GEG announces Selected Unaudited Q1 2021 Financial Data
Tokyo, 13 May 2021 – Galaxy Entertainment Group (“GEG”, “Company” or the “Group”) (HKEx stock code: 27) today reported results for the three month period ended 31 March 2021. (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 in Q1 2021. COVID-19 has continued to impact the community and businesses globally including Macau and GEG. We are encouraged by Macau’s gradual recovery and remain cautiously optimistic that business conditions will continue to improve, while, at the same time, remain hypersensitive about any future outbreaks of the pandemic. From the later part of 2020 and continuing into 2021, we started to see some easing of restrictions relating to COVID-19. As a result, Macau has experienced a gradual increase in visitor arrivals which has translated into increased revenue.
Group’s Q1 Adjusted EBITDA of $859 million more than tripled year-on-year and was down 15% quarter-on-quarter. Please note that even though Adjusted EBITDA in Q1 2021 was less than Adjusted EBITDA in Q4 2020, we are pleased with the outcome given that Q4 2020 included a one-off $100 million COVID-19 insurance claim. In addition, Construction Materials Division is historically seasonal softer in the first quarter compared to the other three quarters. Construction Materials Division contributed $156 million in Q1 2021 compared to $326 million in Q4 2020. This is an annual seasonal occurrence and we expect an improvement in Q2 2021. Further, GEG’s performance was also supported by continued effective cost controls across the Group.
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 are pleased that the Macau Government through the Macau Government Tourism Office (MGTO) has been actively touring numerous Mainland cities and actively promoting Macau. This marketing is positioning Macau’s track record in combating COVID-19, promoting the various health and safety measures implemented in Macau and offering special tourism and accommodation packages to encourage visitation to Macau. We will continue to work with and support this important government lead initiative.
On 15 May 2021, Galaxy Macau™ will celebrate an exceptional 10-year presence in Macau. Since our launch in 2011, Galaxy Macau™ has delivered the highest level of entertainment and leisure options and provided exceptional experiences to our guests from all over the world. We are pleased to report that we continue to make good progress with our expansion plans through our development projects including Cotai Phases 3 & 4. In addition, we continue renovate, reconfigure and introduce new products to our resorts and we remain engaged in our international expansion plans including Japan, which is also being impacted by the pandemic.
We were pleased to announce in March 2021 the introduction of the legendary Raffles at Galaxy Macau. Raffles at Galaxy Macau will feature an approximate 450 all-suite tower and is targeted to open in the later part of 2021 or early 2022. The addition of Raffles further expands GEG’s portfolio of world-class accommodation offerings.
Our balance sheet continues to remain healthy with $42.4 billion in cash and liquid investments as at the end of Q1 and $33.6 billion of net cash. Total debt was $8.8 billion, including $8.3 billion associated with our treasury yield enhancement program and $0.5 billion of core debt. Our conservative financial management provides the Group with valuable flexibility in managing our ongoing operations and allows us to continue with our longer term development plans.
Going forward in the medium to longer term, we remain confident in the future of Macau. We have seen signs of early recovery post the reinstatement of the Individual Visit Scheme (“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.
Finally, I would again like to acknowledge and thank the Government of Macau and 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
Q1 2021 RESULTS HIGHLIGHTS
GEG: Gradual Pandemic Recovery Continues Supported by Continued Effective Cost Control
- Q1 Group net revenue of $5.1 billion, up 1% year-on-year and flat quarter-on-quarter
- Q1 Group Adjusted EBITDA of $859 million, up 204% year-on-year and down 15% quarter-on-quarter
- Normalized Q1 Adjusted EBITDA was $690 million after adjusting for good luck of $169 million
- Latest twelve months Adjusted EBITDA of $(444) million, down 104% year-on-year and up 57% quarter-on-quarter
Galaxy MacauTM: Gradual Pandemic Recovery Continues
- Q1 net revenue of $3.4 billion, down 3% year-on-year and up 3% quarter-on-quarter
- Q1 Adjusted EBITDA of $764 million, up 132% year-on-year and up 4% quarter-on-quarter
- Normalized Q1 Adjusted EBITDA was $637 million after adjusting for good luck of $127 million
- Hotel occupancy for Q1 across the five hotels was 44%
StarWorld Macau: Gradual Pandemic Recovery Continues
- Q1 net revenue of $1.0 billion, up 1% year-on-year and up 6% quarter-on-quarter
- Q1 Adjusted EBITDA of $170 million, up 63% year-on-year and up 13% quarter-on-quarter
- Normalized Q1 Adjusted EBITDA was $128 million after adjusting for good luck of $42 million
- Hotel occupancy for Q1 was 62%
Broadway Macau™: A Unique Family Friendly Resort, Strongly Supported by Macau SMEs
- Q1 net revenue of $15 million, down 72% year-on-year and down 6% quarter-on-quarter
- Q1 Adjusted EBITDA of $(23) million, versus $(45) million in Q1 2020 and $(28) million in Q4 2020
- There was no luck impact on Q1 Adjusted EBITDA
- Hotel occupancy for Q1 was 9%
Balance Sheet: Healthy and Liquid Balance Sheet
- As at 31 March 2021, cash and liquid investments were $42.4 billion and net cash was $33.6 billion
- As at 31 March 2021, debt was $8.8 billion, including $8.3 billion associated with our treasury yield enhancement program and $0.5 billion of core debt
Development Update: Making Progress on Cotai Phases 3 & 4
- 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
- Target to open an exclusive all-suite tower, Raffles at Galaxy Macau in the later part of 2021/early 2022
- Greater Bay Area & Hengqin – We understand the strategic master plan might have been revised with more emphasis on strengthening ties with Macau’s plan for the future and the Macau community. It was reported that more information will be available shortly and we are eagerly awaiting the details. 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