1

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-Q

QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES
REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER

1. For the quarterly period ended June 30, 2024

2. Commission identification number 54666

3. BIR Tax Identification No. 000-163-396

4. SHAKEY’S PIZZA ASIA VENTURES INC.

Exact name of issuer as specified in its charter

5. MANILA, PHILIPPINES
Province, country or other jurisdiction of incorporation or organization

6. Industry Classification Code: (SEC Use Only)

7. 15KM EAST SERVICE ROAD CORNER MARIAN ROAD 2,

BARANGAY SAN MARTIN DE PORRES, PARANAQUE CITY 1700
Address of issuer's principal office Postal Code

8. (632) 867-7602
Issuer's telephone number, including area code

9. N/A
Former name, former address and former fiscal year, if changed since last report

10. Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA

Title of each Class COMMON SHARES

Number of shares of common stock outstanding 1,683,760,178

11. Are any or all of the securities listed on a Stock Exchange?

Yes [ ] No []

If yes, state the name of such Stock Exchange and the class/es of securities listed therein:
PHILIPPINE STOCK EXCHANGE; COMMON SHARES

12. Indicate by check mark whether the registrant:

(a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17
thereunder or Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections
26 and 141 of the Corporation Code of the Philippines, during the preceding twelve
(12) months (or for such shorter period the registrant was required to file such
reports)
Yes [ ] No []

(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ ] No []
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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim consolidated financial statements of Shakey’s Pizza Asia Ventures Inc., and
its wholly owned subsidiaries Bakemasters, Inc., Shakey’s International Limited, Shakey’s
Seacrest Incorporated, Shakey’s Pizza Regional Foods Limited, Shakey’s Pizza Commerce, Inc., and
Wow Brand Holdings Inc. (collectively, the ‘Company’ or ‘PIZZA’) as of and for the period ended
June 30, 2024 and the comparative period in 2023 is attached to this 17-Q report, comprising of
the following:

1.1 Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023
1.2 Consolidated Statement of Income for the period ended June 30, 2024 and June 30,
2023
1.3 Consolidated Statement of Cash Flows for the period ended June 30, 2024 and June 30,
2023
1.4 Consolidated Statement of Changes in Shareholder’s Equity for the period ended June
30, 2024 and June 30, 2023
1.5 Notes to Consolidated Financial Statements for the period ended June 30, 2024

Item 2. Management Discussion and Analysis of Financial Condition and Results of

Operations (Based on the unaudited consolidated financial statements for the
period ended June 30, 2024)

Business Overview

Shakey’s Pizza Asia Ventures Inc. (SPAVI) or PIZZA, is the market leader in chained pizza full
service restaurant, chained full service restaurant, and chained kiosks with 67.5%, 22.8%, and
14.4% market shares, respectively, based on data from Euromonitor.

PIZZA has over 40 years of brand legacy in the Philippines. Originally an American brand
established in 1954, Shakey’s expanded into the Philippines in 1975, and has since become a
household name to generations of Filipinos. PIZZA is a strong brand because of its unique products
paired with excellent guest service. It is best known for its original thin crust pizza and iconic
Chicken N’ Mojos.

PIZZA owns the trademarks and licenses to operate the Shakey’s brand in the Philippines. With
this, it has full control over the management and execution of Shakey’s Philippine operations. As
the brand owner, PIZZA generates additional revenue from franchising while not having to pay
royalty fees for the use of the Shakey’s name. PIZZA also owns the rights and trademarks in Asia
(except Malaysia and Japan), China, Middle East, Australia and Oceania. This gives the company
international expansion opportunities in the long-term. As of today, PIZZA operates Shakey’s
stores in the Philippines, United Arab Emirates and Singapore.

PIZZA is able to serve the A, B and upper C income classes through its various sales channels.
PIZZA’s dine-in segment caters mostly to families and friends who want an affordable upgrade
from the usual fast-food dining. At the same time, PIZZA also reaches it guests through its delivery
segment. With the shift of consumer trend towards safety and convenience, PIZZA ensures that it
continues to operate well-designed, comfortable, clean and guest-oriented stores, operate an
efficient delivery system for guests, and expand its online sales platform to align itself with current
market and consumption trends.
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PIZZA is accessible nationwide through various store formats. These formats differ in size ranging
from 120 sqm to 400 sqm. Smaller stores tend to need lower capital investment. This allows PIZZA
flexibility to serve the demand of a specific market, while still achieving the desired profitability.

PIZZA has an in-house commissary that supplies proprietary raw materials and other baked
products to Shakey’s stores. With this vertical integration strategy, product quality is preserved
and controlled while also enabling for higher sales margins.

Finally, PIZZA operates a simple business model that is cash generative and requires low upfront
costs due to the simplicity of its products. This model enables high financial liquidity and an
average payback period of 3 to 4 years. PIZZA also has a well-established franchised model with
an industry-leading return on investment averaging 4 years.

In 2016, Century Pacific Group Inc. (CPGI) and the sovereign wealth fund of Singapore acquired
majority ownership of PIZZA. CPGI is the parent company of Century Pacific Food Inc. (CNPF), the
largest manufacturer of canned food in the Philippines.

Subsequently, on December 15, 2016, PIZZA successfully listed on the Main Board of the
Philippine Stock Exchange (PSE) with a total of 1,531,321,053 common shares at ₱11.26 per
share.

On June 1, 2019, PIZZA acquired Peri-Peri Charcoal Chicken, an emerging fast casual and full
service restaurant brand in the Philippines. The acquisition includes assets and intellectual
property relating to the Peri business, including its brand, trade name, and the various proprietary
recipes used by the chain to make its trademark peri-peri chicken.

In August 2020, the Company entered into a master franchise agreement with Singapore-based
Koufu Group Ltd to bring the R&B milk tea brand to the Philippines. R&B is one of the leading milk
tea and bubble tea players in Singapore. It currently has more than 1,000 outlets worldwide,
spanning across China, US, Singapore, Cambodia, Vietnam, Malaysia and Indonesia. Under the
agreement, PIZZA shall be awarded the territorial rights to sell R&B milk tea, bubble tea, and other
specialty tea drinks in the Philippines, through stand-alone store formats and co-branding in
select Shakey’s and Peri-Peri Charcoal Chicken outlets.

In December 2021, the Company entered into an agreement to purchase assets and intellectual
property relating to Potato Corner, with PIZZA assuming the management of the brand beginning
March 2022. Potato Corner is one of the leading and most established food kiosk chains in the
Philippines. Since its inception in 1992, the brand has built a vast network of over 1,000 outlets
domestically and has a growing international footprint in Asia and beyond.

Results of Operations

The following table summarizes the reported key financial information for PIZZA for the six
months ending June 30, 2024 and 2023, respectively:

Six months ending Six months ending

In ₱ Mill Change YoY
June 30, 2024 June 30, 2023
Systemwide sales 10,091 8,820 14%
Net Revenue 6,524 6,062 8%
Cost of Sales (4,939) (4,624) 7%
Gross Profit 1,586 1,437 10%
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Operating Expense (960) (707) 36%

Operating Income 626 730 -14%
EBITDA 985 1,069 -8%
Net income before tax 441 575 -23%
Net income after tax 420 489 -14%
Margins
Gross profit margin 24.3% 23.7% +60 bps
Operating margin 9.6% 12.0% -250 bps
Net income margin 6.4% 8.1% -160 bps

Results of Operation

● Shakey’s Pizza Asia Ventures Inc, the Philippines’ leading fast casual restaurant chain and
food service group, sustained its systemwide sales growth momentum amid a soft
consumer environment.

