Purple Real Estate Income Plc (‘Purple Group’ or ‘Purple’ or ‘PREIP’ or ‘The Group’) has announced its audited results for the full year ended 31 December 2022.
Consolidated Statement of Profit or Loss
- Gross earnings of ₦20.4 billion, up 385.4% year-on-year (FY 2021: ₦4.2 billion)
- Net revenue of ₦2.4 billion, up by 36.5% year-on-year (FY 2021: ₦1.8 billion)
- Total other income of ₦14.5 billion, up by 853.8% year-on-year (FY 2021: ₦1.5 billion)
- Operating income ₦16.9 billion, upby 411.6% year-on-year to (FY 2021: ₦3.3 billion)
- Total expenses of ₦2.2 billion, up by 22.5% year-on-year to (FY 2021: ₦1.8 billion)
- Profit before income tax of ₦14.7 billion, up by 873.5% year-on-year (FY 2021: ₦1.5 billion)
- Profit after tax of ₦13.1 billion, up by 895.9% year-on-year (FY 2021: ₦1.3 billion)
Consolidated Statement of Financial Position
- Total assets of ₦45.8 billion, up by 73.5% year-on-year (FY 2021: ₦26.4 billion)
- Total liabilities of ₦23.1 billion, up by 32.5% year-on-year (FY 2021: ₦17.4 billion)
- Shareholders’ funds of ₦22.8 billion, up by 152.9% year-on-year (FY 2021: ₦9.0 billion)
Key Ratios
- Profit margin on trading properties of 32.6% (FY 2021: 44.8%)
- Net rental income margin of 73.4% (FY 2021: 89.1%)
- Net revenue margin of 41.4% (FY 2021: 66.8%)
- Operating income margin of 83.0% (FY 2021: 78.8%)
- Adjusted operating income margin of 40.6% (FY 2021: 39.6%)
- Profit before tax margin of 72.2% (FY 2021: 36.0%)
- Profit after tax margin of 64.2% (FY 2021: 31.3%)
- Return on average asset of 36.2% (FY 2021: 6.1%)
- Return on average equity of 82.4% (FY 2021: 16.9%)
- Asset turnover ratio of 0.6x (FY:2021 0.2x)
- Asset to equity/equity multiplier of 2.0x (FY 2021: 2.9x)
- Total borrowings to equity of 0.9x (FY 2021: 1.7x)
Operational developments
- Purple Group completed its listing on NASD (Ticker: SDPURPLERE) as a Real Estate Company on 23 March 2023. Purple is morphing into a tech-powered real estate and financial services business. At the heart of this integration is Purple Proptech, a wholly owned Purple entity deploying tech-based solutions, with the ultimate goal being to bring down barriers and access to world-class retail, entertainment, financial services and investments. Purple is leveraging technology, to create a unique ecosystem of interconnected products in the cloud, and offline.
- Purple Maryland maintained its high occupancy rate at 96% reflecting high tenant confidence. A new supermarket anchor tenant, “Market Square” was introduced and has been well received by the public. Our strategy of building and growing with a strong group of homegrown tenants has continued to reap benefits, keeping attrition levels low at this centre. Our commitment to working with these businesses has ensured that both ourselves and the tenants continue to thrive.
- Purple Lekki made significant progress on development as the building reached the seventh floor. We are encouraged by the reception of this project as the retail section currently sits at 96% occupancy with numerous tenants signed up and paying rental deposits. Purple Lekki is poised to open sectionally in 2023 with the retail portion expected to welcome customers by the third quarter. Purple Lekki is the first IFC EDGE-certified mixed-used building in Nigeria.
- Purple URBAN also made giant strides as the lowrise blocks reached the second-floor stage towards the end of 2022.
Governance update
Bringing added fresh perspectives and their diverse experience, two independent directors, Mrs Fiona Ahimie and Mrs Osareme Archibong, joined the Board, bringing the total number of independent directors to 5. Overall, executive directors make up 27.2% of the Board, non-executive directors 27.2% and independent directors 45.4%.
