MLCO 新濠博亚娱乐

Operator

Good day ladies and gentlemen and thank you for participating in the First Quarter 2008 Earnings Conference Call of Melco PBL Entertainment (Macau) Limited. At this time, all participants are in listen-only mode. After the call, we will conduct a question-and-answer session. Today's conference is being recorded. I would now like to turn the call over to Simon Dewhurst, Executive Vice President and Chief Financial Officer of Melco PBL Entertainment. Please proceed

Simon Dewhurst

Good morning. Thank you for joining us today for our first quarter earnings call. On the call with me from MPEL, Lawrence Ho, Garry Saunders, Stephanie Cheung, Constance Hsu and Geoffrey Davis, as well as Greg Hawkins who has recently been appointed CEO of City of Dreams and Keith Heise who has been recently named as CEO of Crown Macau having worked from inception as its CFO. Please note that today's discussions may contain forward-looking statements made under the Safe Harbor provision of U.S. Federal Securities Laws. I would also like to caution you that the company's actual results could differ materially from the anticipated results in those forward-looking statements. For further clarification, please read the full disclosure in our press release. In addition, we may discuss adjusted EBITDA, adjusted net income, adjusted EPS, and adjusted profit-to-EBITDA which are all non-GAAP measures. The definition and reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release. Please note that this presentation today is being recorded. Net revenue in the first quarter exceeded US$480 million, up more than 2.5 times over the last quarter. We generated over US$28,000 per table per day substantially ahead of any competitor and more than three times the Macau market average. Adjusted EBITDA was US$77.4 million for the reporting quarter, generating an adjusted EBITDA margin of 16.5%. Net income for the quarter was US$43.2 million or $0.10 per ADS and our net income margin against net revenue was just under 10%. Our balance sheet is in excellent shape. Outstanding debt at the end of the quarter was US$616 million or 0.25 times on a total debt-to-equity basis. We held US$949 million of cash at the end of the quarter and we currently have unused loan commitment totaling a further US$1.25 billion. Our balance sheet composition gives us real confidence in these uncertain capital markets. I'd now like to turn the call over to Lawrence.

Lawrence Ho - Co

Thank you Simon. I'd like to start things off by saying that we are fully support and endorse the recent comments by Chief Executive Edmund Ho and the Macau government concerning gaming regulations in Macau. The new regulatory structure will strengthen the market and are expected to be beneficial to the industry as a whole, including MPEL, our employees, and especially our shareholders. We look forward to supporting the Macau authorities as they formulate and implement these policies in the coming months. I would also like to make a brief comment on Crown Macau. In the fourth quarter of last year, we embarked upon a reconfiguration and repositioning of Crown Macau with the goal of creating the most productive VIP focused casino in Macau. Needless to say I am pleased to report that this is exactly what we have accomplished. Taking in a property and what many viewed as an impossible location and transforming into the highest gaming volume company not only in Macau but also the entire world. It is also interesting to note that while we were the last of the new gaming operators to obtain a license or a concession, we are now second in terms of the amount of capital that we have committed into helping Macau realize it's vision to become the entertainment and gaming capital of Asia. As a final point, I would like to take a moment to acknowledge that tragedy, unfolding in the Sichuan Province right now. We extend our sympathies to the victims of the disaster and their families including those in the MPEL family who have been directly affected. We have pledged $6 million to help supporting the ongoing relief efforts in the region and that has already been given to the China [inaudible] office. Let me now turn the call over to Gary Saunders, our Chief Operating Officer.

Garry Saunders

Thank you Lawrence. The key to our success at Crown Macau has been our focus on rolling chip customer needs, and our ability to provide an environment that addresses the key elements of the player experience. As part of this effort, we entered into an agreement with Ama in the latter part of last year. Ama through the provision of working capital assistance to the junket operators, who works beneath them, provides a more compelling value proposition especially higher commission rates. Our success with Ama is that it is not related to commission, it is related to the outsource provision of additional working capital for junket operators. Combined with the relationship that exists between Ama and the junkets that are performing so well at Crown Macau today our approach guarantees substantial volume without any associated MPEL working capital. Now I want to quickly switch gears and talk about of our plans for the City of Dreams. As some of you know, we recently held our topping-out ceremony for the podium in the Hard Rock hotel tower. For those of you who have seen City of Dreams recently, I think that you will agree that it has come a long way over the last year. And for those of you who have not seen it for a while, you will notice significant progress on your next visit. We are incredibly excited with the project's progress as we see it come to life. We have moved from drawing the pieces of the paper to concrete and steel that you can walk through and touch and have a better sense of that experience that will be provided. City of Dreams is the next major integrated urban resorts scheduled to open in Macau. This project remains on course with our most recent guidance on budget and timing. We have talked about our portfolio approach to multiple property development before. All of our properties are intended be complimentary towards each other and also to be complimentary to our neighbors. City of Dreams addresses the premier mass market, which we believe will grow dramatically as Macau becomes a multi-night stay market for vacationers and concessioners [ph]. City of Dreams is designed as the mini-rich [ph] environment with a heavy emphasis on entertainment. It will complement the properties already open or underway on Cotai. City of Dreams will provide diverse and many of these in tune with Asian customers. We will leverage our local knowledge to deliver experiences that will appeal to local taste. We believe that our customers will respond well to the unique experiences that we plan to create. A team of world-class partners will help us in delivering this vision and we will be making announcements during the course of the next 12 months as the project moves to completion. With Crown Macau addressing the rolling chip universe and City of Dreams addressing the emerging multi-night stay market, Melco addresses the non-casino machine... non-casino based gaming machines market in which it is the market leader. Melco delivers stable cash flow and enjoys the second-highest win for gaming machine per day in Macau. It also gives us valuable insight into customer habits, which would be very valuable to us as we configure our casino floor at City of Dreams. Overall each of our assets fits into our overarching portfolio approach to development and each represents the best of breed product in the segment as best. Now, I would like to turn the call back over to Simon.

Simon Dewhurst

Thanks, Garry. Crown Macau experienced high hold of 3.1% in the first quarter above our 2.7% targeted hold. We believe high hold positively impacted adjusted EBITDA at Crown Macau by approximately US$36 million. I would like to provide a short comment on risk mitigation in our business, a matter, which we take very seriously. In our business risk mitigation straddles a wide array of concern, including table hold volatility. There are a number of things that we can do to mitigate the impact of table hold volatility and we believe that this is especially important for us given that we have one property that currently delivers the vast majority of our revenue and earnings. And that property caters to the most volatile segment of the market with respect to luck. The most effective way to reduce table hold volatility is to increase volume. Since the commencement of operations by Ama in mid-December and the commensurate increase in rolling chip volume, the volatility and our daily rolling chip table hold percentages dropped as expected. We've also always offered a revenue shared base junket compensation model, which shares the impact of table hold variation between the casino and the junket operators. Some of the tables allocated to Ama have recently been included in this program. Last we have constructed a win rate sharing arrangement that allows us to smooth the peaks and rallies the table hold within our commission based junket business with Ama. All the business designed to make our cash flows and earnings more stable and predictable. Though we held high in the first quarter of 2008, you should remember that we suffered from low hold in the third quarter and fourth quarter of last year. Like to date, our rolling chip hold percentage is 2.8%. We will continue to provide some forward-looking color on non-operating line items expected in our income statement in the second quarter of 2008. Depreciation and amortization cost of approximately US$32 million and corporate cost of approximately US$6 million in the first quarter of 2008 provided good indication of our run rate going forward. Net interest income in the second quarter of 2008 is expected to be approximately US$3 million. Pre-opening expense in the second quarter is projected to be roughly US$4 million entirely associated with City of Dreams. And finally, capital expenditure in the second quarter is expected to be in the range of US$200 million to US$240 million. Operator, we are now ready to open the call for questions. Question and Answer

Operator

[Operator Instructions]. And the first question comes from the line of Bill Lerner from Deutsche Bank. Please proceed.

Bill Lerner

Thanks. Hey guys. I just... I have few questions. One, on the risk mitigation and volatility deal Simon, can you just talk a little bit about that, what does that manifest or just can you at least sort of outline the structure? I mean can we assume it's... if your holding a particular month... I assume it's monthly, if you hold in a particular month above a certain level, you give away certain X% of the cash flow and then you project [ph] it up on the downside and, I would suspect that maybe this manifested this quarter, so EBITDA would have been even higher, if can help us out there that would be great and then I have a follow-up.

Simon Dewhurst

Yeah, no problem Bill. Obviously, it's reasonably complicated, but I guess the two key aspects that we would want to stress is first of all, it doesn't reset itself on settlements. It is a live to date calculation in terms of what the hold is and whether there is any settlement away from us or back into us. The second thing that I would just mention is that there is a range around our theoretical hold line about which there is no impact on this hold share arrangements. So beyond going into more of the mechanics on it, I think that should help.

Bill Lerner

Okay. And then in terms of the... at least obviously directionally number would have been higher this quarter had that not been in place, is that a reasonable assumption?

Simon Dewhurst

Yeah, I mean obviously at 3.1% hold in the first quarter, we booked a cost if you like associated to the hold arrangement and I am happy to quantify that it's approximately US$11 million.

