ACCCOB2 PORTFOLIO

Reflection paper presented to the

Accountancy Department

In partial fulfillment of the course

requirement in ACCCOB2

Submitted By:

Agustin, Alfonso Miguel B.

Santos, Reshawn Kimi C.

Submitted To:

Ms. Jacinto, Abigail N.

 Appendix

Presentation of Financial Statements…………..………………………… page 1

Cash and Cash Equivalents………………….…………………………………. page 2

Trade and Other Receivables….…………….………………………………… page 3

Investment in Equity/Debt Securities…….………………………………… page 4

Inventories……………………….…………….………………………………… page 5-6

Property, Plant and Equipment…………….………………………………… page 7-8

Natural Resources……………….…………….………………………………… page 9-10

Intangible Assets………….……….…………….………………………………….. page 11

Trade and other Payables……….…………….………………………………….. page 12-13

Long-term Liabilities……………….………….………………………………….. page 14-15

Share Capital…..………………….…………….………………………………….. page 16-17

 Presentation of Financial Statements

The amount of money Shell Philippines’s has available changed slightly. They
occasionally had more, and occasionally they did not. Liquidity is the term for this. The
stability of the company's cash flow is crucial for its financial well -being. Even while the
company had made some progress in its financial performance, overall, it wasn't doing
well. Even if they were doing better in certain areas, such as exploiting their assets and
money to earn more money, it was still tough for them to generate bigger profits.

The business began to rely more on borrowing capital than on its own. Compared to
what they owned. They had greater debt. Even if they could pay their bills, their financial
security was still not very high. They must effectively manage their debts and ensure that
they have sufficient funds for the long run. The corporation also saw adjustments in its
sales volume. They marketed more things for businesses and less of one thing, like
transportation services. This demonstrates that the market they were operating in altered,
necessitating a change in how they conducted business.

In conclusion, Shell Philippines’s financial performance was inconsistent. There were

still concerns with having enough money at certain periods, taking on more debt, and
needing more financial security, yet it fared better in several areas, such as producing
profits and selling more. They must manage their long-term debts, maintain a regular cash
flow, and rely less on borrowing to remain financially stable. Additionally, they must
maintain a balanced business and be able to adjust to market fluctuations.
 Cash and Cash Equivalents

1
Shell Philippines’s, an organization working in the energy area, saw a huge
expansion in its ongoing resources from December 2021 to December 2022. There are a
number of factors in the company's operations that are responsible for this rise. Exchange
and other receivables encountered a significant increment of Php7,111.7 million, driven by
higher deals and completed item costs internationally. Additionally, prepayments and other
current assets saw a significant increase of Php2,886.5 million, primarily because of
prepaid corporate income tax and an increase in input VAT credit resulting from increased
imports. Inventories rose by Php2,086.4 million, mirroring the flood in normal worldwide
fuel costs for oil-based commodities, for example, gas, diesel, fuel oil, and avionics fuel.

Shell Philippines’s financial position improved because of the rise in current assets.
Particularly, there was a significant increase of Php1,272.9 mill ion in cash holdings. Despite
dividends paid and strategic spending on capital projects, this increase was partially offset
by stronger cash generation from operations and financing activities. The organization
expected to extend its portability organization and upgrade its production network, which
required reasonable capital consumption. Shell Pilipinas was able to improve its financial
stability and strengthen its cash position by strategically allocating resources and capital.

Finally, the upward trend in Shell Philippines’s current assets demonstrates the
company's capacity to respond to changes in the market and capitalize on growth
opportunities. The company's efforts to improve its financial performance and capture
market demand are reflected in higher trade receivables, prepayments, inventories, and
cash holdings. However, Shell Pilipinas must carefully manage its current assets to achieve
its long-term financial objectives. By keeping a reasonable way to deal with liquidity,
obligation the board, and speculation choices, the organization can guarantee supported
development and monetary strength in the unique energy area.
 Trade and Other Receivables
2
Shell Philippines saw significant growth in its trades and other receivables, as well
as its prepayments and other current assets, during the fiscal year that ended on
December 31, 2021. Exchange and other receivables expanded by Php4,207.5 million,
addressing a development pace of 35.9%. This rise can be attributed to the region's rising
prices for finished goods, which led to more sales and more receivables as a result. Shell
Philippines expanding customer base and rising product demand are reflected in this
growth.

Prepayments and other current assets also saw significant growth, rising by
Php1,134.7 million at a rate of 60.9%. The primary cause of this rise is an increase in
creditable withholding tax, which the business can use to reduce its upcoming income tax
bill. Moreover, there was an expansion in input Tank credit, further adding to the
development of prepayments and current resources. This growth suggests that Shell
Pilipinas strategically managed its cash flow and took advantage of tax breaks that were
available.

