TIDMPURP
RNS Number : 5044J
Purplebricks Group PLC
29 June 2017
29 June 2017
Purplebricks Group plc
Final results for the year ended 30 April 2017
UK expectations upgraded, Australia on track, US beckons
Purplebricks Group plc (AIM: PURP) ("Purplebricks"), the hybrid
estate agent providing a new way to buy, sell or let property,
announces its final results for the year ended 30 April 2017.
Financial highlights
UK and
UK Australia US Total Total
Year ended 30
April, GBPm 2017 2017 2017 2017 2016
------------------------- ------- ---------- ------ ------- -------
Revenue 43.2 3.5 - 46.7 18.6
Gross profit 24.2 1.6 - 25.8 10.6
Marketing (14.4) (3.8) - (18.2) (12.9)
Operating profit/(loss) 0.2 (6.1) (0.1) (6.0) (11.9)
Adjusted EBITDA
(1) 1.7 (6.1) (0.1) (4.5) (9.7)
------------------------- ------- ---------- ------ ------- -------
Business Highlights
-- Group revenue up 151% to GBP46.7m (FY16: GBP18.6m)
-- UK revenue up 132% to GBP43.2m (FY16: GBP18.6m)
-- Ahead of recruitment plan; number of UK Local Property
Experts rose 118% to 448 as of April 2017
-- UK business reports first full year operating profit and
adjusted EBITDA of GBP1.7m (FY16: loss GBP9.7m)
-- Average income per instruction for the UK up 14.8% to GBP1,035 (GBP1,088 for the Group)
-- Sold and completed on over GBP5.8bn of UK property (further GBP3.69bn in pipeline SSTC)
-- Online market share increased to 72% (from 62%) whilst online
growing as a share of total market
-- Sale agreed in the UK every 9 minutes 24/7
-- Website visits increased to over 2.5m per month
-- Most positively reviewed agent on Trustpilot in the UK with over 20,000 reviews
-- Successful launch in Australia; ahead of UK at same stage of
development in terms of listings, sales, revenue, LPEs and
Trustpilot
-- Raised GBP50m in March 2017 to launch in the US, a $70bn market, starting with California
-- Strong Balance Sheet, with net cash of GBP71.3m
Commenting on the results, Michael Bruce, Group Chief Executive,
said:
"This has been a very successful year in the early development
of the Purplebricks model and brand. We have materially grown our
national footprint and have built a growing brand awareness and
reputation for delivering customers a more convenient, transparent
and cost effective service. In tandem with our growth we have
invested in the business and strengthened the management team. This
has allowed us to significantly grow our number of positive reviews
on the independent review site Trustpilot (currently with over
20,000). We have retained our rating of excellent. Purplebricks is
now in a strong position to become the no.1 estate agent in the UK
for both listings and sales.
With the UK business now in profit it is encouraging to see
Australia following a similar growth trajectory. Just eight months
in and Purplebricks already operates in five key states, which
represent 85% of all Australian property transactions. The launch
of our Commisery campaign in Australia from May 2017 will further
accelerate progress. All of this bodes well for the US, where plans
to launch, first in California, in the second half of the calendar
year are progressing at pace.
We are confident that we have a compelling proposition and the
strategy, team and Balance Sheet strength to deliver on it for all
stakeholders."
Outlook
The first two months of the financial year have started well,
with continued trading momentum in both the UK and Australia, while
plans for the US launch continue at pace. This progress is to a
great degree driven by the continued recruitment of high quality
LPEs and the success of the Purplebricks marketing, which has
resonated with consumers. To fully capitalise on this momentum and
the long term market opportunity, Purplebricks is stepping up its
recruitment of LPEs to meet demand and following the recent success
of the additional marketing spend in the spring market, is
increasing its budget for the current financial year. UK marketing
spend in the first half of this financial year is now anticipated
to increase by some GBP3.5m year-on-year, with spend in the second
half also likely to rise, should the expected returns come through.
As a result UK revenue expectations for the current year are raised
to some GBP80m; a near doubling from the GBP43m reported for FY17.
For Australia, our expectations remain unchanged following good
progress to date, with revenues expected to reach GBP12m in the
current year.
While the broader macro climate is uncertain and it is early in
the financial year, Purplebricks remains confident in its prospects
and of meeting the board's increased expectations.
Notes
(1) Adjusted EBITDA is calculated as operating profit plus
depreciation, amortisation, share based payments and fundraising
costs in respect of IPO.
A presentation to analysts and institutional investor will be
held at the offices of Instinctif Partners on 29 June 2017. For
further details please contact Gemma Mountford on: +44 (0) 20 7457
2020 or email gemma.mountford@instinctif.com.
For further information, please contact:
Purplebricks +44 (0) 20 7457 2020
Michael Bruce, James Davies
Zeus Capital (NOMAD) +44 (0) 20 3829 5000
Nicholas How, Benjamin Robertson
Peel Hunt (Broker) +44 (0) 20 7418 8900
Dan Webster, George Sellar
Investec Bank (Broker) +44 (0) 20 7597 5970
Keith Anderson, Carlton Nelson
Instinctif Partners +44 (0) 20 7457 2020
David Simonson, Mark Reed,
George Yeomans
About Purplebricks
Purplebricks is a leading next generation estate agency in the
UK, combining highly experienced and professional Local Property
Experts (LPEs) and an innovative use of technology to help make the
process of selling, buying or letting so much more convenient,
transparent and cost effective. Purplebricks is transforming the
way people perceive estate agents and estate agency. Building on
its UK success, Purplebricks launched into Australia in August 2016
and in February 2017 announced plans to enter the US market.
Forward looking statements:
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
Chairman's statement
It is our first full year as an AIM listed company and we are
pleased to announce that Purplebricks is leading significant change
in the estate agency market.
During the year, we continued to focus heavily on building our
brand awareness, growing our number of Local Property Experts
("LPEs"), evolving our technology, growing internationally in
Australia and shortly launching into the US, and most importantly
advancing on our strong reputation for customer service. We have
made excellent progress on all fronts.
We continue to attract and retain top quality LPEs across all
areas of the country. Our strategy of creating an "ultra-local"
presence has materially advanced with the recruitment of a further
320 LPEs, an increase of 156% over the corresponding financial
year. This additional expertise is providing essential capacity to
meet the continued burgeoning demand from our customers. More and
more highly skilled estate agents are choosing to join Purplebricks
because of our strong reputation and growing market share.
We have continued to invest in high impact marketing with our
"commisery" campaign resonating and hitting home with prospective
customers. Brand awareness is high and continues to grow alongside
our "best in class customer service". As the most positively
reviewed estate agent in the UK we are proud to have grown our
reviews on independent review site, Trustpilot, from 5,700 at the
end of the last financial year to over 20,000, an increase of 251%.
