Interim Results Presentation December 2017
Today’s agenda 1 Business Highlights Michael Bruce 2 Financial Highlights James Davies 3 Strategic Overview Michael Bruce 4 Summary 5 Q&A 6 Appendix 2
1 Business Highlights
Highlights - UK LPEs increased by 107% EBIT Online market share Revenue up £3.2m 74% 1 to 650 118% (Oct 16: £0.3m loss) (Oct 16: 63%) (Oct 16: 314) Currently 2.92m Average revenue per H1 instructions YoY Instructions instruction up monthly visits to our increased by 32,112 website, year on year 14% £1,138 84% increase of (H1 17 17,424) (H1 2017: £1,000) 101% Sold and completed on Conversion from Over 32,000 reviews Current SSTC pipeline instruction to sale £4.62bn £3.75bn on Trustpilot agreed over 2 the most revewed (H1 2017: £2.59bn) 78% (Oct 2016: £2.52bn) estate agent in the UK 1 At 12 December 2017 2 May-October 2017 4
Highlights - Australia Revenue increased to LPEs increased by H1 instructions Conversion from instruction 1 £6.8m 600% to 105 2,325 to sale agreed 2 83% (Oct 16: £0.4m) (Oct 16: 15) (H2 17: 1,210 ) Over 1,500 reviews Average revenue per Sold and completed on Commission saved for instruction up on Trustpilot $0.8bn customers over 21% £3,145 9.4 Rated 'Excellent' $22m AUD the most reviewed (6 months to April 17: $322m) (H1 2017: £2,600) estate agent in Australia 1 At 12 December 2017 2 May - October 2017 5
2 Financial Review
Financial Highlights - by region Average revenue Gross Profjt Adjusted EBITDA Revenue growth 118% to per instruction £39.9m 56.5% £4.7m £1,138 (H1 17: £18.3m) (H1 17: 55.6%) (H1 17: £0.3m) (H1 2017: £1,000) Average revenue per Revenue increased to instruction Gross Profjt Adjusted EBITDA £6.8m £3,145 53.3% (£5.1m) (Oct 16: £0.4m) (H1 17: £2,600) Investment Further region £102k up to end of H1 18 1 40 LREEs launches £6m revenue 1 At 12 December 2017 7
Income Statement - UK • Signifjcant revenue growth UK H1 2018 H1 2017 • Increase of 118% £m £m • 107% increase in LPEs 1 Revenue 39.9 18.3 • Revenue per instruction up 14% to £1,138 Cost of sales (17.4) (8.1) • Ancillary revenue proportion increase Gross Profjt 22.5 10.2 • Gross profjt margin of 56.5% vs 55.6% Administrative expenses (9.3) (3.8) Sales and marketing costs (10.1) (6.6) • Higher proportion of ancillary revenue/further stabilisation Operating profjt/(loss) 3.2 (0.3) Finance income/(expenses) 0.0 0.0 • Administrative expenses Profjt/ (loss) before tax 3.2 (0.3) • Headline increase of £5.5m vs prior period Taxation 0.0 0.0 • Underlying increase of £3.4m Profjt/(loss) for the period 3.2 (0.3) • Sales and Marketing costs Reconciliation of Operating Profjt to Adjusted EBITDA • Increase of £3.5m as per guidance Operating profjt/(loss) 3.2 (0.3) • Continued decline as a proportion of revenue Less: Depreciation and Amortisation 0.6 0.2 EBITDA 3.9 (0.1) • £3.2m operating profjt vs £300k operating loss Less: Share based payments charge 0.9 0.4 • Adjusted EBITDA achieved of £4.7m vs £0.3m Adjusted EBITDA 4.7 0.3 1. At 12 December 2017. Notes Adjusted EBITDA is defjned by the Group as profjt/(loss) before net fjnance costs, tax, depreciation, amortisation and share based payments charge. Financial data have not been rounded. As a result the arithmetic total of data presented in this document may vary slightly from the sum. 8
Income Statement - Australia • First period with full market coverage AUS H1 2018 H1 2017 • Highly experienced industry Sales Director and CMO £m £m appointed Revenue 6.8 0.4 Cost of sales (3.2) (0.2) • KPIs in line, or ahead of, the UK on a like for like basis Gross Profjt 3.6 0.2 • Signifjcant revenue growth Administrative expenses (3.0) (1.7) • Up £6.4m from £0.4m in prior year and £3.1m in H2 17 Sales and marketing costs (5.7) (1.0) • 600% increase in LPEs Operating loss (5.1) (2.5) Finance income/(expenses) 0.0 0.0 • Revenue per instruction up 21% to £3,145 Loss before tax (5.1) (2.5) • Gross profjt margin increase Taxation 0.0 0.0 • Up to 53.3% from 49.7% as business develops Loss for the period (5.1) (2.5) • Administrative costs and marketing spend Reconciliation of Operating Profjt to Adjusted EBITDA • Developing in line with management expectations Operating loss (5.1) (2.5) • Early signs of operational leverage Less: Depreciation and Amortisation 0.0 0.0 EBITDA (5.1) (2.5) • Loss for period £5.1m Less: Share based payments charge 0.0 0.0 • Cash investment as at 31 October 2017 of £9.3m Adjusted EBITDA (5.1) (2.5) Notes Adjusted EBITDA is defjned by the Group as profjt/(loss) before net fjnance costs, tax, depreciation, amortisation and share based payments charge. Financial data have not been rounded. As a result the arithmetic total of data presented in this document may vary slightly from the sum. 9
Income Statement - USA • Launch date w/c 15th September 2017 USA H1 2018 • Income statement represents just fjve weeks of trading £m activity Revenue 0.1 Cost of sales 0.0 • Launched ahead of time, key themes to date Gross Profjt 0.1 • Initial KPIs are promising Administrative expenses (3.8) • Attraction of experienced LREEs Sales and marketing costs (2.5) • Instructions being won Operating loss (6.3) • Offers being accepted Finance income/(expenses) 0.0 • Escrow business generating further revenue Loss before tax (6.3) • Sale prices above asking price being achieved Taxation 0.0 • Agreed launch plans for second batch of regions in Loss for the period (6.3) January Reconciliation of Operating Profjt to Adjusted EBITDA Operating loss (6.3) Less: Depreciation and Amortisation 0.0 EBITDA (6.3) Less: Share based payments charge 0.0 Adjusted EBITDA (6.3) Notes Adjusted EBITDA is defjned by the Group as profjt/(loss) before net fjnance costs, tax, depreciation, amortisation and share based payments charge. Financial data have not been rounded. As a result the arithmetic total of data presented in this document may vary slightly from the sum. 10
Income Statement • Consolidated Group revenue of £46.8m, an increase of 150% Consolidated on £18.7m in H1 17 H1 2018 H1 2017 £m £m • Average revenue per instruction is £1,263 up from £1,000 in Revenue 46.8 18.7 H1 17 Cost of sales (20.6) (8.3) • Gross profjt margin of 56.0% Gross Profjt 26.2 10.4 Administrative expenses (16.2) (5.5) • Group gross profjt increase of 152% to £26.2m (H1 17: £10.4m) Sales and marketing costs (18.3) (7.7) Operating loss (8.2) (2.8) • Loss in H1 18 due to investment in establishing a national Finance expenses 0.0 0.0 footprint in AUS whilst making our initial step into the US Loss before tax (8.2) (2.8) market, launching in our fjrst Californian region Taxation 0.0 0.0 Loss for the period (8.2) (2.8) Reconciliation of Operating Profjt to Adjusted EBITDA Operating loss (8.2) (2.8) Less: Depreciation and Amortisation 0.7 0.2 EBITDA (7.5) (2.6) Less: Share based payments charge 0.9 0.4 Adjusted EBITDA (6.6) (2.2) Notes Adjusted EBITDA is defjned by the Group as profjt/(loss) before net fjnance costs, tax, depreciation, amortisation and share based payments charge. Financial data have not been rounded. As a result the arithmetic total of data presented in this document may vary slightly from the sum. 11
Cost contribution analysis - UK Evolution of marketing costs as a % of sales UK P eriod ended 31 Oct (£m) H1 2018 H1 2017 Growth 100 Revenue 39.9 18.3 118% 91.7% 90 80 Underlying administration costs 6.7 3.3 107% % of sales 17% 18% 70 60 % of revenue 55.3% Sales and marketing costs 10.1 6.6 53% % of sales 25% 36% 50 36.1% 40 Adjustments 2.6 0.5 31.3% 30 Total non-direct costs 19.4 10.4 25.2% 20 10 H2 16 H2 17 H1 18 H1 16 H1 17 12
Consolidated cash fmow bridge 30 April 2017 - 31 October 2017 £m 71.3 6.6 1.2 2 0.5 64.4 70 60 50 0 Cash at 30 April 2017 Adjusted EBITDA 2017 Movement in working Investment cash fmow Net cash fmow from Cash at 31 October 2017 capital fjnancing Movement during H1 2018 No corporation tax payments in H1 18. Expected to continue to utilise accumulated losses in FY 18 13
3 Strategic Overview
Investing in people and innovation for growth Leading historic change in the estate agency industry people culture innovation learning winning 15
Our LPE footprint Continuing to attract more fjrst class people Investing in people and innovation for growth 100 200 300 400 500 600 700 0 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 16
Investing in people and innovation for growth £1,600,000 £1,000 Continuing to drive marketing effjciency £900 £1,400,000 £1,600,000 £1,000 £800 £900 £1,200,000 £1,400,000 £700 £800 £1,000,000 £1,200,000 £600 £700 Spend £800,000 £500 CPI £1,000,000 £600 £400 Spend £600,000 CPI £800,000 £500 £300 £400 £400,000 £600,000 £200 £300 £200,000 £400,000 £100 £200 £0 £0 £200,000 £100 £0 £0 Spend CPI Linear (CPI) 17 Spend CPI Linear (CPI)
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