In conclusion, Shell Pilipinas' monetary year finishing off with December 2021
exhibited huge development in exchange and other receivables as well as prepayments and
other current resources. The rise in finished product prices is reflected in the rise in trade
receivables, which indicates an expanding customer base and increased sales. The
development in prepayments and current resources can be ascribed to the use of
respectable saved portion tax breaks and an expansion in input Tank credit. Sh ell Pilipinas'
overall ability to adapt to market conditions and effectively manage its assets and cash flow
is reflected in these financial indicators.
 Investment in Equity/Debt Securities

The financial statements of Shell Pilipinas provide insights into the company's
Investment in Equity/Debt Securities. In 2022, the company had cash and cash equivalents
totaling Php75,407, which includes both defined benefit and defined contribution funds.
This amount decreased from Php470,383 in 2021, primarily due to changes in investment
strategies.

When looking at investments, the company held various types of securities.

Investments in government bonds and securities amounted to Php2,720,807 in 2022,
compared to Php2,947,165 in 2021. Additionally, the company had investments in unquoted
equity instruments, unit investment trust funds, and corporate bonds. The total balance of
investments in 2022 was Php7,456,309, lower than the Php8,552,423 recorded in 2021.

These figures demonstrate the company's approach to managing its funds, utilizing
a combination of cash, cash equivalents, and different investment instruments. The
decrease in cash and investments from 2021 to 2022 suggests potential changes in
investment strategies or the reallocation of funds. Overall, this information sheds light on
the company's financial position and its management of funds for both defined benefit and
defined contribution plans.
 INVENTORIES

The financial summary of Shell Pilipinas provides insights into the company's
inventory position. In 2022, the company's inventories increased to Php17,939,924 from
Php15,853,475 in 2021. The majority of these inventories consist of petroleum products,
which accounted for Php17,759,686 in 2022. Materials and supplies, on the other hand,
amounted to Php180,238.

The company maintains an allowance for inventory write-down and obsolescence,

which stood at Php66,103 as of December 31, 2022. This allowance repre sents potential
losses due to the write-down of petroleum products to their net realizable value and the
obsolescence of finished products. In 2022, no petroleum products were written off,
indicating an improvement in inventory management compared to previ ous years.

It is worth noting that a portion of the inventories, amounting to Php2.0 billion as of

December 31, 2022, is carried at net realizable value, which is lower than its cost. This
adjustment reflects a conservative approach to valuing invent ories and ensures that their
reported value aligns with their potential selling price. Additionally, the cost of inventories
included in the cost of sales for the year amounted to Php232.5 billion, indicating the
significant impact of inventory-related expenses on the company's operations.

5
 In summary, Shell Pilipinas experienced an increase in inventories, primarily driven
by petroleum products. The company maintains an allowance for inventory write -down and
obsolescence to account for potential losses. By carrying inventories at net realizable value,
the company demonstrates a cautious approach to valuing its stock. The cost of inventories
significantly influences the company's cost of sales, highlighting the importance of effective
inventory management in the company's operations.

6
 Property, Plant and Equipment

Property, plant, and equipment form a significant part of Shell Pilipinas' assets and
are accounted for at historical cost less accumulated depreciation, amortization, and
impairment losses. The historical cost includes the acquisition cost and any additional
expenses directly related to bringing the asset into working condition and its intended use.
Costs incurred during the construction phase are accumulated until the project is completed,
at which point they are charged to the appropriate property accounts. Ongoing repairs and
maintenance expenses are recognized in the statement of income during the period they
occur.

Depreciation is calculated using the straight-line method based on estimated useful

lives. The depreciation period ranges from 5 to 40 years for leasehold improvements, 5 to
20 years for furniture and fixtures, 3 to 30 years for machinery, plant, and equipment, and
5 to 25 years for transportation assets. Depreciation begins when the asset is availa ble for
use and ceases when it is classified as held for sale or derecognized. Assets under
construction are not subject to depreciation until they are put into operation. Major
renovations are depreciated over the remaining useful life of the asset.

7
 Property and equipment are derecognized when they are disposed of or when no
future economic benefits are expected. Any gains or losses from disposals are determined
by comparing the proceeds with the carrying amount of the assets. The cost and accumulated
depreciation of the assets sold are removed from the accounts, and any resulting gain or
loss is recorded as other operating income or expense in the statement of income.

8
 Natural Resources (Right to use assets)

Throughout the years 2021 and 2022, there were movements in the right to use
assets. In 2021, the total value of these assets was Php17,964,489. During the year, there
were additions to the assets amounting to Php7,187,208, reflecting the acquisition of new
assets. Some assets were also derecognized, leading to a decrease in value. Depreciation
was recorded to account for the wear and tear of the assets over time. Additionally,
remeasurements impacted the valuation of the assets.

By the end of 2022, the value of the right to use assets increased to Php20,113,272.
This increase was primarily driven by additional assets added during the year, amounting to
Php6,446,478. However, some assets were derecognized, resulting in a decrease in the total
value. Depreciation was also recorded for the assets to reflect their ongoing use and aging.
Remeasurements continued to influence the valuation of the assets.

The movements in the right to use assets provide insights into Shell Pilipinas' asset
management and utilization. These figures demonstrate the company's investment in
acquiring new assets and its strategic decisions regarding asset retention or disposal.

9
 The recording of depreciation acknowledges the gradual decrease in the value of the
assets over their estimated useful lives. By tracking and managing these assets, Shell
Pilipinas ensures effective resource allocation and maintains an accurate representation of
its financial position.

