Galaxy Entertainment Group Selected Unaudited Q1 2022 Financial Data

Continue Working Closely With Macau Community To Control COVID-19

Q1 2022 Group Adjusted EBITDA of $575 Million, Down 33% Year-on-Year

Continue Investing in Macau’s Future with Cotai Phases 3 & 4

Paid Special dividend of $0.30 per Share on 29 April 2022

HONG KONG--(BUSINESS WIRE)--Galaxy Entertainment Group (“GEG”, “Company” or the “Group”) (HKEx stock code: 27) today reported results for the three month period ended 31 March 2022. (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 Macau market and our financial performance in Q1 2022. COVID-19 has continued to impact the community and businesses globally including Macau and GEG. The Group’s Q1 Adjusted EBITDA was $575 million, down 33% year-on-year and down 45% quarter-on-quarter. The decrease in Adjusted EBITDA is a result of recent outbreaks of COVID-19 in greater China. This resulted in tightening visitation policy to preserve public health and safety which, unfortunately, adversely impacted visitation to Macau and, in turn, revenue and profitability.

Whilst we experienced a modest uptick in visitation over the May Labor Holiday we do acknowledge it still remains well below pre-pandemic levels. During the May Labor Holiday our integrated resorts were more active including our hotels and restaurants among others. We believe that this bodes well for the future recovery of Macau as it signals pent up demand for leisure, tourism and travel.

Our balance sheet continues to remain solid in this challenging period with net cash of $24.5 billion where we continue to invest in GEG and Macau’s future with Cotai Phases 3 & 4. We are also pleased to report that we paid the previously announced special dividend of $0.30 per share on 29 April 2022. This attests to our long term confidence in Macau, our financial strength and our future earnings potential as we continue to navigate through the pandemic headwinds.

In regards to future development, Phase 3 is effectively completed and we continue to move forward with Phase 4. We continue our commitment to support the Macau government in its economic recovery and maintain the social stability of Macau. Notwithstanding the current economic environment, we continue with our disciplined approach to exploring opportunities within Mainland China with a particular focus on the Greater Bay Area.

We are pleased to report that in April 2022 we applied for an extension of our concession to 31 December 2022. We remain supportive of the regulatory process in Macau including a number of gaming related legislative initiatives and are also preparing for the forthcoming gaming concession tendering process.

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 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 throughout the pandemic. Thank you!

Dr. Lui Che Woo
GBM, MBE, JP, LLD, DSSc, DBA
Chairman

Q1 2022 RESULTS HIGHLIGHTS   GEG: Continues to be Impacted by COVID-19 and Travel Restrictions Q1 Group Net Revenue of $4.1 billion, down 20% year-on-year and down 14% quarter-on-quarter Q1 Group Adjusted EBITDA of $575 million, down 33% year-on-year and down 45% quarter-on-quarter Normalized Q1 Adjusted EBITDA was $572 million after adjusting for good luck of $3 million, versus $751 million in Q1 2021 and $920 million in Q4 2021 Latest twelve months Adjusted EBITDA of $3.3 billion, up significantly year-on-year and down 8% quarter-on-quarter Galaxy Macau^™: Continues to be Impacted by COVID-19 and Travel Restrictions Q1 Net Revenue of $3.1 billion, down 10% year-on-year and down 4% quarter-on-quarter Q1 Adjusted EBITDA of $724 million, down 5% year-on-year and down 5% quarter-on-quarter Normalized Q1 Adjusted EBITDA was $721 million after adjusting for good luck of $3 million, versus $664 million in Q1 2021 and $805 million in Q4 2021 Hotel occupancy for Q1 across the five hotels was 37% StarWorld Macau: Continues to be Impacted by COVID-19 and Travel Restrictions Q1 Net Revenue of $424 million, down 58% year-on-year and down 37% quarter-on-quarter Q1 Adjusted EBITDA of $(58) million, versus $170 million in Q1 2021 and $44 million in Q4 2021 There was no luck impact on Q1 Adjusted EBITDA, versus Normalized Adjusted EBITDA of $162 million in Q1 2021 and $47 million in Q4 2021 Hotel occupancy for Q1 was 51% Broadway Macau^™: Continues to be Impacted by COVID-19 and Travel Restrictions Q1 Net Revenue of $16 million, up 7% year-on-year and up 14% quarter-on-quarter Q1 Adjusted EBITDA of $(17) million, versus $(23) million in Q1 2021 and $(22) million in Q4 2021 There was no luck impact on Q1 Adjusted EBITDA, versus Normalized Adjusted EBITDA of $(23) million in Q1 2021 and $(22) in Q4 2021 Hotel occupancy for Q1 was 24% Balance Sheet: Healthy and Liquid & Paid Recent Dividend As at 31 March 2022, cash and liquid investments were $35.0 billion and net cash was $24.5 billion As at 31 March 2022, debt of $10.5 billion primarily reflects ongoing treasury yield management initiatives with minimal core debt 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, and proceeding with the construction of remaining phases Future development opportunities – Notwithstanding the current economic environment, we continue with our disciplined approach to exploring opportunities within Mainland China with a particular focus on the Greater Bay Area International – Continuously exploring opportunities in overseas markets

