EXECUTIVE SUMMARY:
Universal Robina Corporation (URC) was founded in 1954 when Mr. John
Gokongwei, Jr. established Universal Corn Products, Inc., a cornstarch
manufacturing plant in Pasig. The Company is involved in a wide range of
food-related businesses, including the manufacture and distribution of
branded consumer foods, production of hogs and day-old chicks,
manufacture of animal and fish feeds, glucose and veterinary compounds,
flour milling, and sugar milling and refining. URC operates its food business
through operating divisions and wholly-owned or majority-owned subsidiaries
that are organized into three core business segments, namely, branded
consumer foods, agro-industrial products and commodity food products. The
Company is also engaged in consumer product-related packaging business
through its packaging division, which is included in the branded consumer
food segment, and through its subsidiary, CFC Clubhouse Property, Inc. The
Company sells its branded food products primarily to supermarkets, as well
as directly to top wholesalers, large convenience stores, large scale trading
companies and regional distributors, which in turn sell its products to other
small retailers and down line markets. Moreover, the products are distributed
to approximately 120,000 outlets in the Philippines and sold through URC's
direct sales force and regional distributors.
The attached report analyses the financial condition of the company in the
years ended September 30, 2012 and 2011. During the year ended
September of 2012, sales at Universal Robina were 71.20 billion Philippine
1
Pesos (US$1.75 billion). This is an increase of 6.0% versus 2011, when the
company's sales were 67.17 billion Philippine Pesos. This was the fifth
consecutive year of sales increases at Universal Robina (and since 2007,
sales have increased a total of 89%). Sales of Branded saw an increase of
11.3% in 2012, from 50.56 billion Philippine Pesos to 56.26 billion Philippine
Pesos. Not all segments of Universal Robina experienced an increase in sales
in 2012: sales of Commodity fell 20.5% to 7.57 billion Philippine Pesos.
The company improved its financial condition in 2012. Due to the product
innovation the company was able to sustain its financial growth. Also its
strategic expansion to the international market contributed to the healthy
cash generation of the company.
2
PURPOSE OF FINANCIAL ANALYSIS:
The objective of financial statements is to provide information about
the financial position, performance and changes in financial position of an
enterprise that is useful to a wide range of users in making economic
decisions. Financial statements should be understandable, relevant, reliable
and comparable. Reported assets, liabilities, equity, income and expenses
are directly related to an organization's financial position.
Financial statements are intended to be understandable by readers
who have "a reasonable knowledge of business and economic activities and
accounting and who are willing to study the information diligently. Financial
statements may be used by users for different purposes:
Owners and managers require financial statements to make important
business decisions that affect its continued operations. Financial
analysis is then performed on these statements to provide management
with a more detailed understanding of the figures. These statements are
also used as part of management's annual report to the stockholders.
Employees also need these reports in making collective
bargaining agreements (CBA) with the management, in the case of labor
unions or for individuals in discussing their compensation, promotion and
rankings.
Prospective investors make use of financial statements to assess the
viability of investing in a business. Financial analyses are often used by
3
investors and are prepared by professionals (financial analysts), thus
providing them with the basis for making investment decisions.
Financial institutions (banks and other lending companies) use them to
decide whether to grant a company with fresh working capital or extend
debt securities (such as a long-term bank loan or debentures) to finance
expansion and other significant expenditures.
COMPANY PROFILE:
4
COMPANY HISTORY:
Universal Robina Corporation (URC) is one of the largest branded food
product companies in the Philippines, with the distinction of being called the
country’s first “Philippine multinational”, and has a growing presence in other Asian
markets. Universal Robina Corporation (URC) traced its beginnings all the
way back to 1954. John Gokongwei, Jr. was doing very well then as a
trader/importer. He had learned the trade when his father died before the
war, and had worked hard through the war and postwar years to prosper.
However, while he thrived, he took a long hard look at his company, and
correctly predicted that trading would remain a low-margin business.
On the other hand, a successful manufacturer controlling its own
production and distribution would command more profitable margins. Mr.
John decided to construct a corn milling plant to produce glucose and
cornstarch, Universal Corn Products (UCP), the first building block of the
company that would become URC.
For a time, business was good. However, Mr. John was still looking
ahead, working with an eye towards the future. While the business was doing
very well, it was producing essentially a commodity, which a customer could
easily access elsewhere. To stay ahead in the game, Mr. John had to diversify
by producing and marketing his own branded consumer foods, similar to the
multinational companies in the Philippines like Nestle and Procter & Gamble.
5
In a sense, he wanted to put up the first ‘local’ MNC, borne out of their best
practices.
Thus, in 1961, Consolidated Food Corporation was born. Their first
‘home run’ product was Blend 45, the first locally-manufactured coffee blend,
dubbed as the “Pinoy coffee”. This became the largest-selling coffee brand in
the market, even beating market leaders Café Puro and Nescafe. After coffee
came chocolates. Nips, a panned chocolate similar to M&Ms, were a staple of
Filipino childhood.
In 1963, Robina Farms started operations, beginning with poultry
products. This was also the beginning of the vertical integration of the
Gokongwei businesses, as the farms would be able to purchase feeds from
UCP in the future. Later that decade, Robichem Laboratories would be put
up, to cater to the veterinary needs of the farms businesses. Robina Farms
expanded as it entered the hogs business in the latter part of the 70s.
1966 saw the establishment of Universal Robina Corporation, which
pioneered the savory snacks industry in the Philippines through its Chiz
Curls, Chippy, and Potato Chips, under the “Jack ‘n Jill” brand. Other snack
products would follow over the years, as the company successfully
introduced market leaders like Jack 'n Jill Pretzels (pretzels), Piattos
(fabricated potato chips), and Maxx (hard candy).
The coming decades saw more acquisitions and expansion. In the early
1970s, the Gokongwei family entered the commodities business through the
6
formation of Continental Milling Corporation, for flour milling and production.
