| Thu 29 Mar 2012, 7:05 | | PPE - Purple Capital Limited - Unaudited results for the six months ended 29 |
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PPE
PPE
PPE - Purple Capital Limited - Unaudited results for the six months ended 29
February 2012
PURPLE CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE ISIN: ZAE 000071411
("Purple Capital" or "the Group")
Unaudited results
for the six months ended 29 February 2012
KEY FEATURES
Profit attributable to shareholders up 375%
Operating profit R8,8 million from a loss of R6,0 million last year
Voltbet launches in-stadium betting in South Africa, betting deposits up
97%
Treasury volumes up 72%
Global Trader revenues up 129%, EBITDA up 811%
Emperor Asset Management doubles ALSI return
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited Unaudited
six months 12 months six months
29 February 31 August 28 February
2012 2011 2011
R`000 R`000 R`000
Revenue 46 166 59 614 23 347
Trading and operating expenses (37 359) (65 631) (25 693)
Total income 8 807 (6 017) (2 346)
Fair value adjustments (274) 13 318 8 242
Other income 1 982 1 125 35
Earnings before interest, 10 515 8 426 5 931
depreciation and amortisation
Net interest expense (791) (442) (699)
Depreciation and amortisation (1 494) (5 612) (3 071)
Profit before tax 8 230 2 372 2 161
Current and deferred tax (2 633) (250) (1 135)
Profit for the period 5 597 2 122 1 026
Other comprehensive (421) 12 73
(loss)/income
Total comprehensive profit 5 176 2 134 1 099
Profit attributable to:
Owners of the company 6 029 2 720 1 269
Non-controlling interests (432) (598) (243)
5 597 2 122 1 026
Weighted number of shares in 819 292 773 207 727 375
issue at end of period (`000)
Basic profit per share (cents) 0,74 0,35 0,17
Diluted profit per share 0,70 0,33 0,17
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited Unaudited
six months 12 months six months
29 February 31 August 28 February
2012 2011 2011
R`000 R`000 R`000
Cash flow generated 20 422 (1 172) (14 312)
by/(utilised in) operating
activities
Cash flow utilised in investing (1 933) (1 215) (4 391)
activities
Cash flow (utilised (3 135) 19 777 23 415
in)/generated by financing
activites
Net increase in cash and cash 15 354 17 390 4 712
equivalents
Cash and cash equivalents at 50 877 33 487 33 487
the beginning of the period
Cash and cash equivalents at 66 231 50 877 38 199
the end of the period
HEADLINE PROFIT PER SHARE
Reviewed Audited Reviewed
six months 12 months six months
29 February 31 August 28 February
2012 2011 2011
R`000 R`000 R`000
Profit for the period 6 029 2 720 1 269
Headline profit for the period 6 029 2 720 1 269
Headline profit per share 0,74 0,35 0,17
(cents)
Diluted profit per share 0,70 0,33 0,17
(cents)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited Unaudited
six months 12 months six months
29 February 31 August 28 February
2012 2011 2011
R`000 R`000 R`000
ASSETS
Equipment 1 731 1 987 2 433
Goodwill 208 146 208 146 208 146
Other intangibles 8 034 6 366 7 958
Investments and associates 49 718 48 295 47 734
Long-term receivables 1 085 1 069 1 043
Deferred tax asset 13 955 14 402 13 517
Total non-current assets 282 669 280 265 280 831
Trade and other receivables 7 173 6 607 8 257
Cash and cash equivalents 66 231 50 877 38 199
Total current assets 73 404 57 484 46 456
Total assets 356 073 337 749 327 287
EQUITY AND LIABILITIES
Share capital and premium 475 974 475 356 475 356
Accumulated loss (215 189) (221 216) (222 666)
Other reserves 14 254 13 472 12 798
Total equity 275 039 267 612 265 488
Long-term liabilities 11 170 14 814 18 454
Total non-current liabilities 11 170 14 814 18 454
Trade and other payables 69 864 55 323 43 345
Total current liabilities 69 864 55 323 43 345
Total equity and liabilities 356 073 337 749 327 287
Net asset value per ordinary 33,51 32,70 32,44
share (cents)
CONDENSED RECONCILIATION OF CAPITAL AND RESERVES
Unaudited Audited Unaudited
six months 12 months six months
29 February 31 August 28 February
2012 2011 2011
R`000 R`000 R`000
Balance at beginning of period 267 612 236 536 236 536
Shares issued - 25 233 25 233
Profit for the period 6 029 2 720 1 269
Share-based payments 2 107 3 297 1 679
Revaluation reserve (227) (11) (8)
Foreign currency translation (194) 23 81
reserve
Non-controlling interests (288) 489 698
Shares acquired - (675) -
275 039 267 612 265 488
SCORE CARD
2011 2012 2012
(six months) (six months) Target
Clients 5 789 8 384 10 089
Client funds on deposit (R`m) 124,7 171,5 237,2
Average value at risk as a % of 0,54 0,41 1,00
market capitalisation
21-day average daily profit and 91 242 175
loss (R`000)
Return on market capitalisation 0,8 6,0 15,0
(six months annualised) (%)
COMMENTARY
Chairman`s review
The intersection between technology and trading in the markets is here to
stay. Understanding this and creating the products, systems, risk management
and client interactions required to accommodate the modern trader is at the
core of the Global Trader and Voltbet expertise sets and growth strategies.