● PIZZA’s systemwide sales (SWS) sales in 1H24 reached ₱10.1 billion, registering a jump of
14% year-on-year (YoY). This was driven by new stores opened during the period and
sustained growth in same store sales. For the six month-period, the Group opened 210
new units, laddering up to a total network of 2,351 stores and outlets as at end June. Same-
store sales growth (SSSG) clocked in at 2%, returning to pre-pandemic levels.

● Operating income lands at ₱626 million for the first semester of 2024, down 14% versus
last year’s comparable period of ₱730 million. While gross margins improved on a year-
on-year basis on the back of easing commodities since the end of 2023, operating income
margins fell from 12.0% to 9.6% over the same period, primarily driven by progressive
investments in systems and the organization since the second half of 2023 in support of
both domestic and international expansion.

● As a result, net income for the first semester of 2024 registered at ₱420 million, 14% lower
compared to the ₱489 million income in the same period the year before. PIZZA’s net profit
margin likewise contracted by 160 bps to 6.4%.

Financial Condition

The Company’s financial stability and financial position as of June 30, 2024, is as follows:

● Cash and cash equivalents stood at ₱688 million. Cash provided by operating activities
amounted to ₱703 million, with net cash used in investing activities totaling ₱596 million
and net cash used in financing activities amounting to ₱320 million.

● Current ratio slightly dipped to 1.4x as of June 30, 2024, relative to 2023’s 1.5x. The cash
conversion cycle slightly increased to 38 days from 33 days as of end 2023. Receivable and
inventory days stood at 47 and 62 respectively, while accounts payable came in at 72 days.

● Net property, plant and equipment, amounted to ₱2.0 billion as of June 30, 2024. Capital
expenditures for the first semester of the year totaled ₱503 million.
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● As of June 30, 2024, the Company had ₱6.2 billion in interest-bearing debt, higher from
the year-end level due to short-term debt incurred in the second quarter of 2024.

● Net debt-to-equity ratio is measured at 1.4x as of June 30, 2024, slightly above the 1.3x
figure as of year-end 2023. Considering only interest-bearing liabilities, the Company’s net
gearing ratio and net interest-bearing debt-to-EBITDA stood at 0.7x and 2.4x, respectively,
as of June 30, 2024.

Key Performance Indicators ( KPIs )

Unaudited Unaudited
1st Semester 2024 1st Semester 2023

Gross Profit Margin 24% 24%

Before Tax Return on Sales 7% 9%
Return on Sales 6% 8%
Interest-Bearing Debt-to-
Equity 0.8x 0.8x
Current Ratio 1.4x 1.5x

Notes:
1 Gross Profit margin = Gross Profit / Net Revenue
2 Before Tax Return on Sales = Net Profit Before Tax / Net Revenue
3 Return on Sales = Recurring Net Profit After Tax / Net Revenue
4 Interest-Bearing Debt-to-Equity = Loans Payable / Total Stockholders’ Equity
5 Current Ratio = Total Current Assets / Total Current Liabilities
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 1
SHAKEY’S PIZZA ASIA VENTURES INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION

June 30, December 31,

2024 2023
(Unaudited) (Audited)

ASSETS

Current Assets
Cash P
= 688,159,578 =901,147,527
P
Trade and other receivables 1,729,732,993 1,224,789,572
Inventories 1,732,119,469 1,712,217,989
Prepaid expenses and other current assets 495,903,927 635,187,293
Total Current Assets 4,645,915,967 4,473,342,381

Noncurrent Assets
Property and equipment 2,004,975,381 1,833,780,584
Intangible assets 10,391,378,592 10,366,799,313
Right-of-use assets 1,391,970,077 1,540,630,889
Deferred input value-added tax 2,883,591 3,886,410
Deferred tax assets- net 383,944,869 100,394,721
Other noncurrent assets 352,825,509 309,113,711
Total Noncurrent Assets 14,527,978,020 14,154,605,628

TOTAL ASSETS P
=19,173,893,987 =18,627,948,009
P

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and other current liabilities P
= 1,984,215,515 =1,753,136,296
P
Short-term loans payable 1,000,000,000 700,000,000
Current portion of:
Lease Liabilities 275,608,551 275,584,146
Long-term loans payable 47,932,514 47,876,004
Contract liabilities 13,445,337 30,059,596
Income tax payable 60,695,003 142,150,319
Total Current Liabilities 3,382,216,920 2,948,806,361

Noncurrent Liabilities
Noncurrent current portion of:
Long-term loans payable 5,169,638,477 5,194,694,987
Lease liabilities 1,408,958,355 1,555,254,353
Contract liabilities 142,101,081 117,882,366
Accrued pension costs 135,873,473 117,600,878
Dealers' deposits and other noncurrent liabilities 96,071,159 106,626,720
Deferred tax liabilities – net 794,409,905 627,872,928
Total Noncurrent Liabilities 7,747,052,450 7,719,932,232
Total Liabilities 11,129,269,370 10,668,738,593

Equity
Capital stock 1,683,760,178 1,683,760,178
Additional paid-in capital 2,451,116,470 2,451,116,470
Retained earnings 3,870,199,604 3,788,433,048
Other components of equity 39,548,365 35,899,720
Total Equity 8,044,624,617 7,959,209,416

TOTAL LIABILITIES AND EQUITY P

=19,173,893,987 =18,627,948,009
P

See accompanying Notes to the Unaudited Interim Condensed Consolidated Financial Statements.
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SHAKEY’S PIZZA ASIA VENTURES INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

2024 2023
(Unaudited) (Unaudited)

REVENUES
Net sales P
=6,282,725,013 =5,837,113,174
P
Royalty and franchise fees 241,509,294 224,445,495
6,524,234,307 6,061,558,669

COSTS OF SALES (4,938,581,725) (4,624,474,355)

GROSS INCOME 1,585,652,582 1,437,084,314

GENERAL AND ADMINISTRATIVE EXPENSES (959,508,339) (706,792,863)

INTEREST EXPENSE (187,123,231) (171,273,235)

OTHER INCOME- net 1,912,073 16,105,511

INCOME BEFORE INCOME TAX 440,933,085 575,123,727

PROVISION FOR (BENEFIT FROM) INCOME TAX

Current 148,565,848 152,697,589
Deferred (128,458,029) (66,577,680)
20,427,819 86,119,909

TOTAL COMPREHENSIVE INCOME P

=420,505,266 =489,003,818
P

Basic/Diluted Earnings Per Share P

=0.25 =0.29
P
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SHAKEY’S PIZZA ASIA VENTURES INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

2024 2023
(Unaudited) (Unaudited)

REVENUES
Net sales P
=3,303,693,881 =3,036,636,263
P
Royalty and franchise fees 129,749,167 116,670,794
3,433,443,048 3,153,307,057

COSTS OF SALES (2,566,931,334) (2,346,990,673)

GROSS INCOME 866,511,714 806,316,384

GENERAL AND ADMINISTRATIVE EXPENSES (487,910,076) (371,256,951)

INTEREST EXPENSE (105,622,287) (87,344,057)

OTHER INCOME- net (5,124,774) 4,072,436

INCOME BEFORE INCOME TAX 267,854,607 351,787,812

PROVISION FOR (BENEFIT FROM) INCOME TAX

Current 76,307,820 71,599,943
Deferred (57,482,885) (8,032,759)
18,824,935 63,567,184

TOTAL COMPREHENSIVE INCOME P

=249,029,672 =288,220,628
P

Basic/Diluted Earnings Per Share P

=0.15 =0.17
P
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SHAKEY’S PIZZA ASIA VENTURES INC.
AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Other
Additional Retained Components of
Capital Stock Paid-in Capital Earnings Equity Total

