PHILEX Mining Corp.’s financial statement for 2014, which was audited by SGV & Co., showed a net income of P702.8 million, more than double the previous year’s P312.4 million. This profit was derived from revenues that increased just 2.51 percent to P10 billion last year from P9.8 billion in 2013.
This is a remarkable financial performance from the Philippines’ most profitable mining company, which had piled up P10.7 billion in retained earnings despite losing P310.8 million in 2012.
The reported net profit is what make’s Philex’s financials attractive because the mining company not only succeeded in sustaining its profitability but even topped its net profit in 2013.
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In fairness to businessman Manuel Pangilinan, chairman of the board, and SGV, they did not hide the numbers. As a matter of fact, the audited financial statement directed the public to Note 10, which explains the entry on the “gain on sale of property, plant and equipment” amounting to P764.7 million. Philex did not have extraordinary income in 2013 and 2012.
Here is how the audited financial report explained the entry in Note 10: “In July 17, 2014, the Parent Company sold its property located in Pasig City for a total amount of P777,445. Total gain of P764,685 was recognized in the consolidated statements of income after the related necessary taxes and expenses.”
(The amounts are in thousands, meaning the public is advised to read them with additional three zeroes so that P777,445 becomes P777.4 million and P764,685 becomes P764.7 million, rounded off.)
Had Philex not sold a piece of property, it would have reported a net loss of P61.8 million instead of a net profit of P702.8 million in 2014.
The majority stockholders of Global Ferronickel Holdings Inc. (FNI) ratified on Feb. 26 the acquisition of Ferrochrome Resources Inc. for $30 million and Southeast Palawan Nickel Ventures Inc. for $50 million.
How could the company raise that much money to pay for the acquisitions?
Global Ferronickel has authorized capital stock of 35.9 billion shares with par value of P0.35 per share. As of Dec. 31, 2014, it had 17.5 billion issued shares for a total of P6.1 billion and 18.4 billion unissued shares.
The capital profile of Global Ferronickel shows the availability of 18.4 billion shares which, if it wants to, it could sell to the public to raise the funds it needs to finance the two corporate acquisitions.
As an alternative, Global Ferronickel may also tap a stock rights offering. At the stock’s P2.91 market price, it needs to sell only 1.2 billion shares to be able to raise P3.5 billion.
Well, if this fails, a final option would be for Global Ferronickel to tap company funds. As of Dec. 31, 2014, it had retained earnings of P4.7 billion that it could declare as stock dividend.
Yuquiang Xie, a member of the board of Global Ferronickel, bought 70,000 FNI shares at P2.65 each on Feb. 24 and 90,000 FNI shares at P2.66 each. The additional acquisitions increased his holdings in the company to 400,000 FNI shares.
As of Feb. 18, a filing showed that Xie owned 240,000 FNI shares, but did not carry the acquisition price. On that day, FNI opened at P2.72, hit a high of P2.75, dropped to a low of P2.58 and closed at P2.64. It climbed to a 30-day high of P3.40.
Ferdinand Constantino, senior vice president and chief finance officer of San Miguel Corp., bought 133,689 SMC shares at P75.50 each on Feb. 24 and sold them at P77.59 each. On Feb. 26, he increased his SMC holdings to 187,500 shares by buying 40,000 shares at P75.50 each.
Victor Macalincag, an independent director of Semirara Mining and Power Corp. (SCC) sold 20,000 SCC shares at P159 each and 4,000 SCC shares at P159.50 each on Feb. 5; and another block of 400 SCC shares at P160.25 on Feb. 6. The transaction reduced his holdings in Semirara to 823,990 shares, or 0.08 percent. SCC peaked at a 30-day high of P164.20 and fell to a month’s low of P142.90.
(Caution: Due Diligencer’s analysis is not a suggestion to buy or sell stocks. For the public to better appreciate the numbers and speculations presented here, they may want to study the company’s PSE postings particularly the financial filings.)