P5.7B swing leads to P2.2B net profit
• Solaire achieved record gaming volumes and revenues
• Solaire’s VIP volumes grew 29 percent, while mass table drop grew by 12 percent and electronic gaming machine (EGM) coin-in grew 18 percent
• Gross gaming revenues grew 19 percent to a record P38.537 billion, while non-gaming revenues increased by 26 percent to also hit a P2.38 billion record
• Total expenses were essentially flat at P26.448 billion
• Provisions for doubtful accounts declined 92 percent to P204 million
• EBITDA more than doubled to P10.599 billion, five percent higher than the previous record posted in 2014
• Hold normalized EBITDA of P12.099 billion is 14 percent higher than the reported EBITDA of P10.599 billion
• Net profit of P2.323 billion, a considerable P5.698 billion swing from the P3.375 billion net loss last year
Bloomberry Resorts Corporation, owner and operator (through its subsidiaries) of Solaire Resort & Casino and Jeju Sun Hotel & Casino, reported a return to profitability, with audited consolidated financial results for 2016 showing all-time highs in VIP volume, mass table drop and EGM coin-in, gross gaming and non-gaming revenues, as well as EBITDA and hold-normalized EBITDA.
In 2016, Solaire generated VIP volume growth of 29 percent, while mass table drop grew 12 percent and EGM coin-in rose 18 percent. Despite VIP hold rates declining to 2.61 percent from 2.87 percent in 2015, Solaire’s gross gaming revenues still managed to increase 19 percent to P38.342 billion. Inclusive of the P195 million contribution from Jeju Sun, the company’s gross gaming revenues rose 19 percent to P38.537 billion in 2016.
Solaire’s promotional allowances and contra accounts grew 14 percent to P10.395 billion, significantly slower than the growth in gross gaming revenues. As a result, promotional allowances and contra accounts as a percentage of gross gaming revenues for Solaire fell by 1.1 percentage points to 27.1 percent. Less P10.487 billion in promotional allowances and contra accounts, Bloomberry reported P28.05 billion in net gaming revenues, 21 percent higher year-on-year.
For the quarter ended December 31, 2016, Solaire also posted new record highs for mass table drop and EGM coin-in with both segments, reporting positive year-on-year and sequential growth. Philippine VIP volumes were up 13 percent year-on-year while mass table drop and EGM coin-in grew by 20 percent and 30 percent, respectively. On a sequential basis, mass tables drop and EGM coin-in grew three percent and nine percent, respectively, from the previous quarter.
Solaire’s 4Q16 gross gaming revenues grew six percent quarter-on-quarter and 35 percent year-on-year to P10.459 billion helped by an improvement in the quarterly VIP hold rate to 2.85 percent.
Enrique K. Razon Jr., Bloomberry chairman and CEO, said, “The year was not without its challenges, but our continuing programs on financial management, marketing, property and systems improvements, and staff engagement rallied us through. Overall, we are more than pleased with the results that put us in good standing with the competition. We hope to use this position of strength to carry us into, if not surpass, the results for the current year.”
Bloomberry’s 2016 non-gaming revenues grew 26 percent to a new annual record of P2.381 billion due to continued improvements in Solaire’s hotel, food and beverage and retail and others segments, which increased by 18 percent and 141 percent, respectively.
Solaire’s hotel business continued to improve with the average room rate and RevPAR increasing by nine percent and 17 percent, respectively, as well as a 6.1 percentage point increase in occupancy to 85.4 percent.
A host of several successful hit shows at the Theatre further enhanced the non-gaming revenue growth while the opening of The Shoppes at Solaire at the beginning of the year was a major driver in the strong growth in the retail and others segment.
On a quarterly basis, Bloomberry’s non-gaming revenues grew 11 percent quarter-on-quarter and 29 percent year-on-year driven by significant improvements in Solaire’s operations. Number of covers served and average check amounts had positive growth on both year-on-year and sequential bases with hotel occupancy improving to 88.9 percent from 83.1 percent and 84.2 percent in 4Q15 and 3Q16, respectively.
Total expenses were essentially flat at P26.448 billion aided by a 6 percent reduction from Korea, which accounted for 5 percent of the total. The growth in Solaire’s cash operating expenses lagged behind the growth in revenues as they grew just 15 percent to P18.767 billion.
