Purplebricks warns investors of possible risk of litigation after months of turbulence

Purplebricks has reported a potential risk of litigation to its shareholders.

In its new annual report, listing principal risks and uncertainties, it says: “The group has experienced significant change in leadership, structure and geographical footprint over the course of the last calendar year.

“As a result the group faces an increased risk of loss of talent, knowledge and experience, and also potentially litigation.”

In the last few months would-be estate agency disruptor Purplebricks has experienced considerable disruption itself, including the departures of founders Michael and Kenny Bruce, and the decision to pull out of Australia and the US.

There has also been the sale of the Bruce family’s shares in Purplebricks to Axel Springer, giving it a 26.6% holding in Purplebricks.

However, the bulk of the annual report, which covers the 12 months to the end of this April although it also references events since, sounds an upbeat note.

There is still “considerable headroom to further disrupt the traditional real estate agency markets in both the UK and Canada,” Purplebricks chairman Paul Pindar writes.

He says that exiting the US and Australian markets will “significantly reduce cash burn”.

Pindar says that Purplebricks’ focus will now be on “our profitable UK business” and its Canadian operation.

New chief executive Vic Darvey says that Purplebricks has a “strong and differentiated business model that is hard to replicate”.

He also describes it as having a “stand-out culture” with a focus on people, not just property.

He adds: “We anticipate that the hybrid model will continue to displace traditional agents.”

Darvey goes on: “There is a huge focus on continuing to take share from incumbent traditional operators and extend our market leadership.

“However, there is also a recognition that we need to do things differently, none more so than in product and technology.

“We will be moving to more agile ways of working, instilling strong product principles and an enduring product vision that lays strong foundations for a data-enabled and digitally-enhanced estate agent of the future.”

The annual report confirms the cost to Purplebricks of its failed attempts to enter the US and Australian markets.

Group operating losses rose from £27.8m to £52.3m in the last financial year “arising entirely from non-UK operations,” says chief financial officer James Davies.

In Australia last year, there was an operating loss of £18.8m, and in the US, a loss of £34.1m.

There will be further losses to come: Davies expects total losses and closure costs to be between £6m and £8m in the 2020 financial year in Australia, and between £4m and £6m in the US.

The annual report also confirms the breakdown of the main investors.

Axel Springer has a 26.57% stake; Woodford Investment Management has 19.26%; Merian Global Investors (formerly Old Mutual Global Investors) has 16.6%; Toscafund Asset Management has 10.43%; and Paul Pindar and his wife have 3.53%.

The report also reveals that James Davies was the highest paid director in the 12 months to the end of April, earning a total of £688,000.

Michael Bruce earned £273,000. His termination payments will be disclosed in financial statements for the year ending April 30, 2020.

There will be no dividend for shareholders.

The AGM is on October 3.

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30 Comments

  1. agent37

    Classic PIE Purplebricks article. Alternative titles you could have used with the exact same information:

    ’Purplebricks upbeat about future after cutting losses overseas’

    ’Purplebricks confirms £52 loss in Oz and US, but UK and Canada in profit’

    ’Purplebricks bullish over greater market share potential as digitally-enhanced estate agent of the future’.

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    1. davehedgehog

      “We will be moving to more agile ways of working, instilling strong product principles and an enduring product vision that lays strong foundations for a data-enabled and digitally-enhanced estate agent of the future.” 
      Translation……
      We will be making the LPE’s work twice as hard for less money, we will continue to s**g off other estate agents to make us look good whilst saving up for some ‘well good’ computers.
       
      PS. No you can’t have a dividend because we are still losing money hand over fist.

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    2. ArthurHouse02

      “Digitally-enhanced”….how exactly are they digitally enhanced compared to any other estate agent? They have a website and the use of email. Their online system is rubbish and only works when real humans interact on the other end.

      All these type of companies bang on about technology and having superior systems, but never seem to confirm what they are. Quirky chops thought his system was worth what, £10million, but ended up a similar price to a Freddo bar.

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      1. PeeBee

        “Quirky chops thought his system was worth what, £10million, but ended up a similar price to a Freddo bar.”

        Yes – but those that buy Freddo bars get what they pay for – it’s not a case of 50% of the wrappers being empty.

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  2. htsnom79

    Pindar looks in the mirror and sees Neo from the matrix, looking on and suffering this shower most of us see Wile.E.Coyote.

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  3. EAMD172

    The more I find PB in a chain the more I dislike them. Their reputation will be their own demise in time. The one figure I would still love them to publish is how many people pay them and DON’T move. In my area their instruction to sale agreed ratio YTD on RM is only 55% which means they are probably only exchanging on less than 40% of their register. Anyone else looked at this stat on RM intel?

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    1. Frown Please

      You obviously dont follow PB stories much on here… lots of stats argued about in the past.