The late 1980s brought the acquisition of three sugar mills and refineries,
under URC Sugar. These two businesses provided stable cash flows, and
allowed for further vertical integration in the supply chain, to help URC
weather any volatility in the cyclical commodities markets. In line with this
strategy, the late 1990s saw the entry of URC into the plastics business,
through URC Packaging.
As the businesses became more diversified, the companies were slowly
integrated in order to streamline operations and minimize costs. In 2005, the
present structure of the group was completed. All the different companies
are now organized under Universal Robina Corporation, divided into three
focused groups:
the Branded Consumer Foods Group, composed of BCFG Domestic
(including packaging) and URC International, for the production and sale
of snacks, beverage, and grocery products,
the Agro-Industrial Group, composed of Universal Corn Products, Robina
Farms, and Robichem, for the production and sale of animal feeds, day-
old chicks, hogs, and veterinary medicine,
and the Commodity Foods Group, with the Sugar and Flour divisions, for
the production of flour and sugar, and for sugar milling and refining
services.
7
URC is a core subsidiary of JG Summit Holdings, Inc. (JGSHI) which is
one of the largest business conglomerates listed in the Philippine Stock
Exchange.
URC owned the Philippine Basketball Association franchise Great Taste
Coffee Makers which played from the inaugural 1975 season to 1992 when
the company sold the team to Sta. Lucia Realty. The Coffee Makers won 6
PBA championships.
BOARD OF DIRECTORS:
John L. Gokongwei, Jr. founded URC in 1954 and has been the
Chairman Emeritus of URC effective January 1, 2002. He had been Chairman
of the Board until his retirement and resignation from this position effective
December 31, 2001. He continues to be a member of URC’s Board and is the
Chairman Emeritus of JG Summit and certain of its subsidiaries. He also
continues to be a member of the Executive Committee of JG Summit. He is
currently the Chairman of the Gokongwei Brothers Foundation, Inc., Deputy
Chairman and Director of United Industrial Corporation, Ltd. and Singapore
Land, Ltd., and a director of JG Summit Capital Markets Corporation, Digital
Telecommunications Phils., Inc., Oriental Petroleum and Minerals
Corporation, First Private Power Corporation and Bauang Private Power
Corporation. He is also a non-executive director of A. Soriano Corporation
and Philex Mining Corporation. Mr. Gokongwei received a Master’s degree in
Business Administration from De La Salle University and attended the
Advanced Management Program at Harvard Business School.
8
James L. Go is the Chairman and Chief Executive Officer of URC. He
had been President and Chief Executive Officer and was elected to his
current position effective January 1, 2002 upon the resignation of Mr. John
Gokongwei, Jr. as Chairman. He is also the Chairman and Chief Executive
Officer of JG Summit and as such, he heads the Executive Committee of JG
Summit. He is currently the Chairman and Chief Executive Officer of
Robinsons Land Corporation (“RLC”), JG Summit Petrochemical Corporation,
Manila Midtown Hotels and Land Corporation, Litton Mills, Inc., CFC
Corporation, Universal Robina Sugar Milling Corporation, Southern Negros
Development Corporation, Robinsons, Inc., and Oriental Petroleum and
Minerals Corporation (“OPMC”). He is also the President and a Trustee of the
Gokongwei Brothers Foundation, Inc. and a director and Vice Chairman of
Digital Telecommunications Phils., Inc. He is also a director of First Private
Power Corporation, Bauang Private Power Corporation, OPMC, Cebu Air, Inc.,
Panay Electric Co., United Industrial Corp., Ltd., Singapore Land, Ltd., Marina
Center Holdings, Inc. and JG Summit Capital Markets Corporation. He
received a Bachelor of Science degree and a Master of Science degree in
Chemical Engineering from the Massachusetts Institute of Technology. Mr.
James L. Go joined URC in 1964.
Lance Y. Gokongwei is the President and Chief Operating Officer of
URC. He had been Executive Vice President and was elected President and
Chief Operating Officer effective January 1, 2002. He is the President and
Chief Operating Officer of JG Summit Holdings, Inc. and JG Summit
Petrochemical Corporation and the Vice Chairman and Deputy Chief
9
Executive Officer of Robinsons Land Corporation and Litton Mills, Inc. He is
also the President and Chief Executive Officer of Cebu Air, Inc. and Digital
Telecommunications Phils., Inc., Chairman of Robinsons Savings Bank,
President of Digital Information Technology Services, Inc., Vice Chairman of
JG Summit Capital Markets Corporation, and a director of OPMC, United
Industrial Corporation, Ltd., and Singapore Land, Ltd. He is also trustee,
secretary and treasurer of Gokongwei Brothers Foundation, Inc. He received
a Bachelor of Science degree in Economics and a Bachelor of Science degree
in Applied Science from the University of Pennsylvania. Mr. Lance Y.
Gokongwei joined URC in 1988.
Patrick Henry C. Go is a director and Vice President of URC. He is
also a director of JG Summit Holdings, Inc., RLC, CFC Corporation, JG Cement
Corporation, Robinsons Savings Bank and JG Summit Petrochemical
Corporation where he is also Deputy Chief Operating Officer. He is a trustee
of the Gokongwei Brothers Foundation, Inc. He received a Bachelor of
Science degree in Management from the Ateneo de Manila University and
attended the General Manager Program at Harvard Business School.
Frederick D. Go has been a director of URC since June 2001. He is the
President and Chief Operating Officer of RLC. He is an alternate director of
United Industrial Corporation and Singapore Land Limited. He also serves as
a director of RLC, Big R Stores, Inc., Robinsons Convenience Stores, Inc.,
Robinsons Recreation Corporation, JG Summit Petrochemical Corporation,
Robinsons Savings Bank, CFC Corporation, Robinsons Handyman, Inc.,
10
Robinsons Venture Corporation, Robinsons-Abenson Appliances Corporation,
Cebu Light Industrial Park, Philippine Hotels Federation and Philippine
Retailers Association. He received a Bachelor of Science degree in
Management Engineering from the Ateneo de Manila University.
Johnson Robert G. Go, Jr. was elected director of the Company on
May 5, 2005. He is the President and Chief Operating Officer of Litton Mills,
Inc. effective August 28, 2006, the textile manufacturing business of JG
Summit. He is also a director of Robinsons Land Corporation, Robinsons
Savings Bank and CFC Corporation. He is also the President of Robinsons
Convenience Stores, Inc. He was elected director of JG Summit on August 18,
2005 and was elected trustee of the Gokongwei Brothers Foundation, Inc. on
September 1, 2005. He received a Bachelor of Arts degree in Interdisciplinary
Studies (Liberal Arts) from the Ateneo de Manila University.
Robert G. Coyiuto, Jr. - director of URC. He is also an independent
director of RLC. He is Chairman of Prudential Guarantee & Assurance, Inc.,
PGA Cars, Inc., and Nissan North Edsa, and Vice-Chairman of First Guarantee
Life Assurance Company, Inc. He is also President and Chief Operating
Officer of Oriental Petroleum and Minerals Corporation and President of PGA
Sompo Japan Insurance, Inc. He is Chairman of Pioneer Tours Corporation
and a director of Canon Marketing (Philippines) Inc. and Destiny Financial
Plans.
Independent Directors:
11
Wilfrido E. Sanchez has been an independent director of URC since
1995. He is also an independent director of EEI Corporation, Kawasaki Motor
Corp., NYK-TDG Maritime Academy and Rizal Commercial Banking
Corporation. Mr. Sanchez is a director of Transnational Plans, Inc., Dolphin
Ship Management, Inc., Adventure International Tours, Inc., Transnational
Diversified Group, Inc., Transnational Diversified Corporation, Magellan
Capital Holdings Corporation, Center for Leadership & Change, Inc., House of
Investment, Inc., Omico Corporation, Amon Trading Corporation, Grepalife
Asset Management Corporation, Grepalife Fixed Income Corporation, and JVR
Foundation.
Pascual Guerzon was elected as an independent director of URC on
September 20, 2007. He is currently the Principal of Dean Guerzon &
Associates (Business Development). He is the Founding Dean of De La Salle
Graduate School of Business. He was also the former President of the
Management Association of the Philippines Agribusiness and Countryside
Development Foundation and the Management Association of the Philippines
Foundation, MBA Director of the Ateneo de Manila Graduate School of
Business, Director of Leverage International Consultants, Dep. Director of
Asean Chambers of Commerce and Industry and Section Chief of the Board
of Investments. Mr. Guerzon is a holder of an MBA in Finance from the
University of the Philippines and a Ph.D. (N.D.) in Management from the
University of Santo Tomas.
Senior Officers:
12
Cornelio S. Mapa – Executive Vice President, URC BCFG Philippines
Patrick O. Ng – Executive Vice President, URC International
Eugenie M.L. Villena – Senior Vice President – Chief Financial Officer
BJ M. Sebastian – Senior Vice President – Chief Strategist
Constante T. Santos – Senior Vice President – Corporate Controller
Nicasio L. Lim – Senior Vice President – Corporate Human Resources
Geraldo N. Florencio – First Vice President - Controller
Ester T. Ang – Vice President - Treasurer
Rosalinda F. Rivera – Corporate Secretary
DIVISIONS UNDER URC:
13
Universal Robina Corporation has three main business lines:
The Branded Consumer Foods Group is the largest business and the key
driver of growth and profitability. It is composed of the Philippine,
international and packaging businesses. In the Philippine BCFG, our main
divisions are Snack Foods, Beverages, Grocery (which include the joint
ventures Nissin-URC and Hunts URC), Exports, and Packaging. Our
international investments are in Thailand, Indonesia, Malaysia/Singapore,
China/HK, and Vietnam.
The Agro-Industrial Group is composed of hog and poultry farms, branded
feeds, and animal health products.
The Commodity Foods Group has both flour and sugar.
14
The latter two groups provide URC with consistent cashflows and, in the case
of commodities, consistent supply of raw materials for the Branded
Consumer Foods Group.
URC VISION
To be the best Philippine food and beverage conglomerate with a powerful
presence throughout the ASEAN region and China, carrying a wide portfolio
of strong brands, equipped with efficient systems and high-quality people.
TOTAL URC VALUES
1. Passion to Win
2. Dynamism
3. Integrity
4. Courage
Passion to Win
We build organizational capability by being entrepreneurial and proactive,
driven by a sense of urgency and purpose. We continuously challenge
ourselves to deliver world-class brands and consistently rally our people to
strive for excellence.
Drive for Results:
Effectively and speedily executes plans and programs. Exhibits
perseverance and tenacity. Achieves quantifiable and measurable
15
results. Identifies areas for improvement and takes necessary steps to
implement those changes.
Entrepreneurial Mindset:
Knowledgeable on the nature of the business and displays a sense of
ownership by continuously finding ways to improve processes. Makes
certain that all resources are properly utilized to achieve desired
results.
Initiative
Able to initiate and do efficient follow-through on projects to guarantee
success. Exhausts available means to smoothly implement difficult
initiatives.
Dynamism
We cultivate a culture of innovation and productive working relationships.
We continuously find ways to improve organizational and people capabilities
to meet constantly changing consumer needs.
Innovation
Able to create and modify systems and processes to address the
constantly changing needs of both internal and external customers. Can
effectively translate creative ideas into tangible projects and workable
solutions.
16
Collaboration
Can work well in a team by complementing strengths and weaknesses
of team leader or members. Comfortable to take on different roles
depending on the nature of engagement.
Strategic Agility
Can effectively cope with structural and physical changes. Uses rigorous
logic and methods to solve difficult problems with effective solutions.
Able to handle multiple tasks. Can comfortably handle risk and
uncertainty.
Integrity
We are guided by transparency, ethics and fairness. We build the business
with honor and are committed to good governance. Our processes and
products meet the highest standards. We are credible in our dealings with
both internal and external stakeholders.
Principle-driven
Abides by social, professional & business ethics & organization values.
Able to manage sensitive information and strategies.
Personal Integration
Actively works to continuously improve himself/herself. Works to deploy
strengths and compensates for weaknesses and limits to support
organizational objectives.
