Core Viewpoint - CICC maintains its adjusted EBITDA forecast for Wynn Macau (01128) for 2025 and 2026, with the current stock price corresponding to 8.0 times the 2025 EV/EBITDA. The firm maintains an outperform rating and a target price of HKD 6.90, implying a 26% upside from the current stock price [1]. Group 1: Financial Performance - Wynn Macau reported Q1 2025 results with net revenue of USD 866 million, a year-on-year decline of 13% and a quarter-on-quarter decline of 7%, recovering to 69% of Q1 2019 levels [2]. - Adjusted property EBITDA for Q1 2025 was USD 252 million, down 26% year-on-year and 14% quarter-on-quarter, recovering to 65% of Q1 2019 levels, and falling short of Bloomberg's consensus estimate of USD 274 million [2]. Group 2: Management Insights - Management indicated that tariff policies may impact and delay capital expenditure plans for U.S. operations, but expect no effect on capital and operational expenditures in Macau [3]. - In April 2025, the mid-market betting volume remained stable compared to the same period in 2024, with direct VIP turnover showing year-on-year growth [3]. - The management emphasized that high-end mid-market business is the core development area for the Macau gaming industry, despite a highly competitive marketing rebate environment [3]. - The Wynn Palace's culinary landmark "Fleur" officially opened in May 2025, and the average fixed operating cost for Q1 2025 was USD 2.64 million, expected to maintain this level throughout the year [3]. - During the May Day Golden Week in 2025, mid-market betting volume increased compared to the same period in 2024, with hotel occupancy reaching 100% [3].

Financial Performance - Casino revenue for 2024 reached HKD 23,617,908, an increase of 23.1% from HKD 19,111,112 in 2023[10] - Adjusted EBITDA for 2024 was HKD 8,210,137, up 24% from HKD 6,621,025 in 2023[10] - Profit attributable to owners for 2024 was HKD 3,198,178, a significant increase of 172.5% compared to HKD 1,171,656 in 2023[10] - Basic earnings per share for 2024 were HKD 0.61, compared to HKD 0.22 in 2023, reflecting a growth of 177.3%[10] - Total operating revenue increased by 18.4% from HKD 24,268,142 in 2023 to HKD 28,740,421 in 2024[49] - Non-gaming revenue for 2024 was HKD 5.12 billion, accounting for 17.8% of total operating revenue, slightly down from HKD 5.16 billion (21.3%) in 2023[51] - Room revenue for 2024 was HKD 2.37 billion, relatively stable compared to HKD 2.44 billion in 2023[52] - Restaurant revenue increased by 19.1% to HKD 1.61 billion in 2024 from HKD 1.35 billion in 2023, driven by increased foot traffic and average bill amounts[55] - Retail and other revenue decreased by 16.5% to HKD 1.14 billion in 2024 from HKD 1.37 billion in 2023, primarily due to a decline in retail sales[55] - Operating costs increased by 13.8% to HKD 23.41 billion in 2024 from HKD 20.57 billion in 2023[59] - Financing income for 2024 was HKD 568.1 million, nearly unchanged from HKD 571.3 million in 2023[60] - Financing costs decreased by 4.4% to HKD 3.19 billion in 2024 from HKD 3.34 billion in 2023, attributed to lower average loan balances and interest rates[61] - Net profit attributable to the company's owners increased by 173.0% to HKD 3.20 billion in 2024 from HKD 1.17 billion in 2023[64] - The operating profit for 2024 was HKD 5,330.0 million, up from HKD 3,700.0 million in 2023, representing a growth of approximately 44.3%[74] Gaming Operations - WRM has obtained a 10-year gaming license from the Macau government, allowing operations from January 1, 2023, to December 31, 2032, at Wynn Palace and Wynn Macau[19] - WRM is required to pay a special gaming tax of 35% on gross gaming revenue and contribute up to 5% of gross gaming revenue annually for public welfare and infrastructure[22] - The gaming special tax rate is set at 35% of gross gaming revenue, with a special contribution of 5% also applicable[28] - The company adjusts its gaming table and slot machine mix in response to market demand and competition, which may impact profitability[36] - The company has been approved to operate a total of 570 gaming tables and 1,100 gaming machines in Macau[151] - The company has been approved for a total of 303 gaming tables at Wynn Palace and 257 at Wynn Macau, with the table mix subject to change based on market demand[151] - The company faces competition from 28 other casinos in Macau and potential new entrants from regions like Japan and Taiwan[32] - Macau's gaming revenue is projected to increase by 23.9% in 2024, reaching HKD 220.18 billion, up from HKD 177.73 billion in 2023[30] - The number of visitors to Macau is expected to rise by 23.8% in 2024 compared to 2023, indicating a strong recovery in tourism[33] Investment and Development - The total investment commitment by WRM over the 10-year license period is MOP 21.03 billion (approximately HKD 20.42 billion), with MOP 19.80 billion (approximately HKD 19.22 billion) allocated for non-gaming capital projects[27] - WRM must submit annual proposals for investment projects to the Macau government by September 30 each year, detailing investment amounts and timelines[25] - WRM's investment plans include attracting foreign visitors, hosting exhibitions, and promoting cultural and health-related activities[27] - The company plans to release its interim report for the six months ending June 30, 2025, in September 2025[10] - Wynn Palace is in the design phase for its next development stage, which will include a theater and expanded event space[13] Regulatory Compliance - The Macau government has the right to revoke WRM's gaming license if it fails to meet obligations, including national security and public interest requirements[23] - WRM is subject to ongoing supervision by the Macau government and must submit progress reports every two months for investment projects[25] - Any financial decisions exceeding 50% of the company's capital must be notified to the Macau Chief Executive at least five working days in advance[24] - The company must appoint a permanent resident of Macau as an executive director, holding at least 15% of the company's capital[20] - WRM's operations are regulated under strict legal frameworks, requiring compliance with various financial reporting and operational obligations[19] - The company must comply with Macau laws and regulations, and failure to do so may negatively impact its operations[105] - The company is subject to ongoing regulatory scrutiny by the Macau government, which may affect its ability to maintain necessary licenses and permits[106] Risks and Challenges - The company faces significant development and construction risks that may impact project success and debt repayment capabilities[37] - External factors such as economic conditions in mainland China and travel restrictions significantly influence Macau's tourism and gaming activities[34] - The company faces significant risks related to consumer discretionary spending, which can be adversely affected by negative macroeconomic conditions[103] - Recent negative macroeconomic conditions have led to rising interest rates and reduced consumer discretionary spending, impacting the company's financial performance[104] - Geopolitical tensions and government policies may adversely affect product and service demand, leading to economic turmoil and impacting business performance[108] - Travel restrictions and anti-corruption campaigns have reduced visitor numbers from affected regions, negatively impacting revenue and cash flow[109] - The company faces multiple investigations and lawsuits that could divert management's attention and harm its reputation, potentially affecting its gaming licenses and market opportunities[110] - Customer willingness to visit resorts is influenced by terrorism threats, disease outbreaks, and regional political events, which may reduce visitor numbers and financial performance[113] - Global political trends and economic policies have decreased demand for hotel products and services, impacting visitor numbers to resorts[114] - The company's cash flow is entirely dependent on its operations in Macau, posing significant risks compared to competitors with more diversified properties[116] - The company faces increased competition from global casinos, including those in Singapore, South Korea, and other Asian regions, which may adversely affect cash flow and operational performance[121] Corporate Governance and Management - The company has a diverse board of directors with members holding various positions since 2009, including the CEO and President, who have extensive experience in the gaming and hospitality industry[160][162][163] - The current CEO, Mr. Pan, has been with Wynn Resorts since 2017 and has held multiple senior management roles, including President and CFO[162] - Ms. Chen, the President and Vice Chairwoman, has over 30 years of industry experience and has been instrumental in the operations of Wynn Macau and Wynn Palace[163][164] - The company emphasizes the importance of governance and compliance, as demonstrated by the diverse expertise of its board members[180] - The financial and administrative leadership is expected to drive strategic initiatives and improve operational efficiency across departments[188] - The company is committed to maintaining high standards of corporate governance and leveraging the extensive experience of its directors and management team[181] Sustainability and Community Engagement - The company continues to invest in sustainable practices, monitoring energy efficiency and resource consumption[12] - The company has established a corporate social responsibility initiative, "Wynn Cares," and a foundation to support community efforts[163] - The group is committed to environmental responsibility, having developed plans to promote efficient operations and resource conservation[198] - The company has implemented various community initiatives under the "Wynn Care" program to promote sustainable development and responsible gaming in the Greater Bay Area[196] - The company has launched a series of talent development programs since 2022 to transform its management team into future industry leaders[197] - The company collaborates closely with various departments to ensure compliance training for employees regarding regulatory matters[199] - The company has partnered with several universities in 2024 to enhance talent development programs in the Greater Bay Area[197] Financial Position and Debt Management - Cash and cash equivalents as of December 31, 2024, were approximately HKD 11.33 billion, with expectations to use this for debt repayment and operational funding[65] - The capital debt ratio improved to 148.9% in 2024 from 155.8% in 2023, indicating a reduction in net debt relative to total capital[70] - Total borrowings as of December 31, 2024, amounted to HKD 44,838.5 million, down from HKD 52,679.6 million in 2023, reflecting a reduction of about 15%[78] - The company has approximately HKD 27.5 billion available under the WM Cayman II revolving credit facility as of December 31, 2024[81] - The company plans to repay HKD 6.0 billion (approximately USD 800 million) of WML 2024 notes on October 1, 2024[84] - The company has maintained compliance with the covenants of the WM Cayman II revolving credit facility as of December 31, 2024[82] - The company faces foreign exchange risks related to the fluctuation of the exchange rates between the Macanese Pataca, Hong Kong Dollar, and US Dollar[148] - The company has a high leverage ratio, and future cash flows may be insufficient to meet its obligations, potentially complicating access to additional financing[152] - The company's debt agreements contain covenants that may restrict its ability to engage in certain transactions, impacting its operational flexibility[157] Cybersecurity and Data Protection - The company relies on information technology systems to manage and transmit large volumes of sensitive customer and employee data, facing significant cybersecurity risks[128] - Past data security incidents have not significantly impacted the company's financial performance, but future breaches could harm its reputation and lead to legal liabilities[131] - The company must invest in data protection and infrastructure to mitigate increasing cybersecurity threats, which may affect its financial performance[131] - Any improper use of confidential or identifiable personal data could severely damage the company's operations and relationships with customers and employees[132] - Disruptions to the company's IT systems could result in significant financial impacts and require substantial investments for repairs or replacements[133] - The company has implemented various systems, procedures, and technologies to mitigate risks associated with fraud and theft, including employee training and security measures[135] - The rise of fraudulent online gambling and investment websites targeting mainland Chinese citizens poses a significant threat to the company's reputation and business operations[136] Intellectual Property and Licensing - The company relies on a licensing agreement with Wynn Resorts, Limited for the use of "WYNN" trademarks, which could be terminated under certain conditions, potentially disrupting its operations[139] - The company has submitted trademark registration applications in various jurisdictions, including the United States and several Asian countries, to protect its intellectual property[140] - The company faces potential negative impacts on its business and financial performance if unauthorized activities related to its intellectual property continue[137]

