ABS-CBN Corporation and Subsidiaries

Consolidated Statements of Financial Position

(amounts in thousands)
2016 2017 2018
ASSETS
Current assets
Cash and cash equivalents 10,964,524 12,346,556 18,104,686
Short-term investments 3,065,793 1,358,429 1,804,041
Trade and other receivables 10,204,118 10,630,014 10,369,080
Inventories 349,821 508,721 680,628
Program rights and other intangible assets 1,067,144 1,137,234 1,359,188
Other current assets 4,141,388 5,062,390 5,383,138
31,043,34 37,700,76
Total current assets 29,792,788 4 1
Noncurrent Assets
Property and equipment 24,509,980 25,700,997 27,875,625
Goodwill, Program rights and other intangible asset-
net of current portion 12,530,231 13,181,185 13,310,366
Available-for-sale investment 210,219 242,743 0
FA@FVOCI 0 0 268,304
Investment properties 202,114 200,740 202,763
Investment in associate and joint ventures 530,005 524,963 495,247
Deferred tax assets 2,498,677 2,462,942 3,020,803
Other noncurrent assets 2,459,848 1,748,181 1,685,348
44,061,74 46,858,45
Total noncurrent assets 42,941,164 1 6
75,105,08 84,559,21
TOTAL ASSETS 72,733,952 5 7

LIABILITIES AND EQUITY

Current liabilities
Trade and other payables 13,648,504 13,252,577 13,637,426
Contract Liabilities 0 0 890,644
Income tax payable 277,239 263,329 208,056
Obligations for program rights 439,316 349,736 441,875
Interest-bearing loans and borrowings 354,950 350,678 414,911
14,216,32 15,592,91
Total current liabilities 14,720,009 0 2
Noncurrent Liabilities
Interest-bearing loans and borrowings - net of
current portion 20,117,273 20,036,027 27,810,584
Obligations for program rights - net of current
portion 660,667 554,637 541,548
Accrued pension obligation and other employee
benefits 4,906,236 5,757,944 4,029,591
Deferred tax liability 138,271 138,271 138,271
Convertible note 221,063 205,380 221,217
Other noncurrent liabilities 278,730 485,542 500,346
27,177,82 33,241,85
Total noncurrent liabilities 26,322,240 1 7
41,394,14 48,834,76
TOTAL LIABILITIES 41,042,249 1 9

EQUITY
Equity attributable to equity holders of the parent company
Capital Stock
Common 872,124 872,124 872,124
Preferred 200,000 200,000 200,000
Additional paid-in capital 4,740,811 4,745,399 4,745,399
Exchange differences on translation of foreign -1,638,719 -1,638,719 -1,638,719
operations
Unrealized gain on AFS investments 18,349 359,816 921,624
Share-based payment plan 147,884 180,408 0
Retained earnings 4,588 0 205,969
Treasury shares and Philippine depository receipts
convertible to common shares 26,709,981 28,560,106 30,291,703
Equity attributable to equity holders of the 33,279,13 35,598,10
parent 31,055,018 4 0
Non-controlling interests 636,685 431,810 126,348
33,710,94 35,724,44
TOTAL EQUITY 31,691,703 4 8
75,105,08 84,559,21
TOTAL LIABILITIES AND EQUITY 72,733,952 5 7

ABS-CBN Corporation and Subsidiaries

Consolidated Statements of Income
(amounts in thousands)

2016 2017 2018

Revenues 41,630,599 40,698,244 40,130,592
Production Costs 12,011,950 11,683,615 12,345,277
Cost of Services 10,323,075 10,711,713 10,785,230
Cost of Sales 1,693,608 2,109,942 2,493,359
GROSS PROFIT 17,601,966 16,042,974 14,506,726
General and Administrative Expenses 12,661,479 11,916,759 12,310,128
Finance Costs 1,036,386 1,007,916 1,124,677
Interest Income 220,982 166,788 202,801
Foreign Exchange Gains 89,063 41,194 404,031
Equity in net losses of associates and joint
ventures 1,055 5,052 29,706
Other Income 467,780 614,806 331,253
INCOME BEFORE INCOME TAX 4,680,871 3,936,035 198,030
Current 1,047,055 604,575 600,791
Deferred 108,500 167,883 528,732
Provision for Income Tax 1,155,555 772,458 72,059
NET INCOME 3,525,316 3,163,577 1,908,241
Attributable to equity holders of the Parent
Company 3,885,278 3,333,889 21,110,251
Noncontrolling Interests 359,962 170,312 202,010

