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Posted on Jul 31, 2024

Based on the provided financial statements for SM Prime Holdings Inc please provide a comprehensive reflection/observation on the following: Trade and Other Payables Long-term Liabilities

Based on the provided financial statements for SM Prime Holdings Inc please provide a comprehensive reflection/observation on the following:

Trade and Other Payables
Long-term Liabilities
Share Capital

Financial Statements

Balance Sheet:

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Liabilities, Share Capital & Trade and other Payables:

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DebtIssueCost The movements in unamortized debt issue cost of the Company follow: Amortization of debt issuance costs is recognized in the consolidated statements of income under "Others - net" account. RepaymentandDebtIssueCostSchedule The repayments of long-term debt are scheduled as follows: The loan agreements of the Company provide certain restrictions and requirements principally with respect to maintenance of required financial ratios and material change in ownership or control. As at December 31,2022 and 2021, the Company is in compliance with the terms of its loan covenants. Interest expense from long-term debt charged to profit or loss amounted to P11,288 million, P9,148 million and P8,224 million for the years ended December 31, 2022, 2021 and 2020, respectively (see Note 22 ). 8. Equity Capital Stock As at December 31, 2022 and 2021, the Company has an authorized capital stock of 40,000 million with a par value of Pl a share, of which 33,166 million shares were issued. The Company has 28,856 million outstanding shares as at December 31,2022 and 2021. The following summarizes the information on SMPH's registration of securities under the Securities Regulation Code: SMPH declared stock dividends in 2012, 2007, 1996 and 1995. The total number of shareholders is 2,346 as at December 31, 2022. Additional Paid-in Capital - Net Following represents the nature of the consolidated "Additional paid-in capital - net": Retained Earnings In 2022, the BOD approved the declaration of cash dividend of P0.097 per share or P2,801 million to stockholders of record as of May 11, 2022, P2 million of which was received by SMDC. This was paid on May 24, 2022. In 2021, the BOD approved the declaration of cash dividend of P0.082 per share or P2,368 million to stockholders of record as of May 5, 2021, P2 million of which was received by SMDC. This was paid on May 19, 2021. In 2020, the BOD approved the declaration of cash dividend of P0.185 per share or P5,343 million to stockholders of record as of June 30, 2020, P4 million of which was received by SMDC. This was paid on July 14, 2020. As at December 31, 2022 and 2021, the amount of retained earnings appropriated for the corporate and mall expansions amounted to P42,200 million. This represents appropriation for land banking activities and planned construction projects for the next two to three years. The appropriation is being fully utilized to cover part of the annual capital expenditure requirement of the Company. Approval of malls expansions and new projects is delegated by the BOD to the Executive Committee of the Company. For the year 2023, the Company expects to incur capital expenditures of approximately P80,000 million. The unappropriated retained earnings account is restricted for the payment of dividends to the extent of the accumulated equity in net eamings of subsidiaries, associates and joint ventures and the balance of treasury stock until such time that the Parent Company receives the dividends from its subsidiaries, associates and joint ventures. The unappropriated retained earnings available for dividend declaration amounted to 96,642 million and 77,728 million as at December 31, 2022 and 2021, respectively. Treasury Stock As at December 31, 2022 and 2021, this includes 4,310 million reacquired capital stock and shares held by a subsidiary stated at acquisition cost of P2,985 million. - 45 - 17. Long-term Debt This account consists of: -2 - \begin{tabular}{lrr} & \multicolumn{2}{c}{ December 31 } \\ \hline \multicolumn{1}{c}{ Total Liabilities (Brought Forward) } & 2022 & 2021 \\ \hline Equity Attributable to Equity Holders of the Parent & P509,063,046 & P470,042,507 \\ Capital stock (Notes 18 and 28) & & \\ Additional paid-in capital - net (Notes 5 and 18) & 33,166,300 & 33,166,300 \\ Cumulative translation adjustment & 38,124,193 & 38,056,016 \\ Net fair value changes of equity instruments at FVOCI (Note 9) & 3,435,171 & 3,083,184 \\ Net fair value changes on cash flow hedges (Note 27) & 14,232,514 & 14,708,368 \\ Remeasurement loss on defined