Purplebricks considers sale as instructions plummet and £20m losses loom

Purplebricks has hung its own For Sale board up after instructions took a nosedive and it wrote off a further £1.2 million.

In a trading update this morning that includes plans for a strategic review, the online agency said it had suffered “more disruption to the sales field than originally envisaged” resulting in around £1.2 million of one-off exceptional costs being incurred in the first half of this year so far.

“As a result of this disruption, the instruction numbers achieved in Q3 FY23 were lower than the Board’s previous expectations.”

SAVINGS

It adds: “The Board has proactively identified £4 million 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 impact of lower instruction levels 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.

The statement says: “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 with the aim of delivering maximum value for shareholders.”

ZEUS

The Group has appointed Zeus as its financial adviser to assist with the sale of the company or some or all of its assets.

Helena Marston, Purplebricks Chief Executive, says: “We have undertaken a huge amount of work in the last nine 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.”