Purplebricks moves deeper into the red...

Purplebricks chief executive Helena Marston insists the brand's turnaround plan is working after posting a half-year loss this morning and revealing plans for further cost cutting.

A stockmarket update from the online agent showed its adjusted earnings before income, taxes depreciation and amortisation deepened to £8.4m for the six months to the end of October 2022.

That compares with a loss of £0.8m from the first half of the year.

It reported that instructions were stable at 21,205 but said fee income fell 1% to £34.4m during the period.

The agent said it had also increased its cost savings from £13m to £17m and has launched Purplebricks Financial Services five months earlier than planned.

Financial highlights include:

Instructions stable at 21,205 (H1 22: 21,131), with average revenue per instruction ('ARPI') down 1% at £1,624 (H1 22: £1,642)
Total fee income also down 1% at £34.4m (H1 22: £34.7m), reflecting the stable level of instructions and ARPI. Revenue was £34.5m (H1 22: £41.3m), in line with expectations, the reduction reflecting the impact of movements in deferred and accrued income (in respect of both instructions and conveyancing respectively), which flattered H1 22
Gross profit margin of 47.0% (H1 22: 63.4%) reflecting the increase in fixed cost base following the transition to an employed model in September 2021, which is in line with our expectations
Adjusted EBITDA loss of £8.4m (H1 22: loss of £0.8m) reflecting lower revenue and as a result of the investments made in the period, including the change to an employed model
Loss from total operations of £14.6m net of finance expense (H1 22: loss of £20.2m also reflecting a tax charge of £7.3m)
Cash and cash equivalents at 31 October 2022 of £31.3m (30 April 2022: £43.2m), reflecting the loss in the period

Marston said: "The turnaround plan is working and is being delivered at pace, with the financial benefits starting to come through in the second half of the year. We have taken further steps to reduce our cost base, from an initial £13m of annualised savings to £17m, while also investing in our strategic priorities and increasing the efficiency of our field.

“Our plan to diversify revenue streams and build a more scalable, balanced business, with less reliance on instructions is gaining momentum. We launched our new mortgage proposition last month, five months ahead of plan, and are rapidly scaling our conveyancing services to the buyer segment of our customer base.

“Our plan to drive instructions is now underpinned by a better understanding of the areas where we know we can win and initiatives to drive profitability in each of them.

“We are ever mindful of the current economic environment. Our relevant, low-cost proposition, effectively communicated via our new marketing campaign, supports our customers and is especially attractive in these economically challenging times.

“I am confident that the progress we are making and the initiatives we are implementing to drive better performance in the field, together with the additional cost actions to ensure we are a leaner, more efficient organisation, underpin our full year expectations including a return to positive cash generation in early FY24."