Balances at January 1, 2024 P

=1,683,760,178 P
=2,451,116,470 P
=3,788,433,048 P
=35,899,720 P
=7,959,209,416
Total comprehensive income – – 420,505,266 1,661,971 422,167,237
Dividends declared – – (336,752,036) – (336,752,036)
Balances at June 30, 2024 P
=1,683,760,178 P
=2,451,116,470 P
=3,872,186,277 P
=37,561,691 P
=8,130,669,329

Balances at January 1, 2023 =1,683,760,178

P =2,451,116,470
P =2,877,362,495
P =33,537,963
P =7,045,777,106
P
Total comprehensive income – – 200,783,190 – 200,783,190
Dividends declared – – (168,376,018) (168,376,018)
Balances at June 30, 2023 =1,683,760,178
P =2,451,116,470
P =3,197,990,295
P =33,537,963
P =7,366,404,906
P
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SHAKEY’S PIZZA ASIA VENTURES INC.
AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

2024 2023
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P
=440,933,085 =575,123,727
P
Adjustments for:
Depreciation and amortization 357,154,694 322,285,881
Interest expense 187,123,231 171,273,235
Increase in accrued pension costs 18,272,595 21,335,794
Interest income (229,060) (172,885)
Unrealized foreign exchange loss (gain) 3,408,604 995,902
Income before working capital changes 1,006,663,148 1,090,841,654
Decrease (increase) in:
Trade and other receivables (504,943,421) 435,316,962
Inventories (19,901,480) (616,502,206)
Prepaid expenses and other current assets 139,283,366 322,868,170
Increase (decrease) in:
Accounts payable and other current liabilities 231,079,219 (974,533,561)
Contract liabilities 7,604,456 (1,286,576)
Net cash generated from operations 859,785,288 256,704,443
Income tax paid (156,548,222) (108,205,852)
Interest received 229,060 172,885
Net cash provided by operating activities 703,466,125 148,671,476
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in:
Other noncurrent assets (43,711,798) (4,599,796)
Deferred input value added tax (1,002,819) 2,404,920
Increase (decrease) in:
Dealer’s deposits and other noncurrent liabilities (10,555,561) (7,082,980)
Acquisition of property and equipment (503,126,143) (228,536,346)
Net cash used in investing activities (595,581,549) (237,814,203)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of long-term loans – (25,000,000)
Proceeds from availment of short- term loan 288,790,845 -
Payment of interest (159,085,408) (124,804,566)
Payment of lease liability (112,945,898) (98,181,629)
Dividends paid (336,752,036) -
Net cash provided by financing activities (319,992,497) (247,986,195)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (880,028) (995,902)
NET INCREASE IN CASH AND CASH EQUIVALENTS (212,987,949) (338,124,824)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 901,147,526 989,578,790
CASH AND CASH EQUIVALENTS AT END OF YEAR P
= 688,159,577 =651,453,966
P
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SHAKEY’S PIZZA ASIA VENTURES INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

1. General Information

Corporate Information
Shakey’s Pizza Asia Ventures Inc. Doing business under the name and style of Shakey’s (SPAVI
or the Parent Company), was incorporated and registered with the Philippine Securities and
Exchange Commission (SEC) on February 14, 1974. The Parent Company and its subsidiaries
(collectively referred to as “the Group”) are involved primarily in the development, operations and
franchising of fast casual restaurants under the trade names “Shakey’s” and “Peri-Peri”.

On December 15, 2016, the common shares of the Parent Company were listed and traded in the
Philippine Stock Exchange (PSE) under the trading name “PIZZA”.

The registered office address of the Parent Company is 15Km East Service Road corner Marian
Road 2, Barangay San Martin de Porres, Parañaque City 1700.

Approval and Authorization for the Issuance of the Unaudited Interim Condensed Consolidated
Financial Statements
The unaudited interim condensed consolidated financial statements were approved and authorized
for issuance by the Parent Company’s Board of Directors (BOD) on August 7, 2024.

2. Basis of Preparation and Consolidation and Statement of Compliance

Basis of Preparation
The unaudited interim condensed consolidated financial statements have been prepared on a
historical cost basis, except for financial assets at fair value through profit or loss (FVPL) which
are carried at fair value. The unaudited interim condensed consolidated financial statements are
presented in Philippine peso, which is the Group’s functional currency. All values are rounded off
to the nearest million, except those otherwise indicated.

Statement of Compliance
The unaudited interim condensed consolidated financial statements have been prepared in
accordance with Philippine Financial Reporting Standards (PFRSs).

Basis of Consolidation
The unaudited interim condensed consolidated financial statements comprise the unaudited interim
condensed financial statements of the Parent Company and its wholly-owned subsidiaries and are
prepared for the same reporting year as the Parent Company, using consistent accounting policies
for like transactions and other events with similar circumstances.
Control is achieved when the Parent Company is exposed, or has rights, to variable returns from
its involvement with the investee and when it has the ability to affect those returns through its
power over the investee.
Specifically, the Parent Company controls an investee if and only if the Parent Company has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee),
 7

• Exposure, or rights, to variable returns from its involvement with the investee, and
• The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has
power over an investee, including:
• The contractual arrangement(s) with the other vote holders of the investee,
• Rights arising from other contractual arrangements, and
• The Group’s voting rights and potential voting rights.
The Parent Company re-assesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the nine elements of control. Consolidation of a
subsidiary begins when the Parent Company obtains control over the subsidiary and ceases when
the Parent Company loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the unaudited interim condensed
consolidated statement of comprehensive income from the date the Parent Company gains control
until the date the Parent Company ceases to control the subsidiary.
Profit or loss and each component of OCI are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation. A change in the ownership
interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Parent Company loses control over a subsidiary, it derecognizes the related assets (including
goodwill), liabilities, non-controlling interest and other components of equity, while any resultant
gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.
The unaudited interim condensed consolidated financial statements include the accounts of the
Parent Company and the following subsidiaries:
Place of Percentage of
Principal Activities Incorporation Ownership (%)
Bakemasters, Inc. (BMI) a Manufacturer of pizza Philippines
100%
dough and pastries
PC International Limited (PCIL) Restaurant business Singapore 100%
Queensview International Limited (QIL) Trademark British Virgin 100%
Islands
Shakey’s International Limited (SIL) Trademark Hong Kong 100%
Shakey's Seacrest Incorporated (SSI) Trademark Philippines 100%
Shakey’s Pizza Regional Foods Limited (SPRFL) Trademark Hong Kong 100%
Shakey’s Pizza Commerce Inc. (SPCI) Trading of goods Philippines 100%
Wow Brand Holdings, Inc. (WBHI) Restaurant business Philippines 100%

3. Changes in Accounting Policies and Disclosures

The accounting policies adopted in the preparation of the Company’s financial statements are
consistent with those of the previous financial year except for the following new accounting
pronouncements.
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Unless otherwise indicated, the Group does not expect that the adoption of the said pronouncements to
have a significant impact on its consolidated financial statements.

• Amendments to PFRS 3, Reference to the Conceptual Framework

• Amendments to PAS 16, Plant and Equipment: Proceeds before Intended Use
• Amendments to PAS 37, Onerous Contracts – Costs of Fulfilling a Contract
• Annual Improvements to PFRSs 2018-2020 Cycle
▪ Amendments to PFRS 1, First-time Adoption of Philippines Financial Reporting
Standards,Subsidiary as a first-time adopter
▪ Amendments to PFRS 9, Financial Instruments, Fees in the ’10 per cent’
test forderecognition of financial liabilities
▪ Amendments to PAS 41, Agriculture, Taxation in fair value measurements
• Amendments to PAS 12, Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
• Amendments to PAS 8, Definition of Accounting Estimates
• Amendments to PAS 1 and PFRS Practice Statement 2, Disclosure of Accounting Policies

Standards Issued but Not Yet Effective

Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the
Group does not expect that the future adoption of the said pronouncements will have a
significant impact on its consolidated financial statements. The Group intends to adopt the
following pronouncements whenthey become effective.

