As of November 19, 2018 2:08 PM PNX Petroleum Last Trade Price: 11.04 % Change: -0.18 Volume: 95,800 Symbol: PNXFind a Station

Our Financial Performance and KPIs

Monitor our gains and growth through our financial reports below.

NOTE: All amounts expressed in millions, unless otherwise stated.

Income Statement Data

Balance Sheet Data

Financial Ratios

NOTES:

  1. Total current assets divided by current liabilities
  2. Total liabilities divided by tangible net worth
  3. Net income divided by average total stockholders’ equity
  4. Net income divided by average total assets
  5. Total stockholders equity - (Common) divided by the total number of shares issued and outstanding
  6. Net income after tax (net of Preferred Stock Dividend Allocation) divided by weighted average number of outstanding common shares
  7. Net income after tax (net of Preferred Stock allocation) divided by stockholders' equity-common

Stock Information

Industry Highlights

SOURCE:Department of Energy

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 

Comparable discussion on Material Changes in Results of Operations for the Year Ended December 31, 2017 vs. December 31, 2016.

Revenues

The Group generated total revenues of ₱46.326 billion in 2017, 52% higher than 2016’s ₱30.577 billion, on the back of a 17% increase in sales volume and fuel prices. This includes addition of LPG revenue of ₱3.4 billion and PNX Petroleum Singapore revenue to third party customers of ₱250 million. The group reported ₱44.426 billion net of the pre-acquisition revenues, 45% higher than 2016.

Sales revenues from trading and distribution of petroleum products increased by 56% from ₱29.472 billion in 2016 to ₱45.879 billion in 2017. Excluding the LPG’s pre-operating revenue, net increase is 49% amounting to ₱44.051 billion. Retail volume (station sales) increased by 9% due to growth in both station network and same store sales. The Commercial and industrial segment also increased by 15%, while aviation volume grew by 13%. Lubricants volume also grew by 49% from the prior year.

The Parent has built five hundred five (530) Phoenix retail service stations as of December 31, 2017 compared to five hundred five (505) retail stations as of the same period last year. The Parent has a number of retail stations undergoing various stages of construction which are projected to be opened within the first half of 2018.

The Group generated revenues of ₱375 million from fuel service, storage, and others in 2017, down from ₱1.104 billion in 2016. The 66% year-on-year decline was mainly because 2016 includes shipping, port and real estate revenues from the spun-off subsidiaries. Excluding the revenue from Chelsea Shipping Corporation (CSC) and Phoenix Petroterminals and Industrial Park Corporation (PPIPC) in 2016, fuel services, storage, and other revenue increased by 6%.

Cost and expenses

The Group recorded cost of sales and services of ₱39.298 billion as of December 2017, an increase of 56% from ₱25.124 billion in 2016. Net of the pre-acquisition cost of sales of the LPG business, the group reported ₱37.909 billion, a net increase of 51%. This was due to higher product costs compared to last year, reflecting increasing global oil prices. The 17% increase in volume is also a factor in the increased cost of sales.

Selling and administrative expenses increased by 32%, driven by higher operating expenses for completed expansions, expected growth impact, and newly acquired subsidiaries.

 

Net Income

The Group’s net income for 2017 grew to ₱1.792 billion from ₱1.092 billion in 2016. This includes one-time gain coming from the excess of fair value over acquisition cost of the newly-acquired subsidiary, Duta, Inc. amounting to ₱650 million and the pre-acquisition profit of PLPI and Duta, Inc. amounting to ₱279 million. Excluding non-recurring income, core business net income grew by 30% to ₱1.421 billion, driven primarily by 17% increase in sales volume and additions from the new business, particularly LPG.

The Parent was registered with the Board of Investments on November 16, 2005 as a new industry participant with new investments in storage, marketing and distribution of petroleum products under RA 8479 (Downstream Oil Industry Regulation Act) and, as such, enjoyed an income tax holiday for five (5) years from November 16, 2005 to November 16, 2010.

