| Fri 17 Nov 2006, 16:37 | | Purple Capital Limited - Audited Abridged Financia |
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PPE
PPE
Purple Capital Limited - Audited Abridged Financial Statements
for the year ended 31 August 2006
PURPLE CAPITAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE
ISIN: ZAE000071411
("Purple Capital" or "the Company")
Audited Abridged Financial Statements for the year ended 31 August 2006
ABRIDGED INCOME STATEMENT
2006 2005
For the year ended 31 August R"000 R"000
Revenue 1 071 378
Other income 14 374 4 476
Transaction and corporate action expenses (1 633) (1 350)
Other operating expenses (5 852) (4 791)
Operating profit/(loss) before financial
income 7 960 (1 287)
Financial income 1 588 362
Financial expenses (111) (163)
Share of profit of associates 150 113
Profit/(loss) before tax 9 587 (975)
Taxation 1 437 2 029
Profit for the period 11 024 1 054
Weighted number of shares in issue
at 31 August 144 936 503 99 211 203
Basic earnings per share (cents) 7,61 1,06
Diluted earnings per share (cents) 7,61 1,04
ABRIDGED CASH FLOW STATEMENT
2006 2005
For the year ended 31 August R"000 R"000
Cash flow utilised in operating activities (5 414) (4 256)
Cash flow from/(utilised in) investing
activities 6 738 (981)
Cash flow from financing activities 1 253 24 640
Net increase in cash and cash equivalents 2 577 19 403
Cash and cash equivalents at beginning of year 19 068 (335)
Cash and cash equivalents at end of year 21 645 19 068
HEADLINE EARNINGS PER SHARE
2006 2005
For the year ended 31 August R"000 R"000
Headline earnings per share (cents) 7,61 1,06
Diluted headline earnings per share (cents) 7,61 1,04
ABRIDGED BALANCE SHEET
2006 2005
As at 31 August R"000 R"000
Equipment 260 328
Interests in associate companies 7 152 5 948
Other investments 34 399 17 522
Long-term receivables 500 -
Deferred tax 3 478 2 029
Total non-current assets 45 789 25 827
Trade and other receivables 2 015 294
Cash and cash equivalents 21 645 19 068
Financial assets classified as held for
trading - 9 272
Total current assets 23 660 28 634
Total assets 69 449 54 461
Share capital and premium 82 891 82 889
Accumulated loss (20 681) (31 555)
Other reserves 3 565 1 852
Total equity 65 775 53 186
Short-term liability 3 070 -
Trade and other payables 604 1 275
Total current liabilities 3 674 1 275
Total equity and liabilities 69 449 54 461
Net asset value per ordinary share (cents) 45,38 36,70
ABRIDGED STATEMENT OF CHANGES IN EQUITY
2006 2005
For the year ended 31 August R"000 R"000
Balance at beginning of year 53 186 7 883
Profit for the period 11 024 1 054
Share based payments 1 563 1 739
Shares issued 2 42 510
65 775 53 186
COMMENTARY
Financial review
The Company recorded a profit of R11,0 million for the 2006 financial year,
compared to a restated profit of R1,1 million in 2005 (previously reported
as a loss of R1,1 million). In 2006 a significant proportion of income
arose as a result of fair value adjustments to investments. We expect a
significant increase in revenue this year and in the future from
investments, deal funding and advisory fees.
Shareholders" funds have increased from R53,2 million in 2005 to R65,8
million in 2006.
Purple Capital"s cash on hand increased from R19,1 million in 2005 to R21,6
million at the 2006 year end.
The implementation of the Cape Empowerment Trust Limited ("CET") share swap
and purchase transaction which was also announced today will result in
shareholders" funds increasing to in excess of R80 million.
Operational review
Our strategic mandate, informed by the experiences over the past year,
continues to be to build an independent financial services group in South
Africa, in partnership with black business professionals.
