Paradise Entertainment Limited — Interim / Quarterly Report 2012

Aug 30, 2012

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

PARADISE ENTERTAINMENT LIMITED 滙彩控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1180)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

RESULTS

The board of directors (the “Board”) of Paradise Entertainment Limited (the “Company”) hereby announces the unaudited consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2012 together with the comparative figures for the relevant period in 2011 as follows:

CONDENSED CONSOLIDATED INCOME STATEMENT

Notes Continuing operations Turnover 3 Cost of sales and services Gross profit Other income Marketing, selling and distribution costs Administrative expenses Impairment loss for doubtful debts Share-based payments Finance costs Amortisation of intangible assets Loss on early redemption of promissory note Profit before tax Income tax expenses 6 Profit for the period from continuing operations Discontinued operation Profit (loss) for the period from discontinued operation 7 Profit for the period 4

Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 (Restated) 318,103 205,603 (107,219) (81,561) 210,884 124,042 1,100 6,602 (60,991) (40,055) (75,585) (52,330) (557) (117) – (3,787) (6,240) (11,024) (6,069) (6,069) (9,297) (15,886) 53,245 1,376 (21,500) – 31,745 1,376 21,093 (892) 52,838 484

1

CONDENSED CONSOLIDATED INCOME STATEMENT (CONTINUED)

Notes Attributable to: Owners of the Company Non-controlling interests Earnings per share (HK cents) 8 From continuing and discontinued operations – Basic – Diluted From continuing operations – Basic – Diluted	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 (Restated) 47,357 484 5,481 – 52,838 484 1.67 0.02 1.38 N/A 0.92 0.05 0.81 N/A

2

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Profit for the period Other comprehensive income Net gain recognised directly in equity exchange translation differences Total comprehensive income for the period, net of tax Total comprehensive income attributable to: Owners of the Company Non-controlling interests	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 52,838 484 16 1,658 52,854 2,142 47,376 2,141 5,478 1 52,854 2,142	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 52,838 484 16 1,658 52,854 2,142 47,376 2,141 5,478 1 52,854 2,142
		2,142
		2,141 1
		2,142

3

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes Non-current assets Property, plant and equipment 9 Intangible assets 10 Current assets Inventories Debtors, deposits and prepayments 11 Bank and cash balances Current liabilities Creditors and accrued charges 12 Amounts due to directors 18 Obligations under finance leases – due within one year 13 Current tax liabilities Net current assets Total assets less current liabilities	Unaudited Audited 30 June 31 December 2012 2011 HK$’000 HK$’000 142,919 148,869 159,814 165,883 302,733 314,752 11,166 200 64,540 61,033 142,300 126,186 218,006 187,419 66,847 74,443 3,773 2,567 107 1,318 8,500 2,467 79,227 80,795 138,779 106,624 441,512 421,376	Unaudited Audited 30 June 31 December 2012 2011 HK$’000 HK$’000 142,919 148,869 159,814 165,883 302,733 314,752 11,166 200 64,540 61,033 142,300 126,186 218,006 187,419 66,847 74,443 3,773 2,567 107 1,318 8,500 2,467 79,227 80,795 138,779 106,624 441,512 421,376
		314,752
		200 61,033 126,186
		187,419
		74,443 2,567 1,318 2,467
		80,795
		106,624
		421,376

4

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

Notes Non-current liabilities Obligations under finance leases – due after one year 13 Convertible loans – due after one year 14 Promissory note 15 Deferred tax liabilities Net assets Capital and reserves Share capital 16 Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	Unaudited Audited 30 June 31 December 2012 2011 HK$’000 HK$’000 359 412 86,563 86,165 23,424 68,336 13,000 – 123,346 154,913 318,166 266,463 284,144 284,144 24,692 (21,432) 308,836 262,712 9,330 3,751 318,166 266,463

5

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

Net cash generated from operating activities Net cash (used in) investing activities Net cash (used in) financing activities Net increase in cash and cash equivalents Effect of foreign exchange rate changes Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS, represented by Bank and cash balances	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 87,546 28,143 (11,342) (4,903) (60,109) (6,259) 16,095 16,981 19 2,032 126,186 83,431 142,300 102,444 142,300 102,444

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For six months ended 30 June 2012

