LBC Express, Inc.

STRATEGIC
MANAGEMENT
PAPER
 A Strategic Management Plan Presented to

The Department of Business Administration College of Business

Feati University

Submitted by: Charles

Matthew A. Roxas

Robincarl B. Disturia

December 2024
 TABLE OF CONTENTS

TABLE OF CONTENTS...................................................................................................2

I. Executive Summary..................................................................................................4

A. Company Background...........................................................................................4

B. Vision and Mission.................................................................................................6

C. Values....................................................................................................................6

D. Product Offering.....................................................................................................8

E. Organizational Chart............................................................................................10

F. Market Summary.................................................................................................10

a. Target Market ................................................................................................... 10

b. Market Trends/Industry Trends.........................................................................13

c. Market Growth .................................................................................................. 14

II. External Analysis....................................................................................................17

A. STEP Analysis.....................................................................................................17

B. Porter’s Five Forces.............................................................................................23

III. Internal Analysis .................................................................................................. 26

A. SWOT Analysis.................................................................................................... 26

B. Internal Factor Evaluation Matrix.........................................................................27

C. Space Matrix........................................................................................................29

D. Financial Statement Analysis (Financial ratios)....................................................29

IV. Strategy Implementation (Recommendations).....................................................40

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A. Revised Mission and Vision.................................................................................40

V. Strategy Evaluation..............................................................................................44

A. Revised SWOT....................................................................................................44

VI. References..........................................................................................................53

VII. Appendices..........................................................................................................55
A. Results Charts and Graphs.....................................................................55
B. Financial Statements...........................................................................................64

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I. Executive Summary

A. Company Background

Luzon Brokerage Company otherwise called LBC is the one of the Philippines'

market chief in payments and money transfer, reports and documents, allocates

parcels, and load and logistics. With a developing network of more than 6,400

locations, accomplices, and operators in more than 30 nations, LBC focused on

moving lives, organizations, and networks and conveying cargo on the world over.

LBC was established by Carlos Araneta of the Araneta family in 1945, a period

where each nation was crushed by World War II, as a financier firm. He extended their

family-claimed business into an air load office and later as a sending specialist co-op to

customers. As an outsider delivery supplier, the organization is answerable for

dispatching shipments through resource based transporters, and arranges shipment

space for their clients. The organization kept on growing their calculated administrations

in 1973 and presented the 24 hour or overnight delivery service in the Philippines.

The overnight delivery service made LBC more well known for Filipinos,

particularly with business foundations. Soon after, LBC settled on growing their branches

all throughout the Philippines, yet of foreign lands. In 1985, the primary part of LBC

outside the nation was set up in San Francisco, California, in the United States.

Alongside the launch of its US-based branch, the organization presented

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the renowned "Balikbayan Box" and their money remittance service to cater to Overseas

Filipino Workers (OFW). Presently, LBC has more than 60 branches in the United States

and Canada.

To additionally offer support to Filipinos locally, yet internationally, LBC likewise decided

to extend by establishing a few branches in neighboring Asian nations, for example, in

Hong Kong, Brunei, Malaysia, Singapore and Taiwan whereas a high number of Filipino

migrant workers have also settled in neighboring Asian countries.

Presently, LBC Express is known as one of the biggest courier companies in the

Philippines. LBC turned into a regarded pioneer offering quick and solid Express Courier

and Money Remittance administration all through the Philippines. Today, LBC offers the

most stretched out inclusion and organization with more than 600 deliberately found

branches across the country.

LBC Express, other than its own delivery service in the Philippines, have also extended

into different undertakings. Probably the most punctual extension is that they

incorporated a bank, the LBC Development Bank in 1995, in which LBC offered banking

items. LBC Express have additionally ventured into utilizing the web to serve Filipinos. A

portion of its online endeavors incorporated an online gift shop, Express Regalo, and an

online flower shop, Flowers Express. LBC Express likewise established Digiprint, a

popular photo printing shop which also offers delivery of photos.

The moniker "Hari ng padala" was made by the organization in 1990. Items,

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for example, Branch Pick-up and Bills Payment were included in 2005, while the safer

mail administration for individual reports, free freight, and holder loads were presented in

2010. The organization additionally started to target entrepreneurs.

B. Vision and Mission Vision

LBC's vision is to be the most trusted logistics and remittance company, recognized

globally for its excellence in service, customer care, and contributions to economic

growth. They strive to make life easier and more efficient for their customers through

continuous innovation and dedication to quality.

Mission

LBC's mission is to provide reliable, fast, and accessible logistics and courier services

that connect people and businesses globally. They aim to empower individuals and

organizations by delivering value, ensuring customer satisfaction, and offering

innovative solutions for their logistics and remittance needs.

C. Values

LBC has built a set of values (LBC Creed) that drives it forward today. Thes

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values contributes the company to a team which brings eagerness and energy

to its success:

• Humility: They believe that being humble in everything that they will do will help

them to build trust and facilitate learning which are the key aspects of personal

development and leadership.

• Integrity: They believe that providing truthful information will give customers

peace of mind which will eventually make the customer trust them more.

• Trust: They value the company’s reliability to the public for the reason that they

want to build a strong relationship with their customers.

• Commitment: They apply strong commitment to their work. By having this, they

are enabled to gratify the needs and wants of the clients.

• Social Responsibility: They act in their best interest but also take into

consideration their shared responsibility to the society.

• Customer First: They always consider the clients’ preference before

making decisions.

• Team work: They believe that their people are the foremost asset of the

company. With this, uniting their people into teams through open communication

and transparency, motivative compensation, and recognition will encompass their

working environment.

• Innovative: They believe that creating new things or modifying will make them

distinguish from their competitors. Also, to bring by making continuous

improvement on their services to meet their customers satisfaction.

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• Positive thinking: They think that by having a positive attitude will help them in

stress management and improve the health of their employees. Moreover, it

creates a positive aura that allures the customers.

D. Product Offering

LBC Express was a pioneer in the field of express delivery and cargo shipping, as

well as 24-hour door-to-door delivery in the country. It is committed to ensuring

the safety and protection of the goods, parcels, and documents shipped

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all over the world. In addition to shipping, it also provide other services for individuals

and businesses, namely:

1. LBC Shipping Services

Courier service is the core product of the company, it helps individuals and businesses

to send and receive parcels from different parts of the globe through land, sea and air

freight services.

2. LBC Remittance Services

It also acts as a remittance center that provides a variety of money transfer services,

depending on the customers’ needs. It allows customers to easily and conveniently send

money to their families at home, whether they’re in the country or overseas, which may

be received by the recipient through any LBC branch, door-to-door, or bank transfer.

3. E-commerce Solutions

LBC also provides a number of e-commerce payment solutions such as Cash on

Delivery (COD), Cash on Pick up (COP), Pay collect and Cross border services that can

support merchant payment processing and services, making it easier for businesses to

reach their customers and collect payments wherever they are.

4. Business Solutions

For moving businesses, LBC provides logistics business solutions and supply chain

services that will satisfy the needs of these companies and improve their business

performance.

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E. Organizational Chart

F. Market Summary

a. Target Market

LBC has certainly and always been such an agency with a focus on the

interests of its clients. Founded in 1950 as the first Filipino courier company in the

world, it grew rapidly by catering to the demand and need of people to carry

documentation and freight throughout our vast archipelago. Including the first 24

hour door-to-door distribution service and the Balikbayan Package for our OFWs

operating abroad, it has developed services and products that remain important

for consumers today.

As part of their initiative, LBC Express Inc.'s latest tagline "We like to

move it" aims to demonstrate the firm's dedication to moving individuals,

companies and neighborhoods across "open space" in which all three

components reconnect and build positive partnerships. Part of the initiative

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is a moving segment that takes the LBC Manifesto to life: "We know at LBC that

we transfer not just parcels, money or products." This demonstrates how, amid

the gap between Filipinos, the firm, through its facilities, services and products

brings us all together. That being said, LBC Express targets upper, middle, lower

class, OFWs, online business owners, and Filipino customers because they are

more likely to use the services provided by LBC Express. They have enough

revenue to cover the bills and the courier services are usually ordered.
• Class A, B and C (upper, middle and lower class)

The LBC supply can be purchased and used by the Upper

Class, Middle Class and Lower Middle Class. There are

competitive prices for LBC, but they provide reliable and

quality service. Upper class men are the individuals who, due

to their high income, have the freedom to compensate at any

rate so they are after the standard of the product and service,

not the price. The middle class men has an immense

demographic that is great for pursuing LBC and has ample

money to pay for LBC programs as well. The money of the

lower middle class must be invested carefully. As per the

NSCB, SW High Income Segments are households / families

paying an average of P200,000 a month or P2.4 million a year.

Thus, they can be described as the population's "rich" section.

They are very few, numbering just 0.1 percent of the

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Philippines' overall households. On the other hand, the middle

income class is said to earn an average of P36,934 per month,

while an average of P9,061 per month is earned by the low

income segment.
• Filipino and Local Jobs Abroad

OFWs have a wide business presence where they can use LBC

Express to deliver their income by money transfers and

remittances. They still seek to provide a cheap way of shipping

their balikbayan packages and a discreet way of sending

remittances or parcels from the Philippines to their relatives.

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• Online Business Owners

Company owners can be male or female, as a growing array of

online companies can be a strong target group for LBC Express
and they try to sell their products to their consumers anywhere in
the Philippines quickly.

b. Market Trends/Industry Trends

Clients' preferences depend on many factors such as the
government, international transactions, supply and demand,
speculation, and expectation. These factors serve as a basis on
how a company should make a decision in terms of creating a
new product, rebranding, making an expansion, or closing a
business segment of the company.

LBC has gone through several changes to adapt to the trends and
appeal to their clients. These changes of the company which will
be discussed below will show how the clients’ preference affects
the company’s overall decision.

The company was established because of the people’s need to

move documents across the archipelago. The changes in the
company started in 2013 in which LBC launched a rebranding
campaign to tap into the emotional aspect of their clients. They
changed their logo and tagline from being the "Hari ng padala” to
"We like to move it”. It is made to be in line with its mission which
is to give its customers better services. Also, to bring the Filipinos
together, despite the distance between them. Most of the Filipinos
during that time are going abroad, this is one of the reasons why
the company made several advertisements showing the
sentimental value of the customers who avail their services.

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 As the fourth industrial revolution takes place, digitalization has set to
revolutionize the entire industry. With this, the LBC saw this as another
opportunity to define themself across all of its business segments. As
aforementioned, the company is customer-oriented which only means that they
are taking into consideration the evolving consumer behavior and preferences. As
a result, in 2019 the company has promised that they will automate all key
processes and upgrade core logistics applications. In line with this, they launched
LBC connect which is an application that is set to reshape the customer’s
experience through technology. Also, they expanded their digital Customer Care
Management as a response to the customer’s need for service that is personal,
prompt, humane, and always available in multiple platforms and touchpoints. The
company is doing its best to understand their customer better by looking closely
at their customer’s satisfaction to address the customer’s demand and
expectation.

Currently, the company made some changes in terms of their services

because of the impact of COVID-19. Since there are many restrictions because of
the pandemic, most of the businesses who moved in online and people prefer to
order online (e.g. Shopee, Lazada, Zalora, and etc.) instead of going outside. As
a result, the demand for the company increases which leads to LBC creating an
easy-to-use touchpoint to social sellers and businesses and a Bazaar for the
social sellers.

c. Market Growth
Nowadays, courier and shipping services have become more and more
prevalent in the country because of its convenience and usefulness for individuals
and businesses that are engaged in online selling, since it involves numerous
parcel shipping solutions. Moreover, with the impact of the COVID-19 crisis, the
said industry is now significantly growing.

