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J O L L I B E E F O O D S C O R P O R A T I O N

D O I N G B U S I N E S S U N D E R T H E N A M E

A N D S T Y L E O F J O L L I B E E

10/F J O L L I B E E P L A Z A B U I L D I N G

10 F. O R T I G A S J R . A V E N U E

O R T I G A S C E N T E R , P A S I G C I T Y

Dept. Requiring this Doc.

Remarks = please use black ink for scanning purposes

Annual Report for the year 2019

Domestic Foreign

Secondary License Type, If Applicable

S T A M P S

To be accomplished by SEC Personnel concerned

File Number

Document I.D.

LCU

Amended Articles Number/Section

Total Amount of Borrowings

Cashier

Total no. of Stockholders

COVER SHEET

(Company's Full Name)

(Business Address: No. Street City / Town / Province)

Atty. Angeline L. Chong (632) 8634-1111 local 7817

Month DayLast Friday of June

S.E.C. Registration Number

Contact Person Company Telephone Number

YearAnnual Meeting

Month Day31-Dec

YearFiscal Year

COVER SHEET

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee

(Company’s Full Name)

10/F Jollibee Plaza Building 10 F. Ortigas Jr. Avenue, Ortigas Center, Pasig City

(Company’s Address)

(632) 8634-1111Telephone Number

December 31 Last Friday of June (Fiscal Year Ending) (Annual Meeting)

Amended SEC Form 17-A Annual Report for the year 2019

(Form Type)

________________________________ Amendment Designation (If applicable)

___________________________________ (Secondary License Type and File Number)

___________________ ___________________ Cashier LCU

___________________ DTU

77487 S.E.C REG. No.

___________________ ___________________ Central Receiving Unit File Number

___________________ Document I.D.

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141

OF THE CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended December 31, 2019

2. SEC Identification Number 77487

3. BIR Tax Identification Number 000-388-771

4. Name of Registrant Jollibee Foods Corporation doing business under the name and style of Jollibee

5. Province, Country or other Jurisdiction ofIncorporation or Organization

Pasig City, Philippines

6. Industry Classification Code

7. Address of Principal Office 10th Floor Jollibee Plaza, 10 F. Ortigas Jr. Avenue, Ortigas Center, Pasig City

Postal Code 1605

8. Registrant’s Telephone Number (632) 8634-1111

9. Former name, former address, and formerfiscal year, if changed since last report

N/A

10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of theRSA:

11. ALL of these securities are listed on The Philippine Stock Exchange.

12. Reports filed by the Registrant

(a) Registrant has filed all reports to be filed under Section 17 of the SRC and SRCRule 17.1 thereunder or Section 11 of the RSA and RSA rule 11(a)-1thereunder, and Sections 26 and 141 of the Corporation Code of the Philippinesduring the preceding twelve (12) months.

(b) Registrant has been subject to such filing requirements for the past ninety (90)days.

13. Aggregate market value of the voting stock held by non-affiliates of the Registrant asof December 31, 2019:

Total number of outstanding shares 1,097,102,930 Less: Outstanding Shares held by Affiliates 587,104,425 Shares held by Non-Affiliates 509,998,505 Average price as of December 31, 2019 Php264.79 Aggregate market value of voting stock held by Non-Affiliates Php135,042,504,138.95 Level of Public Float based on information available as of December 31, 2019

43.70%

DOCUMENTS INCORPORATED BY REFERENCE

NONE of the following documents are incorporated by reference:

(a) Any annual reports to the security holder;

(b) Any proxy information statement filed pursuant to SRC Rule 20; or

(c) Any prospectus filed pursuant to SRC Rule 8.1.

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PART I. BUSINESS AND GENERAL INFORMATION

1. BUSINESS

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee (formerly Jollibee Foods Corporation) was incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on January 11, 1978. The Parent Company and its subsidiaries (collectively referred to as “the JFC Group”) and affiliates are involved primarily in the development, operation and franchising of quick service restaurants (QSRs) under the trade names “Jollibee”, “Chowking”, “Greenwich”, “Red Ribbon”, “Yong He King”, “Hong Zhuang Yuan”, “Mang Inasal”, “Burger King”, “Highlands Coffee”, “PHO24”, “Hard Rock Cafe”, “Dunkin’ Donuts”, “Smashburger”, “Tim Ho Wan”, “Tortas Frontera”, “The Coffee Bean & Tea Leaf” and “Panda Express”. The other activities of the JFC Group include manufacturing and property leasing in support of the QSR systems and other business activities.

Milestones and updates for subsidiaries and affiliates are discussed further in other parts of this Report.

Jollibee

As of December 31, 2019, there were 1,195 Jollibee stores nationwide, of which 680 were franchised and 515 were company-owned. In addition, Jollibee International had 266 stores of which 78 were franchised and 188 were company-owned with specific locations as follows: 39 in the United States, 9 in Canada, 1 in Guam, 1 in Italy, 1 in United Kingdom, 130 in Vietnam, 18 in Brunei, 10 in Hong Kong, 9 in Singapore, 1 in Macau, 1 in Malaysia and 46 in the Middle East.

Jollibee offers a quality menu of food, beverages and set meals that includes Chickenjoy, Yumburger, Jolly Hotdog, Jolly Spaghetti, rice meals, Jolly Crispy fries, side dishes, pies, sundaes, soft serve cones, coffee, juice and soft drinks. It also serves a full breakfast menu that includes breakfast Yumburger, bacon & egg pancake sandwich, breakfast Burger Steak and breakfast rice meals. In addition, Jollibee introduces special menus and sells other food products during limited-time promotions to ensure that the brand remains exciting and relevant. Certain Jollibee stores are open 24 hours daily. Jollibee also offers themed party packages that include the venue, food, cake, appearance of mascots and party favours.

The Corporate Supply Chain provides manufacturing and logistics services to the various brands of JFC through Zenith Foods Corporation (“ZFC”) and JWS Logistics.

Zenith Foods Corporation (ZFC), a wholly-owned subsidiary of the Company, is the manufacturing arm of the Group in the Philippines. ZFC’s main facility in Carmelray Industrial Park 1 in Canlubang, Laguna has a combined capacity of approximately 700 metric tons of various food products. The second facility of ZFC in Mandaue City, Cebu, has a combined capacity of approximately 45 metric tons of various food products. Manufacturing expansion plans are underway in Luzon and in VisMin to support the projected growth of the JFC brands. As of December 31, 2019, the Jollibee Group had 15 commissaries in the Philippines.

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JWS Logistics (JWSL) is part of Jollibee Worldwide Pte. Ltd., the regional operating headquarters of the Jollibee Group of companies. JWSL ensures the delivery of goods to the JFC stores on-time and in-full through its services which include supply planning, warehousing, distribution, and customer support and order management. It operates distribution centers in strategic locations to service the growing network of stores in the JFC system and ensures the timely delivery of goods. The biggest distribution center which serves as a major hub for Metro Manila and South Luzon is located in a 5-hectare property in Barangay Marcelo Green, Parañaque City with over 20,000 combined pallet locations for both dry and cold storages. Like its manufacturing partner ZFC, JWSL is poised for expansion by increasing its storage capacities in its distribution centers nationwide.

The Company’s main suppliers are:

Food Supplier

Chicken SAN MIGUEL FOODS, INC. JMT Building, ADB Avenue, Pasig City

Carbonated COCA-COLA BOTTLERS PHILIPPINES, INC. Beverages Net Lima Building., 5th Avenue corner 26th Street, Taguig City

Sauces and DEL MONTE PHILIPPINES, INC. Beverages JYCC Building., Corner 9th Avenue and 30th Street, Taguig City

Beverages NESTLE PHILIPPINES 31 Plaza Drive, Rockwell Center, Makati City

Dressings UNILEVER PHILIPPINES Bonifacio Stopover Corporate Center, 31st Street corner 2nd Avenue, Taguig City

Oils OLEO-FATS INC. #5 Mercury Avenue, Bagumbayan, Quezon City

The Company has existing agreements with all suppliers.

ZFC supplies all the requirements of all the brands. Commissaries owned and operated by ZFC are a total of three sites which serve multi-brands and product platforms such as burgers, marinated chicken, sauces, pizza dough, pies, etc. Separately, we also have Company’s subsidiaries that own commissaries producing specific product lines such as two sites that produce Chinese dishes for Chowking, five sites that bake cakes and pastries for Red Ribbon, and four sites that prepare grilled chicken and Filipino food items for Mang Inasal.

Similarly for the international markets, Company’s subsidiaries own and operate two commissaries in the People’s Republic of China (“PRC”), four in the United States of America, and two in Vietnam.

Food quality, service, price-value relationship, store location and ambience, and efficient operations continue to be critical elements of the Company’s success in the quick-service restaurant industry.

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ACQUISITIONS, INVESTMENTS AND DIVESTMENTS Joint Venture – Philippines (July 9, 2019) Further to its September 27, 2018 disclosure, the Company disclosed that the joint venture company between the Company and Panda Restaurant Group, Inc. for the operation of Panda Express restaurants in Manila has been incorporated on July 3, 2019 and started commercial operations on December 12, 2019. Acquisitions – United States of America (July 24, 2019 and September 24, 2019) On July 24, 2019, the Company disclosed that through its wholly-owned subsidiary Jollibee Worldwide Pte. Ltd. (JWPL), it entered into an agreement to invest USD100 million in a new Singapore based holding company to acquire 100% of The Coffee Bean & Tea Leaf ® (CBTL). The acquiring entity will be JWPL’s wholly-owned subsidiary Java Ventures, LLC which will eventually be a wholly-owned subsidiary of the new holding company. On September 24, 2019, the Company disclosed that it completed the acquisition of 100% of CBTL. The closing of the transaction was effected after the parties had completed the necessary closing conditions, including required government approvals, provided under the executed purchase agreement. The Company acquired CBTL for USD350 million (~Php18.3 billion) on a debt-free basis (the acquired business will have no debt upon acquisition). The acquiring entity is Java Ventures, LLC, a US-based wholly owned subsidiary of Super Magnificent Coffee Company Pte. Ltd. (SMCC Singapore). SMCC Singapore is a subsidiary of JWPL. The payment for the acquisition of CBTL is being funded by proceeds from bridge loans entered into by JWPL with several financial institutions. Investment – Singapore (October 2, 2019) Further to its May 8, 2018 disclosure, the Company disclosed that the fund size of Titan Dining LP (Titan), of which JWPL is an investor, will be increased from SGD100 million to SGD200 million, and that in connection therewith, JWPL will increase its capital commitment to Titan from SGD45 million to SGD12 million. As a result, the Company’s investment will constitute 60% of the fund. The increase in fund size and additional capital commitment of JWPL are in furtherance of certain strategic projects currently being undertaken by Titan, consistent with its mandate to invest in the food service sector and grow strong Asia Pacific food service brands. Joint Venture – People’s Republic of China (November 13, 2019) Further to its May 8, 2018 disclosure, the Company disclosed that its wholly-owned subsidiary Golden Plate Pte. Ltd. (GPPL) entered into a Joint Venture Agreement with Dim Sum Pte. Ltd. (DSPL) to form a Company (the JV) in the People’s Republic of China (PRC). After the incorporation of the JV, it shall sign a Unit Franchise Agreement with Tim Ho Wan Pte. Ltd. (Franchisor), authorized master franchisor of Tim Ho Wan in the Asia-Pacific, to develop and operate Tim Ho Wan stores in Shanghai and such other cities within the PRC as may be agreed with the Franchisor. GPPL will own 60% of the business and DSPL will own the remaining 40%. GPPL and DSPL have committed to invest up to USD13 million to the JV, of which up to USD7.8 million will be contributed by GPPL in proportion to its ownership in the business. The JV shall have its own resources and personnel to operate and manage the business.

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EMPLOYEES The Company, its local subsidiaries and support units have approximately 16,690 employees in the Philippines as at December 31, 2019. The regular daily-paid employees of Company-owned Jollibee stores are subject to a collective bargaining agreement which was renewed and signed on March 3, 2017. Aside from all benefits mandated by law, the Company provides training opportunities (internal and external) to its employees. Qualified employees are also entitled to avail of options under the Company’s Stock Options Plan.1 COMPETITION The JFC Group’s stores compete within the quick service restaurants (QSRs) and fast casual segments and other food service and restaurant companies. The JFC Group competes on the basis of food quality and variety, price, value perception, customer service reputation, location as well as cleanliness and maintenance of stores. New product development, digital engagement as well as advertising levels and promotional initiatives are also key factors. The JFC Group’s primary competition includes McDonald’s, KFC, Burger King (outside the Philippines), other chicken, burger, pizza and pasta chains, Chinese fast food restaurants, grilled chicken and Filipino restaurants as well as bakeshops. Competition from independent restaurants, grocers, food packs and convenience stores offering take-away options has also increased. The JFC Group also competes not only for customers but also for personnel, suitable land or buildings and franchisees who have the commitment, capability and capitalization. The JFC Group believes that its competitive position is differentiated by, among others, the taste of its food products and value for money product offerings. The JFC Group plans to continue to increase market share through, among others, store network expansion supported by new product launches, tie-ups and increasing visit frequency and targeting certain consumer groups that are not yet part of the customer base through, among others, promotions and target advertising. CUSTOMERS The Company serves a wide spectrum of customers from all economic classes. It is not dependent on a single customer or a few customers. Neither is there a single customer that accounts for, or will account for, 20% or more of the Company’s sales. RELATED PARTIES The Company runs its business independently of its subsidiaries and other related parties. There is no dependence on the Company’s related parties.

1Please see discussion on page 66.

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PERMITS AND APPROVALS Other than the reportorial requirements of the Securities and Exchange Commission (“SEC”), The Philippine Stock Exchange (“PSE”), the Bureau of Internal Revenue (“BIR”), and the local permits for the opening and continued operations of its stores, commissary facilities and distribution centers there are no other permits, licenses or approvals required from the Company for its operations. The Company is in compliance with the requirements of the SEC, PSE, BIR and local government units. RESEARCH AND DEVELOPMENT Research and development are an integral part of the Company’s operations. New products, concepts and ideas are critical to the continued success of the Company and its subsidiaries. For this reason, the Company allocates a Research and Development budget as indicated below for the Jollibee Philippines brand:

Year Amount Percentage to Systemwide Sales of Jollibee Brand 2019 Php15,656,786.00 0.02% 2018 Php43,784,707.00 0.02%

ENVIRONMENTAL LAWS In keeping with its Corporate Social Responsibility (CSR), the Company places great premium in its commitment to environmental conservation and protection. A dedicated office, led by the company’s Chief Sustainability Officer, is at the forefront of Company’s sustainability efforts. Even if manufacturing standards are currently being used to monitor the Restaurant Sector, the Company exerts efforts to meet the standards being applied to it by government regulators. Several measures were included in its operations, covering both procedural and technological aspects, which pay heed to the environmental laws and regulations being applied to the quick-service restaurant sector. Part of the proactive measures being undertaken at the store level, the Company continues to implement its ongoing training programs that equip the store teams with the knowledge and skills for environmental management and best management practices in the kitchen. For 2019, the Company conducted training for almost 1,500 Pollution Control Officers and Store Managers equipping them to become environmental stewards of the stores. In addition, several technologies have been introduced at the stores to aid in addressing wastewater quality namely, the Automated Grease Removal Unit (Auto-GRU) and Bioaugmentation. The Company continues its energy saving initiatives in the use of Grid-tied Solar Power in some stores to reduce power consumption from the Grid by about 10% to 15% for a typical free-standing store. Use of solar power even with limited capacity will provide environmental benefits. In 2019, our roof-installed Solar PV System was able to generate more than 180,000 kWh from solar power equal to more than 130 tons of CO2e saved. Since 2014, our solar-powered stores have generated more than 640,000 kWh equal to more than 450 tons of CO2e saved. Low-E high performance glass is used in some stores to reduce the air-conditioning requirement by about 10% thus reducing power consumption.

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In addition, different energy-saving technologies are being tested to transform stores to be more energy-efficient. Use of advanced equipment in freezers and refrigerators help reduce power consumption through delivery of required fixed-minimum space temperature and optimization of the running-time of the compressor. This can contribute up to 30% reduction in energy consumption for air-conditioning units (ACUs). Another is the control of surge and power fluctuation which can contribute of 8% to 9% savings in total kWh consumption.

While these energy-saving technologies can provide savings, equipping store personnel with the best store practices can also contribute in reducing power consumption in store. For 2019, a total of almost 1,500 stores were provided training on Energy Conservation. The stores also initiated Project-24 in 2019, where stores set the temperature setting of its ACUs to 24⁰ C to reduce electricity consumption while still retaining the comfort level inside the stores. This, along with the other initiatives, has led to a reduction from previous year of more than 11.6 million kWh (equal to more than 8,300 tons of CO2e) for existing stores.

Hand in hand with its mission of bringing the joy of eating to everyone, the Company also believes in inculcating the spirit of environmental responsibility both inside and outside the Company. More than a one-time effort, this unceasing pledge to the environment can be best seen in its proactive efforts to anticipate and address issues through continuous feedback and communication with the Company’s partners in the government and the customer base.

RISKS

The Company and its subsidiaries are all in the quick-service restaurant sector. Quick-service restaurants like those maintained by the Company are expected to maintain high quality in terms of food, service and cleanliness (“FSC”). The Company responds by observing stringent guidelines, processes and procedures in its FSC, and conducting regular and spot audits to ensure that FSC standards are maintained not only in stores but also in commissaries. The Company has likewise instituted a system of incentives to reward excellent performance in terms of FSC by stores.

The Company encourages the implementation of systems that allow it to adequately identify, measure, manage and control significant and relevant risks that affect its activities and businesses. These systems and risk management policies enable the Company to: a) attain the strategic objectives formulated by the Company with controlled unpredictability; b) provide the maximum level of assurance to its shareholders; c) protect the Company’s reputation; d) defend the interests of customers, shareholders, other groups interested in the Company’s progress; and e) ensure sustained corporate stability and financial strength.

To ensure the effective availability of essential and critical services, the Company maintains its business continuity management policy in support of a comprehensive program for business continuity, limiting the impact and losses caused by major incidents, and business recovery.

The Company maintains its business continuity management policy and business continuity plan in compliance with ISO 22301 Societal Security – Business Continuity Management Systems as part of its risk management procedures.

ADDITIONAL REQUIREMENTS AS TO CERTAIN ISSUES OR ISSUERS

The Company has no additional requirements as to certain issues or issuers.

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SUBSIDIARIES AND AFFILIATES

The Company owns, develops, operates and franchises the following brands through various subsidiaries:

Chowking

Chowking was acquired by the Company in 2000.

Chowking combines traditional Chinese cuisine with modern fast food service. It offers freshly made and affordably priced Chinese food and beverages including chao fan (Chinese fried rice), dim sum, noodles and milk tea. Chowking also offers breakfast rice meals, combination meals and Chinese lauriat-style individual and family meals. In 2013, Chowking launched its first drive-thru store in the Philippines. Certain Chowking stores are open 24 hours daily.

As of December 31, 2019, there were 617 Chowking stores in the Philippines, of which 270 were owned and operated by the Company and 347 were franchised. As of the same date, there were 48 Chowking stores in operation in six countries and territories outside the Philippines, all of which were franchised, including in the United States, UAE, Qatar, Oman, Kuwait and Saudi Arabia.

Greenwich

Greenwich was the first brand acquired by the Company in 1994 and became a wholly-owned subsidiary of the Company in 2006.

Greenwich offers a menu with a variety of pizzas and pastas that caters to the local taste. It also offers individual and group combination meals, side dishes and desserts. Over the years, the Group transformed the brand in terms of food offerings, look and heightened social media presence from Greenwich Pizza & Pasta to Greenwich Pizzeria, reflecting dynamism and promoting a stronger culture of barkadahan (a group of friends). The JFC Group believes that Greenwich is the first pizza chain in the Philippines to use heated thermal bags to ensure that food stays hot even after transit.

As of December 31, 2019, there were 284 Greenwich stores in the Philippines, of which 162 were owned and operated by the Company and 122 were franchised.

PHO24

PHO24 serves traditional Vietnamese dishes with rice noodles as its core product. It specializes in pho (Vietnamese soup with noodles and thinly sliced beef or chicken) comprising 24 ingredients based on a family recipe. In addition to several types of pho, it offers rice meals, other traditional Vietnamese dishes such as cold vermicelli and spring rolls, beverages and desserts. PHO24 also sells preservative-free instant pho through its stores and retail outlets to enable its customers to enjoy pho at home.

As of December 31, 2019, there was one PHO24 store in the Philippines.

“Chowking”, “Greenwich” and “PHO24” are business units of Fresh N’ Famous Foods, Inc., a wholly-owned subsidiary of the Company.

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Red Ribbon

Red Ribbon was acquired by the Company in 2005. Red Ribbon offers an extensive variety of high-quality cakes, pastries and bread and provides cake customization services for special occasions. The JFC Group believes that Red Ribbon is a leading bakeshop for round cakes and that it has an increasing market share in dedication and roll cakes. Red Ribbon’s best-selling products include its chocolate cakes, namely, Black Forest cake, Chocolate Dedication cake, Chocolate Mousse and Triple Chocolate roll. Red Ribbon also offers traditional Filipino bakeshop products such as empanada (baked turnover with filling), ensaymada (soft, sweet dough pastry) as well as mamon and taisan (chiffon or sponge cakes). In the United States, Red Ribbon serves hot meals and cold desserts in-store. As of December 31, 2019, there were 502 Red Ribbon stores in the Philippines, of which 198 were owned and operated by the Company and 304 were franchised. As of the same date, there were 33 Red Ribbon stores in operation in the United States, all of which were owned and operated by the Group, including in the states of California, Nevada, Washington, Hawaii, New York, New Jersey, Virginia, Texas and Illinois.

Mang Inasal In 2010, the Company acquired a 70 per cent. equity interest in Mang Inasal. In 2016, Mang Inasal became a wholly-owned subsidiary of the Company. Mang Inasal offers grilled food products such as chicken inasal (chicken marinated in local spices before being skewered and grilled) and traditional Filipino dishes and desserts such as pork sisig (chopped pork seasoned with chilli pepper, local citrus fruit and onion) and halo-halo (a layered dessert made of sweetened beans and fruits, shaved ice and milk), respectively. In addition, Mang Inasal offers value meals, combination meals and party pans. The Company believes that Mang Inasal is the top grilled chicken restaurant in the Philippines. As of December 31, 2019, there were 611 Mang Inasal stores in the Philippines, of which 20 were owned and operated by the Company and 591 were franchised.

Burger King In 2011, the Company acquired a 54 per cent. equity interest in BKTitans Inc., the parent company of the entities that owns the franchises for Burger King stores. Burger King is a hamburger QSR chain that offers the Whopper or flame-grilled hamburgers, specialty hamburgers, chicken and other specialty sandwiches, rice meals, side dishes, beverages and desserts. The launch of its delivery website in 2018 is a key aspect of Burger King’s sales growth. As of December 31, 2019, there were 105 Burger King stores in the Philippines, all of which were owned and operated by the Company.

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Yonghe King

In 2004, the Company acquired an 85 per cent. equity interest in Yonghe King. In 2007, Yonghe King became a wholly-owned subsidiary of the Company.

Yonghe King is the largest QSR brand of the Group in the PRC in terms of sales and store network. Its top three flagship products are premium tomato beef noodle soup, crispy tender chicken thigh with minced pork rice and soya milk. The JFC Group believes that Yonghe King’s competitive position is differentiated by, among others, its soya milk being made fresh in-store daily. The expansion of delivery channels including partnerships with food delivery aggregators and the implementation of mobile payment through Alipay and WeChat are key aspects of Yonghe King’s sales growth.

As of December 31, 2019, there were 339 Yonghe King stores in the PRC, of which 268 were owned and operated by the Company and 71 were franchised.

Hong Zhuang Yuan

Hong Zhuang Yuan was acquired by the Company in 2008.

Hong Zhuang Yuan specializes in congee. Its bestselling products include eight treasures congee, century egg congee, spring onion pancake and beef pies. In addition, it regularly offers, for a limited time, certain seasonal food products to provide additional variety to its menu. In 2018, Hong Zhuang Yuan launched a self-service digital ordering system in all of its stores that enabled customers to place their orders by simply scanning the QR code on the table. Certain Hong Zhuang Yuan stores also have open kitchens to attract diners and enable them to experience the food “show”.

As of December 31, 2019, Hong Zhuang Yuan had 42 stores, all of which were owned and operated by the Company.

Dunkin’ Donuts

The Company, through its non-wholly owned subsidiary, has exclusive rights to develop and expand Dunkin’ Donuts in certain territories in the PRC pursuant to a master franchise agreement with Dunkin Donuts Franchising LLC.

Dunkin’ Donuts is a baked goods and coffee chain. It offers a wide variety of doughnuts, bagels, breakfast sandwiches, other baked goods and beverages including coffee, espresso-based drinks, teas and frozen drinks. Dunkin’ Donuts also offers regional items to cater to local tastes. In 2017, it launched CoffeeForward+ aimed at adapting the café culture and transforming the brand from being doughnut-centric to a doughnut and coffee business.

As of December 31, 2019, there were eight Dunkin’ Donuts stores in the PRC, in particular, Beijing, all of which were owned and operated by the Company, through its non-wholly owned subsidiary.

SuperFoods

The SuperFoods Group owns and operates various brands, including Highlands Coffee Shops in Vietnam, Highlands Coffee Packaged Products, and Hard Rock Café franchised stores in Macau, Hong Kong and Vietnam. Highlands Coffee serves Vietnamese coffee and light meals in trendy coffee shops, and also sells packaged coffee through retail outlets.

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Highlands Coffee

Highlands Coffee is a brand under the Company’s majority-owned subsidiary SuperFoods.

Highlands Coffee serves coffee prepared in the traditional Vietnamese way using the phin filter, espresso-based beverages, ice blended coffee- and non-coffee based beverages, modern tea beverages that include fresh fruits and toppings, banh mi and Vietnamese flavour-inspired pastries in trendy coffee shops. It also sells packaged coffee and other merchandise through its cafés and wholesale to an exclusive distributor.

As of December 31, 2019, there were 401 Highlands Coffee cafés in Vietnam, of which 344 were owned and operated by the Company and 57 were franchised. As of the same date, there were 43 Highlands Coffee cafés in the Philippines, all of which were franchised. The Philippines is the first international market of Highlands Coffee.

PHO24

PHO24 is a brand under the Company’s majority-owned subsidiary SuperFoods.

PHO24 serves traditional Vietnamese dishes with rice noodles as its core product. It specializes in pho (Vietnamese soup with noodles and thinly sliced beef or chicken) comprising 24 ingredients based on a family recipe. In addition to several types of pho, it offers rice meals, other traditional Vietnamese dishes such as cold vermicelli and spring rolls, beverages and desserts. PHO24 also sells preservative-free instant pho through its stores and retail outlets to enable its customers to enjoy pho at home.

As of December 31, 2019, there were 22 PHO24 stores in Vietnam, all of which were owned and operated by the JFC Group. As of the same date, there was one PHO24 store in the Philippines and 16 PHO24 stores in Indonesia, all of which were franchised.

Hard Rock Café

The Hard Rock Cafe franchised stores in Macau SAR, Hong Kong SAR and Vietnam are under the Company’s majority-owned subsidiary SuperFoods.

Hard Rock Cafe is a music-themed restaurant chain with live performance venues. It offers a menu with a variety of burgers, starters, salads, sandwiches, entrées, beverages and desserts as well as a kids’ menu. Hard Rock Cafe also sells collectible fashion and music-related merchandise at its Hard Rock Shops in-store and on its website. It introduces diverse product promotions regularly and provides customized packages for private events.

As of December 31, 2019, the Company owned and operated two Hard Rock Cafes in Vietnam and one Hard Rock Cafe in Hong Kong SAR. It also owned and operated two Hard Rock Shops in Hong Kong SAR and one in Macau SAR.

As of December 31, 2019, SuperFoods had 445 stores (Highlands Coffee has 401 stores with 358 in Vietnam and 43 in the Philippines; PHO24 has 38 stores with 22 in Vietnam and 16 in Indonesia; and other SuperFoods brands with 6 restaurants).

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Smashburger

In 2015, the Company acquired a 40% equity interest in SJBF LLC, the parent company of the entities comprising the Smashburger business. In 2018, Smashburger became a wholly-owned subsidiary of the Company after acquiring an additional 45% and subsequently, remaining 15% equity interest in SJBF LLC. Smashburger is a hamburger fast casual chain that offers a variety of burgers, salads, side dishes and beverages. The Group believes that its competitive position is differentiated by, among others, its use of never frozen 100% Certified Angus Beef. In addition, Smashburger offers new products, limited time offers and holiday specials to enable its customers to experience new burgers. In 2019, Smashburger partnered with key delivery aggregators to expand its sales channels and provide greater availability of its products to customers. As of December 31, 2019, there were 301 Smashburger stores in operation in nine countries and territories, all of which were franchised including in the United States, Canada, Costa Rica, Egypt, El Salvador, Panama, Saudi Arabia, Scotland and the United Kingdom. As of the same date, there were 277 Smashburger stores in the United States, of which 132 were owned and operated by the Company and 145 were franchised. The Coffee Bean & Tea Leaf ® In 2019, the Company acquired The Coffee Bean & Tea Leaf ® (CBTL). CBTL is an American coffee chain founded in 1963, based in Los Angeles, California and is widely credited for driving high quality and innovation to the coffee and tea industry. CBTL uses only individually hand-roasted coffee beans and hand-blended teas from farms in various countries like Costa Rica, Colombia, Kenya, Indonesia, Jamaica, Thailand and Sri Lanka. It started the frozen coffee drink craze with the invention of the The Original Ice Blended® drink and is also the first global coffee and tea retailer to offer cold brew tea which has become increasingly popular due to its smoother, less acidic taste. CBTL offers a variety of hot and cold coffee and hot and iced tea drinks. It also sells a variety of whole bean coffees, whole leaf teas, flavored powders and baked food. At the end of 2019, CBTL operated 1,173 stores across 26 countries. JOLLIBEE GROUP FOUNDATION, INC. As the corporate social responsibility arm of one of the largest food service companies in the world, Jollibee Group Foundation (JGF) continues to expand its reach to uplift more communities through programs in agriculture, education, and disaster response. Jollibee Group Foundation Marks 15 Years of Uplifting Filipino Communities As Jollibee Group Foundation starts a new chapter, it continues to enable more families across the country to put food on their table through programs in agriculture, education and disaster response.

12

Farmer Entrepreneurship Program (FEP) Through FEP, smallholder farmers were organized and trained to grow their own agro-enterprises and supply institutional markets such as JFC. Since the program’s launch in 2008, the number of farmer cooperatives able to do so increased from one to seventeen. Since 2009, at least 7,000 metric tons of vegetables have been delivered to JFC, with farmers earning more than Php300 million in sales. A range of capacity building interventions were provided to local implementing partners that enabled FEP to train hundreds of farmers delivering to JFC. This included agro-entrepreneurship (AE) for LGUs and NGO extension workers, online and on-site AE coaching with farmer leaders, Good Agricultural Practices (GAP), and Financial Management. Busog, Lusog, Talino (BLT) School Feeding Program In support of the Department of Education’s School-Based Feeding Program, the Foundation continued to establish the BLT School Feeding Kitchens. The Kitchens centralize meal preparation for a cluster of schools and enable safe and efficient large-scale feeding. In 2019, 34 BLT Kitchens served more than 28,000 pupils in 305 schools. Partnerships with various local government units were fostered to replicate the BLT Kitchens nationwide. In addition, JGF encouraged partners to explore ways to maximize the use of the Kitchens. Thus, BLT Kitchens have been used as facilities for preparing food served in school canteens, and as training centers for mothers, senior high school students, and new BLT partners. Access, Curriculum, and Employability (ACE) Scholarship Program Over the years, ACE has provided educational assistance to more than 2,200 underprivileged Filipino youth so they can access gainful employment and attain better lives for themselves and their families. Among them are 500 scholars under Don Bosco’s Technical Mechanical and Agriculture-related courses who graduated in 2019. The pilot run of the Quick Service Restaurant Operations (QSRO) curriculum in partnership with the Anihan Technical School was successfully completed with all 27 female scholars graduating. This curriculum is envisioned to facilitate the development of a competency-based training for QSRO personnel in the country. It covered technical and life skills courses, and on-the-job training that are aligned with the needs of the food service industry. Of this inaugural batch, all were absorbed for employment by industry partners including JFC restaurants. The training of a new batch of 68 new scholars has also begun. Jollibee Group FoodAID This program systematizes JFC’s disaster response efforts to better address community needs in the fastest time possible. In 2019, more than 23,000 individuals were provided with food assistance including those affected by the Mindanao earthquakes in coordination with various partners. Among the assistance provided were congee mix packs that were prepositioned to provide communities with immediate access to warm meals during calamities. For the first quarter of 2020, JGF worked with Provincial Government of Batangas to establish a community kitchen that served 18,000 meals in three weeks to 500 families affected by the Taal Volcano eruption. A campaign was also launched to donate P220 million worth of food products to frontliners and communities affected by the COVID-19 pandemic.

13

OTHERS

Other subsidiaries of the Company include FREEMONT FOODS CORPORATION, a wholly-owned subsidiary which owns and operates the Company’s Jollibee stores across the country, primarily in the Visayas and Mindanao areas, and GRANDWORTH RESOURCES CORPORATION, a real estate company which owns or leases some of the properties used as store sites.

PERCENTAGE OF FOREIGN SALES

The percentage of foreign sales to total net sales for the last four (4) years is as follows:

2019 2018 2017 2016 Total Sales 166,909,364,033 150,200,825,668 124,663,547,749 107,924,453,615 Foreign Sales 49,334,269,832 40,717,384,462 28,393,358,940 23,056,961,216 Percentage 29.56% 27.11% 22.78% 21.36%

The percentage of foreign sales to net income is as follows:

2019 2018 2017 2016 Net Income* 6,422,914,779 7,641,585,603 6,493,018,583 6,053,508,622 Foreign Sales 49,334,269,832 40,717,384,462 28,393,358,940 23,056,961,216 Percentage 768.10% 532.84% 437.29% 380.89%

*As restated, 2018 and 2017 Net income

TRADEMARK REGISTRATION

Following is a list of the local and international trademark registrations and pending applications for registration for the “Jollibee” brand as of December 31, 2019.

The Company’s subsidiaries have likewise procured the relevant trademark registrations for their respective brands.

[List is found on the following page.]

14

TRADEMARK REGISTRATION

Trademark Records by Country

Following is a list of the local and international trademark registrations and pending applications for registration for the “Jollibee” brand as of December 31, 2019.

The Company’s subsidiaries have likewise procured the relevant trademark registrations for their respective brands.

Country Title of

Trademark Representation of Trademark

Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Afghanistan BEE DEVICE 5987 7-May-16 17632 20-Nov-

16 Registered 29

Afghanistan BEE DEVICE 5988 7-May-16 17633 20-Nov-

16 Registered 43

Afghanistan BEE HEAD

DEVICE 5986 7-May-16 17631

20-Nov-16

Registered 43

Afghanistan BEE HEAD

DEVICE 5985 7-May-16 17630

20-Nov-16

Registered 29

Afghanistan CHAMP (word mark) 5995 7-May-16 17640 20-Nov-

16 Registered 29

Afghanistan CHICKENJOY 5991 7-May-16 17636 20-Nov-

16 Registered 29

Afghanistan CHICKENJOY 5992 7-May-16 17637 20-Nov-

16 Registered 43

Afghanistan EVERYDAY DELICIOUS

(word mark) 5996 7-May-16 17641 20-Nov-

16 Registered 35

Afghanistan JOLLIBEE 5990 7-May-16 17635 20-Nov-

16 Registered 43

Afghanistan JOLLIBEE 5989 7-May-16 17634 20-Nov-

16 Registered 29

Afghanistan JOLLY 5993 7-May-16 17638 20-Nov-

16 Registered 30

Afghanistan YUM 5994 7-May-16 17639 20-Nov-

16 Registered 29

Argentina

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

1997309 29-Aug-95 1,652,377 3-Dec-97 Registered 42

Australia BEE HEAD

DEVICE 1666161 23-Dec-14 1666161 23-Dec-14 Registered

29, 43

Australia CHICKENJOY 1666176 23-Dec-14 1666176 23-Dec-14 Registered 29, 43

Australia EVERYDAY DELICIOUS

(word mark) 1666177 23-Dec-14 1666177 23-Dec-14 Registered 35

Australia HOME OF THE

FAMOUS CHICKENJOY

(word mark) 1879000 10-Oct-17 187900

0 10-Oct-

17Registered

29, 43

15

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Australia JOLLIBEE MASCOT DESIGN

1666168 23-Dec-14 1666168 23-Dec-14 Registered 29, 43

Australia JOLLIBEE MASCOT DEVICE

654121 24-Feb-95 654121 24-Feb-95 Registered 42

Australia JOLLIBEE

1666158 23-Dec-14 1666158 23-Dec-14 Registered 29, 43

Australia BEE HEAD

DEVICE

2035489

6-Sep-19 Pending

16, 21, 25, 28, 35

Australia JOLLIBEE (word mark) 203548

8 6-Sep-19 Pending

16, 21, 25, 28, 35

Bahrain BEE DEVICE

80980 15-Apr-10 80980 15-Apr-10 Registered 43

Bahrain BEE DEVICE


Bahrain BEE DEVICE


Bahrain BEE HEAD

DEVICE


Bahrain BEE HEAD

DEVICE


Bahrain CHAMP (word mark) 96797 17-Mar-13 96797 17-Mar-

13 Registered 29

Bahrain CHICKENJOY (word mark) 91759 24-Apr-12 91759 24-Apr-12 Registered 29

Bahrain CHICKENJOY (word mark) 91760 24-Apr-12 91760 24-Apr-12 Registered 43

Bahrain EVERYDAY DELICIOUS

(word mark) 96788 17-Mar-13 96788 17-Mar-

13 Registered 35

Bahrain HOME OF THE

FAMOUS CHICKENJOY

(word mark) 120580 10-Oct-17 120580 28-Feb-

2018 Registered 29

Bahrain HOME OF THE

FAMOUS CHICKENJOY

(word mark) 120581 10-Oct-17 120581 28-Feb-

2018 Registered 43

Bahrain JOLLIBEE (word mark) 91755 24-Apr-12 91755 24-Apr-12 Registered 29

Bahrain JOLLIBEE (word mark) 91756 24-Apr-12 91756 24-Apr-12 Registered 43

Bahrain JOLLIBEE & MASCOT DEVICE

1070/95 2-Aug-95 S1718 2-Aug-95 Registered 42

Bahrain JOLLIBEE (IN

ARABIC SCRIPT)

116614 28-Jun-16 116614 6-Jun-17 Registered 43

Bahrain JOLLIBEE GREAT

BURGERS

1068/95 2-Aug-95 TM 19220 10-Feb-98 Registered 29

16

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

GREAT CHICKEN &

DEVICE

Bahrain

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

1069/95 2-Aug-95 SM 1717 18-Dec-96 Registered 42

Bahrain JOLLIBEE LOGO & DEVICE






Bahrain JOLLIBEE MASCOT DESIGN

96798 17-Mar-13 96798 17-Mar-

13 Registered 29

Bahrain JOLLIBEE MASCOT DESIGN

96786 17-Mar-13 96786 17-Mar-

13 Registered 43

Bahrain JOLLY

100636 3-Nov-13 100636 28-Dec-16 Registered 30

Bahrain YUM

96817 17-Mar-13 96817 16-Nov-

15 Registered 29

Bahrain BEE HEAD

DEVICE

126998 22-Aug-19 Pending 21

Bahrain BEE HEAD

DEVICE

126999 22-Aug-19 Pending 25

Bahrain BEE HEAD

DEVICE

127001 22-Aug-19 Pending 28

Bahrain BEE HEAD

DEVICE

127002 22-Aug-19 Pending 35

Bahrain JOLLIBEE (word mark) 126991 22-Aug-19 Pending 16





Bahrain BEE HEAD

DEVICE

126997 22-Aug-19 Pending 16

Brazil

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN

818935359

15-Dec-95 81893535

9 30-Nov-

99 Registered 38

17

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Brunei Darussalam

BEE HEAD DEVICE

42,856 26-Apr-12 42,856 26-Apr-12 Registered 29, 43

Brunei Darussalam

CHAMP (word mark) 43909 14-Mar-13 43909 14-Mar-

13 Registered 29

Brunei Darussalam

CHICKENJOY

42855 26-Apr-12 42,855 26-Apr-12 Registered 29, 43

Brunei Darussalam

EVERYDAY DELICIOUS SLOGAN

(word mark) 43908 14-Mar-13 43908 14-Mar-

13 Registered 35

Brunei Darussalam

HOME OF THE FAMOUS

CHICKENJOY (word mark)

TM/49226

2-Oct-17 49226 2-Oct-

17 Registered

29, 43

Brunei Darussalam

JOLLIBEE (word mark) TM42857 26-Apr-12 42857 26-Apr-12 Registered 29, 43

Brunei Darussalam

JOLLIBEE (Stacked)

36,341 24-Jun-04 36,341 24-Jun-04 Registered 43

Brunei Darussalam

JOLLIBEE MASCOT DESIGN

43,918 14-Mar-13 43918 14-Mar-

13 Registered

29, 42

Brunei Darussalam

YUM (word mark) 43937 14-Mar-13 43937 14-Mar-

13 Registered 29

Brunei Darussalam

BEE HEAD DEVICE

50957 21-Sep-19 Pending

16, 21, 25, 28, 35

Brunei Darussalam

JOLLIBEE (word mark) 50958 21-Sep-19 Pending

16, 21, 25, 28, 35

Cambodia BEE HEAD

DEVICE


16, 21, 25, 28, 35

Cambodia BEE HEAD

DEVICE

KH/46002

/12 11-May-12

KH/43235/12

26-Dec-12 Registered 43

Cambodia BEE HEAD

DEVICE

KH/46001

/12 11-May-12

KH/43234/12


Cambodia CHAMP (word mark) 50600 12-Mar-13 47542 4-Sep-13 Registered 29

Cambodia CHICKENJOY (word mark) KH/46004

/12 11-May-12

KH/44011/13

29-Mar-13

Registered 43

Cambodia CHICKENJOY (word mark) KH/46003

/12 11-May-12

KH/44094/13

1-Apr-13 Registered 29

Cambodia EVERYDAY DELICIOUS

(word mark) 50601 12-Mar-13 47543 4-Sep-13 Registered 35

Cambodia JOLLIBEE

KH/45999/12

11-May-12 KH/43232

/12 26-Dec-12 Registered 29

Cambodia JOLLIBEE

KH/46000/12

11-May-12 KH/43233

/12 26-Dec-12 Registered 43

18

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Cambodia JOLLIBEE MASCOT DESIGN

50597 12-Mar-13 47540 4-Sep-13 Registered 29

Cambodia JOLLIBEE MASCOT DESIGN


Cambodia YUM

KH/50599/13

12-Mar-13 KH/50876

/14 7-Apr-14 Registered 29

Cambodia JOLLIBEE (word mark) 87865 6-Sep-19 Pending

16, 21, 25, 28, 35

Canada BEE HEAD

DEVICE

1324318 16-Nov-06 TMA7614

68 11-Mar-

10 Registered 43

Canada BEE HEAD

DEVICE

1563176 8-Feb-12 TMA9618

81 2-Feb-17 Registered 29

Canada CHAMP (word mark) 1617855 20-Mar-13 Pending 29

Canada JOLLIBEE

1324317 16-Nov-06 TMA7614

76 11-Mar-

10 Registered

29, 30, 32, 42, 43

Canada

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DESIGN

783671 26-May-95 TMA7271

49 28-Oct-08 Registered

29, 42

Canada JOLLIBEE HALO HALO SUNDAE

(word mark) 1786752 13-Jun-16 TMA1026

168 17-Jun-19 Registered

29, 30

Canada JOLLIBEE MASCOT DESIGN

1617851 20-Mar-13 TMA9655

63 13-Mar-

17 Registered

29, 43

Canada JOLLY

1756916 27-Nov-15 TMA1030

680 24-Jun-19 Registered 30

Canada JOLLY BURGER (word mark) 1757228 1-Dec-15 TMA1030


Canada JOLLY

CHICKEN (word mark) 1757227 1-Dec-15

TMA1030702

24-Jun-19 Registered 29

Canada JOLLY CRISPY

CHICKEN (word mark) 1786751 13-Jun-16

TMA1022138

21-May-19

Registered 29

Canada JOLLY CRISPY

FRIES (word mark) 1761602 30-Dec-15

TMA1030679


Canada JOLLY

HOTDOG (word mark) 1756914 27-Nov-15

TMA1030681


Canada JOLLY

KRUNCHY TWIRL

(word mark) 1761599 30-Dec-15 TMA1064

227 25-Nov-

19 Registered

29, 30

Canada JOLLY

SPAGHETTI (word mark) 1757226 1-Dec-15

TMA1006088

3-Oct-19 Registered 30

Canada JOLLY VANILLA

TWIRL (word mark)

1761601 30-Dec-15

TMA1064226

25-Nov-19

Registered 29, 30

19

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Canada YUM

1617850 20-Mar-13 TMA9622

53 8-Feb-17 Registered 29

Canada BEE HEAD

DEVICE

1983157

30-Aug-19 Pending

16, 21, 25, 28, 35

Canada JOLLIBEE (word mark) 198315

8 30-Aug-19 Pending

16, 21, 25, 28, 35

China (Mainland)

JOLLIBEE BEE HEAD DEVICE AND CHINESE CHARACTERS

514926

8

7-June-

19

Registered (Renewal)

1

China (Mainland)


514923

7

7-June-

19


2

China (Mainland)


514923

6 7-Aug-

13 Registered (Renewal)

3

China (Mainland)


514923

5

7-June-

19


4

China (Mainland)


514923

4

11-Nov-

19


5

China (Mainland)


514923

3

21-Mar-

2019


6

China (Mainland)


514923

2

14-Jan-19


7

China (Mainland)


514923

1

21-Nov-

19


8

China (Mainland)


514923

0

21-Mar-

19


9

China (Mainland)


514922

9 21-Mar-


10

20

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)


514922

8 7-Jun-13


11

China (Mainland)


514924

7

14-Jan-

19


12

China (Mainland)


514924

6 21-Mar-


13

China (Mainland)


514924

5

7-Aug-

20

Renewed 14

China (Mainland)


514924

4

7-June-

19


15

China (Mainland)


514924

3

28-Jul-

19


16

China (Mainland)


514924

2

21-Jun-

19


17

China (Mainland)

JOLLIBEE BEE HEAD DEVICE

474057

3

28-May-

20

Renewed 18

China (Mainland)


514924

0

21-Jun-

19


19

China (Mainland)


514923

9

7-Aug-20

Renewed 20

China (Mainland)


514923

8 21-Dec-


21

China (Mainland)


514925

7 2-Jun-19


22

China (Mainland)


514925

6 7-Jun-19


23

21

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)


514925

5

14-Jan-20

Renewed 24

China (Mainland)


514925

2 7-July-


26

China (Mainland)


514925

1 7-Jan-20

Renewed 27

China (Mainland)


514925

0

7-Aug-

20

Renewed 28

China (Mainland)


514924

9 21-Mar-


29

China (Mainland)


514924

8 28-Jun-


30

China (Mainland)


514926

7 21-Mar-


31

China (Mainland)


514926

6

21-Mar-

19


32

China (Mainland)


514926

5 21-Mar-


33

China (Mainland)


514926

4 21-Mar-


34

China (Mainland)


474057

7

7-Aug-

20

Renewed 35

China (Mainland)


514926

0 28-Aug-


36

China (Mainland)


514925

9 28-Aug-


37

22

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)


514925

8 21-Aug-


38

China (Mainland)


514927

7 28-May-


39

China (Mainland)


514927

6 28-Aug-


40

China (Mainland)


514927

5 21-June-


41

China (Mainland)


514927

4 21-June-


42

China (Mainland)


514927

0 28-Aug-


44

China (Mainland)


514926

9

28-Aug-

19


45

China (Mainland)

JOLLIBEE AND BEE HEAD

DEVICE

514924

1 14-Apr-


18

China (Mainland)


DEVICE

474057

2 7-May-


20

China (Mainland)


DEVICE

474057

1 7-May-


21

China (Mainland)


DEVICE

474057

6 7-Feb-


26

China (Mainland)


DEVICE

474059

0 7-Feb-


28

China (Mainland)


DEVICE

474057

5 7-Mar-


31

China (Mainland)


DEVICE

474057

4

7-Mar-18


33

23

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)


DEVICE

474057

8

21-Feb-

19


40

China (Mainland)

JOLLIBEE

474057

9

7-May-19


16

China (Mainland)

JOLLIBEE

514925

3 21-Apr-

11 Registered 25

China (Mainland)

JOLLIBEE

514926

1 28-May-

09 Registered 35

China (Mainland)

JOLLIBEE

514927

1

28-Aug-

19


43

China (Mainland)

BEE HEAD DEVICE

514925

4

28-Jan-

20

Renewed 25

China (Mainland)

BEE HEAD DEVICE

514926

2 28-May-

19 Registered 35

China (Mainland)

BEE HEAD DEVICE

474058

0 21-Feb-


41

China (Mainland)

BEE HEAD DEVICE

514927

2 14-Mar-

14 Registered 43

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

5149263

7-Aug-13

Registered 35

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

5149273

28-Aug-19


43

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173251

28-Feb-

20

Renewed 1

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173250

28-Feb-

20

Renewed 2

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173249

14-Feb-20

Renewed 3

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173248

21-Feb-

20

Renewed 4

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173247

28-Feb-20

Renewed 5

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173246

7-Jan-20

Renewed 6

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173245

14-May-20

Renewed 7

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173244

21-Feb-20

Renewed 8

24

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173243

28-Feb-20

Renewed 9

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173242

28-Dec-19


10

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173261

28-Feb-20

Renewed 11

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173260

7-Jan-20 Renewed 12

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173259

14-Feb-20

Renewed 13

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173258

21-Jan-20

Renewed 14

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173257

14-Jan-20

Renewed 15

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173256

14-Feb-20

Renewed 16

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173255

14-Feb-20

Renewed 17

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173254

28-Mar-20

Renewed 18

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173253

21-Feb-20

Renewed 19

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173252

28-Jan-20

Renewed 20

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173271

7-Feb-20

Renewed 21

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173270

28-Mar-20

Renewed 22

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173269

28-Mar-20

Renewed 23

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173268

28-Mar-20

Renewed 24

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173267

28-Mar-20

Renewed 25

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173266

28-Mar-20

Renewed 26

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173265

28-Mar-20

Renewed 27

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173264

28-Mar-20

Renewed 28

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173263

7-Sept-19


29

25

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173262

14-Jan-20

Renewed 30

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173331

7-Sept-19

Registered 31

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173330

14-Jan-20

Renewed 32

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173328

7-Sept-19

Registered 34

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173327

7-Jun-20 Renewed 35

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173326

21-Mar-20

Renewed 36

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173325

21-Mar-20

Renewed 37

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173324

21-Mar-20

Renewed 38

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173323

7-Jun-20 Renewed 39

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173322

21-Mar-20

Renewed 40

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173332

7-Jun-20 Renewed 41

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173346

7-Jun-20 Renewed 42

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173345

28-Mar-20

Renewed 43

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173344

28-Mar-20

Renewed 44

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

6173343

28-Mar-20

Renewed 45

China (Mainland)


123655

88 14-Sep-

14 Registered 43

China (Mainland)


123653

91 14-Sep-

14 Registered 29

China (Mainland)

EVERYDAY DELICIOUS

(word mark) 123655

53

14-Sep-

14

Registered 35

China (Mainland)

CHAMP (word mark) 123654

94

14-Sep-

14

Registered 30

26

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)

JOLLIBEE 123653

78

14-Sep-

14

Registered 29

China (Mainland)

BEE HEAD DEVICE

123653

67

14-Sep-

14

Registered 29

China (Mainland)

BEE HEAD DEVICE AND JOLLIBEE IN CHINESE

CHARACTERS

128898

63

7-Jan-15

Registered 18

China (Mainland)

CHICKENJOY 106963

20 28-May-

13 Registered 29

China (Mainland)

CHICKENJOY 106963

36 28-May-

13 Registered 43

China (Mainland)

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DESIGN

971757

28-Mar-17


42

China (Mainland)

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DESIGN

111764

3

7-Oct-

17


29

China (Mainland)


955790 28-Feb-


42

China (Mainland)


951389 21-Feb-


29

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS & DESIGN

101909

7 28-May-


29

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS & DESIGN

980654 14-

April-17 Registered (Renewal)

32

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS & DESIGN

101987

4 05-May-


42

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

135654

4 21-Jan-

20 Renewed 30

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

135913

2 28-Jan-

20 Renewed 29

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

136999

5 28-Feb-

20 Renewed 42

27

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)

CHICKENJOY AND

CHICKENJOY IN CHINESE

CHARACTERS

333265

95

5-Sep-18

Registered

43

China (Mainland)


CHARACTERS

33340378

5-Sep-18

Registered

43

China (Mainland)

CHICKENJOY AND


CHARACTERS

333453

88

5-Sep-18

Registered

29

China (Mainland)


CHARACTERS

33338097

5-Sep-18

Registered

29

China (Mainland)

BEE HEAD DEVICE

346533

01

13-Nov-18

Registered 3

China (Mainland)

JOLLIBEE 346430

37 13-Nov-

18 Registered 3

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

34650418

13-Nov-18

Registered 3

China (Mainland)

BEE HEAD DEVICE

346383

76 13-Nov-

18 Registered 35

China (Mainland)

JOLLIBEE 346346

63 13-Nov-

18 Registered

35

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS

34644930

13-Nov-18 Registered

35

China (Mainland)

JOLLIBEE 41539772 11-Oct -19 pending

16, 21, 25, 28, 35

China (Mainland)

JOLLIBEE (word mark) 41440421 30-Sep -19 pending 39

China (Mainland)

JOLLIBEE (word mark) 41500976 9-Oct-19 pending 43

China (Mainland)

BEE HEAD DEVICE

41539770 11-Oct-19 pending

16, 21, 25, 28, 35

China (Mainland)

BEE HEAD DEVICE

41440942 30-Sep-19 pending 39

China (Mainland)

BEE HEAD DEVICE

41497346 10-Sep-19 pending 43

China (Mainland)


41523478 10-Oct-19 pending 16

China (Mainland)


41523846 10-Oct-19 pending 24

28

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

China (Mainland)

JOLLIBEE IN CHINESE

CHARACTERS 41524260 10-Oct-19 pending 43

China (Mainland)


41506279 9-Oct-19 pending 43

Czech Republic

JOLLIBEE & DEVICE

104009 19-Sep-95 196474 3-Jan-97 Registered

29, 30, 32, 42

Egypt JOLLIBEE &

DEVICE

95740 18-May-95 95740 14-Feb-01 Registered 42

Egypt JOLLIBEE &

DEVICE

95741 18-May-95 95741 17-Jan-01 Registered 29

Egypt JOLLIBEE MASCOT DEVICE


Hong Kong JOLLIBEE

300352025

11-Jan-05 30035202

5 11-Jan-05 Registered 43

Hong Kong JOLLY

HOTDOG (word mark)

303914596

27-Sept-

16

Registered 29

Hong Kong YUM!

(Color) 3039188

44

30-Sept-

16 Registered

29&30

Hong Kong JOLLY

SPAGHETTI (word mark)

303914587

26-Sept-19

Registered 30

Hong Kong JOLLIBEE MASCOT DESIGN

3025694

65

5-April-13

Registered

29, 43

Hong Kong BEE HEAD

DEVICE

3025694

56 5-April-

13 Registered

29&43

Hong Kong EVERYDAY DELICIOUS

(word mark)

302569492

4-April-13

Registered 35

Hong Kong JOLLIBEE WORD

302569447

5-April-13

Registered 29&43

Hong Kong JOLLIBEE CHAMP

(word mark) 3030305

79 12-June-

14 Registered 30


1997006

68 20-Jan-

97 Registered 29

Hong Kong

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DESIGN

1999019

84 04-Apr-

95 Registered 42


1999044

65 12-May-

95 Registered 42

29

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Hong Kong HOME OF THE

FAMOUS CHICKENJOY

(word mark) 3042955

57 08-Oct-

17 Registered

29, 43

Hong Kong YUMBURGER 3043621

01 08-Dec-17 Registered

29, 30, 43

Hong Kong CHICKENJOY 30221781

6 11-Apr-12

302217816

10-April-12

Registered 29, 43

Hong Kong CHICKENJOY IN

CHINESE CHARACTERS

30466268

5

7-Sep-

18

Registered 29, 43

Hong Kong

CHICKENJOY & CHICKENJOY IN

CHINESE CHARACTERS

30466269

4

7-Sep-

18 Registered

29, 43

Hong Kong JOLLIBEE IN CHINESE

CHARACTERS

304662702

7-Sep-

18 Registered

29, 43

Hong Kong JOLLIBEE IN CHINESE

CHARACTERS

304662711

7-Sep-

18 Registered

29, 43

Hong Kong JOLLIBEE (word mark) 305078331

9-Oct -19

Pending

16, 21, 25, 28, 35, 39

Hong Kong BEE HEAD

DEVICE

305078340

9-Oct -19

Pending

16, 21, 25, 28, 35, 39

India BEE HEAD

DEVICE

2860866 10-Dec-14 2860866 12-Oct-14 Registered 29, 43

India CHAMP (word mark) 3238600 19-Apr-16 3238600 19-Apr-16 Registered 30

India CHAMP (word mark) 2855781 3-Dec-14 Pending 29

India CHICKENJOY (word mark) 2855782 3-Dec-14 Pending 29, 43

India CRISPYLICIOUS (word mark) 3339898 18-Aug-16 3339898 18-Aug-16 Registered 29

India HOME OF THE

FAMOUS CHICKENJOY

(word mark) 3253269 6-May-16 Pending 29, 43

India JOLLIBEE &

DEVICE

1356313 10-May-05 1356313 10-May-

05 Registered 42

India JOLLIBEE &

DEVICE

1367743 29-Jun-05 1367743 29-Jun-05 Registered 29, 30

India


2855779 3-Dec-14 Pending 29, 43

30

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

India JOLLIBEE (word mark) 2860855 10-Dec-14 2860855 10-Dec-14 Registered 29, 43

India JOLLY

SPAGHETTI (word mark) 3252108 5-May-16 3252108 5-May-16 Registered 30

India JUICYLICIOUS (word mark) 3339899 18-Aug-16 3339899 18-Aug-16 Registered 29

India YUM

3238599 19-Apr-16 Pending 30

India YUM

2855780 3-Dec-14 Pending 29

India CHICKENJOY

MAIN (word mark)

4165351

12-Mar-14

Pending 43

India

JOLLIBEE HOME OF

THE FAMOUS

CHICKENJOY

(word mark) 422451

7 3-Jul-19 Pending

29, 43

Indonesia BEE HEAD

DEVICE

D002015001765

16-Jan-15 IDM0005

66741 9-Mar-17 Registered 25

Indonesia BEE HEAD

DEVICE

J00-2012-022539

11-May-12 IDM0004


Indonesia BEE HEAD

DEVICE

D00-2012-

022535 11-May-12

IDM000441097


Indonesia CHAMP (word mark) D00.2013.015229

3-Apr-13 Pending 29

Indonesia CHICKENJOY (word mark) J00-2012-022547

11-May-12 IDM0004


Indonesia CHICKENJOY (word mark) D00-2012-

022543 11-May-12

IDM000441084

5-Sep-14 Registered 29

Indonesia EVERYDAY DELICIOUS

(word mark) J00.2013.015227

3-Apr-13 IDM0004

85452 27-Jul-15 Registered 35

Indonesia HOME OF THE

FAMOUS CHICKENJOY

(word mark) D00-2017-

051064 10-Oct-17 Pending 29

Indonesia HOME OF THE

FAMOUS CHICKENJOY

(word mark) J00-2017-051067

10-Oct-17 Pending 43

Indonesia JOLLIBEE

D00-2012-

0022546 11-May-12

IDM000441083


Indonesia JOLLIBEE

J00-2012-022551

11-May-12 IDM0004


Indonesia JOLLIBEE &

DEVICE

R14885/2013

30-Sep-13 IDM0000

04618 30-Sep-13 Registered 43

Indonesia JOLLIBEE

D002015001767

16-Jan-15 ID000648


Indonesia

JOLLIBEE BEEFBURGER

GREAT BURGERS

GREAT

R5853/2015

9-Apr-15 IDM0004

31821 24-Apr-05 Registered 42

31

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

CHICKEN & DEVICE

Indonesia

JOLLIBEE BEEFBURGER

GREAT BURGERS

GREAT CHICKEN &

DEVICE

R7455/2015

6-May-15 IDM0004


Indonesia JOLLIBEE MASCOT DESIGN

D002015001763

16-Jan-15 IDM0005

67534 9-Mar-17 Registered 25


J00.2013.015228

3-Apr-13 IDM0004

85987 27-Jul-2015

Registered 43


D00.2013.015232

3-Apr-13 IDM0004

91932 20-Aug 2015

Registered 29

Indonesia YUM

D00.2013.015230

3-Apr-13 IDM0006

42704 17-May-

19 Registered 29

Indonesia BEE HEAD

DEVICE

DID2019057571

30-Sep-19 Pending 16

Indonesia BEE HEAD

DEVICE

DID2019057572


Indonesia BEE HEAD

DEVICE

DID2019057576


Indonesia BEE HEAD

DEVICE

DID2019057580


Indonesia BEE HEAD

DEVICE

JID2019057584


Indonesia JOLLIBEE (word mark) DID2019057497








Indonesia JOLLIBEE (word mark) JID2019057546


Israel

JOLLIBEE GREAT

BURGERS GREAT

100922 20-Sep-95 100922 20-Sep-02 Registered 29

32

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

CHICKEN & DEVICE

Israel

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

100923 20-Sep-95 100923 20-Sep-02 Registered 42

Italy BEE HEAD

DEVICE

MI2012C004989

15-May-12 1521187 10-Dec-12 Registered 29, 43

Italy CHAMP (word mark) MI2013C002500

13-Mar-13 1571901 20-Jan-14 Registered 29

Italy CHICKENJOY (word mark) MI2012C004988


Italy EVERYDAY DELICIOUS

(word mark)

MI2013C002501

13-Mar-13 1561497 2-Oct-13 Registered 35

Italy HOME OF THE

FAMOUS CHICKENJOY

(word mark) 302015000077885

27-Nov-15 302015000077885

22-Jun-17 Registered 29, 43

Italy JOLLIBEE

MI2012C004987


Italy JOLLIBEE MASCOT DESIGN

MI2013C002502

13-Mar-13 1561496 2-Oct-13 Registered 29, 43

Italy YUM

MI2013C002503

13-Mar-13 1571900 20-Jan-14 Registered 29

Italy BEE HEAD

DEVICE

302019000069


16, 21, 25, 28, 35

Italy JOLLIBEE (word mark) 302019000069


16, 21, 25, 28, 35

Japan BEE HEAD

DEVICE

2014-104750

11-Dec-14 5814835 18-Dec-15 Registered

29, 30, 32, 43

Japan CHAMP (word mark) 2014-

104753 11-Dec-14 5842079 15-Apr-16 Registered 30

Japan CHICKENJOY

2014-104754

11-Dec-14 5755936 3-Apr-15 Registered 29, 43

Japan EVERYDAY DELICIOUS

(word mark) 2014-

104755 11-Dec-14 5753946

27-Mar-15

Registered 35

Japan HOME OF THE

FAMOUS CHICKENJOY

(word mark) 2017-

128409 26-Sep-17

6023713

2-Mar-2018

Registered 29, 43

Japan JOLLIBEE &

DEVICE


Japan JOLLIBEE &

DEVICE


33

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Japan JOLLIBEE &

DEVICE


Japan JOLLIBEE &

DEVICE


Japan JOLLIBEE CHAMP

(word mark) 2015-

056995 16-Jun-15 5803627 30-Oct-15 Registered 30

Japan JOLLIBEE MASCOT DESIGN

2014-104751

11-Dec-14 5814836 18-Dec-15 Registered

29, 30, 32, 43

Japan JOLLIBEE (word mark) 2014-

104749 11-Dec-14 5854408

27-May-16

Registered

29, 30, 32, 43

Japan JOLLY-B

BOX

2019-117346


Japan JOLLIBEE

BOX

2019-117347


Japan YUM

2014-104752

11-Dec-14 5755935 3-Apr-15 Registered 30

Jordan BEE HEAD

DEVICE


Jordan JOLLIBEE


Korea - Republic of

(South)

BEE HEAD DEVICE

45-2012-0002341

7-May-12 48276 21-Feb-14 Registered 29, 43

Korea - Republic of

(South) CHAMP

40-2013-0016098

14-Mar-13 Pending 29

Korea - Republic of

(South) CHICKENJOY

45-2012-0002342

7-May-12 46615 17-Oct-13 Registered 29, 43

Korea - Republic of

(South) JOLLIBEE

45-2012-0002340

7-May-12 48272 21-Feb-14 Registered 29, 43

Korea - Republic of

(South)

JOLLIBEE & DESIGN

40-

0358457 21-Mar-

97 Registered

29, 30

Korea - Republic of

(South)

JOLLIBEE & DESIGN

40-

0372192 9-Aug-97 Registered 32

Korea - Republic of

(South)

JOLLIBEE & DESIGN

40-

0372105 8-Aug-97 Registered

29, 30

Korea - Republic of

(South)

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

96-11545 23-Mar-96 377580 8-Oct-97 Registered 29

34

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Korea - Republic of

(South)

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

95-48721 21-Dec-95 369351 18-Jul-97 Registered 29

Korea - Republic of

(South)


45-2013-0001412

14-Mar-13 48629 18-Mar-

14 Registered

29, 43

Korea - Republic of

(South) YUM

40-2013-0016097

14-Mar-13 Pending 29

Korea - Republic of

(South) YUM

40-2013-0087644

31-Dec-13 40-


Korea - Republic of

(South) CHAMP (word mark)

40-2013-0087645

31-Dec-13 40-

1071265 21-Nov-

14 Registered 30

Kuwait JOLLIBEE

LOGO AND DEVICE


Kuwait BEE DEVICE


Kuwait BEE DEVICE


Kuwait BEE DEVICE


Kuwait BEE HEAD

DEVICE

129537 23-Apr-12 Pending 29

Kuwait BEE HEAD

DEVICE

129538 23-Apr-12 Pending 43

Kuwait CHAMP

138830 2-Apr-13 Pending 29

Kuwait CHICKENJOY

129539 23-Apr-12 Pending 29

Kuwait CHICKENJOY

129540 23-Apr-12 Pending 43

Kuwait EVERYDAY DELICIOUS

(word mark)

138831 2-Apr-13 Pending 35

Kuwait HOME OF THE

FAMOUS CHICKENJOY

(word mark) 194303 8-Oct-17 198215 8-Oct-17 Registered 43

Kuwait HOME OF THE

FAMOUS CHICKENJOY

(word mark) 194302 8-Oct-17 197558 8-Oct-17 Registered 29

35

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Kuwait JOLLIBEE

129535 23-Apr-12 Pending 29

Kuwait JOLLIBEE

129536 23-Apr-12 Pending 43

Kuwait JOLLIBEE &

DEVICE

32460 26-Nov-95 29945 26-Nov-

95 Registered 29

Kuwait JOLLIBEE (IN

ARABIC SCRIPT)


Kuwait JOLLIBEE

(WORD) AND DEVICE

32461 26-Nov-95 29947 25-Nov-

05 Registered 30

Kuwait JOLLIBEE

(WORD) AND DEVICE

32462 26-Nov-95 29403 25-Nov-

05 Registered 32

Kuwait JOLLIBEE DEVICE &

32463 26-Nov-95 29946 25-Nov-

05 Registered 43

Kuwait JOLLIBEE

LOGO AND DEVICE


Kuwait JOLLIBEE

LOGO AND DEVICE


Kuwait JOLLIBEE MASCOT DESIGN

138827 2-Apr-13 Pending 29

Kuwait JOLLIBEE MASCOT DESIGN

138828 2-Apr-13 Pending 43

Kuwait YUM

138829 2-Apr-13 Pending 29

Kuwait BEE HEAD

DEVICE

2019/007982


Kuwait BEE HEAD

DEVICE

2019/007981


Kuwait BEE HEAD

DEVICE

2019/007980


Kuwait BEE HEAD

DEVICE

2019/007979


Kuwait BEE HEAD

DEVICE

2019/007976


Kuwait JOLLIBEE

(word mark) 2019/00

7987 24-Sep-19 Pending 16

36

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Kuwait JOLLIBEE

(word mark) 2019/00


Kuwait JOLLIBEE

(word mark) 2019/00


Kuwait JOLLIBEE

(word mark) 2019/00


Kuwait JOLLIBEE

(word mark) 2019/00


Lebanon

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

66960 20-Sep-95 130273 13-Aug-10 Registered 29, 42

Macau CHICKENJOY 23-Apr-12 N/065040 (061)

27-Feb-20

Registered 43

Macau CHICKENJOY 23-Apr-2012 N/065039 (136)

27-Feb-20

Registered 29

Macau JOLLIBEE MASCOT DESIGN

29-Apr-13 N/075126 (775)

14-Jan-14

Registered 29

Macau JOLLIBEE MASCOT DESIGN

29-Apr-13 N/075132 (123)

14-Jan-14 Registered 43

Macau CHAMP 29-Apr-13 N/0751

28(170) 14-Jan-

14Registered 29

Macau CHAMP 29-Apr-13 N/0751

30(457) 14-Jan-

14Registered 30

Macau EVERYDAY DELICIOUS

(word mark) 29-Apr-13 N/0751

31(398) 14-Jan-

14 Registered 35

Macau JOLLIBEE 29-Apr-13 N/0650

42(371) 27-Feb-

20Registered

29

Macau JOLLIBEE 29-Apr-13 N/0650

44(840) 27-Feb-

20Registered 43

Macau BEE HEAD

DEVICE 23-Apr-12

N/065043 (604)

27-Feb-20 Registered 29

Macau BEE HEAD

DEVICE

23-Apr-12 N/065045 (376)

27-Feb-20 Registered 43

Macau JOLLIBEE IN CHINESE

CHARACTERS

23-Apr-12 N/065046 (329)

27-Feb-20

Registered 43


CHARACTERS

23-Apr-12 N/065041 (628)

27-Feb-20

Registered 29

Macau HOME OF THE

FAMOUS CHICKENJOY

11-Mar-16 N/109778 (800)

13-Oct-16

Registered 43

Macau HOME OF THE

FAMOUS CHICKENJOY

11-Mar-16 N/109777 (796)

13-Oct-16

Registered 29

Macau JOLLY

SPAGHETTI 15-Nov-16

N/117479 (381)

26-Apr-17

Registered 30

Macau JOLLY

HOTDOG 15-Nov-16

N/117480 (148)

26-Apr-17

Registered 29

Macau


CHINESE CHARACTERS

N/144628


37

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Macau


CHINESE CHARACTERS

N/144629

3-Oct-18

Registered 43


CHARACTERS

N/144632



CHARACTERS

N/144633



CHARACTERS

N/144630

3-Oct-18 Pending 29


CHARACTERS

N/144631

3-Oct-18 Pending 43

Macau JOLLIBEE N/16090

9 17-Oct-19 pending 16











Macau BEE HEAD

DEVICE

N/160915

17-Oct-19 pending 16

Macau BEE HEAD

DEVICE

N/160916


Macau BEE HEAD

DEVICE

N/160917


Macau BEE HEAD

DEVICE

N/160918


Macau BEE HEAD

DEVICE

N/160919


Macau BEE HEAD

DEVICE

N/160920


Malaysia BEE HEAD

DEVICE

2014069069

17-Dec-14 20140690

69 17-Dec-14 Registered 25

Malaysia BEE HEAD

DEVICE

2012052510

23-Apr-12 20120525


Malaysia BEE HEAD

DEVICE

2012052508

23-Apr-12 20120525


Malaysia CHAMP (word mark) 20130522

08 13-Mar-13

2013052208

13-Mar-13

Registered 29

Malaysia CHICKENJOY

2012052511

23-Apr-12 20120525


38

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Malaysia CHICKENJOY

2012052512

23-Apr-12 20120525


Malaysia EVERYDAY DELICIOUS

(word mark) 20130522

09 13-Mar-13

2013052209

13-Mar-13

Registered 35

Malaysia HOME OF THE

FAMOUS CHICKENJOY


63 27-Nov-15

2015070163

27-Nov-15

Registered 29

Malaysia HOME OF THE

FAMOUS CHICKENJOY


65 27-Nov-15

2015070165

27-Nov-15

Registered 43

Malaysia JOLLIBEE

2012052507

23-Apr-12 20120525


Malaysia JOLLIBEE

2359 3-Mar-00 2359 3-Mar-00 Registered 43

Malaysia JOLLIBEE &

DEVICE


Malaysia JOLLIBEE

2014069065

17-Dec-14 20140690


Malaysia JOLLIBEE MASCOT

(SERIES OF 3)

2000-02358

3-Mar-00 2000-02358

3-Mar-00 Registered 43

Malaysia JOLLIBEE MASCOT DESIGN

2014069071

17-Dec-14 20140690



2013052205

13-Mar-13 20130522

05 13-Mar-

13 Registered 43


2013052204

13-Mar-13 20130522

04 13-Mar-

13 Registered 29

Malaysia YUM

2013052206

13-Mar-13 20130522


Malaysia BEE HEAD

DEVICE

TM2019030520

19-Aug-19 Pending 16

Malaysia BEE HEAD

DEVICE

TM2019030523


Malaysia BEE HEAD

DEVICE

TM2019030526


Malaysia BEE HEAD

DEVICE

TM2019030527


Malaysia BEE HEAD

DEVICE

TM2019030530


39

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Malaysia JOLLIBEE (word mark) TM2019030439










Malaysia YUM

2013052206

13-Mar-13

2013052206

20-Sep-16

Registered 29

Malaysia JOLLIBEE

TM2019034092


Mexico

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DESIGN

405557 6-Jan-00 764426 21-Oct-02 Registered 42

Morocco

BEE HEAD DEVICE

(BLACK & WHITE)

194038 7-May-18 194038 7-May-

18 Registered

29, 43

Morocco JOLLIBEE (word mark) 194036 7-May-18 194036 7-May-

18 Registered

29, 43

Myanmar BEE HEAD

DEVICE

N/A

28-Feb-18

4/2430/2018

15-Mar-2018

Registered 29, 43

Myanmar CHAMP (word mark) N/A 28-Feb-18

4/2433/

2018 15-Mar-

2018 Registered 29

Myanmar CHICKENJOY

N/A 28-Feb-18

4/2434/

2018 15-Mar-

2018 Registered

29, 43

Myanmar EVERYDAY DELICIOUS

(word mark) N/A 28-Feb-18

4/2435/

2018 15-Mar-

2018 Registered 35

Myanmar JOLLIBEE MASCOT DESIGN

N/A 28-Feb-18 4/2431/

2018 15-Mar-

2018 Registered

29, 43

Myanmar JOLLIBEE

N/A 28-Feb-18 4/2429/

2018 15-Mar-

2018 Registered

29, 43

Myanmar YUM

N/A 28-Feb-18 4/2432/

2018 15-Mar-

2018 Registered 29

Myanmar HOME OF THE

FAMOUS CHICKENJOY

(word mark) N/A 2-Apr-18 4/3704/

2018 18-Apr-

18 Registere

d 29, 43

Myanmar BEE HEAD

DEVICE

N/A 20-Sep-19 4/25913

/2019 27-Sep-

19 Registere

d

16, 21, 25, 28, 35

Myanmar JOLLIBEE (word mark) N/A 20-Sep-19 4/25914

/2019 27-Sep-

19 Registere

d

16, 21, 25,

40

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

28, 35

New Zealand

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

254483 6-Oct-95 254483 6-Oct-95 Registered 29

New Zealand

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

254484 6-Oct-95 254484 6-Oct-95 Registered 42

Oman BEE HEAD

DEVICE

73974 23-Apr-12 73974 20-May-

13 Registered 29

Oman BEE HEAD

DEVICE

73975 23-Apr-12 73975 20-May-

13 Registered 43

Oman CHAMP (word mark) 79630 13-Mar-13 79630 25-Aug-14 Registered 29

Oman CHICKENJOY

73976 23-Apr-12 73976 20-May-

13 Registered 29

Oman CHICKENJOY

73977 23-Apr-12 73977 20-May-

13 Registered 43

Oman EVERYDAY DELICIOUS

(word mark) 79631 13-Mar-13 79631 25-Aug-14 Registered 35

Oman HOME OF THE

FAMOUS CHICKENJOY

(word mark) 113349 8-Oct-17 113349 4-Jul-2018

Registered 29

Oman HOME OF THE

FAMOUS CHICKENJOY

(word mark) 113350 8-Oct-17 113350 4-Jul-2018

Registered 43

Oman JOLLIBEE (IN

ARABIC SCRIPT)

103059 7-Jun-16 103059 17-Jul-17 Registered 43

Oman JOLLIBEE

69397 20-Jul-11 69397 4-Mar-14 Registered 29

Oman JOLLIBEE


Oman JOLLIBEE


Oman

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

11659 29-May-95 11659 29-May-

05 Registered 42

Oman JOLLIBEE MASCOT

11658 29-May-95 11658 11-Dec--

03 Registered 42

41

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Oman JOLLIBEE MASCOT DESIGN

79627 13-Mar-13 79627 25-Aug-14 Registered 29

Oman JOLLIBEE MASCOT DESIGN


Oman YUM


Oman BEE HEAD

DEVICE

130806 19-Aug-19 130806 8-Dec-

19 Registered 16

Oman BEE HEAD

DEVICE

130807 19-Aug-19 130807 8-Dec-

19 Registered 21

Oman BEE HEAD

DEVICE

130809 19-Aug-19 130809 8-Dec-

19 Registered 25

Oman BEE HEAD

DEVICE

130810 19-Aug-19 130810 8-Dec-

19 Registered 28

Oman BEE HEAD

DEVICE

130812 19-Aug-19 130812 8-Dec-

19 Registered 35

Oman JOLLIBEE (word mark) 130801 19-Aug-19 130801 8-Dec-

19 Registered 16

Oman JOLLIBEE (word mark) 130802 19-Aug-19 Pending 21


19 Registered 25


19 Registered 28


19 Registered 35

Pakistan BEE HEAD

DEVICE


Pakistan BEE HEAD

DEVICE


Pakistan BEE HEAD

DEVICE


Pakistan JOLLIBEE 461107 9-Jun-17 Registered 30

42

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es



Pakistan CHICKENJOY (word mark) 483806 29-Jan-

2018 Pending 29

Pakistan JOLLY

CRISPY FRIES

JOLLY CRISPY FRIES

483807 29-Jan-

2018 Pending 29

Philippines

AMAZING ALOHA ANG PINEAPLLE

SLICE DEVICE

4-1996-108683

04-Mar-96 4-1996-108683

04-Nov-02

Registered 30

Philippines JOLLIBEE

4-2000-004772

08-Jun-00 4-2000-004772

10-Mar-16

Renewed

29, 30, 32, 42


4-2000-007421

31-Aug-00 4-2000-007421

24-Sep-15

Renewed 16, 28

Philippines

JOLLY SHAKES

WRITTEN IN COLORS RED

AND ORANGE

ENCLOSED BY A

RECTANGLE SHADED IN

BLUE

4-2003-001019

05-Feb-03 4-2003-001019

20-Nov-16

Renewed 29, 30

Philippines YUM

4-2003-008177

04-Sep-03 4-2003-008177

11-Nov-10

Registered 29, 43

Philippines JOLLY CRISPY

FRIES (word mark)

4-2004-006392

20-Jul-04 4-2004-006392

09-Feb-19

Renewed 29

Philippines CHICKENJOY (word mark) 4-2004-006569

23-Jul-04 4-2004-006569

26-May-16

Renewed 29

Philippines BEE HEAD

DEVICE

4-2004-006570

23-Jul-04 4-2004-006570

06-Jan-16

Renewed 43

Philippines JOLLIKIDS (word mark) 4-2005-000388

13-Jan-05 4-2005-000388

08-Jun-16

Renewed

16, 18, 25,26

Philippines JOLLY

KRUNCHY TWIRL

(word mark) 4-2005-001998

02-Mar-05 4-2005-001998

18-Sep-16

Renewed 29,30

Philippines JOLLIBEE SUPER

MEALS (word mark)

4-2005-002450

15-Mar-05 4-2005-002450

18-Dec-16

Renewed 43


DEVICE

4-2005-007557

05-Aug-05 4-2005-007557

19-Feb-17

Renewed

9, 16, 18, 20, 21, 24, 25, 28

Philippines Jollibee (word mark) 4-2005-007558

05-Aug-05 4-2005-007558

19-Feb-17

Renewed

9, 18, 20, 21, 24, 25

43

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Philippines JOLLITOWN AND DEVICE

4-2008-005395

08-May-08 4-2008-005395

25-Mar-10

(under renewal)

Renewed

16, 18, 20, 24, 25, 27, 28, 41

Philippines TWIRLIE MASCOT DESIGN

4-2008-007561

25-Jun-08 4-2008-007561

23-Jul-19 Renewed

16, 18, 20, 21, 24, 25, 27, 28, 41

Philippines JOLLIBEE MASCOT DESIGN

4-2008-007562

25-Jun-08 4-2008-007562

23-Jul-19 Renewed

16, 18, 20, 21, 24, 25, 27, 28, 41

Philippines HETTY

MASCOT DESIGN

4-2008-007563

25-Jun-08 4-2008-007563

23-Jul-19 Renewed

16, 18, 20, 21, 24, 25, 27, 28, 41

Philippines POPO

MASCOT DESIGN

4-2008-007564

25-Jun-08 4-2008-007564

23-Jul-19 Renewed

16, 18, 20, 21, 24, 25, 27, 28, 41

Philippines YUM

MASCOT DESIGN

4-2008-007565

25-Jun-08 4-2008-007565

23-Jul-19 Renewed

16, 18, 20, 21, 24, 25, 27, 28, 41

44

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Philippines LANGHAP

SARAP (word mark)

4-2009-003033

23-Mar-09 4-2009-003033

12-Nov-19

Renewed 29, 30

Philippines JOLLIBEE CHAMP

(word mark) 4-2009-006900

13-Jul-09 4-2009-006900

12-Nov-19

Renewed 29, 35


BREAKFAST JOYS

(word mark) 4-2009-006901

13-Jul-09 4-2009-006901

24-Dec-19

Renewed 29, 35

Philippines Jolly Hotdog (word mark) 4-2009-006903

13-Jul-09 4-2009-006903

24-Dec-19

Renewed 29, 35


FRIES

4-2009-006965

14-Jul-09 4-2009-006965

15-Apr-10

Registered 35

Philippines Jollibee

4-2010-002055

24-Feb-10 4-2010-002055

22-Jul-10 Registered

29, 30, 43

Philippines CHAMP (word mark) 4-2010-004236

21-Apr-10 4-2010-004236

28-Jan-11

Registered 29, 35

Philippines

JOLLIBEE KIDS CLUB INSIDE A CIRCLE

4-2010-005155

17-May-10 4-2010-005155

31-Dec-10

Registered 16, 35

Philippines


4-2010-005156

17-May-10 4-2010-005156

31-Dec-10

Registered 16, 35

Philippines


4-2010-005302

20-May-10 4-2010-005302

31-Dec-10

Registered 16, 35

45

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Philippines


4-2010-005303

20-May-10 4-2010-005303

23-Dec-10

Registered 16, 35

Philippines YUM

MASCOT HOUSE

4-2010-005362

20-May-10 4-2010-005362

06-Jan-11

Registered

16, 18, 25, 28,41

Philippines TWIRLIE MASCOT HOUSE

4-2010-005363

20-May-10 4-2010-005363

21-Oct-10

Registered

16, 18, 25, 28, 41

Philippines POPO

MASCOT HOUSE

4-2010-005364

20-May-10 4-2010-005364

21-Oct-10

Registered

16, 18, 25, 28, 41

Philippines HETTY

MASCOT HOUSE

4-2010-005365

20-May-10 4-2010-005365

21-Oct-10

Registered

16, 18, 25, 28, 41

Philippines JOLLIBEE MASCOT HOUSE

4-2010-005366

20-May-10 4-2010-005366

21-Oct-10

Registered

16, 18, 25, 28, 41

Philippines JOLLIBEE MASCOT HOUSE

4-2010-005367

20-May-10 4-2010-005367

21-Oct-10

Registered

16, 18, 25, 28, 41

Philippines HETTY

MASCOT HOUSE

4-2010-005368

20-May-10 4-2010-005368

14-Oct-10

Registered

16, 18, 25, 28, 41

Philippines POPO

MASCOT HOUSE

4-2010-005369

20-May-10 4-2010-005369

14-Oct-10

Registered

16, 18, 25, 28, 41

Philippines TWIRLIE MASCOT HOUSE

4-2010-005370

20-May-10 4-2010-005370

14-Oct-10

Registered

16, 18, 25, 28, 41

Philippines YUM

MASCOT HOUSE

4-2010-005371

20-May-10 4-2010-005371

14-Oct-10

Registered

16, 18, 25, 28, 41

Philippines AFFORDELICIOUS (word mark) 4-2010-010083

15-Sep-10 4-2010-010083

07-Apr-11

Registered 35

46

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Philippines CONE TWIRL (word mark) 4-2010-010089

15-Sep-10 4-2010-010089

07-Apr-11

Registered 29

Philippines

HAPPYPLUS CASHLESS

PAYMENTS WITH

REWARDS

4-2011-002977

15-Mar-11 4-2011-002977

20-Jun-13

Registered

9, 16, 35, 36

Philippines

HAPPYPLUS CASHLESS PAYMENT

WITH REWARDS

4-2011-009245

05-Aug-11 4-2011-009245

05-Jan-12

Registered

9, 16, 35,36

Philippines EVERYDAY

DESERVES A SUNDAE

(word mark) 4-2011-010765

08-Sep-11 4-2011-010765

20-Nov-14 Registered 30

Philippines CRISPYLICIOUS (word mark) 4-2012-000563

16-Jan-12 4-2012-000563

31-May-12

Registered 29

Philippines JUICYLICIOUS (word mark) 4-2012-000564

16-Jan-12 4-2012-000564

09-May-13

Registered 29

Philippines MAAGA ANG

PASKO (word mark)

4-2012-001251

01-Feb-12 4-2012-001251

11-May-12

Registered 36

Philippines BEE HAPPY (word mark) 4-2012-003129

12-Mar-12 4-2012-003129

24-May-12

Registered 35

Philippines CHICKENJOY (word mark) 4-2012-004770

19-Apr-12 4-2012-004770

12-Jul-12 Registered 43


4-2012-004771

19-Apr-12 4-2012-004771

23-Aug-12

Registered 29

Philippines

DITO ANG SARAP

MAGING PAMILYA

(word mark) 4-2013-001089

31-Jan-13 4-2013-001089

20-Feb-15

Registered 35

Philippines DITO ANG

SARAP MAGING

(word mark) 4-2013-001090

31-Jan-13 4-2013-001090

20-Feb-15

Registered 35


4-2013-002707

11-Mar-13 4-2013-002707

20-Jun-13

Registered 29, 43

Philippines ULTIMATE

BURGER STEAK (word mark)

4-2013-006004

24-May-13 Pending 29

Philippines ULTIMATE BURGER STEAK

4-2013-006363

03-Jun-13 4-2013-006363

23-Oct-14

Registered 29

Philippines FAMILY VALUES

AWARDS (word mark)

4-2013-010435

02-Sep-13 4-2013-010435

19-Dec-13

Registered 35

Philippines

JOLLIBEE FAMILY VALUES

AWARDS CELEBRATING EXEMPLARY

FILIFINO FAMILIES

4-2013-010436

02-Sep-13 4-2013-010436

12-Jun-14

Registered 35

Philippines JOLLY (word mark) 4-2013-012443

16-Oct-13 4-2013-012443

15-Oct-16

Registered

29, 30, 32

Philippines JOLLY (word mark) 4-2014-003233

14-Mar-14 4-2014-003233

18-Aug-16

Registered 29

Philippines CRISPYJUICYEXTRAORDINARYLICIOUS

(word mark) 4-2014-505926

17-Dec-14 4-2014-505926

26-Feb-15

Registered 29

47

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es


MAAGA ANG PASKO LOGO

4-2015-500315

22-Jan-15 4-2015-500315

31-Mar-16

Registered 36

Philippines JOLLISAVERS (word mark) 4-2015-503892

14-Jul-15 4-2015-503892

12-Nov-15

Registered

29, 30, 32,43

Philippines Jollibee

Burger Steak Supreme

(word mark) 4-2015-506500

11-Nov-15 Pending 29

Philippines Jollibee Big

Burger Steak Supreme

(word mark) 4-2015-506501

11-Nov-15 Pending 29

Philippines JOLLY JOY

BOX JOLLY JOY BOX

4-2015-507151

17-Dec-15 4-2015-507151

17-Aug-17

Registered

16, 28, 35

Philippines 3-D BOX DESIGN

4-2015-507226

22-Dec-15 4-2015-507226

27-Oct-16

Registered

16, 28, 35

Philippines GRAVYLICIOUS (word mark) 4-2016-503206

28-Jun-16 4-2016-503206

01-Sep-16

Registered 29

Philippines P99 PAIRS (word mark) 4-2016-504734

14-Sep-16 4-2016-504734

05-Apr-18

Registered

29, 30, 32, 43

Philippines PERFECT

PAIRS (word mark)

4-2016-504735

14-Sep-16 4-2016-504735

22-Dec-16

Registered

29, 30, 32, 43

Philippines P99 PERFECT

PAIRS (word mark)

4-2016-504736

14-Sep-16 4-2016-504736

15-Feb-18

Registered

29, 30, 32,43


FLAVORED FRIES

(word mark) 4-2016-505391


Philippines

JOLLY CRISPY FLAVORED

FRIES (stylized)

4-2016-505392


Philippines

CHAMP MADE WITH 100% PURE

BEEF 1/3 POUND PATTY

LANGHAP-SARAP

4-2016-506284

02-Dec-16 4-2016-506284

25-May-17

Registered 29, 43

Philippines FRAMILY (word mark) 4-2016-506373

08-Dec-16 4-2016-506373

02-Mar-17

Registered

29, 35,43

Philippines JOLLY KIDDIE

MEAL

4-2016-506501

15-Dec-16 4-2016-506501

25-May-17

Registered 16,35

Philippines JOLLY KIDDIE

MEAL

4-2016-506504

15-Dec-16 4-2016-506504

06-Jul-17 Registered 16, 35

Philippines

HOME OF THE

FAMOUS CHICKENJOY

(word mark) 4-2017-501502

10-Apr-17 4-2017-501502

22-Jun-17

Registered 29, 43

48

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Philippines TOP-YOUR-OWN JOLLY

HOTDOG (word mark)

4-2017-501751

27-Apr-17 4-2017-501751

07-Mar-19

Registered 29,43

Philippines NEW! SPICY CHICKENJOY

4-2018-501710

19-Apr-18 4-2018-501710

19-Aug-18

Registered 29, 43

Philippines Spicylicious (word mark) 4-2018-006922

24-Apr-18 4-2018-006922

02-Aug-18

Registered 29,43

Philippines OVERTOP (word mark) 4-2018-007743

08-May-18 4-2018-007743

02-Aug-18

Registered 29

Philippines JOLLY TWIRL (word mark) 4-2019-006108

11-Apr-19 4-2019-006108

07-Jul-19 Registered 29, 30

Philippines TWIRL (word mark) 4-2019-006109

11-Apr-19 4-2019-006109

14-Jul-19 Registered 29,30

Philippines JOLLIBEE (word mark) 4-2019-506253



DEVICE

4-2019-506254


Philippines

JOLLIBEE SWEET-SPICY BBQ BURGER

STEAK

4-2019-506884


Philippines CRISPY HOT CHICKENJOY

(word mark) 4-2019-506902


Philippines JUICYLICIOUS

4-2019-509199

21-Dec-19 Pending 29

Philippines JOLLY


4-2019-509200


Philippines JOLLY

SPAGHETTI 4-2019-509208


Philippines YUMBURGER (word mark) 4-2019-509209


Philippines BEFFY

LANGHAP SARAP

4-2019-509210

21-Dec-19 Pending 29, 43

Philippines YUMBURGER 4-2019-509211


Philippines JOLLIBEE & BEE HEAD

DESIGN

4-2019-509212

21-Dec-19 Pending

16, 21, 25, 28, 29, 30, 32, 35, 39,43


DESIGN

4-2019-509213

21-Dec-19 Pending

16, 21, 25, 28, 29, 30, 32, 35, 39, 43

49

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es


4-2019-509214

21-Dec-19 Pending

16, 21, 25, 28, 29, 30, 32, 35, 39,43


4-2019-509215

21-Dec-19 Pending

16, 21, 25, 28, 29, 30, 32, 35, 39, 43

Qatar BEE HEAD

DEVICE

74466 30-Apr-12 74466 23-Nov-

14 Registered 29

Qatar BEE HEAD

DEVICE

74467 30-Apr-12 74467 16-Oct-14 Registered 43

Qatar CHAMP (word mark) 80276 14-Mar-13 80276 22-Oct-15 Registered 29

Qatar CHICKENJOY


Qatar CHICKENJOY


Qatar EVERYDAY DELICIOUS

(word mark) 80277 14-Mar-13 80277 22-Oct-15 Registered 35

Qatar HOME OF THE

FAMOUS CHICKENJOY

(word mark) 117443 26-Sep-17 117443 6-Aug-

18 Registered 29

Qatar HOME OF THE

FAMOUS CHICKENJOY

(word mark) 117444 26-Sep-17 Pending 43

Qatar JOLLIBEE


Qatar JOLLIBEE

74465 30-Apr-12 74465 23-Nov-

14 Registered 43

Qatar JOLLIBEE (IN

ARABIC SCRIPT)

106585 5-Jun-16 106585

23-Jul-18

Registered 42

Qatar JOLLIBEE

CHARACTER AND DEVICE

57954 8-Jul-09 57954 20-Sep-12 Registered 29

50

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Qatar JOLLIBEE



Qatar JOLLIBEE



Qatar JOLLIBEE LOGO & DEVICE






Qatar JOLLIBEE MASCOT DESIGN

80273 14-Mar-13 80273 22-Oct-15 Registered 29

Qatar JOLLIBEE MASCOT DESIGN


Qatar JOLLY

84753 23-Oct-13 84753 16-Feb-17 Registered 30

Qatar YUM


Qatar BEE HEAD

DEVICE

134251 9-Sep-19 Pending 16

Qatar BEE HEAD

DEVICE

134252 9-Sep-19 Pending 21

Qatar BEE HEAD

DEVICE

134253 9-Sep-19 Pending 25

Qatar BEE HEAD

DEVICE

134254 9-Sep-19 Pending 28

Qatar BEE HEAD

DEVICE

134255 9-Sep-19 Pending 35

Qatar JOLLIBEE (word mark) 134242 9-Sep-19 Pending 16





51

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Romania

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

13511 8-Mar-95 29524 8-Mar-05 Registered 29, 42

Romania JOLLIBEE MASCOT DEVICE

13512 8-Mar-95 29525 1-Jul-99 Registered 42

Saudi Arabia BEE HEAD

DEVICE

182342 21-May-12 14330768

7 22-Aug-13 Registered 29


DEVICE

182343 21-May-12 14330768


Saudi Arabia CHICKENJOY

182346 21-May-12 14330768


Saudi Arabia CHICKENJOY

182347 21-May-12 14330768


Saudi Arabia EVERYDAY DELICIOUS

(word mark) 194610 26-Mar-13 14340646


Saudi Arabia HOME OF THE

FAMOUS CHICKENJOY

(word mark) 120088 25-Oct-17 143900

2982 11-Apr-

18 Registered 29

Saudi Arabia HOME OF THE

FAMOUS CHICKENJOY

(word mark) 120089 25-Oct-17 Pending 43

Saudi Arabia JOLLIBEE

182344 21-May-12 14330768


Saudi Arabia JOLLIBEE

182345 21-May-12 14330768


Saudi Arabia JOLLIBEE & BEE DEVICE

122600 1-Oct-07 14280933


Saudi Arabia JOLLIBEE (IN

ARABIC SCRIPT)

