ABOUT THE COVER

This year’s theme of “Balancing Continuity

& Renewal” is captured in this geometric
progression of lines, angles, waves, and color.

The undulating fractal flow represents the

proud continuity upon which Max’s Group
has been built through the years. Through
structured repetition, we reach seamlessly
into the wisdom of our history, and replicate
success for the future.

The patterned fractals bearing the corporate

identity race bravely across the canvas,
deliberately daring to remain unresolved at its
rightmost edge. This suggests the ambition of
Max’s Group to continually author its vision
for the future.

The vibrant, bold flares of red and orange

represent the spirit of renewal across
the sturdy cobalt field. Innovation,
transformation, and hope are captured in
the hues of a flame that acts as a lighthouse
to perpetually attract the consumers of
tomorrow.
TABLE OF CONTENTS
4 About MGI
6 Company History
8 Our Theme: Balancing Continuity & Renewal
10 MGI At A Glance
12 Financial Summary
13 Financial Highlights
15 Message from the Chairperson
17 Message from the President
19 Year in Review
20 Max’s Restaurant
22 Pancake House
24 Yellow Cab
26 Krispy Kreme
28 Jamba Juice
29 Maple / Dencio’s
30 Teriyaki Boy / Sizzlin Steak
31 Eats
33 Corporate Sustainability, Synergies, and Relationships
34 Sustainability For The Future
36 Corporate Governance Report
54 Board of Directors
58 Management Team
60 Store Network
62 Management Discussion and Analysis
74 Independent Auditor’s Report
87 Notes to Consolidated Financial Statements
162 Sustainability Report
203 Contact Information
 MAX’S GROUP INC. IS THE
PHILIPPINES’ LARGEST
OPERATOR OF CASUAL DINING
RESTAURANTS WITH 690
LOCATIONS IN THE PHILIPPINES
AND 70 BRANCHES OVERSEAS
AS OF YEAR-END 2019.

04 Balancing Continuity and Renewal : 2019 Annual Report

Balancing Continuity and Renewal : 2019 Annual Report 05
COMPANY HISTORY

1945 1974 1982

Max’s Restaurant opens its first Pancake House opens its doors for the Max’s Restaurant opens its first
branch in Scout Tuason, Quezon City. first time in Magallanes. international branch on Gellert
Boulevard, South San Francisco.

1991 1998 2001

The first Dencio’s branch opens. The first Max’s Restaurant franchised Yellow Cab Pizza Co. and Teriyaki Boy
store opens in Harrison Plaza. open.

2003 2006 2007

The first international franchise Krispy Kreme Philippines opens its Sizzlin’ Pepper Steak debuts. Kabisera
location of Max’s Restaurant opens in first store in Bonifacio High Street, ni Dencio’s opens its doors to
West Covina, California. Taguig. customers.

06 Balancing Continuity and Renewal : 2019 Annual Report

 2007 2011 2012

Pancake House opens its first Jamba Juice starts blending in the Maple launches.
overseas outlet in Malaysia. Philippines.

2014 2014 2015

Max’s Group, Inc. (MGI) acquires MGI completes follow-on public MGI opens its pioneering shared
Pancake House Inc. offering. space multi-brand format, Burgos
Eats and Eco Eats.

2018 2019

MGI kicked off construction

No Bia Food Manufacturingof
andNo BiaCenterMGI opens its flagship multi-brand
Distribution

Food Manufacturing and Distribution concept store EDSA Eats at the

GSPublisherVersion 0.0.100.100

Center in Carmona, Cavite. heart of the Philippines’ busiest

thoroughfare.

Balancing Continuity and Renewal : 2019 Annual Report 07

08 Balancing Continuity and Renewal : 2019 Annual Report
BALANCING
CONTINUITY
AND RENEWAL

As the largest casual dining operator in the Philippines,

Max’s Group is in the unique position of being both
archeologist and architect. At the core of it is a
foundation rooted in the continuity of its proud roster
of heritage brands. This bedrock is what gives it the
perspective and energy to spring relentlessly forward
with the appetite for constant renewal and innovation.

Striking this balance between past and present was the

positive tension that drove the Group’s performance
in 2019, and defined its overall approach to building
for the future. As it accelerated its vision of building
the country’s most-loved brands for consumers
everywhere, it continued to reinforce and reinvent its
business fundamentals to define new commercial
opportunities, bolster its operating infrastructure,
and retool its service channels to adapt to changing
consumer needs.

At the heart of this balance were powerful strategic

shifts for its four core brands of Max’s Restaurant,
Yellow Cab Pizza Co., Pancake House, and Krispy
Kreme. Each of these venerable brands found
inspiration from their respective histories and defined
avenues to repurpose and retool them into new anchors
for the future—future trends, future tastes, future
relevance, future culture.

All these efforts were underpinned by timeless values

that defined the successes of the past: the promise of
genuine intent, the commitment to thoughtful action,
and the focus on authentic delight.

At Max’s Group, the story of balancing continuity and

renewal will continue to inspire resilience, ambition, and
agility for the world of tomorrow even as it operates
in the ever-changing world of today’s consumers,
competitors, partners, and stakeholders.

Balancing Continuity and Renewal : 2019 Annual Report 09

MGI AT A GLANCE

10 Balancing Continuity and Renewal : 2019 Annual Report

Balancing Continuity and Renewal : 2019 Annual Report 11
FINANCIAL SUMMARY

12 Balancing Continuity and Renewal : 2019 Annual Report

FINANCIAL HIGHLIGHTS

Balancing Continuity and Renewal : 2019 Annual Report 13

14 Balancing Continuity and Renewal : 2019 Annual Report
MESSAGE FROM THE
CHAIRPERSON
My Fellow Shareholders,

In the last twelve months we have seen how dining has We care about people, the environment we live in, and
evolved, and continues to evolve, in our globalized, deeply the good for the planet. Thus, Max’s Group has never
diverse world. I am happy to report that Max’s Group, wavered in our commitment to good governance and
Inc. (MGI) has adapted beautifully to these developments, sustainability. It is our responsibility and honor to be a
and is well-equipped to anticipate and address the key contributor to community development. MGI abides
developments that arise for years to come. by environmental laws in the conduct of our business,
and promotes sustainable practices in the delivery of our
Your company has been blessed with the opportunity to act products and services. Our raw materials are sourced
as both archeologist and architect. Within our portfolio of only from reputable suppliers who are compliant with all
most-loved brands, we hold the collective wisdom gleaned environmental regulations, and we continue to ramp up
from decades of experience in the Philippine restaurant our commitments in supporting our own local farmers
industry. Likewise, with our investments in building and suppliers, all while building a sustainable future and
capabilities in analytics, restaurant systems, and supply providing thoughtful dining experiences for our customers.
chain integration, we believe Max’s Group to be engineered
for the future. Our achievements have been made possible by the
talent, dedication, and passion of the women and men of
This fine balance between continuity and renewal has been Max’s Group. I wish to express my heartfelt thanks to our
the theme that informed our successes in 2019, and primes Board of Directors, Shareholders, Business Partners, and
us for accelerated relevance and agility demanded by Customers for their unflagging support all these years as
tomorrow’s consumers. we operate with integrity, honesty, and passion. As we
engage with the realities of our ever-changing world, rest
Throughout an ever-changing industry, with consumer assured that MGI will continue to draw on the continuity
tastes and preferences shifting by the day, our best-loved of its heritage, while constantly renewing its commitment
brands have continued to provide our customers with to provide uniquely delightful dining experiences for
delicious meals and uniquely delightful dining experiences. generations to come.
Our 2019 strategies were built on building value through
purpose, centered around our core brands of Max’s Thank you for your continued support.
Restaurant, Yellow Cab Pizza Co., Pancake House, and
Krispy Kreme, and supported strategically by Jamba Juice,
Dencio’s, Sizzlin’ Steak, Teriyaki Boy, Maple, and our multi-
brand Eats concept to secure consumer love, consumer Sharon T. Fuentebella
trust, consumer delight. Chairperson

Even as dining has become an “any time, any place”

activity, MGI has proven that it can transcend physical
locations to serve consumers whenever and wherever they
need us.

We likewise recognize the importance of aligning our

business practices with the present needs of society,
without compromising the demands of our customers.

Balancing Continuity and Renewal : 2019 Annual Report 15

16 Balancing Continuity and Renewal : 2019 Annual Report
MESSAGE FROM THE
PRESIDENT

My Fellow Shareholders,

2019 was another year of growth for your Company as we totalled P11.79 billion, a 4.4% improvement from the P11.30
followed through on our thrust to balance continuity and billion we reported in 2018.
renewal.
Commissary sales increased 13.6% from P1.57 billion to
We asserted our dominance as the largest casual dining P1.78 billion. Franchising and other revenue grew from
group in the Philippines through four core strategies P820.41 million to P828.92 million.
to compete aggressively today, while renewing our
capabilities for tomorrow. Thus, net income grew by 17.3%, from P631.14 million in
2018, to P740.28 million in 2019.
These were:
This focused, streamlined growth was powered by our
1. Growing the global footprint through franchise- four core brands: Max’s Restaurant, Yellow Cab Pizza Co.,
driven expansion Pancake House, and Krispy Kreme.
2. Driving mainstream relevance through the power of
our brands Max’s Restaurant celebrated its 74th year as flagbearer
3. Diversifying and developing our retail channels of classic Filipino cuisine for multi-generational family
4. Ensuring resilience through supply chain celebrations and mainstream everyday consumers, with its
sustainability and responsiveness famous Sarap-To-The-Bones fried chicken, and complete
all-in-one combo meals.
We are confident that our performance, combined with our
ability to anticipate and address consumer needs, will keep Yellow Cab Pizza Co. delivered on its promise of serving
MGI relevant in the market. up a taste of New York-style pizza to a younger, more
progressive audience. The brand continued to offer bolder
Grow the Global Footprint Through Franchise-Driven and more vibrant tastes and formats through its signature
Expansion edge-to-edge pizzas.
We ended 2019 with 760 stores around the world, a net
increase of 55 versus 2018. Pancake House enhanced its reputation as a destination
for all-day comfort food. The long-running Choose Any
690 were located in the Philippines, with another 70 in Two platform continued to offer up a range of exciting
strategic international markets. Of our global stores, 37 innovations to complement its all-time favorites like Pan
were in the Middle East, another 19 stores in the United Chicken, Spaghetti, and the Best Taco in Town.
States and Canada, with yet another 14 in Southeast Asia.
Global megabrand Krispy Kreme continued to make a
MGI fueled this growth through accelerated franchising, splash with its exciting collaborations to support its iconic
from a one-third contribution in 2015, to 45% in 2019. Original GlazedTM Donuts. Compact new store formats
This demonstrates our ability to continue attracting new heightened the brand’s reach into new territories like travel
partners to fuel expansion. plazas and mini-malls.

Drive Mainstream Relevance Through The Power of Our Our other brands of Teriyaki Boy, Sizzlin’ Steak, Dencio’s,
Brands Maple, and Jamba Juice continued to fill strategic roles
2019 systemwide sales registered growth of 7.0% to P20.11 in their communities, and complete our ability to serve
billion, up from P18.80 billion. Revenue improved by 5.3% different consumer needs, different consumer tastes.
to P14.40 billion, up from P13.68 billion. Restaurant sales To elevate the power of convergence, we also opened EDSA

Balancing Continuity and Renewal : 2019 Annual Report 17

Eats Cubao, our newest multi-brand concept site along utmost confidence that we assure our investors of MGI’s
one of the country’s busiest intersections. In this multi- ability to sustain high levels of service and agility.
brand format, consumers can eat, have fun, and relax in
a welcoming atmosphere before going back to the daily The fundamentals of our strategies are what have enabled
grind. Max’s Group to survive a challenging 2020. We believe our
resilience will translate into eventual recovery, however
Diversify and Develop Our Retail Channels long it may take.
We also proved that our ability to serve consumer demand
outpaces our physical network. We leveraged partnerships These strategic principles have taken us to the top of the
with the country’s largest food delivery aggregators to industry. Our commitment to build the most-loved brands
chase on-the-go Digital Filipinos, and complement our in- in the country is constantly renewed. Your company will
house delivery capability. continue to build value for our stakeholders and the dining
public—whatever they crave, wherever in the world they
As a whole, MGI Delivery Sales grew by 20.4%. may be.

Yellow Cab remains our most powerful weapon in this My deepest thanks to our Board of Directors, our Group
arena, with over 60% of the company’s total. Krispy Kreme COO Ariel Fermin, our management team, and our
more than doubled its 2018 performance, with Max’s and stakeholders for their continued confidence and support.
Pancake House also registering high double-digit growth.
Here at Max’s Group, we are built on the continuity of our
Our B2B Corporate Sales channel likewise grew over 50%, heritage, and primed for renewal in a world balanced on
as we forged relationships with some of the country’s top the edge of change.
institutions. In 2019, we had won over 100 clients across 10
different industries.

In a world where dining has become an “any time, any

place” activity, Max’s Group proves it can compete with Robert F. Trota
scale wherever there is demand—from individuals, groups, President and Chief Executive Officer
and institutions.

Ensure Resilience Through Supply Chain Sustainability

And Responsiveness
We also recognized the need to invest in strategic
capabilities to support growth. We broke new ground
by future-proofing our Supply Chain manufacturing
capability.

We are nearing completion of our world-class Commissary

in Carmona, Cavite. This facility is designed to global
standards, and will triple the production capability of our
existing commissary in Taguig City.

Our Carmona hub will be supported by an even more

responsive supply chain all over the Philippines—from new
distribution depots to satellite manufacturing sites. This
will give us added agility in leveraging local synergies and
efficiencies.

Balancing Continuity & Renewal for Resilience,

Recovery & Growth
Through our achievements in 2019, we proved the
viability of our strategies focused on our core brands,
channel diversification, and franchise-led expansion. Our
investment in our commissary future-proofs us to serve
future demand across multiple streams. It is with the

18 Balancing Continuity and Renewal : 2019 Annual Report

MAX’S RESTAURANT
EVERY KIND OF FAMILY

20 Balancing Continuity and Renewal : 2019 Annual Report

74 years of excellence and experience have established During the peak summer season last year, the brand
Max’s Restaurant as the flagbearer of Filipino cuisine and entered into a fruitful branded collaboration with the
culture. The taste and quality of its classic recipes have largest global cinematic property in pop culture history,
not changed since the brand first delighted diners in the merging two loyal fanbases of great food and great
post-World War II era. What has changed is its response to entertainment into a single synergized program enjoyed by
the needs of the market, a more dynamic and progressive consumers across the country.
outlook reflected in new formats and product offerings.
Max’s Restaurant has long been known and loved as the Innovations to celebrate the best of Philippine food culture
destination for family and group meals; now it is poised to also helped propel the brand forward. The Max’s Corner
secure growth by welcoming the adventurous solo diner Bakery Malagos Chocolate Cake elevated the country’s
into its restaurants. most-globally-awarded heirloom chocolate to the mass
market, while secret gems from across the country, like the
In 2019 Max’s continued to enhance its mainstream rich, flavorful Nilagang Pasko stew and much-raved-about
credentials, transforming itself from a preferred family Bibingka Cheesecake surfaced as menu specials.
destination for special occasions to a beloved everyday
dining brand for younger consumers. In the retail segment, Max’s recognized that the younger
market values off-premise, eat-anywhere dining more than
To get more people to dine at Max’s every day, the brand just brick-and-mortar destinations like restaurants. As the
employed a “high-low” strategy of Single Plate Dining brand sought the loyalty of the progressive Digital Filipino,
complemented by Complete Set Dining. First, Max’s it affiliated with new delivery growth partners like the food
generated excitement among its loyal fans and re-invited aggregators GrabFood and FoodPanda. These partnerships
them to try their favorite chicken again through its annual delivered complementary incremental business to Max’s
flagship event, “Chicken All You Can.” existing in-house delivery platform. This allowed the brand
to grow delivery by over 20%.
Then the brand doubled down on its growth agenda for
Max’s Best Plate, an all-in-one dish containing all-time Max’s Restaurant has always been known as a destination
classics on a single plate—its signature Sarap-To-The- for baptisms, wedding receptions, birthday parties, and
BonesTM Fried Chicken, Spicy Tofu, Lumpiang Shanghai, other large gatherings. The brand built on this traditional
Pancit Canton, and its famous Caramel BarTM. In 2019, strength by making it easier and more convenient to book
Max’s Best Plate was the trial vehicle to reintroduce the functions and events by launching an end-to-end event
brand’s bestsellers to everyday mainstream consumers in booking portal where people can choose a venue, a room, a
a more affordable format. theme, a menu, and pay for it all in one go. This brought the
brand forward into a new generation of celebrators, and is
At the same time, Max’s made it easier for large groups the first of its kind in the Philippine casual dining segment.
to celebrate get-togethers by making its Family Sets
and Seasonal Bundles prominent growth drivers in its The brand’s hospitality and genteel service remains the
marketing programs. This strategy set the growth agenda same. It is best-in-class training for its workforce, a
for the whole year. majority of whom have served in its restaurants for over a
decade. While staying true to its heritage, Max’s keeps an
To accelerate relevance among the wider, multi- eye on the future with training and development programs
generational market, Max’s released two critically- for its next generation of leaders. These programs have
recognized, world-class branded films: “New Year is for been recognized by the Investors in People International
Resolutions” and “Rise Up.” “New Year is for Resolutions” Awards, which named Max’s Apprenticeship Program
reinforced the message that Max’s is for “Every Kind of as the best in the industry, and cited its achievements in
Family, Every Day To The Max”. “Rise Up” expressed the Social Responsibility, Outstanding Use of Technology,
brand’s belief that “The World Is Better When We Come Rewards and Recognition, Leadership and Management,
Together.” and Learning and Development.

