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D.

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

D.1 HORIZONTAL ANALYSIS


ABS-CBN CORPORATION AND SUBSIDIARIES
COMPARATIVE STATEMENTS OF INCOME
FOR THE YEAR ENDED DEC. 31 2015,2014,2013
Years Ended December 31 CHANGE
2015 2014 2013 2015-2014 2014-2013
Amount % Amount %
REVENUE
Advertising revenue 21,264,714 18,879,946 19,331,908 2,384,768 12.63 2,384,768 (2.34)
Sale of services 15,148,219 14,173,204 13,287,245 975,015 6.88 975,015 6.67
Sale of goods 1,734,397 351,528 579,140 1,382,869 393.39 1,382,869 (39.30)
Others 130,785 138,950 179,611 (8,165) (5.88) (8,165) (22.64)
Total Revenue 38,278,115 33,543,628 33,377,904 4,734,487 14.11 4,734,487 0.50

PRODUCTION COSTS -11,434,166 -11,007,656 -11,499,365 (426,510) 3.87 (426,510) (4.28)

-9,941,758 -9,045,527 (896,231) 9.91 (896,231) 2.17


COST OF SERVICES -8,853,440

COST OF SALES (1,330,207) 658.54 (1,330,207) (38.80)


-1,532,200 -201,993 -330,029
15,369,991 13,288,452 12,695,070 2,081,539 15.66 2,081,539 4.67
GROSS PROFIT

GENERAL AND ADMINISTRATIVE


EXPENSES -11,777,634 -10,113,904 -9,614,356 (1,663,730) 16.45 (1,663,730) 5.20
-811,787 -1,165,313 -816,919 353,526 (30.34) 353,526 42.65
FINANCE COSTS
INTEREST INCOME 169,270 153,968 94,438 15,302 9.94 15,302 63.04

FOREIGN EXCHANGE GAINS (LOSSES)


- Net 123,881 -31,704 -145,500 155,585 (490.74) 155,585 (78.21)

EQUITY IN NET EARNINGS (LOSSES)


OF ASSOCIATES AND JOINT
VENTURES -1,141 3,283 -12,397 (4,424) (134.75) (4,424) (126.48)
256,796 652,352 512,322 (395,556) (60.64) (395,556) 27.33
OTHER INCOME

3,329,376 2,787,134 2,712,658 19.46


INCOME BEFORE INCOME TAX 542,242 542,242 2.75
784,242 756,998 684,311 27,244 3.60 27,244 10.62
PROVISION FOR INCOME TAX
2,545,134 2,030,136 2,028,347
514,998 25.37 514,998 0.09
NET INCOME
Attributable to 2,931,777 2,387,085 2,145,725 544,692 22.82 544,692 11.25
Equity holders of the Parent Company
Noncontrolling interests -386,643 -356,949 -117,378 (29,694) 8.32 (29,694) 204.10
2,545,134 2,030,136 2,028,347 514,998 25.37 514,998 0.09
HORIZONTAL ANAL
ABS-CBN CORPORATION AND SUBSAIDIARIES
COMPARATIVE STATEMENTS OF FINANCIAL POSITION
FOR THE YEARS 2015,2014,2013
HORIZONTAL ANALYSIS
Dec. 31 CHANGES
ASSETS 2015 2014 2013 2015-2014 2014-2013
Amount Amount Amount % %
Current Assets
Cash and cash equivalents 11,537,559 13,238,377 10,616,855 (1,700,818) (12.85) 2,621,522 24.69
Short-term investments 1,617,546 - 1,617,546 0 0 0
Trade and other receivables 11,561,147 10,717,317 8,333,761 843,830 7.87 2,383,556 28.60
Inventories 672,501 544,362 265,221 128,139 23.54 279,141 105.25
Program rights and other intangible assets 959,411 1,183,184 1,385,972 (223,773) (18.91) (202,788) (14.63)
Other current assets 3,890,024 3,124,952 2,781,665 765,072 24.48 343,287 12.34
Total Current Assets 30,238,188 28,808,192 23,383,474 1,429,996 4.96 5,424,718 23.20

Noncurrent Assets
Property and equipment 21,798,053 20,572,543 18,535,905 1,225,510 5.96 2,036,638 10.99
Program rights and other intangible assets - net
of current portion 7,041,430 6,598,402 5,429,192 443,028 6.71 1,169,210 21.54
Goodwill 5,301,526 5,289,956 5,288,350 11,570 0.22 1,606 0.03
Available-for-sale (AFS) investments 275,096 242,368 219,191 32,728 13.50 (48,823) (16.77)
Investment properties 200,801 198,734 196,916 2,067 1.04 1,818 0.92
Investments in associates and joint ventures 523,733 199,874 166,591 323,859 162.03 33,283 19.98
Deferred tax assets (Note 29) 2,891,139 2,858,187 2,192,429 32,952 1.15 665,758 30.37
Other noncurrent assets 2,154,138 2,468,564 2,580,033 (314,426) (12.74) (111,469) (4.32)
Total Noncurrent Assets 40,185,916 38,428,628 34,608,607 1,757,288 4.57 3,820,021 11.04

TOTAL ASSETS 70,424,104 67,236,820 57,992,081 3,187,284 4.74 9,244,739 15.94

LIABILITIES AND EQUITY


Current Liabilities
Trade and other payables 14,941,690 12,788,120 11,332,006 2,153,570 16.84 1,456,114 12.85
Income tax payable 276,374 292,053 193,216 (15,679) (5.37) 98,837 51.15
Obligations for program rights 498,905 724,266 448,861 (225,361) (31.12) 275,405 61.36
Interest-bearing loans and borrowings 404,794 110,751 1,345,471 294,043 265.50 (1,234,720) (91.77)
Total Current Liabilities 16,121,763 13,915,190 13,319,554 2,206,573 15.86 595,636 4.47
NoncurrentLiabilities
Interest-bearing loans and borrowings - net of
current portion 20,125,519 20,214,484 13,334,579 (88,965) (0.44) 6,879,905 51.59
Obligations for program rights - net of current
portion 172,600 224,472 276,344 (23.11) (51,872) (18.77)
(51,872)
Accrued pension obligation and other employee
4,047,559 4,790,813 4,191,082 (15.51) 599,731 14.31
benefit (743,254)
Deferred tax liabilities 618,856 587,654 299,798 31,202 5.31 287,856 96.02
Convertible note 205,231 190,522 245,195 14,709 7.72 (54,673) (22.30)
Other noncurrent liabilities 417,250 438,857 402,772 (21,607) (4.92) 36,085 8.96
Total Noncurrent Liabilities 25,587,015 26,446,802 18,749,770 (859,787) (3.25) 7,697,032 41.05
Total Liabilities 41,708,778 40,361,992 32,069,324 1,346,786 3.34 8,292,668 25.86

Dec. 31
CHANGES
2015 2014 2013 2015-2014 2014-2013
Amount % Amount %
Equity Attributable to Equity Holders of the
Parent Company
Capital stock:
Common 872,124 872,124 872,124 0 0.00 0 0.00
Preferred 200,000 200,000 200,000 0 0.00 0 0.00
Additional paid-in capital 4,711,050 4,495,050 4,495,050 216,000 4.81 0 0.00
Exchange differences on translation of foreign
-466,159 -456,773 -270,632 2.05
operations (9,386) (186,141) 68.78
Unrealized gain on AFS investments 176,009 143,281 121,766 32,728 22.84 21,515 17.67
Share-based payment plan 34,349 34,349 34,349 0 0.00 0 0.00
Retained earnings 23,922,847 21,363,395 19,817,957 2,559,452 11.98 1,545,438 7.80
Treasury shares and Philippine depository
receipts convertible to common shares -1,638,719 -1,264,096 -1,164,146 (374,623) 29.64 (99,950) 8.59
Equity attributable to Equity Holders of the
27,811,501
Parent 25,387,330 24,106,468 2,424,171 9.55 1,280,862 5.31
Noncontrolling Interests 903,825 1,487,498 1,816,289 (583,673) (39.24) (328,791) (18.10)
Total Equity 28,715,326 26,874,828 25,922,757 1,840,498 6.85 952,071 3.67

TOTAL LIABILITIES AND EQUITY 70,424,104 67,236,820 57,992,757 3,187,284 4.74 9,244,063 15.94

ABS-CBN CORPORATION AND SUBSIDIARIES


COMPARATIVE STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
HORIZONTAL ANALYSIS
2015 2014 2013 2015-2014 2014-2013
Amount % Amount %
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax 3,329,376 2,787,134 2,712,658 542,242 19.46 74,476 2.75
Adjustments for:
Depreciation and amortization 3,022,249 2,871,000 2,714,199 151,249 5.27 156,801 5.78
Amortization of:
Program rights and other intangibles 1,677,088 1,327,894 1,430,811 349,194 26.30 (102,917) (7.19)
Debt issue costs 34,687 122,975 73,421 (88,288) (71.79) 49,554 67.49
Deferred charges 34,484 69,617 52,871 (35,133) (50.47) 16,746 31.67
Interest expense 762,463 845,478 716,894 (83,015) (9.82) 128,584 17.94
Movement in accrued pension obligation
and other employee benefits
655,634 531,092 973,130 124,542 23.45 (442,038) (45.42)
Interest income (169,270) (153,968) (94,438) 15,302 9.94 (59,530) 63.04
Net unrealized foreign exchange loss (2548.06
71,665 (69,427) 2,836 141,092 (203.22) (72,263)
(gain) )
Loss (gain) on sale of property and
equipment (11,687) 4,167 5,688 (15,854) (380.47) (1,521) (26.74)
Equity in net losses (earnings) of
associates and joint
1,141 (3,283) 12,397 4,424 (134.75) (15,680) (126.48)
ventures
Gain on settlement of liabilities 0 (444,826) (13,910) 444,826 (100.00) (430,916) 3097.89
Impairment loss 0 0 20,061 0 0 (20,061) (100.00)
Share-based payment expense 0 0 5,397 0 0 (5,397) (100.00)
Income before working capital changes 9,407,830 7,887,853 8,612,015 1,519,977 19.27 (724,162) (8.41)
Provisions for doubtful accounts 364,874 530,573 432,094 (165,699) (31.23) 98,479 22.79
Decrease (increase) in:
(1,565,14
Trade and other receivables (2,886,288) (814,390) 1,321,140 (45.77) (2,071,898) 254.41
8)
Inventories (122,722) (278,981) (46,742) 156,259 (56.01) (232,239) 496.85
Other current assets (638,789) (347,574) 111,917 (291,215) 83.79 (459,491) (410.56)
Increase (decrease) in:
Trade and other payables 1,680,860 985,677 356,911 695,183 70.53 628,766 176.17
(1,018,05
Other noncurrent liabilities (371,221) (5,461) 646,833 174.24 (365,760) 6697.67
4)
Obligations for program rights (278,495) 225,297 239,177 (503,792) (223.61) (13,880) (5.80)
Cash generated from operations 7,830,356 5,745,336 8,885,521 2,085,020 36.29 (3,140,185) (35.34)
Income taxes paid (261,994) (912,745) (830,461) 650,751 (71.30) (82,284) 9.91
Net cash provided by operating activities 7,568,362 4,832,591 8,055,060 2,735,771 56.61 (3,222,469) (40.01)

CASH FLOWS FROM INVESTING


ACTIVITIES
Additions to:
(1,617,54
Short-term investment 0 0 1,617,546 0 0 0
6)
(4,743,80
Property and equipment (Note 10) (4,991,980) (3,727,670) 248,171 4.97 1,264,310 33.92
9)
Program rights and other intangible (1,927,82
(1,433,238) (1,772,969) 494,587 34.51 339,731 19.16
assets (Notes 12 and 35) 5)
Investment properties (Notes 11 and 35) 0 (2,508) 0 2,508 (100.00) 2,508 0
Proceeds from sale of property and
519,328 96,580 24,629 422,748 437.72 71,951 292.14
equipment
Investments in joint ventures and
(291,405) (30,000) (137,962) 261,405 871.35 107,962 78.25
associates (Note 14)
Increase (decrease) in other noncurrent
129,281 (194,505) (97,296) 323,786 166.47 97,209 99.91
assets
Interest received 155,818 140,660 97,881 15,158 10.78 42,779 43.71
(7,776,15
Net cash used in investing activities (6,414,991) (5,613,387) 1,361,167 21.22 801,604 14.28
8)

CASH FLOWS FROM FINANCING ACTIVITIES


Proceeds from:
Bank loans 300,000 0 850,000 300,000 0 (850,000) (100.00)
Long-term debt 0 8,576,439 2,000,000 (8,576,439) (100.00) 6,576,439 328.82
Payments of:
Dividends (493,717) (498,950) (298,066) 5,233 (1.05) (200,884) 67.40
Interest (742,242) (983,203) (744,937) 240,961 (24.51) (238,266) 31.98
Long-term debt (178,510) (2,372,139) (115,722) 2,193,629 (92.47) (2,256,417) 1949.86
Obligations under finance lease (25,154) (29,549) (37,551) 4,395 (14.87) 8,002 (21.31)
Bank loans (400,000) (3,850,000) 0 0 3,450,000 (89.61)
Acquisition of treasury shares and
Philippine depository receipts (374,623) (99,950) 0 (274,673) 274.81 (99,950) 0
Proceeds from additional investment 35,878 0 0 0 0 0 0
Issuances of:
Common shares 0 0 3,939,501 0 0 (3,939,501) (100.00)
Preferred shares (Note 22) 0 0 200,000 0 0 (200,000) (100.00)
Decrease in noncontrolling interests 0 0 (185,893) 0 0 185,893 (100.00)
Net cash provided by (used in) financing (1,514,24
4,228,526 1,757,332 (5,742,772) (135.81) 2,471,194 140.62
activities 6)