Effective beginning on or after January 1, 2024

• Amendments to PAS 1, Classification of Liabilities as Current or Non-current

Effective beginning on or after January 1, 2025

• PFRS 17, Insurance Contracts

Deferred effectivity
• Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28,
Sale orContribution of Assets between an Investor and its Associate or Joint
Venture

4. Business Combinations

Acquisition of Potato Corner (PC) Business

On March 5, 2022, the Group entered into various purchase agreements (the “Agreements”) with
Cinco Group for the assets and intellectual property related to the PC business. The acquisition
alsoinvolved owning and operating all company-owned stores, as well as serving as brand-owner
and franchisor of stores being operated by franchisees both domestically and internationally. The
agreements also include purchase of 100% shares in the PC offshore entities. The agreements
wereconsidered a linked transactions and accounted as one business combination at the Group’s
consolidated financial statements.

Potato Corner is a food franchise known for its flavored French fries.

In December 2022, the Group and the seller made amendments in the agreements dated
March 5, 2022. The fair value of the identifiable net assets acquired amounted to =P2,540.0
million at date of acquisition. The current assets acquired composed of cash, receivables,
prepayments, and inventories with fair values amounting to = P20.5 million, P
=14.5 million, P
=0.9
 9

million and =P39.0 million, respectively at date of acquisition. The noncurrent assets acquired
composed of property and equipment, security deposits, and trademarks with fair values
amounting to =P78.0 million, = P42.0 million and =
P3,208.8 million, respectively at date of
acquisition. The liabilities assumed composed of accounts payable and other current liabilities
amounting to =P61.5 million at date of acquisition. The carrying values of the assets and liabilities
assumed is the same with its fair value at date of acquisition except for the trademarks with
carrying amount of =P2,467.4 million at date of acquisition.

The fair value of property and equipment was measured using the replacement cost method while
thefair value of the trademark was measured using the income approach. The revenue growth and
discount rates used to measure the fair value of trademark are 2% and 11%, respectively.

As of December 31, 2022, the fair values of the assets acquired assumed were finalized; no
changes from the initial recognition were recognized by the Group.

The goodwill of =
P60.9 million reflects the expected growth in the Group’s business and Group
management attributes the goodwill to achieving synergies and economies of scale arising
from itscommon processes from its existing operations and contacts with suppliers and other
partners to improve cost and efficiency. The goodwill is not deductible for tax purposes.

5. Segment Information

Segment information is prepared on the following bases:

Business Segments
For management purposes, the Group is organized into three business activities - Restaurant sales,
franchise and royalty fees and commissary sales. This segmentation is the basis upon which the
Group reports its primary segment information.
▪ Restaurant sales comprise revenues from restaurant activities and sale of merchandise and
equipment to franchisees.
▪ Franchise and royalty fees represents payment of subdealers for use of the Shakey’s brand.
▪ Commissary sales comprise third party sales other than aforementioned activities.
Inter-segment Transactions
Segment revenue, segment expenses and operating results include transfers among business
segments. The transfers are accounted for at competitive market prices charged to unrelated
customers for similar services. Such transfers are eliminated upon consolidation.

The Group’s chief operating decision maker monitors operating results of its business segments
separately for the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss and is measured
consistently with operating profit and loss in the consolidated financial statements.

On a consolidated basis, the Group’s performance is evaluated based on consolidated net income
for the year, EBITDA and EBITDA margin. EBITDA margin pertains to EBITDA divided by
gross revenues.

EBITDA and EBITDA margin are non-PFRS measures.

The following table shows the reconciliation of the consolidated EBITDA to consolidated net
income for the nine months ended June 30, 2024 and 2023:
 10

June 30, June 30,

2024 2023
Consolidated EBITDA P
=984,981,949 =1,068,509,957
P
Depreciation and amortization (357,154,694) (322,285,881)
Provision for income tax (20,427,819) (86,119,909)
Interest expense (187,123,231) (171,273,235)
Interest income 229,060 172,885
Consolidated net income P
=420,505,266 =489,003,818
P

6. Cash and Cash Equivalents

June 30, December 31,
2024 2023
Cash on hand P
=67,979,845 P
=79,685,940
Cash in banks 620,179,732 821,461,587
P
=688,159,578 P
=901,147,527

Cash in banks earn interest at the respective bank deposit rates. Interest income on cash and cash
equivalents amounted to P=0.1 million and P =0.1 million for the three months ended June 30, 2024
and 2023, respectively.

7. Trade and Other Receivables

June 30, December 31,
2024 2023
Trade:
Franchisee P
=968,155,431 P416,906,032
=
Third parties 291,051,175 403,171,544
Related parties 21,674,375 18,458,583
Royalty receivable 45,396,431 131,528,977
Receivable from:
Franchisees 218,195,765 61,680,414
National Advertising Fund (NAF) 51,829,287 51,829,287
Employees 29,177,781 23,383,864
Others 102,904,995 82,484,854
1,740,911,666 1,234,839,466
Less allowance for doubtful account (11,178,673) (10,049,894)
P
=1,729,732,993 =P1,224,789,572

Below are the terms and conditions of the financial assets:

▪ Trade receivables are noninterest-bearing and are normally collectible within 10 days.
▪ Royalty receivable is being collected from dealers on the 20th day of the following month.
▪ Receivable from National Advertising Fund (NAF) pertains to reimbursable advertising and
promotion expenses from dealers which will be applied on future dealer remittances.
▪ Receivable from franchisees pertains to receivables for transactions other than sale of goods
such as management fees, freight and gas expenses and are non-interest bearing and generally
have 30 to 45 days’ term.
▪ Receivables from employees, which represent mainly salary loan, are interest-free and are
being collected through salary deduction for a period ranging from 6 months to 1 year.
 11

▪ Other receivables consist mainly of receivables from cooperatives and freight charges which
are non-interest bearing and generally have 30 to 45 days’ term.
The movements of allowance for doubtful accounts are as follows:
June 30, December 31,
2024 2023
Receivables Receivables
Trade and from Trade and from
Others Employees Total Others Employees Total
Balance at beginning of year P
=8,035,616 P
= 2,014,278 P
=10,049,894 P
=8,020,079 =1,245,567 P
P =9,265,646
Provision 1,128,779 – 1,128,779 15,537 768,711 784,248
Balance at reporting date P
=9,164,395 P
= 2,014,278 P
=11,178,673 P
=8,035,616 =2,014,278 P
P =10,049,894

8. Inventories
June 30, December 31,
2024 2023
At cost -
Finished goods P
=9,852,719 =11,450,454
P
At NRV:
Merchandise 1,677,313,184 1,631,792,556
Raw materials - food 24,855,708 63,168,734
Raw materials - packaging 20,097,856 5,806,245
P
=1,732,119,468 =1,712,217,989
P

Allowance for inventory obsolescence amounted to P

=4.8 million as at June 30, 2024 and
December 31, 2023.

