The former NDP secretary Ahmed Ezz behind the bars in Cairo criminal court
Four of Egypt's major firms – Ezz Steel, Talaat Mostafa Group (TMG), Palm Hills and SODIC – were among the dozens which found themselves embroiled in legal battles last year.
But the Egyptian company which arguably faced the most considerable legal challenges in the wake of the January 25 revolution actually saw some steady gains in revenues and profits, according to figures.
Last week Ezz Dekheila announced a 0.5 per cent annual rise in net profits for the first three quarters of 2011. The steelmaker is 55 per cent owned by Ezz Steel whose founder, Ahmed Ezz, was found guilty on corruption charges four months ago.
Ezz Dekheila put its nine-month profits at LE562 million, up from LE559 for the same period in 2010.
Ahmed Ezz, who also served as chief whip in former president Hosni Mubarak's now-dismantled National Democratic Party (NDP), was removed from his chairman positions at both Ezz Steel and Ezz Dekheila in May 2011.
In September, Cairo's Criminal Court sentenced Ezz to 10 years in prison and to a fine of LE660 million ($110.9 million) on graft charges related to the illegal sale of steel licenses.
High-end property developer the Talaat Mostafa Group (TMG) also reported a reasonably good year. TMG’s gross profit margin declined by 15 per cent in the third quarter of 2011 compared to 25 per cent in the same quarter of 2010, and 29 per cent in the second quarter of 2011.
“While the third quarter of 2011 gross proﬁt margin came as a disappointment to us and to the market, we are expecting a normalised gross proﬁt margin in the range of 27 per cent – 29 per cent annually, going forward,” Harshjit Oza a real estate analyst at Beltone Financial said.
Total new sales of real estate units for TMG reached LE925 million in the third quarter of 2011, up on LE632m in the second quarter, an increase of 46 per cent. Year-on-year figures were less encouraging, though, with sales down 27 per cent.
“The company has witnessed strong sales momentum in the financial year of 2011 despite ongoing political uncertainty and lack of clarity over its Madinaty land title,” Oza added.
TMG was involved in a court battle predating Mubarak's overthrow with regards to its $3 billion Madinaty residential project, which some alleged was being built on undervalued land. The developer's land contract was finally declared valid in late November 2011.
Fellow real estate group Palm Hills, the country's second-biggest listed developer, failed to match TMG's performance. It reported a net loss in the third quarter of 2011, hit by weaker revenues and what analysts suspected was a high rate of cancellations.
The firm, battered by investigations into previous state land sales, posted net losses of LE17.7 million ($2.97 million) in the third quarter, compared with profits of LE153.7 million for the same period the previous year.
The company's CEO Yassin Mansour fled Egypt after several complaints were filed against him. He faced graft charges of misusing his position to illegally acquire land, and was acquitted in July.
Similar allegations contributed to a poor performance for SODIC, one of Egypt's largest real estate companies. Former chairman Magdi Rasekh – who is also father-in-law to ex-presidential scion Alaa Mubarak – was accused of violating laws regulating tenders and auctions.
The firm recorded a net loss of LE38 million in the third quarter of 2011, against net profits of LE107 for the same period the previous year.