17
Quality Orientation
Ensures that integrity of processes is preserved. Strictly adheres to
quality standards to delight both internal and external customers.
Courage
We seize opportunities in building long-term, sustainable businesses. We
make tough people and business decisions to ensure competitive advantage.
Visioning
Able to provide long-term direction, inspiration and momentum.
Maximizes utilization of available and possible resources. Displays a
clear sense of purpose.
Organizational Interface
Able to interface with both top line and down line to execute effectively
tasks at hand. Ensures that policies are adhered to at all levels. Able to
relay information objectively and clearly, whether oral or written.
Standing Alone
Able to operate with minimum supervision and achieve results
autonomously.
.
18
UNIVERSAL ROBINA CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SEPTEMBER 30
2012 2011 2010
ASSETS:
Current Assets
Cash and cash equivalents5,345,833,3
974,546,881,52
7 4,459,254,984Financial assets at fair value through profit or loss
10,812,402,265
5,511,551,122
10,022,605,224
Available-for-sale investments4,797,876,6
2110,652,071,6
97 6,748,394,466
Receivables7,461,032,9
157,419,824,81
5 6,550,949,865
Inventories9,759,334,1
529,724,784,65
6 7,888,923,770
Biological assets1,057,007,6
58 911,265,129 846,876,801
Other current assets 454,142,702 651,357,138 908,713,064
Total Current Assets39,687,629,
71039,417,736,
08437,425,718,1
74
Noncurrent Assets
Property, plant and equipment27,918,634,
45426,423,220,7
3825,312,012,09
2
Intangible assets1,273,627,7
761,463,851,17
6 1,641,227,640
Biological assets 428,961,591 459,053,688 448,700,235
Investment in a joint venture 96,139,053 89,966,944 89,497,240
Investment properties 64,491,512 68,149,307 71,807,094
Deferred tax assets 91,907,509 98,507,804 28,258,903
Net Pension Assets 70,030,200
Other noncurrent assets 425,923,637 353,198,160 272,049,168
Total Noncurrent Assets30,299,685,
53228,955,947,
81727,933,582,5
72
TOTAL ASSETS:69,987,315,
24268,373,683,
90165,359,300,7
46
LIABILITIES AND EQUITY:
Current LiabilitiesAccounts payable and other accrued liabilities
7,586,842,126
7,270,818,277 6,513,309,554
Current portion of long-term debt -8,205,763,57
8 7,401,385
Short-term debt8,588,536,8
845,749,632,63
5 5,111,859,534Trust receipts and acceptances payable
3,464,360,214
1,448,156,283 -
19
Income tax payable 428,184,136 408,699,778 363,718,685
Total Current Liabilities20,067,923,
36023,083,070,
55111,996,289,1
58
FORWARD
SEPTEMBER 30
2012 2011 2010
Noncurrent Liabilities
Long-term debt - net of current portion2,990,455,9
263,002,447,14
611,218,947,38
5
Deferred tax liabilities 301,320,823 237,004,193 305,823,194
Net pension liability 11,063,529 24,650,517 -
Total Noncurrent Liabilities3,302,840,2
783,264,101,8
5611,524,770,5
79
Total Liabilities23,370,763,
63826,347,172,
40723,521,059,7
37
EquityEquity attributable to equity holders of the parent
Paid-up capital19,056,685,
25113,455,557,3
7013,455,557,37
0
Retained earnings32,956,735,
05229,137,859,1
47 28418631895
Other comprehensive income 793,452,103 581,744,696 1161870260
Equity reserve(5,556,531,
939) - -
Treasury shares(670,386,03
4)(2,414,026,1
53) -209191201846,579,954,
43340,761,135,0
6040,944,147,50
7Equity attributable to non-controlling interests 36,597,171
1,265,376,434 894093502
Total Equity46,616,551,
60442,026,511,
49441,838,241,0
09
TOTAL LIABILITIES AND EQUITY69,987,315,
24268,373,683,
90165,359,300,7
46
20
UNIVERSAL ROBINA CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITION
HORIZONTAL ANALYSIS
SEPTEMBER 30 INCREASE(DECREASE)
2012 2011 AMOUNT %
ASSETS:
Current Assets
Cash and cash equivalents5,345,833,39
74,546,881,52
7 798,951,870 17.57%Financial assets at fair value through profit or loss
10,812,402,265
5,511,551,122 5,300,851,143 96.18%
Available-for-sale investments4,797,876,62
110,652,071,6
97(5,854,195,076
)-
54.96%
Receivables7,461,032,91
57,419,824,81
5 41,208,100 0.56%
Inventories9,759,334,15
29,724,784,65
6 34,549,496 0.36%
Biological assets1,057,007,65
8 911,265,129 145,742,529 15.99%
Other current assets 454,142,702 651,357,138 (197,214,436)-
30.28%
Total Current Assets39,687,629,7
1039,417,736,
084 269,893,626 0.68%
Noncurrent Assets
Property, plant and equipment27,918,634,4
5426,423,220,7
38 1,495,413,716 5.66%
Intangible assets1,273,627,77
61,463,851,17
6 (190,223,400)-
12.99%
Biological assets 428,961,591 459,053,688 (30,092,097) -6.56%
Investment in a joint venture 96,139,053 89,966,944 6,172,109 6.86%
Investment properties 64,491,512 68,149,307 (3,657,795) -5.37%
Deferred tax assets 91,907,509 98,507,804 (6,600,295) -6.70%
Net Pension Assets
Other noncurrent assets 425,923,637 353,198,160 72,725,477 20.59%
Total Noncurrent Assets 30,299,685,5 28,955,947, 1,343,737,715 4.64%
21
32 817
TOTAL ASSETS:69,987,315,2
4268,373,683,
901 1,613,631,341 2.36%
LIABILITIES AND EQUITY:
Current LiabilitiesAccounts payable and other accrued liabilities
7,586,842,126
7,270,818,277 316,023,849 4.35%
Current portion of long-term debt -8,205,763,57
8
Short-term debt8,588,536,88
45,749,632,63
5 2,838,904,249 49.38%Trust receipts and acceptances payable
3,464,360,214
1,448,156,283 2,016,203,931
139.23%
Income tax payable 428,184,136 408,699,778 19,484,358 4.77%
Total Current Liabilities20,067,923,3
6023,083,070,
551(3,015,147,191
)-
13.06%
SEPTEMBER 30 INCREASE(DECREASE)
2012 2011 AMOUNT %
Noncurrent LiabilitiesLong-term debt - net of current portion
2,990,455,926
3,002,447,146 (11,991,220) -0.40%
Deferred tax liabilities 301,320,823 237,004,193 64,316,630 27.14%
Net pension liability 11,063,529 24,650,517 (13,586,988)-
55.12%Total Noncurrent
Liabilities3,302,840,27
83,264,101,8
56 38,738,422 1.19%
Total Liabilities23,370,763,6
3826,347,172,
407(2,976,408,7
69)
-11.30
%
EquityEquity attributable to equity holders of the parent
Paid-up capital19,056,685,
25113,455,557,3
705,601,127,88
1 41.63%
Retained earnings32,956,735,
05229,137,859,1
473,818,875,90
5 13.11%
Other comprehensive income 793,452,103 581,744,696 211,707,407 36.39%
Equity reserve(5,556,531,9
39) -
Treasury shares(670,386,03
4)(2,414,026,15
3)1,743,640,11
9 -72.23%46,579,954,
43340,761,135,0
605,818,819,37
3 14.28%Equity attributable to non-controlling interests 36,597,171
1,265,376,434
(1,228,779,263) -97.11%
Total Equity46,616,551,
60442,026,511,
4944,590,040,1
10 10.92%
TOTAL LIABILITIES AND EQUITY69,987,315,
24268,373,683,
9011,613,631,3
41 2.36%
22
UNIVERSAL ROBINA CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITION
FOR THE YEARS ENDED SEPTEMBER 30VERTICAL ANALYSIS
2012 % 2011 %ASSETS:
Current Assets
Cash and cash equivalents5,345,833,3
97 7.64%4,546,881,52
7 6.65%
Financial assets at fair value through profit or loss
10,812,402,265
15.45%
5,511,551,122 8.06%
Available-for-sale investments4,797,876,6
21 6.86%10,652,071,6
9715.58
%
Receivables7,461,032,9
1510.66
%7,419,824,81
510.85
%
Inventories9,759,334,1
5213.94
%9,724,784,65
614.22
%
Biological assets1,057,007,6
58 1.51% 911,265,129 1.33%
Other current assets 454,142,702 0.65% 651,357,138 0.95%
23
Total Current Assets39,687,629,
71056.71
%39,417,736,
08457.65
%
Noncurrent Assets
Property, plant and equipment27,918,634,
45439.89
%26,423,220,7
3838.65
%
Intangible assets1,273,627,7
76 1.82%1,463,851,17
6 2.14%
Biological assets 428,961,591 0.61% 459,053,688 0.67%
Investment in a joint venture 96,139,053 0.14% 89,966,944 0.13%
Investment properties 64,491,512 0.09% 68,149,307 0.10%
Deferred tax assets 91,907,509 0.13% 98,507,804 0.14%
Net Pension Assets
Other noncurrent assets 425,923,637 0.61% 353,198,160 0.52%
Total Noncurrent Assets30,299,685,
53243.29
%28,955,947,
81742.35
%
TOTAL ASSETS:69,987,315,
242100.00
%68,373,683,
901100.00
%
LIABILITIES AND EQUITY:
Current LiabilitiesAccounts payable and other accrued liabilities
7,586,842,126
10.84%
7,270,818,277
10.63%
Current portion of long-term debt -8,205,763,57
8 12%
Short-term debt8,588,536,8
8412.27
%5,749,632,63
5 8.41%
Trust receipts and acceptances payable3,464,360,2
14 4.95%1,448,156,28
3 2.12%
Income tax payable 428,184,136 0.61% 408,699,778 0.60%
Total Current Liabilities20,067,923,
36028.67
%23,083,070,
55133.76
%
2012 % 2011 %
Noncurrent Liabilities
Long-term debt - net of current portion2,990,455,9
26 4.27%3,002,447,14
6 4.39%
Deferred tax liabilities 301,320,823 0.43% 237,004,193 0.35%
Net pension liability 11,063,529 0.02% 24,650,517 0.04%
Total Noncurrent Liabilities3,302,840,2
78 4.72%3,264,101,8
56 4.77%
Total Liabilities23,370,763,
63833.39
%26,347,172,
40738.53
%
EquityEquity attributable to equity holders of the parent
Paid-up capital 19,056,685, 27.23 13,455,557,3 19.68
24
251 % 70 %
Retained earnings32,956,735,
05247.09
%29,137,859,1
4742.62
%
Other comprehensive income 793,452,103 1.13% 581,744,696 0.85%
Equity reserve(5,556,531,9
39) -7.94% - 0.00%
Treasury shares(670,386,03
4) -0.96%(2,414,026,15
3) -3.53%46,579,954,
43366.55
%40,761,135,0
6059.62
%Equity attributable to non-controlling interests 36,597,171 0.05%
1,265,376,434 1.85%
Total Equity46,616,551,
60466.61
%42,026,511,
49461.47
%
TOTAL LIABILITIES AND EQUITY69,987,315,
242100.00
%68,373,683,
901100.00
%
UNIVERSAL ROBINA CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
25
YEARS ENDED SEPTEMBER 30
2012 2011 2010SALE OF GOODS AND SERVICES 71,201,677,779 67,167,630,481 57,719,996,079
COST OF SALES 52,730,554,394 50,645,273,658 41,113,405,237
GROSS PROFIT 18,471,123,385 16,522,356,823 16,606,590,842Selling and distribution costs
(8,696,876,368) (7,680,831,878) (7,091,008,271)
General and administrative expenses
(1,973,722,359) (1,952,777,324) (1,837,374,186)
OPERATING INCOME 7,800,524,658 6,888,747,621 7,678,208,385Market valuation gain (loss) on financialassets at fair value through profit or loss 1,548,491,547 (1,157,315,912) 2,007,094,315
