GALAXY ENTERTAINMENT GROUP

Q2 & INTERIM RESULTS 2022

CONTINUE WORKING CLOSELY WITH MACAU COMMUNITY

TO CONTROL COVID-19

WELL PREPARED TO SUBMIT MACAU GAMING CONCESSION TENDER BY 14 SEPTEMBER

Q2 2022 GROUP ADJUSTED EBITDA OF $(0.4) BILLION,

VERSUS $1.1 BILLION IN Q2 2021 AND $0.6 BILLION IN Q1 2022

CONTINUE EFFECTIVELY CONTROLLING COSTS &

REMAINS FINANCIALLY HEALTHY

CONTINUE INVESTING IN MACAU'S FUTURE WITH COTAI PHASES 3 & 4

Hong Kong, 18 August 2022 - Galaxy Entertainment Group ("GEG", "Company" or the "Group") (HKEx stock code: 27) today reported results for the three-month and six-month periods ended 30 June 2022. (All amounts are expressed in Hong Kong dollars unless otherwise stated)

LETTER FROM THE CHAIRMAN OF GALAXY ENTERTAINMENT GROUP

I appreciate the opportunity to update you on GEG's most recent activities and financial results for the second quarter and first half of 2022. We continue to support the Macau Government by providing hotels for quarantine and medical personnel. We would also like to acknowledge and thank our staff for participating in our various voluntary community programs.

We are pleased to report that we successfully applied for and was granted an extension of our Macau gaming concession, which has been extended to the end of December 2022. The Government subsequently announced the tendering process on 29 July 2022 with submissions due by 14 September 2022. We are well positioned to compete for one of the Macau's gaming concessions, given our track record of introducing innovative non-gaming elements into our resorts, our strong operational history, significant investment into Macau's economy and our substantial CSR efforts including supporting SMEs. We look forward for the completion of the concession bidding process by year end.

A number of cities across China experienced travel restrictions for a significant part of the first half of 2022. These restrictions on inter-provincial travel impacted visitation to Macau and in turn adversely impacted both revenue and profitability. In addition, Macau experienced a COVID-19 outbreak and the Macau Government requested suspension of all commercial activities from 11 to 22 July 2022 which further impacted visitation, revenue and profitability. In Q2 2022, Group Net Revenue was $2.4 billion, down 56% year-on-year and down 41% quarter-on-quarter. Group Adjusted EBITDA was $(0.4) billion, versus $1.1 billion in Q2 2021 and $0.6 billion in Q1 2022.

Our balance sheet remains liquid and healthy. As of 30 June 2022, cash and liquid investments were $29.0 billion and net cash was $20.3 billion. Core debt remains relatively unchanged at $0.3 billion. This provides us with valuable flexibility in managing operations and supporting our development initiatives. Given the ongoing impact of COVID-19, today the Board of Directors has decided not to declare a dividend. We paid the previously announced special dividend of $0.30 per share on 29 April 2022.

During the quarter, we optimized our City Club operations and ceased business at Rio Casino and President Casino. All gaming related staff have been reassigned to our other properties.

1 | P a g e

Moving on to our development update, we continue to make ongoing progressive enhancements to our resorts to ensure that they remain competitive and appealing to our guests. We also continue to invest in Macau with our Cotai Phase 3 effectively completed and continue to move forward with Phase 4, our next generation integrated resort, which will complete our ecosystem in Cotai. As you can see, we remain confident about the future of Macau where Cotai Phases 3 & 4 will support Macau's vision of becoming a World Centre of Tourism and Leisure.

Going forward in the medium to longer term, we remain confident in the future of Macau. However, we do acknowledge that further potential outbreaks of COVID-19 may impact our future financial performance. Finally, I would again like to thank the Macau Government 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 throughout the pandemic. Thank you.

Dr. Lui Che Woo

GBM, MBE, JP, LLD, DSSc, DBA

Chairman

2 | P a g e

Q2 & Interim 2022 RESULTS HIGHLIGHTS

GEG: Continues to be Impacted by COVID-19 and Travel Restrictions

  • 1H Group Net Revenue of $6.5 billion, down 39% year-on-year
  • 1H Group Adjusted EBITDA of $191 million, down 90% year-on-year
  • 1H Net Loss Attributable to Shareholders of $850 million, versus profit of $947 million in 1H 2021
  • Q2 Group Net Revenue of $2.4 billion, down 56% year-on-year and down 41% quarter-on-quarter
  • Q2 Group Adjusted EBITDA of $(384) million, versus $1,132 million in Q2 2021 and $575 million in Q1 2022
  • Normalized Q2 Adjusted EBITDA was $(408) million after adjusting for good luck of $24 million
  • Latest twelve months Adjusted EBITDA of $1.7 billion, down 16% year-on-year and down 47% quarter-on- quarter

Galaxy MacauTM: Continues to be Impacted by COVID-19 and Travel Restrictions

  • 1H Net Revenue of $4.5 billion, down 38% year-on-year
  • 1H Adjusted EBITDA of $536 million, down 68% year-on-year
  • Q2 Net Revenue of $1.4 billion, down 62% year-on-year and down 53% quarter-on-quarter
  • Q2 Adjusted EBITDA of $(188) million, versus $924 million in Q2 2021 and $724 million in Q1 2022
  • Normalized Q2 Adjusted EBITDA was $(212) million after adjusting for good luck of $24 million
  • Hotel occupancy for Q2 across the five hotels was 28%

StarWorld Macau: Continues to be Impacted by COVID-19 and Travel Restrictions

  • 1H Net Revenue of $644 million, down 67% year-on-year
  • 1H Adjusted EBITDA of $(216) million, versus $305 million in 1H 2021
  • Q2 Net Revenue of $220 million, down 76% year-on-year and down 48% quarter-on-quarter
  • Q2 Adjusted EBITDA of $(158) million, versus $135 million in Q2 2021 and $(58) million in Q1 2022
  • There was no luck impact on Q2 Adjusted EBITDA
  • Hotel occupancy for Q2 was 33%

Broadway Macau™: Continues to be Impacted by COVID-19 and Travel Restrictions

  • 1H Net Revenue of $31 million, up 7% year-on-year
  • 1H Adjusted EBITDA of $(36) million, versus $(43) million in 1H 2021
  • Q2 Net Revenue of $15 million, versus $14 million in Q2 2021 and $16 million in Q1 2022
  • Q2 Adjusted EBITDA of $(19) million, versus $(20) million in Q2 2021 and $(17) million in Q1 2022
  • There was no luck impact on Q2 Adjusted EBITDA
  • Hotel occupancy for Q2 was 32%

Balance Sheet: Maintain a Healthy and Liquid Balance Sheet

  • As at 30 June 2022, cash and liquid investments were $29.0 billion and net cash was $20.3 billion
  • As at 30 June 2022, core debt was $0.3 billion
  • Given the ongoing impact of COVID-19, today the Board of Directors has decided not to declare a dividend. We paid the previously announced special dividend of $0.30 per share on 29 April 2022

Development Update: Continue 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 - Phase 3 is effectively completed and our efforts are firmly focused on the development of Phase 4. Phases 3 & 4 have a strong focus on non-gaming, primarily targeting MICE, entertainment, family facilities and also include gaming
  • Will align the opening of Raffles at Galaxy Macau with prevailing market conditions, followed by the opening of Galaxy International Convention Center ("GICC") and Andaz Macau, while proceeding with the construction of remaining phases

3 | P a g e

Macau Market Overview

The performance of tourism and gaming industries were adversely impacted by travel restrictions and a COVID-19 outbreak in Macau during Q2 and 1H 2022. Based on DICJ reporting, Macau's Gross Gaming Revenue ("GGR") for Q2 2022 was $8.2 billion, down 67% year-on-year and down 52% quarter-on- quarter.

In Q2 2022, due to increased cases of COVID-19 and the associated travel restrictions and quarantine rules, visitor arrivals to Macau were 1.6 million, down 27% year-on-year and down 15% quarter-on- quarter. Visitor arrivals from the Mainland were 1.4 million, down 29% year-on-year and down 18% quarter-on-quarter. Overnight visitors were 0.5 million, down 49% year-on-year and down 14% quarter- on-quarter.

Group Financial Results

1H 2022

The Group's 1H 2022 results posted Net Revenue of $6.5 billion, down 39% year-on-year and Adjusted EBITDA was $191 million, down 90% year-on-year. Net loss attributable to shareholders was $850 million, versus profit of $947 million in 1H 2021. Galaxy Macau™'s Adjusted EBITDA was $536 million, down 68% year-on-year. StarWorld Macau's Adjusted EBITDA was $(216) million, versus $305 million in 1H 2021. Broadway Macau™'s Adjusted EBITDA was $(36) million, versus $(43) million in 1H 2021.

In 1H 2022, GEG experienced good luck in its gaming operation, which increased its Adjusted EBITDA by approximately $27 million. Normalized 1H 2022 Adjusted EBITDA was $164 million, down 91% year- on-year.

GEG Adjusted EBITDA (HK$'m)

$1,991

$1,546

$1,688

$1,217

SW,

CC,

$191

$69

$19

$305

CC,

CC,

$536

$531

$32

$445

$30

$289

Reversal, $168

$(434)

BW,

$(430)

BW,

$(401)

$(43)

$(41)

$(216)

BW,

$(36)

2021 1H

2021 2H

2022 1H

Galaxy Macau™

StarWorld Macau

Broadway Macau™

City Clubs

Construction Materials

Corporate Costs

Expense Reversal (Corporate)

4 | P a g e

The Group's total GGR on a management basis1 in 1H 2022 was $4.8 billion, down 51% year-on-year. Mass GGR was $3.8 billion, down 35% year-on-year. Rolling chip GGR was $719 million, down 79% year-on-year. Electronic GGR was $238 million, down 29% year-on-year.

Group Key Financial Data

(HK$'m)

1H 2021

1H 2022

Revenues:

Net Gaming

7,841

4,130

Non-gaming

1,389

1,079

Construction Materials

1,431

1,315

Total Net Revenue

10,661

6,524

Adjusted EBITDA

1,991

191

Gaming Statistics2

(HK$'m)

1H 2021

1H 2022

Rolling Chip Volume

99,9713

21,5604

Win Rate %

3.5%

3.3%

Win

3,506

719

Mass Table Drop5

24,465

14,073

Win Rate %

24.2%

27.1%

Win

5,910

3,817

Electronic Gaming Volume

8,996

7,019

Win Rate %

3.7%

3.4%

Win

333

238

Total GGR Win6

9,749

4,774

Q2 2022

In Q2 2022, the Group posted Net Revenue of $2.4 billion, down 56% year-on-year and down 41% quarter-on-quarter. Adjusted EBITDA was $(384) million, versus $1,132 million in Q2 2021 and $575 million in Q1 2022. Galaxy Macau™'s Adjusted EBITDA was $(188) million, versus $924 million in Q2 2021 and $724 in Q1 2022. StarWorld Macau's Adjusted EBITDA was $(158) million, versus $135 million in Q2 2021 and $(58) million in Q1 2022. Broadway Macau™'s Adjusted EBITDA was $(19) million versus $(20) million in Q2 2021 and $(17) million in Q1 2022.

Latest twelve months Adjusted EBITDA was $1.7 billion, down 16% year-on-year and down 47% quarter- on-quarter.

  1. The primary difference between statutory gross revenue and management basis gross revenue is the treatment of City Clubs revenue where fee income is reported on a statutory basis and gross gaming revenue is reported on a management basis (only up to 26 June 2022). At the Group level the gaming statistics include Company owned resorts plus City Clubs.
  2. Gaming statistics are presented before deducting commission and incentives.
  3. Represents sum of junket VIP and inhouse premium direct.
  4. Represents inhouse premium direct.
  5. Mass table drop includes the amount of table drop plus cash chips purchased at the cage.
  6. Total GGR win includes gaming win from City Clubs.

5 | P a g e

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Galaxy Entertainment Group Limited published this content on 18 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2022 04:43:02 UTC.