At 1 January 2012 Total comprehensive income for the period Transfer of share option reserve upon the lapse of share options Disposal of subsidiaries At 30 June 2012			Attributable to own	Attributable to own	ers of the Company	ers of the Company	Sub-total HK$’000 262,712 47,376 – (1,252) 308,836	Non- controlling interests HK$’000 3,751 5,478 – 101 9,330	Total equity HK$’000 266,463 52,854 – (1,151)
	Share capital HK$’000 284,144 – – – 284,144	Share premium HK$’000 581,629 – – – 581,629	Special reserve HK$’000 88,643 – – – 88,643	Option reserve HK$’000 57,841 – (26,923) – 30,918	Convertible loans reserve HK$’000 6,235 – – – 6,235	Translation Accumulated reserve losses HK$’000 HK$’000 22,423 (778,203) 19 47,357 – 26,923 (1,252) – 21,190 (703,923)
									318,166

For six months ended 30 June 2011

At 1 January 2011 Total comprehensive income for the period Recognition of equity component of convertible loans Issue of shares on conversion of convertible loans Recognition of share-based payments At 30 June 2011			Attributable to own	Attributable to own	ers of the Company	ers of the Company	Sub-total HK$’000 124,161 2,141 1,634 97,244 3,787 228,967	Non- controlling interests HK$’000 49 1 – – – 50	Total equity HK$’000 124,210 2,142 1,634 97,244 3,787
	Share capital HK$’000 186,344 – – 97,800 – 284,144	Share premium HK$’000 576,215 – – 5,414 – 581,629	Special reserve HK$’000 88,643 – – – – 88,643	Option reserve HK$’000 65,062 – – – 3,787 68,849	Convertible loans reserve HK$’000 10,571 – 1,634 (5,970) – 6,235	Translation Accumulated reserve losses HK$’000 HK$’000 22,080 (824,754) 1,657 484 – – – – – – 23,737 (824,270)
									229,017

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NOTES:

(1) Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

(2) Accounting policies

The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual audited financial statements for the year ended 31 December 2011.

The application of the new and revised Standards, Amendments or Interpretations issued by the HKICPA has had no material effect on how the results and financial position of the Group for the current or prior accounting period have been prepared and presented. Accordingly, no prior period adjustment is required.

The Group has not early adopted the following new and revised Standards, Amendments and Interpretations that have been issued but are not yet effective:

HKFRS 7 (Amendments)	Disclosures – Offsetting Financial Assets and Financial Liabilities2
HKFRS 9 and Amendments	Financial Instruments4
to HKFRS 9
HKFRS 10	Consolidated Financial Statements2
HKFRS 11	Joint Arrangements2
HKFRS 12	Disclosures of Interests in Other Entities2
HKFRS 13	Fair Value Measurements2
HKAS 1 (Amendments)	Presentation of Items of Other Comprehensive Income1
HKAS 32 (Amendments)	Presentation – Offsetting Financial Assets and Financial Liabilities3
HKAS 19 (Revised in 2011)	Employee Benefits2
HKAS 27 (Revised in 2011)	Separate Financial Statements2
HKAS 28 (Revised in 2011)	Investments in Associates and Joint Ventures2
HK(IFRIC) – Interpretation 20	Stripping Costs of the Production Phase of a Surface Mine2

1. Effective for annual periods beginning on or after 1 July 2012

2. Effective for annual periods beginning on or after 1 January 2013 3. Effective for annual periods beginning on or after 1 January 2014

4. Effective for annual periods beginning on or after 1 January 2015

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(3) Turnover and segment information

For management purposes, the Group is organised into business units based on their products and services, and has two reportable operating segments as follows:

• Biopharmaceutical Research, development and sales of biopharmaceutical products which was classified as discontinued operation of the Group and was disposed of during the period.

• –

• Gaming Provision of management services, development, provision and sales of electronic gaming system

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) is managed on a group basis and is not allocated to operating segments.

During the period, the Group’s operating segments changed as a result of the change in the Group’s internal organization structure. The corresponding information for the six months ended 30 June 2011 has been re-stated accordingly.

Revenue Revenue from external customers Segment results Gain on disposal of a subsidiary Finance costs Loss on early redemption of promissory note Profit before tax Income tax expenses Profit for the period Other information Capital expenditure Depreciation		Unaudited Six months ended 30 June Continuing operations Others Sub-total 2012 2011 2012 2011 HK$’000 HK$’000 HK$’000 HK$’000 (Restated) (Restated) – – 318,103 205,603 (13,911) (13,114) 68,782 28,286 621 718 8,902 6,062 149 113 13,977 14,089	Discontinued operation Biopharmaceutical 2012 2011 HK$’000 HK$’000 (Restated) 20,385 48,337 185 (892) – 4 57 111	Total 2012 2011 HK$’000 HK$’000 (Restated) 338,488 253,940 68,967 27,394 20,908 – (6,240) (11,024) (9,297) (15,886) 74,338 484 (21,500) – 52,838 484 8,902 6,066 14,034 14,200
	Gaming 2012 2011 HK$’000 HK$’000 (Restated) 318,103 205,603 82,693 41,400 8,281 5,344 13,828 13,976	Others 2012 2011 HK$’000 HK$’000 (Restated) – – (13,911) (13,114) 621 718 149 113

