Preventative and mitigating measures


     We have in place the preventative and mitigating measures as described below.


     Due diligence on and screening of STG Operators are carried out by us in accordance with
the relevant recommendations issued by FATF. Where the information is available, we also keep
a list of customers who have or are suspected of having committed cheating and fraud in other
casinos for reference.


    Detection and prevention of fraud, cheating and other malpractices in our casino are
primarily carried out by the Casino Tables Operations Department with the cooperation of other
casino departments, especially the Treasury and the Surveillance Department. The Treasury
Department is the first point of contact when customers buy chips at the casino, such as on the
public floor, and will alert the other relevant departments whenever there is a large amount of
buy-in in accordance with our casino policy and procedure. The dealers, supervisors, pit bosses
and casino shift managers of the Casino Tables Operations Department are trained to identify and
detect any suspicious activities in the conduct of gaming by players. The Casino Table Operations
Department will also sort the used cards after each round to ensure completeness of the cards.




                                            — 122 —
                                           BUSINESS

     In addition, any betting activities over a certain value will be monitored by the Surveillance
Department. The Surveillance Department monitors all activities in the casino through the use of
a network of closed circuit television cameras which are strategically placed throughout the
casino. Whenever there is a table loss of a certain value at any one time, close-up and enlarged
images of the table activities will be reviewed to detect any potential cheating element. High
resolution video images of the gaming activities recorded will be archived normally for seven
days or until such period as our management deems fit.


     Procedures for the effective implementation of the internal controls of the Group, including
controls for prevention and mitigation of fraud and cheating, are documented, reviewed and
updated.


     Our Directors believe that the internal controls and procedures in place are adequate to help
prevent and mitigate the risk of fraud and cheating in the casino.


External reports by Ernst & Young


     Ernst & Young considered the internal controls over the gaming operations of the Group
based on agreed upon procedures. The procedures were performed in December 2004 and May
2005 and April 2006. In this connection, summary and full reports were issued on 28th August,
2006.


     In the assessments, the internal controls on gaming activities of the Group were assessed
against controls identified by our management to be the key internal controls applied to casinos
operating in highly regulated environments such as the USA and Australia. It is noted in the
report, among other things, that certain of the key internal controls were not operating in the
same manner as in casinos in a more regulated environment and, consequently, the internal
controls on our gaming operations did not fully conform with the key internal controls selected.
Management provided explanations for these instances along with an action plan to address these
matters. Management has implemented a number of the internal controls to conform with the key
internal controls selected. Improvements that management have made are set out below. Other
than as described more fully below, the Company had in place the sample of key internal controls
at the time of review.


     Given the operating environment and size of our operations, our management is of the view
that the Company has made appropriate improvements to its internal control on gaming
operations for the purpose of mitigating all relevant risks.




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    A summary of the material improvements made to the internal controls of the Group based
on observations set out in the summary report together with other improvements are set out
below:

     Areas of
     internal controls     Observations                  Improvements made

1.   Policies and          Policies and procedures   Not in full compliance with the key internal
     Procedures Manual     documented should contain controls.
                           greater detail.
                                                     We have compiled policy and procedures
                                                     manuals based on an assessment of the key
                                                     risks and level of complexity and size of our
                                                     operation.

                                                         Regular review on the manuals is carried out
                                                         to ensure key risks are covered and
                                                         addressed. Our management is of the view
                                                         that the scope of the policy and procedures
                                                         manuals are adequate based on an
                                                         assessment of the key risks facing our gaming
                                                         operations and level of complexity and size
                                                         of our casino operation.

2.   Treasury and Income   The chips stored in reserve   Adopted to comply with the key internal
     Control               cabinet should be counted     controls.
                           on a more regular basis.
                                                         More counting of chips stored is carried out.

                           Unused fill and credit        Adopted to comply with the key internal
                           forms are not stored in a     controls.
                           locked storage facility.
                                                         Unused fill and credit forms are now kept in
                                                         a locked facility and supervised by treasury
                                                         manager on duty.

                           Duties between the cheque     Adopted to comply with the key internal
                           bank cashier and other        controls.
                           cage functions are not
                           segregated.                   A counter has been designated for cheque
                                                         bank cashier to segregate its functions from
                                                         other cage functions.

                           Income audit should retain    Adopted to comply with the key internal
                           its own copy of all           controls.
                           documents audited.
                                                         We keep copies of documents vetted
                                                         separately by income audit unit which is
                                                         under the finance department.




                                            — 124 —
                                           BUSINESS

     Areas of
     internal controls    Observations                   Improvements made

                          The income audit function      Adopted to comply with the key internal
                          should be performed in a       controls.
                          location segregated from
                          the gaming operations.         The income control function has been
                                                         relocated to another area away from the
                                                         treasury operations.

3.   Routine Gaming Day   A separate main bank close     Adopted to comply with the key internal
     Operations           out form is ordinarily         controls.
                          completed for each gaming
                          shift.                         We have computerised the filing procedure
                                                         and use appropriate separate forms.

4.   VIP/Junket           Junket operators’ identity     Adopted to comply with the key internal
     Operations           and credit worthiness are      controls.
                          not formally documented.
                                                         We have expanded the level of details in and
                                                         centralised the documentation.

                          In certain circumstances       Adopted to comply with the key internal
                          non-negotiable chips are       controls.
                          issued to junkets prior to
                          the clearance of front         The issuance of chips to junket operators
                          monies.                        before clearance of front monies is subject to
                                                         approval from the authorised personnel. All
                                                         approvals are appropriately documented. The
                                                         chips are issued in accordance with our
                                                         internal policy and procedure.

                          Formal background and          Adopted to comply with the key internal
                          credit checks are not          controls.
                          performed prior to issuing
                          credit to junket operators.    We have commissioned an independent
                                                         security firm to conduct background checks
                                                         on junket operators in addition to our
                                                         internal background checks. Copies of junket
                                                         operators’ passports are retained. Careful
                                                         credit analysis is carried out before granting
                                                         credit facilities to the junket operators.

5.   Gaming Information   The Company has not            Adopted to comply with the key internal
     Systems              formally tested its disaster   controls.
                          recovery plan.
                                                         We currently have not installed an integrated
                                                         computer system to link up all the operations
                                                         as it has not achieved the economies of scale
                                                         as yet. We have formally tested our disaster
                                                         recovery plan. Testing is carried out on
                                                         stand-alone computers. We have also
                                                         expanded the level of detail in
                                                         documentation.




                                            — 125 —
                                          BUSINESS

     Areas of
     internal controls   Observations                    Improvements made

6.   Human Resources     Limited background checks       Not in full compliance with the key internal
                         which include liaison with      controls.
                         local police and interviews
                         with neighbours.                Enhanced background checks have been
                                                         conducted on all new potential employees.
                                                         These include obtaining police clearance and
                                                         paying a visit to places of residence of
                                                         potential staff. Passports are viewed and
                                                         copies taken as part of the background
                                                         checks for expatriate candidates. Senior
                                                         management staff is subject to background
                                                         checks by an independent security firm
                                                         wherever necessary in addition to our own
                                                         internal background checks. The National
                                                         Police of Cambodia does not maintain a
                                                         centralised record of all employees of casinos
                                                         in the country. Nonetheless, we have
                                                         continued to enhance background checks on
                                                         potential staff as more external information
                                                         becomes available for assessment.

                         Engagement of a                 Adopted to comply with the key internal
                         compliance manager to           controls.
                         ensure compliance with
                         gaming legislation and to       A compliance manager has been appointed to
                         facilitate regular updates of   further ensure compliance with all relevant
                         the policy and procedures       regulations and to facilitate regular updates
                         manuals.                        of the internal control policy and procedures
                                                         manuals.

7.   Security            The external transportation     Not in full compliance with the key internal
                         of cash from the casino is      controls.
                         not conducted by a
                         specialised external party.     NRCL has recruited a special task force unit
                                                         since commencement of business to transfer
                                                         cash to external banks. Our management has
                                                         reviewed the possibility of using a security
                                                         firm to conduct cash transfers from
                                                         NagaWorld to external banks. Given the
                                                         limited maximum cash allowed per transfer
                                                         and therefore the high frequency of such
                                                         cash transfers offered by security firms in
                                                         Cambodia, our management is of the view
                                                         that it is currently more effective for the
                                                         function to be carried out by its specially
                                                         trained staff.




                                           — 126 —
                                                     BUSINESS

        Areas of
        internal controls         Observations                      Improvements made

8.      Surveillance              A new digital surveillance        Adopted to comply with the key internal
                                  system was introduced             controls.
                                  which did not provide for
                                  audio in the count room.          A new digital surveillance system has been
                                                                    introduced since commencement of
                                                                    operations in NagaWorld. An audio device
                                                                    has been added at the count room to aid in
                                                                    cash count process with the new gaming
                                                                    machine supplier, this cash count process is
                                                                    currently undertaken by them.

9.      Internal Audit            Formal documentation of           Adopted to comply with the key internal
                                  internal audit plan on            controls.
                                  gaming functions such as:
                                                                    Internal audits for Casino Operation
                                  ●     Table fill and credits      Department, Treasury Department, Finance
                                                                    Department and Surveillance Department are
                                  ●     Jackpot and slot fill       carried out at least once a year. Other areas
                                        procedures                  will be audited at least once every two years.
                                                                    Audit results are documented.
                                  ●     Cage and credit
                                        procedures                  The internal audit department will review key
                                                                    performance indicators used in management
                                  ●     Treasury and cage           reports on a monthly basis.
                                        functions.

10.     Management                Preparation of actual to          Adopted to comply with the key internal
        Reporting                 budget comparisons.               controls.

                                                                    Management reports are prepared on a
                                                                    monthly basis. Budgets and monthly reports
                                                                    including details and explanations of
                                                                    variances are also prepared.

     Our management is of the view that it is not appropriate for the Company to comply fully
with certain recommendations above (items 1, 6 and 7), given the scale and complexity of its
operations and the external operating environment in which it operates. Save for the above, the
Company has, where appropriate, taken into account all the observations and made appropriate
improvements.


     (Please refer to Appendix VI for more details about the improvements on internal controls
of the Group.)


Note:


The reports from Ernst & Young were compiled based on agreed upon procedures and were for the purpose and use of
the Company only. They were not prepared for disclosure in a listing document for public inspection. The preparation
of the reports did not constitute an audit in accordance with Australian Auditing Standards or a review in accordance with
Australian Auditing Standards applicable to review engagements. Accordingly, Ernst & Young did not express any



                                                      — 127 —
                                                    BUSINESS

assurance or opinion on the internal controls over the gaming operations of NRCL. The reports contained factual findings
in a form selected to enable a more detailed description of the gaming internal controls reviewed, the gaming internal
controls the Company had in place and areas of gaming internal controls where the Company could implement or
improve on to meet the standard of internal controls of casinos operating in the USA and Australia.


The procedures performed by Ernst & Young only considered a selection of key gaming internal controls and did not
consider all of the internal controls a regulated casino would be expected to have in place. The key gaming internal
control procedures considered were selected by management based on the assessment of the importance of these
controls.


The reports from Ernst & Young are available for public inspection. (Please refer to Appendix X to this prospectus for
further details.)


Our commitment to good corporate governance


Internal audit function


     Our internal audit department reviews the internal controls and quality assurance, on a
regular basis, to ensure strict compliance with our policies and procedures.


External audit on AML internal controls


     After the listing, we will engage an independent auditor to review and/or audit our internal
controls with a focus on AML, on a semi-annual basis, and to have its findings disclosed in our
annual reports. We undertake to act upon the recommendations made by the independent auditor
where appropriate.


Review of investment risks in Cambodia


      After the listing, we shall engage an independent professional party to assess and review,
on an annual basis, the investment risks in Cambodia and disclose its findings in our annual and
interim reports.


Controlling Shareholder’s indemnity


    Tan Sri Dr Chen, our chief executive officer and controlling Shareholder, has undertaken to
indemnify the Group for any liabilities suffered and brought about by any actions or suits filed
by third parties as a result of any shortcomings and deficiencies in our AML internal controls that
might have occurred prior to listing. For further details about the indemnity, please refer to the
paragraphs headed “Taxation and AML indemnity” in Appendix IX to this prospectus.




                                                     — 128 —
                                           BUSINESS

COMPETITION


     Our business is subject to the following principal competitive factors:


     —    competition from existing and new casinos in the Asia Pacific region;


     —    the nature of the products and services we offer to our customers;


     —    competition for STG Operators;


     —    competition from other operators of gaming machine stations in Phnom Penh; and


     —    other forms of gambling in Cambodia.


Competition from existing and new casinos in the Asia Pacific region


      The casino industry in the Asia Pacific region is becoming increasingly competitive given the
number of countries which have considered, or are giving consideration to, legalising casino
gaming. Further, a number of existing casino operators in the Asia Pacific region have expanded
their existing casino facilities.


     We face competition from land-based casino facilities based in Macau, Malaysia, Philippines
and South Korea.


     We also face competition for potential customers residing in the PRC, Hong Kong,
Singapore, Malaysia, Thailand and Taiwan from various cruise-ship operators with onboard
casinos.


     While there are a number of casinos operating in other parts of Cambodia, such as Poipet
and Sihanoukville, we understand that they are generally targeted at the Thai market.
Accordingly, we do not perceive Cambodia’s domestic border casinos as a significant competitive
threat to our operations.


     With respect to Macau, the Government of Macau announced the liberalisation of its gaming
industry and in 2002 granted three gaming concessions to casino operators. The existing casinos
in Macau, along with new casinos may present a competitive threat to the profitability of our
operations, in particular, with respect to our customers from the PRC.


The nature of the products and services we offer our customers


     A large segment of our revenue is derived from STG Players, who are normally more
accustomed to place heavier bets than our public players. Accordingly, the table limits set in our
casino will be a consideration for higher stakes gamblers when deciding whether to visit our


                                            — 129 —
                                           BUSINESS

casino or our competitors. The table limits in our casino are generally lower than those available
in the casinos in Malaysia and Macau. Accordingly, players wishing to bet higher stakes would
likely visit our competitors in Malaysia and Macau.


     We understand that casinos in some other Asian countries offer credit facilities to individual
players and STG Operators. We presently only offer credit facilities to STG Operators with good
financial background and with whom we have had extended dealings over the past few years. As
a result, we may not be in the best position to compete for the business of high stakes players
or certain STG Operators who wish to obtain high credit facilities from casinos.


Competition for STG Operators


     There are other casinos operating in Cambodia outside the Designated Area. As mentioned
above, a large segment of our revenue is derived from STG Players, who visit our casino in a tour
organised by STG Operators. The STG Operators earn commissions calculated against the amount
of Rollings achieved by an STG organised by them at a casino. Most STG Operators also organise
for players to visit other casinos, including those operated by our competitors, and so we
compete for STG Operators.


Competition for players of gaming machine stations


      There are a number of outlets in Phnom Penh and elsewhere in Cambodia that offer gaming
machine stations to customers and we compete with such outlets for players of gaming machine
stations (who may be either Cambodian nationals or foreign passport holders).


Other forms of gambling in Cambodia


     In the past few years, there have been a growing number of gaming outlets around Phnom
Penh offering lottery games. In addition to these lottery operators, there is also legal football
bettings. While these games may attract the attention of foreign passport holders who visit our
casino, we do not view them as a significant threat to our business given the different nature of
our products.


INSURANCE


     We maintain the following insurance policies:


     —    insurance to cover losses or damages in respect of property, buildings, gaming
          equipment and contractors’ risks;


     —    personal accident insurance for our expatriate employees;


and we have purchased an insurance policy as a precautionary measure in order to hedge our
country risk in Cambodia.


                                            — 130 —
                                           BUSINESS

     The gaming machine stations in our casino are owned by Best Merit Assets Limited and it
is required to take and maintain public liability insurance in respect of the operation of the
machines in our venues.


     We did not make any material insurance claim during the Track Record Period nor have
there been any incidents likely to give rise to the need to make a material claim.


     Our Directors have confirmed that, to the best of their knowledge and experience, the
insurance coverage of the Group is sufficient for its operations.


INTELLECTUAL PROPERTY RIGHTS                                                                        A10(28)(4)



      As at the Latest Practicable Date, we had registered a number of our trademarks in several
different jurisdictions. Ariston has registered the “NAGA” logo trademark in Cambodia, Taiwan
(in class 42) and the United Kingdom, the “NAGA RESORTS & CASINOS” trademark in Taiwan and
the United Kingdom and the “NAGA RESORTS & CASINOS LIMITED” trademark in Cambodia and
the Company has registered the “NagaCorp”, “NagaWorld” and “Naga” trademarks as well as the
diamond shaped logo in Hong Kong.


     As at the Latest Practicable Date, we had also lodged renewal applications in respect of the
registration of the “NAGA” logo and “NAGA RESORTS & CASINOS” trademarks in Taiwan (in class
41).


     Other than the above protective measures and the legal protections conferred by the
registrations of our trademarks, there were no other measures to prevent infringement of our
intellectual property rights by third parties.


    For the Track Record Period, we were not exposed to any infringement claims and did not
experience any third party infringement of our intellectual property rights.                        [App 28(5)]




                                             — 131 —
              RELATIONSHIP WITH CONTROLLING SHAREHOLDER

Tan Sri Dr Chen                                                                                       A1a(27A)



     Tan Sri Dr Chen, our chief executive officer, controlling Shareholder and a Director, is also
the president, chief executive officer and a controlling shareholder of Karambunai Corp Bhd
(“KCB”) (formerly known as FACB Resorts Berhad) and holds or is otherwise interested in
approximately 43% of the issued share capital of KCB as at the Latest Practicable Date. KCB is a
company which was incorporated in Malaysia in 1965 and has been listed on the main board of
the Bursa Malaysia Securities Berhad since 1967. The core business of KCB and its subsidiaries
(“KCB Group”) is in the leisure, tourism and hospitality sectors, principally in Malaysia. We have
been advised by KCB that it has no operations in Cambodia and has no plans to expand into
Cambodia.


      Tan Sri Dr Chen is also the president, chief executive officer and a controlling shareholder
of FACB Industries Incorporated Berhad, a company listed on the main board of the Bursa
Malaysia Securities Berhad, in which he has an approximate 20% shareholding interest by virtue
of his interests in First Allied Holdings Sdn Bhd and his indirect interest in shares held by his
spouse. FACB Industries Incorporated Berhad and its subsidiaries are primarily involved in
stainless steel and bedding products in both Malaysia and China.


     In addition, Tan Sri Dr Chen is the chief executive officer and a controlling shareholder of
Petaling Tin Berhad (“PTB”) and holds or is otherwise interested in approximately 34% of its
issued share capital as at the Latest Practicable Date. PTB was incorporated in Malaysia in 1920
and has been listed on the main board of the Bursa Malaysia Securities Berhad since 1973.
Currently, PTB is principally engaged in property investment and development in Malaysia.


     Tan Sri Dr Chen is the beneficial owner of all of the issued share capital of Ariston Holdings
save for one share, which is legally and beneficially held by his spouse. Immediately prior to
completion of the Addendum Agreement, Ariston Holdings owned the rights to develop the Naga
Island, Sihanoukville International Airport and O’Chhoue Teal and related facilities in the
Sihanoukville region which it acquired from Ariston in August 2002 for approximately US$6.8
million. However, these development rights have been surrendered to the Cambodian
Government in connection with the extension of the exclusivity period of the Casino Licence.


     As at the Latest Practicable Date, none of PTB, the KCB Group or FACB Industries
Incorporated Berhad carried on casino operations. In view of this, the Directors are of the view
that none of the other businesses in which Tan Sri Dr Chen has an interest compete or are likely
to compete, either directly or indirectly, with the business of the Group.


Independence from the Controlling Shareholder


      We are satisfied that we can carry on business independently of Tan Sri Dr Chen and his
associates after we are listed on the Main Board. This is based on our experienced existing
management and the absence of business transactions (other than the transactions disclosed in
this prospectus, which in the Directors’ opinion are not material) between the Group and Tan Sri
Dr Chen or his associates.


                                            — 132 —
             RELATIONSHIP WITH CONTROLLING SHAREHOLDER

Other Directors


     Lew Shiong Loon, one of our Directors, is the head of corporate strategies and research of
PTB and spends approximately one-third of his time on PTB matters. John Pius Shuman Chong,
another of our Directors, is a director of PTB and spends up to half his time on PTB matters.
Neither Director is involved in the day-to day management of PTB and each is provided with
administrative and management support by the Group. The Board is therefore of the view that
they have sufficient time to discharge their duties as Directors effectively.


     No Director is interested in any business which competes or is likely to compete, directly
or indirectly, with the business of the Group.




                                          — 133 —
                              CONNECTED TRANSACTIONS

      We have entered into a number of agreements and arrangements with connected persons of
our Company. Upon the listing of the Shares on the Stock Exchange, the following transactions
will constitute exempt connected transactions under the Listing Rules.


Exempt Continuing Connected Transactions


     Details of the continuing connected transactions of the Company which are exempt from the
reporting, announcement and independent shareholders’ approval requirements set out in
Chapter 14A of the Listing Rules (“exempt continuing connected transactions”) are set out below:


1.   Provision of air ticketing and travel services by First Travel & Tours (M) Sdn Bhd
     (“FTT”) to NRCL and Ariston


Transaction nature


     On 19th May, 2006, NRCL and Ariston entered into an agreement with FTT with effect from
1st January, 2006 on normal commercial terms pursuant to which FTT agreed to provide air
ticketing and travel booking services to NRCL and Ariston, primarily in relation to travel between
Cambodia and Malaysia (“FTT Agreement”). The FTT Agreement provides that the value of the
services provided and the fees to be paid by NRCL and Ariston shall in aggregate be less than
HK$1 million per annum.


Connected person


     FTT is a subsidiary of Karambunai Corp Bhd, a company in which our controlling
Shareholder and chief executive officer, Tan Sri Dr Chen, is the chief executive officer, a director
and a controlling shareholder.


Reason for exemption


     The FTT Agreement is an exempt continuing connected transaction as it is expected to fall
within the de-minimis thresholds in Rule 14A.33(3). The total amount attributable to the FTT
Agreement for the three years ended 31st December, 2005 and the five-month periods ended 31st
May, 2005 (unaudited) and 2006 was approximately US$207,241, US$102,936, US$129,691,
US$50,608 and US$62,085, respectively. In the event that the FTT Arrangement ceases to satisfy
the requirements of Rule 14A.33(3) for any year, the Company will comply with the requirements
relating to continuing connected transactions under Chapter 14A of the Listing Rules, as
applicable.


    The Directors, including the independent non-executive Directors, are of the view that the
FTT Agreement is in the ordinary and usual course of the Group’s business, on normal
commercial terms, fair and reasonable and in the interests of the Shareholders as a whole.



                                            — 134 —
                             CONNECTED TRANSACTIONS

2.   Provision of accommodation by Karambunai Resorts Sdn Bhd (“KRSB”)


     On 19th May, 2006 NRCL and KRSB entered into an agreement with effect from 1st January,
2006 on normal commercial terms pursuant to which KRSB agreed to provide to NRCL use of
accommodation and facilities in Malaysia (“KRSB Agreement”).


Connected person


     KRSB is a wholly-owned subsidiary of Karambunai Corp Bhd, a company in which our
controlling Shareholder and chief executive officer, Tan Sri Dr Chen, is the chief executive
officer, president and a controlling shareholder.


Reason for exemption


     The KRSB Agreement is an exempt continuing connected transaction as it is expected to fall
within the de-minimis thresholds in Rule 14A.33(3). The total amount attributable to the KRSB
Agreement for the three years ended 31st December, 2005 and for the five-month periods ended
31st May, 2005 (unaudited) and 2006 was approximately US$9,634, US$782, US$6,222, US$6,222
and US$12,010, respectively. In the event that the consideration under the KRSB Agreement
exceeds the thresholds in Rule 14A.33(3) for any year, the Company will comply with the
requirements relating to continuing connected transactions under Chapter 14A of the Listing
Rules, as applicable.


    The Directors, including the independent non-executive Directors, are of the view that the
KRSB Agreement is in the ordinary and usual course of the Group’s business, on normal
commercial terms, fair and reasonable and in the interests of the Shareholders as a whole.


3.   Lease arrangements with Karambunai Corp Bhd


     Ariston and Karambunai Corp Bhd entered into a lease agreement on 1st June, 2004
pursuant to which Ariston agreed to lease from Karambunai Corp Bhd an office space in Petaling
Jaya, Selangor Darul Ehsan, Malaysia (“Lease”). The Lease is on normal commercial terms for a
term of two years commencing on 1st June, 2004 for a consideration of US$212 per month with
an option to renew for a further two years. Ariston exercised this option, entering into an
agreement with Karambunai Corp Bhd on 14th June, 2006, pursuant to which the term of the
lease was extended for a further two years for a consideration of approximately US$790 per
month.


Connected person


     Our controlling Shareholder, Tan Sri Dr Chen, is the chief executive officer, president and
a controlling shareholder of Karambunai Corp Bhd.



                                          — 135 —
                             CONNECTED TRANSACTIONS

Reason for exemption


      The Lease is an exempt continuing connected transaction as it is expected to fall within the
de-minimis thresholds in Rule 14A.33(3) of the Listing Rules. In the event that the consideration
under the Lease exceeds the thresholds in Rule 14A.33(3) for any year, the Company will comply
with the requirements relating to continuing connected transactions under Chapter 14A of the
Listing Rules, as applicable.


     The Directors, including the independent non-executive Directors, are of the view that the
Lease is in the ordinary and usual course of the Group’s business, on normal commercial terms,
fair and reasonable and in the interests of the Shareholders as a whole.




                                           — 136 —
                  DIRECTORS, SENIOR MANAGEMENT AND STAFF

     Our Board consists of 11 Directors, four of whom are independent non-executive Directors.   A1a(41)
                                                                                                 3rd Sch(6)
The following table contains certain information relating to our Directors:                      LR11.07



                                    Executive Directors

Name                      Age     Address                       Position

Tan Sri Dr Chen            59     18 Jalan Tengku Ampuan,       Chief Executive Officer
                                  Taman Duta,                   Member of Nomination
                                  50480 Kuala Lumpur            Committee, Remuneration
                                  Malaysia                      Committee, and AML
                                                                Oversight Committee

David Martin Hodson        64     Flat B, 5/F                   Chairman of
                                  Manly Mansion                 AML Oversight Committee
                                  69B Robinson Road
                                  Hong Kong

Tian Toh Seng              51     Room 511                      Chief Operating Officer
                                  Himawari Hotel Apartments     Member of AML Oversight
                                  313 Sisowath Quay             Committee, Remuneration
                                  Phnom Penh                    Committee, and AML
                                  Kingdom of Cambodia           Oversight Committee

Lee Wing Fatt              41     No 239, Street 63,            Chief Financial Officer
                                  Boeng Keng Kang 1             Member of AML Oversight
                                  Phnom Penh                    Committee
                                  Kingdom of Cambodia

Lew Shiong Loon            37     No 22, Jalan Desa Aman 1A     Executive Director
                                  Taman Desa Aman               Executive Assistant
                                  Cheras, 56100                 to President/CEO
                                  Kuala Lumpur, Malaysia        Member of AML Oversight
                                                                Committee
                                                                Head of AML Sub-Committee

Monica Lam Yi Lin          46     Flat C 16/F Block 8           Executive Director
                                  Villa Athena
                                  Ma On Shan
                                  New Territories
                                  Hong Kong

John Pius Shuman           45     Unit 603, 6th Floor           Executive Director
  Chong                           Likas Square Apartments
                                  Jalan Isdiatat
                                  88400 Kota Kinabalu
                                  Sabah



                                          — 137 —
                DIRECTORS, SENIOR MANAGEMENT AND STAFF

                          Independent Non-Executive Directors

Name                      Age     Address                       Position

Timothy Patrick McNally    58     2233 Peak Place               Chairman, Member of AML
                                  Thousand Oaks                 Oversight Committee,
                                  California 91362              Chairman of Remuneration
                                  USA                           and Nomination Committees

Tun Hamid                  77     No. 10 Langgak Tunku          Vice Chairman, Member of
                                  Bukit Tunku                   AML Oversight Committee,
                                  50480 Kuala Lumpur            Audit, Remuneration and
                                  Malaysia                      Nomination Committees

Wong Choi Kay              39     3596, Hudson Street           Chairperson of Audit
                                  Vancouver BC                  Committee, Member of AML
                                  Canada                        Oversight Committee

Zhou Lian Ji               73     5/F,                          Member of Audit,
                                  157 Wong Nai Chung Road       Remuneration and
                                  Happy Valley                  Nomination Committees
                                  Hong Kong


DIRECTORS


Executive Directors                                                                              3rd Sch. 6



     Tan Sri Dr Chen, aged 59, is the chief executive officer as well as the founder and the
controlling Shareholder of the Company with about 28 years of managerial, corporate and
business experience. Tan Sri Dr Chen was responsible for Ariston’s bid for the Sihanoukville
Development and has been guiding the development of the Group since its inception in 1995.
Tan Sri Dr Chen is also a director of Ariston, NagaCorp (HK) and NRCL. Tan Sri Dr Chen is the
controlling shareholder and president and chief executive officer of Karambunai Corp Bhd
(formerly known as FACB Resorts Berhad), a tourism company in Sabah, East Malaysia, FACB
Industries Incorporated Berhad, a stainless steel pipes and fittings manufacturing company and
Petaling Tin Berhad, a property development company. The securities of these three companies
are listed on the main board of the Bursa Malaysia Securities Berhad. Tan Sri Dr Chen was also
the chief executive officer of Composite Technology Research Malaysia Sdn Bhd (1995-2002), a
company owned by the Malaysian Government and responsible for the development of the
Malaysian aerospace industry from design, certification to manufacturing. Tan Sri Dr Chen’s
company, Resourceful Petroleum Ltd, has teamed up with PTTEP International Ltd of Thailand,
Singapore Petroleum Company Ltd of Singapore and Cooper Energy Ltd of Australia to extract oil
and gas in the Gulf of Siam.




                                          — 138 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

     Tan Sri Dr Chen graduated from the University of Malaya with an MBBS in 1973. In
recognition of his various economic services to Malaysia, Tan Sri Dr Chen has been conferred
with various titles and awards including Darjah Indera Mahkota Pahang (which carries the title
“Dato”), Darjah Sultan Salahuddin Aziz (which carries the title “Datuk”) and Panglima Setia
Mahkota (which carries the title “Tan Sri”.) Tan Sri Dr Chen was appointed as an economic
advisor to Samdech Hun Sen, Prime Minister of the Cambodian Government in June 2001.


     Tan Sri Dr Chen is also a director of and sole shareholder in Insightner Limited, a company
incorporated in the British Virgin Islands which has at no time undertaken any trading,
investment or other business activities. Insightner Limited was the protector of the Cambodian
Development Fund, a fund beneficially owned by Tan Sri Dr Chen. This fund was established in
conjunction with the proposed Singapore IPO to procure the reinvestment of some of the
dividends paid by the Company back into Cambodia for community aid programs, infrastructure
development and other such projects. When the Singapore IPO was discontinued the fund, and
consequently the protector of the fund, Insightner Limited, had no further purpose. Tan Sri Dr
Chen intends to liquidate Insightner Limited by way of solvent voluntary winding-up.


     Mr. David Martin Hodson, a British citizen, aged 64, joined the Company as an executive
Director and the Chairman of the AML Oversight Committee in February 2005. His responsibilities
include enhancing the Company’s AML Strategy, Development and Compliance Programme and
he is the Chairman of the AML Oversight Committee.


     Mr. Hodson has been a member of the Hong Kong Police for 37 years, spending most of his
career in criminal investigation. During this period he was posted to the Narcotics Bureau from
1972-1977 being responsible for Investigations and Operations from 1975-1977. He was then
appointed as Director of Studies at the Detective Training School. From 1978-1979 he
commanded the Special Crimes Bureau which was responsible for investigating the most serious
criminal cases occurring in Hong Kong. He was appointed as Head, Interpol Hong Kong from
1979-1983. In this capacity he developed relationships with overseas Law Enforcement Agencies
which liaised with Hong Kong and developed arrangements for mutual assistance. He
commanded the Criminal Intelligence Bureau from 1987-1988.


     From 1989-1992 he was Head of the Narcotics Bureau. During this period the Bureau was
responsible for enforcing the Drug Trafficking (Recovery of Proceeds) Ordinance (DT(ROP)
Ord.) which became law in 1989. This was Hong Kong’s first legislation creating the offence of
“money laundering” in relation to drug trafficking. During this initial period he had oversight of
the Bureau’s investigations which resulted in over $400 million being seized and over $200
million actually being confiscated. Subsequently he was responsible for representing the
Commissioner at the Law Reform Commission and representing the Police at various meetings of
both the Executive and Legislative Council. He had oversight of police proposals for law revision
of the DT(ROP) Ord. and the Organised and Serious Crimes Ordinance which dealt, inter alia,
with money laundering. He held the post of Assistant Commissioner — Crime from 1994 to 1997
being responsible for all aspects of criminal investigation in Hong Kong.


                                           — 139 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

     On his retirement he was appointed as Consultant to the Hong Kong Police from 1997 to
1999 to advise on crime and security during the transition of Hong Kong to Chinese Sovereignty.

      Mr. Hodson was a founding member of OXFAM HONG KONG in 1988 and remains a member
of the Council of Management. He was appointed as the first Hon. Director of the Centre for
Criminology, University of Hong Kong from May 1999 to March 2004. In recognition of his
distinguished service to the University he was appointed as an Honorary Fellow for life in the
Centre for Criminology. He was appointed as a Visiting Professor at the Chinese People’s Public
Security University, Beijing in March 2001.

     In 1976 he received a “Special Award of Honour” for his outstanding contribution to narcotic
enforcement by the International Narcotic Enforcement Officer’s Association. He was honoured
by HM The Queen in 1985 for Meritorious Service and in 1995 for Distinguished Service.

      Mr. Tian Toh Seng, aged 51, is the chief operating officer of the Company and is
responsible for overseeing our operations. Mr. Tian joined NRCL as the Vice President, Treasury
in 1995 and was appointed as chief operating officer of the Group in 2002. Mr. Tian is also a
director of NagaCorp (HK), NRCL and Neptune Orient. Before joining the Group, Mr. Tian had
been employed by Resorts World Bhd for 13 years and held various positions during his term with
that company. Resorts World Bhd is a member of the Genting Group in Malaysia which owns and
operates the Genting Highlands Resort and Casino. Mr. Tian has more than 20 years of experience
in the gaming industry.

      Mr. Lee Wing Fatt, aged 41, joined the Group in February 2002 as Vice President, Corporate
Affairs and was appointed as chief financial officer of the Group in June 2002, and continues in
this role as at the Latest Practicable Date. Mr. Lee is responsible for overseeing the financial
performance and commercial affairs of the Company. Mr. Lee was a member of the team which
prepared Ariston’s tender for the Sihanoukville Development in 1994. Mr. Lee is a director of
NagaCorp (HK), Ariston, Ariston Cambodia and Neptune Orient, and was a director of NRCL until
September 2004. Prior to joining the Group in 2002, Mr. Lee was employed by FACB Resorts
Berhad and held the position of General Manager, Finance, and before that, held the position of
Manager, Finance, in Resorts World Bhd, a member of the Genting Group in Malaysia. Prior to
joining the Resorts World Bhd in 1991, Mr. Lee was an assistant manager, audit, at Price
WaterhouseCoopers in Kuala Lumpur. Mr. Lee is a member of the Malaysian Institute of Certified
Public Accountants.

     Mr. Lew Shiong Loon, aged 37, is an executive Director and the head of the AML
Sub-Committee of the Company. Mr. Lew joined the Group in 1993 as the head of business
research and development and a member of the chief executive office’s secretariat during the
establishment of the Group during 1994 to 1996, and coordinated the team which prepared
Ariston’s tender for the Sihanoukville Development in 1994. Mr. Lew left the Group in 1996 and
rejoined it as executive assistant to the chief executive officer of the Company in January 2004.
Mr. Lew has also been a director of NagaCorp (HK) and NRCL since September 2004. He has been
involved in the development and implementation of AML strategies and policies within the
Company, including liaison with governmental bodies such as the MOI and the Cambodian
Central Bank. Mr. Lew is also currently the head of corporate strategies and research unit of


                                           — 140 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

Petaling Tin Berhad. Prior to joining the Group, he had worked for Accenture Consulting (then
Andersen Consulting, Arthur Andersen Worldwide) and also for Kumpulan Emas Berhad and
Systematic Education Group International Berhad, both of which are listed companies on the
main board of the Malaysian Exchange in various managerial positions. Mr. Lew is a member of
the Association of Certified Anti-Money Laundering Specialists (the “ACAMS”), a member of the
ACAMS education task force and has contributed articles to publications involving AML matters.
Mr. Lew is a certified financial planner and a member of the Financial Planning Association of
Malaysia. He graduated from the University of Malaya with a degree in Economics and holds a
master of business administration from the Heriot-Watt University in the United Kingdom.
Currently, he is also a candidate for the Chartered Financial Analyst Course and PhD (Capital
Markets) Programme with the University of Nottingham in the United Kingdom.


     Ms. Monica Lam Yi Lin, aged 46, joined the Group in October 1995 and is responsible for
supervising the company secretarial and other administrative matters of our operations in Hong
Kong. Prior to joining the Group, Ms. Lam was a company secretary in a Canadian solicitors firm
from July 94 to October 95, and prior to that was a company secretarial assistant in an
architectural firm for nearly three years. Ms. Lam is an Associate of The Hong Kong Institute of
Company Secretaries and an Associate of The Institute of Chartered Secretaries and
Administrators.


     Mr. John Pius Shuman Chong, aged 45, joined the Company as an executive Director in
February 2005 and is responsible for our Company’s overall business development. Mr. Chong is
also a director of NRCL. He also oversees corporate development and investor relations for
Petaling Tin Berhad, a company listed on the Malaysian Exchange, with interests in property
development and investment as the director of corporate development.


     Prior to that, Mr. Chong was the managing director of M4N, Pte. Limited which specialises
in mergers and acquisitions and had its principal office in Los Angeles, United States of America.
He was employed by Arthur Andersen & Co from 1998 to 2000 and held the position of a senior
manager, and before that, he held the position of senior manager in Colliers Seeley International
from 1993 to 1997. He also worked for Merrill Lynch, Inc as an investment consultant in the
property investment division from 1990 to 1992, and for MCI, Inc. as a marketing manager in the
technology and marketing division from 1987 to 1989.


     Mr. Chong graduated from the University of Southern California with a bachelor of Science,
Electrical Engineering in 1986. He received the Edge Financial Journal (South East Asia) Year
2000 Top 50 Entrepreneur Award. Mr. Chong is a member of the U.S.-Asia Chamber of Commerce
and the Rotary Club of Kuala Lumpur.


Independent non-executive Directors


     Mr. Timothy Patrick McNally, age 58, joined the Company as the Chairman of the Board
and an independent non-executive Director in February 2005. From April 1999 until October
2005, Mr. McNally was the Executive Director of Security and Corporate Legal Services for the
Hong Kong Jockey Club (“Club”). In this capacity, Mr. McNally has been a member of the


                                           — 141 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

executive Board of Management of the Club. Mr. McNally’s responsibilities include physical
security matters; information security; internal investigations; racing licensing matters;
membership vetting; corporate governance matters; liaison with law enforcement and legal
services for the Club. He is currently an international security consultant.


     Prior to his involvement with the Club, Mr. McNally was a special agent of the Federal
Bureau of Investigation (“FBI”) for 24 years (1975-99). Mr. McNally’s career focused on the
investigation and prosecution of serious crime, particularly organised crime, drug trafficking,
corruption and fraud matters. He also was assigned for two years as a legislative counsel by the
FBI to handle issues arising with the US Congress on budgetary and oversight matters. He
subsequently held several senior positions within the FBI including heading the organised crime
and drug investigative programs in the Miami, Florida office from 1984 to 1991. He served as
Deputy Director of the National Drug Intelligence Center 1992-93; subsequently headed up the
Criminal Division of the Washington DC field office; served as the Agent in charge of the
Baltimore, Maryland office (1994-96); and concluded his career with the FBI as the head of the
FBI’s second largest field division in Los Angeles, California.


     Mr. McNally is a member of the International Security Management Association (ISMA); the
National Executive Institute (NEI); and the Society of Former Special Agents of the FBI. He also
participates as a member of the American Chamber of Commerce in Hong Kong. He is a graduate
of the University of Wisconsin-Eau Claire, receiving a Bachelor’s degree in Political Science in
1969. He was also granted a Juris Doctorate degree from Marquette University Law School in
1973. Mr. McNally was admitted to the State Bar of Wisconsin in June 1973.


     Mr. McNally currently runs a security consultancy and investigation business in California.
He was a senior adviser to Hill & Associates from October 2005 until 11th September, 2006. In this
role, he developed clients in the United States and attended conferences there, and had no
involvement in the preparation by Hill & Associates of the reports for the Company. Please refer
to the section headed “Business — Independent reviews by Hill and Associates” in this
prospectus for further details.


     Tun Hamid, aged 77, joined the Company as an independent non-executive Director on
18th August, 2003. Tun Hamid has been a member of the Malaysian judiciary for more than 30
years. He held the office of Lord President of the Supreme Court and was the head of the judiciary
branch of Malaysia from 1988 to September 1994. Prior to his appointment as Lord President of
the Supreme Court, he held the appointments of Chief Justice of the Federal Court of Malaysia
from 1984 to 1988 and Justice of the Federal Court from 1980 to 1984 and was a judge of the High
Court of Malaysia from 1968 to 1980. Before his appointment as a High Court judge, Tun Hamid
also served in the Judicial and Legal service of the Government of Malaysia as Magistrate,
Sessions Court President, Deputy Public Prosecutor, State Legal Advisor, Chief Registrar and
Parliamentary Draftsman from 1956 to 1968. Tun Hamid graduated as a Barrister-at-Law in
England and was called to the English Bar in November 1955. In April 1997, he was conferred the
Honorary Degree of Doctor of Laws by the Oklahoma City University, United State of America.


                                           — 142 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

In recognition of his services to Malaysia, Tun Hamid has been conferred with various titles and
awards, including Dato Paduka Mahkota Perak (which carries the title “Dato”), Panglima Setia
Mahkota (which carries the title “Tan Sri”), Panglima Mangku Negara (which carries the title “Tan
Sri”) and Seri Setia Mahkota (which carries the title “Tun”).

     Tun Hamid is currently the Chairman of Olympia Industries Berhad and Lien Hoe
Corporation Berhad, each of which are companies listed on the Malaysian Exchange. Tun Hamid
has been involved in various professional and charitable organisations. He is currently the
appointed Chancellor of Darjah Yang Mulia Setia Mahkota Malaysia, Honorary President of the
Spastic Children’s Association of Selangor and the Federal Territory, President of the Malaysian
Leprosy Association and Special Advisor to the Malaysian Red Crescent Society. Since August
2003, Tun Hamid has been an independent non-executive director of Insightner Limited, a
company incorporated in the British Virgin Islands which has at no time undertaken any trading,
investment or other business activities. At the time of his appointment, Insightner Limited was the
protector of the Cambodian Development Fund, a fund beneficially owned by Tan Sri Dr Chen.
This fund was established at the request of the manager for the proposed Singapore IPO to
procure the reinvestment of some of the dividends paid by the Company back into Cambodia for
community aid programs, infrastructure development and other such projects. The manager to
the Singapore IPO required that an independent non-executive director of the Company be
appointed to the board of Insightner Limited. When the Singapore IPO was discontinued the
fund, and consequently the protector of the fund, Insightner Limited, had no further purpose. Tan
Sri Dr Chen is also a director of and the sole shareholder in Insightner Limited and, in his capacity
as shareholder, has expressed an intention to liquidate the company by way of a solvent
voluntary winding-up. In regard to Tun Hamid’s position as an independent non-executive
director of the Company, no Director of the Company has any concern that Tun Hamid’s role as
an independent non-executive director of Insightner Limited compromises his independence.

      Ms. Wong Choi Kay, aged 39, joined the Company as the chairperson of the audit
committee and an independent non-executive Director in February 2005. Ms. Wong has been a
consultant of the Great Canadian Gaming Corporation functioning in the lead role as chief audit
executive in the business risk management and internal audit department. She was the airport
improvement fee internal control and revenue administrator and project specialist of the
Vancouver International Airport Authority from 2001 to June 2004. She also provided external
consultancy services to KPMG Financial Advisory Services and KPMG Investigation and Security
Inc., both of which are part of the Canadian member firm of KPMG International, from 1998 to
2004. She has also worked for the Workers Compensation Board of British Columbia and the
Integrated Proceeds of Crime Section of the Royal Canadian Mounted Police in Vancouver, British
Columbia as a forensic analyst and accountant. Ms. Wong is currently a consultant overseeing
corporate governance work with casinos and other intensive cash-related enterprises usually
functioning in the lead role as chief audit executive in the business risk management and internal
audit department.


    Ms. Wong is a qualified expert witness in financial crimes and money laundering in the
Supreme Court of British Columbia, a Certified Fraud Examiner and a Gaming Auditor. She is also
a Certified Instructor in financial and internal control profiling, financial crimes and
methodologies, and culture profiling for undercover or source handling. She has consulted with


                                             — 143 —
                DIRECTORS, SENIOR MANAGEMENT AND STAFF

the Office of the Solicitor General of Canada to amend the Proceeds of Crime (Money
Laundering) Act as well as assisted with the creation of a suspicious transaction reporting and
cross-border currency reporting regime. Ms. Wong completed her graduate admission programme
in advanced accounting in the University of British Columbia and British Columbia Institute of
Technology in 1992. She graduated from the Queen’s University in 1988 with a degree in political
science and information technology and completed an associate programme certificate from Kent
University in law studies in 1990. She is a Chartered Accountant of the Institute of Chartered
Accountants of British Columbia.


     Mr. Zhou Lian Ji, aged 73, joined the Company as an independent non-executive Director
on 18th August, 2003. Mr. Zhou has been active in the Chinese tourism industry since the 1980s
and has previously served as the Director of Reception Office of Guangzhou Municipal
Government of PRC, General Manager of Guangzhou Tour Company, General Manager and
President of Guangdong (HK) Tours Co Ltd. Prior to 1997, Mr. Zhou was the Deputy General
Manager of Guangdong Enterprises Holdings Ltd and a Director of Guangdong Investment
Limited, which is listed on the main board of the Stock Exchange. Mr. Zhou also served as the
Chief Secretary of the Preparatory Committee of the Hong Kong tourist industry to celebrate the
return of Hong Kong to PRC in 1997. He was the Director of Travel Industry Council and
Convenor of its Fellowship Committee. Currently Mr. Zhou is the Vice President of the Hong
Kong Association of China Travel Organisers Ltd, President and Director of GZTC International
Tours Co Ltd, Vice Chairman of Association Guangzhou CPPCC (Chinese People’s Political
Consultative Conference) Liaison Committee. President of the Association of Membership of HK
Tours and Vice President of Ling Nan Culture Research Institute. Mr. Zhou graduated with a
bachelor of economics degree from Hubei University in the PRC.


SENIOR MANAGEMENT                                                                                  App 1A(41)(1)
                                                                                                   (5)


      Mr. Tan Theam Loo, aged 52, was appointed in 2002 as our General Manager, Hotel
Operations. Mr. Tan is responsible for overseeing the construction of our new hotel in
NagaWorld, recruiting a suitably experienced management team and finalising the business plan
for the Group’s hotel operations. Once our hotel is operational, Mr. Tan will be responsible for
supervising its day to day operations. As a senior member of the management team, Mr. Tan
contributes to the overall strategic direction and business development of the Group. Prior to
joining the Group in 2002, Mr. Tan was the Deputy General Manager of Destination East Sdn Bhd,
an international destination management company specialising in in-bound travel and tours,
meetings, conferences and special events. From 1990 to 1999, Mr. Tan held positions in various
hotels, including members of the Concorde group of hotels in Malaysia, Singapore and Myanmar
and members of the Impiana chain of hotels in Malaysia. Mr. Tan has been involved in the hotel
industry for over 23 years. Mr. Tan holds a Diploma in Business Management from the Malaysia
Institute of Management.


     Mr. Paul Ng Wee Sin, aged 45, is our Vice President of Casino Operations and is responsible
for supervising all aspects of casino operations. Mr. Ng has been with the Group since he joined
NRCL in 1995. Prior to joining the Group in 1995, Mr. Ng was a Senior Commodities Trader with
Pasternak & Baum (M) Sdn Bhd from 1981.


                                          — 144 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

     Mr. Phang Chun Hua, aged 41, is our Vice President, Finance and Treasury, and is
responsible for supervising our finance and treasury operations. Mr. Phang is an Associate
Member of the Malaysian Association of Chartered Secretaries and Administrators. Prior to joining
the Group in 1995, Mr. Phang was the Assistant Manager with Anika Insurance Brokers Berhad.
From 1992 to 1994, Mr. Phang was an Executive Assistant, Investment, with Overseas Assurance
Corporation, and prior to that, was the Finance Executive of Kelantan Transport Sdn Bhd. Mr.
Phang was a member of the pioneer team which set up our casino operations and formulated the
procedures and internal controls of NRCL.


     Mr. Lui Kim Wah, aged 54, rejoined the Group in May 2002 and is responsible for our
Surveillance Department and the overall security of our casino operations. He was formerly a
Casino Shift Manager with NRCL from 1995 to 1997. Mr. Lui has over 10 years experience in the
gaming industry and has worked with various casinos including the Empress Cruise Lines Sdn
Bhd, Legend International Resorts, Subic Bay, Philippines and Berjaya Cruise Sdn Bhd.                  App1A(42)



     Mr. Michael Thach Nen, aged 43, joined the Group in February 1995 and is responsible for
our Casino Security Department and Public Affairs Department, which is the Group’s liaison with
the Cambodian Government and other regulatory bodies. Prior to joining the Group, Mr. Nen was
Regional Security Advisor at the US Embassy in Phnom Penh from January 1994 to February 1995
and prior to that was in law enforcement in the United States for five years from mid 1989 to 1993.


     Mr. Chong Chee Keong, Alan, aged 49, joined the Company as a Vice President in 2004
and is responsible for overseeing the Group’s promotional and customer service areas. Mr. Chong
has 23 years of experience in the travel industry. He is also the executive director of First Travel
& Tours (M) Sdn Bhd. He also held the position of managing director of Martravel Sdn Bhd, a
travel agency in Malaysia, from 1995 to 2000.


     Mr. Ling Doh Seong, Richard, aged 31, is the financial controller of the Group and is
responsible for assisting the chief financial officer on group financial matters. He is also the
deputy chairman of the AML Sub-Committee and assists the Company in dealing with AML. Mr.
Ling was the internal audit manager of the Company from February 2003 to June 2004. Before
joining the Company, he worked for KPMG Cambodia from May 2000 and he was an audit
supervisor from January 2002 to January 2003 and an audit senior with a Malaysian auditing firm,
Leslie Yap & Co from March 1997 to April 2000.


     Mr. Ling obtained a bachelor degree in commerce (accounting) from the University of
Southern Queensland. He is a professional member of the ACAMS, a Chartered Accountant of the
Malaysian Institute of Accountants, a Certified Practising Accountant of CPA Australia and a
Certified Public Accountant of Hong Kong Institute of Certified Public Accountants.


COMPANY SECRETARY                                                                                      App 1A(42)



     Ms. Gloria Sau-kuen Ma, aged 47, joined the Company as the Company Secretary on 30th
January, 2005. She has been handling the secretarial work for our Hong Kong incorporated
companies namely, NRCL and NagaCorp (HK).


                                            — 145 —
                      DIRECTORS, SENIOR MANAGEMENT AND STAFF

     She has over 20 years of experience in corporate secretarial work. She has worked for KCS
Limited, a corporate secretarial and administrative service provider, as a senior manager since
June 2004 and remains so at the Latest Practicable Date.


     Ms. Ma holds a master degree in Business Administration from the University of Strathclyde.
She is a Fellow member of the Hong Kong Institute of Chartered Secretaries and the Institute of
Chartered Secretaries and Administrators.


QUALIFIED ACCOUNTANT                                                                                                             A1a(42)



     Mr. Ling Doh Seong, Richard, aged 31 is the qualified accountant of the Group and his
details are set forth in the paragraph headed “Senior management” above.


MANAGEMENT STRUCTURE


     Our management structure is as follows:


The Group


                                                    Board of Directors




                                                                                                               Board AML
                                       Audit Committee                        Nomination Committee
                                                                                                           Oversight Committee


    Executive Committee                 Internal Audit               Remuneration
                                                                                                           AML Sub-Committee**
          (EXCO)                         Department                   Committee



                                              Chief Executive Officer (CEO)



                   General Manager               Chief Operating Officer         Chief Financial Officer
                  (Hotel & Property)                 - Casino (COO)                      (CFO)


              •    Hotel Operations*              • Casino Tables                • Legal &
              •    Sales & Marketing*               Operations                     Compliance/
              •    Finance*                       • Surveillance                   Company
              •    Food & Beverage                • VIP Services                   Secretary
              •    Retail & Shopping*             • Finance                      • Group Finance/
              •    Theme Spa &                    • Treasury                       Treasury
                   Karaoke*                       • Security                     • Human Resources
                                                                                 • Public Affairs




                                                             — 146 —
                      DIRECTORS, SENIOR MANAGEMENT AND STAFF

Note:


*       The departments will be established after the opening of the hotel wing of NagaWorld expected in the second half
        of 2006.


**      Refer to Appendix VI to this prospectus for details of the organisational structure of this management committee.


Audit Committee

     The Board established an audit committee on 16th March, 2005 with written terms of
reference in compliance with the Listing Rules. The primary duties of the audit committee include
reviewing and supervising our financial reporting process and internal control system and
advising our Board on audit matters.

       The audit committee has three members, namely Wong Choi Kay, Tun Hamid and Zhou Lian
Ji, all being independent non-executive Directors. Ms. Wong Choi Kay is the chairperson of the
audit committee.

Remuneration Committee

     The Board established a remuneration committee on 16th March, 2005 with written terms of
reference. The functions of this committee include formulating and making recommendations to
our Board on our policy and structure for all remuneration of our Directors and senior
management.

    The members of the remuneration committee are Timothy McNally (Chairman), Tun Hamid,                                    App1A(33)(4)
                                                                                                                            (a), (b), (c)
Zhou Lian Ji, Tan Sri Dr Chen and Tian Toh Seng.

Nomination Committee

     The Board’s nomination committee was formed on 16th March, 2005 with written terms of
reference. A primary function of the nomination committee is, among others, to review the
structure, size and composition of the Board.

    The members of the nomination committee are Timothy McNally (Chairman), Tun Hamid,
Zhou Lian Ji, Tan Sri Dr Chen and Tian Toh Seng.