Financial Performance - Total revenue for the year ended December 31, 2024, reached HKD 28,740,421, an increase of 18.8% from HKD 24,268,142 in 2023[5] - Adjusted EBITDA for the same period was HKD 8,210,137, up 24% from HKD 6,621,025 in 2023[5] - Profit attributable to owners for 2024 was HKD 3,198,178, a significant increase of 172.5% compared to HKD 1,171,656 in 2023[5] - Basic earnings per share rose to HKD 0.61, compared to HKD 0.22 in the previous year, reflecting a growth of 177.3%[5] - Total operating expenses for the year ended December 31, 2024, amounted to HKD 4.39 billion, an increase from HKD 3.76 billion in 2023[17] - The company's profit before tax for the year ended December 31, 2024, was HKD 3,250,058,000, a significant increase from HKD 1,214,362,000 in 2023[21] - The effective tax rate for 2024 was 12.0%, consistent with the previous year, with total tax expenses amounting to HKD 390,007,000[21] - Net profit attributable to the company's owners increased by 173.0% from HKD 1.17 billion in 2023 to HKD 3.20 billion in 2024[91] Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.185 per share, up from HKD 0.075 per share in 2023[6] - The proposed final dividend for the year ended December 31, 2024, is HKD 0.185 per share, an increase from HKD 0.075 per share in 2023[27] Assets and Liabilities - Non-current assets totaled HKD 26,473,075, a decrease from HKD 27,457,459 in 2023[8] - Current assets decreased to HKD 12,758,455 from HKD 17,371,594 in 2023, largely due to a reduction in trade receivables[8] - Total liabilities decreased to HKD 52,521,827 from HKD 60,639,484 in 2023, indicating improved financial health[9] - The total assets as of December 31, 2024, amount to HKD 39,231,530, a decrease from HKD 44,829,053 in 2023[45] Cash Flow and Financing - The company reported a cash and cash equivalents balance of HKD 11,333,372, which supports its liquidity position despite a total asset deficit of HKD 13,290,297[10] - Operating cash flow for 2024 was HKD 7.694 billion, an increase from HKD 6.812 billion in 2023, reflecting a growth of approximately 12.9%[100] - Investment cash flow for 2024 was HKD 4.830 billion, compared to a cash outflow of HKD 5.409 billion in 2023, indicating a significant turnaround[101] - Financing cash flow for 2024 showed a net outflow of HKD 11.423 billion, a stark contrast to a net inflow of HKD 1.486 billion in 2023, primarily due to loan repayments and interest payments[102] Taxation - The company did not make any provisions for Hong Kong profits tax for the year ended December 31, 2024, as there were no taxable profits[20] - The company has been granted a tax exemption for the Macau supplementary tax on gaming profits at a rate of 12% for the period from January 1, 2023, to December 31, 2027[22] - The company recorded unrecognized tax losses of HKD 1,360,000,000 as of December 31, 2024, down from HKD 4,440,000,000 in 2023[24] Operational Highlights - The company views Wynn Palace and Wynn Macau as two reportable segments for management purposes[16] - Adjusted EBITDA for Wynn Palace is HKD 5,148,874, up 19.2% from HKD 4,311,754 in 2023, while Wynn Macau's adjusted EBITDA is HKD 3,061,263, an increase of 32.5% from HKD 2,309,271[44] - The company operates a casino space of approximately 294,000 square feet, featuring 257 gaming tables and 696 slot machines, providing 24-hour gaming services[51] Market and Competitive Landscape - The company faces competition from 28 other casinos in Macau and potential new entrants from regions like Japan and Taiwan[62] - The competitive landscape in Macau's gaming and hotel industry is intensifying, with 30 casinos operating as of December 31, 2024, including 13 managed by a competitor, which may adversely affect the company's business and financial performance[139] Risks and Challenges - The company faces significant risks related to consumer discretionary spending, which can be adversely affected by negative macroeconomic conditions, impacting its business and financial performance[125] - Recent negative macroeconomic conditions, including inflationary pressures and rising interest rates, may adversely affect the company's gaming revenue and financial condition[126] - The company is exposed to risks related to geopolitical tensions and travel restrictions, which may negatively affect demand for its products and services[129] Compliance and Governance - The company has complied with the corporate governance code throughout the year ending December 31, 2024[173] - The audit and risk committee, consisting of three independent non-executive directors, reviewed the group's performance for the year ending December 31, 2024[175] Capital Expenditures - Capital expenditures for Wynn Palace and Wynn Macau totaled HKD 1,305,963 for the year ended December 31, 2024, compared to HKD 714,296 in 2023, indicating an increase of 82.6%[45] Cybersecurity and Data Protection - The company faces significant cybersecurity risks, including system failures and unauthorized access to sensitive data, which could adversely affect its operations[147] - The company has implemented various systems and procedures to combat fraud and theft, but may not be able to prevent all criminal activities[152] Intellectual Property - The company has made efforts to protect its intellectual property, which may incur high costs and may not guarantee the maintenance of its asset value[154] - The company relies on a licensing agreement with Wynn Resorts, Limited for the use of "WYNN" trademarks, which could be terminated under certain conditions, impacting its business operations[155]

Financial Performance - Entertainment revenue for the first half of 2024 reached HKD 12,089,797 thousand, a significant increase from HKD 8,271,795 thousand in the same period of 2023[5] - Adjusted EBITDA for the first half of 2024 was HKD 4,352,599 thousand, compared to HKD 2,764,152 thousand in the first half of 2023[5] - Net profit attributable to owners for the first half of 2024 was HKD 1,592,122 thousand, a substantial increase from HKD 87,467 thousand in the same period of 2023[5] - Basic earnings per share for the first half of 2024 were HKD 0.30, compared to HKD 0.02 in the first half of 2023[5] - Total operating revenue increased by 37.2% from HKD 10.74 billion in the first half of 2023 to HKD 14.73 billion in the first half of 2024, driven by increased gaming volume and restaurant traffic[34] - Casino revenue rose from HKD 8.27 billion (77.0% of total operating revenue) in the first half of 2023 to HKD 12.09 billion (82.1% of total operating revenue) in the first half of 2024, primarily due to increased gaming volume[35] - VIP table games revenue increased by 15.4% from HKD 2.20 billion in the first half of 2023 to HKD 2.53 billion in the first half of 2024, with VIP table games turnover rising by 20.3% from HKD 61.69 billion to HKD 74.18 billion[35] - Mass market table games revenue grew by 52.5% from HKD 7.46 billion in the first half of 2023 to HKD 11.37 billion in the first half of 2024, with mass market table games turnover increasing by 38.5% from HKD 38.42 billion to HKD 53.23 billion[35] - Slot machine revenue increased by 28.0% from HKD 664.2 million in the first half of 2023 to HKD 850.3 million in the first half of 2024, with slot machine turnover rising by 30.7% from HKD 16.58 billion to HKD 21.67 billion[35] - Non-casino revenue (including rooms, food and beverage, and retail and other) increased by 7.2% from HKD 2.47 billion (23.0% of total operating revenue) in the first half of 2023 to HKD 2.64 billion (17.9% of total operating revenue) in the first half of 2024[37] - Room revenue increased by 7.6% from HKD 1.14 billion in the first half of 2023 to HKD 1.22 billion in the first half of 2024, driven by higher occupancy rates and average daily rates at Wynn Palace and Wynn Macau[37] - Food and beverage revenue grew by 32.0% from HKD 609.6 million in the first half of 2023 to HKD 804.9 million in the first half of 2024, due to increased restaurant traffic and average check amounts at Wynn Palace and Wynn Macau[39] - Retail and other revenue decreased by 14.5% from HKD 720.0 million in the first half of 2023 to HKD 615.6 million in the first half of 2024, primarily due to a decline in retail sales[39] - Gaming tax and premium increased by 41.3% from HKD 4.39 billion in the first half of 2023 to HKD 6.21 billion in the first half of 2024, driven by higher casino revenue[40] - Total operating costs and expenses rose by 25.6% from HKD 9.41 billion in the first half of 2023 to HKD 11.82 billion in the first half of 2024[42] - Financing income increased by 43.3% from HKD 226.2 million in the first half of 2023 to HKD 324.2 million in the first half of 2024, due to higher average cash and investment balances[43] - Net profit attributable to the company's owners surged to HKD 1.59 billion in the first half of 2024, compared to HKD 87.5 million in the same period of 2023[47] - Cash and cash equivalents, along with investment balances, stood at HKD 10.8 billion and HKD 3.9 billion respectively as of June 30, 2024[48] - The company repaid approximately HKD 312.1 million of the WM Cayman II revolving credit facility on July 31, 2024[48] - Capital gearing ratio improved slightly to 152.7% as of June 30, 2024, compared to 155.8% at the end of 2023[50] - Net cash from operating activities increased to HKD 3.805 billion in the first half of 2024, up from HKD 3.0323 billion in the same period of 2023[53] - Cash and cash equivalents at the end of June 2024 amounted to HKD 10.7978 billion, compared to HKD 12.6717 billion at the end of June 2023[53] - The company declared a cash dividend of HKD 0.075 per share for the year ended December 31, 2023, totaling HKD 393.7 million[48] - Net cash generated from operating activities increased to HKD 3.81 billion for the six months ended June 30, 2024, compared to HKD 3.03 billion for the same period in 2023, driven by higher operating profit and changes in working capital[54] - Operating profit for the six months ended June 30, 2024, was HKD 2.91 billion, up from HKD 1.33 billion in the same period in 2023[54] - Net cash generated from investing activities was HKD 1.15 billion for the six months ended June 30, 2024, compared to a net cash outflow of HKD 869.1 million in the same period in 2023, primarily due to investment maturities and