City Briefs: Purplebricks; West Bromwich Building Society

Purplebricks has revealed its turnaround plan is “working and is being delivered at pace”.

The Solihull-based online estate agents announced in August that it was planning to cut £13m of costs following failed overseas expansions and a fall in instructions.

Chief executive Helena Marston has now said in the firms half year results that the cost saving initiative has increased to £17m which will help Purplebricks invest in “strategic priorities and drive new revenue streams”.

Purplebricks Financial Services has also been launched five months ahead of plan. The new mortgage proposition is said to be helping scale the firm’s conveyancing services to potential buyers.

Marston says the financial benefits of the plan will begin to come through in H2 and drive cash generation in 2024.

Revenue was £34.5m (H1 22: £41.3m), which the group says is in line with expectations, following trends in deferred and accrued income.

Purplebricks also reported an adjusted EBITDA loss of £8.4m (H1 22: loss of £0.8m) reflecting the lower revenue report and as a result of the investments made in the period.

Chief executive Helena Marston said: “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.”

West Bromwich Building Society has reported a strong half-year performance, as its continues to navigate through a “challenging external environment”.

For the six months to the end of September, statutory profit before tax increased by 24% to £18.1m (2021: £14.6m) which West Bromwich says was driven by higher net interest income, fair value gains and revaluation gains on investment properties.

The firm says for its savings members, it has used the rising interest rate environment to improve their returns. This has resulted in the the benefit to savings members increasing to around £25.5m from £8.8m for the six month period.

New lending applications were worth £609m (2021: £542m), with completions totalling £276m (2021: £479m) reflecting market conditions including delays in borrowers drawing down mortgages.

During the period a one-off payment of £1,200 was provided to 430 staff, to help during the cost of living crisis.

Jonathan Westhoff, Chief Executive of the Society said: “The pressures on the cost of living, especially the rising cost of essential goods such as food and energy, have moved from a forecast to a reality across the period, and we are focused on supporting our members where we can.

“This means that as interest rates increase towards levels not experienced for well over a decade, we have striven to mitigate the impact on borrowing members, whilst passing on the benefit to our saving members.

“With there being no real indication of the situation easing in the near term, we will ensure we remain alert to where even further support may be necessary, for example for any borrowers who encounter temporary challenges in meeting their repayments”.

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