AML Oversight Committee

     The AML Oversight Committee was formed by the Board on 16th March, 2005 to enhance the
Group’s AML strategy and development programme, ensure quality assurance, and perform an
oversight function over the AML Sub-Committee’s roles and responsibilities. (Please refer to
Appendix VI in this prospectus for further details.)

     The members of the AML Oversight Committee are Mr. David Martin Hodson (Chairman),
Tan Sri Dr Chen, Timothy McNally, Tun Hamid, Wong Choi Kay, Tian Toh Seng, Lee Wing Fatt,
and Lew Shiong Loon.


                                                       — 147 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

AML Sub-Committee


     On 1st April, 2004, we formalised the AML Sub-Committee, known as the AML Co-ordination
Unit since October 2003, a management committee comprising senior representatives of key
operational areas of the casino, including treasury, surveillance and gaming operations. The AML
Sub-Committee’s role is to monitor the Group’s AML activities on a day-to-day basis, develop
additional AML measures at an operational level as necessary and work with the relevant
authorities in Cambodia, such as the MOI and the National Bank of Cambodia, on the prevention
of money laundering. All AML Sub-Committee members are trained in AML prevention and are
members of the Association of Certified Anti-Money Laundering Specialists (“ACAMS”). ACAMS is
a US based association formed on 7th November, 2001 to advance the professional knowledge,
skills and experience of those dedicated to the detection and prevention of international money
laundering, and to promote the development and implementation of sound AML policies and
procedures.


     The AML Sub-Committee reports to the AML Oversight Committee, a committee of the Board.


Executive committee


     The Board established an executive committee the primary duties of which include, among
other things, the supervising and approving the applications for credit lines and facilities by STG
Operators.


     The executive committee comprises Tan Sri Dr Chen, Mr. Lee Wing Fatt and Mr. Tian Toh
Seng, all being executive Directors.


Internal Audit


    The Internal Audit Department is responsible for auditing our operations as well as
formulating, implementing and monitoring internal controls, overseeing risk management, and
ensuring compliance with regulatory requirements. The Internal Audit Department reports to the
Audit Committee.


External Audit


     After the listing, we will engage an independent auditor to review and/or audit our internal
controls with a focus on AML, on a semi-annual basis, and to have its findings disclosed in our
annual reports. We undertake to act upon the recommendations made by the independent auditor
where appropriate.




                                            — 148 —
                   DIRECTORS, SENIOR MANAGEMENT AND STAFF

Group Finance and Support Services


     The various departments under our Chief Financial Officer are as follows:


                                       Chief Financial Officer



                                   Legal &
                  Group
                                 Compliance/              Human
                 Finance/                                                Public Affairs
                                  Company                Resources
                 Treasury
                                  Secretary


Group Finance/Treasury


     The Group Finance and Treasury Department is responsible for co-ordinating finance for the
Group as a whole and works closely with the Finance Department, the Casino Operations and the
Accounting Department and Hotel Operations Department. The Group Finance Department will
collate the various financial information on a Group level and is also responsible for the Group’s
treasury function.


Legal and Compliance/Company Secretary


    The Legal and Compliance Department is responsible for monitoring legal matters and
ensuring that we comply with the various legal, statutory and regulatory requirements to which
we are subject. This role also incorporates the company secretarial function for the Group.


Human Resources


    The Human Resources Department is responsible for employee recruitment, benefits
administration and training. The Department also works in conjunction with our various
department heads in respect of employee matters.


Public Affairs


      The Public Affairs Department is responsible for our public affairs matters and acts as our
liaison with the Cambodian Government and other authorities.




                                            — 149 —
                  DIRECTORS, SENIOR MANAGEMENT AND STAFF

Casino operating departments

     The various departments responsible for our casino operations and their respective roles
and functions are as follows:


                                   Chief Operating Officer (Casino)



                                   Casino Tables                                   Marketing &
      Finance        Treasury                         Surveillance     Security
                                    Operations                                     VIP Services
     Department     Department                        Department      Department
                                    Department                                     Department

     An important part of our casino operations is the detection and prevention of any potential
money laundering activities in our casino. We have put in place firm guidelines and guidelines
in the AML manual, which all our staff are required to follow.

Finance Department

     The Finance Department is responsible for the financial management, accounting and other
management activities in the casino as well as to monitor the general performance of the casino
and highlight any unusual trends in management and cost control. In addition, the Finance
Department monitors and controls the funds deposited by ST Groups and liaises with the
Treasury Department to coordinate the amount of NN Chips to be issued to an STG upon their
arrival at the casino. The Finance Department also reconciles the daily movement of gaming
chips and funds as a check and balance to the Treasury Department to ensure that the funds of
the casino are all accounted for. The Finance Department also monitors the modes of payments
to STG Operators, and particularly payments in cash. Upon check out or settlement of a trip, only
winnings to STG Operators may be paid in the form of cash, cheque or telegraph transfer and the
modes of other payments will depend on the modes of check-in deposits made by the STG
Operator. (Please refer to the “Glossary” section to this prospectus for further details.) The
Finance Department works closely with the Group Finance Department and also functionally
reports to the chief financial officer.

Treasury Department

      The Treasury Department is responsible for the control, monitoring and recording of
gambling chips and the movement of funds in the casino on a 24-hour basis. The Treasury
Department reconciles chip and fund movements throughout the day and at the end of each day
determines our performance for the day. In addition, the Treasury Department is also responsible
for monitoring Rollings of the check-in amounts deposited by individual ST Groups in order to
determine the entitlement of these ST Groups to the various incentives offered by the casino as
well as the commission payable to STG Operators. The Treasury Department also monitors buy-in
amounts purchased by customers on the public floor in accordance with our AML manual. Our
staff at the cage are trained to differentiate and recognise counterfeit bank notes with the help
of specialised devices. Customers are requested to show their identities for purchasing buy-in
amounts of US$3,000 or above and are requested to line up in a special lane for buy-in amounts
of US$10,000 or above.


                                            — 150 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

Casino Tables Operations Department


     The Casino Tables Operations Department oversees the operations at the various gaming
tables as well as the gaming machine stations on a 24-hour basis. The Casino Tables Operations
Department’s responsibilities include supervision of the croupiers and other staff as well as
ensuring that our various internal rules and procedures are complied with. Detection and
prevention of fraud, cheating and other malpractices in the casino also come within the purview
of the Casino Tables Operations Department. As an example, Casino Tables Operations
Department will carry out rating of the customers who purchased buy-in amounts in excess of
US$10,000.


Surveillance Department


     The Surveillance Department monitors all activities in the casino on a 24-hour basis through
the use of a network of good quality closed circuit television cameras which are strategically
placed throughout the casino to ensure that the whole gaming floor is covered. The Surveillance
Department works with other departments and plays a key role in the monitoring of suspicious
transactions during visits of customers. As an example, the Surveillance Department will monitor
customers’ gaming activities through closed circuit television cameras in accordance with
requests from the Treasury or Casino Tables Operations Departments. In cases of suspicious
transactions, the Surveillance Department will keep and archive the necessary video images. The
Surveillance Department assists and supports the Treasury Department, Casino Operations
Department and Security Department in their various functions.


Security Department


    The Security Department is charged with the overall security of the casino on a 24-hour basis
and works closely with the Casino Operations Department in this regard.


     Other functions of the Security Department include escorting funds and gaming chips within
the casino as well as outside the casino, for example to the bank, and assisting MOI Immigration
Officers in ensuring that only foreign passport holders are allowed to enter and gamble in the
casino. In addition, the Security Department would from time to time also accompany VIP visitors
during their visit, if requested. The Security Department also assists the AML Sub-Committee in
all matters relating to liaison with officials of MOI or other government bodies in the monitoring
of suspicious transactions.


Marketing and VIP Services Department


     The Marketing and VIP Services Department is responsible for coordinating visits by ST
Groups with our STG Operators. The Department is also responsible for attending to VIP visitors.
In the future, the Marketing and VIP Services Department will also work together with the Sales
and Marketing Department of the NagaWorld hotel with a view to marketing NagaWorld as an
integrated leisure and entertainment centre.


                                           — 151 —
                   DIRECTORS, SENIOR MANAGEMENT AND STAFF

Hotel and Property Operations

     After the opening of the hotel wing of NagaWorld, new departments will be formed in
respect of hotel operations and it is anticipated that our hotel operations management structure
will be as follows:


                                          General Manager
                                         (Hotel & Property)



                                                                               Themed
             Hotel        Sales &                     Food &      Retail &
                                       Finance                                  Spa &
           Operations    Marketing                   Beverage    Shopping
                                                                               Karaoke


Hotel Operations

     This department will incorporate front office, reservations, housekeeping, telephone,
laundry, security and engineering/maintenance and will have overall responsibility for hotel
guest room services.

Sales and Marketing

      This department will be responsible for the pre-opening launch and ongoing marketing
strategy of our hotel and other non-casino facilities.

Finance

     This department will be responsible for the accounting function for the hotel and other
non-casino facilities. The specific tasks of this department will include general finance, accounts
payable, accounts receivable, income audit, cashiering, purchasing, cost control, receiving,
stores and payroll.

Food and Beverage

     This department will be responsible for the set up, operational planning and quality of all
the food and beverage outlets including those at the casino.

Retail Shopping and Arcade

     This department will plan and organise the retail and shopping arcade including developing
a retail merchandise structure to ensure the needs of our visitors are addressed.

Themed Spa and Karaoke

     This department will be responsible for the operations of our themed spa centre and
karaoke centre.


                                            — 152 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT                                                       A1a(33)(2)(3)



     Each of our executive Directors has entered into a service contract with the Company which
may be terminated by either party to the service contract giving to the other in the case of Tan
Sri Dr Chen, Mr. Tian Toh Seng and Mr. Lee Wing Fatt, not less than three months’ prior notice
in writing and in the case of the other executive Directors, not less than one month’s prior notice
in writing.

     Tan Sri Dr Chen is entitled to an annual performance bonus based on the Group’s
consolidated profit before tax and before the annual performance bonus (“PBT”) as reported in
the Company’s consolidated audited financial statements which shall be paid within one month
of the approval of the consolidated financial statements. The performance bonus is calculated in
accordance with the following formula:

     Less than US$30 million PBT               — US$nil performance bonus
     Between US$30 million and                 — performance bonus of 2% of PBT
       US$40 million PBT
     More than US$40 million but up            — performance bonus of US$0.8 million plus
       to and including US$50 million            3% of additional portion of PBT from
                                                 US$40,000,001 to US$50,000,000
     More than US$50 million                   — performance bonus of US$1.1 million plus
                                                 5% of additional part of PBT from
                                                 US$50,000,001 onwards


     Tan Sri Dr Chen’s employment contract expires on 1th April, 2007.

     Particulars of the terms of the above service contracts are set forth in the paragraph headed
“Further information about Directors, Management and Staff — Particulars of Directors’ service
contracts” in Appendix IX to this prospectus.

EMPLOYEES                                                                                             A1a(28)(7)



    As at the Latest Practicable Date, we had 935 full-time employees. The breakdown of our
employees by functions is as follows:

                                              Cambodia      Hong Kong       Malaysia         Total

     Accounting and finance                           30             Nil          62            36
     Administration and maintenance                  173              1           Nil          174
     Human resources                                   8             Nil          Nil            8
     Casino operation                                747             Nil          Nil          747
     Hotel operation                                   4             Nil          Nil            4


     Total                                           928               1            6          935




                                            — 153 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

     All employees are employed under employment contracts which specify, among other
things, each employee’s responsibilities, remuneration and grounds for termination of
employment. Our remuneration policy is based on the expertise, capability, performance and
responsibility of our employees.


     We grant bonuses to employees to reward their contribution to our business on a                A1a(28)(7)

discretionary basis. We provide various forms of training for our employees. Ongoing training is
given to our casino operations personnel and all relevant staff receive training on AML policies
and procedures. We also arrange in-house training and external development programmes
confirmed on new procedures or technology that is introduced to specific departments. New
employees are provided with training to ensure that they are equipped with the necessary skills
to perform their duties.


    Employees (including executive Directors) are entitled to participate in the Share Option
Scheme at the discretion of the Directors. Please refer to “Share Option Scheme” in Appendix IV
to this prospectus for details.


Relationship with employees


    In 1998, some of our staff went on strike for a few days and our casino operations which
were then being carried out in the barge anchored at the banks of Bassac River in Phnom Penh,
Cambodia were interrupted briefly. The strike was initiated by certain staff and a labour union
for the purpose of seeking better employment terms and after negotiations between the
representatives of the relevant labour union and our management members, a settlement in
respect of an increase in remuneration was reached. The strike therefore ended and our casino
operations resumed as normal.


    For the three business days ended 9th December, 2001, around 300 of our staff including
croupiers and cashiers, went on strike and ceased to discharge their respective duties and as a
result of which, our casino operations, which were then carried out in the barge moored on the
bank of the Bassac River in Phnom Penh, Cambodia, were interrupted temporarily. After
negotiations between representatives of the relevant labour union and our management,
settlement in respect of pay rises, bonuses and overtime payments were reached and the strike
ended and our casino operations resumed to normal thereafter.


     Both of the above incidents occurred prior to the Track Record Period.


     We have not experienced any significant problems with our employees or disruption to our
operations due to labour disputes nor experienced any difficulties in the recruitment and
retention of suitable employees for the Track Record Period. Our Directors believe that the Group
has a good working relationship with its employees.




                                           — 154 —
                 DIRECTORS, SENIOR MANAGEMENT AND STAFF

COMPLIANCE ADVISOR


     The Company has appointed Anglo Chinese as its compliance advisor pursuant to Rule
3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the compliance advisor will
advise the Company on the following:


     (1)   before the publication of any regulatory announcement, circular or financial report;


     (2)   where a transaction, which might be a notifiable or connected transaction, is
           contemplated including share issues and share repurchases;


     (3)   where the Company proposes to use the proceeds of the initial public offering in a
           manner different from that detailed in this prospectus or where the business activities,
           developments or results of the Company deviate from any forecast, estimate, or other
           information in this prospectus; and


     (4)   where the Stock Exchange makes enquiries with the Company regarding unusual
           movements in the price or trading volume of the securities of the Company or any other
           matters under 13.10 of the Listing Rules.


     Further, the compliance advisor will also provide, among others, the following services to
the Company:


     (a)   if required by the Stock Exchange, deal with the Stock Exchange in respect of any or
           all matters listed in paragraphs (1) to (4) above;


     (b)   in relation to an application by the Company for a waiver from any of the requirements
           in Chapter 14A of the Listing Rules, advise the Company on its obligations and in
           particular the requirement to appoint an independent financial advisor; and


     (c)   assess the understanding of all new appointees to the Board regarding the nature of
           their responsibilities and fiduciary duties as a Director, and, to the extent the
           compliance advisor forms an opinion that the new appointees’ understanding is
           inadequate, discuss the inadequacies with the Board and make recommendations to
           the Board regarding appropriate remedial steps such as training.


     The term of the appointment shall commence on the Listing Date and end on the date on
which the Company distributes its annual report in respect of its financial results for the first full
financial year commencing after the Listing Date.




                                             — 155 —
                                 SUBSTANTIAL SHAREHOLDERS

     So far as the Directors are aware, immediately following the completion of the Share Offer                           3rd Sch(30)
                                                                                                                          A1a(41)
and the Capitalisation Issue and taking no account of Shares which may be taken up under the
Share Option Scheme or upon the exercise of the Over-allotment Option, each of the following
persons will have an interest or short position in the Shares which would fall to be disclosed to
the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or who will be, directly or indirectly, interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at general meetings of any other
members of the Group:

                                                                                  Number of
                                                                                      Shares         Approximate
                                                                                  directly or       percentage of
                                                                                   indirectly        issued Share
     Name                     Capacity/Nature of Interest                                held              Capital
                                                                                     (Note 1)                             A1a(27)


     Tan Sri Dr Chen          Personal interest and interest                   1,391,967,104                   69.6%      A1a(24)
                              in a controlled corporation


     If the Over-allotment Option is exercised in full, the interests or short positions of the above
person will be as follows:

                                                                                  Number of
                                                                                      Shares         Approximate
                                                                                  directly or       percentage of
                                                                                   indirectly        Issued Share
     Name                     Capacity/Nature of Interest                                held              Capital

     Tan Sri Dr Chen          Personal interest and interest                   1,391,967,104                   67.1%
                              in a controlled corporation


     Notes:


     Tan Sri Dr Chen will be interested in 1,391,967,104 Shares of which 1,230,769,876 Shares will be registered in his
     name and the remaining 161,197,228 Shares will be registered in the name of and beneficially owned by CDC. The
     entire issued share capital of CDC is beneficially owned by Tan Sri Dr Chen and, under the SFO, Tan Sri Dr Chen
     is deemed to be interested in all the Shares held by CDC.




                                                    — 156 —
                             SUBSTANTIAL SHAREHOLDERS

     For details of the Directors’ interests in Shares immediately following completion of the
Share Offer and the Capitalisation Issue, please refer to the paragraph headed “Further
information about Directors, Management and Staff — Interests in the share capital of the
Company” in Appendix IX to this prospectus.


     Save   as disclosed herein, the Directors are not aware of any person who will, immediately
following   the Share Offer and the Capitalisation Issue, have an interest or a short position in
Shares or   underlying Shares which would fall to be disclosed to the Company and the Stock
Exchange    under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures
Ordinance, or be directly or in directly interested in 10 per cent. or more of the nominal value
of any class of share capital carrying rights to vote in all circumstances at general meetings of any
other members of the Group.




                                             — 157 —
                                                    SHARE CAPITAL

     The following is a description of the authorised and issued share capital of the Company in
issue and to be issued as fully paid or credited as fully paid immediately before and after the
completion of the Share Offer and the Capitalisation Issue:


Immediately following completion of the Share Offer and the Capitalisation Issue (but                                                A1a(23)(1)
                                                                                                                                     3rd Sch(2)
without taking into account the exercise of the Over-allotment Option)


Shares of US$0.0125 each

Authorised share capital                                                                                US$                 HK$

8,000,000,000            Shares                                                               100,000,000         780,000,000

Issued share capital

1,442,332,491            Shares in issue                                                       18,029,156         140,627,418

1,500,000,000            Shares in issue after the Capitalisation Issue                        18,750,000         146,250,000
  500,000,000            Shares to be issued pursuant to the Share Offer                        6,250,000          48,750,000
Total:
2,000,000,000            Shares                                                                25,000,000         195,000,000



Notes:


1.       Assumptions


         This table assumes that the Share Offer has become unconditional.


         It takes no account of any Shares which may be allotted and issued by the Company pursuant to the exercise of
any options which may be granted under the Share Option Scheme, the Over-allotment Option or under the general
mandates for the allotment and issue or repurchase of Shares granted to our Directors as described in notes 3 to 5 below.


2.       Ranking


         The Shares to be issued will rank pari passu in all respects with all Shares in issue, and will qualify for all dividends
and other distributions declared, made or paid on the Shares.


3.       Share Option Scheme


         We have adopted the Share Option Scheme which will come into effect after Listing. A summary of the main terms
of the Share Option Scheme is set out in the section headed “Share Option Scheme” in Appendix IV to this prospectus.




                                                           — 158 —
                                               SHARE CAPITAL

4.    General mandate to issue new Shares


      The Directors have been conditionally granted a general mandate to allot, issue and deal with Shares which will
come into effect after Listing.


      Further information on this general mandate is set out in the paragraph headed “Further information about the
Company — Resolutions of Shareholders” in Appendix IX to this prospectus.


5.    General mandate to repurchase Shares


      The Directors have been conditionally granted a general mandate to exercise all the powers of the Company to
repurchase Shares which will come into effect after Listing.


      Further information on this general mandate is set out in the paragraph headed “Further information about the
Company — Resolutions of Shareholders” in Appendix IX to this prospectus.




                                                     — 159 —
                               FINANCIAL INFORMATION

INDEBTEDNESS                                                                                         R11.07(3)
                                                                                                     3rd Sch(23)
                                                                                                     App1A(32)(1)(2)
                                                                                                     LR11.07
Borrowings                                                                                           3rd Sch(3)



    As at the close of business on 31st August, 2006, being the Latest Practicable Date for the
purpose of this indebtedness statement prior to the printing of this prospectus, the Group did not
have any outstanding borrowings or indebtedness in the nature of borrowings, including bank
overdrafts or loans, debt securities or similar indebtedness, or any mortgages or charges.

Contingent liabilities                                                                               A1a(32)(4)



     As at 31st May, 2006, there were contingent liabilities as specified in note C29 of the
Accountants’ Report set out in Appendix I to this prospectus. There were no changes in the
contingent liabilities during the three month period to 31st August, 2006.

Securities and guarantees

     As at 31st August, 2006, the Group had no pledged deposits or any outstanding corporate
guarantees.

Net current liabilities

     As at 31st August, 2006, the net current liabilities of the Group were US$12.5 million.

    Current assets were approximately US$10.3 million, which comprised trade receivables of
approximately US$6.6 million, other receivables, deposits and prepayments of approximately
US$3.2 million and cash at bank and in hand of approximately US$0.5 million.

     Current liabilities were approximately US$22.8 million, which comprised trade payables of
approximately US$2.9 million, other payables and accruals of approximately US$7.8 million,
deferred income of approximately US$0.6 million, unredeemed chips of approximately US$7.8
million, provisions of approximately US$2.1 million, current tax liabilities of approximately
US$1.5 million, and deposits of approximately US$0.1 million.

Disclaimer                                                                                           3rd Sch(24)3rd
                                                                                                     Sch(25)
                                                                                                     App1A(32)
                                                                                                     (1),(3)(4)
     Save as disclosed in this section and Appendix I to this prospectus, as at the close of
business on 31st August, 2006 the Group did not have any outstanding mortgages, charges,
debentures, loan capital, bank loans and overdrafts, debt securities, or other similar
indebtedness, guarantees or other material contingent liabilities.

DISCLOSURE REQUIREMENT UNDER RULES 13.11 TO 13.22 OF THE LISTING RULES

     Our Directors have confirmed that as at the Latest Practicable Date, they were not aware of
any circumstances which would give rise to a disclosure requirement under rules 13.11 to 13.22
of the Listing Rules.


                                           — 160 —
                                FINANCIAL INFORMATION

TRADING RECORD

Summary of audited results of the Group                                                             App1A(33)(1)
                                                                                                    3rd Sch (27)

      The table below summarises our consolidated audited financial results for each of the three
financial years ended 31st December, 2005 and for the five-month period ended 31st May, 2006,
and our consolidated unaudited financial results for the five-month period ended 31st May, 2005.
This summary should be read in conjunction with the Accountants’ Report set out in Appendix
I to this prospectus.

                                                                                Five months
                                       Year ended 31st December,              ended 31st May,
                                        2003      2004       2005              2005       2006
                                     US$’000    US$’000    US$’000           US$’000   US$’000
                                                                           (unaudited)

     Revenue (1)                       55,175       58,534       64,282       20,561      38,007
     Cost of sales                    (23,641)     (28,530)     (24,554)      (8,855)    (12,784)


     Gross profit                      31,534       30,004      39,728        11,706      25,223

     Other operating income                27           44           53           18          15
     Administrative expenses           (4,584)      (4,394)      (5,702)      (2,935)     (2,596)
     Amortisation of casino
       licence premium                   (150)        (150)      (1,282)         (62)     (1,477)
     Other operating expenses          (5,955)      (6,647)      (6,504)      (2,804)     (3,125)


     Profit from operations            20,872       18,857      26,293         5,923      18,040
     Costs relating to postponed
       initial public offering         (4,065)          —            —            —           —
     Finance costs                        (15)          (1)          —            —           —


     Profit before taxation            16,792       18,856      26,293         5,923      18,040
     Income tax                          (723)      (1,202)     (1,352)         (563)       (634)


     Profit attributable to
       equity Shareholders
       of the Company                  16,069       17,654      24,941         5,360      17,406


     Dividends declared                    —        32,000      20,737            —       18,000


     Basic earnings per share
       (US cents) (2)                    1.30         1.42         2.01         0.43        1.21



                                           — 161 —
                                        FINANCIAL INFORMATION

     Notes:


     (1)      Revenue comprises of net house takings arising from casino operations and income from the provision of
              food and beverages and video arcade games.

                                                                             Year ended                  Five months
                                                                         31st December,                 ended 31st May,
                                                                  2003         2004        2005         2005        2006
                                                               US$000        US$000       US$000      US$000      US$000
                                                                                                    (unaudited)


              Casino operations                                 55,149        58,527      62,599       20,549      36,632
              Income from operating lease for the
                 operation of gaming machine stations               —             —        1,535           —        1,292
              Food and beverages and video arcade
                games                                               26             7         148           12          83


                                                                55,175        58,534      64,282       20,561      38,007



     (2)      The calculation of basic earning per Share has not taken into account the Shares which will or may be issued
              pursuance to the Share Offer or the Capitalisation Issue.


     The table below summarises the financial ratios of the Group for each of the three financial
years ended 31st December, 2005 and the two five-month periods ended 31st May, 2005
(unaudited) and 31st May, 2006.

                                                                                                           For the
                                                                                                        five months
                                                                          For the year                      ended
                                                                      ended 31st December,                31st May,
Financial Ratios                  Formulae                           2003     2004     2005             2005      2006

1. Profit margins

    a. Gross margin               Gross profit/                     57.2%       51.3%       61.8%       56.9%      66.4%
                                  Sales x 100%
    b. Net profit margin          Net profit after taxes/           29.1%       30.2%       38.8%       26.1%      45.8%
                                  Sales x 100%
2. Turnover ratios

    a. Debtors’                   Trade debtor/                     9 days     24 days    42 days     34 days     30 days
       turnover days              Sales x Number of days
                                  in period
    b. Creditors’                 Trade creditors/                40 days      37 days    33 days     40 days     29 days
       turnover days              Cost of sales x Number of
                                  days in period




                                                        — 162 —
                               FINANCIAL INFORMATION

CRITICAL ACCOUNTING POLICIES


     For the preparation of our financial statements for the Track Record Period, some of the
accounting policies are significant for portraying our financial position and some require the
judgement and estimation of our senior management, often as a result of the need to estimate
effects arising from matters that are inherently uncertain and subject to amendments in
subsequent periods. We considered the following accounting policies critical in view of the
significance of financial terms referred thereto and the level of judgements and estimations
required for the preparation of our financial information for the Track Record Period:


Revenue recognition


    The Group recognises revenue when it is probable that the economic benefits will flow to
the Group and the revenue and costs, if applicable, can be measured reliably. Revenue is
recognised in the income statement as follows:


    (i)    Casino revenue represents net house takings arising from casino operations and is
           recognised in the income statement when the stakes are received by the casino and the
           amounts are paid out to players.


    (ii)   Gaming machine revenue represents net winnings from the operation of gaming
           machine stations and is recognised in the income statement when the stakes are
           received and the amounts are paid out to players. Revenue relating to minimum profit
           sharing and fixed payments from suppliers who provide and maintain the gaming
           machine stations is recognised in the income statement in equal instalments over the
           period of the contract, and additional revenue deriving from profit sharing
           arrangements is recognised when the right to receive such amounts is ascertained.


    (iii) Income from restaurant and amusement machines represent revenue from the
           provision of food and beverages and from video arcade games and is recognised when
           the service is provided.




                                           — 163 —
                               FINANCIAL INFORMATION

Depreciation


    Property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses.


     Depreciation is based on the estimated useful lives of property, plant and equipment other
than construction in progress and calculated, on a straight-line basis, over their economic useful
lives as follows:

     Ship structure and improvements          5 years
     Buildings                                50 years
     Renovations, furniture and fittings      5 - 10 years
     Motor vehicles                           5 years
     Plant and equipment                      5 - 10 years
     Land and improvements                    Over term of the lease


     The gain or loss arising from disposal or retirement of an asset is the difference between the
proceeds from sales and the carrying amount of the asset. Such a gain or loss will be recorded
in the income statement.


    Capital work in progress is stated at specifically identified cost, aggregate cost of
development, materials and supplies, wages and other direct expenses. No depreciation is
provided for capital work-in-progress.


Provision policy for credit facilities


      In general, the Group offers credit terms of up to 14 days to select STG Operators for
settlement of their outstanding balances in respect of credit facilities granted to them. For the
outstanding balance in respect of credit facilities granted to select STG Operators which in excess
of 14 days, our management will estimate the likelihood of recovering such outstanding amounts
from the select STG Operators for the purpose of making provision.


     Credit facilities of approximately US$159,000 were outstanding for more than one year as at
the end of each of the three financial years ended 31st December, 2005 and the five-month period
ended 31st May, 2005 (unaudited) and 2006. Provisions of approximately US$150,000,
US$159,000, US$159,000, US$159,000 and US$438,000 were made, respectively for the
corresponding periods as a result of non-payment of all the outstanding credit facilities.




                                            — 164 —
                                FINANCIAL INFORMATION

MANAGEMENT DISCUSSION AND ANALYSIS                                                                     App1A(28)(1)(a)
                                                                                                        App1A(34)(1)
                                                                                                       (a)(c)

     The following discussions should be read in conjunction with the Accountants’ Report
together with the notes accompanying thereto as set out in Appendix I to this prospectus.


Overview


     We have offered casino gaming activities since 1995 from which time the primary source of
our revenue derived from the provision of table games and gaming machine stations located on
a barge anchored along the banks of the Bassac River in Phnom Penh. On 1st October, 2003, we
relocated our casino gaming activities from the barge to the entertainment wing of NagaWorld,
which is currently the only licensed casino within the Designated Area. We have a Casino Licence
to operate a casino for 70 years with exclusive rights to manage casino operations within the
Designated Area up to the end of 2035.


     The full completion of NagaWorld will diversify and broaden the range of our products and
services to include hotel accommodation, food and beverage outlets, recreational facilities,
entertainment and retail operations. This will expand and diversify our revenue base.


     For the Track Record Period, our revenue comprised (i) net house takings arising from the
operation of gaming tables and revenue from gaming machine stations, and (ii) revenue from the
provision of food and beverages and video arcade games.


Revenues                                                                                               3rd Sch27



     The principal source of our revenue comes from the management and operation of the
casino operations. For the three financial years ended 31st December, 2005 and five-month
period ended 31st May, 2006, revenue derived from provision of gaming tables and gaming
machine stations accounted for over 99% of our total revenue during the period. We also derive,
to a lesser extent, revenue from provision of food and beverages and video arcade games in
NagaWorld. Upon completion of NagaWorld, certain spaces of the entertainment and hotel wings
will be leased to third parties as shops or outlets for retail purposes and the revenue derived from
which will be recognised as rental income.




                                            — 165 —
                                         FINANCIAL INFORMATION

     The table below sets out the composition of revenue from our operations over the past three
financial years ended 31st December, 2005 and the two five-month periods ended 31st May, 2005
(unaudited) and 31st May, 2006:

                                                    Year ended 31st December,                          Five months ended 31st May,
                                      2003                      2004                  2005                  2005                       2006
                                 Approximate                Approximate          Approximate           Approximate                Approximate
                              US$m             %        US$m             %    US$m             %    US$m             %         US$m             %
                                                                                                     (Unaudited)


STG Floor Tables               21.6          39.1        25.1          42.9    35.3          54.9     9.7          47.1         22.2          58.4
Public Floor Tables            29.4          53.3        27.8          47.5    25.8          40.1     9.4          45.6         14.5          38.2
Gaming Machines                 4.2           7.6         5.6           9.6     1.7           2.7     1.5           7.3          —             —
Income from operating lease
   for provision and
   maintenance of gaming
   machine stations             —             —            —            —       1.5           2.3     —             —            1.3           3.4


Total                          55.2          100         58.5          100     64.3          100     20.6          100          38.0          100




      Revenue from our gaming operations comes from house takings or winnings and is the
difference between our total winnings and total losses from players who bet in our casino.


      As at 31st May, 2006, our casino operated 42 tables, offering Mini Baccarat, Blackjack,
Caribbean Stud poker and Roulette. Located on the public floors, we have 205 gaming machine
stations that have been installed. A detailed breakdown of our gaming tables and gaming
machines is set out in the “Business” section of this prospectus.


STG Floor Table Revenue (unaudited)


    The table below sets out selected unaudited operating information on our STG floor table
games:

                                                                                                                 Five months
                                                         Year ended 31st December,                             ended 31st May,
                                                          2003      2004      2005                              2005       2006

        Number of tables at the
          year/period end                   20        22        22                                                        18                  18
        Average winnings per table
          per day                    US$2,959  US$3,126  US$4,396                                           US$3,569  US$8,168
        Number of visits by players      9,093    13,962    14,052                                              5,188     5,827
        Check-in amounts            US$146.0m US$203.3m US$221.7m                                           US$71.5m US$128.4m
        Average check-in amounts
          per visit per player      US$16,056 US$14,561 US$15,777                                           US$13,782           US$22,035




                                                                — 166 —
                         FINANCIAL INFORMATION

The table below sets out the unaudited number of STG Players who travelled to our casino:


Number of STG Players (unaudited)

                                                                        Five months
                                 Year ended 31st December,            ended 31st May,
                                  2003      2004      2005             2005       2006

Malaysia                          4,418       5,530        6,719       2,455       2,551
PRC                               2,563       5,238        3,444       1,219       1,443
Singapore                         1,985       2,824        2,860       1,074       1,351
Thailand                             —          186          720         318         383
Others                              127         184          309         122          99


Total                             9,093      13,962      14,052        5,188       5,827



The table below sets out the unaudited check-in amounts deposited by our STG Players:


STG check-in amounts (unaudited)

                                                                        Five months
                                 Year ended 31st December,            ended 31st May,
                                  2003      2004      2005             2005       2006
                                 US$m       US$m      US$m             US$m      US$m

Malaysia                           74.2        76.3         76.7        25.2        41.2
PRC                                37.7        72.2         67.2        20.1        46.5
Singapore                          31.4        43.0         48.3        13.6        24.4
Thailand                             —          6.1         18.4         8.8        14.4
Others                              2.7         5.7         11.1         3.8         1.9


Total                             146.0       203.3        221.7        71.5       128.4




                                     — 167 —
                                      FINANCIAL INFORMATION

Public Floor Table and Gaming Machine Station Revenue (unaudited)


    The table below sets out selected unaudited operating information on our public floor tables
and gaming machines:

                                                                                                  Five months
                                                 Year ended 31st December,                      ended 31st May,
                                                  2003      2004      2005                       2005       2006

     Number of tables as at
       year/period end                  23        22        22                                       22              24
     Average winnings per table
       per day                   US$3,502  US$3,462  US$3,213                               US$2,830       US$4,001
     Buy-ins by players         US$131.0m US$112.0m US$102.1m                               US$43.1m       US$55.0m


      The table below sets out selected unaudited operating information on our gaming machine
stations: (unaudited)

                                                                                                  Five months
                                                 Year ended 31st December,                      ended 31st May,
                                                  2003      2004      2005                       2005       2006

     Number of gaming
       machine stations                             110             115             211              70            205
     Average winnings per
       gaming machine
       station per day                       US$104.6        US$133.4               —       US$141.9                —
                                                                               (note i)                        (note i)


     Note:


     (i)     Pursuant to the agreement we entered into with the independent party for provision of gaming machine
             stations on 28th March, 2005, we began to receive fixed payments rather than winnings from gaming machine
             stations from 1st July, 2005 and as such, the average winnings per gaming machine station per day did not
             reflect the whole of our revenue derived from the gaming machine stations for the financial year ended 31st
             December, 2005 and five months ended 31st May 2006.




                                                     — 168 —
                              FINANCIAL INFORMATION

Factors which may affect our revenues


    We consider that the following are the main factors that may affect our revenues:


    i)    Number of visitors and check-in amounts


         Between 1st January, 2003 and 31st May, 2006, our casino enjoyed growing patronage,
    in particular, from visitors from Malaysia, Singapore and major cities in the PRC such as
    Guangzhou and Shanghai.


         The level of patronage from STGs, as measured by the quantum of check-in amounts,
    increased at a compound annual growth rate of 23.2% from US$146.0 million in 2003 to
    US$221.7 million in 2005. The overall number of visits by STG Players was 14,052 in 2005,
    which represented a compound annual growth rate of 24.3% from 9,093 in 2003. The
    number of visits by STG Players increased by 12.3% to 5,827 for the five months ended 31st
    May, 2006 from 5,188 for the five months ended 31st May, 2005.


         The level of patronage on our public floor tables declined over the period between
    2003 and 2005. The level of patronage on our public floor, as measured by the dollar value
    of buy-ins, were approximately US$131.0 million in 2003 and approximately US$102.1
    million in 2005. The level of patronage, in terms of buy in amounts, on our public floor
    tables increased to approximately US$55.0 million for the five-month period ended 31st
    May, 2006 from approximately US$43.1 million for the five-month period ended 31st May,
    2005.


    ii)   Country Factors


          —   Foreign passport holders are the main customers of our casino and as such a
              stable political environment in Cambodia is positive to the number of visitor
              arrivals to the country which in turn is beneficial to our operations.


          —   Around the dates of local or national elections in Cambodia, we have experienced
              some reductions in the level of visits to our casino, which contribute to the
              decrease in our revenues during the periods concerned. In addition, we
              experienced an increase in the level of visitors to our casino around the times of
              public holidays such as Chinese New Year, Labour Day (1st May) and China’s
              National Day (1st October), which contribute to the increase in our revenue
              during the periods concerned.


          —   According to statistics of the Ministry of Tourism, Cambodia, there were around
              701,014 visitors, 1,055,202 visitors and 1,421,615 visitors who travelled to
              Cambodia for each of the three years ended 31st December, 2005. The changes in
              the number of visitor arrivals to Cambodia during the past three years had a direct
              impact on the number of customers who visited our casino which in turn impacted
              our financial performances for the Track Record Period.


                                          — 169 —
                                         FINANCIAL INFORMATION

        iii)   Casino/Business Factors


               —      Our ability to continue attracting both new and existing customers is dependent
                      upon among others, the quality of service and scope of facilities offered by us.
                      The quality and scope of facilities offered by casinos have an influence over
                      customers’ choice of casinos in the region.


               —      The number of STG visits to our casino is based on the recommendation of the
                      STG Operators who organise their visits. These operators earn a commission
                      calculated against the amount of Rollings achieved during a visit to our casino by
                      the respective groups of STG Players brought by them. The level of these
                      commissions, along with the value of the air fare, accommodation and other
                      rebates we provide to STGs, impact our competitive position versus other casinos
                      in the region and hence, the number of STG Players who choose to come to our
                      casino.


Expenses


    Our operating expenses comprise mainly cost of sales, administrative and other operating
expenses.


Cost of Sales


        The following table shows the breakdown of our cost of sales:

                                               Year ended 31st December,                           Five months ended 31st May,
                                      2003                   2004                  2005                  2005                  2006
                                 Approximate            Approximate           Approximate           Approximate           Approximate
                              US$m        %          US$m        %         US$m        %         US$m        %         US$m        %
                                                                                                  (Unaudited)


Commission to STG
  Operators and
  other STG expenses           16.5          69.9     24.1          84.5    22.5          91.5     7.6          86.4    12.4          96.9
Commission to local
  operators
  and other costs               5.0          21.2      1.5           5.3     1.3           5.3     0.5           5.6     0.4           3.1
Rental of gaming equipment      2.1           8.9      2.9          10.2     0.8           3.2     0.7           8.0     —             —


Total                          23.6      100.0        28.5      100.0       24.6      100.0        8.8      100.0       12.8      100.0




                                                             — 170 —
                                FINANCIAL INFORMATION

     Our cost of sales comprise primarily commissions paid to STG Operators and local operators
and other expenses incurred in relation to STGs, including rebates on air fares, accommodation
and food and beverage costs and rental for gaming equipment.


     The commissions paid to STG Operators are calculated as a percentage of the total Rollings
generated by the STGs they bring to our casino. The package of commissions and incentives
granted to STG Operators and STG Players is influenced by the other casino operators in the
region who offer incentives to attract STGs. The commission rates we pay to our STG Operators
have not varied significantly since we first commenced operations in 1995. The commission rates
paid also depend on the games that the STGs are playing.


     Air travel and accommodation costs for STGs are dependent on the volume and frequency
of STG visits. Lower rates and better discounts can be negotiated with hotels and airline operators
depending on the volume of transactions. Once the hotel wing of NagaWorld is completed, the
Group will be able to provide accommodation facilities and amenities to players without having
to rely on third party providers.


     The commission paid to local operators and other costs consists of commissions paid for
bringing in customers to the public floor and the cost of our complimentary rated programme. A
customer under the complimentary rated programme is required to make a check-in deposit of
US$5,000. The operator for the complimentary rated programme is paid a fixed commission for
bringing customers to our public floor. The operator for the complimentary rated programme and
its members are entitled to a rebate of air fare, accommodation, food and beverage.


    Up to 30th June, 2005, the cost of sales for our gaming machine stations comprised rental
payments paid to our gaming machine stations supplier. These rental payments represented 50%
of the gross amount collected by these gaming machine stations plus mutually agreed operating
costs. As a result, there was a fairly stable relationship between the cost of sales and the level of
revenues generated by the gaming machine stations. Subsequently we entered into two
agreements with another independent party for provision of gaming machine stations. Pursuant
to the agreements, we granted the party the right to provide and maintain gaming machine
stations for patronage in our casino in return for fixed income payments to us in the aggregate
of US$10 million over the first four years ending 30th June, 2009, a fixed monthly income
payment of US$275,000 or a monthly income based on pre-determined rates for years five to
seven, and a fixed monthly income payment of US$300,000 or a monthly income based on
pre-determined rates for years eight to ten. We are given the right to elect the type of income
payment method for the years five to ten. We are not required to pay rental costs for the gaming
machine stations provided by the party.




                                             — 171 —
                                      FINANCIAL INFORMATION

Administrative, amortisation and other operating expenses


    These costs consist primarily of staff costs, depreciation, amortisation and other
administrative and operating expenses and their breakdown is shown below:

                                            Year ended 31st December,                          Five months ended 31st May,
                                   2003                   2004                  2005                 2005                 2006
                           US$m             %     US$m             %    US$m             %    US$m            %    US$m            %
                                                                                               (Unaudited)


Staff costs                  5.7          53.3      6.1          54.5     6.1          45.2    2.6          44.9    2.8          38.9
Depreciation                 0.2           1.9      0.4           3.6     0.4           3.0    0.2           3.4    0.2           2.8
Amortisation                 0.2           1.9      0.2           1.8     1.3           9.6    0.1           1.7    1.5          20.8
Other administrative and
   operating expenses        4.6          42.9      4.5          40.1     5.7          42.2    2.9          50.0    2.7          37.5


Total                       10.7          100      11.2          100     13.5          100     5.8          100     7.2          100




Staff costs


    Staff costs comprise primarily salaries and wages, bonuses, allowances, overtime and other
benefits provided to our employees. As at 31st May, 2006, we had 935 employees.


Depreciation


      Depreciation is calculated to write off the cost of property, plant and equipment, and major
components that are accounted for separately on a straight-line basis over their estimated useful
lives.


Amortisation


     Amortisation of our intangible assets, being the Casino Licence premium of US$3 million and
premium of US$105 million that accrued for the extension of the exclusivity period, is charged
to the income statement on a straight-line basis over the exclusivity period of the Casino Licence.


Other administrative and operating expenses


     Our other administrative and operating expenses comprise various expenses and charges
incurred on functions ancillary to the operation of our casino. These expenses and charges
include significant items such as lease payments and expenses relating to the barge on which our
casino was based for the period up to 30th September, 2003, lease payments and expenses
relating to NagaWorld, donations, repairs and maintenance, fuel costs, travel costs,
telecommunication charges, utilities and if applicable, provision for doubtful debts.


                                                          — 172 —
                               FINANCIAL INFORMATION

      Finance costs comprise mainly interest payable by us in relation to the utilisation of a bank
overdraft facility with a limit of US$2 million extended by a licensed bank in Cambodia up to
February 2003. In consideration of granting of the bank overdraft facility by the licensed bank,
a fixed and floating charge on all assets of NRCL and a personal guarantee from a former director
of NRCL were provided to the licensed bank as collateral. The interest rate of 12% per annum was
charged on the outstanding balance of the overdraft facility that was subsequently cancelled on
21st February, 2003. Finance costs also comprise interest payable on finance leases.

Taxation

Cambodia

Outstanding liabilities relating to taxes and obligation payments

     During 2004 and 2005, the Group and the Government were in discussions on the settlement
of outstanding gaming and non-gaming obligation payments and their related tax penalties and
late payment interest for the period to 31st December, 2005.

      On 11th May, 2006, the Government formally confirmed the settlement terms of outstanding
taxes for the period to 31st December, 2005 in respect of outstanding gaming obligation payments
and non-gaming obligation payments, and their related tax penalties and late payment interest.
The Government confirmed that no additional penalties were due to the Government in respect
of the year ended 31st December, 2005 and that an additional $89,000 of late payment interest is
due in respect of outstanding gaming obligation payments and non-gaming obligation payments
for the year ended 31st December, 2005 and on the previously agreed instalments in accordance
with an agreement between the Group and Government dated 12th November, 2004 in respect
of gaming obligation payments, non-gaming obligation payments and their related penalties and
late payment interest for the period ended 31st December, 2004.

      The outstanding gaming obligation payments and non-gaming obligation payments, and
their related tax penalties and late payment interest for 2005, and the outstanding instalments in
accordance with the agreement dated 12th November, 2004 are to be settled by the Group in
instalments from May to October 2006. The additional late payment interest that the Government
formally confirmed on 11th May, 2006 has been charged to the income statement during the year
ended 31st December, 2005.

     The Cambodian Government further agreed on 3rd August, 2006 that the outstanding
gaming obligation payments and non-gaming obligations payments in aggregate of US$994,788
payable by the Company for the period between February 2006 and July 2006 will be settled in
the fourth week of October 2006 with no interest, fine or penalty imposed.

Taxes on gaming activities

    As further described in the section titled “Our Agreements with the Cambodian
Government” in the Business section of this prospectus, the Group enjoys certain tax incentives
and exemptions in respect of revenue derived from our on gaming activities.


                                            — 173 —
                               FINANCIAL INFORMATION

      The Group is required to make obligation payments to the MOEF in respect of gaming
activities. These obligation payments were US$60,000 per month for the period between 1st
January, 2000 and 31st December, 2003, US$100,000 per month for the year ended 31st December,
2004, US$112,500 per month for the financial year ended 31st December, 2005 and are currently
US$126,563 per month for the year ending 31st December, 2006. Such payments will be subject
to an annual increase of 12.5% thereafter until the full completion of NagaWorld and subject to
the review of MOEF thereafter.


     In addition, the Group has paid a casino taxation certificate fee of US$30,000 per year to the
MOEF since the financial year ended 31st December, 2004.


Taxes on non-gaming activities


     The Group is obliged to make tax payments in respect of non-gaming activities being carried
out in our casino complex in Cambodia. The tax payments for our non-gaming activities were
US$31,000 per month for the two years ended 31st December, 2004, US$34,875 per month for the
year ended 31st December, 2005 and are currently US$39,235 per month for the year ending 31st
December, 2006. The taxes payable by the Group in respect of non-gaming activities being
carried out in our casino complex in Cambodia are subject to the review and approval of the
MOEF on an annual basis.


     The tax payments for our non-gaming activities detailed above are considered
representative of various types of tax payable in respect of our non-gaming activities including
among others, salary tax, fringe benefit tax, withholding tax and value-added tax.


Other corporate taxes


     The NRCL hotel and entertainment branch in Cambodia is entitled to certain tax incentives,
such as an allowance for any losses to be carried forward for five years for computation of profit
tax. In addition to the Group’s obligation payments in respect of gaming activities and tax
payments for non-gaming activities, the NRCL hotel and entertainment branch is subject to profit
tax at a concessionary rate of 9% per year for the period up to March 2008 and subject to a normal
profit tax rate of 20% thereafter. The NRCL hotel and entertainment branch is required to pay a
minimum profit tax of US$2,000 per year or a minimum profit tax of 1% of turnover in event of
a loss for the year or when profit tax levied is less than the minimum profit tax. In addition, the
NRCL hotel and entertainment branch in Cambodia is currently entitled to exemption from import
duties on machinery, materials and equipment used in the construction of the NagaWorld.


    The corporate profit tax and value-added tax applicable to the Group’s other operations in
Cambodia are currently fixed at rates of 20% and 10% per annum respectively.




                                            — 174 —
                               FINANCIAL INFORMATION

Taxes on dividends


     Our operations in Cambodia are currently exempt from any form of withholding taxes
ordinarily payable pursuant to the “LoI” and “LoT” on dividends declared and distributed by the
NRCL gaming branch in Cambodia.


     As at the Latest Practicable Date, the legal advisors to the Company as to Cambodian law are
of the view that in the event that a new casino law is passed in Cambodia, profits arising from
our gaming activities will only be subject to taxes for periods subsequent to the passage of that
law. In the interim, the agreements between the MOEF and the Company in relation to taxation
on profits arising from gaming activities continue to be applicable and legally binding, valid and
enforceable in accordance with their terms.


Hong Kong


     For the Track Record Period and up to the Latest Practicable Date, the Group has no
assessable profits that will give rise to taxation under the applicable rules and regulations in
Hong Kong and, as such, no charge for Hong Kong profits tax has been made.


Cayman Islands


     As an exempted company incorporated in Cayman Islands, the Company is exempt from
Cayman Islands taxation save for stamp duties which may be applicable from time to time on
certain instruments executed in or brought within the jurisdiction of the Cayman Islands.


Year ended 31st December, 2004 compared to year ended 31st December, 2003


Revenue


     Our revenue increased by US$3.3 million or 6.0% from approximately US$55.2 million in
2003 to approximately US$58.5 million in 2004. This was largely attributable to a significantly
higher revenue contribution from our STG floor tables which recorded revenues of
approximately US$25.1 million in 2004, representing an increase of US$3.5 million or 16.2% from
approximately US$21.6 million in 2003.


      The overall growth in our revenue was also reflective of a further improvement in the
political and economic situation in Cambodia after the national election held in July 2003 and the
passing of the severe acute respiratory syndrome in the Asia region, which saw the number of
visitor arrivals to Cambodia increase from 701,014 visitors in 2003 to 1,055,202 visitors in 2004.


     Our public floor tables recorded revenues of US$27.8 million in 2004, which represented a
decrease of US$1.6 million or 5.4% from US$29.4 million in 2003.


                                           — 175 —
                               FINANCIAL INFORMATION

STG Floor Tables


     Revenue from our STG floor tables increased in 2004 to approximately US$25.1 million
which accounted for approximately 42.9% of our total revenue in that year. This represented an
increase of approximately US$3.5 million from our STG revenues of approximately US$21.6
million in 2003. This increase was primarily due to a higher number of STG Players visiting our
casino.


     The number of STG Players who visited our casino increased by approximately 53.5% from
9,093 in 2003 to 13,962 in 2004. Check-in amounts deposited by our STG Players increased by
US$57.3 million or 39.2% to US$203.3 million in 2004 from US$146.0 million in 2003. In particular,
there were 5,238 STG Players from PRC, representing an increase of approximately 104.4% in
comparison to the number of STG Players from this region in 2003. Total check-in amounts from
STG Players from PRC were approximately US$72.2 million in 2004, representing an increase of
approximately 91.5% in comparison to the check-in amounts from this region in 2003.


    A significant proportion of the growth in the number of STG Players who visited our casino
was accounted for by continued strong growth in the level of visits by STG Players from all
geographical segments.


Public Floor Tables


     Revenue from our public floor tables, which accounted for 53.3% of total revenue in 2003,
decreased to US$27.8 million in 2004. This represented a decrease of US$1.6 million or 5.4% from
the 2003 amount of US$29.4 million. This was primarily driven by a decrease of US$19.0 million
or 14.5% in buy-in amount by our public floor players from US$131.0 million in 2003 to US$112.0
million in 2004. In 2004, we decreased the commission and rebates offered under the
complimentary rated programme and tightened the conditions for the players qualifying for the
commission and rebates for the control of the quality of our public floor players. The buy-in
amounts for public floor decreased as a result.


Gaming Machine Stations


     Revenue from our gaming machines, which accounted for 7.6% of total revenue in 2003, was
US$5.6 million in 2004. This represented an increase of US$1.4 million or 33.3% from US$4.2
million in 2003. This increase was primarily attributable to a higher average winnings per gaming
machine station per day, which increased by approximately 27.5% to approximately US$133.4
and the additional 5 gaming machine stations installed in our casino. As at 31st December, 2004,
our casino offered a total of 115 gaming machine stations.




                                           — 176 —
                               FINANCIAL INFORMATION

Cost of Sales


      The cost of sales of our operations was US$28.5 million, which represented an increase of
US$4.9 million or 20.8% from US$23.6 million in 2003. The increase was primarily due to the
rising costs of commissions paid to STG Operators and other STG expenses. These amounts were
US$24.1 million in 2004 (or 84.5% of total cost of sales), an increase of US$7.6 million or 46.1%
from US$16.5 million in 2003. The significant increase was in line with the overall increase in the
number of STG Players.


      Another factor was the increase in rental costs for our gaming machine stations which
totalled approximately US$2.9 million in 2004, or 38.1% over the amount of approximately US$2.1
million in 2003.


     The decrease of gross profit margin from approximately 57.2% to approximately 51.3% for
the period was attributed mainly to an increase of approximately 20.7% in cost of sales against
an increase of approximately 6.0% in revenue in 2004.


Administrative, Amortisation and Other Operating Expenses


     Staff costs in 2004 were US$6.1 million which represented an increase of approximately
7.0% from approximately US$5.7 million incurred in 2003. The increased staff costs were largely
due to an increase in our average headcount of 46 employees from around 871 employees in 2003
to around 917 employees in 2004.


     Depreciation expense in 2004 was approximately US$0.4 million, representing an increase
of approximately US$0.2 million from approximately US$0.2 million incurred in 2003. The
increase in depreciation expenses reflected investment of approximately US$3.3 million in
property, plant and equipment in 2003 being depreciated from 2004 onwards.


     Total administrative amortisation and other operating expenses increased by approximately
US$0.5 million to approximately US$11.2 million in 2004 from approximately US$10.7 million in
2003.


Finance costs


     Finance costs decreased by approximately US$14,000 to approximately US$1,000 due to the
termination of our overdraft facility on 21st February, 2003.


Taxation


      Taxation for 2004 was approximately US$1.2 million, representing an increase of
approximately US$0.5 million from approximately US$0.7 million incurred in 2003. The increase
in tax payment was a result of an increase in the obligation payments from US$60,000 per month
in 2003 to US$100,000 per month in 2004.


                                            — 177 —
                               FINANCIAL INFORMATION

Net Profit


     As a result of the above and after accounting for taxation, we achieved a net profit of
US$17.7 million in 2004, representing an increase of 9.9% as compared to net profits of US$16.1
million in 2003.


     The net profit margin increased from approximately 29.1% to approximately 30.2% for the
period given the absence of the non-recurrent write-off in 2004 relating to our postponed initial
public offering in 2003.