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    2. PeeBee

      EAMD
      “In my area their instruction to sale agreed ratio YTD on RM is only 55%”
      Is that GROSS SSTCs, or actual listings that have ‘sold’?
      And do you know what percentage of the instructions are #RElistings?

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      1. agent37

        If it re-listed then the client isn’t paying again, so that would increase the conversion?

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    3. Mothers Ruin

      Difficult info to find out. I did a rental val on a large house that was for sale with PB last week. It’s been on for over a year and during that time we’ve sold next door. They are reluctant to lose the money they’ve paid upfront but wish now that they’d used a ‘proper estate agent’ – their words not mine. I don’t criticise other agents on vals because it’s unprofessional and doesn’t win instructions but it’s frustrating when you know how to sell houses. We sold next door because of local knowledge and our efficient mailing list. Not rocket science. When we rent it out for them how will PB show that on their figures I wonder?

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      1. PeeBee

        Why won’t they let you sell it?

        You’re clearly capable of finding a buyer as evidenced by your success with the property next door – renting it out is surely just a short term answer to a longer-term problem.

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  4. RichardHill61

    No dividend!

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  5. EAMD172

    PIE – Please can you put pressure on Purplebricks to disclose what percentage of their properties  actually complete to purchasers introduced by Purplebricks.

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    1. PeeBee

      Just pick a number – it seems like the ‘disruptive’ way of doing things…

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  6. Thomas Flowers

    When I was 18, many years ago, my boss asked me what my main role was. I responded ‘to list as many houses as possible’. His response was ‘no, it is to make as much money as possible’.

    Will PB ever make a real profit?

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    1. ARC

      Are you Michael Bruce?

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      1. AgencyInsider

        Second Bruce: G’day, Bruce!
        First Bruce: Oh, Hello Bruce!
        Third Bruce: How are you Bruce?
        First Bruce: A bit crook, Bruce.
        Second Bruce: Where’s Bruce?
        First Bruce: He’s not ‘ere, Bruce.
        etc etc

        (Monty Python 1970)

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  7. padymagic

    If I use radar I can see whats coming over the horizon, don’t think PB’s radar is working at all.

    No business model, no strategy, probably run out of money and almost certainly no future.

    Disrupt away my friends

     

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    1. Woodentop

      They would have gone under years ago if it wasn’t for gullible investors. People who should have known better, so begs the question what story were they told =

       

      “As a result the group faces an increased risk of loss of talent, knowledge and experience, and also potentially litigation.”

       

      Some people were making some substantial benefits considering the actual history of this company. Will we hear if the city was misled and share dealings?

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  8. GPL

     
    Aah Yes…..
     
    The New Slogan …..much better than “Commisery”  
     
    Purplebricks – Totally F*****!    

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  9. s71

    where is Ducky??

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    1. Hillofwad71

      To be fair Cyberduck hasn’t been invested in Bricks for some years took a profit and ran .Read his posts on LSE share chats .He has been  very  neutral about their overseas expansion and is very  aware that instruction levels have been falling so he is no fan

      His main gripes are about agents fees generally . That some agents are gulty of portal juggling etc  and being hypocritical

      That was his challenge on EYE .The  sort of view was never going to endear him ! . I think  the level of hostility that provoked mean tin the interest of all parties it was better that  he stoped posting !!  Think Roz and the  team had better things to do .I am sure if you go on Bricks LSE you will get a response

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  10. AJL20

    “Loss of talent”  Chortle, chortle.

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  11. DomPritch134

    ‘Where is ducky’
     
    I’m pretty sure he has moved away from this comments section after the constant barage of abuse from the usual suspects. I have to be careful how to phrase this but the moderation tends to be non existent when it’s the clique.

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    1. GPL

       
      It makes sense for ducky to paddle elsewhere. Safe paddling, wherever he is. 
       

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    2. Property Pundit

      Always the lurker, rarely the poster, eh Dom? Nice to have you back though. For the one post.

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  12. HMHB49

    Figures from Purplebricks website. I have been keeping a log of sorts

    12/9/2018   available property 20,999  including SSTC 38,800

    10/9/2019   available property 20,134  including SSTC 37,181

     

    Make of that as you choose

     

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  13. PeeBee

    Interesting…
     
    Share price was bimbling along (credit: Jonnie) this morning showing no significant signs of life – then lo and behold it took off at lunchtime like a purple rat up a purple drainpipe, at one point showing almost 20% uplift.
     
    It’s now coming the other side of the mountain on it’s @rse, apparently heading back to the 120+/-p base camp.
     
    Wonder what caused that?

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    1. HonestJohn

      who knows, but the last time they peaked out of the ordinary like that, it happened to coincide with Woodford selling off a good chunk of his shares. Just saying.

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  14. HIT MAN

    RIP PB… RM will be next.

    Report
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