In a shock announcement Purplebricks says founder Michael Bruce is to leave the business and its Australian operation will shut.
“With hindsight, our rate of geographic expansion was too rapid” the firm says.
The news came in the form of a trading statement delivered on the agency’s website and then to the London Stock Exchange.
Here is the announcement:
With the financial year now concluded, the Board confirms that it expects Group revenue to be within the £130-140 million range it guided to on 21 February 2019.
Cash balances as at 30 April 2019 will be not less than £62 million.
Whilst the UK property market remains challenging, the Company continues to out- perform the market and the Board remains confident about the future of the business. Having established a market-leading position, there remain many opportunities for further profitable growth and this will be a key area of focus going forward.
The Group’s Canadian business continues to perform well and trading is in line with management's expectations. The Board has a strong belief in the future
opportunities in this market.
During the two and a half years that Purplebricks has been operating in Australia, market conditions have become increasingly challenging. This, combined with some execution errors, has resulted in the business not delivering the progress the Board expected.
The Board has therefore concluded that the prospective returns from Australia are not sufficient to justify continued investment. Accordingly, the Group has chosen to exit the Australian market and the business there has been put into an orderly run down with immediate effect, pending closure. The business remains committed to our current customers.
Whilst good progress has been made in launching our brand across the US, the Board has to reduce expenditure to sustainable levels As part of this review, management proposes to examine the options for delivering the next phase of growth in a more effective and cost-efficient way including more closely considering the opportunities and risks associated with a materially scaled back US business. A further announcement on this strategic review will be made in due course.
Michael Bruce, the Group's Founder and Chief Executive Officer is stepping down from the business with immediate effect. In turn, the Board has appointed Vic Darvey, previously Purplebricks’ Chief Operating Officer, to the role of Chief Executive Officer and to the Board of Purplebricks.
Vic joined Purplebricks in January 2019 following a successful career most recently as Managing Director of Moneysupermarket.com Group plc. Vic has extensive experience of leading strong technology-focused, customer-centric businesses and will play a key role in guiding Purplebricks through a period of greater focus and strong execution.
Paul Pindar, Non Executive Chairman, said: “Firstly, I would like to place on record our thanks to Michael for the truly remarkable contribution that he has made to the creation and development of Purplebricks. Michael's vision in creating the UK's leading hybrid estate agent has been deeply impressive, as has his relentless energy in developing the business both in the UK and internationally."
"The Board is delighted to have an executive of Vic Darvey's calibre to take on the leadership of our business for its next important phase of development. We have a lot to do and Vic has a clear vision of the priorities we need to address."
"Importantly, we are very conscious that the Group's performance has been disappointing over the last 12 months and we sincerely apologise to shareholders for that."
"With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered. We have also made sub-optimal decisions in allocating capital. We will learn from these errors and will not make them again.”