9. Prepaid Expenses and Other Current Assets

June 30, December 31,

2024 2023
Advances to suppliers P
=309,393,608 =473,193,172
P
Prepaid expenses 99,648,161 90,883,087
Prepaid taxes 86,862,159 71,111,034
P
=495,903,927 =635,187,293
P

Advances to suppliers represent payments for items purchased or goods yet to be delivered or
services to be rendered.
Prepaid expenses pertain to advance payments for insurance and dues and subscription and are
amortized monthly over a period of one year.
 12
10. Property and Equipment

Cost of Shops
Furniture, Machinery and
Leasehold Fixtures and and Transportation Maintenance Glassware Construction
Building Improvements Equipment Equipment Equipment Tools and Utensils in-progress Total
Cost
Balance at December 31, 2022 =264,977,352 =
P P1,647,293,440 P =1,428,884,616 =236,418,036
P =37,895,667
P =38,678,600
P =37,330,448
P =225,384,737 =
P P3,916,862,896
Additions - 225,937,419 162,101,104 30,638,451 8,221,037 12,290,228 8,967,393 - 448,155,632
Disposals (15,680,772) (34,900,814) (5,458,238) (6,564,234) (1,691,269) (436,539) (1,359,871) - (66,091,737)
Reclassification - 87,529,089 89,824,836 - - 5,619,558 - - -
Balance at December 31, 2023 249,296,580 1,925,859,134 1,675,352,318 260,492,253 44,425,435 56,151,847
Additions – 39,097,128 53,459,070 1,303,316 2,420,000 2,763,734 66,167 2,210,258 101,319,674
Disposals – – (1,941,446) – – – – – (1,941,446)
Balance at June 30, 2024 P
= 264,977,352 P= 1,686,390,568 P=1,480,402,241 P
=237,721,352 P
=40,315,667 P
=41,442,334 P
=37,396,615 P
= 227,594,995 P
=4,016,241,124

Accumulated Depreciation
Balance at December 31, 2022 83,361,948 910,396,230 938,671,837 144,195,704 19,373,321 31,222,918 24,917,533 – 2,152,139,491
Depreciation 15,031,953 135,975,178 150,331,872 17,574,144 4,212,795 13,050,768 16,572,520 - 352,749,230
Disposals (7,840,386) (19,116,067) (5,094,158) (6,334,947) - (157,091) (1,199,,864) - (39,742,513)
Balance at December 31, 2023 90,553,515 1,027,255,341 1,083,909,551 155,434,901 23,586,116 44,116,595 40,290,189 - 2,465,146,208
Depreciation 3,718,861 22,550,427 46,941,853 4,550,501 1,033,439 3,406,779 860,823 – 83,062,683
Disposals – - (1,941,446) – – – – – (1,941,446)
Balance at June 30, 2024 87,080,809 932,946,657 983,672,244 148,746,205 20,406,760 34,629,697 25,778,356 – 2,233,260,728

Net Book Value

Balance at December 31, 2023 =158,743,065
P =898,603,793
P =591,442,767
P P105,057,352
= =20,839,319
P P12,035,252
= =4,647,781
P =42,411,254 =
P P1,833,780,584
Balance at June 30, 2024 P
= 177,896,543 P
= 753,443,911 P
= 496,729,997 P
=88,975,147 P
=19,908,908 P
=6,812,636 P
=11,618,259 P
= 227,594,995 P
=2,004,975,381

There are no idle assets as at June 30, 2024 and December 31, 2023. The Group has no property and equipment that are used as collateral for existing loans payable.
 13
11. Intangible Assets

The Group’s intangible assets consist of:

June 30, December 31,

2024 2023
Goodwill P
=1,324,852,131 P=1,324,852,131
Trademarks 8,772,833,250 8,769,089,243
Software 288,950,176 267,554,247
Franchise right 4,743,035 5,303,692
P
=10,391,378,592 =
P10,366,799,313

In 2016, goodwill amounting to P=1,078.6 million was recognized in connection with its acquisition
of BMI while trademarks amounting to P =4,987.1 million was recognized and treated as acquisition
of assets based on relevant accounting standards since such transaction did not qualify as an
acquisition of a business.

On April 2, 2019, SPAVI and I-Foods, Inc. (IFI) entered into a purchase agreement (the
“Agreement”) for the rights, title and interest to the Peri-Peri (P2) Business, including the
properties, assets, and rights which are related to or are used in the P2 Business. Such transaction
was accounted for as an acquisition of a business and additional goodwill and trademarks
amounting to P =185.5 million and P=562.2 million were recorded as at the date of acquisition.

P2 Business is a casual and full-service restaurant brand in the Philippines. The restaurant offers
variety of food and sauces such as peri-peri chicken, pizza and pasta.

On June 1, 2019 (the acquisition date), SPAVI and WBHI, a newly-incorporated subsidiary,
executed a deed of assignment, wherein SPAVI, assigned, transferred and conveyed all its rights
under the Agreement, except with respect to SPAVI’s rights under the Agreement pertaining to
Trademarks, Know-How and Confidential Information, and Intellectual Properties (collectively, the
“Intangible Assets”) of the P2 Business, to WBHI. Subsequently, WBHI and IFI executed a deed of
absolute sale of assets wherein I-Foods sold, transferred and conveyed to WBHI the title, rights,
material and physical possession of, and interest in, the assets related to the P2 Business. On the
same date, as part of the acquisition of the P2 business, SPAVI acquired 100% ownership of
AWIL, which is the owner of the intangible assets relevant to the P2 Business.

On August 24, 2020, the Group entered into a master franchise agreement with Supertea (Int) Pte.
Ltd. (Supertea), whereby Supertea granted the Group the following:
• the exclusive right and license to develop and operate the Business, provide the services
and sell the products, from the R&B Tea Outlets;
• the exclusive right and license, subject to the fulfillment of certain conditions, to grant
franchisees for R&B Tea Outlet to third parties (Sub-Franchisees) by entering into sub-
franchise agreements in the form approved and/or provided by Supertea in writing; and
• the non-exclusive right and license to use the Intellectual Property strictly in connection
with the aforesaid.

The license does not include the right to sell, provide or distribute any products or services through
channels other than the R&B Outlets, or selected outlets as set out in the master franchise
agreement.

The master franchise agreement is effective from August 20, 2020 and continue for the initial term
of seven (7) years, unless otherwise terminated or renewed.
 14

On November 17, 2021, the Group executed a deed of assignment with DBE Project, Inc. acquiring
the Project Pie Design Build Eat trademark for a consideration of P
=1.2 million.

Increase in trademarks and goodwill as of December 31, 2022 amounting to P =3,208.8 million and
=60.85 million, respectively, pertains to the business combination recognition during the year.
P

12. Right-of-Use Assets and Lease Liabilities

Group as a lessee
The Group has lease contracts for its office spaces and stores. Lease contracts office spaces
usuallay has terms of 20 to 25 years while leases of stores usually has terms of 3 to 15 years. The
Group’s obligations under its leases are secured by the lessor’s title to the leased assets.

The Group also has certain leases of stores with lease terms of 12 months or less and leases of
office equipment with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value
assets’ recognition exemptions for these leases.

The rollforward analysis of this account follows:

June 30, December 31,
2024 2023
Cost
Balance at beginning of year P
=2,767,508,242 =P2,376,814,694
Additions - 482,493,291
Pre-terminations (4,444,331) (91,799,743)
Balance at end of year 2,763,063,911 2,767,508,242
Accumulated Amortization
Balance at beginning of year 1,226,877,353 933,034,115
Amortization 144,216,481 379,801,415
Pre-terminations - (85,958,177)
Balance at end of year 1,371,093,834 1,226,877,353
Net Book Value P
=1,391,970,077 =1,540,630,889
P

The rollforward analysis of lease liabilities follows:

June 30, December 31,
2024 2023
Balance at beginning of year P
=1,830,838,499 =P1,700,018,174
Additions – 485,848,399
Interest expense 51,897,979 111,567,612
Payments (198,169,572) (461,980,269)
Pre-terminations – (4,615,417)
Lease concessions – –
Balance at end of year 1,684,566,906 1,830,838,499
Current portion of lease liabilities 275,608,551 275,584,146
Lease liabilities -net of current portion P
=1,408,958,355 P=1,555,254,353
 15

