TIDMPURP
RNS Number : 6238I
Purplebricks Group PLC
15 December 2020
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Purplebricks Group plc
("Purplebricks", the "Company" or the "Group")
Half Year Results for the six months ended 31 October 2020
Strong results as Purplebricks continues to execute strategy
Purplebricks Group plc (AIM: PURP), a leading UK technology-led
estate agency business, announces its half year results for the six
months ended 31 October 2020 ("H1 21" "H1" or the "first
half").
Summary performance H1 21 H1 20(1) Change
GBPm GBPm
Group - continuing operations(1)
Revenue 44.2 47.1 -6%
Gross profit 29.6 30.0 -1%
Gross profit margin (%) 67.0% 63.7% +330bps
Operating profit / (loss) 6.9 (0.2) n/a
Adjusted EBITDA (2) 8.4 4.0 +110%
Cash at period end 75.8 41.6 +82%
KPIs - UK
Total fee income (3) 49.1 46.3 +6%
Instructions (number) 35,387 32,850 +8%
Average revenue per instruction (4) GBP1,392 GBP1,353 +3%
------------------------------------- --------- --------- ----------
Financial and operational performance
-- 4.8% (5) share of properties sold by volume
-- Total instructions increased by 8% to 35,387 (H1 20: 32,850)
-- Instructions increased by 20% in the five months since May, post the market reopening
-- Average revenue per instruction ('ARPI') increased by 3% to GBP1,392 (H1 20: GBP1,353)
-- Total fee income (3) increased by 6% to GBP49.1m (H1 20: GBP46.3m)
-- Revenue of GBP44.2m, down 6% (H1 20: GBP47.1m), due to instruction revenue recognition
-- Adjusted EBITDA increased by 110% to GBP8.4m (H1 20: GBP4.0m)
-- Operating profit increased to GBP6.9m (H1 20: loss GBP0.2m),
including GBP3.3m non-trading items(6)
-- Group consolidated profit for the period of GBP6.8m (H1 20: loss of GBP14.1m)
-- Cash increased by GBP44.8m since the year end to GBP75.8m (30 April 2020: GBP31.0m).
Progress in strategy execution
-- The business has performed strongly in the period since the
market shutdown ended, with buoyant trading supported by strong
market recovery
-- Purplebricks has never been more relevant, with brand
awareness and consideration at record levels
-- We demonstrated the strength of our model with the ability to
continue to service customers during lockdown with virtual
capabilities
-- Our leadership team has been further strengthened with the
appointment of new Chief Digital and Chief Marketing Officers
-- Clear evidence consumers are starting to shift towards apps and tech-based alternatives
-- Strategic initiatives under our House Strategy continue to be executed at pace
-- The disposal of Canadian business gives us the financial
strength to focus on our UK growth opportunity
Outlook
Whilst there are reasons to remain cautious on the economic
outlook, we are confident in the levers which are under our
control, and we currently expect adjusted EBITDA for the full year
to exceed the upper end of the current range of consensus (7) .
Vic Darvey, Chief Executive Officer, commented :
"Purplebricks has delivered a strong performance in the period
with instructions up 8% and total fee income growth of 6%, despite
the UK housing market being disrupted through the height of
COVID-19. This continued momentum demonstrates the strength of
our technology-led business model and our ability to adapt quickly
to a changing market.
"I am proud of the way we responded to the COVID-19 crisis,
which demonstrated our ability to deliver our improved virtual
capabilities to our customers throughout the period. We made sure
we looked after our people when things got tough, we adapted
quickly to new ways of working, and we enhanced our technology to
make it easier and safer for customers to do business with us.
" We are now emerging from the pandemic in a very strong
competitive position. As a result of continued financial discipline
and operational excellence across the business we have experienced
strong growth in adjusted EBITDA, up 110%, and a significant
improvement in cash generation compared to last year.
"Our focus for 2021 will be to re-accelerate the growth of our
core business by continuing to enhance our digital innovation, our
virtual capabilities and increasing agent productivity through
automation and efficiency. This period has shown that our
technology-led business model is now more relevant than ever, as
customers continue to shift to being more comfortable buying and
selling their homes digitally."
(1) Continuing operations now represents the UK segment only
with H1 20 restated. The results of our Canada business up to its
disposal on 15 July 2020 and of our discontinued Australian and US
operations for the prior period are presented in note 6.
(2) The underlying performance of the Group is monitored
internally using a number of alternative performance measures
("APMs"), which are not defined within IFRS. Such measures should
be considered alongside the equivalent IFRS measures. For full
definitions and reconciliations of APMs, please refer to note 4.
Adjusted EBITDA is defined as operating profit, adding back
depreciation, amortisation, share-based payment charges / credits,
results of associates / joint ventures and exceptional items.
(3) Total fee income is a KPI used by management to track income
from current activity levels. Total fee income is a non-IFRS
measure and represents fees receivable for published instructions,
lettings and mortgage referrals; and conveyancing fees due in
relation to completed transactions.
(4) ARPI: Average revenue per instruction equates to total fee
income excluding lettings, divided by the number of instructions
published in the period.
(5) Source: Twenty CI.
(6) These non-trading items are a share-based payment credit of
GBP1.9m and a gain of GBP1.4m on deemed disposal relating to the
investment in Homeday, and are discussed in the Financial Results
section.
(7) As at 14 December 2020, the Group's compiled full year 2021
consensus for adjusted EBITDA is GBP7.0m, ranging from GBP5.0m to
GBP10.6m.
Results presentation and conference call
Vic Darvey, CEO and Andy Botha, CFO are streaming a video
presentation of results via webcast at 9.00am today followed by a
live Q&A session for analysts and investors.
The video webcast link is via the webcast registration page and
on the website. A replay will also be available on the Purplebricks
website following the Q&A session at
http://www.purplebricksplc.com/investors/latest_results .
Enquiries
Purplebricks +44 (0)20 7466 5000
Vic Darvey, Chief Executive Officer investors@purplebricks.com
Andy Botha, Chief Financial Officer
Zeus Capital (NOMAD) + 44 (0)20 3829 5000
Daniel Harris, Nick Cowles
Citi +44 (0) 207 986 4000
Stuart Field, Robert Farrington
Peel Hunt +44 (0)20 7418 8900
Dan Webster, George Sellar
Buchanan +44 (0)20 7466 5000
David Rydell, Jamie Hooper, Kim van Beeck
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.
About Purplebricks
Purplebricks is a leading technology-led estate agency business,
based in the UK. 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.
Chief Executive's review
Summary performance
Trading has been strong since the market opened up in May, and
our first half performance is ahead of our upgraded expectations.
We have seen a strong market recovery during the period - overall
we delivered an 8% increase in instructions, with a 20% increase in
instructions for the five months since May. Meanwhile, our overall
share of the market has remained stable at 4.8% of properties
sold.
As a result of continued financial discipline and operational
excellence across the business, we have experienced very strong
growth in our adjusted EBITDA, up 110% vs last year. Excluding the
Canada sale, we have also generated cash from operating activities
of GBP13.6m, compared to consuming GBP14.1m in the same period last
year.
We are now emerging from the pandemic in a strong competitive
position. During the first half of the year, we have continued to
simplify the business and focus on the delivery of our House
Strategy , details of which are outlined below. This has included
the disposal of our Canadian business, which has considerably
strengthened our cash position and allowed us to focus fully on our
home market once again. We have also strengthened our leadership
team with the appointment of a number of new hires across the
business to ensure that we have the right capabilities to continue
to deliver our digital transformation program.
As we move into the second half of the year, we strongly believe
that technology-led estate agency is continuing to emerge as the
winning model. Purplebricks has never been more relevant, with
prompted brand awareness at 98%, its highest ever level. We are
starting to see evidence that consumers are shifting towards apps
and tech-based alternatives, and with our strengthened leadership
team and balance sheet, we are in a strong position to accelerate
our model and extend our market leadership.
