phi-6k_20190307.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

March 7, 2019

 

PLDT INC.

(Translation of registrant’s name into English)

 

Ramon Cojuangco Building

Makati Avenue, Makati City

Philippines

(Address of registrant’s principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F   Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):     Yes      No  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):     Yes      No  

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.     Yes      No  

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

PLDT

 

PLDT INC.

(Registrant)

 

By:

 

/s/ Marilyn A. Victorio-Aquino

 

Name:

 

Marilyn A. Victorio-Aquino

Title:

 

Corporate Affairs and Legal Services Head

Date: 03/07/2019

 


 

 

SEC Number  

PW-55

File Number  

 

 

 

 

 

PLDT Inc.

 

(Company’s Full Name)

 

Ramon Cojuangco Building

Makati Avenue, Makati City

 

(Company’s Address)

 

 

(632) 816-8556

 

(Telephone Number)

 

 

Not Applicable

 

(Fiscal Year Ending)

(month & day)

 

 

SEC Form 17-C

 

Form Type

 

 

Not Applicable

 

Amendment Designation (if applicable)

 

 

December 31, 2018

 

Period Ended Date

 

 

Not Applicable

 

(Secondary License Type and File Number)

 

 


 

March 7, 2019

 

Securities & Exchange Commission

Secretariat Building, PICC Complex

Roxas Boulevard, Pasay City

 

Attention:

 

Mr. Vicente Graciano P. Felizmenio, Jr.

 

 

Director – Markets and Securities Regulations Dept.

 

Gentlemen:

 

In accordance with Section 17.1(b) of the Securities Regulation Code and SRC Rule 17.1.1.1.2, we submit herewith two (2) copies of SEC Form 17-C with Management’s Discussion and Analysis and accompanying unaudited consolidated financial statements as at and for the year ended December 31, 2018.

 

Very truly yours,

 

 

 

 

 

/s/ Ma. Lourdes C. Rausa-Chan

 

MA. LOURDES C. RAUSA-CHAN

 

Corporate Secretary

 

 

 

 


 

COVER SHEET

 

SEC Registration Number

P

W

-

5

5

 

 

 

 

 

 

 

 

Company Name

P

L

D

T

 

I

N

C

.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Office (No./Street/Barangay/City/Town/Province)

R

A

M

O

N

 

C

O

J

U

A

N

G

C

O

 

B

U

I

L

D

I

N

G

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M

A

K

A

T

I

 

A

V

E

N

U

E

 

M

A

K

A

T

I

 

C

I

T

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Form Type

 

 

 

Department requiring the report

 

 

 

Secondary License Type, If Applicable

 

 

1

7

-

C

 

 

 

 

 

 

 

M

S

R

D

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY INFORMATION

 

Company’s Email Address

 

Company’s Telephone Number/s

 

Mobile Number

 

 

jacabal@pldt.com.ph

 

(02) 816-8534

 

 

 

 

 

No. of Stockholders

 

Annual Meeting

Month/Day

 

Fiscal Year

Month/Day

 

 

11,657

as at January 31, 2019

 

Every 2nd Tuesday in June

 

December 31

 

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation

Name of Contact Person

 

Email Address

 

Telephone Number/s

 

Mobile Number

June Cheryl A. Cabal-Revilla

 

jacabal@pldt.com.ph

 

(02) 816-8534

 

 

 

Contact Person’s Address

11/F Ramon Cojuangco Bldg. Makati Ave., Makati City

Note:  In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

 

 

SECURITIES AND EXCHANGE COMMISSION

 

SECURITIES AND EXCHANGE COMMISSION

CURRENT REPORT UNDER SECTION 17

OF THE SECURITIES REGULATION CODE

AND SRC RULE 17.1

 

 

1.

March 7, 2019

Date of Report (Date of earliest event reported)

 

2.

SEC Identification Number PW-55

 

3.

BIR Tax Identification No. 000-488-793

 

4.

PLDT INC.

