NOTE: All amounts expressed in millions, unless otherwise stated.
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, 2020 vs. December 31, 2019 (as re-stated).
The Group’s Revenues during the year 2020 declined 20% to Php 78.300 billion mainly due to lower fuel prices. The average peso per liter price of petroleum products was 36% lower in 2020 on the back of the 35.5% drop in Dubai crude average to USD 42.24 per barrel, as well as the 4.2% appreciation of the peso to Php 49.64:USD 1. Volume, meanwhile, was up by 31.6% driven by the volume sold by its foreign-based subsidiaries, PNX Singapore and PNX Vietnam, which partly offset the 42% decline in domestic operations as the pandemic slowed down the local economy. Cost of Sales and Services decreased by 17.9% to Php 71.252 billion in 2020 amidst the decline in fuel prices and growth in volume. Consequently, Gross Margin fell 36% resulting from the volatile prices of petroleum products and lower domestic volume.
Selling and Administrative Expenses were higher by 11% at Php 5.801 billion and OPEX per liter improved by 47% to Php 1.37 as the company continued to implement cost-effective programs aimed to streamline its processes and reduce cost. Net Non-operating Charges were lower by 48% at Php 1.407 billion as interest expenses decreased and as recognized fair value gains on investment properties, finance income, equity share in the JV income, and other income increased.
Operating Income was lower by 72.3% at Php 1.244 billion, while Net Income After Tax (NIAT) declined by 95.7% to Php 62.56 million. Comprehensive Income was 49% down at Php 0.767 billion attributable to higher translation adjustment losses related to PNX SG’s operations offset by the Php 1.194 billion gain on revaluation of land.
(As of December 31, 2020 versus December 31, 2019)
Consolidated resources stood at Php 82.532 billion, which were 5% lower than prior year mainly due to the reduced inventory value as a result of the decline in the fuel prices.
Cash and Cash Equivalents decreased by 41% to Php 5.788 billion on outflows from settlement of loans and trade payables and redemption of preferred shares. Trade and Other Receivables increased by 10% to Php 17.514 billion due to the reclassification of certain non-current accounts. Inventory was 59% lower at Php 4.769 billion due to lower prices of petroleum products, the slowdown of domestic volume, and the inventory management initiatives to optimize the use of working capital.
Property and Equipment, net of accumulated depreciation, increased to Php 32.708 billion of which Php 1.194 billion represented the fair value appraisal of certain land properties of Duta leased by PLPI. Investment Properties was 1221% higher at Php 0.596 billion following market revaluation of the real estate properties leased to external customers in compliance with accounting standards. Intangible Assets were 10% lower at Php 0.279 billion as a result of normal amortization. Right of Use assets decreased to Php 0.793 billion resulting from the cancellation of several lease contracts during the pandemic. Investment in Joint Ventures was 14% higher at Php 1.635 billion driven by cumulative increase from the equity share in the JVs net income and retail expansion via retail Joint Venture Agreements. Deferred Tax Asset was 217% higher at Php 0.494 billion resulting from certain subsidiaries reporting losses.
Interest-bearing Loans and Borrowings, both current and non-current, were lower by 3% at Php 48.243 billion mainly from the settlement of debts. Trade and Other Payables decreased by 23% to Php 9.107 billion due to the timing and reduced value of purchases of petroleum products. Deferred Tax Liabilities were up by 41% to Php 1.054 billion as a result of the related fair value gains on land and investment properties.
Total Stockholders’ Equity decreased to Php 21.161 billion as preferred shares were redeemed and Treasury Shares were sold during the year and as retained earnings declined by 8% due to payment of dividends on preferred shares. These were offset by the Php 0.063 billion net income and the increase in the revaluation reserves driven by fair value gains of certain assets.
The Group’s key performance indicators and relevant ratios, and how they are computed are listed below:
NOTES: Formulas are based on Philippine Accounting Standards
2 - Total liabilities net of derivative financial liabilities divided by Total stockholder’s equity
3 - Total stockholder’s equity (net of Preferred) divided by the total number of shares issued and outstanding
4 - Period or Year Net income after tax divided by weighted average number of outstanding common shares
The Interest Bearing Debt to Equity ratio improved in 2020 due to the decline in overall debt level. Current
ratio was, meanwhile, stable from the previous year amidst the pandemic. The negative earnings per share
was largely a result of the losses incurred in the first three quarters of the year.
For inquiries from analysts, the financial community, and institutional investors, contact Phoenix Petroleum Philippines, Inc. through: