JFC Annual Report 2013

Jollibee
CORPORATION
Foods
San Pin Wang
Se
rving You with Joy!
ANNUAL REPORT 2013
Jollibee
CORPORATION
Foods
Se
rving You with Joy! This annual report to our shareholders features how the
people in our restaurants serve our customers with passion
and excellence. This is how they bring to life the Company’s
mission of “spreading the joy of eating to everyone”!
Table of Contents 1
1 Serving You with Joy! 20 Pursuing Growth through Customer Satisfaction

2 Chairman’s Message 22 Marked for Success
6 Enabling Our Customers to Savor the Joy of Family 24 Robust Growth Reflects Company Success in Meeting
8 Spreading the Joy of Eating Across the Globe Pinoy Taste Needs
10 It’s Green-and-Go for Greenwich 26 Prosperity Amidst Complexity
12 Moving Forward as One in 2013 28 Delivering the Best Burger Experience
14 A Great Leap Forward 30 The Joy of Giving Back
16 Continuing the Winning Streak 32 Board of Directors and Corporate Management Team
18 Delivering Sweet Delight 33 Financial Statements
2 Message to Stockholders
2013:
A Record Breaking
Year for JFC
3
System wide sales rose by 12.8% in Net income attributable to equity JFC’s stock price increased by
2013, the highest organic sales growth holders of the Parent Company 69.7%, one of the best performers
in six years, enabling JFC to breach the grew by 25.3%, the fastest growth in the Philippine Stock Market
Php100 billion mark for the first time in 7 years
To My Fellow Stockholders, Despite the challenges brought about by the calamities in the
country and the uncertainty in the world economy, the Philippine
The world economy continued to recover, although very gradually economy grew strongly. Your Company surely benefitted from the
in 2013. It grew by 2.1%, about the same growth rate as in 2012. The healthy growth of the country but it performed even better! Your
United States grew by 1.9%, lower than its 2.8% performance in 2012. Company performed even stronger than the major competitors in the
China’s economy did one of the strongest performances with its gross Philippines, and practically everywhere it does business. It delivered
domestic product rising by 7.7 percent, matching its growth in 2012. record performance in 2013, successfully driving both revenue growth
After growing by 6.8% in 2012, the Philippine economy posted an and margin expansion.
even stronger performance of 7.2% in 2013 driven by robust private JFC revenues increased by 13.0% to Php80.3 billion. Worldwide
consumption and fixed investment of 5.6% and 11.7%, respectively. System Wide Sales, a measure of all sales to consumers both from
The impressive performance was despite three major tragedies company-owned and franchised stores, increased by 12.8% to
that struck the country during the year: the Zamboanga crisis in Php104.1 billion. The Philippines grew by 11.3%, China by 19.7%,
September; the Bohol earthquake in October; and the super typhoon the United States by 9.9% and Southeast Asia and the Middle East
Yolanda in November. by 32.2%. In total, our foreign business grew by 19.0%. This was
Philippine inflation averaged 3.0% in 2013, the lowest in six years, the highest organic sales growth in six years, enabling JFC to breach
due largely to lower non-food inflation as a result of lower electricity the Php100 billion sales mark for the first time. According to data
rates and domestic petroleum prices. The peso, however, weakened from consumer research Euromonitor and to various other sources
against the US dollar by 8.1% closing at Php44.40/US$1 at year-end. including Bloomberg, your Company had the 2nd highest system
The Philippine Stock Exchange (PSE), meanwhile, gained only a modest wide sales among all Asian restaurant companies, outgrowing several
77 points, or 1.3% from 2012’s close. The Philippine financial market, Asian competitors. According to our estimate, JFC would generate
together with other emerging markets, was affected by concerns over the largest sales by 2014 or 2015. For all intents and purposes,
the timing and scale of the US Federal Reserve’s reduction of its bond your Company has achieved its vision of becoming the No. 1 Asian
purchases program, the US budget impasse over the debt ceiling and restaurant company. The sales growth was driven by strong same store
measures of automatic spending cuts and tax increases. sales and by the continued expansion of our store network, which
grew by 5.2%. Worldwide same store sales growth versus year ago was
4 Message to Stockholders
“We achieved a return on equity of 21.5%, our highest in 15 years.

Total shareholder return for 2013 was 73.0%.”
8%, practically all from higher volume of customers and purchases industry in the whole world! JFC is also the most valuable Asian
per store. Based on our market research data, our same store sales Restaurant company based on its market capitalization as of end of
growth was clearly superior to those of our major competitors in the the year. Total shareholder return, the combination of stock price
Philippines, in China, in the United States, in Southeast Asia and in the appreciation and cash dividends, for 2013 was 73.0%.
Middle East. During the year, we opened 235 new stores worldwide; Our progress in building the business has been taking place
172 in the Philippines and 63 outside the country. across our brands in different countries. In the years ahead, we look
Net income attributable to equity holders of the Parent Company forward to further strengthening our brands and to accelerating our
grew by 25.3%, the fastest growth rate in seven years. Earnings per profitable growth by keeping our intense focus on the fundamentals
share grew by 24.4% to Php4.45. We achieved a return on equity of of our business for the benefit of our consumers: superior product
21.5%, our highest in 15 years. For the entire year, net income margin quality and taste, value, service, restaurant experience and store
increased from 5.2% of revenues in 2012 to 5.8% in 2013 driven locations made possible by an even stronger JFC organization.
primarily by improvement in store operating efficiency. We continued In 2013, your Company and the Jollibee Group Foundation (JGF)
to have a conservative balance sheet and continued to build our continued to take meaningful steps to address hunger and help pupils
financial resources to execute our growth plans. Our total assets grew stay in school and learn better through the Busog, Lusog, Talino (BLT)
by 10.2% to Php46.0 billion. During the year, we generated Php9.2 School Feeding Program. For school year 2013-2014, the BLT Program
billion in cash from operations and spent Php4.2 billion in capital was implemented in over 1,100 public schools in 193 cities and
expenditures, mostly for new stores and for the renovation of existing municipalities nationwide benefitting more than 40,000 grades 1 and
stores. 2 pupils. The program has now covered over 100,000 pupils since its
We drove significant value for our shareholders. We declared implementation in 2007. The Farmer Entrepreneurship Program (FEP)
special cash dividends and regular cash dividends of Php3.36, the that was launched in 2008 to give opportunities to small farmers to be
highest cash dividend in JFC’s history, representing a 76.5% payout of direct suppliers of JFC has helped more than 900 small farmers in 15
profit. JFC’s stock price increased by 69.7%, one of the best performers provinces nationwide. In a move aimed at improving education and
in the Philippine Stock Market. JFC’s stock price to earnings ratio employment opportunities, the JGF continued to support 20 students
rose to 38.9 times. Based on Bloomberg data, your Company’s stock of Hotel and Restaurant Management from its partner schools as well
valuation is already the 2nd highest in the Quick Service Restaurant as 40 technical skills scholars from Don Bosco.
5
Responsible citizenship was also reflected in JGF’s efforts to Services. JFC’s great performance in 2013 was to a significant extent,
help the victims of the typhoon Yolanda that hit the Philippines in due to his leadership, particularly in our Philippine business and in
November 2013. The JGF formed the Jollibee Group FoodAID Program our corporate support services. While stepping down as CEO, I will
to facilitate relief operations and set up mobile kitchen in severely continue to provide guidance as Chairman of the Board of JFC, and
affected communities in the Visayas region that benefited more than will remain active in the area of product research and development for
160,000 survivors, with the help of our employee volunteers from all the Jollibee Group of Companies.
the business units of JFC. The JGF was able to raise Php44.0 million In closing, we would like to thank our shareholders, partners and
worth of donations from JFC, shareholders, franchisees, business customers for their support and loyalty to our business. We would
partners, executives, employees and the public through the JGF also like to thank the Board of Directors and the Senior Management
coinbanks in JFC stores nationwide. Team for their outstanding contributions over the past year. Most
In 2013, your Company commenced the succession process of importantly, we would like to thank all our employees whose efforts
the Chief Executive Officer (CEO). We announced on August 6, 2013 have helped us achieve another year of superb performance. We
the Board’s decision to appoint Ernesto Tanmantiong as JFC’s CEO look forward to another year of record performance in 2014 as we
effective July 1, 2014. His performance has clearly demonstrated that accelerate our profitable growth, expand our business in key markets
he is ready to lead our organization in building an even stronger, around the world and reinforce our competitive strength.
larger and more successful business in the future here in the
Philippines and abroad. Ernesto has been the Chief Operating Officer
of the entire Philippine business since January 2012. As COO, he is in
charge of the profitability and growth of JFC’s 6 local brands, namely:
Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal and Burger
King and the Global Filipino markets in the following countries: the TONY TAN CAKTIONG
Middle East, USA, Brunei, Singapore and Hong Kong. In addition, he Chairman and Chief Executive Officer
has been responsible for the JFC Corporate Services Group which
includes: Supply Chain, Purchasing, Engineering, Quality Management,
Information Management, and Accounting and Employee Shared
Operational Highlights 7
Enabling Our taste superiority via a campaign highlighting it as the

best choice of Filipino families, came up with a series of
Beeda ang Pamilya. Jollibee also produced heartwarming
family thematic and Christmas ads, which cultivated brand
Customers to Savor attractive bucket promotions and super value meals, and
introduced buttered corn and mashed potato as side dishes.
love and engaged customers, stakeholders and employees.
2013 also witnessed a new milestone for Jollibee as it
the Joy of Family Yumburgers attained the highest ever recorded occasion
and value shares – thanks to the successful comeback of
opened its 800th store in Malaybalay, Bukidnon. It opened a
total of 42 new stores ending the year with a store network
the Amazing Aloha and the launch of our premium burger of 811, still the biggest and most extensive in the industry.
In 2013, Jollibee reaffirmed its commitment to delight extension, the Cheesy Bacon Mushroom Champ. Jolly Jollibee continued to champion the promotion of
customers with superior-tasting food while strengthening Spaghetti’s ‘Happiest with the Spaghettiest’ campaign and Filipino values with its 3rd Jollibee Family Values Awards
the bond of Filipino families. It was also the year that tested special bundling with other products helped protect its where a new OFW category was added to honor Global
the Philippine’s leading fast food chain’s mettle due to the leadership in the noodles category. Filipinos. The yearly Maaga ang Pasko was also expanded to
natural disasters and other challenges faced by the country Jollibee also continued to introduce exciting products Hong Kong, Kuwait and Singapore.
that affected many lives, properties and businesses. giving customers more reasons to keep coming back, such For the past 35 years, Jollibee has hinged its success on
Through it all, Jollibee successfully managed to as the premium Ultimate Burger Steak, Crispy Pork Steak, its long standing relationship with generations of Filipino
continue its growth path, recording total system wide sales Garlic Bangus, Chocolate and Coffee Flip Floats, and Milo families and it will continue to do so as it remains the
of P50.6 billion, 11.8 percent higher than 2012. Total stores’ Mix-ins in three delicious variants. brand’s greatest source of inspiration and fulfillment.
net operating income (NOI) also breached the P2-billion With Jollibee celebrating its 35th year in 2013, a
mark and set a new record in terms of the highest NOI year-long campaign anchored on the theme, “Dito ang
percentage achieved in 10 years. sarap maging pamilya,” was implemented. This included
The steady growth in Jollibee’s market share was the Jollibee Family Getaway Promo in partnership with
consistently achieved through its flagship products Resorts World Singapore, the special 35th anniversary
and new offerings. Jollibee re-asserted Chickenjoy’s commemorative watch by Swatch and the HR-led initiative
“At Jollibee, we aim to give the best experience possible

to our customers - genuine Alagang Jollibee that is warm, ARNEL YANEZA
sincere and efficient. We treat every encounter as an Crew Leader
Ground Floor, SM Megamall
opportunity to engage our customers.” Mandaluyong City, Philippines
Spreading the Joy two new stores and the introduction of “Everyday Affordable”
value offerings.
Jollibee USA continued its strong performance with
a system wide sales growth of 17.3%, driven by strong
of Eating Across the Jollibee Hong Kong implemented operational

improvements that helped the store attain a 13.1% sales
same store sales and new stores supported by a full year TV
commercial and aggressive sales promotions. Jollibee USA
Globe growth. Complementing the new store look were the creation
of a two-lane counter during Sundays, earlier store hours on
opened 3 stores in 2013, with its first branch in Texas, Jollibee
Houston breaking the opening day record sales previously
Saturdays and the introduction of new breakfast offerings, held by Jollibee Hawaii. It also opened its first store in the
2013 was another eventful year for Jollibee’s that all helped improve overall customer experience. state of Virginia on April, bringing the total store network to 29.
international operations as it ended the year with P4.5- Jollibee Kingdom of Saudi Arabia (KSA) drove sales Jollibee Singapore had its much awaited opening
billion in sales, up by 28% vs. 2012. This was driven by growth to a robust 34.1% due to the opening of a new last March and delivered the highest sales performance
the opening of 18 new stores and steady growth in all store, significant trade area development, launching of new among international markets. It also landed in the list of
markets. Jollibee is now present in eight countries outside products and aggressive sales promotions. To date, Jollibee Singapore’s longest queue restaurants, proving the strong
the Philippines, including Vietnam, Brunei, Hong Kong, KSA has a total of nine stores across the country. appeal of Everyday Delicious meals not just to Filipinos but to
Singapore, USA, Saudi Arabia, Qatar and Kuwait. Jollibee Qatar opened its latest store, Jollibee Bin Singaporeans as well.
Jollibee Vietnam bounced back strongly in 2013 Mahmoud, last year bringing its total store count to four. It In line with its vision of becoming a truly global brand,
with a series of value for money offerings, new product also introduced the Family Bucket Meals that helped sustain Jollibee is poised to aggressively expand and conquer more
introductions and eight new store openings that led to more growth amidst intense competition from new QSRs in the new markets like Indonesia and Canada in the coming years
customer visits. With a total of 41 stores, Jollibee Vietnam area. These initiatives helped Jollibee Qatar achieve system bringing the joy of eating to more families across the globe.
now has the highest number of branches in a single foreign wide sales of 30.1%.
market. Despite stricter measures implemented by the
Jollibee Brunei was able to register a 15.8% sales government in the OFW retail trade, Jollibee Kuwait
growth despite the aggressive efforts of competitors and the continued to expand with two new store openings that drove
influx of new players. This was due mainly to the opening of sales growth to 40.1%.
“Serving our customers is not just simply doing it well, but

rather doing it excellently. I always keep in mind that giving our
customers my 100% best shows my respect not just toward them,
but also to my employers. Being passionate and dedicated in CIELO TIMBOL
service will make our customers come back to the store. Service Crew
Jollibee Eagle Rock
They know their needs are given paramount importance.” California, USA
It’s Green-and-Go Greenwich’s connection with its market also became

stronger than ever through a growing mix of brand
make it the most preferred crispy thin crust pizza ever.
To top it all, Greenwich will also continue to feed the
for Greenwich
ambassadors with whom customers easily identified with hearts of the people. Together with the Jollibee Group
– a fun, outgoing barkada who enjoys bonding moments Foundation, Greenwich will still play an active role in the
and great-tasting food. Customers readily felt a sense of Busog Lusog Talino School Feeding Program in offering
“belongingness” with Greenwich, which is also another nutritious meals in various schools to address hunger and
reason why they keep coming back for more. improve learning among marginalized youth.
In spite of having reached the pinnacle of the brand’s Of course, Greenwich will continue to keep its social
There is no stopping Greenwich from being the strength so far, Greenwich is not just about to rest on its media channels open to its ever-growing followers. Since
country’s best-loved pizza. 2013 saw Greenwich on a laurels. The brand believes there is still more room for its launch in 2012, the Greenwich official Twitter account (@
sumptuous gastronomic roll and as envisioned, everyone growth that is why it is bracing for a more dynamic 2014 to greenwichpizza) has garnered the most number of followers
wanted to have a slice of Greenwich’s great tasting pizza and strengthen Greenwich as the country’s top-of-mind pizza amongst all eat-out brands with over 70,000 followers.
dig in to its mouthwatering pasta. and pasta destination. With the remarkable success Greenwich attained in
One major indicator of the brand’s rise to the top is Starting at the storefront, plans are already in the 2013, pizza lovers can look forward to nothing but the
the fact that Greenwich significantly led all pizza brands in pipeline to give stores a facelift with the next generation best from Greenwich in 2014. It’s the Year of the Horse and
key brand imagery attributes. From tickling the consumers’ Greenwich concept store designs. Greenwich continues to gallop to dominate and conquer the
pizza appetite all the way down to the last bite, Greenwich Greenwich will also optimize its menu with new pizza and pasta industry.
delivered and even exceeded expectations in terms of products that will complement its flagship products: the
product offering, product quality, customer service, and iconic Ultimate Special Overload, Hawaiian Overload and
brand innovation. Evidently, the Greenwich pizza and pasta Lasagna Supreme.
lines attained a remarkable double-digit growth – the In the thin crust category, the Greenwich Pizza Thins
highest growth achieved since 2008. will continue to take an aggressive stance in the market and
“As a Crew Team Leader, I ensure that standard practices are

followed at all times by the team, keeping an eye out that we
always strictly adhere to production standards and brand service
practices. With this commitment and dedication from the entire JONWARD “LANCE” PENERO
team, gold standard products are made, food serving time is met Crew Team Leader
Greenwich Atrium Level 4, SM Megamall
and guests get a delightful dining experience.” Mandaluyong City, Philippines
Moving Forward welcoming. Lastly, the introduction of two system wide

activations, Cookie Fat Choi and Mooncake Dice For a Prize,
With the momentum of 2013, Chowking is more ready
than ever to WOW its guests in 2014! It will remain focused
as One in 2013
brought the brand even closer to its Chinese heritage. These on delivering the best of its food, its people and its brand. It
campaigns were mounted during the Chinese New Year and will WOW for WIN!
Mooncake Festival, respectively.
In growing iconic products, Chowking sourced
growth from strengthening key existing products and from
introducing new blockbuster offerings, Pork Siomai Chao
Fan and Golden Chinese Pork Rice. To ensure consistent,
The Chowking Philippines business cemented its high quality food in all restaurants every day, an end-to-
turnaround in 2013. Its cash registers punched in more end approach was undertaken. This began with all its
customers, more spending and hence, more profitable commissary sites receiving the highest ratings in quality
growth for the restaurants. Inspired to race to the finish, all management audits. This was followed through with an
its engines were revved up—all regional business units from effort to equip all stores with capability in terms of people
Luzon, Visayas to Mindanao delivering both growth and and equipment.
profit. The business moved forward as one, guided by three The team worked to achieve excellence in all
priorities: to elevate the brand, grow iconic products and restaurants starting with their strategic locations. Chowking
achieve excellence in the restaurant. opened new well-located restaurants in 2013. Chowking
Key efforts to elevate the brand included a visual also renovated and improved existing restaurants.
showcase of Chowking’s Chinese food that Filipinos love. Additionally, the day to day operations of the stores worked
These were prominently displayed in the restaurant interiors, to meet acceptable levels of food, service and cleanliness
creating a Chinese atmosphere that is up-to-date and standards.
“As a proud service frontliner of Chowking for eight years, I make

it a point to consistently provide all the guests with only the best
service - smiling and greeting them as they come in the store,
attentively listening and promptly attending to their requests and
giving an extra hand to our elderly customers. We are the most
visible employees for the customers. That is why, we take extra JOVEN MANALON
effort in ensuring that our guests feel at home and satisfied Regular Frontliner
Chowking Marcos Highway
the whole time they are in the store.” Antipolo City, Philippines
A Great Leap Chowking USA also added new delectable Chinese

dishes to their menu such as the Chao Fan, the Crispy
UAE. The results were encouraging as the market achieved
an FSC score of 100%. This showed the brand’s strong
Forward
Soy Chicken, and the Taho Shake. It also re-launched the commitment towards consistently delivering Gold Standard
Sotanghon, giving the customers more food choices. Products to its guests.
Making the year memorable and in celebration of the An aggressive store expansion is planned by Chowking
Chinese New Year, Chowking USA offered the $1 Siopao Middle East in 2014 as it prepares to enter new markets in
that helped reinforce customers’ perception of the brand the Kingdom of Saudi Arabia and Kuwait. It will also launch
of having low cost but high satisfaction meals. one of its flagship products, the Chinese Style Fried Chicken,
Chowking International Operations (IO) proved that Chowking Middle East’s sales continued to grow at a in the Middle East market.
in 2013, its consistent drive for excellence could bring robust rate with its total sales growing 24% in 2013, driven The strong performances of Chowking USA and
the brand to new and stellar places. The continuous by high growth sales of Chowking United Arab Emirates Chowking Middle East in 2013 will continue in 2014 as its
opening of new stores, introduction of new products and (UAE) at 24% and Chowking Qatar at close to 20%. solid foundation in these regions are already supported by
improvement of existing products and enhanced services The brand opened two additional stores in Qatar. It the continuous introduction of new products, new store
to customers were keys to Chowking IO’s achievements also opened its second store in the Sultanate of Oman— locations, stringent store processes as well as the hundreds
last year. bringing to 26 its store network in key cities in the Middle of customers that visit the stores throughout the year.
Chowking USA expanded its store count to 20 in the East. It now has 19 stores in the UAE, five in Qatar and two
region with the opening last April of its new store along in Oman.
Vermont Avenue in Los Angeles, helping the brand reach 2013 was also a breakthrough in quality management
a wider consumer base. Throughout the year, Chowking’s for Chowking Middle East. As a step towards aligning
stores in the cities of Union, Mira Mesa, National, Vallejo Food, Service, Cleanliness and Conditions (FSC) standards
and Panorama were also renovated, enhancing the with Jollibee Food Corporation’s Corporate Quality
customers’ dining experience. Management, the first official audit was conducted in
“Bringing warmth and joy to all customers who visit our store CARLO MIGUEL SUPAN
is our mission. We make each moment truly comfortable and Service Crew
Chowking West Covina
satisfying for them.” Californina, USA
Continuing the experience the brand eagerly flocked to Red Ribbon stores
in new territories in Nueva Vizcaya, Tarlac, Bohol, Roxas,
In a pioneering partnership with Apl.de.Ap of the
world-renowned and Grammy-award winning musical
Winning Streak Dumaguete, Isabela, Butuan, Kidapawan, and Cotabato.

As a result, the 5-year record for opening day sales was
group Black Eyed Peas and the Franklin Baker Company of
the Philippines, Macaroons for a Cause was launched as a
smashed not just once, but twice in 2013. The expanding CSR project that aimed to provide access to education by
network was achieved with best-in-class store ratings building public schools starting in Zamboanga.
in Food, Service, and Cleanliness – a testament to Red Supply chain improvement programs were
Ribbon’s commitment to product and service quality. implemented to meet the ever-increasing lift in demand.
True to their being flagship products, Chocolate The purchase of new ovens and equipment in Red Ribbon’s
The winning streak continued as Red Ribbon Dedication Cake, Black Forest, and Butter Mamon topped various commissaries significantly increased baking
registered its biggest year yet in 2013. System wide sales the chart, posting huge incremental sales vs prior capacity. A brand new commissary with more modern
and rolling base growths were the highest in six years! The year. Market share made quantum leaps for Chocolate and efficient facilities was opened in Cagayan de Oro
show-stopping sales performance was driven by a 10% Dedication Cake and Black Forest, while Mamon finally in late 2013, an unmistakeable sign of the company’s
leap in transaction count, showing that more customers established its dominance in the mamon segment. commitment to grow the business in the provinces.
are experiencing and enjoying the brand. Outstanding Innovation made its full swing with the launch of These outstanding results signal that Red Ribbon is
sales coupled with prudent management of store and fourteen new products like Brazo de Mercedes and Cheesy poised to create more sweet family moments through
main office expenses, plus relentless pursuit of commissary Mamon, providing customers with a wider assortment breakthrough innovations in products and services. With
efficiencies led to company profitability soaring to its all of products. Meanwhile, sales during red-letter days like a brand new year ahead, Red Ribbon is committed to take
time high in 2013. Valentine’s, Mother’s Day, Father’s Day, Christmas, and New the lead as it goes higher in 2014.
Red Ribbon delighted the market by making itself Year had record-breaking growths vs prior year, a clear
more accessible with the opening of 74 new stores – proof that Red Ribbon is increasingly becoming a part of
the highest in its history. Customers who longed to celebrations of more and more Filipinos.
“Simple gestures such as politely greeting our customers with a

warm smile, and asking them how their day was really do leave a
good impression with them. With the whole team executing these,
aside from the established standards we follow, customers indeed RUBY LYN T. DELOS REYES
come in droves to our stores! And we get to be good friends Regular Crew
Red Ribbon Marquee Mall
with them in the long run.” Angeles City, Philippines
Delivering Sweet The Mango Cake also had a memorable advertising

campaign that prided it as the cake with the sweetest
and sanitation work gear, work safety program and conduct
of good manufacturing practices (GMP) training programs
Delight ripe mango ingredients imported from the Philippines—

sweeter than the taste of locally-sourced mangoes. This
resulted to sustained commissary profitability and improved
GMP scores.
translated to a 24% growth in the product’s sales revenues Red Ribbon USA’s commitment to deliver delicious,
versus the same period a year ago. high-quality bakeshop products and excellent service
Red Ribbon also introduced popular products that made 2013 a truly memorable & delightful experience to its
Red Ribbon USA continued to soar high and delight
were widely accepted by our customers. This generated customers and this will surely carry on for the years to come.
customers in 2013. Despite tough economic situation &
incremental sales for the business. The launch of the Triple
stiff competition in the region, Red Ribbon USA managed
Chocolate Roll contributed 42% additional sales for the
an impressive same store sales growth of 5.6% and
rolls category. The new Mocha Crumble Cake became
exceeded net income budget by double digits.
the top 5 best-selling round cake, contributing to the 6%
A key ingredient for this sweet success was the focus
total cakes category growth in 2013 vs 2012. The pastries
on improving its flagship products Butter Mamon and
category also had a strong growth of 30%, aided by the
Mango Cake. For Butter Mamon, a successful advertising
launch of Brownies & Cheesy Mamon.
campaign was developed that promoted the product as
Red Ribbon USA also opened its first bakeshop-model
the standard for butter deliciousness. The “Buy 6, Get 1
store in the city of Rancho Cucamonga, California, marking
Free” Value Pack offer also encouraged bulk purchases for
the brand’s 31st store in the United States.
Butter Mamon. These efforts grew Butter Mamon’s revenue
Commissary improvements such as the
grew double digit at 13% versus same period last year,
mechanization of cake slicing, investment in additional
and nearly tripling its sales compared to 2011 or a 185%
icing conveyor lines, installation of new refrigeration
growth increase.
systems, rehabilitation of ovens, implementation of safety
“Working with my co-employees who are hardworking,

dedicated, and respectful has helped me serve our customers so JEAN LABOG
well everyday. I learned that espousing these values produce Service Crew
Red Ribbon Bakeshop Rancho Cucamonga
happy employees like me, and happy customers!” California, USA
Pursuing Growth With the clarity of brand positioning, YHK introduced

a series of iconic Taiwanese foods such as “Pop Chicken,”
Power Index) for three consecutive years; Seven Star
Award for Chinese Food Safety for two consecutive years
through Customer “Douhua (Sweet Bean curd Dessert),” and “Formosa

Meatball Rice,” and strengthened product taste on existing
and the Sincerity Service and Satisfactory Brand on March
15, 2013 (dubbed as Consumer Day) for two consecutive
Satisfaction products such as 3-cup Chicken Rice and Braised Beef

Noodle to condition customer impression of continuously
years. In addition, YHK was recognized by WPP, the largest
communication group around the world, in their BRANDZ
supporting the brand. category as one of the Most Valuable China brand being the
Yonghe King also launched a year-round marketing only Chinese QSR brand on the group.
event named “Taiwan Food Festival” with a pervasive TV Equally the same with customers’ needs, Yonghe
commercial that clearly communicated and showcased King also prioritized the needs of its employees. Last year,
In 2013, competition in China in the Quick Service the taste and quality of YHK’s products. The TV ad resulted it facilitated People Culture building that reinforced the
Restaurant (QSR) market was increasingly fierce. Western to Good Value Score for its major products as it increased performance and full potential of the organization inside
QSRs such as McDonald’s and KFC expanded their menu by by 10% and Good Taste Score reached over 60% based on out.
offering delicacies that satisfy the Chinese locals’ palates. Consumer Research statistics. It is YHK’s vision to become the most favorite QSR in
They massively invested in advertising and media which These various efforts paved the way for Yonghe China and it is set to deliver on its promises to offer more
targeted customers’ familiarity with the Chinese QSR King to achieve more than 10% sales growth in 2013, the tasty food, more excellent services, and valued customer
market. highest growth recorded in the QSR Industry in China. experience to its customers in 2014 and in the coming years.
This was one reason why Yonghe King (YHK) became In addition to business performance and
more critical of its brand differentiation last year. Since the enhancement of customer satisfaction, Yonghe King
repositioning of the brand in 2012 from a general “Tastes of further upgraded its brand reputation that resulted
China” brand to a distinct “Taiwan-inspired” brand, YHK has to numerous awards. It won The Top Brand in Chinese
indeed refocused its sights to its customers. Quick Service Restaurant Industry of C-BPI (China Brand
“As a Store Manager in Yonghe King, I learned to bear hardships,

accept new ideas and analyze information. These made me do LEI ZHENG
my job ably and serve our customers so well that they always South Lianhua Road Manager
Yonghe King
feel delighted to be in our stores!” China
Marked for Success Showcasing its competitive stance, two of its

restaurants, Tong & Yang, both broke the Monthly Sales
Record of ¥1 Million (Net) last July & August 2013. This
double digit sales growth helped the brand remodel three
of its old restaurants encouraging more customers to visit
the stores and feel the HZY store experience.
2013 was also the year HZY formalized its new
tagline, “Congee, and Much More,” where a full new menu
2013 marked another prosperous year for Hong Zhuang of 30 new products was introduced. This provided more
Yuan (HZY) as it strengthened its position as the only great-tasting food at very affordable prices to customers.
Chinese neighborhood restaurant that “feels like home.” The launch of the new menu improved the brand’s
HZY aggressively pursued this goal as a key for maintaining average check (AC) to 10% and its gross profit (GP) by 5%
customers’ loyalty to the brand by serving best-tasting, in the last quarter of 2013.
value-for-money authentic Chinese dishes and improving Never foregoing congee as its main flagship product,
their overall service for a delightful, comfortable eating HZY managed to evolve from a quick-service congee
experience. restaurant to China’s neighborhood casual dining
The company focused on improving its service levels restaurant.
in the restaurants by greeting all customers with a smile Hong Zhuang Yuan is determined to be at the top
and ensuring that all their food orders were served on time. of its industry in the coming years. It firmly believes that
Maximizing the good service to the customers earned the innovations they put in place will not just improve
compliments and good word-of-mouth for the brand, which the company’s reputation but will help in maintaining the
translated to more traffic count everyday at the stores. brand’s unique identity.
“Working carefully and earnestly in the store kitchen everyday

is what I love to do. I want to let all our customers know the
great taste of our products and make them come back for more.
At the same time, I also provide service to my fellow workers
by helping train new employees in the correct kitchen working XIAOMIN ZHAI
procedures. My positive attitude helps both my co-workers and Back Kitchen Employee
Hong Zhuang Yuan
customers appreciate good service when they visit our store.” Yuanzhou, China
Robust Growth The 2-in-1 sa Laki at Sarap campaign was launched

to highlight the great taste and value of Chicken Inasal.
All three Mang Inasal commissaries passed the 2013
Corporate Quality Management audit rating with flying
Reflects Company Featuring popular movie and television actress Angel

Locsin as its brand ambassador, the campaign resonated
colors. HACCP accreditation was awarded to the Taguig,
Iloilo and Davao commissaries, attesting to Mang Inasal’s
Success in Meeting with both loyal and newly-captive Mang Inasal consumers,
leading to a significant 2013 growth in chicken sales over
commitment to food safety.
The company intensified its continuing improvement
Pinoy Taste Needs 2012.

Mang Inasal’s other flagship product, the Halo-Halo,
process, launching the comprehensive FSC Audit Training,
Feedback Management System, Food Safety Computer-
Mang Inasal’s record performance in 2013 mirrors was boosted by marketing campaigns that nearly doubled based Training, HACCP standards, workshops for grillmen
its success in satisfying the unique needs and taste its sales–indicating an increase in consumer preference for and overall systematization to improve store operations
preferences of the Filipino consumer. the brand. Moreover, the Pork Barbecue re-launch in May and product quality. Food Serving Time was shortened
Guided by its vision of ‘serving its customers with joy’, resulted in a hefty growth in sales over the previous year. through Product Assembly Improvement training.
the company focused on strategic moves to strengthen its Strengthening its menu line-up to sustain consumer The leadership team was completed and operations
position as the leading Filipino branded chicken outlet in excitement, Mang Inasal also launched Pansit Bihon, re-structured into three Regional Business Units (RBU) to
Metro Manila and as purveyor of dishes well-loved by the Ginataang Bilo-Bilo and big size Halo-halo to complete the provide focus in growing each RBU.
Filipino heart and palate. customer dining experience. Mang Inasal is the No. 1 Pinoy branded outlet in Metro
The company implemented Gold Standard Training With the brand’s surging growth, it became Manila. It achieved an excellent FSC Stars Rating even
across all stores to ensure the consistent high quality paramount to safeguard consistent product quality and with higher validation criteria. Eighteen (18) new stores
of Chicken Inasal, its flagship product. Chicken Inasal sanitation. Standardized Commissary Processes following were built while 29 existing stores underwent renovation
systematization provided for standardized tools and the Chicken Inasal Gold Standard manufacturing process translating into a robust system wide sales and rolling
utensils, better timer and strengthened holding cabinet and store manuals were completed to uphold strict base growth. Mang Inasal ended 2013 with 459 stores
compliance. procedural guidelines. nationwide. No wonder that for 2014, customers will
continue to get the best from Mang Inasal.
“As a Grillman of Mang Inasal, I strictly adhere to the Standard

Operating Procedures in cooking Chicken Inasal and other grilled
products. This is to ensure that we only serve Gold Standard ANDREW BAUTISTA SULIT
Chicken Inasal and other grilled products. Our customers surely Crew Team Leader & Grillman
Mang Inasal Araneta
love them and crave for more. This is truly Alagang Pinoy!” Cubao, Quezon City, Philippines
San Pin Wang
Prosperity Amidst San Pin Wang also launched its new 5 Happiness Beef
Rice noodles and the Pickled Vegetables Beef Rice noodles
Recognizing the importance of all its employees to
the stores’ daily operations, SPW raised the staff’s pay last
Complexity giving the customers more options and value to choose

from. High-end melamine bowls also replaced the stainless
year giving them a greater sense of belongingness working
with the company.
steel bowls used in serving beef noodles. Bigger and better plans are in store for San Pin Wang
Aside from new products and improved food in 2014 as it plans to enhance its flagship products, open
processes, San Pin Wang amplified its store designs to more stores and expand its franchise business. SPW also
make the customers feel more comfortable with their plans to launch a take-out service system, introduce new
dining experience. Huge posters about its delicious packaging and improve its manufacturing and quality
2013 proved to be a challenging year for San Pin Wang products were posted at the stores’ doors making it easily management in the organization as these will lay the
(SPW) but that did not stop it from instituting reforms in visible for customers. 3D signs were also posted on the foundation to a more profitable growth for the brand in
the organization. door to entice more customers. the years to come.
Faced with the rising price of domestic beef, San San Pin Wang also opened seven new stores in 2013,
Pin Wang took advantage of its group procurement and where it established its first stores in Liuzhou, Guigang
imported quality beef from other countries such as New and Yulin, areas outside Nanning, China where most of
Zealand, Australia and Canada, fully guaranteeing the the brands’ stores are located. 2013 also marked the year
stable supply of beef to its stores. With this initiative, where SPW opened its first franchised store. These solid
SPW decided to return to its original beef soup. Despite steps in store expansion utilized the brand’s commitment
the added processing time, storage, and logistics costs, to reach out to as many areas in the region to be able to
the brand was able to ensure the quality and taste of its satisfy the local food cravings of the customers.
products.
“Providing warm and thoughtful service to our customers, which

include the young, the elderly and pregnant women, is what
I always aspire to give at the store. I believe that my ebullient
personality complemented with my joyful demeanor and excellent XIAODONG NONG
work attitude helps gain the delight and loyalty of Coach
San Pin Wang Minghu
our customers in San Pin Wang!” Nanning, China
Delivering the Best Burger King also introduced via limited time offers other
world burger favorites such as the Angus Steak House
All the efforts of 2013 brought the official store
count of Burger King to 34 by the end of 2013 sporting
Burger Experience collection among others.

The second half of 2013 marked a milestone in Burger
the brands revitalized look aptly called the “Garden Grill”
concept. The new design, which is expected to be adapted
King’s recent history with the most number of restaurant by soon-to-open Burger King restaurants in the country,
openings in the country. The “Home of the Whopper” highlights the unique heritage that’s been with Burger
strengthened its foothold in key Central Business District King since 1954, which is flame-grilling.
areas such as Makati City and Ortigas. It also expanded its All these initiatives in 2013 always place the customer
territory with strategic locations in the South Luzon area. at its heart to ensure that Burger King is able to deliver the
In 2013, Burger King set its course to delivering only The Whopper and all its products have also been best burger experience, with the delicious food, friendly
the “best burger experience” to all its valued guests. made more accessible in new Burger King Drive-Thru service, and warm ambiance, that will truly make every
With this in mind, Burger King focused on building its restaurants which marked the first Drive-Thru restaurants guest feel like a king!
world famous burgers through innovations centered on to be opened since more than a decade ago.
bringing out the “best tasting burger,” with new value and Drive-Thru and cashier terminal systems were
limited time offerings; crafting the most delightful guest upgraded to allow for an easier order-taking process, thus
experience by means of restaurant technology upgrades; allowing guests to have a more pleasant and convenient
and creating new avenues for accessibility via network experience every time they come to visit the restaurants.
expansion and remodeling of its key outlets. Key outlets also got much-needed renovation works
For its world-famous Whopper, a delightful twist to the delight of our guests, resulting in immediate sales
was given via its 3-Meat Whopper which was warmly growth despite increased competition in both retail trade
appreciated for its unique, satisfying taste and value. areas.
“I believe that we should treat all our customers entering the

store as friends or relatives visiting our homes.
Be friendly and always make them feel at home! Having our KRISTINE A. BAUTISTA
valued guests experience this type of exceptional service Restaurant General Manager
Burger King Frontera Verde
makes them come back to our stores!” Pasig City, Philippines
The Joy of in SY 2013-2014 were funded with significant support

from local institutions. In Davao City for example, the city
set up a disaster response center which provided
food assistance to affected communities. The Jollibee
Giving Back government committed P5.7 million pesos to support the

BLT Program in 142 schools in the next five (5) years.
Group FoodAID Program organized relief operations
and established mobile kitchens in severely affected
Farmer Entrepreneurship Program (FEP). For 2013, communities in the Visayas region. This benefited more
Jollibee Group Foundation (JGF), the corporate than 160,000 survivors, with the help of employee
the program helped more than 900 small farmers in 15
social responsibility arm of Jollibee Foods Corporation volunteers from all the business units of JFC. The FoodAID
provinces nationwide. FEP was implemented in Ilocos,
(JFC), brings joy to the communities through the Program also provided assistance to volunteers of various
Pangasinan, Nueva Vizcaya, Nueva Ecija, Quezon, Mindoro,
implementation of various initiatives. Its major programs relief organizations and served more than 17,000 meals.
Albay, Antique, Iloilo, Cebu, Negros Occidental, Bukidnon,
are as follows: JGF was able to raise P44M worth of donations
Compostela Valley, Davao Oriental and Agusan del Sur.
Busog, Lusog, Talino (BLT) School Feeding from JFC, shareholders, franchisees, business partners,
Eight farmer groups are supplying onions, tomatoes,
Program. For SY 2013-2014, the BLT Program was executives, employees and from the public through the JGF
bell peppers, chilli peppers, and calamansi to JFC. In
implemented in over 1,100 public schools in 193 cities and coinbanks in all JFC stores nationwide. Portion of this will
total, for 2013 the program assisted 18 farmer groups
municipalities nationwide benefitting more than 40,000 go to the Foundation’s rehabilitation efforts that include
to deliver their products to various institutions such
pupils. The program has now covered over 100,000 pupils a special school feeding program, livelihood recovery
as restaurants, supermarkets, and food processors. In
since its implementation in 2007. By providing lunch every assistance for small farmers and scholarship grants to
addition, 12 companies are currently sourcing directly
day, the Program addresses hunger and helps pupils stay students in affected communities.
from smallholder farmers for their vegetable material
in school and learn better.
requirements through FEP. These companies practice In line with the government’s thrust to promote
Community ownership is a component of the BLT
inclusive business by offering the farmers opportunities to inclusive growth, JGF will continue to serve its communities,
Program that makes it sustainable. In partnership with
be directly part of the supply chain. scale up its reach and help develop resiliency in these areas,
local education stakeholders, local civic organizations,
residents and overseas contacts are mobilized to donate Jollibee Group FoodAID Program. When Typhoon through meaningful and productive partnerships.
to and volunteer in the program. About 500 BLT schools Yolanda hit the Philippines in 2013, JGF immediately
“JGF helped me realize my desire to give back to the

community. I am grateful that JGF gave me the chance to help
out as an English tutor to the scholars and as a volunteer staff in
the BLT activities. In my own small way, I contribute in VICTORINO “VIC” TOLOSA II
Corporate IM Manager
uplifting the lives of our fellowmen.” Jollibee Foods Corporation
32 Board of Directors and Corporate Management Team* Jollibee Foods Corporation and Subsidiaries
DIRECTORS1 CORPORATE OFFICERS HEADS OF INTERNATIONAL UNITS HEADS OF CORPORATE UNITS
ANG NGO CHIONG† TONY TAN CAKTIONG CHIN SENG YUE INOCENCIO HUYONG JR.
Chairman Emeritus President and Chief Executive Officer Chief Human Resource Advisor VP - Country Real Estate
TONY TAN CAKTIONG ERNESTO TANMANTIONG DR. POLLY YANG WILLIAM S. LORENZANA, JR.
Chairman of the Board/President Chief Operating Officer VP - Corporate Research and President - Zenith Business Unit and
Development VP - Corporate Supply Chain
WILLIAM TAN UNTIONG YSMAEL V. BAYSA
Director / Corporate Secretary Chief Finance Officer RAYMOND SU ANASTACIA S. MASANCAY
President, Yonghe King Business VP - Corporate Audit and Other
ERNESTO TANMANTIONG WILLIAM TAN UNTIONG
Businesses
Director / Treasurer Chief Real Estate Executive LAWRENCE YIN
General Manager, Hong Zhuang Yuan SUSANA K. TANMANTIONG
JOSEPH C. TANBUNTIONG DANIEL RAFAEL RAMON Z. GOMEZ III
Business Chief Procurement Officer
Director Chief Marketing Officer
FRANKIE TAN LAURO C. MATIAS
ANG CHO SIT
President, Jollibee Foods Processing Chief Information Officer
Director HEADS OF LOCAL UNITS
Pte., Ltd
LIWAYWAY T. MATEO
ANTONIO CHUA POE ENG JOSEPH C. TANBUNTIONG DU HAN VP - Corporate Quality Management
Director President, Jollibee Philippines President, Guangxi San Pin Wang Food
and Beverage Management Co., Ltd ERLINDA F. CASTRO
MONICO C. JACOB JOSE A. MINANA, JR. Head, FA/HR Shared Services
Director Group President, JFC FRANCIS ALDWIN E. FLORES
CEZAR P. CONSING VP - International Mainstream Markets
FERNANDO S. YU JOLLIBEE GROUP FOUNDATION, INC.
Director President, Chowking Philippines DENNIS M. FLORES
VP - Global Filipino Markets GRACE A. TAN CAKTIONG
(RET) CHIEF JUSTICE ARTEMIO C. ALBERT C. CUADRANTE
President, Jollibee Group Foundation,
PANGANIBAN General Manager, Greenwich Business TRAN THI LAN ANH Inc.
Director
General Manager, Jollibee Vietnam
ZINNIA CARMENCITA RIVERA
WASHINGTON Z. SYCIP General Manager, Red Ribbon Business MARIBETH DELA CRUZ
Independent Adviser * As of March 31, 2014
General Manager, US Operations
JUSTO S. ALANO III
1
ATTY. VALERIE F. AMANTE General Manager, Mang Inasal
Assistant Corporate Secretary
LEILA F. ACOSTA
and VP - Corporate Legal
Managing Director, Burger King Business
34
Selected Financial Data
35
Statement of Management’s Responsibility for Financial Statements
36
Independent Auditors’ Report
37
Consolidated Statements of Financial Position
38
Consolidated Statements of Comprehensive Income
39
Consolidated Statements of Changes In Equity
40
Consolidated Statements of Cash Flows
42
Notes to Consolidated Financial Statements
34 Selected Financial Data
(in P’000, except Number of Stores, Personnel, Ratios, Per Share Data and Outstanding Shares)
FOR THE YEAR 2011** 2012** 2013
Consolidated Systemwide Sales 82,170,085 92,271,200 104,090,057

Gross Revenues 62,554,927 71,059,039 80,282,769
Net Income 3,284,780 3,711,996 4,722,807
Net Income (Attributable to Equity Holders of the Parent) 3,262,644 3,727,084 4,671,559
Payroll and Benefits 9,919,111 11,056,054 12,504,376
Personnel 39,162 42,090 40,958
Number of Stores
Jollibee* 823 872 912
Greenwich 205 202 199
Chowking* 430 430 446
Red Ribbon* 242 244 309
Yonghe King 265 297 314
Hong Zhuang Yuan 52 46 43
Mang Inasal 429 465 459
Burger King 23 29 34
Chow Fun 3 3 3
San Pin Wang 40 45
*Domestic and International
AT YEAR-END
Total Assets 38,908,227 41,768,131 46,026,634

Total Property & Equipment 10,580,367 11,059,464 11,772,441
Total Equity 20,414,870 21,731,303 23,360,940
Current Ratio 1.10 0.94 1.18
Debt Ratio 0.49 0.49 0.50
PER SHARE DATA
Basic Earnings Per Share 3.14 3.58 4.45

Diluted Earnings Per Share 3.10 3.51 4.36
Cash Dividend 1.07 2.20 3.36
Book Value 19.66 20.75 22.20
SHARE INFORMATION
Outstanding Shares (net of Treasury Shares) 1,038,505,893 1,047,412,219 1,052,161,335
**Restated
Statement of Management’s Responsibility for Financial Statements 35
The management of JOLLIBEE FOODS CORPORATION AND SUBSIDIARIES (the Company) is responsible REPUBLIC OF THE PHILIPPINES )
for the preparation and fair presentation of the consolidated financial statements for the years ended CITY OF PASIG )S.S
December 31, 2013, 2012 and 2011 including the additional components attached therein, in accordance
with the prescribed financial reporting framework indicated therein. This responsibility includes designing
and implementing internal controls relevant to the preparation and fair presentation of consolidated Before me, a notary public in and for the city named above, personally appeared the following:
financial statements that are free from material misstatement, whether due to fraud or error, selecting
and applying appropriate accounting policies, and making accounting estimates that are reasonable in Name Competent Evidence of Identity
the circumstances.
Tony Tan Caktiong SSS Number: 03-5003942-0
The Board of Directors reviews and approves the consolidated financial statements and submit the same Ysmael V. Baysa SSS Number: 03-4228219-1
to the stockholders. Marilou N. Sibayan SSS Number: 03-9964176-9
SyCip Gorres Velayo & Co., the independent auditors, appointed by the stockholders for the years ended Who are personally known to me and to me known to be the same persons who presented the foregoing
December 31, 2013, 2012 and 2011 has examined the consolidated financial statements of the Company instrument and signed the instrument in my presence, and who took on oath before me as to such
in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed instrument.
its opinion on the fairness of presentation upon completion of such examination.
Witness my hand and seal this 31st day of March 2014.
Signed under oath by the following: Doc. No. 100

Page No. 21
Book No. I
Series of 2014
TONY TAN CAKTIONG

Chairman of the Board
Chief Executive Officer
YSMAEL V. BAYSA MARILOU N. SIBAYAN

Vice-President for Corporate Finance Comptroller
and Chief Finance Officer
36 Independent Auditors’ Report
The Stockholders and the Board of Directors

Jollibee Foods Corporation
We have audited the accompanying consolidated financial statements of Jollibee Foods We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
Corporation and its subsidiaries, which comprise the consolidated statements of financial basis for our audit opinion.
position as at December 31, 2013 and 2012, and the consolidated statements of comprehensive
Opinion
income, statements of changes in equity and statements of cash flows for each of the three years
in the period ended December 31, 2013, and a summary of significant accounting policies and In our opinion, the consolidated financial statements present fairly, in all material respects, the
other explanatory information. financial position of Jollibee Foods Corporation and its subsidiaries as at December 31, 2013
and 2012, and their financial performance and their cash flows for each of the three years in the
Management’s Responsibility for the Consolidated Financial Statements
period ended December 31, 2013 in accordance with Philippine Financial Reporting Standards.
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with Philippine Financial Reporting Standards, and for
such internal control as management determines is necessary to enable the preparation of SYCIP GORRES VELAYO & CO.
consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based Marydith C. Miguel
on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Partner
Those standards require that we comply with ethical requirements and plan and perform the CPA Certificate No. 65556
audit to obtain reasonable assurance about whether the consolidated financial statements are SEC Accreditation No. 0087-AR-3 (Group A),
free from material misstatement. January 18, 2013, valid until January 17, 2016
Tax Identification No. 102-092-270
An audit involves performing procedures to obtain audit evidence about the amounts and BIR Accreditation No. 08-001998-55-2012,
disclosures in the consolidated financial statements. The procedures selected depend on April 11, 2012, valid until April 10, 2015
the auditor’s judgment, including the assessment of the risks of material misstatement of the PTR No. 4225193, January 2, 2014, Makati City
consolidated financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of April 7, 2014
the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
Consolidated Statements of Financial Position 37
December 31, January 1,

2012 2012
December 31, (As restated - (As restated -
2013 Note 2) Note 2)
ASSETS
Current Assets
Cash and cash equivalents (Notes 6, 30 and 31) P9,903,877,068 P8,848,591,584 P6,655,312,875
Receivables (Notes 7, 30 and 31) 3,082,872,678 2,750,341,491 2,388,617,052
Inventories (Note 8) 3,560,432,134 2,629,743,477 2,860,103,279
Other current assets (Note 9) 1,836,995,105 1,394,525,363 1,354,914,695
18,384,176,985 15,623,201,915 13,258,947,901
Noncurrent Assets
Available-for-sale financial assets (Notes 10, 30 and 31) 21,479,461 128,149,438 120,649,438
Interests in and advances to joint ventures, co-venturers and an associate (Note 11) 3,322,393,765 3,011,501,581 3,188,515
Property, plant and equipment - net (Note 12) 11,772,440,510 11,059,464,042 10,580,366,696
Investment properties (Note 13) 751,767,041 754,012,771 772,468,616
Goodwill and other intangible assets (Note 14) 9,103,636,848 8,837,559,145 8,542,321,057
Operating lease receivables (Note 29) 21,267,251 22,560,089 26,838,873
Deferred tax assets - net (Note 24) 756,196,860 685,822,447 636,389,585
Other noncurrent assets (Notes 15, 30 and 31) 1,893,275,392 1,645,859,282 4,609,351,786
Total Noncurrent Assets 27,642,457,128 26,144,928,795 25,291,574,566
P46,026,634,113 P41,768,130,710 P38,550,522,467
LIABILITIES AND EQUITY

Current Liabilities
Trade payables and other current liabilities (Notes 16, 30 and 31) P14,249,926,021 P11,753,066,051 P10,165,594,869
Income tax payable 154,744,537 78,958,189 154,717,083
Short-term debt (Notes 18, 30 and 31) − − 900,000,000
Current portion of:
Long-term debt (Notes 18, 30 and 31) 1,106,275,244 4,572,839,927 777,301,991
Liability for acquisition of businesses (Notes 11, 30 and 31) 107,666,875 216,368,476 104,763,179
Total Current Liabilities 15,618,612,677 16,621,232,643 12,102,377,122
Noncurrent Liabilities
Noncurrent portion of:
Long-term debt (Notes 18, 30 and 31) 4,062,970,500 854,616,489 3,942,742,029
Liability for acquisition of businesses (Notes 11, 30 and 31) 129,007,932 151,203,664 178,964,787
Provisions (Note 17) 30,500,639 30,500,639 30,500,639
Derivative liability (Notes 18, 30 and 31) 4,532,600 22,782,820 −
Pension liability (Note 25) 932,841,109 521,578,602 9,379,018
Operating lease payables (Note 29) 1,569,071,461 1,460,167,999 1,343,261,889
Deferred tax liabilities - net (Note 24) 318,157,118 374,744,826 528,426,655
Total Noncurrent Liabilities 7,047,081,359 3,415,595,039 6,033,275,017
Total Liabilities 22,665,694,036 20,036,827,682 18,135,652,139
Equity Attributable to Equity Holders of the Parent Company (Note 30)
Capital stock (Note 19) 1,051,430,791 1,046,681,675 1,037,775,349
Additional paid-in capital (Note 26) 3,640,716,729 3,284,139,309 2,914,463,925
Cumulative translation adjustments of foreign subsidiaries, joint ventures and an associate 38,306,710 (351,379,055) (187,186,852)
Remeasurement gain (loss) on net defined benefit plan - net of tax (472,054,212) (224,657,742) 128,728,399
Unrealized gains on available-for-sale financial assets (Note 10) − 102,626,829 102,626,829
Comprehensive loss on derivative liability (Note 18) (3,411,504) (7,087,197) −
Excess of cost over the carrying value of non-controlling interests acquired (Note 19) (542,764,486) (542,764,486) (542,764,486)
Retained earnings (Notes 2 and 19):
Appropriated for future expansion 10,200,000,000 5,000,000,000 1,200,000,000
Unappropriated 8,817,166,243 12,871,154,204 15,238,047,410
22,729,390,271 21,178,713,537 19,891,690,574
Less cost of common stock held in treasury (Note 19) 180,511,491 180,511,491 180,511,491
22,548,878,780 20,998,202,046 19,711,179,083
Non-controlling Interests (Note 11) 812,061,297 733,100,982 703,691,245
Total Equity 23,360,940,077 21,731,303,028 20,414,870,328
P46,026,634,113 P41,768,130,710 P38,550,522,467
See accompanying Notes to Consolidated Financial Statements.

38 Consolidated Statements of Comprehensive Income
Years Ended December 31

2012 2011
(As restated - (As restated -
REVENUES
Net sales P76,313,489,585 P67,493,953,521 P59,266,444,340
Royalty, franchise fees and others (Note 20) 3,969,279,614 3,565,085,633 3,288,482,719
80,282,769,199 71,059,039,154 62,554,927,059
COST OF SALES (Note 21) 65,284,763,064 58,435,498,743 51,366,071,947
GROSS PROFIT 14,998,006,135 12,623,540,411 11,188,855,112
EXPENSES
General and administrative expenses (Note 22) 7,427,887,196 6,908,802,947 5,939,317,810
Advertising and promotions 1,639,022,544 1,369,719,679 1,310,113,894
9,066,909,740 8,278,522,626 7,249,431,704
INTEREST INCOME (EXPENSE) (Note 23)
Interest income 245,573,808 270,114,157 179,763,236
Interest expense (152,920,028) (206,012,700) (291,342,791)
92,653,780 64,101,457 (111,579,555)
EQUITY IN NET EARNINGS (LOSSES) OF JOINT VENTURES AND AN ASSOCIATE (Note 11) (115,560,608) (50,954,378) 299,710
OTHER INCOME (Note 23) 337,325,031 503,534,839 566,813,617
INCOME BEFORE INCOME TAX 6,245,514,598 4,861,699,703 4,394,957,180
PROVISION FOR INCOME TAX (Note 24)
Current 1,521,966,682 1,277,160,734 1,187,563,865
Deferred 741,389 (127,456,683) (77,386,893)
1,522,708,071 1,149,704,051 1,110,176,972
NET INCOME 4,722,806,527 3,711,995,652 3,284,780,208
OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Cumulative translation adjustments of foreign subsidiaries, joint ventures and associates 414,851,757 (169,424,928) 133,206,626
Comprehensive gain (loss) on derivative liability (Note 18) 6,806,839 (13,124,439) −
Unrealized loss on available-for-sale financial assets - net of tax (Note 10) (102,626,829) − (4,537,748)
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Remeasurement gains (losses) on net defined benefit plan - net of tax (247,396,470) (353,386,141) 128,728,399
71,635,297 (535,935,508) 257,397,277
TOTAL COMPREHENSIVE INCOME P4,794,441,824 P3,176,060,144 P3,542,177,485
Net Income Attributable to:
Equity holders of the Parent Company (Note 28) P4,671,559,394 P3,727,084,297 P3,262,644,224
Non-controlling interests 51,247,133 (15,088,645) 22,135,984
P4,722,806,527 P3,711,995,652 P3,284,780,208
Total Comprehensive Income Attributable to:
Equity holders of the Parent Company P4,714,897,551 P3,202,418,756 P3,516,670,668
Non-controlling interests 79,544,273 (26,358,612) 25,506,817
P4,794,441,824 P3,176,060,144 P3,542,177,485
Earnings Per Share for Net Income Attributable to Equity Holders of the Parent Company (Note 28)
Basic P4.450 P3.577 P3.168
Diluted 4.360 3.513 3.125

Consolidated Statements of Changes In Equity 39
Equity Attributable to Equity Holders of the Parent Company (Note 30)

Cumulative
Translation Remeasurement Excess of Cost
Adjustments of Gains (Loss) Unrealized Comprehensive over the Carrying
Foreign on Net Gain on Loss on Value of Retained Earnings (Note 19) Cost of Common
Additional Subsidiaries Defined Benefit Available-for-Sale Derivative Non-controlling Appropriated Stock Held in Non-controlling
Capital Stock Subscriptions Paid-in Capital Joint Ventures Plan - net of tax Financial Assets Liability Interests Acquired for Future Treasury Interests Total Equity
(Note 19) Receivable (Note 26) and an Associate (Note 2) (Note 10) (Note 18) (Note 19) Expansion Unappropriated (Note 19) Total (Notes 2 and 11) (Note 2)
Balances at January 1, 2013, as previously reported P1,063,859,559 (P17,177,884) P3,284,139,309 (P351,379,055) P– P102,626,829 (P7,087,197) (P542,764,486) P5,000,000,000 P12,808,533,096 (P180,511,491) P21,160,238,680 P733,100,982 P21,893,339,662
Effect of adoption of Revised PAS 19 – – – – (224,657,742) – – – – 62,621,108 – (162,036,634) – (162,036,634)
Balance at January 1, 2013 (As restated - Note 2) 1,063,859,559 (17,177,884) 3,284,139,309 (351,379,055) (224,657,742) 102,626,829 (7,087,197) (542,764,486) 5,000,000,000 12,871,154,204 (180,511,491) 20,998,202,046 733,100,982 21,731,303,028
Net income – – – – – – – – – 4,671,559,394 – 4,671,559,394 51,247,133 4,722,806,527
Other comprehensive income (loss) 389,685,765 (247,396,470) (102,626,829) 3,675,693 – – – – 43,338,159 28,297,138 71,635,297
Total comprehensive income (loss) – – – 389,685,765 (247,396,470) (102,626,829) 3,675,693 – – 4,671,559,394 – 4,714,897,553 79,544,271 4,794,441,824
Movements in other equity accounts:
Issuances of and subscriptions to capital stock 4,749,116 – 206,158,679 – – – – – – – – 210,907,795 – 210,907,795
Cost of stock options granted – – 150,418,741 – – – – – – – – 150,418,741 – 150,418,741
Cash dividends (Note 19) – – – – – – – – – (3,525,547,355) – (3,525,547,355) – (3,525,547,355)
Cash dividends received by non-controlling
interest – – – – – – – – – – – – (30,000,000) (30,000,000)
Appropriation during the year (Note 19) – – – – – – – – 5,200,000,000 (5,200,000,000) – – – –
Additional investments during the year – – – – – – – – – – – – 29,416,044 29,416,044
4,749,116 – 356,577,420 – – – – – 5,200,000,000 (8,725,547,355) – (3,164,220,819) (583,956) (3,164,804,775)
Balances at December 31, 2013 P1,068,608,675 (P17,177,884) P3,640,716,729 P38,306,710 (P472,054,212) P– (P3,411,504) (P542,764,486) P10,200,000,000 P8,817,166,243 (P180,511,491) P22,548,878,780 P812,061,297 P23,360,940,077
Balances at January 1, 2012, as previously reported P1,054,953,233 (P17,177,884) P2,914,463,925 (P187,186,852) P– P102,626,829 P– (P542,764,486) P1,200,000,000 P15,174,359,248 (P180,511,491) P19,518,762,522 P703,691,245 P20,222,453,767
Effect of adoption of Revised PAS 19 – – – – 128,728,399 – – – – 63,688,162 – 192,416,561 – 192,416,561
Balance at January 1, 2012, as restated 1,054,953,233 (17,177,884) 2,914,463,925 (187,186,852) 128,728,399 102,626,829 – (542,764,486) 1,200,000,000 15,238,047,410 (180,511,491) 19,711,179,083 703,691,245 20,414,870,328
Total comprehensive income, as restated:
Net income, as previously reported – – – – – – – – – 3,728,151,351 – 3,728,151,351 (15,088,645) 3,713,062,706
Effect of adoption of Revised PAS 19 – – – – – – – – – (1,067,054) – (1,067,054) – (1,067,054)
Net income, as restated – – – – – – – – – 3,727,084,297 – 3,727,084,297 (15,088,645) 3,711,995,652
Other comprehensive income (loss), as
previously restated – – – (164,192,203) – – (7,087,197) – – – (171,279,400) (11,269,967) (182,549,367)
Effect of adoption of Revised PAS 19 – – – – (353,386,141) – – – – – (353,386,141) – (353,386,141)
Other comprehensive loss, as restated – – – (164,192,203) (353,386,141) (7,087,197) – – – (524,665,541) (11,269,967) (535,935,508)
– – – (164,192,203) (353,386,141) – (7,087,197) – – 3,727,084,297 – 3,202,418,756 (26,358,612) 3,176,060,144
Movements in other equity accounts: – – –
Issuances of and subscriptions to
capital stock 8,906,326 – 292,691,011 – – – – – – – – 301,597,337 – 301,597,337
Cash dividends received by non-controlling
interest – – – – – – – – – – – – (45,000,000) (45,000,000)
Arising from business combination – – – – – – – – – – – – 20,895,511 20,895,511
Appropriation during the year (Note 19) – – – – – – – – 3,800,000,000 (3,800,000,000) – – – –
Arising from incorporation of a subsidiary – – – – – – – – – – – – 20,724,838 20,724,838
8,906,326 – 369,675,384 – – – – – 3,800,000,000 (6,093,977,503) – (1,915,395,793) 55,768,349 (1,859,627,444)
Balances at December 31, 2012, as restated P1,063,859,559 (P17,177,884) P3,284,139,309 (P351,379,055) (P224,657,742) P102,626,829 (P7,087,197) (P542,764,486) P5,000,000,000 P12,871,154,204 (P180,511,491) P20,998,202,046 P733,100,982 P21,731,303,028
Balances at January 1, 2011, as previously reported P1,053,438,818 (P17,177,884) P2,773,682,164 (P317,022,645) P– P107,164,577 P– (P542,764,486) P1,200,000,000 P13,042,709,169 (P180,511,491) P17,119,518,222 P561,924,546 P17,681,442,768
Effect of adoption of PAS 19R – – – – – – – – – 32,710,878 – 32,710,878 – 32,710,878
Balances at January 1, 2011, as restated 1,053,438,818 (17,177,884) 2,773,682,164 (317,022,645) – 107,164,577 – (542,764,486) 1,200,000,000 13,075,420,047 (180,511,491) 17,152,229,100 561,924,546 17,714,153,646
Total comprehensive income, as restated – – – – – – – – –
Net income, as previously reported – – – – – – – – – 3,231,666,940 – 3,231,666,940 22,135,984 3,253,802,924
Effect of adoption of Revised PAS 19 – – – – – – – – – 30,977,284 – 30,977,284 – 30,977,284
Net income, as restated – – – – – – – – 3,262,644,224 – 3,262,644,224 22,135,984 3,284,780,208
previously reported – – – 129,835,793 – (4,537,748) – – – – – 125,298,045 3,370,833 128,668,878
Effect of adoption of Revised PAS 19 – – – 128,728,399 – – – – – – 128,728,399 – 128,728,399
restated – – – 129,835,793 128,728,399 (4,537,748) – – – – – 254,026,444 3,370,833 257,397,277
– – – 129,835,793 128,728,399 (4,537,748) – – – 3,262,644,224 – 3,516,670,668 25,506,817 3,542,177,485
Movements in other equity accounts
Issuances of and subscriptions to capital stock 1,514,415 – 67,185,580 – – – – – – – – 68,699,995 – 68,699,995
Arising from business combination – – – – – – – – – – – – 73,838,539 73,838,539
Arising from incorporation of a subsidiary – – – – – – – – – – – – 4,000,043 4,000,043
1,514,415 – 140,781,761 – – – – – – (1,100,016,861) – (957,720,685) 116,259,882 (841,460,803)
Balances at December 31, 2011, as restated P1,054,953,233 (P17,177,884) P2,914,463,925 (P187,186,852) P128,728,399 P102,626,829 P– (P542,764,486) P1,200,000,000 P15,238,047,410 (P180,511,491) P19,711,179,083 P703,691,245 P20,414,870,328

40 Consolidated Statements of Cash Flows

2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P6,245,514,598 P4,861,699,703 P4,394,957,180
Adjustments for:
Depreciation and amortization (Notes 12, 13, 21 and 22) 3,072,455,820 2,705,626,363 2,401,593,897
Loss on disposals and retirements of :
Property, plant and equipment - net (Note 12) 446,158,983 317,088,159 216,294,908
Investment properties (Note 13) – 1,542,484 –
Available-for-sale (AFS) financial assets (Note 10) – – 229,360
Write off of AFS financial asset (Note 10) 4,343,148 – –
Interest income (Note 23) (245,573,808) (270,114,157) (179,763,236)
Interest expense (Note 23) 152,920,028 206,012,700 291,342,791
Deferred rent amortization - net (Note 29) 110,196,300 121,184,894 182,565,058
Movement in pension liability(Notes 21, 22 and 25) 86,990,769 56,017,397 49,056,944
Stock options expense (Note 26) 150,418,741 76,984,373 73,596,181
Impairment losses on:
Receivables (Notes 7 and 22) 11,206,210 97,559,491 –
Inventories (Notes 8 and 22) 9,367,464 – –
Property, plant and equipment, investment properties and security and other deposits (Note 22) (13,300,000) 53,677,361 –
Contingencies (Note 22) 1,102,608 – –
Equity in net loss (earnings) of joint ventures and an associate (Note 11) 115,560,608 50,954,378 (299,710)
Net unrealized foreign exchange loss (gain) (34,235,766) (30,892,981) 4,582,117
Income before working capital changes 10,113,125,703 8,247,340,165 7,434,155,490
Decreases (increases) in:
Receivables (324,828,093) (214,752,618) (314,201,325)
Inventories (940,056,121) 243,401,297 (693,934,034)
Other current assets (447,087,313) 308,051,784 (227,403,532)
Increases in trade payables and other current liabilities 2,040,310,855 858,004,807 783,520,729
Net cash generated from operations 10,441,465,031 9,442,045,435 6,982,137,328
Interest received 224,956,889 158,963,809 105,417,626
Income taxes paid (1,446,921,723) (1,363,045,319) (1,206,994,209)
Net cash provided by operating activities 9,219,500,197 8,237,963,925 5,880,560,745
(Forward)
Consolidated Statements of Cash Flows 41

2012 2011
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment(Note 12) (P3,907,875,891) (P3,755,906,880) (P3,700,449,259)
Intangible assets (Note 14) (267,270,178) – –
Subsidiaries - net of cash acquired (Note 11) – (127,585,219) (637,662,433)
Interest in a joint venture (Note 11) (103,608,000) (98,040,000) –
Available-for-sale financial assets (Note 10) (300,000) (7,500,000) –
Investment property (Note 13) – – (8,011,386)
Collection from (advances to) a joint venture (170,125,640) (105,179,193) 18,733,666
Proceeds from disposals of:
Property, plant and equipment 50,662,989 41,167,841 31,976,343
Investment properties – 599,048 –
Recovery from a joint venture (Note 11) – 2,403,795 –
Increase in long-term loan receivable (Note 15) – – (1,753,600,000)
Deposit for future business transaction (Note 15) – – (1,096,000,000)
Decrease (increase) in other noncurrent assets 109,573,188 166,332,173 (11,750,343)
Net cash used in investing activities (4,288,943,532) (3,883,708,435) (7,156,763,412)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of:
Cash dividends (Note 19) (3,232,637,120) (2,274,367,485) (1,196,621,682)
Short-term debt (Note 18) – (900,000,000) (342,030,865)
Long-term debt (Note 18) (3,149,351,766) (728,863,892) (2,379,825,785)
Liability for acquisition of businesses (Note 11) (149,814,984) (108,696,000) (178,125,110)
Proceeds from:
Long-term debt (Note 18) 2,582,580,000 1,700,800,000 3,131,020,350
Issuances of and subscriptions to capital stock 210,907,795 301,597,337 68,699,995
Short-term debt (Note 18) – – 900,000,000
Interest paid (141,263,440) (194,335,697) (284,118,329)
Contributions from non-controlling interests 29,416,042 79,872,838 42,421,343
Dividends paid to non-controlling interests (30,000,000) (45,000,000) –
Net cash used in financing activities (3,880,163,473) (2,168,992,899) (238,580,083)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,050,393,192 2,185,262,591 (1,514,782,750)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 4,892,292 8,016,118 (393,676)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,848,591,584 6,655,312,875 8,170,489,301
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6) P9,903,877,068 P8,848,591,584 P6,655,312,875

