11:05 K. WAH INT'L<00173>K. WAH CONS<00027>-Joint Ann & Resumed-13 The Second City Club Casino --- the Galaxy Casino at Cotai City Club The Galaxy Casino at Cotai City Club is situated within close vicinity to Galaxy Cotai Mega Resort, and will offer additional gaming facilities to complement the Galaxy Cotai Mega Resort. The Galaxy Casino at Cotai City Club will have approximately 14,000 square metres of gaming space, 146 table games, including 46 table games located in 12 dedicated VIP rooms, and 200 slot machines. It is expected to open in the first quarter of 2006. Companhia Great China Limitada is the owner of the land and the hotel building where Galaxy Casino at Cotai City Club is situated. Galaxy will take a lease from Companhia Great China Limitada for its Galaxy Casino at Cotai City Club and will at the relevant time comply with any applicable Listing Rules. Monthly rental for Galaxy Casino at Cotai City Club is to be negotiated but will not be less than HK$6,000,000 for the first 3 years of the lease term. Galaxy has an indirect interest of 10% in Companhia Great China Limitada. The rest of the equity interest in Companhia Great China Limitada is owned by Mr. Cheng Kwee and Mr. Yeung Chi Hang, each of whom is an Independent Third Party On 24th September, 2004 Galaxy signed an agreement with Hugo Legend and Wise Gain, which have undertaken to provide a steady flow of customers for Galaxy Casino at Cotai City Club. This agreement lasts for the life of the Concession. In return, their entitlement will be determined by reference to various rates on the profits of Galaxy Casino at Cotai City Club. Galaxy has a minority interest of 10% in Wise Gain and the balance is owned by Mr. Yeung Chi Hang and Mr. Cheng Kwee, each of whom is also an Independent Third Party. The Third City Club Casino --- the Galaxy Casino at Rio Hotel Galaxy Casino at Rio Hotel will have 60 mass tables, 5 VIP rooms with 20 tables and 150 slot machines. It will be situated at Quarteira 9 Lots C & D at Zona de Aterros do Porto Exterior, Macau and will comprise approximately 70,000 sq. ft. for the purposes of operating a casino. Currently, the hotel building at which the proposed casino premises will be situated is being renovated. Subject to the necessary government approval having been obtained, Galaxy will take a lease after the renovation is completed and KWCM will at the relevant time comply with any applicable Listing Rules. On completion of such renovations the building will be converted into a 4-star hotel. Renovation completion is expected to be before June 2006, and the casino is expected to commence business in the first quarter of 2006. The registered owner of the Rio Hotel building is STDM and Galaxy understands that Seng Fok Holdings Ltd will have a right to grant leases over the hotel. STDM is an Independent Third Party. Mr. Lui Keung Kwong and Siu Tak Hung are the beneficial owners of Seng Fok Holdings Ltd and each of whom is an Independent Third Party. Rio Entertainment Limited () is ultimately beneficially owned by Mr. Lui Keung Kwong and Mr. Siu Tak Hung each of whom is an Independent Third Party. On 8th September, 2004 Galaxy signed an agreement with Rio Entertainment Limited and Seng Fok Holdings Ltd. This agreement lasts for the life of the Concession. Under it Rio Entertainment Limited has undertaken to provide a steady flow of customers to the Galaxy Casino at Rio Hotel. In return its entitlement will be determined by reference to net gaming wins. Further information relating to Galaxy's life-of-Concession agreements will be set out in the circular to be issued to the KWIH Shareholders and the KWCM Shareholders. Estimated Capital Expenditure for Future Projects Galaxy's capital expenditure budget (excluding finance costs) for Galaxy StarWorld, Galaxy Cotai Mega Resort, Galaxy Casino at Waldo Hotel, Galaxy Casino at Cotai City Club, Galaxy Casino at Rio Hotel and Galaxy's corporate office are as set out below: Incurred up to 31/12/2004 2005--2009 Total (HK$ million) (HK$ million) (HK$ million) Galaxy StarWorld 317 1,514 1,831