Purplebricks Group Strong results as it continues to execute strategy

Purplebricks

Purplebricks Group plc (LON:PURP), a leading UK technology-led estate agency business, has announced its half year results for the six months ended 31st October 2020.

Summary performanceH1 21£mH1 201£m Change 
Group – continuing operations1    
Revenue44.247.1 -6%
Gross profit29.630.0 -1%
Gross profit margin (%)67.0%63.7% +330bps
Operating profit / (loss)6.9(0.2) n/a
Adjusted EBITDA28.44.0 +110%
Cash at period end75.841.6 +82%
KPIs – UK    
Total fee income349.146.3 +6%
Instructions (number)35,38732,850 +8%
Average revenue per instruction4£1,392£1,353 +3%
      

Financial and operational performance

·    4.8%5 share of properties sold by volume

·    Total instructions increased by 8% to 35,387 (H1 20: 32,850)

·    Instructions increased by 20% in the five months since May, post the market reopening

·    Average revenue per instruction (‘ARPI’) increased by 3% to £1,392 (H1 20: £1,353)

·    Total fee income3 increased by 6% to £49.1m (H1 20: £46.3m)

·    Revenue of £44.2m, down 6% (H1 20: £47.1m), due to instruction revenue recognition

·    Adjusted EBITDA increased by 110% to £8.4m (H1 20: £4.0m)

·    Operating profit increased to £6.9m (H1 20: loss £0.2m), including £3.3m non-trading items6

·    Group consolidated profit for the period of £6.8m (H1 20: loss of £14.1m)

·      Cash increased by £44.8m since the year end to £75.8m (30 April 2020: £31.0m).
 

Progress in strategy execution

·    The business has performed strongly in the period since the market shutdown ended, with buoyant trading supported by strong market recovery

·    Purplebricks has never been more relevant, with brand awareness and consideration at record levels

·    We demonstrated the strength of our model with the ability to continue to service customers during lockdown with virtual capabilities

·    Our leadership team has been further strengthened with the appointment of new Chief Digital and Chief Marketing Officers

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

·    Strategic initiatives under our House Strategy continue to be executed at pace

·    The disposal of Canadian business gives us the financial strength to focus on our UK growth opportunity

Outlook

Whilst there are reasons to remain cautious on the economic outlook, we are confident in the levers which are under our control, and we currently expect adjusted EBITDA for the full year to exceed the upper end of the current range of consensus7.

Vic Darvey, Chief Executive Officer, commented:

“Purplebricks has delivered a strong performance in the period with instructions up 8% and total fee income growth of 6%, despite the UK housing market being disrupted through the height of
COVID-19. This continued momentum demonstrates the strength of our technology-led business model and our ability to adapt quickly to a changing market. 

“I am proud of the way we responded to the COVID-19 crisis, which demonstrated our ability to deliver our improved virtual capabilities to our customers throughout the period. We made sure we looked after our people when things got tough, we adapted quickly to new ways of working, and we enhanced our technology to make it easier and safer for customers to do business with us.

“We are now emerging from the pandemic in a very strong competitive position. As a result of continued financial discipline and operational excellence across the business we have experienced strong growth in adjusted EBITDA, up 110%, and a significant improvement in cash generation compared to last year.

“Our focus for 2021 will be to re-accelerate the growth of our core business by continuing to enhance our digital innovation, our virtual capabilities and increasing agent productivity through automation and efficiency. This period has shown that our technology-led business model is now more relevant than ever, as customers continue to shift to being more comfortable buying and selling their homes digitally.”

1   Continuing operations now represents the UK segment only with H1 20 restated. The results of our Canada business up to its disposal on 15 July 2020 and of our discontinued Australian and US operations for the prior period are presented in note 6.

2 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.  Adjusted EBITDA is defined as operating profit, adding back depreciation, amortisation, share-based payment charges / credits, results of associates / joint ventures and exceptional items.

3 Total fee income is a KPI used by management to track income from current activity levels.  Total fee income is a non-IFRS measure and represents fees receivable for published instructions, lettings and mortgage referrals; and conveyancing fees due in relation to completed transactions.

4 ARPI: Average revenue per instruction equates to total fee income excluding lettings, divided by the number of instructions published in the period.

5   Source: Twenty CI.

6 These non-trading items are a share-based payment credit of £1.9m and a gain of £1.4m on deemed disposal relating to the investment in Homeday, and are discussed in the Financial Results section.

7 As at 14 December 2020, the Group’s compiled full year 2021 consensus for adjusted EBITDA is £7.0m, ranging from £5.0m to £10.6m.

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