42 Notes to Consolidated Financial Statements
recognized financial instruments that are subject to an enforceable master netting arrangement
1. Corporate Information
or ‘similar agreement’, irrespective of whether they are set-off in accordance with PAS 32. The
Jollibee Foods Corporation (the Parent Company) was incorporated in the Philippines. The Parent amendments require entities to disclose, in a tabular format, unless another format is more
Company and its subsidiaries (collectively referred to as “the Jollibee Group”) are involved primarily appropriate, the following minimum quantitative information. This is presented separately for
in the development, operation and franchising of quick service restaurants under the trade names financial assets and financial liabilities recognized at the end of the reporting period:
“Jollibee”, “Chowking”, “Greenwich”, “Red Ribbon”, “Yong He King”, “Hong Zhuang Yuan”, “Mang Inasal”,
a) The gross amounts of those recognized financial assets and recognized financial liabilities;
“Burger King”, “San Pin Wang” and “12 Hotpot”. The other activities of the Jollibee Group include
b) The amounts that are set-off in accordance with the criteria in PAS 32 when determining the
manufacturing and property leasing in support of the quick service restaurant systems and other
net amounts presented in the statement of financial position;
business activities (see Notes 2 and 5).
c) The net amounts presented in the statement of financial position;
The common shares of the Parent Company were listed and have been traded in the Philippine Stock d) The amounts subject to an enforceable master netting arrangement or similar agreement
Exchange (PSE) beginning July 14, 1993. that are not otherwise included in (b) above, including:
The registered office address of the Parent Company is 10th Floor, Jollibee Plaza Building, No. 10 Emerald i. Amounts related to recognized financial instruments that do not meet some or all of
Avenue, Ortigas Centre, Pasig City. the offsetting criteria in PAS 32; and
ii. Amounts related to financial collateral (including cash collateral); and
The consolidated financial statements as at December 31, 2013 and 2012 and January 1, 2012 and for e) The net amount after deducting the amounts in (d) from the amounts in (c) above.
each of the three years in the period ended December 31, 2013 were reviewed and recommended
for approval by the Audit Committee as well as approved and authorized for issuance by the Board of The amendments affect disclosures only and have no impact on the Jollibee Group’s financial
Directors (BOD) on April 07, 2014. position or performance.
 PFRS 10, Consolidated Financial Statements
The Jollibee Group adopted PFRS 10 in the current year. PFRS 10 replaced the portion of PAS 27,
2. Basis of Preparation, Statement of Compliance, Accounting Policies, Restatement of
Consolidated and Separate Financial Statements. It also included the issues raised in Standing
Comparative Financial Statements and Basis of Consolidation
Interpretations Committee (SIC) 12, Consolidation - Special Purpose Entities. PFRS 10 established a
Basis of Preparation single control model that applied to all entities including special purpose entities. The changes
The consolidated financial statements of the Jollibee Group have been prepared on a historical cost introduced by PFRS 10 require management to exercise significant judgment to determine which
basis, except for the derivative liability and certain available-for-sale (AFS) financial assets, which are entities are controlled, and therefore, are required to be consolidated by a parent, compared with
measured at fair value. The consolidated financial statements are presented in Philippine peso, which is the requirements that were in PAS 27. The adoption of the new standard did not have a significant
the Parent Company’s functional and presentation currency. impact on the financial position and performance of the Jollibee Group.
Statement of Compliance  PFRS 11, Joint Arrangements
The accompanying financial statements have been prepared in compliance with Philippine Financial
PFRS 11 replaced PAS 31, Interests in Joint Ventures, and SIC 13, Jointly Controlled Entities Non-
Reporting Standards (PFRS).
Monetary Contributions by Venturers. PFRS 11 removed the option to account for jointly controlled
Changes in Accounting Policies entities using proportionate consolidation. Instead, jointly controlled entities that meet the
The accounting policies adopted are consistent with those of the previous financial year, except for definition of a joint venture must be accounted for using the equity method. The adoption of
the adoption of the following new PFRSs and amendments to existing PFRS and PAS which became the new standard did not have a significant impact on the financial position and performance of
effective on January 1, 2013: the Jollibee Group.
 Amendments to PFRS 1, First-time Adoption of Philippine Financial Reporting Standards - Government  PFRS 12, Disclosure of Interests in Other Entities
Loans
PFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries,
The amendments to PFRS 1 require first-time adopters to apply the requirements of PAS 20, joint arrangements, associates and structured entities. The requirements in PFRS 12 are more
Accounting for Government Grants and Disclosure of Government Assistance, prospectively to comprehensive than the previously existing disclosure requirements for subsidiaries (for example,
government loans existing at the date of transition to PFRS. However, entities may choose to where a subsidiary is controlled with less than a majority of voting rights). While the Jollibee
apply the requirements of PAS 39, Financial Instruments: Recognition and Measurement, and Group has subsidiaries with material non-controlling interests, joint ventures and an associate,
PAS 20 to government loans retrospectively if the information needed to do so had been there are no unconsolidated structured entities. PFRS 12 disclosures are provided in Note 11 to
obtained at the time of initially accounting for those loans. These amendments are not relevant the consolidated financial statements.
to the Jollibee Group.
 PFRS 13, Fair Value Measurement
 Amendments to PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial
PFRS13 establishes a single source of guidance under PFRS for all fair value measurements. PFRS
Liabilities
13 does not change when an entity is required to use fair value, but rather provides guidance on
These amendments require an entity to disclose information about rights of set-off and related how to measure fair value under PFRS when fair value is required or permitted. The application
arrangements (such as collateral agreements). The new disclosures are required for all recognized of PFRS 13 has not materially impacted the fair value measurements carried out by the Jollibee
financial instruments that are set-off in accordance with PAS 32. These disclosures also apply to Group. PFRS 13 also requires specific disclosures on fair values, some of which replace existing
43
disclosure requirements in other standards, including PFRS 7. The Jollibee Group provides these Years Ended
disclosures in the individual notes relating to the assets and liabilities whose fair values were 2013 2012 2011
determined. Fair value hierarchy is provided in Note 31. Consolidated statements of comprehensive income
Increase (decrease) in:
 Amendments to PAS 1, Presentation of Financial Statements - Presentation of Items of Other General and administrative expenses P− P1,477,996 (P86,959,970)
Comprehensive Income or OCI Income before income tax − 1,477,996 86,959,970
Provision for income tax − (410,942) (23,271,808)
The amendments to PAS 1 introduced a grouping of items presented in OCI. Items that Net income − (1,067,054) 63,688,162
will be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon Net income attributable to:
derecognition or settlement) will be presented separately from items that will never be recycled. Equity holders of the Parent Company − (1,067,054) 63,688,162
The amendments affect presentation only and have no impact on the Jollibee Group’s financial Non-controlling interests − − −
position or performance. Basic earnings per share − (0.001) 0.030
Diluted earnings per share − (0.001) 0.029
 PAS 19, Employee Benefits (Revised) Remeasurement gain (loss) on net defined benefit plan (350,596,092) (500,959,899) 182,335,526
Income tax relating to pension remeasurement gains/
For defined benefit plans, the Revised PAS 19 requires all actuarial gains and losses to be losses (103,199,623) (147,573,758) 53,607,127
recognized in OCI and unvested past service costs previously recognized over the average vesting Other comprehensive income (247,396,469) (353,386,141) 128,728,399
period to be recognized immediately in profit or loss when incurred. Prior to adoption of the Total comprehensive income (247,396,469) (354,453,195) 192,416,561
Revised PAS 19, the Jollibee Group recognized actuarial gains and losses as income or expense Total comprehensive income attributable to:
when the net cumulative unrecognized gains and losses for each individual plan at the end of the Equity holders of the parent (247,396,469) (354,453,195) 192,416,561
previous period exceeded 10% of the higher of the present value of the defined benefit obligation Non-controlling interests − − −
and the fair value of the plan assets and recognized unvested past service costs as an expense
The adoption did not have an impact on consolidated statement of cash flows.
on a straight-line basis over the average vesting period until the benefits become vested. Upon
adoption of the Revised PAS 19, the Jollibee Group changed its accounting policy to recognize all This revised standard also requires more extensive disclosures. The disclosures are provided in
actuarial gains and losses in OCI and all past service costs in profit or loss in the period they occur. Note 25. Revised PAS 19 has been applied retrospectively, with following permitted exceptions:
The Revised PAS 19 replaced the interest cost and expected return on plan assets with the concept
a) The carrying amounts of other assets have not been adjusted for changes in employee
of net interest on defined benefit liability or asset which is calculated by multiplying the net
benefit costs that were included before 1 January 2012; and
balance sheet defined benefit liability or asset by the discount rate used to measure the employee
benefit obligation, each as at the beginning of the annual period. b) Sensitivity disclosures for the defined benefit obligation for comparative period,
December 31, 2012, have not been provided.
The Revised PAS 19 also amended the definition of short-term employee benefits and requires
 PAS 27, Separate Financial Statements (As Revised in 2011)
employee benefits to be classified as short-term based on expected timing of settlement rather
than the employee’s entitlement to the benefits. In addition, the Revised PAS 19 modifies the As a consequence of the issuance of the new PFRS 10, Consolidated Financial Statements, and
timing of recognition for termination benefits. The modification requires the termination benefits PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for
to be recognized at the earlier of when the offer cannot be withdrawn or when the related subsidiaries, jointly controlled entities, and associates in the separate financial statements. The
restructuring costs are recognized. adoption of the amended PAS 27 did not have a significant impact on the separate or stand-alone
financial statements of the entities in the Jollibee Group.
Changes to definition of short-term employee benefits and timing of recognition for termination
benefits do not have any impact to the Jollibee Group’s financial position and financial  PAS 28, Investments in Associates and Joint Ventures (As Revised in 2011)
performance. As a consequence of the issuance of the new PFRS 11, Joint Arrangements, and PFRS 12, Disclosure
The Jollibee Group applied Revised PAS 19 retrospectively in the current period in accordance of Interests in Other Entities, PAS 28 has been renamed PAS 28, Investments in Associates and Joint
with the transitional provisions set out in the revised standard. The opening consolidated Ventures, and describes the application of the equity method to investments in joint ventures in
statement of financial position of the earliest comparative period presented, January 1, 2012, and addition to associates. The adoption of the amended PAS 28 did not have a significant impact on
the comparative figures have been accordingly restated. The changes in accounting policies have the separate or stand-alone financial statements of the entities in the Jollibee Group.
been applied retrospectively. The effects of adoption on the consolidated financial statements  Philippine Interpretation of International Financial Reporting Interpretations Committee
are as follows: (IFRIC) 20, Stripping Costs in the Production Phase of a Surface Mine
December 31, December 31, January 1, This interpretation applies to waste removal (stripping) costs incurred in surface mining activity,
2013 2012 2012 during the production phase of the mine. The interpretation addresses the accounting for the
Consolidated statements of financial position
Increase (decrease) in:
benefit from the stripping activity. This new interpretation is not relevant to the Jollibee Group.
Pension liability P406,535,327 P502,437,895 (P269,295,496)
Deferred tax assets - net 117,994,172 147,984,700 (53,607,127)
Pension remeasurement gains/losses (288,541,155) (353,386,141) 128,728,399
Retained earnings (1,067,054) (1,067,054) 63,688,162
 Annual Improvements to PFRSs (2009-2011 Cycle) Early Adoption of Amendments to Standards