Exact name of issuer as specified in its charter

 

 


 

5.

PHILIPPINES

Province, country or other jurisdiction

of Incorporation

 

6.

____________ (SEC Use Only)

 

Industry Classification Code

 

 

 

 

 

 

7.

Ramon Cojuangco Building, Makati Avenue, Makati City

1200

 

Address of principal office

Postal Code

 

8.

(632) 816-8553

Issuer's telephone number, including area code

 

9.

Not Applicable

Former name or former address, if changed since last report

 

10.

Securities registered pursuant to Sections 8 and 12 of the Securities Regulation Code and Sections 4 and 8 of the Revised Securities Act

 

 

Title of Each Class

Number of Shares of Common Stock Outstanding

 

 

 

Common Stock

 

216,055,775 (1)

Amount of Debt Outstanding

 

Php176,276 million as at December 31, 2018

_____________

 

(1)

Represents the total outstanding common shares (net of 2,724,111 Treasury shares).

 

 


 

TABLE OF CONTENTS

 

PART I -

 

FINANCIAL INFORMATION

 

1

Item 1.

 

Consolidated Financial Statements

 

1

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

1

 

 

Financial Highlights and Key Performance Indicators

 

2

 

 

Performance Indicators

 

3

 

 

Overview

 

4

 

 

Management’s Financial Review

 

4

 

 

Results of Operations

 

5

 

 

Wireless

 

9

 

 

Revenues

 

9

 

 

Service Revenues

 

10

 

 

Non-Service Revenues

 

13

 

 

Expenses

 

13

 

 

Other Income (Expenses)

 

14

 

 

Provision for Income Tax

 

14

 

 

Net Income (Loss)

 

14

 

 

EBITDA

 

14

 

 

Core Income

 

14

 

 

Fixed Line

 

14

 

 

Revenues

 

14

 

 

Service Revenues

 

15

 

 

Non-Service Revenues

 

16

 

 

Expenses

 

16

 

 

Other Income (Expenses)

 

17

 

 

Provision for Income Tax

 

17

 

 

Net Income

 

17

 

 

EBITDA

 

17

 

 

Core Income

 

17

 

 

Others

 

18

 

 

Revenues

 

18

 

 

Expenses

 

18

 

 

Other Income (Expenses)

 

18

 

 

Net Income

 

18

 

 

EBITDA

 

18

 

 

Core Income

 

18

 

 

Liquidity and Capital Resources

 

19

 

 

Operating Activities

 

20

 

 

Investing Activities

 

20

 

 

Financing Activities

 

21

 

 

Changes in Financial Conditions

 

22

 

 

Off-Balance Sheet Arrangements

 

22

 

 

Equity Financing

 

23

 

 

Contractual Obligations and Commercial Commitments

 

23

 

 

Quantitative and Qualitative Disclosures about Market Risks

 

23

 

 

Impact of Inflation and Changing Prices

 

24

PART II

 

OTHER INFORMATION

 

25

 

 

Related Party Transactions

 

28

ANNEX

 

Aging of Accounts Receivable

 

A-1

 

 

Financial Soundness Indicators

 

A-2

 

 

SIGNATURES

 

S-1

 

 

 

 

 

 

 

 

 


 

 

 

 

PART I – FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

Our consolidated financial statements as at and for the years ended December 31, 2018 and 2017 and related notes (pages F-1 to F-168) are filed as part of this report on Form 17-C.

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

In the following discussion and analysis of our financial condition and results of operations, unless the context indicates or otherwise requires, references to “we,” “us,” “our” or “PLDT Group” mean PLDT Inc. and its consolidated subsidiaries, and references to “PLDT” mean PLDT Inc., not including its consolidated subsidiaries (please see Note 2 – Summary of Significant Accounting Policies to the accompanying unaudited consolidated financial statements for the list of these subsidiaries, including a description of their respective principal business activities and PLDT’s direct and/or indirect equity interest).

