Rationale of Naga2

The existing NagaWorld complex is reaching full capacity, with above 80% room occupancy on a regular basis as it caters to gamblers, tourists, tour groups, walk-ins and the general public. As such, NagaCorp Ltd. (“the “Company” and together with its subsidiaries, the “Group””) has decided to develop Naga2 (costing US$369 million), which will be situated a stone's throw away from the current premises. The development of Naga2 has a total built-up area of approximately 110,105 square metres, which includes the NagaCity Walk with approximately 9,800 square metres of retail and public space, and TSCLK Complex (also refer to Naga2) an additional 850 hotel rooms, 38 luxury VIP suites, a multipurpose-entertainment/theatre with a seating capacity of approximately 2,000; and additional gaming space (up to 300 gaming tables and 500 - 2,500 electronic gaming machines).

Updates of Naga2

On 30 December 2016, pursuant to the Share Purchase Agreement, the founder and CEO, Dr. Chen elected for the Consideration for the TSC Inc. Shares, payable by the Company at the TSCLK Complex Completion, to be settled by way of the issue of the TSCLK Complex Convertible Bonds in accordance with the terms of the Share Purchase Agreement in respect of the Acquisition which was approved by the Independent Shareholders (as defined in the Circular) at an extraordinary general meeting of the Company held on 30 January 2012.

Each of the conditions precedent to the TSCLK Complex Completion has been satisfied. Accordingly, the TSCLK Complex Completion, comprising the transfer of the TSC Inc. Shares to the Company and the issue of the TSCLK Complex Convertible Bonds to Dr. Chen, took place on 30 December 2016.

It is anticipated that the completion of Naga2 together with the present NagaWorld will position the Group as the leading integrated gaming and entertainment destination in the Mekong Region.

Naga2 will consist of two components: the TSCLK Complex and NagaCity Walk, with the following sub-components:

	Naga2
Gaming tables	200-300
Electronic gaming machines	500 - 2,500
Hotel rooms	850
VIP private gaming suites	38
Retail space (sq m)	3,800
MICE/Theatre facilities (seating capacity)	2,000
Parking spaces	400

The TSCLK Complex (also known as Naga2) is undergoing fit-out and is expected to be operational in the fourth quarter of 2017. The Group believes that the opening of Naga2 with provision of ancillary entertainment facilities will enhance NagaWorld’s appeal to both the Mass Market and VIP Market across the region and further cement NagaWorld as the entertainment centre in Mekong Region for the benefit of all Shareholders.

Updates of NagaCity Walk

Exterior of NagaCity Walk

Interior of NagaCity Walk

Retail shop operated by China Duty Free Group

On 17 May 2016, pursuant to the Share Purchase Agreement, Dr. Chen notified the Company of his election of Split Completion, whereby the NagaCity Walk Completion will take place in advance of the TSCLK Complex Completion.

Dr. Chen also elected for the Consideration for the City Walk Shares, payable by the Company at the NagaCity Walk Completion, to be settled by way of the issue of the NagaCity Walk Convertible Bonds amounting to US$94 million in accordance with the terms of the Share Purchase Agreement in respect of the Acquisition which was approved by the Independent Shareholders (as defined in the Circular) at an extraordinary general meeting of the Company held on 30 January 2012.

Each of the conditions precedent to the NagaCity Walk Completion has been satisfied. Accordingly, the NagaCity Walk Completion, comprising the transfer of the City Walk Shares to the Company and the issue of the NagaCity Walk Convertible Bonds to Dr. Chen, has taken place on 17 May 2016.

Located right next to NagaWorld, NagaCity Walk offers duty-free shopping operated by China Duty Free Group, the largest duty-free operator in China, as its anchor tenant. China Duty Free Group has leased about 3,800 square metres in the NagaCity Walk to operate duty-free shopping which opened in August 2016.

Artist impression of Vladivostok project

Reference is made to the announcement of the Company dated 9 September 2013 in relation to the Company's investment in Vladivostok, Russia. Pursuant to an investment agreement dated 6 September 2013 entered into among the Company, the Administration of Primorsky Territory of the Russian Federation acting by its Governor; Open Joint Stock Company Primorsky Krai Development Corporation and the Department of International Cooperation and Tourism Development of the Primorsky Territory, the Group agreed to make an investment of not less than US$350 million (approximately HK$2.7 billion or approximately Russian Roubles 11.6 billion) in a gaming and resort development project in Russia under the name 'Primorsky Entertainment Resort City' (PERC) (the "PERC Project") sited on an area with dual frontage and majestic views to the sea and an inland lake flanked by two hills.

An office has been established in the city centre of Vladivostok, Russia and certain key personnel have been appointed to monitor various aspects of the progress of the project which remains broadly on schedule for operation by 2019.

The Group believes that its strategy to diversify its business geographically and expand into new casino markets will drive revenue growth in the long term.