Although there are a lot of delivery, courier, and shipping services in the
Philippines, LBC Express is known to be the country’s leading courier as well as
payments, money transfer and logistics. It is an organization that

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has always been sensitive to the needs of its customers, making it one of the
most trusted brands in the Philippines. In 2017, LBC Express’ revenue rose to
15% from P8.7 billion in 2016 to 10 billion in 2017 and also registered a growth in
net income after tax of 985 million, which is a 7% increase in the previous
revenue of 920 million. According to the chief financial officer of LBC Express, in
addition to the rise in consumer spending and the growth in e-commerce, the rise
in the revenue of the company is primarily due to an increase in revenues from air
and courier service, led by improved sea and air freight costs. Subsequently, LBC
secured $50 million investment from a Singapore-based private equity group
which provides them capital to invest in the growth of its network. After a year,
LBC almost doubled its earnings, hitting 12.51 billion in 2018 which is a 25%
increase from last year’s revenue. The acquisition of one domestic and nine
international entities engaged in money remittance and online regular logistics of
the company contributed significantly to the increase of their revenues with a total
amount of P889.79 million net contribution or 36% of the total increase.
Furthermore, domestic operations also contributed to its overall revenue
amounting to P123.67 million due to the opening of 76 new retail branches and
the introduction of new services such as Retail Cash-on-delivery and Cash-on-
pickup (COD/COP) services. However, in 2019 LBC Express’ net income drops
by 64.7 to P475.82 million from P1.349 billion in the previous year. The decrease
in revenue of the company was due to the loss of derivatives attributable to the
convertible instrument amounting to P590.94 million, lower foreign exchange gain
of P127.50 million, and the adoption of Philippine Financial Reporting Standards
(PFRS) 16.

By 2020, LBC Express earned P187.71 million in the first quarter of the year, an
increase of 2.378 percent from the reported revenue in the same period last year.
This increase was due to a gain of derivatives attributable to the convertible
instrument amounting to P0.16 million and the provision of lower income taxes.
Also, service revenues increased by 2 percent amounting to P3.8 billion
compared to P3.717 billion from the first

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quarter of last year. Amidst the onslaught of COVID- 19 crisis, LBC continues to
empower both consumers and businesses as the country moves to the new
normal. LBC offers a list of digital services that will not only enable online sellers
and businesses to process their transactions online but will also help them
survive and prosper during this pandemic. However, considering the
unanticipated effects of the COVID-19 crisis, the company’s financial statements
cannot yet be determined since the said crisis could have a material impact on
the company’s 2020 financial results and for the succeeding periods.

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II. External Analysis

A. STEP Analysis

Social

LBC is an organization that has rotated itself and set up the idea of "The Joy of
Moving." But its prosperity has provoked the organization to show duty for social
obligation, utilizing the key venture of their center quality, individuals, assets and
organization to truly have any kind of effect.
1. Carry OFWs closer to their families back home

One of the objective business sectors of LBC is to carry OFWs closer to their
families back home. OFWs have become our present day legends, and we comprehend
the purposes for each padala (settlement). The LBC Express wants to respect that by
ensuring they remain associated, any place they are. Additionally, those individuals in
the metropolitan region are sending cash to their friends and family in the provincial
zone. Also, those individuals who have a business, they let their clients get the package
in LBC Express.
2. Understanding client needs

However good your product or service is, the straightforward truth is that nobody
will make a transaction if they don't want it or believe they don't need it. Also, you won't
convince anybody that they need or need to execute what you're offering except if you
plainly comprehend what it is your clients truly need. Knowing and understanding client
needs is at the focal point of each fruitful business, regardless of whether it sells
legitimately to people or different organizations. LBC tackled this information, they
utilized it to convince potential and existing clients that purchasing from them is in their
best interests. Desires are the foreseen conditions for the customers to buy. They
incorporate all means of the client venture, all associations with the organization, just as
the impacts of the buy and experience, the viable advantages, and the feelings. Clients
rate an organization's exhibition by its

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capacity to live up to their desires. What the client needs is frequently to a
greater degree a ground-breaking helper than what they need. This turns out to
be clear when you tune in to your client and ask them to let you know for what
reason they need what they need. Normally they want to get what they need and
basically need you to give them how they can get it.
3. Number of inhabitants in the Philippines

The number of inhabitants in the Philippines has been consistently developing for
a long time. It is the thirteenth most populated nation on the planet, among
Mexico and Ethiopia, and developed at a pace of 1.72% somewhere in the range
of 2010 and 2015. The 2019 populace is 108.11 million, as per the most recent
UN gauges. The developing populace isn't influencing in a terrible way the
business in light of the fact that as should be obvious the 13 assessed OFWs
around the world is 10.2 million Filipino's. Many have moved to another country
incidentally to look for some kind of employment yet others have settled abroad
forever, that is the reason their friends and family who left in the Philippines are
sending them a balikbayan boxes and it advantage the LBC Express.
4. Record handling administrations

LBC is currently offering record handling administrations that permit individual

Filipinos in the Center East to validate or restore their necessary government-
related records, additionally in different nations. There are reports and papers
that should be confirmed for different use particularly when you are abroad.
Being an OFW, it may very well be an issue to measure these particularly when
the OFW don't have a lot of time, they have to return to the Philippines so as to
apply for these confirmed records. Presently, the LBC is an inviting improvement
since this makes it simpler for OFWs to apply for confirmed papers while they are
outside the Philippines.

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Technological

The organization has any kind of effect by ensuring that the trust their clients gives them
is reimbursed with unwavering quality, straightforwardness, and genuineness. It's a
notoriety that they've endeavored to build up since the 50s; and one that they endeavor
to satisfy by constantly advancing. Today, they are On the Move indeed—this time
towards computerized change. Your necessities are changing... and they're keeping up
the movement to improve with their customers.
1. Robotization

For their clients, evolving purchaser conduct and inclinations are driving the way LBC
needs to move toward business. Their organization will present answers for a market
that is associated every minute of every day, time-starved, with requests secured on
innovation's capacity to react at the speed of need. Because of client interest, LBC
perceives that they can not keep maintaining their business with the current cycles and
advancements. Robotization of all key cycles is expected to endure and to be pertinent
in the business. They are overhauling their organization's center coordination's
applications to robotize every single manual cycle. Tasks will fundamentally change once
completely actualized, and we all look forward to this coming to fruition. Their
organization will likewise be acquainting extra items and administrations with clients, all
things considered.

For their partners, boundaries among providers, specialist co-ops and customers are
developing rapidly, because of fast moves in innovative advances. This involves a crucial
reevaluation about how LBC smoothest out interior cycles, and will organize effectively.
2. Digital Transformation

Accomplishing their vision is secured on our capacity to carefully change the manner in
which they do things, the Way They Move. In any case, Digital Transformation isn't just
barely about joining the innovative apparatuses expected to change the association; it is
a gigantic endeavor

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given the size of the organization, and understanding that changes will just start
once outlooks of the human components are additionally moved. This "Change
Management” for a 70-year old organization, a legacy brand, will incorporate
more than 8,000 partners over the globe, and an immense organization of
physical stores, centers, and stockrooms. We're up for the assignment, we're
prepared for the test.

LBC's Digital Transformation will quicken their own business exercises, cycles
and abilities that will, thus, sway our partners in vital and significant manners.
They tackle Digital Transformation to profoundly improve interior execution,
accomplice connections, and grow reach across various business sections. LBC
has spread DTrelated correspondences, fell to all workers, undertaking wide, to
urge ALL to join the fleeting trend and connect more partners to purchase into the
development.

LBC's venture wide Digital Transformation will be upheld by a full-pile of IT

activities covering everything from foundation to customer confronting
innovations. The size of this endeavor is extraordinary. Furthermore, until this
point, key overhauls and functionalities are as of now being presented in the very
system of LBC's activities. The extent of the LBC IT framework traverses the
gathering's auxiliaries and subsidiaries in nations across AsiaPacific, USA,
Canada, the Middle East, Europe and Australia, covering the two its Corporate
and Retail organizations, likewise for both Logistics and Money portions. The
change's essential goal, in the innovative angle, is to supplant and upgrade
existing frameworks, a basic usefulness given

LBC's worldwide reach, broadness, and huge extent of administrations. This

improved framework will upgrade the primary load "Trade focus" in Manila, and
permit joining into the set up "Put-To-Light" (PTL) arranging framework, which
was likewise an ongoing advancement for the organization.

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Economic

The company is involved in the provision of the logistics services which operates
through the segments of logistics and money. The logistics segment provides services to
retail and corporate customers. On the other hand, the money segment consists of
domestic and international money transfer services. These segments are affected by the
following factors:
1. Supply and Demand

The two great economic factors that affect the business model work are the
demand and supply. Demand shows the willingness and capability of a consumer in
purchasing what a business offers. In contrast, supply manifests how the company
makes the services or product available to the consumer. Through supply and demand,
LBC would be able to determine the adjustment in terms of their rates. Nowadays, the
demand for couriers is high since most of the people cannot go outside because of the
quarantine which makes them purchase things online. With this, the company will
consider this as a factor whether to raise their fares or not.
2. Job Opportunity

According to the Philippine Statistics Authority (PSA), the unemployment rate in

the Philippines in March 2019 is 5.2 lower than 5.3 a year ago. The number of
unemployed decreased by 118 thousand to 2.20 million and the number of employed fell
by 387 thousand to 41.37 million. In the meantime, the rate of labor force participation
dropped to 60.2 from 62.2 percent. Of all the employed persons, the workers in the
service sector made up a total of 58.1 percent which is followed by 22.1 percent by the
agriculture sector and 19.7 percent by the industry. The Philippines unemployment rate
had an average of 9.34 percent from 1994 until 2019 it reached an all-time high of 13.90
percent in the first quarter of 2000.

The aforementioned made the LBC Express Inc believe that in order to build an
easy skilled force, the employee itself must want it. As they say

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"Workers are a necessity, not a luxury. The company becomes more global as
the markets shift, making productivity and worker efficiency more important. With
this, they continue to train their employees in order to respond to the customers'
needs. Also, it will make the company competitive.
3. COVID Response

COVID-19 created a big impact in the economic side of the Philippines which
made it reach its critical point. Due to the declaration of an Enhanced Community
Quarantine, some businesses are facing an output slowdown which leads to
closing of some establishments. As a result, some employees lost their jobs
because of the situation.

LBC continues to be the leading market leader in courier, cargo and remittance
despite the tough situation. The company made a tremendous effort to provide
business continuity at the same time protecting its employees and servicing its
customers. The action plan by giving LBC front-liners personal protective
equipment, and providing lodging facilities to heightened precautionary measures
for its customers and employees. In addition, the company supports all of its
employees’ needs by giving them home quarantine leaves and calamity leaves
for the affected employees due to the temporary closure of hubs and branches.
Also, they made webinars to accommodate their employees who are suffering
from depression, anxiety, and unhealthy eating.
Political

LBC is the foremost provider of express courier service that offers a convenient,
reliable, and cost-effective alternative to retail consumer, government owned
companies, and operated postal service. Also, it automates and almugates the
company both in local and foreign markets.
1. Implementation of RA 11469

The impact of COVID-19 led to many changes and because of this,

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the government made an action about it by enacting RA 11469. Republic Act No.
11469 also called Bayanihan to Heal as One Act which ensures the availability of
credit to the public sectors of the economy especially in the countryside through
measures such as but not limited to lowering the effective lending rate of interest
and reserve requirements of lending institutions. As a result, the company has
extended its loan moratorium, processed early release of 13th month pay to all
employees, and released a medicine allowance.

B. Porter’s Five Forces Threat of New Entrants

New entrants in Delivery bring advancement, better approaches for getting things
done and squeezed LBC Express through lower estimating systems, diminishing
expenses, and giving new offers to the clients. Quick Transportation Company
needs to deal with every one of these difficulties and manufacture viable
hindrances to defend its serious edge.
How LBC Express can handle the Threats of New Entrants:

• By enhancing new items and administrations. New items carry new clients to
the overlay as well as give old clients motivation to remain in patronizing LBC
Express administrations.
• By building economies of scale with the goal that it can bring down the fixed
expense per unit.
• Building limits and burning through cash on innovative work. New participants
are less inclined to enter a unique industry where the set up players, for
example, LBC Express continue characterizing the principles routinely. It
fundamentally diminishes the window of remarkable benefits for the new firms in
this way dishearten new parts in the business.

