McGrath says not aware of franchisee exodus, only Ascot in Brisbane
Real estate agent McGrath, whose shares plummeted to a record low last week, has dismissed reports that it was facing an exodus by its franchisees.
McGrath shares fell on Thursday to 58 cents, after rumours spread about five franchisees leaving the company, prompted a compliance query from the Australian Stock Exchange.
It was unchanged at 58 cents in morning trading today on the ASX.
In its response to the ASX query, McGrath said the company was not “aware of any information concerning it that has not been announced to the market which, if known by some in the market, could explain the recent trading in its securities”.
Earlier, a newspaper report claimed that five franchisees that "account for about 50 per cent of the group's earnings" could quit McGrath.
The McGrath letter said “we have no information regarding any franchisees intending to leave the company other than one franchisee — Ascot in Queensland — whose franchise agreement expires on May 30”.
“We note that this franchisee and McGrath mutually agreed not to renew the franchise agreement back in late 2016 and can so no reason why this would trigger any publicity at the current time,” it continued.
Shares in McGrath, which was hit by high-profile agent exits earlier this year, listed in late 2015 at $2.10 and has gone into a decline ever since.
They opened 2017 at 90 cents, then fell in January this year after it signalled weak revenues.
The company has previously blamed the summer defection of a number of high-profile agents in part for for its woes.
McGrath also said the "unprecedented low volumes of listings" had emerged as high prices had discouraged some sellers from putting properties on the market, fearing that prices could rise too far before they could acquire their next property.
The letter to ASX said the company was “not aware of any other reason for the recent trading in its securities”.
McGrath has 72 franchise offices, and the media report that five of those would leave the company, would unlikely have a huge material impact on the real estate company as about two-thirds of its earnings come from company-owned offices, they advised shareholders.