1437020649

16-Jun-16 14370206

49 12-Oct-16 Registered 43

Saudi Arabia JOLLIBEE CHAMP


26 8-Feb-15

1436008326


Saudi Arabia JOLLIBEE CHAMP


27 8-Feb-15

1436008327


Saudi Arabia

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

501/26 17-Oct-99 Registered 29

Saudi Arabia

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

501/25 17-Oct-99 Registered 42

52

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Saudi Arabia JOLLIBEE MASCOT DESIGN

194606 26-Mar-13 14340647


Saudi Arabia JOLLIBEE MASCOT DESIGN

194607 26-Mar-13 14340647


Saudi Arabia JOLLIBEE MASCOT DEVICE

379/25 2-Jul-96 Registered 42

Saudi Arabia YUM

194608 26-Mar-13 14340646



DEVICE

200897 19-Sep-19 Pending 16


DEVICE

200898 19-Sep-19 Pending 21


DEVICE

200902 19-Sep-19 Pending 25


DEVICE

200903 19-Sep-19 Pending 28


DEVICE

200904 19-Sep-19 Pending 35

Saudi Arabia JOLLIBEE (word mark) 200881 19-Sep-19 Pending 16





Singapore BEE HEAD

DEVICE

T1205981F

26-Apr-12 T1205981

F 26-Apr-12 Registered

29, 43

Singapore CHAMP (word mark) T1304014

J 11-Mar-13

T1304014J

11-Mar-13

Registered 30

Singapore CHICKENJOY

T1205748A

20-Apr-12 T1205748

A 20-Apr-12 Registered

29, 43

Singapore EVERYDAY DELICIOUS

(word mark) T1304015

I 11-Mar-13

T1304015I

11-Mar-13

Registered 35

Singapore HOME OF THE

FAMOUS CHICKENJOY

(word mark)

40201520749Y

26-Nov-15 40201520

749Y 26-Nov-

15 Registered

29, 43

Singapore JOLLIBEE

T1205747C

20-Apr-12 T1205747

C 20-Apr-12 Registered

29, 43

53

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Singapore JOLLIBEE


T0908261F

24-Jul-09 T0908261

F 24-Jul-09 Registered

29, 30, 43

Singapore JOLLIBEE

LOGO AND DEVICE

T0908260H

24-Jul-09 T0908260

H 24-Jul-09 Registered

29, 30, 43

Singapore JOLLIBEE MASCOT DESIGN

T1304012D

11-Mar-13 T1304012

D 11-Mar-

13 Registered

29, 43

Singapore JOLLIBEE WORD & DEVICE

3473/93 11-May-

93 Registered

42

Singapore JOLLIBEE WORD & DEVICE

3472/93 11-May-

93 Registered 30

Singapore YUM

40201809933T

25-May-18 Pending 30

Singapore BEE HEAD

DEVICE

40201919754X

12-Sep-19 Pending

16, 21, 25, 28, 35

Singapore JOLLIBEE (word mark) 4020191

9752P 12-Sep-19 Pending

16, 21, 25, 28, 35

Singapore YUMBURGER (word mark) 40201914752U

8-Jul-19 Pending 30, 43

South Africa

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

9510214 8-Aug-95 95/10214 12-Jun-98 Registered 29

South Africa

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

9510215 8-Aug-95 95/10215 12-Jun-98 Registered 42

Spain BEE HEAD

DEVICE

3012444 5-Jan-12 3012444 1-Jun-12 Registered 29, 43

Spain CHAMP (word mark) M306698

8 11-Mar-13 3066988 12-Jun-13 Registered 29

Spain CHICKENJOY

M3012445

5-Jan-12 3012445 21-May-

12 Registered

29, 43

Spain EVERYDAY DELICIOUS

(word mark) M306699

1 11-Mar-13 3066991 12-Jun-13 Registered 35

54

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Spain HOME OF THE

FAMOUS CHICKENJOY

(word mark) 3684349 27-Sep-17 368434

9 27-Sep-

17 Registered

29, 43

Spain JOLLIBEE MASCOT DESIGN

M3066986

11-Mar-13 3066986 12-Jun-13 Registered 29, 43

Spain JOLLIBEE

M3012443

5-Jan-12 3012443 21-May-

12 Registered

29, 43

Spain BEE HEAD

DEVICE

4031764

19-Aug-19 Pending

16, 21, 25, 28, 35

Sri Lanka JOLLIBEE

211717 29-Sep-16 Pending 29

Sri Lanka JOLLIBEE

211719 29-Sep-16 Pending 43

Sri Lanka BEE HEAD

DEVICE

211713 29-Sep-16 Pending 29

Sri Lanka BEE HEAD

DEVICE

211714 29-Sep-16 Pending 43

Sri Lanka JOLLIBEE MASCOT DESIGN

211716 29-Sep-16 Pending 29

Sri Lanka JOLLIBEE MASCOT DESIGN

211718 29-Sep-16 Pending 43

Syria JOLLIBEE MASCOT DEVICE

56345 23-Oct-95 Registered 29, 30, 42

Taiwan JOLLY


01851117

30-Jun-17

Registered 30

Taiwan JOLLY

HOTDOG (word mark)

01850970

15-May-17

Registered 29

Taiwan YUM (IN STYLIZED FORM)

187483

7 15-Oct-

17 Registered 29

Taiwan JOLLIBEE (word mark) 018411

73 16-May-

17 Registered 29

Taiwan JOLLIBEE (word mark) 018559

25 16-May-

17 Registered 43

Taiwan BEE HEAD

DEVICE

018411

74 16-May-

17 Registered 29

Taiwan BEE HEAD

DEVICE

018422

99 16-May-

17 Registered 43

55

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Taiwan JOLLIBEE MASCOT DESIGN

018411

75 16-May-

17 Registered 29

Taiwan JOLLIBEE MASCOT DESIGN

018423

00 15-May-

17 Registered 43

Taiwan CHAMP (word mark) 018411

76 16-May-

17 Registered 29

Taiwan CHICKENJOY

018411

77 16-May-

17 Registered 29

Taiwan CHICKENJOY

018423

01 16-May-

17 Registered 43

Taiwan YUMBURGER (word mark) 019207

10 16-Jun-

18 Registered 30

Taiwan YUMBURGER (word mark) 019370

77 01-Sept-

18 Registered 43

Taiwan HOME OF THE

FAMOUS CHICKENJOY

(word mark) 019095

77 16-Apr-

18 Registered 29

Taiwan HOME OF THE

FAMOUS CHICKENJOY

(word mark) 019107

67 16-Apr-

18 Registered 43

Taiwan JOLLIBEE IN CHINESE

CHARACTERS

107059823



CHARACTERS

107059824



CHARACTERS

107059825



CHARACTERS

107059826


Taiwan JOLLIBEE

108060460

12-Sep-19 Pending

16, 21, 25, 28, 35

Taiwan JOLLIBEE BEE HEAD DEVICE

108060462

12-Sep-19 Pending

16, 21, 25, 28,36

Taiwan JOLLIBEE BEE HEAD DEVICE

108064308

1-Oct-19 Pending 39

Taiwan JOLLIBEE

108064309

1-Oct-19 Pending 39

Thailand BEE HEAD

DEVICE

970144 19-Jan-15 17110841


Thailand BEE HEAD

DEVICE

970143 19-Jan-15 17110134


Thailand CHAMP (word mark) 970148 19-Jan-15 KOR4145


56

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Thailand CHICKENJOY

970149 19-Jan-15 Pending 29

Thailand CHICKENJOY

970150 19-Jan-15 Pending 43

Thailand EVERYDAY DELICIOUS

(word mark) 970151 19-Jan-15 Pending 35

Thailand HOME OF THE

FAMOUS CHICKENJOY


4 9-Oct-17 Pending 29

Thailand HOME OF THE

FAMOUS CHICKENJOY


5 9-Oct-17 Pending 43

Thailand

JOLLIBEE & THREE BEE

DEVICE (JOLLIBEE MASCOT)

284093 19-Apr-95 BOR4134 19-Apr-95 Registered 43

Thailand JOLLIBEE

969050 8-Jan-15 17110869


Thailand

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

284091 19-Apr-95 KOR4180


Thailand

JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

284092 19-Apr-95 BOR4135 19-Apr-95 Registered 43

Thailand JOLLIBEE MASCOT DESIGN

969052 8-Jan-15 17110747



970145 19-Jan-15 17110203



970146 19-Jan-15 17110842


Thailand JOLLIBEE 970142 19-Jan-15 16110965


Thailand JOLLIBEE

970141 19-Jan-15 17110134


Thailand YUM

970147 19-Jan-15 KOR4159


Thailand BEE HEAD

DEVICE

969051 8-Jan-15 171107


Thailand BEE HEAD

DEVICE

190137

807

2-Oct-19 Pending 16, 21, 25,

57

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

28, 35

Thailand JOLLIBEE (word mark) 190137

806 2-Oct-19 Pending

16, 21, 25, 28, 35

Turkey BEE HEAD

DEVICE

2014/824

16 13-Oct-14

2014/82416

13-Oct-14 Registered 29, 43

Turkey JOLLIBEE

2014/82414

13-Oct-14 2014/824

14 13-Oct-14 Registered 29

United Arab Emirates

BEE HEAD DEVICE



BEE HEAD DEVICE



CHAMP (word mark) 189044 26-Mar-13 189044 9-Sep-14 Registered 29


CHICKENJOY



CHICKENJOY



EVERYDAY DELICIOUS

(word mark) 189045 26-Mar-13 189045 3-Sep-14 Registered 35


HOME OF THE FAMOUS

CHICKENJOY (word mark) 280804 10-Oct-17 Pending 43


HOME OF THE FAMOUS

CHICKENJOY (word mark) 280803 10-Oct-17 Pending 29


JOLLIBEE



JOLLIBEE



JOLLIBEE (IN ARABIC SCRIPT)

4686783 5-Jun-16 Pending 43


JOLLIBEE CHARACTER &

DEVICE




DEVICE




DEVICE


58

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es



DEVICE



JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

16343 27-May-96 15560 27-May-

98 Registered 42


JOLLIBEE GREAT

BURGERS GREAT

CHICKEN & DEVICE

16344 27-May-96 15559 27-May-

98 Registered 29


JOLLIBEE LOGO & DEVICE


















JOLLIBEE MASCOT DEVICE

16345 27-May-96 14694 25-Apr-98 Registered 42


YUM



BEE HEAD DEVICE

317972 30-Sep-19 Pending 16


BEE HEAD DEVICE

317973 30-Sep-19 Pending 21

59

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es


BEE HEAD DEVICE

317974 30-Sep-19 Pending 25


BEE HEAD DEVICE

317975 30-Sep-19 Pending 28


BEE HEAD DEVICE

317976 30-Sep-19 Pending 35


JOLLIBEE (word mark) 317967 30-Sep-19 Pending 16









United Kingdom

BEE HEAD DEVICE

3086509 17-Dec-14 3086509 20-Mar-

15 Registered

29, 43

United Kingdom

CHAMP (word mark) 3086550 17-Dec-14 3086550 20-Mar-

15 Registered 30

United Kingdom

CHICKENJOY

3086685 18-Dec-14 3086685 27-Mar-

15 Registered

29, 43

United Kingdom

EVERYDAY DELICIOUS

(word mark) 3086549 17-Dec-14 3086549 27-Mar-

15 Registered 35

United Kingdom

HOME OF THE FAMOUS

CHICKENJOY (word mark) 3138210 27-Nov-15

UK00003138210

26-Feb-16 Registered 29, 43

United Kingdom

JOLLIBEE (STYLISED) &

DEVICE

2572105 14-Feb-11 2572105 14-Feb-11 Registered 43

United Kingdom


3086533 17-Dec-14 3086533 20-Mar-

15 Registered

29, 43

United Kingdom

JOLLIBEE

3086498 17-Dec-14 3086498 20-Mar-

15 Registered

29, 43

United Kingdom

YUM

3086691 18-Dec-14 3086691 27-Mar-

15 Registered 30

United States of America

AMAZING ALOHA

(word mark) 78/77348

3 14-Dec-05 3399726

18-Mar-08

Registered 30


BEE HAPPY (word mark) 76/35592

0 7-Jan-02 2,830,503 6-Apr-04 Registered 43


BEE HEAD DEVICE

85/513900

11-Jan-12 4426087 29-Oct-13 Registered 29, 43


CHICKENJOY

85/524814

25-Jan-12 4874637 22-Dec-15 Registered 43

60

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es


CHICKENJOY

78/773490

14-Dec-05 3949145 19-Apr-11 Registered 29


HOME OF THE FAMOUS

CHICKENJOY (word mark) 86836564 2-Dec-15

5697656

12-Mar-19

Registered 29, 43


JOLLIBEE

78/683906

2-Aug-05 3196017 9-Jan-07 Registered 43


JOLLIBEE & DEVICE

78/546427

12-Jan-05 3152057 3-Oct-06 Registered 43


JOLLIBEE BURGER STEAK


7 14-Dec-05 3562559 13-Jan-09 Registered 29



85/872818

11-Mar-13 5146897 21-Feb-17 Registered 29, 43


JOLLIBEE

85524886 25-Jan-12 4426109 29-Oct-13 Registered 29


JOLLY CHICKEN

(word mark) 87028174 6-May-16 523942

7 11-Jul-

17 Registered 29


JOLLY CRISPY FRIES

(word mark) 87030021 9-May-16 589156

9 22-Oct-

19 Registered 29


JOLLY HOTDOG

(word mark) 87028187 6-May-16 5239427 11-Jul-17 Registered 29, 30


JOLLY KRUNCHY

TWIRL

(word mark)

87028194 6-May-16 5253889 1-Aug-17 Registered 29, 30


JOLLY SPAGHETTI


6 14-Dec-05 3374063 22-Jan-08 Registered 30


JOLLY VANILLA TWIRL

(word mark) 87028182 6-May-16 Pending 29, 30


PALABOK FIESTA


0 14-Dec-05 3393101 4-Mar-08 Registered 29


YUM

78-773,415

14-Dec-05 3,363,459 1-Jan-08 Registered 30


YUMBURGER (word mark) 78/77338

3 14-Dec-05 3349864 4-Dec-07 Registered 30


BEE HEAD DEVICE

88632538

26-Sep-19 Pending

16, 21, 25, 28, 35


JOLLIBEE (word mark) 886325


16, 21, 25, 28, 35

61

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Vietnam JOLLIBEE

EVERYDAY DELICIOUS

(word mark) 4-2014-15419

07-Jul-14 254335 12-Nov-

15 Registered

29, 30

Vietnam BEE DEVICE

4-2013-04474

12-Mar-13 225456 3-Jun-14 Registered 29, 43

Vietnam BEE HEAD

DEVICE

4-2012-08039

24-Apr-12 210299 13-Aug-13 Registered 29, 43

Vietnam CHAMP (word mark) 4-2013-04470

12-Mar-13 225455 3-Jun-14 Registered 30

Vietnam CHICKENJOY

4-2012-08038


Vietnam HOME OF THE

FAMOUS CHICKENJOY

(word mark) 4-2017-31269

27-Sep-17 Pending 29, 43

Vietnam JOLLIBEE

4-2005-02046

25-Feb-05 89304 20-Sep-07 Registered 43

Vietnam JOLLIBEE

4-2012-08037


Vietnam JOLLIBEE MASCOT

4-2008-25172

25-Nov-08 153633 28-Oct-10 Registered 29, 43

Vietnam JOLLIBEE MASCOT DEVICE

4-1995-22974

18-May-95 19997 10-Feb-96 Registered 29

62

Country Title of


Application Number

Application Date

Registration Number

Registration Date

Status Class/es

Vietnam JOLLIBEE STACKED

LOGO

4-2008-25170


Vietnam PEEKING BEE

4-2008-25171


Vietnam

GÀ GIÒN VUI VẺ

(CHICKENJOY in Vietnamese)

GÀ GIÒN VUI VẺ

4-2018-30910

10-Sept-18 Pending 29, 43

Vietnam BEE HEAD

DEVICE

4-2019-31693

19-Aug-19 Pending

16, 21, 25, 28, 35

Vietnam JOLLIBEE (word mark) 4-2019-31692

19-Aug-19 Pending

16, 21, 25, 28, 35

Vietnam CON ONG

VUI VẺ (word mark)

4201918796

28-May-19

Pending 29, 43

Vietnam JOLLY BEE (word mark) 420191

8797 28-May-

19 Pending

29, 43

Vietnam YUM

4-2013-04471

12-Mar-13

Pending 29

63

2. PROPERTIES The Company’s properties are, primarily, its company-owned Jollibee stores which are located either on company-owned premises or on land or buildings leased by the Company from third parties under land or building lease agreements. In terms of store floor area, the largest company-owned Jollibee stores are the following:

STORE LOCATION SITE OWNER TYPE OF LEASE

Davao Maa DT Julian Rodriguez, Jr. Land Tuguegarao Tanza Junction Romeo Babaran Land

Bayombong Joseph Gregan G. Cutaran, Randolf Aquino G. Cutaran, Rosauro Armstrong G. Cutaran, Darhleen Gemmalie G. Cutaran-Monteclaro (L1); Wilma V. Noscal (L2)

Land

Tuguegarao Buntun Magno Y. Lim Corporation Land Carmona Highway Grandworth Resources Corporation Land Puerto Princesa Junction Palawan Jolly Foods Corporation Land

Palo Leyte V Lava and Company Incorporated Land

Alang-Alang DT

Linda V. Ramos married to Rodolfo C. Ramos; Alma V. Delgado married to Peter Igmedio Delgado; Beatriz V. Saso married to Manuel Saso; Leticia V. Abejuela married to Benjamin E. Abejuela; Hermina V. Yu married to Alejo Yu; Amelia V. Larraga; Fernando S. de Veyra; Eduardo S. de Veyra married to Virginia M. de Veyra; Socorro V. Seneca married to Arnulfo Seneca

Land

Paciano / Mayapa STF Realty and Development Corp. Land Morong Reloc Gloria T. Melendres Land Atimonan Paul Barley P. Chito/ Kein Harvey P. Chito Land Tanay Highway Geronimo M. Custodio / Darwin B. Garcia Land

Gen Maxilom Cebu Super Development Corporation and Jesa Management Corporation Land

North Harbour Chong 119 Philippines Corporation Land

Binalonan Lolita Co; Quirino Tan Co; John Tan Co; Tolentino Co Land

Ipil Irvin Pino Laureta Land Davao Talomo Emelito Yparraguirre Land Canlubang Sugar Junction Inc./Leandro Y. Locsin, Jr. Land Dolores Junction Jolly Palate Foods Corp Land Ortigas Roosevelt Alben Holdings Corporation Land

64

The Company houses its main office in the Jollibee Plaza located in 10 F. Ortigas Jr. Avenue, Ortigas Center, Pasig City (where it occupies an area totaling approximately 11,289.48 square meters), in the Jollibee Center located in San Miguel Avenue (where it occupies an area totaling approximately 3,089.50 square meters) and soon Jollibee Tower located at F. Ortigas Jr. Road cor. Garnet Road, Ortigas Center, Pasig City. It also leases additional office spaces in the Jollibee Plaza, Jollibee Center, Karina, JJACISS and Pioneer Center buildings. In Cebu City, satellite main office at the Insular Life Building, Ayala Center Cebu enables the Company to take direct and timely advantage of the business opportunities in the Visayas and Mindanao Areas. Additional office spaces are being leased out at the Mercedes Benz Tower in Cebu and Ayala Business Center in Matina, Davao City. To keep up with demand, the Company leases and operates various warehousing and distribution centers nationwide. The latest addition being the 10,000 square meter building leased at CentralHub - Luisita Tarlac. All of the properties owned by the Company are free of liens and encumbrances. 3. LEGAL PROCEEDINGS For purposes of this discussion, a legal proceeding is deemed “material” if the claim for damages involved, exclusive of interest and costs, exceeds 10% of the Company’s current assets. As of December 31, 2019, there are no material pending legal proceedings to which the Company is a party. 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote by security holders of the Company during the fourth quarter of the fiscal year covered by this Report.

65

PART II. OPERATIONAL AND FINANCIAL INFORMATION 5. MARKET PRICE FOR ISSUER’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(A) Market Price of and Dividends on Registrant’s Common Equity, and Related Stockholder Matters

(1) Market Information

Shares traded at the Philippine Stock Exchange

2019 2018 High Low High Low

1st Quarter 325.20 292.00 305.40 253.00 2nd Quarter 322.00 270.00 300.00 259.00 3rd Quarter 285.80 217.40 294.00 287.00 4th Quarter 235.00 184.10 309.80 303.00

Source: The Philippine Stock Exchange The high and low daily closing prices for the first quarter of 2020 are Php217.00 and Php91.10, respectively.

(2) Holders

There are approximately 3,004 holders as of December 31, 2019. The Company’s top 20 shareholders as of this date are:

66

(3) Dividends

The Company declares dividends on a semi-annual basis and upon approval by the Board of Directors. The JFC Group has a cash dividend policy of declaring one-third of the JFC Group’s net income for the year as cash dividends. It uses best estimate of its net income as basis for declaring cash dividends. For 2019, the actual cash dividends per share declared as a percentage of the Earnings Per Share is 44.5%. Below are the cash dividend declarations of the Company for the years 2019, 2018 and 2017:

Cash Dividend Declaration Date Ex-Date Record Date Payment Date Php1.35 November 11, 2019 November 21, 2019 November 26, 2019 December 10, 2019 Php1.23 April 8, 2019 April 23, 2019 April 26, 2019 May 9, 2019 Php1.34 November 9, 2018 November 21, 2018 November 26, 2018 December 10, 2018 Php1.14 April 6, 2018 April 19, 2018 April 24, 2018 May 9, 2018 Php1.18 November 10, 2017 November 22, 2017 November 27, 2017 December 11, 2017 Php1.00 April 5, 2017 April 18, 2017 April 21, 2017 May 5, 2017

(4) Recent Sales of Unregistered Securities There are no recent sales of unregistered securities.

Senior Management Stock Options and Incentive Plan

On January 10, 2017 and December 17, 2002, the SEC approved the exemption requested by the JFC Group on the registration requirements of 31,500,000 and 101,500,000 options, respectively, underlying the Parent Company’s common shares to be issued pursuant to the JFC Group’s Senior Management Stock Option and Incentive Plan (the Plan). The Plan covers selected key members of management of the JFC Group and designated affiliated entities. The Plan is divided into two programs, namely, the Management Stock Option Program (MSOP) and the Executive Long-term Incentive Program (ELTIP). The MSOP provides a yearly stock option grant program based on company and individual performance while the ELTIP provides stock ownership as an incentive to reinforce entrepreneurial and long-term ownership behavior of executive participants. MSOP. The MSOP is a yearly stock option grant program open to members of the senior management committee of the JFC Group and members of the management committee, key talents and designated consultants of some of the business units. Each MSOP cycle refers to the period commencing on the MSOP grant date and ending on the last day of the MSOP exercise period. Vesting is conditional on the employment of the employee-participants in the JFC Group within the vesting period. The options will vest at the rate of one-third of the total options granted on each anniversary of the MSOP grant date until the third anniversary. The exercise price of the stock options is determined by the JFC Group with reference to prevailing market prices over the three months immediately preceding the date of grant for the 1st up to the 7th MSOP cycle. Starting with the 8th MSOP cycle, the exercise price of the option is determined by the JFC Group with reference to the market closing price at date of grant.

67

The options will vest at the rate of one-third of the total options granted from the start of the grant date on each anniversary date which will start after a year from the grant date. For instance, under the 1st MSOP cycle, the Compensation Committee of the JFC Group granted 2,385,000 options to eligible participants on July 1, 2004. One-third of the options granted, or 795,000 options, vested and may be exercised starting July 1, 2005. The exercise period for the 1st MSOP cycle was until June 30, 2012. From July 1, 2005 to September 25, 2019, the Compensation Committee granted series of MSOP grants under the 2nd to 16th MSOP cycle to eligible participants. Under the most recent grant (September 25, 2019), the 16th MSOP cycle, the Compensation Committee granted 2,222,300 options. These options vest similar to the 1st MSOP cycle. The options under MSOP expire eight years after grant date. The 1st, 2nd, 3rd, 4th, 5th, 6th, 7th and 8th MSOP cycles expired on June 30, 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019, respectively. The JFC Group does not pay cash as a form of settlement. The movements in the number of stock options outstanding under MSOP and related weighted average exercise prices (WAEP) for the years ended December 31, 2019, 2018 and 2017 follow: 2019 2018 2017

Number of

Options WAEP Number of


Options WAEP Total options

granted at beginning of year 50,492,844 P=111.92 47,184,794 P=102.59 42,986,294 P=92.47

Options granted during the year 2,222,300 219.00 3,308,050 245.00 4,198,500 206.20 Total options granted at end of

year 52,715,144 P=116.43 50,492,844 P=111.92 47,184,794 P=102.59 Outstanding at beginning

of year 17,613,253 P=193.07 16,780,550 P=176.63 15,256,198 P=159.46 Options granted during the year 2,222,300 219.00 3,308,050 245.00 4,198,500 206.20 Options exercised during

the year (1,696,402) 139.16 (2,234,849) 145.31 (2,672,040) 110.35 Options forfeited during

the year (234,003) 270.75 (240,498) 204.03 (2,108) 213.28 Outstanding at end of year 17,905,148 P=200.38 17,613,253 P=193.07 16,780,550 P=176.63

Exercisable at end of year 12,077,981 P=188.14 10,612,036 P=169.70 9,688,683 P=151.94 The weighted average share price of the Parent Company’s common shares is P=264.79, P=278.16 and P=222.86 in 2019, 2018 and 2017, respectively. The weighted average remaining contractual life for the stock options outstanding is 4.62 years, 4.48 years and 5.21 years as at December 31, 2019, 2018 and 2017, respectively. The weighted average fair value of stock options granted in 2019, 2018 and 2017 is P=48.07, P=58.42 and P=29.88, respectively. The fair value of share options as at the date of grant is estimated using the Black-Scholes Option Pricing Model, taking into account, the terms and conditions upon which the options were granted. The option style used for this plan is the American style because the option plan allows exercise before the expiry date.

68

The inputs in the valuation of the options granted on the dates of grant for each MSOP cycle are shown below:

MSOP Cycle Year of Grant

Dividend Yield

Expected Volatility

Risk-free Interest

Rate

Expected Life of

the Option

Stock Price on Grant

Date Exercise

Price 1st 2004 1.72% 36.91% 6.20% 5-7 years P=24.00 P=20.00 2nd 2005 1.72% 36.91% 6.20% 5-7 years 29.00 27.50 3rd 2006 1.72% 36.91% 6.20% 5-7 years 35.00 32.32 4th 2007 1.70% 28.06% 6.41% 3-4 years 52.50 50.77 5th 2008 1.80% 26.79% 8.38% 3-4 years 34.00 39.85 6th 2009 2.00% 30.37% 5.28% 3-4 years 48.00 45.45 7th 2010 2.00% 29.72% 5.25% 3-4 years 70.00 57.77 8th 2011 2.00% 34.53% 4.18% 3-4 years 89.90 89.90 9th 2012 2.00% 28.72% 3.50% 3-4 years 107.90 107.90 10th 2013 2.00% 29.38% 2.68% 3-4 years 145.00 145.00 11th 2014 2.00% 24.87% 2.64% 3-4 years 179.80 179.80 12th 2015 2.00% 18.94% 2.98% 3-4 years 180.00 180.00 13th 2016 2.00% 17.76% 2.63% 3-4 years 236.00 236.00 14th 2017 2.00% 16.70% 3.92% 3-4 years 206.20 206.20 15th 2018 2.00% 28.98% 4.95% 3-4 years 245.00 245.00 16th 2019 2.00% 27.65% 4.18% 3-4 years 219.00 219.00

The expected life of the stock options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. ELTIP. The ELTIP entitlement is given to members of the senior management committee and designated consultants of the JFC Group. Each ELTIP cycle refers to the period commencing on the ELTIP entitlement date and ending on the last day of the ELTIP exercise period. Actual grant and vesting are conditional upon achievement of the JFC Group’s medium to long-term goals and individual targets in a given period, and the employment of the employee-participants in the JFC Group within the vesting period. If the goals are achieved, the options will be granted. For the 3rd ELTIP cycle, a percentage of the options to be granted are based on the percentage of growth in annual earnings per share such that 100%, 50% or 25% of the options granted when percentage of growth in annual earnings per share are 12% and above, 10% to less than 12% or 8% to less than 10%, respectively. For the 4th ELTIP cycle, the percentage of the options to be granted and the targeted percentage of growth in annual earnings per share have been further revised such that 150%, 100% or 50% of the options granted when percentage of growth in annual earnings per share are 15% and above, 12% to less than 15% or 10% to less than 12%, respectively. The exercise price of the stock options under ELTIP is determined by the JFC Group with reference to prevailing market prices over the three months immediately preceding the date of entitlement for the first and second ELTIP cycles. Starting with the 3rd ELTIP cycle, the exercise price of the option is determined by the JFC Group with reference to the closing market price as at the date of entitlement. The options will vest at the rate of one-third of the total options granted on each anniversary date which will start after the goals are achieved. For instance, on July 1, 2004, the Compensation Committee gave an entitlement of 22,750,000 options under the 1st ELTIP cycle to eligible participants. One-third of the options granted, or 7,583,333 options, vested and were

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exercised starting July 1, 2007 until June 30, 2012. On July 1, 2008, October 19, 2012, August 25, 2015 and January 3, 2018, entitlement to 20,399,999, 24,350,000, 11,470,000 and 9,290,000 options were given to eligible participants under the 2nd, 3rd, 4th and 5th ELTIP cycles, respectively. The 1st and 2nd ELTIP cycles expired on June 30, 2012 and April 30, 2017, respectively. The stock options granted under the 3rd and 4th ELTIP cycles will expire in 2020 and 2023, respectively. The JFC Group does not pay cash as a form of settlement. The movements in the number of stock options outstanding for the 3rd to 4th ELTIP cycles and related WAEP for the years ended December 31, 2019, 2018 and 2017 follow:

2019 2018 2017

Number of



Options WAEP Total options granted at

beginning and end of year 78,969,999 P=74.58 78,969,999 P=74.58 78,969,999 P=74.58 Outstanding at beginning

of year 18,630,000 P=120.55 27,436,666 P=136.35 35,118,896 P=122.65 Options exercised during

the year (3,238,299) 107.47 (1,323,333) 111.99 (7,682,230) 73.69 Options forfeited during

the year (23,333) 180.00 (7,483,333) 180.00 − − Outstanding at end of year 15,368,368 P=123.22 18,630,000 P=120.55 27,436,666 P=136.35

Exercisable at end of year 13,895,035 P=117.20 15,683,333 P=109.38 15,966,666 P=105.00 The weighted average remaining contractual life for the stock options outstanding is 1.06 years, 2.07 years and 3.59 years as at December 31, 2019, 2018 and 2017, respectively. The fair value of stock options granted is P=26.13 in 2015. There were no additional stock option grants under ELTIP in 2019, 2018 and 2017. The fair value of share options as at the date of grant is estimated using the Black-Scholes Option Pricing Model, taking into account the terms and conditions upon which the options were granted. The option style used for this plan is the American style because this option plan allows exercise before the maturity date. The inputs to the model used for the options granted on the dates of grant for each ELTIP cycle are shown below:

ELTIP Cycle

Year of Grant

Dividend Yield

Expected Volatility

Risk-free Interest Rate

Expected Life of

the Option

Stock Price on Grant

Date Exercise

Price 1st 2004 1.72% 36.91% 6.20% 5 years P=24.00 P=20.00 2nd 2008 1.80% 26.79% 8.38% 3-4 years 34.00 39.85 3rd 2012 2.00% 28.74% 3.60% 3-4 years 105.00 105.00 4th 2015 2.00% 18.94% 2.98% 3-4 years 180.00 180.00

The expected life of the stock options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. The cost of the stock options expense charged to operations for both MSOP and ELTIP in the “General and administrative expenses” account amounted to P=262.9 million, P=312.0 million and P=227.5 million in 2019, 2018 and 2017, respectively (see Notes 19 and 22). Correspondingly, a credit was made to additional paid-in-capital (see Note 19).

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External Audit Fees

The audit and audit-related fees cover professional services related to the performance of the audit or review of the Company’s annual financial statements by the external auditor. The Audit Committee reviews and approves the audit and non-audit services rendered by the Company’s external auditors to ensure that the Company does not engage the external auditors for certain non-audit services expressly prohibited by regulations of the Securities and Exchange Commission to be performed by an external auditor for its audit clients. The proposal of external auditors for professional services was submitted to, and reviewed by, the Audit Committee which, in turn, is endorsed to the Board of Directors for approval. For the 2019 audit, the aggregate fee for professional services rendered by the external auditors is approximately Php119.8 Million. For the 2018 audit, the aggregate fee for professional services rendered by the external auditors for the JFC Group is approximately Php58.5Million. Tax Fees: In 2019 and 2018, fees for professional services rendered by the external auditors for tax accounting, compliance, advise and other tax services are included in the external audit fees. Other Fees: There are no other fees billed for 2019 and 2018 professional services rendered by external auditors other than those mentioned above. 6. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF

OPERATIONS AND FINANCIAL CONDITION FOR THE YEAR ENDED

DECEMBER 31, 2019

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES Management Discussion and Analysis of Results of Operations and Financial Condition The following Management Discussion and Analysis should be read in conjunction with the submitted Audited Consolidated Financial Statements as at December 31, 2019, December 31, 2018 and December 31, 2017 and for the periods ended December 31, 2019, 2018 and 2017. The results of operations for the years 2018 and 2017 have been amended to include the impact of the adoption of (1) PFRS 15 reclassifying franchisees’ contribution to advertising expenses as revenues instead of as deduction from JFC’s advertising expenses, which became effective in January 2018; and, (2) PFRS 16 which sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under PAS 17, Leases. The standard includes two recognition exemptions for lessees—leases of “low-value” assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

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Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g. a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. PFRS 16 is mandatory for financial years commencing on or after 1 January 2019. The Group adopted PFRS 16 using the full retrospective method of adoption with the date of initial application of 1 January 2019. Thus, the Group adjusted the comparative amounts in the audited consolidated financial statements of the Group as of and for the years 2018 and 2017. The accounting policies adopted are consistent with those of the previous financial year. Please refer to Note 2 of the attached Audited Consolidated Financial Statements for the Basis of Preparation, Statement of Compliance, Changes in Accounting Policies and Basis of Consolidation.

Results of Operations For the Year Ended December 31, 2019 vs. December 30, 2018 (All Amounts are in Million Pesos) On September 24, 2019, Jollibee Foods Corporation included The Coffee Bean and Tea Leaf® (CBTL) in its financial consolidation. – See Note 11 to the accompanying Audited Consolidated Financial Statements for details. Revenues and System Wide Sales Consolidated revenues increased by P18,458.4 million or 11.5% to P179,626.2 million for the year 2019, primarily as a result of: (a) the addition of new stores; (b) the consolidation of CBTL; and, (c) an increase in same store sales. This increase was partially offset by the negative impact of foreign currency translation. The addition of franchised stores in the Philippines to sustain growth also had an impact on the Group’s revenues as Group-owned stores require more expenses on the part of the Group. For 2019, franchised stores comprised 83%. of the total number of stores that were opened. This resulted in lower revenue growth for the Group’s domestic businesses as well as lower increase in store operating expenses, particularly, rent, depreciation, electricity, supplies and communication expenses.

SWS is the Group’s measure for all sales to consumers, both from Group-owned and franchised stores. Consolidated SWS increased by P31,606.7 million or 14.9 per cent. from P212,185.4 million for 2018 to P243,792.2 million for 2019.

2019 2018 Amount PctSystem Wide Sales 243,792.2 212,185.4 31,606.7 14.9%Revenues 179,626.2 161,167.8 18,458.4 11.5%

Year Ended December Change

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The table below shows a breakdown of the growth of the Group’s SWS for the following categories for the year ended 31 December 2019.

(1) Same store sales growth refers to food sales (gross of discount and net of returns and taxes) of Group-owned and franchised stores that have been in operation for at least 15 months. It excludes sales from new store openings.

(2) New store contribution refers to sales of stores opened from 1 January to 31 December 2019 and from 1 January to 31 December 2018.

(3) Acquisition-driven growth refers to the incremental sales contributed by a newly acquired majority-owned business during the period.

(4) Foreign exchange rate changes refer to the impact of currency fluctuations. To eliminate the impact of currency fluctuations, the Group utilises constant currencies by converting current SWS using prior period’s average exchange rate.

The table below shows a breakdown of the growth of the Group’s SWS by region for the year 2019.

Direct Costs Consolidated direct costs for the year 2019 increased to P150,257.9 million, which is P17,837.3 million or 13.5% higher than the consolidated direct costs for the year 2018, primarily as a result of an increase in: (i) the cost of inventories and (ii) store and manufacturing costs. The following table summarizes the breakdown of the Jollibee Group’s direct costs for the years ended December 31, 2019 and 2018 and the percentage of each component and the consolidated cost of sales to consolidated revenues:

For the Year 2019

PercentSame store sales growth 2.8 New store contribution 9.3 Acquisition-driven growth 3.8 Foreign exchange rate changes (1.0)

SWSSame Store

Sales GrowthNew Store

Contribution

Newly Acquired Business

Contribution

Impact of FOREX* on SWS

Philippines 10.5 3.3 7.2 - - People's Republic of China (3.8) 2.6 (0.4) - (6.0) North America 59.3 (1.9) 27.2 36.5 (2.5) Europe, Middle East, Asia (EMEAA) 17.3 4.0 16.5 - (3.3) Total worldwide 14.9 2.8 9.3 3.8 (1.0)

Percent

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Consolidated cost of inventories increased at a faster rate driven by higher cost of raw materials and increased freight cost. As a percentage of revenues, cost of inventories increased by 1.0%-point year-on-year (YoY). Consolidated store and manufacturing costs increased by 12.9% to P64,852.8 million resulting from (a) the acquisition of CBTL; (b) the full impact of the consolidation of Smashburger; and (c) increase in number of company-owned stores. The adoption of PFRS 16 – Leases also had an impact on store and manufacturing costs, details of which are presented below (please see discussion on rent and depreciation expenses). The following discussion details the components of store and manufacturing costs, for the year ended December 31, 2019 compared to December 31, 2018: Personnel costs increased primarily as a result of an increase in: (a) store and commissary headcount and (b) basic pay of existing employees as a result of employee performance or promotion. Depreciation and amortization expenses increased primarily as a result of (a) the impact of PFRS 16, which amounted to P7,128.5 million in 2019 compared to P5,989.9 million in 2018 and, (b) increase in the JFC Group’s fixed asset base resulting from new stores and additional commissaries. Contracted services expenses increased primarily as a result of an increase in store and commissary headcount in the Philippines and overseas. Electricity expenses increased primarily as a result of the factors discussed above (see discussion on Consolidated store and manufacturing costs). Rent expenses decreased primarily as a result of higher store closures in 2019 compared to 2018. In 2019, 116 owned stores were closed compared to 43 in 2018. The impact of PFRS 16 was a reduction of P8,442.5 million in 2019 and P7,451.0 million in 2018 in rent expenses under Direct Costs - Store and manufacturing expenses and General and administrative expenses.

2019 2018 Amount Pct 2019 2018Cost of SalesCost of inventories 85,405.0 74,995.4 10,409.6 13.9% 47.5% 46.5%Personnel costs:

Salaries, wages and other employee benefits 17,778.1 14,878.1 2,900.0 19.5% 9.9% 9.2%Pension expense 189.3 190.3 (0.9) -0.5% 0.1% 0.1%

Depreciation and amortization 12,877.0 11,343.8 1,533.1 13.5% 7.2% 7.0%Contracted services 9,942.9 8,847.5 1,095.5 12.4% 5.5% 5.5%Electricity and other utilities 5,535.8 5,247.5 288.3 5.5% 3.1% 3.3%Rent 4,466.4 4,700.2 (233.8) -5.0% 2.5% 2.9%Supplies 2,963.2 3,150.1 (186.9) -5.9% 1.6% 2.0%Repairs and maintenance 2,001.4 1,578.6 422.8 26.8% 1.1% 1.0%Security and janitorial 1,103.8 983.3 120.5 12.3% 0.6% 0.6%Communication 341.0 289.7 51.4 17.7% 0.2% 0.2%Professional fees 162.5 169.5 (7.0) -4.2% 0.1% 0.1%Representation and entertainment 125.5 131.9 (6.3) -4.8% 0.1% 0.1%Others 4,364.7 3,391.3 973.5 28.7% 2.4% 2.1%

147,256.8 129,897.1 17,359.7 13.4% 82.0% 80.6%

Cost of ServicesAdvertising expense 3,001.1 2,523.5 477.6 18.9% 1.7% 1.6%

150,257.9 132,420.6 17,837.3 13.5% 83.7% 82.2%

Change Pct to Rev Year Ended December

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Supplies expenses decreased primarily as a result of a decrease in the usage of store and janitorial supplies of the domestic business, particularly the Jollibee business. Repairs and maintenance expenses increased primarily as a result of an increase in: (a) store equipment preventive maintenance expenses of the Group and (b) service fees for the maintenance of the point of sale system and hardware of Smashburger. Security and janitorial expenses increased primarily as a result of the expansion of the Group’s store network and the establishment of new commissary facilities. Communication expenses increased primarily as a result of the expansion of the Group’s store network. Other expenses increased primarily as a result of an increase in delivery expenses as well as transportation and travel expenses. Gross Profit As a result of the foregoing, gross profit increased by P621.1 million or 2.2% from P28,747.2 million for year 2018 to P29,368.3 million for the year 2019. General and Administrative Expenses Consolidated expenses increased by P3,424.0 million or 22.1%. from P15,460.6 million for the year 2018 to P18,884.6 million for the year 2019, primarily as a result of (a) the acquisition on and consolidation of CBTL in the Company’s financials starting 24 September 2019 and (b) the full nine months impact of the consolidation of Smashburger. The adoption of PFRS 16 – Leases also had an impact on general and administrative expenses, particularly depreciation expense - P36.3 million for 2019 and P31.5 million for 2018. The following table summarizes the breakdown of the Jollibee Group’s general and administrative expenses for the years ended December 31, 2019 and 2018 and the percentage of each component and the consolidated cost of sales to consolidated revenues:

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The following discussion details the components of general and administrative expenses for the year ended December 31, 2019 compared to December 31, 2018: Personnel costs increased primarily as a result of an increase in: (a) the corporate headquarters’ headcount, (b) basic pay of existing employees as a result of employee performance or promotion and (c) fringe benefits tax resulting from an increase in the number of stock options that were exercised. Taxes and licenses expenses increased primarily as a result of an increase in business-related taxes and license fees resulting from higher revenues arising from the expansion of the Group’s store network and an increase in same store sales. Professional fees increased primarily as a result of an increase in: (a) accounting, consultancy and legal fees in relation to acquisitions and (b) other professional fees relating to digital marketing. Transportation and travel expenses increased primarily as a result of an increase in lodging, mileage and per diem expenses resulting from: (a) the Group’s various activities relating to acquisition projects and the expansion of the Group’s store network such as site visit/evaluation and sourcing and (b) various projects in the Philippines and overseas. Depreciation and amortization increased primarily as a result of the Group’s fixed asset base resulting from the growth of the Group’s businesses and the impact of PFRS 16—Leases, which amounted to P36.3 million in 2019 compared to P31.5 million in 2018.

2019 2018 Amount Pct 2019 2018Personnel costs:

Salaries, wages and other employee benefits 9,580.1 8,027.2 1,552.9 19.3% 5.3% 5.0%Stock options expense 262.9 312.0 (49.1) -15.7% 0.1% 0.2%Pension expense 204.8 208.5 (3.7) -1.8% 0.1% 0.1%

Taxes and licenses 1,854.4 1,561.7 292.7 18.7% 1.0% 1.0%Professional fees 1,213.1 1,018.3 194.7 19.1% 0.7% 0.6%Transportation and travel 836.5 748.9 87.7 11.7% 0.5% 0.5%Depreciation and amortization 596.3 541.9 54.4 10.0% 0.3% 0.3%Contracted services 597.2 565.3 32.0 5.7% 0.3% 0.4%Rent 522.2 587.0 (64.8) -11.0% 0.3% 0.4%Impairment in value of:

Property, plant & equipment 399.2 - 399.2 100.0% 0.2% 0.0%Receivables 25.3 10.2 15.2 148.7% 0.0% 0.0%Inventories 16.7 8.3 8.4 101.4% 0.0% 0.0%

Repairs and maintenance 323.3 279.9 43.4 15.5% 0.2% 0.2%Training 279.5 151.8 127.8 84.2% 0.2% 0.1%Corporate events 215.4 234.9 (19.5) -8.3% 0.1% 0.1%Membership and subscriptions 222.8 160.4 62.4 38.9% 0.1% 0.1%Loss (gain) on retirements and disposals of

property, plant and equipment (278.3) 45.5 (323.9) -711.2% -0.2% 0.0%Communication 186.0 158.4 27.6 17.4% 0.1% 0.1%Reversals of provision for impairment on:

Receivables (91.4) (23.7) (67.7) 286.1% -0.1% 0.0%Property, plant & equipment (29.2) (408.2) 379.0 -92.9% 0.0% -0.3%Inventories (26.5) (6.1) (20.3) 330.5% 0.0% 0.0%

Donations 120.6 101.1 19.5 19.2% 0.1% 0.1%Supplies 106.8 96.2 10.6 11.0% 0.1% 0.1%Representation and entertainment 94.2 121.3 (27.1) -22.3% 0.1% 0.1%Insurance 80.0 41.2 38.9 94.4% 0.0% 0.0%Electricity and other utilities 71.7 72.1 (0.3) -0.5% 0.0% 0.0%Association dues 42.3 69.6 (27.2) -39.1% 0.0% 0.0%Security and janitorial 34.1 26.1 8.0 30.7% 0.0% 0.0%Others 1,424.4 751.0 673.3 89.7% 0.8% 0.5%Total General and Administrative Expenses 18,884.6 15,460.6 3,424.0 22.1% 10.5% 9.6%

Year Ended December Change Pct to Rev

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Contracted services expenses increased primarily as a result of an increase in outsourced services for the conduct of the various training programs of the Group. Rent expenses decreased primarily as a result of the impact of PFRS 16—Leases. Repairs and maintenance expenses increased primarily as a result of an increase in system maintenance expenses of a subsidiary of the Parent Company. Training expenses increased primarily as a result of an increase in the number of leadership programs such as the Leadership Summit. Corporate events decreased on account of higher base as JFC’s 2018 expenses for events were higher due to its 40th year celebration. Membership and subscription expenses increased primarily as a result of: (a) an increase in cloud subscriptions and (b) new memberships in various organizations. Communication expenses increased primarily as a result of an increase in telephone and internet-related expenses. The Group reversed previously recognized provisions for impairment on property, plant and equipment, receivables and inventories amounting to P147.1 million. The Group also reported gain on retirements and disposals of property, plant and equipment amounting to P278.3 million as a result of change in store ownership, store closures and fixed asset disposals. In addition, the Group recognized provisions for impairment in the value of property, plant and equipment, receivables and inventories amounting to P399.2 million, P25.3 million and P16.7 million, respectively, following certain assessments performed by the Group. Donations increased primarily as a result of an increase in the Group’s 2018 net income on which donations are computed at a certain percentage. Supplies expenses increased as a result of an increase in office and general supplies expenses of the foreign businesses. Representation and entertainment expenses decreased primarily as a result of a higher base in 2018 resulting from the higher representation and entertainment expenses of Smashburger. Insurance expenses increased primarily as a result of an increase in (a) the value of the Group’s properties resulting from a higher asset appraisal, (b) increase in number of commissaries. Association dues decreased due to change in account used when building charges are billed to various departments. In 2018, the account being credited was Miscellaneous expenses (Building charges), this has been changed to Association dues in 2018. Security and janitorial expenses increased primarily as a result of (a) an increase in manpower at JWS and (b) additional office spaces of the Mang Inasal business. Other expenses increased primarily as a result of an increase in various expenses such as: (a) research and development expenses of the Group, (b) penalties due to pre-termination of lease contracts for Group-owned stores that were closed, (c) an increase in the number of transactions exempt from value added tax such as sales to persons with disabilities and to senior citizens, (d) settlement of tax-related cases and (e) miscellaneous expenses.

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Advertising and Promotions Advertising and promotions decreased primarily as a result of lower advertising spending of domestic businesses.

Operating Income As a result of the foregoing, operating income decreased by P2,757.8 million or 29.8% from P9,259.0 million for year 2018 to P6,501.1 million for year 2019. Interest Income (Expense)

Interest income decreased primarily as a result of lower money market placements and lower cash balance. Interest expense increased primarily as a result of (a) increased bank loans for working capital, capital expenditures relating to on-going operations and other general corporate purposes, (b) impact of PFRS 16—Leases, which amounted to P1,824.3 million in 2019 and P1,728.6 million in 2018. Equity in Net Earnings (Losses) of Joint Ventures and Associates — Net

The Consolidated equity in net losses of joint ventures and an associate for 2019 pertains to the JFC Group’s equity share in the net earnings of Golden Bee Foods Restaurants LLC (Jollibee UAE), Tortas Frontera LLC (Tortas), and Entrek (Jollibee Brunei), partially offset by the equity share in the net losses of Titan Dining and JBPX Foods, Inc. (Panda Express). See Note 11 to the accompanying Audited Consolidated Financial Statements for details.

2019 2018 Amount Pct 2019 2018Advertising and promotions 3,982.6 4,027.6 (45.0) -1.1% 2.2% 2.5%


2019 2018 Amount Pct 2019 2018

Interest income 400.7 424.4 (23.8) -5.6% 0.2% 0.3%Interest expense (3,187.3) (2,617.5) (569.8) -21.8% -1.8% -1.6%

(2,786.6) (2,193.0) (593.6) -27.1% -1.6% -1.4%

Year Ended December Pct to RevChange

2019 2018 Amount Pct 2019 2018

Equity in net earnings (losses) of joint ventures and associates - net 23.4 (86.8) 110.1 127.0% 0.0% -0.1%


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Other Income

Other income increased primarily as a result of the: (a) gain from the acquisition of CBTL and (b) pre-termination of operating leases, partly offset by higher foreign exchange loss and higher bank charges. Provision for Income Tax

Provision for income tax increased primarily as a result of higher (a) final tax withheld on royalty income and (b) regular and minimum corporate income tax. Net Income As a result of the foregoing, net income decreased by P1,218.7 million or 15.9%, from P7,641.6 million for the year 2018 to P6,422.9 million for the year 2019. Net Income Attributable to Equity Holders of the Parent Company Net income attributable to the equity holders of the Parent Company decreased by P1,780.2 million or 21.7% from P8,212.6 million for the year 2018 to P6,432.4 million for the year 2019. Basic earnings per shares decreased by 22.1% to P5.887.

2019 2018 Amount Pct 2019 2018

Gain from acquisition of a business and re-measurementof previously held interest 3,150.8 754.8 2,396.0 317.4% 1.8% 0.5%

Write-off of liabilities 2,290.5 2,343.3 (52.8) -2.3% 1.3% 1.5%Bank charges (405.0) (317.8) (87.2) 27.4% -0.2% -0.2%Rebates and suppliers' incentives 339.1 194.9 144.2 74.0% 0.2% 0.1%Pre-termination of operating leases 400.4 193.2 207.1 107.2% 0.2% 0.1%Foreign exchange gain (loss) - net (268.2) (34.6) (233.6) 675.1% -0.1% 0.0%Penalties and charges 65.8 62.5 3.4 5.4% 0.0% 0.0%Charges to franchisees 24.6 24.7 (0.1) -0.5% 0.0% 0.0%Other rentals 6.3 8.7 (2.4) -27.8% 0.0% 0.0%Net unrealized gain of financial assets at FVTPL (1.6) 10.0 (11.6) -116.4% 0.0% 0.0%Marked-to-market gain (loss) ong derivatives - (49.8) 49.8 -100.0% 0.0% 0.0%Reversal of impairment loss on interest in an associate - 16.7 (16.7) -100.0% 0.0% 0.0%Insurance claims and others 143.0 136.0 7.0 5.2% 0.1% 0.1%

5,745.7 3,342.5 2,403.1 71.9% 3.2% 2.1%


2019 2018 Amount Pct 2019 2018

Current 3,255.7 2,822.1 433.6 15.4% 1.8% 1.8%Deferred (195.0) (142.0) (53.0) -37.4% -0.1% -0.1%

3,060.6 2,680.1 380.5 14.2% 1.7% 1.7%

Pct to RevChange Year Ended December

79

Financial Condition As at December 31, 2019 Versus December 31, 2018 The Jollibee Group ended the 2019 with consolidated total assets of P187,276.0 million, 24.4% higher than the P150,512.9 million as at the end of 2018 (as restated). The following explain the significant movements in the asset accounts: - The Jollibee Group’s consolidated cash and cash equivalents decreased to P20,892.0

million, P2,393.9 million or 10.3% lower than the balance at year-end 2018, primarily due to payment of: (a) trade payables, (b) bank loans and (c) the acquisition of CBTL, which was completed on September 24, 2019. The movements in the Jollibee Group’s cash will be explained further in the cash flow discussion.

- Short-term investments increased by P1,246.8 million or 141.2% to P2,130.0 million

representing placements in money market of the China-based subsidiaries.

- Consolidated receivables and contract assets increased by P1,043.5 million or 21.5% to P5,906.3 million primarily due to the consolidation of CBTL, with 71.4% of its stores are franchised.

- Consolidated inventories increased by P1,153.9 million or 13.1%, mainly due to the consolidation of CBTL.

- Other current asset increased due to higher pre-payments for rent and taxes and higher

deposits to suppliers and consolidation of CBTL. The Company has a current ratio of 0.67:1.00 as at December 31, 2019, lower than the current ratio of 1.07:1.00 as at December 31, 2018. - Interests in joint ventures and associates increased to P6,832.1 million,

P3,319.9 million or 94.5% primarily due to advances to C-Joy Poultry amounting to P1,200.0 million and additional investment to Titan Dining (Tim Ho Wan) amounting to P2,800.0 million.

- Consolidated property, plant and equipment increased by P5,919.6 million or 22.2% to P32,592.1 million, net of accumulated depreciation, primarily due to investments in new stores, renovation of existing stores and investments in commissaries. See Note 12 to the accompanying Audited Consolidated Financial Statements for details.

- Right-of-use assets increased by P6,343.2 million or 17.3% to P42,907.4 million primarily due to the consolidation of CBTL, partly offset by the decrease in right-of-use assets from the closure of Smashburger stores.

- Trademarks, goodwill and other intangible assets increased by P18,666.3 million or 59.2% to P50,208.1 million, primarily due to the acquisition of CBTL.

- Consolidated operating lease receivables decreased by P34.4 million or 53.6% to P98.7

million, which is the cumulative difference of rent income recognized under the straight-line method and the rent amounts in accordance with the terms of the lease agreements.

- Consolidated finance lease receivable decreased by P22.9 million or 12.4% to P161.9 million due to payments received from lessees, partly offset by recognition of new lease receivables and finance income.

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- The change in consolidated derivative asset P82.9 million pertains to the unrealized loss on

the fair value of the Interest Rate Swap (IRS) as at end of 2019 compared to the unrealized gain as at end of 2018. The floating interest rates as at end of 2018 were higher than the floating interest rates as at 2019. See Note 18 to the accompanying Audited Consolidated Financial Statements for details.

- Consolidated deferred tax assets decreased by P262.5 million or 5.6% to P4,449.3 million,

primarily due to decrease in deferred tax assets on lease liabilities and share-based payments partly offset by increase in NOLCO of US-based subsidiary and decrease in deferred tax liabilities on rights-of-use assets. See Note 24 to the accompanying Audited Consolidated Financial Statements for details.

Consolidated current liabilities amounted to P67,679.8 million, P28,053.2 million or 70.8% higher than the 2018 year-end balance of P39,626.6 million (as restated). The following explain the significant movements in current liabilities: - Consolidated trade payables and other current liabilities and contract liabilities increased

by P5,935.3 million or 20.7% to P34,652.1 million primarily due to significant increase in employee-related and store-related accruals, mainly arising from the consolidation of CBTL.

- Consolidated income tax payable increased by P128.4 million or 48.7% to P391.9 million due to higher taxable income for 2019.

- Consolidated short-term debt pertains to the USD22.0 million loan of SJBF on March 22, 2019, payable on March 21, 2020 and the USD400.0 million loan, mainly for the CBTL acquisition acquired in September 2019. See Note 18 to the accompanying Audited Consolidated Financial Statements for details.

- Consolidated current portion of lease liabilities increased by P1,293.7 million or 22.5% to

P7,036.8 million, primarily due to reclassification of leases payable within one year from non-current portion to current portion of lease liabilities partly offset by payments made.

- Consolidated current portion of long-term debt decreased by P1,476.1 million or 30.2% to

P3,416.0 million primarily due to payments made during the period, partly offset by reclassification of loans maturing within one year from non-current portion to current portion of long-term debt.

- Liability for acquisition of businesses decreased pertains to the remaining balance of re-acquired franchise rights of Smashburger, partially offset by subsequent payments made.

Consolidated noncurrent liabilities amounted to P67,314.3 million, 8.8% or P5,424.2 million higher than the December 31, 2018 audited balance (as restated) of P61,890.1 million. The following explain the significant movements in noncurrent liabilities: - Consolidated noncurrent portion of lease liabilities increased by P5,383.0 million or 15.4%

to P40,270.7 million, primarily due to the consolidation of CBTL and additional leases arising from the increase in company-owned stores.

- Consolidated noncurrent portion of long-term debt decreased by P2,192.5 million to

P19,179.7 million mainly due to reclassification to current portion of loans maturing within one year. See Notes 18, 30 and 31 to the accompanying Audited Consolidated Financial Statements for details.

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- Consolidated pension liability increased by P900.7 million or 68.0% to P2,221.3 million,

primarily due to additional accruals during the period. - The consolidated derivative liability pertains to the IRS entered into by the Jollibee Group

on November 20, 2015 with a bank to convert its exposure in variable interest rate of Loan 1 to a fixed interest rate. The IRS had a negative fair value of P58.2 million as at December 31, 2019 versus a fair value of P82.9 million (Derivative asset) as at December 31, 2018. See Note 18 to the accompanying Audited Consolidated Financial Statements for details.

- Consolidated deferred tax liabilities increased by P1,277.7 million or 37.0% to P4,759.2

million, mainly coming from the trademarks of CBTL. See Note 24 to the accompanying Audited Consolidated Financial Statements for details.

Consolidated total equity increased by P3,285.8 million or 6.7% to P52,281.9 million. The following explain the significant movements in Equity: - Capital Stock and Additional paid-in capital increased due to issuance of new shares

pertaining to the company’s stock option program and the related stock option expense accrual.

- Other reserve pertains to JFC Group's dilution gain from investment in SMCC-SG

computed as the difference between the value of SMCC-SG’s ordinary shares purchased (USD100.0) and the subscription price of USD136.0 million amounting to USD36.0 million (P1,877.4 million). See Note 11 to the accompanying Audited Consolidated Financial Statements for details.

- The change of P244.7 million in cumulative translation adjustment was partly due to

translation attributable to foreign operations based on the relevant foreign currency exchange rates at reporting date

- The decrease in consolidated other comprehensive income on derivative liability by P141.1 million was due to the recognition of unrealized loss in the interest rate swap resulting from higher fixed rate compared to current floating rate.

- The increase in consolidated retained earnings of P3,617.5 million pertains to the

consolidated net income (attributable to equity holders of the Parent Company) for 2019 partly offset by cash dividends declared during the period.

Liquidity and Capital Resources Consolidated net cash provided by operating activities amounted to P19,895.0 million as at end of December 2019, P577.6 million or 2.8% lower compared to the consolidated net cash provided by operating activities of P20,472.7 million as at end of December 2018. The decrease in funds from operations was mainly due to lower Earnings before income tax generated in 2019 compared to 2018. Income taxes paid in 2019 was also higher compared to those paid in 2018. Consolidated net cash used in investing activities amounted to P28,885.3 million at the end of December 2019, P14,910.3 million or 106.7% higher compared with the net cash used in investing activities at the end of December 2018, mainly due to acquisition of CBTL in September 2019. Capital expenditures for 2019 was higher by P487.5 million compared with the capital expenditures for 2018. JFC also provided advances to C-Joy Poultry amounting to P1,236.7 million.

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Consolidated net cash provided by financing activities amounted to P6,718.8 million at the end of 2019, mainly coming from proceeds from short-term bank loans partly offset by payments of bank loans, interests, lease liabilities and cash dividends. Cash and cash equivalents at the end of December 2019 stood at P20,892.0 million, P2,393.9 million or 10.3% lower than the December 31, 2018 balance. Discussion and Analysis of Material Events and Uncertainties 1. There were no events during the period that will trigger direct or contingent financial

obligation that is material to the Jollibee Group. 2. There were no material off-balance sheet transactions, arrangements, obligations created

during the reporting period. 3. In response to the disruption in the operations of the business brought by the COVID-19

epidemic, JFC is postponing about Php9 billion worth of capital expenditures from 2020 to 2021 given the operational constraints to the construction of facilities and to the uncertain demand volume due to limited mobility of consumers. Its planned capital expenditures for 2020 are being reduced by 64% from Php14 billion to Php5 billion.

4. Food service operations have both peak and lean seasons. Historically, sales in the second

and fourth quarters are strong due to the summer and the Christmas seasons, respectively. Demand during the first and third quarters usually slackens. The material financial impact of this seasonality has been considered in the Jollibee Group’s consolidated financial forecast.

5. All of the Jollibee Group’s income arose from its continuing operations.

6. Events after the Reporting Period:

Dividend Declaration On April 7, 2020, the BOD of the Parent Company approved a cash dividend of P0.62 per share of common stock to all stockholders of record as at April 27, 2020. Consequently, the cash dividend is expected to be paid out on May 22, 2020. The cash dividend is 50.0% lower than the P1.23 cash dividend per share declared on April 8, 2019. Issuance of Guaranteed Senior Perpetual Capital Securities Guaranteed Senior Perpetual Capital Securities (Securities) was issued by JWPL, a wholly owned subsidiary, and listed in the Singapore Exchange Securities Trading Limited on January 24, 2020. The Securities offered an initial distribution rate of 3.9%, non-call (5 years) and payable semi-annually.

Prepayment of Short-term Debt On February 3 and February 6, 2020, JWPL prepaid its USD400.0 million short-term debt amounting to USD170.0 million and USD230.0 million, respectively, from the proceeds of the issuance of the Guaranteed Senior Perpetual Capital Securities.

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Impact of COVID-19 Outbreak The JFC Group of Companies operates restaurants in 34 countries, the largest of which in terms of contribution to system wide sales (SWS), a measure of all sales to consumers- both from company-owned and franchised stores are the Philippines, the United States/Canada, China and Vietnam. The impact of the COVID-19 to the operations of restaurants varies quite significantly at different countries and changing on a daily basis. In China, the epicenter of the epidemic and which accounts for 6.1% of JFC’s global SWS, the decline in sales was abrupt. All the 14 restaurant outlets of Yonghe King (YHK) brand in and near Wuhan, believed to be the origin of the epidemic were temporarily closed down mainly due to the restriction of movement of people imposed by the government in order to contain the virus. At its worst time, in the week of February 10, 2020 - Yonghe King had 107 stores temporarily closed, representing 31% of its total store network, to ensure the safety of its employees and in view of the very low level of customer visits due to restriction of movement of people. The number of temporarily closed stores had declined to 22 representing 6% of Yonghe King’s total store network as of the week of March 30, 2020. Meanwhile, sales in China have been improving as the number of new infections have been declining. In the Philippines, in a move to contain the COVID-19 outbreak, on March 13, 2020, the Office of the President issued a Memorandum directive to impose stringent social distancing measures in the National Capital Region effective March 15, 2020. On March 16, 2020, Presidential Proclamation No. 929 was issued, declaring a State of Calamity throughout the Philippines for period of six (6) months and imposed an enhanced community quarantine throughout the island of Luzon until April 12, 2020, unless earlier lifted or extended. These measures have caused disruptions to businesses and economic activities, and its impact on businesses continue to evolve. About 70% of JFC Group’s domestic stores have been temporarily closed, resulting to a decline in systemwide sales by about 40%. In North America, Smashburger has suspended its Dine-In services, but continued serving its customers through on-line Delivery to Homes and Take-Out business. Philippine brands Jollibee, Chowking and Red Ribbon also continued to operate with Drive-Thru and Take-Out and has started operating its on-line Delivery to Homes in April, 2020. In Singapore, the Delivery business grew by 256% in the crisis period versus year ago, increasing its sales contribution from 7% to 22%, enabling total same store sales to grow by about 4%. The JFC Group considers the events surrounding the outbreak as non-adjusting subsequent events, which do not impact its financial position and performance as of and for the year ended December 31, 2019. However, the outbreak could have a material impact on the JFC Group’s 2020 financial results and even periods thereafter. Considering the evolving nature of this outbreak, the JFC Group cannot determine at this time the impact to its financial position, performance and cash flows. The JFC Group will continue to monitor the situation.

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To manage the risks or uncertainties brought about by the outbreak, the JFC Group has implemented the following measures, among others: (1) Restaurant Operations – Prioritizing the protection of health and safety of its employees and preservation of cash in the business to ensure sustainability and long-term growth and profitability by temporarily closing losing outlets. (2) Product Supply – To ensure adequate supply, the Philippine business had identified alternative sources of supply and has also spread its inventories in different parts of the country in various warehouses and depots. The JFC Group also has commissaries located in different parts of the country. This dispersion of supply chain facilities, warehouses and restaurant outlets reduces the probability that the pandemic will have significant impact and magnitude, all at the same time, on the different parts of the JFC Group’s business. (3) Safety and Health of Customers, Employees and Workers and Business Partners – Implementation of the following: observing social distancing in the stores and buildings; travel restrictions; and work from home arrangements.

(4) Dispersion and Diversification – The nature and structure of the JFC Group’s business have created physical dispersion and diversification into different brands, countries, sites, facilities and locations which make the business strong against event risks.

(5) Overall Business – To preserve cash, the JFC Group will delay some capital expenditures this year to next year. It will also aggressively cut costs in response to the reduction in revenues due to constraints brought about by the lockdowns.

Discussion of the Jollibee Group’s Top Five (5) Key Performance Indicators System Wide Sales System Wide Sales is a measure of all sales to consumers both from company-owned and franchised stores.

As at end Dec 2019 As at end Dec 2018 System Wide Sales P243,792.2 million P212,185.4 million % Growth vs LY 14.9% 23.5%

Revenues Revenues is a measure of (1) all sales made by the Jollibee Group’s company-owned stores (both food and novelty sales); (2) Commissary sales to franchised stores; (3) fees from stores operated by franchisees; (4) rental revenues of the Jollibee Group’s investment properties; and (5) revenues from services rendered by the in-house Construction.

As at end Dec 2019 As at end Dec 2018 Revenues P179,626.2 million P161,167.8 million % Growth vs LY 11.5% 20.6%

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Net Income Margin Net Income Margin is the ratio of the Jollibee Group's earnings after interest and tax. This is computed by dividing consolidated net income by consolidated revenues. The quotient is expressed in percentage. This measures the Jollibee Group’s return for every peso of revenue earned, after deducting cost of sales, operating expenses, interests and taxes.

As at end Dec 2019 As at end Dec 2018 Net Income P6,422.9 million P7,641.6, million % to Revenues 3.6% 4.7%

Basic Earnings Per Share (EPS) EPS is the portion of the Jollibee Group’s profit allocated to each outstanding share of common stock. This is computed by dividing the net income for the period attributable to the equity holders of the Parent Company by the weighted average outstanding shares during the same period. This serves as an indicator of the Jollibee Group’s profitability.

As at end Dec 2019 As at end Dec 2018 EPS (Basic) P5.887 P7.555 % Growth vs LY -22.1% 17.6%

Return on Equity (ROE) ROE is the ratio of the JFC Group’s net income attributable to equity holders of the Parent Company to equity. It is computed by dividing annualized net income attributable to equity holders of the Parent Company by average equity attributable to equity holders of the Parent Company. ROE is a measure of return for every peso of invested equity. The JFC Group also uses ROE for comparing its profitability with other firms in the same industry. Annualized As at end Dec 2019 As at end Dec 2018 Return on Equity 12.9% 18.8%

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Financial Ratios

Jollibee Foods Corporation and SubsidiariesDec-19 Dec-18

Formula Audited Audited

Liquidity Ratios

Current Assets 0.67 1.07 Current Liabilities

Financial Leverage Ratios

Total Assets 3.56 3.17 Total Equity Attributable to Equity Holders of the Parent Company

Total Debt* 72.0% 68.1%Total Debt + Equity Attributable to EquityHolders of the Parent Company

Total Debt* - Cash and Cash Equivalents - Short-term Investments 68.0% 62.0%

(Total Debt* - Cash and Cash Equivalents - Short-term Investments) + Equity Attributable to Equity Holders of the Parent Company

Earnings before Interest and Taxes** 4.0 4.9 Interest Expense**

Net Income** + Depreciation and Amortization** 0.15 0.19 Total Liabilities

Net Income** 0.05 0.08 Total Liabilities

* Including both total current and total noncurrent liabilities** Annualized

Debt Service Coverage Ratio

Current Ratio

Asset to Equity Ratio

Debt Ratio

Net Debt Ratio

Interest Coverage Ratio

Solvency Ratio

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Results of Operations For the Year Ended December 31, 2018 vs. December 31, 2017 (All Amounts are in Million Pesos) Revenues and System Wide Sales Revenues increased by P27,584.7 million or 20.6% to P161,167.8 million for the year 2018, primarily as a result of: (a) the addition of new stores; (b) an increase in same store sales. This increase was partially offset by the negative impact of foreign currency translation. The addition of franchised stores in the Philippines to sustain growth also had an impact on the Group’s revenues as Group-owned stores require more expenses on the part of the Group. For 2018, franchised stores comprised 77%. of the total number of stores that were opened. This resulted in lower revenue growth for the Group’s domestic businesses as well as lower increase in store operating expenses, particularly, rent, depreciation, electricity, supplies and communication expenses.

SWS is the Group’s measure for all sales to consumers, both from Group-owned and franchised stores. SWS increased by P40,424.4 million or 23.5% to P212,185.4 million for 2018. The table below shows a breakdown of the growth of the Group’s SWS for the following categories for the year ended 31 December 2018.

(5) Same store sales growth refers to food sales (gross of discount and net of returns and taxes) of Group-owned and franchised stores that have been in operation for at least 15 months. It excludes sales from new store openings.

(6) New store contribution refers to sales of stores opened from 1 January to 31 December 2018 and from 1 January to 31 December 2017.

(7) Acquisition-driven growth refers to the incremental sales contributed by a newly acquired majority-owned business during the period.

(8) Foreign exchange rate changes refer to the impact of currency fluctuations. To eliminate the impact of currency fluctuations, the Group utilises constant currencies by converting current SWS using prior period’s average exchange rate.

2018 2017 Amount PctSystem Wide Sales 212,185.4 171,761.0 40,424.4 23.5%Revenues 161,167.8 133,583.1 27,584.7 20.6%


For the Year 2018

PercentSame store sales growth 6.2 New store contribution 8.3 Acquisition-driven growth 6.9 Foreign exchange rate changes 2.1

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The table below shows a breakdown of the growth of the Group’s SWS by region for the year 2018.

System wide sales (SWS), a measure of all sales to consumers, both from company owned and franchised stores grew by 23.5% for the entire year of 2018. Of this growth rate, global store network expansion, including the impact of Smashburger accounted for 15.2%, same store sales contributed 6.2% and currency exchange rate changes added 2.1%. JFC opened a total of 502 stores in 2018 (Philippines 317; Foreign 185), the highest number of new stores opened in a year in JFC’s 40-year history. It closed 131 stores (Philippines 66; Foreign business 65) in 2018. Smashburger increased JFC’s store network by 349 stores. JFC ended 2018 with 4,521 stores, 19.1% higher compared to the number of stores at the end of 2017. In the Philippines, sales of its restaurant chains grew by 15.1% for the entire year driven by 8.2% store network expansion and 6.9% same store sales growth. Same store sales growth pertains to restaurants that were already open for at least 15 months. It excludes sales growth from new store opening. Sales of stores abroad rose by 55.5% led by the North America business which grew by 161.1% due to the consolidation of Smashburger (21.7% ex-Smashburger), Europe, Middle East and Asia ex-Philippines (EMEAA) business grew by 42.7% (28.6% ex-SuperFoods) and the China business by 9.1%. Direct Costs Consolidated direct costs increased to P129,897.1 million, which is P23,369.7 million or 21.9% higher than consolidated cost of sales for the year 2017. The following table summarizes the breakdown of the Jollibee Group’s cost of sales for the years ended December 31, 2018 and 2017 and the percentage of each component and the consolidated cost of sales to consolidated revenues:

SWS

Same Store Sales

GrowthNew Store

Contribution

Newly Acquired Business

Contribution

Impact of FOREX* on SWS

Philippines 15.1 6.9 8.2 - - People's Republic of China 9.1 4.4 (2.2) - 6.9 North America 161.1 6.2 20.5 129.1 5.3 Europe, Middle East, Asia (EMEAA) 42.7 (0.5) 37.9 - 5.3 Total worldwide 23.5 6.2 6.9 8.3 2.1

Percent

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See Note 21 to the accompanying Audited Consolidated Financial Statements for details. Consolidated cost of inventories increased primarily as a result of: (a) the addition of new stores, (b) an increase in the prices of raw materials and (c) the consolidation of Smashburger into the Group. Consolidated personnel costs increased primarily as a result of an increase in: (a) store and commissary headcount and (b) basic pay of existing employees as a result of employee performance or promotion. Consolidated depreciation and amortization increased primarily as a result of an increase in investment in new stores outside the Philippines and the impact of PFRS 16—Leases, which amounted to P5,989.9 million in 2019 and P4,172.5 million in 2018. Consolidated contracted services increased primarily as a result of an increase in: (a) store and commissary headcount and (b) hourly rates of all workers, in each case in the Group’s businesses in the Philippines and in the PRC. The reclassification of expenses related to outsourced network development and information management from general and administrative expenses to direct costs in the year ended December 31, 2018 also contributed to the increase. Consolidated electricity and other utilities expenses increased primarily as a result of an increase in (a) usage resulting from the expansion of the Group’s store network and (b) power rates. Consolidated rent increased primarily as a result of an increase in store, satellite warehouses and logistics center rent resulting from annual rent escalation, partly offset by the impact of PFRS 16. The impact of PFRS 16 was a reduction of P7,451.0 million in 2018 and P5,290.3 million in 2018 in rent expenses under Direct Costs - Store and manufacturing expenses and General and administrative expenses. Consolidated supplies expenses increased as a result of: (a) the addition of new stores, (b) the consolidation of Smashburger into the Group. Consolidated repairs and maintenance increased primarily as a result of the reclassification of expenses related to engineering and information management from general and administrative expenses to direct costs in the year ended 31 December 2018.

2018 2017 Amount Pct 2018 2017

Cost of SalesCost of inventories 74,995.4 62,725.5 12,269.9 19.6% 46.5% 47.0%Personnel costs:

Salaries, wages and other employee benefits 14,878.1 11,021.8 3,856.3 35.0% 9.2% 8.3%Pension expense 190.3 168.1 22.2 13.2% 0.1% 0.1%

Depreciation and amortization 11,343.8 8,467.3 2,876.5 34.0% 7.0% 6.3%Contracted services 8,847.5 7,305.0 1,542.4 21.1% 5.5% 5.5%Electricity and other utilities 5,247.5 4,587.2 660.3 14.4% 3.3% 3.4%Rent 4,700.2 4,429.6 270.6 6.1% 2.9% 3.3%Supplies 3,150.1 2,570.0 580.1 22.6% 2.0% 1.9%Repairs and maintenance 1,578.6 1,218.6 360.0 29.5% 1.0% 0.9%Security and janitorial 983.3 795.8 187.5 23.6% 0.6% 0.6%Communication 289.7 227.2 62.5 27.5% 0.2% 0.2%Professional fees 169.5 57.6 112.0 194.5% 0.1% 0.0%Representation and entertainment 131.9 39.2 92.7 236.5% 0.1% 0.0%Others 3,391.3 2,914.5 476.7 16.4% 2.1% 2.2%

129,897.1 106,527.4 23,369.7 21.9% 80.6% 79.7%


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Consolidated security and janitorial expenses increased primarily as a result of the expansion of the Group’s store network. Consolidated communications expenses increased primarily as a result of the expansion of the Group’s store network. Consolidated professional fees increased due to higher legal fees and professional fees related to recruitments, store design, etc. arising from increase in store network and higher legal fees. Consolidated representation and entertainment expenses increased as a result of the consolidation of Smashburger into the Group. Consolidated other expenses increased as a result of an increase in the number of transactions exempt from value added tax such as sales to persons with disabilities and to senior citizens. Gross Profit As a result of the foregoing, gross profit increased by P3,728.0 million or 14.9% from P25,019.2 million for year 2017 to P28,747.2 million for the year 2018. General and Administrative Expenses Consolidated expenses for the year 2018 increased at a slower rate than revenues despite the consolidation of Smashburger and SuperFoods. This was due to the lower increase in the Philippine business’ consolidated expenses. The following table summarizes the breakdown of the Jollibee Group’s consolidated expenses for the years ended December 31, 2018 and 2017, and the percentage of each expense item to the consolidated revenues:

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See Note 22 to the accompanying Audited Consolidated Financial Statements for details. - Consolidated personnel costs increased primarily as a result of an increase in: (a) basic pay

of existing employees as a result of employee performance or promotion and (b) fringe benefits tax resulting from an increase in the number of stock options that were exercised.

- Consolidated taxes and licenses increased primarily as a result of an increase in business-related taxes and license fees resulting from higher revenues arising from the expansion of the Group’s store network and an increase in same store sales.

- Consolidated professional fees increased primarily as a result of an increase in: (a) legal fees in relation to acquisitions and (b) other professional fees relating to digital marketing, market research and training.

- Consolidated transportation and travel expenses increased primarily as a result of an increase in lodging, mileage and per diem expenses resulting from (a) the Group’s various activities related to the expansion of the Group’s store network such as site visit/evaluation and sourcing and (b) various projects in the Philippines and overseas, such as those pertaining to acquisitions and commissary expansion.

2018 2017 Amount Pct 2018 2017

Personnel costs:Salaries, wages and other employee benefits 8,027.2 6,850.4 1,176.8 17.2% 5.0% 5.1%Stock options expense 312.0 227.5 84.5 37.1% 0.2% 0.2%Pension expense 208.5 194.8 13.8 7.1% 0.1% 0.1%

Taxes and licenses 1,561.7 1,394.4 167.3 12.0% 1.0% 1.0%Professional fees 1,018.3 825.3 193.1 23.4% 0.6% 0.6%Transportation and travel 748.9 577.4 171.5 29.7% 0.5% 0.4%Rent 587.0 516.7 70.3 13.6% 0.4% 0.4%Contracted services 565.3 474.6 90.6 19.1% 0.4% 0.4%Depreciation and amortization 541.9 460.9 81.0 17.6% 0.3% 0.3%Reversals of provision for impairment on:

Property, plant & equipment (408.2) (2.1) (406.1) 19236.0% -0.3% 0.0%Receivables (23.7) (20.7) (3.0) 14.5% 0.0% 0.0%Inventories (6.1) (53.8) 47.7 -88.7% 0.0% 0.0%

Repairs and maintenance 279.9 157.5 122.4 77.7% 0.2% 0.1%Corporate events 234.9 192.2 42.7 22.2% 0.1% 0.1%Membership and subscriptions 160.4 139.6 20.9 15.0% 0.1% 0.1%Communication 158.4 116.1 42.3 36.4% 0.1% 0.1%Training 151.8 134.4 17.3 12.9% 0.1% 0.1%Representation and entertainment 121.3 70.3 51.0 72.5% 0.1% 0.1%Donations 101.1 93.3 7.8 8.4% 0.1% 0.1%Supplies 96.2 89.6 6.6 7.3% 0.1% 0.1%Electricity and other utilities 72.1 55.8 16.3 29.2% 0.0% 0.0%Association dues 69.6 52.0 17.6 33.8% 0.0% 0.0%Loss (gain) on retirement and disposals of:

Property, plant and equipment 45.5 174.5 (129.0) -73.9% 0.0% 0.1%Investment properties - (231.0) 231.0 -100.0% 0.0% -0.2%

Insurance 41.2 21.2 20.0 94.4% 0.0% 0.0%Security and janitorial 26.1 24.4 1.7 7.0% 0.0% 0.0%Impairment in value of:

Receivables 10.2 143.8 (133.6) -92.9% 0.0% 0.1%Inventories 8.3 7.4 0.8 11.2% 0.0% 0.0%Property, plant & equipment - 431.9 (431.9) -100.0% 0.0% 0.3%Other assets - 122.8 (122.8) -100.0% 0.0% 0.1%

Others 751.0 688.3 62.7 9.1% 0.5% 0.5%Total General and Administrative Expenses 15,460.6 13,929.4 1,531.2 11.0% 9.6% 10.4%Advertising and promotions 4,027.6 3,342.9 684.7 20.5% 2.5% 2.5%

19,488.2 17,272.3 2,215.9 12.8% 12.1% 12.9%


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- Consolidated rent expense increased primarily as a result of: (a) an increase in office rent

for existing leases resulting from annual rent escalation, (b) additional rent for new office spaces in the Philippines the PRC and the United States resulting from the growth of the Group’s businesses and (c) the inclusion of SuperFoods Group’s and Smashburger’s respective rent expenses resulting from the consolidation of these entities into the Group. SuperFoods was consolidated in the Group on May 10, 2017

- Consolidated contracted services increased primarily as a result of an increase in outsourced services for the Group’s information management and network development functions resulting from the growth of the Group’s businesses.

- Consolidated depreciation and amortization increased primarily as a result of the growth

of the Group’s fixed asset base resulting from the growth of the Group’s businesses and the impact of PFRS 16, which amounted to P31.5 million in 2018 and to P19.4 million in 2017.

- Consolidated repairs and maintenance increased primarily as a result of: (a) the inclusion of SuperFood’s and Smashburger’s respective repairs and maintenance expenses resulting from the consolidation of these entities into the Group and (b) an increase in licensing fees resulting from the implementation of SAP Business Warehouse.

- Consolidated corporate events increased primarily as a result of an increase in the number of participants in corporate events, including conventions, corporate awards and corporate programme launches, resulting from an increase in headcount.

- Consolidated membership and subscription increased primarily as a result of an increase

in: (a) headcount and (b) membership and subscription fees in various organizations.

- Consolidated communication expenses increased primarily as a result of: (a) an increase in telephone and internet-related expenses, (b) the implementation of Office 365 in the Group’s Philippine business and (c) the inclusion of SuperFoods’ and Smashburger’s respective communications expenses resulting from the consolidation of these entities into the Group.

- Consolidated training expenses increased primarily as a result of an increase in the number of training programmes such as talent development programmes (including Leadership Enhancement and Acceleration Programme), coaching programmes and JFC University training programmes for store management teams.

- Consolidated representation and entertainment expenses increased primarily as a result of the inclusion of SuperFoods’ and Smashburger’s respective representation and entertainment expenses resulting from the consolidation of these entities into the Group.

- Consolidated donations increased as a result of an increase in the Group’s net income on which donations are computed as a certain percentage.

- Consolidated supplies expenses increased primarily as a result of an increase in office and janitorial supplies expenses.

- Consolidated electricity and other utilities expenses increased primarily as a result of an increase in usage and power rates.

- Consolidated association dues increased primarily as a result of an increase in the number

of office spaces of the Group and the rate per square meter for various buildings.

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- Consolidated insurance expense increased primarily as a result of an increase in the value

of the Group’s properties resulting from a higher asset appraisal. - Consolidated other expenses increased primarily as a result of an increase in: (a) expenses

related to market research and (b) the number of transactions exempt from value added tax.

- The Group reversed previously recognized provisions for impairment on property, plant and equipment, receivables and inventories amounting to P438.0 million. The Group also incurred loss on retirements and disposals of property, plant and equipment amounting to P45.5 million as a result of change in store ownership, store closures and fixed asset disposals. In addition, the Group recognized provisions for impairment in the value of receivables and inventories amounting to P10.2 million and P8.3 million, respectively, following certain assessments performed by the Group.

Advertising Expenses

Advertising and promotions increased primarily as a result of: (a) an increase in marketing campaigns for new and flagship products and (b) the inclusion of SuperFoods’ and Smashburger’s respective advertising and promotions resulting from the consolidation of these entities into the Group.

Operating Income As a result of the foregoing, operating income increased by P1,512.1 million or 19.5% from P7,746.9 million for year 2017 to P9,259.0 million for year 2018. Interest Income (Expense)

See Note 23 to the accompanying Audited Consolidated Financial Statements for details. Consolidated interest income increased primarily as a result of higher interest rates on short-term deposits and short-term investments. See Note 23 to the accompanying Audited Consolidated Financial Statements for more information. Consolidated interest expense increased primarily as a result of: (a) increased bank loans to fund the: (i) acquisition of Smashburger and (ii) investments in Titan Dining LP and Tortas Frontera (b) higher loan interest rates and (c) impact of PFRS 16, which amounted to P1,728.6 million in 2018 and P1,387.6 million in 2017. See Notes 18 and 23 to the accompanying Audited Consolidated Financial Statements for more information.

2018 2017 Amount Pct 2018 2017Advertising and promotions 4,027.6 3,342.9 684.7 20.5% 2.5% 2.5%


2018 2017 Amount Pct 2018 2017Interest income 424.4 269.4 155.0 57.5% 0.3% 0.2%Interest expense (2,617.5) (1,793.4) (824.1) 46.0% -1.6% -1.3%

(2,193.0) (1,523.9) (669.1) 43.9% -1.4% -1.1%


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Equity in Net Losses of Joint Ventures and Associates

See Note 11 to the accompanying Audited Consolidated Financial Statements for details. Consolidated equity in net losses of joint ventures and associates - net decreased primarily as a result of the group’s share in the net losses of Smashburger arising from the increase in operating expenses of Smashburger and C-Joy Poultry Meats Production Inc. This was offset by the earnings of Entrek (B) SDN BD and Golden Bee Foods Restaurants LLC, the members of the Group that operate Jollibee stores in Brunei and the UAE, respectively. Other Income

See Note 23 to the accompanying Audited Consolidated Financial Statements for details. Consolidated other income increased primarily as a result of: (a) the reversal of long outstanding accruals and liabilities resulting from the reassessment of validity of outstanding accruals and other liabilities and (b) no provisions being made in 2018. This was partially offset by decreases in gains from re-measurement of previously held interest and bank charges. Income Taxes

Provision for income tax increased primarily as a result of an increase in: (a) regular corporate income tax due to increase in taxable income, and (b) higher final tax withheld on royalty income and interest income. See Note 24 to the accompanying Audited Consolidated Financial Statements for details.

2018 2017 Amount Pct 2018 2017

Equity in net losses of joint ventures and associates - net (86.8) (282.6) 195.9 69.3% -0.1% -0.2%


2018 2017 Amount Pct 2018 2017

Write-off of liabilities 2,343.3 1,547.2 796.1 51.5% 1.5% 1.2%Gain from re-measurement of previously held interest 754.8 1,328.7 (573.9) -43.2% 0.5% 1.0%Bank charges (317.8) (165.3) (152.4) 92.2% -0.2% -0.1%Rebates and suppliers' incentives 194.9 189.5 5.5 2.9% 0.1% 0.1%Pre-termination of operating leases 193.2 52.8 140.5 266.1% 0.1% 0.0%Penalties and charges 62.5 69.6 (7.1) -10.3% 0.0% 0.1%Marked-to-market loss on derivatives (49.8) (129.4) 79.6 -61.5% 0.0% -0.1%Foreign exchange loss (34.6) (63.5) 28.9 45.5% 0.0% 0.0%Charges to franchisees 24.7 19.0 5.7 30.0% 0.0% 0.0%Reversal of impairment loss on interest in an associate 16.7 - 16.7 100.0% 0.0% 0.0%Gain on available-for-sale financial assetss 10.0 - 10.0 100.0% 0.0% 0.0%Other rentals 8.7 17.5 (8.8) -50.5% 0.0% 0.0%Provisions - (794.6) 794.6 -100.0% 0.0% -0.6%Loss on divestment of subsidiaries and interese in a joint - (116.2) 116.2 -100.0% 0.0% -0.1%Insurance claims and others 136.0 180.5 (44.5) -24.7% 0.1% 0.1%

3,342.5 2,135.6 1,206.9 56.5% 2.1% 1.6%


2018 2017 Amount Pct 2018 2017Current 2,822.1 2,310.6 511.5 22.1% 1.8% 1.7%Deferred (142.0) (727.7) 585.7 -80.5% -0.1% -0.5%

2,680.1 1,582.9 1,097.2 69.3% 1.7% 1.2%


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Net Income

As a result of the factors discussed above, consolidated net income for 2018 increased compared to 2017. However, net income margin for 2018 declined by 0.2% over 2017. Net Income Attributable to Equity Holders of the Parent Company

Consolidated net income attributable to equity holders of the Parent Company increased by 18.3% YoY, higher than the 17.7% increase in consolidated net income as share in losses of non-controlling interests increased due to Smashburger. Basic earnings per share for 2018 grew by 17.6% to P7.555. Financial Condition As at December 31, 2018 Versus December 31, 2017 The Jollibee Group ended 2018 with consolidated total assets of P150,512.9 million, 30.2% higher than the P115,619.4 million consolidated total assets as at the end of 2017. The following explain the significant movements in the asset accounts: - The Jollibee Group’s consolidated cash and cash equivalents increased to P23,285.9

million, P2,178.4 million or 10.3% higher than the balance at year-end 2017, mainly due to proceeds from loans availed partly offset by uses of funds to settle loans and other payables. The movements in the Jollibee Group’s cash will be explained further in the cash flow discussion.

- Short-term investments decreased by P530.2 million or 37.5% due to reclassification to

cash and cash equivalents of deposits that have matured.

- Consolidated receivables and contract assets increased by P921.7 million or 23.4% to P4,862.7 million primarily due to higher receivables from franchisees for their commissary purchases and royalty fees, relative to increase in sales. Average collection period was maintained at 10 days.

- Consolidated inventories increased by P1,976.7 million or 28.9% due to commodity price

increases as well as the impact of the depreciation of the Philippine Peso. The increase in average diesel price also contributed to the higher cost of inventories.

2018 2017 Amount Pct

Net Income 7,641.6 6,493.0 1,148.6 17.7%Net Income Margin 4.7% 4.9%

ChangeYear Ended December

2018 2017 Amount PctNet Income Attributable to Equity Holders

of the Parent Company 8,212.6 6,939.6 1,273.0 18.3%


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- Consolidated other current assets increased mainly due to increase in prepaid taxes, prepaid

rent, prepaid insurance, prepaid advertising and deposits to suppliers and other third parties. See Note 9 to the accompanying Audited Consolidated Financial Statements for the terms and conditions of other current assets.

The Company has a current ratio of 1.07:1.00 as at December 31, 2018, lower than the current ratio of 1.20:1.00 as at December 31, 2017. - Consolidated financial assets at fair value through profit or loss increased due to increase

in fair value of investments, reported in accordance with PFRS 9.

- Consolidated interests in and advances to joint ventures, co-venturers and associates decreased by P3,980.5 million or 53.1% to P3,512.2 million due to the acquisition of non-controlling interest in Smashburger amounting to P5,345.5. See Note 11 to the accompanying Audited Consolidated Financial Statements for more information.

- Consolidated property, plant and equipment increased by P5,802.8 million or 27.8% to P26,672.5 million, net of accumulated depreciation, primarily due to investments in new stores and renovation of existing stores and investments in commissaries.

- Right-of-use assets increased mainly due to the consolidation of Smashburger and

SuperFoods.

- The increase in trademarks, goodwill and other intangible assets pertains to the trademarks of P10,414.0 million and goodwill of P5,345.5 million arising from the acquisition of the Smashburger. The acquisition of the remaining 15% stake in Smashburger was completed on December 14, 2018. Other intangibles likewise increased by P47.7 million.

- Consolidated operating lease receivables decreased by P93.5 million or 59.3% to P64.3 million, which is the cumulative difference of rent income recognized under the straight-line method and the rent amounts in accordance with the terms of the lease agreements.

- Consolidated finance lease receivable decreased by P19.9 million or 9.7% to P184.8 million

due to payments received from lessees, partly offset by recognition of new lease receivables and finance income.

- The increase in consolidated derivative asset pertains to the unrealized gain position on the

interest rate swap that amounted to P70.9 million. This is due to the lower fixed rate compared to the current floating rate, which is based on the 3 months USD LIBOR. See Note 18 to the accompanying Audited Consolidated Financial Statements for details.

- Deferred tax assets increased by P429.0 million or 10.0% to P4,711.8 million, mainly due

to the recognition of deferred tax assets on stock options and increase in excess of MCIT over Regular Corporate Income Tax (RCIT). See Note 24 to the accompanying Audited Consolidated Financial Statements for details.

- Consolidated other noncurrent assets increased by P240.5 million or 6.9% to P3,751.0 million, mainly from increase in refundable and security deposits for new stores.

Consolidated current liabilities amounted to P39,626.6 million, P8,693.8 million or 28.1% higher than the 2017 year-end balance of P30,932.8 million. The following explain the significant movements in current liabilities:

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- Consolidated trade payables and other current liabilities increased by P3,462.2 million or

13.7% to P28,716.8 million, relative to increase in consolidated inventories, increase in employee-related accruals, customer deposits and store accruals.

- Consolidated income tax payable increased by P39.7 million or 17.7% to P263.5 million, due to higher taxable income in 2018.

- Current portion of long-term debt increased, from P1,216.2 million to P4,892.1 million, due to reclassification of loans maturing within one year from non-current portion to current portion of long-term debt, partly offset by payments made during the year.

- Current portion of lease liabilities increased by P1,504.9 million or 35.5% to

P5,743.1million, due to reclassification of lease liabilities payable within the year from non-current portion to current portion of lease liabilities, partly offset by payments made during the year.

- Current portion of liability for acquisition of businesses pertains to the remaining balance

of re-acquired franchise rights of Smashburger, partially offset by subsequent payments made.

Consolidated noncurrent liabilities amounted to P61,890.1 million, 44.3% or P18,993.8 million higher than the December 31, 2017 restated audited balance of P42,896.3 million. The following explain the significant movements in noncurrent liabilities: - Consolidated noncurrent portion of lease liabilities increased by P10,443.0 million or

42.7% to P34,887.7, due to additional leases arising from increase in number of company-owned stores.

- Consolidated noncurrent portion of long-term debt increased by P6,471.2 million to

P21,372.3 million, due to bank loans of P11,127.1 million, availed in February to November 2018, partly offset by reclassification to current portion of loans maturing within one year. See Notes 18, 30 and 31 to the accompanying Audited Consolidated Financial Statements for details.

- Consolidated pension liability decreased by P168.9 million to P1,320.6 million, due to

additional contributions to plan assets and actuarial changes arising from changes in financial assumptions.

- Deferred tax liabilities as of December 31, 2018 increased by P2,296.6 million or 193.8% to P3,481.5 million compared to the 2017 year-end audited balance of P1,184.9 million. The increase was due to taxable temporary differences pertaining substantially to excess of fair value over book value of property, plant and equipment and other intangibles of Smashburger and adjustments related to PFR 16. See Note 24 of the accompanying Audited Consolidated Financial Statements for details.

Consolidated total equity increased by P7,205.8 million or 17.2% to P48,996.1 million primarily due to the income for 2018 that amounted to P8,212.6 million, increase in cumulative translation adjustments and additional paid-in capital, partly offset by cash dividend payments. The following explain the significant movements in Equity:

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The change of P248.7 million (income) in cumulative translation adjustment was due to the depreciation of the Philippine Peso versus the RMB for end of December 2018 (Peso to RMB: 7.68) compared to December 31, 2017 (Peso to RMB: 7.64) and the depreciation of the Philippine Peso versus the USD for end of December 2018 (Peso to USD: 52.58) compared to December 31, 2017 (Peso to USD: 49.93) which resulted to the increase in value of the Jollibee Group’s net assets. The improvement in consolidated other comprehensive income on derivative liability by P70.9 million was due to the recognition of derivative asset for the interest rate swap compared to a derivative liability last year. - The increase in consolidated retained earnings of ₱5,527.6 million pertains to the

consolidated net income (attributable to equity holders of the Parent Company) for 2018 amounting to P8,329.9 million, partly offset by cash dividends paid during the year amounting to P2,691.8 million. JFC also disclosed in Q3 2018 the release of previously appropriated retained earnings amounting to ₱18,200.0 million as at September 30, 2018 related to the completed projects in 2013 to 2018 and the appropriation of retained earnings amounting to ₱20,000.0 million. Details are as follows:

Projects Timeline Amount Capital Expenditures 2019 - 2024 P=12,000,000 Acquisition of Businesses 2019 - 2024 8,000,000 P=20,000,000

Liquidity and Capital Resources Consolidated net cash provided by operating activities amounted to P20,472.7 million at end of December 2018, P2,726.7 million or 15.4% higher compared to the consolidated net cash provided by operating activities of P17,746.0 million as at December 2017 mainly from higher income, partly offset by higher inventories and income taxes paid. Consolidated net cash used in investing activities amounted to P13,974.9 million at end of December 2018, P3,430.5 million or 32.5% higher compared with the net cash used in investing activities of P10,544.4 at the end of December 2017. The increase was primarily due the acquisition of additional 45% stake in Smashburger and higher capital expenditures for 2018 compared to 2017. Consolidated net cash provided by financing activities amounted to P4,289.1 million at the end of December 2018, mainly from proceeds from bank loans amounting to P11,126.5 million, partly offset by payments of bank loans, interest on bank loans and cash dividends. Cash and cash equivalents at the end of December 2018 stood at P23,285.9 million, P2,178.4 million or 10.3% higher than the December 31, 2017 audited balance of P21,107.5 million.

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Discussion and Analysis of Material Events and Uncertainties

1. There were no events during the period that will trigger direct or contingent financial obligation that is material to the Jollibee Group.

2. There were no material off-balance sheet transactions, arrangements, obligations

created during the reporting period.

3. Consolidated capital expenditures budget for 2019 amounted to P17,200.00 million, of which P8,000.0 million will be used for new stores and renovations, P6,000.0 million for commissary expansion and the rest for head office capital expenditures.

4. Food service operations have both peak and lean seasons. Historically, sales in the

second and fourth quarters are strong due to the summer and the Christmas seasons, respectively. Demand during the first and third quarters usually slackens. The material financial impact of this seasonality has been considered in the Jollibee Group’s consolidated financial forecast.

5. All of the Jollibee Group’s income arose from its continuing operations. 6. Event after the Reporting Period: Dividend Declaration On April 8, 2019 the BOD of the Parent Company approved a regular cash dividend of P1.23 of common stock to all stockholders of record as of April 26, 2019. Consequently, the cash dividend is expected to be paid out by May 9, 2019. The cash dividend is 7.9% higher than the P1.14 regular dividend declared on April 6, 2018.

Discussion of the Jollibee Group’s Top Five (5) Key Performance Indicators System Wide Sales System Wide Sales is a measure of all sales to consumers both from company-owned and franchised stores.

As of end Dec 2018 As of end Dec 2017 System Wide Sales P212,185.4 million P171,761.0 million % Growth vs LY 23.5% 15.2%

Revenues Revenues is a measure of (1) all sales made by the Jollibee Group’s company-owned stores (both food and novelty sales); (2) Commissary sales to franchised stores; (3) fees from stores operated by franchisees; (4) rental revenues of the Jollibee Group’s investment properties; and (5) revenues from services rendered by the in-house Construction and Business Support Service Groups.

As of end Dec 2018 As of end Dec 2017 Revenues P161,167.8 million P133,583.1 million % Growth vs LY 20.6% 15.5%

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Net Income Margin Net Income Margin is the ratio of the Jollibee Group's earnings after interest and tax. This is computed by dividing consolidated net income by consolidated revenues. The quotient is expressed in percentage. This measures the Jollibee Group’s return for every peso of revenue earned, after deducting cost of sales, operating expenses, interests and taxes.

As of end Dec 2018 As of end Dec 2017 Net Income P7,641.6 million P6,493.0 million % to Revenues 4.7% 4.9%

Basic Earnings Per Share (EPS) EPS is the portion of the Jollibee Group’s profit allocated to each outstanding share of common stock. This is computed by dividing the net income for the period attributable to the equity holders of the Parent Company by the weighted average outstanding shares during the same period. This serves as an indicator of the Jollibee Group’s profitability.

Return on Equity (ROE) ROE is the ratio of the JFC Group’s net income attributable to equity holders of the Parent Company to equity. It is computed by dividing annualized net income attributable to equity holders of the Parent Company by average equity attributable to equity holders of the Parent Company. ROE is a measure of return for every peso of invested equity. The JFC Group also uses ROE for comparing its profitability with other firms in the same industry. Annualized As of end Dec 2018 As of end Dec 2017 Return on Equity 18.8% 18.8%

As of end Dec 2018 As of end Dec 2017 EPS (Basic) P7.555 P6.423 % Growth vs LY 17.6% 11.8%

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Financial Ratios

Jollibee Foods Corporation and SubsidiariesDec-18 Dec-17

Formula Audited Audited

Liquidity Ratios

Current Assets 1.07 1.20 Current Liabilities

Financial Leverage Ratios

Total Assets 3.17 2.89 Total Equity Attributable to Equity Holders of the Parent Company

Total Debt* 68.1% 64.8%Total Debt + Equity Attributable to EquityHolders of the Parent Company

Total Debt* - Cash and Cash Equivalents - Short-term Investments 62.0% 56.2%

(Total Debt* - Cash and Cash Equivalents - Short-term Investments) + Equity Attributable to Equity Holders of the Parent Company

Earnings before Interest and Taxes** 4.9 5.5 Interest Expense**

Net Income** + Depreciation and Amortization** 0.19 0.21 Total Liabilities

Net Income** 0.08 0.09 Total Liabilities

* Including both total current and total noncurrent liabilities** Annualized

Debt Service Coverage Ratio

Current Ratio

Asset to Equity Ratio

Debt Ratio

Net Debt Ratio

Interest Coverage Ratio

Solvency Ratio

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7. FINANCIAL STATEMENTS

Please see Annexes pertaining to 2019 Audited Consolidated and Parent Financial Statements. 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in and disagreements with accountants on accounting and financial disclosure.

[Part III starts on the following page.]

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PART III. CONTROL AND COMPENSATION INFORMATION 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER The following Directors of the Company were elected during the stockholders meeting on June 28, 2019 and shall continue to be such until their successors have been elected and have qualified: Tony Tan Caktiong Mr. Tan Caktiong, born in 1953, 66, Filipino, is the Chairman of the Board of Directors of the Company. He has been a member of the Board since 1978 and was President and Chief Executive Officer of the Company until July 1, 2014, after which he continued to serve as Chairman of the Board. Mr. Tan Caktiong is a member of the Executive, Nomination, and Corporate Governance Committees of the Board of Directors. He is also the Chairman of the Compensation Committee. Other directorships and trusteeships are: Listed Companies Non-Executive

Director and Co-chairman

DoubleDragon Properties Corp.

Non-listed Companies

Director Fresh N’ Famous Foods, Inc. Director Mang Inasal Phils. Inc. Director BKTitans, Inc. Director PFN Holdings Corporation Director Perf Restaurants, Inc. Director Perf Trinoma, Inc. Director Perf MOA Pasay, Inc. Director RRB Holdings, Inc. Director Red Ribbon Bakeshop, Inc. Director Honeystar Holdings Corporation Director Chanceux, Inc. Director Bee Good! Inc. Director SJBF LLC Director Honeybee Foods (Canada) Corporation Director Honeybee Foods Corp. Director Red Ribbon Bakeshop Inc. (USA) Director Chowking Food Corporation (USA) Director Yong He Holdings Co. Ltd. Director Centenary Ventures Limited Director Southsea Binaries Limited Director Belmont Enterprises Ventures Ltd. Director Jollibee International (BVI) Ltd. Director WJ Investments Limited1

1 Pending liquidation.

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Director Jollibee Worldwide Pte. Ltd. Director JSF Investments Pte. Ltd. Director Golden Cup Pte. Ltd. Director Golden Plate Pte. Ltd. Director Golden Beeworks Pte. Ltd. Director Happy Bee Foods Processing Pte. Ltd. Director Super Magnificent Coffee Company Pte. Ltd.2 Director The Coffee Bean & Tea Leaf (Singapore) Pte. Ltd.3 Director SF Vung Tau Joint Stock Company Director Blue Sky Holdings Limited Director Jollibee (China) Food & Beverage Management Co. Ltd. Director Beijing Golden Coffee Cup Food & Beverage Management Co. Ltd. Director Beijing New Hongzhuangyuan Food & Beverage Management

Co. Ltd.4 Director Hangzhou Yonghe Food and Beverage Co. Ltd. Director Hangzhou Yongtong Food and Beverage Co. Ltd.5 Director Tianjin Yong He King Food & Beverage Co. Ltd. Director Beijing Yong He King Food and Beverage Co. Ltd. Director Shenzhen Yong He King Food and Beverage Co. Ltd. Director Wuhan Yong He King Food and Beverage Co. Ltd. Director Happy Bee Foods Processing (Anhui) Co. Ltd. Director Shanghai Belmont Enterprises Management & Adviser Co., Ltd.6 Director Honeysea Corporation Director Honeystar Holdings Corporation Director Hyper Dynamic Corporation Director Mainspring Resources Corporation Director Winall Holding Corporation Director Imperial Premium Treasures, Inc. Director Queenbee Resources Corporation Director Centregold Corporation Trustee Jollibee Group Foundation, Inc.

Director7 STI College Tanauan Inc. Board Director Temasek Foundation International CLG Limited

Member International Advisory Board, The Philharmonic-Symphony Society of New York, Inc.

William Tan Untiong Mr. Tan Untiong, born in 1953, 66, Filipino, has been the Corporate Secretary of the Company since 1994, and a member of the Board since 1993. He is a member of the Executive, Nomination and Audit Committees of the Board of Directors. Mr. Tan Untiong has also been the Vice President for Real Estate since 1989. Effective January 1, 2014, Mr. Tan Untiong is the Chief Real Estate Officer of JFC.

2 As of June 28, 2019. 3 Effective September 24, 2019. 4 As executive director. 5 As general manager. 6 Deregistered as of August 28, 2019. 7 Mr. Tan Caktiong is also the Chairman.

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Other directorships and trusteeships are: Listed Companies Non-Executive Director


Non-listed Companies Director Fresh N’ Famous Foods Inc. Director Mang Inasal Phils. Inc. Director BKTitans, Inc. Director Chanceux, Inc. Director RRB Holdings, Inc. Director Red Ribbon Bakeshop, Inc. Director Grandworth Resources Corporation Director Zenith Foods Corporation Director Belmont Enterprises Ventures Ltd. (BVI) Director Yong He Holdings Co. Ltd. Director Centenary Ventures Limited Director Honeybee Foods (Canada) Corporation Director Honeybee Foods Corporation Director Red Ribbon Bakeshop Inc. (USA) Director Chowking Food Corporation (USA) Director WJ Investments Limited8 Director Golden Plate Pte. Ltd. Director Golden Cup Pte. Ltd. Director Entrek (B) SDN BHD Director Jollibee (China) Food & Beverage Management Co. Ltd. Director Hangzhou Yong He Food and Beverage Co. Ltd. Director Tianjin Yong He King Food & Beverage Co. Ltd. Director Beijing Yong He King Food and Beverage Co. Ltd. Director Shenzhen Yong He King Food and Beverage Co. Ltd. Director Wuhan Yong He King Food and Beverage Co. Ltd. Director Beijing Golden Coffee Cup Food & Beverage Management Co.

Ltd. Director Adgraphix, Inc. Director JC Properties & Ventures Corporation9 Director Honeystar Holdings Corporation Director Centregold Corporation Director Winall Holding Corporation Director Iconnect Multimedia Network, Inc. Director Mainspring Resources Corporation Director Queenbee Resources Corporation Director Hyper Dynamic Corporation Director Kingsworth Corporation Director Honeysea Corporation Trustee Jollibee Group Foundation, Inc.

8 Pending liquidation. 9 For liquidation.

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Ernesto Tanmantiong Mr. Tanmantiong, born in 1958, 61, Filipino, is the President and Chief Executive Officer of the Corporation, effective January 1, 2014. He has been a member of the Board since 1987, and previously served as the Treasurer and Chief Operating Officer of the Company. He is also a member of the Executive and Nomination Committees of the Board of Directors. Other directorships and trusteeships are:

Director Fresh N’ Famous Foods, Inc. Director BKTitans, Inc. Director Chanceux, Inc. Director Red Ribbon Bakeshop, Inc. Director RRB Holdings, Inc. Director Grandworth Resources Corp. Director C-Joy Poultry Meats Production Inc. Director C-Joy Poultry Realty Inc. Director Bee World UK Limited Director Cibo Felice S.R.L. Director Bee World Spain SRL Director Honeybee Foods (Canada) Corporation Director Honeybee Foods Corporation Director Red Ribbon Bakeshop Inc. (USA) Director Chowking Food Corporation (USA) Director SJBF LLC Director Jollibee Worldwide Pte. Ltd. Director Golden Plate Pte. Ltd. Director Golden Beeworks Pte. Ltd. Director Happy Bee Foods Processing Pte. Ltd. Director Yong He Holdings Co. Ltd. Director Centenary Ventures Limited Director Belmont Enterprises Ventures Ltd. Director Jollibee International (BVI) Ltd. Director Jollibee Hong Kong Ltd. Director Hanover Holdings Ltd.

Commissioner P.T. Jollibee Indonesia Commissioner P.T. Chowking Indonesia

Director Jollibee Vietnam Co. Ltd. Director Golden Bee Foods Restaurant LLC Director Happy Bee Foods Processing (Anhui) Co. Ltd. Director Jollibee (China) Food & Beverage Management Co. Ltd. Director Hangzhou Yonghe Food and Beverage Co. Ltd. Director Tianjin Yong He King Food & Beverage Co. Ltd. Director Beijing Yong He King Food and Beverage Co. Ltd. Director Wuhan Yonghe King Food and Beverage Co. Ltd. Director Adgraphix, Inc. Director EST58 Corporation Director Kingsworth Corporation Director Imperial Premium Treasures, Inc. Director Honeystar Holdings Corporation Director Hyper Dynamic Corporation Director Centregold Corporation Director Honeysea Corporation Director Queenbee Resources Corporation

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Director Winall Holding Corporation Director Mainspring Resources Corporation Trustee Jollibee Group Foundation, Inc.

Joseph C. Tanbuntiong Mr. Tanbuntiong, born in 1963, 56, Filipino, was elected to the Board in 2013. He was elected as the Company’s Treasurer on June 27, 2014. He is a member of the Executive and Compensation Committees of the Board of Directors. Mr. Tanbuntiong joined the Company in 1993. He is currently the President - Regional Business Head for Philippines of the Jollibee Group of Companies. He was previously President of the Jollibee Business Unit (Philippines). Other directorships are: Listed Companies

Non- Executive Director


Non-listed Companies Director Red Ribbon Bakeshop, Inc. Director RRB Holdings, Inc. Director BKTitans, Inc. Director Perf Restaurants, Inc. Director Perf MOA Pasay, Inc. Director Perf Trinoma, Inc. Director PFN Holdings Corporation Director JSF Investments Pte. Ltd. Director SF Vung Tau Joint Stock Company Director Golden Bee Foods Restaurant LLC Director Honeystar Holdings Corporation Director Jaysforjay, Inc. Director 4Jays San Juan Holdings, Inc. Trustee Jollibee Group Foundation, Inc.

Ang Cho Sit Mr. Ang, born in 1950, 69, Filipino, has been a member of the Board since 1978. He is a member of the Compensation Committee of the Board of Directors. Other directorships are:

Director Freemont Foods Corporation Director Grandworth Resources Corporation Director A-Star Holding Corporation Director Longshore Corporation Director Hyper Dynamic Corporation Director Venice Corporation

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Antonio Chua Poe Eng Mr. Chua Poe Eng, born in 1947, 72, Filipino, has been a member of the Board since 1978. He is a member of the Audit Committee of the Board of Directors. Other directorships are:

Chairman, President Honeyworth Corporation Director Albany Resources Corporation Director Hyper Dynamic Corporation

Ret. Chief Justice Artemio V. Panganiban Mr. Panganiban, born in 1936, 83, was elected to the Board of Directors in 2012. Mr. Panganiban was the Chief Justice of the Philippine Supreme Court from 2005 to 2006. Concurrent with his position as Chief Justice, he was also the Chairperson of the Presidential Electoral Tribunal, the Judicial and Bar Council and the Philippine Judicial Academy. Prior to his elevation as Chief Justice in 2005, Mr. Panganiban was a Justice of the Supreme Court in 1995 to 2005. Mr. Panganiban is a member of the Executive and Compensation Committees and is the Chairman of the Nomination Committee. Other directorships and affiliations are:

Listed Companies Independent Director Asian Terminals, Inc. Independent Director First Philippine Holdings Corp. Independent Director GMA Network, Inc. Independent Director GMA Holdings, Inc. Independent Director MERALCO Independent Director Metro Pacific Investment Corp. Independent Director Petron Corporation Independent Director Philippine Long Distance Telephone Company Independent Director Robinsons Land Corp. Senior Adviser Metropolitan Bank and Trust Company Member, Advisory Council Bank of the Philippine Islands Adviser


Non-listed Companies Independent Director Asian Hospital Inc. Independent Director Liberty Telecoms Holdings Inc. Independent Director Metro Pacific Tollways Corp. Independent Director Tollways Management Corporation Director TeaM Energy Corporation Chairman, Board of Advisors Metrobank Foundation Chairman, Board of Directors Pan Philippine Resources Corp. Chairman, Board of Directors Peecee Holdings Corporation Chairman, Board of Trustees Foundation for Liberty and Prosperity Chairman, Board of Trustees Philippine Judges Foundation Chairman, Philippine Chapter ASEAN Law Association Chairman Emeritus Philippine Dispute Resolution Center, Inc. President Manila Metropolitan Cathedral – Basilica Foundation

109

Trustee Tan Yan Kee Foundation, Claudio Teehankee Foundation, Speaker Laurel Foundation and ASEAN Law Foundation

Adviser Asian Institute of Management Corporate Governance Center, World Bank (Philippines) and Johann Strauss Society

Consultant Judicial and Bar Council Member Permanent Court of Arbitration, The Hague,

Netherlands Monico V. Jacob Mr. Jacob, born in 1945, 74, Filipino, has been a member of the Board since 2000. Mr. Jacob is an Independent Director and is a member of the Nomination and Corporate Governance Committees of the Board of Directors. He is also the chairman of the Audit Committee. Other directorships are:

Listed Companies Independent Director Lopez Holdings Corp. Independent Director Phoenix Petroleum Philippines, Inc. Independent Director Rockwell Land Corporation Director Asian Terminals, Inc. Director STI Education Systems Holdings, Inc. Non-listed Companies Director De Los Santos – STI College Director Eximious Holdings, Inc. Director GROW Vite, Inc. Director Global Resource for Outsourced Workers, Inc. Director Information and Communications Technology (i-Academy), Inc. Director Maestro Holdings, Inc. Director Philippines First Insurance Co., Inc. Director Philippine Life Financial Assurance Corp. Director Philhealthcare, Inc. Director PhilPlans First, Inc. Director Rosehills Memorial Management, Inc. Director STI Education Services Group, Inc. Director STI West Negros University Director Tantivy Holdings, Inc. Director TechZone Philippines, Inc. Director Total Consolidated Asset Management, Inc.

Cezar P. Consing Mr. Consing, born in 1959, 60, Filipino, was elected as an Independent Director of the Company in 2010. He is a member of the Compensation and Audit Committees of the Board of Directors. He is also the chairman of the Corporate Governance Committee. Mr. Consing is the President and Chief Executive Officer of the Bank of the Philippine Islands (BPI) and a Senior Managing Director of Ayala Corporation, BPI’s controlling shareholder. From 2004 to 2013, Mr. Consing was a partner with The Rohatyn Group, a New York-based investment management company. From 1985 to 2004, he was an investment

110

banker with J.P. Morgan & Co., and was head or co-head of Investment Banking in Asia Pacific (ex-Japan) from 1999 to 2004. Other directorships are:

Listed Companies Director Bank of the Philippine Islands Director

National Reinsurance Corp. of the Philippines (PhilNare)10

Non-listed Companies Chairman BPI Family Savings Bank, Inc. Chairman BPI/MS Insurance Corp. Director BPI-Philam Life Assurance Corp. Chairman BPI Capital Corp. Chairman BPI Europe PLC Director BPI Asset Management and Trust Corporation Chairman BPI Century Tokyo Lease & Finance Corp. Chairman BPI Century Tokyo Rental Corp. Vice-Chairman Board of Trustees, BPI Foundation, Inc. Director BancNet, Inc. Director LGU Guarantee Corp. Board Director & Non-Executive Chairman

Filgifts.com

Board Partner TRG Management Principals LP Director Sqreem Technologies Private Ltd. Director Endeavor Philippines

Assistant Corporate Secretary Valerie Feria Amante Atty. Amante, born in 1974, 45, Filipino, is the Assistant Corporate Secretary of the Company. She is also Vice-President, Head, Corporate Legal and Head, Corporate Ethics. She joined the Company in January 2007. She was previously connected with Ayala Land, Inc. and previous to that, SyCip Salazar Hernandez & Gatmaitan. Corporate Officers The Company’s Corporate Officers are Messrs. Tony Tan Caktiong, Ernesto Tanmantiong, William Tan Untiong, Ysmael V. Baysa, Daniel Rafael Ramon Z. Gomez III and Arsenio M. Sabado. Ysmael V. Baysa Mr. Baysa, born in 1956, 63, Filipino, is Chief Financial Officer and Compliance Officer. He joined the Company in 2003. Previously, Mr. Baysa was Senior Vice-President for Financial Comptrollership, Human Resources and Corporate Planning of Union Bank. He was also Finance Director of Procter & Gamble from 1993 to 2001.

10 Until June 27, 2019.

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Arsenio M. Sabado Mr. Sabado, born in 1966, 53, Filipino, is Chief Human Resources Officer. He joined the Company in December 2018. He was previously Head of Human Resources and Organization Development of ABS-CBN Group. Daniel Rafael Ramon Z. Gomez III Mr. Gomez, born in 1972, 47, Filipino, is Chief Marketing Officer. He joined the Company in July 2008. He was previously Managing Director for Skin, Deodorants and Home Care of Unilever Philippines and prior to that, Category Director for Skin & Deodorants in the same company. Heads of Philippine Units The heads of the Company’s Philippine units are: Joseph C. Tanbuntiong Mr. Tanbuntiong, born in 1963, 56, Filipino, is the President - Regional Business Head of Philippines. He was previously President of the Jollibee Business Unit (Philippines). Justo S. Alano III Mr. Alano, born in 1965, 54, Filipino, is the President of Jollibee Business Unit. He joined the Company in 2006 and was formerly the President of the Mang Inasal Business Unit. Prior to this, he was Head of the Metro Manila-North Regional Business Unit of the Jollibee Business Unit. Rowel D. Vijandre Mr. Vijandre, born in 1970, 49, Filipino, is the President of Chowking Business Unit. He joined the Company in October 2015. Prior to joining the Company, he was the President for L’Oreal Philippines and previous to that, he was the General Manager for Johnson and Johnson Consumer Vietnam. Andrew L. Santos, Jr. Mr. Santos, born in 1967, 52, Filipino, is the President of Chowking Business Unit effective July 1, 2019. Prior to joining the Company, he served as the First Vice President and Head of Consumer Marketing of PLDT-Smart Communications and previous to that, he was the Regional President of Wyeth Asia Pacific Rim. Jose Alexander P. Subido Mr. Subido, born in 1964, 55, Filipino, is the President of Mang Inasal Business Unit. He joined the Company in January 2000 and was formerly the head of the National Business Unit of Jollibee Philippines.

112

Zinnia Carmencita S. Rivera Ms. Rivera, born in 1961, 58, Filipino, is the President of Red Ribbon Business Unit. She joined the Company in 2013 and was previously the President and Managing Director for Johnson & Johnson Philippines. Joseph Michael V. Castro Mr. Castro, born in 1973, 46, Filipino, is the General Manager of Greenwich Business Unit effective January 1, 2019. He joined the Company in 2004 and was formerly Head of the Metro Manila – North Regional Business Unit of the Jollibee Business Unit. Prior to this, he was the National Operations Head of the Red Ribbon Business Unit. Jose Amado M. Dominguez Mr. Dominguez, born in 1964, 55, Filipino, is the General Manager of Burger King Business Unit effective May 1, 2019. Prior to joining the Company, he served as Market Director of Mars Wrigley Confectionery overseeing the total business in Philippine and Indonesia and previous to that, he was the Vice President and Business Executive Manager of the Ice Cream Business Unit of Nestle Philippines. Heads of International Units: The heads of International Units are: Carlson Choi Mr. Choi, born in 1973, 46, is the Chief Digital Officer, International Business. He joined the Company in August 2016. Prior to joining the Company, he was the Vice President of Digital Initiatives Group and General Manager of Apps & Games of Mattel Inc. Thomas Ryan Mr. Ryan, born in 1957, 62, is the Chief Product Development Advisor for JFC Global. He was previously the Chief Executive Officer of Smashburger Business. Yixing Frank Sheng Mr. Sheng, born in 1967, 52, is the Internal Audit Head, International Business. He joined the Company in June 2018. Prior to joining the Company, he was head of internal audit and internal control in Schneider, Greater China, and Yum! China division. Thai Phi Diep Mr. Thai, born in 1972, 47, is the Chief Executive Officer of the SuperFoods Group (Highlands Coffee and PHO24).

113

Heads of People’s Republic of China Units: The heads of PRC Units are: Carl Brian Tancaktiong Mr. Tancaktiong, born in 1980, 39, is the Chairman of JFC China. He was previously President of Yong He King Business. Shu-Hwa Shirley Chang Ms. Chang, born in 1963, 56, joined the Company in January 2017 as President of JFC China and Yong He King business. She was previously Managing Director of TGI Friday’s in Taiwan and prior to that, she was Managing Director of McDonalds in Hong Kong. Shih-Chieh Jackson Hsiao Mr. Hsiao, born in 1964, 55, is the Managing Director of the Yong He King Business effective October 1, 2019. Prior to joining the Company, he served as General Manager of YUM Taiwan. Li Yi Mr. Li, born in 1982, 37, is the General Manager of the Hong Zhuang Yuan Business effective August 5, 2019. Prior to joining the Company, he served as Senior Vice President of Xiaoheng Dumpling. Yi Sandy Sun Ms. Sun, born in 1975, 44, joined the Company in November 2018 as the General Manager of Dunkin’ Donuts China Business. Prior to this, Ms. Sun worked in many famous enterprises such as Hilding Anders Sweden (China), Hema Fresh, Shanghai Min, Heinz (China), Unilever and Garden (China). Heads of North America Units: The heads of North America Units are: Rowel D. Vijandre Mr. Vijandre, born in 1970, 49, Filipino, is the President - Regional Business Head of North America effective May 30, 2019. He joined the Company in October 2015 and was previously the President of Chowking Business Unit. Maribeth dela Cruz Ms. Dela Cruz, born in 1965, 54, is the President, Philippine Brands – North America. She was previously General Manager, Philippine Brands – North America. Carl Bachmann Mr. Bachmann, born in 1967, 52, is the President of the Smashburger Business effective August 2019. He joined Smashburger in 2017 and was previously Chief Operating Officer.

114

Head of EMEAA Units Dennis M. Flores Mr. Flores, born in 1963, 56, Filipino, is President – Regional Business Head of EMEAA. He joined the Company in 2000 and was previously Vice President and International Business Head, Jollibee Asia and Middle East, and Chowking Middle East. Heads of Corporate Units: The heads of Corporate Units are: Jose Ma. A. Miñana, Jr. Mr. Minana, born in 1964, 55, Filipino, is the Chief Sustainability and Public Affairs Officer. He joined the Company in 2000. He was previously Country Business Group Head, North America (US and Canada). Fernando S. Yu, Jr. Mr. Yu, born in 1967, 52, Filipino, is the Chief Business Support Officer. Effective September 1, 2018, he became concurrent head of Jollibee Worldwide Services. He joined the Company in 2004 and was previously the President of Chowking Business Unit. Susana K. Tanmantiong Ms. Tanmantiong, born in 1958, 61, Filipino, is the Chief Procurement Officer. She joined the Company in 1984 and was previously Purchasing Vice President of the Company. Valerie Feria Amante Atty. Amante, born in 1974, 45, Filipino, is the Assistant Corporate Secretary of the Company. She is also Vice-President, Head, Corporate Legal and Head, Corporate Ethics. She joined the Company in January 2007. She was previously connected with Ayala Land, Inc. and previous to that, SyCip Salazar Hernandez & Gatmaitan. Marilou N. Sibayan Ms. Sibayan, born in 1969, 50, Filipino, is the Vice President and Comptroller – Worldwide. She joined the Company in July 2004. She was previously connected with Caltex (Asia) Limited and previous to that, SyCip Gorres Velayo & Co., a member firm of Ernst & Young Global Limited. Lorna D. Atun Ms. Atun, born in 1969, 50, Filipino, is the Assistant Vice President for Internal Audit. She joined the Company’s Corporate Audit team in 2006. Prior to this, she was the Comptroller for P.J. Lhuillier Group of Companies.

115

President of the Jollibee Group Foundation, Inc. Grace A. Tan Caktiong Ms. Tan Caktiong, born in 1949, 70, Filipino, is the President of the Jollibee Group Foundation, Inc. since 2004. She was previously connected with the Company as head of the Information Technology Division. Ms. Tan Caktiong brings to JGF her extensive experience in business management and leadership in socio-civil activities. Certain Relationships and Related Transactions Tony Tan Caktiong, Ernesto Tanmantiong, William Tan Untiong and Joseph Tanbuntiong are brothers. Ang Cho Sit is the brother-in-law of Tony Tan Caktiong. Susana K. Tanmantiong is the wife of Ernesto Tanmantiong and sister-in-law of Tony Tan Caktiong, William Tan Untiong and Joseph Tanbuntiong. Antonio Chua Poe Eng is the brother-in-law of Tony Tan Caktiong, Ernesto Tanmantiong, William Tan Untiong and Joseph Tanbuntiong. Grace A. Tan is the wife of Tony Tan Caktiong. Some of the Company’s directors own franchises or have minority interests in companies which own and operate franchised stores of the Company. All such franchises are subject to contracts which have been entered into in on an arms-length basis and on terms similar to those granted to other franchisees. Involvement in Legal Proceedings Neither the Company nor any of its directors or officers were involved in any bankruptcy petition or have been convicted by final judgment by any court, or have been subject to any order, judgment or decree or have violated a securities or commodities law within the past five (5) years. 10. EXECUTIVE COMPENSATION

Name and Position Year Salary (PhP) Bonus (PhP) Total (PhP) Tony Tan Caktiong Chairman

Ernesto Tanmantiong President and Chief Executive Officer

2018 113,562,835 75,289,369 188,852,204

Joseph Tanbuntiong Treasurer, President – Regional Business Head of Philippines

2019 132,266,470 72,534,150 204,800,620

Ysmael V. Baysa Chief Financial Officer

2020* 141,270,090 68,957,442 210,227,532

Daniel Rafael Gomez III Chief Marketing Officer, JFC Group

All other officers and directors as a group unnamed

2018 502,976,282 267,298,511 770,274,793

2019 559,459,699 243,406,406 802,866,105 *Estimates 2020* 582,431,055 230,006,050 812,437,105

116

Compensation of Directors Standard Arrangements Directors of the Company receive a per diem of PhP60,000.00 for attendance in a board meeting. Board meetings are scheduled monthly. A director who attends all regular meetings earns a total of PhP720,000.00 annually. In addition, the Company instituted a performance-based incentive for its directors. The incentive shall be determined by the Compensation Committee.

Other Arrangements The Company has no other arrangements pursuant to which a director is compensated or to be compensated, directly or indirectly. Employment Contracts The Company maintains standard employment contracts with executive officers. The contracts provide for annual salary increases and bonuses. Other than these employment contracts, there are no special compensatory plans or arrangements which result from the resignation, retirement or any other termination of employment of executive officers other than the Company’s retirement plan which is made applicable to all of the Company’s employees. Senior Management Stocks Option and Incentive Plan [Please see page 66] Outstanding Warrants There are no outstanding warrants held by the Chief Executive Officer, other officers and directors as a group. 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT11 (A) Security Ownership of Certain Record and Beneficial Owners

Title of Class

Name and Address of Record Owner

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship No. of Shares Held

Percent

Common

Hyper Dynamic Corporation 6th Floor Jollibee Center San Miguel Ave., Pasig City

Majority of the shares in Hyper Dynamic Corporation are owned or controlled by Tony Tan Caktiong and certain relatives within the second degree of consanguinity or affinity.

Filipino

273,218,750

24.90%

Common

PCD Nominee Corporation G/F Makati Stock Exchange 6767 Ayala Ave., Makati City

Approximately 646,528 scripless shares lodged with Deutsche Regis Partners Inc. are owned by Queenbee Resources Corporation, a special purpose vehicle which

Non-Filipino

281,702,088

25.68%

11 As of December 31, 2019.

117

Title of Class

Name and Address of Record Owner

Name of Beneficial Owner and Relationship with Record

Owner

Citizenship No. of Shares Held

Percent

is the issuer of warrants over such shares.

Common

Honeysea Corporation 6th Floor Jollibee Center San Miguel Ave., Pasig City

Majority of the shares in Honeysea Corporation are owned or controlled by Tony Tan Caktiong and certain relatives within the second degree of consanguinity or affinity.

Filipino

127,743,747

11.64%

Common

PCD Nominee Corporation G/F Makati Stock Exchange 6767 Ayala Ave., Makati City

Filipino

161,526,271

14.72%

Common

Winall Holding Corporation 6th Floor Jollibee Center San Miguel Ave., Pasig City

Majority of the shares in Winall Holding Corporation are owned or controlled by certain relatives within the fourth degree of consanguinity or affinity.

Filipino

54,140,736

4.93%

(B) Security Ownership of Management The common shares of the Company owned by its directors are as follows:

Name and Position Citizenship Nature of Beneficial Ownership

Number of Shares

Percent of Class

Tony Tan Caktiong

Filipino

Direct 8,254,565

Total: 0.77% Director, Chairman Indirect (through Deutsche)

240,000

Ernesto Tanmantiong

Filipino

Direct 7,398,951

Total: 0.72% Director, President and Chief Executive Officer

Indirect (through Deutsche)

457,019

William Tan Untiong

Filipino

Direct 8,323,388

Total: 0.78% Director, Corporate Secretary and Chief Real Estate Executive


279,667

Joseph C. Tanbuntiong

Filipino

Direct 64,630

Total: 0.01% Director, Treasurer, and Head, Country Business Group – Philippines


-

Ang Cho Sit

Filipino

Direct 11

Total: 0.00% Director Indirect (through Deutsche)

-

Antonio Chua Poe Eng Director

Filipino

Direct 1

Total: 3.68% Direct (through Honeyworth)

39,097,446

Indirect (through Honeyworth)

1,257,127

C.J. Artemio V. Panganiban

Filipino

Direct 1 Total: 0.00%

Director Indirect (through Deutsche)

22,800

Monico V. Jacob

Filipino

Direct 100

Total: 0.00% Independent Director


-

Cezar P. Consing

Filipino

Direct 1

Total: 0.00% Independent Director Indirect (through Deutsche)

-

118

The common shares of the Company’s corporate officers are:


Number of Shares

Percent of Class

Ysmael V. Baysa Chief Financial Officer, Vice President for Corporate Finance

Filipino Direct

811,667 Total: 0.07%


-

Arsenio M. Sabado Chief Human Resources Officer

Filipino Direct

- Total: 0.00%


-

Daniel Rafael Ramon Gomez III Chief Marketing Officer

Filipino Direct

- Total: 0.00%


-

Valerie F. Amante Assistant Corporate Secretary; Vice President, Head Corporate Legal and Head, Corporate Ethics

Filipino Direct

- Total: 0.00%


-

The common shares of the Heads of Philippine Units are:


Number of Shares

Percent of Class

Justo S. Alano III President, Jollibee Business Filipino

Direct

-

Total: 0.00% Indirect (through Deutsche)

-

Andrew Santos

Filipino

Direct -

Total: 0.00% President, Chowking Business Indirect (through Deutsche)

-

Jose Alexander P. Subido President, Mang Inasal Business

Filipino

Direct 500


-

Zinnia Carmencita S. Rivera

Filipino

Direct -

Total: 0.00% President, Red Ribbon Business Indirect (through Deutsche)

1,050

Joseph Michael Castro General Manager, Greenwich Business

Filipino

Direct 11,667

Total: 0.00% Indirect

(through Deutsche) -

Jose Amado M. Dominguez

Filipino

Direct -

Total: 0.00% General Manager, Burger King Business Indirect

(through Deutsche) -

The common shares of the Heads of Corporate Units are:

Name and Position Citizenship Nature of Beneficial

Ownership Number of

Shares Percent of Class

Jose Ma. A. Miñana, Jr. Chief Sustainability and Public Affairs Officer Filipino

Direct

74,646


252,946

Fernando S. Yu, Jr. Filipino

Direct 122,000

Total: 0.01% Chief Business Support Officer Indirect (through Deutsche)

-

Susana K. Tanmantiong Chief Procurement Officer

Filipino

Direct

1,123,857 Total: 0.12%

119


Number of Shares

Percent of Class

Indirect (through Deutsche) 138,000

Valerie F. Amante Assistant Corporate Secretary; Vice President, Head Corporate Legal and Head, Corporate Ethics

Filipino Direct -


-

Marilou N. Sibayan Vice President and Comptroller - Worldwide

Filipino Direct 34,875

Total: 0.00% Indirect (through Deutsche) 10,000

Lorna D. Atun Filipino Direct -

Total: 0.00% Assistant Vice President – Corporate Audit

Indirect (through Deutsche) -

(C) Voting Trust Agreements

There are no voting trust agreements granting any person the right to exercise the voting rights of a holder of 5% or more of a class of shares.

(D) Changes in Control

There are no arrangements which may result in a change in control of the Company.

12. Certain Relationships and Related Transactions

Some of the Company’s directors own franchises or have minority interests in companies which own and operate franchised stores of the Company. All such franchises are subject to contracts which have been entered into on an arms-length basis and on terms similar to those granted to other franchisees.

The Company has no parent company.

The Company has no transaction with promoters.

120

PART IV. CORPORATE GOVERNANCE

13. Corporate Governance

The Company has adopted a Manual of Corporate Governance (“Manual”) which was filed with and duly approved by the SEC. Under the terms of the Manual, the Company is required to measure compliance by the Board of Directors and management with the terms of the Manual. Pursuant to the Manual, the Compliance Officer is required annually to prepare a self-rating report on the extent of the Company’s compliance with the Manual, explaining reasons for deviation, if any.

Pursuant to SEC Memorandum Circular No. 9, series of 2014, the Company filed its Amended Manual of Corporate Governance on July 24, 2014. Pursuant to SEC Memorandum Circular No. 19, series of 2016, the Company filed its New Manual on Corporate Governance on May 30, 2017.

Pursuant to SEC Memorandum Circular No. (SEC MC) 15, series of 2017, companies shall no longer be required to file a Consolidated Changes in the ACGR within ten (10) days from the end of the year. The Integrated Annual Corporate Governance Report (I-ACGR) shall be submitted on May 30 of the following year.

On May 29, 2019, the Company filed its Integrated Annual Corporate Governance Report for the year ended December 31, 2018.

14. Sustainability Report

In compliance with SEC MC No. 4, series of 2019 on Sustainability Reporting Guidelines for Publicly-Listed Companies in relation to SEC MC No. 13, series of 2020 on the Extension of Deadline for the Submission of the Sustainability Report, the Sustainability Report of the Company for the year ended December 31, 2019 is found via the following link:

https://bucketeer-db71ed0b-178e-4a82-bfd6-d68a68e0de55.s3.amazonaws.com/public/uploads/Jollibee-Foods-Corporation-Sustainability-Report-for-the-year-ended-2019.pdf

121

PART V. EXHIBITS AND SCHEDULES

The attachments to this Report are the following:

1. SEC Form 17-C filed for the year 2019

2. 2019 Audited Consolidated Financial Statements

3. 2019 Audited Parent Financial Statements

Note: The Statement of Management Responsibility is duly marked with blue-colored tab while the page showing the stamped received marking of both BIR and SEC is duly marked with a green-colored tab.

SIGNATURES

Pursuant to the requirements of Section 17 of the Code and Section 141 of the Corporation

Code, this report is signed on behalf of the issuer by the undersigned, thereunto duly

authorized, in the City of Pasig on the 22 day of May 2020.

122

nd

vintaak

Underline

SUBSCRIBED AND SWORN TO before me this May 22, 2020, Affiants exhibiting to me their proofs of identification, as follows:

Name Proof of Identification

Ernesto Tanmantiong Passport No. P8719063A, issued on September 12, 2018 and expiring on September 11, 2028.

William Tan Untiong Passport No. P4278187B, issued on January 2, 2020 and expiring on January 1, 2030.

Ysmael V. Baysa Passport No. EC7589116, issued on April 30, 2016 and expiring on April 29, 2021.

Marilou N. Sibayan Passport No. EC5240112, issued on September 7, 2015 and expiring on September 6, 2020.

123

31264

1

SEC Form 17-C filed for the year 2019

Weendeju

blank

Weendeju

wala

7 7 4 8 7









JFC to Invest US$100M for the Acquisition of

The Coffee Bean & Tea Leaf® Brand

Domestic Foreign

Year


Fiscal Year

17C

S T A M P S


File Number

Document I.D.

LCU



Cashier


COVER SHEET



Atty. Angeline L. Chong (632) 634-1111 loc. 7817




YearAnnual Meeting

Month Day31-Dec

COVER SHEET



10/F Jollibee Plaza Building 10 F. Ortigas Jr. Avenue,

Ortigas Center, Pasig City (Company’s Address)

(632) 634-1111 Telephone Number


17C Press Release

JFC to Invest US$100M for the Acquisition of The Coffee Bean & Tea Leaf® Brand

(Form Type)



___________________ ___________________

Cashier LCU ___________________ DTU 77487 S.E.C REG. No.


___________________ Document I.D.

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-C

CURRENT REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATIONS CODE (SRC) AND SRC RULE 17 THEREUNDER

1. Date of Report July 24, 2019 2. Commission identification number 77487 3. BIR Tax Identification No. 000-388-771 4. JOLLIBEE FOODS CORPORATION doing business under the name and style of Jollibee Exact name of registrant as specified in its charter 5. PHILIPPINES Province, country or other jurisdiction of incorporation or organization 6. Industry classification code (SEC Use Only) 7. 10/F JOLLIBEE PLAZA BUILDING, 10 F. ORTIGAS JR. AVENUE, ORTIGAS CENTER,

PASIG CITY Address of registrant’s principal office 1605 Postal Code 8. (632) 634-1111 Registrant’s telephone number, including area code 9. N/A Former name, former address and former fiscal year, if changed since last report 10. Securities registered pursuant to Sections 4 and 8 of the RSA

Note: Total common outstanding shares of 1,093,529,163 is inclusive of 2,229,978 shares entrusted with Deutsche Regis Partners, Inc. with the following details:

MSOP Shares:

Beginning balance (per SEC Form 17-C dated July 22, 2019) 1,154,068

Shares applied for listing -

Ending balance, as of July 23, 2019 1,154,068

ELTIP Shares:

Beginning Balance (per SEC Form 17-C dated July 22, 2019) 1,088,410

Shares applied for listing (12,500)

Ending balance, as of July 23, 2019 1,075,910

TOTAL 2,229,978

11. Other Events

Title of each Class

Number of shares of Common stock outstanding

Common 1,093,529,163 Treasury Shares:

Common 16,447,340

SIGNATURE

Pursuant to the requirements of the Securities Regulation Code, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

7 7 4 8 7









Domestic Foreign

Year


Fiscal Year

17C

S T A M P S


File Number

Document I.D.

LCU



Cashier


Press Release: 2019 2nd Quarter Financial Results

COVER SHEET







YearAnnual Meeting

Month Day31-Dec

COVER SHEET







17C Press Release 2019 2nd Quarter Financial Results

(Form Type)



___________________ ___________________



___________________ Document I.D.

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-C CURRENT REPORT PURSUANT TO SECTION 17 OF THE

SECURITIES REGULATIONS CODE (SRC) AND SRC RULE 17 THEREUNDER 1. Date of Report August 5, 2019 2. Commission identification number 77487 3. BIR Tax Identification No. 000-388-771 4. JOLLIBEE FOODS CORPORATION doing business under the name and style of Jollibee Exact name of registrant as specified in its charter 5. PHILIPPINES Province, country or other jurisdiction of incorporation or organization 6. Industry classification code (SEC Use Only) 7. 10/F JOLLIBEE PLAZA BUILDING, 10 F. ORTIGAS JR. AVENUE, ORTIGAS CENTER,


Note: Total common outstanding shares of 1,093,529,763 is inclusive of 2,217,478 shares entrusted with Deutsche Regis

Partners, Inc. with the following details:

MSOP Shares:

Beginning balance (per SEC Form 17-C dated August 1, 2019) 1,154,068


Ending balance, as of August 5, 2019 1,154,068

ELTIP Shares:

Beginning Balance (per SEC Form 17-C dated August 1, 2019) 1,075,910


Ending balance, as of August 5, 2019 1,063,410

TOTAL 2,217,478

11. Other Events Please see attached Press Release re: 2019 2nd Quarter Financial Results.

Title of each Class


Common 1,093,529,763 Treasury Shares: Common 16,447,340

SIGNATURE

Pursuant to the requirements of the Securities Regulation Code, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SIGNATURE: JOLLIBEE FOODS CORPORATION Registrant

JOLLIBEE FOODS CORPORATION AND SUBSIDIARIES JFC Sales Growth Improves, Eyes Profit Recovery in 2020

Metro Manila, Philippines, August 5, 2019 – Jollibee Foods Corporation (PSE: JFC) – Financial Results for the Second Quarter and First Semester ended June 30, 2019

Following are the highlights of the financial results of operations of Jollibee Foods Corporation and Subsidiaries for the second quarter and first semester ended June 30, 2019 based on its Unaudited Consolidated Financial Statements:

Jollibee Foods Corporation (JFC), one of Asia’s largest food service companies, disclosed today that its system wide sales, a measure of sales to consumers both from company-owned and franchised stores grew by 10.2% in the second quarter of 2019 compared to the same quarter last year. Same store sales growth in the Philippines improved to 4.2% in the second quarter versus 1.4% in the first quarter, excluding Red Ribbon business. Sales of this brand was adversely affected by product supply shortage as it transferred its main production facility to a new commissary located south of Metro Manila. Full product supply is expected in September 2019.

Sales from foreign business increased by 8.6%, with EMEAA (Europe, Middle East

and Asia) growing by 20.9% and North America by 11.3%. The China business’ system wide sales increased by 2.3% (-5.2% in Php terms due to changes in currency exchange rates). Its same store sales improved to +3.5%, from -1.1% in the first quarter of 2019.

Jollibee Foods Corporation Chief Financial Officer, Mr. Ysmael V. Baysa gave the

following statement: “Same store sales growth in the Philippines continued to improve as we estimated, as consumers gradually regained their purchasing power with increasing wages and lower inflation rate. In the month of June 2019 same store sales in the Philippines reached 5.7% including Red Ribbon, or 6.8% excluding Red Ribbon. Transaction counts or consumer visits to stores are rising. Businesses abroad are strong led by Vietnam, Philippine brands in the US, Yonghe King in China and Jollibee brand in new countries. Operating profit in the Philippines excluding Red Ribbon grew by 14.2% in Q1 of 2019 and by 15.3% in Q2 and is expected to keep this momentum in the months ahead. Our profit challenges are short term, mainly Red Ribbon in the Philippines and Smashburger in the United States. Red Ribbon products will be in complete supply in September. On Smashburger, we introduced major changes that created short term disruption in sales and profit but will drive sustainable sales growth and strengthen

2019 2018 % Change 2019 2018 % Change

System Wide Retail Sales 59,428 53,931 10.2% 113,706 99,910 13.8%Revenues 43,673 40,922 6.7% 84,027 76,285 10.1%Operating Income 1,142 2,392 -52.3% 2,910 4,361 -33.3%Net Income Attributable to Equity Holders of the Parent Company 1,122 2,251 -50.2% 2,657 4,050 -34.4%Earnings Per Common Share - Basic 1.027 2.071 -50.4% 2.434 3.728 -34.7%Earnings Per Common Share - Diluted 1.013 2.043 -50.4% 2.400 3.676 -34.7%*Amounts in PhP Millions, except % change and Per Share data.

Financial SummaryYTD JuneQuarter 2

the brand health. These changes include permanent price reduction to replace temporary discounts and major product improvements to ensure higher product quality. Product SKUs were also reduced to simplify the menu to improve kitchen operations. We will also continue to open stores in very good locations. To accelerate sales and profit growth, Smashburger is re-building and strengthening its leadership team. The acquisition of Coffee Bean and Tea Leaf, when completed is expected to add to our profit within 12-18 months of acquisition. We continue to aim to achieve the profit level in 2020 and in the years ahead that we set two years ago despite the profit challenges in 2019 which are short term and sustain our historical profit growth rate moving forward”.

Jollibee Foods Corporation had turned several businesses acquired in previous years

into stronger, more profitable and faster growing market leaders. These include Yonghe King in China (acquired in 2004), Red Ribbon in the Philippines (2005), Hong Zhuang Yuan in China (2008), Mang Inasal in the Philippines (2010) and Highlands Coffee (2012). Together, they contributed 25% to JFC’s worldwide system sales and 37% to operating income (based on 2018 audited financial results) and are key drivers of JFC’s sales and profit growth now and in the years ahead.

Net income attributable to equity holders of the Parent Company for the second quarter

was Php1.1 billion, decreasing by 50.2% versus profit from the same period a year ago, due to, extraordinary manufacturing expenses for and lower sales of Red Ribbon related to the transition to the new plant and losses from Smashburger in the United States. These costs are extraordinary and are expected to be at a much lower level starting in 2020.

Same store sales growth in the Philippines in the second quarter excluding Red Ribbon

reached 4.2%; China achieved 3.5%; Philippine brands in the US 8.3%; Vietnam 8.7%: and, the Middle East and other parts of Asia 1.4%.

Worldwide sales for the first semester of 2019 grew by 13.8% over same period last

year, with the Philippine business growing by 10.2% and the foreign business by 24.9%. The Jollibee Group opened a total of 170 stores in the first six months of the year, of

which 111 are in the Philippines and 59 are in foreign operations.

On July 24, 2019, JFC disclosed that through its wholly owned subsidiary Jollibee Worldwide Pte Ltd (JWPL, Singapore), it entered into an agreement to invest USD100 million in a new Singapore-based holding company (“holding company”) to acquire 100% of The

Coffee Bean & Tea Leaf® specialty coffee and tea brand (CBTL), based in Los Angeles, California, USA. The acquiring entity will be JWPL’s wholly owned subsidiary Java Ventures, LLC (United States), which will eventually be a wholly owned subsidiary of the new holding company. The total consideration for this acquisition is USD350 million on a debt-free basis (the acquired business will have no debt upon acquisition). Initially, JFC through JWPL will finance the entire acquisition through a bridge loan.

JFC operates the largest food service network in the Philippines. As of June 30, 2019, it was operating 3,195 restaurant outlets in the country: Jollibee brand 1,163, Chowking 590, Greenwich 284, Red Ribbon 479, Mang Inasal 577, Burger King 101 and PHO24 1. Abroad, it was operating 1,418 stores: Yonghe King (China) 323, Hong Zhuang Yuan (China) 45, Dunkin’ Donuts (China) 9, Jollibee 238 (Vietnam 118, Brunei 17, Hong Kong 8, Singapore 7, Macau 1, Malaysia 1, United States 37, Canada 4, Saudi Arabia 13, UAE 14, Qatar 7, Kuwait 6, Bahrain 1, Oman 1, Italy 1, United Kingdom 1, and Guam 1), Red Ribbon in the US 31, Chowking 47 (US 15, UAE 21, Qatar 4, Oman 2, Kuwait 3, and Saudi Arabia 2), Highlands Coffee 340 (Vietnam 297, and Philippines 43), PHO24 34 (Vietnam 18, Indonesia 16), Hard Rock Cafe 6 (Vietnam 2, Hong Kong 3, and Macau 1); and, Smashburger 345. The JFC Group’s worldwide store network reached 4,613 stores. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C06179-2019

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17OF THE SECURITIES REGULATION CODE

AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported)

Sep 6, 20192. SEC Identification Number

774873. BIR Tax Identification No.

000-388-7714. Exact name of issuer as specified in its charter

JOLLIBEE FOODS CORPORATION DOING BUSINESS UNDER THE NAME ANDSTYLE OF JOLLIBEE

5. Province, country or other jurisdiction of incorporation

PHILIPPINES6. Industry Classification Code(SEC Use Only)

7. Address of principal office

10/F JOLLIBEE PLAZA BUILDING, 10 F. ORTIGAS JR. AVENUE, ORTIGAS CENTER,PASIG CITYPostal Code1605

8. Issuer's telephone number, including area code

(632) 634-11119. Former name or former address, if changed since last report

-10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA

Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding

COMMON 1,093,583,096

TREASURY 16,447,340

11. Indicate the item numbers reported herein

-

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporatedisclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange,and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly tothe Corporate Information Officer of the disclosing party.

Jollibee Foods CorporationJFC

PSE Disclosure Form 4-30 - Material Information/TransactionsReferences: SRC Rule 17 (SEC Form 17-C) and

Sections 4.1 and 4.4 of the Revised Disclosure Rules

Subject of the Disclosure

Approval to revert the Management Stock Option and Incentive Plan to the system approved on November 23, 2015. Thisnullified the system that was approved on April 11 and June 27, 2019.

Background/Description of the Disclosure

The Management Stock Option and Incentive Plan was revised with approval by the Board and ratification of thestockholders on November 23, 2015. This was revised further on April 11 and June 27, 2019 with the approval of theBoard.

Upon recommendation of the Compensation Committee of the Board of Directors, the same stock option and incentiveplan is being reverted to its November 23, 2015 system per approval by the Board of Directors in its meeting thisafternoon, September 6, 2019.

The amendment approved last November 23, 2015 pertained to the amendment to the provision on maximum number ofshares which reads as follows: “The maximum number of Shares in respect of which Stock Options/Incentives may begranted under the Plan shall be in such number as may be determined by the Compensation Committee.”.

Other Relevant Information

Amended disclosure is being submitted to reflect the following:1. Date of board approval2. Clarification on the nature of amendment made on the November 23, 2015 Plan.

Filed on behalf by:

Name VALERIE AMANTE

Designation VICE-PRESIDENT

7 7 4 8 7









COVER SHEET





17C


31-Dec Last Friday of JuneMonth Day Year Month Day Year

Fiscal Year Annual Meeting

JFC Completes the Acquisition of 100% of The Coffee Bean & Tea Leaf®

Foreign


File Number LCU




Document I.D. Cashier

S T A M P S

Total no. of Stockholders Domestic

COVER SHEET







17C Press Release

JFC Completes the Acquisition of 100% of The Coffee Bean & Tea Leaf® (Form Type)



___________________ ___________________



___________________ Document I.D.



SECURITIES REGULATIONS CODE (SRC) AND SRC RULE 17 THEREUNDER 1. Date of Report September 24, 2019 2. Commission identification number 77487 3. BIR Tax Identification No. 000-388-771 4. JOLLIBEE FOODS CORPORATION doing business under the name and style of Jollibee Exact name of registrant as specified in its charter 5. PHILIPPINES Province, country or other jurisdiction of incorporation or organization 6. Industry classification code (SEC Use Only) 7. 10/F JOLLIBEE PLAZA BUILDING, 10 F. ORTIGAS JR. AVENUE, ORTIGAS CENTER,


Note: Total common outstanding shares of 1,093,584,763 is inclusive of 2,040,144 shares

entrusted with Deutsche Regis Partners, Inc. with the following details:

MSOP Shares:

Beginning balance (per SEC Form 17-C dated September 19, 2019) 1,101,734


Ending balance, as of September 24, 2019 1,101,734

ELTIP Shares:

Beginning Balance (per SEC Form 17-C dated September 19, 2019) 955,910


Ending balance, as of September 24, 2019 938,410

TOTAL 2,040,144

11. Other Events

Please see attached Press Release as disclosed on September 24, 2019 at the PSE Edge website.

Title of each Class



The JFC Group of Companies JFC Completes the Acquisition of 100% of The Coffee Bean & Tea Leaf®

Metro Manila, Philippines, September 24, 2019 – Jollibee Foods Corporation (PSE:JFC) Jollibee Foods Corporation (JFC), one of Asia’s largest food service companies, disclosed today that it completed the acquisition of 100% of The Coffee Bean & Tea Leaf® (CBTL) specialty coffee and tea brand, based in Los Angeles, California, USA. The closing of the transaction was effected after the parties had completed the necessary closing conditions, including required government approvals, provided under the executed purchase agreement. Consistent with the terms of the executed purchase agreement completed on September 23, 2019 (Los Angeles time)/ September 24, 2019 (Manila time), JFC acquired CBTL for USD350 million (~Php18.3 billion) on a debt-free basis (the acquired business will have no debt upon acquisition). The acquiring entity is Java Ventures, LLC, a US-based wholly owned subsidiary of Super Magnificent Coffee Company Pte. Ltd. (SMCC Singapore). SMCC Singapore is a subsidiary of Jollibee Worldwide Pte Ltd. The payment for the acquisition of CBTL is being funded by proceeds from bridge loans entered into by JWPL with several financial institutions. As previously disclosed, the acquisition of The Coffee Bean & Tea Leaf® brand is JFC’s largest and most multinational with business presence in 27 countries. This will add 14% to its global system wide sales, 26% to its total store network, will bring international business’ contribution to 36% of worldwide sales and will bring JFC closer to its vision to be one of the top 5 restaurant companies in the world in terms of market capitalization. Combined with Highlands Coffee, with business mostly in Vietnam, this acquisition will enable JFC to become an important player in the large, fast growing and profitable coffee business. CBTL will be JFC’s second largest business after Jollibee brand while coffee business will account for 14% of JFC’s worldwide system sales. As at August 31, 2019, CBTL had 1,180 outlets (company owned 336, franchised 844), of which 288 are in the US, 439 in Southeast Asia (Philippines 150, Indonesia 88, Malaysia 100, Singapore 65), 301 in East Asia (South Korea 290), 152 in the Middle East and other parts of Asia (Kuwait 36, Qatar 28, Saudi Arabia 16, Egypt 13, India 25). Total revenue in 2018 was USD313 million. JFC operates the largest food service network in the Philippines. As of August 31, 2019, it was operating 3,226 restaurant outlets in the country: Jollibee brand 1,170, Chowking 600, Greenwich 283, Red Ribbon 487, Mang Inasal 582, Burger King 103 and PHO24 1. Abroad, it was operating 1,437 stores: Yonghe King (China) 324, Hong Zhuang Yuan (China) 44, Dunkin’ Donuts (China) 8, Jollibee 243 (Vietnam 119, Brunei 18, Hong Kong 8, Singapore 8, Macau 1, Malaysia 1, United States 37, Canada 5, Saudi Arabia 13, UAE 14, Qatar 8, Kuwait 6, Bahrain 1, Oman 1, Italy 1, United Kingdom 1, and Guam 1), Red Ribbon in the US 30, Chowking 47 (US 15, UAE 21, Qatar 4, Oman 2, Kuwait 3, and Saudi Arabia 2), Highlands Coffee 355 (Vietnam 311, and Philippines 44), PHO24 34 (Vietnam 18, Indonesia 16), Hard Rock Cafe 7 (Vietnam 2, Hong Kong 3, and Macau 2); and, Smashburger 345. The JFC Group’s worldwide store network reached 4,663 stores. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

7 7 4 8 7











YearAnnual Meeting

Month Day31-Dec


COVER SHEET





17C

S T A M P S


File Number

Document I.D.

LCU



Cashier

JFC to Increase Investment in Buyer of Tim Ho Wan Franchisee

Domestic Foreign

Year


Fiscal Year

COVER SHEET







JFC to Increase Investment in Buyer of Tim Ho Wan Franchisee (Form Type)



___________________ ___________________



___________________ Document I.D.

COVER SHEET







Cash Dividend Declaration (Form Type)



___________________ ___________________



___________________ Document I.D.



SECURITIES REGULATIONS CODE (SRC) AND SRC RULE 17 THEREUNDER 1. Date of Report November 11, 2019 2. Commission identification number 77487 3. BIR Tax Identification No. 000-388-771 4. JOLLIBEE FOODS CORPORATION doing business under the name and style of Jollibee Exact name of registrant as specified in its charter 5. PHILIPPINES Province, country or other jurisdiction of incorporation or organization 6. Industry classification code (SEC Use Only) 7. 10/F JOLLIBEE PLAZA BUILDING, 10 F. ORTIGAS JR. AVENUE, ORTIGAS CENTER,




MSOP Shares:

Beginning balance (per SEC Form 17-C dated November 8, 2019) 2,035,366


Ending balance, as of November 11, 2019 2,035,366

ELTIP Shares:

Beginning Balance (per SEC Form 17-C dated November 8, 2019) 3,413,410



TOTAL 5,436,276

Title of each Class



11. Other Events Jollibee Foods Corporation (JFC) announced that its Board of Directors approved today, November 11, 2019, a cash dividend of Php1.35 per share of common stock for all shareholders of record as of November 26, 2019 (ex-dividend date of November 21, 2019). This will be distributed on December 10, 2019. This cash dividend is 0.7% higher than the cash dividend per share declared on November 9, 2018. The total cash dividends declared in 2019 is Php2.58 per share, an increase of 4.0% versus the total cash dividends declared in 2018.

[nothing follows]

SIGNATURE


COVER SHEET







JFC and DSPL Signs Agreement to Expand and Operate the Tim Ho Wan Brand in China

(Form Type)



___________________ ___________________



___________________ Document I.D.



SECURITIES REGULATIONS CODE (SRC) AND SRC RULE 17 THEREUNDER 1. Date of Report November 13, 2019 2. Commission identification number 77487 3. BIR Tax Identification No. 000-388-771 4. JOLLIBEE FOODS CORPORATION doing business under the name and style of Jollibee Exact name of registrant as specified in its charter 5. PHILIPPINES Province, country or other jurisdiction of incorporation or organization 6. Industry classification code (SEC Use Only) 7. 10/F JOLLIBEE PLAZA BUILDING, 10 F. ORTIGAS JR. AVENUE, ORTIGAS

CENTER, PASIG CITY Address of registrant’s principal office 1605 Postal Code 8. (632) 8634-1111 Registrant’s telephone number, including area code 9. N/A Former name, former address and former fiscal year, if changed since last report 10. Securities registered pursuant to Sections 4 and 8 of the RSA



MSOP Shares:

Beginning balance (per SEC Form 17-C dated November 11, 2019) 2,035,366



ELTIP Shares:

Beginning Balance (per SEC Form 17-C dated November 11, 2019) 3,400,910



TOTAL 5,423,776

Title of each Class



11. Other Events.

THE JFC GROUP OF COMPANIES JFC and DSPL Signs Agreement to Expand and Operate the Tim Ho Wan Brand in China

Metro Manila, Philippines, November 13, 2019 - Jollibee Foods Corporation (PSE: JFC) – Further to its May 8, 2018 disclosure, Jollibee Foods Corporation (JFC) disclosed today that its wholly owned subsidiary Golden Plate Pte. Ltd. (GPPL) entered into a Joint Venture Agreement with Dim Sum Pte. Ltd. (DSPL) to form a Company (the JV) in the People’s Republic of China (PRC). After the incorporation of the JV, it shall sign a Unit Franchise Agreement with Tim Ho Wan Pte. Ltd. (Franchisor), authorized master franchisor of Tim Ho Wan in the Asia-Pacific, to develop and operate Tim Ho Wan stores in Shanghai and such other cities within the PRC as may be agreed with the Franchisor. GPPL will own 60% of the business and DSPL will own the remaining 40%. GPPL and DSPL have committed to invest up to USD13 Million to the JV, of which up to USD7.8 Million will be contributed by GPPL in proportion to its ownership in the business. The JV shall have its own resources and personnel to operate and manage the business. DSPL, a company incorporated in Singapore, is a wholly owned subsidiary of Titan Dining Holdings Pte. Ltd. The primary activities of DSPL is owning and operating Tim Ho Wan restaurants in Singapore. Tim Ho Wan is a dim sum restaurant chain which originated in Hong Kong in 2009. Its Sham Shui Po, Hong Kong restaurant located at 9 Fuk Wing Street has been awarded one Michelin star since 2010. Its restaurants are typically full-packed with long waiting line at lunch and dinner. In April 2018, Tim Ho Wan was rated by CNN as offering the Best Value among Hong Kong’s best dim sum restaurants. JFC already has three brands serving Chinese cuisine: Chowking, a Chinese fast casual concept with presence mostly in the Philippines and JFC’s third largest brand in terms of system wide sales (602 stores worldwide), Yonghe King, a Chinese fast food restaurant chain in China that is famous for its freshly prepared soya milk (330 stores), and Hong Zhuang Yuan, a full-service Chinese restaurant chain in Beijing, PRC famous for its congee (44 stores). The three brands combined account for close to 20% of JFC’s systemwide sales. JFC operates the largest food service network in the Philippines. As of September 30, 2019, it was operating 3,238 restaurant outlets in the country: Jollibee brand 1,174, Chowking 602, Greenwich 282, Red Ribbon 489, Mang Inasal 586, Burger King 104 and PHO24 1. Abroad, it was operating 1,451 stores: Yonghe King (China) 330, Hong Zhuang Yuan (China) 44, Dunkin’ Donuts (China) 7, Jollibee 248 (Vietnam 121, Brunei 18, Hong Kong 8, Singapore 8, Macau 1, Malaysia 1, United States 38, Canada 7, Saudi Arabia 13, UAE 14, Qatar 8, Kuwait 6, Bahrain 1, Oman 1, Italy 1, United Kingdom 1, and Guam 1), Red Ribbon in the US 31, Chowking 47 (US 15, UAE 21, Qatar 4, Oman 2, Kuwait 3, and Saudi Arabia 2), Highlands Coffee 363 (Vietnam 319, and Philippines 44), PHO24 34 (Vietnam 18, Indonesia 16), Hard Rock Cafe 6 (Vietnam 2, Hong Kong 3, and Macau 1); and, Smashburger 341. The JFC Group’s worldwide store network reached 4,689 stores. On September 24, 2019, JFC disclosed the completion of the acquisition of 100% of The Coffee Bean & Tea Leaf® (CBTL) specialty coffee and tea brand, based in Los Angeles, California, USA. As at September 30, 2019, CBTL had 1,174 outlets (company owned 335, franchised 839. With CBTL, the JFC Group now has 5,863 stores worldwide.

SIGNATURE


2019 Audited Consolidated Financial Statements

- 2 -

*SGVFSM000078*

New Standards, Interpretations and Amendments adopted by the JFC GroupThe accounting policies adopted are consistent with those of the previous financial year, except forthe adoption of the following new accounting pronouncements starting January 1, 2019. Adoption ofthese pronouncements did not have any significant impact on the consolidated statement of financialposition and performance unless otherwise indicated.

§ PFRS 16, Leases

PFRS 16 supersedes PAS 17, Leases, Philippine Interpretation International Financial ReportingInterpretations Committee (IFRIC) 4, Determining whether an Arrangement contains a Lease,Standard Interpretation Committee (SIC)-15, Operating Leases-Incentives, and SIC-27,Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard setsout the principles for the recognition, measurement, presentation and disclosure of leases andrequires lessees to account for all leases under a single on-balance sheet model similar to theaccounting for finance leases under PAS 17, Leases. The standard includes two recognitionexemptions for lessees – leases of ‘low-value’ assets (e.g., personal computers) and short-termleases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease,a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an assetrepresenting the right to use the underlying asset during the lease term (i.e., the right-of-useasset). Lessees will be required to separately recognize the interest expense on the lease liabilityand the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events(e.g., a change in the lease term, a change in future lease payments resulting from a change in anindex or rate used to determine those payments). The lessee will generally recognize the amountof the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under PFRS 16 is substantially unchanged from today’s accounting underPAS 17. Lessors will continue to classify all leases using the same classification principle as inPAS 17 and distinguish between two types of leases: operating and finance leases.

PFRS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17.

A lessee can choose to apply the standard using either a full retrospective or a modifiedretrospective approach. The standard’s transition provisions permit certain reliefs.

The JFC Group adopted PFRS 16 using the full retrospective method of adoption with the date ofinitial application of January 1, 2019. The JFC Group elected to use the transition practicalexpedient allowing the standard to be applied only to contracts that were previously identified asleases applying PAS 17 and IFRIC 4 at the date of initial application. The JFC Group elected touse the recognition exemptions for lease contracts that, at the commencement date, have a leaseterm of 12 months or less and do not contain a purchase option (‘short-term leases’), and leasecontracts for which the underlying asset is of low value (‘low-value assets’).

- 3 -

*SGVFSM000078*

The effect of adoption of PFRS 16 is as follows:

Impact on the consolidated statements of financial position (increase / (decrease)):

December 31,2019

December 31,2018

January 1,2018

AssetsRight-of-use assets (see Note 29) P=42,907,418 P=36,564,242 P=25,324,378Operating lease receivables (17,990) (16,953) (14,279)Finance lease receivables 161,934 184,800 204,698Property, plant and equipment (see Note 12) (17,087) (21,442) (24,076)Other intangible assets (see Note 14) (219,449) (288,232) –Prepayments (293,022) (150,157) (29,221)Deferred tax assets 438,252 388,798 374,009Total Assets P=42,960,056 P=36,661,056 P=25,835,509

LiabilitiesOperating lease payable (P=3,328,811) (P=3,016,923) (P=2,051,567)Lease liabilities (see Note 29) 47,307,404 40,630,789 28,682,918Deferred tax liabilities (41,899) (30,756) (4,143)

Total Liabilities 43,936,694 37,583,110 26,627,208EquityRetained earnings (913,347) (866,339) (749,063)Noncontrolling interests (70,926) (53,613) (40,993)Cumulative translation adjustments 7,635 (2,102) (1,643)

Total Equity (976,638) (922,054) (791,699)Total Liabilities and Equity P=42,960,056 P=36,661,056 P=25,835,509

Impact on the consolidated statement of comprehensive income (increase / (decrease)):

2019 2018 2017Depreciation expense (included in “Store and

manufacturing costs” under “Direct costs”account in the consolidated statements ofcomprehensive income) P=7,128,477 P=5,989,858 P=4,172,539

Depreciation expense (included in “General andadministrative expenses” in the consolidatedstatements of comprehensive income) 36,326 31,526 19,421

Amortization of favourable leases (59,446) (43,567) –Depreciation expense of asset retirement obligation (7,634) (1,825) (8,902)Rent income (26,338) (31,606) (30,015)Rent expense (included in “Store and manufacturing

costs” and “General and administrativeexpenses” in the consolidated statements ofcomprehensive income) (8,442,543) (7,450,971) (5,290,310)

Operating profit 1,318,482 1,443,373 1,077,237Finance costs 1,824,311 1,728,620 1,387,557Interest income 8,086 9,034 9,866Other income 371,514 107,332 36,893Income tax expense (61,854) (39,132) (83,998)Profit for the year (P=64,375) (P=129,749) (P=179,563)

Attributable to:Equity holders of the parent (P=47,008) (P=117,276) (P=169,543)Non-controlling interests (17,367) (12,473) (10,020)

- 4 -

*SGVFSM000078*

Impact on the consolidated statement of cash flows (increase / (decrease)):

2019 2018 2017Net cash flows from operating activities P=8,419,749 P=6,979,019 P=4,902,325Net cash flows from financing activities (8,419,749) (6,979,019) (4,902,325)

There is no material impact on other comprehensive income. The basic EPS decreased fromP=7.663 to P=7.555 and P=6.580 to P=6.423, while diluted EPS decreased from P=7.550 to P=7.443 andP=6.494 to P=6.340 for the years ended December 31, 2018 and 2017, respectively.

The nature of the effect of adoption of PFRS 16 is as follows:

The JFC Group has various lease commitments, as a lessee, for QSR outlets, warehouses andoffice spaces which were accounted for as operating leases under PAS 17. Before the adoption ofPFRS 16, the JFC Group classified each of its leases (as lessee) at the inception date as either afinance lease or an operating lease. A lease was classified as a finance lease if it transferredsubstantially all of the risks and rewards incidental to ownership of the leased asset to theJFC Group; otherwise it was classified as an operating lease. Finance leases were capitalized atthe commencement of the lease at the inception date fair value of the leased property or, if lower,at the present value of the minimum lease payments. Lease payments were apportioned betweeninterest (recognized as finance costs) and reduction of the lease liability. The JFC Group has nolease commitments accounted for as finance lease. In an operating lease, the leased property wasnot capitalized and the lease payments were recognized as rent expense in profit or loss on astraight-line basis over the lease term. Any prepaid rent and accrued rent were recognized under“Prepayments” and “Operating lease payable” in the consolidated statement of financial position,respectively.

Upon adoption of PFRS 16, the JFC Group applied a single recognition and measurementapproach for all leases for which it is the lessee, except for short-term leases and leases of low-value assets. The JFC Group recognized lease liabilities to make lease payments and right-of-useassets representing the right to use the underlying assets. In accordance with the fullretrospective method of adoption, the JFC Group applied PFRS 16 at the date of initialapplication as if it had already been effective at the commencement date of existing leasecontracts.

As at January 1, 2018, December 31, 2018 and December 31, 2019:§ Right-of-use assets were recognized and presented separately in the consolidated statement of

financial position. Asset retirement obligations previously recognized and included underproperty, plant and equipment were reclassified to right-of-use assets (see Note 12). Theright of use assets was also adjusted by favourable terms of the lease relative to market termsrecognized and included under other intangible assets (see Note 14).

§ Additional lease liabilities were recognized and presented separately in the consolidatedstatement of financial position.

§ Finance lease receivables relating to sublease arrangement were recognized and presentedseparately in the consolidated statement of financial position.

§ Prepayments, operating lease receivables relating to sublease arrangement and operating leasepayable related to previous operating leases were derecognized.

§ Deferred tax assets increased while deferred tax liabilities decreased because of the deferredtax impact of the changes in recognized lease related assets and liabilities.

§ The net effect of these adjustments had been adjusted to retained earnings, non-controllinginterests and cumulative translation adjustments.

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For the year ended December 31, 2019:§ Depreciation and amortization increased by P=7,097.7 million relating to the depreciation of

additional assets recognized (i.e., increase in right-of-use assets, net of decrease in property,plant and equipment and other intangible assets).

§ Rent expense decreased by P=8,442.5 million relating to previous operating leases.§ Finance costs increased by P=1,824.3 million relating to the interest expense on additional

lease liabilities recognized.§ Other income increased by P=371.5 million due to lease liabilities, net of right-of-use assets,

derecognized relating to pre-terminated lease during the year.§ Rent income relating to previous operating leases decreased by P=26.3 million while finance

income increased by P=8.1 million relating to interest income on additional lease receivablesrecognized.

§ Income tax expense decreased by P=61.9 million relating to the tax effect of these changes inexpenses.

§ Cash outflows from operating activities decreased by P=8,419.7 million and cash outflowsfrom financing activities increased by the same amount, representing the payments for theprincipal portion of recognized lease liabilities.

§ Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments

The interpretation addresses the accounting for income taxes when tax treatments involveuncertainty that affects the application of PAS 12, Income Taxes, and does not apply to taxes orlevies outside the scope of PAS 12, nor does it specifically include requirements relating tointerest and penalties associated with uncertain tax treatments.

The interpretation specifically addresses the following:

§ Whether an entity considers uncertain tax treatments separately§ The assumptions an entity makes about the examination of tax treatments by taxation

authorities§ How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates§ How an entity considers changes in facts and circumstances

The entity is required to determine whether to consider each uncertain tax treatment separately ortogether with one or more other uncertain tax treatments and use the approach that better predictsthe resolution of the uncertainty. The entity shall assume that the taxation authority will examineamounts that it has a right to examine and have full knowledge of all related information whenmaking those examinations. If an entity concludes that it is not probable that the taxationauthority will accept an uncertain tax treatment, it shall reflect the effect of the uncertainty foreach uncertain tax treatment using the method the entity expects to better predict the resolution ofthe uncertainty.

Upon adoption of the Interpretation, the JFC Group has assessed whether it has any uncertain taxposition. The JFC Group applies significant judgement in identifying uncertainties over itsincome tax treatments. The JFC Group determined, based on its tax compliancereview/assessment, in consultation with its external tax counsels, that it is probable that itsincome tax treatments (including those for the subsidiaries) will be accepted by the taxationauthorities. Accordingly, the interpretation did not have an impact on the consolidated financialstatements of the JFC Group.

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§ Amendments to PFRS 9, Prepayment Features with Negative Compensation

Under PFRS 9, a debt instrument can be measured at amortized cost or at fair value through othercomprehensive income, provided that the contractual cash flows are ‘solely payments of principaland interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is heldwithin the appropriate business model for that classification. The amendments to PFRS 9 clarifythat a financial asset passes the SPPI criterion regardless of the event or circumstance that causesthe early termination of the contract and irrespective of which party pays or receives reasonablecompensation for the early termination of the contract.

These amendments had no impact on the consolidated financial statements of the JFC Group.

§ Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement

The amendments to PAS 19 address the accounting when a plan amendment, curtailment orsettlement occurs during a reporting period. The amendments specify that when a planamendment, curtailment or settlement occurs during the annual reporting period, an entity isrequired to:

§ Determine current service cost for the remainder of the period after the plan amendment,curtailment or settlement, using the actuarial assumptions used to remeasure the net definedbenefit liability (asset) reflecting the benefits offered under the plan and the plan assets afterthat event

§ Determine net interest for the remainder of the period after the plan amendment, curtailmentor settlement using: the net defined benefit liability (asset) reflecting the benefits offeredunder the plan and the plan assets after that event; and the discount rate used to remeasurethat net defined benefit liability (asset).

The amendments also clarify that an entity first determines any past service cost, or a gain or losson settlement, without considering the effect of the asset ceiling. This amount is recognized inprofit or loss. An entity then determines the effect of the asset ceiling after the plan amendment,curtailment or settlement. Any change in that effect, excluding amounts included in the netinterest, is recognized in other comprehensive income.

The amendments had no significant impact on the consolidated financial statements of the JFCGroup.

§ Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures

The amendments clarify that an entity applies PFRS 9 to long-term interests in an associate orjoint venture to which the equity method is not applied but that, in substance, form part of the netinvestment in the associate or joint venture (long-term interests). This clarification is relevantbecause it implies that the expected credit loss model in PFRS 9 applies to such long-terminterests.

The amendments also clarified that, in applying PFRS 9, an entity does not take account of anylosses of the associate or joint venture, or any impairment losses on the net investment,recognized as adjustments to the net investment in the associate or joint venture that arise fromapplying PAS 28, Investments in Associates and Joint Ventures.

These amendments had no impact on the consolidated financial statements as the JFC Group doesnot have long-term interests in its associate and joint venture.

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§ Annual Improvements to PFRSs 2015-2017 Cycle

§ Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements,Previously Held Interest in a Joint Operation

The amendments clarify that, when an entity obtains control of a business that is a jointoperation, it applies the requirements for a business combination achieved in stages,including remeasuring previously held interests in the assets and liabilities of the jointoperation at fair value. In doing so, the acquirer remeasures its entire previously held interestin the joint operation.

A party that participates in, but does not have joint control of, a joint operation might obtainjoint control of the joint operation in which the activity of the joint operation constitutes abusiness as defined in PFRS 3. The amendments clarify that the previously held interests inthat joint operation are not remeasured.

An entity applies those amendments to business combinations for which the acquisition dateis on or after the beginning of the first annual reporting period beginning on or afterJanuary 1, 2019 and to transactions in which it obtains joint control on or after the beginningof the first annual reporting period beginning on or after January 1, 2019, with earlyapplication permitted. These amendments had no impact on the consolidated financialstatements of the JFC Group as there is no transaction where joint control is obtained.

§ Amendments to PAS 12, Income Tax Consequences of Payments on Financial InstrumentsClassified as Equity

The amendments clarify that the income tax consequences of dividends are linked moredirectly to past transactions or events that generated distributable profits than to distributionsto owners. Therefore, an entity recognizes the income tax consequences of dividends inprofit or loss, other comprehensive income or equity according to where the entity originallyrecognized those past transactions or events.

An entity applies those amendments for annual reporting periods beginning on or afterJanuary 1, 2019, with early application is permitted. These amendments had no impact onthe consolidated financial statements of the JFC Group because dividends declared by theGroup do not give rise to tax obligations under the current tax laws.

§ Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization

The amendments clarify that an entity treats as part of general borrowings any borrowingoriginally made to develop a qualifying asset when substantially all of the activities necessaryto prepare that asset for its intended use or sale are complete.

An entity applies those amendments to borrowing costs incurred on or after the beginning ofthe annual reporting period in which the entity first applies those amendments. An entityapplies those amendments for annual reporting periods beginning on or after January 1, 2019,with early application permitted.

Since the JFC Group’s current practice is in line with these amendments, they had no impacton the consolidated financial statements of the JFC Group.

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Future Changes in Accounting PoliciesPronouncements issued but not yet effective are listed below. Unless otherwise indicated, the JFCGroup does not expect that the future adoption of the said pronouncements will have a significantimpact on its consolidated financial statements. The JFC Group intends to adopt the followingpronouncements when these become effective.

Effective beginning on or after January 1, 2020

§ Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove theassessment of a market participant’s ability to replace missing elements, and narrow thedefinition of outputs. The amendments also add guidance to assess whether an acquired processis substantive and add illustrative examples. An optional fair value concentration test isintroduced which permits a simplified assessment of whether an acquired set of activities andassets is not a business.

An entity applies those amendments prospectively for annual reporting periods beginning on orafter January 1, 2020, with earlier application permitted.

These amendments will apply on future business combinations of the JFC Group.

§ Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,Changes in Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used acrossPFRSs and other pronouncements. They are intended to improve the understanding of theexisting requirements rather than to significantly impact an entity’s materiality judgements.



§ PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts coveringrecognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replacePFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types ofinsurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type ofentities that issue them, as well as to certain guarantees and financial instruments withdiscretionary participation features. A few scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts thatis more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which arelargely based on grandfathering previous local accounting policies, PFRS 17 provides acomprehensive model for insurance contracts, covering all relevant accounting aspects. The coreof PFRS 17 is the general model, supplemented by:

§ A specific adaptation for contracts with direct participation features (the variable feeapproach)

§ A simplified approach (the premium allocation approach) mainly for short-duration contracts

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PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, withcomparative figures required. Early application is permitted. Adoption of this standard is notexpected to have any impact to the JFC Group.

Deferred Effectivity

§ Amendments to PFRS 10, Consolidated Financial Statements and PAS 28, Sale or Contributionof Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss ofcontrol of a subsidiary that is sold or contributed to an associate or joint venture. Theamendments clarify that a full gain or loss is recognized when a transfer to an associate or jointventure involves a business as defined in PFRS 3. Any gain or loss resulting from the sale orcontribution of assets that does not constitute a business, however, is recognized only to theextent of unrelated investors’ interests in the associate or joint venture.

On January 13, 2016, the Financial Reporting Standards Council postponed the original effectivedate of January 1, 2016 of the said amendments until the International Accounting StandardsBoard has completed its broader review of the research project on equity accounting that mayresult in the simplification of accounting for such transactions and of other aspects of accountingfor associates and joint ventures.

Basis of ConsolidationThe consolidated financial statements comprise the financial statements of the Parent Company andits subsidiaries as at December 31, 2019 and 2018 and for each of the three years in the period endedDecember 31, 2019.

Control is achieved when the JFC Group is exposed, or has rights, to variable returns from itsinvolvement with the investee and has the ability to affect those returns through its power over theinvestee. Specifically, the JFC Group controls an investee if, and only if, the JFC Group has:

§ Power over the investee (i.e., existing rights that give it the current ability to direct the relevantactivities of the investee);

§ Exposure, or rights, to variable returns from its involvement with the investee;§ The ability to use its power over the investee to affect its returns.

There is a general presumption that a majority of voting rights results in control. To support thispresumption when the JFC Group has less than a majority of the voting or similar rights of aninvestee, the JFC Group considers all relevant facts and circumstances in assessing whether it haspower over an investee, including:

§ The contractual arrangement with the other vote holders of the investee.§ Rights arising from other contractual arrangements.§ The JFC Group’s voting rights and potential voting rights.

The JFC Group re-assesses whether or not it controls an investee if facts and circumstances indicatethat there are changes to one or more of the three elements of control. Consolidation of a subsidiarybegins when the JFC Group obtains control over the subsidiary and ceases when the JFC Group losescontrol of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired ordisposed of during the year are included in the consolidated financial statements from the date theJFC Group gains control until the date the JFC Group ceases to control the subsidiary.

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Profit or loss and each component of OCI are attributed to the equity holders of the Parent Companyand to the non-controlling interests, even if this results in the non-controlling interests having a deficitbalance. When necessary, adjustments are made to the financial statements of subsidiaries to bringtheir accounting policies in line with the JFC Group’s accounting policies. All intra-group assets andliabilities, equity, income, expenses and cash flows relating to transactions between members of theJFC Group are eliminated in full on consolidation.

The reporting dates of the Parent Company and the associates or joint ventures are identical and thelatter’s accounting policies conform to those used by the Parent Company for like transactions andevents in similar circumstances.

If the JFC Group loses control over a subsidiary, it:

§ Derecognizes the assets (including goodwill) and liabilities of the subsidiary;§ Derecognizes the carrying amount of any non-controlling interests;§ Derecognizes the cumulative translation differences recorded in equity;§ Recognizes the fair value of the consideration received;§ Recognizes the fair value of any investment retained;§ Recognizes any surplus or deficit in profit or loss; and,§ Reclassifies the parent’s share of components previously recognized in other comprehensive

income to profit or loss or retained earnings, as appropriate, as would be required if the JFCGroup had directly disposed of the related assets or liabilities.

Non-controlling interests represent the interests in the subsidiaries not held by the Parent Company,and are presented separately in the consolidated statement of comprehensive income and consolidatedstatement of financial position, separately from equity attributable to equity holders of theParent Company.

A change in ownership interest in a subsidiary that does not result in a loss of control is accounted foras an equity transaction. The carrying amounts of the controlling and non-controlling interests areadjusted to reflect the changes in the JFC Group’s relative interests in the subsidiary. The JFC Grouprecognizes directly in equity any difference between the amount by which the non-controllinginterests are adjusted and the fair value of the consideration paid or received, and attribute it to theequity holders of the Parent Company. These include acquisitions of non-controlling interests ofGreenwich, Yong He King, Mang Inasal, Happy Bee Foods Processing Pte. Ltd. and Smashburger.In particular cases where the JFC Group acquires non-controlling interest in a subsidiary at aconsideration in excess of its carrying amount, the excess is charged to the “Excess of cost over thecarrying value of non-controlling interests acquired” account under equity. These changes in theownership interest in a subsidiary do not result in the recognition of a gain or loss in profit or loss.

The consolidated financial statements include the accounts of the Parent Company and the followingwholly-owned and majority-owned subsidiaries as at December 31, 2019 and 2018:

Countryof Incorporation

2019 2018

Principal ActivitiesDirect

OwnershipIndirect

OwnershipDirect

OwnershipIndirect

OwnershipFresh N’ Famous Foods Inc. (Fresh N’ Famous) - Philippines Food service 100 – 100 –

Chowking Food Corporation USA United Statesof America(USA) Holding company – 100 – 100

Zenith Foods Corporation (Zenith) Philippines Food service 100 – 100 –Freemont Foods Corporation (Freemont) Philippines Food service 100 – 100 –RRB Holdings, Inc. (RRBH): Philippines Holding company 100 – 100 –

Red Ribbon Bakeshop, Inc. (RRBI) Philippines Food service – 100 – 100Red Ribbon Bakeshop, Inc. USA (RRBI USA) USA Food service – 100 – 100

Mang Inasal Philippines Inc. (Mang Inasal) Philippines Food service 100 – 100 –

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2019 2018


OwnershipIndirect

OwnershipDirect

OwnershipIndirect

OwnershipGrandworth Resources Corporation (Grandworth): Philippines Leasing 100 – 100 –

Adgraphix, Inc. (Adgraphix) Philippines Digital printing – 100 – 100IConnect Multi Media Network, Inc. (IConnect) Philippines Dormant – 60 – 60

JC Properties & Ventures Co. Philippines Dormant – 50 – 50Honeybee Foods Corporation (HFC): USA Food service 100 – 100 –

Tokyo Teriyaki Corporation (TTC) USA Food service – 100 – 100Honeybee Foods (Canada) Corporation (HFCC) Canada Food service – 100 – 100

Jollibee Worldwide Pte. Ltd. (JWPL): Singapore Holding company 100 – 100 –Regional Operating Headquarters of JWPL (JWS) Philippines Financial accounting,

human resourcesand logisticsservices – 100 – 100

Golden Plate Pte., Ltd. (GPPL): Singapore Holding company – 100 – 100 - Golden Beeworks Pte. Ltd. Singapore Food service – 60 – 60

- Golden Piatto Pte. Ltd. (m) Singapore Holding company – 75 – 75� Cibo Felice S.R.L. (k) Italy Food service – 100 – 100

- Bee World Spain, Sociedad Limitada (h) Spain Food service – 100 – – - Hong Yun Hong (Shanghai) Food and Beverages

Management Company. Ltd.(a)People’s

Republic ofChina(PRC) Food service – 60 – –

Golden Cup Pte.Ltd. Singapore Holding company – 60 – 60 - Beijing Golden Coffee Cup Food & Beverage

Management Co., Ltd. PRC Food service – 100 – 100 Beijing New Hongzhuangyuan Food and Beverage

Management Co., Ltd. (Hong Zhuang Yuan) PRC Food service – 100 – 100Southsea Binaries Ltd. (Southsea) British Virgin

Island(BVI) Holding company – 100 – 100

Beijing Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100 Shenzhen Yong He King Food and

Beverage Co., Ltd. PRC Food service – 100 – 100 Hangzhou Yongtong Food and Beverage Co., Ltd. PRC Food service – 100 – 100 Hangzhou Yong He King Food and

Beverage Co., Ltd. PRC Food service – 100 – 100 Wuhan Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100 Tianjin Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100

Happy Bee Foods Processing Pte. Ltd. (HBFPPL) Singapore Holding company – 100 – 100 - Happy Bee Foods Processing (Anhui) Co. Ltd. PRC Food service – 100 – 100

JSF Investments Pte. Ltd. (JSF): Singapore Holding company – 100 – 99- SF Vung Tau Joint Stock Company (l) Vietnam Holding company – 60 – 60� Highland Coffee Service Joint-stock Company Vietnam Food service – 100 – 100� Quantum Corporation Vietnam Food service – 100 – 100 Pho Viet Joint Stock Company Vietnam Food service – 100 – 100 Pho 24 Service Trade Manufacture Corporation Vietnam Food service – 100 – 100

- Blue Sky Holdings Limited (l) Hong Kong Holding company – 60 – 60� Sino Ocean Limited Hong Kong Food service – 100 – 100� Blue Sky Holdings (Macau) Limited Macau Food service – 100 – 100

Jollibee (China) Food & Beverage ManagementCo.Ltd. PRC

Managementcompany – 100 – 100

Jollibee International (BVI) Ltd. (JIBL): BVI Holding company – 100 – 100- Jollibee Vietnam Corporation Ltd. Vietnam Food service – 100 – 100

· Goldstar Food Trade and Service Company Ltd(GSC) Vietnam Food service – 100 – 100

- PT Chowking Indonesia Indonesia Food service – 100 – 100- PT Jollibee Indonesia Indonesia Dormant – 100 – 100- Jollibee (Hong Kong) Limited and Subsidiaries Hong Kong Dormant – 85 – 85- Belmont Enterprises Ventures Limited (Belmont): BVI Holding company – 100 – 100� Shanghai Belmont Enterprises Management and

Adviser Co., Ltd. (SBEMAC) (b) PRCBusiness management

service – – – 100� Yong He Holdings Co., Ltd. BVI Holding company – 100 – 100 Centenary Ventures Ltd. BVI Holding company – 100 – 100

Bee Good! Inc. (BGI) USA Holding company – 100 – 100- SJBF LLC (SJBF)(i) USA Food service – 100 – 40

Bee World UK Limited (UK) (g) UK Holding company – 100 – – Super Magnificent Coffee Company Pte. Ltd. (SMCC-SG) (f) Singapore Holding company – 80 – –

- Super Magnificent Coffee Company IrelandLimited (SMCC-IE) (e) Ireland Holding company – 100 – –

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2019 2018


OwnershipIndirect

OwnershipDirect

OwnershipIndirect

Ownership- Super Magnificent Coffee Company Hungary Kft.

(SMCC-HU) (d) Hungary Holding company – 100 – –� Java Ventures, LLC (JVL) (g) USA Holding company – 100 – –� International Coffee & Tea, LLC (ICTL) (c) USA Food service – 100 – – 6000 Jefferson BH, LLC USA Holding company – 100 – – CBTL Ventures, LLC USA Food service – 100 – – CBTL Franchising, LLC USA Franchising company – 100 – –

- The Coffee Bean & Tea Leaf (Singapore) Pte., Ltd.(CBTL-SG) (c) Singapore Food service – 100 – –� The Coffee Bean & Tea Leaf (Malaysia)

Sdn. Bhd. Malaysia Food service – 100 – –� The Coffee Bean & Tea Leaf (Hongkong)

Limited Hong Kong Dormant – 100 – –Chanceux, Inc. Philippines Holding company 100 – 100 – BKTitans Inc. (BKTitans) Philippines Holding company – 54 – 54

- PFN Holdings Corporation Philippines Holding company – 99 – 99� PERF Restaurants, Inc. Philippines Food service – 100 – 100 PERF Trinoma Philippines Food service – 100 – 100 PERF MOA Philippines Food service – 100 – 100

Jollibee Foods Corporation (USA) USA Holding company 100 – 100 –Donut Magic Phils., Inc. (Donut Magic)(n) Philippines Dormant 100 – 100 –Ice Cream Copenhagen Phils., Inc. (ICCP)(n) Philippines Dormant 100 – 100 –Mary’s Foods Corporation (Mary’s)(n) Philippines Dormant 100 – 100 –QSR Builders, Inc. Philippines Dormant 100 – 100 –

(a) On November 18, 2019, the JFC Group, through GPPL incorporated Hong Yun Hong in PRC.(b) On August 28, 2019, SBEMAC was deregistered with the Shanghai Administration for Industry and Commerce and completely dissolved and liquidated on

December 23, 2019.(c) On September 24, 2019, the JFC Group, through Java Ventures, LLC completed the acquisition of 100% share of International Coffee & Tea, LLC.(d) On September 11, 2019, Super Magnificent Coffee Company Hungary Kft. was incorporated.(e) On August 22, 2019, Super Magnificent Coffee Company Ireland Limited was incorporated.(f) On June 28, 2019, the JFC Group, through JWPL incorporated Super Magnificent Coffee Company Pte. Ltd. in Singapore.(g) On June 4, 2019, Java Ventures, LLC (USA) was incorporated.(h) On May 23, 2019, Bee World Spain, Sociedad Limitada was incorporated and registered in the Mercantile Registry of Madrid.(i) On April 17, 2018, the JFC Group, through BGI completed the acquisition of additional 45% share of SJBF, increasing its ownership from 40% to 85%.

Subsequently, on December 14, 2018, the JFC Group, through BGI acquired the remaining 15% share resulting to 100% share in SJBF.(j) On April 16, 2018, Bee World UK Limited (UK) was incorporated.(k) On July 31, 2017, the JFC Group, through Golden Piatto Pte. Ltd. incorporated Cibo Felice in Italy.(l) On May 10, 2017, the JFC Group, through JSF increased its shareholding in SF Vung Tau Joint Stock Company (SFVT) and Blue Sky Holdings Limited

(Blue Sky) to 60%.(m) On April 12, 2017, the JFC Group, through GPPL, incorporated Golden Piatto Pte. Ltd. to own and operate Jollibee restaurants in Italy.(n) On June 18, 2004, the stockholders of the JFC Group approved the Plan of Merger of the three (3) dormant companies. The application is pending

approval from the SEC as at December 31, 2019.

3. Summary of Significant Accounting Policies

Current versus Noncurrent ClassificationThe JFC Group presents assets and liabilities in the consolidated statement of financial position basedon current/noncurrent classification.

An asset is classified as current when it is:

§ Expected to be realized or intended to be sold or consumed in the normal operating cycle;§ Held primarily for the purpose of trading;§ Expected to be realized within twelve months after the reporting period; or§ Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at

least twelve months after the reporting period.

A liability is classified as current when:

§ It is expected to be settled in the normal operating cycle;§ It is held primarily for the purpose of trading;§ It is due to be settled within twelve months after the reporting period; or

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§ There is no unconditional right to defer the settlement of the liability for at least twelve monthsafter the reporting period.

The JFC Group classifies all other assets and liabilities as noncurrent. Deferred tax assets andliabilities are classified as noncurrent assets and liabilities.

Fair Value MeasurementFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. The fair value measurement isbased on the presumption that the transaction to sell the asset or transfer the liability takes placeeither:

§ In the principal market for the asset or liability; or§ In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the JFC Group.

The fair value of an asset or a liability is measured using the assumptions that market participantswould use when pricing the asset or liability, assuming that market participants act in their economicbest interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability togenerate economic benefits by using the asset in its highest and best use or by selling it to anothermarket participant that would use the asset in its highest and best use.

The fair value for financial instruments traded in active markets at the reporting date is based on theirquoted price or binding dealer price quotations, without any deduction for transaction costs. Wherethe JFC Group has financial assets and financial liabilities with offsetting positions in market risks orcounterparty credit risk, it has elected to use the measurement exception to measure the fair value ofits net risk exposure by applying the bid or ask price to the net open position as appropriate. For allother financial instruments not traded in an active market, the fair value is determined by usingvaluation techniques deemed to be appropriate in the circumstances. Valuation techniques includethe market approach (i.e., using prices and other relevant information generated by markettransactions involving identical or comparable assets, liabilities or a group of assets and liabilities),the income approach (i.e., discounted cash flow analysis and option pricing models making as muchuse of available and supportable market data as possible) and the cost approach (i.e., based on theamount required to replace the service capacity of an asset).

The JFC Group uses valuation techniques that are appropriate in the circumstances and for whichsufficient data are available to measure fair value, maximizing the use of relevant observable inputsand minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financialstatements are categorized within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilitiesLevel 2 - Valuation techniques for which the lowest-level input that is significant to the fair value

measurement is directly or indirectly observableLevel 3 - Valuation techniques for which the lowest-level input that is significant to the fair value

measurement is unobservable

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For assets and liabilities that are recognized in the consolidated financial statements on a recurringbasis, the JFC Group determines whether transfers have occurred between levels in the hierarchy byreassessing categorization (based on the lowest-level input that is significant to the fair valuemeasurement as a whole) at the end of each reporting period.

The JFC Group’s management determines the policies and procedures for both recurring fair valuemeasurement and non-recurring measurement. At each reporting date, the management analyzes themovements in the values of assets and liabilities which are required to be remeasured or reassessed asper the JFC Group’s accounting policies. For this analysis, the management verifies the major inputsapplied in the latest valuation by agreeing the information in the valuation computation to contractsand other relevant documents.

For the purpose of fair value disclosures, the JFC Group has determined classes of assets andliabilities based on the nature, characteristics and risks of the asset or liability and the level of the fairvalue hierarchy as explained above.

Cash and Cash EquivalentsCash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investmentsthat are readily convertible to known amounts of cash with original maturities of three months or lessfrom the date of acquisition and are subject to an insignificant risk of change in value.

Short-term InvestmentsShort-term investments are deposits with original maturities of more than three months to one yearfrom acquisition date.

Financial InstrumentsA financial instrument is any contract that gives rise to a financial asset of one entity and a financialliability or equity instrument of another entity.

Date of Recognition. The JFC Group recognizes a financial asset or a financial liability in theconsolidated statement of financial position, when it becomes a party to the contractual provisions ofthe instrument. Purchases or sales of financial assets that require delivery of assets within a timeframe established by regulation or convention in the market place (regular way trades) are recognizedon the trade date, i.e., the date that the JFC Group commits to purchase or sell the asset.

Financial Instruments - Initial Recognition and Subsequent Measurement

Financial Assets

Effective beginning January 1, 2018 (Upon Adoption of PFRS 9)

Initial Recognition and Measurement. Financial assets are classified, at initial recognition, assubsequently measured at amortized cost, FVOCI and FVTPL.

The classification of financial assets at initial recognition depends on the financial asset’s contractualcash flow characteristics and the JFC Group’s business model for managing them. With theexception of trade receivables that do not contain a significant financing component or for which theJFC Group has applied the practical expedient, the JFC Group initially measures a financial asset atits fair value plus, in the case of a financial asset not at FVTPL, transaction costs. Trade receivablesthat do not contain a significant financing component or for which the JFC Group has applied thepractical expedient are measured at the transaction price determined under PFRS 15.

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In order for a financial asset to be classified and measured at amortized cost or FVOCI, it needs togive rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principalamount outstanding. This assessment is referred to as the SPPI test and is performed at an instrumentlevel.

The JFC Group’s business model for managing financial assets refers to how it manages its financialassets in order to generate cash flows. The business model determines whether cash flows will resultfrom collecting contractual cash flows, selling the financial assets, or both.

Subsequent Measurement. For purposes of subsequent measurement, financial assets are classified infour categories:

§ Financial assets at amortized cost (debt instruments)§ Financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments)§ Financial assets designated at FVOCI with no recycling of cumulative gains and losses upon

derecognition (equity instruments)§ Financial assets at FVTPL

The JFC Group has no financial assets at FVOCI as at December 31, 2019 and 2018.

Financial Assets at Amortized Cost (Debt Instruments). This category is the most relevant to the JFCGroup. The JFC Group measures financial assets at amortized cost if both of the followingconditions are met:

§ The financial asset is held within a business model with the objective to hold financial assets inorder to collect contractual cash flows; and

§ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest (EIR)method and are subject to impairment. Gains and losses are recognized in profit or loss when theasset is derecognized, modified or impaired.

The JFC Group’s cash in banks, short-term deposits, short-term investments, receivables (excludingreceivables from government agencies), security and other deposits, operating lease receivables andlease receivables are classified under this category as at December 31, 2019 and 2018.

Financial Assets at FVTPL. Financial assets at FVTPL include financial assets held for trading,financial assets designated upon initial recognition at FVTPL, or financial assets mandatorily requiredto be measured at fair value. Financial assets are classified as held for trading if they are acquired forthe purpose of selling or repurchasing in the near term. Derivatives, including separated embeddedderivatives, are also classified as held for trading unless they are designated as effective hedginginstruments. Financial assets with cash flows that are not solely payments of principal and interestare classified and measured at FVTPL, irrespective of the business model. Notwithstanding thecriteria for debt instruments to be classified at amortized cost or FVOCI, as described above, debtinstruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantlyreduces, an accounting mismatch.

Financial assets at FVTPL are carried in the consolidated statement of financial position at fair valuewith net changes in fair value recognized in the consolidated statement of comprehensive income.

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The JFC Group elected to classify irrevocably its investments in golf and leisure club shares underthis category as at December 31, 2019 and 2018.

Impairment of Financial Assets. The JFC Group recognizes an allowance for ECLs for all debtinstruments not held at FVTPL. ECLs are based on the difference between the contractual cash flowsdue in accordance with the contract and all the cash flows the JFC Group expects to receivediscounted at an approximation of the original EIR. The expected cash flows will include cash flowsfrom the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significantincrease in credit risk since initial recognition, ECLs are provided for credit losses that result fromdefault events that are possible within the next 12-months (a 12-month ECL). For those creditexposures for which there has been a significant increase in credit risk since initial recognition, a lossallowance is required for credit losses expected over the remaining life of the exposure, irrespectiveof the timing of the default (a lifetime ECL).

For receivables and contract assets, and operating lease receivables, the JFC Group applies asimplified approach in calculating ECLs. Therefore, the JFC Group does not track changes in creditrisk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The JFCGroup has established a provision matrix that is based on its historical credit loss experience, adjustedfor forward-looking factors specific to the debtors and the economic environment. For security andother deposits, the JFC Group applies the general approach and calculates ECL based on the12-month ECLs or lifetime ECLs, depending on whether there has been a significant increase incredit risk on the financial instruments since initial recognition.

For cash in banks, short-term deposits and short-term investments, the JFC Group applies the lowcredit risk simplification. The probability of default and loss given defaults are publicly available andare considered to be low credit risk investments. It is the JFC Group’s policy to measure ECLs onsuch instruments on a 12-month basis. However, when there has been a significant increase in creditrisk since origination, the allowance will be based on the lifetime ECL. The JFC Group assesses thatthere is a significant increase in credit risk of a financial asset when default occurs. The JFC Groupuses the ratings from Moody’s to determine whether the debt instrument has significantly increased incredit risk and to estimate ECLs.

The JFC Group considers a financial asset in default when contractual payments are 30 days past due.However, in certain cases, the JFC Group may also consider a financial asset to be in default wheninternal or external information indicates that the JFC Group is unlikely to receive the outstandingcontractual amounts in full before taking into account any credit enhancements held by the JFCGroup. A financial asset is written off when there is no reasonable expectation of recovering thecontractual cash flows.

The JFC Group incorporates forward-looking information into both its assessment of whether thecredit risk of an instrument has increased significantly since its initial recognition and itsmeasurement of ECL. To do this, the JFC Group has considered a range of relevant forward-lookingmacro-economic assumptions for the determination of unbiased general industry adjustments and anyrelated specific industry adjustments that support the calculation of ECLs.

Based on the JFC Group’s evaluation and assessment and after taking into consideration externalactual and forecast information, the JFC Group considers two or more economic scenarios and therelative probabilities of each outcome. External information includes economic data and forecastspublished by governmental bodies, monetary authorities and selected private-sector and academicinstitutions.

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The JFC Group has identified and documented key drivers of credit risk and credit losses of eachportfolio of financial instruments and, using an analysis of historical data, has estimated relationshipsbetween macro-economic variables and credit risk and credit losses. The Group considers macro-economic factors such as gross domestic product growth rates and inflation rates in its analysis.

Effective before January 1, 2018 (Prior to Adoption of PFRS 9)

Initial Recognition and Measurement. Financial assets are classified, at initial recognition, asfinancial assets at FVTPL, loans and receivables, held-to-maturity (HTM) investments, AFS financialassets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Allfinancial assets are recognized initially at fair value plus, except for financial assets at FVTPL,transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established byregulation or convention in the market place (regular way trades) are recognized on the trade date,i.e., the date that the JFC Group commits to purchase or sell the asset.

The JFC Group’s financial assets consist of financial assets at FVTPL, loans and receivables, andAFS financial assets as at December 31, 2017. The JFC Group has no financial assets classifiedunder the HTM investments category as at December 31, 2017.

Subsequent Measurement

Financial Assets at FVTPL. Financial assets at FVTPL include financial assets held for trading andfinancial assets designated upon initial recognition at FVTPL. Financial assets are classified as heldfor trading if they are acquired for the purpose of selling or repurchasing in the near term.Derivatives, including separated embedded derivatives, are also classified as held for trading unlessthey are designated as effective hedging instruments as defined by PAS 39. The JFC Group has notdesignated any financial assets at FVTPL. Financial assets at FVTPL are carried in the consolidatedstatement of financial position at fair value with net changes in fair value recognized in profit or loss.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fairvalue if their economic characteristics and risks are not closely related to those of the host contractsand the host contracts are not held for trading or designated at FVTPL. These embedded derivativesare measured at fair value with changes in fair value recognized in profit or loss. Reassessment onlyoccurs if there is either a change in the terms of the contract that significantly modifies the cash flowsthat would otherwise be required or a reclassification of a financial asset out of the FVTPL.

This category generally applies to the JFC Group’s derivative assets as at December 31, 2017.

Loans and Receivables. This category is the most relevant to the JFC Group. Loans and receivablesare non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market. After initial measurement, such financial assets are subsequently measured atamortized cost using the effective interest rate method, except for short-term loans and receivableswith no stated interest which are measured at undiscounted amounts less impairment. Amortized costis calculated by taking into account any discount or premium on acquisition and fees or costs that arean integral part of the effective interest rate. The effective interest rate amortization is recognized inprofit or loss. The losses arising from impairment are recognized also in profit or loss.

This category includes the JFC Group’s cash in banks, short-term deposits, short-term investments,receivables, receivable from sale of business, security and other deposits, and operating leasereceivables as at December 31, 2017.

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AFS Financial Assets. AFS financial assets include equity investments. Equity investmentsclassified as AFS financial assets are those that are neither classified as held for trading nordesignated at FVTPL.

After initial measurement, AFS financial assets are subsequently measured at fair value withunrealized gains or losses recognized in other comprehensive income and credited directly in equityuntil the investment is derecognized, at which time, the cumulative gain or loss is recognized in profitor loss, or the investment is determined to be impaired, when the cumulative loss is reclassified fromequity to profit or loss. Dividends earned while holding AFS financial assets is recognized in profitor loss.

This category includes investments in golf and leisure club shares as at December 31, 2017.

Impairment of Financial Assets. The JFC Group assesses, at each reporting date, whether there isobjective evidence that a financial asset or a group of financial assets is impaired. An impairmentexists if one or more events that has occurred since the initial recognition of the asset (an incurred‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group offinancial assets that can be reliably estimated. Evidence of impairment may include indications thatthe debtors or a group of debtors is experiencing significant financial difficulty, default ordelinquency in interest or principal payments, the probability that they will enter bankruptcy or otherfinancial reorganization and observable data indicating that there is a measurable decrease in theestimated future cash flows, such as changes in arrears or economic conditions that correlate withdefaults.

§ Financial Assets Carried at Amortized Cost. For financial assets carried at amortized cost, theJFC Group first assesses whether impairment exists individually for financial assets that areindividually significant, and individually or collectively for financial assets that are notindividually significant. If the JFC Group determines that no objective evidence of impairmentexists for an individually assessed financial asset, whether significant or not, it includes the assetin a group of financial assets with similar credit risk characteristics and collectively assesses themfor impairment. Assets that are individually assessed for impairment and for which animpairment loss is, or continues to be, recognized are not included in a collective assessment ofimpairment. The amount of any impairment loss identified is measured as the difference betweenthe asset’s carrying amount and the present value of estimated future cash flows (excluding futureexpected credit losses that have not yet been incurred). The present value of the estimated futurecash flows is discounted at the financial asset’s original EIR.

The carrying amount of the asset is reduced through the use of an allowance account and the lossis recognized in profit or loss. Interest income continues to be accrued on the reduced carryingamount using the rate of interest used to discount the future cash flows for the purpose ofmeasuring the impairment loss. Loans and receivables, together with the associated allowance,are written off when there is no realistic prospect of future recovery and all collateral has beenrealized or has been transferred to the JFC Group. If, in a subsequent year, the amount of theestimated impairment loss increases or decreases because of an event occurring after theimpairment was recognized, the previously recognized impairment loss is increased or reduced byadjusting the allowance account. If a write-off is later recovered, the recovery is recognized inprofit and loss to the extent that the carrying value of the asset does not exceed what theamortized cost would have been had the impairment not been recognized at the date theimpairment is reversed.

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§ AFS Financial Assets. For AFS financial assets, the JFC Group assesses at each reporting datewhether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as AFS financial assets, objective evidence wouldinclude a significant or prolonged decline in the fair value of the investment below its cost.‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against theperiod in which the fair value has been below its original cost. When there is evidence ofimpairment, the cumulative loss measured as the difference between the acquisition cost and thecurrent fair value, less any impairment loss on that investment previously recognized in profit orloss is removed from OCI and recognized in profit or loss. For unquoted equity investments thatare not carried at fair value because such cannot be reliably measured, or on a derivative asset thatis linked to and must be settled by delivery of such unquoted equity instruments, the amount ofloss is measured as the difference between the assets carrying amount and the present value ofestimated future cash flows discounted at the current market rate of return for a similar financialasset.

Impairment losses on equity investments are not reversed through profit or loss; increases in theirfair value after impairment are recognized in OCI.

The determination of what is ‘significant’ or ‘prolonged’ requires judgment. In making thisjudgment, the JFC Group evaluates, among other factors, the duration or extent to which the fairvalue of an investment is less than its cost.

Financial Liabilities (Applies before and after January 1, 2018)

Initial Recognition and Measurement. Financial liabilities are classified, at initial recognition, asfinancial liabilities at FVTPL, loans and borrowings, payables or as derivatives designated as hedginginstruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowingsand payables, net of directly attributable transaction costs.

The JFC Group’s financial liabilities include loans and borrowings, payables and derivative financialliabilities as at December 31, 2019 and 2018.

Subsequent Measurement

§ Financial Liabilities at FVTPL. Financial liabilities at FVTPL include financial liabilities heldfor trading and financial liabilities designated upon initial recognition as at FVTPL. Financialliabilities are classified as held for trading if they are incurred for the purpose of repurchasing inthe near term. This category also includes derivative financial instruments entered into by theJFC Group that are not designated as hedging instruments in hedge relationships as defined byPAS 39. Separated embedded derivatives are also classified as held for trading unless they aredesignated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognized in profit or loss.

Financial liabilities designated upon initial recognition at FVTPL are designated at the initial dateof recognition, and only if the criteria in PAS 39 are satisfied. The JFC Group has not designatedany financial liability as at FVTPL.

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§ Loans and Borrowings, and Other Payables. This is the category most relevant to the JFCGroup. After initial recognition, interest-bearing loans and borrowings, and other payables aresubsequently measured at amortized cost using the EIR method. Gains and losses are recognizedin profit or loss when the liabilities are derecognized as well as through the EIR amortizationprocess.

Amortized cost is calculated by taking into account any discount or premium on acquisition andfees or costs, including debt issue costs for the JFC Group’s debts that are an integral part of theeffective interest rate. The effective interest rate amortization is included as interest expense inthe consolidated statement of comprehensive income.

This category includes the JFC Group’s trade payables and other current liabilities (excludinglocal and other taxes payable and unearned revenue from gift certificates), long-term debts andlease liabilities as at December 31, 2019 and 2018.

§ Debt Issue Costs. Debt issue costs are specific incremental costs, other than those paid to thelender, that are directly related to issuing a debt instrument. These are presented in theconsolidated statement of financial position as a reduction from the related debt instrument andare amortized through the EIR amortization process.

Derecognition of Financial Assets and Liabilities (Applies to Financial Instruments before and afterJanuary 1, 2018)

Financial Assets. A financial asset (or, where applicable, a part of a financial asset or part of a groupof similar financial assets) is primarily derecognized (i.e., removed from the JFC Group’sconsolidated statement of financial position) when:

§ The rights to receive cash flows from the asset have expired, or,

§ The JFC Group has transferred its rights to receive cash flows from the asset or has assumed anobligation to pay the received cash flows in full without material delay to a third party under a‘pass-through’ arrangement; and either (a) the JFC Group has transferred substantially all therisks and rewards of the asset, or (b) the JFC Group has neither transferred nor retainedsubstantially all the risks and rewards of the asset, but has transferred control of the asset.

When the JFC Group has transferred its rights to receive cash flows from an asset or has entered intoa pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards ofownership. When it has neither transferred nor retained substantially all of the risks and rewards ofthe asset, nor transferred control of the asset, the JFC Group continues to recognize the transferredasset to the extent of its continuing involvement. In that case, the JFC Group also recognized anassociated liability. The transferred asset and the associated liability are measured on a basis thatreflects the rights and obligations that the JFC Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured atthe lower of the original carrying amount of the asset and the maximum amount of consideration thatthe JFC Group could be required to repay.

Financial Liabilities. A financial liability is derecognized when the obligation under the liability isdischarged, cancelled or has expired. When an existing financial liability is replaced by another fromthe same lender on substantially different terms, or the terms of an existing liability are substantiallymodified, such an exchange or modification is treated as a derecognition of the original liability andthe recognition of a new liability, and the difference in the respective carrying amounts is recognizedin the consolidated statement of comprehensive income.

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‘Day 1 Difference’Where the transaction price in a non-active market is different from the fair value based on otherobservable current market transactions in the same instrument or based on a valuation techniquewhose variables include only data from observable market, the JFC Group recognizes the differencebetween the transaction price and fair value (a ‘Day 1 difference’) in the profit or loss unless itqualifies for recognition as some other type of asset. In cases where unobservable data is used, thedifference between the transaction price and model value is recognized in the profit or loss only whenthe inputs become observable or when the instrument is derecognized. For each transaction, the JFCGroup determines the appropriate method of recognizing the ‘Day 1 difference’ amount.

Offsetting of Financial InstrumentsFinancial assets and financial liabilities are offset and the net amount is reported in the consolidatedstatement of financial position if there is a currently enforceable legal right to offset the recognizedamounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilitiessimultaneously. The JFC Group assesses that it has a currently enforceable right of offset if the rightis not contingent on a future event, and is legally enforceable in the normal course of business, eventof default, and event of insolvency or bankruptcy of the JFC Group and all of the counterparties.

Derivative Financial Instruments and Hedge Accounting

Initial Recognition and Subsequent Measurement. The JFC Group uses derivative financialinstruments, such as cross currency swaps and interest rate swaps to hedge its foreign currency risksand interest rate risks, respectively. Such derivative financial instruments are initially recognized atfair value on the date on which a derivative contract is entered into and are subsequently remeasuredat fair value. Derivatives are carried as financial assets when the fair value is positive and as financialliabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit orloss, except for the effective portion of cash flow hedges, which is recognized in other comprehensiveincome and later reclassified to profit or loss when the hedge item affects profit or loss.

For the purpose of hedge accounting, hedges are classified as:

§ Fair value hedges when hedging the exposure to changes in the fair value of a recognized asset orliability or an unrecognized firm commitment

§ Cash flow hedges when hedging the exposure to variability in cash flows that is either attributableto a particular risk associated with a recognized asset or liability or a highly probable forecasttransaction or the foreign currency risk in an unrecognized firm commitment

§ Hedges of a net investment in a foreign operation

The JFC Group’s interest rate swap is cash flow hedge. The JFC Group has no fair value hedge andhedge of a net investment in a foreign operation as at December 31, 2019 and 2018.

At the inception of a hedge relationship, the JFC Group formally designates and documents the hedgerelationship to which it wishes to apply hedge accounting and the risk management objective andstrategy for undertaking the hedge.

Before January 1, 2018, the documentation includes identification of the hedging instrument, thehedged item or transaction, the nature of the risk being hedged and how the entity will assess theeffectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changesin the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges areexpected to be highly effective in achieving offsetting changes in fair value or cash flows and are

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assessed on an ongoing basis to determine that they actually have been highly effective throughoutthe financial reporting years for which they were designated.

Beginning January 1, 2018, the documentation includes identification of the hedging instrument, thehedged item, the nature of the risk being hedged and how the JFC Group will assess whether thehedging relationship meets the hedge effectiveness requirements (including analysis of sources ofhedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies forhedge accounting if it meets all of the following effectiveness requirements:

§ There is ‘an economic relationship’ between the hedged item and the hedging instrument§ The effect of credit risk does not ‘dominate the value changes’ that result that economic

relationship§ The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the

hedged item that the JFC Group actually hedges and the quantity of the hedging instrument thatthe JFC Group actually uses to hedge that quantity of hedged item

Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:

Cash Flow Hedges. Cash flow hedges are hedges of the exposure to variability in cash flows that isattributable to a particular risk associated with a recognized asset, liability or a highly probableforecast transaction and could affect the consolidated statements of comprehensive income. Changesin the fair value of a hedging instrument that qualifies as a highly effective cash flow hedge arerecognized as “Comprehensive income (loss) on derivative liability” in the consolidated statement ofcomprehensive income, whereas any hedge ineffectiveness is immediately recognized in profit orloss.

The JFC Group has an interest rate swap for its exposure to volatility in interest rates.

Amounts recognized as other comprehensive are transferred to profit or loss when the hedgedtransaction affects profit or loss, such as when the hedged income or expense is recognized or when aforecast sale occurs.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover(as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge nolonger meets the criteria for hedge accounting, any cumulative gain or loss previously recognized inother comprehensive income remains separately in equity until the forecast transaction occurs or theforeign currency firm commitment is met.

Contract Balances

Contract Assets. These pertain to unbilled service revenues. A contract asset is the right toconsideration in exchange for goods or services transferred to the customer. If the JFC Groupperforms by transferring goods or services to a customer before the customer pays consideration orbefore payment is due, a contract asset is recognized for the earned consideration that is conditional.

Trade Receivables. A receivable represents the JFC Group’s right to an amount of consideration thatis unconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract Liabilities. A contract liability is the obligation to transfer goods or services to a customerfor which the JFC Group has received consideration (or an amount of consideration is due) from thecustomer. If a customer pays consideration before the JFC Group transfers goods or services to thecustomer, a contract liability is recognized when the payment is made or the payment is due

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(whichever is earlier). Contract liabilities are recognized as revenue when the JFC Group performsunder the contract.

InventoriesInventories are valued at the lower of cost and net realizable value. Costs are accounted for asfollows:

Processed inventories - Standard costing, which is reviewed on a quarterlybasis and revised as necessary to approximatecurrent costs determined using first in, first out(FIFO). Cost includes direct materials, labor and aproportion of manufacturing overhead costs basedon normal operating capacity.

Food supplies, packaging, store andother supplies, and novelty items

- Standard costing which is reviewed on a quarterlybasis and revised as necessary to approximatecurrent costs determined using FIFO.

Net realizable value of processed inventories is the estimated selling price in the ordinary course ofbusiness, less estimated costs of completion and the estimated costs necessary to make the sale.

Net realizable value of food supplies, packaging, store and other supplies is the current replacementcost. Food and other supplies are held for use in the production of processed inventories.

Net realizable value of novelty items is the estimated selling price in the ordinary course of business,less the estimated costs necessary to make the sale.

Other Current AssetsOther current assets include prepaid expenses which are paid in advance and recorded as asset beforethese are utilized, deposits which pertain to advance payments to suppliers to be applied for futurepurchases, and creditable withholding taxes, which will be applied in the following year againstcorporate income tax or be claimed for refund with the Bureau of Internal Revenue. Prepaidexpenses are amortized over time and recognized as expense as the benefit is derived from the asset.

Interests in and Advances to Joint Ventures, Co-venturers and AssociatesAn associate is an entity over which the JFC Group has significant influence. Significant influence isthe power to participate in the financial and operating policy decisions of the investee, but is not incontrol or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the joint venture. Joint control is the contractually agreedsharing of control of an arrangement, which exists only when decisions about the relevant activitiesrequire unanimous consent of the parties sharing control.

The JFC Group’s investments in its associates and joint ventures are accounted for using the equitymethod based on the percentage share of ownership and capitalization. Interests in joint ventures areaccounted for under the equity method from the date the joint control is obtained.

Under the equity method, the JFC Group’s investments in joint ventures and associates are carried inthe consolidated statement of financial position at cost plus the JFC Group’s share in post-acquisitionchanges in the net assets of associates or joint ventures, less any impairment in value. Goodwillrelating to the joint ventures or associates is included in the carrying amount of the investment and isnot amortized. The consolidated statement of comprehensive income includes the JFC Group’s sharein the financial performance of the associates or joint ventures. The JFC Group’s share in profit or

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loss of the associates is shown on the face of the consolidated statement of comprehensive income as“Equity in net losses of joint ventures and associates - net”, which is the profit or loss attributable toequity holders of the joint ventures and associates.

When the JFC Group’s share of losses in the joint ventures or associates equals or exceeds its interest,including any other unsecured receivables, the JFC Group does not recognize further losses, unless ithas incurred obligations or made payments on behalf of the associates or joint ventures. Where therehas been a change recognized directly in the equity of the associate or joint venture, the JFC Grouprecognizes its share in any changes and discloses this, when applicable, in the consolidated statementof changes in equity.

Unrealized gains arising from transactions with the associates or joint ventures are eliminated to theextent of the JFC Group’s interests in the associates or joint ventures against the related investments.Unrealized losses are eliminated similarly but only to the extent that there is no evidence ofimpairment in the asset transferred.

The JFC Group ceases to use the equity method of accounting on the date from which it no longer hasjoint control in the joint ventures, no longer has significant influence over the associates, or when theinterest becomes held for sale.

Upon loss of significant influence over the associate or joint control over the joint ventures, the JFCGroup measures and recognizes its remaining investment at its fair value. Any difference betweenthe carrying amount of the former associate or former jointly controlled entities upon loss ofsignificant influence or joint control, and the fair value of the remaining investment and proceedsfrom disposal is recognized in profit or loss. When the remaining interest in the former jointlycontrolled entity constitutes significant influence, it is accounted for as interest in an associate.

Property, Plant and EquipmentProperty, plant and equipment, except land and construction in progress, are stated at cost lessaccumulated depreciation and amortization and any accumulated impairment in value. Such costincludes the cost of replacing part of property, plant and equipment at the time that cost is incurred, ifthe recognition criteria are met, and excludes the costs of day-to-day servicing. Land is stated at costless any impairment in value.

The initial cost of property, plant and equipment consists of its purchase price, including importduties and nonrefundable taxes and any other costs directly attributable in bringing the asset to itsworking condition and location for its intended use. Cost also includes any related asset retirementobligation and interest incurred during the construction year on funds borrowed to finance theconstruction of the asset. Expenditures incurred after the property, plant and equipment have beenput into operation, such as repairs and maintenance, are normally charged to profit or loss in the yearin which the costs are incurred. In situations where it can be clearly demonstrated that theexpenditures have resulted in an increase in the future economic benefits expected to be obtainedfrom the use of an item of property, plant and equipment beyond its originally assessed standard ofperformance, the expenditures are capitalized as additional costs of property, plant and equipment.

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Depreciation and amortization are calculated on a straight-line basis over the following estimateduseful lives of the assets:

Land improvements 5 yearsPlant, buildings, commercial condominium units and

improvements 5 - 40 yearsLeasehold rights and improvements 2 - 10 years or term of the lease,

whichever is shorterOffice, store and food processing equipment 2 - 15 yearsFurniture and fixtures 3 - 5 yearsTransportation equipment 3 - 5 years

The residual values, if any, useful lives and depreciation and amortization method of the assets arereviewed at the end of each financial year and adjusted prospectively, if appropriate.

Fully depreciated assets are retained in the accounts until they are disposed or retired.

An item of property, plant and equipment is derecognized upon disposal or when no future economicbenefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset(calculated as the difference between the disposal proceeds and the carrying amount of the asset) isincluded in profit or loss in the year the asset is derecognized.

Construction in progress represents assets under construction and is stated at cost less any impairmentin value. This includes the cost of construction and other direct costs. Cost also includes interest onborrowed funds incurred during the construction year. Construction in progress is not depreciateduntil such time that the relevant assets are completed and ready for use.

Investment PropertiesInvestment properties consist of land and buildings and building improvements held by the JFCGroup for capital appreciation and rental purposes. Investment properties, except land, are carried atcost, including transaction costs, less accumulated depreciation and amortization and any impairmentin value. Cost also includes the cost of replacing part of an existing investment property at the timethat cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicingof an investment property. Land is carried at cost less any impairment in value.

The depreciation of buildings and building improvements are calculated on a straight-line basis overthe estimated useful lives of the assets which are five (5) to twenty (20) years.

The residual values, if any, useful lives and method of depreciation and amortization of the assets arereviewed at each financial year-end and adjusted prospectively, if appropriate.

Investment property is derecognized when either it has been disposed of or when the investmentproperty is permanently withdrawn from use and no future economic benefit is expected from itsdisposal. Any gains or losses on the retirement or disposal of an investment property are recognizedin profit or loss in the year of retirement or disposal.

Transfers to investment property are made only when there is a change in use, evidenced by ending ofownership-occupation, or commencement of an operating lease to another party. Transfers frominvestment property are made only when there is a change in use, evidenced by commencement ofowner-occupation or commencement of development with a view to sell.

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For a transfer from investment property to owner-occupied property, the cost of property forsubsequent accounting is its carrying value at the date of change in use. If the property occupied bythe JFC Group as an owner-occupied property becomes an investment property, the JFC Groupaccounts for such property in accordance with the policy stated under property and equipment up tothe date of change in use.

Borrowing CostsBorrowing costs directly attributable to the acquisition, construction or production of an asset thatnecessarily takes a substantial year of time to get ready for its intended use or sale are capitalized aspart of the cost of asset. Capitalization of borrowing costs commences when the activities to preparethe asset are in progress and expenditures and borrowing costs are being incurred. Borrowing costsare capitalized until the assets are substantially ready for their intended use. All other borrowingcosts are expensed as incurred. Borrowing costs consist of interest and other cost that an entity incursin connection with the borrowing of funds.

Business CombinationsBusiness combinations are accounted for using the acquisition method. Applying the acquisitionmethod requires the (a) determination whether the JFC Group will be identified as the acquirer; (b)determination of the acquisition date; (c) recognition and measurement of the identifiable assetsacquired, liabilities assumed and any non-controlling interest in the acquiree; and (d) recognition andmeasurement of goodwill or a gain from a bargain purchase.

When the JFC Group acquires a business, it assesses the financial assets and liabilities assumed forappropriate classification and designation in accordance with the contractual terms, economiccircumstances and pertinent conditions as at acquisition date.

The cost of an acquisition is measured as the aggregate of the (a) consideration transferred by the JFCGroup, measured at acquisition-date fair value, (b) amount of any non-controlling interest in theacquiree and (c) acquisition-date fair value of the JFC Group’s previously held equity interest in theacquiree in a business combination achieved in stages. Acquisition costs incurred are expensed andincluded in “General and administrative expenses” account in the consolidated statement ofcomprehensive income.

Initial Measurement of Non-controlling Interest. For each business combination, the JFC Groupmeasures the non-controlling interest in the acquiree using the proportionate share of the acquiree’sfair value of identifiable net assets.

Business Combination Achieved in Stages. In a business combination achieved in stages, the JFCGroup remeasures its previously held equity interests in the acquiree at its acquisition-date fair valueand recognizes the resulting gain or loss, if any, in profit or loss.

Measurement Period. If the initial accounting for a business combination is incomplete by the end ofthe reporting period in which the business combination occurs, the JFC Group reports in itsconsolidated financial statements provisional amounts for the items for which the accounting isincomplete. The measurement period ends as soon as the JFC Group receives the information it wasseeking about facts and circumstances that existed as at the acquisition date or learns that moreinformation is not obtainable. The measurement period does not exceed one year from the acquisitiondate.

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Initial Measurement of Goodwill or Gain on a Bargain Purchase. Goodwill is initially measured bythe JFC Group at cost being the excess of the total consideration transferred over the net identifiableassets acquired and liabilities assumed. If this consideration is lower than the fair value of the netassets of the subsidiary acquired, the difference is recognized in profit or loss as gain on a bargainpurchase. Before recognizing a gain on a bargain purchase, the JFC Group determines whether it hascorrectly identified all of the assets acquired and all of the liabilities assumed and recognize anyadditional assets or liabilities that are identified in that review.

Subsequent Measurement of Goodwill. Following initial recognition, goodwill is measured at costless any accumulated impairment losses.

Impairment Testing of Goodwill. For the purpose of impairment testing, goodwill acquired in abusiness combination is, from the acquisition date, allocated to each of the JFC Group’sCGU, or groups of CGUs, that are expected to benefit from the synergies of the combination,irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groupsof units.

Each unit or group of units to which the goodwill is allocated:

§ represents the lowest level within the JFC Group at which the goodwill is monitored for internalmanagement purposes; and

§ is not larger than an operating segment as defined in PFRS 8, Operating Segments, beforeaggregation.

Frequency of Impairment Testing. Irrespective of whether there is any indication of impairment, theJFC Group tests goodwill acquired in a business combination for impairment annually as atDecember 31 and more frequently when circumstances indicate that the carrying amount is impaired.

Allocation of Impairment Loss. An impairment loss is recognized for a CGU if the recoverableamount of the unit or group of units is less than the carrying amount of the unit or group of units. Theimpairment loss is allocated to reduce the carrying amount of the assets of the unit or group of unitsfirst to reduce the carrying amount of goodwill allocated to the CGU or group of units and then to theother assets of the unit or group of units pro rata on the basis of the carrying amount of each asset inthe unit or group of units. In allocating the impairment loss, the JFC Group cannot reduce thecarrying amount of an asset below the highest of its fair value less costs of disposal if measurable, itsvalue in use if determinable and zero.

Intangible AssetsIntangible assets acquired separately are measured at cost on initial recognition. Following initialrecognition, intangible assets are carried at cost less any accumulated amortization and anyaccumulated impairment loss. The useful lives of intangible assets are assessed at the individual assetlevel as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life using the straight-linemethod and assessed for impairment whenever there is an indication that the intangible assets may beimpaired. At a minimum, the amortization period and the amortization method for an intangible assetwith a finite useful life are reviewed at least at each financial year-end. Changes in the expecteduseful life or the expected pattern of consumption of future economic benefits embodied in the assetare accounted for by changing the amortization period or method, as appropriate, and treated aschanges in accounting estimates.

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Intangible assets with indefinite useful lives are tested for impairment annually either individually orat the CGU level. Such intangible assets are not amortized. The useful life of an intangible assetwith an indefinite life is reviewed annually to determine whether the indefinite life assessmentcontinues to be supportable. If not, the change in the useful life assessment from indefinite to finite ismade on a prospective basis.

Amortization of computer software, trademarks and other intangible assets are calculated on astraight-line basis over the following estimated useful lives of the assets:

Computer software 10 yearsTrademarks 5 yearsOther intangible assets 5 years

Gains or losses arising from derecognition of an intangible asset are measured as the differencebetween the net disposal proceeds and the carrying amount of the asset, and are recognized in profitor loss when the asset is derecognized.

Impairment of Nonfinancial AssetsThe carrying values of interests in and advances to joint ventures, co-venturers and associates,property, plant and equipment, right-of-use assets, investment properties, trademarks, goodwill andother intangible assets are reviewed for impairment when events or changes in circumstances indicatethat the carrying value may not be recoverable. If any such indication exists, and if the carrying valueexceeds the estimated recoverable amount, the assets or CGU are written down to their recoverableamounts. The recoverable amount of the asset is the greater of fair value less costs to sell or value inuse. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s-length transaction between knowledgeable, willing parties, less costs of disposal. In assessing valuein use, the estimated future cash flows are discounted to their present value using a pre-tax discountrate that reflects current market assessments of the time value of money and the risks specific to theasset. For an asset that does not generate largely independent cash inflows, the recoverable amount isdetermined for the CGU to which the asset belongs. Impairment losses are recognized in profit orloss in those expense categories consistent with the function of the impaired asset.

For nonfinancial assets, excluding goodwill, an assessment is made at each reporting date as towhether there is any indication that previously recognized impairment losses may no longer exist ormay have decreased. If such indication exists, the recoverable amount is estimated. A previouslyrecognized impairment loss is reversed only if there has been a change in the estimates used todetermine the asset’s recoverable amount since the last impairment loss was recognized. If that is thecase, the carrying amount of the asset is increased to its recoverable amount. That increased amountcannot exceed the carrying amount that would have been determined, net of depreciation andamortization, had no impairment loss been recognized for the asset in prior years. Such reversal isrecognized in profit or loss. After such a reversal, the depreciation charge is adjusted in future yearsto allocate the asset’s revised carrying amount, less any residual value on a systematic basis over itsremaining useful life.

Equity

Capital Stock and Additional Paid-in Capital. Capital stock is measured at par value for all sharesissued. Proceeds and/or fair value of considerations received in excess of par value, if any, arerecognized as additional paid-in capital. Incremental costs incurred directly attributable to theissuance of new shares are shown in equity as a deduction from proceeds, net of tax.

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Additional paid-in capital is also credited for the cost of the JFC Group’s equity settled share-basedpayments to its employees.

Subscription Receivable. Subscription receivable represents the unpaid balance of the subscriptionprice for subscribed common stock of the Parent Company.

Retained Earnings. Retained earnings represent the JFC Group’s accumulated earnings, net ofdividends declared. The balance includes accumulated earnings of subsidiaries, joint ventures andassociates, which are not available for dividend declaration.

Dividends. The JFC Group recognizes a liability to make cash distribution to its equity holders whenthe distribution is authorized and the distribution is no longer at the discretion of the JFC Group. Acorresponding amount is recognized directly in the equity. Dividends for the year that are approvedafter the financial reporting date are dealt with as an event after the reporting period.

Other Comprehensive Income. Other comprehensive income comprises items of income and expense(including reclassification adjustments) that are not recognized in profit or loss. These includecumulative translation adjustments, gains or losses on derivatives designated as hedging instrumentsin an effective hedge, unrealized gains or losses on financial assets at FVOCI, remeasurement gainsor losses on pension and their income tax effects.

Treasury Shares. Acquisitions of treasury shares are recorded at cost. The total cost of treasuryshares is shown in the consolidated statement of financial position as a deduction from the totalequity. Upon re-issuance or resale of the treasury shares, cost of common stock held in treasuryaccount 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-incapital but only to the extent of previous gain from original issuance, sale or retirement for the sameclass of stock. Otherwise, losses are charged to retained earnings.

Revenue from Contracts with CustomersRevenue from contracts with customers is recognized when control of the goods or services aretransferred to the customer at an amount that reflects the consideration to which the JFC Groupexpects to be entitled in exchange for those goods or services. The JFC Group assesses its revenuearrangements against specific criteria to determine if it is acting as a principal or as an agent. TheJFC Group has concluded that it is acting as principal in majority of its revenue arrangements. Thefollowing specific recognition criteria must also be met before revenue is recognized:

Sale of Goods. Revenue from sale of goods is recognized at the point in time when control istransferred to the customer, which is normally upon delivery. Sales returns and discounts arededucted from sales to arrive at net sales shown in the consolidated statement of comprehensiveincome.

Royalty Fees. Revenue from royalty fees is recognized as the royalty accrues based on certainpercentages of the franchisees’ net sales.

Set-up Fees. Revenue from set-up fees is recognized on a straight-basis over the term of the franchiseagreement and when performance obligations relating to the payment of set-up fees have beensatisfied.

System-wide Advertising Fees. Revenues consisting of reimbursements of network advertising andpromotional costs from franchisees are recognized upon performance of service.

Service Fees. Revenue is recognized in the period in which the service has been rendered.

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Management Fees. Revenue is recognized in the period in which the administration services has beenrendered based on a certain percentage of the total costs incurred.

Other RevenuesThe following specific recognition criteria must also be met before other revenue is recognized:

Rent Income. Rent income from short-term leases and leases of low-value asset is recognized on astraight-line basis over the lease terms.

Interest Income. Interest income is recognized as the interest accrues, taking into account theeffective yield on the asset.

Other Income. Other income is recognized when there is an incidental economic benefit, other thanthe usual business operations, that will flow to the JFC Group through an increase in asset orreduction in liability and that can be measured reliably.

Cost and ExpensesCost and expenses are decreases in economic benefits during the reporting period in the form ofoutflows or decrease of assets or incurrence of liabilities that result in decreases in equity, other thanthose relating to distributions to equity participants. Cost and expenses are recognized as incurred.

Advertising and promotions expenses include costs incurred for advertising schemes and promotionalactivities for new products.

Pension BenefitsThe pension liability or asset is the aggregate of the present value of the defined benefit obligation atthe end of the reporting period reduced by the fair value of plan assets (if any), adjusted for any effectof limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of anyeconomic benefits available in the form of refunds from the plan or reductions in future contributionsto the plan.

The cost of providing benefits under the defined benefit plans is actuarially determined using theprojected unit credit method.

Pension expense comprises the following:§ Service cost§ Net interest on the net defined benefit liability or asset

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as part of pension expense. Past service costs are recognized whenplan amendment or curtailment occurs. These amounts are calculated periodically by independentqualified actuaries.

Net interest on the pension liability or asset is the change during the period in the liability or asset thatarises from the passage of time which is determined by applying the discount rate based ongovernment bonds to the pension liability or asset. Net interest on the pension liability or asset isrecognized under “Direct costs” and “General and administrative expenses” in the consolidatedstatement of comprehensive income.

Remeasurements comprising actuarial gains and losses, return on plan liability or assets and anychange in the effect of the asset ceiling (excluding net interest on defined benefit liability) arerecognized immediately in other comprehensive income in the period in which they arise.Remeasurements are not reclassified to profit or loss in subsequent periods.

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Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurancepolicies. Plan assets are not available to the creditors of the JFC Group, nor can they be paid directlyto the JFC Group. Fair value of plan assets is based on market price information. When no marketprice is available, the fair value of plan assets is estimated by discounting expected future cash flowsusing a discount rate that reflects both the risk associated with the plan assets and the maturity orexpected disposal date of those assets (or, if they have no maturity, the expected period until thesettlement of the related obligations). If the fair value of the plan assets is higher than the presentvalue of the defined benefit obligation, the measurement of the resulting defined benefit asset islimited to the present value of economic benefits available in the form of refunds from the plan orreductions in future contributions to the plan.

The JFC Group also participates in various government-defined contribution schemes for the PRC-based and USA-based subsidiaries. Under these schemes, pension benefits of existing and retiredemployees are guaranteed by the local pension benefit plan, and each subsidiary has no furtherobligations beyond the annual contribution.

Employee Leave EntitlementEmployee entitlements to annual leave are recognized as a liability when they are accrued to theemployees. JFC Group recognizes undiscounted liability for leave expected to be settled whollybefore twelve months after the end of the annual reporting period.

Share-based PaymentsThe JFC Group has stock option plans granting its management and employees an option to purchasea fixed number of shares of stock at a stated price during a specified period (“equity-settledtransactions”).

The cost of the options granted to the JFC Group’s management and employees that becomes vestedis recognized in profit or loss over the period in which the performance and/or service conditions arefulfilled, ending on the date on which the relevant management and employees become fully entitledto the award (“vesting date”).

The fair value is determined using the Black-Scholes Option Pricing Model. The cumulative expenserecognized for the share-based transactions at each reporting date until the vesting date reflects theextent to which the vesting period has expired and the JFC Group’s best estimate of the number ofequity instruments that will ultimately vest. The charge or credit in profit or loss or the investmentaccount for a period represents the movement in cumulative expense recognized as of the beginningand end of that period.

No expense is recognized for awards that do not ultimately vest.

Where the terms of a share-based award are modified, at a minimum, an expense is recognized as ifthe terms had not been modified. In addition, an expense is recognized for any modification, whichincreases the total fair value of the share-based payment agreement, or is otherwise beneficial to themanagement and employees as measured at the date of modification.

Where a share-based award is cancelled, it is treated as if it had vested on the date of cancellation, andany expense not yet recognized for the award is recognized immediately. However, if a new award issubstituted for the cancelled award, and designated as a replacement award on the date that it isgranted, the cancelled and new awards are treated as if there were a modification of the originalaward.

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LeasesThe JFC Group assesses at contract inception whether a contract is, or contains, a lease. That is, ifthe contract conveys the right to control the use of an identified asset for a period of time in exchangefor consideration.

JFC Group as Lessee. The JFC Group applies a single recognition and measurement approach for allleases, except for short-term leases and leases of low-value assets. The JFC Group recognizes leaseliabilities to make lease payments and right-of-use assets representing the right to use the underlyingassets.

§ Right-of-Use Assets. The JFC Group recognizes right-of-use assets at the commencement date ofthe lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measuredat cost, less any accumulated depreciation and impairment losses, and adjusted for anyremeasurement of lease liabilities. The cost of right-of-use assets includes the amount of leaseliabilities recognized, initial direct costs incurred, and lease payments made at or before thecommencement date less any lease incentives received. The cost of right-of-use assets alsoincludes an estimate of costs to be incurred by the lessee in dismantling and removing theunderlying asset to the condition required by the terms and conditions of the lease, unless thosecosts are incurred to produce inventories. Unless the JFC Group is reasonably certain to obtainownership of the leased asset at the end of the lease term, the recognized right-of-use assets aredepreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.Right-of-use assets are subject to impairment.

§ Lease Liabilities. At the commencement date of the lease, the JFC Group recognizes leaseliabilities measured at the present value of lease payments to be made over the lease term. Thelease payments include fixed payments (including in-substance fixed payments) less any leaseincentives receivable, variable lease payments that depend on an index or a rate, and amountsexpected to be paid under residual value guarantees. The variable lease payments that do notdepend on an index or a rate are recognized as expense in the period on which the event orcondition that triggers the payment occurs.

In calculating the present value of lease payments, the JFC Group uses the incremental borrowingrate (IBR) at the lease commencement date if the interest rate implicit in the lease is not readilydeterminable. In determining the IBR, the JFC Group uses risk-free rate plus credit spread wherethe credit spread is based on the credit risk of the lessee. After the commencement date, theamount of lease liabilities is increased to reflect the accretion of interest and reduced for the leasepayments made. In addition, the carrying amount of lease liabilities is remeasured if there is amodification, a change in the lease term, a change in the in-substance fixed lease payments or achange in the assessment to purchase the underlying asset.

The JFC Group’s lease liabilities are included in interest-bearing loans and borrowings.

§ Short-term Leases and Leases of Low-value Assets. The JFC Group applies the short-term leaserecognition exemption to its short-term leases of QSR outlets. It also applies the lease of low-value assets recognition exemption to leases of that are considered of low value (i.e., belowUSD5,000 or approximately P=250,000). Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.

§ Subleases of Underlying Asset. The JFC Group continues to account for the original lease (thehead lease) as a lessee and accounts for the sublease as the lessor (intermediate lessor).

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JFC Group as Lessor. Leases in which the JFC Group does not transfer to the lessee substantially allthe risks and benefits incidental to ownership an asset are classified as operating leases. Initial directcosts incurred in negotiating an operating lease are added to the carrying amount of the operatinglease receivable and recognized over the lease term on the same basis as rent income. Rent incomefrom operating leases is accounted for on a straight-line basis over the lease term and is recognized asincome in profit or loss. Contingent rents are recognized as revenue in the period in which they areearned.

JFC Group as an Intermediate Lessor. Sublease is classified at the inception date as a finance leaseor an operating lease. Subleases in which the JFC Group determined that the lease term constitute amajor part of the economic life of the underlying asset and at the inception date, the present value ofthe minimum lease payments amounts to substantially all of the fair value of the underlying asset areclassified as finance lease.

If the sublease is classified as finance lease, JFC Group as an intermediate lessor:

§ derecognizes the right-of-use asset relating to the head lease that it transfers to the sublessee andrecognizes the net investment in the sublease;

§ recognizes any difference between the right-of-use asset and the net investment in the sublease inprofit or loss; and

§ retains the lease liability relating to the head lease in its consolidated statement of financialposition, which represents the lease payments owed to the head lessor.

During the term of the sublease, JFC Group recognizes both finance income on the sublease andinterest expense on the head lease.

If the sublease is classified as an operating lease, JFC Group retains the lease liability and the right-of-use asset relating to the head lease in its consolidated statement of financial position. During theterm of the sublease, JFC Group recognizes a depreciation charge for the right-of-use asset andinterest on the lease liability and recognizes rent income from the sublease.

Foreign Currency Transactions and TranslationsThe consolidated financial statements are presented in Philippine Peso, which is the ParentCompany’s functional and presentation currency. Each entity in the JFC Group determines its ownfunctional currency and items included in the financial statements of each entity are measured usingthat functional currency. The functional currency of subsidiaries domiciled and operating in thePhilippines are also determined to be the Philippine Peso. Where the functional currency is thePhilippine Peso, transactions in foreign currencies are recorded in Philippine Peso using the exchangerate at the date of the transaction. Monetary assets and liabilities denominated in foreign currenciesare restated using the closing rate of exchange at reporting date. All differences are recognized inprofit or loss. Nonmonetary items that are measured in terms of historical cost in a foreign currencyare translated using the exchange rates as at the dates of the initial transactions.

The functional currencies of the JFC Group’s foreign operations are US dollar (USD), PRC Renminbi(RMB), Indonesia rupiah, Vietnam dong, Singapore dollar, Hong Kong dollar, Canadian dollar,Macau pataca, Euro and Malaysian ringgit. As of the reporting date, the assets and liabilities offoreign subsidiaries are translated into the presentation currency of the Parent Company at the rate ofexchange ruling at the reporting date while the income and expense accounts are translated at theweighted average exchange rates for the year. The resulting translation differences are included inequity under the account “Cumulative translation adjustments of foreign subsidiaries and interests injoint ventures and associates”. On disposal of a foreign subsidiary, the accumulated exchangedifferences are recognized in profit or loss.

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Taxes

Current Tax. Current tax liabilities for the current and prior periods are measured at the amountexpected to be paid to the tax authority. The tax rates and tax laws used to compute the amount arethose that are enacted or substantively enacted at reporting date.

Current income tax relating to items recognized directly in equity is recognized in equity (not in theprofit or loss). Management periodically evaluates positions taken in the tax returns with respect tosituations in which applicable tax regulations are subject to interpretation and establishes provisionswhere appropriate.

Deferred Tax. Deferred tax is provided using balance sheet liability method, on all temporarydifferences at reporting date between the tax bases of assets and liabilities and their carrying amountsfor financial reporting purposes.

Deferred tax assets are recognized for all deductible temporary differences and carryforward benefitsof unused tax credits from excess of minimum corporate income tax (MCIT) over regular corporateincome tax (RCIT) and net operating loss carryover (NOLCO), to the extent that it is probable thattaxable profit will be available against which the deductible temporary differences and carry forwardbenefits of excess of MCIT over RCIT and NOLCO can be utilized, except:

§ where the deferred tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at thetime of the transaction, affects neither the accounting profit nor taxable profit; and

§ in respect of deductible temporary differences associated with investments in subsidiaries andinterest in joint ventures and associates, deferred tax assets are recognized only to the extent thatit is probable that the temporary differences will reverse in the foreseeable future and taxableprofit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to theextent that it is no longer probable that sufficient taxable profit will be available to allow all or part ofthe deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at eachreporting date and are recognized to the extent that it has become probable that future taxable profitwill allow the deferred tax assets to be recovered.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

§ where the deferred tax liability arises from the initial recognition of goodwill or of an asset orliability in a transaction that is not a business combination and, at the time of the transactions,affects neither the accounting profit nor taxable profit; and

§ in respect of taxable temporary differences associated with investments in subsidiaries andinterests in joint ventures and associates, where the timing of the reversal of the temporarydifferences can be controlled and it is probable that the temporary differences will not reverse inthe foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the yearwhen the asset is realized or the liability is settled, based on tax rates and tax laws that have beenenacted or substantially enacted at the reporting date.

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Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss.Deferred tax items are recognized in correlation to the underlying transaction either in othercomprehensive income or directly in another equity account.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separaterecognition at that date, are recognized subsequently if new information about facts andcircumstances change. The adjustment is either treated as reduction in goodwill, as long as it doesnot exceed goodwill, if it was incurred during the measurement year or recognize in profit or loss.

Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current taxassets against current tax liabilities and the deferred taxes relate to the same taxable entity and thesame taxation authority.

Value Added Tax (VAT). Revenue, expenses and assets are recognized net of the amount of VAT, ifapplicable.

When VAT from sales of goods and/or services (output VAT) exceeds VAT passed on frompurchases of goods or services (input VAT), the excess is recognized as part of “Trade payables andother current liabilities” account in the consolidated statement of financial position. When VATpassed on from purchases of gods or services (input VAT) exceeds VAT from sales of goods and/orservices (output VAT), the excess is recognized as part of “Other current assets” account in theconsolidated statement of financial position.

Earnings per Share (EPS) Attributable to Equity Holders of the Parent CompanyBasic EPS is calculated by dividing the net income for the year attributable to the equity holders ofthe 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 ofthe Parent Company by the weighted average number of common shares outstanding during theperiod, adjusted for any potential common shares resulting from the assumed exercise of outstandingstock options. Outstanding stock options will have dilutive effect under the treasury stock methodonly when the average market price of the underlying common share during the period exceeds theexercise price of the option.

Where the EPS effect of the shares to be issued to management and employees under the stock optionplan would be anti-dilutive, the basic and diluted EPS would be stated at the same amount.

ProvisionsProvisions are recognized when the JFC Group has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation and a reliable estimate can be made of the amount of the obligation.If the effect of the time value of money is material, provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects current market assessmentof the time value of money and, where appropriate, the risks specific to the liability. Wherediscounting is used, the increase in the provision due to the passage of time is recognized as interestexpense.

ContingenciesContingent liabilities are not recognized in the consolidated financial statements but are disclosed inthe notes to financial statements unless the possibility of an outflow of resources embodyingeconomic benefits is remote. Contingent assets are not recognized in the consolidated financialstatements but are disclosed when an inflow of economic benefits is probable.

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Business SegmentsThe JFC Group is organized and managed separately according to the nature of operations andgeographical locations of businesses. The three major operating businesses of the JFC Group arefood service, franchising and leasing while geographical segments are segregated to Philippinebusinesses and international businesses. These operating and geographical businesses are the basisupon which the JFC Group reports its primary segment information presented in Note 5.

Events after the Reporting PeriodPost year-end events that provide additional information about the JFC Group’s financial position atreporting date (adjusting events) are reflected in the JFC Group’s consolidated financial statements.Post year-end events that are not adjusting events are disclosed in the notes to consolidated financialstatements when material.

4. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the consolidated financial statements requires management to make judgments,estimates and assumptions that affect the reported amounts in the consolidated financial statementsand related notes at the end of the reporting period. However, uncertainty about these assumptionsand estimates could result in outcomes that could require a material adjustment to the carryingamount of the affected asset or liability in the future.

The JFC Group believes the following represents a summary of these significant judgments, estimatesand assumptions and the related impact and associated risks on the JFC Group’s consolidatedfinancial statements.

JudgmentsIn the process of applying the JFC Group’s accounting policies, management has made the followingjudgments, apart from those involving estimations, which have the most significant effect on theamounts recognized in the consolidated financial statements.

Functional Currency. Management has determined that the functional and presentation currency of theParent Company and its Philippine-based subsidiaries is the Philippine Peso, being the currency of theprimary environment in which the Parent Company and its major subsidiaries operate. The functionalcurrencies of its foreign operations are determined as the currency in the country where the subsidiaryoperates. For consolidation purposes, the foreign subsidiaries’ balances are translated to Philippine Pesowhich is the Parent Company’s functional and presentation currency.

Revenue Contracts with Customers - Determining the Timing of Satisfaction of Set-up Fees. The JFCGroup undertakes activities prior to store opening (e.g., initial training, site development, systems set-up, etc.) as indicated in the franchise agreement. The JFC Group determines whether these activitiesare capable of being distinct (i.e., whether the franchisee can benefit on each of these activities on astandalone basis) and whether these activities are distinct within the context of the franchiseagreement (i.e., whether these activities can be separated from the franchise license granted to thefranchisee).

The JFC Group determined that revenue from set-up fees should be recognized on a straight-linebasis over the term of the franchise agreement and when performance obligations relating to thepayment of set-up fees have been satisfied.

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Principal versus Agent Consideration. The JFC Group’s agreement with the franchisee includes theright to charge the franchisee its share in the JFC Group’s nationwide advertising and marketingefforts as well as fees for the JFC Group’s administration of various advertisements, network andmedia placements. The JFC Group determined that it is acting as principal for the nationwideadvertising because it is the JFC Group who retains the right to direct the service provider of theadvertisements, network and media placements, and has the discretion on how to price the advertisingfee charges. The JFC Group considers both the legal form and the substance of its agreement todetermine each party’s respective roles in the agreement.

Determining the Lease Term of Contracts with Renewal Options - JFC Group as Lessee. The JFCGroup determines the lease term as the non-cancellable term of the lease, together with any periodscovered by an option to extend the lease if it is reasonably certain to be exercised, or any periodscovered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The JFC Group has the option, under some of its leases to lease the assets for additional terms of 5 to15 years. The JFC Group applies judgement in evaluating whether it is reasonably certain to exercisethe option to renew. That is, it considers all relevant factors that create an economic incentive for itto exercise the renewal. After the commencement date, the JFC Group reassesses the lease term ifthere is a significant event or change in circumstances that is within its control and affects its abilityto exercise (or not to exercise) the option to renew (e.g., a change in business strategy). The JFCGroup included the renewal period as part of the lease term for leases of QSR outlets and warehousesdue to the significance of these assets to its operations. These leases have a short non-cancellableperiod (i.e., 5 to 10 years) and there will be a significant negative effect on operations if areplacement is not readily available.

Property Lease Classification - JFC Group as Lessor. The JFC Group has entered into commercialproperty leases on its investment property portfolio. Management has determined, based on anevaluation of the terms and conditions of the arrangements, such that the lease term not constituting amajor part of the economic life of the commercial property and the present value of the minimum leasepayments not amounting to substantially all the fair value of the commercial property, that it retainssubstantially all the risks and rewards incidental to ownership of these properties and accounts for thecontracts as operating leases.

Rent income amounted to P=58.5 million, P=25.0 million and P=27.2 million in 2019, 2018 and 2017respectively (see Notes 13, 20 and 29).

Sublease Arrangements Classification - JFC Group as an Intermediate Lessor. JFC Group has enteredinto arrangements to sublease its leased assets. Management has determined, based on an evaluation ofthe terms and conditions of the sublease arrangements, such that the lease term constitutes a major part ofthe economic life of the leased assets even if title is not transferred, and at the inception date, the presentvalue of the minimum lease payments amounts to substantially all the fair value of the leased assets andaccounts for the arrangements as finance lease.

Interest income amounted to P=8.1 million, P=9.0 million and P=9.9 million in 2019, 2018 and 2017,respectively (see Notes 23 and 29).

Assessing Joint Control of an Arrangement and the Type of Arrangement. Joint control is thecontractually agreed sharing of control of an arrangement which exists only when decisions about therelevant activities require the unanimous consent of the parties sharing control. The JFC Groupassessed that it has joint control in all joint arrangements by virtue of a contractual agreement withother stockholders. The JFC Group’s joint ventures have separate legal entities and the shareholdershave right to their net assets (see Note 11).

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Material Partly-Owned Subsidiaries. The consolidated financial statements include additionalinformation about subsidiaries that have non-controlling interests that are material to the JFC Group(see Note 11). Management determined material partly-owned subsidiaries as those with balance ofnon-controlling interest greater than 5% of total non-controlling interests and those subsidiaries withactivities that are important to the JFC Group as at end of the period.

Material Joint Ventures and Associates. The consolidated financial statements include additionalinformation about joint ventures and associates that are material to the JFC Group (see Note 11).Management determined material joint ventures and associates as those joint ventures and associateswhere the JFC Group’s carrying amount of investment is greater than 5% of the total interests in jointventures and investments in associates as at end of the period.

Estimates and AssumptionsThe key estimates and assumptions concerning the future and other key sources of estimationuncertainty at reporting date that has a significant risk of causing a material adjustment to the carryingamounts of assets and liabilities within the next financial year are discussed below. The JFC Groupbased its assumptions and estimates on parameters available when the consolidated financialstatements were prepared. Existing circumstances and assumptions about future developments,however, may change due to changes on market circumstances arising beyond the control of the JFCGroup. Such changes are reflected in the assumptions when they occur.

Determination of Provisional Purchase Price Allocation. On September 24, 2019, the JFC Group,through SMCC-HU, acquired CBTL for the total consideration of P=17,163.0 million (see Note 11). Inidentifying the assets acquired and liabilities assumed, management has determined that part of the assetsbeing acquired pertains to the trademark, favourable leases and other intangibles of CBTL amounting toP=18,703.6 million (see Note 14).

In April 2018, the JFC Group, through BGI, increased its ownership interest in SJBF from 40% to 85%ownership interest for a total consideration of P=11,284.9 million (see Note 11). In identifying the assetsacquired and liabilities assumed, management has determined that part of the assets being acquiredpertains to the trademark of Smashburger amounting to P=10,414.0 million (see Note 14).

Management has measured the trademarks and favourable leases, and the property and equipment thatwere acquired using the appraisal reports that were prepared by an independent appraiser. Thetrademarks were valued using the relief-from-royalty method wherein the fair value of trademarks isbased on cost savings from owning the trademarks. Significant assumptions and estimates used includecomparable royalty rates, long-term growth rates, discount rates based on available market data andrevenue growth rate forecasts. The property and equipment were valued using the replacement cost.Adjustments were made to replacement cost to reflect depreciation. The valuation of favourable leaseswas based on market values using income approach.

Recoverability of Trademarks, Goodwill and Other Intangible Assets. The JFC Group determineswhether trademarks, goodwill and other intangible assets with indefinite useful life is impaired at least onan annual basis or more frequently if events or changes in circumstances indicate that the carrying valuemay be impaired. This requires an estimation of the value in use of the CGU to which the goodwill isallocated. Estimating the value in use requires the JFC Group to make an estimate of the expected long-term growth rates and earnings before interest, taxes, depreciation and amortization (EBITDA) from theCGU and also consider market data in determining discount rate in order to calculate the present value ofthose cash flows.

Management has determined that trademarks, goodwill and other intangible assets are not impaired. Thecarrying amount of trademarks, goodwill and other intangible assets amounted to P=50,208.1 million andP=31,541.8 million as at December 31, 2019 and 2018, respectively (see Note 14).

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Recoverability of Interests in and Advances to Joint Ventures, Co-venturers and Associates. The JFCGroup performs impairment test of its interests in and advances to joint ventures, co-venturers andassociates when there are facts and circumstances indicating that their carrying amounts exceed theirrecoverable amounts. Determining the recoverable amount of assets, which requires the determination offuture cash flows expected to be generated from the continued operations of joint ventures and associates,requires the JFC Group to make significant assumptions that can materially affect the consolidatedfinancial statements. These assumptions include long-term growth rates, EBITDA and discount rate.Future events could cause the JFC Group to conclude that the assets are impaired. Any resultingimpairment loss could have a material adverse impact on the JFC Group’s financial position andperformance.

Reversal of impairment loss on interest in an associate was recognized in 2018 amounting toP=16.7 million (see Notes 11 and 23).

The carrying amounts of interests in and advances to joint ventures, co-venturers and associates as atDecember 31 are as follows (see Note 11):

2019 2018Interests in joint ventures P=3,102,559 P=969,791Interests in associates 824,405 869,578Advances to co-venturers 2,905,138 1,672,861

Realizability of Deferred Tax Assets. The carrying amounts of deferred tax assets at each reporting dateis reviewed and reduced to the extent that sufficient taxable profits are available to allow all or part of thedeferred tax assets to be utilized. The JFC Group’s assessment on the recognition of deferred tax assetsis based on the forecasted taxable income. This forecast is based on future expectations on revenue andexpenses as well as management’s plans and strategies for the relevant entities.

The carrying amount of the recognized deferred tax assets amounted to P=15,424.0 million andP=14,641.1 million as at December 31, 2019 and 2018, respectively. Unrecognized deferred tax assetsamounted to P=820.5 million and P=443.2 million as at December 31, 2019 and 2018, respectively(see Note 24).

Recoverability of Property, Plant and Equipment, Right-of-use Assets and Investment Properties. TheJFC Group performs impairment review of right-of-use assets, property, plant and equipment andinvestment properties when certain impairment indicators are present. Determining the fair value ofassets, which requires the determination of future cash flows expected to be generated from the continueduse and ultimate disposition of such assets, requires the JFC Group to make estimates and assumptionsthat can materially affect the consolidated financial statements. Future events could cause the JFC Groupto conclude that the assets are impaired. Any resulting impairment loss could have a material adverseimpact on the JFC Group’s financial position and performance.

Provision for impairment loss amounted to P=399.2 million, nil and P=431.9 million in 2019, 2018 and2017, respectively. Reversal of previously recognized impairment loss amounted to P=29.2 million,P=408.2 million and P=2.1 million in 2019, 2018 and 2017, respectively (see Notes 12 and 22).

The aggregate carrying values of property, plant and equipment, right-of-use assets and investmentproperties as at December 31 are as follows:

2019 2018Property, plant and equipment (see Note 12) P=32,592,122 P=26,672,549Right-of-use assets (see Note 29) 42,907,418 36,564,242Investment properties (see Note 13) 572,722 848,974

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Impairment of Receivables and Contract Assets (Upon Adoption of PFRS 9). The JFC Group uses aprovision matrix to calculate ECLs for its receivables and contract assets. The provision rates arebased on days past due.

The provision matrix is initially based on the JFC Group’s historical observed default rates. The JFCGroup calibrates the matrix to adjust the historical credit loss experience with forward-lookinginformation. At every reporting date, the historical observed default rates are updated and changes inthe forward-looking estimates are analyzed.

The assessment of the correlation between historical observed default rates, forward-lookinginformation, and ECLs is a significant estimate. The amount of ECLs is sensitive to changes incircumstances and of forecast economic conditions. The JFC Group’s historical credit lossexperience and forecast of economic conditions may also not be representative of customers’ actualdefault in the future.

Provision for impairment loss on receivables and contract assets amounted to P=25.3 millionand P=10.2 million in 2019 and 2018, respectively (see Note 22). Reversal of previously recognizedprovision for impairment loss amounted to P=91.4 million and P=23.7 million in 2019 and 2018,respectively (see Note 22). The carrying amount of receivables and contract assets amounted toP=5,906.3 million and P=4,862.7 million as at December 31, 2019 and 2018, repectively (see Note 7).

Impairment of Receivables (Prior to Adoption of PFRS 9). The JFC Group maintains an allowance forimpairment losses at a level considered adequate to provide for potential uncollectible receivables. Thelevel of allowance is evaluated on the basis of factors that affect the collectability of the accounts. Thesefactors include, but are not limited to, the length of the JFC Group’s relationship with the customers andcounterparties, average age of accounts and collection experience. The JFC Group performs a regularreview of the age and status of these accounts, designed to identify accounts with objective evidence ofimpairment and provide the appropriate allowance for impairment losses. The review is done quarterlyand annually using a combination of specific and collective assessments. The amount and timing ofrecorded expenses for any period would differ if the JFC Group made differentjudgments or utilizeddifferent methodologies. An increase in allowance account would increase general and administrativeexpenses and decrease current assets.

Provision for impairment loss on receivables in 2017 amounted to P=143.8 million resulting from specificand collective assessments (see Note 22). Reversal of previously recognized provisions amounting toP=20.7 million was recognized in 2017 (see Note 22).

Net Realizable Value of Inventories. The JFC Group writes down inventories to net realizable value,through the use of an allowance account, whenever the net realizable value of inventories becomeslower than the cost due to damage, physical deterioration, obsolescence, changes in price levels orother causes.

The estimates of net realizable value are based on the most reliable evidence available at the time theestimates are made of the amounts the inventories are expected to be realized. These estimates takeinto consideration fluctuations of prices or costs directly relating to events occurring after reportingdate to the extent that such events confirm conditions existing at reporting date. The allowanceaccount is reviewed on a regular basis to reflect the accurate valuation in the financial records.

The JFC Group assessed that the net realizable value for some inventories is lower than cost, hence, itrecognized provision for inventory obsolescence amounting to P=16.7 million, P=8.3 million andP=7.4 million in 2019, 2018 and 2017, respectively (see Note 22). Reversal of previously recognizedprovisions amounting to P=26.5 million, P=6.1 million and P=53.8 million were recognized in 2019, 2018

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and 2017, respectively (see Note 22). The carrying amount of inventories amounted toP=9,966.1 million and P=8,812.2 million as at December 31, 2019 and 2018, respectively (see Note 8).

Present Value of Defined Benefit Obligation. The pension expense as well as the present value of thedefined benefit obligation are determined using actuarial valuations. The actuarial valuation involvesmaking various assumptions. These include the determination of the discount rates and the future salaryincreases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature,defined benefit obligations are highly sensitive to changes in these assumptions. All assumptions arereviewed at each reporting date.

In determining the appropriate discount rate, management considers the interest rates of governmentbonds that are denominated in the currency in which the benefits will be paid, with extrapolatedmaturities corresponding to the expected duration of the defined benefit obligation.

Future salary increases are based on budgetary salary increases.

The carrying amount of pension liability amounted to P=2,221.3 million and P=1,320.6 million as atDecember 31, 2019 and 2018, respectively (see Note 25).

Share-based Payments. The Parent Company measures the cost of its equity-settled transactions withmanagement and employees by reference to the fair value of the equity instruments at the grant date.Estimating fair value for share-based payment transactions requires determining the most appropriatevaluation model, which is dependent on the terms and conditions of the grant. The estimate also requiresdetermining the most appropriate inputs to the valuation model including the expected life of the shareoption, volatility and dividend yield and making assumptions about these inputs. The fair value of theshare option is being determined using the Black-Scholes Option Pricing Model. The expected life of thestock options is based on the expected exercise behavior of the stock option holders and is not necessarilyindicative of the exercise patterns that may occur. The volatility is based on the average historical pricevolatility which may be different from the expected volatility of the shares of the Parent Company.

Total expense arising from share-based payment recognized by the JFC Group amounted toP=262.9 million, P=312.0 million and P=227.5 million in 2019, 2018 and 2017, respectively(see Notes 19, 22 and 26).

Estimation of Useful Lives of Property, Plant and Equipment, Investment Properties and IntangibleAssets with Definite Useful Lives. The JFC Group estimates the useful lives of property, plant andequipment, investment properties and intangible assets with definite useful lives based on the yearover which the property, plant and equipment, investment properties and intangible assets areexpected to be available for use and on the collective assessment of the industry practice, internaltechnical evaluation and experience with similar assets. The estimated useful lives of property, plantand equipment, investment properties and intangible assets are reviewed periodically and updated ifexpectations differ from previous estimates due to physical wear and tear, technical or commercialobsolescence and legal or other limits in the use of the said assets. However, it is possible that futurefinancial performance could be materially affected by changes in the estimates brought about bychanges in the factors mentioned above. The amount and timing of recording the depreciation andamortization for any year would be affected by changes in these factors and circumstances. Areduction in the estimated useful lives of property, plant and equipment, investment properties andintangible assets would increase the recorded depreciation and amortization and decrease noncurrentassets.

There was no change in the estimated useful lives of property, plant and equipment, investmentproperties and intangible assets in 2019 and 2018.

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Leases - Determining the IBR. The JFC Group cannot readily determine the interest rate implicit inthe lease, therefore, it uses its IBR to measure lease liabilities. The IBR is the rate of interest that theJFC Group would have to pay to borrow over a similar term, and with a similar security, the fundsnecessary to obtain an asset of a similar value to the right-of-use asset in a similar economicenvironment. The IBR therefore reflects what the JFC Group would have to pay, which requiresestimation when no observable rates are available (such as for subsidiaries that do not enter intofinancing transactions). The JFC Group estimates the IBR using observable inputs (such as marketinterest rates) when available and is required to make certain entity-specific estimates (such as thesubsidiary’s stand-alone credit rating).

Fair Value of Financial Assets and Liabilities. When the fair values of financial assets and financialliabilities recorded or disclosed in the consolidated statement of financial position cannot bemeasured based on quoted prices in active markets, their fair value is measured using valuationtechniques, including the discounted cash flow model. The inputs to these models are taken fromobservable markets where possible, but when this is not feasible, a degree of judgment is required inestablishing fair values. Judgments include considerations of inputs such as liquidity risk, credit riskand volatility. Changes in assumptions about these factors could affect the reported fair value offinancial instruments.

The fair value of financial assets and liabilities are discussed in Note 32.

Provisions and Contingencies. The JFC Group is involved in litigations, claims and disputes whichare normal to its business. The estimate of the probable costs for the resolution of these claims hasbeen developed in consultation with the JFC Group’s legal counsels and based upon an analysis ofpotential results (see Note 17). The inherent uncertainty over the outcome of these matters is broughtabout by the differences in the interpretation and application of laws and rulings. Managementbelieves that the ultimate liability, if any, with respect to the litigations, claims and disputes will notmaterially affect the financial position and performance of the JFC Group.

Total outstanding provisions amounted to P=825.1 million as at December 31, 2019 and 2018(see Notes 17 and 30).

5. Segment Information

For management purposes, the JFC Group is organized into segments based on the nature of theproducts and services offered and geographical locations. The Executive Management Committeemonitors the operating results of its segments separately for resource allocation and performanceassessment. Segment results are evaluated based on operating profit or loss and is measuredconsistently with operating profit or loss in the consolidated financial statements.

Business SegmentsThe JFC Group’s operating businesses are organized and managed separately according to the natureof the products and services provided, with each segment representing a strategic business unit thatoffers different products and serves different markets.

§ The food service segment is involved in the operations of QSRs and the manufacture of foodproducts to be sold to JFC Group-owned and franchised QSR outlets.

§ The franchising segment is involved in the franchising of the JFC Group’s QSR store concepts.§ The leasing segment leases store sites mainly to the JFC Group’s independent franchisees.

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The following tables present certain information on revenues, expenses, assets and liabilities andother segment information of the different business segments as at and for the years endedDecember 31, 2019, 2018 and 2017:

2019Food Service Franchising Leasing Eliminations Consolidated

Revenues from external customers P=167,227,077 P=11,949,859 P=449,252 P=– P=179,626,188Inter-segment revenues 41,824,266 3,707,162 7,605,038 (53,136,466) –Segment revenues 209,051,343 15,657,021 8,054,290 (53,136,466) 179,626,188Segment expenses (211,514,043) (6,708,270) (7,745,021) 53,136,466 (172,830,868)Impairment losses on receivables, inventories and

property, plant and equipment - net of reversals (294,178) – – – (294,178)Equity in net earnings of joint ventures and

associates - net 23,384 – – – 23,384Other segment income 5,744,793 – 878 – 5,745,671Segment result P=3,011,299 P=8,948,751 P=310,147 P=– 12,270,197

Interest income 400,657Interest expense (3,187,298)Income before income tax 9,483,556Provision for income tax (3,060,640)Net income P=6,422,916

2019Food Service Franchising Leasing Eliminations Consolidated

Assets and LiabilitiesSegment assets P=182,297,253 P=– P=529,491 P=– P=182,826,744Deferred tax assets - net 4,448,761 – 501 – 4,449,262Consolidated assets P=186,746,014 P=– P=529,992 P=– P=187,276,006

Segment liabilities P=107,048,249 P=– P=199,010 P=– P=107,247,259Deferred tax liabilities - net 4,759,233 – – – 4,759,233Long-term debt, including current portion 22,595,723 – – – 22,595,723Income tax payable 388,442 – 3,472 – 391,914Consolidated liabilities P=134,791,647 P=– P=202,482 P=– P=134,994,129

Other Segment InformationCapital expenditures P=10,041,912 P=– P=– P=– P=10,041,912Depreciation and amortization 13,465,854 – 7,392 – 13,473,246

2018 (As Restated - Note 2)Food Service Franchising Leasing Eliminations Consolidated

Revenues from external customers P=150,498,395 P=10,114,292 P=555,095 P=– P=161,167,782Inter-segment revenues 43,571,728 3,225,369 8,824,495 (55,621,592) –Segment revenues 194,070,123 13,339,661 9,379,590 (55,621,592) 161,167,782Segment expenses (193,222,950) (5,748,861) (8,978,135) 55,621,592 (152,328,354)Reversal of impairment losses on receivables,

inventories and property, plant and equipment -net of provisions 419,541 – – – 419,541

Equity in net losses of joint ventures andassociates - net (86,750) – – – (86,750)

Other segment income 3,339,416 – 3,112 – 3,342,528Segment result P=4,519,380 P=7,590,800 P=404,567 P=– 12,514,747


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Assets and LiabilitiesSegment assets P=145,431,884 P=– P=369,200 P=– P=145,801,084Deferred tax assets - net 4,711,794 – – – 4,711,794Consolidated assets P=150,143,678 P=– P=369,200 P=– P=150,512,878

Segment liabilities P=71,442,035 P=– P=65,423 P=– P=71,507,458Deferred tax liabilities - net 3,481,497 – – – 3,481,497Long-term debt - including current portion 26,264,353 – – – 26,264,353Income tax payable 260,421 – 3,052 – 263,473Consolidated liabilities P=101,448,306 P=– P=68,475 P=– P=101,516,781



Revenues from external customers P=124,972,802 P=8,075,199 P=535,070 P=– P=133,583,071Inter-segment revenues 38,836,601 2,928,473 8,205,610 (49,970,684) –Segment revenues 163,809,403 11,003,672 8,740,680 (49,970,684) 133,583,071Segment expenses (161,816,236) (4,965,008) (8,396,342) 49,970,684 (125,206,902)Impairment losses on receivables, inventories and

property, plant and equipment and other assets -net of reversals (629,278) – – – (629,278)

Equity in net losses of joint ventures andassociates - net (282,645) – – – (282,645)

Other segment income 2,109,826 – 25,821 – 2,135,647Segment result P=3,191,070 P=6,038,664 P=370,159 P=– 9,599,893



Geographical SegmentsThe JFC Group’s geographical segments are based on the location of the assets producing revenues inthe Philippines and in other locations which includes PRC, USA, Canada, Vietnam, UAE, Hongkong,Macau, Brunei, Saudi Arabia, Singapore, Malaysia, Oman, Kuwait, Qatar, Italy and UK. Sales toexternal customers disclosed in the geographical segments are based on the geographical location ofthe customers.

Majority of the JFC Group’s revenues were generated from the Philippines, which is the ParentCompany’s country of domicile.

The JFC Group does not have a single external customer which revenue amounts to 10% or more ofthe JFC Group’s revenues.

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The following tables present segment revenues, segment assets and capital expenditures of the JFCGroup’s geographical segments:

2019Philippines International Eliminations Consolidated

Segment revenues P=129,913,889 P=50,551,864 (P=839,565) P=179,626,188Segment assets 82,147,177 100,679,567 – 182,826,744Capital expenditures 6,449,194 3,592,718 – 10,041,912

2018 (As Restated - Note 2)Philippines International Eliminations Consolidated

Segment revenues P=120,272,288 P=41,621,421 (P=725,927) P=161,167,782Segment assets 75,431,186 70,369,898 – 145,801,084Capital expenditures 7,121,815 2,508,537 – 9,630,352

2017 (As Restated - Note 2)Philippines International Eliminations Consolidated

Segment revenues P=105,163,697 P=28,937,959 (P=518,585) P=133,583,071Capital expenditures 7,382,960 1,591,470 – 8,974,430

Revenue from Contracts with CustomersSet out below is the disaggregation of the JFC Group’s revenue from contracts with customers:

2019Revenue Source Food Service Franchising TotalSale of goods P=166,909,364 P=– P=166,909,364Royalty fees – 8,477,040 8,477,040Set-up fees – 471,711 471,711System-wide advertising fees – 3,001,108 3,001,108Other revenues 317,713 – 317,713Total revenue from contracts with customers P=167,227,077 P=11,949,859 P=179,176,936

Timing of recognition:Goods transferred at a point in time P=167,227,077Services transferred over time 11,949,859

P=179,176,936

2018Revenue Source Food Service Franchising TotalSale of goods P=150,200,826 P=– P=150,200,826Royalty fees – 7,043,891 7,043,891Set-up fees – 546,909 546,909System-wide advertising fees – 2,523,492 2,523,492Other revenues 297,569 – 297,569Total revenue from contracts with customers P=150,498,395 P=10,114,292 P=160,612,687Timing of recognition:

Goods transferred at a point in time P=150,498,395Services transferred over time 10,114,292

P=160,612,687

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2017Revenue Source Food Service Franchising TotalSale of goods P=124,663,548 P=– P=124,663,548Royalty fees – 5,614,447 5,614,447Set-up fees – 424,217 424,217System-wide advertising fees – 2,036,535 2,036,535Other revenues 309,254 – 309,254Total revenue from contracts with customers P=124,972,802 P=8,075,199 P=133,048,001

Timing of recognition:Goods transferred at a point in time P=124,972,802Services transferred over time 8,075,199

P=133,048,001

6. Cash and Cash Equivalents and Short-term Investments

Cash and Cash EquivalentsThis account consists of:

2019 2018Cash on hand P=376,882 P=480,889Cash in banks 13,790,804 12,097,440Short-term deposits 6,724,335 10,707,586

P=20,892,021 P=23,285,915

Cash in banks earn interest at the respective savings or special demand deposit rates. Short-termdeposits are made for varying periods of up to three months depending on the immediate cashrequirements of the JFC Group, and earn interest at the respective short-term deposit rates.

Short-term InvestmentsThe JFC Group also has short-term investments amounting to P=2,130.0 million and P=883.2 million asat December 31, 2019 and 2018, respectively. These pertain to deposits with maturities of more thanthree months but less than a year.

Interest income earned from cash and cash equivalents and short-term investments amounted toP=273.0 million, P=313.3 million and P=149.3 million in 2019, 2018 and 2017, respectively(see Note 23).

7. Receivables and Contract Assets

This account consists of:

2019 2018Trade P=5,348,930 P=4,680,553Less allowance for impairment loss 392,357 676,906

4,956,573 4,003,647Advances to employees 175,400 167,352

(Forward)

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2019 2018Current portion of employee car plan receivables

(see Note 15) P=83,279 P=91,172Interest receivable 8,921 19,314Others 269,018 173,887

5,493,191 4,455,372Contract assets 413,098 407,372

P=5,906,289 P=4,862,744

The terms and conditions of the receivables are as follows:

§ Trade receivables are noninterest-bearing and are generally settled on a 14-day term. The JFCGroup classified unbilled service revenues as contract assets. Additions in contract assets in 2019of P=413.1 million pertain to the service revenues earned during the year and will be billed in2020. Contract assets amounting to P=407.4 million as at December 31, 2018 were billed andcollected in 2019.

§ Advances to employees, current portion of employee car plan receivables and other receivablesare normally collectible within the next financial year.

§ Other receivables consist of receivables from the retirement plan, the Social Security System(SSS) and insurance claims.

The movements in the allowance for impairment loss on trade receivables as at December 31 are asfollows:

2019 2018Balance at beginning of year P=676,906 P=690,119Write-offs (216,968) (1,201)Reversals (see Note 22) (91,402) (23,675)Provisions (see Note 22) 25,342 10,188Translation adjustments (1,521) 1,475Balance at end of year P=392,357 P=676,906

8. Inventories


2019 2018At cost:

Food supplies and processed inventories P=9,115,643 P=8,289,323Packaging, store and other supplies 622,220 406,186

9,737,863 8,695,509At net realizable value -

Novelty items 228,221 116,665Total inventories at lower of cost and net

realizable value P=9,966,084 P=8,812,174

The cost of novelty items carried at net realizable value amounted to P=249.6 million andP=151.4 million as at December 31, 2019 and 2018, respectively.

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The movements in the allowance for inventory obsolescence for novelty items as at December 31 areas follows:

2019 2018Balance at beginning of year P=34,694 P=32,565Reversals (see Note 22) (26,465) (6,148)Provisions (see Note 22) 16,670 8,278Write-offs (3,400) –Translation adjustments (69) (1)Balance at end of year P=21,430 P=34,694

9. Other Current Assets


2019

2018(As Restated -

Note 2)Prepaid expenses:

Taxes P=2,472,580 P=1,963,937Rent (see Note 2) 1,119,030 367,820Supplies 147,188 78,604Insurance and others 696,780 490,748

Current portion of security and other deposits(see Note 15) 239,096 239,096

Deposits to suppliers and other third parties 2,050,334 1,554,184P=6,725,008 P=4,694,389

Terms and conditions of other current assets are as follows:

§ Prepaid taxes represent creditable withholding taxes that can be applied in the following yearagainst the corporate income tax due or can be claimed as tax refund from the BIR. This alsoincludes prepaid real property taxes which are expected to be utilized within the next twelvemonths.

§ Prepaid rent pertains to short-term leases of store and office spaces that are paid in advance.Supplies consist of various office and administrative supplies. Prepaid rent, insurance and othersare normally utilized within the next financial year.

§ Deposits to suppliers and other third parties are generally applied to purchase of inventories andavailment of services within the next financial year.

10. Financial Assets at FVTPL

This account consists of investment in shares of stocks of Manila Polo Club, Tagaytay Highlands andother golf and leisure clubs amounting to P=38.2 million and P=39.8 million as at December 31, 2019and 2018, respectively.

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Due to the adoption of PFRS 9, the JFC Group classified its investments in golf and leisure clubshares amounting to P=29.9 million as financial assets at FVTPL as at January 1, 2018. As a result ofthe change in classification, the net unrealized gain on AFS financial assets related to thoseinvestments that were previously presented under OCI, was reclassified to retained earnings as atJanuary 1, 2018, resulting in a decrease in other components of equity and an increase in retainedearnings of P=6.8 million.

The movements in financial assets at FVTPL as at December 31 are as follows:

2019 2018Balance at beginning of year P=39,842 P=29,862Marked-to-market gain on financial assets at FVTPL

(see Note 23) (1,640) 9,980Balance at end of year P=38,202 P=39,842

The fair value of financial assets at FVTPL has been determined directly by reference to quotedprices in active market or inputs other than quoted prices that are directly or indirectly observable(see Note 32).

11. Business Combinations, Incorporation of New Subsidiaries, Material Non-controlling Interests,Interests in and Advances to Joint Ventures, Co-venturers and Associates and Cessation ofOperations

A. Business Combinations

Acquisition of CBTL. On June 4, 2019 and June 28, 2019, JWPL, a wholly owned subsidiary,incorporated Java Ventures, LLC in the state of Delaware, USA and Super Magnificent CoffeeCompany Pte. Ltd. (SMCC-SG) in Singapore, respectively.

On July 24, 2019, the JFC Group, through its wholly owned subsidiary, JWPL, entered into anagreement with Brewheal Pte. Ltd. (Brewheal), a company based in Singapore, to investUSD100.0 million (P=5,118.0 million) in SMCC-SG to acquire 100% of The Coffee Bean & Tea Leaf(CBTL), specialty coffee and tea brand based in Los Angeles, California, USA. Consequently,Brewheal subscribed to 20% ordinary shares of SMCC-SG for a total consideration ofUSD70.0 million (P=3,650.5 million). SMCC-SG is 80% owned by JWPL and 20% owned byBrewheal. The difference between the value of the ordinary shares purchased and the subscriptionprice amounting to USD36.0 million (P=1,877.4 million) is recognized and included in equity under“Other reserve” account in the consolidated statement of financial position.

The agreement between JWPL and Brewheal provides a mechanism wherein JWPL and Brewheal hasthe option, but not the obligation, to purchase the 20% ordinary shares of SMCC-SG held byBrewheal and to subscribe for up to 10% of the ordinary shares of SMCC-SG, respectively, upon theoccurrence of a call option event enumerated in the agreement from the date of acquisition of CBTLup to September 24, 2029.

On September 11, 2019, the JFC Group, through SMCC-SG, incorporated Super Magnificent CoffeeCompany Hungary Kft. (SMCC-HU), a holding company based in Hungary.

On September 24, 2019, SMCC-SG, through its wholly owned subsidiary, SMCC-HU, completed the100% acquisition of CBTL. The closing of the transactions was effected after the completion ofclosing conditions, including required government approvals, provided under the executed UnitPurchase Agreement (UPA).

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Consistent with the terms of the executed UPA, the JFC Group, through SMCC-HU acquired CBTLfor USD350.0 million (P=18,252.5 million) on a debt-free basis. SMCC-HU paid in cash amounting toUSD329.1 million (P=17,163.0 million). The balance amounting to USD20.9 million(P=1,089.5 million) was applied to CBTL’s debt from unearned revenue from gift certificates soldassumed by SMCC-HU at acquisition date.

Transaction costs of USD0.7 million (P=36.6 million) have been expensed and are included in generaland administrative expenses in the consolidated statement of comprehensive income for the yearended December 31, 2019.

The JFC Group included CBTL in its financial consolidation starting September 24, 2019 (the“acquisition date”).

The fair value of the identifiable assets acquired and liabilities assumed as at the date of theacquisition were as follows:

Cash and cash equivalents P=221,426Receivables 361,192Inventories 1,162,540Other current assets 144,177Right-of-use assets (see Note 29) 12,150,307Property, plant and equipment (see Note 12) 3,978,818Trademarks, favourable leases and other intangibles (see Note 14) 18,703,635Other noncurrent assets 350,294

Total identifiable assets acquired 37,072,389Less:

Trade payables and other current liabilities 2,227,779Lease liabilities (see Note 29) 12,472,792Other noncurrent liabilities 731,091Deferred tax liabilities 1,326,969Total identifiable liabilities assumed 16,758,631

Net identifiable assets acquired P=20,313,758

The amount of gain on bargain purchase provisionally computed at acquisition date shown as part of“Other Income” in the consolidated statements of comprehensive income amounted toP=3,150.8 million determined as follows:

Cash consideration P=17,162,982Less fair value of net identifiable assets acquired 20,313,758Gain on bargain purchase (see Note 23) P=3,150,776

The net cash outflow from the acquisition is as follows:

Cash paid on acquisition P=17,162,982Less cash acquired from subsidiary 221,426

P=16,941,556

Management has measured the trademarks that were acquired using the valuation report that wereprepared by an independent valuation specialist. The trademarks were valued using the relief-from-royalty method wherein the fair value of the trademarks is based on cost savings from owning thetrademarks. Significant assumptions and estimates used include comparable royalty rates, long-termgrowth rates, discount rates based on available market data and revenue growth rate forecasts.

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On September 24, 2019, SMCC-HU completed the acquisition of 100% of CBTL from previousshareholders. The previous shareholders had been looking for buyers for the past two years and wereunable to sell CBTL. Upon notification and after doing due diligence, JFC Group agreed to purchasethe business. The acquisition resulted in a gain on bargain purchase of P=3,150.8 million.

