| Tue 20 Oct 2009, 17:38 | | PPE - Purple Capital - Audited results for the year ended 31 August 2009 |
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PPE
PPE
PPE - Purple Capital - Audited results for the year ended 31 August 2009
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")
AUDITED RESULTS for the year ended 31 August 2009
"its back to basics now..." Mark Barnes, Chairman
Non-core assets disposed of
Group debt reduced by 90% from R163,2 million to R19,0 million at year end
Global Trader client deposit base more than doubles over the year
CONDENSED CONSOLIDATED INCOME STATEMENT
Group Company
2009 2008 2009 2008
R`000 R`000 R`000 R`000
Revenue 96 978 105 749 21 696 11 668
Trading and operating (74 800) (91 073) (28 804) (18 498)
expenses
Net income/(loss) 22 178 14 676 (7 108) (6 830)
Fair value adjustments (20 313) (36 767) (20 313) (36 767)
Other income (49 716) (2 013) (42 559) 3 972
Loss before interest, (47 851) (24 104) (69 980) (39 625)
depreciation and
amortisation
Net interest expense (22 391) (11 685) (25 075) (18 302)
Depreciation and (26 590) (18 421) (3 959) (966)
amortisation
Loss before loss on (96 832) (54 210) (99 014) (58 893)
subsidiary
Loss on loss of - (70 586) - (63 980)
control of subsidiary
Loss before tax (96 832) (124 796) (99 014) (122 873)
Current and deferred 8 423 15 329 6 458 14 437
tax
Loss for the period (88 409) (109 467) (92 556) (108 436)
Loss attributable to:
Owners of the company (89 795) (110 388) (92 556) (108 436)
Minorities 1 386 921 - -
(88 409) (109 467) (92 556) (108 436)
Weighted number of 652 076 295 228 652 076 295 228
shares in issue at end
of period (`000)
Basic loss per share (13,77) (37,39) (14,19) (36,73)
(cents)
Diluted loss per share (13,77) (37,39) (14,19) (36,73)
(cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Loss for the period (88 409) (109 467) (92 556) (108 436)
Other comprehensive 668 (4 979) - -
income
Total comprehensive (87 741) (114 446) (92 556) (108 436)
income
Loss attributable to:
Owners of the company (89 127) (115 367) (92 556) (108 436)
Minorities 1 386 921 - -
(87 741) (114 446) (92 556) (108 436)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Cash flow generated 19 319 10 533 8 022 (309)
by/(utilised in)
operating activities
Cash flow 16 325 (351 041) 16 995 (358 053)
from/(utilised in)
investing activities
Cash flow (utilised (33 849) 322 513 (31 262) 322 513
in)/from financing
activities
Net 1 795 (17 995) (6 245) (35 849)
increase/(decrease) in
cash and cash
equivalents
Cash and cash 27 252 45 247 9 398 45 247
equivalents at the
beginning of the
period
Cash and cash 29 047 27 252 3 153 9 398
equivalents at the end
of the period
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group Company
2009 2008 2009 2008
R`000 R`000 R`000 R`000
ASSETS
Equipment 3 856 5 700 211 314
Global Trader 251 168 264 990 - -
Intangible assets
- Intangibles 46 600 60 422 - -
(customers, trademark)
- Goodwill 204 568 204 568 - -
Other intangible 5 085 12 624 - 3 823
assets
Investments, 45 583 150 412 303 322 407 651
subsidiaries and
associates
Long-term receivables 4 418 1 204 3 332 191
Deferred tax asset 7 233 3 458 17 340 10 543
Total non-current 317 343 438 388 324 205 422 522
assets
Trade and other 3 394 7 058 1 633 2 937
receivables
Cash and cash 29 047 27 252 3 153 9 398
equivalents
Total current assets 32 441 34 310 4 786 12 335
Total assets 349 784 472 698 328 991 434 857
EQUITY AND LIABILITIES
Share capital and 450 123 337 453 450 402 337 453
premium
Accumulated loss (173 428) (83 633) (174 316) (81 759)
Other reserves and 7 037 3 222 11 347 7 364
minorities
Total equity 283 732 257 042 287 433 263 058
Long-term liabilities 19 031 111 243 19 031 111 243
Deferred tax liability 1 258 6 375 - -
Total non-current 20 289 117 618 19 031 111 243
liabilities
Loans and borrowings - 52 000 - 52 000
Trade and other 45 763 46 038 22 527 8 556
payables
Total current 45 763 98 038 22 527 60 556
liabilities
Total equity and 349 784 472 698 328 991 434 857
liabilities
Net asset value per 39,81 81,37 40,23 83,57
ordinary share (cents)
CONDENSED RECONCILIATION OF CAPITAL AND RESERVES
Balance at beginning 257 042 208 851 263 058 208 851
of period
Shares issued 112 949 159 270 112 948 159 271
Loss for the period (88 409) (109 467) (92 556) (108 436)
Share-based payments 3 983 3 373 3 983 3 372
Revaluation reserve 300 (221) - -
Foreign currency 453 (4 764) - -
translation reserve
Distributions to (2 307) - - -
minorities
Own shares purchased (279) - - -
283 732 257 042 287 433 263 058
HEADLINE EARNINGS PER SHARE
Loss for the period (89 795) (110 388) (92 556) (108 436)
Add loss on loss of - 70 586 - 63 980
control of subsidiary
Total tax effect - (8 957) - (8 957)
Headline loss for the (89 795) (48 759) (92 556) (53 413)
period
Headline loss per (13,77) (16,52) (14,19) (18,09)
share
Diluted headline loss (13,77) (16,52) (14,19) (18,09)
per share
COMMENTARY
Chairman`s report
During the 2009 financial year Purple Capital completed a two year process of
returning to a bankable balance sheet. We are practically debt free now and have
retained only core businesses where we have specific expertise, hands on
operational influence and real growth prospects.
