Purplebricks Group emerging through COVID-19 pandemic in a very strong position

Purplebricks

Purplebricks Group plc (LON:PURP), a leading UK estate agency business, announces its results for the year ended 30 April 2020 and provides an update on strategy and current trading.

Full YearGroup*2020
£m
2019£mChange 
Revenue111.1113.8-2%
Gross profit67.769.4-3%
Gross profit margin (%)60.9%61.0%-10 bps
Operating loss(9.4)(1.5)-527%
Adjusted EBITDA11.86.6-73%
Cash at year end231.062.8
*Group refers to UK and Canada   

Financial and operational results

·    COVID-19 materially impacted trading at year end, business adapted quickly to remain open and conserve cash

·    UK average revenue per instruction (‘ARPI’)3 of £1,394, up 12% (2019: £1,243)

·    Revenue

–      Group revenue down by 2% to £111.1m (2019: £113.8m)

–      UK revenue flat through first 10 months until pandemic and down 11% for full year

–      UK instructions down 23% but underpinned by 12% increase in ARPI  

·    Adjusted EBITDA

–      Group adjusted EBITDA from continuing operations reduced to £1.8m (2019: £6.6m) including loss of £1.4m from Canada which was sold post year end

–      UK adjusted EBITDA down to £4.8m (2019: £10.2m) reflecting impact of suspension of housing market in the last two months of the financial year

·    Including the results of the discontinued operations in the US and Australia, the Group’s total loss for the year was £19.2m (2019: £54.9m)

·    Strong financial position, cash balance of £66.0m at 15 July following disposal of the Canadian business and no bank debt

·    Improved UK marketing spend efficiency at 25.6% of revenue, down 400bps

·      Saved UK customers £77m in commission4

·    3.9%5 market share of instructions, 5.1%5 share of properties sold by volume

Strategy update and current trading

·    Strategic focus now fully on the UK following disposal of the Canadian business

·    Strategic initiatives being delivered at pace with significant opportunity for further innovation

·    Continued to see new instructions through the pandemic and market recovering well since mid-May, supported by Government’s Stamp Duty holiday effective 8 July

·    Highest ever month for instructions in the UK, listing over 7,000 homes in July

·    Clear evidence consumers are starting to shift towards apps and tech-based alternatives

·    Confident in the opportunity to drive leverage and scale by extending our market and growing value-add revenues

·    Despite market rebounding strongly, outlook for second half of year remains uncertain

Vic Darvey, Purplebricks Group Chief Executive Officer, commented:

“This year has seen some very difficult market conditions with political and economic uncertainty dominating the landscape as a result of both Brexit and the COVID-19 pandemic. But despite all of this, I’m pleased to say that we saw a resilient performance, with revenue decline of only 2% across the Group.  

This year has seen significant change for the Group, shifting our strategic focus back to the UK market and ensuring that we have a strong platform for growth. As a result, we are now emerging through the COVID-19 pandemic in a very strong position.

We exited the US and Australian markets, recently disposed of our Canadian business, and we’ve sharpened our focus on instilling financial discipline and operational excellence across the business. Alongside that, we’ve put in place a new and highly experienced digital leadership team.

Despite the challenges of COVID-19, our strategic initiatives are being delivered at pace to accelerate our digital and data capabilities, and with a very healthy net cash balance of £66m, I’m confident that we can take advantage of the changing landscape.  

The Group is encouraged by the early signs of the housing market rebounding well following the lifting of the lockdown and the Government’s Stamp Duty holiday. 

We strongly believe that, in the current market, technology led estate agency is starting to emerge as the winning model and there is clear evidence that consumers are increasingly shifting towards apps and tech-based alternatives. With our strengthened leadership team and balance sheet, we are in a strong position to accelerate our model, extend our market share and grow our value-add revenues.”

1: The underlying performance of the Group is monitored internally using a number of alternative performance measures (“APMs”), which are not defined within IFRS. Such measures should be considered alongside the equivalent IFRS measures. For full definitions and reconciliations of APMs, please refer to note 4. FY 20 APMs are presented including the effects of adopting IFRS 16 (see note 2). As IFRS 16 was adopted using the modified retrospective approach, prior year comparatives have not been restated. Adjusted EBITDA is defined as Operating profit, adding back depreciation, amortisation, share based payment charges and exceptional items.

2. Cash position as at 15 July 2020 was £66.0m

3. ARPI: Average revenue per instruction equates to total fee income divided by the number of instructions published in the year

4. Fees paid by customers who sell with Purplebricks vs typical commission of 1.3% including VAT

5. Source:  Independent research from TwentyCi dated June 2020

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