A number of financial services partnerships, specifically in banking and
treasury operations, were examined and progressed in some detail. We remain
convinced of the opportunity (in fact our ambitions, if anything, have
grown), recognising that, to achieve success in a market of established
players will require a large scale of capital, established systems and
management expertise to be in place. There is definitely a place for South
Africa"s first black controlled banking and financial services group, built
as a partnership of old and new capital and expertise; and we still have
every intention to be part of it. Whilst this financial services strategy
will always be at the core of what we do, we recognise also the imperative
to generate revenue.
The relationship and business case for our Black Economic Empowerment
("BEE") shareholder partnership established last year with Umnombo
Investment Holdings Limited ("UIH") and the Democratic Nursing Organisation
of South Africa ("DENOSA"), (the largest nurses and health workers union in
South Africa - which recently celebrated its 10th anniversary) has proven
well founded over the last year. UIH and DENOSA Investment Holdings (Pty)
Limited ("DIHOLD") (the investment vehicle for DENOSA) have established a
number of now valuable stakes in operating companies and are partners in
significant property proposals. Subsequent to the year end, Purple Capital
increased its holding in UIH to 40% by acquiring the interests of Bridge
Capital Group Limited ("Bridge Capital") in UIH. This further investment is
as much a vote of confidence as it is an increased direct economic
alignment in the increased deal flow we expect. Our structured investment
into the Enaleni Pharmaceuticals BEE transaction (through UIH and DENOSA)
has been profitable to date and is marked to market in our financial
statements.
Blackstar Investors plc raised initial capital of GBP35 million (R480
million) for equity investments in BEE deals in South Africa. Blackstar
Managers manages these investments and Purple Capital retains a 33%
economic interest in Blackstar Managers" performance fees. Blackstar has
now announced its participation in the Myriad and Yorkcor transactions and
we look forward to their continued success.
On 18 August 2006 Purple Capital announced that it had entered into an
arrangement with Lubert-Adler Partners ("LAP") and Klaff Realty, LP ("KR")
and their investors, to participate in equity investments totalling in
excess of USD150 million in BEE deals in South Africa. LAP, based in
Philadelphia, USA was formed in 1997 and has invested in approximately 260
investments representing in excess of USD10 billion of real estate and
related assets. KR was established in 1982 as a privately owned real estate
investment company based in Chicago, USA and has been the operating partner
of all of LAP"s retail real estate transactions for the past 20 years. LAP
and KR, together with Purple Capital, have developed a BEE investment
structure which anticipates a combination of equity and debt instrument
funding with features attractive to USA funds, local institutional
financiers, BEE partners and target companies. It is a top priority for
the Purple Capital team to invest this capital in attractive, major BEE
transactions over the next year, in partnership with local institutional
debt providers.
Various share transactions were entered into in acsis as part of its
ongoing BEE restructuring programme. Purple Capital has purchased further
shares in acsis so as to retain its 20% stake. acsis is now a very valuable
investment within the group which continues to experience exceptional
growth in funds under advice off a current base in excess of R14,8 billion,
with an increased focus on corporate clients.
Bridge Capital"s July year end result was lower than expected, mainly as a
result of deal flow timing. This has been more than made up for over the
last two months which have been particularly profitable as fees are brought
through on finalised projects. Purple Capital retains a 30% equity stake in
Bridge Capital and we expect a significant increase in profit this year.
Bridge Capital also recently launched the R850 million BDO Springbok Fund,
a property fund, representing a consortium of Irish investors.
A growing number of private company investment opportunities are being
presented to Purple Capital. Where we are able to add value and where a
potential BEE opportunity for UIH and DENOSA exists, we will make
investments. To date three early stage, relatively small investments have
been made which are expected to deliver significant returns in the short to
medium term. Subsequent to the year-end Purple Capital entered into an
agreement to participate in structured mezzanine debt funding into a black-
empowered vehicle finance company. Once sufficient critical mass has been
established we will raise capital in a separate fund to house and manage
these investments. We have begun increasing our executive capacity to
handle the opportunities presented to us.
