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LONDON BRIEFING: Purplebricks Founder Out After "Too Rapid" Expansion

LONDON (Alliance News) - Purplebricks Group said Tuesday that Founder & Chief Executive Michael ...

Alliance News 7 May, 2019 | 8:01AM
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LONDON (Alliance News) - Purplebricks Group said Tuesday that Founder & Chief Executive Michael Bruce will step down immediately and be replaced by Chief Operating Officer Vic Darvey.

The company confirmed that it expects annual revenue for the financial year ended April 30 to be within the GBP130 million to GBP140 million range guided back in February. Cash balances will be "not less" than GBP62 million, the company added.

Back in February, the online estate agent had cut its annual guidance by GBP35 million and warned that its revenue in Australia and the US will fail to meet expectations.

After two and a half years in Australia, market conditions have become increasingly challenging, the company said on Tuesday. This, alongside some execution errors, resulted in the business not delivering the progress the board expected. As such, Purplebricks said it has decided to exit Australia and put the business into an orderly run down with immediate effect, pending closure.

Moreover, Purplebricks has started a strategic review of its US business in a bid to deliver growth in a cost-efficient way.

Chair Paul Pindar said; "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."

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.7% at 7,332.15
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Hang Seng: up 0.4% at 29,335.30
Nikkei 225: closed down 1.5% at 21,923.72
DJIA: closed down 0.3% at 26,438.48
S&P 500: closed down 0.5% at 2,932.47
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GBP: down at USD1.3120 (USD1.3150)
EUR: up at USD1.1211 (USD1.1185)

Gold: firm at USD1,282.24 per ounce (USD1,279.90)
Oil (Brent): flat at USD71.17 a barrel (USD71.18)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come

