A 1 9 9 9 0 4 8 6 4

SEC Registration Number

B L O O M B E R R Y R E S O R T S C O R P O R A T I O N

(Company’s Full Name)

T H E E X E C U T I V E O F F I C E S , S O L A I R E

R E S O R T & C A S I N O , 1 A S E A N A V E N U E ,

E N T E R T A I N M E N T C I T Y , T A M B O ,

P A R A Ñ A Q U E C I T Y
(Business Address: No. Street City/Town/Province)

JONAS R. RAMOS 883-8921

(Contact Person) (Company Telephone Number)

Definitive
1 2 3 1 S E C 20 IS any day in June
Month Day (Form Type) Month Day
(Fiscal Year) (Annual Meeting)

N/A
(Secondary License Type, If Applicable)

SEC-MSRD N/A
Dept. Requiring this Doc. Amended Articles Number/Section
Total Amount of Borrowings

94
(as of 31 December 2018) N/A N/A
Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

STAMPS
Remarks: Please use BLACK ink for scanning purposes.
 SECURITIES AND EXCHANGE COMMISSION
SEC FORM 20-IS

INFORMATION STATEMENT PURSUANT TO

SECTION 20 OF THE SECURITIES REGULATION CODE

1. Check the appropriate box:

[ ] Preliminary Information Statement
[ x ] Definitive Information Statement

2. Name of Registrant as specified in its charter

Bloomberry Resorts Corporation

3. Province, country or other jurisdiction of incorporation or organization

Philippines

4. SEC Identification Number A199904864

5. BIR Tax Identification Code 204-636-102

6. Address of Principal Office The Executive Offices, Solaire Resort & Casino,
1 Asean Avenue, Entertainment City, Tambo,
Parañaque City
Postal Code 1701

7. Registrant’s telephone number, including area code (632) 883-8920

8. Date, time and place of the meeting of security holders: April 11, 2019 at 2:00 p.m. to be
held at the Ballroom of Solaire Resort & Casino, 1 Asean Avenue, Entertainment City,
Barangay Tambo, Parañaque City

9. Approximate date on which the Information Statement is first to be sent or given to

security holders: March 20, 2019

10. Securities registered pursuant to Sections 8 and 12 of the Code or Sections 4 and 8 of
the RSA (information on number of shares and amount of debt is applicable only to
corporate registrants):

Title of Each Class Number of Shares of Stock Outstanding

as of 31 December 2018
Unclassified Shares, P1.00 par value 11,008,675,899 Shares

11. Are any or all of registrant's securities listed in a Stock Exchange?

Yes  No

Name of Stock Exchange: Philippine Stock Exchange

Class of Securities Listed: Common Shares
BLOOM MANAGEMENT IS NOT SOLICITING PROXIES FOR
THIS ANNUAL STOCKHOLDERS’ MEETING.
PLEASE DO NOT SEND BLOOM MANAGEMENT YOUR PROXY.
 BLOOMBERRY RESORTS CORPORATION
2019 ANNUAL STOCKHOLDERS’ MEETING

Notice is hereby given that the Annual Stockholders’ Meeting of Bloomberry Resorts
Corporation will be held at the Ballroom of Solaire Resort & Casino, 1 Asean Avenue,
Entertainment City, Barangay Tambo, Parañaque City, Philippines on Thursday, April 11, 2019
at 2:00 p.m., with the following agenda:

A G E N D A

1. Call to order
2. Determination of existence of quorum
3. Approval of the minutes of the meeting of 5 June 2018
4. Report of the Chairman
5. Approval of the Audited Financial Statements
6. Ratification of all acts, contracts, investments and resolutions of the board of directors and
management since the last annual stockholders’ meeting
7. Election of the members of the Board of Directors
8. Appointment of the External Auditor
9. Other Matters

The Board of Directors fixed March 11, 2019 as the record date for the purpose of
determining Stockholders entitled to notice and to vote at the said meeting.

Registration starts at 12:00 Noon. Please bring your identification documents (e.g. SSS
card, driver’s license, passport) to facilitate registration.

Should you be unable to attend the meeting, but wish to be represented, please send us
a Proxy.

For Stockholders whose shareholdings are lodged with the Philippine Central
Depository, please secure a certification from your respective brokers and send it to us on or
before March 18, 2019.

Proxy validation will be held on March 29, 2019 at 11 a.m. at the Executive Offices,
Solaire Resort & Casino, 1 Asean Avenue, Entertainment City, Tambo Parañaque City.

Makati City, March 7, 2019

For the Board of Directors:

SILVERIO BENNY J. TAN

Corporate Secretary

2
 PART I. A. GENERAL INFORMATION

Item 1. Date, Time and Place of Meeting of Security Holders

The Annual Stockholders’ Meeting of Bloomberry Resorts Corporation (the “Company” or

“BLOOM”) will be held on April 11, 2019 at the Ballroom of Solaire Resort & Casino, 1 Asean
Avenue, Entertainment City, Barangay Tambo, Parañaque City at 2:00 p.m.

The address of the principal office of BLOOM is The Executive Offices, Solaire Resort & Casino,
1 Asean Avenue, Entertainment City, Tambo Parañaque City. This Information Statement will
be mailed to Stockholders entitled to notice of and to vote at the Annual Stockholders’ Meeting
on or about March 20, 2019.

Item 2. Dissenters’ Right of Appraisal

The matters to be acted upon at this Annual Stockholders’ Meeting are not matters with respect
to which a dissenting Stockholder may exercise his appraisal right under Section 80 of the
Revised Corporation Code.

Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon

Other than election of Directors, there are no substantial interest, by security holdings or
otherwise, of BLOOM, any Director or Officer thereof, or associate of any of the foregoing
persons in any matter to be acted upon at the Annual Stockholders’ Meeting.

None of the Directors of BLOOM has informed BLOOM in writing that he intends to oppose any
action to be taken by BLOOM at this Annual Stockholders’ Meeting.

Part I. B. CONTROL AND COMPENSATION INFORMATION

Item 4. Voting Securities and Principal Holders Thereof

As of February 28, 2019, there are 11,008,675,899 common shares of BLOOM issued and
outstanding. Only Stockholders of record at the close of business on March 11, 2019 are
entitled to notice and to vote at the Annual Stockholders’ Meeting. The stockholders will vote on
matters scheduled to be taken up at the Annual Meeting with each share being entitled to cast
one (1) vote.

For the election of Directors, Stockholders entitled to vote may vote such number of shares for
as many persons as there are Directors to be elected, or may cumulate said shares and give
one candidate as many votes as the number of Directors to be elected multiplied by the number
of their shares shall equal or may distribute them on the same principle among as many
candidates as they shall see fit.

Security Ownership of Certain Beneficial Owners and Management

As of February 28, 2019, the Company does not know of anyone who beneficially owns in
excess of 5% of the Company’s stock except as set forth in the table below:

3
Security Ownership of Certain Record and Beneficial Owners

Title of Name, Address of Name of Beneficial Citizenship No. of Shares Percentage

Class Record Owner and Owner and Held
Relationship with Relationship with
Issuer Record Owner
1
Common Prime Metroline Enrique K. Razon, Jr. Filipino 5,935,972,444 53.80%
Shares Holdings, Inc. Controlling Shareholder
18/F Liberty Center,
104 H.V. Dela Costa
St., Salcedo Village,
Makati City
Controlling
Shareholder of
Issuer
1
Common Quasar Holdings, Enrique K. Razon, Jr. Filipino 921,184,056 8.35%
Shares Inc. Controlling Shareholder
18/F Liberty Center,
104 H.V. Dela Costa
St., Salcedo Village,
Makati City
Controlling
Shareholder of
Issuer
2
Common PCD Nominee Various parties Foreign 3,131,905,709 28.45%
Shares Corporation
(Non-Filipino)
Makati Stock
Exchange Bldg.,
Ayala Avenue,
Makati City
No relationship
Common PCD Nominee Various parties Filipino 674,770,519 6.13%
Shares Corporation
(Filipino)
Makati Stock
Exchange
Bldg.,Ayala Avenue,
Makati City
No relationship
2
Common Global Gaming Global Gaming Asset Foreign 921,184,056 8.35%
Shares Philippines, LLC Management Holdings,
499 Park Avenue, LLC
nd
2 Floor, New York, Controlling Entity of
United States of Global Gaming
America Philippines, LLC
No relationship
1
Enrique K. Razon Jr. is the controlling stockholder of Prime Metroline Holdings, Inc., Quasar Holdings, Inc. and Falcon Investco Holdings, Inc. Enrique
K. Razon, Jr. directly and indirectly owns 7,113,389,332 shares or 64.47% some of which are lodged with the PCD Nominee Corporation.
2
The shares of Global Gaming Philippines, LLC is lodged under the shares of PCD Nominee Corporation (Non-Filipino).

Security Ownership of Management as of February 28, 2019

Name Citizenship Number of Shares Percentage of Ownership
Enrique K. Razon, Jr.1 Filipino 7,113,389,332 64.47%
Thomas Arasi American 4,994,191 0.05%
Jose Eduardo J. Alarilla Filipino 1,326,889 0.01%
Christian R. Gonzalez Filipino 100,933 0.00%
Estella Tuason-Occeña Filipino 3,150,100 0.03%
Donato C. Almeda Filipino 1,326,502 0.01%
Silverio Benny J. Tan Filipino 112,619 0.00%
4
 Name Citizenship Number of Shares Percentage of Ownership
Laurence Upton New Zealander 216,721 0.00%
Cyrus Sherafat American 1,489,943 0.01%
1
Enrique K. Razon, Jr. directly owns 100 shares and indirectly owns: through Prime Metroline Holdings, Inc., 5,935,972,444 (53.92%) shares, through Falcon
Investco Holdings, Inc., 225,000,000 (2.04%) shares; and through Quasar Holdings, Inc., 921,184,056 (8.37%) shares.

Voting Trust Holders of 5% or More

None

Change in Control
None

Certain Relationships and Related Transactions

Descriptions and explanations of the related party transactions are disclosed in Note 14,
Related Party Transactions, to the Annual Audited Consolidated Financial Statements.

Aside from the transactions as disclosed in the Annual Audited Consolidated Financial
Statements, the Group does not have any other transactions with its directors, executive
officers, security holders or members of their immediate family.

Item 5. Directors and Executive Officers

The following are information on the business experience of the members of the Board of
Directors (the Board) and Executive Officers of BLOOM for the last five (5) years.

The members of the Board of Directors and executive officers of BLOOM as of February 28,
2019 are:

Office Name Citizenship Age

Chairman of the Board and CEO Enrique K. Razon Jr. Filipino 58
Vice Chairman Jose Eduardo J. Alarilla Filipino 67
Director, President & Chief Operating Officer Thomas Arasi American 61
Director Christian R. Gonzalez Filipino 43
Director Donato C. Almeda Filipino 64
Independent Director Carlos C. Ejercito Filipino 73
Independent Director Jose P. Perez1 Filipino 72
Chief Financial Officer and Treasurer Estella Tuason-Occeña Filipino 49
Senior Vice President for International Laurence Upton New 49
Marketing Zealander
Senior Vice President for Casino Marketing Cyrus Sherafat American 36
Senior Vice President for Construction Theunis D. van Niekerk South African 61
Corporate Secretary and Compliance Officer Silverio Benny J. Tan Filipino 62
Assistant Corporate Secretary Jonas S. Khaw Filipino 39
1
Appointed on 1 February 2019.

Below are summaries of the business experience and credentials of the Directors and the
Company's key executive officers:

Enrique K. Razon, Jr. — Chairman and Chief Executive Officer

Mr. Razon is the Chairman and the President of International Container Terminal Services, Inc.
(ICTSI)*, ICTSI Warehousing, Inc., ICTSI Foundation, Inc., Razon Industries, Inc., Prime
Metroline Holdings Inc. (PMHI), Quasar Holdings Inc., Falcon Investco Holdings Inc., Achillion
Holdings Inc., Collingwood Investment Company Ltd., Bravo International Port Holdings Inc. and
Provident Management Group, Inc.; the CEO and the Chairman of Bloomberry Resorts and
5
Hotels, Inc.; the Chairman of Sureste Realty Corp. and Australian Terminal Ltd.; the President
of Contecon Manzanillo S.A., Tecon Suape, S.A. and Tecplata S.A.; a Director A of Contecon
Guayaquil S.A.; a Director B of ICTSI Capital B.V.; and a Director of Sureste, ICTSI (Hongkong)
Ltd., Monte Oro Resources and Energy, Inc. (MORE), Yantai International Container Terminals,
Limited, Australian Container Terminals Ltd., Pentland International Holdings Ltd., CLSA
Exchange Capital and Xcell Property Ventures, Inc.

Mr. Razon is a member of the American Management Association, the Management

Association of the Philippines, the US Philippines Society and the World Economic Forum. Mr.
Razon was conferred an honorary degree of Doctor of Science in Logistics from the De La Salle
University on February 16, 2019.

*Publicly-listed Corporation

Jose Eduardo J. Alarilla — Vice Chairman

Mr. Alarilla is the President of Lakeland Village Holdings, Inc., Devoncourt Estates Inc., Eiffle
House Inc., Alpha Allied Holdings Ltd. and Sureste. He is the President and CEO of Mega Subic
Terminal Services, Inc., Chairman of Mega Equipment International Corp., and President of
Manila Holdings and Management, Inc. Mr. Alarilla is a director of BRHI, MORE, MORE Electric
& Power Corporation and International Cleanvironment Systems Inc. He holds a Bachelor of
Science in Mechanical Engineering from De La Salle University and a Master in Business
Management from the Asian Institute of Management.

Thomas Arasi —President and Chief Operating Officer

Mr. Arasi was appointed as President and Chief Operating Officer of the Company effective
October 11, 2013. He is also the President of BRHI. He was formerly President and Chief
Executive Officer of Marina Bay Sands Pte Ltd. He has also held senior positions with
InterContinental Hotels Group as President of three major divisions, and was formerly the
President of Tishman Hotel Corporation. Mr. Arasi is a graduate of Cornell University, where he
received a Bachelor of Arts degree in Hotel and Restaurant Administration.

Christian R. Gonzalez — Director

Mr. Gonzalez is a director of BRHI, Sureste and PMHI. He is the Vice President and Head of
Asia Pacific Region & Head of Manila International Container Terminal (MICT) in ICTSI*. Mr.
Gonzalez is the Chairman and/or President of ICTSI Subic, Inc., Subic Bay International
Terminal Holdings, Inc. and IW Cargo Handlers, Inc.; the Chairman of ICTSI Far East Pte. Ltd.;
the President Commissioner of PT Makassar Terminal Services and ICTSI Jasa Prima; and a
Director of Bauan International Ports, Inc., Davao Integrated Port & Stevedoring Services Corp.,
Mindanao International Container Terminal Services, Inc., South Cotabato Integrated Ports
Services, Inc., Subic Bay International Terminal Corp., Abbotsford Holdings, Inc., ICTSI
Warehousing, Inc., Hijo International Port Services, Inc., International Container Terminal
Services (India) Private Limited, and Pakistan International Container Terminal Limited. Mr.
Gonzalez is a Director and the Chairman of the Board in both Yantai International Container
Terminals, Limited and Victoria International Container Terminal Ltd. In 2009, Mr. Gonzalez
was appointed as the Treasurer of the Board of Trustees of ICTSI Foundation, Inc. In 2010, he
was elected a Director of The Country Club.

Mr. Gonzalez is a graduate of Instituto de Estudios Superiores de la Empresa (IESE) Business

School, the graduate school of management of the University of Navarra, in Barcelona, Spain,
where he received his Bilingual Masters in Business Administration. He is also a graduate of
Business Administration from Pepperdine University in California.

6
*Publicly-listed Corporation

Donato C. Almeda — Director

Mr. Almeda is director of BRHI and is the President of Bloomberry Cultural Foundation Inc. He
served as President and CEO of Waterfront Philippines Inc. He also served as: President of
Waterfront Cebu City Hotel, Waterfront Mactan Hotel and Fort Ilocandia Hotel, Managing
Director of Waterfront Promotions Ltd. (a gaming company) and President of Insular Hotel in
Davao. He earned his Engineering Degree from De La Salle University.

Carlos C. Ejercito — Independent Director

Mr. Ejercito is an independent director of Monte Oro Resources & Energy, Inc. He is the
Chairman and President of Northern Access Mining Corporation, Forum Cebu Coal Corporation,
Morganhouse Holdings Inc., Aboitiz Power Corporation* and Century Properties Group, Inc.* He
was Chairman of the Board of Directors of United Coconut Planters Bank, and was the former
CEO of United Laboratories Inc. and several of its subsidiaries. He was a director of Ayala
Greenfield Development Corporation. He was a former director in National Grid Corporation of
the Philippines, Greenfield Development Corporation, Fort Bonifacio Development Corporation
and Bonifacio Land Corporation. Mr. Ejercito is a governor of the Management Association of
the Philippines and is a member of the Philippine Chamber of Commerce. Mr. Ejercito has a
Bachelor’s degree in Business Administration, cum laude, from the University of the East, and is
an MBA candidate from Ateneo Graduate School of Business. He attended the Program for
Management Development of Harvard Business School.

Jose P. Perez — Independent Director

Retired Justice Perez is an independent director of Eagle Cement Corporation*, SMC
Yamamura Glass, SMC Hong Kong, South Luzon Tollway Corporation. He is the Dean of
Manuel L. Quezon University School of Law. He was formerly an Associate Justice of the
Supreme Court from December 2009 to December 2016. He holds a Bachelor of Laws degree
from the University of the Philippines College of Law and a Bachelor of Arts degree Major in
Political Science, from the University of the Philippines.

*Publicly-listed Corporation

Estella Tuason-Occeña — Chief Financial Officer and Treasurer

Ms. Occeña is the Treasurer of BRHI and Sureste and Director and Treasurer of PMHI. She is
an Executive Officer of ICTSI*, Treasurer of Sureste Realty Corporation, Lakeland Village
Holdings Inc., Devoncourt Estates Inc., Achillion Holdings, Inc., and Razon Industries, Inc. She
was Chief Financial Officer of MORE and was a director and Chief Financial Officer of
International Cleanvironment Systems Inc.. Ms. Occeña has an MBA from De La Salle
University and graduated with Distinction from St. Scholastica’s College with a Bachelor’s
Degree in Commerce.

*Publicly-listed Corporation

7
Laurence Upton — Senior Vice President for International Marketing
Mr. Upton was previously with Crown Ltd, Melbourne as Senior Vice President, VIP
International Marketing. He was also previously connected with Star City Pty Ltd in a variety of
senior management roles. He is a graduate of the New South Wales Vocational and Education
and Training Accreditation Board in Australia with a diploma in Business Management.

Cyrus Sherafat — Senior Vice President for Casino Marketing

Mr. Sherafat has 10 years’ experience in the gaming industry working in various marketing roles
both at local casinos and international integrated resorts. He was the Vice President of Casino
Marketing in Marina Bay Sands in Singapore. He is a graduate of Cornell University’s School of
Hotel Administration. He began his career in the gaming industry with Pinnacle Entertainment, a
regional casino operator in the United States.

Rajesh Jhingon* — Senior Vice President for Resort Operations

Mr. Jhingon has extensive experience in hotel and resorts operations. Prior to joining Solaire,
Mr. Jhingon served as the Executive Vice President Operation of the Leela Palaces, Hotels and
Resorts. From 2008 to 2012, he held the position of General Manager of the Mandarin Oriental,
Las Vegas and the same position of General Manager with the Mandarin Oriental, Singapore
from 2004 to 2008. He was also the General Manager of Taj Exotica Resort and Spa, Maldives
from 2002 to 2004. Mr. Jhingon has a Master’s Degree in Hospitality Management from IMHI
Cornell ESSEC, Paris, France.

*Mr. Rajesh Jhingon is an officer of BLOOM’s Subsidiaries, Sureste Properties Inc.

Theunis van Niekerk – Senior Vice President for Construction

Mr. van Niekerk has over three decades experience in successfully delivering complex projects
in the specialized entertainment, hospitality, gaming, retail, commercial, industrial, broadcasting,
movie industry, food processing, high security manufacturing facilities, warehousing, explosives
fabrication, and IT systems. He was part of the teams that were responsible for delivering
complex projects for both Melco Crown Entertainment and MGM China. He has a diploma in
Project Management from the Damelin Business School and studied Civil Engineering and Law
at the University of Pretoria in South Africa.

Silverio Benny J. Tan — Corporate Secretary & Compliance Officer

Atty. Tan is a partner, and was managing partner in 2013 to 2015, in the law firm Picazo Buyco
Tan Fider & Santos. He is chairman of the Board of Mapfre Insular Insurance Corporation. He
is a director and corporate secretary of Prime Metroline Holdings, Inc., Bravo International Port
Holdings Inc., Alpha International Port Holdings Inc., Eiffle House Inc., Cyland Corp., OSA
Industries Philippines Inc. and Negros Perfect Circles Food Corp. He is also a director of the
following companies: Celestial Corporation, Skywide Assets Ltd., Monte Oro Minerals (SL) Ltd.,
and Dressline Holdings Inc. and its subsidiaries and affiliates. He is the corporate secretary of
several companies including: Sureste, BRHI, MORE Electric & Power Corporation, Lakeland
Village Holdings Inc., Devoncourt Estates Inc., Apex Mining Company Inc.* Monte Oro
Resources & Energy Inc., Bloomberry Cultural Foundation Inc., and Pilipinas Golf Tournaments,
Inc. He is the assistant corporate secretary of ICTSI* and ICTSI Ltd. He is a trustee and the
auditor of the ICTSI Foundation, Inc.

Atty. Tan holds a Bachelor of Laws, cum laude, from the University of the Philippines College of
Law and a Bachelor of Arts Major in Political Science, cum laude, from the University of the
Philippines College Iloilo. Atty. Tan placed third in the 1982 Philippine Bar exams.

*Publicly-listed Corporation
8
Jonas S. Khaw — Assistant Corporate Secretary
Atty. Khaw is a partner in the law firm Picazo Buyco Tan Fider & Santos. He is the corporate
secretary of Medco Holdings, Inc.* Atty. Khaw holds a Juris Doctor and Bachelor of Science in
Management Engineering degrees both from the Ateneo de Manila University.

*Publicly-listed Corporation

Significant Employees
No person who is not an executive officer of BLOOM is expected to make a significant
contribution to BLOOM.

Family Relationships
Director Christian R. Gonzales is the nephew of Chairman and President, Enrique K. Razon, Jr.
There are no other family relationships among the directors and officers listed.

Involvement in Certain Legal Proceedings

Based on their individual responses after due inquiry as of date hereof, none of the following
events occurred with respect to any of the foregoing nominees and executive officers during the
past five (5) years up to the latest date that would be material to an evaluation of their ability or
integrity to act as directors or executive officers of the Corporation, except as otherwise
provided below:

(a) Any bankruptcy petition filed by or against any business of which the nominee
was a general partner or executive officer either at the time of the bankruptcy
or within two (2) years prior to that time;

(b) Any conviction by final judgment, in a criminal proceeding, domestic or

foreign, or being subject to a pending criminal proceeding, domestic or
foreign, excluding traffic violations and other minor offenses;

(c) Being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, domestic or
foreign, permanently or temporarily enjoining, barring, suspending or
otherwise limiting the nominee’s involvement in any type of business,
securities, commodities or banking activities; and

(d) Being found by a domestic or foreign court of competent jurisdiction (in a civil
action), the SEC or comparable foreign body, or a domestic or foreign
exchange or other organized trading market or self-regulatory organization, to
have violated a securities or commodities law or regulation, and the judgment
has not been reversed, suspended, or vacated.

As of date, there are no material pending legal proceedings to which the registrant or any of its
subsidiaries or affiliates is a party.

9
Nominees for Independent Directors/Nomination Committee
In line with established procedures, a formal nomination of an Independent Director is signed by
an incumbent Director, and is submitted to the Corporate Secretary. The Corporate Secretary,
guided by the By-Laws, Revised Manual on Corporate Governance and the Revised
Corporation Code, forwards the same to the Nomination Committee. In accordance with the
Revised Manual on Corporate Governance, the Nominations Committee passes upon the
qualifications of the nominee; the process includes an examination of the nominee’s business
background and company affiliations, and ascertains that the nominee does not possess any of
the disqualifications to serve as an Independent Director of BLOOM as provided in Section 38 of
the Securities Regulation Code and its Implementing Rules and Regulations. The Nomination
Committee is composed of Enrique K. Razon Jr. as Chairman, and Jose Eduardo J. Alarilla,
Christian Gonzalez as members.

Carlos C. Ejercito and Jose P. Perez were nominated as Independent Directors of BLOOM by
Ms. Estella Tuason-Occeña, and Enrique K, Razon Jr. respectively. Information on the
nominees are stated on pages 6 of this Information Statement.

Directors and Executive Officers

The following have been nominated as Members of the Board of Directors for the ensuing year:

Name Citizenship Age

Enrique K. Razon, Jr. Filipino 58
Jose Eduardo J. Alarilla Filipino 67
Thomas Arasi American 61
Christian R. Gonzalez Filipino 43
Donato C. Almeda Filipino 64
Carlos C. Ejercito* Filipino 73
Jose P. Perez* Filipino 72
*As Independent Director

Item 6. Compensation of Directors and Executive Officers

The Group paid compensation in 2018 to the Chief Executive Officer (CEO) and executive
officers named below, as a group, amounting to P254.2 million.

Name Office
Enrique K. Razon Jr. Chairman of the Board & Chief Executive Officer
Jose Eduardo J. Alarilla Vice Chairman
Thomas Arasi President & Chief Operating Officer
Christian R. Gonzalez Director
Donato C. Almeda Director
Estella Tuason-Occeña Chief Financial Officer & Treasurer
Rajesh Jhingon1 Senior Vice President for Resort Operations
Laurence Upton Senior Vice President for International Marketing
Cyrus Sherafat Senior Vice President for Casino Marketing
Arcan Lat Senior Vice President for Finance
Silverio Benny J. Tan Corporate Secretary & Compliance Officer
1
Mr. Rajesh Jhingon is an officer of one of BLOOM’s Subsidiary, Sureste Properties Inc.

The following is the breakdown of the aggregate amount of compensation paid to the CEO and
top four (4) highest paid executive officers in 2017 and 2018, and estimated to be paid to the
CEO and top four (4) highest paid executive officers in 2019 named below (amounts in millions):

10
 Bonus &
Year Salary Others Total
President and Top 4 Executive Officers, as 2019 P25.8 P139.3 P165.1
group: (Estimate)
2018 25.8 161.2 187.0
Enrique K. Razon, Jr. – Chairman & Chief (Actual)
Executive Officer 2017 25.2 77.5 102.7
Thomas Arasi – President & Chief (Actual)
Operating Officer
Cyrus Sherafat – Senior Vice President for
Casino Marketing
Laurence Upton – Senior Vice President for
International Marketing
Rajesh Jhingon – Senior Vice President for
Resort Operations
Flint Richardson – Senior Vice President for
Finance (until April 16, 2017)
2019 P22.7 P27.0 P49.7
All Other Officers and Directors, as a group (Estimate)
unnamed 2018 19.8 47.4 67.2
(Actual)
2017 5.3 15.4 20.7
(Actual)

The members of the Board are not expected to receive any compensation in 2019. There are
no material terms of any other arrangements or contracts where any director of the Company
was compensated or is to be compensated, directly or indirectly, in 2017, 2018 or in the coming
year, for any service provided as a director.

Named executives officers are covered by Letters of Appointment, with the Company stating
therein their respective terms of employment.

There are no existing compensatory plans or arrangements, including payments to be received

from the Company by any named executive officer, upon resignation, retirement or any other
termination of the named executive officer’s employment with the Company and its subsidiaries
or from a change-in-control of the Company or a change in the named executive officers’
responsibilities following a change-in-control.

Stock Incentive Plan

The Stockholders of the Parent Company approved on June 25, 2012 a Stock Incentive Plan
(SIP) for directors, officers, and employees of the Group, effective for a period of ten years
unless extended by the board of directors. The Participants to the SIP are: permanent and
regular employees of the Group or its affiliates with at least one year tenure; officers and
directors of the Group; officers and directors of affiliates of the Group; and other persons who
have contributed to the success and profitability of the Group or its affiliates.

The SIP is administered by the Stock Incentive Committee (SIC), which is composed of three
directors or officers appointed by the BOD. The SIC determines the number of shares to be
granted to a participant and other terms and conditions of the grant.

11
Unissued shares from the authorized capital stock or treasury shares which together with
shares already granted under the SIP, are equivalent to seven percent (7%) of the resulting total
outstanding shares of the Parent Company shall be allocated for the SIP.

The grant of shares under the SIP does not require an exercise price to be paid by the awardee.
The shares awarded shall vest in two years: 50% on the first anniversary date of the award; and
the other 50% on the second anniversary date of the award. Vesting grants the participant
absolute beneficial title and rights over the shares, including full dividend and voting rights.

Below is a summary of SIP grants and their corresponding schedule of vesting:

Details 2016 2017 2018 Balance as

of
Grant Date Price per
No. of Shares Cancelled Vested Cancelled Vested Cancelled Vested December
Share 31, 2018
2015
April 28 922,645 11.36 - 461,323 - 461,323 - - -
August 13 1,157,403 8.95 385,723 192,979 386,523 192,178 - - -
October 23 1,105,842 6.59 - 552,921 - 552,921 - - -
2016
February 16 18,986,490 4.49 - - 166,251 9,326,994 166,264 9,326,981 -
June 28 558,289 5.8 - - 163,637 115,508 163,637 115,507 -
2017
April 18 26,748,522 8.38 - - - - 60,695 13,313,566 13,374,261
2018
May 16 22,013,874 12.66 - - - - - - 22,013,874
June 8 88,043 11.40 - - - - - - 88,043
August 1 102,466 9.00 - - - - - - 102,466
Total 71,683,574 385,723 1,207,223 716,411 10,648,923 390,596 22,756,054 35,578,644

The stock incentive obligation amounting to P = 220.7 million and P

= 145.8 million for 2018 and
2017, respectively were recognized as part of “Salaries and benefits” under “Operating costs
and expenses” in the consolidated financial statements. 

Item 7. Independent Public Accountants

On June 5, 2018, the Stockholders of BLOOM re-appointed SGV & Co. as external auditor to
audit its financial statements for 2018.Ms. Christine Vallejo, partner of SGV & Co., is the audit
partner for the audit of the Company’s books and accounts in 2018.

External Audit Fees and Services

The Group paid its external auditors the following fees for the last three years for professional
services rendered:

For the Year Ended December 31

In thousands pesos 2018 2017 2016
Audit P11,877.7 P9,283.5 P10,707.4
Tax and others 3,868.6 6,316.0 6,356.0
Total P15,746.3 P15,599.5 P17,063.4

Tax fees paid to the auditors are for tax compliance and tax advisory services. In 2018, 2017
and 2016, the other fees include fees for limited review services provided.

The Audit Committee makes recommendations to the Board concerning the external auditors
and pre-approves audit plans, scope and frequency before the conduct of the external audit.
The Audit Committee reviews the nature of the non-audit related services rendered by the
external auditors and the appropriate fees paid for these services.

12
Changes in and Disagreements with Accountants of Accounting and Financial Disclosure
There were no changes or disagreements with the Company’s external auditors, SyCip Gorres
Velayo & Co. (SGV & Co.) on accounting and financial statement disclosures.

Item 8. Compensation Plans

Not Applicable

PART I. C. ISSUANCE AND EXCHANGE OF SECURITIES

Item 9. Authorization or Issuance of Securities Otherwise for Exchange

Not Applicable

Item 10. Modification or Exchange of Securities

Not Applicable

Item 11. Financial and Other Information

Not Applicable

Item 12. Mergers, Consolidations, Acquisitions and Similar Matters

Not Applicable

Item 13.Acquisition or Disposition of Property

Not Applicable

Item 14.Restatement of Accounts

Not Applicable

Part I. D. OTHER MATTERS

Item 15. Action with Respect to Reports

Ratification of All Acts, Contracts, Investments and Resolutions of the Board of Directors
and Management since the Last Annual Stockholders’ Meeting

As a matter of corporate policy, Management seeks the approval and ratification by the
Stockholders of all acts, contracts, investments and resolutions of the Board of Directors and
Management since June 5, 2018, the date of the last Annual Stockholders’ Meeting. These are
reflected in the minutes of the meetings of the Board of Directors, in the regular reports and
disclosures to the Securities and Exchange Commission and to the Philippine Stock Exchange,
and in the 2017 Annual Report and the Report of the Chairman.

The affirmative vote of a majority of the votes cast on this matter is necessary for the ratification
of all acts, contracts, investments and resolutions of the Board of Directors and Management,
which include the following:

Date of Board Matters Approved

Meeting
21 March 2018 Increase in target shares to be acquired pursuant to the share buy-back
program by an additional 20,000,000 shares
4 April 2018 1. Approved the 2017 Financial Statements as of and for the fiscal
year ending December 31, 2017, as reviewed by Sycip Gorres Velayo &
13
 Co.
2. Approved sale of motor vehicles to employees
10 April 2018 Approved cash dividend of Ten Centavos (P10.10) per share to
stockholders of record as of record Date 24 April 2018 with Payment Date
on 30 April 2018.
25 April 2018 1. Setting the Date, Venue, Agenda and Record Date for the 2018
Annual Stockholders’ Meeting.
2. Approved amendment of by-laws to change the date of the annual
meeting from any day in June of each year to every third Thursday of
April of each year.
3. Approved application for registration and licensing with the Optical
Media Board.
5 June 2018 The following Executive Officers of BLOOM, were elected, namely:
Chairman of the Board and Chief Enrique K. Razon Jr.
Executive Officer
President & Chief Operating Officer Thomas Arasi
Chief Finance Officer and Treasurer Estella Tuason-Occeña
Senior Vice President for Laurence Upton
International Marketing
Senior Vice-President for Casino Cyrus Sherafat
Marketing
Senior Vice President of Theunis D. van Niekerk
Construction
Corporate Secretary & Compliance Silverio Benny J. Tan
Officer
Assistant Corporate Secretary Jonas S. Khaw

The Board appointed the following chairmen and members of mandated

committees:

Audit Committee
Carlos C. Ejercito - Chairman
Christian R. Gonzalez
Jon Ramon Aboitiz

Nomination Committee
Enrique K. Razon Jr. - Chairman
Jose Eduardo J. Alarilla
Christian R. Gonzalez
Jon Ramon Aboitiz

Compensation Committee and Stock Incentive Plan Committee

Jose Eduardo J. Alarilla - Chairman
Estella Tuason-Occeña
Carlos C. Ejercito
11 December 2018 1. Approval of operating budget for 2019
2. Approval of priority of Bloomberry Resorts and Hotels Inc.
investment in Sureste Properties Inc.
1 February 2019 Appointment of Jose P. Perez as independent director
4 March 2019 Approved the 2018 Financial Statements as of and for the fiscal year
ending December 31, 2018, as reviewed by Sycip Gorres Velayo & Co.
14
Summary of the Minutes of the Annual Stockholders’ Meeting on June 5, 2018

The stockholders elected the following Directors:

Enrique K. Razon, Jr.

Thomas Arasi
Jose Eduardo J. Alarilla
Christian R. Gonzalez
Donato C. Almeda
and
Carlos C. Ejercito
Jon Ramon Aboitiz
as Independent Directors

The stockholders approved all other items in the agenda.

Item 16. Matters not Required to be Submitted

Not Applicable

Item 17. Amendment of Charter, Bylaws or Other Documents

Not Applicable

Item 18. Other Proposed Actions

Approval of Minutes of the Annual Stockholders’ Meeting on June 5, 2018

The Minutes of the Annual Stockholders’ Meeting of BLOOM held on June 5, 2018 (“Minutes”)
will be presented for approval of the Stockholders in the Annual Stockholders’ Meeting. Such
action on the part of the Stockholders will not constitute approval or disapproval of the matters
referred to in said Minutes since Stockholder approval and action on those items had already
been obtained in that meeting.

The Minutes and related records are available for inspection by any Stockholder at any
reasonable hour during business days. In addition, copies of the Minutes shall be posted at the
meeting site, and will be available for review by the Stockholders present in the Annual
Stockholders’ Meeting.

The affirmative vote of a majority of the votes cast on this matter is necessary for approval of
the Minutes.

Approval of the 2018 Audited Financial Statements

The audited financial statements of Company as of and for the year ended December 31,
2018 and the accompanying notes to audited financial statements (referred to as Financial
Statements) prepared by the Company and audited by SGV & Co., the independent auditors
appointed by the stockholders in 2018, will be submitted for approval of the Stockholders at
the Annual Stockholders’ Meeting.

The information and representations in the Financial Statements are the responsibility of the
Company's management. The financial statements have been prepared in conformity with
Philippine Financial Reporting Standards, and reflect amounts that are based on best
15
estimates and informed judgment of management with an appropriate consideration to
materiality.

Management maintains a system of accounting and reporting which provides for the
necessary internal controls to ensure that transactions are properly authorized and
recorded, assets are safeguarded against unauthorized use or disposition, and liabilities are
recognized. Management likewise discloses to the Company's audit committee and to its
external auditors: (i) all significant deficiencies in the design or operation of internal controls
that could adversely affect its ability to record, process, and report financial data; (ii)
material weaknesses in internal controls; and (iii) any fraud that involves management or
other employees who exercise significant roles in internal controls.

The Board of Directors reviews the financial statements before such statements are
approved and submitted to the stockholders of the Company.

SGV & Co. have examined the financial statements of the Company in accordance with
Philippine Standards on Auditing, and have expressed their opinion on the fairness of
presentation upon completion of such examination in the Report to the Stockholders and
Board of Directors of the Company.

The affirmative vote of majority of the votes cast on this proposal will constitute approval of the
Financial Statements.

Item 19. Voting Procedures

The Chairman will announce each proposal to the floor, which shall be voted upon separately.
In the absence of any objection from the floor, the Chairman shall instruct the Corporate
Secretary to enter a unanimous vote of approval except for the votes indicated in proxies with
specific voting instruction. If there is an objection, the Chairman will call for a division of the
house. The votes of shareholders present in person or by Proxy shall be counted by hand, and
the Chairman will announce the result of the voting, unless voting by ballots is called for. If
voting by ballots is decided, ballots will be distributed to Stockholders present in person or by
Proxy in the meeting. The ballots will be filled up by stockholders, and submitted to the
Corporate Secretary or his duly authorized representatives. The valid ballots will be counted by
the Corporate Secretary or a committee that the Board may organize for the purpose for the
votes of the Stockholders. The Chairman will then announce the result after the counting.

The following matters require the following votes:

Subject Matter Votes Required

Approval of Minutes of the Annual Stockholders’ Majority of the votes cast
Meeting on June 5, 2018
Approval of the 2018 Audited Financial Statements Majority of the votes cast
Ratification of all acts, contracts, investments and Majority of the votes cast
resolutions of the board of directors and management
since the last annual stockholders’ meeting
Election of Directors The top seven (7) nominees with the
most number of votes are elected
Appointment of SGV & Co. as the Company’s Majority of the votes cast
external auditors

16
Undertaking to Provide Annual Report
A copy of the 2018 BLOOM Annual Report on SEC Form 17-A for the fiscal year ended
December 31, 2018, as filed with the Securities and Exchange Commission, will be sent to any
Stockholder at their indicated address without charge upon written request addressed to:

The Corporate Secretary

Bloomberry Resorts Corporation

The Executive Offices, Solaire Resort & Casino

1 Asean Avenue, Entertainment City
Barangay Tambo, Parañaque City

Item 20. Proxies:

Not Applicable

Attached herewith are the following: Annex “A” is the Management Report of the Company;
Annex “B” is the audited financial statements of the Company as of December 31, 2018.

17
Part IV. SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information
set forth in this report is true, complete and correct. This report is signed in the City of Makati on
March 7, 2019.

For and in behalf of the Board of Directors

By:

SILVERIO BENNY J. TAN

Corporate Secretary

18
 Annex “A”

MANAGEMENT REPORT

Management’s Discussion and Analysis or Plan of Operations

The following discussion and analysis relate to the financial condition and results of
operations of Bloomberry Resorts Corporation (the “Company”) and its subsidiaries
(collectively referred to as “the Group”) and should be read in conjunction with the
accompanying audited financial statements and related notes as of and for the year ended
December 31, 2018.

BUSINESS AND GENERAL INFORMATION

Business Development

Bloomberry Resorts Corporation (formerly Active Alliance, Incorporated), referred to as

“Bloomberry” or Parent Company, is incorporated in the Philippines and was registered with
the Securities and Exchange Commission (SEC) on May 3, 1999. Bloomberry was mainly
engaged in the manufacture and distribution of consumer communication and electronic
equipment and operated within the Subic Bay Freeport Zone (SBFZ) until 2003. Effective
December 14, 2009, the lease agreement between Bloomberry and Subic Bay Metropolitan
Authority was mutually rescinded. Bloomberry’s primary purpose is to subscribe, acquire,
hold, sell, assign or dispose of shares of stock and other securities of any corporation,
including those engaged in hotel and/or gaming and entertainment business, without
engaging in dealership in securities or in the stock brokerage business or in the business of
an investment company, to the extent permitted by law, and to be involved in the
management and operations of such investee companies; and to guarantee the obligations of
its subsidiaries or affiliates or any entity in which the Parent Company has lawful interest.

Bloomberry’s shares of stock are publicly traded in the Philippine Stock Exchange (PSE).

As of December 31, 2011, the Parent Company was a majority-owned subsidiary of Wespac
Holdings Incorporated (WHI). On January 26, 2012, Prime Metroline Holdings, Inc. (PMHI)
acquired 60,000,000 shares of Bloomberry, constituting 75% of the outstanding capital stock,
from WHI and other stockholders through a cross sale transaction in the PSE.

On February 6, 2012, PMHI sold 100% of its ownership interest in Sureste Properties, Inc.
(Sureste or SPI), to Bloomberry for P = 5.9 billion. As of December 31, 2018, Bloomberry’s
subsidiaries include Sureste and its wholly-owned subsidiary, Bloomberry Resorts and Hotels,
Inc. (BRHI), Bloom Capital B.V and its subsidiary Solaire de Argentina S.A., Solaire Korea
Co., Ltd and its subsidiaries Golden & Luxury Co., Ltd and Muui Agricultural Corporation.
(collectively referred to as “the Group”).

On February 27, 2012, the SEC approved the increase in the authorized capital stock of the
Company to P = 15 billion pesos divided into 15 billon shares and the following amendments in
its articles of incorporation, among others: change in the corporate name to Bloomberry
Resorts Corporation; change in the primary purpose to that of a holding company; and
change in the Parent Company’s registered office address to Unit 601, 6/F Ecoplaza Building,
Chino Roces Avenue Extension, Makati City. This was further amended to its present
address at the Executive Offices of Solaire Resort & Casino in June 2014.

In the increase in the authorized capital stock, PMHI subscribed to additional 7,265,656,500
shares of Bloomberry.

In May 2012, Bloomberry and its parent company, PMHI, completed a Placing and
Subscription Transaction under which PMHI first sold in a private placement to various
institutional investors 1,179,963,700 shares of stock in Bloomberry at P
= 7.50 per share. The

1
transaction was crossed through the Philippine Stock Exchange on May 5, 2012. PMHI then
used the proceeds of the placing transaction to subscribe to an equivalent number of shares
in Bloomberry at the same subscription price of P
= 7.50 per share.

On May 28, 2012, CLSA Limited as the stabilizing agent exercised the over-allotment option
to purchase 117,996,300 shares of stock in Bloomberry from PMHI at the same purchase
price of
P
= 7.50 per share. The net proceeds of this exercise was used by PMHI to subscribe to the
equivalent number of new shares in Bloomberry at the same subscription price of P
= 7.50 per
share.

A total of 1,297,960,000 new shares were subscribed by PMHI as a result of the foregoing
Placing and Subscription Transaction, including the exercise of the over-allotment option by
the stabilizing agent. These shares were listed in the Philippine Stock Exchange on
December 7, 2012. On December 18, 2012, PMHI purchased an additional 3,000,000
Bloomberry shares from the market. As a result, PMHI directly owns 53.80% and indirectly
owns 8.35% (through Quasar Holdings Inc.) equity stake in Bloomberry.

In November 2014, Bloomberry and its parent company, PMHI, completed a Placing and
Subscription Transaction under which PMHI first sold in a private placement to various
institutional investors 435,000,000 shares of stock in Bloomberry at P
= 13.00 per share. The
net proceeds of the private placement were used by PMHI to subscribe to the equivalent
number of new shares in Bloomberry at the same subscription price of P = 13.00 per share.

On September 9, 2011, Sureste and BRHI jointly entered into a Management Services
Agreement (MSA) with Global Gaming Philippines, LLC (GGAM) for the technical assistance
on all aspects of planning, design, layout, and construction of the Project and for services
related to recruitment, selection, and hiring of employees for the Project. GGAM through the
Management Team shall also provide management and other related services upon
commencement of the Project’s commercial operations. Fees per contract amounts to
US$100,000 per month for the technical assistance and US$75,000 monthly for services
related to the pre-opening operations. Upon commencement of the commercial operations
and five years thereafter (after which the contract expires unless GGAM extends it for another
5 years), the Group will pay GGAM annual fees equivalent to certain percentages of Sureste’s
and BRHI’s EBITDA.

Sureste and BRHI terminated the MSA effective September 12, 2013 because of material
breach of the MSA by GGAM after prior notice and failure of discussions to settle the dispute.
Accordingly, the Group has accrued annual fees due to GGAM up to September 12, 2013
only. GGAM denies having breached the MSA and alleges that it is BRHI and Sureste who
breached the MSA. The parties have submitted their dispute to arbitration before a 3-member
arbitral tribunal in Singapore under the arbitration rules of the United Nations Commission on
International Trade Law (UNCITRAL) using Philippine law as the governing law.

Under the MSA, GGAM was granted the option, from the date of execution of the MSA, to
purchase up to 921,184,056 shares, equivalent to 9.91% of Bloomberry’s outstanding shares
(prior to Bloomberry’s top-up equity offering) from PMHI at a purchase price equivalent to P=
1.00 per share plus US$15 million. On December 21, 2012, GGAM exercised its option to
purchase 921,184,056 shares in Bloomberry from PMHI at the agreed option strike price of P =
1.67 per share and was crossed through the Philippine Stock Exchange on December 28,
2012. As a result of the exercise of this option, GGAM currently owns 8.35% of the
outstanding capital stock of Bloomberry. On February 25, 2014, the Makati Regional Trial
Court (MRTC) granted Sureste, BRHI and PMHI’s application for measures of protection for
the Bloomberry shares in the form of writ of preliminary attachment and writ of preliminary
injunction to restrain GGAM from disposing the Bloomberry shares to maintain the status quo.
GGAM filed a petition for review on certiorari with the Court of Appeals against the decision of
the MRTC.

2
On December 9, 2014, the tribunal issued its Order in Respect of Claimants’ Interim
Measures of Protection, declaring among others, that the February 25 Order of MRTC is
superseded and that parties are restored to their status quo ante as of January 15, 2014 and
allowed GGAM to sell the shares.

Following the order of the arbitral tribunal, GGAM filed a Manifestation with the MRTC
informing the order of the arbitral tribunal and seeking assistance in the enforcement thereof.
BRHI, Sureste and PMHI filed a Counter-Manifestation stating among others, the impropriety
of the Manifestation given its non-compliance with requirements of the Special Rules of Court
and Alternative Dispute Resolution (Special ADR Rules) for enforcement of judgement/interim
measures of protection. GGAM also filed a Manifestation and Motion with the Court of
Appeals seeking the same relief as that filed with the MRTC. BRHI, Sureste and PMHI filed a
Comment/Opposition arguing against the grant of the Motion with the Court of Appeals for
non-compliance with the Special ADR Rules as well as for forum-shopping. In a resolution
dated May 29, 2015 and affirmed on November 27, 2015 the Court of Appeals remanded
back the case to the MRTC for future proceedings.

On September 20, 2016, the arbitral tribunal issued a partial award on liability. It declared
that GGAM has not misled BRHI/SPI (Respondents) into signing the Management Services
Agreement (MSA), and Respondents were not justified to terminate the MSA because the
services rendered by the Respondents Management Team should be considered as services
rendered by GGAM under the MSA; rejected GGAM’s claim that GGAM was defamed by the
publicized statements of the Chairman of BRHI/SPI; that there is no basis for Respondents to
challenge GGAM’s title to the 921,184,056 Bloomberry shares because the grounds for
termination were not substantial and fundamental, thus GGAM can exercise its rights in
relation to those shares, including the right to sell them; reserved its decision on reliefs,
remedies and costs to the Remedies Phase which is to be organized in consultation with the
Parties; reserved for another order its resolution on the request of GGAM: (a) for the Award to
be made public, (b) to be allowed to provide a copy of the Award to Philippine courts,
government agencies and persons involved in the sale of the shares, and (c) to require
BRHI/SPI and Bloomberry to inform Deutsche Bank AG that they have no objection to the
immediate release of all dividends paid by Bloomberry to GGAM. The arbitration proceeding
is still ongoing on the Remedies Phase.

On August 31, 2017, BRHI and SPI filed a request for reconsideration of the partial award in
the light of U.S. DOJ and SEC findings of violations of the Foreign Corrupt Practices Act by
certain GGAM officers, and for false statements and fraudulent concealment by GGAM in the
arbitration. GGAM opposed the request on September 29, 2017. In a decision dated
November 22, 2017, the tribunal denied the request for reconsideration saying it has no
authority to reconsider the partial award under Singapore law. The tribunal said that the
courts might be the better forum to look into the allegations of fraud.

On December 21, 2017, BRHI and SPI filed a petition in the High Court of Singapore to set
aside the June 20, 2017 judgment of the Court and to either remit the partial award to the
tribunal for correction, or otherwise set aside the partial award based the fraud allegations
previously raised in the request for reconsideration. This is case is still pending in the
Singapore court.

In a resolution dated November 23, 2017, the MRTC affirmed the continuing validity of its
February 25, 2014 order and the writ of preliminary injunction and attachment issued pursuant
thereto. GGAM then filed a petition for review with the Court of Appeals to question this
MRTC order. The Court of Appeals has denied this petition, and GGAM has filed a petition in
Supreme Court to question the decision of the Court of Appeals.