Our clients are ultimately individuals who seek access to economic outcomes in
financial and sports markets. Purple Capital provides leveraged access to
traded financial markets. We will lend you four times the amount you deposit
in your margin account to enable you to take positions and trade in the Top 40
companies listed on the JSE and many other financial instruments and indices
on world-wide markets, it`s that simple.
I am particularly encouraged by this half-year result:
- Global Trader is back on track - the figures speak for themselves but it is
even better than that. Our experienced team is out there providing exciting
new products and technology solutions to attract new clients to trade;
- Voltbet, with the first-ever introduction of in-stadium sports betting in
South Africa, has established itself as the leading on-line sports betting
company in the country; and
- Treasury client and volume growth continues. At the same time, we are
implementing aligned economic models designed to yield the returns both our
clients and shareholders require.
Profit attributable to shareholders for the comparable period increased by
375% from R1,27 million to R6,03 million. For the first time in our three
consecutive periods of reported profitability, earnings come primarily from
trading profit, not fair value adjustments and Purple Capital operations are
now net generators of cash. This confirms the turnaround. Operating profit of
R8,8 million for this six months compares very favourably against the trading
loss of R6,0 million reported for the 2011 financial year.
Purple Capital`s balance sheet is strong. Long-term liabilities have decreased
from R18,5 million a year ago to R11,2 million now and the Group is in a net
positive cash position overall. All market exposure is closely monitored daily
and kept well within agreed limits. Current average value at risk is below
0,5% of market capitalisation.
Global Trader (gt247.com) regains its position as the leading retail
derivatives trading house in South Africa. Our well-established active trading
client base provides a more predictable stream of cash earnings now which will
continue to grow as our market share is doing. I look forward to an increase
in profits for the second half of our financial year which has seasonally
always been way ahead of the first half, which includes the quieter holiday
months. I expect that market volatility will at least be maintained for the
balance of the financial year and that is at the heart of the profit-
generating capacity of gt247.com.
Voltbet is a classic growth story. In most parts of the modern world, betting
is an integral part of the overall sports experience - whether within a
formal, regulated environment or just amongst friends - its part of the fun.
Voltbet is leading the way in on-line sports betting in South Africa by
providing reliable, instant and secure access to sports outcomes for fans. We
will continue to invest and partner in this business which we expect will soon
be a big multiple of its current size and reach. Voltbet`s installed base
will, in due course, yield plentiful cash flows. Right now though, market
penetration is our focus and our share is growing.
Purple Capital Treasury has increased forex turnover on behalf of clients to
R37,8 billion, an increase of 72% compared to the first half of 2011. Improved
relationships with banks and clients and new, aligned contract structures will
deliver the returns we expected from this business when we bought it.
Real People delivered another strong performance in the nine months to
December 2011 with results well up on the previous year. Funds for future
growth have been successfully raised in the capital markets.
I have every confidence in our teams and the work they are doing to deliver
shareholder returns. We`re clearly getting there and I am grateful for each
individual contribution.