EFFECTS OF EXCHANGE RATE


CHANGES AND TRANSLATION
21,224 (24,604) 22,912 45,828 (186.26) (47,516) (207.38)
ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS

NET INCREASE (DECREASE) IN (1,700,81


2,621,522 4,221,917 (4,322,340) (164.88) (1,600,395) (37.91)
CASH AND CASH EQUIVALENTS 8)

CASH AND CASH EQUIVALENTS 13,238,37


10,616,855 6,394,938 2,621,522 24.69 4,221,917 66.02
AT BEGINNING OF YEAR 7
CASH AND CASH EQUIVALENTS 11,537,55
13,238,377 10,616,855 (1,700,818) (12.85) 2,621,522 24.69
AT END OF YEAR (Note 6) 9

CHANGE
2015 2014 2013 2013-2014 2014-2015
Amount % Amount %
26,874,82 19,421,83
Beginning Balance 25,922,757
8 1
Net income (loss) 2,545,134 2,030,136 2,028,347 1,789 0.09 514,998 25.37
Other comprehensive -
185,332 -499,393 810,137 -1,309,530 684,725 -137.11
income (loss) 161.64
Total comprehensive income
2,730,466 1,530,743 2,838,484 -1,307,741 -46.07 1,199,723 78.38
(loss)
Remeasurement gain on
defined benefit plan
0 0.00 0 0.00
transferred to retained
earnings
0 0.00 0 0.00
Benefit plan transferred to
- _ 0 0.00 0 0.00
retained earnings
0 0.00 0 0.00
Cash Dividends declared -514,352 -514,600 0 -514,600 0.00 248 -0.05
Acquisition of PDRs and
-375,616 -99,950 -99,950 0.00 -275,666 275.80
common shares
Reversal of appropriation
0 0.00 0 0.00
of retained earnings
Appropriation of retained
0 0.00 0 0.00
earnings
-
Share-based payment plan 5,397 -5,397 0 0.00
100.00
-
Issuance of common stock 3,939,501 -3,939,501 0 0.00
100.00
-
Issuance of preferred stock 200,000 -200,000 0 0.00
100.00
Decrease in noncontrolling -
0 0 -185,893 185,893 0 0.00
interests 100.00
Additional investment 0 35,878 0 35,878 0.00 -35,878 -100.00
28,715,32 25,922,75
Ending Balance 26,874,828
6 7
ABS-CBN CORPORATION AND SUBSIDIARIES
COMPARATIVE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DEC. 31 2015,2014,2013
HORIZONTAL ANALYSIS

INTERPRETATIONS OF HORIZONTAL ANALYSIS1

1Charts and Tables presented in this analysis are elaborately presented in APPENDIX A
2013 2014 2015
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
e s s
nu ce ds er
e vi oo Ot
h
ev Ser fG
R f
in
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eo l eo
rt is Sa
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v e
Ad
A. Statement of Income Analysis
Based on the Income Statement, the gross revenue has showcased a quite favorable result for it
has increased by .50% from 2013-2014. However, despite of such increase, the other factors that
comprises the gross revenuewhich are Advertising Revenue, Sale of Goods, and the other Revenue, has
decreased by 2.34%, 39.30%, and 22.64% respectively. Due to the decrease of majority of the line items,
the company should be cautious and come up with an immediate optimal solution to prevent the possible
continuous decline of the mentioned sources of revenues.
During 2014-2015, there has been a huge increase in the gross revenues which is 14.11%. This
increase was due to great performances of the local and international broadcast groups and was supported
by Sky Cable. It can be observed that the revenues that declined during the previous period have already
increased. Due to that factor, the trend between 2014-2015 as compared to 2013-2014 was a better
performance.

Net Income
3,000,000

2,500,000

2,000,000

1,500,000

1,000,000
2013 2014 2015
Net Income
There has been a minimal
increase in net income from 2013-2014, which was only .09%. This was because of the decrease of
majority of the revenuesAdvertising, Sale of Goods, and other revenue and the increase of majority of
the expensesProduction, Cost of Services, Cost of Sales, and General and Administrative. This kind of
trend should not be maintained by the entity and should come up with a solution that would result to
cutting down their expenses and earning more revenues. During the same period, there has been an
increase in the interest income and other income by 63.04% and 27.33% respectively, and contributed to
the slight increase of the net income.
The net income during 2014-2015 has increased by 25.37%. This is an immense increase if it is
going to be compared to the previous periods increase. This increase was caused by the increase of the
revenues due to the excellent performance of the broadcasting groups in the company as well as the
proceeds that the company received for the advertisement because of the presidential elections.

Current Liabilities
17,000,000
Current
16,000,000
Liabilities
15,000,000
14,000,000
13,000,000
B. 2013 2014 2015

Current Assets
35,000,000
30,000,000 Current Assets

25,000,000
20,000,000
2013 2014 2015 Short-Term Solvency Analysis

During 2013-2014, the percentage of the increase in the current assets, which is 23.20%, is larger than the
increase in the current liabilities, which is 4.47%. This result is favorable on the part of the company
because it may pertain that the company has ample current assets in order to meet their currently maturing
obligations.
During 2014-2015, there has been and increase with regards to the percentage in the total of the current
assets, which is 4.96%. However, the total current liability also had an increase of 15.86%. It can be
observed that the percentage of the current liabilities now is much larger than of the percentage of the
increase of the total assets. This type of result would be unfavorable as to the short-term solvency of the
company because the company is now exposed to the risk as to the ability of the entity to meet those
currently maturing obligations, with regards if their current assets can do meet those obligations.
Non Current Liabilities
27,000,000
25,000,000 Non Current
23,000,000 Liabilities
21,000,000
19,000,000
17,000,000
C. 2013 2014 2015

Non Current Assets


42,000,000
40,000,000 Non Current
Assets
38,000,000
36,000,000
34,000,000
2013 2014 2015 Long-Term Financial Position
Analysis

During 2013-2014, the total non-current assets increased by 11.04% because of the acquisition of the
property, plant, and equipment, and program rights despite of the decreases of the AFS investments and
the other non-current assets. The decrease in the AFS investments was caused by the sale of the said
investments, whereas the decrease in the other non-current assets was caused by the provision for
unrecoverable tax credits and the amortization for deferred charges.
The non-current liabilities have increased by 41.05%. The increase was primarily caused by the interest-
bearing loans and borrowings. So therefore, the entity should be prepared enough as early as that period
in order to meet those obligations. The entity should be cautious because more debts can expose the firm
to a huge risk where they could not meet their contractual debt payments over the long run

During 2014-2015, the total non-current asset increased by 4.57%. It may be a minimal increase if it were
to be compared to the previous trend. However, it can be noted that most of the items that lies under the
total non-current assets have increased and it may be beneficial for the company as a result, especially in
the long run because they may earn income from those investments.
The non-current liabilities have decreased by 3.25% and it was probably due to the factor that the long-
term obligations are starting to mature little by little and thus currently maturing and is to be settled by the
entity

D. Operating Cash Flow Analysis


The net cash provided by operating activities decreased by 40.01% during 2013-2014. The decrease of the
cash flows provided by operating activities during 2013-2014 was caused by the gain on settlement of the
liabilities and the settlement of non-current liabilities, and also the increase in trade and other receivables
(254.41%). Due to those activities of the firm, the entity should make more efforts as to the collection of
those receivables because a lot of receivables may cause that a percentage of it would be deemed
uncollectible.
The decrease in the cash flows provided by operating activities increased by 56.61% during 2014-2015.
As compared to the previous trend of 2013-2014, it shows that the entity was able to convert more
earnings to cash. It can also be noted that the trade and other receivables has a minimal increase of
45.77% as compared to the previous one.

Cash Flows Provided by Financing Activities


4,500,000
4,000,000 Cash Flows
3,500,000 Provided by
3,000,000 Financing
2,500,000 Activities
2,000,000
1,500,000
1,000,000
2013 2014 2015

Cash Flows Provided by Operating Activities


8,500,000
8,000,000
Cash Flows
7,500,000
Provided by
7,000,000
Operating
6,500,000 Activities
6,000,000
5,500,000
5,000,000
4,500,000
2013 2014 2015

E. Investing Cash Flow Analysis


There has been an increase in the net cash provided by the investing activities from 2013-2014 by 14.28%
due to the acquisition of Property, Plant, and Equipment, and the Program Rights and other intangible
assets. This is also the same reason for the increase in the net cash provided by investing activities during
the period from 2014-2015, which was 21.22%
Having in mind the nature of the industry of the entity, it can be noted that the entity is coping up with the
modern technologies that are present, and was able to make earnings out of the other properties, which
thus explains the gain on the proceeds.

F. Financing Cash Flow Analysis


There has been an increase in cash flows provided by financing activities by 140.62%. This was primarily
caused by 328.82% increase on the proceeds from the bank loans. This shows that during this period, the
company may have relied on the bank loan with regards to the financing the entity. As always, the
company should be cautious as to the loans for the company may be exposed to some risks that are related
to such, and must be carefully thought carefully when entering to this type of agreement.

Cash Flows Provided by Financing Activities


4,500,000
4,000,000
3,500,000 Cash Flows Provided by
3,000,000 Financing Activities
2,500,000
2,000,000
1,500,000
1,000,000
2013 2014 2015
During 2014-2015, there has
been a decrease with the cash flows provided by the financing activities by 135.81%. This was primarily
caused by the payments of the entity with regards to the dividends, interest, and other debts. This is
favorable on the part of the entity because it shows that the entity was able to reduce their debts.

G. Changes in Equity Analysis


As one may have observed, there has been a lot of changes in the equity of the company during the year
2013 as compared to the changes in the subsequent years. This is because that the entity issued shares
during 2013, and has not made additional issuance on the subsequent years. The issuance of shares may
help the entity in various ways, such as the acquisition of cash that they need and it can also be used to
repay a high debt when the circumstances arise. So therefore, when it is needed, the entity should acquire
more shares in order to enjoy the respective benefits, but bearing in mind the presence of risks.
There is a minimal difference as to the declaration of cash dividends of the entity from 2014-2015, which
is only a decrease of .05%. It seems like the entity is maintaining a balance with regards to the declaration
of cash dividends. The declaration of cash dividends may attract more investors in the future.

D.2 VERTICAL ANALYSIS


ABS-CBN CORPORATION AND SUBSAIDIARIES
COMPARATIVE STATEMENTS OF FINANCIAL POSITION
FOR THE YEARS 2015,2014,2013
VERTICAL ANALYSIS

Dec. 31
ASSETS 2015 2014 2013
Amount % Amount % Amount %
Current Assets
Cash and cash equivalents 11,537,559 16.38% 13,238,377 19.69% 10,616,855 18.31%
Short-term investments 1,617,546 2.30% 0.00% - 0.00%
Trade and other receivables 11,561,147 16.42% 10,717,317 15.94% 8,333,761 14.37%
Inventories 672,501 0.95% 544,362 0.81% 265,221 0.46%
Program rights and other intangible assets 959,411 1.36% 1,183,184 1.76% 1,385,972 2.39%
Other current assets 3,890,024 5.52% 3,124,952 4.65% 2,781,665 4.80%
Total Current Assets 30,238,188 42.94% 28,808,192 42.85% 23,383,474 40.32%

Noncurrent Assets
Property and equipment 21,798,053 30.95% 20,572,543 30.60% 18,535,905 31.96%
Program rights and other intangible assets -
net of current portion 7,041,430 10.00% 6,598,402 9.81% 5,429,192 9.36%
Goodwill 5,301,526 7.53% 5,289,956 7.87% 5,288,350 9.12%
Available-for-sale (AFS) investments 275,096 0.39% 242,368 0.36% 219,191 0.38%
Investment properties 200,801 0.29% 198,734 0.30% 196,916 0.34%
Investments in associates and joint ventures 523,733 0.74% 199,874 0.30% 166,591 0.29%
Deferred tax assets (Note 29) 2,891,139 4.11% 2,858,187 4.25% 2,192,429 3.78%
Other noncurrent assets 2,154,138 3.06% 2,468,564 3.67% 2,580,033 4.45%
Total Noncurrent Assets 40,185,916 57.06% 38,428,628 57.15% 34,608,607 59.68%
100.00 100.00 100.00
TOTAL ASSETS 70,424,104 % 67,236,820 % 57,992,081 %

LIABILITIES AND EQUITY


Current Liabilities
Trade and other payables 14,941,690 21.22% 12,788,120 19.02% 11,332,006 19.54%
Income tax payable 276,374 0.39% 292,053 0.43% 193,216 0.33%
Obligations for program rights 498,905 0.71% 724,266 1.08% 448,861 0.77%
Interest-bearing loans and borrowings 404,794 0.57% 110,751 0.16% 1,345,471 2.32%
Total Current Liabilities 16,121,763 22.89% 13,915,190 20.70% 13,319,554 22.97%
NoncurrentLiabilities
Interest-bearing loans and borrowings - net
of current portion 20,125,519 28.58% 20,214,484 30.06% 13,334,579 22.99%
Obligations for program rights - net of
current portion 172,600 224,472 276,344
0.25% 0.33% 0.48%
Accrued pension obligation and other
4,047,559 4,790,813 4,191,082
employee benefit 5.75% 7.13% 7.23%
Deferred tax liabilities 618,856 0.88% 587,654 0.87% 299,798 0.52%
Convertible note 205,231 0.29% 190,522 0.28% 245,195 0.42%
Other noncurrent liabilities 417,250 0.59% 438,857 0.65% 402,772 0.69%
Total Noncurrent Liabilities 25,587,015 36.33% 26,446,802 39.33% 18,749,770 32.33%
Total Liabilities 41,708,778 59.23% 40,361,992 60.03% 32,069,324 55.30%