BRHI and SPI were advised by Philippine counsel that an award of the Arbitral Tribunal can
only be enforced in the Philippines through an order of a Philippine court of proper jurisdiction
after appropriate proceedings taking into account applicable Philippine law and public policy.
No further details will be disclosed as the Group may prejudice the results.

3
The Company has marketing offices in the Asian region. Currently, the Company has
marketing presence in Korea, Macau, Hong Kong, Singapore, Malaysia, Indonesia, Thailand,
Taiwan and Japan.

Vertis Property
In 2015, Sureste purchased from the National Housing Authority (NHA) 15,676 square meter
of land in Vertis North, Quezon City Central Business District and was issued Transfer
Certificates of the Title on June 24, 2016.

This property will be the site of BRHI’s proposed second integrated resort in the Philippines
under the same PAGCOR license. The Company is currently working on the design of the
Vertis Property.
On February 11, 2019, SPI and BRHI signed an Omnibus Loan and Security Agreement
(“OLSA”) for a 10-year combined loan facility in the principal amount of P = 40 Billion with the
following Lenders: Philippine National Bank, BDO Unibank, Inc., Metropolitan Bank & Trust
Company, Union Bank of the Philippines, Bank of Commerce, China Banking Corporation,
and Robinsons Bank Corporation. BDO Unibank, Inc. – Trust and Investments Group is the
security trustee, facility agent and paying agent for the loan facility, while BDO Capital &
Investment Corporation acted as the lead arranger and sole bookrunner. The proceeds of the
loan will be used by SPI and BRHI to partially finance the design, construction and
development of an integrated hotel and gaming resort located at the Vertis property.

Bloomberry is continually exploring potential projects both in the Philippines and other parts of
the world.

Business of Issuer

Overview

The Parent Company was engaged in the manufacture of printed circuit board up to 2003. It
ceased commercial operations in December 2003 up to 2011. On February 27, 2012, the
SEC approved the change in its primary purpose to that of a holding company. The Company
now has Sureste, BRHI, Bloom Capital B.V., Solaire de Argentina S.A., Solaire Korea Co.,
Ltd., G&L, Ltd. and Muui Agricultural Corporation as its subsidiaries. BRHI has 49%
shareholdings in Falconer Aircraft Management Inc., a company engaged in aircraft
management.

Sureste Properties, Inc.

Sureste was incorporated in 1993 as a property holding company. On July 2, 2010, Sureste
amended its primary purpose to develop and operate tourist facilities including hotel - casino
entertainment complexes. Sureste is registered with the Philippine Economic Zone Authority
("PEZA") as developer of a hotel project in a PEZA Tourism Economic Zone. As a result,
Sureste enjoys certain incentives granted by the Government in relation to the hotel
component of Solaire Resorts & Casino, including reduced tax rates. In 2011, in compliance
with the requirements of PEZA, Sureste divested itself of all its non-hotel assets including its
ownership in Monte Oro Resources and Energy Inc. (“MORE”) and various prime real estate
properties. Sureste acquired all the shares of BRHI on January 12, 2011.

Bloomberry Resorts and Hotels Inc.

On February 27, 2008, BRHI was incorporated as Bloombury Investments Holdings Inc.
("BIHI") for the purpose of developing and operating tourist facilities, including casino-
entertainment complexes with casino, hotel, retail and amusement areas and themed
development components. On April 8, 2009, BRHI was granted a Provisional License by
PAGCOR to establish and operate integrated casino, hotel and entertainment complex at the
Entertainment City in Paranaque City. On September 21, 2010, the SEC approved the

4
change of BIHI's name to BRHI. On May 7, 2015, BRHI’s Provisional License was replaced
with a regular casino Gaming License upon full completion of the Project, referred to as
“Solaire”. The Gaming License has the same terms and conditions as the Provisional
License.

Bloom Capital B.V.

In 2013, Bloomberry subscribed to 60% of the capital stock of Bloom Capital B.V., a financial
holding entity incorporated in the Netherlands as a private company with limited liability under
the Dutch law on November 21, 2013. On October 23, 2014, Bloomberry acquired the
remaining 40% capital stock of Bloom Capital B.V. In 2014, Bloom Capital B.V. acquired 94%
shares in Solaire de Argentina S.A. Bloom Capital B.V and Solaire de Argentina S.A. are
currently not in operation.

Solaire Korea Co., Ltd.

On December 28, 2014 Bloomberry established through a nominee a new company Solaire
Korea Co., Ltd. (Solaire Korea), to hold the Group’s investment interest in the Republic of
Korea. After a series of stock subscriptions, Bloomberry now owns 100% of Solaire Korea.

Golden & Luxury Co., Ltd.

On April 24, 2015, Solaire Korea acquired 77.26% of the outstanding shares of Golden &
Luxury Co., Ltd. (G&L). Subsequently on May 22, 2015, it acquired additional 18.98% of
G&L, bringing Solaire Korea’s ownership in G&L to 96.23%. On August 20, 2015, Bloomberry
acquired 10.00% of the outstanding shares of G&L from Solaire Korea. G&L is a hotel and
casino operator in Jeju Island in the Republic of Korea.

Muui Agricultural Corporation

On March 8, 2016, Solaire Korea established a new company Muui Agricultural Corporation
(Muui) to hold Solaire Korea’s investment interest in agricultural land in Muui and Silmi
pending its conversion. Solaire Korea owns 80% of Muui.

Solaire Resort & Casino

Solaire Resort & Casino (“Solaire”), is the first Philippine premium/luxury hotel and gaming
resort in Entertainment City. BRHI, as the license holder, operates the casino while Sureste
operates the hotel and other non-gaming business.

On March 16, 2013, the Group commenced commercial operations, upon completion of
Phase 1 of Solaire, along with the opening of the main gaming area and initial non-gaming
amenities, such as Solaire’s hotel, food and beverage outlets.

Phase 1 of Solaire consists of a casino with an aggregate gaming floor area of approximately
18,500 square meters (including approximately 6,000 square meters of exclusive VIP gaming
areas), with approximately 1,653 slot machines, 295 gaming tables and 88 electronic table
games. Phase 1 had 488 hotel rooms, suites and bayside villas, and 15 specialty restaurants
and F&B outlets including (the number of seats are approximations): 240-seat Chinese
restaurant, 182-seat Korean restaurant (operated by a third party), 150-seat Japanese
restaurant, 120-seat Italian restaurant, 322-seat international buffet/coffee shop, 170-seat
noodle shop, 150-seat live entertainment lounge and 406-seat food court and 20 seat lobby
bar, and a 50-seat lounge area. It has a multilevel parking building with approximately 1,500
parking slots, a grand ballroom with approximately 1,000 seats, spa and fitness center, and
bayview promenade. On December 7 2018, Solaire unveiled The Cigar Bar and Poker
Room, a high-end poker area with eight gaming tables. On February 11, 2019, Solaire
opened the Philippine’s first ETG (electronic table games) stadium called “Players Stadium” -
an expansive and colorful entertainment space highlighted by a massive 360 square meter

5
surround screen.

On November 22, 2014, Bloomberry opened the Sky Tower, which was previously referred to
as Phase 1A development of Solaire. Contiguous to the existing Solaire Resort and Casino,
the Sky Tower consists of a 312 all-suite hotel, additional ten VIP gaming salons with 66
gaming tables and 230 slot machines, an exclusive House of Zhou Chinese restaurant and
The Macallan Whisky and Cigar Bar for VIP gamers, state-of-the art meeting rooms (The
Forum) and a lyrical theater (The Theatre). The Sky Tower also features two restaurants, the
Waterside Restobar and Oasis Garden Café. The Theatre is a certified 1,760-seat theatre
designed to provide a superior
audio-visual experience for a wide range of theatre plays and musicals, dance performances,
concerts, and amplified music and speech events. The Forum is a 2,000 square-meter
meeting facility with eight meeting rooms, two boardrooms and a column-free grand ballroom
and a flexible pre-function area. Sky Tower also features Sky Range Shooting Club with 5
rifle shooting bays and 15 pistol bays. It is also accessible to a new multi-level parking
garage that, to date, can accommodate and secure over 1,050 vehicles. The Shoppes in the
Sky Tower features retail stores, including premium brands such as Saint Laurent, Bvlgari,
Salvatore Ferragamo, Givenchy, Louis Vuitton and Prada. In 2018, an additional mid-range
five retail stores were opened.

Jeju Sun Hotel & Casino

On April 24, 2015 and subsequently on May 22, 2015, Bloomberry, through its wholly-owned
subsidiary, Solaire Korea, acquired majority ownership of G&L. G&L operated a hotel and
casino property in Jeju, Korea under the brand names “T.H.E Hotel” and “LVegas Casino”.
Upon takeover of operation by Bloomberry, the property was redeveloped and rebranded as
“Jeju Sun Hotel & Casino”. The property consists of a 202-room hotel with 5 Hibiscus rating,
2,000 square meters of gaming operation with 36 tables and 20 electronic gaming machines.
The property has four F&B outlets to service its hotel guests and casino players. The casino
operation of Jeju Sun was suspended on May 10, 2015 pending the completion of the
renovation of the expanded gaming area of the property. On September 15, 2015, Jeju Sun
resumed its casino operations after it substantially completed the renovation of its gaming
facilities. The casino operation was suspended on November 16, 2015 as administrative
penalty for the acts of its previous casino management imposed by the Jeju Island gaming
regulator CRD. This was the result of CRD’s investigation of the gaming tax (tourism tax)
payment practices of the casino then known as “LVegas Casino” under its old management
and owners. On December 15, 2015, the casino resumed its operation with 60 tables and 51
slot machines in accordance with its gaming license.

In June 2016, the Parent Company and Solaire Korea entered into an agreement to sell its
investment in G&L. However, the sale did not push through. The Parent Company decided
to again operate Jeju Sun under normal course of business. In 2018, a reorganization was
implemented separating the management of hotel and casino operations. Jeju Sun appointed
a Hotel Operations Officer and a Casino Operations Officer, in January and July, respectively.
In the fourth quarter of 2018, Jeju Sun embarked on a renovation project covering 164 rooms,
a new ballroom, restaurants, lobby, building facade and back of the house.

Competition

As an integrated gaming resort designed, planned and developed according to world-class

industry standards, Solaire competes with integrated tourism resorts and casinos domestically
in the Philippines, as well as in Macau, Malaysia and Singapore and other casinos and resort
developments that operate in Asia. Solaire Resort & Casino competes against facilities in the
world’s other major gaming centers, including Las Vegas and Australia. In particular, with
respect to VIP customers, the Company competes primarily with Macau, Malaysia,
Cambodia, Vietnam and Australia for customers of independent junket promoters, while
Singapore is a strong competition for Premium Direct customers.

6
The Company competes effectively because of its well-designed facilities and targeted
gaming offerings, as well as the expertise of its current management team in effectively
managing gaming and non-gaming operations, developing events and promotions for the
mass market and procuring business from junket operators throughout the region.

In the Philippine gaming market, the Company is one of only four private gaming operators in
Entertainment City, along with Travellers International Hotel Group, Inc. (“Travellers”), Melco
Resorts and Entertainment (Philippines) Corporation (“Melco Philippines”) and Tiger Resort
Leisure & Entertainment, Inc. (“Tiger”). The Company is not aware of any other potential new
private applicants for additional licenses from PAGCOR in Entertainment City. In 2018,
Landing Resorts Philippines Development Corporation was granted a provisional license by
PAGCOR but it was suspended after the lease contract over its project site was cancelled on
instruction of President Rodrigo Duterte for violation of Philippine BOT Law. In terms of its
integrated tourism resort and tourism business, the Company competes domestically with
both Philippine and
foreign-owned hotels and resorts. With respect to its gaming business in particular, Solaire
competes domestically with PAGCOR gaming facilities, existing privately owned casinos and
the facilities, built/to be operated by the three other developers in Entertainment City. As of
end 2018, there are 9 casino branches and 31 satellite casinos throughout the Philippines
owned and/or operated by PAGCOR. In addition, outside of Entertainment City and Metro
Manila, PAGCOR has licensed private casino operators in special economic zones, including
four in Clark Ecozone, one in Poro Point, La Union, and one in Binangonan, Rizal. PAGCOR
has granted provisional licenses for two integrated casino resorts in Mactan and Boracay.
Other competitors licensed by government agencies include companies specializing in horse
racing, cockfighting, lotteries, sweepstakes and other smaller-scale gaming operators.

Travellers opened Resorts World Manila in August 2009, the first PAGCOR-licensed
integrated tourism resort located in the Newport City Cybertourism Zone (“Newport City”) in
the vicinity of Manila’s international airport. Travellers is a joint venture between Genting
Hong Kong Limited (“Genting HK”), a Hong Kong-based gaming operator and a part of the
Genting Group that has facilities worldwide, and Alliance Global Group, Inc. (“AGI”), a
Philippine conglomerate that owns Megaworld Corporation, a large Philippine property
developer. Travellers has commenced construction on the first phase of its second integrated
resort, Westside City Resorts World Bayshore, located in Entertainment City.

City of Dreams Manila (COD) is a project of Belle Corporation thru its subsidiary, Premium
Leisure Corp. and Melco Crown Philippines (now known as Melco Resorts Philippines). COD
is an integrated tourism resort near Entertainment City on an approximately 6.2-hectare site,
which initially opened its doors to the public in December 2014. COD, which is solely
operated and managed by Melco Philippines, includes gaming, hotel, retail, dining and
entertainment facilities.

Okada Manila (Okada) is a project of Universal Entertainment, through its subsidiary, Tiger
Resort Leisure & Entertainment Inc. Okada is also an integrated tourism resort which
occupies an area of 44 hectares in New Seaside Drive, Entertainment City. On December
21, 2016, the casino complex was opened for preview and officially commenced casino
operations on December 30, 2016.

The Company believes that Solaire can continue to compete effectively against these new
entrants with its captured mass and VIP customers in the Philippines and across Asia,
through its superior product and excellent service. These appeal to the preferences of all
segments of the Philippine gaming market, which are expected to grow significantly over the
next few years.

Principal Suppliers/ Service Providers

Sureste and BRHI retain various suppliers including Bluefire LPG Marketing Inc., Crimson
Group Inc., Empire Automation Philippines, FABTECH, Jade Entertainment & Gaming

7
Technologies, Maxicare Healthcare Corporation, Metrojet, Petron Corporation, PLDT, Angel
Playing Cards, Royal Country Marketing, MERALCO M-Power and Maynilad Water Services
Inc.

Customers

The Company expects that each area of Solaire and its respective facilities and gaming
offerings will meet the needs of each category of customer. Solaire's world-class facilities are
complemented by extensively trained employees with skillsets tailored to the customer base
that they will be serving, allowing Solaire to offer them the best possible gaming experience.

VIP Players

Solaire's VIP customers are players who are on a rolling chip or revenue share program at
Solaire. These VIP players may come to Solaire directly without any agent or
junket/independent gaming promoter intermediary, or they may be sourced from
junket/independent gaming promoters in the Philippines and across Asia.

Mass Market

Solaire’s table and slot machine customers who do not fall under the VIP customer segments
mentioned above are classified as Mass Market.

Related Parties

The Company and its subsidiaries, in their ordinary course of business, engage in
transactions with affiliates. The Company's policy with respect to related party transactions is
to ensure that these transactions are entered into on arm’s length terms comparable to those
available from unrelated third parties.

In considering each possible related entity relationship, attention is directed to the substance
of the relationship, and not merely the legal form.

Intellectual Property, Licenses, Contract and Agreements

Sureste and BRHI, have registered or applied to register trademarks in connection with the
Company’s properties, facilities and development projects. The following trademarks are duly
registered: “Solaire Manila”, “Solaire Resort & Casino Manila” and “Eclipse” and device,
“Solaire Resort & Casino Manila”, “Solaire Resort & Casino”, “Strip Steakhouse”, “Finestra”,
“Red Lantern”, “Yakumi", “Lucky Noodles”, “Sabong Cards”, “Fresh” and “Food Court”. These
are brand names under which Sureste and BRHI market its properties and services. The
Company considers these brand names to be important to its business since they have the
effect of developing brand identification and awareness. The Company expects to apply to
register additional trademarks for its logos, club names, restaurants and other property as
needed to protect its brand names.

Sureste and BRHI also possess copyrights for certain of the proprietary software systems,
whose remaining useful lives range from one to five years. The Group sees to it that its rights
for the use of these software systems are secured at all times to ensure continued use and
support from vendors.

Insurance

Sureste and BRHI maintain insurance which covers incidents such as damage to property;
the transport of gaming chips, playing cards and equipment; monetary loss due to third party
and/or employee theft or fraud; damage to third party property and injury / death to persons;
and life, accident and medical insurance for employees. Each policy has exclusions
customary in the Philippines. Sureste and BRHI also maintain business interruption insurance

8
for Solaire.

Notwithstanding the insurance coverage, damage to its facilities, equipment, machinery,

buildings or other properties as a result of occurrences such as fire, explosion, intentional
unlawful act or natural disaster could nevertheless materially and adversely affect the
Company’s financial condition and results of operations to the extent that such occurrences
disrupt the Company’s normal operations. In addition, there are certain types of risks that are
not covered by the Company’s insurance policies, including acts of war and acts of terrorism.

The Company maintains a director and officers liability insurance, which covers directors and
officers for errors and omissions. The Company does not maintain key personnel insurance
for any of its directors or other members of senior management.

Government License and Regulatory

Provisional License/Gaming License

PAGCOR issued to BRHI a provisional license ("Provisional License") for the development of
an integrated casino, hotel and entertainment complex within Entertainment City on April 8,
2009. BRHI is one of four licensees for Entertainment City.
On May 7, 2015, BRHI’s Provisional License was replaced with a regular casino Gaming
License upon full completion of the Project, referred to as “Solaire”. The Gaming License has
the same terms and conditions as the Provisional License. The US$50 million held in escrow
under the Provisional License was released upon issuance of the regular casino gaming
license. The Provisional License, as well as the regular license issued to replace it, is
coterminus with PAGCOR's franchise. PAGCOR’s franchise will expire on July 11, 2033 and
may be renewed when PAGCOR’s franchise is renewed by law.

The Vertis property will be the site of BRHI’s proposed second casino resort in the Philippines
under the same PAGCOR license.

PEZA Registration

Sureste is a PEZA-registered Tourism Economic Zone Enterprise for the construction,

development, management and operation of a hotel and entertainment complex at the
Bagong Nayong Pilipino – Entertainment City Manila.

Employees

The Group recruits most of Solaire’s gaming, hotel, food and beverage and other staff locally.
The Group aims to generate jobs in Metro Manila in support of PAGCOR’s policy goals, both
directly as Solaire expands and indirectly should Solaire stimulate local tourism.

As of December 31, 2018, the Group employed 5,583 individuals at Solaire, 592 of whom are
officers and managers, 1,259 supervisors and 3,372 are rank and file. These employees
serve various departments including management and administrative, gaming, hotel
operations, food and beverage, property and marketing, among others.

The Group is in compliance with all applicable Philippine labor and employment regulations.
The Company currently has in place internal control systems and risk management
procedures to monitor compliance with labor, employment and other applicable regulations.
Going forward, the Company, through its human resources and legal departments, will
continue to monitor all labor issues to ensure compliance with all applicable labor and
employment regulations.
The Company's employees are not subject to any collective bargaining agreements.

Discussion of Risks

9
Management has identified major business risk factors affecting the Group as follows: (i)
General Risks Relating to the Group; (ii) Risks Relating to the Gaming License and
Regulation of the Philippine Gaming Industry; (iii) Risks Relating to Future Expansion; (iv)
Risks Relating to the Operation of Solaire; and (v) Risks Relating to the Philippines.

General Risks Relating to the Group

Solaire has been operational for six years and is still subject to significant risks and
uncertainties. The Group’s short operating history should be considered to determine its
future operating results and prospects.

The Group’s businesses and assets are in the Philippines and Korea, and a significant
number of its VIP customers are from Greater China, Korea, Singapore, Thailand, Malaysia
and other parts of Asia. The gaming business is vulnerable to global economic downturns.

Jeju in Korea historically enjoyed the patronage of millions of Chinese tourists. In 2017, there
was a huge decline in Chinese travelers to Jeju mainly due to the issue of Terminal High
Altitude Area Defense (THAAD) deployment (US missile defense system). Chinese tourists
account for an estimated 85% of Jeju tourists. Chinese tourist arrivals to Korea in 2017 fell
48.3 percent to 4.2 million from 8.1 million visitors the previous year with Jeju Island
experiencing a more drastic 75.5 percent drop from 3.1 million to 0.75 million Chinese visitors.
In 2018, Chinese tourist arrivals in Jeju remained flat.

Risks Relating to the Gaming License and Regulation of the Philippine Gaming Industry

The Company's gaming operations are dependent on the Gaming License issued by
PAGCOR.

Any additional gaming licenses issued by PAGCOR could increase competition and diminish
the value of the Company's Gaming License and the Company's business may be adversely
affected by policy changes or additional conditions on its Gaming License. In 2018, Landing
Resorts Philippines Development Corporation was granted a provisional license by PAGCOR
but it was suspended after the lease contract over its project site was cancelled on instruction
of President Rodrigo Duterte for violation of Philippine BOT Law.

New regulations or laws on gaming operations may adversely affect the gaming operations of
BRHI. For example, smoking ban in casinos may have an adverse impact on customers who
are smokers, or a change in tax regime for casinos.

Risks Relating to Future Expansion

The Group’s local and international expansion plans and any further plans to expand Solaire
may not materialize or be successful.

Risks Relating to the Operation of Solaire

The loss of members of the Solaire’s management team may adversely affect the Group’s
operations.

Solaire faces competition in the Philippines and elsewhere in Asia, and it may have difficulty
in competing and gaining the desired market share. The Group also needs to maintain, or
develop additional, successful relationships with reputable junket/independent gaming
promoters to be successful as the Philippine gaming industry grows.

Solaire’s success partly depends on the reputation and integrity of the junket operators it
engages, and the Group may be affected by a lack of probity and integrity of any such
operators. There could also be increased regulation or scrutiny on junket/independent
gaming promoters.

The Group is exposed to risk on credit extended to its clients. Any default by VIP gaming
customers may cause significant volatility in the Group’s revenues and cash flows.

10
Solaire’s ability to generate revenues depends to a substantial degree on Manila’s
development as a tourist and as a gaming destination. Metro Manila’s transport infrastructure
is a key component for the development of the Philippine’s gaming industry.

Solaire requires a substantial number of qualified managers and employees, and is

dependent on the Group’s ability to recruit, train and retain a sufficient number of such
qualified personnel.

Risks Relating to the Philippines

The occurrence of natural catastrophes could adversely affect the Group’s business, financial
condition or results of operations. In addition, political instability in the Philippines could
destabilize the country and may have a negative effect on the Group. Acts of terrorism could
also destabilize the country and could have a material adverse effect on the Group’s assets
and financial condition.

The current campaign of the Duterte Administration against the drug menace have given rise
to concerns about extrajudicial killings which have alarmed the U.S. and European Union
governments. The approval of the House of Representatives of the House Bill re-imposing
the death penalty has led U.S. and EU Governments to warn about imposition of the trade
restrictions on the Philippines which could have an adverse impact on the Philippine
economy.

Properties

On May 7, 2010, BRHI entered into a contract of lease with PAGCOR to lease 83,084 square
meters of land for the construction of the gaming facility. The lease period was for about 23
years, which commenced upon the execution of the contract and is co-terminus with the term
of lessor as provided in the PAGCOR charter (which will expire on July 11, 2033), unless
sooner revoked, rescinded or cancelled. On May 20, 2011, BRHI and Sureste entered into a
deed of assignment whereby BRHI assigned to Sureste all its rights and interests as a lessee
under the contract of lease with PAGCOR. In December 2012, BRHI and Sureste agreed to
amend the above deed of assignment. Pursuant to the amended deed of assignment and
with the consent of PAGCOR, BRHI assigned 89% of its leasehold rights over the leased land
to Sureste and retained the 11% of such rights. In 2013, an addendum to the contract of
lease covering an additional 3,733 square meters of PAGCOR land was executed. In
December 2014, a second addendum to the contract of lease covering 73,542 square meters
of PAGCOR land was executed under similar terms and conditions of the original contract of
lease. In April 2018, Sureste purchased from PAGCOR the 160,359 square meters land after
two failed biddings.

During the first quarter of 2015, the Company signed four real estate sales agreements with
several landowners for the purchase of land with an aggregate area of 12.2 hectares located
in Muui Island in the Republic of Korea. The property is intended to be developed into a
leisure and tourism complex with entertainment facilities and mixed-use developments. The
property was acquired under Solaire Korea. Bloomberry also signed a real estate sales
agreement for the purchase of the Silmi Island in the Republic of Korea. Silmi Island has an
area of 20.96 hectares and is adjacent to the 12.2 hectares property in Muui Island. Silmi
Island is also intended to be developed into a leisure and tourism complex with entertainment
facilities and mixed uses developments. The Silmi Island property was also acquired by
Solaire Korea.
On March 8, 2016, Solaire Korea established Muui Agricultural Corporation to hold Solaire
Korea’s investment interest in agricultural land. As of December 31, 2016, Muui owns parcels
of agricultural land in Muui and Silmi.

In 2015, the National Housing Authority (NHA) sold to Sureste after two failed biddings, a
15,676 square meter land in Vertis North, Quezon City Central Business District. Sureste has
fully paid purchase price of this parcel of land. This property will be the site of BRHI’s
proposed second casino resort in the Philippines under the same PAGCOR license and

11
subject to relevant LGU and other government approvals. The Company is currently working
on the design of Vertis Property

Legal Proceedings

Sureste and BRHI terminated the MSA with GGAM effective September 12, 2013 because of
material breach of the MSA by GGAM after prior notice and failure of discussions to settle the
dispute. GGAM denies having breached the MSA and alleges that it is BRHI and Sureste
who breached the MSA. The parties have submitted their dispute to arbitration before a 3-
member arbitral tribunal in Singapore under the arbitration rules of the United Nations
Commission on International Trade Law (UNCITRAL) using Philippine law as the governing
law.

Sureste and BRHI have filed a petition with, which was granted by, the Regional Trial Court of
Makati, a petition for measures of protection for the Bloomberry shares owned by GGAM in
the form of a writ of preliminary attachment and writ of preliminary injunction to stop GGAM
from disposing of its Bloomberry shares. On February 25, 2014, the MRTC granted the BRHI
and PMHI’s application for measures of protection for the Bloomberry shares in the form of
writ of preliminary attachment and writ of preliminary injunction to restrain GGAM from
disposing the Bloomberry shares to maintain the status quo. GGAM filed a petition for review
on certiorari with the Court of Appeals against the decision of the MRTC.

On December 9, 2014, the tribunal issued its Order in Respect of Claimants’ Interim
Measures of Protection, declaring among others, that the February 25 Order of MRTC is
superseded and that parties are restored to their status quo ante as of January 15, 2014 and
allowed GGAM to sell the shares.

Following the order of the arbitral tribunal, GGAM filed a Manifestation with the MRTC
informing the order of the arbitral tribunal and seeking assistance in the enforcement thereof.
BRHI, Sureste and PMHI filed a Counter-Manifestation stating among others, the impropriety
of the Manifestation given its non-compliance with requirements of the Special Rules of Court
and Alternative Dispute Resolution (Special ADR Rules) for enforcement of judgement/interim
measures of protection. GGAM also filed a Manifestation and Motion with the Court of
Appeals seeking the same relief as that filed with the MRTC. BRHI, Sureste and PMHI filed a
Comment/Opposition arguing against the grant of the Motion with the Court of Appeals for
non-compliance with the Special ADR Rules as well as for forum-shopping. In a resolution
dated May 29, 2015 and affirmed on November 27, 2015 the Court of Appeals remanded
back the case to the MRTC for future proceedings.

On September 20, 2016, the arbitral tribunal issued a partial award on liability. It declared
that GGAM has not misled BRHI/SPI (Respondents) into signing the Management Services
Agreement (MSA), and Respondents were not justified to terminate the MSA because the
services rendered by the Respondents Management Team should be considered as services
rendered by GGAM under the MSA; rejected GGAM’s claim that GGAM was defamed by the
publicized statements of the Chairman of BRHI/SPI; that there is no basis for Respondents to
challenge GGAM’s title to the 921,184,056 BRC shares because the grounds for termination
were not substantial and fundamental, thus GGAM can exercise its rights in relation to those
shares, including the right to sell them; reserved its decision on reliefs, remedies and costs to
the Remedies Phase which is to be organized in consultation with the Parties; reserved for
another order its resolution on the request of GGAM: (a) for the Award to be made public, (b)
to be allowed to provide a copy of the Award to Philippine courts, government agencies and
persons involved in the sale of the shares, and (c) to require BRHI/SPI and BRC to inform
Deutsche Bank AG that they have no objection to the immediate release of all dividends paid
by BRC to GGAM. The arbitration is still on going on the Remedies Phase.

On August 31, 2017, BRHI and SPI filed a request for reconsideration of the partial award in
the light of U.S. DOJ and SEC findings of violations of the Foreign Corrupt Practices Act by
certain GGAM officers, and for false statements and fraudulent concealment by GGAM in the

12
arbitration. GGAM opposed the request on September 29, 2017. In a decision dated
November 22, 2017, the tribunal denied the request for reconsideration saying it has no
authority to reconsider the partial award under Singapore law. The tribunal said that the
courts might be the better forum to look into the allegations of fraud.

On December 21, 2017, BRHI and SPI filed a petition in the High Court of Singapore to set
aside the June 20, 2017 judgment of the Court and to either remit the partial award to the
tribunal for correction, or otherwise set aside the partial award based the fraud allegations
previously raised in the request for reconsideration. This is case is still pending in the
Singapore court.

In a resolution dated November 23, 2017, the MRTC affirmed the continuing validity of its
February 25, 2014 order and the writ of preliminary injunction and attachment issued pursuant
thereto. GGAM then filed a petition for review with the Court of Appeals to question this
MRTC order. The Court of Appeals has denied this petition, and GGAM has filed a petition in
Supreme Court to question the decision of the Court of Appeals.

BRHI and SPI were advised by Philippine counsel that an award of the Arbitral Tribunal can
only be enforced in the Philippines through an order of a Philippine court of proper jurisdiction
after appropriate proceedings taking into account applicable Philippine law and public policy.
No further details will be disclosed as the Group may prejudice the results.

On June 4, 2014, BRHI filed with the Supreme Court a Petition for Certiorari and Prohibition
under Rule 65 of the Rules of Court. The petition sought to annul the issuance by the Bureau
of Internal Revenue of an unlawful governmental regulation, specifically the provision in RMC
33-2013 dated April 17, 2013 which subjected the contractees and licensees of PAGCOR to
income tax under the NIRC, this violates the tax exemption granted to contractees of
PAGCOR under Section 13(2)(b) of P.D. 1869.

On August 10, 2016, the Supreme Court granted BRHI’s petition against the BIR (G.R. No.
212530) which ordered the BIR to cease and desist from imposing corporate income tax on
the gaming operations of BRHI as a licensee of PAGCOR. The same decision confirmed that
PAGCOR’s tax exemption extends to its contractees and licensees. Hence, BRHIs income
from gaming operations is subject to 5% franchise tax only and its income from other related
services, if any, is subject to corporate income tax. Accordingly, BRHI paid income tax only
up to June 2016.

On March 31, 2016, the Court of Appeals (“CA”) issued a 30-day freeze order on one of the
BRHI’s bank accounts upon the petition filed by Anti-Money Laundering Council (“AMLC”) in
relation to their ongoing investigation. The freeze order of the CA on the bank account was
lifted on April 14, 2016. Subsequently, on request of the AMLC, the Supreme Court
reinstated the freeze order on the account, which contained the amount of P = 110.7 million that
was frozen from the accounts of those patrons subject to the investigation. BRHI has moved
for the lifting of the freeze order. This motion is still pending with the Supreme Court. As of
December 31, 2018 and 2017, the balance of this bank account amounting to P = 110.8 million
is presented under the “Prepayments and other current assets” account in the statement of
financial position.

Newspapers have reported that the Bangladesh Bank has sued RCBC in New York for
recovery of
US$81 million alleged stolen from Bangladesh Bank account with the Federal Reserve Bank
in New York that were allegedly laundered through Philippine casinos. The lawyer of
Bangladesh Bank has sent by courier the summons for the case to BRHI. BRHI is impleaded
as one of 17 Philippine companies and individuals in the suit because the amount of P= 1,365
million of alleged stolen funds passed through BRHI bank account in that incident in 2016.

Except for the matters discussed in the preceding paragraphs, neither the Company nor any
of its subsidiaries are involved in or the subject of any legal proceedings which, if determined

13
adversely to the Company or the relevant subsidiary's interests, would have a material effect
on the business or financial position of the Company or any of its subsidiaries.

Management's Discussion and Analysis or Plan of Operations

The following discussion and analysis relate to the financial condition and results of
operations of Bloomberry and should be read in conjunction with the accompanying audited
financial statements and related notes as of and for the year ended December 31, 2018.

OVERVIEW

The Company is a developer and operator of hotels, casinos and integrated tourism resorts in
the Philippines and in Korea, through its direct and indirect subsidiaries Sureste, BRHI,
Solaire Korea and G&L. BRHI was granted one of four Provisional Licenses to establish
integrated resorts and casinos by the PAGCOR within Entertainment City. This is a special
economic zone in Parañaque City being developed into a gaming and entertainment district
along Manila Bay. Sureste and BRHI developed and operates the Solaire Resort & Casino,
the Philippines' premiere integrated resorts and gaming complex, and also the first integrated
resort in operation in Entertainment City when it opened on March 16, 2013. On November
22, 2014, Bloomberry opened its newest development in Solaire, the Sky Tower.

On April 24, 2015, and subsequently on May 22, 2015, Bloomberry through its wholly-owned
subsidiary, Solaire Korea, acquired majority ownership of G&L. G&L redeveloped and
operated a hotel and casino property in Jeju Province, Korea under the brand names “T.H.E
Hotel” and “LVegas Casino”. These were subsequently rebranded as “Jeju Sun Hotel &
Casino”. The casino operations of Jeju Sun was temporarily closed on May 10, 2015 pending
the completion of the renovation of the expanded gaming area of the property. On
September 15, 2015, Jeju Sun resumed its casino operations after it substantially completed
the renovation of its gaming facilities. The Casino was suspended on November 16, 2015 as
a penalty for the acts of its previous casino management. Jeju Sun was imposed an
administrative penalty of one month suspension of gaming operations by the Jeju Island
gaming regulator CRD. This was the result of CRD’s investigation of the gaming tax (tourism
tax) payment practices of the casino then known as “LVegas Casino” under its previous
management and owners. On December 15, 2015, Jeju Sun resumed its operations.

RESULTS OF OPERATIONS

KEY PERFORMANCE INDICATORS (KPIs)

The following are the key performance indicators:

Key Performance Indicators

For the Year Ended December 31
In thousands except for ratios 2018 2017
EBITDA 14,894,548 12,347,550
Net Debt to Equity Ratio (D/E) 1.44 0.60
Current Ratio 2.13 2.16
Total Assets 125,648,978 72,786,452
Return on Equity (ROE) 19.60% 20.02%
EBITDA is earnings before interest expense, income taxes, depreciation and amortization.
Net Debt to Equity Ratio (D/E Ratio) is the ratio of the borrower's total liabilities net of cash to total shareholder's equity.
Current Ratio is a liquidity ratio that measures the company's ability to pay short-term obligations.
Return on Equity (ROE) is calculated by dividing the Company's annual earnings by shareholders’ equity.

14
The following table shows a summary of the results of operations for the year ended December 31, 2018, 2017 and 2016, as derived from the
accompanying Audited Financial Statements.

Table 6.1
For The Year Ended December 31 % %
2016 (as restated) Change Change
2018 2017 (as restated)
In thousands, except % change 2018 vs. 2017 vs.
data Philippines Korea Consolidated Philippines Korea Consolidated Philippines Korea Consolidated 2017 2016
Gross gaming revenues* P= 47,747,534 P
= 484,372 P
= 48,231,906 P= 41,807,488 P
= 407,075 P
= 42,214,563 P= 36,207,271 P
= 194,539 P
= 36,401,810 14.3 16.0
Promotional allowances/
contra accounts (16,528,766) (97,694) (16,626,460) (15,115,539) (57,869) (15,173,408) (13,191,757) (91,444) (13,283,201) 9.6 14.2
Net gaming revenues 31,218,768 386,678 31,605,446 26,691,949 349,206 27,041,155 23,015,514 103,095 23,118,609 16.9 17.0
Non-gaming & other revenues** 6,535,541 220,316 6,755,857 5,785,011 261,703 6,046,714 4,303,922 211,712 4,515,634 11.7 33.9
Net revenues 37,754,309 606,994 38,361,303 32,476,960 610,909 33,087,869 27,319,436 314,807 27,634,243 15.9 19.7
Cash operating expenses (22,590,522) (847,183) (23,437,705) (19,903,524) (869,669) (20,773,193) (15,970,943) (861,028) (16,831,971) 12.8 23.4
Reversal of (provision for)
allowance for doubtful accounts (29,224) 174 (29,050) 32,874 - 32,874 (174,608) (29,145) (203,753) (188.4) (116.1)
EBITDA 15,134,563 (240,015) 14,894,548 12,606,310 (258,760) 12,347,550 11,173,885 (575,366) 10,598,519 20.6 16.5
Depreciation and amortization (3,437,910) (191,527) (3,629,437) (4,174,510) (179,343) (4,353,853) (4,681,365) (173,677) (4,855,042) (16.6) (10.3)
Interest, foreign exchange loss
& others (3,827,411) (398,359) (4,225,770) (2,176,810) 478,363 (1,698,447) (1,460,834) (300,495) (1,761,329) 148.8 (3.6)
Benefit from (provision for)
income tax 89,228 37,262 126,490 14,491 (247,124) (232,633) (1,571,754) (87,329) (1,659,083) (154.4) (86.0)
Net Income (Loss) P
= 7,958,470 (P
= 792,639) P
= 7,165,831 P
= 6,269,481 (P
= 206,864) P
= 6,062,617 3,459,932 (P
= 1,136,867) P
= 2,323,065 18.2 161.0
Basic Earnings (Loss) Per
Share P
= 0.652 P
= 0.551 P
= 0.214
Diluted Earnings (Loss) Per
Share P
= 0.651 P
= 0.549 P
= 0.214
* as defined under PFRS 15
**includes Interest Income

15
OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2018 COMPARED WITH
2017

REVENUES

Revenues consist of: (1) Gaming; (2) Hotel, food and beverage; (3) Retail and others and
(4) Interest income. The table below illustrates the consolidated revenues for the year ended
December 31, 2018 and 2017:

%
For The Year Ended December 31 Change
In thousands, except % change 2018 2017 (as restated) 2018 vs.
data Philippines Korea Consolidate Philippines Korea Consolidate 2017
d d
Gaming* P
= 47,747,534 P
= 484,372 P
= 48,231,906 P= 41,807,488 P
= 407,075 P
= 42,214,563 14.3
Hotel, food and beverage 3,589,288 171,376 3,760,664 3,542,609 184,677 3,727,286 0.9
Retail and others 2,805,248 48,869 2,854,117 2,178,643 74,610 2,253,253 26.7
Interest income 141,005 71 141,076 63,759 2,416 66,175 113.2
Gross revenues 54,283,075 704,688 54,987,763 47,592,499 668,778 48,261,277 13.9
Less contra revenue accounts 16,528,766 97,694 16,626,460 15,115,539 57,869 15,173,408 9.6
Net revenues P
= 37,754,309 P
= 606,994 P
= 38,361,303 P= 32,476,960 P
= 610,909 P
= 33,087,869 15.9
* as defined under PFRS 15

Solaire registered gross gaming revenues of P47.7 billion for 2018, the highest annual figure
recorded since opening.

For 2018, gross gaming revenues, non-gaming revenues (including hotel, food and beverage,
retail and other), and interest income represented 87.7 percent, 12.0 percent and 0.3 percent of
gross revenues, respectively. In the same period last year, gross gaming revenue was 87.5
percent of gross revenue; hotel, food and beverage accounted for 12.4 percent; and interest
income for 0.1 percent. Contra revenue increased to P16,626.5 million, up 9.6 percent
year-on-year, mainly due to higher rebates to junket operators as a result of higher VIP volume,
rebates for VIP guests and other promotional incentives provided to guests.

Gaming

Philippines
Solaire outperformed last year’s revenue volume by registering robust growth in all segments with
record high mass table drop and slot coin-in for 2018. VIP volume, mass table drop and slot
coin-in, grew by 1.9 percent, 22.1 percent and 14.7 percent, respectively, for 2018 compared to
the same period last year.

Gross gaming revenue in 2018 increased by 14.2 percent or P5,941.0 million as compared to
2017. Below is the breakdown of the growth in gross gaming revenue:

Amounts in 2018 2017 Change in Revenue

millions
Volume* Revenue Hold Volume* Revenue Hold Amount %
VIP tables 810,233 P
= 21,817 2.69% 794,825 P
= 20,712 2.61% P
= 1,105 5.3%
Mass tables 44,894 15,258 34.0% 36,757 12,059 32.8% 3,199 26.5%
Slots 211,887 13,897 6.6% 184,652 11,748 6.4% 2,149 18.3%
Total 50,972 44,519 6,453 14.5%
PFRS 15 Allocation (3,224) (2,712) (512) 18.9%
Total P
= 47,748 P
= 41,807 P
= 5,941 14.2%
*VIP volume represents rolling chips; Mass volume represents mass drop; Slots volume
represents coin-in

On a hold normalized basis, the VIP revenue would have increased by 5.8 percent. VIP hold
stood at 2.69 percent, below the normal hold of 2.85 percent. Mass table revenue and slot

16
revenue reached record highs of P15.3 billion and P13.9 billion, respectively, after both segments
registered all-time high volumes.

There were 6,648,871 visitors in 2018, representing growth of 13.8 percent over the previous
year.

Korea
Jeju Sun registered P484.4 million in gross gaming revenue for 2018 which was 19.0 percent
higher than the previous year. The significant increase in gross gaming revenue was attributed to
the increased level of play in VIP and mass segments as a result of the highly competitive
marketing programs of Jeju Sun.

Hotel, Food and Beverage

Philippines
Hotel, food and beverage revenue increased by P46.7 million or 1.3 percent for 2018 versus the
previous year. Solaire increased its REVPAR by 7.3 percent year-on-year and at the same time,
managed to increase its hotel occupancy for 2018 to 92.6 percent from 90.7 percent in 2017.

Hotel cash revenues were approximately 56.1 percent for 2018 compared to 55.2 percent for the
comparative period in 2017, while non-gaming F&B cash revenues accounted for 58.0 percent of
F&B revenues for 2018 compared to 57.4 percent in the prior year.

Food and beverage covers for 2018 were approximately 2,057,426 in comparison to
approximately 2,103,851 covers for 2017 representing a decrease of 2.2 percent. Average check
for 2018 increased by 12.1 percent to P1,096.

Korea
The hotel and F&B operation of Jeju Sun generated P171.4 million of revenue for 2018, 7.2
percent lower than the comparative period in 2017. Jeju has historically enjoyed the patronage of
millions of Chinese tourists and the decline in the tourist arrivals from China has had an adverse
impact on the hotel and F&B revenues of Jeju Sun.

Retails and Others

Philippines
Retail and other revenues increased by 28.8 percent or P626.6 million compared to the prior
year primarily as a result of as a result of additional rental revenue from new tenants at the
Shoppes.

Korea
The retail and other revenues generated by Jeju Sun was P48.9 million for 2018.

Interest Income

Consolidated interest income increased by 113.2 percent, from P66.2 million to P141.1 million,
because of higher average consolidated cash balances for 2018. Cash generated from Solaire
operations resulted in higher cash balances and increased interest income.

EXPENSES

Total operating cost and expenses consist of: (1) Taxes and licenses; (2) Advertising and
promotions; (3) Depreciation and amortization; (4) Salaries and benefits; (5) Outside services and
charges; (6) Office expenses; (7) Cost of sales; (8) Utilities; (9) Rent; (10) Repair and

17
 maintenance; (11) Communication and transportation; (12) Provision for (reversal of) allowance
for doubtful accounts; and (13) Others.

The table below shows the breakdown of total expenses for 2018 and 2017.

%
For the Year Ended December 31
Change
2018 2017 (as restated) 2018 vs.
In thousands, except % change data Philippines Korea Consolidated Philippines Korea Consolidated 2017
Operating costs and expenses:
Taxes and licenses P10,987,451 P65,385 P11,052,836 P9,518,676 P65,259 P9,583,935 15.3
Advertising and promotions 454,897 6,965 461,862 466,289 16,660 482,949 (4.4)
Depreciation and amortization 3,437,910 191,527 3,629,437 4,174,509 179,343 4,353,852 (16.6)
Salaries and benefits 3,714,935 552,232 4,267,167 3,325,536 503,679 3,829,215 11.4
Outside services and charges 1,428,984 94,119 1,523,103 1,041,849 118,974 1,160,823 31.2
Office expenses 1,063,831 23,077 1,086,908 1,006,851 26,765 1,033,616 5.2
Cost of sales 2,652,009 27,520 2,679,529 2,186,726 31,107 2,217,833 20.8
Utilities 858,367 44,432 902,799 810,716 42,056 852,772 5.9
Rent 330,796 1,565 332,361 526,230 5,163 531,393 (37.5)
Repairs and maintenance 388,798 6,536 395,334 389,888 12,949 402,837 (1.9)
Communication and transportation 189,533 10,651 200,184 201,371 10,919 212,290 (5.7)
Provision of (reversal of allowance)
for doubtful accounts 29,224 (174) 29,050 (32,874) - (32,874) (188.4)
Others 520,921 14,701 535,622 429,393 36,138 465,531 15.1
26,057,656 1,038,536 27,096,192 24,045,160 1,049,012 25,094,172 8.0
Interest expense 4,564,370 17,557 4,581,927 2,053,899 97,649 2,151,548 113.0
Foreign exchange losses (gains) - net (738,514) 380,802 (357,712) (34,649) (847,586) (882,235) (59.5)
Others 1,555 - 1,555 157,560 271,574 429,134 (99.6)
Total Expenses P29,885,067 P1,436,895 P31,321,962 P26,221,970 P570,649 P26,792,619 16.9

Cost and Expenses

Total expenses of the Group for 2018 increased by 16.9 percent to P31.3 billion.

Philippines
Solaire operating costs and expenses increased by 8.4 percent from P24.0 billion to P26.1
billion for 2018 compared to the prior year due to higher: a) gaming taxes as a result of
record GGRs in VIP, Mass table and EGM, b) salaries and wages, c) outside services and
charges, and d) cost of sales due to higher food and beverage revenues. These increases
were partially offset by the decline in rent and depreciation and amortization.

Interest expense increased by 122.2 percent from P2,053.9 million to P4,564.4 million mainly
due to the P41.1 billion in incremental debt after the Group secured a new P73.5 billion
Syndicated Loan. The proceeds were used to retire the old debt facilities amounting P32.1
billion and purchase the land where Solaire is located in Entertainment City from PAGCOR
amounting to P40.4 billion, including taxes.

The Philippine peso depreciated against the US dollar and other foreign currencies resulting in
net foreign exchange gain of P738.5 million in 2018 as compared to the net foreign exchange
gain of P34.6 million in 2017. The Company maintains foreign currency deposits mainly
denominated in US and Hong Kong dollars.

Korea
Solaire Korea and Jeju Sun’s combined operating costs and expenses in 2018 was P1,038.5
million slightly lower than in 2017 which was P1,049.0 million. The Korean operation also
registered P380.8 million in foreign exchange loss mainly due to the depreciation of the Korean
Won against the US Dollar in the year. Solaire Korea and Jeju Sun’s liabilities to the Parent

18
Company are US dollar denominated.

Taxes and licenses

Taxes and licenses consist mainly of licenses fees (inclusive of the franchise tax) paid to
PAGCOR. The higher taxes and licenses in 2018 were due to higher gaming revenues.

Advertising and promotions

Advertising and promotions costs consist of costs of property and brand marketing, events and
promotions, print and media placements, corporate giveaways, prizes and sponsorship of events,
trade shows, exhibits and partnerships and other related expenses.

Depreciation and amortization

Depreciation and amortization pertains to the straight-line depreciation and amortization of
property and equipment as well as the operating equipment over the useful lives of these assets
ranging from 3 to 40 years.

Salaries and benefits

Salaries and wages increased by 11.4 percent which is attributable to the P389.4 increase in the
Philippine operations million mainly attributable to the Stock Incentive Plan (SIP) share grants as
well as the rationalization of its manpower requirements. Korean operation contributed 9.6
percent or P48.6 million increase in salaries and benefits.

Outside services and charges

Outside services and charges increased by 31.2 percent in 2018 as compared to the prior year.
This account pertains to the cost of professional and third-party services which include, among
others, legal services, consultancy services, marketing services, security services, audit services,
landscaping services and maintenance and cleaning services.

Office expenses
Office expenses, consisting mainly of costs of gaming and office supplies, guest supplies,
cleaning supplies, insurance, housekeeping supplies and team member expenses, increased by
5.2 percent.

Cost of sales
Cost of sales mainly consists of food and beverage costs and buying costs of retail items. The
increase in 2018 is directly attributable to the higher in F&B and Retail revenues. The Philippine
operation’s cost of sales increased by P465.3 million which was partially offset by Korean
operation’s P3.6 million decrease in cost of sales.

Utilities
Utilities expenses are composed of electricity cost, water charges, fuel costs, gas, sewerage and
cost of air conditioning supplies. Utilities expenses increased by 5.9 percent in 2018.

Rent
Rent consists mainly of lease rentals for the land and other real properties as well as casino,
office and other equipment. Rent decreased by 37.5 percent mainly due to the purchase of
previously rented land from PAGCOR.

Repairs and maintenance

The upkeep of the property and equipment is charged to repairs and maintenance account, which
includes the maintenance of casino equipment, furniture and fixtures, computer equipment,
curtains and drapery, transportation equipment, electrical and mechanical equipment. Repairs
and maintenance slightly decreased by 1.9 percent.

19
Communication and transportation
Communication and transportation represent cost of telephone and data communications, valet
services, fleet management services and shuttle services. Costs of business travels are also
charged to this account.

Provision for (reversal of) allowance for doubtful accounts

The Group evaluates provision for doubtful accounts based on a specific and collective review of
customer accounts as well as experience with collection trends in the gaming industry and current
economic and business conditions. For 2018, the Group provided only P29.1 million for doubtful
accounts.

