SM Development posts 45% profit hike

Boosted by gains on the sale of marketable securities, SM Development Corp. (SMDC), a listed property developer owned by retail tycoon Henry Sy, reported a 45-percent jump in its net income last year to P523.49 million from P361.29 million in 2003.

In a financial report filed with securities regulators, SMDC said total revenues grew 76.9 percent to P725.36 million mainly coming from investment operations and from the sale of real estate.

Gains on the sale of real estate amounted to P213.16 million or more than six times the previous year’s P35.31 million. Interest in fixed-income securities, on the other hand, dropped by 10.9 percent to P139.69 million from P156.81 million as a result of lower gross yield.

SMDC has sold units in Chateau Elysee which is nearly has complete as of end-2004. The project is located in Parañaque and is undertaken by SMDC’s 85.5-percent-owned subsidiary SM Synergy Properties Inc.

"The relatively peaceful national elections brought significant improvements on the stock market during the second half of the year, thus giving us some trading opportunities. This resulted to a robust 51.7-percent year-on-year increase in trading gains to P265.5 million," SMDC said.

Cost and operating expenses went up 49.8 percent as a result of the cost of real estate units sold during the year. Brokerage fees and commissions expanded by 650.6 percent due to active trading and greater number of sold units in Chateau Elysee.

Cost of sales surged 470.4 percent to P135.43 million from only P23.74 million. Interest expense likewise went up 306 percent to P15.43 million from P3.8 million.

Total operating expenses likewise climbed 49.8 percent to P29.61 million from P19.77 million.

MDC said loans payable also increased 471.8 percent because of increased borrowings to fund the construction of projects. Accounts payable and other liabilities ballooned by 197.2 percent due to additional supplier credits.

SMDC was formed in 1974 as a closed-end investment company. Previously named Ayala Fund Inc., it changed its business name to SM Fund Inc. after the SM Group of Companies took major ownership in March 1986. The change of the company’s name to what is known today also reflected its new thrust of property development in the real estate sector.

SMDC targets residential properties near the SM shopping malls. It is also considering ventures in tourism and entertainment to enhance mall operations. The securities investments business of the company is retained to provide a regular flow of earnings and cash the projects are in the early stages of transformation.