TIDMPURP
RNS Number : 5923W
Purplebricks Group PLC
12 December 2019
12 December 2019
Purplebricks Group plc
("Purplebricks", the "Company" or the "Group")
Results for the six months ended 31 October 2019
Revenue growth and EBITDA profit despite difficult market
conditions
Purplebricks Group Plc (AIM: PURP), a leading estate agency
business, announces its Interim Results for the six months ended 31
October 2019 ("H1 20", the "First Half" or the "Period").
First Half H1 20 H1 19[1] Change H1 19(1)
Pro forma
GBPm GBPm % GBPm
Group - continuing operations[2]
Revenue 64.8 63.6 1.9 57.6
Gross profit 39.4 39.5 (0.3) 36.2
Gross profit margin (%) 60.8% 62.1% (130)bps 62.8%
Operating (loss)/profit (1.2) 4.8 (125.0) 4.1
Adjusted operating profit[3] 1.6 6.2 (74.2) 5.5
Adjusted EBITDA(3) 4.3 8.4 (48.8) 7.9
Cash (consolidated) 41.6 103.1 (59.7) 103.1
---------------------------------- ------ ----------- --------- -----------
Financial highlights
-- Group revenue GBP64.8 million (H1 19: GBP57.6 million), up
12.5% or 1.9% on a pro forma basis
-- Revenue split UK 73%, Canada 27%
-- Group gross margin 61%, down 130bps mostly due to buyside revenue growth in Canada
-- UK ancillary revenue[4] 45% of total (H1 19: 44%)
-- UK Adjusted EBITDA(3) GBP5.5 million (H1 19: GBP8.4 million),
an Adjusted EBITDA margin of 11.7%
-- Cash at period end GBP41.6 million (30 April 2019: GBP62.8 million)
-- Loss for the period including discontinued businesses GBP14.1
million (H1 19: GBP27.8 million)
Operational highlights
-- Customers saved more than GBP150 million in commission in the First Half
-- UK listing market share[5] broadly maintained at 4.1%; share
of completions(5) 5.3%, up 280bps
-- UK average revenue per instruction ("ARPI") up 12% year-on-year
-- UK pricing review completed, moving into testing phase
-- UK brand awareness now at 97%
-- Canada maintained solid EBITDA margin in Quebec
-- Strong growth of Purplebricks brokerage outside of Quebec driven by buyside mandates
-- Australia and the US closures going to plan and within the
GBP10-14m range announced in July
Vic Darvey, Group Chief Executive Officer, commented: "We are
very pleased with the progress made in the Period in light of the
market backdrop. We've seen resilient trading in the First Half,
with our diverse revenue streams and strong ARPI growth improving
the quality of earnings and balancing out declining market
conditions. We end the First Half having now stabilised the
business and the significant losses incurred last year have now
been reversed with the Group enjoying profitable trading.
"Our focus on operational excellence and improvements in our
technology-led proposition, along with proactive management of our
pricing structure will enable us to continue to achieve profitable
growth. We remain confident of meeting our medium-term objective to
gain a 10% share of the UK market."
------
Presentation
A presentation for analysts and professional investors will be
held at 9.00am at the offices of Buchanan, 107 Cheapside, London
EC2V 6DN. To attend please email Hannah Ratcliffe at
hannahr@buchanan.uk.com.
The presentation will be webcast live and will be accessible via
the Purplebricks website[6] at
www.purplebricksplc.com/investors/latest_results and a replay will
also be available on the Purplebricks website following the
presentation.
Enquiries
Purplebricks +44 (0)20 7466 5000
Vic Darvey, CEO
James Davies, CFO
Adam Kay, Head of Investor Relations
Zeus Capital (NOMAD) +44 (0)161 831 1512
Nick Cowles, Jamie Peel
Citi (Co-broker) +44 (0)20 7986 4000
Stuart Field, Robert Farrington
Peel Hunt (Co-broker) +44 (0)20 7418 8900
Dan Webster, George Sellar
Buchanan +44 (0)20 7466 5000
David Rydell, Jamie Hooper, Kim van Beeck
About Purplebricks
Purplebricks is a leading estate agency business. Based in the
UK, it also operates in Canada and is invested in Homeday.de in
Germany. Purplebricks combines highly experienced and professional
Local Property Experts and innovative technology to help make the
process of selling, buying or letting more convenient, transparent
and cost effective. Purplebricks shares are traded on the London
Stock Exchange AIM market.
Forward-looking statements
This announcement includes statements that are, or may be
considered to be, "forward-looking statements". By their nature,
such statements involve risk and uncertainty since they relate to
future events and circumstances. Results may, and often do, differ
materially from forward-looking statements previously made. Any
forward-looking statements in this announcement reflect
management's view with respect to future events as at the date of
this announcement. Except as required by law or by the AIM Rules of
the London Stock Exchange, the Company undertakes no obligation to
publicly revise any forward-looking statements in this announcement
following any change in its expectations to reflect subsequent
events or circumstances.
Interim Results
This was a challenging First Half for the Group with the number
of properties coming onto the UK market falling to the lowest level
in a decade as consumers adopted a 'risk off' mentality. However,
management is pleased to report that the Group had a resilient
performance in the first six months of the year with its diverse
revenue streams and strong ARPI growth balancing out declining
market conditions, resulting in positive revenue growth as a
Group.
Trading was in line with management expectations. While the
Group maintained its 4% listings market share in the UK, it
increased share of the number of houses sold by 280bps to 5.3% of
the market as the investments made to get closer to the customer
and sell more houses started to pay off. The Canadian business
modestly outperformed expectations, with strong growth in Alberta,
Manitoba and Ontario ("English Canada").
A key management initiative over the First Half was to stabilise
the business and maintain a strong cash position. The exit of the
US and Australian markets is going to plan and the costs associated
with the withdrawals are within the range guided at the full year
results in July 2019. It is expected that both markets will be
fully closed by the end of the financial year.
Looking forward, the business is making good progress on the
strategy articulated in July, with the brand continuing to gain
traction in both the UK and Canada and a transformation programme
that will deliver on four key strategic initiatives designed to
accelerate the growth of the core business and start the journey
towards management's goal of 10% UK market share.
Initiative 1 - Evolve our pricing
An in-depth pricing exercise was conducted in the period by
management to answer three fundamental questions:
1. How much headroom do we have in our pricing?
2. Can we increase our addressable market by evolving our pricing structure?
3. Can we better incentivise our population of Local Property
Experts ("LPEs") to improve customer outcomes?
The pricing exercise saw the deployment of four different
pricing methods into the market to gather data and as a result, a
series of in-field tests will be conducted in early 2020 that will
examine different pricing strategies, with some reducing the level
of up-front fee and splitting the payment between publication and
completion. The data gathered to date indicates an ability to
extend the Group's addressable market with more sophisticated
pricing.
In the meantime, on 24 October management increased UK prices by
GBP100 nationwide, honouring any earlier valuations for 30 days.
The business' pricing remains favourable to a typical industry
commission level of 1.2% plus VAT.
Initiative 2 - Estate agent of the future
During the First Half, particularly in the UK, the Group worked
closely with a number of customers to better understand how the
existing customer experience can be improved, and also how future
areas of growth can be unlocked.
Despite the market backdrop, management has increased investment
into technology and building out product and engineering
capability. The technology teams have been restructured to
accelerate delivery speed, with dedicated squads focused on
improving all elements of the customer experience. Specifically,
with the ever-increasing adoption of mobile technology, resources
have been increased on delivering a more personalised customer
experience.
Initiative 3 - Enhancing performance in the field
In order to improve the quality of the customer offering in the
field, significant investment was made in real-time analytics and
market data to enable LPEs to have more meaningful conversations
with customers in their living rooms to drive conversion.
Investment has also been made into recruitment, induction and
training academy programmes, which have significantly improved
performance management in the field and across the business.
At Full Year results, management made a commitment to give back
a day a week to LPEs by the end of 2020. The Group has now begun to
improve key process automation, including anti-money laundering
checks. Management also has a clear vision that LPEs should earn
more than their high street counterparts, supported by more
relevant data and enabling technology to offer customers a better
experience.
Initiative 4 - Transforming our customer processes
In the First Half, significant investments were made in both
people and technology to improve the level of service provided to
customers and to focus the business on selling more houses. The
most significant investment was made to enhance proactive sales
support for customers, resulting in a reduction in time from sale
agreed to completion by seven days. This also helped increase the
number of houses sold in a declining market and increased the
Group's market share of completed sales to 5.3% in the First
Half.
The Group has also invested in new technology in the UK to
ensure that customers have a choice of channel through which to
communicate with the Company, including the deployment of an
omni-channel customer engagement platform.
Internally, during the First Half the World-Class Manager
training programme was introduced, along with a contact centre
school, which have helped to increase productivity by around
25%.
These improvements have been validated with a net promotor score
of 80 (October 2018: 79). Purplebricks continues to be the most
positively reviewed UK estate agent with more than 70,000 reviews
on Trustpilot and were recently awarded the Gold Trusted Service
Award by another review provider, Feefo.
Business review by geography
UK
Extract of consolidated statement H1 20 H1 19 Change
of comprehensive income
GBPm GBPm %
----------------------------------- ------- ------- --------
Revenue 47.1 48.4 (2.7)
Cost of sales (17.1) (17.2) (0.6)
Gross profit 30.0 31.2 (3.8)
Gross profit margin (%) 63.7% 64.5% (80)bps
Administrative expenses (14.2) (12.0) 18.3
Marketing costs (12.3) (13.5) (8.9)
Operating profit 3.5 5.7 (38.6)
UK Alternative Performance Measures3 H1 20 H1 19 Change
GBPm GBPm %
-------------------------------------- ------- ------ -------
Adjusted EBITDA 5.5 8.4 (34.5)
Adjusted operating profit 4.1 6.9 (40.6)
Adjusted operating costs (12.2) (9.3) 31.2
Key performance indicators ("KPIs")
The Directors use KPIs to assess performance of the business
against the Group's strategy, which is built around: efficiently
attracting customers to our website; gaining market share;
and providing customers with choice to drive increases in
revenue per instruction. Cost-effective marketing and a controllable
operating cost base are the other components of a sustainably
profitable business.
Unique visitors represent the number of unique visitors to
the website in the period.
Average revenue per instruction equates to total sales revenue
divided by the number of published instructions
Cost per instruction represents total marketing costs, including
portal costs, divided by instructions.
Marketing as a percentage of sales represents the total marketing
costs, including portal costs, as a percentage of total revenue.
UK KPIs H1 20 H1 19 Change
Unique visitors 8.0m 7.4m 8%
Instructions 32,850 38,619 (15)%
Average revenue per instruction
("ARPI") 1,353 1,209 12%
Marketing cost per instruction
("CPI") 376 350 7%
Marketing costs as a % revenue 26.1 27.9 (180)bps
UK revenue was GBP47.1 million (H1 19: GBP48.4 million) a
decrease of 3%, driven by a 15% decrease in the number of
instructions largely offset by a 12% increase in average revenue
per instruction to GBP1,353 (H1 19: GBP1,209).
Ancillary services represented 45% of revenue, up from 44% in
the comparable period, as LPEs successfully sold a wider selection
of products and services to customers.
The majority of cost of sales is represented by payments to
self-employed LPEs. UK Gross profit margin was 63.7%, marginally
lower year-on-year (H1 19: 64.5%), reflecting adjustments to the
LPE commission structure aimed at driving better customer
outcomes.
Adjusted operating costs were GBP12.2 million (H1 19: GBP9.3
million), up 31.2%, including GBP1.3 million of restructuring
costs. Underlying costs were up 17% as we further invest in
professionalising the business from a personnel and technology
perspective.
Marketing costs were GBP12.3 million (H1 19: GBP13.5 million), a
decrease of 8.9% reflecting a more targeted approach to investment
in UK brand and customer acquisition. Marketing costs as a
percentage of revenue fell 180bps YoY. Excluding portal costs, CPI
was broadly flat. However, due to the shrinking market for new
listings, along with higher portal costs, CPI increased to GBP376
(H1 19: GBP350).
Adjusted EBITDA was GBP5.5 million (H1 19: GBP8.4 million), a
decrease of 34.5% reflecting the net effect of the items above.
Depreciation and amortisation was GBP1.4 million (H1 19: GBP1.1
million), predominantly reflecting increased investment in
technology. H1 20 also includes GBP0.1m of amortisation of lease
right to use assets, following the adoption in the period of IFRS
16.
Operating profit was GBP3.5 million (H1 19: GBP5.7 million), a
decrease of 38.6%.
Canada
Extract of consolidated statement H1 20 H1 19 Change H1 19
of comprehensive income
Pro forma (from 6
July 2018)
GBPm GBPm % GBPm
----------------------------------- ------ ----------- --------- -------------
Revenue 17.7 15.2 16.4 9.2
Cost of sales (8.3) (6.9) (20.3) (4.2)
------ ----------- --------- -------------
Gross profit 9.4 8.3 13.3 5.0
Gross profit margin (%) 53.1% 54.6% (150)bps 54.3%
Administrative expenses (5.8) (4.4) 31.8 (2.9)
Marketing costs (4.2) (3.2) 31.3 (2.1)
------ ----------- --------- -------------
Operating (loss)/profit (0.6) 0.7 (185.7) (0.0)
------ ----------- --------- -------------
Canada Alternative Performance H1 20 H1 19 Change H1 19
Measures3
Pro forma (from 6
July 2018)
------ ----------- -------- -------------
GBPm GBPm % GBPm
------ ----------- -------- -------------
Adjusted EBITDA 0.1 0.9 (88.9) 0.4
------ ----------- -------- -------------
Adjusted operating (loss)/profit (0.4) 0.8 (150.0) 0.1
------ ----------- -------- -------------
Canada KPIs - H1 19 from 6 H1 20 H1 19 Change H1 19
July 2018
Pro forma (from
6 July
2018
Total transactions 20,486 21,401 (4)% 13,217
Average revenue per instruction
("ARPI") (GBP) 942 741 27% 765
Marketing cost per transaction
(GBP) 205 150 36.7% 159
Marketing costs as a % revenue 23.7 21.1 (260)bps 22.8
Canada enjoyed a solid First Half, with good growth from the
rebranded business outside of Quebec. In order to enable a
meaningful like for like comparison, pro forma numbers are
disclosed for the entire prior period to reflect what this period
would have looked like if had the business have been owned from 1
May 2018.
The performance of the Canadian business is determined by two
factors:
1. Stable mid-teens profitability and established market share
within Quebec, with ARPI strength currently offsetting listing
headwinds; and
2. High revenue growth in the Rest of Canada as the Purplebricks
branded business gains traction driven by the enhanced marketing
campaign.
Against a broadly flat market for new listings in Quebec and
some light headwinds in Ontario and Western Canada, total Canadian
revenue grew by 16.4% YoY or 13.0% at constant currency. ARPI was
up 27% to GBP942 (H1 19: GBP741).
The overall Canadian business achieved Adjusted EBITDA of GBP0.1
million (H1 19: GBP0.9 million), as a result of increasing
marketing investment in Rest of Canada by more than 60%. This
resulted in prompted brand awareness increasing to 56% and the
volume of leads rising 45% YoY.
Closure of operations in Australia and the United States
Throughout the closure processes in both countries, the wind-up
of operations have been conducted in a responsible manner to
protect the Purplebricks brand and respect commitments made to
customers and business partners, while minimising costs where
possible within these broader reputational parameters. The Group
guided to closure costs of GBP6-8 million for Australia and GBP4-6
million for the US, and is tracking within these ranges currently.
Closure of each market is on track to be fully completed by the end
of the financial year.
Tax
The Group reports a net tax charge of GBP0.2 million (H1 19:
GBP0.5 million), which includes a GBP0.5 million UK deferred tax
charge relating to a reduction in the value of share-scheme-related
deferred tax assets due to movements in the share price since year
end and the use of deferred tax assets against UK profits arising
in the period. This UK charge is partially offset by a GBP0.3
million deferred tax credit arising in the period on tax losses and
amortisation of intangible fixed assets relating to the Canadian
business. Given the previously announced closure of the Australian
and US operations, no deferred tax asset has been recognised in
relation to losses arising in these businesses in the period.
Cash, working capital and balance sheet
Operating cash flow, which represents cash generated from or
consumed by operations, before capital expenditure was an outflow
of GBP14.1 million (H1 19: GBP20.7 million). Within this, net
operating cash outflow for continuing operations accounted for an
outflow of GBP2.4 million and for discontinued operations an
outflow of GBP11.7 million.
Capital expenditure and financing items represented an outflow
of GBP7.1 million (H1 19: GBP29.0 million), with an additional
GBP4.6 million investment being made in Homeday.de (H1 19: GBP27.3
million in relation to our Canadian acquisition). Total cash
outflows for the period were GBP21.2 million (H1 2019: GBP49.7
million), of which continuing operations comprised GBP9.5 million
and discontinued operations comprised GBP11.7 million. There are no
further contractual commitments to invest further into
Homeday.de.
Estimates and judgements
In preparing the condensed consolidated financial statements,
the Directors have approached the areas of critical accounting
estimate and judgement as described on pages 51 and 52 of the
annual report which is available at
https://www.purplebricksplc.com/investors/latest_results. The
approach to these areas in these condensed consolidated financial
statements is in line with that taken at 30 April 2019. There has
been no change to the areas of critical estimate and judgement.
Principal risks and uncertainties
The principal risks and uncertainties set out in the last annual
report remain valid at the date of this report. A detailed
explanation of the risks summarised below, and how the Group seeks
to mitigate the risks, can be found on pages 20 to 21 of the annual
report which is available at
https://www.purplebricksplc.com/investors/latest_results.
In summary, these include:
-- UK economic uncertainty
-- The failure to recruit and retain an experienced and knowledgeable workforce
-- The failure to either deliver a professional service or to elicit positive reviews
-- Internal financial controls are inadequate
-- Challenges in growing and scaling the business
-- Sustain a cyber security breach
-- International risk
-- Changes in regulation and legislation
-- Changes in leadership
Responsibility statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
and their impact during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
Signed on behalf of the Board by:
Vic Darvey James Davies
Chief Executive Officer Chief Financial Officer
11 December 2019
Condensed consolidated statement of comprehensive income
for the six months ended 31 October 2019
Six months ended Year
31 October ended
unaudited 30 April
2018 2019
Restated Restated
see note see note
2019 2.2 2.2
Note GBPm GBPm GBPm
------- ---------- ----------
Revenue 4 64.8 57.6 113.8
Cost of Sales (25.4) (21.4) (44.4)
------- ---------- ----------
Gross profit 39.4 36.2 69.4
Administrative and establishment
expenses (22.5) (16.5) (36.3)
Marketing costs (16.5) (15.6) (34.1)
Share of results of joint
venture (1.6) - (0.5)
------- ---------- ----------
(Loss)/profit from operating
activities (1.2) 4.1 (1.5)
Finance income 0.2 0.6 0.8
Finance expense (2.4) (1.5) (4.2)
------- ---------- ----------
(Loss)/profit on ordinary activities
before taxation (3.4) 3.2 (4.9)
Taxation on loss on ordinary
activities (0.2) (0.5) 1.3
(Loss)/profit from continuing
operations (3.6) 2.7 (3.6)
Loss from discontinued
operations 7 (10.5) (30.5) (51.3)
Loss for the period (14.1) (27.8) (54.9)
Items that may be reclassified subsequently
to profit and loss:
Exchange differences on translation
of foreign operations 0.7 - (0.1)
------- ---------- ----------
Total other comprehensive
income - - (0.1)
Total comprehensive loss (13.4) (27.8) (55.0)
------- ---------- ----------
Earnings per share 6
From continuing operations:
Basic (1)p 1p (1)p
Diluted (1)p 1p (1)p
Total including discontinued
operations:
Basic and diluted (5)p (9)p (18)p
Comparative figures have not been restated for the adoption of
IFRS 16 at 1 May 2019 - see note 2.