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes.  Our unaudited consolidated financial statements, and the financial information discussed below, have been prepared in accordance with Philippine Financial Reporting Standards, or PFRS, which is virtually converged with International Financial Reporting Standards as issued by the International Accounting Standards Board. PFRS differs in certain significant respects from generally accepted accounting principles, or GAAP, in the U.S.

The financial information appearing in this report and in the accompanying unaudited consolidated financial statements is stated in Philippine pesos.  Unless otherwise indicated, translations of Philippine peso amounts into U.S. dollars in this report and in the accompanying unaudited consolidated financial statements were made based on the exchange rate of Php52.56 to US$1.00, the exchange rate as at December 31, 2018 quoted through the Bankers Association of the Philippines.

Some information in this report may contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended.  We have based these forward-looking statements on our current beliefs, expectations and intentions as to facts, actions and events that will or may occur in the future. Such statements generally are identified by forward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,” “expect,” “may,” “will” or other similar words.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.  We have chosen these assumptions or bases in good faith.  These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control.  In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance.  Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors.  When considering forward-looking statements, you should keep in mind the description of risks and other cautionary statements in this report.  You should also keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as at the date on which we made it.  New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us.  We have no duty to, and do not intend to, update or revise the statements in this report after the date hereof.  In light of these risks and uncertainties, you should keep in mind that actual results may differ materially from any forward-looking statement made in this report or elsewhere.

 

1


 

 

 

 

Financial Highlights and Key Performance Indicators

 

 

 

Years ended December 31,

 

 

Increase (Decrease)

 

 

 

2018

 

 

2017

 

 

Amount

 

 

%

 

(amounts in million Php, except for EBITDA margin, earnings

   per common share)

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

 

Consolidated Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

164,752

 

 

 

159,926

 

 

 

4,826

 

 

 

3

 

Expenses

 

 

150,979

 

 

 

150,415

 

 

 

564

 

 

 

 

Other income (expenses)

 

 

9,042

 

 

 

5,058

 

 

 

3,984

 

 

 

79

 

Income before income tax

 

 

22,815

 

 

 

14,569

 

 

 

8,246

 

 

 

57

 

Net income

 

 

18,973

 

 

 

13,466

 

 

 

5,507

 

 

 

41

 

Core income

 

 

25,855

 

 

 

27,668

 

 

 

(1,813

)

 

 

(7

)

EBITDA

 

 

64,027

 

 

 

66,174

 

 

 

(2,147

)

 

 

(3

)

EBITDA margin(1)

 

 

42

%

 

 

44

%

 

 

 

 

 

 

Reported earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

87.28

 

 

 

61.61

 

 

 

25.67

 

 

 

42

 

Diluted

 

 

87.28

 

 

 

61.61

 

 

 

25.67

 

 

 

42

 

Core earnings per common share(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

119.39

 

 

 

127.79

 

 

 

(8.40

)

 

 

(7

)

Diluted

 

 

119.39

 

 

 

127.79

 

 

 

(8.40

)

 

 

(7

)

 

 

 

December 31,

 

 

Increase (Decrease)

 

 

 

2018

 

 

2017

 

 

Amount

 

 

%

 

(amounts in million Php, except for net debt to equity ratio)

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

482,750

 

 

 

459,444

 

 

 

23,306

 

 

 

5

 

Property and equipment

 

 

195,964

 

 

 

186,907

 

 

 

9,057

 

 

 

5

 

Cash and cash equivalents and short-term investments

 

 

52,819

 

 

 

33,979

 

 

 

18,840

 

 

 

55

 

Total equity attributable to equity holders of PLDT

 

 

112,358

 

 

 

106,842

 

 

 

5,516

 

 

 

5

 

Long-term debt, including current portion

 

 

176,276

 

 

 

172,611

 

 

 

3,665

 

 

 

2

 

Net debt(3) to equity ratio

 

1.10x

 

 

1.30x

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

Change

 

 

 

2018

 

 

2017

 

 

Amount

 

 

%

 

(amounts in million Php, except for operational data)

