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Macau Success Ltd. reports results

"We are delighted to announce that our flagship project, Ponte 16, will have its grand opening on February 1, 2008,' said Mr. Sonny Yeung, Chairman of Macau Success. "This world-class integrated casino-resort will become one of the most attractive landmarks in Macau, enabling the Group to enhance its status in the fast-growing gaming and entertainment-related industries in Macau."

Ponte 16 is a world-class integrated resort comprising a five-star luxury hotel – Sofitel Macau at Ponte 16, a casino (subject to Macau SAR Government approval), a shopping arcade, and food and beverage facilities. Featuring a unique European theme, the project is located at one of the Macau's historic landmarks, Pier 16, part of the early 20th century waterfront. The two-minute ferry connection between Ponte 16 and Zhuhai provides convenient access for mainland tourists. The casino has 22 VIP tables and 10 premium market tables, 120 mass market tables and 320 slot machines, while Sofitel Macau at Ponte 16 comprises 423 guest rooms, including 394 standard guest rooms, 10 suites and 19 mansions.

Ponte 16 has its unique competitive advantages in the gaming and entertainment-related businesses, including our partnership with Sociedade de Jogos de Macau, S.A., the Group's extensive management experience in gaming industry, strong support from the Macau SAR Government, its central location in Macau's historical district, its proximity to Zhuhai, and a world-class European-themed architectural design which is far different from the most Las Vegas Styles hotels in the enclave.

Mr. Yeung added that since 2005, the Group has adopted a three-pronged strategy based on gaming and entertainment-related, cruise and travel businesses. "We successfully executed the strategy in the year under review, generating a stable income in our current businesses," he said. "When Ponte 16 is in operation, the travel business will play more of a crucial role in attracting travelers, especially from Mainland China, to the casino-resort complex."

REVIEW OF OPERATIONS

During the year under review, operating profit margin was 32.8%. Profit from operations dropped from HK$48.9 million to approximately HK$34.1 million, mainly due to the increase in fuel oil price and operating costs that adversely affected our cruise leasing and management operations. Profit attributable to equity shareholders of the Company was approximately HK$2.3 million (2006: approximately HK$28.4 million). Other than the above, there was an increase in shared loss from associates. Prior to the commencement of business of Ponte 16, preparation and pre-operating expenses were incurred that led to the shared loss to be borne by the Group.

Cruise Business

During the year under review, cruise business remained as the major source of the Group's total turnover. The business has generated steady cash flow for years. The leasing and management of the Group's cruise ship, M.V. Macau Success, accounted for 92.4% of total turnover.

For the year ended 30 September 2007, turnover from the cruise business was approximately HK$95.9 million, up 0.2% from about HK$95.7 million in 2006. Segment profit from the business amounted to approximately HK$32.0 million.

As well as providing a stable income, our cruise business continued to create synergy effect on other businesses in the Group, which has helped us to achieve our vision of becoming a major player in the gaming and entertainment-related industries.

Travel Business

During the year under review, turnover from the travel business climbed slightly by 0.5% to approximately HK$7.9 million from about HK$7.8 million in 2006, accounting for approximately 7.6% of the Group's total turnover.

Although travel business is not the major source of the Group's total turnover, the Group's strategy is to develop the segment into a unique platform, providing professional travel services to high-end customers, directing traffic to the Group's flagship project Ponte 16 and cruise ship, M.V. Macau Success.

OTHER

Sale and purchase agreement between World Fortune and Joy Idea

On 30 November 2006, the Group, through a then indirect wholly-owned subsidiary, namely World Fortune Limited ("World Fortune"), entered into a sale and purchase agreement with Joy Idea Investments Limited ("Joy Idea") for acquisition of a 12.25% equity interest in, and the related loan to, Pier 16 – Property Development Limited ("Pier 16 – Property Development") which is responsible for the development of Ponte 16, from Joy Idea, for an aggregate consideration of HK$200 million. Following the acquisition, Macau Success significantly increased its shareholding in the Ponte 16 project to 49%.

Syndicated Loan Facility

On 28 June 2007, Pier 16 – Property Development Limited successfully arranged a syndicated loan facility of HK$1.6 billion with eight leading banks in Macau and Hong Kong. The syndication attracted enthusiastic response from the banks, reflecting their confidence in the project. Soon after the loan facility arrangement, Ponte 16 launched its new logo, which highlights the historical value of the Inner Harbour of Macau where Ponte 16 is located.

Cooperation with Maruhan

On 1 October 2007, Golden Sun Profits Limited, Maruhan, and the Group entered into a conditional sale and purchase agreement for the disposal of 10.2% of the entire issued share capital of, and the related shareholder's loan to, World Fortune, for a consideration of approximately HK$208.5 million. The Company and Maruhan also signed a subscription agreement, pursuant to which Maruhan subscribed 220,000,000 new shares issued by the Company at a subscription price of HK$1.062 per share. Upon completion of the said disposal, World Fortune became an 89.8% owned indirect subsidiary of the Company, and the Group's effective interest in Pier 16 – Property Development decreased from 49% to approximately 44%. Meanwhile, Maruhan has an effective interest of approximately 5% in Pier 16 – Property Development through World Fortune.

The recruitment of Maruhan as a strategic partner of the Group reflects management's vision to expand beyond Macau to other places in the Asia-Pacific region. While the Group and Maruhan have agreed to co-operate in developing the gaming industry in Japan -- pending the grant of gaming licenses -- both parties are also looking at other potential business opportunities.

OUTLOOK

Commenting on the Group's future, Mr. Yeung said, "Macau Success is setting the stage for growth and profit margin enhancement after the operation of Ponte 16. We believe that Ponte 16 will also benefit from the extensive experience of Maruhan in the entertainment industry and its business networks in Japan. Mr. Yeung said. "We anticipate the collaboration with Maruhan will bring the project more customers with diverse portfolio. Furthermore, we are targeting, in cooperation with Maruhan, to enter Japan's gaming industry in the near future."

Management is optimistic about the Group's future based on the steady growth of its core businesses and great potential of Ponte 16 project. Management is diligent in pursuing opportunities in Macau, Mainland China and other places in the Asia-Pacific regions so as to develop new sources of synergy and Shareholders' value. The Group's vision is to become one of the leading gaming and entertainment-related companies in the Asia-Pacific region.

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