Shell Pilipinas Corporation Audited Financial Statements

SHELL PILIPINAS CORPORATION
(formerly Pilipinas Shell Petroleum Corporation)

NOTES TO THE FINANCIAL STATEMENTS
For the years ended December 31
1. Corporate information
Shell Pilipinas Corporation (the “Company”) was incorporated in the Philippines and registered with the
Securities and Exchange Commission (SEC) on 09 January 1959 primarily to engage in the refining and
marketing of petroleum products.
Prior to its initial public offering ("IPO"), the Company is 68% owned by Shell Overseas Investments BV
(“SOIBV”), a corporation registered under the laws of the Netherlands and 32% owned by Filipino and
other foreign shareholders. The ultimate parent of the Company is Shell plc., incorporated in the United
Kingdom. The Company conducted its IPO to list in the Philippine Stock Exchange on 03 November 2016.
The offer was composed of a Primary Offer of 27,500,000 common shares and Secondary Offer of
247,500,000 common shares with an overallotment option of up to 16,000,000 common shares, with an
offer price of P67.0 (USD1.39) per share. After the IPO, SOIBV owns 55% of the total outstanding shares
of the Company. The Company used the net proceeds from the Primary Offer to fund capital expenditure,
working capital and general corporate expenses. Net proceeds amounted to P1.4 billion (USD 0.03 billion).
The IPO proceeds have been fully utilized as at 31 December 2017. The Company does not have any other
share issuances subsequent to its initial public offering.
On 20 February 2019, the President of the Philippines signed into law the Republic Act No. 11232 or the
Revised Corporation Code of the Philippines (Revised Code). The Revised Code expressly repeals Batas
Pambansa Blg. 68 or the Corporation Code of the Philippines. Section 11 of the Revised Code states that
a corporation shall have perpetual existence unless the article of incorporation provides otherwise.
Corporations with certificates of incorporation issued prior to the effectivity of this Revised Code, and
which continue to exist, shall have perpetual existence, unless the corporation, upon vote of its
stockholders representing a majority of its outstanding capital stock, notifies the SEC that it elects to retain
its specific corporate term pursuant to its articles of incorporation: Provided, that any change in the
corporate term under this section is without prejudice to the appraisal right of dissenting stockholders in
accordance with the provisions of this Revised Code. The Revised Code took effect on 23 February 2019.
In relation to the Company’s cessation of its refinery operations and move to build a world class import
terminal to optimize its asset portfolio and enhance its cost and supply chain competitiveness, the
Company during its Stockholders’ Meeting on 11 May 2021 amended its Primary Purpose in the Articles
of Incorporation. The shift in supply chain strategy from manufacturing to full import, is a move that will
further strengthen the Company’s financial resilience amidst the significant changes and challenges in the
global refining industry. It also prepares the Company for a future that will rely on more and cleaner
energy solutions.
Certain operations of the Company was registered with the Board of Investments (BOI) and entitled to
Income Tax Holiday (ITH) provided under Republic Act 8479, otherwise known as the Downstream Oil
Deregulation Act of 1998 (see Note 29). The same has been voluntarily waived on 6 August 2020 pursuant
to the Company’s decision to convert its refinery to a world-class import terminal.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
1. Corporate information (continued)

The Company’s registered office, which is also its principal place of business, is 41st Floor, The Finance
Centre, 26th Street corner 9th Avenue Bonifacio Global City, Brgy. Fort Bonifacio, Taguig City, Metro
Manila, 1635. On August 10, 2022, the Board has approved the change in corporate name of the Company
to “Shell Pilipinas Corporation” and the amendment and broadening of the Corporation’s Secondary
Purpose to include retail trade as it aims to grow its non-fuel retail segment.
Moreover, in its virtual Special Stockholders’ Meeting on 26 September 2022 through Shell Operated
Webcast, stockholders representing at least 79.1% of the total issued and outstanding capital approved the
change in corporate name from “Pilipinas Shell Petroleum Corporation” to “Shell Pilipinas Corporation”
and the new Secondary Purpose to allow retail trade. This introduces the Company’s wider future forward
approach towards energy transition that will reposition it beyond petroleum, shifting towards sustainable
and cleaner energy solutions. The change was approved by the stockholders in a virtual Special
Stockholder’s Meeting held on 26 September 2022. The SEC approval was obtained on 15 March 2023.
The 2022 financial statements have been authorized for issue by the Company’s Board of Directors on 23
March 2023 upon endorsement by the Board Audit and Risk Oversight Committee on 21 March 2023.
2. Operating segments
The Company operates under the downstream oil and gas segment. The Company’s integrated downstream
operations span all aspects of the downstream product supply chain, importing and distributing refined
products to its customers across the Philippines. The products it sells include gasoline, diesel, heating oil,
aviation fuel, marine fuel, lubricants and bitumen. Recognizing that its customers’ needs go beyond fuel,
the Company also has non-fuel offerings through Shell Select convenience stores and Deli2go. It also offers
full vehicle servicing such as oil change and other car maintenance through Shell Oil Helix Oil Change+
and Helix Service Centers (HSC).
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3. Cash
The account as at 31 December 2022 and 2021 consists of cash in banks which are earning interest at the
prevailing bank interest rates. The Company maintains cash deposits with universal and commercial banks
in the Philippines. Universal and commercial banks represent the largest single group, resource-wise, of
financial institutions in the country.
2022 2021
Universal bank 1,979,727 924,247

Commercial bank 977,436 760,005
2,957,163 1,684,252
4. Trade and other receivables, net

Note 2022 2021
Trade receivables
Third parties 18,899,677 12,213,152
Related parties 24 234,717 117,327
Provision for impairment of trade receivables from third parties (488,943) (358,991)
18,645,451 11,971,488
Non-trade receivables from related parties 24 36,005 60,804
Other receivables
Creditable withholding tax 852,577 427,431
Duty drawback and other claims 2,508,474 2,526,517
Non-trade receivables from third party 349,934 327,099
Miscellaneous 699,277 666,662
4,410,262 3,947,709
Provision for impairment of other receivables (39,886) (39,886)
4,370,376 3,907,823
23,051,832 15,940,115
Duty drawback and other claims pertain to claims from government agencies arising mainly from the
payment of excise duties in which the Company has a right of exemption. Miscellaneous receivables
pertain to rental from co-locators in mobility service stations and other non-trade receivables.
The gross carrying amounts of the Company’s trade, non-trade and other receivables are denominated in
the following currencies:
2022 2021
Philippine peso 23,519,052 15,402,529

US dollar 59,962 931,609
Other currencies 1,647 4,854
23,580,661 16,338,992
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4. Trade and other receivables, net (continued)
The Company holds collaterals for trade receivables from third parties as at 31 December 2022 valued at
P5.7 billion (2021 - P4.6 billion) consisting of cash securities, letters of credit or bank guarantees and Real
Estate Mortgages (REM). These securities can be applied once the related customer defaults on settlement
of the Company’s receivables based on agreed credit terms. The maximum exposure of the Company is
P12.9 billion as at 31 December 2022 (2021 – P7.4 billion) (see Note 31.b). These balances relate to a
number of independent customers with whom there is no recent history of default. The carrying amount
of trade and other receivables at the reporting date approximated their fair value.
Impaired receivables are fully provided and movements in the provision for impairment of the receivables
are presented in the table below.
Trade Others Total

At 01 January 2021 336,472 39,886 376,358
Provisions 27,102 - 27,102
Write-off (4,583) - (4,583)
At 31 December 2021 358,991 39,886 398,877
Provisions 130,382 - 130,382
Write-off (430) - (430)
At 31 December 2022 488,943 39,886 528,829
For the year ended 31 December 2022, trade receivables written off directly to statement of income
amounted to P24.9 million (2021 - P3.6 million and 2020 – P33.9 million) based on the Company’s
assessment of recoverability.
Set out below is the information about the credit risk exposure on the Company’s trade receivables using
a provision matrix:
Trade receivables
31 December 2022 Current 31-60 Greater than 60 Total
Carrying Amount 17,498,803 440,354 960,520 18,899,677
Expected Credit Loss 22,237 5,261 461,445 488,943
Expected Credit loss rate 0.13% 1.19% 48.04% 2.59%
Trade receivables
31 December 2021 Current 31-60 Greater than 60 Total
Carrying Amount 11,544,122 143,616 525,414 12,213,152
Expected Credit Loss 24,207 656 334,128 358,991
Expected Credit loss rate 0.21% 0.46% 63.59% 2.94%
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5. Inventories, net
2022 2021
Petroleum products 17,759,686 15,666,835
Materials and supplies 180,238 186,640
17,939,924 15,853,475
Details of allowance for inventory write-down and obsolescence as at 31 December 2022 and 2021 are as
follow:
Petroleum Materials
products and supplies Total
At 01 January 2021 68,969 106,000 174,969
Write-off (78,829) (103,000) (181,829)
Provisions, net 24,719 - 24,719
At 31 December 2021 14,859 3,000 17,859
Provisions, net 48,244 - 48,244
As at 31 December 2022 63,103 3,000 66,103
The allowance for inventory resulting from the write-down of petroleum products to net realizable value
amounted to P58.9 million as at 31 December 2022 (2021 – P8.9 million and 2020 – P51.6 million) and the
allowance for obsolescence of finished products amounted to P4.2 million as at 31 December 2022 (2021
– P6.0 million and 2020 – P17.3 million). In 2022, amount of petroleum products written-off amounted to
nil as at 31 December 2022 (2021 – P78.8 million and 2020 – P582.3 million).
Of the total amount of inventories, the inventories with a cost of P2.0 billion as at 31 December 2022 (2021
- P254.8 million) are carried at net realizable value, this being lower than cost which approximates the
inventories fair value less cost to sell.
Cost of inventories included as part of cost of sales amounted to P232.5 billion for the year ended 31
December 2022 (2021 - P123.7 billion and 2020 - P113.3 billion) (see Note 19).
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6. Prepayments and other current assets
2022 2021
Input VAT net of output VAT (a) 612,872 173,696
Prepaid corporate income taxes (b) 4,457,170 2,435,441
Advance rentals 659,555 309,468
Derivative financial assets (c) 101,897 53,001
Prepaid duties and taxes 4,489 2,239
Others 48,349 23,956
5,884,332 2,997,801
(a) Input VAT, net of output VAT
Input VAT represents the taxes paid on purchases of goods and services which can be recovered as tax
credit against future output VAT liability of the Company.
(b) Prepaid corporate income tax
These are claimed against income tax due, representing amounts that were withheld from income tax
payments and carried over in the succeeding period for the same purpose.
(c) Derivative financial assets
The Company enters into commodity forward contracts to hedge the commodity price risks arising from its
petroleum products requirements. As at 31 December 2022, the notional principal amount of the
outstanding commodity forward contracts assets amounted to P2.4 billion (2021 – P2.8 billion). As at 31
December 2022, the fair value of the derivative assets from outstanding commodity forward contracts
amounted to P101.9 million (2021 – P53.0 million).
During the year, the Company realized a loss of P974.1 million (2021 - gain of P547.6 million and 2020 -
loss of P461.9 million) from mark-to-market settlement of derivatives which was recognized in other
operating income, net in the statements of income (see Note 21).
For the year ended 31 December 2022, net fair value changes of the outstanding commodity forward
contracts amounting to a gain of P88.0 million (2021 - loss of P12.8 million; 2020 - gain of P18.2 million)
was recognized in other operating income, net in the statements of income (see Note 21).
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7. Long-term receivables, rentals and investments, net
2022 2021
Advance rentals 141,520 141,679
Customer grants (b) 100,308 101,587
Investments in associates (c) 26,160 32,466
267,988 275,732
Long term receivables (a) 11,222,057 7,813,393
Provision for impairment of long-term receivables (158,545) (208,604)
11,063,512 7,604,789
11,331,500 7,880,521
(a) Long-term receivables
Long-term receivables include claims from government agencies amounting to P10.9 billion and P7.5
billion as at 31 December 2022 and 2021, respectively, representing the amount to be recovered from the
government on various taxes paid. Further included in this P10.9 billion claims from government is P4.6
billion of excise duties and VAT paid under protest for certain Alkylate shipments (see Note 28(b)).
As at 31 December 2022, allowance for impairment amounted to P158.5 million (2021 – P208.6 million).
Movements in provision for impairment of long-term receivable are as follows:
2022 2021
At 01 January 208,604 269,733
Write-off (1,000) (4,280)
Reversal (49,059) (56,849)
At 31 December 158,545 208,604
The other classes and balances within long-term receivables, rental and investments are fully performing.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above. The carrying amount of long-term receivables approximate their fair value (see Note
31.3).
(b) Customer grants
Customer grants consist of business development funds used to help customers expand their operations.
The payments of the funds are secured by long-term sales contracts with the customers. The carrying
amount of customer grant approximate their fair value (see Note 31.3).
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7. Long-term receivables, rentals and investments, net (continued)

(c) Investments in associates
2022 2021
Carrying amount of investment in associate 26,161 32,466
The details of assets, liabilities and results of operations of associates, all of which are incorporated in the
Philippines, are as follows:
Share of
Interest Assets Liabilities Net Assets Income profit
2022
Bonifacio Gas Corporation 40% 185,080 137,498 47,582 152,719 61,088
Kamayan Realty Corporation 40% 23,922 6,100 17,822 6,412 2,565
2021
2020
Bonifacio Gas Corporation is an entity engaged in wholesale distribution of LPG and was established to
operate a centralized gas distribution system within Bonifacio Global City.
In 2021 Fort Bonifacio Development Corporation (FBDC) offered to acquire the 3.65% or 11,108 shares
which PSPC agreed to sell. The shares have a par value of Php 100 for each share. The share purchase
agreement was subsequently finalized with the receivable amount of P6.0 million. The said receivable was
collected in 2022.
Kamayan Realty Corporation is an entity engaged in leasing and selling of real properties in the Philippines.
The Company received dividends in the amount of P111.5 million and P21.8 million in December 31, 2022
and 2021, respectively
There are no contingent liabilities relating to the Company’s interest in the associates.
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8. Property, plant and equipment

Property, plant and equipment as at 31 December 2022 and 2021 and the movements in the accounts for the year consist of:
Assets under
Leasehold Plant, machinery Furniture and construction
Notes improvements and equipment fixtures Transportation (AUC) Total
Cost
At 01 January 2021 23,984,495 36,821,718 2,796,642 99,165 2,895,596 66,597,616
Acquisitions - - - - 2,241,748 2,241,748
Disposals/write-off (356,659) (6,310,985) (11,424) (9,724) - (6,688,792)
Impairment 23 - - - - (33,626) (33,626)
Transfers 1,770,350 942,933 191 - (2,713,474) -
At 31 December 2021 25,398,186 31,453,666 2,785,409 89,441 2,390,244 62,116,946
Acquisitions - - - - 5,787,272 5,787,272
Disposals/write-off (243,729) (31,624) (11,150) - - (286,503)
Impairment 23 - - - - - -
Transfers 2,044,334 365,426 48,288 26,508 (2,484,556) -
At 31 December 2022 27,198,791 31,787,468 2,822,547 115,949 5,692,960 67,617,715
Accumulated depreciation, amortization, and
impairment
At 1 January 2021 (11,581,373) (29,465,692) (2,319,933) (95,641) - (43,462,639)
Depreciation and amortization 19, 20 (455,494) (1,035,067) (162,311) (883) - (1,653,755)
Disposals/write-off 278,659 6,385,771 11,424 9,724 - 6,685,578
Impairment 23 (194,533) (72,209) - - - (266,742)
At 31 December 2021 (11,952,741) (24,187,197) (2,470,820) (86,800) - (38,697,558)
Depreciation and amortization 19, 20 (900,045) (760,231) (122,559) (1,033) - (1,783,868)
Disposals/write-off 114,848 8,125 3,438 - - 126,411
Impairment 23 - - - - - -
At 31 December 2022 (12,737,938) (24,939,303) (2,589,941) (87,833) - (40,355,015)
Net book values
At 31 December 2021 13,445,445 7,266,469 314,589 2,641 2,390,244 23,419,388
At 31 December 2022 14,460,853 6,848,165 232,606 28,116 5,692,960 27,262,700
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8. Property, plant and equipment (continued)

Assets under construction represent cost of ongoing capital projects in mobility, supply chain and marketing
business. As at December 31, 2022 and 2021, there are no property, plant and equipment which are
restricted or pledged as security for liabilities or contractual commitment to acquire in the future.
9. Leases
The Company has lease contracts on various land, buildings, storage and pipelines and vessels used in
operations. Leases of land and buildings generally have lease terms between 2 and 28 years, while others
generally have a lease term between 1 and 7 years. There are several lease contracts that include extension
and termination options, which are further discussed below.
There are no leases with lease terms of less than 12 months and low value assets for the year 2022.
a) Right to use assets
Right to use assets recognized and movement in the accounts for the year consist of:
Land and
Buildings Others ARO Total
At 1 January 2021 12,152,347 1,862,053 493,095 14,507,495
Additions 6,100,881 253,600 832,727 7,187,208
Derecognition (1,002,954) - (329) (1,003,283)
Depreciation (1,769,847) (539,863) (79,643) (2,389,353)
Remeasurement (318,934) (18,644) - (337,578)
At 31 December 2021 15,161,493 1,557,146 1,245,850 17,964,489
Additions 6,446,478 - - 6,446,478
Derecognition (1,484,387) - - (1,484,387)
Depreciation (2,058,047) (478,972) (97,693) (2,634,712)
Remeasurement (31,440) 82,806 (229,962) (178,596)
At 31 December 2022 18,034,097 1,160,980 918,195 20,113,272
Asset Retirement Obligation is purely from Land & Buildings. Others represent leases on vessels, pipelines
and other assets.
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9. Leases (continued)
b) Lease liabilities
Lease liabilities recognized and movement in the accounts for the year consist of:
Notes 2022 2021

At 1 January 2022 17,614,805 14,477,352
Additions 5,685,318 6,333,202
Accretion of Interest 1,112,231 1,007,575
Payments (2,964,273) (2,919,824)
Derecognition (1,304,438) (1,352,408)
Remeasurement 51,230 68,908
20,194,873 17,614,805
Notes 2022 2021

Current Portion 12 2,068,541 1,685,598
Non-Current portion 18,126,332 15,929,207
20,194,873 17,614,805
The statements of total comprehensive income show the following amounts relating to leases:
Notes 2022 2021

Depreciation expense of right to use assets 20 (2,634,712) (2,389,353)
Interest expense on lease liabilities 22 (1,112,231) (1,007,575)
Total expenses recognized in profit or loss (3,746,943) (3,396,928)
The Company's total cash outflows on leases amounts to P3.0 billion (2021 – P2.9 billion). The Company
also has non-cash additions to right to use assets and lease liabilities. The Company has a lease contract for
storage facility services that has not yet commenced as at 31 December 2022. The future lease payments
for this non-cancellable lease contract will amount to P3.6 billion to be paid beginning 2024 until 2038.
The Company has lease contracts that include extension and termination options. These options are
negotiated by the management to provide flexibility, in managing the leased asset portfolio and align the
business needs. Management does not have significant judgement in determining whether these extension
and termination options are reasonably certain to be exercised since extension and termination options shall
be mutually agreed by both parties.
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10. Provision for income tax; deferred income tax assets (liabilities)
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal
authority. The net amounts at 31 December 2022 and 2021 are as follows:
2022 2021
Deferred income tax assets (liabilities)
Impairment of property, plant and equipment 1,297,376 1,295,618
PFRS 16 Lease Liability accrual 1,142,287 843,451
Retirement benefit asset (1,115,657) (1,106,235)
Asset retirement obligation 1,012,556 992,602
MCIT – Recognition 738,784 425,390
Prepaid duties and taxes (558,542) (633,363)
Provision for doubtful debts 168,202 148,229
Provision for inventory losses 151,990 190,085
Other provisions 151,541 347,766
Unrealized foreign exchange gain (61,314) (32,067)
Share-based compensation 57,536 35,813
NOLCO 42,834 1,493,012
Unamortized past service cost, net 37,228 64,810
Mark to market gain (23,784) (1,775)
Provision for remediation costs (3,524) 67,316
Net deferred income tax 3,037,513 4,130,652
The gross movements in net deferred income tax assets (liabilities) are as follow:
2022 2021
At 01 January 4,130,652 6,102,753
Credited/(charged) to profit and loss (1,361,539) (2,938,392)
Credited to other comprehensive income (44,993) 701,094
MCIT Credited/(charged) to profit and loss 313,393 265,197
At 31 December 3,037,513 4,130,652
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10. Provision for income tax; deferred income tax assets (liabilities) (continued)
Realization of the future benefits related to the deferred income tax assets is dependent on many factors,
including the Company’s ability to generate taxable income in the future. The Company’s management has
considered these factors in arriving at its conclusion that the deferred income tax assets as at 31 December
2022 and 2021 are fully realizable.
As at 31 December 2020, the BIR issued Revenue Regulations No. 25-2020 implementing Section 4(bbbb)
of “Bayanihan to Recover As One Act” which states that the NOLCO incurred for taxable years 2020 and
2021 can be carried over and claimed as a deduction from gross income for the next five (5) consecutive
taxable years immediately following the year of such loss.
NOLCO balances as at 31 December 2022
As at 31 December 2020, the Company has incurred NOLCO which can be claimed as deduction from the
regular taxable income for the next five (5) consecutive taxable years pursuant to the Bayanihan to Recover
As One Act, as follows:
NOLCO Applied NOLCO NOLCO Applied NOLCO

Year Incurred Availment Period Amount Previous Years Expired Current Year Unapplied
2020 2021-2025 5,899,148 - - 5,800,711 98,437
2021 2022-2026 72,899 - - - 72,899
MCIT balances as at 31 December 2022
MCIT Applied MCIT MCIT Applied MCIT

Year Incurred Availment Period Amount Previous Years Expired Current Year Unapplied
2020 2021-2023 160,193 - - - 160,193
2021 2022-2024 265,197 - - - 265,197
2022 2023-2025 313,393 - - - 313,393
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10. Provision for income tax; deferred income tax assets (liabilities) (continued)
The details of provision for income tax for the year ended 31 December 2022, 2021, and 2020 are as follows:
2022 2021 2020

Current tax 342,383 237,037 231,605
Deferred tax 1,048,145 2,673,195 (7,077,134)
1,390,528 2,910,232 (6,845,529)
The reconciliation of provision for income tax computed at the statutory rate to actual provision for income
tax shown in the statements of income is shown below:
2022 2021 2020

Income tax (benefit from income tax) at statutory rate 1,366,568 1,691,486 (6,908,461)
Income tax effect of:
Non-deductible expense 30,691 29,459 72,832
Limitation on deductible interest expense 118 126 522
Interest income subject to final tax (592) (628) (1,583)
Income subjected to 8% final tax (8,950) (11,693) (2,703)
Non-taxable income (26,297) (4,351) (24,150)
Effects of change in income tax rates due to CREATE
Current tax - (53,394) -
Deferred tax - 1,233,993 -
Provision for (benefit from) income tax before final taxes 1,361,538 2,884,998 (6,863,543)
Final taxes on interest and other charges 28,990 25,234 18,014
Provision for (benefit from) income tax 1,390,528 2,910,232 (6,845,529)
The “CREATE” Act was signed into law on 26 March 2021. This effectively amended applicable regular
corporate income tax (RCIT) rates of PSPC from 30% to 25%, and minimum corporate income tax
(MCIT) rates from 2% to 1% effective 01 July 2020.
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11. Other assets, net

Note 2022 2021
Pension asset 25 4,553,157 4,515,467
Equity through OCI (a) 816,858 632,618
Deferred input VAT (b) 86,960 129,275
Intangible assets (c) 1,194 1,194
5,458,169 5,278,554
space
(a) Equity through OCI
Equity through Other Comprehensive Income (Equity through OCI) financial assets represent proprietary
club shares and equity securities which are carried at fair value in 2022 (see Note 31.3). Details of the
account as at 31 December 2022 and 2021 are as follows:
Notes 2022 2021
Cost
As at 01 January 26,800 26,800
As at 31 December 26,800 26,800
Fair value adjustments recognized directly in OCI
Balance at the beginning 605,818 554,158
Changes during the year 184,240 51,660
790,058 605,818
Balance at the end 816,858 632,618
The Company does not intend to sell equity instruments within 12 months from 31 December 2022 and
2021.
(b) Deferred input VAT
Deferred input VAT is estimated to be recovered more than 12 months from the reporting date. Hence, it is
presented as a non-current asset as at 31 December 2022 and 2021.
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11. Other assets, net (continued)

(c) Intangible assets
Intangible asset consists of program software and others. The movements in the accounts for the years
consist of:
Note 2022 2021
Cost
At 01 January 1,007,623 1,007,623
Additions - -
At 31 December 1,007,623 1,007,623
Accumulated amortization
At 01 January (1,006,429) (1,006,262)
Amortization for the year 19, 20 - (167)
At 31 December (1,006,429) (1,006,429)
Net book value 1,194 1,194
12. Trade and other payables

Note 2022 2021
Trade payables
Third parties 10,148,439 7,900,755
Related parties 24 14,033,005 10,100,256
24,181,444 18,001,011
Non-trade payables from related parties 24 239,045 124,710
Lease liabilities 9 2,068,541 1,685,598
Project-related costs and advances 1,885,819 847,808
Provision for ARO and remediation (a) 1,535,046 1,014,534
Rent and utilities 555,617 173,820
Advertising and promotions 498,032 526,085
Employee benefits 435,901 391,611
Duties and taxes 228,559 239,340
Supply and distribution 4,228 16,181
Derivatives (b) 6,759 45,902
Others (c) 1,287,057 1,400,873
32,926,048 24,467,473
(a) Movements in the provision for ARO and remediation are as follows:
Note 2022 2021
At 01 January 1,014,533 815,653
Transferred from long-term 15(a) 310,441 -
Decommissions (583,920) (521,796)
Remeasurements 793,992 720,677
At 31 December 1,535,046 1,014,534
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12. Trade and other payables (continued)

(b) As at 31 December 2022, the notional principal amount of the outstanding commodity forward contract
liabilities amounted to P0.8 billion (2021 – P1.8 billion). As at the same date, the fair value of the
derivative liabilities from outstanding commodity forward contracts amounted to P6.8 million (2021 –
P45.9 million).
(c) Others include provision related to accrual of interest on short term borrowings, IT related cost and
various other accruals.
13. Short-term loans

As at 31 December 2022, unsecured short-term loan amounted to P17,827.0 million with tenure ranging
from 5 to 60 days. The loans are intended solely for working capital requirements and corporate expenses.
As at 31 December 2021, unsecured short-term loan amounted to P8,220.0 million with tenure ranging
from 182 to 360 days. The loans are intended solely for working capital requirements and corporate
expenses.
The average interest rate on local borrowings for the year 31 December 2022 was 4.51% (2021 - 2.25%
and 2020 - 3.68%). Total interest expense charged to operations for the year ended 31 December 2022
arising from short-term loans amounted to P528.4 million (2021 – P335.7 million and 2020 - P636.6 million)
(see Note 22).
14. Long-term debt

Details of the loan agreements with Bank of the Philippine Islands (BPI) as at 31 December 2022 and 2021
are as follows:
2022 2021 Interest Terms

Payable after sixty (60) months reckoned from
the drawdown date on 08 March 2018. Principal
2.88% as at 31 December is payable in lump sum at maturity date 08 March
2022 effective until next re- 2023. Interest is re-priced every three (3) months
9,000,000 9,000,000 pricing (Note 34).
Payable after sixty (60) months reckoned from
the drawdown date on 20 December 2021.
3.32% as at 31 December Principal is payable in lump sum at maturity date
2022 effective until next re- 21 December 2026. Interest is repriced every
6,000,000 6,000,000 pricing three (3) months.
15,000,000 15,000,000
23
14. Long-term debt (continued)
Total interest expense charged to operations for the year ended 31 December 2022 arising from these loans
amounted to P325.4 million (2021 - P152.4 million and 2020 - P251.9 million) (see Note 22).
There are no borrowings related to acquisition, construction, or production of a qualifying asset in 2022
and 2021. The borrowings are intended solely for working capital requirements.
There are no collaterals pledged as security against these borrowings.
Under the loan agreements, the Company is required to comply with certain covenants, as follows:
• Maintenance of the Company’s legal status.
• Ensure that at all times the loans rank at least pari passu with the claims of all other unsecured
and unsubordinated creditors except those whose claims are preferred by any bankruptcy,
insolvency, liquidation or other similar laws of general application.
• The Company shall not create nor permit to subsist any encumbrance over all or any of its present
or future revenues or assets other than permitted encumbrance as defined in the loan agreements.
• The Company shall duly pay and discharge all taxes, assessment and charges of whatsoever
nature levied upon or against it, or against its properties, revenues and assets prior to the date on
which penalties attach thereto, and to the extent only that the same shall be contested in good
faith and by appropriate legal proceedings.
The Company is in compliance with the covenants as at reporting periods presented. See also Note 31.1.c
for the maturity analysis of these loans.
15. Provisions and other liabilities
2022 2021
Asset retirement obligation (ARO) (a) 3,288,274 4,339,999
Cash security deposits 179,355 193,678
Provision for legal cases (b) 274,510 274,510
Provision for remediation (c) 63,073 65,345
Other liabilities (d) 404,673 470,695
4,209,885 5,344,227
24
15. Provisions and other liabilities (continued)

(a) Asset retirement obligation
Movements in the provision for asset retirement obligation as follows:
Note 2022 2021
At 01 January 4,339,999 3,674,244
Additions - 360,520
Accretions 22 101,596 55,463
Remeasurements (842,880) 249,772
Transferred to short term 12(a) (310,441) -
At 31 December 3,288,274 4,339,999
Asset retirement obligation includes provision for decommissioning and demolition of Tabangao oil
refinery assets amounting to P722.3 million (2021 - P1,412.6 million). Current portion of provision for
decommissioning and demolition amounting to P1,216.3 million (2021 – P849.9 million) is recognized
under trade and other payables.
The Company makes full provision for the future cost of decommissioning and demolition of oil refinery
assets. The decommissioning provision represents the present value of decommissioning and demolition
costs relating to refinery, which are expected to be incurred during the period up to 2025. Assumptions are
based on the current economic environment and form a reasonable basis upon which to estimate the future
liability. These estimates are reviewed regularly to take into account any material changes to the
assumptions. However, actual decommissioning costs will ultimately depend on future market prices for
the necessary decommissioning works required that will reflect market conditions at the relevant time. The
discount rate used in the calculation of the provision as at 31 December 2022 was 6.25% (2021: 3.77%).
Other asset retirement obligation represents the future estimated dismantling costs of various assets used in
mobility, depot and commercial operations. Average remaining life of the related assets is 7 years as at 31
December 2022 (2021 - 7 years). These are stated at present value at 31 December 2022 using a range of
discount rates from 6.25% to 7.22% (2021 - 2.64% to 3.29%).
25
15. Provisions and other liabilities (continued)
(b) Provision for legal cases
The account represents provisions arising from disputes/legal matters in the ordinary course of business.
The Company has recorded provisions for tax and legal items relating to the regular operations of the
Company in 2020. Movements in the provision for legal case as follows:
2022 2021
At 01 January 274,510 274,510
Provisions - -
At 31 December 274,510 274,510
(c) Provision for remediation
Provision for remediation amounted to P63.1 million as at 31 December 2022 (2021 - P65.3 million).
Provision for environmental liabilities is recorded where there is a constructive or legal obligation to
remediate any known environmental damages arising in the ordinary course of business. The amount
recorded is generally based on independent evaluation of environmental firms. The estimated amount of
provision is recorded at net present value discounted as at 31 December 2022 at 6.25% to 7.22% (2021 -
2.64% to 3.29%). As at 31 December 2022, there is minimal transfers to short-term amounting to P2.3
million and no further changes in additions and reversals. The amount recognized as accretion cost or
income in the statement of income as at December 31, 2022 amounted to nil (2021 - nil).
(d) Other liabilities
Other liabilities also include provisions for payments to be made to customers, employees and business
partners have also been considered and onerous provision which were fully settled during 2022.
16. Share capital; Treasury shares

Capital stock and treasury shares as at 31 December consist of:
2022 2021 2020

Number of Number of Number of
Amount Amount Amount
shares shares shares
Authorized capital stock, common shares
2.5 billion 2,500,000 2.5 billion 2,500,000 2.5 billion 2,500,000
at P1 par value per share
Issued shares 1,681,058,291 1,681,058 1,681,058,291 1,681,058 1,681,058,291 1,681,058

Treasury shares (67,614,089) (507,106) (67,614,089) (507,106) (67,614,089) (507,106)
Issued and outstanding shares 1,613,444,202 1,173,952 1,613,444,202 1,173,952 1,613,444,202 1,173,952
As at 31 December 2022, the Company has 319 shareholders excluding treasury shares (2021 - 323), 282
of whom, hold at least 100 shares of the Company’s common shares (2021 - 286).
26
17. Retained earnings (accumulated loss)
2022 2021 2020

Unappropriated retained earnings (loss), unadjusted 3,788,190 1,325,887 (6,775,854)
PFRS 16 Deferred tax - - (58,031)
Unappropriated retained earnings (loss), adjusted 3,788,190 1,325,887 (6,833,885)
On 06 October 2021, the Company applied with Securities of Exchange Commission (SEC) an equity
restructuring to offset the 2020 deficit amounting to P4,304.1 million against its share premium. On 10
November 2021, the Company received the certificate of approval of the equity restructuring dated 05
November 2021. The Company’s share premium after the equity restructuring amounted to P21,857.7
million in 2021.
At the Regular Meeting of the Board held on 10 August 2022, the Board approved the distribution of cash
dividends to stockholders on record as of 25 August 2022 amounting to P1.6 billion pertaining to the audited
2021 Net Income after Tax, out of the unrestricted retained earnings available for dividend as of 30 June
2022.
Cash dividend declared and paid in 2022:
Declared Date Paid Per share 2022

10 August 2022 19 September 2022 1.00 1,613,444
As at 31 December 2022, cost of treasury shares, accumulated earnings of its associates, unrealized mark
to market gains and remeasurement gain on retirement benefits and recognized deferred tax assets are not
considered for dividend declaration as per SEC Rule 68, as amended and SEC Memorandum Circular No.
11.
18. Earnings (loss) per Share
Computation of earnings per share (EPS) for the years ended 31 December are as follows:
Notes 2022 2021 2020

Earnings available to stockholders:
Profit (Loss) for the year 4,075,747 3,855,713 (16,182,673)
Weighted average number of Shares 1,681,058,291 1,681,058,291 1,681,058,291
Treasury shares 16 (67,614,089) (67,614,089) (67,614,089)
1,613,444,202 1,613,444,202 1,613,444,202
Earnings (loss) per share, basic and diluted 2.53 2.39 (10.03)
As at 31 December 2022, 2021 and 2020, the Company does not have any potentially dilutive shares of
stocks.

