Purplebricks blames City consultancy for sharp share ...

Purplebricks has this morning issued an unusual statement to the Stock Exchange blaming a City report for the sharp fall in the agency’s share price yesterday afternoon.

The report alleged the agency sold fewer than 52 per cent of its listed homes in one particular month.

The agency's share priced dropped around 40 points - some nine per cent - during yesterday's trading.

This morning's statement says:

Purplebricks Group plc (AIM: PURP) ("Purplebricks" or "the Group"), the hybrid estate agent, notes its share price decline yesterday afternoon. Purplebricks knows of no reason for the share price fall other than the research note published by Jefferies International Ltd. ("Jefferies") after market close.

Purplebricks contests the findings of the Jefferies research report. Jefferies estimated Purplebricks' completion rate is based on a single month's data and does not include properties that have completed but have yet to be uploaded to the Land Registry, which can take several months. Equally the research does not take into account properties which have exchanged, have reached sold subject to contract (SSTC), or are on marketing breaks. Purplebricks reiterates its most recently published sales conversion rate from instruction to sale agreed of 78 per cent, which it believes more accurately reflects its sales performance, although this figure itself does not include those properties in the sales pipeline at the end of the period which will in due course sell.

Purplebricks firmly refutes the criticism in the research note of its revenue recognition policy and stands behind both the fully audited results and the accounting policy itself.

Yesterday we reported the Jefferies report, in which equity analyst Antony Codling looked at the stock Purplebricks took on board in November 2016.

By looking at what happened to those properties over the following 10 months, Codling concluded that Purplebricks’ 51.6 per cent sales figure was “”a similar success rate to the overall market.”

Codling then took issue with the agency over its claim, made in 2016, that it sold 88 per cent of its stock; he also said the odds for customers using the agency were “finely balanced” because 48.4 per cent of homes did not sell.

Purplebricks this morning also provided an update for what it called “the start of the important spring market”, claiming:

- 6,160 instructions in January 2018, up 66% year-on-year resulting in further overall market share growth;

- agreed sales in January 2018 alone on 4,618 UK properties;

- online market share increased in January 2018 to 77%;

- Purplebricks has now sold and completed on over £10bn of UK property;

- Australia continues to build and remains on-track;

- The US is proceeding to plan and work continues at pace towards launch in New York;

- "With a few key months remaining the Board of Purplebricks is pleased with progress and confirms trading is in line with the Board's expectations for the year ending 30 April 2018”.