Other
Other expenses consist of miscellaneous expenses mainly pertaining to complimentary service
charges, representation, dues and subscriptions, freight charges, contract entertainment, trust
fees, donations and community service expenses, credit card commissions and bank charges.
This account increased by 15.1 percent due to higher representation and entertainment
expenses.

Interest Expense

Interest expense represents interest on the Group’s Original and Expansion Facilities with BDO,
Syndicated Loan Facility, the Corporate Notes and short-term borrowings. As earlier mentioned,
the Group’s interest expense increased by 113.0 percent mainly due to the P41.1 billion in
incremental debt after the Group secured a new P 73.5 billion Syndicated Loan.

Foreign Exchange Losses (Gains) - Net

The Group recognized a net foreign exchange gain for the year of P357.7 million because of the
net favorable result of the depreciation of the Philippine Peso against the US dollar and Hong
Kong dollar and depreciation of Korean Won against the US dollar in 2018. The Philippine peso
depreciated against the US dollar from P49.930/US$1 as of December 31, 2017 to
P52.563/US$1 as of December 31, 2018. The Group also reported P882.2 million net foreign
exchange gains in 2017.

Others

Others is composed of mark-to-market loss and write off of transportation equipment in Philippine
operations.

EBITDA

Philippines
For 2018, Solaire generated P15,134.6 million EBITDA, the highest annual EBITDA achieved
since opening. This represents a 20.1 percent year-on-year increase or P2,528.3 million from
last year. The increase in EBITDA was due to record-breaking revenues in the mass segment.

Korea
Solaire Korea and its subsidiary, Jeju Sun, posted P240.0 million negative EBITDA in 2018.

CONSOLIDATED

Below is the consolidated hold-normalized EBITDA highlights:

20
 For the Year Ended
December 31
Change
In thousands, except % change
2018 2017
data
Net Revenue 38,361,303 33,087,869 15.9%
EBITDA 14,894,548 12,347,550 20.6%
EBITDA Margin 38.83% 37.32% 151 bps
Hold-Normalized EBITDA* 16,049,409 13,781,666 16.5%
Hold-Normalized EBITDA Margin* 40.4% 39.5% 90 bps
* Hold-normalized EBITDA is based on 2.85% VIP hold.

The reported VIP hold in 2018 was 2.69 percent, 16 basis points lower than the 2.85 percent
normalized hold. This resulted in the reported EBITDA being 7.8 percent lower than
hold-normalized EBITDA of P16.0 billion.

PROVISION FOR (BENEFIT FROM) INCOME TAX

In 2018, the Group recognized P126.5 million benefit from income tax as compared to P232.6
million provision for income tax recognized in 2017.

NET INCOME

The Group reported a consolidated net income of P7,165.8 million in 2018 which was 18.2
percent or P1,103.2 million improvement from the P6,062.6 million net income in 2017.

The Philippine operations registered net income of P7,958.5 million, which was a
P1,689.0 million increase from the net income last year. The remarkable growth in net
income for the current year was due to higher EBITDA and further improved by lower
depreciation and amortization. However, consolidated net income was reduced by higher
interest expense and by the Korean operation which registered P792.6 million net loss for the
year.

EARNINGS PER SHARE

The basic earnings per share of P0.652 for twelve months of 2018 was a significant increase from
last year’s earnings per share of P0.551. The diluted earnings per share for 2018 was P0.651
while for 2017 the diluted earnings per shares was P0.549 after considering the shares granted
under the Company’s stock incentive plan

There are no other significant elements of income and expense outside the Company’s operating
results for the year ended December 31, 2018.

OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017 COMPARED WITH
2016

REVENUES

Revenues consist of: (1) Gaming; (2) Hotel, food and beverage; (3) Retail and others and (4)
Interest income. The table below illustrates the consolidated revenues for the year ended
December 31, 2017 and 2016:

21
 %
For The Year Ended December 31 Change
In thousands, except % change 2017 (as restated) 2016 (as restated) 2017 vs.
data Philippines Korea Consolidate Philippines Korea Consolidated 2016
d
Gaming* P
= 41,807,488 P
= 407,075 P
= 42,214,563 P
= 36,207,271 P
= 194,539 P
= 36,401,810 16.0
Hotel, food and beverage 3,542,609 184,677 3,727,286 2,828,159 195,451 3,023,610 23.3
Retail and others 2,178,643 74,610 2,253,253 1,432,021 15,971 1,447,992 55.6
Interest income 63,759 2,416 66,175 43,742 290 44,032 50.3
Gross revenues 47,592,499 668,778 48,261,277 40,511,193 406,251 40,917,444 17.9
Less contra revenue accounts 15,115,539 57,869 15,173,408 13,191,757 91,444 13,283,201 14.2
Net revenues P
= 32,476,960 P
= 610,909 P
= 33,087,869 P
= 27,319,436 P
= 314,807 P
= 27,634,243 19.7
* as defined under PFRS 15

Solaire registered gross gaming revenues of P41.8 billion for 2017, the highest in a year since
opening. The non-gaming segment also outperformed its previous year’s reported revenues
reaching P5,721.3 million in 2017, 34.3 percent higher on a year-on-year basis. Jeju Sun on the
other hand, showed significant improvement with gaming revenues doubling in 2017 despite
operating in a very challenging environment with a 75.5 percent decline in Chinese tourist arrivals
in Jeju. Jeju has historically enjoyed the patronage of millions of Chinese tourists.

For 2017, gross gaming revenues, non-gaming revenues (including hotel, food and beverage,
retail and other), and interest income represented 87.5 percent, 12.4 percent and 0.1 percent of
gross revenues, respectively. In the same period last year, gross gaming revenue was 89.0
percent of gross revenue; hotel, food and beverage accounted for 10.9 percent; and interest
income for 0.1 percent. Contra revenue increased to P15,173.4 million, up 14.2 percent
year-on-year, mainly due to higher rebates to junket operators as a result of higher VIP volume,
rebates for VIP guests and other promotional incentives provided to guests.

Gaming

Philippines
Solaire registered robust growth across all segments with record high VIP volume, mass table
drop and slot coin-in for 2017. VIP volume, mass table drop and slot coin-in, grew by 11.4
percent, 21.3 percent and 29.0 percent, respectively, for 2017 compared to the same period last
year.

Gross gaming revenue in 2017 increased by 15.5 percent or P5,600.2 million as compared to
2016. Below is the breakdown of the growth in gross gaming revenue:

amounts in 2017 2016 Change in Revenue

millions
Volume* Revenue Hold Volume* Revenue Hold Amount %
VIP tables 794,825 P
= 20,712 2.61% 713,691 P
= 18,613 2.61% P
= 2,099 11.3%
Mass tables 36,757 12,059 32.8% 30,305 10,062 33.2% 1,997 19.8%
Slots 184,652 11,748 6.4% 143,159 9,667 6.8% 2,081 21.5%
Total 44,519 38,342 6,177 16.1%
PFRS 15 (2,712) (2,135) (577) 27.0%
Allocation
Total P
= 41,807 P
= 36,207 P
= 5,600 15.5%
*VIP volume represents rolling chips; Mass volume represents mass drop; Slots volume
represents coin-in

On a hold normalized basis, the VIP revenue would have increased by 11.8 percent. VIP hold
stood at 2.61 percent, below the normal hold of 2.85 percent. Mass table revenue and slot
revenue reached record highs of P12.1 billion and P11.7 billion, respectively, after both segments
registered all-time high volumes.

There were 5,843,686 visitors in 2017, representing growth of 14.0 percent over the previous
year.

22
Korea
Jeju Sun registered P407.1 million gross gaming revenues for 2017 which was 109.3 percent
higher than the previous year. This was achieved against the backdrop of a huge decline in
Chinese travelers to Jeju mainly due to the issue of Terminal High Altitude Area Defense
(THAAD) deployment (US missile defense system). Chinese tourists account for an estimated 85
percent of Jeju tourists. Chinese tourist arrivals to Korea in 2017 fell 48.1 percent to 4.2 million
from 8.1 million visitors last year with Jeju Island experiencing a more drastic 75.8 percent drop
from 3.1 million to 0.75 million Chinese visitors.

Hotel, Food and Beverage

Philippines
Hotel, food and beverage revenue increased by P714.5 million or 25.3 percent for 2017 versus
last year. Solaire increased its REVPAR by 10.5 percent year-on-year and at the same time,
managed to increase its hotel occupancy for 2017 to 90.7 percent from 85.4 percent in the
previous year.

Hotel cash revenues were approximately 55.2 percent for 2017 compared to 51.7 percent for the
comparative period in 2016, while non-gaming F&B cash revenues accounted for 57.4 percent of
F&B revenues for 2017 compared to 57.5 percent in the prior year.

Food and beverage covers for 2017 were approximately 2,103,851 in comparison to
approximately 1,808,759 covers for 2016 representing an increase of 16.3 percent. Average
check for 2017 increased 6.3 percent to P978.

Korea
The hotel and F&B operation of Jeju Sun generated P184.7 million of revenue for 2017, 5.5
percent lower than the comparative period in 2016. Jeju has historically enjoyed the patronage of
millions of Chinese tourists and the decline in the tourist arrivals from China has had an adverse
impact on the hotel and F&B revenues of Jeju Sun.

Retails and Others

Philippines
Retail and other revenues increased by 52.1 percent or P746.6 million compared to the prior
year primarily as a result of additional rental revenue from new tenants at the Shoppes.

Korea
Retail and other revenues increased to P74.6 million for 2017. The increase was due to higher
rental income generated from additional tenants and other income/refund received.

Interest Income

Philippines
Interest income increased by P20.0 million or 45.8 percent from 2016 because of higher average
consolidated cash balances in 2017.

Korea
Korean operations contributed P2.4 million or 3.7 percent of the consolidated interest income for
the year.

23
EXPENSES

Total operating cost and expenses consist of: (1) Taxes and licenses; (2) Advertising and
promotions; (3) Depreciation and amortization; (4) Salaries and benefits; (5) Outside services and
charges; (6) Office expenses; (7) Cost of sales; (8) Utilities; (9) Rent; (10) Repair and
maintenance; (11) Communication and transportation; (12) Provision for (reversal of) allowance
for doubtful accounts; and (13) Others.

The table below shows the breakdown of total expenses for 2017 and 2016.

%
For the Year Ended December 31
Change
2017 (as restated) 2016 (as restated)
2017 vs.
In thousands, except % change data Philippines Korea Consolidated Philippines Korea Consolidated 2016
Operating costs and expenses:
Taxes and licenses P9,518,676 P65,259 P9,583,935 P6,653,474 P34,405 P6,687,879 43.3
Advertising and promotions 466,289 16,660 482,949 380,240 133,941 514,181 (6.1)
Depreciation and amortization 4,174,509 179,343 4,353,852 4,681,365 173,677 4,855,042 (10.3)
Salaries and benefits 3,325,536 503,679 3,829,215 3,154,718 548,316 3,703,034 3.4
Outside services and charges 1,041,849 118,974 1,160,823 934,773 22,184 956,957 21.3
Office expenses 1,006,851 26,765 1,033,616 1,008,274 31,442 1,039,716 (0.6)
Cost of sales 2,186,726 31,107 2,217,833 1,602,574 23,593 1,626,167 36.4
Utilities 810,716 42,056 852,772 782,841 40,845 823,686 3.5
Rent 526,230 5,163 531,393 504,824 5,924 510,748 4.0
Repairs and maintenance 389,888 12,949 402,837 316,831 7,515 324,346 24.2
Communication and transportation 201,371 10,919 212,290 179,229 9,940 189,169 12.2
Provision for (reversal of) allowance -
for doubtful accounts (32,874) (32,874) 174,608 29,145 203,753 (116.1)
Others 429,393 36,138 465,531 453,165 2,923 456,088 2.1
24,045,160 1,049,012 25,094,172 20,826,916 1,063,850 21,890,766 14.6
Interest expense 2,053,899 97,649 2,151,548 2,133,221 90,092 2,223,313 (3.2)
Foreign exchange losses (gains) - net (34,649) (847,586) (882,235) (692,796) 210,403 (482,393) 82.9
Mark-to-market loss (gains) 157,560 271,574 429,134 20,409 - 20,409 2,002.7
Total Expenses P26,221,970 P570,649 P26,792,619 P22,287,750 P1,364,345 P23,652,095 13.3

Cost and Expenses

Total expenses of the Group for 2017 had increased by 13.3 percent to P26.8 billion. This
increase was attributable mainly due to higher volume of business activity both in gaming and
non-gaming resulting in higher gaming taxes, outside services and chargers, communication and
transportation and, cost of sale. In addition, the Company invested in several renovations to
maintain the world class standard of Solaire. However, the increase in total expenses was
partially offset by lower depreciation and amortization expenses with the favorable change in the
useful economic lives of the building and other fixed assets.

Philippines
Solaire operating costs and expenses increased by 15.5 percent from P20.8 billion to P24.0
billion for 2017 compared to the prior year. This is mainly due to higher volume of business
activity both in gaming and non-gaming resulting in higher gaming taxes, advertising and
promotions, outside services and charges, communication and transportation and cost of
sales (food and beverage cost). In addition, taxes and licenses increased as a result of the
reversion to the original gaming tax structure (please refer to the discussion of taxes and
licenses below). The increase in total expenses of the Philippine operation was partially offset
by the decrease in depreciation and amortization which fell by 10.8 percent due to the
change in the useful life of the building from 25 years to 40 years.

24
In 2017, Solaire recognized a net foreign exchange gain of P34.7 million, which is P658.1 million
lower than the net foreign exchange gain of P692.8 million in 2016, as a result of Solaire’s
accommodation of certain FX transactions with its patrons, vendors and foreign subsidiaries. A
certain portion of Solaire’s cash is denominated in US and Hong Kong dollars.

Mark-to-market losses presented under “Others” totaled P7.6 million for 2017 compared to P20.4
million loss in 2016.

Korea
Solaire Korea and Jeju Sun combined operating costs and expenses was at P1,049.0 million in
2017 which was 1.4 percent lower than the P1,063.9 million booked last year.

The Korean operation also registered P847.6 million in foreign exchange gains mainly due to the
depreciation of the US Dollar against the Korean Won since the beginning of the year. Solaire
Korea and Jeju Sun’s liabilities to the Parent Company are US-dollar denominated. An
impairment loss on goodwill and its casino license of P271.6 million was also recognized in 2017.

Taxes and licenses

Taxes and licenses consist mainly of licenses fees (inclusive of the franchise tax) paid to
PAGCOR. When the new PAGCOR Board assumed office in June 2016, it required the
licensees to revert to the original license fee rates provided under the Gaming License. The legal
correctness of this decision was confirmed when in a decision dated August 10, 2016, the
Supreme Court ruled that BRHI is exempted from corporate income taxes from its gaming
operations. This caused an adjustment on the payment of gaming taxes paid to PAGCOR
resulting in an increase in operating cost and expenses. Prior to this, PAGCOR had entered into
an agreement with the four (4) licensees of Entertainment City for the licensees to meet the
corporate income taxes required under BIR Revenue Memorandum Circular 33-2013 even if it
was contrary to the tax exemption of the licensees under the PAGCOR Charter. PAGCOR’s
Guidelines for the 10 percent Income Tax Allocation provided that instead of 15 percent and 25
percent (inclusive of 5 percent franchise tax) license fee rates for high rollers/junket and mass
gaming, respectively, prescribed under the Gaming License, the licensees would pay 5 percent
and 15 percent rates, respectively. The difference of 10 percentage points for each category was
allocated to pay for the corporate income taxes as administrative relief considering the tax
exemption provided to the licensees under the PAGCOR Charter and under the Gaming License.
The reversion to the original gaming tax structure of 15 percent and 25 percent effective July 1,
2016 caused the increase in gaming taxes during the current period covering the twelve months
in 2017.

Advertising and promotions

The Group increased its advertising and promotional activities that helped boost gaming and
non-gaming revenues and enhanced its competitiveness with the opening of a new property in
Entertainment City. Advertising and promotions costs consist of costs of property and brand
marketing, events and promotions, print and media placements, corporate giveaways, prizes and
sponsorship of events, trade shows, exhibits and partnerships and other related expenses.

Depreciation and amortization

Depreciation and amortization pertains to the straight-line depreciation and amortization of
property and equipment as well as the operating equipment over the useful lives of these assets
ranging from 3 to 40 years.

Salaries and benefits

Salaries and wages slightly increased by 3.4 percent which is attributable to the increase in
Philippine operations by P170.8 million mainly attributable to the Stock Incentive Plan (SIP) share
grants as well as the rationalization of its manpower requirements. This was partially offset by

25
the Korean operation where salaries and benefits decreased by P44.6 million.

Outside services and charges

Outside services and charges increased by 21.3 percent in 2017 as compared to the prior period.
This account pertains to the cost of professional and third-party services which include, among
others, legal services, consultancy services, marketing services, security services, audit services,
landscaping services and maintenance and cleaning services.

Office expenses
Office expenses, consisting mainly of costs of gaming and office supplies, guest supplies,
cleaning supplies, insurance, housekeeping supplies and team member expenses, slightly
decreased by 0.6 percent.

Cost of sales
Cost of sales consists mainly of food and beverage costs and buying costs of retail items. The
increase in 2017 is directly attributable to higher F&B and Retail revenues. The Philippine
operation’s cost of sales increased by P584.2 million while the Korean operation contributed a
P7.5 million increase.

Utilities
Utilities expenses are composed of electricity cost, water charges, fuel costs, gas, sewerage and
cost of air conditioning supplies. Utilities expenses for 2017 is slightly higher compared with
2016.

Rent
Rent consists mainly of lease rentals for the land and other real properties as well as casino,
office and other equipment.

Repairs and maintenance

The upkeep of the property and equipment is charged to this account, which includes the
maintenance of casino equipment, furniture and fixtures, computer equipment, curtains and
drapery, transportation equipment, electrical and mechanical equipment. Repairs and
maintenance increased by 24.2 percent after standard warranties on the Group’s machinery and
equipment had lapsed and with the property operating for almost five years to date.

Communication and transportation

Communication and transportation represents cost of telephone and data communications, valet
services, fleet management services and shuttle services. Costs of business travels are also
charged to this account. The higher expense in 2017 was mainly due to the increase in executive
travel related to business and player development.
Provision for (reversal of) allowance for doubtful accounts
The Group evaluates provision for doubtful accounts based on a specific and collective review of
customer accounts as well as experience with collection trends in the gaming industry and current
economic and business conditions. In 2017, the Group did not make any provisions for doubtful
accounts but rather had a reversal of P32.9 million as a result of the collection of certain fully
provided doubtful accounts in 2017.

Other
Other expenses consist of miscellaneous expenses mainly pertaining to complimentary service
charges, representation, dues and subscriptions, freight charges, contract entertainment, trust
fees, donations and community service expenses, credit card commissions and bank charges.
This account increased by 2.1 percent due to the rationalization of representation and
entertainment expenses.

26
Interest Expense

Interest expense represents interest on the Group’s Original and Expansion Facilities with BDO,
the Corporate Notes and short-term borrowings.

Foreign Exchange Losses (Gains) - Net

The Group recognized a net foreign exchange gain for the year of P882.2 million because of the
favorable effect of the depreciation of the Philippine Peso against the US dollar and Hong Kong
dollar in 2017 and appreciation of Korean Won against the US dollar. The Group also reported
P482.4 million net foreign exchange gains in 2016. The Philippine peso depreciated against the
US dollar from P49.720/US$1 as of December 31, 2016 to P49.930/US$1 as of December 31,
2017.

Others

Others is composed of mark-to-market loss, transportation equipment write off of Philippine

operations and impairment loss on goodwill and casino license of Korean operations.
Mark-to-market loss was a result of the fair value determination of the embedded derivative in the
prepayment option of the Group’s loan with BDO as of December 31, 2017. The mark-to-market
loss in 2017 is lower by 62.7 percent compared to prior year mainly because of the lower principal
repayment of the Original Facility in 2017 in effect of the loan restructuring. In 2017, the
Philippine operations wrote off a transportation asset resulting to a loss of P150.0 million. An
impairment loss on goodwill and casino license of P271.6 million was also recognized in 2017.

EBITDA

Philippines
For 2017, Solaire generated P12,606.3 million EBITDA, the highest annual EBITDA achieved
since opening. This represents an 12.8 percent year-on-year increase or P1,432.4 million from
the previous year. The increase in EBITDA was due to all-time high revenues and continuous
implementation of cost containment initiatives.

Korea
The EBITDA registered by Solaire Korea and its subsidiary, Jeju Sun, was reduced to
P258.8 million negative EBITDA or 42.4 percent negative EBITDA margin. This was a substantial
improvement from the P575.4 million negative EBITDA incurred during the same period last year.
Jeju Sun had significantly improved its operations despite the challenging market conditions in
Jeju, Korea.

27
CONSOLIDATED

At the consolidated level, the 2017 EBITDA margin was slightly lower at 37.3 percent compared
to 38.4 percent in the same time period last year. On a comparable basis, the EBITDA for 2017
should have increased by 35.4 percent as compared to 2016 as adjusted using the original
gaming (final gaming) tax structure as follows:

For the Year Ended December 31

% Change
In thousands, except % change data 2017 2016
EBITDA as reported 12,347,550 10,598,519 16.5%
Adjustment* - (1,480,614) n/a
EBITDA using original tax structure 12,347,550 9,117,905 35.4%
*this represents additional gaming taxes (that used to be paid as corporate income tax) using
the original tax structure

Below is the consolidated hold-normalized EBITDA comparison based on PAGCOR table

classification of original gaming tax rates (as stated in the Gaming License) effective July 1, 2016,
as follows:

a. Junket tables (VIP) - 15 percent of junket revenue

b. High roller tables (VIP) – 15 percent of high roller revenue*
c. Non-high roller tables (Mass tables) – 25 percent of non-high roller revenue*
d. Slots – 25 percent of slots revenue
* BRHI is also required to remit an additional 2 percent of casino revenues generated from non-
junket operation tables to a foundation devoted to the restoration of Philippine cultural
heritage, as selected by the BRHI and approved by PAGCOR.

For the Year Ended December 31

Change
In thousands, except % change data 2017 2016
Net Revenue 33,087,869 27,634,243 19.7%
EBITDA 12,347,550 10,598,519 16.5%
EBITDA Margin 37.3% 38.4% (110 bps)
Hold-Normalized EBITDA* 13,781,666 11,245,044 22.6%
Hold-Normalized EBITDA Margin* 39.5% 38.5% (100 bps)
* Hold-normalized EBITDA is based on 2.85 percent VIP hold. For 2015, the calculation
was based on reduced gaming tax with corporate income tax in the 1st half to be
comparable with 2016 applicable gaming tax.

The reported VIP hold in 2017 was 2.61 percent, 24 basis points lower than the 2.85 percent
normalized hold. This resulted in the reported EBITDA being 11.6 percent lower than hold-
normalized EBITDA of P13.8 billion.

PROVISION FOR (BENEFIT FROM) INCOME TAX

In 2017, the Group recognized P1.6 million of provision for income tax compared to
P1,481.8 million for the same period in 2016. The decrease in current provision for income tax is
due to the new PAGCOR Board order effective July 1, 2016 to revert back to the original gaming
tax structure, which was affirmed by the Supreme Court’s decision granting exemption of BRHI
from corporate income tax on its gaming operation.

The Group incurred a deferred tax provision of P231.0 million in 2017 and P177.3 million for the
same period last year which resulted from changes in net deferred tax liabilities and assets.

28
 NET INCOME (LOSS)

The consolidated net income of P6,062.6 million in 2017 was significantly higher as
compared to 2016 by 161.0 percent.

Philippine operations registered a net income of P6,269.5 million, which was 81.2 percent
higher than the same period last year. The annual net income was due to Solaire’s higher
revenues generated across all revenue segments generating higher EBITDA for the property
and further enhanced with lower depreciation and amortization expenses and financing costs.
Net income was reduced by the Korean operation which registered a P206.9 million net loss
for the year. However, this net loss for 2017 was significantly lower than the net loss
registered in 2016 amounting to P1,136.9 million.

EARNINGS (LOSS) PER SHARE

The basic earnings per share of P0.551 for twelve months of 2017 was a significant increase from
last year’s earnings per share of P0.214. The diluted earnings per share for 2017 was P0.549
while for 2016 the diluted loss per shares was P0.214 after considering the shares granted under
the Company’s stock incentive plan

There are no other significant elements of income and expense outside the Company’s operating
results for the year ended December 31, 2017.

OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2016 COMPARED WITH
2015

REVENUES

Revenues consist of: (1) Gaming; (2) Hotel, food and beverage; (3) Interest income; and (4)
Retail and others. The table below illustrates the consolidated revenues for the year ended
December 31, 2016 and 2015:

%
For The Year Ended December 31 Change
In thousands, except % change 2016 2015 2016 vs.
data Philippines Korea Consolidated Philippines Korea Consolidated 2015
Gaming P
= 38,342,203 P
= 194,539 P
= 38,536,742 P
= 32,232,242 P
= 228,528 P
= 32,460,770 18.7
Hotel, food and beverage 1,692,372 195,451 1,887,823 1,434,491 171,587 1,606,078 17.5
Retail and others 432,876 15,971 448,847 179,617 32,337 211,954 111.8
Interest income 43,742 290 44,032 74,702 2,705 77,407 (43.1)
Gross revenues 40,511,193 406,251 40,917,444 33,921,052 435,157 34,356,209 19.1
Less contra revenue accounts 10,395,424 91,444 10,486,868 9,083,639 155,246 9,238,885 13.5
Net revenues P
= 30,115,769 P
= 314,807 P
= 30,430,576 P
= 24,837,412 P
= 279,911 P
= 25,117,323 21.2

For 2016, gross gaming revenue accounted for 94.2 percent and non-gaming revenues (including
hotel, food and beverage, retail and other) contributed 5.7 percent while the balance of 0.1
percent represented interest income. For the same period last year, gross gaming revenue was
94.5 percent of total revenue; hotel, food and beverage accounted for 5.3 percent; and interest
income for 0.2 percent. Contra revenue increased to P10,486.9 million, up 13.5 percent year-on-
year, mainly due to higher rebates to junket operators as a result of higher VIP volume, rebates
for VIP guests as well as other promotional incentives provided to guests.

Solaire registered gross gaming revenue of P38.3 billion for 2016, the highest in a year since
opening. The non-gaming revenue reached a record high of P2,336.7 million, 28.5 percent higher
on a year-on-year basis.

29
Gaming

Philippines
Solaire registered robust growth across all segments with all time high VIP volume, mass table
drop and slot coin-in for 2016. VIP volume, mass table drop and slot coin-in, grew by 29.2
percent, 11.5 percent and 18.3 percent, respectively, for 2016 compared to the same period in
the prior year.

Gross gaming revenue in 2016 increased by 19.0 percent or P6,110.0 million as compared to
2015. Below is the breakdown of the growth in gross gaming revenue:

amounts in 2016 2015 Change in Revenue

millions
Revenue Hold Revenue Hold Amount Percentage
VIP tables 18,613 2.61% 15,851 2.87% 2,762 17.4%
Mass tables 10,062 33.2% 8,234 30.3% 1,828 22.2%
Slots 9,667 6.8% 8,148 6.7% 1,520 18.7%
Total 38,342 32,233 6,110 19.0%

On a hold normalized basis, the VIP revenue would have increased by 29.1 percent. VIP hold
stood at 2.61 percent, below normal hold of 2.85 percent. The mass table revenue reached an
all-time high of P10.1 billion due to higher volume and improved hold percentage by 290 bps.
Slot revenue also reached an all-time high of P9.7 billion owing to best ever slot coin-in.

Total visitation for 2016 was 5,124,028 which was up 6.4 percent from 2015.

Korea
Jeju Sun registered P194.5 million gross gaming revenues for 2016. In anticipation of the sale to
Iao Kun, the Company had deliberately concentrated on reducing expenses rather than
increasing VIP business to minimize volatility. However, on the agreed closing date, Iao Kun
failed to raise the funding necessary to consummate the sale of Jeju Sun. The Parent Company
rejected Iao Kun’s request to extend the closing and payment date of the transaction.
Considering this development, the Parent Company decided to again operate Jeju Sun under
normal course of business.

Hotel, Food and Beverage

Philippines
Hotel and food and beverage revenue increased by P257.9 million or 18.0 percent for 2016
versus last year. Solaire increased its REVPAR by 16.9 percent year-on-year and at the same
time, managed to increase its hotel occupancy for 2016 to 85.4 percent from 79.2 percent in the
previous year.

Hotel cash revenues were approximately 49.6 percent for 2016 compared to 45.7 percent for the
comparative period in 2015, while non-gaming F&B cash revenues accounted for 50.4 percent of
F&B revenues for 2016 compared to 54.3 percent in prior year.

Food and beverage covers for 2016 were approximately 1,808,759 in comparison to
approximately 1,894,191 covers for 2015 representing a decrease of 4.5 percent. Average check
for 2016 increased 4.8 percent to P919 over 2015.

Korea
The hotel and F&B operation of Jeju Sun generated P195.5 million of revenue for 2016.

30
 Retail and Others

Philippines
Retail and other revenues increased by 141.0 percent or P253.3 million compared to the prior
year primarily as a result of additional rental revenue as tenants in The Shoppes@Solaire
became operational.

Korea
Jeju Sun contributed P16.0 million in retail and other revenue for the year.

Interest Income

Philippines
Interest income decreased by P30.9 million or 41.4 percent from 2015 as Solaire had less
available cash to invest based on reduced net cash.

Korea
Korean operations contributed P0.3 million or 0.001% of the consolidated interest income for the
year.

COST AND EXPENSES

Total operating cost and expenses consist of: (1) Taxes and licenses; (2) Depreciation and
amortization; (3) Advertising and promotions; (4) Salaries and benefits; (5) Office expenses; (6)
Outside services and charges; (7) Utilities; (8) Cost of sales; (9) Rent; (10) Repair and
maintenance; (11) Provision for doubtful accounts; (12) Communication and transportation; and
(13) Others.

The table below shows the breakdown of total expenses for 2016 and 2015.

%
For the Year Ended December 31
Change
2016 2015
2016 vs.
In thousands, except % change data Philippines Korea Consolidated Philippines Korea Consolidated 2015
Operating costs and expenses:
Taxes and licenses P6,653,474 P34,405 P6,687,879 P4,862,797 P80,703 P 4,943,500 35.3
Depreciation and amortization 4,681,365 173,677 4,855,042 4,795,772 60,631 4,856,403 (0.0)
Advertising and promotions 4,088,826 133,941 4,222,767 3,130,047 45,598 3,175,645 33.0
Salaries and benefits 3,154,718 548,316 3,703,034 3,427,550 397,895 3,825,445 (3.2)
Office expenses 1,008,274 31,442 1,039,716 1,077,528 17,127 1,094,655 (5.0)
Outside services and charges 934,773 22,184 956,957 1,005,290 414,470 1,419,760 (32.6)
Utilities 782,841 40,845 823,686 788,342 38,613 826,955 (0.4)
Cost of sales 690,320 23,593 713,914 681,332 22,172 703,504 1.5
Rent 504,824 5,924 510,748 515,734 6,879 522,613 (2.3)
Repairs and maintenance 316,831 7,515 324,346 234,508 8,578 243,086 33.4
Provision for doubtful accounts 174,608 29,145 203,753 2,568,041 679 2,568,720 (92.1)
Communication and transportation 179,229 9,940 189,169 172,135 9,249 181,384 4.3
Others 453,167 2,921 456,088 411,867 17,792 429,659 6.2
23,623,249 1,063,849 24,687,098 23,670,944 1,120,385 24,791,329 (0.4)
Interest expense 2,133,221 90,092 2,223,313 2,102,797 64,342 2,167,139 2.6
Foreign exchange losses (gains) – net (692,795) 210,402 (482,393) (562,142) 269,314 (292,828) 64.7
Mark-to-market loss (gains) 20,409 - 20,409 (5,278) - (5,278) (486.7)
Total Expenses P25,084,084 P1,364,343 P26,448,427 P25,206,321 P1,454,041 P26,660,362 (0.01)

Philippines
Solaire operating costs and expenses remain relatively flat which slightly decreased from P23.67
billion to P23.62 billion for the twelve months of 2016 compared to the same period in the prior
year. The reversion to the original gaming tax structure of 15% and 25% effective July 1, 2016

31
caused the increase in gaming taxes during the current period. The increase in gaming taxes
was partially offset by a decrease in the provision for doubtful accounts for 2016.

In 2016, Solaire recognized a net foreign exchange gain of P377.2 million, which is P90.3 million
higher than the net foreign gain of P286.9 million in 2015, as a result of Solaire’s favorable
exchange rate transactions with its patrons, vendors and Solaire Korea and Jeju Sun. Mark-to-
market losses totaled P20.4 million for the twelve months of 2016 compared to P5.3 million loss
for the same period in 2015. A portion of Solaire’s cash is denominated in US and Hong Kong
dollars.

Korea
Solaire Korea’s overhead expenses consist mainly of salaries and benefits, outside services and
office expenses. Solaire Korea and Jeju Sun registered P1,063.8 million in combined operating
costs and expenses. In addition, both incurred P90.1 million of interest expenses and recognized
P210.4 million in foreign exchange loss mainly due to the restatement of Solaire Korea and Jeju’s
US dollar denominated liabilities to the Parent Company.

Total expenses remain relatively flat from P26.7 billion to P26.5 billion

Taxes and licenses

Taxes and licenses consist mainly of licenses fees (inclusive of the franchise tax) paid to
PAGCOR. When the new PAGCOR Board assumed office in June 2016, it required the
licensees to revert to the original license fees rates provided under the Gaming License. The
legal correctness of this decision was confirmed when in a decision dated August 10, 2016, the
Supreme Court ruled that BRHI is exempted from corporate income taxes from its gaming
operations. This caused an adjustment on the payment of gaming taxes paid to PAGCOR
resulting in an increase in operating cost and expenses. Prior to this, PAGCOR had entered into
an agreement with the four (4) licensees of Entertainment City for the licensees to meet the
corporate income taxes required under BIR Revenue Memorandum Circular 33-2013 even if it
was contrary to the tax exemption of the licensees under the PAGCOR Charter. PAGCOR’s
Guidelines for the 10% Income Tax Allocation provided that instead of 15% and 25% (inclusive of
5% franchise tax) license fees rates for high rollers/junket and mass gaming, respectively,
prescribed under the Gaming License, the licensees would pay 5% and 15% rates. The
difference of 10% for each category was allocated to pay for the corporate income taxes as
administrative relief considering the tax exemption provided to the licensees under the PAGCOR
Charter and under the Gaming License. The reversion to the original gaming tax structure of 15%
and 25% effective July 1, 2016 caused the increase in gaming taxes during the current period.

Depreciation and amortization

Depreciation and amortization pertains to the straight-line depreciation and amortization of
property and equipment as well as the operating equipment over the useful lives of these assets
ranging from 2 to 40 years.

Advertising and promotions

The Group increased its advertising and promotional activities that helped boost gaming and non-
gaming revenues and enhanced its competitiveness. Advertising and promotions consist of costs
of property and brand marketing, events and promotions, print and media placements, corporate
giveaways, prizes and sponsorship of events, trade shows, exhibits and partnerships and other
promotion related expenses.

Salaries and benefits

Despite the opening of various restaurant and retail store in the Sky Tower, salaries and wages of
Solaire decreased by P272.8 million due to rationalization of its manpower requirements which
was partially offset by the Korean operation which contributed P150.4 million increase in salaries
and benefits.

32
Office expenses
Office expenses, consisting mainly of costs of gaming and office supplies, guest supplies,
cleaning supplies, insurance, housekeeping supplies and team member expenses, decreased by
5.0 percent.

Outside services and charges

Outside services and charges was significantly higher in 2015 due to the acquisition of Jeju Sun.
This account pertains to the cost of professional and third party services which include, among
others, legal services, consultancy services, marketing services, security services, audit services,
landscaping services and maintenance and cleaning services.

Utilities
Utilities expenses are composed of electricity cost, water charges, fuel costs, gas, sewerage and
cost of air conditioning supplies. Utilities expenses for 2016 were relatively flat compared with
2015.

Cost of sales
Cost of sales consists mainly of food and beverage costs and buying costs of retail items. The
increase in 2016 is directly attributable to the increase in F&B and Retail revenues. Korean
operation contributed P23.6 million in cost of sales.

Rent
Rent consists mainly of lease rentals for the land and other real properties as well as casino,
office and other equipment.

Repairs and maintenance

The upkeep of the property and equipment is charged to this account, which includes the
maintenance of casino equipment, furniture and fixtures, computer equipment, curtains and
drapery, transportation equipment, electrical and mechanical equipment. Repairs and
maintenance increased by 33.4 percent after standard warranties on the Group’s machinery and
equipment had lapsed.

Provision for doubtful accounts

The Group evaluates provision for doubtful accounts based on a specific and collective review of
customer accounts as well as experience with collection trends in the gaming industry and current
economic and business conditions.

Communication and transportation

Communication and transportation represents cost of telephone and data communications, valet
services, fleet management services and shuttle services. Costs of business travels are also
charged to this account. The higher expense in 2016 was mainly due to the increase in executive
travel related to business and player development.

Other
Other expenses consist of miscellaneous expenses mainly pertaining to complimentary service
charges, representation, dues and subscriptions, freight charges, contract entertainment, trust
fees, donations and community service expenses, credit card commissions and bank charges.
This account increased by 6.62 percent due to the rationalization of representation and
entertainment expenses.

33
 EBITDA

Philippines
For 2016, Solaire generated an EBITDA of P11,173.8 million which represented an 87.4 percent
or P5,211.6 million increase from the same period last year due to the record breaking revenues
in all categories, significant reduction of provision for bad debts and maintaining operating costs
and expenses at the same level as last year.

Korea
The consolidated EBITDA was reduced by the P575.4 million negative EBITDA registered by
Solaire Korea and its subsidiary, Jeju Sun.

Below is the consolidated hold-normalized EBITDA comparison based on PAGCOR table

classification of original gaming tax rates (as stated in the Gaming License) effective July 1, 2016,
as follows:

a. Junket tables (VIP) - 15 percent of junket revenue

b. High roller tables (VIP) – 15 percent of high roller revenue*
c. Non-high roller tables (Mass tables) – 25 percent of non-high roller revenue*
d. Slots – 25 percent of slots revenue
* BRHI is also required to remit an additional 2% of casino revenues generated from non-junket operation
tables to a foundation devoted to the restoration of Philippine cultural heritage, as selected by the BRHI
and approved by PAGCOR.

For the Year Ended December 31

Change
In thousands, except % change data 2016 2015
Net Revenue 30,430,576 25,117,323 21.2%
EBITDA 10,598,519 5,182,397 104.5%
EBITDA Margin 34.8% 20.6% 1,420 bps
Hold-Normalized EBITDA* 12,099,461 5,459,655 121.6%
Hold-Normalized EBITDA Margin* 37.8% 21.6% 1,621 bps
* Hold-normalized EBITDA is based on 2.85% VIP hold. For 2015, the calculation was based on reduced gaming tax
st
with corporate income tax in the 1 half to be comparable with 2016 applicable gaming tax.

The reported VIP hold in the twelve 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 14.2
percent lower than hold-normalized EBITDA of P12.1 billion.

Provision for (Benefit From) Income Tax

In the twelve months of 2016, the Group recognized P1,659.1 million of provision for income tax
compared to P1,832.2 million for the same period in 2015. The decrease in current provision for
income tax is due to the new PAGCOR Board order effective July 1, 2016 to revert back to the
original gaming tax structure, which was affirmed by the Supreme Court’s decision granting
exemption of BRHI from corporate income tax on its gaming operation.

Net Income (Loss)

The consolidated net income of P2,323.1 million was a compelling turnaround, resulting in a
P5,698.3 billion swing, from a net loss of P3,375.3 million of the same period last year.

Philippine operations registered a net income of P3,459.9 million, which was P5,837.0 million
reversal from the net loss for the same period last year. The net income for the year was due to
higher EBITDA, and net foreign exchange gain. Net income was reduced by the Korean
operation which registered a P1,136.9 million net loss for the year.

34
Earnings (Loss) Per Share

The basic earnings per share of P0.214 for twelve months of 2016 was a significant positive
reversal from last year’s loss per share of P0.305. The basic and diluted earnings (loss) per
shares were the same after considering the shares granted under the stock incentive plan.

There are no other significant elements of income and expense outside the Company’s operating
results for the year ended December 31, 2016.

TRENDS, EVENTS OR UNCERTAINTIES AFFECTING RECURRING REVENUES AND

PROFITS

The Group is exposed to a number of trends, events and uncertainties, which can affect its
recurring revenues and profits from its casino and hotel operations. These include levels of
general economic activity, as well as certain cost items, such as labor, fuel and power. The
Group collects revenues in various currencies and the appreciation and depreciation of the US
dollar and other major currencies against the Philippine peso, may have a negative impact on the
Group’s reported levels of revenues and profits.

FINANCIAL CONDITION

The table below shows the consolidated condensed balance sheets as of December 31, 2018,
2017 and 2016:

Table 6.6 Balance Sheets

As of December 31 % Change % Change
In thousands, except % change data 2018 2017 2016 2018 vs 2017 2017 vs 2016
Current assets P40,466,064 P25,906,486 P18,515,777 56.2 39.9
Total assets 125,648,978 72,786,452 67,514,910 72.6 7.8
Current liabilities 19,000,603 11,974,865 10,485,675 58.7 14.2
Total interest-bearing debt 71,186,920 32,100,820 33,825,980 121.8 (5.1)
Total liabilities 89,087,875 42,501,101 43,370,434 109.6 (2.0)
Total equity 36,552,125* 30,256,435* 24,107,029* 20.8 25.5
*Total equity attributable to Equity Holders of the Parent Company

As of December 31
In thousands, except % change data 2018 2017 2016
Current assets/total assets 32.21% 35.59% 27.42%
Current ratio 2.13 2.16 1.77
1
Debt-equity ratio 2.44 1.40 1.80
2
Net debt-equity ratio 1.44 0.60 1.11
1
Debt includes all liabilities. Equity includes paid-up capital, equity reserves, share-based payment plan and retained earnings/deficit.
2
Net Debt includes all liabilities less cash and cash equivalents and restricted cash (current and noncurrent portion).

As of December 31, 2018, current assets were P40.5 billion, which was 56.2 percent higher than
current assets of P25.9 billion as of December 31, 2017. The increase was due to the P14.5
billion increase in cash and cash equivalents and P522.5 million increase in receivables.

The following summarizes the aging of the Group’s receivables as of December 31, 2018:

In thousands
Current P
= 1,940,278
90 Days 862,940
Over 90 Days 317,927
Total P
= 3,121,145

35
Total assets increased by 72.6 percent to P125.6 billion as of December 31, 2018 from
P72.8 billion as of December 31, 2017. The increase was attributable to higher levels of cash
and cash equivalents and additions to property and equipment with the acquisition of land where
Solaire is located from PAGCOR.

The P19.0 billion current liabilities as of December 31, 2018 were higher than the previous year
mainly because of the increase in outstanding chips, gaming tax and interest accruals.

Total liabilities increased from P42.5 billion as of December 31, 2017 to P89.1 billion as of
December 31, 2018. This increase was due to: a) higher level of current liabilities as mentioned
above; and b) the full drawdown of the new Syndicated Loan Facility.

Total equity as of December 31, 2018 amounted to P36.6 billion, 20.8 percent higher than the
P30.3 billion reported as of December 31, 2017. The increase was due to the net income
reported for 2018 amounting to P7.2 billion.

The table below shows the consolidated condensed balance sheets as of December 31, 2017,
2016 and 2015:

Balance Sheets
As of December 31 % Change % Change
In thousands, except % change data 2017 2016 2015 2017 vs 2016 2016 vs 2015
Current assets P25,906,486 P18,515,777 P18,239,037 39.9 1.5
Total assets 72,786,452 67,514,910 70,734,131 7.8 (4.6)
Current liabilities 11,974,865 10,485,675 14,270,889 14.2 (26.5)
Total interest-bearing debt 32,100,820 33,825,980 36,804,494 (5.1) (8.1)
Total liabilities 42,501,101 43,370,434 48,937,213 (2.0) (11.4)
Total equity 30,256,435* 24,107,029* 21,726,525* 25.5 11.0
*Total equity attributable to Equity Holders of the Parent Company

As of December 31
In thousands, except % change data 2017 2016 2015
Current assets/total assets 35.59% 27.42% 25.79%
Current ratio 2.16 1.77 1.28
1
Debt-equity ratio 1.40 1.80 2.25
2
Net debt-equity ratio 0.60 1.11 1.48
1
Debt includes all liabilities. Equity includes paid-up capital, equity reserves, share-based payment plan and retained earnings/deficit.
2
Net Debt includes all liabilities less cash and cash equivalents and restricted cash (current and noncurrent portion).

Current assets were higher by 39.9 percent to P25.9 billion as of December 31, 2017 from P18.5
billion as of December 31, 2016. The significant increase was attributable to a P7,635.9 million
increase in cash and cash equivalent, a P44.5 million increase in inventories, a P384.4 million
increase in prepayments and other current assets which was reduced by the P674.1 million
decrease in receivables.

Total assets increased by 7.8 percent to P72.8 billion as of December 31, 2017 from
P67.5 billion as of December 31, 2016. The increase was principally the result of increase in
current assets which partially decrease by the reduction in property, plant and equipment totaling
P2,020.8 million coming mainly from a P4,259.2 million in depreciation and amortization expense
for the year partially offset by P1,801.9 million in additions.

The P12.0 billion in current liabilities as of December 31, 2017 increased by 14.2 percent from the
beginning of the year mainly because of higher levels of outstanding chips, gaming tax payable
and customer’s deposits as well as the current portion of long-term debt. This was mitigated by
the reduction in trade accounts payable and construction accruals.

Total liabilities decreased from P43.4 billion as of December 31, 2016 to P42.5 billion as of
December 31, 2017. The higher level of current liabilities as mentioned above was offset by the
decrease in long-term debt resulting from the scheduled principal repayments of outstanding
long-term debt.

36
Total equity as of December 31, 2017 amounted to P30.3 billion, 25.5 percent higher compared
with P24.1 billion reported as of December 31, 2016. The increase was due to the net income
reported for 2017 amounting to P6,062.6 million.

MATERIAL VARIANCES AFFECTING THE BALANCE SHEET

Balance sheet accounts as of December 31, 2018 with variances of plus or minus 5.0 percent
against December 31, 2017 balances are discussed, as follows:

Current Assets

1. Cash and cash equivalents increased as of December 31, 2018 due to higher cash
generated by operations and the release of the funds in escrow.

2. Receivables increased due to additional credit approved to patrons and junket operators.

3. Inventories decreased by 9.1 percent mainly due to the decreased inventory level of
engineering items.

4. Prepaid expenses and other current assets decreased by 32.7 percent mainly due to
acquisition of land which caused the termination of the lease contract with PAGCOR
resulting to the closure of the prepaid rent account.

Noncurrent Assets

5. Property and equipment significantly increased with the purchase of land where Solaire
and its expansion area is located in Entertainment City from PAGCOR.

6. Other noncurrent assets increased due to increases in advances to contractors,

noncurrent portion of security deposit and revaluation of AFS.

7. Restricted cash decreased due to the release of funds in escrow held as collateral for the
Original and Expansion loan facilities which were fully paid.

Current Liabilities

8. Payables and other current liabilities increased by 83.1 percent primarily from gaming
related accounts due to the increase in gaming liabilities across all segments.

9. Current portion of long-term debt decreased because of the full payment of the
Corporate Notes and the Original and Expansion loan facilities after the Group
secured a new Syndicated Loan Facility with a longer maturity.

Noncurrent Liabilities

10. Noncurrent portion of long-term debt increased by 135.3 percent due to new Syndicated
Loan Facility amounting to P = 73.5 billion, part of which financed the full payment of the
outstanding principal of the Original Facility, the Expansion Facility and Corporate
Notes.

11. Retirement liability decreased by 14.4 percent due to remeasurement gain recognized
as a result of the periodic reevaluation of actuarial assumptions.

37
 12. The movement in other noncurrent liability mainly represents the effect of foreign
exchange translations and increases in deposits received from tenants.

Equity

13. Treasury shares increased by 48.1 percent due to additional acquisition of Bloomberry
shares to cover maturing SIP shares.

14. Share-based payment plan increased by 41.7 percent due to the recognition of current
period’s expense.

15. Other comprehensive income pertains to the net effect of the translation of the financial
statements of the Korean operation and unrealized gain on equity instrument designated
at fair value through other comprehensive income.

16. Retained earnings increased by 102.3 percent due to the net income reported in 2018
amounting to P= 7.2 billion which was partially offset by cash dividends declared in the
current year.

MATERIAL VARIANCES AFFECTING THE BALANCE SHEET

Balance sheet accounts as of December 31, 2017 with variances of plus or minus 5.0 percent
against December 31, 2016 balances are discussed, as follows:

Current Assets

1. Cash and cash equivalents increased as of December 31, 2017 mainly due to higher
cash generated by operations.

2. Receivables decreased because of the collection of receivables aged over 90 days.

3. Inventories increased by 16.1 percent mainly due to the increased inventory level of
engineering items.

4. Prepaid expenses and other current assets increased by 40.2 percent mainly due to
prepaid promo merchandise.

Noncurrent Assets

5. Deferred tax assets decreased as of December 31, 2017 due to the application of DTA to
the recognized DTL in 2017.

6. Intangible and other noncurrent assets decreased as of December 31, 2017 mainly due
to the advances to contractors and revaluation of intangible assets due to foreign
exchange translations and the impairment of goodwill and Jeju Sun’s casino license.

Current Liabilities

7. Payables and other current liabilities increased by 5.4 percent primarily from gaming
related accounts due to the increase in gaming liabilities across all segments.

8. Income tax payable increased due to accrual of minimum corporate income tax relative to
Parent Company’s interest income.

38
 9. Current portion of long-term debt increased because of higher additional principal due
within one year pertaining to the Original Facility, Expansion Facility and Corporate
Notes.

Noncurrent Liabilities

10. Long-term debt net of current portion, decreased by 8.5 percent to P29.4 billion as of
December 31, 2017 due to the reclassification to current portion.

11. The increase in deferred tax liability with the equivalent provision for income tax was the
tax effect of capitalized rent, interest and unrealized foreign exchange gain for the year.