The net effect of the disposals and the focus on operating earnings is that debt
has reduced by 90% from R163,2 million to R19,0 million at year end (and further
still to date). The resultant net asset value is R283,7 million (40 cents per
share).
Towards the end of the financial year, I introduced market making in Purple
Capital shares which brought a notable and welcome increase in the volumes
traded. I intend to continue to make a market in Purple Capital shares and offer
this initiative to many companies listed on the JSE so they too can benefit from
higher liquidity in their shares.
Looking ahead, our focus is on trading and corporate finance - where we have
deep understanding, experience and competence:
* Global Trader is back on track. Client confidence is restored, risk is being
properly managed, new products have been successfully launched, system upgrades
are in place and paid for, client accounts and deposits for trading are growing
every month and the company is debt free. I expect quite extraordinary growth
off this resilient base.
* Our corporate finance capability was re-launched about six months ago. The
team has grown and has been well received by companies we are already engaged
with. We are pro-active and our approach is to present logical, original ideas.
For us its back to basics now, back to where we have a competitive advantage in
what we offer and an established track record.
I am grateful to the clients, shareholders and fellow employees who have all
stayed the distance. Thank you.
We are ready to grow again.
I look forward to a return to profitability and the capacity to pay dividends in
the current year.
Financial review
The group recorded an attributable loss of R89,8 million (2008: R110,4 million)
for the 2009 financial year.
In 2009 practically all of the loss was attributable to negative fair value
adjustments to investments, the write-down in Integer and high interest and
amortisation costs. Other than future amortisation these are non-recurring
items.
Shareholders` funds have increased from R257,0 million in 2008 to R283,7 million
in 2009.
The proceeds from the rights issue in October 2008 and the sale of various
assets were used to reduce debt from R163,2 million at 31 August 2008 to R19,0
million at year end.
Purple Capital`s cash on hand increased from R27,3 million in 2008 to R29,1
million at the 2009 year end.
Operational review
Operations
Global Trader
The Global Trader results have been consolidated since acquisition on 21
November 2007. In the current period, Global Trader South Africa contributed
R12,0 million in pre-tax profit on revenue of R73,5 million. The company
incurred approximately R5,3 million in non-recurring costs related to the
transfer of systems from Europe to South Africa as a result of the loss of the
International Operations.
The South African operations of Global Trader continue to grow despite the
impact of the loss of the International operations and the severe market
conditions experienced during the year. Global Trader`s client deposit base has
more than doubled since the beginning of the financial year, signaling a strong
return of investor confidence in Global Trader, its business practices, products
and services. The withdrawal of significant competition and stronger local
equity markets have also seen the contract for difference ("CFD") business grow
over 100% during the first eight months of the calendar year.
Global Trader continues to lead the market, having recently launched binary
options and Mini-CFDs (first for the South African market place) both already
posting positive returns. The extension of Global Trader`s services to self
directed full service broking has introduced traditional equity trading and
education services in October 2009.
Corporate finance
The company has staffed up its corporate finance advisory division in the last
six months in order to leverage off the current corporate finance expertise in
the company in what we expect to be a remarkably active period of capital
restructuring and corporate deals. We have been actively pursuing advisory
mandates over the last few months and have already secured a number of these.
This division is expected to generate solid earnings in the next year.
Investment holdings
Real People South Africa ("RPSA")
RPSA provides a broad range of credit management services to the South African
market.
RPSA is a well managed business which continues to do exceptionally well in
difficult market conditions.
Spanjaard
It was announced on 15 October 2009 that Purple Capital had reached agreement to
dispose of its entire shareholding in Spanjaard. This investment has yielded an
IRR of 21% but is not core to the future business of Purple Capital. Mark Barnes
resigned from the board of Spanjaard with effect from 14 October 2009.
African Independent Retail Finance ("AIRF")
AIRF is a specialist asset finance company currently involved in the commercial
equipment rentals, asset backed consumer finance markets and vehicle finance.
Purple Capital retains its 15% equity stake and R4,6 million redeemable
debenture.
The current focus is on AIRF collecting the outstanding book and paying down
debt.
Disposals
acsis
Purple Capital`s 20% stake in acsis was sold with effect from 1 April 2009 for
R32,0 million. This realised a profit on cost of R15,1 million.
Bond Exchange of South Africa ("BESA")
Purple Capital acquired 5,3% of the equity of BESA in September 2008 for an
investment of R7,5 million. The JSE Limited subsequently made an offer to BESA
shareholders to purchase the entire share capital, which was accepted by the
majority of shareholders. Purple Capital therefore sold its stake for R12,9
million, realising a profit of R5,3 million.
Cape Empowerment Trust ("CET")
The 8% investment in CET that Purple Capital held was sold for total proceeds of
R9,5 million, realising a loss of R12,9 million on cost.
Integer
Purple Capital held a 47% equity stake in Integer (Pty) Limited, a residential
and mortgage loan business. This was disposed of for an amount of R9,4 million,
resulting in a loss of R60,1 million.
Treasury
The South African National Roads Agency chose to implement their own internal
treasury and therefore did not renew the treasury services contract with Purple
Capital.
Capital raised
In order to reduce the group`s borrowings and to fund other investing
activities, the board of Purple Capital raised R120,0 million in new equity by
means of a rights issue in October 2008.
Operating segments
The results by operating segment are as follows:
PC Purple
GTSA Treasury Capital
Revenue 73 454 10 628 12 896
Operating expenses (49 128) (5 400) (14 806)
Trading expenses (5 466) - -
Net income/(loss) 18 860 5 228 (1 910)
Fair value adjustments - - -
Other income (715) - -
Profit/(loss) before 18 145 5 228 (1 910)
interest, depreciation and
amortisation
Net interest 2 683 - (25 074)
income/(expense)
Depreciation and (8 810) - (17 780)
amortisation
Profit/(loss) before tax 12 018 5 228 (44 764)
Current and deferred tax (1 904) (1 464) 2 087
Minority - (1 386) -
Profit/(loss) after tax 10 114 2 378 (42 677)
Investment
Holdings Total
Revenue - 96 978
Operating expenses - (69 334)
Trading expenses - (5 466)
Net income/(loss) - 22 178
Fair value adjustments (20 313) (20 313)
Other income (49 001) (49 716)
Profit/(loss) before (69 314) (47 851)
interest, depreciation and
amortisation
Net interest - (22 391)
income/(expense)
Depreciation and - (26 590)
amortisation
Profit/(loss) before tax (69 314) (96 832)
Current and deferred tax 9 704 8 423
Minority - (1 386)
Profit/(loss) after tax (59 610) (89 795)
Subsequent events
Other than the sale of Spanjaard, the directors are not aware of any events
since 31 August 2009 that are material to these financial statements.
Annual general meeting
The annual general meeting of Purple Capital will be held at 57 Sixth Road, Hyde
Park on Tuesday, 1 December 2009 at 10h00.
Accounting policies
The abridged consolidated financial results have been presented in terms of IAS
34 - Interim Financial Reporting, and the Companies Act of South Africa. The
financial results have been prepared in accordance with International Financial
Reporting Standards ("IFRS"), the interpretations adopted by the International
Accounting Standards Board and the requirements of the South African Companies
Act.
The accounting policies are those presented in the consolidated annual financial
statements for the year ended 31 August 2009 and have been applied consistently
to the periods presented in these condensed financial statements.
Report of the independent auditors
KPMG Inc.`s unmodified auditors` reports included in the annual consolidated
financial statements and on the summarised financial statements contained in
this condensed report are available for inspection at the company`s registered
office.
On behalf of the board
Mark Barnes Mike Wilson
Chairman Financial Director
Johannesburg
20 October 2009
Purple Capital Limited is an Authorised Financial Services Provider (FSP NO.
35584).
Registered office Transfer secretaries
Ground Floor Link Market Services South
Eastwood Africa
57 Sixth Road (Pty) Limited
Hyde Park 2196 11 Diagonal Street
(PO Box 411449 Johannesburg 2001
Craighall 2024) (PO Box 4844, Johannesburg 2000)
Independent auditors Sponsor
KPMG Incorporated KPMG Services (Pty) Limited
Chartered Accountants (SA) KPMG Crescent
Registered Accountants and 85 Empire Road
Auditors Parktown
KPMG Crescent (Private Bag 9, Parkview 2122)
85 Empire Road, Parktown
(Private Bag 9, Parkview 2122)
Executive Directors: Mark Barnes (Chairman), Craig Carter, Charles Savage, Mike
Wilson
Non-executive Directors: Dennis Alter (American), Thembeka Gwagwa, Ronnie Lubner
(British)
Date: 20/10/2009 17:38:08 Produced by the JSE SENS Department.
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