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

61,116

 

 

 

56,114

 

 

 

5,002

 

 

 

9

 

Net cash used in investing activities

 

 

(25,054

)

 

 

(21,060

)

 

 

(3,994

)

 

 

(19

)

Payment for purchase of property and equipment, including

   capitalized interest

 

 

48,771

 

 

 

37,432

 

 

 

11,339

 

 

 

30

 

Net cash used in financing activities

 

 

(18,144

)

 

 

(40,319

)

 

 

22,175

 

 

 

55

 

Operational Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of mobile subscribers

 

 

60,499,017

 

 

 

58,293,908

 

 

 

2,205,109

 

 

 

4

 

Prepaid(4)

 

 

58,178,978

 

 

 

55,776,646

 

 

 

2,402,332

 

 

 

4

 

Postpaid

 

 

2,320,039

 

 

 

2,517,262

 

 

 

(197,223

)

 

 

(8

)

Number of broadband subscribers

 

 

2,025,563

 

 

 

1,950,881

 

 

 

74,682

 

 

 

4

 

Fixed Line broadband

 

 

1,812,037

 

 

 

1,713,527

 

 

 

98,510

 

 

 

6

 

Fixed Wireless broadband

 

 

213,526

 

 

 

237,354

 

 

 

(23,828

)

 

 

(10

)

Number of fixed line subscribers

 

 

2,710,972

 

 

 

2,663,210

 

 

 

47,762

 

 

 

2

 

Number of employees:

 

 

17,222

 

 

 

17,779

 

 

 

(557

)

 

 

(3

)

Fixed Line

 

 

10,890

 

 

 

10,737

 

 

 

153

 

 

 

1

 

LEC

 

 

8,772

 

 

 

6,832

 

 

 

1,940

 

 

 

28

 

Others

 

 

2,118

 

 

 

3,905

 

 

 

(1,787

)

 

 

(46

)

Wireless

 

 

6,332

 

 

 

7,042

 

 

 

(710

)

 

 

(10

)

 

(1)

EBITDA margin for the period is measured as EBITDA divided by service revenues.

(2)

Core earnings per common share, or EPS, for the period is measured as core income divided by the weighted average number of outstanding common shares for the period.

(3)

Net debt is derived by deducting cash and cash equivalents and short-term investments from total debt (long-term debt, including current portion).

2


 

 

 

 

(4)

Beginning 2Q2017, the prepaid subscriber base excludes subscribers who did not reload within 90 days vis-à-vis 120 days previous cut-off.

 

Exchange Rates – per US$

 

Month end

rates

 

 

Weighted

average rates

during the year

 

December 31, 2018

 

 

52.56

 

 

 

52.68

 

December 31, 2017

 

 

49.96

 

 

 

50.41

 

December 31, 2016

 

 

49.77

 

 

 

47.48

 

 

Performance Indicators

We use a number of non-GAAP performance indicators to monitor financial performance.  These are summarized below and discussed later in this report.

EBITDA  

EBITDA for the year is measured as net income excluding depreciation and amortization, amortization of intangible assets, asset impairment on noncurrent assets, financing costs – net, interest income, equity share in net earnings (losses) of associates and joint ventures, foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net, provision for (benefit from) income tax and other income – net.  EBITDA is monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment.  EBITDA is presented also as a supplemental disclosure because our management believes that it is widely used by investors in their analysis of the performance of PLDT and to assist them in their comparison of PLDT’s performance with that of other companies in the technology, media and telecommunications sector.  We also present EBITDA because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements.  Companies in the technology, media and telecommunications sector have historically reported EBITDA as a supplement to financial measures in accordance with PFRS.  EBITDA should not be considered as an alternative to net income as an indicator of our performance, as an alternative to cash flows from operating activities, as a measure of liquidity or as an alternative to any other measure determined in accordance with PFRS.  Unlike net income, EBITDA does not include depreciation and amortization, and financing costs and, therefore, does not reflect current or future capital expenditures or the cost of capital.  We compensate for these limitations by using EBITDA as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance. Such PFRS-based measurements include income before income tax, net income, cash flows from operations and cash flow data.  We have significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in EBITDA.  Our calculation of EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

