UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): August 15, 2014
LAS VEGAS SANDS CORP.
(Exact name of registrant as specified in its charter)
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| NEVADA |
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001-32373
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27-0099920
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| (State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer
Identification No.) |
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| 3355 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA |
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89109 |
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(Zip Code) |
Registrant’s telephone number, including area code: (702) 414-1000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the
appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
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Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 |
Regulation FD Disclosure. |
On August 15, 2014, Sands China Ltd. (“SCL”), a subsidiary of Las Vegas Sands Corp. with ordinary shares listed on The
Stock Exchange of Hong Kong Limited (the “SEHK”), filed its interim results in respect of the six month period ended June 30, 2014 (the “Interim Results Announcement”) with the SEHK. The Interim Results Announcement is
furnished as Exhibit 99.1 to this Form 8-K.
The information in this Form 8-K and Exhibit 99.1 attached hereto shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly
set forth by specific reference in any such filing.
| Item 9.01 |
Financial Statements and Exhibits. |
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| 99.1 |
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Interim Results Announcement of Sands China Ltd., dated August 15, 2014. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 15, 2014
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| LAS VEGAS SANDS CORP. |
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| By: |
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/s/ Ira H. Raphaelson |
| Name: |
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Ira H. Raphaelson |
| Title: |
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Executive Vice President and Global General Counsel |
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INDEX TO EXHIBITS
99.1 Interim Results Announcement of Sands China Ltd., dated August 15, 2014.
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Exhibit
99.1
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no
responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the
contents of this announcement.
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 1928)
ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2014
1. FINANCIAL HIGHLIGHTS
We generated an all-time
half year record of US$1,737.4 million (HK$13,467.1 million) of adjusted EBITDA, an increase of 35.7% compared to US$1,280.1 million (HK$9,931.3 million) in the first half of 2013.
Total net revenues for the Group increased 24.7% to US$5,075.3 million (HK$39,340.2 million) in the first half of 2014,
compared to US$4,070.3 million (HK$31,578.2 million) in the first half of 2013.
Profit for the Group increased
45.7% to US$1,370.4 million (HK$10,622.4 million) in the first half of 2014, compared to US$940.5 million (HK$7,296.6 million) in the first half of 2013.
Capitalized terms used but not defined herein shall have the meanings ascribed to them in our 2013 Annual Report.
2. MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF
OPERATIONS
The Board of Directors (the “Board”) of Sands China Ltd. (“we” or our
“Company”) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended June 30, 2014 compared to the six months ended June 30, 2013.
Note: The translation of US$ amounts into HK$ amounts has been made at the rate of US$1.00 to HK$7.7513 (six months ended
June 30, 2013: US$1.00 to HK$7.7582) for the purposes of illustration only.
1
Net
Revenues
Our net revenues consisted of the following:
Six months ended June 30,
2014 2013 Percent change
(US$ in millions, except
percentages)
Casino 4,571.5 3,650.7 25.2%
Rooms 164.9 136.1 21.2%
Mall 147.9 119.6 23.7%
Food and beverage 84.1
69.2 21.5%
Convention, ferry, retail and other 106.9 94.7 12.9%
Total net revenues 5,075.3 4,070.3 24.7%
Net revenues were US$5,075.3 million for the six months ended June 30, 2014, an increase of US$1,005.0 million, or 24.7%, compared to US$4,070.3 million for the six months ended
June 30, 2013. Net revenues increased in all the segments, mainly driven by market growth as well as increase in visitation resulting from efforts in marketing and management’s focus on driving the high-margin mass market gaming segment,
while continuing to provide luxury amenities and high service levels to our VIP and premium players.
Our net
casino revenues for the six months ended June 30, 2014 were US$4,571.5 million, an increase of US$920.8 million, or 25.2%, compared to US$3,650.7 million for the six months ended June 30, 2013. The growth was primarily attributable to an
increase of US$419.6 million at The Venetian Macao and US$391.5 million at Sands Cotai Central driven by an increase in volume in our mass market segment, as well as ramp-up in premium mass segment.
2
The
following table summarizes the results of our casino activity:
Six months ended June 30,
2014 2013 Change
(US$ in millions, except percentages and points)
The Venetian Macao
Total net casino revenues 1,985.2 1,565.6 26.8%
Non-Rolling Chip drop 4,645.1 2,927.7 58.7%
Non-Rolling Chip win percentage 25.9% 30.0%(4.1)pts
Rolling Chip volume 27,645.2 23,508.9 17.6%
Rolling Chip win percentage 3.47% 3.49%(0.02)pts
Slot handle 2,798.3 2,341.2 19.5%
Slot hold percentage 5.0% 5.5%(0.5)pts
Sands
Cotai Central
Total net casino revenues 1,445.8 1,054.3 37.1%
Non-Rolling Chip drop 3,682.3 2,263.5 62.7%
Non-Rolling Chip win percentage 22.2% 21.8% 0.4pts
Rolling Chip volume 27,909.7 27,957.8(0.2)%
Rolling Chip win percentage 2.89% 2.71% 0.18pts
Slot handle 3,788.1 2,478.1 52.9%
Slot hold percentage 3.6% 3.9%(0.3)pts
The Plaza
Macao
Total net casino revenues 534.9 446.4 19.8%
Non-Rolling Chip drop 718.6 296.6 142.3%
Non-Rolling Chip win percentage 25.1% 32.3%(7.2)pts
Rolling Chip volume 14,841.6 19,424.4(23.6)%
Rolling Chip win percentage 3.42% 2.58% 0.84pts
Slot handle 460.2 366.4 25.6%
Slot hold percentage 5.1% 5.6%(0.5)pts
Sands
Macao
Total net casino revenues 605.7 584.4 3.6%
Non-Rolling Chip drop 2,173.2 1,586.1 37.0%
Non-Rolling Chip win percentage 17.7% 20.7%(3.0)pts
Rolling Chip volume 10,032.1 12,197.2(17.8)%
Rolling Chip win percentage 2.87% 2.69% 0.18pts
Slot handle 1,635.6 1,343.7 21.7%
Slot hold percentage 3.8% 3.9%(0.1)pts
Net room
revenues for the six months ended June 30, 2014 were US$164.9 million, an increase of US$28.8 million, or 21.2%, compared to US$136.1 million for the six months ended June 30, 2013. Sands Cotai Central and The Venetian Macao continued to
experience strong growth in both occupancy and ADR driven by strong demand.
