2019 ANNUAL REPORT VISION Belle Corporation envisions itself as a world-class provider of the finer things in life. MISSION To develop quality entertainment and leisure facilities that promote growth and environmental sustainability. To enhance shareholder value for the Company’s investors and partners. To promote a mutually beneficial relationship with all stakeholders grounded on integrity and respect. To be the employer of choice offering career growth opportunities. To enhance the quality of life of the communities we serve. CORE VALUES Sustainability. Accountability. Integrity. Leadership. Hard Work. Innovation. CONTENTS Corporate Structure 2 Message to Shareholders 4 Message from the President 6 Board of Directors 10 Board Committees and Management Team 13 City of Dreams Manila 14 Premium Leisure Corp. 16 Tagaytay Highlands 18 Pacific Online Systems Corporation 20 Corporate Social Responsibility 22 Sustainability 24 Corporate Governance 26 Financial Statements 33 Corporate Information 115 CORPORATE STRUCTURE GAMING 2 REAL ESTATE ASSETS (DIRECTLY OWNED BY BELLE) BELLE CORPORATION BELLE OTHER MAJOR INVESTMENTS CORPORATE STRUCTURE 100% 24.9 billion shares (78.7%) 448.6 million (50.1% of issued shares) City of Dreams Tagaytay Highlands Manila International Golf Club 3 Proprietary The Country Club at REPORT ANNUAL 2019 club shares Tagaytay Highlands Land held for development and Tagaytay Midlands finished real estate Golf Club products 3.7 billion shares (48.8%) 61.8 million shares (less than 1.0%) MESSAGE TO SHAREHOLDERS “Belle’s decision more than a decade ago to support the development of the Philippine Amusement and Gaming Corporation’s Entertainment City still reaps benefits.” elle Corporation achieved solid results in 2019 with closure of all operations of pari-mutuel games of 4 consolidated net income of ₱2.9 Billion, coming chance under the auspices of the Philippine Charity Bfrom consolidated total revenues of ₱7.5 Billion. Sweepstakes Office (PCSO) in an effort to investigate and address perceived irregularities, particularly These results allowed Belle to announce a regular concerning the Small Town Lottery. This adversely cash dividend of ₱0.12 per share on February 27, 2020, affected our majority-owned subsidiary, Pacific Online or total dividends to common shareholders of Systems Corporation (Pacific Online), which leases approximately ₱1.2 Billion, paid on March 27, 2020. online betting equipment to the PCSO for their Lotto, BELLE CORPORATION BELLE This reflects our mission to continue to focus on Keno and scratch ticket operations, even though these enhancing shareholder value. operations were not the main focus of the government’s investigations. Since suspensions were lifted in Belle’s decision more than a decade ago to support September 2019, Pacific Online has been working the development of the Philippine Amusement and with the PCSO to ensure the proper conduct of its Gaming Corporation’s Entertainment City still reaps operations and to help ensure that the PCSO’s ability benefits. The government’s push to develop a globally to raise and provide funds for its health and medical competitive, environmentally sustainable and socially assistance programs remains intact. responsible tourism industry supported by significant spending on infrastructure projects led to record visitor During 2019, we took time to celebrate the 25th arrivals in 2019. This has been a boon to our multi- anniversary of our luxury mountain resort complex, awarded integrated resort, City of Dreams Manila, which Tagaytay Highlands. After completing significant has been an anchor attraction in Entertainment City renovation and facility improvement projects and since the opening of the integrated resort in December continuing our rollout of distinctively themed residential 2014. The Belle Group’s investment in City of Dreams developments, we took the opportunity to thank our Manila continues to bear fruit, realizing revenues from members and our host communities with a number leases and gaming operations totaling ₱5.6 Billion in of activities throughout the year. Unfortunately, the 2019. Taal Volcano eruption on January 12, 2020 caused the temporary closure of our resort and affected the lives At the same time, 2019 was not without its challenges. of thousands of families in the surrounding towns and In July, the Philippine government ordered a brief villages. Our dedicated and hardworking employees BELLE CORPORATION MESSAGE TO SHAREHOLDERS Elizabeth Anne C. Uychaco Emilio S. De Quiros, Jr. Willy N. Ocier Vice Chair Chairman of the Board Vice Chair immediately set to work cleaning up and rehabilitating We believe that there continues to be ample 5 resort facilities to the extent that the resort was able to opportunities in