SJM 2008 net profit down 48% on lower Macau gaming revenue

In addition, other factors contributing to a lower profit in 2008 were competitive conditions which resulted in increased commissions being paid to gaming promoters, start-up costs and operating loss of the company’s joint venture Ponte 16 development, start-up costs of the Grand Lisboa Hotel, and increased depreciation and interest costs.

Speaking on the annual results, Stanley Ho, Chairman of SJM Holdings, said: “Our results in 2008 reflected the general economic conditions and specific challenges to our industry that characterized the year, particularly during the second half. However, we have continued to earn a significant profit while making operational improvements across the Group and our Casino Grand Lisboa has gone from strength to strength. With a deliberately careful approach to growth, SJM continues to be one of the most financially sound casino operators in Macau and the leader in terms of market share.”

However, SJM has been able to capitalize on its balance sheet flexibility during the global financial downturn carrying low levels of debt and maintaining a strong financial position. In addition, operational improvements across the group continue and rationalization strategies are being implemented.

Revenue from mass market table gaming operations continued to grow in 2008, and comprised 40 % of the group’s gaming revenue in the year, compared with 33 % in 2007.

Casino Grand Lisboa’s performance continued to exceed the company’s expectations, with revenue and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for Casino Grand Lisboa growing by 80 % and 41% to us$ 1.1 billion and us$ 181 million, respectively.

According to SJM Holdings, other operational highlights of 2008 included the opening of Casino Ponte 16 in February, the opening of the Grand Lisboa Hotel in December, commencement of construction of Casino Oceanus which is scheduled for completion in November 2009 and commencement of construction of Casino L’Arc which is planned for opening in the third quarter of this year and added that the company sees no need for borrowing in the coming year.

Also, the company announced last week that it had replaced the terms of its purchase option agreement for the Hotel Lisboa with an agreement for joint redevelopment of the property with Sociedade de Turismo e Diversões de Macau, S.A.

Commenting on the company’s prospects, Ambrose So, CEO of SJM Holdings, added, “Whilst the growth of Macau’s gaming industry has been interrupted by the general weakening of the global economy and the tightening of visa restrictions, we remain confident in SJM Holdings’ ability to adapt and grow. We have all the ingredients in place to ensure continued success – the right products, the best strategic locations and a highly successful operation at Casino Grand Lisboa, and will continue to exploit opportunities for growth based on our excellent relationships with gaming promoters while capitalizing on our balance sheet flexibility.”