3
The
following table summarizes our room activity. Information in this table takes into account rooms provided to customers on a complimentary basis.
Six months ended June 30,
2014 2013 Change
(US$, except percentages and points)
The Venetian Macao
Gross room revenues (in
millions) 126.6 105.5 20.0%
Occupancy rate 91.7% 89.5% 2.2pts
Average daily rate 265 229 15.7%
Revenue per available room 243 205 18.5%
Sands
Cotai Central
Gross room revenues (in millions) 152.7 94.2 62.1%
Occupancy rate 86.9% 69.0% 17.9pts
Average daily rate 173 148 16.9%
Revenue per
available room 150 102 47.1%
The Plaza Macao
Gross room revenues (in millions) 24.7 19.9 24.1%
Occupancy rate 86.4% 81.0% 5.4pts
Average daily
rate 419 361 16.1%
Revenue per available room 363 292 24.3%
Sands Macao
Gross room revenues (in millions) 12.8 12.0 6.7%
Occupancy rate 97.6% 94.9% 2.7pts
Average daily rate 254 244 4.1%
Revenue per
available room 248 232 6.9%
Net mall revenues for the six months ended June 30, 2014 were US$147.9
million, an increase of US$28.3 million, or 23.7%, compared to US$119.6 million for the six months ended June 30, 2013. The increase was primarily driven by higher base fees due to contract renewals and replacements, additional stores opened at
Shoppes at Venetian, and the opening of the third phase of Shoppes at Cotai Central in June 2014.
Net food and
beverage revenues for the six months ended June 30, 2014 were US$84.1 million, an increase of US$14.9 million, or 21.5%, compared to US$69.2 million for the six months ended June 30, 2013. The increase was primarily driven by stronger
business volume at most outlets due to increased property visitation.
Net convention, ferry, retail and other
revenues for the six months ended June 30, 2014 were US$106.9 million, an increase of US$12.2 million, or 12.9%, compared to US$94.7 million for the six months ended June 30, 2013. The increase was driven by the entertainment segment due
to shows with higher popularity, and convention and exhibition revenues from some major groups at Sands Cotai Central and The Venetian Macao.
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Operating
Expenses
Operating expenses were US$3,655.4 million for the six months ended June 30, 2014, an increase
of US$565.4 million, or 18.3%, compared to US$3,090.0 million for the six months ended June 30, 2013. The increase in operating expenses was primarily attributed to the revenue growth at The Venetian Macao and Sands Cotai Central and a new
bonus program for non-management employees.
Adjusted EBITDA(1)
The following table summarizes information related to our segments:
Six months ended June 30,
2014 2013 Percent change
(US$ in millions, except
percentages)
The Venetian Macao 872.9 709.5 23.0%
Sands Cotai Central 513.0 277.0 85.2%
The Plaza Macao 180.8 115.2 56.9%
Sands Macao
173.0 184.4(6.2)%
Ferry and other operations(2.4)(6.1) 60.7%
Total adjusted EBITDA 1,737.4 1,280.1 35.7%
Adjusted EBITDA for the six months ended June 30, 2014 was US$1,737.4 million, an increase of US$457.3 million, or 35.7%, compared to US$1,280.1 million for the six months ended
June 30, 2013. This performance was driven by revenue increases in all of the business segments, as a result of growth in Non-Rolling Chip win and improvement in operational efficiencies at all properties. The management team continues to focus
on operational efficiencies throughout both gaming and non-gaming areas of the business, further improve adjusted EBITDA.
(1) Adjusted EBITDA is profit before share-based compensation, corporate expense, pre-opening expense, depreciation and amortization, net foreign exchange gains/(losses), gain/(loss) on
disposal of property and equipment and investment properties, fair value losses on financial assets at fair value through profit or loss, interest, loss on modification or early retirement of debt and income tax expense. Adjusted EBITDA is used by
management as the primary measure of operating performance of the Group’s properties and to compare the operating performance of the Group’s properties with that of its competitors. However, adjusted EBITDA should not be considered in
isolation; construed as an alternative to profit or operating profit; as an indicator of the Group’s IFRS operating performance, other combined operations or cash flow data; or as an alternative to cash flow as a measure of liquidity. Adjusted
EBITDA as presented by the Group may not be directly comparable to other similarly titled measures presented by other companies.
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Interest
Expense
The following table summarizes information related to interest expense:
Six months ended June 30,
2014 2013 Percent change
(US$ in millions, except
percentages)
Interest and other finance costs 41.9 46.7(10.3)%
Less — capitalized interest(3.7)(2.7) 37.0%
Interest expense, net 38.2 44.0(13.2)%
Interest
expense, net of amounts capitalized, was US$38.2 million for the six months ended June 30, 2014, compared to US$44.0 million for the six months ended June 30, 2013. The decrease was primarily due to the decrease in interest and other
finance costs resulting primarily from a reduced interest rate after the Group amended the 2011 VML Credit Facility in March 2014, as described below.
Profit for the Period
Profit for the six months
ended June 30, 2014 was US$1,370.4 million, an increase of US$429.9 million, or 45.7%, compared to US$940.5 million for the six months ended June 30, 2013.
LIQUIDITY AND CAPITAL RESOURCES
We fund our
operations through cash generated from our operations and our debt financing.
In March 2014, we amended our
2011 VML Credit Facility, which extended the maturity of US$2.39 billion in aggregate principal amount of the term loans under the facility to March 31, 2020 (the “Extended 2011 VML Term Facility”), and provided for revolving loan
commitments of US$2.0 billion (the “Extended 2011 VML Revolving Facility”). A portion of the revolving proceeds was used to pay down the US$819.7 million in aggregate principal balance of the 2011 VML Term Facility loans that were not
extended. Borrowings under the Extended 2011 VML Revolving Facility are being used to fund the development, construction and completion of Sands Cotai Central and The Parisian Macao, and for working capital requirements and general corporate
purposes. As at June 30, 2014, the Group had US$1.18 billion of available borrowing capacity under the Extended 2011 VML Revolving Facility.
As at June 30, 2014, we had cash and cash equivalents of US$1.51 billion, which was primarily generated from our operations.
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Cash Flows
— Summary
Our cash flows consisted of the following:
Six months ended June 30,
2014 2013
(US$ in millions)
Net cash generated from operating activities 1,671.0 1,361.3
Net cash used in investing activities(418.4)(236.6)
Net cash used in financing activities(2,690.2)(1,430.1)
Net decrease in cash and cash equivalents(1,437.5)(305.5)
Cash and cash equivalents at beginning of period 2,943.4 1,948.4
Effect of exchange rate on cash and cash equivalents 1.9(3.9)
Cash and cash equivalents at end of period 1,507.8 1,639.0
Cash Flows — Operating Activities
We derive most of our operating cash flows from our casino, hotel and mall operations. Net cash generated from operating activities for the six months ended June 30, 2014 was
US$1,671.0 million, an increase of US$309.7 million, or 22.8%, compared to US$1,361.3 million for the six months ended June 30, 2013. The increase in net cash generated from operating activities was primarily due to the increase in our
operating results.
Cash Flows — Investing Activities
Net cash used in investing activities for the six months ended June 30, 2014 was US$418.4 million, and was primarily
attributable to capital expenditures for development projects as well as maintenance spending. Capital expenditures for the six months ended June 30, 2014, totaled US$428.0 million, including US$346.1 million for construction activities at
Sands Cotai Central and The Parisian Macao and US$81.9 million for our operations, mainly at The Venetian Macao, The Plaza Macao and Sands Macao.
Cash Flows — Financing Activities
For the
six months ended June 30, 2014, net cash used in financing activities was US$2,690.2 million, which was primarily attributable to US$2,600.9 million in dividend payments.
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CAPITAL
EXPENDITURES
Capital expenditures were used primarily for new projects and to renovate, upgrade and
maintain existing properties. Set forth below is historical information on our capital
expenditures, excluding capitalized interest and construction payables:
Six months ended June 30,
2014 2013
(US$ in millions)
The Venetian Macao 44.2 44.2
Sands Cotai Central 156.5 123.4
The Plaza Macao
21.9 5.7
Sands Macao 14.8 9.7
Ferry and other operations 1.1 0.2
The Parisian
Macao 189.6 58.5
Total capital expenditures 428.0 241.7
Our capital expenditure plans are significant. In April 2012, September 2012 and January 2013, we opened the Conrad
and Holiday Inn tower, the first Sheraton tower and the second Sheraton tower, respectively, of Sands Cotai Central, which is part of our Cotai Strip development. We have begun construction activities on the remaining phase of the project, which
will include a fourth hotel and mixed-use tower, located on parcel 5, under the St. Regis brand. The total cost to complete the remaining phase of the project is expected to be approximately US$700 million.
We have commenced construction activities on The Parisian Macao, our integrated resort development on Parcel 3, but
stopped in June 2014, pending receipt of certain government approvals, which management has been informed are scheduled to be issued in October 2014. In the meantime, the Company is working to accelerate the permit approval process and, as with
projects of this nature, will continue to analyze options for both a full and phased opening of the facility in 2015. We have capitalized costs of US$595.9 million, including land, as at June 30, 2014. The Parisian Macao is targeted to open in
late 2015 and we expect the cost to design, develop and construct The Parisian Macao will be approximately US$2.7 billion, inclusive of land premium payments.
These investment plans are preliminary and subject to change based upon the execution of our business plan, the progress of our capital projects, market conditions and the outlook on
future business conditions.
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CAPITAL
COMMITMENTS
Future commitments for property and equipment that are not recorded in the financial
statements herein are as follows:
June 30, December 31,
2014 2013
(US$ in millions)
Contracted but not provided for 1,836.5 1,227.4
Authorized but not contracted for 1,693.3 2,031.3
Total capital commitments 3,529.7 3,258.7
DIVIDENDS
On February 26, 2014, the Company paid an interim dividend of HK$0.87 (equivalent to US$0.112) per share and a special dividend of HK$0.77 (equivalent to US$0.099) per share for the
year ended December 31, 2013, amounting in aggregate to HK$13.23 billion (equivalent to US$1.71 billion), to Shareholders of record on February 14, 2014.
On May 30, 2014, the Shareholders approved a final dividend of HK$0.86 (equivalent to US$0.111) per share for the year ended December 31, 2013 to Shareholders of record on
June 9, 2014. This final dividend, amounting in aggregate to HK$6.94 billion (equivalent to US$894.4 million), was paid on June 30, 2014.
The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2014.
PLEDGE OF FIXED ASSETS
We have pledged a
substantial portion of our fixed assets to secure our loan facilities. As at June 30, 2014, we have pledged leasehold interests in land; buildings; building, land and leasehold improvements; furniture, fittings and equipment; construction in
progress; and vehicles with an aggregate net book value of approximately US$7.60 billion (December 31, 2013: US$7.04 billion).
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CONTINGENT
LIABILITIES AND RISK FACTORS
The Group has contingent liabilities arising in the ordinary course of business.
Management has made estimates for potential litigation costs based upon consultation with legal counsel. Actual results could differ from these estimates; however, in the opinion of management, such litigation and claims will not have a material
adverse effect on our financial condition, results of operations or cash flows.
Under the land concession for
The Parisian Macao, we are required to complete the development by April 2016. The land concession for Sands Cotai Central contains a similar requirement, which was extended by the Macao Government in April 2014, that the development be completed by
December 2016. Should we determine that we are unable to complete The Parisian Macao or Sands Cotai Central by their respective deadlines, we would expect to apply for another extension from the Macao Government. If we are unable to meet the current
deadlines and the deadlines for either development are not extended, we could lose our land concessions for The Parisian Macao or Sands Cotai Central, which would prohibit us from operating any facilities developed under the respective land
concessions. As a result, the Group could record a charge for all or some portion of the US$595.9 million or US$4.37 billion in capitalized construction costs including land, as at June 30, 2014, related to The Parisian Macao and Sands Cotai
Central, respectively.
CAPITAL RISK MANAGEMENT
The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going
concern in order to provide returns for Shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk.
The capital structure of the Group consists of debt, which includes borrowings (including current and non-current borrowings as shown in note 12 to the condensed consolidated financial
statements), cash and cash equivalents, and equity attributable to Shareholders, comprising issued share capital and reserves.
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The Group
actively and regularly reviews and manages its capital structure to maintain the net
debt-to-capital ratio
(gearing ratio) at an appropriate level based on its assessment of the current
risk and circumstances. This
ratio is calculated as net debt divided by total capital. Net debt is
calculated as interest bearing
borrowings, net of deferred financing costs, less cash and cash
equivalents and restricted cash and cash
equivalents. Total capital is calculated as equity, as
shown in the consolidated balance sheet, plus net debt.
June 30, December 31,
2014 2013
(US$ in millions,
except percentages)
Interest bearing borrowings, net of deferred financing costs 3,107.7 3,139.6
Less: cash and cash equivalents(1,507.8)(2,943.4)
restricted cash and cash equivalents(6.3)(5.7)
Net debt 1,593.7 190.5
Total equity 5,242.2
6,449.9
Total capital 6,835.9 6,640.4
Gearing ratio 23.3% 2.9%
The increase in the
gearing ratio during the six months ended June 30, 2014 was primarily due
to dividend payments of US$2.60
billion.
BUSINESS REVIEW AND PROSPECTS
Our business strategy is to continue to successfully execute our Cotai Strip developments and to leverage our integrated
resort business model to create Asia’s premier gaming, leisure and convention destination. The Company continues to execute on the strategies outlined in our 2013 Annual Report. These strategies have proven to be successful in the first half of
2014 and we are confident they will continue into the future.
Sands Cotai Central
Sands Cotai Central is located across the street from The Venetian Macao and The Plaza Macao. It is our largest integrated
resort on Cotai. Sands Cotai Central consists of three hotel towers including 636 five-star rooms and suites under the Conrad brand, 1,224 four-star rooms and suites under the Holiday Inn brand and 3,863 rooms and suites under the Sheraton brand. In
April 2012, we opened the Conrad and Holiday Inn tower, a variety of retail offerings, approximately 350,000 square feet of meeting space, several food and beverage establishments, along with the Himalaya casino and VIP gaming areas. In September
2012, we opened the first Sheraton tower featuring 1,796 rooms and suites, the Pacifica casino and additional retail, entertainment, dining and meeting facilities. In January 2013, we opened the second Sheraton tower featuring an additional 2,067
rooms and suites.
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We have
begun construction activities on the remaining phase of the project, which will include a fourth hotel and mixed-use tower, located on parcel 5, under the St. Regis brand. The total cost to complete the remaining phase of the project is expected to
be approximately US$700 million.
The Parisian Macao
The Parisian Macao, which is currently expected to open in late 2015, is intended to include a gaming area (to be operated
under our gaming subconcession), a hotel with over 3,000 rooms and suites and retail, entertainment, dining and meeting facilities. We expect the cost to design, develop and construct The Parisian Macao will be approximately US$2.7 billion,
inclusive of land premium payments. We have commenced construction activities, but stopped in June 2014, pending receipt of certain government approvals, which management has been informed are scheduled to be issued in October 2014. In the meantime,
the Company is working to accelerate the permit approval process and, as with projects of this nature, will continue to analyze options for both a full and phased opening of the facility in 2015. We have capitalized construction costs of US$595.9
million for The Parisian Macao, including land, as at June 30, 2014.