These films helped secure major increases in Brand Equity Max’s Restaurants are a snapshot of timeless Filipino
across all consumer segments, while garnering multiple culture, but tuned for the shifts demand by tomorrow.
advertising accolades, including top awards from Tambuli
Asia-Pacific and YouTube Philippines. Tens of millions of As it approaches its 75th year of bringing beloved Filipino
views helped cement true mainstream youth traction for cuisine and culture to the public as the most multi-channel
one of the country’s longest-standing retail dining brands, brand of the Max’s Group portfolio, Max’s Restaurant
and positioned it for future relevance and desire. remains true to its heritage of excellence while embracing
the future with a fresh and energetic attitude.

Balancing Continuity and Renewal : 2019 Annual Report 21

PANCAKE HOUSE
CHOOSE TO FEEL GOOD

Pancake House, home of delicious comfort food and QSR market was drawn to Pancake House promos such as
creator of beautiful memories, celebrated its third straight the P45 Mini Classic Pancakes, P79 All-Day Solo Spaghetti,
year of double-digit growth in 2019. and the Pan Chicken Box with Free 1.5L Coke, for only P69
per piece.
For 45 years, Pancake House has maintained a loyal
and discerning following for its all-day comfort dining. Among these exciting promos, the long-running bestseller
In 2019 it enhanced growth with a marketing campaign has been Choose Any Two, a platform that highlights new
called “Choose to Feel Good,” which espoused a positive products while making existing classics more accessible.
mindset and equated it with dining at Pancake House. The Its unbeatable value-for-money proposition increased
campaign reached millions of viewers, and achieved gold- demand for both new and existing products, while assuring
standard engagement rates across social media platforms, customers that they need not spend more for their favorite
From April onwards, it contributed double-digit growth in meals. Choose Any Two proved especially attractive to
brand sales. mainstream customers in search of fresh favorites.

At the same time, a host of buzzworthy products and Increased digital awareness has boosted brand health,
irresistible promotions were launched. In March, National and the added awareness has revived attachment to the
Pancake Month, all Mondays were dedicated to Pancake brand. In 2020, Pancake House will continue reaching
Saving Monday—Mini Classic Pancakes at an unbeatable out to the mainstream in both marketing and product
price of P45. offerings. Kitchen efficiencies will also be prioritized in
order to achieve the full potential of catering and delivery
Pancake House rolled out offerings for both loyalists who channels. Expect more and more customers to fall in love
have been coming to the restaurant for many years, and with Pancake House, and to stay in love with the brand in
the workaday warriors in search of good value meals. For the years to come.
loyalists there was the first-ever Spaghetti All You Can,
an all-day treat for two weeks in June. Fans responded to
the promo by flocking to Pancake House and declaring
their brand love in an emotional nostalgia-fest on digital
platforms.

For workaday warriors the goal was no less than

conversion. Since this market has the impression that
Pancake House is more expensive than their usual fast food
fare, they are more responsive to promotions that highlight
discounts and savings.

The brand responded with the P145 Weekday Classics

in July, featured a different Pancake House classic on
each day of the week. Once new customers availed of
the promos and tried the classic dishes, they not only
proclaimed their new-found brand love online, they also
became regular customers.

Mindful that Pancake House has higher price points than

fast-food operators, the brand gave the quick service
restaurant (QSR) market a delightful introduction to its
iconic product at great value prices. The high-spending

22 Balancing Continuity and Renewal : 2019 Annual Report

Balancing Continuity and Renewal : 2019 Annual Report 23
24 Balancing Continuity and Renewal : 2019 Annual Report
YELLOW CAB PIZZA CO.
EDGE-TO-EDGE ENERGY
Yellow Cab Pizza Co. achieved strong sales and revenues Key highlights for 2019 were such offers as 2 Pizzas for
in 2019 while strengthening its brand equity with an P499, the Black Friday Pizza Sale, World Pizza Week,
aggressive mainstream marketing campaign. The beloved Happy Birthday Charlie!, World Wings Day, and the Spend
pizza brand, whose flagship products like New York’s Finest Anywhere partnership with Citi Philippines. New products
Pizza, Dear Darla Rolled Pizza, Charlie Chan Pasta, and Hot included the New York Famous XL Pizza Slice, flavor
Wings have earned it a cult-like following. expansion for its popular Chicken Wings, macaroni-based
innovations, and Thigh Fillet Bites.
The brand’s youthful and hip attitude holds a special
appeal for younger, more dynamic audiences in search of Yellow Cab’s So Worth It Pizza Tour campaign was
bolder tastes. In order to attain the brand fame required for recognized with a Bronze Award in the Digital Category
mainstream market penetration, Yellow Cab established of the Media Specialists Association of the Philippines’ Ice
its credentials as an exciting brand for millennial and Awards, and with a Silver Award at the Anvil Awards of the
Gen Z consumers. To do so, it created a communications Public Relations Society of the Philippines.
campaign to encapsulate the spirit of the times, celebrate
individual passions, breed positivity, and fully support Having won the love and trust of the youth market,
people living their best lives. Yellow Cab builds on its strengths to capture the wider
mainstream market with its vibrant spirit and premium
With its “You Do You” campaign, Yellow Cab conveys its quality.
belief that every individual has their own edge-to-edge
passions worth celebrating with edge-to-edge pizza. The
campaign enhanced the perception of the brand as edgy
and streetwise but not rebellious or notorious, bold and
confident but not arrogant or self-centered, energetic and
dynamic but not impulsive or chaotic, and unique but not
shocking.

The campaign achieved its marketing objectives of

increasing frequency of usage of existing customers and
expand the brand’s customer base to a more mainstream
market. To increase transaction count, Yellow Cab
expanded its customer base by boosting mass-market
appeal while remaining true to the spirit of the brand
and the premium quality of its products and services,
particularly through new mainstream offerings such as the
All Day Lunch Solos.
Programs will continue to be rolled out to intensify brand
desire through core product focus, and to reinvigorate the
product portfolio through a compelling range of product
extensions and adjacencies. Value-driven and season-
relevant promotions are also lined up to encourage repeat
transactions from customers.

Touch points are being energized for an accessible,

seamless, and customer-focused experience. The brand will
be revamping in-store and off-premise assets to improve
service time and customer engagement.

Balancing Continuity and Renewal : 2019 Annual Report 25

26 Balancing Continuity and Renewal : 2019 Annual Report
KRISPY KREME
EVERY ONE IS AN ORIGINAL
Krispy Kreme, one of MGI’s classic core brands, had an For Planet, sustainability practices in production
excellent 2019 with record-setting achievements and and manufacturing processes are continually being
prospects for even greater growth. Delivery more than improved between Commissaries and stores. Sustainable
doubled in value through partnerships with the country’s packaging materials have been developed and are set for
leading food aggregators. implementation to replace the current packaging by the
end of 2020. Not only is the new packaging more earth-
New stores, innovative products, new store formats, and friendly, but it will lead to substantial savings and mindful
new sales channels such as e-commerce will continue to resource management once its use is in full swing.
drive our business growth. Krispy Kreme will continue its
aggressive campaign to bring in new users and build its Krispy Kreme also encouraged customers to become more
capacity to cater to its existing market as well as unserved mindful of sustainability with incentive programs. For
trade areas. instance, to reduce packaging, customers got the chance
for free Original GlazedTM Donuts when they purchased
One of the key pieces in enhancing brand equity was the coffee using their own reusable tumblers. Meanwhile,
“Every One Is An Original” campaign, the first animated the brand partnered with regional food producers to
film in the Krispy Kreme market. An original production support livelihood projects. Malagos Chocolate sourced in
from the Philippines, “Every One Is An Original” was Mindanao allowed it to give back to the community while
launched to promote inclusivity and self-appreciation. delighting our customers.
This global benchmark brand effort was recognized in the
Branded Content category at the 2019 Ice Awards, while With sustainable growth in mind, a double S-curve
increasing Favorite Brand Score & Net Promoter Score in growth plan until 2022 is set for execution. Innovation
its brand health tracker. will be the core strategy for growing the business, with
sustainable cost structure as a key metric. Store expansion
Buzzworthy product campaigns boosted the brand’s in unserved and underserved markets will bring us closer
performance and established the brand in the premium to the customer and open new opportunities for the brand.
category. Sweet treats like The Ultimate Chocolate Glaze Stronger partnerships with our suppliers and shareholders
and the DUOghnuts promo combining two bestsellers in will enable us to source sustainable materials and help to
one doughnut contributed massive commercial value. manage our profit.

Krispy Kreme has also launched more game-changing With its renewed commitment to People, Planet, and
efforts including the OG Card, a loyalty platform ended sustainable Profit, Krispy Kreme is poised for even greater
2019 with over 70,000 members. Another first in the Krispy success in the years to come.
Kreme market, the OG Card allows cardholders to get
freebies and exclusive rewards as well as access to cool
events. Innovative offerings such as Original GlazedTM
Bites—bite-size versions of its world-famous Original
GlazedTM doughnut—and the Original GlazedTM Popcorn
in collaboration with leading premium popcorn brand Chef
Tony’s continue to boost the brand’s strength in the sweet
treats market.

Krispy Kreme is not only a best-loved brand, but one which

shows its love for People and Planet. Sustainability efforts
have been implemented in phases to ensure sustainable
growth.

For People, programs such as the Management Accelerated

Program to deepen the leadership bench is in full swing.

Balancing Continuity and Renewal : 2019 Annual Report 27

JAMBA JUICE Jamba Juice is Max’s Group’s strategic play into the world
of healthful lifestyles for today’s generation of consumers
who define themselves as “active attractives.”
KEEPING IT REAL
Built on its core portfolio of wholesome, better-for-you
real whole-fruit smoothies, this leading healthy active
lifestyle brand has been operating in the Philippines since
2015. 2019 was shaped by tireless innovation into fast-
emerging health trends, such as chia seed-based refreshers
and pudding cups, new fiber-and-protein smoothies, and
superfruit smoothies like its avocado range of offerings.

Strategic alliances with like-minded partners across

different consumer industries in personal accessories,
entertainment, and telecommunications kept the brand
top-of-mind with high-affinity users, while milestone
events like the second installment of both its signature
#BetterBlended Whirl’d Cup Ultimate Frisbee Tournament
and Big #BetterBlended Swap events captured new
category users.

Meanwhile, Jamba Juice also took aggressive steps to build

consumption outside of its traditional retail trading areas;
for the first time, consumers could now order smoothies for
delivery through restaurant aggregator giant GrabFood.

In a world where food indulgence is perpetually in a battle

with the desire for mindful living, Jamba Juice will continue
to shine a light for Max’s Group.

28 Balancing Continuity and Renewal : 2019 Annual Report

 MAPLE
ELEVATED, CURATED, UNDERSTATED
Maple stands proudly for elevated Western comfort
food, especially curated for a consumer segment
with discernment and taste. Crafted to address new
opportunities to serve the growing affluent market, the
brand has gained a loyal following for its high-quality
menu, generous servings, thoughtful service and warm
understated interiors. It primarily serves diners from the
upscale residential communities in and around Makati
City.

Whether it’s for a holiday feast, lazy weekend brunches,

or a mid-week treat, Maple’s heartwarming dishes never
fail to hit the spot. The brand’s classic favorites include its
signature Maple Buttermilk Pancakes, indulgent Prime Rib
Tapa, or its Cajun rubbed Blackened Chicken.

Maple offers personalized menus for functions and events,

and takeout service for nearby residents who prefer to
partake of its sumptuous fare in the comfort of their homes.

DENCIO’S
KAINAN, USAPAN, INUMAN

Dencio’s continues the trend it built in the local bar and

grill category from the day it originally opened its doors.
As Max’s Group’s mainstream offering for the after-hours
market of urban professionals, balikbayans, and families,
it presents a cozy-yet-vibrant ambience perfect for core
kainan, usapan, inuman moments.

With its wide-ranging menu of crowd-pleasing Filipino

dishes at value-charged pricing, the brand leaves a lasting
impression for anyone who swings by for a late-night treat
or a lunchtime appointment. Such offerings as its “Pulutam
(Pulutan na Ulam),” Party Bilao selections, and sinugba
(grilled) platters to complement iconic dishes like its Krispy
Pata, award-winning Krispy Sisig, and Pinaputok na
Pancit. With live music sessions at select branches, further
complemented by its ever-growing range of signature
cocktails and mocktails, it’s no wonder the brand was
a choice destination for countless convivial gatherings
throughout 2019.

Balancing Continuity and Renewal : 2019 Annual Report 29

TERIYAKI BOY SIZZLIN’ STEAK
DO WHAT THE JAPANESE DO ALWAYS WELL DONE

For adventurous consumers who continue to expand Sizzlin’ Steak provides Filipino meatlovers with a delightful
their appreciation for global tastes and flavors, Teriyaki Japanese steakhouse dining experience at remarkable
Boy is Max’s Group’s portal to a wide world of high- value. Its imported meat cuts topped with garlic butter,
quality Japanese favorites. served with steamed rice and hearty sides, and presented
on sizzling plates, truly make premium steak experiences
New hits like its Tonkotsu Ramen and Japanese Milk accessible for your regular meat fix.
Tea complemented long-time bestsellers like its Teriyaki
Chicken, Ebi Tempura, Donburi meals, and Kazoku The combination store concept pairing Sizzlin’ Steak with
Family Sets, giving diners a reason to keep coming back MGI sister brand Teriyaki Boy has been an efficient formula
for more. for both brands. The layout of these combination stores
maximizes manpower, kitchen efficiency, and capital
In partnership with Sizzlin’ Steak, the brand remains expenditures, while offering a convenient way to built
primed to serve its target market and reach more cross-brand usership and loyalty.
consumers through the combination store format.

30 Balancing Continuity and Renewal : 2019 Annual Report

EATS
COME TOGETHER, GROW TOGETHER
Eats, the pioneering multi-brand dining format of Max’s The multi-brand hub was designed and engineered to
Group, Inc, showcases the impressive range and variety save energy and mitigate flood, taking into consideration
of the Company’s restaurant portfolio. Here, the country’s the Philippines’ vulnerability to natural disasters most
largest operator of casual dining restaurants offers diners especially to typhoons. LED lights are also installed
the flexibility to choose from among MGI’s loved brands, all together with solar panels to contribute to the overall
within the same space. reduction of carbon footprint.

Whether it’s at the heart of Bonifacio Global City via Flood mitigation technologies are also manifested in EDSA
Burgos Eats, or nestled within a homey residential Eats’ permeable pavements, rainwater collection system,
community at Paseo de Magallanes, just to name a and low flow plumbing fixtures. These help the hub utilize
few, Max’s Group has continually proven the power of water more effectively as it reuses stormwater runoff.
convergence for its powerhouse portfolio.
Additionally, EDSA Eats has waste management
In 2019, the Group took this multi-brand concept to a components such as a sewage treatment plant for high
greener, more responsible direction with the opening of performance cleaning with low operating costs, and its
EDSA Eats, the company’s biggest sustainability-led own Materials Recovery Facility for recycling trash.
project to date. Touted as MGI’s convergent, innovative,
and sustainable multi-brand hub, EDSA Eats sets the The multi-brand hub also has lodged bike racks to promote
benchmark in adapting environment-friendly technologies the use of bikes to help reduce congestion and cut down
in the local food industry, even as it fills a true consumer greenhouse gas emissions as well as low-VOC (Volatile
need for a respite from their daily commutes. Organic Compound) plants that help purify air.

Built using eco-bricks that are composed of 100 plastic To ensure the comfort of diners while still being sustainable,
sachets per brick and reclaimed bricks from old houses in EDSA Eats’ dining areas are supplemented with wide
Vigan, Ilocos Sur, EDSA Eats sits on one of the country’s trellises to reduce the need for power-generated air
busiest intersections along Main Avenue in Cubao, and conditioning.
EDSA itself. It brings together MGI’s well-loved brands
under one roof, including Max’s Restaurant, Yellow With mindfulness at its core DNA, EDSA Eats plays a deep
Cab, Pancake House, Krispy Kreme, and Teriyaki Boy role of aligning business practices with the present needs
united through a single shared back kitchen for power of society without compromising the demands of our
conservation and efficiency. customers, built around integrity, honesty, and passion.

