Good morning ladies and gentlemen, and thank you for participating in the Q4 2014 Earnings Conference Call of Melco Crown Entertainment Limited. At this time all participants are in a 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 Mr. Geoffrey Davis, Chief Financial Officer of Melco Crown Entertainment Limited. Thank you, please go ahead sir.

Thank you for joining us today for our fourth quarter 2014 earnings call. On the call with me today are Lawrence Ho, Ted Chan, and Ross Dunwoody. Before we get started, please note that today's discussion may contain forward-looking statements made under the Safe Harbor provision of federal securities laws. Our actual results could differ from our anticipated results. I will now turn the call over to Lawrence.

Thank you, Geoff. Well it has been a challenging period from Macau. I would like to highlight some of Melco Crown’s key achievements during the fourth quarter of 2014, and the progress made on our development pipeline. In Macau, I’m pleased to announce that we gained market share in the rolling chip mass market table games and gaming machine segments in the fourth quarter of 2014. Our ability to once again take share in the mass market table game segment, while maintaining a disciplined approach to reinvestment in costs. Highlights our market leading position in this segment, especially at the premium end and reinforces our confidence in our strategy of providing world class service and amenities to premium customers. As further evidenced - following the recent change in management direction, the repositioning of our rolling chip business to focus on larger and higher quality junkets in Macau, continues to gather momentum at City of Dreams and up here in Macau. Both of which gained market share in this segment during the fourth quarter of 2014. Despite the challenging demand environment in Macau, we remain committed to enhancing our current operating assets in Macau, and investing meaningfully in our exciting development pipeline. Our resolute belief that Macau remains the most important and exciting gaming market in the world now and going forward, as demonstrated by the retail expansion in the fifth hotel tower at City of Dreams. As well as the ongoing development of Studio City, the next standalone, and a greater resort to open in Macau. Our company has always taken a leadership role in delivering world class entertainment and attraction to Macau, including The House of Dancing Water that’s had [indiscernible] and Club CUBIC, demonstrating our commitment to furthering Macau’s appeal as a multi-faceted leisure and tourism destination. This…

Thanks, Lawrence. We reported property EBITDA of 279 million in the fourth quarter of 2014 compared to 394 million in the fourth quarter of last year. Our property EBITDA margin in the fourth quarter of 2014 was 25.1% compared to 28.5% in the fourth quarter of 2013, and 27.5% in the third quarter of 2014. Our luck-adjusted property EBITDA in the fourth quarter of 2014 was approximately 290 million, while our luck-adjusted property EBITDA margins were 25.8% compared to 28.1% in the prior quarter, in part reflecting a strong performance of our rolling chip business and the resulting impact on mix. The EBITDA contribution from our non-VIP segments represents approximately 85% of luck-adjusted EBITDA at City of Dreams, and 80% on a group wide basis. Following revisions to our employee retention program and an encouraging increase in the take-up of the longer term retention program by our employees versus the shorter term option. We were required to increase our retention provision in the fourth quarter of 2014 by approximately US$5 million as compared to prior guidance in the third quarter level. The greater than estimated number of colleagues electing the one-time payment in 2017 as opposed to the annual summer bonus plan, reflects the efficacy of our creative retention plan and highlights our company’s position as an employer of choice. In addition to the capital expenditures relating to our extensive development pipeline, we returned over 640 million to shareholders in calendar year 2014 with 340 million returned via dividends, and approximately 300 million through our share repurchase program. Given City of Dreams Manila was partly operational and for only a few days in the fourth quarter of 2014, we have not provided detailed KPI’s of financial figures. From the first quarter of 2015 onwards, we will provide greater detail regarding the properties performance, including our typical disclosure of key operating and financial metrics. As we normally do, we give you some guidance on non-operating line items for the upcoming quarter. Total depreciation and amortization expense is expected to be approximately 110 million to 115 million, corporate expense is expected to come in at approximately 30 million. And consolidated net interest expense is expected to be approximately 40 million, which includes finance lease interest of 11 million relating to City of Dreams Manila, net of approximately 37 million of total capitalized interest. That concludes our prepared remarks, operator back to you for the Q&A.