Core Income

Core income for the year is measured as net income attributable to equity holders of PLDT (net income less net income attributable to noncontrolling interests), excluding foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net (excluding hedge costs), asset impairment on noncurrent assets, other non-recurring gains (losses), net of tax effect of aforementioned adjustments, as applicable, and similar adjustments to equity share in net earnings (losses) of associates and joint ventures.  The core income results are monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment.  Also, core income is used by management as a basis of determining the level of dividend payouts to shareholders and basis of granting incentives to employees.  Core income should not be considered as an alternative to income before income tax or net income determined in accordance with PFRS as an indicator of our performance.  Unlike net income, core income does not include foreign exchange gains and losses, gains and losses on derivative financial instruments, asset impairments and other non-recurring gains and losses.  We compensate for these limitations by using core income as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance.  Such PFRS-based measurements include income before income tax and net income.  Our calculation of core income may be different from the calculation methods used by other companies and, therefore, comparability may be limited.  

3


 

 

 

 

Overview

We are the largest and most diversified telecommunications company in the Philippines which delivers data and multimedia services nationwide.  We have organized our business into business units based on our products and services and have three reportable operating segments which serve as the bases for management’s decision to allocate resources and evaluate operating performance:

 

Wireless mobile telecommunications services provided by Smart Communications, Inc., or Smart, and Digitel Mobile Philippines, Inc., or DMPI, our mobile service providers; Smart Broadband, Inc., or SBI, and Primeworld Digital Systems, Inc., or PDSI, our wireless broadband service providers; and certain subsidiaries of PLDT Global Corporation, or PLDT Global, our mobile virtual network operations, or MVNO, provider;

 

Fixed Line fixed line telecommunications services primarily provided by PLDT.  We also provide fixed line services through PLDT’s subsidiaries, namely, PLDT Clark Telecom, Inc., PLDT Subic Telecom, Inc., PLDT-Philcom, Inc. or Philcom, and its subsidiaries, or Philcom Group, PLDT-Maratel, Inc., Bonifacio Communications Corporation, PLDT Global and certain subsidiaries, and Digital Telecommunications Phils., Inc., or Digitel, all of which together account for approximately 4% of our consolidated fixed line subscribers; data center, cloud, big data, managed security services, managed IT services and resellership provided by ePLDT, Inc., or ePLDT, IP Converge Data Services, Inc., or IPCDSI, and subsidiary, or IPCDSI Group, ABM Global Solutions, Inc., or AGS, and its subsidiaries, or AGS Group, Curo Teknika, Inc. and ePDS, Inc., or ePDS; business infrastructure and solutions, intelligent data processing and implementation services and data analytics insight generation provided by Talas Data Intelligence, Inc., or Talas; distribution of Filipino channels and content by Pilipinas Global Network Limited and its subsidiaries; and

 

Others Voyager Innovations Holdings, Pte. Ltd., or VIH, and certain subsidiaries, our mobile applications and digital platforms developers and mobile financial services provider; PLDT Communications and Energy Ventures, Inc., or PCEV, PLDT Global Investment Holdings, Inc., PLDT Global Investments Corporation, or PGIC, PLDT Digital Investments Pte. Ltd., or PLDT Digital, and its subsidiaries, our investment companies.

As at December 31, 2018, our chief operating decision maker, or our Management Committee, views our business activities in three business units: Wireless, Fixed Line and Others.

Management’s Financial Review

In addition to consolidated net income, we use EBITDA and core income to assess our operating performance. The reconciliation of our consolidated net income to our consolidated EBITDA and our consolidated core income for the years ended December 31, 2018 and 2017 are set forth below.