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Threat of Substitutes

As online businesses grew, so did the shipping industries. Customers and buyers
tend to choose the most reliable and fastest shipping with low freight charges to deliver
their orders. When this pandemic happened, logistics suddenly popped out from
everywhere. Not only with shipping and logistics matters but also with
sending/transferring of money. Customers will choose the one with the lowest charge
when sending money. In this present world people won't compromise for anything. If they
are not satisfied by the service they will jump to other substitutes who can give better
rates and services.
Bargaining Power of Customers

Buyers are often demanding a lot. They want to buy the best offerings available
by paying the minimum price possible. This put focus on LBC Express gainfulness over
the long haul. The more modest and all the more remarkable the client base is of LBC
Express, the higher the dealing intensity of the clients and higher their capacity to look
for expanding limits and offers.
How LBC Express can handle the Bargaining Power of Buyers

• By building an enormous base of clients. This will be useful in two different

ways. It will diminish the bartering intensity of the purchasers in addition to it will give an
occasion to the firm to smooth out its deals and creation measure.
• By rapidly innovating new services. Customers often seek discounts and
offerings on established products so if LBC Express keeps on coming up with new
services then it can limit the bargaining power of buyers.
• New items will likewise decrease the surrender of existing clients of LBC
Express to its rivals.
Bargaining Power of Suppliers

Almost all the organizations in their business purchase their crude material
from various providers. Providers in prevailing positions can diminish the edges
LBC Express can win in the market. Amazing providers in the Services area
utilize
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their arranging capacity to separate more exorbitant costs from the organizations in the
Delivery field. The general effect of higher provider haggling power is that it brings down
the general gainfulness of delivery.
How LBC Express can handle Bargaining Power of the Suppliers

• By building a productive flexible chain with different providers.

• By exploring different avenues regarding item plans utilizing various materials so that
on the off chance that the costs go up of one crude material, at that point organization
can move to another.
• Developing committed providers whose business relies on the firm. One of the
exercises LBC Express can gain from their rivals is the means by which these
organizations grew outsider makers whose business exclusively relies upon them in this
manner making a situation where these outsider producers have altogether less
bartering power.
Competitive Rivalry

When looking at logistics and money transfer services here in the Philippines, you can
see that it is quite high because of the many competitors. LBC is well known and has a
reputation when it comes to logistics. It has competitive advantage because it exists
longer than its competitors. Right now, it is a corporation and has branches not only here
in the Philippines but also in other parts of the world. It is also one of the leading logistics
here in the Philippines along with other logistics.

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 III. Internal Analysis

A. SWOT Analysis

STRENGTHS WEAKNESSES

1. Philippines’ leading 1. Delayed

remittance and courier delivery of

company packages

2. Pioneer in the sometimes

industry 2. Misroute items

3. Number of operating 3. Unsatisfied

branches nationwide Customer Service

4. Online tracking of 4. Slow in terms of

goods delivered coping with

2. High demand on 2. Traffic
innovations
shipping situation
3. Increasing 3.
population of people Government
under Class B and C regulations
Untapped markets that
can still be tapped

26
 B. Internal Factor Evaluation Matrix

The numbers range from 4 to 1, where 4 means a superior response, 3 - above

average response, 2 - average response and 1 - poor response.

Key Internal Factors Weight Rating Weighted Score

STRENGTHS

1. Philippines’ leading
remittance and courier 0.16 4 0.64
company
2. High quality services 4 0.48
0.12

3. Pioneer in the industry 0.10 3 0.30

4. Number of operating
0.07 3
0.21
branches nationwide
0.05
5. Online tracking of goods
2 0.10
delivered

WEAKNESSES

0.13 4 0.52
6. Delayed delivery of packages
sometimes
7. Misroute items 0.11 4 0.44
0.15 3 0.45
8. Unsatisfied customer service

9. Slow in terms of coping with

0.03
2 0.06
innovations

10. Market segment is not well

0.04 1 0.04
defined

27
 0.04 1 0.04
11. Doesn’t have a wide spread
of Integrated Marketing
Communications (IMC)
channels. IMC ensures that
all forms of communications
and messages are carefully
linked together

TOTAL 1 - 3.28

28
 C. Space Matrix

LBC is located in Quadrant I of the Space Matrix because of the positive weighted score
of both the internal factor evaluation matrix and external factor evaluation matrix. This means
that it has an excellent strategic position when it comes to continued concentration on current
markets (market penetration and market development). LBC can also afford to take advantage
of external opportunities in several areas. They can take risks aggressively when necessary.
Best advantage for the company is to maximize its strengths and take the opportunities.

D. Financial Statement Analysis (Financial ratios)

Comparative Income Statement Horizontal Analysis
COMPARATIVE Income Statement HORIZONTAL ANALYSIS

Increase/Decrease

2019 2018 Amount Rate

29
 Income

Dividends 723,002,743 1,582,594,366 (859,591,623) -54.32%

Service Fees 30,872,114 29,929,719 942,395 3.15%

Interest 43,078,225 23,164,559 19,913,666 85.97%

Total Income 796,953,082 1,635,688,644 (838,735,562) -51.28%

Operating Expenses 51,687,177 48,013,659 3,673,518 7.65%

Other Income (Expense)

Gain (Loss) on Derivative (642,506,134) 454,198,052 (1,096,704,186) -241.46%

Foreign Exchange Gain (Loss) -

(9,571,924) 91,210,437 (100,782,361) -110.49%
net

Interest Expense (183,923,419) (161,654,374) (22,269,045) 13.78%

Others -net 101,745 3,913,821 (3,812,076) -97.40%

Total Other Income (835,899,732) 387,667,936 (1,223,567,668) -315.62%

Income(Loss) before Income Tax (90,633,827) 1,975,342,921 (2,065,976,748) -104.59%

Provision for benefit from income tax (5,121,785) 4,825,235 (9,947,020) -206.15%

Net Income (Loss) (85,512,042) 1,970,517,686 (2,056,029,728) -104.34%

Other Comprehensive Income - -

Total Comprehensive Income (Loss) (85,512,042) 1,970,517,686 (2,056,029,728) -104.34%

Analysis:

• Dividends is one of the main sources of their income went down because of the offsetting of
dividends receivable and payables.

30
 • The company net income went down by 104.34.% since the majority of the income
derived from income outside the operations such as dividends income, other income in
the form of derivatives, foreign exchange and interest income.
• The company’s operating expenses decreased by 7.65% because of the decrease in
operating expenses in outside services and other expenses.
Comparative Income Statement Vertical Analysis

COMPARATIVE Income Statement VERTICAL ANALYSIS

2019 2018 2019 2018

Income

Dividends 723,002,743 1,582,594,366 90.72% 96.75%

Service Fees 30,872,114 29,929,719 3.87% 1.83%

Interest 43,078,225 23,164,559 5.41% 1.42%

Total Income 796,953,082 1,635,688,644 100.00% 100.00%

Operating Expenses 51,687,177 48,013,659 6.49% 2.94%

Other Income (Expense)

Gain (Loss) on Derivative (642,506,134) 454,198,052 -80.62% 27.77%

(9,571,924) 91,210,437 -1.20% 5.58%

Foreign Exchange Gain
(Loss) -net

Interest Expense (183,923,419) (161,654,374) -23.08% -9.88%

Others -net 101,745 3,913,821 0.01% 0.24%

Total Other Income (835,899,732) 387,667,936 -104.89% 23.70%

Income(Loss) before Income Tax (90,633,827) 1,975,342,921 -11.37% 120.77%

Provision for benefit from income tax (5,121,785) 4,825,235 -0.64% 0.29%

31
Net Income (Loss) (85,512,042) 1,970,517,686 -10.73% 120.47%
- - - -
Other Comprehensive Income

(85,512,042) 1,970,517,686 -10.73% 120.47%

Total Comprehensive Income
(Loss)

Comparative Balance Sheet Horizontal Analysis

COMPARATIVE BALANCE SHEET HORIZONTAL ANALYSIS

Increase/Decrease

2019 2018 Amount Rate

ASSETS

Current Assets

Cash and Cash Equivalents 1,838,629,131 1,548,935,345 289,693,786 19%

Receivables 718,559,131 1,582,609,349 (864,050,218) -55%

Due from Related Parties 405,424,317 2,548,124 402,876,193 15811%

Investment at Fair Value through Profit or

1,046,312 1,009,832 36,480 4%
Loss
18,198,795 10,040,713 8,158,082 81%
Prepayments and Other Current assets

Total Current Assets 2,981,857,686 3,145,143,363 (163,285,677) -5%

Non-Current Assets

Investment in Associate 227,916,452 227,916,452 0%

0
Investment in Subsidiaries 2,194,053,032 1,930,554,146 263,498,886 14%

Deferred T ax Asset 533,038 - 533,038 -

- 439,823,608 (439,823,608) -100%
Advances for Future Investment in
Shares

Other Non-Current Assets 388,350,925 - 388,350,925 -

32
Total Non-Current Assets 2,810,853,447 2,598,295,206 212,558,241 8%

TOTAL ASSETS 5,792,711,133 5,743,437,569 49,273,564 1%

LIABILITIES AND STOCKHOLDERS EQUITY

Current Liabilities

Accounts and Other Payables 6,795,180 21,235,719 (14,440,539) -68%

Dividend Payable 14,775,250 285,173,094 (270,397,844) -95%

Due to Related Parties 43,741 266,771 (223,030) -84%

Total Current Liabilities 21,614,171 306,675,584 (285,061,413) -93%

Non-Current Liabilities

Derivative Liability 2,048,681,561 1,406,175,427 642,506,134 46%

Bond Payable 1,247,021,058 1,108,417,074 138,603,984 13%

Deferred Tax Liability - 4,796,731 (4,796,731) -100%

Total Non-Current Liability 3,295,702,619 2,519,389,232 776,313,387 31%

Total Liabilities 3,317,316,790 2,826,064,816 491,251,974 17%

Stockholder’s Equity

Capital stock 1,425,865,471 1,425,865,471 0%

0

Additional Paid-in Capital 55,420,327 55,420,327 0 0%

Retained Earnings 994,108,545 1,436,086,955 (441,978,410) -31%

Total Equity 2,475,395,343 2,917,372,753 (441,977,410) -15%

5,792,711,133 5,743,437,569 49,273,564 1%

TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY

Analysis:

• The receivables decreased by 55% since Transtech Co., Ltd. and LBC Express, Inc. (LBCE) made
payments to the company for the dividends and the loans.

33
 • The company’s due to related parties increased by 15811% because of the signed agreement with
SAP Philippines, Inc. to acquire cloud services named HANA Enterprise Cloud for Production
Software (HEC Subscription) for 60 months and purchase of shares of the entities under LBC
Express Holdings USA Corporation. The purchase of shares of the entities will be beneficial to the
company in terms of the building a network to the LBC outside the Philippines which will make it
more global. This will also increase their sales of service because the OFWs abroad will be able to
access the services of the LBC in our country much easier.
• The accounts and other payables decreased by 68% since the subscription payable was settled in
2019.
• The convertible instruments such as the derivative liability and bonds payable increased because
the BOD approved the issuance of convertible instruments which will be used to fund the growth of
the company including the capital expenditures and working capital.

Comparative Balance Sheet Vertical Analysis

COMPARATIVE BALANCE SHEET VERTICAL ANALYSIS

2019 2018 2019 2018

ASSETS

Current Assets

Cash and Cash Equivalents 1,838,629,131 1,548,935,345 31.74% 26.97%

Receivables 718,559,131 1,582,609,349 12.40% 27.56%

Due from Related Parties 405,424,317 2,548,124 7.00% 0.04%

1,046,312 1,009,832 0.02% 0.02%
Investment at Fair Value through Profit or
Loss

Prepayments and Other Current assets 18,198,795 10,040,713 0.31% 0.17%

Total Current Assets 2,981,857,686 3,145,143,363 51.48% 54.76%

Non-Current Assets

Investment in Associate 227,916,452 227,916,452 3.93% 3.97%

34
 Investment in Subsidiaries 2,194,053,032 1,930,554,146 37.88% 33.61%

Deferred T ax Asset 533,038 - 0.01% 0.00%

- 439,823,608 0.00% 7.66%
Advances for Future Investment in
Shares

Other Non-Current Assets 388,350,925 - 6.70% 0.00%

Total Non-Current Assets 2,810,853,447 2,598,295,206 48.52% 45.24%

TOTAL ASSETS 5,792,711,133 5,743,437,569 100% 100.00%

LIABILITIES AND STOCKHOLDER’S EQUITY

Current Liabilities

Accounts and Other Payables 6,795,180 21,235,719 0.12% 0.37%

Dividend Payable 14,775,250 285,173,094 0.26% 4.97%

Due to Related Parties 43,741 266,771 0.0008% 0.0046%

Total Current Liabilities 21,614,171 306,675,584 0.37% 5.34%

Non-Current Liabilities

Derivative Liability 2,048,681,561 1,406,175,427 35.37% 24.48%

Bond Payable 1,247,021,058 1,108,417,074 21.53% 19.30%

Deferred Tax Liability - 4,796,731 0.00% 0.08%

Total Non-Current Liability 3,295,702,619 2,519,389,232 56.89% 43.87%

Total Liabilities 3,317,316,790 2,826,064,816 57.27% 49.21%

Stockholders Equity

Capital stock 1,425,865,471 1,425,865,471 24.61% 24.83%

Additional Paid-in Capital 55,420,327 55,420,327 0.96% 0.96%

Retained Earnings 994,108,545 1,436,086,955 17.16% 25.00%

35
Total Equity 2,475,395,343 2,917,372,753 42.73% 50.79%

5,792,711,133 5,743,437,569 100.00% 100.00%

TOTAL LIABILITIES AND
STOCKHOLDER’S EQUITY

Analysis of Financial Ratio

The following major ratios that were obtained from the financial statements of years 2018
to 2019, reveal the financial health history of the company which would help the Finance and the
Accounting Department assess its financial situation and project future financial variables.

