SAN MIGUEL BREWERY, INC.

Group 1
Jugalbot, Igot, Salibongcogon, Malagapo, Panugaling, Dumaguit, Ymbong,
Villareal, and Taghoy
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

Where is San Miguel Beer originally from?

San Miguel Beer was first produced by La Fabrica
de Cerveza de San Miguel, an upstart brewery in
the heart of Manila that began its operations in
1890. In 1889, Don Enrique Barreto applied and
received the Royal Grant from the Spanish king to
brew beer in the Philippines, then a colony of
Spain.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

Where is San Miguel Beer originally from?

On September 29, 1890 (feast day of Saint Michael the
Archangel), the brewery was declared open for business.
It was located at 6 Calzada de Malacañang (later called
Calle Avilés), San Miguel, Manila. The brewery was the
first in Southeast Asia using the most modern equipment
and facilities of the day.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

In 1963, the brewery was renamed San Miguel Corp.

(SMC) to reflect its growing ventures into food and
packaging. All SMB's beer operations were then under the
San Miguel Beer Division, a business unit of SMC. SMB
was incorporated on July 26, 2007, and the domestic beer
business was spun off from SMC to SMB on October 1,
2007.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

In its 125 years, San Miguel beer has witnessed many

historical events. It was there when the nation got back on
its feet after World War II. Prosperity came and beer
consumption increased. San Miguel kept up by building
more plants to meet the growing demand for beer and even
pioneered markets in nearby countries, most notably in
Vietnam where Filipino soldiers fought alongside the
Americans.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND
When the Pacific War broke out in the 1940s, the Japanese
military seized San Miguel Brewery and renamed it the
Balintawak Beer Brewery. After the country’s liberation,
Don Andres Soriano got San Miguel Brewery back and
gave away all that was left of Balintawak Beer Brewery’s
supply to American and Filipino troops rather than bottle it
under San Miguel’s label. It took them two weeks of revelry
to consume the brew.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

Another historical event that shaped the Philippines was the

EDSA People Power of 1986. San Miguel Brewery reflected
the spirit of change that came into vogue following the People
Power Revolution by reinstating Andres Soriano III as its
chairman in replacement of Eduardo Cojuanco Jr. who fled
the country with Marcos.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

From a single product produced in a single brewery in

1890, today SMB carries a portfolio of ten strong and
popular beer brands: San Mig Light, Red Horse Beer,
Cerveza Negra, Gold Eagle Beer, San Miguel Strong Ice,
San Miguel Super Dry, San Miguel Premium All-Malt
Beer, San Miguel Flavored Beer, San Mig Zero, and its
flagship brand, San Miguel Pale Pilsen.
 SAN MIGUEL BREWERY, INC.
HISTORICAL BACKGROUND

The Company’s manufacturing operations extend beyond

the Philippines to Hong Kong, China, Indonesia, Vietnam,
Thailand and Malaysia. At present, the company have more
than 100 major facilities in the Philippines, Southeast Asia,
China, Australia, and New Zealand.
KEY DATES FOR SMB:
1890:
Don Enrique Ma Barretto de Ycaza establishes a brewery in Manila called La Fabrica de
Cerveza de San Miguel.
1913:
The brewery is incorporated.
1918:
Andrés Soriano y Roxas joins San Miguel, beginning the long-term, multigenerational
involvement of the Soriano family.
1922:
Company expands into nonalcoholic beverages with the opening of the Royal Soft Drinks
Plant.
1925:
Production of ice cream begins at the Magnolia Ice Cream Plant.
1927:
San Miguel becomes the first non-U.S. national Coca-Cola bottler and distributor.
1963:
Company shortens its name to San Miguel Corporation.
1983:
Soriano family proxy fight leads to the purchase of a 19.5 percent stake in San Miguel by
Eduardo Cojuangco, Jr., a close associate of Philippine dictator Ferdinand Marcos.
1984:
Cojuangco assumes the chairmanship of San Miguel.
1986:
“People power” revolution forces Marcos to flee the country; Cojuangco is among those
joining him in exile; the new Philippine government sequesters 51.4 percent of the company
shares; Andrés Soriano III resumes the company chairmanship.
1987:
San Miguel purchases majority control of La Tonde¤a Distillers, Inc., the leading producer of
hard liquor in the Philippines.
1997:
San Miguel exchanges its 70 percent stake in Coca-Cola Bottlers Philippines, Inc. for a 25 percent
interest in the Australian firm Coca-Cola Amatil Limited (CCA).
1998:
Cojuangco returns to the chairmanship following the election of Joseph Estrada to the Philippine
presidency.
2001:
Pure Foods Corporation, producer of processed meats and flour, is acquired; San Miguel joins
forces with the Coca-Cola Company to reacquire Coca-Cola Bottlers Philippines, relinquishing its
stake in CCA as part of the deal.
2002:
The company acquires Cosmos Bottling Corporation; Kirin Brewery Company, Limited acquires
a 15 percent stake in San Miguel.
 SAN MIGUEL BREWERY, INC.
PRESIDENT & CHAIRMAN OF THE BOARD
SAN MIGUEL BREWERY, INC.
FINANCIAL STATEMENTS
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

ASSETS
Current Assets
Cash and other cash equivalents ₱ 28,297 ₱ 22,015 ₱ 15,850
Trade and other receivables - net 4,995 5,058 5,124
Inventories 4,032 4,914 3,766
Prepaid expenses and other current assets 1,629 1,269 1,195
Total Current Assets ₱ 38,953 ₱ 33,256 ₱ 25,935

Noncurrent Assets
Investments - net ₱ 41 ₱ 41 ₱ 60
Property, plant and equipment - net 18,732 18,579 18,759
Investments property - net 1,323 1,807 1,540
Intangible assets - net 36,808 36,171 35,987
Deferred tax assets 1,317 1,435 1,574
Other noncurrent assets - net 12,109 10,302 9,236
Total Noncurrent Assets ₱ 70,330 ₱ 68,335 ₱ 67,156
Total Assets ₱ 109,283 ₱ 101,591 ₱ 93,091
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses ₱ 9,032 ₱ 8,098 ₱ 7,389
Income and other taxes payable 3,685 3,435 2,874
Current maturities of long-term debt - net of debt issue costs 0 2,998 0
Total Current Liabilities ₱ 12,717 ₱ 14,531 ₱ 10,263

Noncurrent Liabilities
Long-term debt - net debt issue costs ₱ 34,665 ₱ 34,619 ₱ 37,566
Deferred tax liabilities 26 113 114
Other noncurrent liabilities 1,091 1,570 3,157
Total Noncurrent Liabilities ₱ 35,782 ₱ 36,302 ₱ 40,837
Total Liabilities ₱ 48,499 ₱ 50,833 ₱ 51,100
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

Equity
Equity Attributes to Equity Holders of the Company
Capital stock ₱ 15,410 ₱ 15,410 ₱ 15,410
Additional paid-in capital 515 515 515
Equity reserves (1,481) (2,199) (3,417)
Retained Earnings:
Appropriated 15,010 5,200 0
Unappropriated 29,076 29,768 27,890
Treasury Stock (1,029) (1,029) (1,029)
57,501 47,665 39,369
Non-controlling interests 3,283 3,093 2,622
Total Equity ₱ 60,784 ₱ 50,758 ₱ 41,991
Total Liabilities and Owner's Equity ₱ 109,283 ₱ 101,591 ₱ 93,091
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(In Millions, Except Per Share Data)

2017 2016 2015

SALES ₱ 113,255 ₱ 97,160 ₱ 82,374
COST OF SALES 62,974 52,309 44,811
GROSS PROFIT ₱ 50,281 ₱ 44,851 ₱ 37,563
SELLING AND ADMINISTRATIVE EXPENSES (19,120) (17,663) (14,932)
INTEREST EXPENSE AND OTHERFINANCING CHARGES (2,283) (2,684) (2,597)
IMPAIRMENT LOSS ON NONCURRENT ASSETS (534) 0 (1,011)
INTEREST INCOME 534 361 261
OTHER INCOME - Net 210 154 55
INCOME BEFORE INCOME TAX ₱ 29,088 ₱ 25,019 ₱ 19,339
INCOME TAX ESPENSE 8,377 7,361 5,821
NET INCOME ₱ 20,711 ₱ 17,658 ₱ 13,518
Attributable to:
Equity holders of the Company 20,178 17,217 13,251
Non-controlling interests 533 441 267
₱ 20,711 ₱ 17,658 ₱ 13,518
Basic and Diluted Earnings Per Share 1.31 1.12 0.86
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax ₱ 29,088 ₱ 25,019 ₱ 19,339
Adjustments for:
Depreciation, amortization and others 3,523 4,213 2,928
Interest expense and other financing changes 2,283 2,684 2,597
Impairment loss on noncurrent assets - net 534 0 1,011
Retirement costs 598 598 590
Interest income (534) (361) (261)
Gain on sale of property and equipment and investment 3 (21) (9)
Provision for (reversals of) impairment losses on receivables, inventories, etc 773 727 (2)
Operating income before working capital changes ₱ 36,268 ₱ 32,859 ₱ 26,193
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

Decrease (increase) in:

Trade and other receivables ₱ 272 ₱ (327) ₱ 1,123
Inventories 716 (762) (361)
Prepaid expenses and other current assets (369) (134) (183)
Increase (decrease) in:
Accounts payable and accrued expenses 983 1,053 1,046
Other taxes payable 191 106 90
Other noncurrent liabilities 6 (6) 1
Cash generated from operations 38,067 32,789 27,909
Interest paid (2,279) (2,633) (2,525)
Income taxes paid (8,349) (6,938) (5,833)
Contributions paid (838) (1,566) (1,028)
Net cash flows provided by operating activities ₱ 26,601 ₱ 21,652 ₱ 18,523
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions of property, plant, and equipment ₱ (1,747) ₱ (1,218) ₱ (1,026)
Acquisitions of investment property 0 0 (4)
Proceeds from sale of property and equipment 7 14 12
Proceeds from sale of investment 4 35
Increase in intangible assets and other noncurrent assets (4,827) (4,653) (2,292)
Interest received 516 355 258
Net cash flows used in investing activities ₱ (6,047) ₱ (5,467) ₱ (3,052)
 SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(In Millions)

2017 2016 2015

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term borrowings ₱ 0 ₱ 0 ₱ 0
Payments of:
Cash dividends (11,059) (10,138) (9,525)
Dividends to non-controlling shareholders (3,000) (159) (183)
Redemption of common shares (240) 0 (6)
Net cash flows used in financing activities ₱ (14,299) ₱ (10,297) ₱ (9,714)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 27 277 207
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,282 6,165 5,964
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 22,015 15,850 9,886
CASH AND CASH EQUIVALENTS AT END OF THE YEAR ₱ 28,297 ₱ 22,015 ₱ 15,850
HORIZONTAL ANALYSIS
FINANCIAL STATEMENT ANALYSIS
H
O
SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015

R (Amounts in Millions and in Pesos)

Increase (Decrease) Increase (Decrease)

I ASSETS
Current Assets
2017 2016 Amount Percent 2016 2015 Amount Percent

Z Cash and other cash equivalents

Trade and other receivables - net
Inventories
28,297
4,995
4,032
22,015
5,058
4,914
6,282
(63)
(882)
28.5
(1.2)
(17.9)
22,015
5,058
4,914
15,850
5,124
3,766
6,165
(66)
1,148
38.9
(1.3)
30.5

O Prepaid expenses and other current assets

Total Current Assets
1,629
38,953
1,269
33,256
360
5,697
28.4
17.1
1,269
33,256
1,195
25,935
74
7,321
6.2
28.2

N Noncurrent Assets
Investments - net
Property, plant and equipment - net
41
18,732
41
18,579
0
153
0.0
0.8
41
18,579
60
18,759
19
(180)
31.7
(1.0)

T
Investments property - net 1,323 1,807 (484) (26.8) 1,807 1,540 267 17.3
Intangible assets - net 36,808 36,171 637 1.8 36,171 35,987 184 0.5
Deferred tax assets 1,317 1,435 (118) (8.2) 1,435 1,574 (139) (8.8)

A
Other noncurrent assets - net 12,109 10,302 1,807 17.5 10,302 9,236 1,066 11.5
Total Noncurrent Assets 70,330 68,335 1,995 2.9 68,335 67,156 1,179 1.8
Total Assets 109,283 101,591 7,692 7.6 101,591 93,091 8,500 9.1
H
O
SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015

R (Amounts in Millions and in Pesos)

Increase (Decrease) Increase (Decrease)

I
LIABILITIES AND EQUITY
Current Liabilities
2017 2016 Amount Percent 2016 2015 Amount Percent

Z
Accounts payable and accrued expenses
Income and other taxes payable
Current maturities of long-term debt - net of debt issue costs
9,032
3,685
0
8,098
3,435
2,998
934
250
(2,998)
11.5
7.3
(100.0)
8,098
3,435
2,998
7,389
2,874
0
709
561
2,998
9.6
19.5
0.0

O Total Current Liabilities

Noncurrent Liabilities
12,717 14,531 (1,814) (12.5) 14,531 10,263 4,268 41.6

N
Long-term debt - net debt issue costs
Deferred tax liabilities
Other noncurrent liabilities
34,665
26
1,091
34,619
113
1,570
46
(87)
(479)
0.1
(77.0)
(30.5)
34,619
113
1,570
37,566
114
3,157
(2,947)
(1)
(1,587)
(7.8)
(0.9)
(50.3)

T
Total Noncurrent Liabilities 35,782 36,302 (520) (1.4) 36,302 40,837 (4,535) (11.1)
Total Liabilities 48,499 50,833 (2,334) (4.6) 50,833 51,100 (267) (0.5)

A
H
O
SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015

R (Amounts in Millions and in Pesos)

Increase (Decrease) Increase (Decrease)

I
Equity
Equity Attributes to Equity Holders of the Company
2017 2016 Amount Percent 2016 2015 Amount Percent

Z
Capital stock
Additional paid-in capital
Equity reserves
15,410
515
(1,481)
15,410
515
(2,199)
0
0
718
0.0
0.0
(32.7)
15,410
515
(2,199)
15,410
515
(3,417)
0
0
1,218
0.0
0.0
(35.6)

O
Retained Earnings:
Appropriated
Unappropriated
15,010
29,076
5,200
29,768
9,810
(692)
188.7
(2.3)
5,200
29,768
0
27,890
5,200
1,878
0.0
6.7

N
Treasury Stock

Non-controlling interests
(1,029)
57,501
3,283
(1,029)

3,093
0
47,665 (105,166)
190
0.0
(220.6)
6.1
(1,029)
47,665
3,093
(1,029)
39,369
2,622
0
(87,034)
471
0.0
(221.1)
18.0

T
Total Equity 60,784 50,758 10,026 19.8 50,758 41,991 8,767 20.9
Total Liabilities and Owner's Equity 109,283 101,591 7,692 7.6 101,591 93,091 8,500 9.1

