(Sharecast News) - Conveyancing and financial intermediary platform provider ULS Technology updated the market on its first half on Wednesday, describing the period as "highly unusual", with the housing market virtually coming to a halt in April and May in the height of lockdown, before "bursting back to life" in June, and being buoyant in terms of instructions throughout the rest of the period and beyond.
The AIM-traded firm said that, while there was a lag between the surge in instructions and those instructions turning into completions, that market performance gave itr confidence in and visibility of revenues over the coming months.
In addition to that market back-drop, the group said its performance in the six months ended 30 September was underpinned by the continued growth in the number of mortgage advisers using its platforms, which had grown by 9% over the first half.
Despite the unprecedented backdrop, the group said it made a small positive underlying profit before tax for the period of £0.1m, despite revenue being 31% down on the same time last year.
That, the board said, was in line with the fall in volume in the overall housing market.
After making adjustments in its cash management due to Covid-19, the company generated operating cash flow which meant that net debt has decreased to less than £2m from an opening net debt position of £3.4m at the start of the financial year.
"We are particularly pleased with the progress of DigitalMove which is gaining increased traction in the market," the board said in its statement.
"The period of lockdown and home-working has highlighted the need for a paperless platform which makes the house moving process quicker, easier and more secure."
During the period, the group launched its 'Solicitor Portal', which allows solicitors to instruct cases directly using DigitalMove, completely independent of its conveyancing comparison platforms.
"There are a growing number of solicitors using this portal to place cases including ones who are new to the group's platforms."
Looking ahead, ULS said the housing market was "undoubtedly buoyant" at present, with instructions up year-on-year.
The stamp duty holiday was providing an additional incentive and while that was due to end in March, unless there was a change in government policy, the impact of Covid-19 was likely to provide a stimulus to the housing market for longer.
It said Predictions were that increased home working would become permanent, with ULS expecting that change in working practices, combined with the experience of lockdown, would encourage people to re-evaluate where they lived.
The potential for a recovery in the first time buyer market, where the group described itself as "particularly strong" but which had remained relatively subdued since the end of lockdown, offered additional growth potential as higher loan-to-value mortgages returned to the market.
ULS said the government's promise to transform 'generation rent' into 'generation buy' suggested further stimulus to that section of the market could be forthcoming, which would also benefit transaction volumes.
"I am delighted with the resilience of the Group in what has been a difficult period for most sectors of the UK economy," said chairman Martin Rowland.
"The underlying growth in our conveyancing comparison business with both increasing numbers of advisers using our platforms as well as increasing instructions is notable and the significant opportunity for DigitalMove has become even more apparent.
"I am excited by the impending arrival of Jesper With-Fogstrup as our new CEO - I believe that the strengths of DigitalMove and Jesper's skill sets will prove to be a potent combination."
At 1307 GMT, shares in ULS Technology were down 1.3% at 53p.
20 Oct 2014 06:56