SMDC Ar2010

www.smdevelopment.
com
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ANNUAL REPORT 2010
SPECIAL EDITION
SCALING
NEW HEIGHTS
SCALING
NEW
HEIGHTS
2010markedthe endof a decade of significanttransformationwithinthe SM
organization. While itwas a periodof exponential growth across all business sectors,it
also presentedopportunities to renew SMs core values,to restate its visionandmission
amidstthe prevailingglobal anddomesticrealities. Itwas a time to fortifythe groups
foundationbasedonits strengths,core competencies andthe legacycreatedbySM
founder Mr. HenrySy,Sr. All these were directedtowards ensuringhealthyreturns to
investors;further strengtheningits financial position;employingthe rightpeople that
cantake the organizationto the nextlevel;definingbusiness strategies thatcanachieve
optimal andsynergisticgrowth objectives;andmostimportantly,developa holistic
approach to doingbusiness which includes deeplyembeddingandinstitutionalizinggood
governance andcorporate social responsibility. Definingthe heartandsoul of SMwas
also critical inensuringthatitachieves its ultimate goal of ServingMillions.
2010also markedthe startof a new decade,one thatpresents real andbigger
opportunities for further growth. With newfoundstrength andits emergence,the
Philippines enteredthis new decade ona platformof improvedeconomicfundamentals,
stronger financial institutions,increasedinvestor andconsumer confidence,andstrong
aspirations thatcanunleash marketdemand,which is both progressive andhighly
sustainable inthe comingyears.
With all thatas a backdrop,SMDevelopmentCorp. (SMDC),SMs mainresidential
armis readyto SCALE NEWHEIGHTS andto seize greater opportunities ahead. SMDC
is now atthe rightplace atthe righttime to deploymore resources,andrealize a vision
thatis alignedwith a worldthatcraves for innovation,greater sophisticationand
leadership. The plans are inplace andSMDC cantwaitto introduce its brandof service to
thousands more.
SM Mall
Timeline
V i s i o n . L e a d e r s h i p . I n n o v a t i o n . F o c u s . H a r d W o r k . I n t e g r i t y . P r u d e n c e .
2006
Chengdu
166,665 sqm
2001
Davao
78,735 sqm
2002
Cagayan de Oro
87,837 sqm
2007
Taytay
98,928 sqm
CHINA SM MALLS
1985
North EDSA,
Q.C.
482,878 sqm
2002
Bicutan,
Paraaque
113,667 sqm
2003
Lucena
78,685 sqm
Company Headquarters
SMPrime Holdings, Inc.
SMCorporate Offices Building A
J.W. Diokno Boulevard
Mall of Asia Complex, CBP-1A, Pasay City
1300 Philippines
Legal Counsel
SyCip, Salazar, Hernandez and Gatmaitan Law Offices
Gonzales Batiller David Leabres & Reyes
Pacis & Reyes
Puno and Puno Law Offices
Tarriela Tagao Ona & Associates
Tan Acut Lopez & Pison Law Offices
Fortun Narvasa Salazar
Picazo Buyco Tan Fider and Santos
External Auditor
SyCip Gorres Velayo & Co.
Bankers
Allied Banking Corporation
Australia and New Zealand Banking Group Limited
Banco De Oro Unibank, Inc.
Bank of the Philippine Islands
Chinatrust (Philippines) Commercial Bank Corporation
Citibank, N.A.
First Metro Investment Corporation
ING Bank
Land Bank of the Philippines
Metropolitan Bank & Trust Company
Mizuho Corporate Bank, Ltd.
Philippine National Bank
Security Bank Corporation
Standard Chartered Bank
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Hongkong and Shanghai Banking Corporation
Stockholder Inquiries
SMPrime Holdings, Inc.s common stock is listed and traded in the Philippine Stock
Exchange under the symbol SMPH.
Inquiries regarding dividend payments, account status, address changes, stock
certificates, and other pertinent matters may be addressed to the companys transfer
agent:
Stock Transfer Service, Inc.
Unit 34-D Rufino Pacific Tower, 6784 Ayala Avenue, Makati City 1200 Philippines
Tel. (632) 403.2410 Fax (632)403.2414
Investor Relations
Please contact : Teresa Cecilia H. Reyes
Vice President
Telephone : (632) 831.1000
E-mail : info@smprime.com
Website : www.smprime.com
1990
Sta. Mesa,
Manila
133,327 sqm
1991
Megamall,
Pasig
348,056 sqm
1993
Cebu
273,804 sqm
1995
Southmall,
Las Pias
205,120 sqm
1997
Bacoor
120,202 sqm
1997
Fairview, Q.C.
188,681 sqm
1999
Iloilo
105,954 sqm
2000
Manila
167,812 sqm
2000
Pampanga
132,484 sqm
2001
Sucat,
Paraaque
96,560 sqm
2003
Marilao
93,910 sqm
2003
Baguio
107,841 sqm
2004
Dasmarias
94,285 sqm
2004
Batangas
80,350 sqm
2005
San Lazaro,
Manila
181,593 sqm
2005
Valenzuela
70,681 sqm
2005
Molino
52,061 sqm
2006
Sta. Rosa
86,463 sqm
2006
Clark
101,840 sqm
2006
Mall of Asia,
Pasay
406,962 sqm
2006
Pasig
29,602 sqm
2006
Lipa
77,261 sqm
2007
Bacolod
71,760 sqm
2007
Muntinlupa
54,292 sqm
2008
Marikina
178,485 sqm
2008
Rosales
63,330 sqm
2009
Naga
75,652 sqm
2009
Las Pias
39,788 sqm
2009
Rosario
59,326 sqm
2008
Baliwag
61,262 sqm
2010
Novaliches,
Q.C.
60,560 sqm
2010
Tarlac
101,629 sqm
2010
San Pablo
59,643 sqm
2010
Calamba
67,384 sqm
2001
Xiamen 1
128,203 sqm
2009
Lifestyle Center
109,947 sqm
2005
Fupu (Jinjiang)
167,830 sqm
2011 MALLS
Masinag 82,804 sqm
San Fernando 40,000 sqm
Olongapo 30,000 sqm
Dasma Exp 27,000 sqm
Davao Exp 44,408 sqm
Suzhou, China 70,000 sqm
2012 MALLS
General Santos 88,675 sqm
Consolacion Cebu 57,436 sqm
Sucat BF 27,300 sqm
Novaliches 2 27,000 sqm
Kadiwa 21,700 sqm
Chongqing, China 140,000 sqm
v i s i o n

We envision SM Development Corporation
to be a leading developer of world-class
residences in the Philippines, uplifting
Filipino lifestyles into one that is convenient,
upscale yet affordable, and environment friendly.
Mi s s i o n
SM Development Corporation will realize its vision by:
Ensuring that its homebuyers enjoy the best value
for their investment with an upscale lifestyle, best
location, generous amenities, and a safe, secure, and
friendly neighborhood yet affordable;
Providing an excellent after-sales and maintenance
service that will preserve and enhance the long-term
value of its residences;
Delivering sustainable long-term growth and
increasing shareholder value by exercising prudence
in resource management based on the principles of
good corporate governance and good planning;
Becoming an employer of choice, offering
comprehensive opportunities for career growth and
enhancement, performance reward and incentives;
and,
Assisting and nurturing the communities in which it
operates by progressively building on its role as a
responsible corporate citizen.
2 SM 0LvLL0PMLNT C0PP0PTl0N ANNUAL REPORT 2010
Chairmans
Message
Henry Sy, Sr. talks about
the company
4
Pro|ecL
UpdaLe
On Time All The Time:
Updates on SMDCs Projects
9
PresidenLs
PeporL
Rogelio Cabuag reports on
SMDCs 2010 performance 6
New
Pro|ecLs
MPlace: A New Brand
in a New Decade 13
SPECIAL EDITION
0LvLL0PLP
Blue
Pesidences
Take Two in Katipunan
15
SM 0LvLL0PMLNT C0PP0PTl0N ANNUAL REPORT 2010 2
CorporaLe
Social
PesponsibiliLy
17
27 Report of the Audit and Risk
Management Committee
29 Statement of Managements
Responsibility for Financial
Statements
20 Independent Auditors Report
lBC Corporate Information
lCLS
SMDCs Board
of Directors and
Executive Officers
22
CorporaLe
Covernance
18
25
ManagemenL
0iscussion
and nalysis
SM 0LvLL0PMLNT C0PP0PTl0N ANNUAL REPORT 2010
CHlPMNS MLSSCL
We will address these
challenges by staying
close to the market and
introducing the latest
in design, architecture,
and technology, while
keeping in mind the
level of affordability of
our homes.
HLNPY SY, SP.
Chairman
We attribute SMDCs growth to several factors. Primarily, your Company pursued a focused
business strategy of providing stylish homes at affordable prices, enhanced with the convenience
of living near schools, workplaces and transport hubs. This strategy has appealed to homebuyers
looking for improved lifestyle, independence, quality time with their families, and value-for-money
propositions.
We believe that housing remains one of the most underserved sectors in the Philippines,
and owning a home is an aspiration of millions. With SM Residences, customers are empowered to
own homes set amidst a safe and secure environment, generous amenities such as grand lobbies,
huge open spaces, large swimming pools, and many other recreational facilities.
To ensure the long-term viability and sustainability of our real estate operations, we are
focusing on strengthening our brand equity. We do this by making good on our commitments
particularly in the timely delivery of our units, and the provision of efficient after-sales services
to ensure the protection of our homeowners and the inherent value of their units. We are
also employing a considerable amount of our resources in acquiring new properties for future
development in and outside of Metro Manila. In the next few years, you will also witness the
growth of SMDC in other key cities in the country.
It is an exciting time for your Company. This new decade presents tremendous opportunities
for those who are ready to step up to the demands of the times and a residential market that is
constantly growing in taste and sophistication. We will address these challenges by staying close
to the market and introducing the latest in design, architecture, and technology, while keeping in
mind the level of affordability of our homes.
That said, we thank you, our valued shareholders for your continued faith and confidence in
your Companys ability to carry out its vision of providing quality homes for every Filipino.
I am happy to report that 2010 was another banner year for SM
Development Corporation. Both revenues and net income from its
real estate operations grew sharply by 73% to Php9.12 billion and
70% to Php2.62 billion respectively, while its pre-sold units for the
whole year more than doubled with a growth of 120%. As a result,
SMDC has emerged as one of the leading residential development
companies in the country today.
ESSAGE TO STOCKHOLDERS
PPLSl0LNTS PLP0PT
Our plans for 2011
include launching four
to five new residential
projects that will offer
the trademark of SMDC,
which equates to quality,
reliability, convenience,
and affordability.

