Learning Technologies Group Regulatory News (LTG)

IN-DEED ONLINE PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2012

Highlights

·; Acquired in-house conveyancing capability on 16 May 2012 to become one of the top 10 conveyancing providers in the UK by volume

·; Reduced costs in the online business to be commensurate with the lower level of growth expected in online sales

·; Sales increase to £1.76m and losses reduced to £237,000 in the seasonally most active months of the year

·; £2.2m cash at bank and nil borrowings

Business Review

As announced previously, following the launch of our online conveyancing service and its slow pace of growth, we reviewed our strategy and decided to pursue opportunities arising from the deregulation of the legal sector. In particular, we targeted the acquisition of a profitable and cash generative conveyancing firm which could act as a platform for a larger legal services business. Following this review, we successfully completed the acquisition of Runnett & Co in the 6 months covered by these results and therefore this is reflected in these trading figures.

We have been satisfied with our acquisition of Runnetts. Integration has proceeded smoothly and trading post acquisition has been consistent with the robust housing market over the summer/autumn. Levels of instructions in the autumn have shown a seasonal slow down and we are using this quieter period to improve operational capability, including our IT systems, and build an even stronger offering for national chains of estate agents.

One element of our strategy is to grow Runnetts' penetration into the national chains. As anticipated at the acquisition, the relationship with one national chain of estate agents was terminated where the work was at very low margins. We have active discussions with other agents on going but these have yet to yield a positive outcome.

The Runnett acquisition included a London office serving the London based agents with a more bespoke service suitable for the higher value properties in the capital. We plan to grow this activity which is higher margin than the mainstream conveyancing market. With this in mind we have rebranded this business as Lewis & Thomas (www.lewisandthomas.co.uk) and have already grown the customer base. We will be opening a second office in January 2013 in central London.

The online conveyancing proposition continues to gain favourable reviews from customers and according to an independent online survey (Feefo) 95% of our customers rate our service 'good' or 'excellent'. Volumes remain modest as we continue to find that online customers are highly price sensitive and our outsourced model restricts our ability to compete in this regard. Since the half year we have integrated our IT systems to Runnett and we are experimenting with pricing for lower value property which still offers us an attractive margin when the work is undertaken in house. We will use data gathered to price our product to maximise volumes in the spring upturn. In the meantime we are keeping our marketing spend (ie cost of customer acquisition) to a level where we make a positive contribution.

Financial Review

The acquisition of our own conveyancing business has increased turnover substantially to £1.7m for the period. This reflects a busy summer for Runnett in particular, and our online business continues to grow, albeit slowly. We bought Runnett with a strong pipeline of business but this has not been replaced as we had hoped with business from new customers. We did opt to take some lower margin work to fill capacity but this, together with one off costs, has detracted from an otherwise strong trading period over the summer, and will impact the next quarter.

Our balance sheet remains strong although our cash reserves have been impacted by the acquisition and trading losses albeit some of this is offset by working capital movements. At the half year we are satisfied that the goodwill fairly reflects the value of the Runnett acquisition especially as £1.3m of it is matched by a contingent consideration that is only payable based on actual profits. We plan to husband our cash especially carefully and to deploy it wherever possible on making our business a best in class operation.

Outlook

Since the half year we have seen a marked drop in instruction levels at Runnett due to specific issues in one of our corporate customers combined with the normal seasonal slowdown. For this reason we expect the second half to show a loss for Runnett. We have taken action to reduce costs whilst balancing this with our desire to create best in class conveyancing provider, which means retaining our best people. We expect to emerge from this as a stronger and more competitive operator. As ever, our performance in 2013 will depend materially on developments in the housing market as well as our ability to retain and win new clients.

