Business Case Project:

Wilcon Depot, Inc.

Presented to the

Accountancy Department

De La Salle University

In partial fulfillment of

the course requirement

in ACC520M

Team Pay Men

Nadela, John Philip F.

Toledo, Jeffrey

June 23, 2022

Submitted to:

Dr. Marivic V. Manalo

 Table of Contents

1.0 Company Profile

1.1 Company History

1.2 Principal Groups of Wilcon Depot, Inc.

2.0 Board of Directors

3.0 Wilcon Depot, Inc. as a Stock Corporation

4.0 Assets and Property and Equipment

4.1 Current and Non-Current Assets

4.2 Property and Equipment

5.0 Understanding the Financial Statement

5.1 Debt-to-Equity Ratio

5.2 Consolidated Changes in Equity

5.3 Income Statement

6.0 Corporate Social Responsibility

6.1 Wilcon Depot, Inc. observes the Triple Bottom Line Framework

7.0 Conclusion and Learning

7.1 Conclusion

7.2 Learning

8.0 References
1.0 Company Profile

1.1 Company History

Wilcon started in 1977 when its founder Mr. William T. Belo, opened the first
branch in Quezon City, a 60-sqm hardware store; as business picked up, he gradually
expanded and opened 3 more branches in Metro Manila from 1989 - 1995 and these
stores had an average area of 2,400 sqm.

In 2002 a branch was opened in Davao City which was Wilcon’s first venture
outside of Metro Manila. And in 2003 Wilcon opened in Las Pinas its first depot-format
concept store which was a new concept at that time. It was a 10,000 sqm air
conditioned store with a comprehensive product selection, knowledgeable sales
personnel and a reliable delivery service.

Wilcon rapidly expanded its operations over the next 17 years and opened 53
depot-format stores around the country; and as of June 26, 2022. Wilcon Depot Inc. has
63 stores nationwide, 56 are depots and are located in major cities of the country.

Wilcon Depot Inc. was first incorporated on December 17, 2015 as a home
improvement and construction supplies retailer. Wilcon Depot Inc. is a subsidiary of the
Wilcom Corporation. Wilcon Depot Inc. officially started operations on April 1, 2016
when the retail operations including all the assets and liabilities were transferred from
Wilcon Corporation; and on March 31, 2017 Wilcon Depot Inc. was listed on the
Philippine Stock Exchange and became a publicly traded company.

1.2 Principal Groups of Wilcon Depot, Inc.

NOTES:

1. What is the name of the corporation? Wilcon Depot, Inc.

What is the nature of its business? Building material and supplies dealers

What industry is this corporation belongs? Construction-supply industry

How long has been this company operating?

Wilcon started to open its first branch in 1977.

2. Who are the members of the Board of Directors?

 Name Directorship No. of Years as Director

Beltram B. Lim Chairman/Independent Director 3

Ricardo S. Pascua Independent Director 4

Rolando S. Narciso Independent Director 4

Delfin L. Warren Independent Director 3

Lorraine Belo-Cincochan Executive Director 4

Mark Andrew Y. Belo Executive Director 4

Careen Y. Belo Executive Director 4

Who is the chairman of the board? William T. Belo

Who is the president of the corporation? Lorraine Belo-Cincochan

What can you observe about the gender distribution? Male (5) - 71.53% while Female (2) -
28.57%

3. What class/classes of stock the corporation is authorized to issue? Common stocks

How many are the authorized shares?

How much are their par values? 1.00 peso

How many shares are issued? 4,099,724,116

How many shares are subscribed?

 Wilcon Depot Inc. became a publicly traded company on March 31, 2017 and is
being traded in the Philippine Stock Exchange (PSE) under the symbol of “WLCON” and
has issued a Common type of stocks. The price of the stock on its Initial Public Offering
(IPO) was PHP 5.05 per share.

As of June 24, 2022, the market capitalization of WLCON, which refers to the
total value of the firm itself is PHP 97,778,420,166.60. The firm has an outstanding
shares of PHP 4,099,724,166 , with listed shares of PHP 4,099,724,166 , issued shares of
PHP 4,099,724,166 ;with the last traded price of PHP 23.50 per share and a Par value of
PHP 1.00

4. What are the current and non-current assets of the company? Expound on this.

Total Assets
2020 (₱28,217,615,978)

- Current Assets (50.9958%)

- Non-Current Assets (49.0042%)

2019 (₱26,237,051,450)

- Current Assets (57.2566%)

- Non-Current Assets (42.7434%)

Total Assets Growth: ₱1,980,564,528

YoY Growth: 7.02%

Current Assets (As of December 31, 2020)

● Cash and cash equivalents

● Short-term investments
● Trade and other receivables Merchandise inventories
● Investment in retail treasury bond
● Other current assets

Current Assets Growth: -₱632,625,606

YoY Growth: -4.2112%

- Despite of an increase of ₱392,851,100 or 21.18% in cash and cash equivalents and an

increase in short-term investments of ₱2,139,479,456 or 77.63% from 2019 to 2020,
there’s a decrease in the total current assets due to the fact that the Wilcon’s
investment in retail treasury bond which amount to ₱2,253,523,133 as at December 31,
2019 has matured on April 11, 2020.
Non-Current Assets (As of December 31, 2020)

● Property and equipment.

