Principally engaged in operations of gaming and entertainment related business.

Business Review - For the year ended March 31, 2010

(i) Visa restriction

In September 2009, the PRC Government further announced that Mainland Chinese citizens with only a Hong Kong visa and not a Macau visa could no longer enter Macau from Hong Kong.

(ii) Global financial crisis

The beginning of the global financial crisis in September 2008 has caused massive wealth destruction to businessmen and high-earning executives, which led to a severe downturn in Macau VIP gaming. Although an economic turnaround now appears underway, most of the VIP customers have reduced their frequency of visits to Macau and/or betting on each visit.

(iii) Decreased liquidity

VIP customers generally bet on credit granted by junkets and such credit is typically unsecured. After the global financial crisis, junkets have encountered decreased liquidity due to the difficulties in debts collection, which limits their ability to grant credit or the amount of credit to their VIP customers. As such, the operating results of junkets are adversely affected.

(iv) Squeeze in junkets’ profit margin

The Macau VIP gaming industry is highly competitive. With the rapid increase in the number of VIP gaming rooms in recent years, junkets have to offer a higher rebate to attract and/or retain VIP customers, which squeezes their profit margin. In addition, the Macau Government published certain guidelines with respect to cap on the commission rates payable to junkets in August 2009. Although the Macau Government has not implemented caps on the commission rates payable to junkets, most of the junkets are not able to obtain favorable terms in renewing their gaming promotion agreements.

(v) Loss of quality VIP customers

As a significant portion of Macau casinos’ gaming revenue is derived from VIP customers introduced by junkets, Macau casino operators have undertaken initiatives to establish direct relationships with quality VIP customers in order to reduce their reliance on junkets. They generally offer very competitive package to selected quality VIP customers that junkets could not match. As a result, junkets have lost a significant number of their quality VIP customers to casino operators.

Due to the dropping on the rolling turnover of the junket partners, our junkets partners cannot meet their obligations under their respective profit guarantee and a further provision in impairments of the Group is required.

Following the opening of Encore in Wynn Macau on April 2010, additional competitors have entered into the market and wrested the turnover of Joli. The future performance of Joli should be deteriorated and we finally, have disposed on 12 May 2010.

Some listed issuers, who engage in similar kind of business as that of the Group does, have not received profit streams on time and their receivables on profit streams were relatively high when compared to the Group. Finally, they even recorded the impairment loss on their receivables on profit streams. Unlike other listed issuers in similar businesses, the Group has never experienced any delay in receiving profit streams from our junket partners under the relevant profit agreements despite they may having a tight cash flow in their junket operations caused by the competition in VIP gaming activities. It is largely reliant upon the business relationship and trust that has built up between the Company and our junket partners.

Although the Group’s principal business activity in gaming and entertainment related business will be streamlined following the disposal of Joli, the Group continues to have a sufficient level of operations because its interest in the VIP gaming at The Venetian via Triple Gain and the revenue generated is stable. Mr. Chen Yi-Ming is the sole owner of Nove and is a general manager of the Company who is responsible for the operations of Nove at the Venetian gaming room for the purpose of the Nove Profit Agreement. The Group can maintain strict control over the outstanding receivables to minimise our credit risk.

Source: Dore Holdings (00628) Annual Results Announcement