Egypt's SODIC adopts cautious stance for 2011

Reuters, Thursday 17 Feb 2011

Developer foresees no immediate impact on revenue

SODIC, Egypt's third-biggest listed developer, said it was assuming zero sales for 2011 after three weeks of political unrest have unnerved investors.

The high-end real estate firm, which does not fully recognise revenue until it delivers units, has a strong cash position, limited outstanding debt and land debt, as well as strong cash flows, its chief executive said.

"To be totally conservative in working out cash flows is our objective -- to make sure our cash flows are more than sufficient to tide us through -- we are assuming zero sales for 2011," Maher Maksoud told Reuters, adding he remained optimistic about the long-term outlook.

It plans to launch three projects in Egypt at its Eastown development this year, now slightly delayed, and to continue work on its Syrian developments, Maksoud said in an interview.

"We were talking about launching in the middle of March, now we are talking about launching in late April."

The firm also lowered its planned investments for 2011 to 1.2 billion Egyptian pounds from 1.8 billion.

Many homebuyers in Egypt purchase houses off-plan or before delivery, meaning sales can take five years to show on SODIC's books. That means it will not take a hit on revenue this year.

"2011 is going to be (about) delivering projects which we sold two to three years ago, so I don't see any major impact on earnings given the way we recognise revenue."

Third-quarter revenue jumped to 74.6 million pounds from 7.9 million in the same period a year earlier.

Short link: