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Egypt's SODIC posts 2013 net loss of $64 mn

2013 was a good year, SODIC's managing director says, but losses came from construction firm's investments in Syria

Reuters, Tuesday 22 Apr 2014
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Egyptian property developer SODIC saw a net loss of LE447.1 million ($64 million) last year, due to one-off items including a write-down on its investments in Syria, managing director Ahmed Badrawi told Reuters on Tuesday.

The company had made a net profit of LE257 million a year earlier. Revenue in 2013 reached LE1.324 billion, a 7 percent decrease on the year before.

"Operationally we had a very strong 2013, but that is not reflected in the actual figures reported because of these one-off items," Badrawi said.

The one-off items included a non-cash charge of LE478 million related to the firm's investments in war-torn Syria.

"Our board decided it would be prudent for us to take an impairment for our investments in Syria ... On our books, it was reduced to zero. So if anything negative happens in the future, we wouldn't be impacted, and if something positive happens, it would be a bonus," Badrawi said.

Before accounting for the one-off items, SODIC's normalised net income reached LE229 million, the firm said.

Egypt's real estate industry was thrown into turmoil after a popular uprising ousted president Hosni Mubarak in 2011, hitting demand for high-end property.

Last week, SODIC ended a dispute with Egypt's government and agreed to pay LE900 million over seven years after a revaluation of its Eastown development project in Cairo.

The Eastown project in New Cairo is twice the size of London's 97-acre Canary Wharf district and includes offices, shops and homes. The government had sought to revoke SODIC's rights over the land because of delays.

"The LE900 million will reduce the profitability of Eastown a little, but we'll try to make up for that by looking at the project's economics, increasing densities, increasing efficiency and if necessary, increasing prices," he said.

The firm had already paid LE100 million from the settlement and will pay the remainder in the coming six years in semi-annual instalments, Badrawi said.

 

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