STAR CRUISES LIMITEDSuite 1501, Ocean Centre, 5 Canton Road, Tsimshatsui, Kowloon, Hong Kong SAR

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2005 ANNUAL REPORT

Scheduled International Ports of Call by Region 2006

ALASKA Juneau, Ketchikan, Skagway ANTARCTICA Cape Lookout(Elephant Island), Half Moon Island, Hope Bay, LemaireChannel/Port Lockroy (Jougla Point) Paradise Harbour, Stanley(Falkland Islands), West Point (Falkland Islands) ASIA Bangkok(Laem Chabang), Danang, Goa, Halong Bay, Ho Chi Minh City,Hong Kong, Hua Hin, Kaoshiung, Kochi, Ko Samui, Kota Kinabalu,Krabi, Kuala Lumpur (Port Klang), Kuching, Lakshadweep ( KadmatIsland), Langkawi Island, Malacca, Mumbai, Nha Trang, Penang,Phuket Island, Redang Island, Sihanoukville, Singapore, XiamenNORTH AMERICA Astoria, Bar Harbor, Boston, Charleston, Halifax,Houston, Key West, Los Angeles, Martha’s Vineyard, Miami, NewOrleans, New York, Newport, Orlando (Port Canaveral),Philadelphia, Prince Rupert, San Francisco, Seattle, Vancouver,Victoria SOUTH AMERICA Arica, Buenos Aires, Coquimbo,Iquique, Itajai, Lima (Callao), Manta, Montevideo, Puerto Chacabuco,Puerto Madryn, Puerto Montt, Punta Arenas, Punta Del Este, Rio deJaneiro, Salaverry, San Andres, San Juan Del Sur, Santiago(Valparaiso), Talcahuano (Concepcion), Ushuaia, Valdivia (Corral)

EUROPE Ajaccio (Corsica), Alicante, Amsterdam, Athens(Piraeus), Barcelona, Bordeaux, Cadiz, Cannes, Corfu, Dublin,Dubrovnik, Florence/Pisa (Livorno), Funchal (Madeira), Gibraltar,Iraklion, Istanbul, Izmir, Katakolon, Korcula, La Coruna, La Spezia(Florence/Pisa), Leixoes, Lisbon, London (Dover), Malaga,Marseille (Aix En Provence), Messina, Mykonos, Naples(Capri/Pompeii), Olbia, Palma (Majorca), Paris (Le Havre), Patmos,Ponta Delgada, Por toferraio, Portofino, Rhodes, Rome(Civitavecchia), Santa Cruz De Tenerife, Santorini, Sao Vicente(Cape Verde), Sorrento, Split, St. Hilier (Jersey), Sysdisfjordur,Taormina, Toulon (St. Tropez), Valletta, Venice, Villerfranche (Nice),Warnemunde (Ber l in), Waterford, Zadar, Zeebrugge(Bruges/Brussels) SCANDINAVIA & RUSSIA Aalborg, Aarhus,Akureyri, Bergen, Copenhagen, Flam, Geiranger, Gudvangen,Hellesylt, Helsinki, Honningsvag, Husavik, Isafjordur, Kalmar,Klaipeda, Kristiansand, Lerwickl, Oslo, Reykjavik, Ronne(Bornholm), Skagen, St. Petersburg , Stavanger, Stockholm, Tallinn,Thorshaven, Tromso, Trondheim, Ystad HAWAI’I Fanning Island,

(Rep. of Kiribati), Hilo, Honolulu, Kahului, Kona, Lahaina, NawiliwiliAFRICA Alexandria, Aquaba, Cape Town, Casablanca, Durban,Mayotte, Mombasa, Nosy Be Madagascar, Port Said, Safaga(Luxor), Sharm El Sheikh, Walvis Bay, Zaanzibar CARIBBEAN &BERMUDA Basseterre, Belize City, Bridgetown, Cayo Levantado,Charlotte Amalie, George Town, Grand Bahama Island, GreatStirrup Cay, Hamilton, King’s Wharf, Montego Bay, Nassau, Ocho

Rios, Oranjestad, Philipsburg, Puerto Limon, Puerto Quetzal,Puntarenas, Roatan (Bay Island), Roseau, San Juan, Santo TomasDe Castilla, St. John’s, St. George’s (Bermuda), St. George’s(Grenada), St. Thomas, Tortola, Willemstad PANAMA CANAL &MEXICO Acapulco, Cabo San Lucas, Cancún, Colon, Costa Maya,Cozumel, Ensenada, Hutulco, Manzanillo, Mazatlan, Playa delCarmen, Progreso, Puerto Vallarta, Zijuatane/Ixtapa

* Ports of call are subject to change

The Star Cruises Group

Honolulu

Miami

London

OsloStockholm

Wiesbaden

Dubai

Mumbai

Ahmedabad

Port Klang

(Kuala Lumpur)

New Delhi

Bangkok

Singapore

Jakarta

Hong Kong

Taipei

SeoulTokyo

Manila

Beijing

Shanghai

Guangzhou

Sydney Auckland

Star Cruises Corporate Headquarters

Worldwide Offices

This Annual Report contains forward-looking statements that involve risks anduncertainties. The forward-looking statements are not historical facts, but ratherare based on the current beliefs, assumptions, expectations, estimates andprojections of the directors and management of Star Cruises Limited (the“Company”) about the industry and markets in which the Company and itssubsidaries (the “Group”) operate. These statements are not guarantees of futureperformance and are subject to risk, uncertainties and other factors, some ofwhich are beyond the control of the Group, are difficult to predict and couldcause actual results to differ materially from those expressed or forecast in theforward-looking statements. Factors that could cause actual results to differmaterially from those reflected in the forward-looking statements include generaleconomics and business conditions, changes in cruise industry competition,weather and other factors. Reliance should not be placed on these forward-looking statements, which reflect the view of the Company’s directors andmanagement as of the date of this report only. The Company undertakes noobligation to publicly revise these forward-looking statements to reflect eventsor circumstances that arise after publication.

Corporate Information 3

Chairman’s Statement 4

Fleet Profile 8

Global Highlights 12

Management’s Discussion and Analysis of 16Financial Condition and Results of Operations

Directors and Senior Management Profiles 21

Report of the Directors 25

Corporate Governance Report 38

Consolidated Income Statement 50

Balance Sheets 51

Consolidated Cash Flow Statement 53

Statements of Changes in Equity 55

Notes to the Consolidated Financial Statements 59

Auditors’ Report 109

Audited Five Years Financial Summary 110

Property Summary 111

Star Cruises Worldwide 112

Cover: NCL’s Norwegian Jewel at sea

SuperStar Virgo & SuperStar Gemini alongside the Star Cruises Jetty atTanjung Malai, Langkawi, Malaysia

Contents

Corporate Information

BOARD OF DIRECTORS

Tan Sri Lim Kok ThayChairman, President and Chief Executive Officer

Mr. Alan Howard Smith, J.P.Deputy Chairman andIndependent Non-executive Director

Mr. Chong Chee TutExecutive Director and Chief Operating Officer

Mr. William Ng Ko SengExecutive Director and Executive Vice President

Mr. David Colin Sinclair VeitchExecutive Director of the Company, Deputy Chairman,President and Chief Executive Officer of NCL Corporation Ltd.

Mr. Tan Boon SengIndependent Non-executive Director

Mr. Lim Lay LengIndependent Non-executive Director

SecretaryMs. Louisa Tam Suet Lin

Assistant SecretaryAppleby Corporate Services (Bermuda) Ltd.

Registered OfficeCanon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda

Corporate HeadquartersSuite 1501, Ocean Centre, 5 Canton Road, Tsimshatsui,Kowloon, Hong Kong SARTel: (852) 23782000 Fax: (852) 23143809

Bermuda Principal RegistrarButterfield Fund Services (Bermuda) LimitedRosebank Centre, 11 Bermudiana Road, Pembroke, BermudaTel: (441) 2951111 Fax: (441) 2956759

Hong Kong Branch RegistrarComputershare Hong Kong Investor Services Limited46th Floor, Hopewell Centre, 183 Queen’s Road East,Hong Kong SARTel: (852) 28628628 Fax: (852) 28650990/25296087

Transfer AgentM & C Services Private Limited138 Robinson Road #17-00, The Corporate Office,Singapore 068906Tel: (65) 62280507 Fax: (65) 62251452

AuditorsPricewaterhouseCoopers, Certified Public Accountants22nd Floor, Prince’s Building, Central, Hong Kong SAR

Internet Homepagewww.starcruises.com

Investor RelationsEnquiries may be directed to:

Ms. Louisa Tam Suet LinCompany SecretaryHong Kong SARTel: (852) 23782000 Fax: (852) 23143809E-mail : louisatam@starcruises.com.hk

Mr. Gerard Lim Ewe KengChief Financial OfficerPort Klang, Selangor, MalaysiaTel: (603) 31092600 Fax: (603) 38840213E-mail : gerard@starcruises.com.my

SuperStar Virgo & SuperStar Gemini alongside the Star CruisesTerminal at Port Klang, Selangor, Malaysia

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Chairman’s Statement

SuperStar Libra in Kadmat Island, Lakshadweep Isles, IndiaMardi Gras Cabaret Lounge &Nightclub, Pride of America

Dear Valued Shareholders,

On behalf of the Board of Directors, I would like to present theAnnual Report for the Star Cruises Group of Companies (“theGroup”) for the year ended 31 December 2005.

A BRIEF REVIEW

Review of Operations

2005 started with the Asia-Pacific region reacting to thedevastation caused by the Boxing Day tsunami. We had toreact by changing affected itineraries and dealing with massivepassenger cancellations. I am glad to report that after the initialfew months of turmoil the tourist numbers for the affected areashave very much returned to normal.

In North America, Hurricane Katrina adversely affected NCLwhich had to redeploy the Norwegian Sun from her scheduledhomeport at New Orleans to Houston.

On a more positive note, last year saw many new andinteresting developments for Star Cruises. One of the majorhighlights was the home-porting of a Star Cruises ship, theSuperStar Libra in India for the first time during the months ofOctober through to May, expanding our scope of operationsto cover South Asia as well.

A great deal of effort and preparation was undertaken by boththe shore and ship staff leading up to the arrival of SuperStarLibra in Mumbai. The home-porting of SuperStar Libra inMumbai was timely and supportive of the tremendous growthpotential and popularity of the Star Cruises brand in India.

For the summer deployment which coincides with the monsoonmonths in the west coast of India, we have decided to movethe SuperStar Libra over to the Eastern Mediterranean in thesummer of 2006. SuperStar Libra will be home-ported inValletta, Malta.

Our strategy of renewing our fleet continued in 2005 with thedelivery of the Pride of America for the NCL America brandand the Norwegian Jewel for the NCL brand in June and August2005 respectively.

The Pride of America is the largest US-flagged ship ever builtand the first newly constructed cruise ship to join the USregister in almost 50 years. Christened by The HonourableElaine L. Chao, US Secretary of Labour, the Pride of Americahas joined the Pride of Aloha in offering inter-island cruises inHawai’i.

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Tan Sri Lim Kok ThayChairman, President andChief Executive Officer

Pride of America in New York City

Valletta, Malta – Home-port of SuperStar Libra in the summer of 2006

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Courtyard Villas, Norwegian Jewel

Norwegian Jewel Christening Ceremony

Norwegian Jewel, NCL’s newest addition

We had the honour of Melania Trump christening the NorwegianJewel which boasts of a luxurious suite complex comprisingGarden and Courtyard Villas, a feature that makes this shipthe first in the industry to offer this exclusive class ofaccommodation. Her successful inaugural itinerary was in theMediterranean and the Baltics in the summer of 2005. She willreturn to the Mediterranean in the summer of 2006.

We proudly await the arrival of the Pride of Hawai’i for the NCLAmerica brand and the Norwegian Pearl for the NCL brandthis year as well as the Norwegian Gem next year for the NCLbrand. These new ships joining the fleet will be exciting andwill surprise the market in their design and interior.

Corporate Highlights

We are proud to report to shareholders that the Company wonthe “Best Cruise Operator in Asia-Pacific”award for a record 8th time at the TTG TravelAwards 2005. Our founder Tan Sri Lim GohTong on the same occasion was named asthe inaugural recipient of the “TravelEntrepreneur of the Year” award.

These prestigious awards are a reflectionof the international recognition for our effortsin not only striving to constantly enhancethe cruise experience for our passengers butalso in pioneering and developing thepotential of cruising in the region.

The accolades continued in India with StarCruises winning two awards for “BestProduct Promotion International” and“Unique Product International” at the IndiaTravel Mart shows in Bangalore andChennai, further reinforcing the acceptanceof the product in the domestic market.

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Star Cruises Ship Simulator Centre located at theStar Cruises Terminal, Port Klang, Malaysia

In China, the Genting-Star International Cruise ManagementProgramme was launched in Shanghai following an earlierMemorandum of Understanding signed between Star Cruisesand the Nanhu Vocational School. The programme has beendesigned along the globally recognised guidelines of theAustralasian Hotel College and the Australian Quality TrainingFramework, with particular emphasis on oral Englishcommunication skills and practical applications to cater to agrowing level of sophistication among travellers. The first batchof students will graduate in March 2006.

The Company together with Genting International PLC hasresponded to the Request for Concept for the Development ofan Integrated Resort at Marina Bay, Singapore and ourconsortium has progressed to the Request for Proposal stage.We will be submitting our proposal by March this year and theaward to the successful consortium is expected in June thisyear.

We entered into a Joint Venture Agreement with VXL CapitalLimited and Nan Fung Development Limited and submitted anExpression of Interest to the Government of Hong Kong forthe development of a cruise terminal. It is envisaged thatfollowing consultation via the Expression of Interest, theGovernment of Hong Kong may invite competitive bidding forthe grant of development rights for the cruise terminaldevelopment. Hong Kong is an important cruise hub for theGroup and the project will help advance the development ofthe cruise industry in East Asia.

Training and Safety

Having been in operation for 7 years and offering some of themost advanced Bridge Resource Management courses, theStar Cruises Ship Simulator Centre was awarded the QualityManagement System Standard ISO 9001:2000 by Lloyd’sRegister Quality Assurance, one of the biggest maritimeclassification societies in the world.

Having achieved this award is testimony to the high safetystandards and culture that has been inculcated throughout theCompany.

Acknowledgement

On behalf of the Board of Directors, I would like to extend mydeepest appreciation to the management, staff and crew fortheir dedicated commitment in contributing to the Group’sperformance in 2005.

I would also wish to express my sincere thanks to the variousgovernment authorities, business partners, consultants, travelagents, customers and loyal shareholders for their support andcooperation throughout the year and am deeply appreciativeof the tremendous support from the central and localgovernments in the jurisdictions where we operate.

Tan Sri Lim Kok ThayChairman, President andChief Executive Officer

20 February 2006

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Mariners Patio Bar,SuperStar Gemini

The Group’s vessels operating under the brand names StarCruises, Norwegian Cruise Line, NCL America, Orient Linesand Cruise Ferries call at over 200 destinations in Asia,Caribbean, Alaska, Bermuda, Antarctica, Hawai’i, North andSouth America, Europe and the Mediterranean.

Fleet Profile

SuperStar Virgo berthed at the HarbourFront Centre, Singapore

Swimming Pool,SuperStar Libra

Grand Piazza, SuperStar Virgo

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Star Pisces

MegaStar Aries

SuperStar Virgo

SuperStar Libra

SuperStar Gemini

MegaStar Taurus

Wasa Queen

STAR CRUISES

Star Cruises currently operates six ships in Asia namelySuperStar Virgo, SuperStar Libra, SuperStar Gemini, StarPisces, MegaStar Aries and MegaStar Taurus.

CRUISE FERRIES

The Cruise Ferries brand was introduced in 2001 andcurrently comprises the Wasa Queen which sails fromHong Kong. The brand is designed to provide an entry-pointexperience for first-time cruisers.

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Norwegian Dawn

Norwegian Star

Norwegian Jewel

Norwegian Spirit

Norwegian Sun

Norwegian Wind

Norwegian Dream

Norwegian Majesty

Norwegian Crown

NORWEGIAN CRUISE LINE

Ships currently in operation include Norwegian Jewel,Norwegian Dawn, Norwegian Star, Norwegian Sun,Norwegian Wind, Norwegian Dream, Norwegian Majesty,Norwegian Crown and Norwegian Spirit.

The Norwegian Pearl and Norwegian Gem are scheduled fordelivery in 2006 and 2007 respectively.

10

NCL AMERICA

Ships operating under NCL America currently include thePride of Aloha and the Pride of America. They will be joinedby the Pride of Hawai’i in April 2006.

ORIENT LINES

Founded in 1992, the award winning cruise line operates asingle cruise ship, the Marco Polo specialising in destination-oriented cruises worldwide.

Pride of America

Crystal Atrium, Norwegian Jewel

Pride of Aloha

Pride of Hawai’i

Marco Polo in Scandinavia

11

Global Highlights

Awards & Achievements

Fleet Captain Gustaf Gronberg (left), Senior Vice President,Marine Operations receiving the Quality Management SystemStandard ISO 9001:2000 award for the Star Cruises ShipSimulator Centre from Mr. Remko Hottentot of Lloyd’s RegisterAsia.

Mr. Chong Chee Tut, Star Cruises’ ChiefOperating Officer with the 2005 TTG Awardfor “Best Cruise Operator in Asia-Pacific”.

Tan Sri Lim Kok Thay, Star Cruises’ Chairman, President &Chief Executive Officer with the inaugural TTG “TravelEntrepreneur of the Year” award presented to foundingChairman Tan Sri Lim Goh Tong.

12

New Spectacular International Show

Hospitality Training

Travel Fairs

Kingdom of Kung Fu – USD1 milliondollar production by Star Cruiseslaunched onboard SuperStar Virgoin November 2005.

Star Cruises’ booth at the Malaysian Association of Tours &Travel Agents (“MATTA”) Fair held at the Putra World Trade Centre,Kuala Lumpur.

Star Cruises’ booth at the National Association of Travel AgentsSingapore (“NATAS”) Travel Fair, Singapore.

The inaugural batch of students of the Genting-StarInternational Cruise Management Programme,Shanghai.

13

Lion Dance at theHarbourFront Centre,Singapore greet guestsembarking SuperStarGemini.

Special welcome ceremony in conjunction withthe arrival of SuperStar Libra in Mumbai, India,25 September 2005.

Traditional welcome for guests on SuperStar Gemini’s first call forthe new season at the Star Cruises Terminal, Port Klang, Malaysia,21 November 2005.

Welcome garlands for guests boarding SuperStar Gemini on herfirst cruise from Singapore, 20 November 2005.

Special visitors from the AutismAssociation, Singapore visit SuperStarVirgo in conjunction with International

Chef’s Day, 14 October 2005.

Special Events

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New Vessels Join NCL’s Fleet

Top: Tan Sri Lim Kok Thay, Star Cruises’ Chairman, President &Chief Executive Officer delivering his speech at the NorwegianJewel’s christening ceremony at the Port of Miami, 3 November2005.

Left to right: Captain of Norwegian Jewel - Constantinos Fafalios;Reverend Kevin Johnson; Bettina Veitch; Puan Sri Cecilia Lim; StarCruises’ Chairman – Tan Sri Lim Kok Thay; NCL’s President andCEO - Colin Veitch & Norwegian Jewel’s Godmother –Melania Trump at the christening ceremony.

Pride of America, the newestaddition to the NCL America fleet.

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16

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

Effective 1 January 2005, the Group adopted the new and revised Hong Kong Financial Reporting Standards which are relevantto its operations. The comparative figures in respect of year 2004 have therefore been amended as required and wherenecessary, in accordance with the relevant requirements of the standards. The adoption of these accounting standards did nothave any significant impact on its results of operations and financial position, except for the adoption of certain accountingstandards which are discussed in note 1 to the consolidated financial statements.

The following discussion is therefore based on, and should be read in conjunction with, the financial statements and the notesthereto included elsewhere in the annual report.

General Description of the Group’s BusinessThe Group is the third largest cruise line in the world by lower berths, with a combined fleet of 22 ships in service and due to bedelivered, with about 35,000 lower berths under three principal brand names, Star Cruises (including Cruise Ferries),Norwegian Cruise Line (including NCL America) and Orient Lines.

Star Cruises (including Cruise Ferries) operate seven ships offering various cruise itineraries and calls destinations primarily inthe Asia Pacific region. Star Cruises, for the first time during the months of October through to May, home-ported the SuperStarLibra in India expanding to cover South Asia as well.

Norwegian Cruise Line (including NCL America) and Orient Lines operate twelve cruise ships (including the new ships deliveredin 2005) offering a wide variety of itineraries in Antarctica, Bermuda, Alaska, the Caribbean, Europe, the Mediterranean, Hawaii,Central and South America. In June 2005, NCL America took delivery of Pride of America on its inter-island Hawaii itinerariesand in August 2005, Norwegian Cruise Line took delivery of Norwegian Jewel which is presently offering Homeland Cruisingprogram to Canada and New England from New York as well as with cruises to Caribbean.

TerminologyCapacity Days represent double occupancy per cabin multiplied by the number of cruise days for the period.

Net Revenue Yield represents total revenues less commissions, transportation and other expenses, and onboard and otherexpenses per Capacity Day. The Group utilises Net Revenue Yield to manage its business on a day-to-day basis and believesthat it is the most relevant measure of the pricing performance and is commonly used in the cruise industry to measure pricingperformance.

Ship Operating Expenses represent operating expenses excluding commission, transportation and other expenses andonboard and other expenses.

Passenger Cruise Days represent the number of passengers carried for the period, multiplied by the number of days in theirrespective cruises.

Occupancy Percentage, in accordance with cruise industry practice, represents the ratio of Passenger Cruise Days to CapacityDays. A percentage in excess of 100 indicates that three or more passengers occupied some cabins.

Overview

Total revenuesTotal revenues of the Group consist of the following:

Revenues from the Group’s cruise and cruise-related activities can be further categorised as “cruise revenues” and “onboardand other revenues”. Cruise revenues are derived from the sale of passenger tickets. Passenger ticket sales comprise a one-offup-front payment collected from passengers for accommodation, meals in certain restaurants on the ship, certain onboardentertainment and, where relevant, air and land transportation to and from the ship. Revenues from passenger ticket sales arecollected from passengers prior to their departure on the cruise, usually at the time of booking the cruise.

Onboard and other revenues consist of revenues from gaming, beverage sales, shore excursions, spa services, internet cafés,art auctions, pre-cruise and post cruise packages, a la carte dining outlets and revenues from onboard retail sales. Onboardrevenues vary according to the size of the ships in operation, the length of cruises operated, and the markets in which the shipsoperate. The Group records onboard revenues from onboard activities the Group performs directly or that are performed byindependent concessionaires, from which the Group receives a percentage of their revenues.

Charter hire revenues comprise the revenues from the bareboat charter hire of a catamaran to a third party customer. Charterhire revenue generally varies according to the number of ships on charter hire during a given period. The Group did not have anycharter hire revenues in the year ended 31 December 2005.

The cruise industry in Asia Pacific is less seasonal than the North American cruise market. This lower degree of seasonality isprimarily attributable to the lower degree of seasonal climate variation in certain parts of Asia Pacific, particularly Southeast Asia.However, the Group has generally experienced a decrease in demand in December and January in the Hong Kong market attributableto unfavourable weather patterns during that time of year. This seasonal decrease in demand is generally offset by increased demandin other markets, such as Singapore, Thailand and Malaysia, as a result of public holidays in December and January.

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Total revenues (continued)The cruise industry in North America is, however, moderately seasonal with greater demand generally occurring during themonths of June to August.

Demand, however, also varies by ship and itinerary.

Operating expensesOperating expenses are made up of commissions, transportation and other expenses, onboard and other expenses, payroll andrelated expenses, food costs, fuel and other operating expenses.

Commissions, transportation and other expenses consist of those amounts directly associated with passenger ticket revenues.These amounts include travel agent commissions, air and other transportation expenses, credit card fees and certain portexpenses.

Onboard and other expenses consist of direct costs that are incurred primarily in connection with onboard and other revenues.These costs are incurred in connection with gaming, shore excursions, bar sales, land packages, cancellation fees, sales ofvacation package insurance and credit card fees.

Payroll and related expenses represent the cost of wages and benefits for crew and other administrative shipboard employees.

Food expenses consist of food costs for passengers and crew, which typically vary according to the number of passengers onboard a particular ship.

Other operating expenses consist of costs such as repair and maintenance, ship insurance and other costs.

Selling, general and administrative expensesSelling expenses consist of the expenses of the Group’s marketing activities. These marketing activities include advertising andpromotional activities, and other passenger related services, such as the Group’s loyalty programmes.

General and administrative expenses consist of shoreside personnel wages and benefits, and expenses relating to the Group’sworld-wide offices, information technology support, crew training and support (including the operation of the Star Cruises ShipSimulator Centre), operation of the Group reservation call centres and support functions, accounting, purchasing operations,ship administration and other ship-related support activities.

Depreciation and amortisation expensesDepreciation and amortisation expenses consist primarily of depreciation of ships and shoreside assets as well as amortisationof goodwill and trade names. Following the adoption of new accounting standards (see note 1 to the consolidated financialstatements) on 1 January 2005, the Group ceased amortisation of goodwill and trade names. Costs associated with drydockinga ship are deferred and included in the cost of the ships and amortised over the period to that ship’s next scheduled drydockingwhich is generally once every two to three years.

Year ended 31 December 2005 (“Year 2005”) compared with year ended 31 December 2004 (“Year2004”)

TurnoverThe Group’s total revenue for the Year 2005 was US$1,954.8 million, up 15.1% from US$1,699.0 million for the Year 2004. Totalcapacity days for the Year 2005 was 8,823,133 compared to 8,163,437 for the Year 2004. Net revenue increased by 13.7%. Thehigher net revenue was due primarily to a 8.1% increase in capacity and a 5.2% increase in net revenue yield. The higher netrevenue yield was attributable to an increase in cruise ticket prices and higher onboard spending. Occupancy level for both theYears 2005 and 2004 was relatively unchanged, at 103.8%.

Star Cruises in Asia Pacific operated with 7.9% lower capacity days in the Year 2005 compared to the Year 2004 because of thedisposals of two less cost efficient ships m.v. SuperStar Capricorn and m.v. SuperStar Aries and the transfer of m.v. SuperStarLeo (renamed m.v. Norwegian Spirit) to the NCLC Group in the first half of 2004, partially offset by the addition of m.v. SuperStarLibra, a ship that was returned to Star Cruises upon expiration of the charter agreement with NCLC Group in August 2005. Netrevenue yield was 3.6% higher compared with the Year 2004. The higher net revenue yield for the Year 2005 was a result ofhigher onboard spending partially offset by the lower than average net revenue yield of m.v. SuperStar Libra during her start-upphase in India. Occupancy level for the Year 2005 was at 93.5% versus 96.5% for the Year 2004.

NCLC Group recorded an increase in capacity days of 12.6% for the Year 2005 compared to the Year 2004. The increase incapacity was primarily due to the additions of m.v. Norwegian Spirit, m.v. Pride of America and m.v. Norwegian Jewel whichentered service in May 2004, June 2005 and August 2005, respectively, partially offset by the departure of m.v. SuperStar Librato Star Cruises. Net revenue yield was up by 6.6% compared with the Year 2004. This increase was primarily attributable toincreases in cruise ticket prices, higher onboard revenues and NCLC Group’s acquisition of Polynesian Adventure Tours inNovember 2004. Occupancy level for the Year 2005 was at 106.1% versus 105.9% for the Year 2004.

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Costs and expensesTotal costs and expenses before interest and non-operating items for the Year 2005 amounted to US$1,810.3 million comparedwith US$1,578.7 million for the Year 2004, an increase of US$231.6 million.

Operating expenses increased by US$227.4 million to US$1,354.6 million for the Year 2005 from US$1,127.2 million for the Year2004. Ship operating expenses was 20.5% higher compared with the Year 2004. The start-up costs for the introduction of m.v.Norwegian Jewel and m.v. Pride of America, higher payroll and related expenses and increased fuel costs were the primaryfactors for the increase in these ship operating expenses partially offset by other operating efficiencies. The higher payroll andrelated expenses were mainly relating to the U.S. crew used for Hawaii itineraries which began operations in June 2004 andexpanded to two ships with the introduction of m.v. Pride of America at the end of second quarter of 2005. Average fuel prices inthe Year 2005 increased approximately 41% compared with the Year 2004. Fuel costs were at 17% of ship operating expensesin the Year 2005 compared with 14% in the Year 2004. On a per capacity day basis, ship operating expenses were 11.5% highercompared with the Year 2004. The aforementioned increases in payroll and related expenses and fuel costs represented nearly6.6 and 5.0 percentage points, respectively, of this increase.

Selling, general and administrative expenses (“SG&A”) increased by US$23.1 million to US$278.2 million for the Year 2005 fromUS$255.1 million for the Year 2004. The increase in SG&A expenses was primarily the result of increased shoreside expense forthe Honolulu office, marketing costs related to NCL America, the introduction of Pride of America and Norwegian Jewel in June2005 and August 2005 respectively. SG&A expenses per capacity day increased by 0.9% compared with the Year 2004 mainlydue to the offsetting effect of the marketing expenses relating to the introduction of m.v. Norwegian Jewel and m.v. Pride ofAmerica and higher payroll costs for the Honolulu office with the benefits of the economies of scale achieved from the capacityincrease.

Depreciation and amortisation expenses decreased by US$5.9 million to US$176.0 million for the Year 2005 compared withUS$181.9 million for the Year 2004 as a result of the impact of the cessation of amortisation of goodwill and trade names sincethe beginning of 2005 following the adoption of new accounting standards effective 1 January 2005, partially offset by anincrease in costs associated with ship drydocks and the additions of m.v. Norwegian Jewel and m.v. Pride of America. Goodwilland trade names amortisation expenses was US$16.5 million for the Year 2004.

A net impairment loss of US$1.4 million was recorded in the Year 2005 arising from a US$2.7 million impairment loss on thedisposal of a catamaran which was partially offset by a US$1.3 million impairment loss reversal on s/s Norway following thecompletion of her disposal in January 2006. An impairment loss on s/s Norway of US$14.5 million was recorded in the Year2004.

Operating profitOperating profit increased by US$24.2 million to US$144.5 million for the Year 2005 compared with US$120.3 million for the Year2004.

Non-operating income/(expense)Non-operating expenses decreased by US$6.9 million to US$124.0 million for the Year 2005 compared with US$130.9 million forthe Year 2004. This was mainly due to the net effect of the following items:

(a) Interest expense, net of interest income and capitalised interest increased by US$40.4 million to US$147.4 million for theYear 2005 compared with US$107.0 million for the Year 2004 primarily as a result of the impact of higher interest rates andan increase in average outstanding borrowings, including the US$250 million Senior Notes issued in July 2004. Capitalisedinterest increased to US$18.4 million for the Year 2005 from US$10.2 million for the Year 2004 mainly due to higher averageborrowings associated with the ships under construction.

(b) For the Year 2005, the Group recorded its share of loss in Valuair Limited of US$5.2 million from the date of acquisition inmid-December 2004 to the date the Group ceased to have significant influence in July 2005.

(c) During the Year 2005, the Group had a non-cash gain on financial instruments amounting to US$4.4 million compared to anon-cash loss on financial instruments of US$11.3 million in the Year 2004.

(d) As a result of converting the outstanding balance of €120.7 million of Euro denominated debts into US dollar denominateddebts, the Group realised a foreign exchange gain of US$14.9 million in the Year 2005. The remaining Euro denominateddebts which have been marked to market at year end resulted in a further US$14.5 million gain in the Year 2005. In the Year2004, the Group recorded a non-cash Euro denominated debt translation loss of US$9.5 million.

Profit/(Loss) before taxationProfit before taxation for the Year 2005 was US$20.5 million compared to loss before taxation of US$10.6 million for the Year2004.

19

TaxationThe Group incurred taxation expenses of US$2.6 million for the Year 2005 compared to US$1.0 million for the Year 2004. Highertaxation expenses for the Year 2005 were mainly due to the provision of U.S. federal income tax for the tour operation in U.S. andcorporation tax for Indian operations.

Net profit/(loss) attributable to shareholdersAs a result, the Group recorded a net profit attributable to shareholders of US$17.9 million for the Year 2005 compared with a netloss attributable to shareholders of US$11.6 million in the Year 2004.

Liquidity and capital resources

Sources and uses of fundsThe majority of the cash and cash equivalents are held in U.S. dollars. For the Year 2005, cash and cash equivalents decreasedto US$187.7 million from US$341.0 million as at 31 December 2004. The decrease of US$153.3 million in cash and cashequivalents was mainly due to the net effect of the following items:

(a) The Group’s business provided US$220.0 million of net cash from operations for the Year 2005 compared to US$283.0million for the Year 2004. The decrease in net cash generated from operations was primarily due to the increase in interestpayments.

(b) The Group’s capital expenditure was approximately US$669.0 million during the Year 2005. Approximately US$599.3million of the capital expenditure was related to capacity expansion and the remaining was vessel refurbishments andonboard assets.

(c) The Group repaid US$373.4 million of its long-term bank loans during the Year 2005 and drewdown a total of US$715.7million under the existing bank loans to finance its ships construction and deliveries of m.v. Norwegian Jewel and m.v. Prideof America and for general working capital purposes. In the Year 2005, the Group also paid loan arrangement fees in theamount of US$16.2 million.

(d) Restricted cash increased by US$19.5 million during the Year 2005 to US$48.0 million as at 31 December 2005 mainly dueto amounts withheld by the credit card processor as a result of an increase in advance ticket sales during the year.

Gearing ratioThe gearing ratio as at 31 December 2005 was 0.54 times, a slight increase, from 0.52 times as at 31 December 2004. Thecalculation of gearing ratio is based on total outstanding borrowings (including the equity component of the convertible bonds)of the Group of approximately US$2.94 billion (2004: US$2.61 billion) divided by the total assets at the end of the year ofapproximately US$5.41 billion (2004: US$4.99 billion).

Contingent liabilitiesDetails of the contingent liabilities of the Group as at 31 December 2005 are disclosed in note 32 to the consolidated financialstatements.

Future commitments and funding sourcesAs at 31 December 2005, the Group had approximately US$2.5 billion of bank borrowings, US$180 million of convertible bonds(including the equity component of the convertible bonds) and US$250 million unsecured senior notes. Details of the borrowingsand a schedule setting out the repayments of such borrowings are disclosed in note 24 to the consolidated financial statements.The outstanding bank borrowings are secured by legal charges over vessels including fixed and floating charges over assets ofthe Group of US$4.2 billion.

