Final Results

RNS Number : 2060M
In-Deed Online PLC
17 September 2012
 



 

 

17 September 2012

 

 

IN-DEED ONLINE PLC

("In-Deed" or the "Company")

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2012

 

 

Highlights

 

Financial

·     Loss of £1.5m on sales of £19k

·     Loss per share of 8.4p

·     No final dividend declared

·     Net cash at year end of £3.3m and strong balance sheet

 

Operational

·     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

·     B2C conveyancing product well received by customers but volumes below expectation

·     Review of plans led to decision to enter B2B conveyancing market where it is distributed through national estate agency chains

·     Since the year end, acquired a profitable 'top 10' conveyancing company

·     Current on going strategic discussions to significantly grow B2B business

 

Executive Chairman Harry Hill commented on the results and outlook:

 

"In the short period since we formed In-Deed in 2010 we have made substantial progress.  We have developed and launched a genuinely market leading conveyancing product direct to consumers whilst at the same time raising capital on AIM.  We are the first to admit volumes have been below our expectation but this led to a rapid reappraisal of strategy and the decision to enter the estate agent distributed conveyancing market.

 

The acquisition of Runnett has taken place since the year end but we are pleased with what we have bought and excited at its growth potential.  Furthermore we are in active discussions with other potential business partners to expand our business and operations and we are hopeful of announcing these soon.  I remain convinced we have the opportunity to make In-Deed the market leading conveyancing business in the UK."

 

 

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 Poutney/James Serjeant (Broker)

 

 

 

 

Executive Chairman's Statement

 

Business Review

 

In-Deed was founded in 2010 to provide the buyers and sellers of residential property in England and Wales with access to a high quality conveyancing service.  Launch of the In-Deed conveyancing service took place on 23 May 2011 with a focus solely on selling direct to consumers and fulfilling the service through a panel of third party licenced conveyancers and/or solicitors.

 

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

 

The B2C product was initially promoted through the property portals (Findaproperty, Prime Location, Globrix and later, Zoopla) supported by a PR campaign.  The PR campaign at launch 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'. 

 

The portals delivered substantial traffic to the site very quickly with over 10,000 visitors per month visiting the site in the initial months.   At the same time, sustained efforts on paid and natural search activity drove a much more gradual increase in both the volume and quality of visitors.  Conversion of visitors into customers proved disappointing so several developments of the customer acquisition process where trialled by launching major updates of the website.  Eventually it was decided to go to a lead capture model whereby the focus would be on obtaining contact details of potential customers and then contacting them actively by phone or email. 

 

Therefore in September 2011 an outbound telesales capability was developed together with the introduction of a third party customer relationship management system.  At the same time the product pricing was revised downwards especially at the lower end of the propery price spectrum (sub £200,000 purchase/sale price).  Nonetheless it has proved hard to differentiate In-Deed from a miscellany of 'lookalike' products promoted on the web, almost always under a misleadingly low price banner. Consequently we concluded at the end of 2011 that, while our cost of acquiring a customer was (and continues to be) improving, it was unlikely to reach levels at which we could be confident of creating a profitable and sustainable business.

 

It is worthy of note that while our focus was on improving origination, many areas of the business performed in line with our expectation.  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 proved to be robust. The legal panel were managed to deliver in line with our expectation in terms of the quality legal services provided and the IT links between our firms.   We launched with two firms and added a third during the year and we are delighted with the service provided.  Finally, and most importantly, customer feedback has been universally positive with particular praise for the functionality delivered by the customer 'dashboard'. 

 

In January 2012 the Board undertook a review of strategy.  It decided that ownership of a conveyancing firm would enable In-Deed to earn more margin per customer from those that it acquired directly.  Furthermore the acquisition of a well established firm with estate agency distribution would both provide critical mass and expand our distribution in the estate agency market. Therefore we actively promoted our interest in buying a profitable and well run conveyancing practice within and subsequently received c50 approaches from firms interested in a discussion.  The vast majority ruled themselves out on grounds of size, profitability or business mix but we focussed on one particularly attractive target which is covered under 'Post Year End Acquisition' below.

 

Financial Review

 

The year covered both pre and post launch.  Sales of £19k reflect the combination of low customer conversion and the time lag from customer acquisition to exchange of contracts, when revenue is recognised.  Cost of sales are marketing costs which were deliberately high before and immediately after launch but were cut back later in the year as information on sales effectiveness was gathered. 

 

Administrative expenses include one off costs from the development phase as well as some IPO costs.  Here again the run rate was reduced later in the year. 

 

At the year end our balance sheet was very strong with net cash of £3.3m and zero borrowings.

 

Post Year End Acquisition

 

In line with the strategy, we announced the acquisition of 100% of Runnett & Co Ltd ('Runnetts') on 15 May 2012.  Runnetts is a volume provider of conveyancing in England and Wales and is regulated by the Council for Licensed Conveyancing.  It is in the top 10 UK conveyancing firms (by volume of registrations at the Land Registry) and undertakes business introduced by the major national estate agents.  The company in based in South Wales and employs about 60 staff.

 

At completion we paid £225k in cash for 100% of the share capital.  In addition we lent the company £325k to repay directors' loans and provided a loan to repay a bank overdraft of £155k.  The total value of payments to the shareholders (including the payments above) is determined according to a multiple of 5 times post tax profit.  Post tax profit is calculated as taking the average, audited pretax profit calculated across the years ended 31 March 2014, 2015, 2016, and 2017.  The total value of payments is capped at £4m.

 

Pro forma accounts for the year ended 31 March 2012 show operating profits of £245k on sales of £3.9m. 

 

Runnetts immediately gives In-Deed distribution in the estate agency sector on a national basis.  It also has a fast growing business serving the London market specifically where higher service standards are required and margins are relatively attractive.  Since acquisition the business has traded in line with our expectations and we expect to show a material positive impact on consolidated sales and income at the half year.

 

Market Update

 

The housing market has continued to experience a very depressed level of buy/sell activity (currently running at c50k per month) with current expectation that the total volume of transactions for 2012 will be as low as 5-600,000 which is half the level recorded in 2007.  We are not expecting a significant recovery as long as economic conditions in the UK remain challenged.  As far as the conveyancing market is concerned, the low level of instructions combined with the increasing cost of professional indemnity insurance in particular, means that smaller conveyancing providers are departing the industry.  In the first half of 2012 the number of firms submitting returns to the Land Registry reduced by 7% although 20% of registrations come from 1.5% of firms.  The largest conveyancing company had a market share of purchases of approximately 2%.

 

People

 

In-Deed is dependent on the quality and commitment of its people to provide the highest level of service to its clients.   It was exciting to welcome the staff from Runnett to the In-Deed group.  I would like to thank all our employees for their effort over the year and I look forward to some exciting times ahead as we work together to create a market leader in UK conveyancing.

 

Current Trading and Outlook

 

We are very happy with our business to consumer product that we believe sets genuinely high and new standards in the UK conveyancing market for service and transparency.  We are building slowly on last year's volumes while focussing on managing our costs tightly.  The Runnett acquisition is trading profitably and generating operating cash flow.

    

A large proportion of our time is being spent on expanding into the B2B market serving national estate agency chains where we have on going strategic discussions with several parties which could lead agreements to receive conveyancing work for the longer term in combination with the possible acquisition of a second conveyancing business.   If these discussions are concluded successfully we expect to issue further equity to our strategic partners and for this reason we will be seeking authority to increase our ability to issue new shares in respect of acquisitions/strategic partnerships at our forthcoming AGM.

 

 IN-DEED ONLINE PLC

 

Statement of Comprehensive Income

For the year ended 31 March 2012

 

 

 

Year ended 31 March 2012

Period ended 31 March 2011

 

 

 

 

 

Note

£

£

Continuing Operations

 

 

 

Revenue

5

19,050

-

Cost of sales

 

(462,227)

-

 

 

────────

────────

Gross loss

 

(443,177)

-

 

 

 

 

Administrative expenses

 

(1,179,613)

(471,759)

 

 

────────

────────

Loss from operations

6

(1,622,790)

(471,759)

 

 

 

 

Finance cost

 

(30)

-

Investment income

 

50,808

746

 

 

────────

────────

Loss for the year before taxation

 

(1,572,012)

(471,013)

 

 

 

 

Taxation

8

(156)

-

 

 

────────

────────

Loss for the year

16

(1,572,168)

(471,013)

 

 

════════

════════

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

Total comprehensive expense

 

(1,572,168)

(471,013)

 

 

════════

════════

 

 

 

 

Loss attributable to :

 

 

 

Owners of the Company

 

