2006 Annual Report - Lopez Holdings Corporation

36
A n n u a l R e p o r t 2 0 0 6
FinAnciAl
ReView
Benpres
MAnAgeMent discussion And AnAlYsis oF Results
oF opeRAtions And FinAnciAl condition
Benpres posted consolidated revenues of ∏17.39
billion in 2006, 2% higher than consolidated revenues
of ∏17.05 billion in 2005. Net income attributable to the
equity holders of the Parent amounted to ∏4.21 billion
in 2006 and ∏732 million in 2005, primarily due to the
79% increase in equity in net earnings of associates to
∏4.59 billion from ∏2.57 billion. This account is a result
of gains booked by affiliate First Philippine Holdings
Corporation (FPHC) from the initial public offering
(IPO) of First Gen Corporation (First Gen) in 2006, as
well as the favorable Supreme Court ruling on Meralco’s
tariff unbundling case. Without these gains recorded by
FPHC, Benpres’s net income attributable to equity holders
of the Parent would have been ∏2.10 billion.
Airtime (+3%), sales and services (+10%), and license
fees (-31%), production costs (+0.4%), general and
administrative expenses (-10%), finance costs (+14%),
agency commission, incentives and co-producer’s share
(+18%), cost of sales and services (+2%), finance revenue
(+74%), and other revenues (+77%) all reflect ABS-CBN
accounts indicating generally better cost control and
lower interest-bearing debt.
In 2005, Benpres booked a one-time reversal of excess
The following discussion should be read in conjunction with the Consolidated
Financial Statements of the Company that is incorporated to this Annual Report
by reference. Such Consolidated Financial Statements have been prepared in
accordance with Philippine Financial Reporting Standards.
Results of Operations of Benpres Holdings Corporation (Benpres) and its Subsidiaries
for the year ended December 31, 2006 compared with December 31, 2005
of accumulated losses over acquisition cost from
its investment in Maynilad Water in the amount of
∏1.09 billion. Loss on dilution of equity interest was
reduced by 87% to ∏65 million from ∏492 million.
This figure represents Benpres’ dilution in FPHC as
a result of availments on their respective employee
stock purchase plans. Gain on sale of available-for-
sale investments improved 15x to ∏119 million as
Benpres sold 126 million shares of Digitel in 2006.
In 2006, Benpres disposed of its 49% equity in
Corporate Information Systems, Inc. (CIS) to Meralco
as settlement of Benpres’ liability. The excess of
payable over carrying value of the investments in
CIS amounted to ∏286 million.
Provisions for investments at equity, deposits and
advances dropped by 75% to ∏572 million from ∏2.319
billion the previous year. Additional impairment loss
was recognized on its deposits in SkyVision in 2006.
Foreign exchange gains amounted to ∏920 million,
an increase of 76% over foreign exchange gains of
∏522 million in 2005. The peso appreciated against
the dollar in 2006, closing the year at ∏49.03, versus
∏53.09 at the end of 2005 and ∏56.28 at the end of
2004.
A n n u a l R e p o r t 2 0 0 6
37