The Group has three ships under construction for additional capacity of approximately 7,200 berths with scheduled deliveries inthe second quarter of 2006, the fourth quarter of 2006 and the fourth quarter of 2007. The aggregate cost of the ships isapproximately US$1.4 billion, of which the Group has paid US$402.6 million as at 31 December 2005.

As at 31 December 2005, liquidity of the Group was US$407.7 million consisting of US$187.7 million in cash and cash equivalentsand US$220.0 million available under the Senior Secured Credit Facility. In addition, the Group has specific funding for the threeships under construction for the equivalent of approximately US$0.9 billion that can be denominated in U.S. dollars or Euros.

ProspectsThe outlook for 2006 remains challenging as rising fuel prices and interest rates could continue to impact 2006 earnings.

In view of the competition in Asia Pacific, Star Cruises recently announced the summer deployment of the m.v. SuperStar Librainto eastern Mediterranean to further develop the cruise market outside of Singapore and Hong Kong.

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Prospects (continued)NCLC Group is proudly awaiting the arrival of the Pride of Hawaii for the NCL America brand and the m.v. Norwegian Pearl forthe NCL brand this year as well as the m.v. Norwegian Gem next year for the NCL brand. Based upon the current demandenvironment, NCLC Group expects net revenue yield for the full year of 2006 to be up roughly 5% but flat for the first quarter of2006 due to the timing of its fleet expansion in the premium-priced Hawaii trade.

Human ResourcesAs at 31 December 2005, the Group had approximately 19,800 employees, of which approximately 17,600 employees (almost90%) were ship officers and crew. The remaining 10% of employees were employed in the various shore office locations of theGroup world-wide. The Group provides competitive salaries, benefits and incentives including provident fund scheme andmedical insurance schemes for its staff. In addition, the Company has adopted a Post-listing Employees’ Share Option Schemeunder which options may be granted from time to time to eligible employees of the Group entitling them to subscribe for sharesin the share capital of the Company.

For the year ended 31 December 2005, there is no significant change in the remuneration policies, bonus, share optionsscheme and training schemes for the Group.

Financial Instruments

GeneralThe functional currency of the Group is the U.S. dollar as a substantial portion of the Group’s transactions are realised or settledin U.S. dollars. Transactions in currencies other than U.S. dollars (“foreign currencies”) are translated into U.S. dollars atexchange rates in effect at the transaction dates. Monetary assets and liabilities expressed in foreign currencies are translatedat exchange rates at the balance sheet date. All such exchange differences are reflected in the consolidated income statement.

The Group is exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices.The Group minimises these risks through a combination of the normal operating and financing activities and through the use ofderivative financial instruments. The financial impacts of these hedging instruments are primarily offset by correspondingchanges in the underlying exposures being hedged. The Group achieves this by closely matching the amount, terms andconditions of the derivative instruments with the underlying risk being hedged.

Foreign currency exchange rate riskThe Group’s primary exposure to foreign currency exchange rate risk relates to the three ships under construction and the debtagreements used to fund the construction. The ship contracts are denominated in Euros and the associated debt agreementscan be denominated in either U.S. dollars or Euros. If denominated in Euros, the principal and interest payments for the debt willbe payable in Euros, and will be subject to the exchange rate of the Euros at the time these payments are due. As at 31December 2005, the Group had approximately €169 million loan which is denominated in Euros.

The Group is also exposed to foreign currency exchange rate fluctuations on the U.S. dollar value of the Group’s foreigncurrency forecasted transactions. The Group’s principal net foreign currency exposure relates to the Singapore dollars, theHong Kong dollars, and the Euros. To manage this exposure, the Group takes advantage of any natural offsets of the Group’sforeign exchange revenues and expenses and from time to time enters into foreign exchange forward contracts for a portion ofthe remaining exposure related to these forecasted transactions. As at 31 December 2005, the Group was a party to certainforward contracts with a total notional amount of US$206.7 million in respect of the Singapore dollars. These forward contractshave remaining lives ranging from 1 to 6 years.

Interest rate riskThe majority of the Group’s indebtedness and its related interest expenses are denominated in U.S. dollars and are based uponfloating rates of interest. In order to limit its exposure to interest rate fluctuation, variable to fixed interest rate swaps have beenutilised from time to time, to fix a portion of interest costs over a period of time. The Group continuously evaluates its debtportfolio, including interest rate swaps to achieve a desired proportion of variable and fixed rate debt based on its view of interestrate movement. As at 31 December 2005, the Group had interest rate swaps on debts with a total notional amount of US$430.4million with remaining lives ranging from 2 to 6 years. In addition, the Group has a series of 5.5% capped USD LIBOR-in-arrearsinterest rate swaps with a total notional amount of approximately US$140.8 million to limit its exposure to fluctuations in interestrate movements if the London Interbank Offer Rate (“LIBOR”) rate moves beyond the cap level of 5.5% with the remaining livesof 3 years. With these interest rate swaps in place and the conversion of certain portion of the borrowing from LIBOR-based rateto a fixed rate, as at 31 December 2005, 38% of the Group’s debts was fixed and the remaining 62% was floating.

Fuel price riskThe Group’s exposure to market risk for changes in fuel prices related to the consumption of fuel on the ships. Fuel costs, as apercentage of the total revenues, was approximately 7.5% in 2005 and 5.8% in 2004. The Group mitigates the financial impact offluctuation in fuel prices using fuel surcharge in Asia and fuel swap agreements. As at 31 December 2005, the Group had fuel swapagreements to pay fixed prices for fuel with an aggregate notional amount of approximately US$12.5 million, maturing in 2006.

Directors and Senior Management Profiles

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Directors

Tan Sri Lim Kok ThayChairman, President and Chief Executive OfficerTan Sri Lim Kok Thay, aged 54, was appointed an Executive Director in September 1994. He is the Chairman, President andChief Executive Officer of the Group and a director of a number of subsidiaries of the Group. He focuses on long-term policiesand new shipbuildings. Tan Sri Lim has been with the Group since the formation of the Company in 1993. He is the ExecutiveChairman of Genting International PLC, a public company listed on the Euro MTF Market of the Luxembourg Stock Exchangeand the Singapore Exchange Securities Trading Limited and a subsidiary of Genting Berhad; Chairman, President and ChiefExecutive of Genting Berhad, a company listed on Bursa Malaysia Securities Berhad; Chairman, President and Chief Executiveof Resorts World Bhd and a director and Joint Chief Executive of Asiatic Development Berhad, both of which are public listedcompanies in Malaysia and subsidiaries of Genting Berhad; and a director of Resorts World Limited, Golden Hope Limited,Joondalup Limited and Cove Investments Limited. Genting Berhad, Resorts World Bhd, Resorts World Limited, Golden HopeLimited acting as trustee of the Golden Hope Unit Trust, Joondalup Limited and Cove Investments Limited are substantialshareholders of the Company. Genting Berhad is an investment holding and management company and is principally involved,through its subsidiaries and associated companies, in leisure and hospitality, gaming and entertainment businesses, plantation,generation and supply of electric power, property development and management, tours and travel related services, investments,manufacturing and trading in paper and paper related products, cruise and cruise related operations and oil and gas explorationactivities. Tan Sri Lim was also involved in the development of the Genting Highlands Resort in Malaysia and the overall conceptand development of the Burswood Resort in Perth, Australia and the Adelaide casino in South Australia. Tan Sri Lim graduatedwith a Bachelor of Science (Civil Engineering) degree from the University of London in 1975 and attended the Program forManagement Development at the Harvard Graduate School of Business in 1979.

Mr. Alan Howard Smith, J.P.Deputy Chairman and Independent Non-executive DirectorMr. Alan Howard Smith, J.P., aged 62, has been an Independent Non-executive Director of the Company since August 2000. Mr.Smith was the Vice Chairman, Pacific Region, of Credit Suisse First Boston (“CSFB”), a leading global investment bank from1997 until he retired in December 2001. Prior to joining CSFB, he was Chief Executive of the Jardine Fleming Group from 1983to 1994 and was Chairman of the Jardine Fleming Group from 1994 to 1996. Mr. Smith has over 27 years of investment bankingexperience in Asia. He was elected a council member of The Stock Exchange of Hong Kong Limited on two occasions. He wasa member of the Hong Kong Special Administrative Region Government’s Economic Advisory Committee, and was for 10 yearsa member of the Hong Kong Government’s Standing Committee on Company Law Reform. He graduated with an LL.B.(Honours) degree from Bristol University, England in 1964, and was admitted as a solicitor in England in 1967 and in Hong Kongin 1970. Mr. Smith is also an Independent Non-executive Director of Kingway Brewery Holdings Limited, Frasers Property(China) Limited, VXL Capital Limited and Lei Shing Hong Limited, which are listed on The Stock Exchange of Hong KongLimited. He also holds directorships in a number of other companies listed overseas.

Mr. Chong Chee TutExecutive Director and Chief Operating OfficerMr. Chong Chee Tut, aged 56, was appointed an Executive Director in August 2000. Mr. Chong is the Chief Operating Officer ofthe Company and a director of a number of subsidiaries of the Group. Mr. Chong worked for 18 years for Exxon Corporation inAustralia, Malaysia and Thailand in various senior management positions. Prior to joining the Company in 1995, Mr. Chong wasemployed by Genting Australia Pty Ltd., an affiliate of the Company and was involved in property development and managementin Sydney. Mr. Chong has a Bachelor of Mechanical Engineering (Honours) degree from the University of Canterbury, NewZealand.

Mr. William Ng Ko SengExecutive Director and Executive Vice President for Corporate AffairsMr. William Ng Ko Seng, aged 51, was appointed an Executive Director in August 1998. Mr. Ng is the Executive Vice Presidentfor Corporate Affairs and a director of a number of subsidiaries of the Group. He joined the Group at its inception in 1994 andprior to joining the Group, he had been with the Genting International Group since 1987. Mr. Ng had also been in public practicewith international accounting firms in the United Kingdom and Malaysia for 12 years. He is a Fellow of the Institute of CharteredAccountants in England and Wales, Fellow of the Hong Kong Institute of Certified Public Accountants and Associate of theInstitute of Chartered Accountants in Australia and Malaysian Institute of Accountants. Mr. Ng also holds a Master of Art degreein Information Technology from Macquarie University in Sydney, Australia.

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Directors (continued)

Mr. David Colin Sinclair VeitchExecutive Director of the Company and Deputy Chairman, President and Chief Executive Officer of NCL Corporation Ltd.Mr. David Colin Sinclair Veitch, aged 49, has been an Executive Director of the Company since August 2000. He is also theDeputy Chairman, President and Chief Executive Officer of NCL Corporation Ltd. (“NCLC”) and a director of a number ofsubsidiaries of NCLC. Before he joined the NCLC Group in January 2000, Mr. Veitch was the Chief Financial Officer and theSenior Vice President of Marketing and Corporate Development of Princess Cruises for approximately 8 years, withresponsibilities at varying times for finance, marketing, international sales, strategic planning and corporate development. Inaddition, beginning in mid 1998, he was also the executive in charge of Princess Cruises’ sister company, P&O Cruises(Australia). Mr. Veitch graduated with a Master in Business Administration degree from the Harvard Graduate School ofBusiness in 1984 and also holds a Bachelor of Science degree with First Class Honours from the University of London.

Mr. Tan Boon SengIndependent Non-executive DirectorMr. Tan Boon Seng, aged 50, has been an Independent Non-executive Director of the Company since August 2000. Mr. Tan isalso the Chairman and Managing Director of Lee Hing Development Limited and a director of Wo Kee Hong (Holdings) Limited,both of which are companies listed on The Stock Exchange of Hong Kong Limited. Mr. Tan is the Executive Director of IGBCorporation Berhad, a company listed on Bursa Malaysia Securities Berhad, and also holds directorships in a number of othercompanies. He has extensive experience in property development and investment, corporate finance and trading businesses.Mr. Tan received his degree from Cambridge University, where he graduated in 1977.

Mr. Lim Lay LengIndependent Non-executive DirectorMr. Lim Lay Leng, aged 55, has been an Independent Non-executive Director of the Company since October 2000. Mr. Lim is adirector of several property and investment holding companies in Hong Kong, China and Malaysia and has extensive experiencein property development and investment. Mr. Lim holds a Bachelor of Civil Engineering (Honours) degree from Queen MaryCollege at the University of London.

Senior Management of the Company

Mr. Gerard Lim Ewe KengChief Financial OfficerMr. Gerard Lim Ewe Keng, aged 46, was appointed Chief Financial Officer in March 2004. Mr. Lim was the Senior Vice President– Chief Executive Office since December 2000. He has held the position of Vice President – Corporate Planning since 1997.Prior to that, he was Vice President – Corporate Affairs at Genting International PLC from 1992 to 1997 and Corporate PlanningExecutive at Genting Berhad from 1984 to 1992. Mr. Lim is responsible for the corporate, legal, finance and treasury and taxplanning of various businesses of the Star Cruises Group. He graduated with a Bachelor of Science (Chemical Engineering)degree from the University of Birmingham and has a Master of Business Administration degree from University of Aston, UK.

Mr. Lee Swee HingExecutive Vice President of VIP Services and Club OperationsMr. Lee Swee Hing, aged 46, assumed the position of Executive Vice President – VIP Services and Sales and Marketing (fromApril 2000), with responsibility over VIP Services and Sales and Marketing functions (until early December 2000). SinceDecember 2000, Mr. Lee has resumed responsibility for Club Operations and VIP Services. He joined the Company in October1993 as Director – VIP Services and was promoted to Senior Vice President – VIP Services in May 1994 and then to ExecutiveVice President – VIP Services in January 1997. Mr. Lee worked with Genting Berhad from September 1984 to December 1985and joined Burswood Resort Casino, Western Australia as Director responsible for international marketing from 1985 toSeptember 1993. Mr. Lee graduated with a Bachelor of Science degree in Computer Science from the University SainsMalaysia, Penang, Malaysia.

Mr. Graham CadmanSenior Vice President of Hotel OperationsMr. Graham Cadman, aged 55, has been Senior Vice President – Hotel Operations of the Company since April 1999. Mr.Cadman joined the Company in June 1994 as Hotel Manager. From July 1995 to June 1996, he was Vice President – HotelOperations, and from July 1996 to April 1999, he was Vice President – Hotel Newbuilding. Mr. Cadman has over 30 years ofexperience in the hospitality industry, of which 18 were with Hilton International. Prior to joining the Company, Mr. Cadman wasDirector of Food & Beverage at Dynasty Singapore from October 1991 to June 1994.

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Senior Management of the Company (continued)

Mr. Gustaf GronbergSenior Vice President of Marine OperationsMr. Gustaf Gronberg, aged 47, assumed the position of Senior Vice President – Marine Operations in December 2005. Hisresponsibilities include technical, nautical and port operations. Mr. Gronberg joined the Company as Safety Manager in 1993.He was subsequently promoted to the position of Vice President – Safety & Security in 1994. He also assumed the position ofFleet Captain from 1996. He was re-designated to Vice President – Nautical in 1999. Mr. Gronberg is a Master Mariner with over20 years experience in the Maritime industry. He graduated with a Bachelor of Nautical Science degree from the StockholmMaritime Academy, Sweden in 1985.

Ms. Jean Teo Siam BeeSenior Vice President of Sales and MarketingMs. Jean Teo Siam Bee, aged 44, assumed the position of Senior Vice President – Sales and Marketing in February 2000. Shehas primary responsibilities in Sales and Marketing including advertising, promotions, public relations and passenger servicesfor the Star Cruises fleet. She joined the Company in February 1995 as Director of Sales and progressed to Vice President inOctober 1997. Prior to joining the Company, she has 14 years of working experience in leading hotels in Singapore, holdingsenior positions as Director of Sales and Regional Director of Sales. Ms. Teo has a Diploma in Hotel Management.

Mr. Choo Seng NamVice President of Group Accounting and TreasuryMr. Choo Seng Nam, aged 39, joined the Company as an Accountant in October 1995 and was holding the position of Controller,Group Accounts from July 1999 to December 2003. He subsequently progressed to the position of Vice President – GroupAccounting and Treasury on 1 January 2004. Mr. Choo is responsible for Treasury, Corporate Finance and ManagementAccounting functions of the Star Cruises Group. Mr. Choo is a fellow member of both the Association of Certified CharteredAccountants and Hong Kong Institute of Certified Public Accountants. He is also a Chartered Accountant of the MalaysianInstitute of Accountants. Prior to joining the Company in 1995, he worked with Kassim Chan & Co., Kuala Lumpur, a memberfirm of Deloitte Touche Tohmatsu International.

Senior Management of NCL Corporation Ltd. (“NCLC”), a major subsidiary of the Company

Ms. Bonnie BiumiExecutive Vice President and Chief Financial OfficerMs. Bonnie Biumi, aged 43, was appointed as Executive Vice President and Chief Financial Officer of the NCLC Group in July2005. Prior to being appointed in this capacity, Ms. Biumi was the Senior Vice President and Treasurer at Royal CaribbeanCruises Ltd. and worked there since 1999. Prior to that, she was Chief Financial Officer of two separate public companies, anequipment rental company and a telecommunications service provider. She is a Certified Public Accountant with 11 yearsexperience at Price Waterhouse in Miami.

Mr. William HamlinExecutive Vice President of Fleet OperationsMr. William Hamlin, aged 53, joined the NCLC Group on 1 June 2004 as Executive Vice President, Fleet Operations. In thiscapacity he is responsible for all marine and hotel operations for all three NCLC brands. Immediately prior to joining the NCLCGroup, Mr. Hamlin was President of the America Region for APL Limited based in Oakland, California. He had previously heldpositions as Vice President, Operations for the America Region and President North America. Prior to joining APL, Mr. Hamlinheld positions with Sea-Land, United States Line and other maritime organisations. Mr. Hamlin has over 25 years of maritimeand logistics experience. He attended the University of Maine in Orono.

Mr. Robert M. KritzmanExecutive Vice President of NCL America Inc.Mr. Robert M. Kritzman, aged 45, was appointed as Executive Vice President of NCL America Inc. in August 2003. Mr. Kritzmanpreviously was Senior Vice President and General Counsel of the NCLC Group. Prior to joining the NCLC Group in June 1990,Mr. Kritzman was an attorney with the law firm of McDermott, Will & Emery. He obtained a Bachelor of Science degree inEconomics and a Juris Doctorate degree from the University of Florida. He is a member of the Florida Bar Association and theAmerican Bar Association. He also serves on the boards of the International Council of Cruise Lines and the North WestCruiseship Association. Mr. Kritzman is based in NCL America Inc.’s offices in Honolulu, Hawai’i.

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Senior Management of NCL Corporation Ltd. (“NCLC”), a major subsidiary of the Company(continued)

Mr. Andrew StuartExecutive Vice President of Sales, Marketing and Passenger ServicesMr. Andrew Stuart, aged 42, was appointed as Executive Vice President of Sales, Marketing and Passenger Services of theNCLC Group in September 2003. He previously held the position of Senior Vice President of Marketing and Sales since August1998 and, prior to that, he was Senior Vice President of Passenger Services. He joined the NCLC Group in August 1988 in itsLondon office holding various Sales and Marketing positions before relocating to the NCLC Group’s headquarters in Miami. Mr.Stuart earned a Bachelor of Science degree in Catering Administration from Bournemouth University, UK.

Mr. Mark E. WarrenExecutive Vice President, General Counsel and Assistant SecretaryMr. Mark E. Warren, aged 54, was appointed Senior Vice President and General Counsel of the NCLC Group in August 2003. Hewas named Assistant Secretary in December 2003 and was promoted to Executive Vice President, General Counsel andAssistant Secretary in August 2005. Mr. Warren was formerly a partner in the Los Angeles, California and Washington, D.C.offices of the international law firm of Gibson, Dunn & Crutcher. Mr. Warren previously served as Senior Vice President andGeneral Counsel of Princess Cruises. He also worked in the federal government, previously served on both the United StatesSenate and the White House staff of Walter F. Mondale. Mr. Warren graduated with a Bachelor of Arts degree with high honorsin Political Science and International Studies from Gustavus Adolphus College and a Juris Doctorate degree with honors fromthe University of Minnesota School of Law.

Mr. Dana Leon LeibovitzSenior Vice President of Casino Operations and MarketingMr. Dana Leon Leibovitz, aged 37, was transferred to the NCLC Group from Star Cruises as Senior Vice President of CasinoOperations and Marketing in January 2003. In this capacity, he is responsible for the overall casino operation including cage,surveillance and marketing. Prior to this appointment, he was Vice President – Corporate Surveillance and Security of StarCruises during the years 1996 to 2002 and was responsible for the co-ordination of hotel and casino surveillance and securityfor all Star Cruises vessels and land-based operations. He joined the Company in December 1994 as Director of Surveillanceand Security. Prior to joining the Company, he had worked in Par-A-Dice Casino, Illinois (as Surveillance Operator), theHollywood Casino, Illinois (as Surveillance Shift Supervisor). Mr. Leibovitz has a Bachelor of Arts degree in Criminal Justicefrom Eastern Illinois University.

Mr. Kevin QuinlivanSenior Vice President and Chief Information OfficerMr. Kevin Quinlivan, aged 50, was appointed Chief Information Officer of the NCLC Group on 24 May 2004 and was promotedto Senior Vice President and Chief Information Officer on 30 September 2005. Mr. Quinlivan was formerly the Vice President,Global Information Technology for Energizer/Shick Wilkinson Sword. He had previously founded and ran the consulting firmTrilocity, Inc. as well as serving in increasingly responsible information technology related positions with Quantum Corporationand Digital Equipment Corporation. Mr. Quinlivan holds a Bachelor of Arts degree from Bridgewater State College and aMaster’s Degree in Computer Science from Worcester State College.

Mr. Richard Scott RogersSenior Vice President of Marketing and SalesMr. Richard Scott Rogers, aged 36, joined the NCLC Group on 6 July 2005 as Senior Vice President, Marketing and Sales. Priorto joining the NCLC Group, Mr. Rogers was with Procter and Gamble, a global branded consumer goods corporation. His mostrecent position with P & G was as Marketing Director, North American Hair Care. Prior to that role, Mr. Rogers was responsiblefor the marketing for a variety of key P & G brands. Mr. Rogers has a Bachelor of Science degree in Hospitality Managementfrom Cornell University.

Mr. Manfred UrsprungerSenior Vice President of Hotel OperationsMr. Manfred Ursprunger, aged 47, joined the NCLC Group on 7 February 2005 as Senior Vice President, Hotel Operations.Immediately prior to joining the NCLC Group, Mr. Ursprunger was a consultant to various cruise lines and to the hotel industry.From 1994 to 2001, he was the Senior Vice President of Total Guest Satisfaction for Celebrity Cruises. Prior to joining Celebrity,Mr. Ursprunger had held key management positions with various other cruise lines as well as hotels in the United States,Austria, Germany and Switzerland.

Report of the Directors

25

The Directors submit their report together with the audited financial statements for the year ended 31 December 2005.

Principal Activities and Geographical Analysis of OperationsThe principal activity of the Company is investment holding. The Company’s subsidiaries are principally engaged in the businessof cruise and cruise related operations. Details of the Company’s principal subsidiary companies are set out in note 35 to theconsolidated financial statements.

An analysis of the Group’s performance for the year by business and geographical segments is set out in note 3 to theconsolidated financial statements.

ResultsThe results of the Company and its subsidiaries for the year ended 31 December 2005 are set out in the consolidated incomestatement on page 50.

DividendsThe Directors do not recommend the declaration of any dividend in respect of the year ended 31 December 2005.

ReservesMovements in the reserves of the Company and the Group during the year are set out on pages 55 to 58. The distributablereserves of the Company amounted to US$214.0 million as at 31 December 2005.

Five Years Financial SummaryA summary of the results and of the assets and liabilities of the Group for the last five years is set out on page 110.

Purchase, Sale or Redemption of SharesNeither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company’s shares during the yearended 31 December 2005, save for the issuance of 6,975,380 new ordinary shares of US$0.10 each at an aggregate price ofUS$1,873,587 pursuant to the exercise of options granted under The Star Cruises Employees Share Option Scheme adoptedby the Company on 16 April 1997 prior to the listing of its ordinary shares on The Stock Exchange of Hong Kong Limited (the“Stock Exchange”).

DonationsCharitable and other donations made by the Group during the year amounted to US$0.5 million.

Property, Plant and EquipmentA brief description of the properties owned by the Group is set out on page 111.

Details of the movements in property, plant and equipment during the year are set out in note 14 to the consolidated financialstatements.

Share Capital and Convertible BondsDetails of the movements in share capital and convertible bonds of the Company are set out in notes 23 and 25 to theconsolidated financial statements, respectively.

IndebtednessDetails of long-term financing facilities of the Company and its subsidiary companies at 31 December 2005 are set out in note24 to the consolidated financial statements.

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DirectorsThe Directors during the year and up to the date of this report are:

Tan Sri Lim Kok ThayMr. Alan Howard Smith, J.P.Mr. Chong Chee TutMr. William Ng Ko SengMr. David Colin Sinclair VeitchMr. Tan Boon SengMr. Lim Lay Leng

The following Directors will retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election:

(a) Tan Sri Lim Kok Thay will retire in compliance with Code Provision A.4.2 of the Code on Corporate Governance Practices(“CG Code”) contained in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange (the “ListingRules”);

(b) Mr. William Ng Ko Seng and Mr. Tan Boon Seng will retire by rotation in accordance with Bye-law 99 of the Company’s Bye-laws; and

(c) Mr. Lim Lay Leng will retire due to the expiry of his specific term of office at the conclusion of the forthcoming AnnualGeneral Meeting.

The Company has received from each of the three Independent Non-executive Directors, namely Mr. Alan Howard Smith, J.P.,Mr. Tan Boon Seng and Mr. Lim Lay Leng, an annual confirmation of his independence and considers that each of theIndependent Non-executive Directors is independent in accordance with the guidelines set out in Rule 3.13 of the Listing Rules.

Biographical details of the Directors and senior management are set out on pages 21 to 24.

Directors’ Service ContractsNone of the Directors proposed for re-election at the forthcoming Annual General Meeting has a service contract with the Groupwhich is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

Interests of Directors and Controlling Shareholders in Contracts of SignificanceSave as disclosed in the section headed “Connected Transactions” below and in the section headed “Related Party Transactionsand Balances” in note 22 to the consolidated financial statements, no contracts of significance to which the Company or any ofits subsidiaries was a party and in which any of the Company’s Director or controlling shareholder or its subsidiaries had amaterial interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Connected Transactions(a) Significant related party transactions entered into by the Group during the year ended 31 December 2005 are disclosed in

note 22 to the consolidated financial statements.

(b) Transactions set out in item (b) of these related party transactions constitute continuing connected transactions under theListing Rules, details of which as required to be disclosed in accordance with the Listing Rules are given below:

Genting Berhad (“GB”), a company in which Tan Sri Lim Kok Thay has a deemed interest and is also the Chairman,President and Chief Executive and shareholder, entered into a services agreement (“GB Services Agreement”) with theCompany on 14 January 2003 in relation to the provision of treasury management services, secretarial services, shareregistration services and other support services (such as information technology support services, finance andadministrative services, travel services, air ticket purchasing services, other purchasing services, central reservationservices, leasing of office space and risk management services) by GB and its related companies (“GB Group”) to theGroup as and when required by the Group from time to time (“GB Transactions”).

As announced in the Company’s announcement dated 23 December 2005, the aggregate annual consideration for the GBTransactions for the year ended 31 December 2005 was expected to exceed the de minimis threshold of 0.1% as set out inRule 14A.33 of the Listing Rules. On 23 December 2005, the Company and GB entered into a supplemental agreement(the “Supplemental Agreement”) setting the term of the GB Services Agreement for 25 months commencing from 1December 2005 pursuant to Rule 14A.35 of the Listing Rules. The maximum aggregate annual consideration (the “AnnualCap”) for the GB Transactions under the term of the GB Services Agreement (as supplemented by the SupplementalAgreement) for each of the financial years ended/ending 31 December 2005, 31 December 2006 and 31 December 2007would/will not exceed US$2 million, US$4 million and US$4 million respectively.

27

Connected Transactions (continued)For the year ended 31 December 2005, the aggregate amount charged to the Group in respect of the GB Transactions wasapproximately US$1.4 million and has not exceeded the Annual Cap of US$2 million.

The Audit Committee comprising all Independent Non-executive Directors of the Company has reviewed the GBTransactions and confirmed that the GB Transactions have been entered into:

(i) in the ordinary and usual course of business of the Group;

(ii) on normal commercial terms or on terms no less favourable to the Group than terms available to independent thirdparties; and

(iii) in accordance with the terms of the agreements governing such transactions on terms that are fair and reasonableand in the interests of the shareholders of the Company as a whole.

The auditors have issued a report to the Directors of the Company following their performance of certain specifiedprocedures in relation to the GB Transactions.

(c) Transactions set out in items (a), (c) and (d) of these related party transactions, which also constitute continuing connectedtransactions under the Listing Rules, are exempt from reporting, announcement and independent shareholders’ approvalrequirements under Rule 14A.33 of the Listing Rules as the aggregate annual consideration under each category of thesecontinuing connected transactions for the year ended 31 December 2005 is less than 0.1% of the applicable percentageratios (as prescribed in the Listing Rules).

(d) Transactions set out in item (g) of these related party transactions in relation to the issue of shares to certain Directors ofthe Company pursuant to their exercise of share options during the year ended 31 December 2005, which constituteconnected transactions under the Listing Rules, are exempt from reporting, announcement and independent shareholders’approval requirements under Rule 14A.31(3)(b) of the Listing Rules.

Directors’ Interests in Competing BusinessTan Sri Lim Kok Thay, the Chairman, President and Chief Executive Officer of the Company, is the Chairman, President andChief Executive, shareholder and share option holder of both Genting Berhad and Resorts World Bhd, which are bothsubstantial shareholders of the Company and companies listed on Bursa Malaysia Securities Berhad. He is also the ExecutiveChairman, shareholder and share option holder of Genting International PLC, a company listed on the Euro MTF Market of theLuxembourg Stock Exchange and the Singapore Exchange Securities Trading Limited. Resorts World Bhd’s principal activitiesinclude the operation of a tourist resort in Malaysia known as Genting Highlands Resort, along with other land-based Malaysianresorts. Resorts World Bhd provides leisure and hospitality services which comprise amusement, gaming, hotel andentertainment. Genting International PLC’s principal activities include investments, operation of casinos, provision of ITapplication related services and provision of sales and marketing services to leisure and hospitality related businesses. ResortsWorld Bhd and Genting International PLC are subsidiaries of Genting Berhad.

The Group engages in cruise and cruise-related businesses. Genting Berhad and Resorts World Bhd (save as via their indirectequity interests in the Company) and Genting International PLC, as set out above, are not engaged in cruise or cruise-relatedbusinesses. However, as the cruise industry forms a segment of the leisure industry, there may be indirect competition betweenthe Group, Resorts World Bhd and Genting International PLC.

Tan Sri Lim Kok Thay is therefore considered as having interests in business (the “Deemed Competing Business”) apart from theGroup’s business, which may compete indirectly with the Group’s business under paragraph 8.10 of the Listing Rules. TheCompany’s management team is separate and independent from Resorts World Bhd, Genting International PLC and GentingBerhad. Coupled with the appointment of three Independent Non-executive Directors to the Board of Directors of the Company,the Group is capable of carrying on its business independent of and at arm’s length from the Deemed Competing Business.

28

Interests of DirectorsAs at 31 December 2005, the interests and short positions of the Directors and the Chief Executive of the Company in theshares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XVof the Securities and Futures Ordinance, Hong Kong (the “SFO”)) as recorded in the register required to be kept under section352 of the SFO or as otherwise notified to the Company and The Stock Exchange of the Hong Kong Limited (the “StockExchange”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) and inaccordance with information received by the Company were as follows:

(A) Interests in the shares of the Company

Number of ordinary shares (Notes) Percentage ofissued

Personal Family Corporate Other ordinaryName of Director interests interests interests interests Total shares

Tan Sri Lim Kok Thay 12,246,793 4,599,245,708 28,357,897 4,570,887,811 4,611,492,501 87.006(1) (2) (3 and 4) (5)

Mr. Chong Chee Tut 819,096 — — — 819,096 0.015Mr. William Ng Ko Seng 412,419 — — — 412,419 0.008Mr. David Colin Sinclair Veitch 335,445 — — — 335,445 0.006

Notes:

1. Tan Sri Lim Kok Thay (“Tan Sri KT Lim”) has a family interest in 4,599,245,708 ordinary shares (comprising (i) the same block of1,908,561,862 ordinary shares directly held by Resorts World Limited (“RWL”), the same block of 15,700,000 ordinary shares directlyheld by Genting Overseas Holdings Limited (“GOHL”) and the same block of 2,646,625,949 ordinary shares directly or indirectly heldby Golden Hope Limited (“Golden Hope”) as trustee of Golden Hope Unit Trust (“GHUT”) in which his child has deemed interests and(ii) the same block of 28,357,897 ordinary shares directly held by Goldsfine Investments Ltd. (“Goldsfine”) in which his wife, Puan SriWong Hon Yee (“Puan Sri Wong”) has a corporate interest).

2. Tan Sri KT Lim is also deemed to have a corporate interest in 28,357,897 ordinary shares directly held by Goldsfine in which each ofTan Sri KT Lim and Puan Sri Wong holds 50% of its issued share capital.

3. Tan Sri KT Lim as founder and a beneficiary of two discretionary trusts, has a deemed interest in 4,570,887,811 ordinary shares(comprising the same block of 1,908,561,862 ordinary shares directly held by RWL, the same block of 15,700,000 ordinary sharesdirectly held by GOHL and the same block of 2,646,625,949 ordinary shares directly or indirectly held by Golden Hope as trustee ofGHUT).

4. Out of the same block of 2,646,625,949 ordinary shares directly or indirectly held by Golden Hope as trustee of GHUT, 392,600,000ordinary shares are pledged shares.

5. There is no duplication in arriving at the total interest.

6. All the above interests represent long positions in the shares of the Company and exclude those in the underlying shares throughshare options or equity derivatives. Interests of the respective Directors set out in this subsection (A) need to be aggregated with theirinterests in the underlying shares through share options or equity derivatives of the Company set out in subsection (B) below in orderto give the total interests of the respective Directors in the Company pursuant to the SFO or as otherwise notified to the Companyand the Stock Exchange pursuant to the Model Code.

