COVER SHEET SEC Registration Number 1 6 3 4 2 Company Name S M I N V E S T M E N T S C O R P O R A T I O N A N D S U B S I D I A R I E S Principal Office (No./Street/Barangay/City/Town/Province) 1 0 t h F l o o r , O n e E - C o m C e n t e r , H a r b o r D r i v e , M a l l o f A s i a C o m p l e x , C B P - 1 A , P a s a y C i t y 1 3 0 0 Form Type Department requiring the report Secondary License Type, If Applicable 1 7 - A COMPANY INFORMATION Company’s Email Address Company’s Telephone Number/s Mobile Number – 8857-0100 – Annual Meeting Fiscal Year No. of Stockholders Month/Day Month/Day 1,260 (as of March 31, 2021) 04/28 12/31 CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Number/s Mobile Number Mr. Frederic C. DyBuncio – 8857-0100 – Contact Person’s Address th 10 Floor, One E-Com Center, Harbor Drive, Mall of Asia Complex, CBP-1A, Pasay City 1300 Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. SEC Number 16342 SM INVESTMENTS CORPORATION (Company’s Full Name) 10th Floor, One E-Com Center, Harbor Drive, Mall of Asia Complex, CBP-1A Pasay City, 1300 (Company’s Address) 8857-0100 (Telephone Number) December 31 (Year Ending) (month & day) SEC Form 17-A Annual Report Form Type Amendment Designation (If applicable) December 31, 2020 Period Ended Date (Secondary License Type and File Number) SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A, AS AMENDED ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES 1. For the fiscal year ended December 31, 2020 2. SEC Identification Number 0000016342 3. BIR Tax Identification No. 169-020-000 4. Exact name of registrant as specified in its charter SM INVESTMENTS CORPORATION 5. PHILIPPINES 6. (SEC Use Only) Province, Country or other jurisdiction of Industry Classification Code: incorporation or organization 7. 10th Floor, One E-Com Center, Harbor Drive, Mall of Asia Complex, CBP-1A, Pasay City 1300 Address of principal office Postal Code 8. (632) 8857-0100 / fax (632) 8857-0132 Registrant's telephone number, including area code 9. ________________________________________________________________ Former name, former address, and former fiscal year, if changed since last report. 10. Securities registered pursuant to Sections 4 and 8 of the RSA Number of Shares of Common Stock Title of Each Class Outstanding and Amount of Debt Outstanding COMMON SHARES, P 10 PAR VALUE 1,204,582,867 11. Are any or all of these securities listed on a Stock Exchange. Yes [X] No [ ] If yes, state the name of such stock exchange and the classes of securities listed therein: Philippine Stock Exchange, 1,204,582,867, P10 par value, common shares 12. Check whether the registrant: (a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); Yes [X] No [ ] (b) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 13. Aggregate market value of the voting stock held by non-affiliates: P611,510,686,533.00 as of December 31, 2020 TABLE OF CONTENTS Page No. PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business 1 Item 2. Properties 6 Item 3. Legal Proceedings 7 Item 4. Submission of Matters to a Vote of Security Holders 7 PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters 8 Item 6. Management’s Discussion and Analysis or Plan of Operation 10 Item 7. Financial Statements 35 Item 8. Changes in and Disagreements with Accountants and Financial Disclosure 35 PART III - CONTROL AND COMPENSATION INFORMATION Item 9. Directors and Executive Officers of the Registrant 37 Item 10. Executive Compensation 46 Item 11. Security Ownership of Certain Beneficial Owners and Management 49 Item 12. Certain Relationships and Related Transactions 50 PART IV – CORPORATE GOVERNANCE Item 13. Corporate Governance 51 PART V - EXHIBITS AND SCHEDULES Item 14. a. Exhibits 53 b. Reports on SEC Form 17-C (Current Report) 53 c. Sustainability Report 53 INDEX TO EXHIBITS 54 INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES 54 SIGNATURES PART I - BUSINESS AND GENERAL INFORMATION ITEM 1. Business SM Investments Corporation (“SMIC”) is the holding company of the SM Group with interests in Retail, Property and Banking. Its Retail arm, SM Retail Inc., operates department stores under the SM Store brand, and several food retail formats including Supermarkets, Hypermarkets, Savemore and Alfamart Stores. It also operates specialty stores focused on DIY, furniture, appliances and toys among others. Its Property arm, SM Prime Holdings Inc., is engaged in building and operating shopping malls both in the Philippines and China. It is also engaged in Residential property development under its SM Development Corporation subsidiary, commercial property development, as well as various hotels and convention centers. The Banking Group is comprised of BDO Unibank, Inc., the country’s largest bank by resources, and China Banking Corporation. SMIC also has Equity Investments in other sectors such as premium commercial buildings, leisure, logistics and mining. The Group takes an integrated approach to creating shared value for all its stakeholders and to applying global Environmental, Social and Governance (ESG) best practices across its businesses. The SM Group seeks alignment of its sustainability programs to the 17 United Nations Sustainable Development Goals, and is a signatory of the UN Global Compact’s 10 Principles. It publishes its report following the International Integrated Reporting Framework, in reference to GRI Standards and the Task Force for Climate Related Disclosures. Business of Issuer SM Retail, Inc. (“SM Retail”) is the holding company of the Group’s retail and merchandising operations where SMIC has a 77.3% effective stake. SM Retail organizes its operations into three categories: Non-Food, Specialty and Food: Non-Food Retail “The SM Store”, in operation since 1958, is SM Retail’s department store format, a leading player in the Philippines and an anchor tenant in SM malls nationwide. The SM Store serves a wide customer base and is committed to providing an extensive range of up to date fashion. SM Retail currently has 66 department stores located in Mero Manila and key provincial cities. Of these, 62 stores are based inside SM malls and 4 stores in Makati, Cubao, Quiapo and Delgado are stand-alone stores. In 2020, two new stores were opened in Butuan and Zamboanga. These new stores contributed an additional 15,412 sqm, bringing the gross selling area (GSA) of The SM Store to 816,958 sqm. Specialty Stores In July 2016, several leading specialty retail stores were merged with SM Retail. These include ACE Hardware, SM Appliances, Homeworld, Our Home, Toy Kingdom, Watsons, Kultura, Baby Company, Sports Central, Pet Express and others. Specialty stores provide SM Retail with a range of leading brands in various fast-growing categories of discretionary spending. All formats operate as tenants in SM malls with several, such as ACE Hardware and Watsons, also growing outside malls. As of December 31, 2020, there are 1,550 specialty stores in operation. - 2 - Food Retail SM Retail has five Food retail formats varying by size, namely SM Supermarket, SM Hypermarket, Savemore, Waltermart and Alfamart. These formats enable SM Retail to serve many different local markets nationwide. SM Supermarket is a large format anchor tenant in SM malls. It has been in operation since 1985 and currently has 59 stores nationwide totaling to 364,624 sqm of GSA with each store carrying 30,000 to 35,000 SKUs. In 2020, it opened one store in Butuan. SM Hypermarket is a large format food retailer store with both stand-alone and in-mall locations. It has been in operation since 2001 and provides a shopping experience that combines the features of a supermarket with those of a department store. There are currently 52 stores in operation totaling 337,020 sqm of GSA with each store carrying over 35,000 SKUs. Savemore is a mid-sized format introduced in 1998. It is located in community malls or as a stand- alone store. Savemore is a neighborhood format, providing food and grocery items in residential locations with extended opening hours. Among SM Retail’s Food formats, Savemore has the largest footprint with 558,608 sqm of GSA across 209 stores as of end-2020. These stores carry 20,000 to 25,000 SKUs. In 2020, they opened 8 stores nationwide. Waltermart is a mid-sized format that provides food and non-food shopping as an anchor tenant in Waltermart community malls, located primarily in Luzon. SM Retail acquired a controlling stake in Waltermart in 2013. It has 71 Department Stores and Supermarkets as at end-2020, with an aggregate GSA of 184,433 sqm.