Smoove LON:SMV, the AIM-listed, software company providing data platforms to conveyancers, mortgage brokers and home-movers, announced today (14th July) that it had entered the formal due-diligence process appertaining to the takeover offer it received from Pexa Group [ASX:PXA], the Australian digital property settlements platform, announced in April this year.
- Quadrise passes milestone test
- Greatland Gold outlines “significant upside opportunities” in Newmont deal
- SRT Marine Systems confident of 2025 outlook despite short-term challenges
In a statement to the market, Smoove said that it: “can confirm that discussions have advanced constructively between the parties and that a formal due diligence process has now commenced.”
Extension of deadline
However, for Pexa to conduct its due diligence in line with the Panel on Takeovers and Mergers, the London Stock Exchange has extended the deadline for Pexa to make a firm offer for Smoove. As previously reported the deadline had been twice previously extended.
The new deadline has now been extended to 11th August, by which time Pexa must make an offer or withdraw from the process. The takeover will be an all-cash transaction.
As previously reported it is believed that there are other bidders for Smoove waiting in the wings.
In the company’s most recently released results, the company reported a 7.4% increase in revenue to GBP20.6m, despite the doom and gloom that has descended on the UK housing market. Smoove’s gross profit was flat year-on-year at GBP7.8m, but EBITDA fell into loss of GBP4.8m as a result of the company’s investment in its core eConveyancer business and in new product areas.
This led to a loss before tax of GBP5.6m, up from the GBP4.9m loss in 2022. The company had GBP10.1m cash in hand following a GBP3.7m return of capital through a tender offer in January.
Strategic partnership
The Oxfordshire-based conveyancer secured a strategic partnership with the Mortgage Advice Bureau (MAS) which helped enhance its market penetration. Jesper With-Fogstrup, Smoove’s CEO said: “The financial year ended 31 March 2023 was another volatile period, presenting both opportunities and challenges. The growth in our remortgage volume demonstrates our ability to adapt to market conditions while the development of a new user interface and APIs for eConveyancer provides a strong platform for future growth of that business. Smoove Complete’s early results are promising and suggest latent demand among conveyancers for a way of working that is flexible, innovative, and customer focused.”
The current year has started strongly for Smoove, and transactions have remained stable albeit with lower instructions due to the state of the UK housing market and economy, and management believes that the company is trading within expectations. Smoove is seeking more strategic partnerships, similar to the one with the MAB, to expand its reach. With-Fogstrup thinks that the company will consume less cash this year, having made significant investment in the year that has just passed, and profit is in line with expectations.
The company opened trading at 38.2p, but was up to 41p quite soon after the announcement. Smoove has offered a 11.1% year-to-date return and a -35.7% one-year return, with its shares ranging between 27p and 77p over a 52-week period.
The company has an GBP21.4m market capitalisation.
As reported, Pexa was established in Australia in 2010 as the world’s first digital settlement platform born out of a 2008 Council of Australian Governments’ initiative to transition property lodgement and settlement away from an outdated paper-based process to a more efficient digital settlement process. Today more than 80% of all property transactions in Australia are completed via PEXA.
The Pexa brand operates in the UK as the trading name of Digital Completion UK Limited, established as a holding company in August 2020 and based at Portland Street, London. The company says it is working with the Bank of England “to streamline the re-mortgaging and property completion experience from start to finish,” to “advance how Britons buy and sell homes.”
Currently Pexa UK is involved in the remortgaging side of the business offering technology solutions and platforms to UK lenders, lawyers, and conveyancers in England and Wales, but is due to expand into sale and purchase in 2024.
Smoove listed on AIM in July 2014 and provides a software platform for home moving. The platform helps home movers to find and compare solicitors, estate agents, and other services related to moving home. Smoove also offers a range of tools and resources to help home movers with the administrative aspects of moving, such as packing lists and checklists.