Financial Ratios
Fiscal Year Ended
Previous Fiscal Year

December 31, 2019

December 31, 2018

Liquidity Ratios:
Current Ratio or Working Capital Ratio 137.96 10.26

Quick Ratio 137.12 1.11

Financial Leverage Ratios:

Debt Ratio 0.57 0.49

Debt-to-Equity Ratio
1.34 0.11

Asset to Equity Ratio 2.34 1.97

Profitability Ratios:

Gross Profit Margin 0.27 0.03

Net Profit Margin

0.03 0.10

Return on Assets
0.08 0.22
Return on Equity 0.19 0.43

36
Market Value Ratios:

Book Value per Share Ratio 1.74 2.05

Dividend Yield Ratio

0.60 0.21
Earnings per share Ratio -0.06 1.38
Price-Earnings Ratio

-16.67 0.72

LIQUIDITY RATIO

^ Current Ratio

The current ratio is a helpful way to evaluate the company’s liquidity. For every 1 peso of
debt for 2019 it has 137.96 of current assets to pay compared with 2018 where it has 10.26
pesos of assets to pay 1 peso of debt. That means the company has enough or normal ratio
since it is a financial company. It is expected that it has a high ratio since they need
immediate cash to conduct their business.
^ Quick Ratio

The quick ratio is an indicator of a company’s ability to meet its short-term obligations with
its most liquid assets. This means that Luzon Brokerage Companyhas the ability to pay its
short term obligations easily as for every one peso of debt for 2019 it has 137.12 as
compared with 2018 which is only 1.11 per peso of debt.
FINANCIAL LEVERAGE RATIO

^ Debt Ratio/Acid test Ratio

The debt ratio is a financial ratio that measures the extent of a company's leverage. The
company needs improvement because they have 0.49 for 2018 and
0.57 for 2019. Many investors look for a company to have a debt ratio between 0.3 and 0.6.
From a pure risk perspective, debt ratios of 0.4 or lower are considered better, while a debt
ratio of 0.6 or higher makes it more difficult to borrow money This would also mean that their
creditors have a higher percentage of control over

37
the resources (assets) of LBC as compared with owners. It has a higher risk level in
case something bad would happen to the company resulting in a sudden liquidation of
the company.
^ Debt-to-Equity Ratio

Compares a company's total liabilities to its shareholder equity and can be used to
evaluate how much leverage a company is using. Higher leverage ratios tend to indicate
a company or stock with higher risk to shareholders. Having a 1.34 compared to 0.11
last 2018, it indicates that the company is getting more of its financing by borrowing
money, which subjects the company to potential risk because the debt levels are too
high. This would further give that they are taking higher risk by using creditors money to
gain more profit.
^ Asset to Equity Ratio

The asset to equity ratio reveals the proportion of an entity's assets that has been
funded by shareholders. The inverse of this ratio shows the proportion of assets that
have been funded with debt. LBC’s asset to equity ratio remains at 2.34 which is often
associated with high risk compared to last year's asset to equity ratio which is 1.97; it
means that a company has been aggressive in financing its growth with debt. If a lot of
debt is used to finance growth, a company could potentially generate more earnings
than it would have without that financing.

PROFITABILITY RATIO - In this ratio, the researchers used the consolidated financial
statement of the LBC Express Inc.
^ Gross Profit Margin

The gross profit margin reflects how good the company is doing in terms of profitability.
Over the past two years, Luzon Brokerage Company's gross profit margin indicates that
it is successful in producing profit over and above its costs. Its gross profit margin had
increased by 0.24 in 2019 from 2018.
^ Net Profit Margin

A higher profit margin would always be desirable since it indicates that it

38
generates more profits from its sales. However, in Luzon Brokerage Company’s case, it
shows that its profit margin in 2018 declined in 2019 by 7%.This was because of the
higher cost of expenses and losses that was incurred in 2019 as compared with 2018.
^ Return on Assets

Return on assets is a ratio that measures the company’s earnings before interest and
taxes. Over the past three years, Luzon Brokerage Company’s return on total assets
continuously declined from 2018 to 2019. It indicates that the company was not able to
maximize its use of assets in securing more profits.
^ Return on Equity

The return on common stock equity tells how well the company uses the money invested
in it. Generally, a high return on common stock equity indicates that the company
spends wisely and is likely profitable. However, Luzon Brokerage Company’s low return
on common stock equity indicates the opposite. It indicates that the company could not
maximize its use of assets in securing more profits from 2018 to 2019.
MARKET VALUE RATIO

^ Book Value per Share Ratio

The book value per share ratio calculates the per-share value of a company based on
the equity available to shareholders. Luzon Brokerage Company’s BVPS is lower than
its previous value per share then there's a possibility that the company's assets will be
sold off and the investor will still make a profit. Further, it could be glean that its value
went down because of the loss it incurred in 2019.
^ Dividend Yield Ratio

The dividend yield is a financial ratio that tells you the percentage of a company's share
price that it pays out in dividends each year. LBC’S dividend yield is higher than the
previous year of 0.21 and this is enough justification for investors to buy a stock just for
the dividend income.

39
^ Earnings per share Ratio

Earnings per share or EPS is an important financial measure, which indicates a loss of the
company. LBC earned -0.06 on the year 2019 compared to 1.38 on the previous year.
Earnings per share or EPS is an important financial measure, which indicates the
profitability of a company.
^ Price-Earnings Ratio

The price-to-earnings ratio indicates the amount an investor cannot expect to invest in a
company in order to receive one of that company's earnings. LBC shows a lower value of -
16.67 compared to 0.72 from the previous year. A lower P/E ratio shows that investors are
not willing to pay a higher share price today because of growth expectations in the future.

IV. Strategy Implementation (Recommendations)

A. Revised Mission and Vision Vision

To be the most trusted and innovative logistics partner, making life easier for everyone.

Mission
To deliver fast, reliable, and accessible logistics and remittance solutions that connect
people and businesses worldwide.

40
Year 1: 2021

1. Improve existing marketing strategies

LBC Express advertises their services through different social media platforms namely,
Facebook, Twitter, Youtube and LinkedIn. However, it seems that some people are still
unfamiliar or have little understanding with the services of the company. In order for the
company to better target new and returning customers and increase their brand awareness,
they should improve their social media engagement by using ads, videos, consumer-
generated content and cross promotions. As for their website/app, organizing events or
contests and creating online games will help them engage the local audience.
2. Increase average order value
LBC Express provides a wide range of services to its customers such as money-transfer
services, e-commerce and business solutions, and shipping services. However, their retail
logistics is the main driver for the company’s revenues and growth. That being said, in order
to better increase its revenue, as well as their brand value in the market, the company
should offer promotions that encourage customers to avail shipping services more. This
includes, increasing the minimum order amount of the customers.
3. Introduction of E-wallet
Due to the pandemic, preventive measures such as physical distancing, have driven people
to use online applications in transacting with other people or businesses. That being said, it
will be a great opportunity for the company to create the so-called "e-wallet”. This will
provide more flexibility to their customers, connectivity to a wide range of cards, security and
sends customers the latest updates about offers such as discounts and the like.
4. Expansion of workforce
The COVID-19 pandemic has made life more challenging for people and businesses. As a
result, demands for logistics business have increased. To be able to cater the demands of
the customers, more staff and employees should be recruited by the company. Each
employee should have different duties and responsibilities for the business to run smoothly.

41
5. Customer service training programs for staffs and employees
The company should invest in customer service training programs because this not only
adds value to the customers, but also helps the company increase its revenues and give the
company a strong competitive advantage.
6. Partnership to Global Companies
LBC Express has been part of some global companies which help them reach their goal in
terms of remittances. This year the company should be able to partner with other global
countries in order to cater the Filipinos who are working overseas. Being a partner will help
the company boost their marketing which can help in increasing the sales. Also, this will
make the company recover the losses that they had in the 2019 wherein they have losses in
the derivatives and foreign exchange.

Year 2: 2022
1. Acquisition of shipping softwares/programs
LBC is the largest courier, cargo and money remittance service in the Philippines. It
provides services from different parts of the globe which is why it is important for the
company to invest in advanced but cost-efficient shipping softwares. This would help them
make shipping services faster, easier and more affordable. Also, it would help the staff and
employees to have the information that they need in making better decisions on how to pick,
pack and ship orders.
2. Conduct trainings for the employees on the new softwares/programs Implementing
a new system is a big change for the employees. All of these changes and new processes
can be daunting to them. Employees may not have the same experience or knowledge in
learning the new softwares/programs on their own. As a result, this can cause
misunderstandings, unnecessary errors and problems to the company. Therefore, in order
to avoid these things, the company should invest in training programs for the employees.
This will not only allow them to make better and productive use of the new system, but will
also increase the productivity of the employees.
3. Renting a cloud storage

42
 As the LBC Express continues to expand, the risk of getting hacking risk
increases. This means that the company should be able rent a cloud storage to protect
the data of its customers. One of the problems that people nowadays are facing is
private information theft which This reasonable assurance that the company will be able
to give will make the customer trust them more. Thus, having this will not only protect its
customers privacy but also to organize the set of information that the company has.
much easier.

Year 3: 2023
1. Making an eco friendly packages for delivery
Making eco-friendly packages for delivery would significantly be an advantage for
LBC Express since most of the companies use single-use-plastic which can harm the
environment. Also, the company can use this opportunity to be a manufacturer of eco-
friendly packages which they can sell to other courier companies.This solution is a win-
win strategy wherein the environment and the company will benefit from this.

43
 V. Strategy Evaluation

A. Revised SWOT

STRENGTHS WEAKNESSES
i. Philippines’ leading
1. Delayed delivery of
remittance and courier
packages sometimes
company
i. Pioneer in the industry 2. Misroute items
3. Number of operating 3. Unsatisfied Customer
branches nationwide Service
4, Online tracking of goods 4. Slow in terms of coping
delivered with innovations
5. Market segment is not
well defined

/ SWOT

OPPORTUNITIES / THREATS
1. Increasing numbers of ___/
online businesses 1. Intense competition
2. High demand on shipping 2. Traffic situation
J. Increasing population of
people under Class B and ^ mniiltatiAnc
C Untapped markets that can J. UUVCINIIICIIL
still be tapped [cgUlaLIUIIi

44
Strengths

LBC Foundation sought to discover approaches to make an impact over the networks that it
serves. Given this thrust, LBC tried to build up associations with key government and
nongovernment organizations, while utilizing their center capacities as a business. From youth
and network improvement, training, climate and catastrophe alleviation, LBC will probably spike
positive change in the lives of Filipinos-a target that is attainable essentially on account of the
organization's intrinsic qualities and organization.
1. LBC Express Holdings, Inc. offers various administrations to purchasers and

Micro, Small, and Medium Enterprise (MSME). The organization of LBC is a trusted name in the
Philippines since it was established in 1945 with regards to guaranteeing their records, mail,
packages, boxes, and load, everything being equal, and sizes get conveyed, an occupation they
have dominated in for more than 70 years. Besides making a difference in lives and
communities, this is a trusted partner in helping your developing organization beat difficulties
with their business arrangements.

Online sellers and other micro, small and medium enterprises (MSMEs) have become an
integral part of the country’ s economy, thus, the need to empower them to further grow their
businesses. With this in mind, the country’s major courier, cargo and logistics and remittance
provider, the LBC Express, has developed a platform that will not only address the logistics
issue, but also the financial aspect of MSMEs.

45
2. Their capacity to apply their expertise in the business, with inventive innovation, and an
innate comprehension of what carries happiness to their clients is empowering them to
keep being a benchmark in this classification. LBC approaches with certainty and
confidence that they will have the option to satisfy the needs of the peak season and
convey incredible support of their huge number of clients everywhere on the globe.
3. LBC Express sees its role as being not just a courier company, but as a warm and
friendly partner who enjoys moving packages, goods, and money for its clients. It is
continually hoping to make the way toward moving or sending bundles and loads as
proficient and simple as could reasonably be expected, regardless of whether it's a little
blessing or an enormous business shipment. For Filipinos, that administration is
priceless and is significant to the progressing development and quality of LBC Express
as a noticeable worldwide Filipino brand. The organization is answerable for dispatching
shipments through resource based transporters and masterminds shipment space for
their clients.
4. LBC granted as the network's Preferred Freight Forwarding Company and Favored
Remittance Service Provider. LBC has more than 1,252 branches in the Philippines, and
more than 60 branches in the United States and Canada. It likewise has branches in
Hong Kong, Brunei, Malaysia, Singapore, Japan, Germany, United Arab Emirates,
Spain, Kuwait, South Korea and Taiwan.
5. LBC is among the hardest contenders of Western Union. All things considered, the two
organizations are practically comparable to one another with regards to sheer outlet
plenitude. LBC Express is putting forth a valiant effort however, to beat its adversary in
reasonableness it is on the grounds that the accessibility and inclination. Regardless of
the number of areas such firms have, there are consistently puts where just one of them
is accessible.

46
Weaknesses

LBC Express Holdings, Inc. is active in the provision of facilities for logistics. It operates
through the segments of Logistics and Money. Retail clients and corporate clients are
represented by the Logistics section. Domestic and international money transfer systems are
part of the Money Segment. Below are weaknesses of LBC Express Holdings that they need to
improve on:

1. Potential customers purchase from other couriers because LBC has more expensive
packages in their courier services compared to others.
2. Competitors have better cargo delivery of products.
3. Needs more training in automatic updates of package location.
4. Customer complaints- damaged items during delivery & delayed delivery of
packages
5. LBC can improve branches that are not in good locations, crating of packages and
warehouse storage service.

Research and development is another field where distribution service providers may also
face a downside. Once more, distribution services need to continuously change and evolve. One
should not take the distribution business to the next stage without sufficient research and
development. In sales and revenue, you will quickly see your opponents outdo you merely
because they earned the benefits of having conducted extensive analysis on their internal
structure and external services.
Opportunities

The aim of LBC courier companies to produce opportunities to quantify and accurately
explain the activities needed to fulfill and accomplish a mission. Objectives describe the
strategies used by your company to attain revenue efficiency, standards of customer service
and promotional potential, as well as all other observable aspirations.
1. Achieving Financial Result

In order to emphasize the company’s financial goals, companies must have

47
specific financial goals. Goals should be optimistic, but they should still be practical and
achievable. The increase in business sales and profits may be an indication of a financial
target.
2. Improving Human Resource

The organization must hire qualified workers who can enforce the strategies and
maintain competitiveness and quality in order to function efficiently.
3. Customer Support Priority

Business administrators set priorities that focus on delivering quality customer service.
These goals aim to calculate consumer loyalty with a product or service’s expense and
overall efficiency. Reducing the supply and processing time of goods and services may
be a customer service target. Another may be to reduce the number of volume of
refunds and grievances from consumers or to increase the reaction time of consumer
inquiries.
4. Establishing Brand Recognition

Many small companies feel that brand promotion is another critical goal in the era of
social media marketing. Branding is all about marketing a product or service experience
by explaining to a customer how your organization serves a need or wish or making their
life more comfortable.
• What changes and trends in our external environment can we benefit from?
Technological progress is hitting the headlines in the courier sector, and the market is
becoming increasingly lucrative. Customers who are technologically linked are believers
in quick gratification, ease of access and seamlessness.
• Is the opportunity ongoing or is there a limited window to get involved?

Strategic alliances harness the capabilities of both players involved, opening numerous
channels and locations for us to receive remittances from all over the world for LBC in
particular. It also provides doors for potential investment prospects such as the
Philippines' external remittances, as well as tapping other nationalities around the globe.
• Is the demand growing or does it consider worth exploring other variables?

48
 Yes, a courier firm is constantly developing LBC, and here are the variables that
will make it worthwhile to try. First is the speed delivery. The time taken for your clients
to receive their products from your delivery service will have an effect on your company's
image and improve (or lessen) your potential revenue. This is because the satisfied
clients are more likely the ones who will be to avail your services again. Secondly,
evidence of availability. Any shipping firm will go a stage further and give the customers
messages letting them know the approximate date & time to receive their courier and
their delivery driver's identity. A perfect shipping experience is generated by this intimate
interaction. And last, value of service to the consumer. On social media, some
disgruntled clients might voice their problems with you, leave bad feedback or even
grumble in real life to their friends. Before any distribution issues worsen, you will want to
track the whole shipment experience your consumers get.

• What is the best way to extend activities is to build existing partnerships with
businesses which have regular needs for couriers?

First of all, many of these organizations concentrate on delivering delivery

services for legal firms, finance companies, and other specialist businesses who need to
make deliveries on the very same day on a regular basis. This is one of the key reasons
a courier service retains daily sales while improving the company's valuation. The other
way to increase operations is to employ new couriers on an ongoing basis who will
support a larger variety of business accounts. This includes a modest expenditure in
resources in order to purchase automobiles.
• How is the courier sector changed by technology?

Innovation and technology have a deep influence on the corporate world today,
making professional careers simpler and more profitable. Staying ahead of shipments is
the essential key to generating satisfied consumers for every courier business. However,
it is hard to do so, with the present scenario of uncertain 5 to 8-hour delivery periods.
That is not to consider the e-commerce revolution that produces a lot of shipments which
need to happen immediately.
The following must be observed in order to maintain its brand strategy in the

49
market. By introducing a lot of public courier engines that can make the service efficient by
providing a fast-paced style of service where couriers are delivered in advance of the anticipated
time, the expectations of the customer will be fulfilled or even better surpassed. Improvement of
IMC networks that are ideal for targeting more customers through LBC is necessary.
5. Dine-in as well as delivery services shall be allowed to operate up to 24 hours a day, as far
as practicable, to augment the additional operational requirements and serve the needs of the
public, while enhancing income opportunities for workers.
6. Untapped markets that can still be tapped like the e-wallet for example. Since the pandemic
started, the demand for online money transfer transactions also increased. LBC can use this
opportunity to come up with their own e-wallet to boost the number of their customers.
Threats

In urban areas, freight transport and package distribution have been main practices that support
the economic and social growth of the cities. At the same time, numerous issues, deficiencies
and environmental impacts, impact this sector. In this scenario, raising awareness is emerging
in order to enhance transportation industry and travel, making them extra viable and sustainable
from an economic and perspective. Furthermore, the need to improve distribution productivity as
marginal profits are diminishing has driven them in emerging technology to recognize new
delivery solutions, including drop boxes, cargo bikes, electric cars, autonomous driving and
drones. Unsurprisingly, because of the relationship and the contradictions between the
distribution options themselves, as well as the entities running them and their marketing
strategies, the incorporation between the various delivery options is not complimentary.

It is vital for valued employees who travel to attempt to work to avoid potential risks that limit the
danger of contamination. The Novel Coronavirus, otherwise called COVID-19, can be
communicated from individual to-individual contact or went on through lifeless things. Since side
effects may not show for quite a long time subsequent to getting the disease, it might stay
dynamic on things, for example, ledges, personal computers, consoles, door handles, lift
catches, and numerous others. on 16 July 2020, the IATF

50
further amended the Omnibus Guidelines and provided, among others, that "(1) the operation of
industries and establishments are subject to the visitorial and enforcement powers of the DOLE
and DTI, and other appropriate agencies to ensure compliance therewith, especially the
compliance with the provisions on maximum allowable operational capacity in establishments,
as well as minimum public health standards and protocols, and (2) the national government
agencies and instrumentalities including GOCCs and LGUs shall adopt measures lawful and
necessary to implement and enforce the minimum public health standards;”
Threats facing our distributors that would have an impact on LBC are:

1. Legal problems, such as liability issues, dispute settlement, contractual irregularities, non-
compliance with laws and liabilities,
2. Software, such as device crashes and concerns relating to the use of redundant facilities.
3. Health and safety at work, such as injuries caused by products, machinery, or the location
of your workplace.
4. Security, such as kidnapping, theft, intellectual property loss, terrorism, racketeering and
online security fraud.
5. Services and infrastructure, such as faults or interruptions in the provision of commodities.

6. The market, such as shifts in the choice of buyers and intensified competition. Major Risks

faced by courier companies:

1. Fluctuating prices of petrol

2. Fleet drivers' reckless conduct/driving
3. Heavy traffic than average, leading to sudden spikes in costs and delays
4. Problems with the vehicle
5. Parcels missing
6. Failure of engines, which increases maintenance costs
7. Trouble in finding the location of courier dispatches
8. Special protection for delicate things
Additional Threats:

51
1. Like 2GO, PalawanExpress and many other courier and remittances who disrupt the
arrival of their goods or packages, LBC Express is currently facing issues that lead to
customer dissatisfaction.
2. Lack of notice from the client or guidance to inform the user on any issues and
difficulties experienced during the distribution period.
3. Issues with their monitoring system and distribution system because often, they return
back the package to its sender, whenever they are not able to contact the
recipient/receiver.
4. Increasing market share of other courier companies like 2GO, PalawanExpress and
many others

52
VI. References

About. (2020). Retrieved from LBC Express: https://www.lbcexpress.com/about

Gomez, T. (2009, August 25). History Of LBC, The Philippine's Finest Courier Company. Retrieved
from PRLOG: https://www.prlog.org/10320708-history-of-lbc-the-philippines-finest-courier-
company.html
(2017, August 25). Retrieved from
http://www.lbcexpressholdings.com/files/2017/08/30/631 /08292017_2016_
AGM_Presidents_Report. pdf
(2020, July 13). Retrieved from Valens Research: https://www.valens-
research.com/dynamic-marketing-communique/track-your-parcel-how-
this-company-maximized-its-marketing-strategies-to-reach-everyone-in-
the-country-and-the-world-monday-marketing-marvels/
Loyola, J. A. (2018, July 10). LBC Express expands network, going digital .
Retrieved from Manila Bulletin: https://mb.com.ph/2018/07/10/lbc-express-expands-network-
going-digital/
Enterprise Asia. (n.d.). Retrieved from https://apea.asia/philippines/hall-of-fame-ph-2018/lbc-

express-inc/
Loyola, J. A. (2019, May 24). LBC profit grows 91% to P1.34 B . Retrieved from Manila Bulletin:
https://mb.com.ph/2019/05/24/lbc-profit-grows-91 -to-p1 -34-
b/#:~:text=LBC%20Express%20Holdings%2C%20Inc.%2C,92%20million %20in%202017
Esmael, L. K. (2020, July 26). Corporate News. Retrieved from The Manila
Times: https://www.manilatimes.net/2020/06/26/business/companies/lbc-income-drops-to-
p476m-last-year/735323/
Castillo, J. (2020, August 12). Business Tech. Retrieved from Manila Bulletin:
https://mb.com.ph/2020/08/12/lbc-empowers-filipinos-amid-covid-19/
Whelan, S. (2017, October 18). News. Retrieved from THELOADSTAR:
https://theloadstar.com/lbc-express-growing-e-commerce-drives-logistics-
boom-philippines/
Macahilig, L. (2020, August 14). Stories. Retrieved from Magzter:

53
 https://www.magzter.com/article/Newspaper/Manila-Bulletin/LBC-EMPOWERS-
FILIPINOS-AMID-COVID-19 Almonte, L. (2020, July 6). Retrieved from Portcalls:
https://www.portcalls.com/lbc-express-income-jumps-2378-in-q1/
(2019). Retrieved from lbcexpressholdings:
http://www.lbcexpressholdings.com/files/2020/06/22/1229/06_19_2020_P
SE_17-A_Annual_Report_with_attachments.pdf Labor Force. (2020, September 3).
Retrieved from Philippine Statistics Authority: https://psa.gov.ph/content/employment-
situation-july-2020#:~:text=Unemployment%20rate%20in%20July%202020,17.7%20pe
rcent%20during%20April%202020
Best Practices. (2020, April 8). Retrieved from Employers Confederation of the

Philippines: http://ecop.org.ph/best-practices-of-lbc-express-inc/
(2020, April 1). Retrieved from Official Gazette:
https://www.officialgazette.gov.ph/downloads/2020/03mar/20200401-IRR-
RA-11469-RRD.pdf
David, F. R. (2011). Strategic Management CONCEPTS AND CASES. One Lake
Street: Pearson.

