Wrap Text
Summary consolidated results for the year ended 31 August 2017
PURPLE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06) - Share code: PPE - ISIN: ZAE000185526 - ("Purple Group" or "the Company" or "the Group")
SUMMARY CONSOLIDATED RESULTS
FOR THE YEAR ENDED 31 AUGUST 2017
LAUNCH OF
US STOCKS
ON EASYEQUITIES
WINNER
AFRICAN FINTECH
AWARDS 2017
WINNING
BEST TFSA
- 3RD TIME!
INTELLIDEX TOP
STOCKBROKER
AWARDS
EasyEquities
REVENUE
up R9.5m
(2016: R4.9m)
EasyEquities DIRECT
AND PARTNER
ASSETS
up 63.3%
to R1 421m
(2016: R870m)
EasyEquities
ACCOUNTS OPENED
up 91.6%
to 59 550
(2016: 31 074)
CHAIRMAN'S LETTER
I reflect on the year past with mixed feelings.
GT247.com, the market trading platform and relationship base into which the current
shareholders originally invested over a decade ago, has had a tough, disappointing
year, to be sure. In its early years, GT247.com was itself in ground-breaking territory
amongst its stockbroking and trading peers and I expect it will remain a foundation to the
established client base of the Group, as they continue to grow with us.
In the future, GT247.com may well find itself central to being able to offer the diverse
product set increasingly demanded by ever more savvy investors. In the right formulation,
GT247.com will return, to yield the annual profits we have become used to over the years,
which are multiples of this year's disappointing yield.
A full analysis of our position in the extremely disappointing investment in Real People
is set out in this report.
Purple's online Investment platform, EasyEquities (launched barely three years ago) is
an industry disruptor that will re-define how all people engage with all market assets. It
really could be that big.
Born out of the market experience and technology expertise gained in GT247.com, our
management team set out on a mission to bring the neglected asset side of ordinary
people's balance sheets to their attention and equip them to do something about it, to
access it, to manage it, to become involved.
When one day we reflect on what EasyEquities achieved, it will be found to have gone
beyond its obvious investment channel, market access merits, to invite, educate, include
and empower ordinary people into the world of wealth creation previously, wrongly,
foolishly, denied them. Its applications will have extended way beyond its primary
function as the easiest, cheapest retail channel to market, as it straddles structures like
corporate loyalty programs and incentive schemes. EasyEquities is the business of our
future. Get one of your kids to show you how it works, and you'll see what I mean.
The opportunities for future client growth within EasyEquities extend beyond the borders
of South Africa.
Not surprisingly, EasyEquities has taken money and management time and energy
to get it off the ground. Coupled with the difficult trading conditions experienced by
GT247.com and the Real People write down, shareholders find themselves presented
with a disappointing set of numbers and no financial returns on their investment. It's a
hard swallow, but I think it will be worth it.
Get to it, management. Fast forward the partnerships, the client acquisition strategies
and the revenues streams that we know are in the EasyEquities story. I'm in it for the long
term, but I do look forward to those dividends.
My sincere thanks to the management team for the effort and energy they put into this
business. My appreciation to fellow Board members and shareholders, particularly
Ronnie Lubner, who continue to provide me with wise council and have had the faith and
patience in our journey.
The year ahead may well deliver our first home run.
Mark Barnes
Chairman
CHIEF EXECUTIVE OFFICER'S LETTER
Another year of #FinTech awards, of broad industry recognition of our market disruption,
of record customer on-boarding numbers and significant growth in client assets. Another
year of inspiring client stories of ordinary everyday South Africans taking up investing
for themselves, on their own terms, cheaply, easily, democratising share ownership
one proudly South African investor at a time. Another year of deepening our platform
capability, of bravely investing in our team and #easy community, of placing purpose over
profit and building a corporate culture that is so much more powerful than the lines of
code that hold up our online advantage and differentiation.
Another year of lacklustre share performance and operating losses for the Group.