During the year, SMDC posted a sharp 62% increase in
consolidated net income of Php3.0 billion, from just Php1.9 billion
in 2009. Of the companys total net income, profits from real estate
grew at a higher rate of 66% to Php2.6 billion, from Php1.5 billion in
2009, showing the underlying strength of our core business. EBITDA
amounted to Php3.7 billion, for an EBITDA margin of 40%.
Consolidated revenues, on the other hand, soared 74% to
Php10.0 billion while realized revenues from real estate operations
during the year jumped 73% to Php9.12 billion from Php5.26 billion
in 2009. The growth resulted from the robust sales and more
projects that achieved higher rates of completion, while completed
units in Mezza, Field, and Chateau Elysee were transferred to 1,451
homeowners.
For the whole of 2010, SMDC pre-sold 10,338 residential units,
worth approximately Php21.8 billion. This compares with 4,512 pre-
sold units in 2009 for a growth of 129%.
Another point worth noting is the fact that SMDCs assets more
than doubled in 2010 to Php43.7 billion, from Php20.7 billion in 2009.
In addition to growth in retained earnings, SMDC conducted three
successful fund raising exercises in 2010. The first was the stock rights
issue in January, which raised Php4.8 billion. This was followed in the
second quarter by the fixed rate corporate notes issue, generating
Php2.0 billion and Php8.0 billion for the three- and five-year notes,
respectively. The third was completed in the third quarter, with
another stocks rights issue, this time amounting to Php11.7 billion.
These fruitful initiatives underscore the trust and confidence that the
capital markets have placed on your company.
And despite the increase in total liabilities, which stood at
Php17.9 billion from Php9.7 billion the previous year, SMDC maintains
a debt-to-equity ratio of only 28%, as we continue to adopt financial
prudence to guard the company against cyclical risks inherent to real
property businesses.
Beyond efficiency, prudence, and a good business model, SMDC
and the residential industry as a whole continued to enjoy strong
demand because the economic environment is now conducive for
housing. Many households found support from record high OFW
remittances, low interest rates and improved consumer and investor
confidence.
Among the products we launched in 2010 was a new brand
known as MPlace, with its pilot project located in Panay Avenue,
Quezon City. MPlace symbolizes your companys trailblazing
mission to reach out to a younger market that desires independent
living. Young adults, such as those who work in business process
outsourcing (BPO) companies, start-up families, and anyone who
would want a highly affordable place to call their own will find the
features and price points of MPlace very attractive.
Your company also launched another SM Residences
project in 2010. Known as Blue Residences, it is located not far
from SMDCs Berkeley Residences along Katipunan Avenue in
Quezon City. Blue Residences is ideally situated near schools and
commercial establishments. With a lot size of 4,235 square meters,
the condominium project will sell 1,591 units, which are available
in studio, one-bedroom, two-bedroom, and garden configurations.
Blue Residences amenities include a roof deck lounge, childrens
playground, two swimming pools, and garden space, among others.
Meanwhile, the other SM Residences projects are well on-track.
Our completed projects include five out of six clusters of Chateau
Elysee; Mezza Residences in Sta. Mesa; residential subdivision
Lindenwoods Residences in Muntinlupa; Berkeley Residences in
Katipunan, Quezon City; and phase one of Field Residences in Sucat,
Paranaque. The rest are in various stages of completion.
Notwithstanding the past years accomplishments, your
company is committed to sustain, if not exceed its growth and
expansion, especially in this new decade when optimism in the
countrys business and economic fronts abound. As such, our plans
for 2011 include launching four to five new residential projects that
will offer the trademark of SMDC, which equates to quality, reliability,
convenience, and affordability. The company has also started to look
beyond the Philippines, particularly at China, for further growth and
progress.
I sincerely thank all of you, our valued homebuyers,
shareholders, contractors, employees, and all of our other
stakeholders for your unwavering trust and confidence in your
company SM Development Corporation.
010 was another landmark year for SM Development Corporation (SMDC). Not
only did it deliver superior growth in earnings, your company also became a
dominant player in the Philippine residential development business, having
ranked the highest, both in terms of number of units sold and of sales value
in Metro Manila. This confirms the viability of our business model, which a
broader spectrum of buyers embraced in a short period of time. It is a business
model that provides five-star quality residences in strategic locations, at highly
affordable prices and delivered on time to our customers.
12.00
10.00
8.00
6.00
4.00
2.00
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
P3.38
SMDC SHARE PRICE CHART (January to December 2010)
P9.00
P0CLLl0 P. CBUNC
President
FINANCIAL HIGHLIGHTS (in Php Billion)
2010 2009 % Change
Total Assets 43.70 20.65 112%
Total Liabilities 18.04 9.72 86%
Stockholders Equity 25.66 10.94 135%
Revenues from Real Estate Sales 9.12 5.26 73%
Net Income from Real Estate 2.62 1.54 70%
ROSALINE Y. QUA
Senior Vice President/COO
How do
you assess
your performance in 2010?
We have done exceptionally well in 2010.
We have exceeded our sales targets and
expanded our market penetration. And in
terms of financial standing and operating
results, the Companys performance was
remarkable.
You launched a new brand last year
now known as MPlace. How does
this differ from SM Residences?
This product is primarily intended to cater
to the needs of those who are just starting
out in their career and those who wish to
be different, as this will allow for the pursuit
of artistic inclinations as regards their own
individuality. Whereas SM Residences is
more straightforward and utilitarian.
How did the market respond
to MPlace?
We have been relatively happy with the
market acceptance of the product. We are
very optimistic that as the market fully
appreciates its value proposition a strong
pick up will occur given
its distinct advantage of
being located in the city.
Aside from MPlace,
what other new
projects did SMDC
launch in 2010?
What areas did you
cover?
Due to some technical and
administrative challenges
brought about by the national and
local elections, we only launched
two projects in 2010. These are MPlace
at South Triangle and Blue Residences in
Quezon City.
Did prices of your units increase
in 2010? If so, by how much?
Unit prices of SMDC products normally
rise because they are priced-engineered
for investments and market reasons. The
increase is being dictated more by the
location and the market condition in the area.
How many new projects will you
launch in 2011 and how many units
are those equivalent to?
We plan to launch 4-5 projects this year.
The equivalent total number of units will
be in the vicinity of between 8,000-10,000
units.
Of the total projects in 2011, how
many are SM Residences and how
many are MPlace?
SM Residences will dominate the launches
and MPlace could be about two. However,
the market condition will continue to be the
primary indicator on the product mix.
What is your estimated cost for
these new projects and what will be
your source of funds?
Our capex budget is about Php17 billion and
a huge portion of the same will be funded
by existing available funds.
Is SMDC planning to expand outside
of Metro Manila? If so, where?
Yes but we are very selective. Maybe it will
be in areas where we strongly believe our
products will have a general fit and will have
demand such as the cities of Baguio, Cebu
and Davao.
Will you pursue your plans to go
into China? What opportunities do
you see in that market?
Housing opportunities in China are huge
but the business environment needs to be
studied and carefully approached with a lot
of pragmatism. We shall continue to have
an open mind on this prospect.
How do you plan to address
the growing competition in the
residential development business,
particularly in Metro Manila?
We shall remain to be active in searching
for the right properties and will seize and
lock-in the ones in the city that fit our
requirements. We will continue to provide
innovative products that are affordable yet
with five star amenities. We will also remain
cost efficient and effective.
TPLN0S & LXPLCTTl0NS
PP0JLCT UP0TL
0n Time
ll The Time
Updates on SMDCs Projects
All of SMDCs various
residential projects
proceeded on schedule
during the year. We were
able to meet most of our
construction targets. In
addition, we attained our
sales goals and delivered
completed units at a
faster rate.
Field Residences
Since 2003, when its first residential development project
was started, SM Development Corporation (SMDC) has always
made sure that it hews closely to its construction schedules. In
2010 the situation was no different, inasmuch as SMDCs on-
going endeavors were on-track, with several projects already
fully completed and turned over to unit owners.
All of SMDCs various residential projects proceeded
on schedule during the year. We were able to meet most of
our construction targets. In addition, we attained our sales
goals and delivered completed units at a faster rate allowing
the company to book and realize more revenues, SMDC vice
chairman and chief executive officer Henry T. Sy, Jr. explained.
As of end December 2010, the companys initial foray into
residential development, Chateau Elysee, has fully completed
five of its six mid-rise condoville clusters in Paraaque City,
near SM City Bicutan. Started in 2003, the project was, as of
the same period, 84% complete with its last cluster. In terms of
sales, Chateau Elysee has sold 73% of its 2,737 total inventory.
The whole project has a gross floor area (GFA) of approximately
104, 404 square meters (sqm).
As for SMDCs second project, Mezza Residences, which
was started in 2006 and is right across SM City Sta. Mesa, it has
already been fully completed and turned over to unit owners.
With a total GFA of 130,779, Mezza Residences has sold 97% of
its 2,332 total units.
Another fully completed SMDC project is Berkeley
Residences, which is along Katipunan Avenue in Quezon City.
The project was launched in 2008 and has a GFA of 56,733 sqm.
Chateau Elysee Chateau Elysee
Chateau Elysee
Chateau Elysee
As of the end of last year, 1,250 units of Berkeley Residences
have been sold and transferred to the owners. This is
equivalent to 98% of the total number of units for sale.
The next SMDC project is Grass Residences, which is right
behind the largest SM mall, SM City North EDSA in Quezon City.
Started in 2008, it was as of the same period, 96% complete with
the construction of its Tower 1, and 21% and 2% complete with
its Tower 3 and Tower 2, respectively. It has a GFA of 246,027
sqm and has sold 71% of its 5,997 total units for sale.
Sea Residences, on the other hand, has a GFA of 140,031
sqm and is located very near the Mall of Asia Complex in Pasay
City. Started in 2008, its buildings A and B are 91% completed,
followed by its buildings C and E, which are 37% completed,
and buildings D and F, at 13% completion. Out of 2,899 Sea
Residences units available for sale, 2,486 units have already
been sold.
Started in 2008, Field Residences in Paraaque City has
sold 1,008 units of its 3,248 total. Of its ten towers, its Tower
1 is fully completed, while its Towers 2 and 8 are 90% and 32%
completed. The whole project has a GFA of 178,051 sqm.
Berkeley Student Lounge
Grass Residences 3BR unit Sea Residences
Berkeley 2BR unit
SMDCs eighth project, Princeton Residences, was started
just last year. It is a single tower residential condominium
project located along Aurora Boulevard in Quezon City. It was as
of the period 32% completed and has sold half of its 1,095 total
units. Princeton Residences has a GFA of 51,624 sqm.
Another project, the construction of which was also started
last year, is Sun Residences. The project is located beside the
Mabuhay Rotunda at the Quezon Avenue-Espaa boundary
of Manila and Quezon City. As of the end of last year, Sun
Residences was 13% completed. 1,333 or 33% of its total units
were already sold. Sun Residences is estimated to have a GFA
of roughly 170,000 sqm.
Jazz Residences is SMDCs residential condominium project
in Makati Citys central business district. Started also in 2009, it
has a GFA of 286,797 sqm and has completed 13% of its Towers
A, C, and D. Out of its total units for sale, 1,678 units or 32% have
already been sold.
Along the northbound side of EDSA in Mandaluyong City is
SMDCs Light Residences. Likewise launched last year, it has a
GFA of 213,419 sqm. 22% of its Tower 1 is completed. It has a
total of 4,227 units, of which 1,341 units have been sold.
SMDCs only residential project outside Metro Manila is
Wind Residences in Tagaytay City. Similarly, its construction of
phase one commenced last year. As of the end of December
2010, its Tower 2 was 11% completed, followed by its Tower 1 at
6% completion. On full completion, Wind Residences will have
ten towers with a total of 7,959 units. During the same period,
it has already sold 848 units, or about 11% of total. The projects
GFA stands at 309,192 sqm.
Field Residences Clubhouse Sun Residences
Princeton Residences
Jazz Residences
NLW PP0JLCTS
A New Brand
in a New Decade
After several years of successfully providing high quality
yet affordable homes through its SM Residences trademark,
SM Development Corporation (SMDC) launched in June 2010 an
innovative brand that reaches out to a wider market through
even greater affordability.
Known as MPlace, the new SMDC business model has for
its inaugural project MPlace South Triangle. Bounded by Panay
Avenue and Mother Ignacia Street in Quezon City and only a
few steps away from the ABS-CBN compound, MPlace South
Triangle is a four-tower condominium project that occupies
about a hectare of land. Combined, the four towers of the
project will offer approximately 3,400 units for sale.
MPlace South Triangle is SMDCs maiden project under
its MPlace brand. This pioneering concept embodies the
companys desire to provide a younger market, which yearns for
independent living, a place that they can truly call their own,
SMDC vice chairman and chief executive officer Henry T. Sy, Jr.
explained.
Either for themselves alone
or with their start-up families,
there is an MPlace unit
that will surely meet their
requirements. Working young
adults who still live either
with their parents or with
other relatives in an extended
family environment, will also
find MPlace units appealing to
their housing needs.
Todays upwardly mobile young adults who are at the
early stages of a successful career, such as those working in
BPO (business process outsourcing) companies are a perfect
fit for MPlace homes. Given the highly affordable price points
of the project, it indeed makes better sense for this dynamic
and driven segment of the workforce to purchase MPlace units
rather than to rent an apartment or stay in a boarding house.
Either for themselves alone or with their start-up families,
there is an MPlace unit that will surely meet their requirements.
Working young adults who still live either with their parents or
with other relatives in an extended family environment, will also
find MPLace units appealing to their housing needs.
MPlace South Triangles amenities include a swimming
pool, garden lounge, jogging path, and a childrens playground,
among others. It will also offer wireless Internet (WIFI) access
in common areas. For added convenience, commercial and
retail areas will be located at the ground floor of the towers.
In addition, the project site is surrounded by a variety of
well-known restaurants, banks, schools, and other popular
commercial establishments, and is only a five- to ten-minute
walk to and from Quezon Avenue and the EDSA MRT (Metro
Railway Transit) station. It is near hospitals such as Capitol
Medical Center and St. Lukes Medical Center.
The unit types available for MPlace South Triangle are
studio, studio with garden, one-bedroom, one-bedroom L-type,
and two-bedroom. Unit sizes may range from 20 square meters
(sqm) to 40 sqm. Completion of its Phase 1 is estimated to be
by the first half of 2013.
Together with SM Residences, the exciting MPlace brand
will further strengthen SMDCs product offerings during this
new decade and beyond.
Take Two in Katipunan
Due to the thoroughfares strategic location and
encouraged by the definite success of its Berkeley Residences,
which today stands distinctively along Katipunan Avenue in
Quezon City, SM Development Corporation (SMDC) again broke
ground for another condominium project in the area. Known
as Blue Residences, the project started in November last year
and is located just beside the Loyola Heights campus of the
Ateneo De Manila University. Thus, Quezon Citys version of the
University Belt will soon be home to two SM Residences.
This district in Quezon City is dotted with schools and
universities, such as Miriam College, Ateneo University, and
U.P., among others. However, affordable housing within the
vicinity and in-campus dormitories are scarce. A great majority
of students and faculty members travel long distances to and
from their respective schools. Aware of this dire situation, SMDC
decided to put up another condominium project within the area
to provide many more high quality, reasonably priced homes for
these individuals and their families, Rose Y. Qua, SMDC senior
vice president and chief operating officer, pointed out.
Not only will Blue
Residences be highly suited
for students and teachers,
it will also be an ideal home
for those working in the
many nearby business and
commercial districts.
Not only will Blue Residences be highly suited for students
and teachers, it will also be an ideal home for those working
in the many nearby business and commercial districts. The
projects proximity to the Manila LRT Purple Line along Aurora
Boulevard and to other public transportation terminals is an
added bonus, she further explains.
Blue Residences occupies 4,235 square meters of land and
is a 41-storey single tower development. It will offer for sale
1,591 units, which are available in studio, one-bedroom, one-
bedroom deluxe, one-bedroom suite, two-bedroom, and garden
unit configurations.
As in other SMDC residential projects, Blue Residences
will provide generous amenities to unit owners. Among its
amenities and facilities are a roof deck lounge, childrens
playground, two kiddie pools, a lap pool, a modern tropical
garden, student lounge, study room, and a grand entrance
lobby with lounge area. Several areas will have Wi-Fi access.
For added convenience, there also is a provision for retail and
commercial areas. More than 300 parking slots will be available.
Blue Residences is scheduled to be completed by late 2013
or early 2014.
C0PP0PTL S0ClL PLSP0NSlBlLlTY
2010:
A Successful Run
for SM Foundation
The year 2010 brought with it a challenge for SM
Foundation to double its efforts in contributing to the society.
The Foundations efforts mainly concentrated in empowering
our marginalized brothers and sisters as it came up with new
projects while continuing to implement the programs that were
done in the past and were deemed effective. The consequent
success of these programs could not have been made possible
without the selfless efforts and volunteerism of people who
have worked tirelessly with SM Foundation. 2010 was a year
of success for the college scholarship and school building
program. Provision of much needed assistance to deprived
communities through medical mission and livelihood training
programs also formed part of the Foundations focus.
SM Foundations education advocacy is intent on
improving the countrys public education sector. It is focused
mainly on the college scholarship program and its partnership
with the Adopt-A-School Program of the Department of
Education (DepEd). For 2010, SMFoundation has awarded
college scholarships to 267 underprivileged yet deserving
students who are now enrolled in four- or five-year college
courses. The Foundation also gave 81 scholarships for
technical-vocational courses. As of December 2010, there are
951 SM Foundation scholars enrolled in over 70 universities
around the country. In addition, 105 SM Foundation scholars
graduated from their respective courses last year, 52 of
them with Latin honors, the highest in terms of percentage
thus far. As for the donation of school buildings, the
Foundation turned over a total of eight buildings with 20
classrooms to public elementary and high schools in 2010. This
brings the total number of school buildings donated by SM
Foundation to 35.
For the Foundations health advocacy, we were able to
conduct 76 medical missions in 2010, serving 72,119 indigent
beneficiaries from all over the Philippines. These beneficiaries
received not only the proper medical diagnosis and treatment;
they were also given free medicines and vitamins, including
complete courses of antibiotics. SM Foundations mobile clinics
also provided laboratory and examination procedures such as
x-ray and urinalysis, among many others. Apart from medical
missions, the Foundations health advocacy also focused on
the Felicidad T. Sy Wellness Centers program, wherein
renovations of dilapidated public health centers help to provide
a better environment for healing and recuperation. Eight public
health centers were successfully repaired and improved last
year; thus bringing to 62 the total number of beneficiary
centers since the project started.
The Foundations mall-based outreach program carried on
with its four quarterly projects in 2010. Its first quarter project,
Share Your Extras, collected from shoppers in all 40 SM malls
donations in kind amounting to approximately Php2.0 million.
The donated items were given to 14,484 indigent families or
roughly 87,000 individuals. During the second quarter, Donate-
A-Book was able to collect close to 200,000 books, many of
which were brand new. A total of 1,375 public schools and six
reading centers nationwide were beneficiaries of this endeavor.
During the third quarter, Gamot Para Sa Kapwa project was
staged in coordination with our health and wellness advocacy.
The undertaking brought together Php1.18 million worth of
donated medicines, which were used during the Foundations
medical missions. In the last quarter of 2010, the Make A Child
Happy / Share A Toy project collected 8,866 toys from mall
donors and distributed to underprivileged children during the
Make-A-Child-Happy program in various SM malls.
The Foundations livelihood advocacy, on the other hand,
continued its Kabalikat sa Kabuhayan program, which trains
beneficiaries in scientific and latest-technology farming
methods. Last year, 1,102 farmer-beneficiaries graduated
from the project. To date, more than 3,000 farmers all over
the country have undergone training through the foundations
efforts. Several selected produce from these farmers are sold
at SM retail outlets.
In all of its advocacies plans and projects during the
year, SM Foundation recognizes the invaluable contribution
of its partners from both the public and private sectors.
The Foundations partnerships with private individuals,
organizations, and companies, as well as with local and
national government agencies truly widened its reach and
enhanced its capability to share its efforts and resources with
the underprivileged.
Encouraged and inspired by its accomplishments in 2010,
SM Foundation looks forward to the new decade where it can
further heighten its advocacies and make a bigger difference in
the lives of a greater number of people.
Board of 0irecLors
SMDCs Manual on Corporate Governance
instills in the Board of Directors the duty of
safeguarding the long term success of the
business, in a manner that demonstrates the
corporate governance principles of fairness,
accountability and transparency.
The Board of Directors is elected during
SMDCs Annual Stockholders Meeting. The
directors serve for a term of one (1) year and
until their successors are elected consistent
with the Companys By-Laws. The Board
holds its organizational meeting after
the annual election of directors. Regular
meetings of the Board are held quarterly,
but special meetings may be called by the
Chairman, President or Corporate Secretary
at the request of any two (2) directors.
Independent Directors
The Board is composed of seven (7)
directors, two (2) of which are independent
directors. SMDC adopts the definition of
independence from the Securities Regulation
Code and considers an independent director
as one who, except for his directors fees
and shareholdings, is independent of
management and free from any business or
other relationship which could reasonably
and materially interfere with his independent
judgment in carrying out his Board duties.
The nomination and election of independent
directors follow the provisions set forth
by the SEC. All Board members have
been screened and deemed eligible by the
Nominations Committee and have undergone
the seminar on corporate governance
in compliance with SMDCs Manual on
Corporate Governance.
Board of Directors Attendance
A directors absence or non-participation
for whatever reason in more than 50% of all
meetings, both regular and special, in a year is
a ground for temporary disqualification in the
succeeding election.
C0PP0PTL C0vLPNNCL
SM Development Corporation continued
to promote and foster its corporate
governance culture through several
initiatives undertaken in 2010. SMDCs
platform of corporate governance
remains rooted in the Manual on
Corporate Governance and the Code of
Ethics, which has been reinforced by
the Companys efforts to further align
its corporate governance standards
towards best practices.
2010 Annual Stockholders Meeting of SM Development Corporation
0irecLors Pegular SM & 0rganizaLional Board Pegular Special Pegular PercenLage
2/15/10 4/26/10 6/25/10 8/02/10 10/19/10
Henry Sy, Sr. 100%
Rogelio R. Cabuag 100%
Henry T. Sy, Jr. 100%
Elizabeth T. Sy 100%
Andres G. Gatmaitan X 83%
Octavio V. Espiritu 100%
Ricardo J. Romulo 100%
Board Remuneration
Members of the Board of Directors receive
a per diem of P10,000 (P20,000 for the
Chairman and Vice Chairman) for each regular
or special Board meeting or Board Committee
meeting attended. Total compensation
paid to directors is disclosed annually in the
Definitive Information Statement sent to
shareholders, together with the Notice of the
Annual Stockholders Meeting.
Board Committees
To support the Boards roles, three (3) Board
Committees were created, namely, the
Compensation and Remuneration Committee,
the Nomination Committee, and the Audit
and Risk Management Committee. The
Compensation and Remuneration Committee
is tasked with the oversight of policies on
salaries and benefits, as well as promotions
and career advancement. The Committee
also reviews existing human resource
policies to ensure the continued growth and
development of SMDCs workforce.
The Nomination Committee evaluates
all candidates nominated to the Board
in accordance with the provisions of the
Manual on Corporate Governance on the
qualifications and disqualifications of
directors. The Audit and Risk Management
Committee directly interfaces with
the internal and external auditors. Its
responsibility include the approval of
the companys financial reports, risk
management, internal control systems
and review and approval of audit plans and
auditing processes. (Please visit SMDCs
website at www.smdevelopment.com to
access the certification on the record of
attendance of Board Committee members of
the board for 2010.)
Committee Charters
Each of SMDCs Board Committees has
adopted a Charter which identifies the
Committees composition, roles and
responsibilities, as drawn from the companys
Manual on Corporate Governance. Under
their Charters, the Committees must be
composed of at least three (3) members, one
of which should be an independent director.
The Charters also include administrative
provisions on conduct of proceedings and
reporting to the Board and Committee
advisors.
The major provisions of the Audit and
Risk Management Committee Charter are
summarized in the Committees report
also found in the Annual Report. The Audit
and Risk Management Committee Report
also highlights the Committees principal
activities for the past year. It is chaired by an
Independent Director.
Evaluation of the Board and President
In 2010, the Board conducted its annual self-
evaluation and evaluation of the President.
The evaluation involved a rating of the
performance of the individual director, the
collective Board and the President for the
past year. The evaluation is based on the
duties and responsibilities of the Board and
the President under the Manual on Corporate
Governance and By-Laws.
The evaluation also included a rating of the
support services provided to the Board, such
as the quality and timing of information
given to the Board, and the frequency
and conduct of meetings. The directors
were also requested to identify trainings,
programs or any other assistance they may
need in the performance of their duties. A
summary of the results of the evaluation
were subsequently presented to the Board of
Directors.
SMDC Executives hold a media briefing following the companys 2010 stockholders meeting. Mr. Henry Sy, Jr. rings the bell at the Philippine Stock Exchange during the listing of SMDCs Php12 billion
stock rights offer on November 3, 2010.
Policies
SMDC revised its Manual on Corporate
Governance in 2010 to comply with the SEC
Revised Code of Governance. Some salient
revisions to the Manual pertain to (i) the
number of independent directors, (ii) Board
responsibilities and (iii) Board Committee
composition. The Manual lays down the
general responsibilities and specific duties
of the Board, the Board Committees, the
Corporate Secretary, and the external
and internal auditors. The Manual equally
recognizes the rights of all shareholders and
expresses SMDCs commitment to protecting
the interests of all its stakeholders.
Code of Ethics
The Code of Ethics guides the Companys
directors, officers and employees in
the performance of their duties and
responsibilities, specifically in its business
dealings with investors, creditors, customers,
contractors, suppliers, regulators and the
public. The Code provides guidelines on
compliance and integrity, employee welfare,
protection of company information and
shareholder rights. Central to the Code are
policies and procedures on the reporting of
suspected or actual fraudulent or dishonest
acts, inappropriate and unauthorized
acceptance of gifts from business partners,
conflicts of interest, confidentiality of vital
business information and insider trading.
Insider Trading Policy
The policy prohibits SMDC directors, officers
and employees who have access to material,
confidential and stock price-sensitive
information (i.e., information on business
transactions that have not yet been disclosed
to the public) from trading SMDC shares,
five (5) trading days before and two (2)
trading days after the disclosure of quarterly
and annual financial results and any other
material information. To ensure compliance
with the policy, SMDC issues reminders
before the trading ban periods.
Related Party Transactions
SMDC practices full disclosure of details
of related-party transactions. The nature,
extent and all other material details of
transactions with related parties are
disclosed in the Companys financial
statements and quarterly and annual
reports to the SEC and PSE. The financial
statements and reports are also available
in the website and readily accessible to the
public. During the meetings of the Audit and
Risk Management Committee, Management
presents information on the transactions
entered into by the Company with related
parties. The Company ensures that all
related-party transactions are conducted on
market and arms length basis.
Guidelines on Acceptance of Gifts
In line with the Code of Ethics, SMDC has
adopted guidelines on the acceptance of
gifts from business partners. Directors,
officers and employees are prohibited from
soliciting or accepting gifts in any form from
any business partner. The term gift covers
anything of value, such as but not limited
to cash or cash equivalent. The guidelines
provide exceptions such as corporate give-
aways, tokens or promotional items of
nominal value. When it is deemed improper
to refuse a gift, the issue is referred to
Management for proper disposition.
Guidelines on Sponsored Travel
In relation to the Guidelines on Acceptance of
Gifts, the policy prohibits travel sponsored by
business partners, which refer to contractors,
suppliers, banks and other entities engaged
in business with SMDC. If a business partner
invites SMDC officers or employees to travel
for the purpose of attending trade shows or
exhibits or for exposure to new products and
innovations, among other similar purposes,
officers and employees are prohibited from
accepting such sponsored travel. If SMDC
Management deems that such travel is
necessary for the business and for the
development and training of officers and
employees, SMDC will shoulder the cost of
the travel.
The guidelines further prohibit all SMDC
officers and employees from accepting travel
sponsored by any current or prospective
business partner which is participating in any
on-going bidding or selection process for any
SM project or transaction.
0isclosure and Transparency
In order to provide shareholders and the
public with timely and accurate information
on SMDCs dealings, the company adopted
a policy of full and prompt disclosure of all
material information. In line with this, SMDC
regularly updates its website, which has a
separate corporate governance section that
features among others, the CG Working
Group, policies, programs and other relevant
corporate governance information.
Also, SMDC conducts regular briefings and
meetings with investors, analysts and
the press to keep them updated on the
Companys various projects and financial
and operational results. The presentation
materials at these briefings, as well as the
Companys SEC and PSE reports and annual
reports, may be viewed and downloaded from
the website. (Please visit SMDCs website
at www.smdevelopment.com for access to
disclosures, write-ups and other company
information.)
The Annual Stockholders Meeting
The Annual Stockholders Meeting (ASM)
gives shareholders an opportunity to raise
concerns, give suggestions and vote on
relevant issues. Shareholders have the right
to elect, remove and replace directors and
vote on certain corporate acts in accordance
with law and SMDCs By-Laws. These
resolutions are recorded in the minutes of the
ASM. Present during the ASM are SMDCs
Chairman, Board Members, President, Board
Committee Chairmen and Members, Senior
Management and External Auditors. Their
attendance allows shareholders to direct
their queries and concerns to the concerned
individuals or bodies. The questions and
corresponding responses are also included in
the minutes of the ASM.

Prior to the ASM, shareholders are furnished
a copy of the annual report, including financial
statements, and all relevant information
about the current and nominated directors
and officers. Also, minority shareholders
are given access to information relating
to matters for which the management is
accountable.
0rienLaLions and Trainings
SMDC recognizes the impact that the
continued development of training and
orientation programs has on the corporate
governance culture of the Company. In
2010, SMDC conducted and participated
in several activities that have helped to
enhance awareness on corporate governance
throughout the organization.
SMDC continues to drill down to its
employees its revised Code of Ethics. The
orientations are meant to inform employees
of their rights and obligations under the Code,
as well as enlighten them on the principles
and best practices in promoting good work
ethic and values. This helps reinforce the
corporate governance training included in the
Human Resources Departments Corporate
Orientation Program for new Employees
(COPE) and the Re-Orientation Program for
employees who have been employed with
the company for five (5) years or more. The
orientations introduce employees to the
SM platform of governance and the various
components of corporate governance in
the business, including business ethics,
risk management and corporate social
responsibility.
SMDC also conducted seminars on the
Anti-Money Laundering Law for its finance
and sales staff in the property group. The
seminars provided an overview of the
requirements and prohibitions under the
law that applies to real estate transactions.
Participants were also given tips and advice
on what they can do to detect, avoid and
report money laundering in the performance
of their duties.
SMDC attended a seminar on the SEC Revised
Code of Corporate Governance in Makati City
on March 19, 2010. The SEC focused its talk
on the definition of corporate governance and
touched on the responsibilities, duties and
functions of the board of directors, the role
and accountability of auditors, among others.
The SEC also included in the presentation
their latest memorandum circulars and legal
opinions.
LxLernal Pro|ecLs
SMDC participated in the ICD Annual Working
Session held November 18-20, 2010. The
annual event enables regulators, advocators
and publicly-listed companies to tackle
relevant corporate governance issues and
strengthen best practice in the country.
The Company participated in the seminar
conducted by the Chartered Financial
Analyst Institute, with the theme Corporate
Governance Global Update on July 22, 2010
at the Philippine Stock Exchange Center. The
event focused on best corporate governance
practices from the different regions.
Corporate Social Responsibility (CSR)
The Company directs most of its corporate
social responsibility to the SM Foundation
Inc. which ably manages the CSR programs
of the SM Group of Companies. In support
of its focus on community development
and the environment, SMDC adopts various
energy conservation measures, such as a
policy that ensures that lights are out in the
work areas during lunch breaks and that air
conditioning units are turned off after office
hours to minimize electricity consumption.
Similar to the SM Malls, waterless urinals
are installed throughout the SMDC offices to
help conserve water. Energy conservation
tips are posted along the bulletin boards
and uploaded onto the Companys intranet
regularly. To aid the community, SMDC
employees participate in regular blood drives,
donate resources to the SM Foundation and
provide emergency assistance to those in
need during calamities.
CiLaLions
SMDC received Silver Category honors
from the 2009 Securities and Exchange
Commission, Philippine Stock Exchange,
and ICD corporate governance scorecards.
The awards and recognition were given
during the ICD annual dinner on May 27,
2010 at the Manila Peninsula Hotel. Ms.
Teresita Sy-Coson, Vice Chairperson of SM
Investments Corporation, parent company
of SMDC delivered the keynote speech at the
event and highlighted the role of corporate
governance in the growth and success of the
SM Group.
On June 15, 2010 Corporate Governance Asia
awarded Ms. Teresita Sy-Coson with the
Asian Corporate Director Recognition Award
for her contributions to the development and
implementation of best corporate governance
practices across all the subsidiaries and
affiliates of SM. Corporate Governance Asia
is the only journal currently specializing in
corporate governance in the region.

