Acquisition of EweMove Sales and Lettings Limited

RNS Number : 0134J

MartinCo PLC

06 September 2016

 

MartinCo Plc

("MartinCo" or the "Group")

Acquisition of EweMove Sales and Lettings Limited

MartinCo plc (AIM: MCO), one of the UK's largest property franchise groups, today announces that it has acquired EweMove Sales and Lettings Limited ("EweMove"), a "hybrid" estate agency franchisor, for a total consideration of up to £15 million (the "Acquisition").  The consideration will be satisfied by a £5 million cash payment at completion and the issue of £3 million of new ordinary shares, followed by a deferred payment of up to £7 million dependent on performance.

Background on EweMove

Launched in 2014, EweMove has a growing network of over 90 franchisees. The EweMove franchise model combines the recruitment of local property experts ("LPEs") with a centralised technology platform whilst retaining the traditional features of a full estate agency service and a consumer fee structure predicated on completed sales, rather than listings. EweMove has shown significant and sustained growth and is a multi-award winning agency, voted the UK's 'No.1 Most Trusted Estate Agent' by Trust Pilot in 2016.

The Board of MartinCo believes the Acquisition, which will operate as a subsidiary of the Group, is highly complementary to its existing business. The Board believes that the UK market could accommodate approximately 800 EweMove LPEs and that EweMove's proprietary technology platform is fully scalable allowing for significant growth opportunities. Importantly, the deferred consideration of the Acquisition will be determined, in part, by the overall profitability of the Group, not solely of the EweMove business.

Acquisition highlights 

	Development of multi-brand strategy - the addition of the EweMove business is in line with MartinCo's established multi-brand strategy and augments the existing model by achieving immediate hybrid/on-line capability for the Group. This market sector now accounts for circa 3% of all listings.
	Further growth at EweMove will be self-funding.
	Strengthened management - the EweMove management will join the senior executive team taking on responsibility for technology and marketing across the Group.
	Increased UK footprint - the acquisition will add 90 franchisees to the Group's network of 287 trading offices.
	Addition to lettings portfolio - EweMove has a rapidly expanding portfolio of properties under management which currently stands at 1,300 properties.

Further details of the Acquisition

MartinCo is acquiring the entire issued and to be issued share capital of EweMove, and its subsidiary Ewesheep Limited, for an initial consideration of £5 million in cash and £3 million through the issue of 2,321,550 new ordinary shares of 1p each in the Company ("Consideration Shares").  The £5 million in cash will be paid using existing cash resources and debt drawn down from the Company's existing debt facility.

In addition, deferred consideration of £7 million will be payable dependent on performance criteria linked to EBITDA for the enlarged Group for the full financial year ending 31 December 2018.

Financial Information on EweMove

For the 12 month period ended 30 June 2016, based on unaudited management accounts, EweMove generated revenues and profit before tax of £1.65 million and £0.12 million respectively. As at 30 June 2016, EweMove had gross assets of nil.   

Admission of Consideration Shares

An application has been made for the Consideration Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will occur on 7 September 2016.

Following Admission, the Company will have 24,321,550 ordinary shares in issue admitted to trading on AIM. This figure may be used by shareholders as the denominator by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure and Transparency Rules.

Ian Wilson, Chief Executive of MartinCo, said:

"Our strategy as a Group remains focused on traditional high street based lettings and estate agency model where we continue to see growth. This Acquisition provides the Group with a strategically important foothold in the rapidly developing market for online estate agency and letting services. We see the Acquisition as complementary to the wider Group strategy with the hybrid model, a people business which combines an online platform with truly local presence and customer service focus, differentiating it from other online offerings."

"The Acquisition is also a logical development of the Group's multi-brand strategy. Our stable of six property brands now includes a UK-wide lettings business, four strong regional players with brand provenance dating back to 1850 and now a "hybrid" agency. MartinCo continues to be focused on creating value for shareholders by leveraging its scale and over 30 years' experience as a franchisor to build a significant share of the UK residential lettings and estate agency market.

"I have also been deeply impressed by EweMove's management and their agreement that overall Group profitability should determine the final consideration paid. This ensures both existing and new management are aligned in the shared goals and objectives for the good of the wider Group.

"Finally, I'm delighted to welcome EweMove's management to the senior executive team.  Their insight will be invaluable in developing our use of on-line marketing techniques and technology across the Group."

David Laycock and Glenn Ackroyd, founders and Managing Directors of EweMove, said: 

"MartinCo is a forward looking company and we are hugely excited about the opportunities that this transaction brings. We look forward to working with the MartinCo team and are confident that the enlarged Group will be able to progress strongly with its broadened range of offerings within the market place."

MartinCo management will host a conference call for analysts today at 9.30am (BST). Analysts who wish to join should dial in on + 44 20 3059 8125 and request the MartinCo conference call.

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The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information, please contact:

MartinCo PLC                                                        01202 292829

Ian Wilson, Chief Executive Officer

David Raggett, Chief Financial Officer

Cenkos Securities plc                                           0207 397 8925

Max Hartley(Nomad), Alex Aylen (Sales)

Bell Pottinger                                                        020 3772 2500

David Rydell, Henry Lerwill

About MartinCo

MartinCo Group operates one of the UK's largest property franchise businesses through its 287 offices and 5 franchise brands Martin & Co, CJ Hole, Parkers, Ellis & Co and Whitegates.

The Group's franchisees manage approximately 45,000 properties on behalf of private clients.

MartinCo is a multiple award winning business and the Directors and senior management have over 100 years of combined residential letting and estate agency experience.

About EweMove

EweMove's central technology platform operates a network of 90 franchisees with individual local property experts servicing a territory of between 20,000 and 30,000 households. EweMove's franchisees are located nationwide.  EweMove has a rapidly expanding portfolio of properties under management which currently stands at 1,300 properties.  EweMove's fee structure is based on traditional commission as a percentage of the sales price on completion, rather than an upfront fee.

 

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