GEG Reports Q4 & Annual 2020 Results
Tokyo, 25 February 2021 – Galaxy Entertainment Group (“GEG”, “Company” or the “Group”) (HKEx stock code: 27) today reported results for the three month and twelve month periods ended 31 December 2020. (All amounts are expressed in HKD 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 in 2020. COVID-19 has continued to impact the community and businesses globally including Macau and GEG. In Q4 2020, Mainland China, Hong Kong and Macau continued to experience travel restrictions and social distancing measures as they continued to effectively contain the pandemic. Given the subdued revenue the Group’s Adjusted EBITDA was $1.0 billion for the fourth quarter. This represents a 207% improvement compared to the Adjusted EBITDA loss of $0.9 billion reported in Q3. This improvement was largely driven by an increase in visitation which translated into increased revenue and continuing cost control. The full year Adjusted EBITDA was $(1.0) billion versus $16.5 billion in 2019.
We again applaud the Macau Government for their proactive leadership during the challenging pandemic crisis. Their focus is not only to ensure the health and safety of the community, but also ensuring that Macau is well positioned to attract visitors, support economic recovery and maintain the social stability of Macau.
We continue to make good progress with our development projects including Cotai Phases 3 & 4. In the meanwhile, we renovate, reconfigure and introduce new products to our resorts. In addition, we remain engaged in our international expansion plans including Japan, which is also being impacted by the pandemic.
Due to our conservative financial management, the Group’s net cash as at year end provides us with valuable flexibility in managing our ongoing operations and allows us to continue with our longer term development plans.
In the Macau Policy Address for 2021, Chief Executive Mr. Ho Iat Seng stated that the Government will promote the stable and healthy development of the gaming industry, and to commence preparatory and preliminary work for the new gaming concessions. We are looking forward to the launching of the public consultation in the 2H 2021.
Upholding the philosophy of “what is taken from the community is to be used for the good of the community”, we have been proactively supporting Macau and the Mainland during this epidemic. GEG has been working with the community to combat the outbreak through an array of practical initiatives, including: offering cash donations, donating hygiene & essential supplies, supporting local SMEs and providing timely assistance to numerous non-profit welfare and social service organizations and schools. In addition, GEG also adopted and supported all protective measures laid out by the Health Bureau of the Macau SAR Government and strengthened the epidemic prevention measures within our resorts.
In the medium to longer term, we have great confidence in the future of Macau. We have seen signs of early recovery post the reinstatement of the IVS in late September 2020 and it may take a few more quarters for business volumes to ramp up. However, we do acknowledge the ongoing difficulties associated with COVID-19 and potential future flare ups of COVID-19 could have a material adverse impact on our financial performance. Given the uncertainty caused by the COVID-19 pandemic, today the Board of Directors has decided not to declare a dividend.
We are pleased to hear that Macau and other locations are proceeding with their COVID-19 vaccination rollout plans. We believe that when Mainland and international tourists make future travel plans, health and safety will be foremost in their minds.
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 various cost savings programs 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
Q4 & FULL YEAR 2020 RESULTS HIGHLIGHTS
GEG: Well Capitalized to Weather the Storm
- Full Year Group Net Revenue of $12.9 billion, down 75% year-on-year
- Full Year Group Adjusted EBITDA of $(1.0) billion versus $16.5 billion in 2019
- Full Year Group net profit attributable to shareholders (“NPAS”) of $(4.0) billion, down 130% year-on-year including $746 million of non-recurring and other charges
- Full year Adjusted NPAS of $(3.2) billion, down 123% year-on-year after adjusting for non-recurring and other charges
- Q4 Group Net Revenue of $5.1 billion, down 61% year-on-year and up 229% quarter-on-quarter
- Q4 Group Adjusted EBITDA of $1.0 billion, down 75% year-on-year and up 207% quarter-on-quarter
- Played unlucky in Q4 which decreased Adjusted EBITDA by approximately $59 million, normalized Q4 Adjusted EBITDA of $1.1 billion, down 73% year-on-year and up 214% quarter-on-quarter
Galaxy MacauTM: Adjusting Operations to the Current Business Environment
- Full Year Net Revenue of $7.8 billion, down 79% year-on-year
- Full Year Adjusted EBITDA of $(0.9) billion versus $12.6 billion in 2019
- Q4 Net Revenue of $3.3 billion, down 64% year-on-year and up 430% quarter-on-quarter
- Q4 Adjusted EBITDA of $0.7 billion, down 77% year-on-year and up 193% quarter-on-quarter
- Played unlucky in Q4 which decreased Adjusted EBITDA by approximately $41 million, normalized Q4 Adjusted EBITDA of $0.8 billion, down 74% year-on-year and up 199% quarter-on-quarter
- Hotel occupancy for Q4 across the five hotels was 49%
StarWorld Macau: Adjusting Operations to the Current Business Environment
- Full Year Net Revenue of $2.2 billion, down 80% year-on-year
- Full Year Adjusted EBITDA of $(0.3) billion versus $3.5 billion in 2019
- Q4 Net Revenue of $1.0 billion, down 64% year-on-year and up 380% quarter-on-quarter
- Q4 Adjusted EBITDA of $0.2 billion, down 81% year-on-year and up 167% quarter-on-quarter
- Played unlucky in Q4 which decreased Adjusted EBITDA by approximately $18 million, normalized Q4 Adjusted EBITDA of $0.2 billion, down 79% year-on-year and up 176% quarter-on-quarter
- Hotel occupancy for Q4 was 57%
Broadway Macau™: A Unique Family Friendly Resort, Strongly Supported by Macau SMEs
- Full Year Net Revenue of $94 million, down 84% year-on-year
- Full Year Adjusted EBITDA of $(0.2) billion, versus $39.0 million in 2019
- Q4 Net Revenue of $16 million, down 90% year-on-year, up 23% quarter-on-quarter
- Q4 Adjusted EBITDA of $(28) million, versus $(37) million in Q3 2020 and $16 million in Q4 2019
- There was no luck impact on Q4 Adjusted EBITDA
- Hotel occupancy for Q4 was 22%
Balance Sheet: Healthy and Liquid Balance Sheet
- As at 31 December 2020, cash and liquid investments were $46.0 billion and net cash was $36.8 billion
- As at 31 December 2020, debt was $9.2 billion, including $8.7 billion associated with our treasury yield enhancement program and $0.5 billion of core debt
Development Update: Continuing 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 project. We are also expanding our focus beyond Hengqin and Macau to potentially include opportunities within the rapidly expanding Greater Bay Area
- International – Continuously exploring opportunities in overseas markets, including Japan