(B) Interests in the underlying shares of the Company through share options or equity derivativesShare options are granted to the Directors under The Star Cruises Employees Share Option Scheme adopted by theCompany on 16 April 1997 prior to the listing of its ordinary shares on the Stock Exchange (the “Pre-listing Employee ShareOption Scheme”) and the share option scheme adopted by the Company on 23 August 2000 (as effected on 30 November2000 and amended on 22 May 2002) (the “Post-listing Employee Share Option Scheme”).

As at 31 December 2005, the Directors had personal interests in the following underlying shares of the Company heldthrough share options granted under the Pre-listing Employee Share Option Scheme and the Post-listing Employee ShareOption Scheme:

Number of underlying Percentage of issuedName of Director ordinary shares ordinary shares

Tan Sri Lim Kok Thay 11,283,148 0.213Mr. Chong Chee Tut 1,448,510 0.027Mr. William Ng Ko Seng 1,198,452 0.023Mr. David Colin Sinclair Veitch 3,415,440 0.064

29

Interests of Directors (continued)

(B) Interests in the underlying shares of the Company through share options or equity derivatives (continued)Further details of share options granted to the Directors under the Pre-listing Employee Share Option Scheme and thePost-listing Employee Share Option Scheme are set out in the section headed “Share Options” below and note 33 to theconsolidated financial statements.

These interests in share options represent long positions in the underlying shares in respect of physically settledderivatives of the Company. Interests of the respective Directors set out in this subsection (B) need to be aggregated withtheir interests in the shares of the Company set out in subsection (A) above in order to give the total interests of therespective Directors in the Company pursuant to the SFO or as otherwise notified to the Company and the Stock Exchangepursuant to the Model Code.

(C) Interests in the shares of associated corporations of the Company

Number of ordinary shares (Notes) Percentage ofissued

Name of Name of Personal Family Corporate Other ordinaryassociated corporation Director interests interests interests interests Total shares

WorldCard International Tan Sri — 1,000,000 — 1,000,000 1,000,000 100Limited Lim Kok Thay (1) (2) (3)

Infinity @ TheBay Tan Sri — 20 — 20 20 100 Pte Ltd Lim Kok Thay (1) (2) (3)

Notes:

1. Tan Sri KT Lim has a family interest in these ordinary shares in which his child has deemed interests.

2. Tan Sri KT Lim as founder and a beneficiary of two discretionary trusts, has a deemed interest in these ordinary shares.

3. There is no duplication in arriving at the total interest.

4. All the above interests represent long positions in the shares of the relevant associated corporations of the Company.

(D) Interests in subsidiaries of the CompanyCertain Directors held qualifying shares in certain subsidiaries of the Company on trust for other subsidiaries.

Save as disclosed above and in the sections headed “Share Options” and “Interests of Substantial Shareholders” below:

(a) as at 31 December 2005, none of the Directors or the Chief Executive of the Company had any interests or short positionsin any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaningof Part XV of the SFO) as recorded in the register required to be kept under section 352 of the SFO or as otherwise notifiedto the Company and the Stock Exchange pursuant to the Model Code; and

(b) at no time during the year was the Company and its subsidiaries a party to any arrangement to enable the Directors of theCompany to acquire benefits by means of the acquisition of shares, underlying shares or debentures in the Company orany other body corporate.

30

Share OptionsDetails of the Company’s Pre-listing Employee Share Option Scheme and Post-listing Employee Share Option Scheme are setout in note 33 to the consolidated financial statements. Share Options are granted to certain Directors of the Company andemployees of the Group under the said schemes. Details of the movement in the share options granted under the Pre-listingEmployee Share Option Scheme and the Post-listing Employee Share Option Scheme during the year and outstanding as at 31December 2005 are as follows:

(A) Pre-listing Employee Share Option Scheme

Number ofshares Number of Number of

Number of acquired upon options options Number ofoptions exercise of lapsed cancelled options Exercise

outstanding options during during during outstanding priceat 1/1/2005 the year the year the year at 31/12/2005 Date granted per share Exercisable Period

Tan Sri Lim Kok Thay 1,219,800 (1,219,800)1 — — — 25/5/1998 US$0.2686 21/8/1999 – 20/8/2005(Director) 3,537,420 (1,326,533)2 — — 2,210,887 24/3/1999 US$0.2686 24/3/2002 – 23/3/2009

1,341,780 — (503,168) — 838,612 24/3/1999 US$0.4206 24/3/2002 – 23/3/20091,219,800 (243,960)3 — — 975,840 23/10/2000 US$0.2686 23/10/2003 – 22/8/20103,537,420 (1,326,533)4 — — 2,210,887 16/11/2000 US$0.2686 24/3/2002 – 23/3/20091,341,780 — (503,168) — 838,612 16/11/2000 US$0.4206 24/3/2002 – 23/3/2009

304,950 (60,990)5 — — 243,960 16/11/2000 US$0.2686 23/10/2003 – 22/8/2010

12,502,950 (4,177,816) (1,006,336) — 7,318,798

Mr. Chong Chee Tut 90,265 (90,265)6 — — — 25/5/1998 US$0.2686 20/12/2000 – 19/12/2005(Director) 60,990 — (15,248) — 45,742 25/5/1998 US$0.4206 23/6/2000 – 22/6/2007

414,732 (155,525)7 — — 259,207 24/3/1999 US$0.2686 24/3/2002 – 23/3/200973,188 — (27,446) — 45,742 24/3/1999 US$0.4206 24/3/2002 – 23/3/2009

585,504 (117,101)8 — — 468,403 23/10/2000 US$0.2686 23/10/2003 – 22/8/201024,396 — (4,880) — 19,516 23/10/2000 US$0.4206 23/10/2003 – 22/8/2010

1,249,075 (362,891) (47,574) — 838,610

Mr. William Ng 91,485 (91,485)9 — — — 25/5/1998 US$0.2686 21/8/2000 – 20/8/2005Ko Seng 24,396 — (9,149) — 15,247 24/3/1999 US$0.2686 24/3/2002 – 23/3/2009(Director) 97,584 — (36,594) — 60,990 24/3/1999 US$0.4206 24/3/2002 – 23/3/2009

463,524 (92,705)10 — — 370,819 23/10/2000 US$0.2686 23/10/2003 – 22/8/201024,396 — (4,880) — 19,516 23/10/2000 US$0.4206 23/10/2003 – 22/8/2010

701,385 (184,190) (50,623) — 466,572

Mr. David Colin 1,219,800 — (243,960) — 975,840 7/1/2000 US$0.4206 7/1/2003 – 6/1/2010Sinclair Veitch(Director)

31

Share Options (continued)

(A) Pre-listing Employee Share Option Scheme (continued)

Number ofshares Number of Number of

Number of acquired upon options options Number ofoptions exercise of lapsed cancelled options Exercise

outstanding options during during during outstanding priceat 1/1/2005 the year the year the year at 31/12/2005 Date granted per share Exercisable Period

All other employees 3,256,866 (1,619,864)11 (1,630,903) (6,099) — 25/5/1998 US$0.2686 21/8/1999 – 20/8/200541,473 (11,300)12 (30,173) — — 25/5/1998 US$0.2686 20/12/2000 – 19/12/2005

121,980 — (30,495) — 91,485 25/5/1998 US$0.2686 11/3/2000 – 10/3/2007512,316 — (128,079) — 384,237 25/5/1998 US$0.4206 23/6/2000 – 22/6/2007

2,467,045 — (664,813) (45,741) 1,756,491 25/5/1998 US$0.4206 6/1/2000 – 5/1/200713,078,426 (292,778)13 (4,794,150) (461,699) 7,529,799 24/3/1999 US$0.2686 24/3/2002 – 23/3/2009

7,330,988 — (2,804,727) (386,642) 4,139,619 24/3/1999 US$0.4206 24/3/2002 – 23/3/20099,149 — (9,149) — — 24/3/1999 US$0.4206 24/3/2003 – 23/3/2005

894,232 (71,683)14 (265,933) (100,510) 456,106 30/6/1999 US$0.2686 30/6/2002 – 29/6/20091,778,652 — (658,712) (153,206) 966,734 30/6/1999 US$0.4206 30/6/2002 – 29/6/20092,312,619 (259,738)15 (284,916) (87,824) 1,680,141 23/10/2000 US$0.2686 23/10/2003 – 22/8/20103,074,960 — (602,362) (70,747) 2,401,851 23/10/2000 US$0.4206 23/10/2003 – 22/8/2010

34,878,706 (2,255,363) (11,904,412) (1,312,468) 19,406,463

Grand Total 50,551,916 (6,980,260) (13,252,905) (1,312,468) 29,006,283

Notes:

1. Exercise date was 5 August 2005. At the date before the options were exercised, the market closing value per share quoted on TheStock Exchange of Hong Kong Limited (the “Stock Exchange”) was HK$2.500.

2. Exercise date was 22 March 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.100.

3. Exercise date was 13 October 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.300.

4. Exercise date was 22 March 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.100.

5. Exercise date was 13 October 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.300.

6. Exercise date was 19 December 2005. At the date before the options were exercised, the market closing value per share quoted onthe Stock Exchange was HK$2.050.

7. Exercise date was 22 March 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.100.

8. Exercise date was 11 October 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.350.

9. Exercise date was 2 August 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.400.

10. Exercise date was 22 October 2005. At the date before the options were exercised, the market closing value per share quoted on theStock Exchange was HK$2.275.

11. At the dates before the options were exercised, the weighted average market closing value per share quoted on the Stock Exchangewas HK$2.706.

12. Exercise date was 14 December 2005. At the date before the options were exercised, the market closing value per share quoted onthe Stock Exchange was HK$2.050.

32

Share Options (continued)

(A) Pre-listing Employee Share Option Scheme (continued)

Notes: (continued)

13. At the dates before the options were exercised, the weighted average market closing value per share quoted on the Stock Exchangewas HK$2.150.

14. At the dates before the options were exercised, the weighted average market closing value per share quoted on the Stock Exchangewas HK$2.300.

15. At the dates before the options were exercised, the weighted average market closing value per share quoted on the Stock Exchangewas HK$2.292.

HK$: Hong Kong dollars, the lawful currency of Hong Kong.

The outstanding share options under the Pre-listing Employee Share Option Scheme vest over a period of 10 yearsfollowing their respective original dates of grant and generally become exercisable as to 20% and 30% of the amountgranted 3 years and 4 years after the grant date, with the remaining options exercisable annually in equal tranches of 10%over the remaining option period, subject to further terms and conditions set out in the relevant offer letters and provisionsof the Pre-listing Employee Share option Scheme.

(B) Post-listing Employee Share Option Scheme

Number ofshares

acquired Number of Number ofNumber of upon exercise options options Number of

options of options lapsed cancelled options Exerciseoutstanding during during during outstanding price

at 1/1/2005 the year the year the year at 31/12/2005 Date granted per share Exercisable Period

Tan Sri Lim Kok Thay 3,369,697 — — — 3,369,697 19/8/2002 HK$2.9944 20/8/2004 – 19/8/2012(Director) 594,653 — — — 594,653 23/8/2004 HK$1.7240 24/8/2006 – 23/8/2014

3,964,350 — — — 3,964,350

Mr. Chong Chee Tut 518,415 — — — 518,415 19/8/2002 HK$2.9944 20/8/2004 – 19/8/2012(Director) 91,485 — — — 91,485 23/8/2004 HK$1.7240 24/8/2006 – 23/8/2014

609,900 — — — 609,900

Mr. William Ng 622,098 — — — 622,098 19/8/2002 HK$2.9944 20/8/2004 – 19/8/2012Ko Seng 109,782 — — — 109,782 23/8/2004 HK$1.7240 24/8/2006 – 23/8/2014(Director)

731,880 — — — 731,880

Mr. David Colin 2,073,660 — — — 2,073,660 19/8/2002 HK$2.9944 20/8/2004 – 19/8/2012Sinclair Veitch 365,940 — — — 365,940 23/8/2004 HK$1.7240 24/8/2006 – 23/8/2014(Director)

2,439,600 — — — 2,439,600

All other employees 68,474,325 — (2,862,956) — 65,611,369 19/8/2002 HK$2.9944 20/8/2004 – 19/8/2012792,870 — — — 792,870 8/9/2003 HK$2.9944 9/9/2005 – 8/9/2013

12,516,065 — (2,919,735) (7,319) 9,589,011 23/8/2004 HK$1.7240 24/8/2006 – 23/8/2014

81,783,260 — (5,782,691) (7,319) 75,993,250

Grand Total 89,528,990 — (5,782,691) (7,319) 83,738,980

33

Share Options (continued)

(B) Post-listing Employee Share Option Scheme (continued)Other than the share options granted on 23 August 2004 under the Post-listing Employee Share Option Scheme whichbecome exercisable in part or in full for a period of eight years commencing from two years after the date of offer, theoutstanding share options under the Post-listing Employee Share Option Scheme vest in seven tranches over a period often years from their respective dates of offer and become exercisable as to 30% and 20% of the amount grantedcommencing from two years and three years respectively after the dates of offer, with the remaining options exercisableannually in equal tranches of 10% commencing in each of the following years. All the outstanding share options under thePost-listing Employee Share Option Scheme are subject to further terms and conditions set out in the relevant offer lettersand provisions of the Post-listing Employee Share Option Scheme.

Interests of Substantial ShareholdersAs at 31 December 2005, the following persons (other than the Directors or the Chief Executive of the Company) had interestsor short positions in the shares and underlying shares of the Company, being 5% or more of the Company’s issued sharecapital, as recorded in the register required to be kept under section 336 of the SFO and in accordance with information receivedby the Company:

(A) Interests in the shares of the Company

Number of ordinary shares (Notes)Percentage of

issuedDirect/Personal Family Corporate Other ordinary

Name of shareholder (Notes) interests interests interests interests Total shares

Parkview Management Sdn Bhd — — 1,924,261,862 1,924,261,862 1,924,261,862 36.31(as trustee of a discretionary trust) (1) (10) (12) (21)

Kien Huat Realty Sdn Bhd (2) — — 1,924,261,862 — 1,924,261,862 36.31(10)

Genting Berhad (3) — — 1,924,261,862 — 1,924,261,862 36.31(10)

Resorts World Bhd (4) — — 1,908,561,862 — 1,908,561,862 36.01(11)

Sierra Springs Sdn Bhd (5) — — 1,908,561,862 — 1,908,561,862 36.01(11)

Resorts World Limited (5) 1,908,561,862 — — — 1,908,561,862 36.01

GZ Trust Corporation — — 2,646,625,949 2,646,625,949 2,646,625,949 49.93(as trustee of a (13) (15,17 and 20) (21)discretionary trust) (6)

Cove Investments Limited (7) — — — 2,646,625,949 2,646,625,949 49.93(18 and 20) (21)

Golden Hope Limited — — 414,260,835 2,646,625,949 2,646,625,949 49.93(as trustee of Golden Hope (14) (16 and 20) (21)Unit Trust) (8)

Joondalup Limited (9) 414,260,835 — — — 414,260,835 7.82

Puan Sri Wong Hon Yee — 4,611,492,501 28,357,897 392,600,000 4,611,492,501 87.01(19(a)) (19(b)) (20) (21)

Notes:

1. Parkview Management Sdn Bhd (“Parkview”) is a trustee of a discretionary trust (the “Discretionary Trust 1”), the beneficiaries ofwhich include certain members of Tan Sri Lim Goh Tong’s family (the “Lim Family”).

2. Kien Huat Realty Sdn Bhd (“KHR”) is a private company of which the Discretionary Trust 1, through Aranda Tin Mines Sdn Bhd,Infomark (Malaysia) Sdn Bhd, Inforex Sdn Bhd, Dataline Sdn Bhd and Info-Text Sdn Bhd (all of which were 100% held by Parkviewas trustee of the Discretionary Trust 1) controlled an aggregate of 100% of its equity interest as at 31 December 2005.

34

Interests of Substantial Shareholders (continued)

(A) Interests in the shares of the Company (continued)

Notes: (continued)

3. Genting Berhad (“GB”), a company listed on Bursa Malaysia Securities Berhad (“Bursa Malaysia”) of which KHR controlled 41.51%of its equity interest as at 31 December 2005.

4. Resorts World Bhd (“RWB”), a company listed on Bursa Malaysia of which GB controlled 57.74% of its equity interest as at 31December 2005.

5. Resorts World Limited (“RWL”) is a wholly-owned subsidiary of Sierra Springs Sdn Bhd (“Sierra Springs”) which is in turn a wholly-owned subsidiary of RWB.

6. GZ Trust Corporation (“GZ”) is the trustee of a discretionary trust (the “Discretionary Trust 2”) established for the benefit of certainmembers of the Lim Family. GZ as trustee of the Discretionary Trust 2 holds 99.99% of the units in Golden Hope Unit Trust (“GHUT”),a private unit trust directly and 0.01% of the units in GHUT indirectly through Cove (as defined below).

7. Cove Investments Limited (“Cove”) is wholly-owned by GZ as trustee of the Discretionary Trust 2.

8. Golden Hope Limited (“Golden Hope”) is the trustee of GHUT.

9. Joondalup Limited (“Joondalup”) is wholly-owned by Golden Hope as trustee of GHUT.

10. Each of Parkview as trustee of the Discretionary Trust 1, KHR and GB has a corporate interest in 1,924,261,862 ordinary shares(comprising the same block of 1,908,561,862 ordinary shares held directly by RWL and the same block of 15,700,000 ordinaryshares held directly by Genting Overseas Holdings Limited (“GOHL”), a wholly-owned subsidiary of GB).

11. Each of RWB and Sierra Springs has a corporate interest in the same block of 1,908,561,862 ordinary shares held directly by RWL.

12. The interest in 1,924,261,862 ordinary shares is held by Parkview in its capacity as trustee of the Discretionary Trust 1 and itcomprises the same block of 1,908,561,862 ordinary shares held directly by RWL and the same block of 15,700,000 ordinary sharesheld directly by GOHL.

13. GZ as trustee of the Discretionary Trust 2 has a corporate interest in the same block of 2,646,625,949 ordinary shares held byGolden Hope as trustee of GHUT (out of which 2,232,365,114 ordinary shares are directly held by Golden Hope as trustee of GHUTand 414,260,835 ordinary shares are held indirectly through Joondalup).

14. Golden Hope as trustee of GHUT has a corporate interest in the same block of 414,260,835 ordinary shares held directly byJoondalup.

15. GZ in its capacity as trustee of the Discretionary Trust 2 has a deemed interest in the same block of 2,646,625,949 ordinary sharesheld by Golden Hope as trustee of GHUT (out of which 2,232,365,114 ordinary shares are directly held by Golden Hope as trusteeof GHUT and 414,260,835 ordinary shares are held indirectly through Joondalup).

16. The interest in 2,646,625,949 ordinary shares is held by Golden Hope in its capacity as trustee of GHUT (out of which 2,232,365,114ordinary shares are directly held by Golden Hope as trustee of GHUT and 414,260,835 ordinary shares are held indirectly throughJoondalup).

17. GZ as trustee of the Discretionary Trust 2 is deemed to have interest in the same block of 2,646,625,949 ordinary shares held directlyor indirectly by Golden Hope as trustee of GHUT in its capacity as beneficiary of GHUT.

18. Cove which holds 0.01% of the units in GHUT is deemed to have interest in the same block of 2,646,625,949 ordinary shares helddirectly or indirectly by Golden Hope as trustee of GHUT in its capacity as beneficiary of GHUT.

19. (a) Puan Sri Wong Hon Yee (“Puan Sri Wong”) as the spouse of Tan Sri Lim Kok Thay (“Tan Sri KT Lim”), has a family interest in thesame block of 4,611,492,501 ordinary shares in which Tan Sri KT Lim has a deemed interest. These interests do not include thedeemed interests of Puan Sri Wong in the underlying shares of the Company through share options held personally by Tan SriKT Lim and need to be aggregated with such interests set out in subsection (B) below to give the total interests of Puan SriWong pursuant to the SFO.

(b) Puan Sri Wong also has a corporate interest in 28,357,897 ordinary shares held directly by Goldsfine by holding 50% of itsequity interest as at 31 December 2005.

20. Out of the same block of 2,646,625,949 ordinary shares held directly or indirectly by Golden Hope as trustee of GHUT, 392,600,000ordinary shares are pledged shares.

21. There is no duplication in arriving at the total interest.

22. All these interests represent long positions in the shares of the Company and exclude those in the underlying shares through shareoptions or equity derivatives.

35

Interests of Substantial Shareholders (continued)

(B) Interests in the underlying shares of the Company through share options or equity derivatives

Number of underlying Percentage of issuedName of shareholder ordinary shares ordinary shares

Puan Sri Wong Hon Yee 11,283,148 (Note) 0.213

Note:

Puan Sri Wong Hon Yee as the spouse of Tan Sri KT Lim, is deemed to have a family interest in 11,283,148 underlying ordinary shares ofthe Company by virtue of the share options granted to Tan Sri KT Lim under the Pre-listing Employee Share Option Scheme and the Post-listing Employee Share Option Scheme. These interests represent long positions in the underlying shares in respect of physically settledderivatives of the Company and need to be aggregated with her interests set out in subsection (A) above to give her total interestspursuant to the SFO.

Save as disclosed above and in the sections headed “Interests of Directors” and “Share Options” above, as at 31 December2005, there were no other persons who had interests or short positions in the shares or underlying shares of the Company asrecorded in the register required to be kept under section 336 of the SFO.

Pre-Emptive RightsThere are no provisions for pre-emptive rights under the Company’s Bye-laws and there are no restrictions against such rightsunder the laws in Bermuda.

Retirement Benefit SchemesInformation on the Group’s retirement benefit schemes is set out in note 34 to the consolidated financial statements.

Management ContractsSave for the arrangements relating to the provision of services by Genting Berhad and its related companies to the Group as setout in the section headed “Connected Transactions” above and in the section headed “Related Party Transactions and Balances”in note 22 to the consolidated financial statements, no contracts concerning the management and administration of the whole orany substantial part of the business of the Group were entered into or existed during the year.

Major Customers and SuppliersDuring the year, the Group purchased less than 30% of its goods and services from its five largest suppliers and the aggregateamount of turnover attributable to the Group’s five largest customers was less than 30% of the Group’s turnover.

Emolument PolicyThe Group’s emolument policy and structure are reviewed by the Remuneration Committee established in May 2005. The Groupprovides competitive employee salaries, benefits and incentives including provident fund scheme and medical insuranceschemes for its staff.

Directors’ emoluments are determined with reference to, inter alia, their duties and responsibilities, the Group’s emolumentpolicy as well as emolument benchmark in the industry, the country where they are based and prevailing market conditions.

The key areas of the Group’s emolument policy are drawn up on the following basis:

Base SalaryBase salaries are set at levels competitive with pay for leisure and tourism industry companies based in similar locations whichthe Group competes for talent. This is to maintain a remuneration structure capable of attracting, motivating and retaining highquality individuals within a cost-effective framework. The Group seeks to reward employees taking into account the Group’sperformance and the markets in which the Group operates. The Group reviews annual salaries versus external market on anannual basis and recommends adjustments that reflect promotions, changes in level of responsibilities and competitive paylevels.

Annual BonusThe annual bonus earned in any year is dependent on the Group’s performance taking into account individual contributiontowards achievement of the Group’s performance.

Executive Share Option PlanTo motivate the employees and to allow them to participate in the growth and success of the Group, the Company has adopteda Post-listing Employees’ Share Option Scheme under which options at market value at the date of grant may be granted fromtime to time to eligible employees of the Group entitling them to subscribe for shares in the share capital of the Company.

36

Emolument Policy (continued)

Retirement BenefitsThe Group contributes to retirement schemes for its employees in accordance with the locations they are employed.

Corporate GovernanceIn the opinion of the Directors, the Company has complied with the code provisions set out in the CG Code during the yearended 31 December 2005, save for the code provisions on internal controls, which are to be implemented for accounting periodscommencing on or after 1 July 2005 pursuant to the CG Code, and deviations from certain code provisions listed below:

(1) Code Provision A.2.1: the roles of Chairman and Chief Executive Officer should be separate;

(2) Code Provision A.4.1: Non-Executive Directors should be appointed for a specific term; and

(3) Code Provision A.4.2: all Directors appointed to fill a casual vacancy should be subject to election by shareholders at thefirst general meeting after their appointment and every Director should be subject to retirement by rotation at least onceevery three years.

Details of considered reasons for the deviations and/or steps taken or proposed to be taken by the Company in order to be ableto comply with the relevant code provisions as well as further information of the Company’s corporate governance practices areset out in the Corporate Governance Report on pages 38 to 49.

Review by Audit CommitteeThis annual report has been reviewed by the Audit Committee established in compliance with Rule 3.21 of the Listing Rules andthe relevant provisions of the CG Code. The Audit Committee comprises the three Independent Non-executive Directors of theCompany, namely, Mr. Alan Howard Smith, J.P., Mr. Tan Boon Seng and Mr. Lim Lay Leng.

Public FloatBased on the information that is publicly available to the Company and within the knowledge of the Directors as at the date ofthis report, the Company has complied with the 10% public float requirement (as imposed by the Stock Exchange on theCompany at the time of listing) during the year and up to the date of this report.

General Disclosure Pursuant to the Listing RulesPursuant to Rules 13.18 and 13.21 of the Listing Rules, the Company discloses the following information.

(i) Loan Agreements of the GroupThe Group is a party to twelve loan agreements for an aggregate principal amount of approximately US$4.90 billion, ofwhich US$3.68 billion has been drawndown, with terms ranging from six to sixteen years from the dates of theseagreements. As at 31 December 2005, the outstanding loan balances was approximately US$2.48 billion. The Eurodenominated amounts had been translated into US dollars based on the exchange rate of US$1.1842 to €1 as at 31December 2005.

Three of these agreements require the Lim Family (or the Lim Family and/or the Lim Family through its indirectshareholding in Resorts World Bhd) to control (directly or indirectly) together or individually, the Company and beneficiallyown (directly or indirectly) at least 51% of the issued share capital of, and equity interest in the Company during the termsof these loans. The other nine agreements require the Lim Family to control (directly or indirectly) together or individually,NCL Corporation Ltd. (“NCLC”), a direct wholly-owned subsidiary of the Company, and beneficially own (directly orindirectly) at least 51% of the issued share capital of, and equity interest in, NCLC during the terms of these loans.

In the event that the shares of NCLC are listed on an approved stock exchange, if: (i) a third party owns or gains control ofmore than 33% of the voting stock of NCLC and the Lim Family ceases together or individually, to control (directly orindirectly) NCLC and beneficially own (directly or indirectly) at least 51% of the issued share capital of, and equity interestin, NCLC; or (ii) without the prior written consent of the agent, NCLC ceases to be listed on an approved stock exchange (inthe case of the US$800 million loan facility, the US$100 million letters of credit facility and the €624 million revolving loanfacility, in the event that the shares of NCLC are listed on an approved stock exchange, if: (i) any individual or any third party(being any person or group of persons acting in concert who is not a member of the Lim Family) (a) owns legally and/orbeneficially and either directly or indirectly at least 33% of the ordinary share capital of NCLC or (b) has the right or theability to control, either directly or indirectly, the affairs or the composition of the majority of the board of directors (orequivalent) of NCLC; and the Lim Family together or individually, directly or indirectly, ceases to beneficially own at least51% of the issued share capital of, and equity interest in, NCLC; or (ii) NCLC ceases to be listed on an approved stockexchange without the prior written consent of the lenders), this will constitute an event of default under the relevant loanagreements.

37

General Disclosure Pursuant to the Listing Rules (continued)

(ii) Convertible Bonds of the CompanyPursuant to the Trust Deed dated 20 October 2003 constituting the US$180 million 2% Convertible Bonds of the Company,the Convertible Bonds may be redeemed at the option of the Bondholders prior to their maturity on 20 October 2008 whenany person or persons, other than Genting Berhad, Golden Hope Limited, Resorts World Bhd or any of their affiliates,acquires control of more than 50% of the voting rights of the issued share capital of the Company.

(iii) Senior Notes of NCL Corporation Ltd.Pursuant to the Indenture dated 15 July 2004 constituting the US$250 million 10.625% Senior Notes of NCLC, holders ofthe Senior Notes have the right to require NCLC to repurchase all or a portion of the Senior Notes prior to their maturity on15 July 2014 when any person or group of related persons, other than Tan Sri Lim Goh Tong, Golden Hope Limited astrustee of the Golden Hope Unit Trust or Genting Berhad and any affiliate or related person thereof (together the “PermittedHolders”), beneficially owns or controls more than 40% of the voting stock of NCLC if at such time the Permitted Holdersbeneficially own or control less of the voting stock of NCLC than such person.

Significant Subsequent EventIn January 2006, the Group disposed of s/s Norway.

AuditorsThe consolidated financial statements have been audited by PricewaterhouseCoopers who will retire at the forthcoming AnnualGeneral Meeting and, being eligible, offer themselves for re-appointment.

On behalf of the Board

Tan Sri Lim Kok ThayChairman, President and Chief Executive Officer

Hong Kong, 20 February 2006

Corporate Governance Report

38

(I) Statement of ComplianceIt is the policy of the Company to manage the affairs of the Group in accordance with the appropriate standards for goodcorporate governance. Summarised below is a statement on how the Company has applied the principles and compliedwith the code provisions as set out in the Code on Corporate Governance Practices (the “CG Code”) contained in Appendix14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”)during the year ended 31 December 2005, save for the code provisions on internal controls, which are to be implementedfor accounting periods commencing on or after 1 July 2005 pursuant to the CG Code, and deviations from certain codeprovisions listed below.

A. Directors

A.1 The Board

Principle

An issuer should be headed by an effective Board which should assume responsibility for leadership and controlof the issuer and be collectively responsible for promoting the success of the issuer by directing and supervisingthe issuer’s affairs. Directors should take decisions objectively in the interests of the issuer.

Summary of Code Provisions Any deviations? Governance practices of the Company

A.1.1 At least 4 regular physical Board meetings shallbe held each year.

A.1.2 All Directors shall be given an opportunity toinclude matters in the agenda for regular Boardmeetings.

A.1.3 Notice of at least 14 days should be given of aregular Board meeting. For all other Boardmeetings, reasonable notice should be given.

A.1.4 All Directors shall have access to the advice andservices of the Company Secretary with a viewto ensur ing that Board procedures andapplicable rules and regulations are followed.

A.1.5 Minutes of Board and Board Committeesmeetings shall be kept by a duly appointedsecretary of the meeting and such minutes shallbe open for inspection on reasonable notice byany Director.

A.1.6 Draft and final versions of minutes of Boardmeetings shall be sent to all Directors for theircomments and records within a reasonable timeafter the Board meeting is held.

A.1.7 There should be a procedure agreed by theBoard to enable Directors, upon reasonablerequest, to seek independent professionaladvice in appropriate circumstances, at theissuer’s expense.

A.1.8 If a substantial shareholder or a Director has aconflict of interest in a material matter to beconsidered by the Board, the matter shall not bedealt with by way of circulation or by a committeebut a Board meeting shall be held.

Under the Listing Rules, Directors must abstainfrom voting on any Board resolution in whichthey or any of their associates have a materialinterest and shall not be counted in the quorumpresent at the Board meeting.

No

No

No

No

No

No

No

No

The Board has overall responsibility for the proper conductof the Company’s business.

Regular Board meetings are held on a quarterly basis andad hoc Board meetings will be held as required.

Draft notice and agenda for regular Board meetings areprovided to all Directors for comments and considerationand inclusion of any matters for deliberation at themeetings.

Formal notice of at least 14 days is given for a regularBoard meeting. Reasonable notice will be given for all otherBoard meetings.

All Directors have access to the advice and services of theCompany Secretary on Board procedures and corporategovernance matters as and when required.

Minutes of the Board, the Audit Committee and the ShareOption Committee meetings are kept by the CompanySecretary while minutes of the Remuneration Committeemeetings are kept by the Head of the Human ResourcesDepartment, Port Klang who is the Secretary of theRemuneration Committee. Such minutes are available forinspection by Directors/Board Committees Members.

Draft and final versions of minutes of Board meetings aresent to all Directors for their comments and records withina reasonable time.

The Board has agreed on a procedure to enable theDirectors to seek independent professional advice inappropriate circumstances, at the Company’s expense, toassist them to discharge their duties.

Material transactions with connected persons will beconsidered at Board meetings whereat the Directors mayconsider, if appropriate, granting approval in-principle forthe proposed transactions and authorising the final formsthereof be further approved by way of circulation or by aBoard committee set up for that purpose.

The Company’s Bye-laws provide for voting and quorumrequirements conforming with this code provision wherebyinterested Directors are required to abstain from voting andshall not be counted in the quorum.

39

(I) Statement of Compliance (continued)

A. Directors (continued)

A.2 Chairman and Chief Executive Officer

Principle

There are two key aspects of the management of every issuer – the management of the Board and the day-to-day management of the issuer’s business. There should be a clear division of these responsibilities at the Boardlevel to ensure a balance of power and authority, so that power is not concentrated in any one individual.

Summary of Code Provisions Any deviations? Governance practices of the Company

A.2.1 Roles of Chairman and Chief Executive Officershall be separate and shall not be performed bythe same individual.

A.2.2 The Chairman shall ensure that all Directors areproperly briefed on issues arising at Boardmeetings.

A.2.3 The Chairman shall ensure that Directorsreceive adequate information, which must becomplete and reliable, in a timely manner.

Yes

No

No

Currently, Tan Sri Lim Kok Thay is the Chairman, Presidentand Chief Executive Officer of the Company. He has beenwith the Group since the formation of the Company in 1993and has considerable cruise industry experience. Heprovides leadership for the Board in considering andsetting the overall strategies and objectives of theCompany. Mr. Chong Chee Tut, Executive Director and theChief Operating Officer is responsible for the day-to-daymanagement of the Company ’s business with theassistance of the other executive Directors and the SeniorManagement team. The Board is of the view that it is in theinterests of the Company to maintain this arrangement sothat the Board can have the benefit of a chairman who isknowledgeable about the business of the Group and iscapable to guide discussions and brief the Board in atimely manner on key issues and developments.

Given that there is a balanced Board with threeexperienced Independent Non-executive Directors(“INEDs”) representing more than one-third of the Boardand an INED acting as the Deputy Chairman, the Board isof the view that there is a strong independent element onthe Board to exercise independent judgement and providesufficient check and balance.