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I have three questions actually. The first one, obviously we saw the weakness in the whole rate for the rolling program, but we also saw a 250 basis points decline in the whole rates of the mass market segment. Is this some structural or does it have something to do with the debt at the top end of the pyramid of customers in Macau, or is this something that can revert back into the high 30s? So that’s my first question, the second question is on the market share gains that you guys have made in the mass market. Clearly these are been pretty significant, and on my calculations you guys are up to about 14.8, 15% in the fourth quarter of the total mass market. How sustainable is that? And are there any initiatives in place that can keep that sort of market share going? And finally, can you give us some colors on the VIP rolling improvement that we saw on the fourth quarter. Has this come through largely on the back of Sun City or are there other junkets that you guys are adding to your program?

Anil it’s Geoff, well we haven’t made any sort of adjustment in our CO EBITDA from any adjustment to the mass market, the hold rate. If we apply the hold rate for the first three quarters of the year to our fourth quarter drop, it would have added somewhere in the range of 10 million to 15 million of incremental EBITDA.

Anil it’s Lawrence. I think on that point, I think we do need more time to do additional research, because our theory is that there is a correlation between the hold rate in mass and the smoking bend, because ultimately amass, the hold rate and mass has always been highly correlated to the length of play. And with players having to go outside or go to smoking lounges to smoke, I think inevitably there will be an impact. So whether that impact is a temporary one or a permanent one, we’ll still need to do more research, but I think on the second and third question about mass market share, we’ll hand it over to Ted.

Yeah Anil, in terms of the last quarter last year, and also we could actually give a little color on the beginning of the year. You’re right, after the classification of the numbers, we did hit record in terms of our market share in naturally in both mass and VIP rolling chips market shares. I’m sure that everyone would know that there’s some impact in terms of visa restriction etcetera. And top-end of customer in market wise, it’s actually declining. In City of Dream however, if you look at the Q3 and Q4 number, we do maintain stable across two quarters in terms of unique customers. As Lawrence has mentioned, I think the reduced whole percentage resulting in a lower revenue definitely it’s actually correlated with the play time as a result of the smoking ban in the mainstream area. I think that’s the reason for that. We're quite confident that we can stay at the current high market share I think due to our very, very high end and best in class products of COD. And also great player advantage with Q2 to manage that problem. I hope that answer your second and third questions.

And our next question comes from the line of David Bain of Sterne Agee, please ask your question.

Lawrence could you give us your view on the upcoming midterm review by the Macau Government? I mean should we look at this as a healthy debate of key topics, and considering the stage for longer term directions or actions, to be set in motion years down the road, or do you think we’ll see something specific near term, in terms of new regulation?

David its Lawrence. I think the government, it’s a totally new government, you have a new financial secretary who oversees the ICJ, which is a gaming control board. And I do think that this review will have longer term implications as well. I think they are reviewing the standard things that they’ve been preaching for many years. And I think these things we are very comfortable about, which is non-gaming investment, diversification, development of local Macanese people supporting derivative industries within Macau. So I think on all of those fronts, I think we would have big check, because I think big ticks I mean because ultimately I think we are one of the companies who have really invested and delivered on those fronts. Whether they have any implications on eventual license renewal, which is 2020 and 2022. I do think that there will be impact, but they haven’t approached us yet. We’ve heard it in the media as well, but we look forward to it, because I think when that review is done, we will not only pass with flying colors, we would be right at the very top.

And then I believe you’re hiring an additional 8,000 people for Studio City. And I was just wondering if you could you describe the process, so far as giving the labor market?

Well I think we’ve started mass recruitment recently. I think our recruitment ads have demonstrated the type of local promotions that we have done over the last few years. The fact that over 50% of our - well over 50% of our management positions are local Macau labor. I think so far, we haven’t seen, even in the integrated resorts that has opened in the last three or four years, we really haven’t seen any significant pressure. Of course there’s a tight labor market, everybody knows that, but at the same time, I think there are more and more people converting over to the gaming industry, because just the basic pay is higher. So we’re not concerned, naturally the tight labor market, and I think the fact that we are, like Geoff said earlier on, we are an employer of choice. I think we have demonstrated whether to screw our pension plan, or the innovative schemes that we have, a retention schemes that we have devised, that we have probably the happiest labor force in Macau.

And then, I guess this is very general and I know there’s a lot of moving parts. But as you’ve done a recent market projection that’s given current dynamics out there, do you think that including new capacity the market can be close to flat this year, or grow, or any thoughts on that, or do you want to take a pass?