3. CORPORATE GOVERNANCE
CORPORATE GOVERNANCE PRACTICES
Good corporate governance underpins the creation of Shareholder value and maintaining the highest standards of corporate governance is a core responsibility of the Board. An effective
system of corporate governance requires that our Board approves strategic direction, monitors performance, oversees effective risk management and leads the creation of the right culture across the organization. It also gives our investors confidence
that we are exercising our stewardship responsibilities with due skill and care.
To ensure that we adhere to
high standards of corporate governance, we have developed our own corporate governance principles and guidelines that set out how corporate governance operates in practice within the Company. This is based on the policies, principles and practices
set out in the Corporate Governance Code (the “Code”) contained in Appendix 14 of the Listing Rules and draws on other best practices.
The Board is of the view that throughout the six months ended June 30, 2014, save as disclosed below, the Company fully complied with all the code provisions and certain recommended
best practices set out in the Code.
Code Provision E.1.2
Under code provision E.1.2 of the Code, the Chairman of the Board should attend the annual general meeting of the Company.
The Chairman of the Board was absent from the Company’s annual general meeting held on May 30, 2014 due to other business commitments.
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MODEL CODE
FOR SECURITIES TRANSACTIONS
The Company has developed its own securities trading code for securities
transactions (the “Company Code”) by the Directors and relevant employees who are likely to be in possession of unpublished inside information of the Company on terms no less exacting than the Model Code for Securities Transactions by
Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (the “Model Code”). Following specific enquiry by the Company, all Directors have confirmed that they have complied with the Company Code and, therefore, with the
Model Code throughout the six months ended June 30, 2014 and to the date of this announcement.
BOARD AND
BOARD COMMITTEES COMPOSITION
Mr. Jeffrey Howard Schwartz resigned as a Non-Executive Director of the
Company with effect from May 30, 2014. Mr. Irwin Abe Siegel and Mr. Lau Wong William did not offer themselves for re-election as Non-Executive Directors of the Company at the annual general meeting of the Company on May 30, 2014.
Mr. Charles Daniel Forman and Mr. Robert Glen Goldstein were elected as Non-Executive Directors of
the Company at the annual general meeting held on May 30, 2014.
The Directors of the Company as at the
date of this announcement are:
Title Note
Executive Directors
Edward Matthew Tracy President and Appointed July 27, 2011
Chief Executive Officer
Toh Hup Hock Executive
Vice President and Appointed June 30, 2010
Chief Financial Officer
Non-Executive Directors
Sheldon Gary Adelson Chairman of the Board Appointed August 18, 2009
Michael Alan Leven Redesignated July 27, 2011
Charles Daniel Forman Elected May 30, 2014
Robert Glen Goldstein Elected May 30, 2014
Independent Non-Executive
Directors
Iain Ferguson Bruce Appointed
October 14, 2009
Chiang Yun Appointed October 14, 2009
David Muir Turnbull Appointed October 14, 2009
Victor Patrick Hoog Antink Appointed December 7, 2012
Steven Zygmunt Strasser Elected May 31, 2013
Alternate Director
David Alec Andrew Fleming
General Counsel, Company Appointed March 1, 2011
Secretary and alternate director
to Michael Alan Leven
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The Board
has established four committees, being the Audit Committee, the Remuneration Committee, the Nomination Committee and the Sands China Capital Expenditure Committee. The table below details the membership and composition of each of the four
committees.
Sands China
Capital
Audit Remuneration Nomination Expenditure
Director Committee Committee Committee Committee
Sheldon Gary Adelson — — Chairman —
Edward Matthew Tracy — — — Member
Toh Hup Hock — — — —
Michael
Alan Leven — — — Chairman
Charles Daniel Forman — — — —
Robert Glen Goldstein — — — —
Iain Ferguson Bruce Member Member Member —
Chiang Yun Member — — —
David Muir Turnbull — Chairman Member —
Victor Patrick Hoog Antink Chairman Member — Member
Steven Zygmunt Strasser Member Member — —
AUDIT COMMITTEE REVIEW
The Audit Committee has reviewed the accounting policies adopted by the Group and the unaudited condensed consolidated financial statements for the six months ended June 30, 2014. All
of the Audit Committee members are Independent Non-Executive Directors, with Mr. Victor Patrick Hoog Antink (Chairman of the Audit Committee) and Mr. Iain Ferguson Bruce possessing the appropriate professional qualifications and accounting
and related financial management expertise.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SHARES
Neither the Company, nor any of its subsidiaries purchased, sold or redeemed any of the listed shares of the
Company during the six months ended June 30, 2014.
14
4.
FINANCIAL RESULTS
The financial information set out below in this announcement represents an extract from the
condensed consolidated financial statements, which is unaudited but has been reviewed by the Company’s independent auditor, Deloitte Touche Tohmatsu, in accordance with the International Standard on Review Engagements 2410 “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity”, and by the Audit Committee.