54
 VII. Appendices A. Results Charts

and Graphs
Gender
54 responses

0 Female •
Male

From the 54 people who responded in the survey, 40 or 74.1% of the respondents are
female while 14 or 25.9% of the respondents are male.

Occupation:
54 responses

0 Student 0
Employed 0
Unemployed

The 54 respondents’ occupation varies. Majority of the respondents are students, which
is 33 or 61.1%, followed by the employed, which is 12 or 22.2%, and lastly the unemployed,
which is 9 or 16.7%.

55
 1. How often do you avail courier/shipping services?
54 responses

9 Always 9
Sometimes 9
Rarely 9 Never

Of the 54 respondents, 19 or 35.2% of them always and sometimes avail the

courier/shipping services. While 16 or 29.6% of the respondents rarely avail the courier/shipping
services.

Of the 54 respondents, majority or 33 (61.1%) respondents chose LBC as their

preferred courier/shipping service. 32 (59.3%) respondents chose Ninja Van as their preferred
courier/shipping service. 26 (48.1%) respondents chose JRS Express. 8 (14.8%) respondents
chose J&T Express. 3 (5.6%) respondents chose Quad X and 10 (18.5%) respondents chose
other mode of courier/shipping service.

56
 3. (In relation to #2), What is your basis for choosing this/these company?

First choice Second Choice Third Choice

In relation to the chart above, the first choice/basis of the 54 respondents for choosing
their preferred courier/shipping service is because of the shipping price followed by the speed
and efficiency and then the reliable tracking information and followed by the professional
packaging and lastly, for some other reason. The second choice/basis of the respondents was
courier/shipping service’s speed and efficiency followed by the price and then its professional
packaging and then its reliable tracking information and lastly its fewer size restrictions. For the
third choice/basis of the respondents, majority chooses it because of their price followed by the
professional packaging and then its fewer size restrictions next is the reliability of tracking the
information and lastly, its speed and efficiency.

4. Have you ever tried the services of LBC Express?

54 responses

# Yes
• No

Majority, 48 or 88.9%, of the respondents have the services of LBC Express while 6 or
11.1% haven’t yet tried the services of LBC Express.

57
 5. (In relation to #4) If yes, what services did you avail?
48 responses

Shipping services

Money remittance services

E-commerce payments (COD,

COP, etc.)

Business Solutions I

For those who’ve tried the services of LBC Express, 40 or 83.3% of the respondents
availed the shipping services. 23 or 47.9% availed the money remittance services. 13 or 27.1%
availed the e-commerce payments (COD, COP, etc.). 3 or 6.3% availed the business solutions.

For those who haven’t tried the services of LBC Express, their reasons vary. They said
that it is expensive compared to other courier/shipping companies. Some haven’t encountered it
yet. Others aren’t familiar with the system of LBC. They find that other courier/shipping services
are more accessible. Lastly, LBC Express is too well-known compared to its competitors and the
price ceiling is too high.

58
 7. How often do you avail/use LBC's service
54 responses

9 More than once a month #

Once a month 9 Once every
three months 9 Once every six
months 9 Once a year 9 Never

Of the 54 respondents, 14 or 25.9% use the LBC’s service once a year followed by 10 or
18.5% who use it more than once a month. 9 or 16.7% respondents use the LBC’s service once
every three months. Once every six months, once a month, and never all have equal 7 or 13%
of the respondents in each of them.
8. What is your preferred method of availing their service?
54 responses

9 In person 9
Telephone 9 E-mail
9 Via LBC application 9
Online website 9 Others:
9 N/A

46 or 85.2% of the respondents preferred to go in person when availing of the service of

LBC Express. 2 or 3.7% chose to avail it either by email or via LBC application. 1 or 1.9% chose
to avail it through telephone or online website or other means or it is not applicable for them.

59
 9. What are you using these services for?
54 responses

0 Business 0
Personal use •
Both

37 or 68.5% use the LBC service for personal use and 5 or 9.3% use it for business.
12 or 22.2% both use it for personal and business.

10. Do you agree with the pricing LBC offers for the type of shipment you avail?
52 responses

0 Ves 0
No

40 or 76.9% agree with the pricing set by LBC for their shipping fee. 12 or 23.1 % don’t
agree.

60
 For those who don’t agree with the price set by LBC for their shipping fee, here are
some of the reasons by the respondents.

12. How familiar are you with LBC Express?

54 responses

9 Extremely familiar 9
Very familiar 9
Somewhat familiar 9 Not
so familiar at all 9 Not
familiar at all

20 or 37% of the respondents answered that they are somewhat familiar with LBC
Express. 15 or 27.8% answered that they are very familiar. 14 or 25.9% answered that they are
extremely familiar. 4 or 7.4% answered that they are not so familiar at all. 1 or 1.9% is not
familiar at all with LBC Express.

61
 13. How would you describe your overall opinion of the brand?
54 responses

0 Extremely favorable 0
Very favorable 0
Somewhat favorable 0
Not so favorable 0 Not
favorable

26 or 48.1% of the respondents are somewhat favorable of LBC Express. 24 or 44.44%

are very favorable. 4 or 7.4% are extremely favorable.

14. How likely would you recommend LBC Express to your f riends/colleagues? (5 being the
highest and 1 being the lowest)
54 responses

28 or 51.9% of the respondents would highly recommend LBC Express to their

friends/colleagues. 18 or 33.3% would recommend it to their friends/colleagues. 8 or 14.8%
would very highly recommend it to their friends/colleagues.

62
 Rate the following services of LBC Express from 1-4. (4 - very satisfied. 3 - satisfied, 2 -dissatisfied, 1 -
very dissatisfied)

Affordability/Cost Quality of products Uniqueness Quality of packaging Speed of shipment Customer service
being shipped

In terms of affordability/cost, majority or 31 of the respondents are satisfied followed by

the 12 who are very satisfied and then with 8 who are dissatisfied followed by 3 with who are
very dissatisfied. In terms of the quality of the products being shipped, 29 of the respondents are
very satisfied and 25 are satisfied. While in uniqueness, 29 are satisfied, 14 are very satisfied,
10 are dissatisfied, and 1 is very dissatisfied. For the quality of packaging, 27 are very satisfied,
26 are satisfied, and 1 is dissatisfied. In terms of speed of the shipment, 36 are satisfied, 13 are
very satisfied, 3 are very dissatisfied, and 2 are dissatisfied. For customer service, 39 are
satisfied, 10 are very satisfied, and 5 are dissatisfied.

63
B. Financial Statements

for
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STAMPED "RECEIVED.'
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CONTACT PERSON INFORMATION
ibe Mt^RRsd csriact mr RUST Be an Odor «f s» Copvakr
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i _ CONTACT PERSON*. ADOREss

64
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 17) Receivables (Notes 5. 8, 13, Pl.838.629.131 PI ,548.935.345
14. 17 and 18) 718359,131 1.582.609349
Due from related parties (Notes 14. 17 and 18) Investment at fair value 405.424*317 2.548.124
through profit or loss (Notes 7,17 and 18)
Prepayments and other current assets (Note 6 and 10) 1.046.312 1.009.832
18.198.795 10.040.713
Total Current Assets 2.981.857.686 3.145.143363

Noncurrent \ssets
Investment in an associate (Note 8) 227.916.452
227.916.452 L930354.146
Investment in subsidiaries (Note 9)
2.194.053.032
Deterred tax assets (Note 16) 439.823.608
533.038
Advances for future investment rn shares (Note 14) Other noncurrent
assets (Note 6 and 10) 388*350,925
Total Noncurrent Assets 2,810.853,447 2.598394J06
1*5.792.711,133 P5.743.437369

LIABILITIES AND EQL1TY

Current Liabilities
Accounts and other payables (Notes 11 and 17) Dividend payable (Notes 14. 17 P6.795.180
and 18) 14,775350 P21335.719
Due to related panics (Notes 14. and 17) 43.741 285.173.094 266.771
Total Current Liabilities 21.614.171 306,675384

2.048.681361
Noncurrent Liabilities 1.406,175.427
1347,021.058
Derivative liability (Notes 12. 17 and 18) Bond payable (Notes 12, 17 and 18) 1.108.417.074
Deferred tax liability (Note 16) 4.796.731
Total Noncuncnt Liabilities 3395.702.619 2.519389332
3317316.790 2.826.064.816

Equity 1.425.865,471 1.425.865.471

Capita] stock (Note 13) ^ ^ Additional paid in capital \ ' 55.420327 55.420327
Retained earn mgs \ — - 994.108345 1.436.086.955
Total Equity \ 2.475394*343 2.917372.753
\ — — «^\^ *** P5.792.711,133 P5.743.437369

See dcrneqpum m* Xatex to Parent Compam Fn

LBC EXPRESS HOLDINGS, INC.
(Formerly Federal Rtmrm lavestreent Groap lac.)____
PARENT COMPANY STATEMENTS OF COMPREHENSIV E INCOME

Vears Ended December 31

2019 2018

INCOME P7 23.002,743PI .582.594.366

Dividends (Notes 9 and 14) Service fees (Note 14) Interest (Note 4. 10 30,872.114 29.929.719
and 14) 43.078.225 23.164.559
796,953.082 1.635.688.644

OPERATING EXPENSES (Note 15) 51,687.177 48.013.659

OTHER INCOME (EXPENSE) (642,506.134) 454.198.052 9U

Gain (loss) on derivative (Note 12) Foreign exchange gam (loss) - net (9,571.924) 10.437
Interest expense (Note 12) (183.923.419) (161.654374)
Others - net (Note 7) 101,745 3.913.821
(8350199,732) 387.667.936

INCOME (LOSS) BEFORE INCOME TAX (90.633.827) 1.975.342,921

PROV ISION FOR (BENEFIT FROM) INCOME TAX

(Note 16) (5,121.785) 4.825335

NET INCOME (LOSS) (85.512.042) 1370.517.686

OTHER COMPREHENSIVE INCOME — —

I
See atxrmtpaming -Vmcj m Parent Com/tan Fauna ui/ SunrmrutM

TOTAL COMPREHENSIVE INCOME (LOSS)

i PI.970.517.686
LBC EXPRESS HOLDINGS, INC.
(Foraerij Federal Rtwnrtw iRvntmfil Group lx.)__
PARENT COMPANY STATEMENTS OF CHANGES IN EQUITY

Star* Retain.*
Capital Skat.
iNote Hi_frtlt__T—*
Far flu tear ended Drtt other 31. 2*1*
HaUwntialJiaaan l.#W IMHMin PI.43ajl0fc*S« pz.oi\ra?«

Net lot. - - (13.511.9421 (*5<12JM2>

• (Rt.tH.M2)
Total eompreheatr, e lam Ditirfrail' declared
(Note Ml _ (3ta.4afc.JaR) (3t*.4**Ja*i

Rtlaacn at of
Dre rather 31. 2R14 FWMJUW71 P55^:*jr Poa4.iM.t4t P2.4TSJ44J4J

Retained
Share
Capital Share Fan tags
(Not. 13| (Oeficni iNote 111 Total

For Ifcc twt tadri Detarta 31. MII

Balance a* J< January 1.1019 PI .425 *»5.4?1 P5 5,420.32? (P24>>.23’fc37> Pl.232j02R.lfcl

CimprcftaiMte tacomc Nel income — l.*?0JlTj*a uruiijM

Other oaanprahcnarvc naeotnc • — • —
Total camprchceeint inct'Ote Dividend, • 1.979L51~6*4 |.4?0^t?fc*fc
deviated 1 Note 14) (2*5.173.0*41 l2*5,|73,044>
Balance, aa of
December 31.2019 Pt.423JlnJ.471 P55.420.32? pl.43*.0Rfc.«35 P2.<*ITJ?2.75>

Ser annmpam mg Atari (■> Parent Cnmpatn Ftnmrtai Siutcmtmtt

:
iv_ ► * -> ’ ~

77
LBC EXPRESS HOLDINGS, INC.
(Formerly Federal Rtwarew luvatmut Gr—p IK.)_
PARENT COMPANY STATEMENTS OF CASH FLOWS

Years Ended December 31

2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES

Income i loss I before income In Adjustments for:
(P49.633.S27l PI.975.342,921
Interest expense (Note 12)
Unrealised (air value gain on tm estment 1*3.423.419 161.654.374
at fair value through profit or loss (Note 7) Interest income
(Notes 4. 10 and 14) (36.4*0) (9.832)
Unrealised foreign exchange loss (gain) - net Loss (gain) on (43.078325) (23,164.559) (9U
derivative (Note 12) 4,571.424 10.437)
Dividend income I Notes 9 and 14)_ 642306,134 (454.19S.052)
(723,002343) (1382394366)
Operating loss before changes in storking capital (20.749.740) (14.179.951)
Changes in working capital

(10-075318) 3.666.122
Decrease (increase) in Receivables (16.116.0861 (7.086359)
Prepayment! and other current assets Other noncunent assets Decrease in (340355.625)
accounts and other pavablcs (12.854.784) (4.187.623)
(444.651.616) (21.787311)
Net cash used in operations Interest received 42.127.088 23.164359
Net cash provided bv (used in) operating activities (462324328) 1376.748

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds hum redemption of investment at fair value through profit or loss 617.757,777
Advances for (inure investment m dares (Note 14) 20.600.060
(439.823.608)
Dividends received (Notes 18 and 19)
1.092.480341
Acquisitions of
Investment m an associate (Notes 8 and 19) (218365.077)
Investment at (air value through profit or loss (Note 7) (20.000.000) (328,580.000)
Investments tn subsidiaries (Note 9) (16366.600) (359.861.780)
Increase in due from related parties (Notes 14 and 19) (216.460.044) (150.081.862)
Net cash provided by (used in) tnv csting activities 865313.442 (878.854350)

CASH FLOW S FROM FLNANCLNG ACTIVITIES

266.771
Decrease in due to related parties __
Dividends paid fk (121.750.437)
Net cash provided by (used in) financing aqnvittes (121.750.437) 266.771

--- T
NET INCREASE (DECRE.ASE) LN CASH AXlfCASH EQI IV.VLEM s _---—-
341.038.477 (877311.031)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON
CASH AND C ASH EQUIVALENTS (51345.141) 141.7Rg.0T7
S
CASH AND CASH EQUIVALENTS AT BEGLN'N'ING OF YEAR 1348.935345
23843583
CASH AND CASH EQI l\ \t EN1S AT F.ND OF VEAR(Notc4) PI,838.624,131 Pl.548.935345 98

Srr im umpu ly .Wan to Ami Comfumy Fmam ial StgMmfc

4. Cash and Cash Equivalents

This account consists of:

_2019_2018
Cash in banks PI 08,222,231 P172,066,438
Cash equivalents 1.730.406,900 1,376.868,907
FI,*38,629,131 FI,548,935,345

Cash and cash equivalents earn interest at the respective bank deposit rates. Cash equivalents include short-
term placements made for varying periods of up to three months depending on the immediate cash
requirements of the Parent Company and earn interest at the prevailing short-term placements rates.
Cash and cash equivalents earn interest at the prevailing bank deposit rates ranging from 0.25% to 6.00% in
2019 and 2018. Interest income earned from cash and cash equivalents amounted to P34.21 million and
P23.16 million in 2019 and 2018, respectively.

5. Receivables

This account consists of:

2019 2018
Dividend receivable (Note 14) P708.002.743 FI,582.594.366
Accrued interest receivable 466.087 —
Other receivable 10,090,301 14.983
P718^59.131 P1.582,609.349

Dividend receivable pertains to unpaid cash dividends from LBC Express, Inc. (LBCE), a subsidiary of the
Parent Company.

Accrued interest receivable pertains to the accrual of interest from loans receivable from Transtech Co.,
Ltd. (see Note 10).
Other receivable pertains to the receivable of the Parent Company from third parties.

The Parent Company’s receivables are expected to be realized and fall due within one year after the
reporting period.

79
6. Prepayments and Other Current Assets

TTjts account consists of:

2019 2018
Loans receivable (Note 10 and 14) Input Pt94.440.2O5 P¬
value-added tax (VAT) 8.2X3,594 5,804.480
Prepaid expenses 2.445.094 2,445,094
Creditable withholding Luxes (CWTs) IJ7635X 40*9 800,326
Deferred input VAT__ 1.789.582
406^49,720 10,839,482
Less allowance for impairment losses Less 798,769
noncurrcnt portion (Note 10 and 14) 3883S03IS
P18.19X.795 PIQ.040,713

Loans receivable pertains to receivable of the Parent Company from Transtech Co., Ltd. and 1 B< L (see Note 10
and 14).
Input VAT arises from domestic purchases of goods and services and is offset against output tax. Management
believes that the remaining balance is recoverable in future periods
Prepaid expenses pertain to advance payment of service fee for cloud subscription services (sec Note 14) The
service fee is paid at the beginning of each quarter
CWTs are attributable to taxes withheld by the withholding agents which are creditable against the income tax
payable
Noocurrent portion pertains to die nooctirreat portion of the Parents Company’s loans receivable to Transtech
Co., Ltd (see Note 10) and LBCF. (sec Note 14).

7. Investment at fair value through profit or loss (FVPL)

Investment at FVPL represents the Parent Company’s investment in unit investment trust fund. Movement of the

investment at FVPL follow:

2019 2018
Balance a1 beginning of penod PI,009.832 P290,177,777
Additions 20,000,000 328.580 000
Redemption (20,000,000) (617,757.777)
Unrealized fair value gam during the year 36.480 9.832
PI ,046312 PI.009.832

In 2019 and 2018, the Parent Company recognized unrealized fan value gam of P36.480 and P9.832 related to
investment at FVPL. This is presented under “Others - net" of “Other income (expenses) in the statements of
comprehensive income
8 Investment in an Associate
On March 19.2018, the Patau Company invested in Orient Freight International. Inc. (OFII), a company
involved in freight forwarding, warehousing and customs brokerage businesses operating within the
Philippines.
The Parent Company subscribed to 3,285,714 common shares out of the unissued capital stock of OFTI at a
subscription price of P44.40 per share for a total investment ofP145 89 million. On the S3 HUT date, the
Parent Company purchased 1,150,000 secondary shares at M3 43 per share for a total consideration of
P72.94 million 6cm Rayomar Management, Inc. (RM1). These acquisitions contribute a total ownership of 30%
on OFII for a total coat of shores of P218.83 million.
In relation to the acquisition of shares, the Parent Company shall also exert commercially reasonable efforts
to direct a certain amount of additional annua! recurring logistics service business to OFII for a period of
five years from closing date.
The Parent Company incurred costs directly attributable to the investment amounting to P9.09 million
which was considered as part of cost of investment.
The Parent Company’s interest in OFII is accounted for using cost method less any accumulated
impairment in value.
The fair values of the financial information of the Parent Company's investment in OFII as at the date of
acquisition follows:

Current assets P499.483.690

Noocurrent assets 107.949,001
Current liabilities (207.702.753)

Equity 366323,175
Share in equity - 30% 109,956,952
Excess of purchase price over fair value of net asset Costs 108,873350
directly attributable to the investment 9,086350
Canvine amount of the investment P227.9I6.452

No impairment loss was recognized for the investment in associate in 2019 and 2018.

The summarized statement of comprehensive income of the associate from January l to

December 31,2019 follows:

Revenue PI 334,969.460

Net income 87.181373

Other comprehensive income 1347.878
lota! comprehensive income P88.729.45l

On June 6,2019, LBCH recognized dividend income from OFII amounting to P15 00 milhon for its
30% interest on OFJL

81
9. Investment in Subsidiaries

The Parent Company's investments in subsidiaries accounted for under cost method accowntmg adjusted for impairment
losses, if any, and the related percentage of ownership are shown below.

Country of Principal
lnccrpi ration acbVKrcs Ownership 2019 2018
Logistics and
LBC Express. Inc Philippines money rcmitsnce loos2

United Stales Logistics and

! BU 84.670,966

LBC Mondial Corporation of America money ran nance 100% 3dt.M7.534 —

LBC Express Airfreight tS) PTE. Logistics
LTD Singapore 100% 125,01X5*5 129,013.5*5
LBC Australia PTY Limited Australia Logistics 100% 98.462,863
LBC Mabuhay North .America United States Logatfics and
Corporation of America money remittance low 59,894,464
QsadXPte Lid Singapore Digital iogistira &b% 34.3de.b59 36>W;659
LBC Mabubay Remittance Sdn Bbd Brunei Money remittance 50% 34,160x598 30.166,598
l HC Mabuhay (Malaysia) Son Bbd Malaysia Logistics 93% 24,682,710 24.682,7)0
United Stales Logistics and
LBC Mabuhov Hawaii Corporation of America money renuttaece 100‘S 17.521.684 —
LBC Mabuhay (3) Sdn Bbd Brunei Logistics 50% ltjiX-n) 1203X413
Logaocsaod 10.782,538
LBC Vtabohav Saipan Inc Saipan money remittance 100% 10,782338
LBCParent
The Money Company,
Transfer PTY [.muled it ownsAustralia
although 50% of theMoney remittance
voting share of LBC100%Mabuhay (B)I0J92J54 I0J9X254
Sdn Bhti and LBC
Met maid Co..
Mabuhay Lad
Remittance Sdn Bbd, in substance Japan
controls saidI^ignaks
entities since:100% 11206,64*
(a) the activities of the subsidiaries—
LBCbeing
are Aircargo (S) Pic Ltd
conducted Singapore
on behalf of the Parent Lngttiaato its specific
Company according 100% business '300,160
need so that 7.800.160
the
E-con web and
Parent Company obtains benefits from the subsidiaries' operations; and (b) the Parent Company has the
OL’ADX IDC
decision-making powers to obtain thePhilippines IO0SIK3
majority of the benefits of the activities- of the subsidiaries.
- 186.021.400
42.194.053dm PI.9 30554.146
No allowance for impairment loss was recognised in die Parent Company's financial statements in 2019 and
2018

QUAPXfcK
On March 19, 2018, through a Deed of Assignment, LBCt assigned its receivables from QIJ ADX Inc. to the
Parent Company amounting to P186.02 million On the same date, the Patent Company and QUADX Inc
entered into a Subscription Agreement to subscribe and issue a total of 1,860,214 shares of stock of QUADX
Inc through the conversion of the assigned advances to equity which represents 86.11% ownership by the
Parent Company. The increase in authorized capital stock of QUADX Inc. was approved by the SEC on
June 14,2018 QUADX Inc owns and operates e-commerce websites and primarily offers shipping, re-
packing and consolidation facilities, multipayment platforms, and digital services that serves clients in the
Philippines
On May 29. 2019, LBCH sold all its 1,860,214 common shares m QUADX Inc. to LBCE for PI 86,021,400
or PI 00 per share payable no later than two years from the execution of deed of absolute sale of share,
subject to any extension as may be agreed in writing by the parties

82
 LB C Express Airfreight (S) Pte. Ltd.. LBC Aircareo fS) P»C- Ltd., LBC Mangy Iiy^ferPry Lanas) and LBC
Australia PH' limited
On June 27. 2018, the BOD of the Parent Company approved the purchase of shares of various overseas entities. On
the same date, the following Share Purchase Agreements (SPAs) were executed H>- tin- Parent Company and Jamal
Limited, a transitory seller, for a total purchase pnee of L’S $4.60 million or R245.67 million under the SPAs. Jamal
Limited, a third party, purchased these entities from Advance Global Systems Limited, an entity under common
control prior to sale to the Parent Company.

Details follow

Entity Name___
I.HC Express Airfreight (S) Pic Ltd- (LBC Singapore) 10,000 52.415.035 Cargo Singapore
LBC iVncM-go (S) Pte- Ltd. iLBC Taiwan) 04.901 146.0 n Cargo Taiwan
LBC Money Transfer PTY Limited (LBC A ultra ha. to 194.5',5 Rcimnancc Australia
Money)
LBC Australia PTY Limned (LBC Australia Cargo) 22L500 1.843.149 Cargo Australia

The transfer of the ownership of the shares and all rights, titles and interests thereto shall lake place following
the payrocn! of the considerations defined. These entities operate as logistics and money remittance companies
on the countries where they are domiciled.

