Purple Group set to release excellent results

EasyEquities-owner Purple Group said it expects its earnings to rise by almost 200% for the six months through February 2024.

Purple Group released a trading update today to inform shareholders that the company is currently finalising its results for the six months ended 29 February 2024. 

The company expects its basic and headline earnings per share to increase by between 188% and 198%.

This would bring its earnings per share to between 0.74 and 0.82 cents, compared to a loss of 0.84 cents per share in the prior period.

It should be noted that the prior period earnings and headline earnings per share have been restated to reflect the impact of the rights offer concluded during the reporting period.

The reported weighted average number of ordinary shares has been restated from 1 255 137 452 shares to 1 271 722 909 shares.

The basic loss per share for the prior period has been restated from 0.85 cents to 0.84 cents, and the headline loss per share has been restated from 0.85 cents to 0.84 cents.

More details on this jump in earnings will be given when the company releases its results on or about 16 April 2024.

However, its earnings may have been boosted by the monthly platform fee added to EasyEquities in late 2023.

In November 2023, EasyEquities made its Thrive loyalty program mandatory and charged users under level 3 a R25 monthly fee.

It explained, “We are launching an enhanced Thrive programme and implementing a new cost, the Thrive R25 monthly fee.”

“The Thrive Fee will be deducted from your EasyEquities account, which has a Free Cash balance greater than R25 on the first of the next calendar month,” EasyEquities said.

Purple Group CEO Charles Savage said the EasyEquities business had to adapt to the South African economic challenges and bear market.

The mandatory R25 Thrive loyalty program subscription is aimed at modifying the behaviour of EasyEquities users.

Big improvement from poor 2023 results

Purple Group reported poor results for the 2023 financial year, as it swung from a profit to a loss due to expenses significantly outpacing revenue.

Revenue grew by a marginal 0.8% to R276.06 million, while expenses before other income, fair value & impairment adjustments, interest, depreciation and amortisation grew by 31.9% to R280.21 million.

This saw the company make a loss of R35.2 million for the year – a 149.6% decline from the R70.95 million profit it made in 2022.

The company’s earnings also fell significantly, with basic and headline earnings per share swinging to losses.

Purple Group made a basic loss per share of 1.9 cents – a 152.2% drop from 2022. Headline earnings per share fell by 283% to 2.05 cents per share.

The loss attributable to ordinary shareholders of Purple Group amounts to R25 million year-to-date in 2023, compared to a profit of R44 million in 2022.

EasyEquities – Purple Group’s largest business by revenue – performed poorly in 2023, with an 11.1% growth in revenue but a 44.8% increase in expenses.

This saw EasyEquities make a loss of R33.38 million for the year – a 146.4% decrease from the R71.94 million profit the business made in 2022.

This is despite an 18% increase in registered clients in the year and a 17.5% increase in active clients to 897,940.

Purple Group’s other business, GT247.com, saw a 34.5% decrease in revenue to R37.3 million compared to R56.9 million in the prior year.

This business made a profit of R2.37 million for the year – a 79% decrease from 2022.

Savage said the company faced “some formidable economic challenges” and a “rollercoaster marked by economic fluctuations in the period”.

However, he said Purple Group’s achievements in this period “are a testament to the strength of our strategy, the dedication of our team and the loyalty of our customers and partners”.