Philippines: SM Investments Corporation approves merger of SM Retail Inc. with several related retail companies

Pasay City, Philippines, 2016-Feb-29 — /EPR Retail News/ — Today the Board of Directors of SM Investments Corporation (SM) approved the merger of its retail arm, SM Retail Inc. (SM Retail) with several related retail companies.

The related companies operate leading local retail chains including Ace Hardware, SM Appliance Center, Homeworld, Our Home, Toy Kingdom, Watsons, Kultura, Baby Company, Sports Station and several other specialty stores. Together they operate 1,374 outlets and in 2015 delivered total revenues of PHP 53 billion.

The merger will complement the existing retail portfolio of SM Retail Inc., which includes 53 SM department stores, 44 hypermarkets and 213 supermarkets as well as majority stakes in the local operations of Alfamart, Forever21, Crate & Barrel and other specialty and apparel retailers in addition to a minority stake in Uniqlo.

The combined entity will have 1,927 outlets and 2.4 million sqm of gross floor area across a diverse portfolio of food, household appliances, DIY, furniture, apparel, footwear, pharmaceuticals/cosmetics and specialty retailing stores. The portfolio will serve a wide range of Filipino consumer needs in both staple and discretionary goods categories and will continue to leverage extensive synergies across the SM group.

Post-merger, SM will own 77.3% of the enlarged SM Retail Inc.

“The merger adds both greater diversity and a more extensive footprint to SM Retail’s portfolio and is consistent with our goal of simplifying our corporate structure. It is similar to the consolidation we undertook in 2013 to create our large-scale, mixed-use property business. As a result, SM Retail will be even better positioned to address the growing needs of Filipino consumers and we expect the merger to be accretive to SM Retail earnings in future years,” said Harley Sy, President of SM.

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About SM Investments Corporation
SM Investments Corporation, founded by entrepreneur Henry Sy, Sr. is the country’s largest publicly listed holding company with a sustainable group of businesses that thrives on leadership, innovation and the synergies of its banking, property and retail operations. SM has evolved into one of the most highly respected companies in the country owing to its progressive approach in business and its comprehensive sustainability programs for its host communities through SM Foundation and SM Cares.

SM’s retail operations enjoy a strong brand franchise consisting of non-food under THE SM STORE and food under SM Markets consisting of SM Supermarket, SM Hypermarket, and Savemore as well as Waltermart and Alfamart stores. SM’s property arm, SM Prime Holdings, Inc., is among the largest integrated property developers in the Philippines with interests in malls, residences, offices, hotels and convention centers as well as tourism-related property development. SM’s interests in banking are in BDO Unibank, Inc. (BDO), the country’s largest and in China Banking Corporation (China Bank), the fifth largest private bank. Combined, these two banks have a network of over 1,000 branches nationwide.

For further information, please contact:

Ms. Corazon P. Guidote
Senior Vice President for Investor Relations
SM Investments Corporation
E-mail: cora.guidote@sminvestments.com
Tel. No. (632) 857-0117
www.sminvestments.com

SM Retail Inc. now with 50 stores across Philippines with the recent opening of The SM Store Megacenter in Cabanatuan, Nueva Ecija

Pasay City, Philippines, 2015-3-13 — /EPR Retail News/ — From SM’s first ShoeMart store in Carriedo, Manila, SM Retail Inc. has grown its department store business, now known as The SM Store, to 50 branches nationwide, making it a market leader in the Philippines with strong brand loyalty that has built and nurtured memories across generations.

“The SM Store has gone a long way from just selling shoes. It has evolved into providing the widest array of products and services than any other store in the country today, offering the greatest convenience through our financial services, and most exciting shopping experience for our customers. We take pride in The SM Store’s commitment in staying true to our slogan of ‘We’ve Got It All for You’,” SM Retail President Jorge Mendiola said.

The recent opening of The SM Store Megacenter in Cabanatuan, Nueva Ecija, the 50th store in the Philippines, and 21st store in Luzon, marked a milestone that brings the SM Store’s total footprint to 669,658 square meters in terms of gross selling area. The SM Store Megacenter consists of two levels, showcasing Shoes and LuggagesLadies WearMen’s WearChildren’s WearHome Items and Appliances.

