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Galaxy Entertainment Group Announces Selected Unaudited Q3 2018 Financial Data

October 29, 2018 Financial No Comments Email Email

Galaxy Entertainment Group (“GEG”, “Company” or the “Group”) (HKEx stock code: 27) today reported selected unaudited financial data for the three months period ended 30 September 2018. (All amounts are expressed in HKD unless otherwise stated)http://www.tourismthailand.org/landing/landing_en.html

Q3 2018 RESULTS HIGHLIGHTS

GEG: Delivered Solid Performance, Driven by Mass, VIP & Operational Execution, Despite Playing Unlucky

  • Q3 Group Net Revenue* of $13.0 billion, up 6% year-on-year and down 7% quarter-on-quarter
  • Q3 Group Adjusted EBITDA of $3.9 billion, up 10% year-on-year and down 10% quarter-on-quarter
  • Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $332 million, Normalized Q3 Adjusted EBITDA of $4.2 billion, up 16% year-on-year and down 6% quarter-on-quarter
  • LTM Adjusted EBITDA of $16.7 billion, up 29% year-on-year and up 2% quarter-on-quarter

Galaxy Macau™: Continued Solid Performance, Despite Playing Unlucky

  • Q3 Net Revenue* of $9.3 billion, up 7% year-on-year and down 6% quarter-on-quarter
  • Q3 Adjusted EBITDA of $3.0 billion, up 9% year-on-year and down 8% quarter-on-quarter
  • Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $323 million, Normalized Q3 Adjusted EBITDA of $3.3 billion, up 14% year-on-year and down 2% quarter-on-quarter
  • Hotel occupancy for Q3 across the five hotels was virtually 100%

StarWorld Macau: Continued Solid Performance Driven by Mass

  • Q3 Net Revenue* of $2.9 billion, up 7% year-on-year and down 5% quarter-on-quarter
  • Q3 Adjusted EBITDA of $927 million, up 16% year-on-year and down 6% quarter-on-quarter
  • Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $5 million, Normalized Q3 Adjusted EBITDA of $932 million, up 24% year-on-year and down 6% quarter-on-quarter
  • Hotel occupancy for Q3 was virtually 100%

Broadway Macau™: A Unique Family Friendly Resort, Strongly Supported By Macau SMEs

  • Q3 Net Revenue* of $145 million, up 38% year-on-year and up 11% quarter-on-quarter
  • Q3 Adjusted EBITDA of $9 million, versus $(4) million in prior year and $2 million in Q2 2018
  • Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $4 million, Normalized Q3 Adjusted EBITDA of $13 million, versus $(4) million in prior year and $4 million in Q2 2018
  • Hotel occupancy for Q3 was 96%

Balance Sheet: Healthy Balance Sheet

  • Cash and liquid investments were $43.3 billion and net cash of $34.7 billion as at 30 September 2018
  • Debt of $8.6 billion as at 30 September 2018, primarily reflects ongoing treasury yield management initiative
  • Paying the previously announced special dividend of $0.50 per share on 26 October 2018

Development Update: Continuing to Pursue Development Opportunities

  • Cotai Phases 3 & 4 — Continue to move forward with Phases 3 & 4, with a strong focus on non-gaming, primarily targeting MICE, entertainment, family facilities and also including gaming
  • Hengqin — Plans moving forward to develop a low-density integrated resort to complement our high-energy entertainment resorts in Macau
  • International — Continuously exploring opportunities in overseas markets, including Japan

*Net Revenue is calculated in accordance with the new accounting standard and the comparison percentage is over the restated Net Revenue in Q3 2017 and Q2 2018.

Dr. Lui Che Woo, Chairman of GEG said:

“I am pleased to report that GEG delivered solid results for the three months period ended 30 September 2018. Before going into details of our results I would like to make a few comments concerning super typhoon Mangkhut which impacted Macau last month.

On 16 September 2018 Macau experienced super typhoon Mangkhut which was reportedly as strong as Hato in August last year. Macau saw significantly less damages and injuries during this No. 10 typhoon Mangkhut, thanks to the precautionary measures taken by the Macau SAR Government and the community, including team members of GEG.

Firstly I would like to thank the Macau SAR Government for their leadership during this challenging event. I would also acknowledge the significant efforts of the civil protection teams, the broader community, our staff and fellow Concessionaires. Significant advanced warning was given which allowed for timely preparation. The Concessionaires, including GEG, worked closely with the Government both pre and post typhoon and helped the community recover from the event. In all, with strong leadership, active community involvement and careful preparation, Macau was substantially less impacted by typhoon Mangkhut when compared to previous typhoons.

Despite increased competition, with new property openings both in Macauand regionally, GEG delivered solid results with Q3 Adjusted EBITDA growing 10% year-on-year to $3.9 billion. It should be noted that during the quarter gaming operations played unlucky which reduced EBITDA by approximately $0.3 billionAdditionally Macau experienced adverse impacts from both the World Cup in July and typhoon Mangkhut in September. We continue to drive every segment of our business with a particular focus on yielding our resorts. GEG’s renowned ‘World Class, Asian Heart’ service combined with our differentiated resorts offerings have resulted in our portfolio of hotels reporting virtually full occupancy.

GEG remains financially healthy with a solid balance sheet. Our balance sheet combined with substantial cash flow from operations allows us to return capital to shareholders through special dividends and to fund our development pipeline and international expansion plans. These include Cotai Phases 3 & 4, Hengqin and JapanOn 26 October 2018 we will pay the previously announced special dividend of $0.50 per share.

The continued growth in the rapidly emerging and underpenetrated middle-class in Mainland China and their demand for leisure and travel gives us confidence in the longer term outlook for Macau. However, I do acknowledge that the current international trade tensions, rising interest rates and a slowing economy may impact consumer sentiment in the short term. We are committed to support the Macau SAR Government’s vision to develop Macau into a World Centre of Tourism and Leisure.   

I am very proud of our team members and I would like to take this opportunity to express my sincere gratitude to our executive team and all team members for their commitment and efforts in delivering these results, especially during typhoon Mangkhut.”           

Macau Market Overview

Macau’s Gross Gaming Revenue (“GGR”) for Q3 2018 was $71.7 billion, up 10% year-on-year and flat quarter-on-quarter. This is the 9th reported consecutive quarter of YoY growth. These results were achieved despite the negative impact of super typhoon Mangkhut.

During the period, visitor arrivals to Macau were 9.0 million, up 9% year-on-year, in which visitors from Mainland China grew at a faster rate of 13%. Overnight visitors grew 7% year-on-year, with the average length of stay rising by 0.1 day year-on-year to 2.27 days.

Group Financial Results

Q3 2018

During Q3 2018, the Group’s net revenue increased 6% year-on-year and decreased 7% quarter-on-quarter to $13.0 billion. Adjusted EBITDA increased 10% year-on-year and decreased 10% quarter-on-quarter to $3.9 billion. Galaxy Macau™’s Adjusted EBITDA increased 9% year-on-year and decreased 8% quarter-on-quarter to $3.0 billion. StarWorld Macau’s Adjusted EBITDA increased 16% year-on-year and decreased 6% quarter-on-quarter to $927 million. Broadway Macau™’s Adjusted EBITDA was $9 million versus $(4) million in Q3 2017 and $2 million in Q2 2018.

Latest twelve months Group Adjusted EBITDA was up 29% year-on-year and up 2% quarter-on-quarter to $16.7 billion.

During Q3 2018, GEG played unlucky in its gaming operations which decreased Adjusted EBITDA by approximately $332 million. Normalized Q3 2018 Adjusted EBITDA grew 16% year-on-year and decreased 6% quarter-on-quarter to $4.2 billion.

The Group’s total GGR on a management basis[1] in Q3 2018 was $15.8 billion, up 6% year-on-year and down 8% quarter-on-quarter. Total mass table GGR was $6.6 billion, up 8% year-on-year and down 3% quarter-on-quarter. Total VIP GGR was $8.6 billion, up 5% year-on-year and down 12% quarter-on-quarter. Total electronic GGR was $0.6 billion, up 10% year-on-year and up 8% quarter-on-quarter.

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