In the update it revealed that revenues are expected to be 56% up on the same period in the previous year at £15.28m, with underlying pre-tax profits up 42% at £2.74m.
The increases are partly due to the acquisition of Conveyancing Alliance Holdings in December 2016, although excluding the acquisition, revenues were up a little over 20%.
In a note from house broker Numis, analyst Will Wallis commented that the organic growth was helped by: “an easy comparative, some market share gain, and some mix shift (benefitting revenue but not gross profit).”
There will be an exceptional charge of approximately £1.87m reported for the first half results, which primarily relates to an upgrade in the estimated earn-out payable for the acquisition of CAL. This reflects the strong performance of CAL since its acquisition by the Group.
House broker Numis upgraded its full-year earnings forecasts by four per cent to a pre-tax profit of £5.4m for the full year to 31 March, 2018 on sales of £30.2m.
Ben Thompson interview
In an exclusive interview with Mortgage Solutions, Ben Thompson, chief executive of ULS Technology, explained: “There was significant market growth against pretty subdued market conditions — we tend to look at housing transactions as an indicator not house prices. We had strong organic growth against that backdrop, increasing our market share in conveyancing to 2.5 per cent. Secondly, our subsidiary company has performed well.”
He continued: “In the organic growth, we’ve expanded in particular into the estate agency-related conveyancing market. We’ve done this in two ways: firstly through one of our subsidiaries. The other is by building a technology platform to enable consumers to compare the performance of estate agents when they are selling a home.”
While the rate of organic growth has encouraging, it current market share of 2.5 per cent of the conveyancing market is well short of its stated aim of achieving 10 per cent. In response, Thompson confirmed that he was expecting to make inroad into new markets, such as estate agents.
Moreover, he is actively considering acquisitions. “From an M&A perspective, we are an acquisitive group. We’ve bought companies before. It may well be that there is a lot of organic growth but we may just make the odd acquisition or two along the way to get to that figure.”
When pressed on whether they were currently looking, he confirmed: “We are always actively looking as a group.”
Thompson added: “Although we have had success in pretty much all our market segments over the period, it is especially pleasing that we are gathering good momentum with mortgage lenders, a market segment that we are focused on achieving further success in.” Currently lenders represent around one third of the conveyancing business for ULS.
“In terms of innovation he also revealed: “We are investing in new technology that will greatly improve customers’ home moving experience and plan to provide our business partners and intermediaries with something new and very different. He said: “This innovation would chime very well with some of the key points being raised in the recent DCLG paper about home moving.”