12. Retirement liability increased to P449.6 million due to the accrual of pension cost based
on the latest actuarial valuation.

13. Other noncurrent liability pertains to the noncurrent portion of security deposits and
unearned revenue paid by tenant.

Equity

14. Treasury shares decreased by 41.7 percent due to the issuance of shares for vested SIP
shares.

15. Share-based payment plan increased by 104.0 percent this period because of the
recognition of the current period’s expense.

16. Other comprehensive loss pertains to the net effect of the translation of the financial
statement of Solaire Korea and its subsidiaries, remeasurement loss on defined benefit
plan and unrealized gain on AFS investment.

17. Retained earnings increased by 6,926.9 percent due to the net income reported for 2017
amounting to P6.1 million.

MATERIAL VARIANCES AFFECTING THE BALANCE SHEET

Balance sheet accounts as of December 31, 2016 with variances of plus or minus 5.0 percent
against December 31, 2015 balances are discussed, as follows:

Current Assets

1. Receivables were higher for the period by 5.1 percent mainly due to increase in hotel
receivables.

2. Inventories increased by 23.6 percent mainly due to the increased inventory level of
engineering items for repair and maintenance purposes.

3. Prepaid expenses and other current assets increased by 36.7% mainly due to increase in
prepaid rent, advances to suppliers, fund held in trust and creditable withholding tax.

4. The balance of prepaid income tax as of December 31, 2015 was applied against tax due
for the first nine months of 2016.

39
Noncurrent Assets

5. Property and equipment decreased by P3.1 billion principally due to the P4,694.8 million
in depreciation and amortization expense for the year partially offset by P1,480.6 million
in additions.

6. Intangible and other noncurrent assets decreased as of December 31, 2016 mainly due
to the amortization of uniforms and operating equipment.

Current Liabilities

7. Payables and other current liabilities were lower by 22.5 percent as of December 31,
2016 mainly due to the payment of gaming tax amounting to P1.2 billion and payment
on the remaining payables for the land acquisition amounting to P791 million.

8. Income tax payable increase due to accrual of minimum corporate income tax
expense to be paid in 2017.

9. Current portion of long-term debt represents principal amounts net of unamortized

debt discount issue cost, which are due in 2017.

Noncurrent Liabilities

10. Long-term debt net, of unamortized debt discount, decreased by 5.2 percent to
P32.1 billion as of December 31, 2016 due to the reclassification of long-term debt to
current portion.

11. The increase in deferred tax liability with the equivalent provision for income tax was
the tax effect of capitalized rent, interest and unrealized foreign exchange gain for the
year.

12. Retirement liability increased to P289.6 million due to the accrual of pension cost based
on the latest actuarial valuation.

13. Other noncurrent liability pertains to the noncurrent portion of security deposits and
unearned revenue paid by tenant.

Equity

14. Share-based payment plan increased by 62.1 percent this period because of the
recognition of current period’s expense. The decrease, however, was the result of the
application and recognition of the revenue for 2016.

15. Translation adjustment pertains to the net effect of the translation of the financial
statements of Solaire Korea and its subsidiaries.

16. Deficit made a turnaround to retained earnings due to net income reported for the year
attributable to the equity holders of the Parent Company amounting to P2,357.1 million.

40
Balance sheet accounts as of December 31, 2015 with variances of plus or minus 5.0 percent
against December 31, 2014 balances are discussed, as follows:

Current Assets

Cash and cash equivalents decreased as of December 31, 2015 mainly due to the acquisition
of Jeju Sun and the purchase of land in Muui and Silmi islands in Incheon, Korea and
purchase of land in Quezon City. The decrease was offset by P6.9 billion cash flows
generated by the operations in Solaire as well as P6.2 billion additional drawdowns from the
existing Expansion Facility.

Restricted cash decreased by P4.4 billion mainly due to fund transfers to operating and
project bank accounts.

Receivables were lower for the period by 31.2 percent due to additional provision for doubtful
accounts amounting to P2,568.7 million.

Inventories increased by 22.2 percent due mainly to the opening of Sky Tower, which
required additional amounts of operating supplies.

Prepaid expenses and other current assets decreased by 5.7% mainly due to the
amortization of prepaid items.

Prepaid income tax pertains to excess income tax payment of BRHI.

Noncurrent Assets

1. Property and equipment increased by P7.1 billion as a result of the completion of Sky
Tower and its turn over to Operations, the acquisition of Jeju Sun in Jeju Island, South
Korea; the purchase of land in Muui and Silmi islands, Incheon, South Korea and land in
Quezon City, Philippines.

2. Advances to contractors decreased by 80.0 percent because of the application of these

advances to billings from suppliers and contractor after the completion of Sky Tower.

3. Net deferred tax assets pertains to DTA on unused NOLCO and DTL on excess of fair
value over carrying value of Jeju Sun’s tangible and intangible assets recognized in the
acquisition of Jeju Sun.

4. Intangible and other noncurrent assets increased by 414.4 percent to P2.4 billion as of
December 31, 2015 mainly due to recognition of casino license from the acquisition of
Jeju Sun.

Current Liabilities

5. Payables and other current liabilities were higher than as of December 31, 2014 by 38.3
percent mainly because of the first time consolidation of Jeju Sun and Solaire Korea and
the remaining balance of the purchase price of property in Quezon City.

6. Current portion of long-term debt represents principal amounts net of unamortized debt
discount issue cost, which are due in 2015.

Noncurrent Liabilities

41
 7. Long-term debt net, of unamortized debt discount, increased by 12.9 percent to P36.8
billion as of December 31, 2015 due to the P6.2 billion additional drawdown from the
Expansion Facility.

8. The increase in deferred tax liability with the equivalent provision for income tax was the
tax effect of capitalized rent, interest and unrealized foreign exchange gain for the year.

9. Retirement liability increased to P226.9 million due to the accrual of pension cost based
on the latest actuarial valuation as well as the first time consolidation of Jeju Sun which,
contributed P134.3 million in retirement liability.

10. Other noncurrent liability pertains to the remaining balance of the holdback liability (net of
the indemnification asset), in relation to the acquisition of Jeju Sun.

Equity

11. Treasury shares increased by 179.4 percent because additional acquisition of

Bloomberry shares to cover maturing SIP shares.

12. Share-based payment plan increased by 27.0 percent this period because of the
recognition of current period’s expense.

13. Translation adjustment pertains to the net effect of the translation of the financial
statements of Jeju Sun.

Retained earnings decreased by 245.3 percent due to the net loss reported for the year of 2015
amounting to P3,375.3 million and the P551.6 million cash dividends declared in March 2015.

LIQUIDITY AND CAPITAL RESOURCES

This section discusses the Group’s sources and use of funds as well as its debt and equity
profile.

Liquidity

The table below shows the Group’s consolidated cash flows for the years ended December 31,
2018, 2017 and 2016:

Consolidated Cash Flows

For the Year
Ended December 31 % Change % Change
In thousands, except % change data 2018 2017 2016 2018 vs 2017 2017 vs 2016
Net cash provided by operating activities P22,526,774 P13,420,214 P6,352,541 67.9 111.3
Net cash used in investing activities (41,853,753) (1,832,414) (1,322,247) 2,184.1 38.6
Net cash provided by (used in) financing
33,765,585 (3,930,879) (5,437,461) (959.0) (27.7)
activities
Effect of exchange rate changes on cash
65,835 (21,026) 237,157 (413.1) (108.9)
and cash equivalents
Net increase (decrease) in cash and cash
14,504,441 7,635,896 (170,010) 90.0 (4,591.4)
equivalents
Cash and cash equivalents, beginning 21,961,407 14,325,511 14,495,521 53.3 (1.2)
Cash and cash equivalents, end P36,465,848 P21,961,407 P14,325,511 66.0 53.3

Cash and cash equivalents increased by 66.0 percent as of December 31, 2018 mainly due
P
= 22.7 billion cash flows generated by the operations in Solaire.

In 2018, the Group registered positive cash flows from operating activities of P
= 22.5 billion,
67.9 percent higher than the previous year. Due to better operational results from Solaire,

42
operating income before working capital changes increased by 20.6 percent.

Increase in net cash used in investing activities for 2018 was mainly due to the purchase of land
from PAGCOR in Entertainment City and minor construction projects.

For 2018, the Group’s financing activities consists mainly of proceeds from additional loan of
P
= 73.5 billion, payment of principal and interest payments totaling P
= 37.1 billion and payment of
cash dividends amounting to P = 1,101.8 billion.

The table below shows the Group’s consolidated cash flows for the years ended December 31,
2017, 2016 and 2015:

Consolidated Cash Flows

For the Year ended December 31 % Change % Change

In thousands, except % change data 2017 2016 2015 2017 vs 2016 2016 vs 2015

Net cash provided by operatinq activities P13,420,214 P6.352.541 P6.896.296 111.3 (7.9)

Net cash used in investinq activities (1,832.414) (1,322,247) (12,535,795) 38.6 (89.5)

Net cash provided by financinq activities (3,930.879) (5,437,461) 1,085.130 (27.7) (601.1)

(21.026) 237,157 (121,535) (108.9) (295.1)

Effect of exchange rate changes on cash
and cash equivalents

7.635.896 (170,010) (4,675,904) (4,591.4) (96.4)

Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents, beginning 14.325.511 14,495,521 19,171,425 (1-2) (24.4)

Cash and cash equivalents, end P21.961.407 P14,325,511 P14,495,521 53.3 (1.2)

Cash and cash equivalents increased by 53.3 percent as of December 31, 2017 mainly due
P
= 13.3 billion cash flows generated by the Group which was offset by additional acquisition of
property and equipment and partial principal repayment of the Original Facility. Expansion,
Corporate Notes and interest.

In 2017. the Group managed to register positive cash flows from operating activities of
P
= 13.3 billion. 110.1 percent higher than last year. Due to better operational results from Solaire.
operating income before working capital changes increased by 42.4 percent.

Investing activities for 2017 in Solaire mainly represented additional acquisition of property and
equipment and minor construction projects.

In 2017 the Group's financing activities were mainly the repayment of principal of the Group's
outstanding long-term debt and interest totaling P
= 3.9 billion.

Capital Resources

The table below shows the Group’s capital sources as of December 31, 2018, 2017 and 2016:
Capital Sources
As of December 31 % Change % Change
In thousands, except % change data 2018 2017 2016 2018 vs 2017 2017 vs 2016
Long-term debt – net P71,186,920 P32,100,820 P33,825,980 121.8 (5.1)
Equity* 36,552,125 30,256,435 24,107,029 20.8 25.5
Total Capital P107,739,045 P 62,357,254 P57,933,009 72.8 7.6
*Attributable to equity holders of the Parent Company

Total debt and equity increased by 72.8 percent to P

= 107.5 billion as of December 31, 2017 from

43
P
= 62.4 billion as of December 31, 2017. The increase was due to the P = 7.2 billion net income in
2018 and the proceeds of the P = 73.5 billion new Syndicated Loan Facility reduced by the P = 31.7
billion full payment of the outstanding principal of the Group’s old debt facilities.

Please refer to Note 12 of the Notes to Audited Consolidated Financial Statements for the
discussion on debt financing, covenants and collaterals.

The table below shows the Group's capital sources as of December 31, 2017, 2016 and 2015:

Capital Sources

As of December 31 % Change % Change

In thousands, except % change data 2017 2016 2015 2017 vs 2016 2016 vs 2015

Long-term debt – net P32.100.820 P33,825,980 P36,804,494 (5.1) (8.1)

Equity* 30.256.435 24,107.029 21,726.525 25.5 11.0

Total Capital P62.357.254 P57,933,009 P58,531,019 7.6 (10)

'Attributable to equity holders of the Parent Company

Total debt and equity increased by 7.6 percent to P= 62.4 billion as of December 31, 2017 from
P
= 57.9 billion as of December 31, 2016. The increase was the result of the combined effect of the
P
= 6.1 billion net income for 2017 reduced by P
= 1.8 billion partial repayment of principal of the
outstanding loan facilities of the Group.

RISKS

The future operations of the Group shall be exposed to various market risks, particularly foreign
exchange risk, interest rate risk and liquidity risk, which movements may materially impact the
future financial results and conditions of the Group. The importance of managing these risks has
significantly increased in light of the volatility in the Philippine and international financial markets.
With a view to managing these risks, the Group has incorporated a financial risk management
function in its organization, particularly in the treasury operations.

Please refer to Note 21 of the Notes to Audited Consolidated Financial Statements for the
discussion on Financial Assets and Liabilities and Financial Risk Management Objectives and
Policies.

Consolidated Financial Statements

The Company’s financial statements and accompanying notes are incorporated herein by
reference.

Corporate Governance

The Company, its Board of Directors, officers and employees strive, through good corporate
governance, to enhance the value of the Company and optimize over time the returns to its
shareholders by:

a. Sound, prudent, and effective management,

b. Efficient and effective management information system,
c. Effective risk management,
d. Reliable financial and operational information,

44
 e. Cost effective and profitable business operations, and
f. Compliance with laws, rules, regulations and contracts.

The following are measures that the Company has undertaken or will undertake to fully comply
with the adopted leading practices on good governance:

1. Manual of Corporate Governance

On May 30, 2017, the Board approved a new Manual of Corporate Governance of the
Company. Our Compliance Officer will continue to coordinate with the Philippine SEC
with respect to compliance requirements, monitor compliance with the manual and report
any governance-related issues to the Board. The Company commits itself to principles
and best practices of governance in the attainment of corporate goals.

2. Board of Directors
Bloomberry’s Board has the expertise, professional experience, and background that
allow for a thorough examination and deliberation of the various issues and matters
affecting the Group. The Board is responsible for the Company’s overall management
and direction. The Board will meet regularly on a quarterly basis, or more frequently as
required, to review and monitor the Company’s project development, future results of
operations and financial position. Bloomberry’s Amended Articles of Incorporation provide
that the Board shall consist of seven (7) directors where two (2) members are
Independent Directors: Mr. Carlos C. Ejercito and retired Justice Jose P. Perez and.
except for Mr. Enrique K. Razon, Jr. and Mr. Thomas Arasi, all members of the Board are
non-executive Directors.

Bloomberry’s directors are elected at the Annual Stockholders’ Meeting. They shall hold
office until the next succeeding annual meeting and until their respective successors
have been elected and qualified.

The Attendance of the Directors in the 2018 Board Meetings are as follows:
11 December
21 March

10 April

25 April

5 June
4 April

Name

Enrique K. Razon, Jr P P P P P P
Jose Eduardo J. Alarilla P P P P P P
Christian R. Gonzalez P P P P P A
Donato C. Almeda P P P P P P
Carlos C. Ejercito P P P P P P
Jon Ramon M. Aboitiz P P P P P A
Thomas Arasi P P P P P P
P – Present A – Absent
1
Organizational Meeting of the BOD

The directors and key officers of the Company attended the corporate governance
seminar held on various dates from August 15, 2018 to November 22, 2018.

3. Audit Committee
The Company’s Audit Committee is responsible for assisting the Board in its fiduciary
responsibilities by providing an independent and objective assurance to its management
and stockholders of the continuous improvement of its risk management systems,
business operations and the proper safeguarding and use of the resources and assets of
its operating subsidiaries. It provides a general evaluation and assistance in the overall
improvement of its risk management, control and governance processes. The Committee
is composed of three (3) Board members, including one (1) independent director who

45
 serves as the committee chairman. The Committee reports to its Board and is required to
meet at least four (4) times a year. As of the date of this report, the Audit Committee
Chairman is Mr. Carlos C. Ejercito who serves with Mr. Christian R. Gonzalez as
member.

The 2018 attendance of the audit committee are as follows:

No of Meeting No. of Length of

Date of Held During the Meetings Service
Office Name Election year Attended %
Chairman Carlos C. Ejercito 6/5/2018 5 5 100% 59 Months
Member Christian R. Gonzalez 6/5/2018 5 5 100% 59 months
Member Jon Ramon Aboitiz1 6/5/2018 5 1 20% 57 months
1
Passed away on 30 November 2018.

4. Nomination Committee
The Board organized the Nomination Committee to review and evaluate the qualifications
of all persons nominated to the Board and other appointments that require Board
approval and to assess the effectiveness of the Board’s processes and procedures in the
election or replacement of directors. As of the date of this report, the Nomination
Committee Chairman is Mr. Enrique K. Razon, Jr. who serves with Mr. Jose Eduardo J.
Alarilla and Mr. Christian R. Gonzalez as members.

5. Compensation and Remuneration Committee

A Compensation and Remuneration Committee was organized by the Board to establish
a formal and transparent procedure for developing a policy on remuneration of directors
and officers to ensure that their compensation is consistent with the Company’s culture,
strategy and the business environment in which it operates. As of the date of this report,
the Compensation and Remuneration Committee Chairman is Mr. Eduardo J. Alarilla,
who serves with Mr. Carlos C. Ejercito and Ms. Estella T. Occeña as members. The
Chairman and members of the Compensation and Remuneration Committee are likewise
the chairman and members of the Stock Incentive Plan Committee.

6. Executive Officers
Bloomberry’s Management Team in the operating subsidiaries (BRHI and SPI), will be
responsible for the day-to-day management and operations of the casino and hotel. The
registered address of the Company’s executive officers for the moment is The Executive
Offices, Solaire Resort & Casino, Asean Avenue, Entertainment City, Tambo, Parañaque
City, Philippines.

7. Independent Audit
Part of the Company’s organizational structure is the Internal Audit Department (IAD). Its
purpose, authority and responsibilities is defined in the Audit Charter, consistent with the
definition of Internal Auditing, IIA Code of Ethics and the International Standards for the
Professional Practice of Internal Auditing. The Audit Charter will be subject to the
approval of the President and the Audit Committee. To ensure its independence, the IAD
functionally reports to the Audit Committee of the Board.

8. Management and Reporting Structure

The Board together with the management in the operating subsidiaries has developed a
reporting structure based on the approved organizational structure of the hotel and
casino operation. The reporting structure, which clearly segregates the different
operations and functions, defines the responsibilities of each department and
incorporates the proper check and balance within the organization.

46
 9. Continuing Improvements for Corporate Governance

Bloomberry will continue to improve its corporate governance, systems and processes to
enhance adherence to practices of good corporate governance.

MARKET FOR ISSUER’S COMMON EQUITY AND RELATED STOCKHOLDER

MATTERS

Market Information

Principal Market where Company’s shares are traded: Philippine Stock Exchange

As of the latest practicable trading date on 28 February 2018 the share prices of the Company
were:

Price/Share
Open: 12.1
High: 12.1
Low: 11.4
Close: 11.4

The high and low share prices for each quarter within the last two years are:

Calendar Period High Low

2016
Quarter 1 5.40 2.90
Quarter 2 6.75 4.00
Quarter 3 7.00 4.50
Quarter 4 6.95 4.37
2017
Quarter 1 8.15 5.88
Quarter 2 10.48 7.94
Quarter 3 11.94 8.71
Quarter 4 11.26 9.24
2018
Quarter 1 10.70 14.86
Quarter 2 9.52 14.52
Quarter 3 7.98 11.12
Quarter 4 7.30 9.84

Holder
The number of stockholders of record as of the latest practicable date on February 28, 2019 was
87 excluding shares under PCD Nominees. Shares outstanding as of the same date were
11,008,675,899 shares which are all listed at the PSE.

The following are the Company’s top 20 registered stockholders holding listed and unlisted
shares as of February 28, 2019:

Name No. of Shares Held % of Total

1. Prime Metroline Holdings, Inc. 5,935,972,444 53.80%
2. PCD Nominee Corporation (Non-Filipino) 3,131,905,709 28.45%
3. Quasar Holdings, Inc. 921,184,056 8.35%

47
4. PCD Nominee Corporation (Filipino) 674,770,519 6.13%
5. Falcon Investco Holdings Inc. 225,000,000 2.04%
6. Enrique K. Razon, Jr. 31,232,832 0.28%
7. Thomas Arasi 4,994,191 0.05%
8. Estella T. Occeña 3,150,100 0.03%
9. Nossahead Management Inc. 2,018,256 0.02%
10. Lesothea Management Inc. 2,018,256 0.02%
11. Ondareta Management Inc. 1,651,588 0.01%
12. Real Sociedad Management Inc. 1,651,588 0.01%
13. Hock Seng Yeo 1,500,000 0.01%
14. Sherafat, Cyrus 1,489,943 0.01%
15. Alarilla, Jose Eduardo J. 1,326,889 0.01%
16. Almeda, Donato C. 1,326,502 0.01%
17. Chadbrad Management Inc. 833,400 0.01%
18. Croker Island Management Inc 833,300 0.01%
19. Willy O. Dizon or Nene C. Dizon 640,000 0.00%
20. Medy Chua See 250,000 0.00%

As of December 31, 2018, the public ownership level of the Company is at 35.27%.

Dividends

On April 10, 2018, the Board declared a P0.10 cash dividend per share to stockholders of Record
Date April 24, 2018and was paid on April 30, 2018.

Recent Sales of Unregistered or Exempt Securities/ Exempt Transactions

None.

48
 ANNEX "B"

COVER SHEET
for
AUDITED FINANCIAL STATEMENTS

SEC Registration Number

A 1 9 9 9 0 4 8 6 4

COMPANY NAME

B L O O M B E R R Y R E S O R T S C O R P O R A T I O N

A N D S U B S I D I A R I E S

PRINCIPAL OFFICE ( No. / Street / Barangay / City / Town / Province )

T h e E x e c u t i v e O f f i c e s , S o l a i r e

R e s o r t & C a s i n o , 1 A s e a n A v e n u

e , E n t e r t a i n m e n t C i t y , T a m b o ,
P a r a ñ a q u e C i t y

Form Type Department requiring the report Secondary License Type, If Applicable

1 7 - A C R M D -

COMPANY INFORMATION
Company’s Email Address Company’s Telephone Number Mobile Number

- 888-8888 -

No. of Stockholders Annual Meeting (Month / Day) Fiscal Year (Month / Day)

98 Every Third Thursday of April December 31

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation
Name of Contact Person Email Address Telephone Number/s Mobile Number
Gerard Angelo Emilio J. Festin [email protected]
883-8921 -

CONTACT PERSON’s ADDRESS

The Executive Offices, Solaire Resort & Casino, 1 Asean Avenue, Entertainment City, Tambo
Parañaque City
NOTE 1 : In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within
thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.
2 : All Boxes must be properly and completely filled-up. Failure to do so shall cause the delay in updating the corporation’s records with the Commission
and/or non-receipt of Notice of Deficiencies. Further, non-receipt of Notice of Deficiencies shall not excuse the corporation from liability for its deficiencies.

*SGVFS032986*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

The Stockholders and the Board of Directors

Bloomberry Resorts Corporation
The Executive Offices, Solaire Resort & Casino
1 Asean Avenue, Entertainment City, Tambo
Parañaque City

Opinion

We have audited the consolidated financial statements of Bloomberry Resorts Corporation and its
subsidiaries (the Group), which comprise the consolidated statements of financial position as at
December 31, 2018 and 2017, and the consolidated statements of comprehensive income, consolidated
statements of changes in equity and consolidated statements of cash flows for each of the three years in
the period ended December 31, 2018, and notes to the consolidated financial statements, including a
summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at December 31, 2018 and 2017, and its consolidated
financial performance and its consolidated cash flows for each of the three years in the period ended
December 31, 2018 in accordance with Philippine Financial Reporting Standards (PFRSs).

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics)
together with the ethical requirements that are relevant to our audit of the consolidated financial
statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our assessment of
the risks of material misstatement of the consolidated financial statements. The results of our audit
procedures, including the procedures performed to address the matters below, provide the basis for our
audit opinion on the accompanying consolidated financial statements.

*SGVFS032986*
A member firm of Ernst & Young Global Limited
 -2-

Adoption of PFRS 15, Revenue from Contracts with Customers

Effective January 1, 2018, the Group adopted the new revenue recognition standard, PFRS 15, Revenue
from Contracts with Customers, under the full retrospective approach. The adoption of PFRS 15 resulted
in changes in the Group’s revenue process and revenue recognition accounting policy. The following
matters are significant to our audit because these involve application of significant judgment and
estimate: (1) identification of the contract for gaming services in the application of PFRS 15 guidance;
(2) identification of performance obligations; (3) determination of the transaction price; and (4) allocation
of the transaction price to the performance obligations.

The Group applied PFRS 15 guidance to a portfolio of contracts with similar characteristics as the entity
reasonably expects that the effects on the consolidated financial statements of applying this guidance to
the portfolio would not differ materially from applying this guidance to the individual contracts within
that portfolio. Hence, the Group viewed a gaming day as one contract. In determining the performance
obligations in the contract, the Group considers as separate performance obligation the promotional
merchandise provided to patrons as part of marketing activities; and incentives granted in conjunction
with the gaming activity. In determining the transaction price, the Group considers the effect of rebates
paid through gaming promoters. In the allocation of the transaction price, the Group considers the
amount at which the entity would sell or purchase the promotional merchandise or incentives separately
as the stand-alone selling price of the performance obligations. The adoption of PFRS 15 resulted to
transition adjustments involving reclassifications in the revenue and costs recognized in the consolidated
statements of comprehensive income in 2017 and 2016.

The disclosures related to the adoption of PFRS 15 are included in Notes 2, 3 and 16 to the consolidated
financial statements.

Audit Response

We obtained an understanding of the Group’s revenue recognition process, including the process of
implementing the new revenue recognition standard. We reviewed the PFRS 15 adoption impact
assessment prepared by management, including revenue streams identification and scoping and contract
identification.

For the identification of contract in the application of PFRS 15 guidance, we assessed the practicability of
monitoring the play of each patron and the effect of applying PFRS 15 guidance on a portfolio basis
considering our understanding of the Group’s operations. For the determination of performance
obligations in the contract, we obtained an understanding of the nature of the promotional merchandise
provided to patrons as part of marketing activities and the incentives provided to patrons in conjunction
with the gaming activity on a discretionary and non-discretionary basis. For the determination of the
transaction price, we obtained an understanding of the rebates paid through gaming promoters, including
the judgment and determination of consideration to which the Group is entitled using all available
information, and checked the amounts paid to gaming promoters through inspection of settlement
documents. We tested the stand-alone selling prices of the promotional merchandise and incentives
against market prices and checked the allocation of the transaction price to the different performance
obligations.

We reviewed the transition adjustments and evaluated the disclosures made in the financial statements on
the adoption of PFRS 15.

*SGVFS032986*
A member firm of Ernst & Young Global Limited
 -3-

Adequacy of Allowance for Doubtful Accounts on Gaming Receivables upon Adoption of PFRS 9,
Financial Instruments

On January 1, 2018, the Group adopted PFRS 9, Financial Instruments. PFRS 9, which replaced PAS 39,
Financial Instruments: Recognition and Measurement, introduces a forward-looking expected credit loss
model to assess impairment on debt financial assets not measured at fair value through profit or loss. The
Group adopted the modified retrospective approach in adopting PFRS 9.

The Group’s adoption of the expected credit loss (ECL) model in calculating the allowance for doubtful
accounts of its gaming receivables is significant to our audit as it involves the exercise of significant
management judgment. Key areas of judgment include: segmenting the Group’s credit risk exposures;
defining default; determining assumptions to be used in the ECL model such as timing and amounts of
expected net recoveries from defaulted accounts; and incorporating forward-looking information (called
overlays) in calculating ECL.

The disclosures on the allowance for doubtful accounts are included in Notes 2, 3 and 5 to the
consolidated financial statements.

Audit Response

We obtained an understanding of the methodologies and models used for the Group’s different credit
exposures and assessed whether these considered the requirements of PFRS 9 to reflect an unbiased and
probability-weighted outcome, the time value of money, and the best available forward-looking
information.

We (a) assessed the Group’s segmentation of its credit risk exposures based on homogeneity of credit risk
characteristics; (b) tested the definition of default against historical analysis of accounts and credit risk
management policies and practices in place, (c) tested historical loss rates by inspecting historical
recoveries and write-offs; (d) checked the classification of outstanding exposures to their corresponding
aging buckets; and (e) checked the forward looking information used for overlay through statistical test
and corroboration using publicly available information and our understanding of the Group’s receivable
portfolios and industry practices.

Further, we checked the data used in the ECL models, such as the historical collection analysis and
default and recovery data, by examining the supporting documents for credits granted to patrons and their
subsequent settlement and performing an analysis of gaming receivables’ aging buckets. We checked
subsequent collections and performed inquiry with the Casino Credit and International Marketing
representatives on the status of collections. To the extent that the loss allowance analysis is based on
credit exposures that have been disaggregated into subsets with similar risk characteristics, we traced or
re-performed the disaggregation from source systems to the loss allowance analysis.

We recalculated impairment provisions on a sample basis. We checked the transition adjustments and
reviewed the disclosures made in the financial statements based on the requirements of PFRS 9.

*SGVFS032986*
A member firm of Ernst & Young Global Limited
 -4-

Recoverability of Goodwill and Casino License

The Group’s goodwill and casino license, arising from the acquisition of Golden & Luxury Co., Ltd. in
2015 amounted to = P1,959.1 million as of December 31, 2018. Under PFRSs, the Group is required to
annually test goodwill and any intangible asset with an indefinite useful life, specifically the casino
license, for impairment. The Group’s goodwill and casino license are allocated to a single cash
generating unit (CGU), i.e., casino-hotel business. Management’s impairment assessment involved the
measurement of the recoverable amount of the Group’s casino-hotel business where goodwill and casino
license are attributable. The recoverable amount was measured using the higher of fair value less costs of
disposal (FVLCD) or value in use (VIU) calculation as of reporting date. The exercise requires
significant judgment and estimates related to the determination of weighted average prices from
comparable transactions and costs of disposal for FVLCD calculation and to the CGU’s prospective
financial information, which includes assumptions on revenue growth rates, long-term growth rate and
discount rate, for VIU calculation. Given the significance of the key assumptions used in estimating the
CGU’s recoverable amount where goodwill and casino license are allocated, we considered this as a key
audit matter.

The disclosures on goodwill and casino license are included in Notes 3 and 10 to the consolidated
financial statements.

Audit response

We involved our valuation specialist to assist in evaluating the methodologies and key assumptions used
by the Group in the impairment testing analysis. The inputs and assumptions include the weighted
average prices from comparable transactions and costs of disposal for FVLCD calculation and the
composition of estimates of future cash flows, including assumed growth rates, terminal value calculation
including long-term growth rate, and discount rate for VIU calculation. We compared the key
assumptions used against the historical performance of the CGU and other relevant external data. We
tested the parameters used in the determination of the discount rate against market data. We also
reviewed the Group’s disclosures about those assumptions to which the outcome of the impairment test is
most sensitive, specifically those that have the most significant effect on the determination of the
recoverable amount of goodwill and casino license.

Provisions and Contingencies

The Group is involved in certain legal proceedings. This matter is significant to our audit because the
determination of whether the provision should be recognized and the estimation of the potential liability
resulting from these legal proceedings require significant judgment by management. The inherent
uncertainty over the outcome of these legal matters is brought about by the differences in the
interpretation and implementation of the relevant laws. We considered this as a key audit matter.

The disclosures on contingencies are discussed in Notes 3 and 19 to the consolidated financial statements.

*SGVFS032986*
A member firm of Ernst & Young Global Limited
 -5-

Audit Response

Our audit procedures focused on the evaluation of management’s assessment on whether any provision
for contingencies should be recognized and the estimation of such amount. We discussed with
management the status of the legal proceedings and obtained opinions from the Group’s external legal
counsels, whose professional qualifications and objectivity were also evaluated. We evaluated the
position of the Group by considering the relevant laws and jurisprudence.

Other Information

Management is responsible for the other information. The other information comprises the
SEC Form 17-A for the year ended December 31, 2018 but does not include the consolidated financial
statements and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report,
and the SEC Form 20-IS (Definitive Information Statement) and Annual Report for the year ended
December 31, 2018, which are expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audits, or
otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with PFRSs, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

*SGVFS032986*
A member firm of Ernst & Young Global Limited
 -6-

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with PSAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

∂ Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

∂ Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

∂ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

∂ Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.

∂ Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

∂ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the audit. We remain solely
responsible for our audit opinion.

*SGVFS032986*
A member firm of Ernst & Young Global Limited
 -7-

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Christine G. Vallejo.

SYCIP GORRES VELAYO & CO.

Christine G. Vallejo
Partner
CPA Certificate No. 99857
SEC Accreditation No. 1402-AR-1 (Group A),
March 2, 2017, valid until March 1, 2020
Tax Identification No. 206-384-906
BIR Accreditation No. 08-001998-105-2017,
January 31, 2017, valid until January 30, 2020
PTR No. 7332623, January 3, 2019, Makati City

March 4, 2019

*SGVFS032986*
A member firm of Ernst & Young Global Limited
BLOOMBERRY RESORTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31
2018 2017
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 21) P
=36,465,847,957 =21,961,406,978
P
Receivables (Notes 5, 13, 16, 18 and 21) 2,805,958,496 2,283,423,748
Inventories (Note 6) 291,573,331 320,836,366
Prepayments and other current assets (Notes 7, 18, 19 and 21) 902,684,435 1,340,818,517
Total Current Assets 40,466,064,219 25,906,485,609
Noncurrent Assets
Property and equipment (Notes 9 and 12) 82,699,866,703 42,470,677,934
Intangible assets (Note 10) 1,959,046,027 1,942,408,693
Restricted cash (Notes 8 and 21) – 2,250,906,354
Other noncurrent assets (Notes 10 and 21) 524,001,443 215,972,935
Total Noncurrent Assets 85,182,914,173 46,879,965,916
P
=125,648,978,392 =72,786,451,525
P

LIABILITIES AND EQUITY

Current Liabilities
Payables and other current liabilities (Notes 11, 16, and 21) P
=16,928,855,982 P9,245,936,992
=
Current portion of long-term debt (Notes 12 and 21) 2,068,149,254 2,727,330,526
Income tax payable 3,597,310 1,597,045
Total Current Liabilities 19,000,602,546 11,974,864,563
Noncurrent Liabilities
Long-term debt - net of current portion (Notes 12 and 21) 69,118,770,432 29,373,489,070
Deferred tax liabilities - net (Note 20) 245,160,354 401,378,947
Retirement liability (Note 14) 384,884,739 449,557,616
Other noncurrent liabilities (Notes 18 and 21) 338,456,494 301,810,617
Total Noncurrent Liabilities 70,087,272,019 30,526,236,250
Total Liabilities 89,087,874,565 42,501,100,813
Equity Attributable to Equity Holders of the Parent Company
Capital stock (Note 15) 11,032,998,225 11,032,998,225
Additional paid-in capital (Note 15) 13,166,895,086 13,141,571,978
Equity reserve (Note 2) (27,138,558) (27,138,558)
Cost of shares held by a subsidiary (see Note 15) (9,269,647) –
Treasury shares (Note 15) (185,406,175) (125,192,149)
Share-based payment plan (Note 15) 226,349,792 159,743,028
Other comprehensive income (loss) (Notes 10 and 14) 18,065,308 (18,821,215)
Retained earnings (Note 15) 12,329,630,590 6,093,273,408
Total Equity Attributable to Equity Holders
of the Parent Company 36,552,124,621 30,256,434,717
Equity Attributable to Non-controlling Interests 8,979,206 28,915,995
Total Equity 36,561,103,827 30,285,350,712
P
=125,648,978,392 =72,786,451,525
P

See accompanying Notes to Consolidated Financial Statements.

*SGVFS032986*
BLOOMBERRY RESORTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31

2017 2016
(As restated - (As restated -
2018 Note 2) Note 2)

REVENUES
Gaming (Notes 3, 16, and 19) P
=31,605,445,445 P
=27,041,155,050 P
=23,118,609,481
Hotel, food and beverage (Notes 3 and 16) 3,760,663,461 3,727,286,239 3,023,610,171
Retail and others (Notes 3, 16 and 18) 2,854,117,177 2,253,252,537 1,447,992,595
38,220,226,083 33,021,693,826 27,590,212,247

OPERATING COSTS AND EXPENSES (Note 17) 27,096,192,238 25,094,171,249 21,890,765,345

INCOME BEFORE OTHER INCOME (EXPENSES)

AND INCOME TAX 11,124,033,845 7,927,522,577 5,699,446,902

OTHER INCOME (EXPENSES)

Interest expense (Notes 11, 12, 17 and 18) (4,581,927,053) (2,151,548,585) (2,223,313,044)
Foreign exchange gains - net (Note 21) 357,712,255 882,235,472 482,392,935
Interest income (Notes 4, 5, 8 and 17) 141,076,096 66,175,264 44,030,573
Others (Notes 9, 10, 12 and 17) (1,554,869) (429,134,443) (20,408,783)
(4,084,693,571) (1,632,272,292) (1,717,298,319)

INCOME BEFORE INCOME TAX 7,039,340,274 6,295,250,285 3,982,148,583

PROVISION FOR (BENEFIT FROM) INCOME TAX

(Notes 19 and 20) (126,489,216) 232,632,503 1,659,083,148

NET INCOME 7,165,829,490 6,062,617,782 2,323,065,435

OTHER COMPREHENSIVE INCOME (LOSS)

Items that will be reclassified to profit or loss in subsequent years:
Exchange difference on translation of foreign operations 30,831,523 (4,953,395) 4,182,417
Unrealized gain on equity instrument designated at fair value
through other comprehensive income (Note 10) 8,650,000 2,850,000 –
Income tax effect (2,595,000) (855,000) –
36,886,523 (2,958,395) 4,182,417
Items that will not be reclassified to profit or loss in subsequent years:
Remeasurement gain (loss) (Note 14) 162,626,262 (67,637,458) (16,963,379)
Income tax effect (8,735,536) 3,049,699 (1,161,302)
153,890,726 (64,587,759) (18,124,681)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 190,777,249 (67,546,154) (13,942,264)

TOTAL COMPREHENSIVE INCOME P

=7,356,606,739 P
=5,995,071,628 P
=2,309,123,171

Net Income (Loss) Attributable To

Equity holders of the Parent Company P
=7,188,233,443 =
P6,070,718,652 =
P2,357,140,560
Non-controlling interests (22,403,953) (8,100,870) (34,075,125)
P
=7,165,829,490 P
=6,062,617,782 =
P2,323,065,435

Total Comprehensive Income (Loss) Attributable To

Equity holders of the Parent Company P
=7,376,543,528 =
P6,003,601,750 =
P2,343,632,903
Non-controlling interests (19,936,789) (8,530,122) (34,509,732)
P
=7,356,606,739 P
=5,995,071,628 P
=2,309,123,171

Earnings Per Share on Net Income Attributable to Equity Holders

of the Parent Company (Note 22)
Basic P
=0.652 P
=0.551 P
=0.214
Diluted P
=0.651 P
=0.549 P
=0.214

See accompanying Notes to Consolidated Financial Statements.

*SGVFS032986*
BLOOMBERRY RESORTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016

Equity Attributable to Equity Holders of the Parent Company Equity

Cost of shares Other Attributable to
Additional Equity held by a Treasury Share-based Comprehensive Retained Non-controlling
Capital Stock Paid-in Capital Reserve subsidiary Shares Payment Plan Income (Loss) Earnings Total Interests Total Equity
Balances at January 1, 2018 P
= 11,032,998,225 P
= 13,141,571,978 (P
=27,138,558) P
=– (P
=125,192,149) P
= 159,743,028 (P
=18,821,215) P
= 6,093,273,408 P
= 30,256,434,717 P
= 28,915,995 P= 30,285,350,712
Net income – – – – – – – 7,188,233,443 7,188,233,443 (22,403,953) 7,165,829,490
Remeasurement gain on defined benefit plan (Note 14) – – – – – – 151,423,562 – 151,423,562 2,467,164 153,890,726
Exchange difference on translation of foreign operations – – – – – – 30,831,523 – 30,831,523 – 30,831,523
Unrealized gain on equity instrument designated at fair value
through other comprehensive income (Note 10) – – – – – – 6,055,000 – 6,055,000 – 6,055,000
Total comprehensive income (loss) – – – – – – 188,310,085 7,188,233,443 7,376,543,528 (19,936,789) 7,356,606,739
Dividend declaration (Note 15) – – – – – – – (1,103,299,823) (1,103,299,823) – (1,103,299,823)
Share-based payments (Note 15) – – – – – 220,722,540 – – 220,722,540 – 220,722,540
Purchase of treasury shares (Note 15) – – – – (189,006,694) – – – (189,006,694) – (189,006,694)
Issuance of treasury shares for share-based
payments (Note 15) – 25,323,108 – – 128,792,668 (154,115,776) – – – – –
Purchase of Bloomberry shares by a subsidiary (Note 15) – – – (34,656,827) – – – – (34,656,827) – (34,656,827)
Issuance of Bloomberry shares held
by a subsidiary (Note 15) – – – 25,387,180 – – – – 25,387,180 – 25,387,180
Remeasurement gain on defined benefit plan transferred
to retained earnings – – – – – – (151,423,562) 151,423,562 – – –
Balances at December 31, 2018 P
= 11,032,998,225 P
= 13,166,895,086 (P
=27,138,558) (P
=9,269,647) (P
=185,406,175) P
= 226,349,792 P
= 18,065,308 P
= 12,329,630,590 P
= 36,552,124,621 P
= 8,979,206 P
= 36,561,103,827

Balances at January 1, 2017 =11,032,998,225 P

P =13,166,617,236 (P
=27,138,558) P–
= (P
=214,589,978) =78,291,899
P (P
=15,862,820) =86,713,263 =
P P24,107,029,267 =37,446,117 =
P P24,144,475,384
Net income – – – – – – – 6,070,718,652 6,070,718,652 (8,100,870) 6,062,617,782
Remeasurement loss on defined benefit plan (Note 14) – – – – – – (64,158,507) – (64,158,507) (429,252) (64,587,759)
Exchange difference on translation of foreign operations – – – – – – (4,953,395) – (4,953,395) – (4,953,395)
Unrealized gain on equity instrument designated at fair value
through other comprehensive income (Note 10) – – – – – – 1,995,000 – 1,995,000 – 1,995,000
Total comprehensive income (loss) – – – – – – (67,116,902) 6,070,718,652 6,003,601,750 (8,530,122) 5,995,071,628
Issuance of treasury shares for share-based
payments (Note 15) – (25,045,258) – – 89,397,829 (64,352,571) – – – – –
Share-based payments (Note 15) – – – – – 145,803,700 – – 145,803,700 – 145,803,700
Remeasurement loss on defined benefit plan transferred to
retained earnings – – – – – – 64,158,507 (64,158,507) – – –
Balances at December 31, 2017 =11,032,998,225 P
P =13,141,571,978 (P
=27,138,558) P–
= (P
=125,192,149) =159,743,028
P (P
=18,821,215) =6,093,273,408 P
P =30,256,434,717 =28,915,995 P
P =30,285,350,712

*SGVFS032986*
 -2-

Equity Attributable to Equity Holders of the Parent Company Equity

Cost of shares Other Attributable to
Additional Equity held by a Treasury Share-based Comprehensive Retained Earnings Non-controlling
Capital Stock Paid-in Capital Reserve subsidiary Shares Payment Plan Income (Loss) (Deficit) Total Interests Total Equity
Balances at January 1, 2016 =11,032,998,225 =
P P13,161,582,250 (P
=27,138,558) =–
P (P
=216,422,356) =48,287,785
P (P
=20,045,237) (P
=2,252,737,223) =
P21,726,524,886 =70,393,349 =
P P21,796,918,235
Net income – – – – – – – 2,357,140,560 2,357,140,560 (34,075,125) 2,323,065,435
Remeasurement loss on defined benefit plan (Note 14) – – – – – – (17,690,074) – (17,690,074) (434,607) (18,124,681)
Exchange difference on translation of foreign operations – – – – – – 4,182,417 – 4,182,417 – 4,182,417
Total comprehensive income (loss) – – – – – – (13,507,657) 2,357,140,560 2,343,632,903 (34,509,732) 2,309,123,171
Purchase of treasury shares (Note 15) – – – – (47,677,001) – – – (47,677,001) – (47,677,001)
Issuance of treasury shares for share-based
payments (Note 15) – 5,034,986 – – 49,509,379 (54,544,365) – – – – –
Share-based payments (Note 15) – – – – – 84,548,479 – – 84,548,479 – 84,548,479
Remeasurement loss on defined benefit plan
transferred to retained earnings – – – – – – 17,690,074 (17,690,074) – – –
Non-controlling interests arising from incorporation
of a subsidiary (Note 1) – – – – – – – – – 1,562,500 1,562,500
Balances at December 31, 2016 =11,032,998,225 P
P =13,166,617,236 (P
=27,138,558) P–
= (P
=214,589,978) =78,291,899
P (P
=15,862,820) =86,713,263 P
P =24,107,029,267 =37,446,117 P
P =24,144,475,384

See accompanying Notes to Consolidated Financial Statements.

*SGVFS032986*
BLOOMBERRY RESORTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31

2018 2017 2016

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax P
=7,039,340,274 P
=6,295,250,285 P
=3,982,148,583
Adjustments for:
Interest expense (Notes 11, 12, 17 and 18) 4,581,927,053 2,151,548,585 2,223,313,044
Depreciation and amortization (Notes 9, 10 and 17) 3,629,437,211 4,353,852,334 4,855,041,542
Unrealized foreign exchange gains - net (334,675,921) (871,109,503) (381,009,023)
Share-based payment expense (Note 15) 220,722,540 145,803,700 84,548,479
Interest income (Notes 4, 5, 8 and 17) (141,076,096) (66,175,264) (44,030,573)
Loss (gain) on sale/write-off of property and equipment - net
(Notes 9 and 17) (5,855,215) 148,849,614 5,709,215
Net change in retirement liability (Note 14) 96,244,140 72,260,970 43,673,324
Other expenses (Notes 9, 10, 12 and 17) 1,554,869 279,187,362 20,408,783
Operating income before working capital changes 15,087,618,855 12,509,468,083 10,789,803,374
Decrease (increase) in:
Receivables (473,918,006) 706,313,442 (51,589,242)
Inventories 29,263,035 (44,518,564) (52,542,489)
Prepayments and other current assets 436,579,213 (392,008,645) (276,461,655)
Increase (decrease) in:
Payables and other current liabilities 7,329,925,919 535,535,300 (2,886,370,780)
Other noncurrent liabilities 36,645,877 40,847,523 259,558,381
Net cash generated from operations 22,446,114,893 13,355,637,139 7,782,397,589
Interest received 118,975,737 65,778,730 (1,474,648,086)
Income taxes paid (38,316,865) (1,201,630) 44,791,151
Net cash provided by operating activities 22,526,773,765 13,420,214,239 6,352,540,654

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property and equipment (Note 9) (43,801,076,692) (1,801,912,337) (1,480,641,639)
Decrease (increase) in:
Restricted cash 2,250,906,354 890,738 300,003
Other noncurrent assets (313,162,938) (65,521,986) 157,695,195
Proceeds from disposal of property and equipment 9,580,561 34,129,611 399,739
Net cash used in investing activities (41,853,752,715) (1,832,413,974) (1,322,246,702)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from availment of loans (Note 12) 72,206,053,556 – –
Payments of:
Long-term debt principal (Notes 12 and 21) (33,455,867,500) (1,807,002,500) (3,047,730,000)
Interest (3,604,051,545) (2,048,983,641) (2,108,629,505)
Short-term borrowing (Note 11 and 21) (80,451,753) (74,892,394) (191,552,400)
Refinancing cost (Note 12) – – (43,435,251)
Dividend payment (1,101,821,109) – –
Acquisitions of:
Treasury shares (Note 15) (189,006,694) – (47,677,001)
Parent Company’s shares by a subsidiary (Note 15) (9,269,647)
Proceeds from subsidiary’s issuance of capital to
non-controlling interest – – 1,562,500
Net cash provided by (used in) financing activities 33,765,585,308 (3,930,878,535) (5,437,461,657)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 65,834,621 (21,025,919) 237,157,908
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 14,504,440,979 7,635,895,811 (170,009,797)

CASH AND CASH EQUIVALENTS AT BEGINNING

OF YEAR (Note 4) 21,961,406,978 14,325,511,167 14,495,520,964
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 4) P
=36,465,847,957 P
=21,961,406,978 P
=14,325,511,167

See accompanying Notes to Consolidated Financial Statements.

*SGVFS032986*
BLOOMBERRY RESORTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business

a. Corporate Information

Bloomberry Resorts Corporation (referred to as “Bloomberry” or “Parent Company”), was

incorporated in the Philippines and registered with the Securities and Exchange Commission
(“SEC”) on May 3, 1999. The Parent Company’s corporate life is 50 years and can be extended
for another 50 years on or within five years before the expiration of its term. The Parent
Company’s primary purpose is to subscribe, acquire, hold, sell, assign or dispose shares of stock
and other securities of any corporation, including those engaged in hotel and/or gaming and
entertainment business, without engaging in dealership in securities or in the stock brokerage
business or in the business of an investment company, to the extent permitted by law, and to be
involved in the management and operations of such investee companies; and to guarantee the
obligations of its subsidiaries or affiliates or any entity in which the Parent Company has lawful
interest.

The Parent Company’s registered office address is at The Executive Offices, Solaire Resort &
Casino, 1 Asean Avenue, Entertainment City, Tambo, Parañaque City.

Bloomberry’s shares of stock are publicly traded in the Philippine Stock Exchange (“PSE”).

As of December 31, 2018 and 2017, Prime Metroline Holdings, Inc. (“PMHI”) is the Group’s
ultimate parent company.
The consolidated financial statements have been approved and authorized for issuance by the
Board of Directors (“BOD”) on March 4, 2019.
b. Subsidiaries of Bloomberry
Sureste Properties, Inc. (“Sureste”) and Bloomberry Resorts and Hotels Inc. (“BRHI”)
On February 6, 2012, Prime Metroline Holdings, Inc. (“PMHI”, the ultimate parent company)
sold 100% of its ownership interest in Sureste to Bloomberry for P
=5.9 billion. Sureste owns
100% of BRHI.
Sureste was incorporated in the Philippines and was registered with the SEC on April 16, 1993.
Its wholly-owned subsidiary, BRHI, was incorporated in the Philippines and registered with the
SEC on February 27, 2008. BRHI holds 9.34% of the shares of Sureste. The primary purpose of
Sureste and BRHI is to develop and operate tourist facilities, including hotel-casino entertainment
complexes with hotel, retail, amusement areas and themed development components.
Solaire Korea Co., Ltd. (“Solaire Korea”), Golden & Luxury Co., Ltd. (“G&L”) and Muui
Agricultural Corporation (“Muui”)
In December 2014, Solaire Korea was established by Bloomberry to hold the Parent Company’s
investment in the leisure and entertainment business in Republic of Korea. On April 24, 2015,
Solaire Korea acquired 77.26% of the outstanding shares of G&L. Subsequently on May 22,
2015, Solaire Korea acquired additional 18.97% of G&L, bringing its ownership in G&L to
96.23%. On August 20, 2015, Bloomberry acquired 10.00% of the outstanding shares of G&L
from Solaire Korea. On March 8, 2016, Muui was established with a total capitalization of
Korean Won (₩)200.0 million (P =8.2 million). Solaire Korea owns 80% of the outstanding shares
of Muui.