● Right-of-use assets
● Net deferred tax assets
● Other noncurrent assets

Non-Current Assets Growth: ₱1,980,564,528

YoY Growth: 7.02%

- Comparing each non-current assets in the year 2019 and 2020, only the other
noncurrent assets decreased in the year 2020, but the rest such as property and
equipment, right-of-use assets, and net deferred tax assets increased.

5. What are the different property, plant and equipment the corporation owns?

- Property and Equipment

- Buildings and improvements take a huge part from the total cost of the Property and
Equipment which amounted to ₱3,952,228,994.
- Based on the property and equipment, transportation equipment is the only one that
decreased in its carrying value from 2019 to 2020 due to its accumulated depreciation
and amortization and not a huge amount in the additions of the transportation
equipment.
- Construction in progress pertains to costs incurred for constructing new stores in
various strategic locations within the Philippines and are expected to be completed in
2021.

- ROU Assets
 - Right-of-use (ROU) Asset is a lessee’s authority to utilize a leased item, typically property
or equipment, over the duration of an agreed-upon lease term
- Land and retail and office units were the 2 factors that make the carrying value of ROU
assets in 2020 greater than the carrying value in 2019.

How did they amortize its cost?

What method of depreciation did they use?

- Depreciation and Amortization

- Depreciation and amortization are computed using the straight-line basis over the
estimated useful life of the asset as follows:

Asset Type Number of Years

Buildings and improvements 20 or term of lease, whichever is shorter

Furniture and equipment 5

Leasehold improvements 5 or term of lease, whichever is shorter

Transportation equipment 5

- Depreciation and amortization recorded the highest increase at 37.76% or ₱687,373,672

as a result of the continuous addition of the company-owned store buildings.

6. What are the sources of their assets? Compare their debt versus equity as sources of the
company’s assets.

- Looking at the debt-to-equity ratio from the year 2019 and 2020, the debt-to-equity
ratio in the year 2020 increased to 0.84:1. Based on the equation, the increase in debt-
 to-equity ratio can either be due to the increase in total debt or decrease in total equity.
But, in this case, both the total debt and total equity increased. So, the increase in debt-
to-equity ratio is mainly due to the greater increase in the total debt.
- The ₱1,332,372,886 or 10.32% difference between total debt in 2020 and 2019.
- The ₱648,191,642 or 4.23% difference between total equity in 2020 and 2019.
- WDI has remained practically bank debt-free, with a debt-to-equity ratio of 0.84:1

7. How do you understand the corporation’s Statement of Changes in Equity?

- Based on the Statement of Changes in Equity, both capital stock and additional paid-in
capital were consistent from the year 2018 up to 2020. Capital stock which is measured
at par value for all shares issued amounts to ₱4,099,724,116 while the additional paid-in
capital which is measured at the excess amount the company receives above the par
value of shares amounts to ₱5,373,738,427.
- Though there’s a decrease in the net income and an increase in cash dividends, the
balance at the end of 2020 under retained earnings is greater than its previous year, the
year 2019, due to the huge amount of its balance at the beginning of the year 2020. As a
result, Wilcon Depot, Inc.’s total equity in the year 2020 which amounts to
₱15,309,5693,304 is ₱648,191,5642 or 4.23% greater than in the year 2019.(
- Among the four factors that contributed to the company’s total equity which includes
the capital stock, additional paid-in capital, other comprehensive income, and retained
earnings, retained earnings contributed the most to the total equity followed by
additional paid-in capital and capital stock.

8. How much is its total accumulated profits or retained earnings? How much is free? How
much is appropriated? What kind of appropriations did it make?
 - On February 24, 2020, the Company’s Board of Directors approved the declaration of a
regular cash dividend of ₱0.12 per share and a special cash dividend of ₱0.06 per share,
or a total of ₱0.18 per share equivalent to ₱738 million to stockholders on record date
of March 12, 2020 and payment date of April 16, 2020.
- The total cash dividend increased to 2 centavos per share by the year 2020.

9. How much is net income or net loss during the year? Did the firm declare dividends during
the year? If yes, how much?

- For the Income Statement, Wilcon Depot, Inc. produces a net income of ₱1,448,843,779
for the year 2020.
- However, the Net Income decreased by 31.8% or ₱675,771,226 by the year 2020.
- Despite the decrease of ₱1,453,063,088 or 8.91% in the company’s cost of sales and a
decrease in the interest expense and income tax expense from 2019 to 2020, the
operating expenses increased by ₱342,349,601 or 5.97% and the Net Sales decreased by
₱1,847,211,416 or 7.56%. The decrease in Net Sales were mainly due to the temporary
closure of stores in Luzon and some stores in Visayas and Mindanao in the first half, and
also, due to the general impact of the pandemic and the continuing quarantine
measures.

