Posted on November 20, 2012 10:48:16 PM [ BusinessWorld Online ]
ETON PROPERTIES Philippines, Inc., the real estate arm of tycoon Lucio C. Tan, swung to a net loss in the third quarter due to nonrecognition of sales of unfinished projects and higher taxes.
Eton incurred a P18.91-million net loss in the third quarter from a net income of P182.74 million in the same three months last year, the company said in a disclosure yesterday.
“The decrease in net income was partly due to nonrecognition of RGP (realized gross profit) of projects that have yet to commence construction. The lower net income was also due to higher taxes incurred relative to the income attained during the year,” the company said.
According to its 2011 annual report, Eton Properties uses the percentage-of-completion method in recognizing residential project revenues, a method that calls for completion of a substantial portion of a project before pre-sales are reflected in the company’s books.
“The group starts recognizing income under percentage-of-completion when 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 costs incurred or to be incurred can be measured reliably,” Eton said in its end-September financial report.
In the same comparative three-month periods, revenues -- composed of real estate sales and rental income -- slid 20.61% to P1.04 billion versus P1.13 billion year on year, while costs and expenses increased 15.56% to P1.03 billion from P891.31 million last year.
The third-quarter result brought the company’s net income to just P11.68 million as of end-September, a 98.06% plunge from P600.63 million in the same nine months last year.
In the same comparative nine-month periods, revenues fell 44.99% to P2.03 billion from P3.69 billion in 2011, while costs and expenses dropped by 32.19% to P1.98 billion from P2.92 billion in the same period last year.
A number of project launches, namely for Aurora Heights Residences, First Homes Makati, and West Wing Villas, had to be pushed back to later dates due to changes in designs, the company explained.
“The company moved back construction timetables of some projects for much-needed design improvements,” Eton said in a separate statement yesterday.
“The enhancements, ranging from road widths to building façade improvements, will be implemented to add value to the projects in terms of quality and functionality.”
Aurora Heights Residences, a high-rise condominium along Aurora Boulevard in Quezon City, will benefit from an improved building façade, additional parking facilities, adult and kiddie pool, as well as an improved residential unit floor plan; while First Homes Makati, another high-rise condominium in Makati City, will also feature an improved building façade, a larger swimming pool and amenity area, and more parking spaces.
Meanwhile West Wing Villas, a 5.2-hectare horizontal development in Eton Properties’ North Belton Communities in Quezon City, will feature wider inner roads to enhance the residential community’s overall master plan.
Last month, the company announced that its board had approved to voluntarily delist by Jan. 2 next year as it will not meet the local bourse’s 10% minimum public float requirement by the mandated year-end deadline.
Eton, with a current public float of 5.65%, is one of 27 listed firms as of end-June that were ordered by the Philippine Stock Exchange to raise their public ownership levels to at least 10% by yearend, or else face penalties leading to eventual delisting. The company has been buying back until Dec. 5 the 73.79 million shares held by its public stockholders at a tender offer price of P3 apiece.
Shares of the company gained two centavos or 0.69% to P2.92 apiece yesterday. -- Franz Jonathan G. de la Fuente