Uls Technology Share Discussion Threads

[simon gordon] 08/8/2014 17:10

Today's Conveyancer - 30/7/14:

eConveyancer lists on the stock exchange

United Legal Services also known as eConveyancer, listed on to the stock exchange on Monday.

ULS, established in 2003, launched the eConveyancer platform in 2004 to provide a web based comparison service for its customers purchasing conveyancing.

Over the years, the company has formed relationships with nationwide intermediaries including Lloyds – which is estimated to account for 65% of the groups' gross profit, Legal and General and Yorkshire Building Society.

With a successful track record of revenue and profit growth, between 2011 and 2014, the group grew revenue by 52%, increasing from over £4 million in 2011, to over £16 million in 2014. eConveyancer estimates that approximately 82% of its growth is influenced by increased market share and 18% by a recovery in the conveyancing market.

The eConveyancer comparison product contributed to 70% of the group's total revenue in 2014 with the remaining 30% of revenue comprised of ULS's other services; eConveyancer Searches, ID Checks and Lease Extensions.

eCon enables customers to obtain conveyancing quotations from solicitors and presents the customer with a range of available firms, determined by distance, fee's and satisfaction ratings – parameters which can be set by the customer.

With the UK residential conveyancing market generating over 850,000 conveyancing transactions each year, eConveyancer itself handled on average over 5,700 transactions per month in 2014, up approximately 50% from the 3,800 monthly transactions seen in 2013.

eConveyancer was one of the first providers of online comparison services directly available to residential conveyancers and believes that this secured important relationships with distributors; with over 7,500 individual mortgage brokers using the service and solicitors, with a current client pool of 150 firms.

Despite distributors being the main customer base for eConveyancer, the company are keen to increase the presence of soliciting firms on their website as they describe it as 'an attractive proposition' due to its ability of enabling solicitors to 'connect with a large pool of potential clients via intermediaries, increasing work flow at a low cost of acquisition.' The Group also believes that the platform 'helps solicitor firms with low brand recognition by raising their profile and helping them attract new business.'

[simon gordon] 08/8/2014 16:04

What I am trying to get across is that B2C for ULS is a tiny market and not likely to grow much. The key is to embed with mortgage originators, B2B, who then put their customers through econveyancer to instruct a solicitor. Lloyds is their big daddy customer, who they're still developing for more volume. Getting a big new mortgage originator would enable more rapid growth, though ULS say it will be difficult to onboard another big mortgage originator, but now that they are public and not seen so much as a Lloyds owned business they can sell into them as a PLC.

[jimjones1] 08/8/2014 15:39

Just wanted to say a HUGE thank you to everyone who has helped me out so far.

This will be my final post (plea)! I just need a few more complete questionnaires so if you wish to take part please follow the link below. It will only take 2-3 minutes of your time.



Just in case you didn't catch my post earlier this week and wonder what this is all about, I am doing a master's thesis on communications within online financial communities. This questionnaire will be a source of my data.

Of course I am more than willing to share the results of the study with anyone who is interested.

Thanks again for your help.



P.S. If you have any questions, please feel free to contact me at jaw73(at)aber.ac.uk.

I confirm that all responses remain strictly ANONYMOUS and that no personal information with be associated with your responses. This study is purely for research purposes with no commercial gain to myself (unfortunately!)

[simon gordon] 08/8/2014 15:34

Henry,

If there was a lot of potential volume wouldn't it be cheaper for RMV to start one from scratch?

Coding wouldn't be too complex. They could buy a smaller online operator and use their software as a base, cost a couple of million.

Then go out and link up with some large solicitors?

What's ULS's USP except the Lloyds contract?

Why pay +£40m for ULS who's business totally depends on Lloyds for its valuation?

Aren't the bulk of conveyancing instructions taking place at the office of the mortgage originator who may require the customer to use their approved conveyancer?

[henryatkin] 08/8/2014 15:23

Simon...you have been able to buy DIY conveyancing kits on line for some time. Its a fairly straight forward procedure if you have a bit of time on your hand but most people still prefer to use a solicitor even though a solicitor is not required. House buyers are looking for peace of mind and I believe most are not penny pinching when it comes to buying and moving home. Getting a new mortgage and moving can be a stressful business so anything to smooth the process is an attraction. If you don't retain a solicitor, then given the choice by your mortgage provider/broker to
1. DIY conveyance
2. Search various solicitors yourself for a competitive price
3. Use our solicitor search software to do the search free of charge or a small fee in a few seconds.
I believe the majority of us would choose option 3. Its another box ticked in the stressful house buying/moving process.

The reason I think it might fit with RMV is they have had most of their expansion out of the market into UK estate agents. They are now under pressure from Zoopla and their organic growth is limited. They will need to look at acquisitions to boost growth and they can't buy estate agencies or there is a conflict of interest. There are few options open to them other than new overseas markets. ULS would be a piece of kit they could own and direct traffic to from their existing website and it wouldn't offend their estate agent customers. The purchases would be able to seek a mortgage knowing they have an instant search access to a competitively priced solicitor via RMV - a well respected & trusted property search company. In the meantime ULS would still be able to deal with the mortgage providers or comparison sites - none of which conflict with RMV interests.

[18bt] 08/8/2014 13:15

Local firms are not necessarily cheaper as they operate out of expensive offices in London, SE, Northern Cities. Plenty of new-style law firms with bulk conveyancing operations use paralegals and operate out of cheap call centres in local enterprise zones. Using proper systems can cut people costs significantly.

[simon gordon] 08/8/2014 12:49

Eezy,

I doubt they do much biz with Money Supermarket. If you use a cost comparison site like that you'll probably phone around some local solicitors to ball check, I would, and you'd probably find you'd save money. The key is that the happy house buyer is in a room with a trained "sales" rep who'll show them econveyancer and they'll think they're getting a choice and a decent deal. When in fact they are paying the bank and ULS to source them a solicitor.

I'm not discounting the business model, I just don't see why RMV would want to buy them.

With no barriers to entry RMV could set up an conveyancing comparison website in no time at little cost.

ULS's USP is the Lloyds contract to 2018.

[aishah] 08/8/2014 12:38

Admission Doc:

Profitable growth with good cash generation and earnings visibility

The Group has a successful track record of revenue and profit growth, and cash generation. Between 2011 and 2014, the Group grew revenue by 52 per cent. CAGR and EBITDA by 65 per cent. CAGR. The Group's revenue growth led to its inclusion in the Sunday Times Tech Track 100 in 2013. According to the Group's unaudited management accounts, revenues attributable to the Group's core conveyancing business grew from approx. £7,910,000 in FY2013 to approx. £11,816,000 in FY2014. The Group's data indicates that repeat business from existing distributors accounted for approx. £2,349,000 of this growth, generating (on average) 30 per cent. higher revenues than in FY2013; the remaining amount was driven by new distributors. The Group has generated operating cash since 2011, increasing from £1.3 million in year ended 31 March 2012 to £2.9 million in the year ended 31 March 2014. In the year ended 31 March 2014, the Group converted 99 per cent. of EBITDA into operating cash flow. The Group maintains a negative net working capital position, which has historically increased in line with trading. Solicitors conducting conveyancing work are obliged to pay the Group within seven days of each transaction completing (apart from in the case of Accord, who are obliged to pay monthly). Payments in respect of searches conducted through the platform are collected weekly via direct debit following an order being made.
The Board has good visibility over the Group's expected financial performance three months in advance, in line with the duration of a typical conveyancing appointment. Revenue is only recognised once a case has completed.

Generates high margin incremental revenue from most conveyancing transactions

The Group has benefitted from providing identification checks, land registry searches and local authority searches to the solicitors that win conveyancing appointments via the platform; as existing users of the platform, this is a captive audience for the Group. The Group estimates that approximately half of all completions generate search fees. The success of the Group's search offering has led to the development of a standalone search platform to be launched in 2015 that will be accessible to solicitors undertaking conveyancing work regardless of whether or not they are included on the Group's solicitor panel.

Operationally geared business model

The Group's business model allows for significant operational gearing as transaction volumes increase. The Group has a small team of salesmen who are responsible for maintaining and building relationships with the distribution network, including broker networks and UK mortgage providers, and then it is the distributors that generate transaction volume through the platform. The Group's software development team is already well developed and the Directors do not believe it would need to scale-up in proportion to increased transaction
volume. The Directors believe that the most significant additional demand on the Group is likely to be in relation to customer services. The customer services team is responsible for setting up solicitors on the panel, managing
the panel and providing support to end customers. The Directors expect that a modest increase in compliance and operations staff may also be required as the Company grows.

[eezymunny] 08/8/2014 12:29

I don't think you're entirely right Simon

hxxp://www.moneysupermarket.com/conveyancing/

That's a white label price comparison offering with ULS behind it...AIUI.

However the Lloy biz is the biggest deal for now, as you point out.

One could make a case for great opps for ULS to do more white label deals for all sorts of legal and property market stuff.

[simon gordon] 08/8/2014 12:19

18,

From what I can see ULS is a distinct business line from RMV and ZPLA.

ULS nestle (embed) next to the mortgage originator.

They are not really a cost comparison site.

