DEVELOPMENT

CORPORATION

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May 31, 2013 THE PHILIPPINE STOCK EXCHANGE Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue, Makati City Attention: MR. HANS B. SICAT President of Receipt of Tender Offer Report from SM Land, Inc.

Re:

Disclosure

Gentlemen:

We hereby disclose the Tender Offer Report received from SM Land, Inc. ("SM Land") for the intended acquisition by SM Land of up to one hundred percent (100%) of the outstanding shares of common stock of SM Development Corporation. Thank you. Very truly yours,

cc:

Ms. Marsha M. Resurreccion Head - Issuer Regulation Division

SM Development Corporation lO/F OneE-Com Center Harbor Drive Mall of Asia Complex, Pasay City 1300 Philippines Tel. No. +632857-0100 Fax No. +632857-0207

www.smdevelopment.com

A Subsidiary 01

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CORPORATION

SECURITIES AND EXCHANGE COMMISSION SEC FORM 19-1 TENDER OFFER REPORT Check the appropriate box: Initial Filing Amendment Amendment No. ......................................................... Items Amended by the Filing ..................................... 1. Exact Name of Subject Company as Specified in its Charter: SM DEVELOPMENT CORPORATION (a). 15th Floor Two E-Com Center, Harbor Drive MOA Complex, CBP-1A, 1300 Pasay City, Philippines Address of Principal Offices Postal Code (b) SEC Identification Number: 56909 (c) (SEC Use Only) Industry Classification Code

(d) BIR Tax Identification Number: 320-000-601-470 2. SM LAND, INC. Name of Bidder (a) One E-com Center, Harbor Drive, Mall of Asia Complex, CBP-1A, Pasay City Address of Bidder 3. Shares of Common Stock Title or Class of Securities Subject to Tender Offer

Item 1. Subject Company and Class of Security Subject to the Tender Offer

SMDC Tender Offer Report

(a) The subject company is SM Development Corporation (SMDC), a corporation organized and existing under the laws of the Republic of the Philippines and with securities listed and traded on the Philippine Stock Exchange (PSE), with principal address at the 15th Floor Two E-Com Center, Harbor Drive MOA Complex, CBP-1A, 1300 Pasay City, Philippines. (b) As of the date of this Tender Offer Report, SMDC has 9,271,204,239 outstanding shares of common stock (the “Shares”). Subject to the Terms of the Tender Offer, incorporated herein as Annex “A” and made an integral part of this Tender Offer Report, the Bidder intends to acquire up to one hundred percent (100%) of the Shares. The Bidder, presently owns 6,043,148,078 or 65.18% of the Shares. Consequently, the subject of this Tender Offer is 3,228,056,161 Shares representing 34.82% of the Shares to be acquired by the Bidder in exchange for SM Prime Holdings, Inc. (“SM Prime”)shares of common stock at an exchange ratio of .472 share of common stock of SM Prime (the “Consideration Share”) for every Share. Manabat Sanagustin & Co. (“MS& Co.), the local member firm of KPMG International in the Philippines, was engaged by SM Investments Corporation (“SMIC”) to act as the independent financial advisor (“IFA”) to the Audit and Risk Management Committee of SMIC in relation to SM Land Inc.’s (“SM Land” or the “Bidder”) valuation of its acquisition of a 100% equity stake in SMDC. SMIC owns 64% of the outstanding shares of stock of SM Land. SM Land will swap its shares in SM Prime in exchange for the acquisition of the Shares. SMIC determined a share swap ratio of .472 SM Prime share for every Share. It was MS&Co.’s role as the IFA to assess the fairness of the swap ratio by conducting its own valuation of the two companies, determining a fair range of values for each and then estimating the corresponding swap ratio. The valuation of SM Prime and SMDC, as a going concern, is as of March 31, 2013 (“Valuation date”). MS& Co. opined on May 30, 2013 that the share-for-share swap ratios between SM Prime and SMDC is fair from a financial point of view. MS & Co. made use of, among others, (i) information provided by SM Prime and SMDC; and (ii) information from third-party sources including Capital IQ, the Philippine Stock Exchange, Bloomberg, Factiva, Bureau of Treasury, Damodaran Online, and Bloomberg. The valuation methodologies used by MS & Co. in establishing the fair range of values included, among others, the Cost Approach, Enterprise valueto-EBITDA multiple, Income approach, Market Approach, SMPH’s market closing price as of the Valuation Date, and both SMDC’s and SM Prime’s 60-day weighted average closing price. MS & Co.’s fairness opinion does not contain and has no intention of forming an opinion as to the strategic, operational, or commercial merits of the transactions. The reports were based on the information prepared and submitted by SM Prime and SMDC.

Capitalized terms used in this Tender Offer Report and not otherwise defined herein shall have the same meaning ascribed to it in the attached Terms of the Tender Offer.
(c) The principal market for the Shares is the Philippine Stock Exchange (the “PSE”). The high and low prices of the Shares on the PSE for each quarterly period during the past two years are as follows: Year 2013 2012 2011 First Quarter High Low 9.52 5.91 6.88 6.16 7.81 5.91 Second Quarter High Low 6.73 8.40 6.00 6.83 Third Quarter High Low 6.50 8.95 5.98 6.50 Fourth Quarter High Low 6.37 8.04 5.72 6.65

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Item 2. Identity and Background of the Bidder The party making this tender offer is SM Land, Inc. (‘SM Land’ or the “Bidder”).

SMDC Tender Offer Report

SM Land is a corporation organized and existing under Philippine laws with principal place of business at One E-com Center, Harbor Drive, Mall of Asia Complex, CBP-1A, Pasay City. SM Land is engaged in investing in shares of stock of other companies, as well as leasing and subleasing certain property and equipment. SM Investment Corporation (SMIC), a corporation organized and existing under the laws of the Republic of the Philippines and with securities listed and traded on the PSE, owns 64% of outstanding capital stock of the Bidder. Below is a list of the Bidder’s directors and executive officers: Name Henry Sy, Sr. Felicidad T. Sy Teresita T. Sy Henry T. Sy, Jr. Hans T. Sy Elizabeth T. Sy Herbert T. Sy Harley T. Sy Grace F. Roque Gema O. Cheng Corazon I. Morando Arthur A. Sy Position Chairman of the Board Director Director Vice Chairman/President Director Director Director Treasurer Assistant Treasurer Chief Financial Officer Corporate Secretary Assistant Corporate Secretary

During the last five (5) years, the Bidder has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, domestic or foreign, which resulted to an order, judgment or decree permanently or temporarily enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities, commodities or banking. During the last five (5) years, no executive officer nor director of SM Land, nor any person controlling SM Land, nor any executive officer or director of any corporation ultimately in control of SM Land, has not been convicted in any criminal proceeding or was a party to any civil proceedings of a judicial or administrative body of competent jurisdiction, domestic or foreign. Item 3. Purpose of the Tender Offer and Plans or Proposals of the Bidder This Tender Offer is carried out as part of a reorganization to consolidate the real estate holdings and interest of the companies that are controlled by the SM Group (the “Reorganizaton”). The Reorganization is undertaken to: Create an integrated real estate platform to further enhance the value of the SM Group’s real estate businesses

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New SM Prime will build on the strong track record of its component businesses, including being the number one shopping mall developer and operator in the Philippines based on GFA, a leading residential developer in the Philippines in terms of condominium units sold, and operating growing office, hotel and leisure segments. New SM Prime is expected to be one of the largest real estate companies listed in Southeast Asia and on the PSE in terms of market capitalization. New SM Prime’s increased free float adjusted market capitalization should translate into greater trading liquidity and increased weighting in regional indices. New SM Prime is expected to have a significant growth pipeline as underscored by its large and diversified land bank consisting of a pro-forma area of approximately 920 hectares of retail, commercial, and residential land in prime locations across the Philippines, which SM Prime believes will be among the largest in the country. In addition, SMIC has granted a non-binding right of first refusal to SM Prime to purchase additional land from SMIC to support further development initiatives. New SM Prime is expected to have a strong mix of recurring income from its mall and office operations, and profit from development activities from its residential operations. On a pro forma basis, taking into account the effects of the Exchange Offers and the Reorganization (as discussed in more detail in “Pro Forma Financial Information”), 73.6% of New SM Prime’s net income for 2012 was derived from recurring sources. SM Prime believes it will have the opportunity to accelerate its growth by participating in higher growth and higher-return development opportunities in the residential, commercial, hospitality and tourism sectors due to its fully integrated real estate platform. New SM Prime intends to leverage on the diverse skill sets of each of its component companies to extract optimal value across the real estate value chain. SM Prime believes it can maximize existing plots of its retail developments that may be underutilized or unutilized by adding residential, commercial and hospitality developments. SM Prime also believes it will have greater flexibility to undertake more large scale integrated mixed use developments such as the 60-hectare Mall of Asia (“MOA”) complex, which are typically built on a larger scale, have more efficient use of land and, in general, are expected by SM Prime to achieve higher overall rates of return and profit margins. New SM Prime intends to replicate the MOA complex’s successful development strategy in other parts of the Philippines. New SM Prime has begun this process with the development of a new mixed used development, the 30-hectare South Road property in Cebu, known as SM Seaside City. Simplify corporate structure and increase organizational efficiencies New SM Prime expects to benefit from an increase in organizational efficiencies and to extract synergies among the component companies. New SM Prime also expects to have access to a larger pool of managerial talent with a strong track record and experience across several real estate classes working together under one entity to focus on maximizing the potential synergies of the new company. New SM Prime expects to take a more coordinated approach and better utilize its resources. For example, future land acquisitions will be done at the New SM Prime level, with a more holistic view of developing mixed used developments instead of individual properties or projects. New SM Prime intends to better utilize the component companies land bank by increasing communication and coordination within the group. New SM Prime expects to benefit from the enlarged group structure by achieving economies of scale resulting in greater bargaining power with its extensive supplier network. In addition, New SM Prime expects to be able to better leverage and further enhance the already strong ‘SM’ brand through a more coordinated brand management effort. Rationalization of the selling and general administrative functions is also expected to reap significant cost synergies for New SM Prime.

SMDC Tender Offer Report

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Enhanced ability to capitalize on strong economic fundamentals of the Philippines’ property, consumer and tourism sectors

SMDC Tender Offer Report

The government of the Republic of the Philippines (the “Government”) is targeting GDP growth of approximately 7 – 8%, which will make the Philippines one of the fastest growing economies in the world. GDP per capita based on purchasing power parity is expected to grow at an average rate of 6.6% from 2013 to 2017 according to Economic Intelligence Unit (“EIU”). The Philippines has a favorable demographic profile, including the second largest population in Southeast Asia and the 12th largest population in the world. It has the lowest median age of 23.3 years and second largest population growth amongst the neighboring countries of Malaysia, Vietnam, Indonesia, Singapore and Thailand, according to CIA World Factbook. SM Prime believes that a growing, young and increasingly affluent Philippine population will help drive growth in its recurring income from mall operations as well as drive sales in the residential development segment. The Philippines is currently enjoying a low-interest rate environment. This is supported by the recent sovereign credit upgrade to investment grade status as well as a benign inflation outlook, which is expected to remain around 4% based on consumer price index until 2015, according to Global Insight. Commercial lending rates are also expected to remain low for the remainder of 2013, at a rate of approximately 6.8%, according to EIU. The continual improvement of mortgage financing terms, including the rate of interest as well as length of the loan term, combined with low household borrowing levels is expected to result in greater affordability of home ownership among the Filipino population. The housing need in the Philippines is expected to reach 5.7 million in 2016, at a CAGR of 32.9% between 2011 and 2016, according to the Housing and Urban Development Coordinating Council (“HUDCC”). SM Prime believes that the favorable lending environment along with the expected housing need in the Philippines will provide a sustainable demand for the residential segment as well as allow it to borrow money on favorable terms to fund its future growth plans. OFW remittances and the strong BPO sector have been key components to the Philippine growth story. OFW remittances have remained strong in recent years, even during the recent global financial crisis. OFW remittances are expected to grow at a CAGR of 7% between 2013 and 2017 according to EIU. Strong OFW remittance is a key driver in the growth of the Philippine residential property market as OFWs tend to seek out property investments and provide housing for their families back home. By 2016, the Philippine IT-BPO and global in-house center industry is expected to grow to U.S.$25 billion in revenue from U.S.$$11 billion in 2011, representing a CAGR of 18%, according to the Business Processing Association of the Philippines. This growth in the BPO sector is expected to provide strong support for demand in the office segment, which New SM Prime plans to target with its E-Com and Cyber office developments. It is expected that the Philippines will experience an increase in tourist arrivals in the near future, something which is widely believed to be long overdue with the Philippines lagging behind neighbouring countries despite its strategic location and attractive tourist offerings. In response, the Government has committed a total of U.S.$700 million worth of infrastructure investments to support the tourism industry in 2013 and 2014. The Department of Public Works and Highways will be building roads in areas identified in the national tourism plan in order to improve the travel experience for tourists. As a result, tourist arrivals are forecasted to grow at a CAGR of 7% between 2013 and 2017 according to EIU. In addition, the Philippines’ growing per capita income bodes well for domestic tourism. This expected increase in foreign and domestic tourist arrivals in the Philippines should benefit the hospitality and tourism industries, sectors that New SM Prime will be acutely focused on with its hotels and leisure projects.
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495. Sysmart Corp.683.190% 65.043.040.1 billion as of December 31.679.651% 15.126% 7.5 billion on a pro forma basis. The key steps in the Reorganization are as follows: • SM Land.818% 20. Sy Family Current Shareholding of SM Land TOTAL Highlands Prime Stockholder Belle Corporation SM Investments Corp.977.678.043% 1. New SM Prime is expected to approximately double its existing asset base from P148.350.940 6.914% • SMDC Stockholder Syntrix Holdings. 2012 to P27.101 337.856 11.101 27.055. allowing it to lower its borrowing costs and cost of capital due to its larger size.813 667.205% 89.721 110. Inc.943.048% Percentage of Ownership 35.945 Percentage of Ownership 7.1 billion on a pro-forma basis.078 7.197% 0. The new company is also expected to achieve a lower leverage ratio (net debt / equity) of 40.495.193% 1. will launch a tender offer to acquire up to 100% of the outstanding capital stock of SMDC and Highlands Prime by transferring all or part of its SM Prime shares to the tendering stockholders of SMDC and Highlands Prime.4% on a pro forma basis from the current 58% of SM Prime as of December 31.911.182% 86.877 453. Such lower borrowing costs and cost of capital should help New SM Prime to accelerate major organic and inorganic growth initiatives on more favorable terms than it could without the impact of the Reorganization. Sybase Equity Investments Corp. Cash flow is expected to strengthen under New SM Prime. as stockholder of SM Prime. SMDC Sy Family TOTAL Page 6 of 12 . liquidity and asset diversification.000 2. The tender offer is expected to be settled on July 19. 2012. in exchange for the shares of stock of SMDC and Highlands Prime.866 396.236 Number of Highlands Prime Shares 804.7 billion for the year ended December 31. Sysmart Corp.557.155% 5. Unless the tender offer period is extended by SM Land and such extension is approved by the SEC.828 481.019. 2012 to P284. SM Investments Corp.SMDC Tender Offer Report Further strengthen the balance sheet and provide enhanced capital raising flexibility SM Prime believes that it will be able to create a more financially sound and profitable company following the Reorganization. The following stockholders of SMDC and Highlands Prime have undertaken to tender their respective SMDC and Highlands Prime shares of stock in exchange for SMPH shares: Number of SMDC Shares 663. New SM Prime believes it will be able to achieve better financial economies of scale. with EBITDA increasing by 33% from P20.675.148. 2013.197% 17.

Inc.500 (ownership of Rappel Holdings. 2.999. 1. 3. .000.00% 5 SM Hotels and Conventions Corporation 6 SM Arena Corporation Complex Page 7 of 12 . otherwise known as the Corporation Code of the Philippines and Section 40 (C)(2) of the National Internal Revenue Code.995 3.000 to 40.. (formerly Pilipinas Makro Inc.Upon commencement of the tender offer. The Plan of Merger which will include the amendment of the articles of incorporation of SM Prime as the surviving entity of the Merger. and (b) increase its authorized capital stock 20.33% 41.196 (ownership of Panther (BVI) Ltd.) 139.999 175. in order to: (a) change its primary purpose to include the business of SM Land.000. SMDC and Highlands Prime will initiate a voluntary delisting process with the PSE in accordance with the PSE Rules on Delisting. The merger of SM Land and SM Prime (the "Merger") pursuant to Title IX (Merger and Consolidation) of Batas Pambansa Blg.000. Limited) 3 Prime Central Limited SMIC 4 Tagaytay Resort Development Corporation Tagaytay Resort Development Corporation SMIC Sy Family SMIC SMIC 33.00% indirect ownership in Prime Metroestate. SMIC 271.67% 100. (100% ownership of Prime Central.in Prime Metroestate. (“Mountain Bliss”) and the Sy Family. with SM Prime as the surviving entity(the “New SM Prime”).00% SMIC 1.000.00% 100. OF SHARES HELD PERCENTAGE OF OWNERSHIP BE ACQUIRED DER 1 Prime Metroestate.999. in Prime Metroestate.) 2 Rappel Holdings. SMDC Tender Offer Report The Board of Directors and stockholders of SM Prime will conduct their respective meetings in order to approve the following: 1. as amended.001 10. in exchange for the latter’s shares in the following companies with their corresponding shareholding interest (the "Share for Share Swap"): NAME OF COMPANY TO STOCKHOL NO.356.995 50. Inc. Mountain Bliss Resort & Development Corp. Inc. 68.) 40. Inc. Inc. Inc. Inc. Inc.085.297 10. The issuance of equivalent amount of SM Prime shares of stock to SMIC. a 100% subsidiary of Prime Central Limited. (100% ownership of Rappel Holdings.000 shares of common stock.00% indirect ownership in Prime Metroestate.

954.992 2.652% 6.761.131 18.141. Share for Share Swap and Property for Share Swap is expected to be filed with the PSEC and Page 8 of 12 . Mountain Bliss 4.073.210% . 685.NAME OF COMPANY TO STOCKHOL NO. OF SHARES HELD PERCENTAGE OF OWNERSHIP BE ACQUIRED DER 7 Costa Del Hamilo Inc.002.097 67.121.00% SMDC Tender Offer Report 4. and Subsequent to the approval by the stockholders of SM Prime. of Rooms* 47.514 36. QC Davao A vote of the stockholders owning at least two thirds (2/3) of the outstanding capital stock of SM Prime is required for the above transactions to be approved.910 204* Asset Type Hospitality Hospitality Hospitality Hospitality Hospitality Commercial Commercial Commercial Land Hospitality Hospitality Location Tagaytay Cebu Batangas Pasay Pasay Pasay Pasay Tagaytay Tagaytay North Edsa.116. m.568% .)/ No. 337 12. including the Plan of Merger.108% 69. 157.491 3.273 46. 2013. On May 30. the Share for Share Swap and the Property for Share Swap are then expected to be approved by the stockholders of SM Prime during its special stockholders’ meeting. The following stockholders of SM Prime have undertaken to vote favorably to the above matters to be taken up during the special stockholders’ meeting to be conducted by SM Prime: SM Prime Stockholder SM Land SM Investments Corp.964% 21. the application for approval on the Merger. the Board of Directors and stockholders of SM Land will conducted their respective meetings and approved the Merger.536 95.190 Non 1.883 19.707 261* 396* 154* 51.495 100.483. PCD Nominee CorporationFilipino Sysmart Corporation Sy Family Total Number of SM Prime Shares 7.394 132.553 Percentage of Ownership 40. The issuance of additional and equivalent amount of SM Prime shares of stock to SMIC in exchange for the following real estate properties ("Property for Share Swap"): Classificat Properties/Developments ion Taal Vista Hotel Land and Building Radisson Cebu Hotel Building Pico Sands Hotel Building SMX Convention Center Building MoA Arena Building MoA Arena Annex Building Corporate Office Building Casino and Waste Water Building Treatment Plant Tagaytay Land EDSA West Land Park Inn Davao Building GFA (sq.791.501% The Merger.

Inc. and all receivables due on whatever account. and • The following real assets that were previously owned by SMIC: • Taal Vista Hotel • Radisson Cebu Hotel • Pico Sands Hotel • SMX Convention Center • MoA Arena • MoA Arena Annex • Corporate Office • Casino and Waste Water Treatment Plant • Tagaytay • EDSA West • Park Inn Davao • Post reorganization. and all and every interest of. immunities and franchises of each of SM Prime and SM Land. SMDC. In addition. real or personal. The completion of the Reorganization shall have the following effects: • SMDC Tender Offer Report SM Prime and SM Land shall become a single corporation. including subscriptions to shares and other choses in action. The separate existence of SM Prime and SM Land shall cease. • 100% direct interest in SM Hotels and Conventions Corporation • 100% direct interest in SM Arena Complex Corporation • 100% direct interest in Costa Del Hamilo Inc. the corporate structure and shareholdings of SM Prime. or due to each of SM Prime and SM Land. • 75% direct interest and 25% indirect interest (via SMDC) in Tagaytay Resort Development Corporation. and all property. The surviving entity SM Prime shall thereupon and thereafter possess all the rights. privileges. Highlands Prime and other real estate companies of the SM Group are as follows: • Page 9 of 12 .the application for listing of the SM Prime shares of stock issued pursuant to the Merger. with SM Prime as the surviving corporation designated in the Plan of Merger. SM Prime will effectively own the following real and personal properties of the SM Group: • At least 84% direct interest in SMDC • At least 89% direct interest in Highlands Prime • 10% direct interest and 90% indirect interest in Prime Metroestate. shall be transferred to and vested in SM Prime without further act or deed. SM Land. or belonging to. Share for Share Swap and Property for Share Swap shall be subsequently filed with the PSE.

056.943. MoA Arena. SM Investments Corp.190% Parent Company Stockholders Page 10 of 12 .Prime Metro Estate Inc.161 Shares representing 34. Interest in Securities of the Issuer The subject of this Tender Offer is 3.856 11. SM Arena Complex Corporation.193% 1. The beneficial interest as of March 31.. SM Hotels and Conventions Corporation.055.82% of the Shares at a consideration of . Sybase Equity Investments Corp. Sy Family Relationship with Bidder Number of Shares 663. Sysmart Corp.197% .813 667. etc Item 4.155% 5. Assets . Inc. Radisson Cebu Hotel.126% 7..828 481. 2013 in the Shares of the Bidder and by each associate and affiliates of the Bidder are as follows: Name Syntrix Holdings.940 Percentage 7. 2 Companies .228.472 SM Prime Share per Share held by various individual and corporate shareholders and stock brokerages.683.495.721 110. Tagaytay Resort & Development Corporation.350.SMDC Tender Offer Report Note: New SM Prime will also have a non-binding Right of First Refusal to purchase major additional land and real estate properties from SMIC 1 Assuming full acceptance rate of the tender offers. Costa Del Hamilo Inc.Taal Vista hotel.

Understandings or Relationships with Respect to Securities of the Issuer There are no contracts. (b) Notice to Stockholders of SMDC regarding Tender Offer (Exhibit “A”).SMDC Tender Offer Report Current Shareholding of SM Land TOTAL 6. division of profits or loss.048% There is no transaction in the Shares which is the subject of the Tender Offer that was effected during the past sixty (60) days by the Bidder or any of its associates and affiliates. (g) Affidavit of publication in the newspaper of general circulation in the Philippines on the date of commencement of the tender offer and for two (2) consecutive thereafter. Contracts. Item 5. (c) Exchange Offer Memorandum (Exhibit “B”) in compact disc form shall be sent to the stockholders.078 7.148.236 65. Arrangements. and (i) Summary of the Fairness Opinion report (Exhibit “F”). naming the person with whom such contracts. arrangements. Materials to be Filed as Exhibits The following tender offer materials will be published or sent or made available to security holders by the Bidder: (a) This Tender Offer Report (SEC Form 19-1).977. arrangements. understandings or relationships among the entities named in Item 2 and between such entities and any person with respect to any of the Shares. puts or calls. Page 11 of 12 .182% 86. joint ventures. finder's fees.043. Item 6. or the giving or withholding of proxies. (d) Application to Tender Shares of SMDC (Exhibit “C”) With the following inclusions: Terms of the Tender Offer (Annex “A”) Form of Irrevocable Power of Attorney for Individual Stockholders (Annex “B”) Form of Board Resolution for Corporate Stockholders (Annex “C”) Form of Partnership Resolution for Partnership Stockholders (Annex “D”) Form of Affidavit of Loss (Annex “E”) (e) Instructions To Participating Brokers (Exhibit “D”) (f) Affidavit of Publication of the Intent to Tender to Shareholders of SMDC. No securities of SMDC are pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities. including but not limited to transfer or voting of any of the securities. understandings or relationships have been entered into. (h) Certification that the SMPH Consideration Shares owned by the Bidder are sufficient to satisfy full acceptance of the tender offer (Exhibit “E”).678. hard copies will be available upon request. guarantees of profits. loan or option arrangements.

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The following is the schedule of the tender offer for the Shares: June 4.660 per share for the SM Prime shares or the Consideration Shares. 2013 at 12:00 noon. Tender Offer Period The Tender Offer Period shall commence on June 4. The subject of this Tender Offer is 3. The terms of the tender offer are as follows: Party Making the Tender Offer SM Land. 2013 (9:30 am) July 9. Inc. as hereinafter defined. unless extended by the Bidder upon approval by the Securities and Exchange Commission (“SEC” or the “Commission”).EXHIBIT “ A ” TO ALL STOCKHOLDERS OF SM DEVELOPMENT CORPORATION: Please be advised that SM Land. (“SM Land” or the “Bidder”) Subject Company SM Development Corporation (“SMDC”) Subject Shares The Bidder intends to acquire one hundred percent (100%) of the outstanding shares of common stock of SMDC (the “Shares”).472 share of common stock of SM Prime (the “Consideration Share”) for every Share. (“SM Prime”)shares of common stock at an exchange ratio of . 2013 July 19. has filed a Tender Offer Report in SEC Form 19-1 with the Securities and Exchange Commission (the “Commission”) and the Philippines Stock Exchange (the “PSE”) pursuant to Section 19 of the Securities Regulation Code in connection with its intention to acquire 100% of the outstanding common shares (the “Shares”) of SM Development Corporation (“SMDC”).m. shall be paid in cash by Bidder at the Crossing Price of the Consideration Shares. 2013 Commencement of the Tender Offer Period End of Tender Offer Period Acceptance of Shares Tendered and Report on Results Cross Date (Sale of Shares on the Philippine Stock Exchange [the “PSE”]) Settlement Date Application to Tender Shares Stockholders who wish to offer all or a portion of their Shares (the “Tendering Shareholder”) for sale to the Bidder may do so by securing an Application to Tender Shares form (the “Application”) from the Tender .228.2013 at 9:30 a. Any resulting fractional share. 2013. Crossing Price The Crossing Price was determined by computing the 1-month volume weighted average price ("VWAP") of the Shares and the Consideration Shares ending March 31.056. 2013 July 16. and end on July 9. The Crossing Prices are P 8. Inc. and P 18. respectively.303 per share for the Shares. is entitled to transfer its/his/her Tender Offer Shares to the Bidder subject to and in accordance with these Terms of the Tender Offer. Inc. 2013 (12:00 noon) July 16.82% of the Shares (the “Tender Offer Shares”) Tender Offer Consideration The Tender Offer Shares shall be acquired by the Bidder in exchange for SM Prime Holdings.161 Shares representing 34. Eligible Shareholders Any registered owner of any number of Tender Offer Shares as of any date during the Tender Offer Period.

For Corporations: (i) Notarized Board Resolution (in substantially the form of the Secretary’s Certificate attached as Annex C to the Application. Inc. For married individuals who are Philippine citizens. additionally: For Individuals: (i) For shareholders acting through an attorney-in-fact.. i. For Tendering Shareholders whose stock certificate/s covering the Share/s is/are lost. (iv) Duly accomplished signature card containing the specimen signature of the Applicant’s designated authorized signatories and verified by the Applicant’s Corporate Secretary or equivalent person having official custody of company records. such shareholder(s) should submit to the Tender Offer Agent the following: (i) one (1) original copy of a duly notarized affidavit of loss (in substantially the form of Annex E to the Application which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC).. and (iv) bond in the amount of twice the closing price per share of the SMDC shares as of the date of execution of the affidavit of loss. original SMDC stock certificates duly endorsed. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC).e. or passport. Social Security System/Government Services Insurance System card. their respective spouses must sign the space provided in the Irrevocable Power of Attorney to indicate marital consent to the sale of the Shares. (iv) Duly accomplished signature card containing the specimen signature of the Applicant’s designated authorized signatories and verified by the Applicant’s Partnership Secretary or equivalent person having official custody of the partnership records. (ii) Copy of the SEC Registration or equivalent constitutive document certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. the stock transfer agent of SMDC. (iii) Copy of latest Articles of Incorporation and By-Laws of the Applicant or equivalent constitutive document certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. (ii) copy of the affidavit of loss as published in a newspaper of general circulation. Page 2 of 5 SMDC Publication . (iii) Notarized Partnership Resolution (in substantially the form of the Partners’ Certificate attached as Annex D to the Application. designating signatories for the purpose and indicating the specimen signature of the signatories. designating signatories for the purpose and indicating the specimen signatures of those signatories. (ii) Photocopies of two (2) valid identification cards showing the Applicant’s signature and photograph.Offer Agent and submitting a duly accomplished Application together with the following documentary requirements to the Tender Offer Agent: For certificated Shares. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC) authorizing the sale of the Shares. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC) authorizing the sale of the Shares. as valid and authentic certificates. driver’s license. a duly notarized Irrevocable Power of Attorney (in substantially the form attached as Annex B to the Application. (ii) Copy of the latest Articles of Partnership of the Applicant or equivalent constitutive document certified as true copy of the original by the Partnership Secretary or equivalent person having official custody of the partnership records. multiplied by the number of shares covered by each lost stock certificate. (v) Copy of latest General Information Sheet (GIS) filed with SEC and certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. to be verified by the Tender Offer Agent with Professional Stock Transfer. (iii) affidavit of publication (of affidavit of loss). tax identification card. (iii) Duly accomplished signature card containing the specimen signature of the Applicant. For Partnership: (i) Copy of SEC Registration or equivalent constitutive document certified as true copy of the original by the Partnership Secretary or equivalent person having official custody of the partnership records.

or (ii) For shares lodged with their PCD Participant. to the PCD Participant (if previously lodged with the PDC Participant) or to the tendering stockholder (if previously certificated). 2013. within ten (10) trading days from the end of the Tender Offer Period. On Settlement Date. and expenses as enumerated below in relation to the conveyance of the Consideration Shares in scripless form from the Bidder to the Tendering Shareholder. or on or before July 2. 2013. except for lodgement expenses in relation to certificated shares tendered by a Tendering Shareholder and any applicable value-added tax on such lodgement expenses. to their stockbroker or custodian (the “PCD Participant”). to the Tender Offer Agent. on or before July 4. the Tendering Shareholders should submit the required documents: (i)For certificated Shares. consents and authorizations for the purchase by the Bidder of the Shares. Checks which remain unclaimed after 30 calendar days from July 2. Trust and Investments Group at the 15th Floor. shall be for the Bidder’s account. to allow for lodgement of the shares with the Philippine Central Depository Nominee Corporation (“PCD”) before the end of the Tender Offer Period. South Tower. Taxes and Other Expenses For this Tender Offer. 2013. at least 5 trading days before the end of the Tender Offer Period.To ensure that the Tender Offer Agent receives the Shares in scripless form within the Tender Offer Period. on or before June 25. The following customary selling charges typically payable by Tendering Shareholders for the transfer of the Tender Offer Shares to the Bidder shall be borne by the Bidder. 2013. Tendering Shareholders whose Shares are lodged with the PCD should instruct their brokers to electronically transfer their Shares to the Tender Offer Agent. The last day to withdraw tendered Shares shall be on July 9. Checks representing the cash payment for fractional shares shall be available for pick-up at the office of BDO Unibank. The Shares shall be deemed accepted by the Bidder on July 16. 2013. five (5) business days after the Settlement Date of the Tender Offer Period or on July 26. Payment of Consideration The Consideration Shares shall be transferred on Settlement Date. at 12:00 noon. the expenses enumerated below in relation to the conveyance of the Tender Offer Shares to the Bidder. and shall be based on the Crossing Price of the Tender Offer Shares: Page 3 of 5 . Inc. The cost of returning the Shares shall be borne by the shareholder making the withdrawal. Makati City. Shares shall be returned in the same form it was received. In addition to the documentary requirements above. contractual and regulatory approvals. at least 3 trading days before the end of the Tender Offer Period or. 2013 shall be mailed to the Tendering Shareholder at his/her/its own risk. to allow for the electronic transfer of the Shares to the Tender Offer Agent before the end of the Tender Offer Period. the Tender Offer Agent shall electronically transfer the Consideration Shares to the Tendering Shareholders through the designated PCD Participant nominated by each of the Tendering Shareholder in their respective Application. BDO Corporate Center. Acceptance of Shares All Shares validly tendered by Tendering Shareholders of SMDC under this Tender Offer shall be accepted for payment by the Bidder. to the Tender Offer Agent. to allow for the issuance of new stock certificate and the lodgement thereof with the PCD before the end of the Tender Offer Period. Withdrawal of Securities and Manner of Payment The Shares tendered may be withdrawn by the stockholder of record at any time during the tender offer period by submitting a written request for the tendered Shares to the Tender Offer Agent and surrendering the receiving copy of the Application signed by the Tender Offer Agent. or SMDC Publication (iii) For lost stock certificate/s. 2013 (the “Closing Date”) subject to the condition that the Bidder shall have obtained all corporate. 7899 Makati Avenue.

(vi) Representation and Warranties of the Bidder The Bidder hereby represents and warrants that the settlement of the Consideration Shares shall be made when it falls due. Material Change If any material change occurs in the information previously disclosed to the stockholders of SMDC. claims and encumbrances and will be able to freely and fully exercise all rights and privileges arising from ownership of such tendered Shares. plus applicable 12% valueadded tax on such commission. the value of the transaction shall be computed by multiplying the number of Tender Offer Shares or Consideration Shares. adverse claim. and has good and marketable title.005% of the value of the transaction.01% of the value of the transaction. plus applicable 12% valueadded tax on such commission. plus applicable 12% value-added tax on such fee For the avoidance of doubt. The tendered Shares have been validly issued. and shall be based on the Crossing Price of the Consideration Shares: • Buying broker’s commission of up to 0. The Tendering Shareholder has obtained all the required approvals and authorizations to enable it/him/her to transfer the Shares to the Bidder. the Bidders shall promptly disclose such change in a manner reasonably calculated to inform the stockholders of such change.25% of the value of the transaction. and there is no objection.50% of the value of the transaction. liens. • Securities and Exchange Commission (SEC) fee of 0. options.25% of the value of the transaction.005% of the value of the transaction. by the Crossing Price. the Bidder will obtain full and valid title to the tendered Shares. and • Philippine Stock Exchange transaction fee of 0. The Tendering Shareholder is the registered and absolute legal and beneficial owner of.005% of the value of the transaction. Representation and Warranties of the Tendering Shareholder By accepting the Tender Offer.005% of the value of the transaction • Philippine Stock Exchange transaction fee of 0. The following customary buying charges typically payable by the Tendering Shareholders for the transfer of the Consideration Shares from the Bidder to the Tendering Shareholders shall be borne by the Bidder. coercion or any other vice of consent. order or regulations or other issuances applicable to the Tender Offer Shares or the Tendering Shareholder. including but not limited to the right to vote and receive dividends.01% of the value of the transaction • Securities Investors Protection Fund (SIPF) fee of 0. free and clear from any warrants. • Stock transaction tax of 0. Any selling broker’s commission in excess of the aforesaid amount shall be payable by the Tendering Shareholder. interests. and For corporate shareholders. • Securities Investors Protection Fund (SIPF) fee of 0.001% of the value of the transaction. the transfer of the Shares to the Bidder shall not constitute a breach of the constitutive documents of the Tendering Shareholder or of any agreement or arrangement. each Tendering Shareholder represents and warrants to the Bidder that: (i) (ii) (iii) (iv) (v) All information contained in the Application and its attachments are true and correct and the signatures thereon are genuine.001% of the value of the transaction • Securities and Exchange Commission (SEC) fee of 0. law. Page 4 of 5 . plus applicable 12% value-added tax on such fee. On the Cross Date. • Securities Clearing Corporation of the Philippines (SCCP) fee of 0. fully paid and the non-assessable . Any buying broker’s commission in excess of the aforesaid amount shall be payable by the Tendering Shareholder.SMDC Publication • Selling broker’s commission of up to 0. dispute or notice concerning its/his/her right to tender and transfer the Shares. to the tendered Shares. • Securities Clearing Corporation of the Philippines (SCCP) fee of 0. as the case may be. properly authorized and obtained without use of fraud.

the Subject Company is expected to file a Petition to Delist its securities with the Philippine Stock Exchange in conjunction with the conduct of this Tender Offer. in consonance with BIR regulations.Tender Offer Report Further information regarding the Tender Offer is included in the Tender Offer Report (SEC Form 19-1). Furthermore. Page 5 of 5 . SMDC Publication All questions relating to this Tender Offer for the Shares of SM Development Corporation may be directed to the following: BDO Securities Corporation Name Janet Amora Jasper Jimenez Karen Lim Daniel Locsin Telephone number +63 (2) 840-7000 local 6386 +63 (2) 878-4070 +63 (2) 840-7682 +63 (2) 840-7000 local 6952 Advisory Pursuant to the minimum public ownership rule of the PSE. any transfer of SMDC shares subsequent to the settlement of the Tender Offer will no longer be subject to the stock transaction tax at the rate of 0.5% of the gross selling price or gross value in cash of the shares but shall be subject to the following taxes on the transfer of shares not traded in the local stock exchange: (i) capital gains tax at the rate of 5% where the net gain realized is in an amount not exceeding P100. once public ownership of SMDC is reduced to less than 10% (which will occur if SM Land acquires more than 90% of the issued and outstanding shares of SMDC).00 and at the rate of 10% on any amount in excess of P100. Copies of the Tender Offer Report have also been filed with SMDC. copies of which are available at the office of the Tender Offer Agent.00. and (ii) documentary stamp tax at the rate of P 0.00 of the par value of the shares of stock sold or transferred.000. Shareholders of SMDC who will not tender its/his shares to the Bidder may end up owning unlisted shares of SMDC. the PSE and the Securities and Exchange Commission.75 on each P200.000.

Before making any decision. and (vi) all information contained herein and in the documents submitted herewith are true and correct and the signatures thereon are genuine. (s) Tax Identification Number Nationality ACKNOWLEDGMENT This Application (with all the required attachments indicated herein) is received subject to the terms and conditions set forth in this Application and to the Terms of the Tender Offer. and lodged with the Philippine Depository & Trust Corporation (the “PDTC”) as Depository Agent through PSE Trading Participants nominated by the Applicants. 2013 for tendering scrip shareholders who will submit directly to BDO Securities Corporation at the address indicated at the back hereof. INC. adverse claim. On behalf of SM Land. of July 9. 2013 (the “Tender Offer Period”). must be received by the Tender Offer Agent before 12:00 p. free from any liens. Inc. the “Applicant”). together with the duly endorsed SMDC stock certificates (as applicable) and the other required attachments specified below. of July 9. objections. encumbrances. with BDO UNIBANK. The notice of withdrawal. options. valid and clean title to such Shares. The Bidder has reserved the right to accept or reject this Application. each shareholder is advised to read the Terms of the Tender Offer and the SEC Form 19-1. disputes. (“SM Land” or the “Bidder”) has prepared SEC Form 19-1. (iv) the Shares are fully paid and non-assessable and there are no further amounts payable by it/him/her to SMDC or to any other entity in respect of these securities. in executing this Application. order or regulations or other issuances applicable to the Shares or Applicant. No. _________________________________________ Authorized Signatory(ies) PDTC Code / PDTC Sub-Account Code: ________________ Upon issuance of the Consideration Shares.(s) No.m. REPRESENTATIONS AND WARRANTIES The Applicant hereby represents and warrants to the Bidder as follows: (i) it/he/she is the sole. confirms that it/he/she: (i) has read and understood and unconditionally accepted the Terms of the Tender Offer and Instructions to Participating Brokers attached to this Application (as applicable). Inc.Exhibit “C” This application must be prepared in triplicate and completed in all parts: 1. Applicant’s Copy DO NOT PROCEED UNLESS YOU HAVE DECIDED TO TENDER YOUR SHARES TO THE BIDDER APPLICATION TO TENDER SHARES IN SM DEVELOPMENT CORPORATION. interests. Inc. liens. and unconditionally accept/s said terms and conditions. and (iv) understand/s that no person has been authorized to give information or to make any representation with respect to the Tender Offer other that those specified and made in the SEC Form 19-1. hereby applies to exchange ________________ SMDC common shares (the “Shares”) for the corresponding consideration stated below. INC. the transfer of the Shares to the Bidder shall not constitute a breach of the constitutive documents of the Applicant or of any agreement or arrangement. as the case may be (in either case. 2013 for tendering scrip shareholders based in the Visayas and Mindanao who will submit thru BDO Cebu Ayala Business Park Branch and BDO Davao CM Recto Branch at the respective addresses indicated at the back hereof. INC. This Application after being submitted may be withdrawn in writing. including but not limited to the right to vote and receive dividends.m. (ii) not later than 12:00 p. 2013. TO SM LAND. 2013. free and clear from any warrants. which was filed with the Securities and Exchange Commission (“SEC”) and the Philippine Stock Exchange (“PSE”) on June 3. (iii) hereby makes the representations and warranties set forth in the Exchange Offer Memorandum (Exhibit B to SEC Form 191) under the caption “The Exchange Offers—Representations and Warranties”. Applicant’s / Participating Broker’s Full Name in Print Applicant’s Mailing Address (Building. If covered by stock certificates. and encumbrances and will be able to freely and fully exercise all rights and privileges arising from ownership of such Shares. SM Land. APPLICATION TO TENDER The undersigned registered shareholder of SM DEVELOPMENT CORPORATION (“SMDC”) or the undersigned Participating Broker holding SMDC shares on behalf of the beneficial owner of such shares and acting in accordance with and within the instructions of said beneficial owner. The Consideration Shares shall be issued in scripless form. of June 28. must be received by BDO Securities Corporation (the “Tender Offer Agent”) as follows: (i) not later than 12:00 p. (v) for corporate shareholders.m. and restrictions of any kind and nature. (iii) the Bidder will obtain full and valid title to such Shares. Tender Offer Agent’s Copy 3. The Tender Offer shall commence at 9:30 a. absolute. including any selling broker’s commissions at the rates indicated in the Terms of the Tender Offer and the taxes thereon. (the “ SMPH Shares” or the “Consideration Shares”) at the ratio of . of July 2. valid and marketable title to the Shares. shall be for the Bidder’s account. legal and beneficial owner of the Shares and has good. This APPLICATION TO TENDER SHARES IN SM DEVELOPMENT CORPORATION (SMDC) TO SM LAND. District and City) Applicant’s Country of Residence Applicant’s / Participating Broker’s Signature Tel.472 SMPH Shares for every one (1) Share tendered by the Applicant (the “Exchange Ratio”). The Applicant should indicate below the name of the PSE Trading Participant under whose name the Consideration Shares shall be registered. The Applicant. of Shares Represented by Each Certificate No.m. and (iii) not later than 12:00 p. INC. Inquiries and requests for assistance and copies of the SEC Form 19-1 may be directed to the Tender Offer Agent. dispute or notice concerning its/his/her right to tender the Shares. claims. and is not aware of any objection. for the purpose of describing the Tender Offer in detail and complying with the Securities Regulation Code and its implementing rules. of Shares Tendered TOTAL The Bidder shall purchase the Shares from the Applicant in exchange for shares of SM Prime Holdings. Street Address. The customary selling charges for the Shares and the customary buying charges for the Consideration Shares. to be effective. 2013 and end at 12:00 p.: BDO Securities Corporation _________________________________________________________ ____________________ ________________ . (the “Application”) is made on the terms and conditions as set out in the Terms of the Tender Offer attached as Annex A to this Application which forms an integral part hereof. whose address and telephone numbers appear in the attached Terms of the Tender Offer. Bidder’s Copy 2. properly authorized and obtained without the use of fraud or coercion or any other device of consent.m. please fill in (and attach separate sheet if needed): SMDC Stock Certificate No. (ii) it/he/she can and has full authority and capacity to transfer good. Name of Nominated PSE Trading Participant: ________________________________________________________ TO BE COMPLETED BY PSE TRADING PARTICIPANT We confirm that we are a PSE Trading Participant and that the Applicant(s) named in this Application is our bona fide client. (ii) warrant/s having read and understood and relied solely upon the provisions of SEC Form 19-1 and the terms and conditions stated herein. of July 4 for tendering scripless shareholders.m. the Applicant may request the Stock Transfer Agent to issue stock certificates evidencing their holdings of the Consideration Shares. This Application. law. – Trust and Investments Group (“Stock Transfer Agent”) maintaining the scripless Registry of Shareholders as the Registrar of the SMPH Shares. on June 4. Any expense to be incurred in relation to such issuance shall be for the account of the requesting Applicant.

designating signatories for the purpose and indicating the specimen signatures of those signatories. 2013. of July 4. unless the Tender Offer Period is extended by the Bidder upon approval by the SEC. (ii) Photocopies of two (2) valid identification cards showing the Applicant’s signature and photograph. such shareholder(s) should submit to the Tender Offer Agent the following: (i) one (1) original of a duly notarized affidavit of loss. Telephone No. affidavit of publication. Shares tendered may be withdrawn by the shareholder of record at any time during the Tender Offer Period. For those whose stock certificate/s covering the Share/s is/are lost.. Makati City. Tel. (Contact Persons: Ms. For those tendering shareholders who lost their stock certificates (“Lost Certificate”).. or lack any of the required attachments will also be rejected. or passport. Karen Lim. The Shares covered by stock certificates (“Scrip Shares”) being tendered for sale to the Bidder must be received by the Tender Offer Agent by the surrender of the documents specified above. 2013 at the 20th Floor. Tel. (v) Copy of latest General Information Sheet (GIS) filed with SEC and certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. i. Telephone No. Locsin. 7899 Makati Avenue. the Tender Offer Agent will also reject the Application. (a) For Tendering Shareholders based in the Visayas and Mindanao. (632)(32) 238-8153 to 56) (Contact Person: Branch Marketing Officer) and (b) Davao CM Recto Branch: 343 Claro M.e. +63 (2) 878-4052 up to 54. as valid and authentic certificates. Jasper M. +63 (2) 840-7000 local 6386 Mr. +63 (2) 840-7000 local 6386. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC). the stock transfer agent of SMDC . Cebu City. (iii) Notarized Partnership Resolution (in substantially the form of the Partners’ Certificate attached as Annex D to the Application. +63 (2) 840-7000 local 6952 For inquiries about the number of shares of a shareholder in SMDC . together with the duly endorsed SMDC stock certificates and the other required attachments specified above. This Application. designating signatories for the purpose and indicating the specimen signature of the signatories. (d) For Partnership: (i) Copy of SEC Registration or equivalent constitutive document certified as true copy of the original by the Partnership Secretary or equivalent person having official custody of the partnership records. but only up to 12:00 noon on July 9. For married individuals who are Philippine citizens. COPIES OF THE SEC FORM 19-1 MAY BE OBTAINED FROM THE TENDER OFFER AGENT AT THEIR OFFICE ADDRESS ABOVE. (iii) Duly accomplished signature cards containing the specimen signature of the Applicant. +63 (2) 878-4070. Tel. and (iv) bond in the amount of twice the closing price per share of the SMDC shares as of the date of execution of the affidavit of loss. Mindanao corner Bohol Avenues. Recto Street. to be verified by the Tender Offer Agent with Professional Stock Transfer. Davao City. Janet Amora. please contact BDO UNIBANK. all foregoing requirements at the Cebu and Davao branch offices of BDO Unibank. (63)(82) 2240821. Telephone No. and bond on or before June 25. (ii) Copy of the SEC Registration or equivalent constitutive document certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC) authorizing the sale of the Shares. Social Security System/Government Service Insurance System card.. Applications received after the end of the Tender Offer Period shall be rejected. Tel. (ii) Copy of the latest Articles of Partnership of the Applicant or equivalent constitutive document certified as true copy of the original by the Partnership Secretary or equivalent person having official custody of the partnership records. no. (ii) copy of the affidavit of loss as published in a newspaper of general circulation (in substantially the form of Annex E to the Application which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC). Jasper Jimenez. BDO Corporate Center.REQUIRED ATTACHMENTS TO THIS APPLICATION Original SMDC stock certificates duly endorsed. (c) For Corporations: (i) Notarized Board Resolution (in substantially the form of the Secretary’s Certificate attached as Annex C to the Application. +63 (2) 840-7000 local 6952). driver’s license. South Tower. 2013. 2013 and end on 12:00 noon of July 9. Authorized Signature/s Date (PLEASE SEE BACK PAGE FOR DETAILED INSTRUCTIONS) Time . 7899 Makati Avenue. their respective spouses must sign the space provided in the Irrevocable Power of Attorney to indicate marital consent to the sale of the Shares. a duly notarized Irrevocable Power of Attorney (in substantially the form attached as Annex B to the Application. +63 (2) 840-7682 Mr. 2013 (the “Tender Offer Period”). Sheila Acain)]. including the corresponding stock certificates duly endorsed. no. Mr. not later than 12:00 noon of July 2. Janet D. Tel. BDO Corporate Center. Tel. no. must be received by BDO Securities Corporation (the “Tender Offer Agent”) not later than 12:00 noon on July 9.M. multiplied by the number of shares covered by each lost stock certificate. 2013 to the Tender Offer Agent. please contact any of the following personnel of BDO Securities Corporation: Ms. South Tower. Inc. Applications that are not properly completed. Tendering Shareholders whose Shares are lodged with the Philippine Depository and Trust Corporation (“Scripless Shares”) should instruct their brokers to electronically transfer their Shares to the Tender Offer Agent prior to 10:00 a. by submitting a written request for the tendered shares to the Tender Offer Agent with a copy of the “Applicant’s Copy” of the Application issued by the Tender Offer Agent. they must submit one (1) original copy of a duly notarized affidavit of loss. Daniel Locsin. Makati City. IMPORTANT INFORMATION The Tender Offer shall commence at 9:30 A.m. tax identification card. Lorelei Zambales and Ms. For inquiries on the Tender Offer.. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC) authorizing the sale of the Shares. copy of the affidavit of loss published in a newspaper of general circulation. Inc. 221-0671 and 226-3703 (Contact Person: Branch Marketing Officers or Ms. 2013. Cebu Business Park. (iv) Duly accomplished signature cards containing the specimen signature of the Applicant’s designated authorized signatories and verified by the Applicant’s Corporate Secretary or equivalent person having official custody of company records . 2013. no. Tel. (iii) affidavit of publication (of affidavit of loss). TRUST AND INVESTMENTS GROUP at the 15th Floor. and Mr. Daniel C. Amora. on June 4. the Shares may be tendered by submitting on or before July 9. If the Tender Offer Agent is unable to verify the signature on the Application or the endorsement of the SMDC stock certificates. (b) For Individuals: (i) For shareholders acting through an attorney-in-fact. (iii) Copy of latest Articles of Incorporation and By-Laws of the Applicant or equivalent constitutive document certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. INC. the parent company of the Tender Offer Agent: (a) Cebu Ayala Business Park Branch: Cebu Towers. Jimenez. +63 (2) 878-4070 Ms. (iv) Duly accomplished signature cards containing the specimen signature of the Applicant’s designated authorized signatories and verified by the Applicant’s Partnership Secretary or equivalent person having official custody of the partnership records .

Any registered owner of any number of Tender Offer Shares as of any date during the Tender Offer Period.660 per share for the SM Prime shares or the Consideration Shares. Any resulting fractional share. shall be paid in cash by the Bidder at the Crossing Price of the Consideration Shares. and end on July 9. The Tender Offer Period shall commence on June 4. as hereinafter defined. respectively. 2013 July 16.Settlement Date Application to Tender Shares Stockholders who wish to offer all or a portion of their Shares (the “Tendering Shareholder”) for sale to the Bidder may do so by securing an Application to Tender Shares form (the “Application”) from the Tender Offer Agent and submitting a duly accomplished Application together with the following documentary requirements to the Tender Offer Agent: For certificated Shares. as valid and authentic certificates. Inc. is entitled to transfer its/his/her Tender Offer Shares to the Bidder subject to and in accordance with these Terms of the Tender Offer. additionally: . original SMDC stock certificates duly endorsed. to be verified by the Tender Offer Agent with BDO Unibank. Trust and Investments Group.2013 (9:30 am) July 9. 2013 at 9:30 a. The Crossing Price was determined by computing the 1-month volume weighted average price ("VWAP") of the Shares and the Consideration Shares ending March 31. and P 18. unless extended by the Bidder upon approval by the Securities and Exchange Commission (SEC or the “Commission”). (“SM Prime”)shares of common stock at an exchange ratio of . 2013 Commencement of the Tender Offer Period End of Tender Offer Period Tender Offer Consideration Crossing Price Eligible Shareholders Tender Offer Period . Inc.m.056. the stock transfer agent of SMDC.Annex “ A” Terms of the Tender Offer for Common Shares of SM Development Corporation U Party Making the Tender Offer Subject Company Subject Shares SM Land. Inc.303 per share for the Shares. (“SM Land” or the “Bidder”) SM Development Corporation (“SMDC”) The Bidder intends to acquire one hundred percent (100%) of the outstanding shares of common stock of SMDC (the “Shares”).Cross Date (Sale of Shares on the Philippine Stock Exchange [the “PSE”]) .472 share of common stock of SM Prime (the “Consideration Share”) for every Share. 2013 at 12:00 noon. The Crossing Prices are P 8.Acceptance of Shares Tendered and Report on Results . 2013. 2013 (12:00 noon) July 16.161 Shares representing 34.228. 2013 July 19.82% of the Shares (the “Tender Offer Shares”) The Tender Offer Shares shall be acquired by the Bidder in exchange for SM Prime Holdings. The subject of this Tender Offer is 3. The following is the schedule of the tender offer for the Shares: June 4.

. For married individuals who are Philippine citizens. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC). (ii) Copy of the SEC Registration or equivalent constitutive document certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records.SMDC Terms of the Tender Offer For Individuals: (i) For shareholders acting through an attorney-in-fact. and (iv) bond in the amount of twice the closing price per share of the SMDC shares as of the 2 . (iii) Copy of latest Articles of Incorporation and By-Laws of the Applicant or equivalent constitutive document certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. tax identification card. designating signatories for the purpose and indicating the specimen signatures of those signatories. (iii) Duly accomplished signature card containing the specimen signature of the Applicant. (v) Copy of latest General Information Sheet (GIS) filed with SEC and certified as true copy of the original by the Corporate Secretary or equivalent person having official custody of company records. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC) authorizing the sale of the Shares. driver’s license. which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC) authorizing the sale of the Shares. (iv) Duly accomplished signature card containing the specimen signature of the Applicant’s designated authorized signatories and verified by the Applicant’s Corporate Secretary or equivalent person having official custody of company records. such shareholder(s) should submit to the Tender Offer Agent the following: (i) one (1) original copy of a duly notarized affidavit of loss (in substantially the form of Annex E to the Application which is Exhibit C to the SEC Form 19-1 filed by the Bidder with the SEC). (ii) Photocopies of two (2) valid identification cards showing the Applicant’s signature and photograph. a duly notarized Irrevocable Power of Attorney (in substantially the form attached as Annex B to the Application. For Tendering Shareholders whose stock certificate/s covering the Share/s is/are lost. Social Security System/Government Services Insurance System card. (iii) affidavit of publication (of affidavit of loss). (iv) Duly accomplished signature card containing the specimen signature of the Applicant’s designated authorized signatories and verified by the Applicant’s Partnership Secretary or equivalent person having official custody of the partnership records.e. (ii) Copy of the latest Articles of Partnership of the Applicant or equivalent constitutive document certified as true copy of the original by the Partnership Secretary or equivalent person having official custody of the partnership records. (iii) Notarized Partnership Resolution (in substantially the form of the Partners’ Certificate attached as Annex D to the Application. their respective spouses must sign the space provided in the Irrevocable Power of Attorney to indicate marital consent to the sale of the Shares. (ii) copy of the affidavit of loss as published in a newspaper of general circulation. i. or passport. designating signatories for the purpose and indicating the specimen signature of the signatories. For Partnership: (i) Copy of SEC Registration or equivalent constitutive document certified as true copy of the original by the Partnership Secretary or equivalent person having official custody of the partnership records. For Corporations: (i) Notarized Board Resolution (in substantially the form of the Secretary’s Certificate attached as Annex C to the Application.

to allow for the issuance of new stock certificate and the lodgement thereof with the PCD before the end of the Tender Offer Period. shall be for the Bidder’s account. the Tender Offer Agent shall electronically transfer the Consideration Shares to the Tendering Shareholders through the designated PCD Participant nominated by each of the Tendering Shareholder in their respective Application. five (5) business days after the Settlement Date of the Tender Offer Period or on July 26. The Shares tendered may be withdrawn by the stockholder of record at any time during the tender offer period by submitting a written request for the tendered Shares to the Tender Offer Agent and surrendering the receiving copy of the Application signed by the Tender Offer Agent. on or before June 25. contractual and regulatory approvals. to the Tender Offer Agent. except for lodgement expenses in relation to certificated shares tendered by a Tendering Shareholder and any applicable value-added tax on such lodgement expenses. Checks representing the cash payment for fractional shares shall be available for pickup at the office of BDO Unibank. Payment of Consideration Acceptance of Shares Withdrawal of Securities and Manner of Payment 3 . to allow for the electronic transfer of the Shares to the Tender Offer Agent before the end of the Tender Offer Period. or (iii) For lost stock certificate/s. Checks which remain unclaimed after 30 calendar days from July 26. Tendering Shareholders whose Shares are lodged with the PCD should instruct their brokers to electronically transfer their Shares to the Tender Offer Agent. the expenses enumerated below in relation to the conveyance of the Tender Offer Shares to the Bidder. The last day to withdraw tendered Shares shall be on July 9. 2013. The Shares shall be deemed accepted by the Bidder on July 16. multiplied by the number of shares covered by each lost stock certificate. to their stockbroker or custodian (the “PCD Participant”). or on or before July 2. The Consideration Shares shall be transferred on Settlement Date. at 12:00 noon. Shares shall be returned in the same form it was received. Taxes and Other Expenses For this Tender Offer. BDO Corporate Center. within ten (10) trading days from the end of the Tender Offer Period. To ensure that the Tender Offer Agent receives the Shares in scripless form within the Tender Offer Period. consents and authorizations for the purchase by the Bidder of the Shares. the Tendering Shareholders should submit the required documents: (i)For certificated Shares. In addition to the documentary requirements above. to allow for lodgement of the shares with the Philippine Central Depository Nominee Corporation (“PCD”) before the end of the Tender Offer Period. or (ii) For shares lodged with their PCD Participant. at least 5 trading days before the end of the Tender Offer Period. and expenses as enumerated below in relation to the conveyance of the Consideration Shares in scripless form from the Bidder to the Tendering Shareholder. to the Tender Offer Agent. 2013. The cost of returning the Shares shall be borne by the shareholder making the withdrawal. On Settlement Date. Makati City. 7899 Makati Avenue. 2013. 2013 shall be mailed to the Tendering Shareholder at his/her/its own risk.SMDC Terms of the Tender Offer date of execution of the affidavit of loss. 2013. at least 3 trading days before the end of the Tender Offer Period or. Inc. on or before July 4. 2013. 2013 (the “Closing Date”) subject to the condition that the Bidder shall have obtained all corporate. All Shares validly tendered by Tendering Shareholders of SMDC under this Tender Offer shall be accepted for payment by the Bidder. Trust and Investments Group at the 15th Floor. to the PCD Participant (if previously lodged with the PDC Participant) or to the tendering stockholder (if previously certificated). South Tower.

005% of the value of the transaction. • Securities Clearing Corporation of the Philippines (SCCP) fee of 0.005% of the value of the transaction. • Securities Clearing Corporation of the Philippines (SCCP) fee of 0. free and clear from any warrants.25% of the value of the transaction. properly authorized and obtained without use of fraud. The tendered Shares have been validly issued. plus applicable 12% value-added tax on such fee. dispute or notice concerning its/his/her right to tender and transfer the Shares.001% of the value of the transaction • Securities and Exchange Commission (SEC) fee of 0.001% of the value of the transaction. • Securities Investors Protection Fund (SIPF) fee of 0.005% of the value of the transaction • Philippine Stock Exchange transaction fee of 0. plus applicable 12% value-added tax on such commission. by the Crossing Price. as the case may be. • Stock transaction tax of 0. adverse claim. The Tendering Shareholder is the registered and absolute legal and beneficial owner of. the Bidder will obtain full and valid title to the tendered Shares. liens. options. • Securities and Exchange Commission (SEC) fee of 0.01% of the value of the transaction • Securities Investors Protection Fund (SIPF) fee of 0. and shall be based on the Crossing Price of the Consideration Shares: • Buying broker’s commission of up to 0. to the tendered Shares.50% of the value of the transaction.SMDC Terms of the Tender Offer The following customary selling charges typically payable by Tendering Shareholders for the transfer of the Tender Offer Shares to the Bidder shall be borne by the Bidder. Any selling broker’s commission in excess of the aforesaid amount shall be payable by the Tendering Shareholder. Representation and Warranties of the Tendering Shareholder (ii) (iii) (iv) (v) 4 . the value of the transaction shall be computed by multiplying the number of Tender Offer Shares or Consideration Shares. and has good and marketable title. and there is no objection. and • Philippine Stock Exchange transaction fee of 0. plus applicable 12% value-added tax on such commission. and shall be based on the Crossing Price of the Tender Offer Shares: • Selling broker’s commission of up to 0. interests. coercion or any other vice of consent. The following customary buying charges typically payable by the Tendering Shareholders for the transfer of the Consideration Shares from the Bidder to the Tendering Shareholders shall be borne by the Bidder. By accepting the Tender Offer. The Tendering Shareholder has obtained all the required approvals and authorizations to enable it/him/her to transfer the Shares to the Bidder. fully paid and the nonassessable . plus applicable 12% value-added tax on such fee For the avoidance of doubt.005% of the value of the transaction.01% of the value of the transaction. each Tendering Shareholder represents and warrants to the Bidder that: (i) All information contained in the Application and its attachments are true and correct and the signatures thereon are genuine.25% of the value of the transaction. On the Cross Date. Any buying broker’s commission in excess of the aforesaid amount shall be payable by the Tendering Shareholder.

Representation and Warranties of the Bidder Material Change Tender Offer Report The Bidder hereby represents and warrants that the settlement of the Consideration Shares shall be made when it falls due.000. the PSE and the Securities and Exchange Commission. any transfer of SMDC shares subsequent to the settlement of the Tender Offer will no longer be subject to the stock transaction tax at the rate of 0. 5 . copies of which are available at the office of the Tender Offer Agent. and (ii) documentary stamp tax at the rate of P 0. law. the transfer of the Shares to the Bidder shall not constitute a breach of the constitutive documents of the Tendering Shareholder or of any agreement or arrangement.75 on each P200. Furthermore.00.00 of the par value of the shares of stock sold or transferred.000. once public ownership of SMDC is reduced to less than 10% (which will occur if SM Land acquires more than 90% of the issued and outstanding shares of SMDC). the Bidders shall promptly disclose such change in a manner reasonably calculated to inform the stockholders of such change. If any material change occurs in the information previously disclosed to the stockholders of SMDC. the Subject Company is expected to file a Petition to Delist its securities with the Philippine Stock Exchange in conjunction with the conduct of this Tender Offer. in consonance with BIR regulations.00 and at the rate of 10% on any amount in excess of P100. order or regulations or other issuances applicable to the Tender Offer Shares or the Tendering Shareholder. Copies of the Tender Offer Report have also been filed with SMDC. All questions relating to this Tender Offer for the Shares of SM Development Corporation may be directed to the following: BDO Securities Corporation Name Janet Amora Jasper Jimenez Karen Lim Daniel Locsin Telephone number +63 (2) 840-7000 local 6386 +63 (2) 878-4070 +63 (2) 840-7682 +63 (2) 840-7000 local 6952 Advisory Pursuant to the minimum public ownership rule of the PSE.SMDC Terms of the Tender Offer (vi) claims and encumbrances and will be able to freely and fully exercise all rights and privileges arising from ownership of such tendered Shares.5% of the gross selling price or gross value in cash of the shares but shall be subject to the following taxes on the transfer of shares not traded in the local stock exchange: (i) capital gains tax at the rate of 5% where the net gain realized is in an amount not exceeding P100. Further information regarding the Tender Offer is included in the Tender Offer Report (SEC Form 19-1). Shareholders of SMDC who will not tender its/his shares to the Bidder may end up owning unlisted shares of SMDC. including but not limited to the right to vote and receive dividends. and For corporate shareholders.

and (e) to do or cause to be done any and all such acts and things as shall be necessary or desirable to effect the sale or transfer of the Shares to SM Land. legal and beneficial owner of the Shares and has good. and (v) the transfer of the Shares to SM Land shall not constitute a breach of any agreement or arrangement. (the “Consideration Shares”). options. law. directly or indirectly. employees. including the appointment of substitute/s and/or broker(s) who will effect the sale of the Shares through the PSE. free from any liability and agree to indemnify the latter from any claims. and restrictions of any kind and nature. (b) to sell the Shares to SM Land through the Philippine Stock Exchange (“PSE”) in exchange for . (“SM Land”) under the Terms of the Tender Offer (Exhibit C. (d) to receive and accept any and all Consideration Shares in my behalf pursuant to the sale or transfer of Shares.472 common shares of SM Prime Holdings. Inc. liens. its directors. claims. free and clear from any warrants. (iii) SM Land will obtain full and valid title to Shares. execute.Annex “B” (to Application to Tender Shares) IRREVOCABLE POWER OF ATTORNEY FOR INDIVIDUAL STOCKHOLDERS Relating to a proposed offer to buy shares in SM DEVELOPMENT CORPORATION I/We. (ii) I/We can and have full authority to transfer good. with address at ________________________. interests. HEREBY CONFIRMING AND RATIFYING everything which the BROKER or any of its duly authorized directors or officers or substitute/s shall do or purport to do under this Power of Attorney and hold the BROKER. as I/we hereby represent and warrant. free from any liens. valid and marketable title to the Shares. adverse claim. objections. representatives or substitute/s. agents. held by me/us in SM Development Corporation (“SMDC”) (the “Shares”) in favor of SM Land. HEREBY IRREVOCABLY APPOINT/S [Name of Broker] (the “BROKER”) acting through any of its directors or officers to be my/our attorneyin-fact to act in my/our name and on my/our behalf. (c) to sign. to SM Land that: (i) I am/We are the sole. . disputes. from the performance of the transactions pursuant to the terms of this Power of Attorney. and am/are not aware of any objection. and in particular: (a) to represent and warrant. and (iv) the Shares are fully paid and non-assessable and there are no further amounts payable by me/us to SMDC or to any other entity in respect of these securities. ___________________________. officers. as it may in its absolute discretion determine. valid and clean title to the Shares. required in connection with or for the purpose of the sale or transfer of the Shares and to ensure that any transfer of the same is effected in the stock and transfer book of SMDC and in the system of the Philippine Depository and Trust Corporation. dispute or notice concerning my/our right to tender and transfer the Shares. including but not limited to the right to vote and receive dividends. which shall be lodged with my/our nominated PSE Trading Participant as specified in my/our Application to Tender Shares in accordance with the Terms of the Tender Offer. Annex A to the SEC Form 19-1 filed by SM Land with the Securities and Exchange Commission (“SEC”)). in connection with the sale or transfer of the [number of shares] common shares. to do all acts and things whatsoever requisite. and complete in my behalf any agreement or documents. and encumbrances and will be able to freely and fully exercise all rights and privileges arising from ownership of Shares. damages or liabilities which may result. necessary or convenient to be done. Inc. order or regulations or other issuances applicable to the Shares or me/us. absolute. encumbrances.

a Notary for and in the city named above this __ day of ____ 2013 personally appeared Name Competent evidence of identity Date/Place Issued who has/have been identified by me through competent evidence of identity. Series of 2013. This Power of Attorney shall be governed by and construed in accordance with the laws of the Republic of the Philippines. which consists of three (3) pages including the page where this acknowledgment is written. I have hereunto set my hand and affixed my notarial seal on the date and place first above written. If the sale is not made by such date. No. BEFORE ME. Doc. ________.This Power of Attorney is given in consideration of the BROKER effecting the sale of the Shares as soon as possible and in any event not later than the Cross Date as defined in the Terms of the Tender Offer filed by SM Land with the SEC or any extended date approved by the SEC. and who acknowledged to me that the same is his/her/their free and voluntary act and deed. IN WITNESS WHEREOF this Irrevocable Power of Attorney has been executed on this ________ day of _____________ 2013. to be the same person/s who executed and signed the foregoing Irrevocable Power of Attorney in my presence. ________. ________. IN WITNESS WHEREOF. . ______________________________________ (Signature over Printed Name of Stockholder) With my marital consent: _________________________________________ (Signature over Printed Name of Spouse) ________________________________________ Signature over Printed Name of Witness _______________________________________ Signature over Printed Name of Witness ACKNOWLEDGMENT REPUBLIC OF THE PHILIPPINES ) ________ CITY )SS. Page No. this Power of Attorney shall automatically lapse without need of any act on my/our part. Book No.

disputes. and in particular. to be the Corporation’s attorney-in-fact. options. . in connection with the sale of the Shares. free and clear from any warrants. (“SM Land”) under the Terms of the Tender Offer (Exhibit C. Inc. and complete on behalf of the Corporation any agreement or document required in connection with or for the purpose of the sale or transfer of the Shares and to ensure that any transfer of the same effected is in the stock and transfer book of SMDC and in the system of the Philippine Depository and Trust Corporation. the following: (a) to represent and warrant. and with office address at the ___________________________________. absolute. the following resolutions were approved: “RESOLVED. Annex A to the SEC Form 19-1 filed by FC Philippines with the Securities and Exchange Commission (“SEC”)) attached to the Notice of Tender Offer to stockholders of SMDC. necessary or convenient to be done. and is not aware of any objection. (c) to sign. RESOLVED. claims. a corporation duly organized and existing under the laws of the Republic of the Philippines. (ii) it can and has full authority to transfer good. authorize as it hereby authorizes the Corporation to sell or transfer its [number of shares] common shares in SM Development Corporation (“SMDC”) in the name of the Corporation (the “Shares”) in favor of SM Land. after having been duly sworn in accordance with law. and (v) the transfer of the Shares to SM Land shall not constitute a breach of its constitutive documents or of any agreement or arrangement. (iii) SM Land will obtain full and valid title to the Shares. to act in its name and on its behalf. do hereby certify that at the meeting of the Board of Directors of the Corporation duly called and held on _______________. with principal office at ___________________________________. [Name of Broker] (the “BROKER”) or any of its duly authorized directors or officers. and (iv) the Shares are fully paid and non-assessable and there are no further amounts payable by it to SMDC or to any other entity in respect of these securities. as it hereby irrevocably appoints.472 common shares of SM Prime Holdings. and encumbrances and will be able to freely and fully exercise all rights and privileges arising from ownership of the Shares. Inc. legal and beneficial owner of the Shares and has good. interests. objections. That the Board of Directors of [name of stockholder] (the “Corporation”). valid and marketable title to the Shares. and to do all acts and things whatsoever requisite. to SM Land that (i) it is the sole. That the Corporation appoint. encumbrances. Filipino. law. ___________________________.Annex “C” (to Application to Tender Shares) FORM OF SECRETARY’S CERTIFICATE FOR CORPORATE STOCKHOLDERS I. liens. including but not limited to the right to vote and receive dividends. as the Corporation hereby represents and warrants. of legal age. execute. as it may in its absolute discretion determine. free from any liens. at which meeting a quorum was present and validly existing throughout. (the “Consideration Shares”). adverse claim. being the duly elected Corporate Secretary of [name of stockholder] (the “Corporation”). dispute or notice concerning its right to tender and transfer the Shares. order or regulations or other issuances applicable to the Shares or to it or its assets or properties. (b) to sell the Shares to SM Land through the Philippine Stock Exchange (“PSE”) in exchange for . which shall be lodged with the Corporation’s nominated PSE Trading Participant as specified in the Corporation’s Application to Tender Shares in accordance with the Terms of the Tender Offer. and restrictions of any kind and nature. FURTHER. valid and clean title to the Shares.

from the performance of the transactions pursuant to the terms of this Power of Attorney. which is given in consideration of the BROKER effecting the sale of the Shares as soon as possible and in any event not later than the Cross Date as defined in the Terms of the Tender Offer or any extended date approved by the SEC. representatives or substitute/s. to be the same person who executed and signed the foregoing Secretary’s Certificate in my presence. Series of 2013. including the stock certificates covering the Shares: Name ____________________________________ ____________________________________ ____________________________________ Specimen Signature ____________________________________ ____________________________________ ___________________________________ IN WITNESS WHEREOF. ____. its directors. NOTE: The person/s who will endorse the stock certificate should be the person/s whose specimen signature/s is/are on file with the stock transfer agent of SMDC. agents. officers. this Power of Attorney shall automatically lapse without need of any act on the part of the Corporation. employees. Witness my hand and seal this ___ day of _________ 2013. provided that. damages or liabilities which may result. and (e) to do or cause to be done any and all such acts and things as shall be necessary or desirable to effect the transfer of the Shares including the appointment of substitute/s and /or broker(s) who will effect the sale or transfer of the Shares through the PSE. personally appeared: Name Competent evidence of identity Date/Place Issued who has been identified by me through competent evidence of identity. FINALLY.(d) to receive and accept any and all Consideration Shares on behalf of the Corporation pursuant to the sale or transfer of Shares. No. Before me. _________________________ [Name of Corporate Secretary] REPUBLIC OF THE PHILIPPINES ) CITY OF ______ )SS. if the sale is not made by such date. Page No. Book No. this Certificate has been signed this _____ day of ____________. endorse and deliver any and all documents necessary to implement the foregoing resolutions. . HEREBY CONFIRMING AND RATIFYING everything which the BROKER or any of its duly authorized directors or officers or substitute/s shall do or purport to do under this Power of Attorney and hold the BROKER. the following persons to sign. RESOLVED. free from any liability and agree to indemnify the latter from any claims. directly of indirectly. That the Corporation authorize. Doc. ___ . a notary public in and for the city named above. and provided further that this Power of Attorney shall be governed by and construed in accordance with the laws of the Republic of the Philippines. and who took an oath before me as to such instrument. as it hereby authorizes. ____. 2013 at ______________________.

“Annex D” (to Application to Tender Shares) IRREVOCABLE POWER OF ATTORNEY FOR PARTNERSHIP STOCKHOLDERS RELATING TO A PROPOSED OFFER TO BUY SHARES IN SM DEVELOPMENT CORPORATION [Name of Partnership] (the “Partnership”). options. to sell the Shares to SM Land through the Philippine Stock Exchange (“PSE”) in exchange for . acting through any of its directors or officers. with address at ________________________. objections. and is not aware of any objection. to SM Land that: (i) the Partnership is the sole. and complete on behalf of the Partnership any agreement or document required in connection with or for the purpose of the sale or transfer of the Shares and to ensure that any transfer of the same effected is in the stock and transfer book of SMDC and in the system of the Philippine Depository and Trust Corporation. encumbrances. necessary or convenient to be done. as it may in its absolute discretion determine. held by the Partnership in SM Development Corporation (“SMDC”) (the “Shares”) in favor of SM Land. (ii) the Partnership can and has full authority to transfer good. dispute or notice concerning its right to tender and transfer the Shares. and in particular: (a) to represent and warrant. including but not limited to the right to vote and receive dividends. which shall be lodged with the Partnership’s nominated PSE Trading Participant as specified in the Partnership’s Application to Tender Shares in accordance with the Terms of the Tender Offer. HEREBY IRREVOCABLY APPOINTS [Name of Broker] (the “BROKER”). free from any liens. to receive and accept any and all Consideration Shares on behalf of the Partnership pursuant to the sale or transfer of Shares. to act in the name of the Partnership and on the Partnership’s behalf. adverse claim. to be the attorney-infact of the Partnership. liens. and (v) the transfer of the Shares to SM Land shall not constitute a breach of the constitutive documents of the Partnership or of any agreement or arrangement. and encumbrances and will be able to freely and fully exercise all rights and privileges arising from ownership of Shares. in connection with the sale or transfer of the [number of shares] common shares. (“SM Land”) under the Terms of the Tender Offer (Exhibit C. interests. free and clear from any warrants. and restrictions of any kind and nature. Inc. and (iv) the Shares are fully paid and non-assessable and there are no further amounts payable by the Partnership to SMDC or to any other entity in respect of these securities.472 common shares of SM Prime Holdings. disputes. Annex A to the SEC Form 19-1 filed by FC Philippines with the Securities and Exchange Commission (“SEC”)). (b) (c) (d) (e) . Inc. law. as the Partnership hereby represents and warrants. (the “Consideration Shares”). valid and clean title to the Shares. execute. absolute. and to do or cause to be done any and all such acts and things as shall be necessary or desirable to effect the transfer of the Shares including the appointment of substitute/s and /or broker(s) who will effect the sale or transfer of the Shares through the PSE. to do all acts and things whatsoever requisite. to sign. claims. legal and beneficial owner of the Shares and has good. (iii) SM Land will obtain full and valid title to Shares. order or regulations or other issuances applicable to the Shares or the partnership or its assets or properties. valid and marketable title to the Shares.

I have hereunto set my hand and affixed my notarial seal on the date and place first above written. ________. representatives or substitute/s. . IN WITNESS WHEREOF. This Power of Attorney is given in consideration of the BROKER effecting the sale of the Shares as soon as possible and in any event not later than the Cross Date as defined in the Terms of the Tender Offer filed by FC Philippines with the SEC. which is given in consideration of the BROKER effecting the sale of the Shares as soon as possible and in any event not later than the Cross Date as defined in the Terms of the Tender Offer or any extended date approved by the SEC. Series of 2013. IN WITNESS WHEREOF this Irrevocable Power of Attorney has been executed on this ________ day of _____________ 2013. this Power of Attorney shall automatically lapse without need of any act on the part of the Partnership. If the sale is not made by such date. officers. this Power of Attorney shall automatically lapse without need of any act on the part of the Corporation. if the sale is not made by such date. free from any liability and agree to indemnify the latter from any claims. BEFORE ME. agents. No. to be the same person/s who executed and signed the foregoing Irrevocable Power of Attorney in my presence. damages or liabilities which may result. Book No. Page No. a Notary for and in the city named above this __ day of ____ 2013 personally appeared Name Competent evidence of identity Date/Place Issued who has/have been identified by me through competent evidence of identity. ________.HEREBY CONFIRMING AND RATIFYING everything which the BROKER or any of its duly authorized directors or officers or substitute/s shall do or purport to do under this Power of Attorney and holding the BROKER. ______________________________________ (Signature over Printed Name of Authorized Signatory/ies of Partnership Stockholder) ________________________________________ Signature over Printed Name of Witness _______________________________________ Signature over Printed Name of Witness ACKNOWLEDGMENT REPUBLIC OF THE PHILIPPINES) ________ CITY )SS. which consists of three (3) pages including the page where this acknowledgment is written. or any extended date approved by the SEC. ________. Doc. provided that. its directors. and who acknowledged to me that the same is his/her/their free and voluntary act and deed. directly of indirectly. employees. and provided further that this Power of Attorney shall be governed by and construed in accordance with the laws of the Republic of the Philippines. from the performance of the transactions pursuant to the terms of this Power of Attorney.

I am a stockholder of SM DEVELOPMENT CORPORATION (the “Company”). Doc. do hereby depose and say that: 1. mortgaged or in any way encumbered by me. Philippines. _________________ Affiant SUBSCRIBED AND SWORN TO before me in _________. of legal age.Annex “E” (to Application to Tender Shares) REPUBLIC OF THE PHILIPPINES ) _________________________) S. The above-mentioned certificates of stock have not been sold. a resident of _______________________. and that they are free from any liens or encumbrances. 4. No. Page No. Filipino. Series of 2013. _______________________. Number of Shares 2. . Book No. _______. this _______________. married/single. this ______________ 2013. AFFIDAVIT OF LOSS I. 3. The above-mentioned certificates were discovered missing and have not been found or located despite diligent search. pledged. _______. I have signed these presents in ___________________. owning ______ shares registered under the name ________________________________. affiant having exhibited to me his/her _____________ Number ___________________________ issued at __________________ on ___________________. Philippines.S. IN WITNESS WHEROF. represented by the following Certificates of Stock: Certificate No. _______. This affidavit has been executed for the purpose of securing new certificate/s in replacement of the certificated of stock mentioned above and to request the Company to take the necessary steps to prevent the negotiations or transfer of said lost certificate/s.

2. Inc. . Inc. For each Participating Broker transacting a transfer of the SMDC Shares to the BROKER. Participating Brokers are required to electronically transfer the SMDC Shares being tendered by their clients to BDO Securities Corporation (the “BROKER”). the Philippine Depository and Trust Corporation’s charges for the share transfer and any subsequent withdrawal will be for the []’s account. a letter to the BROKER (in the form attached as Annex 1) citing the exact number of shares being transferred. to purchase common shares of SM Development Corporation (the “SMDC Shares”) in exchange for common shares of SM Prime Holdings. to purchase shares of SM Development Corporation in exchange for shares of SM Prime Holdings. Inc. Inc. the Participating Broker should deliver in original. PDTC Account No. Only those shares electronically transferred to the BROKER as of 12:00 noon on July 4. The Terms of the Tender Offer form part of these instructions. the following are the instructions for Participating Brokers whose clients are accepting the said offer: 1. In connection with the tender offer by SM Land.472 Consideration for every SMDC Share. (the “Consideration”) at a ratio of . 3. 2013 are eligible for the Tender Offer.Exhibit “D” INSTRUCTIONS TO PARTICIPATING BROKERS on the offer of SM Land. 279. For orderly transfer and accurate tracking.

AMORA . Our clients commit to sell the shares and authorize BDO Securities Corporation (the “BROKER”) to sell these shares to SM Land under the Terms of the Tender Offer. which we have read and understood).Annex 1 (to Instructions to Participating Brokers) LETTER TO BDO SECURITIES CORPORATION FROM PARTICIPATING BROKERS DELIVERING SHARES OF THEIR CLIENTS [Date] BDO SECURITIES CORPORATION 20th Floor. MS. Acceptance and Conforme: _______________________________ BDO SECURITIES CORPORATION Signature over Printed Name of Authorized Signatory Date: _____________ _________________________ PCD Account No. [Participating Broker’s Name] ____________________________ Signature over Printed Name of Authorized Signatory/ies Telephone Number: Fax Number: BDO SECURITIES CORPORATION hereby accepts ________ SMDC Shares from _____________________ and shall hold these shares in custody under the Terms of the Tender Offer. JANET D. Philippines Attention: Madam: ______(Name of Participating Broker)__ is delivering ___________________________ (______) common shares of SM Development Corporation (“SMDC”) from our clients who wish to participate in the Tender Offer made by SM Land. Thank you. 2013 filed by SM Land. Inc. Very truly yours. (“SM Land”) under the Terms of the Tender Offer (Annex A to the SEC Form 19-1 dated May 31. These shares will be held in custodianship by the BROKER until such time that the transfer of these shares to SM Land has been effected by the BROKER. South Tower BDO Corporate Center 7899 Makati Avenue Makati City.

Inc. Inc.. for each share of SMDC. The tender offer is intended to commence on June 4. in compliance with Section 19 of the Securities Regulation Code. intends to conduct a tender offer to acquire up to 100% of the outstanding shares of common stock of SM DEVELOPMENT CORPORATION (SMDC) at a consideration of .NOTICE TO THE STOCKHOLDERS OF SM DEVELOPMENT CORPORATION TO ALL STOCKHOLDERS OF SM DEVELOPMENT CORPORATION: Please be advised that SM Land. Inc. Subsequent publications shall be made to announce the details of the tender offer. upon approval by the Securities and Exchange Commission. This publication is made pursuant to SRC Rule 19 (5). 2013 unless extended by SM Land. 2013 and to end on July 9.472 share of common stock of SM Prime Holdings. .