Our average rating has increased from 9.4 to 9.5 out of 10. Our
customer advocacy continues to blossom despite our rapid
growth.
Financials
Trading momentum has been strong throughout the year, with total
revenues of GBP47m representing an increase of 151% on the prior
year. The UK has continued to advance with GBP43.2m of revenue,
whilst Australia contributed GBP3.5m ($6m AUD) in the period
following its launch in September 2016. I am pleased to report that
the UK made an adjusted EBITDA profit of GBP1.7m for the full year
whilst Australia made an adjusted EBITDA loss of GBP6.1m and our
new US entity a GBP0.1m loss. Group losses from operating
activities reduced to GBP6.0m from GBP11.9m the year before
demonstrating clear progress whilst continuing to expand
internationally. The operating leverage of our low fixed cost
business model is now fully apparent with the UK demonstrating EBIT
profit at both the operating level and at the adjusted EBITDA
level.
Net cash at the year end was GBP71.3m as a result of the
fundraising activities undertaken, the acquisition of a lettings
business and also the marked step up in revenue generated during
this year. Net assets at 30 April 2017 were GBP75.4m (2016:
GBP28.1m) with net current assets standing at GBP66.5m (2016:
GBP27.5m).
Australia
In our last Annual Report, we announced an intention to launch
in Australia. In September 2016, we officially launched in
Queensland and Victoria. In January 2017, we launched in New South
Wales and in March and April, we launched in Perth and Adelaide
respectively.
We have had some significant early success and momentum is
growing. We committed to an investment of GBP10m over a two year
period with the majority of the investment being in this financial
year. We made an adjusted EBITDA loss of GBP6.1m in the period, or
GBP5.4m at constant currency.
We have recently launched our "commisery" marketing campaign in
Australia and, like the UK, we will review our marketing spend,
momentum and market share. If we consider it necessary to invest
further to grow market share and continue momentum we may choose to
do so.
We have added to the strength of the team with the recent
appointment of an Operations Director, Deborah Lee, who was
formerly at Capita Plc.
US launch
We have recently announced our intention to launch the
Purplebricks proposition into the US, a $70bn market. We
successfully raised GBP48.8m, net of fees of GBP1.2m via a placing
on 22 February 2017.
Our market research indicates that our compelling model
comprising of high quality customer service allied to a fair, more
competitive fee structure and technology that enables sales to
progress 24 hours a day will appeal in a market where sellers are
currently charged a commission of around 6% to sell their home.
We are excited about our launch and will provide more details in
due course on launch dates, regions and service offering. We have a
superb management team who are working on our plan with a view to
execution in the second half of 2017. Similarly to the UK and
Australia, we will launch regionally, with California being the
first state, and adapt our timing and offering to the momentum of
each market.
As announced at that time, the Directors consider expansion of
the Company's business and the Purplebricks brand into the US real
estate market to be the next logical step in the Company's
expansion. The US is one of the world's largest real estate markets
and we estimate that total real estate commission income in the US
is in the range of c.US$70 billion annually (compared with US$4.3
billion in the United Kingdom).
The Group believes that the Purplebricks platform and business
model is scalable and can adapt to the US market. Given the many
comparable trends, sentiment and similarities between the property
markets in the US, the UK and Australia, the Group's expansion
strategy will be shaped significantly by the Group's experience
with its successful UK and more recent Australian operations.
Although the Group initially intends to strategically roll out
across a defined number of US states, the US as a whole represents
a material opportunity for future growth in the long term.
We believe that there is a significant opportunity for our
business model to make a meaningful and lasting impact on the US
real estate market. It is intended that, initially, the Group will
strategically roll out in a defined number of US states, launching
in the second half of 2017, before rolling out more widely across
other states. The initial expansion into the US is to be funded
from the net proceeds of the Placing and will be led by US Chief
Executive Office, Eric Eckardt, supported by Founder and Group CEO
Michael Bruce and his brother and co-founder Kenny Bruce. Eric has
more than 20 years of experience in real estate and finance
technology.
The Group will look to attract some of the most experienced real
estate agents in the US property industry who want to run their own
business, as many of Purplebricks' existing LPEs do. The Directors
believe that real estate agents in the US will want to become LREEs
(Local Real Estate Experts), given the compelling customer
proposition and the benefits of the Purplebricks model. The
Purplebricks model should allow agents to spend more time focusing
on looking after customers and selling homes, rather than a
significant proportion of their time being taken up prospecting for
the next listing. This is possible because a sustained marketing
and advertising campaign is intended to drive listing appointments
to the LREEs. The Purplebricks platform and business model is
designed to result in improved LPE productivity which provides
LREEs the opportunity to earn more revenue than they would as a
traditional real estate agent.
The Group's technology should help to ensure that Purplebricks
deliver a high quality service to customers. The Purplebricks
platform will, once rolled out, provide US customers, LPEs, Listing
Agents and Buying Agents with a reliable means of engaging in the
process of buying and selling real estate at all times of the day
and night. The platform is accessible 24 hours a day, seven days a
week with the click of a button. Buyers, sellers, LREEs, Listing
Agents and Buying Agents will be able to safely and securely
communicate with one another through the Purplebricks platform or,
if they wish, communicate with Purplebricks. The Purplebricks model
is intended to empower LREEs, Listing Agents and Buying Agents to
be more productive and for the customer's journey to be more
convenient, transparent and cost effective.
The recruitment and training of local LREEs and the adaptation
of the Purplebricks platform and business model for the US will be
coupled with an advertising and marketing strategy built upon the
Group's successful brand led strategies in the UK and Australia.
The Directors consider advertising and marketing to have played a
significant part in the growth of the Group's existing business,
with Purplebricks having become the most recognised real estate
agency brand in the UK property market in less than three
years.
Board and people
Our strong results would not have been possible without the
enthusiasm and commitment shown by our colleagues this year. On
behalf of the Board, I would like to thank them sincerely for their
hard work in growing our business whilst maintaining our strong
culture of customer service.
We recently announced the departure of Neil Cartwright, our CFO,
through ill health. Neil has been a great force within the team and
will be sadly missed. We also announced the appointment of James
Davies as Neil's replacement. James has a strong track record and
comes highly recommended and after strong competition for his
services. Our Board continues to be supported by a very strong
management team.
Dividend
As a young and fast growing Group with a substantial market
opportunity, we intend to focus our financial resources on
realising our potential in full. As we progress our strategy and
our financial performance, we will look to move to a progressive
dividend policy in future years.
The year ahead
After a successful first financial year as a public company we
are pleased with the investments we have made, the growth of our
technology and LPE numbers, the engagement our marketing has
generated, the increased awareness of our brand and our success so
far in Australia and intended launch into the US. We look forward
with considerable optimism and are pleased to report that the year
has started well, with more and more customers choosing our full
service hybrid agency model.
