Century Legend, which holds stakes of 15 percent in VIP junket operations in Casino Lisboa and the Diamond Casino in the Holiday Inn Macau, this week responded to a cautionary note that auditors Grant Thornton put on its annual results for the second year in a row over the lack of documentation on the VIP businesses.

Century Legend said the lack of documentation ``must be viewed against the inherent informality'' of the VIP business in Macau. It said ``prevailing industry market practice'' was for verbal agreements among investors in junket operators and between their syndicates and casino operators.

``The association of the members of the syndicates [is] based on mutual trust and confidence,'' it said.

``Being a passive investor holding only a minority 15 percent interest in the syndicates, the company is not able to change the scenario.''

It said the head of the syndicates issued monthly statements to fellow investors on expenses incurred and payments received from casino operator Sociedade de Jogos de Macau, and verbally confirmed the profit distributions against its own records. This was judged to be sufficient proof by its board to recognize HK$5.5 million as its share of the junkets' profits last year.

Century Legend incorporated joint ventures with controlling shareholder China Sky Investments in January to apply for junket licenses for the two VIP operations after China Sky bought out the other members of the two existing syndicates.

It pledged that the joint ventures will maintain proper documentation and audited accounts and ``use their best endeavor'' to push SJM to put their contractual arrangement in writing. Macau is in the process of licensing junket agents under a new regulatory system.

In a separate announcement, Century Legend said another joint venture it formed with China Sky has paid HK$4 million for a one-year option to buy the Holiday Inn for at least HK$540 million. The partners have to pay HK$5.4 million a month to maintain the option, with the exercise price rising by HK$1.6 million each month they wait.

If the companies do buy the property, Century Legend said they will expand the hotel's casino. It added that the hotel turned an operating profit of HK$20.6 million last year, more than double its earnings the year before.

In its annual report, the company said it holds an 11 percent stake in Subic Diamond Entertainment, which runs junkets and is involved in the management of a casino in the Subic International Hotel in Olongopo City, the Philippines, which is scheduled to open this month.

zach.coleman@singtaonewscorp.com