(1,572,168)

(471,013)

 

 

════════

════════

Total comprehensive expense attributable to :

 

 

 

Owners of the company

 

(1,572,168)

(471,013)

 

 

════════

════════

 

 

 

 

Earnings per share

 

 

 

Basic (pence per share)

9

(8.4)

(70.8)

Diluted (pence per share)

9

(7.4)

(34.3)

 

 


IN-DEED ONLINE PLC

 







Statement of Financial Position

As at 31 March 2012

 

 

 

 

2012

2011

 

Note

£

£

£

£

Non-current assets

 

 

 

 

 

Intangible asset

10

186,315

 

278,750

 

Property, plant and equipment

11

5,134

 

3,166

 

 

 

───────

 

───────

 

 

 

 

191,449

 

281,916

 

 

 

 

 

 

Current assets

 

 

 

 

 

Trade and other receivables

12

     93,780

 

38,792

 

Cash and cash equivalents

 

3,299,191

 

265,862

 

 

 

───────

3,392,971

───────

304,654

 

 

 

 

 

 

 

 

 

───────

 

───────

Total assets

 

 

3,584,420

 

586,570

 

 

 

───────

 

───────

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

13

 

(142,057)

 

(20,942)

 

 

 

───────

 

───────

Net current assets

 

 

3,250,914

 

283,712

 

 

 

───────

 

───────

 

 

 

 

 

 

 

 

 

───────

 

───────

Net assets

 

 

3,442,363

 

565,628

 

 

 

═══════

 

═══════

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

14

 

76,500

 

10,000

Share premium

15

 

1,218,335

 

970,000

Share based payment reserve

15

 

93,924

 

    56,641

Retained earnings

16

 

2,053,604

 

(471,013)

 

 

 

───────

 

───────

Equity attributable to

owners of the Company

 

 

 

3,442,363

 

 

565,628

 

 

 

═══════

 

═══════

 

IN-DEED ONLINE PLC

 

Statement of Changes in Equity

For the year ended 31 March 2012

 

 

 

Share

capital

 

Share premium

Share based payment reserve

 

Retained earnings

 

 

Total

 

£

£

£

£

£

At incorporation

                  1

                -

                 -

              -

                 1

Shares issued during period

 

           9,999

 

        990,000

 

                 -

 

              -

 

      999,999

Cost of share issue

                  -

         (20,000)

                 -

              -

        (20,000)

Share based payment in the period

 

                  -

 

                 -

 

         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

 

════════

════════

════════

════════

════════

 

 

 

 

 

 

 

At 1 April 2011

10,000

970,000

56,641

(471,013)

565,628

Shares issued during year

66,500

4,639,988

-

-

4,706,488

Cost of share issue

-

(351,509)

-

-

(351,509)

Elimination of share premium

-

(4,040,144)

-

4,040,144

-

Share based payment in the year

-

-

93,924

-

93,924

Share options exercised in the year

-

-

(56,641)

56,641

-

Loss/total comprehensive expense for the year

 

-

 

-

 

-

 

(1,572,168)

 

(1,572,168)

 

────────

────────

────────

────────

────────

At 31 March 2012

76,500

1,218,335

93,924

2,053,604

3,442,363

 

════════

════════

════════

════════

════════

 

 

IN-DEED ONLINE PLC

 

Statement of Cash Flows

For the year ended 31 March 2012

 

 

 

Year ended 31 March 2012

Period ended 31 March 2011

 

Notes

£

£

 

 

 

 

Net cash from operating activities

17

(1,319,041)

(338,996)

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisition of property, plant & equipment

 

(3,719)

(4,221)

Acquisition of intangible asset

 

(542)

(371,667)

Interest received

 

1,808

746

 

 

────────

────────

Net cash (used in) investing activities

 

(2,453)

(375,142)

 

 

────────

────────

 

 

 

 

Taxation paid

 

(156)

-

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds on issue of ordinary shares

 

4,706,488

1,000,000

Costs of share issue

 

(351,509)

(20,000)

 

 

────────

────────

Net cash generated by financing activities

 

4,354,979

980,000

 

 

────────

────────

Net increase in cash and cash equivalents

 

3,033,329

265,862

 

 

 

 

Cash and cash equivalents at beginning of year

 

265,862

-

 

 

────────

────────

Cash and cash equivalents at end of year

 

3,299,191

265,862

 

 

════════

════════

 

 

 

 

Comprising:-

 

 

 

Cash

 

3,299,191

265,862

 

 

════════

════════

 

 

Notes to the Financial Statements

For the year ended 31 March 2012

 

1.       General information

In-Deed Online PLC is a company incorporated in the United Kingdom. The address of its registered office and principal place of business are disclosed in the company information section of the financial statements. These financial statements are in respect of the individual entity only.