Paul Pindar
Chairman
28 June 2017
Strategic report
Principal activity and strategy
The principal activity of the business is estate agency.
At the core of our strategy is a commitment to our customers and
our people.
We will continue to offer an exceptional experience by:
-- selecting and training Local Property Experts that enhance
our culture and core values and have the desire and motivation to
build their own business;
-- building upon our market leading technology that helps Local
Property Experts be more productive and which delivers a much more
convenient, transparent and cost effective service for our
customers;
-- creating marketing and advertising that interests, engages
and inspires consumers to want to book a free valuation from
Purplebricks and ensures that our messaging is clear and
transparent to enable consumers to swiftly instruct us to sell
their home;
-- building upon our customer service and product offering by
growing our Data Sales Unit and introducing new products and
services that are relevant to our customers' needs throughout their
journey;
-- maintaining a progressive and fun working environment where
our people care about our customers, our brand and our business and
can grow personally and professionally, and
-- building a strong, sustainable and profitable business, which
is respected by all stakeholders for its professional conduct and
making good on its promises.
Our strategy for growth is based upon the above core
commitments.
Increase our footprint of Local Property Experts
We are extremely privileged to have secured some of the best
people in our industry who have a strong desire to be part of a
business that is changing the way people think about estate agents
and estate agency. They are passionate about customer experience,
giving customers that "light bulb moment" where they have met an
estate agent, who has promised a service, delivered on that
service, sold their house and saved them lots of money.
Our Local Property Experts are entrepreneurial, ambitious to
grow their territory and to meet the demand which continues to grow
for our hybrid offering. As a result we are accelerating our
recruitment programme and increasing our footprint of experts
across the UK in order to grow our share of instructions in local
markets. We are finding that more and more talented, professional
estate agents want to be part of what Purplebricks is seeking to
achieve. The pool of applicants continues to grow and as a result
the number of people suitable to represent the Purplebricks brand
is increasing. Our main focus though is on maintaining that first
class, driven quality of individual. We are pleased to report that
the industry has a large number of high quality people to choose
from.
Build upon our market leading technology
Bringing together first class Local Property Experts and
industry leading technology is the foundation upon which the
Purplebricks business has been created. We are very proud of our
technology and indeed the work we are doing to introduce new and
innovative features that set us apart from anyone else in the
industry. The recent release of the Purplebricks buyers App has
proven remarkably successful. Our App has now been downloaded by
110,000 selling and buying customers. We have added further
resource to the App team and will be introducing new and innovative
features during the course of this year. We continue to ensure that
everything we do makes the process even more integrated,
convenient, effective and transparent. We have already
revolutionised the way sellers and buyers communicate throughout
the process and continue to build on the work we have started.
We continue to add advanced changes and new features that are
engaging, informative, supportive for our customers and which make
our LPEs more productive. We are also focused on engaging ways of
increasing revenue with targeted and timely technology driven cross
sales opportunities. There are smarter, more effective ways of
selling some products and services with the use of our technology
platform.
We have increased our technology team and are starting to become
a hub of technical interest for developers across the UK.
Create engaging marketing and advertising
Advertising has always been a central element of the
Purplebricks Group plc strategy. We continue to work hard to grow
our brand and the progress in just three years has been
outstanding. Purplebricks Group plc continues to lead the front of
mind awareness (amongst all estate agents) for people thinking of
selling their home according to The Nursery, one of the UK's
leading independent research and planning agencies*.
We continue to grow brand recognition across all TV and radio
advertising compared with a year ago. We are confident that the
team has built upon their early success with the introduction of
their new campaign, which launched in May 2017. Our new campaign
titled "commisery" will continue and will focus on the misery a
person feels when they have paid a commission and got nothing more
for it.
Our above the line marketing is complemented by brand and
generic pay-per-click activity which is predominantly provided by
Google and Bing. We are also looking at better ways of using social
media in a targeted way to drive more activity amongst sellers. We
continue to test and refine marketing campaigns with Rightmove,
which we hope will raise further awareness and recognition and
create opportunities for customers to experience our service.
In addition to paid activities we continue to drive efficiencies
in our valuation conversion funnel and to analyse trends amongst
our database of hundreds of thousands of sellers and buyers in
order to ensure that our key messages are resonating with
consumers. Our User Experience (UX) specialists have proved
invaluable at helping us achieve greater conversions across our
website and through the "book a valuation" funnel. We have added to
the team to continue to build on the great work that has been
started and the results we are seeing. We also make use of PR as
part of our strategy of driving home our messaging and how we wish
our brand to be best represented.
We will continue to create marketing and advertising that
interests, engages and inspires consumers to want to book a free
valuation from Purplebricks and ensure that our messaging is clear
and transparent to enable consumers to swiftly instruct us to sell
their home.
* Based on 1,131 respondents in a survey
Central Property Team and Data Sales
Our Central Property Team and Data Sales Team continue to grow
as activity grows as part of our strategy to increase valuations
and drive down the cost per acquisition of every customer. They
play an important part in generating valuation opportunities and
growing other revenue streams. Every day we generate thousands of
data points from people registering with Purplebricks, arranging a
viewing direct, online or via the property portals and from buyers
making offers and agreeing sales. We are steadily increasing
revenue generating opportunities from data and as our people
develop and we place them into dedicated product and service
streams, we will start to see the unit make a significant financial
contribution.
Introduce new products and services
We believe that a major part of selling is being in the right
place at the right time. Our model of combining people and
technology places us in the best possible position to be in the
right place at the right time. As a result we want to be able to
offer customers relevant additional products and services that
complement their journey of selling, buying or letting. We continue
to look at new and smarter ways of supporting our customers with
much more convenient, easy, accessible, stress free and cost
effective products and services. We will add new products and
services once we are satisfied that they add value for our
customers and will be delivered with the Purplebricks culture and
ethos. We want to create lifetime value for our customers and
everything we do as part of our strategy is working towards
this.
Our culture is our business
Our people create our culture and our technology and our people
deliver it. As a starting point the founders wanted to create a
Purplebricks that cared about its people, that had a progressive
and fun working environment and as a consequence our people cared
about our customers, our brand and our business and they could grow
personally and professionally. We have achieved these founding
principles to date and continue to ensure that the same principles
are applied as we scale.
Following our listing, the businesses of our founding Local
Property Experts as well as a number of employees have been awarded
share options in Purplebricks Group plc that will vest in part each
year and in full over the coming years. We intend to extend
awarding of share options to more LPEs' businesses and employees
with the objective of everyone having some form of reward for their
efforts in growing our business into the future in accordance with
our admission document.
We have created a strong brand advocacy within our growing
business and our customers. We work in a progressive and fun
environment where, despite a strong desire to grow their business,
our people have a tremendous degree of camaraderie, togetherness
and a collective brand advocacy that is extremely hard to
replicate. The foundations begin for everyone with the recruitment
programme and training methodology and continue through the heart
of the business.