The Board wi l l evaluate from t ime to t ime theappropriateness of the dual roles of Chairman and ChiefExecutive Officer performed by the same individual andensure that the arrangement will continue to be in theinterests of the Company and its shareholders as a whole.

All Directors are properly briefed on issues arising at Boardmeetings.

Adequate business documents and information about theGroup are provided to all Directors in a timely manner.

A.3 Board composition

Principle

The Board should have a balance of skills and experience appropriate for the requirements of the business of theissuer. The Board should ensure that changes to its composition can be managed without undue disruption. TheBoard should include a balanced composition of Executive and Non-executive Directors (including IndependentNon-executive Directors) so that there is a strong independent element on the Board, which can effectivelyexercise independent judgement. Non-executive Directors should be of sufficient calibre and number for theirviews to carry weight.

Summary of Code Provisions Any deviations? Governance practices of the Company

A.3.1 INEDs shall be expressly identified in allcorporate communications that disclose thenames of Directors of the issuer.

No The Board currently comprises seven Directors, four ofwhom are Executive Directors and three are INEDs,constituting a balanced Board with strong independentelement. Please refer to the section headed “Directors andSenior Management Profiles” for the skills and experienceof each Director.

Composition of the Board, by category of Directors,including names of Executive Directors and INEDs isdisclosed in all corporate communications.

40

(I) Statement of Compliance (continued)

A. Directors (continued)

A.4 Appointments, re-election and removal

Principle

There should be a formal, considered and transparent procedure for the appointment of new Directors to theBoard. There should be plans in place for orderly succession for appointments to the Board. All Directors shouldbe subject to re-election at regular intervals. An issuer must explain the reasons for the resignation or removal ofany Director.

Summary of Code Provisions Any deviations? Governance practices of the Company

A.4.1 Non-executive Directors shall be appointed for aspecific term, subject to re-election.

A.4.2 All directors appointed to fill a casual vacancyshould be subject to election by shareholders atthe first general meeting after their appointment.Every Director should be subject to retirement byrotation at least once every three years.

Yes

Yes

During the year under review, non-executive Directors werenot appointed for a specific term, but subject to rotation forretirement and re-election at annual general meeting(“AGM”) in accordance with the Company’s Bye-laws.

In February 2006, a letter agreement has been entered intobetween the Company and each of the INEDs whereby histerm of office is generally fixed for a term of not more thanapproximately two years expiring at the conclusion of theAGM of the Company held in the second year following theyear of his last re-election by shareholders, subject to therequirements for retirement by rotation at the AGM inaccordance with the Company’s Bye-laws. For Mr. Tan BoonSeng who will be retiring by rotation at the coming 2006 AGMin accordance with the existing Bye-laws of the Company, his2-year specific term of office will take effect from theconclusion of the 2006 AGM. Mr. Lim Lay Leng will retire forre-election at the coming 2006 AGM due to the expiry of his 2-year specific term of office at the conclusion of the 2006 AGM.

According to the Bye-laws of the Company:

(i) at each AGM, one-third of the Directors for the timebeing (or, if their number is not three or a multiple ofthree, then the number nearest one-third), shall retirefrom office by rotation save any Director holding officeas Chairman or Managing Director; and

(ii) Directors appointed to fill a casual vacancy shall holdoffice only until the next following AGM of the Companyand shall be eligible for re-election at the meeting.

Subject to the shareholders’ approval at the forthcoming2006 AGM, the Company’s Bye-laws will be amended toconform with this CG Code so that every Director(including Directors holding office as Chairman orManaging Director and those appointed for a specific term)shall be subject to retirement by rotation at least onceevery three years and Directors appointed by the Board tofill casual vacancy shall be subject to re-election byshareholders at the first general meeting after theirappointment rather than the next following AGM after theirappointment.

In compliance with this CG Code, Tan Sri Lim Kok Thay willalso retire at the forthcoming 2006 AGM and stand for re-election by the shareholders.

41

(I) Statement of Compliance (continued)

A. Directors (continued)

A.5 Responsibilities of Directors

Principle

Every Director is required to keep abreast of his responsibilities as a Director of an issuer and of the conduct,business activities and development of that issuer. Given the essential unitary nature of the Board, Non-executiveDirectors have the same duties of care and skill and fiduciary duties as Executive Directors.

Summary of Code Provisions Any deviations? Governance practices of the Company

A.5.1 Every newly appointed Director shall receive acomprehensive, formal and tailored induction onthe first occasion of his appointment andsubsequently, such briefing and professionaldevelopment as is necessary.

A.5.2 Functions of non-executive Directors shallinclude the following:

(a) participating in Board meetings to bring anindependent judgement;

(b) taking the lead where potential conflicts ofinterest arise;

(c) serving on the audit, remuneration,nominat ion and other governancecommittees, if invited; and

(d) scrutinizing the issuer’s performance inachieving agreed corporate goals, andmonitoring the reporting of performance.

A.5.3 Every Director shall give sufficient time andattention to the affairs of the issuer.

A.5.4 Directors must comply with the Model Code forSecurities Transactions by Directors of ListedIssuers (the “Model Code”) set out in Appendix10 when dealings in the securities of the issuer.

Written guidelines for relevant employees’dealings in the securities of the issuer, whichshall be on no less exacting terms than theModel Code, shall be established.

“Relevant Employee” includes any employee ofthe issuer, a Director or employee of a subsidiaryor holding company of the issuer who is likely tobe in possession of unpublished price sensitiveinformation in relation to the issuer or itssecurities.

No

No

No

No

On appointment, new Directors will be given acomprehensive formal induction.

Directors are provided with continuous updates on thelatest changes or material development in statutes, theListing Rules, corporate governance practices etc. andare encouraged to participate in continuous professionaldevelopment seminars to update their knowledge fordischarging Directors’ responsibilities.

Non-executive Directors of the Company continue toperform these functions.

Directors continue to give appropriate time and attention tothe affairs of the Company.

The Company has adopted the Model Code as set out inAppendix 10 of the Listing Rules. All Directors haveconfirmed, following specific enquiry by the Company, thatthey have complied with the required standard set out inthe Model Code during the year from 1 January 2005 to 31December 2005 (both dates inclusive).

The Model Code has been extended and has becomeequally applicable to dealings in the securities of theCompany by members of Senior Management as includedin the Company’s latest Annual Report.

42

B. Remuneration of Directors and Senior Management

B.1 The level and make-up of remuneration and disclosure

Principle

An issuer should disclose information relating to its Directors’ remuneration policy and other remunerationrelated matters. There should be a formal and transparent procedure for setting policy on Executive Directors’remuneration and for fixing the remuneration packages for all Directors. Levels of remuneration should besufficient to attract and retain the Directors needed to run the company successfully, but companies should avoidpaying more than is necessary for this purpose. No Director should be involved in directing his own remuneration.

Summary of Code Provisions Any deviations? Governance practices of the Company

A.6.1 In respect of regular Board meetings and so faras practicable in all other cases, Board papersshall be sent in full to all Directors at least 3 days(or such other period as agreed) before a Boardor Board Committee meeting.

A.6.2 Management shall supply the Board and itscommittees with adequate information in a timelymanner. The Board and each Director shall haveseparate and independent access to the issuer’sSenior Management.

A.6.3 All Directors are entitled to have access to Boardpapers and related materials. Where queries areraised by Directors, steps must be taken torespond as promptly and fully as possible.

No

No

No

Board papers are sent to all Directors/Board Committeesmembers at least 3 days (or such other period as agreed)before the relevant meeting.

The Company continues to supply the Board and itscommittees with adequate information in a timely manner.

There are formal and informal contact between the Boardand the Senior Management from time to time at Boardmeeting and other events.

Board papers, minutes and re la ted corporatedocumentation are made available for inspection by allDirectors.

All Directors are entitled to have access to SeniorManagement who will respond to queries raised by theDirectors promptly.

(I) Statement of Compliance (continued)

A. Directors (continued)

A.6 Supply of and access to information

Principle

Directors should be provided in a timely manner with appropriate information in such form and of such quality aswill enable them to make an informed decision and to discharge their duties and responsibilities as Director of anissuer.

Summary of Code Provisions Any deviations? Governance practices of the Company

B.1.1 Remuneration Committee shall be establishedwith specific written terms of reference. Amajority of the members of the RemunerationCommittee shall be INEDs.

B.1.2 Remuneration Committee shall consult theChairman and/or Chief Executive Officer abouttheir proposals on the remuneration of otherexecutive Directors and have access toprofessional advice if necessary.

B.1.3 The terms of reference of the RemunerationCommittee shall include, as a minimum, theprescribed specific duties.

B.1.4 The Remuneration Committee shall makeavailable its terms of reference.

B.1.5 The Remuneration Committee shall be providedwith sufficient resources to discharge its duties.

No

No

No

No

No

On 24 May 2005, the Board has establ ished aRemuneration Committee with specific written terms ofreference. A majority of the members of the RemunerationCommittee are INEDs.

The Chairman, President and Chief Executive Officer ofthe Company is one of the Remuneration Committeemembers and is involved in formulating proposals on theremuneration of other Executive Directors prior to their dueconsideration by the Remuneration Committee.

The Chairman, President and Chief Executive Officer of theCompany is to abstain from voting when his remuneration isconsidered by the Remuneration Committee.

Terms of reference of the Remuneration Committeecontain the specific duties prescribed by the CG Code.Please refer to section (II)(B)(2) of this Report for theprincipal duties of the Remuneration Committee.

Terms of reference of the Remuneration Committee(including its role and functions) are available on theCompany’s website.

The Remuneration Committee is entitled to seekindependent professional advice, at the Company’sexpenses, if it considers necessary in order to perform itsduties.

43

C.2.1 Directors shall conduct a review of theeffectiveness of internal control system of theissuer and its subsidiaries at least annually andreport to shareholders that they have done so inthe CG Report. The review should cover allmaterial controls, including financial, operationaland compliance controls and risk managementfunctions.

N/A Under the transitional arrangements, code provisions oninternal control are to be implemented for accountingperiods commencing on or after 1 July 2005. In the case ofthe Company with a December year end, the codeprovisions on internal control are effective for accountingperiod commencing 1 January 2006. The Company wouldhave to first include in its interim report for the 6 monthsending 30 June 2006 if there is deviation from this codeand considered reasons therefor, and to include in itsCorporate Governance Report for the financial year ending31 December 2006 a statement on the internal controls ofthe Company.

The Management and internal auditors are considering thecurrent procedures and the required enhancement and willsubmit status report(s) for review by the Audit Committeeand the Board of the state of internal controls of theCompany before the required disclosure period.

C.1.1 Management shall provide explanation andinformation to the Board to enable the Board tomake an informed assessment of the financialinformation.

C.1.2 The Directors shall acknowledge in this Reporttheir responsibility for preparing the accounts andthere shall be a statement by the auditors abouttheir reporting responsibilities in the Auditors’Report on the financial statements.

C.1.3 The Board’s responsibility to present a balanced,clear and understandable assessment shallextend to annual and interim reports, other price-sensitive announcements and other disclosures.

No

No

No

Directors are regularly provided with relevant reports andupdates on the Company’s business and financialinformation.

The Directors are responsible for preparing accounts foreach financial year which give a true and fair view of thestate of affairs of the Company and the Group and of theresults and cash flows of the Group for the year thenended. In preparing accounts for the year ended 31December 2005, the Directors have:

(i) selected suitable accounting policies and appliedthem consistently;

(ii) made judgements and estimates that are prudentand reasonable; and

(iii) prepared accounts on the going concern basis.

The Auditors’ Report states the auditors’ reportingresponsibilities.

The Board endeavours to present a balanced, clear andunderstandable assessment of the Group’s position in allcorporate communications.

(I) Statement of Compliance (continued)

C. Accountability and Audit

C.1 Financial reporting

Principle

The Board should present a balanced, clear and comprehensible assessment of the Company’s performance,position and prospect.

Summary of Code Provisions Any deviations? Governance practices of the Company

C.2 Internal controls

Principle

The Board should ensure that the issuer maintains sound and effective internal controls to safeguard theshareholders’ investment and the issuer’s assets.

Summary of Code Provisions Any deviations? Governance practices of the Company

44

D. Delegation by the Board

D.1 Management functions

Principle

An issuer should have a formal schedule of matters specifically reserved to the Board for its decision. The Boardshould give clear directions to management as to the matters that must be approved by the Board beforedecisions are made on behalf of the issuer.

Summary of Code Provisions Any deviations? Governance practices of the Company

(I) Statement of Compliance (continued)

C. Accountability and Audit (continued)

C.3 Audit Committee

Principle

The Board should establish formal and transparent arrangements for considering how it will apply the financialreporting and internal control principles and for maintaining an appropriate relationship with the Company’sAuditors. The Audit Committee established by an issuer pursuant to the Exchange Listing Rules should haveclear terms of reference.

Summary of Code Provisions Any deviations? Governance practices of the Company

C.3.1 Minutes shall be kept by a duly appointedsecretary of the meeting. Draft and final versionsof minutes of Audit Committee meetings shall besent to all members of the committee for theircomments and records within a reasonable timeafter the meeting.

C.3.2 A former partner of the issuer’s existing auditingfirm shall be prohibited from acting as a memberof the issuer’s Audit Committee for a period of 1year commencing on the date of his ceasing:

(a) to be partner of the firm; or

(b) to have any financial interest in the firm,

whichever is the later.

C.3.3 The terms of reference of the Audit Committeeshall include at least the prescribed specificduties.

C.3.4 The Audit Committee shall make available itsterms of reference.

C.3.5 Where the Board disagrees with the AuditCommittee’s view on the selection, appointment,resignation or dismissal of the external auditors, theissuer shall include in this Report a statement fromthe Audit Committee explaining its recommendationand the reason why the Board has taken a differentview.

C.3.6 The Audit Committee shall be provided withsufficient resources to discharge its duties.

No

No

No

No

No

No

Minutes of the Audit Committee meetings are kept by theCompany Secretary as Secretary of the Audit Committee.

Draft and final versions of minutes of Audit Committeemeetings are sent to all Audit Committee members for theircomments and records within a reasonable time.

None of the three Audit Committee members are formerpartners of the external auditors.

Terms of reference of the Audit Committee contain thespecific duties prescribed by the CG Code. Please refer tosection (II)(D)(2) of this Report for the principal duties ofthe Audit Committee.

Terms of reference of the Audit Committee (including itsrole and functions) are available on the Company’swebsite.

The Audit Committee recommended to the Board that,subject to shareholders’ approval at the forthcoming AGM,PricewaterhouseCoopers be re-appointed as the externalauditors. The Board endorsed the Audit Committee’srecommendation on the re-appointment of the externalauditors.

The Audit Committee is entitled to seek independentprofessional advice, at the Company’s expenses, if itconsiders necessary in order to perform its duties.

D.1.1 When the Board delegates aspects of itsmanagement and administration functions toManagement, it must also give clear directionsas to the powers of management.

No The Board delegates management and administrationfunctions to Management as it considers appropriate fromtime to time, with clear directions as to the powers ofmanagement including circumstances where Managementshall report back and obtain prior approval from the Board.

45

(I) Statement of Compliance (continued)

D. Delegation by the Board (continued)

D.1 Management functions (continued)

Summary of Code Provisions Any deviations? Governance practices of the Company

D.2.1 The Board shall prescribe sufficiently clear termsof reference of Board Committees.

D.2.2 The terms of reference of Board Committeesshall require such committees to report the backto Board on their decisions or recommendations.

No

No

Clear terms of reference have been adopted for the formalBoard Committees of the Company, namely the AuditCommittee, the Remuneration Committee and the ShareOption Committee.

This term has been included in the terms of reference ofBoard Committees.

D.1.2 The issuer shall formalize the functions reservedto the Board and those de legated toManagement and review those arrangements ona periodic basis.

No There is a formal schedule of matters reserved for theBoard’s decision, including:

(i) Overall strategic direction;

(ii) Annual operating plan;

(iii) Annual capital expenditure plan;

(iv) Major acquisitions and disposals;

(v) Major capital projects; and

(vi) Monitoring of the Group’s operating and financialperformance.

D.2 Board Committees

Principle

Board committees should be formed with specific written terms of reference which deal clearly with thecommittees’ authority and duties.

Summary of Code Provisions Any deviations? Governance practices of the Company

E. Communication with Shareholders

E.1 Effective communication

Principle

The Board should endeavour to maintain an on-going dialogue with shareholders and in particular, use annualgeneral meetings or other general meetings to communicate with shareholders and encourage theirparticipation.

Summary of Code Provisions Any deviations? Governance practices of the Company

E.1.1 A separate resolution on each substantiallyseparate issue shall be proposed by theChairman of a general meeting.

E.1.2 Chairman of the Board shall attend the annualgeneral meeting and arrange for the Chairmen ofthe Audit, Remuneration and NominationCommittees (as appropriate) or in his absence,another member of the committee or failing thishis duly appointed delegate, to be available toanswer questions at the annual general meeting.

No

No

A separate resolution is proposed on each substantiallyseparate issue at a general meeting.

The Chairman of the Board and two Audit Committeemembers had attended the 2005 AGM of the Company.

46

(II) Other Information

In addition to the information disclosed above, set out below is other information required to be disclosed pursuant to therules on Corporate Governance Report contained in Appendix 23 to the Listing Rules.

(A) Board of Directors

(1) During the year under review, four Board meetings were held and details of the Directors’ attendance are set outbelow:

Attendance

Executive Directors:Tan Sri Lim Kok Thay 4/4

(Chairman, President and Chief Executive Officer)Mr. Chong Chee Tut 4/4

(Chief Operating Officer)Mr. William Ng Ko Seng 4/4

(Executive Vice President)Mr. David Colin Sinclair Veitch 4/4

(Deputy Chairman, President andChief Executive Officer of NCL Corporation Ltd.)

INEDs:Mr. Alan Howard Smith, J.P. 4/4

(Deputy Chairman)Mr. Tan Boon Seng 2/4Mr. Lim Lay Leng 4/4

(I) Statement of Compliance (continued)

E. Communication with Shareholders (continued)

E.2 Voting by poll

Principle

The issuer should regularly inform shareholders of the procedure for voting by poll and ensure compliance withthe requirements about voting by poll contained in the Exchange Listing Rules and the constitutional documentsof the issuer.

Summary of Code Provisions Any deviations? Governance practices of the Company

E.2.1 Procedures for and the rights of shareholders todemand a poll shall be disclosed in the issuer’scirculars to shareholders.

E.2.2 The issuer shall count all proxy votes and,except where a poll is required, the Chairman ofa meeting shall indicate to the meeting the levelof proxies lodged on each resolution and thebalance for and against the resolution.

E.2.3 The Chairman of a meeting shall at thecommencement of the meeting provide anexplanation on:

(a) the procedures for demanding a poll byshareholders before putting a resolution tothe vote on a show of hands; and

(b) the detailed procedures for conducting apoll and then answer questions fromshareholders whenever voting by way of apoll is required.

No

No

No

Procedures for and the rights of shareholders to demand apoll have been disclosed in the Company’s circulars toshareholders issued during the year under review.

The Company had held one general meeting during theyear under review, being the 2005 AGM. Votes cast at the2005 AGM were properly counted and recorded and pollresults for the relevant resolutions were published innewspapers on the business day following the saidmeeting and posted on the websites of the StockExchange and the Company.

Procedures for demanding and conducting a poll wereproperly explained during the Company’s 2005 AGMproceedings.

47

(II) Other Information (continued)

(B) Remuneration of Directors

(1) During the year under review, one Remuneration Committee meeting was held and details of attendance of theRemuneration Committee members are set out below:

Attendance

Mr. Alan Howard Smith, J.P. 1/1(Chairman of the Remuneration Committee and INED)

Tan Sri Lim Kok Thay 1/1(Chairman, President and Chief Executive Officer)

Mr. Lim Lay Leng 1/1(INED)

(2) The principal duties of the Remuneration Committee include the following:

(a) to review and make recommendations to the Board on the Company’s policy and structure for allremuneration of Directors and Senior Management;

(b) to review and determine the specific remuneration packages of all Executive Directors and SeniorManagement and to review and make recommendations to the Board of the remuneration of Non-executiveDirectors (including INEDs);

(c) to review and approve performance-based remuneration;

(d) to review and approve the compensation payable to Executive Directors and Senior Management inconnection with any loss or termination of their office or appointment;

(e) to review and approve compensation arrangements relating to dismissal or removal of Directors formisconduct;

(f) to ensure that no Directors or any of his associates is involved in deciding his own remuneration;

(g) when the occasion arises, to advise shareholders on how to vote with respect to any service contracts ofDirectors that require shareholders’ approval under the Listing Rules; and

(h) to consider other topics, as may be delegated by the Board.

(3) During the year 2005, the Remuneration Committee has reviewed and determined the specific remunerationpackages (including annual bonus) of certain Executive Directors and certain Senior Management.

(4) No Director is involved in deciding his own remuneration.

(C) Nomination of Directors

(1) The Board will review its composition from time to time as appropriate to ensure that the Board has a balance ofskills and experience appropriate for the business of the Company and that changes to its composition, if any,can be managed without undue disruption.

(2) During the financial year under review, there have not been any changes to Board composition.

48

(II) Other Information (continued)

(C) Nomination of Directors (continued)

(3) During the year 2005, the Board has:

(a) recommended Mr. David Colin Sinclair Veitch and Mr. Alan Howard Smith, J.P., who retired by rotation, bere-appointed at the 2005 AGM of the Company pursuant to the Company’s Bye-laws. The respectiveresolutions for re-election of the said retiring Directors were duly approved by the shareholders;

(b) re-appointed Tan Sri Lim Kok Thay as Chairman of the Company and Mr. Alan Howard Smith, J.P. as DeputyChairman of the Company, to hold office until the conclusion of the 2006 AGM of the Company pursuant tothe Company’s Bye-laws;

(c) appointed Tan Sri Lim Kok Thay, Mr. Alan Howard Smith, J.P. and Mr. Lim Lay Leng as members of theRemuneration Committee to hold office until the conclusion of the 2006 AGM of the Company andappointed Mr. Alan Howard Smith, J.P. as the Chairman of the Remuneration Committee; and

(d) re-appointed Mr. Alan Howard Smith, J.P., Mr. Tan Boon Seng and Mr. Lim Lay Leng as members of the AuditCommittee to hold office until the conclusion of the 2006 AGM of the Company and re-appointed Mr. AlanHoward Smith, J.P. as the Chairman of the Audit Committee.

(D) Audit Committee

(1) During the year under review, four Audit Committee meetings were held and details of attendance of AuditCommittee members are set out below:

AttendanceINEDs:Mr. Alan Howard Smith, J.P. 4/4

(Chairman of the Audit Committee)Mr. Tan Boon Seng 2/4Mr. Lim Lay Leng 4/4

(2) The principal duties of the Audit Committee include the following:

(a) to be primarily responsible for making recommendation to the Board on the appointment, reappointmentand removal of the external auditor, the remuneration and terms of engagement of the external auditor, andany questions of resignation or dismissal of that auditor;

(b) to review and monitor the external auditor’s independence and objectivity and the effectiveness of the auditprocess in accordance with applicable standard;

(c) to develop and implement policy on the engagement of an external auditor to supply non-audit services;

(d) to monitor integrity of financial statements of the Company and the Company’s annual report and accounts,half-year report and quarterly reports, and to review significant financial reporting judgements contained inthem before submission to the Board;

(e) in regard to (d) above,

(i) members of the Committee must liaise with the Company’s Board, Senior Management and qualifiedaccountant and discuss problems and reservations arising from the interim and final audits and anymatters the auditors may wish to discuss; and

(ii) the Committee should consider any significant or unusual items;

(f) to review the external auditor’s management letter, any material queries raised by the auditor toManagement in respect of the accounting records, financial accounts or systems of control andManagement’s response;

(g) to ensure that the Board will provide a timely response to the issues raised in the external auditor’smanagement letter;

49

(II) Other Information (continued)

(D) Audit Committee (continued)

(h) to review the Company’s financial controls, internal control and risk management systems;

(i) to discuss with Management the system of internal control and ensure that Management has discharged itsduty to have an effective internal control system;

(j) to review the internal audit programme and to review and monitor the effectiveness of the internal auditfunction;

(k) to review the Group’s financial and accounting policies and practices;

(l) to consider any findings of major investigations of internal control matters and Management’s response; and

(m) to consider other topics, as defined by the Board.

(3) During the year 2005, the Audit Committee has, inter alia:

(a) reviewed the financial reports for the year ended 31 December 2004, for the three months ended 31 March2005, for the six months ended 30 June 2005 and for the nine months ended 30 September 2005;

(b) reviewed the internal and external audit plans;

(c) reviewed the internal and external audit reports;

(d) reviewed connected transactions and related party transactions as set out in the section headed“Connected Transactions” in the Directors’ Report and in note 22 to the consolidated financial statements;

(e) considered the appointment of the external auditors including the proposed audit fees; and

(f) reported to the Board conclusions of its review and recommendations on the matters set out above.

(E) Auditors’ Remuneration

(1) A remuneration of US$0.9 million was paid/payable to the Company’s external auditors for the provision of auditservices in 2005. During the same year, the fees paid/payable to the external auditors for non-audit relatedactivities amounted to US$1.4 million, comprising tax services fees of US$0.5 million, regulatory reportingservices fees of US$0.7 million and other miscellaneous items of US$0.2 million.

Consolidated Income StatementFor the year ended 31 December 2005

50

Note GROUP

(Restated)2005 2004

US$’000 US$’000

Turnover 3 1,954,799 1,699,007

Operating expenses (excluding depreciation,amortisation and impairment loss) (1,354,591) (1,127,176)

Selling, general and administrative expenses(excluding depreciation) (278,249) (255,138)

Depreciation and amortisation 3, 4 (176,022) (181,866)Impairment loss 5 (1,400) (14,500)

(1,810,262) (1,578,680)

Operating profit 3, 4 144,537 120,327

Interest income 8,484 2,985Financial costs 6 (155,930) (110,005)Share of loss of an associate 7 (5,219) —Other non-operating income/(expenses), net 8 28,675 (23,920)

(123,990) (130,940)

Profit/(Loss) before taxation 20,547 (10,613)

Taxation 9 (2,641) (971)

Profit/(Loss) for the year 17,906 (11,584)

Basic earnings/(loss) per share (US cents) 10 0.34 (0.22)

Diluted earnings per share (US cents) 10 0.34 N/A

Balance SheetsAs at 31 December 2005

51

Note GROUP COMPANY

(Restated) (Restated)2005 2004 2005 2004

US$’000 US$’000 US$’000 US$’000

ASSETSNON-CURRENT ASSETSIntangible assets 13 605,994 605,286 — —Deferred tax assets 27 359 387 — —Property, plant and equipment 14 4,341,443 3,821,484 — —Lease prepayments 15 1,739 1,818 — —Investments in subsidiaries 16 — — 2,735,780 2,788,948Investment in an associate 17 — 15,148 — —Available-for-sale investment 17 10,285 — — —Restricted cash 150 150 — —Other assets 18 101,543 85,095 6,601 8,839

5,061,513 4,529,368 2,742,381 2,797,787

CURRENT ASSETSConsumable inventories 19 38,332 42,059 — —Trade receivables 20 22,810 12,089 — —Prepaid expenses and others 47,959 29,684 3,099 2,919Derivative financial instruments 30 4,533 2,241 3,960 2,241Amounts due from related companies 22 — 125 — —Restricted cash 48,034 28,520 — —Cash and cash equivalents 21 187,698 341,027 61,228 117,446

349,366 455,745 68,287 122,606

TOTAL ASSETS 5,410,879 4,985,113 2,810,668 2,920,393

52

Note GROUP COMPANY

(Restated) (Restated)2005 2004 2005 2004

US$’000 US$’000 US$’000 US$’000

EQUITYCapital and reserves attributable to the

Company’s equity holdersShare capital 23 530,018 529,320 530,018 529,320Reserves:

Share premium 1,269,089 1,267,913 1,269,089 1,267,913Additional paid-in capital 93,893 94,018 90,981 91,212Convertible bonds -

equity component 25 14,400 14,400 14,400 14,400Foreign currency translation

adjustments (24,052) (23,197) — —Unamortised share option expense (1,087) (2,300) (214) (773)Cash flow hedge reserve 5,368 (20,564) 5,368 (21,777)Retained earnings/

(Accumulated losses) 12,252 (34,080) 213,983 271,271

1,899,881 1,825,510 2,123,625 2,151,566

LIABILITIESNON-CURRENT LIABILITIESLong-term borrowings 24 2,671,129 2,415,716 567,759 656,824Derivative financial instruments 30 7,240 22,361 7,240 22,361Other long-term liabilities 26 2,631 5,734 — —Deferred tax liabilities 27 574 539 — —

2,681,574 2,444,350 574,999 679,185

CURRENT LIABILITIESTrade creditors 28 90,815 83,481 — —Current income tax liabilities 1,647 1,227 — —Provision, accruals and other liabilities 29 189,998 209,281 13,115 12,462Current portion of long-term borrowings 24 256,442 179,159 98,575 75,788Derivative financial instruments 30 354 1,392 354 1,392Amounts due to related companies 22 118 — — —Advance ticket sales 290,050 240,713 — —

829,424 715,253 112,044 89,642

TOTAL LIABILITIES 3,510,998 3,159,603 687,043 768,827

TOTAL EQUITY AND LIABILITIES 5,410,879 4,985,113 2,810,668 2,920,393

Tan Sri Lim Kok Thay Mr. Chong Chee TutChairman, President and Chief Executive Officer Chief Operating Officer

Consolidated Cash Flow StatementFor the year ended 31 December 2005

53

Note GROUP

2005 2004US$’000 US$’000

OPERATING ACTIVITIESCash generated from operations (a) 358,206 356,184Interest paid (144,202) (74,483)Interest received 8,138 2,948Income tax paid (2,170) (1,698)

Net cash inflow from operating activities 219,972 282,951

INVESTING ACTIVITIESPurchase of property, plant and equipment (668,997) (468,270)Proceeds from sale of property, plant and equipment 186 82,171Acquisition of a subsidiary, net of cash acquired (b) — (4,647)Acquisition of an equity investment in Valuair Limited — (15,148)Payment of additional purchase consideration for NCLH acquisition (7,654) —Others (1,139) (4,695)

Net cash outflow from investing activities (677,604) (410,589)

FINANCING ACTIVITIESProceeds from long-term borrowings 715,696 1,499,697Principal repayments of long-term borrowings (373,401) (1,358,100)Proceeds from issuance of ordinary shares pursuant to the Pre-listing

Employee Share Option Scheme 1,874 18Payment of loan arrangement fees (16,211) (53,375)Restricted cash, net (19,514) 2,204Others, net (3,103) (504)

Net cash inflow from financing activities 305,341 89,940

Effect of exchange rate changes on cash and cash equivalents (1,038) 1,692

Net decrease in cash and cash equivalents (153,329) (36,006)Cash and cash equivalents at beginning of year 341,027 377,033

Cash and cash equivalents at end of year 187,698 341,027

NON-CASH INVESTING ACTIVITYAcquisition of motor vehicles by means of finance lease 10,310 —

54

Notes to Consolidated Cash Flow Statement

(a) Cash generated from operations

GROUP

(Restated)2005 2004

US$’000 US$’000

OPERATING ACTIVITIES

Profit/(Loss) before taxation 20,547 (10,613)Depreciation and amortisation

- relating to operating function 166,300 172,299- relating to selling, general and administrative function 9,722 9,567

176,022 181,866

Interest expense, net of capitalised interest 155,930 110,005Interest income (8,484) (2,985)Impairment loss 1,400 14,500Loss/(Gain) on translation of debts (29,418) 9,545Others 4,245 444

320,242 302,762

Decrease/(Increase) in :Trade receivables (8,879) 7,768Consumable inventories (13,373) (3,635)Prepaid expenses and others (16,989) 24,966Other assets (1,714) (1,617)

Increase/(Decrease) in :Trade creditors 5,835 (14,019)Provisions, accruals and other liabilities 23,504 (3,915)Amounts due to related companies 243 (234)Advance ticket sales 49,337 44,108

Cash generated from operations 358,206 356,184

(b) Acquisition of a subsidiary, net of cash acquired

In November 2004, the Group acquired all of the outstanding shares of Polynesian Adventure Tours, Inc. (“Polynesian”), atour bus operator in Hawaii that had previously provided the Group with shore excursions. The purchase price wasapproximately US$4.6 million, net of cash acquired. The acquisition of the tour bus company did not have a material impacton the Group’s consolidated income statement for the year ended 31 December 2004. The details of the net assetsacquired and cash flow arising from the acquisition of Polynesian are shown below.

