City of Dreams Manila in an earlier stage of construction in Aseana Business Park along Roxas Boulevard. Leisure estate and gaming firm Belle Corp. jacked up its net profit in 2013 by 554 percent to P3.64 billion mostly on revenues from the leasing of the upcoming integrated casino and entertainment complex to operator Melco Crown group of Macau. PHOTO BY RICK ALBERTO
MANILA, Philippines—Leisure estate and gaming firm Belle Corp. jacked up its net profit last year by 554 percent to P3.64 billion mostly on revenues from the leasing of an upcoming integrated casino and entertainment complex at Pagcor Entertainment City property to operator Melco Crown group of Macau.
Return on equity for the year improved to 19.7 percent from only 3.4 percent in the previous year, based on Belle’s regulatory filing.
Revenues for the year surged 431 percent to P2.62 billion due to the lease and operating agreements with the local units of Melco Crown Entertainment Ltd. worth P2.28 billion. Receipts from Melco included about P949.6 million in costs that the foreign group agreed to absorb as one of Belle’s conditions in including it as co-licensees of the City of Dreams Manila integrated resort project. There was also P1.18 billion in interest income on finance lease accounting for 17 hectares of building space while another P157.1 million was generated from the lease of 6.2 hectares of land.
The lease agreement with Melco for the first phase of the casino building was accounted for under finance lease wherein Belle recognized finance lease receivable measured at present value of the minimum lease payments and did not recognize the cost of the related asset. The excess of the present value of minimum lease payments over cost of the asset amounting to P2.32 billion was recognized as “one-time day one” gain.
Under existing rules, the building lease is treated as a theoretical sale under a capital lease arrangement, notwithstanding the fact that Belle is not relinquishing ownership of any property being leased to Melco.
“The company has been devoting significant resources to development activities connected with its integrated resort project located in Aseana Business Park in Parañaque City and is targeted for its grand opening within 2014,” the company reported.
Meanwhile, Belle also booked a one-time gain from the swap of its 809 million common shares of Highlands Prime Inc. for 109 million shares of SM Prime Holdings Inc. amounting to P772.2 million last year. This swap was in line with the consolidation of SM property units under a single publicly listed vehicle, SM Prime.
Gross revenues from the sale of real estate and club shares last year fell 46 percent to P175.3 million. There were no new real estate projects launched by the company in 2013 and 2012.
From equity in net earnings of associates, earnings declined by 61 percent to P176.4 million. One of these associates, Pacific Online Systems Corp., which is 35-percent owned by Belle, contributed P113.1 million last year, slower than the P142.1 million in 2012. This company, which leases online equipment to the Philippine Charity Sweepstakes Office for lottery operations in Visayas and Mindanao, reported a 22-percent decline in earnings last year due to the Zamoanga siege and a series of natural disasters.