Description of the account based on the San Miguel Corporation 

The carrying amount of loans payable and accounts payable and accrued expenses
approximates fair value due to the relatively short-term maturities of these financial instruments.

Interpretation/Conclusion

Loans payable represent unsecured peso-denominated loans obtained from local banks
amounting to P23,950 and P44,750 as of December 31, 2020, and 2019, respectively. Interest
rates for peso-denominated loans range from 3.00% to 3.50% and 4.95% to 5.625% in 2020 and
2019, respectively. 

Presentation and disclosure

The net defined benefit retirement liability or asset is the aggregate of the present value of the
amount of future benefit that employees have earned in return for their service in the current and
prior periods, reduced by the fair value of plan assets (if any), adjusted for any effect of limiting
a net defined benefit asset to the asset ceiling. The asset ceiling is the present value of economic
benefits available in the form of reductions in future contributions to the plan. The cost of
providing benefits under the defined benefit retirement plan is actuarially determined using the
projected unit credit method. Projected unit credit method reflects services rendered by
employees to the date of valuation and incorporates assumptions concerning projected salaries of
employees. Actuarial gains and losses are recognized in full in the period in which they occur in
other comprehensive income. Such actuarial gains and losses are also immediately recognized in
equity and are not reclassified to profit or loss in subsequent period.

Defined benefit costs comprise the following:

 Service costs;

 Net interest on the defined benefit retirement liability or asset; and

 Remeasurements of defined benefit retirement liability or asset.

Service costs which include current service costs, past service costs and gains or losses on non-
routine settlements are recognized as expense in the consolidated statements of income. Past
service costs are recognized when plan amendment or curtailment occurs. These amounts are
calculated periodically by independent qualified actuary.

Net interest on the net defined benefit retirement liability or asset is the change during the period
as a result of contributions and benefit payments, which is determined by applying the discount
rate based on the government bonds to the net defined benefit retirement liability or asset. Net
interest on the net defined benefit retirement liability or asset is recognized as expense or income
in the consolidated statements of income.
Remeasurements of net defined benefit retirement liability or asset comprising actuarial gains
and losses, return on plan assets, and any change in the effect of the asset ceiling (excluding net
interest) are recognized immediately in other comprehensive income in the period in which they
arise. Remeasurements are not reclassified to consolidated statements of income in subsequent
periods.

When the benefits of a plan are changed, or when a plan is curtailed, the resulting change in
benefit that relates to past service or the gain or loss on curtailment is recognized immediately in
the consolidated statements of income. The Group recognizes gains and losseson the settlement
of a defined benefit retirement plan when the settlement occurs.

A deferred income is the Group’s obligation to transfer goods or services to a customer for
which the Group has received consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the Group transfers goods or services to the
customer, a deferred income is recognized when the payment is made or the payment is due
(whichever is earlier). Deferred income is recognized as revenue when the Group performs under
the contract.

Redeemable Preferred Shares. These represent the preferred shares of TADHC issued in 2010.
The preferred shares are cumulative, non-voting, redeemable and with liquidation preference.
The shares are preferred as to dividends, which are given in the form of coupons, at the rate of
90% of the applicable base rate (i.e., one year Bloomberg Valuation or BVAL). The dividends
are cumulative from and after the date of issue of the preferred shares, whether or not in any
period the amount is retained earnings.

Classification of Redeemable Preferred Shares. Based on the features of the preferred shares of
TADHC, particularly on mandatory redemption, management determined that the shares are, in
substance, financial liabilities. Accordingly, these were classified as part of ‘’Accounts payable
and accrued expenses” account and “Other noncurrent liabilities” account in the consolidated
statements of financial position as at December 31, 2020 and 2019, respectively

The preferred shares are required to be redeemed at the end of the 10-year period from and after
the issuance of the preferred shares by paying the principal amount, plus all unpaid coupons (at
the sole option of TADHC, the preferred shares may be redeemed earlier in whole or in part).

In the event of liquidation, dissolution, bankruptcy or winding up of the affairs of TADHC, the
holders of the preferred shares are entitled to be paid in full, an amount equivalent to the issue
price of such preferred shares plus all accumulated and unpaid dividends up to the current
dividend period or proportionately to the extent of the remaining assets of TADHC, before any
assets of TADHC will be paid or distributed to the holders of the common shares.

As at December 31, 2020, the preferred shares remain outstanding as other requirements prior to
redemption are pending from the shareholder.

“Others” include accruals for materials, repairs and maintenance, advertising, handling,
contracted labor, supplies and various other payables.
The methods and assumptions used to estimate the fair value of derivative liabilities are
discussed in Note 40.

CONCLUSION
The Group’s revenue contracted by 18.5% to ₱28,404 million in the first quarter of 2020
compared to the same period last year mainly due to the decline in sales volume net of the effect
of the price increase on the Company’s beer products implemented on March 1, 2020. The
decrease in sales volume is mainly due to the liquor ban imposed in the Philippines by local
government units and the total lockdowns in some areas of both domestic and international
operations as part of the measures to contain the COVID-19 pandemic which resulted to a
decrease in demand for beer products. Domestic operations contributed ₱25,752 million while
international operations contributed US$52.3 million or ₱2,656 million.

Consolidated net income lagged behind the ₱6,747 million net income reported for the same
period last year by 44.1% due to the economic slowdown brought about by the COVID 19
pandemic, ending the first quarter at ₱3,770 million. Domestic operations contributed ₱3,469
million while international operations contributed US$5.9 million or ₱301 million

After analyzing the liability section under the Statement of Financial Position of San Miguel
Corporation, our group concluded that the San Miguel Corporation presented its financial
statement and accounts in compliance with Philippine Financial Reporting Standards (PFRS)
including Philippine Accounting Standard (PAS). 

   After the Evaluation, we conclude that the Current Liabilities of San Miguel Corporation  is
decreasing over a period of time that means they settled  for their current liabilities while, the
Non Current liabilities still increasing .

The Group prepared its interim consolidated financial statements as of and for the period ended
March 31, 2020 and comparative financial statements for the same period in 2019 following the
new presentation rules under Philippine Accounting Standard (PAS) No. 34, Interim Financial
Reporting. The consolidated financial statements of the Group have been prepared in compliance
with Philippine Financial Reporting Standards (PFRS).
Adoption of New and Amended Standards and Framework The Financial Reporting Standards
Council (FRSC) approved the adoption of a number of new and amended standards and
framework as part of PFRS. New and Amended Standards and Framework Adopted in 2020 The
Group has adopted the following PFRS effective January 1, 2020 and accordingly, changed its
accounting policies in the following areas:
Amendments to References to Conceptual Framework in PFRS sets out amendments to PFRS,
their accompanying documents and PFRS practice statements to reflect the issuance of the
revised Conceptual Framework for Financial Reporting in 2018 (2018 Conceptual Framework).
The 2018 Conceptual Framework includes: (a) a new chapter on measurement; (b) guidance on
reporting financial performance; (c) improved definitions of an asset and a liability, and guidance
supporting these definitions; and (d) clarifications in important areas, such as the roles of
stewardship, prudence and measurement uncertainty in financial reporting. Some standards, their
accompanying documents and PFRS practice statements contain references to, or quotations
from, the International Accounting Standards Committee (IASC)'s Framework for the
Preparation and Presentation of Financial Statements adopted by the IASB in 2001 or the
Conceptual Framework for Financial Reporting issued in 2010. The amendments update some of
those references and quotations so that they refer to the 2018 Conceptual Framework, and makes
other amendments to clarify which version of the Conceptual Framework is referred to in
particular documents.

Definition of a Business (Amendments to PFRS 3, Business Combinations). The amendments

narrowed and clarified the definition of a business. The amendments also permit a simplified
assessment of whether an acquired set of activities and assets is a group of assets rather than a
business.

Definition of Material (Amendments to PAS 1, Presentation of Financial Statements and PAS 8,

Accounting Policies, Changes in Accounting Estimates and Errors). The amendments refine the
definition of what is considered material. The amended definition of what is considered material
states that such information is material if omitting, misstating or obscuring it could reasonably be
expected to influence the decisions that the primary users of general purpose financial statements
make on the basis of those financial statements, which provide financial information about a
specific reporting entity. The amendments clarify the definition of what is considered material
and its application by: (a) raising the threshold at which information becomes material by
replacing the term ‘could influence’ with ‘could reasonably be expected to influence’; (b)
including the concept of ‘obscuring information’ alongside the concept of ‘omitting’ and
‘misstating’ information in the definition; (c) clarifying that the users to which the definition
refers are the primary users of general purpose financial statements referred to in the Conceptual
Framework; (d) clarifying the explanatory paragraphs accompanying the definition; and (e)
aligning the wording of the definition of what is considered material across PFRS and other
publications. The amendments are expected to help entities make better materiality judgments
without substantively changing existing requirements.
Interest Rate Benchmark Reform (Amendments to PFRS 9, PAS 39, Financial Instruments:
Recognition and Measurement and PFRS 7, Financial Instruments: Disclosures). The
amendments provide temporary exceptions to all hedging relationships directly affected by
interest rate benchmark reform - the market-wide reform of an interest rate benchmark, including
the replacement of an interest rate benchmark with an alternative benchmark rate such as that
resulting from the recommendations set out in the Financial Stability Board's July 2014 report
'Reforming Major Interest Rate Benchmarks'.