MON, 07 NOV, 2022-theGBJournal| Purple Real Estate Income Plc (Purple Group) has announced its audited results for the half year ended 30 June 2022 and as expected gross earnings sits N4.7 billion, up 157.5% year-on-year (H1 2021: N1.8 billion). A key driver of gross earnings growth was income earned from trading properties under development (70.5% of gross earnings) which grew year-on-year by 391.0% to N3.3 billion (H1 2021: N676.1 million).
Other drivers of gross earnings include Rental income (5.8% of gross earnings) of N273.8 million (H1 2021: 288.9 million), down marginally by 5.2% as a result of concessions given to tenants to help alleviate the adverse economic conditions in the country, revenue from services to tenants (7.2% of gross earnings) which grew significantly by 87.2% to N337.1 million from N180.1 million in H1 2021 driven by the rise in diesel and electricity rates in 2022 and total other income (16.6% of gross earnings) which grew by 14.0% to N779.8 from N684.1 million recorded in H1 2021 on higher impairment write-backs of N273.8 million (H1 2021: N147.2 million).
Net revenue grew by 57.1% to N984.6 million in H1 2022 (H1 2021: N626.8 million), primarily on account of higher revenue recorded on trading properties under development. The cost of sales also increased significantly over the period specifically, the cost of sales from trading properties under development rose by 638.6% to N2.7 billion (H1 2021: N372.9 million) because of the recognition of the direct cost associated with the sales of trading property in addition to the rise in the cost of materials and exchange rate. Overall, this resulted in a net revenue margin of 20.9% in H1 2022 relative to the 34.3% recorded in H1 2021.
Adjusted operating expenses of N469.8 million (10.0% of gross earnings), went up by 46.9% (H1 2021: N319.7 million). Growth in other operating expenses was largely dominated by professional expenses which grew by 53.7% to N125.8 million (H1 2021: N81.8 million).
Personnel expenses of N257.0 million were up 65.5% from N155.3 million due to business operation expansion. Overall, the Group recorded a cost-to-income of 26.6% (H1 2021: 24.4%), due to higher growth in adjusted operating expenses relative to the increase in net operating income (+34.6% to N1.8 billion from N1.3 billion).
EBITDA increased by 30.5% to N1.3 billion from N1.0 billion reported in H1 2021. Depreciation for property and equipment increased by 26.9% to N26.2 million (H1 2021: N20.6 million). The Group’s EBITDA margin declined to 28.0% year-on-year from 55.3%, reflective of the significant increase in marketing expenses and professional fees along with the exchange rate factors affecting the cost of materials.
Operating profits increased by 30.6% to N1.3 billion from N991.2 million in the year-ago period. The operating profit margin of 27.5% relative to 54.2% in H1 2021 is reflective of the trickle-down impact of fund-raising activities and marketing expenses incurred this year and the slight decline in margins from sales due to the increase in cost of materials due to do the declining value of the Naira against the Dollar.
Finance costs increased marginally by 0.2% to N356.6 million (H1 2021: N355.8 million). Interest expense on borrowings represented over 94.2% of finance costs with an interest coverage ratio of 3.6x (H1 2021: 2.8x)
Profit before tax rose by 47.6% to N938.1 million (H1 2021: N635.4 million) driven largely by higher revenue from increased activities, resulting in a Profit before tax margin of 19.9% (H1 2021: 34.7%).
The Group recorded an effective tax rate of 20.6% (H1 2021: 15.9%) due to higher operating profit. Profit after tax of N744.7 million, up by 39.3% from N534.5 million reported in H1 2021. The growth was largely driven by an increase in gross earnings which resulted from higher activity levels and sales value.
Year-to-date, total assets grew by 16.6% to N30.8 billion (FY 2021: N26.4 billion). The growth in non-current assets to N20.1 billion (FY 2021 N17.7 billion) was driven by a 39.5% increase in investment property under development to N8.3 billion (FY 2021: N5.9 billion). Current assets also grew by 17.7% to N10.7 billion (FY 2021: N9.1 billion) driven largely by growth in account receivables which is a function of the Group’s sales revenue for trading properties and other assets.
Shareholders’ funds increased to N9.8 billion from N9.0 billion due to a 59.3% increase in share capital to N2.1 billion (FY 2021: N1.3 billion) while share premium increased to N1.3 billion (H1 2021: N625.6 million).
Total liabilities grew by 20.4% to N21.0 billion from N17.4 billion in FY 2021, driven by a 24.5% increase in total borrowings to N19.4 billion (FY 2021: N15.6 billion) and 54.2% growth in current tax liabilities to N550.0 million from N356.7 million in FY 2021.
Long-term borrowings, which made up 52.9% of total borrowings, increased by 23.9% to N10.3 billion (FY 2021: N8.3 billion), while short-term borrowings, which made up 47.1% of the total borrowings, increased by 25.2% year to date to N9.1 billion (FY 2021: N7.3 billion). This resulted in a year-to-date leverage ratio of 2.0x (FY 2021: 1.7x).
Commenting on the performance, the Chief Executive Officer, Mr Laide Agboola, said, “building on the momentum we achieved in 2021, we made significant progress during the first half of 2022 and reached several milestones as we expanded our client reach and developed more properties. This was accomplished despite a background of considerable geopolitical instability made worse by the conflict in Ukraine. This war has had a big influence on consumer spending, supply chains, overall inflation, exchange rate and energy prices.
We remain committed to providing solutions that cater for the needs of our environment and young and vibrant population. The aim is to diversify our revenue streams through our real estate 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 progressing further during the year.”
Twitter-@theGBJournal| Facebook-The Government and Business Journal|email: gbj@govbusinessjournal.ng|govandbusinessj@gmail.com