27
19. Cost of Sales

Note 2022 2021 2020
Petroleum Product Costs 5 232,525,595 123,735,249 113,288,033
Duties and specific tax 30,917,175 28,837,719 31,130,557
Depreciation and amortization 8, 11 - 31,251 440,411
Logistics and transshipment 1,357,837 931,898 1,119,965
Freight and wharfage 1,319,160 845,221 683,981
Salaries and other employee benefits - 31,354 671,990
Manufacturing expenses - - 5,956,264
266,119,767 154,412,692 153,291,201
The more significant components of manufacturing expenses consist of repairs made to manufacturing units,
professional services, onerous provisions and other costs.
20. Selling, general and administrative expenses

The components of selling, general and administrative expenses for the years ended 31 December are as
follows:
General and administrative
Selling expenses expenses
2022 2021 2020 2022 2021 2020
Outside services 2,878,235 2,779,851 2,601,071 865,003 709,879 608,128
Depreciation on right to use assets
(Note 9) 2,562,250 2,299,726 2,207,791 72,462 89,627 105,176
Logistics, storage and handling 2,233,812 1,865,480 1,732,820 - - -
Compensation and employee benefits 1,812,552 1,616,680 1,210,312 634,871 456,701 707,998
Depreciation and amortization (Notes 8
and 11) 1,658,050 1,498,445 1,365,367 125,818 124,226 122,496
Repairs and maintenance 994,467 1,669,859 602,242 - 10,759 -
Advertising and promotions 779,334 756,031 545,223 70,144 148,200 144,619
Communication and utilities 389,069 144,154 115,666 370,561 267,792 361,947
Travel and transportation 129,092 34,349 20,557 33,264 3,967 15,256
Write-off/Impairment (reversal) of
receivables 99,737 (34,560) 108,266 - (439) 949
Rentals 94,483 27,445 134,291 29,126 23,363 25,859
Insurance 15,410 13,045 4,071 18,998 15,947 63,214
Miscellaneous 551,997 442,275 558,348 260,859 384,936 361,111
14,198,488 13,112,780 11,206,025 2,481,106 2,234,958 2,516,753
28
21. Other operating (income)/expense
Note 2022 2021 2020
Realized trading loss (gain), net 6 974,069 (547,575) 461,916

Retailer fee, rental income and franchise commission (851,675) (672,319) (493,935)
Royalties (222,425) (143,806) (119,136)
Remeasurement of asset retirement obligation 197,131 240,252 914
Share in profits from associates (105,190) (16,374) (80,485)
Unrealized mark-to-market (gain) loss, net 6 (88,039) 12,846 (18,209)
Commissions 79,944 53,296 20,631
Loss (gain) on disposal of property and equipment 30,603 (41,588) 55,619
Write-off of assets 262 8,468 769
Provision for legal cases - - 1,267
Others, net (11,615) (807,987) (7,124)
3,065 (1,914,787) (177,773)
Others include aviation concession fees and non-oil income.
22. Finance income/(expense)
Note 2022 2021 2020

Finance Income
Unrealized foreign exchange gain, net 116,989 - 46,203
Realized foreign exchange gain, net - - 228,164
Interest income 526 3,066 5,710
117,515 3,066 280,077
Finance expense
Interest expense on lease liability 9 (1,112,231) (1,007,575) (1,339,438)
Interest on debts and borrowings 13,14 (853,816) (488,054) (888,448)
Accretion expenses 15 (101,596) (55,463) (63,342)
Unrealized foreign exchange loss, net - (308,468) -
Realized foreign exchange loss, net (1,263,400) (368,110) -
Bank charges (400) (20,302) (8,215)
(3,331,443) (2,247,972) (2,299,443)
Realized foreign exchange loss, net consist of settlements to its related parties such as SIETCO, SIPC, SBI
and other related parties which was mainly transacted in USD.
29
23. Impairment Losses
Notes 2022 2021 2020
Property plant and equipment - oil refinery assets 8, 11 - 300,368 8,848,885
Right to use assets - ARO 9 - - 2,275,588
In 2020, there was a steep decline in crude oil prices as a consequence of COVID-19 and other factors
impacting global supply and demand. Impairment of refinery assets was triggered by the depressed regional
refining margin environment and the overall outlook on supply and demand in the region. Pursuant to which
the management decided to convert its oil refinery into a world-class import terminal to optimize its asset
portfolio and enhance its cost and supply chain competitiveness. This move will further strengthen the
Company’s financial resilience amidst the significant changes and challenges in the global refining industry.
In 2021, as a result of the conversion of the refinery into the Shell Import Facility Tabangao (SHIFT), the
company recognized additional impairment to certain assets that are not transferrable to SHIFT.
In assessing whether an impairment is required, the carrying value of the oil refinery assets is compared
with its recoverable amount. The recoverable amount is the assets fair value less costs of disposal (FVLCD).
The key assumption in determining the FVLCD is the market recoverable value of the assets. The
management has identified the fair value of the assets based on current market estimates amounting to nil
in 2022 and 2021.
The fair value is the price that would be received on sale of the asset in an orderly transaction between
market participants at the measurement date. The fair value is categorized under Level 2 of the fair value
hierarchy.
24. Related party disclosures
In the normal course of business, the Company transacts with companies, which are considered related
parties under PAS 24, “Related Party Disclosures”.
Related Party Transactions (RPT) with a contract value that equals or exceeds 5% of the Company's
reported net assets of the previous year or aggregate RPT within a twelve-month period that breaches the
materiality threshold of 10% of the Company's total assets, will be endorsed by the Related Party
Transactions Committee to the Board of Directors for approval.
The transactions and outstanding balances of the Company with related parties as at and for the year ended
31 December 2022 are presented in the table below.

30
24. Related party disclosures (continued)
(a) Entities under common shareholdings

Note Transactions Receivables
(Payables) Terms and conditions
Purchases of goods and services (i, vii, 12 160,126,060 (14,265,423) Payable balances are to be settled in cash
viii) and are due within 30 to 60 days from date
of each transaction. These are unsecured,
non-interest bearing and not covered by any
guarantee.
Leases (iii) 304,063 - Payable balances are to be settled in cash
and are due within 30 to 60 days from date
guarantee.
Sales 4 351,714 234,717 Receivable balances are to be settled in cash
and are due within 30 to 60 days from date
security.
Royalty fee (iv) 963,921 - Payable balances are to be settled in cash
within 30days from month end.
Admin billings (v)
Charges to the Company (ii) 12 928,761 (6,627) The non-trade balances are settled in cash
Charges by the Company (ii) 4 184,834 36,005 and are due within 15 days from month end.
These are unsecured, non-interest bearing
and are not covered by any security.
Contributions to the plan 25 16,182 - Contributions to the plan and investing
transactions of the plan are approved by the
Retirement Plan Board of Trustees.
b) Parent company
Transactions Payable Terms
Dividends are usually paid in cash within 12 months from
Dividends declared 890,860 - reporting date.
(c) Key management personnel
Category/ Transaction Transactions Balances Terms

Current
Salaries and other
short-term employee
benefits 93,467 -
The terms and arrangements of these non-current employee
Non-Current benefits are summarized in the related notes.
Post-employment
benefits 1,215 -
Share-based
compensation 10,443 -
31

(d) Entities with common director
The Company has a long-term loan from Bank of Philippines (BPI) amounting to P6.0 billion as at 31
December 2022. The loan was drawn in 2021 in which a director of the Bank holds office as a director of
the Company and resigned from its position as director in BPI last September 2022.
The transactions and outstanding balances of the Company with related parties for the comparative figures
as at and for the years ended 31 December 2021 and 2020 are presented in the table below. The terms and
arrangements presented for 2022 also apply to the transactions and balances for 2021 and 2020.
(a) Entities under common shareholdings

Note 2021 2020
Receivables Receivables
Transactions (Payables) Transactions (payables)
Purchases of goods and services 12 88,111,868 (10,224,547) 66,262,630 (6,737,260)
Leases 4, 12 329,416 - 328,547 (3,181)
Sales 4 321,274 117,327 9,897,396 911,107
Royalty fee (iv) 1,054,956 - 1,210,088 -
Admin billings (v)
Charges to the Company 12 2,201,733 (419) 1,582,304 (203,773)
Charges by the Company 4 385,447 60,804 482,911 79,910
Contributions to the plan 58,696 - 132,691 -
(b) Parent company
2021 2020
Transactions Payable Transactions Payable
Dividends declared
- - - -
(c) Key management personnel
2021 2020
Transactions Balances Transactions Balances
Current
Salaries and other short-term employee benefits 69,121 - 90,064 -
Non-Current
Post-employment benefits 2,343 - 6,104 -
Share-based compensation 6,629 - 28,396 -
i. The Company purchases petroleum products from Shell International Eastern Trading Co. (SIETCO), an
entity under common shareholdings. The Company’s purchases during the year pertains to petroleum
products as the Company transitioned to full importation, while in 2020, purchases pertain to crude and
other oil products. Cost of gross purchases for ended 31 December 2022 amounted to P153.4 billion (2021
- P83.5 billion and 2020 - P63.5 billion). As at 31 December 2022, balances payable to SIETCO amounted
to P13.4 billion (2021 - P8.8 billion and 2020 - P6.2 billion).
32

ii. Under existing agreements with Shell International Petroleum Company (SIPC) of the United Kingdom
and Shell Global Solutions International B.V. (SGS) of The Netherlands, entities under common
shareholdings, SIPC and SGS provide management advisory, business support, and research and
development and technical support services to the Company under certain terms and conditions. These
agreements shall remain in full force until terminated by either party by giving the other party not less than
12 months prior written notice to that effect. Cost of the services charged to operations amounted to P0.4
billion during the year ended 31 December 2022 (2021 – P1.0 billion and 2020 P1.1 billion). As at 31
December 2022, balances payable to SIPC amounted to P23.5 million (2021 - P46.7 million, 2020 - P16.4
million).
iii. The Company leases land from Tabangao Realty, Inc. (TRI), for several depots and mobility sites located
around the country. Lease term ranges from 3 to 50 years and is renewable, thereafter. Rent payments
amounted to P304.1 million for the year ended 31 December 2022 (2021 - P329.4 million and 2020 - P328.5
million). As at 31 December 2022, outstanding payable amounted to nil (outstanding payable of 2021 -
payable P7.2 million and outstanding payable of 2020 - P3.2 million).
iv. On 01 January 2020, the Company and Shell Brands International AG (SBI), an entity under common
shareholdings, entered into Trademarks and Manifestation License Agreement pursuant to which SBI, the
licensor, grants the Company, the licensee, a non-exclusive right to reproduce, use, apply and display the
Shell trademark and other manifestation. In consideration, the Company shall pay a royalty fee, which shall
be computed as certain percentage of business contribution of each class of business. Royalty rate varies
from 0.82% to 8.29% depending on class of business, subject to a minimum royalty amount. This agreement
can be terminated by either party without any penalty.
v. The Company receives billings from entities under common shareholdings for group-shared expenses
related to IT maintenance, personnel and other administrative costs. On the other hand, the Company
charges entities under common shareholdings for group-shared expenses related to personnel and other
administrative costs and other services.
vi. The Company has five common members between its Board of Directors and Board of Trustees of
Pilipinas Shell Foundation Inc. The Company has contributed towards donations and program recovery
expenses amounting to P20.4 million (2021 - P155.1 million). The outstanding payable balances as at 31
December 2022 is nil (2021 is P47.0 million).
vii. The Company purchases lubricants products from The Shell Company of Thailand Limited, an entity
under common shareholdings. Cost of gross purchases for ended 31 December 2022 amounted to P2.2
billion (2021 - P1.5 billion and 2020 - P0.4billion). As at 31 December 2022, balances payable to The
Shell Company of Thailand Limited amounted to P154.1 million (2021 - P96.0 million and 2020 - P27.5
million).
viii. The Company have transactions related to aviation fuel settlements from The Shell Aviation Limited,
an entity under common shareholdings. Cost of gross purchases for ended 31 December 2022 amounted to
P2.0 billion (2021 - P0.7 billion and 2020 - P0.2billion). As at 31 December 2022, balances payable to The
Shell Aviation Limited amounted to P380.2 million (2021 - P143.2 million and 2020 - P0.8 million).
33
25. Employee benefits

Retirement plan
The Company has one retirement plan, namely, Shell Companies in the Philippines Multi-Employer
Retirement Plan (Defined Benefit and Defined Contribution sections) for the benefit of its regular
employees. The assets of the plans are maintained by a trustee bank. The plans provided for payment of
benefits in lump sum, upon attainment of the normal retirement age of 60, or upon retirement/separation at
an earlier age.
The Company submitted an application to the Bureau of Internal Revenue (BIR) on 2 July 2012 for a revised
retirement benefit plan with defined benefit for existing members and a new defined contribution provision
for prospective members. This revised plan was approved by the BIR on 24 August 2015 and became
effective on 1 September 2015.
As of 31 December 2022 and 2021, the number of employees entitled to the defined contribution plan were
159 and 139, respectively.
The Company is in compliance with the minimum mandated retirement benefit by the Republic Act (R.A.)
7641.
Under the defined contribution plan, the employer makes a contribution to the fund of 10% of the employees’
monthly salary, subject to compliance with Republic Act (R.A.) 7641.
Based on the latest actuarial valuation report prepared by the independent actuary for the year ended 31
December 2022 and 2021, the principal assumptions were:
2022 2021
Discount rate 7.1% 5.1%
Age 20-30: 13% Age 20-30: 16%
Age 31-40: 10% Age 31-40: 10%
Age 41-50: 7% Age 41-50: 8%
Future salary increases Age >50: 4% Age >50: 5%
The Board of Trustees has set an investment strategy and approved a strategic asset allocation with the aim
to generate sufficient returns so that the fund maintains a low reliance on contributions from the
Company. The Board of Trustees monitor the performance of the scheme investments on a regular basis.
34
25. Employee benefits (continued)

There are 2 committees (Investment Committee, Risk & Audit Committee) set up to support the Board of
Trustees and oversee the investment & risk/audit issues relating to the pension plan.
The details of the pension expense and pension asset (obligation) for the year ended 31 December 2022 and
2021 are as follow:
2022 2022 2021 2021
Defined Defined 2022 Defined Defined 2021
Benefit Contribution Total Benefit Contribution Total
Pension expense 31,584 16,337 47,921 25,983 11,655 37,638
Pension asset (obligation) 4,556,386 (3,229) 4,553,157 4,518,739 (3,272) 4,515,467
The amount of pension asset (obligation) recognized in the statement of financial position is determined as
follows:
2022 2022 2021 2021
Present value of defined benefit
(2,836,443) (66,709) (2,903,152) (3,977,498) (59,458) (4,036,956)
obligation
Fair value of plan assets 7,392,829 63,480 7,456,309 8,496,237 56,186 8,552,423
Pension asset (obligation) 4,556,386 (3,229) 4,553,157 4,518,739 (3,272) 4,515,467
The movement in the pension asset recognized in the statement of financial position as at 31 December are
follows:
2022 2022 2021 2021
01 January 4,518,739 (3,272) 4,515,467 6,590,133 (5,838) 6,584,295
Pension expense (31,584) (16,337) (47,921) (25,983) (11,655) (37,638)
Actual contributions - 16,182 16,182 47,259 11,437 58,696
Remeasurement gains (losses) 69,231 198 69,429 (2,092,670) 2,784 (2,089,886)
Balance at the period 4,556,386 (3,229) 4,553,157 4,518,739 (3,272) 4,515,467
35

Pension expense recognized in the statements of income for year ended 31 December 2022 and 2021 is as
follows.
2022 2022 2021 2021
Current service cost 255,616 16,182 271,798 271,788 11,439 283,227
Net interest income (224,032) 155 (223,877) (245,805) 216 (245,589)
31,584 16,337 47,921 25,983 11,655 37,638
Changes in the present value of the defined benefit obligation are as follows.
2022 2022 2021 2021
01 January 3,977,498 59,458 4,036,956 4,292,508 46,370 4,338,878
Current service cost 255,616 16,182 271,798 271,788 11,439 283,227
Interest cost 192,963 3,409 196,372 157,141 2,002 159,143
Benefits paid (387,778) - (387,778) (860,598) (1,120) (861,718)
Transfer of employees from/to
entities under common control - - - 543,038 (206) 542,832
Remeasurement (gains) losses
from:
Changes in economic assumptions (1,209,596) (1,566) (1,211,162) (179,512) (2,005) (181,517)
Experience adjustments 7,740 (10,774) (3,034) (246,867) 2,978 (243,889)
Balance at the period 2,836,443 66,709 2,903,152 3,977,498 59,458 4,036,956
Changes in the fair value of the plan assets are as follows.