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(4) Profit (loss) for the period

Profit (loss) for the period has been arrived at after charging (crediting):

Continuing operations Staff costs – Directors’ remunerations_(note 5) – Other staffs – Salaries and other benefits – Equity-settled share-based payments(note 19) – Retirement benefit scheme contributions Total staff costs Consultancy fee – Equity-settled share-based payments(note 19)_ – Others Auditors’ remuneration Amortisation for intangible assets Cost of inventories recognised as expenses Depreciation of property, plant and equipment Loss (gain) on disposal of property, plant and equipment Impairment loss for amount due from an associate Operating lease rentals paid in respect of rented premises Discontinued operation Staff costs – Salaries and other benefits – Retirement benefit scheme contributions Total staff costs Cost of inventories recognised as expenses Depreciation of property, plant and equipment Operating lease rentals paid in respect of rented premises

Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 (Restated) 8,303 3,234 24,369 18,635 – 1,894 213 257 32,885 24,020 – 1,894 894 967 894 2,861 472 348 6,069 6,069 7,757 – 13,941 14,125 25 (953) 15 117 3,178 2,546 179 363 42 114 221 477 19,266 44,706 57 111 76 106

10

(5) Directors’ remuneration

The remuneration of directors during the period was as follows:

Directors’ fees Salaries and other benefits Retirement benefit scheme contributions Accommodation benefits	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 180 180 7,230 2,394 13 12 880 648 8,303 3,234	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 180 180 7,230 2,394 13 12 880 648 8,303 3,234
		3,234

The remuneration of directors is determined by the remuneration committee having regard to the performance of individuals and market trends.

(6) Income tax expenses

The income tax expenses during the period was as follows:

Provision for: Income tax Deferred tax	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 8,500 – 13,000 – 21,500 –	Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 8,500 – 13,000 – 21,500 –
		–

No provision for Hong Kong Profits Tax or PRC Enterprise Income Tax has been made in the financial statements as the Group did not generate any assessable profit in Hong Kong or PRC for the period. The provision for Macau Complementary Tax of HK$8.5 million (2011: Nil) is calculated on the assessable profit at the prevailing tax rate in Macau in which the Group operates.

Deferred taxation is calculated in full on temporary differences under the liability method using applicable tax rates prevailing in the jurisdictions in which the Group operates. Deferred tax liabilities of HK$13.0 million (2011: Nil) arising from temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. No deferred tax asset has been recognised in respect of tax losses as the recoverability of these potential deferred tax assets is uncertain.

11

(7) Discontinued operation

In April 2012, the Group disposed of its entire interest in LifeTec Pharmaceutical Limited and its subsidiaries (collectively the “Disposed Group”) for a nominal consideration of US$1. For details of the disposal, please refer to the Company’s announcement dated 2 April 2012. A gain on disposal of the Disposed Group of HK$20.9 million has been recognised during the period. The biopharmaceutical business segment which was solely carried out by the Disposed Group was classified as a discontinued operation during the period. The condensed consolidated income statement and presentation of certain items of the corresponding reporting period have been restated to comply with relevant requirements accordingly.

An analysis of the results of the discontinued operation is as follows:

Revenue Cost of sales and services Gross profit Other income Marketing, selling and distribution costs Administrative expenses Profit (loss) for the period of the discontinued operation Gain on disposal of the Disposed Group Profit (loss) for the period from the discontinued operation Attributable to: Owners of the Company Non-controlling interests Earnings (loss) per share (HK cents) – Basic – Diluted

Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 20,385 48,337 (19,266) (44,706) 1,119 3,631 133 75 (286) (1,206) (781) (3,392) 185 (892) 20,908 – 21,093 (892) 21,088 (892) 5 – 21,093 (892) 0.75 (0.03) 0.57 N/A

12

The cash flow attributable to the discontinued operation was as follows:

Net cash (used in) operating activities Net cash generated from (used in) investing activities Net cash generated from (used in) financing activities Net decrease in cash and cash equivalents Earnings per share The calculation of the basic and diluted earnings per share is based on the following Profit (loss) Profit (loss) attributable to owners of the Company, used in the basic earnings per share calculation: From continuing operations From a discontinued operation Interest on convertible bonds Profit attributable to owners of the Company before interest on convertible bonds Attributable to: Continuing operations Discontinued operation

Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 (195) (1,678) 2 (1) 59 (2,934) (134) (4,613) data: Unaudited Six months ended 30 June 2012 2011 HK$’000 HK$’000 (Restated) 26,269 1,376 21,088 (892) 47,357 484 3,932 4,670 51,289 5,154 30,201 6,046 21,088 (892) 51,289 5,154

(8) Earnings per share

13

Unaudited Six months ended 30 June 2012

2011

Number of shares

Weighted average number of ordinary shares for the purpose of calculating basic earnings per share Effect of dilutive potential ordinary shares on convertible notes Weighted average number of ordinary shares for the purpose of calculating diluted earnings per share	2,841,444,778 887,500,000 3,728,944,778	2,504,903,342 1,091,113,259
		3,596,016,601

As the effects of all potential ordinary shares are anti-dilutive for the period ended 30 June 2011, no diluted earnings per share was presented for the period ended 30 June 2011.

(9) Property, plant and equipment

During the period, additions to the property, plant and equipment amounted to HK$8.9 million, which includes HK$1.8 million of gaming facilities and HK$6.5 million of leasehold improvements. The Group has disposed of property, plant and equipment with an aggregate net book value of HK$0.8 million (2011: Nil) during the period.

(10) Intangible assets

During the period, the Group has disposed of intangible assets related to the biopharmaceutical business with no net book value. The decrease in value of intangible assets represents amortisation of a patent regarding the betting terminal system.

14

(11) Debtors, deposits and prepayments

Unaudited 30 June 31 2012 HK$’000 The ageing analysis of trade debtors is as follows: Within 30 days 43,812 31 - 60 days – 61 - 90 days – Over 90 days – 43,812 Other debtors, deposits and prepayments 20,728 64,540	Audited December 2011 HK$’000 33,998 3,986 1,492 229
	39,705 21,328
	61,033

The Group normally allows a credit period of 30 days and 90 to 180 days to its gaming partners and trade debtors, respectively. The credit policy is consistent with the gaming and biopharmaceutical industry practice in Macau and the PRC, respectively.

(12) Creditors and accrued charges

Unaudited 30 June 31 2012 HK$’000 The ageing analysis of trade creditors is as follows: Within 30 days – 31 - 60 days – 61 - 90 days – 91 - 365 days – More than 365 days – – Value added tax payable – Other creditors and accrued charges 66,847 66,847	Audited December 2011 HK$’000 4,618 4,026 1,664 1 97
	10,406 9,470 54,567
	74,443

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(13) Obligations under finance leases

					Present	value
	Minimum				of minimum
	lease payments				lease payments
	Unaudited		Audited		Unaudited	Audited
	30 June	31	December		30 June	31 December
	2012			2011	2012	2011
	HK$’000		HK$’000		HK$’000	HK$’000
Within one year	134			1,350	107	1,318
More than one year, but not
exceeding two years	132			132	112	100
More than two years, but not
exceeding five years	263			329	247	312
	529			1,811	466	1,730
Less: Future finance charges	(63)			(81)	–	–
Present value of lease obligations	466			1,730	466	1,730
Less: Amounts due for settlement
within one year (shown under
current liabilities)					(107)	(1,318)
Amounts due for settlement
after one year					359	412

All obligations under finance leases are denominated in Hong Kong dollars.

The Group’s obligations under finance leases are secured by the lessor’s charge over the leased assets.

16

(14) Convertible Loans

On 20 January 2010, the Company entered into subscription agreements with three independent third parties. Pursuant to subscription agreements I, II and III, the Company agreed to issue and the independent third parties agreed to subscribe for the Company’s convertible debentures in an aggregate principal amount of HK$116,000,000, US$85,500,000 (or approximately HK$662,625,000) and US$1,000,000 (or approximately HK$7,750,000), respectively. The parties are entitled to convert the principal amount in whole or in part of the principal amount of the debentures into new ordinary shares of the Company, at a conversion price of the higher of (i) the average of the closing price of the Shares of any three consecutive Trading Days within the sixty Trading Days immediately prior to the conversion date and (ii) the par value for the time being of the Shares, and at any time between the issue date of the debentures and 31 December 2014. If the debentures are not converted before 31 December 2014, they will be redeemed at par on 31 December 2014. The debentures bear interests at 8% per annum payable quarterly on or before the fifth business day of January, April, July and October in each year until their settlement date.