Building a business for the future
We have worked hard this year to strengthen our business and
restructure the organisation to deliver on our strategic
pillars.
Our priorities for building our business for the future are
clear: we need to evolve our pricing model; we need to achieve the
best possible performance in the field; and we need to go even
faster in Tech, introducing new products and features to the market
to ensure we continue to improve the home moving experience for UK
consumers.
House Strategy - delivering against our strategic objectives
Evolving our pricing
Whilst our first half performance has confirmed that the
up-front fee model still resonates with consumers in the UK, we
continue to look at ways to evolve our proposition, exploring new
pricing models and introducing new proposition bundles that will
help us to expand our target market.
We started in-field tests at the end of August and these will
continue in 2021. Early lead indicators have provided valuable data
on the penetration of new customer segments but it's far too early
to assess the likely outcome of our trials, especially given the
current lag in the time it's taking to completion.
Further iterations of pricing tests are being launched in
calendar Q1 21 and we look forward to reporting back on those tests
at our Full Year results.
Estate agent of the future
We are creating the best home moving experience by redefining
the end-to-end customer journey. Innovation is the key to that
journey, with better personalisation that brings us closer to the
customer.
In the first half, we continued to invest in technology and in
building out our engineering capability and I'm pleased to say that
we now have a new Chief Digital Officer on board as well as a new
Head of Product.
Already the new team are starting to drive a step change in our
customer experience with
a clear focus on improving our virtual capabilities and
enhancing our visual content, having introduced interactive 3D
tours and video trailers and re-designed our search and listings
functionality.
With the ever-increasing adoption of mobile, we've also
increased our resources in this area to deliver an easier, faster
and simpler experience on our mobile app.
Our focus for the rest of the year will be to r e-accelerate the
growth of our core business by continuing to enhance our digital
innovation and our virtual capabilities and increasing agent
productivity through automation and efficiency.
Enhancing performance in the field
We're empowering our people to improve their effectiveness and
efficiency in the field. The use of real-time analytics and market
data will improve sales conversion in the living room, and, by
getting closer to our customers, we are confident we can sell more
ancillary services.
We have scaled our team of Local Property Experts, and placed a
stronger focus on training, recruitment, retention, and talent
management in the first half of the year.
Following the restructuring of our field teams in March, we have
redesigned our agent support structure, ensuring that we start to
deliver a more consistent and improved performance across all
regions.
We're introducing a new value proposition to bring to life our
culture and values in the living room . We're starting to implement
a new target operating model to drive a strong sales culture
balanced by high quality service standards. We're also introducing
a new talent tool to help Territory Operators recruit, train and
retain the best agents in the field.
Lastly, as we continue to evolve our journey as a digital
business, we're launching a new initiative called "Your key to PB"
providing continuous training modules and learning opportunities
for everyone in the field.
Transforming our customer processes
We are building for scale, by transforming our platform and
processes. Over the last six months we've made significant
investments in both people and technology to improve the level of
service provided to customers and to focus the business on selling
more houses.
The improvements we've seen in the year have been validated with
our Net Promoter Score of 77 at the half year and we continue to be
the most positively reviewed estate agent in the category.
We've also recently been awarded the Gold Trusted Service Award
for the second year running by our review provider Feefo which is a
great endorsement of our improving service levels.
Over the last six months we have continued to invest further in
technology to deliver innovative customer processes for improved
service and scaled growth, including the delivery of automated
anti-money laundering checks for sellers. We have also started work
on a number of other initiatives including self-certification
through facial recognition and automated anti-money laundering
checks for buyers and the automation of processes for property
management in our lettings business.
Financial results
Summary
The UK business has performed strongly in the period, despite
the challenges in the early weeks of the half due to the housing
market shutdown arising from COVID-19 restrictions. Trading
recovered quickly, and instructions growth together with our
continued focus on cost efficiencies and financial discipline,
combined to deliver a strong set of results. As a result, we have
further strengthened our cash position, creating a stronger balance
sheet to support our plans for growth.
Summary income statement - UK
For the six months ended 31 October H1 2021 H1 2020 Change
Extract of condensed statement of GBPm GBPm %
comprehensive income and alternative
performance measures
--------------------------------------- -------- -------- --------
Revenue 44.2 47.1 -6%
Cost of sales (14.6) (17.1) -15%
-------- -------- --------
Gross profit 29.6 30.0 -1%
Gross profit margin (%) 67.0% 63.7% +330bps
Adjusted operating costs(1) (12.2) (12.2) -%
Marketing costs (9.0) (12.3) -27%
-------- -------- --------
Adjusted EBITDA (1) 8.4 5.5 +53%
Depreciation and amortisation (1.3) (1.4) -7%
-------- -------- --------
Adjusted operating profit (1) 7.1 4.1 +73%
Share-based payment credit / (charge) 1.9 (0.6) -417%
Exceptional operating costs (1.7) - +100%
-------- -------- --------
Operating profit 7.3 3.5 +109%
-------- -------- --------
Key Performance Indicators - UK
H1 2021 H1 2020 Change
------------------------------------ --------- --------- ---------
Unique visitors(2) 7.3m 8.0m -9%
Instructions(3) 35,387 32,850 +8%
Average revenue per instruction(4) GBP1,392 GBP1,353 +3%
Total fee income(5) GBP49.1m GBP46.3m +6%
Marketing cost per instruction(6) GBP254 GBP376 -32%
Marketing costs as a % revenue(7) 20.4% 26.1% -570 bps
Definitions:
(1) See definitions of alternative performance measures in note
4.
(2) The number of unique visitors to the website in the
period.
(3) Instructions represents the number of instructions won in
the period.
(4) Average revenue per instruction equates to total fee income
excluding lettings, divided by the number of published instructions
in the period.
(5) Total fee income is a KPI used by management to track income
from current activity levels. Total fee income is a non-IFRS
measure and represents fees receivable for published instructions,
lettings and mortgage referrals; and conveyancing fees due in
relation to completed transactions.
(6) Marketing cost per instruction represents total marketing
costs, including portal costs, divided by instructions.
(7) Marketing as a percentage of revenue represents the total
marketing costs, including portal costs, as a percentage of total
revenue.
Revenue
As a result of the buoyant market in H1 we saw an 8% increase in
the number of instructions, picking up significantly once the
market re-opened in mid-May. Alongside this, we delivered a 3%
increase in the average revenue per instruction to GBP1,392 (H1 20:
GBP1,353).
We recognise our revenues over the expected service period
during which we provide services to customers. In a market where
instructions are increasing, as we saw in H1, we would expect to
defer a greater amount of revenue into future service periods than
we are releasing from previous months. As a result of the increase
in activity being weighted to the end of H1, itself as a result of
the housing market shutdown in effect at the beginning of the
period, reported UK revenues of GBP44.2m reduced by 6% (H1 20:
GBP47.1m). As the market normalises, we expect the majority of this
deferral to be recognised in the second half of the year.
Ancillary fee income represented 38% of revenue, down from 45%
in the comparable period, due to timing lag effects of conveyancing
income compared to instructions, which we expect to come through in
H2. In addition, we have seen lower assisted viewings as some
customers choose to limit visitors to their properties.
Average revenue per instruction ('ARPI')
The 3% increase in ARPI to GBP1,392 (H1 20: GBP1,353) is
primarily driven by last year's price increases being in effect for
the full H1 21 period. H1 21 ARPI is broadly in line with FY 20
ARPI of GBP1,394.
Gross profit margin
UK gross profit margin increased significantly to 67.0% (H1 20:
63.7%) as a result of cost of sales profile and revenue mix. LPE
payments, which form a significant part of cost of sales, have been
tightly controlled in H1 21. In H2, we expect the gross margin
percentage to return closer to historical levels, as lower margin
instruction revenues deferred at 31 October are recognised.