GROUP

2005 2004US$’000 US$’000

Net assets acquired:Property, plant and equipment — 2,288Other assets — 4,347Consumable inventories — 349Trade and other receivables — 1,653Cash and bank balances — 638Trade and other creditors — (1,112)Long-term borrowings (including current portion) — (2,673)Other long-term liabilities — (205)

Purchase consideration — 5,285Cash and bank balances of a subsidiary acquired — (638)

Satisfied by cash — 4,647

Statements of Changes in EquityFor the year ended 31 December 2005

55

Convertible Foreign Unamortised Cash RetainedAdditional bonds currency share flow earnings/

Share Share paid-in - equity translation option hedge (Accumulatedcapital premium capital component adjustments expense reserve losses) Total

GROUP US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

At 1 January 2005 529,320 1,267,913 94,018 14,400 (23,197 ) (2,300 ) (20,564 ) (34,080 ) 1,825,510Adoption of HKAS 39,

HKFRS 3 and HKAS 38 — — — — — — 11,343 28,426 39,769

At 1 January 2005, as restated 529,320 1,267,913 94,018 14,400 (23,197 ) (2,300 ) (9,221 ) (5,654 ) 1,865,279

Exchange translationdifferences — — — — (855 ) — — — (855 )

Cash flow hedge:- Gain on financial instruments — — — — — — 4,738 — 4,738- Transferred to consolidated income statement — — — — — — 9,851 — 9,851

Net amounts notrecognised in theconsolidated incomestatement — — — — (855 ) — 14,589 — 13,734

Profit for the year — — — — — — — 17,906 17,906

Total recognised income/(expense) for 2005 — — — — (855 ) — 14,589 17,906 31,640

Issue of ordinaryshares pursuant to thePre-listing EmployeeShare Option Scheme 698 1,176 — — — — — — 1,874

Amortisation ofshare option expense — — — — — 1,088 — — 1,088

Issuance of share option — — 227 — — (227 ) — — —Forfeiture of share option — — (352 ) — — 352 — — —

At 31 December 2005 530,018 1,269,089 93,893 14,400 (24,052 ) (1,087 ) 5,368 12,252 1,899,881

56

Convertible Foreign Unamortised CashAdditional bonds currency share flow

Share Share paid-in - equity translation option hedge Accumulatedcapital premium capital component adjustments expense reserve losses Total

GROUP US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

At 31 December 2003- as previously stated 529,314 1,267,901 92,818 — (23,013 ) (2,065 ) (34,366 ) (22,073 ) 1,808,516- adoption of HKAS 32 retrospectively — — — 14,400 — — — (423 ) 13,977

At 1 January 2004, as restated 529,314 1,267,901 92,818 14,400 (23,013 ) (2,065 ) (34,366 ) (22,496 ) 1,822,493

Exchange translationdifferences — — — — (184 ) — — — (184 )

Cash flow hedge:- Loss on financial instruments — — — — — — (2,667 ) — (2,667 )- Transferred to consolidated income statement — — — — — — 16,469 — 16,469

Net amounts notrecognised in theconsolidated incomestatement — — — — (184 ) — 13,802 — 13,618

Loss for the year — — — — — — — (11,584 ) (11,584 )

Total recognised income/(expense) for 2004 — — — — (184 ) — 13,802 (11,584 ) 2,034

Issue of ordinaryshares pursuant to thePre-listing EmployeeShare Option Scheme 6 12 — — — — — — 18

Amortisation ofshare option expense — — — — — 965 — — 965

Issuance of share option — — 1,750 — — (1,750 ) — — —Forfeiture of share option — — (550 ) — — 550 — — —

At 31 December 2004 529,320 1,267,913 94,018 14,400 (23,197 ) (2,300 ) (20,564 ) (34,080 ) 1,825,510

57

Convertible Unamortised CashAdditional bonds share flow

Share Share paid-in - equity option hedge Retainedcapital premium capital component expense reserve earnings Total

COMPANY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

At 1 January 2005 529,320 1,267,913 91,212 14,400 (773) (21,777) 271,271 2,151,566Adoption of HKAS 39 — — — — — 12,556 (12,556) —

At 1 January 2005, as restated 529,320 1,267,913 91,212 14,400 (773) (9,221) 258,715 2,151,566

Cash flow hedge:- Gain on financial

instruments — — — — — 4,738 — 4,738- Transferred to income

statement — — — — — 9,851 — 9,851

Net amounts notrecognised in theincome statement — — — — — 14,589 — 14,589

Loss for the year — — — — — — (44,732) (44,732)

Total recognised income/(expense) for 2005 — — — — — 14,589 (44,732) (30,143)

Issue of ordinaryshares pursuant to thePre-listing EmployeeShare Option Scheme 698 1,176 — — — — — 1,874

Amortisation ofshare option expense — — — — 328 — — 328

Issuance of share option — — 22 — (22) — — —Forfeiture of share option — — (253) — 253 — — —

At 31 December 2005 530,018 1,269,089 90,981 14,400 (214) 5,368 213,983 2,123,625

58

Convertible Unamortised CashAdditional bonds share flow

Share Share paid-in - equity option hedge Retainedcapital premium capital component expense reserve earnings Total

COMPANY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

At 31 December 2003- as previously stated 529,314 1,267,901 91,052 — (1,297) (34,366) 331,369 2,183,973- adoption of HKAS 32 retrospectively — — — 14,400 — — (423) 13,977

At 1 January 2004, as restated 529,314 1,267,901 91,052 14,400 (1,297) (34,366) 330,946 2,197,950

Cash flow hedge:- Loss on financial instruments — — — — — (3,880) — (3,880)- Transferred to income statement — — — — — 16,469 — 16,469

Net amounts notrecognised in theincome statement — — — — — 12,589 — 12,589

Loss for the year — — — — — — (59,675) (59,675)

Total recognised income/(expense) for 2004 — — — — — 12,589 (59,675) (47,086)

Issue of ordinaryshares pursuant to thePre-listing EmployeeShare Option Scheme 6 12 — — — — — 18

Amortisation ofshare option expense — — — — 684 — — 684

Issuance of share option — — 710 — (710) — — —Forfeiture of share option — — (550) — 550 — — —

At 31 December 2004 529,320 1,267,913 91,212 14,400 (773) (21,777) 271,271 2,151,566

Notes to the Consolidated Financial Statements

59

1. Principal Accounting Policies

(a) Basis of preparationThe consolidated financial statements have been prepared in accordance with Hong Kong Financial ReportingStandards (“HKFRS”) issued by Hong Kong Institute of Certified Public Accountants (“HKICPA”). The preparation ofconsolidated financial statements in conformity with HKFRS requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the accounts and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. The consolidated financial statements are prepared under thehistorical cost convention, as modified by the revaluations of available-for-sale financial assets, financial assets andfinancial liabilities (including derivative instruments) which are carried at fair value.

Where necessary, certain comparative figures have been reclassified to conform to the current year’s presentation.

The HKICPA has issued a number of new and revised Hong Kong Financial Reporting Standards and Hong KongAccounting Standards (“new HKFRSs”) which are effective for accounting periods beginning on or after 1 January2005.

As at 1 January 2005, the Group adopted the new/revised standards and interpretations of HKFRSs as listed below,which are relevant to its operations. The comparative figures in respect of year 2004 have been amended as requiredand where necessary, in accordance with the relevant requirements.

HKAS 1 Presentation of Financial StatementsHKAS 2 InventoriesHKAS 7 Cash Flow StatementsHKAS 8 Accounting Policies, Changes in Accounting Estimates and ErrorsHKAS 10 Events after the Balance Sheet DateHKAS 12 Income TaxesHKAS 14 Segment ReportingHKAS 16 Property, Plant and EquipmentHKAS 17 LeasesHKAS 18 RevenueHKAS 19 Employee BenefitsHKAS 21 The Effects of Changes in Foreign Exchange RatesHKAS 23 Borrowing CostsHKAS 24 Related Party DisclosuresHKAS 27 Consolidated and Separate Financial StatementsHKAS 28 Investments in AssociatesHKAS 32 Financial Instruments: Disclosure and PresentationHKAS 33 Earnings Per ShareHKAS 34 Interim Financial ReportingHKAS 36 Impairment of AssetsHKAS 37 Provisions, Contingent Liabilities and Contingent AssetsHKAS 38 Intangible AssetsHKAS 39 Financial Instruments: Recognition and MeasurementHKFRS 1 First-time Adoption of Hong Kong Financial Reporting StandardsHKFRS 2 Share-based PaymentHKFRS 3 Business CombinationsHKFRS 5 Non-current Assets Held for Sale and Discontinued Operations

The Group revalued certain of the properties in conjunction with the listing of the entire share capital on The StockExchange of Hong Kong Limited in 2000. On 1 January 2005, the Group applied the exemptions under HKFRS 1whereby it elected to use the revalued amount of these properties under HK GAAP as deemed cost at the date oftransition to HKFRSs.

The adoption of the above new HKFRSs did not have any significant impact on its results of operations and financialposition, except for the adoption of HKFRS 2, HKFRS 3, HKAS 38, HKAS 17, HKAS 32 and HKAS 39 which arediscussed below.

60

1. Principal Accounting Policies (continued)

(a) Basis of preparation (continued)

HKFRS 2

The adoption of HKFRS 2 has resulted in a change in the accounting policy for share options granted after 7November 2002 and to be vested after 1 January 2005. The Group has also applied HKFRS 2 retrospectively for shareoptions granted after 7 November 2002 and vested before 1 January 2005. Prior to 1 January 2005, the Groupaccounted for compensation expense in respect of these share options to employees based on the excess, if any, ofthe quoted market price of the share at the date of the grant over the exercise price of the option. Effective from 1January 2005, the Group accounts for the compensation cost of these share options based on the fair value of theemployee services received in exchange for the grant of these options.

This change in accounting policy has been accounted for retrospectively as follows:

As Effect ofpreviously adoption of

reported HKFRS As restated

US$’000 US$’000 US$’000

GroupAt 31 December 2004Reserves:Additional paid-in capital 92,689 1,329 94,018Accumulated losses (31,079) (139) (31,218)Unamortised share option expense (1,110) (1,190) (2,300)

Selling, general and administrative expenses 254,956 139 255,095

The impact on basic and diluted earnings per share as a result of adopting HKFRS 2 is not material.

CompanyAt 31 December 2004Reserves:Additional paid-in capital 90,745 467 91,212Retained earnings 274,159 (26) 274,133Unamortised share option expense (332) (441) (773)

HKAS 17

The adoption of HKAS 17 requires the Group to classify the land held under a long-term lease as an operating leaseif the risks and rewards incidental to ownership will not be transferred to the lessee. The comparative in respect of theproperty, plant and equipment has been restated whereby the land held under operating lease is now presented aslease prepayments. The up-front prepayments made for the leasehold land and land use rights are expensed in theconsolidated income statement on a straight-line basis over the period of the lease or when there is impairment, theimpairment is expensed in the consolidated income statement. The effect of the reclassification of the comparative isas follows:

As Effect ofpreviously adoption of

reported HKFRS As restated

US$’000 US$’000 US$’000

GroupAt 31 December 2004Property, plant and equipment 3,823,302 (1,818) 3,821,484Lease prepayments — 1,818 1,818

Depreciation and amortisation 181,909 (43) 181,866Selling, general and administrative expenses 254,956 43 254,999

61

1. Principal Accounting Policies (continued)

(a) Basis of preparation (continued)

HKAS 32

The adoption of HKAS 32 requires the Group to analyse the compound financial instruments into debt and equitycomponents based on the circumstances at the inception of the instrument. The comparative in respect of theconvertible bonds has been restated whereby the equity conversion option is now presented as a component ofreserves. The related interest expense on the convertible bonds has been restated by applying the effective interestmethod to the liability component. The effects of the adoption of HKAS 32 have been accounted for retrospectively asfollows:

As Effect ofpreviously adoption of

reported HKFRS As restated

US$’000 US$’000 US$’000

GroupAt 31 December 2004Convertible bonds 180,000 (3,188) 176,812Provision, accruals and other liabilities 217,631 (8,350) 209,281Reserves:Convertible bonds - equity component — 14,400 14,400Accumulated losses (31,079) (2,862) (33,941)

Financial costs 107,566 2,439 110,005Basic loss per share (US cents) (0.17) (0.05) (0.22)

CompanyAt 31 December 2004Convertible bonds 180,000 (3,188) 176,812Provision, accruals and other liabilities 20,812 (8,350) 12,462Reserves:Convertible bonds - equity component — 14,400 14,400Retained earnings 274,159 (2,862) 271,297

The impact on opening retained earnings at 1 January 2004 of the Group and the Company from the adoption ofHKAS 32 was US$0.4 million each.

HKFRS 3 and HKAS 38

The adoption of HKFRS 3 and HKAS 38 resulted in a change in the accounting policy for goodwill and trade names.Prior to 1 January 2005, goodwill and trade names were amortised over useful lives of 40 years and negative goodwillwas amortised over 26 years, the remaining weighted average useful life of the non-monetary assets acquired. Inaddition, the goodwill and trade names were assessed for impairment annually or where there were indications ofpossible impairment.

In accordance with the provisions of HKFRS 3:

- The Group ceased amortisation of goodwill and trade names from 1 January 2005;

- Accumulated amortisation as at 31 December 2004 has been eliminated with a corresponding decrease in thecost of goodwill and trade names;

- The carrying amount of previously recognised negative goodwill has been derecognised as at 1 January 2005with a corresponding adjustment to the opening balance of retained earnings;

- The Group will continue to review goodwill and trade names for impairment annually or where there areindications of possible impairment.

62

1. Principal Accounting Policies (continued)

(a) Basis of preparation (continued)

HKFRS 3 and HKAS 38 (continued)

This change in accounting policy has been accounted for prospectively from 1 January 2005 as follows:

As Effect ofpreviously adoption of

reported HKFRS As restated

US$’000 US$’000 US$’000

GroupAt 1 January 2005Intangible assets, net of accumulated

amortisation and impairment 605,286 39,769 645,055Retained earnings/(Accumulated losses) (31,079) 39,769 8,690

HKAS 39

Upon adoption of HKAS 39 on 1 January 2005, the fair value of certain interest rate swaps of US$10.7 million(Company: US$12.0 million) which no longer qualified as hedging instruments as a result of early repayment ofcertain bank borrowings and which had been included within cash flow hedge reserve, has been adjusted to theopening balance of retained earnings. Similarly, the fair value of the 5.5% capped USD LIBOR-in-arrears interest rateswaps amounting to US$0.6 million which were not effective hedges and had been included within cash flow hedgereserve, has been adjusted to the opening balance of retained earnings.

The effects of the change on the Group’s and Company’s financial statements have been accounted for prospectivelyfrom 1 January 2005 as follows:

As Effect ofpreviously adoption of

reported HKFRS As restated

US$’000 US$’000 US$’000GroupAt 1 January 2005Reserves:Cash flow hedge reserve (20,564) 11,343 (9,221)Accumulated losses (31,079) (11,343) (42,422)

CompanyAt 1 January 2005Reserves:Cash flow hedge reserve (21,777) 12,556 (9,221)Retained earnings 274,159 (12,556) 261,603

There was no impact on basic and diluted earnings per share of the Group from the adoption of HKAS 17, HKFRS 3,HKAS 38 and HKAS 39.

There was no impact on opening retained earnings at 1 January 2004 of the Group and the Company from theadoption of HKFRS 2, HKAS 17, HKFRS 3, HKAS 38 and HKAS 39.

No early adoption of the following new Standards or Interpretations that have been issued but are not yet effective. Theadoption of such Standards or Interpretations will not result in substantial changes to the Group’s accounting policies.

HKAS 19 (Amendment) Actuarial Gains and Losses, Group Plans and DisclosuresHKFRS – Int 4 Determining whether an Arrangement contains A Lease

63

1. Principal Accounting Policies (continued)

(b) Group accounting

(i) ConsolidationSubsidiaries are those entities in which the Group, directly or indirectly, controls more than one half of the votingpower; has the power to govern the financial and operating policies; to appoint or remove the majority of themembers of the board of directors; or to cast majority of votes at the meetings of the board of directors.

The consolidated financial statements include the financial statements of the Company and all its subsidiariesmade up to the end of the year. The results of subsidiaries acquired or disposed of during the year are includedin the consolidated income statement from the effective date on which control is transferred to the Group or up tothe effective date that control ceases, as appropriate.

All significant intercompany transactions, balances and unrealised gains on transactions within the Group areeliminated on consolidation. Unrealised losses are eliminated unless the transaction provides evidence of animpairment of the asset transferred.

The gain or loss on the disposal of a subsidiary represents the difference between the proceeds of the sale andthe Group’s share of its net assets together with any goodwill which was not previously charged in theconsolidated income statement.

In the Company’s balance sheet, investments in subsidiaries are stated at cost less provision of impairment loss,if any. The results of subsidiaries are accounted for by the Company on the basis of dividends received andreceivable.

(ii) AssociateAn associate is a company, not being a subsidiary or a joint venture, in which an equity interest is held for thelong-term and significant influence is exercised in its management. Investment in an associate is accounted forby the equity method of accounting and is initially recognised at cost.

The consolidated income statement includes the Group’s share of the results of associate for the year, and theconsolidated balance sheet includes the Group’s share of the net assets of the associate and goodwill (net ofaccumulated impairment loss) on acquisition.

Equity accounting is discontinued when the carrying amount of the investment in an associate reaches zero,unless the Group has incurred obligations or guaranteed obligations in respect of the associate.

Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group’sinterest in the associate; unrealised losses are eliminated unless the transaction provides evidence of animpairment of the asset transferred.

(c) Intangible assetsIntangible assets consist of goodwill and trade names.

Goodwill represents the excess of purchase consideration over the fair values of the Group’s share of net identifiableassets of the acquired subsidiaries and associate at the date of acquisition. Goodwill on acquisition of subsidiaries isincluded in intangible assets. Goodwill on acquisition of associate is included in investment in associate. Goodwill istested annually for impairment or where there are indications of possible impairment and carried at net carryingamount less accumulated impairment losses. Gains and losses on the disposal of an entity include the carryingamount of goodwill relating to the entity sold.

Trade names of Norwegian Cruise Line and Orient Lines recorded on acquisition of NCL Holding ASA are estimatedto have an indefinite useful life and, therefore, are not subject to amortisation. Trade names are tested annually forimpairment or where there are indications of possible impairment and carried at net carrying amount lessaccumulated impairment losses.

64

1. Principal Accounting Policies (continued)

(d) Translation of foreign currenciesItems included in the financial statements of each of the Group’s entities are measured using the currency of theprimary economic environment in which the entity operates (“the functional currency”). The consolidated financialstatements are presented in US dollars, which is the Company’s functional and presentation currency.

Transactions in currencies other than US dollars (“foreign currencies”) are translated into US dollars at exchange ratesin effect at the transaction dates. Foreign exchange gains and losses resulting from the settlement of suchtransactions are recognised in the consolidated income statement. Monetary assets and liabilities expressed inforeign currencies are translated at exchange rates at the balance sheet date. All such exchange differences arereflected in the consolidated income statement.

For those subsidiaries and associate which do not have the US dollar as their presentation currency, translation oftheir foreign currency accounts is dealt with as follows:

(i) assets and liabilities are translated at exchange rates at the balance sheet date; and

(ii) income and expense items are translated at average exchange rates prevailing during the year.

The resulting translation gains and losses arising from remeasurement are included as a separate component ofreserve “Foreign currency translation adjustments”.

(e) Revenue and expense recognitionRevenues are recognised when the relevant services have been rendered. Cruise revenue, and all associated directcosts of a voyage, are generally recognised on a pro rata basis over the period. Where services are provided on credit,ongoing credit evaluations are performed and potential credit losses are expensed at the time accounts receivable areestimated to be uncollectible.

Income from charter-hire is recognised evenly over the period of the charter-hire.

Deposits received from customers for future voyages are recorded as advance ticket sales until such passengerrevenue is earned.

Interest income and expense is recognised on a time proportion basis, taking into account the principal amountoutstanding and the interest rates applicable.

(f) Drydocking expensesDrydocking costs represent major inspection and overhaul costs and are depreciated to reflect the consumption ofbenefits, which are to be replaced or restored by the subsequent drydocking generally every two to three years. TheGroup has included these drydocking costs as a separate component of the ship costs in accordance with HKAS 16“Property, Plant and Equipment”.

(g) Advertising costsThe Group’s advertising costs are generally expensed as incurred. Costs incurred that result in tangible assets,including brochures are treated as prepaid supplies and expensed as consumed.

(h) Start up expensesStart up expenses, which primarily comprise expenses of deploying a ship from the dockyard to its port of operationsand repositioning a ship to develop a new market, including crew payroll and ship expenses, are expensed as incurredand included in operating expenses. Marketing expenses incurred during this period are included in selling, generaland administrative expenses.

(i) Deferred taxationDeferred taxation is provided in full, using the liability method, on temporary differences arising between the tax basesof assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferredincome taxes arises from initial recognition of an asset or liability in a transaction other than a business combinationthat at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Taxationrates enacted or substantially enacted by the balance sheet date are used to determine deferred taxation.

65

1. Principal Accounting Policies (continued)

(i) Deferred taxation (continued)Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available againstwhich the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investments in subsidiaries and associate, exceptwhere it is probable that the temporary difference will not reverse in the foreseeable future.

(j) Cash and cash equivalentsCash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquidinvestments with original maturities of three months or less.

(k) Restricted cashRestricted cash consists of cash collateral in respect of certain agreements, including requirements imposed by theGroup’s credit card processor.

(l) Loan arrangement feesCosts incurred in connection with the arranging of loan financing have been deferred and amortised over the lives ofthe loan agreement. The unamortised amount, which is to be amortised within one year is included in prepaidexpenses and others. The remaining amount is included in other assets.

(m) Convertible bondsThe fair value of the liability component and the equity conversion component are determined at issuance of theconvertible bonds.

The fair value of the liability component, included in long-term borrowings is calculated using a market interest rate foran equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis untilextinguished on conversion or maturity of the bonds. The residual amount, representing the value of the equityconversion component, is included as a component of reserves in shareholders’ equity.

The finance cost recognised in the consolidated income statement in respect of convertible bonds is calculated so asto produce a constant periodic rate of charge on the remaining balance of the liability component of the convertiblebonds for each accounting period.

The costs incurred in connection with the issue of convertible bonds are deferred and amortised over the lives of theconvertible bonds from the date of issue of the bonds to their final redemption date. The unamortised amount, whichis to be amortised within one year is included in prepaid expenses and others. The remaining amount is included inother assets. If any of the bonds are redeemed or converted prior to the final redemption date, an appropriate portionof any remaining unamortised costs will be charged immediately to consolidated income statement.

(n) Consumable inventoriesConsumable inventories consist mainly of provisions, supplies and engine and ship spare parts and are carried at thelower of cost, determined on a weighted average basis, and net realisable value. Net realisable value is determined onthe basis of estimated selling price in the ordinary course of business, less applicable variable selling expenses.

(o) Trade receivablesTrade receivables are carried at invoiced amount less provision for impairment. A provision for impairment of tradereceivables is established when there is objective evidence that the Group will not be able to collect all amounts dueaccording to the original terms of receivables. The amount of provision is recognised in the consolidated incomestatement.

(p) Available-for-sale investmentsAvailable-for-sale investments are those non-derivative financial assets that are designated as available-for-sale orare not classified in any of the other three categories under the scope of HKAS 39. The available-for-sale investmentsare included in non-current assets unless management intends to dispose of the investments within 12 months fromthe balance sheet date. The purchases and sales of available-for-sale investments are recognised on trade date, thedate on which the Group commits to purchase or sell the investments. These investments are initially recognised atfair value plus transaction costs. After initial recognition, available-for-sale investments are measured at fair value withgains or losses recognised as a separate component of equity until the investments are derecognised or until theinvestments are determined to be impaired, at which time the cumulative gains or losses previously reported in equityare included in the consolidated income statement.

66

1. Principal Accounting Policies (continued)

(p) Available-for-sale investments (continued)The Group assesses at each balance sheet date whether there is any objective evidence that the available-for-saleinvestments are impaired as a result of one or more events that occurred after the initial recognition of the assets. If theavailable-for-sale investments are impaired, an amount comprising the difference between its acquisition cost and itscurrent fair value, less any impairment loss previously recognised in the consolidated income statement, is transferredfrom equity to the consolidated income statement. Impairment loss recognised in the consolidated income statementon available-for-sale investments shall not be reversed through the consolidated income statement.

(q) Software development costsDeferred software development costs consist principally of salaries and fringe benefits of certain programmers andsystem analysts and outside consultant fees incurred in connection with the enhancement of significant internal dataprocessing systems. These costs are recognised as an asset and amortised when the software is available for useusing the straight-line method over their estimated useful lives, not exceeding ten years. The unamortised amount isincluded in other assets.

(r) Provisions, contingent liabilities and contingent assetsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, itis probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amountcan be made.

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmedby the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.It can also be a present obligation arising from past events that is not recognised because it is not probable thatoutflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the consolidated financial statements. When achange in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by theoccurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group.

Contingent assets are not recognised but are disclosed in the notes to the consolidated financial statements when aninflow of economic benefits is probable. When inflow is virtually certain, the asset is recognised.

(s) Assets under leases

(i) Finance leasesLeases that substantially transfer to the Group all the risks and rewards of ownership of assets are accounted foras finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of theleased assets and the present value of the minimum lease payments. Each lease payment is allocated betweenthe capital and finance charges so as to achieve a constant rate on the finance balance outstanding. Thecorresponding rental obligations, net of finance charges, are included in the current and long-term liabilities. Thefinance charges are charged to the consolidated income statement over the lease periods, so as to produce aconstant periodic rate of interest on the remaining balance of the liability for each period.

Assets held under finance leases are depreciated over the shorter of their estimated useful lives or the leaseperiods.

(ii) Operating leasesLeases where substantially all the rewards and risks of ownership of assets remain with the leasing company areaccounted for as operating leases. The land held under a long-term lease is classified as an operating lease if therisks and rewards incidental to ownership will not be transferred to the lessee. Rental payments applicable tosuch operating leases are charged to the consolidated income statement on a straight-line basis over the leaseterm.

67

1. Principal Accounting Policies (continued)

(t) Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and impairment. Significant cruiseship refurbishing costs are capitalised as additions to the cruise ship, only when it is probable that future economicbenefits associated with these items will flow to the Group and the costs of these items can be measured reliably.Costs of repairs and maintenance are expensed as incurred.

Cruise ships and passenger ferry are depreciated to their estimated residual values on a straight-line basis overperiods ranging from 15 to 30 years. Other assets are depreciated on a straight-line basis over their estimated usefullives as follows:

Jetties and terminal buildings 28 - 99 yearsEquipment and motor vehicles 3 - 20 years

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date.

No depreciation is provided on property, plant and equipment, which are under construction. The Group capitalisesinterest based on the weighted average cost of borrowings on cruise ships and other capital projects during the periodrequired to get such assets ready for their intended use. Interest capitalisation ceases when the asset is substantiallycompleted.

Costs incurred on project which are at an exploratory stage are expensed to consolidated income statement whenincurred until such time that it can be demonstrated that the project has commenced and is commercially viable,whereupon such costs are capitalised. All project costs previously expensed to consolidated income statement are notcapitalised upon the commencement of the project.

Project costs capitalised are reviewed at the end of each reporting period in order to determine if these costs shouldcontinue to be capitalised. When a project has been aborted or circumstances indicate that a project has becomecommercially not viable, all costs previously capitalised relating to such projects are expensed to the consolidatedincome statement.

The gain or loss on disposal of a property, plant and equipment is the difference between the net sales proceeds andthe carrying amount of the relevant asset, and is recognised in the consolidated income statement.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount isgreater than its estimated recoverable amount (Note z).

(u) Earnings per shareBasic earnings per share is computed by dividing net profit by the weighted average number of ordinary sharesoutstanding during each year.

Diluted earnings per share is computed by adjusting the weighted average number of ordinary shares outstanding toassume conversion of all dilutive potential ordinary shares. The Company has two categories of dilutive potentialordinary shares: convertible bonds and share options. The convertible bonds are assumed to have been convertedinto ordinary shares and the net profit is adjusted to eliminate the interest expense. For the share options, certainshares under option have an effect on the adjusted weighted average number of shares in issue as the average optionprice is lower than the average market price.

(v) Share option expenseThe fair value of the employee services received in exchange for the grant of the options is recognised as an expense.The total amount to be expensed over the vesting period is determined by reference to the fair value of the optionsgranted.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value)and share premium when the options are exercised.

68

1. Principal Accounting Policies (continued)

(w) Retirement benefit costsContributions to the defined contribution retirement schemes are expensed as incurred and are reduced bycontributions forfeited by those employees who leave employment before the schemes’ contributions are being fullyvested.

Expenses in respect of a retirement scheme providing benefits based on final pay are charged to the consolidatedincome statement in the period to which they relate. The pension obligations, which are wholly unfunded, aredetermined based on the estimates of the effects of future events on the actuarially determined net present value ofaccrued pension obligations and are determined by a qualified actuary on a regular basis. Actuarial gains and lossesare recognised as an expense over the average remaining service lives of the employees.

(x) Employee leave entitlementsEmployee entitlements to annual leave are recognised when they accrue to the employees. A provision is made for theestimated liability for annual leave as a result of services rendered by the employees up to the balance sheet date.

Employee entitlements to sick leave and maternity or paternity leave are not recognised until the time of leave.

(y) Borrowings and borrowing costsBorrowings are recognised initially at fair value and are subsequently stated at amortised costs.

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarilytakes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of thatasset. All other borrowing costs are charged to the consolidated income statement in the year in which they areincurred.

(z) Impairment of assetsAt each balance sheet date, both internal and external sources of information are considered to assess whether thereis any indication that investments in subsidiaries, property, plant and equipment, goodwill and trade names areimpaired. If any indication of impairment of an asset exists, and annually for goodwill and trade names, the recoverableamount of the asset is estimated and where relevant, an impairment loss is recognised to reduce the asset to itsrecoverable amount. Such impairment losses are recognised in the consolidated income statement. For the purposeof assessing impairment, assets are grouped and evaluated at the lowest level for which there are identifiable cashflows that are largely independent of the cash flows of other groups of assets.

The Group measures the amount of the impairment by comparing the carrying amount of an asset to its recoverableamount, which is the higher of an asset’s net selling price or its value in use. The Group estimates recoverable amountbased on the best information available making whatever estimates, judgements and projections considerednecessary. Net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction betweenknowledgeable willing parties less costs of disposal. The estimation of value in use is measured using variousfinancial modeling techniques such as discounting future cash flows expected to arise from the continuing use of anasset and from its disposal at the end of its useful lives at discount rates which commensurate with the risk involved.

In respect of assets other than goodwill, an impairment loss is reversed if there has been a change in the estimatesused to determine the recoverable amount. An impairment losses made against goodwill is not reversed. A reversal ofimpairment losses is limited to the asset’s carrying amount that would have been determined had no impairment lossbeen recognised in prior years. Reversals of impairment losses are credited to consolidated income statement in theyear in which the reversals are recognised.

(aa) Segment reportingThe Group has determined that business segments be presented as the primary reporting format and geographicalsegments as the secondary reporting format.

Unallocated costs represent corporate expenses. Segment assets consist primarily of property, plant and equipment,trade names, inventories, receivables and cash and cash equivalents. Segment liabilities comprise operating liabilitiesand exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions toproperty, plant and equipment and intangible assets other than goodwill, including additions resulting fromacquisitions through purchases of subsidiaries.

In respect of geographical segment reporting, turnover is based on the country in which the customer is located.

69

2. Financial Risk Management

(a) Financial risk factorsThe Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest riskand price risk), credit risk, liquidity risk and cash flow interest-rate risk. The Group’s overall risk managementprogramme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on theGroup’s financial performance. The Group enters into derivative instruments, primarily forward contracts, fuel swapagreements and interest rate swaps to limit its exposures to fluctuations in foreign currency exchange rates and fuelprices, and to modify its exposure to interest rate movements and to manage its interest costs.

(i) Foreign exchange riskThe Group’s primary exposure to foreign currency exchange risk relates to the three ships under constructionand the debt agreements used to fund the construction. The ship contracts are denominated in Euros and theassociated debt agreements can be denominated in either U.S. dollars or Euros. If denominated in Euros, theprincipal and interest payments for the debt will be payable in Euros, and will be subject to the exchange rate ofthe Euros at the time of these payments are due. From time to time, the Group enters into foreign currencyforward contracts and/or options contracts for these payments.

The Group is also exposed to foreign currency exchange rate fluctuations on the U.S. dollar value of the Group’sforeign currency forecasted transactions. The Group principal net foreign currency exposure relates to theSingapore dollars, the Hong Kong dollars, and the Euros. To manage this exposure, the Group takes advantageof any natural offsets of the Group’s foreign exchange revenues and expenses and from time to time enters intoforeign exchange forward contracts for a portion of the remaining exposure related to these forecastedtransactions.

(ii) Credit riskCredit risk arises when sales of services are made on deferred credit terms. The Group seeks to control creditrisk by setting credit limits and ensuring that services are made to customers with an appropriate credit history.The Group considers the risk of material loss in the event of non-performance by a debtor to be unlikely.

(iii) Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availabilityof funding through an adequate amount of committed credit facilities and ability to close out market positions.Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding bykeeping committed credit lines available.

(iv) Cash flow and fair value interest rate riskAs the Group has no significant interest-bearing assets, the Group’s income and operating cash flows aresubstantially independent of changes in market interest rates.

The Group’s interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose theGroup to cash flow interest-rate risk. The Group manages its cash flow interest-rate risk by using floating-to-fixedinterest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floatingrates to fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixedrates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest-rateswaps, the Group agrees with other parties to exchange, at specified intervals (mainly semi-annually), thedifference between the fixed contract rates and floating-rate interest amounts calculated by reference to theagreed notional principal amounts.

(v) Fuel price riskThe Group’s exposure to market risk on changes in fuel prices relates to the forecasted consumption of fuel on itsships. The Group mitigates the financial impact of fluctuation in fuel prices using fuel surcharge in Asia and fuelswap agreements.

70

2. Financial Risk Management (continued)

(b) Accounting for derivative financial instruments and hedging activitiesDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequentlyremeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivativeis designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certainderivatives as either: (i) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair valuehedge); and (ii) hedges of highly probable forecast transaction (cash flow hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedgeditems, as well as its risk management objective and strategy for undertaking various hedge transactions. The Groupalso documents its assessment, both at the inception of the hedge and on an ongoing basis, of whether thederivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flowsof the hedged items.

(i) Fair value hedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in theconsolidated income statement, together with any changes in the fair value of the hedged asset or liability thatare attributable to the hedged risk. Changes in the fair value of derivatives that are designated as fair value hedgethat hedge foreign currency commitments to complete the construction of a cruise ship are deferred and includedin the cost of the ship when the commitment is paid. To the extent that the derivative is not effective as a hedge,gains and losses are recognised in the consolidated income statement as a gain or loss on foreign exchange.

(ii) Cash flow hedgeThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flowhedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately inthe consolidated income statement. Amounts accumulated in equity are recognised in the consolidated incomestatement as the underlying hedged items are recognised.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedgeaccounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised whenthe forecast transaction is ultimately recognised in the consolidated income statement. When a forecasttransaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediatelytransferred to the consolidated income statement.

(iii) Derivatives that do not qualify for hedge accounting and those not designated as hedgesChanges in the fair value of any derivative instruments that do not qualify for hedge accounting and those notdesignated as hedges are recognised immediately in the consolidated income statement.

3. Turnover, Operating Profit and Segment InformationThe turnover consists of revenues earned from cruise and cruise related activities and charter hire.

The Group is principally engaged in the operation of passenger cruise ships. Cruise and cruise related revenues comprisesales of passenger tickets, including, in some cases, air transportation to and from the cruise ship, and revenues fromonboard services and other related services, including gaming, food and beverage. Charter hire revenue includes the leaseof a catamaran to a third party customer. In August 2005, the Group entered into a charter and sale agreement to disposeof its catamaran and as a result, the Group ceased to receive revenue from the charter hire of the catamaran.

