Broker squabbles with Purplebricks over sales
A SPAT has broken out between
Purplebricks and investment bank Jefferies over allegations the online estate agent sells fewer homes than it claims.
The dispute, which concerns the proportion of properties sold on Purplebricks’ website within ten months, first erupted on Thursday when Jefferies compared a listing with the online agent to a ‘£1,000 coin toss’ – basically suggesting homeowners had a 50/50 chance of selling their property.
Purplebricks charges a flat fee rather than a percentage of the sale price, but customers have to pay the fee regardless of whether the property is sold or not.
Jefferies said that Purplebricks’ sales success rate was just over 51pc and in line with traditional estate agents, compared to previous claims it sold 88pc of homes listed. Analyst Anthony Codling said: ‘Our analysis suggests that Purplebricks’ success rate is near the middle of the pack. However, although only just over half actually sell their home, everyone has to pay. With a traditional High Street agent, the homeowner only pays if the agent sells their home.
‘A review of Purplebricks’ accounting policies raises concerns to us that either its contractual obligations to its customers end with their home being listed on the major property portals, or revenue may have been overstated and deferred income provisions understated in its audited accounts.
‘Should the model stumble, the share price may do likewise.’
The comments sent shares in Purplebricks down more than 7pc on Thursday and forced the firm to publish a statement yesterday refuting the criticism.
Purplebricks argued that Jefferies’ data is based on a single month and did not include properties that had yet to be uploaded to the Land Registry – a process it claimed can take ‘several months’. It reiterated its most recently published sales success rate of 78pc, which it claimed more accurately reflects its sales performance.
It added that Jefferies, which acts as a broker to traditional rival Countrywide, had a history of miscalculating its figures, having claimed in 2016 that only 14pc of its homes progressed to competition. But, despite rigorously refuting the note, the estate agent slipped 8pc, or 34.4p to 418.6p.
The FTSE 100 finished down 0.6pc, or 47 points, at 7443.43 while the FTSE 250 finished down 1.1pc, or 223.08 points, at 19962.46. Aerospace and defence firm Cobham dipped 6.4pc, or 7.95p, to 116.8p after revealing it had agreed to sell its test and measurement business to Californiabased Viavi Solutions for £322m.
The sale is the latest stage of its turnaround effort and comes after it revealed plans in August to sell the units, use the proceeds to reduce debt and further strengthen its balance sheet after a string of profit warnings. It said the sale of its Avcomm and Wireless test business will enable it to pay down around £440m of debt by combining the proceeds from the deal with existing cash.
Infrastructure and support services company Stobart jumped 1.9pc, or 4.5p, to 245p yesterday after announcing the appointment of Richard Laycock as chief financial officer. Engineering company Wood
Group nudged up 0.1pc, or 0.8p, to 650.2p after revealing it will benefit from President Donald Trump’s tax reforms.
Energy provider Fulcrum Utility was also given a boost after agreeing to acquire electrical infrastructure firm Dunamis for £22m.
The company, which provided the gas infrastructure to light the Olympic flame at London 2012, edged up 1.7pc, or 1p, to 60.2p.
Telford Homes jumped 0.7pc, or 3p, to 410p after chairman Andrew Wiseman cashed in £512,000 worth of shares.