Harry Hill's InDeed firm mulls its future

Harry Hill's InDeed firm mulls its future

Harry Hill’s conveyancing business In-Deed Online has announced it is reviewing its operations.

Problems with estate agents and penetrating the chains to grow the business appear to have played a part.

According to a statement to shareholders at the end of last year, there had been “specific issues” with a corporate customer. The statement also refers to a contract with one national chain having been terminated, and said that discussions with other agents had yet to bear fruit.

Now a new update to shareholders makes clear that problems for In-Deed are not over.

The legendary Hill, who founded Countrywide and ran it with great success for a number of years, went on to launch In-Deed, an online conveyancing firm which immediately entered the AIM stock market.

It was the first time a conveyancing firm had been listed on AIM and within hours of its launch, accelerating share prices valued the company at £11.23m.

However, the launch two years ago appeared ill-timed in terms of transaction numbers, while the online proposition failed to gain the promised traction.

Hill himself had to admit that the company had failed to make headway in its original ambitions.

Last May (2012), the firm bought a top ten conveyancing firm called Runnetts, said to have made a profit of  £245,000 on sales of £3.9m. In-Deed agreed to pay up to £4m for Runnetts, the acquisition of which was to give it “immediate scale” in the UK conveyancing market, as well as a high street presence and established work with estate agents.

Hill said at the time: “Our ambition remains to become one of, if not the, largest high-quality provider of conveyancing services in the UK. To this end, we continue to progress our discussions with law firms, conveyancing firms and estate agency companies, and look forward to updating our shareholders in due course.”

However, In-Deed has now issued an update to its shareholders, warning of problems.

It says that Runnetts has had a “challenging” time, and that its online business is loss making.

A review of the options for both businesses is now under way. The statement says that the review will not lead to a sale of the group. There is no mention in the statement as to whether closure could be an option.

In its last report, covering the six months to the end of September 2012, In-Deed posted pre-tax losses of £236,831 from turnover of £1,759,682. It said it was satisfied with its acquisition of Runnetts, but it did note that while Runnetts had had a strong pipeline of business, this had not been replaced by new customers.

The statement also referred to a “marked drop in instruction levels at Runnett due to specific issues in one of our corporate customers combined with the normal seasonal downturn”.

The new trading update says: “In our half-year results, we highlighted that we expected our conveyancing business, Runnett & Co, to show a loss in the second half of the financial year to 31 March 2013 and also its sensitivity to existing and new clients.

“As predicted, the second half proved challenging and the first two months of the current financial year have continued in a similar fashion, although we have seen some pick up in May which we expect to continue throughout the seasonally busier summer period.
“The online business continues to make steady progress in terms of customer numbers although it remains lossmaking.
“We continue to scrutinize our cost base so as to minimize cash burn, including making significant reductions in the salaries and fees of the directors. The cash balance in IOL at the end of April 2013 was £1.288m with no external indebtedness.
“In light of the headwinds we face in Runnett & Co, combined with the cost of making the necessary operational improvements this business, the Board will be reviewing its options for both its businesses over the coming weeks. For the avoidance of doubt, this review is not expected to lead to a sale of the Group. 
“The Board will update shareholders as soon as there are significant developments.”