IF THE public stockholders of listed companies know what to ask during annual stockholders’ meetings, the management and the board of directors that they elected should be able to answer them clearly with direct-to-the point response.
But do the members of the board and the management know how to deal with the public during the open forum that usually follows the company’s financial performance reports?
If the chairman of the board or the company president is asked about the financial performance, does his or her response satisfy the audience? It is not enough for the board to simply recite the numbers as they appear on the audited financial reports in a given year. What would be of interest to the public is an assurance that the company’s profitability remains on track, so they need to see and understand each of the historical data to stay optimistic about the company’s future.
Don’t say, “we are happy to report to you . . . ” and not consider the sentiment of your small stockholders. Remember that the company that pays you is public because the stockholders outside of your clan or group are responsible for making it public.
Full disclosure is a standard market policy for listed companies so to require an explanation from the board and the management for the numbers as they appear in financial reports is a normal order of the day during stockholders’ meetings.
It would not be enough for the company officials to merely state there was profit made from the operations during the period in review. If profit shows a declining trend over recent months or quarters or years, the company must explain that and inform the stockholders if that would lead to eventual losses or be averted with a strategy already put in place.
Reporting the numbers
Let me cite sample numbers that would be of interest to the public if they happen to be stockholders of Pryce Corp. In a financial posting on the website of the Philippine Stock Exchange, Pryce gave detailed information on the sources of revenue by presenting not only the amount but how it was generated.
In 2014, for instance, Pryce reported in its audited financial statement P5.667 billion in revenue resulting from the sales of liquefied petroleum gas (LPG), industrial gas and fuels.
Of the amount, LPG accounted for P5.268 billion or 92.955 percent. Industrial gases and fuels contributed P391.175 million, or 6.902 percent and 0.143 percent, respectively.
How Pryce ended up with these figures would be of interest to stockholders because when added, these resulted in net income that eventually boosted the company’s retained earnings. But the more important information that the company delivered to consumers was the decline in the prices of gas products from 2012 to 2014.
A series of computations showed LPG’s price per kilogram fell P11.461, or 19.774 percent, per kilogram from P57.959 in 2012 to P46.498 in 2014. In between, the average price per kg was P52.757.
Since Pryce provided only the numbers for product revenues and sales volume, Due Diligencer had to do the additional computations as follows:
In 2014, Pryce reported LPG revenues of P5.268 billion on 113,294,008 kgs. As computed, the price per LPG kg that year was P46.498, down 11.863 percent from P52.757 in 2013, which, in turn, was lower by 8.975 percent from P57.959 in 2012.
Pryce reported a similar price drop in the prices of industrial gas which generated revenues of P391.175 million from the sales of 934,085 cylinders, or P418.779 each, in 2014; P412.572 million from sales of 897,549 cylinders, or P459.665 each, in 2013; and P418.209 million from sales of 898,299 cylinders, or P465.556 each, in 2012. That’s a two-year drop of 10.076 percent to P418.779 per cylinder in 2014 from P465.556 per cylinder in 2012.
In 2014, Pryce grossed P8.095 million from the sale of 184,278 liters of fuel. That translates to P43.929 per liter, which means an increase of 0.43 percent from P43.741 in 2013 when the company made revenues of P43.273 million on 989,293 liters. In 2012, it sold 898,298 liters at P46.324 each for revenues of P75.503 million.
Incidentally, Pryce’s pricing strategy is governed by supply and demand. The price of LPG, for example, is “consistent with the movement of the contract price of LPG in the international market.” As a result, the company explained in an explanatory note, “domestic retail prices of LPG began the year—referring to 2013—at an average of P69.27 per kg and dipped consistently to P60.77 per kg by June.”
Pryce said in the same filing that the price “thereafter climbed gradually to P63.57 per kg starting July to a high of P83.67 per kg in December. Despite this, the company said “the average retail price of LPG in 2013 at P67.20 was slightly lower than that of 2012.
Does Pryce mean we are even luckier that the price of LPG has stopped hurting the budgets of the Filipino family in 2013? How about this year and the years thereafter?
As of March 31, 2015, Pryce has successfully reduced its deficit to P642.133 million from P770.29 million as of Dec. 31, 2014. In 2013, it had a deficit of P1.031 billion. Despite this deficit and because of its regained profitability, Pryce closed on Monday at P2.29. It recorded a 52-week high of P4.50 and plunged to a year’s low of P1, which is its stock’s par value per share.