Another year marked by poor economic and investment conditions that kept investor
confidence and market volatility at multi decade lows, key drivers of revenue across
all our businesses. Another year where we found incredible shareholders to stand
resolutely alongside us who committed capital and resources to our dreams of making
investing easy and accessible for all.
It takes a long time to build sustainable long-term value, it takes a long-term vision
and a determined focus on building and investing in the things that matter. It takes the
confidence that comes from happy customers to ignore the musings of short-term
passengers who want short-term returns for their flighty capital.
Warren Buffet often observed "it is the market's insistence on ever-improving "quarterly
results" that leads many management teams to make decisions that help profits (and
stock option value) in the short-term and hurt companies in the long-term. Sometimes
these myopic decisions just result in companies under-investing in promising long-term
opportunities. Sometimes they lead to corner-cutting and brand damage."
Purple Group will never do that, not under my leadership or team, we are all committed
to the creation of incredible long-term value for our customers, for our staff and for our
shareholders. Nothing less.
Over the last 12 months much has been achieved, some of these include:
PURPLE GROUP
- Upgraded our data warehouse capability and rolled out extensive business
intelligence across the Group improving management insights and decision-making
- Successfully concluded the deal terms with Sanlam Investment Holdings Proprietary
Limited.
EASYEQUITIES
- Raised R100 million of growth capital from Sanlam Investment Holdings for a 30%
shareholding in EasyEquities.
- Launched a managed personal share portfolio service on the platform through our
Accenture innovation award winning Bundle and Baskets functionality.
- Launched a US share and ETF offering on the platform in the same low cost, no
minimums, fractional ownership, zero barriers to entry #Easy way.
- Quadrupled the operating scalability of the platform to cater to the exponentially
increasing demand.
- Significantly improved our website traffic conversion rate to three times the industry
average through a series of user experience improvements deployed throughout the
year.
- Setup the EasyEquities Retirement Annuity Fund enabling the launch of RA's on the
platform in December 2017.
- Integrated into the Finswitch transactional engine enabling the launch of Unit Trusts
on our partner platform, SatrixNow, in November 2017 and extending our platform
capability to be able to offer shares and ETFs to other LISPs.
- #1 Tax Free Savings Account at this year's Intellidex/Financial Mail/Investors Monthly Top
Stockbroking Awards for the third year in a row.
- Overall winner of the annual African FinTech and InvestTech Award for the second
year running.
GT247.COM & GT PRIVATE BROKING
- New leadership and management team appointed to drive the business strategy and
growth going forward.
- Swapped out 80% of our own technology stack in favour of MetaTrader 5 to reduce our
technology cost of ownership whilst improving our platform capability, in the result
coupling our market leading low cost stock broking offering with an international
award-winning execution platform. Launched 1 November 2017 this is expected to
drive significant growth in the year ahead.
- Remodelled and relaunched our website, research, blog and podcasts offering
coupled with a revised digital marketing strategy which has doubled website traffic
and client conversion rates.
EMPEROR ASSET MANAGEMENT
- Leverage our quantitative-based investment approach to broaden our range of fund
and strategy offerings to cater to all risk return profiles. Launched this offering on
EasyEquities in March 2017 on-boarding 1583 customers in just six months.
- Completed an independent peer review of our entire investment offering, technology
stack, investment process and marketing strategy with the view to remodel and
relaunch Emperor Asset Management to a broader retail and institutional client base
in 2018.
The year ahead holds much promise. The promise of partnerships that will further
entrench our leadership position and lock out distribution opportunities from competitors
that may come, of product and platform launches that will see us square up against the
heavyweights of asset management and administration and excitingly see the launch of
EasyEquities in new markets in which we will get to test our capability to replicate what
we have achieved here at home and abroad.
In other words, another year of incredible milestones, record breaking achievements and
some failing, all on the path towards achieving spectacular long-term success.
Thank you all for your continued support, commitment, contributions, capital and trusting
patronage you are all a huge part of our proudly unfolding Purple story to make investing
easy for all, everywhere!