 

The principal activity of the Company is described on page 2.

 

2.       Statement of compliance

         The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board, International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union, and the Companies Act 2006 where applicable to companies reporting under IFRSs.

 

3.         Summary of significant accounting policies

The accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to each year presented unless otherwise stated.

 

Basis of preparation

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

 

Adoption of new and revised standards

The following standards, amendments and interpretations became effective during the year and have been adopted in these financial statements.  Their adoption has not had any impact on the amounts reported in these financial statements:

 

IAS 1                                   Presentation of Financial Statements

IAS 24                                 Related Party Disclosures

IAS 32                                 Financial Instruments: Presentation

IFRS 7                                 Financial Instruments: Disclosures

 

At the year end the following standards, amendments and interpretations, which have not been applied in these financial statements, were in issue but not yet effective:

 

IAS 1                                   Presentation of Financial Statements

IAS 7                                   Statement of Cash Flows

IAS 12                                 Income Taxes

IAS 39                                 Financial Instruments: Recognition and Measurement

IFRS 7                                 Financial Instruments: Disclosures

IFRS 9                                 Financial Instruments

IFRS 13                               Fair Value Measurement

                                      

The directors have not yet had an opportunity to consider the potential impact of the adoption of these amendments. At the year end there were further standards, amendments and interpretations in issue but not yet effective which are not expected to be relevant to the Company's operations and are therefore not disclosed separately.

 

            Revenue

Revenue is recognised for the rendering of services when all the following conditions are satisfied:

·      the amount of revenue can be measured reliably

·      it is probable that the economic benefits associated with the transaction will flow to the entity

 

The point at which the Company recognises its revenue is where contracts between the vendor and buyer have been exchanged.

 

Interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and the effective interest rate.

 

Taxation

The tax expense represents the sum of the tax currently payable. Current tax, including UK corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

                  

Intangible assets

Expenditure on research activities are recognised as an expense in the year in which it is incurred.

 

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

 

·      the technical feasibility of completing the intangible asset so that it will be available for use or sale;

·      the intention to complete the intangible asset and use or sell it;

·      the ability to use or sell the intangible asset;

·      how the intangible asset will generate probable future economic benefits;

·      the availability of adequate technical, financial and other resources to complete the development and use or sell the intangible asset; and

·      the ability to measure reliably the expenditure attributable to the intangible asset during its development

 

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the year in which it is incurred.

 

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. 

 

The amortisation rates applicable are:-

 

Website development costs - 25% straight line

 

The amortisation charge for the year is disclosed within administrative expenses within the Statement of Comprehensive Income.

 

Property, plant and equipment

Fixtures & fittings and equipment are stated at cost less accumulated depreciation.

 

Any item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

 

Depreciation

Depreciation is calculated to write off the cost less the estimated residual value of assets over their expected useful lives. The estimated useful lives, residual values and depreciation method are reviewed by class of asset at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

 

The rates applicable are:-

 

Fixtures & fittings          -    25% straight line

Computer equipment     -    25% straight line

 

Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is based on estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where the impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and on deposit.

 

Share-based payment transactions of the Company

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity settled share-based transactions are set out in note 20. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of equity instruments that will eventually vest, with a corresponding increase to equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision on the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share based payment reserve.

 

The policy described above is applied to all equity settled share based payment transactions.

 

Equity settled share based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

 

          Leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits of the leased asset are consumed.

 

Financial Instruments

Financial assets and financial liabilities are recognised in the Company's Statement of Financial Position when the Company has become a party to the contractual provisions of the instrument:

 

I. Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

 

II. Derecognition of financial assets

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

 

III.     Impairment of financial assets

The Company assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets are impaired. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. 

 

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows. 

 

IV.     Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

 

V.      Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

 

VI.     Other financial liabilities

Trade payables, and other payables that have fixed or determinable payments are classified as other financial liabilities. Other financial liabilities are initially measured at fair value, and subsequently measured at amortised cost.