The net assets recognized in the consolidated financial statements were based on the provisionalassessment of their fair value while the JFC Group sought an independent valuation for the propertyand equipment, trademark and other intangible assets owned by CBTL, and any favourable terms ofthe lease relative to market terms. The valuation had not been completed by the date the consolidatedfinancial statements were approved for issue by the BOD.

As part of the ownership restructuring, the trademarks of CBTL are required to be valued by anindependent third party. Management determined that the bargain purchase gain was mainlyattributable to the value of trademarks. The legal structure of CBTL is being redesigned for fastgrowth both in the United States and Asia, to be driven mainly by franchising. This is in line withJFC Group’s plan to build a truly global business. Management expects CBTL to be accretive to JFCGroup’s profit within a short period of time. The acquisition of the CBTL brand is JFC Group’slargest and most multinational with business presence in 27 countries. This will bring JFC Groupcloser to its vision to be one of the top 5 restaurant companies in the world in terms of marketcapitalization. Combined with Highlands Coffee, the business mostly in Vietnam, the CBTLacquisition will enable JFC Group to become an important player in the large, fast growing, andprofitable coffee business. CBTL will be JFC Group’s second largest business after Jollibee brand.Management’s priority is to accelerate the growth of the CBTL brand particularly in Asia, bystrengthening its brand development, marketing and franchise support system.

From the acquisition date, CBTL contributed P=4,436.8 million of revenues and P=153.5 million netloss to the JFC Group. If the business combination had taken place at the beginning of 2019,contribution to consolidated revenues and net loss for the year ended December 31, 2019 would havebeen P=15,645.1 million and P=1,634.1 million, respectively.

Business Combination Achieved in Stages

SJBF. On October 8, 2015, the JFC Group, through JWPL, incorporated BGI in the state ofDelaware, USA.

On October 13, 2015, BGI entered into an agreement with Smashburger Master LLC (Master) toacquire 40% of the outstanding equity interest of SJBF, the parent company of the entities comprisingthe Smashburger business, a fast-casual better burger restaurant business based in the United States.

The consideration for BGI’s 40% stake in SJBF amounted to USD99.5 million (P=4,629.5 million).Thereafter, a post-closing adjustment of USD0.8 million (P=36.6 million) to the purchase price at theclosing date was recognized based on a pre-agreed mechanism with Master. The JFC Group settledwith Master USD99.5 million (P=4,629.5 million) and USD0.8 million (P=36.6 million) in December2015 and January 2016, respectively. In addition, acquisition-related costs consisting of professionalfees for the JFC Group’s financial, tax, accounting and legal advisors for the transaction amounted toP=221.8 million.

In February 2016, September 2016 and November 2016, BGI made additional investments to SJBFamounting to USD4.0 million (P=189.0 million), USD4.6 million (P=221.4 million) andUSD8.0 million (P=397.8 million), respectively.

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The agreement between BGI and Master dated October 27, 2015 provides for a mechanism whereinMaster can sell or BGI can purchase up to an additional 35% equity interest in SJBF (First Put/CallRight) between January 1, 2018 and January 1, 2021, and up to an additional 25% equity interestfrom the closing date or after expiration of the First Put/Call Right and five years thereafter(Second Put/Call Right). The purchase price of the remaining 60% will be based on the achievementof certain financial performance targets agreed between BGI and Master.

On February 25, 2017, BGI and Master have amended their original agreement to enable BGI topurchase more shares in SJBF. With the amendment, BGI shall be entitled to purchase from Masteran additional 45% of SJBF shares between the years 2018 and 2021, and to acquire the balance of15% between 2019 at the earliest and 2026 at the latest.

On March 24, 2017 and September 7, 2017, BGI made additional investments to SJBF amounting toUSD8.0 million (P=402.6 million) and USD2.5 million (P=128.5 million), respectively. The additionalinvestments did not change BGI’s equity interest in SJBF.

On March 8, 2018, BGI executed the Purchase Agreement with Master for the acquisition of anadditional 45% share of SJBF pursuant to the exercise by Master of its First Put Option forUSD100.0 million (P=5,207.0 million). This increased BGI’s ownership in SJBF from 40% to 85%.

On April 17, 2018, closing conditions, including required government approvals, have been obtainedas provided under the Purchase Agreement. The JFC Group, through BGI, paid Master in cashamounting to USD100.0 million (P=5,207.0 million). With the completion of the acquisition, the JFCGroup included Smashburger in its financial consolidation starting April 17, 2018(the “acquisition date”).

As a result of the first and second Put/Call Rights in the agreement between BGI and Master, the JFCGroup allocated P=75.0 million of the purchase price to a derivative asset in 2015, representing the fairvalue of the First and Second Put/Call Rights on transaction date. As at December 31, 2018, thederivative liability pertaining to the Put/Call Rights amounted to nil after SJBF becomes a whollyowned subsidiary of BGI. The marked-to-market loss amounted to P=49.8 million andP=129.4 million in 2018 and 2017, respectively (see Note 23).

The details of JFC Group’s interest in SJBF as at December 31, 2018 are as follows:

Interest in a joint venture - cost:Balance at beginning of year and transfer date P=6,151,981

Cumulative equity in net losses:Balance at beginning of year (691,926)Equity in net loss during the year (36,085)Balance at transfer date (728,011)

5,423,970Transferred to investment in a subsidiary (5,423,970)

P=–

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Cash and cash equivalents P=1,408,882Receivables 154,360Inventories 59,478Other current assets 321,766Property, plant and equipment (see Note 12) 2,565,988Trademarks and favourable leases (see Note 14) 10,782,418Other noncurrent assets 68,201


Short-term debt 84,300Trade payables and other current liabilities 1,092,701Long-term debt 4,133,311Other noncurrent liabilities 645,552Deferred tax liabilities 2,323,280Total identifiable liabilities assumed 8,279,144


Due to the adoption of PFRS 16, at acquisition date, JFC Group recognized right-of-use assets andlease liabilities amounting to P=10,102.3 million and P=10,308.4 million, respectively (see Notes 2 and29). Prepayments and operating lease payable related to previous operating leases amounting toP=45.2 million and P=549.2 million, respectively, were derecognized and the right-of-use assets wereadjusted by favourable terms of the lease relative to market terms previously recognized and includedunder other intangible assets of P=297.9 million as at acquisition date. The adoption of PFRS 16 hasno impact on the determination of the amount of goodwill.

The JFC Group’s investment in SJBF was previously accounted for as investment in a joint venture.In accordance with PFRS 3, with the JFC Group’s acquisition of control over SJBF in 2018, the fairvalue of the previously held interest amounted to P=6,178.8 million and the resulting gain from the re-measurement of the 40% previously held interest amounted to P=754.8 million (see Note 23).

The fair value of trade receivables approximates the carrying amount of receivables acquiredamounting to P=154.4 million and it is expected that the full contractual amounts can be collected.

The amount of goodwill recorded at acquisition date amounted to P=5,345.5 million determined asfollows:

Fair value of consideration transferred:Fair value of previously held interest P=6,178,774Cash consideration 5,207,000

Derivative liability at acquisition date (100,833)11,284,941

Fair value of non-controlling interest’s share inthe net identifiable assets acquired 1,142,502

Aggregate amount 12,427,443Less fair value of net identifiable assets acquired 7,081,949Goodwill (see Note 14) P=5,345,494

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The net cash outflow from the acquisition is as follows:

Cash paid on acquisition P=5,207,000Less cash acquired from subsidiary 1,408,882

P=3,798,118

The goodwill of P=5,345.5 million is attributable to synergies and other benefits from the acquisitionof SJBF.

The non-controlling interest was recognized as a proportion of the fair value of the net assetsacquired. The fair value of the non-controlling interest in SJBF has been estimated by applying thefollowing valuation methodology and significant inputs:

§ Relief-from-Royalty method for trademark using a royalty rate of 4.12% and terminal value,calculated based on long-term sustainable growth rate for the industry of 2% and estimateddiscount rate of 11%;

§ Income approach for favourable leases using a market rent growth of 2.5% anda discount rate of 7.5%;

§ Cost method for other intangible assets; and§ Replacement cost method for property, plant and equipment.

The JFC Group’s acquisition of additional shares in SJBF will allow the JFC Group to have a moresignificant business in the USA by increasing the sales contribution from that country to the JFCGroup’s worldwide system-wide sales.

From the acquisition date, SJBF contributed P=6,497.1 million revenues and P=886.8 million net loss tothe JFC Group. If the business combination had taken place at the beginning of 2018, contribution toconsolidated revenues and net loss for 2018 would have been P=9,423.1 million and P=1,065.9 million,respectively.

SJBF has outstanding liabilities for the purchase of non-controlling interest in a joint venture andacquisition of franchise markets amounting to USD0.06 million (P=2.8 million) and USD0.3 million(P=14.1 million) as at December 31, 2019 and 2018, respectively. The last installment is expected tobe settled in 2020.

On December 14, 2018, the JFC Group, through BGI, acquired the remaining 15% stake in SJBF fora total cash consideration of USD10.0 million (P=528.8 million). The acquisition resulted to SJBFbecoming a wholly owned subsidiary of BGI.

The difference of the carrying value of the minority interest over the acquisition cost at the date ofacquisition, amounting to P=347.4 million, was recognized under the “Excess of cost over the carryingvalue of non-controlling interests acquired”, a separate component of “Equity Attributable to EquityHolders of the Parent Company” in the consolidated statements of financial position (see Note 19).

On December 21, 2018, upon signing of the Restructuring Agreement, the loan of BGI to SJBFamounting to USD80.0 million (P=4,206.4 million) was converted to additional equity.

In 2019, the fair values of the assets acquired, and liabilities assumed were finalized. There were nochanges or adjustments made from that of provisionally recognized in 2018.

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SuperFoods Group. On January 20, 2012, upon fulfillment of certain legal and regulatoryrequirements in Vietnam, the JFC Group, through JWPL, acquired effective ownership of 50% sharein the business of the SuperFoods Group (includes SF Vung Tau Joint Stock Company (SFVT),Highlands Coffee Service JSC, Quantum Corp., Pho24 Corp., Blue Sky Holdings Limited Hongkong(Blue Sky), Sino Ocean Asia Limited Hongkong and Blue Sky Holdings Limited Macau) throughformation of joint ventures. This consists of a 49% share in SFVT in Vietnam and a 60% share inBlue Sky in Hongkong (the SuperFoods Group Holding Companies). The formation of joint venturesis an implementation of the Framework Agreement made on May 20, 2011 between the JFC Group,through JSF, a 99% subsidiary of JWPL, and its co-venturers, Viet Thai International Joint StockCompany (VTIJS) and Viet Thai International Company Limited (VTI) (collectively, VTI Group).The SuperFoods Group operates the chain of Highlands Coffee shops, Pho 24 restaurants and HardRock Cafe stores, whose market is mostly in Vietnam, Hong Kong and Macau. The FrameworkAgreement provided for the JFC Group to contribute a total of USD25.0 million (P=1,079.6 million) togain 50% effective ownership in the joint ventures. Loans and deposits were made to the SuperFoodsGroup and the co-venturers prior to the formation of the joint ventures in 2012.

Pursuant to the Framework Agreement, the preliminary consideration for the 50% share inSuperFoods Group amounted to a cash payment of USD25.0 million (P=1,079.6 million) in 2011.

On October 22, 2015, JSF contributed additional investment in SuperFoods Group amounting toUSD0.7 million (P=34.1 million).

The Supplemental Agreement further provides that JWPL shall be required to pay the co-venturers anadditional amount in 2016 based upon achieving a positive amount determined in accordance with aformula contained in the agreement (earn-out formula). No additional consideration was recognizedas at January 20, 2012, date of acquisition, and as at December 31, 2012 to 2016.

In accordance with the Framework Agreement, the JFC Group, through JSF, extended loans toSurperFoods Group. First and Second Supplements to the Loan Agreement were executed thatbasically extended the loan due dates.

On November 18, 2016, the JFC Group, through JSF, entered into an agreement with its co-venturers,VTIJS, to make SuperFoods Group a public company by listing in the Vietnam Stock Exchange withan Initial Public Offering (IPO) on or before July 2019. As part of the agreement, the ownership ofthe SuperFoods Group will be adjusted with the JFC Group, owning 60% of the joint venture and VTIowning 40%. With this agreement, the following loan structures were amended, as documented inthe Third and Fourth Supplements to the Loan Agreement signed on December 29, 2016 andMarch 28, 2017, respectively.

§ Advances to SFVT. On April 30, 2013, an additional loan was extended to the co-venturers in theSuperFoods Group amounting to USD1.0 million (P=41.2 million) payable in February 2014 butwas extended to September 30, 2017. The loan bears interest of 5% per annum. With theextension to September 30, 2017, the sum of principal and the accumulated interest as atApril 2015, were subjected to 4.99% interest per annum. The loan was agreed to be used forgeneral corporate purposes. Total interest from this loan recognized as interest income amountedto USD0.003 million (P=0.1 million) for the period ended May 10, 2017.

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On August 22, 2013, an additional loan was extended to the co-venturers in the SuperFoodsGroup amounting to USD1.0 million (P=44.1 million) payable in August 2014 but was extended toSeptember 30, 2017. As at August 21, 2014, the principal was subject to 5% interest per annum.However, with the extension to September 30, 2017, the sum of principal and the accumulatedinterest starting August 22, 2014 were subjected to 4.99% interest per annum. Total interest fromthis loan recognized as interest income amounted to USD0.003 million (P=0.1 million) for theperiod ended May 10, 2017.

The loans granted on April 30, 2013 and August 22, 2013, including accrued interests as atMay 10, 2017, were converted to additional equity on SFVT upon the completion of theSettlement Transaction Documents and the approval of certain legal and regulatory requirementsin Vietnam on May 10, 2017 as provided in the Third Supplement to the Loan Agreement signedon December 29, 2016.

§ Advances to Blue Sky. On June 10, 2011, a loan was extended to Blue Sky, the Hong Kong-basedholding company, amounting to USD5.0 million (P=216.0 million) payable in June 2014. As atJune 2014, the principal was subject to 5% interest per annum. However, with the extension ofthe due date to September 30, 2017, the sum of principal and the accumulated interest as at June2014 were subjected to 4.99% interest per annum. Total interest from this loan recognized asinterest income amounted to USD0.01 million (P=0.7 million) for the period ended May 10, 2017.

On May 7, 2012, an additional loan was extended to Blue Sky amounting to USD2.5 million(P=105.9 million) payable in May 2014. As at May 9, 2014, the principal was subject to 5%interest per annum. However, with the extension of the due date to September 30, 2017, the sumof principal and the accumulated interest starting May 10, 2014 were subjected to 4.99% interestper annum. Total interest from this loan recognized as interest income amounted toUSD0.01 million (P=0.3 million) for the period ended May 10, 2017.

With the Third Supplement to the Loan Agreement signed on December 29, 2016 and upon thecompletion of the Settlement Transaction Documents, the loans to Blue Sky including accruedinterests as at May 10, 2017 were converted into equity except for the balance of USD2.9 million(P=157.7 million). The carrying value of the remaining loan of Blue Sky to the Parent Companyamounting to P=149.6 million and P=153.5 million were eliminated in the consolidation process asat December 31, 2019 and 2018, respectively.

The conversion of the loans and related accrued interests into equity is part of the agreemententered into by the JFC Group with VTI Group in adjusting the ownership in the SuperFoodsGroup.

On May 10, 2017, a key step in the plan to list SuperFoods Group as a public company in theVietnam Stock Exchange was completed by adjusting the ownership interest in the SuperFoodsGroup to 60% JFC Group and 40% VTI Group from its previous 50-50 ownership share. As a result,JFC Group obtained control over SuperFoods Group and started consolidating these companies as atacquisition date.

To help fund the SuperFoods Group’s expansion plans, the JFC Group will henceforth take the leadin the former’s capital raising activities and will work with various financial institutions in Vietnamand other parts of Asia in this undertaking.

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Cash and cash equivalents P=105,251Receivables 99,746Inventories 86,664Other current assets 137,035Property, plant and equipment 846,327Trademarks (see Note 14) 4,145,013Other noncurrent assets 223,240


Trade payables and other current liabilities 488,645Loans and other noncurrent liabilities (see Note 18) 569,523Deferred tax liability 744,006Total identifiable liabilities assumed 1,802,174


The JFC Group’s investment in SuperFoods Group was previously accounted for as investmentin a joint venture. In accordance with PFRS 3, with the JFC Group’s acquisition of controlover SuperFoods Group in 2017, the fair value of the previously held interest amounted toP=2,099.7 million and the resulting gain from the re-measurement of the 50% previously held interestamounted to P=1,328.7 million (see Note 23). A total of P=2,712.7 million loan to SuperFoods Groupwas also converted to equity which was included in the consideration transferred.

The non-controlling interest was recognized as a proportion of the fair value of the net assetsacquired.

The amount of goodwill recorded at acquisition date amounted to P=2,507.8 million determined asfollows:

Fair value of consideration transferred:Fair value of previously held interest P=2,099,721Advances converted to equity:

Advances to VTI Group (see Part D of this note) 2,253,870Advances to SuperFoods Group 458,871

2,712,7414,812,462

Fair value of non-controlling interest’s share in the netidentifiable assets acquired 1,536,441

Aggregate amount 6,348,903Less fair value of net identifiable assets acquired 3,841,102Goodwill (see Note 14) P=2,507,801

The net cash inflow from the acquisition is as follows:Cash acquired from subsidiary P=105,251

The goodwill of P=2,507.8 million is attributable to synergies and other benefits from the acquisitionof SuperFoods Group.

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From the acquisition date, SuperFoods Group contributed P=2,476.7 million of revenues andP=67.3 million net income to the JFC Group. If the business combination had taken place at thebeginning of 2017, contribution to consolidated revenues and net income for 2017 would have beenP=3,715.0 million and P=100.9 million, respectively.

In 2018, the fair values of the assets acquired, and liabilities assumed were finalized. There were nochanges or adjustments made from that of provisionally recognized in 2017.

B. Incorporation of New Subsidiaries and Additional Investment to a Subsidiary

Hong Yun Hong (Shanghai) Food and Beverages Management Company Ltd. (Hong Yun Hong). OnNovember 13, 2019, the JFC Group through its wholly owned subsidiary, GPPL, entered into anagreement with Dim Sum Pte. Ltd. (DSPL) to develop and operate Tim Ho Wan stores in Shanghaiand other cities within PRC as may be agreed with the Franchisor.

Hong Yun Hong, incorporated on November 18, 2019, is 60% owned by GPPL and 40% owned byDSPL. GPPL and DSPL have committed to invest up to USD13 million (P=658.3 million) to HongYun Hong. As at December 31, 2019, the capital contribution of GPPL amounted to USD0.9 million(P=45.6 million). Hong Yun Hong has not started its commercial operations as at December 31, 2019.

Super Magnificent Coffee Company Hungary Kft (SMCC-HU). On September 11, 2019, the JFCGroup, through SMCC-SG, incorporated SMCC-HU, a holding company in Hungary. As atDecember 31, 2019, SMCC-HU owns the US Entities of CBTL and the capital contribution ofSMCC-SG amounted to USD28.9 million (P=1,508.2 million).

Super Magnificent Coffee Company Ireland Limited (SMCC-IE). On August 22, 2019, the JFCGroup, through SMCC-SG, incorporated SMCC-IE in Ireland. As at December 31, 2019, the capitalcontribution of SMCC-SG amounted to USD307.1 million (P=16,017.1 million). SMCC-IE owns theintellectual property and existing contracts of CBTL starting from October 1, 2019.

Bee World Spain, Sociedad Limitada (Bee World Spain). On May 23, 2019, the JFC Group, throughits wholly owned subsidiary, GPPL, incorporated Bee World Spain. As at December 31, 2019,capital contribution of GPPL amounted to USD0.003 million (P=0.2 million). Bee World Spain willown and operate Jollibee stores in Spain.

Bee World UK Limited (Bee World UK). On April 16, 2018, the JFC Group, through its whollyowned subsidiary, JWPL, incorporated Bee World UK in UK. As at December 31, 2018, no capitalinvestment has been made other than the investment to incorporate the new entity. The first storestarted its commercial operations on October 20, 2018.

On September 4, 2019, advances from JWPL amounting to USD1.5 million (P=76.3 million) wereconverted to equity and registered at Companies House in UK. As at December 31, 2019, capitalcontribution of JWPL to Bee World UK amounted to USD1.5 million (P=76.3 million).

Golden Piatto Pte. Ltd. (Golden Piatto). On March 31, 2017, the JFC Group, through its whollyowned subsidiary, GPPL, entered into an agreement with Blackbird Holdings Pte. Ltd. (Blackbird) toown and operate Cibo Felice S. R. L. (Cibo Felice), the first Jollibee store in Italy. The first storestarted its commercial operations on March 18, 2018.

Golden Piatto, incorporated on April 12, 2017, is 75% owned by GPPL and 25% owned byBlackbird. GPPL and Blackbird have committed to invest up to EUR1 million (P=60.2 million) toGolden Piatto, of which EUR0.8 million (P=48.2 million) will be contributed by GPPL in proportion toits ownership in the business.

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On January 31, 2018, GPPL and Blackbird made additional investments to Golden Piatto amountingto EUR0.5 million (P=33.5 million) and EUR0.2 million (P=11.2 million), respectively. As atDecember 31, 2019 and 2018, capital contribution of GPPL to Golden Piatto amounted toEUR1.3 million (P=77.0 million).

C. Material Non-Controlling InterestsThe JFC Group has subsidiaries with material non-controlling interest as provided below.

Proportion of equity interest held by non-controlling interest:

Country of incorporation andoperation 2019 2018 2017

GCPL Singapore 40% 40% 40%SuperFoods Group Vietnam 40% 40% 40%

The summarized financial information of GCPL and SuperFoods Group in 2019 and 2018 areprovided below. These information are based on amounts before intercompany elimination.

Summarized Statements of Comprehensive Income for the year ended December 31

GCPL2019 2018 2017

Revenues P=140,255 P=276,325 P=318,082Net loss (212,868) (472,122) (674,982)Other comprehensive income (loss) (5,134) 95,338 8,109Total comprehensive loss (218,002) (376,784) (666,873)Total comprehensive loss attributable

to non-controlling interests (87,201) (150,714) (266,749)

SuperFoods Group2019 2018 2017

Revenues P=5,733,569 P=4,756,001 P=2,486,779Net income (loss) (312,410) (18,571) 78,129Other comprehensive income (loss) (14,584) 3,398 (3,877)Total comprehensive income (loss) (326,994) (15,173) 74,252Total comprehensive income (loss)

attributable to non-controllinginterests (130,798) (6,069) 29,701

Summarized Statements of Financial Position as at December 31

GCPL2019 2018

Current assets P=1,486,976 P=1,532,013Noncurrent assets 287,379 271,262Current liabilities 1,204,788 1,002,821Total equity 569,567 800,454Equity attributable to non-controlling

interests 227,827 320,182

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SuperFoods Group2019 2018

Current assets P=838,302 P=640,186Noncurrent assets 4,277,400 1,941,206Current liabilities 3,269,974 1,053,309Noncurrent liabilities 1,298,578 597,851Total equity 547,150 930,232Equity attributable to non-controlling

interests 218,860 372,093

Summarized Cash Flow Information for the year ended December 31

GCPL2019 2018 2017

Net cash used in operating activities (P=87,408) (P=58,718) (P=430,134)Net cash provided by investing activities 71,160 89,220 57,512Net increase (decrease) in cash and

cash equivalents (16,248) 30,502 (372,622)

SuperFoods Group2019 2018 2017

Net cash provided by (used in) operatingactivities P=178,732 P=310,283 (P=827,535)

Net cash used in investing activities (163,132) (335,086) (408,572)Net cash provided by financing activities 160,051 51,678 1,572,770Net increase in cash and cash equivalents 175,651 26,875 336,663

D. Interests in and Advances to Joint Ventures, Co-venturers and Associates

2019 2018Interests in joint ventures:

Titan Dining LP P=2,804,247 P=742,206Golden Bee Foods Restaurant LLC 240,553 227,585JBPX Foods Inc. 57,759 –C-Joy Poultry Meats Production, Inc. – –

3,102,559 969,791Interests in associates:

Tortas Frontera 678,793 668,679Entrek (B) SDN BHD 137,065 191,744C-Joy Poultry Realty, Inc. 8,547 9,155

824,405 869,578Advances to a joint venture and co-venturer:

VTI Group 1,664,532 1,672,861C-Joy Poultry Meats Production, Inc. 1,240,606 –

2,905,138 1,672,861P=6,832,102 P=3,512,230

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Interests in Joint Ventures

Titan Dining LP (Titan). On May 23, 2018, the JFC Group, through JWPL, investedSGD18.0 million (P=706.9 million) in Titan, a private equity fund that has executed (through a wholly-owned subsidiary) a binding agreement for the acquisition of 100% of the Asia Pacific masterfranchise holder of the “Tim Ho Wan” brand, Tim Ho Wan Pte. Ltd. and its affiliate Dim Sum Pte.Ltd., which owns and operates Tim Ho Wan stores in Singapore.

The investment provides an opportunity for the JFC Group to have a significant interest in the TimHo Wan franchise in the long-term.

Consistent with the agreement that JWPL shall invest up to SGD45.0 million (P=1,687.1 million) or45% of the total maximum fund of SGD100.0 million (P=3,749.0 million) in Titan, JWPL madeadditional investments to Titan amounting to SGD2.7 million (P=102.7 million) and SGD0.9 million(P=35.3 million) on May 31, 2019 for the third capital call and on August 29, 2018, respectively.

On October 2, 2019, the total maximum fund of Titan increased from SGD100.0 million(P=3,749.0 million) to SGD200.0 million (P=7,498.0 million). As such, JWPL, increased its capitalcommitment to Titan from SGD45.0 million (P=1,687.1 million) to SGD120.0 million(P=4,498.8 million) which, when completed, JWPL’s investment will constitute 60% of the totalmaximum fund. The increase in the total maximum fund and additional capital commitment of JWPLare in furtherance of certain strategic projects currently being undertaken by Titan, consistent with itsmandate to invest in the food service sector and grow strong Asia Pacific food service brands.

On October 28, 2019, JWPL made an additional investment for the 4th capital call amounting toSGD53.4 million (P=2,006.1 million).

The details of the JFC Group’s interest in Titan as at December 31 are as follows:

2019 2018Interest in a joint venture - cost:

Balance at beginning of year P=742,206 P=706,906Additions during the year 2,108,760 35,300

2,850,966 742,206Equity in net loss during the year (46,719) –

P=2,804,247 P=742,206

Summarized financial information of Titan based on its financial statements and reconciliation withthe carrying amount of the investment in the consolidated financial statements are set out below:

2019 2018Current assets P=2,916,421 P=28,141Noncurrent assets 1,701,864 1,553,022Total assets P=4,618,285 P=1,581,163

Current liabilities P=8,916 P=14,800

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The amounts of assets and liabilities above include:

2019 2018Cash and cash equivalents P=2,916,251 P=27,690

The amounts of the income and expense accounts include the following:

2019 2018Net loss P=77,865 P=49,400Total comprehensive loss 77,865 49,400

2019 2018Net assets P=4,609,369 P=1,566,363Proportion of the JFC Group’s ownership 60% 45%

2,765,621 704,863Cumulative translation adjustments 38,626 37,343

P=2,804,247 P=742,206

Golden Bee Foods Restaurants LLC (Golden Bee). On February 25, 2014, the JFC Group, throughGPPL, signed a joint agreement with Golden Crown Foods LLC (GCFL) to establish a joint ventureentity to own and operate the Jollibee brand in the United Arab Emirates.

The joint venture entity, incorporated as Golden Bee on January 28, 2015, is 49% owned by GPPLand 51% owned by GCFL. GPPL and GCFL will share joint control and management of Golden Bee.GPPL has invested USD0.8 million (P=33.9 million) in Golden Bee. The first store started commercialoperations on May 4, 2015.

The details of the JFC Group’s interest in the Golden Bee joint venture as at December 31 are asfollows:

2019 2018Interest in a joint venture - cost P=33,926 P=33,926Cumulative equity in net earnings:

Balance at beginning of year 193,659 164,841Equity in net earnings during the year 47,526 63,455Dividends received during the year (34,558) (34,637)Balance at end of year 206,627 193,659

P=240,553 P=227,585

Summarized financial information of Golden Bee based on its financial statements and reconciliationwith the carrying amount of the investment in the consolidated financial statements are set out below:

2019 2018Current assets P=686,984 P=523,053Noncurrent assets 294,675 346,422Total assets P=981,659 P=869,475

Current liabilities P=488,174 P=383,523

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2019 2018Cash and cash equivalents P=352,633 P=193,920


2019 2018 2017Revenues P=1,687,621 P=1,601,623 P=1,313,210Depreciation and amortization 90,077 78,438 54,539Net income 96,991 129,501 242,124Total comprehensive income 96,991 129,501 242,124

2019 2018Net assets P=493,485 P=485,952Proportion of the JFC Group’s ownership 49% 49%

241,808 238,116Cumulative translation adjustments (1,255) (10,531)

P=240,553 P=227,585

JBPX Foods Inc. (Panda Express). On September 27, 2018, the JFC Group, through the ParentCompany, entered into an agreement with Panda Restaurant Group, Inc. to establish a joint ventureentity to own and operate Panda Express restaurants in the Philippines.

The joint venture entity, incorporated as JBPX Foods Inc. on July 3, 2019, is 50% owned by theParent Company and 50% owned by Panda Restaurant Group, Inc. As at December 31, 2019, capitalcontribution of the Parent Company to Panda Express amounted to P=66.0 million. Panda Expressstarted commercial operations on December 12, 2019.

As at December 31, 2019, Panda Express’s total assets and total liabilities amounted toP=185.7 million and P=70.2 million, respectively. The assets of Panda Express include cash and cashequivalents amounting to P=130.4 million as at December 31, 2019.

In 2019, net loss and total comprehensive loss amounted to P=16.5 million. Share in equity in net lossamounted to P=8.3 million for the year ended December 31, 2019.

C-Joy Poultry Meats Production, Inc. (C-Joy Poultry). On May 24, 2016, the Parent Companyentered into an agreement with Cargill Philippines, Inc., a wholly owned subsidiary of Cargill, Inc.(Cargill), to establish a joint venture entity to build and operate a poultry processing plant inSto. Tomas, Batangas, Philippines. Cargill will oversee the setting up, management and operations ofthis facility.

C-Joy Poultry, the joint venture entity, formerly incorporated as Cargill Joy Poultry MeatsProduction, Inc., is 70% owned by Cargill and 30% owned by the Parent Company. C-Joy Poultry isestimated to create 1,000 new full-time jobs and develop new opportunities in the farming communityin Batangas and nearby provinces as local poultry farmers are contracted to grow chicken to supplythe requirements of the processing plant. The poultry processing plant started its commercialoperations on December 5, 2017.

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The details of JFC Group’s interest in C-Joy Poultry as at December 31 are as follows:

2019 2018Interest in a joint venture - cost P=233,406 P=233,406Cumulative equity in net losses:

Balance at beginning of year (233,406) (81,948)Equity in net loss during the year − (151,458)Balance at end of year − (233,406)

P=− P=−

The JFC Group’s equity share in net losses amounting to P=527.1 million in 2018 exceeded thecarrying value of its interest in C-Joy Poultry amounting to P=151.5 million as at December 31, 2017.Consequently, the JFC Group’s unrecognized equity share in net losses amounted to P=591.7 millionand P=375.6 million in 2019 and 2018.

Summarized financial information of the C-Joy Poultry based on its financial statements andreconciliation with the carrying amount of the investment in the consolidated financial statements areset out below:

2019 2018Current assets P=2,039,066 P=1,523,852Noncurrent assets 2,026,536 1,843,050Total Assets P=4,065,602 P=3,366,902

Current liabilities P=7,242,810 P=4,591,583Noncurrent liabilities 47,207 27,430Total liabilities P=7,290,017 P=4,619,013

The amounts of assets and liabilities above include the following:

2019 2018Cash and cash equivalents P=1,224,437 P=192,876Current financial liabilities (excluding trade

payables and other current liabilities andprovisions) 522,880 399,134

Noncurrent financial liabilities (excludingprovisions) 53,166 26,635


2019 2018 2017Revenues P=4,764,375 P=4,014,768 P=1,929,850Depreciation and amortization 118,088 109,629 5,510Taxes and licenses 93,660 35,788 6,890Interest income 1,706 593 6,727Interest expense 283,992 101,939 1,091Net loss (1,972,303) (1,756,971) (260,076)Total comprehensive loss (1,978,024) (1,755,682) (260,076)

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2019 2018Net liabilities (P=3,224,415) (P=1,252,111)Proportion of the JFC Group’s ownership 30% 30%

(P=967,324) (P=375,633)

Interest in Associates

Tortas Frontera LLC (Tortas). On September 7, 2018, the JFC Group, through Jollibee FoodsCorporation (USA), entered into a business venture with award-winning Chef Rick Bayless to build aMexican fast-casual restaurant business in the USA.

This partnership was formalized through an investment by JFC Group of USD12.6 million(P=668.7 million) in Tortas, which owns the Tortas Frontera business founded by Chef Bayless, inconsideration for 47% of the fully-diluted membership interests therein. The remaining 53%membership interests in Tortas shall be held by Chef Ricky Bayless and other shareholders. Thetransaction is subject to the fulfillment of agreed closing conditions.

On December 21, 2018, upon fulfillment of the closing conditions, Jollibee Foods Corporation (USA)paid Chef Bayless in cash.

The details of the JFC Group’s interest in Tortas as at December 31 are as follows:

2019 2018Interest in an associate - cost P=668,679 P=668,679Equity in net earnings during the year 10,114 −

P=678,793 P=668,679

Summarized financial information of Tortas based on its financial statements and reconciliation withthe carrying amount of the investment in the consolidated financial statements are set out below:

2019 2018Current assets P=719,743 P=548,001

Current liabilities P=331 P=4,893


2019 2018Cash and cash equivalents P=408,756 P=544,410


2019 2018Revenues P=128,138 P=48,213Net income 24,899 34,717Total comprehensive income 24,899 34,717

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2019 2018Net assets P=719,412 P=543,108Proportion of the JFC Group’s ownership 52.22% 52.22%

375,677 283,611Goodwill 381,532 381,532Cumulative translation adjustments (78,416) 3,536

P=678,793 P=668,679

Entrek (B) SDN BHD (Entrek). The JFC Group, through JIBL, has 1/3 or 33.3% ownership inEntrek, a company that operates Jollibee stores in Brunei.

The details of the JFC Group’s interest in Entrek as at December 31 are as follows:

2019 2018Interest in an associate - cost P=16,660 P=16,660Cumulative equity in net earnings:

Balance at beginning of year 175,084 120,577Equity in net earnings during the year 21,336 37,847Dividends received during the year (76,015) −Reversal of impairment loss (see Note 23) − 16,660Balance at end of year 120,405 175,084

P=137,065 P=191,744

Summarized financial information of Entrek based on its financial statements and reconciliation withthe carrying amount of the investment in the consolidated financial statements are set out below:

2019 2018Current assets P=538,882 P=743,134Noncurrent assets 314,943 270,932Total assets P=853,825 P=1,014,066

Current liabilities P=388,928 P=385,870Noncurrent liabilities 13,643 5,594Total liabilities P=402,571 P=391,464


2019 2018 2017Revenues P=973,596 P=888,909 P=733,217Depreciation 66,523 52,429 38,381Net income 64,009 113,543 75,031Total comprehensive income 64,009 113,543 75,031

2019 2018Net assets P=451,254 P=622,602Proportion of the JFC Group’s ownership 33.33% 33.33%

150,418 207,534Cumulative translation adjustments (13,353) (15,790)

P=137,065 P=191,744

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C-Joy Poultry Realty, Inc. (C-Joy Realty). On May 24, 2016, the Parent Company entered into anagreement with Cargill Philippines to establish C-Joy Realty, which leases the land where the C-JoyPoultry plant is located.

The details of the JFC Group’s interest in C-Joy Realty as at December 31 are as follows:

2019 2018Interest in an associate - cost P=10,586 P=10,586Cumulative equity in net losses:

Balance at beginning of year (1,431) (922)Equity in net loss during the year (608) (509)Balance at end of year (2,039) (1,431)

P=8,547 P=9,155

Summarized financial information of C-Joy Realty based on its financial statements andreconciliation with the carrying amount of the investment in the consolidated financial statements areset out below:

2019 2018Current assets P=715 P=2,597Noncurrent assets 62,152 62,152Total assets P=62,867 P=64,749

Current liabilities P=3,244 P=1,025Noncurrent liabilities 31,133 33,209Total liabilities P=34,377 P=34,234

The amounts of assets and liabilities above include the following:

2019 2018Cash and cash equivalents P=371 P=1,380Current financial liabilities (excluding trade

payables and other current liabilities andprovisions) 1,067 164

Noncurrent financial liabilities 31,133 33,209


2019 2018 2017Revenues P=2,400 P=2,400 P=1,400Taxes and licenses 208 281 60Interest expense 2,465 2,177 1,414Net loss (2,027) (1,699) (1,067)Total comprehensive loss (2,027) (1,699) (1,067)

2019 2018Net assets P=28,490 P=30,515Proportion of the JFC Group’s

ownership 30% 30%P=8,547 P=9,155

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Advances to Co-venturers

Advances to VTI Group. The details of the JFC Group’s advances to VTI Group as atDecember 31 are as follows:

2019 2018Balance at beginning of year P=1,672,861 P=1,535,590Accrual of interest (see Note 23) 53,531 55,523Translation adjustments and others (61,860) 81,748Balance at end of year P=1,664,532 P=1,672,861

Loan to VTI Group amounting to USD35.0 million (P=1,523.9 million), extended on June 9, 2011, ispayable in December 2016. In accordance with the Fourth Supplement to the Loan Agreement signedon March 28, 2017, the due date of the loan was further extended to May 31, 2017. This loan issecured by a mortgage by the VTI Group of all their shares in SuperFoods Group.

The loan bears interest of 5% per annum payable in lump sum on the due date. The loan was agreedto be used for general corporate purposes. Total interest from this loan, recognized as interestincome, amounted to USD0.6 million (P=31.6 million) for the period ended May 10, 2017.

The Third Supplement to the Loan Agreement signed on December 29, 2016 provides the assignmentof the USD35.0 million (P=1,735.3 million) loan receivable including accrued interests as atDecember 31, 2016 from JSF to JWPL. With the completion of the Settlement TransactionDocuments and upon the approval of certain legal and regulatory requirements in Vietnam onMay 10, 2017, the loan, including interests as at the same day, was contributed as additional capital tothe SuperFoods Group.

On December 14, 2016, a loan of USD9.0 million (P=447.5 million) was extended to the VTI Groupwith an interest rate of 3.5% per annum. The loan was agreed to be used for SuperFoods Group’scapital needs. The loan is part of the total agreed loan of USD30.0 million payable in eight (8) yearsfrom the first utilization date. On June 2, 2017, the additional loan of USD21.0 million(P=1,060.0 million) was granted to the VTI Group. The loan is secured by pledged shares in SFVTand Blue Sky which will be released in proportion to the amount of the principal paid. Total interestfrom this loan, recognized as interest income, amounted to USD1.1 million (P=53.5 million),USD1.1 million (P=55.5 million) and USD0.8 million (P=37.6 million) for the years endedDecember 31, 2019, 2018 and 2017, respectively (see Note 23).

Advances to a Joint Venture

Advances to C-Joy Poultry. On May 30, 2019, loans totaling to P=615.0 million were extended by theParent Company to C-Joy Poultry payable on May 29, 2020. The loans were subject to interest ratebased on PHP BVAL Reference Rates for the 6-month tenor (6-month BVAL) plus spread of 0.50%.

On June 28, 2019, additional loan was extended amounting to P=315.0 million due on June 26, 2020.The loan was subject to interest rate based on 6-month BVAL plus spread of 0.50%.

On December 20, 2019, additional loan amounting to P=306.7 million was extended subject to interestrate based on 6-month BVAL plus spread of 0.50%. Total interest from the loans recognized asinterest income amounted to P=32.5 million in 2019 (see Note 23). As at December 31, 2019, thecarrying value of the loans amounted to P=1,240.6 million.

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E. Cessation of Operations

WJ Investments Limited (WJ). On August 22, 2012, the JFC Group, through JWPL and GPPL,entered into an agreement with Hoppime Ltd., a subsidiary of Wowprime Corporation of Taiwan(Wowprime) and some key executives of Wowprime, to establish a joint venture entity to own andoperate the 12 Hotpot brand in the People’s Republic of China, Hong Kong and Macau. The “12Hotpot” restaurant is known in Taiwan for its low-priced hotpot dishes.

The joint venture entity, incorporated as WJ Investments Limited (WJ), is 48%-owned by the JFCGroup and 48%-owned by Wowprime’s subsidiary and executives. The remaining 4% is owned bycertain individuals with experience in the retail sector in China. Through their subsidiaries, JFCGroup and Wowprime have joint control and management of WJ.

On October 31, 2017, WJ ceased the operations of the 16 stores of the 12 Hotpot brand in thePeople’s Republic of China to focus in building the JFC Group’s larger and fast-growing business inChina and other parts of the world. With this, WJ will be dissolved and liquidated. The JFC Grouprecognized a loss of P=116.2 million in the consolidated statement of comprehensive income in 2017(see Note 23).

On August 13, 2019, WJ completed the dissolution of 12 Hotpot in the People’s Republic of China.

12. Property, Plant and Equipment

The rollforward analysis of property, plant and equipment are as follows:

2019

Land andLand

Improvements

Plant,Buildings,

CommercialCondominium

Units andImprovements

LeaseholdRights and

Improvements

Office, Storeand Food

ProcessingEquipment

Furnitureand

FixturesTransportation

EquipmentConstruction

in Progress TotalCostBalance at beginning of year,

As previously reported P=677,030 P=4,078,145 P=22,691,183 P=21,602,616 P=2,325,794 P=710,293 P=5,306,609 P=57,391,670Effect of adoption of PFRS 16 (see Note 2) – – (69,952) – – – – (69,952)Balance at beginning of year, As

restated 677,030 4,078,145 22,621,231 P=21,602,616 P=2,325,794 P=710,293 P=5,306,609 P=57,321,718Additions – 640,300 1,185,444 1,579,326 115,295 45,300 6,476,247 10,041,912Acquisition of a business (see Note 11) 380,174 – 1,806,996 1,155,572 466,519 3,592 165,965 3,978,818Retirements and disposals (250,800) (90,805) (2,127,825) (2,090,377) (211,873) (152,675) (142,040) (5,066,395)Reclassifications (see Note 13) 276,252 2,951,849 2,887,927 3,900,906 439,723 22,283 (8,075,874) 2,403,066Translation adjustments (12,897) (70,722) (512,392) (276,227) (66,802) (2,634) (21,824) (963,498)Balance at end of year 1,069,759 7,508,767 25,861,381 25,871,816 3,068,656 626,159 3,709,083 67,715,621Accumulated Depreciation and

AmortizationBalance at beginning of year,

As previously reported 7,564 1,887,219 12,790,556 14,143,755 1,301,456 532,563 – 30,663,113Effect of adoption of PFRS 16

(see Note 2) – – (48,510) – – – – (48,510)Balance at beginning of year, As

restated 7,564 1,887,219 12,742,046 14,143,755 1,301,456 532,563 – 30,614,603Depreciation and amortization

(see Notes 21 and 22) – 216,525 2,129,239 3,364,544 389,518 79,910 – 6,179,736Retirements and disposals – (86,482) (1,531,475) (1,681,962) (120,274) (142,745) – (3,562,938)Reclassifications – 194,900 899,878 651,475 380,172 389 – 2,126,814Translation adjustments – (25,021) (350,490) (211,507) (49,125) (2,420) – (638,563)Balance at end of year 7,564 2,187,141 13,889,198 16,266,305 1,901,747 467,697 – 34,719,652Accumulated Impairment LossesBalance at beginning of year – – – 34,566 – – – 34,566Additions (see Note 22) – – – 399,212 – – – 399,212Reversals (see Note 22) – – – (29,179) – – – (29,179)Translation adjustments – – – (752) – – – (752)Balance at end of year – – – 403,847 – – – 403,847Net Book Value P=1,062,195 P=5,321,626 P=11,972,183 P=9,201,664 P=1,166,909 P=158,462 P=3,709,083 P=32,592,122

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2018 (As Restated)

Land andLand

Improvements

Plant,Buildings,

CommercialCondominium

Units andImprovements

LeaseholdRights and

Improvements


ProcessingEquipment

Furnitureand

FixturesTransportation

EquipmentConstruction

in Progress TotalCostBalance at beginning of year,

As previously reported P=673,514 P=3,345,527 P=20,461,846 P=18,177,531 P=1,441,786 P=672,266 P=2,370,853 P=47,143,323Effect of adoption of PFRS 16

(see Note 2) – – (68,407) – – – – (68,407)Balance at beginning of year,

As restated 673,514 3,345,527 20,393,439 18,177,531 1,441,786 672,266 2,370,853 47,074,916Additions – 402,275 1,085,299 1,314,825 138,374 51,950 6,527,958 9,520,681Acquisition of a business (see Note 11) – – 625,204 1,250,499 677,733 676 11,876 2,565,988Retirements and disposals – (15,538) (1,367,825) (946,935) (66,916) (17,557) (197,580) (2,612,351)Reclassifications – 335,133 1,768,001 1,708,279 118,208 2,171 (3,411,359) 520,433Translation adjustments 3,516 10,748 117,113 98,417 16,609 787 4,861 252,051Balance at end of year, As restated 677,030 4,078,145 22,621,231 21,602,616 2,325,794 710,293 5,306,609 57,321,718Accumulated Depreciation and

AmortizationBalance at beginning of year, as

previously reported 7,564 1,409,213 11,246,146 11,699,317 978,883 465,693 – 25,806,816Effect of adoption of PFRS 16

(see Note 2) – – (44,331) – – – – (44,331)Balance at beginning of year, As restated 7,564 1,409,213 11,201,815 11,699,317 978,883 465,693 – 25,762,485Depreciation and amortization

(see Notes 2, 21 and 22) – 291,598 2,132,629 2,882,908 362,787 80,666 – 5,750,588Retirements and disposals – (11,619) (857,636) (696,510) (52,035) (16,728) – (1,634,528)Reclassifications – 189,732 154,058 174,575 (272) 2,340 – 520,433Translation adjustments – 8,295 111,180 83,465 12,093 592 – 215,625Balance at end of year, As restated 7,564 1,887,219 12,742,046 14,143,755 1,301,456 532,563 – 30,614,603Accumulated Impairment LossesBalance at beginning of year – – – 442,693 – – – 442,693Reversals (see Note 22) – – – (408,184) – – – (408,184)Translation adjustments – – – 57 – – – 57Balance at end of year – – – 34,566 – – – 34,566Net Book Value, As Restated P=669,466 P=2,190,926 P=9,879,185 P=7,424,295 P=1,024,338 P=177,730 P=5,306,609 P=26,672,549

Construction in progress account mainly pertains to costs incurred for ongoing construction ofproperties, including soon-to-open stores and commissaries. The borrowing cost that has beencapitalized for the construction of commissaries amounted to P=89.7 million and P=19.6 million as atDecember 31, 2019 and 2018, respectively.

On December 9, 2019, RRB Holdings Inc., a wholly owned subsidiary, entered into a memorandumof agreement with Robinsons Land Corporation, Double Dragon Properties Corp. and Hotel of Asia,Inc. for the sale of a parcel of land for P=1,033.2 million with carrying amount of P=250.8 million.

Gain on retirements and disposals of property, plant and equipment amounted to P=299.0 millionin 2019 and loss on retirements and disposals of property, plant and equipment amounted toP=45.5 million and P=174.5 million in 2018 and 2017, respectively (see Note 22).

On December 24, 2019, the Parent Company purchased condominium units in Jollibee Tower for atotal cost of P=1,055.0 million in relation to the contract to sell they entered with Double Dragon.

The JFC Group performed impairment assessments of fixed assets considering that there areobservable indications that the assets’ values have significantly declined resulting to recognition ofprovision for impairment amounting to P=399.2 million, nil and P=431.9 million in 2019, 2018 and2017, respectively (see Note 22).

Management reassessed the recoverable amount of the JFC Group’s office, store and food processingequipment and recognized reversal of provision amounting to P=29.2 million, P=408.2 million andP=2.1 million in 2019, 2018 and 2017, respectively (see Note 22). Consequently, allowance forimpairment loss on office, store and food processing equipment amounted to P=403.8 million,P=34.6 million and P=442.7 million as at December 31, 2019, 2018 and 2017, respectively.

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No property, plant and equipment as at December 31, 2019 and 2018 have been pledged as securityor collateral.

13. Investment Properties

The rollforward analysis of this account as at December 31, 2019 and 2018 follows:

2019

Land

Buildingsand Building

Improvements TotalCostBalance at beginning of year P=848,974 P=179,377 P=1,028,351Reclassification to property, plant and

equipment (see Note 12) (276,252) – (276,252)Balance at end of year 572,722 179,377 752,099Accumulated Depreciation and

AmortizationBalance at beginning and end of year – 179,377 179,377Net Book Value P=572,722 P=– P=572,722

2018

Land

Buildingsand Building

Improvements TotalCostBalance at beginning and end of year P=848,974 P=179,377 P=1,028,351Accumulated Depreciation and

AmortizationBalance at beginning and end of year – 179,377 179,377Net Book Value P=848,974 P=– P=848,974

In 2019, the land, with a cost of P=276.3 million, was transferred at cost to property, plant andequipment due to change in use, evidenced by commencement of owner-occupation (see Note 12).

The JFC Group’s investment properties have an aggregate fair value of P=1,747.3 million as atDecember 31, 2017 as determined by independent appraisers who holds a recognized and relevantprofessional qualification. Management does not expect a significant change in the aggregate fairvalue of the JFC Group’s investment properties in 2019 and 2018. The fair value represents theamount at which the assets and liabilities can be exchanged in an orderly transaction between marketparticipants to sell the asset or transfer the liability at the measurement date under current marketconditions in accordance with International Valuation Standards.

In determining the fair value of the investment properties, the independent appraisers used the marketdata approach for land and cost approach for buildings and building improvements. For land, fairvalue is based on sales and listings of comparable properties within the vicinity after adjustments fordifferences in location, size and shape of the lot, time elements and other factors between theproperties and their comparable properties. For buildings and building improvements, fair value isbased on the current cost to replace the properties in accordance with prevailing market prices formaterials, labor, and contractors’ overhead, profit and fees in the locality after adjustments fordepreciation due to physical deterioration, and functional and economic obsolescence based on

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personal inspection of the buildings and building improvements and in comparison to similarproperties. Fair value hierarchy disclosures for investment properties have been provided in Note 32.

Rent income derived from income-generating properties amounted to P=28.8 million, P=25.0 millionand P=27.2 million in 2019, 2018 and 2017, respectively (see Notes 20 and 29).

Direct operating costs relating to the investment properties which include maintenance expensestotaled to P=15.0 million, P=12.5 million and P=28.9 million in 2019, 2018 and 2017, respectively.

In 2017, the Parent Company sold its land located at Sta. Rosa Laguna and Luisita Industrial Park inTarlac for a total consideration of P=365.5 million. Net gain arising from the disposals of theseinvestment properties amounted to P=231.0 million (see Note 22).

In 2015, the Parent Company entered into an agreement to develop a commercial and officecondominium building (the “Project”) in a parcel of its land in consideration for cash and assignedunits in the Project. The completion of the transaction is conditional upon fifty percent (50%)completion of the Project, as certified by the general contractor of the Project, and when all of theassigned units are fully constructed. As at December 31, 2019 and 2018, the Project is still underdevelopment.

No investment properties as at December 31, 2019 and 2018 have been pledged as security orcollateral for the JFC Group’s debts.

14. Trademarks, Goodwill and Other Intangible Assets


2019

2018(As restated -

Note 2)Trademarks (see Note 11) P=35,047,990 P=16,563,269Goodwill (see Note 11) 14,497,162 14,395,717Computer software, net of accumulated amortization 570,685 516,975Other intangible assets, net of accumulated

amortization 92,282 65,864P=50,208,119 P=31,541,825

Trademarks and GoodwillTrademarks and goodwill acquired through business combinations are attributable to the followinggroup of CGUs as at December 31:

2019 2018Trademarks:

CBTL (see Note 11) P=18,484,721 P=–Smashburger (see Note 11) 10,414,000 10,414,000SuperFoods Group (see Note 11):

Highlands Coffee 3,681,912 3,681,912Pho 24 463,101 463,101

Mang Inasal 2,004,256 2,004,256Total (Carried Forward) 35,047,990 16,563,269

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2019 2018Total (Brought Forward) P=35,047,990 P=16,563,269Goodwill:

Smashburger (see Note 11) 5,198,690 5,345,494SuperFoods Group (see Note 11) 2,464,156 2,507,801Hong Zhuang Yuan 2,718,848 2,497,253Mang Inasal 1,781,267 1,781,267Red Ribbon Bakeshop:

Philippine operations 737,939 737,939US operations 400,632 434,651

Yong He King 575,701 535,281Chowking US operations 448,614 383,855GSC 166,070 166,931Burger King 5,245 5,245

14,497,162 14,395,717Trademarks and goodwill P=49,545,152 P=30,958,986

Computer SoftwareThe JFC Group’s computer software pertains to the Enterprise Resource Planning (ERP) systemwhich the JFC Group started to use on August 1, 2014 and cloud-based hosting arrangements andimplementation costs of CBTL.

The rollforward analysis of the JFC Group’s computer software as at December 31 are as follows:

2019 2018CostBalance at beginning of year P=823,506 P=740,260Additions – 83,246Acquisition of a business (see Note 11) 169,652 –Write-off (see Note 22) (20,690) –Balance at end of year 972,468 823,506Accumulated AmortizationBalance at beginning of year 306,531 227,671Amortizations (see Note 22) 90,504 78,860Balance at end of year 397,035 306,531Translation adjustment (4,748) –Net Book Value P=570,685 P=516,975

Other Intangible AssetsThe JFC Group’s other intangible assets include other trademarks and patents, liquor licenses andcustomer list amortized over a useful life of five years.

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The rollforward analysis of other intangible assets as at December 31 are as follows:

2019

2018(As restated -

Note 2)CostBalance at end of year, As previously reported P=453,507 P=57,119Effect of adoption of PFRS 16 (see Note 2) (331,799) –Balance at beginning of year, As restated 121,708 57,119Additions – 27,970Acquisition of a subsidiary (see Note 11) 49,262 368,418Effect of adoption of PFRS 16 (see Note 2) – (331,799)Balance at end of year, As restated 170,970 121,708Accumulated AmortizationBalance at end of year, As previously reported 99,490 38,961Effect of adoption of PFRS 16 (see Note 2) (43,567) –Balance at beginning of year, As restated 55,923 38,961Amortization (see Note 22) 19,132 60,529Effect of adoption of PFRS 16 (see Notes 2 and 22) – (43,567)Balance at end of year, As restated 75,055 55,923Translation adjustment (3,633) 79Net Book Value P=92,282 P=65,864

Impairment Testing of Trademarks and GoodwillGoodwill acquired through business combinations have been allocated to ten (10) groups of CGUs,which are subsidiaries of the Parent Company, owned directly or indirectly. The recoverable amountsof the groups of CGUs have been determined based on value in use calculations using cash flowprojections from financial budgets approved by the BOD covering a five-year period. Furthermore,the trademarks of Smashburger, SuperFoods Group and Mang Inasal are allocated to the CGU ofSmashburger, SuperFoods Group and Mang Inasal, respectively.

The calculation of value in use is most sensitive to the following assumptions which vary pergeographical location:

CGUsGeographical

LocationPre-tax

Discount Rate

Long-termRevenue

Growth RateHong Zhuang Yuan PRC 10.0% 5.7%Mang Inasal Philippines 10.0% 6.5%Red Ribbon Bakeshop:

Philippine operations Philippines 10.1% 6.5%US operations USA 7.5% 2.0%

Yong He King PRC 8.7% 5.7%Chowking US operations USA 9.3% 2.0%Burger King Philippines 11.0% 6.5%GSC Vietnam 11.9% 6.5%SuperFoods Group Vietnam 11.2% 6.5%Smashburger USA 7.6% 2.0%

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Key assumptions with respect to the calculation of value in use of the groups of CGUs as atDecember 31, 2019 and 2018 used by management in its cash flow projections to undertakeimpairment testing of goodwill are as follows:

a) Discount rates - discount rates represent the current market assessment of the risks specific toeach group of CGUs, regarding the time value of money and individual risks of the underlyingassets which have not been incorporated in the cash flow estimates. The discount rate calculationis based on the specific circumstances of the JFC Group’s group of CGUs, derived from weightedaverage cost of capital (WACC) of each group of CGUs. The WACC takes into account both thecost of debt and equity. The cost of equity is calculated using the Capital Asset Pricing Model(CAPM). The cost of debt is based on the assumed interest-bearing borrowings each group ofCGUs is obliged to service. CGU-specific risk is incorporated by applying individual alpha andbeta factors. The beta factors are evaluated annually based on publicly available market data.

b) Long-term growth rates - rates are determined in consideration of historical and projected results,as well as the economic environment where the group of CGUs operate.

c) EBITDA - is based on the most recent value achieved in the year preceding the start of the budgetperiod, and adjusted for planned efficiency improvement, if any.

Management believes that any reasonably possible change in the key assumptions on whichrecoverable amount is based would not cause the carrying amount of the CGUs to exceed itsrecoverable amount.

No impairment losses were recognized for trademarks and goodwill for the years endedDecember 31, 2019, 2018 and 2017.

15. Other Noncurrent Assets


2019

2018(As restated -

Note 2)Security and other deposits (see Notes 9, 31 and 32) P=2,971,739 P=2,474,748Noncurrent portion of:

Rent and other long-term prepayments 136,046 505,797 Employee car plan receivables

(see Notes 7, 31 and 32) 133,434 169,109Prepaid market entry fee - net of accumulated

amortization of P=20.8 million and P=15.4 millionin 2019 and 2018, respectively (see Note 22) 85,518 94,315

Franchise rights - net of accumulated amortizationof P=63.0 million and P=49.4 million in 2019 and2018, respectively (see Note 22) 80,125 80,903

Deferred rent expense 77,003 78,652Deferred compensation 24,776 27,367Returnable containers and others 20,482 38,644Tools and other assets 266,851 281,509

P=3,795,974 P=3,751,044

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Terms and conditions of other noncurrent assets are as follows:

§ Security and other deposits generally represent deposits for leases entered into by the JFC Groupas lessee. The security deposits are recoverable from the lessors at the end of the lease terms,which range from three to twenty years. These are carried at amortized cost. The discount ratesused range from 2.91%-21.57% and 2.36%-21.57% in 2019 and 2018, respectively. Thedifference between the fair value at initial recognition and the notional amount of the securitydeposits is charged to “Deferred rent expense” account and amortized on straight-line basis overthe lease terms.

§ Employee car plan receivables are presented at amortized cost. The difference between the fairvalue at initial recognition and the notional amount of the employee car plan receivables isrecognized as “Deferred compensation” and is amortized on a straight-line basis over the creditperiod.

Accretion of interest on security and other deposits and employee car plan receivables amountedto P=33.6 million, P=46.6 million and P=33.1 million in 2019, 2018 and 2017, respectively(see Note 23).

§ Prepaid market entry fee represents upfront fee paid to the franchisor prior to the operations ofDunkin’ Donuts restaurants in the PRC. Market entry fee is amortized over twenty (20) yearseffective February 2016, start of Dunkin’ Donuts operations.

The rollforward analysis of prepaid market entry fee as at December 31 are as follows:

2019 2018Market Entry FeeBalance at beginning and end of year P=93,870 P=93,870Accumulated AmortizationBalance at beginning of year 15,392 9,863Amortizations (see Note 22) 5,438 5,529Balance at end of year 20,830 15,392Translation adjustment 12,478 15,837

P=85,518 P=94,315

§ Franchise rights pertain to franchise fees paid by PERF entities to Burger King Asia Pacific forthe license to operate Burger King stores in the Philippines. Franchise rights are amortized overten (10) years.

The rollforward analysis of franchise rights as at December 31 are as follows:

2019 2018Franchise RightsBalance at beginning of year P=130,317 P=105,386Additions 12,855 24,931Balance at end of year 143,172 130,317Accumulated AmortizationBalance at beginning of year 49,414 36,985Amortizations (see Note 22) 13,633 12,429Balance at end of year 63,047 49,414

P=80,125 P=80,903

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§ Tools and other assets represent tools for repairs and maintenance of office and store equipmentwhich were still unused as at December 31, 2019 and 2018.

16. Trade Payables and Other Current Liabilities and Contract Liabilities


2019 2018Trade P=14,576,452 P=13,094,676Accruals for:

Salaries, wages and employee benefits 2,774,588 2,127,743Store operations 2,220,719 1,699,887Local taxes 2,580,103 2,005,187Advertising and promotions 1,646,581 1,585,517Rent 1,259,282 1,156,140Freight 753,050 795,271Utilities 569,001 484,693Repairs and maintenance 334,262 393,278Operating supplies 301,716 255,229

Accruals for:Professional fees 299,894 195,681Interest (see Note 18) 167,272 239,663Security 162,061 169,245Transportation and travel 100,284 101,363Communication 90,226 78,974Insurance 79,263 18,267Trainings and seminars 28,805 29,531Service fees and others 1,580,258 1,320,665

Customers’ deposits 1,036,909 898,248Unearned revenue from gift certificates 1,370,466 628,070Dividends payable 87,959 80,780Other current liabilities 1,624,841 1,208,583

33,643,992 28,566,691Contract liabilities 1,008,073 150,078

P=34,652,065 P=28,716,769

The terms and conditions of the above liabilities are as follows:

§ Trade payables to suppliers are noninterest-bearing and are normally settled on a 30 to 60-dayterm.

§ Accrued expenses are noninterest-bearing and are normally settled within the next financial year.Other accrued liabilities presented under “Service fees and others” consist of asset retirementobligation and other miscellaneous expenses.

§ Customers’ deposits pertain to security deposits from operating leases with franchisees, which arerefundable at the end of the lease term, deposits for kiddie party packages and deposits fromfranchisees for the sale of store assets.

Accretion of interest on customer’s deposits amounted to P=0.5 million, P=0.6 million andP=13.2 million in 2019, 2018 and 2017, respectively (see Note 23).

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§ Other current liabilities consist of staled checks, amounts payable for mascots and varioussubscriptions in newspapers given to customers as a complementary to their meals.

§ Contract liabilities pertain to deferred revenues and unearned revenues from gift certificates frominternational operations.

Movements of contract liabilities arising from deferred revenues and unearned revenues from giftcertificates from international operations are as follows:

2019 2018Balance at beginning of year P=150,078 P=2,650Additions 728,527 36,506Acquisition of a subsidiary (see Note 11) 803,150 113,572Utilized gift certificates (646,179) (2,650)Translation adjustments (27,503) –Balance at end of year P=1,008,073 P=150,078

The amount of contract liabilities arising from deferred revenues and unearned revenues from giftcertificates from international operation is expected to be earned within one year.

17. Provisions

The JFC Group has outstanding provisions amounting to P=825.1 million as at December 31, 2019 and2018, consisting mainly of provisions for asserted claims which are normal to its business. In 2017,JFC Group recognized provision amounting to P=794.6 million (see Note 23).

These include estimates of legal services, settlement amounts and other costs of claims made againstthe JFC Group. Other information on the claims is not disclosed as this may prejudice the JFCGroup’s position on such claims (see Note 30).

18. Short and Long-term Debts

Short-term DebtShort-term debt consists of USD-denominated bank loans as at December 31, 2019. Details asfollows:

Availment Date Maturity Date Interest Rate Condition AmountLoan 1 September 23, 2019 September 23, 2020 LIBOR plus spread;

quarterlyUnsecured P=2,532,000

Loan 2 September 20, 2019 September 20, 2020 LIBOR plus spread;quarterly

Unsecured 4,557,600


Unsecured 4,557,600


Unsecured 2,532,000


Unsecured 6,076,800

Loan 6 March 22, 2019 March 23, 2020 LIBOR plus spread;quarterly

Unsecured 1,012,800

Loan 7 August 14, 2019 -December 30, 2019

August 14, 2020 LIBOR plus spread;quarterly

Unsecured 911,520

P=22,180,320

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Loans of JWPL. Loan 1 consists of a short-term loan availed on September 23, 2019 from a localbank amounting to USD50.0 million (P=2,679.5 million) subject to a variable interest rate based onLondon Interbank Offered Rate (LIBOR) plus spread of 0.55% which is payable and is reset on aquarterly basis. The principal is payable on September 23, 2020, the maturity date. As atDecember 31, 2019, the carrying value of the loan amounted to USD50.0 million (P=2,532.0 million).The loan is guaranteed by the Parent Company.

Loan 2 consists of a short-term loan availed on September 20, 2019 from a local bank amounting toUSD90.0 million (P=4,823.1 million) subject to a variable interest rate based on three-month LIBORplus spread of 0.62% which is payable and is reset on a quarterly basis. The principal is payable onSeptember 20, 2020, the maturity date. As at December 31, 2019, the carrying value of the loanamounted to USD90.0 million (P=4,557.6 million). The loan is guaranteed by the Parent Company.

Loan 3 consists of a short-term loan availed on September 20, 2019 from a local bank amounting toUSD90.0 million (P=4,823.1 million) subject to a variable interest rate based on LIBOR plus spread of0.55% which is payable and is reset on a quarterly basis. The principal is payable onSeptember 20, 2020, the maturity date. As at December 31, 2019, the carrying value of the loanamounted to USD90.0 million (P=4,557.6 million). The loan is guaranteed by the Parent Company.

Loan 4 consists of a short-term loan availed on September 20, 2019 from a foreign bank amounting toUSD50.0 million (P=2,679.5 million) subject to a variable interest rate based on LIBOR plus spread of0.90% which is payable and is reset on a quarterly basis. The principal is payable on September 7,2020, the maturity date. As at December 31, 2019, the carrying value of the loan amounted toUSD50.0 million (P=2,532.0 million). The loan is guaranteed by the Parent Company.

Loan 5 consists of a short-term loan availed on September 13, 2019 from a foreign bank amounting toUSD120.0 million (P=6,430.8 million) subject to a variable interest rate based on three-month LIBORplus spread of 0.50% which is payable and is reset on a quarterly basis. The principal is payable onSeptember 7, 2020, the maturity date. As at December 31, 2019, the carrying value of the loanamounted to USD120.0 million (P=6,076.8 million). The loan is guaranteed by the Parent Company.

The short-term debts of JWPL (Loans 1 to 5) have been prepaid on February 3 and 6, 2020 from theproceeds of the issuance of guaranteed Senior Perpetual Capital Securities (see Note 34).

Loans of SJBF. Loan 6 consists of a short-term uncommitted line of credit agreement signed onMarch 22, 2019 with a local bank up to an aggregate amount of USD20.0 million (P=1,046.4 million)until April 1, 2020. The loan is subject to variable interest rate based on three-month LIBOR plusspread of 0.95% which is payable monthly and subject to quarterly repricing. The initial drawdownwas availed on April 5, 2019 amounting to USD5.0 million (P=260.5 million). Subsequently, 2nd , 3rdand 4th drawdowns amounting to USD5.0 million (P=262.2 million), USD5.0 million (P=257.9 million)and USD5.0 million (P=255.2 million) were availed on May 14, 2019, June 21, 2019 and July 19,2019, respectively. The loan will mature on March 23, 2020. As at December 31, 2019, the carryingvalue of the loan amounted to USD20.0 million (P=1,012.8 million).

Loan 7. On August 14, 2019, Smashburger Finance LLC signed a short-term uncommitted line ofcredit agreement with a local bank up to an aggregate amount of USD20.0 million (P=1,045.6 million)until August 14, 2020. The loan is subject to variable interest rate based on three-month LIBOR plusspread of 0.95% which is payable monthly and subject to quarterly repricing. The initial drawdownwas availed on August 22, 2019 amounting to USD5.0 million (P=261.3 million). Subsequently, 2ndand 3rd drawdowns amounting to USD10.0 million (P=507.3 million) and USD3.0 million(P=151.9 million) were availed on November 12, 2019 and December 30, 2019, respectively. The loanwill mature on August 14, 2020. As at December 31, 2019, the carrying value of the loan amountedto USD18.0 million (P=911.5 million).

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Interest expense recognized on short-term debt amounted to P=189.9 million in 2019 (see Note 23).

Long-term DebtThe long-term debt consists of the following:

2019 2018Principal P=22,682,946 P=26,363,627Unamortized debt issue cost (87,223) (99,274)

P=22,595,723 P=26,264,353

The details of long-term debt follow:

Availment Date Maturity Date Interest Rate Condition 2019 2018USD-denominatedSubsidiaries

Loan 1 October 21, 2015 October 21, 2025 LIBOR plus spread; quarterly Unsecured P=3,713,600 P=4,498,511 Loan 2 November 29, 2016 November 29, 2024 3.0% per annum;

annuallyUnsecured 1,473,624 1,545,852

Loan 3 November 29, 2016 November 29, 2022 ROP 2121 and ROP 2024 plusspread; annually

Unsecured 392,966 412,227

Loan 4 April 25, 2014 April 25, 2019 1.48%; quarterly Unsecured – 310,222VND-denominatedSubsidiaries Loan 5

(see Note 11)February 19, 2015 February 20, 2020 VIOR plus spread; monthly Unsecured 10,743 79,296

Loan 6(see Note 11)

December 30, 2015 December 20, 2020 VND COFplus spread; quarterly

Unsecured 37,145 88,128

Loan 7(see Note 11)

April 3, 2017 April 1, 2022 VND COF plus spread;quarterly

Unsecured 92,863 137,088

Loan 8 February 13, 2018 March 20, 2023 VND COF plus spread;quarterly

Unsecured 229,269 260,352

Loan 9 November 15, 2018 -October 9, 2019

December 24, 2023 Bank’s three-month COF plusspread; quarterly

Unsecured 404,225 41,951

Loan 10 November 19 -December 30, 2019

August 30, 2024 Bank’s three-month COF plusspread; quarterly

Unsecured 118,511 –

PHP-denominatedParent Company Loan 11 December 16, 2013 June 17, 2019 PDST-F

plus spread; quarterlyUnsecured – 1,454,318

Loan 12 April 21, 2014 April 22, 2019 PDST-Fplus spread; quarterly

Unsecured – 799,733

Loan 13 April 22, 2016 April 22, 2021 PDST-R2plus spread; quarterly

Unsecured 373,583 622,583

Loan 14 December 22, 2017 December 22, 2022 PDST-R2plus spread; quarterly

Unsecured 1,195,200 1,593,600


Unsecured 1,568,700 2,091,600


Unsecured 597,600 796,800


Unsecured 448,200 597,600

Loan 18 March 27, 2018 March 27, 2025 PDST R-2plus spread; quarterly

Unsecured 4,176,375 4,171,875

Loan 19 May 11, 2018 May 11, 2025 PDST R-2 plus spread;quarterly

Unsecured 2,982,589 2,979,376

Loan 20 August 15, 2018 August 15, 2025 PDST-R2plus spread; quarterly

Unsecured 2,683,607 2,680,714

Subsidiaries Loan 21 December 21, 2016 December 21, 2021 PDST-R2

plus spread; quarterlyUnsecured 109,780 109,670

Loan 22 August 24, 2018 August 24, 2025 PDST-R2plus spread; quarterly

Unsecured 993,929 992,857

Loan 23 May 8, 2019 May 8, 2026 BVAL plus spread Unsecured 993,214 –22,595,723 26,264,353

Less current portion - net of debt issue costs of P=17.8 million and P=7.0 millionin 2019 and 2018, respectively 3,415,975 4,892,102

P=19,179,748 P=21,372,251LIBOR – London Interbank Offered RateVIOR – Vietnam Interbank Offered RateBVAL – Bloomberg Valuation ServicePDST-F – Philippine Dealing System Treasury FixingPDST-R2 – Philippine Dealing System Treasury - Reference Rate Two

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VND-denominated Loans of SuperFoods Group. On April 3, 2017, SuperFoods Group acquiredLoan 7 which consists of a 5-year unsecured loan from a local bank in Vietnam amounting toVND68.0 billion (P=151.2 million) with variable interest rate based on three-month VND COF plusspread of 1.5%. The principal is payable in sixteen (16) quarterly installments commencing on the15th month from the first drawdown date until April 1, 2022, the maturity date. As at December 31,2019 and 2018, the carrying value of the loan amounted to VND42.5 billion (P=92.9 million) andVND59.5 billion (P=137.1 million), respectively.

Loan 8 consists of a 5-year unsecured loan acquired from a local bank in Vietnam amounting toVND113.0 billion (P=262.7 million) available in tranches within eighteen (18) months fromFebruary 13, 2018, the date of loan agreement. The loan is subject to a variable interest rate based onthree-month VND COF plus spread of 1.3%. The principal is payable in fourteen (14) quarterlyinstallments commencing on the 21st month from the initial drawdown date on March 20, 2018amounting to VND7.5 billion (P=17.4 million). The loan will mature on March 20, 2023. As atDecember 31, 2019 and 2018, the carrying value of the loan amounted to VND104.9 billion(P=229.3 million) and VND113.0 billion (P=260.4 million), respectively.

Loan 9 consists of a 5-year unsecured loan acquired from a local bank in Vietnam amounting toVND185.0 billion (P=426.2 million) available in tranches within twenty-four (24) months fromNovember 15, 2018, the date of loan agreement. The loan is subject to a variable interest rate basedon the Bank’s three-month COF plus spread of 1.35%. The principal is payable in twelve (12)quarterly installments commencing on the 27th month from the initial drawdown date onDecember 25, 2018 amounting to VND18.2 billion (P=42.0 million). Subsequent tranches amountingto a total of VND166.8 billion (P=374.5 million) were availed in 2019. The loan will mature onDecember 24, 2023. As at December 31, 2019 and 2018, the carrying value of the loan amounted toVND185.0 billion (P=404.2 million) and VND18.2 billion (P=42.0 million), respectively.

Loan 10 consists of a 5-year unsecured loan acquired from a local bank in Vietnam amounting toVND160.0 billion (P=349.6 million) available in tranches within twelve (12) months from August 29,2019, the date of loan agreement. The loan is subject to a variable interest rate based on the Bank’sthree-month COF plus spread of 1.35%. The principal is payable in sixteen (16) quarterlyinstallments commencing on the 16th month from the date of agreement. Initial drawdownamounting to VND4.6 billion (P=10.2 million) was availed on November 19, 2019. Subsequenttranches amounting to a total of VND49.6 billion (P=108.4 million) were availed in November andDecember 2019. The loan will mature on August 30, 2024. As at December 31, 2019, the carryingvalue of the loan amounted to VND54.2 million (P=118.5 million).

PHP-denominated Loans of the Parent Company. Loan 14 consists of 5-year unsecured loanacquired from a local bank on December 22, 2017 amounting to P=1,600.0 million. The loan is subjectto a variable interest based on the simple average of the preceding five (5) days of the three-monthPDST-R2 plus spread of 0.50%, which is payable and repriced on a quarterly basis, and to an interestrate floor of 2.70%. Provided, however that on any interest payment date, but in no case later than365 days from the initial drawdown date, in lieu of a floating interest rate, the Parent Company shallhave a one-time option to convert into a fixed-interest rate loan based on the applicable three-monthPDST-R2 rate plus spread of 0.60%. The principal is payable in sixteen (16) quarterly installmentscommencing on the 15th month from drawdown date amounting to P=100.0 million. The ParentCompany incurred debt issue cost of P=8.0 million, representing documentary stamp tax, for this loan.The Parent Company also has an option to prepay the loan in part or in full on any interest paymentdate subject to certain conditions.

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Loan 15 consists of 5-year unsecured loan acquired from a local bank on December 22, 2017amounting to P=2,100.0 million. The loan is subject to a variable interest rate based on the simpleaverage of the five (5) trading days of the three-month Treasury Securities Benchmark Yield, aspublished in the PDST-R2 page of the PDEX preceding and inclusive of the Interest Rate SettingDate plus spread of 0.50%. The principal is payable on December 22, 2022, the date of maturity withan option to prepay the loan, wholly or partially, without penalty at any time during the term of theloan subject to certain conditions. On July 16, 2018, the loan agreement was amended to pay theprincipal in sixteen (16) quarterly installments commencing on the end of the fourth quarter from thedrawdown date. The Parent Company incurred debt issue cost of P=10.5 million, representingdocumentary stamp tax, for this loan.

Loan 16 consists of 5-year unsecured loan acquired from a local bank on December 22, 2017amounting to P=800.0 million. The loan is subject to a variable interest based on the simple average ofthe preceding five (5) days of the three-month PDST-R2 rate plus spread of 0.50%, which is payableand is reset on a quarterly basis, and to an interest rate floor based on BSP Overnight Deposit FacilityRate. The principal is payable in sixteen (16) quarterly installments commencing on the 15th monthfrom drawdown date amounting to P=50.0 million. The Parent Company incurred debt issue cost ofP=4.0 million, representing documentary stamp tax, for this loan. The Parent Company has an optionto prepay the loan in part or in full on any interest payment date subject to certain conditions.

Loan 17 consists of 5-year unsecured loan acquired from a local bank on December 27, 2017amounting to P=600.0 million. The loan is subject to a variable interest equal to the three-monthPDST-R2 rate plus spread of 0.50%, which is payable and is reset on a quarterly basis, and to aninterest rate floor based on BSP Overnight Deposit Facility Rate plus 0.50%. The principal is payablein sixteen (16) quarterly installments commencing on the 15th month from drawdown date amountingto P=37.5 million. The Parent Company incurred debt issue cost of P=3.0 million, representingdocumentary stamp tax, for this loan. The Parent Company has an option to convert the variableinterest rate into a fixed interest rate on any interest payment date but in no case later than 365 daysfrom the drawdown date. The conversion to fixed interest rate is based on a five year PDST-R2 rateplus spread of 0.75%. The Parent Company also has an option to prepay the loan in part or in full onany interest payment date subject to certain conditions.

Loan 18 consists of 7-year unsecured loan acquired from a local bank on March 27, 2018 amountingto P=4,200.0 million. The loan is subject to a variable interest equal to the simple average of thepreceding five (5) days of the three-month PDST-R2 rate plus spread of 0.40% and to an interest ratefloor of 3.0%. The principal is payable in equal quarterly installments commencing on the 27thmonth from drawdown date amounting to P=210.0 million. The Parent Company incurred debt issuecost of P=31.5 million, representing documentary stamp tax, for this loan. The Parent Company has anoption to convert the variable interest rate into a fixed interest rate but in no case later than 365 daysfrom the drawdown date. The conversion to fixed interest rate is based on simple average of theapplicable/interpolated “Done” PDST-R2 rates within the preceding five (5) consecutive businessdays plus spread of 0.60%. In the event that there is no “Done” PDST-R2 rates, it shall bedetermined by interpolating the “Done” PDST-R2 of other tenors or mutually agreed computationbased on the available bids/interpolation. The Parent Company also has an option to prepay the loanin part or in full on any interest payment date subject to certain conditions.

Loan 19 consists of 7-year unsecured loan acquired from a local bank on May 11, 2018 amounting toP=3,000.0 million. The loan is subject to a variable interest rate equal to simple average of the five (5)trading days of the three-month Treasury Securities Benchmark Yield, as published in the PDST-R2page of the PDEX preceding and inclusive of the Interest Rate Setting Date plus spread of 0.50%.The Parent Company has a one-time option to convert the variable interest rate into a fixed interestrate until the fourth interest rate setting date subject to certain conditions. The conversion to fixed

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interest rate is equal to the interpolated Treasury Securities Benchmark Yield based on the remainingtenor of the Loan, as published in the PDST-R2 on the interest setting date plus spread of 0.50%. Theprincipal is payable in twenty (20) quarterly installments commencing on the end of the 8th quarterfrom the drawdown date. The Parent Company incurred debt issue cost of P=22.5 million,representing documentary stamp tax, for this loan.

Loan 20 consists of 7-year unsecured loan acquired from a local bank on August 15, 2018 amountingto P=2,700.0 million. The loan is subject to a variable interest rate equal to simple average of the five(5) trading days of the three-month Treasury Securities Benchmark Yield, as published in the PDST-R2 page of the PDEX preceding and inclusive of the Interest Rate Setting Date plus spread of 0.50%.The Parent Company has a one-time option to convert the variable interest rate into a fixed interestrate until the fourth interest rate setting date subject to certain conditions. The conversion to fixedinterest rate is equal to the interpolated Treasury Securities Benchmark Yield based on the remainingtenor of the Loan, as published in the PDST-R2 on the interest setting date plus spread of 0.50%. Theprincipal is payable in twenty (20) quarterly installments commencing on the end of the 8th quarterfrom the drawdown date. The Parent Company incurred debt issue cost of P=20.3 million,representing documentary stamp tax, for this loan.

The Parent Company’s PHP denominated long-term debt (Loans 11 to 20) amounted toP=14,025.9 million and P=17,788.2 million, net of unamortized debt issue cost of P=74.1 million andP=91.8 million as at December 31, 2019 and 2018, respectively. The current portion amounted toP=2,573.3 million and P=3,773.0 million, net of debt issue cost of P=16.7 million and P=7.0 million as atDecember 31, 2019 and 2018, respectively.

PHP-denominated Loan of Zenith. Loan 22 is a 7-year unsecured loan acquired from a local bank onAugust 24, 2018 amounting to P=1,000.0 million. The loan is subject to a variable interest equal to thesimple average of the preceding five (5) days of the three-month PDST-R2 on the interest setting dateplus spread of 0.48% and to an interest rate floor equal to the BSP Overnight Reverse RepurchaseRate. Zenith has an option to convert the variable interest rate into a fixed interest rate but in no caselater than 365 days from the drawdown date. The conversion to fixed interest rate is based on simpleaverage of the applicable/interpolated “Done” PDST-R2 rates within the preceding five (5)consecutive business days plus spread of 0.60%. Zenith incurred debt issue cost of P=7.5 million,representing documentary stamp tax, in relation to this loan. The principal is payable in equalquarterly installments commencing on the 27th month from the drawdown date and every quarterthereafter until maturity. The carrying amount of the loan is P=993.9 million and P=992.9 million, netof unamortized debt issue cost of P=6.1 million and P=7.1 million as at December 31, 2019 and 2018,respectively.

Loan 23 consists of 7-year unsecured loan acquired from a local bank on May 8, 2019 amounting toP=1,000.0 million. The loan is subject to a variable interest equal to the simple average of thepreceding five (5) banking days PHP BVAL Reference rate for three (3) months tenor plus spread of0.66% or to an interest rate floor equal to the BSP Overnight Reverse Repurchase Rate plus spread of0.50%. Zenith has an option to convert the variable interest rate into a fixed interest within one (1)year from the drawdown date. The conversion to fixed interest rate is based on simple average of theapplicable/interpolated PHP BVAL Reference rate for the remaining tenor of the loan plus spread of1.0%. Zenith incurred debt issue cost of P=7.5 million, representing documentary stamp tax, inrelation to this loan. The principal is payable in equal quarterly installments commencing on the 9thquarter from the drawdown date and every quarter thereafter until maturity. The carrying amount ofthe loan is P=993.2 million, net of unamortized debt issue cost of P=6.8 million, as at December 31,2019.

In 2019, Loans 4, 11 and 12 were paid in full at maturity dates.

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The loans are guaranteed by the Parent Company. Consequently, the Parent Company is subject tocertain debt covenants which include, among others, maintaining a Debt-to-Equity ratio, Debt-to-EBITDA ratio and Debt-to-Service Coverage Ratio. As at December 31, 2019, the Debt-to-EBITDAratio was amended temporarily from 3.0-4.0 or below to 5.0 or below and Debt-to-Service CoverageRatio was waived until December 31, 2020. The Parent Company is in compliance with these debtcovenants as at December 31, 2019 and 2018.

Interest expense recognized on long-term debt amounted to P=1,172.6 million, P=888.2 million andP=392.6 million in 2019, 2018 and 2017, respectively (see Note 23). Accretion of debt issue costsamounting to P=19.6 million, P=14.9 million and P=3.2 million in 2019, 2018 and 2017, respectively, isrecognized under “Interest expense” account in the consolidated statements of comprehensiveincome.

The future expected principal settlements of the JFC Group’s loans follow:

2019 20182019 P=– P=4,899,1512020 3,433,754 3,510,2352021 4,758,007 4,391,7932022 4,928,959 4,552,1942023 to 2026 9,562,226 9,010,254

22,682,946 26,363,627Less debt issue costs (87,223) (99,274)

P=22,595,723 P=26,264,353

Embedded DerivativesCertain long-term loans of the JFC Group include provisions for an option to convert the variableinterest rate into a fixed interest rate. Certain long-term loans are also subject to an interest ratefloor. In addition, the JFC Group’s long-term loans generally provide an option to pre-pay the loan infull before the maturity date.

The JFC Group assessed that the derivatives embedded in the loan contracts need not be bifurcatedsince they are clearly and closely related to the economic characteristics and risks of the host loancontract and do not qualify for separate accounting as at December 31, 2019 and 2018.

Freestanding Derivatives, Hedges and Hedge Effectiveness TestingOn November 20, 2015, the JFC Group entered into an Interest Rate Swap (IRS) with a bank toconvert its exposure in the variable interest rate of Loan 1 to a fixed interest rate. The IRS willterminate and the loan will mature simultaneously on October 21, 2025. The JFC Group hasdesignated the IRS as a cash flow hedge.

The IRS with a notional amount equal to the principal amount of the loan requires the JFC Group topay fixed interest payments at 3.36% in exchange of variable interest payments at three-monthLIBOR plus spread of 1.20% from the bank throughout the term of the IRS on the notionalamount. The IRS settles quarterly on a net basis.

The fair value of the IRS amounted to P=58.2 million as at December 31, 2019, presented as derivativeliability, and P=82.9 million as at December 31, 2018, presented as derivative asset in the consolidatedstatements of financial position. The terms of the IRS approximately match the terms of the interestpayments on the loan. Accordingly, there is no hedge ineffectiveness to be recognized in profit orloss.

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Unrealized loss of P=141.1 million and unrealized income of P=70.9 million and P=45.5 million wererecognized in other comprehensive income in 2019, 2018 and 2017, respectively.

19. Equity

a. Capital Stock

The movements in the account are as follows:

2019 2018Authorized - P=1 par value

1,450,000,000 shares P=1,450,000 P=1,450,000

Issued and subscribed:Balance at beginning of year P=1,105,214 P=1,101,656Issuances during the year 4,935 3,558Balance at end of year 1,110,149 1,105,214Subscriptions receivable (17,178) (17,178)

P=1,092,971 P=1,088,036

The total number of shareholders of the Parent Company is 3,004 and 3,023 as at December 31,2019 and 2018, respectively.

b. Additional Paid-in-Capital

The movements in the Additional paid in-capital pertain to the difference between the exerciseprices of stock options exercised and the par value of Parent Company’s shares. For the yearsended December 31, 2019 and 2018, stock options totaling 4,934,701 shares and 3,558,182shares, respectively, were exercised (see Note 26). These resulted to an additional paid-in capitalamounting to P=580.5 million, P=472.0 million and P=850.8 million in 2019, 2018 and 2017,respectively.

Stock options expense amounting to P=262.9 million, P=312.0 million and P=227.5 million in 2019,2018 and 2017, respectively, were also recognized as part of additional paid-in capital(see Notes 22 and 26).

The Parent Company recognized deferred tax assets on MSOP and ELTIP, resulting to a decreaseof P=684.5 million and increase of P=334.1 million and P=782.0 million in additional paid-in capitalin 2019, 2018 and 2017, respectively.

As at December 31, 2019 and 2018, total additional paid-in capital amounted to P=8,797.4 millionand P=8,638.4 million, respectively.

c. Treasury Shares

The cost of common stock of the Parent Company held in treasury of P=180.5 million consists of16,447,340 shares as at December 31, 2019 and 2018.

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d. Excess of Cost over the Carrying Value of Non-controlling Interests Acquired

The amount of excess of cost over the carrying value of non-controlling interests acquired as atDecember 31, 2019 and 2018, recognized as part of “Equity Attributable to Equity Holders of theParent Company” section in the consolidated statements of financial position, resulted from thefollowing acquisitions of non-controlling interests:

20% of Greenwich in 2006 P=168,25715% of Belmont in 2007 375,72140% of Adgraphix in 2010 (1,214)30% of Mang Inasal in 2016 1,217,61530% of HBFPPL in 2016 391,78215% of SJBF in 2018 (see Note11) (347,395)

P=1,804,766

e. Retained Earnings

The JFC Group has a cash dividend policy of declaring one-third of the JFC Group’s net incomefor the year as cash dividends. It uses best estimate of its net income as basis for declaring cashdividends. Actual cash dividends per share declared as a percentage of the EPS are 43.8%,32.8% and 33.9% in 2019, 2018 and 2017, respectively.

The Parent Company’s retained earnings available for dividend declaration, computed based onthe guidelines provided in SEC Memorandum Circular No. 11, amounted to P=14,183.9 million,P=12,538.8 million and P=10,876.0 million as at December 31, 2019, 2018 and 2017, respectively.

The Parent Company’s cash dividend declarations for 2019, 2018 and 2017 follow:

Declaration Date Record Date Payment DateCash Dividend

per ShareTotal Cash

Dividends Declared(In Thousands, except dividend per share)

2019April 8 April 26 May 9 P=1.23 P=1,341,178November 11 November 26 December 10 1.35 1,473,767

P=2.58 P=2,814,945


P=2.48 P=2,691,787


P=2.18 P=2,355,511

An important part of the JFC Group’s growth strategy is the acquisition of new businesses in thePhilippines and abroad. Examples were acquisitions of 85% of Yonghe King in 2004 in PRC(P=1,200.0 million), 100% of Red Ribbon in 2005 (P=1,700.0 million), the remaining 20% minorityshare in Greenwich in 2006 (P=384.0 million), the remaining 15% share of Yonghe King in 2007(P=413.7 million), 100% of Hong Zhuang Yuan restaurant chain in PRC in 2008(P=2,600.0 million), 70% of Mang Inasal in 2010 (P=2,976.2 million), 100% of Chowking USoperations in 2011 (P=693.3 million), 40% of SJBF LLC, the parent company of the entitiescomprising the Smashburger business in US (P=4,812.8 million), including transaction costs in

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2015, the remaining 30% minority share each in Mang Inasal (P=2,000.0 million) and HBFPPL(P=514.9 million), acquisition of GSC (P=8.6 million) in 2016, the acquisition of additional 10%share in SuperFoods Group (P=2,712.7 million) in 2017, acquisition of the remaining 60% share inSJBF LLC (P=5,735.8 million) in 2018 and 80% of The Coffee Bean & Tea Leaf(P=17,163.0 million) in 2019.

The JFC Group plans to continue to make substantial acquisitions in the coming years. The JFCGroup uses its cash generated from operations to finance these acquisitions and capitalexpenditures. These limit the amount of cash dividends that it can declare and pay, making thelevel of the retained earnings higher than the paid-up capital stock.

On November 9, 2018, the BOD approved the following:

§ Release of previously appropriated retained earnings amounting to P=18,200.0 million as atSeptember 30, 2018 related to the completed projects in 2013 to 2018; and,

§ Appropriation of retained earnings amounting to P=20,000.0 million. Details are as follows:

Projects Timeline AmountCapital Expenditures 2019 - 2024 P=12,000,000Acquisition of Businesses 2019 - 2024 8,000,000

P=20,000,000

The unappropriated retained earnings of the Parent Company is also restricted to the extent ofcost of common stock held in treasury amounting to P=180.5 million as well as the undistributedretained earnings of its subsidiaries which amounted to P=1,715.4 million, P=3,063.9 million andP=3,525.2 million as at December 31, 2019, 2018 and 2017, respectively.

In relation with the Securities Regulation Code, below is the summary of the Parent Company’strack record of registration of securities.

Number ofShares

registered

Initialissue/offer

price

Number of holders of securities

Listing Date 2019 2018Common shares 75,000,000 P=9 July 14, 1993 3,004 3,023

20. Royalty, Set-up Fees and Others


2019

2018(As restated -

Note 2)

2017(As restated -

Note 2)Royalty fees P=8,477,040 P=7,043,891 P=5,614,447Set-up fees 471,711 546,909 424,217Service fees 381,188 489,359 380,149Scrap sales 89,367 109,658 199,077Rent income (see Notes 13

and 29) 58,493 24,992 27,219Other revenues 237,917 228,655 237,879

P=9,715,716 P=8,443,464 P=6,882,988

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The JFC Group has existing Royalty and Service Agreements with independent franchisees for thelatter to operate quick service restaurant outlets under the “Jollibee”, “Chowking”, “Greenwich”,“Red Ribbon”, “Mang Inasal”, “Yong He King”, “Hong Zhuang Yuan”, “Highlands Coffee”,“Pho 24”, “Smashburger” and “The Coffee Bean & Tea Leaf” concepts and trade names. Inconsideration thereof, the franchisees agree to pay set-up fees and monthly royalty fees equivalent toa certain percentage of the franchisees’ net sales.

The JFC Group’s franchisees pay service fees for various services, including repairs and maintenanceservices, rendered by the JFC Group’s personnel.

Other revenues pertain to delivery fees and other miscellaneous revenues earned by the JFC Group.

21. Direct Costs


2019

2018(As restated -

Note 2)

2017 (As restated -

Note 2)Cost of SalesCost of inventories P=85,405,049 P=74,995,446 P=62,725,504Personnel costs: Salaries, wages and other

employee benefits(see Note 25) 17,778,095 14,878,078 11,021,803

Pension expense(see Note 25) 189,336 190,272 168,059

Depreciation and amortization(see Notes 2, 12 and 29) 12,876,957 11,343,834 8,467,350

Contracted services 9,942,936 8,847,468 7,305,046Rent (see Notes 2 and 29) 4,466,414 4,700,223 4,429,587Electricity and other utilities 5,535,762 5,247,450 4,587,166Supplies 2,963,236 3,150,090 2,570,007Repairs and maintenance 2,001,413 1,578,608 1,218,581Security and janitorial 1,103,819 983,306 795,773Communication 341,033 289,677 227,195Professional fees 162,482 169,531 57,575Representation and entertainment 125,518 131,853 39,191Others 4,364,723 3,391,257 2,914,522

147,256,773 129,897,093 106,527,359Cost of ServicesAdvertising expense 3,001,108 2,523,492 2,036,535

P=150,257,881 P=132,420,585 P=108,563,894

Others consist mainly of delivery costs and insurance expenses.

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22. General and Administrative Expenses - Net


2019

2018 (As restated -

Note 2)

2017(As restated -

Note 2)Personnel costs: Salaries, wages and other

employee benefits(see Note 25) P=9,580,087 P=8,027,163 P=6,850,398

Stock options expense(see Notes 19 and 26) 262,875 311,964 227,483

Pension expense (see Note 25) 204,831 208,533 194,781Taxes and licenses 1,854,426 1,561,687 1,394,412Professional fees 1,213,054 1,018,320 825,264Transportation and travel 836,518 748,856 577,374Depreciation and amortization

(see Notes 2, 12, 14, 15 and 29) 596,289 541,918 460,874Contracted services 597,231 565,260 474,622Rent (see Notes 2 and 29) 522,230 586,982 516,717Impairment in value of: Property, plant and equipment

(see Note 12) 399,212 – 431,939Receivables (see Note 7) 25,342 10,188 143,772Inventories (see Note 8) 16,670 8,278 7,443Other assets – – 122,759

Repairs and maintenance 323,257 279,891 157,495Training 279,548 151,753 134,448Corporate events 215,376 234,865 192,187Membership and subscriptions 222,805 160,414 139,552Loss (gain) on retirements and

disposals of: Property, plant and equipment

and other intangible assets(see Notes 12 and 14) (278,318) 45,540 174,510

Investment properties(see Note 13) – – (231,036)

Communication 186,030 158,430 116,101Reversals of provision for

impairment on:Receivables (see Note 7) (91,402) (23,675) (20,705)

Property, plant and equipment(see Note 12) (29,179) (408,184) (2,111)

Inventories (see Note 8) (26,465) (6,148) (53,819)Donations 120,576 101,118 93,294Supplies 106,830 96,224 89,641Representation and entertainment 94,201 121,306 70,282Insurance 80,048 41,179 21,182Electricity and other utilities 71,749 72,095 55,806Association dues 42,338 69,569 51,994Security and janitorial 34,054 26,053 24,408Research and development and

others 1,424,369 751,040 688,308P=18,884,582 P=15,460,619 P=13,929,375

Others pertain to penalties on pre-termination of leases and other miscellaneous expenses.