*SGVFS032986*
 -2-

Bloom Capital B.V. and Solaire de Argentina S.A.

On November 21, 2013, Bloomberry subscribed to 60% of the capital stock of Bloom Capital
B.V., a financial holding entity incorporated in the Netherlands as a private company with limited
liability under the Dutch law. On October 23, 2014, Bloomberry acquired the remaining 40% of
the capital stock of Bloom Capital B.V. In 2014, Bloom Capital B.V. acquired 94% ownership
interest in Solaire de Argentina S.A.

c. Status of Operations

Sureste and BRHI

The Philippine Amusement and Gaming Corporation (“PAGCOR”) has granted BRHI the
Provisional License on April 8, 2009 to develop an integrated casino, hotel and entertainment
complex within Entertainment City (the “Project”). BRHI is one of four licensees for Entertainment
City. Prior to the development of integrated resorts in the Philippines, only PAGCOR-operated
casinos and six private casinos in special economic zones were allowed to operate in the country.
The Provisional License, as well as any regular license to be issued to replace it, is concurrent with
PAGCOR’s congressional franchise. PAGCOR’s franchise will expire on July 11, 2033 and may be
renewed when PAGCOR’s franchise is renewed by law. On May 5, 2015, BRHI’s Provisional
License was replaced with a regular casino Gaming License upon full completion of the Project,
referred to as “Solaire”. The Gaming License has the same terms and conditions as the Provisional
License.

Solaire is one of the Philippines’ first premium/luxury hotel and gaming resort. The 16-hectare
gaming and integrated resort complex along Asean Avenue in Parañaque City is the first casino to
operate within Entertainment City. BRHI, as the license holder, operates the casino while Sureste
operates the hotel and non-gaming business.

On March 16, 2013, BRHI and Sureste commenced commercial operations, upon completion of
Phase 1 of Solaire, now referred to as the Bay Tower, along with the opening of the main gaming
area and initial non-gaming amenities, such as Solaire’s hotel, food and beverage outlets.

On November 22, 2014, the Group opened the Sky Tower, which was previously referred to as
Phase 1A development of Solaire. Contiguous to the existing Solaire Resort and Casino, the Sky
Tower consists of a 312 all-suite hotel, additional 10 VIP gaming salons with 66 gaming tables and
223 slot machines, an exclusive House of Zhou Chinese restaurant and The Macallan Whisky and
Cigar Bar for VIP gamers, state-of-the art meeting rooms (“The Forum”) and a lyrical theater (“The
Theatre”). The Sky Tower also features two restaurants, the Waterside Restobar and Oasis Garden
Café. The Theatre is a certified 1,760-seat lyric theatre designed to provide a superior audio-visual
experience for wide range of theatre plays and musicals, dance performances, concerts, and
amplified music and speech events. It is also accessible to a new multi-level parking garage that can
accommodate and secure over 3,000 vehicles. The Forum is a 2,000 square meters of meeting
facility with eight meeting rooms, two boardrooms and a column-free grand ballroom and a flexible
pre-function area. In 2016, retail stores, including premium brand boutiques, were opened in The
Shoppes in the Sky Tower. In January 2017, Louis Vuitton and Prada were opened.

In 2015, Sureste purchased from the National Housing Authority a 15,676 square meter land in
Vertis North, Quezon City Central Business District. As of December 31, 2015, Sureste had fully
paid purchase price of this parcel of land.

This property will be the site of BRHI’s proposed second integrated resort in the Philippines
under the same PAGCOR license and subject to relevant LGU and other government approvals.
The Company is currently working on the masterplan for the Vertis Property.

*SGVFS032986*
 -3-

On June 5, 2018, Sureste acquired two parcels of land in Entertainment City from PAGCOR with
a total area of 160,359 square meters where Solaire Resorts and Casino is located.

G&L
G&L operated a hotel and casino property in Jeju, Korea under the brand name “T.H.E Hotel”
and “LVegas Casino”. Upon takeover of operation by Bloomberry in 2015, the property was
rebranded as “Jeju Sun Hotel & Casino” (“Jeju Sun”). The property consists of 202-room hotel
with 5 Hibiscus rating, 2,000 square meters of gaming operation with 36 tables and 20 electronic
gaming machines. The property has four food and beverage outlets to service its hotel guest and
casino patrons. The casino operation of Jeju Sun was temporarily closed in May 2015 for the
renovation and expansion of the gaming area of the property. The casino operation resumed on
September 15, 2015. However, the gaming regulator Casino Regulation Division (“CRD”)
imposed a one-month suspension which started on November 16, 2015 due to the result of the
CRD’s investigation of the gaming tax (tourism tax) payment practices of the casino under its old
management and owners. On December 15, 2015, Jeju Sun opened its upgraded and expanded
facilities. In 2018, a reorganization was implemented separating hotel and casino operations.
Jeju Sun appointed a Hotel Operations Officer and a Casino Operations Officer, in January and
July, respectively.

2. Summary of Significant Accounting Policies and Disclosures

Basis of Preparation
The Group’s consolidated financial statements have been prepared in conformity with Philippine
Financial Reporting Standards (“PFRS”). PFRS include statements named PFRS and Philippine
Accounting Standards (“PAS”), and Philippine Interpretations based on equivalent interpretations of
International Financial Reporting Interpretations Committee (“IFRIC”) issued by the Philippine
Financial Reporting Standards Council (“FRSC”).

The consolidated financial statements have been prepared under the historical cost basis except for
derivative assets and investment in club shares which have been measured at fair value. The
consolidated financial statements are presented in Philippine Peso, the functional and presentation
currency of the Group, and all values are rounded to the nearest peso, except when otherwise
indicated.

Basis of Consolidation
The consolidated financial statements include the financial statements of Bloomberry and its
subsidiaries (collectively referred to as the “Group”).

As of December 31, 2018 and 2017, direct and indirect subsidiaries of Bloomberry include:

Effective Percentage of Ownership

2018 2017
Direct Indirect Direct Indirect
Sureste 91 9 91 9
BRHI – 100 – 100
Bloom Capital B.V.* 100 – 100 –
Solaire de Argentina S.A. (through Bloom
Capital B.V)* – 94 – 94
Solaire Korea 100 – 100 –
G&L (through Solaire Korea) 10 86 10 86
Muui (through Solaire Korea)* – 80 – 80
*has not started commercial operations

*SGVFS032986*
 -4-

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee, if and only if, the Group has:

ƒ Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
ƒ Exposure, or rights, to variable returns from its involvement with the investee; and
ƒ The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that majority of voting rights results in control. To support this
presumption and when the Group has less than majority of voting rights or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has power
over an investee, including:

ƒ The contractual arrangement(s) with the other vote holders of the investee;
ƒ Rights arising from other contractual arrangements; and
ƒ The Group’s voting rights and potential voting rights.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary
begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity
holders of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.

If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill),
liabilities, noncontrolling interest and other components of equity, while any resultant gain or loss is
recognized in profit or loss. Any investment retained is recognized at fair value.

Non-Controlling Interests. Non-controlling interests represent the portion of profit or loss and net
assets in the subsidiaries not held by the Group and are presented separately in the consolidated
statement of comprehensive income and within equity in the consolidated statement of financial
position, separately from equity attributable to equity holders of the Group.

*SGVFS032986*
 -5-

Changes in Accounting Policies and Disclosures

The Group’s accounting policies are consistent with those of the previous financial year, except for
the adoption of the following new accounting pronouncements effective January 1, 2018.

ƒ Amendments to PFRS 2, Share-based Payment, Classification and Measurement of Share-based

Payment Transactions

The amendments to PFRS 2 address three main areas: the effects of vesting conditions on the
measurement of a cash-settled share-based payment transaction; the classification of a share-
based payment transaction with net settlement features for withholding tax obligations; and the
accounting where a modification to the terms and conditions of a share-based payment
transaction changes its classification from cash settled to equity settled. Entities are required to
apply the amendments to: (1) share-based payment transactions that are unvested or vested but
unexercised as of January 1, 2018, (2) share-based payment transactions granted on or after
January 1, 2018 and to (3) modifications of share-based payments that occurred on or after
January 1, 2018. Retrospective application is permitted if elected for all three amendments and if
it is possible to do so without hindsight.

Adoption of the amendments did not have any impact on the consolidated financial statements.

ƒ PFRS 9, Financial Instruments

PFRS 9, Financial Instruments, replaces PAS 39, Financial Instruments: Recognition and
Measurement, for annual periods beginning on or after January 1, 2018, bringing together all
three aspects of the accounting for financial instruments: classification and measurement;
impairment; and hedge accounting.

The Group has applied PFRS 9 with an initial application date of January 1, 2018. The Group
has not restated the comparative information, which continues to be reported under PAS 39. The
adoption of PFRS 9 did not have material impact on the consolidated financial statements.

a) Classification and measurement

Under PFRS 9, debt instruments are subsequently measured at fair value through profit or
loss, amortized cost or fair value through OCI. The classification is based on two criteria: the
Group’s business model for managing the assets; and whether the instruments’ contractual
cash flows represent ‘solely payments of principal and interest’ (SPPI) on the principal
amount outstanding.

The assessment of the Group’s business model was made at the date of initial application,
January 1, 2018. The assessment of whether contractual cash flows on debt instruments are
SPPI was based on the facts and circumstances at the initial recognition of the assets.

The following are the changes in the classification of the Group’s financial assets:

• Cash and cash equivalents and trade receivables previously classified as loans and
receivables are held to collect contractual cash flows and give rise to cash flows
representing SPPI. These are now classified and measured as financial assets at
amortized cost.

*SGVFS032986*
 -6-

• Quoted equity investment previously classified as available-for-sale (AFS) financial

assets are now classified and measured as financial assets at fair value through OCI. The
Group elected to classify irrevocably its investment in club shares under this category as
it intends to hold these investments for the foreseeable future. There were no impairment
recognized in profit or loss for this investment in prior periods.

The Group has not designated any financial liabilities as at fair value through profit or loss.
There are no changes in classification and measurement for the Group’s financial liabilities.

The classification and measurement requirements of PFRS 9 did not have a significant impact
to the Group. The Group continued measuring at amortized cost all financial assets
previously carried at amortized cost under PAS 39.

In summary upon the adoption of PFRS 9, the Company had the following required or elected
reclassifications:

As at January 1, 2018

PAS 39 Measurement Category PFRS 9 Measurement Category

Loans and Amortized
Receivables AFS FVPL Cost FVOCI
Cash and cash equivalents P
=21,961,406,978 =
P– P
=– = P21,961,406,978 =
P–
Receivables 2,283,423,748 – – 2,283,423,748 –
Quoted equity investment – 16,350,000 – – 16,350,000
P
=24,244,830,726 P
=16,350,000 P
=– = P24,244,830,726 P
=16,350,000

b) Impairment

The adoption of PFRS 9 has fundamentally changed the Group’s accounting for impairment
losses for financial assets by replacing PAS 39’s incurred loss approach with a forward-
looking expected credit loss (ECL) approach. PFRS 9 requires the Group to recognize an
allowance for ECL for all debt instruments not held at fair value through profit or loss and
contract assets. The adoption of PFRS 9 ECL approach, however, did not materially impact
the recognized impairment on the Group’s financial assets such as cash and cash equivalents
and receivables.

ƒ Amendments to PFRS 4, Applying PFRS 9 Financial Instruments with PFRS 4 Insurance

Contracts

The amendments address concerns arising from implementing PFRS 9, the new financial
instruments standard before implementing the new insurance contracts standard. The
amendments introduce two options for entities issuing insurance contracts: a temporary
exemption from applying PFRS 9 and an overlay approach. The temporary exemption is first
applied for reporting periods beginning on or after January 1, 2018. An entity may elect the
overlay approach when it first applies PFRS 9 and apply that approach retrospectively to financial
assets designated on transition to PFRS 9. The entity restates comparative information reflecting
the overlay approach if, and only if, the entity restates comparative information when applying
PFRS 9.

The amendments are not applicable to the Group since none of the entities within the Group have
activities that are predominantly connected with insurance or issue insurance contracts.

*SGVFS032986*
 -7-

ƒ PFRS 15, Revenue from Contracts with Customers

PFRS 15 supersedes PAS 11, Construction Contracts, PAS 18, Revenue and related
Interpretations and it applies, with limited exceptions, to all revenue arising from contracts with
its customers. PFRS 15 establishes a five-step model to account for revenue arising from
contracts with customers and requires that revenue be recognized at an amount that reflects the
consideration to which an entity expects to be entitled in exchange for transferring goods or
services to a customer.

PFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts
and circumstances when applying each step of the model to contracts with their customers. The
standard also specifies the accounting for the incremental costs of obtaining a contract and the
costs directly related to fulfilling a contract. In addition, the standard requires extensive
disclosures.

The Group adopted PFRS 15 using the full retrospective method of adoption. The effect of the
transition on the current period has not been disclosed as the standard provides an optional
practical expedient. In addition, the Group applied PFRS 15 guidance to a portfolio of contracts
with similar characteristics as the entity reasonably expects that the effects on the consolidated
financial statements of applying this guidance to the portfolio would not differ materially from
applying this guidance to the individual contracts within that portfolio. Hence, the Group viewed
a gaming day as one contract. The Group did not apply any of the other available optional
practical expedients.

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The effect of adopting PFRS 15 is as follows:

2017 2016
As previously As previously
Reference Reported Adjustments As restated Reported Adjustments As restated

REVENUES
Gaming a, b, c, d P
=33,381,950,713 (P
=6,340,795,663) P
=27,041,155,050 P
=28,049,873,847 (P
=4,931,264,366) P
=23,118,609,481
Hotel, food and beverage b 2,413,546,028 1,313,740,211 3,727,286,239 1,887,823,815 1,135,786,356 3,023,610,171
Retail and others a, b 855,018,891 1,398,233,646 2,253,252,537 448,847,215 999,145,380 1,447,992,595
36,650,515,632 (3,628,821,806) 33,021,693,826 30,386,544,877 (2,796,332,630) 27,590,212,247

OPERATING COSTS AND EXPENSES a, b, c, d 28,722,993,055 (3,628,821,806) 25,094,171,249 24,687,097,975 (2,796,332,630) 21,890,765,345

*SGVFS032986*
The change did not have an impact on the consolidated net income, total comprehensive income,
basic and diluted earnings per share, equity, and consolidated statements of cash flows.

The nature of the adjustments are described below:

a) Promotional merchandise given to patrons as part of marketing activities

The Group provides promotional merchandise items to its patrons as giveaways at different
marketing events. Before the adoption of PFRS 15, no revenue is recognized for the
promotional merchandise given to patrons as part of marketing activities. The costs incurred
in providing the promo merchandise are charged as part of operating expenses.

Under PFRS 15, retail revenue, arising from providing promotional merchandise to patrons,
previously not recognized as revenue is allocated from gaming revenue based on the stand-
alone selling price of the promo merchandise and the amount incurred to purchase the goods
is charged to cost of sales. Upon adoption of PFRS 15, the Group reclassified “Gaming
revenue” of =P324.6 million and = P24.7 million in 2017 and 2016, respectively, to “Retail and
others”. In addition, the cost incurred to purchase the goods, which was initially recorded
under “Advertising and promotions”, was charged to “Cost of sales”.

b) Discretionary incentives issued in conjunction with gaming activities

The Group, at management’s discretion, grants certain complimentaries in the form of free
hotel accommodation; food and beverages; and retail merchandise from outlets to incentivize
future gaming. Before the adoption of PFRS 15, all discretionary incentives, except for
complimentaries to be supplied by third parties, are recognized as gaming revenue at market
value (equivalent to stand-alone selling price) of the provided goods and services upon
redemption of the discretionary incentives by the patrons. Complimentaries supplied by third
parties are recognized as part of operating expenses.

Under PFRS 15, complimentary revenues arising from discretionary incentives is allocated
from gaming revenues to respective revenue streams based on the stand-alone selling price of
complimentaries upon redemption. Hence, upon adoption of PFRS 15, the Group reclassified
“Gaming revenue” amounting to P =1,313.7 million and P=1,135.8 million in 2017 and 2016,
respectively, to “Hotel, food and beverage”. The Group also reclassified “Gaming revenue”
amounting to = P1,073.6 million and =P974.4 million in 2017 and 2016, respectively, to “Retail
and others”. In addition, the cost incurred in providing the complimentaries supplied by third
parties amounting to =P982.6 million and =P887.6 million in 2017 and 2016, respectively,
which was initially recorded under “Advertising and promotions”, was charged to “Cost of
sales”.

c) Loyalty points program (non-discretionary incentives)

The Group grants loyalty points to patrons based on play activities which may be redeemed
for complimentary hotel accommodations; food and beverages; shopping and leisure items,
transportation, entertainment and similar items at a predetermined rate. Before the adoption
of PFRS 15, the Group’s loyalty points program resulted in the allocation of a portion of the
transaction price to the loyalty points and recognition of a deferred revenue in relation to
points issued but not yet redeemed or expired. Revenue is recognized upon redemption of the
points, except for points redeemed through third parties which is included as part of
advertising and promotions expense.

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Under PFRS 15, a loyalty program that provides a material right to the customer that the
customer would not receive without entering into the contract should be identified as a
performance obligation for purposes of revenue recognition. If the customer (holder of the
points) is able to use the points as a currency (that is the currency value has already been
fixed and can no longer be changed by the issuer), the amount is classified as a financial
liability and the amount of points redeemed through third parties are recognized as reduction
in gaming revenue. Hence, upon adoption of PFRS 15, the Group presented as reduction in
gaming revenue previously recognized “Advertising and promotions” amounting to
=1,661.4 million and =
P P987.2 million in 2017 and 2016, respectively.

d) Amounts Paid to Gaming Promoters

The Group pays the gaming promoters, who introduce VIP patrons to Solaire, a percentage of
the gross gaming win generated by each gaming promoter. Before the adoption of PFRS 15,
the estimated amount of rebates returned to the patrons through the gaming promoters are
netted against gaming revenue while the estimated amount ultimately retained by the gaming
promoters for their compensation are included in operating expenses. Such estimation
process involves assumptions of information that is proprietary to the gaming promoters and
is not communicated by the gaming promoters to the Group.

Under PFRS 15, the Group can apply judgment and determine the consideration to which it is
entitled using all the information available. If the casino (acting as the principal) is not
expected to know the ultimate price charged by the gaming promoters (acting as agent) to the
patrons, then the difference between the amount to which the gaming entity is entitled from
the intermediary and the amount charged by the intermediary to the end customer are not
variable consideration and, therefore, should not be included in the transaction price. As the
information necessary for the Group to apply judgment and determine the consideration to
which it is entitled are proprietary to the gaming promoters and are not communicated by the
gaming promoters to the Group, the Group recognized the full amount paid to gaming
promoters as reduction in gaming revenue. Upon the adoption of PFRS 15, the estimated
amount retained by gaming promoters of P =1,967.5 million and =
P1,809.2 million in 2017 and
2016, respectively, previously presented as part of “Advertising and promotions” was netted
against revenue.

The change did not have a significant impact on the Group’s consolidated statement of financial
position, except for outstanding chips liability and gaming customers’ deposits which are now
considered as contract liabilities.

ƒ Amendments to PAS 28, Investments in Associates and Joint Ventures, Measuring an Associate
or Joint Venture at Fair Value (Part of Annual Improvements to PFRSs 2014 - 2016 Cycle)

The amendments clarify that an entity that is a venture capital organization, or other qualifying
entity, may elect, at initial recognition on an investment-by-investment basis, to measure its
investments in associates and joint ventures at fair value through profit or loss. They also clarify
that if an entity that is not itself an investment entity has an interest in an associate or joint
venture that is an investment entity, the entity may, when applying the equity method, elect to
retain the fair value measurement applied by that investment entity associate or joint venture to
the investment entity associate’s or joint venture’s interests in subsidiaries. This election is made
separately for each investment entity associate or joint venture, at the later of the date on which
(a) the investment entity associate or joint venture is initially recognized; (b) the associate or joint
venture becomes an investment entity; and (c) the investment entity associate or joint venture first
becomes a parent. Retrospective application is required.

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 - 11 -

The amendments have no significant impact on the Group’s consolidated financial statements.

ƒ Amendments to PAS 40, Investment Property, Transfers of Investment Property

The amendments clarify when an entity should transfer property, including property under
construction or development into, or out of investment property. The amendments state that a
change in use occurs when the property meets, or ceases to meet, the definition of investment
property and there is evidence of the change in use. A mere change in management’s intentions
for the use of a property does not provide evidence of a change in use. Retrospective application
of the amendments is not required and is only permitted if this is possible without the use of
hindsight.

The amendments have no impact on the Group’s consolidated financial statements.

ƒ Philippine Interpretation IFRIC-22, Foreign Currency Transactions and Advance Consideration

The interpretation clarifies that, in determining the spot exchange rate to use on initial recognition
of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset
or non-monetary liability relating to advance consideration, the date of the transaction is the date
on which an entity initially recognizes the nonmonetary asset or non-monetary liability arising
from the advance consideration. If there are multiple payments or receipts in advance, then the
entity must determine the date of the transaction for each payment or receipt of advance
consideration. Retrospective application of this interpretation is not required.

The clarification has no impact on the Group’s consolidated financial statements.

Standards Issued But Not Yet Effective

The Group will adopt the following new pronouncements when these become effective. Except as
otherwise indicated, the Group does not expect the adoption of these new pronouncements to have a
significant impact on the consolidated financial statements.

Effective beginning on or after January 1, 2019

ƒ Amendments to PFRS 9, Prepayment Features with Negative Compensation

Under PFRS 9, a debt instrument can be measured at amortized cost or at fair value through OCI,
provided that the contractual cash flows are ‘solely payments of principal and interest on the
principal amount outstanding’ (the SPPI criterion) and the instrument is held within the
appropriate business model for that classification. The amendments to PFRS 9 clarify that a
financial asset passes the SPPI criterion regardless of the event or circumstance that causes the
early termination of the contract and irrespective of which party pays or receives reasonable
compensation for the early termination of the contract. The amendments should be applied
retrospectively and are effective from January 1, 2019, with earlier application permitted.

These amendments have no impact on the consolidated financial statements of the Group.

ƒ PFRS 16, Leases

PFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of
leases and requires lessees to account for all leases under a single on-balance sheet model similar
to the accounting for finance leases under PAS 17, Leases. The standard includes two
recognition exemptions for lessees - leases of ’low-value’ assets (e.g., personal computers) and

*SGVFS032986*
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short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date
of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and
an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-
use asset). Lessees will be required to separately recognize the interest expense on the lease
liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events
(e.g., a change in the lease term, a change in future lease payments resulting from a change in an
index or rate used to determine those payments). The lessee will generally recognize the amount
of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under PFRS 16 is substantially unchanged from today’s accounting under
PAS 17. Lessors will continue to classify all leases using the same classification principle as in
PAS 17 and distinguish between two types of leases: operating and finance leases.

PFRS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17.

A lessee can choose to apply the standard using either a full retrospective or a modified
retrospective approach. The standard’s transition provisions permit certain reliefs.

The Group is currently assessing the impact of adopting PFRS 16.

ƒ Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement

The amendments to PAS 19 address the accounting when a plan amendment, curtailment or
settlement occurs during a reporting period. The amendments specify that when a plan
amendment, curtailment or settlement occurs during the annual reporting period, an entity is
required to:

∂ Determine current service cost for the remainder of the period after the plan amendment,
curtailment or settlement, using the actuarial assumptions used to remeasure the net defined
benefit liability (asset) reflecting the benefits offered under the plan and the plan assets after
that event

∂ Determine net interest for the remainder of the period after the plan amendment, curtailment
or settlement using: the net defined benefit liability (asset) reflecting the benefits offered
under the plan and the plan assets after that event; and the discount rate used to remeasure
that net defined benefit liability (asset).

The amendments also clarify that an entity first determines any past service cost, or a gain or loss
on settlement, without considering the effect of the asset ceiling. This amount is recognized in
profit or loss. An entity then determines the effect of the asset ceiling after the plan amendment,
curtailment or settlement. Any change in that effect, excluding amounts included in the net
interest, is recognized in other comprehensive income.

The amendments apply to plan amendments, curtailments, or settlements occurring on or after the
beginning of the first annual reporting period that begins on or after January 1, 2019, with early
application permitted. These amendments will apply only to any future plan amendments,
curtailments, or settlements of the Group.

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ƒ Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures

The amendments clarify that an entity applies PFRS 9 to long-term interests in an associate or
joint venture to which the equity method is not applied but that, in substance, form part of the net
investment in the associate or joint venture (long-term interests). This clarification is relevant
because it implies that the expected credit loss model in PFRS 9 applies to such long-term
interests.

The amendments also clarified that, in applying PFRS 9, an entity does not take account of any
losses of the associate or joint venture, or any impairment losses on the net investment,
recognized as adjustments to the net investment in the associate or joint venture that arise from
applying PAS 28, Investments in Associates and Joint Ventures.

The amendments should be applied retrospectively and are effective from January 1, 2019, with
early application permitted. The amendments will not have an impact on the Group’s
consolidated financial statements.

ƒ Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments

The interpretation addresses the accounting for income taxes when tax treatments involve
uncertainty that affects the application of PAS 12, Income Taxes, and does not apply to taxes or
levies outside the scope of PAS 12, nor does it specifically include requirements relating to
interest and penalties associated with uncertain tax treatments.

The interpretation specifically addresses the following:

∂ Whether an entity considers uncertain tax treatments separately

∂ The assumptions an entity makes about the examination of tax treatments by taxation
authorities
∂ How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates
∂ How an entity considers changes in facts and circumstances

An entity must determine whether to consider each uncertain tax treatment separately or together
with one or more other uncertain tax treatments. The approach that better predicts the resolution
of the uncertainty should be followed.

This interpretation is not relevant to the Group because there is no uncertainty involved in the tax
treatments made by management in connection with the calculation of current and deferred taxes
as of December 31, 2018 and 2017.

ƒ Annual Improvements to PFRSs 2015-2017 Cycle

∂ Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements,

Previously Held Interest in a Joint Operation

The amendments clarify that, when an entity obtains control of a business that is a joint
operation, it applies the requirements for a business combination achieved in stages,
including remeasuring previously held interests in the assets and liabilities of the joint
operation at fair value. In doing so, the acquirer remeasures its entire previously held interest
in the joint operation.

*SGVFS032986*
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A party that participates in, but does not have joint control of, a joint operation might obtain
joint control of the joint operation in which the activity of the joint operation constitutes a
business as defined in PFRS 3. The amendments clarify that the previously held interests in
that joint operation are not remeasured.

An entity applies those amendments to business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period beginning on or after
January 1, 2019 and to transactions in which it obtains joint control on or after the beginning
of the first annual reporting period beginning on or after January 1, 2019, with early
application permitted. These amendments are currently not applicable to the Group but may
apply to future transactions.

∂ Amendments to PAS 12, Income Tax Consequences of Payments on Financial Instruments

Classified as Equity

The amendments clarify that the income tax consequences of dividends are linked more
directly to past transactions or events that generated distributable profits than to distributions
to owners. Therefore, an entity recognizes the income tax consequences of dividends in
profit or loss, other comprehensive income or equity according to where the entity originally
recognized those past transactions or events.

An entity applies those amendments for annual reporting periods beginning on or after
January 1, 2019, with early application is permitted. These amendments are not relevant to
the Group because dividends declared by the Group do not give rise to tax obligations under
the current tax laws.

∂ Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization
The amendments clarify that an entity treats as part of general borrowings any borrowing
originally made to develop a qualifying asset when substantially all of the activities necessary
to prepare that asset for its intended use or sale are complete.

An entity applies those amendments to borrowing costs incurred on or after the beginning of
the annual reporting period in which the entity first applies those amendments. An entity
applies those amendments for annual reporting periods beginning on or after January 1, 2019,
with early application permitted.

Since the Group’s current practice is in line with these amendments, the Group does not
expect any effect on its consolidated financial statements upon adoption.

Effective beginning on or after January 1, 2020

ƒ Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove the
assessment of a market participant’s ability to replace missing elements, and narrow the
definition of outputs. The amendments also add guidance to assess whether an acquired process
is substantive and add illustrative examples. An optional fair value concentration test is
introduced which permits a simplified assessment of whether an acquired set of activities and
assets is not a business.

An entity applies those amendments prospectively for annual reporting periods beginning on or
after January 1, 2020, with earlier application permitted.

*SGVFS032986*
 - 15 -

These amendments will apply on future business combinations of the Group.

ƒ Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,

Changes in Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used across
PFRSs and other pronouncements. They are intended to improve the understanding of the
existing requirements rather than to significantly impact an entity’s materiality judgements.

An entity applies those amendments prospectively for annual reporting periods beginning on or
after January 1, 2020, with earlier application permitted.

Effective beginning on or after January 1, 2021

ƒ PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts covering

recognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replace
PFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types of
insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of
entities that issue them, as well as to certain guarantees and financial instruments with
discretionary participation features. A few scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts that
is more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which are
largely based on grandfathering previous local accounting policies, PFRS 17 provides a
comprehensive model for insurance contracts, covering all relevant accounting aspects. The core
of PFRS 17 is the general model, supplemented by:

∂ A specific adaptation for contracts with direct participation features (the variable fee
approach)
∂ A simplified approach (the premium allocation approach) mainly for short-duration contracts

PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, with
comparative figures required. Early application is permitted.

The amendments are not applicable to the Group since none of the entities within the Group have
activities that are predominantly connected with insurance or issue insurance contracts.

Deferred effectivity

ƒ Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss of
control of a subsidiary that is sold or contributed to an associate or joint venture. The
amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint
venture involves a business as defined in PFRS 3. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however, is recognized only to the
extent of unrelated investors’ interests in the associate or joint venture.

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On January 13, 2016, the Financial Reporting Standards Council deferred the original effective
date of January 1, 2016 of the said amendments until the International Accounting Standards
Board (IASB) completes its broader review of the research project on equity accounting that may
result in the simplification of accounting for such transactions and of other aspects of accounting
for associates and joint ventures.

These amendments may apply to future transactions of the Group.

Significant Accounting Policies

Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, which is measured at acquisition date fair
value and the amount of any non-controlling interests in the acquiree. For each business combination,
the Group elects whether to measure the non-controlling interests in the acquiree either at fair value
or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs
incurred are recognized as expense and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the
acquisition date. Contingent consideration classified as equity not remeasured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset or liability
that is a financial instrument and within the scope of PFRS 9, Financial Instruments, is measured at
fair value with the changes in fair value recognized in the consolidated statement of comprehensive
income in accordance with PFRS 9. Other contingent consideration that is not within the scope of
PFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in profit
or loss.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration
transferred and the amount recognized for non-controlling interests and any previous interest held
over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has
correctly identified all of the assets acquired an all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment
still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For
the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to
those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of
in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.

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Current versus Noncurrent Classification

The Group presents assets and liabilities in the consolidated statement of financial position based on
current/noncurrent classification. An asset is current when it is:

ƒ Expected to be realized or intended to be sold or consumed in normal operating cycle;

ƒ Held primarily for the purpose of trading;
ƒ Expected to be realized within twelve months after the reporting period; or
ƒ Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.

All other assets are classified as noncurrent.

A liability is current when:

ƒ It is expected to be settled in normal operating cycle;

ƒ It is held primarily for the purpose of trading;
ƒ It is due to be settled within twelve months after the reporting period; or
ƒ There is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.

The Group classifies all other liabilities as noncurrent.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities, respectively.

Fair Value Measurement

The Group measures financial instruments such as derivatives at fair value at each reporting date.
Fair value related disclosures for financial instruments that are measured at fair value or where fair
values are disclosed are summarized in Note 21.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is
based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:

ƒ In the principal market for the asset or liability; or

ƒ In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their economic
best interest.

A fair value measurement of a nonfinancial asset takes into account a market participant's ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

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All assets and liabilities for which fair value is measured or disclosed in the consolidated financial
statements are categorized within the fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a whole:

ƒ Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or
liabilities
ƒ Level 2 - Valuation techniques for which the lowest level input that is significant to the
fair value measurement is directly or indirectly observable
ƒ Level 3 - Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognized in the consolidated financial statements at fair value on a
recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy
by reassessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

Financial Instruments - Initial Recognition and Subsequent Measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

Financial assets

Initial Recognition, Subsequent Measurement and Impairment Prior to the Adoption of PFRS 9

Initial Recognition and Measurement

Financial assets are classified as FVPL, loans and receivables, HTM investments, available-for-sale
(AFS) financial assets, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate. All financial assets are recognized initially at fair value plus, in the case of financial
assets not recorded at FVPL, transaction costs that are attributable to the acquisition of the financial
asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date,
i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement
For purposes of subsequent measurement financial assets are classified in four categories: financial
assets at FVPL, loans and receivables, HTM investments and AFS financial assets.

The Group has no HTM investments and has not designated any financial assets at FVPL.

Loans and receivables

After initial measurement, loans and receivables are subsequently measured at amortized cost using
the effective interest rate method, less impairment. Amortized cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of the
effective interest rate. The effective interest rate amortization is included in interest income in profit
or loss. The losses arising from impairment of receivables are recognized in profit or loss.

The Group’s cash and cash equivalents, receivables, restricted cash and security deposits are included
in this category as of December 31, 2017.

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AFS financial assets

AFS financial assets are those non-derivative financial assets which are designated as such or do not
qualify to be classified in any of the three preceding categories. These are purchased and held
indefinitely, and may be sold in response to liquidity requirements or changes in market conditions.
AFS financial assets are classified as current assets if management intends to sell these financial
assets within 12 months from financial reporting date. Otherwise, these are classified as noncurrent
assets.

After initial recognition, AFS financial assets are subsequently measured at fair value, with
unrealized gains and losses being recognized as OCI account until the investment is derecognized or
until the investment is determined to be impaired, at which time the cumulative gain or loss
previously reported in OCI reserve account is recognized in profit or loss in the consolidated
statement of comprehensive income. The Group uses the specific identification method in
determining the cost of securities sold. Interest earned on holding AFS debt securities is included
under “Interest income” using the EIR method in the consolidated statement of comprehensive
income. Dividends earned on holding AFS equity investments are recognized in the consolidated
statement of comprehensive income when the right of payment has been established.

The Group’s investment in club shares is classified as AFS financial assets as of December 31, 2017.

Impairment of Financial Assets

The Group assesses, at each financial reporting date, whether there is objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of
one or more events that has occurred after the initial recognition of the asset (an incurred “loss
event”) and that loss event has an impact on the estimated future cash flows of the financial asset or
the group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the debtors or a group of debtors is experiencing significant financial difficulty,
default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganization and when observable data indicate that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.

For financial assets carried at amortized cost, the Group first assesses whether impairment exists
individually for financial assets that are individually significant. If the Group determines that no
objective evidence of impairment exists for an individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses them for impairment. Assets that are individually assessed
for impairment and for which an impairment loss is, or continues to be, recognized are not included in
a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future expected
credit losses that have not yet been incurred). The present value of the estimated future cash flows is
discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is
recognized in profit or loss. Interest income continues to be accrued on the reduced carrying amount
and is accrued using the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss. Loans and receivables, together with the associated allowance, are
written off when there is no realistic prospect of future recovery and all collateral has been realized or
has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment

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loss increases or decreases because of an event occurring after the impairment was recognized, the
previously recognized impairment loss is increased or reduced by adjusting the allowance account. If
a write-off is later recovered, the recovery is credited to other income in profit or loss.

Initial Recognition, Subsequent Measurement and Impairment Upon Adoption of PFRS 9

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair
value through OCI, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. With the exception of
trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component or for which the Group has applied
the practical expedient are measured at the transaction price determined under PFRS 15.

In order for a financial asset to be classified and measured at amortized cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (“SPPI”)’
on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.

The Group’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date,
i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:

ƒ Financial assets at amortized cost (debt instruments)

ƒ Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
ƒ Financial assets designated at fair value through OCI with no recycling of cumulative gains and
losses upon derecognition (equity instruments)
ƒ Financial assets at fair value through profit or loss

Financial assets at amortized cost (debt instruments)

This category is the most relevant to the Group. The Group measures financial assets at amortised
cost if both of the following conditions are met:

ƒ The financial asset is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows; and
ƒ The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.

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Financial assets at amortized cost are subsequently measured using the effective interest (EIR)
method and are subject to impairment. Gains and losses are recognized in profit or loss when the
asset is derecognized, modified or impaired.

The Group’s cash and cash equivalents, receivables and security deposits are included in this category
as of December 31, 2018.

Financial assets at fair value through OCI (debt instruments)

The Group measures debt instruments at fair value through OCI if both of the following conditions
are met:

ƒ The financial asset is held within a business model with the objective of both holding to collect
contractual cash flows and selling; and
ƒ The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and
impairment losses or reversals are recognized in the statement of profit or loss and computed in the
same manner as for financial assets measured at amortized cost. The remaining fair value changes are
recognized in OCI. Upon derecognition, the cumulative fair value change recognized in OCI is
recycled to profit or loss.

The Group has no debt instruments at fair value through OCI as of December 31, 2018.

Financial assets designated at fair value through OCI (equity instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under
PAS 32, Financial Instruments: Presentation and are not held for trading. The classification is
determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are
recognized as other income in the statement of profit or loss when the right of payment has been
established, except when the Group benefits from such proceeds as a recovery of part of the cost of
the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at
fair value through OCI are not subject to impairment assessment.

The Group elected to classify irrevocably its non-listed equity investments under this category.

The Group’s investment in club shares is classified as equity instrument designated at fair value
through OCI as of December 31, 2018.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial
assets designated upon initial recognition at fair value through profit or loss, or financial assets
mandatorily required to be measured at fair value. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including
separated embedded derivatives, are also classified as held for trading unless they are designated as
effective hedging instruments. Financial assets with cash flows that are not solely payments of
principal and interest are classified and measured at fair value through profit or loss, irrespective of
the business model. Notwithstanding the criteria for debt instruments to be classified at amortized
cost or at fair value through OCI, as described above, debt instruments may be designated at fair
value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an
accounting mismatch.

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Financial assets at fair value through profit or loss are carried in the consolidated statement of
financial position at fair value with net changes in fair value recognized in the consolidated statement
of comprehensive income.

This category includes derivative instruments and listed equity investments which the Group had not
irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are
also recognized as other income in the statement of profit or loss when the right of payment has been
established.

The Group has not designated any financial assets at FVPL as of December 31, 2018.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is

separated from the host and accounted for as a separate derivative if: the economic characteristic and
risks are not closely related to the host; a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair
value through profit or loss. Embedded derivatives are measured at fair value with changes in fair
value recognized in profit or loss. Reassessment only occurs if there is either a change in the terms of
the contract that significantly modifies the cash flows that would otherwise be required or a
reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded with a hybrid contract containing a financial asset host is not accounted for
separately. The financial asset host together with the embedded derivative is required to be classified
in its entirety as a financial asset at fair value through profit or loss.

The Group’s derivative asset arising from the loan prepayment option is classified as financial assets
at FVPL.

Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated statement of
financial position) when:

ƒ The rights to receive cash flows from the asset have expired; or
ƒ The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, the Group continues to recognize the transferred asset to
the extent of its continuing involvement. In that case, the Group also recognizes an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Group could be required to repay.

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Impairment of financial assets

The Group recognizes an ECL for all debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an approximation of
the original effective interest rate. The expected cash flows will include cash flows from the sale of
collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).

For cash and cash equivalents, the Group applies a general approach in calculating ECLs. The Group
recognizes a loss allowance based on ether 12-month ECL or lifetime ECL, depending on whether
there has been a significant increase in credit risk on its cash and cash equivalents since initial
recognition.

For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime
ECLs at each reporting date. The Group has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment.

The Group considers a financial asset in default when contractual payments are 90 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when
internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Group. A
financial asset is written off when there is no reasonable expectation of recovering the contractual
cash flows.

Financial liabilities

Initial Recognition and Subsequent Measurement Prior to and Upon Adoption of PFRS 9

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in
an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include payables and other current liabilities (excluding statutory
payables and contract liabilities), long-term debt and tenants’ security deposits as of
December 31, 2018 and 2017.

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 - 24 -

Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative financial instruments entered
into by the Group that are not designated as hedging instruments in hedge relationships as defined by
PFRS 9. Separated embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognized in the consolidated statement of
comprehensive income.

Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated at the initial date of recognition, and only if the criteria in PFRS 9 are satisfied. The
Group has not designated any financial liability as at fair value through profit or loss.

The Group has no financial liability at FVPL as of December 31, 2018 and 2017.

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are
recognized in profit or loss when the liabilities are derecognized as well as through the EIR
amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the
consolidated statement of comprehensive income.

This category includes payables and other current liabilities (excluding statutory payables and
contract liabilities), long-term debt and tenants’ security deposits as of December 31, 2018 and 2017.

Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognized in the consolidated
statement of comprehensive income.

Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, or to realize the assets and settle the
liabilities simultaneously. The Group assesses that it has a currently enforceable right of offset if the
right is not contingent on a future event, and is legally enforceable in the normal course of business,
event of default, and event of insolvency or bankruptcy of the Group and all of the counterparties.

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 - 25 -

Cash and Cash Equivalents

Cash includes cash on hand and in banks, including bank accounts maintained by the Group as
collateral for its long-term debt. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash with original maturities of three months or less from
the date of acquisition, and for which there is an insignificant risk of change in value.

Restricted Cash
Restricted cash represents cash in escrow account which are restricted as to withdrawal and use as
required by a lending bank of Sureste.

Inventories
Inventories are valued at the lower of cost and Net Realizable Value (NRV). Cost is determined
using the moving average method except for table card inventories (presented as part of operating
supplies) where the first in, first out method is being utilized. NRV is based on estimated selling
prices less estimated costs to be incurred on completion and disposal. NRV of operating and other
supplies is the current replacement cost.

Prepayments
Prepayments are carried at cost and are amortized on a straight-line basis, over the period of intended
usage, which is equal to or less than 12 months or within the normal operating cycle.

Promo Merchandise
Promo merchandise pertains to items to be provided by the Group to its patrons as giveaways at
different marketing events. These are carried at lower of cost and NRV and charged to “Cost of
sales” once distributed to the patrons.

Advances to Suppliers
Advances to suppliers primarily represent advance payments made to a service provider for the
Group’s aircraft operation and management. Advances to Suppliers is presented under the
“Prepayments and other current assets” account in the consolidated statement of financial position.

Creditable Withholding Taxes (“CWT”)

CWT represents the amount of tax withheld by counterparties from the Group. These are recognized
upon collection and are utilized as tax credits against income tax due as allowed by the Philippine
taxation laws and regulations. CWT is presented under the “Prepayments and other current assets”
account in the consolidated statement of financial position. CWT is stated at its estimated NRV.

Property and Equipment

Property and equipment are carried at cost, except land, excluding the costs of day-to-day servicing,
less accumulated depreciation and any impairment in value. Land is stated at cost less any
impairment in value.

The initial cost of property and equipment comprises its construction cost or purchase price and any
directly attributable costs in bringing the property and equipment to its working condition and
location for its intended use. Expenditures incurred after the property and equipment have been put
into operations, are normally recognized in the consolidated statement of comprehensive income in
the year the costs are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits expected to be obtained
from the use of an item of property and equipment beyond its originally assessed standard of
performance, such expenditures are capitalized as additional costs of property and equipment. When
assets are sold or retired, their costs and accumulated depreciation, amortization and impairment
losses, if any, are eliminated from the accounts and any gain or loss resulting from their disposal is
included in the consolidated statement of comprehensive income of such period.

*SGVFS032986*
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The useful lives and depreciation and amortization method are reviewed at least at each financial
year-end to ensure that the periods and method of depreciation and amortization are consistent with
the expected pattern of economic benefits from items of property and equipment.

Depreciation and amortization are computed using the straight-line method over the following
estimated useful lives of the assets:

Land improvements 10 years

Building and improvements 40 years
Machineries 10 years
Gaming equipment 5 years
Office furniture and fixtures 5 years
Transportation equipment 5 years
Leasehold improvements 3 years or lease term, whichever is shorter
Office and communication equipment 5 years

Property and equipment includes costs incurred in the construction of the hotel and casino
entertainment complex classified under “Construction in progress”. These include costs of
construction, equipment and other direct costs such as borrowing costs. Upon completion, these costs
will be depreciated and amortized over the life of the asset. During the period of construction,
construction in progress is carried at cost and is tested for impairment if any impairment indicators
are present.

Intangible Assets
Intangible assets, such as the casino license and goodwill, acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a business combination is their fair value
at the date acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortization and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually,
either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed
annually to determine whether the indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective basis.

An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising
upon derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the consolidated statement of comprehensive income.

Operating Equipment
Operating equipment (shown as part of “Other noncurrent assets” account) includes linen, china,
glassware, silver, and other kitchen wares, which are carried at cost less accumulated amortization, as
applicable. Bulk purchases of items of operating equipment with expected usage period of beyond
one year are classified as noncurrent assets and are amortized over two to three years. Subsequent
purchases of operating equipment upon start of business operations are recognized in profit or loss in
the consolidated statement of comprehensive income.

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Impairment of Nonfinancial Assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the
Group estimates the asset’s recoverable amount. An asset’s recoverable amount is determined for an
individual asset, unless the asset does not generate inflows that are largely independent of those from
other assets or group if assets. When the carrying amount of an asset of CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of the time value of money and the risks
specific to the asset. In determining fair value less costs of disposal, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are
prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These
budgets and forecast calculations generally cover a period of five years. A long-term growth rate is
calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations are recognized in the consolidated statement of

comprehensive income in expense categories consistent with the function of the impaired asset,
except for properties previously revalued with the revaluation taken to OCI. For such properties, the
impairment is recognized in OCI up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether
there is an indication that previously recognized impairment losses no longer exist or have decreased.
If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously
recognized impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed
the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement
of comprehensive income unless the asset is carried at a revalued amount, in which case, the reversal
is treated as a revaluation increase.

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value
may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group
of CGUs) to which the goodwill relates. When the recoverable amount of CGU is less than its
carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be
reversed in future periods.

Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as
appropriate, and when circumstances indicate that the carrying value may be impaired.

Equity
Capital stock is measured at par value for all shares issued. Incremental costs incurred directly
attributable to the issuance of new shares are shown in equity as a deduction of proceeds, net of tax.
Proceeds and/or fair value of considerations received in excess of par value are recognized as
additional paid-in capital (“APIC”).

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Equity reserve pertains to costs incurred in 2011, in connection with the issuance of capital stock such
as taxes and legal fees. The account also includes the effect of the reverse acquisition when
Bloomberry acquired Sureste from the ultimate parent in 2012.

Treasury shares are the Group’s own equity instruments which are reacquired and are recognized at
cost and presented as reduction in equity. No gain or loss is recognized in the consolidated statement
of comprehensive income on the purchase, sale, reissuance or cancellation of the Group’s own equity
instruments. Any difference between the carrying amount and the consideration upon reissuance or
cancellation of shares is recognized as APIC.

Retained earnings represents the Group’s cumulative net earnings (losses), net of dividends declared.

Share-based Payment Plan

Certain qualified officers and employees of the Group and subsidiaries receive remuneration for their
services in the form of equity shares of the Group (“equity-settled transactions”).

The cost of equity-settled transactions with officers and employees is measured by reference to the
fair value of the stock at the date on which these are granted.

The cost of equity-settled transactions is recognized, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled, ending on the date
on which the relevant employees become fully entitled to the award (‘the vesting date’).

The cumulative expense recognized for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate
of the number of equity instruments that will ultimately vest. The expense or credit in the
consolidated statement of comprehensive income for a period represents the movement in cumulative
expense recognized at the beginning and end of that period and is recognized as share-based payment
expense as part of “Salaries and benefits” under operating costs and expenses.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transaction
for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting
irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.

Foreign Currency Transactions and Translations

The Group’s financial statements are presented in Philippine Peso. The Philippine Peso is the
currency of the primary economic environment in which the Group operates.

Transactions and Balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective
functional currency spot rates prevailing at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date. Differences arising on settlement or translation
of monetary items are recognized in profit or loss in the consolidated statement of comprehensive
income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss on the change in fair value of the item
(i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or
loss are also recognized in OCI or profit or loss, respectively).

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Group Companies
On consolidation, the assets and liabilities of foreign operations are translated into Philippine peso at
the rate of exchange prevailing at the reporting date and their statements of profit or loss are
translated at the average exchange rates for the year. The exchange differences arising on translation
for consolidation are recognized in OCI and taken directly to a separate component of equity as
translation adjustments. On disposal of these subsidiaries, the amount of deferred cumulative
translation adjustments recognized in equity relating to subsidiaries shall be recognized in profit or
loss in the consolidated statements of comprehensive income.

Revenue from Contracts with Customers

The Group’s revenue from contracts with customers primarily consist of gaming, hotel
accommodation services, food and beverage, and retail and other revenue. Revenue from contracts
with customers is recognized when control of the goods or services are transferred to the customer at
an amount that reflects the consideration to which the Group expects to be entitled in exchange for
those goods or services. The Group has generally concluded that it is the principal in its revenue
arrangements.

Gaming revenue
Gaming revenue is recognized when the control of the service is transferred to the patron upon
execution of a gaming play. The Group accounts for its gaming revenue contracts collectively on a
portfolio basis versus an individual basis as all patrons have similar characteristics. The Group
considers whether there are other promises in the contract that are separate performance obligations to
which a portion of the transaction price needs to be allocated. Accordingly, for gaming transactions
that include complimentary goods and services provided by the Group to incentivize future gaming,
the Group allocates the stand alone selling price of each goods or services to the appropriate revenue
type. In determining the transaction price, gaming revenue is measured by the aggregate net
difference between gaming wins and losses and the effect of consideration payable to a patron (if any)
is considered. Amounts rebated to junket operators and premium patrons for rolling play, cash
discounts and other cash incentives to patrons related to gaming play are recognized as a reduction
from gross gaming revenue.

