here - Ayala

Globe 2012 annual report
financial report
As of December 31, 2012, Innove, GXI, GTI and KVI reported net input VAT amounting to P=638.63 million, net
of output VAT of P=110.94 million. As of December 31, 2011, Innove and GXI reported net input VAT amounting
to P=844.09 million, net of output VAT of P=94.36 million. As of December 31, 2010, Innove, GXI and EGG
reported net input VAT amounting to P=954.64 million, net of output VAT of P=102.45 million.
7. Property and Equipment
The rollforward analysis of this account follows:
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
Investments in
Cable Systems
2012
Office Transportation
Equipment Equipment
(In Thousand Pesos)
Land
Assets Under
Construction
Cost
At January 1 P=187,924,112 P=27,374,020 P=13,129,153 P=7,333,754 P=2,206,974 P=1,527,375 P=11,955,324 P=251,450,712
Additions 5,026,981 58,025 351,345 212,107 257,696 – 20,751,350 26,657,504
Retirements/disposals (1,030,704) (1,960) – (139,907) (154,746) – (5,600) (1,332,917)
Reclassifications/adjust
ments 10,281,243 1,422,676 663,946 545,614 1,916 46,619 (15,104,603) (2,142,589)
At December 31 202,201,632 28,852,761 14,144,444 7,951,568 2,311,840 1,573,994 17,596,471 274,632,710
Accumulated
Depreciation
and Amortization
At January 1 125,417,729 13,087,427 5,569,643 6,152,934 1,582,493 – – 151,810,226
Depreciation and
amortization
Incremental effect of
network
modernization 4,202,766 8 5,043 37,488 – – – 4,245,305
Others 14,185,102 1,264,176 858,464 815,831 241,031 – – 17,364,604
Retirements/disposals (999,456) (1,797) – (139,841) (142,533) – – (1,283,627)
Reclassifications/adjust
ments 241,728 202,159 51,893 (32,180) – – – 463,600
At December 31 143,047,869 14,551,973 6,485,043 6,834,232 1,680,991 – – 172,600,108
Impairment Losses
At January 1 159,837 – – 3,182 – – 209,687 372,706
Additions – – – – – – 259,262 259,262
Write-off/adjustments (21,768) – – – – – 38 (21,730)
At December 31 138,069 – – 3,182 – – 468,987 610,238
Net Book Value at
December 31 P=59,015,694 P=14,300,788 P=7,659,401 P=1,114,154 P=630,849 P=1,573,994 P=17,127,484 P=101,422,364
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
Investments in
Cable Systems
Office
Equipment
2011
Transportation
Equipment
(In Thousand Pesos)
Land
Assets Under
Construction
Cost
At January 1 P=174,342,419 P=25,605,238 P=13,028,303 P=6,395,943 P=2,153,222 P=1,514,332 P=16,441,841 P=239,481,298
Additions 1,837,618 67,717 87,900 163,909 260,991 13,043 14,840,996 17,272,174
Retirements/disposals (2,969,817) (2,894) – (137,669) (208,432) – (99,698) (3,418,510)
Reclassifications/adjust
ments 14,713,892 1,703,959 12,950 911,571 1,193 – (19,227,815) (1,884,250)
At December 31 187,924,112 27,374,020 13,129,153 7,333,754 2,206,974 1,527,375 11,955,324 251,450,712
Accumulated
Depreciation
and Amortization
At January 1 113,486,718 11,955,511 4,736,035 5,642,866 1,497,090 – – 137,318,220
Depreciation and
amortization 14,802,833 1,134,039 833,833 646,073 263,634 – – 17,680,412
Retirements/disposals (2,811,884) (2,782) – (136,195) (178,231) – – (3,129,092)
Reclassifications/adjust
ments (59,938) 659 (225) 190 – – – (59,314)
At December 31 125,417,729 13,087,427 5,569,643 6,152,934 1,582,493 – – 151,810,226
Impairment Losses
At January 1 151,751 – – 3,182 – – 170,891 325,824
Additions 11,200 – – – – – 117,414 128,614
Write-off/adjustments (3,114) – – – – – (78,618) (81,732)
At December 31 159,837 – – 3,182 – – 209,687 372,706
Net Book Value at
December 31 P=62,346,546 P=14,286,593 P=7,559,510 P=1,177,638 P=624,481 P=1,527,375 P=11,745,637 P=99,267,780
Total
Total
Retirements/disposals (408,040) (29,092) – (87,113) (237,996) (14,025) (4,162) (780,428)
Reclassifications/adjust
ments 12,064,233 1,299,402 (1,415,706) 201,797 11,883 (23,705) (15,100,321) (2,962,417)
At December 31 174,342,419 25,605,238 13,028,303 6,395,943 2,153,222 1,514,332 16,441,841 239,481,298
Accumulated
Depreciation and
Amortization
