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534386 Sands AR Eng [用 Blacklining] www.sandschina.com 2017 ANNUAL REPORT Annual Report 2017 This annual report is printed on recycled paper using soy ink WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 From Luxury Duty Free Shopping, Exciting Entertainment and Fabulous Dining to World-Class Hotel Suites and MICE, Come and Discover Everything at Sands China. WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 SANDS CHINA LTD. CONTENTS 1. OVERVIEW 4 1.1 Financial Highlights 4 1.2 Highlights of 201 7 5 1.3 Directors and Senior Management 14 2. BUSINESS REVIEW 22 2.1 Chairman’s Statement 22 2.2 Business Overview and Outlook 24 2.3 Our Properties 30 2.4 Management Discussion and Analysis 37 2.5 Priority Risk Factors 49 2.6 Stakeholder Information 57 2.6.1 Our Shareholders 57 2.6.2 Our Lenders 58 2.6.3 Our Customers 58 2.6.4 Our Commitment to Sustainability 59 3. CORPORATE GOVERNANCE 63 REPORT 3.1 Introduction and Highlights 63 3.2 Corporate Governance Code Compliance 63 3.3 Board Governance Structure 64 3.4 The Board 65 3.5 Audit Committee 74 3.6 Remuneration Committee 77 3.7 Nomination Committee 79 3.8 Capex Committee 80 3.9 Risk Management and Internal Control 81 3.10 Shareholders 87 3.11 Compliance Disclosures and Other Matters 89 3.12 Directors’ Report 90 4. FINANCIAL STATEMENTS 1 09 4.1 Independent Auditor’s Report 1 09 4.2 Financial Statements 11 3 4.3 Notes to the Consolidated Financial Statements 1 19 4.4 Financial Summary 20 1 5. CORPORATE INFORMATION 20 2 6. CONTACT US 20 3 7. GLOSSARY 20 4 In case of any inconsistency between the English version and the Chinese version of this Annual Report, the English version shall prevail. WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 SANDS CHINA LTD. 1.1 FINANCIAL HIGHLIGHTS our Luxurious Hotel Rooms and Suites await you. INTRODUCTION Sands China operates the largest collection of integrated resorts in Macao. As at December 31, 2017, we had 12,605 hotel rooms and suites, 140 restaurants, 1.9 million square feet of retail malls, 1.7 million square feet of MICE space, 4 permanent theaters, a 15,000-seat arena and some of the world’s largest casinos. 2 ANNUAL REPORT 2017 WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 SANDS CHINA LTD. 1.1 FINANCIAL HIGHLIGHTS 3 ANNUAL REPORT 2017 WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 SANDS CHINA LTD. 1.1 FINANCIAL HIGHLIGHTS • Net revenues were US$7.71 billion (HK$60.30 billion) for the year ended December 31, 2017, an increase of 16.0%, compared to US$6.65 billion (HK$51.60 billion) for the year ended December 31, 2016. • Operating expenses were US$5.94 billion (HK$46.44 billion) for the year ended December 31, 2017, an increase of 12.1%, compared to US$5.30 billion (HK$41.11 billion) for the year ended December 31, 2016. • Adjusted property EBITDA for the year ended December 31, 2017 increased 16.4% to US$2.61 billion (HK$20.41 billion), compared to US$2.24 billion (HK$17.40 billion) for the year ended December 31, 2016. • Profi t for the year ended December 31, 2017 was US$1.60 billion (HK$12.53 billion), an increase of 31.0%, compared to US$1.22 billion (HK$9.49 billion) for the year ended December 31, 2016. • Total dividend paid during the year ended December 31, 2017 was HK$1.99 (equivalent to US$0.257) per share, in line with the HK$1.99 (equivalent to US$0.257) per share during the year ended December 31, 2016. In 2018, the Board declared an interim dividend of HK$0.99 (equivalent to US$0.127) per share, which was paid on February 23, 2018, and proposed a fi nal dividend of HK$1.00 (equivalent to US$0.128) per share, which is subject to the approval of the Shareholders, for the year ended December 31, 2017. • The Parisian Macao enjoyed a very successful first full year of operations, with adjusted property EBITDA of US$412 million for the year ended December 31, 2017. • In October 2017, the Company announced that it will renovate, expand and rebrand the Sands Cotai Central into a new destination integrated resort, The Londoner Macao, by adding extensive thematic elements both externally and internally. The Londoner Macao will introduce new attractions and features from London, including some of London’s most recognizable landmarks, an expanded retail mall and an additional 350 luxury suites (formerly the St. Regis-serviced and -branded apart-hotel). • In October 2017, the Company also announced that the tower adjacent to the Four Seasons Hotel Macao (formerly the Four Seasons apart-hotel tower) will feature an additional 295 premium quality suites . Note: The translation of US$ amounts into HK$ amounts or vice versa has been made at the exchange rate on December 31, 2017 of US$1.00 to HK$7.8157 (2016: US$1.00 to HK$7.7555) for the purposes of illustration only. 4 ANNUAL REPORT 2017 WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 SANDS CHINA LTD. 1.2 HIGHLIGHTS OF 2017 Business • Our combined Sands China web traffi c increased by 154% to 18.4 million unique visitors in 2017 compared