Financial director`s review
The Purple Capital Group recorded an after-tax profit of R6,0 million for the
six months to 29 February 2012, compared to a profit of R1,3 million for the
same period last year and R2,7 million for financial year ended 31 August
2011.
The Group`s cash on hand at 29 February 2012 was R66,2 million (28 February
2011: 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.
Total debt was R11,1 million (28 February 2011: R18,5 million) at the end of
the period.
Shareholders` funds have increased from R265,5 million to R275,0 million since
28 February 2011.
Operational review
(all comparatives are to the six-month period ended 28 February 2011)
Global Trader
Trading revenue
Trading revenue recorded extraordinary growth against the comparative period
last year building on the already strong growth experienced in the second half
of 2011. Spread Trading continues to drive the majority of this growth,
however strong performances were recorded across all lines of business.
2011 2012
Trading revenue
R18,8 million R43,1 million +129,3%
Spread Trading
Spread Trading posted a record set of results; revenue achieved in the first
half of 2012 was just 15% short of full year 2011 Spread Trading revenue. A
strong improvement in active clients and a marked increase in market
volatility, in the first quarter, were the major drivers. Sales and marketing
campaigns continue to fuel this business to all-time highs. The second half of
the year will be focused on launching our mobile and tablet trading platforms
which we expect will set the benchmark for the industry and further entrench
our market leadership position.
2011 2012
Spreads revenue
R12,1 million R30,4 million +151,2%
Active clients
1 638 2 753 +68,1%
Contracts for Difference
CFD revenue also posted very strong results recording half-year revenue almost
on par with full year 2011 CFD revenue. We focused effort on delivering
superior levels of service across our sales trading desk and supplemented our
DIY CFD offering with a uniquely tailored geared asset management offering in
EAM, the result is proving us right.
2011 2012
CFD revenue
R5,2 million R10,8 million +107,6%
Active clients
733 873 +19,1%
Client Equity
Client Equity grew strongly over the reporting period. The increase in client
funds held with Global Trader is a positive indicator for future revenue as
well as a vote of confidence from our clients. The increase is the result of
our continued strategy to grow our sales and marketing focus where sales
activity, comparable to the same period last year, increased by 58% driven by
a marked step up in sales performance where we experienced 80% growth in new
account openings.
2011 2012
Total client equity
R123,7 million R169,7 million +37,15%
EBITDA
As expected, strong revenue growth has translated into a very encouraging
improvement in EBITDA over the comparative reporting periods, in the result
surpassing the 2011 Global Trader annual EBITDA.
Shareholders should be very encouraged by the results delivered by Global
Trader this reporting period. The business has finally returned to high levels
of profitability supported by strong growth across all key performance
metrics. Congratulations to the management team for an extraordinary set of
results which I have no doubt will set the tone for the coming financial
periods.
2011 2012
EBITDA
R1,8 million R16,4 million +811,1%
Emperor Asset Management (EAM)
EAM is a unique investment solution, tailored to meet your life style and risk
profile and geared to ensure you get the maximum return from the funds stock
selection performance. Our investment in EAM is rapidly transforming the mix
of income and client types in our CFD business and delivering fantastic
results to the Group as well as its clients. Assets under management increased
by 64,15%, whilst clients enjoyed a market-leading return on investment of
22,81% over the first half reporting period. Comparatively the fund
outperformed the benchmark FTSE/JSE Top 40 by just over 100%.
Voltbet.com
Voltbet.com continues to post aggressive headline growth across its key
performance indicators further validating the Group`s commitment to invest in
the high growth sports betting industry.
Our client acquisition strategy, as demonstrated through our exciting
partnership with the Blue Bulls, is focused on developing partnerships with
leading sports entertainment brands. Voltbet targets and acquires clients
through in-stadium entertainment and high levels of brand awareness. Our fun
and engaging in-stadium activations heighten the sports fans stadium
experience.
Innovation, transparency and brand trust is how we will continue to
differentiate and entrench our market leadership position. Over the next six
months we will leverage our brand to extend on our product and mobile platform
offering as well as further improve our customer service levels and with it
punter value.
Increasing our African footprint will be achieved in the next six months. We
recently received approval for a sports betting license, from the gambling
authorities in Tanzania, and are in the final stages of partnering with the
National Lotto operators to deliver the first sports betting pools in the
region.