Dec. 31
2015 2014 2013
Equity Attributable to Equity Holders of Amount % Amount % Amount %
the Parent Company
Capital stock:
Common 872,124 1.24% 872,124 1.30% 872,124 1.50%
Preferred 200,000 0.28% 200,000 0.30% 200,000 0.34%
Additional paid-in capital 4,711,050 6.69% 4,495,050 6.69% 4,495,050 7.75%
Exchange differences on translation of
-466,159 -456,773 -270,632
foreign operations -0.66% -0.68% -0.47%
Unrealized gain on AFS investments 176,009 0.25% 143,281 0.21% 121,766 0.21%
Share-based payment plan 34,349 0.05% 34,349 0.05% 34,349 0.06%
Retained earnings 23,922,847 33.97% 21,363,395 31.77% 19,817,957 34.17%
Treasury shares and Philippine depository
receipts convertible to common shares -1,638,719 -2.33% -1,264,096 -1.88% -1,164,146 -2.01%
Equity attributable to Equity Holders of the
27,811,501
Parent 39.49% 25,387,330 37.76% 24,106,468 41.57%
Noncontrolling Interests 903,825 1.28% 1,487,498 2.21% 1,816,289 3.13%
Total Equity 28,715,326 40.77% 26,874,828 39.97% 25,922,757 44.70%
100.00 100.00 100.00
TOTAL LIABILITIES AND EQUITY 70,424,104
% 67,236,820 % 57,992,757 %

ABS-CBN CORPORATION AND SUBSIDIARIES


COMPARATIVE STATEMENTS OF INCOME
FOR THE YEAR ENDED DEC. 31 2015,2014,2013
VERTICAL ANALYSIS
Years Ended December 31
2015 2014 2013
Amount % Amount % Amount %
REVENUE
Advertising revenue 21,264,714 55.553% 18,879,946 56.285% 19,331,908 57.918%
Sale of services 15,148,219 39.574% 14,173,204 42.253% 13,287,245 39.809%
Sale of goods 1,734,397 4.531% 351,528 1.048% 579,140 1.735%
Others 130,785 0.342% 138,950 0.414% 179,611 0.538%
Total Revenue 38,278,115 100.000% 33,543,628 100.000% 33,377,904 100.000%

PRODUCTION COSTS -11,434,166 -29.871% -11,007,656 -32.816% -11,499,365 -34.452%


-9,941,758 -25.972% -9,045,527 -26.966% -8,853,440 -26.525%
COST OF SERVICES

-1,532,200 -4.003% -201,993 -0.602% -330,029 -0.989%


COST OF SALES

GROSS PROFIT 15,369,991 40.153% 13,288,452 39.615% 12,695,070 38.034%

GENERAL AND ADMINISTRATIVE


EXPENSES -11,777,634 -30.769% -10,113,904 -30.151% -9,614,356 -28.805%

FINANCE COSTS -811,787 -2.121% -1,165,313 -3.474% -816,919 -2.447%

INTEREST INCOME 169,270 0.442% 153,968 0.459% 94,438 0.283%

FOREIGN EXCHANGE GAINS (LOSSES)


- Net 123,881 0.324% -31,704 -0.095% -145,500 -0.436%

EQUITY IN NET EARNINGS (LOSSES)


OF ASSOCIATES AND JOINT -1,141 -0.003% 3,283 0.010% -12,397 -0.037%
VENTURES
256,796 0.671% 652,352 1.945% 512,322 1.535%
OTHER INCOME
3,329,376 8.698% 2,787,134 8.309% 2,712,658 8.127%
INCOME BEFORE INCOME TAX
784,242 2.049% 756,998 2.257% 684,311 2.050%
PROVISION FOR INCOME TAX
2,545,134 10.747% 2,030,136 10.566% 2,028,347 10.177%
NET INCOME
Attributable to 2,931,777 115.19% 2,387,085 117.58% 2,145,725 105.79%
Equity holders of the Parent Company
Noncontrolling interests -386,643 -15.19% -356,949 -17.58% -117,378 -5.79%
2,545,134 100.00% 2,030,136 100.00% 2,028,347 100.00%
INTERPRETATION OF VERTICAL ANALYSIS2
A. Short-Term Solvency Analysis
As shown on the financial position statement, total current assets are in an increasing tendency by which
it has increased by 2.61% from the year 2013 because of the changing increase in trade and other
receivable, inventories, and other current assets. The percentage of cash and cash equivalent to the total
assets of the company shows adequate use of cash for the acquisition of assets and payment for expenses
and debts as seen in the financial statements of the company. Also, it is evident that cash may have
decreased due to the application of the business for a short-term investment which may be of benefit in
order that some cash of the business would not be in idle condition and for further acquisition of short-
term wealth for the company.
Also, inventory levels of the corporation are in tolerable relation to that of total assets for the business
because the company focuses more on media coverage service. But, it must still be of concern of the
business that inventory is increasing as a percentage over the years which means that inventory should be
maintained properly to avoid surplus in inventory stocks and increase in storage cost of inventory. In
addition, accounts receivable account is increasing over the years and much higher in percentage
compared to cash and cash equivalent of the 2015 financial position statement. It just shows that the
company may have an increase in credit sales and a probable extension of credit policies and debts.
Though the proportion of the receivable account is of normal condition to that of its total assets based on
the industry in which it operates, the company must give effort on managing credit policies and
controlling credit sales to customers.
With all this said, it is evident that the company is in a good credit position given that current assets for
the year 2015 is 42.93 % which is higher than that of companys current liabilities which is 22.89%,
showing that the company has good liquidity condition and satisfactory proportion of assets to meet
current obligations. As shown, though current liabilities have been increasing exponentially by the
company, the company has enough assets to accommodate and meet their commitments to borrowers.

2 Charts and Tables presented in this analysis are elaborately presented in APPENDIX A
B. Long-Term Financial Asset Analysis
It can be noted that non-current portion of the company is much higher than that of its current where
current assets only takes 42.93% while non-current assets takes 57.07% of total assets which is a good
indicator that the business is in a well-balanced financial standing for the year 2015. Also, it is noticed
that non-current portion of assets in decreasing compared to previous years due to decreases in property
and equipment, goodwill, investment properties and other noncurrent assets.
As a business concerning to television and
radio services, it is shown that property and
equipment is of vital asset to the company
and such percentage as shown in the
financial statements indicates that
proportion of property and equipment is of
normal condition in the industry in which
the company is in. It can also be assessed
that company has 10% program rights and
other intangible assets, which is increasing
over the years, in proportion to the total
assets of the company. This signifies that
company may have different rights to
variety of media coverage which is a good
standing for the company for it may be
useful for future operations and acquisition
of future customers. In addition, though
business non-current assets have been
decreasing, investment in associates and
joint venture has been increasing
exponentially showing that business are
entering to contracts of business ventures to
gain more financial wealth and relationship
with other companies.

