Galaxy Entertainment Group Announces 2013 Q2 and Interim Results

       Galaxy Entertainment Group Announces 2013 Q2 and Interim Results

RECORD HALF YEAR GROUP ADJUSTED EBITDA OF $5.8 BILLION, UP 23% YEAR-ON-YEAR

NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS GREW 35% TO $4.6 BILLION

FURTHER STRENGTHENED LIQUID BALANCE SHEET WITH 35% REDUCTION IN BORROWINGS

PHASE 2 OF GALAXY MACAU™ ON SCHEDULE AND ON BUDGET TO COMPLETE AS THE NEXT
MAJOR PROJECT IN MACAU BY MID-2015

PR Newswire

HONG KONG, Aug. 20, 2013

HONG KONG, Aug. 20,2013 /PRNewswire-FirstCall/ -- Galaxy Entertainment Group
Limited ("GEG" or "the Group") (HKEx stock code: 27) today reported unaudited
results for the three and six month periods ended 30 June 2013. All figures
are in Hong Kong dollars unless otherwise stated.

HIGHLIGHTS

GEG: Record half year revenue, Adjusted EBITDA and NPAS

  oHalf year revenue increased 9% year-on-year to $30.8 billion
  oHalf year Adjusted EBITDA of $5.8 billion, up 23% year-on-year
  oSecond quarter Adjusted EBITDA of $3.02 billion, a year-on-year increase
    of 18%
  oNet profit attributable to shareholders increased by 35% year-on-year to
    $4.6 billion

GEG: Recognition and strategic acquisition

  oIncluded as a constituent of the benchmark Hang Seng Index effective from
    17 June 2013
  oCompleted strategic $3.25 billion acquisition of the Grand Waldo Complex
    on 17 July 2013

Galaxy Macau™: Quarterly Adjusted EBITDA grew for the 8^th consecutive quarter

  oHalf year revenue climbed 13% to $18.1 billion and Adjusted EBITDA rose
    40% to $4 billion
  oSecond quarter Adjusted EBITDA of $2.1 billion increased 34% year-on-year
  oAchieved the latest twelve months (LTM) Return on Investment (ROI*) of 45%
  oConstruction of Phase 2 is on budget and on schedule to complete by
    mid-2015
  oPlans for phases 3 & 4 are well advanced; construction targeted to
    commence by the end of 2013 / early 2014

StarWorld Macau: Improving momentum with second best quarter of Adjusted
EBITDA

  oHalf year revenue increased 2% year-on-year to $11.6 billion
  oHalf year Adjusted EBITDA of $1.7 billion (H1 2012: $1.8 billion)
  oSecond quarter Adjusted EBITDA of $885 million, the second best quarter 
  oAchieved LTM ROI* of 92%

Balance Sheet: Remains healthy with significant reduction in leverage 

  oCash on hand at 30 June 2013 of $18.1 billion, up from $15.6 billion at 31
    December 2012
  oSubsequently prepaid $3.5 billion of debt in early Q3 2013, which reduced
    borrowings by approximately 35% from $10.3 billion as of 30 June 2013 to
    $6.8 billion
  oGearing ratio remains at zero at 30 June 2013

* ROI calculated based on the total Adjusted EBITDA for the latest twelve
months divided by gross book value through 30 June 2013 including allocated
land cost.

Dr. Lui Che-woo, Chairman of GEG said:

"We are very pleased to report improving financial results across the business
and that Phase 2 of Galaxy Macau™ remains on schedule. The Group also expanded
its existing Cotai landbank with the strategic purchase of the Grand Waldo
Complex. We also strengthened our balance sheet by prepaying a significant
portion of our bank borrowings. I am particularly delighted that the half year
culminated in the Group being included as a constituent of the Hang Seng
Index.

Looking into the future, Macau's prospects for the remainder of 2013 and
beyond continue to be bright. We believe that our development pipeline for
Phases 2, 3 and 4 plus the Grand Waldo Complex on Cotai position us well for
continued growth."

Market Overview

The Macau gaming market experienced another robust period of growth as total
gaming revenue increased by 15% year-on-year to $166.5 billion. Revenue in the
second quarter grew by 16% year-on-year to an all-time record $83.7 billion.
Visitor arrivals in the first six months were 14.1 million, an increase of 4%
on the first half of 2012. Visitation from Mainland China grew at a faster
rate of 10%, with Mainland Chinese now accounting for 63% of total visitor
numbers.

The evolution in the market toward the mass segment continued in the first
half of the year, with higher margin mass revenue growing 30% year-on-year to
$47.1 billion. The Group expects the ongoing major improvements in
infrastructure and transport links over the coming years such as the expansion
of the Zhuhai Gongbei border gate and the Macau Taipa Ferry Terminal, the
construction of Macau's Light Rail and the Hong Kong-Zhuhai-Macau Bridge, to
dramatically improve access and boost visitation.

The VIP segment, which accounts for 68% of the total gaming revenue,
registered year-on-year growth of 10% to $112.5 billion, with over three
consecutive quarters of sequential growth indicating an improving trend.

Group Financial Results

The Group delivered a good performance in the first half of the year,
generating revenue of $30.8 billion and Adjusted EBITDA of $5.8 billion, an
increase of 9% and 23% respectively year-on-year. As of 30 June 2013, LTM
Group Adjusted EBITDA increased by 26% to $10.9 billion. Galaxy Macau™'s 40%
growth in Adjusted EBITDA was the key contributing factor to the uplift in
Group earnings. All parts of the business delivered year-on-year revenue
growth for the half year.

Of the gaming segments, mass once again recorded the fastest rate of growth as
Galaxy Macau™'s mass net win improved from $3.3 billion in H1 2012 to $4.8
billion in H1 2013, an increase of 45%. StarWorld Macau also achieved
excellent growth, with net win rising 50% from $1.1 billion in H1 2012 to $1.7
billion in H1 2013. The VIP performance at both properties was solid.

As of 30 June 2013, cash on hand increased to $18.1 billion from $15.6 billion
at 31 December 2012, including restricted cash of $2.2 billion. Subsequent to
period end, we reduced our borrowings by almost 35% by prepaying $3.5 billion
of bank debt where total debt declined from approximately $10.3 billion to
$6.8 billion on a pro forma basis.

Galaxy Macau™

In the first half of this year management focused on refining all elements of
Galaxy Macau™'s product offer with a view to yielding the floor space more
efficiently.

Galaxy Macau™'s status as the Group's growth engine was again exemplified by
it recording revenue of $18.1 billion, an increase of 13% against the same
period last year. Quarterly Adjusted EBITDA surged 34% to $2.1 billion,
representing the 8^th consecutive quarter of growth for the property.

Galaxy Macau™'s performance continues to improve with LTM ROI of 45%.

Adjusted EBITDA margin under HK GAAP rose from 18% in H1 2012 to 22% in H1
2013, and from 26% to 31% under US GAAP.

VIP Gaming Performance

Total VIP rolling chip volume for the period was $346 billion. This translated
to revenue of $11.9 billion (H1 2012: $11.4 billion). Volumes in Q2 increased
by 6% over Q1 2013.

VIP Gaming
HK$'m      Q2 2012 Q2 2013 YoY% 1H 2012 1H 2013 YoY%
Turnover   186,442 178,196 -4%  357,835 346,210 -3%
Net Win    6,287   5,965   -5%  11,407  11,875  4%
Win %      3.4%    3.3%    n/a  3.2%    3.4%    n/a

Mass Gaming Performance

Revenue in the mass market segment was $4.8 billion, up 45% on H1 2012. Second
quarter revenue increased by 48% year-on-year to $2.5 billion, and was up 12%
sequentially. These excellent growth rates are especially impressive in light
of additional new capacity in Cotai.