The subscriptions were approved by the Company’s shareholders at a special general meeting held on 1 April 2010. The subscriptions contemplated under subscription agreements I and III were completed on 14 April 2010 and 20 April 2010, respectively.

For subscription agreement II, the Company has received a partial payment of HK$88,700,000 on 21 April 2010 and entered into a supplemental agreement with the subscriber to extend the completion date to 21 October 2010. On 21 October 2010, the Company further entered into another supplemental agreement with the subscriber to extend the completion date to 21 October 2011.

Up to 21 October 2011 which is the completion date under the second supplemental agreement, the Company had received subscription monies in the aggregate amount of HK$207,500,000. Subscription monies of HK$455,125,000 remained unpaid and no more convertible notes will be issued to the subscriber under the agreement.

Details of the above are set out in the Company’s circular dated 16 March 2010 and 7 December 2010, and announcements dated 21 January 2010, 1 March 2010, 1 April 2010, 21 April 2010, 23 April 2010, 18 October 2010, 21 October 2010, 2 November 2010 and 19 November 2010.

17

The net proceeds received from the issue of convertible debentures have been split between the liability components and equity components, as follows:

Unaudited 30 June 31 2012 HK$’000 Liability components At the beginning of the period/year 86,165 Liability components at date of issue – Interest charged 3,932 Interest paid (3,534) Converted into ordinary shares of the Company – At end of the period/year 86,563 Equity components At the beginning of the period/year 6,235 Equity components at date of issue – Converted into ordinary shares of the Company – At end of the period/year 6,235 The maturity of the liability components of the convertible loans is as follows: Unaudited 30 June 31 2012 HK$’000 Within one year – More than one year but not more than five years 86,563 86,563

Audited December 2011 HK$’000 129,178 52,366 9,788 (7,923) (97,244) 86,165 10,571 1,634 (5,970) 6,235 Audited December 2011 HK$’000 – 86,165 86,165

The interests charged for the period for convertible debentures in respect of subscription agreements I, II and III are calculated by applying the effective interest rates of 9.16%, 8.63% and 11.92% (year ended 31 December 2011: 9.17%, 8.64% and 11.92%) respectively to the liability components since the convertible loans were issued.

The directors estimate the carrying value of the liability components approximates its fair value as at 30 June 2012.

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(15) Promissory note

Unaudited 30 June 31 2012 HK$’000 At the beginning of the period/year 68,336 Interest charged 2,291 Early redemption during the period/year (47,203) At end of the period/year 23,424 The maturity of the promissory note is as follows: Unaudited 30 June 31 2012 HK$’000 Within one year – More than one year but not more than five years 23,424 23,424	Audited December 2011 HK$’000 119,472 9,180 (60,316) 68,336 Audited December 2011 HK$’000 – 68,336 68,336

The promissory note is measured at amortised cost using the effective interest method with the effective interest rate at 11.85% per annum.

During the period ended 30 June 2012, the Group redeemed part of the promissory note in the principal amount of HK$60,106,000 (year ended 31 December 2011: HK$100,050,000). The loss on early redemption was the difference between the discounted repayment amount and the respective carrying amount at the date of redemption, which was HK$47,203,000 (year ended 31 December 2011: HK$60,316,000).

19

(16) Share capital

Share of HK$0.10 each Authorised: At 1 January 2012 and 30 June 2012 Issued and fully paid: At 1 January 2012 and 30 June 2012 (17) Capital commitments Capital expenditure contracted for but not provided in the consolidated financial statements in respect of: Acquisition of property, plant and equipment	Number of shares ’000 10,000,000 2,841,445 Unaudited 30 June 2012 HK$’000 8,191 8,191		Nominal value HK$’000 1,000,000
			284,144
		31	Audited December 2011 HK$’000 11,927
			11,927

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(18) Related party transactions

In addition to those related party transactions and balances disclosed elsewhere in the consolidated financial statements, the Group had the following transactions with its related parties during the period:

					Unaudited	Unaudited
			Six months ended 30 June
		Directors			Associate				Related parties
		2012	2011		2012	2011			2012	2011
	HK$’000		HK$’000	HK$’000		HK$’000		HK$’000		HK$’000
Consultancy fee paid
to_(note a & b)_		–	–		–	–			258	227
Salaries and other
benefits paid to
(note b & e)		–	–		–	–			1,205	600
	Unaudited		Audited	Unaudited		Audited		Unaudited		Audited
		30 June31 December			30 June31 December				30 June31 December
		2012	2011		2012	2011			2012	2011
	HK$’000		HK$’000	HK$’000		HK$’000		HK$’000		HK$’000
Amounts due from
(note c & d)		–	–		9,622	9,607			–	–
Amounts due to
(note c)		3,773	2,567		–	–			–	–

Notes:

• (a) The related party is the son of a director, Mr. Shan Shiyong, alias, Sin Sai Yung.

• (b) The transactions were charged at predetermined amounts agreed between the parties involved.

• (c) The amounts are unsecured, interest free and have no fixed terms of repayment.

• (d) Impairment of approximately HK$15,000 (30 June 2011: HK$117,000) has been made for the period for the amount due from an associate. The amount due from an associate was fully impaired.

• (e) The related party is the spouse of a director, Mr. Jay Chun.

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(19) Equity-settled share-based payments

On 29 January 2011, 66,000,000 share options were granted by the Group to 2 consultants and 2 employees with fair value of HK$1,893,500 and HK$1,893,500, respectively.

The estimated fair value of the share options granted during the period ended 30 June 2011 was determined using the Black-Scholes model. The fair value and significant inputs to the model are as follows:

	Share option grant date
	29 January 2011
Fair value at the grant date	HK$3,787,000
Number of share options granted	66,000,000
Closing share price preceding the grant date	HK$0.098
Exercise price	HK$0.100
Expected volatility	72.888%
Expected life	5 years
Risk free rate	1.76%
Expected dividend yield	–

Expected volatility was determined by calculating the historical volatility of the Company’s closing share price over the 250 days immediately before each grant date. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of the non-transferability, exercise restrictions and behavioral considerations. The risk-free rate is based on the annual yield of Hong Kong Exchange-Fund Note for the corresponding expected life at the grant date.

The share options have not been exercised as at the date of this announcement.

(20) Comparative figures

Certain comparative figures have been reclassified to conform to the current period’s presentation. The new classification was considered to provide a more appropriate presentation of the financial position of the Company.

22

INTERIM DIVIDEND

The Directors do not recommend the payment of an interim dividend for the six months ended 30 June 2012 (2011: Nil).

BUSINESS REVIEW AND PROSPECTS

The first half of 2012 was a rewarding period for the Group. As a result of the continued strong performance of the gaming business in Macau, the Group recorded a substantial growth in revenue by approximately 54.7% from HK$205,603,000 for the six months ended 30 June 2011 to HK$318,103,000 for the corresponding period in 2012 and achieved a remarkable growth of approximately 10,816.9% in profit from HK$484,000 for the six months ended 30 June 2011 to HK$52,838,000 for the corresponding period in 2012. The basic earnings per share was HK1.67 cent, representing a strong increase of 8,250% as compared with HK0.02 cent for the same period last year.

In order to enhance the efficacy of resource allocation, the Group sold the entire issued share capital of its wholly-owned subsidiary LifeTec Pharmaceutical Limited, an investment holding company of pharmaceutical business of the Group, in April 2012. Accordingly, the Group recognized a gain of approximately HK$21,093,000. The disposal enables the Group to focus on its gaming business in the future.

The Group remains optimistic about the future of Macau’s gaming industry. Macau is the only city in China that permits casino gaming. The Group believes that more tourists will visit Macau, which will contribute to the growth of revenue of the Group.

LIQUIDITY AND FINANCIAL RESOURCES

As at 30 June 2012, the Group’s finance lease, liability component of convertible loans and promissory note stood at HK$466,000, HK$86,563,000 and HK$23,424,000, respectively, of which HK$107,000, nil and nil, respectively were payable within 12 months. Current liabilities of the Group decreased from HK$80,795,000 to HK$79,227,000, representing a decrease of approximately 1.9%. The Group’s total liabilities decreased from HK$235,708,000 to HK$202,573,000, representing a decrease of approximately 14.1%.

As at 30 June 2012, the cash on hand and available financial resources were sufficient for financing ongoing activities of the Group.

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GEARING RATIO

The Group’s gearing ratio (defined as the ratio of total outstanding interest bearing borrowing less bank balances and cash to total assets (excluding bank balances and cash)) was zero as at 30 June 2012 (as at 31 December 2011: 8%)

FOREIGN EXCHANGE EXPOSURE

The Group’s operations are primarily based in the PRC and Macau and the income derived and expenses incurred are denominated in Renminbi (“RMB”) and Macau Pataca (“MOP”), respectively. On the other hand, expenses of the headquarters are denominated in Hong Kong dollars (“HK$”) and are financed by funds raised in Hong Kong dollars. Due to the relatively matched position among Hong Kong, Macau and the PRC and the stability of the exchange rates between RMB and HK$ and between MOP and HK$, the directors do not consider specific hedges for currency fluctuations necessary.