On January 1, 2013, the Jollibee Group early adopted the Amendments to PAS 36, Impairment of
The Annual Improvements to PFRSs (2009-2011 Cycle) contain non-urgent but necessary
Assets - Recoverable Amount Disclosures for Non-Financial Assets.
amendments to PFRSs. The Jollibee Group adopted these amendments for the current year.
These amendments remove the unintended consequences of PFRS 13 on the disclosures required
 PFRS 1, First-time Adoption of PFRS - Borrowing Costs
under PAS 36. In addition, these amendments require disclosure of the recoverable amounts for the
The amendment clarifies that, upon adoption of PFRS, an entity that capitalized borrowing assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed
costs in accordance with its previous generally accepted accounting principles, may carry during the period. These amendments are effective retrospectively for annual periods beginning
forward, without any adjustment, the amount previously capitalized in its opening statement on or after January 1, 2014 with earlier application permitted, provided PFRS 13 is also applied. The
of financial position at the date of transition. Subsequent to the adoption of PFRS, borrowing amendments affect disclosures only and has no significant impact on the Jollibee Group’s financial
costs are recognized in accordance with PAS 23, Borrowing Costs. The amendment does not position or performance.
apply to the Jollibee Group.
New Accounting Standards, Interpretations and Amendments to Existing Standards Effective
 PAS 1, Presentation of Financial Statements - Clarification of the Requirements for Comparative Subsequent to December 31, 2013
Information The Jollibee Group will adopt the following revised standards, interpretations and amendments when
these become effective.
These amendments clarify the requirements for comparative information that are disclosed
voluntarily and those that are mandatory due to retrospective application of an accounting Effective January 1, 2014 (Unless otherwise indicated)
policy, or retrospective restatement or reclassification of items in the financial statements.
 Amendments to PFRS 10, PFRS 12 and PAS 27, Investment Entities
An entity must include comparative information in the related notes to the financial
statements when it voluntarily provides comparative information beyond the minimum These amendments are effective for annual periods beginning on or after January 1, 2014. They
required comparative period. The additional comparative period does not need to contain provide an exception to the consolidation requirement for entities that meet the definition of an
a complete set of financial statements. On the other hand, supporting notes for the third investment entity under PFRS 10. The exception to consolidation requires investment entities to
statement of financial position (mandatory when there is a retrospective application of an account for subsidiaries at fair value through profit or loss. It is not expected that this amendment
accounting policy, or retrospective restatement or reclassification of items in the financial would be relevant to the Jollibee Group since none of the entities in the Jollibee Group would
statements) are not required. As a result, the Jollibee Group has not included comparative qualify to be an investment entity under PFRS 10.
information in respect of the opening statement of financial position as at January 1, 2012
 Philippine Interpretation IFRIC 21, Levies
relating to the accounts affected by the adoption of the Revised PAS 19. The amendments
affect disclosures only and have no impact on the Jollibee Group’s financial position or Philippine IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that
performance. triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon
reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated
 PAS 16, Property, Plant and Equipment - Classification of Servicing Equipment
before the specified minimum threshold is reached. Philippine IFRIC 21 is effective for annual
The amendment clarifies that spare parts, stand-by equipment and servicing equipment periods beginning on or after January 1, 2014. The Jollibee Group does not expect that Philippine
should be recognized as property, plant and equipment when they meet the definition of IFRIC 21 will have material financial impact in its future financial statements.
property, plant and equipment and should be recognized as inventory if otherwise. The
 Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial
amendment does not have any significant impact on the Jollibee Group’s financial position
Liabilities
or performance.
These amendments to PAS 32 clarify the meaning of “currently has a legally enforceable right
 PAS 32, Financial Instruments: Presentation - Tax Effect of Distribution to Holders of Equity
to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems
Instruments
(such as central clearing house systems) which apply gross settlement mechanisms that are not
The amendment clarifies that income taxes relating to distributions to equity holders and simultaneous. The amendments will have no significant impact on the Jollibee Group’s financial
to transaction costs of an equity transaction are accounted for in accordance with PAS 12, position or performance.
Income Taxes. The amendment does not have any significant impact on the Jollibee Group’s
 Amendments to PAS 39, Financial Instruments: Recognition and Measurement - Novation of
financial position or performance.
Derivatives and Continuation of Hedge Accounting
 PAS 34, Interim Financial Reporting - Interim Financial Reporting and Segment Information for
These amendments provide relief from discontinuing hedge accounting when novation of
Total Assets and Liabilities
a derivative designated as a hedging instrument meets certain criteria. These amendments
The amendment clarifies that the total assets and liabilities for a particular reportable are effective for annual periods beginning on or after January 1, 2014. The Jollibee Group has
segment need to be disclosed only when the amounts are regularly provided to the chief not novated its derivatives during the current period. However, these amendments would be
operating decision maker and there has been a material change from the amount disclosed considered for future novations.
in the entity’s previous annual financial statements for that reportable segment. The
amendment affects disclosures only and has no impact on the Jollibee Group’s financial
position or performance.
45
Effective January 1, 2015 (Unless otherwise indicated)  PAS 16, Property, Plant and Equipment - Revaluation Method - Proportionate Restatement of
Accumulated Depreciation
 Amendments to PAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions
The amendment clarifies that, upon revaluation of an item of property, plant and equipment,
The amendments apply to contributions from employees or third parties to defined benefit
the carrying amount of the asset shall be adjusted to the revalued amount, and the asset
plans. Contributions that are set out in the formal terms of the plan shall be accounted for as
shall be treated in one of the following ways:
reductions to current service costs if they are linked to service or as part of the remeasurements
of the net defined benefit asset or liability if they are not linked to service. Contributions that are a) The gross carrying amount is adjusted in a manner that is consistent with the
discretionary shall be accounted for as reductions of current service cost upon payment of these revaluation of the carrying amount of the asset. The accumulated depreciation
contributions to the plans. The amendments to PAS 19 are to be retrospectively applied for annual at the date of revaluation is adjusted to equal the difference between the gross
periods beginning on or after July 1, 2014. The amendment will have no significant impact on the carrying amount and the carrying amount of the asset after taking into account any
Jollibee Group’s financial position or performance. accumulated impairment losses.
 Annual Improvements to PFRSs (2010-2012 Cycle) b) The accumulated depreciation is eliminated against the gross carrying amount
of the asset.
The Annual Improvements to PFRSs (2010-2012 Cycle) contain non-urgent but necessary
amendments to the following standards: The amendment is effective for annual periods beginning on or after July 1, 2014. The
amendment shall apply to all revaluations recognized in annual periods beginning on or
 PFRS 2, Share-based Payment - Definition of Vesting Condition
after the date of initial application of this amendment and in the immediately preceding
The amendment revised the definitions of vesting condition and market condition and annual period. The amendment will have no impact on the Jollibee Group’s financial
added the definitions of performance condition and service condition to clarify various position or performance.
issues. This amendment shall be prospectively applied to share-based payment transactions
 PAS 24, Related Party Disclosures - Key Management Personnel
for which the grant date is on or after July 1, 2014. The amendments will have no significant
impact on the Jollibee Group’s financial position or performance. The amendments clarify that an entity is a related party of the reporting entity if the
said entity, or any member of a group for which it is a part of, provides key management
 PFRS 3, Business Combinations - Accounting for Contingent Consideration in a Business
personnel services to the reporting entity or to the parent company of the reporting
Combination
entity. The amendments also clarify that a reporting entity that obtains management
The amendment clarifies that a contingent consideration that meets the definition of a personnel services from another entity (also referred to as management entity) is not
financial instrument should be classified as a financial liability or as equity in accordance required to disclose the compensation paid or payable by the management entity to its
with PAS 32. Contingent consideration that is not classified as equity is subsequently employees or directors. The reporting entity is required to disclose the amounts incurred
measured at fair value through profit or loss whether or not it falls within the scope of for the key management personnel services provided by a separate management entity.
PFRS 9 (or PAS 39, if PFRS 9 is not yet adopted). The amendment shall be prospectively The amendments are effective for annual periods beginning on or after July 1, 2014 and
applied to business combinations for which the acquisition date is on or after July 1, 2014. are applied retrospectively. The amendments will affect disclosures only and will have no
The Jollibee Group shall consider this amendment for future business combinations. significant impact on the Jollibee Group’s financial position or performance.
 PFRS 8, Operating Segments - Aggregation of Operating Segments and Reconciliation of the  PAS 38, Intangible Assets - Revaluation Method - Proportionate Restatement of Accumulated
Total of the Reportable Segments’ Assets to the Entity’s Assets Amortization
The amendments require entities to disclose the judgment made by management in The amendments clarify that, upon revaluation of an intangible asset, the carrying amount
aggregating two or more operating segments. This disclosure should include a brief of the asset shall be adjusted to the revalued amount, and the asset shall be treated in one
description of the operating segments that have been aggregated in this way and the of the following ways:
economic indicators that have been assessed in determining that the aggregated operating
a) The gross carrying amount is adjusted in a manner that is consistent with the
segments share similar economic characteristics. The amendments also clarify that an entity
revaluation of the carrying amount of the asset. The accumulated amortization
shall provide reconciliations of the total of the reportable segments’ assets to the entity’s
at the date of revaluation is adjusted to equal the difference between the gross
assets if such amounts are regularly provided to the chief operating decision maker. These
carrying amount and the carrying amount of the asset after taking into account any
amendments are effective for annual periods beginning on or after July 1, 2014 and are
accumulated impairment losses.
applied retrospectively. The amendments will have no impact on the Jollibee Group’s
financial position or performance. b) The accumulated amortization is eliminated against the gross carrying amount of
the asset.
 PFRS 13, Fair Value Measurement - Short-term Receivables and Payables
The amendments also clarify that the amount of the adjustment of the accumulated
The amendment clarifies that short-term receivables and payables with no stated interest
amortization should form part of the increase or decrease in the carrying amount accounted
rates can be held at invoice amounts when the effect of discounting is immaterial. The
for in accordance with the standard.
amendment is immaterial to the Jollibee Group’s financial position or performance.
The amendments are effective for annual periods beginning on or after July 1, 2014. The All other debt instruments are subsequently measured at fair value through profit or loss. All
amendments shall apply to all revaluations recognized in annual periods beginning on or equity financial assets are measured at fair value either through OCI or profit or loss. Equity
after the date of initial application of this amendment and in the immediately preceding financial assets held for trading must be measured at fair value through profit or loss. For
annual period. The amendments will have no impact on the Jollibee Group’s financial FVO liabilities designated as at FVPL using the fair value option, the amount of change in the
position or performance. fair value of a liability that is attributable to changes in credit risk must be presented in OCI.
The remainder of the change in fair value is presented in profit or loss, unless presentation
 Annual Improvements to PFRSs (2011-2013 Cycle)
of the fair value change relating to the entity’s own credit risk in respect of the liability’s
The Annual Improvements to PFRSs (2011-2013 Cycle) contain non-urgent but necessary credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. All other
amendments to the following standards: PAS 39 classification and measurement requirements for financial liabilities have been
carried forward to PFRS 9, including the embedded derivative bifurcation separation rules
 PFRS 1, First-time Adoption of Philippine Financial Reporting Standards - Meaning of ‘Effective
and the criteria for using the FVO. The adoption of the first phase of PFRS 9 will have an
PFRSs’
effect on the classification and measurement of the Jollibee Group’s financial assets, but
The amendment clarifies that an entity may choose to apply either a current standard or a will potentially have no impact on the classification and measurement of financial liabilities.
new standard that is not yet mandatory, but that permits early application, provided either
standard is applied consistently throughout the periods presented in the entity’s first PFRS On hedge accounting, PFRS 9 replaces the rules-based hedge accounting model of PAS 39
financial statements. This amendment is not applicable to the Jollibee Group. with a more principles-based approach. Changes include replacing the rules-based hedge
effectiveness test with an objectives-based test that focuses on the economic relationship
 PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangements
between the hedged item and the hedging instrument, and the effect of credit risk on that
The amendment clarifies that PFRS 3 does not apply to the accounting for the formation economic relationship; allowing risk components to be designated as the hedged item, not
of a joint arrangement in the financial statements of the joint arrangement itself. The only for financial items, but also for non-financial items, provided that the risk component is
amendment is effective for annual periods beginning on or after July 1, 2014 and is applied separately identifiable and reliably measurable; and allowing the time value of an option, the
prospectively. This amendment will not have any significant impact on the Jollibee Group’s forward element of a forward contract and any foreign currency basis spread to be excluded
financial position and performance. from the designation of a financial instrument as the hedging instrument and accounted for
 PFRS 13, Fair Value Measurement - Portfolio Exception as costs of hedging. PFRS 9 also requires more extensive disclosures for hedge accounting.
The amendment clarifies that the portfolio exception in PFRS 13 can be applied to financial PFRS 9 currently has no mandatory effective date. PFRS 9 may be applied before the
assets, financial liabilities and other contracts. The amendment is effective for annual periods completion of the limited amendments to the classification and measurement model
beginning on or after July 1, 2014 and is applied prospectively. The amendment will have no and impairment methodology. The Jollibee Group will not adopt the standard before the
significant impact on the Jollibee Group’s financial position or performance. completion of the limited amendments and the second phase of the project.
 PAS 40, Investment Property With Deferred Effective Date
The amendment clarifies the interrelationship between PFRS 3 and PAS 40 when classifying  Philippine Interpretation IFRIC 15, Agreements of Construction of Real Estate
property as investment property or owner-occupied property. The amendment stated that This interpretation covers accounting for revenue and associated expenses by entities
judgment is needed when determining whether the acquisition of investment property that undertake the construction of real estate directly or through subcontractors. The
is the acquisition of an asset or a group of assets or a business combination within the interpretation requires that revenue on construction of real estate be recognized only upon
scope of PFRS 3. This judgment is based on the guidance of PFRS 3. This amendment is completion, except when such contract qualifies as construction contract to be accounted
effective for annual periods beginning on or after July 1, 2014 and is applied prospectively. for under PAS 11, Construction Contracts, or involves rendering of services in which case
The amendment will have no significant impact on the Jollibee Group’s financial position or revenue is recognized based on stage of completion. Contracts involving provision of
performance. services with the construction materials and where the risks and reward of ownership are
With No Mandatory Effective Date transferred to the buyer on a continuous basis will also be accounted for based on stage of
completion. The Securities and Exchange Commission (SEC) and the Financial Reporting
 PFRS 9, Financial Instruments Standards Council have deferred the effectivity of this interpretation until the final Revenue
PFRS 9, as issued, reflects the first and third phases of the project to replace PAS 39 and standard is issued by the International Accounting Standards Board and an evaluation of the
applies to the classification and measurement of financial assets and liabilities and hedge requirements of the final Revenue standard against the practices of the Philippine real estate
accounting, respectively. Work on the second phase, which relates to impairment of industry is completed. The amendment will not have significant impact on the Jollibee
financial instruments, and the limited amendments to the classification and measurement Group’s statements of financial position and performance.
model hedge accounting is still ongoing, with a view to replace PAS 39 in its entirety. Restatement of Comparative 2012 Financial Statements
PFRS 9 requires all financial assets to be measured at fair value at initial recognition. A debt On March 9, 2012, the Jollibee Group, through its wholly-owned subsidiary, completed its acquisition
financial asset may, if the fair value option (FVO) is not invoked, be subsequently measured at of 55% of Guangxi San Pin Wang Food and Beverage Management Company (“San Pin Wang”) which
amortized cost if it is held within a business model that has the objective to hold the assets operates the San Pin Wang noodle business in South China for a total acquisition cost of People’s
to collect the contractual cash flows and its contractual terms give rise, on specified dates, Republic of China (PRC) renminbi (RMB) 30 million (or P195.9 million).
to cash flows that are solely payments of principal and interest on the principal outstanding.
47
In 2013, the valuation of the acquired net assets was completed resulting to the recognition of a Non-controlling interests represent the interests in the subsidiaries not held by the Parent Company, and
contingent consideration and deferred tax asset and a corresponding increase in the amount of are presented separately in the consolidated statement of income and within equity in the consolidated
goodwill amounting to P121.7 million (see Note 14). balance sheet, separately from equity attributable to holders of the Parent Company.
In accordance with PFRS 3, the Jollibee Group restated its comparative 2012 consolidated financial The consolidated financial statements include the accounts of the Parent Company and the following
statements to reflect the results of the recognition of the contingent consideration as if the information wholly-owned and majority-owned subsidiaries as at December 31, 2013 and 2012:
existed as of the acquisition date.
2013 2012
Basis of Consolidation Country of Principal Direct Indirect Direct Indirect
The consolidated financial statements comprise the financial statements of the Parent Company Incorporation Activities Ownership Ownership Ownership Ownership
and its subsidiaries as at December 31, 2013 and 2012 of each year and for the three years ended Fresh N’ Famous Foods, Inc. (Fresh N’
Famous): Philippines Food service 100 – 100 –
December 31, 2013, 2012 and 2011. Chowking Food Corporation USA United States
of America
Control is achieved when the Jollibee Group is exposed, or has rights, to variable returns from its
(USA) Holding company – 100 – 100
involvement with the investee and has the ability to affect those returns through its power over the Zenith Foods Corporation (Zenith) Philippines Food service 100 – 100 –
investee. Specifically, the Jollibee Group controls an investee if and only if the Jollibee Group has: Freemont Foods Corporation (Freemont) Philippines Food service 100 – 100 –
RRB Holdings, Inc. (RRBHI): Philippines Holding company 100 – 100 –
 Power over the investee (i.e., existing rights that give it the current ability to direct the relevant Red Ribbon Bakeshop, Inc. (RRBI) Philippines Food service – 100 – 100
activities of the investee); Red Ribbon Bakeshop, Inc. USA (RRBI
 Exposure, or rights, to variable returns from its involvement with the investee; and USA) USA Food service – 100 – 100
Mang Inasal Philippines Inc. (Mang Inasal) Philippines Food service 70 – 70 –
 The ability to use its power over the investee to affect its returns. Grandworth Resources Corporation
(Grandworth): Philippines Leasing 100 – 100 –
When the Jollibee Group has less than a majority of the voting or similar rights of an investee, the Adgraphix, Inc. (Adgraphix) Philippines Digital printing – 100 – 100
Jollibee Group considers all relevant facts and circumstances in assessing whether it has power over an IConnect Multimedia Network, Inc.
investee, including: (IConnect) Philippines Advertising – 60 – 60
JC Properties & Ventures Corp. Philippines Inactive – 50 – 50
 The contractual arrangement with the other vote holders of the investee; Honeybee Foods Corporation (Honeybee): USA Food service 100 – 100 –
 Rights arising from other contractual arrangements; or Tokyo Teriyaki Corporation (TTC) USA Food service – 100 – 100
 The Jollibee Group’s voting rights and potential voting rights. Jollibee Worldwide Pte. Ltd. (JWPL): Singapore Holding company 100 – 100 –
Regional Operating Headquarters of Philippines Financial
The Jollibee Group re-assesses whether or not it controls an investee if facts and circumstances indicate JWPL (JWS) accounting,
human
that there are changes to one or more of the three elements of control. Consolidation of a subsidiary resources
begins when the Jollibee Group obtains control over the subsidiary and ceases when the Jollibee and logistics
Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired services – 100 – 100
or disposed of during the year are included in the consolidated financial statements from the date the Golden Plate Pte., Ltd. (GPPL) Singapore Holding company – 100 – 100
Golden Beeworks Pte. Ltd. Singapore Food service – 60 – 60
Jollibee Group gains control until the date the Jollibee Group ceases to control the subsidiary. Beijing New Hongzhuangyuan Food and PRC Food service – 100 – 100
Beverage Management Co., Ltd.
Profit or loss and each component of OCI are attributed to the equity holders of the Parent Company (Hong Zhuang Yuan)
and to the non-controlling interests, even if this results in the non-controlling interests having a deficit Southsea Binaries Ltd. (Southsea) British Virgin Holding – 100 – 100
balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring Island (BVI) company
their accounting policies into line with the Jollibee Group’s accounting policies. All intra-group assets Shanghai Yong He King Food and PRC Food service – 100 – 100
Beverage Co., Ltd.
and liabilities, equity, income, expenses and cash flows relating to transactions between members of Beijing Yong He King Food and Beverage PRC Food service – 100 – 100
the Jollibee Group are eliminated in full on consolidation. Co., Ltd.
Shenzhen Yong He King Food and PRC Food service – 100 – 100
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an Beverage Co., Ltd.
equity transaction. If the Jollibee Group loses control over a subsidiary, it: Hangzhou Yongtong Food and Beverage PRC Food service – 100 – 100
Co., Ltd.
 Derecognizes the assets (including goodwill) and liabilities of the subsidiary; Hangzhou Yong He Food and Beverage PRC Food service – 100 – 100
 Derecognizes the carrying amount of any non-controlling interests; Co., Ltd.
Wuhan Yong He King Food and Beverage PRC Food service – 100 – 100
 Derecognizes the cumulative translation differences recorded in equity; Co., Ltd.
 Recognizes the fair value of the consideration received; Tianjin Yong He King Food and Beverage PRC Food service – 100 – 100
 Recognizes the fair value of any investment retained; Co., Ltd.
 Recognizes any surplus or deficit in profit or loss; and Guangxi San Pin Wang Food and PRC Food service – 55 – 55
Beverage Management Company
 Reclassifies the parent’s share of components previously recognized in OCI to profit or loss or Limited (San Pin Wang)
retained earnings, as appropriate, as would be required if the Jollibee Group had directly disposed Jollibee Foods Processing Singapore Holding – 70 – 70
of the related assets or liabilities. Co. Ltd. (JFPPL) company
2013 2012 All other assets are classified as noncurrent. A liability is classified as current when:
Country of Principal Direct Indirect Direct Indirect
Incorporation Activities Ownership Ownership Ownership Ownership  It is expected to be settled in the normal operating cycle;
- Jollibee Foods Processing (Anhui) PRC Food service – 100 – 100  It is held primarily for the purpose of trading;
Co. Ltd.  It is due to be settled within twelve months after the reporting period; or
JSF Investments Pte. Ltd. (JSF) Singapore Holding – 99 – 99  There is no unconditional right to defer the settlement of the liability for at least twelve months
company
Chow Fun Holdings LLC (Chow Fun) USA Food service – 81 – 81
after the reporting period.
Jollibee (China) Food & Beverage PRC Management – 100 – 100 The Jollibee Group classifies all other liabilities as noncurrent. Deferred tax assets and liabilities are
Management Co. Ltd. (formerly company classified as noncurrent assets and liabilities.
Shanghai Chunlv Co. Ltd)
Jollibee International (BVI) Ltd. (JIBL): BVI Holding – 100 – 100 Fair Value Measurement
company Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
- Jollibee Vietnam Corporation Ltd. Vietnam Food service – 100 – 100
- PT Chowking Indonesia Indonesia Food service – 100 – 100
transaction between market participants at the measurement date. The fair value measurement is
- PT Jollibee Indonesia Indonesia Dormant – 100 – 100 based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- Jollibee (Hong Kong) Limited and Hong Kong Dormant – 85 – 85
Subsidiaries  In the principal market for the asset or liability; or
- Belmont Enterprises Ventures Limited BVI Holding company – 100 – 100  In the absence of a principal market, in the most advantageous market for the asset or liability.
(Belmont):
• Shanghai Belmont Enterprises PRC Business – 100 – 100 The principal or the most advantageous market must be accessible by the Jollibee Group.
Management and Adviser management
Co., Ltd. (SBEMAC) service The fair value of an asset or a liability is measured using the assumptions that market participants would
• Yong He Holdings Co., Ltd.: BVI Holding company – 100 – 100 use when pricing the asset or liability, assuming that market participants act in their economic best
 Centenary Ventures Limited BVI Holding company – 100 – 100 interest. A fair value measurement of a non-financial asset takes into account a market participant’s
 Colossus Global Limited (a)
BVI Dormant – – – 100
ability to generate economic benefits by using the asset in its highest and best use or by selling it to
 Granite Management BVI Dormant – – – 100
Limited(a) another market participant that would use the asset in its highest and best use.
 Cosmic Resources Limited(a) BVI Dormant – – – 100
The fair value for financial instruments traded in active markets at the reporting date is based on their
• All Great Resources Limited(a) BVI Dormant – – – 100
Chanceux, Inc. - Philippines Holding 100 – 100 – quoted price or binding dealer price quotations, without any deduction for transaction costs. Where
company the Jollibee Group has financial assets and financial liabilities with offsetting positions in market risks or
 BKTitans, Inc. (BKTitans) - Philippines Holding – 54 – 54 counterparty credit risk, it has elected to use the measurement exception to measure the fair value of its
company
- PFN Holdings, Corp. - Philippines Holding – 53 – 53
net risk exposure by applying the bid or ask price to the net open position as appropriate. For all other
company financial instruments not traded in an active market, the fair value is determined by using valuation
• Perf Restaurants, Inc. Philippines Food service – 53 – 53 techniques deemed to be appropriate in the circumstances. Valuation techniques include the market
Donut Magic Phils., Inc. (Donut Magic)(b) Philippines Dormant 100 – 100 – approach (i.e., using recent arm’s length market transactions adjusted as necessary and reference to the
Ice Cream Copenhagen Phils., Inc. (ICCP)(b) Philippines Dormant 100 – 100 –
Mary’s Foods Corporation (Mary’s)(b) Philippines Dormant 100 – 100 –
current market value of another instrument that is substantially the same) and the income approach
QSR Builders, Inc. Philippines Inactive 100 – 100 – (i.e., discounted cash flow analysis and option pricing models making as much use of available an
Jollibee USA USA Dormant 100 – 100 – supportable market data as possible).
(a) BVI dormant entities were dissolved on May 1, 2013. The Jollibee Group uses valuation techniques that are appropriate in the circumstances and for which
(b) Perf Restaurants, Inc. also holds shares in Perf Trinoma and Perf MOA. sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and
(c) On June 18, 2004, the stockholders of the Jollibee Group approved the Plan of Merger of the three dormant companies. The application is minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured
pending approval from the SEC as at December 31, 2013. or disclosed in the financial statements 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:
3. Significant Accounting Policies  Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
 Level 2 - Valuation techniques for which the lowest-level input that is significant to the fair
The Jollibee Group presents assets and liabilities in the consolidated statement of financial position value measurement is directly or indirectly observable
based on current/noncurrent classification. An asset is classified as current when it is:  Level 3 - Valuation techniques for which the lowest-level input that is significant to the fair
 Expected to be realized or intended to be sold or consumed in normal the operating cycle; value measurement is unobservable
 Held primarily for the purpose of trading; For assets and liabilities that are recognized in the consolidated financial statements on a recurring
 Expected to be realized within twelve months after the reporting period; or basis, the Jollibee Group determines whether transfers have occurred between levels in the hierarchy
 Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at by reassessing categorization (based on the lowest-level input that is significant to the fair value
least twelve months after the reporting period. measurement as a whole) at the end of each reporting period.
49
The Jollibee Group’s management determines the policies and procedures for both recurring fair value “Day 1” Difference. Where the transaction price in a non-active market is different from the fair value of
measurement and non-recurring measurement. At each reporting date, the management analyzes the other observable current market transactions in the same instrument or based on a valuation technique
movements in the values of assets and liabilities which are required to be remeasured or reassessed as whose variables include only data from observable market, the Jollibee Group recognizes the difference
per the Jollibee Group’s accounting policies. For this analysis, the management verifies the major inputs between the transaction price and fair value (a “Day 1” difference) in profit or loss unless it qualifies
applied in the latest valuation by agreeing the information in the valuation computation to contracts for recognition as some other type of asset or liability. In cases where unobservable data is used, the
and other relevant documents. difference between the transaction price and model value is only recognized in profit or loss when the
inputs become observable or when the instrument is derecognized. For each transaction, the Jollibee
For the purpose of fair value disclosures, the Jollibee Group has determined classes of assets and
Group determines the appropriate method of recognizing the “Day 1”difference amount.
liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair
value hierarchy as explained above. Financial Assets
Cash and Cash Equivalents Financial Assets at FVPL. Financial assets at FVPL include financial assets held-for-trading and financial
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments assets designated as at FVPL upon initial recognition.
that are readily convertible to known amounts of cash with original maturities of three months or less
Financial assets are classified as held-for-trading if they are acquired for the purpose of selling in the near
from the date of acquisition and are subject to an insignificant risk of change in value.
term. Gains or losses on investments held-for-trading are recognized in profit or loss.
Financial Instruments
Financial assets may be designated as at FVPL at initial recognition if the following criteria are met:
Date of Recognition. The Jollibee Group recognizes a financial asset or a financial liability in the
 the designation eliminates or significantly reduces the inconsistent treatment that would
consolidated statements of financial position when it becomes a party to the contractual provisions
otherwise arise from measuring the assets or recognizing gains or losses on them on a different
of an instrument. In the case of a regular way purchase or sale of financial assets, recognition and
basis;
derecognition, as applicable, is done using trade date accounting. A regular way purchase or sale is a
purchase or sale of a financial asset under a contract whose terms require delivery of the asset within  the assets are part of a group of financial assets which are managed and their performance
the time frame established generally by regulation or convention in the market place concerned. evaluated on a fair value basis, in accordance with a documented risk management strategy; or
Financial instruments are classified as liability or equity in accordance with the substance of the  the financial asset contains an embedded derivative, unless the embedded derivative does not
contractual arrangement. Interest, dividends, gains or losses relating to financial instruments or significantly modify the cash flows or it is clear, with little or no analysis, that it would not be
a component that is financial liability are reported as expense or income. Distribution to holders of separately recorded.
financial instruments classified as equity is charged directly to equity, net of any related income tax
The Jollibee Group has no financial assets at FVPL as at December 31, 2013 and 2012.
benefits.
Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or
Initial Recognition and Measurement. Financial instruments are recognized initially at fair value, which is
determinable payments that are not quoted in an active market. They are not entered into with the
the fair value of the consideration given (in case of an asset) or received (in case of a liability). Transaction
intention of immediate or short-term resale and are not classified or designated as AFS financial assets
costs that are directly attributable to the acquisition or issue of the financial instruments are included
or financial assets at FVPL. After initial measurement, such financial assets are subsequently measured
in the initial measurement of all financial assets and liabilities, except for financial assets and liabilities
at amortized cost using the effective interest method, less any impairment in value. Amortized cost is
measured at fair value through profit or loss (FVPL).
calculated by taking into account any discount or premium on acquisition and fees or costs that are an
Subsequent to initial recognition, the Jollibee Group classifies its financial instruments in the following integral part of effective interest rate (EIR). Gains and losses are recognized in profit or loss when the
categories: financial assets and financial liabilities at FVPL, loans and receivables, held-to-maturity loans and receivables are derecognized or impaired, as well as through the amortization process.
(HTM) investments, AFS financial assets, other financial liabilities and derivatives designated as hedging
The Jollibee Group’s cash and cash equivalents, receivables, and security and other deposits are
instruments in an effective hedge. The classification depends on the purpose for which the instruments
classified under this category.
are acquired and as liabilities were incurred whether they are quoted in an active market. Management
determines the classification of its financial instruments at initial recognition and, where allowed and HTM Investments. Non-derivative financial assets with fixed or determinable payments and fixed
appropriate, re-evaluates this classification at every reporting date. maturity are classified as HTM when there is a positive intention and ability to hold to maturity. Financial
assets intended to be held for an undefined period are not included in this category. HTM investments
For all other financial instruments not traded in an active market, the fair value is determined using
are subsequently measured at amortized cost. This cost is computed as the amount initially recognized
appropriate valuation techniques. Valuation techniques include net present value techniques,
minus principal repayments, plus or minus the cumulative amortization using the effective interest
comparison to similar instruments for which observable market prices exist, option pricing models and
method of any difference between the initially recognized amount and the maturity amount less
other relevant valuation models for which sufficient data are available to measure fair value, maximizing
allowance for impairment. Amortized cost is calculated by taking into account any discount or premium
the use of relevant observable inputs and minimizing the use of unobservable inputs.
on acquisition and fees or costs that are an integral part of effective interest rate. Gains and losses are
Determination of Amortized Cost. The amortized cost of financial instruments is computed using the recognized in profit or loss when the financial assets are derecognized or impaired, as well as through
effective interest method less any allowance for impairment. The calculation takes into account any the amortization process.
premium or discount on acquisition and includes transaction costs and fees that are integral part of the
effective interest.
The Jollibee Group has no HTM investments as at December 31, 2013 and 2012. For the purpose of hedge accounting, derivatives can be designated as cash flow hedges or fair value
hedges, depending on the type of risk exposure.
AFS Financial Assets. AFS financial assets are non-derivative financial assets that are designated in this
category or are not classified in any of the other categories. AFS financial assets include equity and debt At the inception of a hedge relationship, the Jollibee Group formally designates and documents
securities. Equity investments classified as AFS are those which are intended to be held for an indefinite the hedge relationship to which the Jollibee Group wishes to apply hedge accounting and the risk
period of time and are neither classified as held-for-trading nor designated as at FVPL. Debt securities management objective and strategy for undertaking the hedge. The documentation includes
are those which are intended to be held for an indefinite period of time and which may be sold in identification of the hedging instrument, the hedged item or transaction, the nature of the risk being
response to needs of liquidity or in response to changes in market conditions. hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure
to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges
After initial measurement, AFS financial assets are subsequently measured at fair value with unrealized
are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are
gains or losses recognized as “Unrealized gains on available-for-sale financial assets” account in other
assessed on an ongoing basis to determine that they actually have been highly effective throughout
comprehensive income until the financial asset is derecognized or determined to be impaired at which
the financial reporting periods for which they were designated.
time the accumulated gains or losses previously reported in other comprehensive income are included
in profit or loss. Interest earned while holding AFS financial asset is reported as interest income using The Jollibee Group accounts for its cross-currency swaps as cash flow hedges of foreign exchange and
effective interest rate method. If the fair value cannot be measured reliably, AFS financial assets are interest rate exposure on its outstanding floating rate US-denominated loan of Perf (see Note 18).
measured at cost, being the fair value of the consideration paid for the acquisition of the investment,
Cash Flow Hedge. Cash flow hedges are hedges on the exposure to variability of cash flows that are
less any impairment in value. All transaction costs directly attributable to the acquisition are also
attributable to a particular risk associated with a recognized asset, liability or a highly probable forecast
included in the cost of investment.
transaction and could affect profit or loss. The effective portion of the gain or loss on the hedging
The Jollibee Group evaluates whether the ability and intention to sell its AFS financial assets in the instrument is recognized in the consolidated statements of comprehensive income and directly in
near term is still appropriate. When in rare circumstances, the Jollibee Group is unable to trade these equity, while the ineffective portion is recognized immediately in profit or loss.
financial assets due to inactive markets; the Jollibee Group may elect to reclassify these financial assets if
Amounts taken to equity are transferred to the profit or loss when the hedged transaction affects profit
the management has the ability and intention to hold the assets for foreseeable future or until maturity.
or loss, such as when hedged financial income or expense is recognized or when a forecast sale or
For a financial asset reclassified from AFS category, the fair value carrying amount at the date of purchase occurs. Where the hedged item is the cost of a nonfinancial asset or liability, the amounts
reclassification becomes its new amortized cost and any previous gain or loss on the asset that has taken to equity are transferred to the initial carrying amount of the nonfinancial asset or liability.
been recognized in equity is amortized to profit or loss over the remaining life of the investment using
If the forecast transaction is no longer expected to occur, amounts previously recognized in equity are
effective interest rate method. Any difference between the new amortized cost and the maturity
transferred to the consolidated statements of comprehensive income. If the hedging instrument expires
amount is also amortized over the remaining life of the asset using the EIR. If the asset is subsequently
or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is
determined to be impaired, then the amount recorded in equity is reclassified to profit or loss.
revoked, amounts previously recognized in equity remain in equity until the forecast transaction occurs.
The Jollibee Group’s investments in club shares are classified under this category as at December 31, If the related transaction is not expected to occur, the amount is recognized in the profit or loss.
2013. Club shares and shares in public utility companies were classified under this category as at
Other Financial Liabilities. This category pertains to financial liabilities that are not held-for-trading or
December 31, 2012.
not designated as at FVPL upon the inception of the liability where the substance of the contractual
Financial Liabilities arrangements results in the Jollibee Group having an obligation either to deliver cash or another
financial asset to the holder, or to exchange financial assets or financial liabilities with the holder under
Financial Liabilities at FVPL. Financial liabilities at FVPL include financial liabilities that are held-for-trading
conditions that are potentially unfavorable to the Jollibee Group. These include liabilities arising from
and financial liabilities designated as at FVPL upon initial recognition.
operations or borrowings.
Financial liabilities are classified as held-for-trading if acquired for the purpose of repurchasing in the
Other financial liabilities are recognized initially at fair value and are subsequently carried at amortized
near term. Gains or losses on liabilities held-for-trading are recognized in profit or loss.
cost, taking into account the impact of applying the effective interest method of amortization (or
The Jollibee Group has no financial liability classified under this category as at December 31, 2013 and accretion) for any related premium, discount and any directly attributable transaction costs. Gains
2012. and losses are recognized in profit or loss when the liabilities are derecognized, as well as through the
amortization process.
Derivative Financial Instruments and Hedge Accounting. The Jollibee Group uses currency swaps
to manage its foreign exchange and interest rate risk exposures on its United States Dollar (USD) This category includes long-term debt (including current portion), liability for acquisition of businesses
denominated variable rate loan. Accruals of interest on the receive-and pay-legs of the cross-currency (including current portion),trade payables and other current liabilities (excluding local and other taxes,
swap are recorded as interest expense in the consolidated statements of comprehensive income. and unearned revenue from gift certificates) and operating lease payable.
Derivative financial instruments are initially recognized at fair value on the date on which a derivative The components of issued financial instruments that contain both liability and equity elements are
contract is entered into and are subsequently measured at fair value. Derivatives are carried as assets accounted for separately, with the equity component being assigned the residual amount after
when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising deducting from the instrument as a whole the amount separately determined as the fair value of the
from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to liability component on the date of issue.
profit or loss.
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Debt Issue Costs recognized in other comprehensive income under “Unrealized gain (loss) on available-for-sale financial
Debt issue costs are deducted against long-term debt and are amortized over the terms of the related assets” account, is removed from equity and recognized in the profit or loss. Impairment losses on
borrowings using the effective interest method. equity investments are not reversed through profit or loss; increases in fair value after impairment are
recognized directly as other comprehensive income.
Impairment of Financial Assets
The Jollibee Group assesses at each reporting date whether a financial asset or a group of financial Derecognition of Financial Assets and Liabilities
assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if there
Financial Assets. A financial asset (or, where applicable a part of a financial asset or part of a group of
is objective evidence of impairment as a result of one or more events that occurred after the initial
similar financial assets) is derecognized when:
recognition of the asset (an incurred loss event) and that the loss event has an impact on the estimated
future cash flows of the financial asset or a group of financial assets that can be reliably estimated. (a) the rights to receive cash flows from the asset have expired;
Objective evidence of impairment may include indications that the borrower or a group of borrowers is
(b) the Jollibee Group retains the right to receive cash flows from the asset, but has assumed an
experiencing significant financial difficulty, default or delinquency in interest or principal payments, the
obligation to pay them in full without material delay to a third party under a “pass-through”
probability that they will enter bankruptcy or other financial reorganization and where observable data
arrangement; or
indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears
or economic conditions that correlate with defaults. (c) the Jollibee Group has transferred its rights to receive cash flows from the asset and either
(i) has transferred substantially all the risks and rewards of the asset, or (ii) has neither transferred
Loans and Receivables. The Jollibee Group first assesses whether objective evidence of impairment
nor retained substantially all the risks and rewards of the asset, but has transferred control of the
exists individually for financial assets that are individually significant or collectively for financial assets
asset.
that are not individually significant. If it is determined that no objective evidence of impairment exists
for an individually assessed financial asset, whether significant or not, the asset is included in a group When the Jollibee Group has transferred its rights to receive cash flows from the asset or has entered
of financial assets with similar credit risk characteristics and that group of financial assets is collectively into a “pass-through” arrangement, and neither transferred nor retained substantially all the risks and
assessed for impairment. Factors considered in individual assessment are payment history, past-due rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the
status and term, development affecting companies and specific issues with respect to the accounts. The Jollibee Group’s continuing involvement in the asset. In that case, the Jollibee Group also recognizes an
collective assessment would require the Jollibee Group to group its receivables based on the credit risk associated liability. The transferred asset and the associated liability are measured on a basis that reflects
characteristics (customer type, payment history, past-due status and term) of the customers. Changes the rights and obligations that the Jollibee Group has retained.
in circumstances may cause future assessment of credit risk to be materially different from current Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the
assessments, which could require an increase or decrease in the allowance account. The Jollibee Group lower of the original carrying amount of the asset and the maximum amount of the consideration that
also considers factors, such as, the type of assets, the financial condition or near term prospect of the the Jollibee Group could be required to pay.
related company or account, and the intent and ability to hold on the assets long enough to allow any
anticipated recovery. Assets that are individually assessed for impairment and for which an impairment Financial Liabilities. A financial liability is derecognized when the obligation under the liability is
loss is, or continues to be recognized, are not included in the collective assessment of impairment. discharged, cancelled or has expired.
If there is objective evidence that an impairment loss on loans and receivables has been incurred, the When an existing financial liability is replaced by another from the same lender on substantially different
amount of loss is measured as the difference between the asset’s carrying amount and the present value terms, or the terms of an existing liability are substantially modified, such an exchange or modification
of estimated future cash flows (excluding future credit losses that have not been incurred) discounted is treated as a derecognition of the original liability and the recognition of a new liability, and the
at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial difference in the respective carrying amounts is recognized in profit or loss.
recognition). If a loan has a variable interest rate, the discount rate for measuring any impairment Offsetting Financial Instruments
loss is the current effective interest rate. The carrying amount of the asset is reduced through the Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
use of an allowance account and the amount of loss is recognized in profit or loss under “General and statements of financial position if, and only if, there is a currently enforceable legal right to offset the
administrative expenses” account. Interest income continues to be recognized based on the original recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle
effective interest rate of the asset. Loans and receivables, together with the associated allowance, are the liability simultaneously.
written off when there is no realistic prospect of future recovery.
Inventories
If, in a subsequent year, the amount of the estimated impairment loss decreases because an event Inventories are valued at the lower of cost and net realizable value. Costs are accounted for as follows:
occurring after the impairment was recognized, the previously recognized impairment loss is reversed.
Any subsequent reversal of an impairment loss is recognized in profit or loss, to the extent that carrying Processed inventories - Standard costing basis, which costs are reviewed every
value of asset does not exceed its amortized cost at the reversal date. quarter and, if necessary, revised in the light of current
Quoted AFS Equity Investments. In the case of equity investments classified as AFS financial assets, an conditions. Cost includes direct materials and labor
objective evidence of impairment would include a significant or prolonged decline in the fair value of and a proportion of manufacturing overhead costs
the investments below its cost. ‘Significant’ is to be evaluated against the original cost of the investment based on normal operating capacity.
and ‘prolonged’ against the period in which the fair value has been below its original cost. When there
is evidence of impairment, the cumulative loss which is measured as the difference between the Food supplies, packaging, store and - Standard costing, which is reviewed on a quarterly
acquisition cost and the current fair value, less any impairment loss on that financial asset previously other supplies, and novelty items basis and revised as necessary to approximate current
costs.
Net realizable value of processed inventories is the estimated selling price in the ordinary course of Fully depreciated assets are retained in the accounts until they are no longer in use and no further
business, less estimated costs of completion and the estimated costs necessary to make the sale. depreciation and amortization is credited or charged to profit or loss.
Net realizable value of food supplies, packaging, store and other supplies is the current replacement Investment Properties
cost. Investment properties consist of land and buildings and building improvement sheld by the Jollibee
Group for capital appreciation and rental purposes. Investment properties, except land, are carried at
Net realizable value of novelty items is the estimated selling price in the ordinary course of business, less
cost, including transaction costs, less accumulated depreciation and amortization and any impairment
the estimated costs necessary to make the sale.
in value. Cost also includes the cost of replacing part of an existing investment property at the time that
Other Current Assets cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an
Other current assets include deposits which pertain to advance payments to suppliers to be applied for investment property. Land is carried at cost less any impairment in value.
future purchases, prepaid expenses which are paid in advance and recorded as asset before these are
The depreciation of buildings and building improvements are calculated on a straight-line basis over
utilized; and creditable withholding taxes, which represent claims for refund with the Bureau of Internal
the estimated useful lives of the assets which are five (5) to twenty (20) years.
Revenue.
The residual values, if any, useful lives and method of depreciation and amortization of the assets are
Property, Plant and Equipment
reviewed and adjusted, if appropriate, at each financial year-end.
Property, plant and equipment, except land, are stated at cost less accumulated depreciation and
amortization and any accumulated impairment in value. Such cost includes the cost of replacing part Investment property is derecognized when either it has been disposed of or when the investment
of property, plant and equipment at the time that cost is incurred, if the recognition criteria are met, and property is permanently withdrawn from use and no future economic benefit is expected from its
excludes the costs of day-to-day servicing. Land is stated at cost less any impairment in value. disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in
profit or loss in the year of retirement or disposal.
The initial cost of property, plant and equipment consists of its purchase price, including import duties
and taxes and any other costs directly attributable in bringing the asset to its working condition and Transfers to investment property are made only when there is a change in use, evidenced by ending
location for its intended use. Expenditures incurred after the property, plant and equipment have been of owner-occupation, or commencement of an operating lease to another party. Transfers from
put into operation, such as repairs and maintenance, are normally charged to income in the year in investment property are made only when there is a change in use, evidenced by commencement of
which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures owner-occupation or commencement of development with a view to sell.
have resulted in an increase in the future economic benefits expected to be obtained from the use of
Business Combinations
an item of property, plant and equipment beyond its originally assessed standard of performance, the
Business combinations are accounted for using the acquisition method. Applying the acquisition
expenditures are capitalized as additional costs of property, plant and equipment.
method requires the (a) determination whether the Jollibee Group will be identified as the acquirer,
Depreciation and amortization are calculated on a straight-line basis over the following estimated (b) determination of the acquisition-date, (c) recognition and measurement of the identifiable assets
useful lives of the assets: acquired, liabilities assumed and any non-controlling interest in the acquiree and (d) recognition and
measurement of goodwill or a gain from a bargain purchase.
Land improvements 5 years
Plant, buildings, condominium units and improvements 5 - 4 years When the Jollibee Group acquires a business, it assesses the financial assets and liabilities assumed
Leasehold rights and improvements 2 - 10 years or term of the lease, for appropriate classification and designation in accordance with the contractual terms, economic
whichever is shorter circumstances and pertinent conditions as at acquisition date.
Office, store and food processing equipment 2 -15 years The cost of an acquisition is measured as the aggregate of the (a) consideration transferred by the
Furniture and fixtures 3- 5 years Jollibee Group, measured at acquisition-date fair value, (b) amount of any non-controlling interest in
Transportation equipment 3 - 5 years the acquiree and (c) acquisition-date fair value of the Jollibee Group’s previously held equity interest
An item of property, plant and equipment is derecognized upon disposal or when no future economic in the acquiree in a business combination achieved in stages. Acquisition costs incurred are expensed
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset and included in “General and administrative expenses”account in the consolidated statements of
(calculated as the difference between the disposal proceeds and the carrying amount of the asset) is comprehensive income.
included in profit or loss in the period the asset is derecognized. Initial Measurement of Non-controlling Interest. For each business combination, the Jollibee Group
The residual values, if any, useful lives and depreciation and amortization method of the assets are measures the non-controlling interest in the acquiree using the proportionate share of the acquiree’s
reviewed and adjusted, if appropriate, at each financial period. identifiable net assets.
When each major inspection is performed, its cost is recognized in the carrying amount of the property, Business Combination Achieved in Stages. In a business combination achieved in stages, the Jollibee
plant and equipment as a replacement if the recognition criteria are satisfied. Group remeasures its previously held equity interests in the acquiree at its acquisition-date fair value
and recognizes the resulting gain or loss, if any, in profit or loss.
Construction in progress represents structures under construction and is stated at cost less any
impairment in value. This includes the cost of construction and other direct costs. Cost also includes Measurement Period. If the initial accounting for a business combination is incomplete by the end of
interest on borrowed funds incurred during the construction period. Construction in progress is not the reporting period in which the combination occurs, the Jollibee Group reports in its consolidated
depreciated until such time that the relevant assets are completed and readily for use. financial statements provisional amounts for the items for which the accounting is incomplete. The
53
measurement period ends as soon as the Jollibee Group receives the information it was seeking about accounted for by changing the amortization period or method, as appropriate, and treated as changes
facts and circumstances that existed as at the acquisition-date or learns that more information is not in accounting estimates.
obtainable. The measurement period does not exceed one year from the acquisition-date.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or
Contingent Consideration or Earn-out. Any contingent consideration or earn-out to be transferred by the at the CGU level. Such intangible assets are not amortized. The useful life of an intangible asset with
Jollibee Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value an indefinite life is reviewed annually to determine whether the indefinite life assessment continues
of the contingent consideration which is deemed to be an asset or liability, is recognized either in profit to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a
or loss or as a change to OCI. If the contingent consideration is classified as equity, it should not be prospective basis.
remeasured until it is finally settled within equity.
The estimated useful lives used in amortizing computer software and other intangible assets are
Goodwill or Gain on a Bargain Purchase disclosed in Note 14.
Initial Measurement of Goodwill or Gain on a Bargain Purchase. Goodwill is initially measured by the Gains or losses arising from derecognition of an intangible asset are measured as the difference between
Jollibee Group at cost being the excess of the total consideration transferred over the net identifiable the net disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss
assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets when the asset is derecognized.
of the subsidiary acquired, the difference is recognized in profit or loss as gain on a bargain purchase.
Interests in and Advances to Joint Ventures, Co-venturers and an Associate
Before recognizing a gain on a bargain purchase, the Jollibee Group determines whether it has correctly
identified all of the assets acquired and all of the liabilities assumed and recognize any additional assets An associate is an entity in which the Jollibee Group has significant influence and which is neither a
or liabilities that are identified in that review. subsidiary nor a joint venture.
Subsequent Measurement of Goodwill. Following initial recognition, goodwill is measured at cost less any A joint venture is a contractual arrangement whereby two or more parties (venturers) undertake an
accumulated impairment losses. economic activity that is subject to joint control. Joint control exists only when the strategic financial
and operating decisions relating to the activity require the unanimous consent of the venturers. A
Impairment Testing of Goodwill. For the purpose of impairment testing, goodwill acquired in
jointly controlled entity is a joint venture that involves the establishment of a company, partnership
a business combination is, from the acquisition-date, allocated to each of the Jollibee Group’s
or other entity to engage in economic activity that the Jollibee Group jointly controls with its fellow
cash-generating units (CGU), or groups of CGUs, that are expected to benefit from the synergies of the
venturer. The considerations made in determining joint controls are similar to those necessary to
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
determine control over subsidiaries.
units or groups of units. Each unit or group of units to which the goodwill is allocated:
The Jollibee Group’s investments in its associate and joint ventures are accounted for using the equity
 represents the lowest level within the Jollibee Group at which the goodwill is monitored for
method based on the percentage share of ownership and capitalization. Interests in joint ventures are
internal management purposes; and
accounted for under the equity method from the date the joint control is obtained.
 is not larger than an operating segment as defined in PFRS 8, Operating Segments, before
aggregation. Under the equity method, the investment in an associates or joint ventures are carried in the
consolidated statements of financial position at cost plus the Jollibee Group’s share in post-acquisition
Frequency of Impairment Testing. Irrespective of whether there is any indication of impairment, the
changes in the net assets of an associate or joint ventures, less any impairment in value. Goodwill
Jollibee Group tests goodwill acquired in a business combination for impairment annually as at
relating to the associate or joint ventures is included in the carrying amount of the investment and is not
September 30 and more frequently when circumstances indicate that the carrying amount is impaired.
amortized. The consolidated statements of comprehensive income include the Jollibee Group’s share in
Allocation of Impairment Loss. An impairment loss is recognized for a CGU if the recoverable amount of the financial performance of the associate or joint ventures. The Jollibee Group’s share in profit (loss) of
the unit or group of units is less than the carrying amount of the unit or group of units. The impairment the associate is shown on the face of the consolidated statements of comprehensive income as “Equity
loss is allocated to reduce the carrying amount of the assets of the unit or group of units first to reduce in net earnings (loss) of joint ventures and an associate”, which is the profit (loss) attributable to equity
the carrying amount of goodwill allocated to the CGU or group of units and then to the other assets holders of the joint ventures and an associate.
of the unit or group of units pro rata on the basis of the carrying amount of each asset in the unit or
When the Jollibee Group’s share of losses in the associate or joint ventures equals or exceeds its interest,
group of units.
including any other unsecured receivables, the Jollibee Group does not recognize further losses, unless
Intangible Assets it has incurred obligations or made payments on behalf of the associate or joint ventures. Where there
Intangible assets acquired separately are measured at cost on initial recognition. Following initial has been a change recognized directly in the equity of the associate or joint venture, the Jollibee Group
recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated recognizes its share in any changes and discloses this, when applicable, in the consolidated statements
impairment loss. The useful lives of intangible assets are assessed at the individual asset level as either of changes in equity.
finite or indefinite.
The reporting dates of the Parent Company and the associate or joint ventures are identical and the
Intangible assets with finite lives are amortized over the useful economic life using the straight-line latter’s accounting policies conform to those used by the Parent Company for like transactions and
method and assessed for impairment whenever there is an indication that the intangible assets may be events in similar circumstances. Unrealized gains arising from transactions with the associate or joint
impaired. At a minimum, the amortization period and the amortization method for an intangible asset ventures are eliminated to the extent of the Jollibee Group’s interests in the associates or joint ventures
with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful against the related investments. Unrealized losses are eliminated similarly but only to the extent that
life or the expected pattern of consumption of future economic benefits embodied in the asset are there is no evidence of impairment in the asset transferred.
The Jollibee Group ceases to use the equity method of accounting on the date from which it no longer Treasury Shares. Acquisitions of treasury shares are recorded at cost. The total cost of treasury shares is
has joint control in the joint ventures, no longer has significant influence over an associate, or when the shown in the consolidated statements of financial position as a deduction from the total equity. Upon
interest becomes held for sale. re-issuance or resale of the treasury shares, cost of common stock held in treasury account is credited for
the cost of the treasury shares determined using the simple average method. Gain on sale is credited
Upon loss of significant influence over the associate or joint control over the joint ventures, the Jollibee
to additional paid-in capital. Losses are charged against additional paid-in capital but only to the extent
Group measures and recognizes its remaining investment at its fair value. Any difference between the
of previous gain from original issuance, sale or retirement for the same class of stock. Otherwise, losses
carrying amount of the associate or former jointly controlled entities upon loss of significant influence
are charged to retained earnings.
or joint control, and the fair value of the remaining investment and proceeds from disposal is recognized
in profit or loss. When the remaining interest in joint ventures constitutes significant influence, it is Subscriptions Receivable. Subscriptions receivable represents common stock subscribed and issued by
accounted for as interest in an associate. the Parent Company but payment from the shareholders has not yet been received, regardless of when
payment is made.
Impairment of Nonfinancial Assets
The carrying values of interests in and advances to joint ventures, co-venturers and associate, property, Revenue
plant and equipment, investment properties, goodwill and other intangible assets are reviewed for Revenue is recognized when it is probable that the economic benefits associated with the transaction
impairment when events or changes in circumstances indicate that the carrying value may not be will flow to the Jollibee Group and the amount of revenue can be reliably measured. Revenue is
recoverable. If any such indication exists, and if the carrying value exceeds the estimated recoverable measured at the fair value of the consideration received or receivable, taking into account contractually
amount, the assets or CGU are written down to their recoverable amounts. The recoverable amount of defined terms of payment and excluding discounts, rebates, sales taxes and duties. The Jollibee
the asset is the greater of fair value less costs to sell or value in use. The fair value less costs to sell is the Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as
amount obtainable from the sale of an asset in an arm’s-length transaction between knowledgeable, principal or agent. The Jollibee Group has concluded that it is acting as a principal in all of its revenue
willing parties, less costs of disposal. In assessing value in use, the estimated future cash flows are arrangements since it is the primary obligor in all the revenue arrangements, has pricing latitude, and
discounted to their present value using a pre-tax discount rate that reflects current market assessments is also exposed to credit risks.
of the time value of money and the risks specific to the asset. For an asset that does not generate
The following specific recognition criteria must also be met before revenue is recognized:
largely independent cash inflows, the recoverable amount is determined for the CGU to which the asset
belongs. Impairment losses are recognized in profit or loss in those expense categories consistent with Sale of Goods. Revenue from sale of goods is recognized when the significant risks and rewards of
the function of the impaired asset. ownership of the goods have passed to the customers, which is normally upon delivery. Sales returns
and sales discounts are deducted from sales to arrive at net sales shown in profit or loss.
For nonfinancial assets, excluding goodwill, an assessment is made at each reporting date as to whether
there is any indication that previously recognized impairment losses may no longer exist or may have Royalty Fees. Revenue from royalty fees is recognized as the royalty accrues in accordance with the terms
decreased. If such indication exists, the recoverable amount is estimated. A previously recognized of the agreement calculated as a percentage of the franchisees’ net sales.
impairment loss is reversed only if there has been a change in the estimates used to determine the
Franchise Fees. Revenue from franchise fees is recognized when all services or conditions relating to a
asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the
transaction have been substantially performed.
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net of depreciation and amortization, Service Fees. Revenue is recognized in the period in which the service has been rendered.
had no impairment loss been recognized for the asset in prior years. Rent Income. Rent income from operating leases is recognized on a straight-line basis over the lease
Such reversal is recognized in profit or loss. After such a reversal, the depreciation charge is adjusted terms. For income tax reporting, rent income is continued to be recognized on the basis of the terms
in future periods to allocate the asset’s revised carrying amount, less any residual value on a systematic of the lease agreements.
basis over its remaining useful life. Interest Income. Interest income is recognized as the interest accrues, taking into account the effective
Equity yield on the asset.
Capital Stock and Additional Paid-in Capital. Capital stock is measured at par value for all shares issued. Other Income. Other income is recognized when there is an incidental economic benefit, other than the
Incremental costs incurred directly attributable to the issuance of new shares are shown in equity as a usual business operations, that will flow to the Jollibee Group through an increase in asset or reduction
deduction from proceeds, net of tax. Proceeds and/or fair value of considerations received in excess of in liability and that can be measured reliably.
par value, if any, are recognized as additional paid-in capital. Cost and Expenses
Retained Earnings. Retained earnings represent the Jollibee Group’s accumulated earnings, net of Costs and expenses are recognized when a decrease in future economic benefit related to a decrease
dividends declared. of an asset or an increase of a liability has arisen that can be measured reliably. Costs and expenses are
recognized in profit or loss on the basis of systematic and rational allocation procedures when economic
Dividends. The Jollibee Group recognizes a liability to make cash distribution to its equity holders when
benefits are expected to arise over several accounting periods and the association with income can only
the distribution is authorized and the distribution is no longer at the discretion of the Group. As per
be broadly or indirectly determined; or immediately when expenditure produces no future economic
the corporate laws in the Philippines, a distribution is authorized when it is approved by the BOD. A
benefits or when, and to the extent that, future economic benefits do not qualify, cease to qualify, for
corresponding amount is recognized directly in the equity. Dividends for the year that are approved
recognition in the Jollibee Group’s statement of financial position as an asset.
after the financial reporting date are dealt with as an event after the reporting period.
55
Advertising and promotions expenses include costs incurred for advertising schemes and promotional Employee Leave Entitlement
activities for new products. The amount of expenses incurred by the Jollibee Group is reduced by Employee entitlements to annual leave are recognized as a liability when they are accrued to the
the network advertising and promotional costs reimbursed by the Jollibee Group’s franchisees and employees. The undiscounted liability for leave expected to be settled wholly before twelve months
subsidiaries. after the end of the annual reporting period is recognized for services rendered by employees up to the
end of the reporting period.
Pension Benefits
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit Share-based Payments
obligation at the end of the reporting period reduced by the fair value of plan assets (if any), adjusted The Jollibee Group has stock option plans granting its management and employees an option to
for any effect of limiting a net defined benefit asset to the asset ceiling. The asset ceiling is the present purchase a fixed number of shares of stock at a stated price during a specified period (equity-settled
value of any economic benefits available in the form of refunds from the plan or reductions in future transactions).
contributions to the plan.
The cost of the options granted to the Jollibee Group’s management and employees that becomes
The cost of providing benefits under the defined benefit plans is actuarially determined using the vested is recognized in profit or loss over the period in which the performance and/or service conditions
projected unit credit method. are fulfilled, ending on the date on which the relevant management and employees become fully
entitled to the award (“vesting date”).
Defined benefit costs comprise the following:
The fair value is determined using the Black-Scholes Option Pricing Model. The cumulative expense
 Service cost
recognized for the share-based transactions at each reporting date until the vesting date reflects the
 Net interest on the net defined benefit liability or asset
extent to which the vesting period has expired and the Jollibee Group’s best estimate of the number
 Remeasurements of net defined benefit liability or asset
of equity instruments that will ultimately vest. The charge or credit in profit or loss or the investment
Service costs which include current service costs, past service costs and gains or losses on non-routine account for a period represents the movement in cumulative expense recognized as of the beginning
settlements are recognized as expense in profit or loss. Past service costs are recognized when plan and end of that period.
amendment or curtailment occurs. These amounts are calculated periodically by independent qualified
No expense is recognized for awards that do not ultimately vest, except for awards where vesting is
actuaries.
conditional upon a market condition, which are treated as vested irrespective of whether or not the
Net interest on the net defined benefit liability or asset is the change during the period in the net market condition is satisfied, provided that all other performance conditions are satisfied.
defined benefit liability or asset that arises from the passage of time which is determined by applying
Where the terms of a share-based award are modified, as a minimum, an expense is recognized as if
the discount rate based on government bonds to the net defined benefit liability or asset. Net interest
the terms had not been modified. In addition, an expense is recognized for any modification, which
on the net defined benefit liability or asset is recognized as expense or income in profit or loss.
increases the total fair value of the share-based payment agreement, or is otherwise beneficial to the
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in the management and employee as measured at the date of modification.
effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately
Where a share-based award is cancelled, it is treated as if it had vested on the date of cancellation, and
in other comprehensive income in the period in which they arise. Remeasurements are not reclassified
any expense not yet recognized for the award is recognized immediately. However, if a new award
to profit or loss in subsequent periods.
is substituted for the cancelled award, and designated as a replacement award on the date that it is
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance granted, the cancelled and new awards are treated as if there were a modification of the original award.
policies. Plan assets are not available to the creditors of the Jollibee Group, nor can they be paid directly
Research and Development Costs
to the Jollibee Group. Fair value of plan assets is based on market price information. When no market
Research costs are expensed as incurred. Development cost incurred on an individual project is
price is available, the fair value of plan assets is estimated by discounting expected future cash flows
capitalized when its future recoverability can reasonably be regarded as assured. Any expenditure
using a discount rate that reflects both the risk associated with the plan assets and the maturity or
capitalized is amortized in line with the expected future sales from the related project.
expected disposal date of those assets (or, if they have no maturity, the expected period until the
settlement of the related obligations). If the fair value of the plan assets is higher than the present value Leases
of the defined benefit obligation, the measurement of the resulting defined benefit asset is limited to The determination of whether an arrangement is, or contains a lease is based on the substance of the
the present value of economic benefits available in the form of refunds from the plan or reductions in agreement at inception date of whether the fulfillment of the arrangement is dependent on the use of
future contributions to the plan. a specific asset or assets or the arrangement conveys a right to use the asset even if that is not explicitly
specified in the agreement.
The Jollibee Group’s right to be reimbursed of some or all of the expenditure required to settle a defined
benefit obligation is recognized as a separate asset at fair value when and only when reimbursement Jollibee Group as Lessee. Leases which do not transfer to the Jollibee Group substantially all the risks
is virtually certain. and benefits of ownership of the asset are classified as operating leases. Operating lease payments
are recognized as expense in profit or loss on a straight-line basis over the lease term and carried at
The Jollibee Group also participates in various government-defined contribution schemes for the PRC-
amortized cost. The related accretion is recognized as interest income and the amortization as rent
based and USA-based subsidiaries. Under these schemes, pension benefits of existing and retired
expense. Associated costs, such as maintenance and insurance, are expensed as incurred.
employees are guaranteed by the local pension benefit plan, and each subsidiary has no further
obligations beyond the annual contribution.
Jollibee Group as Lessor. Leases which do not transfer to the lessee substantially all the risks and benefits  where the deferred tax asset relating to the deductible temporary difference arises from the initial
of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating recognition of an asset or liability in a transaction that is not a business combination and, at the
an operating lease are added to the carrying amount of the leased asset and recognized over the lease time of the transaction, affects neither the accounting profit nor taxable profit; and
term on the same basis as rent income. Rent income from operating leases is recognized as income in
 in respect of deductible temporary differences associated with investments in subsidiaries and
profit or loss on a straight-line basis over the lease term. Contingent rents are recognized as revenue in
interest in a joint venture, deferred tax assets are recognized only to the extent that it is probable
the period in which they are earned.
that the temporary differences will reverse in the foreseeable future and taxable profit will be
Provisions available against which the temporary differences can be utilized.
Provisions are recognized when the Jollibee Group has a present obligation (legal or constructive) as a
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
result of a past event, it is probable that an outflow of resources embodying economic benefits will be
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each reporting
If the effect of the time value of money is material, provisions are determined by discounting the
date and are recognized to the extent that it has become probable that future taxable profit will allow
expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of
the deferred tax assets to be recovered.
money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognized as interest expense. Deferred tax liabilities are recognized for all taxable temporary differences, except:
Foreign Currency Transactions and Translations  where the deferred tax liability arises from the initial recognition of goodwill or of an asset or
The consolidated financial statements are presented in Philippine peso, which is the Parent Company’s liability in a transaction that is not a business combination and, at the time of the transactions,
functional and presentation currency. Each entity in the Jollibee Group determines its own functional affects neither the accounting profit nor taxable profit; and
currency and items included in the financial statements of each entity are measured using that functional
 in respect of taxable temporary differences associated with investments in subsidiaries and interest
currency. Transactions in foreign currencies are recorded in Philippine peso using the exchange rate
in a joint venture, where the timing of the reversal of the temporary differences can be controlled
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
and it is probable that the temporary differences will not reverse in the foreseeable future.
restated using the closing rate of exchange at reporting date. All differences are recognized in profit
or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year
translated using the exchange rates as at the dates of the initial transactions. when the asset is realized or the liability is settled, based on tax rates and tax laws that have been
enacted or substantially enacted at the reporting date.
The functional currencies of the Jollibee Group’s foreign operations are US dollar (USD), RMB, Indonesia
rupiah, Vietnam dong and Hong Kong dollar. As of the reporting date, the assets and liabilities of Deferred tax relating to items recognized outside profit or loss. Deferred tax items are recognized in
foreign subsidiaries are translated into the presentation currency of the Parent Company at the rate correlation to the underlying transaction either in OCI or directly in equity.
of exchange ruling at the reporting date while the income and expense accounts are translated at the Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate
weighted average exchange rates for the year. The resulting translation differences are included in the recognition at that date, are recognized subsequently if new information about facts and circumstances
consolidated statements of changes in equity under the account “Cumulative translation adjustments change. The adjustment is either treated as reduction in goodwill, as long as it does not exceed goodwill,
of foreign subsidiaries, joint ventures and an associate” and in other comprehensive income. On disposal if it was incurred during the measurement period or recognize in profit or loss.
of a foreign subsidiary, the accumulated exchange differences are recognized in profit or loss.
Deferred tax assets and liabilities are offset, if a legally enforceable right exists to setoff current tax assets
Taxes against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
Current Tax. Current tax liabilities for the current and prior periods are measured at the amount expected taxation authority.
to be paid to the tax authority. The tax rates and tax laws used to compute the amount are those that Value Added Tax (VAT). Revenue, expenses and assets are recognized net of the amount of tax, except:
are enacted or substantively enacted at reporting date.
 where the tax incurred on a purchase of assets or services is not recoverable from the taxation
Current income tax relating to items recognized directly in equity is recognized in equity and not in authority, in which case the tax is recognized as part of the cost of acquisition of the asset or as
the profit or loss. Management periodically evaluates positions taken in the tax returns with respect to part of the expense item as applicable; and
situations in which applicable tax regulations are subject to interpretation and establishes provisions
where appropriate.  receivables and payables that are stated with the amount of tax included.
Deferred Tax. Deferred tax is provided using balance sheet liability method, on all temporary differences The net amount of tax recoverable from, or payable to, the taxation authority is included as part of
at reporting date between the tax bases of assets and liabilities and their carrying amounts for financial “Other current assets” or “Trade payables and other current liabilities”accounts in the consolidated
reporting purposes. statements of financial position.
Deferred tax assets are recognized for all deductible temporary differences and carryforward benefits Earnings per Share (EPS) Attributable to Equity Holders of the Parent Company
of unused tax credits from excess of minimum corporate income tax (MCIT) over regular corporate Basic EPS is calculated by dividing the net income for the year attributable to the equity holders of the
income tax (RCIT) and net operating loss carryover (NOLCO), to the extent that it is probable that taxable Parent Company by the weighted average number of common shares outstanding during the year,
profit will be available against which the deductible temporary differences and carryforward benefits of after considering the retroactive effect of stock dividend declaration, if any.
excess of MCIT over RCIT and NOLCO can be utilized except:
57
Diluted EPS is computed by dividing the net income for the year attributable to the equity holders and benefits of ownership of these properties, which the Jollibee Group leases under operating lease
of the Parent Company by the weighted average number of common shares outstanding during the arrangements, remain with the lessors. Accordingly, the leases are accounted for as operating leases.
period, adjusted for any potential common shares resulting from the assumed exercise of outstanding
Rent expense amounted to P6,287.3 million, P5,895.9 million and P5,131.8 million in 2013, 2012 and
stock options. Outstanding stock options will have dilutive effect under the treasury stock method
2011, respectively (see Notes 21, 22 and 29).
only when the average market price of the underlying common share during the period exceeds the
exercise price of the option. Operating Lease Commitments - Jollibee Group as Lessor. The Jollibee Group has entered into commercial
property leases on its investment property portfolio and various sublease agreements. Management has
Where the EPS effect of the shares to be issued to management and employees under the stock option
determined, based on an evaluation of the terms and conditions of the arrangements, that the Jollibee
plan would be anti-dilutive, the basic and diluted EPS would be stated at the same amount.
Group retains all the significant risks and benefits of ownership of the properties which are leased out.
Contingencies Accordingly, the leases are accounted for as operating leases.
Contingent liabilities are not recognized in the consolidated financial statements but are disclosed
Rent income amounted to P97.5 million, P93.6 million and P88.4 million in 2013, 2012 and 2011,
unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent
respectively (see Notes 20 and 29).
assets are not recognized in the consolidated financial statements but are disclosed when an inflow of
economic benefits is probable. Assessing Joint Control of an Arrangement and the Type of Arrangement. Joint control is the contractually
agreed sharing of control of an arrangement which exists only when decisions about the relevant
Business Segments
activities require the unanimous consent of the parties sharing control. The Jollibee Group assessed
The Jollibee Group is organized and managed separately according to the nature of operations and
that it has joint control in all joint arrangements by virtue of a contractual agreement with other
geographical locations of businesses. The three major operating businesses of the Jollibee Group
stockholders. The Jollibee Group’s joint ventures have separate legal entity and the shareholders have
are food service, franchising and leasing while geographical segments are segregated to Philippine
right to their net assets (see Note 11).
businesses and international businesses. These operating and geographical businesses are the basis
upon which the Jollibee Group reports its primary segment information presented in Note 5. Impairment of AFS Financial Assets - Significant or Prolonged Decline in Fair Value and Calculation of
Impairment Loss. The Jollibee Group determines that an AFS financial asset is impaired when there
Events after the Reporting Period
has been a significant or prolonged decline in the fair value below its cost. The Jollibee Group
Post year-end events that provide additional information about the Jollibee Group’s financial position at
determines that a decline in fair value of greater than 20% of cost is considered to be a significant
reporting date (adjusting events) are reflected in the Jollibee Group’s consolidated financial statements.
decline and a decline for a period of more than 12 months is considered to be a prolonged decline.
Post year-end events that are not adjusting events are disclosed in the notes to consolidated financial
This determination of what is significant or prolonged requires judgment. In making this judgment, the
statements when material.
Jollibee Group evaluates, among other factors, the normal volatility in price. In addition, impairment
may be appropriate when there is evidence of deterioration in the financial health of the investee,
industry and sector performance.
4. Significant Accounting Judgments, Estimates and Assumptions
To compute for the impairment of AFS equity instruments, the Jollibee Group expands its analysis to
The preparation of the consolidated financial statements requires management to make judgments,
consider changes in the investee’s industry and sector performance, legal and regulatory framework,
estimates and assumptions that affect the reported amounts on the consolidated financial statements
changes in technology, and other factors that affect the recoverability of the Jollibee Group’s investments.
and related notes at the end of the reporting period. However, uncertainty about these assumptions
and estimates could result in outcomes that could require a material adjustment to the carrying amount There were no provisions for impairment loss on AFS financial assets in 2013, 2012 and 2011. The carrying
of the affected asset or liability in the future. The Jollibee Group believes the following represents a amount of AFS financial assets amounted to P21.5 million and P128.1 million as at December 31, 2013 and
summary of these significant judgments, estimates and assumptions and the related impact and 2012, respectively (see Note 10).
associated risks on the Jollibee Group’s consolidated financial statements.
Estimates and Assumptions
Judgments The key estimates and assumptions concerning the future and other key sources of estimation
In the process of applying the Jollibee Group’s accounting policies, management has made the following uncertainty at reporting date that has a significant risk of causing a material adjustment to the carrying
judgments, apart from those involving estimations, which have the most significant effect on the amounts amounts of assets and liabilities within the next financial year are discussed below.
recognized in the consolidated financial statements.
Impairment Loss on Receivables. The Jollibee Group maintains an allowance for impairment losses at a level
Functional Currency. Management has determined that the functional and presentation currency of the considered adequate to provide for potential uncollectible receivables. The level of allowance is evaluated
Parent Company and its Philippine-based subsidiaries is the Philippine peso, being the currency of the on the basis of factors that affect the collectability of the accounts. These factors include, but are not
primary environment in which the Parent Company and its major subsidiaries operate. The functional limited to, the length of the Jollibee Group’s relationship with the customers and counterparties, average
currencies of its foreign operations are determined as the currency in the country where the subsidiary age of accounts and collection experience. The Jollibee Group performs a regular review of the age
operates. For consolidation purposes, the foreign subsidiaries’ balances are translated to Philippine peso and status of these accounts, designed to identify accounts with objective evidence of impairment and
which is the Parent Company’s functional and presentation currency. provide the appropriate allowance for impairment losses. The review is done quarterly and annually using
a combination of specific and collective assessments. The amount and timing of recorded expenses for any
Operating Lease Commitments - Jollibee Group as Lessee. The Jollibee Group has entered into commercial
period would differ if the Jollibee Group made different judgments or utilized different methodologies. An
property leases for its Quick Service Restaurants and offices as a lessee. Management has determined,
increase in allowance account would increase general and administrative expenses and decrease current
based on an evaluation of the terms and condition of the arrangements that all the significant risks
assets.
Provision for impairment loss on receivables in 2013, 2012 and 2011 amounted to P34.0 million, Estimating the Fair Values of Acquiree’s Identifiable Assets and Liabilities. Where the fair values of the
P97.6 million and P33.6 million, respectively, resulting from specific and collective assessments. The acquiree’s identifiable assets and liabilities cannot be derived from active markets, the Jollibee Group
carrying amount of receivables amounted to P3,082.9 million and P2,750.3 million as at December 31, determined the fair values using internal valuation techniques and generally accepted valuation
2013 and 2012, respectively (see Notes 7 and 22). approaches. The inputs to these valuation approaches are taken from historical experience and
observable markets where possible, but where this is not feasible, estimates are used in establishing
Net Realizable Value of Inventories. The Jollibee Group writes down inventories to net realizable value,
fair values. The estimates may include discount rates and assumptions used in cash flow projections.
through the use of an allowance account, whenever the net realizable value of inventories becomes
lower than the cost due to damage, physical deterioration, obsolescence, changes in price levels or The fair values of the identifiable net assets acquired from San Pin Wang in 2012 amounted to
other causes. P46.4 million (see Note 11).
The estimates of net realizable value are based on the most reliable evidence available at the time the Impairment of Property,Plant and Equipment and Investment Properties. The Jollibee Group performs
estimates are made of the amounts the inventories are expected to be realized. These estimates take impairment review of property, plant and equipment and investment properties when certain
into consideration fluctuations of prices or costs directly relating to events occurring after reporting impairment indicators are present. Determining the fair value of assets, which requires the determination
date to the extent that such events confirm conditions existing at reporting date. The allowance of future cash flows expected to be generated from the continued use and ultimate disposition of such
account is reviewed on a regular basis to reflect the accurate valuation in the financial records. assets, requires the Jollibee Group to make estimates and assumptions that can materially affect the
consolidated financial statements. Future events could cause the Jollibee Group to conclude that the
The Jollibee Group assessed that the net realizable value for some inventories is lower than cost,
assets are impaired. Any resulting impairment loss could have a material adverse impact on the Jollibee
hence, it recognized provision for inventory obsolescence amounting to P9.4 million, P2.2 million and
Group’s financial position and performance.
P6.1 million in 2013, 2012 and 2011, respectively (see Note 22). In addition, reversal of previously
recognized provisions amounting to P13.3 million was recognized in 2012, while no reversal Reversal of impairment loss amounted to P13.3 million in 2013 while provision for impairment loss
was recognized in 2013 and 2011 (see Note 22). The Jollibee Group also wrote-off allowance for amounted to P29.5 million and nil in 2012 and 2011, respectively (see Note 22). The aggregate carrying
inventory obsolescence amounting to P4.4 million in 2012, respectively. No write-off was made in values of property, plant and equipment and investment properties amounted to P12,524.2 million and
2013. The carrying amount of inventories amounted to P3,560.4 million and P2,629.7 million as at P11,813.5 million as at December 31, 2013 and 2012, respectively (see Notes 12 and 13).
December 31, 2013 and 2012, respectively (see Note 8).
Realizability of Deferred Tax Assets. The carrying amounts of deferred tax assets at each reporting date is
Estimation of Useful Lives of Property, Plant and Equipment and Investment Properties. The Jollibee Group reviewed and reduced to the extent that there are no longer sufficient taxable profits available to allow
estimates the useful lives of property, plant and equipment and investment properties based on the all or part of the deferred tax assets to be utilized. The Jollibee Group’s assessment on the recognition
period over which the property, plant and equipment and investment properties are expected to be of deferred tax assets on deductible temporary differences and carryforward benefits of excess of MCIT
available for use and on the collective assessment of the industry practice, internal technical evaluation over RCIT and NOLCO is based on the forecasted taxable income. This forecast is based on past results
and experience with similar assets. The estimated useful lives of property, plant and equipment and and future expectations on revenue and expenses.
investment properties are reviewed periodically and updated if expectations differ from previous
The carrying amount of deferred tax assets - net amounted to P756.2 million and P685.8 million as at
estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits
December 31, 2013 and 2012, respectively (see Notes 2 and 24).
in the use of property, plant and equipment and investment properties. However, it is possible that
future financial performance could be materially affected by changes in the estimates brought about Present Value of Defined Benefit Obligation. The cost of defined benefit pension plans and other post-
by changes in the factors mentioned above. The amount and timing of recording the depreciation employment medical benefits as well as the present value of the defined benefit obligation are
and amortization for any period would be affected by changes in these factors and circumstances. A determined using actuarial valuations. The actuarial valuation involves making various assumptions.
reduction in the estimated useful lives of property, plant and equipment and investment properties These assumptions include, among others, discount rate and rate of increase in compensation. Due to
would increase the recorded depreciation and amortization and decrease noncurrent assets. 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 are reviewed at each
There was no change in the estimated useful lives of property, plant and equipment and investment
reporting date.
properties in 2013, 2012 and 2011.
In determining the appropriate discount rate, management considers the interest rates of government
Impairment of Goodwill and Other Intangible Assets. The Jollibee Group determines whether goodwill
bonds that are denominated in the currency in which the benefits will be paid, with extrapolated
and other intangible assets with indefinite useful life is impaired at least on an annual basis or more
maturities corresponding to the expected duration of the defined benefit obligation.
frequently if events or changes in circumstances indicate that the carrying value may be impaired. This
requires an estimation of the value in use of the CGU to which the goodwill is allocated. Estimating the The mortality rate is based on publicly available mortality tables for the specific country and is modified
value in use requires the Jollibee Group to make an estimate of the expected future cash flows from the accordingly with estimates of mortality improvements. Future salary increases and pension increases
CGU and also to choose a suitable discount rate in order to calculate the present value of those cash are based on expected future inflation rates for the specific country.
flows.
The carrying amount of pension liability amounted to P932.8 million and P521.6 million as at
Management has determined that goodwill and other intangible assets are not impaired. The carrying December 31, 2013 and 2012, respectively (see Note 25).
amount of goodwill and other intangible assets amounted to P9,103.6 million and P8,837.6 million as at
December 31, 2013 and 2012, respectively (see Notes 2 and 14).
59
Share-based Payments. The Parent Company measures the cost of its equity-settled transactions with Business Segments
management and employees by reference to the fair value of the equity instruments at the grant date. The Jollibee Group’s operating businesses are organized and managed separately according to the
Estimating fair value for share-based payment transactions requires determining the most appropriate nature of the products and services provided, with each segment representing a strategic business unit
valuation model, which is dependent on the terms and conditions of the grant. The estimate also that offers different products and serves different markets.
requires determining the most appropriate inputs to the valuation model including the expected life
 The food service segment is involved in the operations of quick service restaurants and the
of the share option, volatility and dividend yield and making assumptions about these inputs. The
manufacture of food products to be sold to Jollibee Group-owned and franchised quick service
fair value of the share option is being determined using the Black-Scholes Option Pricing Model. The
restaurants outlets.
expected life of the stock options is based on the expected exercise behavior of the stock option holders
and is not necessarily indicative of the exercise patterns that may occur. The volatility is based on the  The franchising segment is involved in the franchising of the Jollibee Group’s quick service
average historical price volatility which may be different from the expected volatility of the shares of the restaurants store concepts.
Parent Company.
 The leasing segment leases store sites mainly to the Jollibee Group’s independent franchisees.
Total expense arising from share-based payment recognized by the Jollibee Group amounted to
The following tables present certain information on revenue, expenses, assets and liabilities and
P150.4 million, P77.0 million and P73.6 million in 2013, 2012 and 2011, respectively (see Notes 22 and 26).
other segment information of the different business segments as at and for the years ended
Fair Value of Financial Assets and Liabilities. The Jollibee Group carries certain financial assets and December 31, 2013 and 2012 and 2011:
liabilities at fair value, which requires extensive use of accounting estimates and judgments. The
2013
significant components of fair value measurement were determined using verifiable objective evidence
Food Service Franchising Leasing Eliminations Consolidated
(i.e., foreign exchange rates, interest rates, volatility rates). The amount of changes in fair value would (In Thousands)
differ if the different valuation methodologies and assumptions are utilized. Any changes the fair value Revenue from external customers P76,595,268 P3,503,960 P183,541 P– P80,282,769
of these financial assets and liabilities would directly affect profit or loss. Inter-segment revenue 23,891,327 665,299 3,130,550 (27,687,176) –
Segment revenue 100,486,595 4,169,259 3,314,091 (27,687,176) 80,282,769
The fair value of financial assets and liabilities are discussed in Note 31. Segment expenses (98,060,904) (665,299) (3,281,467) 27,687,176 (74,320,494)
Contingent Consideration or Earn-out. The Jollibee Group has an existing joint venture agreement with Impairment losses on property,
contingent consideration or earn-out provisions. This requires the estimation of payout associated with plant and equipment,
investment properties,
the probability-weighted discounted cash flow model, taking into consideration the specific conditions
receivables, inventory and
outlined in the purchase agreement that must be met to satisfy the contingency. contingencies (31,178) – – – (31,178)
The Jollibee Group has recognized a contingent consideration amounting to RMB17.5 million Equity in net loss of joint ventures
(P121.7 million) in 2012 (see Notes 2 and 11). and an associate (115,561) – – – (115,561)
Other segment income 329,816 – 7,509 – 337,325
Provisions. The Jollibee Group recognizes a provision for an obligation resulting from a past event when Segment result P2,608,768 P3,503,960 P40,133 P– 6,152,861
it has assessed that it is probable that an outflow of resources will be required to settle the obligation and Interest income 245,574
a reliable estimate can be made of the amount of the obligation. These assessments are made based Interest expense (152,920)
on available evidence, including the opinion of experts. Future events and developments may result Income before income tax 6,245,515
in changes in these assessments which may impact the financial condition and results of operations. Provision for income tax (1,522,708)
Net income P4,722,807
There were no additional provisions recorded in 2013, 2012 and 2011. Total outstanding provisions
Assets and Liabilities
for legal claims and restructuring costs amounted to P30.5 million as at December 31, 2013 and 2012 Segment assets P44,909,353 P– P361,084 P– P45,270,437
(see Note 17). Deferred tax assets 740,289 – 15,908 – 756,197
Consolidated assets P45,649,642 P– P376,992 P– P46,026,634
Contingencies. The Jollibee Group is currently involved in litigations, claims and disputes which are
normal to its business. The estimate of the probable costs for the resolution of these claims has been Segment liabilities P16,913,356 P– P110,190 P– P17,023,546
developed in consultation with the Jollibee Group’s legal counsels and based upon an analysis of Deferred tax liabilities 315,170 – 2,987 – 318,157
Long-term debt - including current
potential results (see Note 29).
portion 5,169,246 – – – 5,169,246
Income tax payable 152,387 – 2,358 – 154,745
Consolidated liabilities P22,550,159 P– P115,535 P– P22,665,694
5. Segment Information
Other Segment Information
For management purposes, the Jollibee Group is organized into segments based on the nature of the Capital expenditures P4,175,146 P– P– P– P4,175,146
products and services offered and geographical locations. The Executive Management Committee Depreciation and amortization 3,063,998 – 8,458 – 3,072,456
monitors the operating results of its segments separately for resource allocation and performance
assessment. Segment results are evaluated based on operating profit or loss and is measured
consistently with operating profit or loss in the consolidated financial statements.
2012 (As restated) 2011 (As restated)

