Financial Performance - The total revenue for the group in 2021 was HKD 265,500,000, an increase of 26% compared to HKD 211,200,000 in 2020, primarily driven by local customers[5]. - The group recorded a positive adjusted EBITDA of HKD 40,900,000 in 2021, compared to a negative adjusted EBITDA of HKD 14,700,000 in 2020[5]. - The company reported a loss attributable to shareholders of HKD 230,000,000 in 2021, compared to a profit of HKD 10,000,000 in 2020, mainly due to a fair value loss of approximately HKD 149,100,000 from derivative financial instruments and impairment losses of approximately HKD 136,900,000 on properties, operating rights, and equipment[5]. - The group confirmed a net loss of HKD 149,100,000 from derivative financial instruments for the year ended December 31, 2021, compared to a net gain of HKD 86,000,000 in 2020, primarily due to holdings in Suntrust Home Developer, Inc.[19]. - The company reported a total loss attributable to owners of the company of HKD 229,988,000 for the year ended December 31, 2021, compared to a profit of HKD 10,018,000 in 2020[62]. - The company recorded an adjusted EBITDA turnaround from negative to positive in 2021, driven entirely by local contributions from the gaming and slot machine business[51]. - The net revenue from gaming operations reached HKD 248,355,000 in 2021, compared to HKD 202,924,000 in 2020, reflecting a growth of approximately 22.4%[60]. - Total gaming revenue for 2021 was HKD 286,101,000, up from HKD 249,736,000 in 2020[67]. - The net gaming revenue from the mass market increased by 38% to HKD 113,000,000 in 2021, compared to HKD 82,000,000 in 2020[74]. - Slot machine gaming revenue rose by 31% to HKD 135,000,000 in 2021, up from HKD 103,000,000 in 2020[79]. - Hotel business revenue increased to HKD 17,164,000 in 2021 from HKD 8,314,000 in 2020, marking a growth of 106.5%[60]. COVID-19 Impact - Due to the ongoing negative impact of COVID-19, particularly on international travel restrictions and economic uncertainty, the company has decided to postpone the development of Phase II of the Tigre de Cristal project, with the current target for opening no earlier than 2025[6]. - The ongoing COVID-19 pandemic continues to negatively impact the group's business, operational performance, and financial condition, despite progress in vaccine development[11]. - The company is currently unable to determine when travel restrictions will be lifted, affecting visitor traffic to the Tigre de Cristal[13]. - The group has initiated a large-scale vaccination program for its employees starting from early February 2021[13]. - The company’s operations have been impacted by COVID-19, particularly in Manila, leading to restrictions that hindered financing discussions for the development of the main hotel entertainment venue[29]. - The company continues to advance the development of the second phase of the Crystal Palace despite ongoing negative impacts from COVID-19[46]. Strategic Initiatives - The group aims to explore business expansion opportunities under potential new restrictions, including further capital investments in the second phase of the project[16]. - The group is focused on diversifying and expanding its market presence through strategic investments and partnerships, particularly in the Philippine entertainment sector[21]. - The company aims to strategically transform into a pan-Asian gaming operator, leveraging the issuance of convertible bonds in 2020 and 2021 for flexibility and immediate interest income[53]. - The company has a strong opportunity to become part of the local integrated resort market in the Philippines, which has shown double-digit growth in gaming revenue over the past decade[53]. - The company remains cautiously optimistic about future expansion in the Russian Far East region, assessing the impact of geopolitical tensions[52]. Operational Adjustments - The group has been adjusting its operations in response to the economic sanctions imposed on Russia due to the conflict with Ukraine[15]. - The group has not engaged in any bank borrowings and is maintaining operations independently in the Russian Far East region[16]. - The group is committed to ensuring operational efficiency despite rising costs due to inflation and supply chain disruptions[16]. - The company has implemented prudent cost control measures since the COVID-19 outbreak, leading to stable general and administrative expenses[58]. - The group maintained strict cost control measures throughout the year to mitigate the impact of COVID-19 on its business[83]. Governance and Management - The board of directors consists of six members, including three executive directors and three independent non-executive directors[136]. - All independent non-executive directors are independent of the group's management and possess extensive experience in accounting, banking, financial management, and business[137]. - The company has adhered to the corporate governance code, except for a specific deviation regarding communication with shareholders[135]. - The company provides comprehensive onboarding information to new directors to ensure they understand the company's operations and responsibilities[140]. - Continuous professional development for directors is emphasized, with training sessions provided to keep them informed of regulatory changes[140]. - The company has established a procedure for directors to seek independent professional advice, with no requests made in 2021[148]. - The company has implemented a securities trading policy for directors and employees, ensuring compliance with listing rules[149]. - The company conducts annual reviews of its insurance arrangements for directors and officers against potential legal actions[150]. Risk Management - The company has established a risk management framework to oversee the effectiveness of risk management and internal control systems, which includes a clear governance structure and reporting mechanisms[189]. - The board is responsible for monitoring the design and implementation of the risk management and internal control systems to achieve the company's strategic objectives[189]. - The group has established a risk management policy to identify, assess, and manage significant risks, with a dedicated risk management team conducting annual reviews[190]. - Risk management and internal control assessment reports are submitted to the audit committee at least once a year, ensuring the effectiveness of the group's risk management systems[191]. Financial Position - The company maintains a strong balance sheet with all financing sourced from equity, without any bank borrowings[52]. - The company maintained a debt-to-asset ratio of 0% as of December 31, 2021, consistent with the previous year[95]. - The net cash flow from operating activities for 2021 was HKD 20,061,000, compared to a negative cash flow of HKD 35,075,000 in 2020[99]. - Cash and cash equivalents as of December 31, 2021, amounted to HKD 606,600,000, a significant decrease from HKD 1,562,300,000 in 2020[98]. - The company had no outstanding bank borrowings as of December 31, 2021[95]. - The group has unutilized tax losses of approximately HKD 589,500,000 as of December 31, 2021, compared to HKD 559,600,000 in 2020[92]. Employee and Community Engagement - The total number of employees in the group was 994, a decrease from 1,081 in 2020, with over 97% being Russian citizens[108]. - The company continues to provide employee compensation benefits and training programs in line with current market practices[108].
凯升控股(00102) - 2021 - 年度财报