Regulatory Story
Go to market news section View chart   Print
RNS
ULS Technology PLC  -  ULS   

Half-year Report

Released 07:00 28-Nov-2017

RNS Number : 6329X
ULS Technology PLC
28 November 2017
 

28 November 2017

ULS Technology plc

(The "Group" or the "Company")

 

Half Yearly Report and Directorate Changes

 

"Gains in market share drive increases in revenue, profits and dividends"

 

ULS Technology plc (AIM: ULS), the provider of online B2B platforms for the UK conveyancing and financial intermediary markets, announces its half yearly results for the six months to 30 September 2017.

 

During the period the Company has further increased its market share, resulting in increased revenue, profits and dividend payments.

 

Financial Highlights

·     Revenue increased by 56% to £15.28m (H1 2017: £9.78m)

·     Organic revenue growth of 22%

·     Underlying Operating Profit1 increased by 44% to £2.81m (H1 2017: £1.95m)

·     Adjusted EPS1,2 increased by 45% to 3.48p (H1 2017: 2.40p)

·     Net debt and equivalents of £2.3m as at 30 September 2017 (FY 2017: net cash £3.7m)

·     Interim dividend of 1.15p per share, an increase of 5% on the same period last year

 

1. Before acquisition intangibles, amortisation and exceptional costs. Exceptional costs of £1.87m primarily relate to an upgrade in the estimated earn-out payable for the acquisition of CAL

2. Based on the number of shares in issue at the end of the period

 

Operating Highlights

·     Continued expansion of market share of housing transactions, both organically and within the acquired CAL business

·     Signed a number of new customer contracts, most notably with mortgage lenders

·     CAL now successfully integrated into Group, delivering a strong H1 trading performance

 

Ben Thompson, Chief Executive of ULS Technology plc, commented:

"This has been a strong first half for ULS. Once again, we have increased our market share and financial results against the backdrop of a housing market that has become quiet, relative to longer term averages.

 

"We have had successes across all relevant market segments, including with intermediaries, through self-serve channels and through achieving new growth in estate agency related conveyancing. Most notably, we are winning new conveyancing work from mortgage lenders - and now work for eight lenders (vs. four lenders two years ago) and continue to target further new growth over the coming months and years.

 

"Another standout performance over the last six months has been how quickly CAL has settled into ULS and specifically how well they have worked with us post-acquisition and performed so strongly in their estate agent and mortgage broker markets.

 

"I remain excited about the Group's prospects and our ability to continue to increase our conveyancing market share, growing our client base by providing outstanding choice and service. The quality of our products and customer base signify the strength of our operations and reflect our continued efforts to deliver value for shareholders."

 

 Enquiries:

ULS Technology plc

Tel: 01844 262392

Geoff Wicks, Chairman


Ben Thompson, CEO


John Williams, Finance Director


Numis Securities Limited (Nomad & Broker)

Tel: 0207 260 1000

Stuart Skinner / Paul Gillam, Corporate Advisory


Michael Burke, Corporate Broking


Walbrook PR Limited 

ulsgroup@walbrookpr.com or Tel: 020 7933 8780

Paul Cornelius


Helen Cresswell

Sam Allen

Nick Rome


 

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.



 

 

Chief Executive's Report

 

This has been a successful reporting period for the Company, despite market uncertainty on many fronts. Over the last decade or so, we have forged close working relationships with a growing number of the most successful mortgage intermediaries and lenders. These relationships, together with our continued investment in technology and customer service underpinned our strong performance during the period.

 

In addition to winning new relationships during the period we identified and will continue to pursue new growth opportunities in existing and adjacent new markets. These include estate agency related conveyancing and providing additional services to more mortgage lenders, through the provision of innovative technology solutions. Successful deployment of this strategy will enable ULS to continue its track record of delivering strong financial growth and increasing shareholder value.

 

Furthermore, while we are a leading technology platform in this sector, it is worth noting that we still only command less than 5% share of the conveyancing market. We believe that our clear strategy will enable us to execute on this growth opportunity.

