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ULS battles sluggish housing market

The online conveyancing specialist has guided towards flat revenue this year
June 19, 2019

Weak housing transaction volumes hindered ULS Technology’s (ULS) revenue growth in the year to March, as brokers placed fewer instructions, particularly during the second half. Market share was also static at around 3 per cent of the online conveyancing platform market, which in turn meant pre-tax profits before exceptional items dipped slightly to £5.4m. Investors can expect more to come; against a tough trading backdrop, chief executive Steve Goodall reckons revenue will be flat in FY2020.

IC TIP: Hold at 75p

Instructions from brokers including Lloyds and Moneysupermarket.com declined by 5 per cent to 118,000, while a higher rate of conversions meant completions were static. Management is pinning its hopes on the launch of its "DigitalMove" platform, which ULS reckons will "transform the experience of buying and selling property". The group also plans to attract more small-scale brokers to its systems, in a bid to boost the gross margin from the 41.7 per cent posted in the period, up from 40.7 per cent a year earlier.

Analysts at Numis expect adjusted pre-tax profits of £5.4m and EPS of 6.5p for the year to March 2020.

ULS TECHNOLOGY (ULS)   
ORD PRICE:75pMARKET VALUE:£49m
TOUCH:75-75.8p12-MONTH HIGH:139pLOW: 62p
DIVIDEND YIELD:3.2%PE RATIO:15
NET ASSET VALUE:16.5p*NET DEBT:

27%

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201516.11.51.81.34
201620.73.13.72.1
201722.33.54.42.2
201830.72.73.12.3
201930.04.15.12.4
% change-2+50+67+4
Ex-div:4 Jul   
Payment:2 Aug   
*Includes intangible assets of £17m, or 27p a share