2022 2022 2021 2021
01 January 8,496,237 56,186 8,552,423 10,882,641 40,535 10,923,176
Interest income 416,994 3,254 420,248 402,946 1,786 404,732
Contributions - 16,182 16,182 47,259 11,437 58,696
Benefits paid (387,778) - (387,778) (860,598) (1,120) (861,718)
Transfer of employees from/to
entities under common control - - - 543,038 (207) 542,831
Return on plan assets (1,132,624) (12,142) (1,144,766) (2,519,049) 3,755 (2,515,294)
36

The carrying value of the plan assets as at the year ended 31 December 2022 and 2021 are equivalent to the
fair values presented above and are comprised mainly of investments in equity securities, which account
for 62% of total plan assets in 2022 (2021: 60%). Plan assets are comprised of:
2022 2022 2021 2021
Cash and cash equivalent 75,407 647 76,054 467,293 3,090 470,383
Investments in debt securities:
Government bonds and securities 2,697,643 23,164 2,720,807 2,927,803 19,362 2,947,165
Corporate bonds - - - 22,090 146 22,236
Unquoted equity instruments 19,961 171 20,132 18,692 124 18,816
Unit investment trust funds 4,599,818 39,498 4,639,316 5,060,359 33,464 5,093,823
The defined benefit plan typically exposes the participating entities to a number of risks such as investment
risk, interest rate risk and salary risk. The most significant of which relate to investment and interest rate
risk. The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of government bonds that are denominated in the currency in which the
benefits will be paid, and that have terms to maturity approximating the terms of the related retirement
liability. A decrease in government bond yields will increase the defined benefit obligation although this
will be partially offset by an increase in the value of the plan's fixed income holdings. Hence, the present
value of defined benefit obligation is directly affected by the discount rate to be applied by the participating
entities. However, the Company believes that due to the long-term nature of the retirement liability, the mix
of debt and equity securities holdings of the plan is an appropriate element of the long-term strategy to
manage the plan efficiently.
Investments are well diversified, such that the failure of any single investment would not have a material
impact on the overall level of assets.
37

Expected contribution to the plan in 2023 is nil for defined benefit plan and P19.5 million for defined
contribution plan.
Maturity profile of Defined Benefit Obligation on Defined Benefit Plan and Defined Contribution Plan for
the years ended 31 December 2022 and 2021 is as follows:
2022 2022 2021 2021
Following year 102,949 1,366 104,315 78,956 438 79,394
Between 2 to 3 years 342,166 5,315 347,481 372,446 2,472 374,918
Between 3 to 5 years 337,340 7,992 345,332 355,352 5,532 360,884
Over 5 years 1,562,087 41,820 1,603,907 1,599,603 26,844 1,626,447
The weighted average duration of the defined benefit obligation on defined benefit plan and defined
contribution plan are 11.58 years and 16.09 years, respectively (2021: 11.08 years and 18.32 years)
Share-based compensation:
Shell plc operates a Performance Share Plan (PSP) covering all of its subsidiaries’ employees who are not
members of the Executive Committee. PSP for conditional shares is awarded to eligible employees based
on their sustained performance and value. Shares are finally delivered at the end of a three-year performance
period, but delivery depends on the performance of the Shell group.
A Monte Carlo option pricing model is used to estimate the fair value of the share-based compensation
expense arising from the Plan. The model projects and averages the results for a range of potential outcomes
for the vesting conditions, the principal assumptions for which are the share price volatility and dividend
yields for Shell plc and four of its main competitors over the last three years and the last ten years.
Movements of the shares granted in respect of the Company for the year ended 31 December are:
2022 2021
Weighted Weighted
average fair average fair
value (in U.S. value (in U.S.
Shares Dollar) Shares Dollar)
Shares granted as at 01 January 211,882 24.00 192,345 23.17
Grants during the year 85,680 23.11 93,870 21.00
Shares delivered during the year (60,290) 43.46 (62,050) 27.82
Cancelled/forfeited during the year (8,594) - (12,283) -
Shares granted as at 31 December 228,678 30.19 211,882 24.00
The total share-based compensation recognized in the statements of income during the year amounted to
P195.0 million (2021 – P85.4 million).
38
26. Lease, commitments and other arrangements
The Company’s future minimum rental and other commitments related to leases as at 31 December 2022
and 31 December 2021 is as below:
2022 2021
Within one year 2,484,771 2,413,157
More than one year but not more than five years 8,977,765 7,755,289
Over five years 16,032,469 13,507,851
27. Foreign currency denominated assets and liabilities

The Company’s foreign currency assets and liabilities as at 31 December are as follows:
Net foreign
currency
assets Exchange Peso
Currency Assets Liabilities (liabilities) Rate equivalent
2022
US dollar 48,332 (12,806) 61,138 55.73 3,407,068
Canadian dollar (12) - (12) 41.17 (494)
UK pound 14 121 (107) 67.19 (7,189)
Euro 1,178 48 1,130 59.45 67,175
Singapore dollar - 227 (227) 41.55 (9,433)
Malaysian ringgit (16) 51 (67) 12.69 (851)
Australian dollar (8) 178 (186) 37.89 (7,047)
Japanese yen 1,843 39,895 (38,052) 0.42 (16,100)
New Zealand dollar - 4 (4) 35.33 (141)
Swedish Krona (16) - (16) 5.34 (85)
51,315 27,718 23,597 3,432,903
39
27. Foreign currency denominated assets and liabilities (continued)

Net foreign
currency
2021
US dollar 32,550 153,635 (121,086) 50.99 (6,174,459)
UK pound (43) 78 (121) 68.92 (8,353)
Euro 1,127 121 1,006 57.71 58,044
Malaysian ringgit 622 5 617 12.24 7,549
Australian dollar - 266 (266) 37.05 (9,845)
Japanese yen - 34,550 (34,550) 0.44 (15,306)
34,256 188,819 (154,564) (6,148,521)
Net foreign
currency
2020
US dollar 33,324 145,627 (112,303) 48.02 (5,392,790)
UK pound 43 199 (156) 65.63 (10,238)
Euro 1,353 1,581 (228) 59.07 (13,468)
Malaysian ringgit 33 - 33 11.96 395
Australian dollar - 335 (335) 37.02 (12,402)
Japanese yen - 224,742 (224,742) 0.47 (105,629)
Chinese yuan - 18 (18) 7.34 (132)
34,753 372,606 (337,853) (5,538,028)
40
28. Contingencies
(a) Excise tax on Importations of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked
Gasoline (LCCG)
Shell Pilipinas Corporation vs. Commissioner of Customs, Collector of Customs of the Port of
Batangas, Bureau of Customs and Bureau of Internal Revenue
SC G.R. Nos. 227651 & 227087 Filed 03 December 2009
Matter Summary:
From 2004 to 2009, the Company imported shipments of CCG and LCCG into the Philippines in accordance
with the BIR Authority to Release Imported Goods (ATRIG) stating that the importation of CCG and LCCG
is not subject to excise tax. Upon payment of VAT as assessed in the ATRIGs, the Bureau of Customs
(BOC) allowed the entry of the imported CCG and LCCG without payment of excise tax. CCG and LCCG,
being intermediate or raw gasoline components, are then blended with refinery products to produce
unleaded gasoline that is compliant with applicable Philippine regulatory standards, particularly the Clean
Air Act of 1999 and the Philippine National Standards (the “resulting product”). Prior to the withdrawal of
the resulting product from the Company’s refinery, the Company paid the corresponding excise taxes.
In 2009, the District Collector of the Port of Batangas issued a letter demanding from the Company the
payment of deficiency excise tax, VAT and penalties covering importation entries from 2006 to 2008. The
Company requested the cancellation of the demand letter for lack of factual and legal basis. The District
Collector of the Port of Batangas denied the request of the Company and declared that the law mandated
the payment of excise tax on importation of unleaded gasoline and that it made no distinction or
qualification on whether or not it was for consumption or sale to the domestic market. The District Collector
of the Port of Batangas then reiterated his previous demand and threatened enforcement of Section 1508 of
the Tariff and Customs Code of the Philippines (TCCP) which would hold the delivery or release of
imported articles when an importer has an outstanding and demandable account.
The Company appealed before the Commissioner of Customs (COC). In the meantime, the Director of the
DOE-Oil Industry Management Bureau issued a letter reiterating the earlier DOE finding that CCG and
LCCG imports were raw materials or blending components in the production or processing of gasoline in
its finished form. The then BIR Commissioner issued a memorandum confirming and reiterating the initial
ruling in 2004 to the effect that CCG and LCCG are intermediate products or blending components which
are not subject to excise tax under Section 148 of the NIRC.
41
28. Contingencies (continued)

The COC denied the appeal of the Company and demanded the payment of excise tax and VAT for the
Company’s CCG and LCCG importations this time from 2004 to 2009. The Company filed a motion for
reconsideration of the Letter-Decision, which was denied by the COC. The COC then ordered the Company
to pay the principal amount of P7.4 billion and pay the excise tax and VAT on all incoming CCG and LCCG
shipments.
The Company thereafter filed a petition for review with the Court of Tax Appeals (CTA) for the purpose
of appealing the ruling of the COC as well as to apply for the issuance of a temporary restraining order
(TRO) to immediately prevent the COC from seizing future shipments of the Company pursuant to Section
1508 of the TCCP. The Company likewise applied for the issuance of a suspension order for the purpose
of ensuring the preservation of the status quo while the merits of the appeal are being heard by the CTA.
While the case was pending in the CTA, the BIR Commissioner at that time issued on 15 December 2009
a Letter-Ruling declaring that the CCG and LCCG imports of the Company were subject to excise tax on
the ground that the law did not make any distinction or qualification on whether or not the imports were
intended for consumption or for blending with other substances. The ruling effectively reversed the earlier
rulings of former BIR Commissioners.
Following the reversal of the ruling by the BIR Commissioner, the BOC started collecting excise taxes in
January 2010 on shipments of the Company. The Company paid the BOC assessments under protest and
on 27 January 2010, filed a Supplemental Petition seeking to annul the 15 December 2009 ruling by the
BIR Commissioner.
In view of the paramount public interest, the government agreed not to exercise Section 1508 of the TCCP
on condition that the Company posts a surety bond.
On 04 March 2010, the CTA approved the surety bond posted by the Company and enjoined the COC, the
Collector of Customs at the Port of Batangas, the BOC and all persons acting under their direction or
authority from undertaking any actions under Section 1508 of the TCCP and/or from all remedies to collect
from petitioner the excise taxes and VAT, with increments, subject of the case.
On 27 November 2012, the CTA 3rd Division issued a Resolution granting the Company’s Motion for
Summary Judgment. The Court deemed that BOC’s demand for the payment of excise taxes on importations
of LCCG/CCG during the period 2004 to 2009 without merit, rendering the discussion on whether the
CCG/LCCG are properly classified (under Section 148(e) or Section 148(f) of the NIRC, as amended) moot
and academic. The CTA 3rd Division ruled in favour of the Company and respondent was prohibited from
collecting the alleged unpaid excise taxes and VAT thereon, on the Company’s importations of CCG/LCCG
for the relevant periods in 2004 to 2009.
42

The BOC filed a Petition for Review with the CTA en banc. Meanwhile, the Company filed its own Petition
for Review with the CTA en banc because the CTA did not invalidate the 15 December 2009 Ruling of the
CIR with respect to double taxation - first, upon importation and the other upon withdrawal of the finished
grade products from the refinery.
In its 28 September 2015 decision, the CTA en banc reversed the CTA Third Division, ruled partially in
favour of the BOC and the BIR and held that the Company is liable to pay excise taxes and VAT on the
importation of CCG and LCCG but only for the period from 2006 to 2009. The CTA en banc recognized
the Company’s defense of amnesty applied for periods from 2004 to 2005, thereby partially reducing the
liability to shipments made from 2006 to 2009. Both parties filed motions for reconsideration of the CTA
en banc decision. The BIR and BOC filed an Omnibus Motion for Partial Reconsideration and Clarification
to question the decision of the CTA en banc in relation to the assessment of the unpaid excise taxes, VAT
and penalties for the years 2004 and 2005. The Company, in turn, filed an Opposition to the said motion.
The Company likewise filed a motion for reconsideration of the CTA en banc decision in relation to the
assessment of the unpaid excise taxes, VAT and penalties for the years 2006 to 2009.
On 21 September 2016, the Company received an Amended Decision of the CTA en banc upholding its 28
September 2015 ruling and holding that the Company is liable to pay the Government for alleged unpaid
taxes for the importation of CCG and LCCG for the period from 2006 to 2009 totaling P5.7 billion.
On 06 October 2016, the Company filed the appropriate appeal with the Supreme Court. The BOC and the
BIR also filed their Petition for Review on Certiorari seeking to bring back the liability of the Company to
P7.4 billion plus interest and surcharges.
Status:
The Supreme Court consolidated the said petitions and the parties have filed their respective Comments.
The Government and the Company filed their Reply on 22 January 2018 and 06 June 2018, respectively.
On 06 March 2020, the Office of the Solicitor General filed a Motion for Early Resolution. The Company
subsequently filed a motion for leave to file an opposition on 23 March 2020. Awaiting action by the
Supreme Court. No change in status as of 31 December 2022.
Management believes that provision should not be recognized as at 31 December 2022 and 31 December
2021 since it is the Company’s assessment that liability arising is not probable because its factual and legal
positions are strong. The Company continues to take appropriate legal action and remediation with respect
to such case.
43

(b) Excise tax on Importations of Alkylate
Shell Pilipinas Corporation vs. Commissioner of Internal Revenue et al.

CTA Case No. 8535, Court of Tax Appeals, 2nd Division
Filed 24 August 2012
Matter Summary:
Following the ruling of the BIR authorizing the collection of excise taxes on CCG/LCCG importations, the
Company began importing Alkylate as its blending component. The COC issued Customs Memorandum
Circular No. 164-2012 directing the BOC and its officers to take the “appropriate action” in relation to BIR
Ruling dated 29 June 2012 (Ruling No. M- 059-2012) issued by the BIR Commissioner. In the ruling dated
29 June 2012, the BIR Commissioner held that Alkylate is also subject to excise tax upon importation. The
BIR Ruling further held that the Company is liable for the amount of P1.9 billion representing the unpaid
taxes, on the importations of Alkylate from 2010.
A Petition for Review of the BIR ruling was filed with the CTA. On 18 September 2012, the Company filed
a Motion for the Issuance of a Suspension Order to stop the implementation of Ruling No. M-059-2012.
On 22 October 2012, the CTA issued a Resolution approving the issuance of a Suspension Order stopping
the collection of alleged deficiency excise taxes (and VAT) for the period from 2010 to June 2012, upon
the posting by the Company of a surety bond. Said bond was duly filed and the CTA approved the same on
30 October 2012.
In a Resolution dated 28 January 2013, the CTA denied the BIR/BOC Motion to Dismiss the case.
Subsequent appeals (Petitions for Certiorari) from the denial of the Motion to Dismiss have been filed by
the BOC and the BIR with Supreme Court.
On 02 June 2014, the Company filed a Petition for Certiorari with Application for the Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction with the SC questioning the denial of
its application for the issuance of a suspension order against the assessment and collection of excise taxes
on its March 2014 alkylate shipment. On 07 July 2014, the SC issued a temporary restraining order
enjoining the CTA and the tax-collecting agencies of the government from imposing excise taxes on
incoming alkylate importations of the Company.
Meanwhile, in the main case before the CTA, on 31 July 2014, the Company filed a Motion for Judgment
on the Pleadings. This Motion was denied by the tax court on 13 February 2015. On 16 March 2015, the
Company filed a Motion for Reconsideration from this denial of the Motion for Judgment on the Pleadings.
As disclosed in Note 7, the Company has excise duties and VAT paid under protest amounting to P4.6
billion for certain Alkylate shipments.
44

Status:
Decision on the merits is pending with the Court of Tax Appeals (“CTA”). The parties have concluded the
presentation of their witnesses. Same status as of 31 December 2022.
In the consolidated jurisdictional cases before the Supreme Court, the Office of the Solicitor General (OSG)
filed a Motion to Lift TRO and for Immediate Resolution of the Consolidated Cases on 23 October 2020.
PSPC filed its Comment/Opposition on 27 November 2020. In July 2021, the Supreme Court lifted the
temporary restraining order (TRO) against the collection of excise tax for the Company’s alkylate
importations from March 2014 to April 2020 (principal amount involved is around P3.4 billion) and
remanded the case to the Court of Tax Appeals (CTA) for the latter to determine the propriety of issuing a
TRO / injunction in favor of the Company.
In line with said Supreme Court ruling, the Company has already filed an application for TRO / injunction
with the CTA, which remains pending to date. The CTA has scheduled a hearing on the application for
TRO / injunction on 26 January 2022 however it did not push through due to COVID situation at that time.
During the hearing on 02 March 2022, the CTA said that PSPC’s application for a TRO / Injunction is
already moot and academic in view of the prior payment under protest. Currently awaiting further action
from the CTA.
In the meantime, the District Collector of the Bureau of Customs, taking action outside of the court
proceedings, issued a letter to the Company demanding for the payment of around P3.4 billion. The
Company promptly responded and argued, among others, that there is no final decision yet from either the
CTA or Supreme Court on the taxability of the Company’s alkylate importations.
Nevertheless, the Bureau of Customs commenced actions to suspend the Company’s accreditation as an
importer. Left without an immediate legal remedy that would avert the disruption of its operations, the
Company in December 2021 and January 2022 was constrained to pay under protest the Bureau of Customs
the amount of around P3.4 billion. The Company has since initiated refund proceedings to recover the
amounts paid under protest.
Claims from government includes P4.6 billion of excise duties and VAT paid under protest for certain
Alkylate shipments. P1.8 billion of which, pertains to the payment made under protest in January 2022.
45

(c) Republic of the Philippines rep. by Bureau of Customs vs. Shell Pilipinas Corporation & Filipino
Way Industries
SC G.R. No. 209324 Supreme Court
Civil Case No. 02-103191, Regional Trial Court of Manila
Matter Summary:
Sometime in March 1996, TCCs were issued to Filway Industries for customs duties and taxes allegedly
paid on raw materials used in the manufacture, processing or production of knitted fabrics. In 1997, Filway
executed a deed of assignment over the TCCs in favour of the company. The Company then utilized said
TCCs to settle its customs duties and taxes on oil importations.
According to the government, it was discovered that the said credit memos were fake and spurious as they
did not conform to the records. Thus, the TCCS were cancelled and BOC is demanding anew for the
payment of custom duties and taxes for the Company’s importations.
The Court of Appeals had earlier upheld the dismissal of the case by the RTC Manila Branch 49 that
dismissed the case. In a Decision dated 09 December 2015, the Supreme Court remanded the case to the
RTC for the conduct of the trial proceedings so that the Bureau of Customs could attempt to prove the
alleged fraudulent acquisition and use of TCCs.
Status:
In a decision dated 16 February 2021, the RTC dismissed the case on the merits. The Bureau of Customs
has filed a Notice of Appeal. As of 31 December 2022, the Company is awaiting further actions from the
RTC and/or the Court of Appeals.
46

(d) Excise Tax Refund Case
There are also tax cases filed by the Company for its claims from the government amounting to P1.5
billion as of 31 December 2022 in the CTA and SC. Management believes that the ultimate outcome of
such cases will not have a material impact on the Company’s financial statements.
(e) Other Significant Case
Case filed by the West Tower Condominium Corporation (WTCC)
West Tower Condominium Corp. et al. vs. Judge Elpidio R. Calis et al

SC G.R. No. 215901, Supreme Court
Filed 11 June 2012
Matter Summary:
The Company is a respondent in this Petition for Certiorari filed by West Tower Condominium Corp, et al.
to challenge the ruling of Judge Calis requiring the payment of filing fees in the civil case for damages
earlier brought by WTCC in connection with the leak in White Oil Pipeline. The issue is whether the case
filed with the lower court is exempt from payment of filing fees. The trial court judge earlier ruled that the
claim is an ordinary claim for damages.
Status:
In a Decision dated 30 June 2014, the Court of Appeals affirmed the ruling of the Regional Trial Court
requiring the payment of filing fees. FPIC and its Board of Directors and Officers asked the Court of
Appeals to reconsider the part of its Decision retaining the party-complainants previously dropped as parties
to the case arguing that the court has no jurisdiction to reinstate these party-complainants. West Tower
Condominium Corporation, et al. filed its Motion for Reconsideration arguing that they have satisfied all
the requirements in order that this case may be treated as an environmental case which does not necessitate
the payment of the filing fees.
On 26 September 2014, the Company asked the Court of Appeals to deny the motion for reconsideration
filed by West Tower Condominium Corporation, et al. for lack of merit. In its resolution dated 11 December
2014, the Court of Appeals denied the motion for reconsideration filed by the West Tower Condominium
Corporation, et al. West Tower Condominium Corporation, et al.'s filed with the Supreme Court the present
petition dated 11 February 2015 seeking a review of the decision of the Court of Appeals. The Company
has filed its Comment with Opposition dated 18 September 2015 asking the Supreme Court to dismiss the
petition and to deny the application for a temporary restraining order. Awaiting Supreme Court's action. No
change in status as of 31 December 2022.
47
29. Deregulation Law

On 10 February 1998, RA No. 8479, otherwise known as the Downstream Oil Industry Deregulation Act
of 1998 (the “Act”) was signed into law. The law provides, among others, for oil refiners to list and offer
at least 10% of their shares to the public within three years from the effectivity of the said law.
In a letter to the Department of Energy (DOE) dated 12 February 2001, the Department of Justice (DOJ)
rendered an opinion that the 3-year period in Section 22 of RA 8479 for oil refineries to make a public
offering is only directory and not mandatory. As to when it should be accomplished is subject of reasonable
regulation by the DOE.
On 03 November 2016, the Company became a public listed company with the Philippine Stock Exchange,
in compliance with Philippine Republic Act No. 8479, otherwise known as the Downstream Oil Industry
Deregulation Act of 1998 and its implementing rules and regulations.
30. Summary of significant accounting policies

30.1. Basis of preparation
Basis of Preparation:
The accompanying financial statements have been prepared on a historical cost basis, except for equity
through OCI, derivatives and retirement assets that are measured at fair value. The financial statements are
presented in Philippine peso, the functional and presentation currency of the Company. All amounts are
rounded off to the nearest thousand peso unit unless otherwise indicated.
Statement of Compliance:
The financial statements have been prepared in compliance with Philippine Financial Reporting Standards
(PFRSs).
Changes in Accounting Policies and Disclosures:

The accounting policies adopted are consistent with those of the previous financial year except for the
adoption of new standards effective in 2022. The Company has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.
New Standards, Interpretations and Amendments

Unless otherwise indicated, adoption of these new standards did not have an impact on the financial
statements of the Company.
48
30. Summary of significant accounting policies (continued)

30.1. Basis of preparation (continued)
• Amendments to PFRS 3, Reference to the Conceptual Framework
The amendments are intended to replace a reference to the Framework for the Preparation and Presentation
of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial
Reporting issued in March 2018 without significantly changing its requirements. The amendments added
an exception to the recognition principle of PFRS 3, Business Combinations to avoid the issue of potential
‘day 2’gains or losses arising for liabilities and contingent liabilities that would be within the scope of PAS
37, Provisions, Contingent Liabilities and Contingent Assets or Philippine-IFRIC 21, Levies, if incurred
separately.
At the same time, the amendments add a new paragraph to PFRS 3 to clarify that contingent assets do not
qualify for recognition at the acquisition date.
• Amendments to PAS 16, Property, Plant and Equipment: Proceeds before Intended Use
The amendments prohibit entities deducting from the cost of an item of property, plant and equipment, any
proceeds from selling items produced while bringing that asset to the location and condition necessary for
it to be capable of operating in the manner intended by management. Instead, an entity recognizes the
proceeds from selling such items, and the costs of producing those items, in profit or loss.
• Amendments to PAS 37, Onerous Contracts – Costs of Fulfilling a Contract
The amendments specify which costs an entity needs to include when assessing whether a contract is
onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that relate
directly to a contract to provide goods or services include both incremental costs and an allocation of costs
directly related to contract activities. General and administrative costs do not relate directly to a contract
and are excluded unless they are explicitly chargeable to the counterparty under the contract.
• Annual Improvements to PFRSs 2018-2020 Cycle
• Amendments to PFRS 1, First-time Adoption of Philippines Financial Reporting Standards, Subsidiary

as a first-time adopter
The amendment permits a subsidiary that elects to apply paragraph D16(a) of PFRS 1 to measure
cumulative translation differences using the amounts reported in the parent’s consolidated financial
statements, based on the parent’s date of transition to PFRS, if no adjustments were made for
consolidation procedures and for the effects of the business combination in which the parent acquired the
subsidiary. This amendment is also applied to an associate or joint venture that elects to apply paragraph
D16(a) of PFRS 1.
49

• Amendments to PFRS 9, Financial Instruments, Fees in the ’10 per cent’ test for derecognition of
financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or
modified financial liability are substantially different from the terms of the original financial liability.
These fees include only those paid or received between the borrower and the lender, including fees paid
or received by either the borrower or lender on the other’s behalf.
• Amendments to PAS 41, Agriculture, Taxation in fair value measurements

The amendment removes the requirement in paragraph 22 of PAS 41 that entities exclude cash flows for
taxation when measuring the fair value of assets within the scope of PAS 41.
Standards Issued But Not Yet Effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the
Company’s financial statements are listed below. The Company intends to adopt these standards when they
become effective. Adoption of these standards and interpretations are not expected to have any significant
impact on the financial statements of the Company unless otherwise indicated.
Effective beginning on or after January 1, 2023
• Amendments to PAS 1 and PFRS Practice Statement 2, Disclosure of Accounting Policies
• Amendments to PAS 8, Definition of Accounting Estimates
• Amendments to PAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendments narrow the scope of the initial recognition exception under PAS 12, so that it no longer
applies to transactions that give rise to equal taxable and deductible temporary differences.
The amendments also clarify that where payments that settle a liability are deductible for tax purposes, it
is a matter of judgement (having considered the applicable tax law) whether such deductions are
attributable for tax purposes to the liability recognized in the financial statements (and interest expense)
or to the related asset component (and interest expense).
An entity applies the amendments to transactions that occur on or after the beginning of the earliest
comparative period presented for annual reporting periods on or after January 1, 2023.
The Company is currently assessing the impact of the amendments.
50

• Amendments to PAS 1, Classification of Liabilities as Current or Non-current

• Amendments to PFRS 16, Lease Liability in a Sale and Leaseback
• PFRS 17, Insurance Contracts
Deferred effectivity
• Amendments to PFRS 10, Consolidated Financial Statements, and PAS 28, Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture.
30.2. Cash
Cash consists of deposits held at call with banks. It is carried in the statement of financial position at face
amount or nominal amount. Cash in banks earns interest at the respective bank deposit rates.
30.3. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity. The Company recognizes a financial instrument in the statement of
financial position when, and only when, the Company becomes a party to the contractual provisions of the
instrument.
Financial assets - Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value
through OCI, and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
flow characteristics and the Company’s business model for managing them. With the exception of trade
receivables that do not contain a significant financing component, the Company initially measures a
financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a significant financing component are measured at
the transaction price determined under PFRS 15.
The Company’s business model for managing financial assets refers to how it manages its financial assets
in order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
51

30.3. Financial Instruments (continued)
Financial assets - Subsequent Measurement
i. Financial assets at amortized cost
The Company measures financial assets at amortized cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to
collect contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets at amortized cost are subsequently measured using the effective interest rate (EIR) method
and are subject to impairment. Gains and losses are recognized in statement of income when the asset is
derecognized, modified or impaired.
The Company’s financial assets at amortized cost includes trade and other receivables.
ii. Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the company can elect to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under PAS 32,
Financial Instruments: Presentation and are not held for trading. The classification is determined on an
instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as
other income in the statement of income when the right of payment has been established, except when the
Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case,
such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to
impairment assessment (see note 11).
The Company elected to classify irrevocably its equity investments under this category as the Company
does not consider these investments for trading.
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30.3. Financial Instruments (continued)
Financial assets - Subsequent Measurement (continued)
iii. Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets
designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily
required to be measured at fair value. Financial assets are classified as held for trading if they are acquired
for the purpose of selling or repurchasing in the near term. Derivatives are classified as held for trading
unless they are designated as effective hedging instruments. Financial assets with cash flows that are not
solely payments of principal and interest are classified and measured at fair value through profit or loss,
irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at
amortized cost or at fair value through OCI, as described above, debt instruments may be designated at fair
value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an
accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair
value with net changes in fair value recognized in the statement of income. Dividends on listed equity
investments are also recognized as other income in the statement of income when the right of payment has
been established.
Financial assets at fair value through profit or loss include financial assets held for trading and financial
assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified
as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.
Derivatives, including separated embedded derivatives, are also classified as held for trading unless they
are designated as effective hedging instruments as defined by PFRS 9. Financial assets at fair value through
profit or loss are carried in the statement of financial position at fair value with net changes in fair value
presented as part of other operating income in the statement of income.
Financial instruments may be designated as at FVPL on initial recognition when any of the following
criteria is met:
The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise
from measuring the assets or liabilities or recognizing gains or losses on them on a different basis
(accounting mismatch); or the assets and liabilities are part of a group of financial assets, financial liabilities
or both which are managed and their performance evaluated on a fair value basis, in accordance with a
documented risk management or investment strategy; or the financial instrument contains an embedded
derivative, unless the embedded derivative does not significantly modify the cash flows or it is clear, with
little or no analysis, that it would not be separately recorded.
Included in this category are the Company’s derivative financial assets (see Note 6).
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Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognized when:
• The rights to receive cash flows from the asset have expired; or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the
asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset
Impairment of financial assets
The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held
at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Company expects to receive, discounted
at an approximation of the original effective interest rate. The expected cash flows will include cash flows
from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses that result from default events
that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there
has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime
ECL).
For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the
Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime
ECLs at each reporting date. The Company has established probability of default rates for third party trade
receivables based on its historical credit loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment. The Company applies the historical credit loss method in case
undue cost or effort is involved in calculating the ECL by considering the forward-looking factors. For
inter-group trade receivables, the Company has established probability of default rates based on internal
credit rating of the customers. Internal credit ratings are based on methodologies adopted by independent
credit rating agencies. Therefore, the internal ratings already consider forward looking information.
The Company considers a financial asset to be in default when contractual payments are 180 days past due.
However, Company considers internal or external information when there are indicators that the Company
is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Company. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows.
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Financial liabilities - initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts, dividends payable and derivative financial instruments.
Financial liabilities - Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss. This category
also includes derivative financial instruments entered into by the Company that are not designated as
hedging instruments in hedge relationships as defined by PFRS 9. Separated embedded derivatives are also
classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the statement of income.
This category comprises two sub-categories: financial liabilities classified as held for trading, and financial
liabilities designated by the Company as at fair value through profit or loss upon initial recognition.
i. Financial liabilities at fair value through profit or loss
A financial liability is classified as held for trading if it is acquired or incurred principally for the purpose
of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments
that are managed together and for which there is evidence of a recent actual pattern of short-term profit-
taking. Derivatives are also categorized as held for trading unless they are designated and effective as
hedging instruments. Financial liabilities held for trading also include obligations to deliver financial assets
borrowed by a short seller.
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A financial liability is designated as financial liability at fair value through profit or loss upon initial
recognition if: such designation significantly reduces measurement or recognition inconsistency that would
otherwise arise; the financial liability forms group of financial assets or financial liabilities or both, which
is managed and its performance evaluated on a fair value basis, in accordance with the Company’s
documented risk management or investment strategy, and information about its grouping is provided
internally on that basis; or it forms part of a contract containing one or more embedded derivatives requiring
separation, and PFRS 9 permits the entire combined contract (asset or liability) to be designated as FVPL.
Included in this category are the Company’s derivative financial liabilities under trade and other payables
account in the statement of financial position.
ii. Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are
derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement
of income.
This category generally applies to interest-bearing loans and borrowings, accounts payable and accrued
expenses.
Financial liabilities - Derecognition
A financial liability is derecognized when the obligation under the liability has been discharged or cancelled
or expired. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognized in the statement of income.
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position
when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle
on a net basis, or realize the asset and settle the liability simultaneously. The Company assesses that it has
a currently enforceable right of offset if the right is not contingent on a future event, and is legally
enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the
Company and all of the counterparties.
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Derivative financial instruments
The Company uses derivatives in the management of foreign exchange risk and commodity price risk
arising from operational activities. A derivative financial instrument is initially recognized at its fair value
on the date the contract is entered into and is subsequently carried at its fair value. The method of
recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, that are not
already required to be recognized at fair value, and that are not closely related to the host contract in terms
of economic characteristics and risks, are separated from their host contract and recognized at fair value;
associated gains and losses are recognized in the statement of income.
A derivative embedded within a hybrid contract containing a financial asset host is not accounted for
separately. The financial asset host together with the embedded derivative is required to be classified in its
entirety as a financial asset at fair value through profit or loss.
Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are
recognized in the statement of income in the period when changes arise.
30.4. Receivables
Trade receivables arising from regular sales with average credit term of 30 to 60 days and other current
receivables are initially recorded at fair value and subsequently measured at amortized cost, less provision
for impairment. Fair value approximates invoice amount due to short-term nature of the financial assets.
Other long-term receivables are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest method, less provision for impairment.
Duty drawback and other claims pertain to claims from the government agencies arising mainly from the
payment of excise duties in which the Company has a right of exemption. The Company calculates the
claimable amount based on the delivered goods in liters to exempt entities multiplied by excise deposit rate,
then recognizes the amount in other receivables with a current (Note 4) and non-current portion (Note 7).
These claims might be subjected to various legal proceedings based on its compliance to the regulatory
requirements in filing for claim refund.
Claims from the government accounted under long-term receivable (Note 7) mainly arises from excise
duties and VAT paid under protest for certain Alkylate shipments. The payments under protest was made
pursuant to Section 1106 of the Customs Modernization and Tariff Act (CMTA). The provision states that
the Company has to pay the amount being demanded prior to its right to appeal. The payments made gives
the entity a right to receive future economic benefits, either in the form of a cash refund or by using the
payment to settle the tax liability.
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30.5. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is the purchase cost determined
using the first-in first-out (FIFO) method for petroleum products, materials and supplies. Crude and product
costs under cost of sales includes invoice cost, duties, excise taxes, refinery production overhead, freight
and pipeline costs and excludes the borrowing costs.
Net realizable value is the estimated selling price in the ordinary course of business and estimated cost
necessary to make the sale. Provision for inventory losses is provided, when necessary, based on
management’s review of inventory movement and condition of inventory item. Inventory losses, if any, is
charged as part of cost of sales in the Company’s statement of income.
The amount of any reversal of inventory write-down, arising from an increase in net realizable value, is
presented under crude and products costs in the period in which the reversal occurred.
Petroleum products are derecognized when sold, and materials and supplies are derecognized when
consumed. The carrying amount of these inventories is charged to cost of sales in the statement of income,
in the period in which the related revenue is recognized.
30.6. Prepayments and other current assets

Prepaid expenses are expenses paid in cash and recorded as assets before they are used or consumed, as the
service or benefit will be received in the future. Prepaid expenses expire and are recognized as expense
either with the passage of time or through use or consumption.
Advance excise tax payments related to inventories are recognized initially as prepayment and charged to
operations when products are sold.
Input VAT claims is stated at face value less provision for impairment, if any. Provision for unrecoverable
input VAT, if any, is maintained by the Company at a level considered adequate to provide for potential
uncollectible portion of the claim. The Company, on a continuing basis, reviews the status of the claim
designed to identify those that may require provision for impairment losses. A provision for impairment of
unrecoverable input VAT is established when there is objective evidence that the Company will not be able
to recover the claims. The carrying amount of the asset is reduced through the use of an allowance account
and the amount of loss is recognized in the statement of income. As at 31 December 2022 and 2021, the
Company has no provision for impairment of input VAT (see Note 6).
The Company pays excise duties in advance and files for a refund with the local tax bureau as the Company
claims exemption on imported petroleum products that were subsequently sold to international carriers or
exempt entities or agencies. The refund of claim requires judgement based on the Company’s assessment
of collection or recoverability through creditable tax certificates from the government.
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30.7. Current and deferred income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognized in the statement of
income, except to the extent that it relates to items recognized in other comprehensive income or directly
in equity. In this case the tax is also recognized in other comprehensive income or directly in equity,
respectively.
Net realizable value is the estimated selling price in the ordinary course of business and estimated cost
necessary to make the sale. Provision for inventory losses is provided, when necessary, based on
management’s review of inventory movement and condition of inventory item. Inventory losses, if any, is
charged as part of cost of sales in the Company’s statement of income.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. The deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction,
other than a business combination, that at the time of the transaction affects either accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted at the statement of financial position date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax on Asset Retirement Obligation considers any temporary differences on a net basis.
In this approach, the net carrying value of the asset and liability is zero on initial recognition and the non-
deductible asset and the tax-deductible liability are regarded as being economically the same as a tax-
deductible asset that is acquired on deferred terms. Deferred tax is recognized on subsequent temporary
differences that arise when the net asset or liability changes from zero.
Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused
tax losses (NOLCO) and unused tax credits (MCIT over RCIT), to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilized. Deferred income
tax liabilities are recognized in full for all taxable temporary differences, except to the extent that the
deferred tax liability arises from the initial recognition of goodwill.
Deferred tax assets and liabilities are derecognized when relevant temporary differences have been realized
and settled, respectively. The Company reassesses at each statement of financial position date the need to
recognize a previously unrecognized deferred income tax asset.
30.8. Property, plant and equipment

Property, plant and equipment are carried at historical cost less accumulated depreciation and amortization
and accumulated impairment losses. Historical cost includes its acquisition cost or purchase price and
expenditure that is directly attributable to the acquisition of the items necessary to bring the asset to its
working condition and location for its intended use. Costs of assets under construction are accumulated in
the accounts until these projects are completed upon which they are charged to appropriate property
accounts.
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30.8. Property, plant and equipment (continued)
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognized. All other repairs and maintenance are charged to the statement of income during the financial
period in which they are incurred.
Asset retirement obligation (ARO) represents the net present value of obligations associated with the
retirement of property and equipment that resulted from acquisition, construction or development and the
normal operation of property and equipment. ARO is recognized as part of the cost of the related property
and equipment in the period when a legal or constructive obligation is established provided that best
estimate can be made. ARO is derecognized when the related asset has been retired or disposed of.
Depreciation on property and equipment is calculated using the straight-line method to allocate the cost of
each asset to its residual value over its estimated useful lives (in years), as follows:
Leasehold improvements 5 to 40 or term of lease, whichever is shorter