Charles Savage
Group CEO
CHIEF FINANCIAL OFFICER'S REPORT
SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
2017 2016 Movement
R'000 R'000 %
Revenue 74 518 105 811 (29.6)
Commissions and research (6 513) (9 747) (33.2)
Operating expenses (91 557) (95 690) (4.3)
Net (loss)/income (23 552) 374 (6 397.3)
Other income 1 972 952 107.1
(Loss)/profit before interest, depreciation
and amortisation (21 580) 1 326 (1 727.5)
Interest expense (3 456) (2 176) 58.8
Depreciation and amortisation (4 837) (2 871) 68.5
Loss before fair value, impairments and
guarantee adjustments (29 873) (3 721) 703.0
Fair value and guarantee adjustments (44 109) - -
Loss before tax (73 982) (3 721) 1 888.8
Taxation 16 120 531 2 935.8
Loss after tax (57 862) (3 190) 1 713.8
Basic loss per share (cents) (6.42) (0.37) 1 635.1
Headline loss per share (cents) (6.42) (0.37) 1 635.1
For the first time, the respective income statements of the various Purple Group
businesses have been carved out below.
Although these businesses leverage off a centralised resource base and have varying
levels of intersection, they each target very different segments of the market and are at
different stages of the business life cycle.
GT247.COM, GT PRIVATE BROKING AND EMPEROR ASSET MANAGEMENT
GT247.com and GT Private Broking are established businesses operating in a niche
segment of the market that provides a trading destination for active OTC derivatives
traders. This market is highly competitive, however, provides healthy margins.
GT247.com also provides execution services for Emperor Asset Management as Emperor
Asset Management manages segregated portfolios for the majority of its clients with the
underlying strategies utilising equity Contracts for Difference (CFDs), of which GT247.
com is the principal. As a result the performance of Emperor Asset Management directly
impacts on the results of GT247.com.
In addition, GT247.com, GT Private Broking and Emperor Asset Management operate
largely off the same centralised resource base of the Group. As such, these business
units have been Grouped together in the analysis below.
GT247.COM, GT PRIVATE BROKING AND EMPEROR ASSET MANAGEMENT
2017 2016 Movement
R'000 R'000 %
Revenue 65 042 100 865 (35.5)
Commissions and research (5 284) (9 096) (41.9)
Operating expenses (57 067) (65 094) (12.3)
Net income 2 691 26 675 (89.9)
Other income 136 90 51.1
Profit before interest, depreciation and
amortisation 2 827 27 765 (89.8)
Interest expense (1 037) (1 088) (4.7)
Depreciation and amortisation (1 451) (1 435) 1.1
Profit before tax 339 24 242 (98.6)
Taxation (71) (12 052) (99.4)
Profit after tax 268 12 190 (97.8)
Key revenue drivers
Volatility index 12.4 17.5 (29.1)
Client funds (R'm) - Trading 136 157 (13.4)
Client funds (R'm) - Asset Management 220 435 (49.4)
The market conditions over the past 12 months, characterised by low volatility and
reduced investor confidence, were not ideal for our speculative trading businesses,
GT247.com and GT Private Broking. This coupled with the significant client out-flows
experienced by Emperor Asset Management has resulted in a 35% decline in revenue
during the year. Despite this decline in revenue these business units still managed to
generate a small profit for the year-ended 31 August 2017.
GT247.com and GT Private Broking's trading related revenue decreased by 19.4%, driven
by a 29.1% decrease in market volatility, which drives client trading activity, and a 13.4%
decrease in Client Funds - Trading ("Trading Funds"). The decrease in Trading Funds was
primarily due to clients realising losses during the year.
Asset management execution revenue, generated by GT247.com, was down 45.3% due
to client outflows from Emperor Asset Management's momentum styled strategies
(Asset Management funds down 49.4%) as a result of the under performance (against
the benchmark) generated by these strategies over the past two years, a decrease in
client confidence in South Africa, clients moving funds into off-shore markets and clients
requiring their funds due to the economic pressure many South Africans currently find
themselves in.