0900 BST UK SMMT auto registration figures

1100 BST Ireland industrial production and turnover

0745 EDT US Retail Economist/Goldman Sachs weekly chain store sales index
0855 EDT US Johnson Redbook retail sales index
1000 EDT US IBD/TIPP economic optimism index
1000 EDT US job openings & labor turnover survey
1000 EDT Canada Ivey purchasing managers index
1500 EDT US consumer credit
1630 EDT US API weekly statistical bulletin
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Top economics advisers to US President Donald Trump have accused China of going back on promises made in an attempt to resolve their trade dispute and have vowed to implement fresh tariffs, US media reported. "Over the course of the last week or so, we've seen an erosion in commitments by China, I would say retreating from commitments that have already been made," the Wall Street Journal quoted US Trade Representative Robert Lighthizer as saying. Lighthizer told reporters that the US would begin implementing a rise in tariffs on USD200 billion worth of Chinese goods from 10% to 25% from Friday. His comments came after Trump made the initial threat on Sunday, tweeting that talks were moving "too slowly" and that the Chinese were attempting to renegotiate. The move apparently took the Chinese by surprise, however both sides have said that planned talks in Washington set to take place on Thursday and Friday would go ahead.
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China's private sector expansion slowed in April while services sector growth accelerated marginally, survey data from IHS Markit showed on Monday. The Caixin composite output index fell to 52.7 in April from 52.9 in March. Any reading above 50 indicates expansion in the private sector. The services Purchasing Managers' Index, or PMI, rose to 54.5 from 54.4 a month ago. The score was forecast to fall to 54.2. That was the highest since January 2018.
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US Acting Defence Secretary Pat Shanahan called on the Iranian regime to "cease all provocation" and said the US will hold it accountable for any attack on US forces or interests. Shanahan made the comments on Twitter a day after the announcement of the deployment of a US carrier strike group and a bomber task force to the Middle East. The deployment represents "a prudent repositioning of assets in response to indications of a credible threat by Iranian regime forces," Shanahan tweeted. US National Security Adviser John Bolton on Sunday announced the deployment of the USS Abraham Lincoln Carrier Strike Group to the US Central Command region in response to an unspecified number of "troubling and escalatory indications and warnings." Iran's Supreme National Security Council shrugged off the US announcement. The USS Abraham Lincoln Carrier Strike Group entered the Mediterranean 21 days ago in a routine operation, the SNSC said, calling Bolton's statement a mere attempt to send a military warning to Iran. An Iranian spokesman described the action as "amateurish" and said Bolton "just wanted to show off," Iranian news agency IRNA reported on Monday.
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UK Prime Minister Theresa May is expected to have discussions with the chairman of the powerful 1922 Committee of Tory backbenchers as calls increase for her to set a firm resignation date. Tuesday's meeting with Graham Brady comes after the 1922 Committee requested "clarity" about the prime minister's timetable for standing down and triggering a leadership contest. As talks between the government and Labour over a Brexit deal resume on Tuesday, there is growing Tory pressure for May to quit. Leading Eurosceptic Bill Cash told the Press Association: "The time has come for her to resign. "She needs to be given a date. The sooner the better. But it needs to be done in an orderly manner." The comments came as the Daily Telegraph reported that grassroots Tories will hold a no-confidence vote in May on June 15.
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BROKER RATING CHANGES
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HSBC CUTS CENTRICA TO 'REDUCE' ('HOLD') - TARGET 90 (120) PENCE
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BARCLAYS INITIATES 4IMPRINT GROUP WITH 'OVERWEIGHT' - TARGET 4500 PENCE
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COMPANIES - FTSE 100
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Telecommunications firm Vodafone said it has signed a cable wholesale agreement with Telefonica Deutschland for Telefonica DE to offer broadband services via Vodafone's network in Germany. Vodafone noted the Telefonica deal is dependent on the approval of Vodafone's Liberty Global assets acquisition. Vodafone said it expects a European Commission decision on the Liberty Global transaction by July. CEO Nick Read said: "Our deal with Liberty Global is transformational in many ways. It is a significant step towards a gigabit society, which will enable consumers & businesses to access the world of content & digital services at high speeds. It also creates a converged national challenger in four important European countries, bringing innovation & greater choice. We are very pleased to announce today our cable wholesale access agreement with Telefonica DE, enabling them to bring faster broadband speeds to their customers and further enhancing infrastructure competition across Germany."
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COMPANIES - FTSE 250
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Domino's Pizza Group said it saw a robust performance in the first quarter, but international sales "remain disappointing". In the 13 weeks to March 31, group system sales rose 4.3% to GBP324.4 million from GBP311.1 million last year. In the UK and Republic of Ireland, system sales were up 4.8% at GBP299.3 million from GBP285.5 million. International system sales were down 2.0% at GBP25.1 million from GBP25.6 million in the first quarter last year. Chief Executive David Wild said: "Internationally, performance remains disappointing and trading visibility is limited. As we outlined at the full-year results, we have new management in Norway, Sweden and Switzerland, and a heightened focus on store-level performance. However, given persistently weak system sales in all our International markets, we no longer expect this part of our business to break-even this year. We are therefore further tightening our focus on International costs and capital deployment. We will provide a further update at our first-half results."
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Oil and lubricant retailer Vivo Energy said 2019 got off to a good start despite the first quarter of the year usually being the "slowest". First-quarter volumes were 7% higher year-on-year at 2.44 billion litres, due to good underlying growth in Vivo Energy's existing fifteen Shell-branded markets and one month's contribution from eight acquired Engen-branded markets and additional sites in Kenya. With the contribution from the new markets for the rest of 2019, Vivo said it expects volume growth to be in line with full-year guidance of low to mid double-digit percentage growth. Chief Executive Christian Chammas said: "We are pleased to have delivered a strong start in the first-quarter of 2019, in line with our expectations, and in what is traditionally the slowest quarter of the year."
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Construction company Kier Group said Finance Director Bev Dew will stand down and leave the company by September 30.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Trainline is completing plans to launch on the London Stock Exchange in a GBP1 billion float, the Times reported. Citing unnamed sources, the newspaper said the route-planning and ticket-buying app is expected to go public in London as soon as next month. Trainline's boss, Clare Gilmartin, declined to comment on the "rumours and speculation" around the float, the Times said. The app's American owner, New York-based private equity group KKR, acquired the company for GBP450 million in 2015.
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COMPANIES - INTERNATIONAL
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Brewer Anheuser-Busch InBev reported a good start to 2019 as it recorded organic volume and revenue growth, and also confirmed it is mulling a listing of its Asian unit in Hong Kong. Organic revenue rose 5.9% year-on-year in the first three months of 2019, while volumes were up 1.3% and normalised earnings before interest, tax, depreciation and amortisation up 8.2%. On a statutory basis, first-quarter revenue fell to USD12.56 billion from USD13.09 billion a year ago, volumes dipped to 133.46 million hectolitres from 134.83 million a year before, and Ebitda was down to USD4.99 billion from USD5.12 billion. The top-line result was driven by "healthy" performances in several key markets, with Brazil getting off to a good start to the year. Meanwhile, there was a softer volume performance in South Africa and Argentina, where consumers remain under pressure, AB InBev said. The Budweiser beer maker said it is exploring a potential minority stake listing of its Asia Pacific business on the Hong Kong Stock Exchange in order to "accelerate" its deleveraging efforts.
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Anadarko Petroleum said the revised merger proposal put forward by Occidental Petroleum is a "Superior Proposal" to Anadarko's merger agreement with Chevron. Anadarko said, as a result, it plans to terminate its merger agreement with Chevron and instead enter into a definitive merger agreement with Occidental. Under the revised Occidental proposal, Occidental would acquire Anadarko for a consideration consisting of USD59.00 in cash and 0.2934 of a share of Occidental common stock per share of Anadarko common stock. Under Chevron merger agreement, Chevron has the right, until May 10, to revise its merger offer or make another proposal. If Anadarko terminates the Chevron agreement to enter into a definitive agreement with Occidental, Anadarko will pay Chevron a USD1 billion termination fee as per terms of the Chevron merger agreement. On Sunday, French oil company Total said it has reached a binding agreement with Occidental Petroleum to acquire Anadarko's assets in Africa - Algeria, Ghana, Mozambique, South Africa - for USD8.8 billion in the event of a successful completion of Occidental's bid for Anadarko.
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Food giant Kraft Heinz said it plans to restate its financial statements for 2016 and 2017. The company will restate its financial statements for the two years by USD181 million. Kraft Heinz will also restate each of its quarterly and year-to-date periods in fiscal year 2017 and the quarterly and year-to-date periods for the nine months ended September 29, 2018. In a filing with the US Securities & Exchange Commission, Kraft Heinz noted that while its previously disclosed investigation into its procurement department is "substantially complete," it has not yet filed its annual report on Form 10-K for 2018 by the prescribed due date.
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Tuesday's Shareholder Meetings

SDL
Empresaria Group
Vivo Energy
Costain Group
4imprint Group
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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Purplebricks Group PLC 108.00 GBX 1.50 -
4imprint Group PLC 2,980.00 GBX 2.41 -
Centrica PLC 73.78 GBX -0.97

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