SJM HOLDINGS(00880)2024-04-26 09:18Financial Performance - The company's subsidiary, SJM Resorts, recorded a net gaming revenue of HKD 20.059 billion in 2023, compared to HKD 6.092 billion in 2022[4] - The group's adjusted EBITDA was HKD 1.727 billion in 2023, a significant improvement from a loss of HKD 3.095 billion in 2022[4] - The company's attributable loss to owners was HKD 2.010 billion in 2023, reduced from HKD 7.798 billion in 2022[4] - Total net revenue increased by 223.7% to HKD 21.623 billion in 2023 compared to HKD 6.679 billion in 2022, driven by rolling chip, non-rolling chip, and electronic gaming revenue[10][11] - Gaming net revenue surged by 229.3% to HKD 20.059 billion in 2023 from HKD 6.092 billion in 2022, with non-rolling chip gaming revenue growing by 239.6% to HKD 17.874 billion[10][12] - Adjusted EBITDA improved significantly to HKD 1.727 billion in 2023 from a loss of HKD 3.095 billion in 2022, with an adjusted EBITDA margin of 8.0% compared to -46.3% in the previous year[10] - Total revenue for 2023 reached HKD 5,746 million, a 379.2% increase compared to 2022, driven by significant growth in casino, hotel, and other non-gaming segments[15] - Casino gross gaming revenue surged to HKD 5,439 million in 2023, up 409.7% from HKD 1,067 million in 2022[15] - Adjusted property EBITDA turned positive at HKD 1,325 million in 2023, compared to a loss of HKD 758 million in 2022[15] - Satellite casino revenue grew 128.3% to HKD 8,647 million in 2023, with adjusted property EBITDA improving to a loss of HKD 338 million from a loss of HKD 635 million in 2022[17] Gaming Revenue and Operations - SJM Resorts accounted for 11.9% of Macau's gross gaming revenue, including 14.8% of mass table gaming revenue and 3.5% of VIP gaming revenue[5] - Grand Lisboa Palace recorded gross revenue of HKD 3.670 billion, including HKD 2.690 billion in gaming revenue and HKD 980 million in non-gaming revenue[5] - Non-rolling chip turnover rose by 350.9% to HKD 9.094 billion in 2023, with a win rate of 16.4%, up 1.3 percentage points from 15.1% in 2022[13] - Electronic gaming revenue soared by 879.2% to HKD 10.987 billion in 2023, with a win rate of 3.1%, slightly down from 3.7% in 2022[13] - Non-rolling chip turnover increased by 590.5% to HKD 22,482 million, with a win rate of 19.8%, slightly lower than the 21.5% in 2022[15] Hotel and Non-Gaming Revenue - Grand Lisboa Palace's occupancy rate increased by 50.4% to 82.6% in 2023, with an average room rate increase of 44.3% to HKD 1,322[5] - Grand Lisboa Hotel's occupancy rate rose by 46.8% to 93.0% in 2023, with an average room rate increase of 76.8% to HKD 1,121[5] - Grand Lisboa Palace's total revenue increased by 434.2% to HKD 3.670 billion in 2023, with casino revenue growing by 677.5% to HKD 2.690 billion and hotel revenue increasing by 615.2% to HKD 472 million[13] - Hotel occupancy rate at Grand Lisboa Palace improved significantly to 82.6% in 2023 from 32.2% in 2022, with average daily rate increasing by 44.3% to HKD 1,322[13] - Hotel occupancy rate improved to 93.0% in 2023, up 46.8 percentage points from 46.2% in 2022, with average daily room rate rising 76.8% to HKD 1,121[15] Financial Position and Liquidity - The group had cash, bank balances, short-term bank deposits, and pledged bank deposits totaling HKD 4.550 billion as of December 31, 2023[5] - The group completed the refinancing of its syndicated loan facility (including HKD 9 billion in term loans and HKD 10 billion in revolving credit) on June 20, 2022, with HKD 3.3 billion undrawn as of December 31, 2023[5] - As of December 31, 2023, the company held HKD 3.542 billion in cash and bank balances, a 48.3% decrease from HKD 6.856 billion at the end of 2022[21] - Total outstanding bank loans decreased to HKD 15.236 billion as of December 31, 2023, down from HKD 18.975 billion at the end of 2022[21] - The company's asset-liability ratio was 52.2% at the end of the reporting period, down from 53.2% at the end of 2022[23] - The company's committed capital expenditure commitments were HK117 million at the end of 2022[24] - The company had mortgaged properties and equipment with a book value of HK1.711 billion as of December 31, 2023[24] - The company had HK1.154 billion at the end of 2022[24] - The company had no significant contingent liabilities as of December 31, 2023[25] Corporate Governance and Board Structure - The board of directors consists of 10 members, with 5 executive directors (50%), 1 non-executive director (10%), and 4 independent non-executive directors (40%)[136] - The company has established mechanisms to ensure independent views and opinions are expressed within the board, including annual meetings between the chairman and independent non-executive directors[138] - The board diversity policy, adopted in 2013, emphasizes factors such as gender, age, race, cultural and educational background, and professional experience[139] - As of December 31, 2023, the board includes 4 female directors and 6 male directors, with a gender ratio of 47% male and 53% female in the overall workforce[141] - The company has separated the roles of chairman and CEO, with Ms. Angela Leong as the chairman and Dr. Ambrose So as the CEO until June 15, 2023[142] - The company's board of directors has the authority to appoint directors to fill temporary vacancies or new director positions, subject to shareholder election at the first annual general meeting after appointment[144] - One-third of the company's directors must retire at each annual general meeting but are eligible for re-election, with specific directors set to retire at the 2024 annual general meeting[144] - Non-executive directors, including independent non-executive directors, have three-year appointment terms and must retire in rotation according to the company's articles of association and listing rules[145] - Independent non-executive directors provide independent, constructive, and well-founded opinions on the company's strategy and policies, contributing positively to decision-making[145] - The company ensures that independent non-executive directors constitute at least one-third of the board and that at least one has appropriate professional qualifications or accounting and financial management expertise[145] Sustainability and Environmental Measures - The company has implemented multiple environmental measures, including installing LED lighting and adopting electronic processes to reduce paper usage[126] - The company's hotel section has obtained the LEED Silver certification from the U.S. Green Building Council[126] - The company submitted a carbon emissions report for its Hong Kong office in 2023, which is available on the carbon neutrality and sustainable development website[126] - The company has established a Sustainability Steering Committee to oversee and report on environmental, social, and governance (ESG) activities[126][131] - The company has a framework to identify and consider environmental and social risks, with the Sustainability Steering Committee providing recommendations to the Board[131] Related Party Transactions - The company's property lease agreement with Sociedade de Turismo e Diversões de Macau, S.A. (STDM) and its affiliates has an annual cap and total transaction amount for 2023, covering the period from January 1, 2023, to December 31, 2025[82] - STDM and its affiliates provide various products and services to the company, including hotel accommodation, hospitality, transportation, maintenance, laundry, hotel management, and advertising services, with an annual cap and total transaction amount for 2023[84] - The company has a chip agreement with STDM and STDM's integrated resort, which has been in place since June 18, 2008, with no fixed term and can be terminated by mutual agreement or upon the termination of STDM's gaming concession[86] - The total value of STDM chips redeemed in 2023 has significantly decreased compared to previous years, as STDM's integrated resort has had sufficient chip supply since 2011 and no longer needs to borrow STDM chips[87] - The total amount for property leasing agreements with SJM and its subsidiaries for the year ended December 31, 2023, was HKD 18.4 million, with an annual cap of HKD 34.5 million[88] - The total amount for hotel accommodation services under the product and service agreement for the year ended December 31, 2023, was HKD 49.1 million, with an annual cap revised to HKD 65.0 million[88][90] - The annual cap for hotel accommodation services under the product and service agreement was further revised to HKD 103.5 million for 2024 and HKD 113.9 million for 2025, reflecting strong growth in hotel services[90] - The annual cap for the chip agreement with SJM was set at HKD 76.0 million for the years 2023, 2024, and 2025, based on the outstanding amount of SJM chips in circulation[90] - The total transaction amount under the New Yaohan Department Store agreement for 2023 was HKD 79.6 million, with annual caps set from HKD 99.2 million in 2023 to HKD 161.6 million in 2031[92][93] - The monthly basic fee for the first three years is 4% of the monthly sales revenue, increasing to 4.5% for years seven to nine, and 5% for years ten to twelve, with a minimum fee based on the previous period's average plus a 10% increase[94] - The fixed monthly management fee for the first three years is approximately HKD 2.1 million, increasing by 7.5% every three years[94] - The fixed monthly promotional fee for the first three years is approximately HKD 333,000, increasing by 7.5% every three years[94] - The total amount for annual rent and related payments for 2023 was HKD 34.8 million, with annual caps set at HKD 37.4 million for 2023, HKD 10.2 million for 2024, and HKD 3.0 million for 2025[97] - The annual cap for the property leasing master agreement was revised to HKD 10.2 million for the fiscal year ending December 31, 2024, due to the extension of the lease agreement for the Grand Lisboa Palace[98] - The company renewed the property leasing master agreement with Angela Leong in March 2023, setting annual caps for the fiscal years ending December 31, 2023, 2024, and 2025 at HKD 37.4 million, HKD 3.0 million, and HKD 3.0 million, respectively[98] - The company entered into a service agreement with Grand Emperor Entertainment, which provides marketing, promotion, and customer development