Food Service Franchising Leasing Eliminations Consolidated Food Service Franchising Leasing Eliminations Consolidated
(In Thousands) Assets and Liabilities
Revenue from external customers P67,751,942 P3,143,620 P163,477 P– P71,059,039 Segment assets P37,533,049 P– P381,083 P– P37,914,132
Inter-segment revenue 21,173,546 559,947 1,889,953 (23,623,446) – Deferred tax assets 616,660 – 19,730 – 636,390
Segment revenue 88,925,488 3,703,567 2,053,430 (23,623,446) 71,059,039 Consolidated assets P38,149,709 P– P400,813 P– P38,550,522
Segment expenses (87,603,459) (559,947) (2,120,384) 23,623,446 (66,660,344)
Impairment losses on property, Segment liabilities P12,743,376 P– (P10,912) P– P12,732,464
plant and equipment, Deferred tax liabilities 524,082 – 4,345 – 528,427
investment properties and Long-term debt - including current
security deposit (53,677) – – – (53,677) portion 4,720,044 – – – 4,720,044
Equity in net loss of joint ventures Income tax payable 153,606 – 1,111 – 154,717
and an associate (50,954) – – – (50,954) Consolidated liabilities P18,141,108 P– (P5,456) P– P18,135,652
Other segment income 488,029 – 15,506 – 503,535 Other Segment Information
Segment result P1,705,427 P3,143,620 (P51,448) P– 4,797,599 Capital expenditures P3,708,461 P– P– P– P3,708,461
Interest income 270,114 Depreciation and amortization 2,393,467 – 8,127 – 2,401,594
Interest expense (206,013)
Income before income tax 4,861,700 Geographical Segments
Provision for income tax (1,149,704) The Jollibee Group’s geographical segments are based on the location of the assets producing revenues
Net income P3,711,996 in the Philippines and in other locations (which includes PRC and USA). Sales to external customers
Assets and Liabilities disclosed in the geographical segments are based on the geographical location of the customers.
Segment assets P40,637,819 P– P444,490 P– P41,082,309
Majority of the Jollibee Group’s revenues were generated from the Philippines, which is the Jollibee
Deferred tax assets 667,539 – 18,283 – 685,822
Consolidated assets P41,305,358 P– P462,773 P– P41,768,131 Group’s country of domicile.
Segment liabilities P14,032,646 P– P123,023 P– P14,155,669 The Jollibee Group does not have a single external customer which revenue amounts to 10% or more
Deferred tax liabilities 371,280 – 3,465 – 374,745 of the Jollibee Group’s revenues.
Long-term debt - including current
5,427,456 – – – 5,427,456 The following table presents revenues, segment assets and capital expenditures of the Jollibee Group’s
portion
Income tax payable 77,361 – 1,597 – 78,958 geographical segments:
Consolidated liabilities P19,908,743 P– P128,085 P– P20,036,828
Other Segment Information 2013
Capital expenditures P3,755,907 P– P– P– P3,755,907 Philippines International Eliminations Consolidated
Depreciation and amortization 2,700,694 – 4,942 – 2,705,636 (In Thousands)
Segment revenue P62,002,412 P18,439,768 (P159,411) P80,282,769
2011 (As restated) Segment assets 29,402,035 15,868,402 – 45,270,437
Food Service Franchising Leasing Eliminations Consolidated Capital expenditures 2,686,332 1,488,814 – 4,175,146
(In Thousands)
Revenue from external customers P59,513,806 P2,893,497 P147,624 P– P62,554,927 2012
Inter-segment revenue 8,331,488 448,801 1,000,582 (9,780,871) – Philippines International Eliminations Consolidated
Segment revenue 67,845,294 3,342,298 1,148,206 (9,780,871) 62,554,927 (In Thousands)
Segment expenses (66,726,218) (448,801) (1,221,356) 9,780,871 (58,615,504) Segment revenue P55,680,452 P15,668,586 (P289,999) P71,059,039
Equity in net earnings of joint Segment assets 26,439,607 14,642,702 – 41,082,309
ventures and an associate 300 – – – 300 Capital expenditures 2,250,655 1,505,252 – 3,755,907
Other segment income 557,655 – 9,159 – 566,814
2011 (As restated)
Segment result P1,677,031 P2,893,497 (P63,991) P– 4,506,537
Philippines International Eliminations Consolidated
Interest income 179,763 (In Thousands)
Interest expense (291,343) Segment revenue P50,235,281 P12,475,708 (P156,062) P62,554,927
Income before income tax 4,394,957 Segment assets 24,446,432 13,467,700 – 37,914,132
Provision for income tax (1,110,177) Capital expenditures 2,263,819 1,444,642 – 3,708,461
Net income P3,284,780
61
6. Cash and Cash Equivalents 8. Inventories

This account consists of:
2013 2012
2013 2012
At cost:
Cash on hand P220,019,290 P194,069,517
Food supplies and processed inventories P3,390,581,280 P2,498,077,691
Cash in banks 4,313,506,109 3,289,593,582
Packaging, store and other supplies 119,209,912 118,104,894
Short-term deposits 5,370,351,669 5,364,928,485
3,509,791,192 2,616,182,585
P9,903,877,068 P8,848,591,584
At net realizable value -
Cash in banks earn interest at the respective savings or special demand deposit rates. Short-term Novelty items 50,640,942 13,560,892
Total inventories at lower of cost and net
deposits are made for varying periods of up to three months depending on the immediate cash
requirements of the Jollibee Group, and earn interest at the respective short-term deposit rates. realizable value P3,560,432,134 P2,629,743,477
Interest income earned from cash in banks and short-term deposits amounted to P145.6 million, The cost of novelty items carried at net realizable value amounted to P67.2 million and P20.8 million as
P159.9 million and P101.1 million in 2013, 2012 and 2011, respectively (see Note 23). at December 31, 2013 and 2012, respectively.
The movements in the allowance for inventory obsolescence as at December 31 are as follows:
7. Receivables 2013 2012
This account consists of: Balance at beginning of year P7,198,880 P22,731,966
Provisions (Note 22) 9,367,464 2,154,527
2013 2012 Reversals (Note 22) – (13,316,722)
Trade P3,128,358,963 P2,714,763,623 Write-offs – (4,370,891)
Less allowance for impairment loss 274,461,795 260,138,120 Balance at end of year P16,566,344 P7,198,880
2,853,897,168 2,454,625,503
Advances to employees 112,214,103 95,502,388 The Jollibee Group performs an aging analysis of food supplies and packaging materials on hand in
Current portion of employee car plan receivables 33,366,298 50,300,588 determining the amount of provision or reversal to be recognized. Based on this assessment, the
Others 83,395,109 149,913,012 Company booked provisions for inventory obsolescence amounting to P9.4 million and P2.2 million in
P3,082,872,678 P2,750,341,491 2013 and 2012, respectively.
Trade receivables are noninterest-bearing and are generally on 30-60 day terms.
9. Other Current Assets
Advances to employees, current portion of employee car plan receivables and other receivables are
normally collectible within the next financial year. This account consists of:
The movements in the allowance for impairment loss for trade receivables as at December 31 are as 2013 2012
follows: Deposits to suppliers and others P840,873,736 P567,340,190
Prepaid expenses:
2013 2012 Rent 465,306,028 421,171,321
Balance at beginning of year P260,138,120 P164,744,992 Taxes 297,092,018 184,878,704
Provisions (Note 22) 34,007,984 97,559,491 Insurance and other prepayments 147,069,555 145,314,639
Write-offs (22,801,774) (1,113,709) Supplies 86,653,768 75,820,509
Translation adjustments 3,117,465 (1,052,654) P1,836,995,105 P1,394,525,363
Balance at end of year P274,461,795 P260,138,120
Deposits to suppliers are generally applied to purchase of inventories and availment of services within
The provisions in 2013 and 2012 resulted from specific and collective impairment assessments the next financial year.
performed by the Jollibee Group. Prepaid expenses consist of the unexpired portion of insurance, advertising, prepaid car plan and other
expenses paid in advance. Supplies pertain to the unused office and operating supplies as at the end
of the year.
Prepaid taxes mainly represent creditable withholding taxes that can be applied in the following year The fair values of the identifiable assets acquired and liabilities assumed as at the date of acquisition
against the corporate income tax of the Jollibee Group. were as follows:
Cash and cash equivalents P7,525,090
10. Available-for-Sale Financial Assets Receivables 2,894,103
Inventories 13,041,495
This account consists mainly of shares in golf and leisure clubs as at December 31, 2013 and of shares in Other current assets 31,336,869
golf and leisure clubs and shares in public utility companies as at December 31, 2012. Property, plant and equipment (Note 12) 71,613,166
Other noncurrent assets 13,891,399
The movements on the carrying value of AFS financial assets are as follows:
Total identifiable assets acquired 140,302,122
2013 2012 Less -
Balance at beginning of year P128,149,438 P120,649,438 Trade payables and other current liabilities 93,867,653
Additions 300,000 7,500,000 Net identifiable assets acquired P46,434,469
Changes in fair value (102,626,829) –
Write-off (4,343,148) – The amount of provisional goodwill initially recorded at acquisition date amounted to
Balance at end of year P21,479,461 P128,149,438 RMB25.2 million (P170.4 million). As a result of the finalization in 2013, the Jollibee Group recognized
additional goodwill amounting to RMB17.3 million (P121.7 million). Total goodwill recognized for this
The net unrealized loss on AFS financial assets presented in the consolidated statements of financial business combination upon finalization amounted to P292.1 million, determined as follows:
position amounted to nil and P102.6 million as at December 31, 2013 and 2012, respectively.
Fair value of consideration transferred:
The change in fair value in 2013 was as a result of the reversal of previously recorded OCI of certain Cash P135,110,309
public utility companies’ shares out of AFS to “Other receivables” as they have already been called for Subscription payable 60,826,786
redemption. There were no movements in 2013 and 2012. Contingent consideration 121,743,395
Total 317,680,490
Non-controlling interests’ share in the net assets acquired 20,895,511
11. Business Combinations, Incorporation of New Subsidiaries, and Interests in and Advances to Aggregate amount 338,576,001
Joint Ventures, Co-venturers and Associate Less acquisition - date fair value of net assets acquired 46,434,469
Goodwill (Notes 2 and 14) P292,141,532
A. Business Combinations
Business Combination through Acquisition of Equity Shares Goodwill pertains to the value of expected synergy arising from the business combination.
Acquisition in 2012 The fair value of acquired receivables approximates their carrying value. No impairment loss was
provided on these receivables.
San Pin Wang. On March 9, 2012, the Jollibee Group, through JWPL, completed its acquisition of
55% of Guangxi San Pin Wang Food and Beverage Management Company Limited (“San Pin Wang”) The net cash outflow on the acquisition is as follows:
which operates the San Pin Wang beef noodle business in South China for a total acquisition cost
Cash paid on acquisition P135,110,309
of RMB30.0 million (P195.9 million). The Jollibee Group paid RMB20.0 million (P135.1 million) as
Less cash acquired from subsidiary 7,525,090
of December 31, 2012. The remaining RMB10.0 million (P67.6 million) was paid in March 2013. The P127,585,219
remaining 45% is held by Guangxi Zong Kai Food Beverage Investment Company Limited (“GZK”).
Subsequent to the acquisition date, the Jollibee Group and GZK contributed additional investments San Pin Wang contributed RMB106.0 million (P709.6 million) and RMB0.94 million (P6.5 million) from the
amounting to RMB11.0 million (P74.6 million) and RMB9.0 million (P59.2 million), respectively. date of acquisition to December 31, 2012 to the consolidated revenue and consolidated net income
for the period, respectively. If the business combination had taken place at the beginning of 2012,
The primary reason for the acquisition of San Pin Wang is to expand the Jollibee Group’s chain of quick consolidated revenue and consolidated net income for the year would have been RMB10,640.7 million
service restaurants and to serve high-quality but affordable noodles to urban areas in China. (P71,212.6 million) and RMB539.6 million (P3,712.2 million), respectively.
As part of the purchase agreement with GZK, a contingent consideration has been agreed. This
consideration is contingent upon a target net income after tax of San Pin Wang for the next three years.
In May 2013, the Jollibee Group paid RMB7.5 million (P50.1 million) as the contingent consideration for
the year 2012. The remaining contingent consideration is due for final measurement and payment to
the former shareholders in May 2016.
63
Below is the rollforward analysis of the unpaid purchase considerations as at December 31, 2013 and The balance of liability for acquisition of Mang Inasal as at December 31, 2013 and 2012 are as follows:
2012:
2013 2012
2013 Balance at beginning of year P72,292,267 P141,737,289
Balance at January 1, 2013 P185,522,383 Payment – (75,000,000)
Accretion 1,772,743 Accretion (Note 23) 2,707,733 5,554,978
Settlements (115,254,984) Balance at end of year P75,000,000 P72,292,267
Translation adjustments (388,423)
Balance at December 31, 2013 P71,651,719 As at December 31, 2013, the Jollibee Group has not yet settled the final installment payment of
P75.0 million pending fulfillment of certain conditions in the contract.
In original currency RMB9,800,000
The liability for acquisition of Mang Inasal was classified under “Current portion of liability for acquisition
Current portion of liability P– of businesses” in the statements of financial position as at December 31, 2013 and 2012, respectively.
The Jollibee Group’s primary reason for the business combination is to grow Mang Inasal’s sales from
Noncurrent portion of liability P71,651,719 existing stores through application of the Jollibee Group’s knowledge of consumers and available
recipes and products, continued expansion of Mang Inasal’s store network, cost improvement on its
2012 raw materials and operational efficiency by applying the Jollibee Group’s technology and scale.
Fixed consideration P60,826,786
Contingent consideration (Note 2) 121,743,395 Business Combination through Purchase of Assets
182,570,181 Chowking US Operations. On May 27, 2011, the Jollibee Group, through its wholly-owned subsidiary,
Accretion 5,391,461 TTC, entered into an Asset Purchase Agreement with Fortune Capital Corporation, owner and operator
Translation adjustments (2,439,259) of all Chowking stores in the US as the master licensee therein, to purchase the latter’s property
Balance at December 31, 2012 P185,522,383 and equipment, inventories and security deposits of its twenty (20) existing stores. The purchase
In original currency RMB28,086,050 consideration amounted to USD16.0 million (P693.3 million). The Jollibee Group paid USD 12.0 million
(P520.0 million) of the total consideration as of December 31, 2011. The balance shall be paid over the
Current portion of liability P113,870,663 next five (5) years.
First and second year payments of the outstanding balance were paid in May 2012 and 2013 amounting
Noncurrent portion of liability P71,651,720 to USD 0.8 million (P33.7 million) and USD 0.8 million (P34.6 million), respectively.
Acquisitions in 2011 and Prior The balance of liability for acquisition of Chowking US operations as at December 31, 2013 and 2012 is
as follows:
Burger King. On September 30, 2011, the Jollibee Group, through the Parent Company, acquired a
majority ownership of the entity, BKTitans, Inc. which operates Burger King in the Philippines. The 2013 2012
Parent Company invested P65.5 million to purchase 54% equity interest in BKTitans, Inc., owner of Balance at beginning of year P109,757,490 P141,990,657
Perf Restaurants, Inc. (or collectively the BK Group), the sole franchisee of the Burger King Brand in the Accretion (Note 23) 6,620,533 10,298,401
Philippines. Payment (34,560,000) (33,696,000)
Translation adjustments 8,205,065 (8,835,568)
Advances were made to the BK Group prior to its acquisition in 2011.
The Jollibee Group’s primary reason for the business combination is to gain presence in the premium In original currency USD2,026,908 USD2,673,750
price segment of the hamburger category in the fast food market.
Current portion of liability P32,666,875 P30,205,546
Mang Inasal. On November 22, 2010, the Jollibee Group, through the Parent Company, acquired 70%
Noncurrent portion of liability 57,356,213 79,551,944
of the issued and outstanding shares of Mang Inasal from Injap Investments, Inc. (the seller), owner
and operator of Mang Inasal restaurant business in the Philippines, for a total acquisition cost of P90,023,088 P109,757,490
P2,976.2 million. The Jollibee Group paid P2,700.0 million as of December 31, 2010.
With this acquisition, the Jollibee Group is poised to take a more active role to further the growth of the
The present value of the remaining 10% of the purchase price is payable over a 3-year period as follows: Chowking business in the USA.
50% 12 months from November 22, 2010 (closing date)
25% 24 months from closing date
25% 36 months from closing date
Business Combination Achieved in Stages Goodwill Arising from Business Combinations