Finance revenue 1,229,729,268 1,191,241,808 1,222,064,699
Finance costs (683,049,996) (1,001,247,740) (1,034,199,841)
Impairment losses (197,874,576) (167,210,935) (442,888,794)Net foreign exchange losses (634,390,049) (36,688,172) (335,280,036)Equity in net income of a joint venture 31,172,102 25,469,633 26,194,500Other income (expenses) 52,624,725 (121,547,748) (201,943,816)
INCOME BEFORE INCOME TAX 9,147,227,679 5,621,448,555 8,919,249,412PROVISION FOR INCOME TAX 989,341,422 613,894,698 780,999,818
NET INCOME 8,157,886,257 5,007,553,857 8,138,249,594
UNIVERSAL ROBINA CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
HORIZONTAL ANALYSIS
26
YEARS ENDED SEPTEMBER 30 INCREASE(DECREASE)
2012 2011 AMOUNT %SALE OF GOODS AND SERVICES
71,201,677,779 67,167,630,481
4,034,047,298 6.01%
COST OF SALES 52,730,554,394 50,645,273,658
2,085,280,736 4.12%
GROSS PROFIT 18,471,123,385 16,522,356,823
1,948,766,562 11.79%
Selling and distribution costs
(8,696,876,368)
(7,680,831,878)
(1,016,044,490) 13.23%
General and administrative expenses
(1,973,722,359)
(1,952,777,324)
(20,945,035) 1.07%
OPERATING INCOME 7,800,524,658 6,888,747,621
911,777,037 13.24%
Market valuation gain (loss) on financial
assets at fair value through profit or loss
1,548,491,547
(1,157,315,912)
2,705,807,459
-233.80
%
Finance revenue 1,229,729,268 1,191,241,808
38,487,460 3.23%
Finance costs (683,049,996)
(1,001,247,740)
318,197,744 -31.78%
Impairment losses (197,874,576)
(167,210,935)
(30,663,641) 18.34%
Net foreign exchange losses
(634,390,049)
(36,688,172)
(597,701,877)
1629.14%
Equity in net income of a joint venture
31,172,102
25,469,633
5,702,469 22.39%
Other income (expenses) 52,624,725
(121,547,748)
174,172,473
-143.30
%
INCOME BEFORE INCOME TAX
9,147,227,679 5,621,448,555
3,525,779,124 62.72%
PROVISION FOR INCOME TAX
989,341,422
613,894,698
375,446,724 61.16%
NET INCOME 8,157,886,257 5,007,553,857
3,150,332,400 62.91%
27
UNIVERSAL ROBINA CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
VERTICAL ANALYSISFOR THE YEARS ENDED SEPTEMBER 30
2012 % 2011 %SALE OF GOODS AND SERVICES 71,201,677,779
100.00% 67,167,630,481
100.00%
COST OF SALES 52,730,554,394 74.06% 50,645,273,658 75.40%
GROSS PROFIT 18,471,123,385 25.94% 16,522,356,823 24.60%Selling and distribution costs (8,696,876,368) -12.21% (7,680,831,878) -11.44%General and administrative expenses (1,973,722,359) -2.77% (1,952,777,324) -2.91%
OPERATING INCOME 7,800,524,658 10.96% 6,888,747,621 10.26%Market valuation gain (loss) on financialassets at fair value through profit or loss 1,548,491,547 2.17% (1,157,315,912) -1.72%
Finance revenue 1,229,729,268 1.73% 1,191,241,808 1.77%
Finance costs (683,049,996) -0.96% (1,001,247,740) -1.49%
Impairment losses (197,874,576) -0.28% (167,210,935) -0.25%Net foreign exchange losses (634,390,049) -0.89% (36,688,172) -0.05%Equity in net income of a joint venture 31,172,102 0.04% 25,469,633 0.04%
Other income (expenses) 52,624,725 0.07% (121,547,748) -0.18%
INCOME BEFORE INCOME TAX 9,147,227,679 12.85% 5,621,448,555 8.37%PROVISION FOR INCOME TAX 989,341,422 1.39% 613,894,698 0.91%
NET INCOME 8,157,886,257 11.46% 5,007,553,857 7.46%
28
FINANCIAL ANALYSIS:
HORIZONTAL ANALYSIS:
A closer look at the URC’ balance sheet reveals that there is 17.6% or P798.9
million increase in cash and cash equivalents from P4.55 billion P5.35 billion in 2012
was due to increase in cash in banks sourced from operating activities. While 12.9%
decrease in available-for-sale investments was primarily due to maturity of certain
bond investments, net of increase in market values and amortization of bond
discount. The 30.3% decrease in other current assets was due to decline in input
taxes.
As a result, total current assets increased by 0.68% or P269 million from P39.42
billion in 2011 to P39.69 billion in 2012.
The 5.66% increase in property, plant and equipment was due to increase in capital
expenditures as a result of company’s expansion.
The 12.99% decrease in intangible assets was due to recognition of impairment loss
on trademark of a foreign subsidiary. The 6.56% decrease in biological assets was
due to increase in population of livestock, net of decline in market value of hogs.
The 6.86% increase investment in a joint venture was due to higher net income of
Hunt-URC, net of dividends received. The 5.37% decrease investment properties
were due to depreciation recognized on the properties. The 20.6% increase in other
non-current assets was due to increase in miscellaneous deposits, net of decline in
deferred input tax.
As a result, there is a 4.64% or P1.34 billion increase in non-current asset from
P28.95billion in 2011 to P30.3billion in 2012.
29
Total assets registered 2.36 % growth or P1.61 billion from P68.27billion in 2011 to
P69.99 billion in 2012.
As per the company’s current liabilities, there is a significant 49.4% increase in
short-term debt due to additional loan availments from foreign and local banks.
