BUSINESS You should read the whole document before you decide to invest in the Offer Shares, and you should not rely solely on key or summarised information. The financial information in this section has been extracted from “Appendix I — Accountants’ Report.” The following map shows SJM’s existing casinos. Macau Peninsula Immigration 1 Casino Lisboa 2 Grand Lisboa 3 Club VIP Legend (Proposed) 4 Casino Emperor Palace HK-Zhuhai-Macau Bridge 5 Casino Oriental 6 Casino Jai Alai 7 Casino Golden Dragon 8 Casino Babylon Macau 9 Casino Casa Real 10 Casino Kingsway Peninsula 11 Casino Kam Pek Macau 12 Casino Fortuna St. Paul's MaritimeTerminal 15 ruins 6 13 Casino Diamond 7 Pier 16 14 14 Casino Macau Palace 9 10 Outer Harbour 15 Casino Ponte 16 Inner Harbour 5 8 Taipa 4 11 13 3 12 2 1 16 Casino Taipa 5 17 Casino Macau Jockey Club A-Ma Temple Lisboa 18 Casino New Century F r i 19 e Casino Marina n District d s h i p B Macau-Taipa Bridge r i Macau Tower d g e Sai Van Bridge Pac On Ferry Terminal University 18 of Macau 16 17 Macau International Race Course Taipa Airport 19 Sports Ground Lotus Macau Cotai East Asian Bridge Games Dome Zhuhai Immigration (Henqin Island) Coloane Note: Map not drawn to scale. 101 BUSINESS OVERVIEW SJM is one of six Concessionaires and Sub-Concessionaires permitted by the Macau Government to operate casino games in Macau and is the largest casino operator in Macau in terms of gaming revenue, market share and number of casinos as at 31 December 2007, according to the DICJ. SJM operates the most extensive portfolio of casinos in Macau out of the six Concessionaires and Sub- Concessionaires and offers a wide array of gaming experiences that cater to different types of gaming patrons. As at 31 December 2007, SJM operated 18 of the 28 casinos in Macau, featuring a total of 305 VIP gaming tables in 75 VIP rooms, 1,107 mass market gaming tables and 3,702 slot machines compared to 253 VIP gaming tables, 653 mass market gaming tables and 2,381 slot machines as at 31 December 2005. For the years 2005, 2006 and 2007, SJM’s gaming revenue was HK$33,406.3 million, HK$34,196.3 million and HK$32,146.6 million, respectively. On 1 February 2008, SJM commenced operations of Casino Ponte 16, which included 105 mass market gaming tables and 297 slot machines. As at the Latest Practicable Date, SJM operated nine Self-Promoted Casinos and 10 Third Party-Promoted Casinos. Self-Promoted Casinos are casinos for which promotional and marketing efforts are handled by SJM’s Marketing Department, and Third Party-Promoted Casinos are casinos for which marketing efforts are handled by the Mass Market Service Providers. For further details, see “Business — Marketing”. As at 31 December 2005, 2006 and 2007, SJM’s gaming tables accounted for approximately 65.3%, 43.5% and 32.3% of the total number of gaming tables in Macau respectively. As at 31 December 2005, 2006 and 2007, SJM’s slot machines accounted for approximately 69.6%, 41.8% and 27.9% of the total number of slot machines in Macau respectively. SJM has a large and stable network of Gaming Promoters that brings VIP gaming patrons from around the world through their respective networking, marketing and promotional efforts. As at the Latest Practicable Date, 12 of SJM’s casinos (excluding Casino Kingsway and Casino Macau Palace which are under renovation) feature VIP rooms that are reserved exclusively for high-stakes gaming patrons who are brought in by SJM’s VIP Room Gaming Promoters. SJM also allocates particular rooms and tables for the priority use of certain of its Gaming Promoters to encourage them to bring their gaming patrons to SJM’s casinos. Through SJM’s agreements with STDM, which has investments of over HK$7 billion in Macau’s transportation, hospitality and services sectors, SJM is able to offer “one-stop shop” services to its Gaming Promoters and their patrons, enhancing their overall gaming experience and promoting loyalty to SJM’s casinos. We have in-depth knowledge of mass market gaming operations in Macau. As at the Latest Practicable Date, SJM had 13 casinos (excluding Casino Macau Palace) that serve the mass market with table games and slot machines, and four casinos exclusively providing table games (excluding Casino Kingsway). SJM also has four slot machines-only operations, which are authorised gaming areas and considered casino operations. Several of SJM’s casinos feature themed gaming halls, such as the Pharaoh’s Palace at Club VIP Legend and the Greek Mythology at Casino New Century, providing mass market patrons with a diversified range of gaming experiences. A number of SJM’s casinos, such as Casino Jai Alai and Casino Oriental, are located near key transport gateways, including the Macau Maritime Terminal, in order to target single day visitors, tour groups and vacation travellers. Casino Lisboa has been for many years a popular destination in Macau for gaming patrons, contributing to the strength and name recognition of the “Lisboa” brand in Greater China and Asia. SJM’s gaming operations are restricted under the Concession to casino games, slot machine gaming and other games authorised by the Macau Government in Macau. SJM does not presently 102 BUSINESS engage in any gaming operations outside of Macau nor does SJM engage in bookmaking transactions in or outside Hong Kong. In addition, SJM does not engage in pari-mutuel gaming, such as horse racing or dog racing, internet betting, cruise ship gaming or any other form of gaming, nor is it permitted to do so under the terms of its Concession Contract. SJM currently intends to focus its casino operations in Macau only, but we will consider other opportunities as they arise. SJM plans to develop clusters of gaming properties in various strategic locations within Macau to offer a wide variety of gaming experiences, in order to attract a broad spectrum of gaming patrons and to keep them within the clusters of SJM’s casinos. The following map indicates SJM’s completed and planned projects in the four strategically located areas, namely Lisboa District, Inner Harbour District, Outer Harbour District and Cotai: Outer Harbour District - Oceanus Lisboa District - Grand Lisboa - L’Hermitage - L’Arc - Lisboa redevelopment Inner Harbour District - Ponte 16 Cotai - The Pearl - Cotai II * Includes L’Hermitage and F.I.T. Note: Map not drawn to scale. For further information regarding SJM’s new projects, including its casino gaming operations and properties under development, see “— Our New Projects.” On 17 April 2008, pursuant to two purchase option agreements entered into between STDM and SJM, SJM exercised its options to purchase the remaining 15/16 portion of the building known as Hotel Lisboa and Nam Van Lake Lot 11-A in the Lisboa District. We believe the exercise of these options will assist SJM in developing its gaming and gaming-related business. See “Relationship with 103 BUSINESS our Controlling Shareholders — Purchase Option Agreements between STDM and SJM.” These options provide SJM an opportunity to develop new properties and further expand the scope of its operations. These potential developments may consist of gaming operations, residential development, hotels, spa facilities, retail and entertainment facilities. Many large casino operators worldwide engage in certain gaming-related businesses primarily to service and cater to their casino patrons and promote their casino operations. Like other Concessionaires and Sub-Concessionaires in Macau, and casino operators elsewhere, SJM will invest and engage in such gaming-related businesses in Macau as appropriate to support its overall casino operations and compete effectively with other Concessionaires and Sub-Concessionaires, as permitted by the terms of SJM’s Concession and subject to the Macau Government’s approval. COMPETITIVE STRENGTHS SJM’s extensive portfolio of existing casinos and future developments allows it to offer a diversified range of gaming experiences to target different segments of the gaming market. SJM operates the most extensive portfolio of casinos in Macau which we believe allows it to better target different types of gaming patrons through the positioning of each of SJM’s casinos. SJM’s extensive casino portfolio appeals to a broad spectrum of gaming patrons, from the modern Grand Lisboa and historic Casino Lisboa, which appeal to VIP and high-stakes mass market patrons, to conveniently located casinos, such as Casino Jai Alai and Casino Oriental near the Macau Maritime Terminal, which appeal to single day visitors. In addition, SJM also operates themed gaming halls in certain casinos to provide a variety in layout and ambience to its mass market gaming patrons. On 17 April 2008, SJM exercised options to purchase the remaining 15/16 portion of the building known as Hotel Lisboa and Nam Van Lake Lot 11-A from STDM. See “Relationship with our Controlling Shareholders — Purchase Option Agreements between STDM and SJM.” We believe the exercise of these options will assist SJM in developing its gaming and gaming-related businesses. SJM has an experienced management team with a proven track record in operating gaming and gaming-related activities in Macau. SJM’s long-serving senior management team has more collective experience in casino management and operation in Macau than any other casino operator management team. SJM has fortified this core team with the addition of experienced professionals from the international gaming industry. We believe that SJM’s senior management team, which has a combination of in-depth local knowledge of gaming in Macau and specialised and international expertise, places SJM in a strong position to take advantage of the opportunities offered by the liberalisation of gaming in Macau.