Commenting on the performance, the Chief Executive Officer, Mr Laide Agboola, stated:
‘’In 2022, Purple Group continued to make operational and financial progress in support of our differentiated strategies. Operationally, the business consistently tweaked its structures to adapt and address various macroeconomic shocks. Underscoring the increased resilience of the business, we recorded very strong financial performance despite economic headwinds and increased costs of building materials, power generation and political uncertainty.
During this period, we expanded our investment in technology through, Purple Proptech Limited, which is aimed at democratizing real estate ownership and investment. The company’s investment-tech products had a strong outing in the capital market onboarding over 1,200 first-time retail equity investors via our electronic platform. This platform along with other useful tech developments continues to be refined under our Fractions Brand, which is poised to launch in 2023.
We also made significant progress on our Purple Lekki and Urban developments. Purple Lekki in particular took huge leaps towards completion as the team sets course for the delivery of the retail portion of this landmark mixed-use asset.
We expect to complete Purple Lekki, the first IFC EDGE-certified mixed-used building in Nigeria, by mid-year 2023 and the single largest building homogenous floor-sized building in Nigeria. Real estate will continue to play a significant role in the economy, and we look to be at the forefront of that role with a firm footing to facilitate significant growth and higher returns for all our stakeholders.”
Financial Review
Gross earnings of ₦20.4 billion, up by 385.4% (FY 2021: ₦4.2 billion). Key drivers of gross earnings:
- Revenue from the sale of trading property under development (22.7% of gross earnings) grew year-on-year by 242.6% to ₦6 billion (FY 2021: N1.4 billion; 32.2% of gross earnings). The major driver of this was the sale of our Nano apartments with the project 90% completed as of December 2022.
- Fair value gains on investment property (69.2% of gross earnings) of ₦1 billion (FY 2021: ₦1.0 billion; 24.0% of gross earnings). This was a result of revaluation changes in the fair value (FV) of investment properties with the contribution in excess of ₦13.0 billion coming from the Lekki Retailtainment.
- Rental income (2.7% of gross earnings) fell by 3.5% to ₦5 million from ₦577.9 million (13.8% of gross earnings) recorded in FY 2021. The major reason for the decline was concessions given to tenants in a bid to respond to economic conditions.
- Revenue from services to tenants(3.5% of gross earnings) declined by 5.0% to ₦4 million from ₦750.7 million (17.9% of gross earnings) in FY 2021. This was also a result of concessions given to tenants.
- Other income(2.1% of gross earnings) grew by 97.0% to ₦8 million from ₦214.1 million (5.1% of gross earnings) in FY 2021. This growth was due to a significant increase in interest income earned from the placement of funds on higher cash balances.
- Impairment write-back/(loss) (-0.2% of gross earnings) was impaired by a loss of 112.6% to ₦(37.1) million from a writeback of ₦5 million in FY 2021 (7.0% of gross earnings). This was a result of loss impairment modelling and recognition of financial instruments.
Costs of sales rose by 288.3% to ₦3.5 billion (FY 2021: ₦891.3 million). The main driver of this increase was the increase in the cost of sales-trading property under development (90.2% of total costs of sales) which grew year-on-year by 318.6% to ₦3.1 billion (FY 2021: ₦745.9 million, 83.7% of total costs of sales).
This was a result of business expansion as well rising material costs reflective of the high inflationary environment, disruptions in the global supply chain and unfavourable exchange rate movement. Also impacting the cost of sales were:
- Expenses on services to tenants (7.2% of costs of sales) increased by 149.4% to ₦0 million from ₦100.2 million (11.2% of costs of sales) in FY 2021. This was due to an increase in diesel prices and other utility expenses.
- Other property operating expenses (2.6% of costs of sales) increased by 96.4% to N7 million from N45.2 million (5.1% of costs of sales) in FY 2021. This was driven by the increase in maintenance costs as a result of inflation.
Net revenue grew by 36.5% to ₦2.4 billion in FY 2022 (FY 2021: ₦1.8 billion), primarily on account of higher profit recorded on trading properties under development which stood at ₦1.5 billion, a 149.1% increase from the ₦606.3 million recorded in FY 2021.
