ana ANNEX “B” Manabat Sanagustin& Co. Teiapnone +63 (1985-7000 Certtied Public acouriants Fax +63 21894 1985, Te KeMG Coot leer Wyeckema.coman 5767 Aye Avene EMail meolagiongcom oh aay Ci 1228 Moyo Mania. Prosines Biarehee- Svb¢ Cebu decode REPORT ON INDEPENDENT AUDITORS ‘The Board of Directors and Stockholders Petron Corporation and Subsidiaries SMC Head Office Complex 40 San Miguel Avenue Mandaluyong City We have audited in accordance with Philippine Standards on Auditing, the consolidated financial statements of Petron Corporation (the “Group”) and Subsidiaries as at and for the year ended December 31, 2011, and have issued our report thereon dated March 7, 2012. (Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken asa whole. The accompanying Schedule of Reconciliation of Retained Eamings Availhble for Dividend Declaration, Tabular Schedule of Philippine Financial Reporting ‘Standards, Supplementary Schedules (A-H) and Map of the Conglomerate within which the Group belongs as at December 31, 2011, presented as attachments to the audited consolidated financial statements of the Group, aro the responsibility of the Group's management. ‘These schedules are presented for purposes of complying with Securities and Exchange Commission ‘Memorandum Circular No. 11, Series of 2008, Guidelines on the Determination of Retained Earnings Available for Dividend Declaration and Securities Regulation Code Rule 68, As Amended, and are not part of the consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit ofthe consolidated financial statements and, in our opinion, fairly state in all material respects, the financial statements data required to be set forth therein in relation to the consolidated financial statements taken as a whole. -MANABAT SANAGUSTIN & CO,, CPAs JORGE MA, S. SANAGUSTIN Partner CPA License No, 0030399 SEC Accreditation No. 0026-AR;3, Group A, valid until January 4, 2015 ‘Tax Identification No, 124-282-616 BIR Accreditation No, 08-001987-7-2010 Issued June 30, 2010; vatid until une 29, 2013 PTR No, 3174027MA Issued January 2, 2012 at Makati City March 7, 2012 Makati City, Metro Marita Manabe! Sinagustin & Co, cred eu accountants, 2 prlessons! gertnersbip {esiotishod under Pippin iwi emb oftha KPMG network of hdepencont ‘abe frm that vn KPLASInerrtion » Ses cooperateCERTIFICATION CORPORATION (hereinafter referred to as the “Corporation”), a corporatidn duly organized and existing under Philippine iaws with principal office address at San Miguel Corp. Head Office Complex, 40 San Miguel Ave., Mandaluyong City, 1550. HEREBY CERTIFIES AND STATES THAT 1, Pursuant to SEC Memorandum Circular 06 Series of 2006, a computer CD is submitted herewith, 2, The said computer CD contains the basic and material data in the Corporation's Audited Financial Statements for 2011 3. This Certification is hereby submitted conformably 10 SEC’s reportorial requirements and for whatever legal purpose it may serve. DONE this 7th day of March 2012 at Ortigas, Mandaluyong City, Metro Manila, Philippines: EFREN P/ GABRILLO Asst. Vice President - Controllers SUBSCRIBED AND SWORN 70 before me, a Notary Pyblic for and in the City of Mandaluyong, Metro Manila, this APR 10 2012, affiant bef me and signed this instrument in my preseace and avowed unt whole truth of contents thereof. Doc. No. 63_; : a PageNo. 4; ssa een Ea ‘ (18 No, 2965492 1.2013 Mandaluyong iy Book No, 1; TBP LAN 07086 1.708 ecty Series of 2012 Wo: Atorsey Ko aia EivratieryPETRON CORPORATION AND SUBSIDIARIES INDEX TO SUPPLEMENTARY SCHEDULES DECEMBER31, 2011 Statement of Management's Responsibi for the Consolidated Financial Statements Independent Auditor’s Report on the SEC Supplementary Schedules Filed Separately from the Basic Consolidated Financial Statements Supplementary Schedules to Consolidated Financial Statements Page No. ‘A. Financial Assets i B. Amounts Receivable from Directors, Officers, Employees, Related NAT Parties, and Prineipal Stockholders C. Amounts Receivable from Related