Thunderbird Resorts Inc.

Thunderbird Resorts Inc.

April 26, 2012 14:47 ET

Thunderbird Resorts Inc.: 2011 Annual Report Filed; Letter From the CEO; Annual General and Special Meeting of Shareholders

PANAMA, REPUBLIC OF PANAMA--(Marketwire - April 26, 2012) - Thunderbird Resorts Inc. ("Thunderbird") (FRANKFURT:4TR)(EURONEXT:TBIRD) is pleased to announce that its 2011 Annual Report and Audited Consolidated Financial Statements have been filed with the NYSE Euronext ("Euronext Amsterdam") and the Netherlands Authority for Financial Markets ("AFM").

As a Designated Foreign Issuer with respect to Canadian securities regulations, the Annual Report is intended to comply with the rules and regulations set forth by the AFM and the Euronext Amsterdam. Copies of the Annual Report in the English language will be available at no cost at the Group's operational office in Panama and at the offices of our local paying agent ING Bank N.V., van Heenvlietlaan 220, 1083 CN Amsterdam, the Netherlands (tel: +31 20 7979 398, fax: +31 20 7979 607, email: and they are available on the Group's website at Copies are also available on SEDAR at and on the Euronext Amsterdam at Thunderbird is also required to file an Annual Document with links to all documents disseminated to shareholders during the past year. This Annual Document is available on our website at


The Letter from the CEO is an excerpt from the Annual Report, which letter summarizes Thunderbird's results for 2011. Thunderbird encourages shareholders and investors to read the entire 2011 Annual Report and Audited Consolidated Financial Statements.

To the Shareholders of Thunderbird Resorts Inc.:

Below are highlights of our progress and challenges in 2011.


Increased book value per share: The per-share book value of our common stock has increased 36% since year-end 2009 through year-end 2011, from $1.18 per share to $1.61 per share. This is a 17% annual compounded growth rate since we began to restructure in 2009.

Growing cash generation: Cash generation improved 6.9% to approximately $7.2 million in 2011 from $6.7 million in 2010. "Cash generation" is a key performance indicator Management analyzes monthly to determine the financial health of the Group, and is defined as adjusted EBITDA1 - Financing Cost - Project Development Expense.

Strengthened capital structure: Group debt from continuing and discontinued operations2 has been aggressively reduced to $78 million at year-end 2011 from $121 million as of 2010 and from $169 million as of 2009. This is a debt reduction of $91 million in 24 months.

Improved debt to adjusted EBITDA: Debt from continuing and discontinued operations to as adjusted EBITDA improved from 4.8X at year-end 2009 to 4.0X by year-end 2011. Based on Q4 2011 Material Contracts and Q1 2012 Subsequent Events (see Chapter 3), Management believes that Group debt ratios will further improve in 2012.

Increased value of our real estate: The value of our real estate property as accounted for based on book value is $62.1 million. However, based on appraisals from qualified, independent appraisers (all performed between 2010 and 2011), the commercial value of our real estate is now in excess of $100 million.

Sharper focus on our core business: Integrated resorts anchored by casinos, which are just three of our twenty-one operating properties, now represent 60% of our global property EBITDA. We believe that integrated resorts in mid-markets have stronger barriers to entry and provide better long-term value for our shareholders than standalone casinos. We have, therefore, strengthened our hotel and F&B management teams recently to prepare to grow this category.

Maturation of our financial & risk management: Through restructuring and building out our senior financial team in 2011, we have become increasingly sophisticated in evaluating our business through a sharp financial lens. The Group will continue these efforts as we are already experiencing the benefits of better financial analysis to support decision making.

Finally, our financials are fundamentally stronger: Profit (loss) before tax did decrease from a gain of $611 thousand in 2010 to a loss of $5.8 million in 2011 as the Group wrote down non-operating India assets (as described below and in Chapter 4). However, when analyzing our underlying fundamentals, Management believes that the Group is now materially healthier. Below, please see our analysis of material line items from our 2011 Consolidated Financial Statements.