Chow Fun. On March 31, 2011, the Jollibee Group, through its wholly-owned subsidiary, JWPL, acquired Goodwill acquired in business combinations in 2011 and prior years was determined as follows:
from Aspen Partners, LLC 2,400 shares of Chow Fun Holdings, LLC (“Chow Fun”) for USD3.2 million Chowking
(P139.6 million), bringing up its equity share in Chow Fun to 80.55%. The Jollibee Group (through JWPL) Mang Inasal BK Group US Operations Chow Fun
previously held 13.89% equity share in Chow Fun. Chow Fun is the developer and owner of Jinja Bar Fair value of consideration
and Bistro in New Mexico, USA. transferred:
The carrying amount of the previously held equity interest in Chow Fun was presented as part of AFS Cash P2,700,000,000 P– P519,960,000 P139,644,000
financial assets in 2010. Prior to the business combination, the previously held equity interest was Advances – 65,454,545 – –
remeasured at the acquisition-date fair value resulting to a loss amounting to P12.8 million which was Liability 276,243,250 – 139,950,677 –
recognized in the statements of comprehensive income under “General and administrative expenses” Total 2,976,243,250 65,454,545 659,910,677 139,644,000
account in 2011. Non-controlling interests’ share in
the net assets acquired 512,132,834 51,289,436 – 3,340,345
The Jollibee Group’s objective in this venture is to enhance its capability in developing Asian food Previously held equity interests
restaurant concepts for the mainstream consumers in the United States as part of its long-term strategy. (13.89%) – – – 29,092,500
Fair Values of Net Identifiable Assets Acquired Aggregate amount 3,488,376,084 116,743,981 659,910,677 172,076,845
Less acquisition - date fair value of
The fair values of the identifiable assets acquired and liabilities assumed from Mang Inasal, BK Group, net assets acquired 1,707,109,445 111,498,774 276,055,430 17,182,844
Chowking US Operations, and Chow Fun as at the dates of acquisitions were as follows: Goodwill (Note 14) P1,781,266,639 P5,245,207 P383,855,247 154,894,001
Chowking The net cash outflows on the acquisitions are as follows:
Mang Inasal BK Group US Operations Chow Fun
2011 2010
Cash and cash equivalents P132,213,023 P17,071,231 P– P4,870,336
Cash paid:
Receivables 113,733,554 5,951,921 – 331,325
Mang Inasal P– P2,700,000,000
Inventories 126,423,715 13,302,567 14,515,550 3,883,969
BK Group – –
Other current assets 557,888 3,245,199 – 3,073,027
Chowking US Operations 519,960,000 –
Property, plant and equipment* 263,083,640 222,303,494 262,106,940 105,912,607
Chow Fun 139,644,000 –
Trademark 2,004,255,942 – – –
659,604,000 2,700,000,000
Deferred tax assets – 3,323,559 – –
Less cash acquired from subsidiary:
Other noncurrent assets 26,086,618 50,269,948 6,322,410 –
Mang Inasal – 132,213,023
Total identifiable assets acquired 2,666,354,380 315,467,919 282,944,900 118,071,264
BK Group 17,071,231 –
Less:
Chowking US Operations – –
Trade payables and other
Chow Fun 4,870,336 –
current liabilities 271,381,354 168,691,196 – 23,760,278 21,941,567 132,213,023
Long-term liabilities – – – 77,128,142 P637,662,433 P2,567,786,977
Income tax payable 59,145,715 1,102,058 – –
Deferred tax liabilities 628,717,866 30,976,291 6,889,470 – Acquirees’ Contribution to Consolidated Revenues and Consolidated Net Income During the Year of Acquisition
Pension liability – 3,199,600 – –
Total identifiable liabilities assumed 959,244,935 203,969,145 6,889,470 100,888,420 The BK Group, Chowking US Operations, and Chow Fun contributed P719.4 million and P23.6 million
Net identifiable assets acquired P1,707,109,445 P111,498,774 P276,055,430 P17,182,844 from the date of acquisition to December 31, 2011 to the consolidated revenue and net income
* The carrying amount of Mang Inasal and BK Group’s property, plant and equipment amounted to for the period, respectively. If the business combinations had taken place at the beginning of
P 171.6 million and P 119.9 million, respectively, at the date of acquisition. 2011, consolidated revenue and net income for the year would have been P63,170.9 million and
P3,262.1 million, respectively.
B. Incorporation of New Subsidiaries
Golden Beeworks Pte. Ltd. (Golden Beeworks). On May 16, 2012, the Jollibee Group, through GPPL, entered
into an agreement to form Golden Beeworks together with Beeworks, Inc (“Beeworks”), to own and
operate Jollibee stores in Singapore. Under the agreement, the parties will establish Golden Beeworks
in Singapore which will be owned 60% by GPPL and 40% by Beeworks. GPPL will have full management
65
control of the company, while leveraging on Beework’s experience, reputation and network to establish Summarized Statement of Financial Position as at December 31, 2012
the “Jollibee” brand in Singapore. The initial funding for Golden Beeworks is USD1.0 million. Golden Mang Inasal JFPPL San Pin Wang
Beeworks was incorporated on July 19, 2012 and started its commercial operation on March 12, 2013. Current assets P889,286,750 P6,014,729 P139,346,180
As at December 31, 2013, capital contributions of the Jollibee Group to Golden Beeworks amounted Noncurrent assets 320,748,285 248,255,657 108,871,703
to P45.1 million. Current liabilities 701,260,666 28,913,277 60,400,592
Noncurrent liabilities 118,729,387 − −
C. Partly-owned Subsidiaries with Material Non-Controlling Interest Total equity 390,044,982 225,357,109 187,817,291
Equity attributable to non-controlling interests 117,013,495 67,607,133 84,517,781
Financial information of subsidiaries that have material non-controlling interests are provided below:
Proportion of equity interest held by non-controlling interests: Summarized Cash Flow Information for 2013
Mang Inasal JFPPL San Pin Wang
Country of incorporation and operation 2013 2012 Net cash provided by (used in) operating
Mang Inasal Philippines 30% 30% activities P360,181,397 (P97,598,466) (P4,249,883)
JFPACL Singapore 30% 30% Net cash used in investing activities (69,758,734) (41,977,010) (34,800,901)
San Pin Wang People’s Republic of China 45% 45% Net cash provided by (used in) financing
Summarized Statement of Comprehensive Income for 2013 activities (100,000,000) 177,580,000 −
Net increase (decrease) in cash and cash
Mang Inasal JFPPL San Pin Wang equivalents 190,556,600 38,004,524 (39,050,784)
Revenues P5,024,650,246 P922,513,905 P88,524,112
Net income (loss) 243,925,820 (23,880,385) (22,758,697) Summarized Cash Flow Information for 2012
Net income (loss) attributable to
non-controlling interests 73,177,746 (7,164,115) (10,241,414) Net cash provided by operating
Other comprehensive income (loss) (858,376) 33,534,645 28,127,143
(used in) activities P414,847,292 P125,497,481 (P51,336,402)
Other comprehensive income (loss)
Net cash used in investing activities (117,069,644) (109,662,093) (39,009,357)
attributable to non-controlling interests (257,513) 10,060,393 12,657,214 Net cash provided by (used in) financing
Total comprehensive income 243,067,445 9,654,260 5,368,446
activities (150,000,000) (13,299,879) 133,778,486
Dividends paid to non-controlling interests 30,000,000 − −
Net increase in cash and cash equivalents 147,777,648 2,535,509 43,432,727
Summarized Statement of Comprehensive Income for 2012
D. Interests in and Advances to Joint Ventures, Co-venturers and Associate
Revenues P4,808,345,023 P36,365,967 P1,112,306,669 2013 2012
Net income (loss) 168,479,571 (24,756,569) 10,822,549 Interests in and advances to SuperFoods joint ventures and
Net income (loss) attributable to co-venturers P3,113,802,292 P2,891,167,600
non-controlling interests 50,543,871 (7,426,971) 4,870,147 Interest in joint venture - Wowprime 157,675,953 98,040,000
Other comprehensive income (loss) − 1,011 (3,220,775) 3,271,478,245 2,989,207,600
Other comprehensive income (loss) Interest in an associate 50,915,520 22,293,981
attributable to non-controlling interests − 303 (1,449,349) P3,322,393,765 P3,011,501,581
Total comprehensive income 168,479,571 (24,755,558) 7,601,774
Dividends paid to non-controlling interests 45,000,000 − − SuperFoods Group. On January 20, 2012, upon fulfillment of certain legal and regulatory requirements in
Vietnam, the Jollibee Group, through JWPL, acquired effective ownership of 50% share in the business
Summarized Statement of Financial Position as at December 31, 2013 of the SuperFoods Group through formation of joint ventures. This consists of a 49% share in SF Vung
Mang Inasal JFPPL San Pin Wang Tau Joint Stock Company, organized in Vietnam, and a 60% share in Blue Sky Holding Limited in Hong
Current assets P1,160,523,661 P401,781,653 P199,066,935 Kong (the SuperFoods Holding Companies). The formation of joint ventures is an implementation of
Noncurrent assets 336,151,664 440,901,558 106,677,352 the Framework Agreement made on May 20, 2011 between the Jollibee Group, through JWPL and
Current liabilities 833,984,844 313,682,561 119,270,638 its partner, Viet Thai International Joint Stock Company and Viet Thai International Company limited
Noncurrent liabilities 129,446,412 177,580,000 2,684,049 (collectively, Superfoods Group). The Framework Agreement provided for the Jollibee Group to
Total equity 533,244,069 351,420,650 183,789,600 contribute a total of USD25 million to gain 50% effective ownership of the joint ventures. Loans and
Equity attributable to non-controlling interests 159,973,221 105,426,195 82,705,320 deposits were made to Superfoods Group and co-venturers prior to the formation of the joint ventures
in 2012.
Pursuant to the Framework Agreement, the preliminary consideration for the 50% share in Superfoods
Group amounted to a cash payment of USD25 million in 2011.
The Supplemental Agreement further provides the following formula that might result in additional sum also in June 2016. The loan is agreed to be used for general corporate purposes. Total interest from
payment on the part of JWPL in 2016: this loan amounted to USD1.4 million P(60.1 million), USD 1.8 million (P75.1 million) and USD 1.0 million
(P43.3 million) for the years ended December 30, 2013, 2012 and 2011, respectively. The USD35.0 million
(a) The actual EBITDA results of Superfoods Group multiplied by specified multiples reduced by its
loan is secured by a mortgage by the co-venturers of all their shares in SuperFoods Holding Companies.
net debt and multiplied by 30% weight recognized for the First Portion Measurement Period
(January 1-December 31, 2012) and the actual EBITDA results of Superfoods Group multiplied On April 30, 2013, an additional loan was extended to SuperFoods Group amounting to USD1.0 million
by specified multiples reduced by its net debt and multiplied by 20% weight recognized for the (P44.4 million) payable in February 2014. The loan bears interest of 5% per annum payable in lump sum
Second Portion Measurement Period (for July 1, 2015 to June 30, 2016); the resulting amount of also in February 2014. The loan is agreed to be used for general corporate purposes. Total interest from
which will be compared with: this loan amounted to USD0.04 million (P1.5 million) in 2013.
(b) The aggregate balance of ‘Interests in the joint ventures’ and ‘Advances to joint ventures and co- On August 22, 2013, an additional loan was extended to SuperFoods Group amounting to
venturers’ and accrued interests as of June 30, 2016. USD1.0 million (P44.4 million) payable in August 2014. The loan bears interest of 5% per annum payable
in lump sum also in August 2014. The loan is agreed to be used for general corporate purposes. Total
If the resulting amount of the above formula is positive (contingent consideration):
interest from this loan amounted to USD0.02 million (P0.8 million) in 2013.
(a) The co-venturers shall sell its 1 share in JSF Investments to JWPL for a purchase price equal to the
Loan to Blue Sky
Loan to co-venturers and accrued interests (the Outstanding Balance) and the proceeds shall be
On June 10, 2011, a loan was extended to Blue Sky Holdings Limited (Blue Sky), the Hong Kong-based
used by the co-venturers to repay the Loan; and
joint venture, amounting to USD5.0 million (P222.0 million) payable in June 2014. The loan bears interest
(b) The contingent consideration is payable in cash to the co-venturers. of 5% per annum payable also in June 2014. Total interest from this loan amounted to USD0.25 million
(P10.8 million), USD0.25 million (P10.7 million) and USD0.14 million (P6.0 million) for the years ended
If the result of the above formula is negative (negative earnout):
December 31, 2013, 2012 and 2011, respectively.
(a) The co-venturers shall still sell its 1 share in JSF Investments to JWPL at USD1.0;
On May 7, 2012, an additional loan was extended to Blue Sky amounting to USD2.5 million
(b) The co-venturers shall repay the loan if the consolidated EBITDA of the Superfoods Holding (P111.0 million) payable in May 2014. The loan bears interest of 5% per annum payable also in
Companies for the Second Portion Measurement Period is: May 2014. Total interest from this loan amounted to USD0.13 million (P5.4 million) and USD0.08 million
(P3.4 million) for the years ended December 31, 2013 and 2012, respectively.
i. above USD25.0 million, the Outstanding Balance shall be deemed paid;
The details of Jollibee Group’s interests in SuperFoods joint venture and advances to co-venturers as at
ii. USD25.0 million or below, JSF Investments shall have the right to acquire such number
December 31, 2013 and 2012 are as follows:
of shares in the Superfoods Holding Companies as would satisfy the repayment of the
Outstanding Balances; 2013 2012
iii. Negative as a result of which the Outstanding Balance cannot be fully satisfied even if JSF Interest in a joint venture–cost P1,086,562,975 P1,086,562,975
Investments acquires 100% of the co-venturers’ shares in Superfoods Holding Companies, Equity in net loss:
the deficiency shall be paid to JSF Investments in cash. The co-venturers shall have a period Balance at the beginning of year (72,463,639) –
of 6 months from the last day of the Second Portion Measurement Period within which to Equity in net loss for the year (100,445,720) (72,463,639)
repay the Outstanding Balance in cash, before JSF Investments may exercise its option to be (172,909,359) (72,463,639)
paid with shares of Superfoods Holding Companies. If JSF Investments exercises its option to Advances to the joint ventures and co-venturer:
Balance at beginning of year 1,877,068,264 2,903,505,390
be paid in shares of Superfoods Holding Companies, the co-venturers shall, within a 6 month
Additions 88,790,000 105,179,193
period from JSF Investments’ exercise of its option, have the right to acquire additional
Accrual of interest 81,335,640 84,322,262
equity in Superfoods Holding Companies to the extent required to restore the ownership Translation adjustments 152,954,772 (129,375,606)
interest of the co-venturers and JSF Investments to the proportion prior to exercise of the Reclassification – (1,086,562,975)
option; provided that the co-venturers’ acquisition of additional equity shall be at the same Balance at end of year 2,200,148,676 1,877,068,264
valuation applied to JSF Investments. P3,113,802,292 P2,891,167,600
JWPL shall be required to pay the co-venturers an additional amount based upon achieving a positive
amount resulting from the above formula. Based on management’s assessment using the above The aggregate amounts as of December 31, 2013 and 2012 of SuperFoods Group are as follows:
earn-out formula, no additional consideration needs to be recognized as of January 20, 2012, 2013 2012
December 31, 2012 and December 31, 2013. Current assets P402,113,549 P307,047,808
In accordance with the Framework Agreement, JWPL, through its 99%-owned subsidiary JSF, extended Noncurrent assets 980,914,259 1,102,444,542
loans to the SuperFoods Group with the details as follows: Total assets P1,383,027,808 P1,409,492,350
Loan to Co-venturers Current liabilities P473,141,806 P989,978,288
Loan to the owners of the SuperFoods Group amounting to USD35.0 million (P1,523.9 million), extended Noncurrent liabilities 609,348,409 (162,086,786)
Total liabilities P1,082,490,215 P827,891,503
on June 30, 2011, is payable in June 2016. The loan bears interest of 5% per annum payable in lump
67
The amounts of assets and liabilities above include the following: The details of Jollibee Group’s interest in Wowprime joint venture as at December 31, 2013 and 2012
are as follows:
2013 2012
Cash and cash equivalents P88,194,498 P92,074,877
Current financial liabilities (excluding trade payables 2013 2012
Balance at beginning of year P98,040,000 P–
and other current liabilities and provisions) 336,217,760 853,408,408
Investment during the year 103,608,000 98,040,000
Noncurrent financial liabilities (excluding provisions) 609,348,409 (162,086,786)
Equity in net loss for the year (43,972,047) –
The amounts of the income and expenses account include the following: Balance at end of year P157,675,953 P98,040,000
2013 2012 The aggregate amounts as at December 31, 2013 and 2012 pertaining to Wowprime are as follows:
Revenues P1,936,000,491 P1,458,754,050
Net income (200,891,440) (144,927,278) 2013 2012
Other comprehensive income – – Current assets P280,636,849 P4,085,110
Total comprehensive income (200,891,440) (144,927,278) Noncurrent assets 95,707,772 200,165,000
Dividends received from the joint venture – – Total assets P376,344,621 P204,250,110
2013 2012 Current liabilities P23,160,593 P–
Depreciation and amortization P118,111,479 P67,310,382
Interest income 3,395,889 1,163,122 The amounts of assets and liabilities above include the following:
Interest expense 53,280,507 26,607,655
Provision for income tax 84,749 –
2013 2012
Reconciliation of the above summarized financial information to the carrying amount of the interest in Cash and cash equivalents P255,653,861 P4,085,110
the associate recognized in the consolidated financial statements: Current financial liabilities (excluding trade payables
and other current liabilities and provisions) 15,594,727 4,105,110
2013 2012
Net assets P300,537,593 P581,600,847 The amounts of the income and expenses account include the following:
Proportion of the Jollibee Group’s ownership 50% 50%
150,268,797 290,800,424 2013 2012
Goodwill 674,794,753 674,794,753 Revenues P48,433,607 P–
Cumulative translation adjustments 88,590,066 48,504,159 Net income (loss) (91,608,431) 427
P913,653,616 P1,014,099,336 Total comprehensive income (91,608,431) 427
2013 2012
Wowprime. On August 22, 2012, the Jollibee Group, through JWPL and GPPL, entered into an agreement
Depreciation and amortization P7,787,242 P–
with Hoppime Ltd., a subsidiary of Wowprime Corporation of Taiwan (Wowprime) and some key
Interest income 731,355 427
executives of Wowprime, to establish a joint venture entity to own and operate the 12 Hotpot brand in
the People’s Republic of China, Hong Kong and Macau. The “12 Hotpot” restaurant is known in Taiwan Reconciliation of the above summarized financial information to the carrying amount of the interest in
for its low-priced hot dishes. the joint venture recognized in the consolidated financial statements:
The joint venture entity, incorporated as WJ Investments Limited (WJ), is 48% owned by the Jollibee
Group and 48% by Wowprime’s subsidiary and executives. The remaining 4% is owned by certain 2013 2012
individuals with experience in the retail sector in China. Through their subsidiaries, Jollibee Group and Net assets P353,184,028 P204,250,000
Wowprime will share equal control and management of WJ. Proportion of the Jollibee Group’s ownership 48% 48%
169,528,333 98,040,000
The Jollibee Group has invested USD2.4 million (P98.0 million) as at December 31, 2012. The first store Cumulative translation adjustments (11,852,380) –
started commercial operations in January 2013. On October 31, 2013, the Jollibee Group invested an P157,675,953 P98,040,000
additional USD2.4 million (P103.6 million).
Interest in an Associate
Entrek. The Jollibee Group, through JIBL, has 1/3 or 33.33% ownership over Entrek (B) SDN BHD (Entrek),
a company that operates Jollibee stores in Brunei. As of December 31, 2011, the Jollibee Group’s
investment in Entrek is carried at nil due to its equity share in the previous losses of Entrek. As at and for
the year ended December 31, 2012, the Jollibee Group recognized its investment in the associate and
equity in net earnings amounting to P22.3 million coming from Entrek’s improved operations.
The details of the Jollibee Group’s interest in an associate as at December 31, 2013 and 2012 are as 2013 2012
follows: Revenues P507,409,777 P429,912,606
Total comprehensive income 85,864,160 66,884,984
2013 2012
Interests in an associate - cost P16,660,000 P16,660,000 Reconciliation of the above summarized financial information to the carrying amount of the interest in
Cumulative equity in net earnings (loss): the associate recognized in the consolidated financial statements:
Balance at beginning of year 5,633,981 (16,660,000)
Equity in net earnings during the year 28,621,539 22,293,981 2013 2012
Balance at end of year 34,255,520 5,633,981 Net assets P215,048,707 P123,771,299
P50,915,520 P22,293,981 Proportion of the Jollibee Group’s ownership 33.33% 33.33%
71,682,902 41,257,100
The aggregate amounts as at December 31, 2013 and 2012 related to the Jollibee group’s interest in Write off of investment in 2011 (16,660,000) (16,660,000)
Entrek follow: Cumulative translation adjustments (4,107,382) (2,303,119)
P50,915,520 P22,293,981
2013 2012
Current assets P333,980,312 P195,456,140 E. Cessation of Operations of Manong Pepe Karinderia
Noncurrent assets 83,117,796 97,210,858 On April 9, 2011, the Jollibee Group, through its wholly-owned subsidiary, Fresh N’ Famous, discontinued
Total assets P417,098,108 P292,666,998 the operations of its Manong Pepe Karinderia business unit. The move is part of the Jollibee Group’s
plan to concentrate resources in building larger quick service restaurant businesses. The cessation
Current liabilities P202,049,401 P168,895,698 of operation of Manong Pepe Karinderia did not have a material impact on the Jollibee Group’s
consolidated financial statements.
12. Property, Plant and Equipment

The rollforward analysis of property, plant and equipment are as follows:
2013
Plant,
Buildings, Office, Store
Land and Condominium Leasehold and Food Furniture
Land Units and Rights and Processing and Transportation Construction
Improvements Improvements Improvements Equipment Fixtures Equipment in Progress Total
(In Thousands)
Cost
Balance at beginning of year P661,794 P1,678,661 P11,683,920 P10,190,137 P923,867 P361,975 P292,754 P25,793,108
Additions – 5,704 1,201,548 1,416,123 135,420 52,518 1,096,563 3,907,876
Retirements and disposals – – (865,474) (811,874) (187,167) (44,368) (240,946) (2,149,829)
Reclassifications (Note 13) – 854 526,967 79,943 3,388 1,962 (612,260) 854
Translation adjustments 4,420 13,058 438,072 171,124 12,999 4,486 11,893 656,052
Balance at end of year 666,214 1,698,277 12,985,033 11,045,453 888,507 376,573 548,004 28,208,061
Accumulated Depreciation and Amortization
Balance at beginning of year 7,186 668,534 6,064,413 7,045,793 665,546 252,672 – 14,704,144
Depreciation and amortization (Notes 21 and 22) 127 51,534 1,607,616 1,229,317 124,933 46,024 – 3,059,551
Retirements and disposals – – (678,604) (759,932) (177,943) (35,674) – (1,652,153)
Reclassifications – – (1,106) 43 (12) 1,075 – –
Translation adjustments – 687 204,889 93,754 5,972 2,576 – 307,878
Balance at end of year 7,313 720,755 7,197,208 7,608,975 618,496 266,673 – 16,419,420
Accumulated Impairment Losses
Balance at beginning of year – – – 29,500 – – – 29,500
Reversal of impairment during the year (Note 22) – – – (13,300) – (13,300)
Balance at end of year – – – 16,200 – – – 16,200
Net Book Value P658,901 P977,522 P5,787,825 P3,420,278 P270,011 P109,900 P548,004 P11,772,441
69
2012
Plant,
Buildings, Office, Store
Land and Condominium Leasehold and Food Furniture
Land Units and Rights and Processing and Transportation Construction
Improvements Improvements Improvements Equipment Fixtures Equipment in Progress Total
(In Thousands)
Cost
Balance at beginning of year P679,254 P966,833 P11,203,440 P9,210,906 P877,229 P404,697 P672,799 P24,015,158
Additions 2,000 760,670 1,343,646 1,106,655 97,220 38,084 407,632 3,755,907
Business combination (Note 11) – 2,906 39,122 41,801 5,833 1,742 2,274 93,678
Retirements and disposals – (38,316) (1,069,962) (445,367) (43,004) (38,025) (12,377) (1,647,051)
Reclassifications (Note 13) (15,773) (7,304) 395,729 360,364 (1,969) (41,087) (713,556) (23,596)
Translation adjustments (3,687) (6,128) (228,055) (84,222) (11,442) (3,436) (64,018) (400,988)
Balance at end of year 661,794 1,678,661 11,683,920 10,190,137 923,867 361,975 292,754 25,793,108
Accumulated Depreciation and Amortization
Balance at beginning of year 7,220 699,836 5,566,671 6,330,640 583,019 247,405 – 13,434,791
Depreciation and amortization (Notes 21 and 22) 143 48,535 1,369,815 1,105,570 123,007 45,344 – 2,692,414
Business combination (Note 11) – 277 6,960 12,684 1,510 634 – 22,065
Retirements and disposals – (10,434) (864,279) (347,909) (36,303) (29,869) – (1,288,794)
Reclassifications (177) (65,043) 78,511 (3,767) (1,222) (8,302) – –
Translation adjustments – (4,637) (93,265) (51,425) (4,465) (2,540) – (156,332)
Balance at end of year 7,186 668,534 6,064,413 7,045,793 665,546 252,672 – 14,704,144
Accumulated Impairment Losses
Balance at beginning of year – – – – – – – –
Impairment loss during the year (Note 22) – – – 29,500 – – – 29,500
Balance at end of year – – – 29,500 – – – 29,500
Net Book Value P654,608 P1,010,127 P5,619,507 P3,114,844 P258,321 P109,303 P292,754 P11,059,464
The cost of fully depreciated property, plant and equipment still in use amounted to P7,448.7 million and P5,809.3 million as at December 31, 2013 and 2012, respectively.
Loss on disposals and retirements of property, plant and equipment amounted to P446.2 million, P358.2 million and P216.3 million in 2013, 2012, and 2011, respectively.
Construction in progress account mainly pertains to costs incurred for ongoing construction of plants and properties, including soon-to-open stores.
In 2012, the Jollibee Group performed preliminary impairment assessments of its store fixed assets after the typhoon and other calamities given that there is an indication that the carrying value may not be fully
recoverable. As a result, the Jollibee Group provided allowance for impairment loss on office, store and food processing equipment amounting to P29.5 million. In 2013, the Jollibee Group reassessed the recoverable
amount of the office, store and food processing equipment of which reassessment process includes actual inspection of the Jollibee Group’s existing assets. Consequently, the Jollibee Group recognized a reversal of
impairment loss amounting to P13.3 million as a result of the reassessment of impairment previously recognized.
In 2012, the Jollibee Group transferred certain land with carrying amount of P23.6 million as at
13. Investment Properties December 31, 2012 from property, plant and equipment to investment property due to end of owner-
occupation.
The rollforward analysis of this account follows:
The cost of fully depreciated buildings still being leased out by the Jollibee Group amounted to
2013 P202.0 million as at December 31, 2013 and 2012.
Buildings The Jollibee Group’s investment properties have aggregate fair values of P1,348.7 million as at
and Building December 31, 2013 and 2012 as determined by independent appraisers, Asian Appraisal and Tan -
Land Improvements Total Gatue Appraisal Associates, Inc. in 2011. The management does not expect a significant change in the
(In Thousands) fair value in 2013 and 2012. The valuations performed by the independent appraisers are in accordance
Cost with recognized professional appraisal standards.
Balance at beginning of year P714,455 P323,086 P1,037,541
Translation adjustments – 12,944 12,944 In determining the fair value of the investment properties, the independent appraisers used the market
Balance at end of year 714,455 336,030 1,050,485 data approach for land and cost approach for buildings and building improvements. For land, fair
Accumulated Depreciation and Amortization value is based on sales and listings of comparable properties within the vicinity after adjustments for
Balance at beginning of year – 237,081 237,081 differences in location, size and shape of the lot, time elements and other factors between the properties
Depreciation (Notes 21 and 22) – 12,905 12,905 and their comparable properties. For buildings and building improvements, fair value is based on the
Translation adjustments – 2,285 2,285 current cost of replacement of the properties in accordance with prevailing market prices for materials,
Balance at end of year – 252,271 252,271 labor, and contractors’ overhead, profit and fees in the locality after adjustments for depreciation due
Accumulated Impairment Losses to physical deterioration, functional and economic obsolescence based on personal inspection of the
Balance at beginning and end of year 46,447 – 46,447 buildings and building improvements and in comparison to similar new properties. Fair value hierarchy
Net Book Value P668,008 P83,759 P751,767 disclosures for investment properties have been provided in Note 31.
Rent income derived from income-generating properties amounted to P31.1 million, P32.0 million and
2012 P56.8 million in 2013, 2012 and 2011, respectively (see Notes 20 and 29). Direct operating costs relating
Buildings
to the investment properties that generated rent income recognized under “Cost of sales” and “General
and Building
and administrative expenses” accounts in the consolidated statements of comprehensive income
Land Improvements Total amounted to P23.2 million, P21.5 million and P26.5 million in 2013, 2012 and 2011, respectively.
(In Thousands)
Cost No investment properties as at December 31, 2013 and 2012 have been pledged as security or collateral
Balance at beginning of year P692,858 P333,654 P1,026,512 for the Company’s debts.
Retirements and disposals (1,999) (4,264) (6,263)
Translation adjustments – (6,304) (6,304)
Reclassifications (Note 12) 23,596 – 23,596 14. Goodwill and Other Intangible Assets
Balance at end of year 714,455 323,086 1,037,541
Accumulated Depreciation and Amortization This account consists of:
Balance at beginning of year – 228,773 228,773
Depreciation (Notes 21 and 22) – 13,212 13,212 2012
Retirements and disposals – (4,121) (4,121) (As restated -
Translation adjustments – (783) (783) 2013 see Notes 2 and 11)
Balance at end of year – 237,081 237,081 Goodwill P6,822,526,341 P6,822,526,341
Accumulated Impairment Losses Trademark 2,004,255,942 2,004,255,942
Balance at beginning of year 25,270 – 25,270 Computer software 267,270,178 −
Impairment loss during the year(Note 22) 21,177 – 21,177 Other intangible assets, net of accumulated amortization 9,584,387 10,776,862
Balance at end of year 46,447 – 46,447 P9,103,636,848 P8,837,559,145
Net Book Value P668,008 P86,005 P754,013
71
Goodwill and trademark 2013 2012