No, I’m happy to, I never take a pass. I think at the end of last year I had - I was probably more, one of the more optimistic people, saying that the market should be up, high, single digits, single to mid-single digits. But having said that, I think, I haven’t seen what has happened in the first couple of months, together with some of the government regulations that we have seen. I think I would revise down my whole year forecast to be probably a slight negative, on slight negative growth year-on-year. I mean year-over-year. And I think with all the smoking regulations and the various things that have hit the industry, together with the fact that the rumor that we’re hearing on the ground is, the next integrator resort to open, will get very little tables. I think that all will have a significant impact on growth of the industry.

And the next question comes from the line of Joseph Greff of JPMorgan. Please ask your question.

My question is on the Philippines, as you look at the next two years and you look at your sourcing of players in different geographies, how dependent is that property planning to be, with respect to Mainland Chinese VIP customers?

Joe, its Lawrence here, I think I get paid to supplement later on, on VIP. But our investment thesis on City of Dreams Manila. And we’ve said many times before, it’s really underpinned by the strong growth in the domestic market. And the fact that Philippines is one of the fastest growing economies in the world, in the last few years. And at the same time, we have, even the two and a half years that we’ve been building that. We have seen obvious improvements in infrastructure and in logistics and coordination. So I think longer term, the tourism aspect of the market will be very significant. At the same time, the Philippines market doesn’t rely just on China, right now, if anything, China I think is the fourth largest - fourth most tourists going to the Philippines. So there’s quite a few countries, Korea, Japan, and the US, who are above China. And Philippines is located kind of halfway between, it’s closer to south-east Asia and halfway between China and Singapore. So I think we expect a lot of south-east Asians. And we have already seen that in the early goings. So it’s not very reliant on China, but at the same time, I think that’s a huge potential, especially when the perception of the Philippines change, and also when the relations between the two country changes.

And the next question comes from the line of Grant Govertsen of Union Gaming Macau. Please ask your question.

Quick question for you on Mocha actually, is that the reason it’s down 15% with revenues this quarter, is that primarily the smoking impact?

Hi Grant, it’s Ted here. You’re right, if you look at the number in compare to our peers around Macau and there’s a [indiscernible] and Cotai. Mocha is actually down Q-on-Q 15% or 16% year-on-year, I think that’s quite in line with the markets. If you look at the impact, we did a full analysis on the play minutes and play day. And Mocha it’s definitely, it’s actually smoking ban is definitely an issue. And it represents a majority of the impact on the decline.

Do you have any of the smoking lounges, or Mocha is now entirely smoke-free?

No, it’s entirely smoke-free.

Got it. And so I guess there’s a follow-up to that. Again I know it’s - or just because smoke is very convenience based, but what gives you the confidence that we wouldn’t see a similar type of impact should Macau go entirely smoke-free along with the elimination of smoking lounges?

If you look at the slot of performance, I can only speak on the advice of the MCE in terms of performance in COD and Mocha definitely because of some of the availability of the smoking lounges in COD that have a lower impact on smoking area. So if you take that as a sign in terms of customer behavior that definitely would bring these things down if it’s a total ban.

Grant, its Lawrence here. Of course we are concerned about the total ban, and we strongly believe that we should respect our customer’s rights and their preferences as well. And that’s why we strongly support having airport-style smoking lounges. Even if there’s a total smoking ban, we do not believe airport-style smoking lounges which already exists within both Hong Kong and Macau International Airports, to be in kind of - to contravene the ban. But I think at the same time, the difference between Mocha and some of the other casinos right now, is the fact that Mocha is smoke-free, whereas others still have the smoking lounges. So I think if it was a kind of a fair playing field, then perhaps the impact would be less.

And the next question comes from the line of John [indiscernible] of CLSA. Please ask your question.

Thank you for taking my question. If you guys can give us sense of your assessment today on the state of people capacity across the market today. Do you think that there’s a large amount of underutilized capacity based on the level of businesses that we're seeing?

John are you referring to tables or?

Tables, I’m referring specifically to tables.

Well I think I’ll let Ted jump in, but I think as a company, I think a lot of our competitors are doing it as well. We were one of the first companies to really optimize our table. So I think for at least three, four years we have been shifting tables between Altira to City of Dreams. And also from VIP to mass, trying to hit that equilibrium in terms of the EBITDA generation per table. But yes, we have had eight months of negative growth but I wouldn’t, I think the amount of visitors coming to Macau is higher than anything. They have had the strongest growth of years, but at the same time, it’s the average spend of the some of the higher end players that have fallen. So I don’t think it’s - I think Ted is best place to answer the question.