benefit obligation (Note 23) & 2,984,605 & (432,883) \\ Retained earnings (Note 18): & (928,882) & (548,643) \\ Appropriated & 42,200,000 & 42,200,000 \\ Unappropriated & 232,972,284 & 205,671,557 \\ Treasury stock (Notes 18 and 28) & (2,984,695) & (2,984,695) \\ \hline Total Equity Attributable to Equity Holders of the Parent & 363,201,490 & 332,919,204 \\ Non-controlling Interests (Note 18) & 1,950,116 & 1,441,569 \\ \hline Total Equity & 365,151,606 & 334,360,773 \\ \hline & P874,214,652 & P804,403,280 \\ \hline \hline \end{tabular} See accompanying Notes to Consolidated Financial Statements. - Liability for purchased land, payable to government agencies, accrued interest and other payables are normally settled throughout the financial period. - Lease liabilities included in "Other noncurrent liabilities" amounted to 13,342 million and P12,284 million as at December 31, 2022 and 2021, respectively. Interest on lease liabilities included under "Others - net" in the consolidated statements of income amounted to P437 million, P404 million and P323 million for the years ended December 31, 2022, 2021 and 2020 , respectively. SM PRIME HOLDINGS, INC. AND SUBSIDIARIES CONSOLDATED BALANCE SHEETS 16. Accounts Payable and Other Current Liabilities This account consists of: - Includes unearned revenue from sale of real estate amounting to P5,452 million and P6,102 million as at December 31, 2022 and 2021, respectively, out of which P4,343 million and PI,491 million were recognized as revenue in 2022 and 2021 , respectively. The terms and conditions of the above liabilities follow: - Trade payables primarily consist of liabilities to suppliers and contractors, which are non-interest bearing and are normally settled within a 30-day term. - Accrued operating expenses pertain to accrued selling, general and administrative expenses which are normally settled throughout the financial period. Accrued operating expenses consist of: - Deferred output VAT represents output VAT on unpaid portion of recognized receivable from sale of real estate. This amount is reported as output VAT upon collection of the receivables. This account consists of unsecured Philippine peso and China yuan renminbi denominated loans obtained from local and foreign banks amounting to 5,423 million and 6,487 million as at December 31,2022 and 2021, respectively, with due dates of less than one year. These loans bear weighted average interest rates of 3.56% and China loan prime rate (LPR) in 2022 and 2.97% and China LPR in 2021. Interest expense incurred from loans payable amounted to P160 million, P177 million and P189 million for the years ended December 31, 2022, 2021 and 2020, respectively (see Note 22). DebtIssueCost The movements in unamortized debt issue cost of the Company follow: Amortization of debt issuance costs is recognized in the consolidated statements of income under "Others - net" account. RepaymentandDebtIssueCostSchedule The repayments of long-term debt are scheduled as follows: The loan agreements of the Company provide certain restrictions and requirements principally with respect to maintenance of required financial ratios and material change in ownership or control. As at December 31,2022 and 2021, the Company is in compliance with the terms of its loan covenants. Interest expense from long-term debt charged to profit or loss amounted to P11,288 million, P9,148 million and P8,224 million for the years ended December 31, 2022, 2021 and 2020, respectively (see Note 22 ). 8. Equity Capital Stock As at December 31, 2022 and 2021, the Company has an authorized capital stock of 40,000 million with a par value of Pl a share, of which 33,166 million shares were issued. The Company has 28,856 million outstanding shares as at December 31,2022 and 2021. The following summarizes the information on SMPH's registration of securities under the Securities Regulation Code: SMPH declared stock dividends in 2012, 2007, 1996 and 1995. The total number of shareholders is 2,346 as at December 31, 2022. Additional Paid-in Capital - Net Following represents the nature of the consolidated "Additional paid-in capital - net": Retained Earnings In 2022, the BOD approved the declaration of cash dividend of P0.097 per share or P2,801 million to stockholders of record as of May 11, 2022, P2 million of which was received by SMDC. This was paid on May 24, 2022. In 2021, the BOD approved the declaration of cash dividend of P0.082 per share or P2,368 million to stockholders of record as of May 5, 2021, P2 million of which was received by SMDC. This was paid on May 19, 2021. In 2020, the BOD approved the declaration of cash dividend of P0.185 per share or P5,343 million to stockholders of record as of June 30, 2020, P4 