09:33     MELCO INT'L DEV<00200> - Announcement (3)                           

    Prior to the third anniversary of the date of the Service                 
    Arrangement and the expiry of the validity of the Proposed                
    Annual Caps for the three financial years ending 31 December              
    2007, Melco will put forward annual caps and the Service                  
    Arrangement for Independent Shareholders' approval (by way of             
    poll) in respect of the remaining term of the initial five                
    year period and will comply with all relevant requirements as             
    specified in Chapter 14A of the Listing Rules in this regard,             
    including the requirements of reporting, announcement and                 
    issue of a circular. If for any reason the Independent                    
    Shareholders do not approve, by way of poll, the annual caps              
    or the Service Arrangement for the remaining term, the                    
    Directors will take such steps as may be necessary to ensure              
    that Melco remains compliant with the provisions of the                   
    Listing Rules in this regard. The independent financial                   
    adviser to the independent board committee of Melco will opine            
    on the reason for the five year period of the Service                     
    Arrangement in its letter of advice to be included in the                 
    circular to be dispatched to the Shareholders.                            
                                                                              
    Services to be provided   :   The services to be provided by              
    and obligations of Mocha Slot include:                                    
                                                                              
    (i)   at the costs of Mocha Slot, to supply, deliver and                  
    install such number of electronic gaming machines and other               
    equipments, as may from time to time be deemed necessary and              
    required by SJM, for operation of the Existing Sites;                     
                                                                              
    (ii)   at the costs of Mocha Slot, to maintain and repair the             
    electronic gaming machines and other equipments installed at              
    the Existing Sites and to keep the necessary spare parts of               
    the relevant machines and equipments for performing the                   
    maintenance work;                                                         
                                                                              
    (iii)   to bear the rents of the Existing Sites;                          
                                                                              
    (iv)   to bear all necessary expenses for the interior design,            
    decoration and renovation of the Existing Sites; and                      
                                                                              
    (v)   to bear all necessary operational expenses in relation              
    to the operation of the Existing Sites (including but not                 
    limited to utilities expenses, staff costs and marketing                  
    expenses).                                                                
                                                                              
    Consideration   :   In consideration for the provision of                 
    Services, Mocha Slot shall be entitled to receive a monthly               
    service fee from SJM representing 31% of the aggregate gross              
    income of all the electronic gaming machines installed in the             
    Existing Sites in the relevant month. Gross income of each                
    electronic gaming machine is defined as the net win from each             
    such machine before deduction of any tax or levy as prescribed            
    by the relevant legislations or rules in Macau. By taking into            
    account the factors mentioned in the paragraph headed                     
    "Proposed Annual Caps" below, the Directors expect that the               
    said 31% of the aggregate gross income of all the electronic              
    gaming machines will translate into a monetary value of about             
    HK$146.82 million, HK$238.91 million and HK$528.49 million                
    respectively for each of the three years ending 31 December               
    2007                                                                      
                                                                              
    The consideration for the Services, representing 31% of the               
    the aggregate gross income of all the electronic gaming                   
    machines installed at the Existing Sites, is determined with              
    reference to the estimated costs of (i) the prices of the                 
    relevant electronic gaming machines and other necessary                   
    equipments; (ii) the resources to be incurred by Mocha Slot               
    for installation and maintenance of the relevant machines and             
    equipments including but not limited to the estimated costs               
    for the estimated number of spare parts that are required;                
    (iii) the rental payment of the Existing Sites; (iv) the                  
    decoration and renovation of the Existing Sites and the                   
    frequency required thereof; and (v) all necessary operational             
    expenses in relation to the operation of the Existing Sites               
    (including but not limited to utilities expenses, staff costs             
    and marketing expenses). During the year ended 31 December                
    2004, the total investment costs incurred by Mocha Slot Group             
    Limited in providing the electronic gaming machines to SJM                
    amounted to approximately HK$54 million and the aggregate                 
    consideration received by Mocha Slot Group Limited from SJM in            
    respect of the services provided under the former Equipment               
    Lease Agreements amounted to approximately HK$57 million.