ABS-CBN Corp, the country's leading media and entertainment company hit its net income grew 39

percent to a record P3.5 billion in 2016 on higher revenues. Advertising revenues, boosted by election
spending, grew 11 percent on the first full year of CPIRP, the company's ratings-based pricing scheme.
Consolidated revenues for the year reached P41.6 billion (Business Mirror,2016). It was in 2015 when
ABS-CBN adopted the cost per individual rating point pricing (CPIRP) scheme, which rewards the
company for an increase in ratings. 2016 was its first full-year of implementation.

ABS-CBN said its rollout of its digital terrestrial television (DTT) helped boost its audience share with
over 2.3 million boxes sold as of the end of December 2016 (BWorld Online, 2016). The total assets
rose to P72.7 billion as of the end December 2016, compared to P69.9 billion in 2015. The company's
equity base went up to P31.7 billion as of end of December 2016 (Lopez-led firm, 2016).

The finance officers are also extremely happy with the performance of ABS CBN’s subsidiaries last
year. The healthy growth in the advertising revenues coupled with the accomplishments of the
different business units enabled to deliver record earnings performance for ABS-CBN, the company's
group chief finance officer Ron Valdueza said.

Meanwhile, SkyCable saw an 8% growth in revenues, driven by the introduction of SkyDirect, its newly
launched Direct-to-Home Pay TV offering, and the continued sharp increase in its broadband
subscriber base. By year-end, the company had over 112,000 SkyDirect subscribers and more than
200,000 broadband subscribers, bringing Sky’s total subscriber base to over one million. Kidzania, the
company's educational theme park, has attracted over 360,000 visitors for 2016, while its TV
shopping channel O Shopping generated over P820 million in sales. (BWorld Online, 2016)

Ratios 2016 2015 2014

Current ratio 2.02 1.88 2.08
Net Debt-to-Equity ratio 0.30 0.31 0.26
Asset-to-equity ratio 2.30 2.45 2.50
Interest rate coverage ratio 5.65 5.20 4.47
Return on Equity 11.12% 8.9% 7.6%
Return on Assets 4.85% 3.6% 3.0%
Profitability ratios:
Gross profit margin 42.28% 40.0% 40.0%
Net income margin 8.47% 6.6% 6.1%
Table 1. Key Performance Indicators

The Net Income Margin was calculated by dividing the net income over the net revenue. This
profitability measures the overall success of the company by revealing the amount of
revenue left after all expenses have been deducted. This shows the amount of profit that the
company can extract from its revenues. In addition, the Gross Profit Margin was calculated by
dividing the gross profit over the net revenues. This r ratios measures the financial health by
revealing the proportion of money left over from revenues after accounting for the cost of
goods and services. In 2016, the table above shows that the Net Income Margin of ABS CBN
Corporation as well as its Gross Profit Margin increased to 8.47% from 6.6% in 2015.
 Variance
2016 2015 Amount %
Consolidated Revenues P41,630 P38,278 P3,352 8.8
Advertising 23,650 21,265 2,385 11.2
Revenues Consumer 17,980 17,013 967 5.7
15,877 15,148 729 4.8
Sales 1,966 1,734 232 13.4
Sale of Services 137 131 6 4.6
Sale of Goods
Others
Costs and Expenses 36,690 34,686 2,004 5.8
Production Costs 12,012 11,434 578 5.1
Cost of Sales and Services 12,017 11,131 886 8.0
General and Administrative Expenses (GAEX) 12,661 12,121 540 4.5
Financial Costs – net 726 519 207 39.9
Equity in Net Loss (Earnings) of 1 1 - -
Associates and Joint Ventures
Other Income – net (467) (257) (210) 81.7
Net Income P3,525 P2,545 P980 38.5
EBITDA P9,853 P7,940 P1,913 24.1
Table 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

For the year ended December 31, 2016, ABS-CBN generated

consolidated revenues of P41.630 billion from advertising and consumer
sales, P3.352 billion or 8.8% higher year-on-year.

Advertising revenues increased by P2.385 billion or 11.2% higher year-on-

year attributable to election related advertising placements and increase in
overall ratings per program. Consumer sales also increased by P967 million
mainly resulting from the sale of ABS-CBN TVPlus, higher revenue from Sky
Cable’s broadband business.

Direct costs and expenses amounted to P36.690 billion in 2016, or a 5.8% increase year-
on-year.

Production cost increased by P578 million or 5.1%. The minimal increase in

production cost is mainly attributable to the following costs incurred: (1)
P100 million from election related expenses, (2) P90 million from sports
related license fees, (3) P210 million from program related expenses and (4)
P100 million from strategic initiatives for the news and current affairs.

Cost of sales and services increased by P886 million or 8.0% which is mainly
attributable to the sale of ABS-CBN TV Plus. Facilities related expenses also
contributed to the increase in cost of sales and services accounting for 20% of
the total growth. In addition, 30% of the total increase is attributable to non-
cash expenses primarily because of Global, Kidzania and ABS-CBN Mobile.

GAEX grew by 4.5% or P540 million. The minimal growth was because of
P597 million provision for doubtful accounts, research and survey, outside
services and legal and professional fees but was offset by P230 million
decline in personnel related expenses.

The Company generated P3.525 billion net income for the year 2016. Net
income increased by 38.5% compared to P2.545 billion in the previous year.
EBITDA reached P9.853 billion, a 24.1% increase year-on-year.