The Parent Company obtained additional registration approval from the Board of Investments (BOI) under R.A. 8479 or Oil Industry Deregulation Law for its Calaca, Batangas Terminal. This entitled the Parent Company to an Income Tax Holiday (ITH) on the revenue activities from this additional storage capacity for five (5) years starting February 2010. Another BOI registration was granted to the Davao Terminal Expansion facility effective February 2010, which entitled the Parent Company another set of incentives, including the five (5) year ITH on its Davao Terminal Marketing and Storage activities.

The Parent Company was also registered with the BOI on November 25, 2010 as new industry participant with new investment in storage, marketing and distribution of petroleum products under RA 8479 (Downstream Oil Industry Deregulation Act) for its storage tanks in Talisayan, Zamboanga City. Under its registration, the Company is required to observe certain general and specific terms and conditions stated in the provisions of the Omnibus Investments Code of 1987. This expired on November 25, 2015.

The Parent Company also obtained new approvals with the BOI for its two (2) new facilities. Both the Cagayan de Oro City and the Bacolod City facilities were registered and issued certification by the BOI on May 12, 2012, entitling the Parent Company ITH for five years from registration plus other fiscal and non-fiscal incentives accorded to BOI-registered entities.

 

The Parent Company also obtained new approvals with the BOI for its four (4) new facilities. Expansions of Cagayan de Oro City and Calaca, Batangas facilities were registered and issued certification by the BOI on November 24, 2017 and December 22, 2017, respectively. New facilities in Tayud, Cebu and Calapan, Mindoro were likewise registered and issued certification by the BOI on September 9, 2017 and October 12, 2017, respectively, entitling the Parent Company ITH for five years from registration plus other fiscal and non-fiscal incentives accorded to BOI-registered entities. These additional ITH incentives will allow the Company to enjoy an effective income tax rate well below 30% as it continuously expands its storage and obtains further incentives from the BOI. 

Financial Condition

(As of December 31, 2017 versus December 31, 2016)

Total resources of the Group as of December 31, 2017 stood at ₱44.471 billion, higher by 68% compared to the ₱26.538 billion as of December 31, 2016. This is mainly due to the acquisition of PLPI and Duta, Inc., higher fuel prices, and increase in inventory.

Cash and cash equivalents this year decreased by 22% from ₱2.339 billion in December 31, 2016 to ₱1.831 billion as a result of increased operating, acquisition, and expansion requirements.

Trade and other receivables decreased by 15% from ₱8.789 billion as of December 31, 2016 to ₱7.510 billion as of December 31, 2017, due to the intensified collection of credit sales and other receivables.

Inventories increased to ₱12.970 billion as of December 30, 2016 from ₱2.999 billion as of December 31, 2016. The increase is brought about by the confluence of the following factors: 1) to address requirements of new businesses, such as LPG with the purchase of PEPI, the operation of Singapore Trading, and serving volume of new accounts; 2) higher price of imported petroleum products, mainly because of the increase in crude prices, and 3) the continued decrease in demand for IFO by the power sectors which also contributed to the higher inventory levels.

 

Due from related parties decreased to ₱518 million as of December 2017 from ₱1.507 billion as of December 2016. The receivable balance from UDENNA Development Corporation (UDEVCO) amounting to ₱50 million for the sale of PPIPC was settled and reclassification of the non-trade receivable from Chelsea Shipping Group Corp. amounting to ₱500 million.

As of December 31, 2017, the Group’s property and equipment, net of accumulated depreciation, increased to ₱13.401 billion compared to ₱9.002 billion as of December 31, 2016 due to the acquisition of PEPI and Duta, Inc. as well as the completion of the new retail stations and various facility expansion of the Group.

Loans and Borrowings, both current and non-current, increased by 114% from ₱13.184 billion as of December 31, 2016 to ₱28.171 billion as of December 31, 2017. The increase of ₱14.987 billion was from the acquisition of PEPI and Duta, investment in PNX Petroleum Singapore, increased inventory value, and other capital expenditures of the Group.

