La prediccion que de éllos debe hacer para no caer

15% 4 0.60

4. Real GDP will grow by about 6.5% per year 10% 3 0.30 5. Economic growth of the Philippines in 2013 10% 3 0.30 6. Modern grocery retailers remain the key distribution

channel for packaged food

15% 4 0.60

Threats

1. Consistent government intervention and dominance 5% 2 0.10 2. Filipino attitudes toward spending 10% 2 0.20 3. Technology as the greatest driver of future growth 5% 3 0.10

TOTAL 100% 3.1

Note: the ratings values are as follows: 1=response is poor, 2=response is average, 3=response is above average, 4=response is superior

URC registered an EFE rating of 3.1 in terms of responsiveness to external environment. In terms of responsiveness to the external threat, URC gathered a rating of 0.4 being the highest level of responsiveness to the threat. It means that URC can respond to the threat of existing several substitutes and in the key factors in maintain position in the industry. In terms of its responsiveness to the external opportunities, it earned a rating of 2.4 being the highest level of responsiveness to the opportunity as well. In is indicative that URC effectively responds to the external opportunities.

5. Company Analysis

5.1 Company Internal Audit

The mission of Corporate Internal Audit of the Company is to provide independent and objective assurance within the Corporation, designed to add value and improve the Corporation’s operations. It helps the Corporation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the

effectiveness of risk management, control and governance processes. The Corporate Internal Audit shall be solely responsible for the planning, implementation, and reporting of the internal audits.

Resource based view A. Physical Resources

Universal Robina Corporation is financially healthy to support the business. With its financial capability, the company can invest in different areas that it could to gain profit. It has its own plant and equipment where money is not a problem for the company to sustain. URC choose to invest in equipment and machines as its own to incur less cost on its part. It is strategically located all over the Philippines. This is considered as one of the strengths of URC. It extends to different cities in the country and in abroad.

A wide variety of raw materials are required in the manufacture of the Company’s food products, including corn, wheat, flour, sugar, robust coffee beans, palm oil and cocoa powder. Some of which are purchased domestically and some of which the Company imports. The Company also obtains a major portion of its raw materials from its agro-industrial and commodity food products segments, such as flour and sugar, and flexible packaging materials from wholly owned subsidiary, CFC Clubhouse Property, Inc. A portion of flexible packaging material requirements is also purchased both locally and from abroad (Vietnam and Indonesia), while Tetra-pak packaging is purchased entirely from Singapore.

The Company’s policy is to maintain a number of suppliers for its raw and packaging materials to ensure a steady supply of quality materials at competitive prices. However, the prices paid for raw materials generally reflect external factors such as weather conditions, commodity market fluctuations, currency fluctuations and the effects of government agricultural programs. The Company believes that alternative sources of supply of the raw materials that it uses are readily available. The Company’s policy is to maintain approximately 30 to 90 days of inventory.

B. Human Resources

As of September 30, 2015, the number of permanent full employees engaged in the Company’s respective businesses is 12,260 and are deployed as follows:

Business Company or Division Number

Branded consumer foods BCF, Packaging Division, CCPI, URCI, URCCCI, NURC, HURC, CURC and DURBI

9,778

Agro-industrial products:

Agribusiness Robina Farms 541

Products and veterinary compounds UCP and Robichem 337 Company food products:

URSUMCO, SONEDCO, CARSUMCO, PASSI and Tolong

Sugar 1,140

Flour and pasta Flour 311

Bio-ethanol and renewable energy Distillery and cogeneration 153 12,260

At the same date, approximately 15,800 contractual and agency employees are engaged in the Company’s businesses.

The Company does not anticipate any substantial increase in the number of its employees in fiscal 2016.

C. Organizational Culture and Resources

The Governance, Nomination and Election Committee shall be responsible for overseeing the development and implementation of corporate governance principles and policies and ensuring that the nomination and election of new members of the Board is transparent with the end objective of having the Board increase shareholder value and aligned with the Corporation’s strategic direction.