Year ended 31st December, 2005 compared to year ended 31st December, 2004


Revenue


     Our revenue increased by US$5.8 million or 9.9% to US$64.3 million in 2005 from
approximately US$58.5 million in 2004. The increase in our revenue was mainly attributable to
the higher revenue contribution from our STG floor tables that recorded revenue of US$35.3
million in 2005, representing an increase of US$10.2 million or 40.6% over 2004.


     Revenue derived from our public floor tables was approximately US$25.8 million in 2005,
representing a decrease of US$2.0 million or 7.2% over 2004.


     The continued political stability and economic expansion were beneficial to the hospitality
industry in Cambodia in 2005. The number of visitor arrivals to Cambodia increased to around
1,421,615 visitors in 2005 from 1,055,202 visitors in 2004. (Source: Ministry of Tourism,
Cambodia)


STG Floor Tables


     In 2005, we derived revenue of approximately US$35.3 million from our STG floor tables,
which accounted for approximately 54.9% of our total revenue. The revenue from our STG floor
tables increased by approximately US$10.2 million or 40.6% on the back of a higher number of
STG Players who visited our casino and check-in amounts deposited by them in 2005.


     The number of STG Players who visited our casino increased by approximately 0.6% to
14,052 in 2005 from 13,962 in 2004. The increase in STG Players, check-in amounts deposited by
our STG Players increased by 9.1% to US$221.7 million in 2005 from approximately US$203.3
million in 2004. The check-in amounts increased at a faster rate than the growth in the number
of STG Players and as a result, the average check-in amounts made by STG Players increased by
approximately US$1,216 per STG Player or 8.4% over 2004.




                                           — 178 —
                               FINANCIAL INFORMATION

Public Floor Tables


     In 2005, we derived revenue of approximately US$25.8 million from our public floor tables,
which accounted for approximately 40.1% of our total revenue. The revenue from our public
gaming tables decreased by approximately US$2.0 million or 7.2% over 2004 largely on the back
of lower buy-in amounts made by players.


Gaming Machine Stations


    Revenue derived from our gaming machine stations was approximately US$3.2 million,
which accounted for approximately 5.0% of total revenue in 2005. Revenue derived from our
gaming machine stations decreased by approximately US$2.4 million or 42.9% over 2004. We
jointly operated and managed our gaming machine stations with the supplier and shared with the
supplier the revenue derived from the gaming machine stations, up to 30th June, 2005. Thereafter
we allowed another independent party to offer its gaming machine stations for patronage in our
casino in return for a fix payment. In view of the change in party and revenue sharing
arrangement above, the Group recorded a decrease in revenue from the provision of gaming
machine stations in 2005.


Cost of Sales


     In 2005, we recorded cost of sales of approximately US$24.6 million, which represented a
decrease of approximately US$3.9 million or 13.7% over 2004. The decrease in cost of sales was
attributable mainly to the decline in rollings achieved by STG Players and commissions paid to
STG Operators and local operators.


     Given the new arrangement with another independent supplier of gaming machine stations,
we were not required to pay rental costs for the gaming machine stations for the six months
ended 31st December, 2005. The costs of sales for provision of gaming machine stations declined
by approximately US$2.1 million or 72.4% over 2004.


     The gross profit margin was approximately 61.8% in 2005 and approximately 51.3% in 2004.
The increase in gross profit margin reflected the decrease of approximately 13.7% in cost of sales
and the increase of approximately 9.9% in revenue.


Administrative, Amortisation and Other Operating Expenses


     We recorded staff costs of approximately US$6.1 million in 2005, which was about the same
as 2004. The average number of our employees increased to 938 employees in 2005 from 917
employees in 2004.


     The depreciation expense remained stable at approximately US$0.4 million in 2005.



                                           — 179 —
                               FINANCIAL INFORMATION

     The amortisation expense increased to approximately US$1.3 million in 2005 from
approximately US$0.2 million in 2004, stemming from the amortisation on the premium of US$105
million for the extension of the exclusivity period of the Casino Licence.


     Total administrative amortisation and other operating expenses increased to approximately
US$13.5 million in 2005 from approximately US$11.2 million in 2004 due mainly to the increase
in the amortisation of Casino Licence premium in 2005.


Finance costs


     We did not incur finance costs as there were no significant financing arrangements in 2005.


Taxation


     Taxation was approximately US$1.4 million in 2005, which represented an increase of
approximately US$0.2 million over 2004. The increase in taxation reflected an increase in the
obligation payments from US$100,000 per month in 2004 to US$112,500 per month in 2005.


Net Profit


     In view of the above, we recorded a net profit of US$24.9 million in 2005, which represented
an increase of 41.3% over 2004.


     The net profit margin was approximately 38.8% in 2005 and approximately 30.2% in 2004.


Five months ended 31st May, 2006 compared to five months ended 31st May, 2005
(unaudited)


Revenue


      Our revenue increased by US$17.4 million or 84.8% from approximately US$20.6 million for
the five-month period ended 31st May, 2005 (unaudited) to approximately US$38.0 million for
the five-month period ended 31st May, 2006.


     The increase in our revenue was largely attributable to the higher revenue contribution from
our STG floor tables. For the five-month period ended 31st May, 2006, STG floor tables
contributed revenue of approximately US$22.2 million, representing an increase of US$12.5
million or 128.9% from approximately US$9.7 million for the five- month period ended 31st May,
2005 (unaudited).


     The revenue from our public floor tables increased by 54.3% to from approximately US$9.4
million for the five-month period ended 31st May, 2005 (unaudited) to approximately US$14.5
million for the five-month period ended 31st May, 2006.


                                           — 180 —
                               FINANCIAL INFORMATION

STG Floor Tables


    Revenue from our STG floor tables increased to approximately US$22.2 million for the five-
month period ended 31st May, 2006 from approximately US$9.7 million for the five-month period
ended 31st May, 2005 (unaudited).


      The increase in revenue from our STG floor tables was attributable mainly to (i) the increase
in check-in amounts from approximately US$71.5 million for the five-month period ended 31st
May, 2005 to approximately US$128.4 million for the five-month period ended 31st May, 2006 and
(ii) the increase in STG Players from 5,188 for the five-month period ended 31st May, 2005 to
5,827 for the five-month period ended 31st May, 2006. The higher growth rate in check-in
amounts than the number of STG Players translated into the increase in the average check-in
amounts per visit by players to US$22,035 for the five-month period ended 31st May, 2006 from
US$13,782 for the five- month period ended 31st May, 2005.


Public Floor Tables


     The revenue from our public floor tables increased by 54.3% to from approximately US$9.4
million for the five-month period ended 31st May, 2005 (unaudited) to approximately US$14.5
million for the five-month period ended 31st May, 2006. The increase in revenue from our public
floor tables was as a result of increased buy-ins which increased from approximately US$43.1
million for the five-month period ended 31st May, 2005 to approximately US$55.0 million for the
five-month period ended 31st May, 2006.


Gaming Machine Stations


     Revenue from gaming machine stations decreased by approximately US$0.2 million or 13.3%
from approximately US$1.5 million for the five-month period ended 31st May, 2005 (unaudited)
to approximately US$1.3 million for the five-month period ended 31st May, 2006. The change in
provider of the gaming machine stations and adoption of a fixed revenue sharing arrangement for
the five-month period ended 31st May, 2006 was the main reason for the decrease in revenue
from gaming machine stations.


Cost of Sales


     For the five-month period ended 31st May, 2006, we recorded cost of sales of approximately
US$12.8 million, which represented an increase of US$3.9 million or 44.4% over the five-month
period ended 31st May, 2005 (unaudited). The increase in cost of sales was attributable mainly
to the increase in STG Operators commissions and related expenses paid to STGs of US$4.8
million, which in turn was attributable to the increase in rollings achieved by STG Players.


      The increase in cost of sales was offset by the reduction in cost of sales for gaming machine
stations of approximately US$0.7 million or 100% as a result of the new arrangement we entered
into with an independent party for provision of gaming machine stations where no rental costs
were required for the gaming machine stations for the five-month period ended 31st May, 2006.


                                            — 181 —
                                FINANCIAL INFORMATION

     The gross profit margins were approximately 66.4% for the five-month period ended 31st
May, 2006 and approximately 56.9% for the five-month period ended 31st May, 2005 (unaudited).
The increase of approximately 9.5% in gross margin for the period was attributed mainly to the
higher rate of increase in revenue of approximately 84.8% than the rate of increase in cost of sales
of only approximately 44.4%. The higher rate of increase in revenue was attributed mainly to the
increase in average winnings per table on the STG floor by approximately US$4,599 per table per
day. The new arrangement we entered into with an independent party where no rental costs were
required for the provision of gaming machine stations for the five-month period ended 31st May,
2006 had contributed to the decrease in cost of sales by reduction in cost of sales for gaming
machine stations of US$0.7 million.


Administrative, Amortisation and Other Operating Expenses


     For the five-month period ended 31st May, 2006, we recorded total administrative,
amortisation and other operating expenses of approximately US$7.2 million which represented
an increase of US$1.4 million or 24.1% over the expenses for the five-month period ended 31st
May, 2005 (unaudited).


     We recorded staff costs of approximately US$2.8 million for the five-month period ended
31st May, 2006, which represented an increase of US$0.2 million or 7.7% over the costs for the
five-month period ended 31st May, 2005 (unaudited). The average number of our employees
decreased to 938 employees in 2005 from 943 employees at 31st May, 2005. Nonetheless, staff
costs were pushed up by the recruitment of more senior employees.


     The depreciation expense remained stable at approximately US$0.2 million for the five-
month period ended 31st May, 2006 as compared to depreciation expense for the five-month
period ended 31st May, 2005 (unaudited).


      The amortisation expenses increased by approximately US$1.4 million to approximately
US$1.5 million for the five-month period ended 31st May, 2006 as compared to the expenses for
the five months ended 31st May, 2005 (unaudited). The increase was attributable mainly to the
amortisation on the premium of US$105 million for the extension of the exclusivity period of the
Casino Licence agreed in late 2005.


Finance Costs


    We did not incur finance costs as there were no significant financing arrangements in 2005
(unaudited) and for the five-month period ended 31st May, 2006.


Taxation


     Taxation was approximately US$634,000 during the five-month period ended 31st May,
2006, which represented an increase of approximately US$71,000 over the taxation for the five-
month period ended 31st May, 2005 (unaudited). The increase in taxation reflected an increase
in the obligation payments from US$112,500 per month in 2005 to US$126,563 in 2006.


                                            — 182 —
                              FINANCIAL INFORMATION

Net Profit

     In view of the above, we recorded a net profit of US$17.4 million for the five-month period
ended 31st May, 2006, which represented an increase of US$12.0 million or 224.7% over the net
profit for the five-month period ended 31st May, 2005 (unaudited).

     The net profit margins were approximately 45.8% for the five-month period ended 31st May,
2006 and approximately 26.1% for the five-month period ended 31st May, 2005. The increase of
approximately 19.7% in net profit margin for the period was attributed mainly to the increase in
gross profit margin of approximately 9.5% offset by the increase in amortisation expense to
US$1.5 million for the five-month period ended 31st May, 2006 from approximately US$0.1
million for the five-month period ended 31st May, 2005 (unaudited) in connection with the
amortisation on the premium of US$105.0 million for the extension of the exclusivity period of
the Casino Licence.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE                                               App1A(32)
                                                                                                   (5)(a)


Net current liabilities

     As at 31st May, 2006, the net current liabilities of the Group were approximately US$70.8
million.

    Current assets were approximately US$11.5 million, which comprised trade receivables of
approximately US$7.3 million, other receivables, deposits and prepayments of approximately
US$2.7 million and cash at bank and in hand of approximately US$1.5 million.

      Current liabilities were approximately US$82.3 million, which comprised trade payables of
approximately US$2.5 million, other payables and accruals of approximately US$9.4 million,
deferred income of approximately US$1.2 million, unredeemed chips of approximately US$2.6
million, provisions of approximately US$2.1 million, current tax liabilities of approximately
US$3.1 million, dividends due to shareholders of approximately US$5.3 million (which was
settled before listing), deposits of approximately US$1.1 million and amounts due to a related
company Ariston Holdings Sdn. Bhd. of approximately US$55 million. The amounts due to
Ariston Holdings of approximately US$55.0 million were settled before listing.

     The amount due of US$55 million to Ariston Holdings was settled by a capital contribution
by the controlling shareholder on 16th August, 2006.

Liquidity and financial resources

     We currently finance our working capital and investments mainly with cash generated from
our gaming operations. In the future, we expect our working capital and investments will be
financed by cash generated from our gaming, hotel and entertainment operations, proceeds
raised from the Share Offer in the manner as set out in the paragraphs headed “Use of proceeds”
in the section headed “Future plans and use of proceeds” in this prospectus, and, if necessary,
other forms of finance.


                                          — 183 —
                               FINANCIAL INFORMATION

Cash flows

     The table below summarises the cash flows of the Group for the three financial years ended
31st December, 2005 and the five-month periods ended 31st May, 2006 and the unaudited cash
flows of the Group for the five-month period ended 31st May, 2005, which have been extracted
from our audited financial statements as set out in the accountants’ report in Appendix I to this
prospectus:

                                               For the year ended                Five months
                                                 31st December,                ended 31st May,
                                             2003      2004     2005             2005      2006
                                           US$000    US$000   US$000           US$000    US$000
                                                                             (unaudited)

     Cash generated from operations         26,061      20,179     25,291        8,807    18,940
     Tax paid                                 (120)       (169)      (243)        (241)     (281)
     Net cash generated from
       operating activities                 25,941      20,010     25,048        8,566    18,659
     Net cash (used in)/generated
       from investing activities           (15,630)     (8,343)       548        3,468     (3,106)
     Net cash used in financing
       activities                           (8,444)    (12,195)   (26,655)     (13,339)   (14,725)
     Net increase/(decrease) in cash
       and cash equivalents                  1,867        (528)    (1,059)      (1,305)      828
     Cash and cash equivalents at the
       beginning of the year                   390       2,257      1,729        1,729       670
     Cash and cash equivalents at the
       end of the year                       2,257       1,729        670         424       1,498


     As at 31st August, 2006, we had cash and cash equivalents of approximately US$0.5 million.

Cash flow from operating activities

     For the five-month period ended 31st May, 2006, cash generated from operations was
approximately US$18.9 million and profit before taxation was approximately US$18.0 million.
The difference was mainly attributable to the increase in trade and other receivables by
approximately US$0.5 million, the decrease in trade and other payables of approximately US$0.2
million and depreciation and amortisation of approximately US$1.6 million. The increase in trade
and other receivables was mainly attributable to the increase in prepayments of professional fees
of approximately US$0.5 million incurred by the Share Offer. The decrease in trade and other
payables was attributable mainly to the decrease in deferred income of approximately US$1.3
million, decrease in unredeemed casino chips of approximately US$2.1 million and decrease in
non-gaming obligation payments and tax penalties of approximately US$0.3 million, which was
offset by the increase in trade payable of approximately US$0.2 million, increase in construction
creditors of approximately US$2.4 million and other creditors and accruals of approximately
US$0.9 million.


                                           — 184 —
                               FINANCIAL INFORMATION

     For the five-month period ended 31st May, 2005 (unaudited), cash generated from
operations was approximately US$8.8 million and profit before taxation was approximately
US$5.9 million. The difference was mainly attributable to the increase in trade and other payables
of approximately US$5.0 million attributed mainly to the increase in deferred income from
arrangement with a new independent supplier of gaming machine stations and offset, to a certain
extent, by the increase in trade and other receivables of approximately US$2.3 million attributed
mainly to the increase in trade receivables and advances to contractors for the construction of
NagaWorld, and the depreciation and amortisation of approximately US$0.2 million.


      For the financial year ended 31st December, 2005, cash generated from operations was
approximately US$25.3 million and profit before taxation was approximately US$26.3 million.
The difference was mainly attributable to the increase in trade and other receivables by
approximately US$4.1 million which was offset by the increase in trade and other payables of
approximately US$1.4 million, and depreciation and amortisation of approximately US$1.6
million. The main reason for the increase in trade and other receivables were the increase in trade
receivables by approximately US$3.7 million arising from the more favourable credit terms
granted to select STG Operators in 2005, in the form of a higher credit limit and rolling forward
facilities to the STG Operators’ future visits to our casino. The increase in prepayments of
professional fees of approximately US$0.4 million incurred by the Share Offer also increased the
trade receivables. The increase in trade and other payables was mainly attributable to the
increase in unredeemed chips of approximately US$1.6 million and increase in deferred income
of approximately US$2.5 million which was offset by a decline in trade payables of approximately
US$0.6 million.


     For the financial year ended 31st December, 2004, we recorded cash generated from
operations of approximately US$20.2 million and profit before taxation of approximately US$18.9
million. The difference was attributable mainly to the increase in trade and other payables of
approximately US$3.9 million and offset, to a certain extent, by the increase in trade and other
receivables of approximately US$3.1 million, and the depreciation and amortisation of
approximately US$0.5 million. The increase in trade and other payables was attributable mainly
to the increase in other creditors and accruals of approximately US$1.4 million and the increase
in unredeemed chips of approximately US$1.1 million. The increase in trade and other
receivables was attributable mainly to the increase in trade receivables of approximately US$2.5
million on the back of a pick up in our gaming operations and the increase in offering credit
terms to select STG Operators.


     For the financial year ended 31st December, 2003, we recorded cash generated from
operations of approximately US$26.1 million and profit before taxation of approximately US$16.8
million. The difference was attributable mainly to the increase in trade and other payables of
approximately US$4.3 million, the decrease in trade and other receivables of approximately
US$2.5 million, the increase in provisions of approximately US$2.1 million and the impact of
depreciation and amortisation of approximately US$0.4 million. The increase in trade and other
payables was attributable mainly to the granting of favourable credit terms by our creditors. The
decrease in trade and other receivables, in general, reflected the tightening of credit terms
offered to select STG Operators.


                                            — 185 —
                               FINANCIAL INFORMATION

Cash flow from investing activities


     For the five months ended 31st May, 2006, net cash of approximately US$3.1 million was
used in investing activities which related to the payment of approximately US$3.1 million for the
purchase of property, plant and equipment for the continued construction of NagaWorld.


     For the five-month period ended 31st May, 2005 (unaudited), net cash of approximately
US$3.5 million was generated from investing activities as a result of receipt of approximately
US$4.2 million as settlement for the advance to the Cambodian Government, and offset by the
payment of approximately US$0.8 million for the purchase of property, plant and equipment for
the construction of NagaWorld.


     For the financial year ended 31st December, 2005, net cash of US$0.5 million was generated
from investing activities as a result of receipt of approximately US$4.2 million as settlement for
the advance to the Cambodian Government, and offset by the payment of approximately US$3.7
million for the purchase of property, plant and equipment for the construction of NagaWorld.


    For the financial year ended 31st December, 2004, net cash used in investing activities was
approximately US$8.3 million. Our main investing activity was the purchase of property, plant
and equipment for the continued construction of NagaWorld.


     For the financial year ended 31st December, 2003, net cash used in investing activities was
approximately US$15.6 million. The net cash used in investing activities were mainly attributable
to our purchase of property, plant and equipment for the construction of NagaWorld.


Cash flow from financing activities


    For the five-month period ended 31st May, 2006, net cash of approximately US$14.7 million
was used in financing activities which related to the payment of an advance of approximately
US$14.7 million to controlling shareholder. The advance was settled subsequently by offsetting
dividend payable to the controlling shareholder.


     For the five-month period ended 31st May, 2005 (unaudited), net cash used in financing
activities were approximately US$13.3 million. The cash outflow from financing activities was
attributable mainly to the payment of dividend to the then shareholders of the Company of
approximately US$6.7 million and the payment of an advance of approximately US$6.6 million to
the controlling shareholder. The advance was settled subsequently by offsetting dividend
payable to the controlling shareholder.


    For the year ended 31st December, 2005, net cash used in financing activities were
approximately US$26.7 million. The cash outflow from financing activities was attributable
mainly to the payment of dividend to the then shareholders of the Company.



                                           — 186 —
                               FINANCIAL INFORMATION

     For the financial year ended 31st December, 2004, net cash used in financing activities were
approximately US$12.2 million. The cash outflow from financing activities was attributable
mainly to the payment of dividends of approximately US$24.0 million to the then shareholders
of the Company and offset by the repayment of advances to the controlling shareholder of the
Company of approximately US$11.8 million.


     For the financial year ended 31st December, 2003, net cash used in financing activities was
approximately US$8.4 million. The cash outflow from financing activities was attributable mainly
to the advance of approximately US$8.4 million to the controlling shareholder of the Company.
The amount due from these shareholders was settled, in full, by way of declaration of dividend
in 2004.


Borrowings


     As at 31st May, 2006 we had no outstanding liabilities, term loans, bank borrowings or         App1A(32)
                                                                                                    (5)(b)
similar indebtedness.


Capital expenditure and commitments


     Our principal capital expenditure and commitment comprises the costs expected to be
incurred in relation to the construction of the NagaWorld. Our capital commitments in respect of
the construction of NagaWorld for the three financial years ended 31st December, 2005 and
five-month period ended 31st May, 2006 are set out below:

                                                                                  For the
                                                                             five months
                                                     For the year ended            ended
                                                       31st December,           31st May,
                                                  2003       2004       2005         2006
                                                US$000     US$000     US$000      US$000

     NagaWorld
      - contracted but not incurred               8,406        6,866        6,128          7,702
      - authorised but not contracted            39,113       58,724       55,547         51,330


                                                47,519       65,590       61,675         59,032



     The capital commitments in respect of the construction of NagaWorld are expected to be
incurred over the next two years in stages, on budget and in accordance with the construction
plan and will be financed by proceeds raised from the Share Offer.


     Based on the estimate made by an independent construction surveyor, the total construction
costs of NagaWorld will be approximately US$90.5 million.


                                           — 187 —
                               FINANCIAL INFORMATION

Operating lease commitments


    As at 31st May, 2006, the Group had commitments under non-cancelable operating leases of
approximately US$14.6 million in respect of property.


Hedging policy


      The majority of our revenue and expenditure is denominated in US dollars and to a lesser
extend in Cambodian Riels and the Group was not exposed to material foreign currency exchange
risk for the three financial years ended 31st December, 2005 and the five-month period ended
31st May, 2006. Our Directors are of the view that the Group has no significant exposure to
foreign currency risk and as such, the Group has not entered into any arrangement for the
purpose of hedging against risk arising from the fluctuations of currency exchanges rates.


Trade receivables


    For the five-month period ended 31st May, 2006, the debtors’ turnover was around 30 days
which was similar to the turnover days for the five-month period ended 31st May, 2005
(unaudited). The trade receivables which was approximately US$7.7 million as at 31st May, 2006
was subsequently settled and reduced to approximately US$2.4 million as at 9th August, 2006.


     For the financial year ended 31st December, 2005, the debtors’ turnover days increased by
around 18 days mainly as a result of the increase in trade debtors of approximately US$3.7 million
(net of allowance for doubtful debts). Of the increase in trade debtors, approximately US$2.2
million represented the increase in extension of credit facilities granted to STG Operators.


    For the financial year ended 31st December, 2004, the debtors’ turnover days increased by
around 15 days, which was attributed mainly to an increase in trade debtors of approximately
US$2.5 million (net of allowance for doubtful debts). Of the increase in trade debtors,
approximately US$1.8 million represented the increase in extension of credit facilities granted to
STG Operators. The rate of increase in debtors was higher than the rate of increase in turnover
in view of the increase in STG Players who visited our casino in 2004.


Trade payables


     The Group was granted, in general, credit terms of 14-45 days by suppliers. For the
five-month period ended 31st May, 2006, the creditors’ turnover decreased to around 29 days
from around 40 days for the five-month period ended 31st May, 2005 (unaudited). The decrease
in creditors’ turnover days was caused mainly by the increase in cost of sales of approximately
US$3.9 million that was attributable to the increase in rollings achieved by STG players.




                                           — 188 —
                                 FINANCIAL INFORMATION

     For the financial year ended 31st December, 2005, the creditors’ turnover days decreased by
around 4 days mainly as a result of the decrease in trade creditors of approximately US$642,000.
The main reason for the decrease in trade creditors was due to the decline in amounts payable
in respect of the provision of gaming machine stations and settlement of professional fees.


     For the financial year ended 31st December, 2004, the creditors’ turnover days decreased by
around 3 days for the period, which was attributed mainly to the decrease in trade creditors of
approximately US$0.3 million. The rate of increase in cost of sales was higher than the rate of
increase in creditors.


Deposits paid by our suppliers


    The deposits paid by our suppliers comprised deposits paid by the equipment supplier of
one of our table games namely, “Caribbean Stud Poker”, for the purpose of a revenue sharing
arrangement under which the equipment supplier is entitled to share revenue with the Company
and take up all table losses. The deposits were made for the benefit of the Company in case losses
incurred were not honoured by the equipment supplier. Save for the above, there was no other
revenue sharing arrangement of a similar nature for other table games offered by us as at the
Latest Practicable Date.


ARRANGEMENT TO SETTLE OVERDUE OBLIGATION PAYMENTS AND OTHER TAXES


    In 1994, Ariston made an advance of US$4.25 million to the Cambodian Government, which
advance bears no interest and has no fixed terms of repayment. It was the intention to set-off the
advance against past and future tax liabilities or other payments payable by the Group to the
Cambodian Government and in this connection, overdue obligation payments and other taxes of
approximately US$5.7 million were incurred as at 31st December, 2005.


     Notwithstanding the above, Tan Sri Dr Chen assumed the repayment liability and settled the
advance in full in March 2005.


     Pursuant to the letters from the Cambodian Government dated 11th May, 2006 and 15th
September, 2006 respectively, the overdue obligation payments and other taxes of approximately
US$4.6 million will be settled in the following manner;

     4th week of May 2006                                                            US$250,000
     4th week of June 2006                                                          US$1,000,000
     4th week of July 2006                                                          US$1,000,000
     4th week of August 2006                                                        US$1,000,000
     October 2006                                                                   US$1,305,759
     Total                                                                          US$4,555,759




                                           — 189 —
                                FINANCIAL INFORMATION

      The penalties of approximately US$1.1 million, being the difference between the overdue
obligation payments and other taxes and penalties accrued up to 31st December, 2005 and the
total repayment amount above, was charged to the income statement during the period to 31st
December, 2005. According to advice from the Company’s Cambodian counsel, the letter from the
Cambodian Government dated 11th May, 2006 has no effect on the Casino Licence. The first four
instalments for overdue obligation payments and other taxes have been settled.


     Pursuant to a letter from the Cambodian Government dated 3rd August, 2006, it was further
agreed that the obligation payments in aggregate of US$994,788 payable by the Company for the
period between February 2006 and July 2006 will be settled in the fourth week of October 2006
with no interest, fine or penalty imposed.


    The exclusivity right of the Casino Licence of the Company is not affected by the delayed
payment of taxes referred to above.


PROPERTY INTEREST


     We own and occupy NagaWorld which is situated at NagaWorld Building, South of Samdech
Hun Sen’s Park, Phnom Penh, Kingdom of Cambodia. We acquired the lease of the land on which
NagaWorld is situated in August 2000 which leases for a period of 70 years from 1st August, 1996.


     Pursuant to the terms of the lease agreement for the NagaWorld site, the Cambodian
Government has a right to annul the agreement if the rental payments are outstanding for 6
consecutive months or more. As at 31st May, 2006, the Group had approximately US$453,990 of
rental payments outstanding for the period from April 2004 to June 2006. The rental payments
were outstanding mainly as a result of the negotiations for the settlement of the advance of
US$4.25 million made to the Cambodian Government (please refer to the paragraph headed
“Arrangement to settle overdue obligation payments and other taxes” in the section headed
“Financial Information” of this prospectus). On 9th June, 2006, the Group settled in full the
outstanding rental payments and the Municipality of Economy and Finance of the Cambodian
Government confirmed this in a letter to the Group dated 1st July, 2006. The Company’s legal
advisors as to Cambodian Law have opined that this letter constitutes a waiver by the
Municipality of its right to terminate the lease for late payment. The Group will take all necessary
steps to ensure that it continues to have the right to use the piece of land.


     We have further leased properties in Cambodia, Malaysia and in Hong Kong. Further details
of these leased properties are included in Appendix III to this prospectus.




                                            — 190 —
                               FINANCIAL INFORMATION

DIVIDENDS AND WORKING CAPITAL                                                                         A1a(34)(2)
                                                                                                      LR11.17,
                                                                                                      11.18

Dividends Policy


     It has been our policy to declare and pay dividends to our Shareholders and we intend to
continue our dividend policy after listing unless circumstances dictate otherwise. The funding for
the construction of NagaWorld is made to the extent that our policy to declare and pay dividends
to our Shareholders is not interrupted. Pursuant to our dividend policy, dividends of US$32.0
million for the financial year ended 31st December, 2004, approximately US$20.7 million for the
financial year ended 2005 and US$18.0 million relating to the five-month period ended 31st May,
2006 were declared and paid. The frequency and scale of dividends we have declared and paid
in the past should not be used as guidance for estimating the level of dividends to be paid by us
in the future. The amount and frequency of payment of any dividends will be at the discretion
of our Directors and will depend upon our future operations and earnings, capital requirements
and surplus, general financial condition, the applicable law and regulations and other factors that
our Directors deem relevant.


     Subject to the factors described above and the financial performance of the Group, it is the
present intention of our Directors to distribute not less than 50% of the Group’s distributable
profit for each year subsequent to the Share Offer. Cash dividends on our Shares, if any, will be
paid in HK dollars. Our Directors expect that in the future, subject to the financial performance
of the Group, the Group will declare and pay two dividends in each financial year.


Working Capital


     Our Directors are of the opinion that, after taking into account our internally generated        App1A(36)

funds and the estimated net proceeds of the Share Offer, we will have sufficient working capital
to satisfy our present requirements for at least twelve months from the date of this prospectus.


DISTRIBUTABLE RESERVES


     As at 31st May, 2006, our distributable reserves were approximately US$1,243,000                 App1A(33)(5)

(approximately HK$9,695,000).




                                            — 191 —
                               FINANCIAL INFORMATION

PROPERTY INTERESTS AND PROPERTY VALUATION


    Our property interest as valued by CB Richard Ellis, an independent property valuer,
as of 31st July, 2006 was approximately US$51,667,000 (equivalent to approximately
HK$403,000,000). There is a net revaluation surplus, representing the excess market value of the
property over its book value as of 31st May, 2006.


     For further details of our property interests, please refer to Appendix III to this prospectus.


     Disclosure of the reconciliation of the valuation of the interest in our property attributable
to us and such property interests in our consolidated balance sheets as of 31st May, 2006 as
required under Rule 5.07 of the Listing Rules is set forth below:

                                                                                      US$ millions

     Net book value as of 31st May, 2006                                                       35.3

     Movement for the period from 1st June to 31st July, 2006
      Additions                                                                                 0.5
      Depreciation                                                                               —


     Net book value as of 31st July, 2006                                                      35.8


     Valuation surplus                                                                         15.9


     Valuation as of 31st July, 2006                                                           51.7



      The revaluation surplus amounting to approximately US$15.9 million of the Group’s
property as at 31st July, 2006 will not be incorporated in the financial statements of the Group
for the year ending 31st December, 2006. It is the Group’s accounting policy to state its property
at cost less accumulated depreciation and any impairment loss in accordance with relevant
International Accounting Standards, rather than at revalued amounts. Had the revaluation surplus
been incorporated in the Group’s financial statements, the increase in the depreciation charge for
the year ending 31st December, 2006 would amount to approximately US$0.3 million.


NO MATERIAL ADVERSE CHANGE                                                                             App1A(34)
                                                                                                       (1)(b)
                                                                                                       App1A(28)(6)
                                                                                                       App1A(38)
     Our Directors confirm that there has been no material change in the financial or trading
position of the Group since 31st May, 2006 (being the date to which our latest consolidated
financial information is made up).




                                            — 192 —
                                      FINANCIAL INFORMATION

UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS


      The following is an illustrative statement of unaudited pro forma adjusted net tangible assets
of the Group which has been prepared for the purpose of illustrating the effect of the Share Offer
as if it had been taken place on 31st May, 2006 and is based on the audited consolidated net
tangible assets of the Group as at 31st May, 2006, as shown in the Accountants’ Report set out in
Appendix I to this prospectus and is adjusted as follows:

                                          Audited
                                    consolidated                                Unaudited             Unaudited
                                     net tangible         Estimated             pro forma             pro forma
                                liabilities of the         proceeds           adjusted net          adjusted net
                                     Group as at           from the               tangible        tangible assets
                                 31st May, 2006 1       Share Offer 2               assets            per Share 3

Based on Minimum
  Offer Price of
  HK$1.25 per Share
  US$’000                                (33,039)               69,993                36,954       US cents 1.85
  HK$’000                               (257,704)              545,945               288,241      HK cents 14.41

Based on Maximum
  Offer Price of
  HK$1.60 per Share
  US$’000                                (33,039)               91,839                58,800        US cents 2.94
  HK$’000                               (257,704)              716,344               458,640       HK cents 22.93


1    The audited consolidated net tangible liabilities of the Group as at 31st May, 2006:

                                                                                                             US$’000


     Audited consolidated net assets of the Group:                                                             70,702
     Less: Intangible assets                                                                                 (103,741)


     Net tangible liabilities                                                                                 (33,039)




2    The adjustment to the pro forma statement of net assets reflects the estimated proceeds from the Share Offer, net
     of related expenses, to be received by the Company. The estimated proceeds from the Share Offer is based on a
     minimum Offer Price of HK$1.25 per Share and a maximum Offer Price of HK$1.60 per Share. The translation of
     estimated proceeds from Hong Kong dollars into United States dollars was at HK$7.80 to US$1.00.


3    The number of Shares is based on a total of 2,000,000,000 Shares issued and outstanding during the entire year,
     adjusted as if the Share Offer and Capitalisation Issue had occurred at 31st May, 2006 excluding any Shares that
     might be issued under the Over-allotment Option.




                                                     — 193 —
                                     FINANCIAL INFORMATION

4    The revaluation surplus amounting to approximately US$15.9 million of the Group’s property as at 31st July, 2006
     will not be incorporated in the financial statements of the Group for the year ending 31st December, 2006. It is the
     Group’s accounting policy to state its property at cost less accumulated depreciation and any impairment loss in
     accordance with relevant International Accounting Standards, rather than at revalued amounts. Had the revaluation
     surplus been incorporated in the Group’s financial statements, the increase in the depreciation charge for the year
     ending 31st December, 2006 would amount to approximately US$0.3 million.


      Our property interests as of 31st July, 2006 have been valued by CB Richard Ellis Limited,
an independent property valuer, and the relevant property valuation report is set out in Appendix
III “Property Valuation”. The above adjustment does not take into account the surplus attributable
to us arising from the revaluation of our property interests amounting to US$15.9 million. The
revaluation surplus will not be incorporated in our financial statements for the year ending 31st
December, 2006. If the valuation surplus was recorded in our financial statements, our
depreciation expense for the year ending 31st December, 2006 would increase by approximately
US$0.3 million. Please refer to Appendix II to this prospectus for further details.




                                                     — 194 —
                      FUTURE PLANS AND USE OF PROCEEDS

FUTURE PLANS AND PROSPECTS


     Our vision is to become a world class casino operator with standards comparable to those
casinos operating in countries such as Australia and the United States and for NagaWorld, as an
integrated hotel and entertainment complex, to become a preferred tourist destination, alongside
Cambodia’s ancient temples of Angkor, for visitors travelling to Cambodia. The hotel wing of
NagaWorld, upon completion, will house a collection of entertainment, leisure and retail outlets
which will allow us to develop gaming and non-gaming revenue streams. Our focus will be to
further expand our markets in the PRC and ASEAN countries such as Thailand and Vietnam. In
order to achieve our objectives, we intend to implement the following business development
strategies:


     Expand facilities at NagaWorld


          We are closely monitoring the completion of the hotel wing of NagaWorld to help
     ensure that it will be operational according to schedule and within budget. We expect to
     open 60 rooms in the hotel wing of NagaWorld by the fourth quarter of 2006 followed by
     157 rooms by the first half of 2007.


     Increase marketing presence


          We intend to develop our regional marketing presence. We are exploring the possibility
     of actively marketing our resort hotel (upon its completion) in our traditional markets
     namely, Singapore, Malaysia and the PRC, and nearby markets namely, Thailand and
     Vietnam. These promotional efforts will be carried out with the view to raising the profile
     of our hotel as well as promoting both NagaWorld and Cambodia as tourist destinations.


     Strengthen and establish commercial ties with STG Operators


          We intend to continue to develop our commercial ties with STG Operators on a
     person-to-person basis, and to develop new ties with STG Operators outside our core
     markets in Singapore, Malaysia and the PRC. Our Directors believe that the establishment of
     strong commercial ties with such tour operators will ensure a stable flow of customers to
     NagaWorld.


     Expand the scope of our products and services


          We will continue to explore opportunities to expand the scope of products (such as the
     variety of table games and gaming machine stations) and services offered by NagaWorld and
     to broaden our customer base and gaming and non-gaming revenue sources.




                                          — 195 —
                      FUTURE PLANS AND USE OF PROCEEDS

USE OF PROCEEDS


     On the assumption that the Over-allotment Option is not exercised, the net proceeds from        3rd Sch(7)
                                                                                                     App1A(17),
the Share Offer, after deducting related expenses, are estimated to be approximately HK$546          (48)

million (based on an Offer Price of HK$1.25 per Share, being the lowest of the stated range of
the Offer Price of between HK$1.25 and HK$1.60 per Share). The Directors presently intend that
the net proceeds from the Share Offer will be utilised as follows:


     —    as to approximately HK$461 million, for the development of NagaWorld;


     —    as to approximately HK$62 million, for the development of our gaming activities such
          as installation of gaming equipment and tables, and other ancillary equipment for the
          public gaming floor in the hotel lobby; and


     —    as to the remaining balance of approximately HK$23 million, for our general working
          capital.


     In the event that the Over-allotment Option is exercised in full, the additional net proceeds
of approximately HK$89 million (based on an Offer Price of HK$1.25 per Share, being the lowest
of the stated range of the Offer Price of between HK$1.25 and HK$1.60 per Share) will be used
for the development of our gaming activities such as installation of gaming equipment and tables,
and other ancillary equipment for public gaming floor at the hotel lobby. Additional proceeds
from the Share Offer (based an Offer Price higher than HK$1.25 per Share) will be utilised in the
proportion as scheduled above.




                                           — 196 —
                     FUTURE PLANS AND USE OF PROCEEDS

     Approximately HK$461 million of the proceeds from the Share Offer (based on the Offer
Price of HK$1.25 per Share) will be used to fund the construction cost of NagaWorld as follows:

                                                                                  Share Offer
                                                                                  HK$’ million

    Hotel wing and car park block                                                           253
    Entertainment wing                                                                       68
    External works and services                                                               7
                                                                                       ---------

                                                                                           328

    Preliminaries (mobilisation, surveying fees etc)                                         21
    Contingencies (allowance for cost overruns only based on a
      percentage of total construction cost)                                                 14
                                                                                       ---------

    Sub-Total                                                                              363

    Furniture, furnishings and equipment                                                     52
    Hotel operators equipment - hotel wing (this includes interior
      fitting-out items such as tables, desks, beds and other hotel
      fittings)                                                                              46
                                                                                       ---------

    Total                                                                                  461



    To the extent that the net proceeds from the Share Offer are not immediately used for the
above purposes, it is the management’s present intention to place such proceeds in short-term
demand deposits, money-market instruments or other forms of banking deposits.




                                          — 197 —
                                     UNDERWRITING

UNDERWRITERS                                                                                        A1a(15)(2)(h)



Placing Underwriters

     Anglo Chinese
     Kim Eng Securities
     Evolution Watterson Securities Limited
     China Merchants Securities (HK) Co., Limited
     First Shanghai Securities Limited
     Taiwan Securities (Hong Kong) Company Limited
     VC Brokerage Limited

Public Offer Underwriters

     Anglo Chinese
     Kim Eng Securities
     Evolution Watterson Securities Limited
     China Merchants Securities (HK) Co., Limited
     First Shanghai Securities Limited
     Taiwan Securities (Hong Kong) Company Limited
     VC Brokerage Limited

UNDERWRITING ARRANGEMENTS AND EXPENSES

Underwriting Agreement                                                                              A1a(15)(2i)



     Under the Underwriting Agreement, the Company has agreed to offer (a) the Public Offer
Shares for subscription on and subject to the terms and conditions of this prospectus and the
Application Forms relating thereto, and (b) the Placing Shares for subscription by professional
investors, institutional investors and other investors on and subject to the terms and conditions
of this prospectus.

     In addition, the Company has granted the Over-allotment Option to Kim Eng Securities
exercisable from time to time during the period of 30 days from the last date of lodging
applications under the Public Offer to require the Company to issue up to 75,000,000 additional
new Shares, representing 15% of the Shares initially available under the Share Offer, on the same
terms as those applicable to the Public Offer and the Placing, to cover over-allocations in the
Placing, if any.

      Subject to the listing committee of the Stock Exchange granting the listing of, and
permission to deal in, the Shares (subject only to allotment and issue) and to certain other
conditions set out in the Underwriting Agreement being satisfied (or where appropriate, waived
in whole or in part), (a) the Public Offer Underwriters have severally agreed to subscribe or
procure subscribers, on the terms and conditions of this prospectus and the Application Forms
relating thereto, for the Public Offer Shares now being offered and which are not taken up under
the Public Offer; and (b) the Placing Underwriters have severally agreed to subscribe or purchase


                                           — 198 —
                                       UNDERWRITING

or procure subscribers or purchasers or placees for the Placing Shares which have not been
subscribed, purchased or placed pursuant to the Placing. If the Underwriting Agreement does not
become unconditional or is terminated in accordance with the terms therein, the Company will
make an announcement as soon as possible.


Grounds for termination


     The obligations of the Underwriters to subscribe or purchase or procure subscribers or
purchasers for the Offer Shares are subject to termination and Kim Eng Securities has the absolute
discretion, after consultation with Anglo Chinese and, to the extent it is practicable to do so, the
Company, and upon giving written notice to the Company, to terminate the Underwriting
Agreement with immediate effect if any of the following events shall occur at any time prior to
5:00 p.m. on the business day immediately prior to the Listing Date:


     (A) if it has come to the notice of Kim Eng Securities, acting for itself and on behalf of the
         Underwriters:


          (i)    that any statement contained in this prospectus and/or the Application Forms in
                 relation to the Share Offer was or when any of such documents was issued, or has
                 become untrue, incorrect or misleading in any material respect in the context of
                 the Share Offer; or


          (ii)   that any matter has arisen or has been discovered which has not been disclosed
                 in this prospectus or otherwise comes to the attention of Kim Eng Securities and
                 would, had it arisen or been discovered immediately before the date of this
                 prospectus and/or the Application Forms in relation to the Share Offer, constitute
                 a material omission therefrom; or


          (iii) any material breach of the warranties or there has been a material breach by the
                Company or any of the Covenantors of any provisions in the Underwriting
                Agreement other than those given by the Sponsor, the Joint Lead Managers or the
                Underwriters; or


          (iv) any event, act or omission which gives or is likely to give rise to any material
               liability of the Company pursuant to the indemnities contained in the
               Underwriting Agreement; or


          (v)    any material breach of the obligations imposed upon any party to the
                 Underwriting Agreement (other than on any of the Sponsor, the Joint Lead
                 Managers or the Underwriters); or


          (vi) any material adverse change in the business or in the financial or trading position
               of any member of the Group;


                                             — 199 —
                                  UNDERWRITING

(B) if there develops, occurs or comes into effect:


    (i)    any change in, or any event or series of events likely to result in any material
           change in, local, national or international financial, political, economic, military,
           industrial, fiscal, regulatory, currency or market conditions or equity securities or
           stock or other financial market conditions or any monetary or trading settlement
           system (including, without limitation, any change in the system under which the
           value of the Hong Kong currency is linked to that of the United States) and/or the
           occurrence of any disasters in Hong Kong, the Cayman Islands, the United States,
           the United Kingdom, Japan, the PRC, Singapore, Malaysia, Cambodia; or


    (ii)   any new applicable law or change in applicable existing laws or any change in the
           interpretation or application thereof by any court or other competent authority in
           the PRC, Hong Kong, the Cayman Islands, the United States, the United Kingdom,
           Japan, Singapore, Malaysia, Cambodia; or


    (iii) the imposition of economic sanctions, in whatever form by the United States of
          America or by the European Union (or any member thereof) on the PRC, Hong
          Kong, the Cayman Islands, the United States of America, the United Kingdom,
          Japan, Singapore, Malaysia or Cambodia; or


    (iv) any event of force majeure affecting the PRC, Hong Kong, the Cayman Islands, the
         United States of America, the United Kingdom, Japan, Singapore, Malaysia,
         Cambodia including, without limiting the generality thereof, any major
         governmental change or political upheaval such as widespread repression of the
         public, widespread suppression of civil liberties or freedom of movement, general
         closing of points of entry or borders or significant constitutional change, or acts
         of God, war, outbreak or severe escalation of hostilities (whether or not war is
         declared) or act of terrorism, terrorist strike or counter terrorist strike anywhere
         in the world which directly affects any of the above mentioned jurisdictions or
         declaration of a national or international emergency or war, coup d’etat, regime
         change, riot, public disorder, civil commotion, fire, flood, explosion, epidemic,
         outbreak of an infectious disease, calamity, crisis, strike or lock-out (whether or
         not covered by insurance), accident or interruption; or


    (v)    the imposition of any moratorium, suspension or restriction on trading in
           securities generally on New York Stock Exchange, NASDAQ, the Stock Exchange
           or any major disruption of any securities settlement or clearing services in Hong
           Kong or on commercial banking activities in New York, London or Hong Kong,
           declared by the relevant authorities, due to exceptional financial circumstances or
           otherwise; or


    (vi) a change or development involving a prospective change in taxation or exchange
         control (or the implementation of any exchange control) in Hong Kong, the
         Cayman Islands, Malaysia or Cambodia; or


                                        — 200 —
                                    UNDERWRITING

       (vii) any outbreak, continuation or escalation of any outbreak of any infectious
             disease, virus or similar event in the PRC, the Cayman Islands, the United States
             of America, the United Kingdom, Japan, Singapore, Malaysia, Cambodia, or the
             refusal of a material number of potential investor(s) to meet with any of the
             Underwriters as a result of any of the foregoing,

       which in each case, in the absolute opinion of Kim Eng Securities (for itself and on
       behalf of the Underwriters):

       (a)   is or will or is likely to be materially adverse to the general affairs, management,
             business, financial, trading or other condition or prospects of the Group taken as
             a whole or, in the case of a change or development involving a prospective
             change in taxation or exchange control, or the implementation of any exchange
             control, in the PRC, Hong Kong, Cambodia, Malaysia, is or will or is likely to be
             materially adverse to any present or prospective shareholder of the Company in
             his capacity as such; or

       (b)   has or will or is likely to have a material adverse effect on the success of the Share
             Offer or the level of Offer Shares being applied for or accepted or subscribed for
             or the distribution of the Offer Shares or dealings in the Shares in the secondary
             market; or

       (c)   make it impracticable, inadvisable or inexpedient to proceed with the Share Offer
             on the terms and in the manner contemplated by this prospectus.

UNDERTAKINGS

   The Underwriting Agreement contains the following undertakings:

   (A) each of the Covenantors (to the extent that each of them directly or indirectly holds,
       or will hold before the Listing Date, any Shares) has jointly and severally undertaken
       to and covenanted with the Company, the Sponsor, the Joint Lead Managers and the
       Underwriters that:

       (i)   save pursuant to the Share Offer or as permitted under the Listing Rules each of
             the Covenantors shall not, and shall procure that none of its affiliates, associates,
             nominees or trustees holding in trust for it shall, during the period ending six
             months following the Listing Date (the “First Six Months Period”) (a) sell, transfer
             or otherwise dispose of or create any rights in respect of any of its direct or
             indirect interest in the Shares held by it or its affiliates, associates, nominees or
             trustees; or (b) sell, transfer or otherwise dispose of any interest in any shares in
             any company controlled by any of them which is directly, or through another
             company indirectly, the beneficial owner of any of the issued capital of the
             Company (provided that the foregoing restrictions shall not apply to any Shares
             which each of the Covenantors or any of its affiliates or associates may acquire or
             become interested in following the Listing Date provided that any such


                                          — 201 —
                                   UNDERWRITING

           acquisition would not result in any breach of Rule 8.08 of the Listing Rules nor
           shall such restrictions restrict Tan Sri Dr Chen from lending Shares held by him to
           Kim Eng Securities pursuant to the Stock Borrowing Agreement and nor shall such
           restrictions restrict the Covenantors or their affiliates, associates, nominees or
           trustees from pledging or charging Shares held by it or them as security in favour
           of an authorised financial institution for a bona fide commercial loan), which are
           in addition to similar restrictions commencing on the date by reference to which
           disclosure of the covenantors is made in this prospectus pursuant to Listing Rule
           10.07(1)(a);

    (ii)   that, it shall not, and shall procure that none of its affiliates, associates, nominees
           or trustees holding in trust for it shall, at any time during the period of six months
           commencing from the expiry of the First Six Months Period (the “Second Six
           Months Period”), in cases where the Covenantor (or where appropriate, the
           relevant Covenantors taken together) is a controlling shareholder of the Company
           (within the meaning of the Listing Rules), take, permit or cause to be done any
           action referred to in paragraph (A)(i) above or paragraph (B) below which would
           result in the Covenantor (or where appropriate, the relevant Covenantors taken
           together) ceasing to be a controlling shareholder of the Company (within the
           meaning of the Listing Rules), and in the event of any disposal of such Shares (or
           any other shares or securities or an interest in the Company arising or deriving
           therefrom), it shall, and shall procure that its affiliates, associates, nominees or
           trustees holding in trust for it to take all reasonable steps to ensure that such
           disposal will not create a disorderly or false market (provided that the foregoing
           restriction shall not apply to any Shares which each of the Covenantors or any of
           its affiliates or associates may acquire or become interested in following the
           Listing Date provided always that any such acquisition would not result in any
           breach of Rule 8.08 of the Listing Rules nor shall this restrict the Covenantors or
           their affiliates, associates, nominees or trustees from pledging or charging Shares
           held by it or them as security in favour of an authorised financial institution for
           a bona fide commercial loan);

    (iii) each of them shall, and shall procure that each of their respective associates,
          nominees or trustees holding in trust for any of them shall comply with all
          restrictions and requirements under the Listing Rules on the disposal by them, or
          by the registered holder, of any Shares or other securities of the Company in
          respect of which any of them is, or is shown in this prospectus to be, the
          beneficial owner; and

    (iv) except as disclosed in this prospectus, none of them nor any of their affiliates or
         companies controlled by them has any present intention of disposing of any
         Shares or other securities of the Company in respect of which any of them is
         shown to be the beneficial owner, or any beneficial interest therein;

(B) each of the Company and the Covenantors has jointly and severally undertaken to and
    covenanted with the Sponsor, the Joint Lead Managers and the Underwriters, that it


                                        — 202 —
                                  UNDERWRITING

     shall not (in the case of the Company) and shall procure (in the case of each of the
     Covenantors) that the Company and its subsidiaries shall not, except in certain
     prescribed circumstances, which include the issue of Shares under the Share Offer and
     the exercise of the Over-allotment Option and options which may be granted under the
     Share Option Scheme, within the First Six Months Period, (i) allot, issue or agree to
     allot or issue any securities of the Company or any subsidiary (including warrants or
     other securities convertible into or exchangeable for Shares or options or other rights
     to subscribe for Shares and whether or not of a class already listed); or (ii) grant or
     agree to grant any options or other rights carrying any right to subscribe for or
     otherwise acquire any securities of the Company or any of its subsidiaries; or (iii) offer
     to or agree to do any of the foregoing or announce any intention to do so; or (iv) enter
     into any swap or other arrangement that transfers, in whole or in part, any of the
     economic consequences of ownership of any Shares;

(C) Each of the Covenantors (to the extent that any of them directly or indirectly holds, or
    will hold before the Listing Date, any Shares) has jointly and severally undertaken with
    the Company, the Sponsor, the Joint Lead Managers and the Underwriters that within
    the period of twelve months from the Listing Date, if any of them pledges, charges,
    encumbers or creates any third party rights in respect of any of the Shares beneficially
    owned by it, or each of its associates, nominees or trustees, it will:

     (i)    immediately inform or procure to inform the Company and the Joint Lead
            Managers in writing of the details and the number of Shares subject to such
            pledge, charge or encumbrance or third party rights and the proposed use of any
            funds secured thereby; and

     (ii)   immediately inform the Company and the Joint Lead Managers, and give all
            material information, if any of them receives indication, either verbal or written,
            from the pledgee or chargee that any of the pledged or charged securities or
            interests in the securities of the Company will be disposed of.

     The Company will notify the Stock Exchange and disclose the matters referred to in (i)
     and (ii) above, as applicable, by way of a press notice as soon as possible after being
     so informed by the relevant Covenantor; and

(D) Each of the Covenantors and the Company has jointly and severally undertaken and
    covenanted with the Sponsor, the Joint Lead Managers and the Underwriters that, save
    with the prior written consent of the Sponsor and the Joint Lead Managers (for
    themselves and on behalf of the Underwriters) such consent not to be unreasonably
    withheld or delayed, it shall not, in the case of the Company, and shall procure, in the
    case of the Covenantors, that the Company and its subsidiaries shall not at any time
    within the period during which the Over-allotment Option may be exercised by Kim
    Eng Securities, declare or make any payment of dividends, make any other distribution
    of profits whatsoever, any return of value or any issue of bonus Shares to its
    shareholders or offer or agree to do any of the foregoing or announce any intention to
    do so.


                                        — 203 —
                                       UNDERWRITING

TOTAL COMMISSION AND EXPENSES                                                                           A1a(13)
                                                                                                        3rd Sch 14
                                                                                                        A1a20(2)

     The Underwriters will receive a commission of 4% of the aggregate issue price of all the
Offer Shares, including such number of Shares to be issued under the Over-allotment Option
(being not more than 75,000,000 Shares), out of which each Underwriter will pay its own
sub-underwriting commission and selling concessions (if any). In addition, Anglo Chinese will
receive a financial advisory fee of US$100,000 for providing advisory services and for acting as
the Sponsor to the Share Offer and an arrangement fee at the rate of 1% of the aggregate Offer
Price of all the Offer Shares (including all Over-allotment Shares) for its services in arranging the
Share Offer.


     Such fees and commissions, together with the Stock Exchange listing fees, the SFC
transaction levy, the Stock Exchange trading fee, legal and other professional fees, printing and
other expenses relating to the Share Offer, which are estimated to amount in aggregate to
approximately HK$79 million (based on an Offer Price of HK$1.25 per Share, being the lowest
of the stated range of the Offer Price of between HK$1.25 and HK$1.60 per Share), assuming the
Over-allotment Option is not exercised, will be payable by the Company.


UNDERWRITERS’ INTERESTS IN THE COMPANY


     Save for its obligations under the Underwriting Agreement, none of the Underwriters or any
of their respective holding companies, or any of their respective subsidiaries was beneficially
interested, directly or indirectly, in any shareholding in the Company or any of its subsidiaries
or has any right, whether legally enforceable or not, to subscribe for or to nominate persons to
subscribe for securities in the Company or any of its subsidiaries.




                                             — 204 —
                          STRUCTURE OF THE SHARE OFFER

THE SHARE OFFER                                                                                          A1a(15)
                                                                                                         (1)(2)(a-c)
                                                                                                         A1a49
                                                                                                         (1)(b)
      The Share Offer comprises the Public Offer and the Placing. Assuming the Over-allotment
Option is not exercised, the total number of Offer Shares under the Public Offer and the Placing         P.N.18
                                                                                                         (4.2, 4.5)
is 500,000,000 Shares. 50,000,000 new Shares, representing 10% of the total number of Shares             App6(1)

initially available under the Share Offer, will initially be offered for subscription under the Public
Offer. 450,000,000 new Shares, representing 90% of the total number of Shares initially available
under the Share Offer, will initially be offered for subscription or purchase under the Placing.


     Investors may apply for Shares under the Public Offer or indicate an interest for Shares
under the Placing, but may not do both. The Public Offer is open to members of the public in
Hong Kong as well as to institutional and professional investors. The Placing will involve
selective marketing of Shares to professional and institutional investors and other investors
expected to have a sizeable demand for the Shares. Professional and institutional investors and
other investors generally include brokers, dealers, companies (including fund managers) whose
ordinary business involves dealing in shares and other securities and corporate entities which
regularly invest in shares and other securities.


     Assuming the Over-allotment Option is not exercised, the Offer Shares will represent
approximately 25% of the enlarged issued share capital of the Company immediately after
completion of the Share Offer and the Capitalisation Issue. If the Over-allotment Option is
exercised in full, the Offer Shares comprised in the Share Offer will represent approximately
27.7% of the enlarged issued share capital of the Company immediately after completion of the
Share Offer and the Capitalisation Issue and the exercise of the Over-allotment Option.


      The Public Offer is fully underwritten by the Public Offer Underwriters and the Placing is         IE Note 11

fully underwritten by the Placing Underwriters, in each case, on a several basis, and each being
subject to the Offer Price that will be agreed between the Company and the Joint Lead Manager
(on behalf of the Underwriters) and other conditions set out in the section headed “Underwriting”
in this prospectus.


OFFER PRICE AND PRICE PAYABLE ON APPLICATION


      The Offer Price will not be more than HK$1.60 per Share and is expected to be not less than        IE Note 9

HK$1.25 per Share. Based on the maximum Offer Price of HK$1.60 per Share, plus 1% brokerage
fee, 0.005% SFC transaction levy and 0.005% Stock Exchange trading fee, one board lot of 2,000
Shares will amount to a total of HK$3,232.32.


     The Offer Price is expected to be determined by the Company and the Joint Lead Managers             IE Note 10

(on behalf of the Underwriters) at the Price Determination Time by 5:00 p.m. on Wednesday, 11th
October, 2006, or such later time as may be agreed by the Company and the Joint Lead Managers
(on behalf of the Underwriters) but in any event no later than 5:00 p.m. on Thursday, 12th
October, 2006.


                                             — 205 —
                          STRUCTURE OF THE SHARE OFFER

     If, based on the level of interest expressed by prospective professional, institutional and       IE Notes 8, 12

other investors during the book-building process, the Joint Lead Managers (on behalf of the
Underwriters, and with the consent of the Company) think it appropriate (for instance, if the level
of interest is below the indicative Offer Price range), the indicative Offer Price range may be
reduced below that stated in this prospectus at any time prior to the morning of the latest day for
lodging applications under the Public Offer. In such case, the Company will, as soon as
practicable following the decision to make such reduction, and in any event not later than the
morning of the last day for lodging applications under the Public Offer cause there to be
published in the South China Morning Post (in English) and the Hong Kong Economic Times (in
Chinese) notice of the reduction of the indicative Offer Price range. Such notice will also include
any financial information which may change as a result of any such reduction. If applications for
Public Offer Shares have been submitted prior to the day which is the last day for lodging
applications under the Public Offer, then even if the Offer Price is so reduced, such applications
cannot be subsequently withdrawn.


    If, for any reason, the Offer Price is not agreed between the Company and the Joint Lead           IE Note 10

Managers (on behalf of the Underwriters) before the Price Determination Time (or such later time
and/or day as agreed), the Share Offer will not proceed and will lapse.


CONDITIONS OF THE SHARE OFFER                                                                          A1a(15)(2)



    Acceptance of your application for the Offer Shares pursuant to the Share Offer is
conditional upon:


     (a)   Listing                                                                                     A1a14(1)



          the listing committee of the Stock Exchange granting the listing of, and permission to
     deal in, the Shares in issue and to be issued as mentioned in this prospectus, any Shares
     which may fall to be issued upon the exercise of the Over-allotment Option and Shares
     which may be issued under the Share Option Scheme;


     (b)   Determination of the Offer Price


          the Offer Price having been duly determined on or before the Price Determination Date
     in accordance with the Underwriting Agreement; and


     (c)   Underwriting Agreement


          the obligations of the Underwriters under the Underwriting Agreement having become
     unconditional, including, if relevant, as a result of the waiver of any conditions by the Joint
     Lead Managers, acting for themselves and on behalf of the Underwriters, and not being
     terminated in accordance with its terms or otherwise, in each case, on or before the dates
     and times specified in the Underwriting Agreement, unless and to the extent such conditions
     are validly waived on or before such dates and times, and in any event not later than 5:00
     p.m. on the date before the Listing Date.


                                            — 206 —
                         STRUCTURE OF THE SHARE OFFER

    In the event that the Share Offer does not become unconditional, the Share Offer will lapse
and a press announcement will be made by the Company as soon as possible. Details of the
Underwriting Agreement and its conditions and grounds for termination are set out in the section
headed “Underwriting” in this prospectus.


     If any of these conditions are not fulfilled, or where applicable, waived by the Joint Lead
Managers, for and on behalf of the Underwriters, your application money will be returned to you
as soon as possible without interest. The terms on which your money will be returned to you are
set out under the paragraph headed “Refund of your money” on the Application Forms. In the
meantime, the application money will be held in one or more separate bank accounts with the
receiving banker or other licensed bank or banks in Hong Kong licensed under the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong) (as amended).


THE PUBLIC OFFER


Number of Shares Initially Offered                                                                  IE Note 6



     The Company is initially offering 50,000,000 Public Offer Shares at the Offer Price,           IE Note 11

representing in aggregate 10% of the Offer Shares initially available under the Share Offer, for
subscription by members of the public in Hong Kong. The Public Offer Shares will represent
approximately 2.5% of the Company’s issued share capital immediately after completion of the
Share Offer, assuming that the Over-allotment Option is not exercised. The Public Offer is fully
underwritten by the Public Offer Underwriters, subject to Offer Price that will be agreed between
the Company and the Joint Lead Manager (on behalf of the Underwriters) and the terms and
conditions of the Underwriting Agreement.


     The Public Offer is open to all members of the public in Hong Kong. Persons allotted Shares
under the Public Offer cannot apply for Shares under the Placing. An applicant for Shares under
the Public Offering will be required to give an undertaking and confirmation in the Application
Form submitted by him that he has not taken up any Shares under the Placing nor otherwise
participated in the Placing nor has he indicated (nor will he indicate) an interest under the
Placing, and such applicant’s application will be rejected if such undertaking and confirmation
is breached and/or found to be untrue, as the case may be. Completion of the Public Offer will
be subject to the conditions stated under the paragraph headed “Conditions of the Share Offer”
above.


     Allocation of the Public Offer Shares to applicants under the Public Offer will be based
solely on the level of valid applications received under the Public Offer. When there is
over-subscription under the Public Offer, allocation of the Public Offer Shares may involve
balloting, which would mean that some applications may be allotted more Public Offer Shares
than others who have applied for the same number of Public Offer Shares, and those applicants
who are not successful in the ballot may not receive any Public Offer Shares.



                                           — 207 —
                          STRUCTURE OF THE SHARE OFFER

     The total number of Public Offer Shares to be allotted and issued pursuant to the Public
Offer may change as a result of the clawback arrangement or any discretionary reallocation as
described under the sub-paragraph headed “Over-subscription” below, or any reallocation of
unsubscribed Public Offer Shares originally included in the Public Offer to the Placing or any
reallocation of the unsubscribed Placing Shares to the Public Offer as described under the
sub-paragraph headed “Under-subscription” below.


THE PLACING


     The Company is initially offering 450,000,000 new Shares representing in aggregate 90% of         App 6(1)
                                                                                                       1E Note 11
the total number of Offer Shares initially available under the Share Offer, for subscription by
professional, institutional and individual investors by way of Placing. The Placing is fully
underwritten by the Placing Underwriters, subject to the Offer Price that will be agreed between
the Company and the Joint Lead Manager (on behalf of the Underwriters) and the terms and
conditions of the Underwriting Agreement.


     Pursuant to the Placing, it is expected that the Placing Underwriters or selling agents
nominated by the Placing Underwriters on behalf of the Company shall place the Placing Shares
at the Offer Price payable by the purchasers of the Placing Shares. Investors purchasing the
Placing Shares are also required to pay 1.0% brokerage, 0.005% Stock Exchange trading fee and
0.005% SFC transaction levy. Placing Shares will be placed with professional, institutional and
individual investors in Hong Kong and certain other jurisdictions outside the United States.
Professional investors generally include brokers, dealers and companies (including fund
managers) whose ordinary business involves dealings in shares and other securities and entities
which regularly invest in shares and other securities.


      In Hong Kong, retail investors should apply for the Offer Shares under the Public Offer, as
retail investors applying for Placing Shares (including applying through banks and other
institutions) are unlikely to be allocated any Placing Shares. If you are a professional,
institutional or individual investor and have applied for the Placing Shares, you are required to
declare that you have applied for the Placing Shares only. In such event, you will not receive any
Shares under the Public Offer.


     All decisions concerning the allocation of Placing Shares to prospective placees pursuant to
the Placing will be made on the basis of and by reference to a number of factors including the
level and timing of demand, total size of the relevant investor’s invested assets or equity assets
in the relevant sector and whether or not it is expected that the relevant investor is likely to buy
further, and/or hold or sell its Placing Shares, after the listing of the Shares on the Main Board.
Such allocation is intended to result in a distribution of the Placing Shares on a basis which would
lead to the establishment of a solid shareholder base to the benefit of the Company and its
shareholders as a whole. In addition, the Placing Underwriters have agreed to assist the Company
to achieve the minimum public float and minimum spread requirements under the Listing Rules.




                                            — 208 —
                          STRUCTURE OF THE SHARE OFFER

OFFER MECHANISM — BASIS OF ALLOCATION OF THE OFFER SHARES


The Share Offer                                                                                        P.N.18(3.1)
                                                                                                       P.N.18.(4.6)


    There will initially be a total of 50,000,000 Public Offer Shares available for subscription       1E Notes 5, 6

under the Public Offer under the WHITE and YELLOW Application Forms.


     For allocation purposes only, the total number of Public Offer Shares initially available for
public subscription under the Public Offer (taking into account any adjustment of Offer Shares
between the Placing and the Public Offer referred to below) is to be divided equally into two
pools for allocation purposes: Pool A comprising 25,000,000 Public Offer Shares and Pool B
comprising 25,000,000 Public Offer Shares. The Shares in Pool A will be allocated on an equitable
basis to successful applicants who have applied for Public Offer Shares with a total subscription
amount (excluding SFC transaction levy, Stock Exchange trading fee and brokerage payable
thereon) of HK$5 million or less. The Shares in Pool B will be allocated on an equitable basis to
successful applicants who have applied for Public Offer Shares with a total subscription amount
(excluding SFC transaction levy, Stock Exchange trading fee and brokerage payable thereon) of
more than HK$5 million and up to the total value of Pool B.


      Applicants should be aware that applications within the same pool, and as well as between
different pools, are likely to receive different allocation ratios. Where one of the pools is
undersubscribed and the other pool is oversubscribed, the surplus Public Offer Shares from the
undersubscribed pool will be transferred to the other pool to satisfy excess demand in the
oversubscribed pool and be allocated accordingly. Applicants can only apply to receive an
allocation of Public Offer Shares in either Pool A or Pool B but not from both pools. No
applications will be accepted from investors applying for more than the total number of Public
Offer Shares originally allocated to each pool. Multiple applications or suspected multiple
applications within either pool or between pools will be rejected.


      Applicants under the Public Offer will be required each to give an undertaking and
confirmation in the Application Form submitted by them that they and any person(s) for whose
benefit they are making the application will not receive any Placing Shares under the Placing,
have not indicated and will not indicate an interest for any Placing Shares under the Placing, and
their applications are liable to be rejected if the said undertaking and/or confirmation is breached
and/or untrue, as the case may be. The Joint Lead Managers in consultation with the Company,
have full discretion to reject or accept any application, or to accept only part of any application.


      Allocation of the Public Offer Shares, including any Offer Shares which may be reallocated
from the Placing, under the Public Offer will be based solely on the level of valid applications
received under the Public Offer. When there is over-subscription under the Public Offer, the basis
of allocation may vary depending on the number of Public Offer Shares validly applied for by
each applicant. The allocation of the Public Offer Shares may involve balloting, which would
mean that some applicants may be allotted more Public Offer Shares in such circumstances than
others who have applied for the same number of the Public Offer Shares, and those applicants
who are not successful in the ballot may not receive any Public Offer Shares.


                                            — 209 —
                          STRUCTURE OF THE SHARE OFFER

     Allocation of the Placing Shares will be based on a number of factors, including the level
and timing of demand and whether or not it is expected that the potential investors are likely to
buy further Shares, or hold or sell their Shares, after the listing of the Shares on the Stock
Exchange. Such allocation is intended to result in a distribution of the Placing Shares which
would lead to the establishment of a solid professional and institutional shareholder base to the
benefit of the Company and its shareholders as a whole. Investors who have been allocated any
of the Placing Shares under the Placing will not be allocated any Public Offer Shares under the
Public Offer. Similarly, investors who have been allocated any Public Offer Shares under the
Public Offer will not be allocated any Placing Shares under the Placing.

Over-subscription                                                                                      P.N.18(4.2)



      The allocation of the Offer Shares between the Public Offer and the Placing is subject to the
clawback arrangement in the event of over-subscription under the Public Offer. If the number of
Shares validly applied for under the Public Offer represents 15 times or more but less than 50
times the number of Shares initially available for subscription under the Public Offer, then Shares
will be reallocated to the Public Offer from the Placing, so that the total number of Shares
available under the Public Offer will be 150,000,000 Shares (representing 30% of the total number
of the Offer Shares available under the Share Offer, assuming the Over-allotment Option is not
exercised). If the number of Shares validly applied for under the Public Offer represents 50 times
or more but less than 100 times the number of Shares initially available for subscription under the
Public Offer, then the number of Shares to be reallocated to the Public Offer from the Placing will
be increased so that the total number of Shares available under the Public Offer will be
200,000,000 Shares (representing 40% of the total number of Offer Shares available under the
Share Offer, assuming the Over-allotment Option is not exercised). If the number of Shares
validly applied for under the Public Offer represents 100 times or more the number of Shares
initially available for subscription under the Public Offer, then the number of Shares to be
reallocated to the Public Offer from the Placing will be increased so that the total number of
Shares available under the Public Offer will be 250,000,000 Shares (representing 50% of the total
number of the Offer Shares available under the Share Offer, assuming the Over-allotment Option
is not exercised). In each such case, the additional Shares reallocated to the Public Offer will be
correspondingly increased and allocated equally between Pool A and Pool B and the number of
Shares allocated to the Placing will be correspondingly reduced.

     In addition, Kim Eng Securities has the absolute discretion to reallocate Offer Shares from
the Placing to the Public Offer to satisfy valid applications under the Public Offer.

Under-subscription

      If the Public Offer is not fully subscribed, Kim Eng Securities may in its absolute discretion
reallocate all or any unsubscribed Public Offer Shares originally included in the Public Offer to
the Placing, in such number as it deems appropriate provided that there is sufficient demand
under the Placing to take up such reallocated Shares.

     If the Placing is not fully subscribed, Kim Eng Securities may in its absolute discretion, in
addition to any reallocation of the Offer Shares from the Placing to the Public Offer under the


                                            — 210 —
                          STRUCTURE OF THE SHARE OFFER

clawback arrangement described under the Over-subscription section above, reallocate all or any
unsubscribed Placing Shares originally included in the Placing to the Public Offer, in such
number as it deems appropriate provided that there is sufficient demand under the Public Offer
to take up such reallocated Shares. Details of any reallocation of Shares between the Public Offer
and the Placing will be disclosed in the results announcement, which is expected to be made on          A1a(15)(2)(k)

18th October, 2006 in English in the South China Morning Post and in Chinese in the Hong Kong
Economic Times.


OVER-ALLOTMENT OPTION


      Under the Underwriting Agreement, the Company has granted to Kim Eng Securities the               A1a(15)
                                                                                                        (3)(c)(d)(e)
right but not the obligation to exercise the Over-allotment Option, exercisable no later than 30
days after the last day for lodging of applications under the Public Offer. Under the                   P.N.18(4.3)
                                                                                                        IE Note 4
Over-allotment Option, Kim Eng Securities will have the right to require the Company to issue
at the Offer Price up to 75,000,000 additional Shares, representing 15% of the number of Shares
initially available under the Share Offer, solely for the purpose of covering over-allocations in the
Placing, if any. The Over-Allotment Option may be exercised in full or in part at any time during
the period in which it is exercisable.


     If the Over-allotment Option is exercised in full, the Offer Shares comprised in the Share
Offer will represent approximately 27.7% of the enlarged issued share capital of the Company
immediately after completion of the Share Offer and the exercise of the Over-allotment Option.
In the event that the Over-allotment Option is exercised, an announcement will be made in
English in the South China Morning Post and in Chinese in the Hong Kong Economic Times.


STABILISATION


     Stabilisation is a practice used by underwriters in some markets to facilitate the distribution
of securities. To stabilise, the underwriters may bid for, or purchase, the newly issued securities
in the secondary market, during a specified period of time, to minimise and, if possible, prevent
any decline in the market price of the securities below the Offer Price. In Hong Kong and certain
other jurisdictions the price at which stabilisation is effected is not permitted to exceed the Offer
Price.


     In connection with the Share Offer, Kim Eng Securities, as stabilising manager, or any person      A1a(15)(3)
                                                                                                        (b)
acting for them, may over-allot or effect any other transactions with a view to supporting the
market price of the Shares at a level higher than that which might otherwise prevail for a limited
period after the trading of the Shares commences on the Stock Exchange. Such stabilisation
transactions may include exercising the Over-allotment Option, stockborrowing, making market
purchases of Shares in the secondary market or selling Shares to liquidate a position held as a         A1a(15)(3)
                                                                                                        (a)
result of those purchases. Any such market purchases will be effected at prices not exceeding the
Offer Price and in compliance with all applicable laws, rules and regulatory requirements of
Hong Kong. However, there is no obligation on Kim Eng Securities or any person acting for them
to conduct any such stabilising activity, which if commenced, will be done at the absolute
discretion of Kim Eng Securities and may be discontinued at any time. Any such stabilising


                                             — 211 —
                          STRUCTURE OF THE SHARE OFFER

activity is required to be brought to an end within 30 days of the last day for the lodging of
applications under the Public Offer. The number of Shares over-allocated will not be greater than
the number of Shares which may be issued upon the full exercise of the Over-allotment Option,
being 75,000,000 Shares, which is 15% of the Shares initially available under the Share Offer.


     As a result of effecting transactions to stabilise or maintain the market price of the Shares,
Kim Eng Securities, or any person acting for them, may maintain a long position in the Shares.
The size of the long position, and the period for which Kim Eng Securities, or any person acting
for them, will maintain the long position is at the discretion of Kim Eng Securities and is
uncertain. In the event that Kim Eng Securities liquidate this long position by making sales in the
open market, this may lead to a decline in the market price of the Shares.


    Stabilising action by Kim Eng Securities, or any person acting for it, is not permitted to
support the price of the Shares for longer than the stabilising period, which begins on the
commencement of trading of the Shares on the Stock Exchange and ends on the 30th day after
the last day for the lodging of applications under the Public Offer. The stabilising period is
expected to end on 10th November, 2006. After this date, when no further stabilising action may
be taken, demand for the Shares, and therefore its market price, could fall.


     Within seven days after the end of the stabilising period, Kim Eng Securities will ensure that
a public announcement containing such information as required by the Securities and Futures
(Price Stabilising) Rules under the SFO be issued whether by or on behalf of the Company or by
Kim Eng Securities.


    Any stabilising action taken by Kim Eng Securities, or any person acting for them, may not
necessarily result in the market price of the Shares staying at or above the Offer Price either
during or after the stabilising period. Bids for or market purchases of the Shares by Kim Eng
Securities, or any person acting for it, may be made at a price at or below the Offer Price and
therefore at or below the price paid for the Shares by subscribers or purchasers.


STOCK BORROWING


     In order to facilitate settlement of over-allocations in connection with the Placing, the Stock
Borrowing Agreement has been entered into between Tan Sri Dr Chen and Kim Eng Securities.
Under the Stock Borrowing Agreement, Tan Sri Dr Chen has agreed with Kim Eng Securities that,
if requested by Kim Eng Securities, he will, subject to the terms of the Stock Borrowing
Agreement, make available to Kim Eng Securities up to 75,000,000 Shares held by him, by way
of stock lending, in order to facilitate settlement of over-allocations in connection with the
Placing. For the purposes of this stock borrowing management a waiver has been granted by the
Stock Exchange from strict compliance with Rule 10.07(1)(a) of the Listing Rules as referred to
in the section of this prospectus headed “Waiver from compliance with the Listing Rules”.




                                            — 212 —
                      HOW TO APPLY FOR PUBLIC OFFER SHARES

WHICH APPLICATION FORM TO USE


    Use a WHITE Application Form if you want the Public Offer Shares to be issued in your own
name.


    Use a YELLOW Application Form if you want the Public Offer Shares to be issued in the
name of HKSCC Nominees Limited and deposited directly into CCASS for credit to your CCASS
investor participant stock account or your designated CCASS participant’s stock account
maintained in CCASS.


    Note:   The Public Offer Shares offered for public subscription under the Public Offer are not available to the
            Directors or the chief executive of the Company or existing beneficial owners of the Shares, or their
            respective associates.


WHERE TO OBTAIN THE APPLICATION FORMS FOR THE PUBLIC OFFER SHARES


     You can obtain a WHITE Application Form and a prospectus between 9:00 a.m. on Friday,
6th October, 2006 to 12:00 noon on Wednesday, 11th October, 2006 from:


                                            Any participant of
                             The Stock Exchange of Hong Kong Limited


                                                       or


                             Anglo Chinese Corporate Finance, Limited
                                     40th Floor, Two Exchange Square
                                            8 Connaught Place
                                                  Central
                                                 Hong Kong


                                                       or


                              Kim Eng Securities (Hong Kong) Limited
                                    Level 30, Three Pacific Place
                                        1 Queen’s Road East
                                                  Hong Kong


                                                       or




                                                  — 213 —
HOW TO APPLY FOR PUBLIC OFFER SHARES

      Evolution Watterson Securities Limited
                     5th Floor
              8 Queen’s Road Central
                   Hong Kong


                         or


  China Merchants Securities (HK) Co., Limited
           48/F One Exchange Square
               8 Connaught Place
                    Central
                  Hong Kong


                         or


         First Shanghai Securities Limited
             19th Floor, Wing On House
             71 Des Voeux Road Central
                    Hong Kong


                         or


 Taiwan Securities (Hong Kong) Company Limited
    Rm 1302 - 05, 13/F, Tower II, Admiralty Centre
                  18 Harcourt Road
                     Hong Kong


                         or


              VC Brokerage Limited
              28th Floor, The Centrium
                 60 Wyndham Street
                     Central
                    Hong Kong




                     — 214 —
                  HOW TO APPLY FOR PUBLIC OFFER SHARES

or any of the following branches of Standard Chartered Bank (Hong Kong) Limited:

                         Branch Name                     Branch Address

Hong Kong Island         88 Des Voeux Road               88 Des Voeux Road Central,
                                                         Central
                         Central                         Shop No. 16, G/F and Lower G/F,
                                                         New World Tower, 16-18 Queen’s
                                                         Road Central, Central
                         Des Voeux Road Branch           Standard Chartered Bank
                                                         Building, 4-4A, Des Voeux Road
                                                         Central, Central
                         Hennessy Road Branch            399 Hennessy Road, Wanchai
                         Leighton Centre Branch          Shop 12-16, UG/F, Leighton
                                                         Centre, 77 Leighton Road,
                                                         Causeway Bay
                         Quarry Bay Branch               G/F, Westlands Gardens,
                                                         1027 King’s Road, Quarry Bay

Kowloon                  Yaumati Branch                  546-550 Nathan Road, Yaumati
                         Tsimshatsui Branch              G/F, 10 Granville Road,
                                                         Tsimshatsui
                         Cheung Sha Wan Branch           828 Cheung Sha Wan Road,
                                                         Cheung Sha Wan
                         Kwun Tong Branch                88-90 Fu Yan Street, Kwun Tong

New Territories          Tsuen Wan Branch                Shop C G/F & 1/F, Jade Plaza,
                                                         No. 298 Sha Tsui Road,
                                                         Tsuen Wan


    You can collect a YELLOW Application Form and a prospectus during normal business
hours from 9:00 a.m. on Friday, 6th October, 2006 till 12:00 noon on Wednesday, 11th October,
2006 from:


                                 Depository Counter
                    Hong Kong Securities Clearing Company Limited
                               2nd Floor, Vicwood Plaza
                                199 Des Voeux Road Central
                                        Hong Kong


or your stockbroker may have the Application Forms available.




                                         — 215 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

HOW TO APPLY USING A WHITE OR YELLOW APPLICATION FORM


1.   Obtain a WHITE or YELLOW Application Form.


2.   You should read the instructions in this prospectus and the relevant Application Form
     carefully. If you do not follow the instructions, your application is liable to be rejected and
     returned by ordinary post together with the accompanying cheque or banker’s cashier order
     to you (or the first-named applicant in the case of joint applicants) at your own risk to the
     address stated on your Application Form.


3.   Decide how many Public Offer Shares you want to purchase. Calculate the amount you must
     pay on the basis of the maximum Offer Price of HK$1.60 per Share, plus brokerage fee of
     1%, the SFC transaction levy of 0.005% and the Stock Exchange trading fee of 0.005%. You
     will find a table in the relevant Application Form which sets out the total amount payable
     for the specified number of Public Offer Shares.


4.   Complete the application form in English (save as otherwise indicated) and sign it. Only
     written signatures will be accepted. Applications made by corporations, whether on their
     own behalf, or on behalf of other persons, must be stamped with the company chop
     (bearing the company name) and signed by a duly authorised officer, whose representative
     capacity must be stated. If you are applying for the benefit of someone else, you, rather than
     that person, must sign the application form. If it is a joint application, all applicants must
     sign it. If your application is made through a duly authorised attorney, the Company and the
     Joint Lead Managers (or their respective agents or nominees) may accept it at their
     discretion, and subject to any condition they think fit, including production of evidence of
     the authority of your attorney.


5.   Each application form must be accompanied by either one cheque or one banker’s cashier
     order, which must be stapled to the top left-hand corner of the application form.


     If you pay by cheque, the cheque must:


     ●    be in HK$;


     ●    be drawn on your Hong Kong dollar bank account in Hong Kong;


     ●    show your account name, which must either be pre-printed on the cheque, or be
          endorsed on the back by a person authorised by the bank. This account name must be
          the same as the name on the application form. If the cheque is drawn on a joint
          account, one of the joint account names must be the same as the name of the
          first-named applicant;


     ●    be made payable to “HORSFORD NOMINEES LIMITED — NAGACORP PUBLIC OFFER”;


                                            — 216 —
                    HOW TO APPLY FOR PUBLIC OFFER SHARES

     ●     be crossed “Account Payee Only”; and


     ●     not be post dated.


     Your application may be rejected if your cheque does not meet all these requirements or is
     dishonoured on its first presentation.


     If you pay by banker’s cashier order, the banker’s cashier order must:


     ●     be issued by a licensed bank in Hong Kong and have your name certified on the back
           by a person authorised by the bank. The name on the back of the banker’s cashier
           order and the name on the application form must be the same. If it is a joint
           application, the name on the back of the banker’s cashier order must be the same as
           the name of the first-named joint applicant;


     ●     be in HK$;


     ●     be made payable to “HORSFORD NOMINEES LIMITED — NAGACORP PUBLIC OFFER”;


     ●     be crossed “Account Payee Only”; and


     ●     not be post dated.


     Your application is liable to be rejected if your banker’s cashier order does not meet all
     these requirements or is dishonoured on its first presentation.


6.   If you are applying for Shares using a WHITE or YELLOW application form, you should
     lodge your application form in one of the collection boxes by the time and at one of the
     locations, as respectively referred to under the paragraph headed “Where to obtain the
     Application Forms for the Public Offer Shares” above.


7.   Multiple or suspected multiple applications are liable to be rejected. Please see the
     paragraph headed “How many applications may you make” in this section of the prospectus.


8.   In order for the YELLOW Application Forms to be valid:


     (a)   if the application is made through a designated CCASS participant, other than a CCASS
           investor participant:


           (i)   the designated CCASS participant or its authorised signatories must sign in the
                 appropriate box; and



                                            — 217 —
                    HOW TO APPLY FOR PUBLIC OFFER SHARES

          (ii)   the designated CCASS participant must endorse the form with its company chop
                 (bearing its company name) and insert its participant I.D. in the appropriate box;
                 or


    (b)   if the application is made by an individual CCASS investor participant:


          (i)    the Application Form must contain the CCASS investor participant’s name and
                 his/her Hong Kong identity card number; and


          (ii)   the CCASS investor participant should insert its participant I.D. and sign in the
                 appropriate box in the Application Form; or


    (c)   if the application is made by a joint individual CCASS investor participant:


          (i)    the Application Form must contain all joint CCASS investor participants’ names
                 and the Hong Kong identity card numbers of all the joint CCASS investor
                 participants; and


          (ii)   the participant I.D. should be inserted and the authorised signatory(ies) of the
                 CCASS investor participant’s stock account should sign in the appropriate box in
                 the Application Form; or


    (d)   if the application is made by a corporate CCASS investor participant:


          (i)    the Application Form must contain the CCASS investor participant’s company
                 name and Hong Kong business registration number; and


          (ii)   the participant I.D. and company chop, bearing the applicant’s company name,
                 and authorised signatures should be inserted in the appropriate box in the
                 Application Form; and


    (e)   signature(s), number of signatories and form of chop, where appropriate, should
          match with the records kept by HKSCC. Incorrect or incomplete details of the CCASS
          participant or the omission or inadequacy of authorised signatory(ies) (if applicable),
          CCASS participant I.D. or other similar matters may render the application invalid.


     Nominees who wish to submit separate applications in their names on behalf of
different owners are requested to designate on each Application Form in the box
marked “For nominees” account numbers or other identification codes for each
beneficial owner or, in the case of joint beneficial owners, for each such joint beneficial
owner.




                                             — 218 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

HOW TO COMPLETE THE APPLICATION FORM


      There are detailed instructions on each Application Form. You should read these
instructions carefully. If you do not strictly follow the instructions your application may be
rejected.


     If the Offer Price as finally determined is less than HK$1.60 per Share, appropriate refund
payments (including the brokerage fee, the SFC transaction levy and the Stock Exchange trading
fee attributable to the surplus application monies) will be made to successful or partially
successful or unsuccessful applications, without interest. Details of the procedure for refunds are
set out under the paragraph headed “Refund of your money” in the Application Forms.


HOW MANY APPLICATIONS MAY YOU MAKE                                                                     P.N.18(4.6)



    There is only one situation where you may make more than one application for the
Public Offer Shares:


     —    If you are a nominee, you may lodge more than one application in your own name on
          behalf of different beneficial owners. In the box on the Application Form marked “For
          nominees” you must include:


          —    an account number; or


          —    some other identification code


          for each beneficial owner (or, in the case of joint beneficial owners, for each such joint
          beneficial owner). If you do not include this information, the application will be
          treated as being for your benefit.


     Otherwise, multiple applications are not allowed.


    It will be a term and condition of all applications that by completing and delivering an
Application Form, you:


     —    (if the application is made for your own benefit) warrant that this is the only
          application which will be made for your benefit on a WHITE or YELLOW Application
          Form; or


     —    (if you are an agent for another person) warrant that reasonable enquiries have been
          made of that other person that this is the only application which will be made for the
          benefit of that other person on a WHITE or YELLOW Application Form, and that you
          are duly authorised to sign the Application Form as that other person’s agent.


                                            — 219 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

     Save as referred to above, all of your applications for Public Offer Shares will be rejected
as multiple applications if you, or you and your joint applicants together or any of your joint
applicants:


     —    make more than one application on a WHITE or YELLOW Application Form; or


     —    apply on one WHITE or YELLOW Application Form for more than 100% of the Public
          Offer Shares being initially available in either Pool A or Pool B to the public as referred
          to in the paragraph headed “Offer mechanism — basis of allocation of the Offer Shares”
          under this section of the prospectus; or


     All of your applications for Public Offer Shares will also be rejected as multiple applications
if more than one application for Public Offer Shares is made for your benefit. If an application
is made by an unlisted company and:


     —    the only business of that company is dealing in securities; and


     —    you exercise statutory control over that company,


then the application will be treated as being for your benefit.


     Unlisted company means a company with no equity securities listed on the Stock
Exchange.


     Statutory control means you:


     —    control the composition of the board of directors of that company; or


     —    control more than half of the voting power of that company; or


     —    hold more than half of the issued share capital of that company, not counting any part
          of it which carries no right to participate beyond a specified amount in a distribution
          of either profits or capital.


MEMBERS OF THE PUBLIC — TIME FOR APPLYING FOR PUBLIC OFFER SHARES                                       App 1A(15)
                                                                                                        (2)(f)


     Completed WHITE or YELLOW Application Forms, with payment attached, must be lodged
by 12:00 noon on Wednesday, 11th October, 2006, or, if the application lists are not open on
that day, then by 12:00 noon on the next business day when the lists are open.




                                            — 220 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

    Your completed WHITE or YELLOW Application Form, with payment attached, should be
deposited in the special collection boxes provided at any of the branches of Standard Chartered
Bank (Hong Kong) Limited listed in this section of this prospectus at the following times:

                   Friday, 6th      October,   2006     —   9:00   a.m.   to   4:30 p.m.
                  Monday, 9th       October,   2006     —   9:00   a.m.   to   4:30 p.m.
                 Tuesday, 10th      October,   2006     —   9:00   a.m.   to   4:30 p.m.
               Wednesday, 11th      October,   2006     —   9:00   a.m.   to   12:00 noon

     The application lists will be open from 11:45 a.m. to 12:00 noon on Wednesday, 11th            3rd Sch(8)
                                                                                                    App 1A(15)
October, 2006. Applications for the Public Offer Shares will not be processed, and no allotment     (2)(f)

of any such Public Offer Shares will be made, until the closing of the application lists.


EFFECT OF BAD WEATHER ON THE OPENING OF THE APPLICATION LISTS


     The application lists will not open if there is:


     —    a tropical cyclone warning signal number 8 or above; or


     —    a “black” rainstorm warning


in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Wednesday, 11th
October, 2006. Instead the application lists will open between 11:45 a.m. and 12:00 noon on the
next business day which does not have either of those warning signals in force in Hong Kong at
any time between 9:00 a.m. and 12:00 noon.


CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED PUBLIC OFFER SHARES


     Full details of the circumstances in which you will not be allocated Public Offer Shares are
set out in the notes attached to the Application Forms, and you should read them carefully. You
should note in particular the following three situations in which Public Offer Shares will not be
allocated to you:


     1.   If your application is revoked


          By completing an Application Form, you agree that you cannot revoke your application
     before the end of the fifth day after the time of the opening of the application lists,
     excluding for this purpose any day which is a Saturday, Sunday or public holiday in Hong
     Kong, being 18th October, 2006 unless a person responsible for this prospectus under
     section 40 of the Companies Ordinance gives a public notice under that section which
     excludes or limits the responsibility of that person for this prospectus.




                                            — 221 —
               HOW TO APPLY FOR PUBLIC OFFER SHARES

     If your application has been accepted, it cannot be revoked. For this purpose,
acceptance of applications which are not rejected will be constituted by notification in          A1a(15)
                                                                                                  (2)(k)
English in the South China Morning Post and in Chinese in the Hong Kong Economic Times            P.N.18(4.4)

of the basis of allocation, and where such basis of allocation is subject to certain conditions
or provides for allocation by ballot, such acceptance will be subject to the satisfaction of
such conditions or the results of the ballot, respectively.


     If any supplement to the prospectus is issued, applicant(s) who have already submitted
an application may or may not (depending on the information contained in the supplement)
be notified that they can withdraw their applications. If applicant(s) have not been so
notified, or if applicant(s) have been notified but have not withdrawn their applications in
accordance with the procedure to be notified, all applications that have been submitted
remain valid and may be accepted. Subject to the above, an application once made is
irrevocable and applicants shall be deemed to have applied on the basis of the prospectus
as supplemented.


2.   If the allocation of the Public Offer Shares is void


     Your allocation of the Public Offer Shares will be void if the listing committee of the
Stock Exchange does not grant permission to list the Shares either:


     (i)    within three weeks from the closing of the applications lists; or


     (ii)   within a longer period of up to six weeks if the listing committee of the Stock
            Exchange notifies the Company of that longer period within three weeks of the
            closing of the application lists.


3.   If the Company, the Joint Lead Managers or their respective agents or
     nominees exercise their discretion


    The Company, the Joint Managers or their respective agents or nominees (acting for
themselves and on behalf of the Public Offer Underwriters) have full discretion to reject or
accept any application, or to accept only part of any application, without having to give any
reasons for any rejection or acceptance. Your application is liable for rejection if:


     (i)    your application is a multiple or a suspected multiple application; or


     (ii)   your Application Form is not completed correctly or is not fully completed; or


     (iii) your payment is not made in the correct form; or




                                        — 222 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

          (iv) your payment is not made correctly or you pay by cheque or banker’s cashier
               order and the cheque or banker’s cashier order is dishonoured on its first
               presentation; or


          (v)   you or the person for whose benefit you are applying have applied for and/or
                received or will receive Shares under the Placing; or


          (vi) the Company believes that by accepting your application, it could violate the
               applicable securities, or other laws, rules or regulations of the jurisdiction in
               which your application is, or is suspected to have been completed and/or signed;
               or


          (vii) the Underwriting Agreement does not become unconditional or it is terminated in
                accordance with the terms thereof.


PUBLICATION OF RESULTS


     The Company expects to release an announcement on the level of interest in the Placing,          A1a(15)
                                                                                                      (2)(k)
results of applications and basis of allocation of Shares under the Public Offer, and the number
of Shares, if any, reallocated between the Placing and the Public Offer on or before 18th October,
2006 in English in the South China Morning Post and in Chinese in the Hong Kong Economic
Times.


DESPATCH AND COLLECTION OF SHARE CERTIFICATES AND, OR, REFUND CHEQUES
AND DEPOSIT OF SHARE CERTIFICATES INTO CCASS


     The Company will not issue temporary documents of title. No receipt will be issued for           A1a(15)
                                                                                                      (2)(g)
application monies received.


WHITE Application Forms:


     If you have applied for 1,000,000 Public Offer Shares or more and have indicated on your         App 1A(15)
                                                                                                      (2)(g)
Application Form that you will collect your share certificate(s) and, or, refund cheque, if any, in
person, you may collect it, them, in person from:


                     Computershare Hong Kong Investor Services Limited
                         Shops 1712-1716, 17th Floor, Hopewell Centre
                                    183 Queen’s Road East
                                           Wanchai
                                         Hong Kong


between 9:00 a.m. and 1:00 p.m. on the date notified by the Company in the newspapers as the
date of despatch of share certificates and, or, refund cheques. This is expected to be on or before
18th October, 2006.


                                            — 223 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

      If you are an individual who opts for personal collection, you must not authorise any other
person to make collection on your behalf. You must show your identification documents, which
must correspond to the information contained in the Application Form and produce other
satisfactory evidence of your identity for collection of your share certificate(s) and/or refund
cheque(s) (if any). If you are a corporate applicant which opts for personal collection, you must
attend by your authorised representative bearing a letter of authorisation from your corporation
stamped with your corporation’s chop. Both individuals and authorised representatives, if
applicable, must produce, at the time of collection, evidence of identity acceptable to
Computershare Hong Kong Investor Services Limited.


     If you do not collect your share certificate(s) and, or, refund cheque, if any, in person within
the time specified for collection, it/they will be sent to the address on your Application Form
shortly after 1:00 p.m. on the date of despatch by ordinary post and at your own risk. Part of your
Hong Kong Identity Card number/passport number, or, if you are joint applicants, part of the
Hong Kong Identity Card number/passport number of the first-named applicant, provided by you
may be printed on your refund cheque, if any. Such data would also be transferred to a third party
for refund purpose. Your banker may require verification of your Hong Kong Identity Card
number/passport number before encashment of your refund cheque. Inaccurate completion of
your Hong Kong Identity Card number/passport number may lead to delay in encashment of or
may invalidate your refund cheque.


     If you have applied for 1,000,000 Public Offer Shares or more and have not indicated on            App 1A(15)

your Application Form that you will collect your share certificate(s) and, or, refund cheque, if
any, in person, or if you have applied for less than 1,000,000 Public Offer Shares, or if your
application is rejected, not accepted or accepted in part only, or if the conditions of the Public
Offer described under the paragraph headed “Conditions of the Share Offer” in the section
headed “Structure of the Share Offer” in this prospectus are not fulfilled in accordance with their
terms, or if any application is revoked or any allotment pursuant thereto has become void, then
your share certificate(s) and/or refund cheque, if any, in respect of the application monies, or the
appropriate portion thereof, together with the related brokerage, SFC transaction levy and Stock
Exchange trading fee, if any, without interest, will be sent to the address on your Application
Form on the date of despatch by ordinary post and at your own risk.


YELLOW Application Forms:


    Your share certificate(s) will be issued in the name of HKSCC Nominees Limited and
deposited into CCASS for credit to your CCASS investor participant stock account or the stock
account of your designated CCASS participant, as instructed by you, on 18th October, 2006, or
under contingent situations, on any other date as shall be determined by HKSCC or HKSCC
Nominees Limited.




                                            — 224 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

     If you are applying through a designated CCASS participant, other than a CCASS investor
participant:


     —    for Public Offer Shares credited to the stock account of your designated CCASS
          participant, other than a CCASS investor participant, you can check the number of
          Public Offer Shares allotted to you with that CCASS participant on 18th October, 2006.


     If you are applying as a CCASS investor participant:


     —    the Company expects to publish the results of CCASS investor participants’ applications   App 1A(15)
                                                                                                    (2)(k)
          together with the results of the Public Offer in the newspapers on 18th October, 2006.
          You should check the announcement published by the Company and report any
          discrepancies to HKSCC before 5:00 p.m. on 18th October, 2006 or such other date as
          shall be determined by HKSCC or HKSCC Nominees Limited. Immediately after the
          credit of the Public Offer Shares to your stock account, you can check your new
          account balance via the CCASS Phone System and CCASS Internet System (under the
          procedures contained in HKSCC’s “An Operating Guide for Investor Participants” in
          effect from time to time). HKSCC will also make available to you an activity statement
          showing the number of the Public Offer Shares credited to your stock account.


    If you have applied for 1,000,000 Public Offer Shares or more and have indicated on your
Application Form that you will collect your refund cheque in person, please follow the
instructions set out in the paragraph headed “WHITE Application Forms” above.


     If you have applied for 1,000,000 Public Offer Shares or more and have not indicated on
your Application Form that you will collect your refund cheque (if any) in person, or if you have
applied for less than 1,000,000 Public Offer Shares, your refund cheque, if any, will be sent to
the address on your Application Form on the date of despatch, which is expected to be on or
before 18th October, 2006, by ordinary post and at your own risk.


COMMENCEMENT OF DEALINGS IN THE SHARES                                                              A1a(22)



     Dealings in the Shares on the Stock Exchange are expected to commence on 19th October,
2006.


     The Shares will be traded in board lots of 2,000 each.


     The Stock code of the Shares is 3918.




                                           — 225 —
                   HOW TO APPLY FOR PUBLIC OFFER SHARES

SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS                                                      Rule 8.13A(1)
                                                                                                      R. 19.05(3)(a)


     If the Stock Exchange grants the listing of, and permission to deal in, the Shares issued and
to be issued as mentioned in this prospectus and the Company complies with the stock admission        App 1A(14)(2)

requirements of HKSCC, the Shares will be accepted as eligible securities by HKSCC for deposit,
clearance and settlement in CCASS with effect from the date of commencement of dealings in the
Shares on the Stock Exchange or on such other date determined by HKSCC. Settlement of
transactions between participants of the Stock Exchange is required to take place in CCASS on
the second business day after any trading day.


     All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational
Procedures in effect from time to time.


     Investors should seek the advice of their stockbroker or other professional advisor for
details of the settlement arrangements as such arrangements will affect their rights and interests.


     All necessary arrangements have been made for the Shares to be admitted into CCASS.              A1a(14(2))




                                            — 226 —
APPENDIX I                                                        ACCOUNTANTS’ REPORT

     The following is the text of a report, prepared for the purpose of incorporation       in this
prospectus, received from the independent reporting accountants, KPMG, Certified             Public
Accountants, Hong Kong. As described in the section headed “Document delivered               to the
Registrar of Companies in Hong Kong and available for inspection” in Appendix X             to this
prospectus, a copy of the Accountants’ Report is available for inspection.

                                                                                8th Floor
                                                                                Prince’s Building
                                                                                10 Chater Road
                                                                                Central
                                                                                Hong Kong

                                                                                6th October, 2006


The Directors
NagaCorp Ltd.
Anglo Chinese Corporate Finance, Limited


Dear Sirs,


     We set out below our report on the Financial Information relating to NagaCorp Ltd. (the
“Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), including
the balance sheets of the Company and the consolidated balance sheets of the Group as at 31st
December, 2003, 2004 and 2005, and 31st May, 2006 and the consolidated income statements, the
consolidated statements of changes in equity and the consolidated cash flow statements of the
Group for each of the three years ended 31st December, 2005, and for the five months ended 31st
May, 2006 (the “relevant period”), and the notes thereto (collectively, the “Financial
Information”), together with the unaudited financial information of the Group including the
consolidated income statement, consolidated statement of changes in equity and consolidated
cash flow statement for the five months ended 31st May, 2005 and notes thereto (the “31st May,
2005 Corresponding Information”) for inclusion in the prospectus of the Company dated 6th
October, 2006 (the “Prospectus”).


     The Company was incorporated in the Cayman Islands on 25th February, 2003 as an
exempted company with limited liability under the Companies Law (Revised) of the Cayman
Islands. The Company became the holding company of the Group on 6th June, 2003 pursuant to
a group reorganisation (the “Restructuring”), as detailed in the “Basis of presentation” in section
A1 of the Accountants’ Report.




                                            — 227 —
APPENDIX I                                                         ACCOUNTANTS’ REPORT

     We have acted as auditors of the companies now comprising the Group for the relevant
period, except for the following companies and branches, which have been audited by the
Malaysian member firm of KPMG International for the relevant period:


     Company/branch


     Naga Resorts & Casinos Limited
     — Gaming branch


     Naga Resorts & Casinos Limited
     — Hotel and Entertainment branch


     Ariston Sdn. Bhd.


     Neptune Orient Sdn. Bhd.


     Ariston (Cambodia) Limited


     For the purpose of this report, we have audited the financial statements of all companies
now comprising the Group for the relevant period, except for those subsidiaries and branches as
set out above. For those subsidiaries and branches not audited by us, we have examined their
audited financial statements for each of the periods referred to in this report, and carried out such
procedures as we considered necessary for forming our opinion on this report. The financial
statements relating to these subsidiaries and branches were audited by KPMG, the Malaysian
member firm of KPMG International, whose reports have been furnished to us. The Group’s
financial statements (including all subsidiaries and branches) for each of the three years ended
31st December, 2003, 2004 and 2005 and the five months ended 31st May, 2006 were audited by
member firms of KPMG International in accordance with applicable local Standards on Auditing
and in accordance with International Standards on Auditing for consolidated Group financial
statement purposes.


      For the purpose of this report, we have also reviewed the 31st May, 2005 Corresponding
Information, for which the Directors are responsible, in accordance with Statement of Auditing
Standard 700 “Engagements to review interim financial reports” issued by the Hong Kong
Institute of Certified Public Accountants.


      A review consists principally of making enquiries of Directors and management, and
applying analytical procedures to the 31st May, 2005 Corresponding Information and based
thereon, assessing whether the accounting policies and presentation have been consistently
applied. A review excludes audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit and therefore provides
a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the
31st May, 2005 Corresponding Information.


                                             — 228 —
APPENDIX I                                                        ACCOUNTANTS’ REPORT

     We have not audited any financial statements of the companies now comprising the Group
in respect of any period subsequent to 31st May, 2006.


     We have examined the audited financial statements of the respective companies comprising
the Group for the relevant period, or since their respective dates of incorporation where there is
a shorter period, in accordance with the Auditing Guideline “Prospectuses and the reporting
accountant” issued by the Hong Kong Institute of Certified Public Accountants.


     The Financial Information as set out in this report has been prepared based on the audited
financial statements of the companies now comprising the Group, and on the basis set out in
section A below.


     The directors of the Company are responsible for preparing the Financial Information which
gives a true and fair view. In preparing Financial Information which gives a true and fair view,
it is fundamental that appropriate accounting policies are selected and applied consistently, that
judgements and estimates are made which are prudent and reasonable and that the reasons for
any significant departure from applicable accounting standards are stated.


     It is our responsibility to form an independent opinion on the Financial Information.


     In our opinion, for the purpose of this report, based on our work and the audited financial
statements of subsidiaries and branches not audited by us, no adjustments to the financial
statements of the Group were considered necessary and the Financial Information, on the basis
of presentation set out in section A below, gives a true and fair view of the consolidated results
and cash flows of the Group for the relevant period and of the state of affairs of the Group as at
31st December, 2003, 31st December, 2004, 31st December, 2005 and 31st May, 2006 and the state
of affairs of the Company as at 31st December, 2003, 31st December, 2004, 31st December, 2005
and 31st May, 2006.


      On the basis of our review of the 31st May, 2005 Corresponding Information which does not
constitute an audit, for the purpose of this report, we are not aware of any material modifications
that should be made to the unaudited financial information presented for the five months ended
31st May, 2005.




                                            — 229 —
APPENDIX I                                                      ACCOUNTANTS’ REPORT

A    BASIS OF PRESENTATION


1    Group restructuring


     NagaCorp Ltd. (the “Company”) was incorporated in the Cayman Islands on 25th February,
2003 with its registered office at Century Yard, Cricket Square, Hutchins Drive, PO Box 2681 GT,
George Town, Grand Cayman, British West Indies. The principal activity of the Company is
investment holding. The Company was incorporated for the purposes of the Restructuring
described below, pursuant to which it acquired the controlling ownership interest in the Group’s
gaming, hotels, hospitality, leisure and tourism operations in Cambodia.


     Pursuant to the Restructuring, on 6th June, 2003 a share swap agreement was entered into
between Starling Trading Limited, Medallion Asian Fund, the Company and the then sole ultimate
shareholder under which the Company acquired the entire issued ordinary shares of NagaCorp
(HK) Limited (formerly known as Sharpwin International Limited) for a consideration of
US$15,500,000, satisfied by the issue of 15,500,000 new ordinary shares of US$1 each in the
Company to entities controlled by the then sole ultimate shareholder, Tan Sri Dr Chen Lip Keong.


    NagaCorp (HK) Limited is incorporated in Hong Kong with its registered office at 18/F,
Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong. The principal activity of
NagaCorp (HK) Limited is investment holding.


     During the period from 1st January, 2003 to 6th June, 2003, NagaCorp (HK) Limited’s sole
ultimate shareholder was Tan Sri Dr Chen Lip Keong. From 6th June, 2003 until the end of the
relevant period, NagaCorp (HK) Limited’s sole shareholder was the Company.


     NagaCorp (HK) Limited wholly owns a subsidiary, Naga Resorts & Casinos Limited (“NRCL”),
a company incorporated in Hong Kong, which operates a casino licence and casino in Phnom
Penh, Cambodia. The casino is operated under a 70 year casino licence, expiring in 2065, with
an initial period of exclusivity within 200 km of Phnom Penh (Except the Cambodia-Vietnam
Border Area, Bokor, Kirirom Mountains and Sihanoukville) for 20 years expiring in 2015, and a
further exclusive period to the end of 2035 has been granted by the Royal Government of
Cambodia. NRCL operated a floating casino on the Bassac-Mekong River in Phnom Penh until
30th September, 2003. The casino was relocated to NagaWorld, a land-based complex which is
currently under construction, on 1st October, 2003.


      On 30th August, 2002, Ariston transferred capital work in progress relating to development
projects undertaken in Sihanoukville, Cambodia (the “Sihanoukville projects”) and the ownership
of all of its subsidiaries with the exception of Neptune Orient Sdn Bhd (“Neptune”) and Ariston
(Cambodia) Limited (“ACL”), to a company owned by the sole ultimate shareholder.


     On completion, NagaWorld is planned to comprise a hotel and entertainment complex with
integrated casino facilities. On 30th August, 2002, Neptune transferred the leasehold land on
which NagaWorld is being built and its assets under construction, i.e. NagaWorld, to NRCL.


                                          — 230 —
APPENDIX I                                                                   ACCOUNTANTS’ REPORT

     Upon completion of the Restructuring, the Group comprised the Company, NagaCorp (HK)
Limited, NRCL, Ariston, ACL and Neptune, and the principal activities of the Group are the
operation of a casino and the development and operation of a hotel and entertainment complex
with integrated casino facilities in Phnom Penh, Cambodia.


2    Basis of preparation


     The consolidated Financial Information has been prepared in accordance with the “pooling
of interests” method as the Restructuring constitutes a reorganisation of businesses under
common control.


     The Financial Information, which is expressed in United States dollars, is prepared on the
historical cost basis. All significant intercompany transactions, balances and unrealised gains are
eliminated on consolidation.


     The following sets out the particulars of the current subsidiaries of the Company.