Condensed consolidated statement of financial position
at 31 October 2019
31 October 31 October 30 April
2019 2018 2019
unaudited unaudited audited
GBPm GBPm GBPm
----------- ----------- ---------
Non-current assets
Goodwill 19.5 15.6 19.5
Intangible assets 19.9 25.9 21.9
Property, plant and equipment 2.4 1.6 2.0
Investment in joint venture 13.7 - 10.7
Deferred tax asset 6.8 3.6 7.1
62.3 46.7 61.2
----------- ----------- ---------
Current assets
Tax receivable 0.4 - 1.2
Trade and other receivables 22.2 27.0 27.4
Derivative financial instruments - 0.1 -
Cash and cash equivalents 41.6 103.1 62.8
64.2 130.2 91.4
----------- ----------- ---------
Total Assets 126.5 176.9 152.6
----------- ----------- ---------
Current liabilities
Trade and other payables (14.8) (27.4) (25.0)
Deferred income (15.0) (19.2) (19.4)
Derivative financial instruments - - -
Lease liabilities (0.4) - -
----------- ----------- ---------
(30.2) (46.6) (44.4)
----------- ----------- ---------
Net current assets 34.0 83.6 47.0
----------- ----------- ---------
Total assets less current liabilities 96.3 130.3 108.2
----------- ----------- ---------
Non-current liabilities
Deferred tax liabilities (4.6) (4.8) (4.5)
Lease liabilities (1.4) - -
----------- ----------- ---------
(6.0) (4.8) (4.5)
----------- ----------- ---------
Net assets 90.3 125.5 103.7
----------- ----------- ---------
Equity
Share Capital 3.1 3.0 3.0
Share premium 177.4 176.9 177.4
Share-based payments reserve 8.2 6.6 8.6
Foreign exchange reserve 0.2 (0.4) (0.5)
Retained earnings (98.6) (60.6) (84.8)
Total Equity 90.3 125.5 103.7
----------- ----------- ---------
Condensed consolidated statement of changes in equity
for the six months ended 31 October 2019
Share-based Foreign
Share Share payment exchange Retained Total
Unaudited Capital Premium reserve reserve Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ------------ ---------- ---------- --------
At 1 May 2019 3.0 177.4 8.6 (0.5) (84.8) 103.7
Impact of change in
accounting policy (see
note 2.3) - - - - - -
Exercise of options 0.1 - (0.4) 0.4 0.1
Tax in respect of share
options - - - - (0.1) (0.1)
Share-based payment - - -
charge - - -
Transactions with owners 0.1 - (0.4) - 0.3 -
--------- --------- ------------ ---------- ---------- --------
Loss for the period - - - - (14.1) (14.1)
Exchange differences
on translation of foreign
operations - - - 0.7 - 0.7
Total comprehensive
loss - - - 0.7 (14.1) (13.4)
--------- --------- ------------ ---------- ---------- --------
At 31 October 2019 3.1 177.4 8.2 0.2 (98.6) 90.3
--------- --------- ------------ ---------- ---------- --------
for the six months ended 31 October 2018
Share-based Foreign
Share Share payment exchange Retained Total
Unaudited Capital Premium reserve reserve Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ------------ ---------- ---------- --------
At 1 May 2018 3.0 176.4 4.6 (0.4) (33.4) 150.2
Exercise of options - 0.5 (0.1) - 0.1 0.5
Tax in respect of share
options - - - - 0.5 0.5
Share-based payment
charge - - 2.1 - - 2.1
Transactions with owners - 0.5 2.0 - 0.6 3.1
--------- --------- ------------ ---------- ---------- --------
Loss for the period - - - - (27.8) (27.8)
Exchange differences
on translation of foreign
operations - - - - - -
Total comprehensive
loss - - - - (27.8) (27.8)
--------- --------- ------------ ---------- ---------- --------
At 31 October 2018 3.0 176.9 6.6 (0.4) (60.6) 125.5
--------- --------- ------------ ---------- ---------- --------
Condensed consolidated statement of changes in equity
For the year ended 30 April 2019
Share-based Foreign
Share Share payment exchange Retained Total
Capital Premium reserve reserve Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ------------ ---------- ---------- --------
At 1 May 2018 3.0 176.4 4.6 (0.4) (33.4) 150.2
Exercise of options - 1.0 (0.3) - 0.3 1.0
Tax in respect of share
options - - - - 3.2 3.2
Share-based payment
charge - - 4.3 - - 4.3
Transactions with owners - 1.0 4.0 - 3.5 8.5
--------- --------- ------------ ---------- ---------- --------
Loss for the year - - - - (54.9) (54.9)
Exchange differences
on translation of foreign
operations - - - (0.1) - (0.1)
Total comprehensive
loss - - - (0.1) (54.9) (55.0)
--------- --------- ------------ ---------- ---------- --------
At 30 April 2019 3.0 177.4 8.6 (0.5) (84.8) 103.7
--------- --------- ------------ ---------- ---------- --------
Condensed consolidated statement of cash flows
for the six months ended 31 October 2019
Six months Six months Year ended
ended 31 ended 31 30 April
October October 2019
2019 unaudited 2018 unaudited
- Restated
see note Restated
2.2 see note
2.2
GBPm GBPm GBPm
---------------- ---------------- -----------
Loss for the period after taxation (14.1) (27.8) (54.9)
Adjustments for:
Amortisation of intangible assets 2.8 1.6 3.6
Depreciation 0.9 0.4 0.8
Share-based payment charge - 2.1 4.3
Interest income (0.2) (0.5) (0.7)
Interest expense - - 0.1
Fair value movement in respect
of derivatives - (0.1) -
Share of result of joint venture 1.6 - 0.5
Taxation credit/(charge) 0.2 0.3 (1.1)
---------------- -----------
Operating cash outflow before
changes in working capital (8.8) (24.0) (47.4)
---------------- ---------------- -----------
Movement in trade and other receivables 5.7 (4.9) (6.6)
Movement in trade and other payables (8.3) 7.0 4.9
Movement in deferred income (3.4) 1.2 1.1
-----------
Cash utilised in operations (14.8) (20.7) (48.0)
---------------- ---------------- -----------
Taxation received/(paid) 0.8 - (1.0)
Interest paid (0.1) - (0.1)
Net cash outflow from operating
activities (14.1) (20.7) (49.1)
---------------- ---------------- -----------
Investing activities
Purchase of property, plant and
equipment (0.6) (0.4) (1.1)
Development expenditure capitalised (1.4) (1.6) (2.6)
Purchase of intangible assets (0.5) (0.6) (0.7)
Interest income 0.2 0.4 0.7
Investment in joint venture (4.6) - (11.2)
Acquisition of subsidiary net
of cash acquired - (27.3) (27.3)
Net cash outflow from investing
activities (6.9) (29.5) (42.2)
---------------- ---------------- -----------
Financing activities
Payments against lease liabilities (0.3) - -
Proceeds from issue of shares 0.1 0.5 1.0
Net cash (outflow)/inflow from
financing activities (0.2) 0.5 1.0
---------------- ---------------- -----------
Net decrease in cash and cash
equivalents (21.2) (49.7) (90.3)
Effect of foreign exchange rates - - 0.3
Cash and cash equivalents at
beginning of the period 62.8 152.8 152.8
Cash and cash equivalents at
the end of the period 41.6 103.1 62.8
---------------- ---------------- -----------
Notes to the condensed financial statements for the six months
ended 31 October 2019
1. General information
Purplebricks Group plc is a public company limited by shares
that is listed on the Alternative Investment Market of the London
Stock Exchange. The Company is incorporated in the United Kingdom
and registered in England and Wales. The address of the Company's
registered office is Suite 7, First Floor, Cranmore Place, Cranmore
Drive, Shirley, Solihull, West Midlands, B90 4RZ. The Company is
primarily involved in the estate agency business.
The information for the year ended 30 April 2019 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditors
reported on those accounts: their report was unqualified, did not
draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
2. Summary of significant accounting policies
The annual financial statements of Group plc are prepared in
accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting', as adopted by
the European Union.
The accounting policies adopted are consistent with those of the
previous financial period (see pages 43 to 51 of the 2019 Annual
Report) except as described below at Note 2.3.
2.1 Basis of preparation
The interim unaudited financial statements have been prepared
under the historical cost convention subject to recognising certain
financial instruments at fair value.
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed financial statements.
The Group typically experiences a seasonal slowdown in activity
during the December holiday period.
2.2 Restatement
Prior period error
In the current period, the Group has classified cash flows
relating to debt factoring finance costs in the statement of cash
flows. As previously disclosed, in the prior period, these cash
flows had been presented within cash flows from financing
activities. Receivables are sold at a discount to face value on
non-recourse terms, with the discount representing the costs
charged by the factor. The factor settles the debt to the Group on
a net basis, after deducting fees. As no cash flows arise from
these transactions, because the costs charged by the factor are
deducted from the gross payment, the cash flows have been removed
from the statement of cash flows.
In the current period, the Company has reclassified cash flows
in respect of loans to subsidiaries in the statement of cash flows.
In the prior period, these cash flows were presented within cash
flows resulting from movements in trade and other receivables and
payables.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
2.2 Restatement (continued)
Extract from statements of cash flows: Six months to 31 October 2018
GBPm
Operating cash flow before changes in working capital previously reported (21.7)
Decrease due to removing the adjustment for debt factoring finance costs (2.3)
-----------------------------
Operating cash flow before changes in working capital (restated) (24.0)
Cash flow from financing activities previously reported (1.8)
Increase due to removal of cash outflows from debt factoring finance costs 2.3
-----------------------------
Cash flow from financing activities (restated) 0.5
Discontinued operations
A discontinued operation is a component of the entity which the
Group has decided to close, or which has been disposed of or which
is classified as held for sale and which represents a separate
major line of business or geographical area of operations. The
results of discontinued operations are presented separately in the
statement of statement of comprehensive income and statement of
cash flows.
In H1 20, the results of US and Australia operations have been
classified as discontinued operations.
Income statement and cash flow statement comparatives for the
year ended 30 April 2019 and for H1 FY 19 have been restated
accordingly.
2.3 New accounting standards adopted in the period
In the current year the Group has applied IFRS 16 Leases for the
first time. The date of initial application of IFRS 16 for the
Group is 1 May 2019. IFRS 16 introduces new or amended requirements
with respect to lease accounting. It introduces significant changes
to the lessee accounting by removing the distinction between
operating and finance lease, requiring the recognition of a
right-of-use asset and a lease liability at commencement for all
leases, except for short-term leases and leases of low value
assets. In contrast to lessee accounting, the requirements for
lessor accounting have remained largely unchanged.
The Group is not party to any leases where it acts as a lessor,
but the Group does have a number of significant property
leases.
Details of the Group's accounting policies under IFRS 16 are set
out below, followed by a description of the impact of adopting IFRS
16. Significant judgements applied in the adoption of IFRS 16
included determining the lease term for those leases with
termination or extension options and determining an incremental
borrowing rate where the rate implicit in a lease could not be
readily determined.
Accounting policies under IFRS 16 Leases
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets. For these leases, the Group
recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
2.3 New accounting standards adopted in the period
(continued)
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
The lease liability is presented as a separate line in the
consolidated statement of financial position and is subsequently
measured by increasing the carrying amount to reflect interest on
the lease liability (using the effective interest method) and by
reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- the lease term has changed, in which case the lease liability
is remeasured by discounting the revised lease payments using a
revised discount rate.
-- a lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments
using a revised discount rate.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. The
depreciation starts at the commencement date of the lease. The
Group does not have any leases that include purchase options or
transfer ownership of the underlying asset.
The right-of-use assets are presented within the same line item
as that within which the corresponding underlying assets would be
presented if they were owned - for the Group this is property,
plant and equipment.
For short-term leases (lease term of 12 months or less) and
leases of low-value assets (such as personal computers and office
furniture), the Group has opted to recognise a lease expense on a
straight-line basis as permitted by IFRS 16. This expense is
presented within administrative and establishment expenses in the
consolidated income statement.
Other costs associated with leases, such as maintenance and
insurance, are expensed as incurred.
Approach to transition
The Group has applied IFRS 16 using the modified retrospective
approach, without restatement of the comparative figures. In
respect of those leases the Group previously treated as operating
leases, the Group has elected to measure its right of use assets
arising from property leases using the approach set out in IFRS
16.C8(b)(i). Under IFRS 16.C8(b)(i) right of use assets are
calculated as if the Standard applied at lease commencement, but
discounted using the borrowing rate at the date of initial
application. The incremental borrowing rate represented the rate of
interest that the Group would have had to pay to borrow over a
similar term and with similar security the funds necessary to
obtain an asset of similar value to the right of use asset in a
similar economic environment.
The Group's weighted average incremental borrowing rate applied
to lease liabilities as at 1 May 2019 is 6.4%.
As a practical expedient, the Group has relied on the previous
identification of leases under IAS 17 for all contracts that
existed on the date of initial application.
Impact on lessee accounting
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were off-balance
sheet.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
2.3 New accounting standards adopted in the period
(continued)
Applying IFRS 16, for all leases (except as noted above), the
Group now recognises right-of-use assets and lease liabilities in
the consolidated balance sheet, initially measured at the present
value of the future lease payments as described above.
Lease incentives (e.g. rent-free periods) are recognised as part
of the measurement of the right-of-use assets and lease liabilities
whereas under IAS 17 they resulted in the recognition of a lease
incentive liability, amortised as a reduction of rental expenses on
a straight-line basis.
Under IFRS 16, right-of-use assets will be tested for impairment
in accordance with IAS 36 Impairment of Assets. This replaces the
previous requirement to recognise a provision for onerous lease
contracts.
Under IFRS 16 the Group recognises depreciation of right-of-use
assets and interest on lease liabilities in the consolidated income
statement, whereas under IAS 17 operating leases previously gave
rise to a straight-line expense in other operating expenses.
Under IFRS 16 the Group separates the total amount of cash paid
for leases that are on balance sheet into a principal portion
(presented within financing activities) and interest (presented
within operating activities) in the consolidated cash flow
statement. Under IAS 17 operating lease payments were presented as
operating cash outflows.
Areas of judgement
The Group has used judgement in estimating its incremental
borrowing rate. None of the leases in place at 1 May 2019 included
extension options.
Financial impact
The application of IFRS 16 to leases previously classified as
operating leases under IAS 17 resulted in the recognition of
right-of-use assets and lease liabilities. Operating lease
incentives previously recognised as liabilities have been
derecognised and factored into the measurement of the right-to-use
assets and lease liabilities. The table below sets out the
adjustments recognised at the date of initial application of IFRS
16.
As previously reported at 30 April Impact of IFRS 16 As restated at 1 May 2019
2019 GBPm GBPm
GBPm
Non-current assets
Property, plant and equipment 2.0 1.6 3.6
Deferred tax asset 7.1 - 7.1
------------------
Total impact on assets 1.6
------------------
Current liabilities
Trade and other payables (25.0) 0.1 (24.9)
Lease liabilities - (0.4) (0.4)
Non-current liabilities
Lease liabilities - (1.3) (1.3)
Total impact on liabilities (1.6)
------------------
Impact on retained earnings -
------------------
Of the total right-of-use assets of GBP1.6 million recognised at
1 May 2019, GBP1.5 million related to leases of property and GBP0.1
million to leases of other equipment.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
2.3 New accounting standards adopted in the period
(continued)
The table below presents a reconciliation from operating lease
commitments disclosed at 30 April 2019 to lease liabilities
recognised at 1 May 2019.
GBPm
Operating lease commitments disclosed under IAS 17 at 30 April 2019 4.5
Short-term and low value lease commitments straight-line expensed under IFRS 16 (0.1)
Effect of discounting (0.3)
Service charges included in 30 April 2019 lease commitments (1.8)
Leases relating to discontinued operations which have now been cancelled or sub let (0.6)
------
Lease liabilities recognised at 1 May 2019 1.7
------
Property and other leases in Australia and the US at 1 May 2019
have now largely been either terminated or re-assigned in full. An
onerous lease provision of GBP0.2 million has been recognised at 31
October 2019 in respect of remaining liabilities. For clarity,
right of use assets and lease liabilities in respect of these
countries have not been recognised and then derecognised in the
period. Lease expenses are included in the loss from discontinued
operations.
