GENTIN G M ALAYSIA BERHAD 198001004236 (58019-U) ANNUAL REPORT 2019 ANNUAL GENTING MALAYSIA BERHAD 198001004236 (58019-U) 24th Floor, Wisma Genting Jalan Sultan Ismail 50250 Kuala Lumpur, Malaysia ANNUAL REPORT 2019 T : +603 2178 2233 / 2333 2233 GENTING MALAYSIA BERHAD F : +603 2161 5304 198001004236 (58019-U) www.gentingmalaysia.com www.rwgenting.com about GENTING MALAYSIA VISION To be the leading integrated resort operator in the world. MISSION We are committed towards providing the most delightful and memorable experiences to our customers. We aim to generate sustainable growth and profits, and to consistently enhance our stakeholders’ value. CORE VALUES • HARD WORK • HONESTY • HARMONY • LOYALTY • COMPASSION CORPORATE PROFILE Genting Malaysia Berhad (“Genting Malaysia” or the “Group”) (www.gentingmalaysia.com) is one of the leading leisure and hospitality corporations in the world. Incorporated in 1980, Genting Malaysia was subsequently listed on Bursa Malaysia’s Main Market in 1989. Genting Malaysia is a renowned provider of premier leisure and entertainment services and has a market capitalisation of RM19 billion as at 31 December 2019. Genting Malaysia owns and operates major resort properties including Resorts World Genting (“RWG”) in Malaysia, Resorts World Casino New York City (“RWNYC”) and Resorts World Catskills (“RWC”) (which is 49%-owned via an associate company) in the United States (“US”), Resorts World Bimini (“RW Bimini”) in the Bahamas, Resorts World Birmingham and about 40 casinos in the United Kingdom (“UK”) and the Crockfords Cairo in Egypt. Genting Malaysia also owns and operates two seaside resorts in Malaysia, namely Resorts World Kijal in Terengganu and Resorts World Langkawi on Langkawi island. With about 10,500 rooms across seven distinct hotels, RWG is Malaysia’s premier integrated resort destination. The resort also features wide-ranging leisure and entertainment facilities, including gaming, theme parks and amusement attractions, dining and retail outlets, as well as international shows and business convention facilities. Genting Highlands Premium Outlets (a joint venture between Genting Plantations Berhad and Simon Property Group) at the mid-hill further complements the various attractions at RWG. Additionally, the new outdoor theme park will add to RWG’s extensive entertainment offerings upon completion. In the UK, Genting Malaysia owns and operates about 40 casinos, making it one of the largest leisure and entertainment businesses in the country. The Group also operates an online gaming platform comprising an online casino and sports book operation which provides customers a seamless multi-channel gaming experience. Additionally, Genting Malaysia operates Resorts World Birmingham, the first integrated leisure complex of its kind in the UK, offering gaming and entertainment facilities, retail and dining outlets and a 182-room four-star hotel. In the Middle East, Crockfords Cairo, an exclusive casino nestled within the posh surroundings of The Nile Ritz-Carlton Hotel in Cairo, is the Group’s first venture into the region. In the US, Genting Malaysia’s RWNYC, the first and only video gaming machine facility in New York City, and RWC, a premium destination resort situated within the scenic Catskills Mountains in the State of New York, collectively offer the ultimate gaming, hospitality and entertainment experience, featuring a live table games casino, over 400 rooms across two hotels, video gaming machines, diverse bar and restaurant choices, exciting shows and memorable events. Additionally, the Group embarked on an expansion project at RWNYC to expand its facilities and attractions, including the development of a new 400-room hotel. Over in Miami, the Group owns the 527-room Hilton Miami Downtown which sits on 30 acres of prime freehold waterfront land. In the Bahamas, the Group operates RW Bimini, which features a casino, Hilton at RW Bimini, restaurants and bars, various resort amenities as well as the largest yacht and marina complex on the island surrounded by turquoise waters and white- sand beaches. Genting Malaysia is a member of the Genting Group, one of Asia’s leading and best-managed multinational companies. The Genting Group is led by Tan Sri Lim Kok Thay, a visionary entrepreneur who has successfully established the Resorts World brand as a leader in the leisure and hospitality sector in Malaysia, Singapore, the Philippines, the US, the Bahamas and the UK. Tan Sri Lim Kok Thay also has significant investments in other industries globally including oil palm plantations, property development, power generation, oil and gas, cruise and biotechnology. CONTENTS FINANCIAL STATEMENTS: 02 Chairman’s Statement / 74 Income Statements Penyata Pengerusi / 主席文告 75 Statements of