CHARGES ON GROUP ASSETS

As at 30 June 2012, the assets of the Group which were subject to charges for securing obligations under finance leases comprised a motor vehicle and gaming machines with net book value amounting to HK$525,000 (31 December 2011: HK$592,000) and HK$533,000 (31 December 2011: HK$4,633,000), respectively.

ORGANIZATION AND STAFF

As at 30 June 2012, the Group had 356 (31 December 2011: 379) staff in total. Majority of the staff are marketing and promotion executives located in Macau. The Group is actively seeking talent in Macau, Hong Kong and China in order to cope with the fast growing operations.

The terms of employment of the staff, executives and directors conform to normal commercial practice. Share option benefits are granted to and included in the terms of selected senior executives of the Company.

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DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS IN SECURITIES

(I) Shares

As at 30 June 2012, the interests and short positions of the directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)) which were required to be notified to the Company pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such director or chief executive was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required to be notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules (the “Model Code”), were as follows:

Interests in Interests in underlying Total Name of shares (other shares interests Approximate company/ Capacity/ than pursuant pursuant in shares/ aggregate associated Nature of to equity to equity underlying percentage of Directors corporation interests derivatives)[(1)] derivatives[(1)] shares interests Mr. Jay Chun The Company Beneficial owner/ 1,241,600 – 288,208,800 10.14% Personal interest The Company Interest of controlled 286,967,200[(2)] – corporation/ Corporate interest Mr. Shan Shiyong, The Company Interest of controlled 260,975,800[(3)] – 260,975,800 9.18% alias, Sin Sai Yung corporation/ Corporate interest

Notes:

• (1) Interests in shares and underlying shares stated above represent long positions. The equity derivatives are physically settled and unlisted.

The interests of the Directors in the underlying shares pursuant to equity derivatives represent share options granted to them pursuant to the share option scheme adopted by the Company on 15 July 2002 (the “Old Share Option Scheme”) and the share option scheme adopted by the Company on 30 July 2007 (the “Existing Share Option Scheme”), the details of which are set out in paragraph (ii) below.

• (2) These shares were held by August Profit Investments Limited, a company which is wholly owned by Mr. Jay Chun.

• (3) These shares were held by Best Top Offshore Limited, a company which is wholly owned by Mr. Shan Shiyong, alias, Sin Sai Yung.

Save as disclosed above, none of the directors and the chief executive of the Company was interested or had any short position in any shares, underlying shares or debentures of the Company and its associated corporation (within the meaning of Part XV of the SFO) as at 30 June 2012.

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(II) Share options

The following table discloses movements in the Company’s share options during the six months ended 30 June 2012 under the Old Share Option Scheme and Existing Share Option Scheme:

Old Share Option Scheme

Date of share options granted Exercisable period Exercise price per share Category: Employees 08.05.2007 08.05.2007 to 07.05.2012 HK$2.42 08.05.2007 08.05.2008 to 07.05.2012 HK$2.42 Category: Consultants 08.05.2007 08.05.2007 to 07.05.2012 HK$2.42 Total Exercisable at the end of the period Weighted average exercise price (HK$)			Number of share options
		Outstanding at beginning the of period 440,000 450,000 24,300,000 25,190,000 2.42	Granted during the period Lapsed during the period – (440,000) – (450,000) – (24,300,000) – (25,190,000) – 2.42	Outstanding at end of the period – – –
				–
				–
				–

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Existing Share Option Scheme

Date of share options granted Exercisable period Exercise price per share Category: Employees 09.10.2007 09.10.2007 to 08.10.2012 HK$1.80 08.11.2007 08.11.2008 to 07.11.2012 HK$2.12 29.01.2011 29.01.2011 to 28.01.2016 HK$0.10 Category: Consultants 09.10.2007 09.10.2007 to 08.10.2012 HK$1.80 29.01.2011 29.01.2011 to 28.01.2016 HK$0.10 Total Exercisable at the end of the period Weighted average exercise price (HK$)			Number of share options
		Outstanding at beginning of the period 3,600,000 200,000 33,000,000 22,800,000 33,000,000 92,600,000 0.5890	Granted during the period Lapsed during the period – – – – – – – – – – – – – –	Outstanding at end of the period 3,600,000 200,000 33,000,000 22,800,000 33,000,000
				92,600,000
				92,600,000
				0.5890

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SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SECURITIES

As at 30 June 2012, according to the register of interests kept by the Company under section 336 of the SFO, and so far as was known to the directors or chief executive of the Company, the following persons, other than directors or chief executive of the Company, had an interest in the shares of the Company, which would require to be disclosed by the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of the Company:

		Interests in shares	Approximate
		(other than pursuant	aggregate percentage
Name of shareholder	Nature of interest	to equity derivatives)	of interests
August Profit Investments Limited1	Corporate interest	286,967,200	10.10%
Best Top Offshore Limited2	Corporate interest	260,975,800	9.18%

Notes:

• (1) August Profit Investments Limited is wholly owned by Mr. Jay Chun.