Trade and other payables increased by 20% from ₱3.333 billion as of December 31, 2016 to ₱3.863 billion as of December 31, 2017 due to longer supplier credit term.

Total Stockholders’ Equity increased to ₱11.952 billion as of December 31, 2017 from ₱9.762 billion as of December 31, 2016, resulting from the earnings generated in 2017 net of cash dividend declared and paid during the period for both common shares and preferred shares. The sale of treasury shares and the employee stock also contributed to the increase. The sale of treasury shares increased the additional paid in capital by ₱367 million while the employee stock option increased the common shares by ₱2.761 million and the additional paid in capital by ₱21.351 million.

Key Performance Indicators and Relevant Ratios

The Group’s key performance indicators and relevant ratios and how they are computed are listed below:

 

December 31, 2017

December 31, 2016

Current Ratio1

1.22 : 1

1.17 : 1

Debt to Equity Ratio2

2.72 : 1

1.72 : 1

Return on Equity 3

17%

11%

Net Book Value per Share4

8.33 : 1

6.81 : 1

Debt to Equity Interest-Bearing5

2.36 : 1

1.35 : 1

Earnings per Share6

1.16

0.64

Earnings per Share (net of one-time gain)6

0.89

0.64

Notes:

1 - Total current assets divided by current liabilities

2 - Total liabilities divided by tangible net worth

3 - Period or Year Net income divided by average total stockholders’ equity

4 - Total stockholder’s equity (net of Preferred) divided by the total number of shares issued and outstanding

5 - Interest Bearing Debts divided by Total stockholder’s equity (net of Preferred)

6 - Period or Year Net Income after tax divided by weighted average number of outstanding common shares

7 - Period or Year Net Income after tax (net of one-time gain) divided by weighted average number of outstanding common shares

These key indicators were chosen to provide management with a measure of the Group’s financial strength (Current Ratio and Debt to Equity) and the Group’s ability to maximize the value of its stockholders’ investment in the Group (Return on Equity, Net Book Value Per Share, and Earnings Per Share). Likewise, these ratios are used to compare the Group’s performance with similar companies.

The Group’s debt to equity (DE) ratio for 2017 is higher at 2.72 : 1 due to increased liability used for the acquisition of PEPI and Duta, Inc, investment in PNX Singapore, capital expenditures for various expansions, and increased inventory requirement.

The Company’s key performance indicators and relevant ratios and how they are computed are listed below

Graph_KPI

NOTES

 

  1. Total current assets divided by current liabilities
  2. Total liabilities divided by tangible net worth
  3. Period or Year Net income divided by average total stockholders’ equity
  4. Total stockholder’s equity (net of Preferred) divided by the total number of shares issued and outstanding
  5. Interest Bearing Debts divided by Total stockholder’s equity (net of Preferred)
  6. Period or Year Net Income after tax divided by weighted average number of outstanding common shares
  7. Period or Year Net Income after tax (net of one-time gain) divided by weighted average number of outstanding common shares 

These key indicators were chosen to provide management with a measure of the Group’s financial strength (Current Ratio and Debt to Equity) and the Group’s ability to maximize the value of its stockholders’ investment in the Group (Return on Equity, Net Book Value Per Share, and Earnings Per Share). Likewise, these ratios are used to compare the Group’s performance with similar companies.

The Group’s debt to equity (DE) ratio for 2017 is higher at 2.72 : 1 due to increased liability used for the acquisition of PEPI and Duta, Inc, investment in PNX Singapore, capital expenditures for various expansions, and increased inventory requirement.

Phoenix Petroleum’s Proposed Debt Issuance Gets PRS Aa Rating

Philippine Rating Services Corporation (PhilRatings) assigned a PRS Aa rating to Phoenix Petroleum Philippines, Inc’s (Phoenix) proposed Corporate Notes or Corporate Bonds issuance amounting to P1 billion. The Corporate Notes or Corporate Bonds issue will mature in 2017. “Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is very strong.”