Yeah. I think the better way to look at is, I’m happy if we could give me another 300 tables, I’m happy to take it. And we can deploy easily with the right FDE to spread out our great table differentiation between different area. Right now we are very easy I think the team are very easy over the course of few quarter to optimize our tables on the casino floor. So yeah, I don’t think that Macau is already there. If you give me another 200, 300 tables, I’m very happy to take it.

Okay. And I guess if I can follow-up with, as we think about MS at the Studio of City tables that you’re asking for? And how should we think about the bare minimum number of tables that at least it would mean on the floor, to kind of make the economics workout. And how should we also think about the different, could be different scenarios that could happen based on the number of tables you’re allocated. How do you then decide what you think is the right split off or have you forgot allocation of what should be mass or what should be VIP? Given that there’s a risk that the table allocation could be underwhelming to your point earlier, that the rumors going around about one of the competitors that are opening, maybe getting a lot less tables. How do you think about the allocation strategy?

Hey John its Lawrence here. I think we've maintained from literally 2011 when we started designing this Studio City, which is, Studio City has capacity for over 500 tables. But we really believe given all the non-gaming investment, all the family friendly, and unique to Asia, and first in the world attractions that we're putting in there. That we should, I think, on a pound-for-pound basis these are more tables, and also for what we've done previously. We still believe that we really do need 400 tables to make the casino kind of happening and busy. I think scenarios that, we have worked on scenarios where, fewer tables than that, but it would be less than optimal. And I think ultimately, as a management team, Melco Crown, we care about the interest of our Melco Crown shareholders first and foremost. Of course as a - one of the licensees, we have the ability to transfer table from one property to another. But at the same time given the shareholding of Studio City it makes it more complicated. And we would need to do a lot more modelling to really look out for the best interests of Melco Crown shareholders.

And the next question comes from the line of Praveen Choudhary of Morgan Stanley. Please ask your question.

I have couple of questions. The first question is related to margin. If we look at year-over-year number, your mass revenue and slot revenue for City of Dreams is down marginally, I would say flattish. VIP is down a lot, but assuming that VIP is kind of variable cost that’s - I’m surprised why the margin overall as a group for year-over-year is down so much. Can you talk a little bit about that?

Relative to expectation, there was about 5 million of incremental retention cost. And I suppose we’ll leave it to you and your colleagues on the sell side to determine whether or not the $10 million to $15 million adjustment for the mass market hold rate is something that you like to apply when you do your financial analysis. But the only other thing I would point out, I suppose, is that if you look at the face of the P&L because of seasonality there were more dark days at The House Dancing Water, you see the impact on entertainment there that has very high slow through. So you put together operating leverage mix the retention scheme, mass market hold rates, and entertainment revenue, and I think that hopefully sheds some light on the sequential margin performance.

That makes sense. Two more simple questions. One, in Altira you mentioned that you’ve added some - and the volume did pickup, but from a profitability perspective again, EBITDA perspective Altira was also down quarter-on-quarter. Anything you can talk about, and then maybe the final question I have is about smoking ban. There were some fine that the Health Department put through for MPEL. I’m just trying to understand if that has been resolved, and what’s the current status of those premium mass areas where you allow smoking, because it’s considered VIP.

I think on the first question on Altira, I’ll let Ted jump in, but I think Altira as we said in the prepared remarks. We have moved towards out the years from having the Amax days, we finally kicked out quite a lot of the smaller and less high quality junkets. And we have moved forward with going with some of the bigger boys. And the rooms that we have created for them, probably some of the nicest VIP junket rooms ever seen anywhere in Macau. And I think that’s why they are seeing that even though Altira is kind of on its own in terms of location. I think that’s why we are gradually opening up and doing better. And I think before Chinese New Year, we have another two very nice salons opening up for them. So I think there are much better days ahead for Altira and it’s on the way up. So I maybe let Ted jump in.

Yeah on this front you are right. We are heading to Sun City, but I think there is still little bit of time to ramp up during the fourth quarter. And I think in the beginning of this year –. And it’s actually doing quite well I must say that’s why I think our rolling chip market shares also hit hard, record high for this company. Adding that we will add another sizeable quality junket operator in Altira next week. And also we remodel a little bit on the junket operation rooms in Altira and which will be also open for business next week. So basically Altira is transformed and into the place whereby we have three biggest junket operator out of four, four biggest to operate in Macau - in Altira and operating from next week onward.

