Gambling wealth of the Sy family

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EMETERIO SD. PEREZ

PREMIUM Leisure Corp. (PLC) is formerly Sinophil Exploration Co., which used to be an oil-and-gas exploration and development company. It is a subsidiary of Belle Corp., which holds 24.905 billion common shares, or 78.745 percent, of the company’s 31.627 billion outstanding common shares.

(Note: The percentage equivalent is based on PLC’s filing under “security ownership of certain record and beneficial owners” posted on the website of the Philippine Stock Exchange.)

As record stockholder, PCD Nominee Corp. holds 5.588 billion common shares, or 17.668 percent, for beneficial owners.

PCD’s holdings in PLC include 1.129 billion common shares owned by non-Filipinos as shown in the list of PLC’s top 100 stockholders as of Dec. 31, 2016.

A public ownership report (POR) credited PLC’s public stockholders as owners of 6.68 billion common shares, or 21.13 percent. This ownership entitles them to at least a seat in PLC’s seven-person board. Instead, the company appoints two independent directors.

Legalized gambling
While PLC defines itself as an “investment holding company,” it is, in fact, engaged primarily in gaming business.

Unlike “jueteng,” the illegal numbers game, the gaming business is simply l egalized gambling. It has been PLC’s main focus since June 2, 2014 when its “board of directors approved to take on the gaming business and interest of the Belle Group.”

In a PSE posting, PLC explained its deal with Belle. “The transaction involved the sale to Belle of PLC’s non-gaming assets (comprising primarily real properties and corporate club membership shares) and acquisition of all of Belle’s interest in Premium Leisure and Amusement Inc. (PLAI) for a consideration of P10,847.8 million and 34.5% interest in Pacific Online Systems Corp. (market symbol: LOTO) for a consideration of P1,525.0 million.”

As a result, Belle ended up owning 90 percent of PLC’s outstanding common shares. Eventually, its ownership dropped to 78.745 percent as of Dec. 31, 2015 when it sold some of its PLC holdings.

An ownership filing listed PLC as holder of 224.28 million LOTO common shares, or 50.1 percent. At P11.28 per share, LOTO’s closing price on Friday, PLC is very rich, with paper wealth of more than P2.53 billion.

Profitable gaming
In a non-audited nine-month financial filing as of Sept. 30, 2016, PLC reported total revenues of P2.494 billion against cost and expenses of P1.528 billion. This financial performance put PLC ahead by P966 million.

The same PSE posting listed PLC’s three sources of income such as gaming share revenue, P1.108 billion; equipment lease rentals, P1.151 billion; and commission and distribution income, P234.771 million.

As to the government’s share, PLC set aside P238.572 million for income tax. The amount represents 23.259 percent of net income before tax of P1.026 billion and 9.566 percent of total revenue of P2.494 billion.

Because of its consistent profitability, PLC distributes dividends annually to its stockholders. On March 23, it said it would pay its stockholders as of March 10 dividend of P0.0281 per common share. At P0.25 per outstanding common share, the dividend translates to a return of 11.24 percent.

On March 23, 2016, PLC paid a dividend of P0.0215 per common share, or 10.75 percent. The dividend computation was based on the P0.25 per common share that PLC issued to its stockholders.

At PLC’s closing price of P1.52 on Friday, P0.0281 dividend equals 1.847 percent.

Executive compensation
Willy N. Ocier is chairman of PLC’s board while Frederic C. Dybuncio is president and chief executive officer. Jackson T. Ongsip, chief finance officer; Armin Raquel-Santos, executive vice president and chief operating officer; Dexter Reyes, assistant vice president for operations; and Maria Neriza E. Cuevas, controller, complete PLC’s six most highly compensated officers.

As a group, Ocier and company were paid P9.066 million in 2015; and P12.73 million in 2016. Based on PLC’s estimate, the will receive P13.366 million of which P12.744 million will be their salary and per diem allowances.

In the same compensation filing, PLC said it paid “all other officers and directors as a group unnamed” P4.99 million in 2015; and P7.41 million in 2016. It projected the group’s pays and perks to be the same as in 2016.

Like other listed companies, Premium Leisure has yet to post its annual report covering 2016 on the PSE website. This is the reason for the footnote “compensation based on estimates only” in the compensation filing.

SM group
Belle Corp. is PLC’s parent company. In turn, it belongs to the group of companies that businessman Henry Sy Sr., along with his family, owns.

By going through layer after layer of ownerships, the public investors can only conclude that legalized gambling also contributes to the wealth of the Sys.

In its own filing, Belle identified PLC as its “listed gaming subsidiary,” in which it owns “78.7 percent of outstanding common shares, 100 percent of the capital stock of PLAI and 50.7 percent of Pacific Online.” PLAI is an acronym for Premium Leisure and Amusement Inc.

A financial filing covering nine-month financial performance in 2016 showed Belle’s P4.642-billion revenue was higher by 17 percent than the P3.901 billion recorded in the same period in 2015. Belle attributed this profitable financial performance to “a P554.3 million (100% increase in the share of PLC in the gaming revenue of City of Dreams Manila from P554.3 million for the 2015 period to P1.108 billion for the 2016 period.”

With these impressive numbers, the Sys should be more optimistic on Belle’s future earnings. If gambling pays off handsomely in dividends, why not?

esdperez@gmail.com

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