Management has taken the decision to diversify and expand the product offering of
Emperor Asset Management to enable it to provide a more diverse range of low cost
investment options for clients that caters to a much broader market opportunity.
Leveraging off our quantitative based approach and in partnering EasyEquities, we have
managed to launch a full range of managed portfolios through EasyEquities' Bundle
solution, including tax free savings options, discretionary stock broking and retirement
accounts, with plans to extend the offering to traditional pension funds in the second
quarter of next year.
Building our client and asset base through partnering the innovative EasyEquities
investment platform and focusing on developing long-term client relationships through
providing systems that seek to guide and assist investors in proving an answer to the
most commonly asked question, "What should I buy?" is our key strategic focus and
expected to rebuild assets under management and rapidly grow client numbers in the
years ahead.
In light of the current operating conditions being experienced by the trading and asset
management divisions, we have focused on cutting costs where ever possible over the
past 12 months and will continue to do so until such time that revenue recovers.
EASYEQUITIES
The Group has continued to invest in its EasyEquities platform over the past 12 months.
In the result, 59 550 accounts have been opened (an increase of 91.6%), with client
assets totalling R1.13 billion (up 58.9%) and partner funds under administration totalling
R291 million (up 83.0%).
The increase in client accounts and assets is testament to the demand for the
EasyEquities platform and indicative of the gap in the market that EasyEquities has filled
since its launch in October 2014.
EASYEQUITIES
2017 2016 Movement
R'000 R'000 %
Revenue 9 476 4 946 91.6
Commissions and research (1 229) (651) 88.7
Operating expenses (34 490) (30 596) 12.7
Net loss (26 243) (26 301) (0.2)
Other income - - -
Loss before interest, depreciation and
amortisation (26 243) (26 301) (0.2)
Interest expense (2 419) (1 088) 122.3
Depreciation and amortisation (3 386) (1 436) 135.8
Loss before tax (32 048) (28 825) 11.2
Taxation 6 311 10 202 (38.1)
Loss after tax (25 737) (18 623) 38.2
Key revenue drivers
Accounts opened 59 550 31 074 91.6
Client funds (R'm) 1 130 711 58.9
Partner funds (R'm) 291 159 83.0
Total funds 1 421 870 63.3
Revenue increased by 91.6% to R9.5 million on the back of average client and partner
assets for the year being 119% higher than the prior year.
Operating expenses increased by 12.7% with employment costs and IT costs being the
primary drivers of this increase.
The business is currently working on a number of partnership opportunities, which will
hopefully be concluded during the next six months which will further drive asset and
client numbers alike.
The business launched its US Trading account during September 2017, allowing
EasyEquities clients the opportunity to now acquire shares listed in the United States
through the platform. We will be launching a Retirement Annuity account on the platform
during December 2017, that will allow clients to transfer their existing Retirement
Annuities to the EasyEquities Retirement Annuity Fund and acquire Regulation 28
Compliant Bundles on the platform.
Another exciting development for EasyEquities is that Sanlam Investment Holdings
Proprietary Limited ("Sanlam") will be acquiring a 30% shareholding in EasyEquities for
a consideration of R100 million, (subject to certain conditions precedent). This funding
will enable the continued growth and development of the EasyEquities platform for the
next 24 to 36 months. Although, it took us longer than expected to secure Sanlam as
our partner, which placed the Group's capital resources under pressure, this is the right
deal, with the right partner and was worth the wait, as Sanlam, in addition to the capital,
will broaden market access through established distribution channels both locally and
abroad.
The Purple Group structure following the internal restructuring and successful conclusion of the
Sanlam transaction has been reflected below.
See press for details.
COMMISSIONS & RESEARCH
Introducing agent commissions, sales commissions and third party research costs decreased by
33.2% for the 12 months ended 31 August 2017, which is in line with the decrease in revenue.
OPERATING EXPENSES
2017 2016 Movement
R'000 R'000 %
Employment costs (47 023) (46 749) 0.6
IT costs (16 883) (16 870) 0.1
Marketing (8 678) (13 230) (34.4)
Office costs (7 669) (7 592) 1.0
Professional fees (5 513) (4 718) 16.9
Other (5 791) (6 531) (11.3)
Total (91 557) (95 690) (4.3)
Operating expenses for the year have decreased by 4.3% primarily due to a 34.4% pull back in
marketing expenditure and other expenses decreasing by 11.3% on the back of lower revenue. The
decreased marketing spend was due to marketing initiatives and campaigns being targeted at client
acquisition, with a reduced spend on brand building, compared to the prior year.
Professional fees were 16.9% higher due to legal consulting costs incurred in respect of the
restructuring of the Group and in concluding the Sanlam transaction. Professional fees in general
have remained high as legal and other consulting costs continue to be incurred in the development of
new products for the EasyEquities platform.
The majority of the other expenses remained flat, despite inflationary increases from most suppliers.
These increases were off-set through various cost savings achieved across the Board. We will continue
to analyse our cost base and cut costs where appropriate, without impacting the future growth
prospects of the business.
NET INTEREST EXPENSE
The increase in the interest expense is due to an increased utilisation of overdraft facilities to fund the
continued growth of the EasyEquities business.
DEPRECIATION AND AMORTISATION
Depreciation and amortisation costs increased due to various new product development costs being
capitalised during the year, mainly comprising software development expenses in respect of the
EasyEquities platform.
FAIR VALUE AND GUARANTEE ADJUSTMENTS
Purple Group holds a direct investment in Real People Investment Holdings Limited ("RPIH") comprising
6 471 ordinary shares, 6 089 (2016: 5 293) compulsory convertible preference shares and 892 (2016:
826) cumulative redeemable preference shares.
RPIH management, supported by the requisite majority of shareholders, entered into a voluntary
restructure with its creditors during July 2017, as RPIH was not in a position to meet its funding
covenants due to losses and a decline in the RPIH Group's productive assets following its decision
to exit its consumer lending operations early in 2013, more recently compounded by the poor
performance delivered by its Kenyan operation. The fact is that the consequences thereof needed to
be comprehensively resolved in order for the RPIH Group to move forward in the current challenging
economic environment.
The RPIH Group's three remaining businesses in South Africa remain operationally sound and are
capable of delivering acceptable returns when funded with the correct mix of equity and debt and
provided assets are valued on a basis that generates the yields required to deliver these metrics.
The shareholders were not willing to provide the requisite capital to effect the balance sheet restructure
and as such this duty fell on the RPIH Group's credit providers to fulfil this role.
The approved restructuring plan is currently being implemented and should be completed by
30 November 2017.
In the result, Purple Group's interests in RPIH have been significantly diluted, as detailed below:
1. The existing 6 471 ordinary shares would entitle Purple Group to the following allocations:
a. 80 802 ordinary shares (0.067%); and
b. 3 236 B Preference shares with a face value of R1 496 per share.
2. The existing 6 089 compulsory convertible preference shares would entitle Purple Group to the
following allocations:
a. 145 954 ordinary shares (0.121%); and
b. 6 089 B Preference shares with a face value of R1 496 per share.
3. The existing 968 compulsory convertible preference shares would entitle Purple Group to the
following allocations:
a. 280 037 ordinary shares (0.233%); and
b. 968 B Preference shares with a face value of R8 298 per share.
In addition, Purple Group holds an indirect investment in RPIH through Blockbuster Trading 3
Proprietary Limited ("BBT"). BBT, of which Purple Group owns a 37.5% shareholding, holds 10 843
ordinary shares in RPIH.
BBT's existing 10 843 ordinary shares would entitle BBT to 6 009 787 ordinary shares (5.0%) post the
restructure.
In respect of Purple Group's indirect investment in RPIH held through BBT, the shareholders of BBT
granted the Industrial Development Corporation ("IDC"), (which funded the transaction) a put option,
on a joint and several basis, whereby the IDC may put any unredeemed preference shares to the
shareholders of BBT at the subscription price. The Company has provided for the estimated liability in
respect of this guarantee (shown as a financial guarantee).
As a result of the above, Purple Group has written down its investment in RPIH and adjusted the
financial guarantee to be in line with current estimates resulting in a net write-down of R42.9 million
(before tax) during the current year.
CURRENT AND DEFERRED TAX
The tax credit of R16.1 million for the year-ended 31 August 2017 comprises a deferred tax credit
raised in respect of the current year's losses, including the fair value adjustments.
LOSS FOR THE YEAR
The Group has realised a basic and headline loss per share of 6.42 cents for the year-ended 31 August
2017 compared to a basic and headline loss per share of 0.37 cents in the prior year.
On behalf of the board
Gary van Dyk
(Chief Financial and Operations Officer)
OPERATING SEGMENTS
The operating segments are distinguished by the type of business and the management team
responsible for the business unit. The Group comprises the following operating segments:
- GT247.com, GT Private Broking and Emperor Asset Management (EAM): are the derivatives
trading and asset management operations of the Group. These two businesses operate largely off
the same centralised resource base of the Group and GT247.com generates a significant portion
of its revenue for services performed for Emperor clients.
- EasyEquities: is the web-based investment platform of the Group.
- Investments: fees and dividends earned on investments and fair value adjustments made against
them.
GT247.com,
GT Private
Broking
and EAM EasyEquities Investments Total
R'000 R'000 R'000 R'000
2017
Segment asset
Non-current assets 212 893 22 792 60 408 296 093
Current assets 152 084 2 106 2 700 156 890
Total assets 364 977 24 898 63 108 452 983
Segment liabilities
Non-current liabilities - - (26 887) (26 887)
Current liabilities (160 197) (27 587) - (187 784)
Total liabilities (160 197) (27 587) (26 887) (214 671)
GT247.com,
GT Private
Broking
and EAM EasyEquities Investments Total
R'000 R'000 R'000 R'000
2017
Revenue 65 042 9 476 - 74 518
Commissions and research
expenses (5 284) (1 229) - (6 513)
Operating expenses (57 067) (34 490) - (91 557)
Net profit/(loss) 2 691 (26 243) - (23 552)
Other income 136 - 1 836 1 972
Profit/(Loss) before
interest, depreciation and
amortisation 2 827 (26 243) 1 836 (21 580)
Interest expense (1 037) (2 419) - (3 456)
Depreciation and amortisation (1 451) (3 386) - (4 837)
Profit/(Loss) before
fair value, impairment
adjustments and tax 339 (32 048) 1 836 (29 873)
Fair value, impairment and
guarantee adjustments - - (44 109) (44 109)
Profit/(Loss) before tax 339 (32 048) (42 273) (73 982)
Current and deferred tax (71) 6 311 9 880 16 120
Profit/(Loss) after tax 268 (25 737) (32 393) (57 862)
* Share-based payment expense of R5 703 650 is included in operating expenses. The split per
segment is as follows:
- GT247.com, GT Private Broking and EAM: R3 220 387.
- EasyEquities: R2 483 263.
One World Trader is registered in Mauritius as a vehicle for foreign currency hedging and has
trading activity that uses the GT247.com platform in South Africa and is therefore not considered
as a separate geographical segment.