Parties which are Eliminated during 2 the Consolidation of Financial Statements 1D, _ Intangible Assets — Other Assets 3 E,Long-term Debt 4 F, Indebtedness to Related Parties NA‘ G. Guaraniees of Securities of Other Issuers NA H. Capital Stock $ Map of the Conglomerate within which the Group belongs 6 ‘Tabular Schedule of Philippine Financial Reporting Standards 7 Balance of acount i ters tha 1% af the ttl assets of the Campany and no individual significant advances ver P100.000 **Bolanceofaccoun is es than 5% ofthe total asset ofthe Company Supplementary Schedule to Parent Financial Statements Reponciliation of Parent Company’s Retained Eamings for F Dividend DeclarationPETRON CORPORATION AND SUBSIDIARIES ‘SCHEDULE A - FINANCIAL ASSETS DECEMBER 31, 2011 (Amounts in Millions, except No. of Shares Data) Amount Value Based Number of shares ‘Shown in the ‘on Market, come Name of issuing Entity / or Principal Amount Statements of ‘Quotations at Feceived Description of Each Issue of Bonds and Notes__Financial Position _Dec. 31, 2011_ _and Accrued Cash and cash equivalents e e 23,623 B 23,823 BR 342 Trade and other receivables - net 26,605, 26,605 7% Noncurrent receivables and deposits - net 23,787 23,787 927 ® 8 Ta2is PF 7a2i5_P T7345PETRON CORPORATION AND SUBSIDIARIES ‘SCHEDULE C - AMOUNTS RECEIVABLE FROM RELATED PARTIES WHICH ARE ELIMINATED ‘DURING THE CONSOLIDATION OF FINANCIAL STATEMENTS BEGINNING. AMOUNTS AMOUNTS. ENDING NAME OF RELATED PARTY BALANCE ADDITIONS COLLECTED _WRITTENOFF __TOTAL CURRENT, NONCURRERT __BALANCE. Puc 58 P 303 P . we P a2 P P 2 PEC a 590 62 82 22 PSTPL 2578 porate a 10.465 10.485. 10485 PETROGEN 5 ‘4 4 4 1594 2284 2.204 2284PETRON CORPORATION AND SUBSIDIARIES SCHEDULE D. INTANGIBLE ASSETS ~ OTHER ASSETS DECEMBER 31, 2011 (Amounts in Millions) Other changes Charged to cost additions and expenses (deductions) { | Ending balance Franchise Fee: Cost P 17P 1P -P -P -P 1B Less amortization for the yearPETRON CORPORATION AND SUBSIDIARIES ‘SCHEDULE £ - LONG-TERM DEBT DECEMBER 31, 2014 {Amounts in Millions) Amount Number Omstaning —Shownas Caron Periodic, Fina TITLE OF ISSUE. AGENT / LENDER, em Current and Long-term. INTEREST RATES Installments Maturity Unsere tem ot Pass sovonaias Fe MeTonleeannear etapa iP ne 18 972% Januant2 Fed eee 2583 Gu21d% and 72807% pe. oust Fed 2 aunt Managua ad Tat Group Siri stem Fred Spl ancetNanegeret and feo 3 oes Does Bart a angeong ranch ers Soon eer Fsting Deelpant ark ofthe Pines ia ato ait et Mt SA pas raga anortzed —ecenber3 Fors sunncy donna Danas Subst rising nodeuseneLncesbrkGiarenale 1208 =. 11880 BOR pus agreed margin Aor June Patna Scars ChoterodBanetMongtons)_260? os Sits Lieor pucanreed'vatn «Saran! Yovenbar12 ser ait 28s Total Longsurm Dob > mare p__ aaa pantsPETRON CORPORATION AND SUBSIDIARIES. ‘SCHEDULE H. CAPITAL STOCK DECEMBER 31, 2011 T ‘Number of —[~ Number of shares issued and | shares reserved Tikleoftesue | Number of Shares | outstandingat | foroptions, | Numberofsharesheld by | Direcorsand | Gaere " ‘Authorized shown under | warrants, related parties officers | conversion and other Fights Prefered C4955 Rot applicable stock | ‘Common | 9375, 104497 Notapplieable RoI ATTA stock:« x 5, Petron Singapore Trading Pte. Ltd, (PSTPL) is a corporation established under the laws of Singapore 24.28% PETRON, SUBSIDIARIES & AFFILIATES GROUP STRUCTURE {as of Dec. 31, 2011) San Miguel Corporation (SMC) directly and indirectly ownes 68.26% common shares of Petron The Petron Corporation Employees Retirement Plan (PCERP) owns 24.28% shares of Petron SEA Refinery Corporation (SIC) controls 50.10% af Petron and is 100% owned by SMC Petrogen, Petron Freeport, Petron Marketing and Petron Foundation are domestic corporations. wholly-owned by Petron (Overseas Ventures Insurance Corporation (QVINCOR} is a corporation established under the laws of Bermuda Limay Energen Corporation (LEC) és 40% owned by Petron New Ventures Realty Corporation (NVRC} is 40% owned by Petron; the company controls