the Philippines to grow our business 2019 ANNUAL REPORT ANNUAL 2019 reopen on February 19, 2020. Your Corporation has and to deliver value to our stakeholders. We look also been at the forefront of relief efforts. Rest assured forward to maintaining our track record of success that we will do more than our share to sustainably assist going forward. our host communities and help restore normal living conditions. Thank you for your continuing support. The disastrous events following Taal’s eruption emphasized, more than ever, the importance of having risk management protocols in place and addressing sustainability concerns within our businesses. Following our maiden 2018 Sustainability Report, we have crafted EMILIO S. DE QUIROS, JR. a roadmap for our sustainability initiatives, which we will Chairman of the Board share with you in our 2019 Sustainability Report. In May 2019, we welcomed Atty. Ricardo L. Moldez to our Board. Atty. Moldez is a Commissioner of the Social Security System, the Chairman of the Social WILLY N. OCIER Security Commission’s Committee on Coverage, Vice Chair Collection and Other Related Matters and the Vice Chairman of the Social Security System’s Governance, Organization and Appointments and Risk Management Committees. He replaced Ms. Aurora Cruz-Ignacio in our Board. ELIZABETH ANNE C. UYCHACO Vice Chair We remain committed to our mission of providing international standard leisure and lifestyle facilities that promote growth and environmental sustainability. MESSAGE FROM THE PRESIDENT “Our integrated resort and real estate businesses remained dependable notwithstanding these headline numbers.” elle Corporation delivered solid results in 2019 Our integrated resort and real estate businesses 6 despite the challenging business environment faced remained dependable notwithstanding these headline Bduring the year. Our luxury resort businesses at City numbers. Following the trend of previous years, the of Dreams Manila, and at Tagaytay Highlands, proved increase in this segment was largely driven by our resilient despite increased competition, and allowed us exposure to the growing integrated resort industry to achieve consolidated net income of through our investment in City of Dreams of Manila ₱2.9 Billion for the year, in spite of difficult dynamics in and our operating partnership with Melco Resorts and our pari-mutuel gaming equipment leasing subsidiary, Entertainment (Philippines) Corporation (“Melco”). BELLE CORPORATION BELLE Pacific Online Systems Corporation (“Pacific Online”). Our consolidated revenues from City of Dreams Manila, These results allowed your Corporation to maintain its comprised of lease income and our share of gaming dividend at ₱0.12 per share, paid on March 27, 2020 earnings, remained stable at ₱5.6 Billion in 2019, which to shareholders of record as of March 13, 2020. This was about the same level as in 2018. More importantly, provided our shareholders with an attractive dividend our earnings before interest, taxes, depreciation and yield of 7.89%, based on Belle’s closing share price of amortization (“EBITDA”) from operations at City of ₱1.52 per share on the dividend declaration date Dreams Manila increased by 13% to ₱5.2 Billion in of February 27, 2020. 2019, from ₱4.6 Billion in 2018. FINANCIAL REVIEW Our legacy real estate operations, centering on the residential communities adjacent to our exclusive Total consolidated revenues dipped by 12% to proprietary clubs at Tagaytay Highlands, also continued ₱7.5 Billion in 2019, from the record level of to realize profitable results. While our legacy real estate ₱8.5 Billion achieved in 2018, and consolidated net business experienced a 12% drop in revenues to income decreased by 9% to ₱2.9 Billion in 2019, ₱859 Million in 2019, compared to ₱979 Million in 2018, from ₱3.2 Billion in 2018. Recurring net income of EBITDA for this segment improved by 23% to ₱3.5 Billion was maintained in 2019 and 2018. ₱371 Million in 2019, from ₱301 Million in 2018, reflecting our higher margin products. BELLE CORPORATION Manuel A. Gana President and Chief Executive Officer CONSOLIDATED RECURRING DEBT-TO-EQUITY 7 REVENUES NET INCOME RATIO REPORT ANNUAL 2019 2015-2019 2015-2019 2015-2019 (in P millions) (in P millions) 29% 30 24% 25 3,464 25% 3,438 3,288 24% 8,515 20 8,012 7,496 20% 15 6,322 2,076 5,352 10 1,334 5 0 ‘15 ‘16 ‘17 ‘18 ‘19 ‘15 ‘16 ‘17 ‘18 ‘19 ‘15 ‘16 ‘17 ‘18 ‘19 The declines in consolidated revenues and net income Pacific Online faced challenging industry conditions in were due to challenges faced by our Pacific Online 2019, with competition from the Small Town Lottery in subsidiary, which leases online betting equipment to the areas where Pacific Online is operating, and with the Philippine Charity Sweepstakes Office (“PCSO”)