SM Investments Corporation (SMIC), the investment holding firm of the family of Henry Sy Sr., reported yesterday, an 85 percent growth in net income for the first six months of 2006 to P5.1 billion on the back of extraordinary gains from the sale of marketable securities during the period and Global Depository Receipts in the first quarter.

‘We are encouraged by the continued growth, profitability, and stability of SM, especially now that it has evolved into one of the country’s largest conglomerates,’ said SMIC President Harley Sy.

Excluding extraordinary items, net recurring income expanded by 26 percent for the first half to P2.9 billion on the strength of its retail merchandising business and mall operations.

The firm informed the Philippine Stock Exchange that SMIC also gained from improved efficiencies which kept a tight lid on operating expenses and improved margins.

It noted that while interest expenses declined by 5 percent to P1.5 billion, provision for income tax during the period grew by 27.6 percent due to a mandatory increase in corporate income tax rates from 32 percent to 35 percent which took effect last November, 2005.

Consolidated revenues increased by 11.1 percent during the first half of this year to P27.8 billion with merchandise sales, which contributes 70 percent to total revenues, grew by 7 percent.

‘The difference in revenue and net income profiles underscore the importance of SM’s upward integration toward higher value-added businesses in mall operations, banking, and real estate as they emerge and provide SM with opportunities to take advantage of wider margins,’ said SMIC Executive Vice President for Finance Jose Sio.

On the other hand, he said the retail operations provides the essential liquidity to fuel the growth and stability of the whole group.

Rental income which accounts for 17.5 percent of revenues, grew 17 percent to P4.9 billion, revenues from cinema operations rose 16 percent to P1.1 billion, while management and other fees and dividends jumped 50 percent to P0.4 billion and 31 percent to P0.6 billion, respectively.