COVER SHEET P R E W A
COVER SHEET P R E W A R 4 7 6 S.E.C. Registration Number P R I M E P H I L I P G A M I N P I N E S G I N C . (Company's Full Name) 9 / F T O W C O R. R E U R H E F I N O P A C I F 6 7 8 4 A Y A L A R E R R A S T M A Business Address: No. Street City/Town/Province Atty. Malu Sia-Bernas Contact Person Day C A V E K A T I 811-0668/810-1814 Company/Telepone Number S Month I E C 2 0 FORM TYPE I S Month Day Secondary License Type, If Applicable Dept. Requiring this Doc. Amended Articles Number/Section Total Amount of Borrowings Total No. of Stockholders Domestic Foreign ---------------------------------------------------------------------------------------------------------------------------------------------------To be accomplished by SEC Personnel concerned _________________________________ File Number LCU _________________________________ Document I.D. STAMPS Remarks - pls. use black ink for scanning purposes Cashier 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 _______ Definitive Information Statement 2. Name of Registrant as specified in its charter - PRIME GAMING PHILIPPINES, INC. 3. Province, country or other jurisdiction of incorporation or organization - Manila, Philippines 4. SEC Identification Number – 476 5. BIR Tax Identification Code - 001-289-374 6. Address of principal office - 9/F Rufino Pacific Tower, 6784 Ayala Avenue corner V.A. Rufino (formerly Herrera) Street, Makati City, Metro Manila 1229 7. Registrant’s telephone number, including area code - (632) 811-0668 8. Date, time and place of meeting of security holders The Annual Meeting of the Stockholders of Prime Gaming Philippines, Inc. (the Corporation) shall be held on 10 October 2008, at 9:30 a.m. at the Function Room of the Manila Mandarin Oriental Hotel located at Makati Avenue corner Paseo de Roxas, Makati City. 9. Approximate date on which the Information Statement is first to be sent or given to security holders - 18 September 2008 10. In case of Proxy Solicitations: Not applicable Name of Person Filing the Statement/Solicitor:_______________________________________________________ Address and Telephone No.: _______________________________________________ 11. Securities registered pursuant to 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 Common Stock Outstanding or Amount of Debt Outstanding COMMON 99,530,872 Amount of Debt Outstanding (as of 30 April 2008) P 162,301,239 -1– 12. Are any or all of registrant's securities listed on the Philippine Stock Exchange? Yes _____ No _______ If yes, disclose the name of such Stock Exchange and the class of securities listed therein: The shares are listed in the Philippine Stock Exchange and are classified either as common or treasury shares. GENERAL INFORMATION Date, time and place of meeting of security holders The Annual Meeting of the Stockholders of Prime Gaming Philippines, Inc. (the Corporation) shall be held on 10 October 2008, at 9:30 a.m. at the Narra/Palm Function Room of the Manila Mandarin Oriental Hotel located at the corner of Makati Avenue and Paseo de Roxas, Makati City. The complete mailing address of the principal office of the registrant is 9/F Rufino Pacific Tower, 6784 Ayala Avenue corner V. A. Rufino (formerly Herrera) Street, Makati City, Metro Manila. The Information Statement will approximately be sent or given first to stockholders of record on 18 September 2008 or fifteen (15) business days before the meeting date. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. Dissenters' Right of Appraisal Pursuant to Section 81 of the Corporation Code of the Philippines (the Corporation Code), any stockholder of the Corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances: 1. 2. 3. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence; In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets; and In case of merger or consolidation. The agenda for the Annual Meeting on 10 October 2008 does not include any of the foregoing instances. -2– Interest of Certain Persons in or Opposition to Matters to be Acted Upon No current director or officer of the Corporation, or nominee for election as directors of the Corporation, or any associate thereof, has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon other than election to office. No director has informed the Corporation in writing that he intends to oppose any action to be taken by the registrant at the meeting. CONTROL AND COMPENSATION INFORMATION Voting Securities and Principal Holders Thereof There are Ninety-Nine Million Five Hundred Thirty Thousand Eight Hundred Seventy-Two (99,530,872) issued and outstanding common shares of stock of the Corporation entitled to vote at the Annual Meeting, each of which is entitled to one (1) vote. The cut-off date of presented information in this Statement is as of 25 August 2008. The record date for closing the stock and transfer book of the Corporation in order to determine the stockholders entitled to vote at the Annual Meeting is 15 September 2008. For purposes of the election of directors, all stockholders of record are entitled to cumulative voting rights as provided by the Corporation Code, and there are no conditions precedent to the exercise thereof. Further, no discretionary authority to cumulate votes is being solicited. A stockholder may vote such number of shares for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares, or he may distribute them on the same principle among as many candidates as he shall see fit. Security Ownership of Certain Record and Beneficial Owners Holders As of 25 August 2008, there are 137 stockholders of 99,530,872 common shares of stock of