ACCTBA2 Case Study

Second Half Course Requirement

Group Research Project

Submitted by:
Mariah Denise Carumba
Jaycee Pazcoguin
Danielle Ann Ranido

Submitted to:
Ms. Elsie N. Velasco

The Jollibee Foods Corporation is one of the Philippines largest business in the
food service industry, which currently in the process of continuously spreading its
service internationally. Worldwide, the corporation has a total network of 2,951 branches
as of early 2015. This network includes the following brands (local and international):
Jollibee brand, Greenwich, Chowking, Red Ribbon, Mang Inasal, Burger King, Yonghe
King, Hong Zhuang Yuan, San Pin Wang, and and Jinja Bar. In addition, Jollibee Foods
Corporation also has 50% share in joint ventures in few brands, (locally and
internationally) namely, Highlands Coffee, Pho 24, and 12 Sabu. Also, the corporation
has commissaries and manufacturing operations for the corporations retailed chains.
Furthermore, Jollibee Foods Corporation participates in corporate social responsibility,
through one of the corporations arms, the Jollibee Group Foundation.
The overall management of the corporation is handled by the governing body of
Jollibee Foods Corporation, which is the Board of Directors. The following are the
names and positions of the Board of Directors members:
ANG NGO CHIONG
Chairman Emeritus
TONY TAN CAKTIONG
Chairman of the Board
WILLIAM TAN UNTIONG
Director / Corporate Secretary
ERNESTO TANMANTIONG
Director / President / CEO
JOSEPH C. TANBUNTIONG

Director / Treasurer
ANG CHO SIT
Director
ANTONIO CHUA POE ENG
Director
MONICO V. JACOB
Director
CEZAR P. CONSING
Director
(RET) CHIEF JUSTICE ARTEMIO V. PANGANIBAN
Director
WASHINGTON Z. SYCIP
Independent Adviser
ATTY. VALERIE F. AMANTE
Assistant Corporate Secretary and VP and Head - Corporate Legal

These are the members of the Board of Directors who are given responsibility to
oversee the management affairs of the corporation. Moreover, the Board of Directors of
Jollibee Foods Corporation has the authority over the business transactions of the
Jollibee Foods Corporation and the use of the corporations assets. The Board of
Directors of Jollibee Foods Corporation has Tony Tan Caktiong as its chairman of the
board, while it has Ernesto Tanmantiong as the corporations president.
Jollibee Foods Corporation is authorized to issue only common stocks as a class
of stock. The authorized shares of the corporation amounts to 1,450,000,000, having

par value at P1. At the start of the year, there were 1,068,608,675 shares that were
issued and subscribed. There were additional 12,431,639 issuances during the year
with subscriptions receivable amounting to P17,177,884. As of 2014, the outstanding
shares (net of Treasury shares) amount to 1,064,592,974.
The cost of common stock of the Parent Company held in treasury of P180.5
million consists of 16,447,340 shares as of December 31, 2014. Acquisitions of treasury
shares are recorded at cost. The total cost of treasury shares is shown in the
consolidated statement of financial position as a deduction from the total equity. Upon
re-issuance or resale of the treasury shares, cost of common stock held in treasury
account is credited for the cost of the treasury shares determined using the simple
average method. Gain on sale is credited to additional paid-in capital. Losses are
charged against additional paid-in capital but only to the extent of previous gain from
original issuance, sale or retirement for the same class of stock. Otherwise, losses are
charged to retained earnings.
The Parent Companys retained earnings available for dividend declaration,
computed based on the guidelines provided in SEC Memorandum Circular No. 11,
amounted to P9,423.8 million and P7,895.7 million as at December 31, 2014 and 2013,
respectively. An important part of Jollibee Groups growth strategy is the acquisition of
new businesses in the Philippines and abroad. Examples were acquisitions of 85% of
Yonghe King in 2004 in PRC (P1,200.0 million), 100% of Red Ribbon in 2005 (P1,700.0
million), the remaining 20% minority share in Greenwich in 2007 (P384.0 million), the
remaining 15% share of Yonghe King in 2007 (P413.7 million), 100% of Hong Zhuang
Yuan restaurant chain in PRC in 2008 (P2,600.0 million), 70% of Mang Inasal in 2010

(P2,976.2 million), 100% of Chowking US Operations in 2011 (P693.3 million), 55% of