Moving lorward
To keep pace with the rapid growth of its
business, SMDC continues to improve its
existing corporate governance policies and
programs and introduce initiatives that
help promote the principles of corporate
governance throughout the organization.
One of the new initiatives the Company is
currently establishing is the formalization
of a Corporate Governance Coordinating
Committee (CGCC) within the SM Group.
Each company under the SM Group of
Companies will be represented on this
committee which will coordinate the
individual corporate governance needs of the
respective companies and formulate uniform
policies and programs across the group. An
additional independent director is now being
considered, while the formalization of the
structures, policies and systems to further
enhance Risk Management is currently being
undertaken.
B0P0 0l 0lPLCT0PS
FACES
HENRY SY, SR.
Chairman
Mr. Sy is the founder of the
SM Group of Companies and the
Chairman of SM Investments
Corporation, SM Prime Holdings, Inc.,
SM Land, Inc. (formerly Shoemart, Inc.)
and Highlands Prime, Inc. He founded
and opened the first Shoemart Inc.
in 1958, which department store
has evolved into a dynamic group
of companies with five lines of
businessesretail, shopping malls,
banking, property and hotels and
conventions. Mr. Sy likewise
serves as Chairman of Highlands
Prime, Inc., Chairman Emeritus
of BDO Unibank, Inc. and
Honorary Chairman of
China Banking Corporation.
HENRY T. SY, JR.
Vice Chairman and
Chief Executive Officer
Mr. Sy, Jr. graduated with a
Management degree from De La
Salle University. He is responsible
for the real estate acquisitions and
development activities of SM Land,
Inc. and SM Development Corporation
which include the identification,
evaluation and negotiation for
potential sites as well as the input
of design ideas. He likewise serves
as Vice Chairman of SM Investments
Corporation, Vice Chairman and
President of SM Land, Inc. and
Highlands Prime, Inc., Director of
SM Prime Holdings, Inc., BDO
Unibank, Inc. and SM Residences
Corporation. He is also the
President of the National Grid
Corporation and Chairman
of Pico De Loro Beach
and Country Club, Inc.
ELIZABETH T. SY
Director
Ms. Sy primarily oversees the SM
Groups increasing involvement
in the tourism and hospitality
industry sector. Ms. Sy is also
the President of SM Hotels and
Conventions Corporation; Director
of SM Land, Inc. and BDO Private
Bank; and Adviser to the Board of
SM Investments Corporation. She
likewise serves as Senior
Vice President of SM Prime
Holdings, Inc., Vice President of
SM Commercial Properties, Inc.
and Co-Chairman of Pico
De Loro Beach and
Country Club.
ROGELIO R. CABUAG
President
Mr. Cabuag graduated from De
La Salle University with a Bachelor
of Science Degree in Commerce
and finished the Top Management
Program at Asian Institute of
Management. He has 41 years of
experience in banking and finance.
He held key executive positions in
other financial institutions prior
to joining the SM Group. Currently,
Mr. Cabuag is also a director
of Highlands Prime, Inc., Belle
Corporation, Keppel Phils. Holdings,
Inc., Tagaytay Highlands International
Golf, SM International Property Sales
SRL and SM Residences Corporation.
He is also Director and Executive
Vice President of SM Synergy
Properties Holdings Corp.
ATTY. ANDRES G.
GATMAITAN
Director
Atty. Gatmaitan is connected with
Sycip Salazar Hernandez & Gatmaitan
Law Firm as Senior Counsel. He serves
as Director of Benguet Corporation,
Colgate Palmolive Phils., Inc., Triumph
International (Phils.), Inc., Maybank
Philippines, Inc., Star Performance
Phils., Inc., AMI Philippines, Inc.,
Holcim Cement Corporation, Unicharm
Philippines, Inc. Atty. Gatmaitan is
also the Chairman of the Board of
Convergys Philippines Services Corp.
and President of United Holdings
& Development Corp. and
St. Agen Holdings, Inc.
OCTAVIO V. ESPIRITU
Independent Director
Mr. Espiritu is a three-term former
President of the Bankers Association
of the Philippines (BAP), former
President and Chief Executive Officer
of Far East Bank and Trust Company,
and former Chairman of the Board
of Trustees of Ateneo De Manila
University. Mr. Espiritu also serves as
Chairman and President of MAROV
Holding Company, Inc. and Chairman
of Delphi Group, Inc. He is also the
Independent Director of Bank
of the Philippine Islands,
Digital Telecommunications
Philippines, Inc., International
Container Terminal Services, Inc.,
Netvoice, Inc. and
Pueblo de Oro Golf
and Country Club.
ATTY. RICARDO J.
ROMULO
Independent Director
Atty. Romulo is a Senior Partner of
Romulo Mabanta Buenaventura
Sayoc & De Los Angeles Law Firm.
Currently, Atty. Romulo is Chairman
and Director of Cebu Air, Inc., Digital
Telecommunications, Inc., Federal
Phoenix Assurance Co., Inc., Interphil
Laboratories, Inc. and Manchester
International Holdings Unlimited Corp.
He also serves as Director of Beneficial-
PNB Life Assurance Co., Inc.,
Goulds Pumps (Phils.), Inc., Honda
Philippines, Inc., Johnson & Johnson
(Phils.), Inc., Kraft Foods
(Phils.), Inc., Maersk-Filipinas, Inc.,
Phil. American Life & General
Insurance Co., Planters
Development Bank and
Zuellig Pharma Corporation.
JOSE T. SIO
Adviser to the Board
of Directors
Mr. Sio is the Executive
Vice President and CFO of
SM Investments Corporation. He
is a Director of China Banking
Corporation, Generali Pilipinas
Holding Company, Inc., Belle
Corporation, and SM Keppel Land,
Inc. as well as other companies
within the SM Group. Mr. Sio is also
adviser to the Board of Directors
of Banco De Oro Unibank, Inc. Mr.
Sio holds a masters degree in
Business Administration from New
York University, is a certified public
accountant and was formerly
a senior partner at
Sycip, Gorres, Velayo & Co.
(a member practice of
Ernst & Young).
LxecuLive CommiLLee

Henry Sy, Sr.
Henry T. Sy, Jr.
Harley T. Sy
Rogelio R. Cabuag
Teresita Sy-Coson
Octavio V. Espiritu
CompensaLion or PemuneraLion CommiLLee
Henry Sy, Sr. Chairman
Atty. Andres G. Gatmaitan Member
Rogelio R. Cabuag Member

NominaLion CommiLLee
Henry Sy, Sr. Chairman
Atty. Ricardo J. Romulo Member
(Independent Director)
Henry T. Sy, Jr. Member

udiL and Pisk ManagemenL CommiLLee

Octavio V. Espiritu Chairman
Atty. Ricardo J. Romulo Member
Henry T. Sy, Jr. Member
Jose T. Sio Member
Left to Right
TTY. LPlTCl0 B. B0PCLLlS, JP. Assistant Corporate Secretary J0SL T. CBl0NZ Vice President, Business Planning and Special Projects
P0CLLl0 P. CBUNC President P0SLlNL Y. 0U Senior Vice President and Chief Operating Officer TTY. LMMNULL C. PPS Corporate Secretary
LXLCUTlvL 0lllCLPS
FACES
SM DEVELOPMENT CORPORATION ANNUAL REPORT 2010 25
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FINANCIAL POSITION
2010 vs. 2009
Dec. 2010 Dec. 2009 % Change
Cash and Cash Equivalents P8,733,866,037 P715,865,365 1120%
Trade and Other Receivables 7,920,306,277 4,960,507,360 60%
Investments Held for Trading 380,668,344 334,088,736 14%
Available-for-Sale Investments 3,933,064,434 2,827,662,394 39%
Condominium Units for Sale 802,424,217 1,017,223,058 -21%
Land and Development 16,679,705,330 7,866,092,699 112%
Advances for Project Development 1,122,277,724 1,301,510,831 -14%
Investment Property 746,966,307 785,212,107 -5%
Deferred Tax Assets 49,106,663 57,522,712 -15%
Other Assets 3,331,242,936 788,614,672 322%
Total Assets P43,699,628,269 P20,654,299,933 112%

Loans Payable P9,924,489,882 P4,013,485,433 147%
Accounts Payable and Other Liabilities 7,691,405,730 5,188,854,836 48%
Income Tax Payable 35,716,005 95,642,565 -63%
Dividends Payable 23,747,030 22,250,737 7%
Deferred Tax Liability 368,430,352 396,844,284 -7%
Total Liabilities P18,043,788,999 P9,717,077,855 86%

Capital Stock P6,412,322,543 P4,122,207,350 56%
Additional Paid-in Capital 8,505,270,332 204,912,695 4051%
Retained Earnings 8,561,849,215 5,979,871,180 43%
Unrealized Mark-to-Market Gain on Available-for-Sale Investments 2,176,397,180 630,230,853 245%
Total Stockholders Equity P25,655,839,270 P10,937,222,078 135%
SM DEVELOPMENT CORPORATION AND SUBSIDIARIES
Financial Condition as at December 31, 2010 compared to as at
December 31, 2009
The Companys total resources as of December 31, 2010 reached P43.7 billion,
112% or P23.0 billion higher than December 31, 2009 level of P20.7 billion.
1120% Increase in Cash and Cash Equivalents
The significant increase in Cash and Cash Equivalents was due to what
remains of the proceeds from the issuance of P10 billion fixed rate corporate
notes in June 2010 and issuance of additional shares by way of rights offering
in October 2010.
60% Increase in Trade and Other Receivables
The increase of P3.0 billion was attributable to higher sales volume in 2010
and on-schedule construction accomplishments of on-going projects.
14% Increase in Investments Held for Trading and 39% Increase in Available for
Sale Investments
The increase of 14% and 39% were due to higher market prices of equity shares
held under these portfolios.
21% Decrease in Condominium Units for Sale
The decrease was due to the sale of Ready for Occupancy (RFO) units of
Chateau Elysee, Mezza Residences, and Field Residences.
112% Increase in Land and Development
The increase was due to the newly acquired lots in various locations within
Metro Manila and additional construction accomplishments of existing
projects.
14% Decrease in Advances for Project Development
The decrease was due to the liquidation of advances and deposits made in
connection with land acquisitions. The liquidation was booked as an addition
to Land and Development and decrease from this account.
5% Decrease in Investment Property
The 5% decrease was attributable to the annual depreciation of the existing
commercial property.
15% Decrease in Deferred Tax Assets
The decrease was due to higher financial revenue over the taxable revenue
for the period.
322% Increase in Other Assets
The increase was mainly due to additional funds transferred from regular cash
in bank account to escrow account as compliance with HLURB requirements
for projects that are still under a temporary license to sell.
147% Increase in Loans Payable
The increase was due to the issuance of P10 billion fixed rate corporate notes
in June 2010.