PGPI. According to the Corporation’s Stock and Transfer Agent, Rizal Commercial Banking Corporation (RCBC), out of the issued and outstanding capital, 39,906,844 shares or 40.094 % is held by the PGPI. To date, its wholly owned subsidiary, PGMC, no longer owns any share of the corporation. According to the Corporation’s Stock and Transfer Agent, Rizal Commercial Banking Corporation (RCBC), the top twenty (20) stockholders of PGPI, including their shares and their percentage of total common shares outstanding held by each as of 25 August 2008 are as follows: -3– NAME BERJAYA LOTTERY MANAGEMENT PRIME GAMING PHILIPPINES, INC. PCD NOMINEE CORP. BERJAYA SPORTS TOTO (CAYMAN) LIMITED FERRYSTAR LIMITED LIM MENG KWONG BERJAYA LOTTERY MANAGEMENT FAR EAST MOLASSES CORPORATION CONCEPCION TEUS VDA. CHIONG, DANIEL Y. DOLORES TEUS DE M. VARA STEINER, NORMA O. CORPORACION FRANCISCANA AWAD, A. THE PHIL.-AMERICAN GEN. PHIL. REMNANTS CO., INC. ELIZALDE, FRANCISCO J. ZERNICHOW, CHRISTIAN D. ELIZALDE, JOAQUIN M., MA. DOLORES VARA DE MA. TERESA VARA DE REY Y TEUS NUMBER OF SHARES HELD PERCENTAGE OF 43,098,833 39,906,844 68,62,641 43.30197 % 40.09494% 6.894987% 5,436,107 4,060,193 35,626 26,131 19,436 8,125 7,820 6,900 3,754 3,674 3,356 2,830 2,802 2,585 2,177 2,110 1,854 1,854 5.46173% 4.07933% 0.035794% 0.026254% 0.019528% 0.008163% 0.007857% 0.006933% 0.003772% 0.003691% 0.003372% 0.002843% 0.002815% 0.002597% 0.002187% 0.00212% 0.001863% 0.001863% TOTAL SHARES HELD Treasury Shares As of 30 April 2003, a total of 28,811,900 shares of stock of PGPI were held by PGMC (21,919,900 shares) and by PGPI (6,892,000 shares). Subsequently, in 2004, 5,500,000 shares were acquired by PGPI from the stock exchange at a cost of P110,735,953 or a total of 34,311,900 treasury shares as of April 30, 2006 amounting to P686,579,273. On 11 July 2006, a total of 250,000 common shares were purchased by the Issuer in the open market at P25.00 per share. On 12 July 2006, a total of 510,000 common shares were purchased by the Issuer in the open market at P25.00 per share. On 11 December 2006, a total of 866,944 common shares were purchased by the Issuer in the open market at P30.00 per share. On 29 January 2007, the Issuer purchased 468,000 common shares of stocks recorded in the name of Mr. Michalko in the open market at P30.00 per share. -4– On 25 April 2007, a total of 21,919,900 common shares recorded in the name of PGMC were acquired by PGPI by means of an ordinary buyback from the open market at a total purchase price of P493,197,750.00 using the corporation’s unrestricted retained earnings. From 19 May 2008 to 2 June 2008, the Issuer purchased from the open market a total of three million five hundred thousand (3,500,000) shares at Four Hundred Twenty Million Pesos (Php420,000,000.00) The records of RCBC Stock and Transfer Department, reflect that as of 30 June 2008, the Issuer holds in its name a total of 39,906,844 treasury shares. Dividends On 28 October 2004 the company declared a P1.00 cash dividend to all stockholders on record as of November 17, 2004 or a total of P87,138,872. Cash dividends, in this regard, totaled P65,218,972 ,which is net of inter-company dividends amounting to P21,919,900 ,representing cash dividends declared by Company on shares of stock held by PGMC. On April 2007, PGMC declared dividends amounting to P400,000,000 payable to PGPI and this was offset against PGPI’s advances to the Company. On 20 November 2007, PGMC declared dividends amounting Five Hundred Thirty Million Pesos (P530,000,000.00) to its stockholders of record as of 20 November 2007. Recent Sales of Unregistered Securities There are no sales of unregistered securities in the last four (4) fiscal years. -5– Security Ownership of Holders of more than 5% Security ownership of holders of more than five percent (5%) of the Company’s securities as of 25 August 2008 is as follows: Name and Address of Record Owner Name of Beneficial Owner / Relationship with Record Owner Citizenship Number of Shares Held Percentage Held Berjaya Lottery Berjaya Lottery Chinese Management (H.K.) Ltd. Management (HK) Ltd. Level 28, Three Pacific (same as record owner) Place, 1 Queen’s Road * person entitled to vote East, HongKong is Messrs. Lim Meng Kwong, Seow Swee Pin or Tan Eng Hwa, in the said order of preference. 43,098,833 43.30% (common shares) Prime Gaming Phils Inc. Prime Gaming Filipino 9th Floor Rufino Pacific Phils Inc. Tower 6784 Ayala corner (same as record V.A. Rufino (Herrera) St. owner) Makati City, M.M. * person entitled to vote is the President of the Corporation, Mr. Lim Meng Kwong 39,906,844 40.09% (treasury shares) Berjaya Sports Toto (Cayman) Limited Close Borthers (Cayman) Ltd, Harbour Place, 4th Flr. 103 South Church St., George Town, Grand Cayman, Cayman Islands 5,436,107 5.462% (common shares) Berjaya Sports Toto Malaysian Cayman) Limited (same as record owner) person entitled to vote is Seow Swee Pin There has been no change in the control of the Corporation since the beginning of its last fiscal year. The value of the Corporation’s outstanding common listed shares increased as can be derived from its posted prices at the Philippine Stock Exchange. The increase may be due to the general or prevailing economic situation in the country. -6– Security Ownership of Management Security ownership of the directors and officers of the Corporation as of 25 August 2008 are as follows: Title of Class Name of Beneficial Owner Common Common Common Common Common Common Common Common Amount and Nature of Beneficial Ownership Lim Meng Kwong P Seow Swee Pin P George T. Yang P Jimmy S. Soo P Alvin C. Go P Tan Eng Hwa P Jose A. Bernas P Marie Lourdes Bernas 120.00 120.00 120.00 120.00 120.00 120.00 120.00 00.00 Citizenship Number of Shares Percentage Held Held Malaysian Malaysian Filipino Filipino Filipino Malaysian Filipino Filipino 35,626 1 1 1 1 1 1 0 0.036% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% There are no voting trust holders of 5% or more of the Corporation’s securities. The figures above are based on the current market price as of 25 August 2008. There are no arrangements which may result in a change in control of the Corporation. Directors and Executive Officers The current directors and officers of the Corporation are listed below: Directors / Officers 1. Lim Meng Kwong 2. 