Mass Gaming
HK$'m      Q2 2012 Q2 2013 YoY% 1H 2012 1H 2013 YoY%
Table Drop 6,041   6,845   13%  11,912  13,539  14%
Net Win    1,717   2,538   48%  3,310   4,799   45%
Hold %     28.4%   37.1%   n/a  27.8%   35.4%   n/a

Electronic Gaming Performance

Electronic gaming revenue rose 30% year-on-year to $742 million. Second
quarter revenue increased 41% year-on-year and 7% quarter-on-quarter.

Electronic Gaming
HK$'m        Q2 2012 Q2 2013 YoY% 1H 2012 1H 2013 YoY%
Slots Handle 4,385   7,781   77%  8,731   13,968  60%
Net Win      271     383     41%  569     742     30%
Hold %       6.2%    4.9%    n/a  6.5%    5.3%    n/a

Non-Gaming Performance

Customers continued to utilise the property's wide range of retail, dining and
accommodation options. Year-on-year revenue increased by 4% to $720 million.
Hotel occupancy rate at the resort's three five star hotels remained very high
averaging 97% in the first six months of 2013.

Cotai Development Update

Construction of the 450,000 square metre Phase 2 of Galaxy Macau™ remains on
budget and on schedule where we expect to complete as the next major project
in Macau by mid-2015.

Planning for Phases 3 & 4 is almost finalised and construction targeted to
commence by the end of 2013 / early 2014. The project will double the
footprint of the first two phases and is targeted to complete in stages
between 2016-2018. Phases 3 & 4 will consist of a 10,000 seat arena for world
class entertainment and sporting events, a 50,000 square metre convention
centre for up to 5,000 guests and an additional 5,500 luxury hotel rooms and
suites. GEG expects it to prove instrumental in securing a significant share
of new visitors for the Group and Macau.

Strategic Acquisition of the Grand Waldo Complex

On 5 May 2013, GEG announced the $3.25 billion acquisition of the Grand Waldo
Complex. Located adjacent to Galaxy Macau™ and the Group's Cotai landbank,
the Grand Waldo Complex is strategically important to GEG for continuing its
development pipeline. The transaction subsequently completed in Q3 2013.

StarWorld Macau

StarWorld Macau's half year revenue was $11.6 billion, up 2% year-on-year, and
Adjusted EBITDA was in line with the same period last year at $1.7 billion.

The improving momentum of the business displayed in the first quarter of this
year carried through into the second quarter as mass continued to outperform
the wider market and VIP strengthened. 

StarWorld Macau continues to generate a LTM ROI in excess of 90% with 92%.

Adjusted EBITDA margin under HK GAAP was 15% in H1 2013 (H1 2012: 16%), and
25% under US GAAP (H1 2012: 26%).

VIP Gaming Performance

StarWorld Macau reported VIP rolling chip volume of $311 billion in the first
six months of 2013 (H1 2012: $339 billion), which translated into revenue of
$9.6 billion.

Positive signs of increased demand in the VIP market were evidenced by volumes
and win in both Q1 and Q2 of this year returning to their highest levels since
Q2 2012. Initiatives to re-energise the offer to ensure the property delivers
the very best quality VIP products and services in an aspirational environment
are ongoing.

VIP Gaming
HK$'m      Q2 2012 Q2 2013 YoY% 1H 2012 1H 2013 YoY%
Turnover   162,971 161,913 -1%  339,088 311,353 -8%
Net Win    5,115   4,807   -6%  9,869   9,612   -3%
Win %      3.1%    2.9%    n/a  2.9%    3.1%    n/a

Mass Gaming Performance

Mass gaming in the first half of the year grew by 50% year-on-year to $1.7
billion on volume of $5.3 billion.

Mass Gaming
HK$'m      Q2 2012 Q2 2013 YoY% 1H 2012 1H 2013 YoY%
Table Drop 2,374   2,663   12%  4,766   5,327   12%
Net Win    545     856     57%  1,109   1,658   50%
Hold %     22.5%   32.2%   n/a  22.9%   30.9%   n/a

Electronic Gaming Performance

StarWorld Macau's electronic gaming generated revenue of $112 million in the
first half of 2013, broadly in line with the same period last year.

