ABS-CBN weathers DU30’s denunciations, thanks to secret shield
ABS-CBN may be at the receiving end of President Duterte’s verbal attacks, but the majority owners of the country’s largest network have apparently found a safe harbor to shelter themselves from the tsunami from Davao.
The network itself may have reported lower 2018 profit to P1.9 billion from P3.1 billion in 2017, but further down the bottom line of the financial statement, the entry on total comprehensive income to equity holders of the parent company minus the non-controlling interests (translation: the Lopez clan) tells a different story.
For 2018, the Lopezes were booked to receive P3.12 billion income from the ABS-CBN Group, a slight improvement from the P3.1 billion that accrued to the family in 2017, the first full-year of the Duterte administration.
ABS-CBN attributed the higher “other comprehensive income” that would accrete to its principals from forex gains of foreign operations and remeasurement gain on the employees’ benefit plan, despite the latter’s fair value actually going down to P1.9 billion from P2.58 billion in end-2017.
But there is a secret sauce, as it were, that provided the real earnings kick.
The network has found an accounting formula that brought down, way down its corporate income tax payments since Rodrigo Duterte stormed his way to Malacañang.
From a 25 percent effective income tax rate in 2016 the network had to cough out to the tax brigade, ABS-CBN the following year had it pared down to 20 percent.
The windfall came even while Congress was still debating a modest one percent point-cut on corporate income tax to 29 percent that would have taken effect only this year.
But the real rocket booster came in for the 2018 earnings, when ABS-CBN managed to slash its income tax rate from 30 percent down to, this is not a misprint, four percent. Yep, that’s four percent.
In peso terms, that four percent rate translates to over P2.88 billion in deductibles the network can claim this tax season.
And even if the political tempest would have died down, ABS-CBN still had an ace up its sleeve. The network is still holding in reserve another P3.95 billion in tax deductibles that it could claim up to 2021.
The tax reduction formula is not by any means peculiar, idiosyncratic is the favored financial buzzword these days, to the Lopez network.
Its sister companies in the power business, the real gravy trains, have taken advantage of the similar tax shelters while reporting robust revenues.
First Gen pruned its tax burden from 26.59 percent in 2016 down to 20.76 percent, helping ratchet its 2018 net income from $208 million in 2017 to $319 million, or about P16.6 billion.
First Philippine Holdings also in those two years brought down its effective income tax rate from 27 percent down to 21 percent, while its net income for 2018 kicked up to P20 billion from “only” P12.7 billion the year before.
Ahh, those gentrified earnings somehow remind yours truly of what his favorite prisoner (of love) is fond of saying, “If this is torture, chain me to the wall!”
Heard through the grapevine
At least 75 buyers, and no sellers, are lined up for a Makati Sports Club share amid increased chatter that the board has finalized a plan to demolish the four-decade club facility and build a high-rise condo on the 1.3-hectare plot.
E-mail: moneygoround.manila@yahoo.com