Hotel, food and beverage, retail and other operating revenues

Hotel, food and beverage, retail and other operating revenues are recognized when the control of the
goods or service is transferred to the customer, generally when the services are performed or the retail
goods are delivered.

Retail and other revenue includes sale of various merchandise, communication and transportation
services to Solaire guests and patrons.

Contract Balances

Trade receivables. A receivable represents the Group’s right to an amount of consideration that is
unconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract assets. A contract asset is the right to consideration in exchange for goods or services
transferred to the customer. If the Group performs by transferring goods or services to a customer
before the customer pays consideration or before payment is due, a contract asset is recognized for
the earned consideration that is conditional.

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Contract liabilities. A contract liability is the obligation to transfer goods or services to a customer
for which the Group has received consideration (or an amount of consideration is due) from the
patron. If a patron pays consideration before the Group transfers goods or services to the patron, a
contract liability is recognized when the payment is made or the payment is due (whichever is
earlier). Contract liabilities are recognized as revenue when the Group performs under the contract.

The contract liabilities include payments received by the Group from the patrons for which revenue
recognition has not yet commenced. Accordingly, funds deposited by patrons before gaming play
occurs (customers’ deposits) and chips in patrons’ possession (outstanding chips liability) are
recorded as contract liabilities until services are provided to the patrons.

Customer Loyalty Program

The Group has a loyalty points program which allows customers to accumulate points that can be
redeemed for free hotel accommodation, food and beverage, retail goods and other services. The
loyalty points give rise to a separate performance obligation as they provide a material right to the
customer. The Group’s customer is able to use the points as a currency (i.e., currency value has been
fixed and can no longer be changed by the Group). A portion of the transaction price is allocated to
the loyalty points awarded to customers based on relative stand-alone selling price and recognized as
a financial liability until the points are redeemed. The amount of points redeemed through third
parties are recognized as reduction in gaming revenue.

Interest Income
Interest income is recognized as it accrues on a time proportion basis taking into account the principal
amount outstanding and the EIR. Interest income represents interest earned from cash and cash
equivalents and restricted cash comprising of cash in escrow and cash allocated to the Project.

Costs and Expenses

Costs and expenses are recognized in the consolidated statement of comprehensive income upon
utilization of the service or at the date they are incurred.

Costs incurred prior to obtaining the license were expensed as incurred.

Gaming Taxes
Being a PAGCOR licensee, BRHI is required to pay license fees on its gross gaming revenues on a
monthly basis starting from the date the casino commences operations. These license fees are
reported as part of “Taxes and licenses” account under “Operating costs and expenses” in the
consolidated statements of comprehensive income.

Retirement expense
The Group has an unfunded, non-contributory defined benefit plan covering all of its regular
employees.

The cost of employee benefits under the defined benefit plan is determined using the projected unit
credit method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined benefit liability and the return on plan assets
(excluding amounts included in net interest on the net defined benefit liability), are recognized
immediately in the statement of financial position with a corresponding debit or credit to retained
earnings through OCI in the period in which they occur. Remeasurements are not reclassified to
profit or loss in subsequent periods.

*SGVFS032986*
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Past service costs are recognized in profit or loss on the earlier of:

ƒ The date of the plan amendment or curtailment, and

ƒ The date that the Group recognizes related restructuring costs

Interest is calculated by applying the discount rate to the defined benefit liability. The Group
recognized the change in defined benefit obligation such as service cost and interest costs as part of
“Salaries and benefits” account under “Operating costs and expenses” in profit or loss in the
consolidated statement of comprehensive income.
Provisions
Provisions are recognized when the Group has present obligations, legal or constructive, as a result of
past events, when it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, the reimbursement is
recognized as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the consolidated statement of comprehensive income, net of
any reimbursements. If the effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to passage of time is recognized as interest
expense.
Borrowing Costs
Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or
production of a qualifying asset. Qualifying assets are assets that necessarily take a substantial period
of time to get ready for its intended use or sale. Capitalization of borrowing costs commences when
the activities necessary to prepare the asset are in progress and expenditures and borrowing costs are
being incurred. Borrowing costs are capitalized until the assets are available for their intended use. If
the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is
recognized. Borrowing costs include interest charges and other costs incurred in connection with the
borrowing of funds, as well as exchange differences arising from foreign currency borrowings used to
finance these projects to the extent that they are regarded as an adjustment to interest cost.
All other borrowing costs are expensed as incurred.
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the
arrangement at the inception date of whether the fulfillment of the arrangement is dependent on the
use of a specific asset or assets or the arrangement conveys a right to use the asset even if that right is
not explicitly specified in an arrangement.
As a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are
classified as operating leases. Operating lease payments are recognized as expense in the
consolidated statement of comprehensive income or capitalized in the consolidated statement of
financial position (in case of leases directly related to construction) on a straight-line basis over the
lease term.
As a lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the
asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset and recognized over the lease term on the same
bases as rental income. Contingent rents are recognized as revenue in the period in which they are
earned.

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Taxes

Current income tax

Current income tax assets and liabilities for the current and prior years are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted at the reporting period.

Current income tax relating to items recognized directly in equity is recognized in equity and not in
the profit or loss.

Deferred income tax

Deferred income tax is provided using the liability method on temporary differences at the reporting
period between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences except: (1) when the
deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and (2) in respect of taxable temporary differences
associated with investments in subsidiaries, associates and interests in joint ventures, where the
timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carryforward benefits
of unused tax credits from excess minimum corporate income tax (“MCIT”) over regular corporate
income tax (“RCIT”) and unused net operating loss carry-over (“NOLCO”) to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences and
the carryforward benefit of unused tax credits and unused tax losses can be utilized except: (1) when
the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; and (2) in respect of
deductible temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each
reporting period and are recognized to the extent that it has become probable that future taxable profit
will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting period.

Deferred income tax relating to items recognized outside profit or loss is recognized outside profit or
loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or
directly in equity.

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Deferred tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to
offset current income tax assets against current income tax liabilities and the deferred income taxes
relate to the same taxable entity and the same taxation authority.

Value-Added Tax (“VAT”)

Revenue, expenses and assets are recognized net of the amount of VAT, except:

∂ When the VAT incurred on a purchase of assets or services is not recoverable from the tax
authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as
part of the expense item as applicable; or
∂ Receivables and payables that are stated with the amount of VAT included.

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of
the “Prepayments and other current assets” or “Payables and other current liabilities” accounts in the
consolidated statements of financial position.

Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed
unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent
assets are not recognized in the consolidated financial statements but are disclosed in the notes to
consolidated financial statements when an inflow of economic benefits is probable.

Events After the Reporting Period

Post year-end events that provide additional information about the Group’s financial position at the
end of the reporting period (adjusting events) are reflected in the consolidated financial statements.
Post year-end events that are not adjusting events are disclosed in the notes to consolidated financial
statements when material.

Earnings (Loss) Per Share

The Group presents basic and diluted earnings (loss) per share rate for its shares.

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) for the year
attributable to equity holders of the Group by the weighted average number of shares outstanding
during the year after giving retroactive effect to any stock dividend declarations.

Diluted earnings (loss) per share is computed in the same manner, adjusted for the effect of the shares
issuable to qualified officers and employees under the Group’s stock incentive plan which are
assumed to be exercised at the date of grant. Where the effect of the vesting of stock under the stock
incentive plan is anti-dilutive, basic and diluted earnings per share are stated at the same amount.

Segment Reporting
A segment is a distinguishable component of the Group that is engaged either in providing products
or services within a particular economic environment subject to risks and rewards that are different
from those of other segments, which operating results are regularly reviewed by the chief operating
decision maker to make decisions about how resources are to be allocated to each of the segments and
to assess their performances, and for which discrete financial information is available. Management
views the hotel and casino business as one integrated business segment, i.e., an integrated resort
facility. A single management team for each geographical area reports to the chief operating
decision-maker. The Group operates in two geographical areas in 2018, 2017 and 2016 where it
derives its revenue. Financial information on segment reporting is presented in Note 24.

*SGVFS032986*
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3. Management’s Use of Judgments, Estimates and Assumptions

The preparation of the consolidated financial statements in conformity with PFRS requires the Group
to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities and disclosure of contingent liabilities at the reporting date. The uncertainties
inherent in these assumptions and estimates could result in outcomes that could require a material
adjustment to the carrying amount of the assets or liabilities affected in the future years.

Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments apart from those including estimations and assumptions, which has the most significant effect
on the amounts recognized in the consolidated financial statements.

Contingencies. The Group is involved in certain legal proceedings. The Group’s judgment and estimate
of the probable cost for the implication of these matters has been developed in consultation with its legal
counsels and is based upon an analysis of potential results. Management and its legal counsels do not
believe these will have a material adverse effect on its financial position or performance. It is possible,
however, that future results of operations could be materially affected by changes in the estimates or in
the effectiveness of strategies relating to this matter (see Note 19).

Identification of Contract with Customers under PFRS 15. The Group applied PFRS 15 guidance to a
portfolio of contracts with similar characteristics as the Group reasonably expects that the effects on the
consolidated financial statements of applying this guidance to the portfolio would not differ materially
from applying this guidance to the individual contracts within that portfolio. Hence, the Group viewed a
gaming day as one contract.

Identifying Performance Obligations. The Group identifies performance obligations by considering

whether the promised goods or services in the contract are distinct goods or services. A good or
service is distinct when the customer can benefit from the good or service on its own or together with
other resources that are readily available to the customer and the Group’s promise to transfer the good
or service to the customer is separately identifiable from the other promises in the contract.

The Group provides promotional merchandise items to its patrons as giveaways at different marketing
events and grants certain complimentaries in the form of free hotel accommodation; food and
beverages; and retail merchandise from outlets to incentivize future gaming. The Group determined
that the promotional merchandise items and complimentary incentives given to the patrons are
capable of being distinct and therefore considered as separate performance obligations.

Evaluating Lease Commitments. The evaluation of whether an arrangement contains a lease is based on
its substance. An arrangement is, or contains a lease when the fulfilment of the arrangement depends on
a specific asset or assets and the arrangement conveys a right to use the asset.

Group as a Lessee
The Group has entered into various operating lease agreements as a lessee. The Group has determined,
based on an evaluation of the terms and conditions of the arrangements, that the lessor retains all the
significant risks and rewards of ownership of these properties because the lease agreements do not
transfer to the Group the ownership over the assets at the end of the lease term and do not provide the
Group with a bargain purchase option over the leased assets and so accounts for the contracts as
operating leases (see Note 18).

*SGVFS032986*
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Determination of Casino License’s Useful Life. The Group’s casino license has been acquired through a
business combination. The license has no expiration and renewal is not necessary. Further, it may only be
cancelled under specific rare circumstances. Accordingly, management has assessed that the Group’s
casino license has an indefinite useful life (see Note 10).

Definition of Default and Credit-Impaired Financial Assets. Upon adoption of PFRS 9, the Group
defines a financial instrument as in default, which is fully aligned with the definition of credit-
impaired, when it meets one or more of the following criteria:

ƒ Quantitative Criteria. The borrower is more than 90 days past due on its contractual payments,
which is consistent with the Group’s definition of default.

ƒ Qualitative Criteria. The borrower meets unlikeliness to pay criteria, which indicates the
borrower is in significant financial difficulty. These are instances where:

a. The borrower is experiencing financial difficulty or is insolvent;

b. The borrower is in breach of financial covenant(s);
c. Concessions have been granted by the Group, for economic or contractual reasons relating to
the borrower’s financial difficulty; or
d. It is becoming probable that the borrower will enter bankruptcy or other financial
reorganization.

The criteria above have been applied to all financial instruments held by the Group and are consistent with
the definition of default used for internal credit risk management purposes. The default definition has been
applied consistently to model the PD, LGD and EAD throughout the Group’s ECL calculation.

Simplified Approach for Trade Receivables. The Group uses a provision matrix to calculate ECLs for
trade receivables. The provision rates are based on days past due for groupings of various patron
segments that have similar loss patterns. The provision matrix is initially based on the Group’s
historical observed default rates. The Group calibrates the matrix to adjust the historical credit loss
experience with forward-looking information. At every financial reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.

Grouping of instruments for losses measured on collective basis

For expected credit loss provisions modelled on a collective basis, a grouping of exposures is
performed on the basis of shared risk characteristics, such that risk exposures within a group are
homogeneous. The characteristics and any supplementary data used to determine groupings are
outlined below.

Trade receivables - Groupings for collective measurement

a. Currency
b. Type of patron

Macro-economic Forecasts and Forward-looking Information. Macro-economic forecasts is

determined by evaluating a range of possible outcomes and using reasonable and supportable
information that is available without undue cost and effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.

The Group takes into consideration using different macro-economic variables to ensure linear
relationship between internal rates and outside factors. Regression analysis was used to objectively
determine which variables to use.

*SGVFS032986*
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Predicted relationship between the key indicators and default and loss rates on various portfolios of
financial assets have been developed based on analyzing historical data over the past 4 years. The
methodologies and assumptions including any forecasts of future economic conditions are reviewed
regularly.

Provision for doubtful accounts recognized in 2018 amounted to =

P29.1 million. The carrying amount
of trade receivables amounted to =
P2,806.0 million as at December 31, 2018 (see Note 5).

Estimates and Assumptions

The key estimates and assumptions concerning the future and other key sources of estimation
uncertainty at reporting date, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities recognized in the consolidated financial statements within
the next financial year are discussed as follows:

Determination and Allocation of the Transaction Price. The Group considers whether there are other
promises in the contracts with customers that are separate performance obligations to which a portion
of the transaction price needs to be allocated. In determining the transaction price, the Group
considers the effect of rebates paid through gaming promoters. As the information necessary for the
Group to apply judgment and determine the consideration to which it is entitled are proprietary to the
gaming promoters and are not communicated by the gaming promoters to the Group, the Group
recognized the full amount paid to gaming promoters as reduction in revenue. In allocating the
transaction price, the Group considers the amount at which the entity would sell or purchase the
promotional merchandise or complimentary incentives separately as the stand-alone selling price of
the performance obligations.

Estimating Allowance for Doubtful Accounts Prior to the Adoption of PFRS 9. The Group reviews its
receivables at each reporting date to assess whether an allowance for doubtful accounts should be
recorded in the consolidated statement of financial position. In particular, judgment by management
is required in the estimation of the amount and timing of future cash flows when determining the
level of allowance required. Such estimates are based on assumptions about a number of factors and
actual results may differ, resulting in future changes to the allowance. In addition to specific
allowance against individually significant receivables, the Group also makes a collective impairment
allowance against exposures which, although not specifically identified as requiring specific
allowance, have a greater risk of default than when originally granted.

Management evaluates the allowance for doubtful accounts based on a specific review of customer
accounts as well as experience with collection trends in the casino industry and current economic and
business conditions. As customer payment experience evolves, management will continue to refine the
estimated allowance for doubtful accounts. Accordingly, the associated doubtful accounts expense
charge may fluctuate. Because individual customer account balances can be significant, the allowance
and the expense can change significantly between periods, as information about a certain customer
becomes known or as changes in a region’s economy or legal systems occur.

Provision (reversal of allowance) for doubtful accounts for the years ended December 31, 2017 and
2016 amounted to (P =32.9 million) and P
=203.8 million, respectively (see Note 17). The carrying
amount of receivables amounted to = P2,283.4 million as of December 31, 2017 (see Note 5).

Estimating Useful Lives of Property and Equipment. Management determines the estimated useful
lives and the related depreciation and amortization charges for its property and equipment based on
the period over which the property and equipment are expected to provide economic benefits.
Management’s estimation of the useful lives of property and equipment is based on collective
assessment of industry practice, internal technical evaluation and experience with similar assets.

*SGVFS032986*
 - 37 -

These estimations are reviewed periodically and could change significantly due to physical wear and
tear, technical or commercial obsolescence and legal or other limits on the use of the assets.
Management will increase the depreciation and amortization charges where useful lives are less than
the previously estimated useful lives.

The aggregate net book value of the Group’s property and equipment (excluding construction in
progress) amounted to =P81,969.0 million and P
=42,302.4 million as of December 31, 2018 and 2017,
respectively (see Note 9).

Impairment of Nonfinancial Assets. PFRS requires that an impairment review be performed when
certain impairment indicators are present. In the case of goodwill and intangible assets with
indefinite useful life, at a minimum, such assets are subject to an impairment test annually and
whenever there is an indication that such assets may be impaired. This requires the determination of
fair value less costs of disposal calculation and an estimation of the value in use of the CGU to which
these assets are allocated. The value-in-use calculation requires us to make an estimate of the
expected future cash flows from the CGU and to choose a suitable discount rate in order to calculate
the present value of those cash flows. See Note 10 for the key assumptions used to determine the fair
value less costs of disposal and value-in-use of the relevant CGU.

Determining the recoverable amount of property and equipment, advances to contractors, intangible
assets, and operating equipment, requires the Group to make estimates and assumptions in the
determination of future cash flows expected to be generated from the continued use and ultimate
disposition of such assets. Future events could cause the Group to conclude that property and
equipment, intangible assets and other noncurrent assets associated with an acquired business are
impaired. Any resulting impairment loss could have a material adverse impact on the Group’s
financial position and financial performance.

Management is required to make estimates and assumptions to determine the recoverable amounts.
While the Group believes that the assumptions used are reasonable and appropriate, these estimates
and assumptions can materially affect the consolidated financial statements. Future adverse events
may cause the management to conclude that the affected assets are impaired and may have a material
impact on the Group’s financial condition and results of operations.

The Group has recognized an impairment loss on its goodwill and casino license amounting to nil and
=
P271.6 million in 2018 and 2017, respectively. The impairment loss is presented as part of “Other
expenses” in the 2017 consolidated statement of comprehensive income (see Note 17).

As of December 31, 2018 and 2017, the carrying values of nonfinancial assets subject to impairment
review are as follows:

2018 2017
Property and equipment (see Note 9) P
=82,699,866,703 =
P42,470,677,934
Casino license and goodwill (see Note 10) 1,959,046,027 1,942,408,693
Advances to contractors (see Note 10) 269,000,913 117,840,549
Investment in a joint venture (see Note 10) 124,949,998 –
Operating equipment (see Note 10) 15,122,692 7,019,640
P
=85,067,986,333 P
=44,537,946,816

Determining Retirement Benefits Liability. The determination of the Group’s obligation and cost for
retirement benefits is dependent on the selection of certain assumptions used by the Group’s actuaries
in calculating such amounts. While it is believed that the Group’s assumptions are reasonable and
appropriate, significant differences in actual experience or significant changes in assumptions may
materially affect the Group’s retirement liabilities.

*SGVFS032986*
 - 38 -

Retirement liability amounted to =P384.9 million and =

P449.6 million as of December 31, 2018 and
2017, respectively (see Note 14).

Recognition of Deferred Tax Assets and Liabilities. The Group reviews the carrying amounts at the
end of each reporting period and reduced the deferred tax assets to the extent that it is no longer
probable that sufficient taxable income will be available to allow all or part of the deferred tax assets
to be utilized. The Group’s assessment on the recognition of deferred tax assets on NOLCO, MCIT
and deductible temporary differences is based on the level and timing of forecasted taxable income of
the subsequent reporting periods. The forecast is based on past results and future expectations on
revenues and expenses as well as future tax planning strategies. However, there is no assurance that
the Group will generate sufficient taxable income to allow all or part of its deferred income tax assets
to be utilized.

The Group recognized deferred tax assets amounting to = P423.3 million and =P456.9 million as of
December 31, 2018 and 2017, respectively (see Note 20). The Group’s unused tax losses and MCIT
for which no deferred tax assets have been recognized amounted P =10,805.5 million and
=8,794.3 million as of December 31, 2018 and 2017, respectively, resulting from the Group’s
P
assessment that it will not have sufficient profits in the future in which it could utilize its deferred tax
assets (see Note 20).

4. Cash and Cash Equivalents

This account consists of:

2018 2017
Cash on hand P
=2,181,713,440 P=1,776,561,344
Cash in banks 20,387,668,654 17,583,055,499
Temporary cash investments 10,450,472,138 963,002,888
Debt collateral accounts (see Note 12) 3,445,993,725 1,638,787,247
P
=36,465,847,957 =
P21,961,406,978

Cash in banks earn interest at the prevailing bank deposit rates. Temporary cash investments are
made for varying periods of up to three months depending on the immediate cash requirements of the
Group and earn interest at the prevailing short-term investment rates.

Debt collateral accounts are bank accounts maintained by the Group as collateral for its long-term
debt (see Note 12).

Interest income earned from cash and cash equivalents amounted to P

=136.5 million, =
P37.8 million
and =
P31.2 million for the years ended December 31, 2018, 2017 and 2016, respectively (see Note 17).

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5. Receivables

This account consists of:

2018 2017
Gaming (see Notes 16 and 19) P
=2,776,947,415 =2,290,513,611
P
Hotel (see Note 16) 151,791,746 132,109,525
Receivables from officers and employees (see Note 13) 116,750,740 117,241,378
Others (see Note 18) 75,655,021 83,806,686
3,121,144,922 2,623,671,200
Less allowance for doubtful accounts 315,186,426 340,247,452
P
=2,805,958,496 =2,283,423,748
P

Gaming receivables mainly include casino markers issued to gaming promoters and VIP premium casino
patrons. Casino markers pertain to credits granted to registered casino patrons. These markers are
noninterest-bearing and are normally collected within 90 days.

Hotel receivables pertain to various food, beverage, and hotel service fees receivable from hotel guests
which are collected upon check-out. This includes credit card transactions, which are normally collected
within one month.

Receivables from officers and employees primarily pertain to cash advances which are normally settled
within one year through salary deduction (see Note 13). Interest income earned from receivables from
officers and employees amounted to =P1.5 million, P
=1.8 million and P=2.7 million in 2018, 2017 and 2016,
respectively (see Note 17).

Accrued interest, presented as part of “Others”, pertains to interest from temporary cash investments and
restricted cash account which are normally received within one year.

Allowance for doubtful accounts pertain to casino markers that the Group assessed as doubtful on an
individual and collective basis.

The movements in the allowance for doubtful accounts on gaming receivables are summarized below:

2018 2017
Balance at beginning of year P
=340,247,452 = P1,722,238,785
Provision (reversal) - net (see Note 17) 29,050,229 (32,873,711)
Write-off (58,182,882) (1,355,826,237)
Revaluation 4,071,627 6,708,615
Balance at end of year P
=315,186,426 P340,247,452
=

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6. Inventories

This account consists of:

2018 2017
At cost:
Operating supplies P
=180,184,754 =110,179,893
P
Food and beverage 99,974,670 202,859,717
Retail merchandise 11,413,907 7,796,756
P
=291,573,331 =320,836,366
P

Inventories charged to cost of sales amounted to =

P2,679.5 million, =
P2,217.8 million and
=1,626.2 million for the years ended December 31, 2018, 2017 and 2016, respectively (see Note 17).
P

7. Prepayments and Other Current Assets

This account consists of:

2018 2017
Creditable withholding tax P
=212,656,133 =145,802,119
P
Advances to suppliers (see Note 13) 154,158,908 203,825,253
Promo merchandise 142,205,500 100,173,053
Fund held in trust (see Note 19) 110,873,410 110,651,903
Prepaid taxes 84,148,414 105,211,357
Prepaid maintenance 75,082,557 79,765,384
Prepaid insurance 55,792,169 79,278,622
Security deposits classified as current (see Note 18) 31,774,336 66,000,864
Prepaid rent (see Note 18) 18,463,752 396,017,074
Input VAT - net 4,347,170 –
Derivative asset (see Note 12) – 1,554,870
Others (see Note 19) 13,182,086 52,538,018
P
=902,684,435 =1,340,818,517
P

Creditable withholding tax represents the amount withheld in relation to sales. These are recognized
upon collection and are utilized as tax credits against income tax due as allowed by the Philippine
taxation laws and regulations.

Advances to suppliers pertain to advance payments made by the Group for goods and services such as
table playing cards, guaranteed flight services and aircraft maintenance.

Promo merchandise pertains to items to be provided by the Group to its patrons as giveaways at different
marketing events.

Security deposits mainly pertain to deposits made by the Group for guaranteed flight services. It also
includes security deposit for the Group’s various lease agreements (see Note 18).

Fund held in trust pertains to the bank account under the freeze order issued by Anti-Money Laundering
Council (“AMLC”) (see Note 19).

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 - 41 -

8. Restricted Cash

Restricted cash represents the escrow account being maintained by the Group as security to Sureste’s
loan.

As of December 31, 2018, the Group no longer maintains the escrow account as the loan was already
settled in April 2018 prior to the scheduled full settlement in 2026 (see Note 12). As of
December 31, 2017, the escrow account amounting to = P2,250.9 million is presented under the
noncurrent assets section in the 2017 consolidated statement of financial position.

Interest income on the restricted cash amounted to =

P3.1 million, =
P26.6 million and =
P10.1 million for
the years ended December 31, 2018, 2017 and 2016, respectively (see Note 17).

*SGVFS032986*
 - 42 -

9. Property and Equipment

This account consists of:

2018
Office Office and
Land and Land Building and Gaming Furniture and Transportation Leasehold Communication Construction in
Improvements Improvements Machineries Equipment Fixtures Equipment Improvements Equipment Progress Total
Cost
Balances at beginning of year P
= 7,119,346,922 P
= 29,976,925,412 P
= 8,921,564,515 P
= 2,972,211,990 P
= 4,078,630,251 P
= 1,081,187,096 P
= 206,791,889 P
= 6,357,819,094 P
= 168,294,108 P
= 60,882,771,277
Additions 40,490,111,834 571,599,834 401,250,141 501,474,083 325,561,836 50,633,657 – 895,315,614 565,129,693 43,801,076,692
Disposal/retirement – – (212,659) (81,531,953) (61,160,192) (29,632,887) (263,795) (44,468,371) – (217,269,857)
Translation adjustment 32,886,980 14,283,118 3,923,929 2,461,244 3,695,323 142,552 (12,941) 354,123 (2,529,031) 55,205,297
Balances at end of year 47,642,345,736 30,562,808,364 9,326,525,926 3,394,615,364 4,346,727,218 1,102,330,418 206,515,153 7,209,020,460 730,894,770 104,521,783,409
Accumulated Depreciation
Balances at beginning of year 4,178,304 5,122,601,522 3,240,910,401 1,877,792,157 3,129,167,500 341,385,812 70,490,043 4,625,567,604 – 18,412,093,343
Depreciation (see Note 17) 1,290,332 761,521,413 896,425,586 405,125,106 509,532,632 80,282,398 65,124,686 896,350,627 – 3,615,652,780
Disposal/retirement – – (110,760) (81,531,953) (59,061,070) (29,087,636) (37,604) (43,715,488) – (213,544,511)
Translation adjustment – 3,912,245 1,140,202 (337,635) 2,617,524 31,983 203 350,572 – 7,715,094
Balances at end of year 5,468,636 5,888,035,180 4,138,365,429 2,201,047,675 3,582,256,586 392,612,557 135,577,328 5,478,553,315 – 21,821,916,706
P
= 47,636,877,100 P
= 24,674,773,184 P
= 5,188,160,497 P
= 1,193,567,689 P
= 764,470,632 P
= 709,717,861 P
= 70,937,825 P
= 1,730,467,145 P
= 730,894,770 P
= 82,699,866,703

2017
Office Office and
Land and Land Building and Gaming Furniture and Transportation Leasehold Communication Construction in
Improvements Improvements Machineries Equipment Fixtures Equipment Improvements Equipment Progress Total
Cost
Balances at beginning of year =6,668,653,627
P =28,676,936,589
P =8,328,703,309
P =2,416,653,683
P =3,672,972,705
P =1,488,720,539
P =199,636,305
P =5,989,935,811
P P663,595,806
= =58,105,808,374
P
Additions 1,502,785 136,590,532 287,804,508 555,558,307 122,666,903 43,037,991 7,130,689 373,077,538 274,543,084 1,801,912,337
Reclassification from construction in progress – 769,327,750 517,032 – – – – – (769,844,782) –
Disposal/retirement – – (6,358,292) – (99,256,068) (443,241,524) – (11,524,110) – (560,379,994)
Translation adjustment 449,190,510 394,070,541 310,897,958 – 382,246,711 (7,329,910) 24,895 6,329,855 – 1,535,430,560
Balances at end of year 7,119,346,922 29,976,925,412 8,921,564,515 2,972,211,990 4,078,630,251 1,081,187,096 206,791,889 6,357,819,094 168,294,108 60,882,771,277
Accumulated Depreciation
Balances at beginning of year 2,950,588 3,919,352,419 2,233,537,063 1,416,166,289 2,088,872,993 483,423,657 9,755,515 3,460,292,330 – 13,614,350,854
Depreciation (see Note 17) 1,227,716 705,823,304 960,433,926 461,625,868 744,038,353 122,166,913 60,713,370 1,203,143,171 – 4,259,172,621
Disposal/retirement – – (2,468,700) – (97,888,697) (266,886,631) – (10,156,741) – (377,400,769)
Translation adjustment – 497,425,799 49,408,112 – 394,144,851 2,681,873 21,158 (27,711,156) – 915,970,637
Balances at end of year 4,178,304 5,122,601,522 3,240,910,401 1,877,792,157 3,129,167,500 341,385,812 70,490,043 4,625,567,604 – 18,412,093,343
=7,115,168,618
P =24,854,323,890
P =5,680,654,114
P =1,094,419,833
P =949,462,751
P =739,801,284
P =136,301,846
P =1,732,251,490
P =168,294,108
P =42,470,677,934
P

*SGVFS032986*
 - 43 -

Construction in progress represents costs incurred in the improvement of Solaire property. Costs
incurred mainly include raw materials procurement, general construction works, architectural design
services, engineering consultancy and construction supervision services and interior design services.

In 2018, the Group purchased two parcels of land previously being leased from PAGCOR for a total
acquisition cost of P
=37,333.1 million (see Note 18).

In 2017, the Group wrote off an aircraft (included in the transportation equipment) and sold the
related spare parts, with carrying value of P
=172.2 million. Loss on write-off/sale amounted to
=149.9 million (see Note 17).
P

There were no capitalizable interests for the years ended December 31, 2018, 2017 and 2016.

As of December 31, 2018 and 2017, BRHI’s and Sureste’s property and equipment under mortgage
have carrying values of =
P75.8 billion and =
P35.6 billion, respectively (see Note 12).

10. Intangible and Other Noncurrent Assets

a. Intangible Assets

The movements in the goodwill and casino license follow:

2018 2017
Balance at beginning of year =1,942,408,693
P =1,959,867,224
P
Translation adjustment 16,637,334 254,115,555
Impairment loss – (271,574,086)
Balance at end of year =1,959,046,027
P =1,942,408,693
P

Impairment Testing of Goodwill and Casino License with Indefinite Useful Life
The Group’s goodwill and casino license with indefinite useful life acquired through a business
combination (Solaire Korea’s acquisition of G&L in 2015) are allocated to a single CGU, i.e.,
casino-hotel business in the Republic of Korea.

The CGU’s recoverable amount has been determined based on fair value less costs of disposal
(“FVLCD”) calculation which is higher than the value-in-use (“VIU”) calculation.

FVLCD is determined using market approach. The fair value is calculated by weighted average
prices from three comparable transactions over the last five years at the time of the transaction
(under level 2 hierarchy). Comparable transactions are the business or stock transfer deals
including change in corporate ownership with respect to casino businesses that are operating
under the approval of the Governor in accordance with the relevant laws and regulations in Jeju,
Korea. Price is the premium for acquisition of casino business license generated at the time of
casino business or stock transfer including change in ownership. Weighted average means the
weighted recent transactions more heavily to reflect the conditions at the date of measurement.
Costs of disposal is assumed to be 2% of the fair value of the CGU taking into account legal
advice and disposal fees.

VIU calculation uses pre-tax cash flow projections based on financial budgets approved by
management covering a five-year period. Management determined the financial budgets based
on past performance and its expectations for market development. Revenue growth is based on
the expected operating results of casino and hotel businesses. Management estimated that

*SGVFS032986*
 - 44 -

revenue will grow at a compounded annual growth rate of 16.0% from 2019 to 2023. Weighted
average long-term growth rate of 1% is used to extrapolate cash flows beyond the budget period
which does not exceed the historical trend of the CGUs. A post-tax discount rate of 11.17% has
been applied to the cash flow projections, the pre-tax equivalent of which is 13.6%. The discount
rate reflects specific risks relating to the Group and is derived from its weighted average cost of
capital (“WACC”). The WACC takes into account both debt and equity. As casino license is
regulated by the government with risk arising with changes in the tourism policy, discount rate is
greater than the average business risk.

The Group has recognized an impairment loss on its goodwill and casino license in 2017
amounting to =P271.6 million and is presented as part of “Other expenses” in the 2017
consolidated statement of comprehensive income (see Note 17). No further impairment was
recognized in 2018.

b. Other Noncurrent Assets

This account consists of:

2018 2017
Advances to contractors P
=269,000,913 =117,840,549
P
Investment in a joint venture 124,949,998 –
Security deposits classified as noncurrent 80,719,348 66,684,841
Investment in club shares 25,000,000 16,350,000
Operating equipment 15,122,692 7,019,640
Others 9,208,492 8,077,905
P
=524,001,443 =215,972,935
P

Advances to contractors pertain to advance payments to various contractors for gaming

equipment, hotel furniture and fixtures, operating equipment and other gaming and hotel
equipment related to the development of hotel and gaming facility of Solaire. As of
December 31, 2018 and 2017, advances to contractors primarily pertain to advance payments for
hotel furniture and fixtures and other gaming and hotel equipment and for small constructions in
the property, respectively.

Investment in a joint venture represents the Group’s 49% ownership in Falconer Aircraft
Management, Inc. The Group’s share in the profit or loss and other comprehensive income of the
joint venture is not material to the consolidated financial statements.

Security deposits classified as noncurrent primarily pertain to deposits to utility companies which
are refundable upon service termination.

Investment in club shares represents the Group’s investment in quoted Manila Polo Club shares.

Operating equipment pertains to linen, china, glassware, kitchen wares and uniforms purchased
by the Group to be amortized over a period of two to three years. Purchases in 2018, 2017 and
2016, amounted to =P21.9 million, =
P4.5 million and =
P7.2 million, respectively. Amortization
amounted to =
P13.8 million, =
P94.7 million and =P160.3 million for the years ended December 31,
2018, 2017 and 2016, respectively (see Note 17).

*SGVFS032986*
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11. Payables and Other Current Liabilities

This account consists of:

2018 2017
Outstanding chips and other gaming liabilities
(see Note 16) P
=8,871,427,933 =3,243,586,534
P
Customers’ deposits (see Note16) 2,499,589,332 2,051,971,869
Payable to contractors and suppliers (see Note 13) 1,117,261,592 688,558,899
Gaming taxes payable (see Notes 13 and 19) 1,074,772,863 777,978,820
Retention payable 476,206,183 239,898,757
Holdback liability (net of indemnification asset) 378,225,323 364,865,130
Short-term borrowing 130,467,000 207,815,000
Output VAT and other taxes payable 64,976,370 212,138,397
Tenants’ security deposits classified as current
(see Note 18) 26,423,258 16,764,233
Accrued expenses:
Interest 1,006,778,677 364,817,203
Outside services and charges 418,730,943 360,963,736
Advertising and promotions 403,683,987 237,267,595
Utilities 54,704,288 58,261,736
Salaries and benefits (see Note 13) 45,469,266 41,539,287
Repairs and maintenance 32,717,590 26,813,874
Rent (see Note 18) 12,532,490 50,203,192
Communication and transportation 12,094,394 10,081,980
Others 302,794,493 292,410,750
P
=16,928,855,982 =9,245,936,992
P

Outstanding chips and other gaming liabilities include outstanding chips, slot tickets as well as
provision for progressive jackpot on slots and for points earned from customer loyalty programs.
Outstanding chips as of December 31, 2018 and 2017 amounting to = P7,524.0 million and
=2,501.5 million, respectively, pertain to chips purchased by the patrons which are not yet converted
P
into cash (see Note 16). Other gaming liabilities mainly include liability for points earned from
customer loyalty programs amounting to P =452.4 million and =
P353.6 million as of December 31, 2018
and 2017, respectively; junket program rebates amounting to = P745.6 million and =P283.8 million as of
December 31, 2018 and 2017, respectively; progressive jackpot liability amounting to = P125.4 million
and =P77.9 million as of December 31, 2018 and 2017, respectively; and slot payout voucher
amounting to = P24.0 million and =
P26.8 million as of December 31, 2018 and 2017, respectively.

The outstanding chip liability represents the collective amounts owed to junket operators and patrons
in exchange for gaming chips in their possession. Outstanding chips are expected to be recognized as
revenue or redeemed for cash within one year of being purchased.

Customers’ deposits pertain to casino patrons’ funds deposited directly to the casino’s bank accounts
or over the cage cashier counter for future purchase of chips or redemption of credit markers and
advance payments for retail space lease, hotel accommodations and events services. Customers’
deposits pertaining to casino patrons’ deposit as of December 31, 2018 and 2017 amounted to
=2,401.3 million and =
P P1,958.4 million, respectively (see Note 16). Customer’s deposits are expected
to be recognized as revenue or refunded to the patrons within one year of the date the deposit was
recorded.

*SGVFS032986*
 - 46 -

Payable to contractors and suppliers represents obligations of the entity to suppliers or creditors for
goods or services received or services performed. These obligations are not secured by liens on
assets, security interest, or other collateral unless otherwise indicated. Common transactions included
are payment to contractors, suppliers and purchase of inventory and equipment.

Gaming taxes payable mainly pertains to license fees payable to PAGCOR, which are normally
settled within one month.

Holdback liability represents the remaining amount of consideration withheld by Solaire Korea
relative to G&L’s acquisition in 2015. Solaire Korea also recognized an indemnification asset at
acquisition date representing reimbursement of payments that Solaire Korea will eventually make
upon settlement of the liabilities of G&L covered by the holdback as G&L’s sellers effectively
indemnify Solaire Korea for the outcome of G&L’s legal contingencies.

Short-term borrowing pertains to borrowings of G&L from banks payable within a year with interest
rate of 6.5% per annum. Interest charges related to this borrowing, recognized as part of “Interest
expense” account in the consolidated statements of comprehensive income, amounted to
=17.6 million, P
P =22.9 million and =
P32.6 million in 2018, 2017 and 2016, respectively (see Note 17).
Principal amount paid in 2018, 2017 and 2016 amounted to = P77.3 million, =
P74.9 million and
P
=191.6 million, respectively.

Accrued rent arises from the recognition of various leases on a straight-line basis.
Other accrued expenses include accrual for insurance and other expenses.

Payables and other current liabilities are normally settled within one year.

12. Long-term Debt

This account consists of:

2018 2017
Principal:
Syndicated loan facility P
=72,397,500,000 =–
P
Original facility – 8,252,697,500
Expansion facility – 12,789,920,000
Corporate notes – 11,310,750,000
72,397,500,000 32,353,367,500
Less unamortized debt discount 1,210,580,314 252,547,904
71,186,919,686 32,100,819,596
Less current portion of long-term debt* 2,068,149,254 2,727,330,526
P
=69,118,770,432 =
P29,373,489,070
*Net of unamortized debt discount of =
P136.6 million and =
P87.8 million as of December 31, 2018 and 2017,
respectively.

The movements in unamortized debt discount follow:

2018 2017
Unamortized debt discount at beginning of year P
=252,547,904 =334,389,914
P
Additions 1,293,946,444 –
Amortization (net of prepayment option value accretion) (335,914,034) (81,842,010)
Unamortized debt discount at end of year P
=1,210,580,314 =252,547,904
P

*SGVFS032986*
 - 47 -

Future repayment of the principal follows:

2018 2017
Within one year P
=2,205,000,000 P=2,815,152,500
After one year but not more than five years 9,555,000,000 25,194,690,000
Beyond five years 60,637,500,000 4,343,525,000
P
=72,397,500,000 =
P32,353,367,500

a. Syndicated Loan Facility

On April 10, 2018, BRHI (the “Borrower”) entered into an aggregate of = P73.5 billion, ten-year
term loan facilities (“Syndicated Loan Facility”) with Banco de Oro Unibank, Inc. (BDO), BDO
Private Bank, Inc., China Banking Corporation, Philippine National Bank, PNB Savings Bank,
Robinsons Bank Corporation and United Coconut Planters Bank (each a “Lender”, and
collectively, the “Lenders”) to: (i) finance the Borrower’s advances to Sureste for the latter’s
investments; (ii) finance the Borrower’s working capital requirements; (iii) refinance the principal
amount of all the existing outstanding term loans of the Borrower; and (iv) finance the
Borrower’s advances to Sureste for refinancing of the principal amount of all of Sureste’s
existing outstanding term loans.

The Syndicated Loan Facility is payable over ten years in 40 consecutive quarterly installments
on each repayment date commencing on the 3rd month from the initial drawdown date as follows:

Amount
Year 1 =
P2,205,000,000
Year 2 2,205,000,000
Year 3 2,205,000,000
Year 4 2,205,000,000
Year 5 2,205,000,000
Year 6 3,675,000,000
Year 7 7,350,000,000
Year 8 7,350,000,000
Year 9 22,050,000,000
Year 10 22,050,000,000
=73,500,000,000
P

The interest on the unpaid principal amount shall be paid in quarterly payments from the initial
drawdown date.

The loan bears a fixed interest per annum from initial drawdown date to the 60th month from the
initial drawdown date of 7.5% divided by 0.99 and from the 61st month from the initial
drawdown date up to the final repayment date of 7.5% divided by 0.95. BRHI is obliged to pay,
on each date of drawdown, for the first year of the facilities, a commitment fee equivalent to 0.5%
per annum, based on the undrawn portion of the commitment.

The Syndicated Loan Facility provides that BRHI is permitted to make optional prepayments
anytime until maturity. In case of prepayment, BRHI shall pay the principal, accrued interest and
0.50% based on the amount prepaid as penalty in the first year. No prepayment penalty shall be
imposed after the first year up to the last repayment date.

*SGVFS032986*
 - 48 -

The embedded prepayment option on the Syndicated Loan Facility was assessed as clearly and
closely related to the loan, thus, not subject for bifurcation.

As of December 31, 2018, this facility had been fully drawn. Outstanding long-term debt, net of
unamortized debt discount, amounted to = P71,186.9 million as of December 31, 2018.

b. Original Facility

On January 24, 2011, Sureste and BRHI entered into an aggregate of P =9.87 billion (P
=7.62 billion
for Sureste and =P2.25 billion for BRHI), seven-year term loan facilities (“Original Facility”) with
Banco de Oro Unibank, Inc. (“the Lender” or “BDO”) as the lender to finance the construction of
the hotel, gaming and entertainment facility, including but not limited to purchase of furniture,
fixture and equipment and payment of consultants. Sureste’s loan has an escrow portion in the
amount of P =2.25 billion, which is secured by the assignment and hold-out on the escrow account
maintained by BRHI as previously required under the Provisional License from PAGCOR
(see Note 8). On April 4, 2012, Sureste’s loan agreement with BDO was amended to, among
others, provide for an additional P=4.73 billion loan facility, making an aggregate available facility
for Sureste of P
=12.35 billion.

The Original Facility is payable over seven years in 16 consecutive quarterly installments on each
repayment date commencing on the 39th month from the initial drawdown date while the interest
on the unpaid principal amount shall be paid in quarterly payments from the initial drawdown
date. The loan bears an interest rate based on a spread of 1% over the 3-month PDST-R1 rate
with respect to the escrow portion of Sureste’s loan in the amount of P
=2.25 billion and 3% over
the 3-month PDST-F rate with respect to the portion not constituting the escrow portion in the
amount of P
=12.35 billion.

On December 22, 2016, the Group and the Lender agreed to restructure the terms of the loan
facility. Under the revised agreement, the Original Facility is payable over 16 years in
50 consecutive quarterly installments on each repayment date commencing on the 39th month
from the initial drawdown date. The loan bears an interest rate on a spread of 1.0% over the
10-year PDST-R2 rate as of December 22, 2016 with respect to the escrow portion of the Group’s
loan in the amount of =P2.25 billion and 1.75% over the 10-year PDST-R2 rate as of
December 22, 2016 with respect to the portion not constituting the escrow portion in the amount
of P
=12.35 billion. The amendment of the terms of the Original Facility was accounted for as a
modification, rather than an extinguishment of debt. Thus, the fees incurred on the loan
refinancing amounting to P=43.4 million was adjusted to the carrying value of the Original Facility
and will be amortized over the remaining term of the modified liability.

Sureste and BRHI are obliged to pay, on each date of drawdown, for the first three years of the
facilities, a commitment fee equivalent to 0.8% per annum for the first year and 0.5% per annum
for the second and third years, based on the undrawn portion of the commitment.

The Original Facility provides that Sureste/BRHI is permitted to make optional prepayments
anytime until maturity. Upon prepayment, Sureste/BRHI shall pay the principal, accrued interest
and penalty based on the amount prepaid in the following percentages: (i) 3% for years 1 to 3
from the initial borrowing date; (ii) 2% for year 4; (iii) 1% for year 5; (iv) 0.5% for year 6.

The prepayment option was assessed as not clearly and closely related to the loan. As at
inception date, the value of the prepayment option is not material. Upon additional drawdowns,
the option was bifurcated at each drawdown date of the loan, resulting to a value of the bifurcated
prepayment option which was offset against additions to capitalized debt issue costs. Accretion

*SGVFS032986*
 - 49 -

of interest on the option amounting to =

P2.5 million, P
=13.5 million and P
=20.9 million in 2018,
2017 and 2016, respectively, were offset against amortization of debt issue costs. Fair value loss
on the prepayment option amounting to P =1.6 million, P
=7.6 million and =
P20.4 million in 2018,
2017 and 2016, respectively, are recognized as part of “Others” under Other income (expenses) in
the consolidated statements of comprehensive income.

As of December 31, 2017, the outstanding long-term debt amounted to P =8,181.5 million, net of
unamortized debt discount, of P
=71.2 million. On April 28, 2018, the outstanding loan principal
amounting to =P8,252.7 million was fully paid. Loan principal amounting to P
=434.4 million and
=2,796.1 million was paid in 2017 and 2016, respectively.
P

c. Expansion Facility

In March 2013, the Group executed a second amendment to the loan agreement to provide for an
additional P
=14.3 billion loan facility (“Expansion Facility”) with BDO Unibank Inc., China
Banking Corp., and Philippine National Bank as expansion lenders.

The Expansion Facility of P =14.3 billion is payable over seven years in 16 consecutive quarterly
installments on each repayment date commencing on the 39th month from the initial drawdown
date while the interest on the unpaid principal amount shall be paid in quarterly payments from
the initial drawdown date. The loan bears an interest rate based on a spread of 2% over the
30-day BSP reverse purchase agreement rate, unless a substitute benchmark rate has been
requested 20 banking days prior to an interest payment date.

Similar with the original facility, Sureste is obliged to pay, on each date of drawdown, for the
first three years of the facilities, a commitment fee equivalent to 0.8% per annum for the first year
and 0.5% per annum for the second and third years, based on the undrawn portion of the
commitment.

The Expansion Facility provides that Sureste is permitted to make optional prepayments anytime
until maturity, but without penalty.

As of December 31, 2017, the outstanding long-term debt amounted to P=12,651.3 million, net of
unamortized debt discount of P
=138.6 million. On April 28, 2018, the outstanding loan principal
amounting to P
=12,789.9 million was fully paid. Loan principal amounting to =
P1,258.4 million
and =
P251.6 million was paid in 2017 and 2016, respectively.

d. Corporate Notes

On February 10, 2014, the Group issued =P11.425 billion unsecured corporate notes (“Corporate
Notes”) to fund Phase 1A of Solaire. Sureste and BRHI signed a corporate notes facility
agreement with BDO Unibank Inc., BDO Leasing and Finance Inc., BDO Private Bank Inc.,
China Banking Corp., Robinsons Bank Corp. and United Coconut Planters Bank. BRHI served
as an issuer, Sureste as surety and BDO Capital & Investment Corp. as the lead arranger and sole
bookrunner for the facility.

The Corporate Notes of = P11.425 billion is payable over seven years in 8 consecutive semi-annual
installments on each repayment date commencing on the 36th month from the initial drawdown
date while the interest on the unpaid principal amount shall be paid in semi-annual payments
from the initial drawdown date. The Corporate Notes bears a fixed interest rate of 6.75% per
annum.

*SGVFS032986*
 - 50 -

The embedded prepayment option on the Corporate Notes was assessed as clearly and closely
related to the loan, thus, not for bifurcation.

As of December 31, 2017, the outstanding balance of the Corporate Notes amounted to
=11,268.0 million, net of unamortized debt discount of =
P P42.8 million. On April 28, 2018, the
outstanding loan principal amounting to P
=11,310.8 million was fully paid. Loan principal
amounting to P=114.2 million was paid in 2017.

All legal and professional fees, including commitment fee, totaling =

P1,293.9 million and
=
P794.5 million as of December 31, 2018 and 2017, respectively, were capitalized. Debt issue costs
were amortized using EIR method.

In 2018, 2017 and 2016, borrowing costs related to these loan facilities recognized as expense
in the consolidated statements of comprehensive income amounted to P =4,553.1 million,
=2,120.3 million and =
P P2,189.3 million, respectively. This comprises of interest expense amounting
to =
P4,217.2 million, =
P2,038.4 million and P =2,076.7 million and amortization of debt discount (net of
interest accretion on the option) amounting to =P335.9 million, P
=81.9 million and P=112.6 million in
2018, 2017 and 2016, respectively (see Note 17).

Unamortized debt discount, representing capitalized debt issue costs and the value of the bifurcated
derivatives arising from embedded prepayment option, is presented as deduction from the Group’s
long-term debt.

Debt Covenant
The Group’s syndicated loan facility, original and expansion facilities and corporate notes contain
certain restrictive covenants that require the Group to comply with specified financial ratios and other
financial tests at quarterly measurement dates. The Group’s loan agreements include compliance
with certain financial ratios such as debt-to-equity ratio (computed as total liabilities divided by total
equity) and debt service coverage ratio (computed as net income less interest expense; depreciation
and amortization; Debt Service Payment Account (“DSPA”) and Debt Service Reserve Account
(“DSRA”) divided by current portion of long-term debt and interest payable). In February 2017, the
definition of the debt-to-equity ratio requirement for the Expansion Facility was amended to exclude
liabilities backed by cash from the total liabilities.