Furniture and fixtures 5 to 20
Machinery, plant and equipment 3 to 30
Transportation 5 to 25
Depreciation of property and equipment begins when it is available for use and ceases at the earlier of the
date that the asset is classified as held for sale and the date that the asset is derecognized.
Assets under construction are not subject to depreciation until these are put into operation.
Major renovations are depreciated over the remaining useful life of the related asset. The assets’ residual
values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position
date.
Property and equipment are derecognized upon disposal or when no future economic benefits are expected
from its use or disposal and related gains and losses on disposals are determined by comparing proceeds
with the carrying amount of assets. The cost and related accumulated depreciation of assets sold are
removed from the accounts and any resulting gain or loss is credited or charged to other operating income
(expense) in the statement of income.
Fully depreciated property and equipment are maintained in the accounts until these are no longer in use.
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30.9. Intangible assets - computer software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring
to use the specific software. These costs are amortized over their estimated useful lives of five years from
the time the software has been ready for its intended use in operations.
Costs associated with maintaining computer software programs are recognized as an expense as incurred
in the statement of income.
Intangible assets are derecognized upon disposal or when no future economic benefits are expected from
its use or disposal and related gains and losses on disposals are determined by comparing proceeds with the
carrying amount of assets. The cost and related accumulated amortization of intangible assets disposed are
removed from the accounts and any resulting gain or loss is credited or charged to other operating income
(expense) in the statement of income.
The Company’s intangible asset is classified under other assets account in the statement of financial position
(see Note 11).
30.10. Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Company uses the definition of a lease as in PFRS 16.
a) Lessee
Classification and measurement
At commencement or on modification of a contract that contains a lease component, the Company allocates
the consideration in the contract to each lease component on the basis of its relative stand-alone prices.
The Company recognizes a right to use asset and a lease liability at the lease commencement date. The right
to use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received. The Company recognizes asset retirement
obligation relating to lease land and buildings which would need to be restored to previous state and
condition.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate. Generally, the Company’s uses its incremental
borrowing rate as the discount rate.
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30.10. Leases (continued)
a) Lessee (continued)
The Company determines the incremental borrowing rate representing the rate of interest that the Company
would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right to use asset in a similar economic environment. The incremental
borrowing rate applied to each lease was determined taking into account the risk-free rate, adjusted for
factors such as the credit rating of the Company and the terms and conditions of the lease.
Lease payments included in the measurement of the lease liability comprise the following:
1. Fixed payments, including in-substance fixed payments;
2. Variable lease payments that depend on an index or a rate, initially measured using the index or
rate as at the commencement date;
3. Amounts expected to be payable under a residual value guarantee; and
4. The exercise price under a purchase option that the Company is reasonably certain to exercise,
lease payments in an optional renewal period if the Company is reasonably certain to exercise an
extension option, and penalties for early termination of a lease unless the Company is reasonably
certain not to terminate early.
Right to use assets and lease liabilities are presented separately in the statement of financial position.
Expenses related to leases are presented under selling and administrative expense or finance
income/expenses in 2022 and 2021. Payments related to leases are presented under Cash flow from
financing activities.
Subsequent measurement
The right to use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company
by the end of the lease term or the cost of the right to use asset reflects that the Company will exercise a
purchase option. In that case the right to use asset will be depreciated over the useful life of the underlying
asset, which is determined on the same basis as those of property and equipment. In addition, the right to
use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
62
Subsequent measurement (continued)
The right to use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company
by the end of the lease term or the cost of the right to use asset reflects that the Company will exercise a
purchase option. In that case the right to use asset will be depreciated over the useful life of the underlying
asset, which is determined on the same basis as those of property and equipment. In addition, the right to
use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if the Company changes
its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised
in-substance fixed lease payment. For remeasurements to lease liabilities, a corresponding adjustment is
made to the carrying amount of the right to use asset or is recorded in profit or loss if the carrying amount
of the right to use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The Company has elected not to recognize right to use assets and lease liabilities for leases of low-value
assets and where is the lease term is less than or equal to 12 months (short-term leases). The Company
recognizes the lease payments associated with these leases as an expense on a straight-line basis over the
lease term.
30.11. Investments in associates

Associates
An associate is an entity over which the Company has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint
control over those policies.
Investments in associates are accounted for using equity method. Under this method, the investment is
carried at cost, increased or decreased by the equity in the net earnings or losses of the investee since the
date of acquisition. Dividends received, if any, are treated as reduction in the carrying value of the
investment.
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30.12. Impairment of non-financial assets
Property and equipment and other non-current assets (investments in other entities, intangibles, and claims
from government agencies lodged under receivables and long-term receivables) that have definite useful
life are reviewed for impairment losses whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the
asset’s carrying amount exceeds its recoverable amount, which is the higher of an asset’s fair value less
cost of disposal and value in use. Value in use requires entities to make estimates of future cash flows to be
derived from the particular asset, and discount them using a pretax market rate that reflects current
assessments of the time value of money and the risks specific to the asset. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units).
The Company recognizes provision for impairment of input VAT and prepaid corporate income tax based
on the Company’s assessment of collection or recoverability through creditable tax certificates from the
government. This assessment requires judgment regarding the ability of the government to settle or approve
the application for claims/creditable tax certificates of the Company.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable amount, but the increased carrying amount should not
exceed the carrying amount that would have been determined had no impairment loss been recognized for
the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized as income
immediately in other operating income (expense) in the statement of income (see Note 21).
30.13. Accounts payable and accrued expenses

Accounts payable and accrued expenses are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers and are recognized in the period in which the related
money, goods or services are received or when a legally enforceable claim against the Company is
established. Accounts payable are classified as current liabilities if payment is due within one year or less.
If not, they are presented as non-current liabilities.
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30.14. Borrowing costs
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and
the maturity value is recognized in the statement of income over the period of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the statement of financial position date.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are
capitalized as part of the cost of that asset. All other borrowing costs are recognized and charged to
operations in the year in which they are incurred.
30.15. Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of
past events, it is more likely than not that an outflow of resources will be required to settle the obligation,
and the amount of the obligation can be reliably estimated. Provisions are not recognized for future
operating losses.
An onerous contract provision is recognised when the unavoidable cost of meeting the obligations under
the contract exceed the economic benefits expected to be received under it. The unavoidable cost under a
contract is the lower of the cost of fulfilling the contract and any compensation or penalties arising from
failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract.
Before an onerous provision is recognised the Company first recognises any impairment loss that has
occurred on assets dedicated to that contract.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognized even if the
likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to passage of time is recognized as part of
other operating expense in the statement of income.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate.
If it is no longer probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, the provision shall be reversed and derecognized from the statement of financial
position.
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30.16. Contingencies
Contingent assets and liabilities are not recognized in the financial statements. Contingent liabilities are
disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent asset are disclosed when an inflow of economic benefits is probable. When the realization of
income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
30.17. Share capital

Common shares are classified as equity. Share premium is recognized for the excess proceeds of
subscriptions over the par value of the shares issued, net of transaction costs.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction from proceeds, net of tax.
Where the Company purchases its equity share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the
Company’s equity holders until the shares are cancelled, reissued or disposed of. Where such shares are
subsequently sold or reissued, any consideration received, net of any directly attributable incremental
transaction costs and the related income tax effects, are included in equity attributable to the Company’s
equity holders.
30.18. Dividends distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s financial
statements in the period in which the dividends are approved by the Company’s Board of Directors.
30.19. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by
the weighted average number of common shares in issue during the year, excluding common shares
purchased by the Company and held as treasury shares.
Diluted earnings per share is calculated by adjusting the weighted average number of common shares
outstanding to assume conversion of all dilutive potential common shares. The Company has no dilutive
potential common shares.
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30.20. Foreign currency transactions and translations
i. Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The financial statements are
presented in Philippine peso, which is the functional and presentation currency of the Company.
ii. Transactions and balances
Foreign currency transactions are translated into Philippine peso using the exchange rate prevailing at the
date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income (see Note 22).
30.21. Revenue and expense recognition

I. Revenue from contracts with customers:
Revenue from contracts with customers is recognized when control of the goods or services are transferred
to the customer at an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services.
i) Sale of goods
Revenue from sales of petroleum products is recognized at the price which the Company is expected to be
entitled to, after deducting sales taxes, excise duties and similar levies.
Sales of oil and gas products are recognized when the control of the products have been transferred, which
is when the customer has the ability to direct the use of the products and obtain substantially all of the
remaining benefits from the products, which generally coincides with the actual delivery of goods. Delivery
does not occur unless the products have been shipped out of the Company’s premises or received by the
customer depending on shipping arrangements.
Sales comprise the fair value of the consideration received or receivable from the sale of oil and gas products
in the ordinary course of the Company’s operations. Sales is shown net of value-added tax. Discounts and
rebates are recognized and measured based on approved contracts and agreements with customers.
The Company identifies the promised products and services within contracts in scope of PFRS 15 and
determines which of those goods and services are separate performance obligations. The Company will
allocate the transaction price to the performance obligations in the contract by reference to their relative
standalone selling prices. PFRS 15 has been applied for recognizing the net sales.
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30.21. Revenue and expense recognition (continued)
The Company is required exercising considerable judgement taking into account all the relevant facts and
circumstances when applying the criteria to its contracts with customers.
a. Variable Consideration
Some contracts for the sale of goods provide customers with volume rebates that give rise to variable
consideration. The Company estimates the variable consideration at contract inception and constrained until
it is highly probable that significant revenue reversal in the amount of cumulative revenue recognized will
not occur when the associated uncertainty with the variable consideration is subsequently resolved.
The Company provides retrospective volume rebates to certain customers once the quantity of products
purchased during the period exceeds a threshold specified in the contract. Under PFRS 15, retrospective
volume rebates give rise to variable consideration. To estimate the variable consideration to which it will
be entitled, the Company applies the most likely method for contracts with a single-volume threshold and
the expected value method for contracts with more than one volume threshold and recognizes a refund
liability for the expected future rebates.
b. Loyalty programme
The Company has loyalty points programme, which allows customers to accumulate points that can be
redeemed for free products. The loyalty points give rise to separate performance obligation as they provide
a material right to the customer. A portion of the transaction price is allocated to the loyalty points awarded
to customers based on relative stand-alone selling price and recognized as a contract liability until the points
are redeemed. Revenue is recognized upon redemption of products by the customer. When estimating the
stand-alone selling price of the loyalty points, the Company considers the likelihood that the customer will
redeem the points. The Company updates its estimates at every balance sheet date and any adjustments to
the contract liability balance are charged against revenue.
c. Trade receivables
A receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the consideration is due).
d. Contract Liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Company transfers goods or services to the customer, a contract liability is
recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are
recognized as revenue when the Company performs under the contract. Contract liability is recognized
under trade and other payables and under provisions and other liabilities.
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30.21. Revenue and expense recognition (continued)
2022 2021
Performance obligations satisfied 443,439 152,384
31 December 2022 31 December 2021

Contract liabilities included in trade and other payables
and in provisions and other liabilities 387,602 457,440
Performance obligations satisfied in 2022 and 2021 amounting to P443.4 million and P152.4 million,
respectively, came from the prior year contract liabilities amounting to P457.4 million in 2021 and P665.4
million in 2020, respectively. There are no significant changes in contract liability arising from change in
measure of progress, change in estimate of transaction price or contract modification.
ii) Other operating income
Other operating income, such as retailer and franchise commission, is recognized on an accrual basis in
accordance with the substance of the relevant agreements.
iii) Finance income
Finance income, such as foreign exchange gains and interest income, is recognized as earned and presented
at gross after operating profit. Interest income is recognized on a time proportion basis, taking account of
the principal outstanding and the effective rate over the period to maturity, when it determined that such
income will accrue to the Company.
iv) Other non-operating income
Other non-operating income, also referred to as incidental or peripheral income (one time), are recognized
for earnings that do not occur on a regular basis or is derived from activities not related to the Company's
core operations.
v) Dividend income
Dividend income is recognized when the Company's right to receive the payment is established. The
Company’s dividend income is presented as part of other non-operating income in the statement of income.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow into the entity and specific criteria have been met for each of the
Company’s activities as described below. The amount of revenue is not considered to be reliably
measurable until all contingencies relating to the sale have been resolved. The Company bases its estimates
on historical results, taking into consideration the type of customer, the type of transaction and the specifics
of each arrangement.
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30.22. Employee benefits
i) Pension obligation
The Company maintains a pension scheme, which is funded through payments to trustee-administered fund.
The Company maintains a defined benefit pension plan and defined contribution plan.
Defined benefit plan is defined as an amount of pension benefit that an employee will receive upon
retirement, dependent on certain factors such as age, years of credited service, and compensation. The
Company makes contributions to the retirement benefit fund to maintain the plan in an actuarially sound
condition. The cost of providing benefits under the defined benefit plan is determined using the projected
unit credit method.
Remeasurements, comprising of actuarial gains and losses, the return on plan assets, excluding amounts
included in net interest on the net defined benefit liability (asset), and any change in the effect of the asset
ceiling, excluding amounts included in net interest on the net defined benefit liability (asset) are recognized
immediately in the statement of financial position with a corresponding debit or credit to retained earnings
through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in
subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
• The date of the plan amendment or curtailment, and

• The date that the Company recognizes related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit obligation or asset. The
Company recognizes the following changes in the net defined benefit obligation under cost of sales,
administration expenses and selling and distribution expenses in statement of income (by function):
• Service costs comprising current service costs, past-service costs, gains and losses on curtailments
and non-routine settlements
• Net interest expense or income
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30.22. Employee benefits (continued)
The liability recognized in the statement of financial position in respect of defined benefit pension plans is
the present value of the defined benefit obligation at the end of the reporting period less the fair value of
plan assets. The present value of the defined benefit obligation is determined by discounting the estimated
future cash outflows using interest rates of high-quality corporate bonds, and that have terms to maturity
approximating to the terms of the related pension obligation.
The Company has a defined contribution plan that covers all regular employees under which it pays fixed
contributions based on the employees’ monthly salaries. The Company, however, is covered under R.A
7641, otherwise known as “The Philippine Retirement Law”, which provides for qualified employees to
receive a defined benefit minimum guarantee. The defined benefit minimum guarantee is equivalent to a
certain percentage of the monthly salary payable to an employee at normal retirement age with the required
credited years of service based on the provisions of R.A. 7641.
Accordingly, the Company accounts for their retirement obligation under the higher of the defined benefit
obligation related to the minimum guarantee and the obligation arising from the defined contribution plan.
For the defined benefit minimum guarantee plan, the liability is determined based on the present value of
the excess of the projected defined benefit obligation over the projected defined contribution obligation at
the end of the reporting period. The defined benefit obligation is calculated annually by a qualified
independent actuary using the projected unit credit method. The Company determines the net interest
expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate
used to measure the defined benefit obligation at the beginning of the annual period to the then net defined
benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during
the period as a result of contributions and benefit payments. Net interest expense (income) and other
expenses (income) related to the defined benefit plan are recognized in our profit or loss.
The defined contribution liability, on the other hand, is measured at the fair value of the defined contribution
assets upon which the defined contribution benefits depend, with an adjustment for margin on asset returns,
if any, where this is reflected in the defined contribution benefits. Remeasurements of the net defined benefit
liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the
effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive
income.
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30.22. Employee benefits (continued)
ii) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes
termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw
the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the
scope of PAS 37 Provisions, Contingent Liabilities and Contingent Assets and involves the payment of
termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination
benefits are measured based on the number of employees expected to accept the offer. Benefits falling due
more than 12 months after statement of financial position date are discounted to present value.
iii) Bonus plans
The Company recognizes a liability and an expense for performance-related bonuses, based on a formula
that takes into consideration the Company and employee’s performance. The Company recognizes a
provision where contractually obliged or where there is a past practice that has created a constructive
obligation.
iv) Performance-share plans
Shell plc operates a Performance Share Plan (PSP) covering all of its subsidiaries’ employees. PSP for
conditional shares are awarded to eligible employees based on their sustained performance and value. The
extent to which shares are finally delivered at the end of a three-year performance period, or not, depends
upon the performance of the Shell group.
The fair value of shares, determined using a Monte Carlo pricing model, is credited as ‘other reserve’ in
equity and is charged to profit or loss over the vesting period. The fair value of share-based compensation
for equity-settled plans granted to employees under the Shell plc schemes is recognized as an intra-group
payable to parent company when charged-out. The charge-out is based on the entitled personnel that were
employed by the Company at the time of awarding.
30.23. Related parties

Related party relationship exists when one party has the ability to control, directly, or indirectly through
one or more intermediaries, the other party or exercise significant influence over the other party in making
financial and operating decisions. Such relationship also exists between and/or among entities under
common shareholdings, which includes entities that are under common control with the reporting enterprise,
or between and/or among the reporting enterprise and its key management personnel, directors, or its
shareholders. In considering each possible related party relationship, attention is directed to the substance
of the relationship, and not merely the legal form.
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30.23. Related parties (continued)
The Company, in its regular conduct of business, enters into transactions with related parties, which consists
of sales and purchase transactions, leases and management and administrative service agreements.
Transactions with related parties are on an arm’s length basis similar to transactions with third parties.
30.24. Operating Segments

An operating segment is a group of assets and operations engaged in providing products or services that are
subject to risks and returns that are different from those of other operating segments (see Note 2).
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the general manager who
makes strategic decisions.
30.25. Events after statement of financial position date

Post year-end events that provide additional information about the Company's financial position at the
reporting date (adjusting events) are reflected in the Financial Statements. Post year end events that are not
adjusting events are disclosed when material.
31. Financial risk management