 

Since acquiring CAL in December 2016, we have established a very strong working relationship with them and have also realised the synergies identified at outset.

 

CAL has built up some good momentum with estate agents, providing a bespoke technology platform to enable customers using an estate agent to have the best possible conveyancing experience. Most notably, CAL has enjoyed very strong success in continuing to build up their portfolio of smaller mortgage brokers, enticing them with highly competitive technology, pricing and good service.

 

CAL enables ULS to accelerate and grow its penetration of these two specific market segments, contributing to a greater Group market share of conveyancing.

 

During this 6 months reporting period, CAL has delivered £3.4 million in revenue and over 10,000 conveyancing completions. This represents a growth in completions of 44% over the same period in the previous year.

 

This better than expected performance has led to the Group increasing its estimate of the earnout payable to the maximum of £5.3 million (undiscounted).

 

ULS took on a £7 million debt facility to fund the purchase of CAL through a mixture of term loan and rolling credit facility. Continued strong cash generation saw net debt at the end of the period fall to £2.35 million.

 

Strategy

 

The Company continues to focus on securing new relationships for its core conveyancing comparison service, and growing market share. The Company is committed to retaining and growing its existing relationships, which remain strong. This organic growth strategy is embedded throughout ULS and the Board believes that there is significant upside potential from both existing and pipeline relationships.

 

The Company's efforts continue to be prioritised around tailoring technology solutions that its existing and prospective business partners require, as well as continually refining its solutions to ensure that its end customers receive the best possible experience when moving home. 

 

Conveyancing today still requires a considerable degree of paperwork and manual intervention. The Board is determined to simplify this as much as possible to ensure that customers benefit from a process that they properly understand, and one that ideally can be completed more quickly and painlessly than is the case across the wider sector today.

 

The Company will continue to consider potential acquisitions that would either directly or indirectly accelerate the Board's growth strategy.

 

Interim Dividend

 

The Company is pleased to announce that it will pay an interim dividend of 1.15 pence per share; this is a five per cent increase on the dividend paid for the six months to 30 September 2017. The dividend record date is 8 December 2017, and the dividend is expected to be paid on 22 December 2017.

 

Board Changes

 

I am pleased to announce that Geoff Wicks, a current Non-Executive Director, is taking on the role of Chairman with immediate effect. Geoff has been a member of the Board since we listed on AIM in 2014. He has provided excellent support to and scrutiny of the Board and I am sure will continue in this vein as Chairman.

 

Peter Opperman will be stepping down from his role as Chairman but will remain on the Board as a Non-Executive Director. Peter has provided outstanding support and guidance to the Board over the last six years as well as significant amounts of his time. I am delighted that he is remaining on the Board and that the Group continues to benefit from his expertise.

 

Outlook

 

Housing transaction numbers look set to remain below long-term historical averages and broadly consistent with levels seen over the last few years. However, last week's budget looked positive for the housing market and the stamp duty relief for first-time buyers should increase transaction volumes.

 

In terms of activity, there has already been a shift away from buy-to-let investors towards first time buyers and there are fewer cash buyers too. This change in market shape ought to provide ULS with comparatively more new opportunities to grow its numbers.

 

With a relatively low market share compared to leaders in other parallel markets, ULS has confidence it can strive for and secure incremental market share growth over future months and years.

 

 

 

Ben Thompson

Chief Executive Officer

 



 

UNAUDITED INCOME STATEMENT

Six months to 30 September 2017

                                                                                                                               



Note


 6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year ended 31 Mar 2017





Unaudited


Unaudited


Audited





£'000s


£'000s


£'000s










Revenue




15,282


9,778


22,260

Cost of sales




(8,908)


(5,577)


(12,796)










Gross profit




6,374


4,201


9,464










Administrative expenses




(3,799)


(2,291)


(5,207)










Operating profit before exceptional expenses




2,575


1,910


4,257

Exceptional administrative expenses


4


(1,482)


-


(386)










Operating profit




1,093

 


1,910


3,871










Finance income




2


7


12

Finance costs




(73)


