Purple Real Estate Income Limited ('Purple Group' or 'Purple' or 'PREIL') announced its unaudited results for the first quarter ended 31 March 2022.
Consolidated Income Statement
- Total revenue of N1.9 billion, up 530.7% year-on-year (Q1 2021: N302.6 million)
- Cost of sales of N1.1 billion (Q1 2021: N19.2 million)
- Gross profit of N773.9 million, up by 173.1% year-on-year (Q1 2021: N283.4 million)
- Other income increased by 9.0% to N43.9 million year-on-year (Q1 2021: N40.3 million)
- Administrative expenses grew by 31.4% to N302.9 million year-on-year (Q1 2021: N230.5 million)
- Operating profit of N505.0 million, up 486.9% year-on-year (Q1 2021: N86.0 million)
- Profit before tax of N342.6 million (Q1 2021: - N94.9 million)
Consolidated Statement of Financial Position
- Total assets of N33.8 billion, up 98% year-on-year (Q1 2021: N17.0 billion)
- Total liabilities of N24.5 billion, up 171.8% year-on-year (Q1 2021: N10.3billion)
- Shareholders’ funds of N9.4 billion (Q1 2021: N6.6billion)
- 2022 interim dividend of N185.5 million at 6 kobo per share (2021 interim dividend of N142.3 million at 22 kobo per share)
Key Ratios
- Gross profit margin of 40.5% (Q1 2021: 93.7%)
- Cost to income ratio of 75.8% (Q1 2021: 84.9%)
- Operating profit margin of 26.5% (Q1 2021: 28.4%)
- EBITDA margin of 27.0% (Q1 2021: 30.8%)
- Profit before tax margin of 17.9% (Q1 2021: 31.3%)
- Leverage ratio of 44.8% (Q1 2021: 52.6%)
Commenting on the performance, the Chief Executive Officer, Mr Laide Agboola, stated:
“We delivered a good first quarter, with strong performance recorded both financially and operationally. Our strategic investment for growth began to significantly yield this quarter. We continue to make headway with our ongoing projects – PurpleLekki Purple Macro, and Purple Urban; and expect to improve our revenue significantly upon completion.
We are committed to providing solutions that meet the needs of our environment and caters to our young and vibrant population. The aim is to diversify our revenue streams through our real estate, financial services, and lifestyle development businesses. Our focus is on strengthening growth through technology and partnerships, as well as improving our capital base. We look forward to further progress for the rest of 2022.”
Revenue grew significantly by 530.7% Y-o-Y to ₦1.9 billion in Q1 2022, mainly due to the income from the sale of our new projects in our real estate business, Nano (N843.9 million) which made up 44.2% of total revenue and Urban (N606.0 million) which made up 31.8% of total revenue. In addition to that, we increased marketing activities to drive higher patronage across other revenue sources. Other revenue growth drivers include:
- Agency fees (6.4% of revenue) of N122.8 million received from tenants in Purple Maryland and Urban Sales
- Rental income (8.3% of revenue) of N157.3 million up by 15.2% to (Q1 2021: N136.8 million)
- Service charge income (1.7% of revenue) of N31.7 million, up by 3.1% (Q1 2021: N30.8 million)
- Advert income (4.3% of revenue) of N81.5 million, up by 165.0% (Q1 2021: N30.8 million) due to increased occupancy rate and aggressive campaign on adverts
We recorded a 6.2% decline in the income from utility (3.1% of revenue) to N59.2 million (Q1 2021: N63.1 million, 20.9% of revenue) and a 15.5% decline in income from parking (0.3% of revenue) to N6.1 million (Q1 2021: N7.2 million, 2.4% of revenue) due to more stable power supply during the quarter and increase in footfall traffic rather than vehicular traffic due to neighbourhood patronage respectively.
Gross profit grew by 173.1% to ₦773.9 million in Q1 2022 (Q1 2021: N283.4 million), primarily on account of higher revenue recorded. Cost of sales increased significantly, reflecting both costs involved in driving the projects as well as a relatively higher cost environment. This resulted in a gross profit margin of 40.5% in Q1 2022 (Q1 2021: 93.7%).
Other income which consists of income on placement and commission from sales, grew by 9.0% to N43.9 million (Q1 2021: N40.3 million) as a result of improved investment yield on cash during the quarter and growth in sales respectively.
Administrative expenses, representing 15.9% of revenue, grew by 31.4% to N302.9 million (Q1 2021: N230.5 million, 76.2% of revenue) due to substantial increase in operational activities due to the Merger and regularisation of our just acquired Asset Manager’s licenses along with associated professional expenses incurred by our rating agencies during the quarter and other professional parties. Finance expenses declined by 10.2% to N162.4 million (Q1 2021: N180.9 million) following the payment of expensive short-term debt and replacement with more affordable long-term finance. This is reflective of our aim to improve overall efficiency.
EBITDA increased to N515.0 million from N93.2 million in Q1 2021 resulting in an EBITDA margin of 27.0% (Q1 2021: 30.8%).
Operating profit grew to N505.0 million from N86.0 million leading to an operating profit margin of 26.5% (Q1 2021: 28.4%). Profit Before Tax was ₦342.6 million (Q1 2021: - N94.9 million) driven by the operating profit and partly by a 10.2% decline in finance expenses to N162.4 million. Profit Before Tax margin of 17.9% (Q1 2021: 31.3%) was recorded.
Total assets grew by 98.0% to N33.8 billion (Q1 2021: N17.0 billion), driven by 77.3% increase in property, plant, and equipment to N23.5 billion (Q1 2021: N13.3 billion); increase in loans and advances to customers to N7.4billion from N3.2 billion.
Shareholders’ funds grew from N6.69 billion to N9.4 billion driven by the growth in our general reserve to N6.0 billion (Q1 2021: N4.8 billion) and share capital of N1.3 billion (Q1 2021: N20.2 million).
Total liabilities grew by 135.4% to N24.5 billion from N10.4 billion in Q1 2021, driven mostly by a 194.3% increase in borrowings to N15.2 billion (Q1 2021: N5.1 billion) and 80.9% growth in other liabilities to N8.7 billion from N4.8 billion in Q1 2021. The effective interest rate of 14.3% in Q1 2022 (Q1 2021: 18.5%) reflects the efficiency of our borrowings. In Q1 2022, we recorded a total debt to asset ratio of 44.8% (Q1 2021: 30.1%).
Operational Update
- Following the retirement of Mr. Olutola Mobolurin as Chairman, the Board of Purple appointed Mrs. Jumoke Akinwunmi as Acting Chairman effective 1 January 2022, continuing in her role as an Independent Director.
- The Group, in collaboration with Northcourt Real Estate hosted a virtual event titled “Excelling as a Woman in Real Estate’ on 8 March 2022, as part of activities marking this year’s International Women’s Day
- In March, the scheme of merger between Purple Real Estate Development Company (‘’PREDCO”) and Purple Real Estate Income Limited ("PREIL") was completed
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