Galaxy recently announced its 2008 annual results year ended 31st December and selected unaudited Q1 2009 results.
The highlights listed by the company included:
- • Galaxy posted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD544 million in 2008. The company said it had recorded three consecutive quarters of growth, including HKD233 million in Q1 2009 EBITDA—a 29 percent rise on the previous quarter.Robert Drake, Galaxy’s Chief Financial Officer, said the company was very pleased with the improvement in EBITDA margin.
“It’s associated with things like our cost savings initiative and managing other things pretty aggressively such as labour and marketing, along with other programmes,” Mr Drake told a press conference held in Hong Kong to announce the results.
Mr Drake added that the significant improvement in EBITDA margin for CityClubs was the result as reported in our March edition, of changing a revenue sharing deal with CityClubs’ external owners to a top line deal.
- • VIP volumes grew 17 percent to HKD55 billion against what Galaxy described as a market decline of 22 percent. Galaxy said its gaming market share in 2008 increased from 10 percent to 13 percent.
- • Group revenue was HKD10.5 billion in 2008 and HKD2.62 billion in the first quarter of 2009.
- • There was a loss attributable to shareholders of HKD11.39 billion in 2008, largely due to a HKD12.33 billion non-cash write-down of the intangible gaming licence.
- • Galaxy said an operational efficiency programme was ‘well advanced’ and was expected to generate savings of HKD200 million per annum.
- • Galaxy said the bond buy back programme the company concluded in January had reduced debt and interest payments and strengthened the balance sheet, with USD50 million of convertible bonds repurchased. The company added it had cash reserves of HKD4.7 billion.
- • GEG reiterated that construction of its Cotai integrated resort continued and that it would time the interior fitting and subsequent opening of the property to the public for when market conditions improved.Galaxy StarWorld
The company said results at StarWorld continue to improve and StarWorld has now delivered three consecutive quarters of EBITDA growth.In the first quarter of 2009, StarWorld’s EBITDA jumped 31 percent to HKD204 million, compared to the previous quarter. Galaxy said results were boosted by a 17 percent rise in VIP volume to HKD55 billion, against the VIP market’s overall decline of 22 percent.
The company said the increase in VIP volume highlighted the success of StarWorld’s strategies in response to the tougher market conditions, which included re-designing Level Three to serve VIP clients and opening a Sky Casino for VIP customers on Level 39.
Galaxy CityClubs
Galaxy said during 2008 CityClubs, in common with all the smaller casinos in Macau, were adversely affected by “significant new supply” entering the market. It said as a result the group restructured the management agreements, adjusted the business model and scale of operations and CityClubs have successfully returned to profitability.Galaxy Cotai
Francis Lui, Galaxy’s Vice Chairman, was asked during the earnings conference what effect he thought the opening of Melco Crown Entertainment’s City of Dreams would have on Cotai.“We hope CoD opens successfully, because I think it will show that the Macau market is on a recovery trend. As to whether it will have any impact on the [Macau] peninsula [operators] I think it will be a more mass market-centric hotel casino, whereas on the peninsula we find we are more VIP-centric, especially StarWorld, so my personal opinion is it will not have too much effect on StarWorld.”
Market outlook
The company identified four major events in 2009 that in its view will support the continued growth of Macau.“These are the election of a new Chief Executive of Macau, the election of a new legislative assembly, the celebration of the 60th anniversary of the establishment of the People’s Republic of China and the 10th anniversary of Macau’s return to China sovereignty. The Group believes these important events will be a catalyst for driving growth and development of Macau,” Galaxy said in a media release to accompany the results.