• (2) Best Top Offshore Limited is wholly owned by Mr. Shan Shiyong, alias, Sin Sai Yung.

Save as disclosed above, as at 30 June 2012, the Company had not been notified of any person or corporation who was interested in or had a short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of the Company.

CHANGES OF DIRECTORS’ INFORMATION

Below are the changes of directors’ information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

The annual salary payable to Mr. Jay Chun and Mr. Shan Shiyong, alias, Sin Sai Yung, executive directors, has been increased from HK$2,268,000 and HK$2,400,000, respectively, to HK$12,000,000 and HK$12,000,000, respectively.

There is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the six months ended 30 June 2012.

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AUDIT COMMITTEE

The Audit Committee has reviewed with the management the accounting policies and practices adopted by the Group and discussed auditing, internal control and financial reporting matters, including the review of the unaudited consolidated financial statements for the six months ended 30 June 2012.

NOMINATION COMMITTEE

The Nomination Committee was established by the Board with written terms of reference on 30 March 2012 in order to comply with the amendments to the Listing Rules.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE AND CORPORATE GOVERNANCE REPORT

The Company has complied with the code provisions as set out in the Corporate Governance Code and Corporate Governance Report (the “Code”) which was revised and took effect on 1 April 2012, as well as those of the former Code, as contained in Appendix 14 to the Listing Rules throughout the six months ended 30 June 2012, save for the following deviations:

CODE PROVISION A.2.1

Under this code provision, roles of the chairman and chief executive officer should be separate and should not be performed by the same individual.

Mr. Jay Chun is the Chairman and the managing director of the Company. In the opinion of the Board, the roles of the managing director and the chief executive officer are the same. The Board considers that the present structure provides the Group with strong and consistent leadership and allows for efficient and effective business planning and execution. Hence, the Board believes that it is in the best interest of the shareholders of the Company that Mr. Jay Chun will continue to assume the roles of the Chairman of the Board and the managing director of the Company. However, the Company will review the current structure as and when it becomes appropriate in the future.

CODE PROVISION A.4.1

Under this code provision, non-executive directors should be appointed for a specific term, subject to reelection.

Currently, none of the independent non-executive directors is appointed for a specific term. However, all independent non-executive directors, whether they are appointed for a specific term or not, are subject to retirement by rotation and re-election at least every three years at the annual general meeting of the Company in accordance with the provisions of the Bye-laws of the Company, and their appointment will be reviewed when they are due for re-election.

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CODE PROVISION A.6.7

Under this code provision, independent non-executive directors should attend the general meetings. However, the independent non-executive directors were unable to attend the annual general meeting on 1 June 2012 for they were engaged in other commitments of the Company.

CODE PROVISION E.1.2

Under this code provision, the chairmen of the board, the audit committee, remuneration committee, nomination committee and any other committees should attend the annual general meeting.

The annual general meeting held on 1 June 2012 was chaired by Ms. Ho Suet Man, Stella, a duly appointed proxy of a shareholder, instead of Mr. Jay Chun or the chairman of the audit committee, remuneration committee, nomination committee or any other committee. Mr. Jay Chun and the chairman of the audit committee, remuneration committee and nomination committee were unable to attend the annual general meeting as they were engaged in other commitments of the Company.

COMPLIANCE WITH MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the Model Code as its code of conduct regarding directors’ securities transactions. Having made specific enquiry of all directors, the directors have confirmed that they have complied with the requirements set out in the Model Code during the six months ended 30 June 2012.

By Order of the Board Paradise Entertainment Limited Stella Ho Company Secretary

Hong Kong, 30 August 2012

As at the date of this announcement, the executive directors of the Company are Mr. Jay Chun (Chairman and Managing Director), Mr. Shan Shiyong, alias, Sin Sai Yung and Mr. Hu Liming and the independent non-executive directors of the Company are Mr. Frank Hu, Mr. Li John Zongyang and Mr. Kuan Hin Meng.

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