48% Increase in Accounts Payable and Other Liabilities
The increase was due to liabilities arising from land acquisitions and progress
billings related to on-going project development.
63% Decrease in Income Tax Payable
The decrease was due to lower taxable income in 2010 compared with prior
year as a result of more maturing accounts that are within the coverage of
the income tax holiday incentive for projects which are registered with the
Board of Investments.
56% Increase in Capital Stock and 4051% Increase in Additional Paid in Capital
The increases were due to the stock rights offering in January 2010 and
October 2010 wherein the Company issued additional 1.4 billion shares at
P3.5 per share and 1.8 billion shares at P6.38 per share, respectively.
245% Increase in Unrealized Mark-to-Market Gain on Available-for-Sale
Investments
The increase was due to the appreciation in prices of equity shares held under
this portfolio.
26 SM DEVELOPMENT CORPORATION ANNUAL REPORT 2010
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
2010 vs. 2009
Dec 2010 Dec 2009 % Change
Revenue from Real Estate Sales P9,118,069,504 P5,261,816,589 73%
Unrealized Mark-to-Market Gain on Investments Held for Trading 85,638,417 11,487,018 646%
Interest Income 301,956,872 79,898,377 278%
Dividend Income 39,956,622 50,193,497 -20%
Gain on Sale of Investments Held for Trading and Available-for-Sale Investments 359,374,019 253,687,973 42%
Other Income 97,664,032 88,367,030 11%
Total Revenues P10,002,659,467 P5,745,450,484 74%
Cost of Real Estate Sold P5,041,144,537 P2,849,815,882 77%
Brokerage Fees and Commissions 386,845,487 256,464,448 51%
Marketing and Selling Expenses 498,565,299 247,840,107 101%
Interest Expense 436,462,009 83,426,309 423%
Salaries Wages and Benefits 154,251,615 95,910,870 61%
Taxes and Licenses 112,692,169 79,345,576 42%
Rentals and Utilities 63,319,260 41,137,882 54%
Representation and Entertainment 31,352,273 19,538,251 60%
Depreciation 66,330,570 39,208,600 69%
Management and Professional Fees 8,628,400 3,534,752 144%
Impairment loss on Available-for Sale Investments 32,558,198.00 - 100%
Total Costs and Expenses P6,832,149,817 P3,716,222,677 84%
Provision for Income Tax 148,829,499 168,528,439 -12%
Net Income P3,021,680,152 P1,860,699,368 62%
Results of Operations for the year ended December 31, 2010 compared to the
year ended December 31, 2009.
The Company posted a net income of P3.02 billion, 62% higher compared to
year of 2009.
74% Increase in Revenue from Real Estate Sales
The increase was due to high sales volume for the year and the additional
construction accomplishments of the existing projects.
646% Increase in Unrealized Mark-to-Market Gain on Investments Held for
Trading
The increase was due to higher market price of equity security held under
this account.
278% Increase in Interest Income
The increase was attributable to income generated from temporary money
market placements and the interests earned from cash in escrow account.
20% Decrease in Dividend Income
The decrease was due to lower level of investments in equity securities
resulting from 2010 and prior years managed divestments of the trading
and available-for-sale portfolios.
42% Increase in Gain on Sale of Investments Held for Trading and Available-
for-Sale Investments
The increase was due to bigger volume of equity shares sold at a higher price
during the year compared with the volume and price of prior years sales.
11% Increase in Other Income
The increase was due mainly to higher recurring income generated in 2010
compared with 2009 level.
77% Increase in Cost of Real Estate Sold
The cost of real estate sold grew proportionately with the increase in sales
volume and realized revenues from real estate sale.
51% Increase in Brokerage Fees and Commissions
The increase was due to higher commission expense recognized in favor of
sales agents which is a consequence of higher sales volume compared with
previous years level.
101% Increase in Marketing and Selling Expense
The increase was attributable to the heightened and focused marketing
activities to support and promote higher sales take-up of projects.
423% Increase in Interest Expense
The increase was mainly due to the issuance of the P10 billion fixed rate
corporate notes in June 2010.
61% Increase in Salaries and Wages
The manpower complement was highly reinforced in 2010 to cope with and to
better service the huge volume of transactions.
42% Increase in Taxes and Licenses
The increase was due to higher business taxes and additional real property
taxes as a result of higher revenues and newly acquired properties.
54% Increase in Rentals and Utilities
The increase was due to additional lease of office space to address the need
of growing manpower complement and volume of transactions.
60% Increase in Representation and Entertainment
Representation and Entertainment expenses increased with the volume of
sales as the company continuously maintains its good relations with all its
business partners.
69% Increase in Depreciation
The increase was mainly due to the full years depreciation of the investment
property compared with only 9 months depreciation booked in 2009.
144% Increase in Management and Professional Fees
More professional services were engaged during the year due to the
heightened level of transactions.
100% Increase in Impairment Loss on Available-for Sale Investments
The amount booked for the year represents the decline in market value of
certain equity investments classified as Available-for-Sale. The impairment
loss originally booked under the stockholders equity section in prior years
was transferred to profit and loss in 2010.
12% Decrease in Provision for Income Tax
The decrease was due to lower taxable income for the year 2010 brought
about by maturing accounts under the income tax holiday incentive for
projects registered with the Board of Investments.
REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE
The Committee Charter
Under its Charter, the purpose of the Audit and Risk Management Committee is to assist the Board of Directors in fulfilling its oversight
responsibilities for the financial reporting process, the internal control system, the audit process and the companys process for monitoring
compliance with laws and regulations and the code of conduct. The Committee is also tasked to oversee special investigations as may be
necessary, review the Charter annually, and evaluate the Committees as well as its individual members performance regularly.
The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. In summary, the
Charter enumerates seven (7) items which fall under the responsibilities of the Committee, namely:
internal control;
financial statements;
risk management;
external audit;
internal audit;
compliance; and
reporting to the Board of Directors and shareholders.
Organization and Role of the Committee
The Audit and Risk Management Committee Charter requires that the Committee should have at least three (3) and no more than six (6)
members of the Board, three (3) of whom shall have a good understanding of finance and financial competency in such area, and one of whom
shall be an independent director, Mr. Octavio V. Espiritu, in compliance with the requirements of the Manual on Corporate Governance. Mr.
Espiritu meets the criteria for independence under the Securities Regulation Code. The Corporate Secretary, Atty. Emmanuel C. Paras, acts
as the Committee Secretary.
The Committee directly interfaces with the internal and external auditors to perform its duties and responsibilities under the Manual on
Corporate Governance, particularly: (I) review and approval of the companys financial reports for compliance with applicable financial reporting
standards and regulatory requirements; (ii) oversight of the financial management functions, specifically on risk management and internal
control functions; and (iii) evaluation and approval of the plans of the internal and external auditors.
The Committee meets at least four times a year, and may convene additional meetings as may be necessary.
Principal Activities for 2010
The Committee met four (4) times in 2010 (on February 15, on April 29, August 2 and October 19) and discussed the following matters:
The Committee reviewed and discussed with management and Sycip, Gorres, Velayo and Company (SGV & Co.), the companys
external auditor, the financial statements of SM Development Corporation for the year ended December 31, 2009, 1st quarter ended
March 31, 2010, six month period ended June 30, 2010, and 3rd quarter ended September 30, 2010, as well as the Managements
Discussion and Analysis of Financial Condition and Results of Operations.
The Committee discussed with SGV & Co. its audit plan, including its scope of work, preliminary audit strategy, and audit time
table.
The Committee discussed with SGV & Co. significant accounting and audit issues, relevant new accounting standards, and updates
on tax rules and regulations.
The Committee discussed with the Internal Audit Group its audit plan and results of its internal audit work.
The Committee reviewed the details of the companys related party transactions.
The Committee reviewed and assessed the effectiveness of the companys risk management system.
The Committee monitored and assessed the companys compliance with laws and regulations.
The Committee reviewed the performance and independence of the external auditor. Except for regular audit of financial statements
and assistance in the preparation of annual income tax returns, SGV & Co. did not render any other professional services in 2010.
Based on its review and discussion, the Committee hereby recommends the approval of the financial statements of SM Development
Corporation for the year ended December 31, 2010, and the re-appointment of SGV & Co. as external auditors.
11 February 2011
OCTAVIO V. ESPIRITU ATTY. RICARDO J. ROMULO
Chairman Member
HENRY T. SY, JR. JOSE T. SIO
Member Member
ATTY. EMMANUEL C. PARAS
Corporate Secretary
STATEMENT OF MANAGEMENTS RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of SM Development Corporation and its Subsidiaries is responsible for all information and representations contained
in the consolidated balance sheets at December 31, 2010 and 2009, and the consolidated statements of income, changes in equity and
cash flows for each of the three years in the period ended December 31, 2010, 2009, and 2008, and the summary of significant accounting
policies and other explanatory notes. The consolidated financial statements have been prepared in accordance with Philippine Financial
Reporting Standards and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate
consideration to materiality.
In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure
that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are
recognized. The management likewise discloses to the Companys Audit Committee and to its external auditor: (i) all significant deficiencies
in the design or operation of internal controls that could adversely affect its ability to record, process and report financial data; (ii) material
weaknesses in the internal controls; and, (iii) any fraud that involves management or other employees who exercise significant roles in
internal controls.
The Board of Directors reviews the consolidated financial statements before such statements are approved and submitted to the stockholders
of the Company.
SyCip Gorres Velayo & Co., the independent auditors appointed by the Board of Directors and stockholders, has audited the consolidated
financial statements of the Company in accordance with Philippine Standards on Auditing and has expressed their opinion on the fairness of
presentation upon completion of such audit, in their report to the stockholders and Board of Directors.
HENRY T. SY, JR. ROGELIO R. CABUAG
Vice Chairman & Chief Executive Officer President
ROSALINE Y. QUA
Senior Vice President & Acting Chief Operating Officer
VIRGINIA A. YAP
Treasurer
INDEPENDENT AUDITORS REPORT
The Stockholders and the Board of Directors
SM Development Corporation
We have audited the accompanying consolidated financial statements of SM Development Corporation and its Subsidiaries, which comprise
the consolidated balance sheets as at December 31, 2010 and 2009, and the consolidated statements of income, statements of comprehensive
income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2010,
and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in
accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of SM Development
Corporation and its Subsidiaries as at December 31, 2010 and 2009, and their financial performance and their cash flows for each of the three
years in the period ended December 31, 2010 in accordance with Philippine Financial Reporting Standards.
SYCIP GORRES VELAYO & CO.
Clairma T. Mangangey
Partner
CPA Certificate No. 86898
SEC Accreditation No. 0779-A
Tax Identification No. 129-434-867
BIR Accreditation No. 08-001998-67-2009,
June 1, 2009, Valid until May 31, 2012
PTR No. 2641539, January 3, 2011, Makati City
February 11, 2011
CONSOLIDATED BALANCE SHEETS
December 31
2010 2009
ASSETS
Cash and Cash Equivalents (Notes 6, 18, 23, 24 and 25) 8,733,866,037 715,865,365
Trade and Other Receivables (Notes 7, 14, 18, 23, 24 and 25) 7,920,306,277 4,960,507,360
Investments Held for Trading (Notes 8, 18, 23, 24 and 25) 380,668,344 334,088,736
Available-for-Sale Investments (Notes 9, 14, 18, 23, 24 and 25) 3,933,064,434 2,827,662,394
Condominium Units for Sale (Notes 10 and 25) 802,424,217 1,017,223,058
Land and Development (Notes 10, 15 and 18) 16,679,705,330 7,866,092,699
Advances for Project Development (Notes 18 and 25) 1,122,277,724 1,301,510,831
Investment Property (Note 12) 746,966,307 785,212,107
Deferred Tax Assets (Note 20) 49,106,663 57,522,712
Other Assets - net (Notes 13, 19 and 25) 3,331,242,936 788,614,671
43,699,628,269 20,654,299,933
LIABILITIES AND EQUITY
Liabilities
Loans payable (Notes 7, 9, 14, 18, 23, 24 and 25) 9,924,489,882 4,013,485,433
Accounts payable and other liabilities (Notes 15, 18, 23, 24 and 25) 5,467,356,743 2,512,229,602
Customers deposits (Notes 16 and 25) 2,224,048,987 2,676,625,234
Income tax payable (Note 25) 35,716,005 95,642,565
Dividends payable (Notes 23, 24 and 25) 23,747,030 22,250,737
Deferred tax liabilities (Note 20) 368,430,352 396,844,284
Total Liabilities 18,043,788,999 9,717,077,855
Equity
Capital stock (Notes 1 and 17) 6,412,322,543 4,122,207,350
Additional paid-in capital (Notes 1 and 17) 8,505,270,332 204,912,695
Retained earnings (Note 17) 8,561,849,215 5,979,871,180
Unrealized mark-to-market gain on available-for-sale investments (Note 9) 2,176,397,180 630,230,853
Total Equity 25,655,839,270 10,937,222,078
43,699,628,269 20,654,299,933
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31
2010 2009 2008
REVENUE FROM REAL ESTATE SALES (Notes 10 and 22) 9,118,069,504 5,261,816,589 3,050,087,673
COSTS OF REAL ESTATE SOLD (Note 10) 5,041,144,537 2,849,815,882 1,328,469,195
GROSS PROFIT 4,076,924,967 2,412,000,707 1,721,618,478
OPERATING EXPENSES
Marketing and selling expenses 498,565,299 247,840,107 81,996,443
Brokerage fees and commissions 386,845,487 256,464,448 81,994,518
Salaries, wages and benefits (Notes 18 and 19) 154,251,615 95,910,870 50,340,764
Taxes and licenses 112,692,169 79,345,576 57,548,697
Rentals and utilities (Note 18) 63,319,260 41,137,882 11,171,453
Depreciation (Notes 12 and 13) 66,330,570 39,208,600 3,163,840
Entertainment, amusement and recreation 31,352,273 19,538,251 3,694,257
Management and professional fees 8,628,400 3,534,752 3,248,804
1,321,985,073 782,980,486 293,158,776
2,754,939,894 1,629,020,221 1,428,459,702
INTEREST EXPENSE (Notes 7, 14 and 18) (436,462,009) (83,426,309) (64,303,292)
GAIN ON SALE OF INVESTMENTS HELD FOR TRADING AND
AVAILABLE-FOR-SALE INVESTMENTS (Notes 8, 9, 18 and 22) 359,374,019 253,687,973 198,251,841
INTEREST INCOME (Notes 6, 7, 9, 13, 18 and 22) 301,956,872 79,898,377 99,184,574
MARk-TO-MARkET GAIN (LOSS) ON INVESTMENTS HELD
FOR TRADING (Notes 8 and 22) 85,638,417 11,487,018 (1,380,200,167)
DIVIDEND INCOME (Notes 18 and 22) 39,956,622 50,193,497 93,916,741
MANAGEMENT FEE (Notes 18 and 22) 28,774,427 33,103,326 19,118,497
OTHER INCOME - Net (Notes 9, 12, 18 and 22) 36,331,407 55,263,704 41,803,593
INCOME BEFORE INCOME TAX 3,170,509,649 2,029,227,807 436,231,489
PROVISION FOR (BENEFIT FROM) INCOME TAX (Notes 20 and 26)
Current 168,827,380 193,943,391 197,664,698
Deferred (19,997,883) (25,414,952) 181,730,871
148,829,497 168,528,439 379,395,569
NET INCOME 3,021,680,152 1,860,699,368 56,835,920
BASIC/DILUTED EARNINGS PER SHARE (Note 21) 0.526 0.451 0.014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2010 2009 2008
NET INCOME 3,021,680,152 1,860,699,368 56,835,920
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on available-for-sale investments - net (Note 9) 1,546,166,327 568,298,232 (641,182,083)
Income tax effect (215,250)
1,546,166,327 568,298,232 (641,397,333)
TOTAL COMPREHENSIVE INCOME (LOSS) 4,567,846,479 2,428,997,600 ( 584,561,413)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
2010 2009 2008
Capital Stock (Notes 1 and 17)
Balance at beginning of year 4,122,207,350 4,122,207,350 3,749,972,059
Stock rights issuance 3,206,161,271
Stock dividends - 10% 372,235,291
Subscription receivable (916,046,078)
Balance at end of year 6,412,322,543 4,122,207,350 4,122,207,350
Additional Paid-in Capital (Notes 1 and 17)
Balance at beginning of year 204,912,695 121,744,133 121,744,133
Additions 13,228,684,959 83,168,562
Subscription receivable (4,928,327,322)
Balance at end of year 8,505,270,332 204,912,695 121,744,133
Retained Earnings (Note 17)
Balance at beginning of year 5,979,871,180 4,323,899,161 4,825,416,178
Net income 3,021,680,152 1,860,699,368 56,835,920
Cash dividends - 0.08 per share in 2010 and 0.05 per share
in 2009 and 2008 (439,702,117) (204,727,349) (186,117,646)
Stock dividends - 10% (372,235,291)
Balance at end of year 8,561,849,215 5,979,871,180 4,323,899,161
Unrealized Mark-to-Market Gain on Available-for-Sale Investments (Note 9)
Balance at beginning of the year 630,230,853 61,932,621 703,329,954
Other comprehensive income (loss) 1,546,166,327 568,298,232 (641,397,333)
Balance at end of year 2,176,397,180 630,230,853 61,932,621
Treasury Stock (Note 17)
Balance at beginning of year (23,323,959) (23,323,959)
Sale 23,323,959
Balance at end of year (23,323,959)
25,655,839,270 10,937,222,078 8,606,459,306
CONSOLIDATED STATEMENTS OF CASH FLOWS
2010 2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax 3,170,509,649 2,029,227,807 436,231,489
Adjustments for:
Interest expense (Notes 7, 14 and 18) 436,462,009 83,426,309 64,303,292
Gain on sale of investments held for trading and available-for-sale
investments (Notes 8, 9 and 18) (359,374,019) (253,687,973) (198,251,841)
Interest income (Notes 6, 7, 9, 13 and 18) (301,956,872) (79,898,377) (99,184,574)
Mark-to-market loss (gain) on investments held for trading (Note 8) (85,638,417) (11,487,018) 1,380,200,167
Depreciation (Notes 12 and 13) 66,330,570 39,208,600 3,163,840
Dividend income (Note 18) (39,956,622) (50,193,497) (93,916,741)
Impairment loss on available-for-sale investments (Note 9) 32,558,198
Operating income before working capital changes 2,918,934,496 1,756,595,851 1,492,545,632
Decrease (increase) in:
Trade and other receivables (2,974,686,457) (2,340,738,976) (823,020,345)
Condominium units for sale 214,798,841 (874,370,729) (56,417,861)
Land and development (8,813,612,631) (2,349,017,319) (2,916,015,556)
Advances for project development 179,233,107 (421,085,160) (257,901,124)
Increase in accounts payable and other liabilities 2,471,643,425 2,785,233,633 1,092,980,702
Cash used for operations (6,003,689,219) (1,443,382,700) (1,467,828,552)
Interest received 306,620,834 77,623,056 107,563,282
Income tax paid (228,753,940) (127,177,245) (139,113,935)
Net cash used in operating activities (5,925,822,325) (1,492,936,889) (1,499,379,205)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other assets (Note 13) (2,567,961,474) (592,650,282) (129,722,488)
Proceeds from sale of investments held for trading and available-for-sale
investments (Notes 8 and 9) 556,638,917 1,065,489,485 232,682,078
Proceeds from maturity of bonds (Note 9) 250,000,000 446,000,000
Dividends received 50,180,200 40,318,314 93,720,422
Additions to investment property (2,751,561)
Net cash provided by (used in) investing activities (1,713,893,918) 513,157,517 642,680,012
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Availments of loans (Note 14) 11,196,785,610 6,285,894,989 3,067,874,802
Stock rights offering (Notes 1 and 17) 10,590,472,830
Sale of treasury stock (Note 17) 106,492,521
Payments of:
Loans (Note 14) (5,285,781,161) (5,025,272,865) (1,686,651,760)
Cash dividends (Note 17) (438,205,824) (208,992,810) (180,018,404)
Interest (Note 14) (405,554,540) (110,926,438) (38,187,980)
Net cash provided by financing activities 15,657,716,915 1,047,195,397 1,163,016,658
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,018,000,672 67,416,025 306,317,465
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 715,865,365 648,449,340 342,131,875
CASH AND CASH EQUIVALENTSAT END OF YEAR 8,733,866,037 715,865,365 648,449,340
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CorporateInformation
SM Development Corporation (the Parent Company) is incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission
(SEC). The Parent Company and its wholly owned subsidiaries, collectively referred to as the Company, are involved in real estate development and
investments in various securities. The registered office address of the Parent Company is 10th Floor, One E-Com Center, Harbor Drive, Mall of Asia Complex,
CBP-1A, Pasay City.
The Parent Company is 65.18% owned by SM Land, Inc. (SM Land), a company incorporated in the Philippines. SM Land is a 66.89% owned subsidiary of
SM Investments Corporation (SMIC). SMIC, a company incorporated in the Philippines which listed its common shares of stock with the Philippine Stock
Exchange (PSE) in 2005, is the ultimate parent company.
On August 2, 2010, the Parent Companys Board of Directors (BOD) approved the stock rights offering of one right for every three shares held. This is
equivalent to 1,832,092,155 common shares of the Parent Company priced at 6.38 per share. The PSE approved the stock rights offering on September 15,
2010. The offer period was from October 18 to October 22, 2010 for stockholders of record date as of October 6, 2010. The stock rights issuance resulted in
a subscription receivable amounting to 5,844.4 million which will be settled in 2011 (see Note 17).
On September 8, 2009, the Parent Companys BOD also approved the stock rights offering consisting of 1,374,069,116 common shares to be offered
to existing shareholders of the Parent Company as of December 7, 2009. Also, on the same date, the BOD approved the subscription of SM Land for
887,408,341 shares and any unsubscribed portion of the stock rights offer. On December 17, 2009, the Parent Company and SM Land entered into a
Subscription Agreement for the subscription of the 887,408,341 shares for a consideration of 3,105.9 million or 3.50 per share. The stock rights offering
was completed on January 8, 2010 (see Note 17).
The accompanying consolidated financial statements were authorized for issue in accordance with a resolution by the BOD on February 11, 2011.
2. BasisofPreparationandStatementofCompliance

Basis of Preparation
The consolidated financial statements have been prepared on a historical cost basis except for investments held for trading and available-for-sale
(AFS) investments that have been measured at fair value. The consolidated financial statements are presented in Philippine peso, which is the Parent
Companys functional and presentation currency. Amounts are rounded off to the nearest peso unit, except when otherwise indicated.

Statement of Compliance
The accompanying consolidated financial statements have been prepared in compliance with Philippine Financial Reporting Standards (PFRS). PFRS also
includes Philippine Accounting Standards (PAS), including Philippine Interpretations from International Financial Reporting Interpretations Committee
(IFRIC) issued by the Financial Reporting Standards Council.
Basis of Consolidation
The consolidated financial statements include the accounts of the Parent Company and the following subsidiaries as of December 31:
Place of Ownership Interest
Company Incorporation 2010 2009 2008
SM Synergy Properties Holdings Corporation (SM Synergy) Philippines 100% 100% 100%
SM_Residences Corp. (SMRC, formerly SM_Homebuilders, Inc.)
(see Note 18e) Philippines 100% 100%
Landfactors Incorporated (Landfactors) (see Note 10) Philippines 100% 100%
Vancouver Lands, Inc. (VLI) (see Note 10) Philippines 100%

The financial statements of the subsidiaries are prepared for the same reporting year as the Parent Company, using consistent accounting policies. All
intra-company balances, transactions, income and expenses and profits and losses resulting from intra-company transactions are eliminated in full.
Subsidiaries are consolidated from the date of acquisition or incorporation, being the date on which the Company obtains control, and continue to be
consolidated until the date such control ceases.
3. ChangesinAccountingPoliciesandDisclosures
The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended PFRS and Philippine
Interpretations which the Company has adopted during the year:
New Interpretation
Philippine Interpretation IFRIC 17, Distributions of Non-Cash Assets to Owners, becomes effective for annual periods beginning on or after July 1,
2009
Amendments to Standards
PFRS 2, Share-based Payment (Amendment) - Group Cash-settled
Share-based Payment Transactions, becomes effective for annual
periods beginning on or after January 1, 2010
PFRS 3, Business Combinations (Revised), and PAS 27, Consolidated
and Separate Financial Statements (Amended), become effective
for annual periods beginning on or after July 1, 2009
PAS 39, Financial Instruments: Recognition and Measurement
(Amendment) - Eligible Hedged Items, becomes effective for annual
periods beginning on or after July 1, 2009
Improvements to PFRS (Effective 2010)
The adoption of the new and amended standards and interpretation has
no impact on the consolidated financial statements.
Future Changes in Accounting Policies
Standards and Interpretations

The Company did not early adopt the following standards and Philippine
Interpretations that have been approved but are not yet effective. The
Company does not expect these changes to have a significant impact on
its consolidated financial statements unless otherwise indicated.
PAS 12, Income Taxes (Amendment) Deferred Tax: Recovery
of Underlying Assets, will become effective for annual periods
beginning on or after January 1, 2012. It provides a practical solution
to the problem of assessing whether recovery of an asset will be
through use or sale. It introduces a presumption that recovery of
the carrying amount of an asset will normally be through sale.
PAS 24, Related Party Disclosures (Amended), will become effective
for annual periods beginning on or after January 1, 2011. It clarifies
the definition of a related party to simplify the identification of such
relationships and to eliminate inconsistencies in its application.
The revised standard introduces a partial exemption of disclosure
requirements for government-related entities.
PAS 32, Financial Instruments: Presentation (Amendment)
Classification of Rights Issues, will become effective for annual
periods beginning on or after February 1, 2010. It amends the
definition of a financial liability to classify rights issues (and certain
options or warrants) as equity instruments in cases where such
rights are given pro rata to all of the existing owners of the same
class of an entitys non-derivative equity instruments, or to acquire
a fixed number of the entitys own equity instruments for a fixed
amount in any currency.
PFRS 7, Financial Instruments: Disclosures (Amendments)
Transfers of Financial Assets, will become effective for annual
periods beginning on or after 1 July 2011. The amendments will
allow users of financial statements to improve their understanding
of transfer transactions of financial assets (for example,
securitizations), including understanding the possible effects of
any risks that may remain with the entity that transferred the
assets. The amendments also require additional disclosures if a
disproportionate amount of transfer transactions are undertaken
around the end of a reporting period.
PFRS 9, Financial Instruments: Classification and Measurement, will
become effective for annual periods beginning on or after January
1, 2013. PFRS 9, as issued in 2010, reflects the first phase of the
work on the replacement of PAS 39 and applies to classification
and measurement of financial assets and financial liabilities as
defined in PAS 39. In subsequent phases, hedge accounting and
derecognition will be addressed. The completion of this project
is expected in 2011. The adoption of the first phase of PFRS 9
will have an effect on the classification and measurement of the
Companys financial assets. The Company will quantify the effect
in conjunction with the other phases, when issued, to present a
comprehensive picture. The Company is still in the process of
assessing the impact of this new standard to its consolidated
financial statements.
Philippine Interpretation IFRIC 14, Prepayments of a Minimum
Funding Requirement (Amendment), will become effective
for annual periods beginning on or after January 1, 2011, with
retrospective application. It provides guidance on assessing the
recoverable amount of a net pension asset. The amendment
permits an entity to treat the prepayment of a minimum funding
requirement as an asset.
Philippine Interpretation IFRIC 15, Agreements for the Construction
of Real Estate, will become effective for annual periods beginning
on or after January 1, 2012. This interpretation covers accounting
for revenue and associated expenses by entities that undertake the
construction of real estate directly or through subcontractors. The
interpretation requires that revenue on construction of real estate
be recognized only upon completion, except when such contract
qualifies as construction contract to be accounted for under PAS 11,
Construction Contracts, or involves rendering of services in which
case revenue is recognized based on stage of completion. Contracts
involving provision of services with the construction materials and
where the risks and reward of ownership are transferred to the
buyer on a continuous basis will also be accounted for based on
stage of completion. The Company is in the process of quantifying
the impact of this new interpretation to its consolidated financial
statements.
Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities
with Equity Instruments, will become effective for annual periods
beginning on or after July 1, 2010. This interpretation clarifies that
equity instruments issued to a creditor to extinguish a financial
liability qualify as consideration paid. The equity instruments
issued are measured at their fair value. In case that this cannot
be reliably measured, the instruments are measured at the fair
value of the liability extinguished. Any gain or loss is recognized
immediately in the consolidated statement of income.
Improvements to PFRS. The omnibus amendments to PFRS issued in
2010 were issued primarily with a view to removing inconsistencies and
clarifying wording. The amendments are effective for annual periods
beginning January 1, 2011, except when otherwise stated. The Company
has not yet adopted the following improvements and anticipates that
these changes will have no material effect on the consolidated financial
statements.
PFRS 3, Business Combinations (Revised), clarifies the following:
a. the amendments to PFRS 7, Financial Instruments:
Disclosures, PAS 32, Financial Instruments: Presentation, and
PAS 39, Financial Instruments: Recognition and Measurement,
that eliminate the exemption for contingent consideration,
do not apply to contingent consideration that arose from
business combinations whose acquisition dates precede the
application of PFRS 3 (as revised in 2008). The amendment
is applicable for annual periods beginning on or after July 1,
2010. The amendment is applied retrospectively.
b. the amendment limits the scope of the measurement choices
that only the components of non-controlling interests that
are present ownership interests and entitle their holders to a
proportionate share of the entitys net assets, in the event of
liquidation, shall be measured either:
i. at fair value; or
ii. at the present ownership instruments proportionate
share of the acquirees identifiable net assets. Other
components of non-controlling interests are measured
at their acquisition date fair value, unless another
measurement basis is required by another PFRS.
The amendment is applicable for annual periods beginning on
or after July 1, 2010. The amendment is applied prospectively
from the date the entity applies PFRS 3.
c. the amendment requires an entity (in a business combination)
to account for the replacement of the acquirees share-based
payment transactions (whether obliged or voluntarily), i.e.,
split between consideration and post combination expenses.
However, if the entity replaces the acquirees awards that
expire as a consequence of the business combination,
these are recognized as post-combination expenses. The
amendment also specifies the accounting for share-based
payment transactions that the acquirer does not exchange
for its own awards: if vested - they are part of non-controlling
interests and measured at their market-based measure;
if unvested - they are measured at market based value as
if granted at acquisition date, and allocated between non-
controlling interests and post-combination expense. The
amendment is applicable for annual periods beginning on or
after July 1, 2010. The amendment is applied prospectively.
PFRS 7, Financial Instruments: Disclosures, clarifies the following:
a. the amendment emphasizes the interaction between
quantitative and qualitative disclosures and the nature and
extent of risks associated with financial instruments.
b. amendments to quantitative and credit risk disclosures are
as follows:
i. clarify that only financial assets whose carrying amount
does not reflect the maximum exposure to credit risk
need to provide further disclosure of the amount that
represents the maximum exposure to such risk;
ii. require, for all financial assets, disclosure of the
financial effect of collateral held as security and other
credit enhancements regarding the amount that best
represents the maximum exposure to credit risk (e.g.,
a description of the extent to which collateral mitigates
credit risk);
iii. remove the disclosure requirement of the collateral
held as security, other credit enhancements and an
estimate of their fair value for financial assets that are
past due but not impaired, and financial assets that are
individually determined to be impaired;
iv. remove the requirement to specifically disclose financial
assets renegotiated to avoid becoming past due or
impaired; and
v. clarify that the additional disclosure required for financial
assets obtained by taking possession of collateral.
c. the amendment is applied retrospectively.
PAS 1, Presentation of Financial Statements, clarifies that an entity
will present an analysis of other comprehensive income for each
component of equity, either in the statement of changes in equity
or in the notes to the financial statements. The amendment is
applied retrospectively.
PAS 27, Consolidated and Separate Financial Statements, clarifies
that the consequential amendments from PAS 27 made to PAS
21, The Effect of Changes in Foreign Exchange Rates, PAS 28,
Investments in Associates, and PAS 31, Interests in Joint Ventures,
apply prospectively for annual periods beginning on or after July 1,
2009 or earlier when PAS 27 is applied earlier. The amendment is
applicable for annual periods beginning on or after July 1, 2010. The
amendment is applied retrospectively.
PAS 34, Interim Financial Reporting, provides guidance to illustrate
how to apply disclosure principles in PAS 34 and add disclosure
requirements around:
a. the circumstances likely to affect fair values of financial
instruments and their classification;
b. transfers of financial instruments between different levels of
the fair value hierarchy;
c. changes in classification of financial assets; and
d. changes in contingent liabilities and assets.
The amendment is applied retrospectively.
Philippine Interpretation IFRIC 13, Customer Loyalty Programmes,
clarifies that when the fair value of award credits is measured based
on the value of the awards for which they could be redeemed, the
amount of discounts or incentives otherwise granted to customers
not participating in the award credit scheme, is to be taken into
account.
4. Summary of Significant Accounting and Financial Reporting
Policies
Cash and Cash Equivalents
Cash includes cash on hand and in banks. Cash equivalents are short-
term, highly liquid investments that are readily convertible to known
amounts of cash with original maturities of three months or less from
dates of acquisitions and are subject to an insignificant risk of change in
value.
Financial Assets
Initial Recognition and Measurement. Financial assets are classified
as financial assets at fair value through profit or loss (FVPL), loans and
receivables, held-to-maturity (HTM) investments, AFS financial assets,
or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. The classification depends on the purpose for
which the instruments were acquired or liabilities incurred, and whether
they are quoted in an active market. The Company determines the
classification of its financial assets at initial recognition, and where
allowed and appropriate, re-evaluates this classification at every balance
sheet date.
All financial assets are recognized initially at fair value plus, in the case
of investments not at FVPL, directly attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets
within a time frame established by regulation or convention in the
market place (regular way trades) are recognized on the trade date, i.e.,
the date that the Company commits to purchase or sell the asset.
The Companys financial assets include cash and cash equivalents,
investments held for trading, trade and other receivables and
investments in bonds and listed and unlisted equity securities.
The Company has no HTM investments as of December 31, 2010 and
2009.
Subsequent Measurement. The subsequent measurement of financial
assets depends on their classification as follows:
Financial Assets at FVPL. Financial assets at FVPL include financial
assets held for trading and financial assets designated upon initial
recognition at FVPL. Financial assets are classified as held for trading if
they are acquired for the purpose of selling or repurchasing in the near
term. Financial assets at FVPL are carried in the consolidated balance
sheet at fair value with changes in fair value recognized in the Mark-
to-market gain (loss) on investments held for trading account in the
consolidated statement of income.
The Company evaluates its financial assets at FVPL whether the intent
to sell them in the near term is still appropriate. When the Company
is unable to trade these financial assets due to inactive markets and
managements intent to sell them in the foreseeable future significantly
changes, the Company may elect to reclassify these financial assets in
rare circumstances. The reclassification to loans and receivables, AFS
financial assets or HTM investments depends on the nature of the
asset. This evaluation does not affect any financial assets designated
at FVPL using the fair value option at designation.
This category includes investments held for trading (see Note 8).
Loans and Receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They are not entered into with the intention
of immediate or short-term resale and are not designated as AFS
investments or financial assets at FVPL. After initial measurement,
such financial assets are subsequently measured at amortized cost
using the effective interest method (EIR), less impairment. Amortized
cost is calculated by taking into account any discount or premium on
acquisition and fee or costs that are an integral part of the EIR. The EIR
amortization as well as the losses arising from impairment is included in
the Interest income account in the consolidated statement of income.
Loans and receivables are included in current assets if maturity is within
12 months from the balance sheet date. Otherwise, these are classified
as noncurrent assets.
This category includes cash and cash equivalents and trade and other
receivables (see Notes 6 and 7).
AFS Investments. AFS investments include equity and debt securities.
Equity investments classified as AFS are those, which are neither
classified as held for trading nor designated at FVPL. Debt securities in
this category are those which are intended to be held for an indefinite
period of time and which may be sold in response to liquidity needs or
changes in market conditions.
After initial measurement, AFS investments are subsequently
measured at fair value with unrealized gains or losses recognized
in the consolidated statement of comprehensive income until the
investment is derecognized, at which time the cumulative gain or loss
is recognized in the consolidated statement of income, or if determined
to be impaired, the cumulative loss is recognized in the consolidated
statement of income. Interest earned on holding AFS debt securities are
reported as interest income in the consolidated statement of income.
Dividends earned on holding AFS equity instruments are recognized in
the consolidated statement of income as dividend income when the
right of the payment has been established.
For AFS investments consisting of unlisted common shares of stock
which are unquoted and have no reliable sources of their market values,
these are stated at cost, net of any impairment.
The Company evaluates its AFS investments to determine whether its
ability and intention to sell them in the near term is still appropriate. When
the Company is unable to trade these financial assets due to inactive
markets and managements intent to do so significantly changes in the
foreseeable future, the Company may elect to reclassify these financial
assets in rare circumstances. Reclassification to loans and receivables
is permitted when the financial asset meets the definition of loans and
receivables and has the intent and ability to hold these assets for the
foreseeable future or maturity. The reclassification to HTM investments
is permitted only when the entity has the ability and intent to hold the
financial asset until maturity. For a financial asset reclassified out of
the AFS category, any previous gain or loss that has been recognized
in the consolidated statement of comprehensive income is amortized
in the consolidated statement of income over the remaining life of the
investment using the EIR. Any difference between the new amortized
cost and the expected cash flows is also amortized over the remaining
life of the asset using the EIR. If the asset is subsequently determined
to be impaired, the amount recorded in consolidated statement of
comprehensive income is transferred to the consolidated statement of
income.
This category includes investments in bonds and listed and unlisted
equity securities (see Note 9).
Day 1 Difference. Where the transaction price in a non-active market is
different from the fair value based on other observable current market
transactions in the same instrument or based on a valuation technique
whose variables include only data from observable market, the Company
recognizes the difference between the transaction price and fair value
(a Day 1 difference) in the consolidated statement of income unless it
qualifies for recognition as some other type of asset. In cases where
unobservable data is used, the difference between the transaction price
and model value is recognized in the consolidated statement of income
only when the inputs become observable or when the instrument is
derecognized. For each transaction, the Company determines the
appropriate method of recognizing the Day 1 difference amount.
Fair Value of Financial Instruments
The fair value of financial instruments that are traded in active markets
at each balance sheet date is determined by reference to quoted market
prices or dealer price quotations (bid price for long positions and ask
price for short positions), without any deduction for transaction costs
at the close of business on the balance sheet date. When current bid
prices and asking prices are not available, the prices of the most recent
transaction provide evidence of the current fair value as long as there
has not been a significant change in economic circumstances since the
time of the transaction.
For financial instruments not traded in an active market, the fair value
is determined using appropriate valuation techniques. Such techniques
may include using recent arms length market transactions; reference
to the current fair value of another instrument that is substantially the
same; discounted cash flow analysis or other valuation models.
An analysis of fair values of financial instruments and further details as
to how they are measured are provided in Note 24.
Derecognition of Financial Assets
A financial asset (or, when applicable, a part of a financial asset or part
of a group of similar financial assets) is derecognized when:
the rights to receive cash flows from the asset have expired; or
the Company has transferred its rights to receive cash flows
from the asset and either: (a) has transferred substantially all the
risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but
has transferred control of the asset.
When the Company has transferred its rights to receive cash flows
from an asset or has entered into a pass-through arrangement and has
neither transferred nor retained substantially all the risks and rewards
of the asset nor transferred control of the asset, the asset is recognized
to the extent of the Companys continuing involvement in the asset.
In that case, the Company also recognizes an associated liability. The
transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that
the Company could be required to repay.
Embedded Derivatives
An embedded derivative is a component of a hybrid (combined)
instrument that also includes a nonderivative host contract with the
effect that some of the cash flows of the combined instrument vary in a
way similar to a stand-alone derivative.
An embedded derivative is separated from the host contract and
accounted for as derivative if all the following conditions are met: (a)
the economic characteristics and risks of the embedded derivative are
not closely related to the economic characteristic of the host contract;
(b) a separate instrument with the same terms as the embedded
derivative would meet the definition of the derivative; and (c) the hybrid
or combined instrument is not measured at FVPL.
The Company assesses whether embedded derivatives are required to
be separated from host contracts when the Company first becomes
party to the contract. Re-assessment only occurs if there is a change in
the terms of the contract that significantly modifies the cash flows that
would otherwise be required.
Impairment of Financial Assets
The Company assesses at each balance sheet date whether a financial
asset or group of financial assets is impaired. A financial asset or a
group of financial assets is deemed to be impaired if, and only if, there
is objective evidence of impairment as a result of one or more events
that has occurred after the initial recognition of the asset (an incurred
loss event) and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets that can
be reliably estimated. Evidence of impairment may include indications
that the debtors or a group of debtors is experiencing significant
financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other
financial reorganization and where observable data indicate that there
is a measurable decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate with defaults.
Assets Carried at Amortized Cost. If there is objective evidence that an
impairment loss on assets carried at amortized cost has been incurred,
the amount of the loss is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows
(excluding future expected credit losses that have not been incurred)
discounted at the financial assets original effective interest rate (i.e.,
the effective interest rate computed at initial recognition). If a loan has
a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance account. The amount
of the loss is recognized in the consolidated statement of income.
The Company first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or
not, the asset is included in a group of financial assets with similar credit
risk characteristics and that group of financial assets is collectively
assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to
be recognized are no longer included in a collective assessment of
impairment.
If, in a subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring after
the impairment was recognized, the previously recognized impairment
loss is reversed by adjusting the allowance account. The amount of the
reversal is recognized in the consolidated statement of income. Interest
income continues to be accrued on the reduced carrying amount based
on the original effective interest rate of the asset. Loans, together with
the associated allowance, are written off when there is no realistic
prospect of future recovery and all collateral, if any, has been realized
or has been transferred to the Company. If a future write-off is later
recovered, the recovery is recognized in the consolidated statement of
income under Other income account. Any subsequent reversal of an
impairment loss is recognized in the consolidated statement of income
under Provision for (reversal of) impairment losses account, to the
extent that the carrying value of the asset does not exceed its amortized
cost at the reversal date.
Assets Carried at Cost. If there is objective evidence that an impairment
loss on an unquoted equity instrument that is not carried at fair value
because its fair value cannot be reliably measured, or on a derivative
asset that is linked to and must be settled by delivery of such an
unquoted equity instrument has been incurred, the amount of the loss
is measured as the difference between the assets carrying amount
and the present value of estimated future cash flows discounted at the
current market rate of return for a similar financial asset.
AFS Investments. In the case of equity instruments classified as AFS
investments, evidence of impairment would include a significant or
prolonged decline in fair value of investments below its cost. Where
there is evidence of impairment, the cumulative loss - measured as the
difference between the acquisition cost and the current fair value, less
any impairment loss on that financial asset previously recognized in the
consolidated statement of comprehensive income - is removed from
the consolidated statement of comprehensive income and recognized
in the consolidated statement of income. Impairment losses on equity
investments are not reversed through the consolidated statement of
income. Increases in fair value after impairment are recognized directly
in the consolidated statement of comprehensive income.
In the case of debt instruments classified as AFS investments,
impairment is assessed based on the same criteria as financial assets
carried at amortized cost. Future interest income is based on the
reduced carrying amount of the asset and is accrued based on the
rate of interest used to discount future cash flows for the purpose of
measuring impairment loss. If, in subsequent year, the fair value of a
debt instrument increases and the increase can be objectively related
to an event occurring after the impairment loss was recognized in the
consolidated statement of income, the impairment loss is reversed
through the consolidated statement of income.

Financial Liabilities
Initial Recognition and Measurement. Financial liabilities are classified
as financial liabilities at FVPL, other liabilities at amortized costs, or as
derivatives designated as hedging instruments in an effective hedge, as
appropriate. The Company determines the classification of its financial
liabilities at initial recognition, and where allowed and appropriate, re-
evaluates this classification at every balance sheet date.
All financial liabilities are recognized initially at fair value and in the
case of other liabilities at amortized costs, plus directly attributable
transaction costs.
The Companys financial liabilities include loans payable, accounts
payable and other liabilities and dividends payable.
The Company has no financial liabilities classified as financial liabilities at
FVPL and derivatives designated as hedging instruments in an effective
hedge.
Other Financial Liabilities. This category pertains to financial liabilities
that are not held for trading or not designated as at FVPL upon the
inception of the liability. These include liabilities arising from operations
and borrowings. Other financial liabilities are recognized initially at fair
value and are subsequently carried at amortized cost, taking into account
the impact of applying the EIR method of amortization (or accretion) for
any related premium, discount and any directly attributable transaction
costs. Gains and losses are recognized in the consolidated statement of
income when the liabilities are derecognized as well as through the EIR
amortization process.
This category includes loans payable, accounts payable and other
liabilities and dividends payable (see Note 23).
Derecognition. A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or has expired. When an
existing financial liability is replaced by another from the same lender
on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognized in
the consolidated statement of income.
Classification of Financial Instruments Between Liability and Equity
A financial instrument is classified as liability if it provides for a
contractual obligation to:
deliver cash or another financial asset to another entity;
exchange financial assets or financial liabilities with another entity
under conditions that are potentially unfavorable to the Company;
or
satisfy the obligation other than by the exchange of a fixed amount
of cash or another financial asset for a fixed number of own equity
shares.
If the Company does not have an unconditional right to avoid delivering
cash or another financial asset to settle its contractual obligation, the
obligation meets the definition of a financial liability.
The components of issued financial instruments that contain both
liability and equity elements are accounted for separately, with the
equity component being assigned the residual amount after deducting
from the instrument as a whole the amount separately determined as
the fair value of the liability component on the date of issue.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net amount
is reported in the consolidated balance sheet if, and only if, there is a
currently enforceable legal right to offset the recognized amounts and
there is an intention to settle on a net basis, or to realize the assets
and settle the liabilities simultaneously. This is not generally the case
with master netting agreements, and the related assets and liabilities
are presented gross in the consolidated balance sheet.
Condominium Units for Sale and Land and Development
Condominium units for sale and land and development are stated at the
lower of cost or net realizable value. Net realizable value is the selling
price in the ordinary course of business, less costs of completion and
the estimated cost to make the sale. Cost includes those incurred for
development and improvement of the properties.
Advances for Project Development
Advances for project development represents advances made for
the purchase of land and is stated initially at cost. Cost includes
interest on borrowed funds incurred for the advances. Advances for
project development are subsequently measured at cost, net of any
impairment.
Investment Property
Investment property is measured initially at cost, including transaction
costs. The carrying amount includes the cost of replacing part of an
existing investment property at the time that cost is incurred if the
recognition criteria are met; and excludes the costs of day-to-day
servicing of an investment property. Subsequent to initial recognition,
investment property is stated at cost less accumulated depreciation and
any accumulated impairment loss.
Depreciation is calculated on a straight-line basis over 25 years.
The residual values, useful life and method of depreciation are reviewed
and adjusted, if appropriate, at each financial year-end.
Transfers are made to or from investment property only when there
is a change in use. For a transfer from inventory and owner occupied
property to investment property, the cost of property for subsequent
accounting is the carrying value of the investment property at the date
of change in use. If owner occupied property becomes an investment
property, the Company accounts for such property in accordance with
the policy stated under office furniture and equipment up to the date of
change in use.
Investment property is derecognized when either it has been disposed of
or when it is permanently withdrawn from use and no future economic
benefit is expected from its disposal. The difference between the net
disposal proceeds and the carrying amount of the asset is recognized in
the consolidated statement of income in the period of derecognition.
Office Furniture and Equipment
Office furniture and equipment, shown under Other Assets account in
the consolidated balance sheet, are stated at cost, excluding the costs of
day-to-day servicing, less accumulated depreciation and impairment in
value, if any. Such cost includes the cost of replacing part of such office
furniture and equipment when that cost is incurred if the recognition
criteria are met. Depreciation is calculated on a straight-line basis over
the useful life of five years.
The assets residual values, useful lives and depreciation method are
reviewed and adjusted, if appropriate, at each financial year-end.
When each major inspection is performed, its cost is recognized in the
carrying amount of the office furniture and equipment as a replacement
if the recognition criteria are satisfied.
An item of office furniture and equipment is derecognized upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the consolidated statement
of income in the year the asset is derecognized.
Interests in Joint Venture
The Company has interests in jointly controlled operations (see Note 11).
The Company recognized in the accompanying consolidated financial
statements the assets that it controls, the liabilities and expenses that
it incurs, and its share in the income that it earns from the sale of real
estate by the joint venture.
Impairment of Nonfinancial Assets
The Company assesses at each balance sheet date whether there is an
indication that an asset may be impaired. If any such indication exists, or
when annual impairment testing for an asset is required, the Company
makes an estimate of the assets recoverable amount. An assets
recoverable amount is the higher of an assets or cash-generating units
fair value less costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
When the carrying amount of an asset exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessment of the time value of money
and the risks specific to the asset. Impairment losses are recognized
in the consolidated statement of income in those expense categories
consistent with the function of the impaired asset.
Equity
Capital stock is measured at par value for all shares issued. Incremental
costs incurred directly attributable to the issuance of new shares are
deducted from proceeds, net of tax. Proceeds and/or fair value of
considerations received in excess of par value, if any, are recognized as
additional paid-in capital.
Treasury Shares
Own equity instruments which are reacquired (treasury shares)
are recognized at cost and deducted from equity. No gain or loss is
recognized in the consolidated statement of income on the purchase,
sale, issue or cancellation of the Companys own equity instruments.
Any difference between the carrying amount and the consideration is
recognized in the Additional paid-in capital account in the consolidated
balance sheet.
Revenue and Cost Recognition
Revenue is recognized to the extent that it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured. The following specific recognition criteria must also be met
before revenue and cost are recognized:
Real Estate Sales. The Company assesses whether it is probable that
the economic benefits will flow to the Company when the sales prices
are collectible. Collectibility of the contract price is demonstrated by the
buyers commitment to pay, which is supported by the buyers initial
and continuous investments that motivates the buyer to honor its
obligation. Collectibility is also assessed by considering factors such as
collections, credit standing of the buyer and location of the property.
Revenue from sales of completed real estate projects is accounted
for using the full accrual method. In accordance with Philippine
Interpretations Committee Q&A No. 2006-01, the percentage-of-
completion method is used to recognize income from sales of projects
where the Company has material obligations under the sales contract
to complete the project after the property is sold, the equitable interest
has been transferred to the buyer, construction is beyond preliminary
stage (i.e., engineering, design work, construction contracts execution,
site clearance and preparation, excavation and the building foundation
are finished), and the costs incurred or to be incurred can be measured
reliably. Under this method, revenue is recognized as the related
obligations are fulfilled, measured principally on the basis of the
estimated completion of a physical proportion of the contract work.
Any excess of collections over the recognized receivables are included
in the Customers deposits account in the consolidated balance sheet.
If any of the criteria under the full accrual or percentage-of-completion
method is not met, the deposit method is applied until all the conditions
for recording a sale are met. Pending recognition of sale, cash received
from buyers are presented under the Customers deposits account in
the consolidated balance sheet.
Cost of real estate sales is recognized consistent with the revenue
recognition method applied. Cost of condominium units sold before
the completion of the development is determined on the basis of the
acquisition cost of the land plus its full development costs, which include
estimated costs for future development works.
Revenue from construction contracts included in the Revenue from
real estate sales account in the consolidated statement of income is
recognized using the percentage-of-completion method, measured
principally on the basis of the estimated physical completion of the
contract work.
For income tax purposes, full recognition is applied when at least 25% of
the selling price has been collected in the year of sale. Otherwise, the
installment method is applied.
Gain on Sale of Investments. Revenue is recognized upon delivery of the
securities to and confirmation of the sale by the broker.
Interest. Revenue is recognized as the interest accrues taking into
account the effective yield on the asset.
Dividends. Dividend income is recognized when the shareholders right
to receive the payment is established.
Rent. Rent income is recognized on a straight-line basis over the terms
of the lease agreements.
Management Fee. Revenue is recognized when services have been
rendered.
Operating Expense
Brokerage fees and commissions, marketing and selling expenses and
other operating expenses are recognized as incurred.
Pension Expense
The Company is a participant to the SM Corporate and Management
Companies Multi-Employer Pension Plan. The Plan is a funded,
noncontributory defined benefit pension plan administered by a Board
of Trustees covering all of its regular full-time employees. The cost of
providing benefits under the defined benefit plan is determined using
the projected unit credit actuarial valuation method. This method
reflects service rendered by employees to the date of valuation and
incorporates assumptions concerning employees projected salaries.
Pension expense includes current service cost, interest cost, expected
return on plan assets, amortization of unrecognized past service costs,
recognition of actuarial gains (losses) and effect of any curtailments
or settlements. Past service cost is amortized over a period until the
benefits become vested. The portion of the actuarial gains and losses
is recognized when it exceeds the corridor (10% of the greater of the
present value of obligation or market related value of the plan assets)
at the previous balance sheet date, divided by the expected average
remaining working lives of active plan members.
The defined benefit liability is the aggregate of the present value of
the defined benefit obligation at balance sheet date and any actuarial
gains and losses not recognized, reduced by past service cost not yet
recognized and the fair value at balance sheet date of plan assets out
of which the obligations are to be settled directly. If such aggregate is
negative, the asset is measured at the lower of such aggregate or the
aggregate of cumulative unrecognized net actuarial losses and past
service cost and the present value of any economic benefits availed in
the form of refund from the plan or reductions in the future contributions
to the plan.
If the asset is measured at the aggregate of cumulative unrecognized
net actuarial losses and past service cost and the present value of any
economic benefits available in the form of refunds from the plan or
reductions in the future contributions to the plan, net actuarial losses
of the current period and past service cost of the current period are
recognized immediately to the extent that they exceed any reduction
in the present value of those economic benefits. If there is no change
or an increase in the present value of the economic benefits, the entire
net actuarial losses of the current period and past service cost of the
current period are recognized immediately. Similarly, net actuarial
gains of the current period after the deduction of past service cost of
the current period exceeding any increase in the present value of the
economic benefits stated above are recognized immediately if the asset
is measured at the aggregate of cumulative unrecognized net actuarial
losses and past service cost and the present value of any economic
benefits available in the form of refunds from the plan or reductions in
the future contributions to the plan. If there is no change or a decrease
in the present value of the economic benefits, the entire net actuarial
gains of the current period after the deduction of past service cost of the
current period are recognized immediately.
Operating Leases
The determination of whether an arrangement is, or contains, a lease is
based on the substance of the arrangement and requires an assessment
of whether the fulfillment of the arrangement is dependent on the use
of a specific asset or assets and the arrangement conveys a right to use
the asset.
Company as Lessor. Leases where the Company does not transfer
substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating
an operating lease are added to the carrying amount of the leased
asset and recognized over the lease term on the same bases as rent
income which is recognized in the consolidated statement of income.
Contingent rents are recognized as revenue in the period in which they
are earned.
Company as Lessee. Leases which do not transfer to the Company
substantially all the risks and benefits of ownership of the asset are
classified as operating lease. Operating lease payments are recognized
as expense in the consolidated statement of income on a straight-
line basis over the lease term or based on the terms of the lease, as
applicable.
Borrowing Costs
Borrowing costs are capitalized if they are directly attributable to the
acquisition or construction of a qualifying asset. Capitalization of
borrowing costs commences when the activities to prepare the asset
are in progress and expenditures and borrowing costs are being incurred.
Borrowing costs are capitalized until the assets are substantially
ready for their intended use. Borrowing costs are capitalized when
it is probable that they will result in future economic benefits to the
Company. All other borrowing costs are expensed in the period they
are incurred. For borrowing associated with a specific asset, the actual
rate on that borrowing is used. Otherwise, a weighted average cost of
borrowings is used.
Taxes
Current Tax. Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the tax authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted at the
balance sheet date.
Deferred Tax. Deferred tax is provided using the balance sheet liability
method on temporary differences at the balance sheet date between
the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax liabilities are recognized for
all taxable temporary differences, except:
where the deferred tax liability arises from the initial recognition
of goodwill or of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects
neither the accounting income nor taxable income or loss; and
in respect of taxable temporary differences associated with
investments in subsidiaries and associates and interest in joint
ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary
differences, carryforward benefits of excess minimum corporate income
tax (MCIT) over regular corporate income tax (RCIT) and net operating loss
carryover (NOLCO), to the extent that it is probable that taxable income
will be available against which the deductible temporary differences,
and the carryforward benefits of excess MCIT over RCIT and NOLCO can
be utilized except:
where the deferred tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting income nor
taxable profit or loss; and
in respect of deductible temporary differences associated with
investments in subsidiaries and associates and interest in joint
ventures, deferred tax assets are recognized only to the extent
that it is probable that the temporary differences will reverse in
the foreseeable future and taxable income will be available against
which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable income will be available to allow all or part of the
deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realized or the liability
is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax relating to items recognized outside profit or loss is
recognized outside profit or loss. Deferred tax items are recognized in
correlation to the underlying transaction either in other comprehensive
income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to offset current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and
the same tax authority.
Sales Tax. Revenue, expenses and assets are recognized net of the
amount of sales tax, except:
where the sales tax incurred on a purchase of assets or services is
not recoverable from the taxation authority, in which case the sales
tax is recognized as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
receivables and payables that are stated with the amount of sales
tax included.
The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of Other Assets or Accounts payable and
other liabilities in the consolidated balance sheet.
Provisions
Provisions, if any, are recognized when the Company has a present
obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
Contingencies
Contingent liabilities are not recognized in the consolidated financial
statements. They are disclosed in the notes to consolidated financial
statements unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not recognized in
the consolidated financial statements but are disclosed in the notes to
consolidated financial statements when an inflow of economic benefits
is probable.
Events After the Balance Sheet Date
Post year-end events that provide additional information about the
Companys financial position at the balance sheet date (adjusting
events) are reflected in the consolidated financial statements. Post
year-end events that are not adjusting events are disclosed in the notes
to consolidated financial statements when material.
Earnings Per Share
Earnings per share are computed based on the weighted average number
of issued and outstanding shares of stock during the year, retroactively
adjusted for stock dividends declared in the current year, if any.
Business Segments
For management purposes, the Company is organized into two
operating businesses, namely, real estate development and investments
in various securities. These divisions are the basis upon which the
Company reports its segment information presented in Note 22 to the
consolidated financial statements.
5. SignificantAccountingJudgments,EstimatesandAssumptions
The Companys consolidated financial statements require management
to make judgments, estimates and assumptions that affect amounts
reported in the consolidated financial statements and related
notes. Future events may occur which will cause the judgments and
assumptions used in arriving at the estimates to change. The effect
of any change in judgments, estimates and assumptions are reflected
in the consolidated financial statements as they become reasonably
determinable.
Judgments, estimates and assumptions are continually evaluated based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Judgments
In the process of applying the Companys accounting policies,
management has made certain judgments, apart from those involving
estimations, which have the most significant effect on the amounts
recognized in the consolidated financial statements.
Revenue Recognition
Selecting an appropriate revenue recognition method for a particular
real estate sale transaction requires certain judgments based on
the buyers commitment on the sale which may be ascertained
through the significance of the buyers initial investment and
completion of development. The buyers commitment is evaluated
based on collections, credit standing and location of the property.
Completion of development is determined based on engineers
judgments and estimates on the physical portion of contract work
done and the completion of development beyond the preliminary
stage.
Operating Leases - Company as Lessor
The Company has entered into commercial property lease on
its investment property. The Company determined, based on
an evaluation of the terms and conditions of the arrangements,
that it retains all the significant risks and rewards of ownership
of the investment property, thus the lease is accounted for as an
operating lease.
Operating Leases - Company as Lessee
The Company has entered into commercial property leases related
to its office spaces. The Company has determined that the
significant risks and rewards of ownership of these properties were
not transferred to the Company. Accordingly, these are accounted
for as operating leases.
Estimates and Assumptions
The key estimates and assumptions concerning the future and other
key sources of estimation uncertainty at balance sheet date that have a
significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed
below.
Allowance for Doubtful Accounts
The Company assesses whether objective evidence of impairment
exists for receivables that are individually significant, and
collectively for receivables that are not individually significant. For
the individually significant accounts, impairment is assessed by
specific evaluation of information available for certain customers
that are unable to meet their financial obligations. In these cases,
management uses judgment, based on the best available facts and
circumstances, including but not limited to, the length of relationship
with customer and the customers current credit status and known
market factors, to record specific allowance for customers against
amounts due to reduce receivable amounts to expected collection.
The specific allowance is re-evaluated and adjusted as additional
information received affects the amounts estimated. For the
purpose of a collective evaluation of impairment, financial assets
are grouped on the basis of such credit risk characteristics as
industry, collateral type, past-due status and term. Allowance for
doubtful accounts is maintained at a level considered adequate to
provide for potentially uncollectible receivables.
Trade and other receivables amounted to 7,920.3 million and 4,960.5
million as of December 31, 2010 and 2009, respectively (see Note 7).
There were no provisions for impairment in 2010, 2009 and 2008.
Net Realizable Value of Condominium Units for Sale and Land and
Development
The Company writes down the carrying value of condominium
units held for sale and land and development cost whenever the
net realizable value becomes lower than the carrying value due to
changes in market prices or other causes. The carrying value is
reviewed regularly for any decline in value.
The carrying values of condominium units for sale and land and
development amounted to 802.4 million and 16,679.7 million,
respectively, as of December 31, 2010, and 1,017.2 million and
7,866.1 million, respectively, as of December 31, 2009 (see Note
10).
Impairment of AFS Investments
In making a judgment on whether an investment is impaired,
the Company evaluates, among other factors, the duration and
extent to which the fair value of an investment is less than its
cost; and the financial health of and near-term business outlook
for the investee, including factors such as industry and sector
performance, changes in technology and operational and financing
cash flow.
The Company treats AFS investments as impaired when there has
been a significant or prolonged decline in the fair value below its
costs or where there are objective evidence that impairment exists.
The determination of what is significant or prolonged requires
judgment. The Company treats significant generally as 20% or
more of the original cost of investment, and prolonged as period
longer than 12 months. The Company evaluates other factors
including normal volatility in share prices for quoted securities
and the future cash flows and discounted factors for unquoted
securities.
If assumptions are made regarding the duration and extent to
which the fair value is less than cost, the Company would suffer
an additional loss representing the write down of cost to its fair
value.
The carrying amount of AFS investments amounted to 3,933.1
million and 2,827.7 million as of December 31, 2010 and 2009,
respectively. In 2010, the Company recognized impairment loss on
certain AFS investments amounting to 32.6 million (see Note 9).
Estimated Useful Lives of Investment Property and Office Furniture
and Equipment
The useful life of each of the Companys investment property and
office furniture and equipment is estimated based on the period
over which the asset is expected to be available for use. Such
estimation is based on a collective assessment of industry practice,
internal technical evaluation and experience with similar assets.
The estimated useful life of each asset is reviewed periodically
and updated if expectations differ from previous estimates due to
physical wear and tear, technical or commercial obsolescence and
legal or other limits on the use of the asset. It is possible, however,
that future results of operations could be materially affected by
changes in the amounts and timing of recorded expenses brought
about by changes in the factors mentioned above. A reduction in
the estimated useful life of any investment property and office
furniture and equipment would increase the recorded operating
expenses and decrease the investment property and office
furniture and equipment.
There were no changes in the estimated useful lives of the
Companys investment property and office furniture and
equipment.
Impairment of Investment Property and Office Furniture and
Equipment
The Company assesses at each balance sheet date whether there
is an indication that the investment property and office furniture
and equipment may be impaired. If any such indication exists, the
Company makes an estimate of the assets recoverable amount.
An assets recoverable amount is the higher of an assets or cash-
generating units fair value less costs to sell and its value in use
and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those
from other assets or group of assets. Where the carrying amount
of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In
assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money
and the risks specific to the asset.
The carrying amount of investment property amounted to 747.0
million and 785.2 million as of December 31, 2010 and 2009,
respectively (see Note 12). The carrying amount of office furniture
and equipment amounted to 121.1 million and 22.6 million as of
December 31, 2010 and 2009, respectively (see Note 13).
Deferred Tax Assets
The Companys assessment on the recognition of deferred tax
assets on deductible temporary differences is based on the
projected taxable income in the following periods. Based on the
projection, not all temporary differences will be realized, therefore,
only a portion of deferred tax assets was recognized.
The carrying amount of deferred tax assets amounted to 49.1
million and 57.5 million as of December 31, 2010 and 2009,
respectively. Unrecognized deferred tax assets amounted to
0.05 million and 0.2 million as of December 31, 2010 and 2009,
respectively (see Note 20).
Pension Expense
The present value of the pension liability depends on a number of
factors that are determined on an actuarial basis using a number
of assumptions. The assumptions used in determining the net
cost for pension includes discount rate, expected rate of return on
plan assets and salary projection rate.
The Company determines the appropriate discount rate at the
end of each year. This is the interest rate that should be used to
determine the present value of estimated future cash outflows
expected to be required to settle the pension obligations. In
determining the appropriate discount rate, the Company considers
the interest rates on government bonds that are denominated
in the currency in which the benefits will be paid, and that have
terms to maturity approximating the terms of the related pension
liability.
The assumption on the expected rate of return on plan assets is
determined on a uniform basis, taking into consideration the future
estimates of long-term investment returns.
Other key assumptions for pension obligations are based in part on
current market conditions.
While it is believed that the Companys assumptions are reasonable
and appropriate, significant differences in actual experience or
significant changes in assumptions may materially affect the
Companys pension asset or liability.
Pension asset amounted to 2.4 million and 4.2 million as of
December 31, 2010 and 2009, respectively (see Note 19).
Fair Value of Financial Assets and Liabilities
The Company carries certain financial assets and liabilities at
fair value in the consolidated balance sheets. Determining the
fair value of financial assets and liabilities requires extensive
use of accounting estimates and judgment. The significant
components of fair value measurement were determined using
verifiable objective evidence (i.e., foreign exchange rates, interest
rates, volatility rates). However, the amount of changes in fair
value would differ if the Company utilized different valuation
methodologies and assumptions. Any changes in the fair value of
these financial assets and liabilities would affect profit and loss
and other comprehensive income.
Where the fair values of certain financial assets and financial
liabilities recorded in the consolidated balance sheet cannot be
derived from active markets, they are determined using internal
valuation techniques using generally accepted market valuation
models. The inputs to these models are taken from observable
markets where possible, but where this is not feasible, estimates
are used in establishing fair values.
The methods and assumptions used to estimate fair value of
financial assets and liabilities are discussed in Note 24.
6. CashandCashEquivalents
This account consists of:
2010 2009
Cash on hand and in banks
(see Note 18) 385,653,093 217,975,731
Temporary investments
(see Note 18) 8,348,212,944 497,889,634
8,733,866,037 715,865,365
Cash in banks earns interest at the respective bank deposit rates.
Temporary investments are made for three months or less depending
on the immediate cash requirements of the Company, and earn interest
at the respective temporary investment rates.
Interest income earned amounted to 158.8 million in 2010, 37.5
million in 2009 and 56.3 million in 2008.
7. TradeandOtherReceivables
2010 2009
Sale of real estate 7,100,541,709 4,113,218,157
Advances to contractors 577,765,718 693,791,211
Receivables from related parties
(see Note 18) 241,921,189 138,532,791
Interest (see Note 18) 77,661 4,741,623
Dividends 10,223,578
7,920,306,277 4,960,507,360
Receivable from sale of real estate is subject to interest with market
rates ranging from 13% to 18% per annum. Interest income earned
amounted to 70.4 million in 2010, 27.5 million in 2009 and 23.7 in
2008.
The Company assigned receivables from sale of real estate on a without
recourse basis to local banks amounting to 1,311.6 million and 2,447.7
million as of December 31, 2010 and 2009, respectively. Accordingly,
the related receivables were derecognized in the consolidated financial
statements (see Note 18).
The Company also assigned receivables from sale of real estate on a
with recourse basis to local banks amounting to 221.5 million as of
December 31, 2009. These receivables were not derecognized in the
consolidated financial statements. Accordingly, loans payable were
recognized for the same amount (see Notes 14 and 18). These assigned
receivables from sale of real estate were all collected in 2010.

The cost of financing receivables recorded under Interest expense
account amounted to 131.7 million in 2010, 39.3 million in 2009 and
64.3 million in 2008.
Advances to contractors are noninterest-bearing and are expected to be
applied as payments for the construction of the Companys projects.
The terms and conditions for receivables from related parties are
discussed in Note 18.
8. InvestmentsHeldforTrading

This account consists of investments in listed common shares carried at
fair value.
The Company recognized gains (losses) on changes in fair values
amounting to 85.6 million in 2010, 11.5 million in 2009 and ( 1,380.2
million) in 2008. Gain on sale of investments held for trading amounted
to 9.9 million in 2010 and 253.7 million in 2009.
The movements in this account are as follows:
2010 2009
At beginning of year 334,088,736 1,134,403,230
Disposals (39,058,809) (811,801,512)
Change in fair value of held for
trading investments 85,638,417 11,487,018
At end of year 380,668,344 334,088,736
9. Available-for-SaleInvestments
This account consists of the following:
2010 2009
Investments in bonds 260,155,000
Investments in shares of stock:
Listed 3,867,326,133 2,355,820,895
Unlisted 65,738,301 211,686,499
3,933,064,434 2,567,507,394
3,933,064,434 2,827,662,394
The movements in this account are as follows:
2010 2009
At beginning of year 2,827,662,394 2,259,543,536
Disposals (420,346,127) (179,374)
Change in fair value of AFS
investments 1,525,748,167 568,298,232
At end of year 3,933,064,434 2,827,662,394
a. Investments in bonds consist of peso-denominated retail
treasury bills with fixed interest rate of 10.6% which matured
on September 8, 2010. Interest income recognized amounted to
10.6 million, 7.1 million and 17.5 million in 2010, 2009 and 2008,
respectively. Investments in bonds with carrying values of 260.2
million as of December 31, 2009 were used as collateral for a portion
of the Companys short-term loans (see Note 14).
b. Investments in shares of stock consist of investments in listed
and unlisted common shares of stock. Unlisted common stocks
are unquoted and there are no reliable sources of their fair market
values, therefore, stated at cost. Management intends to dispose
these AFS investments, both listed and unlisted, when the need
arises. The costs of investments sold are determined using the
weighted average method.
In 2010, a total of 67.1 million shares with a total acquisition cost
of 158.3 million were sold resulting to a realized gain of 349.5
million. Disposals in 2010 are composed of listed and unlisted
shares.
The movements in the Unrealized mark-to-market gain on AFS
investments account presented in the consolidated balance sheets are
as follows:
2010 2009
Balance at beginning of year 630,230,853 61,932,621
Unrealized gains on changes in fair
values of AFS investments 1,525,748,167 568,298,232
Transferred to profit and loss:
Realized gain from sale of AFS
investments (12,140,038)
Impairment loss 32,558,198
1,546,166,327 568,298,232
Balance at end of year 2,176,397,180 630,230,853
Impairment loss in 2010 on certain listed investments in shares of stock
that were deemed to have a significant and prolonged decline in the fair
values below its costs is charged to Other income - net account in the
2010 consolidated statement of income.
10. CondominiumUnitsforSaleandLandandDevelopment
This account consists of the following:
2010 2009
Condominium units for sale 802,424,217 1,017,223,058
Land and development costs 16,679,705,330 7,866,092,699
17,482,129,547 8,883,315,757
Condominium units for sale pertain to the completed projects of the
Company.
Land and development costs pertain to the Companys on-going
residential condominium projects. Estimated cost to complete the
projects amounted to 5,518.0 million and 8,364.0 million as of
December 31, 2010 and 2009, respectively.
The Company also acquired several parcels of land for future development
with aggregate carrying values of 8,759.5 million and 2,149.5 million
as of December 31, 2010 and 2009, respectively.
In 2010, the Parent Company acquired VLI for 566.6 million and became
a wholly owned subsidiary. The purchase of VLI was accounted for as an
acquisition of asset. VLI owns a parcel of land which will be developed
into a commercial/residential condominium project.
In 2009, the Parent Company acquired Landfactors for 300.0 million
and became a wholly owned subsidiary. The purchase of Landfactors
was accounted for as an acquisition of asset. Landfactors owns a parcel
of land which is currently being developed into a commercial/residential
condominium project.
The Company partially finances its project development through issuance
of notes and availment of loans. Capitalized borrowing costs amounted
to 334.9 million in 2010 and 222.0 million in 2009 (see Note 14).
The condominium units for sale and land and development are stated at
cost as of December 31, 2010 and 2009.
11. JointVentureAgreement(JVA)
The Parent Company entered into a JVA with the Government
Service Insurance System (GSIS) for the development of a residential
condominium project (the Project) on a parcel of land owned by GSIS.