The rating assigned reflects the following key considerations: upward trend in profitability; the company’s successful equity capital raising activities which supported business expansion; the continuous business expansion in both the retail and commercial/ industrial segments; and the expected improvements in cash flows from operations (CFO) over the long-term.

PhilRatings’ ratings are based on available information and projections at the time that the rating review is on-going. PhilRatings shall continuously monitor developments relating to Phoenix and may change the assigned rating at any time, should circumstances warrant a change.

Phoenix’s total revenues improved markedly over the period 2006-2010. Using the year 2006 as the base year, total revenues in 2010 were about nine times higher. The compounded annual growth rate for the period was a robust 77.43%. In 2011, total revenues amounted to P27.47 billion, 86% higher compared to the 2010 level.

 

Net income likewise registered notable growth, with a compounded annual growth rate of core net income for the five year period of 54.87%. Core net income increased from P74.26 million in 2006 to P427 million in 2010. In 2011, net income further rose by 19.5% to P510.50 million.

The improvement in the company’s financial performance over the last six years was primarily driven by substantial increases in sales volume of petroleum products and income from fuel service and storage. The aggressive expansion of Phoenix’s retail and distribution network (from 1 in 2005 to 220 in 2011) and it's improved commercial/ industrial customer base supported the increase in sales volume.

The continuous expansion also allowed the company to increase its overall market share from 0.3% in 2009 to 3.6% as of the first half of 2011 (based on data sourced from the Department of Energy). In an industry, however, where the primary means of increasing revenues is through market share gain, the company still faces a great challenge in terms of enhancing its market position. It is still far behind the Big Three- Petron, Shell and Chevron which have well-established distribution networks. Phoenix has performed credibly though relative to the numerous independent market players.

Phoenix listed its shares in the Philippine Stock Exchange in 2007, issuing 29 million shares. Since then, the company has issued additional shares of common and preferred stocks and has received deposits for future stock subscriptions. Proceeds from the equity capital raising activities supported the company’s station roll-out, the expansion of its terminals and depots and the acquisition of property and equipment. The accompanying increase in debt levels, however, offset the higher equity and resulted in a debt to equity ratio of 1.77x in 2011, above the 1.39x ratio registered in 2010.

 

In the next two years, the company expects to sustain its growth momentum with the continued station roll-out and depot expansion in key trade areas. Correspondingly, cash flows from operations are expected to improve coming from higher income before tax and the slower rate of increase in receivables and inventory levels. In the last six years, a big portion of the company’s resources was tied up in receivables and inventory due to the aggressive expansion, as well as increasing oil prices. This has resulted in negative cash flows from operations in some years. The company needed to raise additional capital- both equity and debt to finance it's operating and investing activities.

PhilRatings also took into consideration external factors which affect the performance of the oil industry but are beyond the company’s control. These expose the company to industry-wide risks. Given the company’s relatively short corporate history, it has yet to consistently demonstrate its capability to weather and handle unforeseen circumstances and developments which may significantly affect its operations and business. This, however, is party mitigated by the fact that members of Phoenix’s management team have an average of 18 years of experience in the oil industry.

Phoenix Petroleum has a credit rating of PRSAa, given by the Philippine Rating & Services Corporation

Contact person: Ms. Angel Viloria-Head of Credit Rating
Contact number: (632) 812-3215

Got questions?


For inquiries from analysts, the financial community, and institutional investors, contact Phoenix Petroleum Philippines, Inc. through:

 

 

Head office
Phoenix Bulk Depot, Lanang, Davao City 8000
Philippines

Tel. +63-82-235-8888

 

 

Manila office
25th Floor Fort Legend Towers, 3rd Avenue corner 31st streetFort Bonifacio Global City, Taguig City, Philippines
Tel: (+632) 403-4013
Fax: (+632) 403-4021

Or you may also send us an email at info@phoenixfuels.ph