As of December 31, 2018 and 2017, Sureste and BRHI were in compliance with these debt
covenants.

Collateral
Under the syndicated loan facility obtained in 2018, collateral includes the following:

i) Assignment of Debt Service Reserve Account

To ensure the payment by BRHI of the Loan, BRHI shall convey, assign, transfer, set over and
confirmed unto the Security Trustee the rights, title and interest of BRHI in its Debt Service
Reserve Account (DSRA) required to be maintained by BRHI.

The level of funds standing in the DSRA on any date commencing on the initial drawdown date
shall be at least the amount of the principal due on the immediately succeeding repayment date
and at least twice the amount of the interest due on the immediately succeeding interest payment
date.

*SGVFS032986*
 - 51 -

In case BRHI fails to transfer funds to the Paying Agent, or transfers an amount not sufficient to
cover the payment of debt service due, on a payment date, the Security Trustee shall debit from
the DSRA such amounts as may be necessary to meet such Debt Service and transfer the same to
BDO Unibank, Inc. - Trust and Investment Group (Paying Agent).

In the event the funds in the DSRA fall below the DSRA maintaining balance, the Borrower shall
replenish the DSRA from its own funds in order that the DSRA maintaining balance shall be met
not later than the five Banking days from the date the funds fell below the DSRA Maintaining
Balance.

As of December 31, 2018, the Group’s debt collateral account related to the Syndicated Loan
Facility amounted to P
=3,446.0 million.

ii) Assignment of Project Agreements

BRHI shall assign, convey, set over and transfer absolutely to the Security Trustee, for the benefit
of the Secured parties, all of its rights, title and interest, present and future, in and into the Future
Project Agreements, the (a) benefit of all claims for damages for the breach by any Counterparty
of any term of any of the Project Agreements and all warranties and indemnities contained
therein; (b) right to terminate any of the Project Agreements or agree to the suspension thereof;
(c) right to compel performance of any of the Project Agreements; (d) the right to agree to any
variation of the terms of any of the Project Agreements; and (e) the right to pursue any action,
proceeding, suit or arbitration arising in relation to any of the rights assigned and to enforce such
rights in the name of BRHI.

iii) Mortgage

As a security for timely payment, discharge, observance and performance of the loan,
Sureste/BRHI (a) establishes in favor of the Security Trustee for the benefit of the Lenders, a first
ranking real estate mortgage on the present real assets, i.e. leasehold rights over the phase 1
PAGCOR land covered by the PAGCOR lease, and future real assets, i.e. the hotel and gaming
facilities and Land; and (b) establish in favor of the Security Trustee for the benefit of the Lender,
a first ranking chattel mortgage on the present and future chattels.

iv) Continuing Suretyship

In consideration of the loan and for other valuable consideration receipt of which the Surety, i.e.
Sureste/BRHI, acknowledges, Sureste/BRHI agrees that it shall be solidarily liable with
BRHI/Sureste to the Lender and the Security Trustee for the payment of the loan.

v) Pledge

The Pledgor, i.e. BRHI shareholders, shall assign, transfer, deliver, set over and grant to the
Security Trustee, a continuing security interest of first priority in, all of its right, title and interest
in and to the Pledged Shares, i.e. BRHI shares, and the Additional Pledged Shares, whether now
owned or existing or hereafter acquired.

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Under the original and expansion facilities and corporate notes obtained in prior years, collateral
includes the following:

i) Assignment of Accounts and Receivables

To ensure the payment by Sureste/BRHI of the Loan, Sureste/BRHI assigned and conveyed unto
the Security Trustee absolutely and unconditionally all of its respective right, title and interest in
all monies standing in its Debt Service Payment Account (“DSPA:) and DSRA required to be
maintained by the Group to service interest and principal payments, all monies standing in the
Escrow Account (see Note 3), project receivables, as well as the proceeds, products and fruits of
the said accounts.

The level of funds standing in the DSRA on any date commencing on the initial drawdown date
shall be at least equal to the amount of principal due on an immediately succeeding repayment
date and two times the interest payable on an immediately succeeding interest payment date.

The level of funds standing in the DSPA commencing on the initial drawdown date shall be at
least equal to (i) on the 60th day from the start of the relevant interest period, at least fifty percent
(50%) of all amounts payable on an immediately succeeding payment date; and (ii) on or before
10:00 am of a payment date, at least one hundred percent (100%) of all amounts payable on such
payment date.

In the event the funds in the DSPA fall below the DSPA maintaining balance, and as a result
thereof, the funds standing in the DSPA becomes insufficient to cover payments for the relevant
payment date, Banco de Oro Unibank, Inc. - Trust and Investment Group (the Security Trustee)
shall, not later than 12:00 pm on such relevant payment date, debit from the DSRA such amount
as would be necessary to pay for the interest or principal falling due on such payment date.

As of December 31, 2017, the Group’s DSRA and DSPA amounted to P

=1,504.5 million and
P
=134.3 million, respectively.

ii) Assignment of Project Agreements

Sureste/BRHI assigned and conveyed absolutely to the Security Trustee all of its rights, title and
interest, present and future, in and into the Future Project Agreements, the (a) benefit of all claims
for damages for the breach by any Counterparty of any term of any of the Project Agreements and
all warranties and indemnities contained therein; (b) the right to terminate any of the Project
Agreements or agree to the suspension thereof; (c) the right to compel performance of any of the
Project Agreements; (d) the right to agree to any variation of the terms of any of the Project
Agreements; and (e) the right to pursue any action, proceeding, suit or arbitration arising in
relation to any of the rights assigned and to enforce such rights in the name of Sureste/BRHI.

iii) Mortgage

As a security for timely payment, discharge, observance and performance of the loan,
Sureste/BRHI (a) established in favor of the Security Trustee for the benefit of the Lender, a first
ranking real estate mortgage on the Present Real Assets, i.e. leasehold rights over the phase 1
PAGCOR Land covered by the PAGCOR Lease, and Future Real Assets, i.e. the hotel and
gaming facilities; and (b) establish in favor of the Security Trustee for the benefit of the Lender, a
first ranking Chattel Mortgage on the Present and Future Chattels.

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iv) Continuing Suretyship

In consideration of the loan and for other valuable consideration receipt of which the Surety, i.e,
Sureste/BRHI, acknowledged, Sureste/BRHI agreed that it shall be solidarily liable with
BRHI/Sureste to the Lender and the Security Trustee for the payment of the loan.

v) Pledge

The Pledgor, i.e. BRHI shareholders, assigned and transferred to the Security Trustee, a
continuing security interest of first priority in, all of its right, title and interest in and to the
Pledged Shares, i.e. BRHI shares, and the Additional Pledged Shares, whether now owned or
existing or hereafter acquired.

13. Related Party Transactions

Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operating decisions. This includes:
(a) individuals owning, directly or indirectly through one or more intermediaries, control or are
controlled by, or under common control with the Group; (b) subsidiaries; and (c) individuals owning,
directly or indirectly, an interest in the voting power of the Group that give them significant influence
over the Group and close members of the family of any such individual.

Related party receivables and payables are generally settled in cash.

The Group’s related party balances are as follows:

Outstanding
Transaction Amounts Receivable (Payable)
Related Party Nature/Terms of Transaction 2018 2017 2016 2018 2017
Global Gaming Philippines, LLC Management fees; payable within =
P– =
P– =
P– (P
=4,742,260) (P =4,742,260)
(GGAM), stockholder 30 days; noninterest-bearing
(see Notes 11 and 19)
Eaglesight Investments Limited* Aircraft lease and maintenance 228,018,420 223,165,380 206,849,560 – –
reimbursements; payable within
1 month; noninterest-bearing
(see Note 11)

Bloomberry Cultural 1. 2% of non-junket gaming revenue; 521,434,684 386,172,965 343,846,510 49,296,070 (32,184,947)
Foundation** unsecured; payable within one year;
noninterest-bearing (see Notes 11
and 19)
2. Noninterest-bearing and unsecured (13,937,640) 10,529,574 3,057,456 259,195 14,196,835
advances (to be settled within 1 year);
no impairment (see Notes 7 and 19)

Officers and employees Interest-bearing and unsecured cash 249,020 15,047,809 38,084,166 10,251,394 10,002,374
advances to be settled through salary
deduction within 1 year; no
impairment (see Note 5)

Other affiliates* 1. Aircraft maintenance reimbursements; 84,333,031 69,981,994 275,597,906 (159,008,742) (74,175,711)
noninterest-bearing (see Note 11)
2. Noninterest-bearing and unsecured (16,477,310) 16,477,310 60,355,738 60,355,738 43,878,428
cash advances to be settled through
liquidation; no impairment
(see Note 7)

Key management personnel 1. Short-term employee benefits 254,591,506 123,401,810 120,241,011 – –

2. Retirement benefits 1,870,645 3,055,947 1,066,161 (8,804,162) (6,933,517)

**Under common control
**Corporate social responsibility sector of the Group

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14. Retirement Cost

The Group has an unfunded and noncontributory defined benefit pension plan covering substantially
all of its regular employees. The cost of providing benefits is valued every year by a professional
qualified independent actuary in compliance with PAS 19. Benefits are dependent on the years of
service and the respective employees’ compensation and are determined using the projected unit
credit method.

The following tables summarize the components of retirement expense recognized in the consolidated
statements of comprehensive income and the retirement liability recognized in the consolidated
statements of financial position as of and for the years ended December 31, 2018, 2017 and 2016:

2018 2017 2016

Retirement expense:
Current service cost =114,406,350
P P80,854,884
= =81,574,466
P
Interest cost 19,826,985 11,639,906 7,551,492
Balance at end of year =134,233,335
P =92,494,790
P =89,125,958
P

Retirement liability:
Balance at beginning of year P449,557,616
= =289,563,876
P =226,935,194
P
Retirement expense 134,233,335 92,494,790 89,125,958
Benefits paid (37,989,195) (20,233,820) (45,452,634)
Remeasurement loss (gain) (162,626,262) 67,637,458 16,963,379
Translation adjustment 1,709,245 20,095,312 1,991,979
Balance at end of year =384,884,739
P =449,557,616
P =289,563,876
P

Changes in the present value of defined

benefit obligation:
Balance at beginning of year P449,557,616
= =289,563,876
P =226,935,194
P
Current service cost 114,406,350 80,854,884 81,574,466
Interest cost 19,826,985 11,639,906 7,551,492
Benefits paid (37,989,195) (20,233,820) (45,452,634)
Remeasurement loss (gain) in
other comprehensive income:
Experience adjustments (90,577,502) 42,995,024 (18,095,940)
Changes in demographic
assumptions (18,578,370) 26,190,236 –
Changes in financial
assumptions (53,470,390) (1,547,802) 35,059,319
Translation adjustment 1,709,245 20,095,312 1,991,979
Balance at end of year =384,884,739
P =449,557,616
P =289,563,876
P

The principal assumptions used in determining the Group’s retirement liability as of December 31,
2018 and 2017 are shown below:
2018 2017
Solaire Solaire
Sureste BRHI G&L Korea Sureste BRHI G&L Korea
Discount rate 7.45% 7.43% 2.27% 2.57% 5.80% 5.80% 2.77% 3.01%
Future salary rate
increase 6.00% 6.00% 5.00% 2.00% 6.00% 6.00% 5.00% 2.00%
Mortality rate 2017 PICM KIDI 2017 PICM KIDI
Disability rate 1952 disability study, period 2, benefit 5 1952 disability study, period 2, benefit 5
Turnover rate A scale ranging from 15% A scale ranging from the A scale ranging from 13% A scale ranging from the
at age 18 decreasing to age 30 decreasing to at age 18 decreasing to age 30 decreasing to
0% at age 60 retirement 0% at age 60 retirement

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Shown below is the maturity profile of the Group’s undiscounted benefit payments:

Expected Benefit Payments

Plan Year 2018 2017
Less than one year P
=10,730,706 =12,461,244
P
More than one year to five years 23,196,459 31,008,556
More than five years to 10 years 143,856,890 114,577,079
More than 10 years to 15 years 468,464,282 482,165,841
More than 15 years to 20 years 590,930,028 710,772,170
More than 20 years 3,337,281,758 4,517,427,838

The average duration of the defined benefit obligation at the end of the reporting period is
24.59 years.

The retirement liability is subject to several key assumptions. To help illustrate the impact of each
key assumption, a sensitivity analysis is provided below, which has been determined based on
reasonably possible changes of each significant assumption on the retirement benefit obligation as of
the end of the reporting period, assuming all other assumptions were held constant:

a. Sureste

Effect on
Present Value of Obligation
Discount rate
Actual + 1.00% (P
=4,757,929)
Actual - 1.00% 5,827,674
Salary increase rate
Actual + 1.00% 6,003,335
Actual - 1.00% (4,965,449)

b. BRHI

Effect on
Present Value of Obligation
Discount rate
Actual + 1.00% (P
=23,453,098)
Actual - 1.00% 28,507,088
Salary increase rate
Actual + 1.00% 29,457,292
Actual - 1.00% (24,561,510)

c. G&L

Effect on
Present Value of Obligation
Discount rate
Actual + 1.00% (P
=12,049,116)
Actual - 1.00% 13,922,685
Salary increase rate
Actual + 1.00% 13,689,203
Actual - 1.00% (12,088,923)

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d. Solaire Korea

Effect on
Present Value of Obligation
Discount rate
Actual + 1.00% (P
=143,746)
Actual - 1.00% 169,929
Salary increase rate
Actual + 1.00% 169,255
Actual - 1.00% (145,867)

The latest actuarial valuation report is as of December 31, 2018.

15. Equity

Capital Stock
Capital stock consists of:

2018 2017
Shares Amount Shares Amount
Capital stock - P
=1 par value
Authorized 15,000,000,000 P15,000,000,000
= 15,000,000,000 P15,000,000,000
=
Issued 11,032,998,225 11,032,998,225 11,032,998,225 11,032,998,225
Issued and outstanding 11,013,711,155 10,847,592,050 11,010,495,000 10,907,806,076

Stock Incentive Plan

The Stockholders of the Group approved on June 25, 2012 a Stock Incentive Plan (“SIP”) for
directors, officers, and employees of the Group, effective for a period of ten years unless extended by
the BOD. The Participants to the SIP are: permanent and regular employees of the Group or its
affiliates with at least one year tenure; officers and directors of the Group; officers and directors of
affiliates of the Group; and other persons who have contributed to the success and profitability of the
Group or its affiliates.

The SIP shall be administered by the Stock Incentive Committee (“SIC”) composed of three directors
or officers to be appointed by the BOD. The SIC shall determine the number of shares to be granted
to a participant and other terms and conditions of the grant.

Unissued shares from the authorized capital stock or treasury shares, together with shares already
granted under the SIP, which are equivalent to seven percent (7%) of the resulting total outstanding
shares of the Group, shall be allocated for the SIP.

The grant of shares under the SIP does not require an exercise price to be paid by the awardee. The
shares awarded shall vest in two years: 50% on the first anniversary date of the award; and the other
50% on the second anniversary date of the award. Vesting grants the participant absolute beneficial
title and rights over the shares, including full dividend and voting rights.

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Stock awards granted by the SIC to officers and employees of the Group are shown below:

Fair Value
Number per Share
of Shares Granted at Grant Date
October 1, 2013 5,792,700 =10.02
P
July 1, 2014 4,318,589 10.84
October 27, 2014* 4,486,000 14.98
April 28, 2015 922,645 11.36
August 13, 2015 1,157,403 8.95
October 23, 2015 1,105,842 6.59
February 16, 2016 18,986,490 4.49
June 28, 2016 558,289 5.80
April 18, 2017 26,748,522 8.38
May 16, 2018 22,013,874 12.66
June 8, 2018 88,043 11.40
August 1, 2018 102,466 9.00
*50 percent of the total granted shares has a 3-year vesting period.

Fair value per share was based on the market price of stock at the date of grant.

Movements in the stock awards granted (number of shares) follow:

2018 2017 2016

Balance at beginning of year 36,520,911 21,885,389 7,962,017
Stock awards granted 22,204,383 26,748,522 19,544,779
Stock awards vested (22,756,055) (11,396,590) (4,546,197)
Stock awards of resigned/terminated
employees (390,596) (716,410) (1,075,210)
35,578,643 36,520,911 21,885,389

Total compensation expense on the stock awards recognized in 2018, 2017 and 2016 as part of
“Salaries and benefits” under “Operating costs and expenses” in the consolidated statements of
comprehensive income amounted to P =220.7 million, =P145.8 million and =P84.5 million, respectively.
Reduction in share-based payment plan and treasury shares arising from the issuance of treasury
shares for vested stock awards amounted to = P154.1 million and =
P128.8 million, respectively, in 2018;
=64.4 million and =
P P89.4 million, respectively, in 2017; and P
=54.5 million and P=49.5 million,
respectively, in 2016. Such issuance of treasury shares resulted to increase in APIC amounting to
=
P25.3 million in 2018, decrease in APIC amounting to = P25.0 million in 2017 and increase in APIC
amounting to P =5.0 million in 2016.

The stock incentive obligation recognized as “Share-based payment plan” in the consolidated
statements of financial position amounted to P
=226.3 million and P
=159.7 million as of
December 31, 2018 and 2017, respectively.

Treasury Shares
The movement in treasury shares follows:

2018 2017 2016

Shares Amount Shares Amount Shares Amount
Balance at beginning of year 22,503,225 P
= 125,192,149 33,899,815 P=214,589,978 24,446,012 =216,422,356
P
Acquisition 19,539,900 189,006,694 – – 14,000,000 47,677,001
Issuance for share-based payments (22,756,055) (128,792,668) (11,396,590) (89,397,829) (4,546,197) (49,509,379)
Balance at end of year 19,287,070 P
= 185,406,175 22,503,225 P=125,192,149 33,899,815 P
=214,589,978

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In 2018, 2017 and 2016, a total of 22,756,055; 11,396,590 and 4,546,197 treasury shares,
respectively, were reissued for vested stock awards.

Set out below is Bloomberry’s track record of issuance of its securities:

Number of Shares
Issued/ Issue/
Date of Approval Authorized Subscribed Offer Price
May 3, 1999* 120,000,000 80,000,000 =1.00
P
February 27, 2012** 15,000,000,000 9,211,840,556 1.00
May 2, 2012** 15,000,000,000 1,179,963,700 7.50
May 31, 2012*** 15,000,000,000 117,996,300 7.50
November 10, 2014**** 15,000,000,000 435,000,000 13.00
December 18, 2014**** 15,000,000,000 8,197,669 12.60
****Date when the registration statement covering such securities was rendered effective by the SEC
****SEC approval of the increase in the authorized capital stock; Offer Shares sold at =
P 7.50 on May 2, 2012
****Transaction date per SEC Form 23-B; Includes Offer Shares and Over-Allotment Option
****Transaction date per SEC Form 17-C

As of December 31, 2018 and 2017, Bloomberry has total shareholders of 98 and 97, respectively, on
record. For this purpose, public shares held under PCD Nominee are counted as two (one for
PCD Nominee - Filipino and another for PCD Nominee - Foreign).

Cost of Shares Held by a Subsidiary

This account includes 863,900 Bloomberry shares owned by BRHI amounting to P =9.3 million as of
December 31, 2018. BRHI purchased a total of 3,229,900 shares at =
P10.73 per share and issued
2,366,000 shares in 2018.

Dividend Declaration
On April 10, 2018, the Parent Company’s BOD approved the declaration of cash dividend of = P0.10
per share or an aggregate amount of P
=1,103.3 million to stockholders on record date of April 24, 2018
payable on April 30, 2018. As of December 31, 2018, outstanding dividends payable amounted to
P
=1.5 million.

16. Revenues

Disaggregated Revenue Information

The table below shows the disaggregation of revenues of the Group by major sources for the years
ended December 31:

2017 2016
(As restated - (As restated -
2018 see Note 2) see Note 2)
Types of goods or services:
Gaming =31,605,445,445 =
P P27,041,155,050 P
=23,118,609,481
Hotel, food and beverage 3,760,663,461 3,727,286,239 3,023,610,171
Retail and others* 2,325,260,940 1,867,872,059 1,260,199,337
Total revenue from contracts with customers =37,691,369,846 P
P =32,636,313,348 =
P27,402,418,989
*Excluding rent income amounting to =
P 528.9 million, =
P 385.4 million and =
P 187.8 million in 2018, 2017 and 2016, respectively.

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2017 2016
(As restated - (As restated -
2018 see Note 2) see Note 2)
Geographical segments:
Philippines =37,084,376,237 P
P =32,027,820,318 P
=27,087,902,051
Korea 606,993,609 608,493,030 314,516,938
Total revenue from contracts with customers =37,691,369,846 P
P =32,636,313,348 P
=27,402,418,989

Performance Obligations
Information about the Group’s performance obligations are summarized below:

Gaming revenue
The performance obligation to provide gaming services is satisfied at a point in time which is upon
the conclusion of the play and usually occur within a single gaming day.

Hotel, food and beverage, retail and other operating revenues

Hotel, food and beverage, retail and other operating revenues are recognized when services are
performed or the retail goods are sold.

Contract Balances

December 31, December 31, January 1,

2018 2017 2017
Trade receivables:
Gaming (see Note 5) P
=2,776,947,415 =2,290,513,611
P =4,198,751,920
P
Hotel (see Note 5) 151,791,746 132,109,525 260,478,488
Contract liabilities:
Outstanding chips liabilities
(see Note 11) 7,524,020,175 2,501,532,525 2,289,515,069
Customers’ deposits
(see Note 11) 2,401,292,297 1,958,429,353 1,451,598,609

Gaming receivables are noninterest-bearing and are normally collected within 90 days.

Hotel receivables are noninterest-bearing and are normally collected within one month.

The Group has no contract assets as of December 31, 2018 and 2017; and January 1, 2017.

The Group identified its outstanding chips liabilities and customers’ deposits as contract liabilities as
of December 31, 2018 and 2017; and January 1, 2017. These represent the Group’s obligation to
provide gaming services to the patrons for which the Group has received consideration from the
patrons. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one
year of being purchased. Customer deposits are expected to be recognized as revenue or refunded to
the patrons within one year of the date the deposit was recorded.

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The following table summarizes the liability activity related to contracts with customers:

December 31, December 31, December 31, January 31,

2018 2017 Increase 2017 2017 Increase
Outstanding chips liabilities P
= 7,524,020,175 P
=2,501,532,525 P
=5,022,487,650 P=2,501,532,525 P
=2,289,515,069 P
=212,017,456
Customers’ deposits 2,401,292,297 1,958,429,353 442,862,944 1,958,429,353 1,451,598,609 506,830,744
P
= 9,925,312,472 P
=4,459,961,878 P
=5,465,350,594 =P4,459,961,878 P
=3,741,113,678 =718,848,200
P

17. Income and Expenses

a. Operating Costs and Expenses

This account consists of:

2017 2016
(As restated - (As restated -
2018 see Note 2) see Note 2)
Taxes and licenses (see Notes 13 and 19) =P11,052,836,019 =9,583,935,124
P =6,687,879,131
P
Salaries and benefits
(see Notes 14 and 15) 4,267,167,292 3,829,214,503 3,703,033,689
Depreciation and amortization
(see Notes 9 and 10) 3,629,437,211 4,353,852,334 4,855,041,542
Cost of sales (see Notes 2 and 6) 2,679,529,314 2,217,833,501 1,626,167,395
Outside services and charges 1,523,103,106 1,160,822,955 956,956,628
Office expenses 1,086,908,423 1,033,615,386 1,039,716,434
Utilities 902,798,592 852,772,486 823,686,103
Advertising and promotions
(see Notes 2, 3, 18 and 19) 461,862,589 482,947,632 514,180,583
Repairs and maintenance 395,334,641 402,837,572 324,346,006
Rent (see Note 18) 332,361,060 531,393,781 510,748,156
Communication and transportation
(see Note 13) 200,183,581 212,290,929 189,168,928
Provision for (reversal of) allowance for
doubtful accounts (see Note 5) 29,050,229 (32,873,711) 203,752,624
Others 535,620,181 465,528,757 456,088,126
=27,096,192,238
P =25,094,171,249 P
P =21,890,765,345

Office expenses mainly consist of supplies amounting to P

=545.4 million, P
=550.7 million and
P
=522.1 million; team member expenses amounting to = P332.6 million, =
P309.8 million and
P
=322.4 million; and insurance expense amounting to P =90.5 million, =
P88.4 million and
=101.0 million in 2018, 2017 and 2016, respectively.
P

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b. Interest Income

Sources of the Group’s interest income are as follows:

2018 2017 2016

Cash and cash equivalents
(see Note 4) P
=136,477,340 =37,758,430
P =31,231,942
P
Receivables from officers and
employees (see Note 5) 1,509,153 1,832,566 2,727,180
Restricted cash (see Note 8) 3,089,603 26,584,268 10,071,451
P
=141,076,096 =66,175,264
P =44,030,573
P

c. Interest Expense

Sources of the Group’s interest expense are as follows:

2018 2017 2016

Short-term borrowing
(see Note 11) P
=17,556,964 P22,938,015
= P32,573,482
=
Long-term debt (see Note 12) 4,553,093,008 2,120,251,416 2,189,334,849
Amortization of tenants’ security
deposit (see Note 18) 11,277,081 8,359,154 1,404,713
P
=4,581,927,053 =2,151,548,585
P =2,223,313,044
P

d. Other Income (Expenses) - Others

This account consists of:

2018 2017 2016

Mark-to-market loss
(see Note 12) (P
=1,554,869) (P
=7,613,277) (P
=20,408,783)
Impairment loss (see Note 10) – (271,574,086) –
Loss on sale/write-off of property
and equipment (see Note 9) – (149,947,080) –
(P
=1,554,869) (P
=429,134,443) (P
=20,408,783)

18. Lease Agreements

As a Lessee
On May 7, 2010, BRHI entered into a contract of lease with PAGCOR to lease 83,084 square meters
of land for the construction of the hotel, gaming and entertainment facility. The lease period shall be
for about 23 years which shall commence upon the execution of the contract and shall be co-terminus
with the term of lessor as provided in the PAGCOR charter which will expire on July 11, 2033, unless
sooner revoked, rescinded or cancelled. The annual lease rental is based on the schedule provided for
in the agreement. No annual lease payments are due during the first two (2) years of the lease period.
Rental shall have 5% annual escalation rate starting on the 18 th year of the lease period.

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On May 20, 2011, BRHI and Sureste entered into a deed of assignment whereby BRHI assigned to
Sureste all its rights and interest as a lessee under the contract of lease with PAGCOR. Such deed of
assignment was approved by PAGCOR on May 26, 2011. Pursuant to the deed of assignment,
Sureste undertakes and commits that it will faithfully observe and fully comply with (a) all of the
representations, covenants and undertakings of BRHI contained in the contract of lease and (b) the
rules and regulations of PAGCOR, to the extent that such representations, covenants, undertakings,
rules and regulations are, or may be, applicable to the lessee under the contract of lease. BRHI shall
remain solidarily liable to PAGCOR for Sureste’s compliance with all the obligations and liabilities
of the lessee under the contract of lease.

In December 2012, BRHI and Sureste agreed to amend the above deed of assignment. Pursuant to the
amended deed of assignment and with the consent of PAGCOR, BRHI assigned 89% of its leasehold
rights over the leased land to Sureste and retained the 11% of such rights. In 2013, an addendum to
the contract of lease covering an additional 3,733 square meters of PAGCOR land, was executed. In
December 2014, a second addendum to the contract of lease covering an additional 73,542 square
meters of PAGCOR land was also executed.

On April 27, 2018, Sureste received a Notice of Award from PAGCOR, awarding the purchase of the
16 hectares of land in Entertainment City where Solaire and its expansion area is located. The
purchase price was =P37,333.1 million as approved by PAGCOR Board on April 18, 2018. On June 4,
2018, Sureste fully paid the purchase price and signed the Deed of Absolute Sale with PAGCOR for
the purchase of two parcels of land in Entertainment City with an area of 3,733 square meters and
156,626 square meters, respectively. Title to the two parcels of land were issued to Sureste on August
15, 2018.

Rent expense amounting to P =221.5 million, P

=462.8 million and =
P459.2 million was recognized as part
of “Rent expense” account under operating costs and expenses in the 2018, 2017 and 2016
consolidated statements of comprehensive income (see Note 17).

Accrued rent on the original lease contract and sublease agreement and prepaid rent on the addendum
to the lease contract arising from straight-line amortization amounted to =
P3.3 million and nil,
respectively, as of December 31, 2018; and = P43.8 million and =
P384.9 million, respectively, as of
December 31, 2017 (see Notes 7 and 11).

Future minimum lease payments under this operating lease with PAGCOR follow:

2018 2017
Within one year P
=2,647,707 P497,473,303
=
Beyond one year but not later than five years 11,982,537 1,868,352,962
Beyond five years 14,564,853 4,397,361,045
P
=29,195,097 =6,763,187,310
P

In 2012, BRHI entered into a lease contract for suites in the SM Arena for three years commencing
May 21, 2012 until May 21, 2015 renewable upon the joint written agreement of the parties under
terms and conditions mutually agreed by the parties. BRHI renews the contract annually. Rent
expense related to this lease, which was primarily used to provide additional incentive to casino
patrons, amounting to =P19.0 million, =
P21.6 million and =P21.3 million, was recognized as part of
“Advertising and promotions” account under operating costs and expenses in the 2018, 2017 and
2016 statements of comprehensive income, respectively (see Note 17).

Future minimum lease payment under this operating lease which is due within one year amounted to
=19.0 million and =
P P21.6 million as of December 31, 2018 and 2017, respectively.

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The Group also entered into other various lease contracts for a period of one year renewable annually.

Rental charges related to these leases, presented as part of “Rent expense” account under operating
costs and expenses in the 2018, 2017 and 2016 consolidated statements of comprehensive income
amounted to =P110.9 million, =P68.6 million and =P51.5 million, respectively (see Note 17).

Security deposits related to the leases discussed above amounted to =

P16.6 million and =
P12.6 million
as of December 31, 2018 and 2017, respectively (see Note 7).

As a Lessor
The Group entered into operating leases with various premium brand boutiques in The Shoppes
(see Note 1) and a BPO company in the parking building. These leases have terms between 1 to 6
years. Rent income amounting to = P528.9 million and =
P385.4 million was recognized as part of
“Retail and others” account in the 2018 and 2017, respectively.

Rent receivable on these operating leases arising from straight-line amortization amounting to
=
P8.0 million and =
P5.8 million as of December 31, 2018 and 2017, respectively (see Note 5).

Tenants’ security deposits classified as noncurrent, presented under “Other noncurrent liabilities”,
amounted to =P327.5 million and = P285.4 million as of December 31, 2018 and 2017. These are
carried at amortized cost using the EIR method. Discount amortization, included as part of the
“Interest expense” account in the consolidated statement of comprehensive income, amounted to
=11.3 million, P
P =8.4 million and =
P1.4 million in 2018, 2017 and 2016, respectively. Tenants’ security
deposit classified as current amounting to =
P26.4 million and =P16.8 million as of December 31, 2018
and 2017, respectively, is presented under “Payables and other current liabilities” in the consolidated
statements of financial position (See Note 11).

Unearned rent amounting to = P11.0 million and =

P16.4 million as of December 31, 2018 and 2017,
respectively, presented under “Other noncurrent liabilities”, represents the excess of the principal
amount of the deposit over its fair value and will be amortized on a straight-line basis over the lease
term. Amortization of unearned rent amounting to = P11.1 million and =
P9.1 million was recognized as
part of “Retail and others” account in the 2018 and 2017 consolidated statement of comprehensive
income, respectively.

Future minimum lease payments under these operating leases as of December 31, 2018 and 2017 are
as follows:

2018 2017
Within one year P
=535,964,618 =300,121,206
P
Beyond one year but not later than five years 2,370,813,692 573,421,724
Beyond five years 331,500 –
P
=2,907,109,810 =873,542,930
P

19. Commitments and Contingencies

a. Under the license agreement with PAGCOR, BRHI has the following commitments, among
others:

ƒ Seven days prior to commencement of operation of the Casino, to secure a surety bond in
favor of PAGCOR in the amount of = P100.0 million to ensure prompt and punctual
remittance/payment of all license fees.

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ƒ License fees must be remitted on a monthly basis, in lieu of all taxes with reference to the
income component of the Gross Gaming Revenues: (a) 15% of the gross gaming revenues
generated by high roller tables; (b) 25% of the gross gaming revenues generated by non-high
roller tables; (c) 25% of the gross gaming revenues generated by slot machines and electronic
gaming machines; and (d) 15% of the gross gaming revenues generated by junket operation.
PAGCOR agreed to the temporary reduction of these license fees effective April 1, 2014 to
5% (from 15%) and 15% (from 25%) on application by BRHI and other licensees during the
pendency of the resolution of the issue on the validity of BIR’s imposition of income tax on
PAGCOR’s licensees under RMC 13-2013. The parties agree to revert to the original license
fee structure under the Provisional License in the event the BIR action to collect income tax
from PAGCOR licensees is permanently restrained, corrected or withdrawn by order of the
BIR or the courts or under a new law. The parties reverted to the original license fee
structure in July 2016 on instruction by PAGCOR. The Supreme Court nullified the
questioned provision of RMC No. 33-2013. The license fees are inclusive of the 5%
franchise tax under the PAGCOR Charter. On September 5, 2016, the Supreme Court
released a decision dated August 10, 2016 which ordered the BIR to cease and desist from
imposing corporate income tax on income from gaming operations of BRHI as a casino duly
licensed by the PAGCOR. The High Court granted the certiorari petition of BRHI against the
BIR. Accordingly, effective July 1, 2016, the license fees being charged by PAGCOR
reverted to its original rate. Subsequently, on November 28, 2016, the Supreme Court denied
the BIR’s motion for reconsideration with finality.

ƒ In addition to the above license fees, BRHI is required to remit 2% of gaming revenues
generated from non-junket operation tables to a foundation devoted to the restoration of
Philippine cultural heritage, as selected by the BRHI and approved by PAGCOR. BRHI has
established Bloomberry Cultural Foundation Inc. (“BCF”) for this purpose. Amount due to
BCF, recognized as part of “Taxes and licenses” account amounted to = P521.4 million,
=386.2 million, P
P =343.8 million in 2018, 2017, and 2016, respectively. Outstanding amount
payable to BCF as of December 31, 2018 and 2017, presented as part of “Gaming taxes
payable”, amounted to = P49.3 million and =P32.2 million, respectively. Furthermore, the
Group has made advances to BCF amounting to P =0.3 million and =
P14.2 million as of
December 31, 2018 and 2017, respectively, presented as part of “Others” under “Prepayments
and other current assets” account in the consolidated statements of financial position
(see Note 7).

ƒ PAGCOR may collect a 5% fee of non-gaming revenue received from food and beverage,
retail and entertainment outlets. All revenues of hotel operations should not be subject to the
5% except rental income received from retail concessionaires.

ƒ Grounds for revocation of the license, among others, are as follows: (a) failure to comply
with material provision of this license; (b) failure to remit license fees within 30 days from
receipt of notice of default; (c) has become bankrupt, insolvent; (d) delay in construction of
more than 50% of the schedule; and (e) if debt-to-equity ratio is more than 70:30. As of
December 31, 2018 and 2017, BRHI has complied with the required debt-to-equity ratio.

Total PAGCOR license fee recognized (including the amount due to BCF), shown as part of
“Taxes and licenses” account, amounted to =P10,873.4 million, P
=9,396.1 million and
=6,534.0 million for the years ended December 31, 2018, 2017 and 2016, respectively
P
(see Note 17). Outstanding amount payable to PAGCOR and BCF, presented as “Gaming taxes
payable”, amounted to =P1,074.8 million and =
P778.0 million as of December 31, 2018 and 2017
(see Note 11).

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b. BRHI and G&L entered into junket operator agreements with junket operators who have the
primary responsibility of directing gaming patrons to the casino. Based on these agreements,
these junket operators are compensated based on a certain percentage of the wins or rolling chips.
Gaming promoters’ expense for the years ended December 31, 2018, 2017 and 2016 amounted to
=9,873.9 million, =
P P9,837.4 million and =P9,045.8 million, respectively. Receivable from junket
operators as of December 31, 2018 and 2017 amounted to P =2,075.6 million and =
P1,086.7 million,
respectively (see Note 5).

c. On September 9, 2011, Sureste and BRHI jointly entered into a Management Services Agreement
(“MSA”) with Global Gaming Philippines LLC (“GGAM”) for the technical assistance on all
aspects of planning, design, layout, and construction of an integrated casino, hotel and
entertainment complex (the “Project”) within Entertainment City and for services related to
recruitment, selection, and hiring of employees for the Project. GGAM through the Management
Team shall also provide management and other related services upon commencement of the
Project’s commercial operations. Fees per contract amounts to US$100,000 per month for the
technical assistance and US$75,000 monthly for services related to the preopening operations.
Upon commencement of the commercial operations and five years thereafter, the Group will pay
GGAM annual fees equivalent to certain percentages of Sureste’s and BRHI’s earnings before
interest, taxes, depreciation and amortization.

Sureste and BRHI terminated the MSA effective September 12, 2013 because of material breach
of the MSA by GGAM after prior notice and failure of discussions to settle their dispute.
Accordingly, the Group has accrued annual fees due to GGAM up to September 12, 2013 only.
GGAM denies having breached the MSA and alleges that it is BRHI and Sureste who breached
the MSA. The parties have submitted their dispute to arbitration before a 3-member arbitral
tribunal in Singapore under the arbitration rules of the United Nations Commission on
International Trade Law (“UNCITRAL”) using Philippine law as the governing law.

Under the MSA, GGAM was granted the option, from the date of execution of the MSA, to
purchase up to 921.2 million shares, equivalent to 9.91% of Bloomberry’s outstanding shares
(prior to Bloomberry’s top-up equity offering) from PMHI at a purchase price equivalent to
=
P1.00 per share plus US$15 million. On December 21, 2012, GGAM exercised its option to
purchase 921.2 million shares of Bloomberry from PMHI at the agreed option strike price of
=1.67 per share and was crossed through the Philippine Stock Exchange on December 28, 2012.
P
On February 25, 2014, the Makati Regional Trial Court (“MRTC”) granted BRHI’s and PMHI’s
application for measures of protection for the Bloomberry in the form of writs of preliminary
attachment and preliminary injunction to restrain GGAM from disposing the Bloomberry shares
to maintain the status quo. GGAM has filed a petition for review on certiorari with the Court of
Appeals against the decision of the MRTC.

On December 9, 2014, the tribunal issued its Order in Respect of Claimants’ Interim Measures of
Protection, declaring among others, that the February 25 Order of MRTC is superseded and that
parties are restored to their status quo ante as of January 15, 2014 and allowed GGAM to sell the
shares.

Following the order of the arbitral tribunal, GGAM filed a Manifestation with the MRTC
informing the order of the arbitral tribunal and seeking assistance in the enforcement thereof.
BRHI, Sureste and PMHI filed a Counter-Manifestation stating among others, the impropriety of
the Manifestation given its non-compliance with requirements of the Special Rules of Court and
Alternative Dispute Resolution (Special ADR Rules) for enforcement of judgement/interim
measures of protection. GGAM also filed a Manifestation and Motion with the Court of Appeals
seeking the same relief as that filed with the MRTC. BRHI, Sureste and PMHI filed a

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Comment/Opposition arguing against the grant of the Motion with the Court of Appeals for non-
compliance with the Special ADR Rules as well as for forum-shopping. In a resolution dated
May 29, 2015 and affirmed on November 27, 2015, the Court of Appeals remanded back the case
to the MRTC for further proceedings.

On September 20, 2016, the arbitral tribunal issued a partial award on liability. It declared that
GGAM has not misled BRHI/Sureste (Respondents) into signing MSA, and Respondents were
not justified to terminate the MSA because the services rendered by the Respondents
Management Team should be considered as services rendered by GGAM under the MSA;
rejected GGAM’s claim that GGAM was defamed by the publicized statements of the Chairman
of BRHI/Sureste; that there is no basis for Respondents to challenge GGAM’s title to the
921,184,056 Bloomberry shares because the grounds for termination were not substantial and
fundamental, thus GGAM can exercise its rights in relation to those shares, including the right to
sell them; reserved its decision on reliefs, remedies and costs to the Remedies Phase which is to
be organized in consultation with the Parties; reserved for another order its resolution on the
request of GGAM: (a) for the Award to be made public, (b) to be allowed to provide a copy of the
Award to Philippine courts, government agencies and persons involved in the sale of the shares,
and (c) to require BRHI/Sureste and Bloomberry to inform Deutsche Bank AG that they have no
objection to the immediate release of all dividends paid by Bloomberry to GGAM. The
arbitration proceedings is still on going on the Remedies Phase.

On August 31, 2017, BRHI and Sureste filed a request for reconsideration of the partial award in
the light of U.S. DOJ and SEC findings of violations of the Foreign Corrupt Practices Act by
certain GGAM officers, and for false statements and fraudulent concealment by GGAM in the
arbitration. GGAM opposed the request on September 29, 2017. In a decision dated
November 22, 2017, the tribunal denied the request for reconsideration saying it has no authority
to reconsider the partial award under Singapore law. The tribunal said that the courts might be
the better forum to look into the allegations of fraud.

On December 21, 2017, BRHI and Sureste filed a petition in the High Court of Singapore to set
aside the June 20, 2017 judgment of the Court and to either remit the partial award to the tribunal
for correction, or otherwise set aside the partial award based the fraud allegations previously
raised in the request for reconsideration. This is case is still pending in the Singapore court.

In a resolution dated November 23, 2017, the MRTC affirmed the continuing validity of its
February 25, 2014 order and the writ of preliminary injunction and attachment issued pursuant
thereto. GGAM then filed a petition for review with the Court of Appeals to question this MRTC
order. The Court of Appeals has denied this petition, and GGAM has filed a petition in the
Supreme Court to question the decision of the Court of Appeals.

BRHI and Sureste were advised by Philippine counsel that an award of the Arbitral Tribunal can
only be enforced in the Philippines through an order of a Philippine court of proper jurisdiction
after appropriate proceedings taking into account applicable Philippine law and public policy.

The hearing on the petition of BRHI and SPI in the Singapore High Court was heard in
September and November 2018, and further hearings are scheduled in May 21-23, 2019.

No further details were provided as required under PAS 37, Provisions, Contingent Liabilities
and Contingent Assets, because these may prejudice the Group’s position in relation to this
matter.

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d. Section 13(2)(a) of PD No. 1869 (“the PAGCOR Charter”) grants PAGCOR an exemption for
tax, income or otherwise, as well as exemption from any form of charges, fees, levies, except a
5% franchise tax on the gross revenue or earnings derived by PAGCOR on its operations.

On April 23, 2013, the BIR issued RMC No.33-2013, clarifying that PAGCOR and its
contractees and licensees are subject to 30% RCIT on their gaming and non-gaming revenues.

On June 4, 2014, BRHI filed with the Supreme Court a Petition for Certiorari and Prohibition
under Rule 65 of the Rules of Court. The petition sought to annul the issuance by the BIR of an
unlawful governmental regulation, specifically the provision in RMC 33-2013 dated
April 17, 2013 subjecting the contractees and licensees of PAGCOR to income tax under the
NIRC, as it violates the tax exemption granted to contractees of PAGCOR under Section 13(2)(b)
of P.D. 1869.

On August 10, 2016, the Supreme Court granted BRHI’s petition against the BIR
(G.R. No. 212530) which ordered the BIR to cease and desist from imposing corporate income
tax on the gaming operations of BRHI as a licensee of PAGCOR. The same decision confirmed
that PAGCOR’s tax exemption extends to its contractees and licensees. Hence, BRHIs income
from gaming operations is subject to 5% franchise tax only and its income from other related
services, if any, is subject to corporate income tax. Accordingly, BRHI paid income tax only up
to June 2016.

e. On March 15, 2016, the Court of Appeals (“CA”) issued a 30-day freeze order on one of BRHI’s
bank accounts upon the petition filed by AMLC in relation to their ongoing investigation. The
freeze order of the CA on the bank account was lifted on April 14, 2016. Subsequently, on
request of the AMLC, the Supreme Court reinstated the freeze order on the account, which
contained the amount of P =109.3 million that was frozen from the accounts of those patrons
subject to the investigation. BRHI has moved for the lifting of the freeze order. This motion is
still pending with the Supreme Court. As of December 31, 2018 and 2017, the balance of this
bank account amounting to = P110.9 million and =
P110.7 million, respectively, is presented as
“Fund held in trust” under the “Prepayments and other current assets” account in the statements
of financial position (see Note 7).

In February 2019, newspapers have reported that the Bangladesh Bank has sued RCBC in New
York for recovery of US$81 million alleged stolen from Bangladesh Bank account with the
Federal Reserve Bank in New York that were allegedly laundered through Philippine casinos.
The lawyer of Bangladesh Bank has sent by courier the summons for the case to BRHI. BRHI is
impleaded as one of 17 Philippine companies and individuals in the suit because the amount of
P
=1,365.0 million of alleged stolen funds passed through BRHI’s bank account in that incident in
2016.

20. Income Taxes

a. Provision for income tax consists of:
2018 2017 2016
Current P
=40,317,130 =1,597,045
P =1,481,815,523
P
Deferred (166,806,346) 231,035,458 177,267,625
(P
=126,489,216) =232,632,503
P =1,659,083,148
P

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In 2018, provision for current income tax represents Bloomberry’s MCIT and Sureste’s 5% Gross
Income Tax (“GIT”). The provision for current income tax in 2017 and 2016 pertains to
Bloomberry’s MCIT and BRHI’s RCIT (for 2016). In 2016, BRHI’s RCIT pertains to the tax
due prior to the promulgation of the Supreme Court decision confirming BRHI’s income tax
exemption (see Note 19).
The reconciliation of provision for income tax computed at the statutory income tax rate to
provision for income tax as shown in the consolidated statements of comprehensive income is
summarized as follows:
2018 2017 2016
Provision for tax at statutory tax rate
of 30% P
=2,111,802,082 =1,888,575,086
P =1,194,644,575
P
Tax effects of:
Income subject to final tax, non-
taxable income and non-
deductible expenses 641,069,033 253,398,788 (414,097,546)
Net movement in unrecognized
deferred income tax assets
and other adjustments (2,879,360,331) (1,909,341,371) 878,536,119
(P
=126,489,216) =232,632,503 P
P =1,659,083,148

b. The components of the Group’s recognized net deferred tax liabilities are as follows:

2018 2017
Deferred tax assets:
NOLCO P
=409,537,621 =435,474,539
P
Retirement liability 9,704,235 13,579,460
Capitalized interest on option 2,022,559 2,160,224
Points accrual 1,311,482 729,052
Accrued rent under PAS 17 718,240 1,904,238
MCIT – 2,798,675
Unrealized foreign exchange loss – 269,831
Prepayment option – 26,791
423,294,137 456,942,810
Deferred tax liabilities:
Excess of fair value over carrying value of net
assets acquired in business combination (528,453,427) (527,548,483)
Capitalized rent (87,636,500) (90,000,048)
Capitalized interest (48,533,119) (51,919,151)
Unrealized gain on investment in club shares (3,450,000) (855,000)
Unrealized forex exchange gain (381,445) (187,999,075)
(P
=245,160,354) (P
=401,378,947)

c. Temporary differences arising from NOLCO and carryforward benefits of excess MCIT for
which no deferred tax assets have been recognized since management believes that it is not
probable that sufficient future taxable income will be available against which these can be utilized
are summarized as follows:
2018 2017
NOLCO P
=10,800,769,819 =8,793,623,837
P
MCIT 4,739,579 703,827
P
=10,805,509,398 =8,794,327,664
P

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d. As of December 31, 2018, the NOLCO of Bloomberry and Sureste that can be carried forward
and claimed as deduction from regular taxable income are as follows:
Year Incurred Expiry Year Amount Applied Expired Balance
2018 2021 P1,685,779,285
= =–
P =–
P P1,685,779,285
=
2017 2020 2,635,726,995 – – 2,635,726,995
2016 2019 3,091,221,294 – – 3,091,221,294
2015 2018 3,419,198,579 – 3,419,198,579 –
=10,831,926,153
P =–
P =3,419,198,579
P =7,412,727,574
P

As of December 31, 2018, the NOLCO of Solaire Korea and G&L that can be carried forward
and claimed as deduction from regular taxable income are as follows:

Year Incurred Expiry Year Amount Applied Expired Balance

2018 2028 P696,522,243
= =–
P =–
P P696,522,243
=
2017 2027 316,568,081 – – 316,568,081
2016 2026 1,188,550,333 60,883,815 – 1,127,666,518
2015 2025 1,631,643,075 570,172,151 – 1,061,470,924
2013 2023 4,631,654 – – 4,631,654
2011 2021 699,476,148 – – 699,476,148
2010 2020 686,003,409 – – 686,003,409
2009 2019 649,887,650 – – 649,887,650
=5,873,282,593 =
P P631,055,966 =–
P =5,242,226,627
P

e. As of December 31, 2018 and 2017, the Group’s unused MCIT that can be carried forward and
used as deduction from income tax due are as follows:

Year Incurred Expiry Year Amount Applied Expired Balance

2018 2021 =1,940,904
P =–
P =–
P =1,940,904
P
2017 2020 1,597,045 – – 1,597,045
2016 2019 1,201,630 – – 1,201,630
2015 2018 703,827 – 703,827 –
=5,443,406
P =–
P =703,827
P =4,739,579
P

f. Sureste is registered with the PEZA as an Ecozone Tourism Enterprise. The scope of registered
activity is limited to the construction, development, management and operation of a hotel and
entertainment complex at the Bagong Nayong Pilipino – Entertainment City Manila, to take over
and undertake the project originally approved by the PEZA Board for BRHI and the importation
of raw materials, machinery, equipment, tools, goods, wares, articles or merchandise directly
used in its registered operations.

Under the PEZA Registration Agreement, Sureste is entitled to:

ƒ Four-year income tax holiday (“ITH”) on income solely derived from servicing foreign
clients for its operations limited to accommodation and other special interest and attraction
activities/ establishments. Upon expiry of the ITH period, Sureste shall pay 5% Gross
Income Tax (“GIT”), in lieu of all national and local taxes; and

ƒ Tax and duty-free importation of capital equipment required for the technical viability and
operation of the registered facilities/activities.

