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Globe 2012 annual report
financial report
2012 2011 2010
(In Thousand Pesos)
Net deferred tax assets* P=765,585 P=765,670 P=670,594
Net deferred tax liabilities (Globe Telecom) 2,473,115 3,929,414 4,620,490
*2012 and 2011 consist of Innove, GXI and EGG Group; 2010 consists of Innove and EGG Group.
The details of NOLCO and MCIT of Innove, GXI, and EGG and the related tax effects are as follows
(in thousand pesos):
Tax Effect of
Inception Year MCIT NOLCO NOLCO Expiry Year
2011 P=92,676 P=1,236 P=371 2014
2010 16,101 53,391 16,144 2013
P=108,777 P=54,627 P=16,515
GXI’s NOLCO amounting to P=34.87 million expired in 2011. GTI’s NOLCO amounting to
P=0.05 million expired in 2012.
The reconciliation of the provision for income tax at statutory tax rate and the actual current and deferred
provision for income tax follows:
2012 2011 2010
(In Thousand Pesos)
Provision at statutory income tax rate P=2,930,503 P=4,229,121 P=4,211,458
Add (deduct) tax effects of:
Equity in net losses of joint ventures 25,075 8,203 890
Deferred tax on unexercised stock options and basis
differences on deductible and reported stock
compensation expense (54,524) 5,324 47,806
Income subjected to lower tax rates (823,505) (517,986) (51,205)
Others 833,783 540,602 84,609
Actual provision for income tax P=2,911,332 P=4,265,264 P=4,293,558
The current provision for income tax includes the following:
2012 2011 2010
(In Thousand Pesos)
RCIT or MCIT whichever is higher P=4,291,409 P=5,011,849 P=4,166,153
Final tax 64,290 37,630 21,472
P=4,355,699 P=5,049,479 P=4,187,625
The corporate tax rate is 30% in 2012, 2011 and 2010.
Globe Telecom and Innove are entitled to certain tax and nontax incentives and have availed of incentives for
tax and duty-free importation of capital equipment for their services under their respective franchises.
25. Agreements and Commitments
25.1 Lease Commitments
25.1.1 Operating lease commitments
(a) Globe Group as lessee
Globe Group leases certain premises for some of its telecommunications facilities and equipment and
for most of its business centers and network sites. The operating lease agreements are for periods
ranging from one to 10 years from the date of the contracts and are renewable under certain terms and
conditions. The agreements generally require certain amounts of deposit and advance rentals, which
are shown as part of the “Prepayment and other current assets” and “Other noncurrent assets”
accounts in the consolidated statements of financial position (see Notes 6 and 11). The Globe Group
also has short term renewable leases on transmission cables and equipment. The Globe Group’s
rentals incurred on these various leases (included in “General, selling and administrative expenses”
account in the consolidated statements of comprehensive income) amounted to P=3,153.51 million,
P=2,830.38 million and P=2,808.91 million for the years ended December 31, 2012, 2011 and 2010,
respectively (see Note 21).
As of December 31, 2012, the future minimum lease payments under these operating leases are as
follows (in thousand pesos):
Not later than one year
P=786,356
After one year but not more than five years 4,799,558
After five years 3,337,817
P=8,923,731
(b) Globe Group as lessor
Globe Telecom and Innove have certain lease agreements on equipment and office spaces. The
operating lease agreements are for periods ranging from one (1) to fourteen (14) years from the date of
contracts. These include Globe Telecom’s lease agreement with C2C Pte. Ltd. (C2C) (see Note 25.4).
Total lease income amounted to P=172.50 million for the years ended December 31, 2012, 2011 and
2010, respectively (included in “Other income” account in the consolidated statements of
comprehensive income).
The future minimum lease receivables under these operating leases are as follows (in thousand
pesos):
Within one year
P=146,615
After one year but not more than five years 329,884
P=476,499
25.1.2 Finance lease commitments
Globe Group as lessee
The Globe Group engaged the services of various suppliers for the upgrade of its wireless, data and
telephony network. In partnership with equipment and service providers and the appointment of a project
and program manager, Globe Group will undertake a transformation upgrade and overhaul of its business
support systems within the USD790.00 million modernization project.
Part of the managed service engagement with the service provider is a lease for hardware infrastructure
and information equipment valued over the seven-year term of the lease at P=785.00 million. Total lease
payments as of December 31, 2012, which is equivalent to one year advance lease, amounted to
P=112.00 million. The managed service engagement has terms of renewal and purchase options, among
others.
Future minimum lease payments under finance leases with the present value of the net minimum lease
payments as of December 31, 2012 are as follows (in thousand pesos):
Minimum
payments
Present value of
payments
Within one year P=112,171 P=99,941
After one year but not more than five years 448,684 417,878
More than five years 224,342 220,267
Total minimum lease payments 785,197 738,086
Less amounts representing finance charges (47,111) –
Present value of minimum lease payments P=738,086 P=738,086
In addition, total payments to service providers based on the seven-year agreement for the maintenance of
servers, which includes application development and maintenance, service design, managed network
services, office automation or end-user computing, service desk services and business supports systems
amounted to P=49.00 million as of December 31, 2012.
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