ULS Technology ends year in line with expectations

Conveyancing and financial intermediary software company ULS Technology said on Wednesday that it was expecting financial results for the year ended 31 March to be in line with market expectations.

The AIM-traded firm said underlying pre-tax profit was expected to be £4.8m, down from £5.4m year-on-year, with sales slipping £28.3m to £30m.

It said that performance reflected the uncertainty caused by Brexit and the general election during 2019, and then the initial impact of the Covid-19 coronavirus pandemic during the last four to six weeks weeks.

Despite the backdrop, the company said it remained “highly cash generative”, and maintained good profit margins, while it also continued to invest in the development of DigitalMove.

Cash balances as at 31 March were more than £2m, with the firm having fully drawn its bank facilities, resulting in a net debt position of about £3.4m.

On the operational front, ULS said it continued to invest in DigitalMove following positive feedback from consumers, solicitors and introducers.

More than 10,000 instructions from consumers, via introducers using eConveyancer, were processed through the platform during the year.

Recently, the firm said it hit two important landmarks - completing its first DigitalMove integration via API with a top 10 conveyancer, and setting up a number of solicitors to be able to use DigitalMove for conveyancing instructions that the solicitors had gained from other sources.

In due course, the board said it expected that to be an important source of additional revenue.

It noted that this week, it launched its new 'Rapid Remo' product with the first instructions already received.

The company described it as a new product in eConveyancer, which had leveraged the capabilities of DigitalMove to speed up transactions.

ULS said it had been in development for a number of months, but its release was “particularly timely” in a remortgage-dominated market.

In terms of the current revenue-generating parts of the group, during the period the number of intermediary advisers using its conveyancing comparison platforms increased by 18% to more than 3,500.

The company also continued to add new lender clients, notably the Principality Building Society.

More recently, post-period end, it was awarded a conveyancing service agreement with an unnamed challenger bank, and was currently in the process of onboarding another lender as a new client.

As it flagged in its trading update on 2 April, due to the Covid-19 pandemic, there was “considerable uncertainty” around the firm’s revenue and profitability in the immediate future.

It said it was difficult to predict when and how quickly the housing market would recover at the current stage.

However, it said it had sufficient cash reserves to allow it to continue to invest in its sales channels and product development, so that it would be well-positioned for when conditions improve.

Investment into DigitalMove was also continuing, with active marketing to conveyancers and ongoing development to further refine the product offering and integration capability, ready for when the housing market picked up.

“With the current effects of Covid-19 enforcing social distancing measures, DigitalMove's remote applications, which enable conveyancing to be completed in a secure and paperless environment, should become increasingly attractive to conveyancers,” said chief executive officer Steve Goodall.

“We are experiencing increased interest in DigitalMove and we expect that interest to continue beyond the current circumstances.

“We believe that our long-term business model - driving sustained profitability, cash generation and continued investment into DigitalMove - means that the company remains well positioned for when market conditions improve.”

At 1519 BST, shares in ULS Technology were up 2.2% at 41.9p.