D. Management

The Board of Directors (the “Board”) represents the shareholders’ interests in its objective to continuously improve the value of the Corporation and to achieve a successful and long-term business. The Board believes that it has to be actively responsible to ensure that the Corporation is properly managed to attain this result. In addition to fulfilling its obligations for increased shareholder value, the Board has responsibility to other stakeholders as well – customers, employees, suppliers, financiers, government, business partners, and to the communities and environment it operates in, all of whom are important to a successful business. The Board of Directors is primarily responsible for the governance of the Corporation. Corollary to setting the policies for the accomplishment of the corporate objectives, it shall provide an independent check on Management.

The Board and Management of the Corporation commit themselves to the principles and best practices as contained in their Corporate Governance Manual. The Board and Management, employees, and shareholders believe that corporate governance is a necessary component of what constitutes sound business management and will therefore undertake every effort necessary to create and strengthen awareness within the organization.

The rules embodied in the manual shall be used as reference by the member of the Board and Management.

This Manual shall be made available for inspection by any shareholder at reasonable hours on business days.

Management Officers shall receive appropriate orientation on his duties as a management executive and how to discharge these duties when he is first appointed to the Corporation. This would ensure that incoming Senior Management Officers are familiar with the Corporation’s business and governance processes. Each director or key officer shall be required to attend a yearly corporate governance training another continuous professional education programmes in accordance with the rules and regulations of the Commission. A director or key officer who was exempted from attending the yearly corporate governance training shall present proof of such exemption.

E. Marketing E.1 Customer

None of the Company’s businesses is dependent upon a single customer or a few customers that a loss of anyone of them would have a material adverse effect on the Company. The Company has no single customer that, based upon existing orders, will account for 20.0% or more of the Company’s total sale of goods and services.

E.2 Distribution and sales

The Company has developed an effective nationwide distribution chain and sales network that it believes provide its competitive advantage. The Company sells its branded food products primarily to supermarkets, as well as directly to top wholesalers, large convenience stores, large scale trading companies and regional distributors, which in turn sell its products to other small retailers and down line markets. The Company’s branded consumer food products are distributed to approximately 120,000 outlets in the Philippines and sold through its direct sales force and regional distributors. URC intends to enlarge its distribution network coverage in the Philippines by increasing the number of retail outlets that its sales force and distributors directly service.

The branded consumer food products are generally sold by the Company from salesmen to wholesalers or supermarkets, and regional distributors to small retail outlets. 15 to 30 day credit terms are extended to wholesalers, supermarkets and regional distributors. The Company believes that its emphasis on marketing, product innovation and quality, and strong brand equity has played a key role in its success in achieving leading market shares in the different categories where it competes. In particular, URC launched “Jack „n Jill” as a master umbrella brand for all its snack food products in order to enhance customer recognition. URC devotes significant expenditures to support advertising and branding to differentiate its products and further expand market share both in the Philippines and in its overseas markets, including funding for advertising campaigns such as television commercials and radio and print advertisements, as well as promotions for new product launches.

E.3 Enhancement and Development of New Products

The Company intends to continuously introduce innovative new products, product variants and line extensions in the snack foods (snacks, biscuits, candies, chocolates and bakery), beverage and grocery (instant noodles and tomato-based) products. This fiscal year alone, the Company’s Philippines Branded Consumer Foods has introduced 41 new products, which contributed to sales growth. The Company supports the rapid growth of the business through line expansion, construction and acquisition of plants. In 2013, the Company acquired a plant facility in San Pedro, Laguna to further enhance its production and warehouse capacities.

F. Production

A wide variety of raw materials are required in the manufacture of the Company’s food products, including corn, wheat, flour, sugar, robust coffee beans, palm oil and cocoa powder. Some of which are purchased domestically and some of which the Company imports. The Company also obtains a major portion of its raw materials from its agro-industrial and commodity food products segments, such as flour and sugar, and flexible packaging materials from wholly owned subsidiary, CFC Clubhouse Property, Inc. A portion of flexible packaging material requirements is also purchased both locally and from abroad (Vietnam and Indonesia), while Tetra-pak packaging is purchased entirely from Singapore. For its feeds segment, the Company requires a variety of raw materials, including corn grains, soya beans and meals, feed-wheat grains, wheat bran, wheat pollard, soya

seeds, rice bran, copra meal and fish meal. The Company purchases corn locally from corn traders and imports feed-wheat from suppliers in China, North America, and Europe. Likewise, soya seeds are imported by the Company from the USA. For its animal health products, the Company requires a variety of antibiotics and vitamins, which it acquires from suppliers in Europe and Asia. The Company maintains approximately two months physical inventory and one month in-transit inventory for its imported raw materials.

For its hog business, the Company requires a variety of raw materials, primarily imported breeding stocks or semen. For its poultry business, the Company purchases the parent stock for its layer chicks from Hendrix Genetics of France and Hyline from USA. The Company purchases vaccines from various suppliers, including Merial, Intervet Philippines, Inc. (through authorized local distributor Castle Marketing and Vetaide Inc.) and Boehringer Ingelheim GmbH and Ceva. Robina Farms obtainall of the feeds it requires from its UCP division and substantially all of the minerals and antibiotics from its Robichem division as part of the vertical integration.

The Company purchases vaccines, medications and nutritional products from a variety of suppliers based on the values of their products. The Company obtains sugar cane from local farmers. Competition for sugar cane supply is very intense and is a critical success factor for its sugar business. Additional material requirements for the sugar cane milling process are either purchased locally or imported. The Company generally purchases wheat, the principal raw material for its flour milling and pasta business, from suppliers in the United States, Canada and Australia. The Company’s policy is to maintain a number of suppliers for its raw and packaging materials to ensure a steady supply of quality materials at competitive prices. However, the prices paid for raw materials generally reflect external factors such as weather conditions, commodity market fluctuations, currency fluctuations and the effects of government agricultural programs. The Company believes that alternative sources of supply of the raw materials that it uses are readily available. The Company’s policy is to maintain approximately 30 to 90 days of inventory.

G. Research and Development

The Company develops new products and variants of existing product lines, researches new processes and tests new equipment on a regular basis in order to maintain and improve the quality of the Company’s food products. In Philippine operations alone, about P =43 million was spent for research and development activities for fiscal 2014 and approximately P =37 million and P =43 million for fiscals 2013 and 2012, respectively.

The Company has research and development staff for its branded consumer foods and packaging divisions of approximately 103 people located in its research and development facility in Metro Manila. The Company also has research and development staff in each of its manufacturing facilities.

In addition, the Company hires experts from all over the world to assist its research and development staff. The Company conducts extensive research and development for new products, line extensions for existing products and for improved production, quality control and packaging as well as customising products to meet the local needs and tastes in the international markets. The Company’s commodity foods segment also utilises this research and development facility to improve their production and quality control. The Company also strives to capitalize on its existing joint ventures to effect technology transfers.

The Company has a dedicated research and development team for its agro-industrial business that continually explores advancements in feeds, breeding and farming technology. The Company regularly conducts market research and farm-test for all of its products. As a policy, no commercial product is released if it was not tested and used in Robina Farms.

H. Management Information System

URC established an Internal Audit System that can reasonably assure the board, management, and stockholders that its key organizational and operational controls are faithfully complied with. URC has a mechanism in place, allowing employees, suppliers, and other stakeholders to raise valid issues. The Chief Executive Officer and Chief Audit Executive executes annually a written attestation that a sound internal audit, control and compliance system is in place and working effectively. The attestation is presented by the Chief Audit Executive during the Audit Committee meeting.

The Audit Committee provides an independent and objective assurance to the Corporation’s stakeholders for the continuous improvement of risk management systems, internal control systems, governance processes, business operations, and proper safeguarding and use of the Corporation’s resources and assets.

URC has a formal risk management policy that guides URC’s risk management and compliance processes and procedures. The company will seek external technical support in risk management when such competence is not available internally. URC has a formal risk management policy that guides URC’s risk management and compliance processes and procedures.

The Company’s Audit Committee evaluates and determines the non-audit work, review periodically the non-audit fees paid to the External Auditor in relation to their significance to the company’s overall consultancy expenses.

5.2 Key Financial Ratio Analysis

Financial and accounting analysis is used to know the firm’s competitive position and overall attractiveness to investors. It determines an organization’s financial strengths and weaknesses. The functions of finance or accounting comprise three decisions: the investment decision, the financing decision and the dividend decision. Hence from the financial statement of the company as filed in the Securities and Exchange Commission the following are the financial ratios of the company.

A. Liquidity Ratio Current Ratio

The current ratio measures the firm’s ability to meet its short-term obligations with its short-term assets. With a high current ratio, there is a higher ability of a firm to meet its short-term obligations. This ratio is obtained by dividing the "Total Current Assets" of URC by its "Total Current Liabilities". The ratio is regarded as a test of liquidity for the company. It expresses the working capital relationship of the current assets available to meet the company's current obligations. Liquidity is an essential character of any organization, and the Company, including the Group as a whole, should indicate acceptable levels of liquidity. The initial test of liquidity is the current ratio, which will display a company’s ability to satisfy current obligations with current

resources. Current ratio is arrived by dividing the current assets over the current liabilities. The Company uses this test and compares it with industry balances to determine its ability to satisfy current obligations with respect to its competitors.

This means that in 2015, URC had a strong financial position in the market and that it has sufficient liquid assets to maintain its operations. This indicates the company is financially stable and health with an increase of 0.05 from the previous year.

B. Solvency Ratio

Leverage ratios measure the extent to which a firm has been financed by debt. It is used to compute the financial leverage of the firm to get an idea of the company’s ways to finance and meet its financial obligations. Leverage ratios are used to measure a company’s operating costs and how will it affect the operating costs from the company and the industry. The leverage ratios are debt to total assets and debt to equity ratios.

Gearing Ratio

The gearing ratio is a general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds. By getting this, total financial deb which includes short-term debt, trust

receipts and acceptances payable and long-term debt including current portion) divided to total equity which includes equity holders and non-controlling assets).

This means that the financial debt of the company remains at its stable position. Hence no great effect on the company’s financial stability.

Debt to equity ratio

The company tests its financial position through the debtto equity ratio. This test indicates the company’s ownership of creditors’ vs. Owners/investors. In addition, debt to equity ratio maintenance is a requirement set by creditors as a standard for extending credit. Debt to equity ratio is computed by dividing the total liabilities over total equity.The ratio

2015 2014

Current Assets P21,905,667 P19,298,379

Current Liabilities P13,867,351 P13,166,619

2.35:1 2.30:1

2015 2014

Total financial debt P28,812,870 P28,569,687

Total equity P68,671,336 P65,264,937

0.42:1 0.42:1

measures how the company is leveraging its debt against the capital employed by its owners. If the liabilities exceed the net worth, the creditors have more stake than the shareowners.

2015 2014

Total debts P45,722,529 P42,581,581

Total Stockholders’ Equity P68,671,336 P65,264,937

0.71:1 0.69:1

Asset to equity ratio

The asset/equity ratio shows the relationship of the total assets of the firm to the portion owned by shareholders. This ratio is an indicator of the company’s leverage (debt) used to finance the firm. This is from dividing total assets over total equity.

2015 2014

Total assets P117,375,275 P110,747,081

Total Equity P68,817,987 P65,359,628

1.71:1 1.69:1

C. Profitability

Profitability Ratios show how successful a company is in terms of generating returns or profits on the Investment that it has made in the business. If a business is liquid and efficient it should also be profitable.

Operating Margin

The operating profit margin measures the profitability of the firm without concern for taxes and interest. It shows how much cash is thrown off after most of the expenses are met. It identifies whether the company has good cost control or that sales are increasing faster than the costs.

2015 2014

Operating income P5,142,035 P4,427,168

Sale of goods and services P29,986,881 P26,951,161

17.2% 16.4 %

According to URC financial statements, its operating profit margin ratio states that the company is profitable from 16.4%

According to URC financial statements, its operating profit margin ratio states that the company is profitable from 16.4%