Dear Shareholders,
This year has been a period of adjustments for Waterfront Philippines, Inc. A number of initiatives and measures were implemented to insure the long-term viability and growth of the company.
Year 1999/2000 was besieged with economic downturns particularly in the tourism industry. A substantial decrease in foreign guests was noted, and as the peso continued to weaken, our cost of servicing our foreign debts became more costly. This was further compounded by the necessary changes instituted to upgrade our level of service.
Despite of this, your Company embarked on an offensive strategy. Substantial capital expenditures to complete the hotel facilities were done. New marketing programs and more favorable terms and conditions were extended to international junket operators to enlarge market share.
Waterfront Philippines recorded total revenues of P850.3 million, with hotel operations contributing 56.0%. The Company posted revenue from hotel operations of P476.5 million, an increase of 14.6% over the P415.9 million recorded in the previous fiscal year despite the highly competitive environment and the soft market. Gaming and non-hotel operations contributed P372.0 million as against P540.0 million the year before.
After costs and expenses, income before depreciation and financial charges remained positive at P98.1 million, or 11.5% of total revenues. Net cash flow is at P30.1 million.
But cash flow was in insufficient to cover the capital expenditure and debt servicing. In our desire to find an equitable way of bridging the funds required, we obtained a five (5) year convertible loan amounting to P375 million from the Social Security System. Unfortunately, the stock market suffered a complete downturn resulting in the loss of the opportunity to convert the loan to equity.
Our offshore company opted to take a more conservative stance by writing down receivables from foreign junket players. We are still actively pushing for the collection of these accounts, and any collected receivables will accrue to our net income in the future.
As the Company went into full commercial operation, interest charges, which increased during the completion period, were also charged to expense.
These factors contributed in the consolidated loss of P143 million for the year