SM Investments : Integrated Report 2021 Financial Supplements

Contents

• 3 We are SM

• 4 Statement of Management's Responsibility for Financial Statements

• 5 Report of the Audit Committee

• 8 Independent Auditor's Report

• 14 Consolidated Balance Sheets

• 16 Consolidated Statements of Income

• 17 Consolidated Statements of Comprehensive Income

• 18 Consolidated Statements of Changes in Equity

• 22 Consolidated Statements of Cash Flows

• 24 Notes to Consolidated Financial Statements

• 86 Corporate Information

We Are SM

Who We Are

Our company was built by our founder, Henry Sy, starting as a small shoe store in the late 1950s in downtown Manila. Today, we are the country's leading holding company, with abroad presence in retail, banking and property. We touch the lives of millions of Filipinos.

Service is proudly in our DNA: we always keep the welfare of our employees, customers,partners and stakeholders front of mind.

We have grown by making sure our people and our partners grow with us. We continueto commit ourselves to improving the quality of life for our communities.

Through the pandemic, we have continued to adapt and be innovative in meeting ourcustomers' needs and we will carry on doing so.

There are huge opportunities ahead and we will be a leader in responsible, inclusiveand sustainable business practices as we continue to grow for the benefit of all.

Our Vision and Commitment

Sustainability is at the heart of our vision-to build an ecosystem of sustainable businessesthat are catalysts for responsible development in the communities we serve.

We are committed to partner with our host communities to provide a consistently highstandard of service to our customers, to look after the welfare of our employees and deliversustainable returns to our shareholders, while at all times upholding the highest standards ofcorporate governance and environmental stewardship across all our businesses.

What We StandFor

Together, We Recover

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SM Investments Corporation

Statement of Management's Responsibility for Financial Statements

The management of SM Investments Corporation and Subsidiaries (the Group) is responsible for the preparation and fair presentation of the consolidated financial statements including the schedules attached therein, for the years ended December 31, 2021 and 2020, in accordance with Philippine Financial Reporting Standards and for such internal controls as management determines are necessary, to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless management either intends to liquidate the Group or cease operations, or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Group's financial reporting process.

The Board of Directors reviews and approves the consolidated financial statements including the schedules attached therein, and submits the same to the stockholders.

SyCip Gorres Velayo & Co., the independent auditors appointed by the stockholders, has audited the consolidated financial statements of the Group in accordance with Philippine Standards on Auditing, and in its report to the stockholders, has expressed its opinion on the fairness of presentation upon completion of such audit.

JOSE T. SIO Chairman of the Board

FREDERIC C. DYBUNCIO

President and

ERWIN G. PATO

Chief Executive Officer

Treasurer and Executive Vice PresidentSigned this 28th day of February 2022

Together, We Recover

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Report of the Audit Committee

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities to ensure the quality and integrity of the Company's financial reporting, internal control system, internal and external audit processes, and compliance with relevant laws and regulations. Likewise, the Committee oversees special investigations as may be necessary. It reviews its Charter annually.

The Committee is composed of three (3) non-executive directors, two (2) of whom are independent directors including the Committee Chairperson. The Committee members have relevant background, knowledge, skill and/or experience in the areas of finance and accounting, audit, risk management, information technology, and corporate governance. In 2021, they attended the annual corporate governance training conducted by an SEC accredited training provider and other updates on new relevant laws, accounting standards, taxes, and other regulatory requirements. The Committee also performed the annual self-assessment/evaluation and reviewed its performance against its Charter and other regulatory mandates to ensure its satisfactory performance.

The profiles and qualifications of the Committee members are as follows:

• • Tomasa H. Lipana (Chair) is an independent director of SMIC. She is a former Chairperson and Senior Partner of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers. She is also an independent director and Audit Committee Chairperson of Flexo Manufacturing Corporation. Previously, she was an independent director of Goldilocks Bakeshop Inc., Inter-Asia Development Bank, and QBE Seaboard Insurance Philippines. She was also an appointive director of Trade and Investment Development Corporation (Philippine Guarantee Corporation, formerly Philippine Export-Import Credit Agency), a government-owned and controlled corporation for the last 5 years. She is a fellow and trustee of the Institute of Corporate Directors. She is also a trustee of the Shareholders' Association of the Philippines, Inc., among other non-profit organizations. Ms. Lipana took up Executive Education/Management Development Programs at Harvard Business School, University of Western Ontario, and Asian Institute of Management. She received the Outstanding CPA in the Public Practice Award from the Philippine Institute of Certified Public Accountants and the Outstanding Alumna Award from the University of the East where she graduated Cum Laude. She is also a CPA Board placer.

• • Alfredo E. Pascual is the Lead Independent Director of SMIC. He was the President and CEO of the Institute of Corporate Directors (ICD) in 2018 and 2019. From 2011 to 2017, he led the University of the Philippines (UP) System as President and Board Co-Chair. Before UP, Mr. Pascual worked at the Asian Development Bank (ADB) for 19 years in several positions, including Director for Private Sector Operations, Director for Infrastructure Finance, and Advisor for Public-Private Partnership (Infrastructure Development). At ADB, he had postings in India and Indonesia and held board directorships at ADB's investee companies in China, India, and the Philippines. Mr. Pascual was a finance professor at the Asian Institute of Management (AIM). Currently, he is an independent director at other publicly-listed companies and a trustee at nonprofits and other organizations. He is the President of the Management Association of the Philippines (MAP) and the global Association of Former Employees of ADB (AFE-ADB). He finished his MBA and BS in Chemistry (cum laude) from UP.

• • Jose T. Sio is the Chairman of the Board of SMIC. He is also a Director of China Banking Corporation, Belle Corporation, Atlas Consolidated Mining and Development Corporation, NLEX Corporation, and Ortigas Land Corporation, Trustee of Far Eastern University, Incorporated, and Adviser to the Board of BDO Unibank, Inc. and Premium Leisure Corporation. Mr. Sio holds a master's degree in Business Administration (MBA) from New York University, is a certified public accountant, and is a former Senior Partner of SyCip Gorres Velayo & Co. (SGV). He was voted CFO of the Year in 2009 by the Financial Executives of the Philippines. He was also awarded as Best CFO (Philippines) in various years by several Hong Kong-based publications.