ULS Technology PLC Acquisition (2802S)
20 December 2016 - 3:11AM
UK Regulatory
TIDMULS
RNS Number : 2802S
ULS Technology PLC
19 December 2016
ULS Technology plc
("ULS", the "Group" or the "Company")
Acquisition of Conveyancing Alliance
ULS Technology plc (AIM: ULS), the provider of online B2B
platforms for the UK conveyancing and financial intermediary
markets, announces that it has acquired 100% of the issued share
capital of Conveyancing Alliance Holdings Limited and its wholly
owned subsidiary Conveyancing Alliance Limited ("Conveyancing
Alliance" or "the business") for an initial cash consideration of
GBP7.2m plus an earn-out until 31 March 2019 to be wholly satisfied
in cash. The acquisition is expected to be significantly earnings
accretive in the first full year of ownership.
Conveyancing Alliance
Conveyancing Alliance is one of the leading B2B technology
platforms in the UK for the selection and instruction of
conveyancing.
Conveyancing Alliance operates under three separate and distinct
brands, "Conveyancing Alliance" and "Agency Convey", targeted at
the estate agency sector and "Broker Conveyancing", targeted at the
mortgage broker sector. The business has delivered strong growth in
recent years, growing revenue from GBP3.8m in the year ended 31
December 2014 to GBP4.4m in the year ended 31 December 2015 and PBT
from GBP808k to GBP949k over the same period. Conveyancing Alliance
is well positioned in the market and a direct comparator to ULS'
core conveyancing proposition, being a 'pure play' technology
service specialising in the selection and instruction of
conveyancing solicitors.
Estate agents and mortgage brokers submit new cases via
Conveyancing Alliance's software platform, which then enables them
to select and instruct from a panel of solicitors and conveyancers
that are all contracted to the business and committed to delivering
the best possible service for customers. The end pricing to
customers is highly competitive and typically cheaper than that
secured from high street firms.
The management team is committed to continue growing the
business and will have a special focus on pursuing new growth in
the estate agency sector, complementing and supporting ULS
Technology's core strategy and objectives.
As of 31 December 2015, Conveyancing Alliance had net assets of
GBP491k.
Investment rationale
The Directors believe this acquisition delivers ULS significant
new growth opportunities in its conveyancing business and supports
its stated strategy to become the leading handler of conveyancing
in the UK. In particular, this acquisition significantly increases
the Company's share of the conveyancing market and further
diversifies conveyancing revenue sources.
The acquisition is also in line with ULS' strategy to penetrate
the estate agent introducer market. ULS has successfully built and
piloted its unique estate agency performance website
(www.estateagent4me.co.uk) in order to grow its conveyancing market
share. This technology is already provided directly to customers
via HomeOwners Alliance but will also now be used to help
Conveyancing Alliance grow its volumes in the estate agency sector,
through its own brands tailored for this market.
The acquisition is expected to be significantly earnings
accretive in the first full year of ownership.
Acquisition consideration
ULS has acquired the entire issued share capital of Conveyancing
Alliance from Harpal Singh, Jitna Singh, John Phillips, Angela
Phillips and Paul Duckworth (the "Vendors") for an initial cash
consideration of GBP7.2m plus an earn-out, payable in cash. Under
the terms of the earn-out, ULS shall pay to the Vendors between
0.5-1.75x annualised PBT for the period from completion to 31 March
2018 and between 0.5-1.75x PBT for the 12 months ended 31 March
2019 (the multiplier of PBT in each year is determined by a ratchet
linked to the financial performance of Conveyancing Alliance), up
to a maximum total consideration of GBP12.5m. ULS shall also pay to
the Vendors GBP829,264 in respect of Conveyancing Alliance's
surplus cash in the bank at the close of business on completion.
The Vendors are committed to remaining with the business until 31
March 2019.
New debt facilities
The Company has entered into an agreement with HSBC in respect
of two new debt facilities; a GBP5m 5-year term loan and a GBP2m
3-year revolving facility. Half of the term loan is repayable in
monthly instalments over the life of the loan, with the remainder
due at maturity.
Commenting on the acquisition, Ben Thompson, Chief Executive
Officer, said:
"This acquisition is central to our strategy of growing market
share in the UK conveyancing market and pursuing further growth via
introductions from the estate agency market. Conveyancing Alliance
has shown a strong track record of revenue and profit growth and
fits neatly within ULS Technology and its plans for the future.
Around half of all UK conveyancing is bought by consumers
following estate agent recommendations. Currently ULS has little
presence in this sector, which is one of the reasons that the
strategic fit with Conveyancing Alliance is so strong. Our combined
offering is intended to provide highly competitive pricing and a
modern technology service that makes customers' lives easier,
enabling them to complete a home move painlessly and more
quickly.
We thoroughly look forward to working with the Conveyancing
Alliance team to enjoy even stronger future success."
Enquiries:
ULS Technology plc Tel: 01844 262392
Peter Opperman, Chairman
Ben Thompson, CEO
John Williams, Finance Director
Numis Securities Limited Tel: 0207 260 1000
(Nomad & Broker)
Stuart Skinner / Paul Gillam,
Corporate Advisory
Michael Burke, Corporate
Broking
Walbrook PR Limited Tel: 020 7933 8780
Paul Cornelius / Nick Rome ulsgroup@walbrookpr.com
Helen Cresswell / Paul Whittington
This information is provided by RNS
The company news service from the London Stock Exchange
END
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