Adjusted operating costs
Adjusted operating costs were flat year-on-year at GBP12.2m (H1
20: GBP12.2m), which reflects cost control across all operational
and support areas, whilst looking to support and retain our teams
during the uncertainty of the housing market shut down. Adjusted
operating costs includes receipts of GBP0.7m (H1 20: GBPnil) from
the UK Government's Coronavirus Job Retention Scheme ('CJRS') in
respect of staff on furlough and therefore not working in the
business during the period.
Marketing costs
Marketing costs were GBP9.0m (H1 20: GBP12.3m), a reduction of
27% reflecting reduced activity in the pandemic-affected start to
the half, together with a more targeted approach to investment in
UK brand and customer acquisition during the heightened activity in
the latter part of the half. As a result, marketing costs per
instruction decreased to GBP254 (H1 20: GBP376) and marketing costs
as a percentage of revenue fell 570 bps year-on-year.
Adjusted EBITDA
Adjusted EBITDA from continuing operations improved by 110% to
GBP8.4m (H1 20: GBP4.0m) reflecting the effects of revenue, margin
and costs, as discussed above.
Depreciation and amortisation
Depreciation and amortisation was GBP1.3m (H1 20: GBP1.4m),
primarily arising from investment in technology.
Share-based payments
Share-based payments in the period saw a credit of GBP1.9m (H1
20: charge of GBP0.6m), reflecting the reversal of charges accrued
to date in respect of a number of leavers.
Operating profit
UK operating profit increased by 109% to GBP7.3m (H1 20:
GBP3.5m), inclusive of the benefit of the GBP1.9m share-based
payment credit described above. Group operating profit was GBP6.9m
(H1 20: loss GBP0.2m). Group operating profit also benefits from a
gain of GBP1.4m on deemed disposal of part of the Group's interest
in Homeday. See note 10 for further detail.
Canada
We disposed of our Canadian business in July 2020 for a cash
consideration of CAD$60.5m (GBP35.9m), and subsequently a working
capital adjustment of GBP0.5m in favour of Purplebricks was agreed
in November 2020 to give a final consideration amount of GBP36.4m.
Net of cash disposed of with the Canada business of GBP3.5m, net
cash consideration in the period was GBP32.4m. A gain of GBP2.3m
arose on disposal of the net assets and liabilities of Canada. The
Canadian business made a profit of GBP1.5m up to the date of
disposal (including receipts of GBP0.9m from the Canada Emergency
Wage Subsidy). Inclusive of foreign exchange losses recycled to the
income statement on disposal of GBP0.9m, the total result from
discontinued operations for the period was a profit of GBP2.9m.
The trading of the Canada business up to disposal and for the
prior period has been reflected within discontinued operations on
the face of the income statement. See note 7 for further
detail.
Tax
The Group reports a net tax charge of GBP0.4m (H1 20 : GBP0.3m)
, which relates primarily to the use of brought forward UK
losses.
Deferred tax assets of GBP1.8m and deferred tax liabilities of
GBP4.3m were disposed of with the Canadian business in July
2020.
Cash, working capital and statement of financial position
Operating cash flow, which represents cash generated from or
consumed by operations, before capital expenditure and financing
was an inflow of GBP13.6m (H1 20 : outflow of GBP14.1m). Within
this amount , net operating cash inflow from continuing operations
was GBP12.3m, with discontinued operations accounting for the
remaining inflow of GBP1.3m.
Inclusive of the GBP32.4m net cash receipt on disposal of the
Canadian business, net cash inflow from investing activities
represented an inflow of GBP31.5m (H1 20 : outflow of GBP6.9m,
including a GBP4.6m investment in the Group's associate
Homeday).
Total cash inflow for the period was GBP44.8m (H1 20 : outflow
of GBP21.2m), of which continuing operations comprised GBP11.1m and
discontinued operations comprised GBP33.7m (including net proceeds
on disposal).
Going concern
As stated in note 2 to the condensed financial statements, 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.
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 60 and 61 of the
Annual Report 2020 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 2020, except in
respect of the Group's judgements in respect of the investment in
Homeday, which has been reclassified in the period from a joint
venture to an associate. See note 3 for further detail. We also
provide in note 3 an update to the key estimate taken over the
length of the service period used for recognition of instructions
revenue, based on our assessment of the economic conditions as at
31 October 2020.
Principal risks and uncertainties
The principal risks and uncertainties set out in the last 2020
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 16 and 17 of the
Annual Report 2020 which is available at
https://www.purplebricksplc.com/investors/latest_results .
In summary, these include:
- COVID-19 pandemic
- Macro-economic conditions
- Competition
- Brand reputation
- People
- Compliance with laws and regulations
- Business model
- Cyber security and protection of data
- Financial controls
Statement of Directors' responsibilities
The Directors confirm that to the best of their knowledge that
this condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' and that the
Half Year Management Report includes a fair review of the
information.
Signed on behalf of the Board by:
Vic Darvey Andy Botha
Chief Executive Officer Chief Financial Officer
14 December 2020
Condensed consolidated statement of comprehensive income
for the six months ended 31 October 2020
Six months Year ended
ended 30 April
Six months 31 October 2020
ended 31 2019 Restated
October Restated - see note
2020 - see 2.2
note 2.2
unaudited unaudited unaudited
Note GBPm GBPm GBPm
----------- ------------ ------------
Revenue 5 44.2 47.1 80.5
Cost of Sales (14.6) (17.1) (28.9)
----------- ------------ ------------
Gross profit 29.6 30.0 51.6
Other income 13 0.7 - -
Administrative and establishment
expenses (14.3) (16.3) (33.9)
Marketing costs (9.0) (12.3) (20.6)
Share of loss of joint
venture - (1.6) (2.8)
Share of loss of associate (0.1) - -
Operating profit / (loss) 6.9 (0.2) (5.7)
Finance income 0.1 0.2 0.5
Finance expense (2.7) (2.3) (4.0)
----------- ------------ ------------
Profit / (loss) on ordinary
activities before taxation 4.3 (2.3) (9.2)
Taxation on profit / (loss)
on ordinary activities (0.4) (0.3) 1.0
Profit / (loss) from
continuing operations 3.9 (2.6) (8.2)
Profit / (loss) from
discontinued operations 7 2.9 (11.5) (11.0)
Profit / (loss) for the
period 6.8 (14.1) (19.2)
Items that may be reclassified subsequently
to profit and loss:
Exchange differences on translation
of foreign operations 0.9 0.7 (0.1)
----------- ------------ ------------
Total other comprehensive
income 0.9 0.7 (0.1)
Total comprehensive profit 7.7 (13.4) (19.3)
----------- ------------ ------------
Earnings / (loss) per
share
From continuing operations:
Basic and diluted 9 1p (1)p (3)p
Total including discontinued
operations:
Basic and diluted 9 2p (5)p (6)p
Comparative figures have been restated for the classification of
Canadian activities as discontinued - see note 2.2.