services, and allows the use of designated areas of the Grand Emperor Hotel for casino operations[99] - The fees for the Grand Emperor service agreement are determined based on a fixed percentage of the gross gaming revenue from the relevant casino areas, after deducting all related costs and expenses[100] - The service fee payable to Arc de Triomphe Entertainment for the year ended December 31, 2023, was HKD 325.7 million, with an annual cap of HKD 510.0 million[102] - The annual caps for the service fee payable to Arc de Triomphe Entertainment for the years ending December 31, 2024, and 2025, are HKD 351.7 million and HKD 450.1 million, respectively[102] - The board revised the annual cap for the Arc de Triomphe service agreement for the year ending December 31, 2023, to HKD 510.0 million, considering factors such as actual gross gaming revenue and expected growth in visitor numbers[103] - The annual caps for the Arc de Triomphe service agreement were determined based on historical gaming revenue, expected recovery in visitor numbers, and a 15% buffer for inflation and unexpected growth[103] - The auditors confirmed that the disclosed related party transactions did not exceed the maximum annual amounts previously disclosed by the company[104] - Independent non-executive directors confirmed that the related party transactions were conducted on normal commercial terms and in the best interests of shareholders[105] - The net amount of circulating chips received and receivable for the year ended December 31, 2023, was HKD 200,000[105] - All related party transactions complied with the requirements under Chapter 14A of the Listing Rules[106] Shareholder and Dividend Information - The company did not declare an interim dividend for the six months ended June 30, 2023, and does not recommend paying a final dividend for the year ended December 31, 2023[43] - The company's annual general meeting is scheduled for June 26, 2024, with the notice to be published on the company's website and the Hong Kong Stock Exchange website around April 29, 2024[44] - The company will suspend share transfer registration from June 20, 2024, to June 26, 2024, to determine shareholder eligibility for the 2024 Annual General Meeting[45] - The last date for share registration for the 2024 Annual General Meeting is June 19, 2024[45] - The deadline for submitting proxy forms for the 2024 Annual General Meeting is June 24, 2024, at 2:30 PM[45] - The company's distributable reserves to shareholders reached HKD 7.167 billion as of December 31, 2023, compared to HKD 7.307 billion in 2022[51] - The company's donations for the year amounted to HKD 2.6 million, down from HKD 3.2 million in 2022[51] Property Portfolio - The company's property portfolio includes the Grand Lisboa Palace with a 94% ownership stake, covering 70,468 square meters of land and 521,435 square meters of floor area[47][49] - The Lisboa Hotel units have an 88.27% ownership stake, covering 11,626 square meters of land and 122,524 square meters of floor area[47][49] - The Oceanus building has a 58.4% ownership stake, covering 6,952 square meters of land and 39,242 square meters of floor area[49] - The Ponte 16 property has a 51% ownership stake, covering 23,066 square meters of land and 126,500 square meters of floor area[49] - The company's Macau International Center property is fully owned, with a floor area of 5,582.72 square meters[49] Share Options and Equity - 477,085,000 share options were granted under the plan, with 299,765,000 exercised, generating HK1,091,456,496 if all are exercised[55] - 43,870,000 share options were unexercised by directors as of December 31, 2023[57] - The plan has a validity period of 10 years from the adoption date and expired on May 13, 2019[54] - The exercise price of share options is determined by the board and must not be lower than the higher of the closing price on the grant date or the average closing price over the preceding five business days[54] - Share options must be exercised within nine years from six months after the grant date[54] - The minimum holding period for share options is six months from the grant date, with the board having discretion to set a longer period[54] - HK$1 is required to accept the share options, payable within 28 days from the date of the grant letter[54] - 37,180,360 share options expired during the year ended December 31, 2023[55] - The total number of share options granted under the share option plan as of December 31, 2023, is 118,994,700, with a total of 37,180,360 options canceled or expired during the year[58] - The share options granted to employees (excluding directors' associates) as of December 31, 2023, amount to 45,635,500, with 36,431,360 options canceled or expired during the year[58] - The share options granted to service providers as of December 31, 2023, total 24,075,000, with 535,000 options canceled or expired during the year[58] - The share options granted to directors' associates (who are also employees/former employees) as of December 31, 2023, amount to 5,414,200, with 214,000 options canceled or expired during the year[58] - The exercise price for share options granted on October 8