ULS ripe for expansion

Many big-name organisations, including Lloyds Banking Group, Halifax, Yorkshire Building Society and TSB, already use the ULS platform. The service provided works like this: when someone expresses an interest in buying a house, the platform will provide details of all the solicitors in that area, estate agents and other services and say which is the cheapest, the fastest, or in the case of estate agents, how good they are at achieving the original listing price.

For partners signing up, notably solicitors, if they attract a lot of business, they can push prices up to avoid being overloaded, and do the reverse when business is sparse. ULS charges a fee, which in the case of conveyancing - the chief focus of the business - is based on a share of that charged by the conveyancer. ULS is paid at the same time as its partner is paid.

Management's key aim is to continue to win market share and there are plenty of opportunities given that it currently has only 5 per cent of the market. Given the low level of capital needed to run the business and the relatively fixed nature of running costs, such growth should lead to significant operational gearing with growth in profits and cash flow substantially outsripping sales growth. What's more, at the moment ULS has very little direct competition, although this could change as the legal services market opens up.

Chief executive Ben Thompson wants to rapidly grow the company to a market capitalisation of at least £100m, through both acquisition in its highly fragmented market and organic growth. Last year it acquired Legal Eye, which provides risk management and compliance services to solicitors and licensed conveyancers, and the business has already performed ahead of expectations.

There are other services coming on stream, too. A new Will Writing comparison and introduction service has just been launched through two major partners, allowing more than 400 mortgage advisers to compare will writing and other estate planning services through ULS. Other services that are expected to come online later this year include a broadband comparison facility and a service that enables potential house buyers to compare removals services. One of the strengths of ULS is the very savvy technical team that works hard to maintain and develop the online service, with new facilities joining the existing offering on a relatively seamless basis.

On the financial front, ULS had net cash at the end of the last financial year, and unlike many small-growth companies, strong cash flows allow it to pay a decent dividend.