The UK real estate giant’s full-year reports reveal the extent of the company’s marketing efforts that ultimately failed to attract an Australian audience.
Purplebricks Group PLC is publicly listed on the London Stock Exchange, where it filed its full-year FY2019 results on 3 July.
In FY18, Purplebricks posted an operating loss of £13.2 million ($23.4 million), which ballooned to £18.8 million ($33.3 million) the time it decided to exit the Australian market in May this year. The group’s marketing as a percentage of sales was 106 per cent in FY19, compared to 31 per cent for its Canadian business and 29 per cent for its UK business.
“The closure of the Australian operations is expected to result in a net cash outflow during FY20,” the group said in a statement.
“Therefore, the cost of investment in the Australian business and the intercompany receivables due from Australia have been impaired to zero in the accounts of Purplebricks Group PLC, on a fair value less costs of disposal basis.
“This has resulted in an impairment charge in the company of £40,837,000 ($72.3 million) including £10,832,000 ($19.1 million) in respect of cost of investment. This impairment has no effect on the consolidated accounts.”
Douglas Driscoll, CEO of Starr Partners, said that timing was a major part of Purplebricks’s undoing, but that, inevitably, someone will come along and do it better.
“Purplebricks had relative early success in the market, and the initial response was favourable with some consumers, with the company negotiating several high-profile sales,” Mr Driscoll told REB.
“Agents in Australia need to come to terms with the fact that some disrupters are here to stay. Rather than be dismissive as an industry, we should see this as a learning opportunity.”