Lloyds take a commission for putting their client through econveyancer, ULS take a cut and the solicitor gets the order. If the customer shopped aroung local solicitors they'd probably get a better deal because they wouldn't be paying two middle men: the bank and ULS.

I don't think RMV and ZPLA would want to buy ULS.

ULS's USP is the Lloyds contract, I don' think they actually save customers money.

The above is not de facto, just my impression.

[18bt] 08/8/2014 06:41

Picked up some via an Octopus AIM EIS at the issue price. Interesting stock - agree with comments about RMV and also Zoopla which has just floated. From a selfish viewpoint, I don't want them to sell for 3 years or I lose my EIS relief, but I suppose there's a price for everything.

[mattboxy] 05/8/2014 19:08

Joined the party today at 45.05 and for once my timing was good. Just read the whole thread and it would appear obvious the onjohn is a tool and is clearly shorting. Unfortunately he is using old data telling porkies and not good at covering his tracks. Nice thread though and hopefully with a good divvy in sept ish will push on through the 50s. Maybe someone should tell Anthony Jenkins at Barclays to use them and show some customer first initiatives for once!

[hpcg] 05/8/2014 16:08

Yes one could ;-) just a bit over given the spread. Decent timing for an investor; time of year, during a bout of IPO phobia, and with the house builders under pressure.

[aishah] 05/8/2014 15:52

Nice move today. Could have had them around 40p float price last week. Won't be surprised if other tipsheets cover them too.

[henryatkin] 05/8/2014 15:45

dasv....I fully agree re market share. RMV actually increased profits between 2007 & 2009 by over 30% when the property markets was in free fall. As the markets fell, RMV increased market share because many of the estate agents that didn't use them went bust and most of those that did use then stayed in business. Others realised that it was cheaper to dump traditional news print advertising in favour of RMV.

[henryatkin] 05/8/2014 11:36

geraldton....I think RMV will be watching what happens here. It would be a perfect fit for them, giving them a second income stream, being able to catch a fee from many of the potential purchasers who visit their site. Give it a year or two.

[dasv] 05/8/2014 11:25

simon - my thoughts:-

I'd say Lloyds involvement is a thumbs-up - not a thumbs down. ULS's biggest customer is Lloyds and they retain 20% of the equity.

"In the year ended 31 March 2014, the Group estimates that approximately 82 per cent. of its growth in completions was driven by increased market share and approximately 18 per cent. by a recovery in the conveyancing market."

The company is geared predominately to market share gains not housing market activity - i.e. potentially even in a flat property market they could still grow the bottom line.

SearchHub - I like the fact it's a service available to competitors too - again the potential to grow revenue/profit whatever is happening in the market

Estate agent comparison technology - great idea and yet another potential revenue stream.


In value terms, for the growth it's reasonable value. THe balance sheet is clean. Quality is high:_

Return on Capital: 38.1%
Return on Equity 64.8%
Operating Margin 15.3%

Looks like a solid smally, I will get some.

[geraldton1] 05/8/2014 08:50

Henryatkin - good find. The guy clearly has a crystal ball - bless him.

[henryatkin] 05/8/2014 08:27

Re ONJonhs.... He reminded me of the RMV thread when it started. There's always one out there waiting to miss out.

From RMV Thread, day 1 post No5:
...............................................................................

Woodsman2004
10 Mar'06 - 15:21 - 5 of 2062 0 0


Sorry to be a bit negative guys but I am less than convinced on this one....
More importantly, where's the growth going to come from?.....
And then of course there is the risk of a downturn in the property market....
I have a sneaky feeling this stock might become a target for the shorters in the event of uncertaintly......
buying this stock you are taking all the risks of the UK property market then compounding the risk by having an equity interst with no underlying security!
..............................................................................

I couldn't help but LOL whilst reading ONJohns posts.

[hpcg] 04/8/2014 10:03

AISHAH - yes, fortunately the IPO coincided with the culmination of an excess of under-performing recent launches. Even those throwing around other people's money must have looked at the shadow of a significant early days losses. Fortunately the buyers came to their senses - their job being to pay the least they can for an asset. I don't think this will be a high flyer but it shows good evidence of being a toll collector, which is ideal for a long term outlook.

[aishah] 04/8/2014 09:19

No. However they say:
"Over the four years to 31 March 2014, revenues jumped five-fold to £16.3m. Throughout that period, ULS was profitable and cash generative"
I expect a full write-up next issue. But this does seem a quality Co. brought to mkt at a reasonable valuation. dyor

[simon gordon] 04/8/2014 08:59

AISHAH,

Did Techinvest state any EPS forecasts?

Cheers

[aishah] 04/8/2014 08:43

Techinvest New Buy in their recent issue. MFM Techinvest Special Situations Fund has acquired a holding. Should put ULS on many radars now.