 

Derecognition of financial liabilities

The Company derecognises a financial liability only when the contractual obligations to the cash flows of the liability expire. Expiry occurs where full settlement of the amount outstanding is made in the form of cash payment or where an agreement is made with the relevant counter party which extinguishes the liability of the Company.

 

4.       Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements under IFRS requires the Company to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.  If in the future should such estimates and assumptions deviate from actual circumstances, the original estimates and assumptions would be modified as appropriate in the period in which circumstances change.

 

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:

 

Valuation of intangible assets

The directors have considered the value of the Company's intangible asset arising from its e-business development at the year-end. The web portal achieved operational status during the year and continues to operate in line with project expectations.  The directors are confident that the carrying amount of the asset will be recovered in full, though this situation will be closely monitored, and adjustments made in future periods if future market activity indicates that such adjustments are appropriate.

 

5.       Revenue

Revenue for the year comprises of fees rendered for the arrangement of conveyancing contracts, exclusive of value added tax. This includes revenue for contracts which have been completed and invoiced, and those where contracts have been exchanged revenue is accrued in line with the Company's accounting policy. 

 


Year ended 31 March 2012

Period ended 31 March 2011

6.

Loss from operations

£

£






Loss from operations is stated after charging:-








Depreciation of property, plant and equipment

1,751

1,055


Amortisation of intangible assets

92,977

92,917


Auditors' remuneration - audit services

8,000

5,000



════════

════════

 




7.

Staff costs





Number

Number


The average monthly number of employees was:-

7

3



════════

════════






Their aggregate remuneration comprised:-

£

£






Wages and salaries

409,648

150,000


Share based payments

93,924

53,775


Social security costs

49,011

17,357



────────

────────



552,583

221,132



════════

════════

 

Compensation of key management personnel

 

 



Year ended 31 March 2012

£

Period ended 31 March 2011

£






Emoluments

271,081

150,000


Share options granted

76,604

53,775



────────

────────



347,685

203,775



════════

════════











Number

Number


Number of directors and key management personnel

5

3



════════

════════

 

 


Year ended 31 March 2012

Period ended 31 March 2011

8.

Taxation

£

£






UK corporation tax - current year

-

-


UK corporation tax - previous year under provision

(156)

-



────────

────────



(156)

-



════════

════════


Factors affecting the tax charge for the year








Loss on ordinary activities before taxation

(1,572,012)

(471,013)



════════

════════






Loss on ordinary activities before taxation multiplied by the effective rate of corporation tax in the United Kingdom of

26% (2011: 28%)

 

(408,723)

 

(131,884)






Expenses not deductible for tax purposes

24,420

16,103


Depreciation in excess of capital allowances

42

(886)


Unrelieved tax losses

384,261

116,667



────────

────────



-

-



════════

════════





 

 


Year ended 31 March 2012

Period ended 31 March 2011

9.

Earnings per share

Pence per share

Pence per share






Basic loss per share

(8.4)

(70.8) 



───────

───────


Diluted loss per share

(7.4)

(34.3)



───────

───────






The loss used in the calculation of basic and diluted earnings per share are as follows:





Year ended 31 March 2012

Period ended 31 March 2011



£

£






Loss for the year (period) attributable to owners of the Company

(1,572,168)

(471,013)



───────

───────






The weighted average number of shares used in the calculation of basic and diluted earnings per share are as follows:



Year ended 31 March 2012

Period ended 31 March 2011



Number

Number






Weighted average number of ordinary shares used in the calculation of basic earnings per share

 

18,826,971

 

   664,975


Shares deemed to be issued for no consideration in respect of




- options exercised

  2,425,776

   707,604



───────

───────


Weighted average number of ordinary shares used in the calculation of diluted earnings per share

 

21,252,748

 

1,372,579



═══════

═══════

 




10.

Intangible Assets


Total




£


Cost




At incorporation


-


Additions


371,667




───────


At 31 March 2011


371,667


Additions


542




───────


At 31 March 2012


372,209




═══════


Amortisation




At incorporation


-


Charge for year


92,917




───────


At 31 March 2011


92,917


Charge for year


92,977




───────


At 31 March 2012


185,894




═══════






Net book value




At 31 March 2012


186,315




═══════


At 31 March 2011


278,750




═══════





 

 

Intangible assets relate to costs incurred in the development and implementation of the Company's web portal which is considered as having a finite useful life. The amortisation method and rate applied are disclosed within the summary of significant accounting policies.