Goodwill and trademark are acquired through business combinations related to the following food
Accumulated amortization:
restaurants:
Balance at beginning of year P5,257,372 P2,806,074
Amortization 3,211,145 2,451,298
2012 Balance at end of year P8,468,517 P5,257,372
(As restated -
Net book value:
2013 see Note 2) At December 31 P9,584,387 P10,776,862
Goodwill: At January 1 10,776,862 7,680,306
Hong Zhuang Yuan P2,497,252,906 P2,497,252,906
Mang Inasal (Note 11) 1,781,266,639 1,781,266,639 Impairment Testing of Goodwill and Trademark
Red Ribbon Bakeshop: Goodwill acquired through business combinations have been allocated to nine (9) groups of CGUs,
Philippine operations 737,939,101 737,939,101 which are subsidiaries of the Parent Company, owned directly or indirectly. The recoverable amounts
US operations 434,651,055 434,651,055 of the groups of CGUs have been determined based on value in use calculations using cash flow
Yong He King:
projections from financial budgets approved by BOD covering a five-year period.
Yong He King 429,016,109 429,016,109
Hangzhou Yonghe 106,264,544 106,264,544 The calculation of value in use is most sensitive to the following assumptions which vary per
Chowking US operations (Note 11) 383,855,247 383,855,247 geographical location:
San Pin Wang (Note 11) 292,141,532 292,141,532
Chow Fun (Note 11) 154,894,001 154,894,001 Geographical Pre-tax Long-term
Burger King Group (Note 11) 5,245,207 5,245,207
CGUs Location Discount Rate Growth Rate
Total goodwill 6,822,526,341 6,822,526,341
Hong Zhuang Yuan PRC 11.83% 7.80%
Trademark -
Mang Inasal Philippines 9.69% 6.80%
Mang Inasal (Note 11) 2,004,255,942 2,004,255,942
Red Ribbon Bakeshop:
Goodwill and trademark P8,826,782,283 P8,826,782,283
Philippine operations Philippines 9.69% 6.80%
The rollforward analysis of goodwill follows: US operations USA 9.12% 3.50%
Yong He King PRC 11.83% 7.80%
Chowking US Operations USA 9.12% 3.50%
2012 Chow Fun USA 9.12% 3.50%
(As restated - Burger King Philippines 9.69% 6.80%
2013 see Note 2) San Pin Wang PRC 11.83% 7.80%
Balance at beginning of year P6,882,526,341 P6,530,384,809
Additions − 292,141,532 Key assumptions with respect to the calculation of value in use of the groups of CGUs as at
Balance at end of year P6,882,526,341 P6,822,526,341 December 31, 2013 and 2012 on which management had based its cash flow projection to undertake
impairment testing of goodwill are as follows:
Computer software
a) Discount rates - discount rates represent the current market assessment of the risks specific to
The Jollibee Group’s computer software pertains to its Enterprise Resource Planning (ERP) System. The
each CGU, regarding the time value of money and individual risks of the underlying assets which
Jollibee Group expects the asset to be available for use starting July 1, 2014 and will have an estimated
have not been incorporated in the cash flow estimates. The discount rate calculation is based
useful life of five years.
on the specific circumstances of the Jollibee Group and its CGUs and derived from its weighted
Other intangible assets average cost of capital (WACC). The WACC takes into account both debt and equity. The cost
The rollforward analysis of other intangible assets as of December 31, 2013 and 2012 is as follows: of equity is derived using the Capital Asset Pricing Model (CAPM). The cost of debt is based on
the interest bearing borrowings the Jollibee Group is obliged to service. CGU-specific risk is
2013 2012 incorporated by applying individual beta factors. The beta factors are evaluated annually based
Cost: on publicly available market data.
Balance at beginning of year P16,034,234 P10,486,380 b) Long-term growth rates - rates are determined with consideration of historical and projected
Additions 2,018,670 5,547,854 results, as well as the economic environment in which the CGUs operate.
Balance at end of year P18,052,904 16,034,234
c) Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin - is based on the
(Forward)
most recent value achieved in the year preceding the start of the budget period, and adjusted for
planned efficiency improvement, if any.
No impairment loss was recognized for goodwill and trademark for the three years ended December Trade payables to suppliers are noninterest-bearing and are normally settled on a 30-day term.
2013, 2012 and 2011.
Accrued expenses, local and other taxes and customers’ deposits are noninterest-bearing and are
normally settled within the next financial year.
15. Other Noncurrent Assets
This account consists of: 17. Provisions
The Jollibee Group has outstanding provisions amounting to P30.5 million as at December 31, 2013 and
2013 2012 2012, consisting mainly of provisions for legal claims.
Security and other deposits - net of allowance
of P3.0 million in 2012 (Notes 30 and 31) P1,360,230,842 P1,161,089,780 Provisions for legal claims,which amounted to P29.3 million, include estimates of legal services,
Noncurrent portion of: settlement amounts and other costs of claims made against the Jollibee Group. Other information
Rent and other long-term prepayments 239,797,867 225,658,848 on the claims is not disclosed as this may prejudice the Jollibee Group’s position on such claims. The
Employee car plan receivables (Notes 30 and 31) 106,011,234 93,029,410 Jollibee Group’s management, after consultation with its legal counsel, believes that the provisions are
Deferred rent expense 61,261,913 68,937,730 sufficient to meet the costs related to the claims.
Deferred compensation 13,433,144 13,866,716
Returnable containers 21,303,019 19,657,734
Other assets 91,237,373 63,619,064 18. Short-term and Long-term Debts
P1,893,275,392 P1,645,859,282
Short-term Debt
Security and other deposits represent deposits for operating leases entered into by the Jollibee Group The P900.0 million short-term debt in 2011 consists of unsecured short-term bank loan of the Parent
as lessee, including returnable containers and other deposits. The security deposits are recoverable Company with an interest rate of 2.63% per annum,was paid in full, including accrued interest, on April
from the lessors at the end of the lease term, which ranges from three to twenty years. These are 17, 2012.
presented at amortized cost. The discount rates used range from 0.23% to 8.65% in 2013 and 2012. The Interest expense recognized on short-term debt amounted to P14.8 million and P78.9 million in 2012
difference between the fair value at initial recognition and the notional amount of the security deposits and 2011, respectively (see Note 23).
is charged to “Deferred rent expense” account and amortized on straight-line basis over the lease terms.
Long-term Debt
Accretion of interest on the liability from acquisition of businesses and customers’ deposits amounted to As at December 31, the long-term debt consists of the following:
P19.1 million, P20.2 million and P18.7 million in 2013, 2012 and 2011, respectively (see Note 23).
2013 2012
Principal P5,176,745,744 P5,437,753,211
16. Trade Payables and Other Current Liabilities Unamortized debt issue cost (7,500,000) (10,296,795)
P5,169,245,744 P5,427,456,416
2013 2012 The details of long-term debt follow:
Trade P6,006,639,836 P4,717,064,438 2013 2012
Accruals for: USD-denominated:
Local and other taxes 1,650,647,422 1,534,231,068 Loan 1 P1,775,800,000 P–
Salaries, wages and employee benefits 1,516,033,345 1,304,409,208 Loan 2 443,950,000 1,231,500,000
Advertising and promotions 1,022,817,189 741,335,875 Loan 3 329,362,744 916,998,808
Rent 534,417,910 456,127,663 Loan 4 799,110,000 –
Utilities 329,764,448 340,883,386 Loan 5 177,580,000 –
Freight 197,069,154 169,388,956 Loan 6 – 287,350,000
Operating supplies 174,724,487 131,022,870 Loan 7 – 533,650,000
Repairs and maintenance 143,883,572 102,788,156 Loan 8 – 821,000,000
Professional fees 114,884,136 91,207,804 Loan 9 – 1,058,211
Store operations, corporate events and others 1,572,317,710 1,115,089,028 PHP-denominated:
Customers’ deposits 602,100,377 600,180,289 Loan 10 – 1,496,329,397
Unearned revenue from gift certificates 47,629,038 75,881,257 Loan 11 1,492,500,000 –
Dividends payable 29,374,422 26,173,052 Loan 12 150,943,000 139,570,000
Other current liabilities 307,622,975 347,283,001 5,169,245,744 5,427,456,416
P14,249,926,021 P11,753,066,051 Less current portion 1,106,275,244 4,572,839,927
P4,062,970,500 P854,616,489
73
USD-denominated loans of JWPL. Loan 1 consists of a 5-year unsecured loan acquired from a local bank Under the loan agreement with MBTC, the Parent Company has an option to convert the variable
on February 25, 2013 amounting to USD40.0 million (or P1,632.0 million) subject to quarterly interest interest rate into a fixed interest rate based on the PDST-F rate for the remaining term of the loan and
repricing with one-time option to fix in the future. The interest rate is based on three-month U.S. Dollar the spread of 1.00% on any interest payment date. The Parent Company also has an option to prepay
London Interbank Offered Rate (USD LIBOR) plus spread of 100 basis points. The principal is payable in the loan in full or in multiples of P10.0 million on any interest payment date.
16 quarterly installments commencing on May 26, 2014 up to February 26, 2018, the date of maturity.
The balance of the Company’s long-term debt as at December 31, 2013 and 2012 is as follows:
Loan 2 consists of a 3-year unsecured loan acquired from a local bank on April 29, 2011 amounting
to USD40.0 million (or P1,712.0 million) with fixed interest rate of 2.53% per annum. The principal is 2013 2012
payable in 4 semi-annual installment commencing on October 29, 2012 up to April 28, 2014, the date Principal P1,500,000,000 P1,500,000,000
of maturity. Less unamortized debt issue cost (7,500,000) (3,670,604)
1,492,500,000 1,496,329,396
Loan 3 consists of a 3-year unsecured loan acquired from a foreign bank on May 9, 2011 amounting to Less current portion – 1,496,329,396
USD30.0 million (or P1,287.9 million) with fixed interest rate of 2.72% per annum. The principal is payable P1,492,500,000 P–
in 4 semi-annual installment commencing on November 9, 2012 up to May 8, 2014, the date of maturity.
The movements in unamortized debt issue cost in 2013 and 2012 are as follows:
Loan 4 consists of a 4-year unsecured loan acquired from a local bank on October 25, 2013 amounting
to USD18.0 million (or P777.8 million) with an interest rate based on three-month USD LIBOR plus spread 2013 2012
of 1.00% subject to interest repricing every quarter. The principal is payable in 12 quarterly installment Balance at beginning of year P10,296,795 P 17,957,381
commencing on January 25, 2015 up to October 25, 2017, the date of maturity. Additions 7,500,000 –
Amortization (10,296,795) (7,660,586)
The loan agreements above provide certain restrictions and requirements principally with respect to
Balance at end of year P7,500,000 P 10,296,795
maintenance of required financial ratios and material change in ownership or control. As at December
31, 2013 and 2012, the Jollibee Group is in compliance with the terms of its loan covenants. Under the loan agreement, the Parent Company is subject to certain debt covenants which include
USD-denominated loan of JFPPL. Loan 5 consists of a 5-year unsecured loan acquired from a local bank among others the maintenance of a required Debt-to-Equity ratio and Debt-to-EBITDA ratio not to
on May 8, 2013 amounting to USD4.0 million (or P163.3 million) with an interest rate based on three- exceed 3.0. The Parent Company is in compliance with these debt covenants as at December 31, 2013
month USD LIBOR plus spread of 100 basis points subject to repricing every quarter. The principal is and 2012.
payable on May 7, 2018, the date of maturity. PHP-denominated loan of Perf Restaurants, Inc.(Perf ). Loan 12 was originally a 5-year unsecured USD-
Loans 6, 7 and 8 availed by JWPL amounting to USD7.0 million (or P299.6 million), USD13.0 million denominated loan availed on December 20, 2011 by Perf. On the same day, the loan of USD3.4 million
(or P553.7 million), and USD20.0 million (or P864.4 million), respectively, consist of three loans obtained (or P149.2 million) bearing fixed interest rate of 5.32% per annum.
from a local bank with a recalibrated fixed interest rate of 2.55% per annum each on March 1, March The loan contains certain restrictive covenants and requirements with respect to the following:
9 and May 29, 2012, respectively. The loans have a term of 2 years and will mature on February 28,
March 7 and May 28, 2014, respectively. However, the loans were preterminated by Jollibee Group and (a) Maintenance of the following ratios for the duration of the loan agreements: (1) minimum debt
paid in full, including accrued interest, in February 2013. service coverage of 1.5:1; and (2) maximum debt to (EBITDA) of 4:1.
USD-denominated loan of RRBI USA. Loan 9 consists of a 5-year unsecured loan acquired from a foreign (b) Restrictions on changes in ownership structure; incurrence of any additional loans with term of
bank in December 2007 amounting to USD1.9 million with an interest rate of 6.50% per annum. The more than one year; repayment of intercompany borrowings from the Parent Company except
principal is payable in 60 monthly installments commencing on January 1, 2008 up to January 1, 2013, those agreed upon signing of this Facility Agreement; investing or entering into any business
the date of maturity. The loan was fully paid in January 2013. substantially different from the business in which Perf is presently engaged; and enter into merger
or consolidation, except where Perf is the surviving corporation, and the Parent Company remains
PHP-denominated loans of the Parent Company. On December 16, 2011, the Parent Company refinanced as the majority beneficial owner of the surviving corporation.
its existing loans with MBTC by availing a P1,500.0 million term loan (Loan 10). The proceeds from
the loan were originally used for working capital purposes. The principal is payable upon maturity on As at December 31, 2013 and 2012, Perf is in compliance with the terms of the loan agreement.
December 16, 2013 with a coupon rate of 3.9% payable on a quarterly basis. The Company incurred Derivative, Hedges and Hedge Effectiveness Testing
debt issue costs of P7.5 million, representing documentary stamp tax, in relation to this loan in 2011. In 2012, Loan 12 was converted into a deliverable cross-currency swap transaction to hedge in full
On December 9, 2013, the Parent Company refinanced the loan by availing from MBTC a term loan of the foreign currency risk and interest rate risk on its floating rate. Under the cross-currency swap,
the same amount (Loan 11). The new loan is payable over five years and six months from the date of Perf received at inception PHP notional amount of P149.2 million and paid USD notional amount of
drawdown with annual principal repayments of P15.0 million starting on the 30th month from the date USD3.4 million based on the PHP/USD spot reference rate of P43.87. At every interest payment date,
of drawdown and P1,455.0 million upon maturity. The loan is subject to a variable interest rate based Perf will receive variable interest based on 3-month US LIBOR plus spread and will pay fix interest rate.
on three-month Philippine Dealing System Treasury Fixing (PDST-F) rate plus spread of 1.25%, which is At maturity date, Perf will receive USD notional amount of USD3.4 million and pay PHP notional amount
payable and is reset on a quarterly basis, and to an interest rate floor based on the Bangko Sentral ng of P149.2 million. The USD receipts from the cross-currency swap correspond with the expected
Pilipinas (BSP) Overnight Reverse Repurchase Agreement Rate. The loan was drawn on December 16, interest fixed principal amount due on the hedged loan. Similar with the hedged loan, the cross-
2013 and will mature on June 17, 2019. The Parent Company incurred debt issue costs of P7.5 million, currency swap is non-amortizing and will mature on December 21, 2016.
representing documentary stamp tax, in relation to this loan in 2013.
Effectively, the cross-currency swap transformed the floating rate USD loan into a fixed rate PHP loan. b. Treasury Shares
Since the critical terms of the hedged loan and cross-currency swap matched, the hedge was assessed The cost of common stock of the Parent Company held in treasury of P180.5 million consists of
to be highly effective. As such, there was no ineffectiveness recognized in the profit or loss for the years 16,447,340 shares as at December 31, 2013 and 2012.
ended December 31, 2013 and 2012.
c. Excess of Cost over the Carrying Value of Non-controlling Interests Acquired
The movement in fair value of cash flow hedge presented in equity under other comprehensive loss in
The amount of excess of cost over the carrying value of non-controlling interests acquired as at
2013 and 2012 follows:
December 31, 2013 and 2012, recognized as part of “Equity Attributable to Equity Holders of the
2013 2012 Parent Company” section in the consolidated statements of financial position, resulted from the
Balance at beginning of year P13,124,439 P– following acquisitions of non-controlling interests:
Changes in fair value of the cash flow hedge (20,212,711) 22,782,820
Foreign exchange revaluation 13,405,872 (9,658,381) 20% of Greenwich in 2006 P168,257,659
Balance at end of year 6,317,600 13,124,439 15% of Belmont in 2007 375,720,914
Non-controlling interests’ share (2,906,096) (6,037,242) 40% of Adgraphix in 2010 (1,214,087)
P3,411,504 P7,087,197 P542,764,486
The foreign exchange revaluation of the hedged loan, amounting to P13.4 million and P9.7 million, was d. Retained Earnings
recognized in other comprehensive loss on derivative liability in 2013 and 2012, respectively.
The Jollibee Group has a cash dividend policy of declaring one-third of the Jollibee Group’s net
The net movement in the fair value of the Company’s derivative liability for the years ended December income for the year as cash dividends. It uses best estimate of its net income as basis for declaring
31, 2013 and 2012 follows: cash dividends. Actual cash dividends per share declared as a percentage of the EPS are 75.5%,
2013 2012 61.5% and 33.8% in 2013, 2012 and 2011, respectively.
Balance at beginning of year P22,782,820 P– The Parent Company’s retained earnings available for dividend declaration, computed based on
Net changes in fair value (20,212,711) 22,782,820 the guidelines provided in SEC Memorandum Circular No. 11, amounted to P7,895.7 million and
Settlements 1,962,491 – P11,617.3 million as at December 31, 2013 and 2012, respectively.
The Parent Company’s cash dividend declarations for 2013, 2012 and 2011 follow:
Interest expense recognized on long-term debt amounted to P133.8 million, P171.1 million and
P193.7 million in 2013, 2012 and 2011, respectively (see Note 23). Total Cash
Cash Dividend Dividends
Declaration Date Record Date Payment Date per Share Declared
19. Equity 2013
April 11 May 7 May 30 P0.65 P680,017,923
a. Capital Stock August 6 September 19 October 14 2.00 2,099,932,206
The movements in the number of shares are as follows: November 12 November 29 December 16 0.71 745,597,226
P3.36 P3,525,547,355
2013 2012 2012
Authorized - 1 par value P1,450,000,000 P 1,450,000,000 April 12 May 9 May 31 P0.58 P602,206,230
Issued and subscribed: November 12 December 3 December 19 1.00 1,044,303,255
Balance at beginning of the year 1,063,859,559 1,054,953,233 November 12 December 3 December 19 0.62 647,468,018
Issuances during the year 4,749,116 8,906,326 P2.20 P2,293,977,503
Balance at end of year 1,068,608,675 1,063,859,559
Subscription receivable (17,177,884) (17,177,884) 2011
P1,051,430,791 P 1,046,681,675 April 13 May 5 May 31 P0.50 P513,586,071
November 4 November 22 December 16 0.57 586,430,790
The total number of shareholders of the Parent Company is 3,244 and 3,325 as at P1.07 P1,100,016,861
December 31, 2013 and 2012, respectively.
75
An important part of Jollibee Group’s growth strategy is the acquisition of new businesses in 21. Cost of Sales
the Philippines and abroad. Examples were acquisitions of 85% of Yonghe King in 2004 in PRC
(P1,200.0 million), 100% of Red Ribbon in 2005 (P1,700.0 million), the remaining 20% minority
share in Greenwich in 2007 (P384.0 million), the remaining 15% share of Yonghe King in 2007 2012 2011
(P413.7 million), 100% of Hong Zhuang Yuan restaurant chain in PRC in 2008 ( P2,600.0 million), (As restated - (As restated -
70% of Mang Inasal in 2010 (P2,976.2 million), 100% of Chowking US Operations in 2011 2013 see Note 2) see Note 2)
(P693.3 million), 55% of San Pin Wang (P195.9 million plus a contingent consideration)and 48% of Cost of inventories P38,227,726,820 P33,898,232,334 P29,809,091,674
WJ Investments Limited (P98.0 million) in 2012. Personnel costs:
The Jollibee Group plans to continue to make substantial acquisitions in the coming years. The Salaries, wages and employee benefits 8,416,655,196 7,771,959,348 6,896,745,053
Jollibee Group uses its cash generated from operations to finance these acquisitions and capital Pension expense (Note 25) 102,196,339 57,928,961 45,213,324
expenditures. These limit the amount of cash dividends that it can declare and pay making the Rent (Note 29) 5,962,800,559 5,499,468,204 4,830,622,917
Electricity and other utilities 3,443,712,321 3,245,101,747 2,738,766,887
level of the retained earnings higher than the paid-up capital stock.
Depreciation and amortization (Notes 12
In support of the Jollibee Group’s strategy, the BOD approved the appropriation of and 13) 2,811,677,195 2,477,433,446 2,188,138,252
P5,200.0 million and P3,800.0 million on April 11, 2013 and February 15, 2012, respectively, for Supplies 1,809,763,316 1,712,100,856 1,438,771,466
future expansion and capital expenditure. Thus as at December 31, 2013 and 2012, the details of Contracted services and professional fees 1,733,982,204 1,237,433,220 1,034,756,176
the appropriated retained earnings follow: Repairs and maintenance 809,564,647 666,242,481 605,944,943
Security and janitorial 325,281,623 294,667,278 295,104,115
Projects Timeline 2013 2012 Communication 135,038,254 119,488,497 109,814,775
Acquisition of Businesses 2013 – 2018 P7,600,000,000 P5,000,000,000 Entertainment, amusement and recreation 26,748,242 31,015,693 27,245,491
Capital Expenditures 2013 – 2018 2,600,000,000 – Others 1,479,616,348 1,424,426,678 1,345,856,874
P10,200,000,000 P5,000,000,000 P65,284,763,064 P58,435,498,743 P51,366,071,947
The unappropriated retained earnings of the Parent Company is also restricted to the extent
of cost of common stock held in treasury amounting to P180.5 million in both years as well as
the undistributed retained earnings of its subsidiaries which amounted to P629.2 million and 22. General and Administrative Expenses
P719.3 million as at December 31, 2013 and 2012, respectively. This account consists of:
2012 2011
20. Royalty, Franchise Fees and Others (As restated - (As restated -
2013 see Note 2) see Note 2)
The Jollibee Group has existing Royalty and Franchise Agreements with independent franchisees Personnel costs:
for the latter to operate quick service restaurant outlets under the “Jollibee”, “Chowking”, “Greenwich”, Salaries, wages and employee benefits P3,731,010,808 P3,104,737,878 P2,828,734,808
“Red Ribbon”, “Mang Inasal”, “Yong He King” and “Hong Zhuang Yuan” concepts and trade names. In Stock options expense (Note 26) 150,418,741 76,984,373 73,596,182
consideration thereof, the franchisees agree to pay franchise fees and monthly royalty fees equivalent Pension expense (Note 25) 104,094,430 44,443,247 74,821,548
to a certain percentage of the franchisees’ net sales. Taxes and licenses 885,250,840 793,134,792 722,967,654
The franchisees also reimburse the Jollibee Group a share in the network advertising and promotional Transportation and travel 339,949,959 299,910,571 289,157,362
activities based on certain percentages of the former’s net sales. Rent (Note 29) 324,481,811 396,384,343 301,131,941
Professional fees 290,661,328 268,376,135 292,142,725
This account consists of: Depreciation and amortization (Notes 12
and 13) 260,778,625 228,192,916 213,455,645
2013 2012 2011 Entertainment, amusement and recreation 105,201,772 105,401,780 109,224,257
Royalty fees P3,470,663,663 P3,103,707,056 P2,832,972,317 Donations 92,513,001 68,199,176 37,125,360
Franchise fees 104,671,216 108,902,005 128,673,840 Repairs and maintenance 88,207,428 43,774,873 49,141,586
Rent income (Note 29) 97,500,225 93,552,079 88,362,582 Communication 80,101,891 87,824,802 80,021,816
Service fees 86,040,358 69,925,324 59,261,700 Contracted services 73,413,676 49,912,515 37,878,401
Other revenues 210,404,152 188,999,169 179,212,280 Training 59,429,198 71,311,451 40,349,256
P3,969,279,614 P3,565,085,633 P3,288,482,719 Provision for impairment losses on:
Receivables (Note 7) 34,007,984 97,559,491 33,643,066
Inventory (Note 8) 9,367,464 2,154,527 6,097,571
Contingencies 1,102,608 – –
(Forward)
2012 2011
(As restated - (As restated - 24. Income Taxes
2013 see Note 2) see Note 2) The Jollibee Group’s provision for current income tax consists of the following:
Property, plant and equipment
(Note 12) P– P29,500,000 P– 2013 2012 2011
Investment property (Note 13) – 21,177,361 – Final tax withheld on:
Security and other deposits (Note 15) – 3,000,000 – Royalty and franchise fee income P753,663,087 P691,731,651 P566,346,862
Supplies 52,966,197 59,372,615 60,553,898 Interest income 40,615,554 28,094,896 17,314,010
Electricity and other utilities 51,858,492 58,686,416 57,143,954 RCIT:
Reversals of: With itemized deduction 414,800,104 401,169,566 447,091,709
Inventory (Note 8) – (13,316,722) – With optional standard deduction 175,871,530 156,164,621 126,619,231
Property, plant and equipment Dividend income 1,477,233 – –
(Note 12) (13,300,000) – – MCIT 135,539,174 – 30,192,053
Security and janitorial 18,596,895 22,168,913 26,209,649 P1,521,966,682 P1,277,160,734 P1,187,563,865
Insurance 12,275,733 10,284,642 15,357,507
Corporate events and others 675,498,315 979,626,852 590,563,624 On December 18, 2008, the BIR issued Revenue Regulations No. 16-2008, which implemented the
P7,427,887,196 P6,908,802,947 P5,939,317,810 provisions of Republic Act 9504 (R.A. 9504) on Optional Standard Deduction (OSD). This regulation
allowed both individuals and corporate taxpayers to use OSD in computing for taxable income.
Corporations may elect a standard deduction equivalent to 40% of gross income, as provided by law, in
lieu of the itemized allowed deductions.
23. Interest Income (Expense) and Other Income (Expense)
For the years ended December 31, 2013 and 2012, Zenith, Grandworth and RRBHI, wholly-owned
2013 2012 2011 subsidiaries, elected to use OSD in computing for its taxable income. The total tax benefits from the
Interest income: availment of OSD amounted to P60.0 million, P47.8 million and P43.8 million in 2013, 2012 and 2011,
Cash and cash equivalents (Note 6) P145,624,891 P159,897,257 P101,123,638 respectively.
Accretion of interest on refundable
deposits and employee car plan The components of the Jollibee Group’s recognized net deferred tax assets follow:
receivables (Note 15) 18,909,301 21,613,453 24,062,575
December 31,
Loan and advances (Note 18) 81,039,616 88,603,447 54,577,023
P245,573,808 P270,114,157 P179,763,236 2012
December 31, (As restated -
Interest expense: 2013 see Note 2)
Long-term debt (Note 18) (P133,771,329) (P171,059,541) (P193,702,854) Deferred tax assets:
Short-term debt (Note 18) − (14,799,129) (78,916,052) Operating lease payables P227,428,655 P219,848,606
Accretion of interest on the liability from NOLCO:
acquisition of businesses and PRC-based entities 233,568,177 275,552,028
customers ’ deposits (Notes 11 Philippine-based entities 77,033,807 43,966,714
and 15) (19,148,699) (20,154,030) (18,723,885) Pension liability and other benefits 121,663,646 68,729,092
(P152,920,028) (P206,012,700) (P291,342,791) Accumulated impairment loss in value of property, plant
and equipment, investment properties, and other
2013 2012 2011 nonfinancial assets 41,093,608 5,794,113
Unamortized past service costs 27,770,876 33,495,695
Other income (expense):
Excess of MCIT over RCIT 20,616,788 12,127,543
Rebates and suppliers’ incentives P122,379,003 P76,099,289 P103,475,060
Allowance for impairment loss on receivables 14,181,539 30,999,167
Write-off of other liabilities 97,044,819 292,136,540 409,556,985
Unaccreted discount on security deposits and employee
Foreign exchange gain (loss) - net 46,628,738 (25,371,670) (63,571,440)
Charges to franchisees 24,360,500 43,898,382 34,672,903 car plan receivables 9,073,014 6,877,119
Penalties and charges 17,438,114 16,063,313 16,135,487 Unrealized foreign exchange loss 2,599,563 636,018
Pre-termination of operating leases 13,058,342 43,765,252 11,335,719 Allowance for inventory obsolescence – 2,159,664
Other rentals 6,820,323 6,977,700 9,881,900 Others 7,513,467 6,831,799
Insurance claims and others 9,595,192 49,966,033 45,327,003 782,543,140 707,017,558
P337,325,031 P503,534,839 P566,813,617 (Forward)
77
December 31, The rollforward analysis of the net deferred tax assets and liabilities follows:
2012
December 31, (As restated - December 31,
2013 see Note 2) 2012
Deferred tax liabilities: December 31, (As restated -
Unaccreted discount on product security deposit P8,110,116 P– 2013 see Note 2)
Pension asset 5,341,747 9,182,244 Balance at beginning of year P311,077,621 P107,962,930
Deferred rent expense 3,742,190 7,428,308 Provisions (741,389) 127,456,683
Operating lease receivables 2,407,133 2,068,542 Application of excess of MCIT over RCIT (1,874,880) (62,011,755)
Unrealized foreign exchange gain 1,968,063 16 Income tax effect of other remeasurements of net defined
Others 4,777,031 2,516,001 benefit plan 103,199,623 147,573,758
26,346,280 21,195,111 Translation adjustments 26,378,767 (9,903,995)
Deferred tax assets - net P756,196,860 P685,822,447 P438,039,742 P311,077,621
The components of the Jollibee Group’s recognized net deferred tax liabilities follow: OSD
The availment of the OSD method also affected the recognition of several deferred tax assets
December 31,
and liabilities. Deferred tax assets and liabilities, for which the related income and expense are not
2012
considered in determining gross income for income tax purposes, are not recognized. This is because
December 31, (As restated - the manner by which the Jollibee Group expects to recover or settle the underlying assets and liabilities,
2013 see Note 2) for which the deferred tax assets and liabilities were initially recognized, would not result to any future
Deferred tax assets: tax consequence under the OSD method. Meanwhile, deferred tax assets and liabilities, for which the
Operating lease payables P184,292,117 P181,588,491 related income and expense are considered in determining gross income for income tax purposes, are
Pension liability and other benefits 171,799,170 109,190,021
recognized only to the extent of their future tax consequence under OSD method. Hence, the tax base
Unrealized foreign exchange loss 98,883,194 31,449,913
of these deferred tax assets and liabilities is reduced by the 40% allowable deduction provided for under
Allowance for impairment loss on receivables 22,688,381 20,967,552
Accumulated impairment loss in value of property, plant the OSD method.
and equipment, investment properties, and other Accordingly, the Jollibee Group’s deferred tax assets and liabilities, which were not recognized due to
nonfinancial assets 17,165,614 17,565,477 the use of the OSD method in future years, are as follows:
Unamortized past service costs 13,948,206 16,737,848
Unaccreted discount on security deposits and employee December 31,
car plan receivables 13,944,952 16,716,317 2012
Provisions for legal claims 9,150,192 9,150,192 December 31, (As restated -
Excess of MCIT over RCIT 2,204,170 – 2013 see Note 2)
Others 2,310 152,231 Deferred tax assets:
534,078,306 403,518,042 Allowance for impairment losses on:
Deferred tax liabilities: Investment properties P10,334,189 P10,334,189
Excess of fair value over book value of identifiable assets Receivables 3,963,705 3,963,705
of acquired businesses 705,641,848 718,144,665 Inventory 25,858 −
Unrealized foreign exchange gain 111,144,838 20,969,516 Other noncurrent assets 3,676,834 1,641,000
Prepaid rent 23,436,251 22,416,209 Operating lease payables 14,185,024 15,634,527
Deferred rent expense 9,531,966 10,457,718 Pension liability 8,001,665 5,447,126
Operating lease receivables 22,926 1,081,056 Unamortized past service costs 627,013 749,019
Others 2,457,595 5,193,704 Unaccreted discount on financial instruments 350,016 426,256
852,235,424 778,262,868 Unrealized foreign exchange loss − 4,735
Deferred tax liabilities - net P318,157,118 P374,744,826 Others 118,378 152,376
41,282,682 38,352,933
Deferred tax liabilities:
Operating lease receivables 8,300,360 9,403,417
Deferred rent expense 201,113 339,514
Others 247,985 339,000
8,749,458 10,081,931
P32,533,224 P28,271,002
As at December 31, 2013, NOLCO and excess of MCIT over RCIT of the Philippine-based entities that can
be claimed as deductions from taxable income and income tax due, respectively, are as follow: 25. Pension Liability
Carry Forward Excess of Defined Benefit Plan
Year Incurred/Paid Benefit up to NOLCO MCIT over RCIT The Parent Company and certain Philippine-based subsidiaries have funded, non-contributory defined
2013 December 31, 2016 P121,422,688 P16,383,798 benefit pension plan covering all permanent employees. The benefits are based on employees’
2012 December 31, 2015 135,356,669 6,437,160 projected salaries and number of years of service.
P256,779,357 P22,820,958 The funds are administered by a trustee bank. Subject to the specific instructions provided by Jollibee
Group in writing, the Jollibee Group directs the trustee bank to hold, invest, and reinvest the funds and
The PRC enterprise income tax law provides that income tax rates are unified at 25%. As of
keep the same invested, in its sole discretion, without distinction between principal and income in, but
December 31, 2013, NOLCO of the PRC-based entities that can be claimed as deductions from taxable
not limited to, certain government securities and bonds, term loans, short-term fixed income securities
income are as follows:
and other loans and investments.
Carry Forward Deferred Tax Under the existing regulatory framework, R.A. 7641 requires a provision for retirement pay to qualified
Year Incurred Benefit Up to Tax Losses at 25% private sector employees in the absence of any retirement plan in the entity, provided however that the
2013 December 31, 2018 P198,770,320 P49,692,580 employee’s retirement benefits under any collective bargaining and other agreements shall not be less
2012 December 31, 2017 461,236,090 115,309,023 than those provided under the law. The law does not require minimum funding of the plan.
2011 December 31, 2016 191,018,116 47,754,529
2010 December 31, 2015 79,438,672 19,859,668 The following tables summarize the components of provision for pension expense, included under
2009 December 31, 2014 3,809,509 952,377 “Cost of sales” and “General and administrative expenses” accounts in the consolidated statement of
P934,272,707 P233,568,177 comprehensive income and “pension liability” account in the consolidated statements of financial
position, which are based on the latest actuarial valuation.
The following are the movements in deferred tax assets on NOLCO of the PRC-based entities:
Changes in pension liability of the Jollibee Group in 2013 are as follows:
2013 2012 2011
Present Value
Balance at beginning of year P275,552,028 P178,380,252 P174,770,129
Additions 49,692,580 156,655,557 73,275,766 of Defined
Write-off (85,576,892) (13,893,801) (73,363,383) Benefit Fair Value Pension
Utilized during the year (20,017,365) – Obligation of Plan Assets Liability
Translation adjustments 13,917,826 (7,858,032) 4,859,496 At January 1, 2013, as restated P1,879,417,452 P1,357,838,850 P521,578,602
Increase in effective tax rate – – 1,250,624 Pension expense (Notes 21 and 22):
Expired – (37,731,948) (2,412,380) Current service cost 162,902,800 – 162,902,800
Balance at end of year P233,568,177 P275,552,028 P178,380,252 Net interest 120,486,015 80,944,803 39,541,212
Adjustments due to curtailment 3,846,757 – 3,846,757
The reconciliation of provision for income tax computed at the statutory income tax rates to provision 287,235,572 80,944,803 206,290,769
for income tax as shown in the consolidated statements of comprehensive income are as follows: Less benefits paid 169,833,368 143,509,013 26,324,355
Remeasurements in other comprehensive
2012 2011 income:
2013 (As restated) (As restated) Return on plan assets (excluding
Provision for income tax at statutory amount included in net interest) – 58,504,692 (58,504,692)
income tax rates P1,873,654,379 P1,458,509,911 P1,318,487,154 Actuarial changes arising from changes
Income tax effects of: in financial assumptions 159,546,177 – 159,546,177
Effect of different tax rate for royalty Actuarial changes due to experience
and franchise fees and interest adjustment 249,554,608 – 249,554,608
income (395,069,768) (359,171,819) (292,576,022) 409,100,785 58,504,692 350,596,093
Expired/written off NOLCO and excess Contributions – 119,300,000 (119,300,000)
of MCIT over RCIT 6,384,855 51,625,749 83,661,073 At December 31, 2013 P2,405,920,441 P1,473,079,332 P932,841,109
Difference between OSD and itemized
deductions (54,787,415) (47,781,922) (43,785,314)
Nondeductible expenses 52,598,260 27,788,407 38,688,395
Unrecorded tax losses of BK Group 4,861,207 11,323,577 18,125,689
Net movement in unrecognized DTA 2,540,695 (4,138,108) –
Others 32,525,858 11,548,256 (12,424,003)
P1,522,708,071 P1,149,704,051 P1,110,176,972
79
Changes in pension liability of the Jollibee Group in 2012 are as follows:  Investments in government securities which consist of retail treasury bonds that bear interest
ranging from 5.50%-7.38% and have maturities from August 2020 to October 2037 and fixed-rate
Present Value treasury notes that bear interest ranging from 4.42%-9.91% and have maturities from February
of Defined 2015 to August 2037.
Benefit Fair Value Pension
Obligation of Plan Assets Liability  Investments in debt securities consist of long-term corporate bonds in the power sector, which
At January 1, 2012, as restated P1,302,672,393 P1,293,293,375 P9,379,018 bear interest ranging from 6.30%-7.75% maturing on April 2017.
Pension expense (Notes 21 and 22):  Other financial assets held by the retirement plan are primarily accrued interest income on cash
Current service cost 99,266,478 – 99,266,478 and cash equivalents, debt instruments and other securities.
Net interest 108,018,074 104,912,344 3,105,730
207,284,552 104,912,344 102,372,208 Pension costs as well as the present value of the pension liability are determined using actuarial
Less benefits paid 178,078,217 133,300,505 44,777,712 valuations. The actuarial valuation involves making various assumptions. The principal assumptions
Remeasurements in other comprehensive used in determining pension for the defined benefit plans are shown below:
income:
Return on plan assets (excluding December 31, 2013 December 31, 2012 January 1, 2012
Discount rate 5.00% - 6.00% 5.70% - 6.30% 6.50% - 7.20%
amount included in net interest) – 46,578,825 (46,578,825)
Salary increase rate 6.50% - 7.11% 7.00% - 7.50% 5.00% - 7.50%
Actuarial changes arising from changes
in financial assumptions 180,380,738 – 180,380,738 The sensitivity analysis below has been determined based on reasonably possible changes of each
Actuarial changes due to experience significant assumption on the defined benefit obligation as of the end of the reporting period, assuming
adjustment 367,157,986 – 367,157,986 if all other assumptions were held constant:
547,538,724 46,578,825 500,959,899
Contributions – 46,354,811 (46,354,811) December 31, 2013
At December 31, 2012, as restated P1,879,417,452 P1,357,838,850 P521,578,602 Increase (Decrease) Philippine Plan
Discount rates +0.50 basis points (P757,777,465)
The maximum economic benefit available is a combination of expected refunds from the plan and -0.50 basis points 1,029,419,507
reductions in future contributions.
Future salary increases +0.50% P1,015,034,231
The overall expected rate of return on plan assets is determined based on the market prices prevailing
-0.50% (778,272,017)
on that date, applicable to the period which the obligation is to be settled.
The following table presents the estimated fair values of the assets of the plan: Shown below is the maturity analysis of the undiscounted benefit payments as at December 31, 2013:
December 31, 2013 December 31, 2012 December 31, 2013

