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City analyst insists Purplebricks will turn fortunes around

Paul Hill of Vox Markets says the agency is doing the right things and the shares are a good investment.

David Callaghan

paul hill purplebricks

Purplebricks is on the right track to turn things around, according to a high profile City analyst.

The struggling agency published its annual results yesterday revealing a drop of 23% in revenues to £70 million, and a profit fall of 27% to 42.1 million. It also suffered an EBITDA loss of £8.8 million.

helena marstonCEO Helena Marston (pictured right) blamed a failed marketing plan and the housing market for the poor outcome.

But Paul Hill of Vox Markets (main picture) told The Neg: “It looks stable to me. They have a plan to turn things around, and they seem to be doing the right things.”

He says the shares are cheap and would make a good investment with the “upside” nature of the company’s fortunes.

“Given the substantial cash balance, it comes down to the execution,” says Hill, who is also MD of PMH Capital.

Stand down

Meanwhile, Purplebricks chairman Paul Pindar and his wife Sharon have increased their holding in the firm to more than 14 million shares or 4.59% of the total. They purchased another 2.5 million shares at 14.79p each.

There have been calls for Pindar, who was one of the original investors in Purplebricks, to stand down. Another investor, Adam Smith, who owns 4% of the agency, said in a letter to The Independent last month that a new direction was needed.

The firm’s share price slumped to 14.34p last month, its second lowest level ever, but was slightly higher yesterday at 15.44p. A money back guarantee was scrapped and fees raised.

August 3, 2022

3 comments

  1. Last year Purplebricks made a post-tax profit of 3.9M – most of that being cash from selling off their Canadian concern for over 2M, so a one off cash fillet. This year it made a 42M loss, on a turnover of 70M, down from the 90M turnover of the previous year.

    If Helena Marston feels that all the problems are behind her, and a few comforting words will turn it all around, well in my opinion as an analyst who has been following Purplebricks since its inception – she is probably in for a rude awakening.

    If an online agent cannot thrive in a pandemic, the very best conditions to do agency, then this version of being an onliner is clearly not working.

    As to a substantial cash balance, Paul Hill would do well to realise that historically Purplebricks used to have cash at bank at around 140M plus not so long ago, and with a 3.2M liability for lettings, plus a likely class action on employment practices which could be a multi-million headache, the cash it does have will be needed there.

    This is not even a dead cat bouncing it is a 15p a share listed company on the AIM that is deeply embedded in the tarmac, it has no clear direction, or strategy and clearly burns far more cash each month than it generates.

    As to it all being about ‘execution’ … never a truer word – but whose?

  2. Having a plan isn’t any good if the plan is flawed. I agree the marketing, since inception, has been an awful waste of money. Providing awareness with little engagement isn’t great marketing – all it does is provide the ubiquitous lead and its then down to hustling for the LPE.

    If the marketing direction is flawed, the business is default dead. The money runs out before they realise their mistake.

  3. Last year Purplebricks made a post-tax profit of 3.9M – most of that being cash from selling off their Canadian concern for over 2M, so a one off cash fillet. This year it made a 42M loss, on a turnover of 70M, down from the 90M turnover of the previous year.

    If Helena Marston feels that all the problems are behind her, and a few comforting words will turn it all around, well in my opinion as an analyst who has been following Purplebricks since its inception – she is probably in for a rude awakening.

    If an online agent cannot thrive in a pandemic, the very best conditions to do agency, then this version of being an onliner is clearly not working.

    As to a substantial cash balance, Paul Hill would do well to realise that historically Purplebricks used to have cash at bank at around 140M plus not so long ago, and with a 3.2M liability for lettings, plus a likely class action on employment practices which could be a multi-million headache, the cash it does have will be needed there.

    This is not even a dead cat bouncing it is a 15p a share listed company on the AIM that is deeply embedded in the tarmac, it has no clear direction, or strategy and clearly burns far more cash each month than it generates.

    As to it all being about ‘execution’ … never a truer word – but whose?

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