Cairo, Egypt:  Sixth of October Development & Investment Company “SODIC” has released its consolidated financial results for the six months ended 30th of June 2023.

Operational & Financial Highlights

    • Gross contracted sales EGP 8.17 billion, up 22% YoY
    • Cancellations 10% of gross contracted sales
    • Net Cash collections EGP 4.06 billion
    • Timely delivery of 402 units
    • Revenues EGP 2.92 billion, up 7% YoY
    • Gross profit: EGP 1.12 billion, up 22% YoY, reflecting a gross profit margin of 38%
    • Operating profit: EGP 404 million, up 4% YoY, implying an operating profit margin of 14%
    • Net profit after tax and non-controlling interests EGP 335 million, up 15% YoY, delivering a net profit margin of 11%

Operational Review;

SODIC sold 674 units during the first six months of 2023, generating gross contracted sales of EGP 8.17 billion, an increase of 22% over EGP 6.67 billion of gross contracted sales recorded during the first half of 2022. Gross contracted sales during the period showed strong performance despite the company slowing down sales during the first quarter to review selling prices amid increasing construction costs. Sales were driven by strong demand for new launches of off-plan units and ready-for-delivery inventory across the SODIC’s projects in the second quarter of the year despite a significant increase in selling prices due to inflation.

Gross contracted sales were driven by strong sales on SODIC’s projects across all main markets. West Cairo projects accounted for 52% of gross contracted sales, primarily driven by the continued strong demand for SODIC’s relaunched 464-acre project, which contributed 32% of the period’s sales. On the other hand, East Cairo projects accounted for 34% of SODIC’s H1 2023 sales, on the back of strong uptake of newly released inventory on Villette which contributed 21% of the period’s sakes. Finally, North Coast June accounted for 15% of gross contracted sales fueled by robust demand for the project’s latest launch.

Cancellations of EGP 816 million were recorded during the first half of 2023, representing 10% of the period’s gross contracted sales. This is in line with a cancellation rate of 10% recorded in the same period in 2022 as the company currently prioritizes the cancellation of units in default, allowing these units to be resold at current market prices, supporting margins and increasing projects’ total returns.

Net cash collections reached EGP 4.06 billion for the period, with delinquencies at 4.5%. This compares to collections of EGP 2.93 billion and a delinquency rate of 8.2% recorded during the same period of 2022.

SODIC delivered some 402 units during the six months period, of which 212 were in East Cairo projects, while West Cairo and North Coast projects accounted for 189 and 1 of the delivered units, respectively. This compares to 463 units delivered during the same period last year.

CAPEX spent on construction during the period amounted to EGP 1.79 billion, compared to EGP 1.3 billion spent during H1 2022.

Financial Review;

Income Statement

Revenues of EGP 2.92 billion were recorded during the first six months of 2023, representing a 7% increase compared to EGP 2.73 billion of revenues recorded during the same period last year.

Revenues were mainly driven by deliveries in West Cairo projects October Plaza and SODIC West’s Pavilion, Allegria Residence, and Six West, with West Cairo projects contributing 52% of the period’s delivered value. On the other hand, East projects accounted for a further 47% of the value delivered during H1 2023 driven by deliveries on SODIC East.

Gross profit increased 22% YoY on the back of higher revenues to record EGP 1.12 billion, implying a gross profit margin of 38%. This compares to a gross profit of EGP 941 million and a gross profit margin of 34% recorded during the first half of 2022.

Operating profit for the six months period amounted to EGP 404 million, reflecting an operating profit margin of 14%. This represents a 4% growth over an operating profit of EGP 387 million and an operating profit margin of 14% recorded during the same period last year.

Net profit after tax and non-controlling interests came in at EGP 335 million, growing 15% from the EGP 292 million recorded during the first half of 2022. Net profit margin expanded 80bps YoY to 11%.

Balance Sheet

SODIC continues to maintain a strong liquidity position with total cash and cash equivalents[1] amounting to EGP 2.93 billion.

Bank leverage remains low, with bank debt to equity standing at 0.41x. Bank debt outstanding amounted to EGP 3.12 billion as of 30 June 2023. SODIC has been gradually increasing leverage mainly to enhance returns. Debt to equity amounted to 0.43x at year-end 2022, with EGP 3.16 billion of outstanding debt; and to 0.38x at year-end 2021, with EGP 2.55 billion of outstanding debt.

Total receivables stood at EGP 33.74 billion, of which EGP 7.50 billion are short-term receivables providing strong cash flow visibility for the company. A total of EGP 4.23 billion of receivables are reported on the balance sheet, reflecting only the receivables relating to delivered units already recognized as revenue. On the other hand, some EGP 29.52 billion of receivables related to undelivered units are disclosed in the footnotes.

SODIC’s total backlog of unrecognized revenue stood at EGP 38.56 billion as of 30 June 2023, providing strong revenue visibility for the company.

Commenting on the results Ayman Amer SODIC’s General Manager said “Despite the limited launches in the first quarter and the significant price increases to offset the effect of inflation we have achieved record H1 sales. It has been a very strong quarter for SODIC with the addition of 620 acres to our land bank in the north coast, one of our key markets. We look forward to a strong second half of the year.”

-Ends-

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.

[1] Including Treasury Bills