(Alliance News) - Purplebricks Group PLC on Thursday said the six-month period to October 31 has been "challenging" following a strong period for the UK housing market buoyed by the stamp duty holiday.
Purplebricks shares were trading 36% lower in London on Thursday at 33.75 pence each.
Therefore Purplebricks said its adjusted earnings before interest, tax, depreciation and amortization are expected to be below previous guidance. Back in July, Purplebricks said it expects Ebitda for the financial year to the end of April 2022 to be flat year-on-year, in line with market expectations.
For financial 2021, the company posted adjusted Ebitda of GBP12.0 million, while current market consensus stands at GBP8.4 million.
The online estate agent said continued strong demand across the housing market was hurt by a reduced number of new instructions, which were 23% below the comparative period last year.
"Following a stronger period for instructions last year, supply in the market has fallen as we slowly adjust to a below normal level of activity following a period of successive lockdowns and the end of the stamp duty holiday," said Chief Executive Vic Darvey.
Purplebricks said it has driven considerable transformation during the first half of the year and has significantly invested in and transformed its business model in this period, introducing new pricing and a simplified proposition alongside a new operating model.
Given the supply and demand imbalance in the market and the disruption caused by the business transformation, Purplebricks said it now expects to report a reduction in instructions for the six-month to October 31 to 22,000 from 35,387 a year ago.
The company's cash position as at October 31 was GBP58 million, down from GBP75.8 million a year prior, which reflects investment in digital, non-recurring costs incurred in managing the business through the pandemic and one-off exceptional costs in transitioning to a fully-employed model. Purplebricks said it expects the cash position to stabilise in the second half of its current financial year.
"Against this more challenging backdrop, the team is continuing to execute on our transition to the new operating model. We are encouraged by the early results we are seeing on the ground and whilst they are not yet reflected in the overall group performance, we are confident in the strategy and that we have developed a strong platform for growth as activity levels pick-up," added Darvey.
The company said it will report its results for the six months to October 31 on December 14.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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