Balancing Continuity and Renewal : 2019 Annual Report 31

32 Balancing Continuity and Renewal : 2019 Annual Report
 CORPORATE SUSTAINABILITY,
SYNERGIES, AND RELATIONSHIPS
Max’s Group takes its commitment to sustainability with And since sustainability is always a consideration in the
utmost seriousness and sincerity. We bear in mind that way we do business, we stopped having single-use plastic
the decisions we make and the actions we take all have an straws in all our restaurants starting in May 2019.
impact on our planet, and we do what we must to minimize
that impact. As an avid partner in community-building, MGI works with
organizations to improve the lives of the most vulnerable
Our Corporate Sustainability, Synergies, and Relationships members of our society. Through its relationship with the
program proceeds from these principles: Philippine Food Bank Foundation (PFBF), Krispy Kreme has
provided 100,000 Charity Doughnuts worth P3 million to
1. We strive to cause as little damage as possible in institutions in Metro Manila and the nearby provinces.
the way we manufacture our products, build our
restaurants, and conduct our operations. Pancake House, in partnership with the Autism Society
2. We are especially mindful of the resources we utilize: of the Philippines (ASP), is committed to hiring neuro-
what we buy, where we source them, and whom we diverse employees for its stores. Teriyaki Boy works with
buy them from. the College of St. Benilde School for the Deaf and Applied
3. We are respectful of each other and of the Studies (CSB SDEAS) to provide employment opportunities
communities that we operate and work in. to deaf workers. Seven of them are now regular employees
4. We believe that collectively, we can leave this planet of Teriyaki Boy. Max’s Restaurant has deployed five youths
a better place. from the Special Employment for Students (SPES) program
of the Department of Labor and Employment (DOLE)
Even before we manufacture or sell a single item, we en in its stores. The Group has further pledged to provide
sure that our restaurants are built to high standards of employment to 69 deaf and senior citizens in its stores in
sustainability. MGI stores are constructed using “green the City of Manila.
materials” such as wood composite panels, low volatile
organic compound paints, and bio-composite-and-fiber Access to quality education is a mission that has always
cement boards. Several stores, as well as the upcoming been close to the heart of the Group. Edgardo S. Trota, the
Carmona Commissary, are built using earth-friendly eco- first President of Max’s Restaurant, believed that education
bricks and. These bricks are manufactured from recycled is essential to nation building. MGI keeps his vision alive
materials such as sachets and single use plastic bottles with the Edgardo S. Trota Memorial Foundation Inc
and caps. Apart from reducing and reusing waste, these (ESTMFI) Scholarship Project. ESTMFI was established in
eco-bricks also require less labor and shorter curing times, 2000 to provide opportunities to improve the standard
incur less breakage while in storage on-site, use less water, of living of indigent school children as well as urban and
and save 30% of overall wall construction costs. rural poor communities. In 2019 The Foundation gave
scholarships to 70 deserving students, among them
Through a partnership with a leading European kitchen indigent scholars endorsed by the local Department of
specialist and a sustainable local real estate developer, all Social Welfare and Development (DSWD) offices. Five of
single-use plastic materials coming from our Commissary the Foundation’s scholars graduated from college last year
are taken to a special facility in Taguig for recycling. These and are now gainfully employed in the private and public
materials are converted into the primary components for sectors.
the manufacture of eco-bricks and pervious pavers.
MGI is proud to be a company that not only provides
In partnership with Ayala Land, Max’s Restaurant the most-loved brands and delightful experiences, but
participated in a pilot study using the enhanced micro- also infuses its every action and program with love
organism Bokashi to hasten the decomposition of food and and respect—for its partners and beneficiaries, for the
organic waste and turn them into soil materials, effectively community, and for the Earth.
diverting them from landfills.

Balancing Continuity and Renewal : 2019 Annual Report 33

 SUSTAINABILITY
FOR THE FUTURE

MGI is committed to development that meets the needs of the present without compromising
the ability of future generations to meet their own needs. We support the United Nations
Sustainable Development Goals (SDGs) as a guide for creating a better future for humankind.

Our CSSR initiatives focus on three sectors: The

Environment, People, and Inclusive Business. Max’s Restaurant branches have been using activity-based
HVAC controllers to optimize the use of air-conditioners
Environment and kitchen exhausts. This enables the stores to conserve
Within the organization there is a heightened consciousness energy and save on the cost of power. This is in addition to
of water consumption. the Electricity Consumption Calculator (2017) that has been
In accordance with the SDG on Clean Water and Sanitation, used to calculate the stores’ ideal consumption and help in
all MGI restaurants have implemented more efficient reduction efforts.
plumbing systems such as dual flush toilets and high
efficiency faucets that use less water. In 5 pilot stores, we Following the SDG on Sustainable Production and
have installed the SMIXIN Hand Washing solution that Consumption, MGI has measured the carbon footprints
automatically dispenses the appropriate volume of soap of it stores, corporate offices and commissaries to
and water upon demand to reduce wastage and lower evaluate power and water consumption as well as solid
water and soap consumption by 28%. and hazardous waste management. The database sets
benchmarks on the efficiency measures employed towards
MGI is also actively replenishing groundwater aquifers with ensuring the sustainable management and use of natural
GreenAntz pervious pavers, a material used in the recovery resources.
of rainwater in open spaces and walkways. Aside from
recovering rainwater, these pavers also reduce the “heat In addition, MGI through its NoBia commissary has
island” effect normally experienced in regular cemented partnered with GreenAntz and ARCA South to upcycle its
pavements. solid waste materials—particularly plastic materials—as
ingredients in eco-bricks and pavers. These construction
The Group is committed to Affordable and Clean Energy. materials have been used in the new MGI Commissary in
Renewable Energy (RE) solar panels have been installed at Carmona, Cavite and in the new EDSA Eats multi-brand
MGI stores in Magallanes, Main Avenue, and Sucat. These compound in Main Ave, Cubao, Quezon City.
solar panels have significantly increased the energy mix
of these stores, which have traditionally sourced power People
through the regular grid. Each system has a size of 47kw MGI contributes to the campaign to eradicate hunger
and an annual production of 56,600Kwh. The system through its Supply Chain Management team’s Direct-to-
reduces electricity consumption from the regular grid with Farm Program, which encourages agricultural productivity
a projected savings of PhP 500K per year (based on a PhP and boosts the incomes of small scale food producers. Raw
10Kwh rate) per store. In 25 years, it is expected to generate materials for the MGI brands are sourced directly from
1.27Gwh for a savings of P16M. More importantly, the farmers’ cooperatives, ensuring farmers with an institutional
reduced dependence on power from the regular grid saves arrangement for their produce that allows fairly negotiated
the environment 61,922lbs of coal or 30,706lbs of CO2. prices and volumes. SCM also provides technical assistance

34 Balancing Continuity and Renewal : 2019 Annual Report

to farmers’ groups by linking them up with seed suppliers
and other farm input providers. Of course, being a true
partner in development means standing by the farmers in
the event of natural calamities which affect their livelihood.

Meanwhile, Krispy Kreme through the Philippine Food

Bank Foundation (PFBF) provides charity doughnuts to
marginalized communities and institutions with vulnerable
clients. Over 100,000 charity doughnuts amounting to
about P3 million were donated to selected groups in Metro
Manila and its environs.

The Edgardo S. Trota Memorial Foundation Inc (ESTMFI),

one of the corporate foundations of MGI, contributes to
the SDG on Quality Education by giving scholarships to
deserving students. Every year the program provides tuition
stipend and monthly allowances to qualified students from
the different regions, including indigent scholars endorsed
by the local Department of Social Welfare and Development
(DSWD) offices. Last year ESTMFI provided scholarships to
70 deserving students, five of whom have graduated from
college are are now gainfully employed.

Inclusive Business
MGI has demonstrated its commitment to Decent Work
and Economic Growth through inclusive employment in its
store operations. Teriyaki Boy has regularized eight deaf
employees while Pancake House has hired three neuro-
diverse individuals. This is in addition to five youths from
the Special Employment for Students (SPES) program of the
Department of Labor and Employment (DOLE) deployed
in Max’s Restaurant branches. In support of the call of
the City Government of Manila for inclusive employment,
MGI is deploying an additional 69 deaf and senior citizen
employees in its stores in Manila.

Balancing Continuity and Renewal : 2019 Annual Report 35

CORPORATE
GOVERNANCE
REPORT
Max’s Group, Inc. (“MGI or the “Company”) firmly believes Company sources its raw materials through and maintains
that preserving a culture of transparency, accountability long-term contracts with reputable providers. With the
and integrity are key to sustainable long-term growth. implementation of category management, it is also able to
We practice a holistic approach based on a defined capitalize on negotiated prices with suppliers to cushion
set of criteria that centers on environment, social and effect of commodity price hikes. To ensure food quality
governance principles to anchor our framework. We and safety, the Company strongly adheres to stringent
are committed to further enhancing these standards in quality standards and guidelines. In addition to third-party
response to ever-changing market needs. certification and in-house inspections of commissaries
MGI is generally compliant with the Revised Code of and stores, quality assurance testing is also conducted
Corporate Governance, its Revised Manual of Corporate regularly.
Governance and all rules and requirements set forth by
the Securities and Exchange Commission (SEC), Philippine RIGHTS OF SHAREHOLDERS
Stock Exchange (PSE), local government units and other The Company shall treat all shareholders fairly and
applicable regulators. equitably, and also recognize, protect and facilitate the
exercise of their rights. The Company recognizes that the
Corporate Objectives most cogent proof of good corporate governance is that
For 2019, MGI focused on the following strategies to sustain which is visible to the eyes of its investors. Therefore, the
its financial and operational success: following provisions are issued for the guidance of all
- Expanding its global footprint through franchise- internal and external parties concerned, as governance
driven expansion; covenant between the Company and all its investors:
- Driving mainstream relevance through the power of
its brands; Right to Dividends
- Diversifying and developing retail channels; and Shareholders shall have the right to receive dividends
- Ensuring resilience through supply chain subject to the discretion of the Board. The Company
sustainability and responsiveness. shall be compelled to declare dividends when its retained
earnings shall be in excess of 100% of its paid-in capital
For 2020, we plan to further integrate our supply chain stock, except: (a) when justified by definite corporate
to leverage on scale in procurement, commissary expansion projects or programs approved by the Board;
production and logistics. Moreover, we will focus on or (b) when the Company is prohibited under any loan
reinforcing delivery and take-out channels . The theme for agreement with any financial institution or creditor,
the upcoming year is balancing continuity and renewal. whether local or foreign, from declaring dividends without
We aim not only to provide our customers with the most its consent, and such consent has not been secured; or
inventive group of brands, but also to thrive amidst the (c) when it can be clearly shown that such retention is
challenges in an ever-changing food industry landscape. necessary under special circumstances obtaining in the
Company, such as when there is a need for special reserve
Key Business Risks for probable contingencies.
The Company operates in a highly competitive industry 

where formats and variety of offerings of other food Dividend Policy
players may directly impact demand for the Company’s MGI recognizes the need to balance growth and
products. Nevertheless, the Company’s multi-brand shareholder interest. In 2015, the Company adopted a
portfolio offers an expansive range of products at various formal dividend policy, to the extent practicable, pay out as
price points thus mitigating the effect of any slowdown dividends to its shareholders of at least 20% of prior year’s
in demand. The Company is also exposed to risks related net income, to be settled within a 30-day period from
to supply disruptions, increase in commodity prices and declaration date. On 19 March 2019, the Company declared
quality or safety issues. To minimize effect of such risks, the cash dividends amounting to P0.15 per share, equivalent

36 Balancing Continuity and Renewal : 2019 Annual Report

to approximately 25% of the prior year’s net income and abstaining votes for each agenda item and other matters.
settled within a 30-day period from declaration date. The most recent Annual Stockholders’ Meeting was
Payout date was set on 30 April 2019. held on 09 May 2019 at Max’s Restaurant Scout Tuason
Quezon City, an easy to reach and accessible location.
Right to Participate in Decisions Concerning The Chairperson, President and Chief Executive Officer
Fundamental Corporate Changes and Chairman of the Audit and Risk Committee were all in
The Company respects the right of shareholders to attendance.
participate in decisions concerning fundamental corporate
changes such as amendments to the Company’s Markets for Corporate Control in an Efficient and
constitution, authorization of additional shares, transfer of Transparent Manner
all or substantially all assets, nomination of candidates to When necessary, the Board may engage independent
the Board and election of directors. parties to evaluate the fairness of transaction prices in
cases of mergers, acquisitions and/or takeover requiring
Right to Participate Effectively in and Vote in General shareholders’ approval.
Shareholder Meetings
Shareholders shall have the right to elect, remove and Exercise of Ownership Rights By All Shareholders
replace directors and vote on certain corporate acts in The Company shall facilitate constant dialogue with the
accordance with the Corporation Code. The Company investing community to promote and encourage active
issues the notice of meeting at least 30 days prior to actual participation during Annual Stockholders’ Meetings.
meeting which also details rationale and explanation for The Company regularly engages shareholders including
each agenda item that require shareholders’ approval. institutional investors through quarterly briefings, one-on-
Cumulative individual voting by poll shall be used in the one meetings, conferences and roadshows.
election of directors. In case of absence or inability to
attend, shareholders have the right to be represented and EQUITABLE TREATMENT OF SHAREHOLDERS
vote by submitting a proxy to the office of the Corporate Shares and Voting Rights
Secretary at least five (5) days before the meeting. Minority It shall be the duty of the directors to promote shareholder
shareholders have the right to nominate candidates to rights, remove impediments to the exercise of shareholders’
the Board. Nominations for directors must be submitted rights and allow possibilities to seek redress for violation
not later than thirty (30) business days prior to the date of their rights. They shall encourage the exercise of
of the meeting. A director shall not be removed without shareholders’ voting rights and the solution of collective
cause if it will deny minority shareholders representation action problems through appropriate mechanisms. They
in the Board. The Company discloses the vote and vote shall be instrumental in removing excessive costs and other
tabulation procedures used in its Definite Information administrative or practical impediments to shareholders
Statement distributed to shareholders prior to the participating in meetings and/or voting in person. The
meeting. Counting and validation of votes at the Annual directors shall pave the way for the electronic filing and
Stockholders’ Meeting is conducted by the Company’s distribution of shareholder information necessary to
appointed external stock transfer agent. make informed decisions subject to legal constraints.
Shareholders are entitled to one (1) vote for each share
Minutes of the most recent Annual Stockholders’ Meeting is of stock recorded in their names in the books of the
uploaded in the Company’s website. It records the entirety Company and should be encouraged to personally attend
of the proceedings including opportunities allowing for shareholders’ meetings. If they cannot attend, they should
shareholders to ask questions or raise issues. It also details be apprised ahead of time of their right to appoint a proxy.
questions asked by shareholders and respective answers
provided by members of the Board. The minutes also Notice of Annual General Meeting
contains meeting quorum, director attendance, resolutions, The Company’s notice of meeting to shareholders is
voting results including approving, dissenting and fully translated in English and includes rationale and

Balancing Continuity and Renewal : 2019 Annual Report 37

 CORPORATE GOVERNANCE REPORT

explanation of each resolution requiring shareholders’ Protecting Minority Shareholders from Abusive Actions
approval individually. There is no bundling of several items All related party transactions between Max’s Group and its
into the same resolution. Proxy documents are made subsidiaries and affiliates are required to be executed on an
easily available and attached to the notice distributed to arm’s length basis at prevailing market rates.
shareholders prior to the meeting. The notice of meeting
clearly identifies and contains the profiles of directors for ROLE OF STAKEHOLDERS
election/re-election and auditors seeking appointment/re- We value our relationships with various stakeholders and
appointment. acknowledge their contributions to our success.

Insider Trading Customer Health and Safety

Insider trading is strictly prohibited. Max’s Group enforces We combine the highest specifications on product quality
a policy on insider trading that covers all directors, and service to offer our customers a superior dining
officers and employees who have knowledge of material experience.
information about the Company, which have not been a) Service crew personnel must complete
made available to the public, including events that may comprehensive training courses on technical,
impact stock price. Employees involved in the trading of sanitation, ethics and interpersonal skills
Company shares in their own capacity are encouraged development prior to deployment. This is necessary
exercise prudence and refer to this policy. The Company to make certain that both product and service
implements a trading blackout period for covered standards are embodied during the course of
individuals starting from ten (10) calendar days before operations.
and three (3) calendar days after disclosure of material b) Our commissaries consistently maintain Hazard
information. Directors are also required to report their Analysis Critical Control Point (HACCP) certification
dealings in Company shares within three (3) business days to ensure conformity with best practices on food
from date of transaction. At the beginning of the year, all handling. This certification prescribes a structured
covered individuals are mandated to submit a certificate methodology to food processing that prevents
signifying full compliance to the insider trading policy hazards that may cause the finished product to
be unsafe for consumption. This guarantees our
Related Party Transactions customers are only served with the finest and safest
The Company and its subsidiaries, in their ordinary course products.
of business, engage in transactions within the Group and c) Stores undergo general audit at least twice a year
related companies. The Company’s policy with respect to identify and correct any food and non-food
to related-party transactions is to ensure that these operational deviations.
transactions are conducted at arm’s length and fair value d) Our operations group are tasked to regularly inspect
and entered into on terms at least comparable to those the physical condition of our stores to monitor
available from unrelated third parties. There are no special compliance with our design and build guidelines.
risks or contingencies arising from these transactions
and these transactions, being in the ordinary and regular Supplier/Contractor Selection Practices
course of business, do not materially affect the financial We forge long-term and mutually-beneficial arrangements
statements of the Company. Except as disclosed in the with business partners who share in our standards on
Annual Report of the Registrant (SEC Form 17-A) for the quality, cost and best practices. We transact with suppliers
year ended December 31, 2019, the Company has not had who provide high quality, stable supply and competitively
any transaction during the last two (2) years in which any priced products and services. Suppliers are required to
Director or Executive Officer or any of their immediate undergo accreditation which includes ocular inspection of
family members had a direct or indirect interest. In the their facilities, submission of audited financial statements
event of related party transactions, members of the and background referencing. Our Supply Chain group
Board are required to abstain from participating in the facilitates an open, fair and transparent biddings and
Board discussion on a particular agenda when they are selection process of suppliers in accordance with Company
conflicted. All directors and employees are mandated to policies.
promptly disclose any related party transactions with the
Company or its subsidiaries and affiliates to determine
potential areas of conflict of interest.