  • Revenue from continuing and discontinued operations decreased by 5.9% because we sold non-strategic assets to reduce debt. In contrast, revenues grew by 1.2% on a same-store basis. Also, material investments in gaming equipment were made in late 2011 and early 2012 that we believe may result in stronger growth in 2012.
  • Cost of goods sold decreased by just 0.1% and operating, general & administrative costs increased by just 1.0%. Also, corporate overhead is now just 5.3% of revenue. Management has succeeded in managing costs and expense closely and intends to continue to maintain sharp controls on outflows in 2012.
  • Project development was reduced by 78.5%. The Group developed only in its current markets because we believe they offer an exciting pipeline. By focusing on existing markets, we both reduce development costs and mitigate new market risks.
  • Financing costs were driven down 36.4% or by $6.6 million due to the Group's intense focus on debt reduction and restructuring.

We believe that these underlying fundamentals are the building blocks of stronger bottom line performance in the periods ahead. Below is a summary P&L for 2011 as compared to 2010, which can be compared against the notes provided above.

Consolidated Consolidated
12 Months Ended 12 Months Ended Variance %
31-Dec-11 31-Dec-10
Net gaming wins 97,978 99,772 (1,794) -1.8%
Food, beverage and hospitality and other sales 20,925 26,623 (5,698) -21.4%
Total revenue 118,903 126,395 (7,492) -5.9%
Cost of goods sold (45,853) (45,916) 63 -0.1%
Gross profit 73,050 80,479 (7,429) -9.2%
Other operating costs
Operating, general and administrative (53,300) (52,775) (525) 1.0%
Project development (453) (2,110) 1,657 -78.5%
Depreciation and amortization (Note 9 and 11) (15,099) (14,876) (223) 1.5%
Other gains and (losses) (Note 5) (186) 1,734 (1,920) -110.7%
Operating profit 4,012 12,452 (8,440) -67.8%
Foreign exchange 113 4,134 (4,021) -97.3%
Financing costs (Note 7) (11,487) (18,060) 6,573 -36.4%
Financing income (Note 7) 2,070 2,085 (15) -0.7%
Other interests (473) - (473) 0.0%
Finance costs, net (9,777) (11,841) 2,064 -17.4%
Profit (Loss) before tax (5,765) 611 (6,376) -1043.5%


Extraordinary write downs: The performance in profit / (loss) before tax is not reflective of the Group's growth in cash generation, which is the most common metric by which many analysts look at gaming companies. Regardless, in 2011 the Group has: a) written down the entire remaining value of our India investment for an impairment of $5.2 million (see below and Chapter 4); and b) assumed other extraordinary losses of $349 thousand.

Philippines regulatory dispute: The first of two major challenges we faced during the year was a dispute that began in June 2011 with the Philippines Amusement and Gaming Corporation ("PAGCOR") as to the term length of our Philippines gaming licenses. One result of this dispute is that, since it began, we have not been authorized by PAGCOR to open approximately 100 slot machines and 7 tables in our Thunderbird Resorts-Rizal casino-event center expansion (which opened in Q1 2011) or to add new marketing programs or promotions in either of our Philippines properties. See Chapter 4 Section A for more details.

Management believes that post any resolution of the dispute with PAGCOR, there should be positive growth ahead for several reasons: a) our Thunderbird Resorts-Rizal casino-event center expansion is complete and approximately 100 slot and 7 tables are ready to open for business; b) our revenue or win per position per day ("WPP") has grown steadily in 2011, indicating that demand has strengthened vis-à-vis supply of gaming positions; and c) our Philippines operations may close on a $52 million equity funding that was announced in August 2011, which includes significant allocations for debt pay down, expansion of our existing gaming and hotel facilities, and funding of our Philippines pipeline.

India licensing and opening status: The second major challenge we faced in 2011 was a continuation of the setbacks in India in the last couple of years, including licensing delays and cost overruns. To mitigate risk, in May 2011, the Group announced that it had sold a control stake to an Indian publicly-traded company that operates in the hospitality and gaming space. This divestment reduced the value of our $9 million of equity invested into the project to approximately $5.2 million. Due to continuing licensing delays, overruns recently disclosed to us by the new controlling shareholder, approaching obligations to repay material sums of mezzanine financing, and the fact that the Group is no longer in a control position nor is receiving access to appropriate levels of information, we have decided to write down the investment entirely. See Chapter 4 Section E for more details.


The Group is only now completing the deleveraging began in 2009 to correct a capital structure that was over weighted with high-amortizing debt. We are mitigating development risks by focusing on our existing markets, where we have an exciting and deep pipeline. We are now in a position to invest in growth because of our stronger foundation and more properly balanced capital structure. The Group's core business is to develop and operate mid-sized integrated resorts anchored by casinos. We have developed and recruited management talent to support growth in this business, and will stay focused in the periods ahead.


Jack R. Mitchell, President and Chief Executive Officer

Thunderbird Resorts Inc.

April 26, 2012

1 "As Adjusted EBITDA" includes the results for continuing, discontinued and held for sale segments for 2010 (including results for Panama operation - 8 months 2010; Guatemala and Poland operations - full year 2010).

2 "Debt from continuing and discontinued operations" is defined as the aggregate of borrowings, obligations under leases and hire purchase contracts and derivative financial instruments, associated with the Group's continuing, discontinued and held for sale segments (see Notes 12, 17, 23 and 27).


Thunderbird also announces that the Annual General and Special Meeting of Shareholders will be held on June 22, 2012 at 10:00 a.m. at 24th Fl. Salcedo Towers, 169 H.V. dela Costa St., Salcedo Village, Makati City, Philippines 1227.


We are an international provider of branded casino and hospitality services, focused on markets in Asia and Latin America. Our mission is to "create extraordinary experiences for our guests". Additional information about the Group is available at

Cautionary Notice: The Annual Report referred to in this release contains certain forward-looking statements within the meaning of the securities laws and regulations of various international, federal, and state jurisdictions. All statements, other than statements of historical fact, included in the Annual Report, including without limitation, statements regarding potential revenue and future plans and objectives of Thunderbird are forward-looking statements that involve risk and uncertainties. There can be no assurances that such statements will prove to be accurate and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Thunderbird's forward-looking statements include competitive pressures, unfavorable changes in regulatory structures, and general risks associated with business, all of which are disclosed under the heading "Risk Factors" and elsewhere in Thunderbird's documents filed from time-to-time with the NYSE Euronext Amsterdam and other regulatory authorities. Included in the Annual Report are certain "non-IFRS financial measures," which are measures of Thunderbird's historical or estimated future performance that are different from measures calculated and presented in accordance with IFRS, within the meaning of applicable Euronext Amsterdam rules, that are useful to investors. These measures include (i) Property EBITDA consists of income from operations before depreciation and amortization, write-downs, reserves and recoveries, project development costs, corporate expenses, corporate management fees, merger and integration costs, income/(losses) on interests in non-consolidated affiliates and amortization of intangible assets. Property EBITDA is a supplemental financial measure we use to evaluate our country-level operations. (ii) Adjusted EBITDA represents net earnings before interest expense, income taxes, depreciation and amortization, equity in earnings of affiliates, minority interests, development costs, and gain on refinancing and discontinued operations. Adjusted EBITDA is a supplemental financial measure we use to evaluate our overall operations. Property EBITDA and Adjusted EBITDA are supplemental financial measures used by management, as well as industry analysts, to evaluate our operations. However, Property and Adjusted EBITDA should not be construed as an alternative to income from operations (as an indicator of our operating performance) or to cash flows from operating activities (as a measure of liquidity) as determined in accordance with generally accepted accounting principles.

Contact Information