A
H SAN MIGUEL BREWERY INC. AND SUBSIDIARIES

O (A Subsidiary of San Miguel Corporation)

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

R (Amounts in Millions and in Pesos, Except Per Share Data)

2017 2016
Increase (Decrease)
Amount Percent 2016 2015
Increase (Decrease)
Amount Percent

I
SALES
COST OF SALES
GROSS PROFIT
113,255
62,974
50,281
97,160
52,309
44,851
16,095
10,665
5,430
16.6
20.4
12.1
97,160
52,309
44,851
82,374
44,811
37,563
14,786
7,498
7,288
17.9
16.7
19.4

Z
SELLING AND ADMINISTRATIVE EXPENSES
INTEREST EXPENSE AND OTHER FINANCING CHARGES
IMPAIRMENT LOSS ON NONCURRENT ASSETS
(19,120)
(2,283)
(534)
(17,663)
(2,684)
0
(1,457)
401
(534)
8.2
(14.9)
0.0
(17,663)
(2,684)
0
(14,932)
(2,597)
(1,011)
(2,731)
(87)
1,011
18.3
3.4
0.0

O
INTEREST INCOME
OTHER INCOME - Net
INCOME BEFORE INCOME TAX
534
210
29,088
361
154
25,019
173
56
4,069
47.9
36.4
16.3
361
154
25,019
261
55
19,339
100
99
5,680
38.3
180.0
29.4

N
INCOME TAX EXPENSE
NET INCOME
Attributable to:
8,377
20,711
7,361
17,658
1,016
3,053
13.8
17.3
7,361
17,658
5,821
13,518
1,540
4,140
26.5
30.6

T
Equity holders of the Company
Non-controlling interests
20,178
533
20,711
17,217
441
17,658
2,961
92
3,053
17.2
20.9
17.3
17,217
441
17,658
13,251
267
13,518
3,966
174
4,140
29.9
65.2
30.6

A
Basic and Diluted Earnings Per Share 1.31 1.12 0.19 17.0 1.12 0.86 0.26 30.2
H
O INTERPRETATION

R 1. Forthe year 2017 current assets decreased by 17.1%. This decrease is a result of 28.5%

I decrease in cash and equivalents. 1.2% decrease in trade and other receivables. 17.9%
decrease of inventories and 28.4% decrease in prepaid expenses and other current assets.

Z This decrease entails the management to check their collections in a year.

2. Current liabilities increases and owners equity decreases despite increase in liabilities
O and owners equity. This can be explained by the 1.4% increase in non current liabilities
which means that the company made heavy borrowings during the year.
N 3. PPE showed a 0.82% increase. This may be due to the purchases or investments made
by the company. It is possible for the owner to invest PPE in the business. However, in
T the case of SMB. The owner's equity showed a decreased of 19.8%. This might not be
possible unless the owner invested non current assets then afterwards made a withdrawal
A during the year.
H
O INTERPRETATION

R 4. Looking at the other components of the income statement, cost of sales increased to

I 20.4%. Even with this increase of cost of sales, gross profit registered a 12.1% decrease.
Selling and administrative expenses showed an 8.2% decrease. The company’s increase

Z in interest expense and other financing activities to 14.9% resulted decrease in income
before taxes. Hence, management can now understand that the magnanimous increase in

O interest expense and other financing activities will caused the decrease in overall net
income.

N
T
A
VERTICAL ANALYSIS
V SAN MIGUEL BREWERY INC. AND SUBSIDIARIES

E
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
(Amounts in Millions and in Pesos)

R ASSETS
Current Assets
2017 % 2016 % 2015 %

T
Cash and other cash equivalents 28,297 25.9 22,015 21.7 15,850 17.0
Trade and other receivables - net 4,995 4.6 5,058 5.0 5,124 5.5
Inventories 4,032 3.7 4,914 4.8 3,766 4.0
Prepaid expenses and other current assets 1,629 1.5 1,269 1.2 1,195 1.3

I
Total Current Assets 38,953 35.6 33,256 32.7 25,935 27.9

Noncurrent Assets
Investments - net 41 0.0 41 0.0 60 0.1

C
Property, plant and equipment - net 18,732 17.1 18,579 18.3 18,759 20.2
Investments property - net 1,323 1.2 1,807 1.8 1,540 1.7
Intangible assets - net 36,808 33.7 36,171 35.6 35,987 38.7
Deferred tax assets 1,317 1.2 1,435 1.4 1,574 1.7

A
Other noncurrent assets - net 12,109 11.1 10,302 10.1 9,236 9.9
Total Noncurrent Assets 70,330 64.4 68,335 (67.3) 67,156 72.1
Total Assets 109,283 100.0 101,591 100.0 93,091 100.0
V SAN MIGUEL BREWERY INC. AND SUBSIDIARIES

E
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
(Amounts in Millions and in Pesos)

R LIABILITIES AND EQUITY

Current Liabilities
2017 % 2016 % 2015 %

T
Accounts payable and accrued expenses 9,032 8.3 8,098 8.0 7,389 7.9
Income and other taxes payable 3,685 3.4 3,435 3.4 2,874 3.1
Current maturities of long-term debt - net of debt issue costs 0 0.0 2,998 3.0 0 0.0
Total Current Liabilities 12,717 11.6 14,531 14.3 10,263 11.0

I Noncurrent Liabilities
Long-term debt - net debt issue costs
Deferred tax liabilities
34,665
26
31.7
0.0
34,619
113
34.1
0.1
37,566
114
40.4
0.1

C
Other noncurrent liabilities 1,091 1.0 1,570 1.5 3,157 3.4
Total Noncurrent Liabilities 35,782 32.7 36,302 35.7 40,837 43.9
Total Liabilities 48,499 44.4 50,833 50.0 51,100 54.9

A
V SAN MIGUEL BREWERY INC. AND SUBSIDIARIES

E
(A Subsidiary of San Miguel Corporation)
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
(Amounts in Millions and in Pesos)

R Equity Attributes to Equity Holders of the Company

Capital stock
2017

15,410
%

14.1
2016

15,410
%

15.2
2015

15,410
%

16.6

T
Additional paid-in capital 515 0.5 515 0.5 515 0.6
Equity reserves (1,481) (1.4) (2,199) (2.2) (3,417) (3.7)
Retained Earnings:
Appropriated 15,010 13.7 5,200 5.1 0 0.0

I
Unappropriated 29,076 26.6 29,768 29.3 27,890 30.0
Treasury Stock (1,029) (0.9) (1,029) (1.0) (1,029) (1.1)
57,501 52.6 47,665 46.9 39,369 42.3
Non-controlling interests 3,283 3.0 3,093 3.0 2,622 2.8

C
Total Equity 60,784 55.6 50,758 50.0 41,991 45.1
Total Liabilities and Owner's Equity 109,283 100.0 101,591 100.0 93,091 100.0

A
V SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)

E
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(Amounts in Millions and in Pesos, Except Per Share Data)

R SALES
COST OF SALES
2017
113,255
62,974
%
100.0
55.6
2016
97,160
52,309
%
100.0
53.8
2015
82,374
44,811
%
100.0
54.4

T
GROSS PROFIT 50,281 44.4 44,851 46.2 37,563 45.6
SELLING AND ADMINISTRATIVE EXPENSES (19,120) (16.9) (17,663) (18.2) (14,932) (18.1)
INTEREST EXPENSE AND OTHERFINANCING CHARGES (2,283) (2.0) (2,684) (2.8) (2,597) (3.2)
IMPAIRMENT LOSS ON NONCURRENT ASSETS (534) (0.5) 0 0.0 (1,011) (1.2)

I
INTEREST INCOME 534 0.5 361 0.4 261 0.3
OTHER INCOME - Net 210 0.2 154 0.2 55 0.1
INCOME BEFORE INCOME TAX 29,088 25.7 25,019 25.8 19,339 23.5

C
INCOME TAX EXPENSE 8,377 7.4 7,361 7.6 5,821 7.1
NET INCOME 20,711 18.3 17,658 18.2 13,518 16.4
Attributable to:
Equity holders of the Company 20,178 17.8 17,217 17.7 13,251 16.1

A
Non-controlling interests 533 0.5 441 0.5 267 0.3
20,711 18.3 17,658 18.2 13,518 16.4
Basic and Diluted Earnings Per Share 1.31 0.001 1.12 0.001 0.86 0.001
V INTERPRETATION
E
R
1. The current asset in 2015 was 27.9 % of the total assets. By 2016, this percentage increased to 32.7%
and another increase in 2017 by 35.6%. This was due to the significant increase in cash. Cash in 2015
was 17% of total assets. By 2016, this percentage increased to 21.7% and continuously increased to

T
25.9% by 2017. Increase in cash was due to the significant decrease in trade and other receivables and
also inventory. This tells us that the company has been collecting its receivables and selling its
inventories effectively.

I 2. Non-current asset was 72.1% of the total assets in 2015 but drastically decreased to 67.3% in 2016
then 64.4% in 2017. This is because the company had lesser investment, PPE, and intangible assets
compared to the year 2015.

C 3. Current liabilities during 2015 was 11% of the total liabilities and owner’s equity. During 2016, it
increased to 14.3% and decreased by 11.6% in 2017 due to the increase in accounts payable and
accrued expenses in the company.
A
V INTERPRETATION
E
R
4. Non current liabilities during 2015 was 43.9% of the total liabilities and owner’s equity. This decreased
to 35.7% in 2016 and 33.7% in 2017. This decrease in noncurrent liabilities is a good sign for the
business.

T 5. From the income statement, the percentage of net income to net sales is 16.4% in 2015. It continuously
increased to 18.2% in 2016 then 18.3% in 2017. The increase has been explained by the increase in
percentage of gross profit to 46.2% in 2016 from 45.6% in 2015 and a decrease to 44.4% in 2017 in

I relation to the decrease in percentage of cost of sales from 54.4% in 2015 to 53.8% in 2016 and an
increase to 55.6% in 2017. Despite of the decrease in percentage of gross profit in 2017, net income still
increased in relation to the increase in percentage of the interest income from 0.4% in 2016 to 0.5% in

C 2017, also the decrease in percentage of the selling and administrative expenses from 18.2% in 2016 to
16.9% in 2017, and the decrease in the percentage of interest expense from 2.8% in 2016 to 2% in 2017.

A
TREND ANALYSIS
T SAN MIGUEL BREWERY INC. AND SUBSIDIARIES

R (A Subsidiary of San Miguel Corporation)

CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION

E DECEMBER 31, 2017, 2016, AND 2015

(Amounts in Millions and in Pesos)

N 2017 2016 2015

D
ASSETS
Current Assets
Cash and other cash equivalents 28,297 178.5% 22,015 138.9% 15,850 100%
A Trade and other receivables - net 4,995 97.5% 5,058 98.7% 5,124 100%
Inventories 4,032 107.1% 4,914 130.5% 3,766 100%
N Prepaid expenses and other current assets 1,629 136.3% 1,269 106.1% 1,195 100%
Total Current Assets 38,953 150.2% 33,256 128.2% 25,935 100%
A Noncurrent Assets
Investments - net 41 68.3% 41 68.3% 60 100%
Property, plant and equipment - net 18,732 99.9% 18,579 99.0% 18,759 100%
L Investments propeerty - net
Intangible assets - net
1,323
36,808
85.9%
102.3%
1,807
36,171
117.3%
100.5%
1,540
35,987
100%
100%
Y Deferred tax assets
Other noncurrent assets - net
1,317
12,109
83.7%
131.1%
1,435
10,302
91.2%
111.5%
1,574
9,236
100%
100%
S Total Noncurrent Assets
Total Assets
70,330
109,283
104.7%
117.4%
68,335
101,591
101.8%
109.1%
67,156
93,091
100%
100%
T
R SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
E CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
N (Amounts in Millions and in Pesos)

D 2017 2016 2015

LIABILITIES AND EQUITY
A Current Liabilities
Accounts payable and accrued expenses 9,032 122.2% 8,098 109.6% 7,389 100%
N Income and other taxes payable
Current maturities of long-term debt - net of debt issue costs
3,685
0
128.2%
0.0%
3,435
2,998
84.7%
0.0%
2,874
0
100%
100%
A Total Current Liabilities 12,717 123.9% 14,531 141.6% 10,263 100%

Noncurrent Liabilities
Long-term debt - net debt issue costs 34,665 92.3% 34,619 92.2% 37,566 100%
L Deferred tax liabilities
Other noncurrent liabilities
26
1,091
22.8%
34.6%
113
1,570
99.1%
49.3%
114
3,157
100%
100%

Y Total Noncurrent Liabilities

Total Liabilities
35,782
48,499
87.6%
94.9%
36,302
50,833
88.9%
99.5%
40,837
51,100
100%
100%

S
T
R SAN MIGUEL BREWERY INC. AND SUBSIDIARIES
(A Subsidiary of San Miguel Corporation)
E CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2017, 2016, AND 2015
N (Amounts in Millions and in Pesos)

D 2017 2016 2015

Equity
A Equity Attributes to Equity Holders of the Company
Capital stock 15,410 100.0% 15,410 100.0% 15,410 100%
N Additional paid-in capital
Equity reserves
515
(1,481)
100.0%
43.3%
515
(2,199)
100.0%
64.4%
515
(3,417)
100%
100%
A Retained Earnings:
Appropriated 15,010 0.0% 5,200 0.0% 0
100%
100%
Unappropriated 29,076 104.3% 29,768 106.7% 27,890 100%
Treasury Stock (1,029) 100.0% (1,029) 100.0% (1,029) 100%
L Non-controlling interests
57,501
3,283
146.1%
125.2%
47,665
3,093
121.1%
118.0%
39,369
2,622
100%
100%

Y Total Equity
Total Liabilities and Owner's Equity
60,784
109,283
144.8%
117.4%
50,758
101,591
120.9%
109.1%
41,991
93,091
100%
100%

S
T SAN MIGUEL BREWERY INC. AND SUBSIDIARIES

R (A Subsidiary of San Miguel Corporation)

CONSOLIDATED STATEMENTS OF INCOME

E FOR THE YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015
(Amounts in Millions and in Pesos, Except Per Share Data)

N 2017 2016 2015

D
SALES 113,255 137.5% 97,160 117.9% 82,374 100%
COST OF SALES 62,974 140.5% 52,309 116.7% 44,811 100%

A
GROSS PROFIT 50,281 133.9% 44,851 119.4% 37,563 100%
SELLING AND ADMINISTRATIVE EXPENSES (19,120) 128.0% (17,663) 118.3% (14,932) 100%
INTEREST EXPENSE AND OTHERFINANCING CHARGES (2,283) 87.9% (2,684) 103.4% (2,597) 100%
N IMPAIRMENT LOSS ON NONCURRENT ASSETS (534) 52.8% 0 0.0% (1,011) 100%
INTEREST INCOME 534 204.6% 361 138.3% 261 100%
A OTHER INCOME - Net 210 381.8% 154 280.0% 55 100%
INCOME BEFORE INCOME TAX 29,088 150.4% 25,019 129.4% 19,339 100%
INCOME TAX EXPENSE 8,377 143.9% 7,361 126.5% 5,821 100%
NET INCOME 20,711 153.2% 17,658 130.6% 13,518 100%
L Attributable to:
Equity holders of the Company 20,178 152.3% 17,217 129.9% 13,251 100%
Y Non-controlling interests 533
20,711
199.6%
153.2%
441
17,658
165.2%
130.6%
267
13,518
100%
100%
S Basic and Diluted Earnings Per Share 1.31 152.3% 1.12 130.2% 0.86 100%
 TREND ANALYSIS
INTERPRETATION

1. Cash and cash equivalents continued its upward trend for three years. Trades and other
receivables increase in 2016 but decreased in 2017. The company must have reviewed
their credit and collection and checked their inventory for obsolete and slow moving
items.
2. Property, plant, and equipment decreased in 2016 and increased in 2017 due to
acquisitions made by the company. Accounts payable increased in 2017 which gives us an
idea that the company purchased it on account.
3. Total liabilities increased in 2016 and decreased in 2017.
4. Net Sales had an upward trend for three years. This may indicate that the company is
benefitting from the newly acquired non-current assets as evidenced by the increase in
sales.
 TREND ANALYSIS
INTERPRETATION

5. Cost of Sales has an upward trend but despite this, gross profit managed to follow with an
upward trend. Selling and administrative expenses has an upward trend. Interest expense and
other financing charges increased a bit in 2016 but decreased in 2017. Interest income and
other income has significantly continued its upward trend. Despite the upward trend in Cost
of Sales and Selling and Administrative Expenses, Net income has an upward trend for three
years.
 FINANCIAL RATIOS
LIQUIDITY RATIOS

