Purple Group’s share price plunged more than 9% after it reported a 152% decline in headline earnings to a 0.85 cents headline loss per share for the six months to February 28.
The group’s expenses increased sharply as new projects took longer and proved more costly than expected to implement.
On top of the headline loss, the online share-trading and investing group, said it would shortly announce plans to raise R150 million in new capital to fund growth over the next years.
Purple’s share price traded 9.7% lower at R1.12 yesterday morning, after the price declined over the year from R2.70. The share, a favourite among many retail investors, drew mixed reactions.
Junior Smith (@JuniorBuffet) commented on Twitter: “Purple group I still believe in the team, the company and its future. Some might call me naive and I might be wrong. A quick few comments on my views. Long-term growth potential, +3 years. Philippines, Capitec, DiscoveryBank and own platform.”
Lord of The Dips (@afro_tez) Tweeted: “Good morning!!!! Today is Purple Group’s shining moment. For me, PPE is not worth the buy at the moment for anything more than 75c a share.”
Thabiso Tshabalala (@Thabiso_XT) Tweeted: “Ewu – watch all those investors who used to post their holdings and gains on Easy Equities slowly start to disappear now that Purple has swung the other way. We’ve seen these movies before.”
CEO Charles Savage said the core of their business continued to trade well, with the number of active clients increasing 23.8% to 831 082 in the period. Client assets increased 15.6% to R42.6bn.
Operating expenses increased by as much as 57.8% to R142 million, while group revenue rose 6.7% to R146m.
“While new products, regions, and partnership initiatives are taking longer to implement and scale, only a few must be successful to deliver considerable value to shareholders,” the group’s director said in the results.
“Partnering GCash alone, the largest and fastest growing mobile wallet in the Philippines, servicing more than 70 million Filipinos, will prove to be the most significant value-creating event in our history… While this has been much harder, more costly and continues to take much longer than anticipated to launch, the reality is the more difficult it proves to be the greater the opportunity it presents,” directors said in the results.
The group is “directly managing a process to introduce global stocks to the Filipino population and managing the regulatory risk,” they said.
“We have more partners than before, new customers continue to arrive at a healthy rate and existing customers choose to stay the course and keep growing their assets with us. We continue to invest heavily in ensuring we can deliver more products to solve more client needs while opening new markets and improving our customer experience,” Savage said.
The tough economic conditions had driven traded value relative to client assets on platform to historic lows. Nevertheless, over the past six months, R2.9 billion in deposits flowed into new investments with the group.
“While the cyclical nature of markets and the economy will impact our clients’ ability to save and invest, we remain determined to pursue our purpose to democratise investing and empower financial dignity for all, while building the world’s best investment platform,” he said.
Savage said considerable investment went to securing and scaling the IT and operations infrastructure that would result in a lower cost to serve customers, increase revenue, and open up new gateways to customer growth through the Philippines and into South East Asia, and beyond.
“Our economic model is now more balanced between retail and institutional flows and much less reliant on activity-based revenue,” he said,
Net-asset value per share increased 8.9% to 38.72 cents.
BUSINESS REPORT