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23. Interest Income (Expense) and Other Income (Expense)

2019

2018(As restated -

Note 2)

2017 (As restated -

Note 2)Interest incomeCash and cash equivalents and

short-term investments(see Note 6) P=273,022 P=313,273 P=149,298

Loans and advances (see Note 11) 85,985 55,523 77,120Accretion of interest on security

and other deposits andemployee car plan receivables(see Note 15) 33,564 46,589 33,149

Accretion of interest leasereceivables (see Note 29) 8,086 9,034 9,866

P=400,657 P=424,419 P=269,433

2019

2018(As restated -

Note 2)

2017 (As restated -

Note 2)Interest expenseAccretion of lease liabilities

(see Notes 2 and 29) (P=1,824,311) (P=1,728,620) (P=1,387,557)Long-term debt (see Note 18) (1,172,589) (888,216) (392,589)Short-term debt (see Note 18) (189,917) – –Accretion of customers’ deposits

(see Note 16) (481) (627) (13,231)(P=3,187,298) (P=2,617,463) (P=1,793,377)

2019

2018 (As restated -

Note 2)

2017 (As restated -

Note 2)Other income (expense)Gain from acquisition of a business

and re-measurement ofpreviously held interest(see Note 11) P=3,150,776 P=754,804 P=1,328,733

Write-off of liabilities 2,290,538 2,343,295 1,547,166Bank charges (404,958) (317,791) (165,348)Pre-termination of lease

agreements (see Note 2) 400,367 193,230 52,778Rebates and suppliers’ incentives 339,082 194,927 189,452Foreign exchange loss - net (268,155) (34,597) (63,535)Penalties and charges 65,826 62,467 69,610Charges to franchisees 24,556 24,679 18,979Other rentals 6,258 8,662 17,484

(Forward)

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2019

2018 (As restated -

Note 2)

2017 (As restated -

Note 2)Net unrealized gain (loss) on

financial assets at FVTPL(see Note 10) (P=1,640) P=9,980 P=–

Marked-to-market loss onderivatives (see Note 11) – (49,791) (129,371)

Reversal of impairment loss oninterest in an associate(see Note 11) – 16,660 –

Provisions (see Note 17) – – (794,609)Loss on divestment of subsidiaries

and interest in a joint venture(see Note 11) – – (116,207)

Insurance claims and others 143,021 136,003 180,515P=5,745,671 P=3,342,528 P=2,135,647

In the normal course of business, the JFC Group accrues liabilities based on management’s bestestimate of costs incurred, particularly in cases when the JFC Group has not yet received final billingsfrom suppliers and vendors. There are also ongoing negotiations and reconciliations with suppliersand vendors on certain liabilities recorded. These balances are continuously reviewed bymanagement and are adjusted based on these reviews, resulting to write-off of certain liabilities asother income.

24. Income Taxes

The JFC Group’s provision for current income tax consists of the following:

2019 2018 2017Final tax withheld on:

Royalty income P=1,750,140 P=1,512,611 P=1,260,352Interest income 30,914 39,153 16,349

RCIT:With itemized deduction 873,698 511,077 306,010

With Optional StandardDeduction (OSD) 195,044 473,240 369,839

MCIT 405,868 286,011 336,152Capital gains – – 21,928

P=3,255,664 P=2,822,092 P=2,310,630

RCIT consists of corporate income taxes from the JFC Group’s operations in the Philippines, PRC,USA and Vietnam.

For the years ended December 31, 2019 and 2018, Grandworth and RRBH, wholly-ownedsubsidiaries, elected to use OSD in computing for their taxable income. The net tax benefit from theavailment of OSD amounted to P=123.6 million and P=2.7 million for in 2019 and 2018, respectively.

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The components of the JFC Group’s recognized net deferred tax assets as at December 31 follow:

2019

2018(As restated -

Note 2)Deferred tax assets:

Lease liabilities P=7,055,657 P=7,766,064NOLCO:

Philippine-based entities 155,759 311,331PRC-based entities 110,960 190,154USA-based entities 608,903 45,976

Pension liability and other benefits 765,184 504,790Accrued expenses of USA-based entities 730,686 749,663Excess of MCIT over RCIT 654,418 614,580MSOP and ELTIP 531,568 1,312,022Unrealized foreign exchange loss 158,461 85,708

Accumulated impairment loss in value ofreceivables, inventories, property, plant andequipment and other nonfinancial assets 66,697 108,432

Unaccreted discount on security deposits andemployee car plan receivables 36,004 36,978

Unamortized past service costs 6,491 15,408Others 12,053 9,634

10,892,841 11,750,740Deferred tax liabilities:

Right-of-use assets 6,019,510 6,746,460Prepaid rent 155,549 4,685

Excess of fair value over book value ofidentifiable assets of acquired businesses 77,282 80,243

Unrealized foreign exchange gain 76,936 93,995State income taxes 47,343 49,157

Unaccreted discount on employee car planreceivables and security deposits 26,714 25,811

Operating lease receivables 22,576 18,087Deferred rent expense 15,225 19,316

Unrealized gain on change in fair value offinancial assets at FVTPL 2,444 1,192

6,443,579 7,038,946Deferred tax assets - net P=4,449,262 P=4,711,794

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The components of the JFC Group’s recognized net deferred tax liabilities as at December 31 follow:

2019

2018(As restated -


Lease liabilities P=4,388,629 P=2,711,783 Allowance for impairment loss on receivables

and inventories 79,590 85,494Pension liability and other benefits 56,045 57,494MSOP and ELTIP 5,665 27,639

Unaccreted discount on security deposits andemployee car plan receivables 837 3,180

Unamortized past service costs 378 3,436Unrealized foreign exchange loss 32 1,377

4,531,176 2,890,403Deferred tax liabilities: Excess of fair value over book value of

identifiable assets of acquired businesses 4,915,996 3,703,679Right-of-use assets 4,333,105 2,631,289Finance lease receivables 33,327 33,264

Unaccreted discount on employee car planreceivables, security and product securitydeposits 1,049 1,640

Unrealized foreign exchange gain 5 –Others 6,927 2,028

9,290,409 6,371,900Deferred tax liabilities - net P=4,759,233 P=3,481,497

The rollforward analysis of the net deferred tax assets and liabilities of the JFC Group follows:

2019

2018(As Restated -

Note 2)Balance at beginning of year, As previously reported P=810,743 P=2,719,818Effect of adoption of PFRS 16 (see Note 2) 419,554 378,152Balance at beginning of year, As restated 1,230,297 3,097,970Additions:

Arising from business combination (1,692,575) (1,697,082)Income tax effect to profit or loss (195,024) (141,975)

Income tax effect of remeasurements of netdefined benefit plan 252,873 (54,831)

Translation adjustments 94,458 26,215Balance at end of year (P=309,971) P=1,230,297

OSDThe availment of the OSD method also affected the recognition of several deferred tax assets andliabilities. Deferred tax assets and liabilities, for which the related income and expense are notconsidered in determining gross income for income tax purposes, are not recognized. This is becausethe manner by which the JFC Group expects to recover or settle the underlying assets and liabilities,for which the deferred tax assets and liabilities were initially recognized, would not result to any

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future tax consequence under the OSD method. Meanwhile, deferred tax assets and liabilities, forwhich the related income and expense are considered in determining gross income for income taxpurposes, are recognized only to the extent of their future tax consequence under the OSD method.Hence, the tax base of these deferred tax assets and liabilities is reduced by the 40% allowablededuction provided for under the OSD method.

Accordingly, the JFC Group’s deferred tax assets and liabilities, which were not recognized due tothe use of the OSD method, are as follows:

2019 2018Deferred tax assets:

Lease liabilities P=19,142 P=– Allowance for impairment loss on receivables

and nonfinancial assets 4,550 6,429 Unaccredited discount on financial

instruments and others 434 50424,126 6,933

Deferred tax liabilities:Operating lease receivables 22,218 4,963Right-of-use assets 15 –Others 391 359

22,624 5,322Deferred tax assets - net P=1,502 P=1,611

As at December 31, 2019, NOLCO and excess of MCIT over RCIT of the Philippine-based entitiesthat can be claimed as deductions from taxable income and income tax due, respectively, are asfollows:

Year Incurred/PaidCarryforwardBenefit up to NOLCO

Excess ofMCIT over

RCIT2019 December 31, 2022 P=1,279,864 P=350,8982018 December 31, 2021 185,873 413,4932017 December 31, 2020 218,874 336,8722016 December 31, 2019 1,037,769 179,133

2,722,380 1,280,396Write-off during the year (1,037,769) (179,133)

P=1,684,611 P=1,101,263

Deferred tax assets on temporary differences and carryforward benefits of NOLCO and excess ofMCIT over RCIT of the Philippine-based subsidiaries, which were not recognized as it is notprobable that taxable income will be sufficient against which they can be utilized, amounted toP=349.6 million and P=446.8 million, respectively, as at December 31, 2019 and P=121.4 million andP=314.9 million, respectively, as at December 31, 2018.

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The PRC enterprise income tax law provides that income tax rates are unified at 25%. As atDecember 31, 2019, NOLCO of the PRC-based entities that can be claimed as deductions fromtaxable income are as follows:

Year IncurredCarryforwardBenefit Up to Tax Losses

Deferred Taxat 25%

2019 December 31, 2024 P=53,716 P=13,4292018 December 31, 2023 43,346 10,8372017 December 31, 2022 40,612 10,1532016 December 31, 2021 212,213 53,0532015 December 31, 2020 237,227 59,3072014 December 31, 2019 227,219 56,805

814,333 203,584Utilized during the year (322,595) (80,649)Translation adjustments (47,898) (11,975)

P=443,840 P=110,960

As at December 31, 2019, NOLCO of the USA-based entities that can be claimed as deductions fromtaxable income are as follows:

Year Incurred Tax LossesDeferred Tax

at 21%2019 P=2,688,684 P=564,6242018 182,732 38,3742017 36,200 7,602

2,907,616 610,600Translation adjustments (8,078) (1,697)

P=2,899,539 P=608,903

NOLCO of USA-based entities has no prescription effective taxable year 2018.

The following are the movements in deferred tax assets on NOLCO of the JFC Group:

2019 2018Balance at beginning of year P=547,461 P=811,226Additions 733,812 50,221Utilized during the year (80,649) (253,376)Write-offs and expirations (311,331) (62,308)Translation adjustments (13,671) 1,698

P=875,622 P=547,461

The following are the movements in deferred tax assets on Excess of MCIT over RCIT of the JFCGroup:

2019 2018Balance at beginning of year P=614,580 P=531,431Additions 218,971 244,814Write-offs and expirations (179,133) (161,665)

P=654,418 P=614,580

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The net change in deferred tax liabilities recognized in equity amounted to P=252.9 million,(P=54.8 million) and (P=59.4 million) in 2019, 2018 and 2017, respectively.

The reconciliation of provision for income tax computed at the statutory income tax rates to provisionfor income tax as shown in the consolidated statements of comprehensive income are as follows:

2019

2018(As Restated -

Note 2)

2017(As Restated -

Note 2)Provision for income tax at

statutory income tax rate P=2,845,067 P=3,096,511 P=2,422,785Income tax effects of: Effect of different tax rate for

royalty and interestincome (887,556) (772,025) (638,351)

Nontaxable income (483,150) (481,576) (313,827) Net movement in

unrecognized DTA 888,650 285,963 (28,325) Expired/written off NOLCO

and excess of MCIT overRCIT 490,463 163,221 156,321

Intrinsic value of stockoptions exercised (261,013) (153,891) (323,503)

Nondeductible expenses 95,678 107,152 35,754 Tax effect of MSOP and

ELTIP 108,357 (49,104) (175,401) Difference between OSD and

itemized deductions (123,565) (2,723) 12,621 Effect of different tax rates

for capital gains tax – (1,497) (47,382)Others 387,709 488,086 482,238

P=3,060,640 P=2,680,117 P=1,582,930

Provision for current income tax of foreign entities operating in the United States, PRC andSingapore amounted to P=120.8 million, P=56.5 million and P=31.5 million, respectively, in 2019 andP=41.0 million, P=147.4 million and P=1.2 million, respectively, in 2018 and P=55.1 million,P=119.3 million and P=2.3 million, respectively, in 2017.

For Philippine-based entities, Republic Act (RA) No.10963 or the Tax Reform for Acceleration andInclusion Act (TRAIN) was signed into law on December 19, 2017 and took effect on January 1,2018. Although the TRAIN changes existing tax law and includes several provisions that willgenerally affect businesses on a prospective basis, the management assessed that the same did nothave any significant impact on the consolidated financial statement balances as of the reporting date.

For US-based entities, Tax Cuts and Jobs Act (the US Tax Reform) was signed into law onDecember 22, 2017, making the new law enacted by that date under Philippine Financial ReportingStandards (PFRSs) and therefore applicable as of the reporting date. The US Tax Reform resulted inthe re-measurement of deferred tax assets and liabilities as a result of the change in the corporateincome tax rate from 35% to 21%. The US-based entities recognized net deferred tax liabilitiesamounting to P=2,375.5 million and P=1,650.9 million as at December 31, 2019 and 2018, respectively.

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25. Pension Liability

Defined Benefit PlanThe Parent Company and certain Philippine-based subsidiaries have funded, independently-administered, non-contributory defined benefit pension plan covering all permanent employees. Thebenefits are based on the employees’ projected salaries and number of years of service.

The funds are administered by trustee banks. Subject to the specific instructions provided in writing,the Parent Company and certain Philippine-based subsidiaries direct the trustee banks to hold, investand reinvest the funds and keep the same invested, in its sole discretion, without distinction betweenprincipal and income in, but not limited to, certain cash and other short-term deposits, investments ingovernment and corporate debt securities and quoted equity securities.

Under the existing regulatory framework, Republic Act No. 7641 requires a provision for retirementpay to qualified private sector employees in the absence of any retirement plan in the entity, providedhowever that the employees’ retirement benefits under any collective bargaining and otheragreements shall not be less than those provided under the law. The law does not require minimumfunding of the plan.

The following tables summarize the components of pension expense, included under “Cost of sales”and “General and administrative expenses” accounts in the consolidated statements of comprehensiveincome and pension liability in the consolidated statements of financial position, which are based onactuarial valuations.

Changes in pension liability of the JFC Group in 2019 are as follows:

Present Valueof Defined

BenefitObligation

Fair Valueof Plan Assets

PensionLiability

At January 1, 2019 P=3,484,946 P=2,164,300 P=1,320,646Pension expense (see Notes 21

and 22):Current service cost 270,535 – 270,535Net interest 251,452 151,420 100,032Past service cost – – –Settlement loss 23,600 – 23,600

545,587 151,420 394,167Benefits paid (198,182) (198,182) –Settlement paid (133,226) (133,226) –Remeasurements in other

comprehensive income: Return on plan assets (excluding

amount included in netinterest) – 126,830 (126,830)

Actuarial changes arising fromchanges in financialassumptions 444,835 – 444,835

(Forward)

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BenefitObligation


PensionLiability

Actuarial changes due toexperience adjustment P=528,344 P=– P=528,344

Actuarial changes due todemographic adjustment 63,920 – 63,920

1,037,099 126,830 910,269Contributions – 401,554 (401,554)Transferred out - net (2,208) – (2,208)At December 31, 2019 P=4,734,016 P=2,512,696 P=2,221,320

Changes in pension liability of the JFC Group in 2018 are as follows:


BenefitObligation


PensionLiability

At January 1, 2018 P=3,574,277 P=2,084,731 P=1,489,546Pension expense (see Notes 21

and 22):Current service cost 290,935 – 290,935Net interest 211,958 123,693 88,265Past service cost 15,851 – 15,851Settlement loss 3,754 – 3,754

522,498 123,693 398,805Benefits paid (150,925) (150,925) –Settlement paid (28,400) (28,400) –Remeasurements in other

comprehensive income: Return on plan assets (excluding

amount included in netinterest) – (223,899) 223,899

Actuarial changes arising fromchanges in financialassumptions (485,586) – (485,586)

Actuarial changes due toexperience adjustment 68,003 – 68,003

Actuarial changes due todemographic adjustment (14,921) – (14,921)

(432,504) (223,899) (208,605)Contributions – 359,100 (359,100)At December 31, 2018 P=3,484,946 P=2,164,300 P=1,320,646

The maximum economic benefit available is a combination of expected refunds from the plan andreductions in future contributions.

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The following table presents the carrying amounts, which approximate the estimated fair values, ofthe assets of the plan:

2019 2018Cash and cash equivalents P=44,913 P=638,046Investments in government and corporate debt

securities 2,049,972 1,043,573Investments in quoted equity securities:

Holding firms 207,530 186,312Property 135,221 110,603Banks 118,411 105,906Food and beverage 42,523 51,292Telecommunications 16,986 25,688Electricity, energy, power and water 18,383 26,223Others 46,618 35,772

Interest and dividends receivable 29,029 15,851Fund liabilities (see Note 27) (196,890) (74,966)

P=2,512,696 P=2,164,300

The plan assets consist of the following:

§ Investments in government securities which consist of retail treasury bonds that bear interestranging from 3.24%-7.38% and have maturities from August 2020 to October 2037 and fixed-ratetreasury notes that bear interest ranging from 5.75%-8.5% and have maturities fromFebruary 2020 to November 2032.

§ Investments in debt securities consist of long-term corporate bonds in the property sector, whichbear interest ranging from 5.13%-6.30% maturing from March 2024 to October 2026.

§ Investments in equity securities consist of investments in listed equity securities, including equitysecurities of the Parent Company, for certain retirement plans of the JFC Group (see Note 27).

§ Other financial assets held by the retirement plan are primarily accrued interest income on cashand cash equivalents, debt instruments and other securities.

Pension expense as well as the present value of the pension liability are determined using actuarialvaluations. The actuarial valuation involves making various assumptions. The principal assumptionsused in determining pension expense and liability for the defined benefit plans are shown below:

December 31,2019

December 31,2018

December 31,2017

Discount rate 4.9% – 5.5% 7.40% – 7.80% 5.90% – 6.30%Salary increase rate 6.00% 6.00% 6.00%

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The sensitivity analysis below has been determined based on reasonably possible changes of eachsignificant assumption on the present value of the defined benefit obligation as at the end of thereporting period, assuming all other assumptions were held constant:

Increase(Decrease)

Philippine Plan2019 2018 2017

Discount rates +0.50% (P=636,924) (P=196,313) (P=142,506)-0.50% 777,116 111,323 195,703

Future salary increases +0.50% 773,398 112,745 194,789-0.50% (636,797) (198,792) (143,116)

Shown below is the maturity analysis of the undiscounted benefit payments as at December 31:

2019 2018Less than 1 year P=822,626 P=797,550More than 1 year to 5 years 1,357,711 1,078,936More than 5 years to 10 years 2,599,074 2,408,837More than 10 years to 15 years 3,135,585 2,880,848More than 15 years to 20 years 3,418,491 2,956,666More than 20 years 11,479,469 10,074,315

The Parent Company and certain Philippine-based subsidiaries do not have a formal asset-liabilitymatching strategy. The overall investment policy and strategy of the retirement plans is based on theclient suitability assessment, as provided by trustee banks, in compliance with the BSP requirements.Nevertheless, the Parent Company and certain Philippine-based subsidiaries ensure that there will besufficient assets to pay the retirement benefits as they fall due while attempting to mitigate the variousrisks of the plans.

The plan assets are primarily exposed to financial risks such as liquidity risk and price risk. Liquidityrisk pertains to the plans’ ability to meet obligation to the employees upon retirement. To effectivelymanage liquidity risk, the trustee banks maintain assets in cash and short-term deposits. Price riskpertains mainly to fluctuation in market prices of the retirement funds’ marketable securities. In orderto effectively manage price risk, the trustee banks continuously assess these risks by closelymonitoring the market value of the securities and implementing prudent investment strategies.

The Parent Company and certain Philippine-based subsidiaries expect to contribute P=823.0 million tothe defined benefit pension plans in 2020.

The average duration of the defined benefit obligation is 10 years as at December 31, 2019 and 2018.

Defined Contribution PlanThe employees of the PRC-domiciled of the JFC Group are members of a state-managed pensionbenefit scheme operated by the national government. These subsidiaries are required to contribute aspecified percentage of their payroll costs to the pension benefit scheme to fund the benefits. Theonly obligation of these subsidiaries with respect to the pension benefit scheme is to make thespecified contributions.

Pension expense under the defined contribution plan amounted to P=506.7 million, P=595.5 million andP=569.8 million in 2019, 2018 and 2017, respectively (see Notes 21 and 22).

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26. Stock Options Plan

Senior Management Stock Option and Incentive PlanOn January 10, 2017 and December 17, 2002, the SEC approved the exemption requested by the JFCGroup on the registration requirements of 31,500,000 and 101,500,000 options, respectively,underlying the Parent Company’s common shares to be issued pursuant to the JFC Group’s SeniorManagement Stock Option and Incentive Plan (the Plan). The Plan covers selected key members ofmanagement of the JFC Group and designated affiliated entities.

The Plan is divided into two programs, namely, the Management Stock Option Program (MSOP) andthe Executive Long-term Incentive Program (ELTIP). The MSOP provides a yearly stock optiongrant program based on company and individual performance while the ELTIP provides stockownership as an incentive to reinforce entrepreneurial and long-term ownership behavior of executiveparticipants.

MSOP. The MSOP is a yearly stock option grant program open to members of the seniormanagement committee of the JFC Group and members of the management committee, key talentsand designated consultants of some of the business units.

Each MSOP cycle refers to the period commencing on the MSOP grant date and ending on the lastday of the MSOP exercise period. Vesting is conditional on the employment of the employee-participants in the JFC Group within the vesting period. The options will vest at the rate of one-thirdof the total options granted on each anniversary of the MSOP grant date until the third anniversary.

The exercise price of the stock options is determined by the JFC Group with reference to prevailingmarket prices over the three months immediately preceding the date of grant for the 1st up to the 7thMSOP cycle. Starting with the 8th MSOP cycle, the exercise price of the option is determined by theJFC Group with reference to the market closing price at date of grant.

The options will vest at the rate of one-third of the total options granted from the start of the grantdate on each anniversary date which will start after a year from the grant date. For instance, under the1st MSOP cycle, the Compensation Committee of the JFC Group granted 2,385,000 options toeligible participants on July 1, 2004. One-third of the options granted, or 795,000 options, vested andmay be exercised starting July 1, 2005. The exercise period for the 1st MSOP cycle was untilJune 30, 2012. From July 1, 2005 to September 25, 2019, the Compensation Committee grantedseries of MSOP grants under the 2nd to 16th MSOP cycle to eligible participants. Under the mostrecent grant (September 25, 2019), the 16th MSOP cycle, the Compensation Committee granted2,222,300 options. These options vest similar to the 1st MSOP cycle.

The options under MSOP expire eight years after grant date. The 1st, 2nd, 3rd 4th, 5th, 6th, 7th and8th MSOP cycles expired on June 30, 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019,respectively.

The JFC Group does not pay cash as a form of settlement.

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The movements in the number of stock options outstanding under MSOP and related weightedaverage exercise prices (WAEP) for the years ended December 31, 2019, 2018 and 2017 follow:

2019 2018 2017Number of

Options WAEPNumber of


Options WAEPTotal options granted at beginning

of year 50,492,844 P=111.92 47,184,794 P=102.59 42,986,294 P=92.47Options granted during the year 2,222,300 219.00 3,308,050 245.00 4,198,500 206.20Total options granted at end of

year 52,715,144 P=116.43 50,492,844 P=111.92 47,184,794 P=102.59

Outstanding at beginning of year 17,613,253 P=193.07 16,780,550 P=176.63 15,256,198 P=159.46Options granted during the year 2,222,300 219.00 3,308,050 245.00 4,198,500 206.20Options exercised during the year (1,696,402) 139.16 (2,234,849) 145.31 (2,672,040) 110.35Options forfeited during the year (234,003) 270.75 (240,498) 204.03 (2,108) 213.28Outstanding at end of year 17,905,148 P=200.38 17,613,253 P=193.07 16,780,550 P=176.63

Exercisable at end of year 12,077,981 P=188.14 10,612,036 P=169.70 9,688,683 P=151.94

The weighted average share price of the Parent Company’s common shares is P=264.79, P=278.16 andP=222.86 in 2019, 2018 and 2017, respectively. The weighted average remaining contractual life forthe stock options outstanding is 4.62 years, 4.48 years and 5.21 years as at December 31, 2019, 2018and 2017, respectively.

The weighted average fair value of stock options granted in 2019, 2018 and 2017 is P=48.07, P=58.42and P=29.88, respectively. The fair value of share options as at the date of grant is estimated using theBlack-Scholes Option Pricing Model, taking into account, the terms and conditions upon which theoptions were granted. The option style used for this plan is the American style because the optionplan allows exercise before the expiry date.

The inputs in the valuation of the options granted on the dates of grant for each MSOP cycle areshown below:

MSOPCycle Year of Grant

DividendYield

ExpectedVolatility

Risk-freeInterest

Rate

ExpectedLife of

the Option

Stock Priceon Grant

DateExercise

Price1st 2004 1.72% 36.91% 6.20% 5-7 years P=24.00 P=20.002nd 2005 1.72% 36.91% 6.20% 5-7 years 29.00 27.503rd 2006 1.72% 36.91% 6.20% 5-7 years 35.00 32.324th 2007 1.70% 28.06% 6.41% 3-4 years 52.50 50.775th 2008 1.80% 26.79% 8.38% 3-4 years 34.00 39.856th 2009 2.00% 30.37% 5.28% 3-4 years 48.00 45.457th 2010 2.00% 29.72% 5.25% 3-4 years 70.00 57.778th 2011 2.00% 34.53% 4.18% 3-4 years 89.90 89.909th 2012 2.00% 28.72% 3.50% 3-4 years 107.90 107.9010th 2013 2.00% 29.38% 2.68% 3-4 years 145.00 145.0011th 2014 2.00% 24.87% 2.64% 3-4 years 179.80 179.8012th 2015 2.00% 18.94% 2.98% 3-4 years 180.00 180.0013th 2016 2.00% 17.76% 2.63% 3-4 years 236.00 236.0014th 2017 2.00% 16.70% 3.92% 3-4 years 206.20 206.2015th 2018 2.00% 28.98% 4.95% 3-4 years 245.00 245.0016th 2019 2.00% 27.65% 4.18% 3-4 years 219.00 219.00

The expected life of the stock options is based on historical data and current expectations and is notnecessarily indicative of exercise patterns that may occur. The expected volatility reflects theassumption that the historical volatility over a period similar to the life of the options is indicative offuture trends, which may also not necessarily be the actual outcome.

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ELTIP. The ELTIP entitlement is given to members of the senior management committee anddesignated consultants of the JFC Group.

Each ELTIP cycle refers to the period commencing on the ELTIP entitlement date and ending on thelast day of the ELTIP exercise period. Actual grant and vesting are conditional upon achievement ofthe JFC Group’s medium to long-term goals and individual targets in a given period, and theemployment of the employee-participants in the JFC Group within the vesting period. If the goals areachieved, the options will be granted. For the 3rd ELTIP cycle, a percentage of the options to begranted are based on the percentage of growth in annual earnings per share such that 100%, 50% or25% of the options granted when percentage of growth in annual earnings per share are 12% andabove, 10% to less than 12% or 8% to less than 10%, respectively. For the 4th ELTIP cycle, thepercentage of the options to be granted and the targeted percentage of growth in annual earnings pershare have been further revised such that 150%, 100% or 50% of the options granted whenpercentage of growth in annual earnings per share are 15% and above, 12% to less than 15% or 10%to less than 12%, respectively.

The exercise price of the stock options under ELTIP is determined by the JFC Group with referenceto prevailing market prices over the three months immediately preceding the date of entitlement forthe first and second ELTIP cycles. Starting with the 3rd ELTIP cycle, the exercise price of the optionis determined by the JFC Group with reference to the closing market price as at the date ofentitlement.

The options will vest at the rate of one-third of the total options granted on each anniversary datewhich will start after the goals are achieved. For instance, on July 1, 2004, the CompensationCommittee gave an entitlement of 22,750,000 options under the 1st ELTIP cycle to eligibleparticipants. One-third of the options granted, or 7,583,333 options, vested and were exercisedstarting July 1, 2007 until June 30, 2012. On July 1, 2008, October 19, 2012, August 25, 2015 andJanuary 3, 2018, entitlement to 20,399,999, 24,350,000, 11,470,000 and 9,290,000 options weregiven to eligible participants under the 2nd, 3rd, 4th and 5th ELTIP cycles, respectively. The 1st and2nd ELTIP cycles expired on June 30, 2012 and April 30, 2017, respectively. The stock optionsgranted under the 3rd and 4th ELTIP cycles will expire in 2020 and 2023, respectively.

The JFC Group does not pay cash as a form of settlement.

The movements in the number of stock options outstanding for the 3rd to 4th ELTIP cycles andrelated WAEP for the years ended December 31, 2019, 2018 and 2017 follow:

2019 2018 2017Number of



Options WAEPTotal options granted at beginning

and end of year 78,969,999 P=74.58 78,969,999 P=74.58 78,969,999 P=74.58

Outstanding at beginning of year 18,630,000 P=120.55 27,436,666 P=136.35 35,118,896 P=122.65Options exercised during the year (3,238,299) 107.47 (1,323,333) 111.99 (7,682,230) 73.69Options forfeited during the year (23,333) 180.00 (7,483,333) 180.00 − −Outstanding at end of year 15,368,368 P=123.22 18,630,000 P=120.55 27,436,666 P=136.35

Exercisable at end of year 13,895,035 P=117.20 15,683,333 P=109.38 15,966,666 P=105.00

The weighted average remaining contractual life for the stock options outstanding is 1.06 years, 2.07years and 3.59 years as at December 31, 2019, 2018 and 2017, respectively.

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The fair value of stock options granted is P=26.13 in 2015. There were no additional stock optiongrants under ELTIP in 2019, 2018 and 2017. The fair value of share options as at the date of grant isestimated using the Black-Scholes Option Pricing Model, taking into account the terms andconditions upon which the options were granted. The option style used for this plan is the Americanstyle because this option plan allows exercise before the maturity date.

The inputs to the model used for the options granted on the dates of grant for each ELTIP cycle areshown below:

ELTIP Cycle Year of GrantDividend

YieldExpectedVolatility

Risk-freeInterest Rate

Expected Life of

the Option

Stock Priceon Grant

DateExercise

Price1st 2004 1.72% 36.91% 6.20% 5 years P=24.00 P=20.002nd 2008 1.80% 26.79% 8.38% 3-4 years 34.00 39.853rd 2012 2.00% 28.74% 3.60% 3-4 years 105.00 105.004th 2015 2.00% 18.94% 2.98% 3-4 years 180.00 180.00


The cost of the stock options expense charged to operations for both MSOP and ELTIP in the“General and administrative expenses” account amounted to P=262.9 million, P=312.0 million andP=227.5 million in 2019, 2018 and 2017, respectively (see Notes 19 and 22). Correspondingly, acredit was made to additional paid-in-capital (see Note 19).

27. Related Party Transactions

The JFC Group has transactions with related parties. Enterprises and individuals that directly, orindirectly through one or more intermediaries, control or are controlled by, or under common controlwith the JFC Group, including holding companies, subsidiaries and fellow subsidiaries are relatedentities of the JFC Group. Individuals owning, directly or indirectly, an interest in the voting powerof the JFC Group that give them significant influence over the enterprise; key management personnel,including directors and officers of the JFC Group, and close members of the family of theseindividuals and companies associated with these individuals also constitute related parties.

Compensation of Key Management Personnel of the JFC GroupThe aggregate compensation and benefits to key management personnel of the JFC Group in 2019,2018 and 2017 are as follows:

2019 2018 2017Salaries and short-term benefits P=1,265,771 P=1,221,283 P=1,107,515Stock options expense

(see Notes 22 and 26) 262,875 311,964 227,483Net pension expense 124,114 106,756 65,075Employee car plan and other

long-term benefits 54,728 58,859 48,948P=1,707,488 P=1,698,862 P=1,449,021

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Transactions with the Retirement PlansAs at December 31, 2019 and 2018, certain retirement funds of the JFC Group include investment inequity securities of the Parent Company with details as follows:

2019 2018Number of shares 151,810 144,740

Market value P=32,791 P=42,694Cost 11,564 9,860Unrealized gain P=21,227 P=32,834

The JFC Group’s receivable from the retirement fund amounted to P=193.6 million andP=72.8 million as at December 31, 2019 and 2018, respectively (see Note 25). The receivable arosefrom benefit payments made by the JFC Group for and in behalf of the retirement plans. Thereceivable is noninterest-bearing.

Terms and Conditions of Transactions with other Related PartiesTransactions with related parties are made at market prices and are normally settled in cash. The JFCGroup has approval process and established limits when entering into material related partytransactions. Other related party transactions between entities under the JFC Group are eliminated inthe consolidation process.

28. Earnings Per Share

Basic and diluted EPS are computed as follows:

2019

2018(As restated -

Note 2)

2017(As restated -

Note 2)(In Thousand pesos, except for shares data and EPS)

(a) Net income attributable to the equityholders of the Parent Company P=6,432,434 P=8,212,608 P=6,939,577

(b) Weighted average number of shares -basic 1,092,593,583 1,087,093,411 1,080,488,873

Weighted average number of sharesoutstanding under the stockoptions plan 32,334,237 34,865,233 32,366,508

Weighted average number of sharesthat would have been purchasedat fair market value (19,781,303) (18,607,619) (18,180,717)

(c) Adjusted weighted average shares -diluted 1,105,146,517 1,103,351,025 1,094,674,664

EPSBasic (a/b) P=5.887 P=7.555 P=6.423Diluted (a/c) 5.820 7.443 6.340

Potential common shares for stock options under the 15th MSOP cycle were not included in thecalculation of the diluted EPS in 2019 because they are antidilutive.

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29. Leases

JFC Group as LesseeThe JFC Group has lease contracts for QSR outlets, warehouses and office spaces. Leases of QSRoutlets and warehouse generally have lease terms between three (3) to 20 years. The JFC Group’sobligations under its leases are secured by the lessor’s title to the leased assets. Generally, the JFCGroup is restricted from assigning and subleasing the leased assets. There are several lease contractsthat include extension and termination options and variable lease payments, which are furtherdiscussed below.

The JFC Group also has certain leases of QSR outlets with lease term of 12 months or less. The JFCGroup applies the ‘short-term lease’ recognition exemptions for these leases.

Set out below are the carrying amounts of right-of-use assets recognized and the movements duringthe period:

QSR Outlets Warehouses Office Space TotalAs at January 1, 2018, As restated

(see Note 2) P=24,653,160 P=601,851 P=69,367 P=25,324,378Acquisition of a business (see Note 11) 10,102,337 – – 10,102,337Additions 7,345,423 162,114 95,110 7,602,647Pre-termination (795,650) – – (795,650)Depreciation expense

(see Notes 2, 21 and 22) (5,896,464) (93,393) (31,527) (6,021,384)Cumulative translation adjustments 346,688 5,226 – 351,914As at December 31, 2018,

As restated (see Note 2) 35,755,494 675,798 132,950 36,564,242Additions 4,960,468 43,880 22,333 5,026,681Acquisition of a business (see Note 11) 12,147,693 – 2,614 12,150,307Pre-termination (2,533,032) (4,285) – (2,537,317)Depreciation expense

(see Notes 2, 21 and 22) (7,024,659) (103,818) (36,326) (7,164,803)Cumulative translation adjustments (1,129,112) (2,557) (23) (1,131,692)As at December 31, 2019 P=42,176,852 P=609,018 P=121,548 P=42,907,418

Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans andborrowings) and the movements during the period:

2019

2018(As restated -

Note 2)As at January 1 P=40,630,789 P=28,682,918Acquisition of a business (see Note 11) 12,472,792 10,308,436Additions 4,998,947 7,513,119Pre-termination (2,934,354) (902,982)Accretion of interest (see Note 23) 1,824,311 1,728,620Payments (8,419,749) (6,979,019)Cumulative translation adjustments (1,265,332) 279,697As at December 31 P=47,307,404 40,630,789

Current P=7,036,754 P=5,743,062Noncurrent 40,270,650 34,887,727

The maturity analysis of lease liabilities are disclosed in Note 31.

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The following are the amounts recognized in profit or loss:

2019 2018 2017Depreciation expense of

right-of-use assets(see Notes 2, 21 and 22) P=7,164,803 P=6,021,384 P=4,191,960

Interest expense on lease liabilities 1,824,311 1,728,620 1,387,557Rent expense - short-term leases

(see Notes 21 and 22) 2,850,568 2,861,424 2,888,536Rent expense - variable lease

payments (see Notes 21 and 22) 2,138,076 2,425,781 2,057,768P=13,977,758 P=13,037,209 P=10,525,821

The JFC Group had total cash outflows for leases of P=13,408.4 million and P=12,266.2 million in 2019and 2018, respectively.

JFC Group as LessorThe JFC Group entered into commercial property leases for its investment property units. Theseleases have terms of between three (3) and 20 years. Leases generally include a clause to enableupward revision of the rent charges on an annual basis based on prevailing market conditions.

Rent income recognized on a straight-line basis amounted to P=58.5 million, P=25.0 million andP=27.2 million in 2019, 2018 and 2017, respectively (see Note 20). The difference of rent incomerecognized under the straight-line method and the rent amounts in accordance with the terms of thelease are included under “Operating lease receivables” which amounted to P=98.7 million,P=64.3 million and P=157.8 million as at December 31, 2019, 2018 and 2017, respectively.

The future minimum lease receivables under noncancellable operating leases as at December 31 areas follows:

2019 2018 2017Within one year P=61,612 P=63,062 P=174,333After one year but not more than

five years 236,607 253,908 500,520More than five years 65,725 33,271 163,067

P=363,944 P=350,241 P=837,920

JFC Group as an Intermediate LessorThe JFC Group subleases certain parcels of land with lease terms between 5 to 20 years. The leasecontracts contain renewal options under terms and conditions that are mutually agreed upon by theparties.

Set out below are the carrying amounts of finance lease receivables and the movements during theperiod:

2019 2018At January 1 P=184,800 P=204,698Accretion of interest (see Note 23) 8,086 9,034Payments (30,952) (28,932)As at December 31 P=161,934 P=184,800

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Shown below is the maturity analysis of the undiscounted finance lease receivables:

2019 20181 year P=33,388 P=30,951more than 1 year to 5 years 144,678 168,142more than 5 years 5,198 15,123

30. Contingencies

The JFC Group is involved in litigations, claims and disputes which are normal to its business.Management believes that the ultimate liability, if any, with respect to these litigations, claims anddisputes will not materially affect the financial position and financial performance of the JFC Group.Thus, other than the provisions in Note 17, there were no other provisions made for contingencies.

The JFC Group does not provide further information on these provisions and contingencies in ordernot to impair the outcome of the litigations, claims and disputes.

31. Financial Risk Management Objectives and Policies

The JFC Group is exposed to a variety of financial risks from its operating, investing and financingactivities. The JFC Group’s risk management policies focus on actively securing the JFC Group’sshort-term to medium-term cash flows by minimizing the exposure to financial markets.

The JFC Group’s principal financial instruments comprise of cash and cash equivalents, short-terminvestments, receivables, short-term and long-term debts. The main purpose of these financialinstruments is to obtain financing for the JFC Group’s operations. The JFC Group has other financialassets and liabilities such as security and other deposits, finance lease receivables, operating leasereceivables, lease liabilities and trade payables and other current liabilities (excluding accrual forlocal and other taxes, liabilities to government agencies and unearned revenue from gift certificates)which arise directly from its operations and financial assets at FVTPL.

The main risks arising from these financial instruments are interest rate risk, foreign currency risk,credit risk and liquidity risk. The risk management policies reviewed regularly by the ParentCompany’s BOD and management for managing each of these risks are summarized as follows:

Interest Rate RiskInterest rate risk arises from the possibility that the fair value or future cash flows of financialinstruments will fluctuate because of changes in market interest rates.

The JFC Group’s exposure to interest rate risk relates primarily to short-term and long-term debtswith floating interest rates. Floating rate financial instruments are subject to cash flow interest raterisk. The JFC Group’s interest rate exposure management policy centers on reducing the JFCGroup’s overall interest expense and exposure to changes in the interest rates.

To manage the interest rate risk related to the JFC Group’s long-term debts, the JFC Group used aderivative instrument to fix the interest rate over the term of one of its long-term debts(see Note 18). With the JFC Group's Corporate Planning Team, it enters into loan contracts withvariable interest rates and option to fix interest rates which can be availed to manage its loan risks.

There is minimal exposure on the other sources of the JFC Group’s interest rate risk. These othersources are from the JFC Group’s cash in banks, short-term deposits and short-term investments.

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The following tables demonstrate the sensitivity to a reasonably possible change in interest rates, withall other variables held constant, of the JFC Group’s income before income tax as at December 31,2019 and 2018. The impact on the JFC Group’s income before income tax is due to changes in thefair value of floating interest rates.

Long-term Debt with Floating Interest Rates

Increase/Decrease

in Basis Points

Effect in Profit or LossBefore Income Tax

2019 2018 2017PHP +100 (161,228) (188,907) (80,599)

-100 161,228 188,907 80,599

USD +100 (55,802) (67,688) (64,245)-100 55,802 67,688 64,245

VND +100 (8,928) (6,068) (4,167)-100 8,928 6,068 4,167

The assumed movement in basis point for interest rate sensitivity analysis is based on the currentlyobservable market environment.

Foreign Currency RiskThe JFC Group’s exposure to foreign currency risk arises from the Parent Company’s investmentsoutside the Philippines, which are mainly in PRC and USA. The net assets of foreign businessesaccount for only 5.0% and 6.1% of the consolidated net assets of the JFC Group as atDecember 31, 2019 and 2018, respectively.

The JFC Group also has transactional foreign currency exposures. Such exposure arises from the JFCGroup’s Philippine operations’ cash and cash equivalents, receivables and trade payables in foreigncurrencies.

The following table shows the JFC Group’s Philippine operations’ foreign currency-denominatedmonetary assets and liabilities and their peso equivalents as at December 31:

2019 2018

USDPHP

Equivalent USDPHP

EquivalentForeign currency denominated assets:

Cash and cash equivalents 17,022 861,884 71,661 3,767,938Receivables 11,063 560,160 9,014 473,955

28,085 1,422,044 80,675 4,241,893Foreign currency denominated

liability -Accounts payable - trade (4,020) (203,576) (4,929) (259,177)

Foreign currency denominated assets- net 24,065 1,218,468 75,746 3,982,716

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Foreign Currency Risk Sensitivity AnalysisThe JFC Group has recognized in profit or loss, a net foreign exchange loss of P=268.2 million,P=34.6 million and P=63.5 million in 2019, 2018 and 2017, respectively (see Note 23), included under“Other income” account. This resulted from the movements of the Philippine peso against the USDas shown in the following table:

December 31, 2019 50.64December 31, 2018 52.58December 31, 2017 49.93

The following table demonstrates the sensitivity to a reasonably possible change in USD to Philippinepeso exchange rate, with all other variables held constant, of the JFC Group’s income before incometax (due to changes in the fair value of monetary assets and liabilities) as at December 31:

2019 2018

Appreciation (Depreciation)of P= against Foreign Currency

Effect onIncomebefore

IncomeTax

Effect onEquitybefore

Income Tax

Effect onIncomebefore

IncomeTax

Effect onEquitybefore

Income TaxUSD 1.50 (P=36,096) (P=36,096) (P=113,619) (P=113,619)

(1.50) 36,096 36,096 113,619 113,6191.00 (24,065) (24,065) (75,746) (75,746)

(1.00) 24,065 24,065 75,746 75,746

Credit RiskCredit risk is the risk that a customer or counterparty fails to fulfill its contractual obligations to theJFC Group. This includes risk of non-payment by borrowers, failed settlement of transactions anddefault on outstanding contracts.

The JFC Group has a strict credit policy. Its credit transactions are with franchisees and customersthat have gone through rigorous screening before granting them the franchise. The credit terms arevery short, while deposits and advance payments are also required before rendering the services ordelivering the goods, thus, mitigating the possibility of non-collection. In cases of non-collection,defaults of the debtors are not tolerated; the exposure is contained the moment a default occurs andtransactions that will further increase the exposure of the JFC Group are discontinued.

The JFC Group has no significant concentration of credit risk with counterparty. The JFC Group’sfranchisee profile is such that no single franchisee accounts for more than 5% of the total system widesales of the JFC Group.

The aging analysis of financial assets as at December 31, 2019 and 2018 are as follows:2019

Neither PastDue nor Past Due but not Impaired (Age in Days)

Total Impaired 1-30 31-60 61-120 Over 120 ImpairedFinancial Assets at Amortized Cost (In Millions)Cash and cash equivalents* P=20,515.1 P=20,515.1 P=– P=– P=– P=– P=–Short-term investments 2,130.0 2,130.0 – – – – –Receivables: Trade 5,348.9 3,753.9 433.6 139.4 124.6 505.0 392.4

Employee car plan receivables** 216.7 216.7 – – – – –Advances to employees 175.4 175.4 – – – – –

Other receivables*** 215.2 41.0 1.7 2.2 3.2 167.1 –

(Forward)

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2019Neither Past

Due nor Past Due but not Impaired (Age in Days)Total Impaired 1-30 31-60 61-120 Over 120 Impaired

Operating lease receivables P=98.7 P=98.7 P=– P=– P=– P=– P=–Finance lease receivables 161.9 161.9 – – – – –Other noncurrent assets -

Security and other deposits** 3,210.8 3,210.8 – – – – –32,072.7 30,303.5 435.3 141.6 127.8 672.1 392.4

Financial Assets at FVTPL 38.2 38.2 – – – – –P=32,110.9 P=30,341.7 P=435.3 P=141.6 P=127.8 P=672.1 P=392.4

*Excluding cash on hand amounting to P=376.9 million. **Including noncurrent portion of employee car plan receivables and security and other deposits.***Including interest receivable and excluding receivables from government agencies amounting to P=62.7 million.

2018 (As restated)Neither Past

Due nor Past Due but not Impaired (Age in Days)Total Impaired 1-30 31-60 61-120 Over 120 Impaired

Financial Assets at Amortized Cost (In Millions)Cash and cash equivalents* P=22,805.0 P=22,805.0 P=– P=– P=– P=– P=–Short-term investments 883.2 883.2 – – – – –Receivables: Trade 4,680.6 2,869.9 267.2 107.6 167.4 591.6 676.9

Employee car plan receivables** 260.3 260.3 – – – – –Advances to employees 167.4 167.4 – – – – –

Other receivables*** 151.6 93.1 0.7 1.7 2.1 54.0 –Operating lease receivables 64.3 64.3 – – – – –Finance lease receivables 184.8 184.8 – – – – –Other noncurrent assets-

Security and other deposits** 2,713.8 2,713.8 – – – – –31,911.0 30,041.8 267.9 109.3 169.5 645.6 676.9

Financial Assets at FVTPL 39.8 39.8 – – – – –P=31,950.8 P=30,081.6 P=267.9 P=109.3 P=169.5 P=645.6 P=676.9

*Excluding cash on hand amounting to P=480.9 million.**Including noncurrent portion of employee car plan receivables and security and other deposits.

***Including interest receivable and excluding receivables from government agencies amounting to P=41.6 million.

Credit Risk Exposure. The tables below show the maximum exposure to credit risk of the JFC Groupas at December 31, 2019 and 2018 without considering the effects of collaterals and other credit riskmitigation techniques:

2019

Gross Maximum Exposure

(a)

Fair Value and Financial Effect of

Collateral or Credit Enhancement

(b)Net Exposure(c) = (a) - (b)

(In Millions)Financial Assets at Amortized CostCash and cash equivalents* P=20,515.1 P=122.8 P=20,392.3**Short-term investments 2,130.0 – 2,130.0Receivables:

Trade 5,348.9 564.6 4,784.3*** Employee car plan receivables 216.7 23.4 193.3

Advances to employees 175.4 – 175.4Other receivables**** 215.2 – 215.2

Operating lease receivables 98.7 – 98.7Finance lease receivables 161.9 – 161.9Other noncurrent assets - Security and other deposits 3,210.8 30.6 3,180.2Financial assets at FVTPL 38.2 – 38.2

P=32,110.9 P=741.4 P=31,369.5* Excluding cash on hand amounting to P=376.9 million.

** Gross financial assets after taking into account insurance bank deposits for cash and cash equivalents. *** Gross financial assets after taking into account payables to the same counterparty.**** Including interest receivable and excluding receivables from government agencies amounting to P=62.7 million.

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2018 (As Restated - Note 2)

Gross Maximum Exposure

(a)

Fair Value and Financial Effect of

Collateral or Credit Enhancement

(b)Net Exposure(c) = (a) - (b)

(In Millions)Financial Assets at Amortized CostCash and cash equivalents* P=22,805.0 P=31.6 P=22,773.4**Short-term investments 883.2 – 883.2Receivables:

Trade 4,680.6 216.3 4,464.3*** Employee car plan receivables 260.3 – 260.3

Advances to employees 167.4 – 167.4Other receivables**** 151.6 – 151.6

Operating lease receivables 64.3 – 64.3Finance lease receivables 184.8 – 184.8Other noncurrent assets - Security and other deposits 2,713.8 – 2,713.8Financial assets at FVTPL 39.8 – 39.8

P=31,950.8 P=247.9 P=31702.9* Excluding cash on hand amounting to P=480.9 million.

** Gross financial assets after taking into account insurance bank deposits for cash and cash equivalents. *** Gross financial assets after taking into account payables to the same counterparty.**** Including interest receivable and excluding receivables from government agencies amounting to P=41.6 million.

With respect to credit risk arising from financial assets of the JFC Group, the JFC Group’s exposureto credit risk arises from default of the counterparty, with a gross maximum exposure equal to thecarrying amount of these instruments.

Credit Quality. The financial assets of the JFC Group are grouped according to stage of whichdescription is explained as follows:

Stage 1 - Those that are considered current and up to 30 days past due, and based on change in rating,delinquencies and payment history, do not demonstrate significant increase in credit risk.

Stage 2 - Those that, based on change in rating, delinquencies and payment history, demonstratesignificant increase in credit risk, and/or are considered more than 30 days past due butdoes not demonstrate objective evidence of impairment as at reporting date.

Stage 3 - Those that are considered in default or demonstrate objective evidence of impairment as atreporting date.

The tables below show determination of ECL stage of the JFC Group’s financial assets:

2019Stage 1 Stage 2 Stage 3

Total 12-month ECL Lifetime ECL Lifetime ECLFinancial Assets at Amortized Cost (in Millions)Receivables:

Trade P=5,348.9 P=4,187.5 P=769.0 P=392.4Employee car plan receivables* 216.7 216.7 – –Advances to employees 175.4 175.4 – –Other receivables** 215.2 42.7 172.5 –

Financial Assets at FVTPL 38.2 38.2 – –P=5,994.4 P=4,660.5 P=941.5 P=392.4

*Including noncurrent portion of employee car plan receivables.**Including interest receivable and excluding receivables from government agencies amounting to P=62.7 million.

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Total 12-month ECL Lifetime ECL Lifetime ECLFinancial Assets at Amortized Cost (in Millions)Receivables:

Trade P=4,680.6 P=3,137.1 P=866.6 P=676.9Employee car plan receivables* 260.3 260.3 – –Advances to employees 167.4 167.4 – –Other receivables** 151.6 93.8 57.8 –

Financial Assets at FVTPL 39.8 39.8 – –P=5,299.7 P=3,698.4 P=924.4 P=676.9

*Including noncurrent portion of employee car plan receivables.**Including interest receivable and excluding receivables from government agencies amounting to P=41.6 million.

Liquidity RiskThe JFC Group’s exposure to liquidity risk refers to the risk that its financial liabilities are notserviced in a timely manner and that its working capital requirements and planned capitalexpenditures are not met. To manage this exposure and to ensure sufficient liquidity levels, the JFCGroup closely monitors its cash flows to be able to finance its capital expenditures and to pay itsobligations as and when they fall due.

On a weekly basis, the JFC Group’s Cash and Banking Team monitors its collections, expendituresand any excess/deficiency in the working capital requirements, by preparing cash position reports thatpresent actual and projected cash flows for the subsequent week. Cash outflows resulting from majorexpenditures are planned so that money market placements are available in time with the plannedmajor expenditure. In addition, the JFC Group has short-term cash deposits and has available creditlines with accredited banking institutions, in case there is a sudden deficiency. The JFC Groupmaintains a level of cash and cash equivalents deemed sufficient to finance the operations. Nochanges were made in the objectives, policies or processes of the JFC Group during the years endedDecember 31, 2019 and 2018.

The JFC Group’s financial assets, which have maturity of less than 12 months and are used to meet itsshort-term liquidity needs, are cash and cash equivalents, short-term investments and tradereceivables and contract assets amounting to P=20,892.0 million, P=2,130.0 million andP=5,369.7 million, respectively, as at December 31, 2019 and P=23,285.9 million, P=883.2 million andP=4,411.0 million, respectively, as at December 31, 2018.

The tables below summarize the maturity profile of the JFC Group’s other financial liabilities basedon the contractual undiscounted cash flows as at December 31, 2019 and 2018:

2019Due and

DemandableLess than

1 Year 1 to 5 YearsOver

5 Years Total(in Millions)

Financial LiabilitiesTrade payables and other current liabilities* P=8,351.2 P=22,255.9 P=- P=- P=30,607.1Short term debt - 22,180.3 - - 22,180.3Long-term debt (including current portion) 47.9 3,367.2 19,081.0 99.6 22,595.7Liability for acquisition of a business

(including current portion) 2.8 - - - 2.8Lease liabilities - 9,139.3 25,015.1 30,110.9 64,265.3Total Financial Liabilities P=8,401.9 P=56,942.7 P=44,096.1 P=30,210.5 P=139,651.2*Excluding statutory obligations such as local and other taxes payable, PHIC, SSS, HDMF and NHMFC payables and unearnedrevenue from gift certificates amounting to P=4,045.0 million as at December 31, 2019.

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2018 (As Restated - Note 2)Due and

DemandableLess than


5 Years Total(in Millions)

Financial LiabilitiesTrade payables and other current liabilities* P=7,174.5 P=18,808.7 P=- P=- P=25,983.2Long-term debt (including current portion) 22.5 4,857.9 19,681.5 1,702.5 26,264.4Liability for acquisition of a business

(including current portion) - 11.2 2.9 - 14.1Lease liabilities - 8,534.9 25,272.8 26,718.7 60,526.4Total Financial Liabilities P=7,197.0 P=32,212.7 P=44,957.2 P=28,421.2 P=112,788.1*Excluding statutory obligations such as local and other taxes payable, PHIC, SSS, HDMF and NHMFC payables and unearnedrevenue from gift certificates amounting to P=2,733.6 million as at December 31, 2018.

Equity Price RiskThe JFC Group is not exposed to significant equity price risk on its investment in quoted equitysecurities consisting of investment in club shares.

Capital Management PolicyCapital includes equity attributable to equity holders of the Parent Company.

The primary objective of the JFC Group’s capital management is to ensure that it maintains a strongcredit rating and healthy capital ratios in order to support its business and maximize shareholdervalue. The JFC Group has sufficient capitalization.

The JFC Group generates cash flows from operations sufficient to finance its organic growth. Itdeclares cash dividends representing at least one-third of its consolidated net income, a ratio thatwould still leave some additional cash for future expansion. If needed, the JFC Group would borrowmoney for acquisitions of new businesses.

As at December 31, 2019 and 2018, the JFC Group’s debt ratio and net debt ratio are as follows:

Debt Ratio

2019

2018(As Restated -

Note 2)Total debt (a) P=134,994,129 P=101,516,781Total equity attributable to equity holders

of the Parent Company 52,780,558 47,675,620Total debt and equity attributable to equity

holders of the Parent Company (b) P=187,774,687 P=149,192,401

Debt ratio (a/b) 72% 68%

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Net Debt Ratio

2019

2018(As Restated -

Note 2)Total debt P=134,994,129 P=101,516,781Less cash and cash equivalents and short-term

investments 23,022,021 24,169,115Net debt (a) 111,972,108 77,347,666Total equity attributable to equity holders

of the Parent Company 52,780,558 47,675,620Net debt and equity attributable

to equity holders of the Parent Company (b) P=164,752,666 P=125,023,286

Net debt ratio (a/b) 68% 62%

32. Fair Value of Financial Assets and Liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at measurement date.

Financial Instruments Which Carrying Amounts Approximate Fair Value. Management hasdetermined that the carrying amounts of cash and cash equivalents, short-term investments,receivables, operating lease receivables, trade payables and other current liabilities, based on theirnotional amounts, reasonably approximate their fair values because of their short-term nature or dueto the immaterial effect of discounting when the present value of future cash flows from theseinstruments are calculated.

Financial Assets at FVTPL. The fair value of investments in quoted shares of stock is based onquoted prices. The JFC Group does not have the intention to dispose these financial assets in the nearterm.

Investment Properties. The fair value of the investment properties are determined by independentappraisers using the market data and cost approach, which considers the local market conditions, theextent, character and utility of the property, sales and holding prices of similar parcels of land and thehighest and best use of the investment properties.

Finance Lease Receivables, Security and Other Deposits, Employee Car Plan Receivables, Long-termDebt and Lease Liabilities. Management has determined that the estimated fair value of security andother deposits, noncurrent portion of employee car plan receivables, long-term debt and derivativeasset or liability are based on the discounted value of future cash flows using applicable rates asfollows:

2019 2018Finance lease receivables 3.46%-3.98% 6.45%-6.83%Security and other deposits 0.55%-15.43% 2.36%-8.20%Employee car plan receivables 2.80%-8.26% 2.51%-8.23%Long-term debt 1.27%-6.89% 2.50%-4.07%Lease liabilities 0.64%–22.48% 0.60%–19.30%

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The following tables provide the fair value measurement hierarchy of the JFC Group’s recurringfinancial assets and liabilities.

Quantitative disclosure fair value measurement hierarchy for assets as at December 31, 2019:

Fair Value Measurement Using

CarryingValue Total

QuotedPrices in

ActiveMarkets(Level 1)

SignificantObservable

Inputs(Level 2)

SignificantUnobservable

Inputs(Level 3)

Assets measured at fair value -Financial assets at FVTPL P=38,202 P=38,202 P=- P=38,202 P=-

Assets for which fair values are disclosed:Investment properties:

Land 572,722 2,083,920 - - 2,083,920Buildings - 954,427 - - 954,427

Finance lease receivables 161,934 162,947 - - 162,947Other noncurrent assets:

Security and other deposits 3,210,835 2,338,288 - - 2,338,288Employee car plan receivables 216,713 194,172 - - 194,171

Quantitative fair value measurement hierarchy for assets as at December 31, 2018:


Carrying Value Total

QuotedPrices in

Active Markets(Level 1)


Inputs(Level 2)


Inputs(Level 3)

Assets measured at fair value:Financial assets at FVTPL P=39,842 P=39,842 P=- P=39,842 P=-Derivative asset - interest rate swap 82,852 82,852 - 82,852 -

Assets for which fair values are disclosed:Investment properties:

Land 848,974 2,083,920 - - 2,083,920Buildings - 954,427 - - 954,427

Finance lease receivables 184,800 165,295 - - 165,295Other noncurrent assets:

Security and other deposits 2,713,844 2,506,400 - - 2,506,400Employee car plan receivables 260,281 251,492 - - 251,492

Quantitative fair value measurement hierarchy for liabilities as at December 31, 2019:


Date of Valuation Total

Quoted Pricesin ActiveMarkets(Level 1)


Inputs(Level 2)


Inputs(Level 3)

Liabilities measured at fair value - Derivative liability - interest

rate swap December 31, 2019 P=58,241 P=- P=58,241 P=-Liabilities disclosed at fair value:

Tenants’ deposit December 31, 2019 7,442 - - P=7,442Long-term debt December 31, 2019 22,768,094 - - 22,768,094

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Quantitative disclosure fair value measurement hierarchy for liabilities as at December 31, 2018:



Quoted Pricesin ActiveMarkets(Level 1)


Inputs(Level 2)


Inputs(Level 3)

Liabilities measured at fair value:Tenants’ deposit December 31, 2018 P=5,907 P=- P=- P=5,907Long-term debt December 31, 2018 16,421,331 - - 16,421,331

There were no transfers between Level 1 and Level 2 fair value measurements, and no transfers intoand out of Level 3 fair value measurements during the year.

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33. Notes to the Statements of Cash Flows

In 2019 and 2018, movements in the JFC Group’s liabilities and equity arising from financing activities follow:

2019

January 1,2019 Cash Flows

Acquisitionof a

Subsidiary(Note 11)

DividendsDeclared(Note 19)

GrantedStock

Options toEmployees

andSubsidiaries

InterestExpense

(Note 23)

DeferredTax Assets

(Note 24)

Amortizationof Debt

Issue Cost(Note 18)

CumulativeTranslation

Adjustments

Share in NetLosses of

Non-controlling

Interest(Note 11)

Share inCumulativeTranslation

Adjustments ofNon-

controllingInterest

(Note 11)Additions(Note 29)

Pre-termination

of Lease(Note 29)

December 31,2019

(in Millions)Dividends payable (see Note 16) P=80.8 (P=2,807.8) P=– P=2,814.9 P=– P=– P=– P=– P=– P=– P=– P=– P=– P=87.9Short-term debt (see Note 18) – 22,180.3 – – – – – – – – – – – 22,180.3Long-term debt (see Note 18) 26,264.4 (3,415.0) – – – – – 19.6 (273.3) – – – – 22,595.7Interest payable (see Note 16) 239.6 (1,434.8) – – – 1,362.5 – – – – – – – 167.3Lease liabilities (see Note 29) 40,630.8 (8,419.7) 1,824.3 (1,265.3) 17,471.7 (2,934.4) 47,307.4Capital stock (see Note 19) 1,105.2 4.9 – – – – – – – – – – – 1,110.1Additional paid-in capital

(see Note 19) 8,638.5 580.5 – – 262.9 – (684.5) – – – –– –

8,797.4Non-controlling interest (see Note 11) 1,500.9 30.4 (1,877.4) (14.9) – – – – – (9.5) 52.3 – – (318.2)Total liabilities and equity

on financing activities P=78,460.2 P=6,718.8 (P=1,877.4) P=2,800.0 P=262.9 P=3,186.8 (P=684.5) P=19.6 (P=1,538.6) (P=9.5) P=52.3 P=17,471.7 (P=2,934.4) P=101,927.9



Acquisitionof a

Subsidiary(Note 11)

DividendsDeclared

(Note 19)

GrantedStock

Options toEmployees

andSubsidiaries

InterestExpense

(Note 23)

DeferredTax Assets

(Note 24)

Amortizationof Debt

Issue Cost(Note 18)


Adjustments


Non-controlling

Interest(Note 11)


Adjustments ofNon-controlling

Interest(Note 11)

Additions(Note 29)

Pre-termination

of Lease(Note 29)

December 31,2018

(in Millions)Dividends payable (see Note 16) P=56.0 (P=2,667.0) P=– P=2,691.8 P=– P=– P=– P=– P=– P=– P=– P=– P=– P=80.8Long-term debt (see Note 18) 16,117.3 5,601.7 4,119.3 – – – – 14.9 411.2 – – – – 26,264.4Interest payable (see Note 16) 83.1 (731.7) – – – 888.2 – – – – – – – 239.6Lease liabilities (see Note 29) 28,683.0 (6,979.0) – – – 1,728.6 – – 279.7 – – 17,821.5 (903.0) 40,630.8Capital stock (see Note 19) 1,101.7 3.5 – – – – – – – – – – – 1,105.2Additional paid-in capital

(see Note 19) 7,520.4 472.0 – – 312.0 – 334.1 – – – – – – 8,638.5Non-controlling interest (see Note 11) 1,758.3 11.4 266.3 – – – – – – (571.0) 35.9 – – 1,500.9Total liabilities and equity on

financing activities P=55,319.8 (P=4,289.1) P=4,385.6 P=2,691.8 P=312.0 P=2,616.8 P=334.1 P=14.9 P=690.9 (P=571.0) P=35.9 P=17,821.6 (P=903.0) P=78,460.2

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Acquisitionof a

Subsidiary(Note 11)

DividendsDeclared

(Note 19)

GrantedStock

Options toEmployees

andSubsidiaries

InterestExpense

(Note 23)Deferred

Tax Assets

Amortizationof Debt

Issue Cost(Note 18)


Adjustments


Non-controlling

Interest(Note 11)


Adjustments ofNon-controlling

Interest(Note 11) Additions

Pre-termination

of LeaseDecember 31,

2017(in Millions)

Dividends payable P=47.7 (P=2,347.2) P=– P=2,355.5 P=– P=– P=– P=– P=– P=– P=– P=– P=– P=56.0Long-term debt 12,155.4 3,909.7 – – – – – 3.2 49.0 – – – – 16,117.3Interest payable 51.4 (360.9) – – – 392.6 – – – – – – – 83.1Lease liabilities 23,605.7 (4,902.3) – – 1,387.6 – – 363.9 8,624.6 (396.5) 28,683.0Capital stock 1,091.3 10.4 – – – – – – – – – – – 1,101.7Additional paid-in capital 5,660.1 850.8 – – 227.5 – 782.0 – – – – – – 7,520.4Non-controlling interest 648.1 14.5 1,536.5 – – – – – – (446.6) 5.8 – – 1,758.3Total liabilities and equity on

financing activities P=43,259.7 (P=2,825.0) P=1,536.5 P=2,355.5 P=227.5 P=1,780.2 P=782.0 P=3.2 P=412.9 (P=446.6) P=5.8 P=8,624.6 (P=396.5) P=55,319.8

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34. Events after the Reporting Period

Dividend DeclarationOn April 7, 2020, the BOD of the Parent Company approved a cash dividend of P=0.62 per share ofcommon stock to all stockholders of record as at April 27, 2020. Consequently, the cash dividend isexpected to be paid out on May 22, 2020. The cash dividend is 50.0% lower than the P=1.23 cashdividend per share declared on April 8, 2019.

Issuance of Guaranteed Senior Perpetual Capital SecuritiesGuaranteed Senior Perpetual Capital Securities (Securities) was issued by JWPL, a wholly ownedsubsidiary, and listed in the Singapore Exchange Securities Trading Limited on January 24, 2020.The Securities offered an initial distribution rate of 3.9%, non-call (5 years) and payable semi-annually.

Prepayment of Short-term DebtOn February 3 and February 6, 2020, JWPL prepaid its USD400.0 million (P=20,340.2 million)short-term debt amounting to USD170.0 million (P=8,660.8 million) and USD230.0 million(P=11,679.4 million), respectively, from the proceeds of the issuance of the Guaranteed SeniorPerpetual Capital Securities.

Impact of COVID-19 OutbreakThe JFC Group operates restaurants in 34 countries, the largest of which in terms of contribution tosystem-wide sales, a measure of all sales to consumers- both from company-owned and franchisedstores, are the Philippines, the United States of America including Canada, China and Vietnam. Theimpact of COVID-19 to the operations of restaurants varies quite significantly at different countriesand changing on a daily basis.

In China, the epicenter of the epidemic and which accounts for 6.1% of JFC Group’s system-widesales, the decline in sales was abrupt. All of the 14 QSR outlets of “Yonghe King” brand in and nearWuhan were temporarily closed down mainly due to the restriction of movement of people imposedby the government in order to contain the virus. At its worst time, in the week of February 10, 2020,107 “Yonghe King” QSR stores were temporarily closed, representing 31% of its total store network,to ensure the safety of its employees and in view of the very low level of customer visits due torestriction of movement of people. The number of temporarily closed QSR stores had declined to 22representing 6% of “Yonghe King” brand’s total store network as of the week of March 30, 2020.Meanwhile, sales in China have been improving as the number of new infections have been declining.

In the Philippines, in a move to contain the COVID-19 outbreak, on March 13, 2020, the Office of thePresident of the Philippines issued a Memorandum directive to impose stringent social distancingmeasures in the National Capital Region effective March 15, 2020. On March 16, 2020, PresidentialProclamation No. 929 was issued, declaring a State of Calamity throughout the Philippines for aperiod of six (6) months and imposed an enhanced community quarantine throughout the island ofLuzon until April 12, 2020, unless earlier lifted or extended. These measures have caused disruptionsto businesses and economic activities, and its impact on businesses continue to evolve. About 70% ofJFC Group’s domestic stores have been temporarily closed, resulting to a decline in systemwide salesby about 40%.

In North America, Smashburger has suspended its dine-in services, but continued serving itscustomers through on-line delivery and take-out. Philippine brands “Jollibee”, “Chowking” and “RedRibbon” also continued to operate with drive-thru and take-out and have started operating its on-linedelivery in April 2020.

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In Singapore, the delivery business grew by 256% in the crisis period versus year ago, increasingsales contribution from 7% to 22%, enabling total same store sales to grow by about 4%.

The JFC Group considers the events surrounding the outbreak as non-adjusting subsequent events,which do not impact its financial position and performance as of and for the year ended December 31,2019. However, the outbreak could have a material impact on the JFC Group’s 2020 financial resultsand even periods thereafter. Considering the evolving nature of this outbreak, the JFC Group cannotdetermine at this time the impact to its financial position, performance and cash flows. The JFCGroup will continue to monitor the situation.

To manage the risks or uncertainties brought about by the outbreak, the JFC Group is implementingthe following measures, among others:

· Restaurant Operations – Prioritizing the protection of health and safety of its employees andpreservation of cash in the business to ensure sustainability and long-term growth andprofitability by temporarily closing losing QSR outlets.

· Product Supply – To ensure adequate supply, the Philippine business had identified alternativesources of supply and has also spread its inventories in different parts of the country in variouswarehouses and depots. The JFC Group also has commissaries located in different parts of thecountry. This dispersion of supply chain facilities, warehouses and QSR outlets reduces theprobability that the pandemic will have significant impact and magnitude, all at the same time, onthe different parts of the JFC Group’s business.

· Safety and Health of Customers, Employees and Workers and Business Partners –Implementation of the following: observing social distancing in the stores and buildings; travelrestrictions; and work from home arrangements.

· Dispersion and Diversification – The nature and structure of the JFC Group’s business havecreated physical dispersion and diversification into different brands, countries, sites, facilities andlocations which make the business strong against event risks.

· Overall Business – To preserve cash, the JFC Group will delay some capital expenditures in 2020to the following year. It will also aggressively cut costs in response to the reduction in revenuesdue to constraints brought about by the lockdowns.


AND SUBSIDIARIES INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

AND SUPPLEMENTARY SCHEDULES DECEMBER 31, 2019

Consolidated Financial Statements

Statement of Management’s Responsibility for Financial Statements

Independent Auditors’ Report

Consolidated Statements of Financial Position as at December 31, 2019 and 2018, and as at January 1, 2018

Consolidated Statements of Comprehensive Income For the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Changes in Equity For the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Cash Flows For the years ended December 31, 2019, 2018 and 2017

Notes to Consolidated Financial Statements

Supplementary Schedules

Independent Auditors’ Report on Supplementary Schedules

SRC Annex 68-J Schedules

A. Financial Assets (Temporary Investments, Time Deposits andAvailable-for-sale Investments)

B. Amounts Receivable from Directors, Officers, Employees, Related Parties andPrincipal Stockholders (Other than Related Parties)*

C. Amounts Receivable from Related Parties which are Eliminated during theConsolidation of Financial Statements

D. Long-term Debt

E. Indebtedness to Related Parties*

F. Guarantees of Securities of Other Issuers*

G. Capital Stock

Schedule of Financial Soundness Indicators

Reconciliation of Retained Earnings for Dividend Declaration

Conglomerate Map

* These schedules, which are required by Revised SRC Rule 68, have been omitted because they are not applicable

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES SCHEDULE A: FINANCIAL ASSETS -Temporary Investments, Time Deposits and Financial Assets at Fair Value through Profit or Loss (FVTPL) FOR THE YEAR ENDED DECEMBER 31, 2019

Name of Issuing Entity and

Association of each use Amount shown in the Consolidated

Statement of Financial Position Income Received and

Accrued (Amounts in thousands) Financial Assets at Amortized Cost Cash in banks and cash equivalents N/A P=20,515,139 P=31,560 Short-term investments N/A 2,130,000 241,462 Receivables: Trade N/A 5,348,930 – Employee car plan N/A 216,713 –

Advances to employees N/A 175,400 – Others N/A 215,167 – Finance lease receivables N/A 161,934 – Security and other deposits N/A 3,210,835 – Operating lease receivables N/A 98,749 – 32,072,867 273,022

Financial Assets at FVTPL: Equity investments Manila Polo Club 25,000 – Equity investments Tagaytay Highlands 7,800 – Equity investments Tagaytay Midlands 650 – Equity investments The Palms Country Club 600 – Equity investments The Rockwell Club 400 – Equity investments Valle Verde Country Club, Inc. 350 – Equity investments Club Filipino 250 – Equity investments Celebrity Sports Plaza 200 – Equity investments Tagaytay Country Club 150 – Equity investments Others 2,802 –

38,202 –

Total Financial Assets P=32,111,069 P=273,022

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES SCHEDULE C: RECEIVABLE FROM RELATED PARTIES ELIMINATED DURING THE CONSOLIDATION OF FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019

Name of Debtor

Balance at Beginning

of Year Additions Amount

Collected Equitized* Current Noncurrent Balance at

End of Year (Amounts in thousands)

Jollibee Foods Corporation P=1,173,053 P=13,997,405 (P=12,978,078) P=– P=2,192,380 P=– P=2,192,380 Freemont Foods Corporation 1,490,156 9,583,188 (9,427,631) – 1,645,713 – 1,645,713 Zenith Foods Corporation 1,874,096 8,460,308 (6,656,410) – 3,677,994 – 3,677,994 Grandworth Resources Corporation 1,663 3,217 (2,442) – 2,438 – 2,438 Fresh N' Famous Foods, Inc. 572,252 8,485,287 (7,972,606) – 1,084,933 – 1,084,933 Red Ribbon Bakeshop, Inc. 288,969 3,965,767 (2,619,258) – 1,635,478 – 1,635,478 Mang Inasal Philippines Inc. 183,842 1,052,876 (1,038,763) – 197,955 – 197,955 Honeybee Foods Corporation 3,805,594 944,603 (127,590) (1,271,683) 3,350,924 – 3,350,924 Tokyo Teriyaki Corporation 888,811 327,143 (220,727) (50,657) 944,570 – 944,570 Red Ribbon Bakeshop, Inc. (USA) 1,053,943 236,647 (256,209) (64,784) 969,597 – 969,597 Jollibee Worldwide Pte. Ltd. 2,582,591 325,128 (362,846) – 2,544,873 – 2,544,873 Jollibee Vietnam Corporation Ltd. 888,065 87,773 (6,857) – 968,981 – 968,981 Jollibee (China) Food & Beverage Management Co. Ltd. 270,611 30,962 (206,731) – 94,842 – 94,842 Golden Beeworks Pte. Ltd. 52,828 68,575 (8,825) – 112,578 – 112,578 Burger King Entities 2,159,073 2,219,484 (2,003,573) – 1,064,984 1,310,000 2,374,984 SuperFoods Group 1,926,128 21,845 (70,787) – 1,877,186 – 1,877,186 JSF Investments Pte. Ltd. 1,709,747 65 (9,690) – 1,700,122 – 1,700,122 Beijing Golden Coffee Cup Food & Beverage Management Co., Ltd. 982,131 407,045 (236,369) – 1,152,807 – 1,152,807 Beijing Yong He King Food and Beverage Co., Ltd. 699,117 377,252 (157,346) – 919,023 – 919,023 Shenzhen Yong He King Food and Beverage Co., Ltd. 151,628 98,391 (247,436) – 2,583 – 2,583 Happy Bee Foods Processing (Anhui) Co. Ltd. 6,364 40,701 (3,906) – 43,159 – 43,159 Super Magnificent Coffee Co. Ltd. – 12,931,825 – – 12,931,825 – 12,931,825 Others 253,010 474 (87,545) – 165,939 – 165,939 Total P=23,013,672 P=63,665,961 (P=44,701,625) (P=1,387,124) P=39,280,884 P=1,310,000 P=40,590,884 *In 2019, certain receivables were converted into equity or additional investments to the entity.

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES SCHEDULE D: LONG - TERM DEBT FOR THE YEAR ENDED DECEMBER 31, 2019

Title of Issue and Type of Obligation

Amount

Authorized by Indenture

Amount Shown Under Caption Current Portion of Long-term Debt in

Related Consolidated Statement of Financial Position

Amount Shown Under Caption Noncurrent Portion of Long-term Debt in

Related Consolidated Statement of Financial Position

(Amounts in thousands) US dollar-denominated: Ten-year unsecured loan P=3,713,600 P=618,933 P=3,094,667 Eight-year unsecured loan 1,473,624 15,192 1,458,432 Five-year unsecured loan 392,966 4,051 388,915 Vietnam dong-denominated:

Five-year unsecured loan 10,743 10,743 – Five-year unsecured loan 37,145 37,145 –

Five-year unsecured loan 92,863 37,145 55,718 Five-year unsecured loan 229,269 70,544 158,725 Five-year unsecured loan 404,225 – 404,225 Five-year unsecured loan 118,511 – 118,511

Philippine peso-denominated: Five-year unsecured loan 375,000 250,000 125,000 Five-year unsecured loan 1,200,000 400,000 800,000 Five-year unsecured loan 1,575,000 525,000 1,050,000 Five-year unsecured loan 600,000 200,000 400,000

Five-year unsecured loan 450,000 150,000 300,000 Seven-year unsecured loan 4,200,000 630,000 3,570,000

Seven-year unsecured loan 3,000,000 300,000 2,700,000 Seven-year unsecured loan 2,700,000 135,000 2,565,000 Five-year unsecured loan 110,000 – 110,000 Seven-year unsecured loan 1,000,000 50,000 950,000

Seven-year unsecured loan 1,000,000 – 1,000,000 Unamortized debt issue costs (87,223) (17,778) (69,445) Total P=22,595,723 P=3,415,975 P=19,179,748

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES SCHEDULE G: CAPITAL STOCK FOR THE YEAR ENDED DECEMBER 31, 2019

Title of issue

Number of shares

authorized

Number of Shares

Issued and Outstanding

Number of Shares Reserved for Options, Warrants,

Conversions, and Other Rights

Number of Shares Held by

Affiliates

Directors, officers and employees Others

Common Stock 1,450,000,000 1,092,970,574 16,447,340 587,104,425 27,622,342 478,243,807

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES SCHEDULE OF FINANCIAL SOUNDNESS INDICATORS FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 and 2017 2019 2018 2017 i. Current ratio Current assets 0.67:1 1.07:1 1.20:1 Current liabilities

ii. Acid test ratio Cash and cash equivalents + Short-term investments + Current

receivables 0.43 0.73 0.87 Current liabilities iii. Solvency ratio Net income + Depreciation and Amortization 0.15 0.19 0.21 Total liabilities iv. Debt to equity ratio Total Debt* 72.0% 68.1% 64.8%

Total Debt + Equity Attributable to Equity Holders of the Parent

Company Net Debt to equity ratio Total Debt* – Cash and cash equivalents – Short-term investments 68.0% 62.0% 56.2%

(Total Debt* – Cash and cash equivalents – Short-term investments) +

Equity attributable to Equity Holders of the Parent Company v. Asset to equity ratio Total assets 3.56 3.17 2.89 Equity Attributable to Equity Holders of the Parent Company vi. Interest rate coverage ratio Earnings before interest expense and taxes 4.0 4.9 5.5 Interest expense

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2019 2018 2017 vii. Return on equity Net Income Attributable to Equity Holders of the Parent Company 12.9% 18.8% 18.8% Average Equity Attributable to Equity Holders of the Parent Company viii. Return on assets Net income 3.4% 5.1% 5.6% Total assets ix. Net profit margin Net income 3.6% 4.7% 4.9% Revenue x. Debt Service Coverage ratio Net income 0.05 0.08 0.09 Total liabilities *Including both total current and total noncurrent liabilities

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES Reconciliation of Retained Earnings for Dividend Declaration Unappropriated Retained Earnings, beginning P=14,646,269,070 Adjustments:

Deferred tax assets, beginning (3,900,457,825) Unrealized foreign exchange gain - net (except those attributable to

cash and cash equivalents)

(297,030,609) Accretion of interest on financial assets, beginning (49,253,670) Unrealized gain on financial assets at fair value through profit or loss (9,980,000)

Unappropriated Retained Earnings Available for Dividend Declaration, beginning 10,389,546,966 Add: Net income actually earned/realized during the period

Net income of the Parent Company closed to Retained Earnings 6,401,607,953 Less: Non-actual/unrealized income

Accretion of interest on financial assets (11,118,344)

Add: Decrease in deferred tax assets 399,329,667 Net income actually earned/realized during the year 6,789,819,276 Less:

Dividends declared during the year (2,814,945,134) Treasury shares (180,511,491)

Unappropriated Retained Earnings Available for Dividend Declaration, ending P=14,183,909,617

JOLLIBEE FOODS CORPORATION Doing business under the name and style of Jollibee AND SUBSIDIARIES CONGLOMERATE MAP

2019 Audited Parent

Financial Statements

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

FILING REFERENCE NO.

TIN : 000-388-771-000

Name : JOLLIBEE FOODS CORPORATION

RDO : 125

Form Type : 1702

Reference No. : 122000035697757

Amount Payable (Over Remittance)

: -1,607,219,380.00

Accounting Type : C - Calendar

For Tax Period : 12/31/2019

Date Filed : 05/19/2020

Tax Type : IT

[ BIR Main | eFPS Login | User Menu | Help ]

Filing Reference Number Page https://efps.bir.gov.ph/faces/EFPSWeb_war/filingrefno.xhtml

1 of 1 5/19/2020 4:01 PM

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New Standards, Interpretations and Amendments adopted by the CompanyThe accounting policies adopted are consistent with those of the previous financial year, except forthe adoption of the following new accounting pronouncements starting January 1, 2019. Adoption ofthese pronouncements did not have any significant impact on the parent company statement offinancial position and performance unless otherwise indicated.

§ PFRS 16, Leases

PFRS 16 supersedes PAS 17, Leases, Philippine Interpretation International Financial ReportingInterpretations Committee (IFRIC) 4, Determining whether an Arrangement contains a Lease,Standard Interpretation Committee (SIC)-15, Operating Leases-Incentives, and SIC-27,Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard setsout the principles for the recognition, measurement, presentation and disclosure of leases andrequires lessees to account for all leases under a single on-balance sheet model similar to theaccounting for finance leases under PAS 17, Leases. The standard includes two recognitionexemptions for lessees – leases of ‘low-value’ assets (e.g., personal computers) and short-termleases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease,a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an assetrepresenting the right to use the underlying asset during the lease term (i.e., the right-of-useasset). Lessees will be required to separately recognize the interest expense on the lease liabilityand the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events(e.g., a change in the lease term, a change in future lease payments resulting from a change in anindex or rate used to determine those payments). The lessee will generally recognize the amountof the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under PFRS 16 is substantially unchanged from today’s accounting underPAS 17. Lessors will continue to classify all leases using the same classification principle as inPAS 17 and distinguish between two types of leases: operating and finance leases.

PFRS 16 also requires lessees and lessors to make more extensive disclosures than under PAS 17.

A lessee can choose to apply the standard using either a full retrospective or a modifiedretrospective approach. The standard’s transition provisions permit certain reliefs.

The Company adopted PFRS 16 using the full retrospective method of adoption, with the date ofinitial application of 1 January 2019. The Company elected to use the transition practicalexpedient to not reassess whether a contract is, or contains, a lease at 1 January 2019. Instead, theCompany applied the standard only to contracts that were previously identified as leases applyingPAS 17 and IFRIC 4 at the date of initial application. The Company also elected to use therecognition exemptions for lease contracts that, at the commencement date, have a lease term of12 months or less and do not contain a purchase option (“short-term leases”), and lease contractsfor which the underlying asset is of low value (“low-value assets”).

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The effect of adopting PFRS 16 is as follows:

Impact on the statement of financial position (increase / (decrease))

December 31,2019

December 31,2018 January 1, 2018

AssetsRight-of-use assets - net P=5,371,486,052 P=6,202,581,689 P=6,937,937,764Prepaid rent (55,138,573) (63,449,457) (92,663,068)Deferred tax assets - net 1,791,638,521 2,024,351,502 2,241,156,611Total Assets P=7,107,986,000 P=8,163,483,734 P=9,086,431,307LiabilitiesOperating lease payable (P=950,213,971) (P=926,190,350) (P=858,025,541)Lease liabilities 6,898,318,755 7,674,028,691 8,328,547,578Deferred tax liabilities 1,592,391,642 1,841,720,333 2,053,582,409

Total Liabilities 7,540,496,426 8,589,558,674 9,524,104,446EquityRetained earnings (432,510,426) (426,074,940) (437,673,139)Total Liabilities and Equity P=7,107,986,000 P=8,163,483,734 P=9,086,431,307

Impact on the statement of comprehensive income (increase / (decrease))

2019 2018Depreciation expense (included in “Cost of sales and

services” account in the statement of comprehensiveincome) P=909,832,220 P=938,669,515

Depreciation expense (included in “General andadministrative expenses” in the statement ofcomprehensive income) 25,728,307 22,793,777

Rent expense (included in “Cost of sales and services”account in the statement of comprehensive income) (1,222,672,613) (1,365,117,801)

Rent expense (included in “General and administrativeexpenses” in the statement of comprehensive income) (31,625,696) (28,261,573)

Operating profit (318,737,782) (431,916,082)Finance costs 408,256,010 434,504,802Other income (66,467,030) (19,129,951)Income tax expense (16,615,712) 4,943,032Profit for the year P=6,435,486 (P=11,598,199)

Impact on the statement of cash flows (increase / (decrease))

2019 2018Net cash flows from operating activities P=1,230,274,685 P=1,263,421,688Net cash flows from financing activities (1,230,274,685) (1,263,421,688)

There is no material impact on other comprehensive income and the basic and diluted EPS.

The nature of the effect of adoption of PFRS 16 is as follows:

The Company has various lease commitments, as a lessee, for quick service restaurant (QSR)outlets, warehouses and office spaces which were accounted for as operating leases underPAS 17. Before the adoption of PFRS 16, the Company classified each of its leases (as lessee) atthe inception date as either a finance lease or an operating lease. A lease was classified as a

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finance lease if it transferred substantially all of the risks and rewards incidental to ownership ofthe leased asset to the Company; otherwise it was classified as an operating lease. Finance leaseswere capitalized at the commencement of the lease at the inception date fair value of the leasedproperty or, if lower, at the present value of the minimum lease payments. Lease payments wereapportioned between interest (recognized as finance costs) and reduction of the lease liability.The Company has no lease commitments accounted for as finance lease. In an operating lease,the leased property was not capitalized and the lease payments were recognized as rent expense inprofit or loss on a straight-line basis over the lease term. Any prepaid rent and accrued rent wererecognized under “Other current assets” and “Operating lease payable” in the statement offinancial position, respectively.

Upon adoption of PFRS 16, the Company applied a single recognition and measurementapproach for all leases for which it is the lessee, except for short-term leases and leases of low-value assets. The Company recognized lease liabilities to make lease payments and right-of-useassets representing the right to use the underlying assets. In accordance with the fullretrospective method of adoption, the Company applied PFRS 16 at the date of initiation;application as if it had already been effective at the commencement date of existing leasecontracts.

As at January 1, 2018, December 31, 2018 and December 2019:

§ Right-of-use assets were recognized and presented separately in the statement of financialposition.

§ Additional lease liabilities were recognized and presented separately in the statement offinancial position.

§ Prepayments and operating lease payable related to previous operating leases werederecognized.

§ Deferred tax assets and liabilities increased because of the deferred tax impact of the changesin assets and liabilities.

§ The net effect of these adjustments had been adjusted to retained earnings.

For the year ended December 31, 2019:

§ Depreciation expense increased by P=935.6 million relating to the depreciation of additionalassets recognized (i.e., increase in right-of-use assets).

§ Rent expense decreased by P=1,254.3 million relating to previous operating leases.§ Other income decreased by P=66.5 million due to lease liabilities, net of right-of-use assets,

derecognized relating to pre-terminated lease during the year.§ Finance costs increased by P=408.3 million relating to the interest expense on additional lease

liabilities recognized.§ Income tax expense decreased by P=16.6 million relating to the tax effect of these changes in

expenses.

§ Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments

The interpretation addresses the accounting for income taxes when tax treatments involveuncertainty that affects the application of PAS 12, Income Taxes, and does not apply to taxes orlevies outside the scope of PAS 12, nor does it specifically include requirements relating tointerest and penalties associated with uncertain tax treatments.

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The interpretation specifically addresses the following:

§ Whether an entity considers uncertain tax treatments separately§ The assumptions an entity makes about the examination of tax treatments by taxation

authorities§ How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates§ How an entity considers changes in facts and circumstances

The entity is required to determine whether to consider each uncertain tax treatment separately ortogether with one or more other uncertain tax treatments and use the approach that better predictsthe resolution of the uncertainty. The entity shall assume that the taxation authority will examineamounts that it has a right to examine and have full knowledge of all related information whenmaking those examinations. If an entity concludes that it is not probable that the taxationauthority will accept an uncertain tax treatment, it shall reflect the effect of the uncertainty foreach uncertain tax treatment using the method the entity expects to better predict the resolution ofthe uncertainty.

Upon adoption of the Interpretation, the Company has assessed whether it has any uncertain taxposition. The Company applies significant judgement in identifying uncertainties over its incometax treatments. The Company determined, based on its tax compliance review/assessment, inconsultation with its external tax counsels, that it is probable that its income tax treatments will beaccepted by the taxation authorities. Accordingly, the interpretation had no significant impact onthe parent company financial statements.

§ Amendments to PFRS 9, Prepayment Features with Negative Compensation

Under PFRS 9, a debt instrument can be measured at amortized cost or at fair value through othercomprehensive income, provided that the contractual cash flows are ‘solely payments of principaland interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is heldwithin the appropriate business model for that classification. The amendments to PFRS 9 clarifythat a financial asset passes the SPPI criterion regardless of the event or circumstance that causesthe early termination of the contract and irrespective of which party pays or receives reasonablecompensation for the early termination of the contract.

The amendments had no significant impact on the parent company financial statements.

§ Amendments to PAS 19, Employee Benefits, Plan Amendment, Curtailment or Settlement

The amendments to PAS 19 address the accounting when a plan amendment, curtailment orsettlement occurs during a reporting period. The amendments specify that when a planamendment, curtailment or settlement occurs during the annual reporting period, an entity isrequired to:

§ Determine current service cost for the remainder of the period after the plan amendment,curtailment or settlement, using the actuarial assumptions used to remeasure the net definedbenefit liability (asset) reflecting the benefits offered under the plan and the plan assets afterthat event.

§ Determine net interest for the remainder of the period after the plan amendment, curtailmentor settlement using: the net defined benefit liability (asset) reflecting the benefits offeredunder the plan and the plan assets after that event; and the discount rate used to remeasurethat net defined benefit liability (asset).

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The amendments also clarify that an entity first determines any past service cost, or a gain or losson settlement, without considering the effect of the asset ceiling. This amount is recognized inprofit or loss. An entity then determines the effect of the asset ceiling after the plan amendment,curtailment or settlement. Any change in that effect, excluding amounts included in the netinterest, is recognized in other comprehensive income.

The amendments had no impact on the parent company financial statements since it did not haveany plan amendments, curtailments, or settlements during the year.

§ Amendments to PAS 28, Long-term Interests in Associates and Joint Ventures

The amendments clarify that an entity applies PFRS 9 to long-term interests in an associate orjoint venture to which the equity method is not applied but that, in substance, form part of the netinvestment in the associate or joint venture (long-term interests). This clarification is relevantbecause it implies that the expected credit loss model in PFRS 9 applies to such long-terminterests.

The amendments also clarified that, in applying PFRS 9, an entity does not take account of anylosses of the associate or joint venture, or any impairment losses on the net investment,recognized as adjustments to the net investment in the associate or joint venture that arise fromapplying PAS 28, Investments in Associates and Joint Ventures.

The amendments should be applied retrospectively and are effective from January 1, 2019, withearly application permitted.

The amendments had no impact on the parent company financial statements as the Company doesnot have long-term interest in its associate and joint venture.

§ Annual Improvements to PFRSs 2015-2017 Cycle

§ Amendments to PFRS 3, Business Combinations, and PFRS 11, Joint Arrangements,Previously Held Interest in a Joint Operation

The amendments clarify that, when an entity obtains control of a business that is a jointoperation, it applies the requirements for a business combination achieved in stages,including remeasuring previously held interests in the assets and liabilities of the jointoperation at fair value. In doing so, the acquirer remeasures its entire previously held interestin the joint operation.

A party that participates in, but does not have joint control of, a joint operation might obtainjoint control of the joint operation in which the activity of the joint operation constitutes abusiness as defined in PFRS 3. The amendments clarify that the previously held interests inthat joint operation are not remeasured.

An entity applies those amendments to business combinations for which the acquisition dateis on or after the beginning of the first annual reporting period beginning on or afterJanuary 1, 2019 and to transactions in which it obtains joint control on or after the beginningof the first annual reporting period beginning on or after January 1, 2019, with earlyapplication permitted.

The amendments had no impact on the parent company financial statements.

Amendments to PAS 12, Income Tax Consequences of Payments on Financial InstrumentsClassified as Equity

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The amendments clarify that the income tax consequences of dividends are linked moredirectly to past transactions or events that generated distributable profits than to distributionsto owners. Therefore, an entity recognizes the income tax consequences of dividends inprofit or loss, other comprehensive income or equity according to where the entity originallyrecognized those past transactions or events.

The amendments had no impact on the parent company financial statements.

§ Amendments to PAS 23, Borrowing Costs, Borrowing Costs Eligible for Capitalization

The amendments clarify that an entity treats as part of general borrowings any borrowingoriginally made to develop a qualifying asset when substantially all of the activities necessaryto prepare that asset for its intended use or sale are complete.

An entity applies those amendments to borrowing costs incurred on or after the beginning ofthe annual reporting period in which the entity first applies those amendments. An entityapplies those amendments for annual reporting periods beginning on or after January 1, 2019,with early application permitted.

These amendments had no significant impact on the parent company financial statements.

Future Changes in Accounting PoliciesPronouncements issued but not yet effective are listed below. Unless otherwise indicated, theCompany does not expect the future adoption of the said pronouncements to have significant impacton its financial statements. The Company intends to adopt the following pronouncements when thesebecome effective.


