Wrap Text
Unaudited results for the six months ended 28 February 2014 and cautionary announcement
PURPLE GROUP LIMITED
(formerly Purple Capital Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE ISIN: ZAE000185526
("Purple Group" or "the group")
(formerly Purple Capital Limited)
UNAUDITED RESULTS
AND CAUTIONARY ANNOUNCEMENT
for the six months ended 28 February 2014
R537,3m
CLIENT FUNDS
73% INCREASE
R48,9m
REVENUE
FROM CONTINUING OPERATIONS
35% INCREASE
R29,6m
OPERATING EXPENSES
2% INCREASE
R15,0m
PROFIT FROM CONTINUING OPERATIONS
BEFORE FAIR VALUE ADJUSTMENTS AND TAX
486% INCREASE
CHAIRMAN'S REPORT
The impact of clear purpose and focused effort are self-evident in the relative
performances of the Purple Group over the last six months.
Our forward ambitions for client growth and the products and services we now
offer cater to investment needs which range from the novice trader to the most
sophisticated investor.
Our offering covers personal financial decision-making covering second to second
trading through to lifetime retirement planning.
The Purple Group, through GT247.com, Emperor Asset Management and GT Private
Broking has now finally put in place a destination that combines technology with
experience to present the modern day solution for personal wealth management.
We have moved well past critical mass and have capacity for extraordinary increases
in revenue over a relatively fixed cost base.
I welcome in this new era of growth for the group and extend my gratitude and
congratulations to the management team and all of our many loyal employees who
have brought us to where we are today.
I am ambitious and confident about our future.
CEO'S REPORT
The last six-month period has built on the foundations set out in our audited results
for the year ended 31 August 2013. Increased focus on our core derivative trading
and asset management operations, whilst containing costs, continues to prove in our
results.
When compared to the corresponding period ended 28 February 2013:
- revenue increased by 35% to R48,8 million;
- client funds increased by 73% to R537,3 million;
- nominal value traded increased by 55% to R117 billion; and
- operating expenses increased by 2% to R29,6 million.
We have delivered an increased profit before tax and fair value adjustments of
R15 million compared to R2,6 million generated during the same period last year.
This translates to a strong increase of 486% and demonstrates the group's significant
leverage over its operating cost structure together with an increased strategic focus.
GT247.com
The group's largest business posted significant revenue growth of 38% driving revenue
up to R35,8 million (R25,9 million in 2013) for the period. Drivers for the strong growth
included:
- nominal value traded by self-directed clients increased by 56% to R106,4 billion; and
- revenue attributable to services rendered to asset management clients increased by
- 198% to 10,5 million.
This performance is particularly strong considering that market volatility, a significant
driver of our spread trading revenue, was down by 7%, compared to the previous
period. The transforming client mix, self-directed and managed, continues to increase
the resilience of GT247.com's revenue and better positions the business to post strong
revenue growth regardless of market conditions.
GT Private Broking (GTPB)
The group's private client division posted good revenue growth of 16%, seeing revenue
climb to R10,6 million (R9,1 million in 2013) for the period. The primary drivers for this
growth were:
- client nominal value traded increased by 48% to R10,1 billion.
- active clients increase by 15%; and
- client funds increased by 12%.
All things considered this was a solid set of results for GTPB. Competition is strongest
at this end of the industry and the strategic decision to differentiate our offering through
a high degree of personal service and professional attention is working well towards
establishing GTPB as the best broker for in person services in South Africa.
Emperor Asset Management (EAM)
The group's alternative asset management division posted impressive growth of 123%,
doubling revenue to a meaningful R2,3 million (R1 million in 2013) for the period.
Growth drivers for the division continue to be:
- client funds increased by 117% to R387,3 million;
- active clients increased by 81% to 1 390; and
- client returns over the period averaged 14,88% vs the benchmark return of 13,09%.
Establishing EAM, over the next five years, as the leading retail alternative asset
manager in South Africa is a journey that we are paying careful attention to. Our
roadmap remains to identify investment excellence, deliver market beating returns,
whilst delivering a user experience that builds confidence and understanding through
complete transparency and a high degree of client engagement.
EAM was awarded a category II A hedge fund licence on 8 April 2014 which opens the
door for institutional investors.
DISCONTINUED OPERATIONS
Purple Group disposed of its interests in Voltbet.com and Purple Capital Treasury
during the latter part of the last financial year. No further expenses will be incurred in
relation to these businesses.
FINANCIAL DIRECTOR'S REVIEW
The Purple Group recorded an after-tax profit of R8,4 million for the six months ended
28 February 2014 compared to a profit of R1,25 million for the same period last year
(a 571% increase) and R2,26 million for the financial year ended 31 August 2013.
INDIRECT INVESTMENT IN REAL PEOPLE INVESTMENT HOLDINGS (PTY)
LIMITED AND CAUTIONARY ANNOUNCEMENT
As detailed in our published results for the year ended 31 August 2013, Purple Group
wrote down its investment in an empowerment vehicle (Blockbuster Trading) holding
a stake in Real People Investment Holdings (Pty) Limited ("RPIH"), by R18,7 million,
in line with RPIH's publicly listed peers.
