Wrap Text
PPE - Purple Capital Limited - Unaudited results for the six months ended 28
February 2011
PURPLE CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE ISIN: ZAE000071411
("Purple Capital" or "the group")
UNAUDITED RESULTS
for the six months ended 28 February 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited Reviewed
6 months 12 months 6 months
28 February 31 August 28 February
2011 2010 2010
R`000 R`000 R`000
Revenue 23 347 59 746 32 570
Trading and operating expenses (25 693) (62 057) (30 923)
Total income (2 346) (2 311) 1 647
Fair value adjustments 8 242 488 1 467
Other income 35 (286) (347)
Earnings before interest, 5 931 (2 109) 2 767
depreciation and amortisation
Net interest expense (699) (7 930) (2 389)
Depreciation and amortisation (3 071) (49 694) (10 395)
Profit/(loss) before tax 2 161 (59 733) (10 017)
Current and deferred tax (1 135) 9 225 2 078
Profit/(loss) for the period 1 026 (50 508) (7 939)
Other comprehensive income 73 140 24
Total comprehensive 1 099 (50 368) (7 915)
profit/(loss)
Profit/(loss) attributable to:
Owners of the company 1 269 (50 508) (7 939)
Non-controlling interests (243) - -
1 026 (50 508) (7 939)
Weighted number of shares in 727 375 712 652 712 652
issue at end of period (`000)
Basic profit/(loss) per share 0,17 (7,09) (1,11)
(cents)
Diluted profit/(loss) per share 0,17 (7,09) (1,11)
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Cash flow (utilised (14 312) 6 743 565
in)/generated by operating
activities
Cash flow (utilised (4 391) 66 4 986
in)/generated by investing
activities
Cash flow from/(utilised in) 23 415 (2 369) (2 155)
financing activities
Net increase in cash and cash 4 712 4 440 3 396
equivalents
Cash and cash equivalents at the 33 487 29 047 29 047
beginning of the period
Cash and cash equivalents at the 38 199 33 487 32 443
end of the period
HEADLINE LOSS PER SHARE
Profit/(loss) for the period 1 269 (50 508) (7 939)
Headline profit/(loss) for the 1 269 (50 508) (7 939)
period
Headline profit/(loss) per share 0,17 (7,09) (1,11)
Diluted profit/(loss) per share 0,17 (7,09) (1,11)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited Reviewed
6 months 12 months 6 months
28 February 31 August 28 February
2011 2010 2010
R`000 R`000 R`000
ASSETS
Equipment 2 433 2 848 3 231
Intangibles 216 104 209 442 247 681
Investments and associates 47 734 39 819 39 790
Long-term receivables 1 043 4 503 4 478
Deferred tax asset 13 517 16 569 9 964
Total non-current assets 280 831 273 181 305 144
Trade and other receivables 8 257 2 716 5 967
Cash and cash equivalents 38 199 33 487 32 443
Total current assets 46 456 36 203 38 410
Total assets 327 287 309 384 343 554
EQUITY AND LIABILITIES
Share capital and premium 475 356 450 123 450 123
Accumulated loss (222 666) (223 935) (181 367)
Other reserves 12 798 10 348 9 357
Total equity 265 488 236 536 278 113
Long-term liabilities 18 454 20 270 16 877
Deferred tax liability - 540 1 320
Total non-current liabilities 18 454 20 810 18 197
Trade and other payables 43 345 52 038 47 244
Total current liabilities 43 345 52 038 47 244
Total equity and liabilities 327 287 309 384 343 554
Net asset value per ordinary 32,44 33,19 39,03
share (cents)
CONDENSED RECONCILIATION OF CAPITAL AND RESERVES
Balance at beginning of period 236 536 283 732 283 732
Shares issued 25 233 - -
Profit/(loss) for the period 1 269 (50 508) (7 939)
Share based payments 1 679 3 172 2 296
Revaluation reserve (8) 10 (7)
Foreign currency translation 81 130 31
reserve
Non-controlling interests 698 - -
265 488 236 536 278 113
COMMENTARY
Chairman`s report
I`m sure all stakeholders will join me in welcoming the return to a reported
profit for Purple Capital.