(22)


(83)

Share of loss of associate




(6)


(10)


(26)

Exceptional Finance costs


4


(390)


(143)


(318)










Profit on ordinary activities before taxation


626


1,742


3,456










Tax on profit on ordinary activities




(438)


(328)


(581)










Profit for the financial period




188


1,414


2,875



















Basic earnings per share (£)


5


0.0029


0.0218


0.0443

Diluted earnings per share (£)


5


0.0027


0.0208


0.0421

 

 

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

Six months to 30 September 2017

                                                                                                                               





6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year ended 31 Mar 2017





Unaudited


Unaudited


Audited





£'000s


£'000s


£'000s










Profit for the period




188


1,414


2,875










Total comprehensive income for the period




188


1,414


2,875



 

UNAUDITED BALANCE SHEET

At 30 September 2017

 


Note


30 Sep 2017


30 Sep 2016


31 Mar 2017




Unaudited


Unaudited


Audited




£'000s


£'000s


£'000s

NON-CURRENT ASSETS








Intangible assets



6,890


3,025


7,064

Goodwill



11,008


4,524


11,008

AFS financial assets



100


100


100

Investment in Associates



543


565


549

Property, plant and equipment



387


601


516

Long-term receivables



200


100


200

Prepayments



127


112


173




19,255


9,027


19,610

CURRENT ASSETS








Inventory



43


40


40

Trade and other receivables



2,758


1,642


1,676

Cash and cash equivalents



2,899


3,710


2,242












5,700


5,392


3,958









TOTAL ASSETS



24,955


14,419


23,568

















EQUITY ATTRIBUTABLE TO EQUITY








HOLDERS OF THE COMPANY








Share capital

6


259


259


259

EBT reserve



(474)


-


-

Share premium account



4,585


4,585


4,585

Capital redemption reserve



113


113


113

Share based payment reserve



207


100


151

Retained earnings



3,573


3,394


4,145

TOTAL EQUITY



8,263


8,451


9,253









NON-CURRENT LIABILITIES








Borrowings



3,250


-


3,750

Contingent consideration

8


1,991


918


2,613

Deferred taxation



1,059


468


1,092




6,300


1,386


7,455

CURRENT LIABILITIES








Trade and other payables



7,888


4,210


4,229

Borrowings



2,000


-


2,000

Current tax payable



504


372


631




10,392


4,582


6,860









TOTAL LIABILITIES



18,692


5,968


14,315









TOTAL EQUITY AND LIABILITIES



24,955


14,419


23,568









 



 

UNAUDITED STATEMENT OF CHANGES IN EQUITY

Six months to 30 September 2017

 


 

 

Share capital

 

 

EBT reserve

 

 

Share premium

 

Capital redemption reserve

Share based payment reserve

 

 

Retained earnings

 

 

Total equity


£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s









For the period ended 30 September 2017








At 1 April 2017

259

-

4,585

113

151

4,145

9,253









Profit for the period

-

-

-

-

-

188

188









Purchase of shares by EBT

-

(618)

-

-

-

-

(618)

Exercise of options

-

144

-

-

(17)

(49)

78

Share-based payments

-

-

-

-

73

-

73

Dividends paid

-

-

-

-

-

(711)

(711)

















At 30 September 2017

259

(474)

4,585

113

207

3,573

8,263

























For the period ended 30 September 2016








At 1 April 2016

259

-

4,585

113

80

2,148

7,185









Profit for the period

-

-

-

-

-

1,414

1,414









Share-based payments

-

-

-

-

20

-

20

Dividends paid

-

-

-

-

-

(168)

(168)

















At 30 September 2016

259

-

4,585

113

100

3,394

 

8,451
















For the year ended 31 March 2016








At 1 April 2016

259

-

4,585

113

80

2,148

7,185









Profit for the year

-

-

-

-

-

2,875

2,875









Exercise of options

-

-

-

-

(1)

1

-

Share-based payments

-

-

-

-

72

-

72

Payment of dividends

-

-

-

-

-

(879)

(879)

















At 31 March 2016

259

-

4,585

113

151

4,145

9,253









 



UNAUDITED STATEMENT OF CASH FLOWS

Six months to 30 September 2017



6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year ended 31 Mar 2017



Unaudited


Unaudited


Audited



£'000s


£'000s


£'000s

Cash flows from operating activities







Profit before taxation


626


1,742


3,456

Finance income


(2)


(7)


(12)

Finance costs


73


165


401

Loss on disposal of plant and equipment


-


2


1

Amortisation


484


234


599

Depreciation


140


131


271

Share of loss of associate


6


10


26

Share-based payments


73


20


72

Tax paid


(598)


(342)


(625)










802


1,955


4,189

Changes in working capital







(Increase) / decrease in inventories


(3)


(18)


(18)

(Increase) / decrease in trade and other receivables


(1,037)


(272)


(246)

Increase / (decrease) in trade and other payables


3,037


42


(68)








Cash inflow from operating activities 


2,799


1,707


3,857








Cash flows from investing activities







Purchase of intangible software assets


(309)


(313)


(642)

Purchase of property, plant and equipment


(11)


(253)


(281)

Disposal of property, plant and equipment


-


4


4

Acquisition of subsidiary (net of cash acquired)


-


-


(6,989)

Payment of deferred consideration


-


-


(1,080)

Interest received


2


7


12








Net cash used in investing activities


(318)


(555)


(8,976)








Cash flows from financing activities







Dividends paid


(711)


(168)


(879)

Share transactions by EBT


(540)


-


-

Interest paid


(73)


(165)


(401)

New loans


-


-


7,000

Repayment of loans


(500)


(890)


(2,140)








Net cash (used in)/generated from financing activities


(1,824)


(1,223)


3,580








Net increase/(decrease) in cash and cash equivalents 


657


(71)


(1,539)








Cash and cash equivalents at beginning of period


2,242


3,781


3,781








Cash and cash equivalents at end of period


2,899


3,710


2,242

 



 

Notes to the financial information

Six months to 30 September 2017

 

1.    GENERAL

 

The interim financial information for the six months to 30 September 2017 is unaudited and was approved by the Directors of the Company on 27 November 2017.  The condensed financial information set out above does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

The Company's operations are not subject to significant seasonality or cyclicality.

 

A dividend of £711,195 has been paid in the six months ended 30 September 2017 (six months to 30 September 2016: £168,101).

         

2.    ACCOUNTING POLICIES

 

The interim financial information in this report has been prepared on the basis of the accounting policies set out in the Group's most recent annual financial statements for the year ended 31 March 2017.

 

IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an on-going process of review and endorsement by the European Commission.

 

The financial information has been prepared using accounting policies that the Directors expect to be applicable as at 31 March 2018, with the exception of IAS 34.

 

The Directors have adopted the going concern basis in preparing the financial information.  In assessing whether the going concern assumption is appropriate, the Directors have taken into account all relevant available information about the foreseeable future. 

 

The condensed financial information for the period ended 31 March 2017 set out in this interim report does not comprise the Group's statutory accounts as defined in section 434 of the Companies Act 2006.

 

 

3.    SEGMENT REPORTING

 

Management identifies its operating segments based on the Group's service lines, which represent the main product and services provided by the Group. The Group's Comparison Services segment represents more than 90% of the business, and as such the Group considers that it has one reportable operating segment.



 

 

 

4.    EXCEPTIONAL EXPENSES

 

Exceptional Administrative Expenses                                           


 6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year to

31 Mar 2017


£'000


£'000


£'000

Adjustment to expected deferred consideration

1,405


-


-

Acquisition related expenses

77


-


386








1,482


-


385

 

Exceptional Finance Costs                                  


 6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year to

31 Mar 2017


£'000


£'000


£'000

Change in NPV of deferred consideration

390


143


318








390


143


318

 



 

5.    EARNINGS PER SHARE

 

Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

Basic and diluted earnings per share                                             


 6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year to

31 Mar 2017


£


£


£







Total basic earnings per share

0.0029


0.0218


0.0367

Total diluted earnings per share

0.0027


0.0208


0.0351

 

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

 


6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year to

31 Mar 2017


£'000s


£'000s


£'000s

Earnings used in the calculation of total basic and diluted earnings per share

188


1,414


2,377

 

 

Number of shares

 

6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year to

31 Mar 2017


Number


Number


Number

Weighted average number of ordinary shares for the purposes of basic earnings per share

64,828,057


64,828,057


64,735,539

 

Taking the Group's dilutive potential ordinary shares into consideration in respect of the Group's weighted average number of ordinary shares for the purposes of diluted earnings per share, is as follows:







Number of shares

6 months to 30 Sep 2017


6 months to 30 Sep 2016


Year to

31 Mar 2017







Potential dilutive effect of share options and warrants

4,770,506


3,150,171


3,039,893







Weighted average number of ordinary shares for the purposes of diluted earnings per share

69,598,563


67,978,228


67,775,432

 

 

 

 

 

 

6.    SHARE CAPITAL

 

a)    Share Capital

 

The Company has one class of Ordinary share with 0.4p nominal value per share which carries no right to fixed income nor has any preferences or restrictions attached.

 

No new shares were issued in the period

 

                Issued and fully paid:


30 Sep 2017


30 Sep 2016


31 Mar 2017


£'000s


£'000s


£'000s







Ordinary shares of 0.40p each

259


259


259

 

 


30 Sep 2017


30 Sep 2016


31 Mar 2017


Number


Number


Number







At beginning of the period

64,828,057


64,828,057


64,828,057

New Share Issue

-


-


-








64,828,057


64,828,057


64,828,057

 

 

b)    Share based payments

 

During the period the Group granted 322,500 options with an exercise price of £1.06 per share.

 

All options in issue vest in 3 equal tranches, three, four, and five years after date of grant. The options are settled in equity once exercised. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest.

 



As at 30 Sep 2017


 

 

Number of options


Weighted average exercise price £





Outstanding at 1 April

4,552,364


0.56





Granted

322,500


1.06

Forfeited prior to vesting

(34,520)


0.51

Exercised

(193,975)


0.40









Outstanding at 30 September

4,646,369


0.60

 

 



 

7.    BORROWINGS

 

In December 2016, the Group took out a 5-year term loan for £5 million and a £2 million revolving cash flow facility. Both had an initial interest rate of 1.90% above LIBOR but this has reduced to 1.55% above LIBOR during the period as certain financial criteria were met. The term loan Is subject to repayments of £250,000 plus accrued interest quarterly.

 

Loans are secured by way of fixed and floating charges over all assets of the Group.

 

8.    DEFERRED CONSIDERATION

 

In February 2015, the Group acquired 100% of the issued ordinary share capital of Legal-Eye Limited, a company incorporated in England and Wales. Part of the consideration was deferred with payments of £1,080,000 due in each of October 2016 and October 2017.

 

In December 2016, the Group acquired 100% of the issued ordinary share capital of Conveyancing Alliance Holdings Limited and its 100% subsidiary Conveyancing Alliance Limited (together referred to as "CAL"), companies incorporated in England and Wales. Part of the consideration is contingent based on a range of between 0.5 and 1.75 times annualised PBT of CAL for the period between completion to 31 March 2018 and also for the 12 months ending 31 March 2019. The estimated undiscounted value of this element of the consideration has been increased to £5,272,000 (£3,473,000 as at 31 March 2017). There is a cap on the contingent consideration payable and the current estimate is for the cap to be reached.

 

The amounts shown in the balance sheet are at net present value and the movement arising on this is shown below

 

 


30 Sep 2017


£'000s



At beginning of the period

3,602



Adjustment to expected deferred consideration

1,405

Change in NPV due to movement in time

390





At end of the period

5,397

 

The current deferred consideration liability of £3,406,000 is included within trade and other payables.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR LLFLELLLDFID
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Half-year Report - RNS