Purple Group is currently negotiating its exit from this investment, primarily with the
funders of the investment vehicle. Discussions are at an early stage and as such we
are unable to assess the negative financial impact that these negotiations could have
on the carrying value of this investment, currently R21,6 million, net of deferred tax, and
the results of the Purple Group.
We will communicate the outcome of our negotiations as well as the impact on the
Purple Group as soon as practicable.
Cautionary announcement
The impact of the above negotiations could have a material effect on the price of the
Purple Group's securities. Accordingly, shareholders are advised to exercise caution
when dealing in the group's securities until a further announcement is made.
SUBSEQUENT EVENTS
The directors are not aware of any other matter or circumstances arising since
28 February 2014 up to the date of this announcement, not otherwise dealt with in
this announcement.
ACCOUNTING POLICIES
The unaudited condensed group interim financial statements are prepared in
accordance with the recognition and measurement requirements of International
Financial Reporting Standards ("IFRS"), the presentation and disclosure requirements
of IAS 34 – Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council, the Listings Requirements
of the JSE Limited and in the manner required by the South African Companies Act,
71 of 2008.
Accounting policies which comply with IFRS have been applied consistently by all
entities in the group and are consistent with those applied in the previous financial year.
The preparation of these unaudited condensed group interim financial statements for
the six months ended 28 February 2014 was supervised by the Chief Financial and
Operations Officer, Gary van Dyk CA(SA).
Any forward-looking statements contained in this announcement have not been
reviewed or reported on by the company's auditors.
On behalf of the board
Mark Barnes (Executive Chairman)
Charles Savage (Chief Executive Officer)
Gary van Dyk (Chief Financial and Operations Officer)
Johannesburg
10 April 2014
CONDENSED GROUP STATEMENT OF PROFIT AND LOSS
for the six months ended 28 February 2014 Unaudited Unaudited Audited
Change six months six months 12 months
2013 to 28 February 28 February 31 August
2014 2014 2013 2013
% R'000 R'000 R'000
Continuing operations
Revenue 35 48 857 36 220 82 921
Trading expenses 14 (3 239) (2 847) (7 109)
Operating expenses 2 (29 561) (29 045) (62 763)
Net income 271 16 057 4 328 13 049
Other income 76 257 146 259
Earnings before interest, depreciation and amortisation 265 16 314 4 474 13 308
Interest income 197 179 368
Interest expense (600) (523) (1 084)
Depreciation and amortisation (893) (1 568) (1 797)
Profit before fair value adjustments and tax 486 15 018 2 562 10 795
Fair value adjustments – 9 255 (15 324)
Profit/(Loss) before tax 15 018 11 817 (4 529)
Current and deferred tax (4 444) (2 064) 2 391
Profit/(Loss) from continuing operations 10 574 9 753 (2 138)
Discontinued operations
Loss from discontinued operations, net of tax (2 172) (8 500) (17 310)
Profit on sale of discontinued operation – – 21 713
Profit for the period 571 8 402 1 253 2 265
Profit attributable to:
Owners of the company 8 402 1 253 2 265
Minority interest – – –
8 402 1 253 2 265
Weighted number of shares in issue at end of period ('000) 817 211 820 738 819 928
Earnings per share
Basic profit per share (cents) 587 1,03 0,15 0,28
Diluted profit per share (cents) 580 1,02 0,15 0,27
Earnings per share – continuing operations
Basic profit/(loss) per share (cents) 8 1,29 1,19 (0,26)
Diluted profit/(loss) per share (cents) 8 1,28 1,19 (0,25)
Headline profit per share
Profit for the period 571 8 402 1 253 2 265
Headline profit/(loss) for the period 571 8 402 1 253 (18 419)
Headline profit/(loss) per share (cents) 587 1,03 0,15 (2,25)
Diluted headline profit/(loss) per share (cents) 580 1,02 0,15 (2,17)
CONDENSED GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME
for the six months ended 28 February 2014 Unaudited Unaudited Audited
six months six months 12 months
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Profit for the period 8 402 1 253 2 265
Other comprehensive income
Items that may be reclassified subsequently to profit/loss
Foreign currency translation reserve (181) (421) (847)
Available-for-sale revaluations – (103) 42
Available-for-sale assets sold – – (44)
Total comprehensive profit 8 221 729 1 416
Total comprehensive profit attributable to:
Owners of the company 8 221 729 1 416
Minority interest – – –
8 221 729 1 416
CONDENSED GROUP STATEMENT OF CASH FLOWS
for the six months ended 28 February 2014 Unaudited Unaudited Audited
six months six months 12 months
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Cash flow generated by operating activities 28 030 14 689 62 647
