Presentation to Investors as of 12 September 2018
Table of contents The Philippine Economy 3 Philippine Gaming Industry 4 About Premium Leisure 7 Pacific Online 8 PLAI 10 Financials 14 Presentation to Investors 2 12 September 2018
Philippines : strong macroeconomic fundamentals Tourist arrivals Young workforce with rising incomes Tourists (millions) Inflation and interest rate environment Avg. Inflation rate: 4.5% (Jan-Jul 2018) Avg. lending rate: 5.8% (Jan-Jul 2018) Foreign direct investments Healthy fiscal and monetary system Source: The World Bank, Most Recent Data Presentation to Investors 3 12 September 2018
The Philippine gaming industry Rise of integrated resorts Regulator : Philippine Amusement & Gaming • Since 2008, 5 integrated resort projects have been approved Corporation (PAGCOR) by PAGCOR for development at or near Entertainment City, • Since 1976, PAGCOR has been overseeing games of with 4 already operating: Resorts World Manila (in Newport City; opened 2009) chance, particularly casino gambling Solaire Resort & Casino (opened 2013) • R evenues generated augment the government’s budget City of Dreams Manila (opened 2014) for socio-civic work and national development programs Okada Manila (opened 2017) • In 2008, the Arroyo government opened the Philippine Resorts World Westside City (estimated opening in gaming market, removing PAGCOR's monopoly 2021) • In 2012, Philippine casino gross gaming revenue was just Php56.0B. In 2017, it reached Php152.6B* operated casinos Philippine casino gross gaming revenues (Php B) LUZON CF : 4 Sat : 10 5-yr CAGR : 22% MM CF : 2 Sat : 15 VISMIN CF : 3 Sat : 6 * Figure excludes revenue from electronic gaming. Source: PAGCOR, Credit Suisse 9 Casino Filipino, 31satellite casinos Presentation to Investors 4 12 September 2018
Integrated resorts : driving growth • In 2017, integrated resorts accounted for 72% of casino GGR 2017 Philippine casino gaming revenues by category Year Hotel Integrated Resorts Opened Rooms Resorts World Manila 2009 1,454 Solaire Resort & Casino 2013 800 City of Deams Manila 2014 946 Okada Manila 2017 993 (proj.) 2017 Total Php152.6B Source: Company Information, Credit Suisse estimates and PAGCOR Presentation to Investors Source: PAGCOR 5 12 September 2018
Gaming : a growth opportunity Philippine gaming is on a growth trajectory with the four Integrated Resorts leading the way. Growth drivers : • Tourist arrivals • Travel documentation requirements for VIPs • VIP experience compared to other Total Integrated Resorts GGR (Php Billions) regional casinos • Targeted marketing efforts aimed at 5-yr CAGR : 31% local clientele • Enhanced family-based entertainment propositions Source: PAGCOR, Credit Suisse Presentation to Investors 6 12 September 2018
About Premium Leisure Corp. Premium Leisure Corp. (PLC) is an investment holding company that participates in gaming- related businesses in the Philippines. Through its subsidiary, PremiumLeisure & Amusement Inc. (PLAI), PLC has an interest in the operations of City of Dreams Manila, an integrated entertainment and gaming complex located in PAGCOR Entertainment City in Parañaque by Manila Bay. PLAI has a partnership with Melco Resorts and Entertainment Ltd., a leading developer and operator of integrated resorts in Macau and other countries, to operate City of Dreams Manila. PLC also owns a 50.1% stake in Pacific Online Systems Corporation (POSC), a publicly listed company that leases Lottery and Keno equipment and software to the Philippine Charity Sweepstakes Office. 100% 50.1% PREMIUMLEISURE & AMUSEMENT, INC. PACIFIC ONLINE SYSTEMS CORPORATION • Unlisted HoldCo for PAGCOR license • PSE listed (LOTO) • Operating agreement with Melco • Lease of Lottery and Keno equipment Philippines for share in COD gaming and software revenue Presentation to Investors 7 12 September 2018
Pacific Online (LOTO): Overview Our business • Provide technical and market expertise for the distribution of lottery products in the country in partnership with the state-run Philippine Charity Sweepstakes Office (PCSO) • Since 1995, LOTO has been leasing to PCSO its online lottery systems for the Visayas and Mindanao regions Key agreements with the PCSO Major suppliers • Equipment Lease Agreements • Scientific Games Worldwide Ltd., a global • Lottery gaming and technology leader in lottery • Keno • Intralot SA Integrated Lottery Systems & • Maintenance Repair Agreement Services, a leading supplier of integrated gaming and transaction processing systems Presentation to Investors 8 12 September 2018
