Purplebricks falls into the red

Online estate agent Purplebricks has seen revenue and profit slide over the past six months, despite the booming housing market. While group revenue was only 7% down for the six months to 31 October, to £41.3m, profit from total operations collapsed from £6.8m in the previous year to a £20.2m loss. Operating profit of £6.2m fell to an £11.1m loss. Chief executive Vic Darvey said the slump was the result of “the implementation of a major change to our operating model coinciding with the UK property market experiencing a substantial fall in new instructions”. The firm’s total instructions for the six months dropped by 38% to 21,131, down from 34,150, although the average revenue earned from each instruction was up by 15% to £1,642. Darvey said: “This dynamic led to a disappointing financial performance but we are confident that we now have the right levers in place to drive a stronger financial performance going forward. Central to our business transformation is our move to a fully employed workforce, which we are confident will increase conversion rates, drive higher standards and improve customer outcomes. Early signs are encouraging with recent rises in conversion levels and market share gains.” The firm is also eating into its cash reserves, which are down from £75.8m to £58.3m. PurpleBricks previously delayed its half-year accounts owing to a potential £30m bill resulting from its failure to inform tenants that their deposits had been placed in a national protection scheme. Darvey said: “We were disappointed by the process issues that we became aware of in our lettings business in December. These are being corrected and a root-and-branch review of the lettings business has been completed in relation to our processes and procedures.” He concluded that, despite improving market conditions, “We do not anticipate a meaningful financial benefit until FY 23.”   To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews