TIDMPURP
RNS Number : 1587Z
Purplebricks Group PLC
13 December 2017
Purplebricks Group plc
Interim Results for the 6 months ended 31 October 2017
Strong trading, strategic investment, UK guidance upgraded
Purplebricks Group plc (AIM: PURP) ("Purplebricks"), the hybrid
estate agent providing a new way to buy, sell or let property,
announces its Interim Results for the six months ended 31 October
2017.
Financial highlights
H1 2018 H1 2017
UK Aus USA Group UK Aus USA Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- ------ ------ ------- ------ ------ ----- ------
Revenue 39.9 6.8 0.1 46.8 18.3 0.4 - 18.7
Gross Profit 22.5 3.6 0.1 26.2 10.2 0.2 - 10.4
Gross Profit
Margin 56.5% 53.3% 69.6% 56.0% 55.6% 49.7% - 55.5%
Administrative
expenses (9.3) (3.0) (3.8) (16.2) (3.8) (1.7) - (5.5)
Marketing (10.1) (5.7) (2.5) (18.3) (6.6) (1.0) - (7.6)
Operating
profit/(loss) 3.2 (5.1) (6.3) (8.2) (0.3) (2.5) - (2.8)
Adjusted EBITDA
* 4.7 (5.1) (6.3) (6.6) 0.3 (2.5) - (2.2)
Net Cash 64.4 29.1
----------------- ------- ------ ------ ------- ------ ------ ----- ------
* Defined by the Group as profit / (loss)
before net finance costs, tax, depreciation,
amortisation and share based payment charges
Financial highlights
-- Group revenue up 150% to GBP46.8m
-- UK revenue up 118% to GBP39.9m
-- UK business adjusted EBITDA increased to GBP4.7m
-- Average UK income per instruction up 14% to GBP1,138
-- Australian revenue increased to GBP6.8m
-- Average income per instruction in Australia $5,282 AUD
Operational highlights
-- Number of UK Local Property Experts rose 107% to 650 as at 12 December
-- Number of Australian Local Property Experts rose 600% to 105 as at 12 December
-- UK Online market share increased to 74%
-- Percentage market share in Australia higher than UK after first anniversary
-- Commenced US expansion ahead of plan, with Los Angeles in September
-- Solid progress in terms of local real estate experts (LREEs),
currently totalling 40. Valuations booked, instructions secured and
completions via our Escrow (conveyancing) business
-- Launches in San Diego, Sacramento and Fresno in January 2018
along with engaging a further 18 LREEs
-- Service rated Excellent with five stars in the UK, Australia
and the US by independent review site Trustpilot
Outlook
-- UK revenue guidance for the full year upgraded 5% from GBP80m
to GBP84m reflecting a strong first half, recent investment in LPEs
and infrastructure, to capitalise on momentum and further increase
market share
-- On-course to achieve full year revenue guidance of GBP12m in Australia
Commenting on the results, Michael Bruce, Group CEO, said:
"We have had a great first half, with strong trading,
significant strategic progress and substantial operational
upgrades. The UK business continues its rapid top line growth,
which is driving a strong increase in profits and margin expansion.
We continue to win UK market share from traditional operators in
what is a challenging market and consolidate our leading position
with competing digital and hybrid offerings.
As a result of our continued success we have seen the highly
customer engaged Post Sales Support team more than double, the
Conveyancing Sales team grow by more than 80% and our Purplebricks
Concierge team expanded, with a view to them covering the whole of
the UK. We have also made considerable strategic investments in
people to support both UK and global growth. Our team in the UK,
excluding LPEs, is now 375 strong.
Our overseas expansion is progressing well with Australia on
track, and the launch into the US in September ahead of schedule.
While it is very early days we are greatly encouraged by the
initial response from customers and the quality of applicants
looking to be Local Real Estate Experts. We are pleased with our
progress to date, confident in our future, and as a result upgrade
our UK full year revenue guidance by 5% from GBP80m to GBP84m."
The Company will be holding an analyst meeting today at 9:30am
in London. Please contact Gemma Mountford on (+44 020 7457 2020 -
gemma.mountford@instinctif.com) for details. There will also be a
live webcast of the analyst meeting - see link below:
http://webcasting.brrmedia.co.uk/broadcast/5a2a9c7e758e796a8ac08e5e
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
Summary
We are pleased to report further strong progress across the
business. In just three and half years Purplebricks has led
fundamental and permanent change in the estate agency market.
Whilst it has been an extremely challenging period for the industry
as a whole with increased competition, the impact of technology,
stamp duty changes and wider macro-economic pressures, Purplebricks
has been able to outperform its peers, delivering rapid growth and
market share gains.
Sales momentum continues to be strong, with Group sales growth
of 150% in the half year. Not only is the UK business retaining its
growth trajectory, with sales increasing 118% year-on-year,
Australia, which has just passed its one year launch anniversary,
has also generated GBP6.8m ($11.3m AUD) of instruction fees in the
period, compared with just GBP0.4m in the prior year. Growing
awareness and understanding of the Purplebricks' offering, an
increasingly local service provided by our growing network of LPEs,
coupled with our expanding and maturing infrastructure is driving
valuation enquiries, which are converting to new instructions and,
as a result, higher revenues.
In the UK we sold and completed on GBP4.6bn of property, with a
further GBP3.8bn in the pipeline. The UK business continues to
scale up, reporting an adjusted EBITDA profit of GBP4.7m (FY17:
GBP0.3m) and an operating profit of GBP3.2m. The increase in
profitability has been achieved through a combination of strong
top-line growth and continued operational leverage and follows a
GBP3.5m planned step-up in marketing investment in the period. In
this period we have invested further in infrastructure for growth
and operational technology.
Our Australian business is progressing well, having recently
completed its first full year since launching in September 2016.
Since launch we have sold and completed on $1.1bn AUD of property.
We are expanding our Australian management team and building
further infrastructure for growth. We currently have 105 Local
Property Experts across five states. We are fast building a brand,
with unprompted brand awareness reaching 10%, a level which it took
the UK two years to reach. Our aim is to replicate the success that
Purplebricks is having in the UK.
Whilst it was a bold decision to enter the $70bn US market, we
continue to believe that there is a substantial opportunity in a
market where the average commission is between 5% and 6%. We are
looking to modernise the US market, as we have done successfully in
the UK and are doing in Australia.
The launch went to plan, ahead of time and within expected
budget. Although it is early days, initial indications from the
first few weeks of trading are encouraging. Since launching our
successful "real misery" advertising campaign we have seen
increasing web visits, valuations, listings and sales. We have
already seen the model work end-to-end from advertising to listing
and right through to legal completion of sales via our US escrow
business.
We currently have 40 Local Real Estate Experts operating in our
launch regions of the Los Angeles designated market area (DMA). We
expect to have around 55 LREEs going into the New Year when we
launch into Fresno, Sacramento and San Diego.
It is testament to the strength and cash generative nature of
the model that net cash at 31 October 2017 is GBP64.4m despite our
continued cash investment in both Australia and the US. This
compares to net cash of circa GBP71.3m at April 2017 year end.
The fast growth in the business and the launch into the US
market has been achieved whilst maintaining a high quality service
for customers. This is not only evidenced by well over 32,000 UK
reviews and 1,500 reviews in Australia on independent review site
Trustpilot, but also a net promoter score ("NPS") of +78 which
compares to brands like Disney and Amazon. We will also be
extending the review choice for our customers to include the highly
respected review site Feefo, with our agreed partnership due to go
live early in 2018.
Increasing our footprint of LPEs across the UK
We currently have 650 UK Local Property Experts which is an
increase of 107% on the same period last year. We will recruit
further in the new year as required to meet the growing demand in
the spring market. In addition, we have 58 UK Local Lettings
Experts which is an increase of 287% on the same period last year.
We are seeing no let-up in our ability to attract and retain
talented and highly experienced agents, with many increasingly
converting to the growing strength of the hybrid offering against a
backdrop of structural and cyclical industry change.
As we grow our LPE network across the country, not only are we
further raising awareness of the Purplebricks' brand and our hybrid
offering, but we are able to continue to provide our customers with
an increasingly 'ultra-local' service. This can only be to the
benefit of customers and the business.
Building on our market leading technology
Bringing together first class LPEs 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 everyone else in the industry.
Technology can play a key part in our strategy of creating
longer lifetime relationships with our customers. It can help to
keep them engaged with the brand through wider products and
services and with simple yet innovative ways of making their lives
easier, more convenient and informed.
We are focusing on user experience and how we can reduce
friction in every interaction with our service offering. Whilst
marginal gains can make a material impact on performance it can
also result in a vastly improved experience for our customers. We
benefit from an enormous amount of customer intelligence and are
constantly testing, challenging and evolving. The advanced features
introduced for our US launch are being migrated into the UK and
Australia.
The Purplebricks App for sellers and buyers has had a number of
upgrades and new features and will play an increasingly important
role in delivering a seamless, superior service for our customers.
It is making the whole process even more integrated, convenient,
effective and transparent. It has taken the experience for a buyer
to a new level. Users can now book valuations, arrange viewings,
give feedback, make offers, negotiate offers, agree sales,
communicate with the seller and get access to information on the
process. We have already revolutionised the way sellers and buyers
communicate throughout the process and are building on the work we
have started.
We continue to develop new ways to leverage our technology
platform and data to grow ancillary revenues. There are smarter,
more effective ways of selling some products and services with the
use of our technology platform such as Rightmove Premium
Listings.
We now have over 80 full time developers across the UK,
Australia and the US and continue to increase our technology team.
As a result Purplebricks is starting to become a hub of technical
interest for developers across the UK.
Creating engaging marketing and advertising
Investment in marketing and advertising has always been a
central element of the Purplebricks' strategy. We continue to work
hard to grow our brand and in less than three years the progress
has been outstanding. Ed Hughes (UK Marketing Director), continues
to drive our brand messaging, engagement and performance in the UK,
supported by James Kydd (Director of Marketing).
Our new CMO in Australia, Matt Simmons, is starting to make
headway whilst Joby Russell returns to the UK to lead our strategy
of creating longer lifetime relationships with customers. Jonathan
Adler leads our marketing charge in the US and is building a highly
experienced team for design, user experience, digital and social
and PR. We are privileged and proud to have such an array of highly
experienced marketing professionals working collaboratively on
consumer engagement and growing our brand worldwide.
We are due to release new TV and radio commercials on Boxing Day
and are in the process of working on website upgrades and changes
to our flows and processes. We will be concentrating on taking our
brand awareness and over 2.9m monthly web visits and turning them
into increased opportunities for the growth of the business.
According to the latest research by The Nursery, one of the
leading independent research and planning agencies, Purplebricks
has industry leading spontaneous brand awareness, which has grown
to 37%, 17% above that of Rightmove, from people looking to sell
their property. Within its competitive set, which includes the
property portals and traditional leading high street agents,
Purplebricks has the highest prompted brand awareness. In tandem
with the increase in awareness is an increase in the understanding
of the Purplebricks' proposition by consumers.
Our above-the-line marketing is complemented by brand and
generic pay-per-click activity which is predominantly provided by
Google, Facebook 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 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. We have dedicated, first
class conversion specialists who are making big strides in
simplifying processes and introducing more engaging and persuasive
information to help people book a valuation. We are working on many
new features that are due to be released shortly with the aim of
taking more of our site visitors and turning them into
customers.
Email marketing will start to play a growing role in our wider
strategy, concentrating on how we engage with customers through
email, reports and processes and indeed how we might engage, inform
and convert people into customers and subsequently customers into
taking greater advantage of our wider services. This will further
advance our marketing and communications strategy.
Post-Sales Support
We are proud of the full service estate agency experience we
give to our customers. We have grown our team of people who support
our customers through the journey from sale agreed to completion by
over 207% in the last year to 45. They offer a specialist and
dedicated service to customers where any issues arise that could
impact the sale that has been agreed and supplement, rather than
replace, the ongoing support provided by the LPEs. They are
pro-active when presented with any issues or problems and have had
a substantial amount of positive feedback from customers. We will
continue to grow our post-sales support teams as the number of
agreed sales increase.
Growing our customer service and Data Sales Unit
Our customer service and data sales teams have grown to 12
people in the UK and 3 in Australia. They are engaging with buyers,
sellers and viewers. As part of our strategy to increase valuations
and drive down the cost per acquisition, we will continue to
develop our Data Sales Unit. We generate thousands of data points
daily as people register with Purplebricks, arrange a viewing, make
offers and agree sales. We continue to increase our revenue
generating opportunities from data and, as our people develop and
move into dedicated product and service streams, we expect to see
the unit continue to make a significant contribution.
Sellers Concierge
We currently have a dedicated team in the UK who communicate
with our customers regularly to review their marketing to ensure we
continue to provide a first class service and to help and support
moving properties from "for sale" to "sale agreed". This team has
estate agency experience and has had positive reviews from
customers who have interacted with them. The team has made a
significant difference to our performance and we will continue to
grow this team to cover all areas of the UK. They are currently
supporting 50% of our regions and it is our objective to cover all
regions of the UK by the year end. Due to the success of our
sellers' concierge service we have recently introduced it into
Australia and we intend to do the same in the US as we scale.
Investing in supporting infrastructure to support UK and global
growth
We have invested in back office and other important supporting
functions to facilitate growth both in the UK and globally. This
includes improving and globalising the finance systems, finance
personnel, IT infrastructure and security along with the legal and
compliance function.
Growing our Lettings business
The lettings business comprised 8% of the revenue in H1 18, up
from 5% during the last financial year. Tenant fees remain a minor
part of this revenue stream. The integration of BFL Property
Management Limited is now complete and we are seeing the benefits
of scale on the overall lettings portfolio. Both the underlying
lettings business and the acquired portfolio are performing in line
with expectations set at the start of the year.
Introducing new products and services
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, easily 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.
We have recently given the full time responsibility of driving this
objective to Joby Russell who has been with Purplebricks for a
number of years. He was the CMO in the UK before going to Australia
and has recently returned to the UK, having built up an experienced
team and installed his replacement.
Growing the Purplebricks' brand across Australia
Our progress in Australia has been exciting and encouraging. Our
market share in Australia is greater than our market share was in
the UK at the same time in its evolution. We are across the five
key states, New South Wales, Victoria, Queensland, South Australia
and Western Australia.
Purplebricks charges a flat sales fee of GBP2,708 ($4,500AUD)
everywhere other than New South Wales where we charge GBP3,309
($5,500 AUD) which includes professional photography, marketing and
advertising on platforms Domain.com.au and RealEstate.com.au, as
well as the Purplebricks Australia website. While Australian
pricing is above that of the UK the overall percentage saving for
customers is broadly similar.
Given the role of auctions in the Australian property market,
Purplebricks offers an additional auction facility with a small
top-up fee, which includes an auctioneer and all viewings held by a
Local Property Expert or their experienced Viewing Assistant.
The brand is growing in Australia:
-- Market share greater than that of the UK after first year
-- Over 105 Local Property Experts
-- 3rd most well-known estate agency brand after first year
-- Spontaneous awareness: 10% after one year
-- Prompted awareness: 74%
-- Brand familiarity: 40%
-- Over 1,500 customer reviews on Trustpilot. Rated excellent with a score of 9.5
-- Over 50% of consumers actively choosing to take upgraded marketing
We are confident that we can continue to build on our success in
Australia.
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 would
care about our customers, our brand and our business and that 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 continue to scale upwards.
Following our stock market listing, over 350 of our LPEs and a
large 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 the awarding of share
options to more LPEs' businesses and employees with the objective
of everyone having some form of equity based reward for their
efforts in growing our business into the future in accordance with
our Admission Document.
We have created strong brand advocacy within our growing
business and among 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 throughout the
heart of the business.
Financial review
This is the first financial period where we have reported
results for three countries. The UK has generated GBP4.7m of
adjusted EBITDA, the Australian business reached its first
anniversary during the period and we launched in the US. Total
Group revenue in the six months grew by 150% year-on-year to
GBP46.8m (H1 FY17: GBP18.7m). In the UK revenue increased 118% to
GBP39.9m and in Australia revenue has increased sixteen-fold to
GBP6.8m, reflecting the further growth and market share gains in
both countries. Both of these countries are benefitting from
national scale, a wider network of LPEs, an increasingly
established operational network and tried and tested efficient
marketing machines. During the period the average fee per
instruction was GBP1,138 (exc. VAT) in the UK and GBP3,145 (exc.
VAT) in Australia, up 14% and 21% respectively when compared to the
same period last year.
Group gross profit in the period was GBP26.2m (H1 FY17:
GBP10.4m), a year-on-year increase of 152%. Gross margin in the
period was marginally higher at 56%. This is despite the stage of
maturity of the Australian business which is currently a drag on
gross profit margin. UK gross profit increased by 121% to GBP22.5m
representing a margin of 56.5%, 80bps higher than the prior period.
This increase is due to a successful shift in the proportion of
higher margin ancillary revenue, along with an increase in the
proportion of London instructions at the higher price point.
Group administrative expenses have increased by GBP10.7m, which
represents launch costs in the US, a full six months of being
operational in Australia, along with a stepped increase of GBP5.5m
in the UK. The investment in the UK includes improving and
globalising the finance systems, finance personnel, IT
infrastructure and security along with the legal and compliance
function to ensure the business has sufficient foundations for the
future.
Marketing has also increased by 138% relative to a revenue
increase of 150%. This is skewed by the US launch and the
establishment of the Australian business. In the UK, marketing
increased by 53% relative to a revenue increase of 118%. The
efficiency of the UK marketing programme continues with cost per
instruction continuing to fall.
Group earnings remain negative due to the early stage of growth
in Australia and also the recent investment in the US launch.
However, the UK business was launched three and a half years ago
and has delivered GBP4.7m of adjusted EBITDA in the period, an
increase of GBP4.4m. The UK business also reported an operating
profit of GBP3.2m for the period, compared with an operating loss
of GBP0.3m last year.
As at the 31 October 2017 the Group had a net cash balance of
GBP64.4m.
Current trading & outlook
The second half of the year has started well, notwithstanding
the ongoing industry headwinds in the UK. We have planned for the
important UK spring market with a coordinated step-up in team,
infrastructure and marketing. Our LPE recruitment has been first
half weighted, reaching 650 LPEs in December, representing a
year-on-year increase of 107%. Team and infrastructure has also
benefitted from a first half weighted GBP5.5m step-up investment,
in order to strengthen and capitalise on our leading position by
building up our operational and support infrastructure to provide
solid foundations for further market share growth.
Aligned with our investment in team and infrastructure is the
launch of new UK marketing initiatives from Boxing Day, targeting
the spring market. As in the prior year and the first half of this
year, we plan to invest more in marketing in the coming months to
capitalise on current market conditions with the objective of
building upon our leading position in the UK as quickly and
effectively as possible. This strategy is tried and tested and has
generated attractive returns on investment, including a reduction
in customer acquisition costs.
Australia continues to progress well and in just over one year
since launch we operate across all five states. During this period
Australia has tracked favourably against the UK at the same time in
its evolution. Looking ahead, while there are not the same seasonal
patterns as the UK, current trading momentum has continued.
The KPIs we have used to assess the success of the UK and
Australia are showing early encouraging signs for the US business.
As a result, we are announcing our plans to launch into the second
batch of regions, including San Diego, Fresno and Sacramento in
January along with the recruitment of a further 18 LREEs. Our total
LREE footprint in the US is fast approaching 60 less than three
months after the launch.
We enter the second half of our financial year in a strong
position with significantly increased LPE capacity, substantial
growth in brand awareness along with record instructions and
revenue growth. With the continued trading momentum, additional
marketing spend in the second half of up to GBP3m over the first
half investment and based on the historic first/second half revenue
splits, we upgrade our full year UK revenue guidance by 5% from
GBP80m to GBP84m in the UK. We reaffirm full year revenue guidance
of GBP12m for Australia. Depending on the speed of payback, the
benefits of this additional marketing spend may not be fully
recovered by the end of our financial year in April but will
position us well through 2018. We remain confident in our
future.
Consolidated Statement of comprehensive income
For the six months ended 31 October 2017
Six Six Year
months months ended
ended ended 30
31 October 31 October April
2017 2016 2017
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Revenue 46,787 18,714 46,706
Cost of Sales (20,567) (8,333) (20,858)
------------ ------------ ---------
Gross profit 26,220 10,381 25,848
Administrative and establishment
expenses (16,155) (5,529) (13,640)
Sales and marketing costs (18,254) (7,652) (18,219)
------------ ------------ ---------
Loss from operating activities (8,189) (2,800) (6,011)
Loss from operating activities
before adjustments in respect
of the following: (6,830) (2,264) (4,694)
Amortisation of intangibles (491) (135) (399)
Share based payment charge (868) (401) (917)
------------ ------------ ---------
Loss from Operating activities (8,189) (2,800) (6,011)
------------------------------------- ------------ ------------ ---------
Finance income 100 37 55
Fair value movement In respect
of derivatives (103) - (104)
------------ ------------ ---------
Loss on ordinary activities
before taxation (8,192) (2,764) (6,060)
------------ ------------ ---------
Taxation on loss on ordinary
activities 0 - 3,054
Loss for the year (8,192) (2,764) (3,005)
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on translation
of foreign operations - (14) 116
------------ ------------ ---------
Total other comprehensive
income - (14) 116
Total comprehensive loss (8,192) (2,778) (2,889)
------------ ------------ ---------
Basic and diluted loss per
share (3p) (1p) (1p)
------------ ------------ ---------
Statement of comprehensive income
For the six months ended 31 October 2017
Six months ended Six months ended Year
31 October 2017 31 October 2016 ended
Unaudited Unaudited 30
April
2017
Audited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
UK AUS USA Total UK AUS USA Total
Revenue 39,931 6,754 102 46,787 18,296 418 0 18,714 46,706
Cost of Sales (17,382) (3,154) (31) (20,567) (8,123) (210) 0 (8,333) (20,858)
Gross profit/(loss) 22,549 3,600 71 26,220 10,174 208 0 10,381 25,848
Administrative
and establishment
expenses (9,282) (3,025) (3,848) (16,155) (3,828) (1,701) 0 (5,529) (13,640)
Sales and marketing
costs (10,050) (5,655) (2,549) (18,254) (6,649) (1,003) 0 (7,652) (18,219)
--------- -------- -------- --------- -------- -------- ------- -------- ---------
Profit/(Loss)
from operating
activities 3,217 (5,080) (6,326) (8,189) (304) (2,497) 0 (2,800) (6,011)
Profit/(loss)
from operating
activities
before adjustments
in respect
of the following: 4,576 (5,080) (6,326) (6,830) 232 (2,496) 0 (2,264) (4,694)
Amortisation
of intangibles (491) - - (491) (134) (1) 0 (135) (399)
Share based
payment charge (868) - - (868) (401) 0 0 (401) (917)
--------- -------- -------- --------- -------- -------- ------- -------- ---------
Profit/(loss)
from Operating
activities 3,217 (5,080) (6,326) (8,189) (304) (2,497) 0 (2,800) (6,011)
---------------------- --------- -------- -------- --------- -------- -------- ------- -------- ---------
Finance income 100 - - 100 36 0 - 37 55
Fair value
movement In
respect of
derivatives (103) - - (103) - - - (104)
Loss on ordinary
activities
before taxation 3,214 (5,080) (6,326) (8,192) (267) (2,497) - (2,764) (6,060)
--------- -------- -------- --------- -------- -------- ------- -------- ---------
Taxation on
loss on ordinary
activities - - 0 - - - - 3,054
Loss for the
year 3,214 (5,080) (6,326) (8,192) (267) (2,497) - (2,764) (3,005)
Items that
may be reclassified
subsequently
to profit or
loss
Exchange differences
on translation
of foreign
operations 0 (14) 0 0 (14) 116
-------- -------- --------- -------- -------- ------- -------- ---------
Total other
comprehensive
income 0 0 0 0 14 - - 14 116
--------- -------- -------- --------- -------- -------- ------- -------- ---------
Total comprehensive
loss 3,214 (5,080) (6,326) (8,192) (281) (2,497) 0 (2,778) (2,889)
--------- -------- -------- --------- -------- -------- ------- -------- ---------
Consolidated statement of financial position
For the six months ended 31 October 2017
31 October 31 October 30 April
2017 Unaudited 2016 Unaudited 2017
Audited
GBP000 GBP000 GBP000
Non-current assets
Property, plant and
equipment 1,004 397 718
Intangible assets 3,843 918 2,757
Goodwill 2,606 0 2,606
Deferred tax asset 3,301 0 3,087
---------------- ---------------- ---------
10,754 1,314 9,168
---------------- ---------------- ---------
Current assets
Trade and other receivables 5,979 2,405 4,865
Cash and other cash
equivalents 64,431 29,064 71,330
---------------- ---------------- ---------
70,410 31,470 76,195
---------------- ---------------- ---------
Current liabilities
Trade and other payables (9,485) (5,472) (7,302)
Deferred income (2,477) (1,129) (2,307)
Derivative financial
instruments (207) 0 (104)
---------------- ---------------- ---------
(12,169) (6,600) (9,713)
---------------- ---------------- ---------
Net current assets 58,241 24,869 66,482
Total assets less
current liabilities 68,995 26,184 75,651
Non-current liabilities
Deferred tax liabilities (458) (244)
Net assets 68,537 26,184 75,407
---------------- ---------------- ---------
Equity
Share Capital 2,718 2,468 2,705
Share premium 75,341 26,319 74,901
Share based payments
reserve 1,562 732 694
Retained earnings (11,201) (3,321) (3,009)
Foreign exchange
reserve 117 (14) 116
Total Equity 68,537 26,184 75,407
---------------- ---------------- ---------
Consolidated statement of changes in equity
For the six months ended 31 October 2017
Unaudited Share Share Retained Share Foreign Total
capital premium earnings based exchange equity
account payment reserve
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2017 2,705 74,901 (3,009) 694 116 75,407
Exercise of options 13 440 - - - 453
Share based payment
charge - - - 868 - 868
Foreign exchange
translation - - - - 1 1
--------- --------- ---------- --------- ---------- --------
Transactions
with owners 13 440 - 868 1 1,322
--------- --------- ---------- --------- ---------- --------
Loss for the
period - - (8,192) - - (8,192)
Total comprehensive
loss - - (8,192) - - (8,192)
--------- --------- ---------- --------- ---------- --------
At 31 October
2017 2,718 75,341 (11,201) 1,562 117 68,537
--------- --------- ---------- --------- ---------- --------
For the period ended
31 October 2016
Unaudited Share Share Retained Share Foreign Total
capital premium earnings based exchange equity
account payment reserve
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2016 2,403 25,887 (558) 331 - 28,063
Exercise of options 61 403 - - - 464
Exercise of warrants 5 29 - - - 34
Share based payment
charge - - - 401 - 401
- - - - -
--------- --------- ---------- --------- ---------- --------
Transactions
with owners 65 432 - 401 - 899
--------- --------- ---------- --------- ---------- --------
Loss for the
period - - (2,764) - - (2,764)
Foreign exchange
translation (14) (14)
Total comprehensive
loss - - (2,764) - (14) (2,778)
--------- --------- ---------- --------- ---------- --------
At 31 October
2016 2,468 26,319 (3,321) 732 (14) 26,184
--------- --------- ---------- --------- ---------- --------
For the year
ended 30 April
2017
Audited Share Share Retained Share Foreign Total
capital premium earnings based exchange equity
account payment reserve
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 May 2016 2,403 25,887 (558) 331 - 28,063
Issue of shares 227 49,773 - - - 50,000
Cost of share
premium - (1,210) - - - (1,210)
Exercise of options 75 450 555 (555) - 525
Share based payment
charge - - - 917 - 917
Transactions
with owners 302 49,013 555 363 - 50,233
Loss for the
year - - (3,005) - - (3,005)
Exchange differences
on
translation of
foreign operations - - - - 116 116
Total comprehensive
loss - - (3,005) - 116 (2,889)
At 30 April 2017 2,705 74,901 (3,009) 694 116 75,407
Consolidated Statement of cash flows
For the six months ended 31 October 2017
Six months Six months Year ended
ended ended 30 April
31 October 31 October 2017 Audited
2017 Unaudited 2016 Unaudited
GBP000 GBP000 GBP000
Cash flows from Operating
activities
Loss for the period
after taxation (8,192) (2,764) (3,005)
Adjustments for:
Amortisation of intangible
assets 491 135 399
Depreciation 184 58 166
Loss on disposal of
fixed assets 2
Share based payment
charge 868 401 917
Non-designated foreign
exchange forward contracts 103 - 104
Deferred taxation 0 - (3,054)
Operating cash flow
before changes in
working capital (6,546) (2,169) (4,471)
Movement in trade
and other receivables (1,113) 565 (1,707)
Movement in trade
and other payables 2,183 246 1,574
Movement in deferred
income 170 368 1,546
Net cash outflow from
operating operations (5,306) (990) (3,057)
Cash flow from investing
activities
Purchase of property,
plant and equipment (470) (238) (586)
Proceeds from sale
of property, plant
and equipment 1
Development expenditure
capitalised (1,577) (682) (1,422)
Purchase of intangible
assets 0 (195)
Acquisition of subsidiary
net of cash acquired (3,295)
Net cash outflow from
investing activities (2,047) (919) (5,496)
Cash flow from financing
activities
Issue of shares 453 497 50,525
Cost of issue of shares - - (1,210)
Net cash flow from
financing activities 453 497 49,316
Net increase in cash
and cash equivalents (6,900) (1,412) 40,763
Effect of foreign
exchange rates changes 1 0 91
Cash and cash equivalents
at beginning of year 71,330 30,476 30,476
Cash and cash equivalents
at the end of the
year 64,431 29,064 71,330
Notes to the financial statements
1. Basis of preparation
Purplebricks Group plc is incorporated and domiciled in the
United Kingdom.
The interim unaudited financial statements for the six month
period ended 31 October 2017 (including the unaudited comparatives
for the six month period ended 31 October 2016 and the audited
comparatives for the year ended 30 April 2017) were approved by the
board of directors on 12 December 2017. Under the Security
Regulations Act of the EU, amendments to the financial statements
are not permitted after they have been approved.
It should be noted that accounting estimates and assumptions are
used in the preparation of the interim financial information.
Although these estimates are based on management's best knowledge
and judgement of current events, actual results may ultimately
differ from those estimates. The interim financial statements have
been prepared using the accounting policies as described in the
year-end financial statements.
The interim financial information contained within this report
does not constitute statutory accounts as defined in the Companies
Act 2006, section 434. The full accounts for the year ended 30
April 2017 received an unqualified report from the auditors and did
not contain a statement under Section 498 of the Companies Act
2006.
2. Segmental reporting
The Company is managed as a single division, providing services
relating to the sale of properties. The financial information
reviewed by the board is materially the same as that reported under
IFR
During the period, no one customer contributed greater than 10%
of the Company's revenues. (six month period ended 31 October 2016:
none, year ended 30 April 2017: none)
H1 2018 H1 2017
UK Aus USA Consolidated UK Aus USA Consolidated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 39.9 6.8 0.1 46.8 18.3 0.4 0.0 18.7
Cost of sales (17.4) (3.2) (0.0) (20.6) (8.1) (0.2) 0.0 (8.3)
------- ------ ------ ------------- ------ ------ ----- -------------
Gross Profit 22.5 3.6 0.1 26.2 10.2 0.2 0.0 10.4
Gross Profit
Margin 56.5% 53.3% 69.6% 56.0% 55.6% 49.7% 0.0% 55.5%
Administrative
expenses (9.3) (3.0) (3.8) (16.2) (3.8) (1.7) 0.0 (5.5)
Sales and
marketing
costs (10.1) (5.7) (2.5) (18.3) (6.6) (1.0) 0.0 (7.7)
------- ------ ------ ------------- ------ ------ ----- -------------
Operating
profit/(
loss) 3.2 (5.1) (6.3) (8.2) (0.3) (2.5) 0.0 (2.8)
Finance income/(expenses) (0.0) 0.0 0.0 (0.0) 0.0 0.0 0.0 0.0
Profit/(loss)
before tax 3.2 (5.1) (6.3) (8.2) (0.3) (2.5) 0.0 (2.8)
Depreciation
and Amortisation 0.6 0.0 0.0 0.7 0.2 0.0 0.0 0.2
------- ------ ------ ------------- ------ ------ ----- -------------
EBITDA 3.9 (5.1) (6.3) (7.5) (0.1) (2.5) 0.0 (2.6)
Share based
payments
charge 0.9 0.0 0.0 0.9 0.4 0.0 0.0 (0.4)
Adjusted
EBITDA * 4.7 (5.1) (6.3) (6.6) 0.3 (2.5) 0.0 (2.2)
------- ------ ------ ------------- ------ ------ ----- -------------
* Defined by the Group as profit / (loss) before net finance
costs, tax, depreciation, amortisation and share based payment
charges
3. 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). Under these plans, a total of 11
schemes have been granted, of which a total of 10 schemes are
currently operating.
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 or licensee's
start date.
The vesting conditions for schemes 5 to 11 are based on future
service from the date of grant, with 25% of the options vesting on
or after either the 12 or 24 month anniversary of the grant, and a
further 6.25% vesting every three months thereafter so that options
vest in full on either the 48 or 60 month anniversary of the date
of grant to the employee or the licensee.
Details of the total number of shares under option at the period
end and conditions on qualification and exercise are set out
below:
Grant Scheme Employees Number Performance Type Exercise Earliest
Date No and/or of options conditions price exercise
Licensees (P) date
entitled
------------ ------- ----------- ------------ ------------ ---------- --------- -----------
Length of
09/01/2015 1 14 205,954 service EMI GBP0.01 09/01/2015
Length of
10/07/2015 2 10 1,057,140 service EMI GBP0.13 10/07/2015
Length of
10/08/2015 4 11 314,008 service EMI GBP0.13 10/08/2015
Length of
06/11/2015 5 8 4,103,698 service EMI GBP0.01 06/11/2016
Length of
29/06/2016 6 65 4,684,697 service ESOP/LSOP GBP1.29 29/06/2017
Length of
05/12/2016 7 184 3,496,250 service ESOP/LSOP GBP1.25 05/12/2017
Length of
04/01/2017 8 3 1,600,000 service ESOP GBP1.40 04/01/2018
Length of
05/03/2017 9 164 2,402,000 service ESOP/LSOP GBP3.10 05/03/2018
Length of
29/06/2017 10 2 1,400,000 service ESOP GBP3.05 29/06/2018
Length of
06/09/2017 11 59 943,000 service ESOP/LSOP GBP4.69 06/09/2018
The number of employees and/or licensees have been updated for
schemes 7 and 9 due to a previous inconsistency between the
disclosure in the annual report and the internal company records
and communications made to option holders at the time of grant.
1,255,798 share options were exercised during the period
(31/10/16 : 6,053,540). The number and weighted average exercise
price of share options are as follows:
31/10/2017 31/10/2017 31/10/2016 31/10/2016 30/04/2017 30/04/2017
Weighted Number Weighted Number Weighted Number
Average of options Average of options Average of options
exercise (no.) exercise (no.) exercise (no.)
price price price
------------ ------------ ----------- ------------ ----------- ------------
Outstanding
at start of
period GBP0.04 19,715,516 GBP0.04 14,256,427 GBP0.04 14,256,430
Granted during
the period GBP3.71 2,343,000 GBP1.29 5,079,500 GBP1.62 12,580,500
Exercised
during the
period GBP0.36 (1,255,798) GBP0.07 (6,053,540) GBP0.07 (7,121,414)
Net lapses
during the
period GBP1.54 (595,970) GBP1.29 (62,500)
Outstanding
at end of
period GBP1.44 20,206,748 GBP0.56 13,219,887 GBP1.04 19,715,516
------------ ------------ ----------- ------------ ----------- ------------
Exercisable
at end of
period GBP0.32 3,129,011 GBP0.23 432,165 GBP0.05 2,364,068
------------ ------------ ----------- ------------ ----------- ------------
The weighted average remaining contractual life of the options
is 8.8 years.
Options outstanding at 31 October 2017 for schemes 1 and 5 have
an exercise price of GBP0.01 (31 October 2016: GBP0.01). The
weighted average remaining contractual life of the options is 8.0
years (31 October 2016: 8.9 years).
Options outstanding at 31 October 2017 for schemes 2 and 4 have
an exercise price of GBP0.13 (31 October 2016: GBP0.13). The
weighted average remaining contractual life of the options is 7.5
years (31 October 2016: 8.9 years).
Options outstanding at 31 October 2017 for scheme 6 have an
exercise price of GBP1.29 (31 October 2016: GBP1.29). The weighted
average remaining contractual life of the options is 8.7 years (31
October 2016: 8.9 years).
Options outstanding at 31 October 2017 for scheme 7 have an
exercise price of GBP1.25 (31 October 2016: not applicable). The
weighted average remaining contractual life of the options is 9.1
years (31 October 2016: not applicable).
Options outstanding at 31 October 2017 for scheme 8 have an
exercise price of GBP1.40 (31 October 2016: not applicable). The
weighted average remaining contractual life of the options is 9.2
years (31 October 2016: not applicable).
Options outstanding at 31 October 2017 for scheme 9 have an
exercise price of GBP3.10 (31 October 2016: not applicable). The
weighted average remaining contractual life of the options is 9.3
years (31 October 2016: not applicable).
Options outstanding at 31 October 2017 for scheme 10 have an
exercise price of GBP3.05 (31 October 2016: not applicable). The
weighted average remaining contractual life of the options is 9.7
years (31 October 2016: not applicable).
Options outstanding at 31 October 2017 for scheme 7 have an
exercise price of GBP4.69 (31 October 2016: not applicable). The
weighted average remaining contractual life of the options is 9.9
years (31 October 2016: not applicable).
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.
31/10/2017 31/10/2016 30/04/2017
Unaudited Unaudited Audited
Weighted average share GBP4.40 GBP1.29 GBP1.62
price at the date of
grant
Weighted average GBP3.71 GBP1.29 GBP1.62
exercise price
Weighted average contractual
life (years) 10 10 10
Weighted average
expected volatility 27% 27% 27%
Weighted average risk
free interest rate 1.50% 1.50% 1.50%
Total weighted average fair GBP3,268 GBP2,908 GBP20,334
value of options granted
(GBP'000)
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 income statement
The charge to the income statement, included within
administrative expenses, comprises:
31/10/2017 31/10/2016 30/04/2017
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
Share-based payment
charge 868 401 917
----------- ----------- -----------
4. Loss per share
Basic and Basic and Basic and
diluted diluted diluted
(rebased)
6 months 6 months Year ended
ended 31 ended 31 April 2017
October October
2017 2016
Unaudited Unaudited Audited
Loss (GBP000) (8,192) (2,764) (3,005)
Weighted average number
of shares 271,291,616 244,365,112 249,811,478
Loss per share (GBP) (0.03) (0.01) (0.01)
------------ ------------ ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFMSSDFWSEIE
(END) Dow Jones Newswires
December 13, 2017 02:00 ET (07:00 GMT)
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