ABS-CBN Corporation and Subsidiaries

Consolidated Statements of Cash Flows
(amounts in thousands)
2016 2017 2018
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax 4,680,871 3,936,035 1,980,300
Adjustments to reconcile income before tax to net
cash flows
Depreciation and amortization 3,401,610 3,666,140 3,819,919
Amortization of
Program rights and other intangibles 1,182,544 1,818,806 1,721,520
Debt issue costs 46,609 40,390 32,927
Deferred charges 6,402 6,993 292
Impairment of Property and Equipment 0 0 9,438
 Movements in accrued pension obligation and
other employee benefits 723,243 -439,759 -73,913
Interest expense 968,768 931,459 1,061,666
Interest income -220,982 -166,788 -202,801
Net unrealized foreign exchange loss (gain) 42,624 -55,261 -179,111
Equity in net losses of associates and joint
ventures 1,055 5,052 29,706
Gain on sale of Property and Equipment -3,987 -6,221 -849
Dividend income -14,230 -10,364 -7,651
Working capital changes:
Decrease (increase) in
Trade and other receivables 1,084,131 -662,248 398,356
Other current assets -526,167 -975,176 -208,986
Inventories 328,993 -158,875 -169,576
Increase (decrease) in
Trade and other payables -2,903,438 -683,328 -956,435
Obligations for program rights 427,155 -197,019 -651,615
Contract Liabilities 0 0 790,567
Other noncurrent liabilities 230,664 197,019 -11,573
Cash generated from operations 9,458,865 7,247,530 7,382,181
Income taxes paid -907,865 -618,484 -656,064
Net cash provided by operating activities 8,551,000 6,629,046 6,726,117

CASH FLOWS FROM INVESTING

ACTIVITIES
Additions to
Property and equipment -5,565,611 -5,058,385 -5,970,703
Goodwill, Program rights and other intangible
assets -1,114,971 -1,944,422 -1,319,100
Decrease (increase) in short-term investments -1,448,248 1,707,364 -445,612
Interest received 222,265 174,369 190,124
Acquisition of a business 0 -350000 0
Increase in other non-current assets 338,551 684,846 406,827
Proceeds from sale of property and equipment 10,967 221,983 18,377
Acquisition of AFS investments -21,008 0 0
Investments in joint ventures and associates -10,062 0 0
Net cash used in investing activities -7,588,117 -4,546,245 -7,120,087

CASH FLOWS FROM FINANCING

ACTIVITIES
Proceeds from Long term debt 8,950,000 3,346,000 8,761,795
Payments of
Interest -871,375 -938,629 -962,001
Long-term debt -8,951,483 -3,457,765 -943,946
Dividends -615,566 -856,938 -766,831
Obligations under finance lease -685 -14,105 -11,986
Bank loans -60,000 0 0
Deposit for future subscription 0 1,220,000 0
Net cash used in financing activities -1,549,109 -701,437 6,077,031

EFFECTS OF EXCHANGE RATE CHANGES AND

TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS 13,191 18,668 75,069

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS -573,035 1,382,032 5,758,130

CASH AND CASH EQUIVALENTS AT BEGINNING

OF YEAR 11,537,559 10,964,524 12,346,556
CASH AND CASH EQUIVALENTS AT END OF
YEAR 10,964,524 12,346,556 18,104,686
 ABS-CBN Corporation and Subsidiaries
Consolidated Statements of Financial Position Trend Percentages
2016 - 2018

2016 2017 2018

ASSETS
Current assets
Cash and cash equivalents 100 112.60 165.12
Short-term investments 100 44.31 58.84
Trade and other receivables 100 104.17 101.62
Inventories 100 145.42 194.56
Program rights and other intangible assets 100 106.57 127.37
Other current assets 100 122.24 129.98
Total current assets 100 104.20 126.54
Noncurrent Assets
Property and equipment 100 104.86 113.73
Goodwill, Program rights and other intangible
asset- net of current portion 100 105.20 106.23
Available-for-sale investment 100 115.47 0.00
FA@FVOCI 100
Investment properties 100 99.32 100.32
Investment in associate and joint ventures 100 99.05 93.44
Deferred tax assets 100 98.57 120.90
Other noncurrent assets 100 71.07 68.51
Total noncurrent assets 100 102.61 109.12
TOTAL ASSETS 100 103.26 116.26

LIABILITIES AND EQUITY

Current liabilities
Trade and other payables 100 97.10 99.92
Contract Liabilities 100
Income tax payable 100 94.98 75.05
Obligations for program rights 100 79.61 100.58
Interest-bearing loans and borrowings 100 98.80 116.89
Total current liabilities 100 96.58 105.93
Noncurrent Liabilities
Interest-bearing loans and borrowings - net of
current portion 100 99.60 138.24
Obligations for program rights - net of current
portion 100 83.95 81.97
Accrued pension obligation and other employee
benefits 100 117.36 82.13
Deferred tax liability 100 100.00 100.00
Convertible note 100 92.91 100.07
Other noncurrent liabilities 100 174.20 179.51
Total noncurrent liabilities 100 103.25 126.29
TOTAL LIABILITIES 100 100.86 118.99