San Pin Wang (P195.9 million plus a contingent consideration) and 48% of WJ
Investments Limited (P98.0 million) in 2012. The Jollibee Group plans to continue to
make substantial acquisitions in the coming years. The Jollibee Group uses its cash
generated from operations to finance these acquisitions and capital expenditures.
These limit the amount of cash dividends that it can declare and pay, making the level of
the retained earnings higher than the paid-up capital stock. In support of the Jollibee
Groups strategy, the BOD approved the appropriation of P5,200.0 million and P3,800.0
million on April 11, 2013 and February 15, 2012, respectively, for future expansion and
capital expenditure. Thus, as at December 31, 2014 and 2013 the company
appropriated P7,600,000,000 from the retained earnings for the acquisitions of
businesses from 2013 to 2018 and P2,600,000,000 for the capital expenditures. The
unappropriated retained earnings of the Parent Company is also restricted to the extent
of cost of common stock held in treasury amounting to P180.5 million in both years as
well as the undistributed retained earnings of its subsidiaries which amounted to
P2,841.3 million and P629.2 million as at December 31, 2014 and 2013, respectively.
The Jollibee Group recognizes a liability to make cash distribution to its equity
holders when the distribution is authorized and the distribution is no longer at the
discretion of the Group. A corresponding amount is recognized directly in the equity.
Dividends for the year that are approved after the financial reporting date are dealt with
as an event after the reporting period. The Jollibee Foods Corporation declared a
regular cash dividend of Php1.64, representing a 32.3% payout of profit with a total of
P1,733,482,541. The Jollibee Group has a cash dividend policy of declaring one-third of

the Jollibee Groups net income for the year as cash dividends. It uses best estimate of
its net income as basis for declaring cash dividends. Actual cash dividends per share
declared as a percentage of the EPS are 32.3%, 75.5% and 61.5% in 2014, 2013 and
2012, respectively. The company declared a total of P788,176,867 cash dividends on
April 7, 2014. It was recorded on May 8 paid on May 30 of the same year. The cash
dividend per share for this distribution amounted to P0.75. The company declared a
total of P945,305,674 cash dividends on November 12, 2014. This was recorded on
November 29 and paid on December 18 of the year 2014. The dividend per share in this
distribution was P0.89. Basic EPS is calculated by dividing the net income for the year
attributable to the equity holders of the Parent Company by the weighted average
number of common shares outstanding during the year, after considering the retroactive
effect of stock dividend declaration, if any. Diluted EPS is computed by dividing the net
income for the year attributable to the equity holders of the Parent Company by the
weighted average number of common shares outstanding during the period, adjusted
for any potential common shares resulting from the assumed exercise of outstanding 61
stock options. Outstanding stock options will have dilutive effect under the treasury
stock method only when the average market price of the underlying common share
during the period exceeds the exercise price of the option. Where the EPS effect of the
shares to be issued to management and employees under the stock option plan would
be anti-dilutive, the basic and diluted EPS would be stated at the same amount.
Stock dividends are dividend payments made in the form of additional shares
rather than a cash payout. These are also known as scrip dividends. Companies may
decide to distribute this type of dividend to shareholders of record if the companys

availability of liquid cash is in short supply. In the case of the Jollibee group, they do not
issue share or stock dividends, only cash dividends. Thus, the company does not have
stock dividends distributable as of balance sheet date.
From the Income Statement, it was stated that the corporation earned an income
of 5,488,941,506. This was calculated by subtracting the cost of sales, expenses,
interest income, equity in net losses of joint ventures and an associate, and income tax
from the corporations total revenue. Looking at the corporations Statement of Changes
in Equity, it was observed that it has a different format compared to the format given in
class. From the ACCTBA2 workbook, the only accounts that were in the column
headings were share capital, accumulated profits, reserves, and treasury shares. On
the other hand, the accounts present in the column headings of the corporations
financial statement were so much more. The Statement of Changes in Equity of the
corporation was more detailed in terms of the number of accounts in their column
headings. The accounts that represent the share capital, accumulated profits, reserves,
and treasury shares were also in the column heading but they were referred to a
different name. In the financial statement, they were presented as capital stock, retained
earnings, additional paid-in capital, and cost of common stock held in treasury.
Under the capital stock, the issuance of and subscription to capital stock was
deducted. As for the account of retained earnings, cash dividends was deducted from
the unappropriated retained earnings. Furthermore, for the account of additional paid-in
capital, a part of the issuance of and subscription to capital stock and cost of stock
options granted was added to the beginning balance of this account. Also included in
the column headings was an account that was taught in class which is the subscription