                                                                                  Percentage
                                                                                    of equity
                                                                                      interest
                                   Place and date of            Place of          held by the        Principal
     Name of company               incorporation                business            Company          activity

     NagaCorp (HK)                 Hong Kong                    Hong Kong                  100%      Investment
      Limited*                     Incorporated on                                                   holding
                                   30th November, 1993
     Naga Resorts &                Hong Kong                    Cambodia                   100%      Gaming,
      Casinos Limited              Incorporated on                                                   hotel and
      (“NRCL”)*                    19th March, 1982                                                  entertainment
                                                                                                     operations
     Ariston Sdn. Bhd.             Malaysia                     Malaysia &                 100%      Investment
       (“Ariston”) #               Incorporated on              Cambodia                             holding
                                   13th April, 1982
     Neptune Orient Sdn.           Malaysia                     Malaysia &                 100%      Inactive
      Bhd. (“Neptune”) #           Incorporated on              Cambodia
                                   16th April, 1987
     Ariston (Cambodia)            Cambodia                     Cambodia                   100%      Inactive
       Limited # (“ACL”)           Incorporated on
                                   25th June, 2001

     *    The financial statements of these subsidiaries were audited by KPMG Hong Kong for the relevant period.


     #
          The financial statements of these subsidiaries were audited by other member firms of KPMG International for
          the relevant period.




                                                  — 231 —
APPENDIX I                                                        ACCOUNTANTS’ REPORT

3    Casino licence


     Following a tender process conducted by the Royal Government of Cambodia (“the
Government”) in 1994, Ariston entered into the Sihanoukville Development Agreement (“SDA”)
with the Government on 2nd January, 1995.


     The SDA provided, inter alia, that, subject to certain conditions being met, Ariston was to
be granted an irrevocable licence to manage and operate gaming facilities in Cambodia for a
period of 70 years from 2nd January, 1995 with the first 20 years to be on an exclusive basis, such
exclusivity extending to the whole of Cambodia.


     The SDA also provided that Ariston was entitled to assign its rights and obligations to any
company of which Tan Sri. Dr Chen Lip Keong was a controlling shareholder. Accordingly, on 8th
May, 1995, Ariston and NRCL entered into the Casino Licence Agreement pursuant to which
Ariston assigned its rights and obligations in respect of the casino licence to NRCL.


     In 1999, Ariston applied to the Phnom Penh City Court to interpret and reaffirm its rights
under the SDA. The Phnom Penh City Court reaffirmed the terms and conditions of the SDA and
in particular, the terms of exclusivity for 20 years in respect of the casino licence granted to
Ariston. Following the court order, the Government and Ariston entered into the Supplementary
Sihanoukville Development Agreement (“SSDA”) on 2nd February, 2000 to supplement and
amend the terms of the SDA, including the terms of the casino licence.


     Also on 2nd February, 2000, Ariston and NRCL entered into a Supplemental Casino Licence
Agreement in which Ariston assigned its rights and obligations in respect of the casino licence
granted under the SSDA to NRCL.


    On 12th August, 2005, Ariston and the Government entered into an Addendum Agreement
which extended the exclusivity period of the Casino Licence within 200 kilometres of Phnom
Penh (except the Cambodia-Vietnam Border Area, Bokor, Kirirom Mountains and Sihanoukville)
(the “Designated Area”) for the period to the end of 2035 in consideration for the surrender by
Ariston of the rights and concessions granted under the Sihanoukville Development Agreement
signed on 2nd January, 1995 and the Supplemental Sihanoukville Development Agreement
signed on 2nd February, 2000 between Ariston and the Government (except for the right to
operate the casino within the Designated Area) including, but not limited to, the rights granted
in respect of the development in O’Chhoue Teal, Naga Island and Sihanoukville International
Airport (the “Assigned Assets”). Prior to 12th August, 2005, the Assigned Assets had been
assigned to Ariston Holdings Sdn. Bhd., a related company that is beneficially owned by the
ultimate controlling shareholder of the Company. Ariston has directed Ariston Holdings Sdn. Bhd.
to surrender all rights, title, benefits and interests in and to the Assigned Assets to the
Government with an effective date of 12th August, 2005 in consideration for US$105 million.




                                            — 232 —
APPENDIX I                                                         ACCOUNTANTS’ REPORT

     In light of the Addendum Agreement, Ariston and NRCL entered into the Second
Supplemental Casino Licence Agreement to supplement and amend the terms and rights to the
Casino Licence granted by Ariston to NRCL under the original Supplemental Casino Licence
Agreement.


     Pursuant to the terms of the SSDA and the Addendum Agreement, the terms of the casino
licence were varied and the salient terms of the amended casino licence are as follows:


    (a)   Duration of Licence


         The casino licence is an irrevocable licence with a duration of 70 years from 2nd
    January, 1995. The SSDA also states that should the Government, for any reason, terminate
    or revoke the licence at any time before its expiry, it will pay Ariston the amount of monies
    invested in the business as agreed investment cost and additional mutually agreed damages
    for the termination and/or revocation of the casino licence at any time before the expiry of
    the period.


    (b)   Exclusivity


          Ariston has the right of exclusivity in respect of the Designated Area for the period to
    2035. During this period, the Government is prohibited from:


          —    authorising, licensing or approving the conduct of casino gaming within the
               Designated Area;


          —    entering into any written agreement with any party with respect to casino gaming
               within the Designated Area; and


          —    issuing or granting any other casino licence.


           The SSDA also states that the Government will pay Ariston mutually agreed damages
    if it terminates or revokes its exclusivity rights at any time prior to the expiry of the period.


    (c)   Casino Complex


          Ariston has the right to locate the casino at any premises or complex within the
    Designated Area and is entitled to operate such games and gaming machines at its own
    discretion without the need for any approval from the Government. There are no restrictions
    relating to the operating hours of the casino.




                                            — 233 —
APPENDIX I                                                           ACCOUNTANTS’ REPORT

B    CONSOLIDATED FINANCIAL INFORMATION

1    Consolidated income statements
     (Expressed in United States dollars)

     The consolidated results of the Group for the relevant period, prepared on the basis set out
in section A above, are set out below.

                                  Section C                                            Five months
                                    Note          Year ended 31st December,         ended 31st May,
                                                   2003      2004      2005          2005       2006
                                                  $’000     $’000     $’000          $’000     $’000
                                                                                (unaudited)

Revenue                              3           55,175     58,534     64,282       20,561    38,007

Cost of sales                                   (23,641)    (28,530)   (24,554)     (8,855)   (12,784)


Gross profit                                     31,534     30,004     39,728       11,706    25,223

Other operating income               4               27         44         53          18         15

Administrative expenses                          (4,584)     (4,394)    (5,702)     (2,935)    (2,596)

Amortisation of casino licence
 premium                             13            (150)      (150)     (1,282)        (62)    (1,477)

Other operating expenses                         (5,955)     (6,647)    (6,504)     (2,804)    (3,125)


Profit from operations                           20,872     18,857     26,293        5,923    18,040

Costs relating to postponed
  initial public offering           5(c)         (4,065)         —          —           —          —

Finance costs                       5(a)            (15)         (1)        —           —          —


Profit before taxation               5           16,792     18,856     26,293        5,923    18,040

Income tax                           6             (723)     (1,202)    (1,352)       (563)     (634)


Profit attributable to equity
  Shareholders of the Company                    16,069     17,654     24,941        5,360    17,406


Dividends                            7               —      32,000     20,737           —     18,000


Basic earnings per share (US cents) 10        1.30 cents 1.42 cents 2.01 cents 0.43 cents 1.21 cents



                                              — 234 —
APPENDIX I                                                                                               ACCOUNTANTS’ REPORT

2    Consolidated balance sheets
     (Expressed in United States dollars)

     The consolidated balance sheets of the Group at 31st December, 2003, 31st December, 2004,
31st December, 2005 and 31st May, 2006, prepared on the basis set out in section A above, are
set out below.

                                            Section C                         At 31st December,       At 31st May,
                                              Note                        2003        2004      2005          2006
                                                                          $’000      $’000      $’000        $’000

Non-current assets
Fixed assets
- Property, plant and equipment               12(a)                   22,812                                      30,795                                      34,152                                      37,113
- Interest in leasehold land held for own
   use under operating leases                 12(c)                          707                                         696                                 685                                         681
Intangible assets                              13                          1,650                                       1,500                             105,218                                     103,741
Advance to the Royal Government
   of Cambodia                                 14                          4,250                                       4,250                                                   —                                           —

                                                            29,419                                      37,241                                     140,055                                     141,535
                                                        -----------                                 -----------                                 -----------                                 -----------
Current assets
Consumables                                    16                         12                                              16                                          17                                          21
Trade and other receivables                    17                     14,113                                           5,362                                       9,444                                       9,960
Cash at bank and in hand                       20                      2,257                                           1,729                                         670                                       1,498

                                                            16,382                                       7,107                                      10,131                                      11,479
                                                        -----------                                 -----------                                 -----------                                 -----------
Current liabilities
Trade and other payables                      21(a)                   11,643                                      23,512                                 124,022                                          77,096
Obligations under finance leases               23                          9                                           7                                       3                                               2
Current tax liabilities                                                  608                                       1,641                                   2,754                                           3,106
Provisions                                     22                      2,096                                       2,096                                   2,096                                           2,096

                                                                       14,356                                      27,256                                 128,875                                          82,300
                                                        -----------
                                                        -----------------------------------------   -----------
                                                                                                    -----------------------------------------   -----------
                                                                                                                                                -----------------------------------------   -----------
                                                                                                                                                                                            -----------------------------------------

Net current assets/(liabilities)                                            2,026                               (20,149) (118,744)                                                                      (70,821)
                                                        -----------
                                                        -----------------------------------------   ----------- -----------
                                                                                                    ----------------------------------------- -----------------------------------------     -----------
                                                                                                                                                                                            -----------------------------------------

Total assets less current liabilities                                 31,445                                      17,092                                      21,311                                      70,714

Non-current liabilities
Obligations under finance leases               23                                          7                                       —                                           15                                          12

NET ASSETS                                                            31,438                                      17,092                                      21,296                                      70,702

CAPITAL AND RESERVES
Share capital                                  25                     15,500                                      15,500                                      15,500                                      18,029
Reserves                                      26(a)                   15,938                                       1,592                                       5,796                                      52,673

TOTAL EQUITY                                                          31,438                                      17,092                                      21,296                                      70,702




                                               — 235 —
APPENDIX I                                                             ACCOUNTANTS’ REPORT

3   Company balance sheets
    (Expressed in United States dollars)


    The Company was incorporated on 25th February, 2003.


    The balance sheets of the Company at 31st December, 2003, 31st December, 2004, 31st
December, 2005 and 31st May, 2006 are set out below.

                                     Section C            At 31st December,     At 31st May,
                                       Note           2003        2004    2005          2006
                                                      $’000      $’000    $’000        $’000

Non-current assets
Plant and equipment                    12(b)             —                    3                    2                    1
Investment in a subsidiary              15           15,500              15,500               15,500               15,500


                                                  15,500               15,503               15,502               15,501
                                                 ---------            ---------            ---------            ---------
Current assets
Prepayments                                               737             1,333                1,729              2,268
Amount due from subsidiaries               19              —             13,375               13,375            121,498


                                                      737              14,708               15,104              123,766
                                                 ---------            ---------            ---------            ---------
Current liabilities
Trade and other payables               21(b)          1,426                1,336               1,156               56,300
Amounts due to subsidiaries             19            3,401                5,175              10,133               10,921
Dividends payable                                        —                 7,954               2,025                5,303


                                                       4,827             14,465               13,314               72,524
                                                 -----------------
                                                 ------------------
                                                  ----- ----          ------------------
                                                                      -----------------
                                                                       ----- ----          -----------------
                                                                                           ------------------
                                                                                            ----- ----          ------------------
                                                                                                                -----------------
                                                                                                                 ----- ----


Net current (liabilities)/assets                     (4,090)                    243              1,790             51,242
                                                 -----------------
                                                 ------------------
                                                  ----- ----          ------------------
                                                                      -----------------
                                                                       ----- ----          -----------------
                                                                                           ------------------
                                                                                            ----- ----          -----------------
                                                                                                                ------------------
                                                                                                                 ----- ----


NET ASSETS                                           11,410              15,746               17,292               66,743


CAPITAL AND RESERVES
Share capital                           25           15,500              15,500               15,500               18,029
Reserves                               26(b)         (4,090)                246                1,792               48,714


TOTAL EQUITY                                         11,410              15,746               17,292               66,743




                                           — 236 —
APPENDIX I                                                       ACCOUNTANTS’ REPORT

4    Consolidated statements of changes in equity
     (Expressed in United States dollars)


    The consolidated statements of changes in equity of the Group for the relevant period,
prepared on the basis set out in section A above, are set out below.

                                                                               Five months
                                Section C      Year ended 31st December,     ended 31st May,
                                   Note         2003      2004      2005      2005      2006
                                               $’000     $’000     $’000     $’000      $’000
                                                                        (unaudited)

Total equity at 1nd January                   15,369    31,438     17,092     17,092   21,296

Issue of ordinary shares            25            —          —          —         —    50,000

Profit attributable to equity
  Shareholders of the Company                 16,069    17,654     24,941      5,360   17,406

Dividends                           7             —     (32,000)   (20,737)       —    (18,000)


Total equity at 31st December/31st May        31,438    17,092     21,296     22,452   70,702




                                            — 237 —
APPENDIX I                                                                   ACCOUNTANTS’ REPORT

5    Consolidated cash flow statements
     (Expressed in United States dollars)

     The consolidated cash flow statements of the Group for the relevant periods, prepared on
the basis set out in section A above, are set out below.

                                                                                       Five months
                                        Section C      Year ended 31st December,     ended 31st May,
                                          Note          2003      2004      2005      2005      2006
                                                       $’000     $’000     $’000     $’000      $’000
                                                                                (unaudited)

Operating activities
Profit before taxation                                 16,792      18,856       26,293       5,923      18,040
Adjustments for:
  - Interest expense                                       15           1           —           —           —
  - Depreciation                                          214         367          356         156         149
  - Loss on disposal of property,
     plant and equipment                                    9           4           —           —           —
  - Amortisation of casino licence
     premium                                              150         150        1,282          62       1,477

Operating profit before changes
  in working capital                                   17,180      19,378       27,931       6,141      19,666
Decrease/(increase) in consumables                         11          (4)          (1)          1          (4)
Decrease/(increase) in trade and
  other receivables                                     2,501      (3,109)      (4,082)     (2,310)       (516)
Increase/(decrease) in trade and
  other payables                                        4,273       3,914        1,443       4,975        (206)
Increase in provisions                                  2,096          —            —           —           —

Cash generated from operations                         26,061      20,179       25,291       8,807      18,940
Tax paid                                                 (120)       (169)        (243)       (241)       (281)

Net cash generated from
  operating activities                                 25,941      20,010       25,048       8,566      18,659
                                                     ---------   ---------    ---------   ---------   ---------
Investing activities
Repayment of advance to Cambodian
  Government                                               —           —         4,250       4,250          —
Payment for the purchase of
  property, plant and equipment                       (15,635)     (8,343)      (3,721)       (801)     (3,106)
Proceeds from sale of property, plant
  and equipment                                             5          —            19          19          —

Net cash (used in)/generated
  from investing activities                           (15,630)     (8,343)         548       3,468      (3,106)
                                                     ---------   ---------    ---------   ---------   ---------




                                                    — 238 —
APPENDIX I                                                                                                               ACCOUNTANTS’ REPORT

                                                                                          Five months
                                    Section C             Year ended 31st December,     ended 31st May,
                                      Note                 2003      2004      2005      2005      2006
                                                          $’000     $’000     $’000     $’000      $’000
                                                                                   (unaudited)
Financing activities
Interest paid                                                        (15)                        (1)                                      —                                     —                                               —
Dividend paid                                                         —                     (24,046)                                  (6,694)                               (6,694)                                             (3)
(Advance to)/repayment from
  shareholders                                            (8,445)                              11,861                             (19,972)                                  (6,638)                           (14,718)
New/(repayment of) finance leases                             16                                   (9)                                 11                                       (7)                                (4)

Net cash used in financing activities                       (8,444)                          (12,195)                              (26,655)                              (13,339)                              (14,725)
                                                 ---------
                                                 -----------------------------------   ---------
                                                                                       -----------------------------------   ---------
                                                                                                                             -----------------------------------   ---------
                                                                                                                                                                   -----------------------------------   ---------
                                                                                                                                                                                                         -----------------------------------
Net increase/(decrease) in cash
  and cash equivalents                                       1,867                                     (528)                          (1,059)                               (1,305)                                         828

Cash and cash equivalents at
  1st January                                                       390                            2,257                                 1,729                                 1,729                                        670

Cash and cash equivalents at
  31st December/31st May                20                   2,257                                 1,729                                        670                                   424                            1,498




                                                — 239 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

C     NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
      (Expressed in United States dollars)

1     Principal accounting policies


      The accounting policies set out below have been applied consistently to all periods presented in the Financial
Information included in this report. The accounting policies have been applied consistently by group entities.


(a)   Basis of preparation of the Financial Information


      The Financial Information has been prepared in accordance with all applicable International Financial Reporting
Standards (“IFRS”) adopted by the International Accounting Standards Board (“IASB”) and the disclosure requirements of
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited as applicable to Accountants’
Reports included in Listing Documents.


      The measurement basis used in the preparation of the Financial Information set out in this report is historical cost.


      The preparation of financial information in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities and
disclosures of contingent liabilities at the date of the Financial Information and the reported amounts of revenues and
expenses during the reporting period. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.


      The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.


(b)   Basis of consolidation


      The consolidated Financial Information of the Group has been prepared using the historical cost method in
accordance with the “pooling of interests” method as the Restructuring constitutes a reorganisation of businesses under
common control. The Company and all of the subsidiaries listed in section A2 to the Financial Information were wholly
owned, either directly or indirectly, by the then sole ultimate shareholder immediately before and immediately after the
Restructuring.


       Under the historical cost method, the consolidated Financial Information for each of the three years ended 31st
December, 2005 and five months ended 31st May, 2006 have been presented in the same manner as if the Group had been
in existence throughout the period from 1st January, 2003 to 31st May, 2006. Assets and liabilities are brought into the
consolidated Financial Information at historical amounts.


      (i)   Subsidiaries


             Subsidiaries are entities controlled by the Company. Control exists when the Company has the power,
      directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
      activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into
      account. The Financial Information of subsidiaries are included in the consolidated Financial Information from the
      date that control commences until the date that control ceases.



                                                       — 240 —
APPENDIX I                                                                          ACCOUNTANTS’ REPORT

              An investment in a controlled subsidiary is consolidated into the consolidated Financial Information, unless
      it is acquired and held exclusively with a view to subsequent disposal in the near future or operates under severe
      long-term restrictions which significantly impair its ability to transfer funds to the Group, in which case, it is stated
      in the consolidated Financial Information at fair value with changes in fair value recognised in the consolidated
      income statement as they arise.


      (ii)    Transactions eliminated on consolidation


            Intra-group balances and transactions, and any unrealised profits arising from intra-group transactions, are
      eliminated in full in preparing the consolidated Financial Information.


      (iii)   Business combinations involving entities under common control


              A business combination involving entities or businesses under common control is a business combination in
      which all of the combining entities or businesses are ultimately controlled by the same party or parties both before
      and after the business combination, and that control is not transitory.


(c)   Revenue recognition


      Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable,
can be measured reliably, revenue is recognised in the income statement as follows:


      (i)     Casino revenue represents net house takings arising from casino operations and is recognised in the income
              statement when the stakes are received by the casino and the amounts are paid out to players.


      (ii)    Gaming machine revenue represents net winnings from the operation of gaming machine stations, and is
              recognised in the income statement when the stakes are received and the amounts are paid out to players.


      (iii)   Income from operating lease for the provision and maintenance of gaming machine stations which comprise
              a minimum profit share and fixed payments from gaming machine operators where third parties provide and
              maintain the gaming machine stations is recognised in the income statement in equal instalments over the
              period of the contract, and any additional revenue relating to profit share arrangements are recognised when
              the right to receive such amounts is ascertained.


      (iv)    Income from restaurant and amusement machines represent revenue from the provision of food and
              beverages and from video arcade games and is recognised when the service is provided.


(d)   Property, plant and equipment


      (i)     Owned assets


            The following items of property, plant and equipment are stated in the balance sheet at cost less accumulated
      depreciation and impairment losses (see note 1(f)).


              —     buildings held for own use which are situated on leasehold land, where the fair value of the building
                    could be measured separately from the fair value of the leasehold land at the inception of the lease
                    (see note 1(r)); and


              —     other items of plant and equipment.



                                                        — 241 —
APPENDIX I                                                                          ACCOUNTANTS’ REPORT

              Capital work in progress is stated at specifically identified cost, including borrowing costs capitalised,
      aggregate cost of development, materials and supplies, wages and other direct expenses.


      (ii)    Leased assets


              Leasehold land premiums are amortised in equal instalments over the period of the respective leases.


      (iii)   Depreciation


              Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated
      residual value, if any, using the straight line method over their estimated useful lives as follows:

              Ship structure and improvements                           5   years
              Buildings                                                50   years
              Renovations, furniture and fittings                  5 - 10   years
              Motor vehicles                                            5   years
              Plant and equipment                                  5 - 10   years



            Interest in leasehold land held for own use under operating lease is amortised in equal instalments over the
      remaining period of the lease.


              No depreciation is provided for capital work-in-progress.


(e)   Intangible assets


      Casino licence premium


      The premium paid for the licence, and related exclusivity periods, to operate the casino in Phnom Penh is stated
at cost less accumulated amortisation and impairment losses (see note 1(f)).


      Amortisation is charged to the income statement on a straight-line basis over the period of exclusivity of the
licence.


(f)   Impairment of assets


      Internal and external sources of information are reviewed at each balance sheet date to identify indications that
the following assets may be impaired or an impairment loss previously recognised no longer exists or may have
decreased:


      —       property, plant and equipment;


      —       pre-paid interests in leasehold land classified as being held under an operating lease;


      —       intangible assets; and


      —       investment in subsidiaries.


      If any such indication exists, the asset’s recoverable amount is estimated. In addition, for intangible assets that are
not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated
annually whether or not there is any indication of impairment.



                                                        — 242 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

      —      Calculation of recoverable amount


             The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value
      in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
      reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does
      not generate cash inflows largely independent of those from other assets, the recoverable amount is determined
      for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).


      —      Recognition of impairment losses


             An impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds
      its recoverable amount.


      —      Reversals of impairment losses


             An impairment loss is reversed if there has been a favourable change in the estimates used to determine the
      recoverable amount.


(g)   Investments in subsidiaries


      In the Company’s stand-alone balance sheet, investments in subsidiaries are accounted for at cost less provision
for impairment losses (see note 1(f)).


(h)   Consumables


       Consumables comprising food and beverage, diesel and sundry store items are stated at the lower of cost and net
realisable value, which is determined principally on a weighted average basis.


(i)   Provisions


      Provisions are recognised for liabilities of uncertain timing or amount when the Company or Group has a legal or
constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be
required to settle the obligation and a reliable estimate can be made. Where the time value of money is material,
provisions are stated at their present value of the expenditure expected to settle the obligation.


       Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is
remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or
more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is
remote.


(j)   Income tax


      Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the
income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity.


      Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.



                                                       — 243 —
APPENDIX I                                                                         ACCOUNTANTS’ REPORT

      Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.


      A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.


      Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability
to pay the related dividend.


(k)   Cash and cash equivalents


      For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash at bank and in
hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having
been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of
the consolidated cash flow statement.


(l)   Commissions and incentives


      Commissions and incentive expenses represent amounts paid and payable to special tour group (“STG”) operators
and non-STG operators, and are included in the cost of sales when incurred by the Group.


(m)   Employee benefits


      Salaries, annual bonuses, paid annual leave, leave passage and the cost to the Group of non-monetary benefits are
accrued in the year in which the associated services are rendered by employees of the Group. Where payment or
settlement is deferred and the effect would be material, these amounts are stated at their present values.


(n)   Foreign currencies


      Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at
exchange rates ruling at the balance sheet date. Foreign currency transactions during the year are translated into United
States dollars at the exchange rates ruling at the transaction dates. The results of foreign enterprises are translated into
United States dollars at the average exchange rates for the year; balance sheet items are translated into United States
dollars at the rates of exchange ruling at the balance sheet date. The resulting exchange differences are dealt with as a
movement in reserves. All other translation differences are included in the income statement.


      The functional currency of the Group has been determined as United States dollars rather than Cambodian Riel, the
domiciled currency, on basis that the gaming and other operations transactions are undertaken in United States dollars.


(o)   Dividends


      Interim dividends are recognised as a liability in the period in which they are declared and final dividends are
recognised as a liability when shareholder approval has been obtained.



                                                       — 244 —
APPENDIX I                                                                          ACCOUNTANTS’ REPORT

(p)      Segment reporting


         A segment is a distinguishable component of the Group that is engaged either in providing products or services
(business segment), which is subject to risks and rewards that are different from those of other segments.


         In accordance with the Group’s internal financial reporting system, the Group has chosen business segment
information as the primary reporting format for the purposes of the Financial Information.


         Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis to that segment. For example, segment assets may include
inventories, trade receivables and property, plant and equipment. Segment revenue, expenses, assets, and liabilities are
determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process,
except to the extent that such intra-group balances and transactions are between group enterprises within a single
segment.


         Segment capital expenditure is the total cost incurred during the period to acquire segment tangible assets that are
expected to be used for more than one period.


(q)      Related parties


         For the purposes of the Financial Information, parties are considered to be related to the Group if the Group has
the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial
and operating decisions, or vice versa, or where the Group and the party are subject to common control or common
significant influence. Related parties may be individuals (being members of key management personnel, significant
shareholders and/or their close family members) or other entities and include entities which are under the significant
influence of related parties of the Group where those parties are individuals, and post-employment benefit plans which
are for the benefit of employees of the Group or of any entity that is a related party of the Group.


(r)      Leased assets


         Assets that are held by the Group under leases which transfer to the Group substantially all the risk and rewards
of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and
rewards of ownership to the Group are classified as operating leases, with the exception of land held for own use under
an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated
thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also
clearly held under an operating lease. For these purposes, the inception of the lease is the time that the lease was first
entered into by the Group, or taken over from the previous lessee, or at the date of construction on those buildings, if
later.




                                                         — 245 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

      (i)     Assets acquired under finance leases


              Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of
      the leased asset, or, if lower, the present value of the minimum lease payments, of such assets are included in fixed
      assets and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases.
      Depreciation is provided at rates which write off the cost of the assets in equal annual amounts over the term of
      the relevant lease or, where it is likely the Company or Group will obtain ownership of the asset, the life of the
      asset, as set out in note 1(d)(iii). Impairment losses are accounted for in accordance with the accounting policy as
      set out in note 1(f). Finance charges implicit in the lease payments are charged to the income statement over the
      period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance
      of the obligations for each accounting period. Contingent rentals are written off as an expense of the accounting
      period in which they are incurred.


      (ii)    Assets held for use in operating lease


              Where the Group leases out assets under operating leases, the assets are included in the balance sheet
      according to their nature and, where applicable, are depreciated in accordance with the Group’s depreciation
      policies, as set out in note 1(d)(iii). Impairment losses are accounted for in accordance with the accounting policy
      as set out in note 1(f). Revenue arising from operating leases is recognised in accordance with the Group’s revenue
      recognition policies, as set out in note 1(c)(iii).


      (iii)   Operating lease charges


              Where the Group has the use of assets under operating leases, payments made under the leases are charged
      to the income statement in equal instalments over the accounting periods covered by the lease term, except where
      an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease
      incentives received are recognised in the income statement as an integral part of the aggregate net lease payments
      made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.


2     Changes in accounting policies


      The International Accounting Standards Board has issued a number of new and revised IFRSs that are effective for
accounting periods beginning on or after 1st January, 2005.


      The accounting policies of the Group and the Company after the adoption of these new and revised IFRSs have
been summarised in note 1. There is no material impact on the financial position and results of the Group for the adoption
of the revised IFRSs.


      The Group has not applied any new standard or interpretation that is not yet effective for the current accounting
period (see note 33).




                                                        — 246 —
APPENDIX I                                                                  ACCOUNTANTS’ REPORT

3   Revenue


    Revenue represents net house takings arising from casino operations and income from other operations as follows:

                                                                                                Five months
                                                        Year ended 31st December,             ended 31st May,
                                                       2003          2004          2005          2005          2006
                                                      $’000         $’000         $’000         $’000         $’000
                                                                                          (unaudited)


    Casino operations                                55,149        58,527        62,599        20,549        36,632
    Income from operating lease for the
      provision and maintenance of gaming
      machine stations                                   —             —          1,535            —          1,292
    Other operations                                     26             7           148            12            83


                                                     55,175        58,534        64,282        20,561        38,007




    Revenue from other operations comprises income from a food and beverage outlet and video arcade games.


4   Other operating income

                                                                                                  Five months
                                                       Year ended 31st December,                ended 31st May,
                                                       2003          2004          2005          2005          2006
                                                      $’000         $’000         $’000         $’000         $’000
                                                                                          (unaudited)


    Rental income                                        27            44            39            18            15
    Sundry income                                        —             —             14            —             —


                                                         27            44            53            18            15




                                                  — 247 —
APPENDIX I                                                                     ACCOUNTANTS’ REPORT

5   Profit before taxation


    Profit before taxation is arrived at after charging/(crediting):

                                                                                                  Five months
                                                          Year ended 31st December,             ended 31st May,
                                                          2003         2004      2005            2005       2006
                                                         $’000         $’000     $’000           $’000      $’000
                                                                                           (unaudited)


    (a)   Finance costs:
          Other borrowing costs
             - interest expense on
                  finance leases                              1           1           —             —            —
             - bank overdraft charges                        14           —           —             —            —


                                                             15           1           —             —            —



    (b)   Other items:
          Fuel expenses                                    436          444       721             264           369
          Other taxes (note)                              (107)         664       647             264           248
          Depreciation                                     214          367       356             156           149
          Loss on disposal of property, plant
             and equipment                                    9           4           —             —            —
          Amortisation of casino licence premium           150          150      1,282             62       1,477
          Operating lease charges for
            properties and vessel                          618          235       185              90            84
          Operating lease charges for hire
             of equipment                                2,097         2,924      874              54            43
          Bad and doubtful debts
             expense/(recovered)                          (132)          19           —             —           278
          Exchange loss                                      39         153           93            —            10
          Auditors’ remuneration                           108          162       142              29           110



          Salaries and benefits                          5,717         6,120     6,044           2,589      2,815
          Retirement scheme contributions                    14          11            8            3             3


          Total staff costs                              5,731         6,131     6,052           2,592      2,818



          Average number of employees
            (full-time equivalent)                         871          917       938             943           935




          Note:     Other taxes relate to non-gaming obligation payments, salary taxes, fringe benefit taxes and
                    withholding taxes and include penalties and interest on late payment of taxes and obligation
                    payments.




                                                     — 248 —
APPENDIX I                                                                            ACCOUNTANTS’ REPORT

    (c)      Cost relating to postponed initial public offering


             The costs relating to postponed initial public offering relate to marketing and professional fees incurred in
             connection with a proposed initial public offering on the main Board of Singapore Exchange Securities
             Trading Limited. The proposed initial public offering was postponed in October 2003.


6   Income tax


    Tax expense

                                                                                                          Five months
                                                   Year ended 31st December,                            ended 31st May,
                                                2003               2004              2005              2005              2006
                                           %     $’000         %    $’000        %    $’000        %    $’000        %    $’000
                                                                                                 (unaudited)


    Current tax expense (note a)                   720               1,202             1,352              563               634
    Under provision in prior year                      3                  —                 —                 —                 —


                                                   723               1,202             1,352              563               634



    Reconciliation of effective
      tax rate:
    Profit before taxation                       16,792             18,856            26,293            5,923             18,040



    Profits tax using Cambodian
      corporation tax rate               20.0     3,358     20.0     3,771    20.0     5,259    20.0    1,185     20.0     3,608
    Tax exempt profits from
      Cambodian operations
      (note a)                          (20.0) (3,358)      (20.0) (3,769)    (20.0) (5,257)    (20.0) (1,185)    (20.0) (3,608)
    Obligation payments (note a)          4.3      720       6.4     1,200     5.1     1,350     9.5      563      3.5      634


                                          4.3      720       6.4     1,202     5.1     1,352     9.5      563      3.5      634
    Under provision in prior year          —           3      —           —     —           —     —           —     —           —


                                          4.3      723       6.4     1,202     5.1     1,352     9.5      563      3.5      634




    Notes:


    (a)      Taxation in the income statement


             The Group has no assessable profits that will give rise to taxation under the applicable rules and regulations
    in Hong Kong during the relevant period and as such, no provision for Hong Kong profits tax has been made.




                                                           — 249 —
APPENDIX I                                                                  ACCOUNTANTS’ REPORT

        Taxation represents obligation payments of $126,563 (2003: $60,000, 2004: $100,000 and 2005: $112,500) per
   month payable to the Ministry of Economy and Finance (“MOEF”) of Cambodia payable by NRCL Gaming Branch
   as explained below and minimum profits tax of $nil for the five months ended 31st May, 2006 (2005: $nil) and
   $2,000 for the year ended 31st December, 2005 (2003: $nil and 2004: $2,000) for the Hotel and Entertainment
   Branch.


        (i)   Casino tax and licence fees


              As described in section A3, under the Sihanoukville Development Agreement (“SDA”) and the
        Supplementary Sihanoukville Development Agreement (“SSDA”) dated 2nd January, 1995 and 2nd February,
        2000 respectively, the Royal Government of Cambodia (the “Government”) has granted a casino licence to
        a subsidiary, Ariston, which in turn assigned the rights to operate gaming activities in Cambodia to NRCL.


              Pursuant to the SDA, Ariston was granted certain tax incentives in respect of the casino operations
        which include a profits tax exemption for a period of eight years from commencement of business, and
        profits thereafter would be subject to a concessionary rate of profits tax of 9% as compared to the normal
        profits tax rate of 20%. Ariston, in turn, assigned to NRCL all the tax incentives that had been granted to
        Ariston pursuant to the SDA and SSDA relating to the gaming operations. The assignment of these tax
        incentives was confirmed by the Senior Minister, Minister in charge of the Council of Ministers, in a letter
        dated 20th November, 2000.


             It was contemplated by the SSDA, the gaming business of NRCL would be regulated by a casino law
        which may prescribe casino taxes and licence fees. However, no casino law in respect of casino taxes or
        licence fees has been promulgated to-date. NRCL has obtained a legal opinion that no casino taxes and
        licence fees are payable until relevant legislation is enacted.


              In May 2000, the MOEF levied an “Obligation Payment” of $60,000 per month on NRCL payable from
        January 2000 to December 2003, in respect of the gaming activities. The MOEF has also confirmed that
        gaming taxes and licence fees are not payable in respect of periods prior to January 2000. NRCL has also
        obtained a legal opinion confirming that the Obligation Payment is not payable prior to January 2000. In
        December 2003, the MOEF revised the obligation payment from $60,000 per month to $100,000 per month
        for the year ended 31st December, 2004, $112,500 per month for the year ended 31st December, 2005 and
        $126,563 per month for the year ending 31st December, 2006. Such payments will be subject to an annual
        increase of 12.5% thereafter until the full completion of NagaWorld. In addition, the MOEF has levied a new
        casino taxation certificate amounting to $30,000 per year payable from year 2004 onwards. However, the
        MOEF in their letter dated 12th November, 2004 acknowledges that under the SDA and SSDA, NRCL’s casino
        licence is valid for 70 years.


              Monthly payment is due on the first week of the following month. In the event of late payment within
        7 days from the due date, there will be a penalty imposed of 2% on the late payment and 2% of interest per
        month. In addition, after 15 days of official government notice to the Company for the late payment of the
        fixed gaming tax, an additional penalty of 25% will be imposed.


               During 2004 and 2005, the Group and the Government were in discussions on the settlement of
        outstanding Gaming and non-Gaming Obligation Payments and their related tax penalties and late payment
        interest for the period to 31st December, 2005.


              On 11st May, 2006, the Government formally confirmed the settlement terms of outstanding taxes for
        the period to 31st December, 2005 in respect of outstanding Gaming Obligation Payments and non-Gaming
        Obligation Payments, and their related tax penalties and late payment interest. The Government confirmed
        that no additional penalties were due to the Government in respect of the year ended 31st December, 2005
        and that an additional $89,000 of late payment interest is due in respect of outstanding Gaming Obligation



                                                 — 250 —
APPENDIX I                                                                ACCOUNTANTS’ REPORT

      Payments and non-Gaming Obligation Payments for the year ended 31st December, 2005 and on the
      previously agreed instalments in accordance with an agreement between the Group and Government dated
      12th November, 2004 in respect of Gaming Obligation Payments, non-Gaming Obligation Payments and their
      related penalties and late payment interest for the period ended 31st December, 2004.


             In respect of the outstanding Gaming Obligation Payments and non-Gaming Obligations Payments for
      the months February 2006 to July 2006, the MOEF has approved the Company’s request to allow the
      Company to settle all its outstanding monthly Gaming Obligation Payments and non-Gaming Obligation
      Payments from February 2006 to July 2006 amounting to $994,788 in the fourth week of October 2006 with
      no interest, fine or penalty imposed. The Company is required to pay its monthly Gaming Obligation
      Payments and non-Gaming Obligations Payments from August 2006 onwards in a timely manner.


             The outstanding Gaming Obligation Payments and non-Gaming Obligation Payments, and their related
      tax penalties and late payment interest for 2005, and the outstanding instalments in accordance with the
      agreement dated 12th November, 2004 are to be settled by the Group in instalments from May to September
      2006. The additional late payment interest that the Government formally confirmed on 11th May, 2006 has
      been charged to the income statement during the year ended 31st December, 2005.


      (ii)   Corporate and other taxes on gaming activities


             Current tax expense represents Obligation Payments for NRCL Gaming Branch as explained above and
      minimum profits tax for the Hotel and Entertainment Branch.


             NRCL Gaming Branch enjoys certain tax incentives relating to gaming activities which were granted by
      the Royal Government of Cambodia in the SDA and SSDA, including exemption from corporate tax for eight
      years. Further tax incentives and extension of the corporate tax exemption period to December 2004 were
      granted to NRCL, as set out in the letters from the MOEF dated 10th May, 2000, 15th September, 2000 and
      30th November, 2000. The tax incentives granted to NRCL up to December 2005 include exemptions from all
      categories of taxes in respect of gaming activities including advance profits tax, dividend withholding tax,
      minimum profits tax, value-added-tax and revenue tax, and exemptions from unpaid fringe benefits tax and
      withholding tax up to 31st December, 1999.


             NRCL has further obtained a clarification letter from the MOEF dated 24th February, 2003 confirming
      exemptions from salary tax for its gaming employees prior to January 2000.


             As explained in note 6(a)(i) above in respect of gaming activities, NRCL has to pay the Obligation
      Payment. The MOEF confirmed, in a letter to NRCL dated 15th September, 2000, clarifying that the Obligation
      Payment is a fixed gaming tax and with the payment of this fixed gaming tax, NRCL will be exempted from
      all category of taxes on gaming activities including advance profits tax, minimum tax, and advance tax on
      distribution of dividends. NRCL, however, is obliged to pay taxes on other non-gaming services and activities
      payable under the law of taxation of Cambodia.


             Furthermore, the Senior Minister of the Minister of the MOEF in a circular to all casinos dated 7th
      December, 2000 clarified that with the payment of the Obligation Payment on gaming activities, companies
      will be exempted from the profits tax, minimum tax, advance tax on dividend distribution and value added
      tax.


             A legal opinion has also been obtained confirming that NRCL will be exempt from the aforementioned
      taxes subject to the Obligation Payments being made.



                                               — 251 —
APPENDIX I                                                                    ACCOUNTANTS’ REPORT

               With the imposition of the Obligation Payment or fixed gaming tax currently imposed, no casino law
         in respect of casino taxes and licence fees having been promulgated and together with the tax incentives
         mentioned in the SDA and SSDA that NRCL would enjoy a concessionary rate of profits tax of 9% after the
         tax exemption period has expired, it is uncertain what applicable rate of tax will be imposed on the profits
         of the Group from gaming activities in the future if a casino law in respect of casino taxes and licence fees
         is eventually promulgated.


               In July 2002, the MOEF imposed a non-gaming Obligation Payment on NRCL Gaming Branch in respect
         of tax on non-gaming activities of a fixed sum of $30,500 per month for the six months ended 31st December,
         2002. For the two years ended 31st December, 2004, the non-gaming Obligation Payment was revised from
         $30,500 per month to $31,000 per month. In November 2004, the MOEF revised the non-gaming Obligation
         Payment from $31,000 per month to $34,875 per month for the year ended 31st December, 2005 and in
         December 2005, the MOEF revised the non-gaming Obligation Payment to $39,235 per month for the year
         ending 31st December, 2006. The monthly rate of non-gaming Obligation Payment will be reviewed annually
         according to circumstances.


               The above non-gaming Obligation Payment is considered as representing various other taxes such as
         salary tax, fringe benefit tax, withholding tax and value-added tax which are included in operating expenses
         in the income statement. The non-gaming Obligation Payment is due to be paid monthly and in the event
         of default in payment, the penalties imposed are similar to the Gaming Obligation Payment penalties as
         stated in note 6(a)(i) above and repayment of arrears and related penalties and interest are similar to the
         Gaming Obligation Payments as stated in note 6(a)(i) above.


   (b)   Taxes on other businesses


          NRCL Hotel and Entertainment Branch that owns NagaWorld has been granted tax incentives by the Council
   for the Development of Cambodia (“CDC”) and the profits from the Branch will be taxed at 9% up to March 2008.
   Thereafter the profits from the Branch will be subject to normal profits tax of 20%. The Branch is required to pay
   a minimum profits tax of 1% of turnover in the event of a loss for the year or when the profits tax levied on the
   profits is less than the minimum profits tax. The CDC has also approved exemption from import duty on materials
   and equipment imported for the construction of NagaWorld.


         Profits from NRCL’s operations in Cambodia, other than Gaming and Hotel and Entertainment branches, are
   subject to normal profits tax of 20%. Revenue from NRCL’s other operations in Cambodia is subject to
   value-added-tax of 10%.


   (c)   Amendments to the Law on Investment and Law of Taxation


        Certain amendments to the existing Law on Investment (“LoI”) and Law of Taxation (“LoT”) of Cambodia
   were promulgated in March 2003.


         Under the amendments made to the LoI, profits tax exemption would be preserved for the term granted
   under the original investment incentives, and the concessionary 9% profits tax rate will be restricted to five years
   from the expiry of the tax exemption period and thereafter profits would be subject to the normal tax rate of 20%.


          Under the previous LoT, dividends can be distributed to shareholders without further withholding taxes. For
   entities that enjoy profits tax exemption or a concessionary profits tax rate of 9%, the amendments to the LoT will
   impose an additional tax that effectively increases the profits tax rate to 20%, upon the distribution of dividends.
   In addition, under the amendments made to the LoT, distribution of dividends to non-residents will be subject to
   a withholding tax on the distribution net of 20% tax at a rate of 14%, resulting in a net distribution tax of 31.2%.



                                                   — 252 —
APPENDIX I                                                                     ACCOUNTANTS’ REPORT

            As explained above, a casino law in respect of casino taxes and licence fees is yet to be promulgated. NRCL
      has written a letter to the MOEF to clarify whether the amendments of the LOI and LOT will apply to their
      company’s gaming business and has received a reply dated 9th June, 2003 that the amendments of the LOI and LOT
      do not apply to casinos as they will be regulated by the Casino Administration Law which has yet to be enacted.
      However, the amendments to the LoI and LoT will apply to the Hotel and Entertainment Branch.


      (d)   Deferred taxation


            No provision for deferred taxation has been accounted for as the Group has no deferred tax assets or
      liabilities at the balance sheet date.


7     Dividends

                                                                                                    Five months
                                                       Year ended 31st December,                  ended 31st May,
                                                       2003          2004           2005           2005          2006
                                                      $’000          $’000          $’000         $’000          $’000
                                                                                            (unaudited)


      Interim tax exempt dividend declared:
        - 2004 $0.026 per share                           —         32,000             —              —             —
        - 2005 $0.017 per share                           —             —          20,737             —             —
        - 2006 $0.012 per share                           —             —              —              —         18,000


                                                          —         32,000         20,737             —         18,000



      Number of shares of NagaCorp Ltd.
        in issue                               1,240,000,080 1,240,000,080 1,240,000,080 1,240,000,080 1,442,332,491




      On 31st December, 2004, the Company declared an interim dividend of $0.026 per share. This represented a
distribution out of the Group’s earnings for the years ended 31st December, 2003 and 2004.


      On 31st December, 2005, the Company declared an interim dividend of $0.017 per share. This represented a
distribution out of the Group’s earnings for the year ended 31st December, 2005.


      On 31st May, 2006, the Company declared an interim dividend of $0.012 per share. This represented a distribution
out of the Group’s earnings for the five month period ended 31st May, 2006.




                                                    — 253 —
APPENDIX I                                                                      ACCOUNTANTS’ REPORT

8     Directors’ interests and remuneration


(a)   Directors’ remuneration


      Details of the emoluments paid and payable to the directors in their capacity as executives for the Group for the
relevant period are as follows:

                                                                                                         Five months
                                                           Year ended 31st December,                    ended 31st May,
                                                         2003          2004          2005           2005           2006
                                                        $’000          $’000         $’000          $’000         $’000
                                                                                              (unaudited)


      Basic salaries                                       447           589           734              310         310
      Housing and other allowances
         and benefits in kind                               66            31            24               10            10


                                                           513           620           758              320         320




      Five month period ended 31st May, 2006

                                                                          Salary             Benefits            Total
                                                                        and fees              in kind     remuneration
                                                                           $’000               $’000              $’000


      Executive directors
      Tan Sri Dr. Chen Lip Keong                                               100                —                 100
      Tian Toh Seng                                                             51                 5                   56
      Lee Wing Fatt                                                             48                 5                   53
      Lew Shiong Loon                                                           40                —                    40
      David Martin Hodson                                                       21                —                    21
      Monica Lam Yin Lin                                                        18                —                    18


      Independent non-executive directors
      Timothy Patrick McNally                                                   21                —                    21
      Wong Choi Kay                                                             11                —                    11


      Total                                                                    310                10                320




                                                     — 254 —
APPENDIX I                                                    ACCOUNTANTS’ REPORT

   Five month period ended 31st May, 2005 (unaudited)

                                                          Salary   Benefits          Total
                                                        and fees    in kind   remuneration
                                                           $’000      $’000          $’000


   Executive directors
   Tan Sri Dr. Chen Lip Keong                               100          —             100
   Tian Toh Seng                                             51          5              56
   Lee Wing Fatt                                             48          5              53
   Lew Shiong Loon                                           40          —              40
   David Martin Hodson                                       21          —              21
   Monica Lam Yin Lin                                        18          —              18


   Independent non-executive directors
   Timothy Patrick McNally                                   21          —              21
   Wong Choi Kay                                             11          —              11


   Total                                                    310         10             320




   Year ended 31st December, 2005

                                                          Salary   Benefits          Total
                                                        and fees    in kind   remuneration
                                                           $’000      $’000          $’000


   Executive directors
   Tan Sri Dr. Chen Lip Keong                               240          —             240
   Tian Toh Seng                                            122         12             134
   Lee Wing Fatt                                            115         12             127
   Lew Shiong Loon                                           96          —              96
   David Martin Hodson                                       47          —              47
   Monica Lam Yin Lin                                        43          —              43


   Independent non-executive directors
   Timothy Patrick McNally                                   47          —              47
   Wong Choi Kay                                             24          —              24


   Total                                                    734         24             758




                                          — 255 —
APPENDIX I                                                                      ACCOUNTANTS’ REPORT

      Year ended 31st December, 2004

                                                                          Salary             Benefits              Total
                                                                        and fees             in kind      remuneration
                                                                           $’000               $’000               $’000


      Executive directors
      Tan Sri Dr. Chen Lip Keong                                               240                —                  240
      Tian Toh Seng                                                            122                12                 134
      Lee Wing Fatt                                                            101                12                 113
      Lew Shiong Loon                                                           96                 7                 103
      Lai Gin Nyap                                                              30                —                   30


      Total                                                                    589                31                 620



      Lai Gin Nyap resigned as a director on 16th August, 2004.


      Year ended 31st December, 2003


                                                                          Salary             Benefits            Total
                                                                        and fees              in kind     remuneration
                                                                           $’000               $’000               $’000


      Executive directors
      Tan Sri Dr. Chen Lip Keong                                               180                20                 200
      Tian Toh Seng                                                            122                23                 145
      Lee Wing Fatt                                                            100                23                 123
      Lai Gin Nyap                                                              45                —                   45


      Total                                                                    447                66                 513



       An analysis of directors’ emoluments (pro-rata on a per annum basis for five months ended 31st May) by number
of directors and emolument ranges is as follows:

                                                                                                          Five months
                                                          Year ended 31st December,                     ended 31st May,
                                                        2003           2004          2005           2005           2006
                                                 Number of        Number of     Number of     Number of       Number of
                                                  directors        directors     directors     directors       directors
                                                                                              (unaudited)


      Not more than $50,000                                 1              1             4                4            4
      $50,001 - $100,000                                  —               —              1                1            1
      $100,001 - $150,000                                   2              3             2                2            2
      $150,001 - $200,000                                   1             —             —                —            —
      $200,001 - $250,000                                 —                1             1                1            1


                                                            4              5             8                8            8




                                                   — 256 —
APPENDIX I                                                                           ACCOUNTANTS’ REPORT

      There were no emoluments paid during the relevant period to former directors in connection with their retirement
from employment with the Group. There were no amounts paid during the relevant period to directors as an inducement
to join or upon joining the Group and no director waived any emoluments during the relevant period.


      Tan Sri Dr. Chen Lip Keong is entitled to an annual performance bonus based on the Group’s consolidated profit
before tax and before the annual performance bonus (“PBT”) as reported in the Company’s consolidated audited financial
statements which shall be paid within one month of the approval of the consolidated financial statements. The
performance bonus is calculated in accordance with the following formula:


      Less than $30 million PBT                             —    $nil performance bonus
      Between $30 million to $40 million PBT                —    performance bonus of 2% of PBT
      More than $40 million but up to and                   —    performance bonus of $0.8 million plus 3% of
        including $50 million                                      additional portion of PBT from $40,000,001 to
                                                                       $50,000,000
      More than $50 million                                 —    performance bonus of $1.1 million plus 5% of
                                                                   additional part of PBT from $50,000,001 onwards



      Tan Sri Dr. Chen Lip Keong’s employment contract expires on 1st April, 2007.


(b)   Directors’ interests


      An analysis of directors’ interests by director is as follows:

                                                                   Beneficially owned ordinary shares
                                                            At 31st December,                           At 31st May,
                                                     2003               2004           2005            2005            2006
                                                                                                (unaudited)


      Tan Sri Dr. Chen Lip Keong:
      - Shares in NagaCorp Ltd.             1,136,120,510    1,136,120,510     1,136,120,510   1,136,120,510   1,338,452,921




      No other director was the beneficial owner of the Company’s ordinary shares during the relevant period.


      There was no director share option scheme during the relevant period.




                                                       — 257 —
APPENDIX I                                                                       ACCOUNTANTS’ REPORT

9     Senior management remuneration


     Of the five individuals as at 31st May, 2006 (31st December, 2005, 2004 and 2003: five) with the highest
emoluments, three as at 31st May, 2006 (31st December, 2005, 2004 and 2003: three) are directors whose emoluments are
disclosed in note 8. The aggregate of the emoluments in respect of the other two as at 31st May, 2006 (31st December,
2005, 2004 and 2003: two) individuals are as follows:

                                                                                                         Five months
                                                             Year ended 31st December,                 ended 31st May,
                                                           2003          2004          2005           2005          2006
                                                          $’000          $’000         $’000         $’000          $’000
                                                                                               (unaudited)


      Fees                                                  201            201           200             83            83
      Basic salaries, housing and other
        allowances and benefits in kind                      45             25            25              1             1


                                                            246            226           225             84            84



      The emoluments of the two as at 31st May, 2006 (31st December, 2005, 2004 and 2003: two) individuals with the
highest emoluments are within the following bands:

                                                                                                         Five months
                                                             Year ended 31st December,                 ended 31st May,
                                                           2003          2004          2005           2005          2006
                                                          $’000          $’000         $’000         $’000          $’000
                                                                                               (unaudited)


      Not more than $50,000                                  —              —             —              —             —
      $50,001 - $100,000                                     —              —             —              —             —
      $100,001- $150,000                                       2             2             2              2             2
      $150,001 - $200,000                                    —              —             —              —             —


                                                               2             2             2              2             2



     No emoluments were paid or payable to senior management as an inducement to join the Group or as
compensation for loss of office during the relevant period.


10    Basic earnings per share


      The calculation of the basic earnings per share is based on the consolidated profit attributable to shareholders for
each respective year/period and on the shares of the Company after the restructuring as set out in note 25.


      There were no potential dilutive ordinary shares in issue during the relevant period.


      The calculation of basic earnings per share has not taken into account the shares which will or may be issued
pursuant to the Placing and Public Offer or subsequent to the Placing and Public Offer.



                                                      — 258 —
APPENDIX I                                                                  ACCOUNTANTS’ REPORT

11    Segment information


      Segment information is presented in respect of the Group’s business segment. Business segment information is
chosen as the primary reporting format because this is more relevant to the Group in making operating and financial
decisions.


(a)   Business segments

                                                                       Casino             Other
                                                                   operations        operations              Total
                                                                         $’000             $’000             $’000


      Revenue from external customers:
      Year ended 31st December,
      2003                                                              55,149                26            55,175
      2004                                                              58,527                 7            58,534
      2005                                                              64,134               148            64,282


      Five months ended 31st May,
      2005 (unaudited)                                                  20,549                12            20,561
      2006                                                              37,924                83            38,007


      Segment profit/(loss) from operations:
      Year ended 31st December,
      2003                                                              21,920            (1,048)           20,872
      2004                                                              20,002            (1,145)           18,857
      2005                                                              28,453            (2,160)           26,293


      Five months ended 31st May,
      2005 (unaudited)                                                   7,422            (1,499)            5,923
      2006                                                              18,999              (959)           18,040


      Segment assets:
      31st December, 2003                                                5,297            40,504            45,801
      31st December, 2004                                                7,973            36,375            44,348
      31st December, 2005                                              114,299            35,887           150,186
      31st May, 2006                                                    99,146            53,868           153,014


      Segment liabilities:
      31st December, 2003                                               (9,792)           (4,571)          (14,363)
      31st December, 2004                                              (14,100)          (13,156)          (27,256)
      31st December, 2005                                             (123,792)           (5,098)         (128,890)
      31st May, 2006                                                   (75,143)           (7,169)          (82,312)


      Total net (liabilities)/assets:
      31st December, 2003                                               (4,495)           35,933            31,438
      31st December, 2004                                               (6,127)           23,219            17,092
      31st December, 2005                                               (9,493)           30,789            21,296
      31st May, 2006                                                    24,003            46,699            70,702




                                                   — 259 —
APPENDIX I                                                                       ACCOUNTANTS’ REPORT

      Revenue and profit from “other operations” comprise income from the operation of a food and beverage outlet and
video arcade machines. In addition to assets employed for the operation of the food and beverage outlet and video arcade
machines, the assets of “other operations” also include leasehold land and capital work-in-progress for the NagaWorld
project in Phnom Penh.