However, unfavourable cost dynamics led to a reduction in the profit margin on trading properties of 32.6% (FY 2021: 44.8%). Net rental income declined by 21.2% to ₦932.2 million from ₦1.2 billion recorded in FY 2021.
This was because of slight declines in revenue from services to tenants and rental income and a higher increase in expenses on services to tenants and other property operating expenses. This resulted in a net rental income margin of 73.4% (FY 2021: 89.1%). Though the net revenue margin dropped to 41.4% (FY 2021: 66.8%), overall, the operating income margin expanded by 413bps to 83.0% (FY 2021: 78.8%).
Total other income of ₦14.5 billion (71.0% of gross earnings) an 853.8% increase from ₦1.5 billion (36.2% of gross earnings) in FY 2021. This increase is majorly attributable to fair value gains on the revaluation of investment properties which stood at ₦14.1 billion (FY 2021: ₦1.0 billion). Benefitting from the growth in total other income,
Operating income grew by 411.6% to ₦16.9 billion (FY 2021: ₦3.3 billion).
Total expenses of ₦2.2 billion (10.8% of gross earnings) grew by 1.7% (FY 2021: ₦1.8 billion; 42.7% of gross earnings) attributable to:
- Operating expenses (38.8% of total expenses) increased by 10.7% to ₦851.9 million in FY 2022 from ₦769.6 million in FY 2021 (42.9% of total expenses). The increase in operating expenses was driven by a 1127.9% increase in other expenses to ₦470.6 million (FY 2021: ₦38.3 million), a 73.6% increase in printing and stationary to ₦2.6 million (FY 2021: ₦1.5 million) and a 66.9% increase in advertisement and public relations to ₦64.2 million (FY 2021: ₦38.5 million).
- Personnel expenses (27.3% of total expenses) grew by 92.6% to ₦3 million in FY 2022 from ₦310.6 million in FY 2021 (17.3% of total expenses). The personnel costs consist of salaries of ₦463.7 million (77.5% of personnel expenses) and staff allowances ₦134.6 million (22.5% of personnel expenses).
This is attributable to the 73% increase in the number of senior staff employees in the Company which is reflective of the growing business, as well as the need to attract and retain highly skilled and competent manpower. - Finance costs (33.9% of total expenses) grew by 4.6% to ₦2 million in FY 2022 from ₦711.6 million in FY 2021 (39.7% of total expenses). This brought the adjusted interest coverage ratio to 133.3% in FY 2022 (FY 2021: 99.7%).
Profit before tax rose by 873.5% to ₦14.7 billion (FY 2021: ₦1.5 billion) driven largely by higher revenue from increased activities and fair value gains on revaluation, resulting in a profit before tax margin of 72.2% (FY: 2021: 36.0%).
Profit after tax of ₦13.1 billion, up by 895.9% from ₦1.3 billion in FY 2021, resulting in a return on average assets of 36.2% (FY 2021: 6.1%) and return on average equity of 82.4% (FY 2021: 16.9%).
Year-to-date, total assets grew by 73.5% to ₦45.8 billion (FY 2021: ₦26.4 billion). The growth in non-current assets to ₦35.6 billion (FY 2021 ₦17.3 billion) was due to a 291.8% growth in investment property under development to ₦23.3 billion (FY 2021: ₦5.9 billion). Current assets increased by 11.9% to ₦10.2 billion (FY 2021: ₦9.1 billion) driven largely by an increase in accounts receivables which was up by 1610.4% to ₦2.7 billion (FY 2021: ₦159.7 million).
Shareholders’ funds increased to ₦22.8 billion from ₦9.0 billion due to a 218.9% increase in retained earnings to ₦19.0 billion (FY 2021: ₦6.0 billion). During the period, additional shares of 1,534,946,801 at ₦0.5/share were issued at a price of ₦225.0 per share, leading to significant growth in the share premium account.
Total liabilities grew by 32.5% to ₦23.1 billion (FY 2021: ₦17.4 billion), driven by a 28.5% increase in total borrowings to ₦20.0 billion (FY 2021: ₦15.6 billion).
Purple’s debt is comprised of long-term borrowings, which increased by 24.6% to ₦10.3 billion (FY 2021 ₦8.3 billion), while short-term borrowings (48.4% of the total borrowings), rose by 33.0% to ₦9.7 billion (FY 2021: ₦7.3 billion). This resulted in total borrowings to equity ratio of 0.9x (FY 2021: 1.7x).
Contact Information
For investor inquiries
Investor Relations
telephone:
Abasi-Ene Bassey
Oluyemisi Lanre-Phillips
Follow Purple on
Facebook: Purple
Instagram:@Purplegroupng
LinkedIn: Purple
About Purple
Purple is Nigeria’s breakthrough real estate and financial services platform at the forefront of a real estate revolution. We invest in the development, management, and acquisition of superior multi-purpose properties and infrastructure across a wide range of sectors to democratise access to real estate ownership and investment, breaking down the barriers that prevent investors from the gains of appreciating assets.
Purple Real Estate Income Plc commenced operations in 2014 and is responsible for developing the Maryland Mall, a Grade-A mixed-use centre that boasts the largest outdoor LED screen in West Africa.
To discover more and join the Purple community, visit Purple. xyz
Disclaimer
This announcement contains or will contain forward-looking statements that reflect management’s expectations regarding the Company’s future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as “anticipate”, “believe”, “expects”, “intend” “estimate”, “project”, “target”, “risks”, “goals” and similar terms and phrases have been used to identify the forward-looking statements.
These statements reflect management’s current beliefs and are based on information currently available to management. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally.
Purple Group cautions readers that several factors could cause actual results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements.
These factors should be considered carefully, and undue reliance should not be placed on forward-looking statements. For additional information concerning these risks or factors, reference should be made to the Company’s disclosure materials filed from time to time with the Securities & Exchange Commission in Nigeria. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise.
Definition of terms
Gross earnings: computed as an aggregate of revenue from the sale of trading properties under development, rental income, revenue from services to tenants and total other income.
Cost of sales: comprised cost of sales from trading properties under development, expenses on services to tenants, other operating expenses.
Income from trading properties and rental properties: the sum of rental income, revenue from services to tenant and profit from trading properties under development.
Income from trading properties: this is the income gotten from sales of properties under development.
Income from rental properties: This is the income from the summation of rental income and revenue from services to tenants.
Net revenue: computed by deducting the total cost of sales from revenue from trading properties and rental properties.
Total expenses: computed by adding finance cost, operating expenses, and personnel expenses.
Adjusted operating expenses: computed by subtracting finance costs from total expenses.
Operating income: derived by aggregating net revenue and total other income.
Total other income: derived by adding other income with other streams of indirect income e.g., fair value gain.
Adjusted operating income: computed by subtracting adjusted operating expenses from net revenue.
Adjusted interest coverage ratio: computed as adjusted operating income divided by finance cost.
Total borrowings: derived as an aggregate of short-term borrowings and long-term borrowings.
Profit margin on trading properties: the ratio of profit on trading properties and income from trading properties
Net rental margin: the ratio of net rental income and income from rental properties
Net revenue margin: this is the ratio of net revenue and income from trading properties and rental properties.
Total other income margin: the ratio of total other income and gross earnings
Operating income margin: the ratio of net operating income and gross earnings.
Adjusted operating income margin: the ratio of adjusted operating profit and net revenue.
Profit before tax margin: the ratio of profit before tax and gross earnings.
Profit after tax margin: the ratio of profit after tax and gross earnings
Asset turnover: computed gross earnings divided by average total assets.
Total borrowings to equity: computed as the ratio of total borrowings to total equity.
Equity multiplier: computed as the ratio of total assets and total equity.
Return on average asset: computed as the ratio of profit after tax and average total asset.
Return on average equity: computed as the ratio of profit after tax and average total equity.