EQUITY
Equity attributable to equity holders of the parent company
Capital Stock
Common 100 100.00 100.00
Preferred 100 100.00 100.00
Additional paid-in capital 100 100.10 100.10
Exchange differences on translation of foreign
operations 100 100.00 100.00
Unrealized gain on AFS investments 100 1960.96 5022.75
Share-based payment plan 100 121.99 0.00
Retained earnings 100 0.00 4489.30
Treasury shares and Philippine depository
receipts convertible to common shares 100 106.93 113.41
Equity attributable to equity holders of the
parent 100 107.16 114.63
Non-controlling interests 100 67.82 19.84
TOTAL EQUITY 100 106.37 112.72
TOTAL LIABILITIES AND EQUITY 100 103.26 116.26

ABS-CBN Corporation and Subsidiaries

Consolidated Statements of Income Trend Percentages
2016 – 2018

2016 2017 2018

Revenues 100 97.76 96.40
Production Costs 100 97.27 102.77
Cost of Services 100 103.76 104.48
Cost of Sales 100 124.58 147.22
GROSS PROFIT 100 91.14 82.42
General and Administrative Expenses 100 94.12 97.23
Finance Costs 100 97.25 108.52
Interest Income 100 75.48 91.77
Foreign Exchange Gains 100 46.25 453.65
Equity in net losses of associates and joint
ventures 100 478.86 2,815.73
Other Income 100 131.43 70.81
INCOME BEFORE INCOME TAX 100 84.09 4.23
Current 100 57.74 57.38
Deferred 100 154.73 487.31
Provision for Income Tax 100 66.85 6.24
NET INCOME 100 89.74 54.13
Attributable to equity holders of the Parent
Company 100 85.81 543.34
Noncontrolling Interests 100 47.31 56.12
 ABS-CBN Corporation and Subsidiaries
Consolidated Statements of Financial Position Common Size Percentages
2016 - 2018

2016 2017 2018

ASSETS
Current assets
Cash and cash equivalents 15.07 16.44 21.41
Short-term investments 4.22 1.81 2.13
Trade and other receivables 14.03 14.15 12.26
Inventories 0.48 0.68 0.80
Program rights and other intangible assets 1.47 1.51 1.61
Other current assets 5.69 6.74 6.37
Total current assets 40.96 41.33 44.59
Noncurrent Assets
Property and equipment 33.70 34.22 32.97
Goodwill, Program rights and other intangible asset- net
of current portion 17.23 17.55 15.74
Available-for-sale investment 0.29 0.32 0.00
FA@FVOCI 0.00 0.00 0.32
Investment properties 0.28 0.27 0.24
Investment in associate and joint ventures 0.73 0.70 0.59
Deferred tax assets 3.44 3.28 3.57
Other noncurrent assets 3.38 2.33 1.99
Total noncurrent assets 59.04 58.67 55.41
TOTAL ASSETS 100 100 100

LIABILITIES AND EQUITY

Current liabilities
Trade and other payables 18.76 17.65 16.13
Contract Liabilities 0.00 0.00 1.05
Income tax payable 0.38 0.35 0.25
Obligations for program rights 0.60 0.47 0.52
Interest-bearing loans and borrowings 0.49 0.47 0.49
Total current liabilities 20.24 18.93 18.44
Noncurrent Liabilities
Interest-bearing loans and borrowings - net of current
portion 27.66 26.68 32.89
Obligations for program rights - net of current portion 0.91 0.74 0.64
Accrued pension obligation and other employee benefits 6.75 7.67 4.77
Deferred tax liability 0.19 0.18 0.16
Convertible note 0.30 0.27 0.26
Other noncurrent liabilities 0.38 0.65 0.59
Total noncurrent liabilities 36.19 36.19 39.31
TOTAL LIABILITIES 56.43 55.11 57.75

EQUITY
Equity attributable to equity holders of the parent company
Capital Stock
Common 1.20 1.16 1.03
Preferred 0.27 0.27 0.24
Additional paid-in capital 6.52 6.32 5.61
Exchange differences on translation of foreign
operations -2.25 -2.18 -1.94
Unrealized gain on AFS investments 0.03 0.48 1.09
Share-based payment plan 0.20 0.24 0.00
Retained earnings 0.01 0.00 0.24
Treasury shares and Philippine depository receipts
convertible to common shares 36.72 38.03 35.82
Equity attributable to equity holders of the parent 42.70 44.31 42.10
Non-controlling interests 0.88 0.57 0.15
TOTAL EQUITY 43.57 44.89 42.25
TOTAL LIABILITIES AND EQUITY 100 100 100