Macau Market Overview

In the first quarter of 2022, Macau continued to be impacted by COVID-19 outbreaks in greater China which led to travel restrictions including the Chinese New Year holiday in February 2022. Based on DICJ reporting, Macau’s Gross Gaming Revenue (“GGR”) for Q1 2022 was $17.3 billion, down 25% year-on-year and down 7% quarter-on-quarter.

In Q1 2022, visitor arrivals to Macau were 1.9 million, up 8% year-on-year and down 4% quarter-on-quarter. Mainland visitor arrivals were 1.7 million, up 10% year-on-year and down 5% quarter-on-quarter. Overnight visitors were 680,725, down 26% year-on-year and down 14% quarter-on-quarter.

Group Financial Results

In Q1 2022, the Group posted Net Revenue of $4.1 billion, down 20% year-on-year and down 14% quarter-on-quarter. Adjusted EBITDA was $575 million, down 33% year-on-year and down 45% quarter-on-quarter, compared to Q4 2021 Normalized Adjusted EBITDA of $920 million after adjusting for a $168 million expense reversal benefit and bad luck of $45 million. Galaxy Macau™’s Adjusted EBITDA was $724 million, down 5% year-on-year and down 5% quarter-on-quarter. StarWorld Macau’s Adjusted EBITDA was $(58) million, versus $170 million in Q1 2021 and $44 million in Q4 2021. Broadway Macau™’s Adjusted EBITDA was $(17) million versus $(23) million in Q1 2021 and $(22) million in Q4 2021.

Latest twelve months Adjusted EBITDA was $3.3 billion, up significantly year-on-year versus a $0.4 billion loss of latest twelve months Adjusted EBITDA in Q1 2021 and down 8% quarter-on-quarter.

In Q1 2022, the Group’s Normalized Adjusted EBITDA was $572 million after adjusting for good luck of $3 million, down 24% year-on-year and down 38% quarter-on-quarter. Please note that Q4 2021 Adjusted EBITDA benefited from the expense reversal benefit of $168 million.

Summary Table of GEG Q1 2022 Adjusted EBITDA and Adjustments:

in HK$'m	Q1 2021	Q4 2021	Q1 2022	YoY	QoQ
Adjusted EBITDA	859	1,043	575	-33%	-45%
Luck^1	108	(45)	3
Expense reversal benefit		168
Normalized Adjusted EBITDA	751	920	572	-24%	-38%

The Group’s total GGR on a management basis² in Q1 2022 was $3.4 billion, down 29% year-on-year and down 13% quarter-on-quarter. Mass GGR was $2.7 billion, down 7% year-on-year and down 12% quarter-on-quarter. Rolling chip GGR was $566 million, down 69% year-on-year and down 21% quarter-on-quarter. Electronic GGR was $162 million, up 25% year-on-year and up 2% quarter-on-quarter.

Group Key Financial Data
(HK$'m)	Q1 2021	Q4 2021	Q1 2022
Revenues:
Net Gaming	3,857	3,256	2,902
Non-gaming	598	666	623
Construction Materials	641	830	575
Total Net Revenue	5,096	4,752	4,100
Adjusted EBITDA	859	1,043	575
Gaming Statistics^3
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Rolling Chip Volume^4	55,334	25,782	17,914
Win Rate %	3.3%	2.8%	3.2%
Win	1,812	713	566
Mass Table Drop^5	11,585	11,449	9,463
Win Rate %	24.6%	26.4%	28.0%
Win	2,849	3,027	2,652
Electronic Gaming Volume	4,195	4,444	4,380
Win Rate %	3.1%	3.6%	3.7%
Win	130	159	162
Total GGR Win^6	4,791	3,899	3,380

Balance Sheet

Due to our conservative financial management, our balance sheet continues to remain strong. At 31 March 2022, cash and liquid investments were $35.0 billion and net cash was $24.5 billion. Total debt was $10.5 billion which primarily reflects our ongoing treasury yield management initiatives where interest income on cash holdings exceeds corresponding borrowing costs. Core debt remained minimal. This provides us with valuable flexibility in managing our ongoing operations and allows us to continue investing in our longer term development plans. The Group paid the previously announced special dividend of $0.30 per share on 29 April 2022. This attests to our confidence in Macau, our financial strength and our future earnings potential.

