Half Yearly Report

RNS Number : 7877R

In-Deed Online PLC

10 November 2011

 

IN-DEED ONLINE PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30^TH SEPTEMBER 2011

	Six months to 30 September 2011 Unaudited	Six months to 30 September 2010 Unaudited
Revenue	£3,100	-
Loss before tax from continuing operations	(£823,109)	(£111,112)
Basic earnings per share from continuing operations	(4.8)p	(39.9)p

Highlights

·    Successfully launched the In-Deed conveyancing product to consumers on 23 May 2011

·    Highly effective PR campaign around the launch reaching trade, national press, national radio

·    Company admitted to AIM on 15 June 2011

·    Significant success on driving traffic to the new website with 50,000 visitors (40,000 uniques) since launch

·    Instructions from 120 new home buyers/sellers. 

·    100% of customer feedback good or excellent

·    £4m cash at bank and monthly cash cost of £120,000

Business Review

Launch of the In-Deed conveyancing service took place on 23 May.  Initial advertising was limited to exposure on the Findaproperty property portal and a PR campaign.  The PR campaign supported by Phil Spencer delivered a full page in the Mail on Sunday plus coverage that in total generated more than 3.5 million opportunities to see the brand.   Perception in the property and legal trade press was extremely positive - summed up by Estate Agent Today as a 'huge PR hit'. 

Admission to AIM took place on 15 June with the issue materially oversubscribed.

The website and the associated IT connections with our legal panel firms had undergone considerable testing prior to launch but had not been subjected to the volume demands or the scrutiny of real paying customers.  We were pleased to see that our IT has proved to be robust and we have achieved 100% uptime since launch whilst at the same time making some significant IT developments post launch.

The strategy was to drive traffic to the site through our relationship with the DMGT portals whilst working on the longer term task of developing In-Deed's ranking on search engines.   The portals have played a significant part in delivering over 10,000 visitors per month to the website since launch.  Over this period we have broadened our portal relationships beyond DMGT to Zoopla.  We do not anticipate that the recently announced merger of Zoopla with the DMGT portals will have a material impact on our portal strategy.

The longer term objective is to supplement portal driven traffic with visitors coming from natural and paid search activities.  Over the period we have seen a consistent improvement in traffic from search engines but there remains much to do that can, and will, yield increasing returns to the business.

With visitors running at c350 daily our challenge has been conversion of these visitors into paying customers.  We are confident that house buyers/sellers like the product but our website has to work very hard to communicate the product benefits and to differentiate us from a miscellany of 'lookalike' products promoted on the web, almost always under a misleadingly low price banner.   We gather data on the performance of our web pages and in the last 3 months we have implemented a programme of changes to the website which have had a positive impact on customer conversion, but significant challenge remains to achieve an economic acquisition cost per customer.  

We have experimented with the capture of phone/email addresses on certain customer 'journeys' in order to enable outbound telesales.  Telesales was launched as a pilot in mid September.  Further experimentation is required to prove we can capture an increased number of leads without suffering a more than offsetting fall in traffic numbers.  Telesales and associated lead generation is being refined and improved and it is too early to reach firm conclusions about the efficacy of this approach although we believe it will have a part in our business model going forward.

We have taken a close look at the price of our product and we believe that it is competitive in the mid market and represents good value for higher value property.  At the lower end (sub £200,000 purchase/sale price) we were less competitive and in September we adjusted our pricing downwards but without loss of margin to In-Deed.

All the above measures have had positive impact on conversion albeit from a relatively low base level.

The legal panel has performed well both in terms of the quality legal services provided and the IT links between our firms.   We are delighted with the first two firms and we are well advanced to launch with firm three before the end of 2011.  Legal capacity is not a limiting factor as long as we are focused on our origination efforts. 