Meanwhile, the 139.2% increase in trust receipts and acceptances payable due to
increased utilization of existing trust receipt facilities.
Resulting total current liabilities decreased favorably by 13.06% or P3.01 billion
from P23.08 billion in 2011 to P20.07 billion in 2012.
As per the company’s noncurrent liabilities, there is a 0.40% decrease in long-term
debt due to settlement of matured bonds payable and long-term loans. The 27.14%
increase in deferred income tax liabilities – net due to decline in deferred tax assets
on unrealized market loss on hogs valuation and recognition of deferred tax liability
on unrealized foreign exchange gain. The 55.12% decrease in net pension liability
due to contributions made to the retirement plan, net of accrual of pension
expense.
Total non-current liabilities registered a 1.19% or P38.73 million increase from P3.26
billion in 2011 to P3.30 billion in 2012.
Total liabilities decreased favorably by 11.30% or P2.98 billion from P26.35billion
from 2011 to P23.37billion in 2012.
As per the URC’s equity, the 41.63% increase in paid-up capital was due to re-
issuance of Company shares held in treasury in excess of cost. The 13.11% increase
in retained earnings was due to net income during the year, net of dividends
declared. The 36.39% increase in other comprehensive income can be attributed to
30
increase in market values of bond and equity investments classified as available-
for-sale, net of decline in cumulative translation adjustments as a result of
appreciation in value of Philippine peso vis-à-vis US dollar. 100% increase in equity
reserve was due to difference in the consideration paid against the carrying value of
the acquired non-controlling interest in URC International. The 72.23% decrease in
treasury shares can be attributed to re-issuance of Company shares. 97.1%
decrease in equity attributable to non-controlling interests was due to acquisition of
the remaining 23% minority share in URC International, net of share in the net
income of Nissin-URC.
Total equity resulted 10.92% or P4.59billion increase from P42.02 billion in 2011 to
P46.62billion in 2012.
As per URC income statement, consolidated sale of goods and services of P71.202
billion for the fiscal year ended September 30, 2012, 6.01% sales growth over last
year.
URC’s cost of sales consists primarily of raw and packaging materials costs,
manufacturing costs and direct labor costs. Cost of sales increased by P2.085
billion, or 4.12%, to P52.730 billion in fiscal 2012 from P50.645 billion recorded in
fiscal 2011 due to increase in sales volume.
URC’s gross profit for fiscal 2012 amounted to P18.471 billion, up by P1.949 billion
or 11.79% from P6.522 billion reported in fiscal 2011.
URC’s selling and distribution costs and general and administrative expenses
consist primarily of compensation benefits, advertising and promotion costs, freight
and other selling expenses, depreciation, repairs and maintenance expenses and
other administrative expenses. Selling and distribution costs, and general and
31
administrative expenses rose by P1.037 billion or 10.76% to P10.671 billion in fiscal
2012 from P9.634 billion registered in fiscal 2011.
As a result of the above factors, operating income increased by P 912million,
or 13.24% to P7.801 billion in fiscal 2012 from P6.889 billion reported in fiscal 2011.
The 233.8% increase in market valuation gain on financial instruments at fair value
through profit or loss of P1.548 billion was reported in fiscal 2012 against the
P1.157 billion market valuation loss in fiscal 2011 due to significant recoveries in
the market values of bond and equity investments according to annual report.
URC’s finance revenue consists of interest income from investments in financial
instruments, money market placements, savings and dollar deposits and dividend
income from investment in equity securities. Finance revenue increased by P38.47
million to P1.230 billion in fiscal 2012 from P1.191 billion in fiscal 2011 due to
increased level of financial assets as per annual report.
URC’s finance costs consist mainly of interest expense which decreased by P318
million or 31.78%, to P683 million in fiscal 2012 from P1.001 billion recorded in
fiscal 2011 due to decline in level of financial debt resulting from settlement of long-
term debt.
There is a 1,629.1 % increase in foreign exchange loss - net amounted to P634
million in fiscal 2012 from P37 million reported in fiscal 2011 due to higher
unrealized foreign exchange loss on translation of foreign currency denominated
accounts as a result of continuous appreciation of Philippine peso vis-a vis US dollar.
32
Impairment loss of P198 million was reported in fiscal 2012, an increase of 18.34%
from P167 million in fiscal 2011 due to higher impairment loss recognized on
trademark this year against last year.
Equity in net income of a joint venture amounted to P31 million in fiscal 2012 as
against P25 million in fiscal 2011 due to higher net income of Hunt-Universal Robina
Corporation this year against last year.
Other income (expenses) - net consists of gain (loss) on sale of fixed assets and
investments, amortization of bond issue costs, rental income, and miscellaneous
income and expenses. Other income (expenses) - net of P53 million was reported in
fiscal 2012 against the P122 million other expenses - net in fiscal 2011 due to loss
on sale of net assets of the disposal group recognized last year.
The Company recognized provision for income tax of P989 million in fiscal 2012,
61.16% increase from P614 million in fiscal 2011 due to higher taxable income and
recognition of deferred tax liabilities on unrealized foreign exchange gain.
URC’s net income for fiscal 2012 amounted to P8.158 billion, higher by P3.150
billion or 62.91% from P5.008 billion in fiscal 2011, due to higher operating income
and significant increase in market valuation gain on bond and equity holdings.
33
VERTICAL ANALYSIS:
URC’s common size balance sheet reveals that the current assets in 2012 are
56.71% of total assets, 0.94% than 57.65% % in 2011. While the total non-current
assets in 2012 are 43.29% of the total assets, 0.94% lower than to 42.35% in 2011.
On the other hand, current liabilities in 2012 are 28.67% of the total liabilities and
equity, 5.09% significantly lower than 33.76% in 2011. Total non-current liabilities in
2012 are 4.72% of total liabilities and equity, 0.05% lower than 4.77% in 2011.
Despite the 0.94% decrease in the total asset, the significant decrease in liabilities
suggests of an improving working capital.