I think Praveen, on your last question about smoking. I think we continue to maintain the same view, which is we're totally respectful and in 100% compliance of what is written in the law. And so I think there’s a kind of a difference of interpretation between us and one of the government departments. In terms of the fine, I don’t think we have a legal department colleague here, but I really have to ask what we're doing on that front. But again, I think it’s a minor fine for not posting signage’s. And so I think by no means is it a major offence, but again, we're fully respectful, I think the data we see something written in black and white and in the log we would comply with it right away.

Congratulations for opening the City of Dreams Manila.

And the next question comes from the line of Brian Han of Morningstar. Please ask your question.

Just a couple of questions. Firstly, can you please comment on whether there’s been any change in the productivity per table torrential between your two properties over the past few months? And secondly, apologies for sounding perhaps a little skeptical, but can you elaborate on what’s so unique about your player management system that’s allowing you to continue taking share in the market, thanks?

Let me just jump to your second question, I think I missed the first one. In terms of how do we maintain that? We would definitely accumulate three to four years’ experience with those dynamic pricing in terms of efficiency of the tables, which is what we invented about three or four years ago. But at the same time, I think the most important thing really is actually the both non-gaming, and also the F&B introduction into the picture, whereby it really, really improve the playtime, or play minutes of the customer, when they come to our property. So if you look at the whole percentage compared to our peers, is way, way higher, if you look at that parameters. So we continue to look at that, and also, apart from the efficiency of the table, but also we are looking at the right of products to serve the right customer. In our property in COD basically these alignments with the high-end premium mass which is so important into the provisioning. So we are quite confident that we can actually maintain that, and also evidenced by the numbers in the last few quarters. And could you repeat your first question about the productivity?

Yeah, there’s always been a real diversions between City of Dreams and Altira in terms of productivity per table. And I know moving towards higher junket, higher quality junkets, what’s going to improve that. And I was just wondering whether that improvement is coming through over the past few months?

It’s a major improvement in terms of productivity in the VIP area basically, I think, coming from Altira in the fourth quarter, particularly in the later part of fourth quarter. And I must say at this point, the VIP productivity is quite close, in terms of two properties in VIP productivities, so that’s a quite improvement. For the mass table productivity, or yield if you like, of course we added some more tables in the fourth quarter of the year. So I think it’s actually down to somewhere close to $120,000 per table, per day for the mass at this stage.

And the next question comes from the line of Harry Curtis of Nomura. Please ask your question.

Two questions, first on the mass piece, if you could describe the promotional environment year-to-date in the mass segment, and whether or not it’s been relatively stable, or do you see signs of it intensifying?

It’s Ted here. In terms of the promotion environment, we would like to take it as a reinvestment onto our customers. So we really did into a deep investigation over the last few weeks for this year, and also at the end of last year. Basically the reinvestment to the mass, particularly in premium mass area it stayed quite flat in terms of Q3 and Q4. That really suggest that our peers in terms our other operators in Macau really, really rationally reacting to the current issue, accelerate issue. So we are not compromising on the margin basically. So I must say Q3, Q4, in terms of reinvestment, is quite similar across these two quarters.

Okay. And then my second question is related to Studio City and how the government would like to see operators increase the mix of their tourist customer. So once you’ve open Studio City, can you describe how you plan to approach mix between casino customers and your leisure/tourist customers?

Hey Harry its Lawrence here. Haven’t spoken to you for a while, hope you’re well. In terms of Studio City it is designed with a lot of non-gaming attractions inline. So, and since it’s situated literally 30 seconds walk from the Lotus Bridge border, I think on top of gaming customers who tend to need one rooms. We’ll also appeal to the customers who might be staying over in Hengqin Island because it’s so convenient, and for families to come over. So I think Studio City without sacrificing the rooms for really non-players, the rooms will still be for non-players but then we’ll also get a nice mix of day trippers who are players, and also day trippers who are purely there for the attraction. Then as I mentioned earlier on the, Batman, Warner Bros., kind of family entertainment center, House of Magic. There’s plenty to do, there’s more than enough to do for leisure seekers and also for families. We probably have more things to do within Studio City than the entire Macau combined right now. So it will be, I think again it ticks all the boxes from the government’s perspective. So we are hopeful that creating the next standalone integrator resort to open, that the government will reward us with more tables than doing an expansion piece.

There are no further question at this time. I would now like to hand the conference back to today’s speaker. Mr. Davis, back to you.

Thanks everyone for your time today.