71

3. Turnover, Operating Profit and Segment Information (continued)The amounts of each significant category of revenue recognised by the Group were as follows:

Cruise and cruise2005 related activities Charter hire Total

US$’000 US$’000 US$’000

TurnoverPassenger ticket revenues 1,275,492 — 1,275,492Onboard and other revenues 679,307 — 679,307

Total revenues 1,954,799 — 1,954,799

Operating profit/(loss) before the reversal ofpreviously recognised impairment loss/(impairment loss) 147,518 (1,581) 145,937

Reversal of previously recognisedimpairment loss/(Impairment loss) 1,300 (2,700) (1,400)

Operating profit/(loss) after the reversal ofpreviously recognised impairment loss/(impairment loss) 148,818 (4,281) 144,537

Interest income 8,484Financial costs (155,930)Share of loss of an associate (5,219)Other non-operating income, net 28,675

Profit before taxation 20,547

Taxation (2,641)

Profit for the year 17,906

Segment assets 4,972,329 — 4,972,329

Goodwill 368,104 — 368,104

Other unallocated assets 70,446

Total assets 5,410,879

Segment liabilities 581,206 — 581,206Long-term borrowings (including current portion) 2,927,571 — 2,927,571

3,508,777 — 3,508,777

Tax liabilities 2,221

Total liabilities 3,510,998

Capital expenditure 708,674 — 708,674

Depreciation and amortisation 175,043 979 176,022

72

3. Turnover, Operating Profit and Segment Information (continued)

(Restated) Cruise and cruise2004 related activities Charter hire Total

US$’000 US$’000 US$’000

TurnoverPassenger ticket revenues 1,092,075 — 1,092,075Onboard and other revenues 604,359 2,573 606,932

Total revenues 1,696,434 2,573 1,699,007

Operating profit/(loss) before impairment loss 135,428 (601) 134,827

Impairment loss (14,500) — (14,500)

Operating profit/(loss) after impairment loss 120,928 (601) 120,327

Interest income 2,985Financial costs (110,005)Other non-operating expenses, net (23,920)

Loss before taxation (10,613)

Taxation (971)

Loss for the year (11,584)

Segment assets 4,486,990 13,417 4,500,407

Goodwill 367,396 — 367,396

Other unallocated assets 117,310

Total assets 4,985,113

Segment liabilities 562,192 770 562,962Long-term borrowings (including current portion) 2,594,875 — 2,594,875

3,157,067 770 3,157,837

Tax liabilities 1,766

Total liabilities 3,159,603

Capital expenditure 455,476 972 456,448

Depreciation and amortisation 179,311 2,555 181,866

73

3. Turnover, Operating Profit and Segment Information (continued)The Group’s turnover, operating profit and assets in its principal markets of Asia Pacific and North America are analysed asfollows:

Operating Capital2005 Turnover profit Total assets expenditure

US$’000 US$’000 US$’000 US$’000

Asia Pacific2 365,332 78,185 785,397 33,760

North America1 1,453,633 60,176 4,186,932 674,914

Others 135,834 6,176 — —

1,954,799 144,537 4,972,329 708,674

Goodwill 368,104Other unallocated assets 70,446

5,410,879

(Restated) Operating Capital2004 Turnover profit Total assets expenditure

US$’000 US$’000 US$’000 US$’000

Asia Pacific 384,249 94,497 681,725 8,665

North America1, 3 1,195,813 30,331 3,818,682 447,783

Others 118,945 5,198 — —

1,699,007 130,026 4,500,407 456,448

Goodwill (9,699) 367,396Other unallocated assets — 117,310

120,327 4,985,113

Notes:

1. Substantially, all the turnover and operating profit arises in the United States of America.

2. Included in the operating profit of Asia Pacific for the year ended 31 December 2005 was a net impairment loss of US$1.4 million.

3. Included in the operating profit of North America for the year ended 31 December 2004 was an impairment loss of US$14.5 million.

74

4. Operating ProfitOperating profit is stated after charging/(crediting) the following:

GROUP

(Restated)2005 2004

US$’000 US$’000

Depreciation of property, plant and equipment 174,215 163,357Amortisation of software development costs 1,807 2,045Amortisation of goodwill — 9,699Amortisation of trade names — 6,765Total depreciation and amortisation analysed into: 176,022 181,866

- relating to operating function 166,300 172,299- relating to selling, general and administrative function 9,722 9,567

Staff costs (see note 11) 433,477 356,231Fuel costs 146,118 98,521Operating leases - land and buildings 8,771 8,349Auditors’ remuneration - audit fees 912 995Advertising expenses 85,722 83,834Impairment loss (see note 5) 1,400 14,500

5. Impairment LossGROUP

2005 2004US$’000 US$’000

Impairment loss: Ship, catamaran and onboard equipment 2,700 14,500Reversal of previously recognised impairment loss (1,300) —

1,400 14,500

In January 2006, the Group entered into an agreement to dispose of s/s Norway and she was delivered to her new ownerin January 2006 following the completion of the sale transaction. As a result of this disposal, as at 31 December 2005, theGroup recorded a reversal of previously recognised impairment loss in the amount of US$1.3 million being the amount bywhich the sale proceeds exceeded the carrying amount of s/s Norway.

On 1 August 2005, the Group entered into a charter and sale agreement of its catamaran with a third party customer. Theterms of the arrangement are such that the Group had effectively disposed of the catamaran in August 2005 on deferredpayment terms. Accordingly, the Group recorded an impairment loss of US$2.7 million in relation to this vessel, being theexcess of its carrying value over the net present value of the proceeds to be received under the above charter and saleagreement.

During the year ended 31 December 2004, the Group carried out an impairment assessment on certain ships for whichthere were indications of possible impairment. As a result of the review, the Group reduced the carrying value of s/s Norwayby recording an impairment charge of US$14.5 million. The impairment loss represented the amount by which the carryingamount of assets exceeded their recoverable amounts.

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6. Financial CostsGROUP

(Restated)2005 2004

US$’000 US$’000

Amortisation of:- bank loans arrangement fees 15,318 8,227- issue costs of convertible bonds and US$250 million Senior Notes 1,704 1,058

Interests on:- bank loans and others 115,743 82,306- convertible bonds and US$250 million Senior Notes 41,581 24,556

Loans arrangement fees written off — 4,086

Total borrowing costs incurred 174,346 120,233Less: interest capitalised in property, plant and equipment (18,416) (10,228)

Total financial costs 155,930 110,005

The capitalisation rate applied to funds borrowed and used for the construction of the cruise ships during the year ended 31December 2005 was between 2.6% and 4.0% per annum (2004: 1.9% to 3.8% per annum).

7. Share of Loss of an AssociateThe Group has accounted for its 26% interest in Valuair Limited (“Valuair”) using the equity method and has recorded itsportion of Valuair’s net operating results as share of loss of an associate. In July 2005, Valuair announced a merger withJetstar Asia Airways Pte. Ltd. (“Jetstar”), an affiliated company of Qantas Airways. The merger has resulted in the Groupceasing to have significant influence in Valuair as its investment in Valuair has been exchanged for a 2.4% investment inOrangestar Investment Holdings Pte. Ltd., the holding company of Jetstar and Valuair (see note 17).

During the year ended 31 December 2005, the Group recorded its share of loss in Valuair of US$5.2 million, being theGroup’s portion of Valuair’s results from the date of acquisition in mid-December 2004 to the date the Group ceased to havesignificant influence in July 2005.

8. Other Non-Operating Income/(Expenses), NetGROUP

2005 2004US$’000 US$’000

Loss on disposal of property, plant and equipment (559) (147)Gain/(Loss) on derivative instruments: forward contracts 3,868 (11,334)Gain on derivative instruments: fuel swaps 573 —Loss on foreign exchange (1,435) (1,778)Gain/(Loss) on translation of debts 29,418 (9,545)Other non-operating expenses, net (3,190) (1,116)

28,675 (23,920)

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9. TaxationGROUP

2005 2004US$’000 US$’000

Overseas taxation- Current taxation 2,782 1,561- Deferred taxation (109) (166)

2,673 1,395

Under/(Over) provision in respect of prior years- Current taxation (189) (555)- Deferred taxation 157 131

2,641 971

Deferred taxation charged/(credited) in respect of temporary differences 48 (35)

The Company, which is domiciled in Bermuda, and the majority of its subsidiaries, are not subject to income tax as theirincome is mainly derived in international waters or outside taxing jurisdictions. However, the Group has incurred a taxcharge, as illustrated in the table above, based on the income which is subject to local tax in certain of the jurisdictionswhere it operates. The appropriate local tax rate has been applied, in such circumstances, to determine the applicable taxcharge.

NCL Corporation Ltd. (“NCLC”), incorporated in Bermuda, is subject to U.S. federal income taxation with respect to certainincome derived from its foreign-flagged operations and the income derived from its U.S. subsidiaries (which commencedoperations in 2004 under the NCL America brand).

NCLC’s foreign-flagged operations derive income from the international operation of ships (“Shipping Income”). UnderSection 883 of the Code, certain foreign corporations, though engaged in the conduct of a trade or business within theUnited States, are exempt from U.S. federal income taxes on (or in respect of) gross income derived from the internationaloperation of ships. NCLC believes that substantially all of its income from the international operation of ships is properlycategorised as exempt Shipping Income. Effective for taxable years beginning on or after 24 September 2004, the InternalRevenue Service issued final regulations interpreting Section 883 of the Code. These final regulations list several items ofincome which are not considered to be incidental to the international operation of ships and, to the extent derived from U.S.sources, are subject to U.S. federal income taxes. Income items considered non-incidental to the international operation ofships include income from the sale of single-day shore excursions, air and other transportation, and pre- and post-cruiseland packages. NCLC recorded an income tax provision of US$1.2 million due to the enactment of the Final Regulations.

Income derived from operations of NCLC’s U.S. flagged operations (under the NCL America brand) generally is subject toU.S. federal income taxation at graduated rates of up to 35%, after an allowance for deductions. U.S. source dividends paidby NCL America generally would be subject to a 30% withholding tax.

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10. Earnings/(Loss) Per ShareEarnings/(Loss) per share has been calculated as follows:

GROUP

(Restated)2005 2004

US$’000 US$’000

BASIC

Profit/(Loss) for the year 17,906 (11,584)

Weighted average outstanding ordinary shares in thousands 5,296,717 5,293,187

Basic earnings/(loss) per share in US cents 0.34 (0.22)

DILUTED

Profit/(Loss) for the year 17,906 (11,584)

Weighted average outstanding ordinary shares in thousands 5,296,717 5,293,187

Effect of dilutive ordinary shares in thousands 3,227 524

Weighted average outstanding ordinary shares afterassuming dilution in thousands 5,299,944 5,293,711

Diluted earnings per share in US cents 0.34 N/A*

The convertible bonds have not been included in the calculation of diluted earnings per share as they are anti-dilutive.

* Diluted loss per share for the year ended 31 December 2004 is not shown, as the diluted loss per share is less than the basic loss pershare.

11. Staff CostsStaff costs include employee salaries and other employee related benefits but excluding directors’ remuneration.

GROUP

(Restated)2005 2004

US$’000 US$’000

Wages and salaries 410,572 338,159Unutilised annual leave 66 628Termination benefits 1,287 860Social security costs 15,039 8,462Non-cash share option expenses 626 460Pension costs - defined contribution plans (see note 34(a)) 5,887 7,662

433,477 356,231

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12. Emoluments of Directors and Senior ManagementThe aggregate amounts of emoluments of the Directors of the Company for the year ended 31 December 2005 is set out asfollows:

AccruedContribution unfunded Non-cash

Discretionary Other to provident pension share optionName of directors Fees Salary bonuses benefits(a) fund Subtotal liability expenses Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

2005

Tan Sri Lim Kok Thay 12 1,122 234 7 3 1,378 — 226 1,604Mr. Alan Howard Smith, J.P. 55 — — — — 55 — — 55Mr. Chong Chee Tut 12 465 97 146 16 736 — 26 762Mr. William Ng Ko Seng 12 273 57 37 2 381 — 23 404Mr. David Colin Sinclair Veitch 12 1,371 284 187 — 1,854 988 187 3,029Mr. Tan Boon Seng 44 — — — — 44 — — 44Mr. Lim Lay Leng 50 — — — — 50 — — 50

197 3,231 672 377 21 4,498 988 462 5,948

(Restated) (Restated)Accrued

Contribution unfunded Non-cashDiscretionary Other to provident pension share option

Name of directors Fees Salary bonuses benefits(a) fund Subtotal liability expenses Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

2004

Tan Sri Lim Kok Thay 12 1,058 221 8 3 1,302 — 285 1,587Mr. Alan Howard Smith, J.P. 48 — — — — 48 — — 48Mr. Chong Chee Tut 12 424 89 150 15 690 — 36 726Mr. William Ng Ko Seng 12 257 53 134 2 458 — 27 485Mr. David Colin Sinclair Veitch 12 1,317 90 173 — 1,592 2,192 157 3,941Mr. Tan Boon Seng 48 — — — — 48 — — 48Mr. Lim Lay Leng 48 — — — — 48 — — 48

192 3,056 453 465 20 4,186 2,192 505 6,883

Note:

(a) Other benefits include housing allowances, other allowances and benefits in kind.

79

12. Emoluments of Directors and Senior Management (continued)Details of the emoluments of the five highest paid individuals in the Group are as follows:

GROUP

(Restated)2005 2004

US$’000 US$’000

Fees 36 36Basic salaries, discretionary bonuses, housing allowances,

other allowances and benefits in kind 5,107 4,602Contributions to provident fund 19 18Accrued unfunded pension liability 1,138 2,291Ex-gratia paid to a past individual 525 —Non-cash share option expenses 439 478

7,264 7,425

Number of Directors included in the five highest paid individuals 3 3

The emoluments of the 5 individuals fall within the following bands:

Number of individuals

2005 2004

HK$4,000,001 - HK$4,500,000 — 1HK$4,500,001 - HK$5,000,000 — 1HK$5,500,001 - HK$6,000,000 1 1HK$6,000,001 - HK$6,500,000 1 —HK$8,000,001 - HK$8,500,000 1 —HK$12,000,001 - HK$12,500,000 1 1HK$23,500,001 - HK$24,000,000 1 —HK$30,500,001 - HK$31,000,000 — 1

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13. Intangible AssetsIntangible assets consist of the following items arising from the acquisition of NCL Holding ASA (“NCLH”):

NegativeGoodwill goodwill

arising on arising onacquisition of acquisition of Trade

84.5% of NCLH 15.5% of NCLH Subtotal names Total

US$’000 US$’000 US$’000 US$’000 US$’000

GROUP

2005

Opening net book value at31 December 2004,as previously reported 407,165 (39,769) 367,396 237,890 605,286

Adoption of HKFRS 3 — 39,769 39,769 — 39,769

At 1 January 2005, as restated 407,165 — 407,165 237,890 645,055

Adjustments (see below) (39,061) — (39,061) — (39,061)

At 31 December 2005 368,104 — 368,104 237,890 605,994

2004

CostAt 1 January 2004 and

31 December 2004 456,624 (45,868) 410,756 291,600 702,356

Accumulated amortisationand impairment

At 1 January 2004 (37,881) 4,220 (33,661) (46,945) (80,606)Amortisation (11,578) 1,879 (9,699) (6,765) (16,464)

At 31 December 2004 (49,459) 6,099 (43,360) (53,710) (97,070)

Net book value at 31 December 2004 407,165 (39,769) 367,396 237,890 605,286

In December 1999, the Group through a subsidiary, Arrasas Limited (“Arrasas”), acquired an interest of approximately38.6% of the then outstanding shares of NCLH as at 31 December 1999, a company incorporated under the laws of theKingdom of Norway.

In February 2000, subsequent to mandatory offers made by Arrasas, the Group had acquired an aggregate interest ofabout 84.5% of the outstanding shares in NCLH. Following the purchase by Arrasas of an additional 10.9% of the shares ofNCLH from related companies (at Norwegian Kroner (“NOK”) 15 per share) on 29 November 2000, Arrasas owned 95.4%of the shares in NCLH.

In accordance with Norwegian law, Arrasas on 30 November 2000 compulsorily acquired the remaining shares in NCLHheld by the minority shareholders, at an offer price of NOK13 per share after owning 95.4% of the shares in NCLH. As aresult of this acquisition, Arrasas became the sole owner of all outstanding shares of NCLH. Persons formerly holding inaggregate 1,831,848 shares rejected the offer price (“minority shareholders”). Arrasas then submitted a valuation petitionto the Oslo City Court to request the valuation court to determine the fair value of the shares held by the minorityshareholders.

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13. Intangible Assets (continued)The valuation proceedings were heard in September 2003, and on 5 December 2003, the Oslo City Court fixed theredemption price for the minority shareholders at NOK25 per share. Pursuant to this decision, Arrasas is required to paythe minority shareholders NOK25 per share. As at 31 December 2003, the Group provided an aggregate amount ofapproximately US$46.7 million, representing the aggregate amount of the additional NOK10 per share to relatedcompanies and the amount in excess of the offer price of NOK13 per share to the minority shareholders in the compulsoryacquisition in November 2000. On 8 January 2004, Arrasas filed an appeal against the decision granted on 5 December2003.

On 28 June 2005, the Appeal Court ruled that the redemption price for the share is fixed at NOK16.50 per share, plus 5.5%annual and compound interest from 30 November 2000 until payment is made. Based on this decision, Arrasas would nowbe required to pay the minority shareholders the price as fixed by the Appeal Court plus interest from 30 November 2000.In addition, pursuant to the terms of the respective stock purchase agreements with the related companies, Arrasas willalso have to pay the related companies an additional NOK1.50 per share (representing the amount in excess of NOK15 pershare to the related companies). As a result of this ruling by the Appeal Court, the Group made an adjustment to thepurchase consideration resulting in a reduction to goodwill previously recognised in the amount of US$39.1 million.

For the years ended 31 December 2005 and 2004, the Group recorded legal and other costs of approximately US$1.1million and US$0.2 million, respectively, related to this matter.

In addition, the Group is also involved in another on-going legal actions which is currently pending final disposal (see note32(ii)(8)).

Impairment tests

GoodwillThe Group has concluded that NCL Corporation Ltd. (“NCLC”) business has a single reportable and operating segment,with each ship considered to be a component. Each component constitutes a business for which discrete financialinformation is available and management regularly reviews the operating results and, therefore, each component isconsidered a reporting unit. NCLC’s reporting units have similar economic characteristics, therefore, NCLC aggregates allof the reporting units in assessing goodwill.

The recoverable amount is determined based on value-in-use calculations. The impairment review of goodwill is based onthe expected future cash flows of the ships approved by management covering a four-year period with a residual periodusing the estimated growth rate of 2.5% and discount rate of 11.0%. The growth rate used is based on past performanceand managements’ expectation of the future. The impairment review also considers the transaction approach wherebyNCLC estimated fair value based on a recent sale transaction of a similar company and where necessary, the fair valueestimated by the guideline company method which utilises market value of companies with similar operations.

Trade namesThe recoverable amount of trade names is determined based on value-in-use calculations. The impairment review of thetrade names is based on the expected future cash flows of the ships which are under the Norwegian Cruise Line and OrientLines trade names, using the estimated current market royalty rates and anticipated revenues associated with therespective brands. The estimated current market royalty rates for Norwegian Cruise Line and Orient Lines trade nameswere based on market royalty rate ranging of 2% to 8% for the hospitality industry.

Based on the impairment assessment above, the Group has concluded that there is no impairment with regards to theGroup’s goodwill and trade names.

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14. Property, Plant and EquipmentProperty, plant and equipment consist of the following:

GROUP

Cruise ships,catamaran, Land, Equipmentpassenger jetties, terminal Equipment Cruise ships and other

ferry and ship buildings and and motor under construction2005 improvements improvements vehicles construction in progress Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Cost

At 1 January 2005 3,536,239 85,302 191,446 621,456 21,302 4,455,745Exchange differences 23 (411) (65) — — (453)Reclassification

of property, plantand equipment 777,275 168 6,172 (777,275) (6,340) —

Additions 83,256 1,868 23,459 587,078 13,013 708,674Written off — (1,388) (4,046) — — (5,434)Disposals (37,524) (33) (1,326) — — (38,883)1

Adjustments — — — — (2,433)2 (2,433)

At 31 December 2005 4,359,269 85,506 215,640 431,259 25,542 5,117,216

Accumulateddepreciation andimpairment

At 1 January 2005 (519,869) (19,362) (95,030) — — (634,261)Exchange differences (4) (10) 66 — — 52Reclassification of

property, plantand equipment — 82 (82) — — —

Charge for the year (152,788) (3,091) (18,336) — — (174,215)Impairment loss (1,400) — — — — (1,400)Written off — 1,388 4,035 — — 5,423Disposals 27,972 30 626 — — 28,6281

At 31 December 2005 (646,089) (20,963) (108,721) — — (775,773)

Net book value

At 31 December 2005 3,713,180 64,543 106,919 431,259 25,542 4,341,443

Notes:

1. Included in the disposal amount is the cost and accumulated depreciation of a catamaran which was disposed of in August 2005pursuant to a charter and sale agreement. The terms of the agreement are such that the Group had effectively disposed of thecatamaran in August 2005 on deferred payment terms.

2. During the year ended 31 December 2005, other construction in progress costs of US$2.4 million was expensed to the consolidatedincome statement as the circumstances indicated that certain projects have become commercially not viable.

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14. Property, Plant and Equipment (continued)

GROUP

Cruise ships,catamaran, Land, Equipmentpassenger jetties, terminal Equipment Cruise ships and other

(Restated) ferry and ship buildings and and motor under construction2004 improvement improvements vehicles construction in progress Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Cost

At 31 December 2003 3,676,541 86,004 214,226 253,424 23,372 4,253,567Adoption of HKAS 17 — (1,971) — — — (1,971)

At 1 January 2004,as restated 3,676,541 84,033 214,226 253,424 23,372 4,251,596

Exchange differences — 320 206 — — 526Acquisition of a subsidiary — — 2,288 — — 2,288Reclassification of property,

plant and equipment — 558 2,373 — (2,931) —Additions 80,049 407 4,811 368,032 861 454,160Written off (230) (16) (2,631) — — (2,877)Disposals (220,121) — (29,827) — — (249,948)

At 31 December 2004 3,536,239 85,302 191,446 621,456 21,302 4,455,745

Accumulateddepreciation andimpairment

At 31 December 2003 (510,230) (16,018) (100,446) — — (626,694)Adoption of HKAS 17 — 125 — — — 125

At 1 January 2004,as restated (510,230) (15,893) (100,446) — — (626,569)

Exchange differences — (119) (205) — — (324)Charge for the year (141,844) (3,350) (18,163) — — (163,357)Impairment loss (14,500) — — — — (14,500)Written off 230 — 2,629 — — 2,859Disposals 146,475 — 21,155 — — 167,630

At 31 December 2004 (519,869) (19,362) (95,030) — — (634,261)

Net book value

At 31 December 2004 3,016,370 65,940 96,416 621,456 21,302 3,821,484

84

14. Property, Plant and Equipment (continued)Included within property, plant and equipment are assets in the charter hire segment as follows:

Equipmentand motor

2004 Catamaran vehicles Total

US$’000 US$’000 US$’000

Cost 37,524 454 37,978Less : accumulated depreciation and impairment (24,819) (266) (25,085)

Net book value at 31 December 2004 12,705 188 12,893

Included within equipment and motor vehicles are net book value of motor vehicles held under finance leases of US$10.1million and US$0.9 million as at 31 December 2005 and 2004, respectively.

At 31 December 2005 and 2004, the net book value of property, plant and equipment pledged as security for the Group’slong-term bank loans amounted to US$4.2 billion and US$3.7 billion respectively.

Net book value of land comprises:

GROUP

2005 2004US$’000 US$’000

Hong Kong: — —

Outside Hong Kong:

Freehold land 6,508 6,508

15. Lease PrepaymentsThe Group’s interest in leasehold land represent prepaid operating lease payments and their net book values are analysedas follows:

GROUP

(Restated)2005 2004

US$’000 US$’000

Hong Kong: — —

Outside Hong Kong:

Long leasehold (not less than 50 years) 1,050 1,100Medium leasehold (less than 50 years but not less than 10 years) 689 718

1,739 1,818

85

16. Investments in Subsidiaries

COMPANY

2005 2004US$’000 US$’000

Investments at cost:Unlisted shares 1,633,690 1,647,700Amounts due from subsidiaries 1,111,274 1,171,450Amounts due to subsidiaries (9,184) (30,202)

2,735,780 2,788,948

Amounts due from/(to) subsidiaries are unsecured, interest free and have no fixed repayment terms.

A list of principal subsidiaries is included in note 35 to the consolidated financial statements.

17. Investment in an Associate and Available-For-Sale InvestmentThe movements of the investment in an associate are as follows:

GROUP

2005 2004US$’000 US$’000

At 1 January 15,148 —Acquisition of an associate during the year — 15,148Additional investment during the year 356 —Share of loss of an associate (5,219) —Derecognition: amount classified as an available-for-sale investment (10,285) —

At 31 December — 15,148

In December 2004, the Company through an indirect wholly-owned subsidiary, Star Cruises Singapore Investment HoldingPte. Ltd., acquired an associate, the details of which are as follows:

Country of Interest heldincorporation Particulars of indirectly in

Name and operation issued shares held percentage Principal activities

Valuair Limited Singapore Ordinary shares 26% Provision of airline(“Valuair”) of S$1.00 each transportation and air

chartering services

S$: Singapore Dollar

In July 2005, Valuair announced a merger with Jetstar Asia Airways Pte. Ltd. (“Jetstar”), an affiliated company of QantasAirways. The merger has resulted in the Group ceasing to have significant influence in Valuair as its investment in Valuairhas been exchanged for a 2.4% investment in Orangestar Investment Holdings Pte. Ltd. (“Orangestar”), the holdingcompany of Jetstar and Valuair.

The carrying value of the investment in Valuair at the end of July 2005 has been regarded as fair value on initialmeasurement of the investment in Orangestar. The investment in Orangestar has been classified as an available-for-saleinvestment under HKAS 39.

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18. Other Assets

GROUP COMPANY

2005 2004 2005 2004US$’000 US$’000 US$’000 US$’000

Loan arrangement fees 52,699 53,535 5,039 6,758Convertible bonds and senior

notes issuance costs 9,926 10,606 1,341 2,081Software development costs, net 14,291 15,314 — —Others 24,627 5,640 221 —

101,543 85,095 6,601 8,839

19. Consumable InventoriesGROUP

2005 2004US$’000 US$’000

Food and beverages 14,582 8,648Supplies, spares and consumables 23,750 33,411

38,332 42,059

20. Trade ReceivablesGROUP

2005 2004US$’000 US$’000

Trade receivables 25,104 15,906Less: Provisions (2,294) (3,817)

22,810 12,089

At 31 December 2005 and 2004, the ageing analysis of the trade receivables were as follows:

GROUP

2005 2004US$’000 US$’000

Current to 30 days 16,208 4,98331 days to 60 days 2,251 2,55761 days to 120 days 2,570 2,897121 days to 180 days 2,098 2,345181 days to 360 days 1,970 2,473Over 360 days 7 651

25,104 15,906

Credit terms generally range from payment in advance to 45 days credit terms. The Group recognised a loss ofapproximately US$0.5 million (2004: US$0.7 million) for the impairment of its trade receivables during the year ended 31December 2005.

87

21. Cash and Cash EquivalentsCash and cash equivalents consist of the following:

GROUP COMPANY

2005 2004 2005 2004US$’000 US$’000 US$’000 US$’000

Deposits with banks – maturingwithin 3 months 83,228 127,992 61,176 117,310

Cash and bank balances 104,470 213,035 52 136

187,698 341,027 61,228 117,446

The effective interest rate on deposits with banks – maturing within 3 months was 3.8% (2004: 2.1%); these deposits havean average maturity of 9 days.

22. Related Party Transactions and BalancesGolden Hope Limited, a company incorporated in the Isle of Man acting as trustee of the Golden Hope Unit Trust, a privateunit trust which is held directly and indirectly by GZ Trust Corporation as trustee of a discretionary trust established for thebenefit of certain members of Tan Sri Lim Goh Tong’s family, is a substantial shareholder of the Company.

Tan Sri Lim Kok Thay, the Chairman, President and Chief Executive Officer of the Group, is a son of Tan Sri Lim Goh Tong.

Kien Huat Development Sdn Bhd (“KHD”) is a company wholly-owned indirectly by a brother of Tan Sri Lim Kok Thay.

Genting Berhad (“GB”), a company in which Tan Sri Lim Kok Thay has a deemed interest and which is listed on BursaMalaysia Securities Berhad (“Bursa Malaysia”), controls Resorts World Bhd (“RWB”), a company also listed on BursaMalaysia which in turn indirectly controls Resorts World Limited (“RWL”) which is a substantial shareholder of the Company.GB indirectly controls Genting International PLC (“GIPLC”), a company listed on the Euro MTF Market of the LuxembourgStock Exchange and the Singapore Exchange Securities Trading Limited.

WorldCard International Limited (“WCIL”) is a company in which a subsidiary of each of the Group and GIPLC has a 50%interest. As at 31 December 2005, the carrying amount of this investment in WCIL amounted to US$65,000 and is includedwithin other assets. The Group’s share of losses from WCIL amounted to US$189,000 and US$246,000 for the years ended31 December 2005 and 2004 respectively.

VXL Capital Limited (“VXL”) is a company in which a brother of Tan Sri Lim Kok Thay has a substantial interest and is listedon The Stock Exchange of Hong Kong Limited.

Significant related party transactions entered into or subsisting between the Group and these companies during the yearended 31 December 2005 are set out below:

(a) KHD, together with its related companies, is involved in carrying out improvements to the Group’s berthing facilitiesand other infrastructure facilities. Amounts charged to the Group in respect of these services were approximatelyUS$23,000 and US$12,000 in the years ended 31 December 2005 and 2004 respectively.

(b) GB and its related companies provide certain services to the Group, including treasury services, secretarial services,certain information technology support services, purchasing and administrative assistance services and othersupport services. The Group also purchases air tickets from a subsidiary of RWB. Amounts charged to the Group inrespect of these services were approximately US$1,443,000 and US$711,000 in the years ended 31 December 2005and 2004 respectively.

(c) The Group provides certain administrative support services to GIPLC internationally and the amounts charged toGIPLC were approximately US$70,000 and US$66,000 for the years ended 31 December 2005 and 2004respectively.

88

22. Related Party Transactions and Balances (continued)(d) WCIL together with its related companies operates and administers the WorldCard programme on an international

basis. The Group also implemented joint promotion and marketing programmes for the purpose of promoting therespective businesses of the Group and the RWB Group.

During the years ended 31 December 2005 and 2004, the following transactions took place:

GROUP

2005 2004US$’000 US$’000

Amounts charged from GB Group to the Group 346 387Amounts charged to the GB Group by the Group 235 571

Amounts outstanding at the end of each fiscal year in respect of the above transactions were included in the balancesheets within amounts due from/(to) related companies. The related party transactions described above were carried outon terms, conditions and prices obtainable in transactions with unrelated parties.

(e) On 24 November 2000, Arrasas Limited entered into separate Stock Purchase Agreements with RWL, GentingOverseas Holdings Limited (a wholly owned subsidiary of GB) and Palomino Limited (an indirect subsidiary of GB) toacquire an aggregate of 29,110,200 ordinary shares representing approximately 10.9% of the issued share capital ofNCLH for a total cash consideration of approximately NOK436.7 million (US$45.7 million) or NOK15 (US$1.572) pershare. The transaction was completed on 29 November 2000. The agreements require that in the event ArrasasLimited pays more than NOK15 (US$1.572) per share in any subsequent transaction, Arrasas Limited will be requiredto pay to these related companies the difference between such higher price per share and NOK15 per share(US$1.572). On 28 June 2005, the Appeal Court ruled that the redemption price was NOK16.50 per share.Accordingly, Arrasas Limited paid the related companies an additional of NOK1.50 per share (see Note 13).

(f) On 8 December 2005, the Group entered into a joint venture agreement with VXL and a non-related party for thepurpose of preparing for an expression of interest to be submitted to Hong Kong Government for the cruise terminaldevelopment and if appropriate, undertaking the project. Each of the Group and VXL has a 30% interest in the jointventure company (“JV company”). As at 31 December 2005, the carrying amount of this investment in JV company isincluded within the investment in an associate. The acquisition of a 30% interest in the JV company did not have amaterial impact on the Group’s consolidated income statement for the year ended 31 December 2005.

Transactions with Directors(g) Certain Directors of the Company and the Group were granted share options entitling them to subscribe for ordinary

shares in the share capital of the Company under both the Pre-listing Employee Share Option Scheme and Post-listing Employee Share Option Scheme. Share options granted are exercisable at the price of US$0.2686 andUS$0.4206 per share (as adjusted) under the Pre-listing Employee Share Option Scheme and HK$2.9944 (US$0.38)(as adjusted) and HK$1.7240 (US$0.22) per share under the Post-listing Employee Share Option Scheme. Details ofthe movement of the share options during the year ended 31 December 2005 and the outstanding share options as at31 December 2005 are set out in the section headed “Share Options” in the Report of the Directors.

Key management compensation(h) The key management compensation is analysed as follows:

GROUP

2005 2004US$’000 US$’000

Salaries and other short-term employee benefits 6,253 4,059Termination benefits 682 —Post-employment benefits 373 161Non-cash share option expenses 138 152

7,446 4,372

89

23. Share Capital

GROUP/COMPANY

Authorised share capital

Preference shares of Ordinary shares ofUS$0.10 each US$0.10 each

No of shares US$’000 No of shares US$’000

At 31 December 2004 and 2005 10,000 1 9,999,990,000 999,999

GROUP/COMPANY

Issued and fully paidOrdinary shares of

US$0.10 each

No of Shares US$’000

At 1 January 2004 5,293,135,387 529,314Issuance of shares pursuant to the Pre-listing Employee

Share Option Scheme 66,480 6

At 31 December 2004 5,293,201,867 529,320

At 1 January 2005 5,293,201,867 529,320Issuance of shares pursuant to the Pre-listing Employee

Share Option Scheme 6,975,380 698

At 31 December 2005 5,300,177,247 530,018

Note :

The remaining unapplied net proceeds of US$105.5 million from the rights issues in 2002 and 2003 have been used to fund thenewbuilding programme in the year ended 31 December 2004. As at 31 December 2004, there were no unapplied proceeds from the rightsissues.

