Purplebricks.com, the new online agency founded by the brothers who sold Burchell Edwards to Connells, told investors it will make annual profits of £25m in just over two years’ time.
However, the projection, in a pitch to investors appears to have been superseded by a later business plan. See the company’s statement at the end of this article which we are happy to publish.
It had said that it was aiming to list just over 15,000 sales instructions by the end of July – even though it is not rolling out nationally until September.
For the year ending July 31, 2015, it anticipated getting 85,413 instructions, and the year after, 100,849 instructions – equivalent to 10% of all transactions.
The figures compare with those of eMoov, an online estate agent currently claiming most market share, which listed 2,522 properties last year, although it says instructions this month are 50% ahead of March last year.
Purplebricks.com’s extraordinarily upbeat investment pitch also set out its lettings targets: 4,362 instructions by July 31 this year; 30,596 in the following 12 months; and 39,660 the year after.
Purplebricks.com, in telling its would-be investors that it was anticipating enormous profits, says that following a loss this year of just over £1.5m, forecast a net profit of £17.6 in the year to July 31, 2015, and £24.9m profit the year after.
The ambitious forecasts were set out in the funding brochure, which has been seen by Eye.
It said of its figures: “The forecast financials are based on a successful launch in the Meridian region in January 2014, followed by a launch in the Central region in April 2014 and a staged national rollout commencing in September 2014.
“The key assumption is that in each month, Purplebricks will achieve a number of new instructions equivalent to 2% of the properties available for sale in the relevant region in that month.
“The corresponding figure for lettings is a number of new monthly instructions equivalent to 1.2%.
“The forecasts also include a conservative conversion rate of ancillary products such as mortgages, conveyancing and insurances.
According to the brochure, £1.3m had already been invested in the business by its founders, Michael and Kenny Bruce. The brochure says they were looking to raise a further £2.1m.
As Eye reported last week, backers have now been named as including Paul Pindar, former chief executive of Capita.
However, the brochure said that the business already had another well-known backer – Allan Leighton, who was CEO of ASDA and sold it to Wal-Mart, and is a former chairman of Royal Mail.
The brochure we saw said he had agreed to be a non-executive director “and to invest personally”. We understand that this is not the case although we have no further details.
Leighton once said: “There is nothing better than being told: ‘This cannot happen, you’ll never be able to do this, you must be mad’.”
Purplebricks.com also revealed ambitious recruitment plans in the investment pitch which we saw, with 125 staff anticipated this year, 355 recruits the year after, and 480 in the year ended July 31, 2016.
The brochure describes Purplebricks.com as “the disruptive next generation estate agency”.
Purplebricks will charge sellers an upfront, non-returnable fee of £599 including VAT. The letting service, says the brochure, will cost from £72 including VAT.
The brochure also refers to a marketing campaign to consumers, which includes a TV advert. It says this has already been shot, but does not say which channels it is due to appear on.
This is the Purplebricks.com statement:
“All of the numbers and figures quoted within the article are considerably out of date and are inaccurate. The information obtained by Property Industry Eye is not a true reflection of the expectations of the business and considerably understates the level of investment secured. The comparisons and observations made are, as a result also inaccurate and do not represent a fair reflection of the current circumstances. Purplebricks were not asked to comment prior to publication of this article.”