38 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

The following summarizes our vendor accreditation product promotions, provide employment opportunities
process: and relief aid in times of calamity in the communities
a) Potential suppliers must satisfy all requirements where we are present.
such as government mandatory documents as well
as Good Manufacturing Practice (GMP) compliance Anti-Corruption Programs and Procedures
on processing, warehouses and product evaluation We strongly support the government’s anti-corruption
among others. drive and efforts towards transparency and nation-
b) An onsite visit of the supplier’s facility shall be building. We do not engage in any form of corruption both
conducted to survey premises, structures, equipment, in the public and private sector. We maintain transparency
personnel as well as procedures related to sanitation, with all our dealings with the government and other
receiving, storage, distribution and statutory entities. We are regularly in touch with local government
requirements. Following the tour, our Supply Chain units on initiatives that would uplift the quality of life of
representative shall discuss initial findings with the residents surrounding our restaurants.
supplier. The Company enforces the following anti-corruption
c) To obtain accreditation, a supplier must secure a policies:
rating of at least 88% from the GMP checklist with no a) Employees are not allowed to solicit gifts from
critical deviations. suppliers for Christmas parties and other corporate
d) If successful, our Supply Chain group shall request events.
product samples from the supplier for further b) Employees are strictly prohibited from accepting all
testing. All product samples must conform with the forms of bribes or gratuities from third parties which
standards set by the Company. may compromise their judgment and independence
e) Upon approval, the supplier shall be informed of its in carrying out their roles.
accreditation via phone or email. c) Employees who receive sponsored travel offers from
third parties are required to disclose and secure prior
Environmentally Friendly Value Chain clearance from management.
We abide by environmental laws in the conduct of our
business. We promote sustainability practices in the Safeguarding Creditor’s Rights
delivery of our products and services. The following We consider our creditors as partners of growth. Based
describes some of our environmental preservation efforts: on policy, we are committed to honoring contracted
obligations and ensure accessibility of information to our
a) Our raw materials are only sourced from reputable creditors through timely and accurate disclosure of all
suppliers who are compliant with all local material information such as, but not limited to, earnings
government environmental regulations. results, major corporate transactions and financial
b) Our stores are equipped with water efficient statements.
plumbing systems such as dual flush toilets and high
efficiency faucets that promote less water usage. Contact Details for Stakeholders
c) Our stores are installed with long-lasting light- The Company provides contact information through its
emitting diode lights that do not contain mercury and Corporate Website and Annual Report, which stakeholders
require minimal maintenance. may use to raise concerns for possible violation of their
d) Our stores are constructed using ‘green materials’ rights. Details below are as follows:
like wood composite panels, low volatile organic
compound paints, bio composite and fiber cement Investor Relations and Compliance Department
boards. Rebecca R. Arago
[email protected]
Community Interaction (+632) 87849000
We are mindful of the impact that our restaurants
have in its location. We consider our stores as places of Corporate Social Responsibility
convergence that build and nurture relationships among The Company details its corporate social responsibility
surrounding communities. We regularly launch various activities separately on page 32.

Balancing Continuity and Renewal : 2019 Annual Report 39

 CORPORATE GOVERNANCE REPORT

Employee Health, Safety, Welfare and Compensation Whistleblowing Policy

Employees are urged to avail of annual physical This policy protects concerned individuals or parties
examination and regular vaccination against flu, cervical who report observed malpractices or unethical business
cancer and other diseases. The Company maintains an behavior to persons of authority, without fear of
in-house clinic with a nurse on duty that provide medicines retaliation, through secured platforms such as electronic
and first aid assistance to all employees. During cases mail, telephone, facsimile or pre-arranged meetings.
when an employee acquires a communicable disease, The whistleblowing policy covers all employees of the
mandatory medical clearance from a certified doctor must Company including subsidiaries, strategic business units,
be obtained prior to reporting for work. Commissary- affiliates and service providers as well as franchisees,
based employees are required to wear protective gear suppliers, creditors and other stakeholders. Nonetheless,
and observe strict standards on sanitation. The Company this policy does not cover personal grievances, which

organizes wellness events such as health caravans and may be coursed through Department Managers or
Human Resources in accordance with existing company
sporting leagues to promote work-life balance and foster
guidelines. The identity of the whistleblower shall not be
camaraderie amongst colleagues. The Company also
disclosed without his or her due consent. Management
has a compensation policy for employees that account
shall observe strict confidentiality and store all information
for corporate performance beyond short-term financial
obtained in written form duly signed by the whistleblower.
measures.
All legitimate concerns shall be dealt and accorded with
proper action. The whistleblower is entitled to receive
Employee Training and Development
feedback depending on the progress of the investigations.
Max’s Group offers training programs designed to upgrade
If the whistleblower raises a genuine concern in good faith,
and optimize skills of its talent base. These cover courses
he or she will not be held liable in case the whistleblower is
on leadership, customer service, technical knowledge,
proven to be incorrect. Complaints received anonymously
communication, character-building, business integrity and
shall be considered but will not necessarily prompt an
corporate governance. investigation. Employees are encouraged to raise relevant
issues to their respective Department Managers. Should
2019 Employee Training Programs
managers be suspected as the source of any malpractice
Level Course or unethical business activity, employees may elevate
concerns to their corresponding Department or Business
All Employees New Employee Orientation Unit Head. In any case, if the employee wishes to elevate
matters to a person of authority independent of his or her
Restaurant Crew Trainees Basic Store Operations department, the Head of Human Resources, Compliance
Officer, Legal Counsel or Head of Internal Audit may be
Associates/Specialists Interaction Skills/Business sought directly.
Communication

Managers/Supervisors/ Leadership Fundamentals DISCLOSURE AND TRANSPARENCY

Officers Transparent Ownership Structure
The Company’s public ownership report is disclosed on a
Managers/Supervisors Systematic Managerial quarterly basis, which includes the identity of beneficial
Analysis
owners with at least 5% shareholdings. The report also
contains the direct and indirect shareholdings of substantial
Board of Directors & Key Annual Corporate
Officers Governance Session shareholders including members of the Board and senior
management.

Statement of Changes in Beneficial Ownership of Directors and Officers

Class of Shares Name As of Dec 31, 2018 Acquired Disposed As of Dec 31, 2019

Common Sharon T. Fuentebella 26,437,890 - - 26,437,890

Common Robert F. Trota 33,906,034 - - 33,906,034

Common Dave T. Fuentebella 25,868,860 - - 25,868,860

Common Carolyn T. Salud 32,212,460 - - 32,212,460

40 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

Class of Shares Name As of Dec 31, 2018 Acquired Disposed As of Dec 31, 2019

Common Cristina T. Garcia 33,292,714 - - 33,292,714

Common Jim T. Fuentebella 26,437,890 - - 26,437,890

Common William E. Rodgers 19,094,802 - - 19,094,802

Common Antonio Jose U. Periquet Jr. 3,000,002 - - 3,000,002

Common Jose Victor Paterno 0 100 - 100

Common Ariel P. Fermin 232,000 - - 332,000

Common Rebecca R. Arago 18,300 - - 18,300

Common Alicia G. Picazo-San Juan - - - -

Common Carmen-Rose A. Basallo- - - - -

Estampador

Common Czarina Sophia Miren E. Cueto - - - -

Audit and Audit Related Fees such as pre-arranged office visits, one-on-one meetings,
Max’s Group engaged Reyes Tacandong Co. as external small group discussions, roadshows, teleconferences,
auditor, with Ms. Michelle M. Cruz as partner-in-charge for email and analysts/media briefings. The Company also
audit year 2019. Details of audit and audit-related fees paid submits regularly its quarterly report to regulators. More
to Reyes Tacandong Co. in the last two years are provided information on governance and investor relations may be
below: accessed through the Company’s website at http://investor.
maxsgroupinc.com.
Audit & audit-related fees Other fees
Financial Reporting
2018 P5.2 million -
Max’s Group releases its Audited Financial Statements
2019 P5.3 million - and Annual Report (SEC Form 17-A) within 120 days from
the end of fiscal year. The true and fair representation of
Disclosure of Related Party Transactions the Audited Financial Statements and Annual Report are
The Company ensures that all related party transactions affirmed by either the Board or relevant officers of the
are executed at arm’s length and fair value. Policy on Company.
related party transactions is uploaded in the corporate
website. Details such as name of parties involved, Company Website
corresponding relationships, nature and value of related The following information about Max’s Group are disclosed
party transactions are to be disclosed in the Company’s in the company website:
Annual Report (SEC Form 17-A).
• Business Operations
Directors Dealings in Company Shares • Financial Statements/Quarterly Reports
Directors are required to report dealings in securities of • Investor/Media Presentation Materials
Max’s Group within three (3) business days from date of • Shareholding Structure
transaction. • Corporate Structure
• Downloadable Annual Report
Medium of Communication • Notice of Annual Stockholders’ Meeting
Financial and operating results, major corporate • Minutes of Annual Stockholders’ Meeting
undertakings and other disclosable material information • Articles of Incorporation
are timely and accurately disclosed to the investing • By-Laws
community and regulators by the Company’s investor • Revised Manual on Corporate Governance
relations unit. Max’s Group engages investors and other • Corporate Disclosures
stakeholders through various modes of communication • International Franchising

Balancing Continuity and Renewal : 2019 Annual Report 41

 CORPORATE GOVERNANCE REPORT

Investor Relations from minority shareholders and shall promote

Max’s Group established an investor relations program transparency of the Board’s nomination and election
to reprise the investing public of salient and material process;
corporate developments. The investor relations unit
plays the lead role in formulating and carrying out • Ensure and adopt an effective succession planning
policies related to the disclosure of relevant information program for directors, key officers and management
to the public and regulators. It also spearheads the to ensure growth and a continued increase in the
implementation and monitoring of compliance to the shareholders’ value and adopt a policy on the
Company’s Revised Manual of Corporate Governance. retirement age for directors and key officers as
part of management succession and to promote
The Company has appointed Ms. Miren E. Cueto as dynamism in the Company;

Investor Relations and Compliance Manager. For investor

• Oversee the development of and approve the
inquiries, Ms. Cueto may be reached through the following:
Company’s purpose, vision, mission, business
objectives and strategy, and monitor their
Email: [email protected]
implementation annually, in order to sustain the
Office: (632) 87849000 local 1271
Company’s long-term viability and strength;

RESPONSIBILITIES OF THE BOARD

• Align the remuneration of key officers and board
Compliance with the principles of good corporate
members with the long-term interests of the
governance shall start with the Board of Directors. It
Company and formulate and adopt a policy
shall be the Board’s responsibility to foster the continuing
specifying the relationship between remuneration
success of the Company and secure its sustained and performance;
competitiveness in a manner consistent with its fiduciary
responsibility, which it shall exercise in the best interest • Ensure that the Company complies with all relevant
of the Company, its shareholders and other stakeholders. laws, regulations and codes of best business
The Board shall conduct itself with utmost honesty and practices;
integrity in the discharge of its duties, functions and
responsibilities. The Company’s Corporate Governance • Establish corporate disclosure policies and
Policy (Revised Manual on Corporate Governance) is procedures to ensure a comprehensive, accurate,
disclosed and may be accessed via website at: http:// reliable and timely report to shareholders and other
investor.maxsgroupinc.com. stakeholders that gives a fair and complete picture
of the Company’s financial condition, results and
Board Duties business operations, as provided under Rules 68
The Board shall formulate the Company’s vision, mission, of the Securities Regulation Code (SRC), Philippine
strategic objectives, policies and procedures to guide Stock Exchange Listing and Disclosure Rules, and
its activities, including means to effectively monitor other regulations such as those required by the
Management performance. To ensure a high standard of Bangko Sentral ng Pilipinas (BSP), as essential for
best practice for the Company and its stakeholders, the comprehensive and timely reporting;
Board shall:
• Implement a process of selection to ensure a mix of • Promote cooperation between the stakeholders
competent directors and officers and adopt a policy of the Company and the Company in formulating
on Board diversity, as to age, ethnicity, culture, skills, the Company’s strategic and operational decisions
competence and knowledge; affecting wealth, growth and sustainability;

• Assess the performance of Management led by the • Adopt a policy informing the shareholders of all their
President and control functions led by their respective rights;
heads (Chief Risk Officer, Chief Compliance Officer,
and Chief Audit Executive); • Adopt an internal control system, including setting up
a mechanism for monitoring and managing potential
• Develop a policy on board nomination, which shall conflicts of interest of Management, board members,
encourage shareholders’ participation by including and shareholders, and improve the Company’s
procedures on how the Board accepts nominations Internal Audit Charter;

42 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

• Oversee that a sound enterprise risk management Business Conduct and Ethics, and adopt an anti-
(ERM) framework is in place to effectively identify, corruption policy and program;
monitor, assess and manage key business risks. The
risk management framework shall guide the Board in • Disseminate to the Board, senior management and
identifying units/business lines and enterprise-level employees and disclose and make available to the
risk exposures, as well as the effectiveness of risk public the Code of Business Conduct and Ethics
management strategies; through the Company’s website;

• Conduct an annual self-assessment of its • Establish a Board Charter that formalizes and
performance, including the performance of the clearly states the Board’s roles, responsibilities
Chairman, individual members and committees. and accountabilities in carrying out its fiduciary
Every three (3) years, the assessment shall be duties. The Board Charter shall serve as a guide to
supported by an external facilitator; the directors in the performance of their functions
and shall be publicly available and posted on the
• Place a system that provides, at the minimum, Company’s website;
criteria and processes to determine the performance
of the Board, the individual directors, committees • Establish policies, programs and procedures that
with a feedback mechanism from the shareholders. encourage employees to actively participate in the
The Corporate Governance Committee shall oversee realization of the Company’s goal and its governance,
the evaluation process; and that covers, among others: (1) health, safety and
welfare; (2) training and development; and (3) reward/
• Formulate and implement group-wide policies and compensation for employees, encourages employees
procedures that would ensure the integrity and to perform better and motivates them to take a more
transparency of Related Party Transactions and dynamic role in the Company; and
other unusual or infrequently occurring transactions,
particularly those which pass certain thresholds of • Establish a framework for whistleblowing that
materiality; allows employees to freely communicate their
concerns about illegal or unethical practices, without
• Disclose all relevant and material information on fear of retaliation and to have direct access to an
individual board members and key executives, independent member of the Board or a unit created to
including the directors and key officers’ qualifications, handle whistleblowing concerns.
share ownership in the Company, membership of
other boards, other executive positions, continuous Notable Accomplishments in 2019
trainings attended and identification of independent • Recommended the re-appointment of Reyes
directors, to evaluate their experience and Tacandong Co. as the Company’s external auditor for
qualifications, and assess any potential conflicts the year 2019;
of interest that might affect their Judgment, as • Reviewed the Company’s mission and vision;
prescribed under Rule 12 Annex C of the SRC; • Approved cash dividends amounting to P0.15 per
share, equivalent to approximately 25% of the prior
• Provide for a policy on disclosure of non-financial year’s net income and settled within a 30-day period
information, with emphasis on the management of from declaration date;
economic, environmental, social and governance
• Conducted review of the Company’s material controls
(EESG) issues of its business, which underpin
including operational, financial and compliance and
sustainability. The Company shall adopt a globally
risk management systems;
recognized standard/framework in reporting
• Reviewed and approved Company’s quarterly
sustainability and non-financial issues;
financial results and 2019 audited financial
statements;
• Adopt a Code of Business Conduct and Ethics, which
shall provide standards for professional and ethical
Corporate Mission and Vision
behaviour, articulate acceptable and unacceptable
“We build loved brands” is the mission of Max’s Group, Inc.
conduct and practices in internal and external
Its vision is to be the leading Filipino company with the
dealings, ensure proper and efficient implementation
and monitoring of compliance of the Code of most loved brands by 2025. The Board reviews the mission

Balancing Continuity and Renewal : 2019 Annual Report 43

 CORPORATE GOVERNANCE REPORT

and vision annually and was last conducted in 2019. It The Charter of the Corporate Governance Committee is
also monitors implementation of corporate strategies in disclosed in the Company’s website at: https://investor.
relation to the mission and vision. maxsgroupinc.com/corporate-governance/board-of-
committees/.
Board Structure and Composition
Max’s Group, Inc. has a working Board composed of Duties and Responsibilities
nine members, including two independent directors, who • Oversee the implementation of the corporate
are elected at each annual stockholders’ meeting by governance framework and periodically review the
shareholders entitled to vote. Each director holds office said framework to ensure that it remains appropriate
until the next annual election and until his or her successor in light of material changes to the Company’s size,
is duly elected unless he or she resigns, dies or is removed complexity and business strategy, as well as its
prior to such election pursuant to the Company’s By-Laws. business and regulatory environments;
The Company shall have at least two independent directors
or such number that will constitute 20% of the members • Oversee the periodic performance evaluation of
of the Board but in no case less than two. The Board the Board and its committees as well as executive
represents a diverse background of professionals equipped management, and conduct an annual self-evaluation
with the necessary competencies to properly discharge his/ of its performance;
her duties judiciously and exercise independent judgment
on various matters requiring Board ratification. The • Ensure that the results of the Board evaluation are
Company does not have any executive director who serves shared, discussed, and that concrete action plans are
on more than two boards of listed entities outside of the developed and implemented to address the identified
group. areas for improvement;

Independent directors hold no interest or relationship • Recommend continuing education/training programs

with the Company including substantial shareholders for directors, assignment of tasks/projects to board
that may compromise or obstruct his/her independence committees, succession plan for the board members
in discharging the responsibilities of a director. An and senior officers, and remuneration packages for
independent director whose beneficial equity ownership corporate and individual performance;
in the Company or its subsidiaries and affiliates exceeds
2% of the subscribed capital stock is temporarily • Adopt corporate governance policies and ensure
disqualified from being a director of the Company, that these are reviewed and updated regularly, and
until his/her beneficial ownership reverts to the 2% consistently implemented in form and substance;
limit. The temporarily disqualified director shall, within
sixty (60) business days from such disqualification, • Propose and plan relevant trainings for the members
take the appropriate action to remedy or correct the of the Board;
disqualification. If he/she fails or refuses to do so for
unjustified reasons, the disqualification shall become • Determine the nomination and election process
permanent. for the Company’s directors and have the duty of
defining the general profile of board members that
BOARD COMMITTEES the Company may need and ensure appropriate
When and as deemed necessary, the Board may constitute knowledge, competencies and expertise that
Committees to aid in complying with the principles of good complement the existing skills of the Board;
corporate governance.
• Establish a formal and transparent procedure to
Corporate Governance Committee develop a policy for determining the remuneration
The Corporate Governance Committee shall be composed of directors and officers that is consistent with
of at least three (3) members directors, the majority of the Company’s culture and strategy as well as the
whom, including the Chairman, should be independent. business environment in which it operates; and
In 2019, the duties of the Nomination and Compensation
Committees were subsumed by the Corporate Governance
Committee.

44 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

• Provide in the Company’s annual reports, information dealer, futures commission merchant, commodity
and proxy statements a clear, concise and trading advisor, or floor broker; or (c) arises out of his
understandable disclosure of the Company’s policies fiduciary relationship with a bank, quasi-bank, trust
and procedure for setting Board and executive company, investment house or as an affiliated person
remuneration, including termination and retirement of any of them; 

provisions.
• Any person who, by reason of misconduct, after
Director Qualifications: hearing, is permanently enjoined by a final
• Holder of at least one (1) share of stock of the judgment or order of the SEC, BSP or any court or
Company; administrative body of competent jurisdiction from:
• He/she shall have attended a seminar on corporate (a) acting as underwriter, broker, dealer, investment
governance conducted by a duly recognized private adviser, principal distributor, mutual fund dealer,
or government institute and submitted a copy of futures commission merchant, commodity trading
his/her certificate of attendance to the Compliance advisor, or floor broker; (b) acting as director or
Officer; officer of a bank, quasi-bank, trust company,
• He/she shall be at least a college graduate or investment house, or investment company; (c)
equivalent academic degree; engaging in or continuing any conduct or practice in
• Have sufficient experience in managing the business any of the capacities mentioned in sub-paragraphs
to substitute for such formal education; (a) and (b) above, or willfully violating the laws
• He/she shall be at least twenty one (21) years old; that govern securities and banking activities. 
The
• He/she shall have proven to possess integrity and disqualification should also apply if (a) such person is
probity; and the subject of an order of the SEC, BSP or any court or
• He/she shall be assiduous. administrative body denying, revoking or suspending
any registration, license or permit issued to him
In addition to the qualifications for membership in the under the Corporation Code, SRC or any other law
Board required in relevant laws, the Board may provide administered by the SEC or BSP, or under any rule or
for additional qualifications which may include practical regulation issued by the Commission or BSP; (b) such
understanding of the Company’s business, membership in person has otherwise been restrained to engage in
good standing in relevant industry, business or professional any activity involving securities and banking; or (c)
organizations, and previous business experience. such person is the subject of an effective order of a
self-regulatory organization suspending or expelling
Disqualifications: him from membership, participation or association
The following shall be grounds for the permanent with a member or participant of the organization; 

disqualification of a director:
• Any person adjudged by final judgment or order of
• Any person convicted by final judgment or order the SEC, BSP, court, or competent administrative
by the court, or competent administrative body body to have willfully violated, or willfully aided,
of an offense involving moral turpitude, fraud, abetted, counselled, induced or procured the violation
embezzlement, theft, estafa, counterfeiting, of, any provision of the SRC, the Corporation Code, or
misappropriation, forgery, bribery, false affirmation, any other law administered by the SEC or BSP, or any
perjury or other fraudulent acts; rule, regulation or order of the SEC or BSP; 



• Any person convicted by final judgment or order • Any person judicially declared as insolvent;
by a competent judicial or administrative body of
any crime that: (a) involves the purchase or sale of • Any person finally found guilty by a foreign court
securities, as defined in the SRC; (b) arises out of the or equivalent financial regulatory authority of acts,
person’s conduct as an underwriter, broker, dealer, violations or misconduct similar to any of the acts,
investment adviser, principal, distributor, mutual fund violations or misconduct listed in the foregoing
paragraphs; and

Balancing Continuity and Renewal : 2019 Annual Report 45

 CORPORATE GOVERNANCE REPORT

• Conviction by final judgment of an offense Directorships

punishable by imprisonment for a period exceeding The Corporate Governance Committee shall consider the
six (6) years, or a violation of the Corporation Code, following guidelines in the determination of the number of
committed within five (5) years prior to the date of his directorships for the Board:
election or appointment. 
 • The nature of the business of the Company where he/
she is a director;
Any of the following shall be a ground for the temporary • Age of the director;
disqualification of a director: • Number of directorships/active memberships and
• Refusal to fully disclose the extent of his officerships in other companies or organizations; and
business interest as required under the SRC and • Possible conflict of interest.
its Implementing Rules and Regulations. This
disqualification shall be in effect as long as his refusal The optimum number shall be related to the capacity of
persists; 
 a director to perform his/her duties diligently in general.
Executive directors shall submit themselves to a low
• Absence in more than fifty percent (50%) of all indicative limit on membership in other company boards.
meetings, both regular and special, of the Board of The same low limit shall apply to independent or non-
Directors during his/her incumbency, or any twelve executive directors who serve as full-time executives in
(12)-month period during said incumbency, unless other companies. In any case, the capacity of directors
the absence is due to illness, death in the immediate to serve with diligence and perform their duties and
family or serious accident. This disqualification responsibilities efficiently should not be compromised.
applies for purposes of the succeeding election; 


Summary of Corporate Governance Committee

• Dismissal/termination from directorship in any
Attendance: 2019
publicly-listed company, public company, registered
issuer of securities and holder of a secondary license No. of
from the Commission for cause. This disqualification Meetings %
Director
Attended/ Present
shall be in effect until he/she has cleared himself/ Held*
herself of any involvement in the cause that gave rise
Antonio Jose U. Periquet Jr. 1/1 100%
to his dismissal or termination; 

(Chairman, Independent)

Sharon T. Fuentebella 1/1 100%

• If the beneficial equity ownership of an independent
director in the Company or its subsidiaries and Carolyn T. Salud 1/1 100%
affiliates exceeds two percent (2%) of its subscribed *Mr. Jose Victor P. Paterno, Independent Director, was appointed as Chairman of
the Corporate Governance Committee on May 9, 2019 during the organizational
capital stock. The disqualification from being elected
meeting of the Board of Directors. Members of the Corporate Governance Committee
as an independent director is lifted if the limit is later include: Mr. Jose Victor P. Paterno, Mr. Antonio Jose U. Periquet Jr., and Ms. Sharon
T. Fuentebella. The special meeting of the Corporate Governance Committee as
complied with; and 
 indicated in the table above was held last year before Mr. Paterno’s appointment.

• Judgments or orders that has not yet become

Notable Accomplishments in 2019
final referred to in the grounds for the permanent
• Reviewed nomination process on identifying quality
disqualification of directors. An independent director
of directors aligned with the Company’s strategic
whose beneficial equity ownership in the Company
directions and ensured that all nominees to the
or its subsidiaries and affiliates exceeds two percent Board possess all the qualifications and none of the
(2%) if the subscribed capital stock is temporarily disqualifications as stated in the Revised Manual of
disqualified from being a director of the Company, Corporate Governance;
until his/her beneficial equity ownership reverts to the • Engaged professional search firms and other external
two percent (2%) limit. sources to help explore potential candidates to the
Board and Senior Management;
• Recommended hiring and movement of key
management personnel; and
• Reviewed Committee charter.

46 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

Audit and Risk Committee • Reviewed and approved matters presented by the
The Audit and Risk Committee shall be composed of at Internal Audit Group and Reyes Tacandong Co.;
least three (3) members of the Board, one (1) of whom shall • Conducted review and determined that the
be an independent director, who shall be the Chairman Company’s internal controls/risk management
thereof. Each member possess relevant accounting systems are adequate and aligned with best business
experience and shall have adequate understanding at practices; and
least or competence at most of the Company’s financial • Reviewed the Committee charter.
management systems and environment. The Charter of the
Audit and Risk Committee is disclosed in the Company’s Summary of Audit and Risk Committee Attendance:
website at: http://investor.maxsgroupinc.com/corporate- 2019
governance/board-of-committees/.
No. of
Meetings %
Duties and Responsibilities Director
Attended/ Present
• Assist the Board in the performance of its oversight Held*
responsibility for the financial reporting process, Antonio Jose U. Periquet Jr. 5/5 100%
system of internal control, audit process and (Chairman, Independent)
monitoring of compliance with applicable laws, rules
Dave T. Fuentebella 5/5 100%
and regulations;
• Check all financial reports against its compliance Cristina T. Garcia 5/5 100%
with both the internal financial management
handbook and pertinent accounting standards
Board Meetings and Attendance
including regulatory requirements;
The calendar of Board meetings are determined before
• Perform oversight financial management functions
the start of financial year. For 2019, the Board held nine
specifically in the areas of managing credit, market,
(9) meetings with an average attendance of 96%. Board
liquidity, operational, legal and other risks of the
materials are provided to each member at least five (5)
Company and crisis management;
business days before the meeting. A majority of the number
• Pre-approve all audit plans, scope and frequency one
of directors shall constitute a quorum for the holding of a
(1) month before the conduct of external audit;
Board meeting. Majority vote of all Board members present
• Perform direct interface functions with the internal
shall be compulsory to approve or carry out a valid act or
and external auditors;
resolution. The Corporate Secretary plays a significant role
• Elevate to international standards the accounting
in supporting the Board in discharging its responsibilities.
and auditing processes, practices and methodologies
She is trained in legal, accountancy, company secretarial
and develop the following in relation to this reform:
duties and has working knowledge of the Company’s
a. A definitive timetable within which the
operations.
accounting system of the Company will be
100% International Accounting Standard (IAS)
Summary of Board Meeting Attendance: 2019
compliant;
b. An accountability statement that will No. of
Meetings %
specifically identify officers and/or personnel Director
Attended/ Present
directly responsible for the accomplishment of Held*
such task;
Sharon T. Fuentebella 9/9 100%
• Develop a transparent financial management system
that will ensure the integrity of internal control Robert F. Trota 9/9 100%
activities throughout the Company through a step- Dave T. Fuentebella 9/9 100%
by-step procedures and policy handbook that will be
Carolyn T. Salud 9/9 100%
used by the entire organization for the benefit of all
shareholders and stakeholders; Cristina T. Garcia 9/9 100%
Jim T. Fuentebella 9/9 100%
Notable Accomplishments in 2019 William E. Rodgers 9/9 100%
• Recommended the re-appointment of Reyes
Antonio Jose U. Periquet Jr. 9/9 100%
Tacandong Co. as the Company’s external auditor for
the year 2019; Jose Victor P. Paterno** 6/9 63%
• Reviewed and approved the Company’s 2019 Audited *Includes Regular, Organizational and Special Meetings of the Board of Directors
** Mr. Jose Victor P. Paterno was elected as Independent Director effective 19 March
Financial Statements as well as quarterly unaudited 2019. One of the regular board meetings held last year was on January 31, 2019, before
financial results; his appointment.

Balancing Continuity and Renewal : 2019 Annual Report 47

 CORPORATE GOVERNANCE REPORT

Board Appointment and Re-election The minimum internal control mechanisms for
The criteria and qualifications used in selecting new management’s operational responsibility shall center
directors are detailed in the charter of the Corporate on the Chief Executive Officer (CEO), being ultimately
Governance Committee. The Company encourages active accountable for the Company’s organizational and
participation among its shareholders in the nomination procedural controls. The scope and particulars of a system
and election process of Board members. The Company of effective organizational and procedural controls shall be
likewise engages third-party search firms to identify based on the following factors: the nature and complexity
individuals who possess the qualifications as stated by the of business and the business culture; the volume, size and
Board. All directors are subject to re-election every year complexity of transactions; the degree of risk; the degree of
during the Annual Stockholders’ Meeting and shall serve centralization and delegation of authority; the extent and
for a minimum of one (1) year from the date of election effectiveness of information technology; and the extent of
until such time of either re-election or replacement by their regulatory compliance.
successors in accordance with the Company’s By-laws.
Enterprise Risk Management
Board Remuneration The Company’s risk management framework integrates
Members of the Board are duly compensated for services strategy setting and designed to identify potential events
rendered to the Board. The Board, as aided by the that may affect the Company, manage risks to be within its
Corporate Governance Committee, shall designate the risk appetite, and provide reasonable assurance regarding
amount of remuneration which shall be sufficient to attract the achievement of its objectives.
and retain qualified and competent directors. Directors are
prohibited from deciding on his or her own remuneration. Max’s Group employs the Assess, Implement and Monitor
Each director receives a fixed per diem of P75,000 for each (A.I.M.) risk model. The Company has a dedicated
regular Board meeting and P35,000 per Board Committee Corporate Systems and Risk Management Manager tasked
meeting attended. Total compensation paid to Executive to institute a structured risk control system. The Assess
Directors and Key Officers are contained in the Definitive phase starts with evaluation and planning where risks are
Information Statement and Annual Report (SEC Form 17-A). classified based on different categories that correspond
This includes basic salary, performance-based bonuses to certain action plans. The Implement phase focuses on
and other variable pay. Independent directors are not activating programs in place to mitigate effects of such
entitled to bonuses, options and performance shares. risks. The Company has contingency plans in place to
ensure business continuity and handle unexpected events
Compensation of Independent Directors: 2019 that may adversely affect operations of the Company. The
Monitor phase observes and reviews the effectiveness of
Director Gross Remuneration
procedures in alleviating the outcome of risks.
People on the Board
Antonio Jose U. Periquet Jr. P625,000

The roles of the Chairperson and President are separate to

Jose Victor P. Paterno P300,000
ensure the exercise of objective and independent judgment
on corporate activities. The Chairperson of the Board is Ms.
Internal Audit Sharon T. Fuentebella while Mr. Robert F. Trota holds the
The Company shall have in place a separate and position of President and Chief Executive Officer. Both were
independent internal audit function which shall be elected on February 24, 2014. The Company’s nomination
performed by an Internal Auditor or a group of Internal process encourages a mix of competent directors with
Auditors, through which its Board, senior management, diverse business backgrounds.
and stockholders shall be provided with reasonable
assurance that its key organizational and procedural Director Training and Continuing Education Program
controls are effective, appropriate, and complied with. The An orientation program for first time directors of the
Internal Audit Group is headed by Ms. Rona A. Silvestre, Company shall be conducted, for at least four (4) hours, and
who reports to the Audit and Risk Committee. The shall cover SEC-mandated topics on corporate governance
appointment and removal of the Internal Auditor requires and an introduction to the Company’s business, Articles of
the approval of the Audit and Risk Committee. Incorporation and Code of Conduct. An annual continuing

48 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

training for all directors shall be conducted for at least four Ariel P. Fermin 08 Exclusive SGV
(4) hours, and shall cover courses on corporate governance November Corporate
matters relevant to the Company, including audit, internal 2019 Governance
Program
controls, risk management, sustainability and strategy.
Rebecca R. Arago 08 Exclusive SGV
In 2019, all members of the Board successfully completed
November Corporate
an exclusive training course on corporate governance 2019 Governance
duly conducted and certified by SyCip Gorres Velayo & Program
Co. (SGV) or Good Governance Advocates & Practitioners Carmen A. Basallo- 08 Exclusive SGV
of the Philippines (GGAPP), locally-based professional Estampador November Corporate
2019 Governance
organizations accredited by the Securities and Exchange
Program
Commission.
Miren E. Cueto 08 Exclusive SGV
November Corporate
Summary of Board Meeting Attendance: 2019
2019 Governance
Date of Program Training Program
Director/Officer
Training Attended Institution
Sharon T. 08 Exclusive SGV
Fuentebella November Corporate Corporate Secretary
2019 Governance The Corporate Secretary is an officer of the Company and
Program perfection in performance and no surprises are expected
Robert F. Trota 08 Exclusive SGV of him/her. Likewise, his loyalty to the mission, vision and
November Corporate
specific business objectives of the corporate entity come
2019 Governance
Program with his/her duties.
Dave T. Fuentebella 08 Exclusive SGV
November Corporate The Corporate Secretary shall be a Filipino citizen and a
2019 Governance resident of the Philippines.
Program

Carolyn T. Salud 08 Exclusive SGV Considering his/her varied functions and duties, he/she
November Corporate
must possess administrative and interpersonal skills, and
2019 Governance
Program if he/she is not the general counsel, then he/she must have
Cristina T. Garcia 08 Exclusive SGV some legal skills. He/she must also have some financial
November Corporate and accounting skills and working knowledge of the
2019 Governance operations of the corporation.
Program
Jim T. Fuentebella 08 Exclusive SGV The Corporate Secretary shall be a separate individual
November Corporate
2019 Governance from the Compliance Officer, shall not be a member of the
Program Board of Directors, and shall annually attend a training on
William E. Rodgers 08 Exclusive SGV corporate governance.
November Corporate
2019 Governance Duties and Responsibilities
Program
• Be responsible for the safekeeping and preservation
Antonio Jose U. 17 Corporate GGAPP of the integrity of the minutes of the meetings of the
Periquet Jr. July Governance
2019 Training: Board and its committees, as well as the other official
CG Trends records of the company;
and D&O • Work fairly and objectively with the Board,
Roles and
Management, stockholders and other stakeholders
Liabilities
and contributes to the flow of information between
Jose Victor Paterno 17 Corporate GGAPP
July Governance the Board and management, the Board and its
2019 Training: committees, and the Board and its stakeholders,
CG Trends including shareholders;
and D&O
• Attend all Board meetings, except when justifiable
Roles and
Liabilities causes, such as illness, death in the immediate family