      Cash flows from operating and investing activities can be analysed as follows:

                                                                          Casino              Other
                                                                      operations         operations               Total
                                                                            $’000              $’000              $’000


      Cash flow from operating activities:
      31st December, 2003                                                  26,225               (284)            25,941
      31st December, 2004                                                  21,021             (1,011)            20,010
      31st December, 2005                                                  29,770             (4,722)            25,048
      31st May, 2005 (unaudited)                                           10,861             (2,295)             8,566
      31st May, 2006                                                       17,395              1,264             18,659



      Cash flow from investing activities:
      31st December, 2003                                                       (57)         (15,573)           (15,630)
      31st December, 2004                                                    (901)            (7,442)            (8,343)
      31st December, 2005                                                    (123)               671                548
      31st May, 2005 (unaudited)                                                (75)           3,543              3,468
      31st May, 2006                                                         (403)            (2,703)            (3,106)




      All cash flows relate to continuing operations.


(b)   Geographical segments


      The Group’s operations and activities are located entirely in Cambodia.


(c)   Discontinued operations


      There are no discontinued operations during the relevant period and there are no net assets relating to
discontinued operations as at 31st December, 2003, 2004, 2005 and 31st May, 2006.




                                                        — 260 —
APPENDIX I                                                                                       ACCOUNTANTS’ REPORT

12      Fixed assets


(a)     Group

                                                                                                                          Interest in
                                                                                                                      leasehold land
                                                                                                                        held for own
                                                           Ship       Capital    Renovations,                              use under
                          Plant and               structure and      Work-in-       furniture      Motor                   operating
                         equipment     Buildings improvements       progress      and fittings   vehicles   Sub-total           lease    Total
                              $’000        $’000          $’000         $’000            $’000      $’000      $’000            $’000    $’000
                                                      (note (a))    (note (b))                                              (note (c))

Cost:
At 1st January, 2003          3,449           —            4,204        6,879             181        405       15,118             751    15,869
Additions                       939           —               —        14,690               1          5       15,635              —     15,635
Transfer                         —         2,119              —        (2,352)            233         —            —               —         —
Disposals                       (55)          —           (4,138)          —               —         (10)      (4,203)             —     (4,203)


At 31st December, 2003        4,333        2,119             66        19,217             415        400       26,550             751    27,301


Accumulated
   depreciation:
At 1st January, 2003          3,117           —            4,203           —              179        225        7,724              33     7,757
Charge for the year             123           12               1           —                2         65          203              11       214
Disposals                       (45)          —           (4,138)          —               —          (6)      (4,189)             —     (4,189)


At 31st December, 2003        3,195           12             66            —              181        284        3,738              44     3,782


Cost:
At 1st January, 2004          4,333        2,119              66       19,217             415        400       26,550             751    27,301
Additions                       301           —               —         8,028               1         13        8,343              —      8,343
Transfers                        —           392             (66)        (436)            110         —            —               —         —
Disposals                        (1)          —               —            —               —         (83)         (84)             —        (84)


At 31st December, 2004        4,633        2,511              —        26,809             526        330       34,809             751    35,560


Accumulated
   depreciation:
At 1st January, 2004          3,195           12              66           —              181        284        3,738              44     3,782
Charge for the year             210           54              —            —               28         64          356              11       367
Transfers                        —            —              (66)          —               66         —            —               —         —
Disposals                        (1)          —               —            —               —         (79)         (80)             —        (80)


At 31st December, 2004        3,404           66              —            —              275        269        4,014              55     4,069




                                                               — 261 —
APPENDIX I                                                                                      ACCOUNTANTS’ REPORT

                                                                                                                         Interest in
                                                                                                                     leasehold land
                                                                                                                       held for own
                                                           Ship      Capital    Renovations,                              use under
                          Plant and               structure and     Work-in-       furniture      Motor                   operating
                         equipment     Buildings improvements      progress      and fittings   vehicles   Sub-total           lease    Total
                              $’000        $’000          $’000        $’000            $’000      $’000      $’000            $’000    $’000
                                                      (note (a))   (note (b))                                              (note (c))

Cost:
At 1st January, 2005          4,633        2,511              —       26,809             526        330       34,809             751    35,560
Additions                        97           —               —        3,497               2        125        3,721              —      3,721
Transfers                        —           700              —         (783)             83         —            —               —         —
Disposals                       (12)          —               —           —               —         (88)        (100)             —       (100)


At 31st December, 2005        4,718        3,211              —       29,523             611        367       38,430             751    39,181


Accumulated
   depreciation:
At 1st January, 2005          3,404           66              —           —              275        269        4,014              55     4,069
Charge for the year             208           57              —           —               31         49          345              11       356
Transfers                        —            —               —           —               —          —            —               —         —
Disposals                        (6)          —               —           —               —         (75)         (81)             —        (81)


At 31st December, 2005        3,606         123               —           —              306        243        4,278              66     4,344


Cost:
At 1st January, 2006          4,718        3,211              —       29,523             611        367       38,430             751    39,181
Additions                       408           —               —        2,698              —          —         3,106              —      3,106
Transfers                        —            —               —           —               —          —            —               —         —
Disposals                        (9)          —               —           —               —          —            (9)             —         (9)


At 31st May, 2006             5,117        3,211              —       32,221             611        367       41,527             751    42,278


Accumulated
   depreciation:
At 1st January, 2006          3,606          123              —           —              306        243        4,278              66     4,344
Charge for the period            84           30              —           —               17         14          145               4       149
Transfers                        —            —               —           —               —          —            —               —         —
Disposals                        (9)          —               —           —               —          —            (9)             —         (9)


At 31st May, 2006             3,681          153              —           —              323        257        4,414              70     4,484



                                                                                                                         Interest in
                                                                                                                     leasehold land
                                                                                                                       held for own
                                                           Ship      Capital    Renovations,                              use under
                          Plant and               structure and     Work-in-       furniture      Motor                   operating
                         equipment     Buildings improvements      progress      and fittings   vehicles   Sub-total           lease    Total
                              $’000        $’000          $’000        $’000            $’000      $’000      $’000            $’000    $’000
                                                      (note (a))   (note (b))                                              (note (c))

Net book value:
At 31st December, 2003        1,138        2,107              —       19,217             234        116       22,812             707    23,519

At 31st December, 2004        1,229        2,445              —       26,809             251         61       30,795             696    31,491

At 31st December, 2005        1,112        3,088              —       29,523             305        124       34,152             685    34,837

At 31st May, 2006             1,436        3,058              —       32,221             288        110       37,113             681    37,794




                                                               — 262 —
APPENDIX I                                                             ACCOUNTANTS’ REPORT

(b)   Company

                                                                                     Plant and
                                                                                    equipment
                                                                                         $’000


      Cost:
      Additions                                                                              3


      At 31st December, 2004                                                                 3



      Accumulated depreciation:
      At 31st December, 2003 and 2004                                                       —



      Net book value:
      At 31st December, 2004                                                                 3



                                                                                     Plant and
                                                                                    equipment
                                                                                         $’000


      Cost:
      At 31st December, 2004, 31st December, 2005 and 31st May, 2006                        3



      Accumulated depreciation:
      At 1st January, 2005                                                                  —
      Charge for the year                                                                    1


      At 31st December, 2005                                                                 1



      At 1st January, 2006                                                                   1
      Charge for the period                                                                  1


      At 31st May, 2006                                                                      2



      Net book value:
      At 31st December, 2004                                                                 3



      At 31st December, 2005                                                                 2



      At 31st May, 2006                                                                      1




                                                  — 263 —
APPENDIX I                                                                      ACCOUNTANTS’ REPORT

   Notes:


   (a)      Ship structure and improvements


            The ship structure and improvement costs were incurred on a shipping vessel leased by NRCL and was used
            for its gaming activities until 30th September, 2003.


   (b)      Capital work-in-progress at net book value relates to the following assets under construction:

                                                                             31st December,                   31st May,
                                                                     2003          2004            2005            2006
                                                                    $’000          $’000           $’000           $’000


            Hotel and casino complex, Cambodia                      19,217        26,809          29,523          32,221




            The hotel and casino complex in Cambodia, known as NagaWorld, is being constructed on land held under
            a lease expiring on 31st July, 2066. The premium paid to obtain the lease of $751,000 is included within land
            and improvements at its amortised cost.


   (c)      Interest in leasehold land held for own use under operating lease is located as follows:

                                                                             31st December,                   31st May,
                                                                     2003          2004            2005            2006
                                                                    $’000          $’000           $’000           $’000


            Cambodia                                                  707            696             685             681




            The land has a remaining leasehold period of around 60 years expiring on 31st July, 2066. The lease is
            undertaken between NRCL and the Municipality of Phnom Penh, Cambodia.


   (d)      The net book value of assets held under finance leases of the Group was $15,000 as at 31st May, 2006 and
            $16,000 as at 31st December, 2005 (2004: $13,000 and 2003: $28,000), and depreciation of $1,000 was charged
            during the five month period ended 31st May, 2006 and $1,000 was charged during the year ended 31st
            December, 2005 (2004: $15,000 and 2003: $15,000).




                                                      — 264 —
APPENDIX I                                                                                                     ACCOUNTANTS’ REPORT

13    Intangible assets

                                                                                                        At 31st December,                                                               At 31st May,
                                                                                  2003                                     2004                                   2005                                      2006
                                                                                $’000                                    $’000                                  $’000                                     $’000


      Casino licence premium, at cost:
      At beginning of year                                                       3,000                                    3,000                                  3,000                            108,000
      Additions                                                                             —                                        —                  105,000                                                       —


      At end of year                                                 3,000                                    3,000                                108,000                                   108,000
                                                                 ---------                                ---------                              ---------                                 ---------

      Less amortisation:
      At beginning of year                                                       1,200                                    1,350                                  1,500                                     2,782
      Charge for year                                                                  150                                      150                              1,282                                     1,477


      At end of year                                                              1,350                                    1,500                                  2,782                                     4,259
                                                                 ---------
                                                                 ------------------------------------     ---------
                                                                                                          ------------------------------------   ---------
                                                                                                                                                 ------------------------------------      ---------
                                                                                                                                                                                           ------------------------------------


      Net book value                                                             1,650                                    1,500                         105,218                                   103,741



      During the year ended 31st December, 2005 Ariston entered into an Addendum Agreement which extended the
exclusivity period of the Casino Licence for the period to the end of 2035 in consideration of $105 million. Refer to note
31 for further details.


14    Advance to the Royal Government of Cambodia


      An advance of $4.25 million was made by Ariston to the Royal Government of Cambodia. The advance was non
interest bearing and had no fixed terms of repayment. The Group believed, based on discussions with officials of the
Royal Government of Cambodia that it was entitled to recover this advance by offset against past and future tax liabilities
or other payments which may be payable by Ariston or NRCL. However, the Group had not received any written
agreement of such entitlement. As part of the consideration for the sale of the entire equity interest in Ariston to NagaCorp
(HK) Limited, Tan Sri Dr. Chen Lip Keong, the ultimate controlling shareholder of the Company gave an undertaking on
11th April, 2003 and reconfirmed on 25th March, 2004 to Ariston and NagaCorp (HK) Limited that in the event that the
Group does not receive such a letter or agreement in writing from the Royal Government of Cambodia, the ultimate
controlling shareholder would reimburse Ariston the sum of $4.25 million within one (1) year of the date of the
reconfirmed undertaking.


      On 25th March, 2005, Tan Sri Dr. Chen Lip Keong settled the advance of $4.25 million by way of set-off against the
dividend due to him.


15    Investment in a subsidiary

                                                                                                        At 31st December,                                                               At 31st May,
                                                                                  2003                                     2004                                   2005                                      2006
                                                                                $’000                                    $’000                                  $’000                                     $’000


      Unlisted shares, at cost                                              15,500                                   15,500                                 15,500                                    15,500




                                                       — 265 —
APPENDIX I                                                                     ACCOUNTANTS’ REPORT

     The investment in a subsidiary relates to the Company’s investment in NagaCorp (HK) Limited.


     Details of the Group companies following the Restructuring are as follows:

                                                                                    Effective
                                             Place of         Place of           equity held
     Name of subsidiary                      incorporation    business         by the Group       Principal activities


     NagaCorp (HK) Limited*                  Hong Kong        Hong Kong                    100%   Investment holding

     Naga Resorts & Casinos Limited*         Hong Kong        Cambodia                     100%   Gaming, hotel and
                                                                                                  entertainment
                                                                                                  operations

     Ariston Sdn. Bhd. #                     Malaysia         Malaysia &                   100%   Investment holding
                                                              Cambodia

     Neptune Orient Sdn. Bhd. #              Malaysia         Malaysia &                   100%   Inactive
                                                              Cambodia

     Ariston (Cambodia) Limited #            Cambodia         Cambodia                     100%   Inactive


     The class of shares held is ordinary.


     *       The Financial Information of these subsidiaries was audited by KPMG Hong Kong for the relevant period.


     #       The Financial Information of these subsidiaries was audited by KPMG Malaysia, Chartered Accountants,
             Wisma KPMG, Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia, for the relevant period.


16   Consumables


     Consumables comprise food and beverage, diesel and sundry items.


17   Trade and other receivables

                                                                           At 31st December,                 At 31st May,
                                                                  2003             2004           2005               2006
                                                                  $’000           $’000           $’000             $’000

     Trade receivables                                            1,334           3,806            7,467            7,669
     Amounts due from ultimate controlling
       shareholder (note 18)                                     11,861              —                —                —
     Other receivables, deposits and prepayments
       (note)                                                     1,068           1,715            2,136            2,729
     Less: Allowance for doubtful debts                            (150)           (159)            (159)            (438)


                                                                 14,113           5,362            9,444            9,960



     Note:   Included in other receivables, deposits and prepayments at 31st May, 2006 are costs of $2,223,000 (31st
             December, 2005, 2004 and 2003: $1,730,000, $1,333,000 and $737,000 respectively) incurred in relation to
             the Company’s proposed initial public offering, which will be offset against the proceeds within the share
             premium account.



                                                        — 266 —
APPENDIX I                                                                      ACCOUNTANTS’ REPORT

      An ageing analysis of trade receivables (net of provisions for bad and doubtful debtors) is as follows:

                                                                           At 31st December,               At 31st May,
                                                                    2003            2004           2005            2006
                                                                   $’000           $’000           $’000           $’000


      Current                                                        645           3,471           6,268           6,538
      Aged over 1 month but less than 2 months                        37              41              —              210
      Aged over 2 months but less than 3 months                      150             135              72              56
      Aged over 3 months                                             352              —              968             427


                                                                   1,184           3,647           7,308           7,231



      The amounts due from the top five specialised Tour Groups (“ST Group”) accounted for approximately 53%, 85%
and 96% respectively of the accounts receivable at 31st December, 2005, 2004 and 2003 and approximately 55% at 31st
May, 2006.


      The trade receivables relate to credit granted to STG Operators. The STG Operators are granted credit facilities
during their visit to the casino. The credit granted to the STG Operators are normally settled upon leaving the casino or
shortly afterwards, but some STG Operators may be given an extended credit period of up to 14 days.


18    Amounts due from/(to) shareholders


      Group

                                                                           At 31st December,               At 31st May,
                                                                    2003            2004           2005            2006
                                                                   $’000           $’000           $’000           $’000


      Amounts due from shareholders                               11,861              —               —               —
      Amounts due to the shareholders                                 —               —               —               —


      Amounts due from shareholders, net                          11,861              —               —               —



       The amounts due from and due to shareholders, are non-trade in nature, unsecured and interest free and have no
fixed terms of repayment.


      During the relevant period, the Group enforced its right to offset the amounts due to and due from the ultimate
controlling shareholder.


      The Group applied $20.0 million of the $20.7 million interim dividend payable to the ultimate controlling
shareholder in respect of the year during the year ended 31st December, 2005 to offset the amount advanced to the
ultimate controlling shareholder during the year ended 31st December, 2005.


      The Group applied $14.7 million of the $18.0 million interim dividend payable to the ultimate controlling
shareholder in respect of the five month period ended 31st May, 2006 to offset the amount advanced to the ultimate
controlling shareholder during the five month period ended 31st May, 2006.



                                                      — 267 —
APPENDIX I                                                                         ACCOUNTANTS’ REPORT

19    Amounts due from/(to) subsidiaries


      The amounts due from/(to) subsidiaries are unsecured, non-interest bearing and have no fixed terms of repayment.


20    Cash at bank and in hand

                                                                              At 31st December,                At 31st May,
                                                                      2003            2004             2005            2006
                                                                     $’000            $’000           $’000            $’000


      Cash at bank and in hand                                        2,257           1,729             670            1,498
      Bank overdraft                                                     —               —                —               —


      Cash and cash equivalents                                       2,257           1,729             670            1,498




      A bank overdraft available from a licensed bank in Cambodia, in which the controlling shareholder had a
substantial interest to 1st July, 2004, was secured by a first debenture incorporating a fixed and floating charge on all the
assets of NRCL and a personal guarantee from a former director of NRCL. The interest rate for the overdraft was 12% per
annum. The bank overdraft facilities were terminated in February 2003.


21    Trade and other payables


(a)   Group

                                                                              At 31st December,                At 31st May,
                                                                      2003            2004             2005            2006
                                                                     $’000            $’000           $’000            $’000


      Trade payables                                                  2,614           2,890            2,248           2,482
      Deferred income                                                    —               —             2,465           1,186
      Chips issued but redeeming                                      2,011           3,080            4,635           2,553
      Deposits                                                        1,060           1,060            1,060           1,060
      Construction creditors                                          2,239           2,699             647            3,104
      Non-gaming obligation payments and other taxes                    793           1,180            1,509           1,375
      Tax penalties and late payment interest                           782           1,398            1,622           1,357
      Other creditors and accruals                                    2,122           3,157            2,811           3,602
      Dividends payable                                                  —            7,954            2,025           5,303
      Amounts due to former director                                     —               70               —               —
      Amounts due to related companies (note 24)                         22              24         105,000           55,074


                                                                    11,643           23,512         124,022           77,096




      Note:   Other taxes relate to salary taxes, fringe benefit taxes and withholding taxes.




                                                       — 268 —
APPENDIX I                                                                       ACCOUNTANTS’ REPORT

      The amounts due to related companies of $55 million as at 31st May, 2006 have subsequently been settled on 16th
August, 2006 (refer to note 24 and section D).


      The Company subsequently settled the dividends payable to shareholders on 24th August, 2006.


      Revenue of $1,292,000 and $1,535,000 in respect of the provision and maintenance of gaming machine stations has
been recognised during the five month period ended 31st May, 2006 and year ended 31st December, 2005 respectively
(refer to note 3) and $2,465,000 of the initial advance received at $4,000,000 is recognised as deferred income as at 31st
December, 2005 and $1,186,000 has been recognised as deferred income as at 31st May, 2006.


      The following is an ageing analysis of trade payables:

                                                                            At 31st December,               At 31st May,
                                                                    2003            2004            2005            2006
                                                                    $’000           $’000           $’000           $’000


      Current                                                         157             468              86             287
      Aged over 1 month but less than 2 months                         —               —                3             435
      Aged over 2 months but less than 3 months                       247              —               28               4
      Aged over 3 months but less than 6 months                       443             453             134             200
      Aged over 6 months but less than 1 year                       1,121             180           1,548             250
      Aged over 1 year but less than 2 years                          646           1,203             133             963
      Aged over 2 years but less than 3 years                          —              586             316             343


                                                                    2,614           2,890           2,248           2,482




      There are generally credit terms of 14-45 days granted by suppliers to the Group.


(b)   Company

                                                                            At 31st December,               At 31st May,
                                                                    2003            2004            2005            2006
                                                                    $’000           $’000           $’000           $’000


      Trade payables                                                1,366           1,228           1,020           1,166
      Other payables                                                   60             108             136             134
      Amounts due to related companies (note 24)                       —               —               —           55,000


                                                                    1,426           1,336           1,156          56,300




                                                      — 269 —
APPENDIX I                                                                     ACCOUNTANTS’ REPORT

22    Provisions

                                                                                                            Litigation
                                                                                                                 $’000


      Balance at 1st January, 2003                                                                                  —
      Provisions made during the year                                                                            2,096


      Balance at 31st December, 2003                                                                             2,096



      Balance at 1st January, 2004                                                                               2,096
      Provisions made during the year                                                                               —


      Balance at 31st December, 2004                                                                             2,096



      Balance at 1st January, 2005                                                                               2,096
      Provisions made during the year                                                                               —


      Balance at 31st December, 2005                                                                             2,096



      Balance at 1st January, 2006                                                                               2,096
      Provisions made during the period                                                                             —


      Balance at 31st May, 2006                                                                                  2,096



      31st December, 2003, 2004 and 2005 and 31st May, 2006


      Current                                                                                                    2,096




      Litigation


      The provision for litigation relates to the winnings of an ST Group who had allegedly resorted to cheating. The
Company has lodged a report to the Cambodian Ministry of Interior’s Police Headquarters (the “Ministry”) and an order
was issued by the Ministry to withhold payment to the ST Group until their investigations were completed. On 11th June,
2003, a charge warrant was issued by the Prosecutor of the Phnom Penh Municipal Court (the “Court”) against certain
members of the ST Group. On 12th June, 2003, the Court issued a temporary restraining order to the Company preventing
it from making payment to the ST Group until completion of the Court’s investigations. The ST Group has not instituted
legal proceedings. Refer to note 29(b) for further details.




                                                      — 270 —
APPENDIX I                                                                     ACCOUNTANTS’ REPORT

23    Obligations under finance leases


      The Group had obligations under finance leases repayable as follows:

                                                                       Principal           Interest        Payments
                                                                           $’000               $’000            $’000


      At 31st May, 2006
      Less than one year                                                        2                 1                 3
      Between one and five years                                              10                  1                11
      After five years                                                          2                 1                 3


                                                                              14                  3                17



      At 31st December, 2005
      Less than one year                                                        3                 1                 4
      Between one and five years                                              10                  1                11
      After five years                                                          5                 1                 6


                                                                              18                  3                21



      At 31st December, 2004
      Less than one year                                                        7                 1                 8
      Between one and five years                                               —                  —                —


                                                                                7                 1                 8



      At 31st December, 2003
      Less than one year                                                        9                 1                10
      Between one and five years                                                7                 1                 8


                                                                              16                  2                18




24    Amounts due to related companies


      The amounts due to related companies in 2003 and 2004 are unsecured and interest free and repayable on demand.


      The amount due to Ariston Holdings Sdn. Bhd., a company controlled by the ultimate controlling shareholder, of
$105 million as at 31st December, 2005 and $55 million as at 31st May, 2006 related to the acquisition of the extended
exclusivity period of the casino licence (refer to notes 13 and 31). The amount due to Ariston Holdings Sdn. Bhd. is
unsecured, interest free and repayable on demand. The amount due to Ariston Holdings Sdn. Bhd. has subsequently been
settled (refer to Section D) by way of a capital contribution of $55 million to the Company.




                                                     — 271 —
APPENDIX I                                                                       ACCOUNTANTS’ REPORT

25    Share capital

                                                                             At 31st December,               At 31st May,
                                                                    2003            2004            2005            2006
                                                                   $’000            $’000           $’000           $’000


      Authorised:
      8,000,000,000 ordinary shares of $0.0125 each              100,000         100,000          100,000         100,000



      Issued and fully paid:
      1,442,332,491 ordinary shares of $0.0125 each                    —               —               —           18,029
      1,240,000,080 ordinary shares of $0.0125 each                15,500          15,500          15,500              —




      The Company was incorporated on 25th February, 2003 with an authorised share capital of $50,000 comprising
50,000 ordinary shares of $1 each and an issued and paid up share capital of $1 comprising 1 share of $1.


      On 25th April, 2003, the authorised share capital of the Company was increased to $100,000,000 divided into
100,000,000 ordinary shares of $1 each and on 24th June, 2003, the issued share capital was increased to $15,500,001
through the issue of 15,500,000 ordinary shares of $1 each pursuant to the Restructuring described in section A1.


      On 4th August, 2003, every one ordinary share of $1 each in the authorised and issued share capital of the Company
was sub-divided into 80 ordinary shares of $0.0125 each.


      On 11th May, 2006, the company issued 202,332,411 ordinary shares of $0.0125 each to Tan Sri Dr Chen Lip Keong
pursuant to an agreement with, amongst others, Ariston Sdn Bhd and Ariston Holdings Sdn Bhd. The fair value of the
202,332,411 ordinary shares was $50 million of which $2,529,155 was the par value of the ordinary shares issued and
$47,470,845 was the premium on the issue of the ordinary shares.


26    Reserves


(a)   The Group

                                                                             At 31st December,               At 31st May,
                                                                    2003            2004            2005            2006
                                                                   $’000            $’000           $’000           $’000


      Share premium account (note 25)                                  —               —               —           47,471
      Reserve on consolidation                                    (12,812)        (12,812)        (12,812)        (12,812)
      Capital contribution                                            568             568             568             568
      Retained profits                                             28,182          13,836          18,040          17,446


                                                                   15,938           1,592           5,796          52,673




      The share capital of the subsidiary companies has been reclassified as a reserve on consolidation as a result of the
adoption of the pooling of interests method of accounting for the Group restructuring, as set out in Section A2.




                                                      — 272 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

(b)   The Company

                                                                              At 31st December,              At 31st May,
                                                                     2003            2004            2005            2006
                                                                    $’000           $’000            $’000           $’000


      Share premium account (note 25)                                   —               —               —           47,471
      (Accumulated loss)/retained profit                            (4,090)            246           1,792           1,243


                                                                    (4,090)            246           1,792          48,714



       The consolidated profit attributable to equity shareholders of the Company includes a (loss)/profit of $(4,090,000),
$36,336,000 and $22,283,000 for the years ended 31st December, 2003, 2004 and 2005 respectively and $17,451,000 for
the five-month period ended 31st May, 2006.


27    Lease commitments


      At 31st May, 2006, the total future minimum lease payments under non-cancellable operating leases are payable as
follows:

                                                                                         The Group
                                                                              At 31st December,              At 31st May,
                                                                     2003            2004            2005            2006
                                                                    $’000           $’000            $’000           $’000


      Within 1 year                                                   185              185             185             185
      After 1 year but within 5 years                                 742              742             742             755
      After 5 years                                                14,075           13,890          13,705          13,617


                                                                   15,002           14,817          14,632          14,557



      Significant leasing arrangements in respect of land held under operating leases are described in note 12.


      The Company did not have any operating lease commitments.

                                                                              At 31st December,              At 31st May,
                                                                     2003            2004            2005            2006
                                                                    $’000           $’000            $’000           $’000


      Land in Phnom Penh for hotel and
        entertainment complex (note)
      Within one year                                                 185              185             185             185
      One to five years                                               742              742             742             755
      After five years                                             14,075           13,890          13,705          13,617


                                                                   15,002           14,817          14,632          14,557



      Note: Hotel and entertainment complex, Phnom Penh



                                                       — 273 —
APPENDIX I                                                                      ACCOUNTANTS’ REPORT

      The Group has entered into lease arrangements in respect of land in Phnom Penh, Cambodia which forms the site
for the NagaWorld hotel and entertainment complex with integrated casino facilities currently under construction. The
lease agreement is for a period of seventy years and does not include any provisions for renewal upon expiry or
contingent rentals. Provisions for periodic adjustments to reflect market rentals are included in the lease agreement and
in the commitments shown above.


28    Capital commitments


      The Group had the following capital commitments as at each balance sheet date:

                                                                           At 31st December,               At 31st May,
                                                                    2003            2004           2005            2006
                                                                   $’000           $’000           $’000           $’000


      Hotel and casino complex, Phnom Penh
         — contracted but not incurred                             8,406           6,866           6,128           7,702
         — authorised but not contracted                          39,113          58,724          55,547          51,330


                                                                  47,519          65,590          61,675          59,032




      The capital commitments relating to the NagaWorld project are expected to be incurred over two years in
accordance with a phased construction plan.


29    Litigation


(a)   Use of vessel


      NRCL operated its casino until 30th September, 2003 on a vessel rented from Punca Rahmat Sdn Bhd (“Punca”), a
company incorporated in Malaysia. NRCL relocated its casino business from the vessel to the land based NagaWorld
complex on 1st October, 2003. Punca leased the vessel from the vessel owner, a company incorporated in Singapore.
Punca and the owner were in dispute with regard to extension of the charter and new charter fees. The owner on 3rd
September, 2001, through its solicitors, issued a notice to Punca to terminate the lease.


      In response, Punca commenced legal proceedings in Cambodia on 24th October, 2001 against the owner to restrain
the owner from taking possession of the vessel. The Phnom Penh Municipal Court Judgement No 5 dated 16th December,
2002, reaffirmed an injunction restraining the owner from taking any steps to seize the vessel from where it is berthed
in Cambodia. This injunction is effective and permanent until the final disposal of all complaints and cross complaints
by the owner and Punca. The Cambodian Court has not fixed a date for the hearing to resolve the dispute.


      The owner subsequently commenced legal action on 28th November, 2001 against Punca in the Singapore High
Court. NRCL understands that since the subject matter of the dispute (the vessel) was in Cambodia, Punca did not take
any steps to defend the action. Consequently, the owner obtained a default Judgment dated 11th December, 2001 from
the Singapore Court against Punca to deliver the vessel to the owner in Singapore.




                                                      — 274 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

        On 27th January, 2003, the owner of the vessel lost a defamation case and the Phnom Penh Municipality Court
ordered the owner to pay $5 million to NRCL and Punca for damages and loss of interest. The Court also directed that
if the owner did not pay the compensation sum, all properties of the owner in Cambodia may be seized and sold and the
proceeds be used to satisfy the award for damages and loss of interest.


        The owner has lodged an objection against the court decision on 10th February, 2003 and the owner has within
two months from the date of objection to lodge an appeal. However, the Cambodian court has not fixed a date for the
hearing.


        The dispute between Punca and the owner has not disrupted the operations of the casino of NRCL and is not
expected to do so in the future as NRCL’s operations have moved from the vessel to the land based NagaWorld Complex
on 1st October, 2003.


        NRCL has also received confirmation from Punca that NRCL will not be liable for any amount incurred by Punca
in the settlement of the dispute with the owner beyond the agreed lease rental payable to Punca.


(b)     ST group cheating case


        An ST group comprising 20 members won approximately $2 million during the period from 23rd April, 2003 to 25th
April, 2003. Based on the information provided and review of internal security records, the Group believes the ST group
may have resorted to cheating in gambling. Therefore, NRCL withheld the money and lodged a report to the Cambodia
local court.


        NRCL lodged a report to the Cambodia Ministry of Interior’s Police Headquarters and an order was issued by police
in Cambodia to NRCL to withhold payment of monies to the ST group until their investigations were completed. On 11th
June, 2003, a charge warrant was issued by the Prosecutor of the Phnom Penh Municipal Court against certain ST group
members. On 12th June, 2003, the Phnom Penh Municipal Court issued an order temporarily restraining the company from
making the $2 million payment to the ST group until completion of the Phnom Penh Municipal Court’s investigations.


        NRCL has received demands for payment from the ST group who have publicised accusations relating to the refusal
of NRCL to pay the ST group. On 15th June, 2003, NRCL obtained an ex parte injunction from the High Court of Hong
Kong against certain of the ST group members from inter alia publicising any accusation or information relating to the
failure or refusal of NRCL to pay the monies to the ST group and from claiming against NRCL for the money withheld other
than by counter claiming for the monies in the same legal action instituted by NRCL, as plaintiff in the High Court of Hong
Kong.


        Due to difficulties in locating the defendants, NRCL’s Hong Kong lawyers only managed to serve the injunction
against one of the defendants. The defendant sought to contest the injunction but the injunction continues to be in force
(as ordered by the High Court of Hong Kong after two subsequent hearings on 20th June, 2003 and 8th July, 2003) until
the next court hearing on the matter, which was set for 9th October, 2003.


        On 18th June, 2003, NRCL obtained a similar injunction against the ST group members from the Singapore High
Court. On 30th July, 2003, NRCL’s lawyers obtained leave from the Singapore High Court to serve the court documents
on certain ST group members in Hong Kong.


        In July 2003, the ST group members obtained a discharge warrant from the Phnom Penh Municipal Court
discharging them from the criminal charges, and obtained a further warrant from the Phnom Penh Municipal Court
cancelling their earlier order that restrained NRCL from making payment to the ST group. NRCL has filed an appeal in the
Cambodia Appeal Court against both warrants.



                                                       — 275 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

      NRCL has commenced a civil action in the Phnom Penh Municipal Court against the ST group members in respect
of the disputed amount. On 29th August, 2003, the Court of Appeal issued a warrant temporarily suspending the
requirement of NRCL to pay the $2 million to the ST group members, pending the judgement of the Cambodia Appeal
Court. NRCL has since, on 4th August, 2003, received a further demand for the outstanding sum and has been threatened
with possible legal action and publicity of the incident.


      At this juncture, NRCL has no obligation to pay the withheld money and compensate the ST group for legal costs.
However a provision has been made for the ST group’s winnings as set out in note 22.


30    Risk management


(a)   Financial risk management objectives and policies


      Exposures to political and economic risks, credit, interest rate and currency risk arise in the normal course of the
Group’s business. The Group has risk management policies and guidelines which set out its overall business strategies,
its tolerance of risk and its general risk management philosophy and has established processes to monitor and control
the hedging of transactions in a timely and accurate manner. Such policies are regularly reviewed by the controlling
shareholder and the board of directors, and regular reviews will be undertaken to ensure that the Group’s policy
guidelines are adhered to.


(b)   Political and economic risks


      The Group’s activities are carried out in Cambodia, a country which has had a history of political instability. While
the political climate has been more stable in recent years, its political and legal frameworks are still evolving and the
economic and legal environments may change significantly in the event of a change of government. Although the Royal
Government of Cambodia (“Government”) has been pursuing reform policies in recent years, no assurance can be given
that the Government will continue to pursue such policies or that such policies may not be significantly altered. There
is also no guarantee that the Government’s pursuit of reforms will be consistent or effective. Changes in laws on taxation
and investment and in policies affecting the industry in which the Group operates could have a significant negative effect
on its operating results and financial condition.


(c)   Credit risk


      Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on all customers requiring credit over a certain amount. The Group does not require collateral
in respect of financial assets.


      At the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit
risk is represented by the carrying amount of each financial asset in the balance sheets.


(d)   Interest rate risk


      With the exception of its bank overdraft, to date the Group’s funding requirements have largely been met by
interest free advances from related companies. The Group does not, therefore, have significant levels of interest bearing
deposits or borrowings and its exposure to fluctuations in interest rates is not considered significant.




                                                      — 276 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

(e)   Foreign currency risk


      The Group’s income is principally earned in United States dollars (“US dollars”). The Group’s expenditure is
principally paid in US dollars and to a lesser extent in Cambodian Riels. The Group does not therefore have significant
exposure to foreign currency risk. The Group does not enter into currency hedging transactions since it considers that
the cost of such instruments outweigh the potential cost of exchange rate fluctuation.


(f)   Fair values


      All financial instruments are carried at amounts not materially different from their fair values at the balance sheet
date because of their short term maturity.


31    Related party transactions


      In addition to the transactions and balances disclosed elsewhere, significant transactions entered into between the
Group, its related companies and controlling shareholder are as follows:


      Advances to the controlling shareholder


      NRCL has made certain advances to the controlling shareholder. The advances were non-trade in nature, on an
interest-free and unsecured basis with no fixed terms of repayment. The amounts due from the controlling shareholder
at each period end are set out in note 18.


      Expenses

                                                                                                          Five months
                                                             Year ended 31st December,                  ended 31st May,
                                                           2003          2004           2005           2005          2006
                                                          $’000          $’000          $’000         $’000          $’000
                                                                                                (unaudited)


      Bank overdraft interest expense (note (i))              14            —              —              —             —
      Travel expenses (note (ii))                           207            103            130            51             74




      Income

                                                                                                          Five months
                                                             Year ended 31st December,                  ended 31st May,
                                                           2003          2004           2005           2005          2006
                                                          $’000          $’000          $’000         $’000          $’000
                                                                                                (unaudited)


      Rental income (note (iii))                               3             6             —              —             —




                                                      — 277 —
APPENDIX I                                                                         ACCOUNTANTS’ REPORT

      Notes:


      (i)      The Group had banking facilities with a related party. Interest was charged on the Group’s bank overdraft
               at a rate of 12% per annum. The bank overdraft with the related company at each year end is set out in the
               balance sheets. Bank overdraft facilities were terminated in February 2003. The bank was not a related party
               from 1st July, 2004.


      (ii)     The Group has used, and expects to continue to use, related parties for the provision of travel,
               accommodation and tour services.


      (iii)    The Group has received rental income from a related party which rents space in the casino for the provision
               of banking facilities. The bank concerned was not a related party from 1st July, 2004 but the Group continues
               to receive, and expects to continue to receive, rental income from the bank.


      The balance and transactions with the Company’s controlling shareholder, Tan Sri Dr. Chen Lip Keong, are
disclosed in note 18.


      It is the directors’ view that the related party transactions relating to (i), (ii) and (iii) were conducted on normal
commercial terms, and their terms were fair and reasonable.


      Intangible assets


      On 12th August, 2005, Ariston, a subsidiary of the Company, and the Government entered into an Addendum
Agreement which extended the exclusivity period of the Casino Licence within 200 kilometres of Phnom Penh (except
the Cambodia-Vietnam Border Area, Bokor, Kirirom Mountains and Sihanoukville) (the “Designated Area”) for the period
to the end of 2035 in consideration for the surrender by Ariston of the rights and concessions granted under the
Sihanoukville Development Agreement signed on 2nd January, 1995 and the Supplemental Sihanoukville Development
Agreement signed on 2nd February, 2000, both between Ariston and the Government (except for the right to operate the
casino within the Designated Area), including the rights granted in respect of the development in O’Chhoue Teal, Naga
Island and Sihanoukville International Airport (the “Assigned Assets”). The Assigned Assets had previously been assigned
to Ariston Holdings Sdn. Bhd., a related company that is beneficially owned by the ultimate controlling shareholder of
the Company on 30th August, 2002. In order to fulfil its obligations under the Addendum Agreement, Ariston proposed
to enter into an agreement with Ariston Holdings Sdn. Bhd. and its related entities pursuant to which Ariston Holdings
Sdn. Bhd. and its related entities would surrender all rights, title, benefits and interests in and to the Assigned Assets to
the Government with an effective date of 12th August, 2005 in consideration for $105 million.


      On 29th April, 2006, the Company and Ariston Sdn. Bhd., a subsidiary of the Company, entered into an agreement
with, amongst others, Ariston Holdings Sdn. Bhd., a related company owned by the ultimate controlling shareholder of
the Company, for the settlement of the $105 million balance due to Ariston Holdings Sdn. Bhd.. The agreement stated that
the $105 million outstanding balance shall be settled after the signing of this agreement by way of $55 million cash
payment to Ariston Holdings Sdn. Bhd. and $50 million by way of allotment and issue by the Company of 202,332,411
new ordinary shares as fully-paid up as to an amount of $0.0125 per share.




                                                        — 278 —
APPENDIX I                                                                        ACCOUNTANTS’ REPORT

32    Ultimate controlling shareholder


      At 31st May, 2006, Tan Sri Dr Chen Lip Keong is interested in 1,338,452,921 ordinary shares of the 1,442,332,491
issued ordinary shares of the Company of which 1,183,452,921 ordinary shares are registered in his name and the
remaining 155,000,000 ordinary shares are registered in the name of and beneficially owned by the Cambodia
Development Corporation (“CDC”), a company incorporated in the British Virgin Islands. The entire issued share capital
of CDC is beneficially owned by Tan Sri Dr Chen Lip Keong.


33    Possible impact of amendments, new standards and interpretations issued but not yet effective for
      the accounting period ended 31st May, 2006


      Up to the date of issue of this report, the IASB has issued a number of amendments, new standards and
interpretations which are not yet effective for the accounting period ended 31st May, 2006 and which have not been
adopted in this report.


      Of these developments, the following relate to matters that may be relevant to the Group’s operations and Financial
Information:

                                                                                                  Effective for
                                                                                                  accounting periods
                                                                                                  beginning on or after


      IFRS 7                         Financial instruments: disclosures                           1st January, 2007
      Amendments to IAS 1            Presentation of financial statements: capital disclosures    1st January, 2007



      The Group is in the process of making an assessment of what the impact of these amendments, new standards and
new interpretations is expected to be in the period of initial application. So far it has concluded that while the adoption
of them may result in new or amended disclosures, it is unlikely to have a significant impact on the Group’s results of
operations and financial position.


D     SUBSEQUENT EVENTS


      On 16th August, 2006, the remaining US$55 million due to Ariston Holdings Sdn. Bhd. was
settled by way of a capital contribution of US$55 million by the ultimate controlling shareholder.


E     INFORMATION RELATING TO THE COMPANY


(a) Distributable reserves


    The Company was incorporated in the Cayman Islands on 25th February, 2003 as an
exempted company with limited liability under the Companies Law (Revised) of the Cayman
Islands.


    On the basis of the Financial Information set out in Sections A to C above, the aggregate
amount of distributable reserves of the Company at 31st May, 2006 was US$1,243,000.


                                                       — 279 —
APPENDIX I                                                    ACCOUNTANTS’ REPORT

(b) Subsequent financial statements


     No audited financial statements have been prepared by the Company or its subsidiaries in
respect of any period subsequent to 31st May, 2006.



                                                                       Yours faithfully,
                                                                           KPMG
                                                                Certified Public Accountants
                                                                         Hong Kong




                                         — 280 —
APPENDIX II                        UNAUDITED PRO FORMA FINANCIAL INFORMATION

     For illustrative purpose only, we set out below certain financial information prepared in
accordance with Rule 4.29 of the Listing Rules so as to provide you with further information
about how the proposed listing might have affected the financial position of the Group after
completion of the Share Offer and to illustrate the performance of the Group had the Share Offer
taken place on 31st May, 2006.

     Although reasonable care has been exercised in preparing the information, you should bear
in mind that these figures are inherently subject to adjustments and may not give a complete
picture of the financial position of the Group as at 31st May, 2006 or at any future date or the
performance of the Group for any future periods.

A.   UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS                                                              3rdSch(42)



      The following is an illustrative statement of unaudited pro forma adjusted net tangible assets
of the Group which has been prepared for the purpose of illustrating the effect of the Share Offer
as if it had been taken place on 31st May, 2006 and is based on the audited consolidated net
tangible assets of the Group as at 31st May, 2006, as shown in the Accountants’ Report set out in
Appendix I to this prospectus and is adjusted as follows:

                                          Audited
                                    consolidated                                Unaudited          Unaudited
                                     net tangible         Estimated             pro forma          pro forma
                                liabilities of the         proceeds           adjusted net       adjusted net
                                     Group as at           from the               tangible     tangible assets
                                 31st May, 2006 1       Share Offer 2               assets         per Share 3

Based on Minimum
  Offer Price of
  HK$1.25 per Share
  US$’000                                (33,039)               69,993                36,954    US cents 1.85
  HK$’000                               (257,704)              545,945               288,241   HK cents 14.41

Based on Maximum
  Offer Price of
  HK$1.60 per Share
  US$’000                                (33,039)               91,839                58,800     US cents 2.94
  HK$’000                               (257,704)              716,344               458,640    HK cents 22.93


1    The audited consolidated net tangible liabilities of the Group as at 31st May, 2006:

                                                                                                       US$’000


     Audited consolidated net assets of the Group:                                                       70,702
     Less: Intangible assets                                                                           (103,741)


     Net tangible liabilities                                                                           (33,039)




                                                     — 281 —
APPENDIX II                       UNAUDITED PRO FORMA FINANCIAL INFORMATION

2    The adjustment to the pro forma statement of net assets reflects the estimated proceeds from the Share Offer, net
     of related expenses, to be received by the Company. The estimated proceeds from the Share Offer is based on a
     minimum Offer Price of HK$1.25 per Share and a maximum Offer Price of HK$1.60 per Share. The translation of
     estimated proceeds from Hong Kong dollars into United States dollars was at HK$7.80 to US$1.00.


3    The number of Shares is based on a total of 2,000,000,000 Shares issued and outstanding during the entire year,
     adjusted as if the Share Offer and the Capitalisation Issue had occurred at 31st May, 2006 excluding any Shares that
     might be issued under the Over-allotment Option.


4    The revaluation surplus amounting to approximately US$15.9 million of the Group’s property as at 31st July, 2006
     will not be incorporated in the financial statements of the Group for the year ending 31st December, 2006. It is the
     Group’s accounting policy to state its property at cost less accumulated depreciation and any impairment loss in
     accordance with relevant International Accounting Standards, rather than at revalued amounts. Had the revaluation
     surplus been incorporated in the Group’s financial statements, the increase in the depreciation charge for the year
     ending 31st December, 2006 would amount to approximately US$0.3 million.


      Our property interests as of 31st July, 2006 have been valued by CB Richard Ellis Limited,
an independent property valuer, and the relevant property valuation report is set out in Appendix
III “Property Valuation”. The above adjustment does not take into account the surplus attributable
to us arising from the revaluation of our property interests amounting to US$15.9 million. The
revaluation surplus will not be incorporated in our financial statements for the year ending 31st
December, 2006. If the valuation surplus was recorded in our financial statements, our
depreciation expense for the year ending 31st December, 2006 would increase by approximately
US$0.3 million.




                                                     — 282 —
APPENDIX II                 UNAUDITED PRO FORMA FINANCIAL INFORMATION

B.   COMFORT LETTER ON UNAUDITED PRO FORMA FINANCIAL INFORMATION
     RELATING TO THE PRO FORMA ADJUSTED NET TANGIBLE ASSETS

                                                                               8th Floor
                                                                               Prince’s Building
                                                                               10 Chater Road
                                                                               Hong Kong




The Board of Directors
NagaCorp Ltd.
c/o Codan Trust Company (Cayman) Limited
Century Yard, Cricket Square
Hutchins Drive
PO Box 2681 GT
George Town
Grand Cayman
British West Indies


Anglo Chinese Corporate Finance, Limited
40th Floor
Two Exchange Square
8 Connaught Place
Central
Hong Kong


6th October, 2006


Dear Sirs


NagaCorp Ltd. (“the Company”)
Unaudited Pro Forma Financial Information in respect of the proposed Initial
Public Offering of the Company and its subsidiaries (collectively the “Group”) on
The Main Board of the Stock Exchange of Hong Kong Limited


     We report on the unaudited pro forma financial information of the Company and its
subsidiaries (“the Group”) set out on page 281 of the prospectus under the heading of “Unaudited
Pro Forma adjusted net tangible assets” (“the unaudited Pro Forma Financial Information”) in
Appendix II to the Company’s prospectus dated 6th October, 2006 (“the Prospectus”), which has
been prepared by the directors of the Company solely for illustrative purposes to provide
information about how the share offer might have affected the financial information presented.
The basis of preparation of the unaudited Pro Forma Financial Information is set out on pages 281
and 282 in Appendix II to the Prospectus.


                                           — 283 —
APPENDIX II                  UNAUDITED PRO FORMA FINANCIAL INFORMATION

Responsibilities


      It is the responsibility solely of the directors of the Company to prepare the unaudited Pro
Forma Financial Information in accordance with Paragraph 4.29 of the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with
reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for
inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”).


     It is our responsibility to form an opinion, as required by paragraph 4.29 of the Listing Rules,
on the unaudited Pro Forma Financial Information and to report our opinion to you. We do not
accept any responsibility for any reports previously given by us on any financial information used
in the compilation of the unaudited Pro Forma Financial Information beyond that owed to those
to whom those reports were addressed by us at the dates of their issue.


Basis of opinion


     We conducted our work in accordance with Hong Kong Standard on Investment Circular
Reporting Engagements (“HKSIR”) 300 “Accountants’ Reports on Pro Forma Financial Information
in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the
unadjusted financial information with source documents, considering the evidence supporting
the adjustments and discussing the Pro Forma Financial Information with the directors of the
Company. The engagement did not involve independent examination of any of the underlying
financial information.


     Our work did not constitute an audit or review made in accordance with Hong Kong
Standards on Auditing or Hong Kong Standards on Review Engagements issued by the HKICPA,
and accordingly, we do not express any such audit or review assurance on the unaudited Pro
Forma Financial Information.


      We planned and performed our work so as to obtain the information and explanations we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the unaudited Pro Forma Financial Information has been properly compiled by the directors
of the Company on the basis stated, that such basis is consistent with the accounting policies of
the Group and that the adjustments are appropriate for the purposes of the unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.


     Our work has not been carried out in accordance with auditing standards or other standards
and practices generally accepted in the United States of America or auditing standards of the
Public Company Accounting Oversight Board (United States) and accordingly should not be
relied upon as if it had been carried out in accordance with those standards.




                                             — 284 —
APPENDIX II                   UNAUDITED PRO FORMA FINANCIAL INFORMATION

      The unaudited Pro Forma Financial Information is for illustrative purposes only, based on
the judgements and assumptions of the directors of the Company, and because of its hypothetical
nature, it does not provide any assurance or indication that any event will take place in the future
and may not be indicative of the financial position of the Group as at 31st May, 2006 or any future
date.


Opinion


        In our opinion:


        a)   the unaudited Pro Forma Financial Information has been properly compiled by the
             directors of the Company on the basis stated;


        b)   such basis is consistent with the accounting policies of the Group, and


        c)   the adjustments are appropriate for the purposes of the unaudited Pro Forma Financial
             Information as disclosed pursuant to Paragraph 4.29(1) of the Listing Rules.


                                                                             Yours faithfully
                                                                                 KPMG
                                                                     Certified Public Accountants
                                                                              Hong Kong




                                             — 285 —
APPENDIX III                                                       PROPERTY VALUATION

     The following is the text of a letter, summary of valuations and valuation certificates
prepared for the purpose of incorporation in this prospectus received from CB Richard Ellis
Limited, an independent valuer, in connection with their valuations as at 31st July, 2006 of our
property interests.

                                                                                                     A1a(39)
                                                                                                     A1a(28)(8)
                                                                                                     A1a(49)
                                                                                                     3rd Sch(46)
                                                                                                     3rd Sch(34)




                                                                               6th October, 2006



The Board of Directors                                                                               A1a9(3)
NagaCorp Ltd.
Century Yard
Cricket Square
Hutchins Drive
P.O. Box 2681 GT
George Town
Grand Cayman
British West Indies


Dear Sirs,


      In accordance with your instructions for us to value the property interests held by NagaCorp
Ltd. (the “Company”) and its subsidiaries (hereinafter together know as the “Group”) in Hong
Kong, the Kingdom of Cambodia (referred hereinafter as “the Cambodia”) and Malaysia. We
confirm that we have carried out inspections, made relevant enquiries and obtained such further
information as we consider necessary for the purpose of providing you with our opinion of the        R5.06(8)
capital values of such property interests as at 31st July, 2006 (the “date of valuation”).


      We have valued the property interests on the basis of Market value which we would define
as intended to mean “the estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arm’s-length transaction after
proper marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion.”


                                           — 286 —
APPENDIX III                                                      PROPERTY VALUATION

     Our valuation has been prepared in the capacity as “overseas consultants” and has been
made on the assumption that the owners sells the properties on the open market without the
benefit or burden of a deferred term contract, leaseback, joint venture, management agreement
or any similar arrangement, which would serve to affect the values of the property interests.


      In valuing the property interests of the Group, we have complied with all the requirements
contained in Chapter 5, Practice Notes 12 and 16 of the Rules Governing the Listing of Securities
(the “Exchange Listing Rules”) issued by The Stock Exchange of Hong Kong Limited and the Hong
Kong Institute of Surveyors Valuation Standards on Properties (1st Edition 2005) published by the
Hong Kong Institute of Surveyors.


      In the course of our valuation for the property interests in Cambodia (Group I and Group
II), we have relied on the legal opinions provided by the Group’s Cambodian legal advisor (the      PN12-7

“Cambodia Legal Opinion”). We have been provided with extracts of title documents relating to
such property interests. We have not, however, searched the original documents to verify
ownership or existence of any amendment which do not appear on the copies handed to us. All
documents and lease have been used for reference only. All dimensions, measurements and areas
are approximations. No on-site measurements have been taken.


     In valuing the property interests in Group I, which is held by the Group under development     PN12-8.1
                                                                                                    8.2
in Cambodia, we have adopted the market approach in valuing the land portion of the property
and the depreciated replacement cost approach in assessing buildings and structures standing on
the land. In valuation of the land portion, we have adopted sale comparison approach in which
market evidence is collected and analysed. Reference to the land price in the area has also been
made in our valuation. Where due to the nature of the buildings and structures constructed on
those property interests in Cambodia, there are no market sales comparables, the property
interests have been valued on the basis of their depreciated replacement cost. Depreciated
replacement cost is defined as “the current cost of replacement (reproduction) of a property less
deductions for physical deterioration and all relevant forms of obsolescence and optimization”.
This opinion of value does not necessarily represent the amount that might be realized from the
disposal of the subject assets in the open market, and this basis has been used due to the lack
of an established market upon which to base comparable transaction. However, this approach
generally furnishes the most reliable indication of value of a property without a known used
market.


     Property interests of Group II, Group III and Group IV, which are leased and occupied by       PN12-8.2

the Group, have no commercial value mainly due to the short term nature of the tenancy,
prohibition against assignment or the lack of substantial profit rent.


     We have inspected the exterior of the properties and, where possible, the interior of the
premises. During our inspection, we did not notice any serious defects. However, we have not
carried out any structural survey nor inspected other parts of the structures which are covered,
unexposed or inaccessible. Therefore, we were not able to report whether the properties are free
of rot, infestation or any other structural defects.


                                           — 287 —
APPENDIX III                                                                      PROPERTY VALUATION

     We have not carried out land survey to verify the site boundaries of the properties. This
report does not make any allowance for contamination or pollution of the lands, if any, which
may have occurred as a result of past usage.


     We have relied to a considerable extent on information provided by the Group and have
accepted advice given to us by the Group on such matters as planning approvals, statutory,
notices, easements, tenure, occupation, lettings, site and floor areas and in the identification of
those property interests in which the Group has a valid interest.


