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Purplebricks plc

Purplebricks Group PLC Future set to build on strengths

Vic Darvey, Group Chief Executive Officer, commented: “It’s been another year of strong revenue growth and we continue to build a highly relevant disruptive brand and defensible position in the market. With a base of clear brand leadership in both the UK and Canada and a differentiated, technology-led proposition driving business model advantages, we now have a clear plan to unlock the next wave of growth and extend our market leadership.

We have taken the difficult decisions to exit our businesses in both Australia and the US as it is very important that we now focus our resources on the UK and Canada, where we have a strong established presence and where there are significant opportunities to grow market share and deliver profitable growth for shareholders. Both exits will be conducted in an orderly manner with the expectation they will be completed by the end of 2019.”

Purplebricks Group PLC (LON:PURP), a leading hybrid real estate agency, announced today its results for the year ended 30 April 2019.

Full Year 201920181Change 
Group£m£m%
Revenue136.587.855
Gross profit79.949.661
Gross profit margin (%)58.5%56.5%+200bps
Operating loss(52.3)(27.8)(88)
Adjusted EBITDA2(43.1)(22.6)(91)
Cash at year end62.8152.8(59)

Financial highlights

·    Group revenue up by 55% to £136.5 million (FY 2018: £87.8 million)

·    UK revenue up by 21% to £90.1 million

·    UK ancillary revenue 44% of total3 (FY 2018: 43%)

·    Canadian business, acquired in July 2018, contributed revenue of £23.7 million

·    Group gross margin up by 200bps to 58.5%, UK like-for-like2 gross margin up by 70bps

·    Operating loss of £52.3 million (FY 2018: £27.8 million)

·    UK operating profit £5.3 million, an operating margin of 5.9% (FY 2018: 3.0%)

·    UK Adjusted EBITDA2 up 65% to £10.2 million (FY 2018: £6.2 million)

Operational highlights

·    UK hybrid market share4 of 76% (April 2018: 73%)

·    3.5x more sales than the number two UK estate agent (FY 2018: 3.1x)5 

·    UK average revenue per instruction up 6%

·    Completed on £10.4 billion of UK property (FY 2018: £9.7 billion), saving customers £77 million in commission6

·    Canadian business continues to meet management expectations

·    On 7 May 2019, Michael Bruce stepped down, and Vic Darvey was appointed CEO

Strategic changes

·    Previously announced closure of the Australian business in May 2019

·    Today the Group announces its withdrawal from the US following a strategic review

Outlook

Over the five years since we launched Purplebricks in the UK, we have fundamentally changed the estate agency market. We believe that our differentiated, technology-led proposition will drive profitable growth and will enable us to take market share from traditional agents. Current economic and political uncertainty in the UK means market conditions remain challenging with volumes continuing to trend downwards, partially offset by higher revenues per instruction. Recent management and strategic changes will enable a greater focus on operational excellence and allow us to leverage our unrivalled data position to drive customer experience and accelerate performance. Given the strength of our balance sheet, we will continue to invest in our brand, technology and product development, while ensuring greater control over cash management and generation. We are excited by the prospect of driving forward our well-established UK and Canadian businesses in FY 2020 and beyond, and reiterate our medium term objective to gain 10% share of the UK market.

1 FY 2018 numbers have been restated under IFRS 15 throughout.

2 The underlying performance of the Group is monitored internally using a variety of statutory and 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 to the financial statements.

3 Ancillary revenue percentage is a KPI used by the Board to measure the performance of the business in generating non-instruction income from customers. The management information in this KPI recognises consideration receivable at a point in time and therefore differs from the accounting in the Group’s financial statements

4 Source: Rightmove

5 Source: TwentyCi data

6 Fees paid to Purplebricks vs typical commission of 1.3% plus VAT

7 The content of the Purplebricks website should not be considered to form a part of or be incorporated into this announcement.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.