ULS.L Regulatory News (ULS)

ULS Technology plc

(The "Group" or the "Company")

Half Yearly Report

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 2016.

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

Financial Highlights

· Revenue increased slightly to £9.78m (H1 2016: £9.76m)

· Underlying Operating Profit1 increased by 4% to £1.95m (H1 2016: £1.88m)

· Adjusted EPS1,2 increased by 5% to 2.40p (H1 2016: 2.28p)

· Net cash and equivalents of £3.7m as at 30 September 2016 (FY 2016: £2.7m)

· Interim dividend of 1.10p per share, an increase of 5% on the same period last year

1. Before acquisition intangibles, amortisation and exceptional costs relating to the acquisition of Legal-Eye Limited

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

Operating Highlights

· Increased market share in difficult market conditions

· Signed a number of new customer contracts, with both financial intermediaries and mortgage lenders

· Appointment of new Managing Director for Legal Eye

· Estate agency performance comparison service (estateagent4me) now promoted by HomeOwners Alliance

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

"I am pleased that we have made good progress in the first half of the year, especially given the unusual market challenges we faced, firstly due to the changes made to the Buy to Let market and secondly the EU referendum.

"We successfully outperformed our competition in the conveyancing comparison market, growing both our B2B customer base and our direct to consumer channels.

"Market conditions have recovered well after the initial referendum shock, and although much remains unknown about the wider economic environment, we are expecting stronger activity in the second half of the year.

"I am very pleased by our strong performance during the period and remain excited by our growth prospects with an encouraging pipeline of new activity. I am therefore confident that we will continue to grow our existing customer relationships while adding further new channels to market to expand our market share. I remain excited about the Group's future and its scope to continue to grow profitably."

 Enquiries:

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 was a successful period for the Company, improving on all its headline financial metrics despite a difficult market backdrop. The UK government's changes to the taxation of buy-to-let properties and landlords' income led to a slow-down in that part of the market at the start of the year, and the EU referendum led to a quiet summer, with transaction volumes reduced significantly.

Given the volatile market environment, the Board is delighted that the Company has outperformed its competitors and secured new relationships that lay the foundations for further growth in market share.

The Company has recently had success in winning new work from mortgage lenders; this is an area that the Company intends to expand further into, by helping lenders reduce their risk exposure and costs, and through tailoring a better all-round experience for their customers.

Legal Eye

Paul Saunders commenced his role as Managing Director of Legal Eye this month and will immediately focus on growing Legal Eye's pipeline of new business opportunities. Paul's strong background and experience will help to further strengthen quality and risk management as a central element of ULS's eConveyancing value proposition.

HomeOwners Alliance

Since investing in HomeOwners Alliance ("HOA") in March 2016, the Company has successfully completed the integration of a tailored version of eConveyancer into HOA's website. The relationship with HOA has opened up the potentially highly lucrative direct-to-customer sales channel for ULS and there is significant scope to build on the strong traction achieved to date.

In addition, Estateagent4me, the first website to rank the performance of all types of estate agencies, has been embedded into the HOA website and HOA will start to promote this more widely throughout the second half of the year.

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 degree of paperwork and manual intervention and 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 1.10 pence per share; this is a five per cent increase on the dividend paid for the six months to 30 September 2015. The dividend record date is 2 December 2016 and the dividend is expected to be paid on 16 December 2016.

Board Changes

Nigel Hoath stepped down as Non-Executive Director at this year's AGM in August.

Outlook

Market conditions have improved after the initial referendum shock, and although much remains unknown about the wider economic environment, the Board is expecting a more normal level of activity in the second half of the year.

The Company will continue to target market share growth, both via new relationships and securing increased work from existing customers. The Board remains excited about the Company's future and expects it to meet the Board's expectations for the full year.

Ben Thompson

Chief Executive Officer

UNAUDITED INCOME STATEMENT

Six months to 30 September 2016

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

Six months to 30 September 2016

UNAUDITED BALANCE SHEET

At 30 September 2016

UNAUDITED STATEMENT OF CHANGES IN EQUITY

Six months to 30 September 2016

UNAUDITED STATEMENT OF CASH FLOWS

Six months to 30 September 2016

Notes to the financial information

Six months to 30 September 2016

1. GENERAL

The interim financial information for the six months to 30 September 2016 is unaudited and was approved by the Directors of the Company on 21 November 2016. 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 seasonality or cyclicality.

A dividend of £168,101 has been paid in the six months ended 30 September 2016 (six months to 30 September 2015: £647,279).

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 2016.

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 2017, 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 2016 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 three main operating segments are:

· Comparison services

· Compliance consultancy for the legal sector

· All other segments which includes head office functions

Any inter-segment indebtedness is excluded when arriving at the assets and liabilities for each segment. Consolidation items such as goodwill and intangibles sit within 'Other'.

4. EXCEPTIONAL EXPENSES

Exceptional Administrative Expenses

Exceptional Finance Costs

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

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

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:

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:

b) Share based payments

During the period the Group granted no new options.

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.

At the end of the period, there were 2,802,800 options outstanding with a weighted average exercise price of £0.43 per share

7. BORROWINGS

In July 2014, the Group took out a bank loan of £4 million, of which £1,850,000 was repaid in August 2014. The remaining balance was repayable in quarterly instalments of £180,000 with quarterly interest payments charged at 2.75% over base rate. During the period, the Group took the decision to make early repayment and the facility was repaid in full on 30 September 2016.

8. DEFERRED CONSIDERATION

On 27 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. The amounts shown in the balance sheet are at net present value and the movement arising on this is shown below