Chief Executive's statement
Review of the year
This has been a very successful year in the early development of
the Purplebricks model and brand. We continue to go from strength
to strength and have materially grown our national footprint and
have built a growing brand awareness and reputation for delivering
customers a more convenient, transparent and cost effective
service. Customers continue to respond to our hybrid model, having
sold properties in the UK this financial year worth GBP5.80bn and
agreed a further GBP3.69 billion of sales that are currently in our
pipeline, sold subject to contract. Our company is now in a strong
position to become the Number one estate agent in the UK for
listings and sales.
UK
In the UK, the average number of monthly instructions continues
to grow despite traditional operators reporting a slowdown in
activity. If we compare April 2016 with this year we achieved 2,670
more instructions in the month which represents an increase of over
94% taking the total to 5,497 instructions for April 2017. We are
winning share from the traditional estate agents and have increased
our share of the "non-traditional" market from 62% to 72% by April
2017.
We are also enjoying continued success at selling the properties
we take to the market in the UK. The monthly run rate in May 2016
was 2,386. I am pleased to report that this monthly run rate has
increased to 4,979 in May 2017. This represents an increase of 108%
compared with a year ago. Our conversion from instruction to sale
is currently 83%. We have increased our revenue per instruction to
GBP1,035.
We believe we are the most visited estate agency website in the
UK. Our customers benefit from this extensive traffic with
increased competition amongst purchasers. Our website visits
increased to 2.5m per month and page views rose to 14.4m per month.
Unique visitors also increased to 1.3m per month and the "book a
free valuation" funnel conversion rose by 86.0%. In a recent Which!
Report they concluded that "online agents" sell properties 38 days
faster than traditional estate agents and reduced the price on the
properties they sold less than traditional estate agents.
Purplebricks was considered the best at selling for more than the
asking price amongst all "online agents" and equally as successful
as traditional estate agents. Purplebricks also reduced their
asking prices by 5% or more significantly fewer instances than
traditional and online estate agents.
Our on-going strength in trading is heavily dependent on our
success in continuing to attract and retain first class,
professional, experienced and highly motivated Local Property
Experts ("LPEs"). Winning more instructions and selling more
properties in a business with a strong customer focused culture is
highly attractive to professional entrepreneurial LPEs who are
running their own businesses and are working hard to quickly build
a local, scalable, profitable, business. We are really pleased to
be considerably ahead of plan, finishing the year with 448 LPEs, a
year on year increase of over 118%. We have built a much stronger,
scalable recruitment and training infrastructure which enables us
to recruit and train many more LPEs going forward.
Marketing has also been a key element to the success and future
growth of the business. During the year Ed Hughes (formerly of
comparethemarket) replaced Joby Russell who took up the role of
Chief Marketing Officer ("CMO") in Australia. Ed has advanced the
development of our marketing strategy and team. We introduced the
"commisery" campaigns which have been very successful and extremely
well received by customers. We have introduced localised versions
to Australia in May 2017 and have shot a number of new commercials
("Commisery stage 2") that aired in the UK from May 2017.
Our investment in marketing has helped drive the growth of our
brand recognition, valuations, instructions, sales and revenue. We
firmly believe that we have hit upon a campaign, have developed a
plan and built a team that can materially change the market share
and future financial performance of the business. We also firmly
believe that we must grasp the opportunity to make Purplebricks the
most successful estate agent ever in the UK and build upon that
success in Australia and thereafter in the US. The business, team
and infrastructure are in the best place they have ever been to
capitalise.
We committed to spending a further GBP1.5m in marketing during
the course of H2 FY2017 and as a result the business has grown
further, faster. We will continually review marketing spend to make
the most of the opportunities that present themselves.
Culturally we have a strong focus on customer support which is
testament to the number of houses we are selling, the speed at
which they are transacting through the legal process and the level
of concentrated help customers receive where issues arise with any
aspect of their sale. We are proud of the dedicated, focused
support we provide whenever it is required. It is to the distinct
advantage of the customer and the process that we are focused on a
completion not on a commission.
We recruited Lee Wainwright in March 2017 as Head of Operations,
who was formerly an extremely successful Divisional Managing
Director for Countrywide Plc for over 16 years. Lee will be
responsible for the Central Property Experts, Post Sales Support,
Data Sales, Concierge team and the Conveyancing Sales Team. They
are all central based departments that play a key role in delivery
of our service and selling additional products and services. Lee
will help drive enhanced service levels and growth in revenue from
these teams.
Our advancement with technology continues at pace with new,
innovative and progressive work being completed on our UK,
Australian and US technology. Our 80 strong development team work
tirelessly to create tools to better help customers through the
process and to help LPEs deliver a more seamless service. We will
be further enhancing the functionality of our App, our search
facility and the journey for buyers amongst the many other features
we are developing for sellers and LPEs. We are building and
progressing our technology in the UK and Australia and will have a
team in the US.
Customer reviews
We continue to be the most customer reviewed estate agent in the
UK on independent review site Trustpilot. We are very proud of the
feedback we receive which is testament to the culture, commitment
and widespread appeal of our full service hybrid model,
demonstrating that we offer not just a competitive flat fee but
also superior customer service. We are rated Excellent, averaging
9.5 out of 10 from over 20,000 customer reviews. We recognise that
from time to time we will receive a small proportion of negative
reviews and as a result we ensure that every customer is contacted
and we do everything we can to provide them with a swift resolution
and an excellent customer experience thereafter.
We request a review from a customer once a sale is agreed but
they are free to choose to leave reviews at any stage of the
selling process. This is carried out via a link with Trustpilot. We
do not offer any form of incentive, we merely provide a link and
request the customer completes a review. We receive significantly
more reviews than any other estate agent (traditional, online or
hybrid) because we give our customers the opportunity to share
their experience publicly and immediately. I am extremely grateful
to everyone in the business for this fantastic achievement and for
the brand advocacy they are creating.
Australia
We are excited by the progress we are making and the opportunity
that exists in Australia. Ryan Dinsdale and the management team
have worked tirelessly to progress our model, recruit and train our
people, steer a path through the state by state regulatory
framework and grow the business with the same customer centric
principles as the UK business.
We are saving our customers on average $12,000AUD and have been
rated "excellent" by independent review site Trustpilot with an
average customer score of 9.6 from over 500 reviews. We are
confident that the introduction of our "commisery" advertising
campaign in Australia will resonate and materially advance our
growing performance.
America
The plans for launch into the American market are moving at pace
and we remain on target to enter the market in the second half of
2017. We have further strengthened the management team with the
appointment of Jonathan Adler as Chief Marketing Officer to work
alongside James Kydd and Phil Felice who has been appointed as
Senior Vice President Sales to work alongside Kenny Bruce.
Jonathan was formerly Managing Director of VCCP International
and Global CEO for Hogarth & Ogilvy and Phil has been Head of
US Sales for Altisource - Hubzu and Vice President of Business
Development for Realogy. Jonathan has a deep understanding of US
marketing and Phil a long history of industry sales experience at
every level. They will no doubt prove superb additions to the
management team
Further details on our plans will be announced when it is the
right time commercially to do so.
Thank you
I would like to thank all of our people for their hard work,
dedication, commitment and absolute belief in our customers and our
brand. They have created thousands of brand advocates in an
industry that is often talked about, criticised and disliked. I
would also like to thank our customers who have embraced what we
are trying to achieve and have actively helped and supported us in
our journey to date. Without belief in what we promise to deliver
(and do deliver) we could not grow our business in quite the same
way. Their advocacy of our products, services and brand is truly
remarkable.
Finally I would like to thank the support and encouragement we
receive from our shareholders. They have invested in creating a
strong and thriving business that is changing the estate agency
industry forever and for the better. We are working tirelessly to
deliver enduring returns for our shareholders.
The future
There has been a significant amount of debate around the
property market and what the future holds with uncertainty over
BREXIT, a slowdown in the number of sellers and buyers, tax changes
and even a general election. As we have reported in the past,
whilst we will continue to monitor trends in the market we have not
seen a slowdown in activity and our strategy is predicated on
winning market share rather than market growth. Our business model
was built with low fixed overheads and a focus on variable costs to
provide greater flexibility and agility to protect against any
changes in the market.
It has been a great year for our customers, our people and the
industry with the shift in consumer attitude away from expensive
commission to a transparent fixed fee full estate agency service.
Our people have risen to the public and professional challenges
that have come their way and have done a remarkable job of
advancing this extraordinary journey for a young, fast growing
business. We are on track to be the most successful estate
agent in UK history. We approach the future with confidence.
Key performance indicators (KPIs)
The following KPIs are the tools used by management to monitor
the performance of the Group, in addition to the more traditional
income statement, statement of financial position and cash flow
analysis reviewed at regular Board meetings.
2017 2016
Financial KPIs
Revenue growth 151% 448%
Operating loss* as a percentage
of revenue (10.0%) (52.6%)
Non-financial KPIs
Number of LPEs 525 205
Monthly website visits 2.50m 1.23m
* pre amortisation of intangibles and share based payment
charges and IPO
Revenue growth is closely monitored to ensure we grow so as to
cover our fixed costs as quickly and as efficiently as possible and
consume as little capital as possible, whilst pursuing a high
growth strategy.
The regular monitoring of the operating margin percentage helps
us ensure that the focus on growth is not at the expense of
profitability in the short and medium term.
Principal risks and uncertainties
Risk management is an important part of the management process
for the Group. Regular reviews are undertaken to assess the nature
of risks faced, the magnitude of the risk presented to business
performance and the manner in which the risk may be mitigated.
Where controls are in place, their adequacy is regularly
monitored.
The risks considered to be particularly important at the current
time are set out below:
Economic
Potential impact: As an estate agency the Group's fortunes are
closely intertwined with those of the housing market and the
broader economy as a whole.
Mitigation: The Group keeps a close eye on market conditions and
the broader economy. Our cost base is flexible and able to react
quickly and effectively to changes in market conditions.
People
Potential impact: An experienced and knowledgeable workforce is
required to service clients' needs. The market for skilled staff
remains competitive and a failure to recruit and retain experienced
staff could impact on the Group's ability to develop and deliver
solutions.
Mitigation: Providing existing staff with relevant training,
great rewards, effective marketing and an effective software
platform is a key priority for the business. Recruiting and
developing new employees, when required, is undertaken by
experienced staff to ensure the correct calibre of individual is
identified.
Reputational and quality
Potential impact: The quality of references obtained from
existing users of Purplebricks' platform is an important part of
the decision making process for a potential client seeking to
instruct the Group.
Mitigation: The Group strives to maintain its reputation as the
best estate agency combined with great value for money and monitors
its Trustpilot reviews on a real time daily basis.
Availability of funding
Potential impact: In order to grow the business and become
profitable the Group needs access to funding. Without sufficient
capital the Group will be unable to meet its ambitious targets.
Mitigation: The Group has continued fundraising activities as a
result of the flotation and prior investment rounds and has
sufficient headroom in respect of its working capital requirements
and its forecasts, even when applying lower case sensitivities to
the forecast.
Financial
Potential impact: Inaccurate financial information may result in
sub-optimal decisions being taken by management and staff.
Inadequate internal controls may fail to prevent the Group
suffering a financial loss.
Mitigation: The systems of internal controls deployed within the
Group are designed to prevent financial loss. Controls are
strongest in areas where management considers the potential
exposure to the Group of material loss or misstatement to be at its
greatest, such as revenue recognition and cash collection. The
adequacy and effectiveness of internal controls are reviewed
regularly.
New entrants to market
Potential impact: The Group operates in a sector where there are
a number of competitors.
Mitigation: To counter the threat of competitors seeking to win
business from us the Group aims to invest in the development of
technology and branding to ensure that the Group becomes the market
leader in the estate agency sector.
Overseas risk
Potential impact: The Group is entering overseas markets.
Mitigation: The Group continues to seek out the best advice
possible and hire the best people possible whilst remaining well
funded to face these challenges with confidence.
Integration risk
Potential impact: The Group may acquire additional companies and
will need to integrate them.
Mitigation: The Group continues to seek out the best advice
possible and hire the best people possible whilst remaining well
funded to face these challenges with confidence.
Future developments
We expect future developments in estate agency to see a
migration away from the high street as a highly fragmented market
consolidates by virtue of the ease and simplicity that Purplebricks
and its technology brings. We expect Purplebricks Group plc to
remain at the forefront of this change in the industry landscape,
creating and building on a market leadership position.
Approved and signed on behalf of the Board
Michael Bruce James Davies
Director Director
28 June 2017 28 June 2017
Consolidated statement of comprehensive income
for the year ended 30 April 2017
2017 2016
Note GBP GBP
Revenue 46,706,078 18,603,679
Cost of sales (20,857,938) (8,011,976)
------------ ------------
Gross profit 25,848,140 10,591,703
Administrative and establishment
expenses (13,639,927) (9,604,541)
Marketing costs (18,218,845) (12,924,002)
------------ ------------
Loss from operating activities (6,010,632) (11,936,840)
Loss from operating activities
before adjustments: (4,694,190) (9,777,815)
Share based payment charge 4 (917,089) (596,647)
Amortisation of intangibles (399,353) (101,309)
Fundraising costs including
Initial Public Offering - (1,461,069)
------------ ------------
Loss from operating activities (6,010,632) (11,936,840)
------------------------------------ ---- ------------ ------------
Finance income 55,430 35,009
Fair value movement in respect
of derivatives (104,317) -
Loss on ordinary activities
before taxation (6,059,519) (11,901,831)
Taxation on loss on ordinary
activities 3,054,190 -
------------ ------------
Loss for the year (3,005,329) (11,901,831)
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on translation
of foreign operations 116,370 -
------------ ------------
Total other comprehensive
income 116,370 -
Total comprehensive loss (2,888,959) (11,901,831)
============ ============
Losses per share
Basic and diluted loss per
share 5 (1p) (12p)
============ ============
All losses and other comprehensive income relate to continuing
operations and are attributable to equity shareholders of the
parent.
Consolidated statement of financial position
at 30 April 2017
2017 2016
Note GBP GBP
Non-current assets
Property, plant and
equipment 718,492 217,386
Intangible assets 2,757,053 370,847
Goodwill 6 2,605,979 -
Deferred tax asset 3,086,950 -
----------- -----------
9,168,474 588,233
----------- -----------
Current assets
Trade and other receivables 4,865,196 2,970,258
Cash and cash equivalents 71,330,300 30,476,386
----------- -----------
76,195,496 33,446,644
----------- -----------
Current liabilities
Trade and other payables (7,302,467) (5,211,353)
Deferred income (2,306,512) (760,358)
Derivative financial -
instruments (104,317) )
----------- -----------
(9,713,296) (5,971,711)
----------- -----------
Net current assets 66,482,200 27,474,933
----------- -----------
Total assets less current
liabilities 75,650,674 28,063,166
=========== ===========
Non-current liabilities
Deferred tax liabilities (243,534) -
Net assets 75,407,140 28,063,166
=========== ===========
Equity
Share capital 2,705,009 2,402,591
Share premium account 74,900,826 25,887,400
Share based payment
reserve 693,537 330,968
Foreign exchange reserve 116,370 -
Retained earnings (3,008,602) (557,793)
Total equity 75,407,140 28,063,166
=========== ===========
Consolidated statement of changes in equity
for the year ended 30 April 2017
Share Share Share Foreign Retained Total
capital premium based exchange earnings equity
account payment reserve
reserve
GBP GBP GBP GBP GBP GBP
At 1 May 2016 2,402,591 25,887,400 330,968 - (557,793) 28,063,166
Issue of shares 227,273 49,772,726 - - - 49,999,999
Cost of share
issue - (1,209,639) - - - (1,209,639)
Exercise of
options 75,145 450,339 (554,520) - 554,520 525,484
Share based
payment charge - - 917,089 - - 917,089
Transactions
with owners 302,418 49,013,426 362,569 - 554,520 50,232,933
---------- ------------ ---------- ---------- ------------ ------------
Loss for the
year - - - - (3,005,329) (3,005,329)
Exchange differences
on translation
of foreign operations - - - 116,370 - 116,370
Total comprehensive
loss - - - 116,370 (3,005,329) (2,888,959)
---------- ------------ ---------- ---------- ------------ ------------
At 30 April
2017 2,705,009 74,900,826 693,537 116,370 (3,008,602) 75,407,140
========== ============ ========== ========== ============ ============
Consolidated statement of changes in equity
for the year ended 30 April 2016
Share Share Share Retained Total
capital premium based earnings equity
account payment
reserve
GBP GBP GBP GBP GBP
At 1 May 2015 17,658 12,298,268 105,016 (8,026,657) 4,394,285
Issue of shares 252,051 34,748,659 - - 35,000,710
Exercise of options 138 25,056 - - 25,194
Exercise of warrants 123 91,947 - - 92,070
Redemption of shares (89) - - - (89)
Share premium cancellation - (19,000,000) - 19,000,000 -
Costs of IPO charged
to share premium
account - (143,820) - - (143,820)
Share based payment
charge - - 596,647 - 596,647
Transfer on exercise
of options - - (370,695) 370,695 -
Bonus share issue 2,132,710 (2,132,710) - - -
Transactions with
owners 2,384,933 13,589,132 225,952 19,370,695 35,570,712
---------- ------------- ---------- ------------- -------------
Loss for the year - - - (11,901,831) (11,901,831)
Total comprehensive
loss - - - (11,901,831) (11,901,831)
---------- ------------- ---------- ------------- -------------
At 30 April 2016 2,402,591 25,887,400 330,968 (557,793) 28,063,166
========== ============= ========== ============= =============
Consolidated statement of cash flows
for the year ended 30 April 2017
2017 2016
GBP GBP
Cash flows from operating activities
Loss for the year after taxation (3,005,329) (11,901,831)
Adjustments for:
Amortisation of intangible assets 399,353 101,309
Depreciation 166,320 61,159
Loss on disposal of fixed assets 1,868 -
Share based payment charge 917,089 596,647
Fundraising costs - 1,461,069
Non-designated foreign exchange
forward contracts 104,317 -
Deferred taxation (3,054,190)
Operating cash outflow before
changes in working capital (4,470,572) (9,681,647)
Movement in trade and other receivables (1,706,903) (2,224,175)
Movement in trade and other payables 1,574,291 4,158,614
Movement in deferred income 1,546,154 650,428
------------ -------------
Net cash outflow from operating
activities (3,057,030) (7,096,780)
------------ -------------
Cash flow from investing activities
Purchase of property, plant and
equipment (585,583) (215,338)
Proceeds from sale of property,
plant and equipment 991 -
Development expenditure capitalised (1,421,927) (334,263)
Purchase of intangible assets (194,595) -
Acquisition of subsidiary net
of cash acquired (3,295,189) -
Net cash outflow from investing
activities (5,496,303) (549,601)
------------ -------------
Cash flow from financing activities
Issue of shares 50,525,483 35,117,885
Costs of issue of shares (1,209,639) (1,604,889)
------------ -------------
Net cash flow from financing
activities 49,315,844 33,512,996
------------ -------------
Net increase in cash and cash
equivalents 40,762,511 25,866,615
Effect of foreign exchange rate
changes 91,403 -
Cash and cash equivalents at
beginning of year 30,476,386 4,609,771
------------ -------------
Cash and cash equivalents at
the end of the year 71,330,300 30,476,386
============ =============
Notes to the Preliminary results
1. General information
Purplebricks Group plc is a public company limited by shares
registered in England and Wales. The address of the Company's
registered office is Purplebricks Group plc, Suite 7, First Floor,
Cranmore Place, Cranmore Drive, Shirley, Solihull, West Midlands,
B90 4RZ. The Company is primarily involved in the estate agency
business.
On 29 March 2016 Purplebricks Group plc incorporated a wholly
owned subsidiary, Purplebricks Australia PTY Ltd, a Company
registered in Australia. On 10 March 2017, Purplebricks Group plc
incorporated a wholly owned subsidiary Purplebricks Inc, a company
registered in the United States.
On 24 March 2017 the Group acquired 100 per cent of the issued
share capital of BFL Property Management Limited. BFL Property
Management Limited ("BFL") is a property management company and was
acquired to complement the existing mainly organically created
property management business in the Group and professionalising it
with a skilled team and their processes.
The recently acquired entity BFL has a year-end reporting date
of 31 December however is consolidated for the year ended 30 April
2017 using detailed management accounts. BFL's reporting date will
be amended to ensure it is coterminous with the Group for future
periods.
The financial information set out in this financial results
announcement does not constitute statutory accounts as defined in
section 435 of the Companies Act 2006. The consolidated statement
of comprehensive income, consolidated statement of financial
position, consolidated statement of change in equity, consolidated
statement of cashflows and the associated notes have been extracted
from the group's financial statements for the year ended 30 April
2017, upon which the auditor's opinion is unqualified and does not
include any statement under section 498 of the Companies Act 2006.
The statutory accounts for the year ended 30 April 2017 will be
delivered to the Registrar of Companies following the Annual
General Meeting.
2. Summary of significant accounting policies
The principal accounting policies are set out below.
2.1 Basis of preparation
The Group's financial statements have been prepared and approved
by the directors in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and
those parts of the Companies Act 2006 that apply to companies
reporting in accordance with IFRSs.
The consolidated financial statements have been prepared under
the historical cost convention subject to recognising certain
financial instruments at fair value.
Full accounting policies are set out in the Financial Statements
and are unchanged.
2.2 Going concern
The financial statements have been prepared on a going concern
basis. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance that may arise
as a result of current economic conditions and other risks faced by
the Group show that the UK Company is likely to become more
profitable and cash generative during the year ended April 2018.
The Group achieving profitability and cash generation is likely to
be delayed by virtue of international expansion in Australia which
will reduce cash due to loans. At the financial year-end the
Company reported cash balances of GBP71.3 million.
The directors have performed sufficient sensitivity analysis to
be satisfied that the going concern basis of preparation is
appropriate. The operational gearing of the Company is such that it
only reinforces the confidence of the directors.
The directors have prepared a monthly forecast to 30 June 2018
on the basis that the growth aspirations are achieved which show
that the Group can operate with its existing resources.
Accordingly, the directors believe that it is appropriate to
adopt the going concern basis of accounting in preparing the
financial statements
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 April 2017. The Company controls
an entity when the Group is exposed to, or has rights to, variable
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
Profit or loss and each component of other comprehensive income
are attributable to the owners of the Company. Total comprehensive
income of the subsidiaries is attributable to the owners of the
Company.
Accounting policies of subsidiaries which differ from Group
accounting policies are adjusted on consolidation. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
3. Segmental reporting
The Group trade is managed as a single division, providing
services relating to the sale of properties however management
report to the Board using geographical segments. The financial
information reviewed by the board is materially the same as that
reported under IFRS and falls under the three geographic locations
it owns a Company in: UK, Australia and the US. During the year, no
customer contributed 10% or more of the Group's revenues (2016:
none).
The following is an analysis of the Group's revenue and results
by reporting segment:
Year ended 30 April 2017
UK Australia US Total
GBP GBP GBP GBP
Revenue 43,187,653 3,518,425 - 46,706,078
Cost of sales (18,946,018) (1,911,920) - (20,857,938)
------------- ------------ --------- -------------
Gross profit 24,241,635 1,606,505 - 25,848,140
Gross profit margin 56% 46% - 55%
Administrative expenses (9,659,191) (3,914,890) (65,846) (13,639,927)
Marketing costs (14,386,154) (3,805,491) (27,200) (18,218,845)
Operating profit/(loss) 196,290 (6,113,876) (93,046) (6,010,632)
Depreciation and amortisation 549,726 15,949 - 565,675
------------- ------------ --------- -------------
EBITDA 746,016 (6,097,927) (93,046) (5,444,957)
Share based payments 917,089 - - 917,089
Adjusted EBITDA 1,663,105 (6,097,927) (93,046) (4,527,868)
============= ============ ========= =============
Year ended 30 April 2016
UK Australia US Total
GBP GBP GBP GBP
Revenue 18,603,679 - - 18,603,679
Cost of sales (8,011,976) - - (8,011,976)
Gross profit 10,591,703 - - 10,591,703
Gross profit margin 57% - - 57%
Administrative expenses (9,604,541) - - (9,604,541)
Marketing costs (12,924,002) - - (12,924,002)
Operating loss (11,936,840) - - (11,936,840)
Depreciation and
amortisation 162,468 - - 162,468
EBITDA (11,774,372) - - (11,774,372)
Share based payments 596,647 - - 596,647
Fund raising costs 1,461,069 - - 1,461,069
Adjusted EBITDA (9,716,656) - - (9,716,656)
============= ========== ==== =============
Segment assets and liabilities by location
Total assets 2017 2016
GBP GBP
UK 90,095,560 34,034,877
Australia 2,911,678 -
US - -
Total 93,007,238 34,034,877
Total liabilities 2017 2016
GBP GBP
UK 8,709,709 5,971,711
Australia 8,907,832 -
USA 93,046 -
Total 17,710,587 5,971,711
========== =========
4. Share based payments
The Company operates an HMRC approved executive management
incentive plan (EMI), an employee share ownership plan (ESOP) and a
licensee share option plan (LSOP).
The vesting conditions for schemes 1, 2 and 4 are based on
length of service with 25% of the options vesting on or after the
12 month anniversary of the employee's start date and a further
6.25% vesting every three months thereafter so that options vest in
full on the 48 month anniversary of the employee's start date.
The vesting conditions for schemes 5, 6, 7, 8 and 9 are based on
future service from the date of grant with 25% of the options
vesting on or after the 12 month anniversary of the grant and a
further 6.25% vesting every three months thereafter so that options
vest in full on the 48 month anniversary of the employee's or the
licensee's (where applicable) grant date.
Details of the total number of shares under option at the year
end and conditions on qualification and exercise are set out
below:
Grant Scheme Employees Number Vesting Type Exercise Earliest Expiry
Date No. entitled of conditions price exercise date
options (p) date
Length
09/01/2015 1 14 403,328 of service EMI GBP0.01 09/01/2015 09/01/2025
Length
10/07/2015 2 11 1,257,505 of service EMI GBP0.13 10/07/2015 10/07/2025
Length
07/08/2015 3 2 - of service EMI GBP0.13 07/08/2015 07/08/2025
Length
10/08/2015 4 11 388,441 of service EMI GBP0.13 23/09/2015 10/08/2025
Length
29/06/2016 6 68 5,329,500 of service ESOP/LSOP GBP1.29 29/06/2017 29/06/2026
Length
05/12/2016 7 287 3,405,000 of service ESOP/LSOP GBP1.25 05/12/2017 05/12/2026
Length
04/01/2017 8 3 1,600,000 of service ESOP/LSOP GBP1.40 04/01/2018 04/01/2027
Length
05/03/2017 9 212 2,246,000 of service ESOP/LSOP GBP3.10 05/03/2018 05/03/2027
The Company operates an unapproved executive incentive plan. The
vesting conditions are based on length of service with 25% of the
options vesting on or after the 12 month anniversary of the
employee's start date and a further 6.25% vesting every three
months thereafter so that options vest in full on the 48 month
anniversary of the employee's start date. Details of the total
number of shares under option at the year end and conditions on
qualification and exercise under unapproved rules are set out
below:
Grant Employees Number Vesting conditions Exercise Earliest Expiry
Date entitled of options price exercise date
(p) date
------------ ---------- ------------ ------------------- --------- ----------- -----------
Length of
06/11/2015 8 5,085,739 service GBP0.01 06/11/2016 06/11/2025
7,121,414 share options were exercised during the year (2016:
9,000,660). The number and weighted average exercise price of share
options are as follows:
2017 2017 2016 2016
Weighted Number Weighted Number
average of options average of options
exercise (number) exercise (number)
price price
----------- ------------ ---------- ------------
Outstanding at
beginning of year GBP0.04 14,256,430 GBP0.01 42,637
Bonus issue - - GBP0.01 4,573,874
Granted during
the year GBP1.62 12,580,500 GBP0.09 18,802,984
Exercised during
the year GBP0.07 (7,121,414) GBP0.11 (9,000,660)
Lapsed during
the year - - GBP0.13 (162,405)
----------- ------------ ---------- ------------
Outstanding at
end of the year GBP1.04 19,715,516 GBP0.04 14,256,430
----------- ------------ ---------- ------------
Exercisable at
end of the year GBP0.05 2,364,068 GBP0.06 3,141,298
----------- ------------ ---------- ------------
The weighted average remaining contractual life of the options
is 9.1 years (2016: 9.2 years).
Options outstanding at 30 April 2017 for schemes 1 and 5 have an
exercise price of GBP0.01 (2016: GBP0.01). The weighted average
remaining contractual life of the options is 8.4 years (2016: 9.4
years).
Options outstanding at 30 April 2017 for schemes 2 and 4 have an
exercise price of GBP0.13 (2016: GBP0.13) following the
redenomination of the shares and admission to AIM. The weighted
average remaining contractual life of the options is 8.3 years
(2016: 8.9 years).
Options outstanding at 30 April 2017 for scheme 6 have an
exercise price of GBP1.29 (2016: nil). The weighted average
remaining contractual life of the options is 9.2 years. (2016:
nil)
Options outstanding at 30 April 2017 for scheme 7 have an
exercise price of GBP1.25 (2016: nil). The weighted average
remaining contractual life of the options is 9.7 years. (2016:
nil)
Options outstanding at 30 April 2017 for scheme 8 have an
exercise price of GBP1.40 (2016: nil). The weighted average
remaining contractual life of the options is 9.7 years. (2016:
nil)
Options outstanding at 30 April 2017 for scheme 9 have an
exercise price of GBP3.10 (2016: nil). The weighted average
remaining contractual life of the options is 9.9 years. (2016:
nil)
Fair value assumptions of share based payments
The fair value of services received in return for share options
granted is measured by reference to the fair value of share options
granted. The estimate of fair value is measured using the
Black-Scholes model. Details of the fair value of share options
granted in the period and the prior period, together with the
assumptions used in determining the fair value are summarised
below.
30 April 30 April
2017 2016
Weighted average share price GBP1.62 GBP0.15
at date of grant
Weighted average exercise price GBP1.62 GBP0.09
Weighted average contractual
life (years) 10 10
Weighted average expected volatility 27% 27%
Weighted average risk free interest
rate 1.5% 1.5%
Total weighted average fair GBP20,333,905 GBP1,664,100
value of options granted
The volatility assumption, measured at the standard deviation of
expected share price movements, is based on a review of volatility
used by listed companies in the same sector.
Charge to the income statement
The charge to profit or loss, included with administrative
expenses, comprises:
2017 2016
GBP GBP
Share based payment charge 917,089 596,647
======== ========
5. Losses per share
Basic and Basic and
diluted diluted
2017 2016
Loss GBP (3,005,329) (11,901,831)
Weighted average number of shares 249,811,478 101,194,640
Losses per share (GBP) (0.01) (0.12)
----------- ------------
During the prior year the Company issued bonus shares prior to
its admission to the Alternative Investment Market (AIM) on a
108.2747 for 1 basis.
Diluted loss per share is equal to the basic loss per share as a
result of the Group recording a loss for the year, which cannot be
diluted.
The table below reconciles the weighted average number of
shares:
Weighted average number of shares 2016 101,194,640
Weighted average issue of new shares
and exercise of options 148,616,838
-----------
Weighted average number of shares 2017 249,811,478
-----------
6. Acquisition of subsidiary
On 24 March 2017 the Group acquired 100 per cent of the issued
share capital of BFL Property Management Limited, obtaining control
of BFL Property Management Limited. BFL Property Management Limited
is a property management company and was acquired to complement the
existing mainly organically created property management business in
the Group and professionalising it with a skilled team and their
processes.
The amounts recognised in respect of the identifiable assets
acquired and liabilities are as set out in the table below.
GBP
Cash paid 3,548,691
Deferred consideration 25,000
-----------------------------------------------
Total consideration 3,573,691
Property, plant and equipment 82,805
Trade and other receivables 188,034
Cash and cash equivalents 253,502
Intangibles - customer relationships 1,070,968
Royalty value of short term use
of tradename and inherent IPR 100,000
Deferred tax liability (210,774)
Trade and other payables (516,823)
Total identifiable net assets 967,712
Goodwill 2,605,979
===============================================
On completion of acquisition and at the year end the goodwill
was reviewed for impairment and the Group will test annually for
impairment going forward. The recoverable amounts of the goodwill
are determined from value in use calculations. The key assumptions
for the value in use calculations are those regarding the discount
rates, growth rates and expected changes to selling prices and
direct costs during the period. The discount rate used was 15% and
the growth rate used was 2% or less based on the Office for Budget
Responsibility growth forecasts contained within the March 2017
economic and fiscal outlook.
The Group has conducted a sensitivity analysis on the impairment
test of goodwill and the group of units carrying value. The Group
prepares cash flow forecasts derived from the most recent financial
budgets approved by management for the next 3 years and
extrapolates cash flows for the following three years based on an
estimated growth rate that does not exceed the average growth rate
for the industry.
At the year end the fair value of goodwill was substantially in
excess of its book value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UWURRBVANUUR
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June 29, 2017 02:01 ET (06:01 GMT)
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