Excellent first half results from online hybrid estate agency Purplebricks (PURP:AIM) lift the shares 17% to 123.1p.

HEADING FOR PROFIT

The company, backed by leading fund manager Neil Woodford, is a Shares favourite. We flagged the company’s pledge to move into the black in the current financial year and this milestone has already been achieved in the UK business at the adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) level.

Showing none of the ill effects from the Brexit vote which have affected its more traditional rivals, Countrywide (CWD) and Foxtons (FOXT), Purplebricks posts revenue up 159% to £18.7m. The group as a whole, including the nascent Australian operation, posts a £2.5m loss at the adjusted EBITDA level but a modest £300,000 profit on the same measure in the UK. First half instructions are up 108% year-on-year.

ChartPURP

MARKET SHARE GRAB

Purplebricks operates a hybrid model with a website backed by local property experts which earn a commission for each new instruction they win. For the company to be successful in the long-term it needs to demonstrate it can actually sell houses. Encouragingly a random sample of 10,000 properties measured against the Land Registry and sold via Purplebricks have officially transacted.

The company is increasing marketing spend to boost market share at a time when its rivals are struggling but this will have some impact on near-term profitability.

House broker Investec reiterates its ‘buy’ recommendation but cuts its price target from 205p to 185p to reflect this impact.

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Issue Date: 05 Dec 2016