31.1 Financial Risk Factors
The Company’s operations expose it to a variety of financial risks: market risk (including foreign currency
risk, cash flow and fair value interest risk, and price risk), credit risk and liquidity risk. The Company’s
overall risk management program focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the Company’s financial performance.
Financial risk management is carried out by its Regional Treasury - Shell Treasury Centre East (STCE)
under policies approved by the Board of Directors. STCE identifies, evaluates, and hedges financial risks
in close cooperation with the Company’s operating units. The Board of Directors provides written principles
for overall risk management, as well as written policies covering specific areas, such as foreign exchange
risk, interest rate risk, credit risk and investing excess liquidity.
a) Market risk
Market risk is the possibility that changes in currency exchange rates, interest rates or the prices of
petroleum products will adversely affect the value of the Company’s assets, liabilities or expected future
cash flows.
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31. Financial risk management (continued)

a) Market risk (continued)
i) Foreign exchange risk
The Company operates internationally and is exposed to foreign currency exchange risk arising from
currency fluctuations, primarily with respect to the importations of crude and finished products
denominated in US dollar. Foreign currency exchange risk may also arise from future commercial
transactions and recognized assets and liabilities denominated in a currency other than the Company’s
functional currency.
Foreign exchange currency risks are not hedged and the Company does not enter significant derivative
contracts to manage foreign currency risks. Since foreign currency exposure is significantly concentrated
on purchase of petroleum products, the Company manages foreign currency risk by planning the timing of
its importation settlements with related parties and considering the forecast of foreign exchange rates.
As at 31 December 2022, if the Philippine peso had weakened/strengthened by 5% (assessment threshold

used by management) against the US dollar with all other variables held constant, equity and post-tax profit
for the period would have been P127.7 million (2021 – P231.5 million) lower/higher, as a result of foreign
exchange gains/losses on translation of US dollar-denominated receivables and payables as at 31 December
2022 and 2021.
Management considers that there are no significant foreign exchange risks with respect to other currencies
disclosed in Note 27.
ii) Cash flow and fair value interest rate risk

Cash flow and fair value interest risk is the risk that future cash flows and fair value, respectively, of a
financial instrument will fluctuate because of changes in market interest rates.
The Company has no significant exposure to fair value interest rate risk as the Company has no significant
interest-earning assets and interest-bearing liabilities subject to fixed interest rates.
The Company’s interest-rate risk arises from its borrowings. Borrowings obtained at variable rates expose
the Company to cash flow interest-rate risk. As at 31 December 2022 and 2021, the Company’s short-term
borrowings and loans payable carry floating rates based on a certain index plus applicable premium.
The Company does not enter into significant hedging activities or derivative contracts to cover risk
associated with borrowings.
For the year ended 31 December 2022, if interest rates on Philippine peso-denominated borrowings had
been 100 basis points higher/lower with all other variables held constant, post-tax profit for the year would
have been P246 million (2021 – P174 million) lower/higher, mainly as a result of higher/lower interest
expense on floating rate borrowings. Management uses 100 basis points as threshold in assessing the
potential impact of interest rate movements in its operations.
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a) Market risk (continued)
iii) Commodity and other price risks
Commodity price risk is the risk that future cash flows from a financial instrument will fluctuate because
of changes in market prices. The Company is affected by price volatility of certain commodities such as
fuel oil, gasoline, diesel and other petroleum products in its operating activities. To minimize the
Company’s risk of potential losses due to volatility of international petroleum products prices, the Company
may implement commodity hedging for petroleum products. The hedges are intended to protect petroleum
products inventories from risk of downward prices and squeezing margins. This allows stability in prices,
thus offsetting the risk of volatile market fluctuations. Through hedging, prices of commodities are fixed at
levels acceptable to the Company, thus protecting raw material cost and preserving margins. For consumer
(buy) hedging transactions, if prices go down, hedge positions may show marked-to-market losses; however,
any loss in the marked-to-market position is offset by the resulting lower physical raw material cost. While
for producer (sell) hedges, if prices go down, hedge positions may show marked-to-market gains; however,
any gain in the marked-to-market position is offset by the resulting lower selling price.
The Company is not significantly exposed to price risk on equity securities and proprietary club shares as
investments held by the Company classified in the statement of financial position as equity through other
comprehensive income financial assets are not considered material in the financial statements.
b) Credit risk
Credit risk arises from deposits with banks and financial institutions, as well as credit exposure to trade and
non-trade receivables.
The Company maintains cash and certain other financial instruments with various major financial
institutions. To minimize this risk, the Company performs periodic evaluations of the relative credit
standing of these financial institutions and where appropriate, places limits on the amount of credit exposure
with any one institution. Additional information is presented in Note 3.
The Company has policies in place to ensure that sales of products are made to customers with acceptable
creditworthiness. Counterparty credit risk is managed within a framework of individual credit limits with
utilization being regularly reviewed. Credit checks are performed by a department independent of sales
department and are undertaken before contractual commitment. Where appropriate, cash on delivery terms
are used to manage the specific credit risk. Also, there are collaterals and security deposits from customers
taken which enables to manage the risk.
There is no concentration of credit risks as at statement of financial position dates as the Company deals
with a large number of homogenous trade customers. Additional information is presented in Note 4.
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Where there is a legally enforceable right to offset under trading agreements and net settlement is regularly
applied, the net asset or liability is recognized in the statement of financial position, otherwise assets and
liabilities are presented at gross. As at 31 December 2022 and 2021, the Company has the following:
Gross amounts Amount Net Amounts as Credit

Note before offset offset presented Enhancement Net Amount
2022
Financial Assets:
Receivables 4 18,681,456 - 18,681,456 5,749,567 12,931,889
2021
Financial Assets:
Receivables 4 12,032,291 - 12,032,291 4,606,106 7,426,185
c) Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the Company’s business activities may not be
available. The Company has access to sufficient external debt funding sources (banks credit lines) to meet
currently foreseeable borrowing requirements. The Treasury group centrally monitors bank borrowings,
foreign exchange requirements and cash flow position.
Surplus cash is invested into a range of short-dated money market instruments, time deposits and money
funds, which seek to ensure the security and liquidity of investments while optimizing yield.
The table below analyzes the Company’s financial liabilities into relevant maturity groupings based on the
remaining period at the statement of financial position date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows.
181 days -
Note 0-90 days 91-180 days 1 year Over 1 year Total
2022
Short-term borrowings-Principal 13 17,827,000 - - - 17,827,000
Short-term borrowings-Interest 22 512,756 - - - 512,756
Current portion of loans payable -
Principal 14 9,000,000 - - - 9,000,000
Current portion Loans payable - Interest 22 15,658 - - - 15,658
Loans payable-Principal 14 - - - 6,000,000 6,000,000
Loans payable-Interest 22 325,402 - - - 325,402
Dividends payable 33 17,764 - - - 17,764
Accounts payable and accrued expenses 12 28,898,082 752,041 - 3,269,166 32,919,289
Derivatives 12 6,759 - - - 6,759
56,603,421 752,041 - 9,269,166 66,624,628
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c) Liquidity risk (continued)
181 days -
Note 0-90 days 91-180 days 1 year Over 1 year Total
2021
Short-term borrowings-Principal 13 - 1,500,000 6,720,000 - 8,220,000
Short-term borrowings-Interest 22 - 148,024 36,000 - 184,024
Loans payable-Principal 14 - - - 15,000,000 15,000,000
Loans payable-Interest 22 - - - 1,330,133 1,330,133
Dividends payable 16,836 - - - 16,836
Accounts payable and accrued
expenses 12 18,906,881 - - 5,514,690 24,421,571
Derivatives 12 45,902 - - - 45,902
18,969,619 1,648,024 6,756,000 21,844,823 49,218,466
The maturity analysis for lease liability is disclosed in Note 26. Availability of funding to settle the
Company’s payables are ensured since the Company has unused credit lines and undrawn borrowing
facilities at floating rate amounting to P46.7 billion (2021 – P73.5 billion), which are subject to annual
review.
31.2 Capital management

The Company manages its business to deliver strong cash flows to fund capital expenditures and growth
based on cautious assumptions relating to petroleum products prices. Strong cash position and operational
cash flow provide the Company financial flexibility both to fund capital investment and return on equity.
Total capital is calculated as ‘equity’ as shown in the statement of financial position less other reserves plus
net debt.
i. Cash flow from operating activities
Cash flow from operating activities is considered a measure that reflects the Company’s ability to generate
funding from operations for its investing and financing activities and is representative of the realization of
value for shareholders from the Company’s operations. The statement of cash flows shows the components
of cash flow. Management uses this analysis to decide whether to obtain additional borrowings or additional
capital infusion to manage its capital requirements.
ii. Gearing ratio
The gearing ratio is a measure of the Company’s financial leverage reflecting the degree to which the
operations of the Company are financed by debt. The amount of debt that the Company will commit depends
on cash inflow from operations, divestment proceeds and cash outflow in the form of capital investment,
dividend payments and share repurchases. The Company aims to maintain an efficient statement of financial
position to be able to finance investment and growth, after the funding of dividends. The gearing ratio is
calculated as net debt divided by total capital. Net debt is calculated as total loans and borrowings less cash.
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31.2 Capital management (continued)
ii. Gearing ratio(continued)
The Company have a 5-year strategy and considers whether the present gearing level is commercially
acceptable based on the ability of the Company to operate on a standalone basis. Gearing target is set after
appropriate advice has been taken from Tax, Treasury and Legal advisors.
The gearing ratios at 31 December 2022 and 2021 are as follows:
Note 2022 2021

Total loans and borrowings 13, 14 32,827,000 23,220,000
Less: Cash 3 2,957,163 1,684,253
Net debt 29,869,837 21,535,747
Total equity (excluding other reserves) 28,019,386 25,505,011
Total capital 57,889,223 47,040,759
Gearing ratio 52% 46%
The Company is not subject to externally imposed capital requirement.
31.3 Fair value estimation

The table below presents the carrying amounts of the Company’s financial assets and financial liabilities,
which approximates its fair values, as at 31 December 2022 and 2021:
Note 2022 2021

Financial assets
Loans and receivables
Cash 3 2,957,163 1,684,252
Receivables 4 18,681,456 12,032,292
Derivatives 6 101,897 53,001
Customer grants 7 100,308 101,587
Long-term receivables 308,084 223,394
Equity through OCI 11 816,858 632,618
Total financial assets 22,965,766 14,727,144
Other financial liabilities
Accounts payable and accrued expenses 12 32,919,289 24,182,231
Dividends payable 33 17,764 16,836
Derivatives 12 6,759 45,902
Cash security deposits 15 179,355 193,678
Short-term borrowings 13 17,827,000 8,220,000
Current portion of loans payable 14 9,000,000 -
Loans payable 14 6,000,000 15,000,000
Lease liabilities 9 20,194,873 17,614,805
Total financial liabilities 86,145,040 65,273,452
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31.3 Fair value estimation (continued)
Receivables in the table above exclude claims from the government and miscellaneous receivables while
accounts payable and accrued expenses exclude amounts payable to the government and its related agencies.
The following methods and assumptions were used to estimate the value of each class of financial
instrument:
i. Current financial assets and liabilities
Due to the short-term nature of the accounts, the fair value of cash, receivables, deposits, accounts payable
(excluding derivative financial liabilities) and short-term borrowings approximate the amount of
consideration at the time of initial recognition.
ii. Financial assets and liabilities carried at cost
Staff car loans, market investment loans, other long-term receivables and payables, are carried at cost which
is the repayable amount.
iii. Financial assets and liabilities carried at fair value.
The Company’s equity securities classified as available-for-sale financial assets are marked-to-market if
traded and quoted. The predominant source used in the determining the fair value of the available-for-sale
financial assets is the quoted price and is considered categorized under Level 1 of the fair value hierarchy.
For unquoted equity securities, the fair values could not be reliably determined due to the unpredictable
nature of future cash flows and the lack of suitable methods of carrying at a reliable fair value. These are
carried at cost less any allowance for impairment losses. These are not significant in relation to the
Company’s portfolio of financial instruments.
Fair values of derivative assets and liabilities are calculated by reference to the fixed or variable price and
the relevant index price as of the statement of financial position date. The fair values of the derivatives are
categorized under Level 2 of the fair value hierarchy.
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31.3 Fair value estimation (continued)
iv. Loans payable
The carrying values of long-term loans payable approximates their fair value because of regular interest
repricing based on market conditions.
32. Critical accounting estimates, assumptions and judgments

Estimates, assumptions and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
32.1. Critical accounting estimates and assumptions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial years are discussed below.
i) Provision for impairment of receivables

The provision for impairment of receivables is based on the Company’s assessment of the collectability of
payments from its debtors. This assessment requires judgment regarding the ability of the debtors to pay
the amounts owed to the Company and the outcome of any disputes. The amounts and timing of recorded
provision for impairment of receivables for any period would differ if the Company made different
assumptions or utilized different estimates. Hence, management considers it impracticable to disclose with
sufficient reliability the possible effects of sensitivities surrounding impairment of receivables. The
Company’s policy in estimating provision for impairment of receivables is presented in Note 30.4. The
carrying amount of receivables and other information are disclosed in Note 4.
The Company’s assessment on the recoverability of the claims from the government (Note 7) arising from
the payments under protest is based on the strength of the legal standing related to the case, the basis of
laws which support the subject of litigation, the evidence presented in court and the strength of such
evidence. The Management believes that the Company’s position in eventually recovering the amount paid
under protest is supported by the facts and the applicable law and jurisprudence that should justify a
favorable decision as well as the recovery of amounts paid.
ii) Provision for inventory losses

The Company provides allowance for inventories whenever the net realizable value of inventories become
lower than cost due to damage, physical deterioration, obsolescence, market driven price changes in price
levels or other causes (i.e., pre-termination of contracts).
80
32. Significant accounting judgments, estimates and assumptions (continued)

32.1. Critical accounting estimates and assumptions (continued)
Assessment of inventory losses on a regular basis is also performed based on historical information and
past experience. The provision account is reviewed on a monthly basis to reflect the estimated net
recoverable value in the financial statements. The carrying amount of inventories and other information are
disclosed in Note 5.
iii) Provision for asset retirement obligation and environmental liabilities and remediation
Estimates of the ARO recognized are based on current legal and constructive requirements, technology and
price levels. Since actual outflows can differ from estimates due to changes in laws, regulations, public
expectations, technology, prices and conditions, and can take place many years in the future, the carrying
amount of the obligation is regularly reviewed and adjusted to take account of such changes. The implicit
rate (based on management’s market assessment of the time value of money and risks specific to the
obligation) used in discounting the cash flows is reviewed at least annually.
The discount rate used to determine the present value of the obligation as at 31 December 2022 is 6.25% to
7.22% and 2.64% to 3.29% as at 31 December 2021. The amount is recognized as accretion cost or income
in the statement of income.
The Company has set total outstanding provision of P63.1 million (2021 - P65.3 million) to cover the
required environmental remediation covering specific assets, based on external evaluation and study, and
total outstanding provision of P3.3 billion (2021 – P4.3 billion) for ARO (see note 15).
Further, it is reasonably possible based on existing knowledge that outcome within the next financial year
that are different from assumptions could require an adjustment to the carrying amount of the provision for
ARO and environmental liabilities and remediation. However, management does not foresee any changes
in terms of business operations and its circumstances that would cause a significant change in the initial
estimates used. Additional information is presented in Note 15.
iv) Determining useful lives and depreciation

Management determines the estimated useful lives and related depreciation charges for the Company’s
property and equipment (Note 8). Management will revise the depreciation charge where useful lives are
different from the previous estimate or will write-off or write-down technically obsolete or non-strategic
assets that have been abandoned or sold. Management does not foresee any changes in terms of business
operations that would warrant reassessment of estimated useful lives.
81

v) Pension benefit obligation and employee benefits
The determination of the Company’s pension benefit obligation and employee benefits is dependent on the
selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions, as
described in Note 25, include among others, discount rates, and salary increase rates.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions as follows:
Impact on defined benefit

obligation
2022 2021
Discount rate
Increase by 0.50% (144,942) (241,447)
Decrease by 0.50% 156,935 264,143
Salary rate
Increase by 0.50% 158,354 258,141
Decrease by 0.50% (147,495) (238,259)
The above sensitivity is based on a change in assumption while holding all other assumptions constant. In
practice, this is unlikely to occur, and changes in some assumptions may be correlated. When calculating
the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method has
been applied as when calculating the pension asset (liability). The methods and types of assumptions used
in preparing the sensitivity analysis did not change compared to prior years.
While the Company’s management believes that the assumptions are reasonable and appropriate, significant
differences in actual experience or significant changes in actuarial assumptions may materially affect the
pension obligation and employee benefits.
82

vi) Provision for expected credit losses of trade receivables
The Company computes probability of default rates for third party trade receivable, based on historical loss
experience adjusted for current and forward-looking information. At every reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed. For inter-
group trade receivables and lease receivables, the Company uses internal credit rating to determine the
probability of default. Internal credit ratings are based on methodologies adopted by independent credit
rating agencies, therefore the internal ratings already consider forward looking information.
The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The
Company’s historical credit loss experience and forecast of economic conditions may also not be
representative of customer’s actual default in the future.
vii) Determining lease term
In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated).
The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes
obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant
event or a significant change in circumstances occurs, which affects this assessment, and that is within the
control of the lessee.
32.2. Critical judgements in applying the Company's accounting policies

i) Impairment of assets
Assets (see Notes 8 and 11) are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. On a regular basis, management
determines if there are triggering events or impairment indicators based on current circumstances. An
impairment loss is recognized whenever evidence exists that the carrying value is not recoverable.
The recognized impairment losses are disclosed in Note 23.
83

32.2. Critical judgements in applying the Company's accounting policies (continued)
ii) Taxes
A certain degree of judgment is required in determining the provision for income taxes, as there are certain
transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business.
The Company recognizes liabilities for tax audit issues when it is probable. The liabilities are based on
estimates whether additional taxes will be due. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
Further, recognition of deferred income tax assets depends on management’s assessment of the probability
of available future taxable income against which the temporary differences can be applied. The Company
reviews its deferred tax assets at each statement of financial position date and reduces the carrying amount
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred tax assets to be utilized. Management believes that deferred tax assets are fully recoverable
at the statement of financial position date (see Note 10).
The Company pays excise duties in advance and files for a refund with the local tax bureau as the Company
claims exemption on own produced and imported petroleum products that were subsequently sold to
international carriers or exempt entities or agencies. The refund of claim requires judgement based on the
Company’s assessment of collection or recoverability through creditable tax certificates from the
government (see Note 4 and 7).
The Company recognizes provision for impairment of input VAT and prepaid corporate income tax based
on the Company’s assessment of collection or recoverability through creditable tax certificates from the
government. This assessment requires judgment regarding the ability of the government to settle or approve
the application for claims/creditable tax certificates of the Company. Management believes that its input
VAT and specific tax claims are fully recoverable as at statement of financial position date (see Note 6).
iii) Assessing contingencies

