LBC Express Holdings, Inc.

Horizontal Analysis- Financial Statements

For the Year’s Ended 2107, 2018 and 2019

Statement of Financial Position

Table 1 Amount and Percentage Change in Current Assets

Amount Change(₱) Increase/Decrease in
Percentage(%)
Current Assets FY2017 2018 2019 FY FY 2019
(base 2018
year)

Cash and cash 359,030,652 640,260,761 9.50% 16.95%

equivalents
Trade and other (33,668,053) (137,953,268) (2.01%) (8.23%)
receivables
Due from related (109,759,540) 436,087,752 (16.44 65.31%
parties %)
Investment at fair - (15,629,263) - (88.1O %)
value
Available-for-sale (440,763,495) (440,763,495) (100%) (100.%)
Investments
Prepayments and 201,386,975 361,648,991 45.14% 81.06%
other current assets

TOTAL Current 107,521,283 78,727,321

1.53% 12.48%
Assets

Amount Change(₱) Increase/Decrease

in Percentage (%)
 Non-current assets 2018 2019 FY FY
2018 2019
PPE 460,026,599 1,134,681,659 47.13% 116.25%

Intangible asset 6,896,887 198,519,645 1.93% 55.63%

Right off-use Assets 0 1,885,830,072 - -

Investment at fair value - (286,728,308) - (15.03%)

through other comprehensive
income

Available-for-sale Investments -444,736,969 - (100%) -

Deferred Tax asset 12,753,230 88,037,457 4.40% 30.41%

Security Deposits 57,004,189 75,197,199 22.32% 29.44%

Investment in an associate 239,019,848 250,638,682 - 4.86%

Advances for future 439,823,608 78,727,321 - (82.10%)

investment
Goodwill 492,446,084 286,887,944 - (41.74%)

Other Non-current Assets 46,764,389 146,297,874 50.74% 158.73%

TOTAL Non-Current Assets 1,839,074,551 3,795,196435 76.16% 157.17%

Table 2 Amount and Percentage Change in Non- Current Assets

Table 3 Amount and Percentage Change of Current and Non-Current Liabilities

Amount Change(₱) Increase/Decrease in

Percentage (%)

LIABILITIES 2018 2019 FY 2018 FY 2019

Accounts and Other Payables 1,203,058,545 1,639,070,126 75.05% 102.24%
Due to Related Parties 91,449,544 31,068,780 3596.72% 1221.94%
Dividends payable 285,172,094 14,775,250 - (94.82%)
Current Portion of Notes (143,050,000) (32.51%) (14.40%)
Payable (63,383,333)
Transmission liability (4,307,820) (7.53% (0.22%)
(1,315,547)
Income Tax Payable 1,544,904 1.24% (65.32%)
(81,657,233)
Current portion of lease (10,420,232) 614,322,888 (33.95%) 2001.60%
liabilities

Total current liabilities 1,383,448,035 2,152,880,931 49.59% 77.17%

Derivative liability (454,198,052) 188,308,082 (24.41%) 10.12%
Bond payable 212,232,015 350,835,999 23.68% 39.15%
Retirement liability (33,060,623) (6 (4.69%) (9.57%)
7,531,082)
Notes payable (68,750,000) (4 (11.43%) (8.02%)
8,194,445)
Lease liabilities 32,765,885 1,269,699,382 37.65% 1458.89%
Other non-current liability (38,340,873) ( (32.40%) (66.37%)
78,539,116)
Total non-current liability (349,351,648) 1,614,578,820 (8.18%) 37.83%

Figure 1. Percentage Change of Equity

 -40.76% 53.38%
100% 145.93% -26.18% -158.36% 38.58%
80% -68.44%
60% 146.55% 4
2
40% 3
1
20%
0%
Retained earnings Accumulated Non controlling interest Total equity
comprehensive income

2019 2018

Figure 2. Total Assets, Liabilities and Equity’s Percentage Change

PERCENTAGE CHANGE OF THE ASSETS,LIABILITIES AND

EQUITY
60.00%
53.38%
53.38%
49.56%
50.00%
percentage change

38.58%
40.00%

30.00%
20.66%
20.00%
14.65%

10.00%

0.00%
FY 2018 FY 2019

Assets Liabilities Equity

This figure shows how the totality of assets, liabilities and equity increases eventually from
2017 as base year to fiscal year 2019 reflected on the Statement of Financial Position of the
company.