Customer feedback has been universally positive with particular praise for the functionality delivered by the customer 'dashboard'.  This, as well as our marketing challenges, were summed up by one, of many happy customers, who gave us the following feedback:

 "Using In-Deed was a leap of faith for us.  We have moved 4 times before and always used the same solicitor who we would meet face to face to go through the paperwork.  I thought I would miss this personal contact and admit I was anxious.  I really need not have worried. My lawyer was great, her telephone manner was great and she always knew what was going on on our file and the level of legal service was faultless. I also love the fact that everything is in one place and I had no need to create a box file full of paperwork to keep track of."

Financial Review

The 6 months under review include both pre and post launch costs.  Inevitably there is a time lag between marketing expenditure and conversion into sales which then themselves take between 6 and 10 weeks to reach completion, and this is reflected in revenues of only £3k.   Spend on marketing and general overheads were within the company's own budgets and management are pleased with the level of interest that the has been shown in the 4 months post launch, with traffic levels close to target.  Conversion of traffic into instructions has however, to date, been slower than previously anticipated.

While the company is refining and improving the conversion process, focus has been on cost effectiveness of marketing channels and cost per lead/customer metrics.  We have used data gathered post launch to rationalize marketing spend which will be directed toward lead generation as well as driving site traffic.  There remains an ongoing spend on improving our performance on search engines which will show return over the longer term.

Headcount is tightly managed, with 9 full time employees, and is not expected to increase materially.  The company continues to manage expenditure with a focus on maximizing return on every investment.   Monthly cash costs are approximately £120k.

The balance sheet is strong with cash balances of £4m. 

Outlook

We are very happy with our product that we believe sets genuinely high and new standards in the UK conveyancing market for service and transparency.  There is also much to be satisfied with in terms of the traffic to the In-Deed website.  Going forward the focus is on customer conversion.  The next few months will provide some clearer answers about how telesales fits into this process.  Management are also exploring other sources of leads which have potential to reduce the cost of customer acquisition. 

With most home owners only moving house once every 12 years, we have concluded that traditional advertising solutions are most unlikely to yield acceptable returns giving extra challenges to materially increasing brand awareness.  In addition, we continue to have ambitions to widen our legal service offering beyond residential conveyancing.

Taking these factors into account, the Board has decided to accelerate the exploration of opportunities arising from the Legal Services Act which would potentially allow In-Deed to own one or more legal firms, or majority stakes therein.  This could enable In-Deed to capture margin, by undertaking legal work directly itself, as well as provide additional distribution.

Enquiries

In-Deed Online PLC	020 7401 9559
Harry Hill - Executive Chairman Peter Gordon - Managing Director
Numis Securities Limited - Nomad and Broker	020 7260 1000
Stuart Skinner/Andrew Holloway (Nomad) David Pountney/James Serjeant (Broker)
Third City PR	020 3174 1023
Mark Lowe, Graz Belli

IN-DEED ONLINE PLC

CONDENSED INCOME STATEMENT TO 30^TH SEPTEMBER 2011

	Notes	6 months 2011 Ended 30th September £ (Unaudited)		6 months 2010 Ended 30th September £ (Unaudited)		Period 2011 Ended 31st March            £ (Audited)
		£		£		£
Continuing operations
Revenue		3,100		-		-
Cost of Sales		(201,663)		-		-
		──────		──────		──────
Gross loss		(198,563)		-		-
Administrative costs		(626,050)		(111,112)		(471,759)
Other operating income		-		-		-
		──────		──────		──────
Loss from operations		(824,613)		(111,112)		(471,759)
Investment income		1,504		-		746
Finance costs		-		-		-
		──────		──────		──────
Loss before taxation		(823,109)		(111,112)		(471,013)
Taxation	3	-		-		-
		──────		──────		──────
Loss for the year		(823,109)		(111,112)		(471,013)
		══════		══════		══════
Attributable to:
Owners of the company		(823,109)		(111,112)		(471,013)
		══════		══════		══════
Earnings per share
From continuing operations
Basic (Pence per share)	4	(4.8)		(39.9)		(42.2)
Diluted (Pence per share)	4	(4.2)		(39.9)		(17.8)

