Purplebricks Group plc

Good morning, everyone, and welcome to the Purplebricks Full Year Results. My name is Vic Darvey, and I wanted to start today by giving you some context to the numbers for the full year.

I also wanted to talk through the decisive actions we've taken to protect and recover the business during COVID-19 and the progress we've made on our strategic initiatives to build a stronger foundation for growth. I'll then hand over to our new CFO, Andy Botha, who'll talk us through the financial review.

Now I don't think it'll be lost on anyone that it was a very difficult market last year with political and economic uncertainty dominating the landscape as a result of Brexit from the COVID-19 pandemic. But despite the challenging and unprecedented conditions, I'm pleased to say that we saw a solid performance last year with revenue decline of just 2% and across the group.

Turning our focus to the U.K. Revenue performance was resilient with our diverse revenue streams and our strong RP growth resulting in revenue decline of 11% against a decline in instructions of 23%.

We maintained our market share of listings at just under 4%. More importantly, we were very pleased to see that our share of houses sold increased to 5.1% of the total market as we continued to widen the gap against our competitors.

Last year was a year of significant change for the group. Shifting our strategic focus back to the U.K.

market and ensuring that we have a strong platform for growth. As a result, we're now emerging through the COVID-19 pandemic in a very strong position.

We've exited our U.S. and Australian markets.

We recently disposed of our Canadian business, and we've sharpened our focus on instilling financial discipline and operational excellence across the business. Alongside that, we put in place a new and highly experienced digital leadership team.

As a team, we're now focused on reestablishing our digital credentials. And with a very healthy cash balance of GBP 66 million, I'm confident that we can take advantage of the changing landscape.

We strongly believe that in the current market, technology-led estate agency is emerging as the winning model. We're the largest and best-performing estate agent station in the U.K., and last year, we saved our customers over GBP 77 million in commission.

There's clear evidence that consumers are starting to shift towards apps and tech-based alternatives. With our strengthened leadership team and balance sheet, we're in a strong position to accelerate our model, extend our market share and grow our value-add revenues.

I'd now like to talk about COVID-19 and the actions we've taken to respond to the crisis over the last few months. The impact of COVID-19 on our industry has been significant, sudden and a median.

So I'd just like to start by saying that I'm immensely proud of the response of all of our people, many of whom continue to work throughout lockdown as we pivoted the business to enable online valuations and virtual viewings and help as many customers as possible through the crisis. And I'd like to take this opportunity to thank all of them for their hard work and dedication over the last few months.

We quickly employed a 3-phase plan to respond to the crisis, centered around 3 phases: respond, recover and thrive. We took swift and decisive action to protect our people, prioritizing the most vulnerable in our community and very quickly pivoting the business to serve customers from home.

We put in median significant measures in place to reduce costs, furloughing 50% of our customer-facing teams, supporting our self-employed agents through a hardship fund and significantly reducing our marketing spend. Our technology-led proposition meant we continue to trade throughout the crisis, although, the number of houses coming to market was significantly impacted March through to May.

I'm pleased to say that since the markets reopened, we are seeing a consistently strong performance across both valuations and listings in all regions, and I'll touch on that in more detail later. And with customer behavior starting to evolve, we are in a strong position to accelerate opportunities for the growth of our hybrid model.

I'm now going to hand over to Andy, who'll take us through the financial review.

Thanks, Vic. Good morning, everyone.

So I just want to start by saying I'm really delighted to be here presenting my first set of results since joining nearly 3 months ago now. And what are 3 months it's been.

It's definitely another way to join the business, but with all the challenges of doing so virtual, I can absolutely recommend it to anyone. But despite landing virtually, I think I've been able to reconfirm my belief in the opportunity that I saw for Purplebricks from the outside during my time at Zoopla.

The business has all the right ingredients to make great progress in the coming years. We have an incredibly passionate team.

We're constantly improving an already compelling proposition for both our consumers and our agent community using innovative technology to take the stress out of moving home. And all of these are underpinned by a market-leading brand and an incredibly strong balance sheet.

And of course, following recent news, we can now add to that a single-minded focus on the U.K. So having told you a little bit about why there's so much to be excited about for the future.

Let's just take a look back through the financial performance for the last year in more detail. So starting with the performance highlights for the U.K.

As you heard from Vic, the U.K. housing market continued to be tough with the ongoing economic and political uncertainty caused by Brexit.

Adding to that, the impact of COVID-19 in the last 6 weeks of the financial year was strongly felt, and I'll cover this in more detail later. All of which contributed to a 23% drop in U.K.

instructions. And against that backdrop, U.K.

revenue was down only 11% to GBP 80.5 million. Result we're happy with as our ongoing work to improve our attachment rates increased our U.K.

