Cairo, Egypt, 27 July 2022, Sixth of October Development & Investment Company “SODIC” has released its consolidated financial results for the six months ended 30th of June 2022.
Operational & Financial Highlights
Gross contracted sales EGP 6.67 billion, up 77% YoY
Cancellations 10% of gross contracted sales
Cash collections EGP 2.96 billion
Timely delivery of 464 units
Revenues EGP 2.73 billion, up 46% YoY
Gross profit: EGP 941 million, up 44% YoY, reflecting a gross profit margin of 34%
Operating profit: EGP 387 million, up 33% YoY, implying an operating profit margin of 14%
Net profit after tax and non-controlling interests EGP 292 million, up 31% YoY, delivering a net profit margin of 11%
Operational Review;
SODIC sold 1,018 units during the first six months of 2022, generating gross contracted sales of EGP 6.67 billion, an increase of 77% over EGP 3.76 billion of gross contracted sales recorded during the first half of 2021 and an achievement of 48% of the company’s 2022 gross contracted sales target of EGP 14 billion, with the company targeting a growth of 23% over FY2021 sales.
Gross contracted sales during the period were diversified between SODIC’s main markets, with West Cairo accounting for 29% of sales mainly driven by the newest project, The Estates Residences. East Cairo contributed 35% of the period’s gross contracted sales on the back of strong absorption of newly released inventory on Villette. While continued strong performance of June led to the North Coast accounting for 36% of sales during the period.
Cancellations of EGP 682 million were recorded during the first half of 2022, representing 10% of the period’s gross contracted sales. This compares to a cancellation rate of 9% during the same period in 2021.
Cancellations were negatively affected by cancellations of EGP 501 million on 500 acres project due to its temporary suspension, with the project accounting for 76% of the cancellations during the period. Excluding cancellations on the 500 acres project, cancellations would stand at 2% of gross contracted sales.
Net cash collections reached EGP 2.96 billion for the period, with delinquencies at 8.2%. This compares to collections of EGP 2.47 billion and a delinquency rate of 9.8% recorded during the same period in 2021.
SODIC delivered some 464 units during the period, of which 355 were in East Cairo projects, while West Cairo and North Coast projects accounted for 99 and 10 of the delivered units respectively. This compares to 264 units delivered during the first six months of the previous year.
Deliveries on 655-acre flagship East Cairo project SODIC East started during the year, with the company delivering 135 units as of 30 of June 2022.
CAPEX spent on construction during the period amounted to EGP 1.29 billion, compared to EGP 1.48 billion spent during the same period last year.
Financial Review;
Income Statement
Revenues of EGP 2.73 billion were recorded during the first six months of 2022, representing a 46% increase compared to EGP 1.87 billion of revenues recorded during the same period last year. Revenues were mainly driven by deliveries in East Cairo projects which contributed 75% of the period’s delivered value, led by Villette’s Sky Condos and SODIC East, which respectively contributed 28% and 26% of the period’s delivered value. Furthermore, West Cairo and North Coast projects contributed 23% and 2% of the delivered value during the six months period respectively.
Gross profit increased 44% YoY on the back of higher revenues to record EGP 652 million, implying a gross profit margin of 34%. This compares to a gross profit of EGP 652 million and a gross profit margin of 35% recorded during the first half of 2021.
Operating profit for the six months period amounted to EGP 387 million, reflecting an operating profit margin of 14%. This represents a 33% growth over an operating profit of EGP 292 million and an operating profit margin of 16% recorded during the same period last year.
Net profit after tax and non-controlling interests came in at EGP 292 million, growing 31% from the EGP 223 million recorded during the first half of 2021. Net profit margin decreased slightly from 12% in 1H 2021, to reach 11% in 1H 2022, affected by the large volume of early phase deliveries in SODIC East during Q2 2022.
Balance Sheet
SODIC continues to maintain a strong liquidity position with total cash and cash equivalents amounting to EGP 2.17 billion.
Bank leverage remains low, with bank debt to equity standing at 0.43x. Bank debt outstanding amounted to EGP 3.06 billion as of 30 June 2022. SODIC has been gradually increasing leverage mainly to enhance returns. Debt to equity amounted to 0.38x at year-end 2021, with EGP 2.55 billion outstanding; and to 0.37x at year-end 2020, with EGP 2.3 billion outstanding.
Total receivables stood at EGP 22.21 billion, of which EGP 5.35 billion are short-term receivables providing strong cash flow visibility for the company. A total of EGP 2.64 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 19.58 billion of receivables related to undelivered units are disclosed in the footnotes.
Total backlog of unrecognized revenue stood at EGP 25.16 billion as of 30 June 2022, providing strong revenue visibility for the company
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