SODIC’s gross profit increased 31% year-on-year (YoY) to reach EGP 2.34 billion in 2021, implying a gross profit margin of 34%, compared to EGP 1.78 billion and a gross profit margin of 32% recorded last year
Recording revenues of EGP 6.92 billion in 2021, a growth rate of 24%, Sixth of October Development & Investment Company (SODIC) has a remarkable 2021, contributed mainly by its East Cairo projects which provided 75% of the year’s delivered value.
SODIC’s gross profit increased 31% year-on-year (YoY) to reach EGP 2.34 billion in 2021, implying a gross profit margin of 34%, compared to EGP 1.78 billion and a gross profit margin of 32% recorded last year.
Witnessing 54% YoY gross contracted sales growth in 2021, SODIC earned EGP 11.36 billion, generated by the sale of 1,745 units across all projects, setting a new record for annual gross contracted sales in terms of both number and value of units sold.
Cancellations of EGP 1.97 billion were recorded during 2021, representing 17% of the year’s gross contracted sales, compared to 14% recorded during 2020. The increase comes as a result of the amplified cancellations on the West Cairo 500 acres project in New Zayed due to its temporary suspension, with the project accounting for EGP 1.12 billion of cancellations in 2021. Excluding cancellations on the 500 acre project, cancellations during 2021 would stand at 7% of gross contracted sales, in line with SODIC’s historical average.
Despite limited launches, West Cairo projects accounted for 30% of gross contracted sales during 2021, supported by continued strong demand for signature project “The Estates.” East Cairo projects accounted for a further 33% of gross contracted sales during 2021, driven by the strong performance of SODIC East, which contributed 17% to the year’s gross contracted sales. Finally, The North Coast made up 37% of gross contracted sales during 2021, on the back of the successful launch of North Coast project “June” during the fourth quarter, which recorded some EGP 4.14 billion in gross contracted sales.
Net cash collections reached EGP 4.95 billion for the year, with delinquencies at 6%. This compares to collections of EGP 4.28 billion and a delinquency rate of 8% recorded during 2020. SODIC delivered some 1,163 units during the year, of which 345 were in West Cairo projects, while East Cairo and North Coast projects accounted for 800 and 18 of the delivered units, respectively. SODIC also delivered 1,163 units during the previous year.
A consortium comprising of Aldar Properties and ADQ acquired approximately 85.52% of SODIC’s outstanding share capital in 2021. The all-cash mandatory tender offer, at a purchase price of EGP 20.0 per share, valued SODIC at EGP 7.1 billion. The offer was accepted by shareholders representing 85.52% of outstanding share capital, resulting in a transaction value of EGP 6.1 billion.
Operating profit grew 14% YoY to amount to EGP 1.16 billion for the year, reflecting an operating profit margin of 17%, compared to EGP 1.02 billion of operating profit and an operating profit margin of 18% recorded in 2020, with the slight decrease in operating profit margin attributable to one-off recognition of sunk costs on Malaaz in the amount of EGP 17 million before relaunching the project as June, as well as sunk costs related to the 500 acres project in the amount of EGP 68 million due to the adjustment of the land plot location, in addition to one-off professional advisory fees of EGP 95 million. Excluding these one-off events, normalized operating profit for 2021 would be EGP 1.47 billion, an increase of 45% on a YoY basis and would reflect an operating profit margin of 21%.
Net profit after tax and non-controlling interests came in at EGP 860 million, growing 5% YoY and delivering a net profit margin of 12%, which compares to EGP 820 million and a net profit margin of 15% recorded during 2020, with the decline in the net profit margin as a result of lower operating profitability due to the recognition of one-off costs in addition to a sharp decline in net finance income due to lower interest rates. Excluding one-off events, normalized net profit after tax and minority interest would come in at EGP 1.1 billion a 33% YoY growth, and would imply a normalized net profit margin of 16%.
Total cash and cash equivalents amounted to EGP 1.9 billion. This amount excludes some EGP 1.5 billion related to customer maintenance deposits, following the reclassification of some of the accounts on the balance sheet implemented as of year-end 2020.
Bank leverage remains low, with bank debt to equity standing at 0.38x. Bank debt outstanding amounted to EGP 2.55 billion as of 31 December 2021. SODIC has been gradually increasing leverage mainly to finance investment in recurring income assets. Debt to equity amounted to 0.37x at year-end 2020, with EGP 2.3 billion outstanding.
SODIC continues to invest in its assets portfolio in line with the company’s strategy to build a sizeable portfolio of prime leasable assets. Investment Property & Investment Property under Development balance amounted to some EGP 3.52 billion on 31 December 2021.
Total receivables stood at EGP 19.5 billion, of which EGP 5 billion are short term receivables providing strong cash flow visibility for the company. The new presentation of receivables reports a total of EGP 2.5 billion of on-balance sheet receivables, reflecting only those relating to delivered units already recognized as revenue. On the other hand, some EGP 17 billion of receivables related to undelivered units are disclosed in the footnotes.
Total backlog of unrecognized revenue stood at EGP 22.76 billion as of 31 December 2021, providing strong revenue visibility for the company. Following the reclassification implemented as of year-end 2020, the backlog can be calculated as the sum of the advances from customers account and the off-balance sheet post-dated checks related to undelivered units.