3. 4. 5. 6. 7. 8. George T. Yang* Seow Swee Pin Jimmy S. Soo Alvin C. Go* Tan Eng Hwa Jose A. Bernas Marie Lourdes Bernas Designation Citizenship Director / President Chairman of the Board Director Director Director Director Treasurer Corporate Secretary Asst Corp Secretary Malaysian Filipino Malaysian Filipino Filipino Malaysian Filipino Filipino * As of 30 April 2008, Messrs. George T. Yang and Alvin C. Go were the independent minority stockholders who are not employees nor officers of the Corporation, and whose shareholdings are less than two percent (2%) of the Corporation’s equity pursuant to Section 38 of the Securities Regulation Code. Mr. George T. Yang is an independent stockholder of Philippine Gaming Management Corporation. The former treasurer of the Corporation, Mr. Low Siaw Peng, nominated Mr. Yang as independent director. -7– Mr. Jose A. Bernas, a stockholder and the Corporate Secretary nominated Mr. Alvin C. Go as independent director during the Corporation’s Annual Stockholders’ Meeting on 18 October 2007. Procedures of SRC Rule 38 have been followed in the nomination and qualification of independent directors. The term of a Director is for one (1) year and Directors are elected annually during the annual stockholders meeting. This year’s nominees for election to the Board of Directors and Corporate Secretary are the same Directors and Corporate Secretary currently holding office. The nominees for election to the Board of Directors are as follows: Name Age Positions/Offices/Directorships Held for the past five years 1. Lim Meng Kwong 55 Director, Chairman of the Board and President Prime Gaming Philippines, Inc. Director and Chief Operating Officer Philippine Gaming Management Corporation Senior General Manager Berjaya Group Bhd. Member Malaysian Institute Accountants 2. George T. Yang 69 Director: Prime Gaming Phils., Inc. Chairman & President: First Georgetown Ventures, Inc. Fun Characters Inc. Fun Characters International Pte. Ltd. (marketing Licensee of Walt Disney Company for Asean countries) HAVI Foods Services (Philippines), Inc Chairman of the Board: Golden Arches Development Corporation (McDonald’s Philippines) Ronald McDonald House Charities (Philippines) Trojan Computer Forms, Inc. Construction Strategies& Management Corporation GEC Land Development Corporation Vice Chairman: Board Alliance Global Group Inc. Megaworld Corporation Director: Empire East Land Holdings, Inc. Philippine Gaming Management Corporation Member of the Board of Governors: The Tower Club Consul ad honorem: State of Eritrea -8– 3. Seow Swee Pin 52 Director: Prime Gaming Phils., Inc. Director and Chairman of the Board: Philippine Gaming Management Corporation Executive Director: Berjaya Sports Toto Malaysia Sdn Bhd (B-Toto) Member: Malaysian Assoc. of Certified Public Accountants Malaysian Institute of Accountants 4. Jimmy S. Soo 50 Chairman: Memworks, Inc. Chairman and President: Inova Holdings Corporation Tasman Resources Corp. Tortola Resources, Inc. Trimante Holdings Phils., Inc. Chairman/Director: MUSIC Semiconductors Corporation MUSIC Semiconductors Philippines, Inc. Director: First Abacus Financial Holdings Corp. Salcedo Corporate Exchange, Inc. Director and Corporate Secretary: Abacus Capital & Investment Corp. B.Grimm MBM Philippines, Inc. Chancery Holdings Corporation Feldeen Holdings Corporation Metrojaya Realty Holdings & Development Corp. Muirfield Holdings Corp. St. Giles Hotel (Manila), Inc. Tanimbar Holdings Corp. Tribeca Holdings, Inc. Vista Holdings Corporation Van der Horst Technologies Phils., Inc. Corporate Secretary: Kanlaon Security Agency & Allied Services, Inc. Limketkai Manufacturing Corporation Limketkai Sons, Inc. Beta Agricultural Products, Inc. Paramount Life & General Holdings Corp. Paramount Life & General Insurance Corp. VDH Land, Inc. Director/Corp. Sec./Treasurer: Tagskie Corp. Resident Agent: IDP Education Pty Limited Managing Partner: Soo Gutierrez Leogardo & Lee Law Offices. -9– 5. Alvin C. Go 47 Senior Vice President and Chief Legal Counsel, Philippine National Bank (PNB) – 23 January 2004 to present Special Assistant to the President, Philippine National Bank 15 August 2003 to 22 January 2004 Senior Partner Go and Castro Offices, March 1999 to 31 July 2003 Go Cojuangco Mendoza Ligon & Castro Law Offices 1 January 1994 to March 1999 State Prosecutor, Department of Justice 18 January 1990 to 31 January 1993 Prosecution Attorney, Department of Justice 5 October 1989 to 17 July 1990 Associate Attorney, Salonga Ordonez Yap Corpuz Padlan and Associates Law Offices July 1985 to October 1989 6. Tan Eng Hwa 39 Treasurer: Prime Gaming Phils., Inc. Vice President for Operations and Treasurer: Philippine Gaming Management Corporation Director: Philippine Gaming Management Corporation Member: Malaysian Institute of Accountants 7. Jose A. Bernas 48 Corporate Secretary: Prime Gaming Phils., Inc. Philippine Gaming Management Corporation Swift Foods, Inc. Dun and Bradstreet Philipines, Inc. President: Discovery Centre Condominium Corporation Chairman: Automation Specialists & Power Exponents Inc. Director: Micros-Fidelio Software Phils Inc. Professor: Ateneo de Manila University School of Law La Salle –Far Eastern University Law School Managing Partner: Bernas Law Offices 8. Marie Lourdes Sia-Bernas 42 Assistant Corporate Secretary: Prime Gaming Phils. Inc. Philippine Gaming Management Corporation FOSROC Phils, Inc. Swift Foods, Inc. Corporate Secretary and director: Micros-Fidelio Software Phils, Inc. Administrative Partner: Bernas Law Offices - 10 – There are no family relationships between and among the directors and officers of the Corporation, except for the Corporate Secretary and the Assistant Corporate Secretary who are married to each other. Meanwhile, the Issuer’s Director Mr. Jimmy S. Soo and PGMC Director and President, Mr. Paulino S. Soo, are brothers. There is no person who is not an executive officer who is expected by the Corporation to make a significant contribution to the business. Neither is there an arrangement that may result in the change in control of the Corporation. Directors and Executive Officers as a Group (1) Title of Class common shares (3) Amount and Nature of Record/ Beneficial Ownership (2) Name of Record/ Beneficial Owner Directors and Executive Officers As a Group Total : 7 --------------------------7 =============== (4) Percentage Held 0.036 % -----------------0.036 % =========== Certain Relationships and Related Transactions There has been no material transactions during the past two years, nor is any material transaction presently proposed, to which any director, executive officer of the Corporation or security holder of more than five percent (5%) of the Corporation’s voting securities, any relative or spouse of any director or executive officer or owner of more than five percent (5%) of the Corporation’s voting securities had or is to have direct or indirect material interest. The Corporation does not have a parent company to which a percentage of its voting securities is owned or controlled by a parent company. No voting trusts or change in control arrangements are recorded in the books of the Corporation. Compensation of Directors and Executive Officers The members of the Board of Directors of the Corporation are entitled to reasonable per diem for actual attendance of any regular or special meeting of the Board of Directors. The directors were paid a per diem of Fifty Thousand Pesos (P 50,000.00) each in fiscal year ended 30 April 2008. There is no need to disclose a summary compensation table because the Issuer does not have employees and does not pay out salaries. There are no standard agreements for the compensation of directors and the top four executive officers as there are no salaries paid. The officers are either directors who receive only their reasonable per diems issued to all directors or are engaged by the corporation on a professional basis like the law firm of the corporate secretary and assistant corporate secretary who are not employees of the Corporation. - 11 – There are no warrants or options on re-pricing or employment contracts or termination of employment contracts entered into by the Corporation. , Neither is there a change in the control arrangement between the Corporation and the executive officers. Actions of the Board for approval are approved without delay. For the past years, the matters which needed approval were the declaration of cash dividends to all stockholders of record as of 9 November 2004 and April 2005, the amendment of corporate name to “Games and Technologies Inc.” which was subsequently cancelled, and the reduction in par value from P10.00 to P1.00, which were approved with dispatch by the Board. There is no pending litigation in which the Corporation is involved either directly or indirectly in the past five years. Neither has the corporation filed a petition for bankruptcy, been subject to any order, judgment or decree or convicted by final judgment. Material Pending Legal Proceedings There is no material pending legal proceeding to which the Issuer is a party to up to the time of the preparation of this report that undersigned is aware of. THERE ARE NO MATERIAL PENDING LEGAL PROCEEDINGS TO WHICH UNDERSIGNED ARE AWARE OF. PGPI IS A PARTY THAT THE While its wholly owned subsidiary is involved in a labor case and has filed a criminal case against one of its employees, said subsidiary is not involved in litigation that will have a material effect on its operations or its financial condition. Independent Public Accountants The election, approval or ratification of the registrant’s public accountant shall also be discussed during the Annual Meeting. Punongbayan & Araullo, which is the principal accountant for the fiscal year ending 30 April 2008, has been selected and shall be recommended to stockholders for election, approval or ratification for the current year. Representatives of Punongbayan & Araullo are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and they are expected to be available to respond to appropriate questions. As a matter of procedure, Punongbayan & Araullo submits the corporation’s Audited Financial Statements to the Audit Committee, which in turn submits the same Audited Financial Statements to the Board of Directors for approval. There are no changes in or disagreements with accountants on accounting and financial disclosure. The partner at Punongbayan & Araullo assigned to the Issuer is changed or rotated in compliance with SRC Rule 68 (3) (b) (iv). - 12 – Compensation Plans There are no compensation plans. OTHER MATTERS Except for the Chairman’s Report which will discuss the financial performance and overall performance of the Corporation during the year ended 30 April 2008, no other report will be rendered by any director, officer or committee. The Chairman’s Report is not subject to approval or disapproval. Except for the amendment of the Corporation’s Articles of Incorporation in order to reflect the (i) retirement of the treasury shares which will have the effect of decreasing the outstanding number of shares; (ii) the increase in capital stock by way of stock dividends, and the (iii) declaration of stock dividends, no authorizations or issuances of securities otherwise than for exchange, or modification or exchanges of securities, or mergers, consolidations, acquisitions and similar matters, or acquisitions or dispositions of property, or restatement of accounts, or action with respect to reports, or amendment of Charter, By- Laws or other documents, or other proposed actions, will be discussed or submitted at the Annual Meeting. New directors were elected and the external auditors were appointed during the Issuer’s Annual Stockholders’ Meeting on 18 October 2007. The following board actions will be discussed in this year’s Annual Meeting: a. The retirement of the Corporation’s treasury shares which will result in the decrease in the Corporation’s issued and outstanding shares as approved in a meeting of the Board on 27 June 2008; In a special meeting of the Board held on 27 June 2008, the Board resolved to retire its treasury shares amounting to thirty nine million nine hundred six thousand eight hundred forty four (39,906,844). The Issuer’s shares are currently broken down as follows: Capital stock Issued Shares Outstanding Shares Listed Shares Treasury Shares 100,000,000 99,530,872 59,624,028 99,530,872 39,906,844 Upon the retirement of the treasury shares subject to stockholder approval on 10 October 2008 and approval by the Securities and Exchange Commission, the issued and outstanding shares of the corporation will be fifty nine million six hundred twenty four thousand and twenty eight (59,624,028) and the capital stock will be sixty million ninety three thousand one hundred fifty six (60,093,156) common shares. - 13 – Prime Gaming Philippines, Inc. 9/F, Rufino Pacific Tower, 6784 Ayala Ave., cor. V.A. Rufino (Herrera) St., Makati City, Metro Manila MANAGEMENT REPORT Dear Stockholders, Business Prime Gaming Philippines, Inc. (the Corporation) was incorporated on 31 October 1924 as Central Azucarera de Pilar mainly for the purpose of production of sugar. It subsequently changed its name to Prime Gaming Philippines, Inc. (PGPI) and completed the acquisition of its subsidiary corporation, Philippine Gaming Management Corporation (“PGMC”) in 1998. Since the acquisition of PGMC in 1998, the Corporation has not made any more acquisitions and has remained as an investment holding company. The Corporation has, in October 2001 and October 2002, purchased 1,892,000 and 5,000,0000 of its own shares from the stock market at a total cost of Php33,432,378 and Php100,786,342 respectively. An additional 5,500,000 of its own shares was purchased from the stock market in December 2003 for Php110,877,353. In 2007 ,the Corporation bought back 24,014,844 shares of stock from the stock market for Php554.380,773. In 2008, the Corporation bought back 3,500,000 of its own shares from the stock market for P420,000,000. These purchases are presented as treasury shares. As of 30 June 2008, the records of the stock and transfer agent reflect that the Corporation has 39,906,844 treasury shares. In August 2002, the Corporation acquired 1,562,500 shares of Roadhouse Grill, Inc. (RHG), a foreign corporation, for Php26,012,000. The Corporation disposed of the investment in June 2007. The Corporation acquired a 35% interest (17,500 shares) in PMC Marketing Corporation (PMC) on 22 July 2004 at a cost of Php2,187,500 and disposed of its shareholdings in PMC in December 2006. There is no change during the year in PGMC’s principal activity as a domestic corporation involved principally in the business of leasing on-line lottery equipment and providing software support. Revenue from the lease of on-line lottery equipment, and maintenance and repair services are recognized based on certain percentage of gross receipts from lottery ticket sales. Page 1 of 10 Document3 The subsidiary has arms length’s business transactions with a related company, International Lottery & Totalizator System, Inc. (ILTS), a US corporation. The transactions comprise the purchase of lottery terminals, and spare parts for the repair and maintenance of the terminals and software support. As of 30 April 2008, the Corporation does not have employees. Its subsidiary, PGMC has one hundred (102) employees and does not anticipate a substantial increase in the number of its employees within the ensuing twelve (12) months. The number of employees in PGMC’s operations, security and administrative are sixty nine (69), ten (10) and twenty three (23) respectively. There are no supplemental benefits or incentive arrangements the subsidiary has or will have with its employees. On 18 December 2006, the Philippine Lottery Employees’ Association-Workers’ Solidarity Network (“PLEA-WSN” or the “Union”) and PGMC entered into a Collective Bargaining Agreement (CBA) whereby PGMC agreed to grant wage increases for the first three (3) years of the CBA to all employees except those employees whose basic salary after the implementation of wage increase exceeds the maximum salary for the employee’s job level. On 3 January 2007, the