Balancing Continuity and Renewal : 2019 Annual Report 49

 CORPORATE GOVERNANCE REPORT

and serious accidents prevent him/her from doing so, the Asian Institute of Management (AIM) and managing
and maintain records of the same; growing companies from Stanford University. Ms.
• Assist the Board in the conduct of their meetings; Fuentebella does not hold directorships in other listed
• Keep abreast on relevant laws, regulations, companies. She has over 20 years of experience in the food
all governance issuances, relevant industry and beverage industry.
developments and operations of the Company, and
advises the Board and the Chairman on all relevant ROBERT RAMON F. TROTA
issues as they arise; President and Chief Executive Officer
• Advise on the establishment of board committees Robert Ramon F. Trota, age 52, Filipino, currently serves as
and their terms of reference; President of Teriyaki Boy Group, Inc., and Golden B.E.R.R.D.
• Perform required administrative functions; and Grill, Inc. He also sits in the Board for most of the Max’s
• Performs such other duties and responsibilities as corporations and its affiliates. He is currently the Vice
may be provided by the Securities and Exchange Consul for the Consulate General of Ireland. Moreover,
Commission; Mr. Trota served as Chairman of the Philippine Franchise
Association from June 2009 to 2013. Mr. Trota holds a
Board Performance Bachelor of Science degree in Business Management from
The Board, Board Committees and Independent Directors the De La Salle University and has completed training
are in the process of enhancing its yearly self-assessment seminars/programs for effective management and family-
exercise guided by a defined set of criteria to measure owned company governance and management conducted
performance and effectiveness. Each director shall rate his by the Asian Institute of Management (AIM). Mr. Trota
or her individual performance and the Board and Board does not hold directorships in other listed companies. He
Committees as a whole. The results of which are to be has over 20 years of experience in the food and beverage
submitted to the Compliance Officer for consolidation and industry.
returned to the Board for further discussion.
CRISTINA T. GARCIA
The criteria shall comprise of three broad areas that cover Director
Board functions – Key Responsibilities, Meeting Procedures Cristina T. Garcia, age 54, Filipino, is currently the Resident
and Individual/Board Performance. In addition, the Board Agent of Global Max Services Ltd. – ROHQ and President
does an annual performance evaluation of the Chief of No Bia, Inc. She likewise holds Directorship positions
Executive Officer. in various companies namely: Trofi Ventures Corp., Trofi
Holdings Corp., Trofi Boosters Corp., Max’s Bakeshop,
Inc., Max’s Kitchen, Inc., The Real American Doughnut
BOARD PROFILE Company, Inc., MGOC Holdings, Inc., Ad Circles, Inc., and
Trota, Gimenez Realty Corp. Ms. Garcia holds a Bachelor of
SHARON T. FUENTEBELLA Science degree in Business Management from the Ateneo
Chairperson de Manila University (1986). Ms. Garcia does not hold
Sharon T. Fuentebella, age 53, Filipino, currently sits as directorships in other listed companies. She has over 20
President of The Real American Doughnut Company, Inc., years of experience in the food and beverage industry.
MGOC Holdings Corp. and Trota, Gimenez Realty Corp.
She holds Directorship and acts as Chairperson for most CAROLYN TROTA- SALUD
of Max’s corporations and its affiliates namely: Max’s Director
Kitchen, Inc., Inc. and other affiliates such as Ad Circles, Carolyn T. Salud, age 56, Filipino, holds the Directorship
Inc., No Bia, Inc., Max’s Bakeshop, Inc., and Teriyaki Boy and President position of Max’s corporations namely:
Group, Inc. Ms. Fuentebella holds a Bachelor of Science Max’s Kitchen, Inc., and other affiliates such as Ad Circles,
degree in Business Management from the De La Salle Inc., and Max’s Bakeshop, Inc. She likewise serves as
University and has completed training seminars/programs Chairperson of The Real American Doughnut Company,
for managing family-owned companies conducted by Inc., Trofi Boosters Corp., Trofi Holdings, Corp., Trofi

50 Balancing Continuity and Renewal : 2019 Annual Report

 CORPORATE GOVERNANCE REPORT

Ventures, Corp., Trota, Gimenez Realty Corp. and MGOC Realty Corp. Mr. Rodgers holds a Master’s Degree in
Holdings, Corp. Ms. Salud holds a Bachelor of Science Economic Development from Columbia University and has
degree in Business Administration from Assumption completed training seminars/programs for family-owned
College. Ms. Salud does not hold directorships in other company governance and management conducted by the
listed companies. She has over 20 years of experience in Asian Institute of Management (AIM). Mr. Rodgers does not
the food and beverage industry. hold directorships in other listed companies. He has over
20 years of experience in the food and beverage industry.
DAVE T. FUENTEBELLA
Director ANTONIO JOSE U. PERIQUET JR.
Dave T. Fuentebella, age 52, Filipino, was previously a full- Independent Director
time banking professional, having held various positions in Antonio Jose U. Periquet Jr., age 59, Filipino, is an
BPI Capital, Citibank, Standard Chartered Bank, and Credit Independent Director of Max’s Group, Inc. He is Chairman
Agricole since 2001. He has been the Director and Head of Pacific Main Holdings, Inc., Campden Hill Group Inc.,
of Global Transaction Banking in Deutsche Bank since Campden Hill Advisors, Inc., and BPI Asset Management
2012. He previously served as Director in Max’s Makati, and Trust Corporation. He also sits as a Director of The
Inc., Max’s Kitchen, Inc., Max’s Sta. Mesa, Inc. and Square Straits Wine Company, Inc., and a Trustee of Lyceum of
Top, Inc. Mr. Fuentebella holds a Bachelor of Arts degree the Philippines University. He is an Independent Director
in Economics and Political Science from the University of of ABS-CBN Holdings, Inc., ABS-CBN Corporation, Ayala
California, Berkeley and completed his Master’s Degree Corporation, Bank of the Philippine Islands, BPI-Capital
in Business in the Asian Institute of Management (AIM). Corporation, BPI-Family Savings Bank, Inc., DMCI
Mr. Fuentebella does not hold directorships in other listed Holdings, Inc., Philippine Seven Corporation, and Semirara
companies. He has over 20 years of combined experience Mining and Power Corporation. He is also a member of
in the banking and food industries. the Global Advisory Board of the University of Virginia’s
Darden School of Business. Mr. Periquet holds an AB
JIM T. FUENTEBELLA Economics degree from the Ateneo de Manila University,
Director an MSc in Economics from Oxford University and an MBA
Jim T. Fuentebella, age 51, Filipino, is currently a Director from the University of Virginia.
of Max’s Kitchen, Inc., The Real American Doughnut
Company, Inc., MGOC Holdings, Inc., Trota, Gimenez JOSE VICTOR P. PATERNO
Realty Corp., Ad Circles, Inc., No Bia, Inc., Max’s Bakeshop, Independent Director
Inc., and Teriyaki Boy Group, Inc.. He also acts as a Jose Victor P. Paterno, age 51, Filipino, is an Independent
Chairperson for Golden B.E.R.R.D. Grill, Inc. Mr. Fuentebella Director of Max’s Group, Inc. He is President/CEO and
holds a Bachelor of Arts degree in Graphic Design with Director of Phil. Seven Corp. He also sits as a Director of
a minor in Business Administration from the Academy Electric Commerce Payment Network, The Straits Wine
of Art, University of San Francisco and has completed Company., Inc. He is a Board Co-Chair at ERC Phils., VP-
training seminars/programs for effective management and National Chapter Development, of Philippine Franchise
family-owned company governance and management Association. He’s also a member of Management Assoc
conducted by the Asian Institute of Management (AIM). of the Phils, Makati Business Club, and Young Presidents
Mr. Fuentebella does not hold directorships in other listed Organization. Mr. Paterno holds a BS Mechanical
companies. He has over 20 years of experience in the food Engineering Magna Cum Laude from Lehigh University,
and beverage industry. Bethlehem Pennsylvania, USA.

WILLIAM E. RODGERS
Director
William E. Rodgers, age 58, American, is the President
of MG Rodgers Phil. Inc. He is a Director for eMax’s LLC,
Alpha Max Group LTD, Ad Circles, Inc., and Trota Gimenez

Balancing Continuity and Renewal : 2019 Annual Report 51

 CORPORATE GOVERNANCE REPORT

The Board of Directors and Management of Max’s Group, and Philippine Stock Exchange by the responsible
Inc., employees and shareholders, believe that corporate committee or officer through the Compliance Officer.
governance is a necessary component of what constitutes All material information, i.e., anything that could
sound strategic business management and will therefore potentially affect share price and which could adversely
undertake every effort necessary to create awareness affect its viability or interest of its shareholders and other
within the organization as soon as possible. stakeholders, shall be publicly and timely disclosed. Such
information shall include earnings results, acquisition
The Company is committed to the principles and best or disposal of assets, Board changes, related party
practices contained in its Revised Manual on Corporate transactions, shareholdings of directors and changes in
Governance (“Manual”) and acknowledge that the same ownership.
may guide the attainment of our corporate goals. Other information that shall always be disclosed includes
This Manual shall institutionalize the principles of good remuneration (including stock options) of all directors and
corporate governance in the entire organization. senior management, corporate strategy, and off-balance
sheet transactions.
Evaluation System All disclosed information shall be released via the approved
The Company has adopted a corporate governance self- stock exchange procedure for company announcements as
rating method to evaluate the level of compliance of the well as through the annual report.
Company with its Manual on Corporate Governance. In
addition, the Compliance Officer reviews on a periodic The Board shall commit at all times to fully disclose
basis the level of compliance of its directors, officers, and material information dealings. It shall cause the filing of all
employees with the leading practices and principles on required information for the interest of the stakeholders.
good corporate governance as embodied in the Company’s
Manual. Deviations from the Manual
The Company does not have any reported deviations from
Measures on Leading Practices of Good Corporate the Manual.
Governance
In compliance with Securities and Exchange Commission Improvement of Corporate Governance Standards
Memorandum Circular No. 19 – Series of 2016, the Max’s Group improved its governance score to 91.39 points
Company submitted its Revised Manual on Corporate in 2018 compared to 83.92 points for 2017 compared based
Governance on May 29, 2017. In keeping the same, the on the assessment of the Institute of Corporate Directors
following policies related to disclosure are observed: on best practices featured in the ASEAN Corporate
Reports or disclosures required under the Company’s Governance Scorecard.
Revised Corporate Governance Manual shall be prepared Max’s Group, Inc. will be filing its 2019 Integrated Annual
and submitted to the Securities and Exchange Commission Corporate Governance Report on or before 30 May 2020.

EXHIBITS AND REPORTS ON SEC FORM 17-C

Reports filed for the period January 1, 2019 to December 31, 2019

Circular No. Circular Date Disclosure Subject

C00391-2019 Jan 23, 2019 Share Buy-Back Transactions

C00403-2019 Jan 24, 2019 Share Buy-Back Transactions

C00438-2019 Jan 25, 2019 Share Buy-Back Transactions

C00450-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions

C04510-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions

C00452-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions

C00482-2019 Jan 28, 2019 Change in Directors and/or Officers (Resignation,

Removal or Appointment, Election and/or Promotion)

C00580-2019 Jan 31, 2019 Press Release: Max’s Group to Accelerate International
Business

C00624-2019 Feb 04, 2019 Change in Directors and/or Officers (Resignation,

52 Balancing Continuity and Renewal : 2019 Annual Report Removal or Appointment, Election and/or Promotion)

C01603-2019 Mar 15, 2019 Notice of Analysts’/Investors’ Briefing

C00438-2019 Jan 25, 2019 Share Buy-Back Transactions

C00450-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions

C04510-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions

C00452-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions

CORPORATE GOVERNANCE REPORT
C00482-2019 Jan 28, 2019 Change in Directors and/or Officers (Resignation,
Removal or Appointment, Election and/or Promotion)

Circular No.
C00580-2019 Circular
Jan 31, 2019Date Disclosure Subject
Press Release: Max’s Group to Accelerate International
Business
C00391-2019 Jan 23, 2019 Share Buy-Back Transactions
C00624-2019 Feb 04, 2019 Change in Directors and/or Officers (Resignation,
C00403-2019 Jan 24, 2019 Share Buy-Back
Removal Transactions
or Appointment, Election and/or Promotion)
C00438-2019
C01603-2019 Jan 25,
Mar 2019
15, 2019 Share Buy-Back
Notice TransactionsBriefing
of Analysts’/Investors’
C00450-2019
C01682-2019 Jan
Mar25,
20,2019
2019 (Amend)
Change inShare Buy-Back
Directors Transactions
and/or Officers (Resignation,
Removal or Appointment, Election and/or Promotion)
C04510-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions
C01687-2019 Mar 20, 2019 Press Release: Max’s Group 2018 Earnings Results
C00452-2019 Jan 25, 2019 (Amend) Share Buy-Back Transactions
C01694-2019 Mar 20, 2019 Declaration of Cash Dividends
C00482-2019 Jan 28, 2019 Change in Directors and/or Officers (Resignation,
C01693-2019 Mar 20, 2019 Removal
Notice of or Appointment,
Annual Election
Stockholders’ and/or Promotion)
Meeting
C00580-2019
C01695-2019 Jan 31,
Mar 20,2019
2019 Press Release:
Material Max’s Group
Information to Accelerate
/ Transactions: International
Results of Board
Business
Meeting
C00624-2019
C01732-2019 Feb
Mar04, 2019
21, 2019 Change
(Amend)inNotice
Directors and/orStockholders’
of Annual Officers (Resignation,
Meeting
Removal or Appointment, Election and/or Promotion)
C02317-2019 April 10, 2019 Change in Directors and/or Officers (Resignation,
C01603-2019 Mar 15, 2019 Notice of or
Removal Analysts’/Investors’ Briefing
Appointment, Election and/or Promotion)
C01682-2019
C02880-2019 Mar 20,
May 02, 2019
2019 ChangeofinAnalysts’/Investors’
Notice Directors and/or Officers (Resignation,
Briefing
Removal or Appointment, Election and/or Promotion)
C03165-2019 May 09, 2019 Results of Annual Stockholders’ Meeting
C01687-2019 Mar 20, 2019 Press Release: Max’s Group 2018 Earnings Results
C03168-2019 May 09, 2019 Results of Organizational Meeting of Board of Directors
C01694-2019 Mar 20, 2019 Declaration of Cash Dividends
C03169-2019 May 09, 2019 Amendments to Articles of Incorporation
C01693-2019 Mar 20, 2019 Notice of Annual Stockholders’ Meeting
C03185-2019 May 10, 2019 Material Information / Transactions: Results of Board
C01695-2019 Mar 20, 2019 Material Information / Transactions: Results of Board
Meeting
Meeting
C03189-2019 May 10, 2019 Press Release: First Quarter Earnings Results
C01732-2019 Mar 21, 2019 (Amend) Notice of Annual Stockholders’ Meeting
C03212-2019 May 10, 2019 (Amend) Press Release: First Quarter Earnings Results
C02317-2019 April 10, 2019 Change in Directors and/or Officers (Resignation,
C03457-2019 May 20, 2019 Removal or Appointment,
(Amend) Change Election
in Directors and/orand/or Promotion)
Officers (Resignation,
Removal or Appointment, Election and/or Promotion)
C02880-2019 May 02, 2019 Notice of Analysts’/Investors’ Briefing
C03617-2019 May 24, 2019 (Amend) Results of Organizational Meeting of Board of
C03165-2019 May 09, 2019 Results of Annual Stockholders’ Meeting
Directors
C03168-2019
C03654-2019 09, 2019
May 28, Results ofInformation
Material Organizational Meeting ofSale
/ Transactions: Board
of of Directors
Subsidiary,
Room Ventures, Corp.
C03169-2019 May 09, 2019 Amendments to Articles of Incorporation
C03655-2019 May 28, 2019 Press Release: Max’s Group Announces Sale of
C03185-2019 May 10, 2019 Material Hotel
Meranti Information / Transactions: Results of Board
Meeting
C05169-2019 July 25, 2019 Notice of Analysts’/Investors’ Briefing
C03189-2019 May 10, 2019 Press Release: First Quarter Earnings Results
C05603-2019 Aug 09, 2019 Material Information / Transactions: Results of Board
C03212-2019 May 10, 2019 (Amend) Press Release: First Quarter Earnings Results
Meeting
C03457-2019
C05604-2019 May 09,
Aug 20, 2019
2019 (Amend)
Press Change
Release: in Directors
First and/or Officers
Half and Second (Resignation,
Quarter 2019
Removal or
Earnings Appointment, Election and/or Promotion)
Results
C03617-2019
C05980-2019 May 24, 2019
Aug 29, 2019 (Amend) Amendments
Results of Organizational Meeting
to Articles of of Board of
Incorporation
Directors
C06752-2019 Oct 04, 2019 Change in Corporate Contact Details and/or Website
C03654-2019 May 28, 2019 Material Information / Transactions: Sale of Subsidiary,
C07073-2019 Oct 10, 2019 Room Ventures,
Material Corp./ Transactions: Results of Board
Information
Meeting
C03655-2019 May 28, 2019 Press Release: Max’s Group Announces Sale of
C07649-2019 Nov 04, 2019 MerantiofHotel
Notice Analysts’/Investors’ Briefing
C05169-2019
C07898-2019 July 11,
Nov 25,2019
2019 Notice ofInformation
Material Analysts’/Investors’ Briefing
/ Transactions: Results of Board
Meeting
C05603-2019 Aug 09, 2019 Material Information / Transactions: Results of Board
C07899-2019 Nov 11, 2019 Meeting
Press Release: Nine Months and Third Quarter 2019
Earnings Results
C05604-2019 Aug 09, 2019 Press Release: First Half and Second Quarter 2019
C08143-2019 Nov 19, 2019 EarningsInformation
Material Results / Transactions: Term Loan
Agreements with Development Bank of the Philippines
C05980-2019 Aug 29, 2019 (Amend) Amendments to Articles of Incorporation

C06752-2019 Oct 04, 2019 Change in Corporate Contact Details and/or Website
Balancing Continuity and Renewal : 2019 Annual Report 53
C07073-2019 Oct 10, 2019 Material Information / Transactions: Results of Board
Meeting
BOARD OF
DIRECTORS

54 Balancing Continuity and Renewal : 2019 Annual Report

SHARON T. ROBERT F. DAVE T.
FUENTEBELLA TROTA FUENTEBELLA
CHAIRPERSON PRESIDENT AND CHIEF EXECUTIVE DIRECTOR
OFFICER

Ms. Fuentebella leads the Corporate Mr. Trota provides strategic leadership Mr. Fuentebella guides the Corporate
Business Development unit of the for the Company. Together with the Finance team for effective and
Group. She provides guidance and Board and Management Team, he efficient operations, and ensures
structure in the implementation of identifies long-term goals, plans, and the Company’s compliance with
MGI’s store expansion plans, and policies. He coaches the Franchising financial regulations and standards.
identifies and develops growth Development team and several He oversees the Company’s financial
opportunities for various brands. She is Strategic Business Units of MGI, strategies and ensures that these are
in charge of the operations, sales, and including Pancake House, Yellow Cab executed within the requisite risk and
marketing of the international brands Pizza Co., Teriyaki Boy, Sizzlin’ Steak, return profile.
Krispy Kreme and Jamba Juice, as well and the multi-brand food hall format,
as the specialty restaurants Kabisera Eats.
and Maple.

Balancing Continuity and Renewal : 2019 Annual Report 55

CRISTINA T. CAROLYN JIM T.
GARCIA TROTA-SALUD FUENTEBELLA
DIRECTOR DIRECTOR DIRECTOR

Ms. Garcia provides leadership and Ms. Trota-Salud provides direction for Mr. Fuentebella oversees marketing
guidance to the Company’s Shared operations and business development initiatives and ensures delightful
Services departments focusing on to Max’s Restaurant, Max’s Corner experiences for the customers of all
Supply Chain, Accounting, Information Bakery, and Meranti Hotel. She the Brands. He heads the development
Technology, and Human Resources. manages the Company commissaries and execution of store concepts in
She is in charge of consolidating that cater to in-house brands and cooperation with the Company’s
support services for both local and international clients. Ms. Trota-Salud Design & Engineering team. Mr.
international services, driving synergy also leads the Corporate Sustainability, Fuentebella also creates business
across departments for optimal and Synergies, and Relationships (CSSR) opportunities by building strong
effective use of resources. programs of the Group. networks and developing initiatives
with key partners.

56 Balancing Continuity and Renewal : 2019 Annual Report

WILLIAM E. ANTONIO JOSE U. JOSE VICTOR P.
RODGERS PERIQUET, JR. PATERNO
DIRECTOR INDEPENDENT DIRECTOR INDEPENDENT DIRECTOR

Mr. Rodgers oversees the Company’s Mr. Periquet provides strategic Mr. Paterno provides strategic
operations in North America, the financial advice to the Board. He direction on the operations of the
Middle East, and Asia (outside of also chairs the Audit and Risk, and company. He is also the Chairman of
the Philippines). From his base in the Compensation Committees of the the Corporate Governance Committee.
United States, he works closely with Company.
the International Team to realize MGI’s
expansion plans in foreign markets.

Balancing Continuity and Renewal : 2019 Annual Report 57

MANAGEMENT TEAM

ARIEL P. FERMIN REBECCA R. ARAGO PAOLO DANIELE S. PYRUS A. DELA CRUZ

GROUP CHIEF SERRANO
OPERATING OFFICER CORPORATE FINANCE CHIEF OPERATING CHIEF OPERATING
DIRECTOR OFFICER OF MAX’S OFFICER OF KRISPY
RESTAURANT KREME, YELLOW CAB,
AND JAMBA JUICE

JOHN S. AMANTE AUDREY LYN S. KERWIN P. ESTEVE RHODORA M. DE

OLIVA LEON
CHIEF OPERATING
OFFICER OF PANCAKE DIRECTOR OF ANALYTICS, SENIOR MANAGER DIRECTOR OF HUMAN
HOUSE, DENCIO’S, BUSINESS & CHANNEL OF FRANCHISE RESOURCES
TERIYAKI BOY, SIZZLIN’ DEVELOPMENT DEVELOPMENT
STEAK, MAPLE, AND
ECOEATS

JOHN GASPAR A. ATTY. CARMEN A. ROBERT E. CATHLEYA S.

ANTONIO BASALLO- PAGDANGANAN GENORING
ESTAMPADOR DIRECTOR OF DIRECTOR OF
HEAD OF INFORMATION DIRECTOR OF LEGAL RESTAURANT SYSTEMS CORPORATE PLANNING,
TECHNOLOGY AND QUALITY SBU FINANCE, AND
MANAGEMENT SHARED SERVICES
ACCOUNTING
OPERATION

58 Balancing Continuity and Renewal : 2019 Annual Report

CYNTHIA R. ROBESON S. MATEO WARREN MON T. NENE O. CRUZ
VILLANUEVA MADRID
DIRECTOR OF DIRECTOR OF SUPPLY PLANT MANAGER OF PLANT MANAGER OF
PROCUREMENT CHAIN MAX’S CORNER BAKERY SQUARE TOP, INC.

CRISTY ALMEDA KAY LEE

HEAD OF CORPORATE GENERAL MANAGER OF

DEMAND AND SUPPLY INTERNATIONAL
PLANNING

Balancing Continuity and Renewal : 2019 Annual Report 59

STORE
NETWORK
Max’s Group, Inc. has decades of
success in the Philippines with a
portfolio of loved brands known
for their warmth, hospitality, great
food, and impeccable service. The
Company plans to bring this winning
recipe to the other continents.

INTERNATIONAL

6
LOCATIONS:

MAX’S RESTAURANT
CANADA
United States of America
Canada

13
Singapore
United Arab Emirates
Qatar
USA
PANCAKE HOUSE
Malaysia
United Arab Emirates

YELLOW CAB PIZZA CO.

Qatar
United Arab Emirates
Kingdom of Saudi Arabia
Singapore
Hawaii
Vietnam
Oman
Cambodia
Brunei

SIZZLIN’ STEAK
United Arab Emirates

TERIYAKI BOY
United Arab Emirates

60 Balancing Continuity and Renewal : 2019 Annual Report

9 21
1
QATAR

5 7
UAE

2
CAMBODIA
690
1
KINGDOM VIETNAM
PHILIPPINES
OF SAUDI

3 2
ARABIA OMAN
MALAYSIA

BRUNEI
SINGAPORE

Balancing Continuity and Renewal : 2019 Annual Report 61

MANAGEMENT
DISCUSSION
AND ANALYSIS

Results of Operations and Financial Condition for 2019 General and administrative expenses increased by 10.8%
For the purposes of this report, it should be noted that to P2.62 billion in 2019 from P2.36 billion in 2018 due to
Philippine Financial Reporting Standards (PFRS) 16, the payments made to food aggregator partners, investments
new accounting standard for leases, became effective for made for the training of employees and retirement
annual reporting periods commencing on or after 1 January provisions. Sales and marketing expenses increased by
2019. Unless otherwise stated, 2019 figures used in the 36.2% to P544.91 million in 2019 from P400.19 million in
discussion below are those inclusive of PFRS 16. 2018.

Consolidated Statements of Income Finance costs increased by 99.6% to P320.36 million in

Max’s Group, Inc.’s (“MGI” or the “Company”) systemwide 2019 from P160.50 million in 2018. This is attributed to the
sales, which is composed of sales from both company- effect of PFRS 16, higher interest rates and higher cost of
owned stores and franchised stores, increased by 7.0% to borrowing. To help mitigate the effects of the borrowing
P20.11 billion in 2019 from P18.80 billion in 2018. Revenues, rate environment, the Company has adopted a strategy
which comprise restaurant sales, commissary sales and to expand its store network mostly through franchising.
franchising and other revenue rose by 5.3% year on year Nonetheless, the Company will continue to work with
to P14.40 billion from P13.68 billion in 2018. Restaurant lenders in order to secure financing, as needed, based on
sales amounted to P11.79 billion, a 4.4% improvement from its expected funding requirements and expected returns for
the P11.30 billion reported in the same period last year. company-owned store expansion.
Due to MGI’s rapidly growing franchise base, commissary
sales increased by 13.6% to P1.78 billion from P1.57 billion. Earnings Before Interest and Tax (EBIT) for the year
Franchising and other revenue marginally grew by 1.0% to improved to P1.22 billion, up 15.5% versus 2018’s figure of
828.92 million from P820.41 million for 2018. P1.08 billion, while net income rose by 17.3% to P740.28
million compared to the P631.14 million reported for 2018.
Cost of sales, which is composed of raw materials and Inclusive of PFRS 16, this translates to an EBIT of 1.32 billion
packaging costs, labor costs, and other store-related and net income of P724.23 million.
and commissary-related costs such as rent, utilities,
etc., increased by 4.5% to P10.46 billion in 2019 from In 2019, MGI opened a total of 82 new stores including 22
P10.01 billion in 2018. As a result of topline improvements overseas. This brings the Company’s total store network to
outpacing the growth of cost of sales, gross profit 760 locations, with 70 situated across various locations in
increased by 7.5% to P3.95 billion in 2019 from P3.67 billion North America, the Middle East, and Asia.
in 2018, translating to an increase in gross margin--27.4%
in 2019 from 26.8% in 2018. Drivers for revenue growth Consolidated Statements of Financial Position
were the deliberate increase in selling and marketing Cash and cash equivalents grew by 26.4% to P888.55
expenses to drive mainstream brand relevance, as well as million in 2019 from P703.23 million in 2018 due to
successful initiatives relating to strategic product bundling, financing of long-term loans payable.
improved restaurant systems and effective supply chain
management.

62 Balancing Continuity and Renewal : 2019 Annual Report

 MANAGEMENT DISCUSSION AND ANALYSIS

Trade and other receivables increased by 45.2% to P1.38 primarily due to depreciation of right-of-use assets and
billion in 2019 from P948.38 million in 2018. The increase interest expense of lease liabilities per PFRS 16. The cash
was due to the outstanding franchise fees and proceeds of conversion cycle of the Company improved to negative 30
conversion of company-owned stores to franchised stores. days in 2019 from negative 29 days in 2018.
Inventories rose by 10.8% to P644.95 million from P581.89
million in 2018. This was attributable to the increasing Net cash used by investing activities settled at P811.31
number of stores and new warehouse/distribution centers million for 2019 from P765.83 million for 2018. The
used in supply chain operations. The sustained inventory Company continued to invest in the expansion of its store
management efficiency from the Company’s commissaries network and in the acquisition of property and equipment
to its stores kept the Days Inventory Outstanding flat at 21 for the new commissary in Carmona, Cavite.
days for 2019 and 2018.
Net cash used in financing activities registered at P818.67
Property and equipment grew by 10.2% to P3.69 billion million for 2019 from net cash provided at P427.54
in 2019 from P3.34 billion in 2018. MGI invested on million for 2018. This is due to the availment of additional
acquisitions for the new Carmona commissary and on new funding for working capital and capital expenditure of the
company-owned stores. Company’s new commissary in Carmona.

Trade and other payables increased by 4.3% to P2.38 Total cash provided netted at P185.32 million for the period,
billion from P2.29 billion in 2018 with an average collection bringing cash and cash equivalents to P888.54 million as
period of 81 days. of December 31, 2019 from P703.23 million as of December
31, 2018.
Loans payable decreased by 64.7% to P920.64 million in
2019 from P2.61 billion in 2018 due to the payment of short- 2020 Capital Expenditure (CAPEX) and Outlook
term loans. Long-term debt increased by 163.5% to P3.10 In 2020, MGI will continue to focus on the following
billion in 2019 from P1.18 billion in 2018. The rise is due to strategies to sustain its growth trajectory:
the funding of additional working capital and CAPEX for - Expanding its global footprint through franchise-
the new commissary in Carmona, Cavite. driven expansion;
- Driving mainstream relevance through the power of
Retained earnings increased by 33.1% to P2.44 billion in its brands;
2019 from P1.83 billion in 2018 due to income generated for - Diversifying and developing retail channels; and
2019. This increase was partially offset by the payment of - Ensuring resilience through supply chain
dividends amounting to P113.24 million. sustainability and responsiveness.

Consolidated Statements of Cash Flows We estimated to spend P600 million for our CAPEX for the
Net cash provided by operating activities grew 47.9% construction of the new Carmona commissary. Additional
to P1.82 billion in 2019 from P1.23 billion in 2018. The CAPEX may be allocated for store renovations and the
strengthened operating cash flows for the period was construction of new stores.

DECEMBER 31, 2019 DECEMBER 31, 2019

DECEMBER 31, 2018
W/ PFRS 16 W/O PFRS 16

Gross Profit Margin 27.4% 26.9% 26.8%

Net Income Margin 5.0% 5.1% 4.6%

Debt to Equity Ratio 1.84x 1.35x 1.35x

Net Debt to Equity Ratio 1.69x 1.20x 1.22x

Return on Equity 12.3% 12.5% 11.5%

Notes: a. Gross Profit Margin = Gross Profit / Revenues d. Net Debt to Equity = (Total Liabilities - Cash / Total Equity)
b. Net Income Margin = Net Income / Revenues e. Return on Equity = Net Income / Total Equity
c. Debt to Equity = Total Liabilities / Total Equity

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Financial Statements
The consolidated financial statements of Max’s Group, Inc. (“MGI”) and its subsidiaries
as of December 31, 2019 and for the years ended December 31, 2018 and 2017 include
the consolidated accounts of the Company and the following subsidiaries: PERCENTAGE OF EFFECTIVE
OWNERSHIP (%)
NAME NATURE OF BUSINESS 2019 2018 2017
Max’s Kitchen, Inc. (MKI) Restaurant 100 100 100
The Real American Doughnut Company, Inc. (TRADCI)5 Bakery 100 100 100
Fresh Healthy Juice Boosters, Inc. 5 Restaurant - 100 100
No Bia, Inc. Commissary 100 100 100
Max’s Bakeshop, Inc. Bakery 100 100 100
Ad Circles, Inc. Advertising Support 100 100 100
MGOC Holdings, Inc. Investment Holding 100 100 100
Trota Gimenez Realty Corporation Real Estate 100 100 100
Alpha (Global) Max Group Limited (Alpha Max) Franchising 100 100 100
eMax’s LLC (eMax) Franchising 100 100 100
Global Max Services Pte. Ltd. (Global Max) Management Consultancy 100 100 100
Yellow Cab Food Corporation (YCFC) 4 - 100 100
Restaurant
YCPI Pizza Venture, Inc. 55 55 55
YCPC Subic, Inc. (formerly DFSI Subic, Inc.) Restaurant 100 100 100
Always Happy BGC, Inc. Restaurant 100 100 100
PCK-LFI, Inc. Restaurant 100 100 100
PCK-Boracay, Inc. Restaurant 100 100 100
PCK Polo, Inc. Restaurant 70 70 70
PCK-Palawan, Inc. Restaurant 60 60 60
DFSI One-Nakpil, Inc. Restaurant 60 60 60
PCK-AMC, Inc. 3
Restaurant 60 60 60
PCK-Estancia, Inc. Restaurant 60 60 60
PCK-MTB, Inc. Restaurant 60 60 60
PCK-N3, Inc. (NAIA-3) Restaurant - - 51
PCK-Bel Air, Inc. Restaurant 51 51 51
PCK-MSC, Inc. 1
Restaurant 50 50 50
Pancake House International, Inc. (PHII) Holding Company 100 100 100
Teriyaki Boy International, Inc. (TBII) Franchising 100 100 100
Yellow Cab Food Co. International, Inc. (YCFCII) Franchising 100 100 100
Pancake House, International Malaysia Sdn Bhd (PHIM) Restaurant 100 100 100

Pancake House Ventures, Inc. (PHV) 3 Holding Company 100 100 100
Pancake House Products, Inc. 2 Holding Company 100 100 100
Golden B.E.R.R.D. Grill, Inc. 3
Restaurant 100 100 100
Teriyaki Boy Group, Inc. (TBGI) 3
100 100 100
TGBI-Trinoma, Inc. 60 60 60
TGBI-Marilao, Inc. Restaurant 51 51 51
TBOY-MS, Inc. 2
50 50 50
TBGI-Tagaytay, Inc. 2 40 40 40

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PERCENTAGE OF EFFECTIVE
OWNERSHIP (%)
NAME NATURE OF BUSINESS 2019 2018 2017
M Food Concepts, Inc. (M Food) Holding Company 100 100 100
Sizzlin’ Steak, Inc. (SSI) Restaurant 100 100 100
Boulangerie Francaise, Inc. (BFI) Restaurant 100 100 100
88 Just Asian, Inc. (88 JAI) Restaurant 80 80 80
CRP Philippines, Inc. 2 Restaurant 50 50 50

All of the subsidiaries are incorporated and operating in the

Philippines, except for the following entities: 220% increase in other income
- PHII, TBII and YCFII, companies incorporated Gain on sale of assets from store conversions
in British Virgin Islands; - PHIM, a company
incorporated and operating in Malaysia; 15% increase in net income Improved overall profitability
- M Food, SSI and eMax, companies incorporated in
U.S.; Balance Sheet
- Alpha Max, a company incorporated in Hong Kong; 26% increase in cash and cash equivalents
and Financing of long-term loans payable
- Global Max, a company incorporated in Singapore.
45% increase in trade and other receivables
ACCOUNTS WITH MORE THAN 5% CHANGE IN Increase is due to accrual of franchise fees and gain on
BALANCES conversion of company-owned stores to franchised stores
(Against December 31, 2018 Balances)
11% increase in inventories
Income Statement Additional stores and new warehouse/distribution centers
14% increase in commissary sales
Additional 33 local franchised outlets 102% increase in property and equipment
Due to PFRS 16 and acquisition of fixed assets for new
7% increase in gross profit stores and commissary
Increase in revenue (particularly restaurant and
commissary sales) and efficient management of cost of 14% increase in net deferred income tax assets
sales Pertains to deferred tax effect of retirement benefits and
impact of PFRS 16
11% increase in general and administrative expenses
Payments to food aggregators, investments in training of 17% increase in security, utility and other deposits
employees and retirement provisions Attributable to advanced rental and leasehold for new
company-owned stores
36% increase in sales and marketing expenses
Maintained tactical and thematic promotions across star 7% increase in other non-current assets
brands Attributable to the new company-owned stores

99% increase in finance costs 65% decrease in loans payable

Effect of PFRS 16, higher cost of borrowing and higher Payment of short-term loans
interest rates

1
Although the Parent Company owns 50% or less of the voting power of these entities, it is able to govern the financial and operating policies of the compa-
nies by virtue of agreements with the other investors of such entities. Consequently, the Parent Company considered these entities as subsidiaries.
2
Companies that are dormant or have not yet started operations as at December 31, 2019 and 2018
3
On April 24, 2018, the Plan of Merger YCFC & TBGI was approved by the SEC with TBGI as the surviving entity and YCFC was the absorbed entity.
5
On July 16, 2018, the Plan of Merger of FHJBI & TRADCI was approved by the SEC, with TRADCI as the surviving entity and FHJBI as the absorbed entity.

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163% increase in long-term debt

increased by 7% to P10.01 billion in 2018 from P9.39 billion
Increase pertains to fund for additional working capital
in 2017. As a result of the growth of revenues outpacing the
and CAPEX for new Carmona commissary growth of cost of sales, gross profit grew by 12% to P3.67
billion in 2018 from P3.28 billion in 2017, translating to an
177% increase in net retirement liabilities increase in gross margin to 26.83% in 2018 from 25.87%
Accrual of retirement expense in 2017. This increase stems from conscious profitability
efforts and initiatives within the Company relating to
33% increase in retained earnings strategic product bundling, improved restaurant systems,
Sustained profitability in 2019 effective supply chain management, mutually-beneficial
relationships with suppliers, among others.
7% increase in non-controlling interests
Share in net income of non-controlling interests General and administrative expenses increased by 9% to
P2.36 billion in 2018 from P2.17 billion in 2017 as a result
155% decrease in other comprehensive income (loss) of increased manpower costs associated with building
Foreign exchange effect and re-measurement loss on strategic capabilities within the Company. Sales and
retirement liabilities and plan assets marketing expenses increased by 2% to P400.19 million in
2019 from P390.62 million in 2017.
Results of Operations and Financial
Condition for 2018 Finance costs increased by 38% to P160.50 million in
2018 from P116.36 million in 2017 due to the increase in
Consolidated Statements of Income borrowing rates from lenders. To help mitigate the effects
System-wide sales, which is composed of sales from both of the borrowing rate environment, the Company has
company-owned stores and franchised stores, increased adopted a strategy to expand its store network mostly
by 8% to P18.80 billion in 2018 from P17.34 billion in through franchising. Nonetheless, the Company will
2017. This growth was driven by a blended same store continue to work with lenders in order to secure financing,
sales growth of 4% and the incremental sales generated as needed, based on its expected funding requirements and
by stores opened within the year. In 2018, a total of 66 expected returns for company-owned store expansion.
new stores were opened – 25 company-owned, 31 local
franchised and 11 international franchised – to bring the As a result, income before income tax increased by 28%
Company’s total to 705 stores as of year-end. This mix to P915.59 million in 2018 from P713.12 million in 2017.
of store openings is aligned with the Company’s overall However, due to the recognition of a deferred tax benefit
strategy to grow the business primarily through franchised of P146.08 million in 2017, net income grew by only 1% to
stores. P631.14 million in 2018 from P626.69 million in 2017. This
deferred tax benefit was a result of the net operating loss
Revenues, which is composed of restaurant sales, carry-overs of some subsidiaries of the Company.
commissary sales, and franchising and other revenue,
grew by 8% to P13.68 billion in 2018 from P12.66 billion in Consolidated Statements of Financial Position
2017. Restaurant sales increased by 8% to P11.30 billion Cash and cash equivalents grew by 5% to P703.23
in 2018 from P10.46 billion in 2017 due to a balanced million in 2018 from P668.98 million in 2017 as a result of
growth of both transaction count and average check in increased cash generated by the operating activities of the
company-owned stores. This growth reflects the ability Company.
of the Company to sustain its market-leading position in Trade and other receivables decreased by 11% to P948.38
the casual-dining segment through targeted marketing million in 2018 from P1,063.42 million in 2017. As a result,
activities and attractive product offerings. Commissary the Days Sales Outstanding of the Company decreased to
sales grew by 10% to P1.57 billion in 2018 from P1.42 billion 27 days in 2018 from 29 days in 2017.
in 2017 while franchising and other revenue grew by 6%
to P820.41 million in 2018 from P776.19 million in 2017 as a Despite the growth of the Company’s store network,
result of the larger base of franchising operations. inventories decreased by 1% to P581.89 million in 2018
from P589.05 million in 2017. The sustained inventory
Cost of sales, which is composed of raw materials and management efficiency from the Company’s commissaries
packaging costs, labor costs, and other store-related to its stores kept the Days Inventory Outstanding flat at 21
and commissary-related costs such as rent, utilities, etc., days for 2018 and 2017.

66 Balancing Continuity and Renewal : 2019 Annual Report

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Property and equipment grew by 7% to P3.34 billion in overall spending year-on-year as a result of the lessened
2018 from P3.13 billion in 2017. The Company invested on capital expenditures required by the shift towards a
the set up of new stores, improvements to existing stores franchising model.
and commissaries, and upgrades to strategic head office
capabilities. Net cash used in financing activities registered at P427.54
million for 2018 from net cash provided at P96.44 million
Trade and other payables increased by 15% to P2.27 in 2017. The significant change was due to the partial
billion in 2018 from P1.96 billion in 2017. As a result of the repayment of loans and payment of dividends, which were
Company’s ability to maintain beneficial payments terms partially offset by the additional short-term borrowings
with its partner suppliers, Days Payable Outstanding availed for the working capital requirements of the
remained flat at 77 days for 2018 and 2017. Company.

Loans payable grew by 4% to P2.61 billion in 2018 As a result, the total cash provided netted at P34.24
from P2.52 billion in 2017 due to additional short-term million for the period, bringing cash and cash equivalents
borrowings availed for the Company’s working capital to P703.23 million as of December 31, 2018 from P668.98
requirements. Long-term debt decreased by 26% to P1.18 million as of December 31, 2017.
billion in 2018 from P1.58 billion in 2017 as P405.61 million
of long- term debt was repaid in 2018. Key Financial Ratios

Dec 31, 2018 Dec 31, 2017

Retained earnings increased by 11% to P1.83 billion in 2018
from P1.66 billion in 2017 due to income generated for Gross Profit Margin 26.8% 25.9%
2018. This increase was partially offset by the payment of
Net Income Margin 4.6% 4.9%
dividends amounting to P122.85 million in 2018.
Debt to Equity Ratio 1.35% 1.37%
Consolidated Statements of Cash Flows
Net Debt to Equity Ratio 1.22% 1.25%
Net cash provided by operating activities grew 68% to
P1.23 billion in 2018 from P730.79 million in 2017. The Return on Equity 11.5% 11.6%
strengthened operating cash flow for the period was Notes:
primarily due to the growth of the core operating income a. Gross Profit Margin = Gross Profit / Revenues
b. Net Income Margin = Net Income / Revenues
of the Company and its overall improvement in working c. Debt to Equity = Total Liabilities / Total Equity
capital management. The cash conversion cycle of the d. Net Debt to Equity = (Total Liabilities – Cash / Total Equity)
e. Return on Equity = Net Income / Total Equity
Company improved to negative 29 days in 2018 from
negative 27 days in 2017.
Financial Statements
Net cash used by investing activities settled at P765.83 The consolidated financial statements of Max’s Group, Inc.
million for 2018 from P904.04 million in 2017. While the (“MGI”) and its subsidiaries as of December 31, 2018 and for
Company continued to invest in the expansion of its the years ended December 31, 2017 and 2016 include the
store network and the improvement of capabilities in its consolidated accounts of the Company and the following
commissaries and head office, the Company reduced its subsidiaries:
PERCENTAGE OF EFFECTIVE
OWNERSHIP (%)
NAME NATURE OF BUSINESS 2018 2017 2016
Max’s Kitchen, Inc. (MKI) 4
Restaurant 100 100 100
The Real American Doughnut Company, Inc. (TRADCI) 5
Bakery 100 100 100
Fresh Healthy Juice Boosters, Inc. 5 Restaurant - 100 100
No Bia, Inc. Commissary 100 100 100
Max’s Bakeshop, Inc. Bakery 100 100 100
4
On September 17, 2015, the SEC issued the Certificate of Filing of the Articles and Plan of Merger approving the merger executed on April 28, 2015 by MKI, as
the surviving entity, and Max’s Circle, Inc. (MCI), Max’s Makati, Inc. (MMI), Max’s SM Marikina, Inc. (MSMI), Max’s Baclaran, Inc. (MBI), Max’s Food Services,
Inc.(MFSI) , Max’s (Ermita), Inc. (MEI), Max’s Franchising, Inc. (MFI), Chicken’s R Us, Inc. (CRU), Square Top, Inc. (STI) and Max’s Express Restaurants, Inc.
(MERI).

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PERCENTAGE OF EFFECTIVE
OWNERSHIP (%)
NAME NATURE OF BUSINESS 2018 2017 2016
Ad Circles, Inc. Advertising Support 100 100 100
MGOC Holdings, Inc. Investment Holding 100 100 100
Trota Gimenez Realty Corporation Real Estate 100 100 100
Alpha (Global) Max Group Limited (Alpha Max) Franchising 100 100 100
eMax’s LLC (eMax) Franchising 100 100 100
Global Max Services Pte. Ltd. (Global Max) Management Consultancy 100 100 100
Yellow Cab Food Corporation (YCFC) 4
- 100 100
Restaurant
YCPI Pizza Venture, Inc. 55 55 55
YCPC Subic, Inc. (formerly DFSI Subic, Inc.) Restaurant 100 100 100
Always Happy BGC, Inc. Restaurant 100 100 100
PCK-LFI, Inc. Restaurant 100 100 100
PCK-Boracay, Inc. Restaurant 100 100 100
PCK Polo, Inc. Restaurant 70 70 70
PCK-Palawan, Inc. Restaurant 60 60 60
DFSI One-Nakpil, Inc. Restaurant 60 60 60
PCK-AMC, Inc. 3
Restaurant 60 60 60
PCK-Estancia, Inc. Restaurant 60 60 60
PCK-MTB, Inc. Restaurant 60 60 60
PCK-N3, Inc. (NAIA-3) Restaurant - - 51
PCK-Bel Air, Inc. Restaurant 51 51 51
PCK-MSC, Inc. 5 Restaurant 50 50 50
Pancake House International, Inc. (PHII) Holding Company 100 100 100
Teriyaki Boy International, Inc. (TBII) Franchising 100 100 100
Yellow Cab Food Co. International, Inc. (YCFCII) Franchising 100 100 100
Pancake House, International Malaysia Sdn Bhd (PHIM) Restaurant 100 100 100

Pancake House Ventures, Inc. (PHV) 3 Holding Company 100 100 100
Pancake House Products, Inc. 6
Holding Company 100 100 100
Golden B.E.R.R.D. Grill, Inc. 3
Restaurant 100 100 100
Teriyaki Boy Group, Inc. (TBGI) 7 100 70 70
TGBI-Trinoma, Inc. 60 60 42
TGBI-Marilao, Inc. Restaurant 51 51 36
TBOY-MS, Inc. 2 50 50 35
TBGI-Tagaytay, Inc. 2 40 40 28

M Food Concepts, Inc. (M Food) Holding Company 100 100 100

Sizzlin’ Steak, Inc. (SSI) Restaurant 100 100 100
Boulangerie Francaise, Inc. (BFI) Restaurant 100 100 100
88 Just Asian, Inc. (88 JAI) Restaurant 80 80 80
CRP Philippines, Inc. 2 Restaurant 50 50 50
5
Although the Parent Company owns 50% or less of the voting power of these entities, it is able to govern the financial and operating policies of the compa-
nies by virtue of agreements with the other investors of such entities. Consequently, the Parent Company considered these entities as subsidiaries.
6
Companies that are dormant or have not yet started operations as at December 31, 2018 and 2017
7
On April 24, 2018, the Plan of Merger YCFC & TBGI was approved by the SEC with TBGI as the surviving entity and YCFC was the absorbed entity.
5
On July 16, 2018, the Plan of Merger of FHJBI & TRADCI was approved by the SEC, with TRADCI as the surviving entity and FHJBI as the absorbed entity.

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All of the subsidiaries are incorporated and operating in the 15% increase in security deposits on lease contracts
Philippines, except for the following entities: Additional security deposits for new stores
- PHII, TBII and YCFII, companies incorporated
in British Virgin Islands; - PHIM, a company 26% decrease in long-term debt
incorporated and operating in Malaysia; Transfer of maturing obligations to current period and
- M Food, SSI and eMax, companies incorporated in payment of Principal due
U.S.;
- Alpha Max, a company incorporated in Hong Kong; 23% decrease in net retirement liabilities
and Change of estimate in salary growth
- Global Max, a company incorporated in Singapore.
5% increase in accrued rent payable
ACCOUNTS WITH MORE THAN 5% CHANGE IN Higher operating lease related to new stores
BALANCES
(Against December 31, 2017 Balances) 11% increase in retained earnings
Sustained profitability in 2018
8% increase in restaurant sales
Opening of 24 new stores and steady same store sales 28% increase in other comprehensive loss
growth Foreign exchange effect and re-measurement of plan
assets
10% increase in commissary sales
Additional 31 local franchised outlets 639% increase in non-controlling interests
Acquisition of non-controlling interests
7% increase in cost of sales
Due to escalating prices of input materials Equity Securities
There were no issuances, repurchases and repayments of
9% increase in general and administration expenses debt and equity securities during the period.
Higher manpower and service related costs

44% increase in other income

Higher marketing support

229% increase in provision for income tax

Normalized income tax

5% increase in cash and cash equivalents

Cash used for dividend payments, loan settlements
and purchase of inventory and equipment, increase in
Operating cash

11% decrease in trade and other receivables

Higher collection efforts in 2018 vs 2017

10% increase in property and equipment

Acquisition of fixed assets for new stores and Commissary

47% decrease in net retirement plan assets

Change of estimate in salary growth.

15% increase in net deferred income tax assets

Recognition of deferred tax benefits

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Discussion of the Company’s Top Five (5) Key Performance Indicators

Number of Stores
In 2019, MGI opened a gross total of 82 new stores including 22 overseas primarily across core brands Max’s Restaurant,
Yellow Cab Pizza, Krispy Kreme and Pancake House.

Below is the breakdown of the Company’s store network as of December 31, 2019:

Company-Owned Franchised International Joint-Venture Total

Max’s Restaurant 98 110 30 - 238
Yellow Cab Pizza 126 50 28 1 205
Krispy Kreme 89 7 - - 96
Pancake House 57 79 4 3 143
Sizzlin’ Steak 4 0 4 - 8
Teriyaki Boy 6 4 4 4 15
Combination* 8 6 - - 14
Dencio’s 2 11 - 1 14
Kabisera 1 - - - 1
Maple 1 - - - 1
Jamba Juice 15 4 - - 19
Eats 1 - - - 1
Multi-brand** 5 - - - 5
Total 413 271 70 6 760
*Teriyaki Boy and Sizzlin’ Steak combination store concept.
**Integrated operating formats that consist of Max’s Restaurant, Krispy Kreme, Yellow Cab Pizza, Pancake House and Teriyaki Boy.

Systemwide Sales Inclusive of IFRS 16, consolidated EBITDA stood at P2.71

Systemwide Sales pertains to the total sales to customers billion in 2019. Without IFRS 16, EBITDA amounted to P1.77
both from company-owned and franchised stores. billion in 2019, up 11% from P1.60 billion in 2018.
Net Income Ratio
Systemwide sales amounted to P20.11 billion in 2019 up 7%
from P18.80 billion in 2018. Net Income Ratio provides a measure of return for every
peso of revenue earned, after all other operating expenses
Revenues and non-operating expenses, including provision for
The Company and its operating subsidiaries generate income taxes, are deducted. It is the percentage of the
revenues from three sources: (i) Restaurant sales from company’s income after tax to net sales in a given period.
company-owned stores; (ii) Commissary sales to
franchised stores; and (iii) Fees from franchising operations Inclusive of PFRS 16, net income ratio was 5.00%. Without
consisting of one-time franchise fees and continuing PFRS 16, net income ratio was 5.10% in 2019, up 0.50%
license fees. from 4.60% in 2018.

Consolidated revenues registered at P14.40 billion in 2019, Off Balance Sheet Transactions, Arrangement,
up 5% from P13.68 billion in 2018. Obligation and Other Relationships
There are no off-balance sheet transactions,
Earnings Before Interest, Taxes, Depreciation, and arrangements, obligation (including contingent
Amortization (EBITDA) obligations), and other relationships of the Company with
EBITDA measures the company’s ability to generate unconsolidated entities or other persons created during the
cash from operations. It is computed by adding back reporting period.
depreciation and amortization (non-cash expenses) to
earnings before interest and income taxes are deducted.

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 For investors, analysts and shareholders inquiries,
you may email the following:

Treasurer and Corporate Information & Compliance Officer

Rebecca R. Arago : [email protected]

Investor Relations & Compliance Manager

Miren E. Cueto : [email protected]

Office Address:
3rd Floor KDC Plaza, 2212 Chino Roces Avenue,
Barangay Pio del Pilar, Makati City

For general inquiries, please call our trunkline at +63.2.842.42800

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