Cash and cash equivalents P152,755,806 P58,002,779 Less than 1 year P223,365,460
Investments in government debt securities 973,525,894 993,931,235 More than 1 year to 5 years 921,649,113
Investment in quoted equity securities More than 5 years to 10 years 930,779,042
Holding firms 95,381,636 76,370,495
The Jollibee Group does not have a formal asset-liability matching strategy. The overall investment
Property 63,636,911 43,015,008
policy and strategy of the retirement plan is based on the client suitability assessment, as provided by
Food, beverage & tobacco 58,864,127 102,421,815
its trust bank, in compliance with the Bangko Sentral ng Pilipinas requirements. It does not, however,
Telecommunications 48,697,750 2,418,680
Banks 30,966,661 45,773,280 ensure that there will be sufficient assets to pay the retirement benefits as they fall due while attempting
Electricity, energy, power & water 12,337,971 46,175,322 to mitigate the various risks of the plan.
Others 31,985,361 16,393,271 The plan assets are primarily exposed to financial risks such as liquidity risk and price risk. Liquidity risk
Interest and dividends receivable 30,984,022 17,455,532 pertains to the plan’s ability to meet its obligation to the employees upon retirement. To effectively
Fund liabilities (26,056,807) (44,121,567) manage liquidity risk, the trustee bank maintains assets in cash and short-term deposits. Price risk
P1,473,079,332 P1,357,835,850 pertains mainly to fluctuation in market prices of the retirement funds marketable securities. In order to
effectively manage price risk, the trustee bank continuously assesses these risks by closely monitoring
The plan’s assets and investments consist of the following: the market value of the securities and implementing prudent investment strategies.
 Investments in equity securities consist of listed equity securities including investment in The Jollibee Group expects to contribute P237.1 million to the defined benefit pension plans in 2014.
equity securities of the Parent Company for certain retirement plans of the Jollibee Group
(see Note 27).
The average duration of the defined benefit obligation is 10 years as at December 31, 2013 and 2012, The movements in the number of stock options outstanding and related weighted average exercise
respectively. prices (WAEP) are as follows:
Defined Contribution Plan 2013 2012 2011
The employees of the PRC-domiciled and USA-based subsidiaries of the Jollibee Group are members of Number of Number of Number of
a state-managed pension benefit scheme operated by the national governments. These subsidiaries Options WAEP Options WAEP Options WAEP
are required to contribute a specified percentage of their payroll costs to the pension benefit scheme to Total options granted as at end of year 33,404,194 P62.69 29,808,694 P53.07 26,790,664 P46.89
fund the benefits. The only obligation of these subsidiaries with respect to the pension benefit scheme Outstanding at beginning of year 16,788,056 P63.90 17,505,395 P52.39 15,904,997 P43.46
is to make the specified contributions. Options granted during the year 3,595,500 142.51 3,018,030 107.90 3,516,970 89.90
Options exercised during the year (3,373,561) 46.34 (3,375,915) 41.80 (1,507,813) 43.07
The contributions made to the scheme and recognized as part of other employee benefits amounted to Options forfeited during the year (94,058) 74.45 (359,454) 80.52 (408,759) 62.03
P156.8 million P280.2 million, and P121.2 million in 2013, 2012 and 2011, respectively. Outstanding at end of year 16,915,937 P83.77 16,788,056 P63.90 17,505,395 P52.39
Exercisable at end of year 10,216,427 P57.83 10,367,798 P45.83 10,424,829 P40.10
26. Stock Option Plans The average share price is P143.27, P103.41 and P85.48 in 2013, 2012 and 2011, respectively. The
Senior Management Stock Option and Incentive Plan weighted average remaining contractual life for the stock options outstanding as of December 31, 2013,
On December 17, 2002, the SEC approved the exemption requested by the Jollibee Group on the 2012 and 2011 is 4.83 years, 4.66 years and 4.88 years, respectively.
registration requirements of the 101,500,000 options underlying the Parent Company’s common shares The weighted average fair value of stock options granted in 2013, 2012 and 2011 is P30.55, P23.43 and
to be issued pursuant to the Jollibee Group’s Senior Management Stock Option and Incentive Plan (the P23.67, respectively. The fair value of share options as at the date of grant is estimated using the Black-
Plan). The Plan covers selected key members of management of the Jollibee Group, certain subsidiaries Scholes Option Pricing Model, taking into account, the terms and conditions upon which the options
and designated affiliated entities. were granted. The option style used for this plan is the American style because this option plan allows
The Plan is divided into two programs, namely, the Management Stock Option Program (MSOP) and exercise before the maturity date. The inputs to the model used for the options granted on the dates of
the Executive Long-term Incentive Program (ELTIP). The MSOP provides a yearly stock option grant grant for each MSOP cycle are shown below:
program based on company and individual performance while the ELTIP provides stock ownership as Risk-free Expected Stock Price
an incentive to reinforce entrepreneurial and long-term ownership behavior of executive participants. Dividend Expected Interest Life of on Grant Exercise
MSOP. The MSOP is a yearly stock option grant program open to members of the corporate management MSOP Cycle Yearof Grant Yield Volatility Rate the Option Date Price
1st 2004 1.72% 36.91% 6.20% 5-7 years P24.00 P20.00
committee of the Jollibee Group and members of the management committee, key talents and
2nd 2005 1.72% 36.91% 6.20% 5-7 years 29.00 27.50
designated consultants of some of the business units. 3rd 2006 1.72% 36.91% 6.20% 5-7 years 35.00 32.32
Each MSOP cycle refers to the period commencing on the MSOP grant date and ending on the last day 4th 2007 1.70% 28.06% 6.41% 3-4 years 52.50 50.77
of the MSOP exercise period. Vesting is conditional on the employment of the employee-participants 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
to the Jollibee Group within the vesting period. The options will vest at the rate of one-third of the total 7th 2010 2.00% 29.72% 5.25% 3-4 years 70.00 57.77
options granted on each anniversary of the MSOP grant date until the third anniversary. 8th 2011 2.00% 34.53% 4.18% 3-4 years 89.90 89.90
The exercise price of the stock options is determined by the Jollibee Group with reference to prevailing 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
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 The expected life of the stock options is based on historical data and current expectations and is not
Jollibee Group with reference to the market closing price as at date of grant. necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption
The stock options expire eight years after grant date. The Jollibee Group does not pay cash as a form that the historical volatility over a period similar to the life of the options is indicative of future trends,
of settlement. which may also not necessarily be the actual outcome.
On July 1, 2004, the Compensation Committee of the Jollibee Group granted 2,385,000 options under ELTIP. The ELTIP entitlement is given to members of the corporate management committee.
the 1st MSOP cycle to eligible participants. The options will vest at the rate of one-third of the total Each ELTIP cycle refers to the period commencing on the ELTIP entitlement date and ending on the
options granted from the start of the grant date on each anniversary date which will start after a year last day of the ELTIP exercise period. Actual grant and vesting is conditional upon achievement of the
from the MSOP grant date. One-third of the options granted, or 795,000 options, vested and may be Jollibee Group’s minimum medium to long-term goals and individual targets in a given period, and the
exercised starting July 1, 2005 and expired on June 30, 2012. On July 1, 2005 to 2013,the Compensation employment of the employee-participants to the Jollibee Group within the vesting period. If the goals
Committee granted series of MSOP grants under the 2nd to 10th MSOP cycle to eligible participants. are achieved, the options will be granted. Starting with the 3rd ELTIP cycle, a percentage of the options
The options vest similar to the 1st MSOP cycle. 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.
81
The exercise price of the stock options is determined by the Jollibee Group with reference to prevailing The expected life of the stock options is based on historical data and current expectations and is not
market prices over the three months immediately preceding the date of entitlement. 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,
The Jollibee Group does not pay cash as a form of settlement. Starting with the 3rd ELTIP cycle, the
which may also not necessarily be the actual outcome.
exercise price of the option is determined by the Jollibee Group with reference to the closing market
price as of the date of grant. The cost of the stock options expense charged to operations under “General and administrative
expenses” account amounted to P150.4 million, P77.0 million and P73.6 million in 2013, 2012 and 2011,
On July 1, 2004, the Compensation Committee gave an entitlement of 22,750,000 options under the
respectively (see Note 22).
1st ELTIP cycle to eligible participants. The options will vest at the rate of one-third of the total options
granted on each anniversary date which will start after a year of the ELTIP grant date. One-third of the
options granted, or 7,583,333 options, vested and may be exercised starting July 1, 2007 and expired on
27. Related Party Transactions
June 30, 2012. On July 1, 2008 and October 19, 2012, a total entitlement of 20,399,999 and 24,350,000
options was given to eligible participants under the 2nd and 3rd ELTIP cycle, respectively. The Jollibee Group has transactions within and among the consolidated entities and related parties.
A related party is an entity that has the ability to control or exercise significant influence, directly or
The movements in the number of stock options outstanding for the 2nd and 3rd ELTIP cycles and
indirectly, over the other party in making financial and operating decisions. Transactions between
related WAEP for the years ended December 31, 2013, 2012 and 2011 follow:
members of the Jollibee Group and the related balances are eliminated at consolidation and are no
2013 2012 2011 longer included in the disclosures.
Number of Number of Number of
Options WAEP Options WAEP Options WAEP
Compensation of Key Management Personnel of the Jollibee Group
Total options given as of end of year 67,499,999 P56.66 66,749,999 P56.12 43,149,999 P29.38 The aggregate compensation and benefits to key management personnel of the Jollibee Group in 2013,
2012 and 2011 are as follows:
Outstanding at beginning of year 37,811,665 P80.51 27,674,569 P32.52 30,661,735 P32.72
Options granted during the year 750,000 105.00 23,600,000 105.00 750,000 39.85 2012 2011
Options exercised during the year (1,375,555) 39.85 (12,962,905) 24.19 (787,166) 20.00 (As restated - (As restated -
Options forfeited during the year − − (499,999) 39.85 (2,950,000) 39.85 2013 see Note 2) see Note 2)
Outstanding at end of year 37,186,110 P82.51 37,811,665 P80.51 27,674,569 P32.52 Salaries and short-term benefits P584,663,115 P442,497,940 P391,620,377
Stock options expense (Note 26) 150,418,741 76,984,373 73,596,182
Exercisable at end of year 12,836,110 P39.85 7,411,665 P39.85 10,224,570 P20.00 Net pension expense 46,292,773 41,900,346 28,897,958
Employee car plan and other long-term
The weighted average remaining contractual life for the stock options outstanding as of 2013, 2012 and
benefits 34,443,875 28,405,255 25,322,690
2011 is 5.30 years, 5.68 years and 3.02 years, respectively.
P815,818,504 P589,787,914 P519,437,207
The fair value of stock options granted is P22.96 in 2013 and 2012. 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 Transactions with the Retirement Plans
terms and conditions upon which the options were granted. The option style used for this plan is the As at and for the years ended December 31, 2013 and 2012, certain retirement funds of the Jollibee
American style because this option plan allows exercise before the maturity date. The stock options Group include investment in equity securities of the Parent Company with details as follows:
granted under the 2nd and 3rd ELTIP cycles will expire on April 30, 2017 and 2020, respectively. The
inputs to the model used for the options granted on the dates of grant for each ELTIP cycle is shown 2013 2012
Number of shares 179,110 782,130
below:
Cost P6,503,796 P25,598,922
Risk-free Expected Stock Price Market value 31,003,941 79,777,260
Year of Dividend Expected Interest Life of on Grant Exercise Unrealized gain P24,500,145 P54,178,338
ELTIP Cycle Grant Yield Volatility Rate the Option Date Price
1st 2004 1.72% 36.91% 6.20% 5 years P24.00 P20.00
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
and 2012, respectively, are charged to “Operating lease payables” account in the consolidated
28. Earnings Per Share statements of financial position.
Basic and diluted EPS are computed as follows: b. Operating lease commitments - Jollibee Group as lessor
2012 2011 The Jollibee Group entered into commercial property leases for its investment property units and
(As restated - (As restated - various sublease agreements. Noncancellable periods of the lease range from 3 to 20 years, mostly
2013 see Note 2) see Note 2) containing renewal options. All leases include a clause to enable upward revision of the rent
(a) Net income attributable to the equity charges on an annual basis based on prevailing market conditions. Rent income in accordance
holders of the Parent Company P4,671,559,394 P3,727,084,297 P3,262,644,224 with the terms of the lease agreements amounted to P98.7 million, P97.8 million and P94.6 million
in 2013, 2012 and 2011, respectively.
(b) Weighted average number of shares - The future minimum rent receivables for the noncancellable periods of the operating leases
basic 1,049,704,316 1,041,923,753 1,029,743,055 follows:
Weighted average number of shares
outstanding under the stock 2013 2012 2011
option plan 54,309,458 33,470,157 21,979,743 Within one year P2,184,390 P25,350,190 P25,856,500
Weighted average number of shares After one year but not more than
that would have been purchased five years 5,223,839 41,607,749 66,466,637
at fair market value (32,513,336) (14,521,214) (7,827,084) More than five years – 2,314,149 –
(c) Adjusted weighted average shares - P7,408,229 P69,272,088 P92,323,137
diluted 1,071,500,438 1,060,872,696 1,043,895,714
Rent income recognized on a straight-line basis amounted to P97.5 million, P93.6 million and
EPS: P88.4 million in 2013, 2012 and 2011, respectively (see Note 20). The difference of rent income
Basic (a/b) P4.450 P3.577 P3.168 recognized under the straight-line method and therent amounts in accordance with the terms of
Diluted (a/c) 4.360 3.513 3.125 the lease agreements amounting to P1.2 million and P4.2 million in 2013 and 2012, respectively,
are included under “Operating lease receivables” account in the consolidated statements of
There were no anti-dilutive options outstanding as at December 31, 2013 and 2012.
financial position.
c. Contingencies
29. Commitments and Contingencies
The Jollibee Group is involved in litigations, claims and disputes which are normal to its business.
a. Operating lease commitments - Jollibee Group as lessee Management believes that the ultimate liability, if any, with respect to these litigations, claims
and disputes will not materially affect the financial position and financial performance of the
The Jollibee Group has various operating lease commitments for quick service restaurant outlets
Jollibee Group. Thus, other than the provisions in Note 17, there were no other provisions made
and offices. The noncancellable periods of the leases range from 3 to 20 years, mostly containing
for contingencies.
renewal options. Some of the leases contain escalation clauses. The lease contracts on certain
sales outlets provide for the payment of additional rentals based on certain percentages of sales
of the outlets. Rent payments in accordance with the terms of the lease agreements amounted
30. Financial Risk Management Objectives and Policies
to P6,294.7 million, P5,779.0 million and P4,955.5 million in 2013, 2012 and 2011, respectively.
The Jollibee Group’s principal financial instruments comprise cash and cash equivalents and receivables.
The future minimum lease payments for the noncancellable periods of the operating leases
The main purpose of these financial instruments is to obtain financing for the Jollibee Group’s operations.
follows:
The Jollibee Group has other financial assets and liabilities such as other noncurrent assets and trade
2013 2012 2011 payables and other current liabilities which arise directly from its operations.
Within one year P2,500,831,215 P2,391,671,677 P2,407,191,659 The main risks arising from these financial instruments are credit risk and liquidity risk. The Jollibee Group
After one year but not more than does not engage in any long-term debt and foreign currency-denominated transactions that may cause
five years 8,090,153,478 7,953,687,706 8,699,820,241 exposure to interest rate risk and foreign currency risk, respectively. The policies for managing each of
More than five years 3,911,301,278 5,965,097,801 5,546,484,166 these risks are summarized as follows:
P14,502,285,971 P16,310,457,184 P16,653,496,066
Equity Price Risk
Rent expense recognized on a straight-line basis amounted to P6,287.3 million, P5,895.9 million The Jollibee Group is not exposed to significant equity price risk on its investment in quoted equity
and P5,131.8 million in 2013, 2012 and 2011, respectively (see Notes 21 and 22). The difference of securities consisting of investment in club shares and shares of public utility companies.
rent expense recognized under the straight-line method and the rent amounts due in accordance
with the terms of the lease agreements amounting to P7.4 million and P116.9 million in 2013
83
Interest Rate Risk The Jollibee Group’s exposure to interest rate risk relates primarily to Perf’s long-term debt with
Interest rate risk arises from the possibility that the fair value or future cash flows of a financial instruments floating interest rates. Floating rate financial instruments are subject to cash flow interest rate risk.
will fluctuate because of changes in market interest rates. The Company’s interest rate exposure management policy centers on reducing the Company’s overall
interest expense and exposure to changes in the interest rates.
The Jollibee Group’s exposure to interest rate risk relates primarily to Perf’s long-term debt with
floating interest rates. Floating rate financial instruments are subject to cash flow interest rate risk. The following table shows the Jollibee Group’s Philippine operations’ foreign currency-denominated
The Company’s interest rate exposure management policy centers on reducing the Company’s overall monetary assets and liabilities and their peso equivalents as at December 31:
interest expense and exposure to changes in the interest rates.
2013 2012
To manage the interest rate risk related to the Company’s long-term debt, the Company uses a derivative PHP PHP
instrument to fix the interest rate over the term of the debt (see Note 18). USD RMB Equivalent USD RMB Equivalent
Assets
There is minimal exposure on the other sources of the Jollibee Group’s interest rate risk. These other Cash and cash equivalents 1,095,583 8,074 48,697,439 2,193,789 8,072 90,108,394
sources are from the Jollibee Group’s cash in bank, short-term deposits, refundable deposits and Receivables 388,260 – 17,236,812 228,184 – 9,366,953
employees’ car plan receivables. Long-term debt (3,400,000) – (150,943,000) (3,400,000) – (139,570,000)
Net exposure (1,916,157) 8,074 (85,008,749) (978,027) 8,072 (40,094,653)
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with
all other variables held constant, of the Company’s equity as at December 31, 2013. The impact on the Foreign Currency Risk Sensitivity Analysis
Company’s equity is due to changes in the fair value of cross-currency swaps designated as cash flow The Jollibee Group has recognized in its profit or loss, foreign currency exchange gain (loss) included
hedges. under “Other income” account which amounted to P46.6 million, (P25.4 million) and (P63.6 million)
on its net foreign currency-denominated assets in 2013, 2012 and 2011, respectively (see Note 23).
Increase/ Effect in Effect in This resulted from the movements of the Philippine peso against the USD and RMB as shown in the
Decrease Profit or Loss Equity Before following table:
in Basis Points Before Income Tax Income Tax
2013 Peso to
USD +100 (101,186) (110,395) USD RMB
-100 109,430 115,129 December 31, 2013 44.40 7.31
December 31, 2012 41.05 6.61
PHP +100 (4,522,944) (4,900,986)
-100 4,877,210 5,111,152 The following table demonstrates the sensitivity to a reasonably possible change in USD and RMB to
Philippine peso exchange rate, with all other variables held constant, of the Jollibee Group’s income
Increase/ Effect in Effect in
before income tax (due to changes in the fair value of monetary assets and liabilities) as at December 31:
Decrease Profit or Loss Before Equity Before
in Basis Points Income Tax Income Tax 2013 2012
2012 Effect on Effect on
USD +100 (9,209) (9,209) Income Effect on Income Effect on
-100 5,699 5,699 Appreciation (Depreciation) Before Income Equity Before Before Income Equity Before
of P against Foreign Currency Tax Income Tax Tax Income Tax
PHP +100 (378,029) (378,029) (In Thousands)
-100 233,944 233,944 USD
Foreign Currency Risk 1.50 (2,874) (2,874) (1,467) (1,467)
The Jollibee Group’s exposure to foreign currency risk arises from the Parent Company’s investments (1.50) 2,874 2,874 1,467 1,467
1.00 (1,916) (1,916) (978) (978)
outside the Philippines, which are mainly in PRC and USA. While the foreign businesses have been
(1.00) 1,916 1,916 978 978
rapidly growing, the net assets of foreign businesses account for only 10.84% and 15.57% of the
RMB
consolidated net assets of the Jollibee Group as at December 31, 2013 and 2012, respectively. Therefore, 0.95 7.7 7.7 (7.7) (7.7)
the total exposure to foreign exchange risk of the Jollibee Group is still not significant. (0.95) (7.7) (7.7) 7.7 7.7
The Jollibee Group also has transactional foreign currency exposures. Such exposure arises from the 0.63 5.1 5.1 (5.1) (5.1)
Jollibee Group’s Philippine operations’ cash and cash equivalents, receivables and long-term debt in (0.63) (5.1) (5.1) 5.1 5.1
foreign currencies.
Credit Risk Credit Risk Exposure and Concentration. The table below shows the maximum exposure to credit risk of
Credit risk is the risk that a customer or counterparty fails to fulfill its contractual obligations to the the Jollibee Group as at December 31, without considering the effects of collaterals and other credit risk
Jollibee Group. This includes risk of non-payment by borrowers and issuers, failed settlement of mitigation techniques:
transactions and default on outstanding contracts.
2013
The Jollibee Group has a strict credit policy. Its credit transactions are with franchisees that have gone Fair Value and
through rigorous screening before granting them the franchise. The credit terms are very short, while Financial Effect of
deposits and advance payments are also required before rendering the service or delivering the goods, Collateral or
thus, mitigating the possibility of non-collection. In cases of non-collection, defaults of the debtors are Gross Maximum Credit
not tolerated; the exposure is contained the moment a default occurs and transactions that will increase Exposure Enhancement Net Exposure*
the exposure of the Jollibee Group are not permitted. (a) (b) (c) = (a) - (b)
The Jollibee Group has no significant concentration of credit risk with counterparty. The Jollibee Group’s (In Millions)
franchisee profile is such that no single franchisee accounts for more than 5% of the total system wide Financial Assets
sales of the Jollibee Group. Loans and Receivables
Cash and cash equivalents* P9,683.9 P129.1 P9,554.8**
The aging analysis of loans and receivables as at December 31 are as follows: Receivables:
Trade 3,128.4 96.8 3,031.6***
2013
Neither Employee car plan receivables 139.4 – 139.4
Past Advances to employees 112.2 – 112.2
Due nor Past Due but not Impaired (Age in Days) Other receivables**** 76.8 – 76.8
Total Impaired 1-30 31-60 61-120 Over 120 Impaired Other noncurrent assets:
(In Millions) Security and other deposits 1,360.2 – 1,360.2
Cash and cash equivalents* P9,683.9 P9,683.9 P– P– P– P– P– Operating lease receivable 21.3 – 21.3
Receivables: P14,522.2 P225.9 P14,296.3
Trade 3,128.4 1,782.3 294.3 92.3 91.0 594.0 274.5
Employee car plan receivables** 139.4 139.4 – – – – – 2012
Advances to employees 112.2 112.2 – – – – – Fair Value and
Other receivables*** 76.8 76.8 – – – – – Financial Effect of
Other noncurrent assets: Gross Maximum Collateral or Credit
Security and other deposits 1,360.2 1,360.2 – – – – –
Exposure Enhancement Net Exposure*
Operating lease receivable 21.3 21.3 – – – – –
P14,522.2 P13,176.1 P294.3 P92.3 P91.0 P594.0 P274.5 (a) (b) (c) = (a) - (b)
Financial Assets (In Millions)
2012 Loans and receivables:
Neither Cash and cash equivalents* P8,654.5 P122.1 P8,532.4**
Past Receivables***:
Due nor Past Due but not Impaired (Age in Days) Trade 2,714.8 212.8 2,502.0***
Total Impaired 1-30 31-60 61-120 Over 120 Impaired
Employee car plan receivables 143.3 – 143.3
(In Millions)
Cash and cash equivalents* P8,654.5 P8,654.5 P– P– P– P– P–
Advances to employees 95.5 – 95.5
Receivables: Other receivables**** 142.2 – 142.2
Trade 2,714.8 1,688.1 286.9 64.0 74.8 340.9 260.1 Other noncurrent assets:
Employee car plan receivables** 143.3 143.3 – – – – – Security and other deposits 1,161.1 – 1,161.1
Advances to employees 95.5 95.5 – – – – – Operating lease receivable 22.6 – 22.6
Other receivables*** 142.2 142.2 – – – – – P12,934.0 P334.9 P12,599.1
Other noncurrent assets: * Excluding cash on hand amounting to P220.0 million and P194.1 million in 2013 and 2012, respectively.
Security and other deposits 1,161.1 1,158.1 – – – – 3.0 ** Gross financial assets after taking into account insurance bank deposits for cash and cash equivalents.
Operating lease receivable 22.6 22.6 *** Gross financial assets after taking into account payables to the same counterparty.
P12,934 P11,904.3 P286.9 P64.0 P74.8 P340.9 P263.1 **** Excluding receivables from government agencies amounting to P6.6 million and P7.7 million in 2013 and 2012, respectively.
* Excluding cash on hand amounting to P220.0 million and P194.1 million in 2013 and 2012, respectively.
** Including noncurrent portion of employee car plan receivables.
With respect to credit risk arising from financial assets of the Jollibee Group, the Jollibee Group’s
*** Excluding receivables from government agencies amounting to P6.6 million and P7.7 million in 2013 and 2012, respectively. exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the
carrying amount of these instruments.
85
Credit Quality. The tables below show the credit quality by class of financial assets that are neither past Liquidity Risk
due nor impaired, based on the Jollibee Group’s credit rating system as at December 31, 2013 and 2012. The Jollibee Group’s exposure to liquidity risk refers to the risk that its financial liabilities are not serviced
in a timely manner and that its working capital requirements and planned capital expenditures are
2013 not met. To manage this exposure and to ensure sufficient liquidity levels, the Jollibee Group closely
Neither Past Due nor Impaired Past Due or monitors its cash flows.
Total A B C Impaired
(In Millions) On a weekly basis, the Jollibee Group’s Cash and Banking Team monitors its collections, expenditures
Loans and Receivables and any excess/deficiency in the working capital requirements, by preparing cash position reports that
Cash and cash equivalents* P9,683.9 P9,683.9 P– P– P– present actual and projected cash flows for the subsequent week. Cash outflows resulting from major
Receivables: expenditures are planned so that money market placements are available in time with the planned
Trade 3,128.4 1,171.2 539.5 71.6 1,346.1 major expenditure. In addition, the Jollibee Group has short-term cash deposits and has available
Employee car plan receivables** 139.4 139.4 – – – credit lines with accredited banking institutions, in case there is a sudden deficiency. The Jollibee
Advances to employees 112.2 112.2 – – – Group maintains a level of cash and cash equivalents deemed sufficient to finance the operations.
Other receivables*** 76.8 76.8 – – – No changes were made in the objectives, policies or processes of the Jollibee Group during the years
Other noncurrent assets ended December 31, 2013 and 2012.
Security and other deposits 1,360.2 1,360.2 – – –
Operating lease receivable 21.3 21.3 – – – The Jollibee Group’s financial assets, which have maturity of less than 12 months and are used to
P14,522.2 P12,565.0 P539.5 P71.6 P1,346.1 meet its short-term liquidity needs, are cash and cash equivalents and trade receivables amounting to
P9,683.9 million and P3,076.3 million, respectively, as at December 31, 2013 and P8,654.5 million and
2012 P2,742.6 million, respectively, as at December 31, 2012.
Neither Past Due nor Impaired Past Due or The tables below summarize the maturity profile of the Jollibee Group’s financial liabilities based on the
Total A B C Impaired contractual undiscounted cash flows as at December 31:
(In Millions)
Loans and Receivables 2013
Cash and cash equivalents* P8,654.5 P8,654.5 P– P– P– Due and Less than Over
Receivables: Demandable 1 Year 1 to 5Years 5 Years Total
Trade 2,714.8 1,280.9 367.7 39.5 1,026.7 Financial Assets
Employee car plan receivables** 143.3 143.3 – – – Loans and receivables:
Cash and cash equivalents P4,533,525,399 P5,370,351,669 P– P– P9,903,877,068
Advances to employees 95.5 95.5 – – –
Receivables:
Other receivables*** 142.2 142.2 – – – Trade 1,071,558,963 1,782,338,205 – – 2,853,897,168
Other noncurrent assets: – – – Employee car plan
Security and other deposits 1,161.1 1,158.1 – – 3.0 receivables* – 139,377,532 – – 139,377,532
Operating lease receivable 22.6 22.6 Advances to employees – 112,214,103 – – 112,214,103
P12,934.0 P11,497.1 P367.7 P39.5 P1,029.7 Other receivables** – 76,835,563 – – 76,835,563
* Excluding cash on hand amounting to P220.0 million and P194.1 million in 2013 and 2012, respectively.
** Including noncurrent portion of employee car plan receivables. Other noncurrent assets:
*** Excluding receivables from government agencies amounting to P6.6 million and P7.7 million in 2013 and 2012, respectively. Security and other deposits – – 1,230,748,216 129,482,626 1,360,230,842
Operating lease receivable – 2,260,812 5,223,837 13,782,602 21,267,251
The credit quality of financial assets is managed by the Jollibee Group using internal credit ratings, as Total 5,605,084,362 7,483,377,884 1,235,972,053 143,265,228 14,467,699,527
shown below: Financial Liabilities
Trade payables and other
A- For counterparty that is not expected by the Jollibee Group to default in settling its obligations, current liabilities*** – 11,035,616,216 – – 11,035,616,216
thus, credit risk exposure is minimal. This counterparty normally includes financial institutions, Long-term debt (including
related parties and customers who pay on or before due date. current portion) – 1,106,275,244 2,594,907,750 1,468,062,750 5,169,245,744
Liability for acquisition of
B- For counterparty with tolerable delays (normally from 1 to 30 days) in settling its obligations businesses (including
to the Jollibee Group. The delays may be due to cut-off differences and/or clarifications on current portion) – 107,666,875 129,007,932 – 236,674,807
contracts/billings. Operating lease payable – 144,730,977 494,650,869 929,689,615 1,569,071,461
– 12,394,289,312 3,218,566,551 2,397,752,365 18,010,608,228
C- For counterparty who consistently defaults in settling its obligation, but with continuing
Net Financial Assets
business transactions with the Jollibee Group, and may be or actually referred to legal and/or (Liabilities) P5,605,084,362 (P4,910,911,428) (P1,982,594,498) (P2,254,487,137) (P3,542,908,701)
subjected to cash before delivery (CBD) scheme. Under this scheme, the customer’s credit line
is suspended and all subsequent orders are paid in cash before delivery. The CBD status will
only be lifted upon full settlement of the receivables and approval of management. Thereafter,
the regular credit term and normal billing and collection processes will resume.
2012 Net Debt Ratio

Due and Less than Over
Demandable 1 Year 1 to 5 Years 5 Years Total 2013 2012
Financial Assets Total debt P22,665,694,036 P20,036,827,682
Loans and receivables: Less cash and cash equivalents 9,903,877,068 8,848,591,584
Cash and cash equivalents P3,483,663,099 P5,364,928,485 P– P– P8,848,591,584 Net debt (a) 12,761,816,968 11,188,236,098
Receivables: Total equity attributable to equity holders
Trade 506,367,595 1,948,258,908 – – 2,454,626,503 of the Parent Company 22,548,878,780 20,998,202,046
Employee car plan Total net debt and equity attributable
receivables* – 143,329,998 – – 143,329,998 to equity holders of the Parent Company (b) P35,310,695,748 P32,186,438,144
Advances to employees 95,502,388 – – – 95,502,388
Other receivables** 130,494,012 11,669,873 – – 142,163,885
Net debt ratio (a/b) 36% 35%
Other noncurrent assets:
Security and other deposits – – 1,161,089,780 – 1,161,089,780
Operating lease receivable – 1,453,888 7,276,424 13,829,777 22,560,089 31. Fair Value of Financial Assets and Liabilities
P4,216,027,094 P7,469,641,152 P1,168,366,204 P13,829,777 P12,867,864,227
Financial Liabilities The fair value of the financial assets and liabilities is included at the amount at which the instrument
Trade payables and other could be exchanged in a current transaction between willing parties, other than in a forced or liquidation
current liabilities*** P– P8,838,544,518 P– P– P8,838,544,518 sale. The following methods and assumptions were used to estimate the fair values:
Long-term debt (including
current portion) – 4,572,839,927 854,616,489 – 5,427,456,416 Financial Instruments whose Carrying Amounts Approximate Fair Value. Management has determined that
Liability for acquisition of the carrying amounts of the following financial assets and financial liabilities based on their notional
businesses (including amounts reasonably approximate their fair values because of their short-term maturities.
current portion) – 216,368,476 151,203,664 – 367,572,140
Operating lease payable – 113,122,706 514,089,887 832,955,406 1,460,167,999
– 13,740,875,627 1,519,910,040 832,955,406 16,093,741,073 2013 2012
Net Financial Assets (Liabilities) P4,216,027,094 (P6,271,234,475) (P351,543,836) (P819,125,629) (P3,225,876,846) Financial Assets
* Including noncurrent portion of employee car plan receivables Cash and cash equivalents P9,903,877,068 P8,848,591,584
** Excluding receivables from government agencies amounting to P6.6 million and P7.7 million in 2013 and 2012, respectively. Receivables:
*** Excluding other “Accrued salaries, wages and employee benefits”, “Output VAT ad other local taxes” and “Unearned revenue from gift certificates”. Trade 2,853,897,168 2,454,625,503
Current portion of employee car plan receivable 33,366,298 50,300,588
Capital Management Advances to employees 112,214,103 95,502,388
Capital includes equity attributable to equity holders of the Parent Company. Other receivables* 76,835,513 142,163,885
Operating lease receivable 21,267,251 22,560,089
The primary objective of the Jollibee Group’s capital management is to ensure that it maintains a strong 13,001,457,401 11,613,744,037
credit rating and healthy capital ratios in order to support its business and maximize shareholder value.
The Jollibee Group has sufficient capitalization. Other Financial Liabilities
Trade payables and other current liabilities** 11,035,616,216 8,838,544,518
The Jollibee Group generates cash flows from operations sufficient to finance its organic growth. It Operating lease payable 1,569,071,461 1,460,167,999
declares cash dividends representing about one-third of its consolidated net income, a ratio that would P12,604,687,677 P10,298,712,517
still leave some additional cash for future acquisitions. If needed, the Jollibee Group would borrow ** Excluding receivables from government agencies amounting to P6.6 million and P7.7 million in 2013 and 2012, respectively.
money for acquisitions of new businesses. ** Excluding “Accrued salaries, wages and employee benefits”, “Output VAT and other local taxes” and “Unearned revenue from gift certificates.
As at December 31, 2013 and 2012, the Jollibee Group’s debt ratio and net debt ratio are as follows: Cash and Cash Equivalents, Receivables, and Trade Payables and Other Current Liabilities
The management assessed that cash and cash equivalents, receivables, employee car plan receivables,
Debt Ratio
trade payables and other current liabilities approximate their carrying amounts largely due to the short-
2013 2012 term maturities of these instruments.
Total debt (a) P22,665,694,036 P20,036,827,682
Total equity attributable to equity holders
of the Parent Company 22,548,878,780 20,998,202,046
Total debt and equity attributable to equity
holders of the Parent Company (b) P45,214,572,816 P41,035,029,728
Debt ratio (a/b) 50% 49%
87
Financial Instruments Carried at Amounts Other than Fair Value. Quantitative fair value measurement hierarchy for assets as at December 31, 2012:
2013 2012
Fair Value Measurement Using
Financial Assets Quoted Significant Significant
Security deposits and other noncurrent assets: Prices in Observable Unobservable
Security deposits P1,414,161,439 P1,206,391,545 Date of Active Markets Inputs Inputs
Noncurrent portion of employee car plan receivables 116,155,190 98,986,724 Valuation Total (Level 1) (Level 2) (Level 3)
AFS Financial Assets Assets measured at fair value:
Investments in club shares and shares of public utility Available-for-sale
companies 21,479,461 128,149,438 financial assets
P1,551,796,090 P1,433,527,707 Quoted equity
shares - club shares December 31, 2012 P128,149,438 P128,149,438 P– P–
There were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and Assets for which fair values are
out of Level 3 fair value measurements during the year. disclosed:
Investment properties:
AFS Financial Assets Land December 31, 2012 714,455,447 – – 714,455,447
The fair value of investments that are traded in organized financial markets are determined by reference Building December 31, 2012 323,085,398 – – 323,085,398
to quoted market bid prices at the close of business at reporting date. Other noncurrent assets:
Security and other
The Jollibee Group does not have the intention to dispose these financial assets in the near term. deposits
Financial Instruments Carried at other than Fair Value Employee car plan
receivables December 31, 2012 1,206,391,545 – – 1,206,391,545
Management has determined that the estimated fair value of security and other deposits, noncurrent Employee car plan
portion of employee car plan receivables, long-term debt and liability for acquisition of businesses are receivables December 31, 2012 98,986,724 – – 98,986,724
based on the discounted value of future cash flows using applicable rates as follows:
2013 2012 Quantitative fair value measurement hierarchy for liabilities as at December 31, 2013:
Security and other deposits 0.23%–8.65% 2.01%–5.50%
Fair Value Measurement Using
Employee car plan receivables 0.36%–8.84% 1.95%–4.11% Quoted Prices Significant Significant
in Active Observable Unobservable
The following table provides the fair value measurement hierarchy of the Jollibee Group’s recurring
Markets Inputs Inputs
financial assets and liabilities. Date of Valuation Total (Level 1) (Level 2) (Level 3)
Quantitative disclosure fair value measurement hierarchy for assets as at December 31, 2013: Liabilities measured at
fair value:
Fair Value Measurement Using Derivative liability December 31, 2013 P4,532,600 P– P4,532,600 P–
Quoted Significant Significant Contingent
Prices in Observable Unobservable consideration December 31, 2013 121,743,395 – – 121,743,395
Active Markets Inputs Inputs
Date of Valuation Total (Level 1) (Level 2) (Level 3) Quantitative disclosure fair value measurement hierarchy for liabilities as at December 31, 2012:
Assets measured at fair value:
Available-for-sale Fair Value Measurement Using
financial assets Significant Significant
Quoted equity Quoted Prices in Observable Unobservable
shares - club shares December 31, 2013 P21,479,461 P21,479,461 P– P– Active Markets Inputs Inputs
Assets for which fair values are Date of Valuation Total (Level 1) (Level 2) (Level 3)
disclosed: Liabilities measured at
Investment properties: fair value:
Land December 31, 2013 714,455,447 – – 714,455,447 Derivative liability December 31, 2012 P22,782,820 P– P22,782,820 P–
Building December 31, 2013 336,029,815 – – 336,029,815 Contingent
Other noncurrent assets: consideration December 31, 2013 121,743,395 – – 121,743,395
Security and other
deposits December 31, 2013 1,414,161,439 – – 1,414,161,439
Employee car plan
receivables December 31, 2013 116,155,190 – – 116,155,190
Description of significant unobservable input to the measurement of the contingent consideration as 33. Non-cash Transactions
at December 31, 2013 is as follow:
In 2013, the Jollibee Group’s principal non-cash transactions under investing activities pertains to the
Significant Sensitivity of the reclassification of trademark and patents under “Other noncurrent assets” account to “Intangible assets”
Valuation Technique Unobservable Input Range of Input Input to Fair Value account amounting to P9.8 million.
Contingent Multiple-scenario Revenue growth rate 7.8% to 25.0% Increase (decrease) in the
consideration weighted-probability used to forecast EBITDA discount would increase In 2013, the Jollibee Group’s principal non-cash transaction under financing activities pertains to the
approach (decrease) the fair value. refinancing of Parent Company’s loan with MBTC amounting to P1,500.0 million within five (5) years and
six (6) months from December 9, 2013.
The Jollibee Group’s principal non-cash transaction under financing activities in 2012 pertains
32. Events after the Reporting Period
to the extension of the terms of two short-term loans that have both matured in 2011 totaling
Capital Infusions to Subsidiaries P1,500.0 million, combined to form a new loan which are now due to be paid in 2013, under a new loan
On January 7, 2014, the BOD approved the Parent Company’s additional investments in JWPL in the agreement.
total amount of USD52.5 million and to Honeybee in the total amount of USD0.8 million. The Parent
The Jollibee Group’s non-cash transaction under investing activities in 2012 pertains to the formation
Company subscribes to approximately to 66,468,928 shares of JWPL.
of joint ventures with 50% equity interest in SuperFoods Group and 54% equity interest in BK Group
Signing of Joint Venture Agreement through advances given prior to 2012.
On February 25, 2014, the Jollibee Group, through GPPL, signed a joint agreement with Golden Crown
Foods LLC (GCFL) to establish a joint venture entity to own and operate the Jollibee brand in the United
Arab Emirates.
The Jollibee Group shall own 49% of the joint venture entity while GCFL will own 51%. GPPL and
GCFL will share control and management of the joint venture entity equally. The initial funding for the
formation of the joint venture entity is approximately USD0.08 million.
Dividend Declaration
On April, 7, 2014, the BOD approved a regular cash dividend of P0.75 a share of common stock to all
stockholders of record as of May 8, 2014. Consequently, the cash dividend is expected to be paid out
by May 30, 2014. The cash dividend is 15.4% higher than the P0.65 regular dividend a share declared
in April 2013.
Loan from Bank of Philippine Islands (BPI)
On April 7, 2014, the BOD authorized the Company to apply for and secure from BPI loans or other
financial accommodations or credit facilities in the aggregate principal amount of P800.0 million.
Investors Information
COMPANY HEADQUARTERS STOCKHOLDERS’ INQUIRIES

10/F Jollibee Plaza Building Inquiries regarding dividend payments, account status, address changes, stock
No. 10 F. Ortigas Jr. Avenue certificates and other pertinent matters may be addressed to the Company’s registrar
Ortigas Center, Pasig City, Philipines 1605 and transfer agent:
Telephone: (632) 634-1111
Facsimile: (632) 633-9504 Rizal Commercial Banking Corporation
Website: www.jollibee.com.ph Stock Transfer Office
Ground Floor, West Wing
Grepalife Building
COMMON STOCK 221 Senator Gil Puyat Avenue
Jollibee’s common stock is listed and traded on the Philippine Stock Exchange with Makati City
the ticker symbol “JFC.” It is one of the companies which comprise the PSE Composite Telephone: (632) 892-4156
Index.
ANNUAL STOCKHOLDERS’ MEETING SEC FORM 17-A

The Annual Stockholders’ Meeting will be held on June 27, 2014 at 2:00 P.M., The financial information in this report, in the opinion of Management, substantially
(registration starts at 1:00 P.M.) at the Philippine Stock Exchange Auditorium, Ground conforms with the information required in the “17-A Report” submitted to the
Floor, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City. Securities and Exchange Commission. Copies of this report may be obtained free of
charge upon written request to the Office of the Corporate Secretary.
Investors Information
COMPANY HEADQUARTERS STOCKHOLDERS’ INQUIRIES

10/F Jollibee Plaza Building Inquiries regarding dividend payments, account status, address changes, stock
No. 10 F. Ortigas Jr. Avenue certificates and other pertinent matters may be addressed to the Company’s registrar
Ortigas Center, Pasig City, Philipines 1605 and transfer agent:
Telephone: (632) 634-1111
Facsimile: (632) 633-9504 Rizal Commercial Banking Corporation
Website: www.jollibee.com.ph Stock Transfer Office
Ground Floor, West Wing
Grepalife Building
COMMON STOCK 221 Senator Gil Puyat Avenue
Jollibee’s common stock is listed and traded on the Philippine Stock Exchange with Makati City
the ticker symbol “JFC.” It is one of the companies which comprise the PSE Composite Telephone: (632) 892-4156
Index.
ANNUAL STOCKHOLDERS’ MEETING SEC FORM 17-A

The Annual Stockholders’ Meeting will be held on June 27, 2014 at 2:00 P.M., The financial information in this report, in the opinion of Management, substantially
(registration starts at 1:00 P.M.) at the Philippine Stock Exchange Auditorium, Ground conforms with the information required in the “17-A Report” submitted to the
Floor, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City. Securities and Exchange Commission. Copies of this report may be obtained free of
charge upon written request to the Office of the Corporate Secretary.
Jollibee
CORPORATION
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JFC Annual Report 2013

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Jollibee

San Pin Wang

1 Serving You with Joy! 20 Pursuing Growth through Customer Satisfaction

“We achieved a return on equity of 21.5%, our highest in 15 years.

Enabling Our taste superiority via a campaign highlighting it as the

“At Jollibee, we aim to give the best experience possible

of Eating Across the Jollibee Hong Kong implemented operational

“Serving our customers is not just simply doing it well, but

It’s Green-and-Go Greenwich’s connection with its market also became

“As a Crew Team Leader, I ensure that standard practices are

Moving Forward welcoming. Lastly, the introduction of two system wide

“As a proud service frontliner of Chowking for eight years, I make

A Great Leap Chowking USA also added new delectable Chinese

Winning Streak Dumaguete, Isabela, Butuan, Kidapawan, and Cotabato.

“Simple gestures such as politely greeting our customers with a

Delivering Sweet The Mango Cake also had a memorable advertising

Delight ripe mango ingredients imported from the Philippines—

“Working with my co-employees who are hardworking,

Pursuing Growth With the clarity of brand positioning, YHK introduced

through Customer “Douhua (Sweet Bean curd Dessert),” and “Formosa

Satisfaction products such as 3-cup Chicken Rice and Braised Beef

“As a Store Manager in Yonghe King, I learned to bear hardships,

Marked for Success Showcasing its competitive stance, two of its

“Working carefully and earnestly in the store kitchen everyday

Robust Growth The 2-in-1 sa Laki at Sarap campaign was launched

Reflects Company Featuring popular movie and television actress Angel

Pinoy Taste Needs 2012.

“As a Grillman of Mang Inasal, I strictly adhere to the Standard

Complexity giving the customers more options and value to choose

“Providing warm and thoughtful service to our customers, which

Burger Experience collection among others.

“I believe that we should treat all our customers entering the

The Joy of in SY 2013-2014 were funded with significant support

Giving Back government committed P5.7 million pesos to support the

“JGF helped me realize my desire to give back to the

DIRECTORS1 CORPORATE OFFICERS HEADS OF INTERNATIONAL UNITS HEADS OF CORPORATE UNITS

FOR THE YEAR 2011** 2012** 2013

Consolidated Systemwide Sales 82,170,085 92,271,200 104,090,057

Total Assets 38,908,227 41,768,131 46,026,634

PER SHARE DATA

Basic Earnings Per Share 3.14 3.58 4.45

Outstanding Shares (net of Treasury Shares) 1,038,505,893 1,047,412,219 1,052,161,335

Signed under oath by the following: Doc. No. 100

TONY TAN CAKTIONG

YSMAEL V. BAYSA MARILOU N. SIBAYAN

The Stockholders and the Board of Directors

December 31, January 1,

LIABILITIES AND EQUITY

See accompanying Notes to Consolidated Financial Statements.

Years Ended December 31

See accompanying Notes to Consolidated Financial Statements.

Equity Attributable to Equity Holders of the Parent Company (Note 30)

See accompanying Notes to Consolidated Financial Statements.

Years Ended December 31

Years Ended December 31

See accompanying Notes to Consolidated Financial Statements.

 Annual Improvements to PFRSs (2009-2011 Cycle) Early Adoption of Amendments to Standards

 PAS 40, Investment Property With Deferred Effective Date

2012 (As restated) 2011 (As restated)

FOR THE YEAR 2011 2012 2013