Bill Lerner

Okay you give away US$11 million. Okay great.

Simon Dewhurst

And I'll also just stress Bill that it's on a fixed monthly settlement cycle.

Bill Lerner

Yeah.

Simon Dewhurst

So we haven’t hit a settlement points yet at this stage.

Bill Lerner

Oh, I understand. Okay. And then actually just sort of housekeeping... you guys talk about 2.7 or 2.8 as feel [ph], but we have seen a lot of threes in the market recently, maybe that's a structural change or sort of mix story on the customer side. I don't know, but why... I guess... if you held 3%, the differential or the spread would've been something like what $12 million, is it just pro rata like that or I just want to get you talk a little bit about where you think feel really is?

Simon Dewhurst

Well. I mean we…

Lawrence Ho - Co

I think we've been opened for a year now. So, we are still observing the patterns of the environment in Macau. So, all the math in the world sense 2.7 and that's why we are sticking to that for now. We will obviously observe the trends going forward. So, I think until there are very clear indications that it is above 2.7, this is the rate that we will speculate and for your reference, so far it is really a monthly thing. So far this month we are holding much lower, so I think net-net when you aggregate everything over a long period of time, it's going to be around there.

Bill Lerner

Okay. It will be lower than 3.1, you mean?

Lawrence Ho - Co

Sure. I think we are holding lower than 2.7.

Bill Lerner

Okay. And then thanks a lot. And then I just have one final question. If the Macanese government... caps commissions or puts type of structure in place on the junket commission front that comes in below your rate and I know that’s complicated because the economics have changed or are evolving with Ama and you guys, what if they come in below that rate, can you just talk about where or how you are protected? I know, obviously you've got contracts, did that change anything with respect to the contracts. Obviously as Gary was saying you offer a lot more in just a favorable commission structure for liquidity and so on and so forth but can you just talk a little bit about that?

Lawrence Ho - Co

No. If the Macau government and I know it's probably going to be imminent, the Macau government have its regulations I think of all of the concessioners and sub-concessioners will have to comply and from our perspective, it's actually the thing because as they do cap at below at... below the rate that we're paying or below we are not even paying the top rate any more, it caps at below that rate, it’s actually good for us because it's pure profit margin for us. And having spoken to Ama, which is our junket aggregator, they actually think they do have a competitive edge because then it really becomes two things in the market, it's a level playing field, it really becomes the product and I think that was the point that we've always talked about. Crown Macau and probably when Macau and the two probably known as the best VIP fix [ph] our properties in Macau. So, I think we have an edge on that standpoint. The location was always supposedly a negative but for VIP, they are the secluded and exclusive location is a big plus and lastly as we all know working capital is a key area for the VIP sector and with Ama doing that type of work for us, we would have a clear edge. When the government implements the plan that will be the day that we would be delighted.

Bill Lerner

And does that change anything with respect to the actual contract, the multi-year contract with Ama, did it trigger any change?

Lawrence Ho - Co

Obviously we would… well, I think we would need to look into the contract and whether it's just a simple change the rate down. We would have to look into that but so far it's all positive.

Bill Lerner

Okay. Thanks Lawrence, thanks guys.

Operator

And the next question comes from the line of Larry Klatzkin from Jefferies. Please proceed. Larry Klatzkin - Jefferies & Co.: Hi guys. You are saying that the month of May, the hold is lower but April weren't you over a 3% hold?

Garry Saunders

Just a second.

Simon Dewhurst

Stay with us Larry, we are just hunting out the number for April. Larry Klatzkin - Jefferies & Co.: No, no it's fine. But I was just saying that for the quarter to date you are really not down below 2.7, is what I am saying.

Garry Saunders

We were at 3.4% [ph] in April, Larry. Larry Klatzkin - Jefferies & Co.: Okay. So if you come out at 2.4 or whatever you're still probably above the 2.7 for the quarter to date? Yeah, we are below 2.4 in this current market.

Lawrence Ho - Co

Larry, we're actually pretty low in May. Larry Klatzkin - Jefferies & Co.: Okay, okay. Though it is not over, but second question is as far as the... how much more... if Ama has gotten a lot more liquidity with the money they've earned. You are doing close to $10 billion rolling chip a month, Ama is doing over $40 billion a month. I mean, they are doing over 50 at the property. How much more can the property handle in rolling chip combined before it starts getting capped out and how much it can handle?

Garry Saunders

Larry, this is Garry Saunders.

Lawrence Ho - Co

Larry.

Garry Saunders

Go ahead Lawrence.