Average revenue per instruction by 12% to GBP 1,394. And when layering in the 3% growth in revenues from Canada as we turn to look at our group results, revenue was only down marginally, reducing by 2% to GBP 111.1 million, a positive result in such a challenging environment.

And just to clarify, the group numbers reflect the U.K. and Canada results only, with the U.S.

and Australian results recorded as discontinued operations separately on the face of the P&L. The impact of those market challenges flow through to a reduced adjusted EBITDA for the U.K.

of GBP 4.8 million and to an overall group adjusted EBITDA of GBP 1.8 million. And this ability to scale down our costs quickly in response to the impact of the COVID outbreak left us with a strong year-end cash position of GBP 31 million.

This cost control continued into Q1 and following the sale of our Canadian business announced last month, our net cash as of the 15th of July was a healthy GBP 66 million. So turning to the group income statement.

Let me take you through each of the key items. As previously mentioned, group revenue performed well, down marginally by 2% to GBP 111.1 million, helped by a small U.K.

price increase in October and increased ancillary revenues in both markets. Our gross margin held steady at 60.9%, demonstrating that our property experts' model operates well in any market.

Our operating costs did increase year-over-year, and I'll cover these in more detail later in the deck. While marketing is a material cost line for us, we do retain a high degree of control and flexibility with it.

As a result, we were able to manage its efficiency all year and also to reduce it significantly at the end of the period once the market slowed. And I'm sure this flexibility will be a strength in the current financial year.

So just to touch briefly on the performance of the Canadian business, Canada was, of course, also impacted by tougher market conditions during the year and experienced the same adverse impact at the year-end from COVID, which, along with our ongoing investment in rebranding Purblebricks Canada, meant the business continued to be loss making, posted an adjusted EBITDA loss of GBP 1.4 million. I think it's worth saying that while we've got a great belief in that business, we're really pleased with the valuation and can now focus on our U.K.

market with a strengthened cash position, resources and options available to us. Our group adjusted EBITDA after all of these items was GBP 1.8 million, as I said earlier, while down year-on-year, we're incredibly happy with the result when taking account of all the external factors at play this year and our response to the pandemic.

So as I turn our attention now to our core U.K. market metrics, as I said earlier, instructions were down 23% to just under 54,000.

Our revenue is split between instruction revenues and revenues from ancillary services, such as conveyancing and mortgages, which are becoming a greater share of our revenue now as we deliver value-add, complementary products to our customers, helping them through their moving journeys. And this 3-point shift results in a 53-47 split between instruction and ancillary revenues and helps to improve RP by 12% to GBP 1,394.

And it's this combination of instructions and RP that meant that U.K. revenue held up well, down 11% to GBP 80.5 million.

The adjusted EBITDA decline of GBP 4.8 million reflects that revenue impact alongside increased investment across the business, which I'll cover in more detail in the later slides. So looking back to 12 months ago and even to our half year results, we were beginning to see some early signs of improvement across our key metrics in the U.K., and the material impact of COVID-19 in the last few weeks of the financial year really masks that.

And I thought it would be helpful to break down a few key metrics between the periods pre and post lockdown. So as you can see from this table, revenue was actually running flat year-on-year despite the challenging market and despite effectively seeing the market closing, we were only 59% down during lockdown.

Operating costs were running higher due to investments across the business, but you can see we were able to reduce this significantly when required. Our marketing cost efficiency was already showing through a 14% down, increasing further when all discretionary spend was halted.

Our EBITDA for the first period was a healthy GBP 5.7 million, and we suffered an EBITDA loss of less than GBP 1 million in that last 2 months. So moving on.

As we continue to focus management time on instilling financial discipline across the business, which will translate to a continuing improvement in the U.K. cost metrics as we return to growth.

This slide shows operating costs for the U.K. business, split between people, marketing and other of GBP 46.8 million, which was flat year-on-year.

We've invested in new talent across the business this year, and we also took a conservative approach to the capitalization of technology spend, reflected in the capitalization rate of 33% this year, down from 43% last year. Both of these result in staff costs increasing in absolute terms and as a percentage of sales.

Going forward, we expect to leverage this investment as the U.K. business scales and we benefit from investment in digital transformation and automation of our customer processes in areas such as compliance.

I've already touched on how we've managed marketing spend this year, reflected in the reducing percentage of total cost and revenues that it represents. And I can share some more detail on that on the next slide.

So you can see here, I've broken down our marketing spend between investment in our brand through TV and radio advertising; our digital marketing spend, which drives traffic to our website, primarily through PPC advertising; and spend on the property portals and other channels. You can see we're starting to see an uplift in efficiencies in brand spend as our awareness continues to reside in the 90s, but the percentage of spend falls to 36%.