- Basic and dilutive earnings per share are computed as net income divided by the
weighted average number of outstanding shares.
- Looking at both Statement of Comprehensive Income and the Statement of Changes in
Equity,

- Let’s take a look at the Operating Expenses.

 - The increase of 5.97% from 2019 to 2020 in operating expenses were due to the
increase of the following:
● Depreciation and amortization (₱687,373,672 or 37.76%)
● Salaries, wages and employee (₱121,254,431 or 10.58%)
● Taxes and licenses (₱71,970,065 or 23.07%)
● Donations and contributions (₱61,386,536 or 84.02%)
● Professional Fees (₱1,186,202 or 10.96%)
- A huge decrease of ₱67,079,527 or 58.24% in Advertising and promotions can be one of
the factors that causes the decrease in the Net Sales.

10. Did the notes to financial statements include any disclosure on corporate social
responsibility such as employee benefits, environmental and community concerns?

The notes in the financial statements did disclose about Wilcons’ employee benefits. Short-
term employee benefit liabilities are measured on an undiscounted basis and are expensed as
the related is provided. Retirement benefit cost are actuarially determined using the project
unit credit method, which reflects services rendered by employees to the date of valuation and
incorporates assumptions concerning employees’ projected salaries.

Wilcon recognises the effects of climate change and has decided to help the planet by
using alternative power and fuel sources that is cost effective in the long-run and reduce the
carbon footprint. Wilcon is also trying to shape the Market towards the Green solution by
expanding their green products. An example would be their water-saving fixtures ex. low flow
and dual flush toilets. Energy efficient lighting that has a lower energy consumption, provides
more light and wood products from renewable forest and recycled materials. Wilcon also uses
solar power on 32 of their branches to be more friendly to the environment ; and they plan to
use solar power on all their branches by 2024.
 Wilcon is expanding their business into key areas outside of Metro Manila, which
creates jobs and stimulates economic activities in these areas. Wilcon is providing local
employment therefore spurring economic growth in these local communities.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is the idea that a business has a responsibility to
the society that exists around it. Firms that embrace Corporate Social Responsibility (CSR) act in
a responsible way. They regulate themselves and take initiatives or strategies, depending on an
organization's approach. What it means to be “socially responsible” is different for every
organization. These organizations are guided by a concept known as the Triple Bottom Line
approach (TBL) Which states that a business must be aware of its impact on the environment
and society that is around it while doing its profit generating activities.

In the case of Wilcon Depot Inc.; being socially responsible is equated with the word “Sustainability”.
Wilcon believes that a sustainable and comfortable life is the dream of every Filipino family and they have
made it their mission to support this aspiration. They have exerted the effort to educate and direct the Market
on the benefits of eco-friendly and sustainable products. They offer “Green Products” that are more friendly
to the environment; products like lighting that is energy-efficient that can provide more light , uses lower
electricity consumption and lasts longer. Another “Green Product” that they endorse is the type of wood that
is made from recycled materials. Wilcon has exerted their effort in decreasing their carbon footprint. They did
this by deciding to place solar panels at their stores and use renewable solar energy to decrease electricity
consumption. Also their buildings are designed to maximize the use of natural light; and the lights are turned
on only in the afternoon.

Wilcons’ growth relies on its ability to open new stores in strategic locations that will
create value for its different stakeholders. That is to increase profitability through new markets
by expanding to fast-growing cities outside of Metro Manila; at the same time creating jobs and
stimulating economic activities in these key areas. Wilcon wants to be recognized as an
inclusive brand by the local communities where they have expanded their business to; and
ensures that the people in these local communities and their cultural differences are respected.
Wilcon believes in giving back to the community. An example of this is when the local
communities of Naga City and Daraga city were affected by the super typhoon Rolly. Wilcon
donated relief goods to the affected communities. Another example is the donation of over
400,000 pesos worth of customized PolyEthylene tank to Islas de Santa Cruz community
through the Yellow Boat of Hope Foundation and ABS-CBN Foundation.

11. What do you think of this corporation? Do they follow the triple bottom line framework
of Profit, People, and Planet? Explain.

Wilcon did follow the Triple Bottom Line approach (TBL) by the following actions
that they have taken. Wilcon took a two month rigorous process to focus their resources
and energy on a sustainability agenda and towards the sustainability of the company.
They took the following actions with emphasis on the three subjects:

- Profit – Job creation, responsible sourcing, infrastructure development, business

expansion and creating a shared value.

- Planet – Proper waste management and managing emissions from energy use for
transport delivery, Green products that are more energy efficient and more friendly to
the environment.

- People – Proper training of personnel, increased emphasis on cyber security to protect

data privacy, meaningful communication and anti-corruption.
12. What conclusions can you derive from this learning activity?

- Conclusion
-

- Learnings
-

References