Trading Update & Update on Strategic Review & FSP

Purplebricks Group PLC

09 May 2023

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

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"). 

9 May 2023

Purplebricks Group plc 

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

FY23 Trading Update and Update on Strategic Review and Formal Sale Process

Purplebricks Group plc (AIM: PURP) provides an update on current trading and on the progress of its Strategic Review and Formal Sale Process.

FY23 Trading Update

The Group expects to have finished the financial year ended 30 April 2023 ("FY23") in line with management expectations, as announced on 17 February 2023. However, instruction[1] levels did not increase through Q4 of FY23 as previously anticipated (5,672 in Q4 of FY23; 10,964 in Q4 FY22), which is anticipated to primarily impact on revenue and EBITDA for FY24 (due to revenue deferral accounting adjustments which mean revenue is recognised throughout the period of service provision). In light of the Group's current financial position, the Group's payment processor for 'pay now' instructions has exercised its right to withhold a portion of remittances to the Group. This withholding and level of instructions has impacted the Company's cash position, which as at 30 April 2023 is estimated to have stood at c. £9.1 million. The Board now expects that the previously anticipated return to cash generation in early FY24 is unlikely, given the trading performance of the Group, and whilst the Strategic Review and resultant uncertainty around the future of the Group remain ongoing.

The term of the Group's contractual arrangements with its finance provider in relation its 'pay later' offering ended on 30 April 2023[2]. The arrangement has been extended for a short period (with a further short term extension under discussion) while the Group's Strategic Review is ongoing. Should the Group not be able to agree revised terms for the financing to support its pay later offering, or should those terms be disadvantageous to the Group or its customers, this would accelerate the Group's utilisation of its remaining cash reserves.  Any further increased rate of withholding by the Group's payment processor for pay now instructions would also accelerate the Group's utilisation of its remaining cash reserves. 

In light of the above, the Board believes it is necessary to conclude the Strategic Review and the Formal Sale Process promptly and in a manner that provides more certainty around the Group's future ownership, that provides the business with access to additional funding and results in a longer term extension to the finance for its pay later offering. In the view of the Board, a conclusion to the process is necessary in the interests of shareholder value, and to create greater stability and clarity for the future of the Company, its employees, its funding partners and its customers. 

Update on Strategic Review and Formal Sale Process

Prior to launching the Formal Sale Process a comprehensive Strategic Review was launched on 17 February 2023, which considered all options for the future of the business, including the potential for an equity fund raising and the sale of the Company or some or all of the Group's business and assets. At that time and following consultation with the Group's largest shareholders, it was concluded that an equity fund raise was not a viable option to recognise the potential of the Group, and having received several credible expressions of interest, it was the opinion of the Board that a Formal Sale Process be launched to fully explore a potential sale of the Group.

The Formal Sale Process has been ongoing since 1 March 2023, and in this time the Group has engaged with a significant number of potential offerors, both via outbound and inbound approaches. The Formal Sale Process has involved several rounds of bidding designed to identify the most credible potential offerors, considering both the value being offered to Purplebricks' shareholders, and the ability to deliver certainty for the Group and its stakeholders in a short timeframe.

Presently, a small number of parties remain in discussions with the Group in relation to the sale of the Company or some or all of the Group's business and assets. 

Negotiations are ongoing, however, at the current time, the transactions being contemplated, if concluded, would be expected to deliver returns to shareholders materially below the Company's current share price.  There can be no guarantee that these negotiations will result in any such transaction, and there can also be no certainty on the timings or level of any return to shareholders.

Given the expected level of potential returns to shareholders the option of an equity fund raise has been revisited but is still considered to lack the necessary support. The Board with the assistance of its advisers will continue to engage with shareholders to understand their views on the options for the Group.

Enquiries
 

Purplebricks
Helena Marston (CEO) and Dominique Highfield (CFO)	Via M7 Communications Ltd
Zeus (Financial Adviser, Nominated Adviser & Broker)	+ 44 (0) 20 3829 5000
Jamie Peel, James Hornigold (Investment Banking)
Benjamin Robertson (Corporate Broking)
PricewaterhouseCoopers LLP (Financial Adviser)	[phone]
Jon Raggett
M7 Communications
Mark Reed	[phone] [e-mail]

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.

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.

Notice related to financial adviser

Zeus Capital Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Purplebricks and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Purplebricks for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

PricewaterhouseCoopers LLP ("PwC") is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is acting exclusively for the Purplebricks and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Purplebricks for providing the protections afforded to its clients nor for providing advice in relation to the subject matter of this announcement.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover 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 Takeover 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 [phone] if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on a website

In accordance with Rule 26.1 of the Takeover 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 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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Note: All figures are unaudited and subject to the Company's financial year end closing procedures.

[1] Instructions represent instructions net of refunds.

[2] Under the Group's 'pay later with conveyancing' product, customers pay on completion or after 10 months, while the Group receives these funds earlier (on publication of the customer's advert) from the Group's finance provider, in exchange for a finance fee.

 

END