We see further opportunities in digital marketing channels over time as we further invest and develop our capabilities here. And of course, the property portals continue to be a significant cost line for us at 20% of spend.

And while they deliver a healthy number of leads we'll continue to work with a portals to further improve the efficiency of this channel. So just moving on to our cash bridge.

You can see this slide shows the material items impacting our net cash position at year-end. For the reasons discussed, our operational cash outflow from continued operations was GBP 10.9 million.

The completion of closures of our Australia and U.S. businesses were in line with guidance at GBP 13.1 million.

Our CapEx was tightly managed during the year, and we'll continually assess the pace at which we choose to invest in technology and the capitalization of development costs. We made a small additional investment in Homeday through our joint venture, bringing our share now to 27%.

And while we've got a great relationship with the team there, we don't expect to have to increase our investment from this point forward. And we finished the year with a strong cash position of GBP 31 million, and importantly, continue to have no bank debt on the balance sheet.

And just quickly to bridge our cash position to the date of sale of the Canadian business, our cash burn in Q1 from operations was effectively 0, and the cash proceeds from the sale of the Canadian business contributed GBP 35 million, leaving us with an enviable cash position today of GBP 66 million as lock down, hopefully, continues to ease. And this, coupled with the positive impact of the housing market reopening on our U.K.

teams who will be back at full strength very soon, means we do not intend to make use of the furlough bonus scheme announced recently. Turning quickly now to capital allocation priorities.

While we're happy to have such a strong balance sheet, we'll continue to be disciplined and careful in all our investment options and decisions, ensuring that the returns justify the spend. We've got no need today to materially increase our investment in the business, but will have no hesitation to do so if the right opportunities arise.

So our focus can now turn to executing our U.K. strategy for growth we're going to -- where we'll continue to invest in technology and automation, our talent within the business and in our agents in the field and marketing if and when we see opportunities to drive market share.

So in summary, everything I've told you leaves me really pleased to be a part of the Purplebricks leadership team. The group has performed incredibly well despite external challenges in the year.

With the Canadian business sold, all our resources are now focused on growth in the U.K., where we have multiple levers in our control to grow revenue and to control costs. We've had minimal cash burn through lockdown and would expect to return to cash flow positive as instruction growth returns in the future.

We have increased confidence from our cash position today to support that growth, but also to withstand any volatility or second spike. Vic is going to cover off the rebound in activity in Q1, which is encouraging, but given the outlook for the market remaining so uncertain, it's too early to extrapolate out to the rest of the year at this stage.

So on that note, I'll hand back over to Vic to provide an update on the strategy. Thank you.

Thanks, Andy. Before we talk about the progress we've made on our strategy, I thought that given the unprecedented market conditions, it was important to give an update on Q1 trading.

And I'm pleased to say that we've seen a strong recovery since the lifting of the housing market suspension in May with consistently strong demand across both valuations and listings. This chart shows the volume of new instructions since the 1st of March.

So you can see the trough in April and the steady recovery from the middle of that month as we very quickly pivoted the business to enable online valuations and virtual viewings at a time when our high-street competitors remain closed. The recovery has been increasing through July, where we've experienced our highest ever month for instructions, hitting over 7,000 instructions in July, which is a growth rate of over 25% year-on-year.

It's important to point out that whilst we anticipate the recovery will continue throughout the summer, the outlook for the second half of the year remains uncertain. So I'd now like to talk about delivery against our strategy.

Firstly, there are clear macro drivers, which we believe are accelerating opportunities for the growth of our hybrid model. Purplebricks has completely revolutionized the process of buying and selling a home in the U.K.

and has created an innovative business model that's helped customers save thousands of pounds in the process. And we strongly believe that in the current market, technology-led estate agency is starting to emerge as the winning model.

As consumer expectations evolve, technology will continue to transform the property landscape, reflecting the emerging trends we're seeing in other categories. And we believe there are significant opportunities for further innovation and Purplebricks remains uniquely positioned to drive leverage through leadership and scale.

We were delighted that, once again, independent analysis from TwentyCi confirmed that we continue to be the largest and best-performing estate agency brand in the U.K. instructing and selling more properties than any other state agent in the country.

We also had the highest level of conversion ratios from listings to sales of any of the top 20 largest brands with a conversion rate that is 35% higher than the industry average. And importantly, we continue to deliver the best value for vendors.

On average, Purplebricks will sell a property for GBP 8,000 more than our closest agency groups. And considering estimated commission savings, we provided over GBP 9,500 more value to a vendor when compared to our closest competitors.