GT247.com,
GT Private
Broking
and EAM EasyEquities Investments Total
R'000 R'000 R'000 R'000
2016
Revenue 100 865 4 946 - 105 811
Commissions and research
expenses (9 096) (651) - (9 747)
Operating expenses (65 094) (30 596) - (95 690)
Net profit/(loss) 26 675 (26 301) - 374
Other income 90 - 862 952
Profit/(Loss) before interest,
depreciation and amortisation 26 765 (26 301) 862 1 326
Interest expense (1 088) (1 088) - (2 176)
Depreciation and amortisation (1 435) (1 436) - (2 871)
Profit/(Loss) before
fair value, impairment
adjustments and tax 24 242 (28 825) 862 (3 721)
Fair value, impairment and
guarantee adjustments - - - -
Profit/(Loss) before tax 24 242 (28 825) 862 (3 721)
Current and deferred tax (12 052) 10 202 2 381 531
Profit/(Loss) after tax 12 190 (18 623) 3 243 (3 190)
* Share-based payment expense of R4 613 000 is included in operating expenses. The split per
segment is as follows:
- GT247.com, GT Private Broking and EAM: R3 229 100.
- EasyEquities: R1 383 900.
EVENTS SUBSEQUENT TO YEAR-END
As announced on SENS on 14 August 2017, Purple Group has entered into agreements with
Sanlam Investment Holdings Proprietary Limited (Sanlam), whereby Sanlam will acquire a
30% shareholding in the EasyEquities business for a consideration of R100 million, subject to
the fulfilment of certain conditions precedent.
ANNUAL GENERAL MEETING
The Annual General Meeting of ordinary shareholders ("shareholders") of the Company will
be held at Ground Floor, Block B, The Offices of Hyde Park, Strouthos Place (off 2nd Road),
Hyde Park on Friday, 8 December 2017 at 10:00.
Basis of preparation of the summary consolidated results
The summary consolidated financial results are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for abridged reports, and the requirements of the
Companies Act of South Africa applicable to summary financial statements. The Listings
Requirements require abridged reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required
by IAS 34 Interim Financial Reporting. This announcement does not include the information
required pursuant to paragraph 16A(j) of IAS 34. The full report is available on the issuer's
website, at the issuer's registered offices and upon request. The accounting policies applied
in the preparation of the consolidated financial statements from which the summary financial
statements were derived are in terms of International Financial Reporting Standards and are
consistent with those accounting policies applied in the preparation of the previous consolidated
annual financial statements, except for the adoption of new, improved and revised standards
and interpretations, which had no material effect on the financial results. This report was
compiled under the supervision of Gary van Dyk CA(SA), Chief Financial and Operations Officer.
The summary consolidated financial statements do not include all of the information required for
full consolidated financial statements and should be read in conjunction with the consolidated
financial statements for the year ended 31 August 2017. The directors take full responsibility for the
preparation of the abridged report. This abridged report is extracted from audited information,
but is not in itself audited.
Report of the independent auditors
The auditor expressed an unmodified opinion on the consolidated financial statements from
which these summary consolidated financial results were derived. A copy of the auditor's
unmodified report on the consolidated financial statements are available for inspection at the
Company's registered office, together with the financial statements identified in the respective
auditor's report.
The auditor's report does not necessarily report on all of the information contained in this
announcement. Shareholders are therefore advised that in order to obtain a full understanding
of the nature of the auditor's engagement they should obtain a copy of the auditor's report
together with the accompanying financial information from the Company's registered office. Any
reference to future financial performance included in this announcement has not been reviewed
or reported on by the Company's auditor.
