Revenues Income from Operations Net Income

1
2003 ANNUAL REPORT
2003 Consolidated Financial Highlights
In Million Pesos except Earnings Per Share and Dividends
2003
2002
Revenues
8,802
8,013
789
10%
2,263
6,539
289%
Income from Operations
5,038
4,581
457
10%
1,149
3,889
338%
Net Income
4,181
3,861
320
8%
1,014
3,167
312%
Earnings per Share
0.422
0.389
0.033
8%
0.140
0.282
201%
12.5%
10.0%
2.5%
25%
Cash and other items
10,576
8,288
2,288
28%
4,635
5,941
128%
Property and Equipment
33,312
30,573
2,739
9%
10,363
22,949
221%
Total Assets
45,870
40,355
5,515
14%
15,424
30,446
197%
6,523
3,878
2,645
68%
34,184
31,277
2,907
9%
14,048
20,136
143%
FOR THE YEAR
Amount % of Increase
(2003-2002)
1994
Amount
% of Increase
(2003-1994)
OPERATING RESULTS
Cash Dividends
FINANCIAL POSITION
Total Borrowings
Stockholders’ Equity
6000
10000
8,802
5,038
4,181
5000
4000
8000
4000
3000
6000
3000
4000
2000
2000
1000
0
5000
94
99
01
02 03
Revenues
0
2000
1000
94
99
01
02 03
Income from Operations
0
94
99
01
02 03
Net Income
2
fellow
stockholders,
Message from the Chairman of the Board
2003 ANNUAL REPORT
3
“I am happy to report that our continued expansion, as well as
sustained consumer confidence, has made it possible for
SM Prime Holdings, Inc. to achieve considerable growth in 2003.”
I
n another particularly challenging
on serving the ever-changing needs of
I am also pleased to report that
year, your Company was able to
our customers, as well as our commit-
prestigious international publications
ments to our shareholders.
continue to cite our efforts. UK-based
scale new heights by opening three new
Supermalls—SM City Lucena, SM City
Euromoney Magazine, for example,
Baguio, and SM City Marilao. These
Starting with four malls in 1994, SM
named us as Best in the Property sector
three new malls have a combined gross
Prime Holdings, Inc. now has 17 Su-
in Asia and as one of the Philippines’
floor area of 270,000 square meters and
permalls with more than two million
leading companies in its Best Asian
now serve customers in key locations in
square meters of great shopping, leisure,
Companies Survey 2003. We were also
Luzon—Lucena in the south, Baguio in
and entertainment. This expansion
cited in Asset Magazine’s Corporate
the north, and Marilao in the central area.
has made it possible for us to build
Governance Benchmark Research survey.
malls across the archipelago in Luzon,
I am happy to report that our continued
Visayas, and Mindanao. We were also
By building new malls, adding more sites
expansion, as well as sustained con-
able to open new markets in key Metro
to our land bank, and enhancing our
sumer confidence, has made it possible
and provincial areas, and likewise
service to our customers, your Company
for SM Prime Holdings, Inc. to achieve
become catalysts in their growth and
will continue to scale new heights in the
considerable growth in 2003.
development through employment and
coming years. In behalf of the Board of
business opportunities.
Directors and Management, I wish to
Our total revenues increased by 10%
thank you again for your support and
from PhP8.01 billion to PhP8.80 billion
Consumer response to our new malls
in the year ending 31 December 2003.
has, in fact, been encouraging, indicating
There was also a 8% increase in con-
that there are huge potential markets to
solidated net income after tax—PhP4.2
be opened in the Philippines. As such,
billion in 2003 over PhP3.86 billion in
we will continue to pursue an aggressive
the previous year.
expansion program, building at least two
confidence in SM Prime Holdings, Inc.
new malls a year. For the year 2004, we
I am also pleased to let you know that
will be opening malls in Dasmariñas,
SM Prime Holdings, Inc. is marking its
Cavite and Batangas City in Batangas.
tenth year as a publicly-listed company
While the past decade has not been
In addition, we have a total land bank
without its challenges—the Asian crisis,
of 194 hectares in 16 strategic locations,
HENRY SY, SR.
9/11, economic and political uncertain-
which are earmarked for future mall
Chairman and President
ties—your Company remained focused
development in the coming years.
4
SM City Baguio sets new standards in
retail development and construction;
its designs in harmony with Baguio
City’s rolling landscapes and temperate
weather, perfect for outdoor dining and
night-time entertainment.
1985 SM City North EDSA opened on a 16.1 hectare property in Quezon
City. Leveraging 30 years of expertise in the retail industry, it is the first
complete one-stop shopping and entertainment destination, and the largest of
its kind at the time. Gross floor area: 275,419 sq.m.
2003 ANNUAL REPORT
5
2003 Operational Highlights
setting
new goals
T
he year 2003 was, once again, a high growth year for SM Prime Holdings,
Inc., which focused its development plans on regional expansion, and
bringing new, spacious community-centered venues for total leisure, entertainment, and shopping to emerging tourist, commercial, and industrial areas.
By moving toward the provinces, SM Prime Holdings, Inc. is moving closer to
its market. Three more SM Supermalls now operate in strategic locations with
strong geographic accessibility and high shopper traffic potential.
Storyland
11:00 AM
SM City Lucena, inaugurated in October 2003, is the only major mall in the
Quezon province. As of December 2003, it had 149 operational tenants, including anchors SM Department Store, SM Supermarket, Ace Hardware, Toy
Trixie and Miguel take Mom and
Kingdom and Surplus Shop. SM City Lucena has a gross floor area of 72,057
Dad for a ride on the Carousel, their
square meters on an eight-hectare total land area.
favorite spot inside Storyland, SM’s
indoor theme amusement park.
SM City Baguio, which has a gross floor area of 105,331 square meters, was
Everybody hold on tight!
launched in November 2003 and has become the city’s principal dining, shopping, and tourist destination. SM City Baguio’s innovative tensile-roofing
design and al fresco verandas on each level were implemented to adapt to and
complement Baguio’s naturally cool weather. Average daily pedestrian count
yields 100,000 shoppers visiting SM City Baguio’s 168 operational tenants as
of December 2003.
1990
SM Centerpoint (now SM City Sta. Mesa)
is opened on a 1.3 hectare site on Magsaysay Avenue in
Manila, a bustling schools and universities district on the
border with Quezon City. Gross floor area: 133,327 sq.m.
6
SM Supermalls boast of brighter, newly renovated interiors that
reflect SM’s new “look.” In cooperation with local governments,
parking and transportation infrastructure was improved to ease
the flow of traffic around several of the SM Supermalls.
1991 SM Megamall, SM Prime Holdings, Inc.’s largest,
most popular, and highest-grossing mall is inaugurated. The
Philippines’ largest shopping mall, with an indoor Ice Skating Rink
and Bowling Center, SM Megamall elevates the Filipino family’s
shopping, dining and leisure, experience to “Mega” proportions.
Gross floor area: 331,679 sq.m.
2003 ANNUAL REPORT
SM City Marilao, with a gross floor area of 88,654 square meters
and situated along MacArthur Highway (only 12 kilometers from
Monumento), was opened also in November 2003. It now serves
residents of Valenzuela and neighboring municipalities in Bulacan, the
Food Court
12:05 PM
largest and fastest growing province in Central Luzon. As of December
2003, there were 156 operational tenants.
Time to eat! Everybody eats their
The opening of these malls also went beyond SM Prime Holdings, Inc.’s
favorite food at the SM Food Court!
customary construction target of two malls per year.
Winning more customers
For all shoppers’ benefit, the SM Supermalls invested extensively in
internal renovation, forging new partnerships and cooperating closely
with government to improve infrastructure in their respective locations.