CONSOLIDATED INCOME STATEMENT
Six months ended
June 30,
2014 2013
Note US$’000, except per share data
(Unaudited)
Net revenues 4 5,075,255 4,070,271
Gaming
tax(2,169,447)(1,777,301)
Employee benefit expenses(529,555)(440,988)
Depreciation and amortization(257,250)(246,276)
Gaming promoter/agency commissions(183,949)(178,766)
Inventories consumed(49,932)(40,610)
Other
expenses and losses 5(465,309)(406,105)
Operating profit 1,419,813 980,225
Interest income 9,489 5,230
Interest expense, net of amounts capitalized 6(38,193)(44,011)
Loss on modification or early retirement of debt 12(17,964) —
Profit before income tax 1,373,145 941,444
Income
tax expense 7(2,729)(949)
Profit for the period attributable to
equity holders of the Company 1,370,416 940,495
Earnings per share for profit attributable to
equity holders of the Company
— Basic 8 US16.99 cents US11.67 cents
—
Diluted 8 US16.98 cents US11.66 cents
15
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Profit for the period attributable to
equity holders
of the Company 1,370,416 940,495
Other comprehensive income/(loss), net of tax
Item that will not be reclassified subsequently to
profit or loss:
Currency translation differences 3,823(4,604)
Total comprehensive income for the period
attributable to equity holders of the Company 1,374,239 935,891
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2014 2013
Note US$’000
(Unaudited)(Audited)
ASSETS
Non-current assets
Investment properties, net 910,193 891,230
Property and equipment, net 6,850,706 6,722,586
Intangible assets, net 22,023 20,147
Deferred income tax assets 58 195
Other assets,
net 31,329 32,561
Trade and other receivables and prepayments, net 16,765 15,392
Total non-current assets 7,831,074 7,682,111
Current assets
Inventories 13,561 13,361
Trade and other receivables and
prepayments, net 10 680,288 820,926
Financial
assets at fair value through
profit or loss — 15
Restricted cash and cash equivalents 6,255 5,663
Cash and cash equivalents 1,507,785 2,943,424
Total current assets 2,207,889 3,783,389
Total assets 10,038,963 11,465,500
16
June 30, December 31,
2014 2013
Note US$’000
(Unaudited)(Audited)
EQUITY
Capital and reserves attributable to
equity holders of the Company
Share capital 80,659 80,632
Reserves 5,161,587
6,369,250
Total equity 5,242,246 6,449,882
LIABILITIES
Non-current liabilities
Trade and other payables
11 69,477 59,618
Borrowings 12 3,186,855 3,022,903
Total non-current liabilities 3,256,332 3,082,521
Current liabilities
Trade and other payables 11
1,531,608 1,724,343
Current income tax liabilities 2,697 1,968
Borrowings 12 6,080 206,786
Total current liabilities 1,540,385 1,933,097
Total liabilities 4,796,717 5,015,618
Total equity and liabilities 10,038,963 11,465,500
Net current assets 667,504 1,850,292
Total assets less current liabilities 8,498,578 9,532,403
17
NOTES TO
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated financial statements are presented in United States dollars (“US$”), unless
otherwise stated. The condensed consolidated financial statements were approved and authorized for issue by the Board of Directors of the Company on August 15, 2014.
The condensed consolidated financial statements for the six months ended June 30, 2014 have been prepared in accordance with International Accounting Standard (“IAS”) 34
“Interim Financial Reporting” issued by the International Accounting Standards Board (“IASB”) and the applicable disclosure requirements of Appendix 16 to the Listing Rules. They should be read in conjunction with the
Group’s annual financial statements for the year ended December 31, 2013, which were prepared in accordance with International Financial Reporting Standards (“IFRS”).
2. Significant accounting policies
The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial assets that are measured at fair value.
Except as described below, the accounting policies adopted and methods of computation used in the preparation of the
condensed consolidated financial statements for the six months ended June 30, 2014 are consistent with those adopted and as described in the Group’s annual financial statements for the year ended December 31, 2013.
During the period, there have been a number of new interpretation and amendments to standards that have come into effect,
which the Group has adopted at their respective effective dates. The adoption of these new interpretation and amendments to standards has no material impact on the results of operations and financial position of the Group.
The Group has not early adopted the new or revised standards, amendments and interpretation that have been issued, but are
not yet effective for the period. The Group has already commenced the assessment of the impact of the new or revised standards, amendments and interpretation to the Group, but is not yet in a position to state whether these would have a significant
impact on the results of operations and financial position of the Group.
18
3. Segment
information
Management has determined the operating segments based on the reports reviewed by a group of
senior management to make strategic decisions. The Group considers the business from a property and service perspective.
The Group’s principal operating and developmental activities occur in Macao, which is the sole geographic area in which the Group is domiciled. The Group reviews the results of
operations for each of its key operating segments, which are also the reportable segments: The Venetian Macao, Sands Cotai Central, The Plaza Macao, Sands Macao and ferry and other operations. The Group’s primary projects under development are
The Parisian Macao, the St. Regis tower (the remaining phase of Sands Cotai Central) and the Four Seasons apart-hotel.
Revenue comprises turnover from sale of goods and services in the ordinary course of the Group’s activities. The Venetian Macao, Sands Cotai Central, The Plaza Macao, Sands Macao and
The Parisian Macao, once in operation will, derive their revenue primarily from casino, hotel, mall, food and beverage, convention, retail and other sources. Ferry and other operations mainly derive their revenue from the sale of ferry tickets for
transportation between Hong Kong and Macao.
