Purple Real Estate Income Plc (‘Purple Group’ or ‘Purple’ or ‘PREIP’) announced its unaudited results for the half year ended 30 June 2022.
Consolidated Income Statement
1. Revenue of N3.3 billion (H1 2021: N605.5 million)
2. Cost of sales of N2.0 billion (H1 2021: N20.8 million)
3. Gross profit of N1.3 billion, up by 141.7% year-on-year (H1 2021: N584.7 million)
4. Other income declined by 56.4% to N43.0 million year-on-year (H1 2021: N98.5 million)
5. Administrative expenses grew by 48.4% to N696.2 million year-on-year (H1 2021: N469.2 million)
6. Operating profit of N732.7 million, up 281.2% year-on-year (H1 2021: N192.2 million)
7. Profit before tax of N410.2 million (H1 2021: – N175.7 million)
8. Consolidated Statement of Financial Position
9. Total assets of N30.1 billion, up 14.0% year-to-date (FY 2021: N26.4 billion)
10. Total liabilities of N20.4 billion, up 17% year-to-date (FY 2021: N17.4 billion)
11. Shareholders’ funds of N9.7 billion (FY 2021: N9.0 billion)
12. 2022 interim dividend of 6 kobo per share down by 72.7% year-on-year (2021 interim dividend of 22 kobo per share)
Key Ratios
13. Gross profit margin of 40.9% (H1 2021: 96.6%)
14. Cost to income ratio of 49.6% (H1 2021: 71.9%)
15. Operating profit margin of 22.2% (H1 2021: 31.7%)
16. EBITDA margin of 23.1% (H1 2021: 35.4%)
17. Profit before tax margin of 12.2% (H1 2021: -29%)
18. Leverage ratio of 67.9% (FY 2021: 62.4%)
Commenting on the performance, the Chief Executive Officer, Mr. Laide Agboola, stated:
“In the last six months, we have delivered a strong performance across all parts of our business as we continue to execute against our strategy. Our Nano, Urban, and Macro projects have been a significant differentiator for us, benefitting from its uniqueness as an integrated world of Residential, Hospitality, Retail, Arts, Recreational and Entertainment, as well as Co-Working and Private Offices, fit to cater to the different needs of the highly diversified populace. We have been encouraged by the subscription to these developments and the impact on our top- and bottom line.
In June, we celebrated Purple Maryland’s sixth anniversary, and we are optimistic about the progress we have made, and the value delivered through the mall. Looking forward, we will continue to align our business to growth and value.”
Financial Review
Revenue grew significantly by 456.2% Y-o-Y toN3.3 billion in H1 2022, mainly due to the income from the sale of new projects in our real estate business, Nano[1] (N1.6 billion) which made up 47.6% of total revenue, Urban[2] (N606.0 million) which made up 18.0% of revenue, and Macro (N365.0 million) which made up 10.8% of revenue. In addition to that, we increased marketing activities to drive higher patronage across other revenue sources. Other revenue growth drivers include:
Rental income (9.0% of revenue) of N302.9 million up by 19.9% to (H1 2021: N252.7 million)
Advert income (4.8% of revenue) of N162.5 million, up by 126.1% (H1 2021: N71.9 million) due to increased occupancy rate and an aggressive campaign on adverts
Agency fees (1.9% of revenue) of N62.7 million received from tenants in Purple Maryland, Urban, and Macro sales
Service charge income (1.8% of revenue) of N59.9 million, up by 4.3% (H1 2021: N57.4 million)
We recorded a 7.1% decline in income from utilities (3.5% of revenue) to N117.2 million (H1 2021: N126.2 million, 20.8% of revenue) and a 9.5% decline in income from parking (0.4% of revenue) to N13 million (H1 2021: N14.3 million, 2.4% of revenue) due to more stable power supply during the quarter and continued increase in footfall traffic rather than vehicular traffic due to neighbourhood patronage respectively.
Gross profit grew by 129.1% to N1.3 billion in H1 2022 (H1 2021: N584.7 million), primarily on account of higher revenue. In the same vein, the cost of sales increased significantly, reflecting both project costs involved as well as a high inflation environment. This resulted in gross profit margin of 40.9% in H1 2022 (H1 2021: 96.6%).
Other income, which consists of income on placement and commission from sales, grew by 19.4% to N117.9 million (H1 2021: N98.5 million).
Administrative expenses, representing 21.1% of revenue, grew by 48.4% to N696.2 million (H1 2021: N469.2 million, 77.5% of revenue) due to a substantial increase in operational activities.
Finance expenses declined by 14.0% to N322.5 million (H1 2021: N367.9 million) following the payment of short-term, high interest loans. This is reflective of our aim to improve overall efficiency.
EBITDA increased to N759.9 million from N214.0 million in H1 2021, with an EBITDA margin of 23.1% (H1 2021: 35.3%).
Operating profit grew to N732.7 million from N192.2 million leading to an operating profit margin of 21.8% (H1 2021: 31.7%). Profit Before Tax improved to N410.2 million (H1 2021: – N175.7 million) driven by the operating profit and partly by a 12.3% decline in finance expenses to N322.5 million. This resulted in profit before tax margin of 12.2% (H1 2021: -29.0%).
Total assets grew by 14.0% to N30.1billion year-to-date (FY 2021: N26.4 billion), due to progress on the projects embarked on as well as the company’s additional investments. Cash and short-term funds increased significantly due to the loan received from BOI and commercial paper raised. Loans and advances increased due to the long-term cheaper funds taken.
Shareholders’ funds grew by 7.6% to N9.7 billion year-to-date (FY 2021: N9.0 billion) driven by the increase in retained earnings and private placement embarked on in Q4 2021.
Total liabilities grew by 17.2% to N20.4 billion year-to-date (FY 2021: N17.4 billion), driven mostly by additional facilities taken between Q3 2021 and Q1 2022. The effective interest rate of 14.3% in H1 2022 (H1 2021: 18.5%) reflects the company’s attempt to replace expensive short-term loans with more affordable long-term facilities.
Operational Update
The Group had a media briefing and anchor client signing of our new construction – Purple Lekki and anchor tenants Genesis Cinemas, Market Square and The Ventures Park
The Group signed a partnership with Klump, a Buy Now Pay Later (BNPL) platform, to help diversify our BNPL offering and give our customers more options in selecting a credit provider
In May, Purple participated in a sustainability summit organised by Real Estate Unite
Purple TV completed production of the second season of its first feature show ‘Most Trusted Girl’. The show features numerous Purple locations and tenants, as well as showcases some of the lifestyle elements available within the Purple ecosystem. The content will be hosted on Purple TV’s Channel which will allow monetisation and will draw a large audience to view the other Purple offerings advertised on the platform.
Outlook
Purple intends to
Continue to drive the expansion of its Real Estate Investment Company (REICO) platform via development and acquisition across residential, hospitality, student accommodation, office and private offices, retail, entertainment, advertising amongst others
Leverage technology to develop a tech-powered real estate and financial services business, to create a unique ecosystem of interconnected products in the cloud and offline
Maximise modern and smarter marketing platforms especially social media and digital platforms which facilitate customers’ direct access to products and services
