“Hollywood on the Nile”: H1 net profits drop six percent
The Egyptian film and entertainment conglomerate, Media Production City (EMPC), has released its results for the first half of the financial year 2001, in which net profit fell 5.8 percent to 19.41 million Egyptian pounds ($4.55 million), compared to LE20.64 million in the same period the previous year, according to the CASE Disclosure Department.
Although operating income in the first half of the current year reached LE 32.08 million—constituting a 20 percent increase—gross profit rose only three percent to LE 15.78 million. This was attributed to a 42 percent rise in operating expenses, which stood at LE 16.3 million, as well as a 14 percent leap in general and administrative expenses that reached LE15.13 million.
Second only to Hollywood and Bombay, Cairo has been the powerhouse of the Middle East film industry for decades. In a bid to preserve its stature as the cinema capital of the Arab world, the Egyptian government had decided in 1997 to establish the region's most comprehensive production facility.
The ambitious billion-dollar project includes three complexes housing 29 studios, ten cinematic outdoor shooting areas, a five-star hotel, a conference center, theaters, cinemas, a shopping mall and an amusement park. All designed to meet a producing target of 3,500 hours of indoor studio material and 5,000 hours of outdoor production per year.
The EMPC, which enjoys a free zone status, owns two million square meters in the 6th of October city, within the compounds of the Media Free Zone. Its main activity is hiring out media production facilities to television and cinematic companies, and to a lesser extent conduct its own production. The city currently operates 11 indoor studios and various outdoor areas. The company's main project, the Mubarak International Studio Complex, housing 18 state of the art studios, was inaugurated in mid-June.
The site holds great promise with a variety of state-of-the-art studios, labs for editing and post-production, and a pool of qualified human resources—technicians, actors, anchors and TV personalities. Currently, however, the city is not generating any real income, as a large part of the studio and production facilities construction is still unfinished. Up to 90 percent of EMPC’s net profits, totaled LE 17.35 million, are believed to be generated from interest on its bank deposits. Other income sources decreased 17 percent to reach LE 1.28 million in H1 FY01.
Incorporated under the Law on Investment and Free Zones, EMPC went public in October 1999, exhibiting an extraordinary rise and fall. From its IPO (Initial Public Offering) price of LE10 in October 1999, it quickly soared to LE75.02 by March-end, after film and television production was declared a tax-free zone. Since then, however, the surprise boom nearly halved, amid allegations of a lack of transparency characterizing the company’s finance. EMPC’s shares now closes at an average LE 8.21, less than the company's original subscription price.
In the financial year 1999, EMPC bottom line profits totaled LE 31 million, compared to LE 16.4 million in 1998. — (Mena Report)
© 2001 Mena Report (www.menareport.com)