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24. Long-Term BorrowingsLong-term borrowings consist of the following:

GROUP COMPANY

(Restated) (Restated)2005 2004 2005 2004

US$’000 US$’000 US$’000 US$’000

SECURED:US$521.6 million syndicated

term loan (i) 154,560 171,734 — —US$450 million term loan (ii) 159,513 182,300 159,513 182,300US$400 million Reducing Revolving

Credit Facility (iii) 320,500 373,500 320,500 373,500US$626.9 million secured

Norwegian Dawn/Star loan (iv) 250,769 271,666 — —US$225 million secured

Norwegian Sun loan (v) 189,000 207,000 — —€298 million secured Pride of America loans (vi) 336,638 259,066 — —US$334.1 million secured

Norwegian Jewel loan (vii) 324,261 113,377 — —€308.1 million secured Pride of Hawaii loan (viii) 200,120 47,212 — —US$800 million secured loan facility (ix) 545,000 540,000 — —

UNSECURED:US$250 million unsecured Senior Notes (xi) 250,000 250,000 — —Convertible bonds (see Note 25) 186,321 176,812 186,321 176,812

Others 10,889 2,208 — —

Total liabilities 2,927,571 2,594,875 666,334 732,612Less: Current portion (256,442) (179,159) (98,575) (75,788)

Long-term portion 2,671,129 2,415,716 567,759 656,824

All the outstanding balance of the long-term borrowings are denominated in U.S. dollars except for an amount of € Nil(2004: €43 million) of the €298 million secured Pride of America loans and the outstanding balance of €169 million (2004:€34.9 million) of the €308.1 million secured Pride of Hawaii loan which are denominated in Euro.

As at 31 December 2005 and 2004, the net carrying amount of the Group’s long-term borrowings would have beenUS$2.86 billion and US$2.53 billion, respectively, had they been stated net of transaction costs incurred (see note 18).

As at 31 December 2005 and 2004, the net carrying amount of the Company’s long-term borrowings would have beenUS$0.66 billion and US$0.72 billion, respectively, had they been stated net of transaction costs incurred (see note 18).

As at 31 December 2005, approximately 38% of the interest costs on the Group’s long-term borrowings was fixed (2004:34%) and approximately 62% was variable (2004: 66%), after taking the effect of interest-rate swaps. The outstandingnotional amount of interest-rate swap was approximately US$390.5 million as at 31 December 2005 (2004: US$451.4million).

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24. Long-Term Borrowings (continued)The following is a schedule of principal repayments of the long-term borrowings in respect of the outstanding borrowings asat 31 December 2005 and 2004.

GROUP COMPANY

(Restated) (Restated)2005 2004 2005 2004

US$’000 US$’000 US$’000 US$’000

Within one year 256,442 179,159 98,575 75,788In the second year 264,262 223,070 98,575 98,575In the third to fifth years 1,280,686 828,148 413,684 449,749After the fifth year 1,126,181 1,364,498 55,500 108,500

2,927,571 2,594,875 666,334 732,612

(i) US$521.6 million syndicated term loanOn 22 January 1998, a syndicated term loan for an amount up to US$521.6 million was obtained by two subsidiaries,SuperStar Leo Limited and SuperStar Virgo Limited, as joint and several borrowers to part finance the construction ofm.v. SuperStar Leo (renamed m.v. Norwegian Spirit) and m.v. SuperStar Virgo. This syndicated term loan was fullydrawndown in September 1999.

In July 2004, the Group repaid the loan related to m.v. Norwegian Spirit. On 30 December 2004, a supplementalagreement was entered into with a syndicate of banks whereby SuperStar Leo Limited was released and dischargedfrom its obligations as a joint and several borrower.

The loan related to m.v. SuperStar Virgo bears interest at rates which vary according to the London Interbank OfferRate (“LIBOR”) and is repayable in 24 equal half yearly installments commencing 6 months from the ship deliverydate, with a maturity date payment to be paid on the maturity date. This facility is secured by ship mortgage over m.v.SuperStar Virgo and guarantees from the Company, and a subsidiary, Star Cruise Services Limited. In addition, theearnings and insurances are assigned to lenders as security. The shares of the borrower are also pledged ascollateral. The loan contains restrictive covenants which require compliance with certain financial ratios.

The outstanding loan balance related to m.v. SuperStar Virgo bears interest at the rate of 5.4% per annum at 31December 2005.

(ii) US$450 million term loanOn 20 February 2002, the Company signed an agreement with a syndicate of banks to provide up to US$450 millionin loans (“US$450 million term loan”) to refinance the outstanding balance of an existing term loan. The US$450million term loan bears interest at rates, which vary according to LIBOR, is repayable in 12 equal installments payableat six-monthly intervals commencing 18 months from the facility agreement date. At 31 December 2005, the interestrate on the US$450 million term loan was 5.7% per annum.

The US$450 million term loan is secured by first and second priority mortgages over certain ships of the Group,guarantees from certain subsidiaries, assignment of earnings and assignment of insurances granted by thesubsidiaries owning the ships relating to the first and second priority mortgages. The shares of these subsidiariesowning the ships relating to the first priority mortgage are also pledged as collateral. The loan contains restrictivecovenants which require compliance with certain financial ratios.

(iii) US$400 million Reducing Revolving Credit FacilityOn 20 April 2004, the Company as borrower signed an agreement for a Reducing Revolving Credit Facility with a syndicateof banks to provide up to US$400 million (“US$400 million facility”) to refinance the outstanding balance of the US$623million fleet loan (“fleet loan”). On 23 April 2004, the Group drewdown US$400 million under the US$400 million facility andtogether with US$3.2 million of internally generated funds, repaid the outstanding amount of the fleet loan. The US$400million facility bears interest at a rate which varies according to LIBOR, and is repayable in 14 equal half yearly installmentswith a balloon payment due in April 2011. At 31 December 2005, the interest rate on the US$400 million facility was 5.7%per annum.

The US$400 million facility is secured primarily by a first priority mortgage over and other security relating to certain ofthe Group’s ships and a guarantee given by various wholly-owned subsidiaries of the Company. The guaranteecontains undertakings requiring compliance with certain financial ratios.

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24. Long-Term Borrowings (continued)

(iv) US$626.9 million secured Norwegian Dawn/Star loanOn 26 June 1999, a syndicated term loan for an amount up to US$604.8 million was obtained by two subsidiaries,Norwegian Star Limited and Norwegian Dawn Limited, to part finance the construction of m.v. Norwegian Star andm.v. Norwegian Dawn, respectively. In October 2001, this syndicated term loan agreement was amended to providefor borrowings of up to US$626.9 million. This syndicated term loan was fully drawndown in December 2002.

In July 2004, the Group repaid the loan related to m.v. Norwegian Star.

The US$626.9 million syndicated term loan bears interest at rates which vary according to LIBOR and is repayable in24 equal half yearly installments commencing 6 months from the ship delivery date, with a maturity date payment tobe paid on the maturity date.

At 31 December 2005, the interest rate ranged from 6.0% to 6.2% per annum based on the timing of the underlyingdraws of m.v. Norwegian Dawn loan.

(v) US$225 million secured Norwegian Sun loanOn 9 July 2003, Norwegian Sun Limited, an indirect wholly-owned subsidiary of the Company, as borrower signed anagreement with a syndicate of banks to provide up to US$225 million (“US$225 million term loan”) to refinance theoutstanding balance of the US$225 million M/S Norwegian Sun Post-delivery Loan. On 16 July 2003, the Group drewdownUS$225 million and fully repaid the outstanding balance of the US$225 million M/S Norwegian Sun Post-delivery Loan andthe balance of US$9.4 million was paid to the Group. The US$225 million term loan bears interest at rate which variesaccording to LIBOR (the interest rate ranged from 5.6% to 5.7% per annum at 31 December 2005 based on the timing ofthe underlying draws), and is repayable in 16 equal half yearly installments with a balloon payment due in July 2011.

(vi) €298 million secured Pride of America loansOn 4 April 2003, Pride of America Ship Holding, Inc. (formerly known as Ship Holding LLC), an indirect wholly-ownedsubsidiary of the Company, as borrower entered into agreements with a syndicate of banks to provide secured termloans of up to €298 million to part finance the construction of the Pride of America vessel. These syndicated termloans were fully drawndown in June 2005.

The €298 million secured term loans are repayable in 24 equal half yearly installments commencing 6 months fromthe ship delivery date.

In December 2005, the €258 million Pride of America Hermes Loan was converted into US dollars, and the applicableinterest rate was converted from a floating LIBOR-based rate to a fixed rate of 5.715%. The Pride of America HermesLoan is secured by a guarantee given by the Federal Republic of Germany acting through HermesKreditversicherungs-AG for up to €245 million and interest thereunder. At 31 December 2005, the interest rate on theremaining €40 million Commercial Loan (which has been fixed into US dollars) bears interest at the rate of 6.0% perannum and is a floating LIBOR-based rate.

(vii) US$334.1 million secured Norwegian Jewel loanOn 20 April 2004, Norwegian Jewel Limited, an indirect wholly-owned subsidiary of the Company, as borrower,secured a term loan of up to US$334.1 million (the “US$334.1 million Norwegian Jewel loan”) from a syndicate ofbanks to part finance the construction of Norwegian Jewel. This syndicated term loan was fully drawndown in August2005.

The facility bears interest at a rate which varies according to LIBOR, and is repayable in 24 equal half yearlyinstallments commencing 6 months from the ship delivery date. At 31 December 2005, the interest rate ranged from4.7% to 5.0% per annum based on the timing of the underlying draws.

93

24. Long-Term Borrowings (continued)

(viii) €308.1 million secured Pride of Hawaii loanOn 20 April 2004, Pride of Hawaii, Inc., an indirect wholly-owned subsidiary of the Company, as borrower, secured aterm loan of up to €308.1 million (equivalent to approximately US$364.9 million based on the exchange rate ofUS$1.1842 to €1 as at 31 December 2005 on the undrawn amount) from a syndicate of banks to part finance theconstruction of Pride of Hawaii.

As at 31 December 2005, the Group drewdown €169 million (equivalent to approximately US$200.1 million) of theloan to pay the shipyard.

The facility bears interest at a rate which varies according to European Interbank Offer Rate (“EURIBOR”) or LIBORdepending on whether amounts under the facility are drawndown in Euro or US dollars. This facility is repayable in 24equal half yearly installments commencing 6 months from the earlier of the delivery date of the Pride of Hawaii or 10October 2006. At 31 December 2005, the interest rate on the €308.1 million Pride of Hawaii loan was 3.0% per annum.

(ix) US$800 million secured loan facilityOn 7 July 2004, NCLC as borrower signed an agreement for a Secured Credit Facility with a syndicate of banks toprovide up to US$800 million, comprising a term loan facility of US$300 million and a revolving credit facility ofUS$500 million. The facility is secured by the vessels m.v. Norwegian Spirit, m.v. Norwegian Star and m.v. Pride ofAloha and bears interest at rates which varies according to LIBOR plus a margin that is dependent on the amountoutstanding on the revolving credit facility (5.7% to 6.1% at 31 December 2005) and matures on the sixth anniversaryof the signing of the loan documentation. The term loan requires semi-annual principal reductions totaling US$17.5million, with the remaining unpaid principal balance due at maturity. The revolving credit facility allows NCLC to borrowon a revolving basis at any time prior to maturity, with all outstanding amounts then due. In regards to the revolvingcredit facility, NCLC is required to pay quarterly a commitment fee equal to approximately 40% of the applicablemargin on the unutilised commitment.

(x) €624 million secured Norwegian Pearl/Gem facilityOn 7 October 2005, NCLC as borrower entered into a Revolving Loan Facility Agreement with a syndicate of banks toprovide up to €624 million (equivalent to approximately US$738.9 million based on the exchange rate of US$1.1842 to€1 as at 31 December 2005) to finance 80% of the contract price of two vessels under construction for the NCLCGroup fleet. After delivery of the vessels any amounts subsequently repaid can be redrawn and used for NCLCGroup’s general corporate and working capital purposes. The facility bears interest at a rate, which varies based uponthe ratio of NCLC’s funded debt to Earnings Before Interest, Taxation, Depreciation and Amortisation. This facility isrepayable in 24 semi annual installments commencing 6 months from the relevant vessel’s delivery date using a 12year amortisation period with a balloon payment at final maturity. No amount was drawndown as at 31 December2005.

NCLC’s bank borrowings (iv) to (x) aboveEach of the loan facilities are secured by, amongst other securities, a mortgage over each associated vessel. These loanagreements also contain covenants that require NCLC, among other things, to maintain a minimum level of free liquidityand to limit NCLC net debt-to-capital ratio.

(xi) US$250 million unsecured Senior NotesIn July 2004, NCLC completed the issue of US$250 million Senior Notes due 2014 (the “Senior Notes”). The SeniorNotes bears interest at 10 5/8% payable semi-annually. The Senior Notes are unsecured senior obligations of NCLCand will rank equally with all of NCLC’s existing and future senior unsecured debt. NCLC may redeem all or a portionof the Senior Notes at any time after 15 July 2009. In addition, NCLC may redeem a portion of the Senior Notes usingthe cash proceeds of certain equity offerings completed before 15 July 2007. NCLC is also required to repurchase theSenior Notes if NCLC sells substantially all of its assets or experiences a change in control, as defined.

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25. Convertible BondsIn October 2003, the Company issued US$180 million 2% Convertible Bonds (the “Bonds”) due in 2008. The Bonds are listed onthe Luxembourg Stock Exchange. The issue price of the Bonds was 100% of their principal amount and the Bonds carriedinterest at the rate of 2% per annum payable semi-annually in arrears. Subject to certain conditions, the Bonds carried a right ofconversion into fully-paid ordinary shares of the Company at an initial conversion price of HK$3.180 (rounded to three decimalplaces) (US$0.41 based on a fixed rate of exchange applicable on conversion of the Bonds of HK$7.743 = US$1.00) per share,subject to reset and adjustments.

On or at any time after 20 October 2005, the Company may, subject to satisfaction of certain conditions, redeem all or aportion of the Bonds at their Early Redemption Amount (as defined in the Terms and Conditions of the Bonds) whichrepresents a gross yield of 5.55% on a semi-annual basis for the Bondholder plus any accrued interest provided that theclosing price of the Company’s ordinary shares for a defined duration of time is at least 125% of the conversion price ineffect on the relevant trading day. In addition, if at any time the aggregate principal amount of the Bonds outstanding is lessthan 10% of US$180 million, the Company shall have the option to redeem such outstanding Bonds in whole but not in partat the Early Redemption Amount plus any accrued interest.

Upon exercise of the right of conversion of the Bonds by the bondholders at anytime on or after 19 November 2003 and up to19 September 2008, the Company may choose to deliver ordinary shares, cash or a combination of cash and ordinary shareswith a total value equal to the value of the ordinary shares otherwise deliverable.

The Bonds may be redeemed, at the option of the bondholders, in the event of a Change in Control or Delisting (as suchterms are defined in the Terms and Conditions of the Bonds), at the Early Redemption Amount together with any accruedbut unpaid interest.

Unless previously converted, redeemed or purchased and cancelled as set out in the Terms and Conditions of the Bonds,the Bonds will be redeemed on 20 October 2008 at 120.136% of the outstanding principal amount thereof, plus anyaccrued but unpaid interest.

Detailed terms and conditions of the Bonds are constituted by the trust deed dated 20 October 2003 entered into betweenthe Company and the trustee.

The analysis of the Bonds recorded in the balance sheet is as follows:

GROUP/COMPANY

(Restated)2005 2004

US$’000 US$’000

Face value of convertible bonds issued on 20 October 2003 180,000 180,000Equity component (14,400) (14,400)

Liability component on initial recognition 165,600 165,600Interest accrued as at 1 January 11,212 2,365Interest expense for the year 13,109 12,447Interest paid during the year (3,600) (3,600)

Liability component 186,321 176,812

The fair value of the liability component of the Bonds at 31 December 2005 amounted to US$188.1 million. The fair value iscalculated using cash flows discounted at a rate based on the borrowings rate of 7.0%. Interest expense on the Bonds iscalculated using the effective interest method by applying the effective interest rate of 7.4% to the liability component.

As at 31 December 2005, none of the Bonds were redeemed or purchased by the Company or converted into ordinaryshares of the Company.

The net proceeds of approximately US$176.3 million from the issuance of the Bonds has been used for the construction ofvessels in line with the Group’s strategy to upgrade its fleet, as general working capital and for the reduction of outstandingliabilities under certain bank loans of the Group. During the year ended 31 December 2005, the remaining unapplied netproceeds of approximately US$67.3 million as at 31 December 2004 have been used to fund the newbuilding programmeand for general working capital purposes. As at 31 December 2005, there were no unapplied proceeds from the issuanceof Bonds.

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26. Other Long-Term Liabilities

GROUP

2005 2004US$’000 US$’000

Deferred lease liability 606 894Pension plan 924 1,092Others 1,101 3,748

2,631 5,734

27. Deferred Tax

GROUP

Excess of capitalallowances

over depreciation2005 2004

US$’000 US$’000

Deferred tax liabilities

The movement on the deferred tax liabilities account is as follows:

At 1 January 539 202Exchange difference (2) 8Deferred taxation charged to consolidated income statement 37 329

At 31 December 574 539

The amount shown in the balance sheet includes the following:

Deferred tax liabilities to be settled after more than 12 months 574 539

GROUP

Tax losses2005 2004

US$’000 US$’000

Deferred tax assets

The movement on the deferred tax assets account is as follows:

At 1 January 387 23Exchange difference (17) —Deferred taxation credited/(charged) to consolidated income statement (11) 364

At 31 December 359 387

The amount shown in the balance sheet includes the following:

Deferred tax assets to be recovered after more than 12 months 359 387

As at 31 December 2005, the amount of unused tax losses for U.S. tax purposes, which will expire at various timescommencing in 2024 and for which no deferred tax asset was recognised in the consolidated balance sheet wasapproximately US$210 million (2004: US$60 million).

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28. Trade CreditorsThe ageing of trade creditors as at 31 December 2005 and 2004 is as follows:

GROUP

2005 2004US$’000 US$’000

Current to 60 days 82,033 76,31161 days to 120 days 8,369 5,887121 days to 180 days 92 813Over 180 days 321 470

90,815 83,481

Credit terms granted to the Group generally vary from no credit to 45 days credit.

29. Provisions, Accruals and Other LiabilitiesProvisions, accruals and other liabilities consist of the following:

GROUP COMPANY

(Restated) (Restated)2005 2004 2005 2004

US$’000 US$’000 US$’000 US$’000

Payroll, taxes and related benefits 33,146 25,902 — —Interest 43,492 38,490 10,249 10,474Provisions (see below) 12,303 58,275 2,300 —Others 101,057 86,614 566 1,988

189,998 209,281 13,115 12,462

The movements of the provisions are as follows:

GROUP

Provision foradditionalpurchase Provision for

consideration legal andfor NCLH settlement

acquisition costs TotalUS$’000 US$’000 US$’000

As at 1 January 2005 46,715 11,560 58,275Adjustments (see Note 13) (39,061) — (39,061)Add : additional provision — 7,362 7,362Less : amounts paid (7,654) (6,619) (14,273)

As at 31 December 2005 — 12,303 12,303

The provision of US$2.3 million as at 31 December 2005 of the Company was for the legal and settlement costs.

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30. Financial InstrumentsThe fair values of financial instruments including derivatives are determined based on a variety of factors and assumptions.Accordingly, the fair values may not represent actual values of the financial instruments that could have been realised as atthe balance sheet date or that will be realised in the future and do not include expenses that could be incurred in an actualsale or settlement. The following are the estimated fair values of the Group’s financial instruments and the methods used toestimate such fair values:

(a) Certain short-term financial instrumentsThe carrying amounts of cash, cash equivalents, trade receivables, trade creditors and accrued liabilities approximatetheir fair values due to the short-term maturities of these instruments.

(b) Long-term borrowingsAs at 31 December 2005, the fair value of the long-term borrowings, including the current portion, was approximatelyUS$2,960.4 million, which was approximately US$32.8 million more than the carrying values. The difference betweenthe fair value and carrying value of the long-term borrowings is due to variable rate debt obligations carrying interestrates that are above or below market rates at the measurement dates. The fair value of long-term borrowings isestimated based on rates currently available for the same or similar terms and remaining maturities.

(c) Interest rate swaps and foreign exchange forward contracts(i) The Group has several interest rate swaps with an aggregate notional amount of US$430.4 million to convert

certain long-term borrowings from a floating rate obligation to a fixed rate obligation. The notional amount will bereduced six-monthly in varying amounts over periods ranging from 6 to 10 years from the dates of the interestrate swap agreements. As at 31 December 2005, the estimated fair market value of the interest rate swaps wasapproximately US$7.3 million, which was unfavourable to the Group. This amount has been recorded within thenon-current portion of the derivative financial instruments in the accompanying balance sheet.

These interest rate swaps have been designated as cash flow hedges. The changes in the fair value of theseinterest rate swaps are included as a separate component of reserves and are recognised in the consolidatedincome statement as the underlying hedged items are recognised.

In July 2004, following the early repayment of certain long-term borrowings, the Group discontinued the relatedspecific existing hedge accounting on the basis that the designated hedged risk ceased to exist and re-designated prospectively a new hedging relationship for all the interest rate swaps that were previouslydesignated as a hedge for the interest payment on these long-term borrowings. Upon adoption of HKAS 39 on 1January 2005, the fair value of these interest rate swaps of approximately US$10.7 million which wasunfavourable to the Group at the date of discontinuing the hedge accounting has been adjusted to the openingbalance of retained earnings (see Note 1).

(ii) The Group has a series of 5.5% capped USD LIBOR-in-arrears interest rate swaps with a notional amount ofapproximately US$140.8 million to limit its exposure to fluctuations in interest rate movements if rate movesbeyond the cap level of 5.5%. The notional amount for each interest period will be reduced six-monthly in varyingamounts over 5 years from August 2003.

Upon adoption of HKAS 39 on 1 January 2005, the changes in the fair value of these interest rate swaps, whichqualify as hedges, are included as a separate component of reserves, and recognised in the consolidatedincome statement as the underlying hedged items are recognised. To the extent an instrument is not effective asa hedge, gains and losses are recognised in the consolidated income statement as a gain or loss on interest rateswaps. Therefore, on 1 January 2005, the ineffective portion of these interest rate swaps of approximatelyUS$0.6 million, which was unfavourable to the Group has been adjusted to the opening balance of retainedearnings (see Note 1).

As at 31 December 2005, the estimated fair market value of these interest rate swaps was approximatelyUS$24,000, which was favourable to the Group. This amount has been recorded within the non-current portion ofthe derivative financial instruments in the accompanying balance sheet. The changes in the fair value of theseinterest rate swaps were included in interest expense in the consolidated income statement.

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30. Financial Instruments (continued)

(c) Interest rate swaps and foreign exchange forward contracts (continued)(iii) The Group entered into various Singapore dollars forward contracts and the notional amount of these contracts

was approximately US$206.7 million. The notional amount will be reduced six-monthly in varying amounts overperiods ranging from 5 to 11 years from the dates of the contracts. As at 31 December 2005, the estimated fairmarket value of these forward contracts was approximately US$3.6 million, which was favourable to the Group.The changes in the fair value of these forward contracts were recognised as other income in the consolidatedincome statement. This amount has been recorded within the current portion of the derivative financialinstruments in the accompanying balance sheet.

(iv) The Group entered into a series of monthly forward contracts to buy US dollars against Hong Kong dollars. Thenotional amount of these forward contracts was approximately US$60.7 million and will be reduced monthly infixed amounts maturing within 3 years from December 2002. The changes in the fair value of these forwardcontracts were recognised as other expense in the consolidated income statement. These forward contractsmatured in December 2005.

(v) The Group entered into fuel swap agreements to mitigate the impact of fluctuations in fuel prices. As at 31December 2005, the Group had fuel swap agreements with an aggregate notional amount of US$12.5 million,maturing through 2006, to pay fixed price for fuel. As at 31 December 2005, the estimated fair market value of thefuel swap was approximately US$0.6 million, which was favourable to the Group. This amount has beenrecorded within the current portion of the derivative instruments in the accompanying balance sheet.

The changes in the fair value of these fuel swap agreements are recognised in the consolidated incomestatement.

The fair values of the above instruments have been estimated using public market prices or quotes from reputablefinancial institutions. The Group had no significant concentrations of credit risk as at 31 December 2005 other thandeposits of cash with reputable financial institutions.

31. Commitments

(i) Capital expenditureThe Group has the following commitments as at 31 December 2005 and 2004:

GROUP

2005 2004US$’000 US$’000

Contracted but not provided for- Cruise ships and other related costs 1,335,000 673,286

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31. Commitments (continued)

(ii) Operating leasesRent expense under non-cancellable operating lease commitments were US$8.1 million and US$7.6 million for theyears ended 31 December 2005 and 2004 respectively.

At 31 December 2005 and 2004, future minimum lease payments payable under non-cancellable operating leases arefollows:

GROUP

2005 2004US$’000 US$’000

Within one year 7,485 6,301In the second to fifth year inclusive 16,459 16,244After the fifth year 13,614 14,951

37,558 37,496

The rent expense under non-cancellable operating lease commitments mainly relates to rental of offices occupied bythe Group and of leasehold land in Thailand.

(iii) Other commitmentsAs at 31 December 2005 and 2004, the Group has future commitments to pay for usage of certain port facilities, asfollows:

GROUP

2005 2004US$’000 US$’000

Within one year 15,947 13,617In the second and fifth year inclusive 37,158 44,908After the fifth year 60,807 68,977

113,912 127,502

(iv) Charter hire revenueThere was no charter hire revenue receivable under non-cancellable operating lease commitments in respect ofcatamaran and onboard equipment in the year ended 31 December 2005. In August 2005, the Group disposed of thecatamaran on deferred payment terms.

Charter hire revenue receivable under non-cancellable operating lease commitments in respect of catamaran andonboard equipment for the year ended 31 December 2004 was US$2.6 million.

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32. Contingent Liabilities

(i) ContingenciesOn 23 September 2005, NCL Corporation Ltd. (“NCLC”) entered into a Letters of Credit Facility agreement (the “NewL/C Facility”) in an aggregate maximum amount of US$100 million to part secure the risks of processing NCLC Groupcredit card sales transactions. The two letter of credit facilities previously entered into by the Company on 25September 2003 in an aggregate maximum amount of US$100 million were cancelled on the same day. There was nooutstanding amount as at 31 December 2005.

(ii) Material litigation(1) A proposed class action suit was filed on 1 August 2000 in the U.S. District Court for the Southern District of

Texas against Norwegian Cruise Line Limited (“NCLL”), alleging that it violated the Americans with DisabilitiesAct of 1990 (“ADA”) in its treatment of physically impaired passengers on board the Norwegian Sea (renamed theSuperStar Libra). The same plaintiffs also filed on the same date a proposed class action suit in a Texas statecourt alleging that NCLL and a third party violated Texas’ Deceptive Trade Practices and Consumer ProtectionAct by misrepresenting certain characteristics and services available to the physically impaired onboard theNorwegian Sea. In connection with the state court lawsuit, in December 2001, the trial court denied the plaintiffs’motion for class certification, and the state appellate court upheld that denial. The state court judge grantedNCLL’s motion to dismiss the case and the plaintiff filed an appeal. In connection with the federal court lawsuit, on9 September 2002, the District Court granted in part and denied in part NCLL’s motion to dismiss the case. TheDistrict Court ruled that it was unnecessary for NCLL to make any physical changes to its vessels. The DistrictCourt permitted an immediate appeal of its ruling to the Fifth Circuit Court of Appeals, which subsequentlydismissed the suit on other grounds. The U.S. Supreme Court accepted jurisdiction at the request of all partiesand the matter was heard on 28 February 2005. On 6 June 2005, the Court ruled that the ADA is applicable toforeign flagged cruise vessels that operate in U.S. waters to the same extent that it applies to U.S. flagged ships.The Court further ruled that retrofitting existing ships with permanent modifications is not required, pursuant to aprovision of the ADA that requires only “readily achievable” modifications. The Court stressed that a ship mustcomply with international safety regulations and that the ADA should not be construed to conflict with thoseinternational standards. The Court remanded the case to the Fifth Circuit to determine which claims in the lawsuitremain under the Court’s ruling.

(2) A proposed class action suit was filed on 20 December 2000 in a Florida State Court alleging that NCLLdiscriminated against disabled persons in violation of the ADA and the Florida Trade Act on several of NCLL’svessels. Discovery has commenced. NCLL believes that it has meritorious defenses to these claims and,accordingly, is defending vigorously this action.

(3) A proposed class action suit was filed on 17 May 2001 in the U.S. District Court for the Southern District of NewYork alleging that during the period from 1 January 1998 to the present, NCLL failed to pay plaintiff crewmembers overtime wages in accordance with their contracts of employment. The proposed class consists of allunlicensed seafarers who worked on its vessels during that period of time and seeks recovery of overtime wagesplus statutory penalty wages equal to two times the unpaid wages for each day the wages remain unpaid. Thecourt entered an order certifying the case as a class action. In March 2005, the parties reached a settlementwhich was preliminarily approved by the Court on 21 April 2005. NCLL believes that the ultimate outcome of thismatter, based on the settlement, will not have a material impact on its financial position, results of operations orcash flows.

(4) A proposed class action suit was filed on 12 June 2001 in Vancouver, British Columbia by a number of nursesalleging breach of a collective bargaining agreement and employment contract for non-payment of overtimewages. NCLL has settled this action and the settlement did not have a material impact on its financial position,results of operations or cash flows.

(5) On 25 July 2002, NCLL was served with a complaint in which a former employee alleged that NCLL failed to payhim severance pay/employment benefits following his discharge. Discovery is proceeding. The case is awaitinga trial date. NCLL believes that it has meritorious defenses to these claims and, accordingly, is defendingvigorously this action.

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32. Contingent Liabilities (continued)

(ii) Material litigation (continued)(6) On 25 May 2003, an explosion in the boiler room onboard the s/s Norway resulted in the death of eight crew

members and the injury of approximately 20 other crew members. All personal injury lawsuits stemming from theincident have been resolved. Additionally, the incident is currently under investigation by regulatory authoritiesand the United States Attorney’s Office for the Southern District of Florida. NCLL is cooperating with theinvestigation. To date, none of the agencies involved has rendered opinions or conclusions concerning theincident.

(7) On 13 June 2005, NCLC was served with a class action complaint alleging a violation of Florida’s Deceptive andUnfair Trade Practices Act and Unjust Enrichment in connection with the sale of shore excursions aboard NCLC’svessels. Discovery has commenced. NCLC believes that it has meritorious defenses to these claims and,accordingly, is defending vigorously this action.

(8) On 6 April 2001, a complaint was filed in the United States District Court for the Southern District of New Yorkagainst Star Cruises Limited, Arrasas Limited (collectively, “Star”) and the Bank of New York (“BNY”). The plaintiffclaimed that Star violated the U.S. securities laws by making false and misleading disclosures in connection withStar’s mandatory offer for the shares of NCL Holding ASA (“NCLH”), and that Star was unjustly enriched inconnection with Star’s acquisition of American Depositary Receipts (“ADRs”) of NCLH previously beneficiallyowned by the plaintiffs. Except for its claim for unjust enrichment, the plaintiff ’s claims against Star weredismissed. The plaintiff also claims that BNY breached the deposit agreement governing NCLH’s ADRprogramme when BNY accepted Star’s subsequent offer. On 14 May 2001, BNY filed cross-claims against Staras well as third party claims against NCLH, alleging that these entities are liable to BNY for any amount for whichBNY may be held liable under the original claims. Following the dismissal, BNY repleaded certain claims. Withthe exception of BNY’s claim for contractual indemnification for its attorneys’ fees and costs against NCLH, on 20January 2005, the Court granted summary judgement in favour of NCLH against BNY. The Court also restoredNCLH’s claim for contractual indemnification for its attorneys’ fees and costs against BNY. On 5 September2001, a purported class action was filed against Star and BNY by other holders of NCLH’s ADRs asserting similarclaims as those in the original action. On 9 March 2004, the Court dismissed the purported class action againstStar. BNY filed the same cross-claims against Star. On 20 January 2005, the Court granted summary judgementin favour of Star against BNY. On 9 August 2005, the Court granted BNY’s motion for summary judgement on theclaim for indemnification of its attorneys’ fees. On 16 December 2005, Star and plaintiff entered into a settlementagreement and mutual release. On 27 December 2005, the Court ordered judgement on BNY’s indemnificationclaim in the amount of US$2.3 million. NCLH is vigorously appealing this judgement. The Group has accrued forthis amount (see note 29).

In addition, the Group is routinely involved in personal injury and personal property damage claims typical of thecruise ship business. After application of deductibles, these claims are covered by insurance and other indemnityarrangements. In the opinion of management, such claims, if decided adversely, individually or in the aggregate,would not have a material adverse effect on the results of operation, cash flows, and financial position of the Group.

33. Share Option Schemes

(i) Pre-listing Employee Share Option SchemePrior to the de-merger from GIPLC in December 1997 the employees of the Group were offered share options inGIPLC under the “Genting International Employees’ Share Option Scheme for Executives”. Subsequently, a shareoption scheme known as “The Star Cruises Employees’ Share Option Scheme for Executives” (“the Pre-listingEmployee Share Option Scheme”) was implemented for the benefit of the employees of the Group. The employees ofthe Group were offered options under the Pre-listing Employee Share Option Scheme in exchange for the unexpiredshare options previously granted by GIPLC.

On 23 August 2000, the share option agreement was modified to reflect a four for one share bonus and to acceleratethe original vesting period to comply with the requirements of The Stock Exchange of Hong Kong Limited (the “StockExchange”). With effect from 30 November 2000, the date of listing of the Company’s shares on the Stock Exchange(the “Listing”), no further options can be granted under the Pre-listing Employee Share Option Scheme.

102

33. Share Option Schemes (continued)

(i) Pre-listing Employee Share Option Scheme (continued)

A summary of the Pre-listing Employee Share Option Scheme is given below:

PurposeTo grant options to selected employees of the Group and Star Cruises Investments Limited, acting as a trusteecompany for the employees under the said scheme.

ParticipantsEmployees of the Group who are executives of any company comprised in the Group.

Total number of shares available for issuePrior to the Listing, the allocation of the total amount of options under the Pre-listing Employee Share Option Schemecould not exceed 5% of the issued ordinary shares of the Company at any time during the existence of the Pre-listingEmployee Share Option Scheme. No further options can be granted under the Pre-listing Employee Share OptionScheme following the Listing.