interest received[56] - Net cash used in financing activities was HKD 4.45 billion for the six months ended June 30, 2024, compared to net cash generated of HKD 3.07 billion in the same period in 2023, mainly due to debt repayments and interest payments[57] - Total interest-bearing borrowings decreased to HKD 50.28 billion as of June 30, 2024, from HKD 52.68 billion as of December 31, 2023[58] - WM Cayman II revolving credit facility has a total available amount of HKD 11.7 billion, with an option to increase by an additional USD 1.0 billion (approximately HKD 7.81 billion) under certain conditions[59] - As of June 30, 2024, the company had approximately HKD 2.44 billion available under the WM Cayman II revolving credit facility[60] - The company repaid approximately HKD 312.1 million of outstanding borrowings under the WM Cayman II revolving credit facility as of July 31, 2024[60] - WML 2024 notes and WML 2027 notes are set to mature on October 1, 2024, and October 1, 2027, respectively[61] - WML 2029 notes, issued on December 17, 2019, are set to mature on December 15, 2029[61] - WML issued WML 2026 and WML 2028 notes, with interest payments starting from January 15, 2021, and February 26, 2021, respectively, and maturing on January 15, 2026, and August 26, 2028[62] - WML used the net proceeds from the WML 2026 and WML 2028 notes to repay Wynn Macau credit facilities and for general corporate purposes[62] - WML completed the issuance of $600 million (approximately HK$4.69 billion) 4.50% convertible bonds due 2029 on March 7, 2023, with net proceeds of $585.9 million (approximately HK$4.60 billion)[65] - The WML convertible bonds can be converted into approximately 459,774,985 shares at an initial conversion price of HK$10.24 per share[66] - As of June 30, 2024, no WML convertible bonds have been converted or redeemed[66] - If all WML convertible bonds are converted at the initial conversion price, Wynn Resorts, Limited's shareholding will decrease from 71.44% to 65.69%[68] - The Capital Group Companies, Inc.'s shareholding will decrease from 5.68% to 5.23% if all WML convertible bonds are converted[68] - Other shareholders' shareholding will decrease from 22.88% to 21.03% if all WML convertible bonds are converted[68] - Bondholders will hold approximately 8.05% of the shares if all WML convertible bonds are converted[68] - The company expects to fulfill its redemption obligations for all outstanding WML convertible bonds upon maturity[69] - WML convertible bondholders can choose to require WML to redeem their bonds on March 7, 2027, at the principal amount plus accrued but unpaid interest, or under specific events such as delisting, change of control, or public shareholding falling below 25%[70] - WML has the option to redeem all, but not part, of the convertible bonds after March 7, 2027, but before March 7, 2029, under certain conditions[70] - WRL provided an unsecured revolving credit facility of up to $500 million (approximately HKD 3.9 billion), which expired on June 14, 2024, with no outstanding borrowings at maturity[71] - The company expects to fund operations and capital expenditures through operating cash flow, cash on hand, and available credit facilities, but cannot guarantee sufficient cash flow for these purposes[74] - The company may need to refinance debt at maturity or seek additional financing for unforeseen events or new business developments[74] - The company continues to invest in upgrading and renovating its resorts to meet market demand and customer preferences, incurring related capital expenditures[74] - The company’s financial performance is highly sensitive to macroeconomic conditions, particularly in Macau and surrounding regions, which could impact discretionary spending and demand for luxury facilities[77] - Negative macroeconomic factors, such as inflation, rising interest rates, and economic slowdowns, could adversely affect the company’s gaming revenue, financial condition, and cash flows[77] - The company’s reliance on customers from Mainland China, Hong Kong, and Taiwan makes it particularly vulnerable to economic downturns in these regions[77] - The company has no material off-balance sheet arrangements other than the WML convertible bond derivative[73] - The company's operations in Macau are subject to strict regulatory compliance, and failure to maintain necessary licenses and approvals could severely impact its business[79] - Geopolitical tensions, visa restrictions, and currency remittance policies may negatively affect visitor numbers and spending at the company's properties, particularly from mainland China, Hong Kong, and Taiwan[80] - Ongoing investigations, lawsuits, and disputes could divert management attention, harm the company's reputation, and lead to additional regulatory scrutiny[82] - The company relies heavily on retaining key management and skilled employees, and failure to do so could significantly impact its operations and financial performance[82] - The company's business is highly susceptible to factors such as terrorism, infectious disease outbreaks, regional political events, and disruptions in air travel, which have historically and may continue to negatively impact visitor numbers to its resorts, significantly affecting its financial performance and cash flow[83] - COVID-19 pandemic led to a sharp decline in visitor numbers to the company's properties due to travel restrictions and quarantine measures, with some restrictions remaining in place until early 2023, and the company cannot predict when or if operations will return to pre-pandemic levels[83] - The company's cash flow is entirely dependent on its Macau operations, making it more vulnerable to risks such as changes in local economic and competitive conditions, government regulations, and restrictions on visitors from Mainland China, Hong Kong, and Taiwan[85] - The company faces intense competition in the Macau gaming and hospitality industry, with six major operators and 30 casinos as of June 30, 2024, and potential new entrants could further intensify competition, negatively impacting its business and financial performance[89] - The company relies on high-end customers for a significant portion of its gaming revenue, but it may not be able to recover all gaming receivables from credit customers due to legal limitations in enforcing gaming debts across different jurisdictions[89] - Macau's gaming tax is calculated as a percentage of gross gaming revenue (GGR), including the face value of credit instruments issued, and does not deduct uncollectible gaming debts[90] - Non-compliance with anti-money laundering (AML) laws, anti-bribery laws, and other anti-corruption regulations could adversely affect the company's business, performance, and financial condition[90] - The company faces significant compliance risks due to evolving and complex legal and regulatory requirements, leading to increased administrative and general expenses[93] - The company relies heavily on IT systems and third-party data services, exposing it to cybersecurity risks such as data breaches, system failures, and malicious attacks[94] - The company's reputation and brand value are critical assets, and any adverse events or negative publicity could harm its financial performance[92] - The company is subject to strict regulatory scrutiny in the gaming industry, and any failure to comply with regulations could result in investigations, penalties, and legal actions[92] - The company's internal controls and compliance programs may not always prevent violations of laws or company policies by employees, contractors, or affiliates[92] - The company faces increasing scrutiny on environmental, social, and governance (ESG) activities, and failure to act responsibly in areas like sustainability and diversity could damage its reputation[92] - The company's third-party information system providers face similar cybersecurity risks, and the company has limited control over their security operations[94] - The cost of maintaining and upgrading cybersecurity measures is significant, and the company's insurance coverage may not fully protect against cybersecurity-related claims and liabilities[94] - The company has experienced data security incidents in the past and expects more in the future, though these have not yet significantly impacted business operations, financial performance, or financial condition[96] - Any future unauthorized disclosure of personal data could harm the company's reputation, lead to legal actions, fines, and penalties, and negatively affect business operations and financial performance[96] - The company may need to increase investments in data and infrastructure protection, including upgrading systems, hiring additional personnel, and conducting employee training to mitigate future cybersecurity risks[96] - Non-compliance with privacy laws or data security standards could result in reputational damage, fines, litigation, and restrictions on data usage, potentially increasing operational costs[96] - The company relies heavily on computer systems for transaction processing, financial reporting, and employee management, and any significant disruption could have a material adverse effect on business operations and financial performance[97] - Fraudulent activities, including counterfeit chips and theft, could lead to financial losses and damage the company's reputation, despite existing security measures[98] - Fraudulent online gambling and investment websites targeting mainland Chinese citizens could harm the company's reputation and business, as these sites often misuse the company's trademarks and branding[100] - The company does not offer online gambling or investment accounts and is not responsible for unauthorized websites using its name or trademarks[100] - Efforts to shut down fraudulent websites through legal actions or reporting to authorities may be costly and not always successful in protecting intellectual property assets[100] - The company faces risks related to the potential termination of the "WYNN" trademark license, which could severely disrupt its business and negatively impact its financial condition and operating performance[101] - The company's Macau operations are exposed to significant political, economic, and social risks, including potential fiscal downturns, international relations, and civil unrest, which could reduce demand for casino resorts and increase tax and foreign exchange control risks[103] - Macau's smoking control laws, which restrict smoking to designated areas within casinos, may reduce the number of smoking customers and negatively impact the company's business, financial condition, operating performance, and cash flow[103] - Extreme weather conditions, such as typhoons and heavy rainfall, could adversely affect the company's Macau operations by disrupting customer travel and causing property closures[104] - The Macau government has the right to terminate the company's gaming concession without compensation if the company fails to comply with the concession contract or applicable Macau laws, which would have a significant adverse impact on its business and financial condition[105] - The company is exposed to foreign exchange risk due to the potential fluctuation of the Hong Kong dollar and Macau pataca against the US dollar, which could negatively impact its operating performance, financial condition, and debt repayment ability[106][108] - Currency exchange controls and restrictions on currency outflows, such as those currently in place for the Chinese yuan, could hinder the growth of Macau's gaming industry and negatively impact the company's Macau operations[109] - WRL holds approximately 72% of the company's shares as of June 30, 2024, and potential conflicts of interest may arise due to overlapping directors and officers between the company and WRL[110] - The company is approved to operate a total of 570 gaming tables and 1,100 gaming machines in Macau, with 304 tables at Wynn Palace and 258 tables at Wynn Macau as of June 30, 2024[111] - The company faces high leverage risks, with future cash flows potentially insufficient to meet obligations, and may struggle to secure additional financing[112] - The company is exposed to interest rate risks related to floating-rate credit facilities and plans to manage this through a mix of long-term fixed and floating-rate borrowings, along with hedging activities[114] - The company's WM Cayman II revolving credit facility is subject to interest rates based on the Secured Overnight Financing Rate (SOFR) or Hong Kong Interbank Offered Rate (HIBOR), plus a margin, and may face challenges if these rates cannot be determined[114] - Ms. Chen has over 30 years of industry experience, having played a key role in the successful opening and operation of Wynn Las Vegas, Wynn Macau, and Wynn Palace, and was responsible for establishing Wynn International Marketing, Ltd.[118] - Mr. Luo Weixin, appointed as the company's Executive Director since August 11, 2022, has over 25 years of experience in the hotel and gaming industry

