| Wed 17 Mar 2010, 17:29 | | PPE - Purple Capital - Reviewed Results for the six months ended |
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PPE
PPE
PPE - Purple Capital - Reviewed Results for the six months ended
28 February 2010
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")
Reviewed Results for the six months ended 28 February 2010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited Reviewed
6 months 12 months 6 months
28 February 31 August 28 February
2010 2009 2009
R`000 R`000 R`000
Revenue 32 570 99 812 55 223
Trading and operating expenses (30 923) (74 800) (38 316)
Total income 1 647 25 012 16 907
Fair value adjustments 1 467 (20 313) (55 972)
Other income (347) (49 716) 134
Earnings before interest,
depreciation and amortisation 2 767 (45 017) (38 931)
Net interest expense (2 389) (25 225) (13 814)
Depreciation and amortisation (10 395) (26 590) (13 787)
Loss before tax (10 017) (96 832) (66 532)
Current and deferred tax 2 078 8 423 6 705
Loss for the period (7 939) (88 409) (59 827)
Other comprehensive income 24 668 (569)
Total comprehensive loss (7 915) (87 741) (60 396)
Loss attributable to:
Owners of the company (7 939) (89 795) (60 662)
Minorities - 1 386 835
(7 939) (88 409) (59 827)
Weighted number of shares in issue
at end of period (`000) 712 652 652 076 586 365
Basic loss per share (cents) (1,11) (13,77) (10,35)
Diluted loss per share (cents) (1,11) (13,77) (10,35)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Cash flow generated by/(utilised
in) operating activities 565 19 319 (8 295)
Cash flow generated by/(utilised
in) investing activities 4 986 16 325 (27 168)
Cash flow (utilised in)/generated
by financing activities (2 155) (33 849) 24 032
Net Increase/(decrease) in
cash and cash equivalents 3 396 1 795 (11 431)
Cash and cash equivalents at the
beginning of the period 29 047 27 252 27 252
Cash and cash equivalents at the
end of the period 32 443 29 047 15 821
HEADLINE LOSS PER SHARE
Loss for the period (7 939) (89 795) (60 662)
Headline loss for the period (7 939) (89 795) (60 662)
Headline loss per share (1,11) (13,77) (10,35)
Diluted loss per share (1,11) (13,77) (10,35)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited Reviewed
6 months 12 months 6 months
28 February 31 August 28 February
2010 2009 2009
R`000 R`000 R`000
ASSETS
Equipment 3 231 3 856 4 512
Global Trader intangible assets 244 257 251 168 258 078
- Intangibles (customers, trademark) 39 689 46 600 53 510
- Goodwill 204 568 204 568 204 568
Other intangibles 3 424 5 085 7 899
Investments and associates 39 790 45 583 90 153
Long-term receivables 4 478 4 418 1 259
Deferred tax asset 9 964 7 233 7 076
Total non-current assets 305 144 317 343 368 977
Trade and other receivables 5 967 3 394 40 433
Cash and cash equivalents 32 443 29 047 15 821
Total current assets 38 410 32 441 56 254
Total assets 343 554 349 784 425 231
EQUITY AND LIABILITIES
Share capital and premium 450 123 450 123 450 402
Accumulated loss (181 367) (173 428) (144 296)
Other reserves 9 357 7 037 3 669
Minorities - - 1 276
Total equity 278 113 283 732 311 051
Long-term liabilities 16 877 19 031 61 940
Deferred tax liability 1 320 1 258 -
Total non-current liabilities 18 197 20 289 61 940
Loans and borrowings - - 12 386
Trade and other payables 47 244 45 763 39 854
Total current liabilities 47 244 45 763 52 240
Total equity and liabilities 343 554 349 784 425 231
Net asset value per ordinary
share (cents) 39,03 39,81 43,36
CONDENSED RECONCILIATION OF CAPITAL AND RESERVES
Balance at beginning of period 283 732 257 042 257 042
Shares issued - 112 949 112 949
Loss for the period (7 939) (88 409) (59 827)
Share-based payments 2 296 3 984 1 937
Revaluation reserve (7) 300 (397)
Foreign currency translation reserve 31 452 (171)
Distribution to minorities - (2 307) (482)
Own shares purchased - (279) -
278 113 283 732 311 051
COMMENTARY
Chairman`s review
Purple Capital is pleased to report no further negative fair value adjustments
in the company as well as a return to profitability at the EBITDA level (a
profit of R2,8 million compared to a loss of R38,9 million for the comparable
period).
Our trading and advisory businesses are both really well positioned - Global
Trader client numbers and deposits continue upwards and efforts in Corporate
Finance have now translated into mandates and fees.
We remain convinced of a welcome return to profitability overall for the year
ahead and the Purple Capital story will extend beyond this year`s recovery into
the future.
