Purple, the owner of EasyEquities, has warned it will report a loss for the year to end-August, largely as a result of plunging activity on its share-trading platform.
Purple’s share price dropped by as much as 9.5% to 57c after issuing a trading statement for the 12 months to end-August on Thursday, though it pared the losses to 1.59%, closing at 62c on Thursday.
Purple said it expects to report a headline loss of between 1.94c and 2.15c after reporting headline earnings per share of 1.12c in the prior year. JSE-listing requirements oblige firms to inform investors as soon as they become aware that year-on-year earnings will differ by 20% or more.
EasyEquities, the group’s main business, is a retail-based platform and has been hit hard as small investors increasingly opt to cash out for expenditure on essential items in the current tough economic conditions.
“The past year has been marked by economic fluctuations, including a significant downturn in the economy and escalating interest rates,” Purple said in the trading statement. “It’s in these times that true innovation emerges.”
Evidence of a squeeze on Easy Equities’ cash flow emerged earlier this month when it introduced a mandatory R25 monthly loyalty programme fee, sparking anger among users.
The loss comes as Purple faces stiff competition from banking group Investec's new trading platform, Clarity, that will offer retail investors trading in more than 600 local and international shares and exchange traded funds at no cost from next year. Unlike EasyEquities, trading on Clarity will be done via Investec-issued contracts for difference, meaning investors won’t own the underlying shares.
The group’s attempt to open EasyEquities in the Philippines in partnership with GCash, a micropayment service that allows users to do money transfers through a mobile app, is also struggling.
“While taking our products live is proving to be much more difficult and taking longer than planned, our time in the market has been well spent,” it said in the trading statement.
“We are building strong regulatory relationships, strengthening our ties and opportunities with GCash and building a community through educational engagement with hundreds of thousands of Filipinos every single day.”
The Purple Group is expected to release its results on Thursday.
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