Financial Performance - For the six months ended June 30, 2024, the company reported total revenue of HKD 14,734,134,000, a 37.9% increase from HKD 10,738,615,000 in the same period of 2023[4] - Adjusted EBITDA for the same period was HKD 4,352,599,000, up 57.3% from HKD 2,764,152,000 year-over-year[4] - The net profit attributable to owners for the six months was HKD 1,592,122,000, compared to HKD 87,467,000 in the prior year, representing a significant increase[4] - Basic earnings per share increased to HKD 0.30 from HKD 0.02, while diluted earnings per share improved from a loss of HKD 0.03 to HKD 0.30[4] - Total operating revenue for the six months ended June 30, 2024, was HKD 14,734,134, representing a 37.1% increase from HKD 10,738,615 in the same period of 2023[48] - Adjusted EBITDA for Wynn Palace was HKD 2,729,015, up 46.2% from HKD 1,866,879 in 2023, while Wynn Macau's adjusted EBITDA increased by 81.1% to HKD 1,623,584 from HKD 897,273[50] - The net profit attributable to the owners of the company for the six months ended June 30, 2024, was HKD 1,592,122, compared to HKD 87,467 in 2023, marking a significant increase[50] Dividends and Shareholder Returns - The company declared an interim dividend of HKD 0.075 per share, expected to be paid on September 12, 2024[5] - The declared interim dividend for the six months ended June 30, 2024, is HKD 0.075 per share, consistent with the declared final dividend for 2023[28] Assets and Liabilities - As of June 30, 2024, total non-current assets were HKD 26,700,643,000, a decrease from HKD 27,457,459,000 at the end of 2023[7] - Current assets totaled HKD 16,306,007,000, down from HKD 17,371,594,000 at the end of 2023[7] - Total liabilities decreased to HKD 42,839,443,000 from HKD 45,374,661,000 year-over-year[8] - The company reported a liquidity position with cash and cash equivalents of HKD 108,000,000,000 and investments of HKD 39,000,000,000 as of June 30, 2024[10] - The company’s total interest-bearing borrowings amounted to HKD 50,279,763, a decrease of 4.5% from HKD 52,679,614 as of December 31, 2023[39] Operating Expenses - The company reported a total operating expenses of HKD 2,177,545,000 for the six months ended June 30, 2024, compared to HKD 1,657,219,000 for the same period in 2023, representing an increase of approximately 31.3%[17] - Interest expenses for the six months ended June 30, 2024, were HKD 1,524,464,000, slightly up from HKD 1,514,279,000 in 2023, indicating a marginal increase of 0.9%[18] - The company recorded a tax expense of HKD 26,382,000 for the six months ended June 30, 2024, compared to HKD 6,214,000 for the same period in 2023, reflecting a significant increase of 324.5%[21] Regulatory and Compliance - The company has not adopted any new standards, interpretations, or amendments that have not yet come into effect prior to the reporting period[14] - The company has extended its tax agreement with the Macau SAR, which allows for annual payments in lieu of certain taxes until December 31, 2025[22] - The company is subject to ongoing regulatory oversight by the Macau government, which includes compliance with financial reporting requirements and maintaining adequate financial capacity[58] - The company must obtain government approval for significant corporate changes, including business expansions and financial decisions exceeding 10% of its capital[62] Market and Competition - The company faces competition from 28 other casinos in Macau and potential future competition from countries like Japan and Taiwan that may legalize gaming[71] - The company is facing increased operational costs due to labor shortages and rising maintenance expenses[159] - The company faces increasing competition from casinos worldwide, including those in Singapore, South Korea, and the Philippines, which may negatively impact cash flow and operating performance[163] Risks and Challenges - The company's business is significantly affected by consumer discretionary spending, which can be negatively impacted by adverse macroeconomic conditions, including economic downturns or prolonged recessions[144] - Current macroeconomic deterioration, global economic slowdown, or recession may adversely affect the company's gaming revenue, financial condition, operating performance, and cash flow[146] - The company faces significant risks related to floating interest rate credit facilities, which could negatively impact operational performance due to interest rate fluctuations[199] - The company may face challenges in obtaining additional financing when needed[200] Investments and Developments - The company continues to invest in its integrated resorts in the Greater Bay Area, focusing on renovations and expansions to enhance customer experience[51] - Wynn Palace is currently in the design phase for its next development, which is expected to include a theater, event spaces, and various non-gaming offerings[52] - The company has committed to invest a total of MOP 177.3 billion (approximately HKD 172.1 billion) over the ten-year term of the gaming concession, with MOP 165.0 billion (approximately HKD 160.2 billion) allocated for non-gaming capital projects[65] Cash Flow and Financing - Net cash generated from operating activities increased to HKD 3.805 billion for the six months ending June 30, 2024, from HKD 3.032 billion for the same period in 2023[111] - Net cash used in investing activities was HKD 1.154 billion for the six months ending June 30, 2024, compared to net cash used of HKD 869.1 million for the same period in 2023[112] - Net cash used in financing activities was HKD 4.454 billion for the six months ending June 30, 2024, compared to net cash generated of HKD 3.068 billion for the same period in 2023[114] Employee and Operational Management - The group employs approximately 11,400 staff in Macau, emphasizing employee training and internal mobility to support career development[51] - The company faces intense competition for qualified personnel in Macau, which could adversely affect its operations and financial performance if it fails to attract and retain key management and staff[154]

Financial Performance - For the year ended December 31, 2023, the total revenue reached HKD 24,268,142,000, a significant increase from HKD 5,643,940,000 in 2022, representing a growth of approximately 329%[6] - Adjusted EBITDA for the year was HKD 6,621,025,000, compared to a loss of HKD 1,948,480,000 in the previous year, indicating a substantial recovery[6] - The net profit attributable to owners was HKD 1,171,656,000, a turnaround from a loss of HKD 7,339,270,000 in 2022[6] - Basic earnings per share improved to HKD 0.22 from a loss of HKD 1.41 in the previous year[6] - Total operating revenue for Wynn Palace and Wynn Macau reached HKD 24,268,142, an increase of 329% from HKD 5,643,940 in 2022[54] - Adjusted EBITDA for Wynn Palace was HKD 4,311,754 compared to a loss of HKD 872,587 in 2022, while Wynn Macau reported an adjusted EBITDA of HKD 2,309,271, up from a loss of HKD 1,075,893[56] - The company reported a net profit attributable to shareholders of HKD 1,171,656, a significant recovery from a net loss of HKD 7,339,270 in the previous year[56] - The company reported financing income of HKD 571,267, compared to HKD 81,511 in 2022, while financing costs increased to HKD 3,335,189 from HKD 2,563,024[56] - The company reported a significant increase in hotel room revenue, reaching HKD 1,579,610 for Wynn Palace in 2023, compared to HKD 313,667 in 2022[92] - Casino revenue increased from HKD 3.7 billion in 2022 to HKD 19.1 billion in 2023, accounting for 78.7% of total operating revenue[102] Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.075 per share for the year, compared to no dividend in 2022[7] - The board proposed a final dividend of HKD 0.075 per share for the year ended December 31, 2023, compared to zero in 2022, pending shareholder approval[32] Assets and Liabilities - Total non-current assets amounted to HKD 27,457,459,000, slightly down from HKD 27,774,438,000 in 2022[9] - Current assets increased significantly to HKD 17,371,594,000 from HKD 8,304,500,000 in 2022, reflecting improved liquidity[9] - The total liabilities decreased to HKD 49,694,872,000 from HKD 48,476,942,000, indicating a slight reduction in financial obligations[10] - The company reported cash and cash equivalents of HKD 10,300,159,000, up from HKD 7,422,901,000 in the previous year, enhancing its liquidity position[9] - As of December 31, 2023, the company's net debt was HKD 44,154.7 million, a slight decrease from HKD 44,822.2 million in 2022[123] - The capital debt ratio improved to 155.8% in 2023 from 162.0% in 2022, indicating a stronger capital structure[123] Taxation - The effective tax expense for the year ended December 31, 2023, was HKD 42,706,000, which is 3.5% of the pre-tax profit, compared to HKD 12,427,000 (0.2%) in 2022[23] - The group has not made provisions for Hong Kong profits tax for the year ended December 31, 2023, as there were no taxable profits from Hong Kong, consistent with 2022[21] - The group recorded unrecognized tax losses of HKD 4.44 billion as of December 31, 2023, down from HKD 6.56 billion in 2022, which is believed to offset any potential adjustments suggested by the Macau tax authorities[28] Financing and Debt - The total interest-bearing borrowings increased from HKD 48,228,497,000 in 2022 to HKD 52,679,614,000 in 2023[47] - The company entered into a revised credit agreement on June 27, 2023, transitioning the benchmark interest rate from LIBOR to SOFR with an adjustment spread of 0.10 basis points[135] - The total revolving credit facility available to WM Cayman II is HKD 11.7 billion, with an option to increase by an additional USD 1 billion (approximately HKD 7.82 billion) under certain conditions[134] - WML issued $600 million (approximately HKD 4.69 billion) 4.50% convertible bonds due in 2029 on March 7, 2023[146] - The net proceeds from the convertible bond issuance amount to $585.9 million (approximately HKD 4.60 billion), which are intended for general corporate purposes[146] Operational Highlights - The company operates primarily in Macau, with its main business segments being the Wynn Palace and Wynn Macau[53] - The company is in the design phase for the next phase of Wynn Palace, which will include a theater and event space, as well as unique dining and non-gaming offerings[61] - The company employs approximately 11,300 staff in Macau, focusing on talent development and community engagement through various initiatives[60] - The company continues to emphasize sustainable development and community support through its Wynn Care program and charitable foundation[60] Market and Economic Conditions - The tourism industry significantly impacts WRM's business, with visitor numbers to Macau increasing by 394.9% in 2023 compared to 2022[81] - The company’s cash flow is primarily dependent