As per the URC’s common size income statement, the cost of sales is maintained at
about 75%. This means that no change in mark up on the goods sold was made
during the two-year period. The increase in gross income was due mainly to the
increase in sales volume and not to the change in the company’s pricing policy.
Moreover, the operating expenses are kept at around 15%. As a result, operating
income increased by 0.70%.
Other income and finance charges increased 1.89% mainly due to the 2.17 %
increase market valuation gain on financial instruments at fair value through profit
or loss.
As a result the income before income tax increased 4.48% from 8.37% in 2011 to
12.85% in 2012.
Provision for income tax favorably increased by 0.48% from 0.91% in 2011 to 1.39%
in 2012.
34
As a result, net income favorably rose 4% from 7.46% in 2011 to 11.46% in 2012.
FINANCIAL RATIO ANALYSIS:
URC’s financial position remains healthy with strong cash levels. The Company has
a current ratio of 1.98:1 as of September 30, 2012 higher than the 1.71:1 as of
September 30, 2011. Acid test ratio also improved by 0.28% in 2012 from 0.90:1 in
2011 to 1.18:1 in 2011. The company’s receivable turnover was maintained at 10
turnovers. The company was able to collect its receivables in 38 days. On the other
hand, Inventory turnover slightly decreased. Likewise the average age of inventory,
was extended for 4 days from 64 days to 68 days.
35
LIQUIDITY RATIOS 2012 2011
Current Ratio 1.98:1 1.71:1
Acid Test Ratio 1.18:1 0.90:1
Receivables Turnover 10 times 10 times
Average Age of Receivables 38 days 38 days
Inventory Turnover 5 times 6 times
Average Age of Inventory 68 days 64 days
SOLVENCY RATIOS 2012 2011
Times Interest Earned 12 times 7 times
Debt to Total Asset Ratio 33% 39%
URC’s Solvency Ratios improved by 2012. Times interest earned improved
tremendously by 5 times from 7 times in 2011 to 12 times in 2012. This means that
the company may be able to pay all its expenses including interest expense and still
have enough left for net income. Furthermore, the company’s debt to total asset
ratio favorably decreased by 6% from 39% in 2011 to 33% in 2012. The decrease in
debt ratio indicates that the total assets provided by the creditors decreased. The
owner’s equity was able to fund its assets.
PROFITABILITY RATIOS 2012 2011
Profit Margin 11% 7%
Asset Turnover 1.03 1.00
Return on Assets 12% 7%
36
Return on common stockholder’s equity 18% 12%
Earnings Per Share 3.69 2.25
Price-Earnings Ratio 22.72:1 21.33:1
Pay-out Ratio 48% 78%
URC’s overall profitability improved in 2012. The company’s profit margin increased
by 4% from 7% in 2011 to 12% in 2012, Asset turnover slightly improved by 0.03%
from 1.00 in 2011 to 1.03 in 2012. Return on assets improved by 5% from 7% in
2011 to 12% in 2012. This indicates that the company was able to manage its
assets efficiently than 2011. Return on common stockholder’s equity favorably
increased by 6% from12% in 2011 to 18% on 2012. Earnings per share increased
by 64% or 1.44 from 2.25 in 2011 to 3.69 in 2012. On the other hand, price-
earnings ratio increased by 6.52% or 1.39 from 21. 33:1 in 2011 to 22.72:1 in 2012.
The company’s payout ratio decreased by 30% from 78% in 2011 to 48% in 2012.
CONCLUSION:
Universal Robina Corporation operates its food business through operating divisions
and wholly-owned or majority owned subsidiaries that are organized into three core
business segments: branded consumer foods, agro-industrial products and
commodity food products. The Company has a strong brand portfolio created and
supported through continuous product innovation, extensive marketing and
37
experienced management. Its brands are household names in the Philippines and a
growing number of consumers across Asia are purchasing the Company’s branded
consumer food products.
The company’s overall financial condition improved in 2012. The company’s
liquidity ratios reveal that the company was able to meet its short term obligations
as per the 16% or 0.27 increase in its current ratio.
The company’s solvency also improved in 2012. URC’s Times interest earned
improved tremendously by 5 times from 7 times in 2011 to 12 times in 2012.
Furthermore, the company’s debt to total asset ratio favorably decreased by 6%
from 39% in 2011 to 33% in 2012.
The company’s overall profitability improved in 2012. . It is evident in the
company’s 4% increase in profit margin from 7% in 2011 to 12% in 2012.
The strong growth in the company’s full year profit was driven by its domestic
branded consumer food group (BCFG), which more than offset the weak
performance of the commodity food group. The company is also benefiting from its
successful expansion internationally.
38
RECOMMENDATION:
Universal Robina Corporation (URC) is a consumer food, animal feed and
agricultural product manufacturing company. The company undertakes
manufacturing and distribution of branded consumer foods, hogs and day-old
chicks, animal and fish feeds, glucose and veterinary compounds as well as it
operates flour milling, sugar milling and refining and makes plastic film for
39
packaging consumer products. It also offers coffee, flour, feed, meat, bakery,
beverages, biscuits, candy, chocolate, noodles, and easy-to-drink products. The
company operates in Philippines, China, Thailand, Malaysia, Vietnam, Singapore,
Hong Kong and Indonesia internationally.
Cost of sales slightly increased due to increase in sales. It would be highly beneficial
if the company would monitor and manage this efficiently. By tapering this down,
the company may be able to increase its profits.
The stronger peso’s effect on the export industry is evident in the 1,629.1 %
increase in foreign exchange loss in 2012. It is highly recommended that the
company would consider its effect on the company’s net income. By prioritizing the
domestic market and by strategically managing the export business, the losses may
be reduced.
The sales in Thailand contracted in 2012; this was largely due to the floods
experienced near the end of 2011. Due to the floods in late 2011, spending on
consumer staples is higher than on discretionary products. It is highly
recommended that the company to launch other products such as confectionaries
and to increase its budget in adverting and marketing.
Through its market leadership and commitment to excellence the company is
expected to play in the ASEAN growth story.
40
FINANCIAL RATIO
COMPUTATIONS
41
42
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