Cash flow utilised in investing activities (1 700) (348) (4 993)
Cash flow utilised in financing activities – (1 817) (1 816)
Net increase in cash and cash equivalents 26 330 12 524 55 838
Cash and cash equivalents at the beginning of the period 119 525 63 687 63 687
Cash and cash equivalents at the end of the period 145 855 76 211 119 525
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
as at 28 February 2014 Unaudited Unaudited Audited
six months six months 12 months
28 February 28 February 31 August
2014 2013 2014
R'000 R'000 R'000
ASSETS
Equipment 2 617 1 080 3 072
Intangible assets and goodwill 206 815 214 441 206 223
Interest in associate companies 5 396 5 200 5 200
Other investments 30 834 55 676 30 167
Long-term receivables 598 – 118
Deferred tax assets 22 695 16 065 22 711
Total non-current assets 268 955 292 462 267 491
Trade and other receivables 5 578 4 044 33 573
Cash and cash equivalents 150 237 80 041 123 361
Total current assets 155 815 84 085 156 934
Total assets 424 770 376 547 424 425
EQUITY AND LIABILITIES
Share capital and premium 458 704 476 062 475 009
Accumulated loss (207 793) (216 016) (216 195)
Other reserves 17 534 15 624 17 214
Equity attributable to owners 268 445 275 670 276 028
Bank overdraft 4 382 3 830 3 836
Tax payable 1 598 – 469
Loans and borrowings 7 505 7 429 7 514
Trade and other payables 141 661 87 971 134 881
Provisions 1 179 1 647 1 697
Total current liabilities 156 325 100 877 148 397
Total equity and liabilities 424 770 376 547 424 425
Net asset value per ordinary share (cents) 32,91 33,58 33,84
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 28 February 2014 Unaudited Unaudited Audited
six months six months 12 months
28 February 28 February 31 August
2014 2013 2013
R'000 R'000 R'000
Balance at beginning of period 276 028 273 597 273 597
Shares issued – 88 88
Profit for the period 8 402 1 253 2 265
Shares acquired – – (1 054)
Share-based payments 501 1 256 1 981
Revaluation reserve – (103) (2)
Foreign currency translation reserve (181) (421) (847)
Dividends paid related to period ended 31 August 2013 (16 305) – –
268 445 275 670 276 028
OPERATING SEGMENTS Continuing operations Discontinued
The results by operating segments are as follows: GT247.com Purple Purple Capital Intersegment
and EAM Group Investments Voltbet Treasury revenues Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000
For the six months ended 28 February 2014
Revenue 48 857 2 075 – – – (2 075) 48 857
Trading expenses (3 239) – – – – – (3 239)
Operating expenses (28 372) (3 264) – (2 659) – 2 075 (32 220)
Earnings before interest, depreciation, amortisation and
fair value adjustments 17 246 (1 189) – (2 659) – – 13 398
Fair value adjustments and other income 257 – – – – – 257
Interest income – 197 – – – – 197
Interest expense (97) (503) – – – – (600)
Depreciation and amortisation (885) (8) – – – – (893)
Profit/(Loss) before tax 16 521 (1 503) – (2 659) – – 12 359
Tax (4 713) 269 – 487 – – (3 957)
Profit/(Loss) for the period 11 808 (1 234) – (2 172) – – 8 402
For the six months ended 28 February 2013
Revenue 36 220 474 – 2 413 1 802 (474) 40 435
Trading expenses (2 847) – – (958) (324) (4 129)
Operating expenses (24 701) (4 818) – (7 748) (3 678) 474 (40 471)
Earnings before interest, depreciation, amortisation and
fair value adjustments 8 672 (4 344) – (6 293) (2 200) – (4 165)
Fair value adjustments and other income 146 – 9 255 9 401
Interest income 179 – – – – – 179
Interest expense (3) (520) – – – – (523)
Depreciation and amortisation (841) (727) – (7) – – (1 575)
Profit/(Loss) before tax 8 153 (5 591) 9 255 (6 300) (2 200) – 3 317
Tax (1 956) (108) – – – – (2 064)
Profit/(Loss) for the period 6 197 (5 699) 9 255 (6 300) (2 200) – 1 253
Registered office
Block B, The Offices of Hyde Park
Strouthos Place, Hyde Park, 2196
Independent auditors
BDO South Africa Incorporated
Chartered Accountants (SA)
Registered Auditors
22 Wellington Road, Parktown, 2193
Private Bag X60500, Houghton, 2041
Transfer secretaries
Link Market Services South Africa Proprietary Limited
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein, 2001
Sponsor
Deloitte & Touche Sponsor Services Proprietary Limited
Building 6
Deloitte Place
The Woodlands
20 Woodlands Drive
Woodmead, 2196
Private Bag X6
Gallo Manor, 2052
Directors
Mark Barnes Executive Chairman
Charles Savage Chief Executive Officer
Gary van Dyk Chief Financial and Operations Officer
Dennis Alter Non-executive Director
Craig Carter Non-executive Director
Thembeka Gwagwa Independent Non-executive Director
Ronnie Lubner Non-executive Director
These unaudited results are available on the company's website: www.purplegroup.co.za
Date: 10/04/2014 04:49:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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