Lawrence Ho - Co

Oh, Gary, sorry. Just one quick point. I think the property and the infrastructure we have is a bit of a constraint because it is a 1 million square foot in GFA, Crown Macau is a six star unique property. But it’s... we are constrained by the footprint. And there is only so much space that we can devote to gaming before we actually start removing hotel rooms and restaurants and stuff like that. And with the new regulations in Macau, that is also quite uncertain. So I think if anything, we are finding that the property itself is starting to constrain the ability of Ama. Having said that, I'd let Gary. Gary, why don't you follow-up.

Garry Saunders

Of course but what you are saying is true Lawrence in terms of the capacity limitation and we just look at ways to be more efficient with the space and we constantly have to evaluate our space like you would any product that you put out for shelf space for best and highest use. And so that that leads to a constant tuning of the casino floor and there is still space that potentially can add more capacity. So I don't think anybody should look for a quantum leap of growth with the rolling chip volume. But at the same time, we have ways to tune our business. Larry Klatzkin - Jefferies & Co.: Okay. So you still have some upside of the property. Okay. As far as the new rules go if, I'm making sure I understand, [inaudible] say the host, which Ama is playing, let say 1.21% they set the new limit at 1.1%. Will the amount you... Ama is making a bigger spread, does the 1.35% you pay them go down also. Will you guys cut a share in the lower commission to the host?

Lawrence Ho - Co

Larry this is Lawrence here. I think, at this point in time, the government have not consulted us and have not decided how they will regulate and implement it. But I think at the end of the day the government is not going to look at Ama differently from other junket and junket operators. So it's going to be a blanket approach, if they say it goes down to, say 1.2% or 1.1% then Ama is going to go down to 1.1% naturally. And I think the edge that Ama will have over and we have talked about this numerous times in the past, Ama although it's not about just giving people the highest commission, not giving their sub-junket the higher commission, and although it will be about working capital and the relationships. So I think a lot of the sub-junket, the smaller junkets, would actually tell you they don't really care about 510 basis points. At the end of the day what they only need is the working capital. Larry Klatzkin - Jefferies & Co.: But if Ama goes down to 1.1% they may lower, you pay the host even less than 1.1% themselves to make a profit.

Simon Dewhurst

Larry, this is Simon, Larry. I mean I think this is relatively speculative, remember when we pay the 1.35% across to Ama we are paying them a piece of margin because they are providing the working capital that they provide which is -- Larry Klatzkin - Jefferies & Co.: Right I understand. That's what I'm saying okay.

Simon Dewhurst

What junkets provide. So how that might work Larry that you are setting forth here is currently unknown. Larry Klatzkin - Jefferies & Co.: Okay. I was just trying figure if you would benefit if they lower the host maximum in your relation with Ama. Okay.

Garry Saunders

Larry, it's Garry. Larry, it's hard to speculate at this point but I would never underestimate the ingenuity and adaptability of this market to be able to do to work with what is put finally in place. And the important thing is that we do believe that whatever is put in place is going to be good for the industry. It’s important to keep in mind that we are positioned to the local company and we believe and we enthusiastically support what the government is doing because we believe it’s going to be good for Macau and for the industry in Macau. Larry Klatzkin - Jefferies & Co.: I agree with you hundred percent. Macau Studio City your management contract on that, any feeling for timing when that might open up?

Garry Saunders

We don't have any particular visibility in terms of their schedule at this point. Larry Klatzkin - Jefferies & Co.: Okay. And then there is some talk of residential gaming rules trying to discourage gaming in residential areas, would that affect Melco’s slots at all?

Garry Saunders

That would certainly make it more difficult to expand that business model. Larry Klatzkin - Jefferies & Co.: Okay. But you wouldn't have to, they don't anticipate making you close some of the places you have?

Lawrence Ho - Co

Larry, it’s Lawrence, I think the non-opening casino gaming or slot gaming in residential areas have always been a policy in Macau. So ever since Melco started in 2003, we have had, we have faced this issue and we have had to be creative and we have to be respectful to the local residents and our neighbors and the Macau government. So nothing has really changed. But having said that, I think the government will look into what is defined as a residential area. So I think we do have a couple of Melco's on the pipeline for this year. And those are approvals already in hand and they are moving forward. Larry Klatzkin - Jefferies & Co.: Good, Okay. All right. The really last question is if the work sharing agreement had been in the beginning of the quarter... that EBITDA, how much difference would it have been?

Simon Dewhurst

Larry, I don't think we are going to get into that. Larry Klatzkin - Jefferies & Co.: Okay. That's fair, that's fair. Well, good quarter guys. Congratulations. Thank you, Larry.

Lawrence Ho - Co

Thank you, Larry.

Operator

Your next question comes from the line of Anil Daswani from Citigroup. Please proceed.

Anil Daswani

Hi, guys. Congratulations again on a great result, just one, I have three questions. First of all, a little bit of a follow on, on this revenue sharing model. You guys mentioned that you have got about $11 million in the bank from the first quarter, could you just highlight what would happen in the event of the second quarter average hold... let’s say get 2.6, does that $11 million immediately get released into two-quarter, or how does that actually function?

Simon Dewhurst

The way it would work Anil is that some of the $11 million would bleed back in because... obviously the run rate or the life to date hold since the arrangement commenced would have come down from where it is at the end of the first quarter. You're getting into the mathematics of it if you wish to try and work out whether all of the $11 million would come in at 2.6. I suspect that it wouldn't all come back to a 2.6, but the majority of it would. Larry Klatzkin - Jefferies & Co.: So for all intents and purposes when we model that thing, we should just be looking at whatever your total roll is plus say a 2.7 to 2.8 hold, I mean we should just assume that base stable over the course of the 12-month period?

Simon Dewhurst

I think that that's appropriate. I mean the way we model it here is actually that we think that over a long enough period it's neutral. And that's why we have entered into it. Ultimately we believe that the long-term hold will be within the band that we set. So, it's something that if you model out at a theoretical... on a theoretical basis and your theoretical is not wildly different from ours then you will reach the conclusion, you don't actually need to model anything.

Anil Daswani

Fantastic. Okay the second issue is obviously you guys have done a great job with A-Max, now there are a lot of copycats that seems to be one thing to emerge. What do you think keeps your sub-junkets in place at A-Max, which is fairly one of the concerns that have been voiced given all these copycats out there at the moment?

Garry Saunders

This is Garry Saunders. I think if you look at the track record and the relationships that A-Max has, I think that that's going to be one of the things that's going to keep this together and there has been a lot of speculation about how will this model work and I think that this model will work as well as the business hands that had been. So it’s demonstrated a record that they have already established. I think it will be quite important for somebody to switch to another that’s unproven. And then also the property that we have, we do believe… one of the difficult things in Macau is that you look at property, you would like for the property account for a dominant portion of the motivation of why people would go with that property. Unfortunately Macau is a still very commissioned oriented market. So I believe that even a competing model to ours I think we have a property that stands up to anything that's in Macau right now for the rolling chip program and I believe that we would be able to get the right type of service and amenities in compliment to what A-Max is doing.

Simon Dewhurst

Gary I'm going to just add a couple of comments to that. And it is, but... if you look at the growth in the first quarter very clearly you can see the impact as a result of the working capital that was brought into the market at the back end of 2007 associated with Ama and I think that we have gone away towards explaining our views that it is the working capital component that gives us the sticking us with junket that's driving at the business that we got in the property. In relative terms yes there has been market share movements, but in absolute terms there hasn't been a lot of cannibalization. If the response from our competitors is to introduce more working capital into market, I think that our view is that the market will continue to demonstrate the type of growth that you have seeing during the course of the first quarter. Relative market shares might move around, but in terms of the absolute volume of business that you might see in properties such as Crown should stay pretty stable.

Anil Daswani

All right. Now the initial targets for A-Max were clearly set at levels much higher than the $40 billion or so enrolled that you guys are doing at the moment. Have those targets changed at all over the course of the last three or four months?

Simon Dewhurst

I think that… I mean Lawrence spoke to this a little bit earlier on, Anil in terms of just talking about what we are physically able to do from a capacity point of view, certain the property guys will argue that we can drive more efficiency out of Crown Macau and there will pursue that but I think that our view was always that taking this property up to $50 billion roll a month level was optimizing in terms of the investments that we have got in the ground, the property and anything beyond that is just... it is challenging from an operational standpoint as well.

Garry Saunders

Remember also that you talk about the aspirations for those particular levels who are not the types of numbers that are reflected in our budget, we are running ahead of our budget.

Anil Daswani

Okay. And maybe can we take from that, given the original aspiration for A-Max that could eventually be fulfilled through your property at the City of Dreams and, has there been any thoughts towards the reconfiguration of some of the math tables at City of Dreams in favor of VIP?

Garry Saunders

The way the property is structured is that we would certainly look on property that has all the amenities to fire on all the cylinders. You have math, you have the slot market that we want to develop there, but also we have the rolling chip market already planned into this property. And in addition we have the flexibility something we are not able to do as well right now and that's the premium direct customer.

