REG-Purplebricks Group Plc Purplebricks Group Plc: Trading update and Launch of Strategic Review

PurplebricksAnnouncement

17/02/2023 07:15

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   Purplebricks Group Plc (PURP)
   Purplebricks Group Plc: Trading update and Launch of Strategic Review

   17-Feb-2023 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information in accordance with the Market Abuse Regulation (MAR),
   transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   THIS IS AN ANNOUNCEMENT UNDER RULE 2.4  OF THE CITY CODE ON TAKEOVERS  AND
   MERGERS (THE "CODE")  AND IS NOT  AN ANNOUNCEMENT OF  A FIRM INTENTION  TO
   MAKE AN OFFER UNDER RULE 2.7 OF  THE CODE. THERE CAN BE NO CERTAINTY  THAT
   SUCH AN OFFER WILL BE MADE, NOR AS  TO THE TERMS ON WHICH ANY OFFER  MIGHT
   BE MADE.

   THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF  ARTICLE
   7 OF  REGULATION  596/2014  AS  AMENDED AND  TRANSPOSED  INTO  UK  LAW  IN
   ACCORDANCE WITH THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR").

                                        

                             Purplebricks Group plc

                 ("Purplebricks", the "Company" or the "Group")

                 Trading Update and Launch of Strategic Review

   Purplebricks Group  plc  (AIM: PURP),  the  UK's leading  tech-led  estate
   agency business, provides an update on trading in respect of the financial
   year ending 30 April  2023 (“FY23”), and announces  the commencement of  a
   strategic review.

   Trading Update

   Since the  Group  published  its  Interim  Results  on  8  December  2022,
   implementation of  its  turnaround  plan  has continued  at  pace.  A  key
   component of the  turnaround plan  in Q3  FY23 was  the implementation  of
   Purplebricks’ revised go-to-market strategy, which aims to focus  resource
   and investment into the regions  which are currently profitable and  those
   where there remains  the largest  opportunities for  market share  growth.
   Implementation has taken place but it has involved more disruption to  the
   sales field than  originally envisaged  in order to  achieve the  required
   cost savings and  efficiency improvements.  This process  has resulted  in
   approximately £1.2m of one-off exceptional costs being incurred in H2 FY23
   to date. As a result of this disruption, the instruction numbers  achieved
   in Q3 FY23 were lower than the Board’s previous expectations.

   In response to  the lower  instruction levels, the  Board has  proactively
   identified £4m of  further annualised  cost savings in  addition to  those
   communicated at the time of the Interim Results. These additional  savings
   will  be  achieved  by  streamlining   the  lettings  business  and   more
   conservative investment  in the  ramp up  of the  mortgages business.  The
   restructured sales field operation is now benefitting from the  leadership
   of the Group’s new Chief Sales and Marketing Officers, who both joined  in
   January 2023. Purplebricks also implemented  a fee increase on 1  February
   which will increase ARPI going forward.

   Notwithstanding the positive  operational changes made  for the long  term
   health of the business, the impact  of lower instruction levels during  Q3
   FY23 has resulted  in the Board  revising its expectations  for full  year
   performance.

   The Group now expects to deliver  revenue for FY23 of between £60  million
   and £65 million, and  an adjusted EBITDA loss  of between £15 million  and
   £20 million.

   As a result of its turnaround plan, the Group continues to expect positive
   cash generation in early FY24.

   Strategic Review

   The Board believes that Purplebricks’  business and brand has  significant
   value. The Purplebricks brand benefits from over a decade building best in
   class brand recognition  within the  UK estate agency  market. The  Group,
   through its turnaround plan,  is positioning itself  well for the  future,
   having laid the foundations to invest in existing and new revenue streams,
   such as lettings  and financial  services, and  thereby generate  material
   long term profitability and cash flow.

   The Board recognise that the potential of the Group may be better realised
   under an alternative ownership structure,  and has, therefore, decided  to
   conduct a  strategic  review  of  the  Group’s  business  (the  “Strategic
   Review”) with the aim  of delivering maximum  value for shareholders.  The
   Group has  appointed Zeus  as its  Financial Adviser  to assist  with  the
   Strategic Review.  The outcome  of the  Strategic Review  may or  may  not
   result in a sale of the Company or some or all of the Group's business and
   assets.

   As a consequence of this announcement, an ‘offer period’ has now commenced
   in respect of the Company in accordance with the rules of the Code and the
   attention of shareholders is drawn to the disclosure requirements of  Rule
   8 of the Code,  which are summarised  below. The Company  is not in  talks
   with any potential  offeror and  is not in  receipt of  any approach  with
   regard to a possible offer.

   Helena Marston, CEO said:

   “We have undertaken a huge amount of work in the last 9 months to  improve
   our sales  business,  raise standards,  establish  Purplebricks  Financial
   Services, and stabilise lettings, all of which means the Company has never
   been in better shape for the future.  Yes, the actions we have taken  have
   caused more short-term disruption to our Q3 performance than  anticipated,
   but we remain confident in returning to positive cash generation in  early
   FY24.  We recognise that our  upside potential is not currently  reflected
   in our  market valuation,  which is  why the  entire Board  has  therefore
   concluded that a  strategic review  is now in  the best  interests of  all
   shareholders.”

   Enquiries

   Purplebricks                                                              
   Helena Marston (CEO)  and Dominique  Highfield   Via M7 Communications Ltd
   (CFO)
   Zeus (Financial Adviser,  Nominated Adviser  &        + 44 (0)20 3829 5000
   Broker)
   Jamie  Peel,   James   Hornigold   (Investment                            
   Banking)
   Benjamin Robertson (Corporate Broking)                                    
   M7 Communications                                                         
                                                          +44 (0)7903 089 543
   Mark Reed
                                                  mark@m7communications.co.uk

   The person responsible for arranging for the release of this  announcement
   on behalf of the Company is Dominique Highfield, Chief Financial Officer.

    

   About Purplebricks

   Purplebricks is a leading technology-led estate agency business, based  in
   the UK. Purplebricks  combines highly experienced  and professional  Local
   Property Partners 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.

   Appendix - Profit Forecast

   The section of  this announcement entitled  ‘Trading Update’ contains  the
   following statement:

   “The Group now expects to deliver revenue for FY23 of between £60  million
   and £65 million, and  an adjusted EBITDA loss  of between £15 million  and
   £20 million.“

   This statement constitutes a profit forecast  for the purposes of Rule  28
   of the Code (the “FY23  Profit Forecast”). Set out  below is the basis  of
   preparation of the FY23 Profit Forecast and the assumptions on which it is
   based.

   Basis of preparation

   The FY23 Profit Forecast has been prepared on a basis consistent with  the
   Group's accounting  policies  which are  in  accordance with  IFRS.  These
   policies are  consistent with  those  applied in  the preparation  of  the
   Group's annual results for the year ended 30 April 2022.

   Assumptions

   The FY23 Profit Forecast is based on the assumptions listed below:

     • There  will   be   no   material  changes   to   existing   prevailing
       macroeconomic, regulatory or political  conditions in the markets  and
       regions in which the Group operates.
     • There will be no material adverse events (internal or external to  the
       Group) that will have  a significant impact  on the Group's  financial
       performance.
     • There will  be no  material  change in  the  availability or  cost  of
       mortgage financing for UK property purchasers.
     • There will be no material impact on stakeholder relationships  arising
       from the Strategic Review.
     • There will  be no  material  change in  the  Group’s market  share  or
       conversion  rates  as  a  result  of  the  recently  introduced  price
       increase, or other market factors.

   Directors' confirmation

   The Directors have considered the FY23 Profit Forecast and confirm that it
   has been properly compiled on the  basis of the assumptions set out  above
   and the  basis of  the  accounting used  is  consistent with  the  Group's
   accounting policies.

    

   Important information

   This announcement is  not intended to,  and does not,  constitute or  form
   part of any offer, invitation or the solicitation of an offer to purchase,
   otherwise acquire,  subscribe  for,  sell or  otherwise  dispose  of,  any
   securities whether pursuant to this announcement or otherwise.

   This announcement (including any information incorporated by reference  in
   this announcement) contains statements about  the Company that are or  may
   be deemed  to  be  forward looking  statements.  Without  limitation,  any
   statements preceded or followed  by or that  include the words  "targets",
   "plans",  "believes",   "expects",  "aims",   "intends",  "will",   "may",
   "anticipates", "estimates",  "projects"  or  words  or  terms  of  similar
   substance or the negative thereof, may be forward looking statements.

   These forward-looking statements are not guarantees of future performance.
   Such forward-looking  statements  involve  known  and  unknown  risks  and
   uncertainties that  could significantly  affect expected  results and  are
   based on certain key assumptions. Many factors could cause actual  results
   to  differ   materially   from  those   projected   or  implied   in   any
   forward-looking statements. Due to  such uncertainties and risks,  readers
   should not rely on such forward-looking statements, which speak only as of
   the date of  this announcement.  The Company disclaims  any obligation  or
   responsibility to update publicly or  review any forward-looking or  other
   statements  contained  in  this   announcement,  except  as  required   by
   applicable law.

   The distribution of this announcement in jurisdictions outside the  United
   Kingdom may  be  restricted  by  law  and  therefore  persons  into  whose
   possession this  announcement comes  should inform  themselves about,  and
   observe, such restrictions.  Any failure to  comply with the  restrictions
   may  constitute  a   violation  of   the  securities  law   of  any   such
   jurisdictions.

   Disclosure requirements of the Code

   Under Rule 8.3(a) of  the Code, any  person who is  interested in one  per
   cent. or more of any class of relevant securities of an offeree company or
   of any  securities  exchange offeror  (being  any offeror  other  than  an
   offeror in respect of which it has been announced that its offer is, or is
   likely to be,  solely in cash)  must make an  Opening Position  Disclosure
   following the commencement of  the offer period  and, if later,  following
   the announcement  in  which  any  securities  exchange  offeror  is  first
   identified.

   An Opening  Position  Disclosure  must contain  details  of  the  person’s
   interests and  short  positions  in,  and rights  to  subscribe  for,  any
   relevant securities  of each  of  (i) the  offeree  company and  (ii)  any
   securities exchange offeror(s). An Opening Position Disclosure by a person
   to whom  Rule 8.3(a)  applies must  be made  by no  later than  3.30  p.m.
   (London time) on the 10th business  day following the commencement of  the
   offer period and, if appropriate, by no later than 3.30 p.m. (London time)
   on  the  10th  business  day  following  the  announcement  in  which  any
   securities exchange offeror is first identified. Relevant persons who deal
   in the  relevant securities  of the  offeree company  or of  a  securities
   exchange offeror  prior to  the deadline  for making  an Opening  Position
   Disclosure must instead make a Dealing Disclosure.

   Under Rule 8.3(b) of the Code,  any person who is, or becomes,  interested
   in one  per cent.  or more  of any  class of  relevant securities  of  the
   offeree company or of any securities exchange offeror must make a  Dealing
   Disclosure if the person deals in  any relevant securities of the  offeree
   company or of any securities  exchange offeror. A Dealing Disclosure  must
   contain details of the dealing concerned and of the person’s interests and
   short positions in, and rights  to subscribe for, any relevant  securities
   of each  of (i)  the  offeree company  and  (ii) any  securities  exchange
   offeror, save  to  the extent  that  these details  have  previously  been
   disclosed under Rule  8. A  Dealing Disclosure by  a person  to whom  Rule
   8.3(b) applies must be made  by no later than  3.30 p.m. (London time)  on
   the business day following the date of the relevant dealing.

   If  two  or  more  persons  act  together  pursuant  to  an  agreement  or
   understanding, whether  formal  or  informal, to  acquire  or  control  an
   interest in  relevant securities  of an  offeree company  or a  securities
   exchange offeror,  they will  be deemed  to  be a  single person  for  the
   purpose of Rule 8.3.

   Opening Position Disclosures must also be made by the offeree company  and
   by any offeror and  Dealing Disclosures must also  be made by the  offeree
   company, by any offeror and by any  persons acting in concert with any  of
   them (see Rules 8.1, 8.2 and 8.4).

   Details of the offeree and offeror companies in respect of whose  relevant
   securities Opening Position  Disclosures and Dealing  Disclosures must  be
   made can  be found  in the  Disclosure  Table on  the Panel’s  website  at
   www.thetakeoverpanel.org.uk, including details of  the number of  relevant
   securities in issue, when the offer period commenced and when any  offeror
   was first identified. You should  contact the Panel’s Market  Surveillance
   Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you  are
   required to make an Opening Position Disclosure or a Dealing Disclosure.

   Rule 2.9 disclosure

   For the purposes of Rule 2.9 of the Code, the Company confirms that as  at
   close of business on 16 February 2023, being the last practicable business
   day prior  to the  date of  this announcement,  its issued  share  capital
   consisted of  306,806,039 ordinary  shares  of £0.01  each in  issue  (the
   “Ordinary Shares”). The International Securities Identification Number for
   the Ordinary Shares is GB00BYV2MV74.

   Publication on a website

   In accordance with Rule 26.1 of the Code, a copy of this announcement will
   be made available  (subject to  certain restrictions  relating to  persons
   resident  in  restricted  jurisdictions)   on  Purplebricks’  website   at
    1 https://www.purplebricksplc.com/investors by  no  later  than  12  noon
   (London time)  on  the first  business  day  following the  date  of  this
   announcement. For  the avoidance  of  doubt, the  content of  the  website
   referred to in  this announcement is  not incorporated into  and does  not
   form part of this announcement.

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   ISIN:          GB00BYV2MV74
   Category Code: TST
   TIDM:          PURP
   LEI Code:      2138003JWQLI3386BB56
   Sequence No.:  223839
   EQS News ID:   1562265


    
   End of Announcement EQS News Service

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References

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