million of which was received by SMDC. This was paid on July 14, 2020. As at December 31, 2022 and 2021, the amount of retained earnings appropriated for the corporate and mall expansions amounted to P42,200 million. This represents appropriation for land banking activities and planned construction projects for the next two to three years. The appropriation is being fully utilized to cover part of the annual capital expenditure requirement of the Company. Approval of malls expansions and new projects is delegated by the BOD to the Executive Committee of the Company. For the year 2023, the Company expects to incur capital expenditures of approximately P80,000 million. The unappropriated retained earnings account is restricted for the payment of dividends to the extent of the accumulated equity in net eamings of subsidiaries, associates and joint ventures and the balance of treasury stock until such time that the Parent Company receives the dividends from its subsidiaries, associates and joint ventures. The unappropriated retained earnings available for dividend declaration amounted to 96,642 million and 77,728 million as at December 31, 2022 and 2021, respectively. Treasury Stock As at December 31, 2022 and 2021, this includes 4,310 million reacquired capital stock and shares held by a subsidiary stated at acquisition cost of P2,985 million. - 45 - 17. Long-term Debt This account consists of: -2 - \begin{tabular}{lrr} & \multicolumn{2}{c}{ December 31 } \\ \hline \multicolumn{1}{c}{ Total Liabilities (Brought Forward) } & 2022 & 2021 \\ \hline Equity Attributable to Equity Holders of the Parent & P509,063,046 & P470,042,507 \\ Capital stock (Notes 18 and 28) & & \\ Additional paid-in capital - net (Notes 5 and 18) & 33,166,300 & 33,166,300 \\ Cumulative translation adjustment & 38,124,193 & 38,056,016 \\ Net fair value changes of equity instruments at FVOCI (Note 9) & 3,435,171 & 3,083,184 \\ Net fair value changes on cash flow hedges (Note 27) & 14,232,514 & 14,708,368 \\ Remeasurement loss on defined benefit obligation (Note 23) & 2,984,605 & (432,883) \\ Retained earnings (Note 18): & (928,882) & (548,643) \\ Appropriated & 42,200,000 & 42,200,000 \\ Unappropriated & 232,972,284 & 205,671,557 \\ Treasury stock (Notes 18 and 28) & (2,984,695) & (2,984,695) \\ \hline Total Equity Attributable to Equity Holders of the Parent & 363,201,490 & 332,919,204 \\ Non-controlling Interests (Note 18) & 1,950,116 & 1,441,569 \\ \hline Total Equity & 365,151,606 & 334,360,773 \\ \hline & P874,214,652 & P804,403,280 \\ \hline \hline \end{tabular} See accompanying Notes to Consolidated Financial Statements. - Liability for purchased land, payable to government agencies, accrued interest and other payables are normally settled throughout the financial period. - Lease liabilities included in "Other noncurrent liabilities" amounted to 13,342 million and P12,284 million as at December 31, 2022 and 2021, respectively. Interest on lease liabilities included under "Others - net" in the consolidated statements of income amounted to P437 million, P404 million and P323 million for the years ended December 31, 2022, 2021 and 2020 , respectively. SM PRIME HOLDINGS, INC. AND SUBSIDIARIES CONSOLDATED BALANCE SHEETS 16. Accounts Payable and Other Current Liabilities This account consists of: - Includes unearned revenue from sale of real estate amounting to P5,452 million and P6,102 million as at December 31, 2022 and 2021, respectively, out of which P4,343 million and PI,491 million were recognized as revenue in 2022 and 2021 , respectively. The terms and conditions of the above liabilities follow: - Trade payables primarily consist of liabilities to suppliers and contractors, which are non-interest bearing and are normally settled within a 30-day term. - Accrued operating expenses pertain to accrued selling, general and administrative expenses which are normally settled throughout the financial period. Accrued operating expenses consist of: - Deferred output VAT represents output VAT on unpaid portion of recognized receivable from sale of real estate. This amount is reported as output VAT upon collection of the receivables. This account consists of unsecured Philippine peso and China yuan renminbi denominated loans obtained from local and foreign banks amounting to 5,423 million and 6,487 million as at December 31,2022 and 2021, respectively, with due dates of less than one year. These loans bear weighted average interest rates of 3.56% and China loan prime rate (LPR) in 2022 and 2.97% and China LPR in 2021. Interest expense incurred from loans payable amounted to P160 million, P177 million and P189 million for the years ended December 31, 2022, 2021 and 2020, respectively (see Note 22)