to 2016. • For The Parisian Macao, all online channels (social media, display, search, etc.) delivered 3.42 billion impressions in 2017 and social media alone contributed 2.09 billion. • On Qunar, China’s leading online travel platform, Sands China’s market share by hotel booking volume increased from 23% in 2016 to 37% in 2017. • Greater China Hospitality fi rst on Machine Learning using TensorFlow (Google’s global fi rst video showcase with a hotel brand). • Greater China Hospitality fi rst to implement Google Accelerated Mobile Pages. • Macao’s fi rst integrated resort which had over 300,000 Alipay/WeChat pay transactions since September 2017. • Sands China won recognition awards from fi ve highly acclaimed online platforms in Greater China for outstanding achievements in brand awareness and infl uence: • Weibo Award: Weibo is one of China’s most infl uential social platforms. We received “2017 International Brand Marketing Gold Award” (2017 國際廣告金獎) • IAI Travel Awards: We received “2017 IAI Travel Gold Award for Campaign Marketing” (2017首屆IAI國際旅遊金 獎) • Qunar Award: We received “2017 The Best Brand for Marketing Innovation Award” (2017最佳品牌營銷創新獎) • Top Touch Festival 2017: We received “Global Business Innovation Awards — Performance Marketing Award” (金觸點2017全球商業創新大獎 — 最佳營銷表現獎) • TravelZoo: We received “2017 Best Leisure Lifestyle Award” (2017年度優選生活大獎) • To further develop the MICE market, Sands Resorts Macao launched “US MICE Activation” in 7 key cities in U.S.A. including San Francisco, Seattle, Minneapolis, Chicago, San Diego, Portland and New York in April 2017. This included 2 MICE client luncheons, 3 public relation events and various sales call activities. “The Ultimate Download”, a MICE Mega FAM was also hosted in June 2017 inviting 150 guests including meeting planners, event organizers and media from over 10 different countries globally. These campaigns and events showcased Sands Resorts Macao as Asia’s leading meetings and events destination and also reinforced our meeting product offerings, highlighting the accommodations, retail, restaurants , entertainment and MICE facilities and services at the resort. Over 285,000 room nights were generated in 2017 in the MICE business. This represented a year-on-year growth of 44%. • Sands Resorts Macao participated in 17 trade shows in New Delhi, Mumbai, Sydney, Melbourne, Shanghai, Shenzhen, Xiamen, Seoul, Frankfurt, Taipei, Beijing and Las Vegas; and hosted 12 VIP events in Beijing, Shanghai, Guangzhou, Taipei, Tokyo, Seoul, Mumbai, Delhi, Hong Kong, Singapore, Melbourne and Sydney. These events showcased Sands Resorts Macao as Asia’s leading leisure and MICE destination and also reinforced our integrated product offerings, highlighting the accommodations, retail, restaurants , entertainment and MICE offerings at the resort. In 2018, our marketing campaigns and events will continue to emphasize luxury retail shopping, live entertainment and the extensive meeting space available at Sands Resorts Macao. 5 ANNUAL REPORT 2017 WorldReginfo - 6352f42d-b343-4674-833b-ea1d53ad58c2 SANDS CHINA LTD. 1.2 HIGHLIGHTS OF 2017 • Wholesale room night production from provinces with tier 2 cities in China for the year of 2017 increased 53% year-on- year, while Southeast Asian countries increased by 15.5% year-on-year. • Cooperative marketing agreements with 60 travel agents across seven Asian countries generated in excess of 980 ,000 room nights in 2017. This represented a year-on-year growth of 12%. • Destination events continued to drive increased visitation with diversifi ed events across our integrated resort. • These events included: “A Spontaneous Celebration”; Seasons of Prosperity (Chinese New Year Celebration 2017); The Venetian Macao’s 3D Light and Sound Spectacular “Seasons of Prosperity”; The Parisian Macao’s Eiffel Tower Grand Illumination Chinese New Year Show; The 2017 Chinese New Year Parade; The Large-Scale China Show “Monkey King” Premiere Event; The 1st Sound in Macao Music Awards; The Boss Baby Movie Premiere; Sands Cotai Central 5th Anniversary Ceremony; 21st China Music Awards and Asian Influential Power Grand Ceremony; Pink Inspired 2017 luncheon; The Macao Open; Sands Macao Fashion Week; Mercedes — AMG Night; The Venetian Macao’s 10th Anniversary Ceremony; Wonderful Winter Festival 2017; Winter In Venice/Winter In Paris; The Venetian Macao’s 3D Light and Sound Spectacular “Magic of Christmas”; The Parisian Macao’s Eiffel Tower Grand Illumination Christmas Show; Place Vendome 3D Light and Sound Spectacular “Magic of Christmas”; New Year’s Eve Countdown To 2018. • Sands China continued to leverage The Venetian Macao’s 3D Light and Sound Spectacular; Eiffel Tower Grand Illumination Show; Place Vendome 3D Light and Sound Spectacular; DreamWorks Experience at Sands Resorts Macao (until October 8, 2017); Kung Fu Panda Adventure Ice World with DreamWorks All Stars (March 16–July 9, 2017); Thomas & The Little Big Club ALL STARS (starting November 14, 2017).
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