Maximum entitlement of each employeePrior to the Listing, the Board of Directors might in its absolute discretion at any time and from time to time as itdeemed fit make an offer to any employee whom the Board of Directors might in its absolute discretion select tosubscribe for ordinary shares of the Company in accordance with the terms of the Pre-listing Employee Share OptionScheme provided always that any such offer by the Board in the case of any one employee should not exceed threemillion shares of the Company or zero point two per centum (0.2%) of the issued ordinary shares of the Company peroffer, whichever was the higher amount.

Period within which the shares must be taken up under an optionPrior to the Listing, options would expire at the retirement age of the employees, which is 55 years old, and if theretirement period was less than 10 years from the date of an offer, the option period for the remaining tranches wouldexpire on the tenth year from the grant date or at any age to be determined by the Board. Following the Listing, theoptions will expire in the tenth year from their original grant date.

Minimum period for which an option must be held before it can be exercisedUnder the Pre-listing Employee Share Option Scheme, the Board of Directors of the Company may determine at itsabsolute discretion the minimum period, if any, for which an option must be held before it can be exercised. Prior to theListing, the options generally became exercisable as to 50% of the amount granted 4 years after the grant date and theremaining can be exercised annually in tranches subject to a minimum amount per tranche per year at various datesin the future until the retirement age of the employees.

Following the Listing, options vest over a period of 10 years from their respective original dates of grant and generallybecame exercisable as to 20% and 30% of the amount granted 3 years and 4 years after the grant date, with theremaining options exercisable annually in equal tranches of 10% over the remaining option period.

Amount payable on acceptance of the option and period within which payments must be madePrior to the Listing, an offer of options under the Pre-listing Employee Share Option Scheme should be open foracceptance within three months from the date of such offer or such period as the Board of Directors may at its solediscretion determine. An option price of US$1 was payable by the employee concerned on acceptance of the option.

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33. Share Option Schemes (continued)

(i) Pre-listing Employee Share Option Scheme (continued)

Basis of determining the exercise price of the sharesPrior to the Listing, options were generally granted at an exercise price per share equal to the average of the middlemarket quotation of the share as quoted and shown in the daily official list issued by the Luxembourg Stock Exchangeor any approved stock exchange as the Directors deemed relevant for the five market days preceding the date of theoffer in writing to the employee.

Remaining life of the Pre-listing Employee Share Option SchemeNo further options may be granted under the Pre-listing Employee Share Option Scheme following the Listing. Theoptions remaining outstanding thereunder (as modified) remain exercisable under the Pre-listing Employee ShareOption Scheme on the terms and conditions subject to the respective grants.

Details of the movement during the year for options outstanding are set out in section headed “Share Options” in theReport of the Directors.

Movements in the number of share options outstanding and their related weighted average exercise prices are asfollows:

2005 2004

Average Averageexercise exerciseprice in price in

US$ Options US$ Optionsper share (thousands) per share (thousands)

At 1 January 0.3268 50,552 0.3280 66,251Exercised 0.2686 (6,980) 0.2686 (66)Cancelled/forfeited 0.3402 (14,566) 0.3322 (15,633)

At 31 December 0.3341 29,006 0.3268 50,552

A summary of the share options outstanding as at 31 December 2005 is as follows:

OptionsOptions outstanding exercisable

WeightedNumber average

outstanding remaining life NumberExercise price (in thousands) (years) (in thousands)

US$0.2686 16,513 2.1 7,103US$0.4206 12,493 1.9 6,085

29,006 2.0 13,188

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33. Share Option Schemes (continued)

(ii) Post-listing Employee Share Option SchemeThe Company adopted a share option scheme on 23 August 2000 which was effected on 30 November 2000 uponlisting of the Company’s shares on the Stock Exchange and amended on 22 May 2002 (the “Post-listing EmployeeShare Option Scheme”) to comply with the new requirements set out in Chapter 17 of the Rules Governing the Listingof Securities on the Stock Exchange effective 1 September 2001.

A summary of the Post-listing Employee Share Option Scheme is given below:

PurposeThe main purpose of the Post-listing Employee Share Option Scheme is to motivate the employees of the Groupincluding any executive directors of any company in the Group.

ParticipantsThe participants are the employees of the Group including any executive director of any company in the Group.

Total number of shares available for issueThe maximum number of shares available for issue under the Post-listing Employee Share Option Scheme andoptions to be granted under any other schemes of the Company is 132,733,953, representing approximately 3.2% ofthe issued share capital of the Company as of 22 May 2002 (the date of adoption of the Post-listing Employee ShareOption Scheme (as amended)) and approximately 2.5% of the issued share capital as at the date of this Report.

Maximum entitlement of each employeeThe total number of shares issued and to be issued upon exercise of the options granted to any one employee(including the exercised, cancelled and outstanding options) in any 12-month period up to and including the proposeddate of the latest grant shall not exceed 1 per cent. of shares in issue, provided that the Company may grant furtheroptions in excess of this 1 per cent. limit subject to the issue of a circular by the Company and the approval of theshareholders in general meeting with such employee and his associates (as defined in the Listing Rules) abstainingfrom voting.

Granting options to Directors, Chief Executive or Substantial ShareholdersAny grant of options to a Director, the Chief Executive or a Substantial Shareholder of the Company or any of theirrespective associates (as defined in the Listing Rules) is required to be approved by the Independent Non-executiveDirectors of the Company (excluding any Independent Non-executive Director who is a grantee of the options).

If the Company proposes to grant options to a Substantial Shareholder (as defined in the Listing Rules) or anyIndependent Non-executive Director of the Company or their respective associates (as defined in the Listing Rules)which will result in the number of shares issued and to be issued upon exercise of options granted and to be granted(including options exercised, cancelled and outstanding) to such person in the 12-month period up to and includingthe date of such grant:

(a) representing in aggregate over 0.1% of the shares in issue; and

(b) having an aggregate value in excess of HK$5 million, based on the closing price of the shares as quoted in theStock Exchange’s daily quotation sheet at the offer date of such option,

such further grant of options will be subject to the issue of a circular by the Company and the approval of theshareholders in general meeting on a poll at which the connected persons (as defined in the Listing Rules) of theCompany shall abstain from voting except that any connected person may vote against the relevant resolution at thegeneral meeting provided that his intention to do so has been stated in the circular.

Period within which the shares must be taken up under an optionThe period during which the options may be exercised will be determined by the Board of Directors of the Company atits absolute discretion, save that no option can be exercised more than 10 years after it has been granted.

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33. Share Option Schemes (continued)

(ii) Post-listing Employee Share Option Scheme (continued)

Minimum period for which an option must be held before it can be exercisedThe Board of Directors of the Company may determine at its absolute discretion the minimum period, if any, for whichan option must be held before it can be exercised.

Amount payable on acceptance of the option and period within which payments must be madeAn offer of options shall be open for acceptance for a period of ninety days after the date of offer or such period as theBoard of Directors may at its sole discretion determine. An option price of US$1 shall be payable by the employeeconcerned on acceptance of the option.

Basis of determining the exercise price of the sharesThe exercise price shall be determined by the Board of Directors of the Company, save that such price will not be lessthan the highest of (a) the closing price of the shares as stated on the daily quotations sheet of the Stock Exchange onthe date of grant, which must be a business day; (b) the average of the closing prices of the shares as stated in thedaily quotations sheets of the Stock Exchange for the five business days immediately preceding the date of grant; and(c) the nominal value of a share of the Company.

Remaining life of the Post-listing Employee Share Option SchemeThe Post-listing Employee Share Option Scheme will remain in force until 29 November 2010.

Other than the share options granted on 23 August 2004 which become exercisable in part or in full for a period ofeight years commencing from two years after the date of offer, the options vest in seven tranches over a period of tenyears from their respective dates of offer and become exercisable as to 30% and 20% of the amount grantedcommencing from two years and three years respectively after the dates of offer, with the remaining optionsexercisable annually in equal tranches of 10% commencing in each of the following years. All outstanding shareoptions are subject to further terms and conditions set out in the relevant offer letters and provisions of the Post-listingEmployee Share Option Scheme.

Details of the movement during the year for options outstanding are set out in the section headed “Share Options” inthe Report of Directors.

Movements in the number of share options outstanding and their related weighted average exercise prices are asfollows:

2005 2004

Average Averageexercise exerciseprice in price in

HK$ Options HK$ Optionsper share (thousands) per share (thousands)

At 1 January 2.8003 89,529 2.9944 99,649Granted — — 1.7240 13,678Cancelled/forfeited 2.3522 (5,790) 2.9944 (23,798)

At 31 December 2.8313 83,739 2.8003 89,529

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33. Share Option Schemes (continued)

(ii) Post-listing Employee Share Option Scheme (continued)

A summary of the share options outstanding as at 31 December 2005 is as follows:

OptionsOptions outstanding exercisable

WeightedNumber average

outstanding remaining life NumberExercise price (in thousands) (years) (in thousands)

HK$2.9944 72,988 6.6 32,556HK$1.7240 10,751 8.6 Nil

83,739 6.9 32,556

34. Pensions and Other Post Retirement Obligations

(a) Defined Contribution PlansNCLC has a defined contribution plan (the “Plan”) for its shoreside employees. Effective 1 January 2002, NCLCamended the Plan to cease employer contributions. The Plan is subject to the provisions of the U.S. EmploymentRetirement Income Security Act of 1974.

In addition, NCLC maintains a 401(k) Plan (the “401(k) Plan”). The 401(k) Plan covers substantially all its shoresideemployees. Participants may contribute up to 100% of eligible compensation each pay period, subject to certainlimitations. NCLC makes matching contributions equal to 100% of the first 3% and 50% of the next 7% of theparticipant’s contributions and shall not exceed 6.5% of each participant’s compensation. NCLC’s matchingcontributions are vested according to a five-year schedule.

NCLC maintains an unfunded Supplemental Executive Retirement Plan (“SERP Plan”), a defined contribution plan,for certain of its key employees whose benefits are limited under the Plan and the 401(k) Plan. NCLC records anexpense for amounts due to the SERP Plan on behalf of each participant that would have been contributed withoutregard to any limitations imposed by the U.S. Internal Revenue Code.

No amounts are required to be or were contributed under the SERP Plan by NCLC as at 31 December 2005 and 2004as the SERP Plan is unfunded. NCLC recorded expenses related to the above described defined contribution plans ofapproximately US$3.2 million and US$4.5 million for the years ended 31 December 2005 and 2004, respectively.

NCLC’s contributions are reduced by contributions forfeited by those employees who leave the schemes prior tovesting fully in the contributions. Approximately US$0.1 million and US$0.01 million of the forfeited contribution wereutilised in the years ended 31 December 2005 and 2004, respectively. As at 31 December 2005 and 2004,approximately US$0.10 million and US$0.08 million, respectively, were available to reduce future contributions.

In addition to the above plans, the Group also contributes to other statutory defined contribution plans, includingprovident fund scheme of various countries in which it operates.

(b) Defined Benefit PlanNCLC maintains an unfunded Supplemental Senior Executive Retirement Plan (“SSERP Plan”), a defined benefitplan, for selected senior executives. NCLC has recorded within payroll, taxes and related benefits accrual at 31December 2005 and 2004 of approximately US$9.7 million and US$8.9 million respectively with respect to the SSERPPlan in the accompanying balance sheet. NCLC records an expense related to the SSERP Plan for such amountsbased on the following actuarial assumptions: 5% discount rate and 5% annual increase in compensation.

No amounts are required to be or were contributed to the SSERP Plan by NCLC as at 31 December 2005 and 2004as the SSERP Plan is currently unfunded. NCLC recorded expenses related to the above described defined benefitplan of approximately US$0.8 million and US$1.9 million within selling, general and administrative expenses for theyears ended 31 December 2005 and 2004, respectively.

107

35. Principal SubsidiariesThe following is a list of principal subsidiary companies as at 31 December 2005:

EffectivePrincipal Issued and equity

Name of country of Country of fully paid up interest in PrincipalCompany operation incorporation share capital percentage activities

(in thousands)

Subsidiaries held directly:

Star Cruises Asia Bermuda Bermuda US$158,032 100.00 Investment holdingHolding Ltd.

NCL Corporation Ltd. Bermuda Bermuda US$12 100.00 Holding company

Subsidiaries held indirectly:

Star Cruise Management Note (1) Isle of Man US$2,000 100.00 Investment holding,Limited ship management

and marketingservices

Cruise Properties Limited Isle of Man Isle of Man RM197,600 100.00 Investment holding

Inter-Ocean Limited Isle of Man Isle of Man US$52,000 100.00 Investment holding

Star Cruise Services Limited Note (2) Isle of Man US$52,000 100.00 Investment holdingand cruise services

Cruise Ferries Holding Note (2) Bermuda US$12 100.00 Investment holdingLimited and cruise ferry

services

NCL International, Ltd. Bermuda Bermuda US$12 100.00 Holding company

NCL (Bahamas) Ltd. Note (2) Bermuda US$12 100.00 Operating company

NCL America Holdings, Inc. USA Delaware, USA US$0.01 100.00 Holding company

NCL America Inc. USA Delaware, USA US$0.003 100.00 Operating company

Superstar Virgo Limited Note (2) Isle of Man US$25,000 100.00 Bareboat chartering

Norwegian Star Limited Note (2) Isle of Man US$0.002 100.00 Cruise services

Norwegian Dawn Limited Note (2) Isle of Man US$0.002 100.00 Cruise services

Norwegian Sun Limited Note (2) Bermuda US$12 100.00 Cruise services

Norwegian Spirit, Ltd. Note (2) Bermuda US$12 100.00 Cruise services

Pride of Aloha, Inc. USA Delaware, USA US$0.01 100.00 Cruise services

Pride of America Ship USA Delaware, USA US$0.001 100.00 Cruise servicesHolding, Inc.

Polynesian Adventure USA Hawaii, USA US$30 100.00 Bus servicesTours, Inc.

Norwegian Jewel Limited Note (2) Isle of Man US$0.002 100.00 Cruise services

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35. Principal Subsidiaries (continued)

EffectivePrincipal Issued and equity

Name of country of Country of fully paid up interest in PrincipalCompany operation incorporation share capital percentage activities

(in thousands)

Pride of Hawaii, Inc. USA Delaware, USA US$0.003 100.00 Cruise services

Norwegian Pearl, Ltd. Note (2) Bermuda US$12 100.00 Cruise services

Norwegian Gem, Ltd. Note (2) Bermuda US$12 100.00 Cruise services

Star Cruises Ship Malaysia Malaysia RM150 100.00 Operator of shipManagement Sdn. Bhd. simulator for

training purposesand marine andtechnicaladministrativeservices

RM: Malaysian Ringgit

(1) This company provides ship management and marketing services to cruise ships operating substantially in international waters.

(2) These companies provide cruise services substantially in international waters.

36. Significant Subsequent Event

In January 2006, the Group disposed of s/s Norway.

37. Approval of Financial Statements

These consolidated financial statements have been approved for issue by the Board of Directors on 20 February 2006.

Auditors’ Report

109

AUDITORS’ REPORT TO THE SHAREHOLDERS OF STAR CRUISES LIMITED(Continued into Bermuda with limited liability)

We have audited the accounts on pages 50 to 108 which have been prepared in accordance with accounting principlesgenerally accepted in Hong Kong.

Respective Responsibilities of Directors and AuditorsThe Company’s Directors are responsible for preparing accounts which give a true and fair view. In preparing accounts whichgive a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion solely toyou, as a body, in accordance with Section 90 of the Companies Act 1981 of Bermuda, and for no other purpose. We do notassume responsibility towards or accept liability to any other person for the contents of this report.

Basis of OpinionWe conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of CertifiedPublic Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in theaccounts. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparationof the accounts, and whether the accounting policies are appropriate to the circumstances of the Company and the Group,consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonable assurance as to whether the accounts are free from materialmisstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts.We believe that our audit provides a reasonable basis for our opinion.

OpinionIn our opinion, the accounts give a true and fair view of the state of affairs of the Company and the Group as at 31 December2005 and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance withthe disclosure requirements of the Hong Kong Companies Ordinance.

PricewaterhouseCoopersCertified Public Accountants

Hong Kong, 20 February 2006

Audited Five Years Financial Summary

110

(Restated) (Restated)2005 2004 2003 2002 2001

US$’000 US$’000 US$’000 US$’000 US$’000

Results

Turnover 1,954,799 1,699,007 1,618,208 1,573,588 1,381,566

Operating profit beforeimpairment loss 145,937 134,827 79,049 160,842 92,971

Impairment loss (1,400) (14,500) (99,545) — (8,430)

Operating profit/(loss) 144,537 120,327 (20,496) 160,842 84,541

Interest income 8,484 2,985 2,613 3,325 6,821Financial costs (155,930) (110,005) (94,227) (99,326) (118,492)Share of loss of an associate (5,219) — — — —Other non-operating

income/(expenses), net 28,675 (23,920) (11,123) (12,435) 12,846

Profit/(Loss) before taxation 20,547 (10,613) (123,233) 52,406 (14,284)Taxation (2,641) (971) (1,663) (1,475) (1,759)

Profit/(Loss) for the year 17,906 (11,584) (124,896) 50,931 (16,043)

Basic earnings/(loss) per share(US cents) 0.34 (0.22) (2.51) 1.15 (0.37)

Diluted earnings per share(US cents) 0.34 N/A* N/A* 1.15 N/A*

Assets and Liabilities

Total assets 5,410,879 4,985,113 4,795,991 4,758,697 4,218,986Total liabilities (3,510,998) (3,159,603) (2,973,498) (2,939,167) (2,644,745)

Shareholders’ equity 1,899,881 1,825,510 1,822,493 1,819,530 1,574,241

* Diluted loss per share for the years ended 31 December 2004, 2003 and 2001 are not shown, as the diluted loss per share is less than thebasic loss per share.

Property Summary

111

Approximate LeaseApproximate gross built-up term

Location Lot No. land area area (years) Usage

1. Star Cruises Jetty, Porto Malai, Lot 2930 137,962ft2 96,123ft2 90 JLangkawi, Kedah Darul Aman, (previously (12,817m2) (8,930m2)Malaysia Lot PT 740)

2. An adjoining site to the Star Lot 2931 40,462ft2 — 90 JCruises Jetty, Porto Malai, (previously (3,759m2)Langkawi, Kedah Darul Aman, Lot PT 741)Malaysia

3. Star Cruises Terminal (Building), Lot PT 64547 252,728ft2 292,888ft2 99 TPulau Indah, Pelabuhan Klang (23,479m2) (27,210m2)(Port Klang), Selangor Darul Ehsan,Malaysia

4. Star Cruises Terminal (Car Park), Lot PT 64548 270,489ft2 — 99 TPulau Indah Pelabuhan Klang (25,129m2)(Port Klang), Selangor Darul Ehsan,Malaysia

5. Star Cruises Terminal (Jetty), Lot PT63807 262,103ft2 104,050ft2 99 JPulau Indah, Pelabuhan Klang (24,350m2) (9,666.5m2)(Port Klang), Selangor Darul Ehsan,Malaysia

6. Star Cruises Jetty, Kijal, Kemaman, Lot PT 4580 65,122ft2 8,124ft2 30 JTerengganu Darul Iman, Malaysia (6,050m2) (754.75m2)

7. Passenger Port A1 of Laem — 404,673ft2 269,638ft2 30 T, JChabang Port, Toong Sukhla (37,595m2) (25,050m2)Sub-district, Sriracha District,Chon Buri Province 20230 Thailand

8. Great Stirrup Cay, Berry Islands, — 91.32 hectares — — IBahamas (225.72 acres)

Notes:

i. The Group owns 100% of each of the above properties.

ii. Usage:

J – JettyT – Passenger TerminalI – Island, an island owned by the Group and used for cruise destination

Star Cruises Worldwide

112

Corporate HeadquartersHong KongSuite 1501, Ocean Centre5 Canton RoadTsimshatsui, KowloonHong Kong S.A.R.Tel: (852) 2378 2000Fax: (852) 2314 3809

AustraliaLevel 8, 401 Sussex StreetSydney, 2000 NSW, AustraliaTel: (61) 2 9212 6288Fax: (61) 2 9212 6188

ChinaBeijing (Representative Office)Unit 1203, Level 12China World Tower 1No. 1 Jian Guo Men Wai AvenueBeijing 100004 P.R.C.Tel: (86) 10 6505 6223Fax: (86) 10 6505 6221

Guangzhou (Representative Office)Unit 927, The Garden Tower368 Huanshi Dong LuGuangzhou 510064 P.R.C.Tel: (86) 20 8387 9047Fax: (86) 20 8387 9048

Shanghai (Travel Agency)No. 1750, XinZha RoadJingan DistrictShanghai 200040 P.R.C.Tel: (86) 21 5292 5608Fax: (86) 21 3218 1998

IndiaMumbai1118, Maker Chamber - VNariman Point, Mumbai - 400021IndiaTel: (91) 22 2281 5591/5592

(91) 22 2282 6503Fax: (91) 22 2287 1948

(91) 22 2281 8369

New Delhi610-611A, International Trade TowerNehru Place, New Delhi 110019IndiaTel: (91) 11 4160 8401/02/03Fax: (91) 11 4160 8404

Ahmedabad307, Setu ComplexNr. Shilp Cross RoadOff C.G. RoadAhmedabad 380009IndiaTel: (91) 79 2640 0239Fax: (91) 79 2640 0238

IndonesiaWisma Nusantara8th Floor, Jl. MH ThamrinNo. 59, Jakarta 10350IndonesiaTel: (62) 21 3190 1978Fax: (62) 21 3190 2782

Japan8F Palazzo Siena2-4-6 Higashi Shinbashi Minato-kuTokyo 105-0021JapanTel: (81) 3 6403 5188Fax: (81) 3 6403 5189

Korea4th Floor Hanmi Building1 Kongpyong Dong, Chongro GuSeoul, KoreaTel: (82) 2 752 8998Fax: (82) 2 754 8998

MalaysiaStar Cruises TerminalPulau IndahPelabuhan Barat42009 Pelabuhan KlangSelangor Darul EhsanMalaysiaTel: (60) 3 3101 1313Fax: (60) 3 3101 1406

New Zealand (CorrespondenceAddress)P.O. Box 28478Remuera, AucklandNew ZealandTel: (64) 9 633 0026Fax: (64) 9 633 0026

PhilippinesUnit 3C, Pacific Place Building539 Arquiza St., ErmitaManila, PhilippinesTel: (63) 2 521 5660/526 8401Fax: (63) 2 521 5637

Singapore9 Penang Road#11-08 Park MallSingapore 238459Tel: (65) 6226 1168Fax: (65) 6220 6993

SwedenStar Cruises ABVasagatan 15-17SE-111 20 StockholmSwedenTel: (46) 8 615 4340Fax: (46) 8 615 4349

Taiwan6F, No. 180, Section 4Chung Hsiao East Road, TaipeiTaiwan R.O.C.Tel: (886) 2 2731 0808Fax: (886) 2 2773 8877

Thailand177/1, 11th Floor, Unit 1Bangkok Union Insurance BuildingSoi Anumarnrachathon 1Surawongse Road, Bangrak DistrictBangkok 10500, ThailandTel: (66) 2 634 7188Fax: (66) 2 634 7218

United Arab EmiratesP.O. Box 26527, 203Qassim Sultan BuildingAirport Road, Deira, DubaiUnited Arab EmiratesTel: (971) 4 295 6651Mobile: (971) 50 456 9153Fax: (971) 4 294 5855

United Kingdom1 Derry StreetKensingtonLondon, W8 5NNUnited KingdomTel: (44) 207 591 8225Fax: (44) 207 591 8065

NCL HeadquartersNorwegian Cruise Line(International Sales Department)7665 Corporate Center DriveMiami, Florida 33126United States of AmericaToll Free: 1-800-327-9020 (ext. 7210/4475)Tel: (1) 305 436 4000 (ext. 7210/4475)Fax: (1) 305 436 4126

Scheduled Ports of Call by Cruise Line 2006

ALEXANDRIA, EGYPTATHENS (PIRAEUS), GREECEBANGKOK (LAEM CHABANG), THAILANDCORFU, GREECEDANANG, VIETNAMDUBROVNIK, CROATIAGOA, INDIAHALONG BAY, VIETNAMHO CHI MINH CITY, VIETNAMHONG KONGHUA HIN, THAILANDIRAKLION, GREECEISTANBUL, TURKEYIZMIR, TURKEYKAOSHIUNG, TAIWANKOCHI, INDIAKO SAMUI, THAILANDKOTA KINABALU, MALAYSIAKRABI, THAILANDKUALA LUMPUR (PORT KLANG), MALAYSIAKUCHING, MALAYSIALAKSHADWEEP (KADMAT ISLAND), INDIALANGKAWI ISLAND, MALAYSIALA SPEZIA (FLORENCE/PISA), ITALYMALACCA, MALAYSIAMESSINA, ITALYMUMBAI, INDIANAPLES (CAPRI/POMPEII), ITALYNHA TRANG, VIETNAMOLBIA, ITALYPENANG, MALAYSIAPHUKET ISLAND, THAILANDREDANG ISLAND, MALAYSIARHODES, GREECEROME (CIVITAVECCHIA), ITALYSANTORINI, GREECESIHANOUKVILLE, CAMBODIASINGAPOREVALLETTA, MALTAVENICE, ITALYXIAMEN, CHINA

ACAPULCO, MEXICOAJACCIO, CORSICA, FRANCEALEXANDRIA, EGYPTARICA, CHILEASTORIA, OREGONATHENS (PIRAEUS), GREECEBAR HARBOR, MAINEBARCELONA, SPAINBASSETERRE, ST. KITTSBELIZE CITY, BELIZEBOSTON, MASSACHUSETTSBRIDGETOWN, BARBADOSBUENOS AIRES, ARGENTINACABO SAN LUCAS, MEXICOCANCÚN, MEXICOCAYO LEVANTADO, DOM. REP.CHARLESTON, SOUTH CAROLINACHARLOTTE AMALIE, ST. THOMASCOPENHAGEN, DENMARKCOQUIMBO, CHILECORFU, GREECECOSTA MAYA, MEXICOCOZUMEL, MEXICODUBLIN, IRELANDDUBROVNIK, CROATIAENSENADA, MEXICOFANNING ISLAND, REPUBLIC OF KIRIBATIFLORENCE/PISA (LIVORNO), ITALYFUNCHAL, MADEIRA, PORTUGALGEORGE TOWN, GRAND CAYMANGIBRALTAR, UNITED KINGDOMGRAND BAHAMA ISLAND, BAHAMASGREAT STIRRUP CAY, BAHAMASHALIFAX, NOVA SCOTIAHAMILTON, BERMUDAHELSINKI, FINLAND

HILO, HAWAIIHONOLULU, OAHUHOUSTON, TEXASHUATULCO, MEXICOIQUIQUE, CHILEIRAKLION, GREECEISTANBUL, TURKEYIZMIR, TURKEYJUNEAU, ALASKAKAHULUI, MAUIKATAKOLON, GREECEKETCHIKAN, ALASKAKEY WEST, FLORIDAKING’S WHARF, BERMUDAKONA, HAWAIILA CORUNA, SPAINLAHAINA, MAUILIMA (CALLAO), PERULONDON (DOVER), ENGLANDLOS ANGELES, CALIFORNIAMANZANILLO, MEXICOMARTHA'S VINEYARD, MASSACHUSETTSMAZATLAN, MEXICOMESSINA, SICILY, ITALYMIAMI, FLORIDAMONTEGO BAY, JAMAICAMONTEVIDEO, URUGUAYMYKONOS, GREECENAPLES, ITALYNASSAU, BAHAHASNAWILIWILI, KAUAINEW ORLEANS, LOUISIANANEW YORK, NEW YORKNEWPORT, RHODE ISLANDOCHO RIOS, JAMAICAORANJESTAD, ARUBAORLANDO (PORT CANAVERAL), FLORIDAPALMA, MAJORCA, BELEARIC IS.PARIS (LE HAVRE), FRANCEPHILADELPHIA, PENNSYLVANIAPHILIPSBURG, ST. MAARTENPLAYA DEL CARMEN, MEXICOPONTA DELGADA, AZORESPRINCE RUPERT, BRITISH COLUMBIAPROGRESO, MEXICOPUERTO CHACABUCO, CHILEPUERTO LIMON, COSTA RICAPUERTO MADRYN, ARGENTINAPUERTO MONTT, CHILEPUERTO VALLARTA, MEXICOPUNTA ARENAS, CHILEPUNTA DEL ESTE, URUGUAYPUNTARENAS, COSTA RICAROATAN, BAY ISLANDS, HONDURASROME (CIVITAVECCHIA), ITALYROSEAU, DOMINICASALAVERRY (TRUJILLO), PERUSAN FRANCISCO, CALIFORNIASAN JUAN, PUERTO RICOSANTIAGO (VALPARAISO), CHILESANTO TOMAS DE CASTILLA, GUATEMALASANTORINI, GREECESEATTLE, WASHINGTONSKAGWAY, ALASKAST JOHN'S, ANTIGUAST. GEORGE'S, BERMUDAST. GEORGE'S, GRENADAST. PETERSBURG, RUSSIAST. THOMAS, US VIRGIN ISLANDSSTANLEY, FALKLAND ISLANDSSTOCKHOLM, SWEDENTALCAHUANO (CONCEPCION), CHILETALLINN, ESTONIATORTOLA, BRITISH VIRGIN ISLANDSUSHUAIA, ARGENTINAVALDIVIA (CORRAL), CHILEVANCOUVER BRITISH COLUMBIAVENICE, ITALYVICTORIA, BRITISH COLUMBIAVILLEFRANCHE (NICE), FRANCEWARNEMUNDE (BERLIN), GERMANYWATERFORD, IRELANDWILLEMSTAD, CURACAOZIHUATANEJO/IXTAPA, MEXICO

AALBORG, DENMARKAARHUS, DENMARKACAPULCO, MEXICOAKUREYRI, ICELANDALEXANDRIA, EGYPTALICANTE, SPAINAMSTERDAM, NETHERLANDSAQUABA, JORDANARICA, CHILEATHENS (PIRAEUS), GREECEBARCELONA, SPAINBERGEN, NORWAYBORDEAUX, FRANCEBRIDGETOWN, BARBADOSBUENOS AIRES, ARGENTINACADIZ, SPAINCALLAO, PERU (LIMA)CANNES, FRANCECAPE LOOKOUT, ELEPHANT ISLANDCAPE TOWN, SOUTH AFRICACASABLANCA, MOROCCOCIVITAVECCHIA, ITALY (ROME)COLON, PANAMACOPENHAGEN, DENMARKCOQUIMBO, CHILECORFU, GREECEDOVER, UK (LONDON)DUBROVNIK, CROATIADURBAN, SOUTH AFRICAFLAM, NORWAYGEIRANGER, NORWAYGEORGE TOWN, GRAND CAYMANGUDVANGEN, NORWAYHALF MOON ISLANDHELLESYLT, NORWAYHELSINKI, FINLANDHONNINGSVAG, NORWAYHOPE BAYHUATULCO, MEXICOHUSAVIK, ICELANDIQUIQUE, CHILEISAFJORDUR, ICELANDISTANBUL, TURKEYITAJAI, BRAZILIZMIR (EPHESUS), TURKEYKALMAR, SWEDENKATAKOLON, GREECEKLAIPEDA, LITHUANIAKORCULA, CROATIAKRISTIANSAND, NORWAYLA SPEZIA (FLORENCE/PISA), ITALYLE HAVRE (PARIS), FRANCELEIXOES, PORTUGAL (OPORTO)LEMAIRE CHANNEL/PORT LOCKROY (JOUGLA POINT)LERWICK, SHETLAND ISLANDSLIMA (CALLAO), PERULISBON, PORTUGALMALAGA, SPAINMANTA, ECUADORMARSEILLE (AIX EN PROVENCE), FRANCEMAYOTTE, COMORO ISLANDSMOMBASA, KENYAMONTEGO BAY, JAMAICAMONTEVIDEO, URUGUAYMYKONOS, GREECENICE (VILLEFRANCHE), FRANCENOSY BE MADAGASCARORANJESTAD, ARUBAOSLO, NORWAYPALMA DE MALLORCA, SPAIN

HILO, HAWAI’IHONOLULU, OAHUKAHULUI, MAUIKONA, HAWAI’ILAHAINA, MAUILOS ANGELES, CALIFORNIANAWILIWILI, KAUAISAN FRANCISCO, CALIFORNIA

* Ports of call are correct at time of print and are subject to change.

PARADISE HARBORPATMOS, GREECEPIRAEUS (ATHENS), GREECEPORT SAID, EGYPTPORTOFERRAIO, ELBAPORTOFINO, ITALYPUERTO CHACABUCO, CHILEPUERTO LIMON, COSTA RICAPUERTO MADRYN, ARGENTINAPUERTO MONTT, CHILEPUERTO QUETZAL, GUATEMALAPUNTA ARENAS, CHILEPUNTA DEL ESTE, URUGUAYPUNTARENAS, COSTA RICAREYKJAVIK, ICELENDRIO DE JANEIRO, BRAZILRONNE, BORNHOLM, DENMARKSAFAGA (LUXOR), EGYPTSALAVERRY (TRUJILLO), PERUSAN ANDRES, COLOMBIASAN JUAN DEL SUR, NICARAGUASANTA CRUZ DE TENERIFE, SPAINSANTIAGO (VALPARAISO), CHILESANTORINI, GREECESAO VICENTE, CAPE VERDE (PORTO GRANDE)SHARM EL SHEIKH, EGYPTSKAGEN, DENMARKSORRENTO, ITALYSPLIT, CROATIAST. HILIER, JERSEY, CHANNEL IS.ST. JOHN'S, ANTIGUAST. PETERSBURG, RUSSIASTAVANGER, NORWAYSTOCKHOLM, SWEDENSYSDISFJORDUR, ICELANDTALLINN, ESTONIATAORMINA, ITALY (NAXOS)THORSHAVEN, FAROE ISLANDSTOULON (ST. TROPEZ), FRANCETROMSO, NORWAYTRONDHEIM, NORWAYUSHUAIA, ARGENTINAVALPARAISO, CHILE (SANTIAGO)VENICE, ITALYWALVIS BAY, NAMIBIAWEST POINT, FALKLAND ISLANDSWILLEMSTAD, CURACAOYSTAD, SWEDENZADAR, CROATIAZANZIBAR, TANZANIAZEEBRUGGE (BRUGES/BRUSSELS), BELGIUMZIHUATENEJO/IXTAPA, MEXICO

STAR CRUISES LIMITEDSuite 1501, Ocean Centre, 5 Canton Road, Tsimshatsui, Kowloon, Hong Kong SAR

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