Sands China, the Asia-Pacific subsidiary of Las Vegas Sands (LVS), announced it renewed a Shared Services Agreement with its parent company to continue to utilize marketing services from LVS targeted at international VIP clients and premium players. The renewed services agreement is set to run for 3 years from January 1, 2021, to December 31, 2023.
“The Shared Services Agreement regulates the relationship of the Group and the LVS Group with respect to the provision of the shared services between the Group and the LVS Group.”Sands China
Sand China Filing to the HKEX
According to the filing to the Hong Kong Stock Exchange (HKEX) Thursday, LVS will continue to provide Sands China with joint marketing services aimed at channeling international VIP clients and high-rollers, including members of the Sands Rewards Club who may wish to visit Macau or Las Vegas.
The agreement also deals with marketing, management and retail leasing for the retail malls which the group owns and operates, including hotel, convention, meeting and exhibition services, as well as sales of entertainment and public relations services.
Sands China noted that as LVS is a controlling shareholder and a connected person under the listing rules, the services renewed under the Shared Services Agreement “constitute continuing connected transactions”, subject to reporting, announcement and annual review requirements.
The Shared Services Agreement sets annual caps for the joint international marketing and retail leasing, management and marketing services provided by the parent company of $10.2 million, $11.2 million and $12.2 million, for 2021, 2022 and 2023 respectively.
Annual caps are determined by taking into account factors such as the historical figures related to such services, the proper and adequate compensation payment for the services to the marketing executives, the expected volume of the services, as well as an additional fee to take into account an expected growth rate for the business during the three-year-period.
Additional Services Provided under the Agreement
As part of the agreement, both the LVS and Sands China groups agreed to provide to each other “procurement consultancy services, transportation and related research, logistics and technical services and design, development, construction and pre-opening consultancy services”, with fees for the services being calculated on a cost basis.
The LVS and Sands China groups also agreed to provide to each other “administrative and logistics services such as (but not limited to), corporate, risk management, investigations, legal and regulatory services, human resource services etc.”, again paid on a cost-calculation basis.