On behalf of the board
Mark Barnes (Non-Executive Chairman)
Gary van Dyk (Chief Financial and Operations Officer)
Johannesburg
8 November 2017
SUMMARY GROUP STATEMENT OF FINANCIAL POSITION
as at 31 August 2017
2017 2016
R'000 R'000
ASSETS
Equipment 3 168 4 003
Intangible assets and goodwill 233 868 216 137
Investments 12 208 58 418
Other financial assets 1 004 954
Deferred tax assets 45 845 29 725
Total non-current assets 296 093 309 237
Trade and other receivables 5 587 8 429
Tax receivable 2 763 2 490
Investments 5 862 5 938
Other financial assets 1 886 1 749
Cash and cash equivalents 140 792 143 839
Total current assets 156 890 162 445
Total assets 452 983 471 682
EQUITY AND LIABILITIES
Share capital and premium 483 321 456 669
Accumulated loss (273 506) (215 644)
Other reserves 28 497 22 358
Equity attributable to owners 238 312 263 383
Financial guarantee 26 887 31 058
Total non-current liabilities 26 887 31 058
Bank overdraft 13 614 12 172
Trade and other payables 13 618 14 420
Client position liability 140 552 150 649
Borrowings 20 000 -
Total current liabilities 187 784 177 241
Total equity and liabilities 452 983 471 682
Net Asset Value per share 25.54 29.88
SUMMARY GROUP STATEMENT OF PROFIT OR LOSS
for the year ended 31 August 2017
2017 2016
R'000 R'000
Revenue 74 518 105 811
Commissions and research expenses (6 513) (9 747)
Operating expenses (91 557) (95 690)
Net (loss)/income (23 552) 374
Other income 1 972 952
(Deficit)/Earnings before interest,
depreciation and amortisation (21 580) 1 326
Interest expense (3 456) (2 176)
Depreciation and amortisation (4 837) (2 871)
Loss before fair value, impairment
adjustments and tax (29 873) (3 721)
Fair value, impairments and guarantee
adjustments (44 109) -
Loss before tax (73 982) (3 721)
Current and deferred tax 16 120 531
Loss for the year (57 862) (3 190)
Loss attributable to:
Owners of the Company (57 862) (3 190)
(57 862) (3 190)
Weighted average number of ordinary
shares in Issue at end of year ('000) 901 334 863 492
Earnings per share
Basic and headline loss per share
(cents) (6.42) (0.37)
Diluted loss per share (cents) (6.13) (0.35)
SUMMARY GROUP STATEMENT OF OTHER
COMPREHENSIVE INCOME
for the year ended 31 August 2017
2017 2016
R'000 R'000
Loss for the year (57 862) (3 190)
Other comprehensive income
Items that may be reclassified
subsequently to profit/loss
Foreign currency translation reserve 507 1 494
Total comprehensive income (57 355) (1 696)
Total comprehensive income
attributable to:
Owners of the Company (57 355) (1 696)
Non-controlling interest - -
(57 355) (1 696)
SUMMARY GROUP STATEMENT OF CASH FLOWS
for the year ended 31 August 2017
2017 2016
R'000 R'000
Cash flows utilised in
operating activities (29 336) (131 110)
Cash flows utilised in investing
activities (15 778) (11 113)
Cash flows generated by financing
activities 40 645 11 389
Net decrease in cash and
cash equivalents (4 489) (130 834)
Cash and cash equivalents at
beginning of year 131 667 262 501
Cash and cash equivalents at 31
August 127 178 131 667
SUMMARY GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 August 2017
2017 2016
R'000 R'000
Balance at beginning of year 263 383 265 517
Shares issued 26 580 11 144
Loss for the year (57 862) (3 190)
Share-based payment expense 5 704 4 858
Foreign currency translation reserve 507 1 494
Capital distribution - (16 440)
Balance at end of year 238 312 263 383
Readers are referred to the CFO's report for further notes and the full
annual report posted on the Company's website: www.purplegroup.co.za
The audited results are available on the Company's website:
www.purplegroup.co.za
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
Group secretary
Trifecta Statutory and Governance Services, a division of Trifecta Capital Services Proprietary Limited
31 Beacon Road, Florida North, 1709
Sponsor
Deloitte & Touche Sponsor Services Proprietary Limited
Building 8, Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, 2196
Private Bag X6, Gallo Manor, 2052
Directors
Mark Barnes Non-Executive Chairman
Charles Savage Chief Executive Officer
Gary van Dyk Chief Financial and Operations Officer
Dennis Alter Independent Non-executive Director
Craig Carter Independent Non-executive Director
Ronnie Lubner Non-executive Director
Date: 08/11/2017 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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