PLC sees gain from PCSO deal

Listed gaming firm Premium Leisure Corp. (PLC) is banking on the profitability of the Philippine Charity Sweepstakes Office’s (PCSO) lottery operations to deliver further growth momentum to its portfolio of gaming and casino products and services. 

As of August 2015, PLC has obtained overall ownership of 50.1 percent in listed Pacific Online Systems Corp. (POSC), which has the PCSO as its major customer.

“On August 5, 2015, PLC acquired additional shares of POSC, resulting in an overall ownership of 50.1 percent. This resulted in the consolidation of the financials of POSC, contributing higher revenues in terms of equipment lease rentals, commission, distribution and instant scratch tickets revenues,” PLC reported.

PLC recognized full-year audited consolidated earnings before interest, incomes taxes, depreciation and amortization (Ebitda) of P1 billion for 2015 and a consolidated net income of P223.2 million for the year.

The 2015 revenues increased substantially due to the full-year operations of City of Dreams Manila, with gaming contributions of P756.2 million. The consolidation of POSC in PLC also contributed higher revenues by about P719.3 million, according to the PLC disclosure.

PLC’s board approved on Feb. 23 the declaration of cash dividends of 2.15 centavos per share for a total cash dividend payment of approximately P680 million, payable on Mar. 23 to shareholders of record as of Mar. 10.

PLC’s total assets increased by P569.1 million, or 4 percent, to P16.44 billion as of Dec. 31, 2015, compared with a year ago. The increase was attributed to the consolidation of POSC in 2015, which resulted in increased receivables, investments (both marketable securities and AFS). and property and equipment.

Total liabilities amounted to P552.7 million in 2015, up by 550 percent from 2014’s P85 million, owing to the consolidation of POSC’s financials with PLC.

Despite the increase in current assets of 14 percent, its current liabilities grew 425 percent. In spite of this, the current assets of the company can more than adequately cover its current liabilities.

In addition, the company does not foresee any cash flow or liquidity problems over the next 12 months.

Return on assets fell from 14.93 percent to 1.38 percent. Its return on equity also declined from 15.2 percent to 1.41 percent, mainly because of the relatively lower net income recognized in 2015 versus 2014.

In 2014, the company realized several one-off transactions due to reorganization that contributed to the higher return on assets and return on equity.

POSC brokers technology from leading global suppliers of integrated gaming systems and leases to PCSO the needed equipment for online lottery operations in the Visayas and Mindanao.

PLC said that POSC “does not expect to face any competition until 2018, upon the expiration of its equipment-lease agreement with the PCSO.”

“However, the management is aware of the prevalence of illegal gambling similar to lotto, particularly in the interior towns and remote areas. In spite of this, improved sales of lotto under the PCSO has exhibited growth due to better payouts under a more transparent system,” it added. RIZA LOZADA