     No allowance has been made in our valuation for any charges, mortgages or amounts owing
on the property interests nor for any expenses or taxation which may be incurred in effecting a
sale. Unless otherwise stated, it is assumed that the property interests are free from                                    PN12-14

encumbrances, restrictions and outgoing of an onerous nature which could affect their values.
Unless otherwise stated, all monetary amounts are stated in Hong Kong dollars (HK$). Where
necessary, we have converted US dollars (“US$”) into Hong Kong dollars at the exchange rates
of US$1 = HK$7.7516, being the rate prevailing at the date of valuation.


        We enclose herewith a summary of valuations and our valuation certificate.

                                               Yours faithfully,                                                          R5.06(7)
                                                                                                                          R5.08(2)(a)
                                             For and on behalf of
                                           CB Richard Ellis Limited

          Kam Hung Yu                                                                       Harry Chan
         FHKIS FRICS RPS(GP)                                                             MHKIS MRICS RPS(GP)
     Executive Director                                                                  Senior Director
Valuation & Advisory Services                                                    Valuation & Advisory Services


Note:   Mr. Yu is the Vice President of the Hong Kong Institute of Surveyors and a fellow member of Hong Kong Institute   R5.08(2)(b)
                                                                                                                          PN12-4.1
        of Surveyors and Royal Institution of Chartered Surveyors. He has over 24 years of experience in valuation of
        properties in Hong Kong, the PRC and various Asian countries including the Kingdom of Cambodia and Malaysia.
        Mr. Harry Chan is a member of Hong Kong Institute of Surveyors and Royal Institution of Chartered Surveyors.
        He has over ten years valuation experience in Asia Pacific Region.




                                                     — 288 —
APPENDIX III                                                         PROPERTY VALUATION

                                   SUMMARY OF VALUATIONS


Group I — Property interests held by the Group under development in the Cambodia                        R5.06(5)


                                                                                      Capital value
                                                Capital value in                       attributable
                                                  existing state         Interests    to the Group
                                                       as at 31st    attributable         as at 31st
     Property Interests                               July, 2006    to the Group         July, 2006
                                                           (HK$)                              (HK$)

1.   Naga World Building located at the              403,000,000            100%         403,000,000
     south of Samdech Hun Sen’s Park
     and the east of the Ministry of Cult
     and Religion Land,
     Phnom Penh,
     the Kingdom of Cambodia

Group II — Property interests leased and occupied by the Group in the Cambodia                          R5.06(5)


                                                                                       Capital value
                                                                                        attributable
                                                                                       to the Group
                                                                                                as at
     Property Interests                                                              31st July, 2006
                                                                                               (HK$)

2.   Administrative office in the                                                    No commercial
     Public Concord, Pochentong                                                             value
     International Airport,
     Administrative Building,
     No.4 National Road,
     Dangkor District,
     Phnom Penh,
     the Kingdom of Cambodia

3.   1st floor restaurant (half part of                                              No commercial
     building) and 104 rooms on the 5th                                                     value
     floor, 6th floor, 7th floor & 8th floor,
     River Side Hotel,
     Sangkat Wat Phnom,
     Khan Daun Penh,
     Phnom Penh,
     the Kingdom of Cambodia




                                                — 289 —
APPENDIX III                                             PROPERTY VALUATION

Group III — Property interests leased and occupied by the Group in Malaysia             R5.06(5)


                                                                       Capital value
                                                                        attributable
                                                                       to the Group
                                                                                as at
     Property Interests                                              31st July, 2006
                                                                               (HK$)

4.   Third Floor,                                                     No commercial
     No. 118 Jalan Semangat,                                                 value
     46300 Petaling Jaya,
     Selangor Darul Ehsan,
     Malaysia

Group IV — Property interests leased and occupied by the Group in Hong Kong             R5.06(5)


                                                                       Capital value
                                                                        attributable
                                                                       to the Group
                                                                                as at
     Property Interests                                              31st July, 2006
                                                                               (HK$)

5.   Office No. 6, 7/F.,                                              No commercial
     Shatin Galleria,                                                        value
     No.18-24 Shan Mei Street,
     Fo Tan,
     New Territories,
     Hong Kong

                                                      TOTAL:            403,000,000




                                     — 290 —
APPENDIX III                                                                    PROPERTY VALUATION

                                        VALUATION CERTIFICATE
Group I — Property interests held by the Group under development in the Cambodia

                                                                                                   Capital value in
                                                                      Details of                existing state as at
     Property             Description and tenure                      occupancy                     31st July, 2006
                                                                                                              (HK$)

1.   Naga World           The property comprises 3 building           Upon recent                       403,000,000    R5.06(1)
                                                                                                                       (a)-(l)
     Building located     blocks namely hotel block, casino block     inspection, the
     at the south of      and carpark/entertainment block. The        property was under
     Samdech Hun          hotel block and casino block are being      construction with
     Sen’s Park and       built upon a parcel of land having a site   superstructure works
     the east of the      area of about 14,160 sq.m. (the “Hotel-     in progress. Ground
     Ministry of Cult     Casino Parcel”). The carpark/               floor of casino block
     and Religion Land,   entertainment block will be erected         was completed and is
     Phnom Penh,          upon a car parking lot of site area of      operated as a casino.
     the Kingdom of       about 2,516 sq.m. (the “Parking
     Cambodia             Structure/Entertainment Parcel”). Both      Space of ground floor
                          sites are generally leveled and             of casino block with
                          rectangular in shape.                       total net floor area of
                                                                      about 30.73 sq.m. has
                          According to the development scheme,        been let to three
                          the hotel block will be a 14-storey         different tenants for
                          building providing 508 guestrooms with      welcoming counters
                          a total gross floor area of about 58,955    for a term to be
                          sq.m. approximately. Upon completion,       expired on 30th
                          coffee shop, themed retails, ballroom       September, 2007.
                          and spa, etc will be accommodated in        Total rental
                          the hotel.                                  receivable is
                                                                      US$3,000 per month
                          The casino block will be a 8-storey         inclusive of costs of
                          building with a total gross floor area of   utilities such as
                          about 21,597 sq.m.                          electricity and air-
                                                                      conditioning.
                          The carpark/entertainment block will be
                          a 9-storey building with a total gross      Remaining portions
                          floor area of about 20,727 sq.m. Upon       of the property is
                          completion, about 307 carparking            under development.
                          spaces, discotheque, karaoke lounges
                          and swimming pool will be provided in
                          the carpark block.

                          The property is expected to be
                          completed in about 2007.

                          The Hotel-Casino Parcel is held for a
                          term of 70 years commencing from 1st
                          August, 1996 for hotel and running
                          business purposes. The Parking
                          Structure/Entertainment Parcel is held
                          for a term of 10 years commencing from
                          26th June, 2001 for carparking
                          purposes.




                                                   — 291 —
APPENDIX III                                                                       PROPERTY VALUATION

   Notes:


   1        Pursuant to lease agreement dated 27th February, 1996 entered into between the Municipality of Phnom
            Penh (the “Municipality”) and the International Land Company Limited (“ILC”), the Hotel-Casino Parcel with
            site area of about 14,160 sq.m. has been granted to the ILC for a lease term of 70 years commencing from
            1st August, 1996 for the purpose of constructing of hotel and running business. The ILC assured to invest
            US$15,000,000 for the construction.


   2        Pursuant to amendment to the sale and purchase agreement dated 15th August, 2000 entered into between
            ILC and Neptune Orient SDN BHD (“Neptune”), the Hotel-Casino Parcel with site area of about 14,160 sq.m.
            has been transferred to the Neptune for a lease term of 70 years commencing from 1st August, 1996 for the
            purpose of constructing of hotel and running business. Pursuant to the Approval to Transfer by Royal
            Government delegation in charge of Phnom Penh Governor dated 16th August, 2000, the Municipality agreed
            in principle to allow ILC to transfer the lease of the Hotel-Casino Parcel to Neptune.


   3        Pursuant to the Approval of Construction Work Ref:1313 dated 30th November, 2000, the Ministry of Land
            Management, Urban Planning & Construction permitted in principle to Ariston Sdn. Bhd to construct the 5
            Star Nexus Naga Hotel on the Hotel-Casino Parcel.


   4        Pursuant to lease agreement dated 6th July, 2001 entered into between the Municipality and Neptune, the
            road yard land behind the former Khov Chuly’s land, north of the land of the Ministry of Foreign Affairs with
            site area of about 2,516 sq.m., the Parking Structure/Entertainment Parcel, was granted to Neptune for a lease
            term of 10 years commencing from 26th June, 2001 for the purpose of carparking.


   5        Pursuant to the Construction Project Permit and Building Plan Approval Ref:87 dated 12th October, 2001, the
            Ministry of Land Management, Urban Planning & Construction agreed to the Proposed 5 Star Nexus Naga
            Hotel on the Hotel-Casino Parcel.


   6        Pursuant to the Construction Commencement Permit Ref:095 dated 15th August, 2002, the Director General
            of General Construction Department permitted the commencement of the construction on the Hotel-Casino
            Parcel.


   7        Pursuant to the sale and purchase agreement of leasehold interest dated 30th August, 2002 entered into
            between Neptune and Naga Resorts & Casinos Limited (“NRCL”), the Hotel-Casino Parcel with a site area of
            about 14,160 sq.m. was transferred to NRCL for a lease term of 70 years commencing from 1st August, 1996
            for the purpose of constructing hotel and running business.


   8        Pursuant to the Approval for the Construction No.051 dated 19th September, 2003, the Ministry of Land
            Management, Urban Planning and Construction approved the proposal on the construction of car park on the
            subject land.


   9        According to a cost budget plan provided by the Group, the total estimated construction cost for the
            hotel/casino/entertainment/carpark blocks is US$90,473,760. The outstanding construction cost dated 31st
            July, 2006 was US$58,073,682.55.


   10       Pursuant to the Lease Agreement dated 1st October, 2003 and the extension letters dated 30th July, 2004, 21st
            December, 2005 and 30th September, 2006 entered into between NRCL and Golden Frontier Consulting
            Limited, welcoming counter of internal area of about 10.68 sq.m. has been leased to Golden Frontier
            Consulting Limited ending on 30th September, 2007 for a monthly rent of US$1,000 inclusive of costs of
            utilities such as electricity and air-conditioning.



                                                      — 292 —
APPENDIX III                                                                    PROPERTY VALUATION

   11   Pursuant to the Lease Agreement dated 1st October, 2003 and the extension letters dated 30th July, 2004, 21st
        December, 2005 and 30th September, 2006 entered into between NRCL and Chan Choi Tak, welcoming
        counter of internal area of about 10.68 sq.m. has been leased to Chan Choi Tak ending on 30th September,
        2007 for a monthly rent of US$1,000 inclusive of costs of utilities such as electricity and air-conditioning.


   12   Pursuant to the Lease Agreement dated 1st October, 2003 and the extension letters dated 30th July, 2004, 21st
        December, 2005 and 30th September, 2006 entered into between NRCL and Cambodia Asia Bank, welcoming
        counter of internal area of about 9.37 sq.m. has been leased to Cambodia Asia Bank ending on 30th
        September, 2007 for a monthly rent of US$1,000 inclusive of costs of utilities such as electricity and
        air-conditioning.


   13   We are advised that Golden Frontier Consulting Limited, Chan Choi Tak and Cambodia Asia Bank are
        independent third parties from the Group.


   14   The legal opinion of the Group’s legal advisors on the laws of Cambodia states that:                             PN12-
                                                                                                                         5.1-5.3.7


        (i)     Pursuant to lease agreement dated 27th February, 1996 entered into between the Municipality of
                Phnom Penh and the International Land Company Limited (“ILC”), the subject land with site area of
                about 14,160 sq.m., the Hotel-Casino Parcel, has been granted to the ILC Limited for a lease term of
                70 years commencing from 1st August, 1996 for the purpose of constructing a hotel and running a
                business.


        (ii)    Pursuant to amendment to the sale and purchase agreement dated 15th August, 2000 entered into
                between ILC and Neptune Orient Sdn Bhd (“Neptune”), the Hotel-Casino Parcel was conveyed by ILC
                to Neptune for a lease term of 70 years commencing from 1st August, 1996 for the purpose of
                constructing a hotel and operating a business. Pursuant to the Approval to Transfer by the Royal
                Government delegation in charge of Phnom Penh Governor dated 16th August, 2000, the Municipality
                agreed in principle to allow ILC to transfer the lease of the said land to Neptune.


        (iii)   Pursuant to the “Supplementary Agreement on the Agreement dated 27th February, 1996 of Filled Land
                Lease at Riverbank South of Samdech Hun Sen Garden East of Cultural Ministry”, dated 16th August,
                2000, No. 726, between the Municipality of Phnom Penh, Neptune and ILC (“Novation”), whereby
                Neptune agreed to assume the obligations and rights contained in the 27th February, 1996 Agreement
                between ILC and the Municipality of Phnom Penh, and further whereby the Municipality of Phnom
                Penh releases ILC and Mr. Khaou Chuly, the representative of ILC, from all responsibilities under the
                said 27th February, 1996 Agreement.


        (iv)    The Sale and Purchase Agreement of the, in rem, Leasehold Interest dated 30th August, 2002 entered
                into between the beneficial owner, Neptune, and Naga Resorts and Casinos Limited is a valid and
                binding agreement.


        (v)     Naga Resorts and Casinos Limited has good and legal title to the leasehold of Hotel-Casino Parcel. Its
                beneficial ownership interest and its ownership interest of the said leasehold is clear and certain.


        (vi)    The leasehold interest in the Hotel-Casino Parcel gives Naga Resorts and Casino Limited exclusive and
                uninterrupted possession of the Hotel-Casino Parcel for the term of the leasehold agreement. The
                leasehold agreement is fully assignable or may be conveyed, with endorsement of the Municipality of
                Phnom Penh.



                                                   — 293 —
APPENDIX III                                                                 PROPERTY VALUATION

      (vii)   Pursuant to lease agreement dated 6th July, 2001 entered into between the Municipality of Phnom
              Penh and Neptune, the road yard land behind the former Khov Chuly’s land, north of the land of the
              Ministry of Foreign Affairs with site area of about 2,516 sq.m. has been granted to the Neptune for a
              lease term of 10 years commencing from 26th June, 2001 for the purpose of car parking (“Parking
              Structure/Entertainment parcel”).


      (viii) The lease agreement for the Parking Structure/Entertainment parcel is valid and binding.


      (ix)    Conditional approval has been granted to the Group by the Municipality of Phnom Penh to allow
              multi-use construction at the parking structure parcel (such as adding entertainment and staff
              quarters), subject to the approval of the Ministry of Land Management, Urban Planning and
              Construction. Such approval should pose no barrier to the proposed construction so long as the
              technical drawings are adequately drafted and provided.




                                                  — 294 —
APPENDIX III                                                                      PROPERTY VALUATION

Group II — Property interests leased and occupied by the Group in Cambodia

                                                                                                         Capital value in
                                                                            Particular of          existing state as at
     Property                Description and tenure                         occupancy                     31st July, 2006
                                                                                                                    (HK$)

2.   Administrative          The property comprises an office unit          The property is       No commercial value       R5.06(1)
                                                                                                                            (a)-(e)
     office in the           which was completed in about 2002.             currently leased
     Public Concord,                                                        and occupied by
     Pochentong              The gross floor area of the property is        the Group as a
     International           approximately 24 square metres.                welcoming office.
     Airport,
     Administrative          The property is leased by Societe
                             Concessionnaire de L’Aeroport to Naga
     Building, No.4
                             Resorts & Casinos Limited for a term until
     National Road,
     Dangkor District,       30th November, 2006 at a rent of US$2,040
     Phnom Penh,             per month with an option to renew for a
                             period of 2 years. The rent includes the
     the Kingdom of
                             cost of utilities such as electricity and
     Cambodia
                             centralize air-conditioning.


     Notes:


     1        Pursuant to the lease agreement entered into between Societe Concessionnaire de L’Aeroport and Naga
              Resorts & Casinos Limited dated 1st December, 2002, the property has been leased to the Group.


     2        We are advised that Societe Concessionnaire de L’Aeroport is an independent third party from the Group.


     3        The legal opinion of the Group’s legal advisors on the laws of the Cambodia states that:                      PN12-
                                                                                                                            5.1-5.3.7

              (i)   This agreement constitutes a valid and binding obligation of landlord in accordance with its terms.




                                                        — 295 —
APPENDIX III                                                                      PROPERTY VALUATION

                                                                                                      Capital value in
                                                                            Particular of          existing state as at
     Property                Description and tenure                         occupancy                    31st July, 2006
                                                                                                                   (HK$)

3.   1st floor               The property comprises 104 apartment           The property is       No commercial value      R5.06(1)
                                                                                                                           (a)-(e)
     restaurant (half        units on the 5th, 6th, 7th and 8th Floor,      currently leased
     part of building)       kitchen and restaurant on 1st Floor which      and occupied by
     and 104 rooms on        were completed in about 2000.                  the Group as staff
     the 5th floor, 6th                                                     quarters and for
     floor, 7th floor &      The property is leased by Mr. Lork Hour to     catering purpose.
     8th floor, River        Naga Resorts & Casinos Limited for a term
     Side Hotel,             from 1st March, 2006 to 1st March, 2008
     Sangkat Wat             with an option to renew for a period of 2
     Phnom, Khan             years at a rent of US$14,500 per month
     Daun Penh,              inclusive of VAT and any other taxes
     Phnom Penh,             related to the premises, but exclusive of
     the Kingdom of          electricity and water.
     Cambodia


     Notes:


     1        Pursuant to the lease agreement entered into between Mr. Lork Hour and Naga Resorts & Casinos Limited
              dated 1st March, 2006, the property has been leased to the Group.


     2        We are advised that Mr. Lork Hour is an independent third party from the Group.


     3        The legal opinion of the Group’s legal advisors on the laws of the Cambodia states that:                     PN12-
                                                                                                                           5.1-5.3.7

              (i)   This agreement constitutes a valid and binding obligation of landlord in accordance with its terms.




                                                      — 296 —
APPENDIX III                                                                           PROPERTY VALUATION

Group III — Property interests leased and occupied by the Group in Malaysia

                                                                                                        Capital value in
                                                                             Particular of           existing state as at
     Property                Description and tenure                          occupancy                   31st July, 2006
                                                                                                                   (HK$)

4.   Third Floor,            The property comprises an office unit           The property is        No commercial value      R5.06(1)
                                                                                                                             (a)-(l)
     No. 118 Jalan           completed in about 1995.                        currently leased
     Semangat,                                                               and occupied by
     46300 Petaling          The gross floor area of the property is         the Group as an
     Jaya,                   approximately 164.03 square metres.             office.
     Selangor Darul
     Ehsan,                  The property is leased by Karambunai
                             Corporation Bhd to Ariston Sdn. Bhd. for a
     Malaysia
                             term of 2 years from 1st June, 2004 to 31st
                             May, 2006 and had been renewed for
                             another two years until 31st May, 2008 at a
                             rent of RM3,000.5 per month.


     Notes:


     1        Pursuant to the lease agreement entered into between Karambunai Corporation Bhd and Ariston Sdn. Bhd.
              dated 1st June, 2004 and the supplementary letter dated 14th June, 2006, the property has been leased to the
              Group.


     2        We are advised that Karambunai Corporation Bhd and Ariston Sdn Bhd are related parties.                        PN12-
                                                                                                                             5.1-5.3.7

     3        FACB Resorts Bhd changed its name to Karambunai Corporation Bhd on 30th September, 2004.




                                                       — 297 —
APPENDIX III                                                                          PROPERTY VALUATION

Group IV — Property interests leased and occupied by the Group in Hong Kong

                                                                                                      Capital value in
                                                                            Particular of          existing state as at
     Property                Description and tenure                         occupancy                   31st July, 2006
                                                                                                                  (HK$)

5.   Office No.6, 7/F.,      The property comprises an office unit          The property is        No commercial value     R5.06(1)
                                                                                                                           (a)-(l)
     Shatin Galleria,        which was completed in 1990.                   currently leased
     No.18-24 Shan Mei                                                      and occupied by
     Street, Fo Tan,         The saleable area of the property is           the Group as an
     New Territories,        approximately 38.45 square metres.             office.
     Hong Kong
                             The property is held under New Grant
                             No.11795 for a lease term of 99 years
                             commencing on 1st July, 1898 at an annual
                             rent of HK$300.

                             The property is leased by Handsome Lift
                             Investment (CI) Limited to Naga Resorts &
                             Casinos Limited for a term of 1 year from
                             1st December, 2005 to 30th November,
                             2006 at a rent of HK$6,576 per month
                             exclusive of air-conditioning charge and
                             building management fee, government
                             rent, rates and all tenant’s expenses and
                             outgoings of a non-capital and recurring
                             nature.


     Notes:


     1        Pursuant to the tenancy agreement entered into between Handsome Lift Investment (CI) Limited and Naga
              Resorts & Casinos Limited dated 24th November, 2003, the property has been leased to the Group.


     2        Pursuant to the Memorial No.ST899846 dated 17th September, 1996, the registered owner of the property is     PN12-
                                                                                                                           5.1-5.3.7
              Handsome Lift Investment (CI) Limited.


     3        Pursuant to the Draft Sha Tin Outline Zoning Plan S/ST/21 dated 16th December, 2005, the property is zoned
              as commercial use.


     4        We are advised that Handsome Lift Investment (CI) Limited is an independent third party from the Group.




                                                      — 298 —
APPENDIX IV                                                         SHARE OPTION SCHEME

1.   Share Option Scheme


     The following is a summary of the principal terms of the Share Option Scheme conditionally      A1A(44)
                                                                                                     R17.02(1)(b)
approved and adopted at the extraordinary general meeting of the Company held on 11th May,           R17.03(1)

2006:


     (a)   Purpose                                                                                   R17.03(1)



          The purpose of the Share Option Scheme is to permit the Company to issue options to
     Eligible Persons (as defined below) to attract and retain the best available personnel and to
     provide additional incentives to employees, directors, consultants, business associates and
     advisors to promote the success of the Group.


           In granting the options, the Company may specify terms and conditions which must be
     satisfied before the options can be exercised. The terms and conditions may include a
     minimum holding period and performance conditions. In addition, the basis for
     determination of the exercise price of the options has been set out in the Share Option
     Scheme. The Board considers that the aforesaid criteria and the terms of the Share Option
     Scheme will serve to preserve the value of the Company and encourage option holders to
     acquire proprietary interests in the Company.


     (b)   Who may join                                                                              R17.03(2)



          The Board may, in its absolute discretion, offer any employee (whether full-time or
     part-time), director (including independent non-executive directors), consultant, business
     associate or advisor of any member of the Group (the “Eligible Person”) options to subscribe
     for Shares at a price calculated in accordance with paragraph (d) below and subject to the
     other terms of the Share Option Scheme summarised below. The Board may grant options
     to Eligible Persons who are considered to have contributed to the development and growth
     of the Group. No consideration is payable by the grantee upon the acceptance of an option.      R17.03(8)



     (c)   Maximum number of Shares                                                                  R17.03(3)



           (i)   The maximum number of Shares which may be issued upon the exercise of all
                 outstanding options granted and yet to be exercised under the Share Option
                 Scheme (each a “Subsisting Option”) and any other share option schemes of the
                 Company must not exceed such number of Shares as shall represent 30% of the
                 Company’s issued share capital from time to time. No options may be granted
                 under the Share Option Scheme or any other schemes if this will result in such
                 overall limit being exceeded.




                                           — 299 —
APPENDIX IV                                                      SHARE OPTION SCHEME

       (ii)   Subject always to the overall limit:


              (A) the Board may grant options under the Share Option Scheme generally and
                  without further authority provided that the number of Shares which may be
                  issued upon exercise of all options to be granted under the Share Option
                  Scheme and any other schemes shall not exceed in aggregate 10% of the
                  Company’s issued share capital as at the date of listing of the Shares (the
                  “Scheme Mandate Limit”) (being 200,000,000 Shares as at such date). For the
                  avoidance of doubt, options that have lapsed in accordance with the Share
                  Option Scheme shall not be counted for the purpose of calculating the
                  Scheme Mandate Limit;


              (B) the Scheme Mandate Limit may be renewed by obtaining approval of
                  Shareholders in general meeting of the Company provided that such
                  renewed limit shall not exceed 10% of the Shares in issue as at the date of
                  approval of such limit (the “Refreshed Limit”). Options previously granted
                  under the Share Option Scheme (including those outstanding, cancelled,
                  lapsed or exercised in accordance with the Share Option Scheme) shall not
                  be counted for the purpose of calculating the Refreshed Limit; and


              (C) the Board may grant options under the Share Option Scheme in excess of the
                  Scheme Mandate Limit (as renewed from time to time) if the grant of such
                  options is to specifically identified Eligible Persons and the grant of such
                  options to specifically identified Eligible Persons is first approved by
                  Shareholders in general meeting. In obtaining Shareholders’ approval, the
                  Company shall send a circular to Shareholders in accordance with and
                  containing such information as is required under rule 17.03(3) of the Listing
                  Rules.


       (iii) Unless approved by Shareholders in the manner as set out in sub-paragraph (iv)        R17.03(4)

             below, the total number of Shares issued and to be issued upon the exercise of the
             options granted to an Eligible Person under the Share Option Scheme (including
             exercised, cancelled and outstanding options) in any 12 month period shall not
             exceed 1% of the relevant class of securities of the Company in issue.


       (iv) Further options may be granted under the Share Option Scheme in excess of the
            limit stated in sub-paragraph (iii) above, by issuing a circular to the Shareholders
            and obtaining separate approval of the Shareholders in general meeting with such
            Eligible Person and his associate(s) (as defined in the Listing Rules) abstaining
            from voting, provided that the terms and number (including the exercise price) of
            the options to be granted to such Eligible Person are fixed before the relevant
            Shareholders’ approval is obtained, and the date of the meeting of the Board
            proposing such further grant shall be deemed to be the Date of Grant (as defined
            in paragraph (d) below) for the purpose of determining the subscription price for
            Shares under the Share Option Scheme.


                                          — 300 —
APPENDIX IV                                                         SHARE OPTION SCHEME

   (d)   Exercise price                                                                               R17.03(9)



         The subscription amount payable in respect of each Share upon the exercise of an
   option granted under the Share Option Scheme shall be determined by the Board and
   notified to the Eligible Person and shall be not less than the greater of:


         (i)    the closing price of the Shares on the Stock Exchange as stated in the Stock
                Exchange’s daily quotations sheet on the date, which must be a Business Day, of
                the written offer of such option (the “Date of Grant”);


         (ii)   the average closing price of the Shares on the Stock Exchange as stated in the
                Stock Exchange’s daily quotations sheets for the five Business Days immediately
                preceding the Date of Grant; and


         (iii) the nominal value of the Shares.


   (e)   Rights are personal to grantee                                                               R17.03(17)



        Any offer to grant an option and an option under the Share Option Scheme shall be
   personal to the Eligible Person to whom it is granted or to whom it is made and shall not
   be transferable or assignable. No Eligible Person shall in any way sell, transfer, charge,
   mortgage, encumber or create any interest in favour of any third party over or in relation to
   any option held by him or any offer relating to the grant of an option made to him.


   (f)   Options granted to directors or substantial shareholders                                     R17.04



         (i)    Any options to be granted to an Eligible Person who is a Director, chief executive
                or substantial shareholder (as defined in the Listing Rules) of the Company or any
                of their respective associates (as defined in the Listing Rules) must first be
                approved by the independent non-executive Directors (excluding any
                independent non-executive Director who is the proposed grantee of such
                options).


         (ii)   Any options to be granted to an Eligible Person who is a substantial shareholder
                or independent non-executive Director or one of their respective associates,
                which would result in the total number of Shares issued and to be issued upon
                exercise of all options granted and to be granted (including options exercised,
                cancelled or still outstanding) to such person in the period of 12 months up to and
                including the date of such grant:


                (A) representing in aggregate over 0.1% of the Shares in issue; and


                (B) having an aggregate value, based on the closing price of the Shares at the
                    date of each grant, in excess of HK$5,000,000,


                                            — 301 —
APPENDIX IV                                                        SHARE OPTION SCHEME

                must first be approved by Shareholders in general meeting by poll convened and
                held in accordance with the Articles of Association and at which all connected
                persons of the Company shall abstain from voting in favour of the resolution
                concerning the grant of such options. In obtaining the approval of Shareholders,
                the Company shall despatch a circular to Shareholders containing such
                information as is required under rule 17.04 of the Listing Rules.


   (g)   Grant of option


         (i)    An offer of an option must be made by the Company in writing on a business day
                and accepted in writing by the grantee in such manner as the Board may prescribe
                within 21 calendar days (from and including the date of the offer by the Company)
                of the same being made and if not so accepted such offer shall lapse.


         (ii)   The Board shall not grant any options under the Share Option Scheme after a
                price sensitive development concerning the Company or any of its subsidiaries
                has occurred or a price sensitive matter concerning the Company or any of its
                subsidiaries has been the subject of a decision until such price sensitive
                information has been announced pursuant to the requirements of the Listing
                Rules. In particular, no option shall be granted during the period of one month
                immediately preceding the earlier of (A) the date of the Board meeting for the
                approval of the Company’s published interim or annual results and where the
                Company has elected to publish them, any published quarterly results or those of
                any other interim period; and (B) the deadline for the Company to publish an
                announcement of its interim or annual results and where the Company has elected
                to publish them, any published quarterly results or those of any other interim
                period, and ending on the date of the announcement of the results for such year,
                half-year, quarterly or interim period (as the case may be).


         (iii) Each option holder will receive a written notice of grant from the Company
                specifying the number of options granted, the exercise period and the exercise
                price and specifying any other applicable terms and conditions relating to such
                options (including but not limited to any performance conditions which must be      R17.03(7)

                satisfied before the options can be exercised).


   (h)   Time of exercise of option                                                                 R17.03(5)



        Any option may be exercised in whole or in part by the Eligible Person at any time
   during the period to be notified by the Board to the Eligible Person upon the grant of the
   option, such period not to exceed ten years from the Date of Grant (the “Exercise Period”).




                                           — 302 —
APPENDIX IV                                                         SHARE OPTION SCHEME

   (i)   Cancellation of options                                                                   R17.03(14)



        Any cancellation of any Subsisting Option shall be conditional on the approval by the
   Board (including the approval of the independent non-executive Directors of the Company)
   and the option holder(s) concerned.


        In the event that the Board elects to cancel any Subsisting Options and issue new
   options to the same option holder, the issue of such new options shall be made with
   available unissued options (excluding the cancelled options) within the Scheme Mandate
   Limit or the Refreshed Limit, as the case may be.


   (j)   Voting and dividend rights                                                                R17.03(10)



        No dividends shall be payable and no voting rights shall be exercisable in relation to
   Shares that are the subject of options that have not been exercised.


   (k)   Effects of alterations in the capital structure of the Company                            R17.03(13)



        Subject to the limits described in paragraph (c) above, in the event of a capitalisation
   issue, rights issue, open offer, consolidation, subdivision or reduction of the share capital
   of the Company in accordance with applicable laws and regulatory requirements,
   corresponding adjustments (if any) shall be made in relation to any Subsisting Option to:


         (i)    the number of Shares subject to the Subsisting Option; and/or


         (ii)   the exercise price payable for each Share; and/or


         (iii) in the event of a consolidation and subdivision of the share capital of the
               Company and to the extent necessary, the maximum number of Shares referred to
               in paragraph (c) above,


         and such adjustment shall be certified by the auditors for the time being of the
         Company as being fair and reasonable, provided that:


         (a)    subject to sub-sections (b) and (c) below, any such adjustment shall give an
                option holder the same proportion of the issued share capital of the Company as
                that to which he was previously entitled (as interpreted in accordance with the
                supplementary guidance set out in a letter issued by the Stock Exchange to all
                listed issuers relating to share option schemes dated 5th September, 2005);


         (b)    no such adjustments shall be made to the advantage of option holders (including,
                but not limited to, adjustments which would increase the intrinsic value of any
                Subsisting Option) except with the prior sanction of a resolution of the
                Shareholders in general meeting; and


                                           — 303 —
APPENDIX IV                                                        SHARE OPTION SCHEME

         (c)   no such adjustment shall be made which would have the effect of enabling any
               Share to be issued at less than its nominal value or which would result in the
               aggregate amount payable on the exercise of any Subsisting Option being
               increased.


        Where any such adjustment shall be required for any alteration in the capital structure
   of the Company (other than by way of a capitalisation of profits or reserves) such adjustment
   shall be further conditional on the Auditors also certifying in writing that (1) such
   adjustment shall give an Eligible Person the same proportion of the issued share capital of
   the Company as that to which he was previously entitled, and (2) such adjustment shall not
   have the effect of enabling a Share to be issued at less than its nominal value.


       For the purpose of these provisions, “intrinsic value” is the difference between the
   market price (or theoretical ex-entitlement price) of the Shares subject to the Subsisting
   Option and the exercise price (or revised exercise price following an alteration in the capital
   structure of the Company) of the Subsisting Option.


   (l)   Rights on a takeover


        If during the Exercise Period of any Subsisting Options an offer is made to acquire all
   or part of the issued Shares (other than those held by the offeror and any persons acting in
   concert (as defined in the Takeovers Code) with the offeror) and such offer becomes or is
   declared unconditional, the Company shall give written notice to all persons then holding
   Subsisting Options of the offer becoming unconditional as soon as reasonably practicable
   after becoming so aware, and such option holders may, by notice in writing to the Company,
   within 14 days of the date of such notice exercise any of their Subsisting Options (in
   accordance with the terms of the Share Option Scheme) to their full extent or to the extent
   specified in such notice.


   (m) Rights on schemes of compromise or arrangement


        If during the Exercise Period of any Subsisting Options an application is made to the
   court (otherwise than where the Company is being voluntarily wound up) pursuant to
   sections 166 and 167 of the Companies Ordinance (or any analogous event under any
   equivalent legislation applicable to the Company) in connection with a proposed
   compromise or arrangement between the Company and its creditors (or any class of them)
   or between the Company and its members (or any class of them), an option holder holding
   Subsisting Options may by notice in writing to the Company, within the period of 21 days
   after the date of such application, exercise any of his Subsisting Options (in accordance with
   the terms of the Share Option Scheme) to their full extent or to the extent specified in such
   notice.




                                          — 304 —
APPENDIX IV                                                        SHARE OPTION SCHEME

   (n)   Rights on a voluntary winding up

        In the event of a notice of a meeting being convened to consider a resolution for the
   voluntary winding up of the Company during the Exercise Period of any Subsisting Options,
   the Company shall forthwith upon notice of such meeting being given, give to the persons
   holding such Subsisting Options written notice of the convening of such meeting and such
   option holders may thereupon by notice in writing to the Company exercise any Subsisting
   Options (in accordance with the terms of the Share Option Scheme) at any time not later
   than five business days prior to the proposed general meeting of the Company to its full
   extent or to the extent specified in such notice.


   (o)   Duration of the Share Option Scheme                                                       R17.03(11)



        Unless otherwise terminated by the Board or the Shareholders of the Company in
   general meeting in accordance with the terms of the Share Option Scheme, the Share Option
   Scheme shall be valid and effective for a period of 10 years from the date of listing of the
   Shares (the “Scheme Period”), and after which no further options will be granted or offered
   but the provisions of the Share Option Scheme shall remain in full force and effect to the
   extent necessary to give effect to the exercise of any Subsisting Options granted within the
   Scheme Period or otherwise as may be required in accordance with the provisions of the
   Share Option Scheme.


   (p) Amendment of the Share Option Scheme                                                        R17.03(18)



         (i)    Subject to sub-paragraph (ii) below, the Board may amend any of the provisions
                of the Share Option Scheme or withdraw or otherwise terminate the Share Option
                Scheme at any time but no amendments shall be made to the advantage of any
                option holder unless approved by Shareholders in general meeting. In addition,
                no amendment shall operate to affect adversely any rights which have accrued to
                any option holder at that date.


         (ii)   Shareholders in general meeting must approve in advance by ordinary resolution
                any proposed change which relates to the following:


                (A) the category of eligible persons to or for whom options may be granted
                    under the Share Option Scheme;

                (B) the authority of the Board in relation to any alteration to the terms of the
                    Share Option Scheme;


                (C) the limits as to the number of Shares which may be issued under the Share
                    Option Scheme;


                (D) the individual limits as to the number of options for each Eligible Person
                    under the Share Option Scheme;


                                           — 305 —
APPENDIX IV                                                        SHARE OPTION SCHEME

             (E)   the determination of the exercise price;


             (F)   any rights attaching to the options and the Shares;


             (G) the terms of any granted options;


             (H) the rights of option holders in the event of a capitalisation issue, rights issue,
                 open offer, sub-division or consolidation of Shares or reduction or any other
                 variation of capital of the Company;


             (I)   the provisions under the Share Option Scheme as described in this
                   sub-paragraph (ii);


             (J)   any matters set out in rule 17.03 of the Listing Rules; or


             (K) any amendment to the Share Option Scheme which is of a material nature.


       (iii) Except as described in sub-paragraph (ii) above, the Board need not obtain the
             approval of Shareholders in general meeting for any minor amendments:


             (A) to benefit the administration of the Share Option Scheme;


             (B) to comply with or take account of the provisions of any proposed or existing
                   legislation;


             (C) to take account of any changes to the legislation; or


             (D) to obtain or maintain favourable tax, exchange control or regulatory
                 treatment of the Company or any subsidiary or associated company (within
                 the meaning of the term “associate” in the Hong Kong Accounting Standard
                 No. 28, “Investment in Associates”) or any present or future Eligible Person.


       (iv) Any amendment to the terms and conditions of the Scheme which is of a material
            nature shall be subject to the clearance of the Stock Exchange save where the
            amendment takes effect automatically under the existing terms of the Share
             Option Scheme.


       (v)   Unless otherwise cleared by the Stock Exchange, the amended terms of the Share
             Option Scheme or the options must comply with the relevant requirements of the
             Listing Rules.




                                          — 306 —
APPENDIX IV                                                          SHARE OPTION SCHEME

   (r)   Lapse of options                                                                             R17.03(12)



        An option shall lapse forthwith (to the extent not already exercised) on the occurrence
   of the earliest of the following events:


         (i)    the expiry of the Exercise Period;

         (ii)   the first anniversary of the death of the option holder;

         (iii) if the option holder is an employee or a Director, upon such option holder ceasing
               to be an employee or a Director by reason of dismissal from employment or
               termination of office; or if the option holder is a consultant, a business associate
               or an advisor, by reason of the termination by the Company or any of its
               subsidiaries of the contract for the provision of services by such option holder, on
               any of the following grounds:

                (A) his misconduct;

                (B) his committing an act of bankruptcy;


                (C) his becoming insolvent or making any arrangements or composition with his
                    creditors generally; or


                (D) his being convicted of any criminal offence involving his integrity or
                    honesty,


         (iv) 90 calendar days after the option holder ceases to be an employee by reason of:


                (A) his retirement on or after attaining normal retirement age;


                (B) his resignation;


                (C) his ill health or disability;


                (D) the company by which he is employed ceasing to be a subsidiary or
                    associated company;


                (E)   the expiry of his contract of employment; or


                (F)   termination of his employment for reasons other than the reasons specified
                      in sub-paragraphs (ii) and (iii) above,


         (v)    90 calendar days after the option holder ceases to be a Director for reasons other
                than the reasons specified in sub-paragraphs (ii) and (iii) above;


                                             — 307 —
APPENDIX IV                                                        SHARE OPTION SCHEME

         (vi) in the case of any takeovers, schemes of compromise or arrangement and
              voluntary winding up, the expiry of any periods of notice, provided that in the
              case of schemes of compromise or arrangement, the proposed compromise or
              arrangement becomes effective;


         (vii) save as otherwise provided in paragraph (n) above, the close of business on the
               fifth business day prior to the general meeting for considering the resolution for
               the voluntary winding up of the Company or the date of the commencement of the
               winding up of the Company, whichever is earlier;


         (viii) any breach of the provisions of paragraph (e) above; and


         (ix) in the case of an option holder who is a consultant, a business associate or an
              advisor, on the date which falls 90 calendar days after the date on which the
              option holder is notified by the Board that the Board has resolved that the option
              holder no longer provides consultancy, business or advisory (as appropriate)
              services to the Company or any of its subsidiaries and is therefore no longer a
              consultant, a business associate or an advisor to the Company or any of its
              subsidiaries.


        If an option shall be determined by the Board to have lapsed, the Board shall notify the
   relevant option holder in writing of such lapse and forthwith upon such notification the
   option holder shall be bound to surrender to the Company the written notice evidencing
   such option.


   (s)   Termination                                                                                R17.03(16)



       The Board or the Shareholders in general meeting may at any time terminate the Share
   Option Scheme and, in such event, no further option shall be granted or offered but in all
   other respects the provisions of the Share Option Scheme shall remain in full force and
   effect in respect of any options granted prior to such termination and not then exercised
   shall continue to be valid and exercisable subject to and in accordance with the terms of the
   Share Option Scheme.


   (t)   Disclosure of the Share Option Scheme


        The Company will, unless otherwise allowed by the Stock Exchange or other relevant
   authority, disclose all information as required by the Listing Rules or any other applicable
   rules and regulations in its annual and interim reports.




                                          — 308 —
APPENDIX IV                                                          SHARE OPTION SCHEME

2.   Present status of the Share Option Scheme


     The Share Option Scheme is conditional on (i) the Listing Committee of the Stock Exchange
granting the listing of, and permission to deal in, the Shares in issue or to be issued and (ii) the
obligations of the underwriters under the Underwriting Agreement becoming unconditional and
not being terminated in accordance with its terms or otherwise on or before the day immediately
before the date on which trading in the Shares commences on the Stock Exchange.


     Application has been made to the Listing Committee of the Stock Exchange for the listing of,
and permission to deal in, 200,000,000 Shares which may be issued pursuant to the exercise of
any options granted under the Share Option Scheme.


     As at the date of this prospectus, no option has been granted or agreed to be granted under
the Share Option Scheme.




                                            — 309 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

     Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman company law.


     The Company was incorporated in the Cayman Islands as an exempted company with                   S342(1)(a)(iv)

limited liability on 25th February, 2003 under the Companies Law. The Memorandum of
Association (the “Memorandum”) and the Articles comprise its constitution.


1.   MEMORANDUM OF ASSOCIATION


     (a)   The Memorandum states, inter alia, that the liability of Shareholders is limited to the
           amount, if any, for the time being unpaid on the Shares respectively held by them and
           that the objects for which the Company is established are unrestricted (including acting
           as an investment company), and that the Company shall have and be capable of
           exercising any and all of the powers at any time or from time to time exercisable by a
           natural person of full capacity irrespective of any question of corporate benefit, as
           provided in section 27(2) of the Companies Law and in view of the fact that the
           Company is an exempted company that the Company will not trade in the Cayman
           Islands with any person, firm or corporation except in furtherance of the business of
           the Company carried on outside the Cayman Islands.


     (b)   The Company may by special resolution alter its Memorandum with respect to any
           objects, powers or other matters specified therein.


2.   ARTICLES OF ASSOCIATION


      The Articles were conditionally approved and adopted at an extraordinary general meeting        A1A7
                                                                                                      S342(1)(a)(i)
of the Company held on 11th May, 2006. The following is a summary of certain provisions of the
Articles:


     (a)   Directors


           (i)   Power to allot and issue shares and warrants


                Subject to the provisions of the Companies Law and the Memorandum and Articles        A3 6(1)

           and to any special rights conferred on the holders of any shares or class of shares, any
           share may be issued with or have attached thereto such rights, or such restrictions,
           whether with regard to dividend, voting, return of capital, or otherwise, as the
           Company may by ordinary resolution determine (or, in the absence of any such
           determination or so far as the same may not make specific provision, as the Board may
           determine). Subject to the Companies Law, the rules of any Designated Stock Exchange       A3 8(1)
                                                                                                      A3 8(2)
           (as defined in the Articles) and the Memorandum and Articles, any share may be issued
           on terms that, at the option of the Company or the holder thereof, they are liable to be
           redeemed. Every share certificate shall be issued under the seal of the Company, or a      A3 2(1)

           facsimile thereof, the use of which shall be authorised by the Board.


                                            — 310 —
APPENDIX V                          SUMMARY OF THE CONSTITUTION OF
                          THE COMPANY & CAYMAN ISLANDS COMPANY LAW

           The Board may issue warrants conferring the right upon the holders thereof to
      subscribe for any class of shares or securities in the capital of the Company on such
      terms as it may from time to time determine. Where share warrants have been issued,             A3 2(2)

      no new share warrant shall be issued to replace one that has been lost unless the
      Directors are satisfied beyond reasonable doubt that the original has been destroyed.


           Subject to the provisions of the Companies Law and the Articles and, where
      applicable, the rules of any Designated Stock Exchange (as defined in the Articles) and
      without prejudice to any special rights or restrictions for the time being attached to any
      shares or any class of shares, all unissued shares in the Company shall be at the
      disposal of the Board, which may offer, allot, grant options over or otherwise dispose
      of them to such persons, at such times, for such consideration and on such terms and
      conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued
      at a discount.


            Neither the Company nor the Board shall be obliged, when making or granting
      any allotment of, offer of, option over or disposal of shares, to make, or make
      available, any such allotment, offer, option or shares to members or others with
      registered addresses in any particular territory or territories being a territory or
      territories where, in the absence of a registration statement or other special formalities,
      this would or might, in the opinion of the Board, be unlawful or impracticable.
      Shareholders affected as a result of the foregoing sentence shall not be, or be deemed
      to be, a separate class of members for any purpose whatsoever.


      (ii)   Power to dispose of the assets of the Company or any subsidiary


           There are no specific provisions in the Articles relating to the disposal of the
      assets of the Company or any of its subsidiaries. The Directors may, however, exercise
      all powers and do all acts and things which may be exercised or done or approved by
      the Company and which are not required by the Articles or the Companies Law to be
      exercised or done by the Company in general meeting.


      (iii) Compensation or payments for loss of office


            Pursuant to the Articles, payments to any Director or past Director of any sum by         A13B 5(4)

      way of compensation for loss of office or as consideration for or in connection with his
      retirement from office (not being a payment to which the Director is contractually
      entitled) must be approved by the Company in general meeting.


      (iv) Loans and provision of security for loans to Directors


             There are provisions in the Articles prohibiting the making of loans to Directors.       A13B
                                                                                                      5(2)




                                         — 311 —
APPENDIX V                         SUMMARY OF THE CONSTITUTION OF
                         THE COMPANY & CAYMAN ISLANDS COMPANY LAW

      (v)   Disclosure of interests in contracts with the Company or any of its subsidiaries        A1A
                                                                                                    7(1)


           A Director may hold any other office or place of profit with the Company (except
      that of the auditor of the Company) in conjunction with his office of Director for such
      period and, subject to the Articles, upon such terms as the Board may determine, and
      may be paid such extra remuneration therefor (whether by way of salary, commission,
      participation in profits or otherwise) in addition to any remuneration provided for by
      or pursuant to any other Articles. A Director may be or become a director or other
      officer of, or otherwise interested in, any company promoted by the Company or any
      other company in which the Company may be interested, and shall not be liable to
      account to the Company or the members for any remuneration, profits or other benefits
      received by him as a director, officer or member of, or from his interest in, such other
      company. Subject as otherwise provided by the Articles, the Board may also cause the
      voting power conferred by the shares in any other company held or owned by the
      Company to be exercised in such manner in all respects as it thinks fit, including the
      exercise thereof in favour of any resolution appointing the Directors or any of them to
      be directors or officers of such other company, or voting or providing for the payment
      of remuneration to the directors or officers of such other company.

            Subject to the Companies Law and the Articles, no Director or proposed or               A13B
                                                                                                    5(3)
      intended Director shall be disqualified by his office from contracting with the
      Company, either with regard to his tenure of any office or place of profit or as vendor,
      purchaser or in any other manner whatsoever, nor shall any such contract or any other
      contract or arrangement in which any Director is in any way interested be liable to be
      avoided, nor shall any Director so contracting or being so interested be liable to
      account to the Company or the members for any remuneration, profit or other benefits
      realised by any such contract or arrangement by reason of such Director holding that
      office or the fiduciary relationship thereby established. A Director who to his
      knowledge is in any way, whether directly or indirectly, interested in a contract or
      arrangement or proposed contract or arrangement with the Company shall declare the
      nature of his interest at the meeting of the Board at which the question of entering into
      the contract or arrangement is first taken into consideration, if he knows his interest
      then exists, or in any other case, at the first meeting of the Board after he knows that
      he is or has become so interested.

           A Director shall not vote (nor be counted in the quorum) on any resolution of the        A34
                                                                                                    (1)
      Board approving any contract or arrangement or other proposal in which he or any of
      his associates is materially interested, but this prohibition shall not apply to any of the
      following matters, namely:

            (aa) any contract or arrangement for giving to such Director or his associate(s)
                 any security or indemnity in respect of money lent by him or any of his
                 associates or obligations incurred or undertaken by him or any of his
                 associates at the request of or for the benefit of the Company or any of its
                 subsidiaries;


                                        — 312 —
APPENDIX V                        SUMMARY OF THE CONSTITUTION OF
                        THE COMPANY & CAYMAN ISLANDS COMPANY LAW

           (bb) any contract or arrangement for the giving of any security or indemnity to a
                third party in respect of a debt or obligation of the Company or any of its
                subsidiaries for which the Director or his associate(s) has himself/
                themselves assumed responsibility in whole or in part whether alone or
                jointly under a guarantee or indemnity or by the giving of security;


           (cc) any contract or arrangement concerning an offer of shares or debentures or
                other securities of or by the Company or any other company which the
                Company may promote or be interested in for subscription or purchase,
                where the Director or his associate(s) is/are or is/are to be interested as a
                participant in the underwriting or sub-underwriting of the offer;


           (dd) any contract or arrangement in which the Director or his associate(s) is/are
                interested in the same manner as other holders of shares or debentures or
                other securities of the Company by virtue only of his/their interest in shares
                or debentures or other securities of the Company;


           (ee) any contract or arrangement concerning any other company in which the
                Director or his associate(s) is/are interested only, whether directly or
                indirectly, as an officer or executive or a shareholder or in which the
                Director and any of his associates are not in aggregate beneficially interested
                in 5 percent. or more of the issued shares or of the voting rights of any class
                of shares of such company (or of any third company through which his
                interest or that of any of his associates is derived); or


           (ff) any proposal or arrangement concerning the adoption, modification or
                operation of a share option scheme, a pension fund or retirement, death, or
                disability benefits scheme or other arrangement which relates both to
                Directors, his associates and employees of the Company or of any of its
                subsidiaries and does not provide in respect of any Director, or his
                associate(s), as such any privilege or advantage not accorded generally to
                the class of persons to which such scheme or fund relates.


      (vi) Remuneration                                                                           A1A
                                                                                                  7(2)


           The ordinary remuneration of the Directors shall from time to time be determined       3rd Sch.(5)

      by the Company in general meeting, such sum (unless otherwise directed by the
      resolution by which it is voted) to be divided amongst the Directors in such
      proportions and in such manner as the Board may agree or, failing agreement, equally,
      except that any Director holding office for part only of the period in respect of which
      the remuneration is payable shall only rank in such division in proportion to the time
      during such period for which he held office. The Directors shall also be entitled to be
      prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to


                                       — 313 —
APPENDIX V                        SUMMARY OF THE CONSTITUTION OF
                        THE COMPANY & CAYMAN ISLANDS COMPANY LAW

      be incurred or incurred by them in attending any board meetings, committee meetings
      or general meetings or separate meetings of any class of shares or of debentures of the
      Company or otherwise in connection with the discharge of their duties as Directors.


            Any Director who, by request, goes or resides abroad for any purpose of the
      Company or who performs services which in the opinion of the Board go beyond the
      ordinary duties of a Director may be paid such extra remuneration (whether by way of
      salary, commission, participation in profits or otherwise) as the Board may determine
      and such extra remuneration shall be in addition to or in substitution for any ordinary
      remuneration as a Director. An executive Director appointed to be a managing director,
      joint managing director, deputy managing director or other executive officer shall
      receive such remuneration (whether by way of salary, commission or participation in
      profits or otherwise or by all or any of those modes) and such other benefits (including
      pension and/or gratuity and/or other benefits on retirement) and allowances as the
      Board may from time to time decide. Such remuneration may be either in addition to
      or in lieu of his remuneration as a Director.


           The Board may establish or concur or join with other companies (being subsidiary
      companies of the Company or companies with which it is associated in business) in
      establishing and making contributions out of the Company’s monies to any schemes or
      funds for providing pensions, sickness or compassionate allowances, life assurance or
      other benefits for employees (which expression as used in this and the following
      paragraph shall include any Director or ex-Director who may hold or have held any
      executive office or any office of profit with the Company or any of its subsidiaries) and
      ex-employees of the Company and their dependents or any class or classes of such
      persons.


           The Board may pay, enter into agreements to pay or make grants of revocable or
      irrevocable, and either subject or not subject to any terms or conditions, pensions or
      other benefits to employees and ex-employees and their dependents, or to any of such
      persons, including pensions or benefits additional to those, if any, to which such
      employees or ex-employees or their dependents are or may become entitled under any
      such scheme or fund as is mentioned in the previous paragraph. Any such pension or
      benefit may, as the Board considers desirable, be granted to an employee either before
      and in anticipation of, or upon or at any time after, his actual retirement.


      (vii) Retirement, appointment and removal                                                   A1A
                                                                                                  7(4)


            At each annual general meeting, one third of the Directors for the time being (or
      if their number is not a multiple of three, then the number nearest to but not less than
      one third) will retire from office by rotation provided that every Director shall be
      subject to retirement at least once every three years. The Directors to retire in every
      year will be those who have been longest in office since their last re-election or


                                        — 314 —
APPENDIX V                        SUMMARY OF THE CONSTITUTION OF
                        THE COMPANY & CAYMAN ISLANDS COMPANY LAW

      appointment but as between persons who became or were last re-elected Directors on
      the same day those to retire will (unless they otherwise agree among themselves) be
      determined by lot. There are no provisions relating to retirement of Directors upon
      reaching any age limit.


           The Directors shall have the power from time to time and at any time to appoint       A3 4(2)

      any person as a Director either to fill a casual vacancy on the Board or as an addition
      to the existing Board. Any Director so appointed shall hold office only until the next
      following annual general meeting of the Company and shall then be eligible for
      re-election. Neither a Director nor an alternate Director is required to hold any shares
      in the Company by way of qualification.


            The Company may by ordinary resolution remove any Director before the                A3 4(3)

      expiration of his period of office (but without prejudice to any claim which such
      Director may have for damages for any breach of any contract between him and the
      Company) and may by ordinary resolution appoint another in his place. Unless
      otherwise determined by the Company in general meeting, the number of Directors            A13B5(1)

      shall not be less than two. There is no maximum number of Directors.