Galaxy Macau™

Galaxy Macau™ is the primary contributor to Group revenue and earnings. In Q1 2022, Galaxy Macau™’s Net Revenue was $3.1 billion, down 10% year-on-year and down 4% quarter-on-quarter. Adjusted EBITDA was $724 million, down 5% year-on-year and down 5% quarter-on-quarter. Adjusted EBITDA margin was 24% (Q1 2021: 22%).

In Q1 2022, Galaxy Macau™’s Normalized Adjusted EBITDA was $721 million after adjusting for good luck of $3 million, up 9% year-on-year and down 10% quarter-on-quarter. The combined five hotels occupancy rate was 37% for Q1 2022.

Galaxy Macau™ Key Financial Data
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Revenues:
Net Gaming	2,875	2,599	2,503
Hotel / F&B / Others	250	252	228
Mall	292	363	346
Total Net Revenue	3,417	3,214	3,077
Adjusted EBITDA	764	763	724
Adjusted EBITDA Margin	22%	24%	24%
Gaming Statistics^7
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Rolling Chip Volume^8	40,711	19,908	17,914
Win Rate %	3.2%	2.7%	3.2%
Win	1,301	542	566
Mass Table Drop^9	7,128	7,827	6,627
Win Rate %	28.3%	29.5%	32.0%
Win	2,019	2,306	2,121
Electronic Gaming Volume	3,167	3,109	3,021
Win Rate %	3.2%	4.2%	4.5%
Win	102	130	136
Total GGR Win	3,422	2,978	2,823

StarWorld Macau

In Q1 2022, StarWorld Macau’s Net Revenue was $424 million, down 58% year-on-year and down 37% quarter-on-quarter. Adjusted EBITDA was $(58) million, versus $170 million in Q1 2021 and $44 million in Q4 2021. There was no luck impact on Q1 Adjusted EBITDA, versus Normalized Adjusted EBITDA of $162 million in Q1 2021 and $47 million in Q4 2021. Hotel occupancy was 51% for Q1 2022.

StarWorld Macau Key Financial Data
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Revenues:
Net Gaming	972	632	391
Hotel / F&B / Others	34	31	27
Mall	7	6	6
Total Net Revenue	1,013	669	424
Adjusted EBITDA	170	44	(58)
Adjusted EBITDA Margin	17%	7%	NEG^10
Gaming Statistics^11
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Rolling Chip Volume	13,683	5,874	0
Win Rate %	3.4%	2.9%	0
Win	470	171	0
Mass Table Drop^12	3,790	2,798	2,183
Win Rate %	19.2%	20.2%	18.8%
Win	727	565	410
Electronic Gaming Volume	520	534	475
Win Rate %	3.5%	2.2%	2.2%
Win	18	12	10
Total GGR Win	1,215	748	420

Broadway Macau™

Broadway Macau™ is a unique family friendly, street entertainment and food resort supported by Macau SMEs, it does not have a VIP gaming component. In Q1 2022, Broadway Macau™’s Net Revenue was $16 million, up 7% year-on-year, up 14% quarter-on-quarter. Adjusted EBITDA was $(17) million, versus $(23) million in prior year and $(22) million in Q4 2021. There was no luck impact on Q1 Adjusted EBITDA, versus Normalized Adjusted EBITDA of $(23) million in Q1 2021 and $(22) in Q4 2021. Hotel occupancy was 24% for Q1 2022 as the hotel served as a “self-health management hotel”.

Broadway Macau™ Key Financial Data
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Revenues:
Net Gaming	0	0	0
Hotel / F&B / Others	9	8	9
Mall	6	6	7
Total Net Revenue	15	14	16
Adjusted EBITDA	(23)	(22)	(17)
Adjusted EBITDA Margin	NEG^13	NEG^13	NEG^13
Gaming Statistics^14
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Mass Table Drop^15	0	0	0
Win Rate %	0	0	0
Win	0	0	0
Electronic Gaming Volume	13	3	3
Win Rate %	3.5%	0.7%	9.0%
Win	0	0	0
Total GGR Win	0	0	0

City Clubs

City Clubs contributed $8 million of Adjusted EBITDA in Q1 2022, down 20% year-on-year and down 68% quarter-on-quarter.