receivables. From the workbook, this account can be found under the column heading
of share capital where it was deducted to. In the corporations financial statement, it had
its own column heading but no other account was added or subtracted from its
beginning balance. This account had a negative balance. The other accounts in the
column heading were beyond what was taught in class. These accounts are Cumulative
Translation Adjustments of Foreign Subsidiaries, Joint Ventures and an Associate,
Remeasurement Gain (Loss) on Net Defined Benefit Plan - net of tax, Unrealized Gain
on Available-for-Sale Financial Assets, Comprehensive Loss on Derivative Liability,
Excess of Cost over the Carrying Value of Non-controlling Ventures Interests Acquired,
and Non-controlling interests.
Scanning the notes to financial statement of the corporation, it was observed that
the corporation espouses the principle of shared value in its corporate social
responsibility activities. 2014 marks the 10th year of Jollibee Group Foundation (JGF).
JFC through its CSR arm, the Jollibee Foundation, implements programs that address
access to education, livelihood development, leadership development and disaster
response, issues that are also of relevance to the companys core business. As the
social responsibility arm of JFC, the flagship programs of the Foundation are inspired by
the companys mission of spreading the joy of eating to everyone. Through the principle
of Creating Shared Value, the Foundation capitalizes on the business objectives and
core competencies of JFC and implements programs that create valuable and
meaningful impact in the community. For SY 2013-2014, the Busog, Lusog, Talino (BLT)
School Feeding Program was implemented in 1,043 public schools in 191 cities and
municipalities across the country, feeding 37,000 undernourished pupils. The program

has reached 145,000 pupils since 2007. BLT provides lunch daily to help pupils stay in
school and learn better. Through the efforts of partners, teachers and parents in BLT
schools across the country, yearon- year, 85% of pupils gained normal nutritional status
after the feeding cycle, which contributed to improved attendance. The promotion of
BLTs School Feeding standards on Food Safety and Quality, Accountability and
Community Ownership (FAC) reached a new milestone with the launching the BLT
Excellence Awards for partner schools in 2014. The Awards aim to ensure the
assessment of BLTs quality implementation and recognition of exemplary performance.
Another activity or program implemented by JFC is the Farmer Entrepreneurship
Program (FEP). FEP continued to enable smallholder farmers to become entrepreneurs
and directly supply fresh produce to institutional markets. In 2014, FEP assisted more
than 900 farmers from 27 farmer groups nationwide. Farmer clusters were accredited as
JFC suppliers for onions, tomatoes, bell peppers, chili peppers, and calamansi leading
to increased incomes. Records show that farmers delivering to JFC can earn up to five
times more compared to when they sell to local markets. As a leading model for
inclusive business, FEP was featured in various forums including the Harvard Asia
Business Conference in Boston, CSR Asia Summit in Hong Kong, and Partnerships for
Disaster and Climate Resilience in Manila. Another program is the Jollibee Group
FoodAID. Following the disaster relief initiatives in response to Typhoon Yolanda, a
special school feeding program was implemented in the first quarter of 2014, nourishing
more than 49,000 pupils in 134 schools in Aklan, Iloilo, Negros Occidental, Capiz,
Western Samar, and Leyte. The Farmer Livelihood Recovery Program was
implemented to help farmers grow food for their familys consumption and generate

additional income. The program provided financing, training and marketing assistance
to 702 smallholder farmers from Iloilo, Antique, Aklan and Cebu. Ten years since its
establishment, JGF continues to render excellent service to communities, thus
ensuring that JFCs success in business creates inclusive success in its communities.
Regarding the employee benefit, the corporation made an amendment to PAS 19,
Employee Benefits - Defined Benefit Plans; Employee Contributions. The corporation
stated that when the amount of contribution is independent to the number of years, the
contribution can be considered as a reduction in the service cost in the period where
service is rendered instead of distributing to the periods of service. Furthermore, it was
stated that this amendment holds no importance to the Jollibee Group given the fact
that there are no entities inside the corporation that has defined benefit plans wherein
employees or third parties make contributions.
From this simple research, the students observed that one can see the
performance of a company just by looking at its financial statements. For the Jollibee
Corporation, it was observed that the companys net income improved by the years. In
fact, the year 2014 was a strong year for the company. The companys franchised fees
and royalty fees increased by 12.9% to Php 90.7 billion. In 2014, their system wide sale
grew by 13.3 % to Php 117.9 billion. The corporations net income attributable to equity
holders of the Parent reached Php5.4 billion in 2014. This is 14.8% higher than the
amount generated in 2013. Earnings per share grew by 14.0% to Php5.08.
Furthermore, the companys brands all grew to double digits. It declared a regular cash
dividend of Php 1.64 which represents the 32.3% payout of profit. As to how the
company achieve these achievements can be clearly seen in their financial statements.

In their financial statement, it can be observed as to how the corporation runs its
business. Also, the students were able to see the similarity of the financial statements of
the corporation to the ones in the workbook. It was understandable that there would be
a bit difference in the format since the format of the financial statement of the Jollibee
Food Corporation was made to suit the corporation. Even if there were differences in
some parts, the general structure of the financial statements were the same.