C. Capital Structure and Long-Term Solvency analysis


As shown in the financial statements, total liabilities always have a higher proportion to the total sum
compared to the total equity of the company where total equity only covers 40.77% of the total for 2015
while total liabilities covers a high percentage of 59.23% for 2015. This shows that company may be
more dependent on making loans and obligations to operate business undertakings showing less
investments and more debts or the company has not been investing enough funds for the business and
spend. If this subsists in the continuing future, unpaid debt obligations can result in legal action against
the firm and may soon indicate ineffective employment of borrowed funds and equity.
Also, it is seen that retained earnings of the company has a balance of 30% and up for the past couple of
years showing a possible scenario that the company has not been declaring massive dividends to
shareholders of the company or the company has appropriated its earnings for other business undertakings
or for future use in helping operations of the business. Though this proportion is not relevantly high to say
that retained earnings are inappropriately being managed, it is of concern that the retained earnings
balance account should be carefully controlled to avoid future conflicts and meet satisfactory results for
the business.
To further elaborate, total equity has been decreasing during the past years due to decrease in capital
stocks and additional paid-in capital and a large proportion of increase in the balance of treasury stocks
that the company has made. The indicator of an increase in treasury share is of not a red flag for the
company and its proportion to the total sum is not that of have material effect on the business financially
but such an increase must be further assessed by the company and effectively managed corporation to
avoid over-balance of treasury stocks and other threats that may occur if such increasing tendency would
continue.
D. Operating Efficiency and Profitability analysis
It can be seen in the income statement that net income is increasing due to tendency of decrease of the
costs of the corporation where it is widely evident that in the financial statement of the company is that
production cost, cost of service and cost of sales are in a decreasing tendency from year 2013 to 2015.
This decreasing trend of the following costs may be because of company prices of products and services
are aligned with the certain changes occurring during each year signifying good selling price and profit
margin policy control over the products and services being offered. However, though the given costs are
decreasing, the general and administrative costs of the company is mildly increasing which might depict
increase in administrative expenses like increase in office salary and the like or there might be ineffective
control of costs by management in general and administrative costs.

Also, based on the accounts of total revenues, it is seen that advertising revenue has the highest
proportion of the accounts which is 55.55%, showing that such proportion is of appropriate for the
company for its focus is on television services and other media services. Also, except from advertising
revenues, the company is also seen from gaining income from other services which gives the company
39.57%. Though the company rely on services on gaining profit, it is also evident that sale of goods is
increasing over the past years showing that company management has efficiently increased efforts on
selling of products and may indicate effective management of prices of goods and may also mean increase
of customers over the years. Plus, net income has been increasing due to the gain of foreign exchange
gain in which this account has been indicating a loss over the past years but now, the company has gained
revenue from foreign currencies. Overall, it can be assessed that net income has been increasing over the
years showing efficient operation on sales of the company.
D.3 RATIO ANALYSIS

*Ratio formulas are enumerated elaborately in APPENDIX B: Summary of most commonly used ratios,
their formulas and basic significance which will also show the relevant notes explaining the use of the
enumerated ratios.
The following analysis is based on thousand PHP and ratios are rounded off to the nearest hundredths,
showing the different financial condition of the company in terms of Solvency, Liquidity, Profitability,
Leverage, Management Efficiency and other relevant information that may be of material use to the users
of the financial statements:

A. Short-term Solvency and Liquidity Ratios


1. Working Capital
2015 2014 2013
Formula: Compt. Amt. Compt Amt. Compt. Amt.
.

Total Current Assets - 23,383,474


30,238,188- 28,808,192- 14,893,00 - 10,063,92
14,116,425
Total Current 16,121,763 13,915,190 2 13,319,554 0
Liabilities

2. Current Ratio
2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Total Current Assets 30,238,188 28,808,192 23,383,474


1.88 2.08 1.76
Total Current Liabilities 16,121,763 13,915,190 13,319,554

3. Acid Test Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Quick Assets 24,716,252 23,955,694 18,950,616


1.53 1.72 1.42
Total Current Liabilities 16,121,763 13,915,190 13,319,554

4. Cash-Flow Liquidity Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Cash+Marketable Sec.+Cash
flow from operating activities 20,723,467 1.29 18,070,968 1.30 18,671,915 1.40
Total Current Liabilities 16,121,763 13,915,190 13,319,554

5. Working Capital to Total Asset Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio
Working Capital 14116425 14893002 10063920
0.20 0.22 0.17
Total Assets 70424104 67236820 57992081

Analysis of Short-term Solvency and Liquidity Ratios

Short-Term Solvency and Liquidity Ratios


2015 2014 2013
2.50 1.88 2.07 1.76 1.72
2.00 1.53 1.42 1.29 1.30 1.40
1.50
1.00 0.20 0.22 0.17
0.50
0.00

It is quite evident
that the 2015 liquidity standing of the company has decreased since the year 2014 but has increased
overall compared to the year 2013. Such declining tendency from the year 2014-2015 could indicate a
deteriorating financial condition because it can be assessed that current liabilities have been increasing
over the years because of an upward tendency of trade and other payables of the company as discussed in
the later analysis. Also, such tendency may be the result of the increase in both receivables and inventory
of the company which may indicate a more fluid state of liquidity condition for the company, meaning the
company has more assets to meet its current obligations to other companies.
This can be interpreted that still, the company has good financial condition for the business has enough
cash and other assets accounts for this alone can still satisfy financial obligations of the business even
though, yet again, current liabilities have been increasing exponentially for the past years. This may also
indicate that the company can still meet obligations without depending heavily on inventory of the
company since such an account is not an immediate source of cash and may not be saleable in times of
economic stress.
It is evident that the company is a highly liquid state not only due to the indicators of the current ratio and
quick ratio of the company but also to the fact that the company has sufficient and significant amount of
cash and other highly liquid assets which may indicate that the company has a good credit position which
may be of an advantage for the company for it has financial prospects to satisfy company obligations.
In summary, the company has enough liquid reserve available to satisfy contingencies and uncertainties
and has a high working capital balance in cases when the entity is unable to borrow on short notice and
also indicating has good short-term solvency and liquidity which means the company has the capacity to
meet current commitments in proportion to the available assets of the company.
B. Asset Activity and Management Efficiency Ratios
1. Trade Receivable turnover
2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Revenues 38,278,115 3.44 33,543,628 3.52 33,377,904 3.99


Average Trade Receivable (Net) 11,139,232 times 9,525,539 times 8,356,672 times

2. Average collection period of Trade Receivable


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

365 days 365 days 106.22 365 days 103.65 365 days 91.38
Receivable Turnover 3.44 days 3.52 days 3.99 days

