TIDMOTMP
RNS Number : 9430S
OnTheMarket plc
22 March 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR .
22 March 2021
ONTHEMARKET PLC
("OnTheMarket", the "Group" or the "Company")
Exercise of Glanty Call Option
OnTheMarket plc, the majority agent-owned company which operates
the OnTheMarket.com property portal, is pleased to announce that it
has exercised its call option to acquire the 80% of Glanty Ltd
("Glanty") that it does not currently own.
The acquisition is expected to allow the Company:
-- to integrate Glanty's products and services into the OnTheMarket platform;
-- develop its product offering to benefit and drive engagement
with estate agents, housebuilders and consumers; and
-- feature "best in class" products and platforms across the entire property marketplace.
About Glanty
Glanty is a property technology ("prop-tech") business which
specialises in providing solutions to the UK residential estate and
lettings sectors.
It is the owner and developer of software products and services
designed to reduce overheads, maximise efficiencies and increase
revenues for estate and lettings agents. At the time of
OnTheMarket's investment in December 2019, Glanty's primary product
was "teclet", an automated portal for the lettings industry which
manages the lettings process end-to-end, from the creation of a
tenancy through to its management to renewal. In the period since
that investment, revenue from sales of "teclet" has increased as
its customer base has continued to grow and further new products
offering similar efficiency savings for the estate agency sector
have been developed. This includes a range of API partnerships
which are expected to accelerate OnTheMarket's digital commerce
strategies, offering agents the opportunity to earn income by
directly presenting buyers, sellers, tenants and landlords products
and services that they can purchase at appropriate points in their
property journey.
Glanty's revenues grew by 76% in the year to 31 December 2020 to
GBP876k (2019: GBP497k). It made a loss after tax of GBP172k (2019:
GBP802k) and had assets (excluding cash) of GBP2.7m at 31 December
2020. Net assets at that date were GBP785k. OnTheMarket expects
Glanty may require some limited investment in the immediate short
term, as it seeks to further develop its products and services.
Completion arrangements
Upon completion of the call option, OnTheMarket will enter into
a share purchase agreement ("SPA") pursuant to which it will
acquire the remaining shares in Glanty for an initial consideration
of approximately GBP1.5 million (on a cash and debt free basis,
subject to adjustment, and payable in cash or shares at
OnTheMarket's option, currently expected to be in shares) plus a
revenue and EBITDA(1) based earnout arrangement. OnTheMarket will
also be required to repay shareholder loans of approximately GBP1.4
million on completion. The earnout arrangement could result in
maximum deferred consideration of up to GBP12 million (payable in
cash or shares at OnTheMarket's discretion) and shall be payable if
certain revenue and EBITDA targets are met by Glanty.
The earnout targets are based on Glanty's recurring revenues and
EBITDA in the third year post completion, the mechanism for
determining which is detailed in the share purchase agreement. The
earnout will be payable if third year revenues exceed GBP2m and
third year EBITDA exceeds GBP0.5m. Below those levels, no earnout
is paid. If payable, the earnout payable will be 1 times third year
revenues plus 1.5 times third year EBITDA, capped at an aggregate
payment of GBP12m. Payment of any earnout will be made following
the third anniversary of completion of the call option and allows
time for drawing up and agreeing the relevant accounts on which the
earnout is calculated.
In the event that the approximately GBP1.5m consideration
payable on completion of the call option is to be satisfied by the
issue by OnTheMarket of consideration shares, the majority of
shares issued in respect of the GBP1.5m consideration payment will
be subject to lock-in arrangements which restrict their sale save
in limited circumstances for either 3 or 4 years post completion of
the call option (4 years for certain sellers actively involved in
the business). There is then an orderly market arrangement in place
in each case for a further 12 months thereafter.
Completion of the call option is subject, inter alia, to the
satisfaction of certain conditions and is scheduled for 28 May
2021.
Jason Tebb, Chief Executive Officer of OnTheMarket,
commented:
"Since I joined the Group in December 2020, the team and I have
built an ambitious roadmap of product and service innovations for
the next 12 months. This is focused on a holistic approach to
deliver rich engagement and functionality for users and provide
them with more reasons to return to us regularly."
"As part of our strategy, we'll be integrating Glanty's products
into our offering, to create even better value for residential
sales agents, lettings agents and housebuilders. By building tools
that will assist them in gaining a competitive edge we will support
increased efficiencies within their businesses, providing them with
best-in-class software."
"I very much look forward to working with the Glanty management
team, who bring a wealth of experience and will add further
industry and technology expertise to OnTheMarket. Exercising this
option with Glanty provides us with the building blocks to
accelerate our development roadmap and roll-out new functionality,
supporting our vision for further growth and innovation for the
business."
Notes
1) EBITDA is defined as operating profit before finance costs,
taxation, depreciation, amortisation, and non-recurring items. The
bases of calculation of Glanty's revenues and EBITDA for the
purposes of determining any earnout payment are set out in the SPA
and allow for adjustments in certain circumstances.
ENDS
For further information, please contact:
OnTheMarket
Jason Tebb, Chief Executive Officer
Clive Beattie, Chief Financial
Officer 0207 353 4200
Tulchan Communications
James Macey White
Giles Kernick
William Booth 0207 353 4200
Zeus Capital (Nominated Adviser/Joint
Broker)
Jamie Peel, Martin Green, Daniel
Harris
(Corporate Finance)
John Goold, Benjamin Robertson 0203 823 5000
(Broking)
Shore Capital (Joint Broker)
Daniel Bush, John More (Corporate
Finance)
Fiona Conroy (Corporate Broking) 0207 408 4090
Background on OnTheMarket:
OnTheMarket plc, the majority agent-owned company which operates
the OnTheMarket.com property portal, is a leading UK residential
property portal provider.
Its objective is to create value for shareholders and property
advertiser customers by delivering an agent-backed, technology
enabled portal - offering a first-class service to agents and new
homes developers at sustainably fair prices and becoming the go-to
portal for serious property-seekers.
OnTheMarket provides a unique opportunity for agents to
participate in the equity value of their own portal. Agent backing
and support enable OnTheMarket to display "New & exclusive"
properties to serious property-seekers 24 hours or more before
agents release these properties to other portals.
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END
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