THE public may be surprised by Due Diligencer’s ownership profiles of SM Investments Corp. and JG Summit Holdings Inc. in two previous pieces.
There is a valid reason for the presentation. From these ownership profiles, the public would learn the paper wealth of the Sys and the Gokongweis, who own SMIC and JG Summit, respectively.
For the public to understand better the two families, they might as well ask (no one in particular) why, despite their most comfortable lifestyles, they beg for alms from the public to finance their charitable endeavors.
In short, why do the Gokongweis and the Sys ask their customers to participate in their charity cause by placing collection tin cans at the cashiers’ counters?
JG Summit owns Robinsons while SMIC runs SM store chains. Their control over these outlets makes it convenient for the Gokongweis and the Sys to collect from customers who contribute what could be significant amounts but which are not reported in their financial postings. Why not require them to file separate disclosures of their alms collections?
SMIC’s P196.404-B retained earnings
For purposes of determining the paper wealth of the two families, Due Diligencer went over the 2016 third-quarter consolidated financial filings of SM Investments and JG Summit.
“Consolidated” means including the financial performance of various subsidiaries in a given period. “Subsidiaries,” in turn, refers to units of companies in which the holding or parent company controls 50 plus one percent of outstanding common and voting shares.
In its PSE posting, SMIC reported retained earnings totaling P196.404 billion as of Sept. 30, 2016. Of the total, it classified P36 billion, or 18.33 percent, as appropriated.
The amount of retained earnings represents a company’s accumulated net profits over the years. From it are sourced the dividends either in cash or in stock.
In a footnote to the financial filing, which is still unaudited, SMIC said it allocated P36 billion to the payment of “certain long-term debts – $400 million or P18.8 billion in 2017 and $180 million or P8.2 billion in 2018 – and new investments of P9 billon from 2016 to 2020.
At the same time, SMIC included in the footnote regarding the utilization of its retained earnings as follows: initial appropriation of P5 billion on Nov. 5, 2003; additional appropriation of P30 billion on Dec. 14, 2012; Reversal of appropriation of P8 billion on April 25, 2013 and P18 billion on Nov. 4, 2015; and additional appropriation of P27 billion on Nov. 4, 2015.
JGS’ P192.705-B surplus
Like the Sys, the Gokongweis are also very rich. JG Summit, which they own, reported in a consolidated financial filing retained earnings of P192.705 billion.
In a footnote to the filing, JG Summit said it classified P8 billion under “appropriated” in April 2003; P39 billion on Dec. 29, 2014; P19 billion on Dec. 30, 2010; and P15 billion on Dec. 28, 2009. That’s a total of P81 billion.
JG Summit also reported the reversal to ‘unappropriated’ of P41.4 billion of P81 billion which it appropriated in 2014, 2010, and 2009. It explained the reason for the reversal, saying, “the related projects to which the retained earnings were earmarked were completed already.”
As of Dec. 31, 2015, JG Summit had P95.3 billion in retained earnings, of which its board appropriated P86.6 billion for various purposes and P8.7 billion in unrestricted retained earnings. It said it would use the restricted or appropriated amounts in paying the loan of a subsidiary which it guaranteed; funding the capital expenditure commitments of certain wholly owned subsidiaries; and using a portion for general corporate purposes.
Due Diligencer’s take
If SMIC and JG Summit are so rich even in paper only, do they need to ask the public to be as charitable as their owners are?
The close to P200 billion in accumulated net profits of each of the two holding companies can buy 50,000 units, or a total of 100,000 units in any of the condominiums built by the subsidiaries of SMIC and JG Summit. The computation was based on P4 million per unit.
The price of P4 million is never constant. It changes every now and then, which means very often. In the case of SMIC, the Sys who own it even include the huge posts in the price computations per square meter, which is the same basis for their collection of condominium owners’ association dues. DueDiligencer wouldn’t guess if JG Summit is doing the same.
The officials of the Housing and Land Use Regulatory Board (HLURB) do not listen to complaining unit buyers for reason/s only HLURB people understand.
Those posts, by the way, carry the weight of the entire condominium and are built inside each of the units from the ground up to the top floor. Why didn’t the Sys build them outside the building? Just asking.