City Clubs Key Financial Data
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Adjusted EBITDA	10	25	8
Gaming Statistics^16
(HK$'m)
	Q1 2021	Q4 2021	Q1 2022
Rolling Chip Volume	940	0	0
Win Rate %	4.4%	0	0
Win	41	0	0
Mass Table Drop^17	667	824	653
Win Rate %	15.4%	18.9%	18.5%
Win	103	156	121
Electronic Gaming Volume	495	798	881
Win Rate %	2.0%	2.1%	1.8%
Win	10	17	16
Total GGR Win	154	173	137

Construction Materials Division

The Construction Materials Division contributed Adjusted EBITDA of $119 million in Q1 2022, down 24% year-on-year and down 59% quarter-on-quarter. Please note that Q1 is historically a seasonally softer quarter compared to the other three quarters. The year-on-year variance is due primarily to challenging market conditions.

Development Update

Galaxy Macau™ and StarWorld Macau

We continue to make ongoing progressive enhancements to our resorts to ensure that they remain competitive and appealing to our guests.

Cotai – The Next Chapter

GEG is uniquely positioned for long term growth. Phase 3 is effectively completed and we look forward to welcoming the iconic Raffles at Galaxy Macau through an exclusive 450 all-suite tower. We will align the opening with prevailing market conditions. We intend to follow this with the opening of the GICC and Andaz Macau in anticipation of the recovery of the MICE and entertainment markets.

We are now firmly focused on the development of Phase 4, which is already well under way. We see the premium market evolving with this segment preferring higher quality and more spacious rooms. Cotai Phase 4 is an integrated resort for the next generation, which will complete our ecosystem in Cotai.

Phases 3 & 4 combined will have approximately 3,000 high end and family rooms and villas, 400,000 square feet of MICE space, a 500,000 square feet 16,000-seat multi-purpose arena, F&B, retail and casinos, among others. As you can see, we remain highly 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.

Future Development Opportunities

Notwithstanding the current economic environment, we continue with our disciplined approach to exploring opportunities within Mainland China, with a particular focus on the rapidly developing Greater Bay Area.

International

We continue to explore international expansion opportunities, but still believe that Macau offers the best longer term outlook.

Selected Major Awards in 2022

AWARD	PRESENTER
GEG
Charitable Community Award	International Gaming Awards 2022
GALAXY MACAU^TM
EarthCheck Certified 2022 - Gold Certification - Banyan Tree Macau - Silver Certification - Galaxy Hotel™	EarthCheck
Michelin Guide Hotel Selection - Banyan Tree Macau - JW Marriott Hotel Macau - The Ritz-Carlton, Macau   Michelin One Star Restaurant - 8½ Otto e Mezzo BOMBANA - Lai Heen   Michelin Selected Restaurant - Terrazza Italian Restaurant - Yamazato - The Ritz-Carlton Café	Michelin Guide Hong Kong and Macau 2022
Forbes Travel Guide Five-star Hotel - The Ritz-Carlton, Macau - Banyan Tree Macau - Hotel Okura Macau   Forbes Travel Guide Five-star Restaurant - Lai Heen   Forbes Travel Guide Five-star Spa - The Ritz-Carlton Spa, Macau - Banyan Tree Spa Macau	Forbes Travel Guide
South China Morning Post 100 Top Tables 2022 - Lai Heen - 8½ Otto e Mezzo BOMBANA - Yamazato	South China Morning Post
The Most Popular Hotel Award - Hotel Okura Macau	Hotelbeds
DestinAsian Reader’s Choice Awards 2022 Top 10 Best Hotels in Macau - Banyan Tree Macau - Galaxy Hotel™	DestinAsian
STARWORLD MACAU
Michelin Two Stars Restaurant - Feng Wei Ju	Michelin Guide Hong Kong and Macau 2022
South China Morning Post 100 Top Tables 2022 - Feng Wei Ju	South China Morning Post

Outlook

Under the COVID-19 “new normal”, GEG team members have been working hard to “do more with less” and have been very supportive of the various company initiatives and constantly striving for improvement. We believe that the reoccurrence of COVID-19 cases in Mainland China will continue to impact Macau tourism industry, which in turn could impact our associated revenue and profitability going forward. However, in the medium to longer term we continue to have great confidence in Macau and we are well positioned for growth with our Phases 3 & 4 projects which will capture the future growth in leisure and tourism from Mainland China. Notwithstanding the current economic environment, we continue with our disciplined approach to exploring opportunities within Mainland China with a particular focus on the Greater Bay Area.

