PETRON COMPANY

PRESENTED BY:
BAUTISTA, KHIMBERLY,
LAMONTE, DARLENE KATE
MARASIGAN, MARIEL
PETRON COMPANY [Publish Date]

INTRODUCTION OF PETRON COMPANY

PETRON Corporation is a leading energy company based in the Philippines. Established in 1966, PETRON has grown to become the country's largest oil refining
and marketing company. With a strong commitment to innovation, sustainability, and excellence, PETRON has played a pivotal role in the development of the
Philippine energy sector.

The company's state-of-the-art refinery, located in Limay, Bataan, boasts a refining capacity of 180,000 barrels per day, ensuring a consistent and reliable
supply of petroleum products. PETRON's extensive network of retail outlets spans the archipelago, providing a wide range of high-quality fuels, lubricants, and
specialty products to millions of consumers.

Beyond its core business of oil refining and marketing, PETRON has diversified its operations to include petrochemicals, providing essential raw materials for
various industries. Committed to environmental responsibility, PETRON has implemented initiatives to reduce its carbon footprint and promote sustainable
practices throughout its operations.

PETRON Corporation is not only a key player in the Philippine energy landscape but also a regional force, expanding its footprint in the Asia-Pacific region.
Through strategic partnerships and investments, PETRON continues to contribute to the economic development of the countries in which it operates.

With a steadfast focus on customer satisfaction, technological advancement, and corporate social responsibility, PETRON Corporation stands as a beacon of
success in the dynamic and competitive energy sector, driving progress and powering the future.
PETRON COMPANY [Publish Date]

Consolidated Statement of Financial Position December 31 HORIZONTAL ANALYSIS

Amount Percentage
2021 2020
Increase/Decrease Change

ASSETS

Current Assets

Cash and cash equivalents 36,406.00 27,053.00 9,353.00 35%

Financial assets at fair value 1,005.00 603.00 402.00 67%

Investment in debt instruments 184.00 -184.00 -

Trade and other receivable - net 51,745.00 27,195.00 24,550.00 90%

Inventories - net 67,684.00 44,922.00 22,762.00 51%

Other current assets 31,195.00 32,337.00 -1,142.00 -4%

Total Current Assets 188,035.00 132,294.00 55,741.00 42%

Noncurrent Assets

Investments in debt instruments - 197.00 197.00 -

1,012.00 1,012.00 -
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Investment in shares of stock of an associate

Property, plant and equipment - net 171,602.00 168,831.00 2,771.00 2%

Right-of-use assets - net 5,648.00 6,045.00 -397.00 -7%

Investment property - net 29,175.00 30,049.00 -874.00 -3%

Deferred tax assets - net 2,172.00 2,190.00 -18.00 -1%

Goodwill - net 8,235.00 8,031.00 204.00 3%

Other noncurrent assets - net 1,541.00 2,088.00 -547.00 -26%

Total Noncurrent Assets 219,385.00 217,431.00 1,954.00 1%

Total Assets 407,420.00 349,725.00 57,695.00 16%

LIABILITIES AND EQUITY

Current Liabilities

Short-term loans 109,196.00 77,704.00 31,492.00 41%

Liabilities for crude oil and petroleum products 42,641.00 22,320.00 20,321.00 91%
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Trade and other payables 14,001.00 15,402.00 -1,401.00 -9%

Lease liabilities - current position 1,335.00 1,243.00 92.00 7%

Derivative liabilities 997.00 1,124.00 -127.00 -11%

162.00 140.00 86%

Income tax payable 302.00

Current portion of long-term debt-net 21,580.00 31,114.00 -9,534.00 -31%

Total Current Liabilities 190,052.00 149,069.00 40,983.00 27%

Noncurrent Liabilities 0.00

Long-term debt - net of current portion 81,065.00 88,340.00 -7,275.00 -8%

Retirement benefits liability - net 3,327.00 3,705.00 -378.00 -10%

Deferred tax liabilities - net 3,784.00 3,084.00 700.00 23%

Lease liabilities - net of current portion 14,220.00 14,561.00 -341.00 -2%

Asset retirement obligation 2,857.00 2,867.00 -10.00 0%

Other noncurrent liabilities 1,202.00 1,904.00 -702.00 -37%

Total Noncurrent Liabilities 106,455.00 114,461.00 -8,006.00 -7%

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Total Liabilities 296,507.00 263,530.00 32,977.00 13%

Equity Attributable to Equity Holders of the Parent

Company

Capital Stock 9,485.00 9,485.00 0.00 100%

Additional paid-in Capital 37,500.00 37,500.00 0.00 100%

Capital securities 62,712.00 36,481.00 26,231.00 72%

29,799.00 433.00 1%
Retained earnings 30,232.00

Equity reserves -18,341.00 -18,371.00 30.00 0%

Treasury stock -18,000.00 -15,122.00 -2,878.00 19%

Total Equity Attributable to Equity Holders of the Parent

103,588.00 79,772.00 23,816.00 30%
Company

Non-Controlling Interests 7,325.00 6,423.00 902.00 14%

Total Equity 110,913.00 86,195.00 24,718.00 29%

407,420.00 349,725.00 57,695.00 16%

PETRON COMPANY [Publish Date]

HORIZONTAL:

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (INTERPRETATION)

Assets:

Current Assets:

A significant increase in cash and cash equivalents by 35% reflects improved liquidity, which can provide flexibility for operational needs.

The 67% increase in financial assets at fair value suggests positive market conditions, contributing to overall asset growth.

The 90% rise in trade and other receivables indicates increased sales or extended credit terms. It's essential to monitor receivable turnover.

The 51% increase in inventories may suggest an expansion in production or anticipation of higher demand.

Noncurrent Assets:

The 2% growth in property, plant, and equipment is modest but signifies ongoing investments in long-term assets.

A 26% decrease in other noncurrent assets raises questions; further analysis is required to understand the reasons behind this decline.

2. Liabilities:

Current Liabilities:

A 41% increase in short-term loans indicates a higher reliance on short-term financing, requiring attention to manage liquidity effectively.

The 91% increase in liabilities for crude oil and petroleum products may be influenced by market dynamics; risk management strategies should be evaluated.
PETRON COMPANY [Publish Date]

A 9% decrease in trade and other payables could signal improved working capital management.

Noncurrent Liabilities:

The 8% decrease in long-term debt suggests a reduction in long-term financial obligations, potentially improving the financial leverage position.

The 10% decrease in retirement benefits liability indicates progress in managing long-term employee benefits.

3. Equity:

Equity Attributable to Equity Holders:

A 72% increase in capital securities suggests significant capital raising or investment, which could be supporting growth initiatives.

The 19% increase in treasury stock may signify stock buybacks, a strategy that should align with the company's overall financial goals.

Non-Controlling Interests:

A 14% increase in non-controlling interests indicates improved performance in subsidiary entities.

Overall:

Total Assets: The 16% increase in total assets reflects overall growth in the company's resource base.

Total Liabilities: A 13% increase in total liabilities requires careful monitoring to ensure sustainable debt levels.

Total Equity: The 29% increase in total equity indicates positive shareholder value creation.

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flow from Operating Activities:

PETRON COMPANY [Publish Date]

Income before income tax decreased significantly by 145%, indicating a substantial drop in profitability.

Depreciation and amortization increased by 4%, reflecting higher non-cash expenses.

Interest expense decreased by 12%, reducing financial costs.

Unrealized foreign exchange gains increased by 222%, impacting overall income positively.

Other gains increased by 24%.

Operating income before working capital changes declined by 23%

Cash generated from operations increased by 15%, a positive sign.

Contributions to the retirement fund increased by 157%, impacting cash flows negatively.

Interest paid decreased by 14%.

Income taxes paid increased by 232%.

Interest received decreased by 27%.

Net cash flows from operating activities increased by 20%.

Cash flow from investing activities:

Additions to property, plant, and equipment increased by 13%.

Proceeds from the sale of property and equipment decreased by 9%.

Acquisitions of investment property increased by 18%.

PETRON COMPANY [Publish Date]

Net cash flows used in investing activities increased by 9%.

Cash flow from financing activities:

Proceeds from availment of loans and bonds increased significantly by 50%.

Payments of loans and bonds increased by 38%.

Payments of lease liabilities decreased by 6%.

Cash dividends and distributions increased by 5%.

Issuance of preferred shares and redemption of preferred shares occurred.

Issuance of capital securities increased by 132%.

Net cash flows provided by financing activities increased by 47%.

Exchange Rate Changes and Net Increase (Decrease) in Cash:

Exchange rate changes contributed positively, with a 7% increase.

The net increase in cash and cash equivalents was 31%.

Cash and Cash Equivalents:

The cash and cash equivalents at the end of the year decreased significantly by 188%.

