CHAPTER 5: DIVIDEND POLICY

5.1 Current Dividend Policy

The Board determines the dividend payout taking into consideration the Company’s
operating results, cash flows, capital investment needs and debt servicing requirements.
The Company’s dividend policy is to declare annual cash dividends equivalent to 30%-
35% of prior year earnings and will endeavor to continue doing so while ensuring
financial flexibility. Dividends shall be paid within thirty (30) days from the date of
declaration.

Analyzing SM PRIME’s Dividend Policy, we can say that they use a constant-payout-
ratio dividend policy. This policy makes use of a percentage of earnings as basis on the
payments to the shareholders of the company. The disadvantage in using this policy is
that the dividends may be low or even nonexistent if the earnings of the company drops
or if they experience a loss. Nonetheless, SM PRIME establishes that a certain
percentage (30-35%) of earnings will be paid to the shareholders each dividend period
(annually) and that it will be paid within thirty (30) days from the date of declaration.
5.2 Historical Earnings versus Dividends

In 2017, the BOD approved the declaration of cash dividend of P0.26 per share or
P7,509 million to stockholders of record as of May 12, 2017. This was paid on May 25,
2017. Net income for this year is P27,573,866.

In 2016, the BOD approved the declaration of cash dividend of P0.23 per share or
P6,642 million to stockholders of record as of April 29, 2016. This was paid on May 12,
2016. Net income for this year is P23,805,713.

In 2015, the BOD approved the declaration of cash dividend of P0.21 per share or
P6,065 million to stockholders of record as of May 14, 2015. This was paid on June 9,
2015. Net income for this year is P28,302,092.

In 2014, the BOD approved the declaration of cash dividend of P0.19 per share or
P5,286 million to stockholders of record as of May 15, 2014. This was paid on June 10,
2014. Net income for this year is P18,390,352.

In 2013, the BOD approved the declaration of cash dividend of P0.27 per share or
P4,691 million to stockholders of record as of May 16, 2013. This was paid on June 11,
2013. Net income for this year is P16,274,820.

Net Income vs Dividends

Year 2013

Year 2014

Year 2015

Year 2016

Year 2017

- 5,000,000 10,000,00015,000,00020,000,00025,000,00030,000,000

Dividends Paid Net Income

5.3 Projections (Incorporated in 4.2)