3. Inventory turnover
2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Cost of revenue 22,908,124 37.65 20,255,176 50.04 20,682,834 85.58


Average Inventory (Net) 608,432 times 404,791 times 241,670 times

4. Days Supply in Inventory


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

365 days 365 days 9.69 365 days 7.29 365 days 4.26
Inventory Turnover 37.65 days 50.04 days 85.58 days
5. Working Capital turnover ratio
2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Net Revenues 38,278,115 33,543,628 33,377,904


Average Working Capital 14,504,714 2.64 12,478,461 2.69 6,819,197 4.89

6. Asset Turnover
2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Revenues 38,278,115 0.56 33,543,628 0.54 33,377,904 0.62


Ave. Total Assets 68,830,462 times 62,614,451 times 53,736,309 times

7. Fixed Asset Turnover


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Revenues 38,278,115 1.81 33,543,628 1.72 33,377,904 1.84


Ave. Fixed Assets 21,185,298 times 19,554,224 times 18,102,809 times

8. Capital Intensity Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Total Assets 70,424,104 1.84 67,236,820 2.00 57,992,081 1.74


Net Assets 38,278,115 33,543,628 33,377,904

9. Current Asset Turnover


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Revenues 38,278,115 1.30 33,543,628 1.29 33,377,904 1.65


Ave. Current Assets 29,523,190 26,095,833 20,225,711

Analysis of Asset Activity and Management Efficiency Ratios


As shown in the computations of ratios as presented, it can be assessed that both accounts receivable
turnover and average collection has been in a tendency which is unfavorable over the past years in which
it has increased 14.84 days as a total change from the year 2013 to 2015. Such increase of accounts
receivable ratios would indicate credit collection from customers may have not been being managed
efficiently or credit policy for customers are not being handled by management over the years. The
company may have been accepting accounts that are not as credit-worthy as previous clients were. It can
be evaluated that if such unfavorable tendency is not managed, the company may have potential conflict
dealing with credit sales and a potential undertaking of uncollectible accounts.
Also, it can be assessed that activity efficiency relating to inventory is also deteriorating in which there is
a decrease in Inventory turnover by 47.93 from 2013 to 2015 and a mild increase in days supply in
inventory 5.43 days from 2013 to 2015. Such a tendency of inventory may be caused by overstocking of
inventory where the company may have done excess inventory buying which can result from poor
planning or overestimated customer demand. Such tendency must be effectively managed by the business
before products are sold at discounted prices or to avoid throwing out inventories due to their expiration
or perished inventory.
In addition to the analysis of inventory and receivables, it is also indicated from the analysis that working
capital turnover ratio also indicates a decreasing tendency showing a total 2.25 decrease in ratio for 2013
to 2015 showing that though this ratio shows a positive result because the company is efficiently using the
firms short-term assets and liabilities to support sales, and money is flowing in and out of the business
smoothly, resulting in more flexibility. But, such result must not be overlooked to the fact that such
positive figure is deteriorating over the past years which management should consider for it may be
caused to a sudden increase in obligations of the company.
Furthermore, though this ratio has been decreasing on a slight tendency compared to the past ratios, both
Asset turnover and Fixed asset turnover has been decreasing mildly which just shows that the company
may have production and management difficulties over the past years on handling assets to produce sales
for the company. But then again, a decrease is still an unfavorable condition to the company because if
such tendency further progress downwards, it would show that company is overinvesting on company
assets which does not help in producing revenue for the company.
C. Long-term financial position/ Stability and Leverage Ratios
1. Debt Ratio
2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Total Liabilities 41,708,778 40,361,992 32,069,324


0.59 0.60 0.55
Total Assets 70,424,104 67,236,820 57,992,081

2. Equity Ratio
2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Total Equity 28,715,326 26,874,828 25,922,757


0.41 0.40 0.45
Total Assets 70,424,104 67,236,820 57,992,081

3. Asset-to-equity ratio
2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Total Assets 70,424,104 67,236,820 57,992,081


2.45 2.50 2.24
Total Equity 28,715,326 26,874,828 25,922,757

4. Net Debt to equity Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Interest-bearing loans and


borrowings-Cash and Cash
0.31 0.26 0.16
equivalent 8,992,754 7,086,858 4,063,195
Total Equity 28,715,326 26,874,828 25,922,757

5. Fixed Assets to long-term liabilities Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Fixed Assets (Net) 21,798,053 20,572,543 18,535,905


0.85 0.78 0.99
Total Noncurrent Liabilities 25,587,015 26,446,802 18,749,770

6. Fixed Asset to Total Equity Ratio


2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Fixed Assets (Net) 21,798,053 20,572,543 18,535,905


0.76 0.77 0.72
Total Equity 28,715,326 26,874,828 25,922,757

7. Interest Coverage Ratio


2015 2014 2013
Formula: Compt. Rati Compt. Ratio Compt. Rati
o o

EBIT 3,957,256 3,780,099 3,408,535


5.19 4.47 4.75
Annual Interest Charges 762,463 845,478 716,894

Analysis of Long-term financial position/ Stability and Leverage Ratios


As seen from the ratios computed, it can be evaluated that the company has a high financial leverage
given the fact that the debt ratio of the company has increased of 0.04 in total ratio for the past 3 years.
And, you can also see that it is supported by a high ratio resulted from the asset-to-equity ratio of an
average of 2.40 in ratio. But in contrast, the company still has enough assets to support its total liabilities
since company assets are still bigger than that of its liabilities. Furthermore, such stability is also
supported by the companys ability to pay interest debts in which the interest coverage ratio shows that
the company has been producing enough cash flow/income to pay interest to loans and other borrowings,
where interest coverage has increased by
Also, the figures that the debt ratio is giving is one indicator that some company assets are partially being
financed through debts and obligations which is evident in the financial statements that liabilities has been
causing such a figure because it has been increasing over the past 3 years. But, such ratio does not strongly
indicate that all company assets are being financed by debts because it is also evident that based on fixed asset to
equity ratio, it has an average of 0.75 in ratio showing that some company productive capacity (Fixed assets) are
being financed through investments of shareholders and help of retained earnings. However, if debt ratio
continues to progress in an increasing manner, it would become a threat to the company for higher debt ratio may
indicate is in danger in case company creditors were to suddenly insist the company on the repayment of their
obligations. But, based on average debt ratios in the industry comparing to other company, such ratio gives the
company a fair presentation for they have a better
financial stability in the long-run compared to the
competitors of ABS-CBN.
In addition, by comparing both debt ratio and equity ratio,
it can be assessed that company assets are not owned
outright by the investors of the company showing that
company liabilities have an average 58% over company
assets and investors only occupy only 42% of company
assets. Yet again, if such tendency would continue,
company would have trouble on convincing creditors to
provide further borrowings because the company has an
increasing financial leverage.