10
 Intangible assets

Shell Pilipinas recognizes and manages its intangible assets, particularly computer
software licenses, in accordance with accounting standards. Acquired computer software
licenses are capitalized, meaning the costs incurred to acquire and implement the specific
software are recorded as an asset on the balance sheet. These costs are then amortized
over their estimated useful lives, which is typically five years from the time the software is
ready for use in the company's operations.

However, costs associated with maintaining computer software programs are

recognized as expenses as they are incurred. This means that ongoing expenses related to
software maintenance are recognized in the statement of income, reflecting the company's
commitment to accurately represent the costs of running its software systems.

When it comes to intangible assets, including computer software licenses, they are
derecognized from the balance sheet upon disposal or when no future economic benefits
are expected from their use or disposal. Gains or los ses from the disposal of intangible
assets are determined by comparing the proceeds from the disposal with the carrying
amount of the assets. The cost of the disposed asset and its related accumulated
amortization are removed from the accounts, and any resulting gain or loss is recorded as
other operating income or expense in the statement of income.

11
 Trade and other Payables

The amount due by the company to its suppliers and other creditors, known as
trade and other payables, increased by Php4,090.2 million from Php20,377.2 million in
2020 to Php24,467.5 million in 2021. This growth was mostly caused by the increase in the
price of petroleum products globally and the depreciation of the Philippine peso, which
increased the company's costs and the amount it owed to its creditors and suppliers.

The amount of short-term loans, which are loans with a payback duration of less
than a year, declined from Php13,00,000,000 in 2020 to Php8,22,000,000 in 2021, a fall of
Php4,780.0 million. The reduction in the company's overall short-term debt burden can be
attributable to the settlement and conversion of some short-term loans into long-term
loans.
 In conclusion, rising product prices and currency depreciation caused Shell Pilipinas
to experience a rise in trade and other payables, which resulted in higher expenses and
indebtedness to suppliers. However, by paying off some of them and turning others into
long-term loans, the corporation was able to successfully manage its short-term debt load.
The company's attempts to manage its liabilities and improve its financial situation are
reflected in these financial adjustments.
 Long-term Liabilities

The business spent P152.4 million on interest on its loans in 2021. This is less than
the P251.9 million and P475.5 million in interest costs from 2020 and 2019, respectively.
These loans were not utilized for buying, constructing, or creating specific assets; rather,
they were used for general business expenses. For these loans, the corporation did not
provide any collateral as security.

The corporation is required to abide by specific rules in the loan agreements. The
business must first keep its legal standing. The loans should also rank equally with other
unsecured creditors, with the exception of those who are given precedence by bankruptcy
or insolvency legislation. Third, the Company may not impose financial obligations on its
assets or income in excess of those permitted by the loan arrangements. As long as there
are no valid legal challenges, the corporation must quickly pay all taxes and charges
associated with it or its assets.

As of the aforementioned reporting periods, the company had complied with all of
these loan agreement conditions. This demonstrates the company's ability to meet its
obligations and financial stability. Check Note 31.1.c in the financial report for more specific
information about the maturity of these loans. This information offers important insights
into the company's financial health and demonstrates how it manages its borrowings and
spending in an ethical manner.
 Share Capital

Over the years 2019, 2020, and 2021, specifics regarding the company's share
capital and treasury shares as of December 31 have been provided. With a par value of P1
per share, the authorized capital stock for common shares has remained consistent over
these years at 2.5 billion shares. In the same time frame, the number of issued shares
remained constant at 1,681,058,291 shares. To be kept as assets, the corporation has
maintained treasury shares, which represent shares that it has repurchased from
shareholders or the open market. The number of treasury shares as of 2021 is 67,614,089
(up from 507,106 in 2020). These treasury shares are not included in the issued and
outstanding shares, which as of December 31, 2021, totaled 1,613,444,202 shares.

The concept of treasury shares indicates that the company has repurchased its own
shares, which can serve various purposes. Such shares can be used for employee stock
options, to boost earnings per share by reducing the number of outstanding shares, or to
have an inventory of shares for potential acquisitions. In this case, the company holds
67,614,089 treasury shares, which means they are not counted as part of the outstanding
shares in the market. The number of shareholders without considering treasury shares has
increased from 320 in 2020 to 323 in 2021. Among these shareholders, 286 individuals
hold at least 100 shares each of the company's common shares. The presence of treasury
shares can have an impact on the company's ownership structure and voting power, as
they represent shares held by the company itself and not by external investors.

The choice of the corporation to keep treasury shares is a sign of a smart financial
move to manage the equity structure and preserve capital management flexibility.
Depending on the company's future objectives and financial requirements, treasury shares
may be retired or reissued to the general public. The corporation can better manage its
ownership and react to anticipated market volatility by repurchasing shares. The growt h in
shareholders holding at least 100 shares shows how appealing the company is to individual
investors and exhibits investor confidence in the company's performance and future
prospects. Overall, the information on the share capital and treasury shares offers
insightful information about the company's financial plan, ownership structure, and efforts
to maximize shareholder value.