Electronic Gaming
HK$'m        Q2 2012 Q2 2013 YoY% 1H 2012 1H 2013 YoY%
Slots Handle 835     777     -7%  1,762   1,675   -5%
Net Win      60      48      -20% 122     112     -8%
Hold %       7.2%    6.1%    n/a  6.9%    6.7%    n/a

Non-Gaming Performance

Non-gaming revenue in the period was $181 million. StarWorld Macau remains one
of Macau's premier luxury hotels with hotel room occupancy at near capacity
throughout the period at 99%.

City Clubs

During the first half of 2013, City Clubs generated $94 million of Adjusted
EBITDA, an increase of 15% year-on-year.

The Grand Waldo casino operations were subsequently suspended for renovation
as part of GEG's acquisition of the Grand Waldo Complex.

Construction Materials Division

Construction Materials Division continues to deliver a solid performance in
the first half of 2013. Revenue for the period grew 8% year-on-year to $1,013
million. First half Adjusted EBITDA was $191 million, a decrease of $37
million or 16% on H1 2012. The decrease in earnings was due primarily to the
softening selling price for cement and ground granulated blast-furnace slag in
some provinces in Mainland China.

Outlook

GEG has achieved a number of milestones in 2013, including record half year
net profit attributable to shareholders and record quarterly Group Adjusted
EBITDA exceeding $3 billion driven by strong performances at Galaxy Macau™ and
StarWorld Macau. In parallel to this, considerable progress has been made in
our future development including the construction of Phase 2 of Galaxy Macau™,
continued preparation of Cotai Phases 3 & 4 and the strategic acquisition of
the Grand Waldo Complex. We are especially proud that GEG has been recognised
by our inclusion as a constituent to the Hang Seng Index. Further, the
balance sheet improved with the prepayment of bank debt and remains very
liquid.

Looking ahead, the prospects for Macau and GEG for the rest of 2013 and beyond
are encouraging. GEG fully expects the shift in the market to mass to
continue, driven by major infrastructure and transport improvement, and VIP to
remain robust. Equipped with a clear roadmap for growth that includes
optimising our operational performance, and further out, developing our
unparalleled landbank in Cotai, GEG is confident that it can substantially
build its customer base and generate further value for both its stakeholders
and shareholders.

About Galaxy Entertainment Group Limited (HKEx stock code: 27)

Galaxy Entertainment Group Limited ("GEG") is one of Asia's leading gaming and
entertainment corporations, and is a member of the Hang Seng Index.

GEG develops and operates hotels, gaming and integrated resort facilities in
Macau, the only legal gaming location in China and the largest gaming
entertainment market in the world.

The two flagship properties of GEG include Galaxy Macau™, a world class
integrated destination resort opened in May 2011 at Cotai, and StarWorld Hotel
and Casino, an award-winning property opened in 2006 on the Macau peninsula.

In April 2012, GEG announced the development of Galaxy Macau™ Phase 2 that
will nearly double the size of the existing resort to one million square
metres. Upon its targeted completion by mid-2015, Galaxy Macau™ Phase 2 will
bring to Macau some of the most exciting entertainment, leisure, retail and
MICE facilities. In December 2012, GEG outlined its concept plans for Phases 3
& 4 of its Cotai landbank and expects to commence construction by the end of
2013 / early 2014 with a targeted phased opening between 2016 and 2018.

Additionally, GEG operates City Club Casinos in Macau and a Construction
Materials Division.

For more information, please visit www.galaxyentertainment.com.

For Media Enquiries:

Galaxy Entertainment Group
Mr. Peter J. Caveny                Ms. Yoko Ku
Vice President, Investor Relations Assistant Manager, Investor Relations
Tel: +852 3150 1111                Tel: +852 3150 1111
Email: ir@galaxyentertainment.com  Email: ir@galaxyentertainment.com
Ms. Kelrah Pang
Senior Manager, Investor Relations
Tel: +852 3150 1111
Email: ir@galaxyentertainment.com

SOURCE Galaxy Entertainment Group Limited

Website: http://www.galaxyentertainment.com/
 
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