How rising OPEX gulped 96% of UPDC’s revenue

UAC Property Development Company (UPDC), Nigeria’s foremost real estate investment firm, is feeling the heat of harsh macroeconomic environment as operating expenses gulp 96 percent of its total revenue.

The end-of-the-year financial results available on the Nigerian Exchange Group show the firm’s profit fell by 110.96 percent to 0.20 billion in 2022 from a decline in profit of 1.87 billion recorded in 2021.

At first glance, Findings by BusinessDay showed the firm’s revenue surged by 614 percent in 2022 to N 5.89 billion from N0.825 billion in 2021.

Further findings showed UPDC’s Operating expenses (OPEX) grew by 48.35 percent in 2022 to N1.35 billion from N0.91 billion at the end of its financial year in 2021.

The increase in operating expenses can be attributed to the 48.6 percent increase in administrative expenses which amounted to N1.28 billion at the end of 2022 from N0.86 billion in the corresponding period of 2021.

Marketing and distribution expenses amounted to N76.13 billion at the end of its financials in 2022 from N46.42 billion in 2021, representing a 64 percent increase.
UPDC’s cost of sales increased by 526.28 percent to N4.29 billion by the end of its financial year in 2022 from N0.69 billion in the corresponding period of 2021.

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Finance income rose to N86.3 billion at the end of its financials in 2022, 89.17 percent up from N45.65 billion recorded in 2021, and despite its decline in interest rates on borrowing by 39.3 percent, finance costs still had a decline by 39.3 percent to 463.6 million in 2022 from 763.7 million in 2021.

Net cash flow used in financing activities grew by 721.1 percent to N1.594 billion at the end of its financial year in 2022 from N195 million recorded in 2021.

Net cash flow from investing activities recorded by the company declined to N26.77 million from N 1.47 billion recorded in 2021.

In the same vein, total assets reported by the company declined by 1.02 percent to N19.4 billion in 2022 from 19.6 billion in 2021.

The real estate company also reported negative cash from financing activities which amounted to N2.9 billion in 2022 from N-2.28 million in 2021.
UPDC’s cash and cash equivalent during the period under review amounted to N3.16 billion, 67.2 percent, an increase from N1.89 billion reported in 2021.

Total borrowings declined by 13.4 percent to N4.77 billion in 2022, from N5.51 billion recorded in 2021.
UPDC Plc is a property investment company with a market capitalisation of N18.7 billion. They are into the acquisition, development, sales, and management of high-quality, serviced, commercial and residential properties in the luxury, premium, and classic segments of the real estate market.