The Group has lease contracts for stores that contains variable payments based on the gross sales.
The following provides information on the Group’s variable lease payments, including the
magnitude in relation to fixed payments:
h8
Fixed Variable
Payments Payments Total
Fixed P
=72,556,251 =– P
P =72,556,251
Variable rent with minimum payment 68,460,737 43,301,360 111,762,097
Variable rent only – 1,393,943 1,393,943
As at June 30, 2024 P
=141,016,988 P
=44,695,303 P
=185,712,291
Fixed Variable
Payments Payments Total
Fixed =72,556,251
P =– P
P =72,556,251
Variable rent with minimum payment 68,460,737 43,301,360 111,762,097
Variable rent only – 1,393,943 1,393,943
As of June 30, 2023 =141,016,988
P =44,695,303 =
P P185,712,291

13. Accounts Payable and Other Current Liabilities

June 30, December 31,
2024 2023
Trade:
Suppliers P
=1,018,453,250 =881,714,386
P
Related parties 135,016,629 151,700,266
Nontrade 286,717,899 191,766,451
Accrued expenses:
Suppliers 136,158,287 129,998,023
Utilities 17,077,180 31,533,587
Salaries and wages 66,409,614 17,479,254
Customers loyalty 50,671,542 36,030,849
Interest - 38,954,319
Others 37,194,397 1,838,479
Other payables 236,316,169 311,075,001
P
=1,984,215,515 =1,753,136,296
P

Below are the terms and conditions of the financial liabilities:

▪ Trade payables are non-interest bearing and are normally settled in 30 to 90 days’ term.
▪ Nontrade payables consist mainly of reimbursable expenses to officers and employees,
payable to contractors and employment agencies which are normally settled in 30 to 90 days’
term.
▪ Accrued expenses, which consist mainly of accrual of rent expense of stores, utilities,
employee benefits and incentives, freight, commissions and storage costs are normally settled
in 30 to 90 days’ term.
▪ Customers loyalty pertain to accumulated points which are generally applied to customer
purchases within the next financial year. Revenue is recognized upon actual usage or
expiration whichever comes first.
▪ Other payables are normally settled in 15 to 45 days’ term.
 16

Other payables consist of the following:

June 30, December 31,
2024 2023
Output VAT P
=83,166,293 =140,029,064
P
Customers’ deposits 53,343,412 51,781,597
Provision 46,575,601 -
Withholding tax payable 45,484,038 47,839,290
Retention Payable 17,888,865 19,004,028
Fun certificates payable 10,156,114 12,885,728
Others 22,282,311 26,106,536
P
=236,316,169 =311,075,001
P
 17
14. Related Party Transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.
This includes: (a) individuals owning, directly or indirectly through one or more intermediaries, control, or are controlled by, or under common control with, the Group; (b) associates;
and (c) individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the Group and close members of the family of any
such individual.
Outstanding balances at year-end are unsecured and settlement occurs in cash throughout the financial year. There have been no guarantees provided or received for any related party
receivables or payables. For the six months ended June 30, 2024 and 2023, the Group has not recorded any impairment of receivables on amounts owed by the related parties. The
assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
The Group, in the normal course of business, has significant transactions with the following companies which have common members of BOD and stockholders as the Group:

Category Nature Year Amount/ Volume Outstanding Balance Terms Conditions

of transaction Receivable Payable
Century Pacific Group Inc. (CPGI, Ultimate Parent Company)
Purchases Purchase of raw materials and 2024 3,883,421 3,082,080 1,385,087 30-day; non-interest Unsecured
goods at agreed prices usually on a 2023 4,865,782 2,874,704 – bearing
cost plus basis

Companies with common members of BOD and stockholders as the Group

The Pacific Meat Company Inc. (PMCI)
Sales Sale of goods at prices (normally on 2024 10,221,618 9,689,164 – 30-day; non-interest Unsecured; not
cost plus basis) mutually agreed 2023 4,070,432 7,068,519 – bearing impaired
upon by both parties
Purchases Purchase of raw materials and 2024 88,351,136 – 91,707,426 30-day; non-interest Unsecured
goods at agreed prices usually on 2023 124,509,354 – 149,710,833 bearing
a cost plus basis
DBE Project Inc. (DBE)
Trade sales and service income Sale of goods at prices (normally on 2024 – - – 30-day; non-interest Unsecured; not
cost plus basis) mutually agreed 2023 99,814 2,778,786 – bearing impaired
upon by both parties
Purchases Purchase of raw materials and 2024 – – – 30-day; non-interest Unsecured; not
goods at agreed prices usually on 2023 – – – bearing impaired
a cost-plus basis
Century Pacific Food Inc. (CPFI)
Sales Sale of goods at prices (normally on 2024 12,590,190 5,818,296 – 30-day; non-interest Unsecured; not
cost plus basis) mutually agreed 2023 11,845,315 4,407,641 – bearing impaired
upon by both parties
Purchases Purchase of raw materials and 2024 17,973,330 – 25,751,388 30-day; non-interest Unsecured
goods at agreed prices usually on 2023 22,055,131 – 18,236,318 bearing
a cost plus basis
2024 20,551,975 118,843,900
2023 17,135,806 167,947,151
 18
Compensation of Key Management Personnel
The salaries and pension costs of key management personnel in 2024 and 2023 are as follows:
For the six months ended June 30, 2024
2024 2023
Salaries P
=93,890,873 =97,868,996
P
Pension costs 1,412,367 18,196,776
P
=95,303,240 =116,065,772
P

There are no other short-term and long-term benefits given to the key management personnel.

15. Short-term Loans Payable

June 30, December 31,

2024 2023
Balance at beginning of year P
=700,000,000 =500,000,000
P
Additions 300,000,000 200,000,000
Balance at end of year P
=1,000,000,000 =700,000,000
P

As at June 30, 2024, the loan has outstanding amount of P

=1.00 billion with interest rate of 5.75%
per annum. Interest expense pertaining to short-term loans amounting to P
=78.9 million and P =78.7
million was recognized for the periods ended June 30, 2024 and 2023, respectively.

16. Long-term Loan Payable

Long-term facility loan
On June 8, 2016, the Group entered into an Omnibus Loan and Security Agreement (OLSA) with
BDO Unibank, Inc. (the Lender) and SAFHI. The lender provided a term loan facility in the
principal amount of P
=5,000.0 million.
The loan is payable within 10 years to commence on the 12th month following the availment
date. Payments shall be made in 18 consecutive semi-annual installments of P
=25.0 million and a
final payment of P
=4,550.0 million.

The loan’s interest is to be fixed at the higher of 5-year PDST-R2 plus a spread of 0.75% or 4.5%
floor rate for the first 5 years, to be repriced at the last 5 years. Management has assessed that the
interest rate floor on the loan is an embedded derivative which is not for bifurcation since the
market rate approximates the floor rate at the transaction date.

The loan facility also contains a prepayment provision which allows the Group to make optional
prepayment in the amount calculated by the lender comprising (i) the outstanding principal amount
of the Loan to be prepaid, and (ii) any accrued interest on the principal amount of the Loan being
prepaid computed as of the date of prepayment. The prepayment option was assessed as closely
related to the loan and thus, was not bifurcated.
On December 22, 2016, the Group notified BDO of its intention to prepay the loan amounting to
P
=1,000.0 million. The exercise of the prepayment option resulted in the revision of estimated
future payments and change in the carrying amount of the financial liability as at December 31,
2016.

As at June 30, 2024 and December 31, 2023, the Group is in compliance with the covenants.
 19
Bank of the Philippines Islands (BPI) Loan
On February 24, 2022, the Group entered into a loan agreement with Bank of the Philippines
Islands (the Lender). The Lender provided a principal amount of 1,600.0 million, payable in ten
years from March 2, 2022 (the value date). The loan has an effective interest rate of 4.3% payable
monthly until paid in full.

The loan agreement also contains a prepayment provision which allows the Group to make
optional prepayments in the amount of P=320.0 million on March 2, 2025, P
=8.0 million on March
2, 2026, and a final payment of P
=1,232.0 million on maturity date.

The Group is not subject to any loan covenants from BPI loan.

The breakdown of the loan is as follows:

June 30, December 31,
2024 2023
BDO loan - principal P
=3,622,932,514 =3,647,932,514
P
Less unamortized debt issue costs 5,361,523 5,361,523
BDO loan – net of unamortized debt issue cost 3,517,570,991 3,642,570,991
BPI loan 1,600,000,000 1,600,000,000
Less current portion of long-term loan 47,932,514 47,876,004
Noncurrent portion P
=5,169,638,477 =5,194,694,987
P

Interest expense amounting to P

=54.3 million and P
=45.3 million was recognized for the six months
ended June 30, 2024 and 2023, respectively.

19. Equity
Capital Stock
Number of
shares Amount
Authorized capital stock - P
=1 par value: 2,000,000,000 =2,000,000,000
P
Issued and outstanding capital stock - P
=1 par value 1,683,760,178 1,683,760,178
Below is the Parent Company’s track record of the registration of securities:
Date of SEC Order
Rendered Effective or Authorized Issue
Permit to Sell Event Capital Stock Issued Shares Price
Registered and Listed Shares
(Original Shares) 2,000,000,000 1,179,321,053 =1.00
P
Initial Public Offering (IPO)
December 1, 2016
Primary 2,000,000,000 104,000,000 11.26
Secondary 2,000,000,000 202,000,000 11.26
Over-allotment Option 2,000,000,000 46,000,000 11.26
August 6, 2021 Issuance 2,000,000,000 152,439,025 7.93
August 9, 2021 Issuance 2,000,000,000 100 8.20

The issued and outstanding shares are held by 40 equity holders as at June 30, 2024 and 41 equity
holders as at December 31, 2023.
 20
Retained Earnings
Details of cash dividends declared in 2023 and 2024 are as follows:
Dividend
Rate
Date of Declaration (per share) Amount Record Date
June 20, 2023 0.10 168,376,017 July 31, 2023
April 12, 2024 0.20 336,752,034 May 15, 2024

There is no outstanding dividends payable as at June 30, 2024 and December 31, 2023.
Undistributed earnings of the subsidiaries included in the Group’s retained earnings amounting to
(P
=44 million) as at June 30, 2024 and P
=200.4 million as at December 31, 2023 are not currently
available for dividend distribution.

APIC
Amount received in excess of the par values of the shares issued amounting to P
=2,451.1 million
were recognized as "APIC" as at June 30, 2024 and December 31, 2023, respectively.

20. Earnings per Share (EPS)

Basic EPS is computed based on the weighted average number of issued and outstanding common
shares during each year. Diluted EPS is computed as if the potential common share or instrument
that may entitle the holder to common share were exercised as of the beginning of the year. When
there are no potential common shares or other instruments that may entitle the holder to common
shares, diluted EPS, is the same as the basic EPS.

There are no dilutive financial instruments as of June 30, 2024 and December 31, 2023, hence,
diluted EPS is the same as the basic EPS.

The Group’s EPS were computed as follows:

For the six months ended June

2024 2023
(a) Net income (loss) P
=420,505,266 P
=489,003,318
(b) Weighted average number of shares outstanding 1,683,760,178 1,683,760,178
Basic/ diluted EPS (a/b) P
=0.25 P
=0.29

21. Financial Risks Management Objectives and Policies

The Group’s principal financial instruments comprise cash and cash equivalents, AFS investments
and loan to a related party. The main purpose of these financial instruments is to finance the
Group’s operations. The Group has various other financial assets and liabilities such as trade and
other receivables, rental deposit, accounts payable and other current liabilities arising directly from
operations and dividends payable.

The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and
equity price risk on AFS investment. The BOD reviews and approves policies for managing each
of these risks and they are summarized below:

Credit Risk. Credit risk is the risk that the Group will incur a loss because its customers or
counterparties failed to discharge their contractual obligations. The Group manages and controls
 21
credit risk by trading only with recognized, creditworthy third parties. It is the Group’s policy that
all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s
exposure to bad debts is not significant. The main risks arising from the Group’s financial
instruments are credit risk, liquidity risk and equity price risk on AFS investment. The BOD
reviews and approves policies for managing each of these risks and they are summarized below:

The table below shows the maximum exposure to credit risk for the Group’s financial assets,
without taking account of any collateral and other credit enhancements:
June 30, December 31,
2024 2023
Cash* P
=620,179,732 =821,461,587
P
Trade and other receivables 1,739,789,266 1,234,629,010
Rental and other deposits 358,079,988 312,411,004
Total credit risk exposure P
=2,718,048,985 =2,368,501,601
P
*Excluding cash on hand.

An aging analysis of financial assets per class are as follows:

June 30, 2024
Neither
Past Due Past Due but not Impaired
nor Impaired 1–180 Days Over 181 days Subtotal Impaired Total
Cash* P=620,179,732 =–
P =–
P =–
P =– P
P =620,179,732
Trade and other receivables 1,317,601,323 408,871,578 2,137,692 411,009,270 11,178,673 1,739,789,266
Rental and other deposits 279,213,981 – 75,568,714 75,568,714 3,297,293 358,079,988
P
=2,216,995,036 P
=408,871,578 P
=77,706,406 P =486,577,984 P
=14,475,966 P=2,718,048,985
*Excluding cash on hand.

December 31, 2023

Neither
Past Due Past Due but not Impaired
nor Impaired 1–180 Days Over 181 days Subtotal Impaired Total
Cash* =821,461,587
P =–
P =–
P =–
P =– P
P =821,461,587
Trade and other receivables 1,087,463,927 131,650,542 5,675,103 137,325,645 9,839,438 1,234,629,010
Rental and other deposits 245,867,461 – 63,246,251 63,246,251 3,297,293 312,411,004
=2,154,792,975
P =131,650,542
P =68,921,354 P
P =200,571,896 =13,136,731 P
P =2,368,501,601

*Excluding cash on hand.

A financial asset is considered past due when a counterparty has failed to make a payment when
contractually due. “Past due but not impaired” financial assets are items with history of frequent
default. Nevertheless, the amounts due are still collectible. Lastly, “Impaired” items are those
that are long outstanding and have been specifically identified as impaired.
The tables below show the credit quality of the Group’s neither past due nor impaired financial
assets based on their historical experience with the corresponding debtors:
June 30, 2024
High grade Medium grade Standard grade Total
Cash* P
=620,179,732 =–
P =–
P P
=620,179,732
Trade and other receivables:
Trade receivables 490,319,858 382,750,324 – 873,070,182
Royalty receivable 57,922,855 – – 51,829,287
Receivable from franchisee – – 218,195,765 218,195,765
Receivable from NAF – – 51,829,287 51,829,287
Receivable from employees – – 17,477,491 17,477,491
Other receivables 99,105,743 – – 99,105,743
Rental and other deposits – – 279,213,981 279,213,981
P
=1,138,328,991 P
=382,750,324 P
= 566,716,524 P
=2,216,995,036
*Excluding cash on hand
 22
December 31, 2023
High grade Medium grade Standard grade Total
Cash* =821,461,587
P =–
P =–
P =821,461,587
P
Trade and other receivables:
Trade receivables 361,316,833 379,066,378 – 740,383,211
Royalty receivable 176,925,409 – – 176,925,409
Receivable from NAF - – 51,829,287 51,829,287
Receivable from franchisee - – 61,680,414 61,680,414
Receivable from employees - – 23,383,344 23,383,344
Other receivables 33,262,262 – - 33,262,262
Rental and other deposits - – 245,867,461 245,867,461
=1,392,966,091
P =379,066,378
P =382,760,506
P =2,154,792,975
P
*Excluding cash on hand.