As of December 31, 2010, the development of the Project has not yet
started.
12. InvestmentProperty
This account consists of building and improvements, which are portion
of the Mezza Residences, that are being leased to third and related
parties. The movements in this account follow:
2010 2009
Cost:
Balance at beginning of year 819,566,541
Additions 2,751,561 819,566,541
Balance at end of year 822,318,102 819,566,541
Accumulated depreciation:
Depreciation 40,997,361 34,354,434
Balance at end of year 75,351,795 34,354,434
746,966,307 785,212,107
The fair value of the investment property amounted 1,378.7 million as
of December 31, 2010 as determined by an independent appraiser. The
fair value represents the amount at which the assets could be exchanged
between a knowledgeable, willing buyer and a knowledgeable, willing
seller in an arms-length transaction at the date of valuation.
Rent income, included as part of Other income - net account, generated
from the investment property amounted to 35.5 million and 28.0
million in 2010 and 2009, respectively. Direct costs which consist mainly
of depreciation amounted to 41.2 million and 34.4 million in 2010 and
2009, respectively.
13. OtherAssets
2010 2009
Cash in escrow 2,650,675,393 392,210,537
Prepaid expenses 225,329,694 212,692,408
Input tax 193,966,605 85,690,116
Office furniture and
equipment (net of
accumulated depreciation
of P41.1 million in 2010 and
P15.8 million in 2009) 121,135,103 22,608,387
Deposits 109,833,143 57,518,135
Advances to officers and employees 11,419,103 11,543,456
Pension asset and others
(see Note 19) 18,883,895 6,351,632
3,331,242,936 788,614,671
Cash in escrow pertains to the amounts deposited in the account of
an escrow agent as required by the Housing and Land Use Regulatory
Board (HLURB) in connection with the Companys temporary license
to sell prior to HLURBs issuance of a license to sell and certificate of
registration.
Interest income earned from the cash in escrow account amounted to
48.3 million in 2010, 7.8 million in 2009 and 1.7 million in 2008.
Prepaid expenses mainly pertain to prepaid rent, taxes and other
expenses. This account also includes interest resulting from the
assignment of receivables on a without recourse basis.
Input tax represents value-added tax (VAT) paid to suppliers that can be
claimed as credit against the Companys output VAT liabilities.
Deposits arising mainly from utilities and advertisements are
noninterest-bearing and are normally collected within the next financial
year.
14. LoansPayable
As of December 31, 2010, this account includes peso-denominated fixed
rate corporate notes issued by the Parent Company on June 1, 2010, as
follows:
Notes:
Series A 2,000,000,000
Series B 8,000,000,000
10,000,000,000
Less unamortized debt issue costs:
Debt issue costs 87,022,849
Amortization (11,512,731)
75,510,118
9,924,489,882
Amortization of debt issue costs is recognized in the 2010 consolidated
statement of income under Interest expense account.
The Series A and Series B notes have fixed interest rates of 6.8% and
7.7% which will mature on June 1, 2013 and June 2, 2015, respectively,
and are payable semi-annually.
The Parent Company has an option to prepay the notes subject to
a fixed prepayment penalty. The prepaid amount shall include the
outstanding principal obligation, any accrued interest on the notes and
the prepayment penalty.
The notes facility agreement provides for certain restrictions and
requirements principally with respect to maintenance of required
financial ratios and material change in ownership or control. As of
December 31, 2010, the Parent Company is in compliance with the terms
of its loan covenants.
As of December 31, 2009, this account includes short-term and
unsecured long-term loans from local banks totaling 4,013.5 million
with annual interest rates ranging from 4.8% to 8.7% in 2009. The
amount also includes loans payable resulting from the assignment of
receivables from sale of real estate (see Note 7).
Portion of short-term loans are secured with the Parent Companys
investments in bonds with a carrying value of 260.2 million as of
December 31, 2009 (see Note 9).
The Company paid all its outstanding short-term and unsecured long-
term loans as of December 31, 2009 in 2010.
Borrowing costs capitalized to land and development account amounted
to 334.9 million and 222.0 million in 2010 and 2009, respectively. The
average rates used to determine the amount of borrowing costs eligible
for capitalization range from 6.7% to 7.2% in 2010, and 4.8% to 6.9% in
2009. Interest expense not capitalized amounted to 304.8 million in
2010 and 44.1 million in 2009.
15. AccountsPayableandOtherLiabilities
2010 2009
Trade 1,897,644,021 143,991,387
Payable arising from acquisition of
land (see Note 10) 2,841,944,471 1,892,283,236
Deferred output VAT 451,700,183 199,685,735
Deferred rent income (see Note 18) 163,688,875 183,548,388
Accrued expenses (see Note 18) 73,895,128 61,156,209
Withholding taxes payable 26,072,034 15,622,725
Others (see Note 18) 12,412,031 15,941,922
5,467,356,743 2,512,229,602
Trade payables consist mainly of liabilities to contractors and suppliers, which are noninterest-bearing and are normally settled on a 30-day term.
Payable arising from acquisition of land will be settled within one year.
Accrued expenses include accruals for salaries, commission, interest, rent and utilities which are expected to be settled within one year.
16. CustomersDeposits

Customers deposits represent nonrefundable reservation fees paid to the Company by prospective buyers which are to be applied against the receivable
upon recognition of revenue. This account also includes excess collections from buyers over the related revenue recognized based on the percentage of
completion method.
17. Equity
Capital Stock
The details and movements are as follows:
Number of Shares
Authorized Issued and Subscribed
2010 2009 2010 2009
Capital stock - P=1 par value
Balance at beginning of year 8,000,000,000 8,000,000,000 4,122,207,350 4,122,207,350
Stock rights 3,206,161,271
Subscription receivable (916,046,078)
Balance at end of year 8,000,000,000 8,000,000,000 6,412,322,543 4,122,207,350
Below are the details of the Parent Companys stock rights offerings in 2010 and 2009:
2010 2009
Date of BOD approval August 2, 2010 September 8, 2009
Offer period October 18 to 22, 2010 January 4 to 8, 2010
Common shares offered 1,832,092,155 1,374,069,116
Price per share P6.38 P3.50
Pricing date September 20, 2010 November 23, 2009
Record date October 6, 2010 December 7, 2009
Additional Paid-in Capital (APIC)
The stock rights offerings completed in 2010 resulted in APIC of P8,300.4 million, net of 4,928.3 million subscription receivable. Issuance costs for stock
rights offerings amounted to 63.1 million (see Note 1).
Retained Earnings
The Companys retained earnings include the accumulated equity in net earnings of subsidiaries amounting to 177.6 million and 620.0 million as of
December 31, 2010 and 2009, respectively, which is not available for dividend declaration until such time that the subsidiaries declares the dividends.
Also, the retained earnings includes mark-to-market gain on investments held for trading amounting to 128.6 million and 43.0 million as of December 31,
2010 and 2009, respectively, and appropriation for future development amounting to 1,500.0 million as of December 31, 2010 and 2009 which are restricted
as to dividend declaration.
The details of the Companys declaration of cash dividends are as follows:
2010 2009
Date of BOD approval April 26 April 27
Amount of cash dividends per share P0.08 P0.05
Record date May 26 May 27
Payment date June 21 June 23
Treasury Stock
The movement in treasury shares as of December 31, 2009 follows:
Sale (27,619,146)
Balance at end of year
The sale of 27,619,146 treasury shares in 2009 resulted in additional APIC of 83.2 million.
18. RelatedPartyTransactions
Transactions with related parties are made at terms equivalent to those that prevail in arms-length transactions. Outstanding balances at year-end are
unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.
For the years ended December 31, 2010 and 2009, the Company has not recorded any impairment of receivables relating to amounts owed by related
parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the
related party operates.
Parties are considered to be related if one party has the ability, directly and indirectly, to control the other party or exercise significant influence over
the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common
significant influence.
Significant transactions with related parties included in the consolidated
financial statements follow:
a. The Company holds certain bank accounts and temporary
investments which earn interest based at the prevailing market
interest rates in Banco De Oro Unibank, Inc. (BDO), an associate.
The Company also has loans payable to BDO (see Note 14).
A summary of the Companys outstanding balance and transactions
with BDO are as follows:
2010 2009
Cash and cash equivalents 8,683,022,631 669,341,163
Accrued interest receivable 77,661 1,012,857
Loans payable 702,735,902
The Company entered into receivable financing arrangements with
BDO. As of December 31, 2010 and 2009, financed receivables on a
without recourse basis amounted to 1,311.6 million and 2,445.4
million, respectively. Moreover, financed receivables on a with
recourse basis amounted to 217.3 million as of December 31,
2009. There were no assigned accounts receivable with recourse
in 2010 (see Note 7).
Interest income earned from cash and cash equivalents with BDO
amounted to 158.8 million in 2010, 37.1 million in 2009 and
28.0 million in 2008. Interest expense incurred from the loans
with BDO amounted to 15.1 million in 2009 and 60.5 million
in 2008. Dividend income amounted to 9.5 million in 2009 and
54.1 million in 2008. No interest expense and dividend income
were recognized in 2010.
In 2009, the Company sold its investments held for trading in BDO
and recognized a gain of 253.7 million, which is included in the
Gain on sale of investments held for trading and available-for-
sale investments account in the 2009 consolidated statement of
income.
b. The Company holds certain bank accounts and investments held
for trading which earn interest based on prevailing market interest
rates in China Banking Corporation (China Bank), an associate. The
Company also has loans payable to China Bank (see Note 14).
A summary of the Companys outstanding balance and transactions
with China Bank are as follows:
2010 2009
Cash in bank 61,561 322,313
Investments held for trading 380,668,344 326,112,820
Loans payable 400,000,000 4,158,510
Interest income earned from cash in bank with China Bank
amounted to 0.001 million in 2010, 0.4 million in 2009 and 28.3
million in 2008. Interest expense incurred from the loans with China
Bank amounted to 18.0 million in 2010, 27.1 million in 2009 and
3.8 million in 2008. Dividend income amounted to 10.4 million
in 2010, 9.6 million in 2009 and 13.9 million in 2008.
The Company entered into receivable financing arrangements with
China Bank on a with recourse basis amounting to 4.2 million
as of December 31, 2009 (see Note 7). The receivable financing
agreements were fully paid in 2010.
c. The Company has investments held for trading and AFS
investments with other associates and related parties as follows:
2010 2009
Belle Corporation 2,632,540,914 824,099,764
Highlands Prime, Inc. 775,822,202 1,124,942,193
SMIC 14,497,275
SM Prime Holdings, Inc. 7,975,916
3,408,363,116 1,971,515,148
Dividend income arising from these investments amounted to 8.3
million in 2009 and 8.2 million in 2008. There were no dividend
income received in 2010.
d. The Company entered into a development agreement with
Intercontinental Development Corporation (ICDC), a company
owned by the stockholders of the SM Group of Companies,
whereby the Company will act as project manager and marketing
arm for the development and sale of a residential project.
Advances for the development of the project amounted to
97.5 million and 56.8 million as of December 31, 2010 and 2009
respectively. These advances are payable on demand. Management
fee recognized from the agreement amounted to 28.8 million in
2010, 33.1 million in 2009 and 19.1 million in 2008. The advances
for the development of the project and receivables arising from
managing the project are included in Receivables from related
parties account in the consolidated balance sheets.
In 2009 and 2008, the Company assigned to SMIC its receivable from
ICDC totaling to 178.0 million to liquidate the liabilities of Bellevue
Properties, Inc. (Bellevue), a related party, to SMIC. The assignment
is part of an agreement between the Company and Bellevue,
wherein the Company paid an exclusive and irrevocable option
price, to purchase a parcel of land owned by Bellevue amounting to
178.0 million, which is included under the Advances for Project
Development account.
e. The Advances for Project Development account includes advances
made to related parties for the acquisition of land for future
development amounting to 1,111.3 million as of December 31,
2010 and 2009. The BOD ratified the advances and the plan to
transfer the ownership of the acquired land to the Company.
The Advances for Project Development account also includes
advances to Tagaytay Resources Development Corporation, a
company owned by stockholders of the SM Group of Companies,
amounting to 7.5 million as of December 31, 2010 and 2009 for
the purchase of a real property.
In 2009, advances amounting to 639.8 million were liquidated
through the transfer of the absolute voting rights in SMRC in favor
of the Parent Company. Consequently, SMRC became a wholly-
owned subsidiary of the Parent Company. The transaction was
accounted for as an acquisition of asset. SMRC owns a parcel
of land which is being developed into a commercial/residential
condominium project.
f. The Company has lease agreements with Supervalue, Inc. and BDO,
for the lease of its investment property for a period of 10 years and 5
years, commencing in March 2009 until February 2019 and April 2014,
respectively. Rent income amounted to 22.2 million in 2010 28.0
million in 2009. Deferred rent income amounted to 163.7 million and
183.5 million as of December 31, 2010 and 2009, respectively (see
Note 15). The future minimum rental receivables under noncancelable
lease are as follows:
Year 2010 2009
Within one year 22,469,324 20,207,874
Over one year but within
5 years 106,737,974 80,732,357
Over five years but within
10 years 43,333,334 82,608,156
Lease agreements include fixed and variable terms.
g. The Company has an agreement with SMIC for the lease of its office
for one year, renewable every year. Rent expense amounted to 17.8
million in 2010, 6.0 million in 2009 and 7.3 million in 2008. Accrued
rent included as part of Accounts payable and other liabilities
account in the consolidated balance sheets amounted to 2.1 million
and 4.8 million as of December 31, 2010 and 2009, respectively.
h. Total compensation paid to key management personnel
representing short-term employee benefits amounted to 45.0
million, 35.2 million and 24.3 million in 2010, 2009 and 2008,
respectively.
i. The Company, in the normal course of business, has other
transactions with related parties. As of December 31, 2010 and
2009, the outstanding receivables amounted to 144.4 million and
81.7 million, respectively, classified as Receivables from related
parties under Trade and other receivables (see Note 7) while
outstanding payables amounted to 11.7 million and 14.4 million,
respectively, classified as Others under Accounts payable and
other liabilities (see Note 15).
19. PensionPlan
The following tables summarize the components of pension expense recognized in the consolidated statements of income and the funded status and
amounts recognized in the consolidated balance sheets for the pension asset.
Pension Expense
2010 2009 2008
Current service cost 8,499,428 2,205,770 2,962,333
Effect of settlement/curtailment 3,675,258
Interest cost on benefit obligation 2,774,355 1,880,411 1,472,073
Expected return on plan assets (1,111,156) (967,055) (647,206)
Net actuarial loss recognized 43,972 131,916 219,736
13,881,857 3,251,042 4,006,936
Pension Asset
2010 2009
Defined benefit obligation ( 26,847,830) ( 24,531,721)
Fair value of plan assets 18,142,617 22,079,985
Unfunded obligation (8,705,213) (2,451,736)
Unrecognized net actuarial loss 11,132,651 6,675,411
Pension asset 2,427,438 4,223,675
The pension asset is included under Other Assets account in the consolidated balance sheets.
Changes in the present value of the defined benefit obligation are as follows:
2010 2009
Defined benefit obligation, January 1 24,531,721 18,356,917
Benefits paid from plan assets (19,152,489) (590,159)
Actuarial losses on obligation 9,524,464 2,678,782
Current service cost 8,499,428 2,205,770
Interest cost on benefit obligation 2,774,355 1,880,411
Settlement/ Curtailment loss 724,916
Benefits paid from book reserve (54,565)
Defined benefit obligation, December 31 26,847,830 24,531,721
Changes in the fair value of plan assets are as follows:
2010 2009
Fair value of plan assets, January 1 22,079,985 12,448,595
Benefits paid from plan assets (19,152,489) (590,159)
Contributions 12,031,055 7,928,128
Actuarial gain 2,072,910 1,326,366
Expected rate of return on plan assets 1,111,156 967,055
Fair value of plan assets, December 31 18,142,617 22,079,985
Actual return on plan assets 3,184,066 2,293,421
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
2010 2009
Cash and cash equivalents 45.3% 31.8%
Investments in government securities 50.3% 61.0%
Other similar debt instruments 4.4% 7.2%
100.00% 100.00%
The principal assumptions used in determining pension and benefit obligations of the pension plan are shown below:
2010 2009
Discount rate 8% 11%
Expected rate of return on plan assets 6% 6%
Salary projection rate 11% 11%
The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the
obligation is to be settled.
Expected contribution in 2011 amounted to 15.0 million.
Amounts for the current and previous four years are as follows:
2010 2009 2008 2007 2006
Defined benefit obligation 26,847,830 24,531,721 18,356,917 17,629,619 11,958,128
Fair value of plan assets 18,142,617 22,079,985 12,448,595 8,530,020 5,962,146
Deficit 8,705,213 2,451,736 5,908,322 9,099,599 5,995,982
Experience adjustments on defined benefit
obligation (993,749) 2,836,318 974,367 2,656,581 3,745,965
Experience adjustments on plan assets 2,072,910 1,326,366 (1,242,145) 76,801 625,884
20. IncomeTax