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

Loss for the period/Total comprehensive expense		(823,109)		(111,112)		(471,013)
		══════		══════		══════
Attributable to:
Owners of the company		(823,109)		(111,112)		(471,013)
		══════		══════		══════

IN-DEED ONLINE PLC

CONDENSED STATEMENT OF FINANCIAL POSITION AT 30^th SEPTEMBER 2011

	Notes	2011 Ended 30th September (Unaudited) £		2010 Ended 30th September (Unaudited) £		2011 Ended 31st March (Audited)  £
Non-current assets
Intangible asset		232,292		-		278,750
Property, plant and equipment		6,123		443		3,166
		────────		────────		────────
Total non-current assets		238,415		443		281,916
		────────		────────		────────
Current Assets
Trade and other receivables		60,889		12,755		38,792
Cash and cash equivalents		4,028,467		875,690		265,862
		────────		────────		────────
Total current assets		4,089,356		888,445		304,654
		────────		────────		────────
Current Liabilities
Trade and other payables		(230,273)		-		(20,942)
Current tax liabilities		-		-		-
		────────		────────		────────
Total current liabilities		(230,273)		-		(20,942)
		────────		────────		────────
Net Current Assets		3,859,083		888,888		283,712
Non-current liabilities
Financial liabilities - borrowings		-		-		-
Deferred tax liabilities		-		-		-
		────────		────────		────────
Total non-current liabilities		-		-		-
		────────		────────		────────
Net assets		4,097,498		888,888		565,628
		════════		════════		════════
EQUITY
Called up share capital		76,500		10,000		10,000
Share premium account		1,218,335		990,000		970,000
Share-based payment reserve		-		-		56,641
Retained earnings		2,802,663		(111,112)		(471,013)
		────────		────────		────────
Equity attributable to equity shareholders		4,097,498		888,888		565,628
		════════		════════		════════

IN-DEED ONLINE PLC

CONDENSED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium account	Share- based payment reserve	Retained earnings	Total
	£	£	£	£	£
At 1 April 2011	10,000	970,000	56,641	(471,013)	565,628
Loss/total comprehensive expense for the period	-	-	-	(823,109)	(823,109)
Shares issued in the period	66,500	4,639,988	-	-	4,706,488
Cost of share  issue	-	(351,509)	-	-	(351,509)
Share based payment	-	-	-	-	-
Elimination of share premium	-	(4,040,144)	-	4,040,144	-
Share options exercised in period	-	-	(56,641)	56,641	-
	───────	───────	───────	───────	───────
At 30 September  2011	76,500	1,218,335	-	2,802,663	4,097,498
	═══════	═══════	═══════	═══════	═══════
At incorporation	1	-	-	-	1
Loss/total comprehensive expense for the period	-	-	-	(111,112)	(111,112)
Shares issued in the period	9,999	990,000	-	-	999,999
Cost of share issue	-	-	-	-	-
Share based payment	-	-	-	-	-
	───────	───────	───────	───────	───────
At 30 September 2010	10,000	990,000	-	(111,112)	888,888
	═══════	═══════	═══════	═══════	═══════
At incorporation	1	-	-	-	1
Shares issued in the period	9,999	990,000	-	-	999,999
Costs of share issue	-	(20,000)	-	-	(20,000)
Share based payment	-	-	56,641	-	56,641
Loss/ total comprehensive expense for the period	-	-	-	(471,013)	(471,013)
	───────	───────	───────	───────	───────
At 31 March 2011	10,000	970,000	56,641	(471,013)	565,628
	═══════	═══════	═══════	═══════	═══════