It's essential for the company to conduct a detailed analysis of the underlying reasons for the observed changes and formulate strategic plans to address
any challenges and capitalize on opportunities. Regular monitoring and adjustment of financial strategies will contribute to long-term sustainability and
growth.
PETRON COMPANY [Publish Date]

VERTICAL ANALYSIS

Consolidated Statement of Income December 31 Common Size

2021 2020 202100.00% 202000.00%

SALES 438,057.00 286,033.00 100.00% 100.00%

COST OF GOODS SOLD 407,558.00 277,320.00 93.04% 96.95%

Gross Profit 30,499.00 8,713.00 6.96% 3.05%

SELLING AND ADMINISTRATIVE EXPENSES -14,557.00 -14,389.00 -3.32% -5.03%

OTHER OPERATING INCOME 1,273.00 1,047.00 0.29% 0.37%

INTEREST EXPENSE AND OTHER FINANCING CHARGES -10,008.00 -11,313.00 -2.28% -3.96%

INTEREST INCOME 564.00 780.00 0.13% 0.27%

SHARE IN NET INCOME OF AN ASSOCIATE 8.00 0.00% 0.00%

OTHER EXPENSES - Net -482.00 -1,049.00 -0.11% -0.37%

-23,202.00 -24,924.00 -5.30% -8.71%

INCOME (LOSS) BEFORE INCOME TAX 7,297.00 -16,211.00 1.67% -5.67%

PETRON COMPANY [Publish Date]

INCOME TAX EXPENSE (BENEFIT) 1,161.00 -4,798.00 0.27% -1.68%

NET INCOME (LOSS) 6,136.00 -11,413.00 1.40% -3.99%

Attributable to:

Equity holders of the Parent Company 5,369.00 -11,380.00 1.23% -3.98%

Non-controlling interests 767.00 -33.00 0.18% -0.01%

6,136.00 -11,413.00 1.40% -3.99%

BASIC/DILUTED EARNINGS (LOSS) PER COMMON SHARE

ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
COMPANY 0.05 -1.58 0.00% 0.00%

NET INCOME (LOSS) 6,136.00 -11,413.00 1.40% -3.99%

OTHER COMPREHENSIVE LOSS

Item that will not be reclassified to profit or loss

Equity reserve for retirement plan -597.00 -631.00 -0.14% -0.22%

Income tax benefit (expense) -213.00 191.00 -0.05% 0.07%

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-810.00 -440.00 -0.18% -0.15%

Item that will not be reclassified to profit or loss

Income (loss) on cash flow hedges 202.00 100.00 0.05% 0.03%

Exchange differences on translation of foreign

operations 880.00 -1,330.00 0.20% -0.46%

Unrealized fair value gains on investments in debt

instruments at fair value through other comprehensive
income 1.00 0.00% 0.00%

Share in other comprehensive income of a joint venture 10.00 0.00% 0.00%

Income tax benefit (expense) -65.00 -30.00 -0.01% -0.01%

1,017.00 -1,249.00 0.23% -0.44%

OTHER COMPREHENSIVE INCOME (LOSS) - Net of tax 207.00 -1,689.00 0.05% -0.59%

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR

- Net of tax 6,343.00 -13,102.00 1.45% -4.58%

Attributable to:
PETRON COMPANY [Publish Date]

Equity holders of the Parent Company 5,399.00 -12,852.00 1.23% -4.49%

Non-controlling interests 944.00 -250.00 0.22% -0.09%

6,343.00 -13,102.00 1.45% -4.58%

The given Consolidated Statement of Income is presented in a vertical analysis format. (INTERPRETATION)
Vertical analysis involves expressing each line item as a percentage of a base amount, in this case, the sales figure. Looking at the Common Size column, we
can see that the Sales figure for 2021 is 100% and for 2020 is also 100%. This means that the sales for both years are being compared to themselves. Similarly, we
can see that the Cost of Goods Sold for 2021 is 93.04% of the sales, while for 2020 it is 96.95% of the sales. This shows a decrease in the cost of goods sold as a
percentage of sales. The Gross Profit for 2021 is 6.96% of the sales, compared to 3.05% for 2020. This increase indicates a higher profit margin in 2021. Other line
items such as Selling and Administrative Expenses, Other Operating Income, Interest Expense and Other Financing Charges, Interest Income, and Income Tax
Expense (Benefit) are also expressed as percentages of the sales figure.
PETRON COMPANY [Publish Date]

RATIO ANALYSIS
Liquidity ratio

A.) Current Ratio = Current assets / Current liabilities

2021 2020
Current assets 188,035.00 132,294.00

Current liabilities 190,052.00 149,069.00

Current Ratio 0.9 0.8

INTERPRETATION:

The resulting current ratios are approximately 0.9 for 2021 and 0.8 for 2020. The current ratio above 1 suggests that the company has more current assets than
current liabilities, indicating a potential ability to cover its short-term obligations. In this case, the current ratio increased from 2020 to 2021, which could signify an
improvement in the company's short-term liquidity position.
PETRON COMPANY [Publish Date]