The components of the Companys deferred tax assets (liabilities) are as follows:
2010 2009
Deferred rent income 49,106,663 55,102,632
Deferred income on sale of real estate to SM Synergy 1,824,192
NOLCO 595,888
49,106,663 57,522,712
Unrealized gross profit on sale of real estate ( 262,712,613) ( 353,601,898)
Capitalized borrowing costs (100,461,085) (40,733,727)
Unrealized foreign exchange gain (4,474,345) (1,154,466)
Pension asset (782,309) (1,354,193)
( 368,430,352) ( 396,844,284)
Deferred tax assets on temporary difference and carryforward benefits of NOLCO of the subsidiaries were not recognized as it is not probable that taxable
income will be sufficient against which they can be utilized are as follows:
2010 2009
Pension liability 54,078 87,091
NOLCO 67,969
54,078 155,060
The current provision for income tax of the Parent Company represents the RCIT in 2010, 2009 and 2008.
The reconciliation of the applicable statutory income tax rates to the effective income tax rates is summarized as follows:
2010 2009 2008
Statutory income tax rates 30% 30% 35%
Tax effects of:
Availment of income tax holiday (29) (22) (19)
Mark-to-market loss (gain) and gain on sale of investments subjected
to final tax (4) (4) 95
Interest income subjected to final tax (1) (1) (6)
Change in effective tax rates (15)
Change in unrecognized deferred tax assets and others 9 5 (3)
Effective income tax rates 5% 8% 87%
Under Republic Act No. 9337, RCIT rate for domestic corporations, and resident and non-resident foreign corporations was reduced to 30% from 35%
beginning January 1, 2009.
21. Basic/DilutedEarningsPerShare
2010 2009 2008
Net income (a) 3,021,680,152 1,860,699,368 56,835,920
Common shares issued, after giving retroactive effect to stock dividend declared in 2008 4,122,207,350 4,122,207,350 4,122,207,350
Weighted average number of shares issued through stock rights 1,622,164,929
Less weighted average number of treasury shares acquired during the year 23,323,959
Weighted average number of common shares outstanding (b) 5,744,372,279 4,122,207,350 4,098,883,391
Basic/diluted earnings per share (a/b) 0.526 0.451 0.014
22. SegmentInformation
The Company conducts its business in the following segments:
2010
Investments
in Various
Securities
Real Estate
Development Eliminations Consolidated
(Amounts in Thousands)
Revenue 1,062,870 8,559,474 ( 65,961) 9,556,383
Inter-segment revenue 1,100,851 (637,917) 462,934
Total revenue 1,062,870 9,660,325 ( 703,878) 10,019,317
Segment results:
Income before income tax 1,002,644 2,767,865 ( 600,000) 3,170,509
Provision for income tax 148,829 148,829
Net income 1,002,644 2,619,036 ( 600,000) 3,021,680
Segment assets 13,252,324 33,310,635 ( 2,863,331) 43,699,628
Segment liabilities 23,747 19,946,006 ( 1,925,964) 18,043,789
Net cash flows provided by (used in):
Operating activities ( 445,012) ( 5,480,810) ( 5,925,822)
Investing activities 1,446,944 (2,560,838) (600,000) (1,713,894)
Financing activities 16,185,217 (527,500) 15,657,717
Other information:
Depreciation 66,331 66,331
Other noncash income 85,638 85,638
2009
Investments
in Various
Securities
Real Estate
Revenue 315,368 5,405,094 ( 51,248) 5,669,214
Inter-segment revenue 165,796 (26,228) 139,568
Total revenue 315,368 5,570,890 ( 77,476) 5,808,782
Segment results:
Income before income tax 289,415 1,734,863 4,950 2,029,228
Net income 289,415 1,566,334 4,950 1,860,699
Segment assets 3,779,816 18,689,684 ( 1,815,200) 20,654,300
Segment liabilities 22,251 10,760,160 ( 1,065,333) 9,717,078
Operating activities ( 25,954) ( 1,691,921) 224,938 ( 1,492,937)
Investing activities 1,105,808 (358,702) (233,948) 513,158
Financing activities (102,500) 1,196,195 (46,500) 1,047,195
Other information:
Other noncash income 11,487 11,487
2008
Investments
in Various
Securities
Real Estate
Revenue ( 1,024,863) 3,094,657 2,069,794
Inter-segment revenue 118,761 (25,540) 93,221
Total revenue ( 1,024,863) 3,213,418 ( 25,540) 2,163,015
Segment results:
Income before income tax ( 1,050,399) 1,486,631 436,232
Net income ( 1,050,399) 1,107,235 P56,836
Segment assets 3,932,816 11,188,116 ( 855,584) 14,265,348
Segment liabilities 785,785 5,663,931 ( 790,827) 5,658,889
Operating activities 46,868 ( 1,725,922) 179,675 ( 1,499,379)
Investing activities 772,403 (151,904) 22,181 642,680
Financing activities (238,847) 1,603,720 (201,856) 1,163,017
Other information:
Other noncash expense (1,380,200) (1,380,200)
The following table shows the reconciliation of total revenue:
2010 2009 2008
Revenue from real estate sales 9,118,069,504 5,261,816,589 3,050,087,673
Gain on sale of investments heldfor trading and AFS investments 359,374,019 253,687,973 198,251,841
Interest income 301,956,872 79,898,377 99,184,574
Mark-to-market gain (loss) on investments held for trading 85,638,417 11,487,018 (1,380,200,167)
Dividend income 39,956,622 50,193,497 93,916,741
Management fee 28,774,427 33,103,326 19,118,497
Others 85,546,645 118,595,519 82,655,589
10,019,316,506 5,808,782,299 2,163,014,748
Inter-segment revenue pertains to commission from sale of real estate and interest income from loans. Commission is based on a certain percentage of
the selling price and interest is based on prevailing market rates.
23. FinancialRiskManagementObjectivesandPolicies
The Companys principal financial instruments comprise cash and cash equivalents, investments held for trading, AFS investments and bank loans. The
main purpose of these financial instruments is to finance the Companys operations. The Company has various other financial assets and liabilities such
as trade receivables and trade payables, which arise directly from its operations.
The main risks arising from the Companys financial instruments are equity price risk, interest rate risk, credit risk and liquidity risk. The Companys
exposure to foreign exchange risk is minimal, as it does not enter into transactions in currencies other than its functional currency. The BOD and
management review and approve the policies for managing each of these risks as summarized below.
Equity Price Risk
The Companys exposure to equity price pertains to its investments in quoted equity shares which are either classified as investments held for trading or
AFS investments in the consolidated balance sheets. Equity price risk arises from the changes in the levels of equity indices and the value of individual
stocks traded in the stock exchange.
As a policy, management monitors the mix of debt and equity securities in its investment portfolio based on market expectations. Material equity
investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by management.
The effect on income before tax and equity (as a result of change in fair value of investments held for trading and AFS investments as of December 31,
2010 and 2009) due to a possible change in equity indices, with all other variables held constant is as follows:
2010
Change in
Equity Price
Effect on
Income Before
Income Tax
Effect on
Equity After
Income Tax
Investments held for trading +9% 230,154
-9% (230,154)
AFS investments +9% 4,786,408
-9% (4,786,408)
2009
Change in
Equity Price
Effect on
Income Before
Income Tax
Effect on
Equity After
Income Tax
Investments held for trading +9% 79,791
-9% (79,791)
AFS investments +9% 1,505,642
-9% (1,505,642)
Interest Rate Risk
In 2009, the Companys exposure to interest rate risk relates primarily to the Companys investments in bonds, which are AFS investments carried at
market value, as disclosed in Note 9. To mitigate the risk, the Company periodically monitors the movements of interest rates and plans the disposal of
investments based on market projections.
The Company has no exposure to interest rate risk on its loans payable as all have fixed interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates in the next reporting period, with all other variables held
constant, of the Companys equity (through the impact of fixed rate debt securities classified as AFS investments):
2009
Increase/(Decrease)
in Basis Points Effect on Equity
100 ( 1,745,849)
50 (875,463)
(100) 1,766,327
(50) 880,582
The Company has no significant exposure to interest rate risk in 2010.
Credit Risk
It is the Companys policy that customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances
are monitored on an ongoing basis with the result that the Companys exposure to bad debts is not significant. Given the Companys diverse base of
customers, it is not exposed to large concentrations of credit risk.
As of December 31, 2010 and 2009, there were no significant credit risk concentrations.
With respect to credit risk arising from the other financial assets of the Company, which comprise cash and cash equivalents, investments held for trading
and AFS investments, the Companys exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying
amount of these instruments.
Since the Company trades only with recognized third parties, there is no requirement for collateral.
As of December 31, 2010 and 2009, the analysis of receivables that were past due but not impaired are as follows:
2010
Neither Past Due but not Impaired
Past Due nor More than
Impaired 30 Days 90 Days 120 Days 150 Days 150 Days Total
Sale of real estate 6,183,964,720 312,497,438 178,657,924 66,643,619 47,567,244 311,210,764 7,100,541,709
Receivable from related
parties 241,921,189 241,921,189
Interest 77,661 77,661
6,425,963,570 312,497,438 178,657,924 66,643,619 47,567,244 311,210,764 7,342,540,559
2009
Neither Past Due but not Impaired
Past Due nor More than
Impaired 30 Days 90 Days 120 Days 150 Days 150 Days Total
Sale of real estate 3,649,088,183 57,725,696 105,585,807 47,814,925 36,202,872 216,800,674 4,113,218,157
Receivable from related
parties 138,532,791 138,532,791
Dividends 10,223,578 10,223,578
Interest 4,741,623 4,741,623
3,802,586,175 57,725,696 105,585,807 47,814,925 36,202,872 216,800,674 4,266,716,149
The table below shows the maximum exposure to credit risk for the components of the Companys financial assets as shown in the consolidated balances
sheets as of December 31, 2010 and 2009:
2010 2009
Cash and cash equivalents* 8,732,579,368 715,435,300
Financial assets at FVPL 380,668,344 334,088,736
Receivables:
Sale of real estate 7,100,541,709 4,113,218,157
Receivable from related parties 241,921,189 138,532,791
Interest 77,661 4,741,623
Dividends 10,223,578
AFS investments:
Stocks:
Listed 3,867,326,133 2,355,820,895
Unlisted 65,738,301 211,686,499
Bonds 260,155,000
Total credit risk exposure 20,388,852,705 8,143,902,579
* Excluding cash on hand
As of December 31, 2010 and 2009, the credit analyses of the Companys financial assets are as follows:
2010
Grade
High Grade Standard Grade Total
Financial assets at FVPL -
Loans and receivables:
Cash and cash equivalents* 8,732,579,368 8,732,579,368
Trade and other receivables:
Sale of real estate 6,183,964,720 916,576,989 7,100,541,709
Interest 77,661 77,661
AFS investments -
Stocks:
Listed 3,867,326,133 3,867,326,133
Unlisted 65,738,301 65,738,301
At December 31, 2010 19,406,537,415 982,315,290 20,388,852,705
2009
Grade
High Grade Standard Grade Total
Cash and cash equivalents* 715,435,300 715,435,300
Sale of real estate 3,649,088,183 464,129,974 4,113,218,157
Dividends 10,223,578 10,223,578
Interest 4,741,623 4,741,623
AFS investments:
Stocks:
Listed 2,355,820,895 2,355,820,895
Unlisted 211,686,499 211,686,499
Bonds 260,155,000 260,155,000
At December 31, 2009 7,468,086,106 675,816,473 8,143,902,579
Credit Quality of Financial Assets
The credit quality of financial assets is managed by the Company using high grade and standard grade as internal credit ratings.
High Grade. Pertains to counterparty who is not expected by the Company to default in settling its obligations, thus credit risk exposure is minimal. This
normally includes large prime financial institutions, companies, government agencies and individual buyers. Credit quality was determined based on the
credit standing of the counterparty.
Standard Grade. Other financial assets not belonging to high grade financial assets are included in this category.
Receivables from sale of real estate, classified under standard grade credit rating, amounting to 916.6 million and 464.1 million as of December 31,
2010 and 2009, respectively, were past due but not impaired.
Liquidity Risk
The Company seeks to manage its liquidity profile to be able to finance its capital expenditures and service its maturing debts. The Companys objective
is to maintain a balance between continuity of funding and flexibility through valuation of projected and actual cash flow information.
The Companys financial assets with maturities of 12 months or less that are used to fund the Companys immediate liquidity requirements. These
comprise cash and cash equivalents and investments held for trading amounting to 8,733.9 million and 380.7 million, respectively, as of December 31,
2010, and 715.9 million and 334.1 million, respectively, as of December 31, 2009.
The Companys AFS investments will be used when cash and cash equivalents and investments held for trading cannot cover the Companys liquidity
requirements.
The table below summarizes the maturity profile of the Companys financial liabilities as of December 31, 2010 and 2009 based on contractual undiscounted
payments:
2010
On Demand Within 1 Year Above 1 Year Total
Loans payable including interest 1,023,748,000 12,168,834,118 13,192,582,118
Trade payable 1,897,644,021 1,897,644,021
Payable arising from acquisition of land 712,428,568 1,337,214,880 792,301,023 2,841,944,471
Accrued expenses 73,895,128 73,895,128
Dividends payable 23,747,030 23,747,030
Others 12,412,031 12,412,031
2,720,126,778 2,360,962,880 12,961,135,141 18,042,224,799
2009
On Demand Within 1 Year Above 1 Year Total
Loans payable including interest 2,075,538,248 2,170,484,885 4,246,023,133
Trade payable 143,991,387 143,991,387
Payable arising from acquisition of land 148,477,297 1,743,805,939 1,892,283,236
Accrued expenses 61,156,209 61,156,209
Others 15,941,922 15,941,922
391,817,552 3,819,344,187 2,170,484,885 6,381,646,624
Capital Management
The primary objective of the Companys management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business
and maximize shareholder value.
The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Company may adjust the return of capital to shareholders or issue new shares. No changes were made
in the objectives, policies and processes in 2010 and 2009.
The Company monitors capital based on current ratio, debt-to-equity ratio, net debt-to-equity ratio, return on assets and return on equity. Total equity
includes capital stock, additional paid-in capital, retained earnings, unrealized mark-to market gain on available-for-sale investments less treasury stock.
As of December 31, 2010 and 2009, the Companys ratios are as follows:
Ratios 2010 2009
Current ratio -
(Current assets over current liabilities) 2.90:1.00 1.00:1.00
Debt-to-equity ratio -
(Interest-bearing debt over total equity) 0.39:1.00 0.37:1.00
Net debt-to-equity ratio -
(Interest-bearing debt less cash and cash equivalents over total equity) 0.05:1.00 0.30:1.00
Return on assets -
(Net income over total assets) 6.9% 9.0%
Return on equity -
(Net income over total equity) 11.8% 17.0%
24. FairValueofFinancialInstruments
The table below presents a comparison of the carrying amounts and fair values of all of the Companys financial instruments, by class and by category, as
of December 31:
2010 2009
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial Assets
Investments held for trading 380,668,344 380,668,344 334,088,736 334,088,736
Cash and cash equivalents 8,733,866,037 8,733,866,037 715,865,365 715,865,365
Sale of real estate 7,100,541,709 7,100,541,709 4,113,218,157 4,113,218,157
Receivable from related parties 241,921,189 241,921,189 138,532,791 138,532,791
Interest 77,661 77,661 4,741,623 4,741,623
Dividends 10,223,578 10,223,578
Total loans and receivables 16,076,406,596 16,076,406,596 4,982,581,514 4,982,581,514
AFS investments:
Stocks:
Listed 3,867,326,133 3,867,326,133 2,355,820,895 2,355,820,895
Unlisted 65,738,301 65,738,301 211,686,499 211,686,499
Bonds 260,155,000 260,155,000
Total AFS investments 3,933,064,434 3,933,064,434 2,827,662,394 2,827,662,394
Total Financial Assets 20,390,139,374 20,390,139,374 8,144,332,644 8,144,332,644
2010 2009
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Financial Liabilities
Other financial liabilities:
Loans payable 9,924,489,882 10,764,578,625 4,013,485,433 4,052,163,839
Accounts payable and other liabilities:
Trade 1,897,644,021 1,897,644,021 143,991,387 143,991,387
Payable arising from acquisition of land 2,841,944,471 2,841,944,471 1,892,283,236 1,892,283,236
Accrued expenses 73,895,128 73,895,128 61,156,209 61,156,209
Others 12,412,031 12,412,031 15,941,922 15,941,922
Dividends payable 23,747,030 23,747,030 22,250,737 22,250,737
Total Financial Liabilities 14,774,132,563 15,614,221,306 6,149,108,924 6,187,787,330
The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate
such value:
Cash and Cash Equivalents, Trade and Other Receivables, Loans Payable (Current Portion),
Accounts Payable and Other Liabilities and Dividends Payable
The carrying amounts approximate fair values due to the short-term nature of the transactions.
Investments Held for Trading
The fair values are based on the quoted market prices of the instruments at balance sheet date.
AFS Investments
The fair value of investments in bonds and listed common stocks are based from quoted market prices at balance sheet date. Unlisted common shares
of stock are unquoted and there are no other reliable sources of their fair market values and are, therefore, stated at cost.
Fixed Rate Loans
The estimated fair value is based on the discounted value of the future cash flows using the discount rate ranging from 2.6% to 5.7% in 2010 and 4.8% to
6.6% in 2009.
Fair Value Hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or directly
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data
The following table shows the Companys financial assets carried at fair value as of December 31 based on Level 1:
2010 2009
AFS investments:
Listed stocks 3,867,326,133 2,355,820,895
Bonds 260,155,000
4,247,994,477 2,950,064,631
As of December 31, 2010 and 2009, the Company has no financial instruments carried at fair value which is based on Levels 2 and 3.
There were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements in 2010
and 2009.
25. ClassificationofBalanceSheetAccounts
The current portions of assets and liabilities are as follows:
2010 2009
Assets:
Cash and cash equivalents 8,733,866,037 715,865,365
Trade and other receivables 3,313,347,225 2,453,668,053
AFS investments 3,933,064,434 820,619,770
Condominium units for sale 802,424,217 1,017,223,058
Advances for project development 1,122,277,724 1,301,510,831
Other assets 3,192,915,957 629,792,227
21,478,563,938 7,272,768,040
2010 2009
Liabilities:
Loans payable 1,981,805,748
Accounts payable and other liabilities 5,115,847,577 2,512,229,602
Customers deposits 2,224,048,987 2,676,625,234
Income tax payable 35,716,005 95,642,565
7,399,359,599 7,288,553,886
26. RegistrationwiththePhilippineBoardofInvestments(BOI)
The Companys real estate sales are registered with the BOI as a new developer of low-cost mass housing projects. Under such registration, the Company
is entitled to a four-year income tax holiday incentive (ITH) for certain projects from July to December 2008 or actual start of commercial operations,
whichever comes first. Such incentives will expire in July to December 2012.
The Company availed of ITH incentives amounting to 419.4 million in 2010, 182.9 million in 2009 and 23.7 million in 2008.
In 2010, additional projects were registered with the BOI. Under this registration, certain projects located within and outside Metro Manila are entitled to
a three-year and four-year ITH, respectively. Period of availment for such incentive is from November 2010 to November 2014.
V i s i o n . L e a d e r s h i p . I n n o v a t i o n . F o c u s . H a r d W o r k . I n t e g r i t y . P r u d e n c e .
SM DEVELOPMENT
CORPORATION
PROJECTS
Company Headquarters
One E-com Center, 10th Floor, Harbor Drive
Mall of Asia Complex, CBP-1A, Pasay City 1300 Philippines
Legal Counsel
SyCip, Salazar, Hernandez and Gatmaitan Law Offices
4th Floor, SSHG Law Office
105 Paseo de Roxas, Makati City
External Auditor
SyCip, Gorres, Velayo & Co.
6760 Ayala Avenue, Makati City
Stockholder Inquiries
SM Development Corporations common stock is listed and traded in the
Philippine Stock Exchange under the symbol SMDC.
Inquiries regarding dividend payments, account status, address changes, stock certificates,
and other pertinent matters may be addressed to the companys transfer agent:
Stock Transfer Service, Inc.
34-D, 34th Floor, Rufino Pacific Tower,
6784 Ayala Avenue, Makati City
Tel. (632) 898-7555 Fax (632) 898-7597
SEC Form 17-A
The financial information in this report, in the opinion of Management, substantially
conforms with the information required in the 17-A Report submitted to the Securities
and Exchange Commission. Copies of this report may be obtained free of charge upon
written request addressed to the Office of the Corporate Secretary.
Investor Relations
Please contact : Jose T. Gabionza
Vice President
Address : One E-com Center, 10th Floor, Harbor Drive
Mall of Asia Complex, CBP-1A, Pasay City 1300 Philippines
Telephone : (632) 857-0100
E-mail : jose.gabionza@smdevelopment.com
Website : www.smdevelopment.com
Chateau Elysee
Paraaque City
2003
Mezza Residences
Quezon City
2006
Berkeley Residences
Quezon City
2008
Grass Residences
Quezon City
2008
Field Residences
Paraaque City
2008
Sea Residences
Pasay City
2008
Princeton Residences
Quezon City
2009
Sun Residences
Quezon City
2009
Light Residences
Mandaluyong City
2009
Jazz Residences
Makati City
2009
Wind Residences
Tagaytay City
2009
MPlace South Triangle
Quezon City
2010
Blue Residences
Quezon City
2011
Lindenwoods
Muntinlupa City
2006
www.smdevelopment.com
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ANNUAL REPORT 2010
SPECIAL EDITION
SCALING
NEW HEIGHTS
SCALING
NEW
HEIGHTS
2010markedtheendofadecadeofsignificanttransformationwithintheSM
organization.Whileitwasaperiodofexponentialgrowthacrossallbusinesssectors,it
alsopresentedopportunitiestorenewSMscorevalues,torestateitsvisionandmission
amidsttheprevailingglobalanddomesticrealities.Itwasatimetofortifythegroups
foundationbasedonitsstrengths,corecompetenciesandthelegacycreatedbySM
founderMr.HenrySy,Sr.Alltheseweredirectedtowardsensuringhealthyreturnsto
investors;furtherstrengtheningitsfinancialposition;employingtherightpeoplethat
cantaketheorganizationtothenextlevel;definingbusinessstrategiesthatcanachieve
optimalandsynergisticgrowthobjectives;andmostimportantly,developaholistic
approachtodoingbusinesswhichincludesdeeplyembeddingandinstitutionalizinggood
governanceandcorporatesocialresponsibility.DefiningtheheartandsoulofSMwas
alsocriticalinensuringthatitachievesitsultimategoalofServingMillions.
2010alsomarkedthestartofanewdecade,onethatpresentsrealandbigger
opportunitiesforfurthergrowth.Withnewfoundstrengthanditsemergence,the
Philippinesenteredthisnewdecadeonaplatformofimprovedeconomicfundamentals,
strongerfinancialinstitutions,increasedinvestorandconsumerconfidence,andstrong
aspirationsthatcanunleashmarketdemand,whichisbothprogressiveandhighly
sustainableinthecomingyears.
Withallthatasabackdrop,SMDevelopmentCorp.(SMDC),SMsmainresidential
armisreadytoSCALENEWHEIGHTSandtoseizegreateropportunitiesahead.SMDC
isnowattherightplaceattherighttimetodeploymoreresources,andrealizeavision
thatisalignedwithaworldthatcravesforinnovation,greatersophisticationand
leadership.TheplansareinplaceandSMDCcantwaittointroduceitsbrandofserviceto
thousandsmore.

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