Purple Real Estate Income Plc, owners of Purple Maryland and Purple Lekki have released their annual financial report for 2022. The company which just became a publicly traded company recorded a gross earnings growth of 385.4% from N4.2 billion in FY 2021 to N20.4 billion in 2022. The company also recorded a gross profit of N2.4 billion, up by 36.5% from the N1.8 billion recorded in FY 2021.
Highlights of the Report
The company recorded an operating income of ₦16.9 billion, a 411.6% increase year-on-year from the ₦3.3 billion recorded in FY 2021. They also recorded a total other income of ₦14.5 billion, up from ₦1.5 billion in 2021. The company’s expenses for 2022 were ₦2.2 billion, up by 22% from ₦1.8 billion in 2021.
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The company recorded a Profit Before Tax of N14.7 billion, an increase of 873.5% from the ₦1.5 billion recorded in 202. It also recorded a Profit After Tax (PAT) of ₦13.1 billion, up from ₦1.3 billion recorded in 2021.
The company recorded a total asset of N45.8 billion and total liabilities of ₦23.1 billion. They recorded a profit margin of 32.6% on trading properties and a net rental income margin of 73.4%. The company recorded a net revenue margin of 41.4%, an operating income margin of 83%, as well as an asset turnover ratio of 0.6x.
Review of the Performance
According to the report, 22.7% of the gross earnings were from the sale of trading property still under development. Revenue generated from the sale of trading property under development grew to ₦4.6 billion, representing an increase of 242.6% year-on-year from ₦1.4 billion generated in 2021. This was primarily due to the sale of its Nano apartments, which were 90% completed as of December 2022.
₦13 billion (69.2%) of the company’s gross earnings came from the revaluation changes in the fair value (FV) of the company’s investment properties, specifically Purple Lekki. In addition, the company reported a rental income of ₦557.5 million, indicating a 3.5% decline from the rental income of ₦577.9 million generated in 2021.
The company generated ₦713.4 million in revenue from services to tenants, down from the ₦750.7 million generated in 2021. And other income grew 97% year-on-year to ₦421.8 million from ₦214.1 million in 2021.
Sales costs rose 288.3% to ₦3.5 billion from ₦891.3 million in 2021. This growth was largely due to an increase in the cost of sales for trading properties under development. This cost increased by 318.6% to ₦3.1 billion from ₦745.9 million in 2021. The increase was attributed to the business expansion and the increasing costs of materials, which were influenced by the high inflationary environment, global supply chain disruptions, and adverse exchange rate movements.
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The company’s expenses on services to tenants increased by 149.4% year-on-year to ₦250 million from ₦100.2 million in 2021. And this surge was due to the increase in diesel prices and other utility expenditures. The increase in maintenance costs also drove the company’s property operating expenses to ₦88.7 million from ₦45.2 million in 2021.
Developments from Purple Group
On the 23rd of March 2023, the company finalized the listing process on NASD after the company carried out its IPO of 2 billion shares at ₦5 each. Apart from becoming a public company, the business is transforming into a technology-driven real estate and financial services enterprise. A key component of this integration is Purple Proptech, a wholly owned Purple entity deploying tech-based solutions for retail, entertainment, investments, and financial services.
In commenting on the company’s financial performance, the CEO of Purple Group, Mr Laide Agboola noted,
“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 such as increased cost of building materials, power generation and political uncertainty.
“During the period, we expanded our investment in technology through Purple Proptech Limited, which is aimed at democratising 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.
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“We also made significant progress on our Purple Lekki and Urban developments. Purple Lekki in particular made major progress towards completion as the team sets the 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 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.”