on its Macau operations, which poses greater risks due to potential adverse events like COVID-19[175] - The ongoing recovery of the Macau gaming business to pre-pandemic levels remains uncertain, impacting the ability to pay dividends[177] - Negative macroeconomic conditions have led to significant increases in interest rates, reduced consumer discretionary spending, and volatility in capital markets, adversely affecting the company's gaming revenue, financial condition, operating performance, and cash flow[161] Regulatory and Compliance Risks - The company must comply with Macau laws and regulations, and failure to maintain necessary licenses and permits could severely impact its operations[162] - The company faces administrative reviews and approvals from multiple Macau government agencies, and failure to comply with gaming license terms may lead to the revocation of its gaming license[164] - Compliance with anti-money laundering laws and regulations is critical, as violations could adversely affect the company's business and financial performance[182] - The company is subject to strict regulations, and non-compliance could lead to increased operational costs and reduced profits[186] Cybersecurity and Operational Risks - Cybersecurity risks, including system failures and data breaches, pose significant threats to the company's operations and customer data security[188] - The company has implemented internal controls and compliance programs, but there is no guarantee that these measures will effectively prevent violations of policies and laws[184] - The company relies heavily on its computer systems for transaction processing and business management, and any significant disruption could have a major negative impact on business performance and financial status[194] Intellectual Property Risks - The company is licensed to use the "WYNN" trademark, and any challenge to this right could adversely affect business operations and financial performance[199] - The company faces risks if third parties successfully challenge its rights to the "WYNN" trademarks, which could adversely affect its business and operating performance[200]

Financial Performance - Entertainment revenue for the six months ended June 30, 2023, was HKD 8,271,795, a significant increase from HKD 2,218,716 in 2022, representing a growth of approximately 273%[9] - Adjusted EBITDA for the same period was HKD 2,764,152, compared to a loss of HKD 873,101 in 2022, indicating a substantial recovery[9] - Profit attributable to owners for the first half of 2023 was HKD 87,467, a turnaround from a loss of HKD 3,597,629 in the previous year[9] - Basic earnings per share for the first half of 2023 was HKD 0.02, compared to a loss per share of HKD 0.69 in 2022[9] - Total operating revenue for the six months ended June 30, 2023, was HKD 10,738,615, up from HKD 3,248,284 in 2022, representing a significant increase[45] - Total operating revenue increased by 230.6% from HKD 3.25 billion in the six months ended June 30, 2022, to HKD 10.74 billion in the same period of 2023, driven by increased gaming volume, hotel occupancy, and restaurant traffic[52] - Casino revenue rose from HKD 2.22 billion (68.3% of total operating revenue) in the six months ended June 30, 2022, to HKD 8.27 billion (77.0% of total operating revenue) in the same period of 2023, attributed to the lifting of travel restrictions[53] - Non-gaming revenue net increased by 139.6% from HKD 1.03 billion (31.7% of total operating revenue) to HKD 2.47 billion (23.0% of total operating revenue)[55] - The net profit attributable to the owners of the company was HKD 87.5 million for the six months ended June 30, 2023, compared to a net loss of HKD 3.6 billion for the same period in 2022[66] Operational Developments - Wynn Palace is currently in the design phase for its next development phase, which will include a theater, interactive entertainment facilities, and unique dining options[12] - Wynn Macau has undergone expansions since its opening, enhancing gaming and non-gaming facilities, with a focus on attracting and retaining customers[11] - The company employs approximately 11,000 staff in Macau, emphasizing employee training and internal mobility to enhance career development[11] - The company is committed to community development through its "Wynn Cares" program, promoting volunteerism and responsible gaming initiatives[11] - The company continues to monitor and reduce energy inefficiencies, supporting sustainable development initiatives in Macau and beyond[11] Regulatory and Compliance - The company has obtained a 10-year gaming license from the Macau government, allowing operations from January 1, 2023, to December 31, 2032[19] - The company is subject to a special gaming tax of 35% on gross gaming revenue and must allocate up to 5% of gross gaming revenue annually for public interest initiatives[21] - The company must submit annual proposals for investment projects to the Macau government by September 30 each year, detailing project specifics and investment amounts[26] - The company is required to provide bi-monthly progress reports on investment plan developments and may need to submit detailed reports if project timelines are affected[26] - The company must notify the Macau government of any significant financial decisions exceeding 10% of its capital, including employee compensation and major financial transactions[24] - The company is required to maintain adequate financial capacity to operate under the gaming license and is subject to ongoing government supervision[21] - The company must comply with suitability requirements related to the background and reputation of its shareholders and key personnel[21] Market and Economic Conditions - The company has faced significant operational impacts due to COVID-19, with visitor numbers to Macau significantly reduced during the pandemic[17] - As of the mid-report date, there are no entry restrictions or quarantine requirements for visitors to Macau, but future restrictions could impact the company's operations[17] - The Macau government has lifted COVID-19 related entry restrictions, which is expected to positively impact tourism and gaming activities[35] - The current macroeconomic environment, including inflation and geopolitical tensions, may adversely affect consumer spending and the company's financial performance[116] - Geopolitical tensions and economic downturns may lead to reduced demand for the company's luxury services and facilities, impacting revenue[118] - Travel restrictions and visa policies may decrease the number of visitors from key markets like China, Hong Kong, and Taiwan, negatively affecting the company's revenue and cash flow[119] Financial Position and Debt Management - Cash and cash equivalents as of June 30, 2023, amounted to approximately HKD 126.7 billion, available for operations, new business development, and debt repayment[68] - The capital debt ratio improved to 157.1% as of June 30, 2023, from 162.0% as of December 31, 2022[74] - Net cash generated from operating activities was HKD 3.03 billion for the six months ended June 30, 2023, compared to a cash outflow of HKD 1.56 billion for the same period in 2022[77] - The company completed the issuance of USD 600 million (approximately HKD 4.7 billion) convertible bonds due in 2029 on March 7, 2023[68] - The company has a revolving loan facility of up to USD 500 million (approximately HKD 3.92 billion) with WRL, which remains undrawn as of June 30, 2023[68] - The company has a revolving credit facility of HKD 11.71 billion, with an option to increase by an additional HKD 10 billion under certain conditions[83] - The company faces interest rate risk related to floating-rate credit facilities and plans to manage this risk through a combination of long-term fixed-rate and floating-rate borrowings, supplemented by hedging activities when deemed necessary[164] - Debt repayment will require a significant portion of the company's cash flow from operations, potentially reducing available cash for working capital and other capital expenditures[165] Leadership and Governance - Ellen F. Whittemore appointed as non-executive director since January 1, 2023, previously served as Executive Vice President and General Counsel of Wynn Resorts, Limited since July 2018[177] - Julie M. Cameron-Doe appointed as non-executive director since May 26, 2023, has been CFO of Wynn Resorts, Limited since April 2022, previously CFO at Aristocrat Leisure Limited[178] - The company continues to focus on expanding its market presence and enhancing its product offerings through strategic leadership appointments[180] - The board of directors includes members with significant experience in finance, law, and community service, contributing to the company's governance and strategic direction[181] - The company is committed to maintaining high standards of corporate governance and community engagement through its board composition[182] Risks and Challenges - The company acknowledges significant risks related to COVID-19, which has adversely affected business operations and financial performance, with a slow recovery in visitor numbers to Macau[111] - The company faces ongoing uncertainties regarding the impact of potential re-imposed public health restrictions on its operations and financial condition[112] - The company faces risks related to non-compliance with gaming license agreements and regulatory changes in Macau, which could negatively impact its operations[115] - The company relies heavily on key management personnel and skilled employees; failure to retain or attract such talent could significantly impact its operations and financial performance[122] - The company’s operations are significantly affected by external factors such as terrorism, infectious disease outbreaks, and regional political events, which can negatively impact visitor numbers[123] - The company faces potential regulatory changes in local laws that could impact its operations, including gaming laws and tourism policies[127] Intellectual Property and Cybersecurity - The company has taken steps to protect its intellectual property, but efforts may be costly and not always successful[146] - The loss of rights to use the "WYNN" trademark could severely disrupt the company's operations and financial performance[150] - The company faces risks from unauthorized use of its trademarks by third parties, which could impact its business[150] - The company relies on information technology systems to manage sensitive customer and corporate data, which are vulnerable to security breaches and cyber threats[137] - Any unauthorized disclosure of confidential or personal data could harm the company's reputation and lead to significant legal and financial liabilities[139] Community and Environmental Commitment - The company is committed to community development through its "Wynn Cares" program, promoting volunteerism and responsible gaming initiatives[11] - The company continues to monitor and reduce energy inefficiencies, supporting sustainable development initiatives in Macau and beyond[11] - The company faces scrutiny regarding its environmental, social, and governance practices, which could affect its brand value and stakeholder perceptions[134]

Financial Highlights [Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the six months ended June 30, 2023, Wynn Macau, Limited's performance significantly improved, with operating revenue rebounding sharply, turning a loss into a net profit of **HKD 87.5 million** and adjusted EBITDA turning positive to **HKD 2.76 billion** Financial Highlights for H1 2023 (Unit: Thousand HKD) | Metric | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :--- | :--- | :--- | | **Casino Revenue** | 8,271,795 | 2,218,716 | | **Other Revenue** | 2,466,820 | 1,029,568 | | **Adjusted EBITDA** | 2,764,152 | (873,101) | | **Profit/(Loss) Attributable to Owners** | 87,467 | (3,597,629) | | **Basic Earnings/(Loss) Per Share (HKD)** | 0.02 | (0.69) | Consolidated Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In H1 2023, the company's total operating revenue increased by **230.6%** to **HKD 10.74 billion**, achieving an operating profit of **HKD 1.33 billion** and a net profit of **HKD 87.5 million**, reversing the prior year's operating loss Key Items from Statement of Profit or Loss (Unit: Thousand HKD) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | **Total Operating Revenue** | **10,738,615** | **3,248,284** | | Casino | 8,271,795 | 2,218,716 | | Rooms | 1,137,287 | 273,461 | | **Operating Profit/(Loss)** | **1,326,675** | **(2,208,059)** | | Finance Costs | (1,615,674) | (1,201,772) | | **Profit/(Loss) Before Tax** | 93,681 | (3,591,551) | | **Net Profit/(Loss) Attributable to Owners of the Company** | **87,467** | **(3,597,629)** | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, total assets increased to **HKD 43.08 billion** driven by a significant rise in cash and cash equivalents to **HKD 12.67 billion**, while total liabilities also increased due to new convertible bond issuance, though liquidity significantly improved Key Items from Statement of Financial Position (Unit: Thousand HKD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Non-Current Assets** | 28,103,076 | 27,774,438 | | **Total Current Assets** | 14,980,587 | 8,304,500 | | Cash and Cash Equivalents | 12,671,669 | 7,422,901 | | **Total Current Liabilities** | 5,660,988 | 4,754,257 | | **Total Non-Current Liabilities** | 54,388,199 | 48,476,942 | | Interest-Bearing Borrowings | 52,739,665 | 48,228,497 | | **Total Asset Deficit (Negative Equity)** | **(16,965,524)** | **(17,152,261)** | - Despite the Group recording an asset deficit of **HKD 16.97 billion** as of June 30, 2023, with **HKD 12.67 billion** in cash and cash equivalents and approximately **HKD 3.92 billion** in available revolving loan facilities, management believes the Group can maintain its going concern[6](index=6&type=chunk) Notes to the Interim Financial Information [Note 8. Goodwill and Intangible Assets](index=9&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) The company recognized a **HKD 1.64 billion** intangible asset on January 1, 2023, representing the right to operate gaming under a new ten-year Macau gaming concession, which will be amortized over the concession period, significantly increasing net intangible assets to **HKD 1.95 billion** - In December 2022, WRM obtained a new 10-year gaming concession, valid from January 1, 2023, to December 31, 2032[18](index=18&type=chunk) - On January 1, 2023, the Group recognized an intangible asset of **HKD 1.64 billion** and a corresponding financial liability, representing the right to operate gaming and the obligation to make related payments. This intangible asset will be amortized over the 10-year concession period[19](index=19&type=chunk) [Note 12. Interest-Bearing Borrowings](index=13&type=section&id=Note%2012.%20Interest-Bearing%20Borrowings) As of June 30, 2023, total interest-bearing borrowings increased to **HKD 52.74 billion**, primarily due to the new issuance of **HKD 4.70 billion** (USD 600 million) convertible bonds, with **HKD 3.92 billion** of the WRL revolving loan facility remaining undrawn Composition of Interest-Bearing Borrowings (Unit: Thousand HKD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Bank Loans | 11,711,620 | 11,699,029 | | Senior Notes | 36,834,767 | 36,645,398 | | Convertible Bonds | 4,702,311 | — | | **Total Interest-Bearing Borrowings** | **52,739,665** | **48,228,497** | - As of June 30, 2023, **USD 500 million** (approximately **HKD 3.92 billion**) of the WRL revolving loan facility remained undrawn[28](index=28&type=chunk) [Note 14. Segment Information](index=15&type=section&id=Note%2014.%20Segment%20Information) In H1 2023, both Wynn Palace and Wynn Macau segments achieved strong recoveries, with Wynn Palace's operating revenue increasing to **HKD 4.99 billion** and Adjusted EBITDA turning to a profit of **HKD 1.87 billion**, while Wynn Macau's operating revenue rose to **HKD 3.29 billion** and Adjusted EBITDA turned to a profit of **HKD 900 million** Segment Operating Revenue (Unit: Thousand HKD) | Segment | Business | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | | **Wynn Palace** | Casino | 4,985,058 | 1,105,868 | | | Rooms | 760,273 | 162,840 | | | Food & Beverage | 382,549 | 143,059 | | | Retail & Other | 438,451 | 322,607 | | **Wynn Macau** | Casino | 3,286,737 | 1,112,848 | | | Rooms | 377,014 | 110,621 | | | Food & Beverage | 227,012 | 106,484 | | | Retail & Other | 281,521 | 183,957 | Segment Adjusted EBITDA (Unit: Thousand HKD) | Segment | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Wynn Palace | 1,866,879 | (460,334) | | Wynn Macau | 897,273 | (412,767) | | **Total** | **2,764,152** | **(873,101)** | Management Discussion and Analysis [Overview](index=18&type=section&id=Overview) The company develops, owns, and operates two integrated casino resorts in Macau, Wynn Palace and Wynn Macau, and is in the design phase for Wynn Palace's next development stage, planning to add non-gaming facilities - The company is the developer, owner, and operator of two integrated casino resorts: Wynn Palace and Wynn Macau[35](index=35&type=chunk) - The next phase of Wynn Palace's development is in the design stage, expected to include a theater, interactive entertainment facilities, specialty dining, and other non-gaming amenities[36](index=36&type=chunk) [Factors Affecting Operating Results](index=21&type=section&id=Factors%20Affecting%20Operating%20Results) The company's operating results are influenced by the lifting of COVID-19 restrictions, the new 10-year gaming concession with strict regulatory requirements and investment commitments, and other factors including tourism, credit risk, and development execution risks - The easing or removal of COVID-19 related protective measures by Macau authorities between December 2022 and January 2023, lifting visitor restrictions, positively impacted the company's performance[38](index=38&type=chunk) - The company's wholly-owned subsidiary, WRM, obtained a new 10-year gaming concession on December 16, 2022, valid until December 31, 2032, subject to strict regulatory requirements, including a **35%** special gaming tax and a **5%** special contribution on gross gaming revenue[39](index=39&type=chunk)[40](index=40&type=chunk) - WRM committed to making **MOP 17.73 billion** in non-gaming and gaming investments over the ten-year concession period, with **MOP 16.50 billion** allocated to non-gaming projects to attract international visitors and diversify business[44](index=44&type=chunk) [Review of Historical Operating Results](index=28&type=section&id=Review%20of%20Historical%20Operating%20Results) Benefiting from the lifting of travel restrictions, the company's H1 2023 operating performance saw a comprehensive rebound, with total operating revenue surging by **230.6%** to **HKD 10.74 billion**, driven by significant growth across all casino segments and non-gaming revenue, ultimately achieving operating profit and turning a loss into a profit - Total operating revenue increased by **230.6%** from **HKD 3.25 billion** in the prior year period to **HKD 10.74 billion**, primarily due to increased gaming volume, hotel occupancy, and restaurant patronage[60](index=60&type=chunk) Casino Revenue Growth by Segment (Unit: Billion HKD) | Business Segment | H1 2023 Revenue | H1 2022 Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | VIP Table Games | 2.20 | 0.48 | +356.4% | | Mass Market Table Games | 7.46 | 2.07 | +259.4% | | Slot Machines | 0.66 | 0.27 | +146.3% | Hotel Occupancy Rate and Revenue Per Available Room | Property | Metric | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | | **Wynn Palace** | Occupancy Rate | 92.2% | 37.7% | | | Revenue Per Available Room | HKD 2,308 | HKD 491 | | **Wynn Macau** | Occupancy Rate | 93.9% | 40.5% | | | Revenue Per Available Room | HKD 1,882 | HKD 550 | - Based on the strong rebound in performance, profit attributable to owners of the company was **HKD 87.5 million**, compared to a net loss of **HKD 3.60 billion** in the prior year period[70](index=70&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly strengthened in H1 2023, with cash and cash equivalents reaching **HKD 12.67 billion** and cash flow from operating activities turning positive, supported by the issuance of **USD 600 million** in convertible bonds, despite a high capital gearing ratio - As of June 30, 2023, the cash and cash equivalents balance was approximately **HKD 12.67 billion**[71](index=71&type=chunk) - On March 7, 2023, the company completed the offering of **USD 600 million** (approximately **HKD 4.70 billion**) of **4.50%** convertible bonds, with proceeds used for general corporate purposes[71](index=71&type=chunk)[87](index=87&type=chunk) Cash Flow Summary (Unit: Million HKD) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Net Cash From/(Used In) Operating Activities | 3,032.3 | (1,558.9) | | Net Cash Used In Investing Activities | (869.1) | (264.8) | | Net Cash From/(Used In) Financing Activities | 3,068.5 | (1,204.7) | | **Cash and Cash Equivalents at End of Period** | **12,671.7** | **8,688.7** | - The capital gearing ratio decreased from **162.0%** at the end of 2022 to **157.1%** as of June 30, 2023[74](index=74&type=chunk) [Material Risk Factors](index=45&type=section&id=Material%20Risk%20Factors) The company faces significant risks including potential re-imposition of COVID-19 travel restrictions, macroeconomic downturns, geopolitical tensions, reliance on key management, intense market competition, compliance with gaming concession terms, and substantial debt levels with associated interest rate volatility - COVID-19 pandemic-related risks: Although current restrictions have been eased, future re-imposition of restrictions could again adversely affect business, operations, and financial condition[97](index=97&type=chunk)[98](index=98&type=chunk) - Regulatory and compliance risks: Business operations are highly dependent on compliance with Macau's laws, regulations, and gaming concession contract terms; any non-compliance could lead to concession revocation[98](index=98&type=chunk)[118](index=118&type=chunk) - Macroeconomic and competitive risks: Business is susceptible to reduced discretionary consumer spending, economic recession, inflation, and geopolitical tensions. Additionally, casinos in Macau and other parts of Asia pose intense competition[100](index=100&type=chunk)[106](index=106&type=chunk) - Debt risks: The company has substantial consolidated debt, and high leverage may result in insufficient cash flow to meet debt obligations and expose the company to rising interest rates[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) Other Information [Dividends](index=60&type=section&id=Dividends) For the six months ended June 30, 2023, the company did not declare any interim dividends, consistent with the prior year period - No interim dividends were declared for the six months ended June 30, 2023 (for the six months ended June 30, 2022: nil)[125](index=125&type=chunk) [Corporate Governance](index=61&type=section&id=Corporate%20Governance) The company is committed to maintaining high corporate governance standards, consistently complying with the Corporate Governance Code, and its interim financial information has been reviewed by the Audit and Risk Committee and auditors - For the six months ended June 30, 2023, the company consistently complied with the code provisions of the Corporate Governance Code[126](index=126&type=chunk) - The Audit and Risk Committee members have reviewed the Group's results for the six months ended June 30, 2023[128](index=128&type=chunk) [Litigation](index=62&type=section&id=Litigation) As of June 30, 2023, the Group had no material outstanding litigation, though the company is vigorously defending against lawsuits related to the gaming junket operator "Dore Entertainment," which it believes lack legal merit - WRM has been named as a defendant in multiple lawsuits by plaintiffs claiming to be investors or depositors of the gaming junket operator "Dore Entertainment." The lawsuits allege losses due to Dore's failure to honor payments and contend that WRM should bear supervisory responsibility[131](index=131&type=chunk) - The company believes these cases are without legal basis and meritless, and intends to vigorously defend against the remaining claims brought against it in these lawsuits[131](index=131&type=chunk)

Financial Performance - Casino revenue for 2022 was HKD 3,695,226, a decrease of 58.8% from HKD 8,973,480 in 2021[8] - Other income for 2022 was HKD 1,948,714, down 29.1% from HKD 2,751,946 in 2021[8] - Adjusted EBITDA for 2022 was a loss of HKD 1,948,480 compared to a profit of HKD 383,800 in 2021[8] - Loss attributable to owners for 2022 was HKD 7,339,270, an increase of 41.7% from HKD 5,179,295 in 2021[8] - Basic and diluted loss per share for 2022 was HKD 1.41, compared to HKD 1.00 in 2021[8] - Total operating revenue decreased by 51.9% from HKD 11.73 billion in 2021 to HKD 5.64 billion in 2022 due to travel-related restrictions and COVID-19 measures[50] - The company reported a significant operating loss of HKD 4,888,445 in 2022, compared to a loss of HKD 2,651,449 in 2021, indicating a worsening financial position[42] - Net loss attributable to owners increased by 41.7% from HKD 5.18 billion in 2021 to HKD 7.34 billion in 2022[62] - The company anticipates ongoing uncertainty regarding potential future restrictions that may impact operations and financial performance[63] Casino Operations - Wynn Macau features approximately 294,000 square feet of gaming space with 276 gaming tables and 567 slot machines[15] - Wynn Palace includes approximately 468,000 square feet of gaming space with 287 gaming tables and 560 slot machines[12] - The company operates two casinos under the gaming concession: Wynn Macau and Wynn Palace[21] - Casino revenue dropped from HKD 89.73 billion (76.5% of total operating revenue) in 2021 to HKD 37.0 billion (65.5% of total operating revenue) in 2022, with VIP table revenue falling by 80.4% to HKD 6.2 billion[51] - VIP table drop for Wynn Palace decreased to HKD 20,658,894 in 2022 from HKD 49,991,814 in 2021, a decline of about 58.7%[46] - The average daily revenue per VIP table at Wynn Palace fell to HKD 9,815 in 2022, down from HKD 57,806 in 2021, a decrease of approximately 83.0%[46] - Wynn Macau's total operating revenue was HKD 2,694,479 in 2022, down from HKD 4,864,225 in 2021, reflecting a decline of about 44.7%[44] - Slot machine revenue for Wynn Macau decreased to HKD 248,688 in 2022 from HKD 275,678 in 2021, a decline of approximately 9.8%[47] - The average daily revenue per slot machine at Wynn Macau was HKD 1,091 in 2022, down from HKD 1,286 in 2021, a decrease of about 15.1%[47] Regulatory and Compliance - The company signed a 10-year gaming concession contract with the Macau government on December 16, 2022, allowing operations from January 1, 2023, to December 31, 2032[19] - The company is required to pay a special gaming tax of 35% on gross gaming revenue and contribute up to 5% of gross gaming revenue annually for public interest initiatives[20] - The company must submit an annual execution proposal for investment projects to the Macau government by September 30 each year, detailing investment amounts and timelines[25] - The company is subject to ongoing regulatory oversight by the Macau government, including compliance with financial reporting and operational requirements[19] - The company must notify the Macau government of any financial decisions exceeding 10% of its capital, including employee compensation and significant loans[24] - The company is obligated to submit a report on the execution of the previous year's investment proposal by March 31 each year[25] - The company faces significant compliance risks due to evolving laws and regulations, which may lead to increased operational costs and reduced profits[121] - The company is subject to strict anti-money laundering regulations, and any violations could negatively impact its business and financial performance[117] Market Conditions and Risks - The company has experienced a significant decrease in visitor numbers due to COVID-19, but restrictions have been lifted as of December 2022, with no further entry limitations for tourists[16] - Visitor numbers to Macau in 2022 decreased by 26.0% compared to 2021 and by 85.5% compared to 2019, significantly impacting the tourism and gaming sectors[34] - The company faces inherent risks and uncertainties related to potential future restrictions on public and tourism activities due to COVID-19[16] - The company faces significant risks related to the COVID-19 pandemic, which has adversely affected its business, operations, financial condition, and performance due to reduced visitor numbers to Macau[96] - The company cannot predict when its Macau properties will return to pre-pandemic business levels due to ongoing uncertainties regarding public health measures and travel restrictions[98] - The company's financial performance is significantly impacted by the macroeconomic environment, including consumer discretionary spending, geopolitical tensions, and economic downturns, which may adversely affect its business and cash flow[101] - The current macroeconomic conditions, characterized by historical inflation levels and relatively low unemployment rates, have led to rising interest rates and market volatility, negatively affecting the company's gaming revenue and financial status[102] - Geopolitical tensions, economic downturns, and travel restrictions may reduce the demand for the company's products and services, impacting overall business performance[104] Leadership and Management - The company appointed Pan Guohong as the Executive Director and CEO effective February 1, 2022, after serving as a non-executive director since August 17, 2018[153] - Chen Zhiling was appointed as the President of the company on March 1, 2023, and also serves as the Vice Chairperson of the Board[154] - Luo Weixin has been the Executive Director and Chief Operating Officer since July 7, 2022, overseeing operations at Wynn Macau and Wynn Palace[161] - The company has a strong leadership team with over 30 years of industry experience, including significant roles in the successful openings of Wynn Las Vegas, Wynn Macau, and Wynn Palace[159] - The company emphasizes local management talent development and service excellence to maintain its market leadership reputation[164] - The company is focused on expanding its market presence and enhancing product quality to drive growth in the competitive landscape[164] - The leadership team has a diverse background in hospitality, law, and business, contributing to a well-rounded strategic approach[163][171] Community and Social Responsibility - The company is focused on corporate social responsibility through initiatives like the Wynn Care Foundation, established by Chen Zhiling in 2020[159] - The "永利關愛" program focuses on community development, volunteer service, and responsible gaming, aiming to positively impact the local community[191] - The company has established a community and government relations department to enhance its social impact and support local initiatives[198] - The group reported a cash donation of HKD 145.9 million and HKD 142.2 million for the years ended December 31, 2022, and 2021, respectively[200] - The company provides professional development and training opportunities for employees, including a "Career Advancement Development Program" launched in 2016[193] Financial Obligations and Debt - The company has a significant amount of debt, and failure to meet payment obligations could lead to acceleration of debt repayment and potential bankruptcy[147] - The capital debt ratio increased to 162.0% in 2022 from 133.2% in 2021, indicating a significant rise in net debt relative to total capital[69] - Total interest-bearing borrowings amounted to HKD 48.23 billion as of December 31, 2022, compared to HKD 46.54 billion in 2021[77] - The company has a high leverage ratio, and future cash flows may be insufficient to meet obligations, making it difficult to obtain additional financing[146] - The company plans to use the proceeds from the issuance of USD 600 million (approximately HKD 4.68 billion) convertible bonds for general corporate purposes[67] Operational Challenges - The company faces significant development and construction risks for ongoing and future renovation projects, which could impact project success[38] - The company may need to seek additional financing for unforeseen developments or new business opportunities[93] - The company is exposed to risks from external factors such as pandemics, social unrest, and natural disasters that could impact the tourism and leisure industry[112] - The company faces potential negative impacts from any damage to its reputation, which could significantly affect business performance and cash flow[110] - The company may experience increased costs related to maintaining its properties and a decrease in visitor numbers to Macau[112] Cybersecurity and Compliance - Cybersecurity risks, including data breaches and system failures, pose a threat to the company's operations and reputation[122] - The company must comply with privacy laws and data security standards, which may increase operational costs and affect marketing capabilities[126] - Any unauthorized disclosure of confidential or personal data could lead to significant reputational damage and legal liabilities for the company[125] - The company has implemented various systems and training to mitigate risks associated with fraud and theft, but acknowledges that these measures may not be sufficient to prevent all incidents[128] Future Outlook - The company is committed to maintaining a competitive edge in the gaming and hospitality industry through strategic leadership and operational excellence[161] - The company aims to leverage its experienced board to navigate future challenges and capitalize on growth opportunities in the market[165] - The company is focused on expanding its market presence in Macau, leveraging its experienced management team[183]