D. Profitability Ratios
1. Gross Profit Margin
2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Gross Profit 15,369,991 40.15% 13,288,452 39.62 12,695,070 38.03


Net Revenues 38,278,115 33,543,628 % 33,377,904 %

2. Operating Profit Margin


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Operating Income 3,329,376 8.70% 2,787,134 8.31% 2,712,658 8.13


Net Revenues 38,278,115 33,543,628 33,377,904 %
3. Net Profit Margin
2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Income 2,545,134 6.65% 2,030,136 6.05% 2,028,347 6.08


Net Revenues 38,278,115 33,543,628 33,377,904 %

4. Cash Flow Margin


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Cash Flow from Operating Actv. 7,568,362 19.77% 4,832,591 14.41 8,055,060 24.13
Net Revenues 38,278,115 33,543,628 % 33,377,904 %

5. Rate of Return on assets


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Income 2,545,134 2,030,136 3.24% 2,028,347 3.77


Ave. Total Assets 68,830,462 3.70% 62,614,451 53,736,309 %

6. Rate of return on average current assets


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Income 2,545,134 2,030,136 8% 2,028,347


Ave. Current Assets 29,523,190 9% 26,095,833 20,225,711 10%
7. Rate of return per turnover of current assets
2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Rate of return on average current


assets 6%
9% 7% 8% 10% 6%
Current Assets Turnover 1.30 1.29 1.65

8. Rate of return on equity


2015 2014 2013
Formula: Compt. Result Compt. Result Compt. Result

Net Income 2,545,134 2,030,136 7.69% 2,028,347 8.55


Ave. Total Equity 27,795,077 9.16% 26,398,793 23,720,815 %

Analysis of Profitability Ratios


As noted from the ratios above, it can be well identified that as per speaking of income compared to
previous years, it has been increasing because revenues are increasing as shown in the previous
statements. One example is the gross profit margin has increased by 2.12% and 0.53% in the years 2013-
2015 and 2014-2015 respectively. Such increase indicates that management has greater capacity on
paying of administrative expenses due to the increase in gross profit. Also, as discussed from the previous
analysis and even though inventory turnover is in an unfavorable tendency due to its increase, operating
income has also been increasing which just indicates that management efficiency maximizing profits
while controlling the evident increase of expenses over the years as portraited in the horizontal analysis of
this report.
All income margins have increased which is a favorable sign for the company like net profit margin has
increased by 0.57% and 0.60% in the years 2013-2015 and 2014-2015 respectively. But, an exception to
that is the cash flow margin is decreasing showing an unfavorable scenario for the company since for
every income the company makes, less cash flows are being produced and one reason for such tendency
is because customers prefer credit sales rather than cash sales and that is why accounts receivable account
is tremendously been increasing because of customer preference of buying company services and
products.
Although the rate of return on assets has decreased by 0.7% and 0.46% in the years 2013-2015 and 2014-
2015 respectively, its till shows a positive result for the company but then again, such ratio has indicated
that management has not been effectively managing its assets to produce greater amount of net income.
However, it is well evident that return on equity has been increasing showing significant increase upon
the financial position of the company. This increase is supported by the increase in liabilities because the
company has been financing through debt rather than investment thus making more profits without
providing additional capital to the company.

E. Market Ratios/Growth Ratio


1. Basic Earnings Per Share
2015 2014 2013
Formula: Compt. Result Compt. Ratio Compt. Ratio

Net Income attributable to equity


holders of the Parent Company 2,931,777 3.56 2,387,085 2.87 2,145,725 2.68
Weighted Average of shares 823,480 831,220 799,828
outstanding
2. Price Earnings Ratio
2015 2014 2013
Formula: Compt. Ratio Compt. Ratio Compt. Ratio

Market Value per Share of


Ordinary Shares 2.69 0.76 2.10 0.73 2.10 0.78
Basic Earnings per share of 3.56 2.10 2.68
ordinary shares

3. Dividend per Share


2015 2014 2013
Formula: Compt. Result Compt. Ratio Compt. Ratio

Dividend paid/declared 493,717 0.57 498,950 0.57 298,066


0.34
Ordinary shares outstanding 872,124 872,124 872,124

4. Dividend Payout
2015 2014 2013
Formula: Compt. Result Compt. Ratio Compt. Ratio

Dividend Per share 0.57 0.16 0.57 0.20 0.34


0.13
Basic Earnings per share 3.56 2.87 2.68

5. Dividend Yield
2015 2014 2013
Formula: Compt. Result Compt. Ratio Compt. Ratio

Dividend Per share 0.57 0.21 0.57 0.27 0.34


0.16
Market Value per Share of 2.69 2.10 2.10
Ordinary Shares

6. Book Value per Share


2015 2014 2013
Formula: Compt. Result Compt. Ratio Compt. Ratio

Total Shareholders Equity 28,515,326 31.26 26,874,828 28.83 25,922,757 27.4


Ave. shares outstanding 912,199 932,183 944,019 6

Analysis of Market Ratios/Growth Ratio

Based on the ratios calculated, we can say that the


market ratios show some positive output because it
is seen that the increase in earnings per share show
favorable figures in which it has increased by
0.88 and 0.69 in the years 2013-2015 and 2014-
2015 respectively. This figure shows, obviously,
that increase in the net income of the company also
helps the earning capacity of shareholders to the
investments and shares that they represent in the
company. Such figure is also connected to the
evident buyback program of the company of their
shares thus increasing the number of treasury
shares over the past years. Such increase in
treasury shares has an effect of increasing the
earnings per share since treasury shares reduces the
total number of shares outstanding of the company. This may also show a good indicator that the
company is in a good condition to invest in in terms of the earnings per share each shareholder is earning.
However, price earnings per share has decreased by 0.05 in ration from 2013-2014 and a slight increase of
0.03 in ratio. Still, price earnings per share has been decreasing compared to the figure in 2013. This
decrease does not necessarily state that company shares may be undervalued, which may be due to
companys increase in total obligations, but might show that the market is not willing, at the current time,
to pay to earn future profits of the company, if the profit of ABS CBN remain constant for 2015 and after.
Such undervalue of stocks may also be supported to the fact that market value per share is below book
value per share of the company.
This increase is as almost the same with the Earnings per ratio which has increased by 0.23 from 2013-
2014 and remained constant from 2014 to 2015. This figure shows that more dividends are being received
by shareholders by the period showing good management control of funds in net income for this may
indicate that net income is showing good figures that it has enough profit to allocate for purposes of
expanding the company operation that company has enough funds to declare dividends over the period.
Such fact is also supported by the increase in Dividend Payout in which it has increased by 0.07 and
0.03 in the years 2013-2014 and 2013-2015 respectively. But, it can also be assessed that an average of
16.33% of net income is allocated to shareholders to receive dividends and 83.67% of net income may
have been allocated for expansion of business operations for better outcome of income in the future. Also,
it can be seen in the Dividend Yield that it has been increasing showing that investors are being
compensated more compared to the previous years of the company.

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