During this down period of low visitor arrivals, we have taken this opportunity to renovate and upgrade our existing properties and focus on elevating service standards with continuous training, among others. We are well positioned to capture mass customers when the market returns as well as MICE business with the opening of the GICC. We continue to drive every segment of our business by enhancing operational efficiencies and exercising prudent cost control especially under the current market conditions.

Following the closure of the VIP business, we have been reallocating our resources and marketing efforts to the mass-oriented tourists whom appreciate GEG’s extensive array of resort offerings, such as a wide range of world class hotels, extensive F&B choices, wide selection of retail and non-gaming amenities such as the Grand Resort Deck. Macau concessionaires continue to working with the Macao Government Tourism Office to actively promote Macau as a safe tourism destination and has hosted a series of roadshows and exhibitions in a numbers of Mainland cities. We will continue to actively support this important government initiative.

Despite sporadic outbreaks in greater China over the past 2 years, Macau has demonstrated an ability to bounce back quickly when travel restrictions were eased, indicating solid pent up demand. Moreover, we continue to remain optimistic and encouraged that we see strong signs of healthy demand for Macau and are very confident that the leisure and tourism sector will bounce back.

In April 2022, we applied for the extension of our concession from 26 June 2022 to 31 December 2022. The amendment of Gaming Law has been positively received by the community. 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 SME’s, we are well positioned to compete for one of Macau’s forthcoming gaming concessions. We look forward for the approval from the Legislative Assembly and the completion of the concession bidding process.

- END -

About Galaxy Entertainment Group (HKEx stock code: 27)

Galaxy Entertainment Group (“GEG” or the “Group”) is one of the world’s leading resorts, hospitality and gaming companies. It primarily develops and operates a large portfolio of integrated resort, retail, dining, hotel and gaming facilities in Macau. The Group is listed on the Hong Kong Stock Exchange and is a constituent stock of the Hang Seng Index.

GEG is one of the three original concessionaires in Macau with a successful track record of delivering innovative, spectacular and award-winning properties, products and services, underpinned by a “World Class, Asian Heart” service philosophy, that has enabled it to consistently outperform the market in Macau.

GEG operates three flagship destinations in Macau: on Cotai, Galaxy Macau™, one of the world’s largest integrated destination resorts, and the adjoining Broadway Macau™, a unique landmark entertainment and food street destination; and on the Peninsula, StarWorld Macau, an award winning premium property.

The Group has the largest undeveloped landbank of any concessionaire in Macau. When The Next Chapter of its Cotai development is completed, GEG’s resorts footprint on Cotai will double to more than 2 million square meters, making the resorts, entertainment and MICE precinct one of the largest and most diverse integrated destinations in the world. Notwithstanding the current economic environment, GEG continues with our disciplined approach to exploring opportunities within Mainland China, with a particular focus on the rapidly developing Greater Bay Area. These projects will help GEG develop and support Macau in its vision of becoming a World Centre of Tourism and Leisure.

In July 2015, GEG made a strategic investment in Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (“Monte-Carlo SBM”), a world renowned owner and operator of iconic luxury hotels and resorts in the Principality of Monaco. GEG continues to explore a range of international development opportunities with Monte-Carlo SBM including Japan.

GEG is committed to delivering world class unique experiences to its guests and building a sustainable future for the communities in which it operates. For more information about the Group, please visit www.galaxyentertainment.com

^{_________________________
1} Reflects luck associated with our rolling chip program.

² 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. At the Group level the gaming statistics include Company owned resorts plus City Clubs.

³ Gaming statistics are presented before deducting commission and incentives.

⁴ Represents sum of junket VIP and 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.

⁷ Gaming statistics are presented before deducting commission and incentives.

⁸ Represents sum of junket VIP and inhouse premium direct.

⁹ Mass table drop includes the amount of table drop plus cash chips purchased at the cage.

¹⁰ NEG represents negative margin.

¹¹ Gaming statistics are presented before deducting commission and incentives.

¹² Mass table drop includes the amount of table drop plus cash chips purchased at the cage.

¹³ NEG represents negative margin.

¹⁴ Gaming statistics are presented before deducting commission and incentives.

¹⁵ Mass table drop includes the amount of table drop plus cash chips purchased at the cage.

¹⁶ Gaming statistics are presented before deducting commission and incentives.

¹⁷ Mass table drop includes the amount of table drop plus cash chips purchased at the cage.