The following table shows the reconciliation of our consolidated net income to our consolidated EBITDA for the years ended December 31, 2018 and 2017:

 

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

(amounts in million Php)

 

Consolidated net income

 

 

18,973

 

 

 

13,466

 

Add (deduct) adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

47,240

 

 

 

51,915

 

Financing costs – net

 

 

7,067

 

 

 

7,370

 

Provision for income tax

 

 

3,842

 

 

 

1,103

 

Noncurrent asset impairment

 

 

2,122

 

 

 

3,913

 

Amortization of intangible assets

 

 

892

 

 

 

835

 

Foreign exchange losses – net

 

 

771

 

 

 

411

 

Impairment of investments

 

 

172

 

 

 

2,562

 

Equity share in net earnings (losses) of associates and joint ventures

 

 

87

 

 

 

(2,906

)

Gains on derivative financial instruments – net

 

 

(1,086

)

 

 

(533

)

Interest income

 

 

(1,943

)

 

 

(1,412

)

Other income – net

 

 

(14,110

)

 

 

(10,550

)

Total adjustments

 

 

45,054

 

 

 

52,708

 

Consolidated EBITDA

 

 

64,027

 

 

 

66,174

 

 

4


 

 

 

 

The following table shows the reconciliation of our consolidated net income to our consolidated core income for the years ended December 31, 2018 and 2017:

 

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

(amounts in million Php)

 

Consolidated net income

 

 

18,973

 

 

 

13,466

 

Add (deduct) adjustments:

 

 

 

 

 

 

 

 

Depreciation due to shortened life of property and equipment

 

 

4,564

 

 

 

12,816

 

Noncurrent asset impairment

 

 

2,122

 

 

 

3,913

 

Manpower rightsizing program

 

 

1,703

 

 

 

 

Unrealized loss in fair value of investments

 

 

1,154

 

 

 

 

Foreign exchange losses – net

 

 

771

 

 

 

411

 

Investment written-off

 

 

362

 

 

 

 

Impairment of investments

 

 

172

 

 

 

2,562

 

Core income adjustment on equity share in net losses of associates and joint ventures

 

 

23

 

 

 

60

 

Net income attributable to noncontrolling interests

 

 

(57

)

 

 

(95

)

Other nonrecurring income

 

 

(1,018

)

 

 

 

Gains on derivative financial instruments – net, excluding hedge costs

 

 

(1,135

)

 

 

(724

)

Net tax effect of aforementioned adjustments

 

 

(1,779

)

 

 

(4,741

)

Total adjustments

 

 

6,882

 

 

 

14,202

 

Consolidated core income

 

 

25,855

 

 

 

27,668

 

 

Results of Operations

The following table shows the contribution by each of our business segments to our consolidated revenues, expenses, other income (expense), income (loss) before income tax, provision for income tax, net income (loss)/segment profit (loss), EBITDA, EBITDA margin and core income for the years ended December 31, 2018 and 2017.  In each of the years ended December 31, 2018 and 2017, majority of our revenues are derived from our operations within the Philippines.  Our revenues derived from outside the Philippines consist primarily of revenues from incoming international calls to the Philippines.  

 

 

 

Wireless

 

 

Fixed Line

 

 

Others(1)

 

 

Inter-segment

Transactions

 

 

Consolidated

 

 

 

(amounts in million Php, except for EBITDA margin)

 

For the year ended December 31, 2018 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

89,929

 

 

 

85,222

 

 

 

1,138

 

 

 

(11,537

)

 

 

164,752

 

Expenses

 

 

82,246

 

 

 

77,782

 

 

 

4,093

 

 

 

(13,142

)

 

 

150,979

 

Other income (expenses)

 

 

(625

)

 

 

(45

)

 

 

12,099

 

 

 

(2,387

)

 

 

9,042

 

Income (loss) before income tax

 

 

7,058

 

 

 

7,395

 

 

 

9,144

 

 

 

(782

)

 

 

22,815

 

Provision for income tax

 

 

1,333

 

 

 

1,336

 

 

 