ABS-CBN Corporation and Subsidiaries

Consolidated Statements of Income Common Size Percentages
2016 - 2018
2016 2017 2018
Revenues 100 100 100
Production Costs 28.85 28.71 30.76
Cost of Services 24.80 26.32 26.88
Cost of Sales 4.07 5.18 6.21
GROSS PROFIT 42.28 39.42 36.15
General and Administrative Expenses 30.41 29.28 30.68
Finance Costs 2.49 2.48 2.80
Interest Income 0.53 0.41 0.51
Foreign Exchange Gains 0.21 0.10 1.01
Equity in net losses of associates and joint
ventures 0.00 0.01 0.07
Other Income 1.12 1.51 0.83
INCOME BEFORE INCOME TAX 11.24 9.67 0.49
Current 2.52 1.49 1.50
Deferred 0.26 0.41 1.32
Provision for Income Tax 2.78 1.90 0.18
NET INCOME 8.47 7.77 4.76
Attributable to equity holders of the Parent
Company 9.33 8.19 52.60
Noncontrolling Interests 0.86 0.42 0.50
TREND PERCENTAGES ANALYSIS AND EVALUATION

Short-Term Solvency

 Current assets increased by 26.54% while current liabilities also increased by

5.93% by 2018. The current financial position of the ABS-CBN Corporation and
Subsidiaries improved as reflected by the upward trend in total current assets
accompanied by the smaller increase in trend rate in current liabilities. The
improvement in the current financial position is also indicated by the fact that the
current assets were 2.02 times the current liabilities as of December 31, 2014 and
2.42 times at the most recent date.
 The trend data revealed that cash and cash equivalents, receivables, and inventory
showed upward tendencies over the years. However, the increase in receivables and
inventory is unfavorable because the trend percentage of revenues decreased. The
unfavorable tendency indicates that more effective credit collection and
merchandising policies should be established and made effective. Although, the
relatively smaller amount of trade receivables reflects more rapid turnover of
customer accounts and possibly a large increase in cash sales
 Other current assets may be increasing over the years but the short-term
investments declined significantly which indicates lesser investment in not-so-
productive assets. All these trends in different directions reflect an increasing
efficiency of working capital management.

Long-Term Financial Position

 A comparison of the trends in total liabilities and equity reveals that the former
increased at a faster rate than the latter. As a result of these variations, the creditors'
margin of safety decreased significantly.
 The expansion in property , plant and equipment which substantially increased was
financed by shareholders ' capital through the issuance of additional paid in capital,
long term liabilities and working capital derived from operations .
 A lesser reliance on equity funds rather than on creditor funds decreased the margin
of safety of the creditors and therefore weakened the financial position of the
company.

Profitability

 It is observed that revenues declined while production costs, cost of services and
cost of sales showed upward trends. These data reflects an unfavorable situation
from the point of view of managerial ability to control costs relative to change on
sales volume. One or more factors such as favorable price level changes, more
effective markup policies or greater efficiency in purchasing should be improved to
achieve a desirable percentage.
 Trend percentages for both selling general and administrative expenses and
revenues decreased. However, an unfavorable tendency is reflected by the fact that
trend percentage of revenues is still less than the expenses in 2018.
COMMON SIZE PERCENTAGES ANALYSIS AND EVALUATION:

Evaluation of the Financial Position

 The ABS-CBN Corporation and Subsidiaries' statement of financial position showed

that there had been substantial changes in the proportions of current and fixed
assets and current and long-term liabilities during the period from December 31,
2016 to December 31, 201. The percentages showed an increasing liquidity in the
company's assets accompanied by a small increase in liabilities over the three-year
period.
 It can be observed that cash and cash equivalents, trade and other receivables as
well as investment in inventory in relation to total assets had been increasing.
Considering that the volume of revenues was continuously decreasing, these
changes can be viewed as unfavorable to the company.
 The increasing percentage of total liabilities to total assets further indicates more
reliance of the company from creditors in raising additional capital. This is
unfavorable as far as the long-term financial position of the company is concerned
because a smaller margin of safety is provided among the creditors.

Evaluation of Profitability

 Unfavorable changes could be observed in the gross profit margin in relation to

revenues. This suggests that the company should improve its markup policy or have
a better procurement policy.
 Production costs , cost of services , cost of sales in relation to revenues show
increasing percentages from 2016 to 2018 while general and administrative
expenses had more or less remain constant. Better control over the selling expenses
should be instituted to further improve the profitability of the company.