Financial assets classified as “high grade” are those cash and cash equivalents transacted with
reputable local banks and financial assets with no history of default on the agreed contract terms
while “medium grade” includes those financial assets being collected on due dates with an effort
of collection. Financial instruments classified as “standard grade” are those financial assets with
little history of default on the agreed terms of the contract.

Liquidity Risk. Liquidity risk arises from the possibility that the Group may encounter difficulties
in raising funds to meet or settle its obligations at a reasonable price.

The Group’s objective is to maintain a balance between continuity of funding and flexibility
through the use of advances to related parties. The Group maintains sufficient cash to finance its
operations.

The Group manages its liquidity risk by maintaining strength and quality on financial position
where debt-to-equity ratio is at a manageable level. The Group also maintains a financial strategy
that the scheduled debts are within the Group’s ability to generate cash from its business
operations.

The tables below summarize the maturity profile of the Group’s financial liabilities based on
contractual undiscounted payments. The tables also analyze the maturity profile of the Group’s
financial assets in order to provide a complete view of the Group’s contractual commitments and
liquidity.
June 30, 2024
Due and Over
Demandable < 90 Days 91–180 Days 181–365 Days 365 Days Total
Cash P
=688,159,578 =–
P =–
P =–
P =–
P P
=688,159,578
Trade and other receivables
Trade 873,070,182 113,431,402 284,573,517 – 8,683,481 1,279,758,582
Royalty receivables 57,829,287 – – – – 57,829,287
Receivable from franchisees 218,195,765 – – – – 218,195,765
Receivable from NAF 51,829,287 – – – – 51,829,287
Receivables from employees 17,477,491 9,220,179 465,833 – 2,014,278 29,177,781
Other receivables 102,424,081 – – – 480,914 102,904,995
Rental and other deposits 279,213,981 – – 75,568,714 3,297,293 258,079,988
2,288,293,220 122,651,581 285,039,350 75,568,714 14,475,966 2,786,028,831
Accounts payable and other
current liabilities:
Trade payables – 1,153,469,879 – – – 1,153,469,879
Nontrade payables – 286,717,899 – – – 286,717,899
Accrued expenses – 270,316,622 – – – 270,316,622
Other payables* – 107,665,838 – – – 107,665,838
Dealers’ deposit and other
noncurrent payables – – – – 96,071,159 96,071,159
Long-term loans payable** 47,932,514 – – – 5,144,638,477 5,192,570,991
47,932,514 1,818,170,237 – – 5,240,709,635 7,106,812,387
Liquidity gap P
=2,240,360,706 (P
= 1,695,518,657) P
=285,039,350 P
=75,568,714 (P
=5,226,233,670) (P
=4,320,783,556)
*Excluding statutory payables.
**Including future interest payments.
 23
December 31, 2023
Due and Over
Demandable < 90 Days 91–180 Days 181–365 Days 365 Days Total
Cash =901,147,527
P =–
P =–
P =–
P =–
P =901,147,527
P
Trade and other receivables
Trade 750,241,303 72,053,021 10,500,334 – 5,531,045 838,325,703
Royalty receivables 43,257,615 10,659,071 – 6,879,438 884,290 61,680,414
Receivable from NAF 30,039,722 21,789,565 – – – 51,829,287
Receivable from franchisees 176,925,408 - – – – 176,925,408
Receivables from employees 4,821,452 16,548,551 – – 1,913,341 23,383,344
Other receivables 82,178,426 - – – 306,428 82,484,584
Rental and other deposits 245,867,461 - – – 66,543,544 312,411,005
2,234,478,914 121,150,208 10,500,334 6,679,438 75,178,648 2,448,187,542
Accounts payable and other
current liabilities:
Trade payables – 1,033,414,652 – – – 1,033,414,652
Nontrade payables – 191,766,451 – – – 191,766,451
Accrued expenses – 216,880,192 – – – 216,880,192
Other payables* – 310,573,934 – – – 310,573,934
Dealers’ deposit and other
noncurrent payables – – – – 106,626,720 106,626,720
Long-term loans payable** 47,932,514 – – – 5,194,694,987 5,242,570,991
Lease Liability 366,104,436 1,944,392,088 2,310,496,524
413,980,440 1,752,635,229 – – 7,245,713,795 9,412,329,464
Liquidity gap =1,820,498,474 (P
P =1,631,485,021) =10,500,334
P =6,679,438 (P
P =7,170,535,147) (P
=6,964,141,922)

*Excluding statutory payables.

**Including future interest payments.

Capital Management
The primary objective of the Group’s capital management is to safeguard the Group’s ability to
continue as a going concern, so that it can to provide returns to stockholders and benefits to others
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Group manages its capital structure and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group adjust the dividend
payment to stockholders, return capital to stockholders or issue new shares.

The Group’s debt-to-equity ratios is as follows:

June 30, December 31,
2024 2023
Total liabilities 11,129,269,370 10,668,738,593
Total equity 8,044,624,618 7,959,416
1.38:1 1.34 :1

22. Fair Value Information

Fair value is defined as the amount at which the financial instruments could be exchanged in a
current transaction between knowledgeable willing parties in an arm’s length transaction, other
than in forced or liquidation sale.
Financial Instruments Whose Carrying Amounts Approximate Fair Value. Management has
determined that the carrying amounts of cash, trade and other receivables, accounts payable and
other current liabilities and dividends payable, based on their notional amounts, reasonably
approximates their fair values because these are mostly short-term in nature or are repriced
frequently.
Other Financial Instruments. Set out below is a comparison by category of carrying amounts and
estimated fair values of the Group’s financial instruments other than those described above:
 24

As at June 30, 2024

Fair Value
Level 2
Significant
Carrying Level 1 Observable
Date of Valuation Value Quoted Input
Assets for which fair values are disclosed -
Rental deposits June 30, 2024 P
=354,782,694 =–
P P
=358,079,988
P
=354,782,694 =–
P P
=358,079,988
Liabilities for which fair values are disclosed:
Long-term loans payable June 30, 2024 P
=5,144,638,477 =– P
P = 5,192,570,991
Dealers’ deposits June 30, 2024 96,071,159 – 96,071,159
P
=5,240,709,636 =– P
P = 5,288,642,150

As at December 31, 2023

Fair Value
Level 2
Significant
Level 1 Observable
Date of Valuation Carrying Value Quoted Input
Assets for which fair values are disclosed -

Rental deposits December 31, 2023 309,113,712 − 300,110,399

=309,113,712
P =−
P =300,110,399
P

Liabilities for which fair values are disclosed:

Long-term loans payable December 31, 2023 =5,242,570,991
P =− =
P P5,457,516,402
Dealers’ deposits December 31, 2023 106,626,720 − 104,355,571
=5,349,197,711
P =− P
P =5,561,871,973

The following methods and assumptions are used to estimate the fair value of each class of
financial instruments:

Rental Deposits. The fair values were obtained by discounting the instruments’ expected cash
flows using interest rates of 1.65% as at June 30, 2024 and December 31, 2023.

Long-term loans Payable. The fair value of loan payable which was discounted using prevailing
market rate of 4.18% as at June 30, 2024 and December 31, 2023 approximates the carrying value
since these bear interest at current market rates. Fair value category is Level 2, significant
observable inputs.

Dealers’ Deposits. The fair values were obtained by discounting the instruments’ expected cash
flows using interest rates of 4.69% and 4.92% as at June 30, 2024 and December 31, 2023.

As at June 30, 2024 and December 31, 2023, there were no transfers between Level 1 and 2 fair
value measurements.