82% equity stake in SMDC. t Philippine law. No work was done insofar as the different aspects of the transaction are concerned.com. 2013 (the “Engagement Letter”). p e e r n s d h e i 1 . 2013 (the agreed “Cut-off Date” or the “Valuation Date” or “3M2013”). The Firm was engaged by SMIC to act as the independent financial advisor to the Audit and Risk Management Committee of SMIC in relation to the fairness of the share swap ratio to be used in this transaction.Manabat Sanagustin & Co. Brgy. MS&Co. SM Land Management shall be using a share-swap ratio of 0. 9/F 6787 Ayala Avenue Makati City 1226. the opinion does not include any statement or opinion as to the commercial merits or strategic rationale of the transaction. (“SMPHI”) shares for this acquisition. This fairness opinion does not contain and has no intention of forming an opinion as to the strategic. operational or commercial merits of the transaction.” or the “Firm”) is pleased to su bmit this Valuation and Fairness Opinion Report (the “Report”) covering the share-for-share swap transaction between SM Land. the scope of MS&Co.1 Introduction Manabat Sanagustin & Co. The Engagement Letter covers the Firm’s engagement with SMIC for the valuation of SMPHI and SMDC.com. Metro Manila.. involved in any way with the conceptualization and execution of the transaction. Sio Executive Vice President and Chief Finance Officer Gentlemen: Subject: Valuation and Fairness Opinion Report on the Proposed Share-for-share Swap Between SM Land. as of March 31. 76 Zone 10 Pasay City.ph May 30.2 1. dated April 5. Inc. Philippines Branches · Subic · Cebu · Bacolod · Iloilo Telephon e Fax Internet E-Mail +63 (2) 885 7000 +63 (2) 894 1985 www. and SM Development Corporation 1 1. SM Land shall become the 100% owner of SMDC. Inc.ph manila@kpmg.4 p i a n r a professional partnership established under Manabat Sanagustin & Co. This Report is based 1.. CPAs The KPMG Center.. Mall of Asia Complex. CPAs. 15th Floor Harbor Drive. as a going concern. Inc. At the end of this transaction. is a member firm of d the KPMG network of independent member firms e n affiliated with KPMG International. 2013 Audit and Risk Management Committee SM Investments Corporation Two E-Com Center.kpmg. SM Land will use SM Prime Holdings. As such.’s work did not include making comments on the commercial feasibility of the transaction nor was MS&Co. Philippines Attention: Jose T.’s work. This Report is submitted in accordance with the engagement letter of MS&Co. a Swiss cooperative.3 1. (“SM Land”) and SM Development Corporation (“SMDC”).472 SMPHI shares for every 1 SMDC share. CPAs (“MS&Co. and consequently. The transaction involves SM Land’s acquisition of an additional 34.

1.1 1. The ranges of values of these two companies were then used as bases to determine the fairness of the SMIC Management-determined share-swap ratio. Bloomberg. The opinion. Based on the initial set of assumptions and information received from SMDC and SMPHI. the market approach and the income approach.6. Bureau of Treasury.2 1. MS&Co. In order to assess the fairness of the share-swap ratio. did not conduct a financial due diligence on the information provided by SMDC and SMPHI.9 2 .7. Damodaran Online. will affect the shareholders. These three (3) criteria were applied to the specific circumstances of this valuation engagement. and resulting observations were based solely on management representations and on publicly available financial information. namely: the cost approach. considered three (3) valuation methodologies.8 1. 1. conducted a valuation of both SMDC and SMPHI.7.7 1. the Firm conducted interviews to clarify certain assumptions and information received in order to test check the reasonableness of the assumptions and underlying data. It is not the independent financial advisor’s role to either evaluate or confirm how the transaction.5 MS&Co. There are no globally accepted rules or standards on the selection of the most appropriate valuation methodologies for a given valuation engagement. The following activities were performed in this valuation and fairness opinion report: Requested for an initial set of information from SMDC and SMPHI management. It was assumed that all information furnished were complete. The management of SMPHI and SMDC had executed their respective representation letters stating that the information submitted to MS&Co. to be executed by SM Land and SMDC. were materially accurate and complete. MS&Co. 2013 on the information prepared and submitted by both SMDC and SMPHI.6 1. (ii) appropriateness of the methodologies with the characteristics of the entity being valued. fair in the manner of its portrayal and therefore forms a reliable basis for the valuation.1 1. and the projected cash flows of SMDC and SMPHI prepared and submitted by the management team of both companies.2 1. The broad criteria for the selection of the methodologies are as follows: (i) consistency of the methodologies given the availability and quality of the data. Factiva and various websites of comparable companies. These include annual and quarterly reports filed in the Philippine Stock Exchange (“PSE”). analysis. other than from a financial point of view. and (iii) applicability of the methodologies with the purpose of the valuation. accurate and reflective of the good faith of the management teams of SMDC and SMPHI to describe its historical status and prospects as of the Cut-off Date from operating and financial points of view. Conducted research and retrieved relevant information from the PSE.SM Investments Corporation Fairness Opinion Report May 30.6.

Further.77 to 9. and properties under development.w eighted average Closing price as of March 27. These are the Cost approach. the projected cash flows provided by SMDC’s management were only limited to a three-year period.290 62.1 Executive summary The valuation results of SMDC are presented below. Enterprise value-to-EBITDA multiple (“EV/EBITDA”). EV/EBITDA was selected as one of the appropriate multiples to estimate the fair range of market values for SMDC.228 62.22 6. considered the use of EV/EBITDA multiple instead of either the P/E or P/B multiples. and the 60-day volume-weighted average prices from the Valuation Date were used. a large portion of SMDC’s assets is comprised of real properties which currently do not reflect the fair market values of the assets. The P/B multiple was not considered as an appropriate method to value SMDC because this multiple does not take into account the earnings potential of SMDC.47 8. the P/E multiple will be sensitive to these differences.SM Investments Corporation Fairness Opinion Report May 30. SMDC’s market closing price as of the Valuation Date. 2013 2 2. The Cost approach was deemed appropriate to estimate the fair value of SMDC because the company relies heavily on the sale of its inventory of real properties to generate its revenues.85 Total (PHP'M) 91. condominium units for sale. and SMDC’s 60-day volume-weighted average price (“VWAP”).85 6. 2013. The value of SMDC is primarily driven by its asset base which primarily consists of raw land. and tax treatments. As such. MS&Co. The closing price as of March 27. analysis Per share (PHP) 9. Actual observed market prices were also used and forms part of the range of values.757 78.77 8. In contrast. EV/EBITDA multiple is generally not sensitive to differences in capital structures. Valuation results .757 to 91. Further.SMDC Cost approach Market approach EV / EBITDA . depreciation and amortization policies. Three-year projection in our opinion is not sufficient to capture the full value over the complete cycle from land development to point of turnover of a real estate developer.527 76. 2013 60-day volume w eighted average share price Valuation range Source: MS&Co. selected four valuation methodologies to estimate the fair range of market values of SMDC. the last trading day for the month. The Income approach was no longer considered as a relevant method since SMDC relies heavily on the sale of its real property inventories rather than on recurring rental income.290  MS&Co.     3 .

In contrast to SMDC.22 318. SMPHI’s market closing price as of the Valuation Date. Further.22 22. Valuation results .790 358.820  MS&Co.38 20. MS&Co.68 324. Cost approach is applicable to SMPHI as the company also relies heavily on its real property assets to generate its revenues.33 318. selected the Income approach to estimate the fair range of values of SMPHI since SMPHI’s future cash flows may be estimated using historical financial figures.837 18. amortization and tax treatment. As such. the planned exchange is fair from a financial point of view.2 The valuation results of SMPHI are presented below. EV/EBITDA was selected as one of the methodologies to estimate the fair range of market values for SMPHI. As such. selected five methodologies to estimate the fair range of market values for SMPHI.SMPHI Cost approach Incom e approach 7% grow th rate 6% grow th rate 5% grow th rate Market approach EV/EBITDA .39 24.10 331.888 420.33 to 24. Based on the management-determined share-swap ratio of 0.525 to 420. the appraised values take into account the recurring revenues attributable to these properties.537 shares of SMPHI for every 1 share of SMDC.    2. and SMPHI’s 60-day weighted average volume price. analysis Per share (PhP) 19.62 Total (PHP'M) 336. 2013 and the 60-day weighted average volume price as this is the traded market value of SMPHI as of the Valuation date. used the closing price as of March 27. MS&Co.525 19. the Income approach.280 to 0. These are the Cost approach.820 388. 2013 2. Some of the comparable companies researched over the course of the valuation work have materially different gearing ratios compared to SMPHI and apply different accounting treatments. the range of exchange ratios for the share-for-share swap transaction is 0.466 18. EV/EBITDA multiple. 4 . SMPHI generates recurring and stable rental and lease revenues. 2013 60-day volume-w eighted average share price Valuation range Source: MS&Co. MS&Co.472 SMPHI share for every 1 SMDC share.SM Investments Corporation Fairness Opinion Report May 30. selected EV/EBITDA as an appropriate multiple to be used as it generally does not take into account differences in leverage.3 Given the above fair ranges of values.231 18. Given that CBRE based the fair value of SMPHI’s malls primarily on discounted cashflows.w eighted average Closing price as of March 27.

Ownership structure SM Land is closely held by the Sy Family and SMIC. (“SVI”). Banco de Oro (“BDO”). and Sanford Marketing Corporation (“Sanford”). (“SM Land”) was incorporated on March 10. Prime Media Holdings.87% Sy Family 36. (“SSMI”). 1960 and is engaged primarily in real estate development. including SMIC. Inc. Inc. SMIC. Below is a summary of shareholdings.SM Investments Corporation Fairness Opinion Report May 30. SM Investments Corporation 63. Inc. PLDT. with respective percentage of ownership in SM Land as of 2013. It currently derives income from dividends received from investment in shares of stock of SMDC. SM Mart Inc. Ayala Corporation. Super Shopping Market. SMPHI. SMPHI. and in leasing and subleasing of properties. SM Land also derives its income from lease agreements with third parties and related parties. Source: SM Land. Inc. Inc. 2013 3 3.1 Organization background and structure of SM Land. Inc. 2013 general information sheet 5 . and other companies.13% SM Land. investment in shares of stock of other companies. (“SM Mart”). Supervalue. Corporate information SM Land. C hinabank (“CBC”).

is owned by SM Synergy Properties Holdings Corp. The company’s residential projects are primarily located within Metro Manila and cater to the middle-income sector. the company has 9. SMI subsequently was renamed to SMDC in May 1996.0 million subscribed capital stock.1 Organization background and structure of SM Development Corporation Corporate information SM Development Corporation (“SMDC”). 18% Foreign). All projects stated above are registered with the Board of Investments (BOI) as a developer of low-cost housing projects. namely: Makati City.4 billion with PHP1. 1974 as Ayala Fund.07% SM Land 65. SMDC is 65. Pasay City.00 par value per share. thus entitling it to a three-year income tax holiday incentive. Manila City. Other major owners of SMDC are PCD Nominee Corporation with 17. Mandaluyong City. AFI changed its name to SM Fund. Quezon City.15% SMDC Source: List of Top 100 Stockholders as of March 31.. a wholly owned subsidiary of SMDC. 2013 SMDC had nine (9) wholly-owned subsidiaries. all of which are either engaged in real estate property development or land holding. Ownership structure As of March 31. the Company has no known stockholder that owns more than 1% of its common stock.239 issued and outstanding common shares. 2013 4 4.26% Syntrix Holdings. 2013 As of March 31. is primarily engaged in the development of residential units. 2013.14% ownership and Sybase Equity Investments Corporation with 1. Other than the mentioned top five stockholders.26% ownership (82% Filipino. 7. (“SMI”) when the SM Group of companies took majority ownership. 2013. Taguig City and Tagaytay City. SMDC had 19 project developments in 8 strategic locations.SM Investments Corporation Fairness Opinion Report May 30. (“AFI”) with a PHP15. Inc. In 1986. the company amended its by-laws and increased its authorized capital stock to PHP8. On April 21. Inc. Parañaque City. Based on the unaudited financial statements as of March 31. with 7. Sysmart Corporation with 5. the company’s authorized capital stock amounts to PHP12.07% ownership. This is discussed further in section 4.2. 1997.204.271.1 Projects Based on the 2012 annual report. 6 . SMDC was first listed with the Philippine Securities and Exchange Commission (“SEC”) on July 12. Four of the subsidiaries were recently acquired in 2012. Currently. SMIC 66. Chateau Elysee.89% PCD Nominee Corporation 17. Syntrix Holdings.0 billion with PHP1.18% owned by SM Land which is also a subsidiary of SMIC. Inc.14% Sybase Equity Investments Corporation 1.18% Sysmart Corporation 5. Inc. a subsidiary of SMIC.20% Others 4.00 par value per share.20% ownership.

SM Investments Corporation Fairness Opinion Report May 30. cost and margin analysis.392 27.3% n/a (17. conducted an analysis of the historical financial performance of SMDC in order to understand the value drivers of the company.7% 1.043 3.991 86 4.674 6.5% 852 15. the asset base was likewise studied to understand the different asset groupings and how it relates to value generation.118 5.2%) (1) Average % of total revenues from 2010 to 2012 SMDC’s audited financial statements as of December 31.158 (17) 4. The analysis included historical revenue.8% 1.335 2.363 27.904 22.9% 25.627 4.077 1.417 574 4. Given that SMDC is a real estate company.041 4.4% 26.8% 3.3% 63. 2011 and 2012.4% 15.2.1 Financial information Financial performance and position MS&Co.167 (8) 4.2 4.9% 2.430 25.175 25.022 33.3% 64.859 100. 2013 7 .0% 53. 2013 4.4% 23. Consolidated statem ent of financial perform ance PHP'M Revenue from real estate sales Cost of real estate sold Gross profit Operating expenses ("OPEX") Income from operations Other income (charges) Income before tax Provision for income tax Net incom e Net incom e m argin Note: Source: 2010 9.9% (37) 2. Unaudited financial statement as of March 31 .171 149 3.1% Audited 2011 16.7% 2010 to 2012 Unaudited 1 3M2013 % of revenue CAGR 5.184 9.343 4.2% 27.577 59.535 8.7% 40. The income statements and balance sheets are presented below.578 13.509 2.742 428 3.6% (24%) 1.8% 2012 21.282 40.5% 29 0.

973 34 26 697 42.3% (11.517 8.920 381 3.5% 52. 2013.8% 1.408 53. analysis 8 .271 13.8%) 94.9% (0.2% 25.727 572 19.0% 14.060 9.0% 0.4% 138.924 5.110 2.3% 4.4% 0.176 25.467 2.974 1.505 8.1% 2.0% 20.428 13.6% 16.9% 0.3% 15.1% 100.0% 0.7% 49.271 13.0% (3.122 707 244 126 4.047 2 26 388 18.1% 66.134 53.734 7.4% 12.177 26.907 3.5% (1) Average % of total assets from 2010 to 2012 SMDC 2011 and 2012 audited financial statements.0% 20.762 1.1% 35.8% 54.198 23.960 9.412 8.889 40.6% 35.700 10.0% 1.944 5.107 3.904 2.126 735 458 280 4.714 13.4% 19.8%) (20.7% 37.8%) 4.729 679 5.8% 8.0% 0.198 2010 8.925 2010 to 2012 1 3M2013 % of total CAGR 5.0% 57. net Deferred tax assets Deposits and other assets Total assets Liabilities and equity Liabilities Loans payable Accounts payable and other liabilities Customers’ deposits Income tax payable Dividends payable Deferred tax liabilities Total liabilities Equity Capital stock Additional paid-in capital Retained earnings Unrealized gain on AFS Total equity Total liabilities and equity Note: Source: Unaudited 2012 8.1% 32.8% 100.1% 0.908 3.5% 58.642 35.366 80.2% 25.210 43.434 14.880 85. 2013 Consolidated statem ent of financial position Audited PHP'M Assets Cash and cash equivalents Trade and other receivables Investments held for trading Available-for-sale investments Condominium units for sale Land and development Advances for project development Investment property Property and equipment.293 85.681 42.539 579 4.5% 9.730 22 26 555 40.8% 41.434 10.596 32.7% 30.562 2. Unaudited financial statements as of March 31.857 29. MS&Co.237 30.7% 0.013 1.224 36 24 368 18.2%) 83.3% 0.022 3.122 747 121 49 3.933 802 16.656 43.7% 27.913 16.712 724 507 405 3.544 2.925 24.138 80.253 13.253 24.2% 6.1% 23.044 6.700 2011 5.9% 22.6% 12.SM Investments Corporation Fairness Opinion Report May 30.7% 3.680 1.322 14.193 384 4.434 15.801 1.

Corp. Adjustm ents to the approxim ate FMV as of 3M2013 Property Makati Home Depot 102 EDSA Realty Corp.550.216. 2008 Available-for-sale schedule as of March 31.70 3.280 Com pany Listed shares Highlands Prime. Available for sale investm ents Carrying value as of 3M2013 (In PHP'M) 770 4.1. 2013. valuation.000 3.    All real estate assets recorded under the books of SMDC were adjusted to reflect the movement in fair market value.101 735.561 189. Inc.1 Valuation of SM Development Corporation Cost Approach Under the Cost approach.05 0. 2013 5 5. The table below presents the breakdown of available-for-sale investments.553. Inc.28 5.193 652 2 15 8 54 2 66 5. Total Note: Source: (1) Latest available share price is as of May 8. analysis 5.26 5. Listed shares classified as available-for – sale investments are stated at fair market value. (“TRDC”).44 0. Export and Industry Bank.000 19.911.548 7. According to management.565. Inc.836 40.1 The table below presents the appraised values of properties we excluded in determining fair market value of SMDC’s real properties.70 FMV as of 3M2013 (In PHP'M) 770 4.1 Keppel Philippines Holding. MS&Co.SM Investments Corporation Fairness Opinion Report May 30. Inc.762 Num ber of shares 337.2 Republic Glass Holdings Corporation Benguet Corporation Unlisted shares Tagaytay Resort Dev't.70 5. MS&Co.000. Belle Corporation Shang Properties.829. Picop Resources. we adjusted the value based on MS&Co. only available-for-sale investments and held for trading investments are subject to market valuation. used the Cost approach in valuing TRDC. 2013 provided by management.80 17. For shares of Tagaytay Resort Dev’t.21 2. Inc. assets and liabilities with available fair market values are markedto-market.000 Latest share price (In PHP) 2.602 1. 2009 (2) Latest available share price is as of May 26. The fair market value was based on the appraisal reports prepared by CBRE using various valuation methods. Total Source: Appraised values (In PHP'M) 1.035. SMDC management 9 .919 105. PSE. namely the market data approach and income approach. Corp.269 2.512 88.193 652 2 15 8 54 2 584 6.871 Details Classified under deposits account Classified under deposits account CBRE appraisal as of February 28.

MS&Co. Cost approach Am ounts in PHP'M Total assets Total liabilities Unadjusted NAV Adjustment to reflect fair value of properties Fair value of available-for-sale securities Carrying value of available-for-sale securities Adjusted fair value of real estate properties Carrying value as of March 31. CBRE master property list. (“VLL”) as comparable companies.478 91. In addition to SMDC.2 The following table summarizes the computation for SMDC net asset value per share as of the Valuation Date.762 86.293 6. there are 39 property companies listed in the PSE.85 Unaudited financial statements as of March 31. 2013 (In PHP'M) Approximate FMV as of 3M2103 Adjustments Adjusted FMV of real properties as of 3M2013 Source: CBRE appraisal as of February 28. the list of comparable companies were evaluated and then chosen based on the following:    Majority (more than 50%) of the companies’ operating revenues should be derived from real estate sales Suite of products should include affordable to mid-end residential units Assets and operating revenues of the company should be relatively similar to SMDC’s asset and operating revenue levels After considering the criteria listed above. Out of the 39.653 519 48. 2013 The adjusted fair market value of SMDC’s real properties is shown below. From the 20 companies.253 42. 5. MS&Co. identified Filinvest Land. analysis 89. 20 companies are engaged in the sale of real estate.271. Adjusted fair m arket value of real properties as of March 31. 2013. (“FLI”) and Vista Land and Lifescapes.280 5.131 . 2013 Condominium units for sale Land and development Investment properties Advances for project development Adjusted NAV Number of shares outstanding NAV per share Source: 13-Mar-13 85. analysis 5.131 1.1.002 2.SM Investments Corporation Fairness Opinion Report May 30.666 724 3. SMDC management. The table below presents the summary of the CoCos selection process.290 9. The CoCos were selected based on the nature of their business and the company structure. MS&Co. gathered information relating to comparable publiclylisted companies operating in the same industry as SMDC.2 Market approach or capitalized earnings approach In using the Market approach. 10 . Inc.596 31.667 37. MS&Co. Inc.239 9.204. using the Cost approach. 2013.871 86.960 42.

0 billion Range below SMDC's level PHP0.656 March 31. BVS and EBITDA per share Notes Earnings per share (PHP) Net income (In PHP'M) 1 Number of shares outstanding ('000) Earnings per share Book value per share Book value (In PHP'M) Number of shares outstanding ('000) Book value per share EBITDA per share EBITDA (In PHP'M) 2 Number of shares outstanding ('000) EBITDA per share Note: Source: 5.204 March 31.37 billion to 49. SMDC EPS.SM Investments Corporation Fairness Opinion Report May 30.258 74. 2013 unaudited FS 4. 2013 unaudited FS 9.61 (1) LTM net income = December 2012 net income – March 2012 net income + March 2013 net income (2) LTM EBITDA = December 2012 EBITDA – March 2012 EBITDA + March 2013 EBITDA MS&Co. the price-to-book (“P/B”) multiple and the EV/EBITDA multiple in valuing SMDC.359.197.927.271. 5. The share prices used were based on the closing prices as of March 31. CoCos websites Under the Market approach.271.563 Entity nam e Revenue m ix SMDC Selected CoCos FLI 100% real estate sales 83. MS&Co. 2012 2012 (In PHP) (In PHP) 21.000 99.80 billion Range above SMDC's level: PHP25.2.1 The calculation for SMDC’s value using the Market approach is shown on the table below.825 80.264.9% real estate sales Yes 16. The respective earnings per share. Decem ber 31.3 million to PHP8. considered the price-to-earnings (“P/E”) multiple.204 March 31.429.053 March 31.97 billion Range above SMDC's level: PHP142.932.688. midend and highend residential units VLI Affordable.437. 2013 unaudited FS 0.293 March 31. 2013 unaudited FS 9. analysis 11 . 2013 unaudited FS 9.23 billion Note: Source: Operating revenues and asset figures were based on CoCos 2012 annual reports (latest available full-year financial information) SMDC and CoCos 2012 annual reports. midCoCos end and high(18 com panies) end units Yes 10.331.72 billion to PHP231.55 42.000 81.48 billion to PHP35.204 March 31. 2013.578.575. midend and highend residential units Excluded Affordable.56 5.2% real estate sales Affordable. 2013 unaudited FS 0. 2013 SMDC CoCos Selection Developm ent type Mid-market residential units Products include affordable to m idend residential units Yes Operating Total assets as of revenues as of Decem ber 31. 2013 of CoCos. book value per share and EBITDA of the CoCos were lifted from the Philippine Stock Exchange and quarterly reports as of March 31.608 All CoCos derive majority of their operating revenues from real estate sales 14 out of the 17 CoCos sell affordable to mid-end residential units Range below SMDC's level: PHP15.271.847.

271 4.85 12 .55 Book value per share EBITDA per share Derived multiple (w eighted average) 11.02 4. 2013 and its respective 30.22 7.30 8.271 6.66 0.674 Number of shares (in millions) 9. analysis P/B (x) EV/EBITDA (x) 4. before adjustments Number of shares (in millions) 9.61 Value per share (PHP) 6.271 N/A N/A N/A 43. Market approach .2.33 Source: MS&Co.29 8.61 14.VWAP Closing price as of March 27.086 0 0 62.33 Range of values Range of values per share.47 8.757 9. 60 and 90 day volume-weighted average share price for SMDC.56 1.207 9. Bloomberg Per share 8.2 Presented below are the share prices as of March 31. 2013 Market approach . 2013 Prior to valuation date 30-day volume w eighted average share price 60-day volume w eighted average share price 90.66 9.271 Range of values.77 5.271 18.72 9.CoCos Range of values per share P/E (x) Earnings per share 0. before adjustments Less: Net debt (PHP'M) N/A Minority interest (PHP'M) N/A Preferred shares (PHP'M) N/A Equity value (PHP'M) 58.271 Equity value per share (PHP) 6.SM Investments Corporation Fairness Opinion Report May 30.day volume w eighted average share price Source: PSE.

SM Supermarkets. 66. Source: SMPHI 2012 Annual report 13 . 2013. 2013 6 6. and is currently headquartered on Mall of Asia Arena Annex Building. McDonald’s.5% of the total outstanding shares.96% SM Prime Holdings. Watsons (Philippines). 1994. Inc PCD Nominee Corp. Wanda Cinema.43% 2.. and SM Investments Corp. sales of cinema tickets.. Ownership Structure SM Investments Corp. Ace Hardware. and Shopwise. (“SMPHI”) is the leading developer and operator of shopping malls in the Philippines. Coral Way cor.9% 21. SM Laiya Department Stores. Major anchor tenants in the Philippines include SM Department Stores. which has a 34. Its operations are mainly driven by rentals from tenants. indirectly owns 27. Robinsons Malls. J.65% stake in SMPHI..1% SMPHI is a listed company in the Philippine Stock Exchange. which has a 21. SMIC.W. Pasay City. (Foreign and Filipino) Others 40. 5. SMPHI was incorporated in January 6. Brgy.1 Organization background and structure of SM Prime Holdings Inc. Inc.4% of SMPHI resulting in an effective ownership of 49. As of March 31. Diokno Blvd.96% stake. which has a 40. SMPHI also operates malls in China. through SM Land Inc. Ownership structure The major shareholders of SMPHI are SM Land Inc.96% 34. The diagram below summarizes the ownership structure of the SMPHI.SM Investments Corporation Fairness Opinion Report May 30. The advantage of SMPHI in this competitive industry rests upon its strategic locations. are owned by the public.43% stake. income from amusement centers and others. KFC.65% SM Land. SMPHI competes with local mall operators and other retailers such as Ayala Malls. SMPHI has an extensive customer base. Zone 10. and Forever 21. National Bookstore. Mall of Asia Complex. Corporate information SM Prime Holdings Inc. Major anchor tenants in China include WalMart... Jollibee. which represent a 30. and Watsons. and long-standing brand. the revenue stream of the company is not reliant on one or a few clients. PCD Nominee Corp. CBP-1 A. Puregold. 76. SM Hypermarkets.3 million shares. KFC. effective tenant mix. Uniqlo.

2.3% -49.8% 16.net Income before income tax Incom e tax Current Deferred Total income tax Net incom e Source: 2010 23.0% -7.277) 14.289 (3.226 (445) 3.9% 21.450) (207) (2.8% 15.0% -10. The analysis includes historical revenue.9% 34.SM Investments Corporation Fairness Opinion Report May 30. the revenues were likewise studied to understand the behaviour of leasing income and how it relates to value generation.657) 8.731 (2. MS&Co.445 (1.995) 16.932) 94 (2.7% -0.897 (12.830 (3.726 (13.271) 12.648) 10.2% 11.4% 53.9% 16.313) (53) (3.382 Unaudited 3M2013 7. The income statements and balance sheets are presented below.620 (2.2 6.6% 15. conducted an analysis of the historical financial performance of SMPHI in order to understand the value drivers of the company.890 2010 to 2012 % of total CAGR 100.716 (11.781 (902) 10 (891) 2.8% 45.400) 12. cost and margin analysis.2% 12. analysis 14 . Consolidated statem ent of financial perform ance Audited 2011 26. Given that SMPHI is a commercial leasing company.1 Financial information Financial performance and position MS&Co.604) 4.0% 13.367) 10. 2013 6.442) 14.2% -10.220 (2.140 2012 30.8% -46. SMPHI 3M2013 financial statements.797 (2.8% PHP'M Total revenues Operating expenses Income from operations Other income (charges).838) 9.922 SMPHI 2012 Annual report.

0% 12.094 7.2% 7.278 244 1.087 110 190 4.405 13.7% 0.918 8.918 8.000 1.707 821 759 5.8% 11.1% -3.1% 0.1% 1.914 57.8% 0.1% 0.980 1.000 19.551 1.324 9.077 6.399 1.104 1.386 1.000 28.8% 1.219 544 - 800 11.276 16.4% -23.7% 0.607 17.2% 9.3% 0.8% 82.556 1.607 124.7% 12.880 1.3% 34.285 93.8% 0.5% -4.324 148.2% 41.000 1.466 1.9% 25.8% 11.2% 21.017 138 187 4.130 19.866 16.154 111.572 40.623 49.393 8.215 1.323 710 1.2% 0.708 1.8% 14.562 33.2% 23.940 738 223 3.9% 7.104 17.0% 96.9% 0.946 98.890 (101) (101) (101) 759 573 955 58.680 (101) 1.7% 1.669 0.4% 8.5% 14.566 28.9% -61.9% 86.133 8.022 49.0% 9.522 148.879 69.5% 3.2% 35.0% -3.219 590 4 10.6% 2.836 116 254 3.1% 0.3% 0.4% -7.792 633 14.0% 0.797 767 404 7.123 15.967 38.015 8.055 73.720 877 500 3.5% 5.9% 20. 2013 Consolidated statem ent of financial position Audited 2010 2011 Unaudited 2010 to 2012 3M2013 % of total CAGR Ver PHP'M Assets Current Assets Cash and cash equivalent Short-term investments Investments held for trading Receivables Available-for-sale investments Prepaid expenses and other current assets Total Current Assets Noncurrent Assets Investment properties .150 799 623 11.net Cumulative translation adjustment Unrealized gain on AFS Retained earnings: Appropriated Unappropriated Treasury stock Non controlling interest Total equity Total liabilities and equity Source: Note: 2012 9.994 17.848 116.000 27.0% -0.0% 13.net of current portion tax liabilities Deferred Derivative liabilities Other noncurrent liabilities Total Noncurrent Liabilities Equity Capital stock Additional paid-in capital .467 1.2% 100. SMPHI 3M2013 financial statements.216 13.611 1.290 877 813 4.380 2.219 516 27.133 128.6% 49.836 62.2% 13.0% 12.219 873 - 800 11. analysis Change in policy regarding allowance for doubtful accounts resulted in adjustments in the 2010 amounts 15 . SMPHI 2011 Audited financial statements.964 107.671 126.2% 6.042 1.440 19.5% 6.4% -1.5% 0.9% -100.647 8.0% 12.266 237 1.950 64.net of current portion Tenants’ deposits Liability for purchased land .393 8.259 238 1.761 159.6% 32.5% 52.3% 1.347 70.4% 14.6% 100.net Derivative assets Deferred tax assets Other noncurrent assets Total Noncurrent Assets Total assets Liabilities and stockholders' equity Current liabilities Loans payable Accounts payable and other current liabilities Current portion of long-term debt Income tax payable Total Current Liabilities Noncurrent Liabilities Long-term debt .8% -0.9% -13.656 130.998 159.000 1.7% -41.130 SMPHI 2011 and 2012 Annual report.000 7.669 7.135 128.900 116.5% 14.797 52. MS&Co.9% 6.SM Investments Corporation Fairness Opinion Report May 30.0% n/a 29.068 816 457 5.360 128.619 1.763 1.2% 2.

lease escalation rates. land use right rates. 2013 6. and approximates the inflation rate plus a marginal premium Assum ption Rem arks Grow th rate of rent pertaining to malls existing as of 2011 5-7% Lease escalation rate of new malls Occupancy rates First year of opening Second year of opening After tw o years of opening 5% 75% 85% 95% Cinema ticket sales annual grow th rate 5% Amusement and other revenues annual grow th rate Operating expenses Income tax rate China operations Revenues Lease escalation rate Occupancy rate Rental discounts Amusement and other revenues grew at a CAGR of 18. Summarized below are the assumptions used to estimate the projection scenarios of SMPHI. Revenues are projected to grow at 7.0% in 2012. and approximates the inflation rate plus a marginal premium 45. management fee rates. new malls are assumed to open during the last quarter and shall only have a three-month contribution to rent revenues.7% 46.5% to Approximates the hisorical ratio of local OPEX to revenues of 45. 24. and 6. for the first year of opening.0% in 2011 and 8. Cinema ticked sales grew at a CAGR of 12.1% from 24. 16 . The assumptions include average lease rates. and depending on taxes and licenses. together with interviews and representations from SMPHI management. management fee escalation.5% of total from 2010 to 2012 Approximates the average historical effective income tax rate.0% A 5.5% 2010 to 2012 3% to 20% 50% to 100% 10% to 50% Revenue assumptions in China are forecasted differently for each mall.0% grow th assumption is also included w hich represent the terminal grow th rate for mature malls. This is the normal escalation rate on the fixed portion of the lease payments Based on historical data.2.0% grow th scenario is included w hich represents a balanced grow th assumption Based on contracts w ith lessee. and rental discounts Operating expense Source: MS&Co analysis Operating expenses in China are based on assumptions such as Various rates inflation rate. These assumptions are forecasted separately mall per mall. salaries and w age increase. occupancy.3% to w hich is the ratio of taxes to net income before tax of 24.6% from 2010 to 2012 5% The projected grow th rate is conservative compared to the historical.1% from 2010 to 2012 The projected grow th rate is conservative compared to the historical. assumptions to support the financial projections were derived.2 Based on the analysis conducted on the historical financial statements of SMPHI. Also. List of assum ptions for financial perform ance Account Philippine operations The historical grow th rate is 7.SM Investments Corporation Fairness Opinion Report May 30.

Assum ption Rem arks Investment properties Predetermined CAPEX Accounts payable and other current liabilities Long term loans Tenant's deposit Dividends China operations Receivables Fixed assets Tenant's Deposit 2013 .0% of the prior year’s net income 6. tenant's deposits averaged 22.2% of the 2010 net income.2 million per year. Historically. Per square meter cost based on historical mall development costs and increased by 5% per year Historically. receivables averaged 21.2% of revenues from 2010 to 2012 Based on planned CAPEX ranging from PHP22.2014 2015 . excluding depreciation Predetermined loan availments Increase by 12.0% per annum 50. Based on the planned loan availments. 2013 List of assum ptions for financial position Account Philippine operations Receivables 20.1% of the 2011 net income Based on the ratio of Accounts receivables to Revenues in 2012 Based on planned CAPEX ranging from USD57 million to USD440.2016 2017 .45% of revenues Predetermined CAPEX 25% of revenues from third party tenants 21% of revenues from third party tenants 17% of revenues from third party tenants Historically. Based on the grow th of the account from 2011 to 2012 Historically.1% from 2010 to 2012. the 2011 dividends w ere 49. and the amortization of existing and future loans.SM Investments Corporation Fairness Opinion Report May 30. w hile the 2012 dividends w ere 43. the accounts payable as a percentage of total OPEX averaged at 107.4% of revenues from third party tenants from 2008 to 2010 17 .0% of the gross OPEX.8% of revenues Based on the ratio of Accounts receivables to Revenues in 2012.0 billion per year.2018 Source: MS&Co analysis 105.4 billion to PHP38.

SMPHI’s legal advisors represent that the company is not involved in any significant cases which may give rise to contingent liabilities.1 Valuation of SM Prime Holdings.  Operational malls in the Philippines and in China and other real estate properties recorded under the books of SMPHI were adjusted to reflect the movement in fair market value. SMPHI is not involved in any pending critical litigation. Financial liabilities were adjusted to reflect the fair values represented in their 3M2013 interim financial statements as of the Cut-off date. 2013 7 7. direct capitalization and discounted cash flow approaches. According to management and the 2012 audited financial statements. Cost Approach Under the Cost approach. namely the cost. assets and liabilities with available fair market values are markedto-market.SM Investments Corporation Fairness Opinion Report May 30. The fair market value was based on the appraisal reports prepared by CBRE using various valuation methods.   18 . Inc.

MS&Co.1. To determine the comparability of the firms in the initial list of property companies in the PSE. From the 19 .439 70. collated information relating to comparable publiclylisted companies operating in the same industry as SMPHI. To be comparable with SMPHI.559) (865) (52.750 19.042 1. Minority interest was adjusted to reflect fair value adjustments on property attributable to minority interests MS&Co. MS&Co.691) 3.400) (8.324 (1. analyzed the operations of each of the property companies in the PSE and determined the significant contributors to their revenues. analysis 7.642 (15.1 The following table summarizes the computation for SMPHI net asset value per share as of the Valuation Date. the two criteria used were: (1) the revenue composition of the company and (2) the scale of the companies’ operations as compared to SMPHI.019) (71. In searching for comparable companies for SMPHI. the firm’s revenues from shopping center operations or leasing of commercial spaces should be the largest contributor to its total revenues.669 85. MS&Co initially focused on the listed retail real estate companies in the Philippines.450 Adjustment to reflect fair value of China properties Fair value of China malls Carrying value of China malls Fair value of other China properties Carrying value of other China properties Adjustment to reflect fair value of financial liabilities Fair value of financial liabilities Carrying value of financial liabilities Long-term debt Tenant's deposits Liability for purchased land Other non-current liabilities Adjusted NAV Adjusted minority interest Adjusted NAV attributable to SMPHI stockholders Number of shares outstanding NAV per share Note: Source: 214.888 17.761 286.141 (9.443) 336.374 19. With regard to the revenue composition.872) 59. using the Cost approach.556 1.2 Market approach or capitalized earnings approach In using the Market approach.39 Minority interest was deducted to reflect NAV attributable to SMPHI stockholders.908 73.332 (9.843) 13.983 Fair value of other Philippine properties Carrying value of other Philippine properties 54.597 (72.892) 38.626 8.SM Investments Corporation Fairness Opinion Report May 30.727) 17.826 (10.209) 346.663 (2.2013 7. Cost approach PHP'M Total assets Total liabilities Unadjusted NAV Adjustment to reflect fair value of Philippine properties Fair value of Philippine malls Carrying value of Philippine malls Land Land use rights & leasehold improvements Building and improvements Other assets 3M2013 159.

there are three listed retail-oriented companies in the South East Asia and East Asia regions. China Philippines Thailand China.. EV and EBITDA of the CoCos were computed from the latest available financial statements of the CoCos.4% 99. Excluded CoCos (3 com panies) Source: Companies 2012 annual reports Under the Market approach. have operations centered on high growth economies.2% All CoCos have mall operations as their largest revenue contributor Malls operated should be m ore than 10 51 32 21 101 Eliminated local CoCos have three and five malls/commercial centers. the Firm extended the search for comparable companies in the region. 2013. the price-to-earnings (“P/E”) multiple. According to the Factiva database. 20 . Thailand and China. Of the four. Ltd. CoCos selection Mall operations have the largest revenue contributions 100. the price-to-book (“P/B”) multiple and the EV/EBITDA multiple were considered in valuing SMPHI. Ltd. Central Pattana Public Co. Selected com panies Robinsons Land Corporation Central Pattana Public Co. Upon exhausting the companies in the Philippines. Malaysia. Ltd. India Eliminated CoCo has virtually all of its revenues sourced from Japan Entity nam e SM Prime Holdings. and CapitaMalls Asia Ltd. Inc.. The share prices used were based on the closing prices as of March 31. The other company. The table below presents the summary of the CoCos selection process. Two of the companies. the firms were then evaluated based on the scale of their operations. is focused on the Japanese region and was eliminated since its operations are primarily focused on the Japanese consumer market. The respective earnings per share. Majority of revenues from grow ing econom ies Philippines. After eliminating companies based on their revenue composition. CapitaMalls Asia Ltd.6% 78. Companies which operate less than 10 malls were eliminated.0% 47.2013 40 property-related companies in the PSE. AEON Mall Co. only four companies were deemed comparable based on their revenue composition. book value per share. only Robinsons Land Corporation was able to meet this requirement with 32 malls as compared to the other companies with only one to five malls. These companies’ revenues are comprised of shopping center operations and leasing of commercial spaces and these companies have multiple shopping centers in their specific markets..SM Investments Corporation Fairness Opinion Report May 30.

66 4. Market approach .678 March 31.373. analysis 7. 2013 unaudited FS. MS&Co.678 18. 2013 unaudited FS 1.47 17.2.678 41.373.18 20. 2013 unaudited FS 17.19 22.373.71 17.71 17.day volume-w eighted average share price Source: Philippine Stock Exchange.373.678 March 31. 2013 unaudited FS 17.17 17. analysis Share price 19.68 18.055 318. Market approach .49 14.525 17.77 Range of values per share Earnings per share Book value per share EBITDA per share Derived multiple Value per share (PHP) Range of values Range of values per share.279 March 31.373.66 18.SM Investments Corporation Fairness Opinion Report May 30.373.65 4. before adjustments Number of shares ('000) Range of values. BVS and EBITDA per share Notes Earnings per share (PHP) Net income (In PHP'M) 1 Number of shares outstanding ('000) Earnings per share Book value per share Adjusted book value (In PHP'M) 2 Number of shares outstanding ('000) Book value per share EBITDA per share EBITDA (In PHP'M) 3 Number of shares outstanding ('000) EBITDA per share Note: 11. 2013 unaudited FS 17.2 The calculation for SMPHI’s value using the Market approach is shown on the table below.373.2.65 72. 2013 unaudited FS 4.18 1.678 N/A N/A 303. analysis 17.1 The calculations for SMPHI’s EPS.3 Presented below are the share prices as March 31.VWAP Closing price as of March 27.CoCos Weighted average P/E (x) P/B (x) EV/EBITDA (x) 0.2.358 1. before adjustments Less: Net debt (PHP'M) Minority interest (PHP'M) Equity value (PHP'M) Number of shares ('000) Equity value per share (PHP) Source: MS&Co.706 March 31.678 17.373. 2013 Prior to valuation date 30-day volume-w eighted average share price 60-day volume-w eighted average share price 90.678 14.373. 2013 unaudited FS 0.678 N/A N/A 255.2013 7.678 March 31.33 7. Book value per share and EBITDA per share is shown on the table below: SMPHI EPS. MS&Co.488 17.10 18.04 21 . 2013 and its respective 30.605 17. 60 and 90 day volume-weighted average share price for SMPHI.632 March 31.47 20.19 Source: (1) Annualized net income was computed by deducting 1Q12 net income and addition of 1Q13 net income (2) Minority interest was deducted to reflect book value attributable to SMPHI’s shareholders (3) Annualized EBITDA was computed by deducting 1Q12 EBITDA and addition of 1Q13 EBITDA March 31.

since revenues from these properties comprise over 77% of SMPHI’s revenues over the projection period.0% which approximates the historical same-store growth rate of SMPHI.3 Income approach In determining the DCF value of SMPHI. 22 . An ave rage growth rate of 6% was also utilized to represent a base case scenario for the revenue growth assumptions. Hence. because events and circumstances frequently do not occur as expected. Same -store revenue growth of established malls has been estimated to be 7. 2018 (the “Forecast Period”). cannot provide assurance on the realization of the financial projections. These are: (a) the projected free cash flows to the firm. exercised its best judgment in evaluating the assumptions. Given the uncertainties inherent in projecting financial performance. would like to highlight that the management of SMPHI is responsible for representations about their plans and expectations. according to management. for the projection scenarios with regard to the established malls. respectively. 7. The business plans and the related financial projections of SMPHI were based on management’s assumptions reflecting conditions it expects would exist and the courses of action it expects to take during the Forecast Period. three (3) important variables were considered.0% for terminal value computation purposes. There will usually be differences between the projected and actual results. and (c) the terminal value.SM Investments Corporation Fairness Opinion Report May 30.2013 7. These two growth estimates have been used as the aggressive and conservative bases. Projected FCFF are discounted back to the present date at an acceptable discount rate to generate a fair range of values for the business. Below are the computations of the present value (“PV”) of SMPHI’s projected cash flows for the three scenarios. scenarios have been created to anticipate volatilities in SMPHI’s revenue streams. (b) the appropriate discount rate. and for disclosure of significant information that might affect the ultimate realization of the business plans and the projected results. Projected FCFFs are discounted back to the Valuation Date at an acceptable discount rate to generate a value for the business. MS&Co. However. 2013 to December 31. and those differences may be material.3. while MS&Co. mature malls would have a same-store growth rate of 5. MS&Co.1 Projected free cash flow to the firm (“FCFF”) Projected FCFF is equivalent to the cash flows from operating (except interest income) and investing activities plus after-tax net interest expense of SMPHI from April 1.

248 4.587 (28.105) (1.682) 32.75 WACC 7.182 (28. 2013 PHP'M Net cash flow s from (used in) operating activities Income (loss) before income tax 12.355) Net cash flow s from (used in) operating 15.75 0.579 Adjustments for: Depreciation and depletion 3.8887 (3. analysis 2014 17.826 (164.201 20.965 (22.725 (138) 2.400) 163.407) Source: MS&Co.448 (6.564 (6.684 (1.953) 28.059 6.6785 9.837 8.8307 (1.659 (22.756 (27.454 Adjustments for: Depreciation and depletion 3.554 4.539) 36.625 Interest income (337) Other adjustments 29 Net w orking capital changes 1.7765 373 2017 24.099) 29.411) 10.418 (122) 2.768 (28.085 (28.75 WACC 7.75 0.75 0.439 2018 27.577 activities Capital expenditures (34.648 Taxes (3.777) Projected FCFF (19.689 Total 120.662 (22.517) 2.75 0.609) 160.092) 22.75 0.414 activities Capital expenditures (34.SMPHI Apr.481) 31.113 4.284 (4.330) Net cash flow s from (used in) operating 15.200) (374) (6.674 5.923) 2.607) 2015 19.777) Projected FCFF (19.625 Interest income (337) Other adjustments 29 Net w orking capital changes 1.280) 23 .SM Investments Corporation Fairness Opinion Report May 30.058) 1.597) 2016 20.986 (133) 2.407 7.9507 Discounted FCFF (from 3M12) (18.75 0.030) Revenue growth at 6% Projected free cash flow s .293 37.6785 8.0% Discount factor 0.9507 Discounted FCFF (from 3M12) (18.7259 6.0% Discount factor 0.473) 26.991 (96) 2.560 6.124 (4.280) 35.8307 (1.278 Total 123.260) 2016 21.438 (137) 2. analysis 2014 17.152) 23.200) Period 0.7765 (47) 2017 23.411) 9.418 (101) 2.618 (29.924 6.619 4.612 5.938 8.321) (8.778 3.880 (164.335) 1.091) (4.75 0.619 4.829) (60) 3.498 6.935 2018 26. 2013 PHP'M Net cash flow s from (used in) operating activities Income (loss) before income tax 12.988) 12.988) 13.573) 26.75 0.8887 (3. to Dec.853) 2015 19.325 Interest expense 1. to Dec.105) (1.SMPHI Apr.201 20.760 (83) 2.492 (162) 1.151 (5.217 (5.325 Interest expense 1.200) (3.2013 Revenue growth at 7% Projected free cash flow s .492 (170) 1.038) 29 12.75 0.284 2.197 (4.033 (27.621 (4.692 (4.458 (85) 2.7259 7.806 5.778 3.082 3.047 (5.887 5.091) (4.284 2.270 7.75 0.308 (28.744 (864) 29 12.363) Period 0.113 4.829) 480 3.082 3.253) Source: MS&Co.732 37.711 Taxes (3.794 (22.

8307 (1.113 (4.2013 Revenue growth at 5% Projected free cash flow s . For variable rate loans.037) 34. As such.284 2.497 (153) 1. is an important element of the Income approach or DCF methodology.341 (6.7765 (451) 2017 22.75 0. used the average lending rates of local universal banks for March 25.75 WACC 7. 2013 sourced from Business World.451 2018 25.808) 28.788 (28. for the fixed rate loans.6785 8. 2013 interest rates. A tax rate was not used since SMPHI uses the Optional Standard Deduction offered by the BIR. The discount rate is also equated with the acceptable rate of return or “hurdle rate” of an investor for a specific investment opportunity taking into account the return on alternative investments and risk factor.455) 7.562) Source: MS&Co.031) 22. interest expense would not be deductible with regard to computing the income tax to be incurred.SMPHI Apr.777) Projected FCFF (19.800 8.988) 11.511 (85) 1.75 0.967 (22.372) 25.925) 2016 20.586 Taxes (3. pegged at 3.75 0.928 (831) 29 11.317) 2.305) Net cash flow s from (used in) operating 15.290) 31.6%.411) 8.028 (85) 2.2 Discount rate Determining an appropriate discount rate.844) 158. SMPHI’s after-tax cost of debt.75 0.979 5.619 4.887 4.778 4.9507 Discounted FCFF (from 3M12) (18.091) (4.200) (6.974 37. analysis 2014 17.SM Investments Corporation Fairness Opinion Report May 30.034 (164.435 (87) 2.297 (22.166) (10. 2013 PHP'M Net cash flow s from (used in) operating activities Income (loss) before income tax 12.483 (27. However.082 3.625 Interest income (337) Other adjustments 29 Net w orking capital changes 1.095) 2015 18.950 (5.252 activities Capital expenditures (34.0% Discount factor 0.325 Interest expense 1.3.335 5.8887 (4. MS&Co.105) (2.298 6. the market rate was provided by management. 24 .525) Period 0. weighted average cost of capital (“WACC”) was computed as the acceptable discount rate to be applied to the projected FCFF during the Forecast Period and the projected FCFF after the explicit Valuation Period.608) 1. The table on the next page presents the computation for the after-tax cost of debt of SMPHI.833 (83) 2.201 20.036 (4. pertains to the weighted average interest rate of SMPHI’s interest-bearing liabilities using March 31.128 Total 116.248 (28.7259 6.551 (4. to Dec.617 6. For this Report.829) (581) 3. which is reflective of both the general and specific risks of a company’s future income stream.329 Adjustments for: Depreciation and depletion 3.577 (27.75 0.113 4.593 7.

1% 2.960 980 784 3.8% 6.4% 1.0% 0.3% 0.0% 0.0% 0.2% 0.5% 4.0B MBTC 5.040 6.027 6.1% 2.002 132 3.2% 2.428 5.0% 0.0% 0.1% 0.1% 3.2% 6.0% 0.1% 0.2% 6.2% 0.1% 2.3% 3.618 198 3.2% 6.2% 0.2% 1.0% 0.1% 2.2% 6.2% 0.2% 6.0% 0.1% 0.1% 2.0% 0.6% SMPHI loan breakdown as of March 31.2% 6.SM Investments Corporation Fairness Opinion Report May 30.020 6.0% 0.1% 2.100 408 1.2% 0.6% 0.0% 2.9% 0.2% 0.1% 0.100 2.1% Short-term PHP LOAN BPI Fixed BPI Fixed Total interest-bearing liabilities Source: 500 300 61.920 980 1. 2013.2% 0.0B MBTC 5.1% 0.0% 0.120 2.0B BPI 1.000 1.000 1.0B MBTC Rate Am ount Interest rate Weighted int.7% 0.2B PHILAM 2. rate 5.0B MBTC 1.0B BPI 7.734 400 985 5.7% 6.450 1.1% 0.0% 12.5% 6.2% 0.0% 0.1% 2.2% 2.2% 0.8% 5.200 800 1.0B LBP 1. 2013 PHP'M Parent PHP LOAN 1.4% 0.1% 2.1% 2.1% 0. BSP loan interest rates during March 25.1% 0.1% 0.2% 4.2013 SMPHI Loan payables breakdow n as of March 31.224 816 4.0% 0. 2013 25 .488 1.2% 6.1% 0.0% 0.1% USD LOAN 25M SMBC 30M HSBC 20M HSBC 270M SCB 50M SMBC MBTC ($150M) ING ($50M) Subsidiaries PHP LOAN 500M BPI RM B LOAN 350M ICBC 150M ICBC 250M ICBC PDSTF + margin Floating rate based on Central Bank of China Floating rate based on Central Bank of China Floating rate based on Central Bank of China 500 3.0% 0.0% 3.0% 0.2% 0.0B BDO CAP 2.5% 4.0% 1.0% 0.9% 6.1% 0.0B LBP 1.2% 3.350 204 204 204 204 204 1.0% 0.5B MBTC Fixed Fixed Fixed PDSTF + margin PDSTF + margin PDSTF + margin PDSTF + margin PDSTF + margin PDSTF + margin PDSTF + margin Fixed Fixed PDSTF + margin PDSTF + margin Fixed Fixed Fixed PDSTF + margin PDSTF + margin PDSTF + margin Fixed Fixed LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread LIBOR + spread 1.000 650 2.000 2.0% 2.0B RCBC 7.1% 2.940 1.7% 3.000 880 1.

” Levered beta factors are always considered in the valuation of companies.91% is the RPm. assumed that 4.0% 50. and Implications – The 2013 Edition. which includes the survey approach. Estimation and Implications . analysis 26 . The market risk premium (“RPm”) represents the excess return to compensate investors for taking a relatively riskier investment.4% Bureau of Treasury.30 Source: Aswath Damodaran website. This was based on the 10-year Philippine Treasury Bond reissued on February 2013.2013 SMPHI’s cost of equity was computed using the Capital Asset Pricing Model (“CAPM”). MS&Co. The risk-free rate (“rf”) represents the minimum return investors would expect from credit risk-free securities. the nearest auction date to the Valuation Date for an issue of a 10-year treasury bond. The rf of 4.SM Investments Corporation Fairness Opinion Report May 30. Levered beta is the beta that takes into account the risk of SMPHI due to its capital structure and applicable tax rate. based on the perception that its share prices move in line with the “market. Estimation. use of historical premiums and implied equity premiums. analysis The table below shows the computation of cost of equity using CAPM for SMPHI. which is sourced from Aswath Damodaran in his paper “Equity Risk Premiums (ERP): Determinants. Cost of equity ("Ke") Risk-free rate ("Rf") Total risk prem ium Relevered beta Ke = Rf + β*(Rm-Rf) Source: 4. MS&Co.0% 50. used the unlevered beta of the real estate industry. Damodaran utilizes several methodologies in determining the equity risk premium.9% 1. in emerging markets from Aswath Damodaran MS&Co. MS&Co.0% 4. Aswath Damodaran – Equity Risk Premiums (ERP): Determinants. The beta factor represents the measure of risk of a particular asset relative to the risk of a portfolio of all risky assets. which states that the Ke is based on the return generated from risk-free investments (“riskfree rate”) plus a premium for the risks associated with the business (“equity risk premium”).tax rate) * (D/E)] 0.The 2013 Edition.30 10. Aswath Damodaran website.65 0. specifically in the operations & services sector.0% was considered in the valuation of SMPHI. WACC computation for SMPHI MS&Co. Relevered beta Form ula: Unlevered beta factor Tax rate Debt ratio Equity ratio Relevered beta Unlevered beta * [1 + (1 .0% 1. relevered the beta to reflect the target capital structure of SMPHI using the company’s target debt and equity ratios.

MS&Co.3 Terminal value The terminal value of a business represents its potential earnings beyond the projection period.4% 7.6785 469. The terminal value is determined by capitalizing the estimated cash flows beyond the Forecast Periods.2013 After performing the procedure as stated above.644 6% grow th 12.last projected year) WACC Less: Projected same-store grow th rate after 2018 PV of terminal value cash flow s Discount factor Present value of terminal value cash flow s Total discounted FCFF Enterprise value Source: MS&Co. 27 .0% 100. Aswath Damodaran website.6785 411.0% 5.2 billion and PHP463.0% 7.0% 5.0% 691.979 7.3.232 The total present values of projected FCFF in the 5%. analysis 5% grow th 11. below is the computed WACC for SMPHI.0% 50.SMPHI PHP'M Terminal value cash flow s = (FCFF .030) 463. Weighted average cost of capital Debt-equity proportion Cost of debt Interest rate Less: Tax rate Cost of debt Cost of equity Risk free rate (Rf) Total risk premium (Rp) Beta (β) Cost of equity (Rf + β*Rp) Total / WACC Source: Bureau of Treasury. This value represents the enterprise value of SMPHI as of the Valuation Date. analysis WACC com putation 3.0% 5. Terminal value and DCF value of SMPHI The computation of the terminal value and the related present value of SMPHI is presented in the table below: Enterprise value .6% 4.806 7.9% 1.098 (10.6785 439.6% 0.0% 4. and 7% revenue growth scenarios are PHP400.0% 50. PHP431.674 7.30 10.202 7% grow th 13.686 0.576 0.0% 605.0% 3.0% 647. certain adjustments such as deduction of long-term loans and preferred shares and addition of cash were made.482 (8.SM Investments Corporation Fairness Opinion Report May 30.263 (6.455) 400. 6%. In order to arrive at the equity value.2 billion.856 0.280) 431.6 billion.

202 41.2 billion to PHP420.644 41.358 1.62 to PHP24.22 per share.22 28 . the range of values of SMPHI using the Income Approach is PHP358.2013 After the aforementioned adjustments. Incom e approach .374 20.055 358.62 6% grow th 431.055 388.374 22.374 24.SMPHI PHP'M Enterprise value Less: Net debt Minority interest Preferred shares Equity value Number of outstanding shares Equity value per share Source: MS&Co.232 41.358 1.055 420.790 17.358 1.8 billion or equivalent to PHP20.231 17.38 7% grow th 463.820 17. analysis 5% grow th 400.SM Investments Corporation Fairness Opinion Report May 30.

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357.227. Vista Land & Lifescapes.03 16. Source: Factiva. and Vista Residences.000 18. 2013 Assets (In PHP) Revenue (In PHP) 84.359. Source: Factiva Vista Land & Lifescapes. primarily housing units and subdivision lots. 2013 were computed as follows: December 2012 revenue – 1Q2012 revenue + 1Q2013 revenue Source: FLI and VLL’s 2012 annual report. in a broad range of real estate market from low-cost to high-end. Inc. FLI real estate products includes socialized and affordable housing. medium-rise buildings.000 11.74 9.000 76. Inc.398. Inc. 1989 and is primarily engaged in the development and sale of residential property. (“FLI”) FLI was incorporated on November 24.038.27 1. 2012 VLL annual report Overview of Com parable Com panies ("CoCos") In PHP as of March 31.02 11. Inc.454 Derived m utiples P/E P/B EV/EBITDA 13. MS&Co.597. Country Philippines Philippines Note: Revenues as of March 31. resorts. VLL currently operates five business units namely Brittany. (“VLL”) VLL was incorporated on February 28.000. Camella Homes. industrial parks. analysis 30 . 1Q2012 financial statements.SM Investments Corporation Fairness Opinion Report May 30. Communities Philippines. 2013 Appendix 1 – Overview of comparable cmpanies SMDC Filinvest Land.109. Inc. farm estates. membership clubs and condominiums.89 1. 1Q 2013 financial statements.75 Com pany Filinvest Land. Crown Asia. 2007 and is an investment holding company engaged in real estate development.

665. Country Philippines Thailand Hong Kong No. The Investment Business segment includes investments in retail properties held directly through subsidiaries or through associates and jointly controlled entities. hotels.52 2. provides utility services. The company has an integrated shopping mall business model encompassing retail real estate investment. The company is engaged in the business of selling. Segment 1 develops shopping centers. and its subsidiaries. operates as an investment holding company which owns. Raffles City Beijing and Raffles City Shanghai. Philippine Stock Exchange.392 7.048. The Others segment includes corporate office and group treasury.688. engages in the investment and development of real estate properties. 2013 SMPHI Robinsons Land Corporation Robinsons Land Corporation is a Philippine listed company incorporated on 4 June 1980. and disposing of real properties such as land. The company operates through three segments: Management Business. of shopping centers 32 21 101 In PHP as of March 31. Segment 3 engages in the business of hotels. water and recreational parks. Plaza Singapore.92 14. development. As of 2011.55 30. mall operations. and food centers. CapitaMalls Asia Ltd.400 29. These properties include shopping centers. office buildings.051. 2004 and is headquartered in Hong Kong. acquiring. develops and manages shopping malls. CapitaMalls Asia was founded on October 12. Segment 2 focuses on the sales of food and beverage in the shopping centres. commercial centers and housing projects. developing.26 Source: Factiva. Inc. CapitaMall Xizhimen.654.21 P/E 23. hotels and other variants and mixed-used property projects. and condominiums for rent.312. CapitaMalls Asia Ltd.626. Central Pattana Public Co. leasing. Overview of Com parable Com panies ("CoCos") Com pany Robinsons Land Corporation Central Pattana Public Co. Ltd. Investment Business and Others. buildings.03 14. constructing. and operates play land and water theme parks in shopping centers. Its shopping malls portfolio includes ION Orchard.316.63 1. asset management and fund management capabilities. offices. Thailand.311.499. It serves as the real estate investment arm of JG Summit Holdings.466.499 12.SM Investments Corporation Fairness Opinion Report May 30. fund management and mall management services. CapitaMall Wangjing.897 331.264. The Management Business segment includes the provision of asset and project management. The company was founded on June 17.14 101. CapitaMalls Asia Ltd. shopping malls. Ltd.471 20. Businessweek 31 . residential buildings. 1980 and is headquartered in Bangkok. the company has four (4) wholly-owned subsidiaries and ownership in two (2) joint ventures Central Pattana Public Co. Ltd.93 7.090 14. 2013 Multiple Assets Revenue EV/EBITDA P/B 73.

SM Prime Holdings. 2012. and Subsidiaries Pro Forma Condensed Consolidated Financial Information As at December 31. 2012 and Years Ended December 31. . 2011 and 2010 SyCip Gorres Velayo & Co. Inc.

The historical financial information is derived from the historical consolidated financial statements of SM Prime Holdings. 6760 Ayala Avenue 1226 Makati City Philippines Phone: (632) 891 0307 Fax: (632) 819 0872 www. we do not express an audit opinion. 2012. as amended. 2011 and 2010. as at December 31. valid until December 31. J. actually occurred at an earlier date. and SM Land. 2012. included such procedures as we considered necessary under the circumstances. Guidelines on Reporting and Attestation of Pro Forma Financial Information Securities Regulation Code Rule 68. 2012 and 2011 and for each of the three years in the period ended December 31.ph BOA/PRC Reg. the pro forma consolidated statement of changes in stockholders’ equity and pro forma consolidated statement of cash flows for the year ended December 31. and. Inc. 2012. Mall of Asia Complex. Series of 2008. Assurance Engagements Other than Audits or Reviews of Historical Financial Information (PSAE 3000) and Philippine Securities and Exchange Commission Memorandum Circular No. Such pro forma adjustments are based on the Group’s assumptions as described in Notes 3 and 4 to the pro forma condensed consolidated financial information. November 15. Inc. 2012. Inc. A review is substantially less in scope than an examination. the pro forma adjustments and the application of those adjustments to historical financial information. The Group’s management is responsible for the pro forma condensed consolidated financial information. 0001.sgv. No. the pro forma consolidated statements of income and pro forma consolidated statements of comprehensive income for the years ended December 31. The objective of this pro forma condensed consolidated financial information is to show what the significant effects on the historical financial information might have been had the transactions occurred at an earlier date. Brgy. valid until November 16. December 28. Accordingly. Zone 10 CBP-1A. 2012. the pro forma condensed consolidated financial information is not necessarily indicative of the results of operations or related effects on the consolidated balance sheet that would have been attained had the transactions mentioned in Note 3. 2012. 2015 SEC Accreditation No. However. the objective of which is the expression of an opinion on management’s assumptions. accordingly. Our review was conducted in accordance with the Philippine Standard on Assurance Engagements 3000. 2015 REPORT ON REVIEW OF PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The Stockholders and the Board of Directors SM Prime Holdings. 2. which were audited by us. Pasay City 1300 We have reviewed the pro forma adjustments reflecting the transactions described in Note 3 and the application of those adjustments to the historical amounts in the accompanying pro forma consolidated balance sheet of SM Prime Holdings. and subsidiaries (the Group) as at December 31. Diokno Blvd. 76. A member firm of Ernst & Young Global Limited *SGVFS002402* . Mall of Asia Arena Annex Building Coral Way cor. Inc.W. 0012-FR-2 (Group A).SyCip Gorres Velayo & Co.com.

or that the pro forma column does not reflect the proper application of those adjustments to the historical financial statements in the pro forma consolidated balance sheet as at December 31.-2Based on our review. 2013. 88823 SEC Accreditation No. 2015 PTR No. 08-001998-78-2012. that the related pro forma adjustments do not give appropriate effect to those assumptions. March 25. June 19. nothing has come to our attention that causes us to believe that the management’s assumptions do not provide a reasonable basis for presenting the significant effects directly attributable to the transactions described in Note 3. valid until March 24. the pro forma consolidated statements of income and pro forma consolidated statements of comprehensive income for the three years ended December 31. 2012. 153-978-243 BIR Accreditation No. 2016 Tax Identification No. Makati City May 31. 2013 *SGVFS002402* . 2013. 2011 and 2010. January 2. the pro forma consolidated statement of changes in equity and pro forma consolidated statement of cash flows for the year ended December 31. 2012. 3669663. 0923-AR-1 (Group A). 2012. Beng Hui Partner CPA Certificate No. Belinda T. valid until June 18. 2012. SYCIP GORRES VELAYO & CO.

245 67.000 1.479 216.416.978.000 18.000 13.577.770.787 P (P =928.434.159 P (P =2.313.201.723 – – – 124.2) (Audited) Inc.531.a) Pro Forma Balances (Unaudited) =8.000 11.000.892.609.188 P P =137.128 20.835.478 (65.009 2.245.118.158.832.975) = P284.042.081.692.974 – – 189.118.286 1.158) (P =1.087.321 17.834 664.439.241 821.894.a.338.217.967. Adjustments and SM Land.354.SM PRIME HOLDINGS.464.958.182) – – 795.382 =10.779.487.922 135.net Investment properties .378 P 1.492.654 20.000.668.681 =10. (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.037.541.000.460 24.a.463.981 (P =5.369.713 – 285.251.524.246.282.a.189.072.336.928.465 Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.582.780) – – – – (950.915.244. Consolidated Corporation Prime.777.411.147) – (23.333.300.964 P P– = – – (5.812.139 19.975) – – – – (5.842 11.717.821 190. Inc.600.074.511.392) 19.338.573) (P =71.562 – 683.000.061.439.020 2.121.635 – – 3.621.343 821.336.798 – 109.118.686.563 =148.372.241 821.000.857.798 42.415) – (768.384.706.876 201.157 (23.125.net (Note 10) Land and development .821 1. INC.404 P 579.893.367) – – (22.410.975) – – – – – – – – – =17.524.958.542.880 – – 1.788.264.602.463 11.092 – – 1.213. (Note 4.000.002.762 – 1.555 P – – 1.619.356.277.800) – 917.091) (142.603.524.607.155.a) (IV) Other Pro Forma Adjustments (Note 4.236.000.883.821 476.877.560 (394.623.000 16.877.303.I.321 95.688 379.348 109.863.580 1. Consolidated (Audited) ASSETS Current Assets Cash and cash equivalents (Note 6) Investments held for trading Short-term investments Receivables (Note 7) Condominium and residential units for sale Land and development Available-for-sale investments (Note 8) Prepaid expenses and other current assets (Note 9) Total Current Assets Noncurrent Assets Available-for-sale investments (Note 8) Investments in shares of stocks Property and equipment .134.621 – – 141.777.2) (Note 4.898 – 9.000.581.653 24.440.841 – – 538.103.274) P =263. Inc.134.322 109.539.843 21.129 *SGVFS002402* . 2012 SM Prime Holdings.I.201.045.418) – – – 9.158) – – – – – – (768.000.898.007. (i) SM Development (ii) Highlands (B) Merger Holdings.515.400.044.879.290 – 10.846.101.524.433.857.838.709.470 2.815 17.562.384.015 6.095.818 128.203.619.777.415) – – – – – – – (496.682.368.043.860 (668.294.196.392.463.334.522.007.709.186 44.392 147.428.338.801 P 1.476.067 1.028 4.960.112 3.301.607.566 23.402.1.III.504.000.955.133 21.902.286 – 9.942.978.642.284.249.IV.304 11.603 3.393 (P =496.361 P 759.927 =3.II.000.865.284) – – – – – 1.579.246. Inc.958.I.772.149.733 1.827.net of current portion Derivative assets Deferred tax assets Other noncurrent assets (Note 11) Total Noncurrent Assets =9.839.127.853 (P =24. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 31.321.978.481 23.434 374.a) (Note 4.092.000.1.000.022.103.208.886.736 11.483.530.500 =2.226.1) (Note 4.129.016.000 5. Inc.286 1.978) – – – – – – 1.232 1.125.880.127) =17.670 61.845.302.

973.063.219.685.129 *SGVFS002402* .000 P 31.930.535.399 15.918 43.474.177.099.500.000 P 402.600.091) (3.213.656.557.783.249.061 118.339.785.893.596 3.554.602.894. 3 and 4): Appropriated Unappropriated Shares held by subsidiary (Notes 2.676 2.261.098.617 10.280 244.500 1.733) 148.827.773.582.103.686.586.336.776.573) – – 1.705) 69.770.III.610.763 – – 1.591.384.375 17.856.a) Pro Forma Balances (Unaudited) =6.213.976.335.785.766.944.net (Notes 2.797 – (101.348.831 =– P – – (50.647.799.734.361 (11.100.998.392.I.822.941.336.246.645.378.000 26.046.564 47.800.555.975) – – – – – =8. Adjustments and SM Land.494) 31. 3 and 4) Additional paid-in capital .769 8.352.900.520.167 18.167 18.214.910.129.386.726.645.361 – – – – – – 10.125.446.995 3.I.125.016.766.407 67.623.160.395 15.200.787 P 12.494) – (24.646 3.136.608.000.043.455 18.749.780) – – (22.710 84.017 1.196 244.898.443.737.II.622 – – 80.440.964 P – – – – – – – – – – – – 33.854.595.455) – – (20.676.964 =10.251.066.a.448 – 544.000.963) (50.125.916 – 160.500. (Note 4.662.848 593.709 (12.686.463.093 85.357 309.330.368 42.004 – – – – 1.799 – 6.146.317 955.065 =830.649.521.I.000.000.336.981 (P =5.000.676 2.000 36.441 – 234.067.000.780) – – – – – =8.-2Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.091) (3.999 151. Inc. 3 and 4) Treasury stock (Notes 2.612 (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.155.826.167 – 27.278.680 2.902 (672.188 – (1.848.630.696 – – 10.000.886.616.1) (Note 4.249.458.899.443.764.000 22.652.766.000.724.901.848 632.822.880.159 87. 3 and 4) Equity adjustment from business combination (Notes 2.274) P =263.746. Consolidated Corporation Prime.270.061.188 P P =137.848 593.417.686.060.730.964 – 10.560.410.146.695 27.191.339.359 3.983.067.130 – 80.160.200.415 – 638.607.336.213.700 70.850. Inc.777.287.040 62.065.559 49.194.2) (Audited) Inc.027) – 322.000 16.697 – – 73.409 3.368 42.000 P 33.488 14.531.385.687) 1.555 3.036.134. (i) SM Development (ii) Highlands (B) Merger Holdings.358 =148.a.893.971) (1.a) (Note 4.862.264.284.027.418 244.839.795 22.000.264.975) – – (5.647 – – 10.144.512.496.549) (234.382. 3 and 4) Cumulative translation adjustment Unrealized mark-to-market gain (loss) on available-for-sale investments Retained earnings (Notes 2.890.513.516.330.610) (P =1.999 135.950.854.383 306.1.251.399 11.520.299 =– P – – – – – – – – – =– P (5.963) – – – – – =800.417.555.000.443.976.a) (IV) Other Pro Forma Adjustments (Note 4.398.873 14.000.2) (Note 4.191.000.261.874.000 32.820 (672.622 =– P (22.921 641. SM Prime Holdings.534.336.321 67.510.1.000 P 2.856.399 14.364 17.091) (3.028) (24.000.386 – – 6.838 1.659.219.099.670 22.021.000.766.035 =3.000 P 19.391.298 – 544.926. (P =24.232.967.924 137.951 – 544.495.894. Inc.799 =10.005.213.711.121.957.817 – (11.136.159 P 837.329.849.856.146.IV.352.118.755 1.733) 132.a.968. Inc. 3 and 4) Total Equity Attributable to Equity Holders of the Parent Non-controlling Interests Total Stockholders’ Equity =800.000 P 11.437) (672.853 See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.668.206.180.499 – – – – 713.685.207.net of current portion (Note 13) Deferred tax liabilities Derivative liabilities Tenants’ deposits and other noncurrent liabilities Total Noncurrent Liabilities Equity Attributable to Equity Holders of the Parent Capital stock (Notes 2.111 1.330.240 – 3.437.200.893. Consolidated (Audited) LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Bank loans Accounts payable and other current liabilities (Note 12) Current portion of long-term debt (Note 13) Income tax payable Total Current Liabilities Noncurrent Liabilities Long-term debt .963.724.595 707.000 35.791.760 8.975) = P284.703.825.825.000.

728 =206.111.552.857.952.645.168.830 3. Inc.978.618 18.927.763.549.261.240.620.515.928 3.362) 84.652 3.439.net =25.967.449) – (P =4.I.b) (Audited) Inc.337.168.125 56.986.437.975.058.081.286 16.365.705.311.922.313.381.517.664 P =– P – – – – – – – – – – – – – – =– P =3.248.591.449) (4.926 P 22.656 P 1.974.829.083) 59.118.405 – – 524.726.382.111.987.208 3.b) (Note 4.050 7.I.050 = 1.393.255 P 521.990 P 392.681) (IV) Other Pro Forma Adjustments (Note 4.071 (2.731 P INCOME (LOSS) BEFORE INCOME TAX PROVISION FOR INCOME TAX Current Deferred NET INCOME Attributable to Equity holders of the parent Non-controlling interests =10.150 (3.692.837 10.277 =10.477.193 =16.442.756.686.415 (17.310.621 (797.995.010.304.491.710 274.991.978.248 (46.966.647 77.808.b) =457. Inc.405.663 1.554.187.178 2.578.491.397 P (P =39. Consolidated (Audited) REVENUE (Note 5) Rent Sales: Real estate Cinema ticket Others COSTS AND EXPENSES (Note 14) INCOME FROM OPERATIONS OTHER INCOME (CHARGES) .634 =10.986.220.858 57.398.578.414.568.715 (39.731 P =0.852 P – – – 510.462.839.139) 14.261.336.223.313.403.491.709.557.313.763 197. INC.383) (2.733.425 10.II.050 (17.010.298 6.346.449) (4.430.328 22.111. 2012 Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.681) – (P =39.067) 1.099.309. Inc.042) (246.169.589 P Basic/Diluted Earnings Per Share (Note 16) See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.992.533 P (P =4.707.142.852 556.922.584.765 P 1.288.146.749.973 P 639.059.625.974 (653.726 = (1.493.022.313.417 P 23.942) 20.580.839.b) (Note 4.924.214. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31. Consolidated Corporation Prime.711.663 1.533 P (P =246.993 128.473.584.250.974.342 (1.177.167 117.366.111.111.761) 406.491.517) 20.313 56.338 278.477.559. Adjustments and SM Land.449) =16.826 – 149.460.458 309.040.684 P – 3.042) – – – (246.748 297.231.010 30.814.808.529.a) (P =95.177.202 63.681) P– = – =– P =16.614 =10.763 23.015 P =206.584.954.681) – – – (P =39.160) 46.533.094.IV.491.481 365.118.715 13.975.658.294.588.628.453.SM PRIME HOLDINGS.491.744.170) 14.974.462.714.689 P 639. Inc.I.169 (3.794 =10.959.III.718.985 7.b) (Note 4.029 P 21.802 (1.026 3.357 13. (Note 4.936.288.015 P SM Prime Holdings.397 P =510.786.313.110.663 1.664 P P1.290.042) – – – (4.403.685.486.877 =32.975.477.027.353.826 11.660 460.439.401.481.517.813 6.396) (1.328 – 426.231 3.726) =– P =30.606 P P8.389.409.221.438.922.085 2.722) 606.039.042 =16. =1.773 54.159.150.267 P (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.817.313.584.449) – – – (P =4.133.191.118.975.261.559 3.901 3.042 =16.745.435 5.142.731.997 5.584.462.117.146.397 P – =206.449) =27.849.929 13.267 P =0. *SGVFS002402* .649.Net Interest expense Interest and dividend income Others .789.270.974.496.126) – – – – – – – – – =– P Pro Forma Balances (Unaudited) =28.126) – – – (95.562.124 5.603.313.921 =16.765 =32.282.195.443.902 68.208.443 22.902.916.593 32.704.126) (95.134.622) 1.067.022.265.497 34.608.458 (45. (i) SM Development (ii) Highlands (B) Merger Holdings.010.804 53.605.

757 (25.378 44.869 =9.379 3.640) (55.399.932.628 =14.252.055.485 19.994.SM PRIME HOLDINGS.466 32.019 (2.216 150.086.558) – – – – (219.b) =438.264.888 (50.629.159) 3.766.222 – 2.474) (P =3.000 4.482) 74.578 P 533.719.616.088. 2011 Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.701 P 330.478.b) (Note 4.224.833.b) (Audited) Inc.588 – 1. (Note 4.704.509. INC.303.992 19. *SGVFS002402* .778 P 18.645 (IV) Other Pro Forma Adjustments (Note 4.995.051.402.245.461. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31.126 340.342 =9.619.732.672.758.I.902) (87.399.a) (P =844.666.726.823. =1.869) 12. Inc.072.510.087 33.128 =490.855 = 1.929.791.973) 2.999.569 4.270.252.672.257.614.716.135.704.567.664.500 50.129.631 11.872. Inc.989) (2.905) (844.905) – – – – – – Pro Forma Balances (Unaudited) =25.908 (543.336.I.400.206 P NET INCOME Attributable to Equity holders of the parent Non-controlling interests =9.521 P P6.277.257.637.368.399.303.958.926.194.596 373.279 109.143 16.490 8.227. Adjustments and SM Land.011 30.704.382.042.411.857.007.479 3.645 P – – – =– P 3.946.704.226.629.051.338.591.055.877 P P1.589) 17.897.877 P – – – =– P 4.869.390.830.874.969.657 SM Prime Holdings.183.645 P – =150. Inc.453.882.514.480.592.716.148) 768.523.701 13.159) (3.930.447.629) 1.637.014.537.182 2.311.221.290.430 INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Current Deferred 2.244.051.221.474) – – – (P =3.588 – 1.II.975 P 16.842 (94.662.224 =14.450 P =150.159 3.672.704.160.637.869.984) 3.308.495 P Basic/Diluted Earnings Per Share (Note 16) See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.994.838.072.571.297.111 P =59.948.065 (86.159) 26.588 2.558) – – – (3.549.791.558) (219.093.324 116.373 150.168.322) 361.230.042.I.330 (812.859.716.159) =24.237.877) (2.272 – 102.590.159) (3.628 =14.612 = (1.867 P =0.544 144.386) (2.159) – (P =3.535 90.244.257.637.035.371.065. Inc.071 17.047.320 25.043.172.672.838.088 119.001.592.257.159) =13. Consolidated Corporation Prime.886.637.858.450 P – =59.286 33.019.544 1.672.940.601 3.156 P – 3.156.740.086.789.408.612) =– P (P =33.379.721.546 =14.124) (P =35.734.542) (P =219.516 30.III.237.745 =8.930.308.835 (2.188.521.798.729.068) (P =35.825) (20.174.058.605 (1.729.945.382.112 P 1.394.b) (Note 4.566.018.060.704.307 26.400.243.672.912 (46.596 P – – – – 490.022 =8.220.Net Interest expense Interest and dividend income Others .977.504.678 =59.122 4.net =22.752.440 (578.954 – – 138.132 (847.IV.736 (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.759.771.129.823.455.948.798.513.885.676 P 16.111 P 74.206 P =0.079. (i) SM Development (ii) Highlands (B) Merger Holdings.408.622 =– P – – – – – – – – – – – – =4.274.496.413.357.927.178) 16.042.276.450 P – – – =150.535.411.350) (1.425 – – – 334.257.042.867 P 77.306. Consolidated (Audited) REVENUE (Note 5) Rent Sales: Real estate Cinema ticket Merchandise Others COSTS AND EXPENSES (Note 14) INCOME FROM OPERATIONS OTHER INCOME (CHARGES) .051 12.208 (70.645 P P– = – =– P =13.847.525 P 326.483 P 533.519) 2.028 (5.446 14.739.884.107.408.b) (Note 4.111) 1.905) – – – – (844.

624 18.441.SM PRIME HOLDINGS.775.218.705.420.971 P =331.037.536 – 148.927 7.408.Net Interest expense Interest and dividend income Others .381.936.200.196. Inc.196.021.184 (48.432) 138.508.275.967.464 P P8.954.I.030 142.715.483) 855.132.392.617 P =0.563.620) 898.029.099 1.140.443 327.218.734.300. (i) SM Development (ii) Highlands (B) Merger Holdings. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31.799.784.670. Inc.671 2.948.218.742 3.990 =8.889 8.030 6.701.064 6.272.670.032) =13.560.737 =342.624 P – =414.b) (Note 4.916.112.135 P 435.221.866.796 P – – – =– P 4. (Note 4.848.802 P (P =3. INC.500 (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.275.304.487.288 P 9.295.489 P 435.221.575.234. 2010 Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.812 P 410.183 – 198.032) 2.275.685 113.304.284) (1.548 =– P – – – – – – – – – – – – =2.444.487.764.609 2.313 3.764.022 P =414.452 15.328 2.007.069.936.935 (2. Inc.216.520.449.b) (Audited) Inc.076 17.971 P 28.221.925 P – – 2.570) =8.856.227 (112.674.624 P P– = – =– P =14.118.276.291 255.242.415 12.302 (152.796.183 2.069.858.913 34.503.746.242.873) 580.269 27.032) =21. Adjustments and SM Land.286 10.985.252.234.320 (71. Consolidated (Audited) REVENUE (Note 5) Rent Sales: Real estate Merchandise Cinema ticket Others COSTS AND EXPENSES (Note 14) INCOME FROM OPERATIONS OTHER INCOME (CHARGES) .084.616 (592.255) (1.752 =9.775.952.487.a) (P =863.774 389.741.728) – – – – (270.531.917) – – – (863.022 P – – – =414.III.312.b) =342. *SGVFS002402* .371.347.219.032) (3.097. =1.271.095 =8.218.II.133.736) 10.879.624 P – – – =– P 2.442.787 (33.119.064.059.755.775.309.093.371.808.102.324 – 2.137) 42.730.482 =14.b) (Note 4.283) =– P =7.032) – (P =3.821.525.421.099 958.888.755 86.936.674.301.398.802 43.240.216.932 9.162.879.088 414.517.310.506.275.661 (56.728) – – – (3.740 6.410.482 =14.674 17.931.236 (1.159 =9. Consolidated Corporation Prime.215.022 P – =331.588.980.748.914.634.759.856) 24.636.594.636 152.942.728) (270.172 (2.519.645 327.044 529.348.207.007.715 =331.459 P 1.552 1.084.980.614.966.636.121 P 11.624 (IV) Other Pro Forma Adjustments (Note 4.504 – – 117.405 P 187.841.917) (863.505.533 P Basic/Diluted Earnings Per Share (Note 16) See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.196.954 P 427.417.490) 473. Inc.219.767 206.775 6.337.858.550.122.823.992 =14.088) 7.052.641.627 23.net INCOME BEFORE INCOME TAX PROVISION FOR (BENEFIT FROM) INCOME TAX Current Deferred NET INCOME Attributable to Equity holders of the parent Non-controlling interests =19.334 16.218.616 =8.565.249.084.140.612.981 13.443.300.032) (3.373.252.221.617 P =7.246 1.271 7.917) – – – – – – Pro Forma Balances (Unaudited) =21.685 (5.715.980.992.075.059.796 P P901.275.156.637 = 1.971.188.545.651 11.372.406.391.248 SM Prime Holdings.I.b) (Note 4.789 P 283.IV.018.607.764.547.736.137 P 9.308.277 =14.321 265.794.102.656.820 – – – 430.522.133.641 2.484.283 = (901.218.274.405 P =0.907.454 40.802 P – – – (P =3.746.311 2.647.275.986 13.291 P – – – – 342.099 1.232 (P =270.300.112.936.544.361.754) 251.725.I.

487) =22.c) (Note 4.277 =10.512.402.681) – – – =– P 6.b) (Note 4.SM PRIME HOLDINGS.581 (328.216 P 1.491.428.919.191. INC.178.687.777 =16.028 P 651.731 P – (328.260.I.633.167.342) =– P =29.886 =23.178.593.886 =23.168.928.723 P – – – =– P (1.475.571.664 P =– P =32.584.201.312 P 651.683.536.177. Consolidated (Audited) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) .484.442.178.633.142.749.974.512.722.793. Inc.512.111.381.015 P (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.b) =206.749.901 P – – – =206.c) (Note 4. Inc.974.397 P – =206.890.681) – (P =39.687.865. Inc.295 P 392.440) – (1.440) =30.572 P =14.584.922.334.397 P (P =39.919.695) =10.722.487) 6.402.I. (i) SM Development (ii) Highlands (B) Merger Holdings. Adjustments and SM Land. =10.342 = (1.584.449) =16.II.617 P See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.681) P– = – =– P =22. *SGVFS002402* . AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31.111.571.403.III.512.695) (328.832.584.059 =16.709.267 P Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.Net Unrealized mark-to-market gain (loss) on available-for-sale investments Cumulative translation adjustment =10.692.584.593.403.475.146.536.890.487) – (P =4.334. 2012 SM Prime Holdings.608. (Note 4.167.094.313.358.974.589 =23.723 P P1.021 (134.093 P – 134.381. Inc.I.397 P – – – (P =39.877 =30.571.695) 6.589 =23.865.901 P =206.428.975.808.919.962 134.572 P 6.554.c) (Audited) Inc.581 (328.358.397 P (P =39.516.695) 6.617 P TOTAL COMPREHENSIVE INCOME Attributable to Equity holders of the parent Non-controlling interests =10. Consolidated Corporation Prime.093 P (P =4.140.974.962) 6.962 (P =4.946 P 1.533 P (P =4.681) (IV) Other Pro Forma Adjustments =– P Pro Forma Balances (Unaudited) =16.975.688.

689 = 1.672.335.433.752.042.645 P – =150.151) 310.699 P 326.150 P 556.070.958.408. *SGVFS002402* .I.450 P – – – – =150.213.784.092) – (P =3.711.174 =9.383.518.159) =14. Inc.645 P (IV) Other Pro Forma Adjustments =– P Pro Forma Balances (Unaudited) =14.408.694) (115.407 P – – – – =– P – (564.854.958.226.694) (P =3.206 P 282. Adjustments and SM Land.220) – (564.b) (Note 4.c) (Note 4.474) (P =3.551 =14.171.727.252. (i) SM Development (ii) Highlands (B) Merger Holdings.450 P – =59. INC.645 P – – – – =– P 282.565.092) =13.637.435.433.084) – 1.090.b) =59.606.245 P 556.736.786.095.818.III.SM PRIME HOLDINGS.408.041 P P7.475.090.407 P P1. 2011 SM Prime Holdings. Consolidated (Audited) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) .257.615.I. (Note 4.175.151 (114.408.727.518.661.054 – 475.867 P Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.530 =8.662 P =59.450 P =150.662 P – – – – =59.551 =14.497 192.497 192.757 P TOTAL COMPREHENSIVE INCOME Attributable to Equity holders of the parent Non-controlling interests =9.512 =14.084 196.718 =8.111 P (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.597 (1.570) (1.070. =8. Consolidated Corporation Prime.848.041 P 115.c) (Audited) Inc.424 = (1.661.848.645 P P– = – =– P =14.257.382. Inc.257. Inc.961.754.c) (Note 4.578.208.I.383.757 P See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.Net Cumulative translation adjustment Unrealized mark-to-market gain (loss) on available-for-sale investments Share in fair value changes in available-for-sale investments of associate =9.704.736.877 P =– P (P =35.129.512 =14.497 (3.755.505.754.303.124) (P =35.818.342 =9.475.711.231.958.424) =– P (P =33. Inc.II.818.505.054 – 475. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31.848.450 P =150.042.933) (P =3.221.323) – 279.606.435.092) 282.960.257.220) (P =35.303.578.755.745.400.

221.c) (Audited) Inc. INC.356 (91.313 =9.230.663.242. Inc.290) =8.221.I.703.100.514.018. *SGVFS002402* .056.100.028 (37.115 P 1.356 (91.SM PRIME HOLDINGS.125 P 410.859 (P =1.820) 503.875.617 P 1.798 =23.219.858. =9.703.624 P (IV) Other Pro Forma Adjustments =– P Pro Forma Balances (Unaudited) =14.592.022 P =414.548 P 1.348 =16.234.022 P – – – – =414.362.084 (91.221.084.100 =16.491.II.405 P Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger (A) Tender Offer Merged SM Prime SM Land.469.049.875.072.703.b) =331.697.140.770.593.896 P P1.331.313 – – 969.Net Unrealized mark-to-market gain on availablefor-sale investments Cumulative translation adjustment Share in fair value changes in available-for-sale investments of associate =8.488.156) =– P =8.185.049.084.173) – (P =1.304.156 = (1.577.892) 1.763.820 (503.374) – (90.663.084.796 P =– P =8.953 P =331.765.784.155 P 512.892 7.783.221.770. (Note 4.I.b) (Note 4.882.022 P =414. Inc.540.022 P – =331. Inc.593.697.936.770.697.395.242.896 P – – – – =– P 969. 2010 SM Prime Holdings.499 P 283.019.358.189.590.250.248.631.616 =8.185.778. Consolidated (Audited) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) .577.624 P – – – – =– P 8.608.808.971 P (II) Acquisition (III) Acquisition of Unlisted of Real Estate Companies Assets (Note 4.982 =23.491.763. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31.599 P See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.084.019.798 =23.032) =14.218.624 P – =414. (i) SM Development (ii) Highlands (B) Merger Holdings.173) 8.c) (Note 4.982 =23.599 P TOTAL COMPREHENSIVE INCOME Attributable to Equity holders of the parent Non-controlling interests =7.801 P 512.953 P – – – – =331.133.505.I.931 37.374) – 8.189.362.477.275.374) – 8.248.608.c) (Note 4.990 =9.624 P P– = – =– P =23. Inc.018.115 P (P =1.173) =22.056.802 P (P =3.115 P =15. Adjustments and SM Land.592. Consolidated Corporation Prime.III.980.115 P 7.783.

000.359 1.000.146.921 = 15.000.145.731 12.035 Non-controlling Interests =573.000) – – (1.770.951 =33.000.920 639.863.443.334 23.334 16.675.475.609.423 P – Total P64.986.617 – – – – (73.359.512.936.067.295.865.562.200.042 16.334.329.498 P 15.661.200.382 – – – 16.000.348.646.805.689 – – 20.886 651.200.695) 6.574.352.951 – – – – – – – – – – 3.180. 2012 At January 1.961.663.336.822.000 11.358 See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.336.443.734.554.028 – – – – – – – – (4.705) – – Total =63.584.044.144.298 P – Equity Attributable to Equity Holders of the Parent Unrealized Mark-toCumulative market Gain on Translation Available-forRetained Earnings Adjustment sale Investments Appropriated Unappropriated =872.724. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31.153.686.512.336.808.474.035 Additional Paid-in Capital .167 = P P18.067 P 15.936.212.862 12.000 – – – (8.689 – – 6.812.179) =3.547 6.091) (3.999 P P =151.976.689 (328.000.102 22.295.352.219.964 2. *SGVFS002402* .049.733) = P148. 3 and 4) As restated Pro forma net income Pro forma other comprehensive income (loss) Pro forma total comprehensive income Appropriation Reversal of appropriation Cash and stock dividends (Note 4) At December 31.852.906.890. INC.562.862 P =– P P =7.586.000.049.000.695) 6.113 133.733) 130.658.822.948.646.000.358.509.043.446. 2012 Capital Stock =13.000.091) (3.551.752.703) (4.562.917.339 – – 22.Net =8.SM PRIME HOLDINGS.339.770.683.368 = P42.044.675.346.000.000 45.095.381.690 52.902 Shares Held by Subsidiary Treasury Stock =– P (P =101.094.693 – P22.846.658.936.034 – – (328.807 – – 16.000.531.474.653 29.521.035 – 14.646.022.000 = P35.000) 1.496.000 = P33.251.274 (672.428.854.406 872.589 23.656.000 (20.795 = P (672.034 – 16.589.346. 2012 Issuance of shares (Notes 4 and 16) Effect of business combination (Notes 2.693.169) =544.976 – – – – – 12.800.476) (P =672.091) (P =3.000.773.975.362.028) 50.443.656.670.743.531.099.

372) (6.654 − − − − − − 412.950.173) 16. (Audited) Corporation Prime.544) (91. Inc.106) 574.491.539 (7.038.916) (6.257.986.491) (6.800.519.678.195.119 − (P =4.196. Inc.488.856.855 − (158.901 P 2.832 (195.462.336.491.297) 142.125 P 17.761 (406.217. (A) Tender Offer Holdings.338) 4.139 (14.493.832 (194.383) =10.047.007.584. (II) Acquisition of Unlisted Companies (III) Acquisition of Real Estate Assets (IV) Other Pro Forma Adjustments Pro Forma Balances (Unaudited) =14. 2012 SM Prime Holdings.718 − − − (706.249.425) 229.net Fair value changes on investments held for trading Sale/retirement of investment properties and property and equipment Unrealized foreign exchange loss (gain) Operating income before working capital changes Decrease (increase) in: Receivables Condominium and residential units for sale Land and development Prepaid expenses and other current assets (Forward) Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger Merged SM Prime SM Land.641.366.156 (7.294.027.039.451.071 − − − − =− P − − − − − − − − − − 5.975 − − − =20.056 (1.212) (107. Consolidated (Audited) CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax and non-controlling interests Adjustments for: Interest expense Interest income and dividend income Depreciation and amortization Equity in net earnings of associates Loss (gain) on: Sale of available-for-sale investments Fair value changes on derivatives .288.500) (254.313.533.208. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31.083 (59.557.177.554.652 P 3.497.253.722 (606.223.548) 27.681) 1.313.731.248.915) 306.445.495) 26.018 (10.309.052.832 706.257.182) 617.622 (1.840 − − − − (84.967. Inc.260.782.217.768. Inc.962. Adjustments Inc.051.362 (84.111.180.211) 732.780 − − − =20.580) =− P − − − − − − − − − − − − − − =46.401.880.435) 401.963) =274.458 P 797.449) (158.474.927.058) (84.277.449) − − − 4.321.978.106.058.298 P 45.711.489.699. INC.173) − (195.789.558) − (7.252 87.985) 451.000.520.442.945 183.744.313.791.838.954.474.214.173) 16.541.349.491.705.184) 6.316) (P =39.978.067 (1.279) *SGVFS002402* .763.974) 3.303 12.957.257.704.118.067.955.369) − − (165.167 (247.204) 162.748) 5.312 (53.599 − − 16.677.929) 9.277.443.840.185 (11.449 − − − − − − 22.658.682.694 (158.240.SM PRIME HOLDINGS.416 (4. Consolidated (i) SM Development (ii) Highlands (B) Merger and SM Land.394.177.974.563) 19.297) (107.084.051) 43.797 (6.558) (254.094.672.500 − (100.351.277.222 (10.208 P 3.440.227 − (158.

819.000.704 P 952. Inc.133.114.435.338.376.651.729 144.369 SM Prime Holdings.698 (460.563.047.762.819.896 10.698 (455.174.290.138 − − − − − − − − − − − − − − − − − − − − − − (22.338.338.648.789.742.102.102 (3.628.384) (134.082.036) − − 38.949.742 (P =22.857 P 3.857 10.455) (34.119.932.225.-2Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger Merged SM Prime SM Land.034) − − − 1.419.100. (Audited) Corporation Prime.011 − (1.069) − (425.759. Consolidated (Audited) Increase (decrease) in: Accounts payable and other current liabilities Tenants deposits and other noncurrent liabilities Net cash generated from (used for) operations Income tax paid Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Investment properties Available-for-sale investments Property and equipment Investments held for trading Proceeds from sale of: Investment properties Available-for-sale-investments Property and equipment Interest received Dividend received Decrease (increase) in other noncurrent assets Net cash provided by (used in) investing activities (Forward) =816.018.068.142. Consolidated (i) SM Development (ii) Highlands (B) Merger and SM Land.848) (1.413.314) 17.715.319 − − − 404.400) − − 282.861 1.423.255 (21.073) (21.534.000 282.017.319 1.994.019.442) − (1.998 − − − − − − − − − − − (3. Adjustments Inc.039) (73.673 1.803) (10.917.498.847) 6.096.935.016 P (18.362.685.249.157) (201.603.419.600.017.265.486 (3.929.024.434) 38.663.890 16.196) 168.377.696) (914.890 740.673 − 241.673 1.508.391.071 (IV) Other Pro Forma Adjustments (P =5.633.094.553.536. Inc.045) 38.140 (8.028.811.118.813.651.208.241.274.747) (914. (A) Tender Offer Holdings.290.506.384) (135.013.890 662.065.529.987 − 5.071 − 412.440.831 575.508.542) =− P − − − − (P =52.539.975) − − − − Pro Forma Balances (Unaudited) =4.145.019) *SGVFS002402* .212.508.133.019.044.117) 6.299 574.597.185) (III) Acquisition of Real Estate Assets =− P − 412.781 P 2.970) (22.442) (22.209. Inc.000 − − 78.384) (560.483 (3.795.019.742 − 49.929.716 144.271.807.743 (10.017.946) − (1.938.901.987.857 − 561.764.652.611) − 1.678) (914.844.419.780) − − − − =4.593.730) (107.898 P 3.169 (II) Acquisition of Unlisted Companies =111. Inc.827.241. =3.196.981.440.151.582.139) (22.322) 49.475 20.839.119.779) (1.695.739) (288.356.066 − − − − − − − − (1.319 − 282.993.

415) (142.234) − (38.845) 12.354.476) − − 6.125 − 227. *SGVFS002402* .007.457) (1.362.978) (P =2.976) 400. (Audited) Corporation Prime.271.000 21. Consolidated (i) SM Development (ii) Highlands (B) Merger and SM Land.524.243.187.004.956.609.924.133.585.691 (412.747.782.050.517) 1.379.118.626 − (1.-3Pro Forma Adjustments (Unaudited) (I) Tender Offer and Merger Merged SM Prime SM Land. Consolidated (Audited) CASH FLOWS FROM FINANCING ACTIVITIES Availments of: Long-term debt Bank loans Payments of: Interest Long-term debt Bank loans Dividends Proceeds from issuance of new common shares Decrease in non-controlling interests Net cash provided by (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS OTHER PRO FORMA ADJUSTMENTS (Note 4.333) − − − − (658.125 (146.978) − − − − =− P (13.572.948) (P =71.000) 400.272.801 P 1.751 P− = − − − − − − − − P− = − − − − − − − − =37.857.619.029.813.976) − (146.729.774 − 6.565.309.630 =8.641.442 =37.416.651.000.693.200.750.839.599.471.000 P 800.673.071 (412.290.III.000) − (639.000.391.000 (3.263.939 =17.022.750.132.d) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR (II) Acquisition of Unlisted Companies (III) Acquisition of Real Estate Assets (IV) Other Pro Forma Adjustments Pro Forma Balances (Unaudited) =18.118. Inc.838.210.415) (P =496. (A) Tender Offer Holdings.812. Inc.184 1.845) 19.445.071) (2.133.309.398 P − (691.524.746.531) 4.361.697.367) (12. SM Prime Holdings.132) (6.235 =− P 140.050.956.398 P 940.310.813.361 P 7.000) (3.346.039 =9.943) − (4.333.000.000.651.313.265.751.477) (5.378 P 13.266.942) − (146.367) (P =928.692.442.913.314.404 P − − − (496.276) − (3.585) 3.354.216.206.888.706.862 (306.729.946) 695.039.071.555 P See accompanying Notes to Pro Forma Condensed Consolidated Financial Information.440.277.276) (1.252) (33.845) 19.167.040.134 P− = − − − − − − − − =800.440.670. Adjustments Inc.000.440.790) P− = − − − − 1.058.729.000. Inc.692.066) (13.797 =2.449 =18.356.000) (332.440) (13.398 P 800.187.182) − − − (928.500. Inc.000 P − (66.071) 13.225.000 (3.042.632.422.758 − − 412.115.000 (2.123.986 (20.080.442 − − 1.758 =17.098.200.827.745.123.322 − 8.

SM PRIME HOLDINGS, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1. Corporate Information SM Prime Holdings, Inc. (SMPH) was incorporated in the Philippines and registered with the Securities and Exchange Commission (SEC) on January 6, 1994. SMPH and its subsidiaries (collectively referred to as “the SMPH Group”) develop, conduct, operate and maintain the business of modern commercial shopping centers and all businesses related thereto, such as the conduct, operation and maintenance of shopping center spaces for rent, amusement centers, or cinema theaters within the compound of the shopping centers. Its main sources of revenue include rent income from leases in mall and food court, cinema ticket sales and amusement income from bowling, ice skating and others. The SMPH’s shares of stock are publicly traded in the Philippine Stock Exchange (PSE). Before the planned corporate restructuring, SMPH is 21.65% and 40.96% directly-owned by SM Investments Corporation (SMIC) and SM Land, Inc. (SM Land), respectively. SM Land is a 66.89% owned subsidiary of SMIC. SMIC, the ultimate parent company, is a Philippine corporation which listed its common shares with the PSE in 2005. The registered office and principal place of business of SMPH is Mall of Asia Arena Annex Building, Coral Way cor. J.W. Diokno Blvd., Mall of Asia Complex, Brgy. 76, Zone 10, CBP-1A, Pasay City 1300. The unaudited pro forma condensed consolidated financial information as at December 31, 2012 and for the years ended December 31, 2012, 2011 and 2010 were authorized for issue by the Board of Directors (BOD) on May 31, 2013.

2. Basis of Preparing Pro Forma Condensed Consolidated Financial Information The unaudited pro forma condensed consolidated financial information have been prepared in accordance with Section 8, Part II of the Securities Regulation Code 68, As Amended in 2011 (SRC Rule 68). The unaudited pro forma condensed consolidated financial information has been prepared solely for inclusion in the exchange offer document prepared by SM Land in connection with its voluntary offer for the tender shares of the other shareholders of SM Development Corporation (SMDC) and Highlands Prime, Inc. (HPI), both publicly-listed entities in the PSE, in exchange of SMPH common shares held by SM Land, and for no other purpose. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the audited consolidated financial statements of SMPH and its subsidiaries and SM Land and its subsidiaries as at December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010. The objective of this unaudited pro forma condensed consolidated financial information is to show what the significant effects on the historical financial information might have been had the transactions described in Note 3 occurred at an earlier date. However, the unaudited pro forma condensed consolidated financial information is not necessarily indicative of the results of operations or related effects on the consolidated financial statements that would have been attained, had the transactions described in Note 3 actually occurred at an earlier date. The

*SGVFS002402*

-2unaudited pro forma condensed consolidated financial information is not intended to be considered in isolation from, or as a substitute for, financial position or results of operations prepared in accordance with Philippine Financial Reporting Standards (“PFRS”). The unaudited pro forma condensed consolidated financial information has not been prepared in accordance with the requirements of Article 11 of the Regulation S-X under the U.S. Exchange Act.

3. Corporate Restructuring The ultimate objective of the corporate restructuring is to consolidate all the SM real estate companies and businesses under one single listed entity, which is the “New SMPH”, to create a fully integrated real estate platform to further enhance the value of the SM Group’s real estate businesses, enhance its ability to capitalize on the strong economic fundamentals of the Philippine property, consumer and tourism sectors and simplify corporate structure and increase organizational efficiencies. This was approved by the BOD of SMPH, SM Land and the other entities involved in the corporate restructuring on May 31, 2013. The following are the significant transactions that are assumed to happen subsequent to December 31, 2012 to effect the corporate restructuring of the SM Property Group and other significant assumptions that were reflected in the pro forma condensed consolidated financial information. a. Tender Offers for SMDC and HPI Both SMDC and HPI are companies primarily engaged in real estate development and listed in the PSE and registered with the Philippine SEC. On June 4, 2013, SM Land will launch a tender offer to the other shareholders of SMDC and HPI in exchange for existing SMPH shares held by SM Land. The terms of the tender offer will be executed at an exchange ratio of 0.472 SMPH share for 1 SMDC share and 0.135 SMPH share for 1 HPI share. The exchange ratios were arrived at based on SMPH’s one month volume-weighted average price (VWAP) of P =18.66 per share and a six percent premium to SMDC’s one month VWAP of =8.303 per share. For HPI, the exchange ratios were arrived at based on SMPH’s one month P VWAP of = P18.66 per share and a fifteen percent premium to HPI’s one month VWAP of = P 2.195 per share. Upon conclusion of the tender offer and provided that at least ninety percent (90%) of the issued and outstanding shares of SMDC and HPI are acquired by SM Land, SMDC and HPI will initiate a voluntary delisting process with the PSE in accordance with the PSE Rules on Delisting. Total estimated number of SMPH common shares held by SM Land that will be exchanged to complete the tender offer to shareholders of SMDC and HPI is 1,592,922,961. The actual ownership structure of SMDC and HPI before the corporate restructuring and the assumed ownership interest after the corporate restructuring follows:

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-3SMDC Ownership (%) Name of stockholders Actual After the assumed tender offer 95.00 – – – 5.00

SM Land SMIC Other SM affiliates Directors and officers Public HPI

65.18 0.13 13.54 5.80 15.35

Ownership (%) Name of stockholders Actual After the assumed tender offer – – – – – 95.00 5.00

Belle Corporation SMIC SMDC Other SM affiliates Directors and officers SM Land Public b. Merger of SMPH and SM Land

35.82 20.20 15.04 17.65 1.15 – 10.14

Following the completion of the tender offer, the BOD and stockholders of SMPH will conduct their respective meetings in order to approve the merger of SMPH and SM Land via a share-for-share swap where the stockholders of SM Land will receive new SMPH shares in exchange for their shareholdings in SM Land. SMPH will be the surviving entity while SM Land will be the absorbed entity. The Plan of Merger also includes the amendment of the articles of incorporation of SMPH as the surviving entity of the Merger, in order to: (a) change its primary purpose to a mixed-use real property developer; and (b) increase its authorized capital stock from 20,000,000,000 shares with a par value of = P1 a share to 40,000,000,000 shares with a par value of = P1 a share. As a result of the planned merger, SMDC and HPI are assumed to become 95% owned direct subsidiaries of the New SMPH. In addition to the shareholdings in SMDC and HPI, the New SMPH is also assumed to hold SM Land’s real estate assets which includes among others, Mall of Asia Complex (MOAC), office buildings such as Two E-Com in MOAC, Cyber 1 and Cyber 2 in Makati, and certain real properties leased to SM SaveMore and SM Department Store. The merger ratio of 369 SMPH shares for 1 SM Land share were arrived based on the net appraised values of SMPH and SM Land as at February 28, 2013 as conducted by CB Richard Ellis. The total estimated number of new SMPH common shares to be issued to SM Land shareholders is 14,390,923,857.

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00 (50% indirect ownership in PMI) 100. (PMI) Rappel Holdings. Inc. Inc. (RHI) Stockholder SMIC SMIC Ownership (%) 10.00 Prime Central.00 (40% indirect ownership in PMI) 33. Inc. Mountain Bliss Resort and Development Corp. Inc.00 100.67 100.00 100.33 41.00 The New SMPH is also assumed to issue an additional and equivalent amount of SMPH shares of stock to SMIC in exchange for the following real estate properties ("Property for Share Swap"): Properties/Development Taal Vista Hotel Radisson Cebu Hotel Pico Sands Hotel SMX Convention Center Mall of Asia Arena Mall of Asia Arena Annex Corporate Office Casino and Waste Water Treatment Plant Tagaytay land EDSA West land Park Inn Davao Classification Land and building Building Building Building Building Building Building Building Land Land Building Location Tagaytay Cebu Batangas Pasay Pasay Pasay Pasay Tagaytay Tagaytay Quezon City Davao *SGVFS002402* . (Mountain Bliss) and the Sy Family.-4c. Acquisition of unlisted real estate companies and assets from SMIC and the Sy Family Following the merger. and subsidiaries (SMHCC) SM Arena Complex Corporation (SMACC) Costa del Hamilo. the New SMPH is assumed to issue the equivalent amount of SMPH shares of stock to SMIC. in exchange for the latter’s shares in the following companies with their corresponding shareholding interest (the "Share for Share Swap"): Company To Be Acquired Prime Metroestate. (Costa) SMIC Sy Family SMIC SMIC Mountain Bliss 100. (PCI) SMIC Tagaytay Resort and Development Corporation (TRDC) SM Hotels and Conventions Corp.

50 per share as at March 31.722. real or personal. including subscriptions to shares and other choses in action. the New SMPH will effectively own the following real estate companies and properties of the SM Group: · · · · · · · · · · 95% direct interest in SMDC 95% direct interest in HPI 100% direct and indirect interest in PMI 100% direct interest in RHI 100% direct interest in PCI 100% direct interest in SMHCC 100% direct interest in SMACC 100% direct interest in Costa 100% direct interest in TRDC.84 billion equivalent to 1.178 SMPH common shares issued based on SMPH closing price of = P19. For purposes of the pro forma financial information. and all property. 2013. and all and every interest of. The completion of the restructuring shall have the following effects: · SMPH and SM Land shall become a single corporation. or belonging to. with SMPH as the surviving corporation designated in the Plan of Merger.-5The unlisted real estate companies owned by SMIC and the Sy Family and the real property assets owned by SMIC will be acquired for a consideration based on the appraised values as at February 28. privileges. and The following real property assets that were previously owned by SMIC: · Taal Vista Hotel · Radisson Cebu Hotel · Pico Sands Hotel · SMX Convention Center · Mall of Asia Arena · Mall of Asia Arena Annex · Corporate Office · Casino and Waste Water Treatment Plant · Tagaytay land · EDSA West land · Park Inn Davao · *SGVFS002402* . The surviving entity the New SMPH shall thereupon and thereafter possess all the rights. immunities and franchises of each of SMPH and SM Land. or due to each of SMPH and SM Land. In addition. and all receivables due on whatever account. the assumed total acquisition price of the unlisted real estate companies and real property assets amounted to = P28. 2013 as conducted by CB Richard Ellis. shall be transferred to and vested in the New SMPH without further act or deed.545.

the transactions are assumed to have occurred on January 1. as the case may be. and (vi) Comparatives are presented as if the entities had always been combined only for the period that the entities were under common control. The only adjustments would be to harmonize accounting policies between the combining entities. (ii) No adjustments are made to reflect fair values. SMPH also presented comparative pro forma consolidated statements of income and comprehensive income for the years ended December 31. after considering the significant transactions described in Note 3 which are assumed to happen after December 31. and (ii) SM Land and its subsidiaries as at December 31. 2012 and 2011 and for the years ended December 31. which is the New SMPH. 2012. For the purpose of the pro forma consolidated statements of income and comprehensive income. (v) The income statement in the year of acquisition reflects the results of the combining entities for the full year. 2012. irrespective of when the combination took place. changes in equity and cash flows for the year ended December 31. nor does it purport to project the results of operations of the New SMPH for any future period or date. 2011 and 2010. the *SGVFS002402* . Pro Forma Adjustments and Consolidation The unaudited pro forma condensed consolidated financial information is based on the historical financial information of the SM Property Group as shown in the (i) audited consolidated financial statements of SMPH and its subsidiaries.-6- 4. 2012. or recognize any new assets or liabilities at the date of the combination. Under the pooling of interests method: (i) The assets and liabilities of the combining entities are reflected at their carrying amounts. The SM real estate businesses involved in the re-organization are under common control of the Sy Family (the Controlling Shareholders). and the audited financial statements of HPI and certain real estate companies and real estate properties controlled and owned by SMIC. For the purpose of the pro forma consolidated balance sheet. or December 31. Thus. (iv) Any difference between the consideration transferred and the net assets acquired is reflected within equity. 2011 and 2010 as required by SRC Rule 68 when a company applies pooling of interests method in a business combination for purposes of the pro forma financial information. (iii) No ‘new’ goodwill is recognized as a result of the business combination. 2012 and after giving effect to certain assumptions and pro forma adjustments described below. The pro forma adjustments are based upon available information and certain assumptions that the SM Property Group believes are reasonable under the circumstances. In addition to the pro forma consolidated statements of income and comprehensive income for the year ended December 31. The pro forma condensed consolidated financial information does not purport to represent what the results of operations and financial position of the New SMPH would have been had the significant transactions discussed above occurred as at January 1 of each of the periods presented. Management of SM Property Group viewed the series of restructuring transactions as described in Note 3 as a “single” or “linked” arrangement which was structured to re-organize the SM real estate businesses and to form a single real estate listed entity. 2012. 2012. the restructuring was considered a re-organization or combination of businesses under common control for which pooling of interests method was applied in preparing the pro forma financial information.

999 million representing the carrying amount of the non-controlling interest assumed to be acquired.304. material nonrecurring charges or credits and the related tax effects which result directly from the transaction and which will be included in income within the 12 months succeeding the transaction were not considered in the pro forma statement of income and comprehensive income.-7transactions are assumed to have occurred as at December 31. The merger transaction was accounted for using the pooling of interests method. which is equivalent to the carrying amount of investment in SMPH to be given up.231 million was accounted for in equity and reflected as part of “Equity adjustment from business combination”. Tender Offer and Merger For purposes of the preparation of the pro forma condensed consolidated financial information. 2012. · Adjustment to record a reduction in “Cash and cash equivalents” amounting to =496 million. 2012 Pro forma adjustments have been made to bring the entire consolidated balance sheet of SM Land into the pro forma consolidated balance sheet of SMPH as at December 31. and the (b) merger between SMPH (surviving entity) and SM Land (absorbed entity). a. In accordance with SRC Rule 68. I. · Adjustment to record the reduction in the “Investment in shares of stocks” amounting to = P768 million or 1.1 The tender offer by SM Land to the shareholders of SMDC was accounted as acquisition of non-controlling interest in exchange for its investment in SMPH. 2012. 1. Pro forma adjustments in the pro forma consolidated balance sheet as at December 31. which pertains to the transaction cost assumed to be incurred from P the transaction.842. Tender offer by SM Land 1. which is an equity transaction. The following pro forma adjustments have been made: · Adjustment to reduce the “Non-controlling interest” amounting to P =11. the following pro forma adjustments have been made for the (a) tender offer by SM Land to the shareholders of SMDC and HPI.088 SMPH shares. *SGVFS002402* . · The excess of the carrying value of non-controlling interest acquired over the cost of investment in SMPH which amounted to = P11. The amount was presented as a reduction from “Equity adjustment from business combination” amounting to = P445 million and “Income tax payable” amounting to = P51 million.

2. · Adjustment to bring the 95% of the retained earnings of HPI to the consolidated pro forma consolidated balance sheet. For purposes of the pro forma consolidated balance sheet. 2012. 2012. In addition. P · Transaction costs amounting to = P101 million estimated to be incurred for this transaction were not included in the pro forma consolidated statements of income and pro forma consolidated statements of comprehensive income for the years ended December 31. “Unrealized mark-to-market loss on available-for-sale investments” of HPI amounting to = P2 million was also recognized. these were charged as a reduction to “Cash and cash equivalents” amounting to P =101 million. · Adjustment to recognize “Non-controlling interest” equivalent to 5% interest in HPI as at December 31. “Retained earnings” amounting to P =90 million and the difference related to the income tax benefit amounting to P =11 million was presented as a reduction to “Income tax payable”. The following pro forma adjustments have also been made: · Adjustment to record the reduction in the “Investment in shares of stocks” amounting to P =143 million.999 SMPH shares was not adjusted since SMDC was consolidated in SM Land’s consolidated financial statements.857 new SMPH common shares with =1.873 SMPH shares. · Adjustment to eliminate the 15% investment of SMDC in HPI classified as available for sale investments amounting to = P672 million.00 par value per share to the shareholders of SM Land in accordance with the P share-for-share exchange transaction to effect the merger of SM Land into SMPH.-81.391 million was credited to “Equity adjustment from business combination”. “Retained earnings” amounting to P =412 million were recognized consistent with the accounting under the pooling of interest. The following pro forma adjustments have also been made for the merger of SMPH and SM Land: 2. 2012 amounting to P =138 million attributable to shareholders assumed not to have participated in the tender offer.617.390. Adjustments have been made to bring the consolidated balances of SM Land after the effect of the tender offer. Merger between SMPH and SM Land As discussed above. 2011 and 2010 as these are considered nonrecurring charges. However. SMDC (a subsidiary of SM Land) has a 15% investment in HPI.923. the merger between SMPH and SM Land was accounted for under the pooling of interest method. The shares are assumed to be issued to SMIC and the Sy Family who participated in *SGVFS002402* . · The resulting difference from the above pro forma adjustments amounting to =1. Pro forma adjustments were made to bring the entire assets and liabilities of HPI into the pro forma consolidated balance sheet of SM Land (eventually to SMPH) as at December 31. The total carrying amount of investment in SMPH to be exchanged by SM Land for the 95% interest in HPI amounted to P =170 million or 288.1 Adjustment to record the issuance of 14. The carrying amount of investment in SMPH assumed to be received by SMDC amounting to = P27 million or 45.2 The tender offer by SM Land to the shareholders of HPI was accounted for as business combination under common control.080.

= P1.524.705 million and P =3. 2011 and 2010. The difference of = P72 million was recognized in “Additional paid-in capital”. The related “Investment in shares of stock” amounting to = P23. 45. 2012.3 Elimination of SM Land’s equity in net earnings on SMPH amounting to =4. respectively.462 million. b. “Additional paid-in capital” and “Equity adjustment from business combination” amounting to = P1. 2. In addition.083 million and elimination of certain intercompany accounts’ balances. 1. 1. 2.4 Elimination of certain intercompany transactions (rental income against rent expense) between SMPH and SM Land. 2011 and 2010 as these are considered nonrecurring charges.7 million and P =0. 2012.999 SMPH common shares held by SMDC amounting to = P672 million was recognized as “Shares held by subsidiary”. 2011 and 2010. P =1. 2012.031.335 million was eliminated. respectively.950 million. For purposes of the pro forma consolidated balance sheet. The following pro forma adjustments have also been made: 1. Pro forma adjustments in the pro forma consolidated statements of income for the years ended December 31.313 million. 1.218 million for the years ended December 31.391 million was recognized from this share issuance. *SGVFS002402* . Pro forma adjustments were made to bring the entire consolidated statements of income of SM Land and HPI into the pro forma consolidated statements of income of SMPH for the years ended December 31.530 shares or = P3. P =1. 2.177 million.245 million and P =901 million for the years ended December 31. respectively. 2011 and 2010. 2011 and 2010 1. 2012.4 million for the years ended December 31.2 Recognition of “Treasury stock” representing SM Land’s remaining investment in SMPH totaling 5.3 Elimination of the “Capital stock”. P 2.5 The resulting difference from the above pro forma adjustments amounting to =382 million was reflected in “Additional paid-in capital”. P 2.6 Transaction costs amounting to P =929 million were not included in the pro forma consolidated statements of income and pro forma consolidated statements of comprehensive income for the years ended December 31.1 Adjustment to attribute the assumed share of “Non-controlling interest” in net income of SMDC to “Equity attributable to equity holders of the parent” as a result of the tender offer amounting to = P1. “Capital stock” amounting to = P14. 2012.251 million.685 million and P =12.617.-9the swap. 2012. upon merger.6 million. 2012. 2011 and 2010.2 Recognition of the share of “Non-controlling interest” in the net income of HPI amounting to = P1. P P =3. these were charged as a reduction to “Cash and cash equivalents” amounting to = P929 million and “Retained earnings” amounting to = P857 million as at December 31. respectively.4 Elimination of SM Land’s accumulated equity in net earnings of SMPH and cumulative translation adjustment of SMPH recognized by SM Land totaling =20.

Addition to “Treasury stock” amounting to = P3. c. 2011 and 2010. 2.905 million which is attributable to the retained earnings of SM Land and HPI as at January 1. 2012 and after the effect of adjustments on the tender offer and the merger. 2011 and 2010 as these are considered nonrecurring charges. 2012. These pro forma adjustments are as follows: · Addition to retained earnings amounting to P =25. Addition to “Non-controlling interest” amounting to P =1.390. d. Pro forma adjustments in the pro forma consolidated statements of comprehensive income for the years ended December 31.949 million which is attributable to the non-controlling interest of SM Land as at January 1.. 2.391 million. Pro forma adjustments were made to bring the entire consolidated statements of comprehensive income of SM Land and HPI into the pro forma consolidated statements of comprehensive income of SMPH for the years ended December 31. Pro forma adjustments in the pro forma consolidated statement of changes in stockholders’ equity for the year ended December 31. 2012. The net effect of the pro forma adjustments to equity as discussed in the “Pro forma adjustments in the pro forma consolidated balance sheet as at December 31. 2012: 1. 2012” were adjusted to the equity balances as at January 1. · · · · · *SGVFS002402* .049 million.857 new SMPH common shares with P =1. 2012. 2011 and 2010 as these are considered nonrecurring charges. 2012 and after the effect of the adjustments on the tender offer and the merger.251 million.923. which is attributable to SM Land and HPI as at January 1.996 million as a result of the net effect pro forma adjustments on the tender offer and the merger.5 The transaction costs discussed above were not included in the pro forma consolidated statements of income for the years ended December 31. 2012. Addition to “Unrealized mark-to-market gain” amounting to P =12.00 par value per share to the shareholders of SM Land in accordance with the share-for-share exchange transaction to effect the merger amounting to = P14. 2012. 2011 and 2010 1. Transaction costs discussed above were not included in the pro forma consolidated statements of income for the years ended December 31.10 1. 2012. The following pro forma adjustments have been made to the pro forma statement of changes in stockholders’ equity as at December 31. Addition to “Shares held by subsidiary” amounting to = P672 million. Adjustment to record the assumed issuance of 14. Addition to “Additional paid-in capital” amounting to = P1. 2012.

957.409 new SMPH common shares with = P1.430 million and = P1. Acquisition of unlisted real estate companies The acquisition of unlisted real estate companies was considered as business combination under common control and was accounted for using the pooling of interests method. 2. (b) dividend received by SM Land from SMPH amounting to = P1. The resulting difference from the above transaction amounting to = P3.11 e. these were charged as a reduction to “Cash and cash equivalents” amounting to *SGVFS002402* . 3. The following pro forma adjustments have also been made: · Adjustment on the “Cash and cash equivalents” at end of the year amounting to =1. a. 5. and (c) receivables of SMPH from SM Land amounting to = P22 million. Adjustment to eliminate SMDC’s “Available-for-sale investments” in TRDC amounting to = P66 million. 2012 1.00 par value per share to SMIC in exchange for the net assets and retained earnings of unlisted real estate companies with carrying values of P =6. “Capital stock” amounting to = P708 million was recognized from this share issuance.651 million. · II. Thus. 2012 1. 2. respectively. 4. Pro forma adjustments in the pro forma consolidated statement of cash flows for the year ended December 31.759 million. Elimination of the impact of the intercompany transactions between SMPH and SM Land on the cash flow namely: (a) equity in net earnings of SM Land from SMPH amounting to = P4. Pro forma adjustments were made to bring the assets and liabilities and retained earnings of the unlisted real estate companies into the pro forma consolidated balance sheet of SMPH as at December 31. 2012.313 million. 2012. For purposes of the pro forma consolidated balance sheet. 2012.954 million was credited to “Additional paid-in capital” account. Pro forma adjustments in the pro forma consolidated balance sheet as at December 31.. 2011 and 2010 as these are considered nonrecurring charges. the assets and liabilities of these unlisted companies were combined with the New SMPH using their carrying values.526 million attributable to the transaction cost to be incurred from the issuance of P shares of SMPH for the merger amounting to = P929 million. tender offer of SMDC amounting to = P496 million and tender offer of HPI amounting to = P101 million. Transaction costs amounting to P =28 million were not included in the pro forma consolidated statements of income and pro forma consolidated statements of comprehensive income for the years ended December 31. The entire statements of cash flows of SM Land and its subsidiaries and HPI were added in the pro forma consolidated statements of cash flows of SMPH and its subsidiaries for the year ended December 31. Adjustment to record the assumed issuance of 707.

Pro forma adjustments in the pro forma consolidated balance sheet as at December 31. 2012. Thus. 2012. Pro forma adjustments in the pro forma consolidated statements of income and comprehensive income for the years ended December 31. “Capital stock” recognized from this issuance amounted to = P838 million. III. b. Pro forma adjustments in the pro forma consolidated statement of changes in stockholders’ equity for the year ended December 31. 2012.504 million. 2012. 2011 and 2010 Pro forma adjustments were made to bring the entire statements of income and statements of comprehensive income of the unlisted real estate companies into the pro forma consolidated statements of income and comprehensive income of SMPH for the years ended December 31.764. 2012: 1. 2012. 2012 The entire statements of cash flows of the unlisted real estate companies were added in the pro forma consolidated statement of cash flows of SMPH for the year ended December 31.409 new SMPH common shares with =1. Addition to “Additional paid-in capital” amounting to = P3. Adjustment to record the issuance of 707. 2.769 new SMPH common shares with P =1.. 2012. Pro forma adjustments in the pro forma consolidated statement of cash flows for the year ended December 31. 2012 The following pro forma adjustments have been made to the pro forma statement of changes in stockholders’ equity as at December 31.893 million as a result of the net effect pro forma adjustments on the acquisition. These pro-forma adjustments are as follows: · · Addition to retained earnings amounting to P =1. 2012” were adjusted to the equity balances as at January 1. The excess of the carrying value of the real estate *SGVFS002402* . 2012 1. Adjustment to record the assumed issuance of 837.00 par value per share to SMIC as payment for the acquisition of the real estate assets with carrying value of P =9. The net effect of the pro forma adjustments to equity as discussed in the “Pro forma adjustments in the pro forma consolidated balance sheet as at December 31. Acquisition of real estate assets The acquisition of real estate assets was considered “acquisition of a business” and was accounted for using the pooling of interests method. d.00 par value per share to the shareholders of unlisted real estate companies in P accordance with the share-for-share exchange transaction amounting to = P708 million. a. The difference amounting to = P3 million was recognized in “Additional paid-in capital”.12 = P28 million and “Retained earnings” amounting to = P25 million as at December 31.957. the real estate assets were combined with the merged SMPH using their carrying values. 2011 and 2010.528 million which is attributable to the retained earnings of the unlisted companies as at January 1. c.

662 million as a result of the net effect pro forma adjustments on the acquisition. 2012 The following pro forma adjustments have been made to the pro forma statement of changes in stockholders’ equity as at December 31. Reduction to “Cash and cash equivalents” amounting to = P1. *SGVFS002402* . Addition to “Additional paid-in capital” amounting to = P8. 2011 and 2010 as these are considered nonrecurring charges. Pro forma adjustments in the pro forma consolidated statements of income and comprehensive income for the years ended December 31. by the real estate assets acquired into the pro forma consolidated statements of income and comprehensive income of SMPH for the years ended December 31. This was charged to “Retained earnings” as at December 31.764. 4. 3. 2.. 4. The difference amounting to P =4 million was recognized in “Additional paid-in capital”. 2011 and 2010 as this was considered as a nonrecurring charge. For purposes of the pro forma consolidated balance sheet. 2012. 2012. 2012 which pertain to the deductible temporary difference between the tax base and accounting base of the real estate assets acquired.00 par value per share to SMIC in accordance with the share-for-share exchange transaction amounting to = P838 million. The input value-added tax was also recognized as part of “Prepaid expenses and other current assets”. 2012.13 assets over the total par value of new SMPH shares issued amounting to = P8. 2012: 1. Recognition of “Deferred tax assets” amounting to P =1. Transaction costs amounting to P =394 million were not included in the pro forma consolidated statements of income and pro forma consolidated statements of comprehensive income for the years ended December 31. 2012. 2. 2011 and 2010 Pro forma adjustments were made to bring the income and expenses directly earned and incurred. c. b. 2011 and 2010. 2012. 2012. Pro forma adjustments in the pro forma consolidated statement of changes in stockholders’ equity for the year ended December 31.960 million representing payment of input value-added tax on acquired real estate assets.769 new SMPH common shares with P =1. Benefit from deferred tax assets was not recognized in the pro forma consolidated statements of income and comprehensive income for the years ended December 31.103 million as at December 31. 2012 since this was not included in the P acquisition of real estate assets. respectively. these were charged as a reduction to “Cash and cash equivalents” amounting to = P394 million and “Retained earnings” amounting to = P390 million as at December 31. 3. Adjustment to eliminate the net loss generated by the real estate assets amounting to =40 million for the year ended December 31.666 million is recognized as “Additional paid-in capital”. Addition to retained earnings amounting to P =754 million. Adjustment to record the assumed issuance of 837.

2012. The real estate development and tourism segment is involved in the development and transformation of major residential. Segment Information For management purposes. retail facilities and all businesses related thereto such as the conduct. accounts and balances as at December 31. 2012 1. Pro forma adjustments in the pro forma consolidated statement of cash flows for the year ended December 31. IV. conducts. or cinema theaters within the compound of the shopping centers and commercial complex. operates and maintains the business of modern commercial shopping centers including office buildings. Segment revenue includes transfers between business segments. Other pro forma adjustments a. Management will monitor the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. 2011 and 2010 Elimination of intercompany transactions. 2011 and 2010. 2012 and pro forma statements of income. The hotels and convention centers segment engages in and carries on the business of hotels and convention centers and performance venues and operates and maintains any and all services and facilities incidental thereto. commercial and industrial and tourism districts through sustained capital investments in buildings and infrastructure. 2. Pro forma adjustments were made to eliminate the net increase in cash and cash equivalents related to the real estate assets amounting to = P412 million to the “Cash and cash equivalents” at the end of the year since these were not included in the acquisition. Transfer prices between segments will be set on an arm’s length basis similar to transactions with related parties. The shopping mall and commercial property development segment develops. 2012. Management has identified three reportable operating segments as follows: shopping mall and commercial property development.. operating segment will be organized into business units based on their products and services. Pro forma adjustments were made to include the cash flows related to the real estate assets with a total net cash inflow amounting to = P412 million to the pro forma consolidated statement of cash flows of SMPH for the year ended December 31. Pro forma adjustments in the pro forma consolidated balance sheet as at December 31. 2012. 2012 and for the years ended December 31. changes in stockholders’ equity and cash flows for the years ended December 31. real estate development and tourism and hotels and convention centers. Such transfers are eliminated in consolidation. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. operation and maintenance of shopping center spaces for rent. 5. amusement centers.14 d. Such transfers will be eliminated in the consolidation. *SGVFS002402* .

657 P =4.945.245.320 P =269.839 P – =57.616 P 130.900 P Pro forma Consolidated Balances Eliminations =32.792) 2.398.147.135.686 (P =368.590. Business Segment Data December 31.221.979 P 3.822) (P =2.390.212) P =132.364) =4.823 P =17.550 P 115.916) (P =300.271 P =13.284 =11.018 P 4.916) (P =2.155 P16.983.198.993) 400.172 (P =111.018.746.099 P =4.541 P =44.074 =272. 2012.252.503. 2012 and for the years ended December 31.458 P 326.155.342 P =245.385 =1.398.089 =422.037 P =39.089 P 276.939) – (P =2.338 P 3.244. 2012 (Unaudited) Shopping Mall and Commercial Property Development Revenue: External customers Inter-segment Segment results: Income before income tax Provision for income tax Net income Net income attributable to: Equity holders of the parent Non-controlling interests Segment assets Segment liabilities Net cash flows provided by (used in): Operating activities Investing activities Financing activities Other information: Capital expenditures Depreciation and amortization Real Estate Development and Tourism Hotels and Commercial Convention Residential and Industrial Centers (In Thousands) =22.245) (P =172..968 P 2.283) (P =111.270.014.624 = (407.329 P 108.425 – P404.534.789 P (22.745.394) (P =1.047.329.080 P 392.294 P 505.941) 16.394 =16.384.245) – =77.183 =269.620.226 =17.494 =– P – =34.504.065 P 533.481 =458.883 P 5.080 P 3.743 =31.816 P 324.422 =464.394) (P =563.381.479 P =5.831 =57.171.147.061.181 =11.920 P 5.717 P 4.906 =1.563 P 639.989. 2011 and 2010.684 P =11.091.265.315 P (P =155.201.028 =22.939) (P =2.748.648.035 =14.15 The following presents the pro forma segment information of SMPH as at December 31.052) 5.194 P 323.008 =22.368.057.974.336.963.242.462 P =1.320 P – =3.448 P =675.238 =21.012.814.813 P =337.375.022 (P =46.012 =– P – =50.809 =13.951) 207.503 P 68.823 P – =50.742) 19.916 =1.014.855.263 =790.719.054) (1.146 P =220.853 P 191.409 P 57.957 P 25.630 P =14.452 P =4.680.247 P 4.607 P 845 =17.407 P (P =94.099 P – =87.172.244.649.720 P 140.832.017.451 P 2.760.838 December 31.066.022 P 121.471.718 =32.242 Pro forma Consolidated Balances Eliminations =31.230 =4.648.604.304 (P =172.711.146 P – =1.231.925.822) – (P =1.653) 246.901 P =87.282 =461.887 P 236.741.000 (P =643.811 =220.291 =6.369) 617.111) 17.839 P =20.193.650 *SGVFS002402* .191 =227.011 =– P (300.661.592 P =708.534 P =17.499.373.245.983.283) – =11.499 = (20. 2011 (Unaudited) Shopping Mall and Commercial Property Development Revenue: External customers Inter-segment Segment results: Income before income tax Provision for income tax Net income Net income attributable to: Equity holders of the parent Non-controlling interests Other information: Capital expenditures Depreciation and amortization Real Estate Development and Tourism Hotels and Commercial Convention Residential and Industrial Centers (In Thousands) =17.556 P =– P (563.670 11.303 P =13.585 P =16.789.293 P (13.925.657 P – =3.435 (P =9.975.938.718 P 150.162.385) P =284.

254.240 P 2.603 =3.300 =22.272 2.383.956.730 P – =43.951 =343.771.743.800 P =167.218 P 102.523 P =3.277.893) (P =1.412.992.365.899.297 P 283.967 P 156.558 =31.453 112.317 P 41.888 P 270.752.100.240.886 P 2.787 P 158.356.364 P – =9.158.916.303.156..924.134 P 142.002 P 5.200.314 =18.165. 2010 (Unaudited) Shopping Mall and Commercial Property Development Revenue: External customers Inter-segment Segment results: Income before income tax Provision for income tax Net income Net income attributable to: Equity holders of the parent Non-controlling interests Other information: Capital expenditures Depreciation and amortization Real Estate Development and Tourism Hotels and Commercial Convention Residential and Industrial Centers (In Thousands) =10.800 P – =781.082 P =12.308 P 24.759 6.976.924.655 =678.285 =13.274.463 Pro forma Consolidated Balances Eliminations =31.936.367 P 2.635 P 2.092 P 4.208.515 =– P – =43.165 P =192.408) 151.911 P =182.890 P =179.392 =14.378 P 7.730 P =17.694.056.691 =17.165.544.904.690 =– P (317.315) (P =317.347 2.890 P – =68.429.953 P 3.976.034.321. Receivables Unaudited Trade: Real estate buyers Third-party tenants Related party tenants Others Due from related parties Others =8.523 P – =10.594 =719.785 =11.364 P =3.112 P *SGVFS002402* .156.486 2.943 P 435.980.772.772.893) – (P =1.996 =179.687 = 16.16 December 31.163 =348.446 P =15.315) (P =1.885.508 =167.125.243 P =14.972.017.076. Cash and Cash Equivalents Cash on hand and in banks Temporary investments Unaudited P1.

409 3.536 203.031.916 22. Prepaid Expenses and Other Current Assets Advances to contractors Input taxes Prepaid expenses Supplies and inventories Others Unaudited =5.127.299.912. furniture and others Construction in progress Accumulated Depreciation and Amortization Land and improvements and land use rights Buildings and improvements Building equipment.000.298.190.000.359.823 =13.762 P 3.862.810.127.512.084.495 P 4.332 821.908 2.044 33.797 16.000 24. furniture and others P34.401.000 1.509.999 = 107.753.000 =23. Other Noncurrent Assets Receivables from real estate buyers Bonds and deposits Others Unaudited =14.17 - 8.429. Investment Properties Unaudited Cost Land and improvements and land use rights Buildings and improvements Building equipment.928.678 =147.000.479 P *SGVFS002402* .103 P 3.399.275.915.260.799.718 10.000.402..654 P 11.845.806.623.756.819.303.410.245 P 10.445.300.000 150.076 =21.465.303.375.316. Available-for-sale Investments Unaudited Shares of stock: Listed Unlisted Bonds and corporate notes Club shares Less current portion =23.964 21.707.476.878.374 1.674.762 P 9.266.762 1.701.804.572 180.486.065.

112.149.838.382.852.036.318 2.201 4.961.332 =33.766.116 161.419 1.777 6.136 4.143 525.563 P 1.206.213. Accounts Payable and Other Current Liabilities Trade Due to related parties Liability for purchased land Accrued operating expenses Output taxes Accrued interest Accrued rent Others Unaudited =15.341.272.676 P *SGVFS002402* .424 118.074. seven-year and ten-year corporate notes Five-year and ten-year corporate notes Five-year floating rate notes Five-year.021.823.382 P 9.460. seven-year and ten-year fixed rate notes Other bank loans Subsidiaries China yuan renminbi-denominated loans: Three-year loan Five-year loan Philippine peso-denominated loans: Three-year and five-year fixed rate notes Five-year bilateral loans Other bank loans Less current portion =10.18 - 12.957.919.966.223 6.227.827.931 795.360.991.995 P 13.099 2..994.240.079.856.944. dollar-denominated loans: Five-year term loans Two-year.641. three-year and five-year bilateral loans Other bank loans Philippine peso-denominated loans: Five-year and ten-year fixed and floating rate notes Five-year.800.776.848 =67.S.665 8.513 754.524 3.242.092.373.163 1.650 18.569 103.252.325.112.896.758 1.216 7. seven-year and ten-year fixed and floating rate notes Five-year.442.151.839.921 497.749. Long-term Debt Unaudited Parent Company U.749.111.920.606.000 71.438.

141.043.294 (7.703 4.741.633.749 7.549 253.732.916.000 199.353 1.436.048.639 P =11.121.340 1.556.047.877. The significant related party transactions entered into by the SMPH and the amounts included in the pro forma consolidated financial information with respect to such transactions follows: The following are the SMPH’s significant related party transactions: Related Party Relationship Nature/Financial Statement Accounts Volume of Transactions/ Outstanding Balance (Unaudited/ In Thousands) =113.334 P =34.879 734.722.829.944) 18. Costs and Expenses Unaudited 2011 2010 2012 P12.net Investment held for trading Rent receivables Due from related parties Accrued interest receivable Due to related parties Accrued rent payable Others *SGVFS002402* .180 4.950 918.425 8.476.053.916 5.801.694 593.474 53.411.952 1.499.775.899 2.641 P 4.962.758.771 5.829) (16.988 1.992 = P27.328 P Cost of real estate sold Administrative Depreciation and amortization Business taxes and licenses Film rentals Rent Management fees Insurance Others 15.405 (229.156.227 2.493 8.144.835 319.057.120) SMIC Parent Rent income Service income Rent expense Utilities Other operating expenses Interest expense Interest income Dividend income Gain on sale of properties Others .999 =30.745 P =14. to control the other party in making financial and operating decisions and the parties are subject to common control.035 593.373 929.959.236.700.680.826) (72.119. Related Party Transactions Parties are considered to be related if one party has the ability.919.075.213.362.421 1.650.114.337.500) (131.299 1.010..312.494. Related parties may be individuals or corporate entities.068 900.695) (2.089.774 299. directly or indirectly.957 14.303.969 1.704.636) (263.013 264.547.19 - 14.798.887.838.650.049.881 844.098.245 = 6.549.800.

421. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.700) (128.535) (99.477 821.059 914.757 (25.000.007) (33. SMPH has not recorded any impairment of receivables relating to amounts owed by related parties. Outstanding balances at year-end are unsecured.000 2.088.006.992 3.20 Volume of Transactions/ Outstanding Balance =9.239 28. *SGVFS002402* . There have been no guarantees/collaterals provided or received for any related party receivables or payables.031 63.119.290 11.895) 193.491 386.181) 16.000) (312) (8.000 1.444 1. noninterest-bearing and settlement occurs in cash.300 (2.104.508) 709.543 1.932 579.065) 6.790 (92.184) Related Party SM Retail and Banking Group Relationship Affiliates Nature/Financial Statement Accounts Rent income Purchases Other operating expenses Interest expense Interest income Dividend income Others ..595.574.551) (695.286 641 2.800) (4.984) (860.933 P (7.226) (14.000 (115.505.538 146.net Cash and cash equivalents Investments held for trading Short-term investments Available-for-sale investments Rent receivables Accrued interest receivable Due from related parties Receivable financing Acquisition of shares Bank loans Trade Accrued expenses Accrued interest payable SM Management Group Others Affiliates Management fees Accrued management fee Rent income Management fees Other operating expenses Interest income Gain on sale of properties Dividend income Rent receivables Other receivables Due from related parties Available-for-sale investments Due to related parties Others Transactions with related parties are made at terms equivalent to those that prevail in arm’s length transactions.

533 P =16.917.693 – 17.521 P 2010 =7.067 3.180.677.617.674.857.922.594.373.525 P 13.529.474.734.617.534.574 5.530 45.578 P 13.542.617.800.329.539 18.367 3.055.392.289.760 =0.474.668.941.035 3.067 15. Basic/Diluted Earnings Per Share Computation Pro forma basic/diluted EPS of the Company is computed as follows: 2012 Pro forma net income attributable to equity holders of the parent (a) Common shares issued at beginning of year Pro forma issuance of shares* Stocks dividends* Weighted average number of shares issued in equity placement Common shares issued at end of year Less: Pro forma treasury stock Pro forma shares held by subsidiary* Weighted average number of common shares outstanding (b) Earnings per share (a/b) *Retroactively adjusted.917.677.689 P 13.035 3.646.067 3.266 =0.348.373.740.266 =0.995.329.474.936. Audited 2011 =9.479 32.760 18.917.856.530 45.646.542.135 P 13.936.942.740.348.789 P 13.737.734.464 P =10.693 – 33.539 =0.990 P 13.000 17.800.917.000 16.857.693 – 33.240.530 45.474.795 5.474..336.936.999 27.035 3.562.888.734.367 15.045 =0.878.495 P 2010 =14.693 118.734.606 P *SGVFS002402* .734.734.067 15.734. Unaudited 2011 =13.760 =0.888.954.348.719.065.479 16.21 - 16.191.589 P Historical basic/diluted EPS of the Company is computed as follows: 2012 Net income attributable to equity holders of the parent (a) Common shares issued at beginning of year Stocks dividends* Weighted average number of shares issued in equity placement Common shares issued at end of year Less treasury stock Weighted average number of common shares outstanding (b) Earnings per share (a/b) *Retroactively adjusted.857.668.191.999 27.795 5.800.888.000 17.542.544.534.693 – 17.180.646.999 27.760 18.392.474.674.800.693 118.

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