B.) Liquid / Acid Test / Quick Ratio

Liquid Ratio = Liquid Assets / Current Liabilities

Cash and cash equivalents – 36,406.00

Financial assets at fair value – 1,005.00

Trade and other receivable – 51,745.00

Total - 89,156.00

2021 2020

Liquid Assets 89,156 89,156

Current Liabilities 190,052.00 149,069.00

Liquid Ratio 0.4 0.5

INTERPRETATION:

In summary, the decrease in the liquid ratio from 2020 to 2021 indicates a potential reduction in the company's ability to quickly cover its short-term
liabilities using its most liquid assets, warranting further investigation and strategic adjustments if necessary.
PETRON COMPANY [Publish Date]

C.) RETURN ON SALES

RETURN ON SALES = NET INCOME / REVENUE

2021 2020

NET INCOME 6,136 -11,413

REVENUE 438,057 286,033

RETURN ON SALES 0.014 -0.040

RECOMMENDATION:

The improvement in ROS is a positive indicator, suggesting that the company is generating a positive net income relative to its revenue. It's essential
to continue focusing on profitability, cost management, and operational efficiency to sustain and enhance ROS over the long term. Regular monitoring and
adjustment of strategies will contribute to ongoing financial success.
PETRON COMPANY [Publish Date]

D.) RETURN ON ASSETS

RETURN ON ASSETS = NET INCOME/ AVERAGE TOTAL ASSETS

2021 2020 AVERAGE

NET INCOME 6,136 (11,413)

AVERAGE TOTAL ASSETS 407,420 349,725 378,573

RETURN ON ASSETS 0.016 (0.030

RECOMMENDATION

The improvement in ROA is a positive indicator, suggesting that the company is effectively utilizing its assets to generate income. It's essential to
continue focusing on profitability, operational efficiency, and asset management to sustain and enhance ROA over the long term. Regular monitoring and
adjustment of strategies will contribute to ongoing financial success.
PETRON COMPANY [Publish Date]

E.) RETURN ON EQUITY

RETURN ON EQUITY = NET INCOME / AVERAGE TOTAL EQUITY

2021 2020 AVERAGE

NET INCOME 6,136 (11,413)

AVERAGE TOTAL EQUITY 110,913 86,195 98,554

RETURN ON ASSETS 0.062 (0.116)

RECOMMENDATION:

The improvement in ROE is a positive indicator, suggesting that the company is effectively generating a positive return on shareholders' equity. It's crucial
to continue focusing on profitability, capital efficiency, and equity growth to sustain and enhance ROE over the long term. Regular monitoring and adjustment
of strategies will contribute to ongoing financial success and shareholder value creation
PETRON COMPANY [Publish Date]

FINANCIAL LEVERAGE RATIO

A.) DEBT RATIO

DEBT RATIO = TOTAL LIABILITIES / TOTAL ASSETS

2021 2020

TOTAL LIABILITIES 296,507.00 263,530.00

TOTAL ASSETS 407,420.00 349,725.00

DEBT RATIO 0.73 0.75

RECOMMENDATION:

The slight reduction in the debt ratio is a positive development, indicating a move towards a lower reliance on debt for financing. Continue to manage debt
effectively, considering the cost of debt, optimal capital structure, and long-term financial goals. Regular monitoring and adjustment of debt management strategies
will contribute to financial stability and sustainability.
PETRON COMPANY [Publish Date]

B.) EQUITY RATIO

EQUITY RATIO = TOTAL EQUITY / TOTAL ASSETS

2021 2020

TOTAL EQUITY 110,913.00 86,195.00

TOTAL ASSETS 407,420.00 349,725.00

EQUITY RATIO 0.27 0.25

RECOMMENDATION:

The increase in the equity ratio is a positive development, indicating a stronger capital structure and reduced reliance on debt financing. Continue to focus
on maintaining a healthy equity position, managing debt, and aligning the capital structure with the company's long-term financial goals. Regular monitoring and
adjustment of financial strategies will contribute to overall financial strength and sustainability.
PETRON COMPANY [Publish Date]

C.) DEBT TO EQUITY RATIO

DEBT TO EQUITY RATIO = TOTAL EQUITY / TOTAL ASSETS

2021 2020

TOTAL LIABILITIES 296,507.00 261,530.00

TOTAL EQUITY 110,913.00 86,195.00

DEBT TO EQUITY RATIO 0.37 0.33

RECOMMENDATION:

The increase in the debt-to-equity ratio suggests a shift in the capital structure. It's important to carefully manage this change, considering the impact on
financial risk and overall stability. Striking the right balance between debt and equity, in alignment with the company's strategic objectives, is crucial for
sustained financial health. Regular monitoring and adjustment of the capital structure will contribute to long-term financial sustainability.