Income statement impact
The application of IFRS 16 resulted in a decrease in other
operating expenses and an increase in depreciation and interest
expense compared to IAS 17. During the six months ended 30 October
2019, in relation to leases under IFRS 16 the Group recognised the
following amounts in the consolidated income statement:
GBPm
Depreciation 0.3
Interest expense 0.1
Short term and low value lease expense -
Under IAS 17, the equivalent amounts would have been
GBPm
Depreciation -
Interest expense -
Short term and low value lease expense 0.3
Cash flow statement impact
Cash flows related to repayment of interest are presented within
operating cash flows. Cash flows related to repayment of lease
liabilities are presented within financing cash flows.
The table below presents a reconciliation of right of use assets
from 1 May 2019 to 31 October 2019
Property Other Total
GBPm GBPm GBPm
Recognised on adoption of IFRS
16 on 1 May 2019 1.5 0.1 1.6
Additions 0.3 - 0.3
Depreciation (0.3) - (0.3)
FX on retranslation - - -
31 October 2019 1.5 0.1 1.6
--------- ------ ------
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
2.3 New accounting standards adopted in the period
(continued)
The table below presents a reconciliation of lease liabilities
from 1 May 2019 to 31 October 2019
Property Other Total
GBPm GBPm GBPm
Recognised on adoption of IFRS
16 on 1 May 2019 1.6 0.1 1.7
Additions 0.3 - 0.3
Interest expense 0.1 - 0.1
Repayments of interest (0.1) - (0.1)
Repayments of liabilities (0.3) - (0.3)
FX on retranslation 0.1 - 0.1
31 October 2019 1.7 0.1 1.8
--------- ------ ------
2.4 Tax
Taxes on income in the interim period are accrued using the tax
rate that would be applicable to expected total annual
earnings.
3. Alternative performance measures
The Group makes use of a number of alternative performance
measures in assessing the performance of the business. The
definition of and relevance of each of these is set out below. The
Group believes that these measures, which are not considered to be
a substitute for or superior to IFRS measures, provide stakeholders
with helpful additional information on the underlying performance
of the Group.
Adjusted EBITDA
Definition
Profit or loss from operating activities, adding back
depreciation, amortisation and share-based payment charges and
non-recurring costs. At a group level this measure also excludes
results of joint ventures and associates.
Relevance to strategy
The adjusted measure is considered relevant to assessing the
underlying performance of the Group against its strategy and plans.
The rationale for excluding certain items is as follows:
-- Depreciation: a non cash item which fluctuates depending on
the timing of capital investment. We believe that a measure which
removes this volatility improves comparability of the Group's
results period on period.
-- Amortisation: a non cash item which varies depending on the
timing of and nature of acquisitions, and on the timing of and
extent of investment in internally generated intangibles such as
software. We believe that a measure which removes this volatility
improves comparability of the Group's results period on period.
-- Share-based payment charges: a non cash item which varies
significantly depending on the share price at the date of grants
under the Group's share option schemes, and depending on the
assumptions used in valuing these awards as they are granted. We
believe that a measure which removes this volatility improves
comparability of the Group's results period on period and also
improves comparability with other companies which typically do not
operate similar share-based payment schemes.
-- Non-recurring costs: a one-off item which exists only in a
single accounting period. We believe adjusting for such
non-recurring items improves comparability period on period.
-- Results of joint ventures and associates: while the Group
exercises some influence over these results, it is unable to
control them.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
3. Alternative performance measures (continued)
Reconciliation
See segmental reporting in note 5. In reporting FY 19 results,
share of results of joint ventures and associates was not excluded
from Adjusted EBITDA due to its size. Therefore, the reported
adjusted EBITDA loss for FY 19 was GBP43.1 million, which has been
amended in these financial statements to a loss of GBP42.6
million.
Adjusted operating costs
Definition
Adjusted operating costs are administrative and establishment
expenses, adjusted by adding back depreciation, amortisation and
share-based payment charges and non-recurring costs.
Relevance to strategy
The adjusted measure is considered relevant to assessing the
underlying performance of the Group against its strategy and plans.
The rationale for excluding depreciation, amortisation, share-based
payments charges and non-recurring costs from this measure is
consistent with that set out above in the "Adjusted EBTIDA"
section.
Reconciliation
Group - continuing activities H1 20 - IFRS 16 basis H1 20 - IAS 17 basis H1 19 (IAS 17 basis)
GBPm GBPm GBPm
Administrative expenses (22.5) (22.5) (16.5)
Depreciation & amortisation 2.7 2.4 2.0
Share-based payment charge 1.2 1.2 1.4
Non-recurring costs - - 0.4
---------------------- --------------------- ---------------------
Adjusted operating costs (18.6) (18.9) (12.7)
---------------------- --------------------- ---------------------
UK H1 20 - IFRS 16 basis H1 20 - IAS 17 basis H1 19 (IAS 17 basis)
GBPm GBPm GBPm
Administrative expenses (14.2) (14.2) (12.0)
Depreciation & amortisation 1.4 1.3 1.1
Share-based payment charge 0.6 0.6 1.2
Non-recurring costs - - 0.4
---------------------- --------------------- ---------------------
Adjusted operating costs (12.2) (12.3) (9.3)
---------------------- --------------------- ---------------------
Adjusted operating profit/loss
Definition
Profit or loss from operating activities, adding back
share-based payment charges and for the Group share of results of
joint venture.
Relevance to strategy
The adjusted measure is considered relevant to assessing the
underlying performance of the Group against its strategy and plans.
The rationale for excluding share-based payments charges from this
measure is consistent with that set out above in the "Adjusted
EBTIDA" section.
The rationale for excluding share of results of joint ventures
or associates is that while the Group exercises significant
influence over these results, it is unable to control them.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
3. Alternative performance measures (continued)
Reconciliation
Group - continuing activities H1 20 H1 19
GBPm GBPm
Operating (loss) / profit (1.2) 4.1
Share-based payment charge 1.2 1.4
Share of results of joint venture 1.6 -
------ ------
Adjusted operating profit 1.6 5.5
------ ------
H1 20 H1 19
UK GBPm GBPm
Operating profit 3.5 5.7
Share-based payment charge 0.6 1.2
------ ------
Adjusted operating profit 4.1 6.9
------ ------
H1 20 H1 19
Canada GBPm (from
6 July
2018)
GBPm
Operating (loss)/profit (0.6) -
Share-based payment charge 0.2 0.1
------ ---------
Adjusted operating (loss)/profit (0.4) 0.1
------ ---------
4. Revenue
Revenue by contract type H1 20 H1 19 Year
GBPm GBPm ended
unaudited unaudited 30 April
2019
GBPm
audited
Continuing
Instructions 37.7 38.4 69.3
Conveyancing 10.7 10.1 17.9
Other 16.4 9.1 26.6
----------- ----------- ----------
64.8 57.6 113.8
----------- ----------- ----------
Discontinued
Instructions 3.6 9.3 14.1
Conveyancing 1.8 - 2.0
Other 0.6 3.2 6.6
----------- ----------- ----------
6.0 12.5 22.7
----------- ----------- ----------
Total revenue 70.8 70.1 136.5
----------- ----------- ----------
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
5. Segmental reporting
The Group trade is managed as a single division, providing
services relating to the sale and letting of properties, however
management report to the Board including the Chief Operating
Decision Maker using geographical segments. The financial
information reviewed by the board is materially the same as that
reported under IFRS and falls under the four geographic locations:
UK, Canada, Australia, and the US. On 7 May 2019, the Company
announced that it was exiting the Australian market, and on 3 July
2019, the Company announced its withdrawal from the US market. In
each case the business was put into an orderly rundown ahead of
closure. The segmental analysis includes recharges between
segments. Certain of these recharges are of costs which are not
classified as discontinued. These are adjusted in the tables below.
The operating losses of discontinued segments are reconciled to the
net loss relating to discontinued activities within note 7.
The following is an analysis of the Group's revenue and results
by reporting segment:
H1 20 - six months ended 31 October 2019 - unaudited
Adjustment Continuing Adjustment
Arising on for operations for Discontinued
UK Canada Consolidation recharges Australia US recharges operations
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 47.1 17.7 - - 64.8 1.4 4.6 - 6.0
Cost of sales (17.1) (8.3) - - (25.4) (2.2) (2.2) - (4.4)
------- ------- -------------- ----------- ----------- ---------- ------ ----------- -------------
Gross profit 30.0 9.4 - - 39.4 (0.8) 2.4 - 1.6
Gross profit margin
(%) 63.7% 53.1% - - 60.8% (57.1)% 52.2% - 26.7%
Administrative
expenses (14.2) (5.8) (0.8) (1.7) (22.5) (4.7) (5.4) 1.7 (8.4)
Marketing expenses (12.3) (4.2) - - (16.5) (1.2) (2.5) - (3.7)
Share of results of
joint venture - - (1.6) - (1.6) - - - -
------- ------- -------------- ----------- ----------- ---------- ------ ----------- -------------
Operating
profit/(loss) 3.5 (0.6) (2.4) (1.7) (1.2) (6.7) (5.5) 1.7 (10.5)
Depreciation &
amortisation 1.4 0.5 0.8 - 2.7 0.5 0.5 - 1.0
Share-based payments 0.6 0.2 - 0.4 1.2 (0.6) (0.2) (0.4) (1.2)
Share of results of
joint venture - - 1.6 - 1.6 - - - -
Adjusted EBITDA 5.5 0.1 - (1.3) 4.3 (6.8) (5.2) 1.3 (10.7)
------- ------- -------------- ----------- ---------- ------ -----------
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
5. Segmental reporting (continued)
H1 19 - six months ended 31 October 2018 - unaudited
Arising Adjustment Continuing Adjustment
on for operations for Discontinued
UK Canada Consolidation recharges Australia US recharges activities Consolidated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 48.4 9.2 - - 57.6 6.6 5.9 - 12.5 70.1
Cost of sales (17.2) (4.2) - - (21.4) (4.5) (2.2) - (6.7) (28.1)
------- ------- -------------- ----------- ----------- ---------- ------- ----------- ------------- -------------
Gross profit 31.2 5.0 - - 36.2 2.1 3.7 - 5.8 42.0
Gross profit
margin (%) 64.5% 54.3% - - 62.8% 31.8% 62.7% - 46.4% 59.9%
Administrative
expenses (12.0) (2.9) (0.6) (1.0) (16.5) (5.1) (7.9) 1.0 (12.0) (28.5)
Marketing
expenses (13.5) (2.1) - - (15.6) (7.2) (16.2) - (23.4) (39.0)
Share of - -
results
of joint
venture - - - - - - - -
------- ------- -------------- ----------- ----------- ---------- ------- ----------- ------------- -------------
Operating
profit/(loss) 5.7 - (0.6) (1.0) 4.1 (10.2) (20.4) 1.0 (29.6) (25.5)
Depreciation
& amortisation 1.1 0.3 0.6 - 2.0 - - - - 2.0
Share-based
payments 1.2 0.1 - 0.1 1.4 0.4 0.4 (0.1) 0.7 2.1
Non-recurring
acquisition
costs 0.4 - - - 0.4 - - - - 0.4
Share of - -
results
of joint
venture - - - - - - - -
Adjusted EBITDA 8.4 0.4 - (0.9) 7.9 (9.8) (20.0) 0.9 (28.9) (21.0)
------- ------- -------------- ----------- ---------- ------- -----------
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
5. Segmental reporting (continued)
FY 19 - year ended 30 April 2019
Adjustment Continuing Adjustment
Arising on for operations for Discontinued
UK Canada Consolidation recharges Australia US recharges activities Consolidated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 90.1 23.7 - - 113.8 11.4 11.3 - 22.7 136.5
Cost of sales (33.3) (11.1) - - (44.4) (7.4) (4.8) - (12.2) (56.6)
------- ------- -------------- ----------- ----------- ---------- ------- ----------- ------------- -------------
Gross profit 56.8 12.6 - - 69.4 4.0 6.5 - 10.5 79.9
Gross profit
margin (%) 63.0% 53.2% - - 61.0% 35.1% 57.5% - 46.3% 58.5%
Administrative
expenses (24.8) (8.4) (1.0) (2.1) (36.3) (10.7) (16.1) 2.1 (24.7) (61.0)
Marketing
expenses (26.7) (7.4) - - (34.1) (12.1) (24.5) - (36.6) (70.7)
Share of results
of joint
venture - - (0.5) - (0.5) - - - - (0.5)
------- ------- -------------- ----------- ----------- ---------- ------- ----------- ------------- -------------
Operating
profit/(loss) 5.3 (3.2) (1.5) (2.1) (1.5) (18.8) (34.1) 2.1 (50.8) (52.3)
Depreciation &
amortisation 2.3 0.8 1.3 - 4.4 - - - - 4.4
Share-based
payments 2.1 0.4 - 0.2 2.7 0.9 0.9 (0.2) 1.6 4.3
Non-recurring
acquisition
costs 0.5 - - - 0.5 - - - - 0.5
Share of results
of joint
venture - - 0.5 - 0.5 - - - - 0.5
Adjusted EBITDA 10.2 (2.0) 0.3 (1.9) 6.6 (17.9) (33.2) 1.9 (49.2) (42.6)
------- ------- -------------- ----------- ---------- ------- -----------
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
5. Segmental reporting (continued)
31 October 31 October 30 April
2019 2018 unaudited 2019 audited
unaudited
Non-current assets GBPm GBPm GBPm
UK 80.5 61.8 77.2
Canada 5.2 4.3 4.5
----------- ---------------- --------------
Continuing operations 85.7 66.1 81.7
Australia - 0.1 0.1
US - 0.2 0.2
----------- ---------------- --------------
Discontinued activities - 0.3 0.3
Consolidation adjustments (23.4) (19.7) (20.8)
----------- ---------------- --------------
Total 62.3 46.7 61.2
=========== ================ ==============
Total assets
UK 227.8 224.3 228.9
Canada 11.4 9.2 9.9
----------- ---------------- --------------
Continuing operations 239.2 233.5 238.8
Australia 0.9 5.1 5.0
US 0.5 7.4 4.6
----------- ---------------- --------------
Discontinued operations 1.4 12.5 9.6
Consolidation adjustments (114.1) (69.1) (95.8)
----------- ---------------- --------------
Total 126.5 176.9 152.6
=========== ================ ==============
Total liabilities
UK 25.9 29.1 28.1
Canada 8.9 4.2 7.2
----------- ---------------- --------------
Continuing operations 34.8 33.3 35.3
Australia 35.0 24.3 32.6
US 51.4 38.0 49.0
----------- ---------------- --------------
Discontinued activities 86.4 62.3 81.6
Consolidation adjustments (85.0) (44.2) (68.0)
----------- ---------------- --------------
Total 36.2 51.4 48.9
=========== ================ ==============
Liabilities in Australia and the US primarily represent
intercompany balances due to the UK.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
6. Earnings per share
Total including discontinued operations
Six months Six months Year ended
ended 31 ended 31 30 April
October October 2018 2019
2019
Loss from
consolidated
operations
GBPm (14.1) (27.8) (54.9)
Weighted
average
number of
shares in
issue ('000) 305,974 302,124 303,090
--------------------------- ---------------------------- ----------------------------
Loss per
share (GBP)
- basic and
diluted (0.05) (0.09) (0.18)
--------------------------- ---------------------------- ----------------------------
Diluted loss per share from consolidated operations is equal to
the basic loss per share as a result of the Group recording a loss
for the period, which cannot be diluted.
From continuing operations
Six months Six months Year ended
ended 31 ended 31 30 April
October October 2019
2019 2018
(Loss)/profit
from
continuing
operations
GBPm (3.6) 2.7 (3.6)
Weighted
average
number of
shares in
issue ('000) 305,974 302,124 303,090
--------------------------- --------------------------- ----------------------------
Earnings per
share (GBP) -
basic (0.01) 0.01 (0.01)
--------------------------- --------------------------- ----------------------------
Potentially dilutive shares
unissued at reporting date
('000) 12,046 22,554 21,827
Total potentially dilutive
shares at reporting date
('000) 318,020 324,678 324,917
----------------------- ----------------------- -----------------------
Earnings per share (GBP) -
diluted (0.01) 0.01 (0.01)
----------------------- ----------------------- -----------------------
Where applicable, diluted loss per share from consolidated
operations is equal to the basic loss per share as a a loss cannot
be diluted.
The table below reconciles the weighted average number of shares
('000):
Weighted average number of shares year ended 30
April 2019 303,090
Weighted average issue of new shares and exercise
of options 2,884
-----------------------
Weighted average number of shares in the six months
ended 31 October 2019 305,974
-----------------------
7. Closure of international operations
On 7 May 2019, the Group announced that it had chosen to exit
the Australian market. No new instructions have been accepted there
since 8 May 2019, and the business has been focused on settling
sales for customers under existing instructions, implementing an
orderly reduction in staff numbers and curtailing relationships
with suppliers and contractors.
The Group also announced on 3 July 2019, that it had chosen to
cease investment in the US. No new instructions were taken by the
business after that date. The focus over the remainder of H1 20 has
been on finalising the completion of existing property transactions
and on curtailing relationships with suppliers and contractors.
The run-down process in both Australia and in the US is
progressing as planned and is expected to be complete by the end of
the financial year.
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
7. Closure of international operations (continued)
The Australia and US operations represent in their entirety the
segments as disclosed in note 5. The operating losses of
discontinued segments are reconciled to the net loss relating to
discontinued activities as follows:
Six months Six months Year ended
ended 31 ended 31 30 April
October October 2018 2019
2019 GBPm GBPm
GBPm
Operating
loss
relating to
discontinued
segments (10.5) (29.6) (50.8)
Net finance
expense
relating to
discontinued
segments - (0.9) (0.3)
Tax charge
relating to
discontinued
segments - - (0.2)
Loss from
discontinued
operations (10.5) (30.5) (51.3)
--------------------------- ---------------------------- ----------------------------
Cash flows related to discontinued operations were as
follows:
Six months Six months
ended ended
31 October 31 October Year ended
2019 unaudited 2018 unaudited 30 April
- restated 2019 Restated
see note - see note
2.2 2.2
GBPm GBPm GBPm
Operating cash inflow/(outflow)
before changes in working capital
Continuing operations 0.2 7.4 8.8
Discontinued operations (9.0) (31.4) (56.2)
---------------- ---------------- ---------------
(8.8) (24.0) (47.4)
Changes in working capital, interest
and taxation paid
Continuing operations (2.6) 1.5 1.1
Discontinued operations (2.7) 1.8 (2.8)
---------------- ---------------- ---------------
Net cash outflow from operating
activities (14.1) (20.7) (49.1)
Investing activities
Continuing operations (6.9) (29.4) (42.0)
Discontinued operations - (0.1) (0.2)
---------------- ---------------- ---------------
Net cash outflow from investing
activities (6.9) (29.5) (42.2)
Financing activities
Continuing operations (0.2) 0.5 1.0
Discontinued operations - - -
---------------- ---------------- ---------------
Net cash (outflow)/inflow from
financing activities (0.2) 0.5 1.0
Notes to the condensed financial statements for the six months
ended 31 October 2019 (continued)
8. Related party transactions
In August 2019 the Group made a loan of EUR5.0 million to its
related party Einhundertsiebte "Media"
Vermogensverwaltungsgesellschaft bmH ("JV HoldCo"), a company
incorporated in Germany in which the Group holds a 50% stake and
which the Group operates as a joint venture together with its
related party Axel Springer SE, an entity closely associated with
Dr. Andreas Wiele, a Non--executive Director of Purplebricks. JV
HoldCo then advanced this amount to Homeday GbmH ("Homeday") as a
convertible loan.
JV HoldCo holds a 25.88% investment in Homeday. Based in Berlin,
Homeday operates homeday.de, a transaction-based digital real
estate platform in Germany that brings customers together with
experienced brokers and supports them in buying and selling
property.
Axel Springer SE purchased a further 43,662,417 shares in
Purplebricks on 3 June 2019 at GBP1.00 per share, to give it an
aggregate shareholding of 26.6% of the issued share capital of the
Company.
[1] Restated for discontinued operations - see note 2.2. Pro
forma numbers reflect a full six months of Canada trading from 1
May 2018, rather than from acquisition on 6 July 2018.
[2] The results of our discontinued Australian and US operations
are presented in note 5.
[3] The underlying performance of the Group is monitored
internally using a number of alternative performance measures
("APMs"), which are not defined within IFRS. Such measures should
be considered alongside the equivalent IFRS measures. For full
definitions and reconciliations of APMs, please refer to note 3. H1
20 APMs are presented including the effects of adopting IFRS 16
(see note 2). As IFRS 16 was adopted using the modified
retrospective approach, prior year comparatives have not been
restated.
[4] Ancillary revenue percentage is a Key Performance Indicator
("KPI") used by the Board to measure the performance of the
business in generating non-instruction income from customers. The
management information in this KPI recognises consideration
receivable at a point in time and therefore differs from the
accounting in the Group's financial statements.
[5] Data provided by TwentyCi.
[6] The content of the Purplebricks website should not be
considered to form a part of or this announcement.
3 The underlying performance of the Group is monitored
internally using a number of alternative performance measures
("APMs"), which are not defined within IFRS. Such measures should
be considered alongside the equivalent IFRS measures. For full
definitions and reconciliations of APMs, please refer to note 3. H1
20 APMs are presented including the effects of adopting IFRS 16
(see note 2). As IFRS 16 was adopted using the modified
retrospective approach, prior year comparatives have not been
restated.
3 The underlying performance of the Group is monitored
internally using a number of alternative performance measures
("APMs"), which are not defined within IFRS. Such measures should
be considered alongside the equivalent IFRS measures. For full
definitions and reconciliations of APMs, please refer to note 3. H1
20 APMs are presented including the effects of adopting IFRS 16
(see note 2). As IFRS 16 was adopted using the modified
retrospective approach, prior year comparatives have not been
restated.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FFLLFKLFFFBV
(END) Dow Jones Newswires
December 12, 2019 02:01 ET (07:01 GMT)
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