LOTO : reliable dividend stock Lotto : steady business Keno : double digit growth # of # of Php B terminals Php B terminals Terminal expansion 3-yr CAGR of 24% LOTO dividend history LOTO: solid track record * Amounts in Php m Amounts in Php B Presentation to Investors * Special dividend declared in 2016 9 12 September 2018
PLAI : overview PAGCOR License Operating Partner: Melco • • Co-terminus with the PAGCOR charter Only Macau-based operator running an integrated resort in the Philippines • Owns and operates three integrated resorts in Macau Key Agreements City of Dreams Manila • ~30 ha. of total gross floor area • Cooperation Agreement (Melco, Belle, • Over 2 ha. of gaming space PLAI) • ~ 2 ha. of retail and restaurants • Operating Agreement (Melco & PLAI) • 3 world class hotels • Dreamplay – Dreamworks inspired play space Presentation to Investors 10 12 September 2018
Melco : a strong partner Experienced operator • Operator of several awarded integrated resorts in Macau City of Dreams Macau Studio City Altira Macau • Able to leverage Macau knowhow for best practices in resort marketing and efficient operations Broad customer base • Proprietary access to regional gaming and tourism customers • Has developed a sizable database of local customers since City of Dreams Manila opened in 2014 City of Dreams Manila – a world class product • 2015: won the prestigious International Gaming Awards Casino / Integrated Resort of the Year • Multiple awards and recognition for each of the hotels in the resort complex Presentation to Investors 11 12 September 2018
Revenue sharing with Melco City of Dreams Manila EBITDA Sharing PLAI is entitled to the HIGHER of: 50% of MRP’s gaming EBITDA computed without Gross Gaming Revenue 1. deducting lease expenses but after deducting: Less: PAGCOR License Fees • Management allowance for 2% of Net Win, where Net Gaming Revenue “Net Win” is defined as: Less: Management allowance (2% of Net Win) − For mass market = Net Gaming Revenue Less: Operating Expenses (excluding lease − For VIP = Net Gaming Revenue less expenses paid to Belle) commissions, marketing/ incentives and bad Gaming EBITDA debts expenses • Incentive fee of 7% of EBITDA Less: Incentive fee (7% of Gaming EBITDA) -OR- Gaming EBITDA for sharing 2. A percentage of Net Win as follows: PLAI share (higher of 50% of Gaming EBITDA or a percentage of Net Win) • For mass market – 15%; and • For VIP – 5% Presentation to Investors 12 12 September 2018
Positioned to benefit from growing gaming sector • The operation of 3 world-class integrated resorts has legitimized Entertainment City as a worthwhile destination for tourists looking for games of chance. • Manila is an attractive destination for Asian gamers : only a few hours flight from China, Japan and Korea. • Favorable tax incentive in the Philippines (15% VIP tax vs 39% in Macau). PLAI revenue (Php m) PLAI net income / net margins PLC dividend history (Php m) net Php m margin • • • Revenue increase driven by Growing share in revenue from VIP It is PLC policy to declare increased share in gaming market contributing to improving dividends of at least 80% of prior year’s unrestricted retained revenue at City of Dreams margins Manila earnings Presentation to Investors 13 12 September 2018
PLC : Strong proxy for growing gaming sector in Php Millions 6 months 2018 6 months 2017 % Chg Full Year 2017 Full Year 2016 % Chg Revenues 2,830 2,516 12.5% 4,929 3,531 39.6% EBITDA 1,740 1,636 6.3% 2,597 1,902 36.6% Net Income 1,340 1,027 30.5% 2,003 1,158 72.9% Net Margin 47.3% 40.8% - 40.6% 32.8% - ROE 15.9% 12.7% - 12.0% 7.2% - ▪ • Superior downside protection Healthy balance sheet • • PLC, through PLAI, collects a fee even No debt • Consolidated stockholders’ equity of when there are operating losses in City of Dreams Manila Php16.7B as of June 30, 2018. • Efficient ownership structure: zero operating costs • • Strong cash flow Attractive dividend play • • No capex requirements Transparent dividend policy: at least • Reliable contribution from Pacific Online 80% of unrestricted retained earnings to be paid out in the succeeding year Presentation to Investors 14 12 September 2018
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