§ Amendments to PFRS 3, Definition of a Business

The amendments to PFRS 3 clarify the minimum requirements to be a business, remove theassessment of a market participant’s ability to replace missing elements, and narrow thedefinition of outputs. The amendments also add guidance to assess whether an acquired processis substantive and add illustrative examples. An optional fair value concentration test isintroduced which permits a simplified assessment of whether an acquired set of activities andassets is not a business.


These amendments will apply on future business combinations of the Company.

§ Amendments to PAS 1, Presentation of Financial Statements, and PAS 8, Accounting Policies,Changes in Accounting Estimates and Errors, Definition of Material

The amendments refine the definition of material in PAS 1 and align the definitions used acrossPFRSs and other pronouncements. They are intended to improve the understanding of theexisting requirements rather than to significantly impact an entity’s materiality judgements.


The Company is currently assessing the impact of adopting these amendments.

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§ PFRS 17, Insurance Contracts

PFRS 17 is a comprehensive new accounting standard for insurance contracts coveringrecognition and measurement, presentation and disclosure. Once effective, PFRS 17 will replacePFRS 4, Insurance Contracts. This new standard on insurance contracts applies to all types ofinsurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type ofentities that issue them, as well as to certain guarantees and financial instruments withdiscretionary participation features. A few scope exceptions will apply.

The overall objective of PFRS 17 is to provide an accounting model for insurance contracts thatis more useful and consistent for insurers. In contrast to the requirements in PFRS 4, which arelargely based on grandfathering previous local accounting policies, PFRS 17 provides acomprehensive model for insurance contracts, covering all relevant accounting aspects. The coreof PFRS 17 is the general model, supplemented by:

§ A specific adaptation for contracts with direct participation features (the variable feeapproach)

§ A simplified approach (the premium allocation approach) mainly for short-duration contracts

PFRS 17 is effective for reporting periods beginning on or after January 1, 2021, withcomparative figures required. Early application is permitted. The standard is not applicable tothe Company since it is not engaged in providing insurance nor issuing insurance contracts.

Deferred Effectivity

§ Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contributionof Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between PFRS 10 and PAS 28 in dealing with the loss ofcontrol of a subsidiary that is sold or contributed to an associate or joint venture. Theamendments clarify that a full gain or loss is recognized when a transfer to an associate or jointventure involves a business as defined in PFRS 3. Any gain or loss resulting from the sale orcontribution of assets that does not constitute a business, however, is recognized only to theextent of unrelated investors’ interests in the associate or joint venture.

On January 13, 2016, the Financial Reporting Standards Council deferred the original effectivedate of January 1, 2016 of the said amendments until the International Accounting StandardsBoard (IASB) completes its broader review of the research project on equity accounting that mayresult in the simplification of accounting for such transactions and of other aspects of accountingfor associates and joint ventures.

These amendments are currently not applicable to the Company but may apply to futuretransactions.

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3. Summary of Significant Accounting Policies

Current versus Noncurrent ClassificationThe Company presents assets and liabilities in the parent company statement of financial positionbased on current/noncurrent classification. An asset is classified as current when it is:

§ Expected to be realized or intended to be sold or consumed in the normal operating cycle;§ Held primarily for the purpose of trading;§ Expected to be realized within twelve months after the reporting period; or§ Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at

least twelve months after the reporting period.

All other assets are classified as noncurrent.

A liability is classified as current when it is:

§ Expected to be settled in the normal operating cycle;§ Held primarily for the purpose of trading;§ Due to be settled within twelve months after the reporting period; or§ There is no unconditional right to defer the settlement of the liability for at least twelve months

after the reporting period.

The Company classifies all other liabilities as noncurrent. Deferred tax assets and liabilities areclassified as noncurrent assets and liabilities.

Fair Value MeasurementFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. The fair value measurement isbased on the presumption that the transaction to sell the asset or transfer the liability takes placeeither:

§ In the principal market for the asset or liability; or§ In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participantswould use when pricing the asset or liability, assuming that market participants act in their besteconomic interest. A fair value measurement of a non-financial asset takes into account a marketparticipant’s ability to generate economic benefits by using the asset in its highest and best use or byselling it to another market participant that would use the asset in its highest and best use.

The fair value for financial instruments traded in active markets at the reporting date is based on theirquoted price or binding dealer price quotations, without any deduction for transaction costs. Wherethe Company has financial assets and financial liabilities with offsetting positions in market risks orcounterparty credit risk, it has elected to use the measurement exception to measure the fair value ofits net risk exposure by applying the bid or ask price to the net open position as appropriate. For allother financial instruments not traded in an active market, the fair value is determined by usingvaluation techniques deemed to be appropriate in the circumstances. Valuation techniques includethe market approach (i.e., using recent arm’s length market transactions adjusted as necessary andreference to the current market value of another instrument that is substantially the same), the incomeapproach (i.e., discounted cash flow analysis and option pricing models making as much use ofavailable and supportable market data as possible) and the cost approach (i.e., based on the amountrequired to replace the service capacity of an asset).

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The Company uses valuation techniques that are appropriate in the circumstances and for whichsufficient data are available to measure fair value, maximizing the use of relevant observable inputsand minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the parent company financialstatements are categorized within the fair value hierarchy, described, as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilitiesLevel 2 - Valuation techniques for which the lowest-level input that is significant to the fair value

measurement is directly or indirectly observableLevel 3 - Valuation techniques for which the lowest-level input that is significant to the fair value

measurement is unobservable

For assets and liabilities that are recognized in the parent company financial statements on a recurringbasis, the Company determines whether transfers have occurred between levels in the hierarchy byreassessing categorization (based on the lowest-level input that is significant to the fair valuemeasurement as a whole) at the end of each reporting period.

The Company’s management determines the policies and procedures for both recurring fair valuemeasurement and non-recurring measurement. At each reporting date, management analyzes themovements in the values of assets and liabilities which are required to be remeasured or reassessed asper the Company’s accounting policies. For this analysis, management verifies the major inputsapplied in the latest valuation by agreeing the information in the valuation computation to contractsand other relevant documents. For short-term trade receivables and payables, the Companydetermines the fair value based on their invoice amount, when the effect of discounting is immaterial.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilitiesbased on the nature, characteristics and risks of the asset or liability and the level of the fair valuehierarchy as explained above.

Cash and Cash EquivalentsCash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investmentsthat are readily convertible to known amounts of cash with original maturities of three months or lessfrom dates of placement and are subject to an insignificant risk of change in value.

Financial InstrumentsA financial instrument is any contract that gives rise to a financial asset of one entity and a financialliability or equity instrument of another entity.

Financial Instruments

Financial Assets

Initial Recognition and Measurement. Financial assets are classified, at initial recognition, assubsequently measured at amortized cost, fair value through other comprehensive income (FVOCI)and FVTPL.

The classification of financial assets at initial recognition depends on the financial asset’s contractualcash flow characteristics and the Company’s business model for managing them. With the exceptionof trade receivables that do not contain a significant financing component or for which the Companyhas applied the practical expedient, the Company initially measures a financial asset at its fair valueplus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Tradereceivables that do not contain a significant financing component or for which the Company hasapplied the practical expedient are measured at the transaction price determined under PFRS 15.

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In order for a financial asset to be classified and measured at amortized cost or FVOCI, it needs togive rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principalamount outstanding. This assessment is referred to as the SPPI test and is performed at an instrumentlevel.

The Company’s business model for managing financial assets refers to how it manages its financialassets in order to generate cash flows. The business model determines whether cash flows will resultfrom collecting contractual cash flows, selling the financial assets, or both.

The Company has no financial assets at FVOCI as at December 31, 2019 and 2018.

Subsequent Measurement. For purposes of subsequent measurement, financial assets are classified infour categories:

§ Financial assets at amortized cost (debt instruments)§ Financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments)§ Financial assets designated at FVOCI with no recycling of cumulative gains and losses upon

derecognition (equity instruments)§ Financial assets at FVTPL

Financial Assets at Amortized Cost (Debt Instruments). This category is the most relevant to theCompany. The Company measures financial assets at amortized cost if both of the followingconditions are met:

§ The financial asset is held within a business model with the objective to hold financial assets inorder to collect contractual cash flows; and

§ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest (EIR)method and are subject to impairment. Gains and losses are recognized in profit or loss when theasset is derecognized, modified or impaired.

The Company’s cash in banks, short-term deposits, short-term investments, receivables (excludingstatutory receivables), advances to related parties, Lease receivables, and refundable deposits areclassified under this category as at December 31, 2019 and 2018.

Financial Assets at FVTPL. Financial assets at FVTPL include financial assets held for trading,financial assets designated upon initial recognition at FVTPL, or financial assets mandatorily requiredto be measured at fair value. Financial assets are classified as held for trading if they are acquired forthe purpose of selling or repurchasing in the near term. Derivatives, including separated embeddedderivatives, are also classified as held for trading unless they are designated as effective hedginginstruments. Financial assets with cash flows that are not solely payments of principal and interestare classified and measured at FVTPL, irrespective of the business model. Notwithstanding thecriteria for debt instruments to be classified at amortized cost or FVOCI, as described above, debtinstruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantlyreduces, an accounting mismatch.

Financial assets at FVTPL are carried in the parent company statement of financial position at fairvalue with net changes in fair value recognized in the parent company statement of comprehensiveincome.

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The Company’s investments in golf and leisure club shares are classified under this category as atDecember 31, 2019 and 2018.

Derecognition. A financial asset (or, where applicable, a part of a financial asset or part of a group ofsimilar financial assets) is primarily derecognized (i.e., removed from the Company’s parentcompany statement of financial position) when:

§ The rights to receive cash flows from the asset have expired, or,

§ The Company has transferred its rights to receive cash flows from the asset or has assumed anobligation to pay the received cash flows in full without material delay to a third party under a‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risksand rewards of the asset, or (b) the Company has neither transferred nor retained substantially allthe risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into apass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards ofownership. When it has neither transferred nor retained substantially all of the risks and rewards ofthe asset, nor transferred control of the asset, the Company continues to recognize the transferredasset to the extent of its continuing involvement. In that case, the Company also recognized anassociated liability. The transferred asset and the associated liability are measured on a basis thatreflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured atthe lower of the original carrying amount of the asset and the maximum amount of consideration thatthe Company could be required to repay.

Impairment of Financial Assets. The Company recognizes an allowance for ECLs for all debtinstruments not held at FVTPL. ECLs are based on the difference between the contractual cash flowsdue in accordance with the contract and all the cash flows the Company expects to receive discountedat an approximation of the original effective interest rate. The expected cash flows will include cashflows from the sale of collateral held or other credit enhancements that are integral to the contractualterms.

ECLs are recognized in two stages. For credit exposures for which there has not been a significantincrease in credit risk since initial recognition, ECLs are provided for credit losses that result fromdefault events that are possible within the next 12-months (a 12-month ECL). For those creditexposures for which there has been a significant increase in credit risk since initial recognition, a lossallowance is required for credit losses expected over the remaining life of the exposure, irrespectiveof the timing of the default (a lifetime ECL).

For cash in banks and short-term deposits, the Company applies the low credit risk simplification.The probability of default and loss given defaults are publicly available and are considered to be lowcredit risk investments. It is the Company’s policy to measure ECLs on such instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, theallowance will be based on the lifetime ECL. The Company assesses that there is significant increasein credit risk of a financial asset when default occurs.

For trade receivables and contract assets, the Company applies a simplified approach in calculatingECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a lossallowance based on lifetime ECLs at each reporting date. The Company has established a provisionmatrix that is based on its historical credit loss experience, adjusted for forward-looking factorsspecific to the debtors and the economic environment.

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For advances to related parties, refundable deposits and lease receivables, the Company applies thegeneral approach and calculates ECL based on the 12-month ECLs or lifetime ECLs, depending onwhether there has been a significant increase in credit risk on the financial instruments since initialrecognition.

The Company considers a financial asset in default when contractual payments are 30 days past due.However, in certain cases, the Company may also consider a financial asset to be in default wheninternal or external information indicates that the Company is unlikely to receive the outstandingcontractual amounts in full before taking into account any credit enhancements held by theCompany. A financial asset is written off when there is no reasonable expectation of recovering thecontractual cash flows.

The Company incorporates forward-looking information into both its assessment of whether thecredit risk of an instrument has increased significantly since its initial recognition and itsmeasurement of ECL. To do this, the Company has considered a range of relevant forward-lookingmacro-economic assumptions for the determination of unbiased general industry adjustments and anyrelated specific industry adjustments that support the calculation of ECLs.

Based on the Company’s evaluation and assessment and after taking into consideration externalactual and forecast information, the Company considers two or more economic scenarios and therelative probabilities of each outcome. External information includes economic data and forecastspublished by governmental bodies, monetary authorities and selected private-sector and academicinstitutions.

The Company has identified and documented key drivers of credit risk and credit losses of eachportfolio of financial instruments and, using an analysis of historical data, has estimated relationshipsbetween macro-economic variables and credit risk and credit losses. The Company considers macro-economic factors such as gross domestic product growth rates and inflation rates in its analysis.

Write-off Policy. A financial asset is written off when there is no reasonable expectation ofrecovering the contractual cash flows.

Financial Liabilities

Initial Recognition and Measurement. Financial liabilities are classified, at initial recognition, asfinancial liabilities at FVTPL, loans and borrowings, payables, or as derivatives designated ashedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings,and payables, net of directly attributable transaction costs.

The Company has no financial liabilities at FVTPL or as derivatives designated as hedginginstruments in an effective hedge as at December 31, 2019 and 2018.

Subsequent Measurement. The measurement of financial liabilities depends on their classification asdescribed below.

§ Loans and Borrowings, and Payables. This is the category relevant to the Company. After initialrecognition, interest-bearing loans and borrowings, and payables are subsequently measured atamortized cost using the EIR method. Gains and losses are recognized in profit or loss when theliabilities are derecognized as well as through the EIR amortization process.

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Amortized cost is calculated by taking into account any discount or premium on acquisition andfees or costs, including debt issue costs for the Company’s debts that are an integral part of theEIR. The EIR amortization is included as interest expense in the parent company statement ofcomprehensive income.

The Company’s financial liabilities include trade payables and other current liabilities (excludinglocal and other taxes payable, liabilities to government agencies and unearned revenues from giftcertificates), long-term debt, due to related parties and lease liabilities, which are all classified asloans and borrowings as at December 31, 2019 and 2018.

§ Debt Issue Costs. Debt issue costs are specific incremental costs, other than those paid to thelender, that are directly related to issuing a debt instrument. These are presented in the parentcompany statement of financial position as a reduction from the related debt instrument and areamortized through the EIR amortization process.

Derecognition. A financial liability is derecognized when the obligation under the liability isdischarged, cancelled or has expired. When an existing financial liability is replaced by another fromthe same lender on substantially different terms, or the terms of an existing liability are substantiallymodified, such an exchange or modification is treated as a derecognition of the original liability andthe recognition of a new liability, and the difference in the respective carrying amounts is recognizedin the parent company statement of comprehensive income.

Offsetting of Financial InstrumentsFinancial assets and financial liabilities are offset and the net amount is reported in the parentcompany statement of financial position if there is a currently enforceable legal right to offset therecognized amounts and there is an intention to settle on a net basis, to realize the assets and settle theliabilities simultaneously. The Company assesses that it has a currently enforceable right of offset ifthe right is not contingent on a future event, and is legally enforceable in the normal course ofbusiness, event of default, and event of insolvency or bankruptcy of the Company and all of thecounterparties.

Contract Balances

Contract Assets. These pertain to unbilled revenues. A contract asset is the right to consideration inexchange for goods or services transferred to the customer. If the Company performs by transferringgoods or services to a customer before the customer pays consideration or before payment is due, acontract asset is recognized for the earned consideration that is conditional.

Trade Receivables. A receivable represents the Company’s right to an amount of consideration that isunconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract Liabilities. A contract liability is the obligation to transfer goods or services to a customerfor which the Company has received consideration (or an amount of consideration is due) from thecustomer. If a customer pays consideration before the Company transfers goods or services to thecustomer, a contract liability is recognized when the payment is made or the payment is due(whichever is earlier). Contract liabilities are recognized as revenue when the Company performsunder the contract.

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InventoriesInventories are valued at the lower of cost and net realizable value. Costs are accounted for asfollows:

Processed inventories - Standard costing, which is reviewed on aquarterly basis and revised as necessaryto approximate current costs determinedusing first in, first out (FIFO). Costincludes direct materials, labor and aproportion of manufacturing overheadcosts based on normal operating capacity.

Food supplies, packaging, store andother supplies, and novelty items

- Standard costing, which is reviewed on aquarterly basis and revised as necessaryto approximate current costs determinedusing FIFO.

Net realizable value of processed inventories is the estimated selling price in the ordinary course ofbusiness, less estimated costs of completion and the estimated costs necessary to make the sale.

Net realizable value of food supplies, packaging, store and other supplies is the current replacementcost.

Net realizable value of novelty items is the estimated selling price in the ordinary course of business,less the estimated costs necessary to make the sale.

Other Current AssetsOther current assets include creditable withholding taxes, which will be applied against theCompany’s corporate income tax due; prepaid expenses which are expenses paid in advance andrecorded as asset before they are utilized or expire; and deposits which pertain to deposits to suppliersto be applied for future purchases. Prepaid expenses include unamortized portion of prepaid car planbenefits shouldered by the Company on the availment of its employees’ car assistance plan.

Property, Plant and EquipmentProperty, plant and equipment, except land and construction in progress, are stated at cost lessaccumulated depreciation and amortization and any accumulated impairment in value. Such costincludes the cost of replacing part of property, plant and equipment at the time that cost is incurred, ifthe recognition criteria are met, and excludes the costs of day-to-day servicing. Land is stated at costless any impairment in value.

The initial cost of property, plant and equipment consists of its purchase price, including importduties and nonrefundable taxes and any other costs directly attributable to bringing the asset to itsworking condition and location for its intended use. Cost also includes any related asset retirementobligation and interest incurred during the construction period on funds borrowed to finance theconstruction of the asset. Expenditures incurred after the property, plant and equipment have beenput into operation, such as repairs and maintenance, are normally charged to profit or loss in the yearin which the costs are incurred. In situations where it can be clearly demonstrated that theexpenditures have resulted in an increase in the future economic benefits expected to be obtainedfrom the use of an item of property, plant and equipment beyond its originally assessed standard ofperformance, the expenditures are capitalized as additional costs of property, plant and equipment.

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Depreciation and amortization are calculated on a straight-line basis over the following estimateduseful lives of the assets:

Buildings, commercial condominiumunits and improvements

5 - 40 years

Leasehold rights and improvements 2 - 10 years or term of the lease,whichever is shorter

Office, store and food processing equipment 1 - 15 yearsFurniture and fixtures 3 - 5 yearsTransportation equipment 3 - 5 years

The residual values, if any, useful lives and depreciation and amortization method of the assets arereviewed at the end of each financial period and adjusted prospectively, if appropriate.

Fully depreciated assets are retained in the accounts until they are disposed or retired.

An item of property, plant and equipment is derecognized upon disposal or when no future economicbenefits are expected from its use or disposal. Any gain or loss arising from the derecognition of theasset (calculated as the difference between the disposal proceeds and the carrying amount of the asset)is recognized in profit or loss in the period the asset is derecognized.

Construction in progress represents assets under construction and is stated at cost less any impairmentin value. This includes the cost of construction and other direct costs. Cost also includes interest onborrowed funds incurred during the construction period. Construction in progress is not depreciateduntil such time that the relevant assets are completed and ready for use.

Intangible AssetsIntangible assets acquired separately are measured at cost on initial recognition. Following initialrecognition, intangible assets are carried at cost less any accumulated amortization and anyaccumulated impairment loss. The useful lives of intangible assets are assessed at the individual assetlevel as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life using the straight-linemethod and assessed for impairment whenever there is an indication that the intangible assets may beimpaired. At a minimum, the amortization period and the amortization method for an intangible assetwith a finite useful life are reviewed at least at each financial year-end. Changes in the expecteduseful life or the expected pattern of consumption of future economic benefits embodied in the assetare accounted for by changing the amortization period or method, as appropriate, and treated aschanges in accounting estimates.

The estimated useful lives used in amortizing the intangible assets are disclosed in Note 12.

Gains or losses arising from derecognition of an intangible asset are measured as the differencebetween the net disposal proceeds and the carrying amount of the as[set, and are recognized in profitor loss when the asset is derecognized.

Investment PropertiesInvestment properties consist of land and buildings and building improvements held by the Companyfor capital appreciation and rental purposes. Investment properties, except land, are carried at cost,including transaction costs, less accumulated depreciation and amortization and any impairment invalue. Cost also includes the cost of replacing part of an existing investment property at the time thatcost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of aninvestment property. Land is carried at cost less any impairment in value.

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The depreciation of buildings and building improvements are calculated on a straight-line basis overthe estimated useful lives of the assets which are five (5) to twenty (20) years.

The residual values, if any, useful lives and method of depreciation and amortization of the assets arereviewed and adjusted, if appropriate, at each financial year-end.

Investment property is derecognized when either it has been disposed of or when the investmentproperty is permanently withdrawn from use and no future economic benefit is expected from itsdisposal. Any gains or losses on the retirement or disposal of an investment property are recognizedin profit or loss in the year of retirement or disposal.

Transfers to investment property are made only when there is a change in use, evidenced by ending ofownership-occupation, or commencement of an operating lease to another party. Transfers frominvestment property are made only when there is a change in use, evidenced by commencement ofowner-occupation or commencement of development with a view to sell.

Investments in SubsidiariesInvestments in subsidiaries are accounted for at cost less any impairment in value. A subsidiary is anentity controlled by the Company. The Company controls an entity when it is exposed or has rightsto variable returns from its involvement with the entity and has the ability to affect those returnsthrough its power over the entity.

Interests in Joint Ventures and an AssociateAn associate is an entity over which the Company has significant influence. Significant influence isthe power to participate in the financial and operating policy decisions of the investee, but is not incontrol or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the joint venture. Joint control is the contractually agreedsharing of control of an arrangement, which exists only when decisions about the relevant activitiesrequire unanimous consent of the parties sharing control.

The Company’s interests in joint ventures and an associate are accounted for using the equity methodbased on the percentage share of ownership and capitalization. Interest in a joint venture is accountedfor under the equity method from the date the joint control is obtained.

Under the equity method, the Company’s interests in joint ventures and an associate are carried in theparent company statement of financial position at cost plus the Company’s share in post-acquisitionchanges in the net assets of an associate or joint venture, less any impairment in value. Goodwillrelating to the associate or joint venture is included in the carrying amount of the investment and isnot amortized.

When the Company’s share of losses in the associate or joint venture equals or exceeds its interest,including any other unsecured receivables, the Company does not recognize further losses, unless ithas incurred obligations or made payments on behalf of the associate or joint venture. Where therehas been a change recognized directly in the equity of the associate or joint venture, the Companyrecognizes its share in any changes and discloses this, when applicable, in the parent companystatement of changes in equity.

The reporting dates of the Company and the associate or joint venture are identical and the latter’saccounting policies conform to those used by the Company for like transactions and events in similarcircumstances.

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The Company ceases to use the equity method of accounting on the date from which it no longer hasjoint control in the joint ventures, no longer has significant influence over the associates, or when theinterest becomes held for sale.

Upon loss of significant influence over the associate or joint control over the joint ventures, theCompany measures and recognizes its remaining investment at its fair value. Any difference betweenthe carrying amount of the former associate or former jointly controlled entities upon loss ofsignificant influence or joint control, and the fair value of the remaining investment and proceedsfrom disposal is recognized in profit or loss. When the remaining interest in the former jointlycontrolled entity constitutes significant influence, it is accounted for as interest in an associate.

Impairment of Nonfinancial AssetsThe carrying values of investments in and advances to subsidiaries and interests in a joint venture andan associate, property, plant and equipment, right-of-use assets, intangible assets, investmentproperties, and other noncurrent assets are reviewed for impairment when events or changes incircumstances indicate that the carrying value may not be recoverable. If any such indication exists,and if the carrying value exceeds the estimated recoverable amount, the asset or cash generating unit(CGU) are written down to their recoverable amounts. The recoverable amount of the asset is thegreater of fair value less costs to sell or value in use.

The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s-lengthtransaction between knowledgeable, willing parties, less costs of disposal. In assessing value in use,the estimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risks specific to the asset. Foran asset that does not generate largely independent cash inflows, the recoverable amount isdetermined for the CGU to which the asset belongs. Impairment losses are recognized in profit orloss in those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previouslyrecognized impairment losses may no longer exist or may have decreased. If such indication exists,the recoverable amount is estimated. A previously recognized impairment loss is reversed only ifthere has been a change in the estimates used to determine the asset’s recoverable amount since thelast impairment loss was recognized. If that is the case, the carrying amount of the asset is increasedto its recoverable amount. That increased amount cannot exceed the carrying amount that would havebeen determined, net of depreciation and amortization, had no impairment loss been recognized forthe asset in prior years. Such reversal is recognized in profit or loss. After such a reversal, thedepreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, lessany residual value on a systematic basis over its remaining useful life.

Equity

Capital Stock and Additional Paid-in Capital. Capital stock is measured at par value for all sharesissued. Proceeds and/or fair value of considerations received in excess of par value, if any, arerecognized as additional paid-in capital. Incremental costs incurred directly attributable to theissuance of new shares are shown in equity as a deduction from proceeds, net of tax.

Additional paid-in capital is also credited for the cost, including income tax effect, of the Company’sequity-settled share-based payments to its employees and employees of its subsidiaries.

Subscriptions Receivable. Subscriptions receivable represents common stock subscribed and issuedby the Parent Company but payment from the shareholders has not yet been received.

Retained Earnings. Retained earnings represent the Company’s accumulated earnings, net ofdividends declared.

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Dividends. The Company recognizes a liability to make cash distribution to its equity holders whenthe distribution is authorized by the BOD and the distribution is no longer at the discretion of theCompany. A corresponding amount is recognized directly in equity. Dividends for the year that areapproved after the financial reporting date are dealt with as an event after the reporting period.

Other Comprehensive Income. Other comprehensive income comprises items of income and expense(including reclassification adjustments) that are not recognized in profit or loss. This includesremeasurement gains or losses on pension and their income tax effects.

Treasury Shares. Acquisitions of treasury shares are recorded at cost. The total cost of treasuryshares is shown in the parent company statement of financial position as a deduction from the totalequity. Upon re-issuance or resale of the treasury shares, cost of common stock held in treasuryaccount 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-incapital but only to the extent of previous gain from original issuance, sale or retirement for the sameclass of stock. Otherwise, losses are charged directly to retained earnings.

Revenue from Contracts with CustomersRevenue from contracts with customers is recognized when control of the goods or services aretransferred to the customer at an amount that reflects the consideration to which the Company expectsto be entitled in exchange for those goods or services. The Company assesses its revenuearrangements against specific criteria to determine if it is acting as a principal or as an agent. TheCompany has concluded that it is acting as principal in majority of its revenue arrangements. Thefollowing specific recognition criteria must also be met before revenue is recognized:

Sale of Goods. Revenue from sale of goods is recognized at the point in time when control istransferred to the customer, which is normally upon delivery. Sales returns and discounts arededucted from sales to arrive at net sales shown in the parent company statement of comprehensiveincome.

Royalty Fees. Revenue from royalty fees is recognized as the royalty accrues based on certainpercentages of the franchisees’ net sales.

Set-up Fees. Revenue from set-up fees is recognized on a straight-basis over the term of thefranchise agreement and when performance obligations relating to the payment of set-up fees havebeen satisfied.

Service Fees. Revenue is recognized in the period in which the service has been rendered.

Management Fees. Revenue is recognized in the period in which the administration services has beenrendered based on a certain percentage of the total costs incurred.

System-wide Advertising Fee. Revenues consisting of reimbursements of network advertising andpromotional costs from franchisees are recognized upon performance of service.

Dividend IncomeDividend income is recognized when the Company’s rights as a shareholder to receive the payment isestablished.

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Interest IncomeInterest income is recognized as the interest accrues, taking into account the effective yield on theasset.

Equity in Net Earnings (Losses) of Joint VenturesShare in the net income or loss of joint ventures proportionate to the equity in the economic shares ofsuch joint ventures is recognized by the Company in accordance with the equity method.

Other IncomeOther income is recognized when there is an incidental economic benefit, other than the usualbusiness operations, that will flow to the Company through an increase in asset or reduction inliability and that can be measured reliably.

Cost and ExpensesCost and expenses are decreases in economic benefits during the accounting period in the form ofoutflows or decreases in assets or incurrence of liabilities that result in decreases in equity, other thanthose relating to distributions to equity participants. Cost and expenses are recognized as incurred.

Advertising and promotions expenses include costs incurred for advertising schemes and promotionalactivities for new products.

Pension BenefitsThe pension liability is the aggregate of the present value of the defined benefit obligation at the endof the reporting period reduced by the fair value of plan assets.

The cost of providing benefits under the defined benefit plans is actuarially determined using theprojected unit credit method.

Pension expense comprise the following:

§ Service cost; and§ Net interest on the pension liability.

Service costs which include current service costs, past service costs and gains or losses on non-routine settlements are recognized as part of pension expense in profit or loss. Past service costs arerecognized when plan amendment or curtailment occurs. These amounts are calculated periodicallyby independent qualified actuaries.

Net interest on the pension liability is the change during the period in the liability that arises from thepassage of time which is determined by applying the discount rate based on government bonds to thepension liability. Net interest on the pension liability is recognized under “Cost of sales and services”and “General and administrative expenses” in the parent company statement of comprehensiveincome as part of pension expense.

Remeasurements comprising actuarial gains and losses, return on plan assets (excluding net interest)are recognized immediately in OCI in the period in which they arise. Remeasurements are notreclassified to profit or loss in subsequent periods.

Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurancepolicies. Plan assets are not available to the creditors of the Company, nor can they be paid directlyto the Company. Fair value of plan assets is based on market price information. When no marketprice is available, the fair value of plan assets is estimated by discounting expected future cash flowsusing a discount rate that reflects both the risk associated with the plan assets and the maturity or

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expected disposal date of those assets (or, if they have no maturity, the expected period until thesettlement of the related obligations). If the fair value of the plan assets is higher than the presentvalue of the defined benefit obligation, the measurement of the resulting pension asset is limited tothe present value of economic benefits available in the form of refunds from the plan or reductions infuture contributions to the plan.

Employee Leave EntitlementEmployee entitlements to annual leave are recognized as a liability when they are accrued to theemployees. The Company recognizes undiscounted liability for leave expected to be settled whollywithin twelve months after the end of the annual reporting period.

Share-based PaymentsThe Company has stock option plans granting management, consultants and selected employees anoption to purchase a fixed number of the Company’s shares of stock at a stated price during aspecified period (“equity-settled transactions”).

The cost of the options granted to the Company’s management, consultants and employees thatbecome vested is recognized in profit or loss with an equivalent credit to additional paid-in capitalover the period in which the performance and/or service conditions are fulfilled, ending on the dateon which the relevant employees become fully entitled to the award (“vesting date”). The cost of theoptions granted to management, consultants and employees of subsidiaries, on the other hand, isrecognized as additional investment in those subsidiaries.

The fair value is determined using the Black-Scholes Option Pricing Model. The cumulative expenserecognized for share-based transactions at each reporting date until the vesting date reflects the extentto which the vesting period has expired and the Company’s best estimate of the number of equityinstruments that will ultimately vest. The charge or credit in profit or loss or the investment accountfor a period represents the movement in cumulative expense recognized as of the beginning and endof that period.

No expense is recognized for awards that do not ultimately vest, provided that all other performanceconditions are satisfied.

Where the terms of a share-based award are modified, as a minimum, an expense is recognized as ifthe terms had not been modified. In addition, an expense is recognized for any modification, whichincreases the total fair value of the share-based payment agreement, or is otherwise beneficial tomanagement and employees as measured at the date of modification.

Where a share-based award is cancelled, it is treated as if it had vested on the date of cancellation, andany expense not yet recognized for the award is recognized immediately. However, if a new award issubstituted for the cancelled award, and designated as a replacement award on the date that it isgranted, the cancelled and new awards are treated as if there were a modification of the originalaward.

LeasesThe determination of whether an arrangement is, or contains a lease is based on the substance of theagreement at inception date of whether the fulfillment of the arrangement is dependent on the use of aspecific asset or assets or the arrangement conveys a right to use the asset, even if that is not explicitlyspecified in an arrangement.

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Company as Lessee. The Company applies a single recognition and measurement approach for allleases, except for short-term leases and leases of low-value assets. The Company recognizes leaseliabilities to make lease payments and right-of-use assets representing the right to use the underlyingassets.

§ Right-of-Use Assets. The Company recognizes right-of-use assets at the commencement date ofthe lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measuredat cost, less any accumulated depreciation and impairment losses, and adjusted for anyremeasurement of lease liabilities. The cost of right-of-use assets includes the amount of leaseliabilities recognized, initial direct costs incurred, and lease payments made at or before thecommencement date less any lease incentives received and estimate of costs to be incurred by thelessee in dismantling and removing the underlying asset, restoring the site on which it is locatedor restoring the underlying asset to the condition required by the terms and conditions of thelease, unless those costs are incurred to produce inventories. Unless the Company is reasonablycertain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful lifeand the lease term as follows:

Warehouses 15 - 35 yearsLand 5 - 20.5 yearsQSR outlets 1.5 - 25.5 yearsOffice and parking spaces 2 - 11 years

§ Lease Liabilities. At the commencement date of the lease, the Company recognizes leaseliabilities measured at the present value of lease payments to be made over the lease term. Thelease payments include fixed payments (including in substance fixed payments) less any leaseincentives receivable, variable lease payments that depend on an index or a rate, and amountsexpected to be paid under residual value guarantees. The lease payments also include theexercise price of a purchase option reasonably certain to be exercised by the Company andpayments of penalties for terminating a lease, if the lease term reflects the Company exercisingthe option to terminate. The variable lease payments that do not depend on an index or a rate arerecognized as expense in the period on which the event or condition that triggers the paymentoccurs.

In calculating the present value of lease payments, the Company uses the incremental borrowingrate (IBR) at the lease commencement date if the interest rate implicit in the lease is not readilydeterminable. After the commencement date, the amount of lease liabilities is increased to reflectthe accretion of interest and reduced for the lease payments made. In addition, the carryingamount of lease liabilities is remeasured if there is a modification, a change in the lease term, achange in the in-substance fixed lease payments or a change in the assessment to purchase theunderlying asset.

§ Short-term Leases and Leases of Low-value Assets. The Company applies the short-term leaserecognition exemption to its short-term leases of outside seating space and office space. It alsoapplies the lease of low-value assets recognition exemption to leases of that are considered of lowvalue (i.e., below USD5,000 or approximately P=250,000). Lease payments on short-term leasesand leases of low-value assets are recognized as expense on a straight-line basis over the leaseterm.

Company as Lessor. Leases which do not transfer to the lessee substantially all the risks andbenefits of ownership of the asset are classified as operating leases. Initial direct costs incurred innegotiating an operating lease are added to the carrying amount of the leased asset and recognizedover the lease term on the same basis as rent income. Rent income from operating leases isrecognized as income in profit or loss on a straight-line basis over the lease term.

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Foreign Currency-Denominated TransactionsTransactions in foreign currencies are recorded in Philippine peso using the Company rate at the dateof the transaction. Monetary assets and liabilities denominated in foreign currencies are restatedusing the closing rate of Company at the reporting date. All differences are taken to profit or loss.Nonmonetary items that are measured in terms of historical cost in a foreign currency are translatedusing the Company rates as at the dates of the initial transactions. Nonmonetary items measured atfair value in a foreign currency are translated using the Company rates at the date when the fair valuewas determined.

TaxesCurrent Tax. Current tax liabilities for the current and prior periods are measured at the amountexpected to be paid to the tax authority. The tax rates and tax laws used to compute the amount arethose that are enacted or substantively enacted at reporting date.

Current income tax relating to items recognized directly in equity is recognized directly in equity (notin profit or loss). Management periodically evaluates positions taken in the tax returns with respect tosituations in which applicable tax regulations are subject to interpretation and establishes provisionswhere appropriate.

Deferred Tax. Deferred tax is provided, using the balance sheet liability method, on all temporarydifferences at reporting date between the tax bases of assets and liabilities and their carrying amountsfor financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

§ where the deferred tax liability arises from the initial recognition of goodwill or of an asset orliability in a transaction that is not a business combination and, at the time of the transactions,affects neither the accounting profit nor taxable profit; and

§ in respect of taxable temporary differences associated with investments in subsidiaries andinterests in a joint arrangement and an associate, where the timing of the reversal of thetemporary differences can be controlled and it is probable that the temporary differences will notreverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences and carryforward benefitsof unused tax credits from excess minimum corporate income tax (MCIT) over regular corporateincome tax (RCIT) and net operating loss carryover (NOLCO), to the extent that it is probable thatfuture taxable profit will be available against which the deductible temporary differences andcarryforward benefits of excess MCIT over RCIT and NOLCO can be utilized except:

§ where the deferred tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at thetime of the transaction, affects neither the accounting profit nor taxable profit; and

§ in respect of deductible temporary differences associated with investments in subsidiaries andinterests in a joint arrangement and an associate, deferred tax assets are recognized only to theextent that it is probable that the temporary differences will reverse in the foreseeable future andtaxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to theextent that it is no longer probable that sufficient future taxable profit will be available to allow all orpart of the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at eachreporting date and are recognized to the extent that it has become probable that future taxable profitwill allow the deferred tax assets to be recovered.

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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the yearwhen the asset is realized or the liability is settled, based on tax rates and tax laws that have beenenacted or substantially enacted at reporting date.

Deferred tax relating to items recognized outside profit or loss are recognized also outside profit orloss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI ordirectly in equity.

Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current taxassets against current tax liabilities and the deferred taxes relate to the same taxable entity and thesame taxation authority.

Value-added Tax. Revenue, expenses and assets are recognized net of the amount of VAT, ifapplicable.

When VAT from sales of goods and/or services (output VAT) exceeds VAT passed on frompurchases of goods or services (input VAT), the excess is recognized as part of “Trade payables andother current liabilities” account in the parent company statement of financial position. When VATpassed on from purchases of gods or services (input VAT) exceeds VAT from sales of goods and/orservices (output VAT), the excess is recognized as part of “Other current assets” account in the parentcompany statement of financial position.

Earnings per Share (EPS) Attributable to Equity Holders of the Parent CompanyBasic EPS is calculated by dividing the net income for the year attributable to the equity holders ofthe 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 ofthe Parent Company by the weighted average number of common shares outstanding during theperiod, adjusted for any potential common shares resulting from the assumed exercise of outstandingstock options. Outstanding stock options will have dilutive effect under the treasury stock methodonly when the average market price of the underlying common share during the period exceeds theexercise price of the option.

Where the EPS effect of the shares to be issued to management and employees under the stock optionplan would be anti-dilutive, the basic and diluted EPS would be stated at the same amount.

For the parent company financial statements, the EPS is presented on the basis of the consolidated netincome.

ProvisionsProvisions are recognized when the Company has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation and a reliable estimate can be made of the amount of the obligation.If the effect of the time value of money is material, provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects current market assessment of the time valueof money and, where appropriate, the risks specific to the liability. Where discounting is used, theincrease in the provision due to the passage of time is recognized as interest expense.

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ContingenciesContingent liabilities are not recognized in the parent company financial statements. These aredisclosed in the notes to the parent company financial statements unless the possibility of an outflowof resources embodying economic benefits is remote. Contingent assets are not recognized in theparent company financial statements but disclosed in the notes to the parent company financialstatements when an inflow of economic benefits is probable.

Business SegmentsThe Company is organized and managed separately according to the nature of business. The threemajor operating businesses of the Company are food service, franchising and leasing. Theseoperating businesses are the basis upon which the Company reports its operating segment informationpresented in the consolidated financial statements filed with the SEC.

Events after the Reporting PeriodPost year-end events that provide additional information about the parent company financial positionat the reporting date (adjusting events) are reflected in the parent company financial statements. Postyear-end events that are not adjusting events are disclosed in the notes to the parent companyfinancial statements when material.

4. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the parent company financial statements requires management to make judgments,estimates and assumptions that affect the reported amounts of revenues, expenses, assets andliabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertaintyabout these assumptions and estimates could result in outcomes that could require a materialadjustment to the carrying amount of the affected asset or liability in the future.

The Company believes the following represents a summary of these significant judgments, estimatesand assumptions and the related impact and associated risks on the parent company financialstatements.

JudgmentsIn the process of applying the Company’s accounting policies, management has made the followingjudgments, apart from those involving estimations and assumptions, which have the most significanteffect on the amounts recognized in the parent company financial statements.

Revenue Contracts with Customers - Determining the Timing of Satisfaction of Set-up Fees. TheCompany undertakes activities prior to store opening (e.g., initial training, site development, systemsset-up, etc.) as indicated in the franchise agreement. The Company determines whether theseactivities are capable of being distinct (i.e., whether the franchisee can benefit on each of theseactivities on a standalone basis) and whether these activities are distinct within the context of thefranchise agreement (i.e., whether these activities can be separated from the franchise license grantedto the franchisee).

The Company determined that revenue from set-up fees should be recognized on a straight-basis overthe term of the franchise agreement and when performance obligations relating to the payment of set-up fees have been satisfied.

Principal versus Agent Consideration. The Company’s agreement with the franchisee includes theright to charge the franchisee its share in the Company’s nationwide advertising and marketing effortsas well as fees for the Company’s administration of various advertisements, network and media

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placements. The Company determined that it is acting as principal for the nationwide advertisingbecause it is the Company who retains the right to direct the service provider of the advertisements,network and media placements, and has the discretion on how to price the advertising fee charges.The Company considers both the legal form and the substance of its agreement to determine eachparty’s respective roles in the agreement.

Property Lease Classification - Company as Lessor. The Company has entered into commercialproperty leases on its investment property portfolio and subleased properties. Management hasdetermined, based on an evaluation of the terms and conditions of the arrangements, such that thelease term not constituting a major part of the economic life of the commercial property and thepresent value of the minimum lease payments not amounting to substantially all the fair value of thecommercial property, that it retains substantially all the risks and rewards incidental to ownership ofthese properties and accounts for the contracts as operating leases.

Rent income amounted to P=278.6 million and P=218.4 million in 2019 and 2018, respectively(see Note 29).

Determining the Lease Term of Contracts with Renewal Options - Company as a Lessee. TheCompany has lease contracts that include renewal options. The Company applies judgment inevaluating whether it is reasonably certain whether or not to exercise the option to renew the lease.That is, it considers all relevant factors that create an economic incentive for it to exercise therenewal. After the commencement date, the Company reassesses the lease term if there is asignificant event or change in circumstances that is within its control and affects its ability to exerciseor not to exercise the option to renew the lease. The Company typically exercises its option to renewfor these leases because there will be a significant negative effect on operations if a replacement assetis not readily available.

Estimates and AssumptionsThe key estimates and assumptions concerning the future and other key sources of estimationuncertainty at reporting date that has a significant risk of causing a material adjustment to the carryingamounts of assets and liabilities within the next financial year are discussed below. The Companybased its assumptions and estimates on parameters available when the parent company financialstatements were prepared. Existing circumstances and assumptions about future developments,however, may change due to market changes or circumstances arising beyond the control of theCompany. Such changes are reflected in the assumptions when they occur.

Leases - Determining the IBR. The Company cannot readily determine the interest rate implicit in thelease, therefore, it uses its IBR to measure lease liabilities. The IBR is the rate of interest that theCompany would have to pay to borrow over a similar term, and with a similar security, the fundsnecessary to obtain an asset of a similar value to the right-of-use asset in a similar economicenvironment. The IBR therefore reflects what the Company would have to pay, which requiresestimation since there are no observable rates available (such as for entities that do not enter intofinancing transactions). The Company estimates the IBR using observable inputs (such as marketinterest rates) and is required to make certain entity-specific estimates (such as the Company’s stand-alone credit rating). In determining the incremental borrowing rate, the Company used risk-free rateat lease inception date plus credit spread where the credit spread is based on the credit risk of thelessee in reference to its existing borrowings and Company’s credit risk.

Impairment of Receivables and Contract Assets. The Company uses a provision matrix to calculateECLs for its receivables and contract assets. The provision rates are based on days past due.

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The provision matrix is initially based on the Company’s historical observed default rates. TheCompany calibrates the matrix to adjust the historical credit loss experience with forward-lookinginformation. At every reporting date, the historical observed default rates are updated and changes inthe forward-looking estimates are analyzed.

The assessment of the correlation between historical observed default rates, forward-lookinginformation, and ECLs is a significant estimate. The amount of ECLs is sensitive to changes incircumstances and of forecast economic conditions. The Company’s historical credit loss experienceand forecast of economic conditions may also not be representative of customer’s actual default in thefuture.

Provision for impairment loss on receivables amounted to nil and P=0.9 million in 2019 and 2018,respectively. Reversal of impairment loss amounted to nil and P=13.8 million in 2019 and 2018,respectively (see Notes 6 and 22).

The carrying value of receivables and contract assets amounted to P=6,031.7 million andP=7,943.6 million in 2019 and 2018, respectively (see Note 6).

Net Realizable Value of Inventories. The Company writes down inventories to net realizable value,through the use of an allowance account, whenever the net realizable value of inventories becomeslower than cost due to damage, physical deterioration, obsolescence, changes in price levels or othercauses.

Estimates of net realizable value are based on the most reliable evidence available at the time theestimates are made of the amounts the inventories are expected to be realized. These estimates take intoconsideration fluctuations of prices or costs directly relating to events occurring after reporting date to theextent that such events confirm conditions existing at the reporting date. The allowance account isreviewed on a regular basis to reflect the accurate valuation in the financial records.

Provision for inventory obsolescence amounted to nil and P=0.6 million in 2019 and 2018, respectively(see Notes 7 and 22). Reversal of allowance for inventory obsolescence amounted to P=5.5 million and nilin 2019 and 2018, respectively (see Notes 7 and 22). The carrying value of inventories amounted toP=665.1 million and P=2,771.9 million as at December 31, 2019 and 2018, respectively (see Note 7).

Impairment of Property, Plant and Equipment, Intangible Assets, Investment Properties and Right-of-Use Assets. The Company performs annual impairment review of property, plant and equipment,intangible assets, investment properties and right-of-use assets when certain impairment indicators arepresent. Determining the fair value of assets, which requires the determination of future cash flowsexpected to be generated from the continued use and ultimate disposition of such assets, requires theCompany to make estimates and assumptions that can materially affect the parent company financialstatements. Future events could cause the Company to conclude that the assets are impaired. Anyresulting impairment loss could have a material adverse impact on the Company’s financial position andperformance.

The aggregate carrying amounts of property, plant and equipment, intangible assets, investmentproperties and right-of-use assets as at December 31 follow:

2019 2018Property, plant and equipment (see Note 11) P=5,245,763,266 P=4,312,277,357Intangible assets (see Note 12) 417,191,603 527,436,559Investment properties (see Note 13) 1,229,865,684 1,261,535,674Right-of-use assets (see Note 29) 5,371,486,052 6,202,581,689

P=12,264,306,605 P=12,303,831,279

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Estimating Useful Lives of Depreciable Property, Plant and Equipment, Intangible Assets andDepreciable Investment Properties. The Company estimates the useful lives of depreciable property,plant and equipment, intangible assets and depreciable investment properties based on the period overwhich the assets are expected to be available for use and based on the collective assessment of theindustry practice, internal technical evaluation and experience with similar assets. The estimateduseful lives of depreciable property, plant and equipment, intangible assets with finite useful life anddepreciable investment properties are reviewed periodically and are updated if expectations differfrom previous estimates due to physical wear and tear, technical or commercial obsolescence andlegal or other limits in the use of the assets as applicable. However, it is possible that future financialperformance could be materially affected by changes in the estimates brought about by changes in thefactors mentioned above. The amounts and timing of recording of depreciation and amortization forany period would be affected by changes in these factors and circumstances. A reduction in theestimated useful lives of depreciable property, plant and equipment, intangible assets with finiteuseful lives and depreciable investment properties would increase the recorded depreciation andamortization and decrease noncurrent assets.

There were no changes in the estimated useful lives of depreciable property, plant and equipment,intangible assets and depreciable investment properties in 2019 and 2018.

Impairment of Investments in Subsidiaries and Interests in and Advances to Joint Ventures and anAssociate. An impairment test of investments in subsidiaries and interests in joint ventures and anassociate is performed when events or changes in circumstances indicate that the carrying value maynot be recoverable. This requires management to make an estimate of the expected long-term growthrates and earnings before interest, taxes, depreciation and amortization (EBITDA) from thesubsidiaries, joint ventures and associate, and also consider market data in determining a discount ratein order to calculate the present value of those cash flows.

There were no provisions for impairment losses on investments in subsidiaries and interests in jointventures and an associate in 2019 and 2018. The carrying values of investments in subsidiaries andinterests in joint ventures and an associate as at December 31 follow:

2019 2018Investment in subsidiaries (see Note 10) P=45,633,545,401 P=42,444,404,768Interests in (see Note 10):

Joint ventures 299,429,459 233,406,000Associate 10,585,500 10,585,500

Advances to a joint venture (see Note 10) 1,240,606,190 –P=47,184,166,550 P=42,688,396,268

Realizability of Deferred Tax Assets. The carrying amount of deferred tax assets at each reporting date isreviewed and reduced to the extent that sufficient taxable profits will not be available to allow all or partof the deferred tax assets to be utilized. The Company’s assessment on the recognition of deferred taxassets is based on forecasted taxable income. This forecast is based on future expectations on revenuesand expenses as well as management’s plans and strategies.

The carrying amount of deferred tax assets amounted to P=4,091.8 million and P=4,962.1 million as atDecember 31, 2019 and 2018, respectively (see Note 25). There were no unrecognized deferred taxassets as at December 31, 2019 and 2018.

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*SGVFSM000079*

Pension Benefits. The pension expense as well as the present value of the defined benefit obligations aredetermined using actuarial valuations. The actuarial valuation involves making various assumptions.These include the determination of the discount rates and future salary increases. Due to the complexityof the valuation, the underlying assumptions and its long-term nature, defined benefit obligations arehighly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

In determining the appropriate discount rate, management considers the interest rates of governmentbonds that are denominated in the currency in which the benefits will be paid, with extrapolatedmaturities corresponding to the expected duration of the defined benefit obligations.

Future salary increases are based on budgeted salary increases.

Pension liability amounted to P=1,205.4 million and P=729.9 million as at December 31, 2019 and2018, respectively. The Company recognized net pension expense of P=205.0 million in 2019 and netpension income of P=25.6 million in 2018 (see Notes 21, 22, 24 and 26).

Share-based Payments. The Company measures the cost of its equity-settled transactions withmanagement and employees by reference to the fair value of the equity instruments at the grant date.Estimating fair value for share-based payment transactions requires determining the most appropriatevaluation model, which is dependent on the terms and conditions of the grant. The estimate also requiresdetermining the most appropriate inputs to the valuation model including the expected life of the shareoption, volatility and dividend yield and making assumptions about these inputs. The fair value of theshare option is being determined using the Black-Scholes Option Pricing Model. The expected life of thestock options is based on the expected exercise behavior of the stock option holders and is not necessarilyindicative of the exercise patterns that may occur. The volatility is based on the average historical pricevolatility which may be different from the expected volatility of the shares of the Company.

Total expense arising from share-based payments recognized by the Company amounted toP=237.0 million and P=277.8 million in 2019 and 2018, respectively (see Notes 22 and 27).

Fair Value of Financial Assets and Liabilities. When the fair values of financial assets and financialliabilities are recorded or disclosed in the parent company statement of financial position cannot bemeasured based on quoted prices in active markets, their fair value is measured using valuationtechniques, including the discounted cash flow model. The inputs to these models are taken fromobservable markets where possible, but when this is not feasible, a degree of judgment is required inestablishing fair values. Judgments include considerations of inputs such as liquidity risk, credit riskand volatility. Changes in assumptions about these factors could affect the reported fair value offinancial instruments.

The fair value of financial assets and liabilities are discussed in Note 31.

Provisions and Contingencies. The Company is currently involved in litigations, claims and disputeswhich are normal to its business. Cost estimates for the resolution of these claims has been developedin consultation with the Company’s legal counsels and based upon an analysis of potential results.The inherent uncertainty over the outcome of these matters is brought about by the differences in theinterpretation and application of laws and rulings. Management believes that the ultimate liability, ifany, with respect to these litigations, claims and disputes will not materially affect the financialposition and performance of the Company.

The carrying amount of the Company’s provisions for litigations, claims and disputes amounted toP=30.5 million as at December 31, 2019 and 2018 (see Notes 16 and 29).

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5. Cash and Cash Equivalents and Short-term Investments

Cash and Cash EquivalentsThis account consists of:

2019 2018Cash on hand P=105,804,204 P=114,041,754Cash in banks 1,784,781,764 1,840,908,913Short-term deposits 1,883,236,961 6,381,515,246

P=3,773,822,929 P=8,336,465,913

Cash in banks earn interest at the respective savings or special demand deposit rates. Short-termdeposits are made for varying periods of up to three months depending on the immediate cashrequirements of the Company and earn interest at the respective short-term deposit rates.

Short-term InvestmentsThe Company also has short-term investments amounting to P=1,030.8 million and nil as at December31, 2019 and 2018, respectively. These pertain to deposits with maturities of more than three monthsbut less than a year.

Interest income earned from cash and cash equivalents and short-term investments amounted toP=102.8 million and P=100.9 million in 2019 and 2018, respectively (see Note 23).

6. Receivables and Contract Assets


2019 2018Trade receivables from:

Franchisees and customers P=1,282,025,135 P=2,293,589,367Related parties (see Notes 28 and 30) 3,115,503,261 4,569,658,490

4,397,528,396 6,863,247,857Less allowance for impairment loss 24,210,358 194,210,358

4,373,318,038 6,669,037,499Employee advances 50,952,137 47,595,221Current portion of employee car plan receivables

(see Note 14) 38,677,858 45,088,625Interest receivable 6,729,880 6,217,512Others (see Note 28) 133,978,818 129,372,877

4,603,656,731 6,897,311,734Contract assets (see Note 28) 1,428,051,247 1,046,300,450

P=6,031,707,978 P=7,943,612,184

The terms and conditions of the receivables are as follows:

§ Trade receivables from franchisees and customers are noninterest-bearing and are generallycollectible on a 14-day term.

§ The terms and conditions of receivables from related parties are discussed in Note 28.

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§ Employee advances, current portion of employee car plan receivables, interest receivable, andother receivables are expected to be collected within the next financial year.

§ Other receivables consist of receivables from the retirement plan, from the Social SecuritySystem (SSS) and insurance claims.

§ The Company classifies unbilled revenues to franchisees and customers, and related parties ascontract assets. Additions in contract assets in 2019 of P=1,428.1 million pertain to the revenuesearned during the year and will be billed in 2020. Contract assets as at December 31, 2018amounting to P=1,046.3 million were billed and collected in 2019.

The movements in allowance for impairment loss on trade receivables as at December 31 follow:

2019 2018Balance at beginning of year P=194,210,358 P=207,088,508Write-off (170,000,000) –Reversal (see Note 22) – (13,798,568)Provision (see Note 22) – 920,418Balance at end of year P=24,210,358 P=194,210,358

The provisions were based on the Company’s ECLs. Receivables directly written off amounted toP=6.4 million and nil in 2019 and 2018, respectively (see Note 22).

7. Inventories

This account consists of the following items:

2019 2018At cost:

Food supplies and processed inventories P=291,660,431 P=2,535,327,848Packaging, store and other supplies 176,941,100 123,103,700

At net realizable value -Novelty items 196,521,666 113,441,703

P=665,123,197 P=2,771,873,251

The Company assesses the age of novelty items on hand in determining the amount of provision forinventory obsolescence or reversal to be recognized. Based on this assessment, the Companyrecognized a provision for inventory obsolescence amounting to P=0.6 million in 2018 and a reversalof allowance for inventory obsolescence of P=5.5 million in 2019 (see Note 22).

The cost of novelty items carried at net realizable value amounted to P=207.8 million andP=130.2 million as at December 31, 2019 and 2018, respectively.

The movements in the allowance for inventory obsolescence on novelty items as at December 31 areas follows:

2019 2018Balance at beginning of year P=16,825,401 P=16,248,751Reversal (see Note 22) (11,519,621) –Provision for the year (see Note 22) 5,973,206 576,650Balance at end of year P=11,278,986 P=16,825,401

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As at December 31, 2019 and 2018, no inventories have been pledged as security or collateral for anyof the Company’s liabilities.

8. Other Current Assets


2019 2018Prepaid expenses:

Taxes P=1,643,741,393 P=1,324,033,064Rent 485,264,027 33,031,475Car plan benefits 41,383,025 54,675,639Other prepayments 76,587,653 45,324,104

Deposits to suppliers and others 383,301,084 354,174,020P=2,630,277,182 P=1,811,238,302

Terms and conditions of other current assets are as follows:

§ Prepaid taxes represent creditable withholding taxes that the Company can apply against itscorporate income tax in the following year and prepaid real property taxes.

§ Prepaid rent pertains to short-term leases of store and office spaces that are paid in advance.

§ Other prepayments consist of unused office and operating supplies and the unexpired portion ofadvertising, insurance and other expenses paid in advance.

§ Deposits to suppliers are generally applied to purchases of inventories and services within thenext financial year.

9. Financial Assets at Fair Value through Profit or Loss

This account consists of investment in shares of stocks of Manila Polo Club, Tagaytay Highlands andother golf and leisure clubs.

The movement in this account are as follows:

2019 2018Balance at beginning of year P=38,048,040 P=28,068,040Market-to-market gain (loss) on financial assets at

FVTPL (see Note 24) (1,640,000) 9,980,000Balance at end of year P=36,408,040 P=38,048,040

The fair value of financial assets at FVTPL have been determined directly by reference to quotedprices in active market or inputs other than quoted prices that are directly or indirectly observable(see Note 31).

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10. Investments in Subsidiaries and Interests in and Advances to Joint Ventures and an Associate

The carrying values of investments are as follows:

2019 2018Subsidiaries:

Jollibee Worldwide Pte. Ltd. (JWPL) P=30,680,843,891 P=28,834,556,512Mang Inasal Philippines Inc. (Mang Inasal) 4,986,768,791 4,983,929,357RRB Holdings, Inc. (RRBH) 2,532,908,317 2,530,011,408Fresh N’ Famous Foods Inc. (Fresh N’ Famous) 2,361,312,626 2,353,224,764Honeybee Foods Corporation (HFC) 3,001,603,096 1,675,106,684Zenith Foods Corporation (Zenith) 1,001,222,168 999,192,210

Jollibee Foods Corporation (USA)(Jollibee USA) 671,479,000 671,479,000

Grandworth Resources Corporation(Grandworth) 270,000,000 270,000,000

BKTitans Inc. (BKTitans)* 67,476,954 66,974,275Freemont Foods Corporation (Freemont) 59,930,558 59,930,558

45,633,545,401 42,444,404,768Joint Ventures: C-Joy Poultry Meats Production Inc.

(C-Joy Poultry) 233,406,000 233,406,000JBPX Foods Inc. (Panda Express) 66,023,459 –

299,429,459 233,406,000Associate -

C-Joy Poultry Realty Inc. (C-Joy Realty) 10,585,500 10,585,500Advances to a joint venture -

C-Joy Poultry 1,240,606,190 –P=47,184,166,550 P=42,688,396,268

*Owned through Chanceux, Inc., which is wholly owned by the Company.

The movements in this account are as follows:

2019 2018Investments in subsidiaries:

Balance at beginning of year P=42,457,519,768 P=35,346,233,138Additional investments 3,163,238,270 7,086,640,864

Share-based payments to employeesof subsidiaries (see Note 27) 25,902,363 24,645,766

45,646,660,401 42,457,519,768Less allowance for impairment loss 13,115,000 13,115,000Balance at end of year 45,633,545,401 42,444,404,768

Interests in joint ventures and an associate:Balance at beginning of the year 243,991,500 243,991,500Additional investments and advances 1,306,629,649 –Balance at end of year 1,550,621,149 243,991,500

P=47,184,166,550 P=42,688,396,268

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*SGVFSM000079*

Investments in JWPLThe Company made additional cash investments of P=1,840.9 million and P=6,417.9 million in 2019and 2018, respectively. These additional investments were used to finance JWPL’s financing andinvesting activities in 2019 and 2018.

Investments in HFCIn 2019, the Company’s trade receivables from HFC of P=1,322.3 million were converted intoadditional investment to HFC.

Investments in Jollibee USAThe Company made additional investments of P=668.7 million to Jollibee USA in 2018. OnDecember 21, 2018, upon fulfillment of the closing conditions, Jollibee USA investedUS$12.6 million (P=668.7 million) in Tortas Frontera LLC in consideration for the 47% fully-dilutedmembership interests therein.

Stock Option Grants to Employees of SubsidiariesThe Company has stock option grants to the employees of its subsidiaries under the ManagementStock Option Program (MSOP). Details about the MSOP are disclosed in Note 27. The cost of thosestock option grants for the years ended December 31, 2019 and 2018 were charged to the investmentin the relevant subsidiary as follows:

2019 2018Fresh N’ Famous P=8,087,862 P=7,624,552JWPL 5,389,682 6,930,729HFC 4,155,839 3,447,587RRBH 2,896,909 2,032,163Mang Inasal 2,839,434 2,756,968Zenith 2,029,958 1,558,598BKTitans 502,679 295,169

P=25,902,363 P=24,645,766

The Company’s subsidiaries as at December 31, 2019 and 2018 include the following:


2019 2018


OwnershipIndirect

OwnershipDirect

OwnershipIndirect

OwnershipFresh N’ Famous Foods Inc. (Fresh N’ Famous) - Philippines Food service 100 – 100 –

Chowking Food Corporation USA United States ofAmerica (USA) Holding company – 100 – 100

Zenith Foods Corporation (Zenith) Philippines Food service 100 – 100 –Freemont Foods Corporation (Freemont) Philippines Food service 100 – 100 –RRB Holdings, Inc. (RRBH): Philippines Holding company 100 – 100 –

Red Ribbon Bakeshop, Inc. (RRBI) Philippines Food service – 100 – 100Red Ribbon Bakeshop, Inc. USA (RRBI USA) USA Food service – 100 – 100

Mang Inasal Philippines Inc. (Mang Inasal) Philippines Food service 100 – 100 –Grandworth Resources Corporation (Grandworth): Philippines Leasing 100 – 100 –

Adgraphix, Inc. (Adgraphix) Philippines Digital printing – 100 – 100IConnect Multi Media Network, Inc. (IConnect) Philippines Advertising – 60 – 60JC Properties & Ventures Co. Philippines Dormant – 50 – 50

Honeybee Foods Corporation (HFC): USA Food service 100 – 100 –Tokyo Teriyaki Corporation (TTC) USA Food service – 100 – 100Honeybee Foods (Canada) Corporation (HFCC) Canada Food service – 100 – 100

Jollibee Worldwide Pte. Ltd. (JWPL): Singapore Holding company 100 – 100 –Regional Operating Headquarters of JWPL (JWS) Philippines Financial

accounting,human resourcesand logisticsservices – 100 – 100

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*SGVFSM000079*


2019 2018


OwnershipIndirect

OwnershipDirect

OwnershipIndirect

OwnershipGolden Plate Pte., Ltd. (GPPL): Singapore Holding company – 100 – 100- Golden Beeworks Pte. Ltd. Singapore Food service – 60 – 60- Golden Piatto Pte. Ltd. Singapore Holding company – 75 – 75 Cibo Felice S.R.L. Italy Food service – 100 – 100

- Bee World Spain, Sociedad Limitada (h) Spain Food service – 100 – – - Hong Yun Hong (Shanghai) Food and Beverages

Management Company. Ltd.(a)People’s Republic

of China (PRC) Food service – 60 – –Golden Cup Pte.Ltd. Singapore Holding company – 60 – 60

- Beijing Golden Coffee Cup Food & BeverageManagement Co., Ltd. PRC Food service – 100 – 100

Beijing New Hongzhuangyuan Food and BeverageManagement Co., Ltd. (Hong Zhuang Yuan) PRC Food service – 100 – 100

Southsea Binaries Ltd. (Southsea) British VirginIsland (BVI) Holding company – 100 – 100

Beijing Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100Shenzhen Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100Hangzhou Yongtong Food and Beverage Co., Ltd. PRC Food service – 100 – 100Hangzhou Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100Wuhan Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100Tianjin Yong He King Food and Beverage Co., Ltd. PRC Food service – 100 – 100Happy Bee Foods Processing Pte. Ltd. (HBFPPL) Singapore Holding company – 100 – 100- Happy Bee Foods Processing (Anhui) Co. Ltd. PRC Food service – 100 – 100JSF Investments Pte. Ltd. (JSF): Singapore Holding company – 100 – 99- SF Vung Tau Joint Stock Company Vietnam Holding company – 60 – 60

· Highlands Coffee Service Joint Stock Company Vietnam Food service – 100 – 100· Quantum Corporation Vietnam Food service – 100 – 100 Pho Viet Joint Stock Company Vietnam Food service – 100 – 100 Pho 24 Service Trade Manufacture Corporation Vietnam Food service – 100 – 100

- Blue Sky Holdings Limited Hong Kong Holding company – 60 – 60· Sino Ocean Limited Hong Kong Food service – 100 – 100· Blue Sky Holdings (Macau) Limited Macau Food service – 100 – 100

Jollibee (China) Food & Beverage ManagementCo. Ltd.

PRC Managementcompany – 100 – 100

Jollibee International (BVI) Ltd. (JIBL): BVI Holding company – 100 – 100- Jollibee Vietnam Corporation Ltd. Vietnam Food service – 100 – 100

· Goldstar Food Trade and Service Company Ltd(GSC) Vietnam Food service – 100 – 100

- PT Chowking Indonesia Indonesia Food service – 100 – 100- PT Jollibee Indonesia Indonesia Dormant – 100 – 100- Jollibee (Hong Kong) Limited and Subsidiaries Hong Kong Dormant – 85 – 85- Belmont Enterprises Ventures Limited (Belmont): BVI Holding company – 100 – 100

· Shanghai Belmont Enterprises Management andAdviser Co., Ltd. (SBEMAC) (b) PRC

Business managementservice – – – 100

· Yong He Holdings Co., Ltd. BVI Holding company – 100 – 100 Centenary Ventures Ltd. BVI Holding company – 100 – 100

Bee Good! Inc. (BGI) USA Holding company – 100 – 100- SJBF LLC (SJBF)(i) USA Food service – 100 – 100Bee World UK Limited (UK) (j) UK Holding company – 100 – –

Super Magnificent Coffee Company Pte. Ltd.(SMCC-SG) (f) Singapore Holding company – 80 – –

- Super Magnificent Coffee Company IrelandLimited (SMCC-IE) (e) Ireland Holding company – 100 – –

- Super Magnificent Coffee Company Hungary Kft.(SMCC-HU) (d) Hungary Holding company – 100 – –

· Java Ventures, LLC (JVL) (g) USA Holding company – 100 – –· International Coffee & Tea, LLC (ICTL) (c) USA Food service – 100 – – 6000 Jefferson BH, LLC USA Holding company – 100 – – CBTL Ventures, LLC USA Food service – 100 – – CBTL Franchising, LLC

USAFranchising

company – 100 – –· The Coffee Bean & Tea Leaf (Singapore) Pte.,

Ltd. (CBTL-SG) (c) Singapore Food service – 100 – – The Coffee Bean & Tea Leaf (Malaysia)

Sdn. Bhd. Malaysia Food service – 100 – – The Coffee Bean & Tea Leaf (Hongkong)

Limited Hong Kong Dormant – 100 – –Chanceux, Inc. Philippines Holding company 100 – 100 –

BKTitans Inc. (BKTitans) Philippines Holding company – 54 – 54- PFN Holdings Corporation Philippines Holding company – 99 – 99

· PERF Restaurants, Inc. Philippines Food service – 100 – 100 PERF Trinoma, Inc. Philippines Food service – 100 – 100 PERF MOA Pasay, Inc. Philippines Food service – 100 – 100

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*SGVFSM000079*


2019 2018


OwnershipIndirect

OwnershipDirect

OwnershipIndirect

OwnershipJollibee Foods Corporation (USA) USA Holding company 100 – 100 –Donut Magic Phils., Inc. (Donut Magic)(k) Philippines Dormant 100 – 100 –Ice Cream Copenhagen Phils., Inc. (ICCP)(k) Philippines Dormant 100 – 100 –Mary’s Foods Corporation (Mary’s)(k) Philippines Dormant 100 – 100 –QSR Builders, Inc. Philippines Dormant 100 – 100 –

(a) On November 18, 2019, the Jollibee Foods Corporation and Subsidiaries (JFC Group), through GPPL incorporated Hong Yun Hong in PRC.(b) On August 28, 2019, SBEMAC was deregistered with the Shanghai Administration for Industry andCommerce and completely dissolved and liquidated on December 23, 2019.(c) On September 24, 2019, the JFC Group, through Java Ventures, LLC completed the acquisition of 100% share of International Coffee & Tea, LLC.(d) On September 11, 2019, Super Magnificent Coffee Company Hungary Kft. was incorporated.(e) On August 22, 2019, Super Magnificent Coffee Company Ireland Limited was incorporated.(f) On June 28, 2019, the JFC Group, through JWPL incorporated Super Magnificent Coffee Company Pte. Ltd. in Singapore.(g) On June 4, 2019, Java Ventures, LLC (USA) was incorporated.(h) On May 23, 2019, Bee World Spain, Sociedad Limitada was incorporated and registered in the Mercantile Registry of Madrid.(i) On April 17, 2018, the JFC Group, through BGI completed the acquisition of additional 45% share of SJBF, increasing its ownership from 40% to 85%. Subsequently, on

December 14, 2018, the JFC Group, through BGI acquired the remaining 15% share resulting to 100% share in SJBF.(j) On April 16, 2018, Bee World UK Limited (UK) was incorporated.(k) On June 18, 2004, the stockholders of the JFC Group approved the Plan of Merger of the three (3) dormant companies. The application is pending approval from the SEC as at

December 31, 2019.

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11. Property, Plant and Equipment

The rollforward analysis of this account follows:

2019

Land

Buildings,Commercial

CondominiumUnits and

Improvements

LeaseholdRights

andImprovements


ProcessingEquipment

Furnitureand Fixtures

TransportationEquipment

Constructionin Progress Total

CostBalance at beginning of year P=28,586,733 P=511,556,323 P=4,724,155,461 P=4,961,281,138 P=546,178,013 P=532,570,525 P=252,435,369 P=11,556,763,562Additions – 225,946 187,721,323 296,390,587 20,984,215 29,744,727 1,914,832,721 2,449,899,519Retirements and disposals – – (342,052,469) (437,386,418) (21,681,698) (81,750,253) (57,009,830) (939,880,668)Reclassifications – 808,447 353,416,908 382,624,958 33,158,349 15,925,759 (785,934,421) –Balance at end of year 28,586,733 512,590,716 4,923,241,223 5,202,910,265 578,638,879 496,490,758 1,324,323,839 13,066,782,413Accumulated Depreciation and AmortizationBalance at beginning of year – 441,824,508 2,588,445,463 3,431,741,309 395,429,108 387,045,817 – 7,244,486,205Additions (see Notes 21 and 22) – 13,385,032 453,508,811 645,150,418 80,742,173 67,320,511 – 1,260,106,945Retirements and disposals – – (213,177,914) (379,176,244) (17,588,592) (73,631,253) – (683,574,003)Balance at end of year – 455,209,540 2,828,776,360 3,697,715,483 458,582,689 380,735,075 – 7,821,019,147Net Book Value P=28,586,733 P=57,381,176 P=2,094,464,863 P=1,505,194,782 P=120,056,190 P=115,755,683 P=1,324,323,839 P=5,245,763,266

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*SGVFSM000079*

2018

Land

Buildings,Commercial

CondominiumUnits and

Improvements

LeaseholdRights

andImprovements


ProcessingEquipment

Furnitureand Fixtures

TransportationEquipment

Constructionin Progress Total

CostBalance at beginning of year P=28,586,733 P=491,329,392 P=4,652,349,250 P=4,730,974,112 P=506,119,417 P=507,107,587 P=219,479,795 P=11,135,946,286Additions – 301,966 155,286,204 366,050,348 41,887,903 33,977,875 707,755,806 1,305,260,102Retirements and disposals – – (385,474,294) (378,290,430) (31,176,610) (10,343,508) (79,157,984) (884,442,826)Reclassifications – 19,924,965 301,994,301 242,547,108 29,347,303 1,828,571 (595,642,248) –Balance at end of year 28,586,733 511,556,323 4,724,155,461 4,961,281,138 546,178,013 532,570,525 252,435,369 11,556,763,562Accumulated Depreciation and AmortizationBalance at beginning of year – 426,344,623 2,311,814,052 3,024,110,036 333,898,559 326,470,363 – 6,422,637,633Additions (see Notes 21 and 22) – 15,479,885 491,446,837 680,337,271 84,834,713 68,442,541 – 1,340,541,247Retirements and disposals – – (214,841,226) (272,680,198) (23,304,164) (7,867,087) – (518,692,675)Reclassifications – – 25,800 (25,800) – – – –Balance at end of year – 441,824,508 2,588,445,463 3,431,741,309 395,429,108 387,045,817 – 7,244,486,205Net Book Value P=28,586,733 P=69,731,815 P=2,135,709,998 P=1,529,539,829 P=150,748,905 P=145,524,708 P=252,435,369 P=4,312,277,357

The construction in progress account as at December 31, 2019 and 2018 mainly pertains to costs incurred for the building of new stores and renovation of old stores. Theoutstanding projects as at December 31, 2019 are expected to be completed within the next financial year. Reclassifications from construction in progress account to theproperty, plant and equipment accounts mainly arise from the completion of the construction of new stores. As at December 31, 2019 and 2018, no borrowing costs havebeen capitalized.

Net loss on retirement of property, plant and equipment amounted to P=21.8 million and P=28.0 million in 2019 and 2018, respectively (see Note 22). The Companydisposed property, plant and equipment with carrying amount of P=234.5 million and P=337.8 million for a total consideration of P=233.3 million and P=443.8 million in 2019and 2018, respectively. Net loss on sale amounting to P=30.6 million in 2019 and net gain on sale amounting to P=58.5 million in 2018 were recognized on the disposals ofproperty, plant and equipment (see Note 24).

In 2019 and 2018, no items of property, plant and equipment have been pledged as security or collateral for any of the Company’s liabilities.

No impairment of property, plant and equipment was recognized by the Company in 2019 and 2018.

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12. Intangible Assets


2019 2018CostBalance at beginning of year P=879,384,116 P=796,089,274Additions – 83,294,842Retirement (see Note 22) (20,690,000) –Balance at end of year 858,694,116 879,384,116Accumulated AmortizationBalance at beginning of year 351,947,557 265,341,619Amortization (see Note 22) 89,554,956 86,605,938Balance at end of year 441,502,513 351,947,557Net Book Value P=417,191,603 P=527,436,559

Intangible assets mainly pertain to computer software relating to the Company’s Enterprise ResourcePlanning (ERP) application which the Company started using on August 1, 2014. The useful life ofthe computer software is ten (10) years. In 2018, the Company continued to capitalize costs for newfunctionalities in the software.

In 2019, the Company recognized loss on retirement of computer software amounting toP=20.7 million (see Note 22).

The Company’s intangible assets also include trademarks and patents amortized over its useful life offive (5) years with net book value of P=4.0 million P=10.5 million as at December 31, 2019 and 2018,respectively.

13. Investment Properties

The rollforward analysis of this account follows:

2019

Land

Buildings andBuilding

Improvements TotalCostBalance at beginning and end of year P=624,727,733 P=985,738,865 P=1,610,466,598Accumulated DepreciationBalance at beginning of year − 348,930,924 348,930,924Additions (see Notes 21 and 22) − 31,669,990 31,669,990Balance at end of year − 380,600,914 380,600,914Net Book Value P=624,727,733 P=605,137,951 P=1,229,865,684

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2018

Land

Buildings andBuilding

Improvements TotalCostBalance at beginning and end of year P=624,727,733 P=985,738,865 P=1,610,466,598Accumulated DepreciationBalance at beginning of year − 317,260,934 317,260,934Additions (see Notes 21 and 22) − 31,669,990 31,669,990Balance at end of year − 348,930,924 348,930,924Net Book Value P=624,727,733 P=636,807,941 P=1,261,535,674

Rent income derived from income-generating properties amounted to P=241.4 million andP=200.1 million in 2019 and 2018, respectively (see Note 29). Direct operating costs relating to theinvestment properties, which include depreciation and maintenance expenses, totaled P=59.6 millionand P=46.3 million in 2019 and 2018, respectively.

In 2015, the Company entered into an agreement to develop a commercial and office condominiumbuilding (the “Project”) in a parcel of its land in consideration for cash and assigned units in theProject. The completion of the transaction is conditional upon fifty percent (50%) completion of theProject, as certified by the general contractor of the Project, and when all of the assigned units arefully constructed. As at December 31, 2019 and 2018, the Project is still under development.

The Company’s investment properties have an aggregate fair value of P=2,397.1 million as atDecember 31, 2017 as determined by independent appraisers who holds a recognized and relevantprofessional qualification. The fair value represents the amount at which the assets and liabilities canbe exchanged in an orderly transaction between market participants to sell the asset or transfer theliability at the measurement date under current market conditions in accordance with InternationalValuation Standards. In determining the fair value of the investment properties, the independentappraisers used the market data approach for land and cost approach for buildings and buildingimprovements. For land, fair value is based on sales and listings of comparable properties within thevicinity after adjustments for differences in location, size and shape of the lot, time elements andother factors between the properties and their comparable properties. For buildings and buildingimprovements, fair value is based on the current cost to replace the properties in accordance withprevailing market prices for materials, labor, contractors’ overhead, profit and fees in the locality afteradjustments for depreciation due to physical deterioration, and functional and economic obsolescencebased on personal inspection of the buildings and building improvements and in comparison, tosimilar new properties.

While the fair value of the investment properties was not determined as at December 31, 2019 and2018, the Company’s management believes that there were no conditions present in 2019 and 2018that would significantly reduce the fair value of the investment properties from that determined in themost recent valuation.

No investment properties have been pledged as security or collateral as at December 31, 2019 and2018.

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14. Other Noncurrent Assets


2019

2018 (As restated -

Note 2)Refundable deposits P=679,843,239 P=608,970,803Noncurrent portion of:

Employee car plan receivables 58,072,165 81,676,061Prepaid car plan 52,841,682 67,676,896Prepaid rent (see Note 2) 33,233,395 26,695,838

Deferred:Rent 20,639,749 28,897,594Compensation car plan 11,486,360 14,343,197

Others 14,635,361 7,236,749P=870,751,951 P=835,497,138

The terms and conditions odf other noncurrent assets are as follows:

§ Refundable deposits represent security deposits for operating leases entered into by the Companyas a lessee (see Note 29). The refundable deposits are recoverable from the lessors at the end ofthe related lease terms and are presented at amortized cost. The discount rates used range from2% to 22% in 2019 and 2018. The difference between the fair value at initial recognition and thenotional amount of the refundable deposits is recognized as deferred rent and amortized on astraight-line basis over the lease terms. Accretion of interest pertaining to refundable depositsamounted to P=5.6 million in 2019 and 2018 (see Note 23).

§ Employee car plan receivables are presented at amortized cost. The difference between the fairvalue at initial recognition and the notional amount of the employee car plan receivables isrecognized as deferred compensation and amortized on a straight-line basis over the credit period.Accretion of interest pertaining to employee car plan receivables amounted to P=5.5 million andP=7.6 million in 2019 and 2018, respectively (see Note 23).

§ Prepaid rent pertains to the variable leases of store and office spaces that are paid in advancewhich is net of current portion.

15. Trade Payables and Other Current Liabilities


2019 2018Trade payables:

Suppliers P=1,791,750,428 P=5,439,474,540Related parties (see Note 28) 1,516,352,901 960,873,167

Accruals for:Advertising and promotions 987,484,697 1,039,758,936Salaries, wages and employee benefits 864,903,756 680,769,739Rent 290,684,130 272,766,096Professional fees 114,355,395 84,663,844

(Forward)

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2019 2018Repairs, maintenance and security P=92,568,708 P=125,600,128Electricity, other utilities and communication 80,703,066 83,186,666Supplies 68,305,552 70,709,729Retention 65,567,446 32,641,536Delivery expenses 46,131,658 34,626,806Corporate events and research 46,066,341 150,486,514Interest (see Notes 17 and 34) 36,192,622 64,917,601Novelties 29,621,791 48,692,594Trainings and seminars 21,820,150 21,522,135Store operations 5,676,281 22,670,694Insurance 2,000,000 4,008,969Transportation and travel 956,914 1,175,746Others 170,205,574 375,129,634

Local and other taxes payable 873,514,161 1,115,279,732Happy plus liabilities 675,451,172 714,840,716Customers’ deposits 534,749,520 440,758,165Unearned revenues from gift certificates 164,757,944 160,055,628Dividends payable (see Note 34) 87,959,486 80,779,640Other current liabilities 156,115,753 105,072,778

P=8,723,895,446 P=12,130,461,733

The terms and conditions of the above liabilities are as follows:

§ Trade payables are noninterest-bearing and are generally settled within a 30-day term.

§ The terms and conditions of payables to related parties are discussed in Note 28.

§ Accruals, local and other taxes payable and dividends payable are noninterest-bearing and arenormally settled within the next financial year.

§ Other accruals generally consist of amounts payable for representation and various activities ofthe Company.

§ Happy plus liabilities pertain to the Company’s customer loyalty program and are generallyapplied to customer purchases or reimbursed to franchisees, depending on the actual usage,within the next financial year.

§ Customers’ deposits pertain to POS deposits and security deposits from leases with franchiseesand subsidiaries, which are refundable at the end of the lease term and deposits for kiddie partypackages. Accretion of interest pertaining to customers’ deposits from operating leases amountedto P=0.1 million and nil in 2019 and 2018 (see Note 23).

§ Unearned revenues from gift certificates pertain to the Company’s redeemable gift certificateswhich are recognized as revenue upon redemption.

§ Other current liabilities consist of staled checks, amounts payable for mascots and varioussubscriptions in newspapers given to customers as a complementary to their meals.

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16. Provisions

The Company has outstanding provisions amounting to P=30.5 million as at December 31, 2019 and2018, consisting mainly of provisions for asserted claims which are normal to its business. Theseinclude estimates of legal services, settlement amounts and other costs of claims made against theCompany. Other information on the claims are not disclosed as this may prejudice the Company’sposition on such claims (see Note 29).

17. Long-term Debt

The balance of the Company’s long-term debt as at December 31 is as follows:

2019 2018Principal P=14,100,000,000 P=17,880,000,000Unamortized debt issue cost (74,145,625) (91,801,324)

14,025,854,375 17,788,198,676Less current portion:

Principal 2,590,000,000 3,780,000,000Unamortized debt issue cost (16,707,214) (7,048,485)

2,573,292,786 3,772,951,515Noncurrent portion - net of debt issue cost P=11,452,561,589 P=14,015,247,161

Debt Issue CostThe movements in unamortized debt issue cost in 2019 and 2018 are as follows:

2019 2018Balance at beginning of year P=91,801,324 P=32,028,788Additions – 74,250,500Amortization (17,655,699) (14,477,964)Balance at end of year P=74,145,625 P=91,801,324

The long-term debt account consists of the following:

P=1,500.0 Million MBTC LoanOn December 9, 2013, the Company refinanced a 2011 loan from MBTC amounting toP=1,500.0 million. The new loan is payable over five years and six months from the date of drawdownwith annual principal repayments of P=15.0 million starting on the 30th month from the date ofdrawdown and P=1,455.0 million upon maturity. The loan is subject to a variable interest rate basedon three-month Philippine Dealing System Treasury Fixing (PDST-F) rate plus spread of 1.25%,which is payable and is reset on a quarterly basis, and to an interest rate floor based on the BangkoSentral ng Pilipinas (BSP) Overnight Reverse Repurchase Agreement Rate. The loan was drawn onDecember 16, 2013 and was paid in full on June 17, 2019, the maturity date. The Company incurreddebt issue costs of P=7.5 million, representing documentary stamp tax, in relation to this loan in 2013.

Under the loan agreement with MBTC, the Company has an option to convert the variable interestrate into a fixed interest rate on any interest payment date based on the PDST-F rate for the remainingterm of the loan and the spread of 1.00%. The Company also has an option to prepay the loan in fullor in multiples of P=10.0 million on any interest payment date.

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P=800.0 Million BPI LoanOn April 21, 2014, the Company obtained an unsecured loan from BPI amounting to P=800.0 million.The principal was paid in full on April 21, 2019, the maturity date. The loan is subject to a variableinterest rate based on three-month PDST-F rate plus spread of 1.00%, which is payable and is reset ona quarterly basis, and to an interest rate floor based on the BSP Special Deposit Account (SDA) Rateplus spread of 1.00% or BSP Overnight Borrowing rate plus spread of 1.00%. The Companyincurred debt issue costs of P=4.0 million, representing documentary stamp tax, in relation to this loan.

Under the loan agreement with BPI, the Company has an option to convert the variable interest rateinto a fixed interest rate based on a five-year treasury securities benchmark yield plus spread of1.00% on the date the option to convert is exercised, subject to an annual interest rate floor of 4.75%.The Company also has an option to prepay the loan, wholly or partially, without penalty at any timeduring the term of the loan subject to certain conditions.

P=1,000.0 Million MBTC LoanOn April 22, 2016, the Company obtained an unsecured loan from MBTC amounting toP=1,000.0 million. The loan is payable over five years from the date of drawdown with quarterlyprincipal payments of P=62.5 million starting on the 15th month from the date of drawdown. The loanis subject to a variable interest rate based on three-month Philippine Dealing System Treasury -Reference Rate Two (PDST-R2) plus spread of 0.55%, which is payable and is repriced on aquarterly basis, and to an interest rate floor of BSP SDA Rate. The loan will mature onApril 22, 2021. The Company incurred debt issue cost of P=5.0 million representing documentarystamp tax, in relation to this loan.

Under the loan agreement with MBTC, the Company has an option to convert the variable interestrate into a fixed interest rate on any interest payment date but in no case later than 730 days fromdrawdown date. The conversion to fixed interest rate is based on the applicable PDST-R2 rate plusspread of 2% if the option is exercised from day 1 to day 365 from drawdown date and based on theapplicable PDST-R2 rate plus spread of 2.75% if the option is exercised from day 366 to day 730from drawdown date. The Company also has an option to prepay the loan in part or in full on anyinterest payment date.

P=1,600.0 Million MBTC LoanOn December 22, 2017, the Company obtained an unsecured loan from MBTC amounting toP=1,600.0 million. The loan is payable over five years from the date of drawdown with quarterlyprincipal payments of P=100.0 million starting on the 15th month from the date of drawdown. The loanis subject to a variable interest rate based on the simple average of the preceding five (5) days of thethree-month PDST-R2 plus spread of 0.50%, which is payable and is repriced on a quarterly basis,and to an interest rate floor of 2.70%. The loan will mature on December 22, 2022. The Companyincurred debt issue cost of P=8.0 million representing documentary stamp tax, in relation to this loan.

Under the loan agreement with MBTC, the Company has an option to convert the variable interestrate into a fixed interest rate on any interest payment date but in no case later than 365 days fromdrawdown date. The conversion to fixed interest rate is based on the simple average of the applicablePDST-R2 rate within the preceding 5 consecutive business days plus spread of 0.60%. The Companyalso has an option to prepay the loan in part or in full on any interest payment date subject to certainconditions.

P=2,100.0 Million BPI LoanOn December 22, 2017, the Company obtained an unsecured loan from BPI amounting toP=2,100.0 million. The principal is payable after five years upon maturity on December 22, 2022. Theloan is subject to a variable interest rate based on the simple average of five (5) trading days of the

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*SGVFSM000079*

three-month Treasury Securities Benchmark Yield, as published in the PDST-R2 page of the PDEXpreceding and inclusive of the Interest Rate Setting Date plus spread of 0.50%, which is payable andis reset on a quarterly basis. The Company incurred debt issue costs of P=10.5 million, representingdocumentary stamp tax, in relation to this loan.

Under the loan agreement with BPI, the Company has an option to convert the variable interest rateinto a fixed interest rate based on the interpolated treasury securities benchmark yield on theremaining tenor of the loan plus spread of 0.50%. The Company also has an option to prepay theloan, wholly or partially, without penalty at any time during the term of the loan subject to certainconditions.

P=800.0 Million Bank of Tokyo-Mitsubishi UFJ, LTD. (MUFG) LoanOn December 22, 2017, the Company obtained an unsecured loan from MUFG amounting toP=800.0 million. The principal is payable after five years upon maturity on December 22, 2022 withquarterly principal payments of P=50.0 million starting on the 15th month from the date of drawdown.The loan is subject to a variable interest rate based on the simple average of the preceding five (5)days of the three-month PDST-R2 rate plus spread of 0.50%, which is payable and is reset on aquarterly basis, and to an interest rate floor based on Overnight Deposit Facility Rate of the BSP. TheCompany incurred debt issue costs of P=4.0 million representing documentary stamp tax, in relation tothis loan.

Under the loan agreement with MUFG, the Company has an option to prepay the loan in part or infull on any interest payment date subject to certain conditions.

P=600.0 Million Citibank (Citi) LoanOn December 27, 2017, the Company obtained an unsecured loan from Citi amounting toP=600.0 million. The principal is payable after five years upon maturity on December 27, 2022 withquarterly principal payments of P=37.5 million starting on the 15th month from the date of drawdown.The loan is subject to a variable interest rate based on three-month PDST-R2 rate plus spread of0.50%, which is payable and is reset on a quarterly basis, and to an interest rate floor based onOvernight Deposit Facility Rate of BSP plus 0.50%. The Company incurred debt issue costs ofP=3.0 million representing documentary stamp tax, in relation to this loan.

Under the loan agreement with Citi, the Company has an option to convert the variable interest rateinto a fixed interest rate on any interest payment date but in no case later than 365 days fromdrawdown date. The conversion to fixed interest rate is based on a five-year PDST-R2 rate plusspread of 0.75%. The Company also has an option to prepay the loan in part or in full on any interestpayment date subject to certain conditions.

P=4,200.0 Million MBTC LoanOn March 27, 2018, the Company obtained an unsecured loan from Metrobank amounting toP=4,200.0 million. The principal is payable after seven years upon maturity on March 27, 2025 withquarterly principal payments of P=210.0 million starting on the 27th month from the date ofdrawdown. The loan is subject to a variable interest rate based on simple average of the precedingfive (5) days of three-month PDST-R2 rate plus spread of 0.40%, which is payable and is reset on aquarterly basis, and to an interest rate floor of 3%. The Company incurred debt issue costs ofP=31.5 million representing documentary stamp tax, in relation to this loan.

Under the loan agreement with MBTC, the Company has an option to convert the variable interestrate into a fixed interest rate on any interest payment date but in no case later than 365 days fromdrawdown date. The conversion to fixed interest rate is based on the sum of simple average of thefive (5) “Done” 5Y PDST-R2 rate over the preceding five (5) consecutive business days plus spreadof 0.60%. The Company also has an option to prepay the loan in part or in full on any interestpayment date subject to certain conditions.

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P=3,000.0 Million BPI LoanOn May 11, 2018, the Company obtained an unsecured loan from BPI amounting to P=3,000.0 million.The principal is payable after seven years upon maturity on May 11, 2025 with quarterly principalpayments of P=150.0 million starting on the end of the eighth quarter from the drawdown date. Theloan is subject to a floating interest rate based on the applicable five (5) trading day (inclusive of theInterest Rate Setting Date) simple average of the three-month Treasury Securities Benchmark Yield,as published in the PDST-R2 rate plus spread of 0.5% which is payable and is reset on a quarterlybasis. The Company incurred debt issue costs of P=22.5 million representing documentary stamp tax,in relation to this loan.

Under the loan agreement with BPI, the Company has an option to convert the floating interest rateinto a fixed interest rate on any interest payment date but in no case later than 365 days fromdrawdown date. The conversion to fixed interest rate is based on the interpolated Treasury SecuritiesBenchmark Yield in the PDST-R2 based on the remaining tenor rate plus spread of 0.50%. TheCompany also has an option to prepay the loan in part or in full on any interest payment date subjectto certain conditions.

P=2,700.0 Million BPI LoanOn August 15, 2018, the Company obtained an unsecured loan from BPI amounting toP=2,700.0 million. The principal is payable after seven years upon maturity on August 15, 2025with quarterly principal payments of P=135.0 million starting on the 27th month from the drawdowndate. The loan is subject to a variable interest rate based on the last five (5) day average of thePDST-R2 rate plus spread of 0.5% which is payable and is reset on a quarterly basis. The Companyincurred debt issue costs of P=20.3 million representing documentary stamp tax, in relation to this loan.

Under the loan agreement with BPI, the Company has an option to convert the variable interest rateinto a fixed interest rate on any interest payment date but in no case later than 365 days fromdrawdown date. The conversion to fixed interest rate is based on the applicable interpolatedPDST-R2 based on the remaining tenor rate plus spread of 0.5%. The Company also has an option toprepay the loan in part or in full on any interest payment date subject to certain conditions.

The future expected principal settlements of the long-term debt as at December 31 follow:

2019 20182019 P=– P=3,780,000,0002020 2,590,000,000 2,590,000,0002021 3,380,000,000 3,380,000,0002022 3,255,000,000 3,255,000,0002023 1,980,000,000 1,980,000,0002024 1,980,000,000 1,980,000,0002025 915,000,000 915,000,000

P=14,100,000,000 P=17,880,000,000

Interest expense incurred related to long-term debt amounted to P=872.3 million and P=582.5 million in2019 and 2018, respectively, which include amortization of debt issue cost amounting toP=17.7 million and P=14.5 million in 2019 and 2018, respectively (see Note 23).

Accrued interest expense included in “Trade payables and other current liabilities” account amountedto P=36.2 million and P=64.9 million as at December 31, 2019 and 2018, respectively (see Note 15).

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Debt CovenantsThe Company’s P=1,500.0 million, P=1,000.0 million and P=1,600.0 million and P=4,200.0 million loanswith MBTC are subject to affirmative debt covenants, including maintaining business, maintainingproperty insurance, paying taxes, notifying MBTC of material legal proceedings and agreements, andmaintaining accurate accounting records, among others. They are also subject to negative debtcovenants, including not making material changes in business, not permitting material changes inownership and voting control, and not guaranteeing debt of non-subsidiaries and non-affiliates,among others. Noncompliance with these debt covenants may result to the acceleration of thematurity of the loans. In addition, the Company is required not to exceed a Debt-to-Equity ratio andDebt-to-EBITDA ratio of 3.0. The Company is in compliance with these debt covenants as atDecember 31, 2019 and 2018.

The Company’s P=800.0 million, P=2,100.0 million, P=3,000.0 million and P=2,700.0 million loans withBPI are subject to affirmative debt covenants, including maintaining and preserving corporateexistence, rights, privileges and franchises, keeping proper and adequate accounting records,compliance with laws, and furnishing BPI with audited financial statements and interim financialreporting statements, among others. They are also subject to negative covenants, including notmaking material changes in business, not making material changes in its ownership, engaging inbusiness not authorized by its articles of incorporation, and assigning, transferring or conveying anyright to receive income or revenues except in the ordinary course of business, among others. Inaddition, the Company is required not to exceed a Debt-to-Equity ratio of 3.0 and to maintain a DebtService Coverage ratio of at least 1.3. The Company is in compliance with these debt covenants as atDecember 31, 2019 and 2018.