Anil Daswani

All right. Can we assume that one of the--

Lawrence Ho - Co

Anil, it's Lawrence. I think our discussion with Ama for City of Dreams, the number one principle is that it has to be incremental to their current rolling chip at Crown Macau, so there won’t be any cannibalization when the business moves over there. And obviously Ama at this stage is very interested and very bullish about what they can do for City of Dreams. So we will... we are continuing the discussion.

Anil Daswani

Fantastic. Lawrence my last question, will Ama be the exclusive junket operator at City of Dreams or would you have to go a bit deeper?

Lawrence Ho - Co

I think we are still.. we are less than a year from opening. So we are... and it’s such a dynamic market and I would like to point out that, it seems like two years has passed, Ama has only been operating in Crown Macau for five months --

Anil Daswani

Yes.

Lawrence Ho - Co

So I think we still have some ways to go. But so far Ama has done a fabulous job and so even at Crown Macau the other junket outside of the Ama Group are doing very well. So we will assess the situation in a few moths time to see what is the best outcome for MPEL and our shareholders.

Anil Daswani

Fantastic. Thanks so much, Lawrence.

Lawrence Ho - Co

Thanks, Anil.

Operator

And the next question comes from the line of Celeste Brown from Morgan Stanley. Please proceed.

Celeste Brown

Hi good evening.

Simon Dewhurst

Hi Celeste.

Celeste Brown

Lawrence did you say that the commission change was imminent and if so or if not how do you think the government is going to bring in about I think the initial suggest was that there would be the legislation or is there something that the Chief Executive to do that can make it come faster? Thanks.

Lawrence Ho - Co

Well, Celeste, I don't want to speculate what the government will do. But I do believe that ever since the Chief Executive made a speech at the end April 22, I think the date was, they are flushing out some of the policy and initiatives and the details of how they are going to be implemented. So we are... there are consultations happening, I think pretty soon. So I think maybe imminent is not the right word but I do think something is going to happen fairly quickly. So it's not going to be a... at the end of this year and this is purely my own speculation. I do think it's going to happen in a couple of months or so. And I think this is really going to benefit the whole industry when these measures are, and these initiatives are put in place.

Celeste Brown

And does it mean --

Lawrence Ho - Co

So I don't want to speculate what the government is going to do because I honestly don't know.

Celeste Brown

But can it be done just say at Chief Executive mandate or does it need to go through the legislature?

Lawrence Ho - Co

Well, I wish I had the legal and political knowledge to give you a clear answer on that one but I think that is reserved for probably the financial secretary of account.

Celeste Brown

Thank you.

Operator

[Operator Instructions]. And the next question comes from the line of Gary Pane [ph] from Mat Corey [ph]. Please proceed. You may proceed, Gary.

Unidentified Analyst

Yes, hi sorry about that. Thanks guys and congratulations on great set of results. Just had a couple of questions for you guys. With regards to the mechanism that you've got in place with the junket operator manage the hold right. I was just wondering, is that another form of providing working capital perhaps to the junket operator, is that another competitive advantage you guys have got in place compared to some of the other casinos that might start spending greater credit out there into the market?

Simon Dewhurst

I guess, if you look at it in form of view, that theoretical is or the way we will perform against theoretical is so high, Gary. So we’re going to be settling on this mechanism to the counter party through the life. Then obviously that's... it's good news for us because our hold is going to be a lot higher than we believe it otherwise is going to be and of course it would generate some additional working capital for the counter party. But I think the fact is you only reach that conclusion if you form a basis of assumption around theoretical, which is high than ours.

Unidentified Analyst

Okay. All right. And the other question that I had slightly less feel question, but I just want to clarify this... that the land that Crown Macau sits on, if I remember correctly that wasn’t part of your concession in. So is that land, I mean, you can effectively have strata title on that land, is that?

Lawrence Ho - Co

Gary it's Lawrence here. That land started off as a residential and was converted into a hotel. So I think philosophically you could convert it back but I think given that the product that we built there and now it’s the busiest VIP casino in the whole world and we won the award earlier this year in London in which we are very proud of. I would really [inaudible] converting that land and back into some sort of residential apartment.

Unidentified Analyst

Okay. All right. So, sorry for the less feel question, but thanks guys.

Simon Dewhurst

Thanks Gary.

Lawrence Ho - Co

Thanks.

Operator

And our next question comes from the line of Jennifer Owen [ph] from Citigroup. Please proceed.

Unidentified Analyst

Thank you very much. I just wanted to clarify you said that the impact of the high win to EBITDA was $36 million so that it would take adjusted EBITDA back to about $40 million for the quarter?

Simon Dewhurst

Yeah, that's correct Jenny.

Unidentified Analyst

And so what would be the normalized revenue number be, and hence normalized EBITDA margin?

