One of Australia's largest real estate agencies McGrath is in turmoil after the company's chief executive and entire board, barring founder John McGrath, quit the company after its lower-than-expected earnings were leaked to the media.
The company announced on Monday that Mr McGrath, dubbed Sydney's Mr Real Estate, will take up the position of executive chairman - a move likely to fuel speculation that the wealthy real estate agent will privatise the company. He had resigned as CEO in 2016 as part of a management and board shake-up.
McGrath's shares were trading down 10 per cent to 51 cents on the news.
The crisis came after a tumultuous history for the company that has been hit hard by the drop off in residential property listings and its struggling sales division.
The group has also been affected by a string of departures of some of its highest profile agents who have jumped ship to other agencies.
On Monday McGrath downgraded its forecast for the six months to December 31, saying earnings would now come in at $1.63 million. It said its full year earnings were expected to be between $5.8 million and $6.8 million after one-off items. McGrath also flagged it would post a loss of $50,000 for the first half of 2018.
The company had warned the market in November that its earnings were tracking at 20 per cent below analyst expectations of $16 million plus in full-year earnings.
McGrath made the statement to the Australian Securities Exchange after details of earnings for the first five months of the half were leaked to the media.
At the same time, McGrath announced the resignation of chief executive Cameron Judson and head of corporate services Morgan Sloper. McGrath had flagged potential management and board changes in its November update but the depth and breadth of the changes caught the market by surprise.
Departing chairman Cass O'Connor - a former business partner of Prime Minister Malcolm Turnbull - said Mr Judson's and Mr Sloper's resignations came after a strategic review that found the company did not currently require the expansion and mergers and acquisitions skills of the two executives.
"Cameron and Morgan were engaged when we anticipated a higher volume of corporate activity. Their skill-sets are broader than the company currently needs," Ms O'Connor said.
McGrath said director Nigel Dews has resigned as part of the strategic review and also because other work commitments.
The company gave no explanation about the departures of Ms O'Connor, directors Elizabeth Crouch and Cath Rogers, only to say the three would leave after an "orderly transition period" that will include the release of the company's results in February.
Mr McGrath, who is a major shareholder in the group, said he was very disappointed in the performance of the company over the past two years.
"Now is the time for a new approach. Despite the challenges we have endured since listing, McGrath remains one of the best real estate businesses in Australia with outstanding talent throughout the company," Mr McGrath said.
"I am very excited and proud to once again be leading the team in the future."
Mr McGrath said he had a clear plan to rebuild momentum in the company, adding: "But I will let our results speak for themselves from here."