••  
CURRENT RATIO
= 2.5:1
= 2.3:1
= 3.1:1
Analysis:
In 2015, the current ratio of the company goes up to 2.5:1 which means that the company has ₱2.5
of current assets that can be converted to cash to pay every peso of current liability.
In 2016, the current ratio goes down to 2.3:1. It is unfavorable since the higher current is the better
although the company is still satisfactory liquid or still has the ability to pay its short term
obligations.
In 2017, the current ratio goes up to 3.1:1 and is favorable. This signifies more liquidity for the
company.
 FINANCIAL RATIOS
LIQUIDITY RATIOS
••  
QUICK RATIO
= 2:1
= 1.9:1
= 2.6:1
Analysis:
In 2015, the starting quick ratio of SMB, Inc. is 2:1. It means that for every ₱1 of debt, SMB, Inc.
has ₱2 that is in cash or easily convertible to cash assets that can be used to settle its short term
obligations.
In 2016, the quick ratio of the company decreased to 1.9:1. It is unfavorable since the higher the
quick ratio is the better but still, the company still has the ability to pay its current liabilities.
In 2017, the quick ratio went up to 2.6:1. This is very favorable and it indicates that the company
has been continuously making efforts on selling its inventory and collecting its receivables.
 FINANCIAL RATIOS
LIQUIDITY RATIOS
•  
• RECEIVABLE TURNOVER
= 16.1 times
= 19.1 times
= 16 times
Analysis:
This means that the SMB was able to collect 16.1 times its average receivable in 2015, 19.1 times in 2016, and 16 times in
2017. The increase in the receivable turnover during 2016 was favorable while the decrease in receivable turnover in 2017
was unfavorable. The company should review its credit and collection policy and make sure it was imposed. However, they
must be careful in doing so since imposing a very strict credit and collection policy may lead to lesser sales as some
customers may want to buy from other companies with more lenient credit terms.
 FINANCIAL RATIOS
LIQUIDITY RATIOS
•  
• AVE. COLLECTION PERIOD =
= 22.4 days
=18.8 days
= 16 days
Analysis:
The average collection period of SMB for the last three years had been continuously decreasing. The determination whether
these are favorable depends on the credit term of the company. If the company’s credit term is 30 days, then the average
collection period is favorable since it did not exceed the 30-day credit term. It is also favorable since it has a downward
trend and the shorter the average collection period is the better.
 FINANCIAL RATIOS
LIQUIDITY RATIOS
•  
• INVENTORY TURNOVER=
= 11.9 times
=12.1 times
= 14.1 times
Analysis:
We can observe that for the last three years, inventory turnover continuously increased. This is favorable since the higher
the inventory turnover is the better. This may also mean a high demand for the company’s products.
 FINANCIAL RATIOS
LIQUIDITY RATIOS
•  
• AVE. SALES PERIOD =
= 30.3 days
= 29.8 days
= 25.5 days
Analysis:
The average sales period for the last three years continuously decreased. This indicates the presence of slow moving items
in its inventory or the company might be overstocking some inventory items.
 FINANCIAL RATIOS
LIQUIDITY RATIOS
•  
• WORKING CAPITAL=
= ₱ 15, 672
= ₱ 18, 725
= ₱ 26, 236
Analysis:
The working capital is ₱ 15, 672 in 2015 , ₱ 18, 725 in 2016, and ₱ 26, 236 in 2017. This means that in 2017,
the company is most liquid in meeting its short-term obligations. The working capital keeps on increasing for
every year and that is favorable since the company has enough capital to use in its day to day operations.
 FINANCIAL RATIOS
SOLVENCY RATIOS
•  
• DEBT RATIO=
= 0.5 / 54.8 %
= 0.5 / 50.0 %
= 0.4 / 44.4 %
Analysis:
As we can see, the debt ratio continuously decreased from 54.8 % in 2015, 50 % in 2016 to
44.4 % in 2017. This is favorable since the lower the debt ratio, the better.
 FINANCIAL RATIOS
SOLVENCY RATIOS
••  
EQUITY RATIO=
= 0.5 / 45.1 %
= 0.5 / 50.0 %
= 0.6 / 55.6 %
Analysis:
The company’s equity ratio is 45.1% for 2015.This went up to 50 % in 2016 then went up further
to 55.6% in 2017. This is favorable since the higher the equity ratio is the better. A higher equity
ratio generally indicates less risk and greater financial strength than a lower ratio (Keythman,
2018). Since SMB’s equity ratio is high, a higher portion of its assets is financed with owners’
investments or equity and a lower portion with debt provided by the creditors.
(example for 2017, 55.6% of the total assets is financed with equity while the remaining 44.4 % of
the total assets is financed with debt)
 FINANCIAL RATIOS
SOLVENCY RATIOS
•  
• DEBT TO EQUITY RATIO=
= 1.2:1 = 1:1 = 0.8:1
Analysis:
The debt to equity ratio is decreasing throughout the years. In 2015, debt to equity ratio was 1.2:1 which meant that for
every ₱ 1 financed by the owner in the assets of the business, ₱ 1.2 was financed by the creditors. The following year
showed a slightly lower ratio that for every ₱ 1 financed by the owner, ₱ 1 was also financed by the creditors. This tells us
that at this point, liabilities are equal to owner’s equity. During 2017, the ratio consistently showed a lower ratio of 0.8:1.
This is favorable since a lower ratio is the better. The optimal or satisfactory ratio is 1 which was observed in the year 2016.
Lower ratio means a lower risk since it means that the borrowed funds are lower and investment by the owner is higher.
 FINANCIAL RATIOS
SOLVENCY RATIOS
•  
• TIMES INTEREST EARNED=
= 6.4 times = 8.3 times = 11.7 times
Analysis:
SMB’s interest is 6.4 times of its income before interest and taxes in 2015, 8.3 times in 2016, and 11.7 times in 2017. The
increase in number of times may be due to decreasing interest payments from large amount of loans. This is favorable since
the higher the number of times the operating income can cover the interest, the more pleasing it is for the creditors because
it means the company is not struggling to pay its interests from loans.
 FINANCIAL RATIOS
PROFITABILITY RATIOS
•  
• GROSS PROFIT RATIO=
x 100 = 45.6 %
x 100 = 46.2 %
x 100 = 44.4 %
Analysis:
SMB’s gross profit ratio was 45.6% in 2015. This was slightly higher in 2016 at 46.2%. This is favorable since it will result
to a greater operating income because of the higher gross profit. However, it went lower in 2017 at 44.4%. The gross profit
margin for three years was not that bad as the mark-up didn’t went lower than 40% which can still be used to absorb the
operating expenses.
 FINANCIAL RATIOS
PROFITABILITY RATIOS
•  
• OPERATING PROFIT RATIO=
x 100 = 27.5%
x 100 = 28%
x 100 = 27.5%
Analysis:
Operating margin was 27.5 % in 2015, went up to 28 % in 2016, and went back down to 27.5 % in 2017. This indicates that
the company is not efficiently managing its expenses. A closer look at SMB’s income statement shows that the selling and
administrative expenses has an upward trend. If this will continue, the operating margin may have a downward trend for the
following years. If that will be the case, SMB may possibly incur losses.
 FINANCIAL RATIOS
PROFITABILITY RATIOS
•  
• NET PROFIT RATIO=
x 100 = 16.4 %
x 100 = 18.2 %
x 100 = 18.3 %
Analysis:
The net profit margin continued to increase every year from 2015 to 2017. From 16.4% in 2015, it went up to 18.2% then
to 18.3% in 2017. Management should continue its efforts to increase sales and cut on expenses if they want to consistently
improve their net income for future operations. They shouldn’t be contented in their current net profit margin since it only
increased by 0.1%.
 FINANCIAL RATIOS
PROFITABILITY RATIOS
•  
• RETURN ON ASSET=
x 100 = 14.5 %
x 100 = 18.2 %
x 100 = 19.6 %
Analysis:
The return on assets was 14.5% in 2015. This continuously increased in 2016 to 18.2% and in 2017 to 19.6%. This means
that the company’s asset were fully utilized to generate income.
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