Simon Dewhurst

Normalized revenue, normalized EBITDA.

Garry Saunders

We don’t have the numbers prepared.

Simon Dewhurst

We don't have the numbers prepared for that. I think from recollection from having just... we looked at that this few days ago. Normalized EBITDA comes away from about 16% and it comes down to around about 14%. I can’t remember what happened to net revenue.

Unidentified Analyst

Okay. Perhaps I could follow that up with you would be later on --.

Simon Dewhurst

[inaudible].

Unidentified Analyst

Thank you. And it is that I mean, given the constraints you've mentioned with respect to the property and you probably kind of pretty much there where you think your base load [ph] volume through the reminder of the year, is that kind of a normalized EBITDA margin that we should be looking at for the rest of the year?

Simon Dewhurst

Yeah, I think that our view would be... that would be the right way to look at it, yes.

Unidentified Analyst

Right. Thank you very much.

Operator

And the next question comes from the line of Gary Maujean [ph] from UBS. Please proceed.

Unidentified Analyst

Hi. Actually I have a couple of questions, firstly, the US$11 million does that effect the first quarter or is it a theoretical number which we should apply going forward? So, in other words... its the... could we add back to US$11 million to the US$77 million for Crown Macau?

Simon Dewhurst

Well. You could reach the conclusion that if we haven't had the hold rate hedge in place, then our EBITDAR in the quarter actually would have been $11 million higher and is it an actual cost, well its an accrual at the end of the first quarter and we booked it through our cost line, it runs through our casino cost line. And if over the next six months or nine months or 12 months, our like to date hold dropped from somewhere in the order of 3.1% which is where it was at, as far as this deal is concerned at the end of the first quarter, if over the next 6, 9,12 months that drifts out and comes down to sitting somewhere in the balance that we have set around 2.7% then the impact of that will have been that over the intervening period we will have drifted that US$11 million back into earnings and it comes back to us. Does that make sense?

Unidentified Analyst

Yes, yes, thank you. My second question is about the Macau Studio City contract. Has that been approved by the government at this point?

Simon Dewhurst

Yes, it has.

Unidentified Analyst

Okay. And my last question is about the... can you comment about the after commission after-tax expenses at Crown Macau for the first quarter versus may be Q4 '07?

Simon Dewhurst

In terms of... are you looking for trends?

Unidentified Analyst

Yes. '08 at roughly how much, how many percent increase quarter-over-quarter?

Simon Dewhurst

It is basically flat. We had some costs, one-off costs in the fourth quarter associated with the reconfiguration in the property and then of course we rolled into a new calendar year, which has of course some salary adjustments attached to it. The two parts basically net off against each other.

Unidentified Analyst

Okay. Thank you very much.

Simon Dewhurst

Thanks.

Operator

And the next question comes from the line of Gary Pane [ph] from Mat Corey [ph]. Please proceed.

Unidentified Analyst

Hi guys. Just a follow-up question. I was wondering in the second quarter are you guys... have you guys added any tables into the casino or are you looking for approval from the government on any additional tables?

Greg Hawkins

Gary, it's Greg Hawkins. We've received approvals recently for some further conversions to increase the number of VIP tables. But that does not increase the overall number of tables in the property. At this stage as always we’re giving consideration to potential expansions, which we have assessed [ph] previously, but there aren't any considerations at this point. So, Q2 at this point we don't expect any incremental increase in the overall number of tables.

Unidentified Analyst

Sure. But… Greg thanks for that, but can you give us a bit of an indication as to how many more VIP tables you could be converting across on the mass-market side?

Greg Hawkins

Yes. At this stage we are going through a physical conversion of little tools of property where we are converting some of the existing match tables there to cater to incremental VIP. Those table numbers would be approximately around 40 tables, just under 40.

Unidentified Analyst

Okay. Excellent. And just one another kind of slightly broader question. In your vertebral commentary, there is quite a bit of commentary down on City of Dreams. I was just wondering with regards to the Trinity project on Macau Peninsula, can you give us any color into how that is developing and what your current thoughts Lawrence or Simon?

Simon Dewhurst

Yeah, this is Simon.

Lawrence Ho - Co

Gary, it’s Lawrence.

Simon Dewhurst

Go on Lawrence, go ahead

Lawrence Ho - Co

No no, go ahead Simon.

Simon Dewhurst

Okay. As everyone can hear, Lawrence is remote at the moment. So apologies for the slight time delay as we speak. The situation with the Peninsula Project is that the project has not substantially moved forward from where we were at the end of the last quarter. It sits there as our next development project in our pipeline and management is very focused at the moment on considerable amount of work that we have going on at City of Dreams. That taken together with what we've been performing at Crown Macau assets has been... the has been the right area for us to have our attention. We will switch to Peninsula when we got the bandwidth to do so.