Building strong regulatory relationships remains key to our continued growth
and development and we are committed to investing in developing strong working
relationships with all our regulators.
Margin is expectantly lower as the business focuses on growth initiatives at
this stage.
2011 2012
Turnover
R16,9 million R39,6 million +134,3%
Gross gaming revenue
R1,0 million R1,6 million +60,0%
Margin
6,07% 4,00% -34,3%
Bets struck
93 564 147 282 +57,4%
Active clients
1 131 1 397 +23,5%
Deposits
R4,9 million R9,6 million +96,6%
Purple Capital Treasury
Purple Capital Treasury continues to post strong growth across all its key
performance indicators. The primary driver for growth is coming from the
integration to the Group`s sales infrastructure and a higher degree of sales
focus across the business unit.
Our product and services mix continues to develop and we recently launched, in
partnership, a competitive, hassle free forex cash offering to supplement our
corporate treasury services and leverage off our installed Group client base
where the demand for the product is obvious.
Our focus remains firmly on the sales side of the business, targeting the SME
sector, where we will continue to make improvements in our on-boarding
processes and sales disciplines. In addition, we remain committed to further
entrenching our key account relationships and leveraging off our extensive
forex volume advantage, service levels and systems capacity.
The challenge over the next six months is to realign, through partnership, the
economics of the business to ensure we maximise client value whilst ensuring
profitable shareholder returns.
2011 2012
Forex volumes
R22,1 billion R37,8 billion +71,5%
Active clients
17 33 +94,1%
Transactions
processed
10 141 11 696 +15,3%
The results by operating segments are as follows:
Purple Global
Capital Trader Voltbet
R`000 R`000 R`000
Revenue 607 43 136 1 580
Trading and operating expenses (562) (26, 685) (5 530)
Earnings before interest, 45 16 451 (3 950)
depreciation and amortisation
Net interest expense (781) (10) -
Depreciation and amortisation (690) (756) (30)
(Loss)/profit before tax (1 426) 15 685 (3 980)
Current and deferred tax 301 (2 934) -
(Loss)/profit for the period (1 125) 12 751 (3 980)
Non-controlling interests - - 147
(1 125) 12 751 (3 833)
Purple
Treasury Total
R`000 R`000
Revenue 2 551 47 874
Trading and operating expenses (4 582) (37 359)
Earnings before interest, (2 031) 10 515
depreciation and amortisation
Net interest expense - (791)
Depreciation and amortisation (18) (1 494)
(Loss)/profit before tax (2 049) 8 230
Current and deferred tax - (2 633)
(Loss)/profit for the period (2 049) 5 597
Non-controlling interests 285 432
(1 764) 6 029
There is no material inter-segment revenue.
Accounting policies
The interim results have been prepared in accordance and contains the
information required by IAS 34: Interim Financial Reporting, as well as the AC
500 standards as issued by the Accounting Practices Board. The financial
results have been prepared in terms of International Financial Reporting
Standards (IFRS), the interpretations adopted by the International Accounting
Standards Board, the requirements of the South African Companies Act and all
policies are consistent with those used in the previous interim period and at
year-end. The interim results were prepared under the supervision of Mike
Wilson, CA(SA).
On behalf of the board
Mark Barnes Mike Wilson
Chairman Financial director
Johannesburg
29 March 2012
Registered office
3rd Floor, 10 Melrose Boulevard, Melrose Arch, 2076
(PO Box 411449, Craighall, 2024)
Independent auditors
BDO South Africa Incorporated
Registered Auditors
13 Wellington Road, Parktown, 2193
Private Bag X60500, Houghton, 2041
Transfer secretaries
Link Market Services South Africa (Pty) Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000)
Sponsor
BDO Corporate Finance (Pty) Limited
7 West Street, Houghton, 2198
PO Box 1574, Houghton, 2041
Executive Directors:
Mark Barnes (Chairman)
Charles Savage
Mike Wilson
Non-executive Directors:
Dennis Alter (American)
Craig Carter
Thembeka Gwagwa
Ronnie Lubner (British)
Date: 29/03/2012 07:05:01 Produced by the JSE SENS Department.
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