(Alliance News) - Purplebricks Group PLC on Tuesday predicted drops in revenue and earnings in the year ahead, after property instruction levels failed to increase as expected, and reaffirmed its decision to explore a potential sale of the company and said negotiations continue.
The Solihull, England-based online real estate agent said it expected to have finished the financial year ended April 30 in line with expectations.
In December, Purplebricks had reiterated its financial 2023 revenue guidance of between GBP67.5 million and GBP72.5 million, compared to GBP70.0 million in financial 2022.
Looking ahead, however, it said instruction levels did not increase in the fourth quarter of the just-completed year, as had been anticipated. Instead, they decreased to 5,672 from 10,964 a year before. Purplebricks expects the decrease to hurt revenue and earnings before interest, tax, depreciation and amortisation in the current financial year.
Purplebricks said its payment processor had withheld a portion of remittances, hurting Purplebricks' cash position which at April 30 was approximately GBP9.1 million. It said the previously expected return to cash generation early in this financial year was now unlikely due to its trading performance.
Purplebricks reaffirmed its commitment to the formal sales process launched on March 1, which in turn had followed the start on February 17 of its strategic review considering options for its future. At the time Purplebricks considered an equity fund raise but decided this was not a viable option.
Purplebricks now intends to "promptly" conclude its strategic review, in a manner that will provide "more certainty" around its future ownership. It said the possibility of an equity fund raise has been revisited but is unlikely to gain enough support.
Purplebricks said negotiations for the sale of its business and assets were ongoing, with a small number of parties remaining in discussions. If concluded, transactions are expected to deliver returns "materially below" its current share price.
Purplebricks was reported in mid-March to be in talks with online estate agent Strike Ltd regarding a potential offer. On April 12 it said discussions were still ongoing. The current deadline for Strike to make an offer for Purplebricks is tomorrow, May 10.
Shares in Purplebricks were down 61% on Tuesday in London at 2.13 pence.
By Emma Curzon, Alliance News reporter
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