Annual Results Announcement [Financial Highlights](index=1&type=section&id=Financial%20Highlights) In fiscal year 2022, the company's operating revenue declined by 51.9%, casino revenue by 58.8%, adjusted EBITDA turned negative, and loss attributable to owners expanded to HKD 7.34 billion FY2022 Financial Highlights (For the year ended December 31) | Indicator | 2022 (Thousand HKD) | 2021 (Thousand HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Casino Revenue | 3,695,226 | 8,973,480 | -58.8% | | Other Revenue | 1,948,714 | 2,751,946 | -29.2% | | Adjusted EBITDA | (1,948,480) | 383,800 | N/A | | Loss Attributable to Owners | (7,339,270) | (5,179,295) | +41.7% | | Loss Per Share (HKD) | (1.41) | (1.00) | +41.0% | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents detailed consolidated statements of comprehensive income and financial position, revealing an expanded operating loss of HKD 4.89 billion and a net asset deficit of HKD 17.15 billion by year-end 2022 [Consolidated Statement of Comprehensive Income](index=2&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Total operating revenue for fiscal year 2022 was HKD 5.64 billion, a 51.9% decrease, with core casino revenue down 58.8%, leading to an operating loss of HKD 4.89 billion and a net loss attributable to owners of HKD 7.34 billion Key Items from Consolidated Statement of Comprehensive Income (For the year ended December 31) | Item | 2022 (Thousand HKD) | 2021 (Thousand HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Operating Revenue** | **5,643,940** | **11,725,426** | **-51.9%** | | Casino | 3,695,226 | 8,973,480 | -58.8% | | Rooms | 514,650 | 928,717 | -44.6% | | Food & Beverage | 476,468 | 624,907 | -23.8% | | Retail & Other | 957,596 | 1,198,322 | -20.1% | | **Operating Costs & Expenses** | **10,532,385** | **14,376,875** | **-26.7%** | | **Operating Loss** | **(4,888,445)** | **(2,651,449)** | **+84.4%** | | **Net Loss Attributable to Owners of the Company** | **(7,339,270)** | **(5,179,295)** | **+41.7%** | [Consolidated Statement of Financial Position](index=3&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2022, total assets decreased by 13.9% to HKD 36.08 billion, total liabilities increased by 2.5% to HKD 53.23 billion, and the net asset deficit expanded to HKD 17.15 billion Key Items from Consolidated Statement of Financial Position (As of December 31) | Item | 2022 (Thousand HKD) | 2021 (Thousand HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Current Assets | 8,304,500 | 12,741,030 | -34.8% | | Total Non-Current Assets | 27,774,438 | 29,155,967 | -4.7% | | **Total Assets** | **36,078,938** | **41,896,997** | **-13.9%** | | Total Current Liabilities | 4,754,257 | 5,090,516 | -6.6% | | Total Non-Current Liabilities | 48,476,942 | 46,829,080 | +3.5% | | **Total Liabilities** | **53,231,199** | **51,919,596** | **+2.5%** | | **Net Liabilities / Total Asset Deficit** | **(17,152,261)** | **(10,022,599)** | **+71.1%** | [Notes to the Financial Statements](index=5&type=section&id=Notes%20to%20the%20Financial%20Statements) The notes detail key financial items, including the new 10-year gaming concession, COVID-19's impact, segment reporting for Wynn Palace and Wynn Macau, and disclosures on operating expenses, financing costs, taxation, receivables, and borrowings - The company's wholly-owned subsidiary, WRM, signed a new **10-year gaming concession** contract with the Macau government, allowing it to operate games of fortune at Wynn Palace and Wynn Macau from January 1, 2023, to December 31, 2032[8](index=8&type=chunk) - The COVID-19 pandemic significantly reduced visitor arrivals to Macau, resulting in a **significant adverse impact** on the Group's 2022 operating results, and despite the easing of most pandemic measures by Macau authorities, future uncertainties persist[9](index=9&type=chunk) - As of year-end 2022, the Group had a **net asset deficit of HKD 17.15 billion** but held **HKD 7.42 billion in cash and cash equivalents** and approximately **HKD 3.90 billion in available borrowing facilities**, leading management to believe the company can continue as a going concern[11](index=11&type=chunk) Segment Operating Revenue (For the year ended December 31) | Segment | 2022 (Thousand HKD) | 2021 (Thousand HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Wynn Palace** | **3,209,461** | **7,231,196** | **-55.6%** | | Casino | 2,000,956 | 5,267,310 | -62.0% | | Non-Casino | 1,208,505 | 1,963,886 | -38.5% | | **Wynn Macau** | **2,434,479** | **4,864,230** | **-49.9%** | | Casino | 1,694,270 | 3,706,170 | -54.3% | | Non-Casino | 740,209 | 1,158,060 | -36.1% | | **Total Operating Revenue** | **5,643,940** | **11,725,426** | **-51.9%** | [Management Discussion and Analysis](index=18&type=section&id=Management%20Discussion%20and%20Analysis) Management discusses the business overview, key performance drivers, historical results, and liquidity, highlighting the impact of COVID-19, the new 10-year gaming concession, and the company's financial position and investment commitments [Overview](index=18&type=section&id=Overview) The Group develops, owns, and operates Wynn Palace and Wynn Macau integrated resorts in Macau, focusing on sustainable development and planning non-gaming expansions for Wynn Palace - The company operates two integrated resorts in Macau: **Wynn Palace and Wynn Macau**, offering gaming, hotel, food and beverage, retail, and entertainment services[36](index=36&type=chunk) - The next phase of Wynn Palace's development is in the design stage, planning to add **non-gaming facilities** such as a theater, interactive entertainment, and specialty dining[37](index=37&type=chunk) [Factors Affecting Our Results of Operations and Financial Condition](index=20&type=section&id=Factors%20Affecting%20Our%20Results%20of%20Operations%20and%20Financial%20Condition) Key factors affecting performance include COVID-19 and Macau's gaming regulations, with the new 10-year concession requiring strict compliance, including a commitment to MOP 17.73 billion in non-gaming and gaming investments - The company's wholly-owned subsidiary, WRM, secured a **new 10-year gaming concession** valid from January 1, 2023, to December 31, 2032[40](index=40&type=chunk) - Concessionaires are required to pay a **35% special gaming tax** and allocate up to **5% of gross gaming revenue** for public interest and social security purposes[41](index=41&type=chunk) - The company committed to investing **MOP 17.73 billion** (approximately **HKD 17.21 billion**) over the new 10-year concession period, with **MOP 16.50 billion** allocated for non-gaming projects and activities[45](index=45&type=chunk) - Macau's gross gaming revenue in 2022 was **HKD 40.97 billion**, a **51.4% year-on-year decrease**, primarily due to reduced visitor arrivals caused by border restrictions[47](index=47&type=chunk) [Review of Historical Operating Results](index=27&type=section&id=Review%20of%20Historical%20Operating%20Results) Total operating revenue in 2022 decreased by 51.9% to HKD 5.64 billion due to COVID-19, with casino revenue down 58.8%, VIP table game revenue down 80.4%, and mass market table game revenue down 50.2%, leading to an expanded operating loss Casino Gaming Business Performance (For the year ended December 31) | Item | 2022 | 2021 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **VIP Business** | | | | | VIP Table Game Rolling Chip Turnover (Thousand HKD) | 34,509,356 | 92,621,727 | -62.7% | | VIP Table Game Revenue (Thousand HKD) | 620,848 | 3,175,164 | -80.4% | | **Mass Market Business** | | | | | Mass Market Table Game Drop (Thousand HKD) | 19,425,925 | 36,105,991 | -46.2% | | Mass Market Table Game Revenue (Thousand HKD) | 3,691,087 | 7,405,804 | -50.2% | | **Slot Machine Business** | | | | | Slot Machine Handle (Thousand HKD) | 12,740,522 | 19,518,689 | -34.7% | | Slot Machine Revenue (Thousand HKD) | 493,516 | 727,545 | -32.2% | Hotel Business Performance (For the year ended December 31) | Item | 2022 | 2021 | | :--- | :--- | :--- | | **Wynn Palace** | | | | Average Daily Rate | 1,218 HKD | 1,416 HKD | | Occupancy Rate | 38.4% | 58.5% | | Revenue Per Available Room | 467 HKD | 828 HKD | | **Wynn Macau** | | | | Average Daily Rate | 1,206 HKD | 1,659 HKD | | Occupancy Rate | 41.1% | 58.8% | | Revenue Per Available Room | 495 HKD | 975 HKD | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) As of year-end 2022, the company held HKD 7.42 billion in cash and cash equivalents, utilized various financing channels including a USD 500 million revolving loan and a HKD 11.7 billion credit facility, issued a USD 600 million convertible bond in March 2023, and saw its debt-to-capital ratio rise to 162.0% - As of December 31, 2022, the company held **HKD 7.42 billion** in cash and cash equivalents[69](index=69&type=chunk) - The company entered into a **USD 500 million** (approximately **HKD 3.9 billion**) unsecured revolving loan facility with its parent company WRL, which remained undrawn at year-end[69](index=69&type=chunk)[82](index=82&type=chunk) - On March 7, 2023, the company issued **USD 600 million** of 4.50% convertible bonds due 2029 for general corporate purposes[70](index=70&type=chunk)[83](index=83&type=chunk) Cash Flow Summary (For the year ended December 31) | Item | 2022 (Million HKD) | 2021 (Million HKD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (2,120.0) | (1,212.4) | | Net Cash Used in Investing Activities | (1,285.5) | (453.9) | | Net Cash Used in Financing Activities | (860.4) | (5,565.1) | | **Net Decrease in Cash and Cash Equivalents** | **(4,265.9)** | **(7,231.4)** | - The debt-to-capital ratio increased from **133.2%** at year-end 2021 to **162.0%** at year-end 2022[71](index=71&type=chunk) [Material Risk Factors](index=41&type=section&id=Material%20Risk%20Factors) This section details business, Macau operations, and debt-related risks, including COVID-19 uncertainty, reliance on Macau and China's economy, market competition, regulatory compliance, high leverage, and dependence on high-end customers [Risks Related to Our Business](index=42&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks arise from macro factors and operations, including COVID-19 uncertainty, reliance on discretionary spending, vulnerability to economic downturns, and risks related to key management, reputation, cybersecurity, AML compliance, and intellectual property - The COVID-19 pandemic has had a **significant adverse impact** on the business, and future re-imposition of restrictions would further increase risks[86](index=86&type=chunk) - The business is particularly vulnerable to reduced **discretionary consumer spending**, and adverse macroeconomic conditions or geopolitical tensions could have a detrimental effect[87](index=87&type=chunk) - All of the company's cash flows depend on a **few resorts in Macau**, posing greater risks compared to geographically diversified companies[90](index=90&type=chunk) - The company faces **intense market competition** not only from the other five concessionaires in Macau but also from casinos in other Asian regions like Singapore and the Philippines[92](index=92&type=chunk) [Risks Related to Our Operations in Macau](index=53&type=section&id=Risks%20Related%20to%20Our%20Operations%20in%20Macau) Macau's operating risks are significant, with business success highly dependent on the political and economic conditions of Macau and China, and the critical risk being the government's right to terminate the gaming concession for non-compliance - Failure to fulfill obligations under the gaming concession contract or Macau laws could lead to the Macau government's **uncompensated termination of the concession**, significantly harming the company's business and financial condition[105](index=105&type=chunk) - Macau's **smoking control laws** may reduce patronage from smoking gaming customers, adversely impacting performance[104](index=104&type=chunk) - As a subsidiary of WRL, the company's certain directors and executives also serving WRL may lead to **conflicts of interest**[108](index=108&type=chunk) [Risks Related to Our Indebtedness](index=56&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) The company faces significant financial risks from high leverage, potentially limiting cash flow for operations and capital expenditures, hindering access to additional financing, and exposing it to rising interest rates and LIBOR discontinuation uncertainty - The company's **high leverage** may result in insufficient future cash flow to meet debt obligations and difficulty in obtaining further financing[110](index=110&type=chunk) - The company faces **interest rate risk** related to floating-rate credit facilities, and the phasing out of LIBOR introduces uncertainty for renegotiation and interest calculation in existing credit agreements[111](index=111&type=chunk)[112](index=112&type=chunk) [Other Disclosures](index=57&type=section&id=Other%20Disclosures) This section covers dividends, share repurchases, corporate governance, litigation, and director changes, noting no dividends or repurchases in FY2022, compliance with governance code, and ongoing litigation related to 'Dore Entertainment' - For the year ended December 31, 2022, the company **did not declare any dividends**[114](index=114&type=chunk) - The company has **complied with the code provisions** of the Corporate Governance Code for the year ended December 31, 2022[115](index=115&type=chunk) - The company is a defendant in several lawsuits related to former gaming promoter 'Dore Entertainment,' but it believes these cases are **without legal merit** and intends to vigorously defend them[119](index=119&type=chunk)