Las Lucas Construction & Development Corporation9, Manila North Harbor Ports inc. (MNHPI) is 35% owned by Petron 10. Pandacan Depot Services in. [PSI is @ joint venture of Petron, Shell and Chewon ‘ML. Petrochemical Asia (HK) Ltd. (PAHL Is 22.7% controlled by Petron; PAHL wholly controls Robinsons International Holdings Inc. (RIHi} and indirectly controls Phil pine Polypropylene Inc, {PPI} and Mariveles Landea Corporation (MLC)Petron Corporation and Subsidiaries TABULAR SCHEDULE OF PERS AS AT DECEMBER 31, 2013 ‘Standards “Adopted”, “Not adopted” or “Not ie Financial Reporting Standards (PFRSs) PFRS 1 First-time Adoption of Philippine Financial Reporting Standards PERS 2 Share-based Payment PERS 3 Business Combinations PERS 4 insurance Contracts ‘PERS 5 Non-current Assets Held for Sale and Discontinued Operations PFRS 6 Exploration for arid Evaluation of Mineral Resources PERS 7 Financial Ingiruments, Disclosures PERS 8 Operating Segments Not applicabie ‘Adopted ‘Adopted Philippine Accounting Standards (PASs) PAS 1 Presentation of Financial Statements PAS 2 Inventories PAS 7 Statement of Cash Flows PAS 6 Accounting Policies, Changes in Accounting Estimates and Errors PAS 40 Events after the Reporting Period PAS 11 Construction Contracts PAS 12 Income Taxes PAS 16 Property, Plant and Equipment PAS 17 Leases PAS 18 Revenue PAS 19 Employes Benefits PAS 20 Accounting for Government Grants and Disclosure of Government Assistance PAS 21 The Effects of Changes in Foreign Exchange Rates. PAS 23 Borrowing Cosis, PAS 24 Relaied Parly Disclosures PAS 26 Accounting and Reporting by Retirement Benefit Plans PAS 27 Consolidated and Separate Financial Statements ‘Adopted Adopted ‘Adopted ‘Adopted ‘Adopted ‘Wot applicable ‘Adopted Adopted. ‘Adopted ‘Adopted, ‘Adopted Not applicable ‘Adopted Adopted ‘Adopted. ‘Adopted ‘Adopled PAS 28 Investments in Associates PAS 29 Financial Reporting in Hypernfiationary Economies PAS 31 interests in Joint Venture: PAS 32. Financial Instruments: Presentation PAS 33 Earnings per Share PAS 34 Interim Financial Reporting PAS 36 Impairment of Assets PAS 37 Provisions, Contingent Liabilities and Gontingent Assets ‘PAS 38 Intangible Assets PAS 39 Financial Instruments: Recognition and Measurement PAS 40 Investment Proper griculture, ‘Adopied Not applicable ‘Adopted ‘Adopted ‘Adopted ‘Adopted Adopted ‘Adopted ‘Adopted ‘Adopted Adopiod Not applicablePETRON CORPORATION SMC Head Office Complex 40 San Miguel Avenue, Mandaluyong City ‘SCHEDULE OF RECONCILIATION OF RETAINED EARNINGS. AVAILABLE FOR DIVIDEND DECLARATION {Amounts in Thousand Pesos) Unappropriated Retained Earnings, as adjusted t0 ‘available for dividend distribution, beginning Add: Net income actual earned/realized during the period Net income during the period closed (o Retained Earnings __P7,956,930 Less: Non-actual/unrealized income Equity in net income of associate/joint venture Unrealized foreign exchange gain - net (except those attributable to Cash and Cash Equivalents) Unrealized actuarial gain Recognized deferred tax assets Pair value adjustment on PVPL finan: Fair value adjustments on derivatives Fair value adjustments on Investment Property resulting to gain Adjustment due to deviation from PFRS/GAAP — gain Otiter unrealized gains or adjustments to the retained earnings as a result of certain transactions accounted for under the PERS Sub-total assets Add: Non-actual losses Depreciation on revaluation increment (after tax) Adjustment duc to deviation from PERS/GAAP ~ loss Loss on fair value adjustment of investment property (afler tax) Net income actually earned during the period Add (Less): Dividend declarations during the period Appropriations of Retained Earnings during the period Reversals of appropriations flocts of prior period adjustments ‘Treasury shares (Figures based on audited! financial statements) P12,970,287 7,956,313, 7,956,313 7.956313 2,128,510) (9,628,000) (1,756,510) (11,756,519) TOTAL RETAINED EARNINGS, END AVAILABLE FOR DIVIDEND, 19,170,090