LBC Mabuhay (Malaysia) SDNJBllD _

On August 15.2018. the Parent Company approved the acquisition of 92.5% equity ownership of LBC Mabuhay
(Malaysia) SDN BHD (LBC Malaysia) for a total purchase price of US $461.782 or P24.68 million LBC Malaysia
engages in the business of courier services in Malaysia
LBC Mabuhay <B) Sdn Bbd and L-BC Mabuhay Remittance Sdn Bhd
On October 15, 2018, *c Parent Company acquired 50% ownership of LBC Mabuhay Remittance Sdn Bhd and
LBC Mabuhay (B) Sdn Bhd for total purchase pnee of US $557,804 and US S225JJ65, respectively, equivalent to
P42.39 million. These entities operate as logistics and money remittance companies in Brunei, respectively.
Dividend Declarations of a Subsidiary
On November 29,2019 and December 20, 2018, the BOD of LBC F. approved the declaration of cash dividends
amounting to P70®,00 million and R1.582-59 million. respectively (see Note 13 and 14).

10. Receiv ables aid Trademark Agreement with Transtech

On September 25, 2019. LBCH extended a 15-vear 2.3% interest-bearing loan tn Transtech Co. Ltd (Transtech)
amounting to $! .80 million Transtech, an entity incorporated in Japan, is involved in freight forwarding, warehousing,
and packing business. Its services include forwarding of Balilrbayan boxes from Japan to the Philippines.
Transtech shall pay interests on a quarterly basis. The Loan Agreement also constitutes a pledge by Transtech on its
trademark for the benefit of LBCH, to secure LBCHTs claims to the repayment of the loaned amount in case of default
as defined in the Loan Agreement

83
Subsequently, on September 30. 2019, Transtech granted LBCH in exclusive license to use its
registered trademark subject to restrictions. LBCH may. in its discretion, use the trademark in
combination with any text, graphics, mark, a* any other indication. As consideration for the
exclusive use oflicense, LBCH shall pay royalty of S0.13 million annually.
In 2019, LBCH incurred royalty fee amounting to FI .59 million wherein the related payable was
offset to LBCH's accrued interest receivable and loan receivable from Transtech amounting to
P0.06 million and FI .53 million, respectively.
As of December 31,2019, the outstanding balance of the loans receivable amounted to F89.82
million, P6.09 miHioo of which is presented under ‘Prepayment and other current assets'
representing short-term portion and the long-term portion of P83.73 million is presented under
Other nonewrent assets'. Interest income aimed amounted to PQ 53 million in 2019

Aceonnts and Other Payables

This account consists of:

2019 2018
Accruals:
Professional fees FJ,502.tMO FI ,630308
Dues and subscriptions —* 7399.764
Deferred output V AT 2-584.113 579,297
Accounts payable 294.921 559,109
Output VAT 135,129 927332
Withholding lax payable 23.674 33J231
Subscription payable • 9,651,375
Other payable 255y303 255303
P6,795,180 P21.235.7I9
Accrued professional fees relates to audit fees and directors' fees. Accrued dues and subscriptions
pertain to the monthly accrual of data cloud subscription. Accrued taxes include output VAT
payable which are settled monthly'.
Deferred output VAT arises from the uncollected receivables from vatablc service fees.
Accounts payable arises from regular transactions with suppliers and service providers These are
nomnterest-beanng and are normally settled on one te 60-day term
Withholding tax payable penains to taxes withheld on payment to suppliers which arc settled on a
monthly basis.
Subscription payable pertains to the unpaid subscription to the shares of OFU which was settled in
2019.

34
 -28-

12. Convertible

Thjs account consists of;

2019 2018
Derivative liability Balance at
beginning of year PI,406,175,427 PI.860.3 73,479

fair value Jess (earn I on derivative

F2.f48.681.56t FI.406.175,427
Bond payable
Balance al beginning of year PI.108.417,074 P806.185.059
Accretion of interest 182,124,669 159.106,145
Unrealized foreign exchange loss (gain ) (45 J 19,435) 50.577,641
Amortization of issuance cost 1.798.750 2.548J29
Fl.247.f21.058 Pl.108.417.074

On June 20, 2017, the BOD of the Parent Company approved the issuance of convertible instrument The proceeds
of the issuance of conv ertible instrument will be used to fund the growth of the business of the Parent Company,
including capital expenditures and working capital Accordingly, on August 4, 2017, the Parent Company issued, in
favor of CP Briks Pec Ltd (CP Bnks), a seven-year secured convertible instrument in the aggregate principal
amount of USS50.0 million (P2.5I8.25 million) convertible at any time into 192,307,692 common shares of the
Parent Company at the option of CP Briks initially at PI 3.00 per share conversion pncc. subject to adjustments and
resetting of conversion price in accordance with the terms and conditions of the instrument as follow:
• effective on three years (3) from issuance date (the Reset Date) - if the 30-day Trading Day Weighted Average
Price (TDWAP) of the Parent Company's common shares on the Principal Market prior to the Reset Date is not
higher than the initial conversion price, the conversion price shall be adjusted on the Reset Date to the 30-day
TDWAP prior to Reset Dale;
• upon issuance of common shares for a consideration less than the conversion pncc in effect -the conversion
price shall be reduced to the pnee of the new issuance;
• upon subdivision or combination (i.ft. stock dividend, stock split recapitalization or otherwise) - the conversion
price in effect shall be proportionately reduced or increased; and
• other events or voluntary adj ustment
The convertible instrument (to the extent that the same has not been converted by CP Bnks as the bolder ot by the
Parent Company) is redeemable at the option of CP Briks, commencing on the 30*1 month from the issuance date
at the redemption price equal to the principal amount of the bood plus an internal rate of 13% (decreasing to 12%,
11% and 10% on the 4th. 5th and 6th anniversary of the issuance date, respectively). The agreement also contains
redemption in cash by the Parent Company at a price equal to the principal amount of the bond plus an internal rate
of 13% (decreasing to 12%,
11% and 10% on the 4th. 5th and bth anniversary of the issuance dare, respectively) in case of a Change of Control
as defined under the agreement
The Parent Company also has full or partial right to convert the shares subject to various conditions including pre-
approval of the PSE of the listing of the conversion shares and other conditions to include closing sale price and
daily trading volume of common shares trading on the Principal Market and upon plan of offering, placement of
shares or similar transaction with common share pncc at a certain minimum share price.

85
13. Equity

Capital Stock
As at December 31,2019 and 2018, the details of the Parent Company's common shares follow;
Number of
__Pares of Stocks_Amount
Capital stock - PI par value
Authorized 2,000,000,000 P2.000.000.000
Issued and outstanding___1,423.865,471 1,425,865,471
Retained Earning?
On September 12,2019. tbe BOD of LBCH approved the declaration of cash dividends amounting to
P356 47 million.
On February 8.2019 and November 4, 2019, through a Memorandum of Agreement, LBCIX
assigned to LBCH a portion of its payable to LBCE amounting to F229.37 million and P263.92
million, respectively. On March 18.2019,1.BCF. paid stockholders of LBCH amounting to PI 1.82
million. Tbe same amounts were offset against tbe dividends pay able of LBCE to LBCH (see Note
18).
On December 20.2018, tbe BOD of LBCH approved the declaration of cash dividends amounting to
P285.17 million.

14. Related Party Transaction'

In the normal course of business, the Parent Company transacts with related parties consisting of its
ultimate parent company, its subsidiary’ and its stockholder 3nd officer. Affiliates include those entities in
which the ow ners of the Parent Company have ownership interests. These transactions include loans, cash
advances, dividends and dues and subscription Except as otherwise indicated, the outstanding accounts
with related parties shall be settled in cash. The transactions are made at terms and prices agreed upon by
the parties.

86
Details of related part} transactions and halances as at and for the yean ended December 31,2019 and 2018 are as
follow:

MW
AaMK'Vitan |Uatv«M* Tent Oarfitioiu

jutarfiVT
Liisecnd.
a.) Service let Mtiam 1W—^-b-na,. ao JB^QtClCCXl
ta»arai cernn^; das mi dexjnSaMe I'nsecrcd.
b | Cub ukstrea IJ5.Qfle.000 BO natrrrcni
Nrai-cnfcroe beartnj, ■One mA Dbccvrcd, no
e.) Dnpmat at Mbkuliary i ba .At l.aoo 116,011.400 dnundnMc mmparmmi
Non-iMaed beanny: LuarewwLao
d 1 Diviiteadl r»mni and receivable ?0SJ«1.?43 7MJK.749
htfcTcttbaa/mg. fixed qaarcr.y Laeccurrd. an
e.) LOM r«rci*»Mr~ cum*: poraoa It.wMWO pavocob
iiHcro: bonne. tec and dasaadahic UawcaeBL ao
hual income tjsa.u* 411M*
■npMTncat

Nao-ureTtii bejaaqr. due and

I
Officer* (HMMT* f) Kdvmetz iktsaadablr
nLdiqao :*.4n.uc

AnetotM Imwal a>

Noo-mmsa bcuioa:
[ ) Dtvnfcnd* ewticd and receivable clue Mi deeumkklr

Uuyti^d wo
laaerea beanas*. lived qnanal..
c-1 Umq tecex>altfr cao^cau P““» H04.MI.ilJ fiff\j£l3StS paytaots

PaeixT-bari rmi'.**

h i Davidcrdi drckied
RM.4bk>M
M4.775J50 Nan mnrra Veer-ay, Nee-ewe* ■—■
Officer /.fffv&vrorl 43,741 heanac.
H4.S18.WI

1010
AowuntVnbiinr Itccccvehfc Tenc* Condanai

Cat fora s rifartrt reify

ShAndurr
W.540.134 Utecoued,
a.) Snvn in d| £>viiknda ococH ml 0W.02fl.71*
receivable Leacared. an
>) .Idviico fair acqiuunoa of 1,5*2.504 :M 1,501,594,364 Kekeminc^. due tad tfceuudaMe
Nma-umnat heariay. dee tad L'csecocd. ao
OdJCJ^OS 439.K3.6M decawdafcae eaoaameal
n.(114.9c6.(m

D«« w Kta-iHLiBCia b> Dividends

Noo-HKemr bearing: ^ tul firm#
deoaetd >285.173J»4 Kii.raw ril aft lr Lose cured

nun Noa-xaecwaa bear-ay due and

A/flua* - twice mnn ttuanl 1.1 Advances lauecuetd
donandeMc
Offktr i.lthvncrtt _Hf*L dee iar. ifrmar»toi-> Cusmoad

a.) On June 30, 2017. LBCH signed an agreement with SAP Philippines, Inc. to acquire cloud services named
HAN A Enterprise Cloud for Production with Subscription Software ("HEC

87
16. Income Taxes

Provision for (benefit from) income tax consists of:

2919_2018
Current P207JJ84 P28„504
Deferred (5J29.769) 4,790.731
(>5,121,785) 1*4,825.235

Ihc proviso on for current tax represents MOT in 2019 and 2018.

iiinniiiiiKBNii

88
 Details of the Parent Company's net deferred tax asset (liability) as of December 31.2019 and
2018 follow.

2019 2018

1*3,569,738
2,143.781 P3 309,738
Deferred tax assets arising from: 567,078 2,143.781
Allowance for impairment losses OIL Properly 239,630 567,078 239.630
and equipment Inventories Receivables 16.828.168 15,117386
Other current assets NOLCO MC1T 248.063 40.079
23336,458 21.617.892
Deferred tax liabilities arising from U finalized
foreign exchange gains (20330.139) (23.401,717)
Others (2,473381) (3.012.906)
(23.003.420) (26,414.623)
1*533.038 (P4.796.731)

Is 2019 and 20IS, the Parent Company recognized deferred tax assets which were applied against the
deferred tax liabilities.

There were no unrecognized deferred tax assets as of December 31, 2019 and 2018.

The reconciliation of the income tax on pretax income computed at the statutory rate to income tax
expense attributable to ope rations is as follows.

2019 2018
Income tax at die statutory income tax rate (P27.190.148) P592.602.876
Tax effects of the items not subject to statutory rale:
Noataxable income (227,194354) (619,161340)
Movement in unrecognized deferred rax asset — (18,953395)
Expired NOLCO 1,873,476 23>3.325
Nondeductible expense 247389341 47,983.869
(P5»I21,785) P4.825335

The NOLCO that can be claimed as deductions from future taxable income and excess MCtT
over ROT that can be credited against future tax liability follow:

NOLCO

Year Inorred_Amount U—d Kiahtd Rolan Expiry Duo

2019
2018
2017
2016

19