Grand Plaza Hotel Corporation Reports Q3 2025 Results and Resolves Major Tax Case

Executive Summary

Grand Plaza Hotel Corporation (“GPHC”), owner and operator of The Heritage Hotel Manila, released its unaudited financial statements for the nine months and third quarter ended September 30, 2025. The report shows marginal revenue growth, significant cost challenges, and a highly price-sensitive resolution to a long-standing tax case. The company also provides a detailed breakdown of its risk exposures and financial position.

Key Financial Highlights

• Total revenue (YTD Sep 2025): PHP 361.0 million, up 0.5% from the previous year.
• Net income (YTD Sep 2025): PHP 24.86 million, down from PHP 31.63 million in 2024.
• 3rd Quarter Net Income: PHP 52.48 million, a dramatic increase from PHP 6.32 million in Q3 2024, primarily driven by non-operating income.
• EBITDA (YTD Sep 2025): PHP 27.4 million, down 56.9% from last year.
• Current Ratio: Improved to 2.15 from 2.08, due to reduced current liabilities.
• Debt-to-Equity Ratio: Decreased to 0.49 from 0.56, reflecting stronger equity and lower debt levels.

Operations & Segment Performance

• Rooms Division: Revenue rose to PHP 190.8 million (up 3.7%), thanks to improved average room rates (PHP 3,203 vs PHP 2,972) enabled by renovations. Occupancy remained steady at 53.5%.
• Food & Beverage Division: Revenue increased 9.5% to PHP 109.6 million, supported by higher average checks and stronger banquet performance (up 23.5%).
• Rental Income: Fell 19.7% due to the departure of a major casino tenant, a notable drag on overall profitability.
• Cost Pressures: Operating expenses rose 6.3%, mainly from government-mandated wage increases and higher water tariffs, partly offset by lower electricity costs.
• Non-Operating Income: A major driver in Q3 2025, with PHP 20.55 million recognized from the forfeiture of casino tenant premises and PHP 5.78 million from exchange gains.

Balance Sheet and Cash Flow

• Cash & Investments: PHP 326.3 million, down 27.9% from December 2024, due to payments for renovations.
• Accounts Receivable: Down 38.1% due to improved collections; other receivables reduced after offsetting with casino tenant’s security deposit.
• Prepaid Expenses: Increased to PHP 69.9 million, mainly from insurance payments.
• Property & Equipment: Up 17.2% following the forfeiture and recognition of renovated casino premises and newly renovated rooms.
• Refundable Deposit: Down 71.2% after termination of casino lease and offset against outstanding rent.
• Net cash decrease (YTD Sep 2025): PHP 126.2 million.

Resolution of Major Tax Case – Potentially Price Sensitive

• GPHC has successfully obtained a final and executory Supreme Court decision denying the Commissioner of Internal Revenue’s (CIR) petition for a PHP 506 million tax deficiency for the year 2008, including all surcharges and interest.
• The Supreme Court denied the CIR’s petition for review and, on October 22, 2025, issued a resolution denying any further motions with finality. No further pleadings will be entertained.
• This resolution removes a substantial contingent liability and risk overhang that had the potential to materially impact shareholder value and the company’s financial position.

Impact: The removal of this PHP 506 million tax risk is a major price-sensitive event that significantly reduces uncertainty for investors and materially strengthens GPHC’s balance sheet and future outlook.

Financial Risk Management

• Credit Risk: Closely managed with regular client vetting and review; no significant concentration.
• Liquidity Risk: Strong coverage, with PHP 779.3 million in current assets versus PHP 362.4 million in current liabilities.
• Market Risk: Minimal interest rate and foreign currency risk; primary exposure is competitive room rates.
• No third-party debt or investment in complex financial instruments.
• Cash is held mainly in local banks and reputable foreign institutions.

Shareholder Information

• Total shares outstanding: 87,318,270 (includes 33,600,901 treasury shares; net outstanding is 53,717,369).
• Earnings per share (YTD Sep 2025): Basic – PHP 0.46; Diluted – PHP 0.23.
• No dividends declared for the period.
• No material off-balance sheet items or undisclosed contingent liabilities.

What Investors Should Watch

• Major risk removed: The Supreme Court’s denial of the PHP 506 million tax claim eliminates a longstanding threat to the company’s financial health and valuation.
• Revenue growth remains marginal, with cost pressures affecting profitability; however, new room renovations and banquet growth provide positive signs.
• Potential upside: With the tax case resolved, GPHC is well positioned for future capital deployment, improved investor confidence, and renewed focus on operational improvements.
• Downside risk: Loss of casino rental income remains a drag, highlighting the need for new or replacement tenants to restore higher margin rental income.
• No dividend payout: May disappoint income-focused investors.

Conclusion

The resolution of the PHP 506 million tax case is a highly material, price-sensitive event for Grand Plaza Hotel Corporation. This removes a significant risk, clears the path for future growth, and may catalyze positive share price movement. Investors should monitor ongoing cost pressures, management’s strategy to replace lost rental income, and any future capital initiatives now that legal uncertainty has abated.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. The information provided is based on unaudited management reports and public disclosures as of September 30, 2025.

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