Unidentified Analyst

Okay. Excellent. Thanks, Simon.

Operator

Next question comes from the line of Robin Farley from UBS. Please proceed.

Robin Farley

Well, thanks my questions have been answered. Thanks.

Simon Dewhurst

Thanks, Robin.

Operator

And the next question comes from the line of [inaudible] from Lehman Brothers. Please proceed.

Unidentified Analyst

Hi, just two... very quick questions going back to the discussion on Trinity, do you actually have the approvals in place or with the Chief Executive's comments, will Trinity be effective in any way?

Simon Dewhurst

We have the applications in for the number of gaming units that we the plan on operating there, so we have the submission in similar to every other gaming activity that we expect to be able to complete such as City of Dreams and Macau Studio City but the same... same identical filing.

Garry Saunders

I think, I think that our view is, that there was no impact on our plans for the Peninsula project or the consequence of the policy addressed in the 22nd of April.

Unidentified Analyst

Okay. And can you maybe at least give us some sense of when you would think start thinking about this project in terms of... would you start thinking about investing in this from '09 onwards or will they be ... being a bit delayed that won’t be until like 2010 or something like that?

Garry Saunders

I think, there is a lot of thinking going on about it right now and certainly Lawrence has been putting a lot of thought into design and plan for that property, so that continues. In terms of when could you see it's physically moving forward on that project I think that you... can assume that for now and for the next 12 months we will be mostly concentrated on bringing City of Dreams through to the market.

Unidentified Analyst

Okay. Last question if I may, it's just along your CapEx numbers, about your 1Q and 2Q numbers now, can you give us some guidance for the full-year exactly how much you will be spending?

Simon Dewhurst

We're... in terms of CapEx looking at through the whole of 2008, our monthly turnover on site at City of Dreams and really the rest of this year is just about CapEx with City of Dreams. Our turnover on site at the moment is after the round about 600 million Hong Kong dollars a month, which is driving this quarterly CapEx level of US$200 million to US$250 million. And that's around about peak turnover for the site of City of Dreams, its about as active as you will see from a CapEx spend point of view. That will obviously try a lot through third quarter, fourth quarter. So if you look at the X [ph] curve I would imagine that we’d probably going in the order of US$200 million in the third quarter and a US$150 million to US$180 million in the fourth quarter, if that helps.

Unidentified Analyst

Okay. Yes, that's useful. Thank you.

Operator

And the final question comes from the line of Kevin Smith from Jeffries. Please proceed. Larry Klatzkin - Jefferies & Co.: Hi, this is actually Larry again. Quick question about residential, what are you hearing about LVS getting residential going and what do you think the effect is going to be on you guys for City of Dreams?

Garry Saunders

Well, Larry, it’s Gary Saunders.

Lawrence Ho - Co

Well, Garry, you go ahead.

Garry Saunders

Go ahead Lawrence, I’m sorry.

Lawrence Ho - Co

Our view remains, which is we do want LVS to go ahead. At the Four Seasons vacations, apartment hotels whatever they call them start selling we'd look at the market at that point in time to see what we want to do. Within Macau all the management have done extensive reviews in the past few months. When City of Dreams is fully completes it’s Phase I and Phase II and Phase III, everything is completed. We only have about 2,200 rooms and being an integrated resort that is supposed to blow people's mind. We do need hotel supply and with the recent Macau... the government’s new initiative it might be a better idea to hold onto those assets. Now we are still evaluating the situations and we watch LVS with a lot of curiosity. Larry Klatzkin - Jefferies & Co.: Okay. Well, thanks guys. I appreciate it.

Simon Dewhurst

Thanks.

Lawrence Ho - Co

Thanks Larry.

Operator

There is no further question. I would now like to turn the call back over to Mr. Simon Dewhurst for closing remarks. Please proceed.

Simon Dewhurst

Thank you. Thanks very much for listening in on our conference call today. The Macau marketplace remains a dynamic and exciting place for us to be located and operating from. We remain very confident about its future growth prospects and we will take a leadership role in this. We get to see how our projects are progressing on a daily basis whether through the improving performance of our operating properties or on the building site at City of Dreams. We hope that we would be able to convey to you some of the excitement that we feel especially to those of you who are unable to spend much time with us here in Macau. We look forward to reporting back to you in another three months time. Thanks again for your questions today. Have a good day.

Operator

This concludes the presentation, ladies and gentlemen. And thank you for joining today's conference. Have a good day.