Bloomberry Resorts Corp. (PSE: BLOOM), owner and operator (through its subsidiaries) of the Solaire Resort & Casino and Jeju Sun Hotel & Casino, reported audited consolidated financial results for the year ended December 31, 2018, with the company reporting the highest levels of EBITDA and net profit since its flagship property Solaire opened in March 2013. Both EBITDA and net profit growth were supported by record levels of gaming volumes and gross gaming revenues (GGR) across the VIP, mass tables and electronic gaming machine (EGM) segments, non-gaming revenues, as well as effective cost containment initiatives.
Enrique K. Razon Jr., Bloomberry chair and CEO, says, “I am pleased to report that Bloomberry continues to be a trailblazer in the Philippine gaming and entertainment scene with our world-class integrated resort offering, Solaire Resort and Casino, delivering record revenues and profits in 2018. We look forward to 2019 and to sowing the seeds of our future growth, as we anticipate to break ground on our second integrated resort in Quezon City this year.”
In 2018, total GGR at Solaire was PhP50.972 billion, representing an increase of 14% YoY.
Solaire’s VIP volumes in 2018 were the highest ever for the property at PhP810.233 billion, increasing by 2% YoY despite the ramp-up of the newest player within Entertainment City. At a VIP win rate of 2.69%, VIP GGR was PhP21.817 billion, representing an increase of 5% YoY.
Full year mass table drop and EGM coin-in at Solaire also reached record highs of PhP44.894 billion and PhP211.887 billion, representing YoY growth of 22% and 15%, respectively. Growth in our mass gaming segments was supported by a 14% annual increase in property visitation to 6.649 million, robust domestic discretionary spending and the increasing participation of international gaming patrons. Mass table revenues were PhP15.258 billion, up by 27% YoY, while EGM revenue was PhP13.897 billion, higher by 18% compared to the previous year.
Higher VIP GGR at Solaire caused Bloomberry’s promotional allowances and contra accounts to increase by 10% YoY to PhP16.626 billion. However, promotional allowances and contra accounts as a percentage of GGR decreased to 32% from 34% in 2017.
In the fourth quarter of 2018, total GGR at Solaire was PhP13.231 billion, 29% higher than the GGR recorded in the same period in 2017. VIP, mass tables, and EGM GGR recorded YoY increases of 53%, 18%, and 10%, respectively.
In Korea, despite the gambling prohibition on locals and meaningfully deteriorated tourist visitation, Jeju Sun reported a 19% YoY increase in annual gaming revenues to PhP484 million.
Strength in both the Philippines and Korea gaming segments enabled the company to grow its consolidated gaming revenues to PhP48.232 billion, representing an increase of 14% against consolidated gaming revenues in 2017.
In 2018, the Company recorded its highest ever consolidated non-gaming revenue of PhP6.615 billion, representing growth of 11% YoY. Growth was driven by higher hotel occupancies at both the Bay and Sky Towers, higher frequency of productions in the Theatre at Solaire, and increased rental income from new tenants at The Shoppes.
Hotel occupancy at Solaire in 2018 was 92.6%, representing a 1.9 percentage point increase from the 90.7% occupancy in 2017.
In 2018, Tumi, Transview, Eye Society, Lukfook Jewellry and The Coffee Bean and Tea Leaf opened outlets in The Shoppes at Solaire, increasing retail rental revenues for the year.
Bloomberry’s net revenues grew 16% YoY to PhP38.220 billion as a result of the strong performance of Solaire’s gaming and non-gaming operations.
Bloomberry has been diligent in managing its expenses by rolling out cost-containment initiatives and programs. In 2018, consolidated cash operating expenses increased by only 13% despite the 16% increase in net revenues. The increase in cash operating expenses was mainly due to higher gaming taxes as a result of record GGRs in Solaire’s VIP, mass tables and EGM segments, salaries and wages, outside services and charges, and cost of sales.
EBITDA, Net Profit and Earnings Per Share
Bloomberry’s 2018 consolidated EBITDA was PhP14.895 billion, representing an increase of 21% YoY. Solaire contributed PhP15.135 billion to consolidated EBITDA, which was off-set by the PhP240 million negative EBITDA recorded at Jeju Sun.
Consolidated EBITDA in the fourth quarter was PhP3.427 billion, PhP244 million or 8% higher compared to the prior quarter and higher by PhP1.316 billion or 62% compared to the same quarter of the previous year.
On a hold-normalized basis, Bloomberry’s consolidated EBITDA for 2018 was PhP16.049 billion, PhP1.155 billion higher than the reported consolidated EBITDA of PhP14.895 billion. Hold-normalized EBITDA in 2018 would have increased by 17% YoY. Hold-normalized EBITDA in the fourth quarter would have been PhP4.016 billion, up by 16% YoY.
The company reported net profit of PhP7.166 billion for 2018. Net profit grew 18% YoY despite the unrealized FX losses from the Korea operations and higher interest expenses incurred resulting from the full drawdown of the PhP73.5 billion Syndicated Loan in the first half of 2018. The proceeds of the Syndicated Loan were used to retire previous debt facilities and finance the acquisition of land from PAGCOR where Solaire and its Phase 2 expansion area is located within Entertainment City.
Bloomberry reported Basic Earnings per Share (EPS) of PhP0.652, representing growth of 18% YoY.
Balance Sheet and Other Items
As of December 31, 2018, Bloomberry had a consolidated cash and cash equivalents balance of PhP36.466 billion. Total long-term debt was PhP69.119 billion, which represents the non-current portion of the PhP73.5 billion Syndicated Loan issued in 2018. Total equity was PhP36.561 billion.
As of December 31, 2018, Bloomberry had PhP3.121 billion in gross receivables, 19% or PhP497 million higher than at the beginning of the year mainly due to additional credit issuances. Receivables over 90 days decreased by PhP38 million from the previous quarter to PhP318 million. Accordingly, the company did not make any additional provisions for bad debt in the fourth quarter of 2018. Total bad debt provisions for the year was PhP29.05 million.