Board of Directors of Philippine Gaming Management Corporation (PGMC) ratified the Collective Bargaining Agreement (CBA), executed by and between PGMC and the Union on 18 December 2006. Financial Statements The Audited Financial Statements of the Corporation as of 30 April 2008 is attached. Disagreements with Accountants on Accounting and Financial Disclosures There are no disagreements with the accountants on accounting and financial disclosures. Management’s Discussion and Analysis of Financial Conditions and Results of Operations The Corporation’s principal activity is investment holding. Since 1998, it owns 100% equity ownership of Philippine Gaming Management Corporation (PGMC) whose principal activity is leasing on-line lottery equipment and providing software support. Since the end of the last fiscal year ended 30 April 2008, the Corporation continues to be an investment-holding company with underlying interests in its subsidiary. There was no change in the operations of PGMC or the Corporation during the year under review. Page 2 of 10 Document3 The top five key performance indicators (KPIs) of the Corporation and its sole subsidiary are: (1) to ensure the prompt collection of receivables from the customers , (2) review the annual budget to monitor and explain any material variances above 10% in the overall operating results, (3) scrutinize and monitor all the controllable budgeted expenses and analyze any material variances above 10%, (4) review all capital expenditures in compliance with the approved budget, and (5) to manage the timely placements of surplus funds to ensure the highest possible bank interest income in view of the appropriate tolerable risks. The Corporation uses the following computations in obtaining key indicators: Key Performance Indicator Formula Current Ratio Current Assets Current Liabilities Debt to Equity Ratio Total Long Term Liabilities Stockholders’ Equity PPE Turnover Net Revenues Property, Plant & Equipment (Net) Return on Average Equity Net Income Average Equity Return on Average Assets Net Income Average Total Assets At the Company level, the Corporation’s revenue increased to Php 548,456,641 in fiscal year 2008 from Php426,872,191 in fiscal year 2007. This is attributable to dividend income from PGMC in fiscal year 2008. The Corporation’s net income increased to Php523,452,458 in fiscal year 2008 from Php416,059,762 in fiscal year 2007. This is mainly due to dividend income from PGMC in fiscal year 2008. In fiscal year 2008, at the subsidiary level, the revenues of PGMC increased by 21.8%. This is due to the increase in percentage based on gross receipts from lottery ticket sales. At the Consolidated level, the Corporation has, for fiscal year 2008, recorded a higher consolidated net income of Php447,932,458 representing an increase of 32.3% over fiscal year 2007’s net income of Php338,564,932. In fiscal year 2008, interest income increased to Php13,747,777 from Php4,167,086 in 2007. This is due to deposit placed in banks. Page 3 of 10 Document3 The higher operating expenses of Php607,203,781 in fiscal year 2008 from Php506,777,495 in fiscal year 2007, resulted mainly from an increase in professional fees, telecommunication, amortization, salary and wages, loss on sale of available-forsale financial assets, and other operating expenses . Financial Position On a consolidated base, Total Assets as of 30 April 2008 Php1,853,409,552 and Total Assets as of 30 April 2007 were Php1,391,519,518. were Current assets increased to Php961,522,991 in 2008 from Php450,481,781 in 2007 . This increase in fiscal year 2008 is primarily attributed to the increase in cash and cash equivalents. In fiscal year 2008, trade and other receivables increased to Php222,519,093 compared to Php197,221,195 in fiscal year 2007. The collections of income by the subsidiary are still prompt. Prepaid expenses and other current assets decreased to Php57,135,741 in fiscal year 2008 mainly due to input value added taxes. Goodwill remained at Php360,110,253 for fiscal year 2008 and 2007. This is attributable to the Revised Philippines Financial Reporting Standards where, goodwill is no longer amortized. Instead, Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might already be impaired. Property and equipment decreased to Php518,998,444 from Php547,396,845, due to depreciation of computer and lottery equipment and other fixed assets. Meanwhile, other Assets decreased to Php1,306,455 from Php2,296,577 due to reduction in rental deposits. Total Consolidated Liabilities increased to Php162,301,239 in fiscal year 2008 from Php147,301,355 in fiscal year 2007. The higher income tax provision of Php60,135,470 in fiscal year 2008 is due to the higher income tax payable by the subsidiary arising from the subsidiary’s improved income before income tax. Arising from the above, the current ratio of the Corporation increased to 6.46:1 from 3.30:1 in fiscal year 2007. The Corporation and its subsidiary are still in good liquidity position. There is no long-term debt except for the provision of Php13,422,818 for retirement benefits as mandated under Republic Act 7641 (Retirement Law). Total stockholders’ equity rose to Php1,691,108,313 from Php1,244,218,163 in fiscal year 2007. This is mainly due to an increase in retained earnings. The book value per share increased to Php7.096 in fiscal year 2008 from Php3.929 in fiscal year 2007. Page 4 of 10 Document3 Barring any unforeseen circumstances, the Corporation’s Board of Directors is confident that the operating financial performances of the Corporation and its subsidiary are expected to be satisfactory in the coming year. i) There is no known trend, event or uncertainty that has or is reasonably likely to have an impact on the Corporation’ short term or long-term liquidity. ii) The liquidity of the subsidiary would continue to be generated from the collections of revenues from customers. There is no requirement for external funding for liquidity. iii) There is no known trend, event or uncertainty that has or that is reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. iv) There is no significant element of income or loss that would arise from the Group’s continuing operations. v) There is no cause for any material change from period to period in one or more of the line items of the Corporation’s financial statements. vi) There were no seasonal aspects that had a material impact effect on the financial conditions or results of operations. vii) There is no event that will trigger direct or contingent financial obligation that is material to the company, including any default or acceleration of an obligation; and viii) There is no material off-balance sheet transactions, arrangements, obligations (including contingent liabilities), and other relationships of the company with unconsolidated entities or persons created during the reporting period. Page 5 of 10 Document3 Information on Independent Accountant Audit and Audit-Related Fees For professional services rendered on the audit of the financial statements of the Corporation and its subsidiary, Punongbayan & Araullo was paid the amounts of P110,000.00 for its audit on the corporation, and P300,000.00 for its audit on PGMC, the wholly owned subsidiary of the corporation for the fiscal year ended 30 April 2008. Punongbayan & Araullo prepared the corporation and its subsidiary’s financial position, and the results of its operations and its cash flows for the years in accordance with generally accepted accounting principles in the Philippines. As part of the audit process, Punongbayan & Araullo made specific inquiries from the management of the corporation and its subsidiary and requested management’s written confirmation concerning representations contained in the financial statements and the effectiveness of the internal control structure. The responses to the inquiries, the written representations, and the results of their audit tests comprised the evidential matter relied upon in forming an opinion on the financial statements. The income tax return (ITR), other tax returns and the general form for financial statements (GFFS) and the information contained therein were the responsibilities of the corporation. Punongbayan & Araullo ascertained that the income and expenses agree with the corporation’s and its subsidiary’s books of accounts. Other Fees For fiscal year ended 30 April 2008, the corporation paid Punongbayan & Araullo P 110,000.00 while its subsidiary paid P 300,000.00. For fiscal year ended 30 April 2008, the corporation paid Punongbayan & Araullo P270,000.00 while its subsidiary paid P100,000.00. Out of pocket expenses which usually consist of meals and transportation allowances during overtime works, traveling, mailing, costs of report reproduction, machine reproduction, telephone and fax charges comprise “Other Fees”. Discussion on Compliance with leading practice on Corporate Governance The Corporation’s evaluation system is headed by its chief financial officer Mr. Tan Eng Hwa assisted by the Assistant Corporate Secretary Ms. Marie Lourdes SiaBernas in determining the level of compliance of the Board of Directors with its Manual of Corporate Governance. There is no deviation from the corporation’s Manual of Corporate Governance. Page 6 of 10 Document3 Directors and Executive Officers of the Registrant Directors and Executive Officers – The Directors of the Corporation are elected at the regular annual meeting of stockholders to serve for one (1) year until their successors are elected and qualified. The Officers of the Corporation are elected by a majority vote of the Board of Directors and are enumerated below, with a description of their business experience over the past five years. Directors / Officers Designation 1. Lim Meng Kwong 2. George T. Yang 3. Seow Swee Pin 4. Jimmy S. Soo Director / President Malaysian Chairman of the Board Director Filipino Director Malaysian Director Filipino 5. Alvin C. Go Director 6. Tan Eng Hwa Treasurer 7. Jose A. Bernas Corporate Secretary 8. Marie Lourdes Bernas Asst Corp Secretary Citizenship Filipino Malaysian Filipino Filipino Term 16 January 2008 - Present 1996 – Present 1996 – Present October 2007 – Present October 2007 – Present 2005 – Present 1996 - Present October 2001 – Present Lim Meng Kwong, 55, was appointed to the Board of the Corporation on 16 January 2008, as Chairman and President He is also the Director of Philippine Gaming Management Corporation (PGMC) and Senior General Manager of Berjaya Group Bhd. He is a member of the Malaysian Institute Accountants. Seow Swee Pin, 52, was appointed by the Board of the Corporation on 12 November 1996 and has retained office since then. He was re-elected as director on 18 October 2007 and is also director and chairman of Philippine Gaming Management Corporation. Besides being a Director of the Corporation, he is also Executive Director of Sports Toto Malaysia Sdn Bhd. He is a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. George T. Yang, 69, was appointed to the Board of the Corporation on 12 November 1996 and has retained office since then. He was re-elected director on 18 October 2007 and is also a Director of PGMC. He is the President and Chairman of the Board of First Georgetown