Condensed consolidated statement of financial position
at 31 October 2020
31 October
31 October 2019 30 April
2020 Restated 2020
- see
note 2.2
Note unaudited unaudited audited
GBPm GBPm GBPm
----------- ----------- ---------
Non-current assets
Goodwill 12 2.6 19.5 19.5
Intangible assets 11 3.9 19.9 19.2
Property, plant and equipment 1.2 2.4 3.5
Investment in jointly controlled
entity 10 - 13.7 12.5
Investment in associate 10 12.4 - -
Deferred tax asset 6.6 6.8 9.0
26.7 62.3 63.7
----------- ----------- ---------
Current assets
Tax receivable - 0.4 0.1
Trade and other receivables 6.4 12.0 10.2
Contract assets - accrued income 6.3 4.6 5.3
Contract assets - prepaid cost
of sales 8.3 5.6 5.3
Cash and cash equivalents 75.8 41.6 31.0
96.8 64.2 51.9
----------- ----------- ---------
Total assets 123.5 126.5 115.6
----------- ----------- ---------
Current liabilities
Trade and other payables (13.8) (14.8) (11.8)
Contract liabilities - deferred
income (20.1) (15.0) (14.6)
Provisions (0.7) - (0.4)
Borrowings - - (0.1)
Lease liabilities (0.3) (0.4) (0.7)
----------- ----------- ---------
(34.9) (30.2) (27.6)
----------- ----------- ---------
Net current assets 61.9 34.0 24.3
----------- ----------- ---------
Total assets less current liabilities 88.6 96.3 88.0
----------- ----------- ---------
Non-current liabilities
Deferred tax liabilities (0.1) (4.6) (4.4)
Borrowings - - (0.1)
Lease liabilities (0.3) (1.4) (1.4)
----------- ----------- ---------
(0.4) (6.0) (5.9)
----------- ----------- ---------
Net assets 88.2 90.3 82.1
----------- ----------- ---------
Equity
Share capital 3.1 3.1 3.1
Share premium 177.4 177.4 177.4
Share-based payments reserve 4.4 8.2 6.9
Foreign exchange reserve - 0.2 (1.8)
Retained earnings (96.7) (98.6) (103.5)
Total equity 88.2 90.3 82.1
----------- ----------- ---------
Condensed consolidated statement of changes in equity
for the six months ended 31 October 2020
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 2020 3.1 177.4 6.9 (1.8) (103.5) 82.1
Tax in respect of share
options - - - - - -
Share-based payment
credit (note 6) - - (2.5) - - (2.5)
Transactions with owners - - (2.5) - - (2.5)
--------- --------- ------------ ---------- ---------- --------
Profit for the period
(including exchange
differences recycled
on disposal of Canada) - - - 0.9 6.8 7.7
Exchange differences
on translation of foreign
operations - - - 0.9 - 0.9
Total comprehensive
profit - - - 1.8 6.8 8.6
--------- --------- ------------ ---------- ---------- --------
At 31 October 2020 3.1 177.4 4.4 - (96.7) 88.2
--------- --------- ------------ ---------- ---------- --------
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
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
--------- --------- ------------ ---------- ---------- --------
Condensed consolidated statement of changes in equity
For the year ended 30 April 2020
Share-based Foreign
Share Share payment exchange Retained Total
Audited 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
Exercise of options 0.1 - (0.4) - 0.4 0.1
Tax in respect of share
options - - - - 0.2 0.2
Share-based payment
credit - - (1.3) - - (1.3)
Transactions with owners 0.1 - (1.7) - 0.6 (1.0)
--------- --------- ------------ ---------- ---------- --------
Loss for the year - - - - (19.3) (19.3)
Exchange differences
on translation of foreign
operations - - - (1.3) - (1.3)
Total comprehensive
loss - - - (1.3) (19.3) (20.6)
--------- --------- ------------ ---------- ---------- --------
At 30 April 2020 3.1 177.4 6.9 (1.8) (103.5) 82.1
--------- --------- ------------ ---------- ---------- --------
Condensed consolidated statement of cash flows
for the six months ended 31 October 2020
Six months Six months Year ended
ended 31 ended 31 30 April
October October 2020
2020 unaudited 2019 unaudited
audited
GBPm GBPm GBPm
---------------- ---------------- -----------
Profit / (loss) for the period
after taxation 6.8 (14.1) (19.2)
Adjustments for:
Amortisation of intangible assets 1.2 2.8 4.1
Depreciation of tangible fixed
assets 0.4 0.9 1.7
Impairment of intangible assets - - 0.5
Impairment of tangible fixed
assets - - 0.6
Gain on disposal of Canada business (2.3) - -
Share-based payment credit (2.5) - (1.3)
Gain on lease modification - - (0.1)
Credit to loss provision - - (0.4)
Increase in provisions 0.1 - 0.4
Interest income (0.1) (0.2) (0.5)
Interest expense - - 0.2
Share of result of associate 0.1 - -
Share of result of joint venture - 1.6 2.8
Taxation charge / (credit) 0.4 0.2 (1.7)
---------------- -----------
Operating cash inflow / (outflow)
before changes in working capital 4.1 (8.8) (12.9)
---------------- ---------------- -----------
Movement in trade and other receivables (5.4) 5.7 7.0
Movement in trade and other payables 7.8 (8.3) (14.2)
Movement in deferred income 7.1 (3.4) (4.8)
-----------
Cash generated from / (utilised
in) operations 13.6 (14.8) (24.9)
---------------- ---------------- -----------
Taxation received - 0.8 1.0
Interest paid - (0.1) (0.1)
Net cash inflow / (outflow) from
operating activities 13.6 (14.1) (24.0)
---------------- ---------------- -----------
Investing activities
Purchase of property, plant and
equipment (0.1) (0.6) (0.8)
Development expenditure capitalised (0.9) (1.4) (2.1)
Purchase of intangible assets - (0.5) (0.1)
Interest income 0.1 0.2 0.5
Investment in joint venture - (4.6) (4.6)
Proceeds from disposal of Canada
business 35.9 - -
Cash disposed of with Canada
business (3.5) - -
Net cash inflow / (outflow) from
investing activities 31.5 (6.9) (7.1)
---------------- ---------------- -----------
Financing activities
Lease interest payments - - (0.1)
Payments against lease liabilities (0.3) (0.3) (0.9)
Proceeds from external borrowings - - 0.3
Repayment of external borrowings - - (0.1)
Proceeds from issue of shares - 0.1 0.1
Net cash outflow from financing
activities (0.3) (0.2) (0.7)
---------------- ---------------- -----------
Net increase / (decrease) in
cash and cash equivalents 44.8 (21.2) (31.8)
Effect of foreign exchange rates - - -
Cash and cash equivalents at
beginning of the period 31.0 62.8 62.8
Cash and cash equivalents at
the end of the period 75.8 41.6 31.0
---------------- ---------------- -----------
Notes to the condensed financial statements for the six months
ended 31 October 2020
1. General information
Purplebricks Group plc ('the Company') 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 2020 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 Purplebricks Group plc are
prepared in accordance with International Financial Reporting
Standards 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 48 to 59 of the Annual Report
2020) except as described below at note 2.4 and in note 3.
The Annual Report 2020 is available at
https://www.purplebricksplc.com/investors/latest_results
2.1 Basis of preparation
These 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. In the current year, activity
has been affected by the housing market shut down in effect in the
UK at the beginning of the period, together with high activity
levels in the months following re-opening of the housing
market.
2.2 Restatement
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 21, the results of the Canadian business, which was sold
on 15 July 2020, have been classified as discontinued
operations.
Income statement comparatives for the year ended 30 April 2020
and for H1 20 have been restated accordingly.
H1 20 comparatives for results from discontinued operations also
include the results of the Group's US and Australia businesses for
that period.
Contract assets
In the current year, contract assets, being accrued income and
prepaid cost of sales, are presented separately on the face of the
statement of financial position. Comparative amounts at 31 October
2019 have also been separately presented, with a corresponding
reduction in the amounts shown as trade and other receivables. No
restatement of total amounts has occurred.
2.3 Going concern
In adopting a going concern basis for the preparation of the
financial statements, the Directors have made appropriate enquiries
and have considered the Group's business activities, cash flows and
liquidity position, and the Group's principal risks and
uncertainties.
The Directors have taken into account reasonably possible future
economic factors in preparing trading and cash flow forecasts
covering the period to 31 December 2021. This assessment took into
consideration sensitivity analysis with regard to the forecast
volume of instructions, including possible effects of the ongoing
COVID19-related macro-economic conditions, the variable nature of
significant elements of the Group's cost base and steps which could
be taken to further mitigate costs if required.