Henry Sy, Sr. built his first shoe store in Quiapo in 1948 and later opened two more outlets namely Plaza, Paris and Park Avenue stores. Ten years later, Sy consolidated his holdings in the three stores and built a bigger shoe store in 1958 in Carriedo and named it ShoeMart.

From approximately annual sales of 200,000 pairs of shoes when the store in Carriedo made an indelible mark in the shoe business, the SM Store now sells millions of shoes every year, having sold 24.3 million pairs of footwear in 2014 alone.

Sy once said: “When I began selling shoes in Manila right after the Second World War, I thought then that if I sold a pair of shoes to every Filipino, even with very low margins, I would be a successful businessman.”

True enough today, The SM Store, has been redefining the customer shopping experience in the Philippines. Its exciting array of merchandise from fashion to home furnishings is complemented by inspired and aspirational store designs that likewise offer convenience and accessibility.

The SM Store has changed the business landscape of retailing by further enhancing customer experience through added services such as bills payments, concert ticket sales, and government requirements. For frequent shoppers, SM Stores have Prestige Lounges where valet shopping, priority fitting rooms and concierge services are offered. Concierge services include gift wrapping, bills payment and other member-related services.

The SM Store has served more than three generations of loyal customers who keep coming back due to the convenience and affordability offered by the department store. The SM Store also continues to set the benchmark in diversity, style, and store design and layout, expanding now into emerging regional centers in the country. It continues to lead the way in customer service, enhancing lifestyles and providing a refined luxury customer experience.

For further information, please contact:

Ms. Quennielyn G. Cua
VP – Marketing Management
SM Retail
Email: quennielyn.g.cua@smretail.com
Office:   831-8000 loc 84304

Ms. Corazon P. Guidote
Senior Vice President for Investor Relations
SM Investments Corporation
E-mail: cora.guidote@sminvestments.com
Tel. No. 857-0117

SM Investments Corporation (SM) reports 14.4% increase in recurring net income

Pasay City, Philippines, 2015-3-5 — /EPR Retail News/ — SM Investments Corporation (SM) reported a record net income in 2014 of PHP28.4 billion. Excluding extraordinary items, recurring net income grew 14.4%.

SM’s underlying earnings growth was mainly driven by BDO Unibank, Inc., which posted a core income growth of 18%. Together with China Banking Corporation, banks accounted for 41% of SM’s consolidated net income in 2014. Property contributed 38% and retail 21%.

The record 2014 consolidated net income of PHP28.4 billion compares with PHP27.4 billion in 2013. These include exceptional items such as trading gains from the group’s banking businesses.

Consolidated revenues grew 9% to PHP275.7 billion in 2014 from PHP253.3 billion in 2013. This was the result of a good retail sales environment which also boosted rental revenues in SM’s property business.

The total assets of SM grew 12% in the past year to PHP711.9 billion. SM maintains a very healthy balance sheet with a conservative gearing ratio of 34% net debt to 66% equity.

SM raised PHP15 billion in May 2014 from a public offer of peso-denominated retail bonds with maturities of 7 and 10 years. The SM bonds were rated Aaa by Philippine Rating Services Corporation, the highest rating assigned by the credit rating firm.

In June 2014, SM issued a USD350 million 10-year senior unsecured bond at a fixed rate of 4.875% per annum, a landmark transaction marking the longest-dated USD bond issued by SM and the company’s fourth USD bond issuance since 2009. The issuance earned SM the Region’s Best Borrower Award from Hong Kong publication Finance Asia.

“The group’s strong underlying earnings growth of 14.4% in 2014 was the result of solid performance and ongoing expansion in all our three core businesses. During the year we raised additional capital and entered into several strong partnerships, accelerating our investments for growth and ensuring we expand in line with our continuing optimism about the economic prospects of the Philippines,” SM President Harley T. Sy said.

Banking
BDO Unibank, Inc. (BDO) recorded net income attributable to equity holders of the parent of PHP22.8 billion compared with PHP22.6 billion in 2014. BDO’s recurring income grew 18%, excluding one-off trading gains in 2013.

Net interest income grew 19% to PHP51.2 billion in 2014, mainly due to 20% growth in the bank’s customer loan business to PHP1.1 trillion. Meanwhile, total deposits registered PHP1.5 trillion, 11% higher than the previous year.

BDO’s total capital adequacy ratio (CAR) of 14.4% and common equity tier 1 (CET 1) ratio of 12.4% remain well above the Basel III regulatory minimums of 10% and 6% respectively.

BDO continues to be the largest bank in the Philippines in terms of total resources, loans and deposits and is the leader in investment and private banking.

Meanwhile, China Banking Corporation (China Bank) posted a full year consolidated net income of P5.11 billion in 2014 on the back of sustained growth in core business operations. This translates to a return on equity of 9.90% and return on assets of 1.12%.

China Bank’s net interest income grew 42% to P14.09 billion, largely due to earnings from loans and receivables. Total operating income reached P18.85 billion, up 25%.

Property
SM also drew strength from its property operations through SM Prime Holdings, Inc. which registered consolidated net income of PHP18.4 billion in 2014, up 13% on revenue growth of 11% to PHP66.2 billion.

SM Prime’s rental revenues rose 13% to PHP36.5 billion from PHP32.2 billion in 2013, mainly from new malls openings and expansions in 2013 and 2014, together with sustained same-store rental growth of 7%. SM Prime’s housing group recorded a 7% increase in real estate sales in 2014 to PHP22.2 billion, with reservation sales increasing 36.5% to PHP35.9 billion. Mall cinemas generated ticket sales of PHP4.3 billion, an increase of 14% during the period under review.

2014 marked a significant milestone as SM Prime opened its 50th mall in Angono, Rizal province, bringing its total gross floor area to 6.5 million sqm. SM Megamall became the country’s largest mall with a gross floor area of 484,373 sqm after opening its 101,005 sqm Mega Fashion Hall.

SM Prime continued its successful development of malls in China and plans to open one mall per year going forward. SM Prime’s sixth mall in China will be in Zibo, Shandong Province and its largest mall, spanning 540,000 sqm, will open in the Tianjin Binhai New Area. Currently SM Prime operates five malls in China with a total gross floor area of almost 800,000 sqm.

Retail Operations
Its retail operations under SM Retail Inc. sustained its growth with net income increasing by 3.3% to PHP5.9 billion while total sales rose 9.0% to PHP197.1 billion.

SM’s food retail business continued to expand in both urban and rural communities, adding 28 new stores in various parts of Luzon, Visayas and Mindanao. SM Retail forged strong partnerships with local and foreign players to accelerate its expansion program, growing its community mall supermarket presence through relationships with CityMalls and WalterMart and developing small format mini-marts in conjunction with Alfamart.

In the department store business, the SM Store added new locations in Cauayan, Isabela and Cabanatuan, Nueva Ecija. The SM Store continued to innovate and enhance its store layout and design and to introduce new brands to its merchandise mix. In the last few years, SM has introduced fashion brands such as Forever 21, Uniqlo, Sfera, Suite Blanco, Josef and other lifestyle brands such as Uno de 50 and Crate and Barrel.

At end 2014, SM Retail had a total of 269 stores, comprising 50 SM Stores, 40 SM Supermarkets, 42 SM Hypermarkets, 113 Savemore stores and 24 WalterMart stores.

About SM Investments Corporation
SM Investments Corporation (SM) is one of the leading conglomerates in the Philippines with highly synergistic businesses in retail, banking and property development. SM has evolved into one of the most highly respected companies in the country owing to its progressive approach in business and its comprehensive sustainability programs for its host communities through SM Foundation and SM Cares.

SM’s retail operations enjoy a strong brand franchise consisting of The SM Store and its food retail chains namely SM Supermarket, SM Hypermarket, Savemore and WalterMart stores. SM’s property arm, SM Prime Holdings, Inc., is among the largest integrated property developers in the Philippines with interests in mall, residential, commercial and tourism development. SM’s interests in banking are in BDO Unibank, Inc. (BDO), the country’s largest and in China Banking Corporation (China Bank), the fifth largest. Combined, these two banks have a network of over 1,000 branches nationwide.

For further information, please contact:
Ms. Corazon P. Guidote
Senior Vice President for Investor Relations
SM Investments Corporation
E-mail: cora.guidote@sminvestments.com
Tel. No. (632) 857-0117
www.sminvestments.com