Jury's Still Out on Purplebricks

The Week: Morningstar columnist Rodney Hobson says a rights issue may still be necessary for estate agent disruptor Purplebricks, while Serco marches on despite coronavirus

Rodney Hobson 7 August, 2020 | 9:17AM

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Credit where it’s due. Some 12 months ago I warned shareholders in Aim-quoted estate agent Purplebricks (PURP) that, despite assurances to the contrary in the annual results statement, they might well be knocked for a rights issue. That hasn’t happened, despite the impact that Covid-19 has had on house sales in the UK.

My main concern was the alarming rate at which Purplebricks was burning cash as it attempted to expand overseas before properly securing its future in its home territory of the UK. Sense has prevailed, and the Canadian operations have been sold for £35 million, more than filling the gap created by a further drain in the year to April 30, when cash balances fell from £62.8 million to £31 million.

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About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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