Enquiries

IN-DEED ONLINE PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

IN-DEED ONLINE PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

IN-DEED ONLINE PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

IN-DEED ONLINE PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

IN-DEED ONLINE PLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 30 September 2012

1. Accounting Policies

Basis of preparation

The condensed financial statements have been prepared 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 have been followed in these condensed financial statements as were applied in the preparation of the company's financial statements for the period ended 31 March 2012, except for the adoption of the following standard:

IFRS 3 (revised 2008) Business Combinations

IFRS 3 (revised 2008) has been applied to business combinations entered into in the 6 month period to 30 September 2012. Its application instructs the accounting for the acquisition of the subsidiaries, Xanther Limited and Runnett & Co. Limited in the current period.

The financial information has been prepared on the basis of IFRSs that the Directors expect to be applicable as at 31 March 2013.

The figures for the year ended 31 March 2012 have been extracted from the audited accounts of In-Deed Online PLC. The accounts for the year ended 31 March 2012 received an unqualified audit report and are filed with the Registrar of Companies.

The financial information for the 6 months ended 30 September 2012 and 30 September 2011 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 in respect of the 6 months ended 30 September 2012 (2011: nil).

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 2012 (2011: nil).

6. Property, plant and equipment

During the period, the company spent £13,351 on additions to property, plant and equipment.

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

IN-DEED ONLINE PLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

for the six months ended 30 September 2012

7. Acquisition of subsidiaries

On 15th May 2012 the Group acquired a 100% interest in Xanther Limited and its 100% subsidiary Runnett & Co Ltd. Runnett & Co Limited is engaged in the provision of conveyancing services and was acquired with the objective of enabling In-Deed to carry out some conveyancing in-house as well as expanding its distribution to the estate agency networks.

Consideration transferred

The contingent consideration requires the Group to pay 5 times Post Tax Profit to the vendors of Xanther. Post Tax Profit is calculated as the average, audited, taxed profit calculated over the financial years ending 31 March 2014, 2015, 2016 and 2017. The vendors can at their discretion substitute the year ending 31 March 2013 for the year ended 31 March 2017 in this calculation. The total value of payments is capped at £4m. The company's debts at completion (comprising the overdraft and directors' loans totalling £525,000) are deducted from the value of the total consideration. The vendors may draw down up to £200,000 of consideration following finalisation of the audited accounts for any one year providing the actual audited taxed profits exceed £200,000. Any amounts drawn down are deducted from the final price payable.

At completion of the acquisition, In-Deed loaned Runnett £350,000 to repay directors' loans and provided a loan of £175,000 to repay a bank overdraft.

Acquisition-related costs amounting to £51,605 have been excluded from the consideration transferred and have been recognised as an expense in the period, within the administrative expenses line in the consolidated statement of comprehensive income.

Assets acquired and liabilities assumed at the date of acquisition

The receivables acquired (which principally comprised trade receivables) with a fair value of £139,197 had gross contractual amounts of £174,197. The best estimate at acquisition date of the contractual cash flows not expected to be collected is £35,000.

IN-DEED ONLINE PLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

for the six months ended 30 September 2012

7. Acquisition of subsidiaries (continued)

Goodwill arising on acquisition

Goodwill arose in the acquisition because the acquisition included the reputation and customer relationships of Runnett & Co. Limited as part of the acquisition. These assets could not be separately recognised from goodwill because they are not capable of being separated from the Group and sold, transferred, licensed, rented or exchanged, either individually or together with any related contracts.

None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.

Net cash outflow on acquisition

Impact of acquisition on the results of the Group

The acquisition took place on 15 May 2012. Included in the loss for the interim period is profit of £231,594 attributable to Runnett & Co Limited. Revenue for the period includes £1,725,615 in respect of Runnett & Co Limited.

The period from April to September is the strongest trading period for the business when the volume of housing transactions is at its greatest and is not representative of trading for the full year which will be affected by operating losses in certain months.

Had the acquisition of Runnett & Co Limited not taken place then the revenue of In-Deed Online PLC from continuing operations for the six months ended 30 September 2012 would have been £34,067, and the loss for the year from continuing operations would have been £468,425.

8. Related party transactions

There were no material related party transactions in the period ended 30 September 2012.

9. Approval of interim financial statements

The interim financial statements were approved by the board of directors on 19 December 2012.