Purple Capital also announced today that it had entered into a strategic
share swap transaction with CET, a black controlled investment company
listed on the JSE, resulting in reciprocal 10% shareholdings between Purple
Capital and CET. The transaction will also increase Purple Capital"s BEE
shareholding to 23%.
CET has recently announced a number of completed transactions in its four
current areas of focus, being gaming, property, security and a controlling
interest in Dynamic Cables, a JSE listed cable manufacturer and distributor
to the telecommunications and associated industries. CET and Purple Capital
both see attractive transactions and we will, where appropriate, jointly
evaluate proposals to determine best fit and structure between the two
companies. Together, the two companies are very well positioned as BEE
investment partners of choice - for deals both big and small. Shaun Rai,
CEO of CET will be invited to join the board of Purple Capital as a non-
executive director. Likewise, Mark Barnes will join the board of CET.
On 3 February 2006 it was announced that 24,4 million shares, being 16,8%
of the issued ordinary share capital of the Company, were purchased by
strategic investors, including Mark Barnes, who increased his investment in
Purple Capital to 31%.
Ronnie Lubner, Chairman of the PG Group in South Africa and Chairman of the
International Belron Group, and Dennis Alter, Chairman and major
shareholder of Advanta Corporation, a NASDAQ listed company with a market
capitalisation of USD700 million, have both joined the board of Purple
Capital as non-executive directors with effect from 1 April 2006.
Andrew Bonamour resigned as a member of the board on 31 December 2005 and
Julian Treger resigned on 31 August 2006. We would like to thank them both
for the contribution they have made as directors since the establishment of
Purple Capital.
We particularly wish to thank our colleagues on the board and the
individual shareholders who have supported us over the past year.
Accounting policies
The financial statements 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.
Change in accounting policy
In order to improve fair presentation and align accounting with economic
realities of the entity, the Company adopted the exemption for venture
capital organisations, IAS 28 Accounting for Associates, during the year.
This exemption allows venture capital organisations and other similar
financial organisations not to equity account for associates, but requires
them to apply IAS 39 Financial Instruments, to those investments.
The application of this amendment requires that these investments be
designated as `held for trading" and accounted for at `fair value through
profit and loss".
The change in accounting policy was accounted for retrospectively and the
comparatives have been restated. The change in accounting policy had the
following impact on the consolidated financial statements:
Income statement
2006 2005
For the year ended 31 August R"000 R"000
Increase in other income 13 705 4 294
Decrease in equity accounted earnings - (1 534)
Increase in taxation (1 987) (623)
Increase in profit after tax 11 718 2 137
Balance sheet
2006 2005
As at 31 August R"000 R"000
Cumulative decrease in deferred tax asset (2 610) (623)
Cumulative decrease in accumulated loss 13 855 2 137
KPMG Incorporated has audited the annual financial statements and the
summarised financial statements contained in this abridged report for the
year ended 31 August 2006 and a copy of their unmodified reports are
available for inspection at the Company"s registered office.
On behalf of the board
Mark Barnes Craig Carter Johannesburg
Chairman Director 17 November 2006
Registered office Transfer secretaries
1st Floor, Eastwood Link Market Services South Africa
57 Sixth Road (Pty) Limited
Hyde Park 2196 11 Diagonal Street
(PO Box 411449, Craighall 2024) Johannesburg 2001
(PO Box 4844, Johannesburg 2000)
Independent auditors Sponsor
KPMG Incorporated Bridge Capital Advisors (Pty)
Chartered Accountants (SA) Limited
Registered Accountants and Auditors 1st Floor, Building 22A
KPMG Crescent The Woodlands
85 Empire Road, Parktown 2193 Woodlands Drive
(Private Bag 9, Parkview 2122) Woodmead, Sandton 2106
(PO Box 651010, Benmore 2010)
Executive Directors: Mark Barnes (Chairman), Craig Carter
Non-executive Directors: Dennis Alter (American), Thembeka Gwagwa, Ronnie
Lubner (British)
Date: 17/11/2006 04:37:08 PM Produced by the JSE SENS Department
