A trading update to the City has revealed that EweMove made losses of £300,000 on turnover of £900,000 in the first half of this year.
As a result, this afternoon’s statement said, underlying profits for the Property Franchise Group this year will be below market expectations.
PFG bought the business a year ago in a £15m deal – although the figure reduced to £9m when founders David Laycock and Glenn Ackroyd walked away just months later without their earn-outs.
This morning in EYE, chief executive Ian Wilson totally denied rumours that the EweMove business had been sold to Countrywide or was on the market at all.
He insisted that he would still buy EweMove today and that it had been a “bit of a bargain”.
This afternoon’s RNS is in full below:
“The Property Franchise Group Plc today announces that trading for the first six months ended 30 June 2017 has been encouraging. Revenue for the period was approximately £4.7m and profit before tax was approximately £2.1m including exceptional items.
“Our traditional high street brand businesses have continued to perform well with revenue up 4% year-on-year to £3.8m and profits up 22% to £2.0m.
“The disruption caused by the early departure of the EweMove co-founders on 30th June 2017, as announced on 29th March 2017, has meant that EweMove’s trading position is behind management expectations with (unaudited) losses for EweMove at the half year to 30th June 2017 of £0.3m against a target loss of £0.1m, on revenues of £0.9m.
“As a result, the management expects underlying profits for the full year for the Group to be below market expectations.
“The Board remains committed to EweMove, which it believes continues to offer significant growth prospects in the medium term.
“EweMove has over 100 franchisees and the Group’s strategy remains to scale the business over the next two years.
“The business recruited 18 new franchisees in the first six months of 2017 and Management Services Fees revenue is up 35% year-on-year to £0.6m.
“The Group will announce its interim results on 14th September 2017.”
Following the statement, shares in PFG went down 10%.
Comments (23)
Once again misleading information. The major concern here is that this is now a PLC company with shareholders. Paying upto £15m of shareholders funds for a company that turned over £900,000 with a £300,000 loss. In anyone’s eyes that’s a business that needs to downsize before it folds, not one that sells fit £9-£15m!!!!! you wouldn’t buy this if it was your own money, so why do it with investors funds????? Something just doesn’t sit right here with me. I think this deal needs to be investigated by the regulators.
The revenue quoted will be for EweMove the franchisor and only includes their royalty, not the turnover of individual franchisees which are independent businesses (Joe Blogs Ltd trading as EweMove).
Assuming the typical 8% franchise fee, £900k turnover represents £11,250,000 combined turnover for all franchisees combined, or about £100k each of there’s over 100 franchisees.
I guess £200k per annum is pretty damn good if you’re a one man band working from your bedroom. However, the real question is how can you proactively market your clients’ properties, accompany viewings, negotiate, sales progress etc when you’re a one man operation and at £200k turnover minus expenses, there’s not much left to employ staff, let alone decent staff.
No wonder they’re talking about putting their fees up. It’s almost like they realise the future is in becoming a genuine, full service agent.
Perhaps the disrupting has gone full circle!
Who is talking about putting their fees up? I’m already the most expensive agent in my area and my clients are loving the service they get
I read this as £900,000 turnover for the franchisor, not the network with costs of £1.2 million.
As I understand it each franchisee pays a fixed monthly fee therefore it’s difficult to assess their actual turnover at the network level. [franchisee]
If however the royalty fee were say 12.5% then an average franchisee would have revenue of circa £75,000 in the six month period
Finally someone who appreciates the details. However it is impossible to average it per franchise due to their different ages, areas, owner ambition and a million other factors.
Last franchise I spoke to was targeting a £60k gross profit after his 3rd year, that may go towards his overdraft
What chance profit? – these numpties can’t even update their website – which still shows Messrs Laycock and Ackroyd as Head Shepherds!
The newe bloke – Nick Neill – must be proper chuffed that his appointment doesn’t even warrant an hour of a techie’s time…
The ‘techie’ time is spent ensuring the Ewemove site remains the best in the Industry. Winners of both the Negotiator and Times best website awards.
Besides I’m sure Nick and the team will be spending their time ensuring Ewemove remain ‘The U.Ks Most Trusted’ estate agent (Trust Pilot). And one of the fastest growing for that matter.
Just another case of a company’s hype not being backed up by the financials!!!
9M purchase a bargain…….
18k per annum per office hahaha DIY agent fools
Please educate yourself
Ooooh. Nice white elephant.
Only a CEO can say spending £9 million on top of £300,000 losses is a bargain.
LOL… a bargain compared with what? Besides being a CW shareholder.
Sometimes you have to hold your hands up and say “We made a mistake.” Unless the new head shepherds can turn this flock-up around pretty sharpish, this could turn into a long-term disaster.
From earlier today, Wilson said: “The trouble is that almost all these models rely on customers paying a low, fixed, up-front fee, and the concern is that the fees are just too low to make a decent profit.
Maybe Ewemove’s problem is that their people are so unmotivated and untrained that they can’t make a decent profit… or any at all!
Uneducated. Simples.
Just like all the commenters above. These results are about Ewemove and have nothing to do with what each franchise is doing.
Small mindedness is what will sink so many dinosaurs in this industry.
Well said!
“Small mindedness is what will sink so many dinosaurs in this industry.”
Oh – so that’s what’ll do the job, is it?
You and your disruptor-type mates had better pray for an asteroid full of the stuff, then – cos the evidence so far suggests ewes can’t sink a lead boot in a chuffin’ bathtub.
My accountant would beg to differ.
“My accountant would beg to differ.”
We always thought ewe were… special.
SO – in best Matrix style –
No we know… Ewe ARE ‘The One’.
“…turnover of £900,000 in the first half of this year…. EweMove has over 100 franchisees…”
Oh, dear.
‘He insisted that… EweMove… had been a “bit of a bargain”.’
Would that “bit” be the letters “B”, “I”, and “N” by any stretch of the imagination?
Does that equate to £9,000 per franchise for six months then?
Wonder if they tell new prospective franchisees this ?
It’s worse than that. In the other story it said the new MD (forgot his name for now) has a strong office that is generating a lot of income. If his share is high, that means there’s even less to go around for other franchisees.
I’ve seen the way they work, they see a franchisee as a money making unit for them without a care for his business. I asked a couple of pointed questions to the founders and they were rude, laughed and avoided telling the truth until pushed. I feel sorry for the franchise’s.
oh, so that’s a cost of £1000 to get a £700 instruction…. i wonder if they print these figures out to franchisees at trade shows… ,..u can only be a dot.com business if you are basically a catalogue/…. selling a house takes a lot more then a pretty webpage like amazon…RIP SHEEP