The Company is currently involved in various legal proceedings including a number of tax cases (see Note
28). Estimates of the probable costs for the resolution of these claims, if any, have been developed in
consultation with internal and external counsels handling the Company’s defense in these matters and are
based upon the probability of potential results. The internal legal counsel mainly considers the strength of
the legal standing related on the case, the basis of laws which support the subject of litigation, the evidences
presented in the court, strength of such evidence, and weakness of the opposing team’s evidence. The
Company engages management specialist to perform deeper assessment and assistance in formulating a
more appropriate strategy to proceed with the case. The Company’s management currently believes that
the ultimate outcome of these proceedings will not have a material adverse effect on the financial statements.
It is possible, however, that future results of operations could be materially affected by changes in the
estimates, in the effectiveness of its strategies relating to these proceedings or the actual outcome of the
proceedings (see Notes 15 and 28).
84

32.2. Critical judgements in applying the Company's accounting policies (continued)
iv) Incremental borrowing rate
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its
incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the
Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary
to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The
Company estimates the IBR using observable inputs like the risk-free rate and adjust it for factors such as
the credit rating of the Company and the terms and conditions of the lease.
33. Changes in liability arising from financing activities

Accrued and
01 January paid during 31 December
2022 Cash flows the year Other 2022
Short term loans (Note 13) 8,220,000 9,607,000 - - 17,827,000
Long term loans (Note 14)
Current - - - 9,000,000 9,000,000
Long-term debt 15,000,000 - - (9,000,000) 6,000,000
Dividend payable 16,836 (1,612,516) - 1,613,444 17,764
Accrued interest payable 81,886 (857,469) 853,816 - 78,233
Lease liabilities (Note 9) 17,614,805 (2,964,273) 1,112,231 4,432,110 20,194,873
Total liabilities from financing
activities 40,933,527 4,172,742 1,966,047 6,045,554 53,117,870
Accrued and
01 January paid during 31 December
2021 Cash flows the year Other 2021
Short term loans (Note 13) 13,000,000 (4,780,000) - - 8,220,000
Long term loans (Note 14) - - - - -
Non-Current 9,000,000 6,000,000 - - 15,000,000
Dividend payable 17,074 (238) - - 16,836
Accrued interest payable 237,247 (651,439) 488,054 8,024 81,886
Lease liabilities (Note 9) 14,477,352 (2,919,824) 1,007,575 5,049,702 17,614,805
Total liabilities from financing
activities 36,371,673 (2,351,501) 1,495,629 5,057,726 40,933,527
Others include the effect of reclassification of non-current portion of interest-bearing loans to current due
to the passage of time, additions to lease liabilities in which portion of it is not yet paid, dividends
declared during the year, and interest accrued but not paid during the year.
85
34. Subsequent Events

The P9.0 billion worth of maturing loan which is reflected as Current Portion of Long-Term Debt in the
Balance Sheet as of 31 December 2022 has been replaced with a new Medium-Term Loan drawn in
February 2023. The 5-year loan has been awarded to BPI and Metrobank for P4.5 billion each.
On August 10, 2022, the Board has approved the change in corporate name of the Company to “Shell
Pilipinas Corporation” and the amendment and broadening of the Corporation’s Secondary Purpose to
include retail trade as it aims to grow its non-fuel retail segment. The SEC approval was obtained on 15
March 2023.
35. Supplementary Information Required Under Revenue Regulations No. 15-2010

The following information required by Revenue Regulations No. 15-2010 is presented for purposes of filing
with the BIR and is not a required part of the basic financial statements.
a) Output value-added tax (VAT)

Output VAT declared and the revenues upon which the same was based as at 31 December 2022 consist of:
Gross amount of
revenues Output VAT
Subject to 12% VAT
Sale of goods 271,229,845 32,547,581
Sale to government 557,224 66,867
Sale of services 860,331 103,240
Others 838,084 100,570
273,485,484 32,818,258
Zero rated
Sale of goods 23,471,022 -
Exempt
Sale of goods 416,792 -
Total 297,373,298 32,818,258
Zero-rated sale of goods pertains to direct export sales transactions with PEZA-registered activities and
international vessels pursuant to Section 106 (A) (2) of National Internal Revenue Code.
86
35. Supplementary Information Required Under Revenue Regulations No. 15-2010 (continued)
a) Output value-added tax (VAT) (continued)
VAT exempt sales pertain to transactions with exempt entities which are exempt pursuant to Section 109 of
National Internal Revenue Code.
b) Input VAT
Movements in input VAT for the year ended 31 December 2022 follow:
Add: Current year’s domestic purchases/payments for:

Importation of goods for resale/manufacture 22,286,967
Domestic goods for resale or manufacture 9,046,222
Services lodged under other accounts 1,702,654
Services rendered by non-residents 146,148
Capital goods subject to amortization 47,002
Capital goods not subject to amortization 6,955
Total input VAT 33,235,948
c) Importations
The total landed cost of imports and the amount of custom duties and tariff fees accrued and paid for the
year ended 31 December 2022 follow:
Landed cost of imports 160,126,697

Customs duties and tariff fees paid 25,598,027
d) Documentary Stamp tax

Documentary stamp taxes in relation to the Company's borrowing transactions were expensed and settled
by the local bank. The related balances amounting to P98.9 million were reimbursed by the Company as
part of bank service fee.
87
35. Supplementary Information Required Under Revenue Regulations No. 15-2010 (continued)
e) Excise taxes
Excise taxes relate to purchase of petroleum and mineral products by the Company. These taxes are
normally paid in advance by the Company and charged to cost of sales upon sale of goods. Total amount
paid and charged to operations for the year ended 31 December 2022 are as follow:
Paid Accrual Balance

Local Petroleum products 41,404 - 41,404
Imported Petroleum products 25,158,128 - 25,158,128
25,199,532 - 25,199,532
f) All other local and national taxes

All other local and national taxes accrued and paid for the year ended 31 December 2022 consist of:
Real property tax 238,112

Municipal taxes / Mayor's permit 10,235
Community tax 1111111
248,358
The above local and national taxes are lodged under miscellaneous account in selling, general and
administrative expense.
g) Withholding taxes
Withholding taxes paid and accrued and/or withheld for the year ended 31 December 2022 consist of:
Paid Accrued Total

Withholding tax on compensation 374,123 15,820 389,943
Expanded withholding tax 1,052,973 193,317 1,246,290
Fringe benefit tax 29,913 9,887 39,800
Final withholding tax 264,436 39,568 304,004
1,721,445 258,592 1,980,037
h) Tax assessments and cases

Other than tax cases mentioned in Note 28, there has been no tax assessments for the year 2022.
88
SCHEDULE I
RECONCILIATION OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION
As at 31 December 2022
(All amounts in thousands Philippine Peso)
Unappropriated Retained Earnings beginning (4,304,059) 1,325,887

Adjustments: (see adjustments in previous year’s Reconciliation) (11,423,711)
Treasure Shares ( (507,106)
Deferred tax assets net, beginning (5,983,513)
Unappropriated Retained Earnings, as adjusted to available for dividend
distribution, beginning (15,727,770) (5,164,732)
Add: Net income actually earned/realized during the period 4,075,747 3,855,346
Less: Non-actual/unrealized income net of tax - 2,983,039
Equity in net income of associate/joint venture -
Unrealized foreign exchange gain - net (except those attributable to cash
and cash equivalents) (129,992) 235,084
Unrealized actuarial gain -
Fair value adjustment (M2M gains) (88,039) 12,846
Deferred tax assets net, movements 1,079,644
Fair value adjustment of Investment property resulting to gain -
Adjustment due to deviation from PFRS/GAAP - gain -
Other unrealized gains or adjustments to the retained earnings as a result of
certain transactions accounted under PFRS -
Add: Non-actual losses -
Depreciation on revaluation increment (after tax) -
Loss on fair value adjustment of investment property (after tax) -
Adjustment due to deviation from PFRS/GAAP - loss -
Net income actually earned during the period 7,050,012 4,937,360
Add (Less):
Dividend declaration during the year - (1,613,444)*
Appropriations of retained earnings during the period -
Reversal of appropriateness -
Effects of prior period adjustments -
Treasury shares (507,106) -
Total retained earnings, end available for dividend declaration (9,184,863) (1,840,816)
(11,319,715) (11,319,715)
*On August 10, 2022, the Company declared dividends of P1.00 per share for its 2021 Net Income After Tax from its unrestricted
retained earnings as of June 30, 2022 (17-Q results) of PHP4.6bn
89
SCHEDULE II
COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS
PURSUANT TO THE REVISED SRC RULE 68, AS AMENDED
Formula 2022 2021

Total Current Assets divided by Total Current Liabilities
Current Ratio Current assets 49,833 0.83 1.12

Divide by: Current Liabilities 59,771
Current Ratio 0.83
Quick Assets (Total Current Assets less Inventories and

Other Current Assets) divided by Current Liabilities
Current assets 49,833

Acid test ratio Less: Inventories 17,940 0.44 0.54
Other Current Assets 5,884
Quick Assets 26,009
Divide by: Current Liabilities 59,771
Acid Test Ratio 0.44
Net Income after Tax (Net Income and Non-Cash Items)

Divided by Total Liabilities
Net Income 4,076

Solvency ratio 11.00% 15.71%
Add: Non-cash Items 5,618
Net Income after Tax 9,694
Divide by: Total Liabilities 88,107
Solvency Ratio 11%
Net Debt (Short-term and Long-Term Borrowings less Cash)

divided by Stockholder’s Equity (Exclusive of Other
Reserves
Short-term loans 17,827

Add: Long-term loans 9,000 1.07 0.84
Debt to Equity
Current portion of Loans Payable 6,000
Less: Cash 2,957
Net Debt 29,870
Divide by: Equity, net of Other Reserves 28,019
Debt to Equity 1.07
SCHEDULE II
90
COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS
PURSUANT TO THE REVISED SRC RULE 68, AS AMENDED (Continued)
Formula 2022 2021

Net Debt (Short-term and Long-Term Borrowings less Cash)
divided by Total Assets
Short-term loans 17,827

Add: Long-term loans 9,000
Debt Ratio Current portion of Loans Payable 6,000 0.26 0.23
Less: Cash 2,957
Net Debt 29,870
Divide by: Total Assets 117,036
Debt Ratio 0.26
Net Income Divided by Stockholder’s Equity (Exclusive of

Other Reserves
Return on Equity 14.55% 15.12%
Net Income 4,076
Return on Equity 14.55%
Total Assets divided by Stockholder’s Equity (Exclusive of

Other Reserves
Asset to Equity
4.18 3.73
Ratio Total Assets 117,036
Asset to Equity Ratio 4.18
Earnings before interest expense and taxes divided by

Interest Expense
Interest rate
7.40 14.86
coverage ratio Earnings before interest expense and taxes 6,320
Divide by: Total Interest in Borrowings 854
Interest Rate Coverage Ratio 7.40
Net Income divided by Total Assets
Return on Assets Net Income 4,076 3.48% 4.05%

Divide by: Total Assets 117,036
Return on Assets 3.48%
91
SCHEDULE A
FINANCIAL ASSETS
Number of Valued based

shares or on market
principal quotation at
amount of Amount shown end of Income
Name of issuing entity and association bonds and in the balance reporting received and
of each issue notes sheet period accrued
Equity through OCI
Alabang Country Club, Inc. 2 22,000 22,000 -
Atlas Consolidated Mining and
Development 3,000,000 11,550 11,550 -
Canlubang Golf & Country Club, Inc. 2 6,000 6,000 -
Club Filipino de Cebu, Inc. 24 700 700 -
Manila Golf & Country Club, Inc. 6 630,000 630,000 -
Manila Polo Club, Inc. 2 60,000 60,000 -
Manila Southwoods Golf & Country
Club 1 3,000 3,000 -
Negros Occidental Golf & Country
Club 1 20 20 -
Pantranco South Express Inc. 5,232,000 3,738 3,738 -
Puerto Azul Beach & Country Club,
Inc. 1 350 350 -
Sta. Elena Golf Club 2 18,000 18,000 -
The Royal Northwoods Golf Club &
Country 1 1,000 1,000 -
Valley Golf Club, Inc. 1 2,500 2,500 -
Wack Wack Golf & Country Club 1 58,000 58,000 -
Total Equity through OCI financial
assets 816,858 816,858
Cash 2,957,163
Receivables 18,681,456
Derivatives 101,897
Market investment loans 100,308
Long-term receivables 308,084
Total financial assets 22,965,766
92
SCHEDULE B
AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS, EMPLOYEES, RELATED
PARTIES AND PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES)
Name and Balance at

Designation of beginning of Amounts Amounts Non Balance at end
Debtor period Additions Collected Written-off Current Current of period
Rizal
Commercial
Banking
Corporation 880 29,226 26,760 N/A 3,346 N/A 3,346
The Insular
Life
Assurance Co
Ltd N/A 1,401 1,049 N/A 351 N/A 351
The Company’s receivables from directors, officers, employees, and principal stockholders are limited to
receivables subject to usual terms for ordinary expense advances and items arising in the ordinary course
of business.
93
SCHEDULE C
AMOUNTS RECEIVABLE FROM RELATED PARTIES WHICH ARE ELIMINATED DURING
THE CONSOLIDATION OF FINANCIAL STATEMENTS
Name and Balance at

Designation of beginning of Amounts Amounts Non Balance at end
Debtor period Additions Collected Written-off Current Current of period
N/A N/A N/A N/A N/A N/A N/A N/A
94
SCHEDULE D
LONG TERM DEBT
(All amounts in thousand Philippine Peso)
Amount shown under caption

Amount shown under caption “Loans payable, net of
“current portion of long-term current portion” in related
Title of issue and type Amount authorized by debt” in related statement of statement of financial
of obligation indenture financial position position
Bank loan 15,000,000 9,000,000 6,000,000
95
SCHEDULE E
INDEBTEDNESS TO RELATED PARTIES
(LONG-TERM LOANS FROM RELATED COMPANIES)
Name of related party Balance at beginning of period Balance at end of period

N/A N/A N/A
96
SCHEDULE F
GUARANTEES OF SECURITIES OF OTHER ISSUERS
Name of issuing entity of Title of issue of

securities guaranteed by the each class of Total amount Amount owned by
company for which this securities guaranteed and person for which Nature of
statement is filed guaranteed outstanding statement is filed guarantee
N/A N/A N/A N/A N/A
97
SCHEDULE G
CAPITAL STOCK
Number of
Number of Shares shares
Issued and reserved for
Outstanding as options,
shown under warrants,
related statement conversion Number of Directors,
Number of Shares of financial and other shares held by officers and
Title of Issue Authorized position caption rights related parties employees Others
Common stocks 2,500,000,000 1,613,444,202 - 890,860,233 402,127 722,181,842
98
SCHEDULE H
RELATIONSHIP MAP
SHELL PLC
(100%)
SHELL PETROLEUM N.V.

(100%)
SHELL OVERSEAS INVESTMENTS B.V.

(55%)
ASSOCIATE ASSOCIATE
KAMAYAN REALTY BONIFACIO GAS
CORPORATION CORPORATION
(40%) (40%)
99

Shell Pilipinas Corporation Audited Financial Statements

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Shell Pilipinas Corporation Audited Financial Statements

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SHELL PILIPINAS CORPORATION

(formerly Pilipinas Shell Petroleum Corporation)

1. Corporate information (continued)

Universal bank 1,979,727 924,247

4. Trade and other receivables, net

Philippine peso 23,519,052 15,402,529

4. Trade and other receivables, net (continued)

Trade Others Total

6. Prepayments and other current assets

(a) Input VAT, net of output VAT

(b) Prepaid corporate income tax

(c) Derivative financial assets

7. Long-term receivables, rentals and investments, net

(a) Long-term receivables

(b) Customer grants

7. Long-term receivables, rentals and investments, net (continued)

8. Property, plant and equipment

8. Property, plant and equipment (continued)

a) Right to use assets

Notes 2022 2021

Notes 2022 2021

Notes 2022 2021

NOLCO balances as at 31 December 2022

NOLCO Applied NOLCO NOLCO Applied NOLCO

MCIT balances as at 31 December 2022

MCIT Applied MCIT MCIT Applied MCIT

2022 2021 2020

2022 2021 2020

11. Other assets, net

(b) Deferred input VAT

11. Other assets, net (continued)

12. Trade and other payables

12. Trade and other payables (continued)

13. Short-term loans

14. Long-term debt

2022 2021 Interest Terms

14. Long-term debt (continued)

There are no collaterals pledged as security against these borrowings.

• Maintenance of the Company’s legal status.

15. Provisions and other liabilities

15. Provisions and other liabilities (continued)

15. Provisions and other liabilities (continued)

(b) Provision for legal cases

(c) Provision for remediation

(d) Other liabilities

16. Share capital; Treasury shares

2022 2021 2020

Issued shares 1,681,058,291 1,681,058 1,681,058,291 1,681,058 1,681,058,291 1,681,058

17. Retained earnings (accumulated loss)

2022 2021 2020

Cash dividend declared and paid in 2022:

Declared Date Paid Per share 2022

18. Earnings (loss) per Share

Notes 2022 2021 2020

SHELL PILIPINAS CORPORATION

19. Cost of Sales

20. Selling, general and administrative expenses

SHELL PILIPINAS CORPORATION

21. Other operating (income)/expense

Note 2022 2021 2020

Realized trading loss (gain), net 6 974,069 (547,575) 461,916

Others include aviation concession fees and non-oil income.

22. Finance income/(expense)