IN-DEED ONLINE PLC

CONDENSED STATEMENT OF CASH FLOWS for the six months ended 30 September 2011

		6 months ended 30 September 2011 (Unaudited)		3 months ended 30 September 2010 (Unaudited)		Period ended 31 March 2011 (Audited)
		£		£		£
Cash flows from operating activities
Loss from operations		(824,613)		(111,112)		(471,759)
Adjustments for:
Depreciation of property, plant and equipment		761		-		1,055
Amortisation of intangible asset		46,458		-		92,917
Share based payments		-		-		56,641
		───────		───────		───────
Operating Activities before working capital changes		(777,394)		(111,112)		(321,146)
		───────		───────		───────
Increase in receivables		(22,097)		(12,755)		(38,792)
Increase in payables		209,331		-		20,942
		───────		───────		───────
Cash generated absorbed by operations		(590,160)		(123,867)		(338,996)
		───────		───────		───────
Interest paid		-		-		-
Income Taxes paid		-		-		-
		───────		───────		───────
Net cash from operating activities		(590,160)		(123,867)		(338,996)
		───────		───────		───────
Cash flows from investing activities
Acquisition of property, plant and equipment		(3,718)		(443)		(4,221)
Acquisition of intangible asset		-		-		(371,667)
Interest Received		1,504		-		746
		───────		───────		───────
Net cash used in investing activities		(2,214)		(443)		(375,142)
		───────		───────		───────
Cash flows from financing activities
Proceeds on issue of ordinary shares		4,706,488		1,000,000		1,000,000
Costs of share issue		(351,509)		-		(20,000)
		───────		───────		───────
Net cash generated by financing activities		4,354,979		1,000,000		980,000
		───────		───────		───────
Net increase in cash and cash equivalents		3,762,605		875,690		265,862
Cash and cash equivalents at start of period		265,862		-		-
		───────		───────		───────
Cash and cash equivalents at end of period		4,028,467		875,690		265,862
		═══════		═══════		═══════
Comprising:-
Cash		4,028,467		875,690		265,862
		═══════		═══════		═══════

IN-DEED ONLINE PLC

NOTES TO THE CONDENSED FINANCIAL INFORMATION

for the six months ended 30 September 2011

1.       Accounting Policies

Basis of preparation

The condensed financial statements have been prepared using accounting policies consistent with  International Financial Reporting Standards (IFRSs) and in accordance with International Accounting Standard IAS 34: Interim Financial Reporting.

Significant accounting policies

The condensed financial statements have been prepared under the historical cost convention.

The same accounting policies, presentation and methods of computation are followed in these condensed financial statements as were applied in the preparation of the company's financial statements for the period ended 31 March 2011. The financial information has been prepared on the basis of IFRSs that the Directors expect to be applicable as at 31 March 2012.

         The figures for the period ended 31 March 2011 have been extracted from the audited accounts of In-Deed Online PLC.  The accounts for the period ended 31 March 2011 received an unqualified audit report and are filed with the Registrar of Companies.

         The financial information for the 6 months ended 30 September 2011 and 30 September 2010 are unaudited and do not constitute statutory accounts.

         The 6 months results have been approved by the board.

2.       Segment information

The directors have considered the revenue streams of the business, in line with IAS 14 "Segment reporting", and conclude that the business has one main business segment.  

3.       Taxation

         As a result of losses incurred, no taxation charge arises.

4.       Earnings per Share

         Basic earnings per share is calculated on the basis of loss for the period after tax divided by the weighted average number of ordinary shares in issue.

         Diluted earnings per share is calculated on the basis of loss for the period after tax divided by the weighted average number of ordinary shares in issue, adjusted for the number of shares under option.

5.       Dividend

         No dividend was declared in respect of the 6 months ended 30 September 2011 (2010: nil).

IN-DEED ONLINE PLC

NOTES TO THE CONDENSED FINANCIAL INFORMATION

for the six months ended 30 September 2011

6.       Property, plant and equipment

         During the period, the company spent £3,718 on additions to property, plant and equipment.

It did not dispose of any property, plant or equipment.

7.       Related party transactions

         There were no material related party transactions in the period ended 30 September 2011.

8.       Approval of interim financial statements

         The interim financial statements were approved by the board of directors on 31 October 2011.

 

END

 

 

IR BBBDBISGBGBC