In H1 2015, Solidere S.A.L, Lebanon’s only listed real estate company, witnessed a significant annual growth in revenues to $57.84M, but ended H1 with a net loss of $28.70M due to a provision of $50.51M recognized on the remaining balance of a previously-made sales contract.
In details, revenues from land sales grew by $19.95M to $26.40M, noting that Solidere’s average price/sqm in the Waterfront area now hovers around $3,500-$4,000, especially for plots towards the inside of the area. Solidere’s management had estimated that the company could reach the same level of sales in 2015 as the previous year, with 2 deals in the pipeline and another 2 expected in H2, 2015.
Revenues from rented properties and rendered services remained roughly stable at $28.20M and $2.91M, respectively, noting that the Cineplex and the food court have boosted revenues. The Cineplex sold 550,000 tickets in 2014, ranking first among Lebanese movie theaters, according to Solidere. Meanwhile, revenues from hospitality fell by $1.18M to $0.33M.
On the balance sheet, Solidere’s total assets edged down by 1.98% to $2,905.50M as accounts and notes receivable decreased by 4.36% to $528.20M and $49.89M of held cash was used, leaving the balance at $108.80M. During its Analyst Day in July, Solidere explained that all future development plans were halted and the only forecasted spending in 2015 will be on the development of the infrastructure of the waterfront area and the department stores designed by famous architect, Zaha Hadid.
On the liabilities side, term bank loans also declined by 14.15% to $94.51M. However, overdraft and short-term loans remained high at $557.90M, and relevant interest expense for H1 amounted to $17.12M, compared to $16M in H1 2014. Solidere is looking at rescheduling its overdraft in to medium term loans to control its interest expenses.
Earlier this year, Solidere had distributed stock and cash dividends for FY 2014, summing up to $0.33/share. Holders of both classes of Solidere shares will benefit from an extra stock for every 50 held, in addition to $0.22/share, that will be paid in cash on October 12th, 2015.
Solidere’s management has expressed its intention to distribute dividends in 2015 as well if the company remains profitable.
Solidere International Limited, where Solidere owns 39.05%, contributed a share of $8.90M to Solidere’s income statement, while Beirut Waterfront Development S.A.L contributed $7.97M. It is worth mentioning that Solidere International, registered in the U.A.E and having projects in UAE, KSA and Lebanon, has not generated any profits from operations, but rather were the result of land and projects revaluations, consistent with the new accounting rules.
Solidere shares were trading this week near the $10 mark, with class “A” shares hitting $10.01 on Wednesday, its lowest since 2005.
Solidere Financials- H1 2015 ($M)
|Earnings Per Share (EPS)||(0.18)||0.0039|
*at June 30, 2014