A significant portion of the growth in Solaire’s cash operating expenses can be attributable to the reversion of the gaming tax to its original structure implemented at the beginning of 3Q16.
On the other hand, due to intensive cost containment measures being implemented in Jeju Sun, cash operating expenses from the Korea operations fell 19 percent to P861 million.
On a consolidated basis, cash operating expenses grew just 13 percent to P19.628 billion. Even with the strong growth in VIP volumes, due to continuing improvements in the credit evaluation and approval processes, provisions for doubtful accounts fell 92 percent year-on-year to P204 million from P2.569 billion in 2015.
In the fourth quarter of 2016, Bloomberry’s total expenses cash operating expenses continued to grow at a slower pace vis-à-vis revenues. The company reported P5.744 billion in cash operating expenses for the quarter growing just 9 percent sequentially and eight percent year-on-year. The implementation of strict cost containment measures in Jeju Sun have continued to pay off with a continued 18 percent sequential drop in cash operating expenses from Korea to P179 million from P217 million in the third quarter.
At the end of 2016, the company had P4.679 billion in gross receivables, 18 percent lower compared to the beginning of the year. Receivables over 90 days declined by 45 percent quarter-on-quarter mainly due to the write off made at the end of the year. Without the write off, the receivables over 90 days would have grown by just 2 percent quarter-on-quarter. Inclusive of the P204 million in provisions for doubtful accounts, receivables over 90 days remain essentially covered by the P1.722 billion in allowance for doubtful accounts.
Bloomberry reported P10.599 billion in EBITDA, 105 percent higher than the previous year’s P5.182 billion, exceeding the previous P10.083 billion record posted in 2014. Removing the impact of the large provision for doubtful accounts in 2015, the reported EBITDA would still have grown by 39 percent year-on-year.
In the fourth quarter of 2016, Bloomberry reported P2.697 billion in EBITDA, a 4 percent sequential improvement and a significant reversal of the negative P546 million reported in the year-earlier period.
The reported VIP hold in the 12 months of 2016 was 2.61 percent, 24 basis points lower than the 2.85 percent normalized hold. This resulted in the reported EBITDA being 14 percent lower than the 2016 hold-normalized EBITDA of P12.099 billion.
The company reported a full-year net profit of P2.323 billion, a substantial P5.7 billion swing from the previous year’s P3.375 billion net loss owing to robust topline growth, effective cost-containment measures and a significant drop in provisions for doubtful accounts although this was moderated by losses from Korea. Without the drag from Korea, Solaire would have reported a P3.460 billion net profit, compared to a P2.377 billion net loss in 2015. Moreover, Bloomberry was able to erase the retained losses in its balance sheet in 4Q16 with P87 million in retained earnings by the end of 2016.
Bloomberry generated in P732 million in net profits in Q4, a P2.598 billion year-on-year swing compared to the P1.866 billion net loss in Q4 2015.
Bloomberry reported earnings per share (EPS) of P0.214 in 2016, a significant turnaround from the negative P0.305 in the preceding year.
For the fourth quarter of 2016, Bloomberry reported an EPS of P0.068, versus a negative P0.176 and P0.129 in the same period last year and the previous quarter, respectively.
The Sky Tower of Solaire Resorts and Casino was named five-star by Forbes Travel Guide in its Official 2017 Star Rating Announcement. This is the most prestigious accolade Solaire has received since Sky Tower opened in 2014.
Bloomberry Resorts Corporation is the owner and operator (through its subsidiaries) of the Solaire Resort & Casino and Jeju Sun Hotel & Casino. Solaire was the first property to open in PAGCOR’s Entertainment City. Solaire became the first Integrated Resort in Entertainment City with the opening of Sky Tower last November 2014. Aside from a 312-key all-suite five-star hotel, Sky Tower features other amenities such as The Theatre, a 1,760-seat Broadway-style theatre; The Macallan, a luxury cigar and whisky bar; 1,000 sqm of meeting space in The Forum; an international KTV bar, as well as additional gaming facilities. Solaire’s high-end retail area, The Shoppes@Solaire, has recently rolled out the following luxury boutiques: Louis Vuitton, Prada, Bvlgari, Salvatore Ferragamo and Givenchy.