Any income from activities of Sureste outside of the PEZA-registered activities is subject to regular
corporate income tax.

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On December 6, 2013, Sureste decided to waive the ITH incentive and be subjected instead to
GIT (with exemption from real property tax). Sureste has obtained confirmation of the said
waiver with PEZA and therefore now subject to GIT.

21. Financial Assets and Liabilities and Financial Risk Management Objectives and Policies

Fair Value
The carrying values of cash and cash equivalents, receivables, security deposits classified as current
and payables and other current liabilities (except statutory payables) approximate their fair values at
reporting date due to the relatively short-term nature of the transactions.

The carrying value of restricted cash and long-term debt (excluding fixed rate Corporate Syndicated
Loan Facility, Original Facility and Corporate Notes) approximates fair value because of regular
repricing based on market conditions. The Group’s variable rate long-term debt is repriced on a
quarterly basis.

The table below set forth the carrying values and the estimated fair values of the Group’s financial
assets and liabilities for which fair values are determined for measurement and/or disclosure as of
December 31, 2018 and 2017:

2018 2017
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial Assets
Financial assets at amortized cost -
Security deposits classified as
noncurrent (1) P
=80,719,348 P
=180,820,483 =66,684,841
P =150,817,801
P
Equity instrument designated at
fair value through OCI -
Investment in club shares 25,000,000 25,000,000 16,350,000 16,350,000
105,719,348 205,820,483 83,034,841 167,167,801
Financial Liabilities
Other financial liabilities:
Long-term debt 71,186,919,686 75,051,397,711 19,449,467,306 20,720,913,243
Tenants’ security deposit (3) 327,455,374 316,865,580 285,384,995 264,750,020
71,514,375,060 75,368,263,291 19,734,852,301 20,985,663,263
(P
= 71,408,655,712) (P
= 75,162,442,808) (P
=19,651,817,460) (P
=20,818,495,462)
(1)
Presented under “Intangible asset and other noncurrent assets” account.
(2)
Included under “Prepayments and other current assets” account.
(3)
Included under “Other noncurrent liabilities” account.

Security Deposits classified as Noncurrent. The fair value of security deposit is the estimated future
cash flows, discounted to present value using a credit-adjusted discount rate.

Derivative Asset. The fair value of derivative asset is determined using Binomial Option Pricing
Model which allows for the specification of points in time until the option expiry date. This valuation
incorporates inputs such as interest rates and volatility.

Fixed Rate Long-term Debt. The estimated fair value is based on the discounted value of future cash
flows using the applicable BVAL rate of 7.07% and PDST-R1 rate of 2.7% as of December 31, 2018
and 2017, respectively.

Tenants’ Security Deposits. The estimated fair value is based on the discounted value of future cash
flows using the applicable BVAL rates ranging from 5.4% to 7.5% and PDST-R2 rates ranging from
3.2% to 5.7%, as of December 31, 2018 and 2017, respectively.

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Fair Value Hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial
instruments by source of inputs:

ƒ Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that
the entity can access at the measurement date.
ƒ Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly.
ƒ Level 3 - Unobservable inputs for the asset or liability.

The table below summarizes the classification of the Group’s financial assets and liabilities as of
December 31, 2018 and 2017 based on fair value measurement hierarchy.

Level 1 Level 2 Level 3 Total

Asset measured at fair value -
Derivative asset 2017 =–
P =1,554,870
P P–
= P1,554,870
=
Investment in club shares 2018 25,000,000 – – 25,000,000
2017 16,350,000 – – 16,350,000
Assets and liabilities for which
fair value is disclosed:
Security deposits classified as
noncurrent 2018 – 180,820,483 – 180,820,483
2017 – 150,817,801 – 150,817,801
Long-term debt 2018 – – 75,051,397,711 75,051,397,711
2017 – – 20,720,913,243 20,720,913,243
Tenants’ security deposits 2018 – – 316,865,580 316,865,580
2017 – – 264,750,020 264,750,020

In 2018 and 2017, there were no transfers between Level 1 and Level 2 fair value measurements and
transfers into and out of the Level 3 fair value measurement.

Financial Risk Management Objectives and Policies

The Group’s principal financial instruments consist mainly of borrowings from local financial
institutions, proceeds of which were used for financing the Group’s capital expenditures and
operations. The Group has other financial assets and financial liabilities such as cash and cash
equivalents, receivables, restricted cash, payables and other accrued liabilities which arise directly
from the Group’s operations.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign exchange
risk, liquidity risk and credit risk. The BOD reviews and approves policies for managing each of
these risks and they are summarized below.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group’s exposure to market risk for
changes in interest rates relates primarily to its long-term debt with floating interest rates.

Variable or floating rate debt is subject to cash flow interest rate risk. Repricing of variable rate debt
is done on quarterly intervals.

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The following table demonstrates the sensitivity of the Group’s income (loss) before income tax
(through the impact on floating rate borrowings) in 2018, 2017 and 2016 to a reasonably possible
change in interest rates, with all other variables held constant.

There is no impact on the Group’s equity other than those already affecting the net income (loss).

2018 2017 2016

Increase by 2% P92,064,829
= P43,030,972
= P44,466,261
=
Decrease by 2% (92,064,829) (43,030,972) (44,466,261)

Foreign Exchange Risk

Foreign exchange risk is the risk that the value of the Group’s financial instrument will fluctuate due
to changes in foreign exchange rates. The Group has recognized in the consolidated statements of
comprehensive income net foreign exchange gains of P =357.7 million, =
P882.2 million and
=482.4 million in 2018, 2017 and 2016, respectively, on the revaluation of its foreign currency-
P
denominated cash and cash equivalents, receivables, restricted cash, payables and accrued expenses.

In the revaluation of its foreign currency-denominated financial assets and liabilities, the Group used
the following exchange rates as of December 31, 2018, 2017 and 2016:

Currency 2018 2017 2016

USD 52.600 49.930 49.720
HKD 6.734 6.388 6.421
EUR 60.311 59.613 51.840
SGD 38.471 37.323 34.354
AUD 37.070 38.905 35.776
JPY 0.475 0.442 0.425
GBP 66.733 – –

The Group’s foreign currency-denominated monetary assets and liabilities as of December 31, 2018,
2017 and 2016, and their Philippine peso equivalent follow:
Original Currency Peso
USD HKD EUR SGD AUD JPY GBP Equivalent
December 31, 2018
Financial assets:
Cash and cash equivalents 7,100,027 803,484,385 287,892 13,818,156 21,220 1,704,063,646 –P=7,143,303,460
Receivables – 54,039,162 – – – – – 363,899,715
Financial liabilities -
Payables and other current
liabilities (1,192,317) (83,534,185) (2,999) (12,631) – – (76,900) (631,033,644)
Net foreign currency -denominated
financial assets 5,907,710 773,989,362 284,893 13,805,525 21,220 1,704,063,646 (76,900) P
=6,876,169,531

December 31, 2017

Financial assets:
Cash and cash equivalents 6,303,409 882,829,379 49,293 12,898,692 534,838 1,648,409,146 –=P7,188,004,384
Receivables – 34,295,170 – – – – – 219,077,546
Financial liabilities -
Payables and other current
liabilities (1,284,759) (78,142,868) – – (1,125) – – (563,368,426)
Net foreign currency -denominated
financial assets 5,018,650 838,981,681 49,293 12,898,692 533,713 1,648,409,146 –P
=6,843,713,504

December 31, 2016

Financial assets:
Cash and cash equivalents 5,912,059 771,801,036 49,230 10,030,853 534,838 1,294,004,101 –=P6,165,920,140
Receivables – 57,497,651 – – – – – 369,192,417
Financial liabilities -
Payables and other current
liabilities (10,937,971) (75,699,357) – – – – – (1,029,901,489)
Net foreign currency -denominated
financial assets (5,025,912) 753,599,330 49,230 10,030,853 534,838 1,294,004,101 –=
P5,505,211,068

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The following table demonstrates the sensitivity to a reasonably possible change in the foreign
exchange rates, with all other variables held constant, of the Group’s income or loss before income
tax at December 31, 2018, 2017 and 2016. There is no other impact on the Group’s equity other than
those affecting other income or loss before income tax.

USD HKD EUR SGD AUD JPY GBP

December 31, 2018
Increase by 3% =
P9,322,366 =P156,361,331 P
= 515,465 =
P15,933,371 =
P23,599 =
P24,282,907 (P
= 153,953)
Decrease by 3% (9,322,366) (156,361,331) (515,465) (15,933,371) (23,599) (24,282,907) 153,953
December 31, 2017
Increase by 3% P
=7,517,436 =P160,782,449 P
=88,155 =
P14,442,536 P
=622,923 =
P21,857,905 –
Decrease by 3% (7,517,436) (160,782,449) (88,155) (14,442,536) (622,923) (21,857,905) –
December 31, 2016
Increase by 3% (P
=7,496,650) =
P145,165,839 P
=76,562 =
P10,337,998 P
=574,031 =
P16,498,552 –
Decrease by 3% 7,496,650 (145,165,839) (76,562) (10,337,998) (574,031) (16,498,552) –

The change in currency rate is based on the Group’s best estimate of expected change considering
historical trends and experiences. Positive change in currency reflects a stronger peso against foreign
currency. On the other hand, a negative change in currency rate reflects a weaker peso against
foreign currency.

Liquidity Risk
Liquidity risk is the potential of not meeting obligations as they become due because of an inability to
liquidate assets or obtain funding. The Group’s objective is to maintain a balance between continuity
of funding and flexibility through the use of bank loans.

As part of its liquidity strategy, the Group will set aside cash to ensure that financial obligations will
be met as they fall due. The Group has cash and cash equivalents amounting to P =36,465.8 million
and =
P21,961.4 million as of December 31, 2018 and 2017, respectively, that are allocated to meet the
Group’s liquidity needs.

The table below summarizes the maturity profile of the Group’s financial assets and liabilities as of
December 31, 2018 and 2017 based on contractual undiscounted payments.
2018
Within More than
1 Year 1–2 Years 2–3 Years 3–4 Years 4 Years Total
Financial assets:
Cash and cash equivalents:
Cash on hand P
= 2,181,713,440 =
P– =
P– =
P– =
P– P
= 2,181,713,440
Cash in banks 20,387,668,654 – – – – 20,387,668,654
Temporary cash investments 10,450,472,138 – – – – 10,450,472,138
Debt collateral accounts 3,445,993,725 – – – – 3,445,993,725
Receivables:
Gaming 2,776,947,415 – – – – 2,776,947,415
Hotel 151,791,746 – – – – 151,791,746
Receivables from officers and
employees 116,750,740 – – – – 116,750,740
Others 75,655,021 – – – – 75,655,021
Security deposits 31,774,336 80,719,348 – – – 112,493,684
P
= 39,618,767,215 P
= 80,719,348 =
P– =
P– =
P– P= 39,699,486,563

Financial liabilities:
Other gaming liabilities:
Junket program rebates P
= 745,601,800 =
P– =
P– =
P– =
P– P
= 745,601,800
Liability for customer loyalty 452,417,537 – – – – 452,417,537
Progressive jackpot liability 125,375,223 – – – – 125,375,223
Slot payout voucher and
tickets liability 24,013,198 – – – – 24,013,198
Customers’ deposits 98,297,035 – – – – 98,297,035
Payable to contractors and suppliers 1,117,261,592 – – – – 1,117,261,592
Retention payable 476,206,183 – – – – 476,206,183
Holdback liability 378,225,323 – – – – 378,225,323
Short-term borrowing 130,467,000 – – – – 130,467,000

(Forward)

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2018
Within More than
1 Year 1–2 Years 2–3 Years 3–4 Years 4 Years Total
Accrued expenses:
Interest P
= 1,006,857,315 =
P– =
P– =
P– =
P– P
= 1,006,857,315
Outside services and charges 418,730,943 – – – – 418,730,943
Advertising and promotions 403,683,987 – – – – 403,683,987
Utilities 54,704,288 – – – – 54,704,288
Salaries and benefits 45,469,266 – – – – 45,469,266
Repairs and maintenance 32,717,590 – – – – 32,717,590
Rent 12,532,490 – – – – 12,532,490
Communication and transportation 12,094,394 – – – – 12,094,394
Others 302,794,493 – – – – 302,794,493
Long-term debt
Principal 2,205,000,000 2,205,000,000 2,205,000,000 2,205,000,000 63,577,500,000 72,397,500,000
Interest 5,421,990,201 5,284,310,414 5,074,015,027 4,920,851,031 18,752,940,477 39,454,107,150
P
= 13,464,439,858 P
= 7,489,310,414 P
= 7,279,015,027 P
= 7,125,851,031 P
= 82,330,440,477 P
= 117,689,056,807

2017
Within More than
1 Year 1-2 Years 2-3 Years 3-4 Years 4 Years Total
Financial assets:
Cash and cash equivalents:
Cash on hand P1,776,561,344
= P–
= P–
= P–
= P–
= P1,776,561,344
=
Cash in banks 17,583,055,499 – – – – 17,583,055,499
Temporary cash investments 963,002,888 – – – – 963,002,888
Debt collateral accounts 1,638,787,247 – – – – 1,638,787,247
Receivables:
Gaming 2,290,513,611 – – – – 2,290,513,611
Hotel 132,109,525 – – – – 132,109,525
Receivables from officers
and employees 117,241,378 117,241,378
Others 83,806,686 – – – – 83,806,686
Security deposits 66,000,864 66,684,841 – – – 132,685,705
Restricted cash – – 2,250,906,354 – – 2,250,906,354
Derivative asset 1,554,870 – – – – 1,554,870
=24,652,633,912
P =66,684,841
P = 2,250,906,354
P =–
P =– P
P =26,970,225,107

Financial liabilities:
Other gaming liabilities:
Junket program rebates P283,790,507
= P–
= P–
= P–
= P–
= P283,790,507
=
Liability for customer loyalty 353,594,359 – – – – 353,594,359
Progressive jackpot liability 77,905,359 – – – – 77,905,359
Slot payout voucher and
tickets liability 26,763,785 – – – – 26,763,785
Customers’ deposits 93,542,516 – – – – 93,542,516
Payable to contractors and suppliers 688,558,899 – – – – 688,558,899
Retention payable 239,898,757 – – – – 239,898,757
Holdback liability 364,865,130 – – – – 364,865,130
Short-term borrowing 207,815,000 – – – – 207,815,000
Accrued expenses:
Interest 364,817,203 – – – – 364,817,203
Outside services and charges 360,963,736 – – – – 360,963,736
Advertising and promotions 237,267,595 – – – – 237,267,595
Utilities 58,261,736 – – – – 58,261,736
Salaries and benefits 41,539,287 – – – – 41,539,287
Repairs and maintenance 26,813,874 – – – – 26,813,874
Rent 50,203,192 – – – – 50,203,192
Communication and transportation 10,081,980 – – – – 10,081,980
Others 292,410,750 – – – – 292,410,750
Long-term debt
Principal 2,815,152,500 4,260,515,000 8,228,765,000 11,836,705,000 5,212,230,000 32,353,367,500
Interest 1,964,611,649 1,813,792,593 1,404,976,054 452,291,181 909,543,081 6,545,214,558
=8,558,857,814
P =6,074,307,593
P =9,633,741,054 =
P P12,288,996,181 =6,121,773,081 =
P P42,677,675,723

Credit Risk
Credit risk is the risk that the Group will incur a loss arising from customers, clients or counterparties
that fail to discharge their contracted obligations. The Group manages and controls credit risk by
setting limits on the amount of risk that the Group is willing to accept for individual counterparties
and by monitoring exposures in relation to such limits.

The Group’s maximum exposure to credit risk is equal to the carrying amount of its financial
instruments. The Group has no concentration of credit risk.

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The table below shows the maximum exposure to credit risk for the components of the consolidated
statements of financial position as of December 31, 2018 and 2017 for which the net maximum
exposure is not equal to the gross maximum exposure.

Gross Maximum Exposure Net Maximum Exposure*

2018 2017 2018 2017
Cash and cash equivalents:
Cash in banks P
=20,387,668,654 =17,583,055,499
P P
=20,340,965,812 =17,536,105,407
P
Temporary cash investments 10,450,472,138 963,002,888 10,449,472,138 962,002,889
Debt collateral accounts 3,445,993,725 1,638,787,247 3,443,241,936 1,636,035,458
P
=34,284,134,517 =20,184,845,634
P P
=34,233,679,886 =20,134,143,754
P
*
Net financial assets after taking into account insurance on bank deposits.

The following table shows the aging analysis of past due but not impaired receivables per class that
the Group held as of December 31, 2018 and 2017. A financial asset is past due when a counterparty
has failed to make a payment when contractually due.
2018
Past due but not impaired
Neither 30 Days
Past Due nor Less than but less than
Impaired 30 Days 90 Days Impaired Total
Trade receivables:
Gaming P
= 1,430,815,504 P
= 168,005,289 P
= 862,940,196 P
= 315,186,426 P
= 2,776,947,415
Hotel 142,856,399 – 8,935,347 – 151,791,746
Receivables from officers and employees 116,750,740 – – – 116,750,740
Others 75,655,021 – – – 75,655,021
P
= 1,766,077,664 P
= 168,005,289 P
= 871,875,543 P
= 315,186,426 P
= 3,121,144,922

2017
Past due but not impaired
Neither 30 Days
Past Due nor Less than but less than
Impaired 30 Days 90 Days Impaired Total
Trade receivables:
Gaming =687,303,342
P =1,159,602,202
P =104,175,940
P =339,432,127
P =2,290,513,611
P
Hotel 91,515,242 38,063,872 1,715,086 815,325 132,109,525
Receivables from officers and employees 117,241,378 – – – 117,241,378
Others 83,806,686 – – – 83,806,686
=979,866,648
P =1,197,666,074
P =105,891,026
P =340,247,452
P =2,623,671,200
P

The evaluation of the credit quality of the Group’s financial assets considers the payment history of
the counterparties.

a. High grade - counterparties that have good paying history and are not expected to default in
settling their obligations. Credit exposure from these financial assets is considered to be minimal.
This normally includes deposits and placements with top tier banks and counterparties with good
credit rating.
b. Standard grade - counterparties for which sufficient credit history has not been established.

As of December 31, 2018 and 2017, all financial assets are viewed by management as ‘high grade’,
except for impaired financial assets, considering the collectability of the receivables and the credit
history of the counterparties.

Capital Management
The primary objective of the Group’s capital management is to ensure that the Group has sufficient
funds in order to support its business, pay existing obligations and maximize shareholder value. The
Group manages its capital structure and makes adjustments to it in light of changes in economic
conditions. To manage or adjust the capital structure, the Group may obtain advances from
stockholders, return capital to shareholders or issue new shares.

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The Group considers equity attributable to equity holders of the Parent Company as its capital, which
amounted to = P36,552.1 million and =
P30,256.4 million as of December 31, 2018 and 2017,
respectively.

The Group monitors capital on the basis of debt-to-equity ratio in order to comply with PAGCOR
requirement and loan debt covenant (see Notes 12 and 18).

The Group’s strategy is to maintain a sustainable debt-to-equity ratio.

22. Basic/Diluted Earnings Per Share on Net Income Attributable to Equity Holders of the Group

The following table presents information necessary to calculate earnings per share:

2018 2017 2016

(a) Net income attributable to equity holders of the Parent
Company P
= 7,188,233,443 P6,070,718,652
= P2,357,140,560
=
(b) Weighted average number of issued shares 11,032,998,225 11,032,998,225 11,032,998,225
Treasury shares at beginning of year (22,503,225) (33,899,815) (24,446,012)
Weighted average number of:
Treasury shares acquired in 2018 (7,085,484) – (14,000,000)
Treasury shares issued for vested stock awards in 2018 17,559,043 – 1,726,982
Treasury shares issued for vested stock awards in 2017 – 10,699,867 –
Treasury shares acquired in 2016 – – –
Treasury shares issued for vested stock awards in 2016 – – –
(c) Weighted average number of treasury shares (12,029,666) (23,199,948) (36,719,030)
(d) Weighted average number of issued shares, net of treasury
shares [(b)+(c)] P
= 11,020,968,559 =11,009,798,277
P =10,996,279,195
P
Unvested stock awards at beginning of year 13,374,260 22,949,388 6,071,218
Weighted average number of:
Stock awards granted in 2018 13,903,805 – –
Stock awards granted in 2017 – 17,832,368 284,498
Stock awards granted in 2016 – – 16,878,170
(e) Weighted average number of stock awards granted 27,278,065 40,781,756 23,233,886
Basic earnings per share (a)/(d) P
= 0.652 =0.551
P =0.214
P
Diluted earnings per share (a)/[(d)+(e)] P
= 0.651 P
=0.549 P
=0.214

Basic and diluted earnings per share in 2016 are stated at the same amount as the effect of the vesting
of stock awards under the SIP is anti-dilutive.

23. Note to Consolidated Statements of Cash Flows

The Group had no material non-cash investing nor non-cash financing activity-related transactions for
the years ended December 31, 2018, 2017 and 2016, except for the following:

a. The Group recognized share-based payment accruals amounting to P =220.7 million,

=145.8 million and =
P P84.5 million in 2018, 2017 and 2016, respectively (see Note 15).

b. Treasury shares were reissued for vested stock awards amounting to P

=128.8 million,
=89.4 million and =
P P49.5 million in 2018, 2017 and 2016, respectively (see Note 15).

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The changes in the Group’s liabilities arising from financing activities are as follows:
Reclassification
January 1, from Current to Interest Amortization of Translation December 31,
2018 Cash Flows Non-current Expense Debt Discount Adjustment 2018
Current portion of long-term debt =2,727,330,526
P (P
= 829,909,783) =–
P =–
P =170,728,511
P =–
P =2,068,149,254
P
Long-term debt - net of current portion 29,373,489,070 39,580,095,839 – – 165,185,523 – 69,118,770,432
Interest payable 364,817,203 (3,604,051,545) – 4,581,927,053 (335,914,034) – 1,006,778,677
Short-term borrowing 207,815,000 (80,451,753) – – – 3,103,753 130,467,000
Total liabilities from financing activities =32,673,451,799
P =35,065,682,758
P =–
P =4,581,927,053
P =–
P =3,103,753
P =72,324,165,363
P

Reclassification
January 1, from Current to Interest Amortization of Translation December 31,
2017 Cash Flows Non-current Expense Debt Discount Adjustment 2017
Current portion of long-term debt =1,713,578,275
P (P
=1,807,002,500) =2,815,152,500
P =–
P =5,602,251
P =–
P =2,727,330,526
P
Long-term debt - net of current portion 32,112,401,811 – (2,815,152,500) – 76,239,759 – 29,373,489,070
Interest payable 343,708,469 (2,048,597,842) – 2,151,548,585 (81,842,010) – 364,817,203
Short-term borrowing 251,943,000 (74,892,394) – – – 30,764,394 207,815,000
Total liabilities from financing activities =34,421,631,555
P (P
=3,930,492,736) =–
P =2,151,548,585
P =–
P =30,764,394
P =32,673,451,799
P

24. Segment Information

For management purposes, the Group is organized into two geographical segments (i.e., Philippines and
Korea). Both segments derive its revenues from operating a casino-hotel business.

Management monitors the operating results of its geographical segment separately for making decisions
about resource allocation and performance assessment. The Group evaluates segment performance based
on contributions to EBITDA, which is not a measure of operating performance or liquidity defined by
PFRS and may not be comparable to similarly titled measures presented by other entities. The Group’s
EBITA is computed as the Group’s consolidated net income/loss before interest expense, provision
for/benefit from income tax, net foreign exchange gains/losses, mark-to-market gain/loss, depreciation
and amortization and non-recurring expense such as impairment loss.

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The results of the Group’s reportable geographical segments for the years ended December 31, 2018, 2017 and 2016 are as follows:
Philippines Korea Eliminations Consolidated
2018 2017 2016 2018 2017 2016 2018 2017 2016 2018 2017 2016
Consolidated EBITDA P
= 15,229,735,360 P=12,681,384,898 P=11,231,404,358 (P
=240,015,782) (P
=258,759,794) (P =575,366,755) (P
=95,172,426) (P
=75,074,929) (P
=57,518,586) P
= 14,894,547,152 P=12,347,550,175 P=10,598,519,017
Depreciation and amortization (see Note 17) (3,437,910,407) (4,174,509,563) (4,681,364,583) (191,526,804) (179,342,771) (173,676,959) – – – (3,629,437,211) (4,353,852,334) (4,855,041,542)
Interest expense (see Note 17) (4,564,370,089) (2,128,610,570) (2,190,739,561) (112,711,094) (97,649,314) (90,092,069) 95,154,130 74,711,299 57,518,586 (4,581,927,053) (2,151,548,585) (2,223,313,044)
Foreign exchange gains (losses) - net (see Note 21) 738,513,857 34,649,063 692,795,424 (380,801,602) 847,586,409 (210,402,489) – – – 357,712,255 882,235,472 482,392,935
Other income (expense) (see Note 17) (1,554,869) (157,560,357) (20,408,783) – (271,574,086) – – – – (1,554,869) (429,134,443) (20,408,783)
Benefit from (provision for) income tax
(see Note 20) 89,227,666 14,491,274 (1,571,754,022) 37,261,550 (247,123,777) (87,329,126) – – – 126,489,216 (232,632,503) (1,659,083,148)
Consolidated net income (loss) P
= 8,053,641,518 P =6,269,844,745 P=3,459,932,833 (P=887,793,732) (P
=206,863,333) (P
=1,136,867,398) (P
=18,296) (P
=363,630) P– P
= = 7,165,829,490 P
=6,062,617,782 P=2,323,065,435

Philippines Korea Eliminations Consolidated

2018 2017 2016 2018 2017 2016 2018 2017 2016 2018 2017 2016
Revenue P
= 37,613,303,605 P
=32,413,200,796 P=27,275,695,309 P = 606,922,478 =608,493,030
P =314,516,938
P =
P– =–
P =– P
P = 38,220,226,083 P
=33,021,693,826 P=27,590,212,247
Operating costs and expenses (26,057,656,043) (24,045,159,774) (20,826,915,771) (1,038,536,195) (1,049,011,475) (1,063,849,574) – – – (27,096,192,238) (25,094,171,249) (21,890,765,345)
Other income (expenses):
Interest expense (4,564,370,089) (2,128,610,570) (2,190,739,561) (112,711,094) (97,649,314) (90,092,069) 95,154,130 74,711,299 57,518,586 (4,581,927,053) (2,151,548,585) (2,223,313,044)
Foreign exchange gains (losses) - net 738,513,857 34,649,063 692,795,424 (380,801,602) 847,586,409 (210,402,489) – – – 357,712,255 882,235,472 482,392,935
Interest income 236,177,391 138,834,313 101,260,237 71,131 2,415,880 288,922 (95,172,426) (75,074,929) (57,518,586) 141,076,096 66,175,264 44,030,573
Others (1,554,869) (157,560,357) (20,408,783) – (271,574,086) – – – – (1,554,869) (429,134,443) (20,408,783)
Benefit from (provision for) income tax 89,227,666 14,491,274 (1,571,754,022) 37,261,550 (247,123,777) (87,329,126) – – – 126,489,216 (232,632,503) (1,659,083,148)
Consolidated net income (loss) P
= 8,053,641,518 P
=6,269,844,745 P=3,459,932,833 (P
=887,793,732) (P
=206,863,333) (P
=1,136,867,398) (P
=18,296) (P
=363,630) =– P
P = 7,165,829,490 =P6,062,617,782 P=2,323,065,435

The assets and liabilities of the Group’s reportable geographical segments as of December 31, 2018 and 2017 are as follows:
Philippines Korea Total Eliminations Consolidated
Assets: 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
Segment assets P
= 292,205,159,353 P=180,997,246,620 P
= 7,568,496,225 =7,566,872,029 P
P = 299,774,163,007 P=188,564,118,649 (P
=174,125,184,615) (P
=115,777,667,124) P
= 125,648,978,392 P =72,786,451,525
Deferred tax assets - net – – 309,557,804 237,318,261 309,557,804 237,318,261 (309,557,804) (237,318,261) – –
Total assets P
= 292,205,159,353 P=180,997,246,620 P
= 7,878,054,029 =7,804,190,290 P
P = 300,083,720,811 P=188,801,436,910 (P
=174,434,742,419) (P
=116,014,985,385) P
= 125,648,978,392 P =72,786,451,525

Liabilities:
Segment liabilities P
= 94,214,120,662 =48,493,392,673
P P
= 9,036,702,475 =8,160,029,136 P
P = 103,250,823,137 =56,653,421,809
P (P
=14,408,108,926) (P
=14,553,699,943) P
= 88,842,714,211 =42,099,721,866
P
Deferred tax liabilities – net 71,035,934 151,628,952 – – 71,035,934 151,628,952 174,124,420 249,749,995 245,160,354 401,378,947
Total liabilities P
= 94,285,156,596 =48,645,021,625
P P
= 9,036,702,475 =8,160,029,136 P
P = 103,321,859,071 =56,805,050,761
P (P
=14,233,984,506) (P
=14,303,949,948) P
= 89,087,874,565 =42,501,100,813
P

*SGVFS032986*
 - 79 -

25. Subsequent Events

On February 11, 2019, SPI and BRHI signed an Omnibus Loan and Security Agreement (“OLSA”)
for a 10-year combined loan facility in the principal amount of P
=40,000.0 million with the following
Lenders: Philippine National Bank, BDO Unibank, Inc., Metropolitan Bank & Trust Company, Union
Bank of the Philippines, Bank of Commerce, China Banking Corporation, and Robinsons Bank
Corporation. BDO Unibank, Inc. - Trust and Investments Group is the security trustee, facility agent
and paying agent for the loan facility, while BDO Capital & Investment Corporation acted as the lead
arranger and sole bookrunner. The proceeds of the loan will be used by SPI and BRHI to partially
finance the design, construction and development of an integrated hotel and gaming resort located at
the Vertis North Complex in Quezon City, Metro Manila.

*SGVFS032986*
 SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001,
6760 Ayala Avenue Fax: (632) 819 0872 October 4, 2018, valid until August 24, 2021
1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-5 (Group A),
Philippines November 6, 2018, valid until November 5, 2021

INDEPENDENT AUDITOR’S REPORT

ON SUPPLEMENTARY SCHEDULES

The Stockholders and the Board of Directors

Bloomberry Resorts Corporation
The Executive Offices, Solaire Resort & Casino
1 Asean Avenue, Entertainment City, Tambo
Parañaque City

We have audited in accordance with Philippine Standards on Auditing, the consolidated financial
statements of Bloomberry Resorts Corporation and its subsidiaries as at December 31, 2018 and 2017 and
for each of the three years in the period ended December 31, 2018, included in this Form 17-A, and have
issued our report thereon dated March 4, 2019. Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The schedules listed in the Index to the
Consolidated Financial Statements and Supplementary Schedules are the responsibility of the Company’s
management. These schedules are presented for purposes of complying with Securities Regulation Code
Rule 68, As Amended (2011), and are not part of the basic financial statements. These schedules have
been subjected to the auditing procedures applied in the audit of the consolidated financial statements
and, in our opinion, fairly state, in all material respects, the information required to be set forth therein in
relation to the basic financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Christine G. Vallejo
Partner
CPA Certificate No. 99857
SEC Accreditation No. 1402-AR-1 (Group A),
March 2, 2017, valid until March 1, 2020
Tax Identification No. 206-384-906
BIR Accreditation No. 08-001998-105-2017,
January 31, 2017, valid until January 30, 2020
PTR No. 7332623, January 3, 2019, Makati City

March 4, 2019

*SGVFS032986*
A member firm of Ernst & Young Global Limited
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

Consolidated Financial Statements Page Number

Statement of Management’s Responsibility for Consolidated Financial F1
Statements
Report of Independent Auditors F2
Consolidated Statements of Financial Position as of F3
December 31, 2018 and 2017
Consolidated Statements of Comprehensive Income for the Years F4
Ended December 31, 2018, 2017 and 2016
Consolidated Statements of Changes in Equity for the Years Ended F5
December 31, 2018, 2017 and 2016
Consolidated Statements of Cash Flows for the Years Ended F6
December 31, 2018, 2017 and 2016
Notes to Consolidated Financial Statements F7

Supplementary Schedules
Report of Independent Auditors on Supplementary Schedules
A. Financial Assets S1
B. Amounts Receivable from Directors, Officers, Employees, Related Parties
and Principal Stockholders (Other than Related Parties) S2
C. Amounts Receivable from Related Parties which are eliminated during the
Consolidation of Financial Statements S3
D. Intangible Assets - Other Assets *
E. Long-term Debt S4
F. Indebtedness to Affiliates and Related Parties (Long-term Loans from
Related Companies) S5
G. Guarantees of Securities of Other Issuers S6
H. Capital Stock S7
I. Company Retained Earnings Available for Dividend Declaration S8
J. Map of Relationships S9
K. Schedule of Proceeds of Placing and Subscription Transaction S10
L. List of Effective Standards and Interpretations S11
*These schedules, which are required by Part II of SRC Rule 68, As Amended (2011) are either
not required, not applicable or the information required to be presented is included in the
Company’s consolidated financial statements or the notes to consolidated financial statements.

53
BLOOMBERRY RESORTS CORPORATION
Schedule A. Financial Assets
December 31, 2018

Name of Issuing Number of Shares or Amount Shown in the Value Based on Unrealized mark-
Name of Issuing Entity and Entity and Principal Amount of Balance Sheet Market Quotations at to-market gain
Description of Each Issue Association of Each Bonds and Notes Balance Sheet Date
Issue

Not Applicable

1
BLOOMBERRY RESORTS CORPORATION
Schedule B. Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties)
For the Year Ended December 31, 2018

Deductions
Amount Amount
Name and Designation of Debtor Beginning Balance Additions Collected Written-Off Others Current Non-current Ending Balance
Bloomberry Resorts Corporation P60,030,707 P- (P8,550,413) P- P- P51,480,294 P- P51,480,294
Sureste Properties, Inc. 20,906,306 64,955,483 (62,889,907) - - 22,971,882 - 22,971,882
Bloomberry Resorts and Hotels Inc. 36,304,365 65,996,594 (60,002,395) - - 42,298,564 - 42,298,564
P117,241,378 P130,952,077 (P131,442,715) P- P- P116,750,740 - P116,750,740
BLOOMBERRY RESORTS CORPORATION
Schedule C. Amounts of Receivable from Related Parties, which are Eliminated During the Consolidation of Financial Statements
For the Year Ended December 31, 2018

Deductions
Amount Amount
Name and Designation of Beginning Balance Additions Collected Written-Off Others Current Non-current Ending Balance
Debtor
Solaire Korea Co., Ltd. P6,059,885,915 P461,841,293 P- P- P P- P6,521,727,208 P6,521,727,208
G&L Co., Ltd. 1,058,978,300 436,078,528 - (1,398,988,226) - - 96,068,602 96,068,602
Bloomberry Capital B.V 8,909,809 640,961 - - - 9,550,770 - 9,550,770

P7,127,774,024 P898,560,782 P- (P1,398,988,226) P- P9,550,770 P6,617,795,810 P6,627,346,580

BLOOMBERRY RESORTS CORPORATION
Schedule E. Long-term Debt
December 31, 2018

Amount
Authorized by Amount Shown Amount Shown as
Name of Issuer and Type of Obligation Indenture as Current Long-term Remarks
BRHI - Philippine peso-denominated term loans 72,397,500,000 2,205,000,000 70,192,500,000 See Note 12 to the Audited
Less: Unamortized Debt Issue Cost (1,210,580,314) (136,850,746) (1,073,729,568) Consolidated Financial Statements
P71,186,919,686 P2,068,149,254 P69,118,770,432
BLOOMBERRY RESORTS CORPORATION
Schedule F. Indebtedness to Related Parties (Long-term Loans from Related Companies)
December 31, 2018

Beginning Ending
Name of Related Party Balance Balance

NONE
BLOOMBERRY RESORTS CORPORATION
Schedule G. Guarantees of Securities of Other Issuers
December 31, 2018

Title of Issue of Amount Owned

Each Class of Total Amount by the Company
Name of Issuing Entity of Securities Guaranteed by Securities Guaranteed and for which
the Company for which Statement is Filed Guaranteed Outstanding Statement is Filed Nature of Guarantee

NONE
BLOOMBERRY RESORTS CORPORATION
Schedule H. Capital Stock
December 31, 2018

Number of Share Number of Shares Held By

Reserved for
Options,
Number of Number of Warrants,
Shares Shares Issued Conversions and Directors, Officers
Title of Issue Authorized and Outstanding Other Rights Parent and and Employees Others
Affiliates

Shares 15,000,000,000 11,013,711,155* - 7,082,156,500 43,950,830 3,887,603,825

*Net of treasury shares.

BLOOMBERRY RESORTS CORPORATION
Schedule I. Retained Earnings Available for Dividend Declaration
December 31, 2018

Amount

Unappropriated retained earnings, beginning P5,364,842,247

Adjustments:
(see adjustments in previous year’s Reconciliation) (796,575,381)

Unappropriated retained earnings, as adjusted to available for dividend

distribution, beginning P4,568,266,866

Add: Net income actually earned/realized during the period

Net income during the year closed to retained earnings (1,088,623,320)

Benefit from deferred income tax recognized during the year -

Unrealized foreign exchange gain – net (265,996,485)

Net income actually earned/realized during the period (1,354,619,805)

Add: Treasury Shares (acquisition and issuance during the year) (60,214,026)

Less: Dividend declaration (1,103,299,823)

Unappropriated retained earnings available for dividend, as adjusted,

P2,050,133,212
ending
BLOOMBERRY RESORTS CORPORATION
Schedule J. Map of Relationships
December 31, 2018
BLOOMBERRY RESORTS CORPORATION
Schedule K. Proceeds of Placing and Subscription Transaction
December 31, 2018

Offering Circular Actual

Gross Proceeds

Net Proceeds

NONE
Use of Net Proceeds:

Investment in Sureste Properties, Inc.

Balance as of December 31, 2018

BLOOMBERRY RESORTS CORPORATION AND SUBSIDIARIES
SCHEDULE OF ALL THE EFFECTIVE STANDARDS
AND INTERPRETATIONS
DECEMBER 31, 2018

PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not

Adopted
AND INTERPRETATIONS Adopted Applicable
Framework for the Preparation and Presentation of Financial
Statements

Conceptual Framework Phase A: Objectives and qualitative
characteristics
PFRSs Practice Statement Management Commentary 
Philippine Financial Reporting Standards
PFRS 1 First-time Adoption of Philippine Financial Reporting

(Revised) Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or 
Associate
Amendments to PFRS 1: Additional Exemptions for

First-time Adopters
Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time 
Adopters
Amendments to PFRS 1: Severe Hyperinflation and

Removal of Fixed Date for First-time Adopters
Amendments to PFRS 1: Government Loans 
Amendment to PFRS 1: Borrowing Costs 
Amendment to PFRS 1: Meaning of Effective PFRSs 
PFRS 2 Share-based Payment 
Amendments to PFRS 2: Vesting Conditions and

Cancellations
Amendments to PFRS 2: Group Cash-settled Share-

based Payment Transactions
Amendment to PFRS 2: Definition of Vesting

Condition
Amendments to PFRS 2: Classification and

Measurement of Share-based Payment Transactions
PFRS 3 Business Combinations 
(Revised)s
Amendments to PFRS 3: Accounting for Contingent

Consideration in a Business Combination
Amendments to PFRS 3: Scope Exceptions for Joint

Arrangements
Amendments to PFRS 3, Business Combination and
PFRS 11, Joint Arrangements, Previously Held Interest Not early adopted
in a Joint Operation
Amendments to PFRS 3: Definition of a business Not early adopted
PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not
Adopted
AND INTERPRETATIONS Adopted Applicable
PFRS 4 Insurance Contracts 
Amendments to PAS 39 and PFRS 4: Financial

Guarantee Contracts
Applying PFRS 9 Financial Instruments with PFRS 4

Insurance Contracts
PFRS 5 Non-current Assets Held for Sale and Discontinued

Operations
Changes in Method of Disposal 
PFRS 6 Exploration for and Evaluation of Mineral Resources 
PFRS 7 Financial Instruments: Disclosures 
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets - Effective Date and Transition
Amendments to PFRS 7: Improving Disclosures about

Financial Instruments
Amendments to PFRS 7: Disclosures - Transfers of

Financial Assets
Amendments to PFRS 7: Disclosures – Offsetting

Financial Assets and Financial Liabilities
Amendments to PFRS 7: Mandatory Effective Date of

PFRS 9 and Transition Disclosures
Amendments to PFRS 7: Servicing Contracts 
Amendments to PFRS 7: Applicability of the
Amendments to PFRS 7 to Condensed Interim 
Financial Statements
PFRS 8 Operating Segments 
Amendments to PFRS 8: Aggregation of Operating
Segments and Reconciliation of the Total of the 
Reportable Segments’ Assets to the Entity’s Assets
PFRS 9 Financial Instruments 
Amendments to PFRS 9: Mandatory Effective Date of 
PFRS 9 and Transition Disclosures
Amendments to PFRS 9: Prepayment Features with
Not early adopted
Negative Compensation
PFRS 10 Consolidated Financial Statements 
Amendments to PFRS 10: Investment Entities 
Amendments to PFRS 10: Applying the Consolidation

Exception
Amendments to PFRS 10: Sale or Contribution of
Assets Between and Investor and its Associate of Joint Not early adopted
Venture
PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not
Adopted
AND INTERPRETATIONS Adopted Applicable
PFRS 11 Joint Arrangements 
Amendment to PFRS 11: Accounting for Acquisitions of

Interests in Joint Operations
PFRS 12 Disclosure of Interests in Other Entities 
Amendments to PFRS 12: Investment Entities 
Amendments to PFRS 12: Applying the Consolidation

Exception
Amendment to PFRS 12: Disclosure of Interests in Other
Entities, Clarification of the Scope of the Standard (Part of 
Annual Improvements to PFRSs 2014 - 2016 Cycle)
PFRS 13 Fair Value Measurement 
Amendment to PFRS 13: Short-term Receivables and

Payables
Amendment to PFRS 13: Portfolio Exception 
PFRS 14 Regulatory Deferral Accounts 
PFRS 15 Revenue from Contracts with Customers 
PFRS 16 Leases Not early adopted
PFRS 17 Insurance Contracts Not early adopted
Philippine Accounting Standards
PAS 1 Presentation of Financial Statements 
(Revised)
Amendment to PAS 1: Capital Disclosures 
Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation
Amendments to PAS 1: Presentation of Items of Other

Comprehensive Income
Amendments to PAS 1: Clarification of the requirements of

comparative information
Amendments to PAS 1, Presentation of Financial Statements
and PAS 8, Accounting Policies, Changes in Accounting Not early adopted
Estimates and Errors, Definition of Material
PAS 2 Inventories 
PAS 7 Statement of Cash Flows 
Amendments to PAS 7: Statement of Cash Flows, Disclosure

Initiative
PAS 8 Accounting Policies, Changes in Accounting Estimates and

Errors
PAS 10 Events after the Reporting Period 
PAS 11 Construction Contracts 
PAS 12 Income Taxes 
Amendment to PAS 12: Deferred Tax: Recovery of

Underlying Assets
Amendments to PAS 12: Income Taxes, Recognition of

Deferred Tax Assets for Unrealized Losses
Amendments to PAS 12: Income Tax Consequences of
Not early adopted
Payments on Financial Instruments Classified as Equity
PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not
Adopted
AND INTERPRETATIONS Adopted Applicable
Property, Plant and Equipment 
Amendment to PAS 16: Classification of Servicing
PAS 16 
Equipment
Amendment to PAS 16: Revaluation Method –
Proportionate Restatement of Accumulated 
Depreciation
Amendment to PAS 16: Clarification of Acceptable

Methods of Depreciation
Amendment to PAS 16: Bearer Plants 
PAS 17 Leases 
PAS 18 Revenue 
PAS 19 Employee Benefits 
(Amended)
Amendments to PAS 19: Defined Benefit Plans:

Employee Contribution
Amendments to PAS 19: Regional Market Issue

Regarding Discount Rate
Amendments to PAS 19, Employee Benefits, Plan
Not early adopted
Amendment, Curtailment or Settlement
PAS 20 Accounting for Government Grants and Disclosure of

Government Assistance
PAS 21 The Effects of Changes in Foreign Exchange Rates 
Amendment: Net Investment in a Foreign Operation 
PAS 23 Borrowing Costs 
(Revised)
Amendments to PAS 23: Borrowing Costs, Borrowing
Not early adopted
Costs Eligible for Capitalization
PAS 24 Related Party Disclosures 
(Revised)
Amendments to PAS 24: Key Management Personnel 
PAS 26 Accounting and Reporting by Retirement Benefit Plans 
PAS 27 Consolidated and Separate Financial Statements 
PAS 27 Separate Financial Statements 
(Amended)
Amendments to PAS 27: Investment Entities 
Amendments to PAS 27: Equity Method in Separate

Financial Statements
PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not
Adopted
AND INTERPRETATIONS Adopted Applicable
PAS 28 Investments in Associates and Joint Ventures 
(Amended)
Amendments to PFRS 10: Sale or Contribution of
Assets Between and Investor and its Associate of Joint 
Venture
Amendments to PAS 28: Applying the Consolidation

Exception
Amendments to PAS 28: Measuring an Associate or
Joint Venture at Fair Value (Part of Annual 
Improvements to PFRSs 2014 - 2016 Cycle)
Amendments to PAS 28: Long-term Interests in
Associates and Joint Ventures
PAS 29 Financial Reporting in Hyperinflationary Economies 
PAS 32 Financial Instruments: Disclosure and Presentation 
Amendments to PAS 32 and PAS 1: Puttable Financial

Instruments and Obligations Arising on Liquidation
Amendment to PAS 32: Classification of Rights Issues 
Amendments to PAS 32: Offsetting Financial Assets

and Financial Liabilities
Amendments to PAS 32: Tax Effect of Distribution to

Holders of Equity Instruments
PAS 33 Earnings per Share 
PAS 34 Interim Financial Reporting 
Amendments to PAS 34: Interim Financial Reporting
and Segment Information for Total Assets and 
Liabilities
Amendments to PAS 34: Disclosure of Information

Elsewhere in the Interim Financial Report
PAS 36 Impairment of Assets 
Amendments to PAS 36: Recoverable Amount

Disclosures for Non-Financial Assets
PAS 37 Provisions, Contingent Liabilities and Contingent

Assets
PAS 38 Intangible Assets 
Amendments to PAS 38: Clarification of acceptable

methods of amortization
Amendments to PAS 38: Revaluation Method –
Proportionate Restatement of Accumulated 
Amortization
PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not
Adopted
AND INTERPRETATIONS Adopted Applicable
PAS 39 Financial Instruments: Recognition and Measurement 
Amendments to PAS 39: Transition and Initial
Recognition of Financial Assets and Financial 
Liabilities
Amendments to PAS 39: Cash Flow Hedge Accounting

of Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option 
Amendments to PAS 39 and PFRS 4: Financial

Guarantee Contracts
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification

of Financial Assets – Effective Date and Transition
Amendments to Philippine Interpretation IFRIC–9 and

PAS 39: Embedded Derivatives
Amendment to PAS 39: Eligible Hedged Items 
Amendments to PAS 39: Novation of Derivatives and

Continuation of Hedge Accounting
PAS 40 Investment Property 
Amendments to PAS 40: Clarifying the
Interrelationship between PFRS 3 and PAS 40 when

Classifying Property as Investment Property or Owner-
Occupied Property
Amendments to PAS 40, Investment Property, Transfers

of Investment Property
PAS 41 Agriculture 
Amendment to PAS 41: Bearer Plants 
Philippine Interpretations
IFRIC 1 Changes in Existing Decommissioning, Restoration and

Similar Liabilities
IFRIC 2 Members’ Share in Co-operative Entities and Similar

Instruments
IFRIC 4 Determining Whether an Arrangement Contains a Lease 
IFRIC 5 Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds
IFRIC 6 Liabilities arising from Participating in a Specific

Market - Waste Electrical and Electronic Equipment
IFRIC 7 Applying the Restatement Approach under PAS 29

Financial Reporting in Hyperinflationary Economies
IFRIC 8 Scope of PFRS 2 
PHILIPPINE FINANCIAL REPORTING STANDARDS Not Not
Adopted
AND INTERPRETATIONS Adopted Applicable
IFRIC 9 Reassessment of Embedded Derivatives 
Amendments to Philippine Interpretation IFRIC–9 and

PAS 39: Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment 
IFRIC 11 PFRS 2 - Group and Treasury Share Transactions 
IFRIC 12 Service Concession Arrangements 
IFRIC 13 Customer Loyalty Programmes 
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum

Funding Requirements and their Interaction
Amendments to Philippine Interpretations IFRIC - 14,

Prepayments of a Minimum Funding Requirement
IFRIC 15 Agreements for the Construction of Real Estate* 
IFRIC 16 Amendments to Philippine Interpretations IFRIC-14,

Prepayments of a Minimum Funding Requirement
Hedges of a Net Investment in a Foreign Operation 
IFRIC 17 Distributions of Non-cash Assets to Owners 
IFRIC 18 Transfers of Assets from Customers 
IFRIC 19 Extinguishing Financial Liabilities with Equity

Instruments
IFRIC 20 Stripping Costs in the Production Phase of a Surface

Mine
IFRIC 21 Levies 
IFRIC 22 Foreign Currency Transactions and Advance

Consideration
IFRIC 23 Uncertainty over Income Tax Treatments 
SIC-7 Introduction of the Euro 
SIC-10 Government Assistance - No Specific Relation to

Operating Activities
SIC-12 Consolidation - Special Purpose Entities 

Amendment to SIC - 12: Scope of SIC 12 

SIC-13 Jointly Controlled Entities - Non-Monetary


Contributions by Venturers
SIC-15 Operating Leases – Incentives 

SIC-25 Income Taxes - Changes in the Tax Status of an Entity


or its Shareholders
SIC-27 Evaluating the Substance of Transactions Involving the

Legal Form of a Lease
SIC-29 Service Concession Arrangements: Disclosures 

SIC-31 Revenue - Barter Transactions Involving Advertising


Services
SIC-32 Intangible Assets - Web Site Costs 