Ventures, Inc., Fun Characters Inc., Fun Characters International Pte. Ltd. (marketing Licensee of Walt Disney Company for Asean countries) and HAVI Foods Services (Philippines), Inc. He also serves as Chairman of the Board of Golden Arches Development Corporation (McDonald’s Philippines), Ronald McDonald House Charities (Philippines), Trojan Computer Forms, Inc., Construction Strategies& Management Corporation and GEC Land Development Corporation. He is Vice Chairman of the Board Alliance Global Group Inc., and Megaworld Corporation. He is also a Member of the Board of Empire East Land Holdings Inc., a Member of the Board of Governors of The Tower Club, Inc. and Consul ad honorem for the State of Eritrea. Mr. Yang graduated Cum Laude from De La Salle College, Manila, with the degree of Bachelor of Science in Business Administration and holds a Masters Degree in Business Administration from the Wharton School, University of Pennsylvania, USA. Page 7 of 10 Document3 Jimmy S. Soo, 50, was appointed to the Board of the Corporation on October, 2007 and has retained office since then. He is Chairman of the Board of Music Semiconductors Corporation and a Director of First Abacus Financial Holdings Corporation, both listed at the PSE. He is an Officer and/or Director and/or Corporate Secretary of various companies. He is the Managing Partner of Soo Gutierrez Leogardo & Lee Law Offices. Alvin C. Go, 47, was appointed to the Board of the Corporation on October 2007 and has retained office since then. He is presently the First Senior Vice President and Chief Legal Counsel, of the Philippine National Bank (PNB). He was Special Assistant to the President, Philippine National Bank from 15 August 2003 to 22 January 2004. He was a Senior Partner of Go and Castro Offices, March 1999 to 31 July 2003; Go Cojuangco Mendoza Ligon & Castro Law Offices 1 January 1994 to March 1999. He was a State Prosecutor, Department of Justice from 18 January 1990 to 31 January 1993; Prosecution Attorney, Department of Justice from 5 October 1989 to 17 July 1990. Tan Eng Hwa, 39, was appointed by the Board as Treasurer of the Corporation on 30 June 2005 and has retained office since then. He is a member of the Board and the Vice-President for Operations and Treasurer of Philippine Gaming Management Corporation (PGMC). He is a member of the Malaysian Institute of Accountants. Jose A. Bernas, 48, was appointed Corporate Secretary on 28 March 1996, and has been such officer since then. He was re-appointed as Corporate Secretary on 18 October 2007. He teaches Private International Law and Government Contracts at the Ateneo de Manila University School of Law, and the La Salle –Far Eastern University Law School. He is presently the Chairman of the Board of Automation Specialists and Power Exponents, Inc.. He is the President of Discovery Centre Condominium Corporation and a director of Micros Fidelio Software Phils. Inc. He is the Corporate Secretary of FOSROC Phils. Inc., Dun and Bradstreet Philippines Inc. and Swift Foods, Inc. He is the Managing Partner of the Bernas Law Offices. Marie Lourdes Sia-Bernas, 42, was appointed Assistant Corporate Secretary on 25 October 2001 and has retained office since then. She is the Corporate Secretary of Automation Specialists and Power Exponents, Inc., Micros-Fidelio Software Phils. Inc. and the Assistant Corporate Secretary of Swift Foods, Inc., and FOSROC Phils. Inc., She is a partner at Bernas Law Offices. Page 8 of 10 Document3 Market Price of and Dividends on the Company’s Shares of Stock The shares of stock of PGPI are traded on the Philippine Stock Exchange (PSE). The high and low sales prices for each quarter within the last two fiscal years are as follows: Date High Low Close 16 Sept 2004 25 Nov. 2004 12 May 2005 14 July 2005 14 Dec 2005 16 Jan 2006 10 April 2006 7 July 2006 6 Oct 2006 29 Dec 2006 7 Feb 2007 28 Feb 2007 15 Mar 2007 18 Apr 2007 24 Apr 2007 30 Apr 2007 26 June 2007 19 Sept 2007 19 Nov 2007 19 Feb 2008 21 Feb 2008 19 May 2008 20 May 2008 21 May 2008 2 June 2008 P 44.00 P 44.00 P 44.00 P 44.00 P 44.00 P 34.00 P 44.00 P 35.00 P 40.00 P 50.00 P 40.00 P 40.00 P 50.00 P 35.00 P 31.00 P 50.00 P 110.00 P 130.00 P 95.00 P 110.00 P 120.00 P 125.00 P 120.00 P 120.00 P 120.00 P 44.00 P 44.00 P 44.00 P 28.00 P 44.00 P 34.00 P 44.00 P 35.00 P 40.00 P 40.00 P 30.00 P 40.00 P 50.00 P 35.00 P 22.00 P 49.50 P 100.00 P 130.00 P 79.00 P 110.00 P 114.00 P 120.00 P 120.00 P 120.00 P 120.00 P 44.00 P 44.00 P 44.00 P 44.00 P 44.00 P 34.00 P 44.00 P 35.00 P 40.00 P 50.00 P 40.00 P 40.00 P 50.00 P 35.00 P 22.50 P 50.00 P 110.00 P 130.00 P 95.00 P110.00 P120.00 P125.00 P120.00 P120.00 P120.00 The price as of the last trading date for this report is One Hundred Twenty Pesos (P120.00) on 2 June 2008. The shares of PGPI were not traded in the months of July to August 2008. There are no restrictions or limitations on PGPI’s ability to pay dividends on common equity. There are no such likely restrictions or limitations foreseen in the future. Page 9 of 10 Document3 Upon the written request of any stockholder, the Company shall provide without charge to the requesting stockholder, a copy of the Company’s annual report on SEC Form 17-A. ALL REQUESTS MUST BE ADDRESSED TO: JOSE A. BERNAS The Corporate Secretary Prime Gaming Philippines, Inc. c/o Bernas Law Offices 8/F Raha Sulayman Building 108 Benavidez Street, Legaspi Village, Makati City Metro Manila For and on behalf of the Board: LIM MENG KWONG Chairman * signed Report will be appended to the Definitive Information Statement on 18 September 2008 Page 10 of 10 Document3
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