As we turn our focus to the 4 pillars of our strategy, we're confident that there are multiple levers within our control that can drive performance and accelerate growth across a number of areas. Our transformation program was being delivered at pace over the last 12 months, focuses on 4 key initiatives: evolving our pricing, building the estate agent of the future, improving performance in the field and transforming our customer processes.

And I'd like to talk about these in more detail now. The first pillar of our strategy looks at how we evolve our pricing.

The proposition of a fixed fee has created a business model that's resulted in Purplebricks becoming the largest estate agent in the U.K. However, we recognize that to extend our addressable market, we need to evolve to a more sophisticated pricing model.

Evolution of our pricing will unlock multiple levers of growth. And this has been confirmed by a number of in-market tests over the last 12 months.

Firstly, we believe there is still headroom for price increases. The pricing differential between us and high-street agents has narrowed, but it is still substantial.

Secondly, we believe that by moving to a more sophisticated pricing model, which will include a split-fee proposition and different bundled services that will widen the market opportunity and introduce new customer segments. We've made good progress over the last 12 months, and we've now completed all of our end-market tests.

Our focus, as we move into this financial year is to pilot the new pricing proposition in London and surrounding areas where significant headroom exists for further penetration of online agents, and we look forward to reporting back with the results of those tests shortly. The second pillar of our strategy looks at the investments we're making in products and technology to drive a step change in our customer experience.

Over the last 12 months, we've continued to invest in technology and building out our engineering capability. We've restructured our teams to accelerate our ability to deliver with dedicated squads focused on improving the customer experience and reestablishing our core digital credentials.

And with the ever-increasing adoption of mobile, we've also increased our resources in this area to deliver an easier, faster and simpler experience. The app now has a 4.5 star approval rating in the app store, based on over 27,000 ratings, and we continue to work hard to improve our overall customer experience.

Our focus for this financial year will be to reaccelerate the growth of our core business by continuing to focus on digital innovation and our virtual capabilities and increasing agent productivity through automation and efficiency. And I'm delighted to say that this work will be led by our new Chief Technology Officer, who'll be joining us at the beginning of September.

The third pillar of our strategy looks at how we get closer to our customers and the investments we're making in the field to improve effectiveness and efficiencies and I'm pleased to say we've made a lot of progress in this area since the first half of the year. Now we've always had a very clear objective to not only recruit the best talent in the industry, but to ensure that we're using our business model advantages to pay them more than the high street.

So in March this year, we restructured our field teams, reducing the number of territory operators in the business from 120 to 42. We've divided the U.K.

into new expanded territories and put a clear leadership structure and span of control in place. As a result of this, our remaining territory operators now have accountability for much bigger regions, significantly increasing their income opportunities and ensuring that our best leaders can now consistently earn more than their high-street counterparts.

We've also redesigned our agent remuneration structure, ensuring the right income opportunities are available for everyone in the field and this included a 20% increase in our instruction pay away last October, in line with our GBP 100 price rise. In the coming financial year, we'll focus on delivering a more consistent and improved performance across all of our regions in the U.K.

by implementing a new target operating model. When we look across the business, what's clear today is that there is a significant variation in performance from region to region, with the best-performing regions already achieving 10% market share.

This presents a great opportunity to increase our market share by focusing on delivering a consistent and improved performance across all regions, supported by our continued investments in recruitment, training and ongoing performance management. And as evidence of that, we're currently recruiting over 50 new agents to manage our increased demand.

The fourth pillar of our strategy looks at the investments we're making to transform our customer processes. Over the last 12 months, we've made significant investments in both our people and our technology to improve the level of service we provide to our customers and reorientate the business to selling more houses.

We've introduced a world-class manager training program as well as a contact center school helping increase productivity. But by far, our biggest investment to date has been in enhancing our resources in proactive cell support, with Purplebricks now contacting every buyer and seller at a number of different stages throughout the transaction process.

As I mentioned earlier, this has also helped us widen the gap against our competitors as we increase the number of houses we've sold last year to 5.1% of the total market. The improvements we've seen in the year have been validated with our Net Promoter Score increasing to 84 at year-end, and we continue to be the most positively reviewed estate agent in the category.

We've also recently been awarded the Gold Trusted Service Award by our review provider, Feefo, which is a great endorsement of our improving service levels. In the next financial year, we plan to invest in further technology to ensure customers have a choice of channel to communicate with us, and that will include the deployment of a new omnichannel customer engagement platform.

And our repurposed digital team will also be focused on delivering further automation to reduce dependency on our contact center. Our clear focus on executing the next stage of our strategic initiatives gives us confidence that there are multiple levers to achieve medium-term growth: By expanding our addressable market through evolving our pricing and increasing share of underpenetrated segments; by growing our value-add ancillary revenue through improvements across our mortgages, conveyancing and home moving services; and thirdly, by transforming our customer processes and customer engagement through reducing operational costs, improving performance in the field and also reducing time to sell.

So in summary, I'm pleased with the progress we've made in the year, given the very challenging circumstances, and I'm very excited about the next stage of our growth story. The market is rebounding strongly.

But as I mentioned earlier, the outlook for the second half of the year remains uncertain. We strongly believe that in the current market, there are multiple levers for growth within our control and there's clear evidence that consumer behavior is starting to change with technology at the heart of our business and even more central to people's lives in a post-COVID world.

We are in a very strong position to accelerate our model, extend our market share and grow our value-add revenues. So I'd like to finish by thanking you for your time today, and I'd like to open up to questions from the conference call.

Thank you.

So my first question is just on the pricing pilots that you're looking to roll out. So I just wondered if you could give us a bit more color on the changes that you're looking to trial in that.

And I know it's been delayed, but just to be clear, is it simply a delay or have you changed your thinking about some of the things that you're going to try? That's the first question.

Second question is on the pricing headroom, and you talked about the gap narrowing. Do you envisage over time that, that gap can close completely versus your sort of traditional competitors?

Or do you think your proposition is centered around always being able to offer a decent discount against some of those traditional agents? And then the third question is just on RP progression.

Over the next 12 months, you gave us some color as some of the things that can drive that up. But I'm just curious to hear how you think about that in a softer market, and how we should think about that in the context of the growth that you achieved in FY '20?

Okay. Well, thank you very much for those questions.

I will answer the first 2 questions, and then I'll hand over to Andy for the RP question. So I think, firstly, on pricing.

To give an update today, we've completed all of our end-market tests, and we've now built the tech capability to move to more sophisticated pricing. I think if you look at what we're trying to achieve through pricing, I think, as we know, we believe we have a very successful model today.

If you look at the TwentyCi data, if you look what's happening since the housing market reopened, clearly, we're seeing a strong recovery. And I think we also recognize the upfront fixed fee model has created a single-minded proposition that has taken us from a start-up to the largest estate agency brand in the U.K.

But I think we also recognize that to extend our addressable audience, we do need to evolve our pricing, and we need to look at more sophisticated pricing. So that's what we've been doing over the last 12 months.

It has been slightly delayed due to our focus on COVID and the fact that we couldn't visit people in their homes to test the various different pricing structures that we have. Albeit, we haven't changed our mind, I mean, if you look at the data.

So currently, today, over 90% of all of the houses we sell are all into the price bracket under GBP 500,000. But what's very clear is there's significant headroom for further underpenetrated segments between GBP 500,000 and GBP 1 million.

And I think today, those customers are using high-street estate agents, we don't believe that they should. We believe that they can -- we can continue to offer that audience significant cost savings.

So we're going into market with a number of different propositions which we'll test, ultimately, consumers will dictate whether we've got the pricing structure right or wrong. And it's a very agile process.

So whilst we have a lot of supportive data of what we believe the right proposition will be, it does not mean that we're going to move away from the upfront fixed fee because we think that's very successful, but we are going to introduce more pricing options, so consumers have more choice. And it's very likely that, that will go live in late summer, and we're just putting the finishing touches to that.

So I think we have a lot of data that suggest that we're going to extend our audience, but we're not going to move away from the current fixed fee model today. It's all about introducing more sophisticated tests within underpenetrated segments.

So that's the first question. The second question was around headroom in pricing.

So we still believe there's significant headroom in pricing, and that still exists. Interestingly, last week, there was a piece of research within the industry media that said the average commission was still around 1.5%.

So if you look at the average house price in the U.K., which is around GBP 240,000, and you apply that 1.5% commission plus the 80, there's still a significant amount of headroom as far as our pricing, and we continue to believe that we will lead on value and we will lead on technology. So I think our consumer proposition is very clear.

We'll continue to take friction out of the buying and selling process. We'll continue to work with all of our partners to ensure that we can automate the end-to-end buying process online and specifically through mobile, but we'll also continue to work hard to ensure that we can pass cost savings on to our customers.

And as the TwentyCi data pointed out, not only do we achieve the best price for our vendors on average, achieving GBP 8,000 more than our closest agency competitors. But if you add the cost savings to that, on average, that's a saving of GBP 9,500.

So I'm going to hand over to Andy, who can talk through the RP question.

Sure. Thanks, Vic.

Yes. So just coming back to the question about RP progression, Natasha, as you bear in mind what I said earlier, I think we were really pleased with this year's RP performance to grow 12%.

And the 2 factors behind that were obviously the price increase, a small price increase we had in the U.K. in October and also the improvement in our attachment rates for things like conveyancing and mortgages.

So I think if I look forward to this year, the reality is, as you just heard from Vic, I think the pricing tests that we're going to run later this year, it's unlikely they're going to have a significant impact in the current year, more likely to have an impact in the following year. And probably also the attachment rates, partly because of the way we expect the market to behave this year and partly, I think it's going to be an evolution of this year rather than a revolution on this year.

My sense is for both of those reasons, we still expect to see RP growth in the year, but it's probably going to be a slightly slower rate than we saw in FY '20.

I noted your comments about some of the regions, in the U.K. already reaching your 10%, which is very impressive.

And I was just wondering whether you could perhaps talk -- provide a little bit more color around the TwentyCi data, which obviously is an average for the whole of the U.K I mean can you just perhaps give a little idea as to where the regions? I think in Scotland, you've got quite a high market share and I imagine that in some of the early adopted regions like in the Meridian and central part of the U.K., it's probably higher.

And I imagine that London, which is one of the later areas where public developed, it is relatively lower. So could you just perhaps give some color on the regional differences in the market share of listings and sales?

Yes, sure. Thank you for that question.

So I think the first thing I'd say is we were very pleased that for the third year running TwentyCi, came to market with the data that indicated that we were the largest and best-performing agent in the U.K. So we still instructs more properties than the #2 in the marketplace.

We sell more. We've actually widened the gap from 3.5x to 3.8x the number of properties sold, and clearly, we referenced that in the fact that we've widened the gap against our competitors in the number of houses we've sold to 5.1% of the total market.

It would be fair to say that we see quite a large variation in performance from region to region. And I think you highlighted that in a number of regions.

I think looking at it more specifically, we continue to have significant market share in Scotland, the Northwest and the Northeast and Meridian and in areas around the Midlands as well. And in some places, we're already achieving in excess of 10% market share in some of those areas.

So I think from our perspective, it goes back to what we need to be doing differently. We're still underrepresented in London and the Southeast, and we believe that we need to evolve our proposition and that there's significant headroom to deliver a service to 2 segments really.

One is London, the Southeast and the Southwest are ones geographical, but one also lists a different pricing bracket. And I mentioned a few moments ago that we're still highly concentrated on properties under GBP 500,000, but we do believe we need to evolve our pricing and our proposition to grow into segments between GBP 0.5 million and GBP 1 million, and that's specifically why we're evolving the proposition and our pricing tests in London and surrounding areas in late summer.

So I think the opportunity for us is very much around delivering more consistency, but also narrowing the gap and the variation that we're seeing from region to region. As you know, we have an aspiration to get to 10% market share.

And in many areas, we're already exceeding that. I think actually, if you look at the last month in Scotland, we achieved 11% market share.

So clearly, we're growing significantly in a market that's recovering strongly. But we need to see more consistency from region to region, which is why we're very much focused on implementing our new target-operating model, understanding what's working in other areas and making sure that we have -- we're in a position to deliver more consistency in all of our regions, and that was that the biggest reason that we decided to restructure our field operations in March and reduce the number of territory operators that we have from 120 to 42 that allows us to deliver a more consistent service, and therefore, a more consistent performance in each region and allows us to share the success in each region to make sure that we can amplify that across all of our regions.

I've just got a couple of questions, if possible. Can you give us a bit more color on the marketing split, particularly with respect to kind of TV and radio spend?

I think kind of 97% brand awareness is clearly very impressive. Just where you think you need to continue to spend and whether 97% is the right number, whether that can come down and not lose kind of your -- not negatively impact your level of market share across the country?

And then secondly, I guess, on another one on pricing structure. If we think about the currency structure of being 100% kind of fee upfront.

As we look into the future, we leave what the overall success fee might be, how should we think about the split going forward? Will it be kind of an 80-20 split, a 60-40 split, 70-30?

Any color on that would be appreciated.

Okay. So I'll start to answer those questions.

So as far as the marketing split is concerned, I mean, I think we're -- we continue to be the most familiar brand in the category. Very pleased to see that this year that we were both in the top 20 most relevant brands in the country, which is a pretty significant achievement for a brand that's so nascent as -- is as nascent as ours.

I think from that perspective, clearly, as we move forward, we need to be more surgical with our marketing. We need to think about the more hard-working channels and our digital channels and how we evolve our message.

I think TV and radio will continue to be a part of what we do and how we communicate. And it's very important.

Our brand is one of our key moats, and it's very important that we continue to use broadcast media in order to underpin the strength of the brand. I think it's not just about awareness for us.

It is about consideration and it is about understanding how we target more specific customer segments where we're underpenetrated. So that's not just around pricing, and it's not just solely focused on evolving our proposition.

It's also focused on how we communicate to each segment. So that will become very important.

We'll start to look at geographical players as well and more geographical targeting. And we're also introducing data into conversation as well.

So if you look at what we're doing online, we are starting to personalize the website experience. We're starting to personalize the app experience.

We're using data to do that, and that's feeding through to our marketing as well as we understand the more profitable segments and how we target those specific segments. So I think from that perspective, we will see a larger focus on digital and social media as well.

And I think we'll be introducing data into how we target those audiences and how we evolve the communication. On the pricing structure question.

So at the moment, I'll go back to what I said earlier. There are a series of tests and we've been in market now for 12 months in customers' living rooms, looking at different bundled propositions.

And there are a number of opportunities that we're going to take to market. We -- as I said, we've built the tech capability now.

We will be launching those tests in market in late summer. And ultimately, consumers will dictate whether it's a split-fee proposition, what that split could be, but it's very much ensuring that we are more aligned to the motivation of our customers.

And I think the focus for the last year has been about how we sell more houses and it's very important that we're reorientating the organization and all of our customer processes to continuing to widen that gap, and that gap has widened to 5.1% of total market. So for us, it's very important that we continue to see the highest conversion ratios from listings to sell in the sector.

If we start looking at pricing, there are a number of different KPIs and success criteria that will be exploring over the coming months, and ultimately, it's an agile test. So we'll be in market.

We'll be amplifying the successes that we see by region. But ultimately, I think the more important thing is that we get out there, we get into customers' living rooms.

We start to talk to customers, and we use that data to evolve our pricing and our proposition in a very agile manner. I don't know if you want to add to that?

No, no. I think I'll just echo what Vic said on the marketing thing really, which is I think our marketing spend has to go hand-in-hand with things like pricing proposition, they don't stand in isolation of each other.

And I think with the awareness that we have today, the key thing for us is to drive and turn that into consideration. And I think that links to the pricing models and the tests that we're running.

It's also going to probably involve a shift of marketing channels to use digital channels more to increase engagement in certain sectors. So I am totally okay what Vic said.

So I'd just like to talk for a second about the incremental EBITDA margin. You talk in the slide of -- Slide 25 of some medium term for the aiming for a margin of 25% to 30%.

So that's an overall margin. And obviously, the business at the moment is operating on a single digits' margin.

Obviously, this year is a year of transition, so perhaps not talking specifically about this year, but in a more normal year going forward, what sort of level of incremental profitability do you expect? What sort of drop-through do you expect to get through from incremental new revenue streams?

Thanks, Robin. Well, I think, as you say, I think the key thing to say here is that we're on a journey.

And I think our view is our medium time -- medium horizon is that we can get our margins to somewhere between 25% to 30%, without setting a specific time frame on that. And it's really a journey from where we are today to get there.

I think in terms of the way we will do that, it's not just about our revenue. It's also about our cost as Vic said before, we've got multiple levers to play with.

So I think we're very fortunate that there's a high degree of flexibility to our cost base already. And as we move forward, you'd certainly expect us to see the efficiencies in our marketing as a percentage of revenue as we scale.

And similarly, the overheads, the fixed cost base should also scaled nicely as the revenues and margins grow. Specifically, to your point around revenue growth, my sense is, as you suggest, as we improve our attachment rates and as we test our pricing, you'd expect our overall margins to improve, and we would hope that a good chunk of that will flow through to EBITDA.

And I think it's that combination of margin progression and cost progression that will get us to our EBITDA margins over the medium term, not one or the other.

I have around 2 additional questions. I mean first thing on the listings.

In the morning, I just saw the -- obviously, the -- your comment that you think that thing is going to be down, which looks different to your other very positive comments in terms of tradings and then improved trading conditions since May. Is it just a bit prudent or [Indiscernible]?

And secondly, is also marketing spend. [Technical Difficulty] a bit more aggressive on marketing spend, given where we currently are, lockdown measures, there's lot of other online businesses models, really see a lot of influx to customers [Technical Difficulty] in the current situation?

Yes. Sorry, we got the first question.

The line is really bad Marcus, actually. Apologies, the line is really bad.

We actually can't hear you. I think the first one was on listings and how conservative that is.

But can you repeat the second question on marketing, please?

Correct. Yes.

And the second question is [Technical Difficulty]

Sorry, the line is breaking up. Why don't I answer the first question on listings, and then we can come back to marketing.

I think if we look at Q1 trading and certainly trading since the easing of the restrictions here in the U.K., I think the first thing it's really important to say is the market is recovering strongly. And as we announced this morning, if we look at July, we had our biggest ever month for instructions, over 7,000 and just over 25% growth year-on-year.

So I think we're in a very strong position. We are seeing the market recover very strongly.

We are seeing -- interestingly, we're starting to see the start of consumers -- consumer behavior changing and shifting towards technology and apps during the buying and selling process. So I think there are some really positive indicators of how supportive the market is at the moment.

But also, we're starting to see consumer behavior change. I mean as we announced this morning, we remained open throughout the crisis.

We have very quickly pivoted our business to online valuations and online viewings. And as you know, you can conduct the entire transaction process online using our mobile services and our app.

So I think from our perspective, we think we're very well positioned. And we recognize, at the moment, that we've just had our biggest ever month, and it looks like that performance will continue throughout the summer.

I think it's just very -- I think if we look at the second half of the year, it's more uncertain, I think, if you look at some of the economic data at the moment. So clearly, we are being conservative in the number of listings that we're working to.

It helps us focus the team and ensure that we continue to instill the financial discipline that we need to and continue to focus on operational excellence. So I think whilst we've had our biggest ever month, we are cautiously optimistic about the second half, but certainly feel that we are in a very strong position.

We're sitting there with a very healthy cash balance of GBP 66 million. We're looking at how we can continue to accelerate our digital innovation.

And I think from our perspective, we feel the consumer behavior is changing, consumers are adopting technology more readily. And I think COVID-19 has been the catalyst of that.

So I think we feel very strongly that we can steal share in this market. We're already starting to see that.

But ultimately, I think the second half is just too uncertain to call at the moment. So clearly, from our perspective, we've had to maintain prudence with the number of listings that we're guiding to.

But clearly, we feel that we are better positioned than any of our contemporaries in the marketplace at the moment. And I don't know if the line is better and you want to ask that marketing question again, please, Marcus.

Okay, I think Marcus dropped off, so if we can go to the next question, if there are any.

Apologies for this. So I don't know the second question was just about marketing.

Is there a chance to have a bigger push on marketing spend, given obviously lockdown measures are pretty much in place and other players are getting a little more, yes, focused now on marketing spend, given what's going on?

I'll start with that, I think, actually. So I think absolutely.

So I think when we look at what's going on in the U.K. at the moment, clearly, the housing market suspension was lifted on May 13, and we moved very quickly to increase our marketing spend during this period but proportionate to what we're seeing in market today, I think, we feel that we've got a unique opportunity with the service we offer our consumers with our technology-led approach.

We believe it's emerging as the winning model. And clearly, there's a significant opportunity for us to still market share during this period.

I think from our perspective, we're very confident that we're going to continue and certainly for the next few months to see a strong market recovery. And during that period, we'll continue to be on TV, on radio and all of our broadcast channels to ensure that we're at the forefront of consumers' minds.

It's very hard to call what's going to happen after that. But we can dial up and dial down our marketing very quickly.

And we've proven that through COVID and certainly in March when COVID hit. So we materially reduced our marketing spend during that period.

So if you look at digital, we can pretty much flex that up on a daily basis. There are longer lead times for radio and TV.

I think from our perspective, we feel the environment is very supportive. And at the moment, I think we feel that there's an opportunity to still share given how consumer behavior is changing.

But at the moment, we don't have a long-term view of what our marketing spend will look like apart from the fact that, clearly, we look at it as a percentage of revenue and these here to make sure that we drive as much efficiency across our marketing spend as possible. But at the moment we can say that we're very agile in our processes and how we market our products.

And I think we'll just respond to the market as we see it. I don't know that you want to answer that.

Yes, absolutely. Yes.

Okay. I think the key thing for us is to match our spend to the demand we're seeing.

We did that pre lockdown, through lockdown and coming out of lockdown, responded very quickly. And I think that's really one of the advantages we have as a digital business, we can see the impact of our spend on our instructions and our visits on a daily basis, on an hourly basis.

So I think absolutely, we will make sure our spend is as effective as it can be in times of uncertainty like this, but absolutely, we've got the balance sheet now that we can accelerate our investment in spend, where we see the opportunity to take share and growth, we'll continue to do that.

Thank you. Are there any other questions?

No? Okay.

So I think we'll just close by saying thank you very much for your time today. Apologies, we couldn't meet in person.

Hopefully, when we get to our half year's, we'll be in a very different situation, but certainly, from our perspective today, we'd just like to thank you for joining the call. And any further questions, please do feel free to get in touch.

Thank you very much.

Thank you.