GEG announces Selected Unaudited Q3 2020 Financial Data
Tokyo, 10 November 2020 – Galaxy Entertainment Group (“GEG”, “Company” or the “Group”) (HKEx stock code: 27) today reported results for the three month period ended 30 September 2020. (All amounts are expressed in Hong Kong dollars unless otherwise stated)
LETTER FROM THE CHAIRMAN OF GALAXY ENTERTAINMENT GROUP
I wish to take this opportunity to update you on the status of Macau and the performance of GEG during Q3 2020. COVID-19 has continued to impact the community and businesses globally including Macau and GEG. In Q3 2020, Mainland China, Hong Kong and Macau continued to experience proactive travel restrictions and social distancing measures as they all continued to effectively contain the pandemic. We are pleased that this contributed to the progressive reinstatement of the Individual Visitor Scheme (IVS) in Q3. However, the majority of Mainland cities only resumed IVS applications in late September, therefore visitation was not materially impacted in Q3 which will hopefully continue to ramp up in Q4. Given the subdued revenue and ongoing staff costs, the Group’s Adjusted EBITDA was negative $943 million for the third quarter. This represents a 31% improvement compared to the EBITDA loss reported in Q2, which was largely driven by greater emphasis on cost control.
We again applaud the Macau Government for their decisive and proactive leadership during the challenging COVID-19 crisis. Their focus remains on ensuring the health and safety of the community and economic and social stability of Macau. Their successful efforts contributed to Macau progressively re-opening its borders to China in a managed and sustainable way to ensure the ongoing effective control of COVID-19. GEG certainly supports the Macau Government’s efforts during this critical time.
We believe that when people make future travel plans, health and safety will be foremost in their minds at least until a COVID-19 vaccine is available. Given Macau’s commendable track record of controlling COVID-19, Macau is well positioned to attract visitors from throughout Asia. We continue to make good progress with our development projects including Cotai Phases 3 & 4.
During this period of low visitation to Macau, we have also taken this opportunity to renovate, reconfigure and introduce new products to our resorts to ensure they remain highly competitive and appealing to our guests. Our continuing investment in these projects help support the local economy in the near term and Macau Government’s vision to develop Macau into a World Center of Tourism and Leisure.
In addition, we remain engaged in our international expansion plans particularly in Japan. We understand that COVID-19 has impacted Japan’s timelines and understand that their schedule for accepting applications from local government and consortium parties has been extended to April 2022.
Our balance sheet continues to remain strong with $43.2 billion in cash at the end of Q3 and liquid investments and $39.7 billion of net cash as well as remaining virtually unlevered. This provides us with valuable flexibility in managing operations and supporting our development initiatives.
During this period of low revenue, we have continued to focus on effective cost control versus revenue generation. However, it is important not to cut costs excessively and therefore adversely impact our renowned “World Class, Asian Heart” service standards and customers experience. We remain committed to the Macau Government, local employment and SMEs.
Whilst it is pleasing to see a gradual increase in visitor arrivals to Macau with the reinstatement of IVS, we would expect a gradual increase in visitor arrivals as well as revenue over the coming quarters.
The management and staff continue to work diligently in regards to health, safety and hygiene. The wellbeing of our staff and guests is our highest priority. Furthermore, to support the Macau Government’s fight against COVID-19, the concessionaries of Macau, including GEG have established on-site COVID-19 testing facilities to enable customers to be tested.
As previously stated, GEG takes our corporate social responsibility seriously. It is worth restating that some of our efforts have included making a cash contribution of $100 million, to assist in the fight against COVID-19. In addition, the Galaxy Entertainment Group Foundation subscribed $100 million to a special purpose Macau COVID-19 Recovery Bond. We also donated 1 million face masks, financially contributed to the deep cleaning of 35 local schools, provided numerous food & hygiene hampers to the needy and provided support to the broader community to name a few.
In the medium and longer term, we have great confidence in the future of Macau. We believe that in the shorter term we may experience some challenges as we navigate through COVID-19 and the market will take some time to recover. This is attributable to cautious consumer sentiment in a recovering economy resulting from events such as the COVID-19 pandemic, the Sino-US trade war and an increased focus on capital outflows, among others.
Finally, I would again like to acknowledge and thank the health and emergency personnel who have worked so hard to ensure the safety of Macau. I would also like to thank our staff, management team and Board of Directors who voluntarily contributed to the cost savings program and for being so supportive of our Company during this period of time. Thank you.
Dr. Lui Che Woo
GBM, MBE, JP, LLD, DSSc, DBA
Q3 2020 RESULTS HIGHLIGHTS
GEG: Well Capitalized to Weather the Storm
- Q3 Group net revenue of $1.6 billion, down 88% year-on-year and up 34% quarter-on-quarter
- Q3 Group Adjusted EBITDA of $(943) million, Vs $4,112 million in Q3 2019 and $(1,370) million in Q2 2020
- Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $3 million, normalized Q3 Adjusted EBITDA of $(940) million, Vs $3,928 million in Q3 2019 and $(1,373) million in Q2 2020
- Latest twelve months Adjusted EBITDA of $2.0 billion, down 88% year-on-year and down 71% quarter-on-quarter
Galaxy Macau™: Adjusting Operations to the Current Business Environment
- Q3 net revenue of $626 million, down 93% year-on-year and up 101% quarter-on-quarter
- Q3 Adjusted EBITDA of $(788) million, Vs $3,172 million in Q3 2019 and $(1,177) million in Q2 2020
- Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $1 million, normalized Q3 Adjusted EBITDA of $(787) million, Vs $3,001 million in Q3 2019 and $(1,189) million in Q2 2020
- Hotel occupancy for Q3 across the five hotels was 20%
StarWorld Macau: Adjusting Operations to the Current Business Environment
- Q3 net revenue of $199 million, down 92% year-on-year and up 146% quarter-on-quarter
- Q3 Adjusted EBITDA of $(223) million, Vs $828 million in Q3 2019 and $(306) million in Q2 2020
- Played unlucky in Q3 which decreased Adjusted EBITDA by approximately $2 million, normalized Q3 Adjusted EBITDA of $(221) million, Vs $813 million in Q3 2019 and $(297) million in Q2 2020
- Hotel occupancy for Q3 was 10%
Broadway Macau™: A Unique Family Friendly Resort, Strongly Supported By Macau SMEs
- Q3 net revenue of $13 million Vs $141 million in Q3 2019 and $12 million in Q2 2020
- Q3 Adjusted EBITDA of $(37) million Vs $2 million in Q3 2019 and $(52) million in Q2 2020
- There was no luck impact on Q3 Adjusted EBITDA
- Hotel occupancy for Q3 was 16%
Balance Sheet: Maintain a Healthy and Liquid Balance Sheet
- As at 30 September 2020, cash and liquid investments were $43.2 billion and net cash was $39.7 billion
- As at 30 September 2020, debt of $3.5 billion primarily reflects ongoing treasury yield management initiative
Development Update: Continue to Pursue Development Opportunities
- Continue to make ongoing progressive enhancements to our resorts to ensure that they remain competitive and appealing to our guests
- Cotai Phases 3 & 4 – Continue with development works for Phases 3 & 4, with a strong focus on non-gaming, primarily targeting MICE, entertainment, family facilities and also including gaming, given COVID-19, timelines may be impacted
- Hengqin – Encouraged by recent strengthening of the relationship between Hengqin and Macau, continue with planning of our Hengqin resort
- International – Continuously exploring opportunities in overseas markets, including Japan