 

There are approximately 2 years remaining in respect of the amortisation period of the intangible assets.

 



Fixtures &



11.

Property, plant and equipment


Fittings

Equipment

Total




£

£

£


Cost






At incorporation


-

-

-


Additions


2,130

2,091

4,221




────────

────────

────────


At 31 March 2011


2,130

2,091

4,221


Additions


380

3,339

3,719




────────

────────

────────


At 31 March 2012


2,510

5,430

7,940




════════

════════

════════


Depreciation






At incorporation


-

-

-


Charge for year


532

523

1,055




────────

────────

────────


At 31 March 2011


532

523

1,055


Charge for year


625

1,126

1,751




────────

────────

────────


At 31 March 2012


1,157

1,649

2,806




════════

════════

════════


Net book value






At 31 March 2012


1,353

3,781

5,134




════════

════════

════════


At 31 March 2011


1,598

1,568

3,166




════════

════════

════════

 


2012

2011

12.

Trade and other receivables

£

£






Trade receivables

3,120

-


Other debtors

31,275

27,372


Prepayments and accrued income

59,385

11,420



────────

────────



93,780

38,792



════════

════════






Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost. Trade receivables do not include any amounts that are past due at the end of the reporting period, therefore no allowance for doubtful receivables is necessary.







2012

2011

13.

Trade and other payables

£

£






Trade payables

55,802

-


Other payables and accruals

69,951

19,535


Other tax and social security

16,304

1,407



────────

────────



142,057

20,942



════════

════════






The average credit period on purchases is 30 days (2011: 30 days). The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

 


2012

2011

14.

Share capital

£

£






Authorised




Equity




20,400,000 ordinary shares of £0.00375 each

76,500

-


8,000,000 A ordinary shares of £0.00125 each

-

10,000


2,000,000 B ordinary shares of £0.00125 each

-

2,500



────────

────────



76,500

12,500



════════

════════


Allotted, called up and fully paid




Equity




20,400,000 ordinary shares of £0.00375 each

(2011: 8,000,000 A ordinary shares of £0.00125 each)

 

76,500

 

10,000



════════

════════

 

The share classes noted above carry one vote per share and carry a right to dividends.

 

  

   Reconciliation of shares

 

2012

 

2011



Number of shares

Number of shares






On 1 April / incorporation

8,000,000

1


Issue of shares during the year

45,657,148

999,900


Consolidation of shares

(33,257,148)

-


Subdivision of shares during the year

-

99


Further subdivision of shares during year

-

7,000,000



────────

────────



20,400,000

8,000,000



════════

════════

 

15.

Reserves


2012

2011




£

£


Share premium










At 1 April / incorporation


970,000

-


Elimination of share premium


(4,040,144)

-


Issue of shares during the year


4,639,988

990,000


Cost of share issue


(351,509)

(20,000)




────────

────────


At 31 March


1,218,335

970,000




════════

════════


Equity-settled share based payments










At 1 April / incorporation


56,641

-


Share options exercised in the year


(56,641)

-


Share based payments in year


93,924

56,641




────────

────────


At 31 March


93,924

56,641




════════

════════

 

The above equity-settled share based payment reserve relates to share options granted by the Company to six of its employees under a share option plan (2011: three employees and one of its suppliers). Further information about share-based payments is set out in note 20.

 

16.

Retained earnings


2012

2011




£

£







At 1 April / incorporation


(471,013)

-


Elimination of share premium


4,040,144

-


Options exercised in the period


 56,641

-


Loss for the year


(1,572,168)

(471,013)




────────

────────


At 31 March


2,053,604

(471,013)




════════

════════

 


2012

2011

17.

Notes to the Statement of Cash Flows

£

£






Loss from operations

(1,622,790)

(471,759)






Adjustments for:




Depreciation of property, plant and equipment

1,751

1,055


Amortisation of intangible assets

92,977

92,917


Share based payments

93,924

56,641


Interest paid

(30)

-



────────

────────


Operating cash flows before movements in working capital

(1,434,168)

(321,146)






(Increase) in receivables

(5,988)

(38,792)


Increase in payables

121,115

20,942



────────

────────


Net cash from operating activities

(1,319,041)

(338,996)



════════

════════





 


2012

2011

18.

Operating Lease Arrangements

£

£






Minimum lease payments under operating leases recognised

35,854

4,443


as an expense for the year

════════

════════

 

At the balance sheet date, the Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:-



£

£






Within one year

18,454

35,854


In the second to fifth years inclusive

-

12,823



────────

────────



18,454

48,677



════════

════════

 

Operating lease payments are in respect of the rental of premises and ongoing computer hosting, with terms of one and two years from inception respectively.

 

19.    Financial instruments

 

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future development of the business. Given the stage of the Company's development there are no formal targets set for return on capital. There were no changes to the Company's approach to capital management during the year.

 

The directors manage capital to ensure that the Company will be able to continue as a going concern, whilst maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company currently consists of cash and equity only.

 

Financial risk management

The Company's activities expose it to market risk (which would include currency risk and interest rate risk), credit risk and liquidity risk. As the Company operates within the United Kingdom whereby all transactions are made in GBP there is no currency risk.

 

This note presents qualitative and quantitative information about the Company's exposure to each of the above risks, their objectives, policies and procedures for managing risk. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.

 

The Company's overall risk management approach focuses on the unpredictability of financial markets and seeks to minimise the potential adverse effects on the financial performance of the Company. The Company does not currently use derivative financial instruments to hedge financial risk exposures and therefore it is exposed to movements in interest rates.

 


2012

2011


Categories of financial instruments

£

£






Financial assets








Cash and cash equivalents

3,299,191

265,862


Trade and other receivables

85,595

27,372



────────

────────



3,384,786

293,234



════════

════════






Financial liabilities




Trade and other payables

142,057

20,942



════════

════════

 

The fair value of the Company's financial assets and liabilities above is not considered to be materially different from their book values.

 

Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a financial loss to the Company and arises principally from the Company's receivables and cash deposits.

 

At the year end no receivables were past due or considered impaired. Cash and cash equivalents are held with Financial Institutions of high credit rating. Credit risk as assessed by the directors is considered low.

 

Liquidity risk

The Company monitors its cash position on a daily basis and utilises short term deposit accounts to maximise interest rate returns. Cash flow requirements are reviewed on a weekly basis with transfers made to current accounts to provide sufficient funds to settle invoices as required.

 

Interest rate risk

The management of interest rate risks to the Company are dependent on a number of factors including:

 

·      Interest rates

·      Level of cash and liquid investments

·      Term of cash and liquid investments

·      Maturity dates of investments.

 

At the reporting date, the Company had no interest bearing financial liabilities.

 

Sensitivity analysis

A 1% increase in the Bank of England base rate would have increased equity and reduced the pre tax loss by £34,000, a decrease of 0.5% would have decreased equity and increased the loss by £17,000.

 

20.     Share based payments

The Company has a share option scheme for its senior employees. Each option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to their date of expiry.

 

The following share-based payment arrangements were in existence during the year:

                                                                                                                            £                   £

 

                                                                                   

          Fair value of share options granted in the year

          Inputs into the model

          Movements in share options



Number

2012

Number

2011






At 1 April / incorporation

1,700,000

-


Granted during the year

2,538,000

212,500


Impact of further subdivision of shares during year on options previously granted

 

-

 

1,487,500


Forfeited during the year

-

-


Exercised during the year

(1,700,000)

-


Expired during the year

-

-



────────

────────


At 31 March

2,538,000

1,700,000



════════

════════

          Share options exercised during the year

 

          Share options outstanding at the end of the year

21.     Related party transactions

 

 

22.     Events after the reporting period

 

The vendors may draw down up to £200,000 in cash of the total value in any one year when the accounts for the years 31 March 2013, 2014, 2015 and 2016 respectively are finalised providing post tax profits are at least £200,000 for that year.  The final payment may be made up to 50% in the Company's shares at the sole discretion of the purchasing Company.  Total payments under the agreement cannot exceed £4m.  To the extent that the loans referred to above are outstanding at the time of final settlement, the amounts involved will be deducted in arriving at the balance due to the vendors.  Forecasts for the acquired business are in course of preparation, and once these are available, the directors will be in a position to value the contingent consideration.

 

Total costs of the acquisition have not been finalised but are not expected to exceed £35,000.  These costs relate primarily to legal advice and none of these costs have been recognised in the 2012 accounts.  There is no revenue or profit of Xanther included in the Company's accounts for the reporting period.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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