The Group’s segment information is as follows:
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Net revenues
The Venetian Macao 2,208,157
1,759,048
Sands Cotai Central 1,598,818 1,163,650
The Plaza Macao 596,369 495,830
Sands Macao 619,913 600,368
Ferry and other
operations 66,026 62,090
The Parisian Macao — —
Inter-segment revenues(14,028)(10,715)
5,075,255 4,070,271
19
Six months
ended June 30,
2014 2013
US$’000
(Unaudited)
Adjusted EBITDA (Note)
The Venetian Macao 872,850 709,504
Sands Cotai
Central 513,026 276,976
The Plaza Macao 180,844 115,248
Sands Macao 172,984 184,402
Ferry and other operations(2,354)(6,080)
The
Parisian Macao — —
1,737,350 1,280,050
Note: Adjusted EBITDA is profit before share-based compensation, corporate expense, pre-opening expense, depreciation and
amortization, net foreign exchange gains/(losses), gain/(loss) on disposal of property and equipment and investment properties, fair value losses on financial assets at fair value through profit or loss, interest, loss on modification or early
retirement of debt and income tax expense. Adjusted EBITDA is used by management as the primary measure of operating performance of the Group’s properties and to compare the operating performance of the Group’s properties with that of its
competitors. However, adjusted EBITDA should not be considered in isolation; construed as an alternative to profit or operating profit; as an indicator of the Group’s IFRS operating performance, other combined operations or cash flow data; or
as an alternative to cash flow as a measure of liquidity. Adjusted EBITDA as presented by the Group may not be directly comparable to other similarly titled measures presented by other companies.
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Depreciation and amortization
The Venetian Macao
75,027 69,519
Sands Cotai Central 137,572 129,469
The Plaza Macao 20,383 24,033
Sands Macao 17,339 16,178
Ferry and other
operations 6,929 7,077
The Parisian Macao — —
257,250 246,276
20
The
following is a reconciliation of adjusted EBITDA to profit for the period attributable to equity holders of the Company:
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Adjusted EBITDA 1,737,350 1,280,050
Share-based compensation granted to employees by
LVS and the Company, net of amounts capitalized(10,754)(5,427)
Corporate expense(29,292)(32,994)
Pre-opening expense(20,077)(7,394)
Depreciation
and amortization(257,250)(246,276)
Net foreign exchange gains/(losses) 1,237(4,697)
Loss on disposal of property and equipment and
investment properties(1,386)(2,986)
Fair value
losses on financial assets at fair value
through profit or loss(15)(51)
Operating profit 1,419,813 980,225
Interest income 9,489 5,230
Interest expense, net
of amounts capitalized(38,193)(44,011)
Loss on modification or early retirement of debt(17,964) —
Profit before income tax 1,373,145 941,444
Income tax expense(2,729)(949)
Profit for the period attributable to equity holders
of the Company 1,370,416 940,495
Six months ended
June 30,
2014 2013
US$’000
(Unaudited)
Capital expenditures
The Venetian Macao 44,150 44,195
Sands Cotai
Central 156,546 123,366
The Plaza Macao 21,850 5,668
Sands Macao 14,788 9,740
Ferry and other operations 1,092 205
The Parisian
Macao 189,563 58,486
427,989 241,660
21
June 30, December 31,
2014 2013
US$’000
(Unaudited)(Audited)
Total assets
The Venetian Macao 3,150,326
4,350,700
Sands Cotai Central 4,456,586 4,731,217
The Plaza Macao 1,155,903 1,295,093
Sands Macao 420,558 385,450
Ferry and other
operations 259,265 298,385
The Parisian Macao 596,325 404,655
10,038,963 11,465,500
June 30, December 31,
2014 2013
US$’000
(Unaudited)(Audited)
Total non-current assets
Held locally 7,653,064 7,497,681
Held in foreign countries 177,952 184,235
Deferred income tax assets 58 195
7,831,074 7,682,111
4. Net revenues
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Casino 4,571,491 3,650,660
Rooms 164,911 136,082
Mall
— Income from right of use 126,057 100,447
— Management fees and other 21,812 19,173
Food and beverage 84,061 69,193
Convention,
ferry, retail and other 106,923 94,716
5,075,255 4,070,271
22
5. Other
expenses and losses
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Utilities and operating supplies 107,519 108,502
Advertising and promotions 78,875 44,704
Contract
labor and services 59,630 45,385
Repairs and maintenance 30,957 26,437
Royalty fees 26,985 24,003
Management fees 26,888 20,350
Provision for
doubtful accounts 24,491 31,948
Operating lease payments 14,304 13,458
Suspension costs(1) 7,545 390
Loss on disposal of property and equipment and
investment properties 1,386 2,986
Auditor’s remuneration 884 996
Fair value
losses on financial assets at fair value
through profit or loss 15 51
Net foreign exchange (gains)/losses(1,237) 4,697
Other support services 63,363 49,013
Other
operating expenses 23,704 33,185
465,309 406,105
(1) Suspension costs are primarily comprised of fees paid to trade contractors and legal costs as a result of the project
suspension.
23
6.
Interest expense, net of amounts capitalized
Six months ended June 30,
2014 2013
US$’000
(Unaudited)
Bank borrowings 25,220 28,517
Amortization of deferred financing costs 10,874 12,132
Finance lease liabilities 3,072 4,057
Standby fee
and other financing costs 2,718 1,983
41,884 46,689
Less: interest capitalized(3,691)(2,678)
Interest expense, net of amounts capitalized 38,193 44,011
7. Income tax expense
Six months ended
June 30,
2014 2013
US$’000
(Unaudited)
Current income tax
Lump sum in lieu of Macao complementary tax
on
dividends 2,653 901
Other overseas taxes 74 141
Under/(over)provision in prior years
Macao complementary tax 2 —
Other overseas
taxes(132)(98)
Deferred income tax 132 5
Income tax expense 2,729 949
24
8.
Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable
to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. For the six months ended June 30, 2014, the Company has outstanding share options and restricted share units that will potentially dilute the ordinary shares.
The calculation of basic and diluted earnings per share is based on the following:
Six months ended June 30,
2014 2013
(Unaudited)
Profit attributable to equity holders of the Company
(US$’000) 1,370,416 940,495
Weighted average number of shares for basic earnings
per share (thousand shares) 8,064,183 8,056,146
Adjustments for share options and
restricted share units (thousand shares) 8,462 7,436
Weighted average number of shares for diluted
earnings per share (thousand shares) 8,072,645 8,063,582
Earnings per share, basic US16.99 cents US11.67 cents
Earnings per share, basic(i) HK131.69 cents HK90.54 cents
Earnings per share, diluted US16.98 cents US11.66 cents
Earnings per share, diluted(i) HK131.62 cents HK90.46 cents
(i) The translation of US$ amounts into HK$ amounts has been made at the rate of US$1.00 to HK$7.7513 (six months ended
June 30, 2013: US$1.00 to HK$7.7582). No representation is made that the HK$ amounts have been, could have been or could be converted into US$, or vice versa, at that rate, at any other rates or at all.
25
9.
Dividends
The Board does not recommend the payment of an interim dividend for the six months ended
June 30, 2014.
10. Trade receivables
The aging analysis of trade receivables, net of provision for doubtful accounts, is as follows:
June 30, December 31,
2014 2013
US$’000
(Unaudited)(Audited)
0–30 days 522,747 705,837
31–60 days
34,788 19,557
61–90 days 14,628 15,728
Over 90 days 30,739 23,274
602,902 764,396
Trade receivables mainly consist
of casino receivables. The Group generally does not charge interest for credit granted, but requires a personal check or other acceptable forms of security. In respect of gaming promoters, the receivables can be offset against the commission
payables and front money deposits made by the gaming promoters. Absent special approval, the credit period granted to selected premium and mass market players is typically 7–15 days, while for gaming promoters, the receivable is typically
repayable within one month following the granting of the credit subject to terms of the relevant credit agreement.
26
11. Trade
and other payables
June 30, December 31,
2014 2013
US$’000
(Unaudited)(Audited)
Trade payables 32,683 29,525
Outstanding chips and other casino liabilities 540,978 604,665
Other tax payables 317,521 419,574
Deposits
275,234 255,891
Construction payables and accruals 145,456 172,164
Accrued employee benefit expenses 121,369 132,340
Interest payables 33,344 31,797
Payables to
related companies — non-trade 3,057 12,201
Other payables and accruals 131,443 125,804
1,601,085 1,783,961
Less: non-current portion(69,477)(59,618)
Current
portion 1,531,608 1,724,343
The aging analysis of trade payables is as follows:
June 30, December 31,
2014 2013
US$’000
(Unaudited)(Audited)
0–30 days 19,816 18,086
31–60 days
6,895 8,892
61–90 days 4,596 1,297
Over 90 days 1,376 1,250
32,683 29,525
27
12.
Borrowings
June 30, December 31,
2014 2013
US$’000
(Unaudited)(Audited)
Non-current portion
Bank loans, secured 3,209,885 3,008,315
Finance
lease liabilities on leasehold interests in land,
secured 74,679 78,341
Other finance lease liabilities, secured 4,477 5,523
3,289,041 3,092,179
Less: deferred financing costs(102,186)(69,276)
3,186,855 3,022,903
Current portion
Bank loans, secured —
200,554
Finance lease liabilities on leasehold interests in land,
secured 3,657 3,845
Other finance lease liabilities, secured 2,423 2,387
6,080 206,786
Total borrowings 3,192,935
3,229,689
During March 2014, the Group amended its 2011 VML Credit Facility to, among other things, modify
certain financial covenants. In addition to the amendment, certain lenders extended the maturity of US$2.39 billion in aggregate principal amount of the 2011 VML Term Facility to March 31, 2020, and, together with new lenders, provided US$2.0
billion in aggregate principal amount of revolving loan commitments. A portion of the revolving proceeds was used to pay down the US$819.7 million in aggregate principal balance of the 2011 VML Term Facility loans that were not extended. The Group
recorded an US$18.0 million loss on modification or early retirement of debt during the six months ended June 30, 2014, in connection with the pay down and extension. Borrowings under the Extended 2011 VML Revolving Facility are being used to
fund the development, construction and completion of Sands Cotai Central and The Parisian Macao, and for working capital requirements and general corporate purposes. As at June 30, 2014, the Group had US$1.18 billion of available borrowing
capacity under the Extended 2011 VML Revolving Facility.
28
5.
PUBLICATION OF INTERIM RESULTS ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY
This announcement is
published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.sandschinaltd.com). The interim report for the six months ended June 30, 2014 will be dispatched to Shareholders and published on the websites of the Stock
Exchange and the Company in due course.
By order of the Board
SANDS CHINA LTD. David Alec Andrew Fleming
Company Secretary
Macao, August 15, 2014
As at the date of this announcement, the directors of the Company are:
Executive Directors:
Edward Matthew Tracy Toh Hup Hock
Non-Executive
Directors:
Sheldon Gary Adelson
Michael Alan Leven (David Alec Andrew Fleming as his alternate)
Charles Daniel Forman Robert Glen Goldstein
Independent Non-Executive Directors:
Iain Ferguson Bruce Chiang Yun David Muir Turnbull Victor Patrick Hoog Antink Steven Zygmunt Strasser
This announcement is prepared in English and Chinese. In the case of inconsistency, please refer to the English version as it shall prevail.
29
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