Mitigations available to the Group include a reduction in
marketing expenditure and reductions in expenditure in the Group's
contact centre and support functions. In satisfying themselves that
the going concern basis is appropriate, the Directors took into
account recent practical experience and steps which were taken with
regard to cost control and cash preservation due to the
COVID19-related macro-economic conditions leading up to and
following the 2020 year-end.
Even in the situation of a severe downside sensitised fall in
revenues that is in excess of the Directors' realistic
expectations, and even before taking any such mitigating actions,
the Group expects to maintain a position of liquidity throughout
the forecast period to 31 December 2021.
The Group holds significant cash balances of GBP75.8m at 31
October 2020.
Based on the Group's forecasts, the Directors are satisfied that
the Company, and the Group as a whole, have adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the financial statements have been prepared on the
going concern basis.
2.4 New accounting standards adopted in the period
No new accounting standards have had a significant effect on the
financial performance or condition of the Group.
2.5 Tax
Taxes on income in the interim period are accrued using the
effective tax rate that would be applicable to expected total
annual earnings.
2.6 Government assistance
During the period the Group received amounts from the UK and
Canada governments in relation to staff on furlough not working in
the business. These receipts have been presented within Other
Income in respect of the UK and are within the overall profit from
discontinued activities in respect of Canada.
The financial impact of government assistance in the period is
described in note 13.
3. Critical accounting estimates and judgements
In the application of the Group's accounting policies, the
Directors are required to make judgements (other than those
involving estimations) that have a significant impact on the
amounts recognised in the financial statements and to make
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
The accounting estimates and judgments as set out on pages 60
and 61 of the Annual Report 2020 have been applied consistently in
these financial statements with the exception of the additional
area of judgment set out below.
Assessment of the status of the Group's investment in
Homeday
In assessing the status of the Group's investment in Homeday,
which is held through a joint venture with Axel Springer, the Group
has to consider the effect of convertible loans which exist between
Axel Springer and 107 Media, and put and call options which exist
between the shareholders of Homeday, as set out on pages 82 and 83
of the Annual Report 2020.
Options which may in the future confer substantive rights must
be considered as exercised if there are no substantial barriers to
exercise. Whether substantial barriers exist is subjective and is a
matter of judgement.
At 30 April 2020, the Group took the view that there were
substantial barriers to the exercise of the convertible loans
between Axel Springer and 107 Media, and therefore the Group's
investment in 107 Media was accounted for as a joint venture.
At 31 October 2020, the Group has re-assessed this judgement and
has concluded that there are no substantive barriers to the
exercise of the convertible loans between Axel Springer and 107
Media. Therefore, at 31 October 2020, the Group's investment in 107
Media has been determined to meet the definition as an associate
rather than a joint venture based on the guidance in IAS28 and IFRS
11, and its presentation has been amended on the Group balance
sheet.
Details of the investment and the gain on deemed dilution in
shareholding at the point of re-assessment is set out in note
10.
Revenue recognition
Instruction revenue is recognised over the estimated period
between instruction and completion or withdrawal of the property
from sale ("service period") and the Directors are, therefore,
required to estimate the average total service period, taking into
account historical experience in addition to current and possible
future economic conditions and factors. At each reporting date,
this estimation includes an assessment of the future service period
in respect of instructions on hand at the period end.
As at 31 October 2020, the Directors have taken account of the
impact of the COVID-19 crisis on the housing market in the UK in
developing their view of the likely future service period. The
Directors assessed, as at 31 October that, due to ongoing delays
experienced in the process between sale agreed and completion, the
future service period in respect of instructions live at 31 October
2020 could reasonably be considered to be longer than has
historically been the case in a business as usual marketplace.
The Directors have assessed a significant reduction in future
service period as compared to the year-end date 30 April 2020, when
the UK housing market was in a complete shutdown.
Based on evidence available to date, the Directors have adopted
an estimated service period which is approximately 22% shorter than
at April 2020 (although approximately 5% longer than at 31 October
2019) in calculating contract liabilities in respect of deferred
income as at 31 October 2020. An increase or decrease of 5% in the
estimated service period would have resulted in an increase or
decrease in deferred income of approximately GBP0.8m
respectively.
Continuing uncertainty at the reporting date, as to the nature
and duration of the impact of COVID-19 on the UK economy, means
there is a greater degree of subjectivity in estimating the future
service period than would be the case in a "steady state" scenario
and the Directors have adopted a best estimate approach, taking
into account available evidence. Should the UK housing market
recover to pre-crisis levels subsequent to the reporting date,
there would be a reasonable expectation that the service period
would move closer to the historical norm for future reporting
periods.
The terms of the UK's future trading relationship with the EU
following Brexit remain uncertain and could have an effect on the
UK property market. Due to the uncertainty of the extent and timing
of any impact on the wider UK economy, it is impractical to
determine any potential, consequential impact on the timing of
revenue recognition in the UK business at the date of this report
and no such estimate has been made.
4. 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 or
credits and exceptional 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 do not operate
similar share-based payment schemes.
-- Exceptional items: These items represent amounts which result
from unusual transactions or circumstances and at a significance
which warrants individual disclosure. We believe that adjusting for
such exceptional items improves comparability period on period. See
note 8 for further detail of amounts disclosed as exceptional.
-- Results of joint ventures and associates: while the Group
exercises some influence over these results, it is unable to fully
control them.
Reconciliation
See segmental reporting in note 6.
Adjusted operating costs
Definition
Adjusted operating costs are administrative and establishment
expenses, adjusted by adding back depreciation, amortisation and
share-based payment charges and exceptional items. In H1 21,
adjusted operating costs includes receipts in respect of government
assistance to support companies with employees on furlough during
the COVID-19 crisis.
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 exceptional costs from this measure is
consistent with that set out above in the "Adjusted EBTIDA"
section, with the addition that receipts in respect of the CJRS
scheme are added back to operating costs to present a more
comparable period on period view of the costs of operating the
business, excluding staff costs in respect of employees who were
not working in the business during the period.
Reconciliation
See segmental reporting in note 6.
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 and exceptional items.
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 and
exceptional items from this measure is consistent with that set out
above in the "Adjusted EBTIDA" section.
Reconciliation
See segmental reporting in note 6.
5. Revenue
Revenue by contract type Year ended
H1 20 30 April
Restated 2020 Restated
- see -
H1 21 note 2.2 see note
unaudited unaudited 2.2 unaudited
GBPm GBPm GBPm
----------- ----------- ---------------
Continuing
Instructions 30.5 30.9 53.5
Conveyancing 8.0 10.8 16.7
Other (Lettings and brokerage) 5.7 5.4 10.3
----------- ----------- ---------------
44.2 47.1 80.5
----------- ----------- ---------------
Discontinued
Instructions 3.5 15.5 24.6
Conveyancing - 1.8 1.8
Other (Brokerage) 3.0 6.4 10.3
----------- ----------- ---------------
6.5 23.7 36.7
----------- ----------- ---------------
Total revenue 50.7 70.8 117.2
----------- ----------- ---------------
6. 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 (the Board being the Chief Operating
Decision Maker ("CODM")) using geographical segments. The financial
information reviewed by the Board is materially the same as that
reported under IFRS and falls under four geographic locations: UK,
Canada, Australia, and the US. On 7 May 2019, the Group announced
that it was exiting the Australian market, and on 3 July 2019, the
Group announced its withdrawal from the US market. In each case the
business was put into an orderly rundown ahead of closure during FY
20. Therefore, there are no results for Australia or the US in H1
21. Following the sale of the Canadian business in July 2020, the
results of Canada are presented as discontinued. Adjusted EBITDA is
a key profit measure used by the CODM in making strategic
decisions. 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 21 - six months ended 31 October 2020 - unaudited
Arising on Continuing Discontinued
UK consolidation operations operations (Canada only) Total
GBPm GBPm GBPm GBPm GBPm
Revenue 44.2 - 44.2 6.5 50.7
Cost of sales (14.6) - (14.6) (1.8) (16.4)
------- ----------------------- -------------------------- -------
Gross profit 29.6 - 29.6 4.7 34.3
Gross profit margin (%) 67.0% -% 67.0% 72.3% 67.7%
Other income 0.7 - 0.7 0.9 1.6
Administrative expenses (14.0) (0.3) (14.3) (3.5) (17.8)
Marketing expenses (9.0) - (9.0) (0.6) (9.6)
Share of results of associate - (0.1) (0.1) - (0.1)
Operating profit 7.3 (0.4) 6.9 1.5 8.4
Reconciliation to adjusted
EBITDA
Operating profit 7.3 (0.4) 6.9 1.5 8.4
Depreciation & amortisation 1.3 0.3 1.6 0.2 1.8
Share-based payments (1.9) - (1.9) (0.6) (2.5)
Share of results of associate - 0.1 0.1 - 0.1
Exceptional items 1.7 - 1.7 - 1.7
------- ----------------------- -------------------------- -------
Adjusted EBITDA 8.4 - 8.4 1.1 9.5
Reconciliation to adjusted
operating profit
Operating profit 7.3 (0.4) 6.9 1.5 8.4
Share-based payments (1.9) - (1.9) (0.6) (2.5)
Share of results of associate - 0.1 0.1 - 0.1
Exceptional items 1.7 - 1.7 - 1.7
------- ----------------------- -------------------------- -------
Adjusted operating profit 7.1 (0.3) 6.8 0.9 7.7
Reconciliation of
administrative expenses to
adjusted operating costs
Administrative expenses (14.0) (0.3) (14.3 ) (3.5) (17.8)
Other income in respect of
government assistance 0.7 - 0.7 0.9 1.6
Depreciation & amortisation 1.3 0.3 1.6 0.2 1.8
Share-based payments (1.9) - (1.9) (0.6) (2.5)
Exceptional items 1.7 - 1.7 - 1.7
------- ----------------------- -------------------------- -------
Adjusted operating costs (12.2) - (12.2) (3.0) (15.2)
------- ----------------------- -------------------------- -------
H1 20 - six months ended 31 October 2019 - unaudited
Adjustment Adjustment
Arising on for Continuing Arising on for Discontinued
UK Consolidation recharges operations Canada Australia US Consolidation recharges operations Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 47.1 - - 47.1 17.7 1.4 4.6 - - 23.7 70.8
Cost of sales (17.1) - - (17.1) (8.3) (2.2) (2.2) - - (12.7) (29.8)
------- -------------- ----------- ------------ ------- ---------- ------ --------------- ----------- ------------- -------
Gross profit 30.0 - - 30.0 9.4 (0.8) 2.4 - - 11.0 41.0
Gross profit
margin (%) 63.7% - - 63.7% 53.1% (57.1)% 52.2% - -
Administrative
expenses (14.2) (0.1) (2.0) (16.3) (5.8) (4.7) (5.4) (0.7) 2.0 (14.6) (30.9)
Marketing
expenses (12.3) - - (12.3) (4.2) (1.2) (2.5) - - (7.9) (20.2)
Share of results
of joint venture - (1.6) - (1.6) - - - - - - (1.6)
Operating
profit/(loss) 3.5 (1.7) (2.0) (0.2) (0.6) (6.7) (5.5) (0.7) 2.0 (11.5) (11.7)
Reconciliation to
adjusted EBITDA
Operating
profit/(loss) 3.5 (1.7) (2.0) (0.2) (0.6) (6.7) (5.5) (0.7) 2.0 (13.1) (11.7)
Depreciation &
amortisation 1.4 0.1 - 1.5 0.5 0.5 0.5 0.7 - 2.2 3.7
Share-based
payments 0.6 - 0.5 1.1 0.2 (0.6) (0.2) - (0.5) (1.1) -
Share of results
of joint venture - 1.6 - 1.6 - - - - - - 1.6
Adjusted EBITDA 5.5 - (1.5) 4.0 0.1 (6.8) (5.2) - 1.5 (10.4) (6.4)
Reconciliation to
adjusted
operating loss
Operating
profit/(loss) 3.5 (1.7) (2.0) (0.2) (0.6) (6.7) (5.5) (0.7) 2.0 (11.5) (11.7)
Share-based
payments 0.6 - 0.5 1.1 0.2 (0.6) (0.2) - (0.5) (1.1) -
Share of results
of joint venture - 1.6 - 1.6 - - - - - - 1.6
Adjusted
operating loss 4.1 (0.1) (1.5) 2.5 (0.4) (7.3) (5.7) (0.7) 1.5 (12.6) (10.1)
Reconciliation of
administrative
expenses to
adjusted
operating costs
Administrative
expenses (14.2) (0.1) (2.0) (16.3) (5.8) (4.7) (5.4) (0.7) 2.0 (14.6) (30.9)
Depreciation &
amortisation 1.4 0.1 - 1.5 0.5 0.5 0.5 0.7 - 2.2 3.7
Share-based
payments 0.6 - 0.5 1.1 0.2 (0.6) (0.2) - (0.5) (1.1) -
Adjusted
operating costs (12.2) - (1.5) (13.7) (5.1) (4.8) (5.1) - 1.5 (13.5) (27.2)
------- -------------- ------- ---------- ------ ---------------
For year ended 30 April 2020 - unaudited
Adjustment Adjustment
Arising on for Continuing Arising on for Discontinued
UK Consolidation recharges operations Canada Australia US Consolidation recharges operations Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 80.5 - - 80.5 30.6 1.5 4.6 - - 36.7 117.2
Cost of sales (28.9) - - (28.9) (14.5) (2.2) (2.2) - - (18.9) (47.8)
------- -------------- ----------- ------------ ------- ---------- ------ --------------- ----------- ------------- -------
Gross profit 51.6 - - 51.6 16.1 (0.7) 2.4 - - 17.8 69.4
Gross profit
margin (%) 64.1% - - 64.1% 52.5% (46.7)% 52.2% - - 48.5% 59.2%
Administrative
expenses (31.2) (0.2) (2.5) (33.9) (10.6) (3.4) (4.8) (1.4) 2.5 (17.7) (51.6)
Marketing
expenses (20.6) - - (20.6) (8.2) (1.2) (2.0) - - (11.4) (32.0)
Share of results
of joint venture - (2.8) - (2.8) - - - - - - (2.8)
Operating
profit/(loss) (0.2) (3.0) (2.5) (5.7) (2.7) (5.3) (4.4) (1.4) 2.5 (11.3) (17.0)
Reconciliation to
adjusted EBITDA
Operating
profit/(loss) (0.2) (3.0) (2.5) (5.7) (2.7) (5.3) (4.4) (1.4) 2.5 (11.3) (17.0)
Depreciation &
amortisation 3.5 0.2 - 3.7 1.0 0.5 0.3 1.4 - 3.2 6.9
Share-based
payments (0.1) - 0.6 0.5 0.3 (0.7) (0.8) - (0.6) (1.8) (1.3)
Share of results
of joint venture - 2.8 - 2.8 - - - - - - 2.8
Exceptional items 1.6 - - 1.6 - - - - - 1.6
Adjusted EBITDA 4.8 - (1.9) 2.9 (1.4) (5.5) (4.9) - 1.9 (9.9) (7.0)
Reconciliation to
adjusted
operating loss
Operating
profit/(loss) (0.2) (3.0) (2.5) (5.7) (2.7) (5.3) (4.4) (1.4) 2.5 (11.3) (17.0)
Share-based
payments (0.1) - 0.6 0.5 0.3 (0.7) (0.8) - (0.6) (1.8) (1.3)
Share of results
of joint venture - 2.8 - 2.8 - - - - - - 2.8
Exceptional items 1.6 - 1.6 - - - - - - 1.6
Adjusted
operating loss 1.3 (0.2 ) (1.9) (0.8) (2.4) (6.0) (5.2) (1.4) 1.9 (13.1) (13.9)
Reconciliation of
administrative
expenses to
adjusted
operating costs
Administrative
expenses (31.2) (0.2) (2.5) (33.9) (10.6) (3.4) (4.8) (1.4) 2.5 (17.7) (51.6)
Depreciation &
amortisation 3.5 0.2 - 3.7 1.0 0.5 0.3 1.4 - 3.2 6.9
Share-based
payments (0.1) - 0.6 0.5 0.3 (0.7) (0.8) - (0.6) (1.8) (1.3)
Exceptional items 1.6 - - 1.6 - - - - - - 1.6
Adjusted
operating costs (26.2) - (1.9) (28.1) (9.3) (3.6) (5.3) - 1.9 (16.3) (44.4)
------- -------------- ------- ---------- ------ ---------------
31 October 31 October 30 April
2020 2019 unaudited 2020 audited
unaudited
Non-current assets GBPm GBPm GBPm
----------- ---------------- --------------
UK 26.7 80.5 69.0
Canada - 5.2 5.7
Australia - - -
US - - -
Consolidation adjustments - (23.4) (11.0)
Total 26.7 62.3 63.7
=========== ================ ==============
Total assets
UK 123.5 227.8 113.6
Canada - 11.4 13.0
Australia - 0.9 -
US - 0.5 -
Consolidation adjustments - (114.1) (11.0)
Total 123.5 126.5 115.6
=========== ================ ==============
Total liabilities
UK 35.3 25.9 22.0
Canada - 8.9 13.1
Australia - 35.0 -
US - 51.4 -
Consolidation adjustments - (85.0) (1.6)
Total 35.3 36.2 33.5
=========== ================ ==============
Cash flows related to discontinued operations were as
follows:
Six months
ended 31 Year ended
Six months October 30 April
ended 31 2019 Restated 2020 Restated
October - see note - see note
2020 unaudited 2.2 unaudited 2.2 unaudited
GBPm GBPm GBPm
---------------- --------------- ---------------
Operating cash inflow / (outflow)
before changes in working capital
Continuing operations 3.1 0.5 (0.5)
Discontinued operations 1.0 (9.3) (12.4)
---------------- --------------- ---------------
4.1 (8.8) (12.9)
Operating cash inflow / (outflow)
after changes in working capital,
interest and taxation paid
Continuing operations 12.3 (1.9) (8.9)
Discontinued operations 1.3 (12.2) (15.1)
---------------- --------------- ---------------
Net cash inflow / (outflow) from
operating activities 13.6 (14.1) (24.0)
Investing activities
Continuing operations (0.9) (5.9) (5.8)
Discontinued operations 32.4 (1.0) (1.3)
---------------- --------------- ---------------
Net cash inflow / (outflow) from
investing activities 31.5 (6.9) (7.1)
Financing activities
Continuing operations (0.3) (0.3) (0.5)
Discontinued operations - 0.1 (0.2)
---------------- --------------- ---------------
Net cash outflow from financing
activities (0.3) (0.2) (0.7)
7. Profit on disposal of Canadian business
On 15 July 2020 the Group completed the disposal of its Canadian
business, being all Canadian subsidiaries and the entire Canada
segment, to the Desjardins Group, a Canadian cooperative financial
group. Headline consideration was $60.5m Canadian Dollars
(GBP36.1m), or GBP35.9m net of professional fees of GBP0.2m, to be
adjusted for working capital and debt in line with completion
accounts in due course. Part of the proceeds were allocated to the
repayment of intra-Group debt owed to Purplebricks Group plc.
In November 2020, working capital and debt adjustments were
provisionally agreed at $1.0m Canadian Dollars (GBP0.5m), giving
revised net proceeds due to the Group, net of advisor fees of
GBP0.2m of GBP36.4m. After accounting for the disposal of the
Group's Canadian business at book value, including the book value
of goodwill and other intangibles arising on the acquisition, and
the derecognition of associated deferred tax assets, the Group
recorded a profit on disposal of GBP2.3m. Further detail is set out
in the table below:
GBPm
----------------------
Cash consideration received / due under working capital true-up 36.4
Carrying amount of net assets disposed of (34.1)
----------------------
Gain on sale 2.3
----------------------
The carrying amounts of assets and liabilities at the date of
sale were:
GBPm
--------------------
Goodwill 17.2
Brand 13.5
Proprietary technology 1.1
Customer relationships 1.1
Working capital and other net assets 1.2
34.1
--------------------
The Australia, US and Canada operations represented in their
entirety the segments as disclosed in note 6. The operating losses
of discontinued segments are reconciled to the net loss relating to
discontinued activities as follows:
Six months Year ended
Six months ended 31 30 April
ended 31 October 2019 2020
October Restated - Restated -
2020 see note 2.2 see note 2.2
GBPm GBPm GBPm
--------------------------- ---------------------------- ----------------------------
Operating
profit /
(loss)
relating to
discontinued
segments 1.5 (11.5) (11.3)
Gain on
disposal of
Canadian
business 2.3 - -
Net finance
expense
relating to
discontinued
segments - (0.1) (0.4)
Tax (charge)
/ credit
relating to
discontinued
segments - 0.1 0.7
Exchange
differences
recycled on
disposal of
Canadian
business (0.9) - -
Profit /
(loss) from
discontinued
operations 2.9 (11.5) (11.0)
--------------------------- ---------------------------- ----------------------------
8. Exceptional items
Six months
ended 31 Six months Year ended
October ended 31 30 April
2020 October 2019 2020
GBPm GBPm GBPm
Exceptional
items 1.7 - 1.6
--------------------------- ---------------------------- ----------------------------
Exceptional items comprise:
i. Costs of a fundamental restructuring programme which was
started in FY20 focused on the customer services and sales
functions and which in H1 21 has shifted focus onto employed head
office functions of GBP0.8m. (H1 20: GBPnil ; FY 20: GBP1.2m).
ii. Costs continuing from FY 20 of supporting the network of
independent LPEs in response to the COVID-19 crisis of GBP0.9m. (H1
20: GBPnil ; FY 20: GBP0.4m).
These items were identified in FY 20 as exceptional because they
are (i) the first instance of such costs being incurred in the
group's history and (ii) they are not expected to recur regularly
or cyclically.
Support to the LPE network during the COVID-19 crisis is
currently not expected to continue into H2 21, as we currently do
not anticipate a full shut down of the housing market to
reoccur.
The aggregate amounts accrued but not yet paid in respect of
exceptional charges total GBP0.1m at 31 October 2020. All amounts
are expected to be paid in cash before the year end. All amounts
disclosed as exceptional are deductible to tax.
All exceptional items are presented within administration
expenses in the consolidated income statement.
9. Earnings per share
Total including discontinued operations
Six months ended 31 Six months ended 31 Year ended 30 April
October 2020 October 2019 2020
------------------------------------- ------------------------------------- --------------------------------------
Profit / (loss) from total
operations GBPm 6.8 (14.1) (19.2)
Weighted average number of
shares in issue ('000) 306,806 305,974 306,389
----------------------- ----------------------- -----------------------
Earnings / (loss) per share
for total operations (GBP)
- basic 0.02 (0.05) (0.06)
----------------------- ----------------------- -----------------------
Potentially dilutive shares
unissued at reporting date
('000) 12,607 12,046 9,738
Total potentially dilutive
shares at reporting date
('000) 319,413 318,020 316,127
----------------------- ----------------------- -----------------------
Earnings / (loss) per share
for total operations (GBP)
- diluted 0.02 (0.05) (0.06)
----------------------- ----------------------- -----------------------
Where applicable, diluted loss per share from total 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 Year ended
ended 31 30 April
Six months October 2019 2020
ended 31 Restated - Restated -
October 2020 see note 2.2 see note 2.2
---------------------------- ---------------------------- ----------------------------
Profit /
(loss) from
continuing
operations
GBPm 3.9 (2.6) (8.2)
Weighted
average
number of
shares in
issue
('000) 306,806 305,974 306,389
---------------------------- ---------------------------- ----------------------------
Earnings /
(loss) per
share for
continuing
operations
(GBP) -
basic 0.01 (0.01) (0.03)
---------------------------- ---------------------------- ----------------------------
Potentially dilutive shares
unissued at reporting date
('000) 12,607 12,046 9,738
Total potentially dilutive
shares at reporting date
('000) 319,413 318,020 316,127
----------------------- ----------------------- -----------------------
Earnings / (loss) per share
for continuing operations
(GBP) - diluted 0.01 (0.01) (0.03)
----------------------- ----------------------- -----------------------
Where applicable, diluted loss per share from consolidated
operations is equal to the basic loss per share as a loss cannot be
diluted.
The number of shares in issue at both 30 April 2020 and 31
October 2020 was 306, 806 ,039.
10. Investment in jointly controlled entity and investment in
associate
Investment in
Investment in jointly controlled
associate entity
GBPm GBPm
-------------------------------------- --------------------------------------
At 1 May 2019 - 10.7
Equity investments - 4.6
Share of result for H1
20 - (1.6)
-------------------------------------- --------------------------------------
At 31 October 2019 - 13.7
Share of result for H2
20 - (1.2)
-------------------------------------- --------------------------------------
At 30 April 2020 12.5
Reclassification to
associate 12.5 (12.5)
Gain on 1.4 -
reclassification to
associate
Share of result for H1 (1.5) -
21
-------------------------------------- --------------------------------------
At 31 October 2020 12.4 -
-------------------------------------- --------------------------------------
In assessing the status of the Group's investment in Homeday,
which is held through a joint venture with Axel Springer, the Group
has to consider the effect of convertible loans which exist between
Axel Springer and 107 Media, and put and call options which exist
between the shareholders of Homeday, as set out on pages 82 and 83
of the Annual Report 2020.
Options which may in the future confer substantive rights must
be considered as exercised if there are no substantial barriers to
exercise. Whether substantial barriers exist is subjective and is a
matter of judgement.
At 30 April 2020, the Group took the view that there were
substantial barriers to the exercise of the convertible loans
between Axel Springer and 107 Media, and therefore the Group's
investment in 107 Media was accounted for as a joint venture.
At 31 October 2020, the Group has re-assessed this judgement and
has concluded that there are no substantive barriers to the
exercise of the convertible loans between Axel Springer and 107
Media. Therefore, at 31 October 2020, the Group's investment in 107
Media has been determined to meet the definition as an associate
rather than a joint venture based on the guidance in IAS28 and IFRS
11, and its presentation has been amended on the group balance
sheet.
At the point of step down, the Group assessed the carrying value
of its investment against the Group's revised share of the fair
value of the underlying assets and liabilities of 107 Media,
including 107 Media's investment in Homeday. A gain on deemed
dilution in shareholding arising from this re-assessment of
accounting judgement of GBP1.4m arose and is reflected in the table
of movements in investment above.
11. Intangible assets
Internally Patents
generated Capitalised and Customer Proprietary
intangible(1) software trademark relationships technology Brand Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------------------------- ------------------------- ----------------------------- --------------------------- ---------------------- ----------------------
Cost
At 1 May 2020 8.9 1.1 0.1 2.8 2.9 13.2 29.0
Internally
developed
assets 0.9 - - - - - 0.9
Foreign
exchange - - - 0.1 0.1 0.3 0.5
Disposals on
sale of
Canada - (0.2) - (1.8) (3.0) (13.5) (18.5)
At 31 October
2020 9.8 0.9 0.1 1.1 - - 11.9
----------------------------- --------------------------- ------------------------- ----------------------------- --------------------------- ---------------------- ----------------------
Amortisation
At 1 May 2020 (5.8) (0.8) (0.1) (1.3) (1.8) - (9.8)
Amortisation
for the
period (0.8) (0.1) - (0.2) (0.1) - (1.2)
Disposals on
sale of
Canada - 0.2 - 0.7 1.9 - 2.8
Transfer - 0.2 - - - - 0.2
At 31 October
2020 (6.6) (0.5) (0.1) (0.8) - - (8.0)
----------------------------- --------------------------- ------------------------- ----------------------------- --------------------------- ---------------------- ----------------------
Net carrying
value
At 31 October
2020 3.2 0.4 - 0.3 - - 3.9
----------------------------- --------------------------- ------------------------- ----------------------------- --------------------------- ---------------------- ----------------------
At 30 April
2020 3.1 0.3 - 1.5 1.1 13.2 19.2
----------------------------- --------------------------- ------------------------- ----------------------------- --------------------------- ---------------------- ----------------------
(1) Being the Group's internally generated technology applications and website.
12. Goodwill
Lettings CGU Canada Total
GBPm GBPm GBPm
---------------------------- ---------------------- ----------------------
Cost and carrying
amount
At 1 May 2020 2.6 16.9 19.5
Foreign exchange - 0.3 0.3
Disposals on sale
of Canada - (17.2) (17.2)
At 31 October 2020 2.6 - 2.6
---------------------------- ---------------------- ----------------------
13. Government assistance
Government grants of GBP0.7m were received in H1 21 (H1 20:
GBPnil, FY 20: GBP0.3m) under the UK Government 's Coronavirus Job
Retention Scheme ('CJRS') initiative to provide financial support
to companies in order to allow them to retain on payroll certain
employees who were not required in the business due to COVID-19
related activity reductions and therefore placed temporarily on
furlough.
Government grants of GBP0.9m were received in H1 21 (H1 20:
GBPnil, FY 20: GBP0.7m) under the "Canada emergency wage subsidy
(CEWS)" relief program to provide financial support to companies in
order to allow them to retain on payroll certain employees who were
not required in the business due to COVID-19 related activity
reductions and therefore placed temporarily on furlough.
In the UK, the Group also took advantage of HMRC's VAT deferral
scheme to defer payment of GBP0.9m of VAT, of which at 31 October
2020, GBP0.8m remains unpaid.
14. Related party transactions
On 14 August 2020, 2,500,000 awards were granted to Vic Darvey,
CEO and 1,700,000 awards were granted to Andy Botha, CFO, under the
Purplebricks Performance Share Plan. The awards have an exercise
price of one penny per share and become exercisable subject to
continued employment and performance based on the Company's
relative total shareholder return and EBITDA over a three-year
performance period.
On 3 August 2020, Adrian Blair, Independent Non-Executive
Director, purchased 97,088 shares in the Company at GBP0.52.
On 6 August 2020, Simon Downing, Senior Independent
Non-Executive Director, purchased 500,000 shares in the Company at
GBP0.58.
In July 2020, the Group disposed of its business in Canada,
including the group of companies headed by DuProprio Inc, as set
out in note 7. As part of the disposal, DuProprio Inc repaid the
intragroup loan due to Purplebricks Group plc of GBP6.1m in
full.
Independent Review Report to Purplebricks Group plc
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 October 2020 which comprises the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of financial position, the condensed
consolidated statement of changes in equity, the condensed
consolidated statement of cash flows and related notes 1 to 14. We
have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial Conduct
Authority. Our work has been undertaken so that we might state to
the Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the interim financial report in accordance with the
AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
Group 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.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
October 2020 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union.
Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
14 December 2020
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BCBDDXXBDGGS
(END) Dow Jones Newswires
December 15, 2020 02:00 ET (07:00 GMT)
Purplebricks (LSE:PURP)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Purplebricks (LSE:PURP)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024