Egypt's SODIC posts 2010 net profit, reversing loss

Ahram Online + Reuters, Thursday 17 Mar 2011

Property developer makes large profits and doubles sales despite association for former regime

SODIC Egypt's third-biggest listed developer, swung to a net profit of 135.3 million Egyptian pounds ($22.8m) in 2010 and doubled project sales, it said on Thursday.

The high-end real estate firm, which does not fully recognise revenues until it delivers units, made a net loss of LE112.5m in 2009.

Egypt's property sector has been a major driver of foreign investment and growth but is now reeling from a string of legal rows over state land sales.

Analysts are watching the sector to see how it fares in the political turmoil that ousted President Hosni Mubarak from office.

SODIC is considered by many as yet another example of crony business which prevailed throughout Mubarak's 30-year rule.

The Company is owned and chaired by Magdy Rasekh, father-in- law of Alaa Mubarak.

The company, established in 1996, faced hard times in the early 2000s until it got the land of its first large project, Beverley Hills, located on seven million square metres and represented a turn of its fortune. Many housing experts, including consultant Mamdouh Hamza and ex-housing minister Hasaballah El-Kafrawi, have said that the land was allocated to SODIC at a very low price, LE32 per metre, compared to at least LE1,000, the price of each metre after developing the land.

The firm made LE2 billion worth of sales in projects, a 100 per cent increase from last year, while 2010 revenues jumped to LE520m, from LE30.7m a year earlier.

SODIC said it proposed a cash dividend of four pounds per share. Last year the board also approved a 2.5-for-1 stock split, in line with a new ratio suggested by the financial regulator.

Chief Executive Officer Maher Maksoud told Reuters on 17 Feb that it was assuming zero sales for 2011 but remained optimistic about Egypt's growth prospects.

It said it had enough cash in reserve and cash flows, as well as limited outstanding debt and land debt to ride its way through short-term hiccups as a result of the political turmoil.

The firm has lowered its planned investments for 2011 to LE1.2bn from LE1.8bn.


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