ULS Technology PLC Trading & COVID-19 Update (4963I)
April 02 2020 - 1:00AM
UK Regulatory
TIDMULS
RNS Number : 4963I
ULS Technology PLC
02 April 2020
ULS Technology plc
("ULS" or the "Company")
Trading & COVID-19 Update
ULS Technology plc (AIM: ULS), the provider of online B2B
platforms for the UK conveyancing and financial intermediary
markets, provides a trading update for the 12 months to 31 March
2020 (the "Period").
During the Period, the Company continued to focus on the
development and roll-out of its new flagship product, DigitalMove,
which enables conveyancing to be completed in a secure and
paperless environment whilst significantly reducing processing
time.
Despite some impact on conveyancing completions in the last few
weeks of the Period due to COVID-19 making house-moving
increasingly difficult, the Company expects to announce underlying
pre-tax profits for the year ended 31 March 2020 in the region of
GBP4.7 million, and to have generated significant levels of
Operating Cashflow.
COVID-19
The Company has strong business continuity systems and
procedures so has been able to move seamlessly to home working in
the last few weeks and is able to provide a full service as usual.
However, Government advice that moving house should be avoided if
at all possible in the current social distancing environment means
that the number of conveyancing transactions being completed are
beginning to reduce substantially. Given the uncertainty as to the
duration of the restrictions and the speed of the recovery when it
comes, it is not possible for management to give guidance on its
forecasts for the next financial year and beyond. Despite the
short-term challenges and their impact on profitability, the Board
believes that the Company continues to be well positioned with a
robust balance sheet and significant cash balances. The Company
will continue to invest in the development of DigitalMove to ensure
that the Company is in a strong position when we emerge from this
situation with the long-term prospects for the business
enhanced.
Balance sheet, liquidity and headroom
The Company had over GBP2 million in cash as at 31 March 2020,
as a result of fully drawing its bank facilities resulting in a net
debt position of c.GBP3.7 million. Whilst the Board believes this
places the Company in a strong financial position, it is
nevertheless taking a prudent approach to future planning by
focussing on cash flow and liquidity while continuing a measured
investment programme in both product development as well as its
relationships with its introducers and conveyancing panel. In order
to preserve cash and maintain the liquidity position of the
business in the current environment; the Company has taken various
actions, including but not limited to:
- deferring VAT payments under the Government VAT holiday scheme;
- negotiating a six-month deferral of term loan repayments worth
GBP500,000 by extending the duration of the term loan by 6
months;
- reducing overhead spend where it does not impact the ability
to provide full operational functionality albeit on lower volumes
or affect the product development pipeline; and
- suspending dividend payments.
Outlook
In the immediate term the Company expects to see a sharp fall in
revenue and profitability while social distancing measures remain
in place. However, once we return to a normal market the Company
expects to benefit from its robust, profitable business model,
underpinned by strong cash generation. For this reason the Company
is confident in continuing to invest in DigitalMove to ensure that
the business is able to move quickly as and when the housing market
improves. In the meantime, there is an expectation that
re-mortgaging volumes will hold up much better than transactional
volumes providing some continuity of revenue in the short-term.
Steve Goodall, CEO of ULS Technology, added: "I have been
delighted by the attitude and application of all our staff as we
have transitioned to a home-working environment. We continue to
work closely with our introducers and conveyancing panel to support
them and provide the best service in what will be a difficult
period for everyone. The Company remains in a strong position with
a robust balance sheet and we are excited by the significant growth
opportunities that we believe DigitalMove will provide. Our model
is focused on cash generation, profitability and sustainability and
we believe that our long-term prospects remain strong and
undiminished. "
Enquiries:
ULS Technology plc Via Walbrook PR
Steve Goodall, CEO
John Williams, Finance Director
Numis Securities Limited (Nomad & Broker) Tel: 0207 260 1000
Stuart Skinner / Paul Gillam
Walbrook PR Limited ulsgroup@walbrookpr.com or Tel: 020
7933 8780
Tom Cooper
Nick Rome
Nicholas Johnson
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.
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END
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