The Company’s P=800.0 million loan with MUFG is subject to affirmative debt covenants, includingmaintaining business, maintaining property insurance, paying taxes, notifying MUFG of materiallegal proceedings and agreements, and maintaining accurate accounting records, among others. It isalso subject to negative debt covenants, including not making material changes in business, notpermitting material changes in ownership and voting control, and not guaranteeing debt of non-subsidiaries and non-affiliates, among others. In addition, the Company is required not to exceed aDebt-to-Equity ratio and Debt-to-EBITDA ratio of 3.0. The Company is in compliance with thesedebt covenants as at December 31, 2019 and 2018.

The Company’s P=600.0 million loan with Citi is subject to affirmative debt covenants, includingmaintaining business, maintaining property insurance, compliance with laws, paying all indebtednessand contractual obligations, paying taxes, notifying Citi of material legal proceedings andagreements, maintaining accurate accounting records, and furnishing Citi with audited financialstatements and quarterly financial reporting statements, among others. It is also subject to negativedebt covenants, including not making material changes in business, not permitting material changesin ownership and voting control, and not guaranteeing debt of non-subsidiaries and non-affiliates,among others. In addition, the Company is required not to exceed a Debt-to-Equity ratio and Debt-to-EBITDA ratio of 3.0 and to maintain a Debt Service Coverage ratio of at least 1.3. The Company isin compliance with these debt covenants as at December 31, 2019 and 2018.

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18. Capital Stock

The movements in this account are as follows:

2019 2018Authorized - P=1 par value

1,450,000,000 shares P=1,450,000,000 P=1,450,000,000

Issued and subscribed 1,092,970,574 shares in 2019and 1,088,035,873 shares in 2018:Balance at beginning of the year P=1,105,213,757 P=1,101,655,575Issuances during the year 4,934,701 3,558,182Balance at end of year 1,110,148,458 1,105,213,757Subscriptions receivable (17,177,884) (17,177,884)

P=1,092,970,574 P=1,088,035,873

The Company’s common stock held in treasury consists of 16,447,340 shares costingP=180.5 million as at December 31, 2019 and 2018.

As required by Revised SRC Rule 68, below is the summary of the Company’s track record ofregistration of securities.

Numberof Shares Issue/Offer Date

Number of Holders of Securitiesas at December 31

Registered Price of Approval 2019 2018Common shares 75,000,000 P=9 June 21, 1993 3,004 3,023

19. Retained Earnings

Cash dividend declarations for 2019 and 2018 follow:

Declaration Date Record Date Payment Date

CashDividend

per Share

Total CashDividendsDeclared

2019April 8 April 26 May 9 P=1.23 P=1,341,178,276November 11 November 26 December 10 1.35 1,473,766,858

P=2.58 P=2,814,945,134

2018April 6 April 24 May 9 P=1.14 P=1,236,518,182November 9 November 26 December 10 1.34 1,455,268,625

P=2.48 P=2,691,786,807

The Company has a cash dividend policy of declaring one-third of its net income for the year as cashdividends. It uses its best estimate of its net income as basis for declaring such cash dividends.Actual cash dividends per share declared as a percentage of the consolidated basic earnings per shareof the JFC Group are 43.8% and 32.8% in 2019 and 2018, respectively.

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An important part of the Company’s growth strategy is the acquisition of new businesses in thePhilippines and abroad. Examples were acquisitions of 85% of Yonghe King in 2004 in PRC(P=1,200.0 million), 100% of Red Ribbon in 2005 (P=1,700.0 million), the remaining 20% minorityshare in Greenwich in 2007 (P=384.0 million), the remaining 15% share of Yonghe King in 2007(P=413.7 million), 100% of Hong Zhuang Yuan restaurant chain in PRC in 2008 (P=2,600.0 million),70% of Mang Inasal in 2010 (P=2,976.2 million), 100% of Chowking US operations in 2011(P=693.3 million), 48% of WJ Investments Limited in 2012 (P=98.0 million), 40% of SJBF LLC, theparent company of the entities comprising the Smashburger in USA in 2015 (P=4,812.8 million,including transaction costs), the remaining 30% minority share each in Mang Inasal(P=2,000.0 million) and HBFPPL (P=514.9 million) in 2016, 30% of C-Joy Poultry in 2016(P=233.4 million), 30% of C-Joy Realty in 2016 (P=10.6 million), 100% of GSC in 2016(P=8.6 million), acquisition of additional 10% of SuperFoods Group in 2017 (P=2,712.7 million), theremaining 60% of SJBF LLC in 2018 (P=5,735.8 million) and 80% of The Coffee Bean & Tea Leaf(P=17,163.0 million) in 2019.

The Company plans to continue to make substantial acquisitions in the coming years. The Companyuses its cash generated from operations and from debt financing to finance these acquisitions andcapital expenditures. These limit the amount of cash dividends that the Company can declare andpay, resulting to a level of retained earnings higher than the paid-in capital stock.

On November 9, 2018, the BOD of the Company approved the following:

§ Release of previously approved appropriated retained earnings amounting to a total ofP=18,200.0 million related to the completed projects in 2013 to 2018.

§ Appropriation of retained earnings amounting to P=20,000.0 million, details of which are asfollows:

Projects Timeline AmountCapital expenditures 2019-2024 P=12,000,000,000Acquisition of businesses 2019-2024 8,000,000,000

P=20,000,000,000

The unappropriated retained earnings of the Company is also restricted for the payment of dividendsto the extent of the cost of common stock held in treasury amounting to P=180.5 million as atDecember 31, 2019 and 2018. The Company’s retained earnings available for dividend declaration,determined based on the guidelines provided by the SEC, is presented in the consolidated financialstatements filed with the SEC.

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20. Revenues

Set out below is the disaggregation of the Company’s revenue from contracts with customers for theyear ended December 31:

2019Revenue Source Food Service Franchising TotalSale of goods P=35,085,072,878 P=– P=35,085,072,878Royalty and set-up fees – 6,562,405,032 6,562,405,032Service revenue and others 3,675,229,236 – 3,675,229,236

38,760,302,114 6,562,405,032 45,322,707,146PFRS 15 impact on system-wide advertising fees – 2,067,870,929 2,067,870,929Total revenue from contracts with customers P=38,760,302,114 P=8,630,275,961 P=47,390,578,075

Timing of recognition:Goods transferred at a point in time P=47,290,378,075Services transferred over time 100,200,000

P=47,390,578,075

2018Revenue Source Food Service Franchising TotalSale of goods P=55,980,924,562 P=– P=55,980,924,562Royalty and set-up fees – 5,724,770,556 5,724,770,556Service revenue and others 4,012,428,452 – 4,012,428,452

59,993,353,014 5,724,770,556 65,718,123,570PFRS 15 impact on system-wide advertising fees – 1,789,948,510 1,789,948,510Total revenue from contracts with customers P=59,993,353,014 P=7,514,719,066 P=67,508,072,080

Timing of recognition:Goods transferred at a point in time P=67,364,072,080Services transferred over time 144,000,000

P=67,508,072,080

Net Sales. Net sales pertain to sale of inventories less sales discounts for the years endedDecember 31, 2019 and 2018.

Royalty and Set-up Fees. The Company has existing Royalty and Service Agreements with certainsubsidiaries and independent franchisees for the latter to operate QSR outlets under the “Jollibee”concept and trade name. In consideration thereof, the franchisees agree to pay set-up fees andmonthly royalty fees equivalent to a certain percentage of the subsidiaries’ and independentfranchisees’ net sales.

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21. Cost of Sales and Services


2019

2018(As restated -

Note 2)Cost of SalesCost of inventories (see Note 28) P=18,334,940,544 P=37,580,305,029Contracted services 2,407,685,637 2,528,447,279Personnel expenses:

Salaries, wages and employee benefits 1,902,861,906 1,861,851,527Pension expense (see Note 26) 76,917,090 57,144,515

Depreciation and amortization for: Property, plant and equipment and investment

properties (see Notes 11 and 13) 992,780,934 1,083,647,442Right-of-use assets (see Note 29) 909,832,220 938,669,515

Electricity and other utilities 1,230,004,479 1,280,880,753Freight 695,793,003 1,934,865,442Supplies 632,275,729 659,171,243Rent (see Notes 28 and 29) 543,903,796 464,180,606Security and janitorial 290,024,736 273,006,511Repairs and maintenance 273,801,849 187,001,907Service fees (see Note 28) 103,901,542 1,162,537,019Transportation and travel 96,740,710 106,552,252Taxes and licenses 61,145,531 57,207,066Communication 29,172,581 32,908,608Representation and entertainment 20,343,354 17,465,538Professional fees 1,429,799 459,473Others 878,710,026 821,704,247

29,482,265,466 51,048,005,972Cost of ServicesAdvertising expense (see Note 2) 2,062,494,695 1,789,948,510Cost of labor and materials 689,383,629 629,619,481Depreciation and amortization (see Notes 11 and 13) 48,423,122 35,577,348Service fees (see Note 28) 51,847,168 54,946,212Taxes and licenses 9,978,200 9,156,594Rent (see Note 29) 9,375,605 69,402,039Professional fees – 65,459,259Others 1,888,779 2,575,702

2,873,391,198 2,656,685,145P=32,355,656,664 P=53,704,691,117

Others consist of delivery costs, supplies and Company’s share in common usage area and insurance.

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22. General and Administrative Expenses


2019

2018(As restated -

Note 2)Personnel expenses:

Salaries, wages and employee benefits P=3,274,216,407 P=3,264,371,184Stock options expense (see Note 27) 236,972,375 277,773,865Pension expense (see Note 26) 128,084,044 –

Service and management fees (see Note 28) 1,132,035,965 764,420,797Corporate events, research and others 525,115,509 290,328,200Taxes and licenses 502,787,693 565,630,989Professional fees 366,448,209 502,034,284Depreciation and amortization for: Property, plant and equipment, intangibles and

investment properties (see Notes 11, 12and 13) 340,127,834 339,592,385

Right-of-use assets (see Note 29) 25,728,307 22,793,777Transportation and travel 246,092,230 266,717,202Trainings and seminars 169,419,903 102,690,889Repairs and maintenance 145,245,928 148,806,765Donations (see Note 28) 120,436,368 101,042,645Rent (see Notes 28 and 29) 89,290,272 93,066,645Communication 70,337,823 75,657,228Delivery charges 56,198,132 36,026,886Net loss on retirement of property, plant and

equipment and intangible assets(see Notes 11 and 12) 42,501,482 90,928

Electricity and other utilities 42,126,656 40,567,036Contracted services 28,085,278 42,131,481Representation and entertainment 26,619,281 30,194,806Supplies 19,719,896 32,678,199Subscriptions 18,831,862 127,385,037Insurance 18,570,916 13,053,323Association dues 11,055,887 36,347,944Security and janitorial 6,625,872 8,729,320Provision for (reversal of) impairment losses on:

Trade receivables (see Note 6) – (12,878,150)Inventories (see Note 7) (5,546,415) 576,650

Bad debts (see Note 6) 6,404,541 –Others 350,837,104 311,975,358

P=7,994,369,359 P=7,481,805,673

Others consist of building charges, amortization of debt issue costs, disallowed input vat on exemptsales and licenses.

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23. Interest Income (Expense)

The Company’s interest income and expenses consist of:

2019

2018(As restated -

Note 2)Interest income:

Cash and cash equivalents and short-terminvestments (see Note 5) P=102,832,316 P=100,928,122

Advances to related parties (see Note 28) 145,888,754 73,888,356Accretion of interest on refundable deposits and

employee car plan receivables(see Note 14) 11,118,344 13,190,522

259,839,414 188,007,000Interest expense:

Long-term debt (see Note 17) (872,313,004) (582,548,296)Lease liabilities (see Note 29) (408,256,010) (434,504,802)Due to related parties (see Note 28) (11,954,253) (13,334,912)

Accretion of interest on customers’ deposits(see Note 15) (60,806) –

(1,292,584,073) (1,030,388,010)(P=1,032,744,659) (P=842,381,010)

24. Other Income - Net


2019

2018(As restated -

Note 2)Dividend income (see Note 28) P=1,580,500,000 P=1,550,000,000Write-off of long-outstanding liabilities 740,841,334 1,178,987,282Net foreign exchange gain (loss) (see Note 30) (253,169,598) 7,895,945Pre-termination of lease 66,467,030 80,858,373Net gain (loss) on disposals of property, plant and

equipment (see Note 11) (30,624,438) 58,537,274Insurance claims 14,094,406 –Guarantee fee income (see Note 28) 8,743,361 56,275,492Net unrealized gain (loss) on financial assets at

FVTPL (see Note 9) (1,640,000) 9,980,000Pension income (see Note 26) – 82,713,822Others 104,794,760 91,649,038

P=2,230,006,855 P=3,116,897,226

In the normal course of business, the Company accrues liabilities based on management’s bestestimate of costs incurred, particularly in cases when the Company has not yet received final billingsfrom suppliers and vendors. There are also ongoing negotiations and reconciliations with suppliersand vendors on certain liabilities recorded. These balances are continuously reviewed bymanagement and are adjusted based on these reviews, resulting to write-off of certain liabilities asother income.

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Others consist mainly of income from charges to truckers and suppliers and salary charges forborrowed staff.

25. Income Taxes

The provision for current income tax consists of the following:

2019 2018Final taxes on:

Royalty fees P=1,242,642,558 P=1,076,609,106Interest income 13,743,771 17,706,839

MCIT 218,970,313 244,813,891P=1,475,356,642 P=1,339,129,836

The details of the Company’s deferred tax assets and liabilities are as follows:

2019

2018(As restated -


Lease liabilities P=2,069,495,627 P=2,302,208,607NOLCO 155,759,323 311,330,585Cost of stock options 510,891,376 1,209,630,625Pension liability 361,613,835 218,973,482Excess of MCIT over RCIT 654,417,808 614,579,804Provision for bonus 154,733,076 121,445,386Unrealized foreign exchange loss 153,261,279 84,625,058Provisions 9,150,192 9,150,192Allowance for impairment losses on:

Receivables 7,263,109 58,263,107Inventories 3,383,696 5,047,620Non-performing assets 2,028,218 3,053,002

Unaccreted discount on:Refundable deposits 7,659,459 9,186,432Employee car plan receivables 830,237 2,994,323

Unamortized past service cost 1,294,927 11,632,6054,091,782,162 4,962,120,828

Deferred tax liabilities:Right-of-use assets 1,611,445,815 1,860,774,507Prepaid rent 155,549,227 17,898,856Unrealized foreign exchange gain 75,540,887 92,707,227Lease receivables 9,468,846 10,030,251Deferred rent expense 6,191,925 9,752,127Deferred compensation expense 3,445,908 4,302,959Net unrealized gain on financial assets at FVTPL 2,443,500 2,689,500

1,864,086,108 1,998,155,427P=2,227,696,054 P=2,963,965,401

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As at December 31, 2019, the Company’s NOLCO and excess MCIT over RCIT, which can becarried forward and claimed as deduction against regular taxable income and as tax credit againstRCIT due, respectively, are as follows:

Year Incurred Expiry NOLCO MCIT2019 2022 P=519,197,745 P=218,970,3142018 2021 – 244,813,8912017 2020 – 190,633,603

P=519,197,745 P=654,417,808

The movements in NOLCO and MCIT are as follows:

2019 2018NOLCO:

Balance at beginning of year P=1,037,768,615 P=1,798,293,880Addition 519,197,745 –Applied – (694,283,554)Expired (1,037,768,615) (66,241,711)Balance at end of year P=519,197,745 P=1,037,768,615

MCIT:Balance at beginning of year P=614,579,804 P=513,071,720Additions 218,970,314 244,813,891Expired (179,132,310) (143,305,807)Balance at end of year P=654,417,808 P=614,579,804

The reconciliation between provision for income tax computed using income before income tax at thestatutory tax rate of 30% with the provision for income tax as shown in the parent company statementof comprehensive income are as follows:

2019

2018(As restated - Note

2)Provision for income tax at statutory tax rate of 30% P=2,442,667,482 P=2,396,069,704Tax effects of: Effect of different tax rates for royalty fees

and interest income (630,764,462) (550,206,006)Dividend income (474,150,000) (465,000,000)Expired MCIT and NOLCO 490,462,894 163,178,320Intrinsic value of stock options exercised (257,118,167) (148,573,492)Nondeductible expenses 85,419,547 95,156,223Tax effect of MSOP and ELTIP 83,853,695 (47,771,474)Effect of different tax rates for capital gains 246,000 (1,497,000)

P=1,740,616,989 P=1,441,356,275

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*SGVFSM000079*

26. Pension Benefits

The Company has a funded, independently-administered, non-contributory defined benefit retirementplan covering all regular and permanent employees with benefits based on years of service and latestcompensation. The plan provides for a lump sum benefit payment upon retirement.

The funds are administered by a trustee bank. Subject to the specific instructions provided by theCompany in writing, the Company directs the trustee bank to hold, invest and reinvest the funds, andkeep the same invested, in its sole discretion, without distinction between principal and income, butnot limited to, certain government securities and bonds, quoted equity securities, and short-term fixedincome securities.

The existing regulatory framework, Republic Act No. 7641, Retirement Pay Law, requires aprovision for retirement pay to qualified private sector employees in the absence of any retirementplan in the entity, provided however that the employee’s retirement benefits under any collectivebargaining and other agreements shall not be less than those provided under the law. The law doesnot require minimum funding of the plan.

The following tables summarize the components of “Pension expense (income)”, included under“Cost of sales and services”, “General and administrative expenses” and “Other income” accounts inthe parent company statement of comprehensive income and “Pension liability” account in the parentcompany statement of financial position, which are based on the latest actuarial valuation.

Changes in pension liability of the Company in 2019 are as follows:


Benefit PlanFair Value

of Plan AssetsPension

LiabilityAt January 1, 2019 P=2,113,764,232 P=1,383,852,624 P=729,911,608Net pension expense

(see Notes 21 and 22):Current service cost 147,169,749 – 147,169,749Net interest 155,780,184 101,569,979 54,210,205Settlement loss 3,621,180 – 3,621,180

306,571,113 101,569,979 205,001,134Benefits paid (113,562,450) (113,562,450) –Settlements paid from plan assets (11,285,346) (11,285,346) –Remeasurements in OCI: Actuarial changes due to

experience 503,436,601 – 503,436,601 Actuarial changes arising in

demographic assumptions 61,430,959 – 61,430,959 Return on plan assets

(excluding amount includedin net interest) – 85,279,044 (85,279,044)

564,867,560 85,279,044 479,588,516Contributions – 205,526,000 (205,526,000)Net transferred liability in/out:

Transferred in 3,616,372 – 3,616,372Transferred out (7,212,179) – (7,212,179)

(3,595,807) – (3,595,807)At December 31, 2019 P=2,856,759,302 P=1,651,379,851 P=1,205,379,451

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Changes in pension liability of the Company in 2018 are as follows:


Benefit PlanFair Value

of Plan AssetsPension

LiabilityAt January 1, 2018 P=2,364,167,643 P=1,338,403,194 P=1,025,764,449Net pension income

(see Notes 21, 22 and 24):Current service cost 167,416,276 – 167,416,276Net interest 134,463,158 78,965,788 55,497,370Settlement loss 2,444,748 – 2,444,748Transferred out (253,578,196) – (253,578,196)Transferred in 2,650,495 – 2,650,495

53,396,481 78,965,788 (25,569,307)Benefits paid (68,594,621) (68,594,621) –Settlements paid from plan assets (26,188,403) (26,188,403) –Remeasurements in OCI: Actuarial changes due to

experience 47,235,307 – 47,235,307 Actuarial changes arising from

changes in financialassumptions (246,452,811) – (246,452,811)

Actuarial changes arising indemographic assumptions (9,799,364) – (9,799,364)

Return on plan assets (excluding amount included in net

interest) – (149,233,334) 149,233,334(209,016,868) (149,233,334) (59,783,534)

Contributions – 210,500,000 (210,500,000)At December 31, 2018 P=2,113,764,232 P=1,383,852,624 P=729,911,608

The actual return on plan assets amounted to P=186.9 million and (P=70.3 million) in 2019 and 2018,respectively.

The maximum economic benefit available is a combination of expected refunds from the plan andreductions in future contributions. The overall expected rate of return on plan assets is determinedbased on the market prices prevailing on that date, applicable to the period over which the obligationis to be settled.

The Company expects to contribute to its defined benefit retirement plan in 2020 the amount ofP=360.5 million.

The following table sets forth the fair values, which are equal to the carrying values, of the plan assetsrecognized as at December 31:

2019 2018Cash and cash equivalents:

Cash in banks P=2,424,162 P=10,729Short-term deposits – 436,389,000

Unitized investment trust fund-FVTPL 216,386,818 –Investment in debt securities 213,300,914 127,956,880

(Forward)

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*SGVFSM000079*

2019 2018Investments in Philippine government securities:

Fixed-rate treasury notes P=722,394,726 P=284,675,758Retail treasury bonds 152,598,336 153,450,444Treasury bills – 60,000,000

Investments in quoted equity securities:Holding firms 140,148,146 125,514,640Property 87,539,530 73,591,250Electricity, energy, power and water 10,660,100 16,148,000Banks 78,162,091 71,533,750Telecommunication 15,549,200 18,047,500Transportation services 13,618,740 8,000,000Food and beverage 31,892,800 40,329,440Retail 8,591,000 8,540,000Construction 261,300 1,545,640Others 3,300,000 3,457,500

Interest and dividends receivable 20,765,998 10,858,531Fund liabilities (see Note 28) (66,214,010) (56,196,438)

P=1,651,379,851 P=1,383,852,624

The plan’s assets and investments consist of the following:

§ Investments in debt securities consist of long-term corporate bonds in the property sector, whichbear interest ranging from 5.13%-6.30% maturing from April 2022 to October 2026;

§ Investments in government securities which consist of retail treasury bonds that bear interest at6.25% and have maturities from March 2024 to October 2026 and fixed-rate treasury notes thatbear interest ranging from 5.75%-8.5% and have maturities from January 2020 to November2032;

§ Investments in shares of stocks listed in the Philippine Stock Exchange; and,

§ Other financial assets held by the retirement plan are primarily accrued interest income on cashand cash equivalents, debt instruments and other securities.

§ Fund liabilities pertain to the advances made by the Company for payments made to retiredemployees and accruals for trust fees.

The principal assumptions used to determine pension liability as at December 31 are as follows:

2019 2018Discount rate 4.90% 7.40%Salary increase rate 6.00% 6.00%

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The sensitivity analysis below has been determined based on reasonably possible changes of eachsignificant assumption on the present value of the defined benefit obligation as at the end of thereporting period, assuming all other assumptions were held constant:

Increase(Decrease)

in Basis Points 2019 2018Discount rate 50 (P=116,156,720) (P=73,672,270)

(50) 125,530,628 79,037,592Salary increase rate 50 P=123,570,614 P=79,729,842

(50) (115,520,897) (74,952,879)

The Company does not have a formal asset-liability matching strategy. The overall investment policyand strategy of the retirement plan is based on the Company suitability assessment, as provided by itstrustee bank, in compliance with the Bangko Sentral ng Pilipinas requirements. It does, however,ensure that there will be sufficient assets to pay the retirement benefits as they fall due whileattempting to mitigate the various risks of the plan.

The average duration of the defined benefit obligation is 10 years as at December 31, 2019 and 2018.

Shown below is the maturity analysis of the undiscounted benefit payments as at December 31:

2019 2018Less than 1 year P=718,521,170 P=658,907,307More than 1 year to 5 years 808,500,716 645,400,099More than 5 years to 10 years 1,505,589,078 1,376,272,493More than 10 years to 15 years 1,652,744,221 1,521,976,274More than 15 years to 20 years 1,553,617,611 1,361,323,459More than 20 years 4,434,017,601 4,360,481,640

27. Stock Options Plan

Senior Management Stock Option and Incentive PlanOn January 10, 2017 and December 17, 2002, the SEC approved the exemption requested by theCompany on the registration requirements of 31,500,000 and 101,500,000 options, respectively,underlying the Company’s common shares to be issued pursuant to the Company’s SeniorManagement Stock Option and Incentive Plan (the Plan). The Plan covers selected key members ofmanagement of the Company, certain subsidiaries and designated affiliated entities.

The Plan is divided into two programs, namely, the Management Stock Option Program (MSOP) andthe Executive Long-term Incentive Program (ELTIP). The MSOP provides a yearly stock optiongrant program based on company and individual performance while the ELTIP provides stockownership as an incentive to reinforce entrepreneurial and long-term ownership behavior of executiveparticipants.

MSOP. The MSOP is a yearly stock option grant program open to members of the senior corporatemanagement committee of the Company and members of the management committee, key talents anddesignated consultants of some of the business units.

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Each MSOP cycle refers to the period commencing on the MSOP grant date and ending on the lastday of the MSOP exercise period. Vesting is conditional on the employment of the employee-participants in the Company within the vesting period. The options will vest at the rate of one-thirdof the total options granted on each anniversary of the MSOP grant date until the third anniversary.

The exercise price of the stock options is determined by the Company with reference to the prevailingmarket prices over the three months immediately preceding the date of grant for the 1st to the 7th

MSOP cycle. Starting with the 8th MSOP cycle, the exercise price of the options is determined bythe Company with reference to the closing market price as at date of grant.

The options will vest at the rate of one-third of the total options granted from the start of the grantdate on each anniversary date which will start after a year from the grant date. For instance, under the1st MSOP cycle, the Compensation Committee of the Company granted 2,385,000 options to eligibleparticipants on July 1, 2004. One-third of the options granted, or 795,000 options, vested and may beexercised starting July 1, 2005. The exercise period for the 1st MSOP cycle was until June 30, 2012.From July 1, 2005 to September 25, 2019, the Compensation Committee granted series of MSOPgrants under the 2nd to 16th MSOP cycle to eligible participants. Under the most recent grant(September 25, 2019), the 16th MSOP cycle, the Compensation Committee granted 2,222,300 options.These options vest similar to the 1st MSOP cycle.

The options under MSOP expire eight years after grant date. The 1st, 2nd, 3rd 4th, 5th, 6th,7th and 8th

MSOP cycles expired on June 30, 2012, 2013, 2014, 2015, 2016, 2017 2018 and 2019, respectively.

The Company does not pay cash as a form of settlement.

The movements in the number of stock options outstanding under MSOP and related weightedaverage exercise prices (WAEP) for the years ended December 31, 2019 and 2018 follow:

2019 2018Number

of options WAEPNumber

of options WAEPTotal options granted as at beginning of year 50,492,844 P=111.92 47,184,794 P=102.59Options granted during the year 2,222,300 219.00 3,308,050 245.00Total options granted as at end of year 52,715,144 P=116.43 50,492,844 P=111.92

Outstanding at beginning of year 17,613,253 P=193.07 16,780,550 P=176.63Options granted during the year 2,222,300 219.00 3,308,050 245.00Options exercised during the year (1,696,402) 139.16 (2,234,849) 145.31Options forfeited during the year (234,003) 270.75 (240,498) 204.03Outstanding at end of year 17,905,148 P=200.38 17,613,253 P=193.07

Exercisable at end of year 12,077,981 P=188.14 10,612,036 P=169.70

The weighted average share price was P=264.79 and P=278.16 in 2019 and 2018, respectively. Theweighted average remaining contractual life for the stock options outstanding is 4.62 years and4.48 years as at December 31, 2019 and 2018, respectively.

The weighted average fair value of stock options granted is P=48.07 and P=58.42 in 2019 and 2018,respectively. The fair value of the share options as at grant date is estimated using the Black-ScholesOption Pricing Model, taking into account, the terms and conditions upon which the options weregranted. The option style used for this plan is the American style because this option plan allowsexercise before the expiry date.

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The inputs in the valuation of the options granted on the dates of grant for each MSOP cycle areshown below:

MSOP Cycle Year of GrantDividend


Risk-freeInterest

Rate

Expected Life of

the Option

Stock Priceon Grant

DateExercise

Price1st 2004 1.72% 36.91% 6.20% 5-7 years P=24.00 P=20.002nd 2005 1.72% 36.91% 6.20% 5-7 years 29.00 27.503rd 2006 1.72% 36.91% 6.20% 5-7 years 35.00 32.324th 2007 1.70% 28.06% 6.41% 3-4 years 52.50 50.775th 2008 1.80% 26.79% 8.38% 3-4 years 34.00 39.856th 2009 2.00% 30.37% 5.28% 3-4 years 48.00 45.457th 2010 2.00% 29.72% 5.25% 3-4 years 70.00 57.778th 2011 2.00% 34.53% 4.18% 3-4 years 89.90 89.909th 2012 2.00% 28.72% 3.50% 3-4 years 107.90 107.9010th 2013 2.00% 29.38% 2.68% 3-4 years 145.00 145.0011th 2014 2.00% 24.87% 2.64% 3-4 years 179.80 179.8012th 2015 2.00% 18.94% 2.98% 3-4 years 180.00 180.0013th 2016 2.00% 17.76% 2.63% 3-4 years 236.00 236.0014th 2017 2.00% 16.70% 3.92% 3-4 years 206.20 206.2015th 2018 2.00% 28.98% 4.95% 3-4 years 245.00 245.0016th 2019 2.00% 27.65% 4.18% 3-4 years 219.00 219.00


ELTIP. The ELTIP entitlement is given to members of the senior management committee anddesignated consultants of the JFC Group.

Each ELTIP cycle refers to the period commencing on the ELTIP entitlement date and ending on thelast day of the ELTIP exercise period. Actual grant and vesting is conditional upon achievement ofthe JFC Group’s medium to long-term goals and individual targets in a given period, and theemployment of the employee-participants in the Company within the vesting period. If the goals areachieved, the options will be granted. For the 3rd ELTIP cycle, a percentage of the options to begranted are based on the percentage of growth in annual earnings per share such that 100%, 50% or25% of the options granted when percentage of growth in annual earnings per share are 12% andabove, 10% to less than 12% or 8% to less than 10%, respectively. For the 4th ELTIP cycle, thepercentage of the options to be granted and the target percentage of growth in annual earnings pershare have been revised such that 150%, 100% or 50% of the options granted when percentage ofgrowth in annual earnings per share are 15% and above, 12% to less than 15% or 10% to less than12%, respectively.

The exercise price of the stock options under ELTIP is determined by the Company with reference tothe prevailing market prices over the three months immediately preceding the date of entitlement forthe 1st and 2nd ELTIP cycles. Starting with the 3rd ELTIP cycle, the exercise price of the option isdetermined by the Company with reference to the closing market price as at date of the entitlement.

The options will vest at the rate of one-third of the total options granted on each anniversary datewhich will start after the goals are achieved. For instance, on July 1, 2004, the CompensationCommittee gave an entitlement of 22,750,000 options under the 1st ELTIP cycle to eligibleparticipants. One-third of the options granted, or 7,583,333 options, vested and were exercisedstarting July 1, 2007 until June 30, 2012. On July 1, 2008, October 19, 2012, August 25, 2015 andJanuary 3, 2018, entitlement to 20,399,999, 24,350,000, 11,470,000 and 9,290,000 options weregiven to eligible participants under the 2nd, 3rd, 4th and 5th ELTIP cycles, respectively.

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*SGVFSM000079*

The stock options granted under the 1st and 2nd ELTIP cycles expired on June 30, 2012 and April 30,2017, respectively, while the stock options granted under the 3rd and 4th ELTIP cycles will expire in2020 and 2023, respectively.

The Company does not pay cash as a form of settlement.

The movements in the number of stock options outstanding for the 3rd to 4th ELTIP cycles and relatedWAEP for the years ended December 31, 2019 and 2018 follow:

2019 2018Number

of options WAEPNumber

of options WAEPTotal options granted as at beginning

and end of year 78,969,999 P=74.58 78,969,999 P=74.58

Outstanding at beginning of year 18,630,000 P=120.55 27,436,666 P=136.65Options exercised during the year (3,238,299) 107.47 (1,323,333) 111.99Options forfeited during the year (23,333) 180.00 (7,483,333) 180.00Outstanding at end of year 15,368,368 P=123.22 18,630,000 P=120.55

Exercisable at end of year 13,895,035 P=117.20 15,683,333 P=109.38

The weighted average remaining contractual life for the stock options outstanding is 1.06 years and2.07 years as at December 31, 2019 and 2018, respectively.

The fair value of stock options granted is P=26.13 in 2015. There were no additional stock optiongrants under ELTIP in 2019 and 2018. The fair value of share options as at grant date is estimatedusing the Black-Scholes Option Pricing Model, taking into account, the terms and conditions uponwhich the options were granted. The option style used for this plan is the American style because thisoption plan allows exercise before the maturity date.

The inputs to the model used for the options granted on the dates of grant for each ELTIP cycle are asshown below:

ELTIP cycleYear

of GrantDividend


Risk-freeInterest

Rate

Expected Life of

the Option

Stock Priceon Grant

DateExercise

Price1st 2004 1.72% 36.91% 6.20% 5 years P=24.00 P=20.002nd 2008 1.80% 26.79% 8.38% 3-4 years 34.00 39.853rd 2012 2.00% 28.74% 3.60% 3-4 years 105.00 105.004th 2015 2.00% 18.94% 2.98% 3-4 years 180.00 180.00


The cost of the stock options charged to operations under “General and administrative expenses”account for both MSOP and ELTIP amounted to P=237.0 million and P=277.8 million in 2019 and2018, respectively (see Note 22). The cost of share options for employees of the subsidiariesamounted to P=25.9 million and P=34.2 million in 2019 and 2018, respectively, and was recognized asadditional investments in subsidiaries (see Note 10).

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*SGVFSM000079*

28. Related Party Transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control orare controlled by, or under common control with the Company, including holding companies,subsidiaries and fellow subsidiaries are related parties of the Company. Individuals owning, directlyor indirectly, an interest in the voting power of the Company that give them significant influence overthe enterprise; key management personnel, including directors and officers of the Company; and closemembers of the family of these individuals and companies associated with these individuals alsoconstitute related parties.

In the normal course of business, the Company engages in transactions with its subsidiaries and otherrelated parties.

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*SGVFSM000079*

The following table provides the summary of transactions that have been entered into with related parties as at and for the years ended December 31, 2019 and 2018:

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018 Terms ConditionsSubsidiariesFresh N’ Famous (FNF)

Sales P=20,811,631 P=64,782,213 P=11,062,261 P=18,290,365 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 508,398,509 707,391,245 265,566,551 236,756,924 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 32,706,152 33,126,676 1,883,165 1,758,193 On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 331,412,651 416,768,560 102,496,836 43,414,200 On demand; Noninterest-bearing Unsecured; No impairmentDividend income 400,000,000 700,000,000 − −Purchases 184,664 9,217,735 − −Interest expense 2,143,014 2,441,096 (407,534) − Monthly; Floating interest rate UnsecuredDue to FNF − − (200,000,000) − 5-years term; Floating interest rate UnsecuredPass-on charges - Receivables − − 24,302,019 30,787,359 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (32,321,282) (136,663) On demand; Noninterest-bearing Unsecured

ZenithSales 2,845,555,679 8,137,616 33,391,062 31,332 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 214,384,412 266,289,386 64,663,157 173,255,014 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 102,506,773 29,845,469 100,131,371 35,209,371 On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 733,311,994 191,696,195 430,585,645 75,241,766 On demand; Noninterest-bearing Unsecured; No impairmentInterest income 35,957,534 19,552,055 33,228,493 21,794,247 On demand; Noninterest-bearing Unsecured; No impairmentPurchases 12,634,196,426 10,183,636,078 (931,829,600) (365,449,073) On demand; Noninterest-bearing UnsecuredService fee expense 2,723,133 32,677,591 − −Due from Zenith 500,000,000 500,000,000 500,000,000 1,000,000,000 6-month term; Fixed interest rate Unsecured; No impairmentPass-on charges - Receivables − − 433,585,474 367,403,122 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (29,335,529) (1,150,089) On demand; Noninterest-bearing Unsecured

RRBISales 360,059 11,390,866 233,400 2,996,733 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 128,257,427 265,100,481 63,961,214 133,795,088 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 20,368,124 19,185,878 291,224 192,551 On demand, Noninterest-bearing Unsecured; No impairmentManagement fee revenue 154,101,348 142,538,268 64,701,706 50,669,640 On demand; Noninterest-bearing Unsecured; No impairmentPurchases 5,111,069 68,867,715 (1,065,982) (4,131,492) On demand; Noninterest-bearing UnsecuredManagement fee expense − 51,327 − −

(Forward)

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*SGVFSM000079*

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018 Terms Conditions

Rent expense P=494,000 P=− P=− P=−Pass-on charges - Receivables − − 5,036,314 5,579,973 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (1,333,004) (459,165) On demand; Noninterest-bearing Unsecured

RRBHService fee revenue 27,681 20,602 25,299 5,196 On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 313,777 319,885 135,373 6,047 On demand; Noninterest-bearing Unsecured; No impairmentDividend income 750,000,000 350,000,000 − −Interest expense 108,635 − (92,340) − On demand; Noninterest-bearing Unsecured

Due to RRBH 305,000,000 − (305,013,120) − On demand Unsecured

GrandworthService fee revenue 72,407 98,089 57,287 41,571 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 2,542 − − − On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 820,768 1,192,667 − 46,411 On demand; Noninterest-bearing Unsecured; No impairmentDividend income 83,500,000 − − −Rent expense 36,795,631 37,686,216 (17,661,610) (3,103,645) On demand; Noninterest-bearing UnsecuredPass-on charges - Receivables − − 2,366,028 1,575,000 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − − (5,363,546) On demand; Noninterest-bearing Unsecured

FreemontSales 779,946,056 6,436,272,353 2,912,946 804,909,130 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 169,339,360 211,102,214 78,986,467 136,749,435 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 123,870 329,786 2,058 120,632 On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 599,919,917 600,961,823 161,764,398 222,002,500 On demand; Noninterest-bearing Unsecured; No impairmentRoyalty fee income 1,351,263,940 1,290,791,492 283,695,460 273,582,283 On demand; Noninterest-bearing Unsecured; No impairmentAdvertising 450,421,313 430,263,831 5,731,967 32,019,736 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − 74,241,206 15,243,418 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (1,695,562) (1,872,956) On demand; Noninterest-bearing Unsecured

JWSSales 130,593 4,910 2,367 1,500 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 55,796,385 30,034,939 51,867,937 2,832,054 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 74,754,972 113,635,232 7,030,762 365,165 On demand; Noninterest-bearing Unsecured; No impairmentService fee expense 1,299,091,258 3,354,587,731 (428,982,306) (517,912,454) On demand; Noninterest-bearing UnsecuredManagement fee expense 13,270,561 42,125,072 (8,502,050) (2,308,220) On demand; Noninterest-bearing UnsecuredInterest expense 9,702,604 7,733,542 (6,747,917) (1,157,333) On demand; Noninterest-bearing UnsecuredDue to JWS − − (150,000,000) (150,000,000) On demand; Noninterest-bearing UnsecuredPass-on charges - Receivables − − 36,806,592 12,725,450 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (2,604,420) (656,790) On demand; Noninterest-bearing Unsecured

(Forward)

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*SGVFSM000079*

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018 Terms ConditionsMang Inasal

Sales P=4,531,036 P=13,480,578 P=27,393 P=4,827,484 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 100,898,603 225,305,163 61,070,314 52,423,114 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 13,695,492 5,749,421 316,838 − On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 142,882,860 210,001,015 24,194,591 9,141,459 On demand; Noninterest-bearing Unsecured; No impairmentDividend income 347,000,000 500,000,000 − −Purchases − 4,232 − −Service fee expense − 10,959 − −Interest expense − 3,160,274 − −Rent expense 1,570 − − −Pass-on charges - Receivables − − 8,962,804 3,467,733 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (143,171) (40,872) On demand; Noninterest-bearing Unsecured

PERFISales 2,600,095 800,054 15,071,933 17,376,600 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 47,330,055 36,698,247 28,604,823 42,831,673 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 3,637,766 5,320,850 2,733,773 7,912,179 On demand; Noninterest-bearing Unsecured; No impairmentManagement fee revenue 58,491,447 70,632,599 22,619,914 92,501,746 On demand; Noninterest-bearing Unsecured; No impairmentInterest income 78,552,584 54,336,301 77,084,104 45,635,479 On demand; Noninterest-bearing Unsecured; No impairmentDue from PERFI − 200,000,000 1,618,000,000 1,618,000,000 3-month to 5-year terms;

Interest-bearingUnsecured; No impairment

Pass-on charges - Receivables − − 64,892,611 73,592,969 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (297,890) (5,876,456) On demand; Noninterest-bearing Unsecured

PERF MOA Pasay, Inc.Sales 28,393 27,392 − −Service fee revenue 15,901 34,893 14,385 17,325 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 883 − 413 − On demand; Noninterest-bearing Unsecured; No impairment

PERF Trinoma, Inc.Service fee revenue 3,033 34,211 229 17,325 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 883 − 413 − On demand; Noninterest-bearing Unsecured; No impairment

AdgraphixMarketing collaterals 38,359,514 42,132,215 (50,903,138) (49,224,204) On demand; Noninterest-bearing Unsecured

Chanceux, Inc.Pass-on charges - receivables − − 44,400 44,400 On demand; Noninterest-bearing Unsecured; No impairment

(Forward)

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*SGVFSM000079*

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018 Terms ConditionsJWPL

Royalty fee income P=165,852,098 P=150,185,320 P=760,601,613 P=594,749,515 On demand; Noninterest-bearing Unsecured; No impairment

Jollibee Vietnam Corporation Ltd.Sales 31,530,200 37,085,025 398,707,041 329,796,146 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue − (551,250) − 1,785,000 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − − 39,193,844 On demand; Noninterest-bearing Unsecured; No impairment

PT Chowking IndonesiaPass-on charges - Receivables − − 25,610,401 24,918,228 On demand; Noninterest-bearing Unsecured; No impairment

RRBI USAPass-on charges - Receivables − − 506,217 525,662 On demand; Noninterest-bearing Unsecured; No impairment

TTCSales − − − 18,496,831 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − − 2,604,764 On demand; Noninterest-bearing Unsecured; No impairment

Golden Beeworks Pte., Ltd.Sales 58,647,402 42,631,779 100,769,218 30,258,916 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue − (35,000) − 427,969 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − − 12,425,133 On demand; Noninterest-bearing Unsecured; No impairment

Hong Zhuang YuanDue to Hong Zhuang Yuan − − (6,234,899) (6,234,899) On demand; Noninterest-bearing UnsecuredPass-on charges - Receivables − − 723,271 729,658 On demand; Noninterest-bearing Unsecured; No impairment

Shanghai Yong He KingPass-on charges - Receivables − − 23,872,404 25,569,760 On demand; Noninterest-bearing Unsecured; No impairment

Beijing Yong He KingPass-on charges - Receivables − − 1,883,634 1,977,938 On demand; Noninterest-bearing Unsecured; No impairment

Shenzhen Yong He KingPass-on charges - Receivables − − 2,582,192 2,719,079 On demand; Noninterest-bearing Unsecured; No impairment

(Forward)

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*SGVFSM000079*

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018 Terms ConditionsHangzhou Yongtong

Pass-on charges - Receivables P=− P=− P=729,139 P=757,106 On demand; Noninterest-bearing Unsecured; No impairment

Hangzhou Yong He KingPass-on charges - Receivables − − 676,420 701,319 On demand; Noninterest-bearing Unsecured; No impairment

Wuhan Yong He KingPass-on charges - Receivables − − 1,301,479 1,383,308 On demand; Noninterest-bearing Unsecured; No impairment

Tianjin Yonghe King - TJ YH Pass-on charges - Receivables − − 14,025 − On demand; Noninterest-bearing Unsecured; No impairment

JFCCSales 12,930 − − −Due to JFCC − − (52,408,390) (52,408,390) On demand; Noninterest-bearing UnsecuredPass-on charges - Receivables − − 49,415,987 50,043,958 On demand; Noninterest-bearing Unsecured; No impairment

SBEMACPass-on charges - Receivables − − − 1,500,886 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Payables − − (540,335) (2,030,209) On demand; Noninterest-bearing Unsecured

Beijing Golden Coffee Cup Food and BeverageManagement Co., Ltd.Pass-on charges - Receivables − − 1,813,486 1,257,520 On demand; Noninterest-bearing Unsecured; No impairment

SFVTPass-on charges - Receivables − − 40,190,145 29,435,235 On demand; Noninterest-bearing Unsecured; No impairment

Happy Bee Foods Processing (Anhui) Co. Ltd.Pass-on charges - Receivables − − 3,290,470 2,458,105 On demand; Noninterest-bearing Unsecured; No impairment

GSCPass-on charges - Receivables − − 2,583,720 − On demand; Noninterest-bearing Unsecured; No impairment

HFCCRoyalty fee income 92,740,147 60,739,708 58,332,528 83,109,100 On demand; Noninterest-bearing Unsecured; No impairment

(Forward)

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*SGVFSM000079*

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018 Terms ConditionsHighlands Coffee Service Joint Stock Company

Guarantee fee income P=8,743,361 P=56,275,492 `P=64,574,009 P=58,152,961 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − 3,137,403 − On demand; Noninterest-bearing Unsecured; No impairment

Bee World UK LimitedSales 326,938 37,366 364,304 37,366 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − 7,374,814 212,321 On demand; Noninterest-bearing Unsecured; No impairment

Bee World Spain SLUPass-on charges - Receivables − − 78,818 − On demand; Noninterest-bearing Unsecured; No impairment

Cibo Felice S.R.LSales 993,980 − 993,980 − On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − 17,996,817 − On demand; Noninterest-bearing Unsecured; No impairment

Bee Good! Inc.Pass-on charges - Payables − − (1,889,231) − On demand; Noninterest-bearing Unsecured

HFCSales 363,755,368 340,371,399 340,679,516 1,144,678,596 On demand; Noninterest-bearing Unsecured; No impairmentPass-on charges - Receivables − − − 126,051,187 On demand; Noninterest-bearing Unsecured; No impairment

Joint Venture -C-Joy Poultry

Advances to a joint venture 1,240,606,190 − 1,240,606,190 − On demand; 6 months term;Interest-bearing

Unsecured; No impairment

Interest income 31,378,636 − − −

Affiliate -Jollibee Group Foundation Inc.

Sales − 675,760 1,440 989 On demand; Noninterest-bearing Unsecured; No impairmentService fee revenue 1,031,472 728,097 − 474 On demand; Noninterest-bearing Unsecured; No impairmentRent revenue 1,905,262 424,144 27,544 43,785 On demand; Noninterest-bearing Unsecured; No impairmentDonations 116,570,013 100,088,723 − −Pass-on charges - Receivables − − 850,326 1,528,441 On demand; Noninterest-bearing Unsecured; No impairment

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*SGVFSM000079*

Volume of Transactions Outstanding Receivable (Payable)Category 2019 2018 2019 2018Total related party transactions:

Net sales P=4,109,230,360 P=6,955,697,311Service fee revenue 1,225,555,245 1,742,251,317Rent revenue 249,702,719 207,617,456Management fee revenue 2,021,254,762 1,634,111,012Royalty fee income (see Note 20) 1,609,856,185 1,501,716,520Interest income (see Note 23) 145,888,754 73,888,356Advertising 488,780,827 472,396,046Dividend income (see Note 24) 1,580,500,000 1,550,000,000Guarantee fee income (see Note 24) 8,743,361 56,275,492Purchases (see Note 21) 12,639,492,159 10,261,725,760Service fee expense (see Notes 21 and 22) 1,301,814,391 3,387,276,281Interest expense (see Note 23) 11,954,253 13,334,912Management fee expense (see Note 22) 13,270,561 42,176,399Rent expense (see Notes 21, 22 and 29) 37,291,201 37,686,216Donations (see Note 22) 116,570,013 100,088,723Advances to related parties 500,000,000 700,000,000Advances from related parties 305,000,000 −Advances to a joint venture (see Note 10) 1,240,606,190 −

Total related party outstanding balances:Trade receivables from related parties and

contract assets (see Note 6) P=4,525,667,063 P=5,603,243,422Advances to related parties 2,118,044,400 2,618,044,400Advances to joint venture (see Note 10) 1,240,606,190 −Lease receivables (see Note 29) 30,355,876 33,434,170Trade payables to related parties (see Note 15) (1,516,352,901) (960,873,167)Due to related parties (713,656,409) (208,643,289)

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*SGVFSM000079*

Common Transactions with Related PartiesThe Company sells and purchases food items to/from related parties at market prices. Purchaseditems warehoused with related parties are charged for logistics and warehousing costs. Due fromrelated parties, unless otherwise stated, are short-term advances made to related parties which areexpected to be paid in the subsequent year. Pass-on charges pertain to advances made by a relatedparty for another. These include payments for various expenditures incurred on behalf of anotherparty.

Fresh N’ Famous

a. Fresh N’ Famous avails the services of the Company for the plan, design, installation and repairsof equipment in Fresh N’ Famous’ stores.

b. Fresh N’ Famous leases its office space and some store locations from the Company.

c. Fresh N’ Famous pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

d. On May 7, 2019 and December 6, 2019, the Company received cash dividends from Fresh N’Famous declared on May 3, 2019 and December 2, 2019, respectively, amounting toP=150.0 million and P=250.0 million or P=0.50 and P=0.83 dividends per share, respectively.

On May 4, 2018 and December 5, 2018, the Company received cash dividends from Fresh N’Famous declared on April 12, 2018 and November 9, 2018, respectively, amounting toP=500.0 million and P=200.0 million or P=1.67 and P=0.67 dividends per share, respectively.

e. On December 6, 2019, the Company received advances from Fresh N’ Famous amounting toP=200.0 million. The advances are payable in full on March 6, 2020. The interest rate on theadvances is based on money market placement rates plus a spread of 3.50%, payable on amonthly basis.

On April 16, 2012, the Company received advances from Fresh N’ Famous amounting toP=749.0 million. The advances are payable in full on April 16, 2017. The interest rate on theadvances is based on money market placement rates plus a spread of 1%, payable on a monthlybasis. The P=449.0 million of the loan was paid on April 17, 2017 and the P=300.0 millionadvances was extended and paid on July 16, 2018.

Zenith

a. Zenith pays service fees to the Company for procurement services rendered by the Company’sPurchasing Department.

b. The Company leases out to Zenith the land where the latter’s manufacturing plant was built. In2014, the lease term was extended to end on December 31, 2023. On January 1, 2015, the termsof the agreement were amended to include an escalation clause. Zenith may pre-terminate thelease provided that an advance notice is provided to the Company within the prescribed period asindicated in the agreement.

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*SGVFSM000079*

The future minimum lease receivables on the lease as at December 31, 2019 and 2018 are asfollows:

2019 2018Within one year P=33,502,391 P=31,907,039After one year but not more than five years 110,897,102 144,399,493

P=144,399,493 P=176,306,532

c. Zenith pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

d. On July 5, 2018 and September 29, 2017, the Company provided two six-month loans to Zenithamounting to P=500.0 million each. Both of the loans are due in six months. The loan onSeptember 29, 2017 was extended until March 29, 2019 while the loan on July 5, 2018 wasextended until April 5, 2020. The interest income recognized amounted to P=31.9 million andP=19.6 million in 2019 and 2018, respectively.

e. The Company pays service fees to Zenith for supply chain and customer and order managementservices, including warehousing and logistics services, under an existing Service Contract.

f. On August 24, 2018, the Company executed a guaranty agreement with MBTC for Zenith’s loanamounting to P=1.0 billion payable equally in 20 quarterly installments. The maturity date ofZenith’s loan is in August 2025.

RRBI

a. RRBI avails the services of the Company for the repairs and maintenance of RRBI’s storeequipment and facilities.

b. RRBI leases its office space from the Company on an annual basis.

c. RRBI pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

RRBH

a. RRBH avails the services of the Company for business support services.

b. RRBH pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

c. On December 26, 2019, the Company received cash dividends from RRBH declared onDecember 23, 2019, amounting to P=750.0 million or P=473.78 per share.

On May 4, 2018 and December 5, 2018, the Company received cash dividends from RRBHdeclared on May 2, 2018 and November 15, 2018, respectively, amounting to P=100.0 million andP=250.0 million or P=63.17 and P=157.93 dividends per share, respectively.

d. On December 27, 2019, the Company received advances from RRBH amounting toP=305.0 million. The advances are payable in partial on January 23, 2020 amounting toP=80.0 million. The remaining balance are to be paid on March 27, 2020. The interest rate on theadvances is based on money market placement rates plus a spread of 3.25%, payable on amonthly basis.

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*SGVFSM000079*

Grandworth

a. Grandworth avails the services of the Company for business support services.

b. Grandworth pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

c. On May 7, 2019 and December 6, 2019, the Company received cash dividends from Grandworthdeclared on May 3, 2019 and December 2, 2019, respectively, amounting to P=33.5 million andP=50.0 million or P=16.75 and P=25.00 dividends per share, respectively.

There was no cash dividend declared and paid by Grandworth to its stockholders of record in2018.

d. The Company is a lessee under various operating lease agreements with Grandworth. These leaseagreements have terms ranging from 5 to 20 years, which mostly contain renewal options. Thelease agreements include escalation clauses on an annual basis based on prevailing marketconditions.

The future minimum lease payments under the lease arrangements as at December 31, 2019 and2018 are as follows:

2019 2018Within one year P=17,502,092 P=31,714,156After one year but not more than five years 70,316,935 128,372,295More than five years − 22,876,497

P=87,819,027 P=182,962,948

Freemont

a. Freemont operates “Jollibee” stores in certain parts of Luzon, Visayas and Mindanao under aRoyalty and Service Agreement with the Company. As a franchisor of Freemont, the Company’ssales of food supplies, processed inventories and packaging, store and other supplies to Freemontare accounted for as part of the Company’s “Net sales” account in the parent company statementof comprehensive income. Freemont also pays royalties and advertising fees to the Companybased on certain percentages of Freemont’s net sales as provided in the Royalty and ServiceAgreement. These transactions were made on similar terms as third party franchisees.

b. Freemont pays service fees to the Company for various services, including repairs andmaintenance services, rendered by the Company’s personnel.

c. Freemont leases office spaces in properties owned by the Company.

d. The Company has a Management Contract (the Contract) with Freemont for the former toprovide managerial services on all aspects of the operations of Freemont’s stores. Managementfees are based on a percentage of Freemont’s net sales as provided for in the Contract.

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JWS

a. JWS leases its office space from the Company on an annual basis.

b. On March 20, 2012, the Company entered into a sub-lease agreement with JWS for the use of theCompany’s leased land and building for a period of five years beginning May 1, 2012 untilApril 30, 2017. In 2017, the sub-lease agreement was amended to reduce the monthly rent andextend the lease term to September 30, 2018, and in 2018, this was further extended up toDecember 31, 2018. The land and building are used by JWS for its logistics services. TheCompany received security deposit amounting to P=27.7 million and P=29.7 million as atDecember 31, 2019 and 2019, respectively, which will be refunded at the end of the lease term.

c. The Company has existing one-year contracts with JWS for accounting and human resourceservices, and logistics services relating to inbound and outbound logistics, warehousing, scrapdisposal and other inventory handling services. The contracts are renewable and with service feesdetermined annually.

d. On September 1, 2018, JWS has assumed the business support services for the JFC Group. Thiscovers services such as network development, business technology, quality management andprocess engineering.

e. The Company pays management fee to JWS for executive office and advisory services renderedunder a Management Services Agreement, renewable annually.

f. On April 16, 2012, the Company received advances from JWS amounting to P=150.0 million. Theadvances are payable in full on April 16, 2017. The interest rate on the advances is based onprevailing money market placement rates plus spread of 1%, payable on a monthly basis. In2017, the term of the P=150.0 million advances was extended to be paid in full on April 17, 2022.Interest expense on these advances amounted to P=9.7 million and P=7.7 million in 2019 and 2018,respectively.

Mang Inasal

a. Mang Inasal avails the services of the Company for the plan, design and installation of equipmentfor Mang Inasal stores.

b. Mang Inasal leases some of its store locations from the Company. The agreements are for aperiod of 5 to 20 years with escalation clauses and subject to renewal upon mutual agreement ofboth parties.

c. Mang Inasal pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

d. On May 7, 2019 and December 6, 2019, the Company received cash dividends from Mang Inasaldeclared on May 3, 2019 and December 2, 2019, respectively, amounting toP=100.0 million and P=247.0 million or P=40.00 and P=98.80 dividends per share, respectively.

On December 5, 2018, the Company received cash dividends declared on November 9, 2018amounting to P=500.0 million or P=200.00 dividends per share .

e. On May 3, 2017, the Company received a one-year cash advance from Mang Inasal amounting toP=300.0 million, with fixed interest rate of 1.5%. The cash advance and interest were settled infull on August 3, 2018.

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On January 31, 2017, the Company received short-term cash advances from Mang Inasalamounting to 300.0 million, with fixed interest rate of 2%. The advances and interest weresettled in full on January 31, 2018.

Interest expense on the advances amounted to nil and P=3.2 million in 2019 and 2018,respectively.

PERFI

a. PERFI avails the services of the Company for the repairs and maintenance of PERFI’s storeequipment and facilities.

b. PERFI leases its office space and pays rental fees to the Company for the use of meeting roomsand parking spaces.

c. PERFI pays management fees to the Company for services rendered under an existingManagement Services Agreement, which is renewable annually.

d. On June 27, 2018, the Company entered into an agreement with PERFI for a loan amounting toP=200.0 million subject to a 3.5% fixed interest rate due on June 27, 2019. In 2019, the maturityperiod of the loan was extended into a five (5) year period until June 27, 2024 with a statedinterest of 5.75%.

In 2017, the Company entered into three (3) loan agreements with PERFI. The Company hasextended the first loan in the principal amount of P=130.0 million on April 17, 2017, the secondloan in the principal amount of P=130.0 million on July 14, 2017 and the third loan in the principalamount of P=250.0 million on October 19, 2017. The loans are subject to interest rate of 3%, 1.5%and 2.2%, respectively and are payable on December 17, 2018, July 14, 2018 and April 19, 2018,respectively. In 2019, the maturity period of these loan agreements were extended into a five (5)year term loan with stated interest rates ranging from 5.75% to 6% per annum.

In 2016, the Company entered into three (3) loan agreements with PERFI, each with a principalamount of P=100.0 million and a stated interest rate of 3% per annum. The Company has extendedits first two P=100.0 million loans on December 15, 2016. The third loan agreement was enteredinto by the Company on December 22, 2016. All loans are payable on March 22, 2017 and wereextended until September 22, 2017. In 2017, the maturity period of the loan agreements wereextended until 2018. In 2019, the maturity period of these loan agreements were extended into afive (5) year term loan with stated interest rates ranging from 5.75% to 6% per annum.

In 2015, the Company extended a five-year loan to PERFI amounting to P=300.0 million for use inthe operations and store expansions of the Burger King business, with maturity date ofDecember 23, 2020 and subject to 5.0% interest rate per annum.

In 2014, the Company entered into four (4) loan agreements with PERFI. The Company hasextended the first loan in the principal amount of P=54.0 million on February 14, 2014, the secondloan in the principal amount of P=54.0 million on May 30, 2014, the third loan in the principalamount of P=100.0 million on September 2, 2014, and the fourth loan in the principal amount ofP=100.0 million on September 26, 2014. All loans are subject to interest at the rate of 5.0% perannum that is to be paid semi-annually. Principal shall be due and paid in lump sum five (5) yearsafter the drawdown date.

Interest income on the advances amounted to P=78.6 million and P=54.3 million in 2019 and 2018,respectively.

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JWPLIn 2012, the Company entered into a Royalty and License Agreement with JWPL. The terms andconditions are similar in nature with those discussed in Note 20.

OthersRelated party transactions and balances for other subsidiaries of the Company are similar in naturewith those discussed above.

Guarantees Provided by the Company to its affiliates

a. On March 2, 2018 and December 3, 2018, the Company executed guaranty agreements for theterm loan facilities amounting to VND113,000.0 million and VND185,000.0 million,respectively, issued by Standard Chartered Bank VN to Highlands Coffee Service Joint StockCompany (“Highlands Coffee”).

b. In 2018, the Company recognized guarantee fee income from Highlands Coffee amounting toP=56.3 million covering the periods from 2014 to 2018 and P=8.6 million in 2019.

c. On various dates in 2017, the Company executed a guaranty agreement for the full performanceand payment of the tenant’s obligations under the contract of lease between:· GPPL and Cenae S.r.l.· HFC and Maui Marketplace Investments Group Inc.· HFC and Sweetwater Associates Limited Partnership· HFC and Mira Mesa Shopping Center - West LLC

d. On March 14, 2017 and August 11, 2017, the Company executed a guaranty agreement for theterm loan facility amounting to VND68,000 million and US$5.0 million, respectively, issued byStandard Chartered Bank VN to Highlands Coffee.

e. In 2016, the Company provided a guarantee on JWPL’s US$30.0 million loan with BPI. In 2016and 2015, the Company provided a guarantee on JWPL’s US$8.0 million loan andUS$110.0 million loan, respectively, with MBTC.

Terms and Conditions of Transactions with Related PartiesTransactions with related parties are made at market prices and are normally settled in cash. TheCompany did not make any provision for impairment losses on receivables from related parties in2019 and 2018. An assessment is undertaken at each financial year by evaluating the financialposition of the related party and the market where the related party operates.

Compensation of Key Management Personnel of the CompanyThe compensation and benefits to key management personnel of the Company for the years endedDecember 31, 2019 and 2018 are as follows:

2019 2018Short-term employee benefits P=795,415,726 P=716,738,258Stock options expense (see Notes 22 and 27) 236,972,375 277,773,865Pension expense (see Note 26) 70,044,206 50,091,430Employee car plan benefits 30,754,201 31,845,453

P=1,133,186,508 P=1,076,449,006

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Transactions with the Retirement PlanAs at December 31, 2019 and 2018, the retirement plan assets of the Company include 120,800common shares investments in the Company with aggregate fair values of P=26.1 million andP=35.2 million, respectively.

The Company usually advances the pension benefits of its retiring employees which are reimbursablefrom the retirement fund. The Company’s receivable from its retirement fund from these advancesamounted to P=64.1 million and P=55.0 million as at December 31, 2019 and 2018, respectively(see Notes 6 and 26). The receivables from retirement fund is included under “Other receivables”account (see Note 6).

29. Commitments and Contingencies

CommitmentsThe Company has the following commitments as at December 31, 2019 and 2018:

a. Lease Commitments - Company as LessorThe Company entered into commercial property leases on its investment properties and subleasedproperties with third party and related party lessees. Non-cancellable periods of the leases rangefrom 3 to 20 years, mostly containing renewal options. All leases include a clause to enableupward revision of the rental charges on an annual basis based on prevailing market conditions.

The difference of rent income recognized under the straight-line method and the rent received inaccordance with the terms of the lease agreements, amounting to P=31.6 million and P=33.4 millionas at December 31, 2019 and 2018, respectively, are presented as “Lease receivables” in theparent company statements of financial position. Rent income derived from subleased propertiesamounted to P=37.2 million and P=18.3 million in 2019 and 2018. Rent income recognized on astraight-line basis amounted to P=278.6 million and P=218.4 million in 2019 and 2018, respectively.

The future minimum rent receivables for the non-cancellable periods of the operating leasesfollow:

2019 2018Within one year P=40,540,181 P=45,263,803After one year but not more than five years 137,551,487 159,195,887More than five years 3,235,627 8,386,620

P=181,327,295 P=212,846,310

b. Lease Commitments - Company as LesseeThe Company has lease contracts expiring on various dates until 2045, renewable for suchperiods as may be mutually agreed upon by both parties. The leases are subject to annualescalation rates ranging from 5% to 10% of the current rental fees. The following are thecarrying amounts of right-of-use assets recognized and the movements during the period:

QSR Outlet Warehouse Office Space TotalBalances as at January 1, 2018, as restated (Note 2) P=6,594,777,042 P=306,302,774 P=36,857,948 P=6,937,937,764Additions 782,280,616 − 47,284,652 829,565,268Pre-termination (603,458,051) − − (603,458,051)Depreciation expense (925,708,363) (12,961,152) (22,793,777) (961,463,292)Balances as at December 31, 2018, as restated (Note 2) 5,847,891,244 293,341,622 61,348,823 6,202,581,689Additions 425,049,850 − 22,332,834 447,382,684Pre-termination (342,917,794) − − (342,917,794)Depreciation expense (896,871,068) (12,961,152) (25,728,307) (935,560,527)Balances as at December 31, 2019 P=5,033,152,232 P=280,380,470 P=57,953,350 P=5,371,486,052

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The following are the carrying amounts of lease liabilities and the movements during the period:

2019

2018(As restated -

Note 2)Balances at beginning of year P=7,674,028,691 P=8,328,547,578Additions 455,679,722 858,714,424Accretion of interest 408,256,010 434,504,802Payments (1,230,260,843) (1,263,421,689)Pre-termination (409,384,824) (684,316,424)Balances at end of year P=6,898,318,756 P=7,674,028,691

The following are the amounts recognized in the statements of comprehensive income:

2019 2018Depreciation expense of right-of-use assets P=935,560,527 P=961,463,292Interest expense on lease liabilities 408,256,010 434,504,801Rent expense relating to variable leases

(included under “Cost of sales andservices”) (Note 21) 539,767,937 498,974,495

Rent expense relating to short-term leases(included under “Cost of sales andservices”) (Note 21) 13,511,464 34,608,150

Rent expense relating to short-term leases(included under “General andadministrative expenses”) (Note 22) 89,290,272 93,066,645

P=1,986,386,210 P=2,022,617,383

ContingenciesThe Company is involved in litigations, claims and disputes which are normal to its business. Exceptfor those legal claims provided for in Note 16, management believes that the ultimate liability, if any,with respect to these litigations, claims and disputes will not materially affect the financial positionand performance of the Company.

The Company does not provide further information on these provisions and contingencies, in ordernot to impair the outcome of the litigations, claims and disputes.

30. Financial Risk Management Objectives and Policies

The Company is exposed to a variety of financial risks which result from both its operating andfinancing activities. The Company’s risk management policies focus on actively securing theCompany’s short-term to medium-term cash flows by minimizing the exposure to financial markets.

The Company’s principal financial instruments comprise of cash and cash equivalents, short-terminvestments, receivables, trade payables and other current liabilities (excluding local and other taxespayable, liabilities to government agencies and unearned revenues from gift certificates) and long-term debt. The Company also has other financial assets and liabilities such as advances to relatedparties, refundable deposits, financial assets at FVTPL and AFS financial assets, due to relatedparties, lease receivables and lease liabilities.

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The Company does not engage in trading financial assets for speculative purposes.

The BOD has overall responsibility for the establishment of the risk management policies to identifyand analyze risks faced by the Company. Risk management policies are reviewed regularly to reflectchanges in the Company’s condition with regard to the risks arising from these financial instruments.

The main risks arising from the use of these financial instruments are foreign currency risk, interestrate risk, credit risk and liquidity risk. The Company’s BOD and management review and approvepolicies for managing each of these risks and they are summarized below.

Foreign Currency RiskThe Company has transactional foreign currency exposures. Such exposures arise from cash and cashequivalents and trade receivables denominated in foreign currencies.

The following tables show the Company’s foreign currency-denominated monetary assets andliabilities and their peso equivalents as at December 31:

2019US$ RMB PhP=

Foreign currency denominated assets:Cash and cash equivalents $16,478,928 RMB– P=834,410,519Trade receivables 18,048,109 11,252,269 995,458,429

34,527,037 11,252,269 1,829,868,948Foreign currency denominated liabilities (37,311) − (1,889,231)Foreign currency-denominated assets - net $34,489,726 RMB11,252,269 P=1,827,979,717

2018US$ RMB PhP=

Foreign currency denominated assets:Cash and cash equivalents $71,448,154 RMB– P=3,756,743,937Trade receivables 34,786,127 10,895,992 1,912,735,776

106,234,281 10,895,992 5,669,479,713Foreign currency denominated liabilities (596,457) − (31,361,719)Foreign currency-denominated assets - net $105,637,824 RMB10,895,992 P=5,638,117,994

The Company recognized in the parent company statement of comprehensive income included under“Other income” account, net foreign exchange gain (loss) amounting to (P=253.2 million) andP=7.9 million for the years ended December 31, 2019 and 2018, respectively (see Note 24). Thisresulted from the movements of the Philippine peso against the US dollar and RMB as shown in thefollowing table:

Peso toUS Dollar RMB

December 31, 2019 P=50.64 P=7.25December 31, 2018 52.58 7.68

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Foreign Currency Risk Sensitivity Analysis. The following table demonstrates the sensitivity to areasonably possible change in Philippine peso to US dollar and RMB exchange rates, with all othervariables held constant, of the Company’s cash and cash equivalents and trade receivables to theincome before income tax as at December 31, 2019 and 2018 (due to the changes in the fair value ofmonetary assets).

Appreciation(Depreciation) of PhP=

Effect on Income Before Income TaxPhP= to US$

RatePhP= to RMB

Rate(In thousands)

2019 P=1.50 (P=51,734.6) (P=16,878.4)1.00 (34,489.7) (11,252.3)

(1.50) 51,734.6 16,878.4(1.00) 34,489.7 11,252.3

2018 1.50 (158,456.7) (16,344.0)1.00 (105,637.8) (10,896.0)

(1.50) 158,456.7 16,344.0(1.00) 105,637.8 10,896.0

Interest Rate RiskInterest rate risk arises from the possibility that the fair value or future cash flows of a financialinstrument will fluctuate because of changes in market interest rates.

The Company’s exposure to interest rate risk relates primarily to the Company’s long-term advancesfrom a subsidiary, JWS, amounting to P=150.0 million as at December 31, 2019 and 2018, asdiscussed in Note 28, short-term advances from subsidiaries, Fresh N’ Famous and RRBH,amounting P=505.0 million and nil as at December 31, 2019 and 2018, respectively, and long-termdebt amounting to P=14,025.9 million and P=17,788.2 million as at December 31, 2019 and 2018, witha current portion of P=2,573.3 million and P=3,773.0 million as at December 31, 2019 and 2018,respectively, which is discussed in Note 17. Floating rate financial instruments are subject to cashflow interest rate risk.

There is minimal exposure on the other sources of the Company’s interest rate risk. These othersources are from the Company’s cash in bank, short-term deposits, refundable deposits and employeecar plan receivables.

Interest Rate Risk Sensitivity Analysis. The following table demonstrates the sensitivity to areasonably possible change in interest rates, with all other variables held constant, of the Company’sincome before income tax.

Increase (Decrease)in Basis Points

Effect on IncomeBefore Income Tax

2019 100 (P=140,258,544)50 (70,129,272)

(100) 140,258,544(50) 70,129,272

2018 100 (177,881,986)50 (88,940,993)

(100) 177,881,986(50) 88,940,993

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Fixed rate financial liabilities, although subject to fair value interest rate risk, are not included in thesensitivity analysis since changes in interest rate do not impact interest expense recorded. Theassumed movement in basis points for interest rate sensitivity analysis is based on the currentlyobservable market environment.

Credit RiskCredit risk is the risk that a customer or a counterparty fails to fulfill its contractual obligations to theCompany. This includes risk of non-payment by customers, borrowers and issuers, failed settlementof transactions and default on outstanding contracts.

The Company has a strict credit policy. Its credit transactions are with franchisees that have gonethrough rigorous screening before granting them the franchise and with related parties. The creditterms are very short, while deposits and advance payments are also required before rendering theservices or delivering goods, thus, mitigating the possibility of non-collection. In cases of non-collection, defaults of the debtors are not tolerated; the exposure is contained the moment a defaultoccurs and transactions that will increase the exposure of the Company are discontinued.

Other than its transactions with related parties, the Company has no significant concentration of creditrisk with counterparties since it has short credit terms to franchisees. In addition, the Company’sfranchisee profile is such that no single unrelated franchisee accounts for more than 5% of the totalsystem wide sales of the Company.

Credit Quality. The financial assets of the Company are grouped according to stage whosedescription is explained as follows:

Stage 1 - those that are considered current and up to 30 days past due, and based on change in rating,delinquencies and payment history, do not demonstrate significant increase in credit risk.

Stage 2 - those that, based on change in rating, delinquencies and payment history, demonstratesignificant increase in credit risk, and/or are considered more than 30 days past due but does notdemonstrate objective evidence of impairment as of reporting date.

Stage 3 - those that are considered in default or demonstrate objective evidence of impairment as ofreporting date.

The table below shows determination of ECL stage of the Company’s financial assets:


Total 12-month ECL Lifetime ECL Lifetime ECLFinancial Assets at Amortized CostCash and cash equivalents* P=3,668,018,725 P=3,668,018,725 P=− P=−Short-term investment 1,030,800,000 1,030,800,000 − −Receivables: Trade:

Franchisees and customers 1,282,025,135 749,668,938 508,145,839 24,210,358 Related parties 3,115,503,261 1,133,872,149 1,981,631,112 −

Employee advances 50,952,137 50,952,137 − − Employee car plan receivables 96,750,023 96,750,023 − − Interest receivable 6,729,880 6,729,880 − − Others** 116,113,402 65,079,928 51,033,474 −Lease receivables 31,562,820 31,562,820 − −Advances to related parties 2,118,044,400 2,118,044,400 − −Refundable deposits*** 681,779,607 681,779,607 − −

12,198,279,390 9,633,258,607 2,540,810,425 24,210,358Financial Assets at FVTPL 36,408,040 36,408,040 − −

P=12,234,687,430 P=9,669,666,647 P=2,540,810,425 P=24,210,358*Excluding cash on hand amounting to P=105.8 million in 2019.**Excluding receivables from SSS amounting to P=17.9 million in 2019.***Included under “Other current assets” and “Other noncurrent assets” account in the statements of financial position.

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Total 12-month ECL Lifetime ECL Lifetime ECLFinancial Assets at Amortized CostCash and cash equivalents* P=8,222,424,159 P=8,222,424,159 P=– P=–Receivables: Trade:

Franchisees and customers 2,293,589,367 1,630,696,705 468,682,304 194,210,358 Related parties 4,569,658,490 2,182,231,780 2,387,426,710 –

Employee advances 47,595,221 47,595,221 – – Employee car plan receivables 126,764,686 126,764,686 – – Interest receivable 6,217,512 6,217,512 – – Others** 115,520,255 64,486,781 51,033,474 –Lease receivables 33,434,170 33,434,170 – –Advances to related parties 2,618,044,400 2,618,044,400 – –Refundable deposits*** 608,970,803 608,970,803 – –

18,642,219,063 15,540,866,217 2,907,142,488 194,210,358Financial Assets at FVTPL 38,048,040 38,048,040 – –

P=18,680,267,103 P=15,578,914,257 P=2,907,142,488 P=194,210,358 *Excluding cash on hand amounting to P=114.0 million in 2018.**Excluding receivables from SSS amounting to P=13.9 million in 2018.***Included under “Other noncurrent assets” account in the statements of financial position.

Credit Risk Exposure and Concentration. The tables below show the maximum exposure to creditrisk of the Company as at December 31, without considering the effects of collaterals and other creditrisk mitigation techniques:

2019

Gross MaximumExposure

(a)

Fair Value andFinancial Effect

of Collateralor Credit

Enhancement(b)

Net Exposure*(a - b)

Financial AssetsFinancial assets at amortized cost:

Cash and cash equivalents** P=3,668,018,725 P=6,541,503 P=3,661,477,222Short-term investments 1,030,800,000 − 1,030,800,000Receivables:

Trade:Franchisees and customers 1,282,025,135 24,210,358 1,257,814,777Related parties 3,115,503,261 1,095,652,867 2,018,850,394

Employee advances 50,952,137 − 50,952,137Employee car plan receivables 96,750,023 − 96,750,023Interest receivable 6,729,880 − 6,729,880Others*** 116,113,402 − 116,113,402

Lease receivables 31,562,820 − 31,562,820Advances to related parties 2,118,044,400 − 2,118,044,400Refundable deposits**** 681,779,607 − 681,779,607

Financial assets at FVTPL 36,408,040 − 36,408,040P=12,234,687,430 P=1,126,404,728 P=11,107,282,702

*Financial assets after taking into account insurance on bank deposits for cash and cash equivalents and payables to the same counterparty for receivables.**Excluding cash on hand amounting to P=105.8 million in 2019.***Excluding receivables from SSS amounting to P=17.9 million in 2019.****Included under “Other current assets” and “Other noncurrent assets” account in the statements of financial position.

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2018

Gross MaximumExposure

(a)

Fair Value andFinancial Effect

of Collateralor Credit

Enhancement(b)

Net Exposure*(a - b)

Financial AssetsLoans and receivables: Cash and cash equivalents** P=8,222,424,159 P=6,549,821 P=8,215,874,338

Receivables:Trade:

Franchisees and customers 2,293,589,367 23,371,101 2,270,218,266Related parties 4,569,658,490 398,204,802 4,171,453,688

Employee advances 47,595,221 − 47,595,221Employee car plan receivables 126,764,686 − 126,764,686Interest receivable 6,217,512 − 6,217,512

Others*** 115,520,255 − 115,520,255Lease receivables 33,434,170 − 33,434,170Advances to related parties 2,618,044,400 − 2,618,044,400Refundable deposits**** 608,970,803 − 608,970,803

Financial assets at FVTPL 38,048,040 − 38,048,040P=18,680,267,103 P=428,125,724 P=18,252,141,379

*Financial assets after taking into account insurance on bank deposits for cash and cash equivalents and payables to the same counterparty for receivables. **Excluding cash on hand amounting to P=114.0 million in 2018.***Excluding receivables from SSS amounting to P=13.9 million in 2018.****Included under “Other noncurrent assets” account in the statements of financial position.

.Liquidity RiskThe Company’s exposure to liquidity risk refers to the risk that its financial liabilities are not servicedon a timely manner and that its working capital requirements and planned capital expenditures are notmet. To manage this exposure and to ensure sufficient liquidity levels, the Company closely monitorsits cash flows to be able to finance its capital expenditures and to pay its obligations as and when theyfall due.

On a weekly basis, the JFC Group’s Cash and Banking Team monitors the Company’s collections,expenditures and any excess/deficiency in the working capital requirements by preparing cashposition reports that present actual and projected cash flows for the subsequent week. Cash outflowsresulting from major expenditures are planned and properly monitored to ensure availability of funds,i.e., pre-terminate short-term deposits if deemed necessary. In addition, the Company has availablecredit lines with accredited banking institutions. The Company maintains a sufficient level of cashand cash equivalents to finance the Company’s operations.

No changes were made in the objectives, policies or processes of the Company in 2019 and 2018.

The tables below summarize the maturity profile of the Company’s financial assets and liabilities asat December 31, 2019 and 2018 based on undiscounted contractual payments:

2019Due and

DemandableLess than


5 Years TotalFinancial AssetsFinancial assets at amortized cost: Cash and cash equivalents P=859,785,968 P=2,914,036,961 P=– P=– P=3,773,822,929

Short-term investment 1,030,800,000 – – – 1,030,800,000 Receivables: Trade: Franchisees and customers 578,319,452 703,705,683 – – 1,282,025,135 Related parties 2,244,129,160 871,374,101 – – 3,115,503,261

(Forward)

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2019Due and

DemandableLess than


5 Years Total Employee advances P=– P=50,952,137 P=– P=– P=50,952,137 Interest receivable – 6,729,880 – – 6,729,880 Employee car plan receivables* – 4,668,186 93,873,207 – 98,541,393 Other receivables** 51,033,474 65,079,928 – – 116,113,402 Advances to related parties* – 1,108,044,400 1,010,000,000 – 2,118,044,400 Refundable deposits* 39,593,250 32,307,396 275,905,050 298,914,685 646,720,381 Lease receivables – 4,261,836 27,300,984 – 31,562,820Financial assets at FVTPL – – – 36,408,040 36,408,040

4,803,661,304 5,761,160,508 1,407,079,241 335,322,725 12,307,223,778Financial LiabilitiesLoans and borrowings, and other payables: Trade payables and other current liabilities*** 30,953,907 7,587,572,527 – – 7,618,526,434 Due to related parties* – 563,656,409 150,000,000 – 713,656,409 Long-term debt* – 2,573,292,786 11,452,561,589 – 14,025,854,375

Lease Liabilities* – 1,298,363,672 3,821,989,207 7,064,482,495 12,184,835,37430,953,907 12,022,885,394 15,424,550,796 7,064,482,495 34,542,872,592

Net Financial Assets (Liabilities) P=4,772,707,397 (P=6,261,724,886)(P=14,017,471,555) (P=6,729,159,770) (P=22,235,648,814)*Gross of unamortized discount and including future interest payments.**Excluding receivables from SSS amounting to P=17.9 million as at December 31, 2019.***Excluding statutory obligations such as accrued local and other taxes, PHIC, SSS, HDMF and NHMFC payables and unearned revenues from gift

certificates amounting to P=1,105.4 million as at December 31, 2019.

2018 (As restated - Note 2)Due and

DemandableLess than


5 Years TotalFinancial AssetsFinancial assets at amortized cost: Cash and cash equivalents P=1,954,950,667 P=6,381,515,246 P=- P=- P=8,336,465,913 Receivables: Trade: Franchisees and customers 744,563,499 1,549,025,868 - - 2,293,589,367 Related parties 3,151,193,117 1,418,465,373 - - 4,569,658,490 Employee advances - 47,595,221 - - 47,595,221 Interest receivable - 6,217,512 - - 6,217,512 Employee car plan receivables* - 45,088,625 97,591,664 - 142,680,289 Other receivables** 51,033,474 64,486,781 - - 115,520,255 Advances to related parties* - 2,318,044,400 300,000,000 - 2,618,044,400 Refundable deposits* 413,387,484 10,562,500 28,052,338 193,241,993 645,244,315 Lease receivables - 3,078,294 30,355,876 - 33,434,170 Financial assets at FVTPL - - - 38,048,040 38,048,040

6,315,128,241 11,844,079,820 455,999,878 231,290,033 18,846,497,972 Financial Liabilities Loans and borrowings, and other payables: Trade payables and other current liabilities*** 21,481,770 10,772,057,367 - - 10,793,539,137 Due to related parties* - 58,643,289 150,000,000 - 208,643,289 Long-term debt* - 3,772,951,515 14,380,678,935 - 18,153,630,450

Lease Liabilities* - 1,542,751,898 4,069,226,951 7,606,247,272 13,218,226,121 21,481,770 16,146,404,069 18,599,905,886 7,606,247,272 42,374,038,997

Net Financial Assets (Liabilities) P=6,293,646,471 (P=4,302,324,249) (P=18,143,906,008) (P=7,374,957,239) (P=23,527,541,025)*Gross of unamortized discount and including future interest payments.**Excluding receivables from SSS amounting to P=13.9 million as at December 31, 2018.***Excluding statutory obligations such as accrued local and other taxes, PHIC, SSS, HDMF and NHMFC payables and unearned revenues from gift

certificates amounting to P=1,336.9 million as at December 31, 2018.

Capital Management PolicyThe primary objective of the Company’s capital management is to ensure that it maintains a strongcredit rating and healthy capital ratios in order to support its business and maximize shareholdervalue. The Company has sufficient capitalization.

The Company generates cash flows from operations sufficient to finance its organic growth. Itdeclares cash dividends representing about 1/3 of its net income, a ratio that would still leave someadditional cash for future acquisitions. If needed, the Company would borrow money for acquisitionsof new businesses.

The Company’s policy is to limit its liabilities to stockholders’ equity ratio at 60:40.

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As at December 31, 2019 and 2018, the Company’s ratio of liabilities to total equity and ratio of netliabilities to total equity are as follows:

Debt Ratio

2019

2018(As restated -

Note 2)Total debt (a) P=31,597,605,076 P=38,561,744,636Total equity 47,267,062,630 43,782,661,710Total debt and equity (b) P=78,864,667,706 P=82,344,406,346

Debt ratio (a/b) 40.07% 46.83%

Net Debt Ratio

2019

2018(As restated -

Note 2)Total debt P=31,597,605,076 P=38,561,744,636Less cash and cash equivalents 3,773,822,929 8,336,465,913Net debt (a) 27,823,782,147 30,225,278,723Total equity 47,267,062,630 43,782,661,710Net debt and equity (b) P=75,090,844,777 P=74,007,940,433

Net debt ratio (a/b) 37.05% 40.84%

31. Fair Value of Financial Assets and Liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at measurement date.

Financial Instruments Whose Carrying Amounts Approximate Fair Value. Management hasdetermined that the carrying amounts of cash and cash equivalents, short-term investments,receivables, and current portions of advances to related parties, lease receivables, trade payables andother current liabilities, due to related parties and lease liabilities based on their notional amounts,reasonably approximate their fair values because of their short-term nature or due to the immaterialeffect of discounting when the present value of future cash flows from these instruments arecalculated.

Financial Assets at FVTPL. The fair value of investments in quoted shares of stock is based onquoted prices.

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Noncurrent Portion of Advances to Related Parties, Refundable Deposits, Employee Car PlanReceivables, Long-term Debt and Due to Related Parties. Management has determined that theestimated fair value of noncurrent portion of advances to related parties, refundable deposits,employees’ car plan receivables, long-term debt and noncurrent portion of due to related parties arebased on the discounted value of future cash flows using the following applicable rates:

2019 2018Noncurrent portion of advances to related parties 3.07%-4.01% 5.49%-6.88%Refundable deposits 3.07%-5.00% 5.41%-7.43%Employee car plan receivables 3.12%-4.07% 5.41%-7.04%Long-term debt 3.10%-4.14% 5.95%-7.06%Noncurrent portion of due to related parties 3.77%-3.77% 5.41%-7.06%

Investment Properties. The fair value of the investment properties are determined by independentappraisers using the market data and cost approach, which considers the local market conditions, theextent, character and utility of the property, sales and holding prices of similar parcels of land and thehighest and best use of the investment properties.

The following tables provide the fair value measurement hierarchy of the Company’s assets andliabilities. Quantitative fair value measurement hierarchy for assets and liabilities as atDecember 31, 2019 and 2018:

2019 Fair Value Measurement Using


QuotedPrices in



Inputs(Level 2)


Inputs(Level 3)

Assets measured at fair valueFinancial assets at FVTPL (see Note 9) December 31, 2019 P=36,408,040 P=− P=36,408,040 P=–Assets for which fair values are disclosedRefundable deposits December 31, 2019 617,559,407 – – 617,559,407Employee car plan receivables December 31, 2019 87,938,050 – – 87,938,050Investment properties (see Note 13) December 31, 2017 2,397,119,730 – – 2,397,119,730Noncurrent portion of advances to related parties December 31, 2019 1,080,629,670 – – 1,080,629,670Liabilities for which fair values are disclosedLong-term debt December 31, 2019 15,934,309,000 – – 15,934,309,000Noncurrent portion of due to related parties December 31, 2019 137,684,804 – – 137,684,804

2018 Fair Value Measurement Using


QuotedPrices in



Inputs(Level 2)


Inputs(Level 3)

Assets measured at fair valueFinancial assets at FVTPL (see Note 9) December 31, 2018 P=38,048,040 P=− P=38,048,040 P=–Assets for which fair values are disclosedRefundable deposits December 31, 2018 611,919,471 – – 611,919,471Employee car plan receivables December 31, 2018 103,222,860 – – 103,222,860Investment properties (see Note 13) December 31, 2017 2,397,119,730 – – 2,397,119,730Noncurrent portion of advances to related parties December 31, 2018 225,620,341 – – 225,620,341Liabilities for which fair values are disclosedLong-term debt December 31, 2018 16,421,331,358 – – 16,421,331,358Noncurrent portion of due to related parties December 31, 2018 306,954,403 – – 306,954,403

There were no transfers from Level 2 fair value measurements in 2019 and 2018.

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32. Earnings Per Share

Basic and diluted EPS are computed as follows:

2019 2018Net income in parent company financial statements P=6,401,607,953 P=6,545,542,739Effects of consolidation 30,825,913 1,667,065,637(a) Consolidated net income attributable to the

equity holders of the Company P=6,432,433,866 P=8,212,608,376

(b) Weighted average number of shares - basic 1,092,593,583 1,087,093,411 Weighted average number of shares outstanding

under the stock options plan 32,334,237 34,865,233 Weighted average number of shares that would

have been purchased at fair market value (19,781,303) (18,607,619)(c) Adjusted weighted average shares - diluted 1,105,146,517 1,103,351,025

EPS:Basic (a/b) P=5.887 P=7.555Diluted (a/c) 5.820 7.443

Potential common shares for stock options under the 16th MSOP cycle were not included in thecalculation of the diluted EPS in 2019 because they are antidilutive.

33. Events after the Reporting Period

Dividend DeclarationOn April 7, 2020, the BOD of the Parent Company approved a cash dividend of P=0.62 per share ofcommon stock to all stockholders of record as at April 27, 2020. Consequently, the cash dividend isexpected to be paid out on May 22, 2020. The cash dividend is 50% lower than the P=1.23 cashdividend per share declared on April 8, 2019.

Issuance of Guaranteed Senior Perpetual Capital SecuritiesGuaranteed Senior Perpetual Capital Securities (Securities) was issued by JWPL, a wholly ownedsubsidiary, and listed in the Singapore Exchange Securities Trading Limited on January 24, 2020.The Securities offered an initial distribution rate of 3.9%, non-call (5 years) and payable semi-annually.

COVID-19 OutbreakIn a move to contain the COVID-19 outbreak, on March 13, 2020, the Office of the President of thePhilippines issued a Memorandum directive to impose stringent social distancing measures in theNational Capital Region effective March 15, 2020. On March 16, 2020, Presidential ProclamationNo. 929 was issued, declaring a State of Calamity throughout the Philippines for a period of six (6)months and imposed an enhanced community quarantine throughout the island of Luzon untilApril 12, 2020, which was subsequently extended to April 30, 2020. These measures have causeddisruptions to businesses and economic activities, and its impact on businesses continue to evolve.About 70% of JFC Group’s domestic stores have been temporarily closed, resulting to a decline insystemwide sales by about 40%.

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The Company considers the events surrounding the outbreak as non-adjusting subsequent events,which do not impact its financial position and performance as of and for the year ended December 31,2019. However, the outbreak could have a material impact on its 2020 financial results and evenperiods thereafter. Considering the evolving nature of this outbreak, the Company cannot determineat this time the impact to its financial position, performance and cash flows. The Company willcontinue to monitor the situation.

To manage the risks or uncertainties brought about by the outbreak, the Company is implementing thefollowing measures, among others:

§ Restaurant Operations - Prioritizing the protection of health and safety of its employees andpreservation of cash in the business to ensure sustainability and long-term growth andprofitability by temporarily closing temporarily losing QSR outlets.

§ Product Supply - To ensure adequate supply, the Philippine business had identified alternativesources of supply and has also spread its inventories in different parts of the country in variouswarehouses and depots. This dispersion of supply chain facilities, warehouses and QSR outletsreduces the probability that the pandemic will have significant impact and magnitude, all at thesame time, on the different parts of the Company’s business.

§ Safety and Health of Customers, Employees and Workers and Business Partners -Implementation of the following: observing social distancing in the stores and buildings; travelrestrictions; and work from home arrangements.

§ Dispersion and Diversification - The nature and structure of the Company’s business have createdphysical dispersion and diversification into different sites, facilities and locations which make thebusiness strong against event risks.

§ Overall Business - To preserve cash, the Company will delay some capital expenditures in 2020to the following year. It will also aggressively cut costs in response to the reduction in revenuesdue to constraints brought about by the lockdowns.

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34. Notes to the Statements of Cash Flows

Changes in Liabilities and Equity Arising from Financing ActivitiesIn 2019 and 2018, movements in the Company’s liabilities arising from financing activities follow:

2019


DividendsDeclared

(Note 19)

InterestExpense(Note 23)

LeaseAdditions

(Note 29)

Pre-termination

of Lease(Note 29)

Amortizationof Debt

Issue Cost(Note 17)*

GrantedStock Optionsto Employees

andSubsidiaries**

December 31,2019

(In Millions)Dividends payable (Note 15) P=80.8 (P=2,807.8) P=2,814.9 P=– P=– P=– P=– P=– P=87.9Interest payable (Note 15) 64.9 (1,321.3) – 1,292.6 – – 36.2Lease liabilities (Note 29) 7,674.0 (822.0) 455.7 (409.4) 6,898.3Long-term debt (Note 17) 17,880.0 (3,780.0) – – – – 14,100.0Debt issue cost (Note 17) (91.8) – – – 17.7 – (74.1)Capital stock (Note 18) 1,105.2 4.9 – – – – 1,110.1Additional paid-in capital 8,477.4 580.6 – – – (352.1) 8,705.9Total liabilities and equity on

financing activities P=35,190.5 (P=8,145.6) P=2,814.9 P=1,292.6 P=455.7 (P=409.4) P=17.7 (P=352.1) P=30,864.3*Excluding interest expense from accretion of security deposits amounting to P=0.01 million.**Including deferred tax asset amounting to P=614.9 million.

2018

January 1,2018 Cash flows

DividendsDeclared(Note 19)

InterestExpense

(Note 23)

LeaseAdditions(Note 29)

Pre-termination of

Lease(Note 29)

Amortizationof Debt

Issue Cost(Note 17)

Granted StockOptions to

Employees andSubsidiaries*

December 31,2018

(in millions)Dividends payable (Note 15) P=56.1 (P=2,667.1) P=2,691.8 P=– P=– P=– P=– P=– 80.8Interest payable (Note 15) 14.3 (979.8) – 1,030.4 – – – – 64.9Lease liabilities (Note 29) 8,328.5 (828.9) – – 858.7 (684.3) – – 7,674.0Long-term debt (Note 17) 8,245.0 9,635.0 – – – – – – 17,880.0Debt issue cost (Note 17) (32.0) (74.3) – – – – 14.5 – (91.8)Capital stock (Note 18) 1,101.7 3.6 – – – – – – 1,105.2Additional paid-in capital 7,469.3 481.5 – – – – – 526.6 8,477.4Total liabilities and equity on

financing activities P=25,182.8 P=5,570.0 P=2,691.8 P=1,030.4 P=858.7 (P=684.3) P=14.5 P=526.6 P=35,190.5*Including deferred tax asset amounting to P=224.1 million.

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Noncash ActivitiesThe principal noncash transactions under investing activities pertain to the conversion of theCompany’s trade receivables of P=1,322.3 million into additional investment in a subsidiary in 2019,and disposal of property, plant and equipment amounting to P=126.5 million and P=41.3 million in 2019and 2018, respectively. The related proceeds from disposal of property, plant and equipment includesoutput VAT amounting to P=29.4 million and P=47.6 million not yet remitted as of December 31, 2019and 2018, respectively.

35. Supplementary Tax Information Required Under Revenue Regulations No. 15-2010

The Bureau of Internal Revenue has issued Revenue Regulations No. 15-2010 which requires certaintax information to be disclosed in the notes to the parent company financial statements. TheCompany presented the required supplementary tax information as a separate schedule attached to itsannual income tax return.

JOLLIBEE FOODS CORPORATIONDoing business under the name and style of JollibeeRETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATIONDECEMBER 31, 2019

Unappropriated Retained Earnings, beginning P=14,646,269,070

Adjustments:Deferred tax assets, beginning (3,900,457,825)Unrealized foreign exchange gain - net (except those attributable to

cash and cash equivalents) (297,030,609)Accretion of interest on financial assets, beginning (49,253,670)Unrealized gain on financial assets at fair value through profit or loss (9,980,000)

Unappropriated Retained Earnings Available for Dividend Declaration, beginning 10,389,546,966

Add: Net income actually earned/realized during the periodNet income of the Parent Company closed to Retained Earnings 6,401,607,953

Less: Non-actual/unrealized incomeAccretion of interest on financial assets (11,118,344)

Add: Decrease in deferred tax assets 399,329,667Net income actually earned/realized during the year 6,789,819,276

Less:Dividends declared during the year (2,814,945,134)Treasury shares (180,511,491)

Unappropriated Retained Earnings Available for Dividend Declaration, ending P=14,183,909,617