Comprehensive Income 10 Board of Directors 76 Statements of Financial Position 12 Directors’ Profile 78 Statements of Changes in Equity 22 Principal Executive Officers’ Profile 81 Statements of Cash Flows 23 Management & Corporate Information 86 Notes to the Financial Statements 24 Group Corporate Structure 161 Statement on Directors’ Responsibility 25 Corporate Diary 161 Statutory Declaration 26 Financial Highlights 162 Independent Auditors’ Report 27 Five-Year Summary 167 List of Properties Held 28 Management’s Discussion and Analysis of Business Operations and 170 Analysis of Shareholdings Financial Performance Group Offices 31 Awards and Accolades Genting Premier Brands 32 2019 Highlights 40 Sustainability Statement 47 Corporate Governance Overview Statement 60 Audit Committee Report 63 Statement on Risk Management and Internal Control 66 Directors’ Report 73 Statement by Directors 2 CHAIRMAN’S STATEMENT Dear Shareholders, 2019 marked a new chapter for us as we transition and adapt to the shifting business landscapes at home and abroad. We embraced challenges by moving forward and leveraged various opportunities to grow our presence, all whilst remaining committed to delivering long-term sustainable value to our shareholders, our employees, and our wider community of stakeholders. On behalf of the Board of Directors (“Board”), it gives me great pleasure to present to you the Annual Report and Audited Financial Statements of Genting Malaysia Berhad (“GENM”) and its group of companies (“Group”) for the financial year ended 31 December 2019 (“FY2019”). Despite operating within a challenging environment, the Group showed resilience and delivered a set of encouraging results through the concerted efforts of management and our employees. During the financial year under review, the Group registered a 5% growth in revenue to RM10,406.9 million, predominantly aided by higher hold percentage in the mid to premium players segment of the Group’s leisure and hospitality business in Malaysia. However, adjusted earnings before interest, taxation, depreciation and amortisation (“adjusted EBITDA”) decreased to RM2,641.4 million mainly due to the higher casino duties imposed on the Group’s operations in Malaysia. Overall, the Group reported a net profit of RM1,332.2 million in FY2019. CHAIRMAN’S STATEMENT 3 In Malaysia, I am heartened by the steady growth of our position RWNYC well for future growth. Additionally, the operations at Resorts World Genting (“RWG”). Amid Group, together with Kien Huat Realty III Limited (“KH”), growing regional competition, we invested in the Genting had completed the privatisation of Empire Resorts, Inc Integrated Tourism Plan (“GITP”) to meet the demands of (“Empire”) in November 2019, which resulted in GENM evolving consumer preferences. Since the progressive roll and KH indirectly owning 49% and 51% equity interest in out of new facilities and attractions from the end of 2016, Empire respectively. Since then, the Group has executed RWG has continued to record a steady rise in visitation various strategies to turn around the business at Resorts every year. In FY2019, the resort attracted over 28.7 World Catskills (“RWC”). This includes leveraging synergies million visitors, representing an improvement of 11% from between RWNYC and RWC to grow business volume and the financial year before while hotel occupancy registered improve the overall margins of the Group’s operations in the a solid 95%. I am also proud to share that our luxurious US. We are confident RWC will soon realise its full potential Crockfords Hotel was a recipient of the coveted Five-Star – operating results at the property have continued to award in the latest Forbes Travel Guide, the first and only record considerable improvements, with gaming revenues hotel in Malaysia to have been conferred such an accolade. registering a 33% increase in December 2019. Together Through the GITP, I am proud that our vision has not only with RWNYC, the Group is focused on capitalising on the expanded the breadth and quality of our non-gaming properties’ unique competitive positions to further cement propositions at RWG significantly, we have also positively its position as a mainstay of the New York State gaming contributed to the hospitality and entertainment landscape market. in the country. In the Bahamas, Resorts World Bimini (“RW Bimini”) In the United Kingdom (“UK”), we continue to see continues to benefit from the strategic changes pressure on our operations due to the prevalence of implemented at the resort in previous years as the property economic headwinds and regulatory uncertainties. While have registered marked improvements throughout the the premium players segment remains volatile, we have year. To further drive visitation and revenue,