Statement of Comprehensive Income

Figure 3. Percentage Change on Calculating Gross Profit

Gross Profit
80.00%

69.29%
70.00%

60.00%
52.65%
50.00%

40.00%

29.63%
30.00%
23.72%
20.01%
20.00%
12.13%
10.00%

0.00%
Service revenue Cost of services Gross profit

2018 2019

Table 4 Percentage Change In Calculating Net Income and Total Comprehensive Income

Increase/Decrease in
Amount Change ₱
Percentage(%)
2018 2019 2018 2019
Gross profit 408,593,812 674,078,539 12.13% 20.01%
Operating Expenses 388,393,254 730,799,814 19.21% 36.14%
Operating Income 20,200,558 (56,721,275 ) 1.50% (4.21%)
Other (303.49%) 106.13%
669,726,843 234,205,993
Income(Charges)
Income before 61.23% (25.82%)
689,927,401 (290,927,268 )
income tax
Provision for income 11.65% (14.05%)
48,811,726 (58,832,064 )
tax
Net income 641,115,675 (232,095,204 ) 90.56% (32.79%)
Other ( 108,782,224 ) (70,554,453) (504.54%
comprehensive ) (327.24%)
 income(loss)
Total comprehensive 72.97% (41.49%)
532,333,451 (302,649,657 )
income

Table 5 . Earnings per share

Increase/Decrease in Percentage
Amount Change in ₱
Change(%)
Earnings per share 2018 2019 2018 2019
Basic 0.46 (0.14) 93.88% (28.57%)
Diluted 0.19 (0.14) 38.78% (28.57%)

Statement of Cash Flow

Table 6. Percentage Change in Cash Flow

Amount Change ₱ Increase/Decrease in
Percentage Change
2018 2019 2018 2019
Net cash provided by
230,503,750 721,136,676 16.63% 52.02%
operating activities
Net cash used in
75,942,985 60,462,662 9.10% 7.24%
investing activities
Net cash provided by

(used in) financing (1,450,911,655) (1,032,476,512) (75.45%) (53.69%)

activities
Net increase in cash and
(2,240,464,304 (2,152,786,198) (90.53%) (86.99%)
cash equivalents
Effect of foreign
148877191 16601458 (618.35%) 68.95%
Exchange
Cash and Cash

Equivalent at Beginning 2,450,617,765 2,809,648,417 184.56% 211.60%

of Year
 Cash and Cash

Equivalent at End of 359,030,652 640,260,761 9.50% 16.95%

Year

Table 1 shows the amount and percentage change of current assets. The change on cash and

cash equivalents is significant to the increase of service revenue found in the income statement, in

the Fiscal Year 2018 cash and cash equivalents records an increase of 9.5% to 16.95% on the

following year respectively from year 2017. This shows that the company is doing well on revenue

growth. Although the business received most of the payments within the invoice period ,some

accounts become overdue while others are uncollectible these reflects on the percentage change on

the receivable from -2.01% to -8.23% in which the company are still fall short on receiving

payments on cash. Due from related parties has a huge increase in the overall currents assets.

Eventually, all remaining currents assets are increasing. In addition, total current has increased

1.52% in the year 2018 and 12.48% in 2019 this indicate that LBC Express manage the cash flow of

the business well. In essence, having substantially more increase in current assets than liabilities

indicates that the business should able to meets its short-term obligations.

Table 2 shows that the Property, Plant and Equipment of the company has increased in the

year 2019, tallying an increase of 47.13% in the year 2018 and 116.25% in 2019, primarily due to

addition of computer hardware and construction in progress related to branches and warehouse due to

an increase of its net book value.. Some of the intangible asset of the company is expected to decline

its value because some are being amortized. This means that the value decreases every year as an

expense for using the item. The amount of the value of the asset decreases also decreases the

business's income for that year. Deferred tax asset has increase in the year 2019 with a percentage

change of 30.41% from a 4.40% change in 2018. The totality of current assets has significantly
incline than the non-current assets of the company throughout the year. This can be an indicator that

the company has excellent liquidity.

Table 3 shows the percentage change in the liabilities section of the financial position. An

increase in accounts payable and other payables in the year 2018 75.05% and 102.24% in the year

2019 implicates that the company has a short term obligations and continues to increase from the

year 2017 as the trend shows in its change. The dominant factor that lead the total liabilities increase

from 2017 to 2019 is the lease liabilities from 37.65% change in 2018 to 1148.89% change in 2019.

This might indicate that the company has incurred more expenses that might be hard to compensate

though revenue has increased. Bond payable increased by 23.68% in the year 2018 and a spiked of

increase in 2019 of 39.15% traceable mainly from accretion of interest and impact of higher

exchange rate. The funds are more likely being used from the acquisition of available-for-sale

investment, property and equipment. To sum it up, the company’s liability is totally increasing

through years and it’s a trend that might continue in the following years if not controlled and manage

well.

Figure 3 shows an increase of service revenue from 23.72% increase in year 2018 to 52.65%

in the year 2019. This is a good implications that the company is managing well in increasing

revenue. Relatively, the Cost of Services also increased as expected because the revenue inclined

changes this is due to an increase of cost in delivery and remittance. Cost of Services rise up to

29.63% to 69.29% in the year 2019, this lead to an increase of the gross profit of the company.

Table 4 shows a significant increase of change on gross profit 12.13% in 2018 to 20.01% in

the year 2019 is quite enough to compensate the increase of income charges and the expenses

incurred by the company. However, this indicates the lower increase of the net income of the

business and a loss in comprehensive income lowers its totality. This because of too much increase in

the expenses and lease liability of the company in the year 2019 that affect the increase of net income
in the latest year. In addition, the net income drops higher than how it increases in the year

2018(90.56%). It might be bad for the company for the following year because there be still a huge

obligation to settle due to the huge increase in the liability specifically lease liability and expenses

that lead to the decrease of the net income of the year 2019. Lease liabilities inclined by 37.65% in

the year 2018 and 1458.89% in 2019 due to the unsettlements of services vehicles through finance

lease.

As stated above the net income eventually drops down in the year 2019 the earnings per share

is also decrease.

Conclusion

 LBC Express Holdings Inc. is on a good trend of increasing its service revenue. However, net
income has a huge decline in the year 2019 (-32.79%) from an increase of ₱641,115,675, a
90.56% percentage increase from the year 2017.
 LBC Express Holdings Inc. is in good performance and well-positioned for future growth.
But it is necessary for the company to watch over and control the increasing costs and
expenses incurred in each period, to avoid some economic risks. It is however advantageous
for the company for having more liquid assets for easily paying off current debts.
 LBC Express Holdings Inc. Asset management ratios are doing good, and mostly showed
improvement in 2019. However, total asset turnover slightly declined in the last period, due
to heavy investments in asset. Overall, there appears to be no major problems with the firms'
assets management ratios, and we're efficient enough in using its assets to generate earnings.

Recommendations:
 In order to maintain the profitability of the company, it is good for them to settle their huge
liabilities and expenses, which is a big help to increase their net income yearly.
 Allocation of the funds should be allocated to help increase its profitability and liability and
expense incurred in the company operations should be controlled.