Purple chairman feels shareholders’ pain


Purple chairman feels shareholders’ pain

Published Date: 2017-11-09 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Purple chairman feels shareholders’ pain

Mark Barnes says he's in it for the long haul

Low volatility on equity markets and weak confidence aren't good for derivative trading businesses - as financial services provider Purple Group is seeing. Revenue at its GT247.com market trading platform is down, likewise at GT Private Broking and Emperor Asset Management. While its online investment platform EasyEquities is showing strong growth, it still has to achieve scale to become profitable.

Purple's Chairman Mark Barnes admits it's been a tough, disappointing year. However, he says in the right formulation, GT247.com will again yield the annual profits it did in the past, which are multiples of this year's disappointing yield.

Barnes says EasyEquities, launched about three years ago, is an industry disruptor that will re-define how all people engage with all market assets. However, he says EasyEquities has taken money and management time and energy to get it off the ground.

New management has been appointed at GT247.com and GT Private Broking to drive the division's business strategy and growth going forward. It plans to remodel and relaunch Emperor Asset Management to a broader retail and institutional client base next year. It will also be cutting costs at the division.

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GT247.com, GT Private Broking and Emperor Asset Management reported a combined 35.5% fall in revenue to R65 million. Net profit declined 98% to R268 000. The group says market conditions over the year weren't ideal for its speculative trading businesses, with low volatility and reduced investor confidence. Combined with significant client outflows, it said revenue came under pressure.

The investment in EasyEquities is starting to pay off, with client accounts jumping by 91.6% over the year to 59 550 and client assets totalling R1.13 billion, an increase of 58.9%. Revenue grew 91.6% to R9.48 million but was still dwarfed by operating expenses of R34.5 million. Sanlam Investments has now invested R100 million in the platform, taking a 30% stake. EasyEquities also launched a US share and ETF offering, which also allows low-cost fractional share ownership with no minimum investment. It plans to launch retirement annuities next month.

For the year to end August, group revenue fell 29.6% to R74.5 million and it reported a net loss of R23.6 million from a R374 000 profit last year. That resulted in a headline loss per share of 6.42c from last year's loss of 0.37c.

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