At a trading level the loss is due to early stage costs in the Powerbet Gaming
and Purple Treasury acquisitions, both of which are expected to be profitable in
the second half of the year. Global Trader continues to record profits despite
lower volatility in markets worldwide driving lower trading volumes. Increased
values in investments held, due to significantly improved performance or
mark-to-market adjustments, result in an overall profit for the period.
In February 2011 Purple Capital raised R25 million of new equity capital which
will be primarily invested in our gaming expansion, already under way locally
and into Africa.
Financial risk has been practically eliminated in Purple Capital now and
business focus will pay dividends as we combine our energy into making cash.
We all see each other almost every day in Purple Capital and we talk a lot -
always looking to attract new clients and grow with existing ones. Every
interaction is an opportunity - individuals for trading and gaming, companies
for treasury and corporate finance.
Every business in Purple Capital is growing much faster than we`d thought
possible a year ago.
Financial Director`s review
The Purple Capital Group recorded a net profit of R1,3 million for the six
months to 28 February 2011, compared to losses of R7,9 million for the same
period last year and R50,5 million for financial year ended 31 August 2010.
Shareholder funds increased from R236,5 million to R265,5 million due to the
profit made in the current period and from the proceeds of a share issue of R25
million.
The Group`s cash on hand at 28 February 2011 was R38,2 million, including Global
Trader client cash held on margin against which there is a client liability
included under current liabilities in the balance sheet.
Operational review
Global Trader
Client trading improved in the first quarter of the financial year, however
trading volumes declined swiftly in November and remained low until February. A
primary driver of these declines was market volatility which dropped off
sharply in the second quarter. As a result trading revenue in the six months
to end-February fell to R19 million from R28 million in the corresponding period
a year earlier whilst EBITDA over the same periods fell to R1,8 million from
R8 million.
Our sales and marketing campaigns continue to drive strong client acquisition
numbers and our sales trading and social investing strategies, launched in
February, are already showing good results. These drove strong growth in client
funds on deposit, a key driver of revenue growth, up 16% to R124 million from
R106 million in August 2010.
In February higher levels of market volatility supported a marked increase in
trading volumes which have again surged dramatically over the last few weeks,
delivering record revenue days this financial year. Our depth of management,
commitment to innovation and strategic alignment with new business initiatives
in asset and wealth management, stock broking, and our partnership programme
into Africa continue to see us lead the South African derivatives industry. We
expect to deliver strong results for the rest of the year.
Corporate Finance
The corporate finance team implemented the acquisition of the 75% stake in
Purple Treasury Solutions and an 85% stake in Powerbet over the last six months.
The team are actively involved in a number of potential acquisitions and
strategic partnerships across Purple Capital, particularly in sports betting,
both locally and elsewhere in Africa. In addition, the division has already
banked external mandate fees and has a good pipeline of deals that are expected
to result in a healthy profit for the year. The intersection between corporate
finance and treasury advisory is already resulting in mandates being secured.
Purple Capital Treasury
Purple Capital Treasury was acquired in October last year. The current Treasury
client base mainly comprises medium to large corporates with estimated combined
annual foreign exchange turnover of between R50 billion and R60 billion.
At the core of our Treasury operation is being able to deal at a better price in
the aggregate than our clients can deal individually. This critical dealing
mass is supported by first class systems installed in major Corporate Treasuries
throughout South Africa.
Our growth strategy is two-fold:
- expand the corporate client base; and
- a new focus on smaller businesses, where we expect to generate higher margins.
Our economic model is based on shared profit and best execution which we expect
will immediately produce significant and sustainable annuity cash flows for
Purple Capital.
Voltbet
The growth achieved in Voltbet.com since acquisition is very encouraging.
Our advertising campaigns are set to establish Voltbet.com as the number one
online sports betting brand in South Africa. Being part of a listed group has
also secured trust in the business.