Global Trader`s South Africa operation has not experienced a single client
default for over eight years, proving itself resilient in an industry where
bigger players have faltered. International evidence overwhelmingly supports
what we have believed for some years - that CFDs and spreads are the way to
trade going forward. Global Trader is the leading independent derivatives
trading house in South Africa and we expect the economics of that position to
flow through now.
Chief Financial Officer`s review
Purple Capital recorded a net loss of R7,9 million for the six months to 28
February 2010, significantly less than the reported loss of R59,8 million for
the same period last year and R88,4 million for the financial year ended 31
August 2009. The loss in the current period arose mainly from funding and
amortisation costs related to the Global Trader investment.
Long-term borrowings have further reduced from R19,0 million at the year-end to
R16,9 million at 28 February 2010. More importantly, the net interest
expense has decreased from R13,8 million to R2,4 million over the same period.
Shareholder funds decreased from R283,7 million (39,81 cents per share) to
R278,1 million (39,03 cents per share).
Cash on hand at 28 February 2010 was R32,4 million, including Global Trader
client cash held on margin against which there is a client liability included
under current liabilities in the balance sheet.
The interest margin on client deposits held by Global Trader have been
reclassified as revenue from net interest expense for the current and prior
reporting periods.
Operational review
Global Trader
It is most relevant to compare the performance figures for Global Trader to the
six months immediately preceding the reporting period ending 28 February 2010.
In comparison to the six months ended 31 August 2009 trading revenue has
increased by 5% from R28,4 million to R29,8 million whilst operating expenses
have decreased by 18% from R23,5 million to R19,3 million. In the result Global
Trader`s operating margin has increased from 5,1% to 27,5%.
CFDs contributed approximately one third and spreads two thirds of trading
revenue.
This result was achieved against a backdrop of significantly reduced volatility
across all markets and declining volumes in the first part of 2010. The strong
equity market rally, which helped stimulate client activity through the second
half of 2009, showed signs of weakness in the first two months of 2010 and
resulted in a moderate close to our half year. A significant reduction in
volatility affected our spread trading business most whilst stronger equity
markets pushed our CFD business volumes on strongly.
Over the reporting period Global Trader continued to rationalise and
restructure our operations and IT, without affecting sales, service, marketing
effectiveness or future capacity. This yields an additional annualised saving
of approximately 20% over our operating cost base. At the same time we launched
a new website, www.gt247.com, as well as new trading platforms for CFDs (EQ
Trader) and Spreads (Future Trader) and a new risk management system.
During the second half of the year our executive focus is on sourcing and
securing new large business opportunities in partnership with established
international players, allowing us to unlock further value through our loyal
and active client base. Locally, Global Trader is set to introduce South
Africa`s first community driven investment platform (facebook for financial
markets) as well as mobile financial subscription and research services (sms
trader news).
On 17 March 2010 we went live with our international partnership with GFT, one
of the world`s leading derivatives brokers, providing our clients with access
to more than 3 000 financial instruments across three award-winning trading
platforms.
Corporate Finance
In Corporate Finance we also punch above our weight - independent thoughts
driving original solutions get us through the door, delivering keeps us in.
Our team continues to expand in response to a growing demand for advisory
services and certainly a more active outlook on the mergers and acquisitions
and restructuring fronts.
Operating segments
The results by operating segments are as follows:
Purple Fair value
GTSA Capital adjustments Total
R`000 R`000 R`000 R`000
Revenue 29 818 2 405 1 467 33 690
Trading expenses (2 268) - - (2 268)
Operating expenses (19 326) (9 329) - (28 655)
Earnings before interest,
depreciation and
amortisation 8 224 (6 924) 1 467 2 767
Net interest expense (31) (2 358) - (2 389)
Depreciation and
amortisation (3 422) (6 973) - (10 395)
Profit/(loss) before tax 4 771 (16 255) 1 467 (10 017)
Current and deferred tax (653) 2 937 (206) 2 078
Profit/(loss) for the
period 4 118 (13 318) 1 261 (7 939)
Accounting policies
The interim results have been presented in terms of IAS34 - 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.
KPMG Inc., the company`s auditors, has reviewed the interim financial
statements contained in this report and has expressed an unmodified conclusion
on the interim financial statements. Their review report is available for
inspection at the company`s registered office.
On behalf of the board
Mark Barnes Mike Wilson
Chairman Financial Director
Johannesburg
17 March 2010
Registered office
Ground Floor, Eastwood
57 Sixth Road
Hyde Park 2196
(PO Box 411449
Craighall 2024)
Independent auditors
KPMG Incorporated
Chartered Accountants (SA)
Registered Accountants and Auditors
KPMG Crescent
85 Empire Road, Parktown 2193
(Private Bag 9, Parkview 2122)
Transfer secretaries
Link Market Services South Africa
(Pty) Limited
11 Diagonal Street
Johannesburg 2001
(PO Box 4844, Johannesburg 2000)
Sponsor
KPMG Services (Pty) Limited
KPMG Crescent
85 Empire Road, Parktown 2193
(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: 17/03/2010 17:29:01 Produced by the JSE SENS Department.
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