Local government infrastructure is easing access to various malls in the
Metro Manila area. The partial opening of Metro Rail Transit 2 (MRT 2) is
attracting new customers to SM City Sta. Mesa; the MRT 2 is scheduled to
begin full operations in April 2004. Inside, many shops now sport reno-
SM Department Store
1:40 PM
vated interiors following new design parameters being adopted across all
SM supermalls. A large-scale renovation of the mall is scheduled for the
1st quarter of 2004.
Female bonding on the go! Erica and
In similar fashion, SM City Manila has reorganized its taxi bays and car-
Trixie shop for fashionable clothes,
parks to increase pedestrian safety and improve traffic in the area. SM
shoes, and accessories at the SM
City Manila enjoyed increased tenancy rates on its new 5th floor level, as
Department Store. “Mom, when I grow
well as new fast food and dining tenants. An annex and amphitheater are
up, I want to be just like you!”
currently under construction to accommodate more business.
1993 SM Prime Holdings, Inc. opens its first provincial mall in Cebu, at
the City’s Port Center. It is the first SM Supermall in the Visayas, and the only
mall with a Science Museum, a traveler’s lounge for inter-island travelers, and
shuttle service to the pier. Gross floor area: 161,562 sq.m.
1994 SM Prime Holdings, Inc. goes public (SMPH in the local bourse) and
holds an initial public offering of 1,114,641,158 shares valued at PhP5.35 per share.
7
8
SM Megamall is the city’s Mega center
for shopping, dining and entertainment,
trade fairs and industry exhibits —
and a showcase for the latest trends
that technology has to offer.
1995 SM Southmall is opened. Located in the busiest commercial area of
south Metro Manila, SM Southmall caters to densely populated residential areas of
Parañaque and Muntinlupa. Gross floor area: 205,120 sq.m.
Storyland Adventure, the first indoor kinetic theme park for children and a popular
site for shows, birthday parties, and summer workshops, opens in SM Southmall. Toy
megastore Toy Kingdom is inaugurated in SM Megamall.
2003 ANNUAL REPORT
9
SM City North Edsa opened 11 new stores in 2003 and remains a
strong movie income generator. It received Metro Manila Filmfest
“top grosser status” in the National Capital Region as one of the city’s
favorite movie-going venues. With average daily pedestrian traffic of
275,000, SM City North Edsa remains the premier venue for promotions of various local and foreign entertainment artists. Promotional
tours of various consumer product companies likewise favor SM City
North Edsa, yielding exemplary consumer response.
ACE Hardware
1:45 PM
SM Megamall now has its own new Cyberzone e-hub, a 40-tenant
high-tech shopping area showcasing the latest computer, audio/
Father and son enjoy their time
video and mobile phone equipment. Its Megatrade Center’s renova-
together at ACE Hardware. Miguel
tions were completed in January 2003, maintaining SM Megamall’s
wants to build his first house. “Will
reputation year after year as a first-choice exhibit area—for book
you help me, Daddy?”
fairs, car shows, and Department of Trade and Industry-sponsored
trade fairs—and attracting new exhibitors as well.
907
1.5
28,366 4,203 1,527
MILLION AVERAGE DAILY PEDESTRIAN
COUNT IN ALL 17 SUPERMALLS
(OFF-PEAK)
PRIMENUMBERS
17
SM SUPERMALLS ACROSS LUZON,
VISAYAS AND MINDANAO
194
PARKING SLOTS AVAILABLE
IN ALL 17 SUPERMALLS
HECTARES SM PRIME
HOLDINGS, INC.’S
TOTAL LANDBANK IN 16
STRATEGIC LOCATIONS
93,472
SEATING CAPACITY OF
124
TENANTS IN ALL 17 SM SUPERMALLS
15,530
FOOD COURT SEATS IN
ALL 17 SM SUPERMALLS
MOVIE SCREENS IN
ALL 17 SM SUPERMALLS
1997
DINING OUTLETS
IN ALL 17
SUPERMALLS
2.31
MILLION
124
KIOSKS/CARTS IN ALL
17 SM SUPERMALLS
SQUARE METERS TOTAL GROSS
FLOOR AREA OF ALL 17
SM SUPERMALLS TO DATE
BOWLING LANES IN SM MEGAMALL,
SM CITY NORTH EDSA, SM CITY FAIRVIEW
AND SM CITY CEBU
SM City Bacoor is built on the Aguinaldo highway, serving shoppers in
the South from Cavite and the Calabarzon special economic zone. With a population
nearing 1 million, Bacoor is a highly urbanized area with over 200 residential
subdivisions. Gross floor area: 116,892 sq.m.
10
The SM Supermalls are venue for community activities, family fun
and get-togethers among friends. Touching the hearts of children
with theme park rides, video arcades, a mega toy store Toy Kingdom, and other fun-filled possibilities—the SM Supermalls are
part of memorable “growing up” experiences of Filipino children
all over the country.
1997
At the northern end of the Metro, SM City Fairview is
inaugurated, serving the near 1.5 million population of surrounding
residential areas. SM City Fairview is highly accessible also to the
approximately 300 schools and universities in north Quezon City, as well as
numerous churches and hospitals. Gross floor area: 130,600 sq.m.
2003 ANNUAL REPORT
Watsons
2:00 PM
SM Megamall is still a principal venue for Red Carpet movie premieres.
Due to the new electronic billboard installed along Edsa and the setup
of additional “movie information points,” SM Megamall theaters enjoy
Keeping healthy, clean, and beautiful is
consistent increased sales. Public transportation and taxi terminal areas
easy with Watson’s personal care items,
have been likewise expanded and improved to ease access to and from
cosmetics, and perfumery. “I like this
the mall.
for you, Mom!”
SM Southmall now features the new mandated mall façade designs
and new color schemes, as well as upgraded floors and columns. SM
Southmall also completed renovations in Storyland, a unique indoor
theme amusement park. A major 3-month renovation of its Ice-Skating
Rink—one of only two ice-skating rinks in the entire country, the site of
ice skating and hockey tournaments, and training ground for Philippine
ice sports athletes—is scheduled from July to September 2004.
SM City Cagayan de Oro, located in northern Mindanao’s boom-town
region, is a regular venue of agro-trade fairs and socio-economic activities and has recently expanded its mall space with a new 2,793-square
meter wing.
Toy Kingdom
2:20 PM
Miguel tries out the latest video games
at Toy Kingdom. “I want to play this
with you, Dad! Will you buy it for me?”
Overall, SM mallers continue to enjoy a wide mix of sports, music, and
family-oriented events, with concert tours from local and foreign artists such as Mandy Moore, Stephen Bishop, and the Cheeky Girls and
many more visiting in the past year. Improved exhibit and trade halls
areas are now the venue for year-round job and trade fairs showcasing
regional produce.
1999 SM City Iloilo is inaugurated on the northwest-northeast juncture
of Jaro West Diversion Road (now Benigno Aquino Jr. Road), close to the city’s
airport and accessible to residents from Panay and other neighboring islands.
Gross floor area: 101,735 sq.m.
11
12
Elaborate landscape plans and 3D designs
showcase the new SM Mall of Asia, scheduled
for completion in 2005. The Mall is the centerpiece of SM’s new Bay City complex, which will
set new standards in urban mixed-use planning.
2000 SM City Manila, strategically built on Arroceros and San Marcelino, near
the LRT and Manila City Hall is opened. Within short distance from of Manila’s densely
populated districts of Tondo, Binondo, Quiapo, Sta. Cruz, Intramuros, Ermita, Malate,
Paco, SM City Manila yields high customer traffic; likewise, from some 50 neighboring
colleges and universities. Gross floor area: 166,554 sq.m.
2003 ANNUAL REPORT
SM Prime Holdings, Inc.’s investments in world-class mall facilities and
infrastructure make SM supermalls the primary choice of Filipino shoppers nationwide. On weekdays and weekends, SM shoppers enjoy a full
day’s program of activities at our malls, with a wide-range of entertain-
Our Home
3:00 PM
ment, food, leisure, and shopping choices at their complete disposal.
Scanning new horizons
“This is perfect in front of the TV,” says
Dad. “What do you think, honey?”
SM City malls are set for opening in Dasmariñas, Cavite and Batangas
City, Batangas within the year 2004. In 2005, scheduled to open are
four new properties: SM City San Lazaro, SM City Molino, SM City
Valenzuela, and the SM Mall of Asia.
The SM Mall of Asia is being built with the same ingenuity and fervor that launched SM City North Edsa in 1985 and SM Megamall in
1994, and changed every Filipino family’s total shopping experience.
Located on a 60-hectare prime property on scenic Manila Bay, the
SM Mall of Asia aims to exceed all standards in shopping, entertainment, and leisure in the country.
In 2005, the first phase of SM Mall of Asia’s construction will be com-
SM Appliance Center
3:40 PM
Trixie’s ballet recital is coming up.
Mom and Dad will make sure it all
gets caught on camera.
pleted, totaling over 350,000 square meters of gross floor area. This
will include the main shopping mall (anchor stores, tenanted shops,
a bowling center, an ice skating rink and a food court), the entertainment mall (cinemas, restaurants), and two parking buildings. When
fully completed, the SM Central Business Park complex—where the
SM Mall of Asia is located—will have hotels, office, and residential
condominium developments and other spots for recreation.
SM City Pampanga, located in the region’s industrial and commercial hub of San
Fernando, is opened. The first SM Supermall in Central Luzon, SM City Pampanga
enjoys high customer traffic from highly populated towns in Pampanga, as well
as neighboring provinces of Tarlac, Pangasinan, Bataan, and Zambales. Gross
floor area: 110,650 sq.m.
13
14
department store
The SM Foundation, with its health, community, scholarship, and livelihood programs, uplifts the lives of
many Filipinos in need.
10:57 AM
2001 SM Prime Holdings, Inc. opens
SM Supercenter Sucat, near the international
and domestic airports and cargo hubs. Gross
floor area: 66,150 sq.m.
SM City Davao, the first SM Supermall in the
Mindanao region is also opened. Gross floor
area: 75,440 sq.m.
2003 ANNUAL REPORT
15
Cinema
4:00 PM
A family date at the movies becomes
a perfect treat with drinks and
yummy snacks.
As of end 2003, total gross floor area in SM Prime Holdings, Inc.’s 17
malls equaled 2.31 million square meters. SM Prime has a land bank
of 194 hectares allocated for planned mall expansion in the next five
years; construction has already begun for new malls in Lipa, Batangas;
Marikina; Clark, Pampanga; and Sta. Rosa, Laguna.
Partnering in Progress
SM Prime Holdings, Inc. makes the climb to progress together with the
Filipino. As a corporate citizen, it strives constantly to uplift the lives of
Filipinos in the areas of education, health, and livelihood. Through SM
Foundation, Inc., SM’s outreach and community service organization,
SM Prime Holdings, Inc. supports a college scholarship program,
SM Supermarket
6:25 PM
health and medical programs, community donation projects, and
livelihood programs for micro-enterprises and people with disabilities.
Planning for family meals, the kids’
The SM Foundation College Scholarship program, which funds
baon, and getting the family’s weekly
promising students from public schools across the country, has
groceries is fun and super convenient at
produced 500 graduates to date and currently supports 400 more
SM Supermarket.
undergraduate scholars.
2002 SM City Bicutan is opened, at the crossroad of several densely populated
residential areas, as well as the country’s biggest factories and warehouses, serving
shoppers in the Bicutan and Taguig areas. Gross floor area: 112,737 sq.m.
16
SM shoppers receive service with a personal touch from all of SM’s
specialized anchor stores, like Toy Kingdom, Watson’s, SM Supermarket,
and ACE Hardware; and enjoy ultimate convenience with SM’s Foreign
Exchange services, Ticketnet outlets, and utility payment centers.
2002
Along the northern coast of
2003 In November, SM City malls are
Mindanao, SM City Cagayan de Oro is opened
opened in Lucena, a gateway to many cities
in the agro-industrial boomtown of the south.
in southern Luzon, and in Marilao, a growing
Cagayan de Oro has the highest population
industrial center. Another SM City mall in
density in the entire Mindanao area.
Baguio, the major tourist destination of the
Neighboring provinces Bukidnon and Lanao
north, follows in December. Gross floor areas:
del Norte are also served by SM City Cagayan
Lucena, 72,057 sq.m.; Marilao, 88,654 sq.m.;
de Oro. Gross floor area: 56,288 sq.m.
Baguio, 105,331 sq.m.
2003 ANNUAL REPORT
SM Foundation’s health and medical program manages 12 activity
centers across the country for the young and the elderly. One hundred thirty medical missions reaching 85,000 people nationwide have
been conducted since 2001. A mobile clinic facility offering health
services to poor families is equipped with a consultation room, x-ray
and ECG facilities, and can perform basic laboratory procedures for
more accurate medical diagnoses.
SM also continues with “Donate a Book”, which benefits public school
libraries and reading centers; “Share a Toy”, which brings Christmas
cheer to many children confined in public hospitals, children in day
care centers, charity institutions, and in indigenous communities; and
“Share Your Extras”, which brings goods, furniture, and food to families in the poorest areas.
Pursuing New Visions
SM Prime Holdings, Inc. is proud of its achievements over the last
decade—building new Supermalls, implementing renovations in ex-
Dinner
7:45 PM
isting ones, and expanding its social reach to fellow Filipinos.
It is with this spirit that SM Prime Holdings, Inc. embarks on the
The day comes to an end, and the
next phase of its journey—embracing new challenges, and scaling
family gathers again for dinner. “What
new heights, with the same perseverance and commitment to one
would you kids like to eat now?”
vision: to serve the Filipino consumer to the highest standards of
service and excellence.
17
18
map of the

N
supermalls
LUZON
SM CITY BAGUIO
SM CITY URDANETA
LUZON
SM CITY CABANATUAN
SM CITY PAMPANGA
SM CITY MARILAO
SM CITY FAIRVIEW
SM CITY NORTH EDSA
SM MEGAMALL
SM CITY STA. MESA
SM CITY MANILA
SM SOUTHMALL
SM CITY FAIRVIEW
SM CITY BICUTAN
SM SUPER CENTER SUCAT
SM CITY BACOOR
SM CITY MEYCAUAYAN
SM CITY MARIKINA
SM CITY VALENZUELA
SM SUPERCENTER VITO CRUZ
SM MALL OF ASIA
SM DASMARIÑAS
SM CITY MOLINO (CAVITE)
SM CITY SAN LAZARO
SM CITY PARAÑAQUE
SM CITY STA. ROSA
SM CITY CALAMBA
SM CITY LUCENA
SM CITY LIPA
SM CITY BATANGAS
VISAYAS
VISAYAS
SM CITY CAGAYAN DE ORO
MINDANAO
SM CITY ILOILO
SM CITY CEBU
BACOLOD, NEGROS OCCIDENTAL
OPERATING MALLS
MINDANAO
TACLOBAN, LEYTE
SM CITY DAVAO
UNDER CONSTRUCTION
SITE FOR DEVELOPMENT
Opening in 2004
SM City Dasmariñas (Dasmariñas, Cavite)
SM City Batangas (Batangas City, Batangas)
Opening in 2005 (under construction)
SM City San Lazaro
SM City Molino
SM City Valenzuela
SM Mall of Asia
Future Projects
SM City Lipa
SM City Marikina
SM City Clark, Pampanga
SM City Sta. Rosa, Laguna
SM Mall of Asia