Since acquisition we have increased our product offering and depth of betting
markets per sport and now have one of the broadest betting offerings available
in South Africa with around 25 live in running events available per week through
our online system and website.
The leverage off the group synergies is already paying dividends with greater
client reach and deeper operational support to ensure we can provide higher
levels of service and transparency in everything that we do.
Customer (punter) numbers are up over three times in the five months since
acquisition and betting volumes are even better, with compounded growth of 64%
per month.
In Africa we plan to launch in two new regions over the next six months. We also
remain well positioned and strategically aligned with strong shareholders and
leading technology partners to present a strong case in our application for one
of the South African online casino licences.
Our mission is to lead a consolidation of the South African bookmaking industry
and very quickly establish the largest sports betting group in South Africa with
a strategic focus on an aggressive store rollout into Africa, combined with
smart online and mobile conversion strategies. In so doing we will secure a
significant market share in the high growth sports betting opportunity in
Africa.
Real People South Africa ("RPSA")
RPSA provides consumer credit, insurance and cellular phone products to the
South African market as well as selected markets elsewhere in sub-Saharan
Africa. RPSA has produced significantly improved results over the past year and
recently successfully raised funding in the capital markets.
Operating segments
The results by operating segment are as follows:
Purple Global Purple
Capital Trader Voltbet Treasury Total
R`000 R`000 R`000 R`000 R`000
Revenue 9 746 18 818 694 2 366 31 624
Trading and (2 127) (17 018) (3 229) (3 318) (25 692)
operating expenses
Earnings before 7 619 1 800 (2 535) (952) 5 932
interest
depreciation and
amortisation
Net interest expense (608) (91) - - (699)
Depreciation and (506) (2 546) - (20) (3 072)
amortisation
Profit/(loss) before 6 505 (837) (2 535) (972) 2 161
tax
Current and deferred (2 346) 1 210 - - (1 136)
tax
Profit/(loss) for 4 159 373 (2 535) (972) 1 025
the period
Non-controlling - - 238 6 244
interests
4 159 373 (2 297) (966) 1 269
Business combinations
Purple Capital acquired 85% of Powerbet Gaming (Pty) Limited and 75% of WIP
Treasury Solutions (Pty) Limited for R4,65 million and R1,5 million
respectively, with effect from 1 October 2010. The purchase prices were split
as follows:
Amount
R`000
Tangible assets 465
Workforce in place 3 833
Customers 1 180
Software 270
Goodwill 2 822
Deferred tax (1 479)
Minorities (941)
Total consideration 6 150
Accounting policies
The interim results have been presented in terms of IAS 34 - Interim Financial
Reporting, and the South African Companies Act. The financial results have been
prepared in terms of International Financial Reporting Standards ("IFRS"), the
interpretations adopted by the International Accounting Standards Board and the
requirements of the South African Companies Act.
On behalf of the board
Mark Barnes Mike Wilson
Chairman Financial Director
Johannesburg
16 March 2011
Registered office Transfer secretaries
3rd Floor Link Market Services (Pty) Limited
10 Melrose Boulevard 11 Diagonal Street
Melrose Arch 2076 Johannesburg 2001
(PO Box 411449 (PO Box 4844
Craighall 2024) Johannesburg 2000)
Independent auditors Sponsor
KPMG Incorporated KPMG Services (Pty) Limited
Chartered Accountants (SA) KPMG Crescent
Registered Accountants and 85 Empire Road, Parktown 2193
Auditors
KPMG Crescent (Private Bag 9, Parkview 2122)
85 Empire Road, Parktown 2193
(Private Bag 9, Parkview 2122)
Executive Directors:
Mark Barnes (Chairman), Charles Savage, Mike Wilson
Non-executive Directors:
Dennis Alter (American), Craig Carter, Thembeka Gwagwa, Ronnie Lubner (British)
www.purplecapital.com
Date: 16/03/2011 17:48:03 Supplied by www.sharenet.co.za
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