            No person other than a Director retiring at the meeting shall, unless recommended
      by the Directors for election, be eligible for election as a Director at any general
      meeting unless a notice is given by a shareholder (other than the person to be             A3 4(4)
                                                                                                 A3 4(5)
      proposed) duly qualified to attend and vote at the meeting for which such notice is
      given of his intention to propose such person for election and also a notice signed by
      the person to be proposed of his willingness to be elected shall have been lodged at
      the head office or at the registration office provided that the minimum length of the
      period, during which such notice(s) are given, shall be at least seven and that (if the
      notices are submitted after the dispatch of the notice of the general meeting appointed
      for such election) the period for lodgment of such notice(s) shall commence on the day
      after the dispatch of the notice of the general meeting appointed for such election and
      end no later than seven days prior to the date of such general meeting.


           The office of director shall be vacated:


           (aa) if he resigns his office by notice in writing delivered to the Company at the
                registered office of the Company for the time being or tendered at a meeting
                of the Board;


           (bb) becomes of unsound mind or dies;


           (cc) if, without special leave, he is absent from meetings of the Board (unless an
                alternate director appointed by him attends) for six (6) consecutive months,
                and the Board resolves that his office is vacated;


                                       — 315 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

              (dd) if he becomes bankrupt or has a receiving order made against him or
                   suspends payment or compounds with his creditors;


              (ee) if he is prohibited from being a director by law;


              (ff) if he ceases to be a director by virtue of any provision of law or is removed
                   from office pursuant to the Articles.


           The Board may from time to time appoint one or more of its body to be managing
      director, joint managing director, or deputy managing director or to hold any other
      employment or executive office with the Company for such period and upon such
      terms as the Board may determine and the Board may revoke or terminate any of such
      appointments. The Board may delegate any of its powers, authorities and discretions
      to committees consisting of such Director or Directors and other persons as the Board
      thinks fit, and it may from time to time revoke such delegation or revoke the
      appointment of and discharge any such committees either wholly or in part, and either
      as to persons or purposes, but every committee so formed shall, in the exercise of the
      powers, authorities and discretions so delegated, conform to any regulations that may
      from time to time be imposed upon it by the Board.


      (viii) Borrowing powers                                                                                          A1A
                                                                                                                       7(3)


            The Board may exercise all the powers of the Company to raise or borrow money,                             3rd Sch22

      to mortgage or charge all or any part of the undertaking, property and assets (present
      and future) and uncalled capital of the Company and, subject to the Companies Law,
      to issue debentures, bonds and other securities of the Company, whether outright or
      as collateral security for any debt, liability or obligation of the Company or of any third
      party.


      Note:   These provisions, in common with the Articles in general, can be varied with the sanction of a special
              resolution of the Company.


      (ix) Proceedings of the Board


            The Board may meet for the despatch of business, adjourn and otherwise regulate
      their meetings as they think fit. Questions arising at any meeting shall be determined
      by a majority of votes. In the case of an equality of votes, the chairman of the meeting
      shall have an additional or casting vote.




                                                — 316 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

         (x)    Register of Directors and Officers

              The    Companies Law and the Articles provide that the Company is required to
         maintain    at its registered office a register of directors and officers which is not
         available   for inspection by the public. A copy of such register must be filed with the
         Registrar   of Companies in the Cayman Islands and any change must be notified to the
         Registrar   within thirty (30) days of any change in such directors or officers.


   (b)   Alterations to constitutional documents

        The Articles may be rescinded, altered or amended by the Company in general meeting           A13B
                                                                                                      1
   by special resolution. The Articles state that a special resolution shall be required to alter
   the provisions of the Memorandum, to amend the Articles or to change the name of our
   Company.

   (c)   Alteration of capital                                                                        A1A7(6)
                                                                                                      A39


        At the date of adoption of the Articles, the authorised share capital of the Company will
   be US$100,000,000 divided into 8,000,000,000 Shares. The Company may from time to time
   by ordinary resolution in accordance with the relevant provisions of the Companies Law:


         (i)    increase its capital by such sum, to be divided into shares of such amounts as the
                resolution shall prescribe;

         (ii)   consolidate and divide all or any of its capital into shares of larger amount than
                its existing shares;


         (iii) divide its shares into several classes and without prejudice to any special rights
               previously conferred on the holders of existing shares attach thereto respectively
               any preferential, deferred, qualified or special rights, privileges, conditions or
               restrictions as the Company in general meeting or as the directors may determine;

         (iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by
              the Memorandum, subject nevertheless to the provisions of the Companies Law,
              and so that the resolution whereby any share is sub-divided may determine that,
              as between the holders of the shares resulting from such sub-division, one or
              more of the shares may have any such preferred or other special rights, over, or
              may have such deferred rights or be subject to any such restrictions as compared
              with the others as the Company has power to attach to unissued or new shares;
              or


         (v)    cancel any shares which, at the date of passing of the resolution, have not been
                taken, or agreed to be taken, by any person, and diminish the amount of its capital
                by the amount of the shares so cancelled.


                                            — 317 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

        The Company may subject to the provisions of the Companies Law reduce its share
   capital or any capital redemption reserve or other undistributable reserve in any way by
   special resolution.


   (d)   Variation of rights of existing shares or classes of shares                                A1A
                                                                                                    25(3)


         Subject to the Companies Law, all or any of the special rights attached to the shares or   A3
                                                                                                    6(2)
   any class of shares may (unless otherwise provided for by the terms of issue of that class)
   be varied, modified or abrogated either with the consent in writing of the holders of not less
   than three-fourths in nominal value of the issued shares of that class or with the sanction of   A13B
                                                                                                    2(1)
   a special resolution passed at a separate general meeting of the holders of the shares of that
   class. To every such separate general meeting the provisions of the Articles relating to
   general meetings will mutatis mutandis apply, but so that the necessary quorum (other than
   at an adjourned meeting) shall be two persons holding or representing by proxy not less
   than one-third in nominal value of the issued shares of that class and at any adjourned
   meeting two holders present in person or by proxy whatever the number of shares held by
   them shall be a quorum. Every holder of shares of the class shall be entitled on a poll to one   A1a(13A)

   vote for every such share held by him, and any holder of shares of the class present in
   person or by proxy may demand a poll.


        The special rights conferred upon the holders of any shares or class of shares shall not,
   unless otherwise expressly provided in the rights attaching to the terms of issue of such
   shares, be deemed to be varied by the creation or issue of further shares ranking pari passu
   therewith.


   (e)   Special resolution-majority required


        Pursuant to the Articles, a special resolution of the Company must be passed by a           A13B
                                                                                                    1
   majority of not less than three-fourths of the votes cast by such members as, being entitled
   so to do, vote in person or, in the case of such members as are corporations, by their duly
   authorised representatives or, where proxies are allowed, by proxy at a general meeting of
   which not less than twenty-one (21) clear days’ notice, specifying the intention to propose
   the resolution as a special resolution, has been duly given. Provided that, except in the case
   of an annual general meeting, if it is so agreed by a majority in number of the members
   having a right to attend and vote at such meeting, being a majority together holding not less
   than ninety-five (95) per cent. in nominal value of the shares giving that right and, in the
   case of an annual general meeting, if so agreed by all Shareholders entitled to attend and
   vote thereat, a resolution may be proposed and passed as a special resolution at a meeting
   of which less than twenty-one (21) clear days’ notice has been given.


        A copy of any special resolution must be forwarded to the Registrar of Companies in
   the Cayman Islands within fifteen (15) days of being passed.


                                          — 318 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

         An ordinary resolution is defined in the Articles to mean a resolution passed by a
   simple majority of the votes of such members of the Company as, being entitled to do so,
   vote in person or, in the case of corporations, by their duly authorised representatives or,
   where proxies are allowed, by proxy at a general meeting held in accordance with the
   Articles.


   (f)   Voting rights (generally and on a poll) and right to demand a poll                           A1A
                                                                                                      25(1)


         Subject to any special rights or restrictions as to voting for the time being attached to    A1A
                                                                                                      25(2)
   any shares by or in accordance with the Articles, at any general meeting on a show of hands,
   every member who is present in person or by proxy or being a corporation, is present by
   its duly authorised representative shall have one vote and on a poll every member present
   in person or by proxy or, in the case of a member being a corporation, by its duly authorised
   representative shall have one vote for every fully paid share of which he is the holder but
   so that no amount paid up or credited as paid up on a share in advance of calls or
   installments is treated for the foregoing purposes as paid up on the share. Notwithstanding
   anything contained in the Articles, where more than one proxy is appointed by a member
   which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a
   show of hands. On a poll, a member entitled to more than one vote need not use all his votes
   or cast all the votes he uses in the same way.


         At any general meeting a resolution put to the vote of the meeting is to be decided on       A1A
                                                                                                      13A
   a show of hands unless voting by way of a poll is required by the rules of the Designated
   Stock Exchange (as defined in the Articles) or (before or on the declaration of the result of
   the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded
   by (i) the chairman of the meeting or (ii) at least three members present in person or, in the     A13B
                                                                                                      2(3)
   case of a member being a corporation, by its duly authorised representative or by proxy for
   the time being entitled to vote at the meeting or (iii) any member or members present in
   person or, in the case of a member being a corporation, by its duly authorised representative
   or by proxy and representing not less than one-tenth of the total voting rights of all the
   members having the right to vote at the meeting or (iv) a member or members present in
   person or, in the case of a member being a corporation, by its duly authorised representative
   or by proxy and holding shares in the Company conferring a right to vote at the meeting
   being shares on which an aggregate sum has been paid equal to not less than one-tenth of
   the total sum paid up on all the shares conferring that right or by any Director or Directors
   who, individually or collectively, hold proxies in respect of shares representing five per
   cent. (5%) or more of the total voting rights of such meeting.


         If a recognised clearing house (or its nominee(s)) is a member of the Company it may         A13B
                                                                                                      6
   authorise such person or persons as it thinks fit to act as its representative(s) at any meeting
   of the Company or at any meeting of any class of members of the Company provided that,
   if more than one person is so authorised, the authorisation shall specify the number and
   class of shares in respect of which each such person is so authorised. A person authorised
   pursuant to this provision shall be deemed to have been duly authorised without further


                                          — 319 —
APPENDIX V                          SUMMARY OF THE CONSTITUTION OF
                          THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   evidence of the facts and be entitled to exercise the same powers on behalf of the
   recognised clearing house (or its nominee(s)) as if such person was the registered holder of
   the shares of the Company held by that clearing house (or its nominee(s)) including the
   right to vote individually on a show of hands.


        Where the Company has any knowledge that any shareholder is, under the rules of the
   Designated Stock Exchange (as defined in the Articles), required to abstain from voting on      A3
                                                                                                   14
   any particular resolution of the Company or restricted to voting only for or only against any
   particular resolution of our Company, any votes cast by or on behalf of such shareholder in
   contravention of such requirement or restriction shall not be counted.


   (g)   Requirements for annual general meetings


        An annual general meeting of the Company must be held in each year, other than the         A13B3(3)
                                                                                                   A13B
   year of adoption of the Articles (within a period of not more than 15 months after the          4(2)

   holding of the last preceding annual general meeting or a period of 18 months from the date
   of adoption of the Articles, unless a longer period would not infringe the rules of any
   Designated Stock Exchange (as defined in the Articles)) at such time and place as may be
   determined by the Board.


   (h)   Accounts and audit


        The Board shall cause true accounts to be kept of the sums of money received and           A13B
                                                                                                   4(1)
   expended by the Company, and the matters in respect of which such receipt and
   expenditure take place, and of the property, assets, credits and liabilities of the Company
   and of all other matters required by the Companies Law or necessary to give a true and fair
   view of the Company’s affairs and to explain its transactions.


        The accounting records shall be kept at the registered office or at such other place or
   places as the Board decides and shall always be open to inspection by any Director. No
   member (other than a Director) shall have any right to inspect any accounting record or
   book or document of the Company except as conferred by law or authorised by the Board
   or the Company in general meeting.


        A copy of every balance sheet and profit and loss account (including every document        A3
                                                                                                   5
   required by law to be annexed thereto) which is to be laid before the Company at its general
   meeting, together with a printed copy of the Directors’ report and a copy of the auditors’
   report, shall not less than twenty-one (21) days before the date of the meeting and at the      A13B
                                                                                                   3(3)
   same time as the notice of annual general meeting be sent to every person entitled to receive   4(2)
                                                                                                   A3 7(1)
   notices of general meetings of the Company under the provisions the Articles; however,          A3 7(2)

   subject to compliance with all applicable laws, including the rules of the Designated Stock
   Exchange (as defined in the Articles), the Company may send to such persons a summary
   financial statement derived from the Company’s annual accounts and the directors’ report


                                         — 320 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   instead provided that any such person may by notice in writing served on the Company,
   demand that the Company sends to him, in addition to a summary financial statement, a
   complete printed copy of the Company’s annual financial statement and the directors’ report
   thereon.


        Auditors shall be appointed and the terms and tenure of such appointment and their
   duties at all times regulated in accordance with the provisions of the Articles. The
   remuneration of the auditors shall be fixed by the Company in general meeting or in such
   manner as the members may determine.


         The financial statements of the Company shall be audited by the auditor in accordance          A13B4(2)

   with generally accepted auditing standards. The auditor shall make a written report thereon
   in accordance with generally accepted auditing standards and the report of the auditor shall
   be submitted to the members in general meeting. The generally accepted auditing standards
   referred to herein may be those of a country or jurisdiction other than the Cayman Islands.
   If so, the financial statements and the report of the auditor should disclose this fact and
   name such country or jurisdiction.


   (i)   Notices of meetings and business to be conducted thereat


        An annual general meeting and any extraordinary general meeting at which it is                  A13B
                                                                                                        3(1)
   proposed to pass a special resolution shall (save as set out in sub-paragraph (e) above) be
   called by at least twenty-one (21) clear days’ notice in writing, and any other extraordinary
   general meeting shall be called by at least fourteen (14) clear days’ notice (in each case
   exclusive of the day on which the notice is served or deemed to be served and of the day
   for which it is given). The notice must specify the time and place of the meeting and, in the
   case of special business, the general nature of that business. In addition notice of every
   general meeting shall be given to all members of the Company other than such as, under the
   provisions of the Articles or the terms of issue of the shares they hold, are not entitled to
   receive such notices from the Company, and also to the auditors for the time being of the
   Company.


       Notwithstanding that a meeting of the Company is called by shorter notice than that
   mentioned above, it shall be deemed to have been duly called if it is so agreed:


         (i)    in the case of a meeting called as an annual general meeting, by all members of
                the Company entitled to attend and vote thereat; and


         (ii)   in the case of any other meeting, by a majority in number of the members having
                a right to attend and vote at the meeting, being a majority together holding not
                less than ninety-five (95) per cent in nominal value of the issued shares giving that
                right.


                                             — 321 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

       All business shall be deemed special that is transacted at an extraordinary general
   meeting and also all business shall be deemed special that is transacted at an annual general
   meeting with the exception of the following, which shall be deemed ordinary business:


         (aa) the declaration and sanctioning of dividends;


         (bb) the consideration and adoption of the accounts and balance sheet and the reports
              of the directors and the auditors;


         (cc) the election of directors in place of those retiring;


         (dd) the appointment of auditors and other officers;


         (ee) the fixing of the remuneration of the directors and of the auditors;


         (ff) the granting of any mandate or authority to the directors to offer, allot, grant
              options over or otherwise dispose of the unissued shares of the Company
              representing not more than twenty (20) per cent in nominal value of its existing
              issued share capital; and


         (gg) the granting of any mandate or authority to the directors to repurchase securities
              of the Company.


   (j)   Transfer of shares                                                                          A1A
                                                                                                     7(8)


         All transfers of shares may be effected by an instrument of transfer in the usual or
   common form or in a form prescribed by the Designated Stock Exchange (as defined in the
   Articles) or in such other form as the Board may approve and which may be under hand or,
   if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine
   imprinted signature or by such other manner of execution as the Board may approve from
   time to time. The instrument of transfer shall be executed by or on behalf of the transferor
   and the transferee provided that the Board may dispense with the execution of the
   instrument of transfer by the transferee in any case in which it thinks fit, in its discretion,
   to do so and the transferor shall be deemed to remain the holder of the share until the name
   of the transferee is entered in the register of members in respect thereof. The Board may also
   resolve either generally or in any particular case, upon request by either the transferor or
   the transferee, to accept mechanically executed transfers.


        The Board in so far as permitted by any applicable law may, in its absolute discretion,
   at any time and from time to time transfer any share upon the principal register to any
   branch register or any share on any branch register to the principal register or any other
   branch register.


                                           — 322 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

         Unless the Board otherwise agrees, no shares on the principal register shall be             A31
                                                                                                     (1)
   transferred to any branch register nor may shares on any branch register be transferred to
   the principal register or any other branch register. All transfers and other documents of title
   shall be lodged for registration and registered, in the case of shares on a branch register, at
   the relevant registration office and, in the case of shares on the principal register, at the
   registered office in the Cayman Islands or such other place at which the principal register
   is kept in accordance with the Companies Law.


        The Board may, in its absolute discretion, and without assigning any reason, refuse to       A3
                                                                                                     1(2)
   register a transfer of any share (not being a fully paid up share) to a person of whom it does
   not approve or any share issued under any share incentive scheme for employees upon               1(3)

   which a restriction on transfer imposed thereby still subsists, and it may also refuse to
   register any transfer of any share to more than four joint holders or any transfer of any share
   (not being a fully paid up share) on which the Company has a lien.


         The Board may decline to recognise any instrument of transfer unless a fee of such          A3
                                                                                                     1(1)
   maximum sum as any Designated Stock Exchange (as defined in the Articles) may determine
   to be payable or such lesser sum as the Directors may from time to time require is paid to
   the Company in respect thereof, the instrument of transfer, if applicable, is properly
   stamped, is in respect of only one class of share and is lodged at the relevant registration
   office or registered office or such other place at which the principal register is kept
   accompanied by the relevant share certificate(s) and such other evidence as the Board may
   reasonably require to show the right of the transferor to make the transfer (and if the
   instrument of transfer is executed by some other person on his behalf, the authority of that
   person so to do).


         The registration of transfers may be suspended and the register closed on giving notice     A13B
                                                                                                     3(2)
   by advertisement in a relevant newspaper and, where applicable, any other newspapers in
   accordance with the requirements of any Designated Stock Exchange (as defined in the
   Articles), at such times and for such periods as the Board may determine and either
   generally or in respect of any class of shares. The register of members shall not be closed
   for periods exceeding in the whole thirty (30) days in any year.


   (k)   Power for the Company to purchase its own shares                                            A1A
                                                                                                     7(9)


        The Company is empowered by the Companies Law and the Articles to purchase its
   own Shares subject to certain restrictions and the Board may only exercise this power on
   behalf of the Company subject to any applicable requirements imposed from time to time
   by any Designated Stock Exchange (as defined in the Articles).


   (l)   Power for any subsidiary of the Company to own Shares


         There are no provisions in the Articles relating to ownership of Shares by a subsidiary.


                                          — 323 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   (m) Dividends and other methods of distribution                                                   A1A
                                                                                                     16


        Subject to the Companies Law, the Company in general meeting may declare dividends           A1A
                                                                                                     7(7)
   in any currency to be paid to the members but no dividend shall be declared in excess of
   the amount recommended by the Board.


        The Articles provide dividends may be declared and paid out of the profits of the
   Company, realised or unrealised, or from any reserve set aside from profits which the
   directors determine is no longer needed. With the sanction of an ordinary resolution
   dividends may also be declared and paid out of share premium account or any other fund
   or account which can be authorised for this purpose in accordance with the Companies Law.


         Except in so far as the rights attaching to, or the terms of issue of, any share may        A3
                                                                                                     3(1)
   otherwise provide, (i) all dividends shall be declared and paid according to the amounts
   paid up on the shares in respect whereof the dividend is paid but no amount paid up on a
   share in advance of calls shall for this purpose be treated as paid up on the share and (ii)
   all dividends shall be apportioned and paid pro rata according to the amount paid up on the
   shares during any portion or portions of the period in respect of which the dividend is paid.
   The Directors may deduct from any dividend or other monies payable to any member or in
   respect of any shares all sums of money (if any) presently payable by him to the Company
   on account of calls or otherwise.


        Whenever the Board or the Company in general meeting has resolved that a dividend
   be paid or declared on the share capital of the Company, the Board may further resolve
   either (a) that such dividend be satisfied wholly or in part in the form of an allotment of
   shares credited as fully paid up, provided that the shareholders entitled thereto will be
   entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment,
   or (b) that shareholders entitled to such dividend will be entitled to elect to receive an
   allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend
   as the Board may think fit. The Company may also upon the recommendation of the Board
   by an ordinary resolution resolve in respect of any one particular dividend of the Company
   that it may be satisfied wholly in the form of an allotment of shares credited as fully paid
   up without offering any right to shareholders to elect to receive such dividend in cash in lieu
   of such allotment.


        Any dividend, interest or other sum payable in cash to the holder of shares may be paid
   by cheque or warrant sent through the post addressed to the holder at his registered
   address, or in the case of joint holders, addressed to the holder whose name stands first in
   the register of the Company in respect of the shares at his address as appearing in the
   register or addressed to such person and at such addresses as the holder or joint holders may
   in writing direct. Every such cheque or warrant shall, unless the holder or joint holders
   otherwise direct, be made payable to the order of the holder or, in the case of joint holders,


                                          — 324 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   to the order of the holder whose name stands first on the register in respect of such shares,
   and shall be sent at his or their risk and payment of the cheque or warrant by the bank on
   which it is drawn shall constitute a good discharge to the Company. The Company may                A3 13(1)

   cease sending cheques for dividend entitlements or dividend warrants by post if such
   cheques or warrants have been left uncashed on two consecutive occasions. However, the
   Company may exercise the power to cease sending cheques for dividend entitlements or
   dividend warrants after the first occasion on which such a cheque or warrant is returned
   undelivered. Any one of two or more joint holders may give effectual receipts for any
   dividends or other moneys payable or property distributable in respect of the shares held
   by such joint holders.


        Whenever the Board or the Company in general meeting has resolved that a dividend
   be paid or declared the Board may further resolve that such dividend be satisfied wholly or
   in part by the distribution of specific assets of any kind.


        All dividends or bonuses unclaimed for one year after having been declared may be             A1A
                                                                                                      7(7)
   invested or otherwise made use of by the Board for the benefit of the Company until claimed
   and the Company shall not be constituted a trustee in respect thereof. All dividends or            A3
                                                                                                      3(2)
   bonuses unclaimed for six years after having been declared may be forfeited by the Board
   and shall revert to the Company.


         No dividend or other monies payable by the Company on or in respect of any share
   shall bear interest against the Company.


   (n)   Proxies


         Any member of the Company entitled to attend and vote at a meeting of the Company            A13B
                                                                                                      2(2)
   is entitled to appoint another person as his proxy to attend and vote instead of him. A
   member who is the holder of two or more shares may appoint more than one proxy to
   represent him and vote on his behalf at a general meeting of the Company or at a class
   meeting. A proxy need not be a member of the Company and shall be entitled to exercise
   the same powers on behalf of a member who is an individual and for whom he acts as proxy
   as such member could exercise. In addition, a proxy shall be entitled to exercise the same
   powers on behalf of a member which is a corporation and for which he acts as proxy as such
   member could exercise if it were an individual member. On a poll or on a show of hands,
   votes may be given either personally (or, in the case of a member being a corporation, by
   its duly authorised representative) or by proxy.


         Instruments of proxy shall be in any common form or in such other form as the Board          A3 11(1)
                                                                                                      A3 11(2)
   may approve (provided that this shall not preclude the use of the two-way form). The
   instrument appointing a proxy shall be in writing under the hand of the appointor or of his
   attorney duly authorised in writing or, if the appointor is a corporation, either under its seal
   or under the hand of an officer, attorney or other person authorised to sign the same.


                                          — 325 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   (o)   Call on shares and forfeiture of shares


       Subject to the Articles and to the terms of allotment, the Board may from time to time
   make such calls upon the members in respect of any monies unpaid on the shares held by
   them respectively (whether on account of the nominal value of the shares or by way of
   premium). A call may be made payable either in one lump sum or by installments. If the sum
   payable in respect of any call or instalment is not paid on or before the day appointed for
   payment thereof, the person or persons from whom the sum is due shall pay interest on the
   same at such rate not exceeding twenty (20) per cent. per annum as the Board may agree
   to accept from the day appointed for the payment thereof to the time of actual payment, but
   the Board may waive payment of such interest wholly or in part. The Board may, if it thinks
   fit, receive from any member willing to advance the same, either in money or money’s
   worth, all or any part of the monies uncalled and unpaid or installments payable upon any
   shares held by him, and upon all or any of the monies so advanced the Company may pay
   interest at such rate (if any) as the Board may decide.


       If a member fails to pay any call on the day appointed for payment thereof, the Board
   may serve not less than fourteen (14) clear days’ notice on him requiring payment of so
   much of the call as is unpaid, together with any interest which may have accrued and which
   may still accrue up to the date of actual payment and stating that, in the event of
   non-payment at or before the time appointed, the shares in respect of which the call was
   made will be liable to be forfeited.


        If the requirements of any such notice are not complied with, any share in respect of
   which the notice has been given may at any time thereafter, before the payment required by
   the notice has been made, be forfeited by a resolution of the Board to that effect. Such
   forfeiture will include all dividends and bonuses declared in respect of the forfeited share
   and not actually paid before the forfeiture.


        A person whose shares have been forfeited shall cease to be a member in respect of
   the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all
   monies which, at the date of forfeiture, were payable by him to the Company in respect of
   the shares, together with (if the Board shall in its discretion so require) interest thereon from
   the date of forfeiture until the date of actual payment at such rate not exceeding twenty (20)
   per cent. per annum as the Board determines.


   (p) Inspection of register of members


        Pursuant to the Articles the register and branch register of members shall be open to          A13B
                                                                                                       3(2)
   inspection for at least two (2) hours on every business day by members without charge, or
   by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by
   the Board, at the registered office or such other place at which the register is kept in


                                           — 326 —
APPENDIX V                            SUMMARY OF THE CONSTITUTION OF
                            THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   accordance with the Companies Law or, upon a maximum payment of HK$1.00 or such
   lesser sum specified by the Board, at the Registration Office (as defined in the Articles),
   unless the register is closed in accordance with the Articles.


   (q)   Quorum for meetings and separate class meetings


       No business shall be transacted at any general meeting unless a quorum is present
   when the meeting proceeds to business, but the absence of a quorum shall not preclude the
   appointment of a chairman.


        Save as otherwise provided by the Articles the quorum for a general meeting shall be             A3
                                                                                                         6(2)
   two members present in person (or, in the case of a member being a corporation, by its duly
   authorised representative) or by proxy and entitled to vote. In respect of a separate class
   meeting (other than an adjourned meeting) convened to sanction the modification of class
   rights the necessary quorum shall be two persons holding or representing by proxy not less
   than one-third in nominal value of the issued shares of that class.


         A corporation being a member shall be deemed for the purpose of the Articles to be
   present in person if represented by its duly authorised representative being the person
   appointed by resolution of the directors or other governing body of such corporation to act
   as its representative at the relevant general meeting of the Company or at any relevant
   general meeting of any class of members of the Company.


   (r)   Rights of the minorities in relation to fraud or oppression


         There are no provisions in the Articles relating to rights of minority shareholders in
   relation to fraud or oppression. However, certain remedies are available to shareholders of
   the Company under Cayman law, as summarised in paragraph 3(f) of this Appendix.


   (s)   Procedures on liquidation


         A resolution that the Company be wound up by the court or be wound up voluntarily
   shall be a special resolution.


         Subject to any special rights, privileges or restrictions as to the distribution of available
   surplus assets on liquidation for the time being attached to any class or classes of shares (i)
   if the Company shall be wound up and the assets available for distribution amongst the
   members of the Company shall be more than sufficient to repay the whole of the capital paid
   up at the commencement of the winding up, the excess shall be distributed pari passu
   amongst such members in proportion to the amount paid up on the shares held by them
   respectively and (ii) if the Company shall be wound up and the assets available for
   distribution amongst the members as such shall be insufficient to repay the whole of the


                                            — 327 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall
   be borne by the members in proportion to the capital paid up, or which ought to have been
   paid up, at the commencement of the winding up on the shares held by them respectively.


        If the Company shall be wound up (whether the liquidation is voluntary or by the
   court) the liquidator may, with the authority of a special resolution and any other sanction
   required by the Companies Law divide among the members in specie or kind the whole or
   any part of the assets of the Company whether the assets shall consist of property of one
   kind or shall consist of properties of different kinds and the liquidator may, for such
   purpose, set such value as he deems fair upon any one or more class or classes of property
   to be divided as aforesaid and may determine how such division shall be carried out as
   between the members or different classes of members. The liquidator may, with the like
   authority, vest any part of the assets in trustees upon such trusts for the benefit of members
   as the liquidator, with the like authority, shall think fit, but so that no contributory shall be
   compelled to accept any shares or other property in respect of which there is a liability.


   (t)   Untraceable members


        Pursuant to the Articles, the Company may sell any of the shares of a member who is            A3
                                                                                                       13(2)(a)
   untraceable if (i) all cheques or warrants in respect of dividends on the shares in question        13(2)(b)

   (being not less than three in total number) for any sum payable in cash to the holder of such
   shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12-year
   period, the Company has not during that time received any indication of the existence of the
   member; and (iii) the Company has caused an advertisement to be published in accordance
   with the rules of the Designated Stock Exchange (as defined in the Articles) giving notice          A3 7(1)

   of its intention to sell such shares and a period of three months, or such shorter period as
   may be permitted by the Designated Stock Exchange (as defined in the Articles), has elapsed
   since such advertisement and the Designated Stock Exchange (as defined in the Articles) has
   been notified of such intention. The net proceeds of any such sale shall belong to the
   Company and upon receipt by the Company of such net proceeds, it shall become indebted
   to the former member of the Company for an amount equal to such net proceeds.


   (u)   Subscription rights reserve


        The Articles provide that to the extent that it is not prohibited by and is in compliance
   with the Companies Law, if warrants to subscribe for shares have been issued by the
   Company and the Company does any act or engages in any transaction which would result
   in the subscription price of such warrants being reduced below the par value of a share, a
   subscription rights reserve shall be established and applied in paying up the difference
   between the subscription price and the par value of a share on any exercise of the warrants.




                                           — 328 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

3.   CAYMAN ISLANDS COMPANY LAW


     The Company is incorporated in the Cayman Islands subject to the Companies Law and,
therefore, operates subject to Cayman law. Set out below is a summary of certain provisions of
Cayman company law, although this does not purport to contain all applicable qualifications and
exceptions or to be a complete review of all matters of Cayman company law and taxation, which
may differ from equivalent provisions in jurisdictions with which interested parties may be more
familiar:


     (a)   Operations


          As an exempted company, the Company’s operations must be conducted mainly
     outside the Cayman Islands. The Company is required to file an annual return each year with
     the Registrar of Companies of the Cayman Islands and pay a fee which is based on the
     amount of its authorised share capital.


     (b)   Share capital


           The Companies Law provides that where a company issues shares at a premium,
     whether for cash or otherwise, a sum equal to the aggregate amount of the value of the
     premiums on those shares shall be transferred to an account, to be called the “share
     premium account”. At the option of a company, these provisions may not apply to premiums
     on shares of that company allotted pursuant to any arrangement in consideration of the
     acquisition or cancellation of shares in any other company and issued at a premium. The
     Companies Law provides that the share premium account may be applied by the Company
     subject to the provisions, if any, of its memorandum and articles of association in (a) paying
     distributions or dividends to members; (b) paying up unissued shares of the Company to be
     issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares
     (subject to the provisions of section 37 of the Companies Law); (d) writing-off the
     preliminary expenses of the Company; (e) writing-off the expenses of, or the commission
     paid or discount allowed on, any issue of shares or debentures of the Company; and (f)
     providing for the premium payable on redemption or purchase of any shares or debentures
     of the Company.


          No distribution or dividend may be paid to members out of the share premium account
     unless immediately following the date on which the distribution or dividend is proposed to
     be paid the Company will be able to pay its debts as they fall due in the ordinary course
     business.


          The Companies Law provides that, subject to confirmation by the Grand Court of the
     Cayman Islands (the “Court”), a company limited by shares or a company limited by
     guarantee and having a share capital may, if so authorised by its articles of association, by
     special resolution reduce its share capital in any way.


                                            — 329 —
APPENDIX V                          SUMMARY OF THE CONSTITUTION OF
                          THE COMPANY & CAYMAN ISLANDS COMPANY LAW

        The Articles includes certain protections for holders of special classes of shares,
   requiring their consent to be obtained before their rights may be varied. The consent of the
   specified proportions of the holders of the issued shares of that class or the sanction of a
   resolution passed at a separate meeting of the holders of those shares is required.


   (c)   Financial assistance to purchase shares of a company or its holding company


        Subject to all applicable laws, the Company may give financial assistance to Directors
   and employees of the Company, its subsidiaries, its holding company or any subsidiary of
   such holding company in order that they may buy Shares in the Company or shares in any
   subsidiary or holding company. Further, subject to all applicable laws, our Company may
   give financial assistance to a trustee for the acquisition of Shares in the Company or shares
   in any such subsidiary or holding company to be held for the benefit of employees of the
   Company, its subsidiaries, any holding company of the Company or any subsidiary of any
   such holding company (including salaried Directors).


         There is no statutory restriction in the Cayman Islands on the provision of financial
   assistance by a company to another person for the purchase of, or subscription for, its own
   or its holding company’s shares. Accordingly, a company may provide financial assistance
   if the directors of the company consider, in discharging their duties of care and acting in
   good faith, for a proper purpose and in the interests of the Company, that such assistance
   can properly be given. Such assistance should be on an arm’s-length basis.


   (d)   Purchase of shares and warrants by a company and its subsidiaries


        Subject to the provisions of the Companies Law, a company limited by shares or a
   company limited by guarantee and having a share capital may, if so authorised by its articles
   of association, issue shares which are to be redeemed or are liable to be redeemed at the
   option of the Company or a shareholder. In addition, such a company may, if authorised to
   do so by its articles of association, purchase its own shares, including any redeemable
   shares. However, if the articles of association do not authorise the manner or purchase, a
   company cannot purchase any of its own shares unless the manner of purchase has first
   been authorised by an ordinary resolution of the Company. At no time may a company
   redeem or purchase its shares unless they are fully paid. A company may not redeem or
   purchase any of its shares if, as a result of the redemption or purchase, there would no
   longer be any member of the Company holding shares. A payment out of capital by a
   company for the redemption or purchase of its own shares is not lawful unless immediately
   following the date on which the payment is proposed to be made, our company shall be able
   to pay its debts as they fall due in the ordinary course of business.


         A company is not prohibited from purchasing and may purchase its own warrants
   subject to and in accordance with the terms and conditions of the relevant warrant
   instrument or certificate. There is no requirement under Cayman Islands law that a


                                         — 330 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   company’s memorandum or articles of association contain a specific provision enabling
   such purchases and the directors of a company may rely upon the general power contained
   in its memorandum of association to buy and sell and deal in personal property of all kinds.


        Under Cayman Islands law, a subsidiary may hold shares in its holding company and,
   in certain circumstances, may acquire such shares.


   (e)   Dividends and distributions


         With the exception of section 34 of the Companies Law, there is no statutory provisions
   relating to the payment of dividends. Based upon English case law, which is regarded as
   persuasive in the Cayman Islands, dividends may be paid only out of profits. In addition,
   section 34 of the Companies Law permits, subject to a solvency test and the provisions, if
   any, of the company’s memorandum and articles of association, the payment of dividends
   and distributions out of the share premium account (see paragraph 2(m) above for further
   details).


   (f)   Protection of minorities


        The Cayman Islands courts ordinarily would be expected to follow English case law
   precedents which permit a minority shareholder to commence a representative action
   against or derivative actions in the name of the Company to challenge (a) an act which is
   ultra vires our company or illegal, (b) an act which constitutes a fraud against the minority
   and the wrongdoers are themselves in control of the Company, and (c) an irregularity in the
   passing of a resolution which requires a qualified (or special) majority.


         In the case of a company (not being a bank) having a share capital divided into shares,
   the Court may, on the application of members holding not less than one fifth of the shares
   of the Company in issue, appoint an inspector to examine into the affairs of the Company
   and to report thereon in such manner as the Court shall direct.


         Any shareholder of a company may petition the court which may make a winding up
   order if the Court is of the opinion that it is just and equitable that the Company should be
   wound up.


        Generally claims against a company by its shareholders must be based on the general
   laws of contract or tort applicable in the Cayman Islands or their individual rights as
   shareholders as established by the company’s memorandum and articles of association.




                                          — 331 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   (g)   Management


        The Companies Law contains no specific restrictions on the power of directors to
   dispose of assets of a company. However, as a matter of general law, every officer of a
   company, which includes a director, managing director and secretary, in exercising his
   powers and discharging his duties must do so honestly and in good faith with a view to the
   best interests of the Company and exercise the care, diligence and skill that a reasonably
   prudent person would exercise in comparable circumstances.


   (h)   Accounting and auditing requirements


        A company shall cause proper books of account to be kept with respect to (i) all sums
   of money received and expended by the Company and the matters in respect of which the
   receipt and expenditure takes place; (ii) all sales and purchases of goods by the Company
   and (iii) the assets and liabilities of the Company.


        Proper books of account shall not be deemed to be kept if there are not kept such
   books as are necessary to give a true and fair view of the state of the company’s affairs and
   to explain its transactions.


   (i)   Exchange control


        There are no exchange control regulations or currency restrictions in the Cayman
   Islands.


   (j)   Taxation


        Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman
   Islands, the Company has obtained an undertaking from the Governor-in-Cabinet:


         (1)   that no law which is enacted in the Cayman Islands imposing any tax to be levied
               on profits, income, gains or appreciation shall apply to the Company or its
               operations; and


         (2)   that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall
               not be payable on or in respect of the shares, debentures or other obligations of
               the Company.


         The undertaking for the Company is for a period of twenty years from 4th March, 2003.


        The Cayman Islands currently levy no taxes on individuals or corporations based upon
   profits, income, gains or appreciations and there is no taxation in the nature of inheritance


                                            — 332 —
APPENDIX V                           SUMMARY OF THE CONSTITUTION OF
                           THE COMPANY & CAYMAN ISLANDS COMPANY LAW

   tax or estate duty. There are no other taxes likely to be material to the Company levied by
   the Government of the Cayman Islands save certain stamp duties which may be applicable,
   from time to time, on certain instruments executed in or brought within the jurisdiction of
   the Cayman Islands. The Cayman Islands are not party to any double tax treaties.


   (k)   Stamp duty on transfers


        No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman
   Islands companies except those which hold interests in land in the Cayman Islands.


   (l)   Loans to directors


        There is no express provision in the Companies Law prohibiting the making of loans
   by a company to any of its directors.


   (m) Inspection of corporate records


        Shareholders of the Company will have no general right under the Companies Law to
   inspect or obtain copies of the register of members or corporate records of the Company.
   They will, however, have such rights as may be set out in the Company’s Articles.


         An exempted company may, subject to the provisions of its articles of association,
   maintain its principal register of members and any branch registers at such locations,
   whether within or without the Cayman Islands, as the directors may, from time to time, think
   fit. There is no requirement under the Companies Law for an exempted company to make
   any returns of members to the Registrar of Companies of the Cayman Islands. The names and
   addresses of the members are, accordingly, not a matter of public record and are not
   available for public inspection.


   (n)   Winding up


         A company may be wound up by either an order of the Court or by a special resolution
   of its members. The court has authority to order winding up in a number of specified
   circumstances including where it is, in the opinion of the Court, just and equitable to do so.


         A company may be wound up voluntarily when the members so resolve in general
   meeting by special resolution, or, in the case of a limited duration company, when the
   period fixed for the duration of the Company by its memorandum expires, or the event
   occurs on the occurrence of which the memorandum provides that the Company is to be
   dissolved. In the case of a voluntary winding up, such company is obliged to cease to carry
   on its business from the time of passing the resolution for voluntary winding up or upon the
   expiry of the period or the occurrence of the event referred to above.


                                          — 333 —
APPENDIX V                            SUMMARY OF THE CONSTITUTION OF
                            THE COMPANY & CAYMAN ISLANDS COMPANY LAW

        For the purpose of conducting the proceedings in winding up a company and assisting
   the Court, there may be appointed one or more than one person to be called an official
   liquidator or official liquidator; and the Court may appoint to such office such person or
   persons, either provisionally or otherwise, as it thinks fit, and if more persons than one are
   appointed to such office, the Court shall declare whether any act hereby required or
   authorised to be done by the official liquidator is to be done by all or any one or more of
   such persons. The Court may also determine whether any and what security is to be given
   by an official liquidator on his appointment; if no official liquidator is appointed, or during
   any vacancy in such office, all the property of the Company shall be in the custody of the
   Court. In the case of a members’ voluntary winding up of a company, the Company in
   general meeting must appoint one or more liquidators for the purpose of winding up the
   affairs of the Company and distributing its assets.


        Upon the appointment of a liquidator, the responsibility for the company’s affairs rests
   entirely in his hands and no future executive action may be carried out without his approval.
   A liquidator’s duties are to collect the assets of the Company (including the amount (if any)
   due from the contributories), settle the list of creditors and, subject to the rights of preferred
   and secured creditors and to any subordination agreements or rights of set-off or netting of
   claims, discharge the company’s liability to them (pari passu if insufficient assets exist to
   discharge the liabilities in full) and to settle the list of contributories (shareholders) and
   divide the surplus assets (if any) amongst them in accordance with the rights attaching to
   the shares.


        As soon as the affairs of the Company are fully wound up, the liquidator must make up
   an account of the winding up, showing how the winding up has been conducted and the
   property of the Company has been disposed of, and thereupon call a general meeting of the
   Company for the purposes of laying before it the account and giving an explanation thereof.
   This final general meeting shall be called by Public Notice (as defined in the Companies
   Law) or otherwise as the Registrar of Companies of the Cayman Islands may direct.


   (o)   Reconstructions


        There are statutory provisions which facilitate reconstructions and amalgamations
   approved by a majority in number representing seventy-five (75) per cent. in value of
   shareholders or class of shareholders or creditors, as the case may be, as are present at a
   meeting called for such purpose and thereafter sanctioned by the Courts. Whilst a dissenting
   shareholder would have the right to express to the Court his view that the transaction for
   which approval is sought would not provide the shareholders with a fair value for their
   shares, the Court is unlikely to disapprove the transaction on that ground alone in the
   absence of evidence of fraud or bad faith on behalf of management.




                                           — 334 —
APPENDIX V                             SUMMARY OF THE CONSTITUTION OF
                             THE COMPANY & CAYMAN ISLANDS COMPANY LAW

     (p) Compulsory acquisition


          Where an offer is made by a company for the shares of another company and, within
     four months of the offer, the holders of not less than ninety (90) per cent. of the shares
     which are the subject of the offer accept, the offeror may at any time within two months after
     the expiration of the said four months, by notice in the prescribed manner require the
     dissenting shareholders to transfer their shares on the terms of the offer. A dissenting
     shareholder may apply to the Court within one month of the notice objecting to the transfer.
     The burden is on the dissenting shareholder to show that the Court should exercise its
     discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or
     collusion as between the offeror and the holders of the shares who have accepted the offer
     as a means of unfairly forcing out minority shareholders.


     (q)   Indemnification


          Cayman Islands law does not limit the extent to which a company’s articles of
     association may provide for indemnification of officers and directors, except to the extent
     any such provision may be held by the court to be contrary to public policy (e.g. for
     purporting to provide indemnification against the consequences of committing a crime).


4.   GENERAL


      Conyers Dill & Pearman, Cayman, the Company’s special legal counsel on Cayman Islands
law, have sent to the Company a letter of advice summarising certain aspects of Cayman Islands
company law. This letter, together with a copy of the Companies Law, is available for inspection
as referred to in the paragraph headed “Documents available for inspection” in Appendix X. Any
person wishing to have a detailed summary of Cayman Islands company law or advice on the
differences between it and the laws of any jurisdiction with which he is more familiar is
recommended to seek independent legal advice.




                                            — 335 —
APPENDIX VI                                REGULATIONS OF OUR CASINO AND
                                  INTERNAL CONTROLS ON MONEY LAUNDERING

INTRODUCTION


      Money laundering involves any conduct or acts designed in whole or in part to conceal or
disguise the nature, location, source, ownership, movement or control of money to avoid a
transaction reporting requirement under applicable laws or to disguise the fact that the money
was acquired by illegal means, and perpetrators attempt to leave minimal or no paper or audit
trails with the object of frustrating investigations by relevant authorities.


     In a casino environment, in particular, potential money launderers may disguise the illicit
origin of monies by converting cash into chips and exchanging the chips back into cash through
issues of cheques or electronic fund transfers (with minimal or no gaming activities), with an aim
of providing the impression that the monies are proceeds from winnings paid by casinos.


INTERNAL AML REGIME


     We are committed to combat money laundering and terrorist financing and our Directors
regard the maintenance of a high standard of internal controls, including AML controls, as part
of good corporate governance.


     We have implemented key and adequate AML internal controls to mitigate the risk of money
laundering since the beginning of casino operations in 1995. We have put in place comprehensive
internal controls that are subject to internal and external audits and reviews and are improved in
accordance with the requirements of the applicable laws and regulations and international
standards as promulgated from time to time for addressing any newly identified risks due to
changes in the internal or external operating environment.


Key AML internal controls (since 1995)


     Since the commencement of casino operations in 1995, we have implemented and observed
the following key internal controls to mitigate the risk of money laundering, as part of the overall
risk management programme:


     (1)   No sub-concession of the Casino Licence


          We do not grant sub-concessions to any third parties for offering table games under the
     Casino Licence. The risks normally perceived to be associated with sub-concession of a
     casino licence to third parties such as the risk relating to the introduction of new
     management and staff of untested background, and the risk of changes in management
     culture and standards of compliance with internal controls and applicable laws and
     regulations, are therefore inapplicable to our casino operations. The prohibition on
     sub-concession is a key internal control to ensure that we have full supervision over all our
     gaming activities.


                                            — 336 —
APPENDIX VI                              REGULATIONS OF OUR CASINO AND
                                INTERNAL CONTROLS ON MONEY LAUNDERING

         Our Directors understand that in many cases of sub-concession, the casino is managed
   by a different team of people and the casino licence holder and senior management are not
   involved directly in day-to-day operations of that part of the business. In some countries and
   cities, we understand that the sub-concession of casino licences is practised and casino
   operators do indeed appoint third parties for the provision of gaming activities.


   (2)   No renting out of premises of our casino


        We do not rent out any part of NagaWorld (e.g. as VIP rooms to STG Operators) for the
   provision of table gaming activities. This AML internal control safeguards against money
   laundering risks stemming from dealing with anonymous players or non-face-to-face
   transactions. This AML internal control allows us to have full supervision of the casino
   operations and to mitigate effectively money laundering risks arising from insufficient
   record keeping in respect of casino players and to ensure the whole operations follow a
   consistent set of internal controls.


        Our Directors understand that in some cases, casino operators frequently lease out part
   of their casino premises as VIP rooms for the provision of gaming activities.


   (3)   Control of the issue of cheques


        The issue of cheques and provision of electronic funds transfers for the benefit of
   casino customers are strictly monitored by us. Since inception, we have not issued cheques
   to Public or Non-STG Players.


        For STG floor, winnings can be paid by cash or cheque to STG Operator. If the initial
   check-in amount is deposited in cash, the STG Operator shall be payable and receive back
   the initial check-in amount only in cash and not otherwise. If the initial check-in amount
   deposited by an STG Operator is by cheque or wire transfer, the STG operator shall be
   payable and receive back the initial check-in amount in the same manner as it was
   deposited. Details of all cheques and electronic funds transfers made to STG Operators are
   recorded and kept for future reference.


         If proper control is not exercised in respect of the issuance of cheques and electronic
   funds transfers it is conceivable that money could be laundered by the purchase of gaming
   chips using illicit money, the player then engaging in minimal gaming activities, thereafter
   seeking a cheque or wire transfer on the pretext of having won the money from gambling
   activities.


   (4)   Customer due diligence


         We only deal with bona fide and credible STG Operators after satisfactory due
   diligence and review the accounts of these operators on an ongoing basis.


                                           — 337 —
APPENDIX VI                               REGULATIONS OF OUR CASINO AND
                                 INTERNAL CONTROLS ON MONEY LAUNDERING

     (5)   No dealing with anonymous accounts


          We do not deal with anonymous accounts nor do we participate in non-face-to-face
     transactions. The risks of money laundering through the use of anonymous accounts or
     technology which favour anonymity (such as internet gambling) are greatly mitigated in our
     casino operations.


     (6)   Record keeping


          We maintain records of our STG customers and banking transactions for a period of ten
     years. We maintain records of all banking transactions with all of our STG Operators. The
     identities of STG Operators and customers are maintained together with copies of their
     passports and other personal details.


     (7)   Management continuity


          Our casino operations have been managed by a consistent management team since the
     commencement of business in 1995. Our management is vigilant on the development and
     adherence of our internal AML controls in accordance with relevant regulations and
     guidelines. The risks normally perceived to be associated with outsourcing the management
     of a casino to third parties, such as the risk of a decline in the standard of management of
     a casino, the risk of non-compliance with internal controls and applicable rules and
     regulations and the lack of complete control over the casino operation are therefore greatly
     mitigated in our casino.


Gaming machine stations


     Pursuant to our agreement with an independent supplier, we allow the supplier to offer,
manage and maintain gaming machine stations in a designated area of our casino. We remain
closely involved in the operation of the gaming machine stations installed in our casino. (Please
refer to the section “Business — Suppliers of Gaming Machine Stations” in this prospectus for
further details.) The operators of the gaming machine stations are requested to follow our AML
internal controls and other regulations.


AML internal controls (since the extension of the FATF recommendations in June 2003)


     As part of our commitment to improve continuously the AML internal controls, we have
taken steps to further enhance the organisational and oversight capacity on AML internal controls
and formalised a comprehensive AML Policy, Procedures and Internal Controls Manual (“AML
Manual”), which are in line with recommendation 15 of the third version of FATF
recommendations, the scope of which was extended in June 2003 to cover professionals such as
accountants, lawyers, and company secretaries, and non-financial businesses such as jewelleries
and casinos.


                                           — 338 —
APPENDIX VI                                REGULATIONS OF OUR CASINO AND
                                  INTERNAL CONTROLS ON MONEY LAUNDERING

      It is important to note that we have put in place key and adequate AML internal controls (as
discussed above) since the inception of business in 1995 to effectively mitigate money laundering
risks well before the commencement of the Track Record Period and the extension of the FATF
recommendations in June 2003.


     Some of the improvements made to the organizational and oversight capacity on our AML
internal controls are summarised below:

     Dates                  Improvements in organisation

     October 2003           Establishment of AML Sub-Committee (then known as AML
                            Coordination Unit) to further improve the oversight of our day-to-day
                            internal controls and procedures.

                            Formal adoption of our policy statements against money laundering.

                            The formalisation process did not involve development of new AML
                            internal controls. Many of the AML internal controls were in place
                            prior to the formalisation.

     April 2004             Formalisation of the comprehensive AML Manual.

                            This formalisation process did not involve the development of new
                            operational manuals. Rather, the procedures set out in the AML
                            Manual were in place under the respective departmental manuals
                            before the commencement of the Track Record Period.

     February 2005          Appointment of Mr. David Martin Hodson, Mr. Timothy P. McNally
                            and Ms. Wong Choi Kay to the Board to further enhance our AML
                            oversight function and capacity.

     March 2005             Formalisation of the Board AML Oversight Committee




                                           — 339 —
APPENDIX VI                                 REGULATIONS OF OUR CASINO AND
                                   INTERNAL CONTROLS ON MONEY LAUNDERING

AML Oversight Committee - Board Level


     By a resolution of the Board passed on 16th March, 2005, the AML Oversight Committee was
established as a committee of the Board comprising the following directors:

    (i)        Mr. David Martin Hodson (Chairman)   Executive Director & Committee Chairman
    (ii)       Tan Sri Dr Chen                      CEO
    (iii)      Mr. Timothy P. McNally               Chairman of Board/
                                                    Independent Non-Executive Director
    (iv)       Ms. Wong Choi Kay                    Independent Non-Executive Director
    (v)        Tun Hamid                            Vice Chairman of Board/
                                                    Independent Non-Executive Director
    (vi)       Mr. Tian Toh Seng                    COO
    (vii)      Mr. Lee Wing Fatt                    CFO
    (viii)     Mr. Lew Shiong Loon                  Executive Director


     The AML Oversight Committee’s key function is to provide AML strategic direction to the
Group and report to the Board on AML matters. The members of the AML Oversight Committee
collectively have extensive experience in domestic and international law enforcement, casino
internal controls and AML strategies and measures.


     Please refer to the section headed “Directors, senior management and staff” in this
prospectus for more details.


    The following members of the AML Oversight Committee, in particular, have specialised
knowledge and skills in AML matters:


    (i)      Mr. Timothy P. McNally


        The Chairman of the Board, Mr. Timothy P. McNally, has more than 24 years of
    experience in the management, investigation, prosecution, of matters relating to serious
    crimes including AML matters. Mr. Timothy P. McNally was a former executive director of the
    Hong Kong Jockey Club responsible for AML, security and corporate legal affairs, and a
    former FBI senior agent and has held several senior positions including heading the
    organised crime and drug investigative programs in Miami, Florida office, Deputy Director
    of the National Drug Intelligence Centre, Head of the Criminal Division of the Washington
    DC field office, agent in charge of Baltimore, Maryland office, and head of FBI’s second
    largest field division in Los Angeles, California.




                                          — 340 —
APPENDIX VI                               REGULATIONS OF OUR CASINO AND
                                 INTERNAL CONTROLS ON MONEY LAUNDERING

     (ii)   Mr. David Martin Hodson


           The chairman of the AML Oversight Committee, Mr. David Martin Hodson, served in the
     Hong Kong police for more than 37 years, including as its assistant commissioner of crime,
     and has substantial experience in dealing with matters relating to serious crimes and AML
     matters. He commanded the Narcotics Bureau, Criminal Intelligence Bureau, Special Crimes
     Bureau, and Interpol Hong Kong. From 1989-1992 when he was Head of the Narcotics
     Bureau, the Bureau was responsible for enforcing the Drug Trafficking (Recovery of
     Proceeds) Ordinance which became law in December 1989. This was Hong Kong’s first
     legislation creating the offence of money laundering in relation to drug trafficking.


     (iii) Tun Hamid


          The vice chairman, Tun Hamid, has been a member of the Malaysian judiciary for more
     than 30 years, culminating in holding the highest position in the judiciary arm of Malaysia
     as the Lord President of the Supreme Court of Malaysia before his retirement. Tun Hamid has
     extensive experience in handling legal matters including trials of serious crimes and AML
     matters.


     (iv) Ms. Wong Choi Kay


          The chairperson of the Audit Committee, Ms. Wong Choi Kay, is a qualified expert
     witness in financial crimes and AML in the Supreme Court of British Columbia, a certified
     fraud examiner and a certified gaming auditor.