At January 1 99,668,498 11,009,763 4,758,210 5,065,820 1,431,233 – – 121,933,524
Depreciation and
amortization 14,403,724 1,054,839 899,440 693,641 265,153 – – 17,316,797
Retirements/disposals (354,424) (25,502) – (81,707) (207,716) – – (669,349)
Reclassifications/adjust
ments (231,080) (83,589) (921,615) (34,888) 8,420 – – (1,262,752)
At December 31 113,486,718 11,955,511 4,736,035 5,642,866 1,497,090 – – 137,318,220
Impairment Losses
At January 1 185,138 – – 3,182 – – 110,887 299,207
Additions – – – – – – 57,805 57,805
Write-off/adjustments (33,387) – – – – – 2,199 (31,188)
At December 31 151,751 – – 3,182 – – 170,891 325,824
Net Book Value at
December 31 P=60,703,950 P=13,649,727 P=8,292,268 P=749,895 P=656,132 P=1,514,332 P=16,270,950 P=101,837,254
In the last quarter of 2011, Globe Group has announced to undertake a network and IT transformation program
for an estimated investment of USD790.00 million over the next two to three years. External partners were
engaged in 2011 to help manage the modernization effort. In the first quarter of 2012, the EUL of certain
wireless and wireline telecommunications equipment were changed as a result of continuing upgrade and
migration to a modernized network. The net effect of the change in EUL resulted in higher depreciation expense
of P=4,245.30 million for the year ended December 31, 2012.
Assets under construction include intangible components of a network system which are reclassified to
depreciable intangible assets only when assets become available for use (see Note 9).
Investments in cable systems include the cost of the Globe Group’s ownership share in the capacity of certain
cable systems under a joint venture or a consortium or private cable set-up and indefeasible rights of use (IRUs)
of circuits in various cable systems. It also includes the cost of cable landing station and transmission facilities
where the Globe Group is the landing party.
The costs of fully depreciated property and equipment that are still being used in the network amounted to
P=87,165.41 million, P=70,229.60 million and P=52,467.14 million as of December 31, 2012, 2011 and 2010,
respectively.
The Globe Group uses its borrowed funds to finance the acquisition of property and equipment and bring it to its
intended location and working condition. Borrowing costs incurred relating to these acquisitions were included
in the cost of property and equipment using 3.01%, 3.19% and 5.61% capitalization rates in 2012, 2011 and
2010, respectively. The Globe Group’s total capitalized borrowing costs amounted to P=808.25 million,
P=591.66 million and P=1,091.21 million for the years ended December 31, 2012, 2011 and 2010, respectively
(see Note 22).
In 2011, the Globe Group entered into a sale-buy back transaction with an equipment supplier whereby Globe
Group conveyed and transferred ownership of certain hardware equipment and licenses nearing end of
economic life and then later purchased upgraded equipment from the same equipment supplier. This
transaction resulted in a gain amounting to P=244.37 million (included under “Gain on disposal of property and
equipment - net” in the consolidated statements of comprehensive income), equivalent to the difference
between the fair value of the new equipment and the carrying amount of the old platforms and equipment at the
time the transaction was consummated.
The carrying value of the hardware infrastructure and information equipment held under finance lease (included
under “Telecommunications equipment”) at December 31, 2012 amounted to P=738.09 million (see Note 25.1.2).
Telecommunications
Equipment
Buildings and
Leasehold
Improvements
Investments in
Cable Systems
Office
Equipment
2010
Transportation
Equipment
(In Thousand Pesos)
Land
Assets Under
Construction
Cost
At January 1 P=161,614,664 P=24,149,664 P=14,444,009 P=6,052,613 P=2,074,149 P=1,551,558 P=14,039,942 P=223,926,599
Additions 1,071,562 185,264 – 228,646 305,186 504 17,506,382 19,297,544
Total
170 171