Cairo, Egypt, May 19th 2019, Sixth of October Development & Investment Company “SODIC” has released its consolidated financial results for the quarter ending 31st of March 2019.
- Revenues: EGP 941 million, up 84% YoY
- Gross profit: EGP 270 million
- Gross profit margin: 29%
- Operating profit: EGP 149 million
- Operating profit margin: 16%
- Net Profit: EGP 161 million
- Net profit margin: 17%
Consolidated Balance Sheet Figures as at 31st of March 2019:
- Accounts Receivable: EGP 11.4 billion
- Cash and cash equivalents balance: EGP 4.3 billion
Financial Review: Leap in Revenues, Robust Balance Sheet
SODIC recorded revenues of EGP 941 million during the quarter growing by 84% compared to EGP 512 million recorded for the same period last year. The strong growth in revenues was driven mainly by Villette which contributed to circa 50% of the delivered value.
Gross profit was recorded at EGP 270 million, with a gross profit margin of 29%, this compares to EGP 266 million recorded during the same period last year reflecting a margin of 52%. The exceptionally high profitability recorded in the comparative period in 1Q18 was on the back of a one off sale of land for sub-development in SODIC West, this in addition to the early phases of Villette dominating the delivered value in 1Q19 impacting gross profit margins.
Operating profits came in at EGP 149 million versus EGP 193 million during the same period last year and reflecting an operating profit margin of 16%.
Net profit amounted to EGP 161 million during the quarter recording a net profit margin of 17%. This compares to EGP 211 million recorded in 1Q18 reflecting a net profit margin of 41%
Total cash and cash equivalents amounted to EGP 4.3 billion, reflecting the strength of the company’s balance sheet and supporting land bank expansion plans and projects execution.
Bank leverage remains low with bank debt to equity at 0.35x. As of 31st of March 2019 SODIC’s bank debts outstanding were EGP 1.8 billion reflecting a 56% utilization rate for available bank facilities of EGP 3.2 billion.
Receivables of EGP 11.4 billion provide strong cash flow visibility, with delinquency rates at 7%.
Client deposits represents the backlog of unrecognized revenues from contracted sales of units that are to be delivered over the coming three to four years. Client deposits as of the end of the quarter were EGP 16.5 billion providing strong revenue visibility for the company.
Operational Review: Limited Launches, Allegria Residence Fully Sold
SODIC recorded EGP 881 million of net contracted sales on the back of limited new launches. During the quarter SODIC launched the first phase of Allegria Residence, a fully finished apartments complex in SODIC West which was fully sold year to date. The quarter also witnessed the launch of the second phase of SODIC’s office complex on road 90 in East Cairo Eastown District New Cairo “EDNC”. The total value of both launches was EGP 1 billion.
Net cash collections came in at EGP 1.1 billion during the first quarter 2019, while delinquencies were recorded at 7%.
The company continues its strong commitment to timely deliveries, with 201 units delivered on schedule during the quarter. This compares to 167 units that were delivered during the same period last year.
Land Bank Developments
On the 21st March 2019 SODIC signed the partnership agreement for the 500 acre plot in the Sheikh Zayed Extension area with the New Urban Communities Authority (NUCA).
The plot is located a mere 10 minutes away from SODIC West, the company’s flagship mixed use community in West Cairo. The project intended to be developed on the plot is expected to comprise over 5,000 units generating an estimated total sales of circa EGP 43 billion. NUCA is entitled to a maximum total payment of EGP 15.3 billion over 11 years of which EGP 8.8 billion are fixed payments including a down payment of EGP 300 million, in addition to 15% of the annual collections. The projected payments imply a land cost per sqm capped at EGP 2,470 on a net present value basis discounted at 16%.
The addition of this plot brings SODIC’s total undeveloped land to circa seven million square meters from which SODIC is looking to generate over EGP 150 billion of potential future sales over the coming 10 years. The project is slated for launch in the fourth quarter of 2019 and is set to be SODIC’s second largest development in West Cairo.
Guidance
SODIC is targeting EGP 7.2 billion of contracted sales, expanding by circa 40%. The company expects West Cairo to contribute heavily to its growth this year leveraging on the positive developments of Al Yosr coming into the pipeline for monetization and the addition of the 500 acre plot to the company’s project portfolio in 2019.
In addition the company plans to deliver some 1,151 units across ten projects with an estimated value of EGP 5.1 billion reflecting a forecasted growth of circa 38% in revenues driven by deliveries in Villette.
About SODIC
SODIC is one of the region’s leading real estate development companies, currently developing a number of diversified projects in Egypt. SODIC’s developments in East and West Cairo and Egypt’s North Coast range from residential, retail and commercial projects to large scale mixed-use developments. SODIC is listed on the Egypt’s Stock Exchange (Ticker OCDI). For more information please visit www.sodic.com.