1,173

 

 

 

 

 

 

3,842

 

Net income (loss)/Segment profit (loss)

 

 

5,725

 

 

 

6,059

 

 

 

7,971

 

 

 

(782

)

 

 

18,973

 

EBITDA

 

 

34,235

 

 

 

30,875

 

 

 

(2,688

)

 

 

1,605

 

 

 

64,027

 

EBITDA margin(2)

 

 

41

%

 

 

38

%

 

 

-246

%

 

 

 

 

 

42

%

Core income

 

 

9,760

 

 

 

6,925

 

 

 

9,952

 

 

 

(782

)

 

 

25,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2017 (Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

92,572

 

 

 

78,341

 

 

 

1,279

 

 

 

(12,266

)

 

 

159,926

 

Expenses

 

 

97,651

 

 

 

63,864

 

 

 

2,774

 

 

 

(13,874

)

 

 

150,415

 

Other income (expenses)

 

 

77

 

 

 

(3,323

)

 

 

10,530

 

 

 

(2,226

)

 

 

5,058

 

Income (loss) before income tax

 

 

(5,002

)

 

 

11,154

 

 

 

9,035

 

 

 

(618

)

 

 

14,569

 

Provision for (benefit from) income tax

 

 

(2,787

)

 

 

3,680

 

 

 

210

 

 

 

 

 

 

1,103

 

Net income (loss)/Segment profit (loss)

 

 

(2,215

)

 

 

7,474

 

 

 

8,825

 

 

 

(618

)

 

 

13,466

 

EBITDA

 

 

36,395

 

 

 

29,478

 

 

 

(1,307

)

 

 

1,608

 

 

 

66,174

 

EBITDA margin(2)

 

 

42

%

 

 

39

%

 

 

-104

%

 

 

 

 

 

44

%

Core income

 

 

9,812

 

 

 

8,846

 

 

 

9,628

 

 

 

(618

)

 

 

27,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

(2,643

)

 

 

6,881

 

 

 

(141

)

 

 

729

 

 

 

4,826

 

Expenses

 

 

(15,405

)

 

 

13,918

 

 

 

1,319

 

 

 

732

 

 

 

564

 

Other income (expenses)

 

 

(702

)

 

 

3,278

 

 

 

1,569

 

 

 

(161

)

 

 

3,984

 

Income (loss) before income tax

 

 

12,060

 

 

 

(3,759

)

 

 

109

 

 

 

(164

)

 

 

8,246

 

Provision for (benefit from) income tax

 

 

4,120

 

 

 

(2,344

)

 

 

963

 

 

 

 

 

 

2,739

 

Net income (loss)/Segment profit (loss)

 

 

7,940

 

 

 

(1,415

)

 

 

(854

)

 

 

(164

)

 

 

5,507

 

EBITDA

 

 

(2,160

)

 

 

1,397

 

 

 

(1,381

)

 

 

(3

)

 

 

(2,147

)

Core income

 

 

(52

)

 

 

(1,921

)

 

 

324

 

 

 

(164

)

 

 

(1,813

)

5


 

 

 

 

 

(1)

Other business segment includes results of operations of VIH, resulting from the transfer from Smart to PCEV in April 2018.  Consequently, we reclassified the presentation of VIH from Wireless to Other business segment, including prior period herein reported.  VIH was deconsolidated from PCEV effective November 30, 2018.

(2)

EBITDA margin for the period is measured as EBITDA divided by service revenues.

 

In the first quarter of 2018, we adopted PFRS 15 using the modified retrospective method of adoption with the date of initial application of January 1, 2018.  Under this method, the standard can be applied either to all contracts at the date of intitial application or only to contracts that are not completed at this date.  We elected to apply the standard to all contracts that are not completed as at the date of initial application, that is, January 1, 2018.  The cumulative effect arising from the transition was recognized as an adjustment to the opening balance of retained earnings.

 

The following is the impact of PFRS 15 adoption in our results of operations for the year ended December 31, 2018: